NOTESTOFINANCIALSTATEMENTS(Continued}

CANALSTRETDEVELOPMENTCORPORATION NOTESTOFINANCIALSTATEMENTS(Continued} December31,195 CONTRIBUTIONS-Continued Cntr~butlonsReceivedandContributionsMade.InacordancewithSFASNo. restricted,orpermanentlyrestrictedsuportdependingonthexistenceor natureofanydonorrestrictions.undersfasno.16,donorrestricted 16,contributionsreceivedarerecordedasunrestricted,temporarily contributionspreviouslyunreportedarerequiredtobereportedas temporarilyrestrictedsuportandarethenreclasifiedtounrestrictednet asetsuponexpirationofthedonorestrictions.thischangehadnoefect onthefinancialstatementsfortheyearendeddecember31,195. Thepreparationoffinancialstatementsinconformitywithgeneralacepted acountingprinciplesrequiresmanagementomakestimatesandasumptions thatafectcertainreportedamountsanddisclosures.acordingly,actual results:coulddiferfromthosestimates. Donationsofpropertyandequipmentarerecordedassuportattheir estimatedfairvalue.suchdonationsarereportedasunrestrictedsuport unlesthedonorhasrestrictedthedonatedasettoaspecificpurpose. CSDC'sasetsarepermanentlyrestrictedbytheactofdonationagrement betwend.h.holmesandtheorganization.theagrementstatesthathe donetransferedtitleexclusivelyforpublicpurposes.theseinclude maintenanceoftheproperty,promotionofsocialwelfare,combating comunitydeterioration,increasingemploymentoportunities,increasing tourismandenhancingtouristamenitiesoncanalstret,andpreservingand improvingthehistoricanduniqueaestheticqualityofthecanalstretarea. Propertyandequipmentaredepreciatedusingthestraight-linemethodovera termofthirty-nine(39)years. In195,theOrganizationelectedtoadoptStatementofFinancialAcounting Standards(SFAS)No.17,"FinancialStatementsofNot-for-Profit Organizations."UnderSFASNo.17,theOrganizationisrequiredtoreport

inherentlimitationsinanyinternalcontrolstructure,erorsor iregularitiesmayneverthelesocurandnotbedetected.also,projection ofanyevaluationofthestructuretofutureperiodsisubjectotherisk thatproceduresmaybecomeinadequatebecauseofchangesinconditionsor that~leefectivenesofthedesignandoperationsofpoliciesand proceduresmaydeteriorate. Ourconsiderationoftheinternalcontrolstructurewouldnotnecesarily disclosealmatersintheinternalcontrolstructurethatmightbematerial weaknesesunderstandardsestablishedbytheamericaninstituteofcertified PublicAcountants.Amaterialweaknesisaconditioninwhichthedesign oroperationofoneormoreoftheinternalcontrolstructureelementsdoes notreducetoarelativelylowleveltheriskthaterorsoriregularities inamountsthatwouldbematerialinrelationtothefinancialstatements beingauditedmayocurandnotbedetectedwithinatimelyperiodby employesinthenormalcourseofperformingtheirasignedfunctions.we notednomatersinvolvingtheinternalcontrolstructureanditsoperation thatweconsidertobematerialweaknesesasdefinedabove. ThisreportisintendedfortheinformationoftheBoardofDirectors, management,andaplicablefederalandstateagencies.however,thisreport isamaterofpublicrecordanditsdistributionisnotlimited. bu9 NewOrleans,Louisiana September17,196 19

PAlLeT.B~LIFIleF~L~BLAJqC,L.LP [~rlili~dpubh~acounlonls ~onoqernznlconsulqnls STRUCTUREBASEDONANAUDITOFGENERALPURPOSEFINANCIALSTATEMENTS PERFORMEDINACORDANCXWITHGOVERNMENTAUDITINGSTANDARDS INDEPENDENTAUDITOR'SREPORTONINTERNALCONTROL ToTheCityCouncil CityofNewOrleans,StateOfLouisiana WehaveauditedthegeneralpurposefinancialstatementsofCanalStret DevelopmentCorporation(anonprofitorganization)fortheyearended December31,195,andhaveisuedourreportthereondatedSeptember17, 196. Weconductedourauditinacordancewithgeneralyaceptedauditing standardsandgovernmentauditinastandards,isuedbythecomptroler GeneraloftheUnitedStates.Thosestandardsrequirethatweplanand performtheauditobtainreasonableasuranceaboutwhetherthefinancial statementsarefreofmaterialmistatement. Inplaningandperformingourauditofthegeneralpurposefinancial statementsofcanalstretdevelopmentcorporation,fortheyearended December31,195,weobtainedanunderstandingoftheinternalcontrol structure.withrespectotheinternalcontrolstructure,weobtainedan understandingofthedesignofrelevantpoliciesandproceduresandwhether theyhavebenplacedinoperation,andweasesedcontrolriskinorderto determineourauditingproceduresforthepurposeofexpresingouropinion onthefinancialstatementsandnottoprovideandopinionontheinternal controlstructure.acordingly,wedonotexpresuchanopinion. ThemanagementofCanalStretDevelopmentCorporationisresponsiblefor establishingandmaintaininganinternalcontrolstructure.infulfiling thisresponsibility,estimatesandjudgementsbymanagementarerequiredto asesthexpectedbenefitsandrelatedcostsofinternalcontrolstructure policiesandprocedures.theobjectivesofaninternalcontrolstructureare toprovidemanagementwithreasonable,butnotabsolute,asurancethat asetsaresafeguardedagainstlosfromunauthorizeduseordisposition, thatransactionsarexecutedinacordancewithmanagement'sauthorization andrecordedproperlytopermithepreparationoffinancialstatementsin acordancewithgeneralyaceptedacountingprinciples.becauseof 3421N.CausewayBlvd.,Suite701~Metaine.LA702e~.201St.CharlesAve.,Suite259~NewOrleans,LA70170 Telephone(504)837-070~Fax(504)837-7102 18 ~Intern~tionaJGroupofAcountingFirms~MemberFirmsinPrlncil)elCities Memberof Telephone(504)52-0504~Fax(504)837-7102 AICPASECPracticeSection~AICPAPrivateCompsnlesPracticeSection

NOTESTOFINANCIALSTATEMENTS(Continued) C~I~LSTRETDEVELOPMENTCORPOR~T'rON December31,195 ThecityofNewOrleansborowed$5,60,0fromtheU.S.Departmentof HousingandUrbanDevelopmentthroughitsSection108LoanProgramwhich originatedmarch194.thecityinturnloanedthefundstocsdcwhointurn loanedthefundsto80canalstretlimitedpartnership.csdcholdsa third-rankingcolateralleaseholdmortgageonthepropertyinconection withthesection108loan. Standardsamaterialisueofnoncompliancehasbendisclosed. Thebankbalancesarecomprisedofthefolowingwhicharenotfulysecured byfede:caldepositinsurance: Demanddeposits,perbankstatements Depositsecuredbyfederaldepositinsurance $289,967 Totalunsecuredeposits f10,0) 17

NOTESTOFZNANCZALSTATEMENTS(Continue~) CANALSTRETD~v~LOPMENTCORPORATION Deoember31,195 andm.preskabacof)guarantespaymentof$50,0(totalofthe $i,0,0loansecurity). TheCSDC\GarageReservewith80CanalStretLimitedPartnershipwas efectivemay195andshalcontinueforthirty-six(36)consecutivemonths thereafter.contingentupontheavailabilityofsuficientrevenues,itis tobefundedmonthlyfromnetgaragerevenuesnotoexced$20,0per year.thesefundsmaybeusedforprincipalorinterestpaymentsonthe LandlordLoanorontheloantotheCityperthesub-recipientLoan Agrement.Asofthepreparationofthisreport,thebalanceoftheacount duetocsdcisundeterminableduetolegalreviewofvariousleasesand comitmentsbetwencsdcandthepartnership. Long-termnotepayableconsistofthefolowing: Variableratesub-recipientnotepayable tothecityofneworleansrepresenting procedsfromthedepartmentofhousing andurbandevelopment,dueonjuly15, 202 Les:curentmaturities $5,541,6 ~160,0) TotalLong-termnotepayable Totalscheduledmaturitiesoflong-termdebtandvariableinterestratesas ofdecember31areasfolows: Year 196 197 Amount 198 148,3 16,250 ~ercent 20 183,3 5.04 201,250 5.4 216,250 5.78 5.93 6.17 16

CANAL8TRETDEVEI~P~NTCORPORATION NOTESTOFINANCIALSTATEMENT8(continued) December31,195 TheHotelParkingLeasehasanOriginalLeaseComencementDateofDecember I,1989.ThetermoftheleasecomencedonSeptember15,193,andshal continueforninety-nine(9)years,andterminateathesametimewiththe HotelLease,unlesearlierterminatedasdescribed. Rentispayableonamonthlybasisandisequaltothegreaterof:(a)a minimumrentof$3,0or(b)anamountequaltosixty-five(65%)percentof algrosincomeandrevenuereceivedorcolectedbythepartnershiporits ManagerinconectionwithoresultingfromtheuseorentofHotelparking spaces. LandlordandTenanthavetherighttoadjustthenumberofparkingspaces nededforthehotelonadailybasisinacordancewiththetermsand conditionsoutlinedinthelease. i.the80canalstretpartnershipselsthehotelorrefinancesthe 2.ThePartnershipselsorefinancestheApartmentsproject,or existingindebtednesencumberingthehotel,or 3.HRIselsitspartnershipinterestin80CanalStretLimited Partnershipor80IbervileStretLimitedPartnershipandasa resultofanyoftheaboveventsocuring,csdcisnotreturnedits pledgefrompremierbank,eachownerofhri(edwardb.boetner 15

NOTESTOFINANCIALSTATEMENTS(Continued) CANALSTRETDEVELOPMENTCORPORATION Deoember31,195 utilities)andperformanceofalobligationsnecesarytofulysatisfy requirementsdescribedinthepartnershipagrement.asofdecemberi, (includinginsurance,repairs,maintenance,trashdisposal,and thepartnership. 194,paymentoftheCaryingCostsRentbecamepermanentobligationsof (a)salmenproperty:theoriginaleasecomencedjanuary1981,and extendedtodecember195.anualrentisadjustedperthecpi. Curently,themonthlyrentis$5,80.Theleasetermcanbe extendedforthre(3)five-yearperiods.thefirstamendmento monthsthroughnovember208. SalmenLeaseprovidesfor15aditionalfive-yearextensions throughdecember2085,andafinaladitionalextensionof35 (b)gravoletproperty:originaly laterkeyworthpropertybefore leaseendedseptember195. thisleasewasknownasmamothand becomingthegravoletlease.the (c)mercierrealtyproperty:theoriginalandleasebeganmarch1968 andterminatesfebruary2020.theminimummonthlyrentalis$5,650 plusacalculatedincreasebasedontheanualchange(closesto AugustI)intheCPIasdefinedinthelease.Theanualrent increaseislimitedtoseven(7%)percentperyear.ifthecpi increaseovertheprecedingyearisequaltorgreaterthantwelve (12%)percent,thentheactualCPIincreaseshalbeusedandthe anualimitationwouldnotaply.inadition,thereisa (8)~IndlordAdministrativeExpenses(LAE):CSDCshalreceiveacertain percentagerentcalculatedofnetsalesover$2,260,0. minimumamountofanualrevenueforlandlordadministrativeexpenses. mrshalnotbepayableinaditiontoanyrent(otherthancarying CostsRent)totalesthan$30,0peryear,orunlesthereisan HotelParkinaLease eventofforeclosureunderthesubordinatingmortgage. OnSeptember15,193,aHotelParkingLeasewasenteredintobyandbetwen thepartnership,csdcandthehoteltoprovideupto150parkingspacesfor thehotel. 14

NOTESTOFINANCIALSTATEMENTS(continued) CANALSTRETDEVELOPMENTCORPORATION December31,195 C2)PercentageRent:ComencingwithYearsix,apercentagerentinthe amountofsix(6%)percentofgrosincomeasdefinedinthehotel Lease,inexcesof$6,50,0(the"PercentageRentThreshold Level"). ThePercentageRentThresholdLevelmaybeincreasedafteryearsix, butonlyafterfixedrenthasexceded$390,0.themethodfor recalculatingthepercentagerentthresholdlevelisdetailedinthe (3)AditionalRent:ComencingJanuary21,193,CSDCreceivestwothirds(2\3)ofalmoniesreceivedaspercentagerentalfromthird HotelLease. (4)RevenueSharingRent:RevenueSharingRentshalonlybepayable parties.noaditionalrenthadbenearnedatdecember31,195. afterthearliertocurof:(a)thepaymentoftheprincipal ReductionPaymenttoFNBC,or(b)thecancelationorsatisfaction ofthefnbcloan.therevenuesharingrentwilbeequaltofiften quarter. (1!5%)percentofNetCashFlow(asdefined)fortheprojecteach (5)BaseComercialRentParticipation:ComencingJanuary21,193, thirty(30%)percentofanybaseorfixedcomercialrentpaidto thepartnershipbyanycomercialtenantisduefromthepartnership. ThisexcludesrentspaidbythehoteloperatortothePartnership.Base ComercialRentisdefereduntilsuchtimeasFNBChasrecoupedthe PrincipalReductionPaymentfromNetCashFlow.AnyBaseComercial RentParticipationthatisdeferedacruesinterestatarateofeight payableuntilthefulamountplusinteresthasbenpaid. (8%)percentperanumfromthedatethatitwouldhaveotherwiseben (6)AirRightsRent:ThePartnershipisrequiredtopayCSDCAirRights Rentintheamountof$30permonth,comencingontheRental ComencementDate(Decemberi,194).BeginingDecemberi,198,the (7)CaryingCostsRent:ComencingontheLeaseComencementDateand rentwilincreaseby15%everyfiveyears. continuingthroughtherentalcomencementdate,(decemberi,194), thepartnershipwasrequiredtopaythecaryingcostsoftheleased Premisesasaditionalrent.Caryingcostsconsistedofalexpenses 13

NOTESTOFINANCIALSTATEMENTS(Continued) CANALSTRETDEVELOPMENTCORPORATION December31,196 CaryingCostsRent)unlesthesumofsuchanualRentpayments unlesthereisaneventoforeclosure. (excludingcaryingcostsrent)totalesthan$12,0peryear,or ApartmentsParkinuLease OnSeptember15,193,anApartmentsParkingLeasewasenteredintobyand betwencsdcandhritoprovidehriwithupto105parkingspacesforthe Apartments.ThisleasewasasignedtoIbervilebyHRI.TheOriginal ComencementDatewasDecemberi,1989.Thetermoftheleasecomenced September15,193,andshalterminateatthesametimeastheApartments Lease.BeginingDecemberi,194,rentwaspayableonamonthlybasisand wasequaltothegreaterof:(i)aminimumrentof$1,50permonth,or(2) theamountofalincomeparkingrentfrommonthlyspacerentasdefinedin thelease. Thetez~softheHotelLease Partnership("Partnership")arebetwenCSDCand80CanalStretLimited ThetermoftheHotelLeaseisforninety-nine(9)yearsandisefectiveas asfolows: ofdecemberi,1989,theleasecomencementdate. (i)fixedrent:comencingwiththerentalcomencementdate(december I,194)andcontinuinguntiltheendoftheterm,tenantshalpay afixedminimumrenttothelandlordonamonthlybasisasfolows: (a)yearone-$259,20fortheyear (b)yearstwothroughthexpirationorterminationofthelease, FixedRentshalbeadjustedanualy(butnotdecreased) comencingonthefirstaniversaryoftherentalcomencement DateinacordancewiththeCPIAdjustmentandFixedRent (c)yearsixten(16)andthereafter,fixedrentistiedtomarket ApraisalprovisionsoftheHotelLease. Valuebyapraisal.TheHotelwilbeapraisedeveryten(I0) years. 12

NOTESTOFINANCIALSTATEMENTS(Continued) CAI4ALSTRETDEVELOPMENTCORPORATION December31,195 APartmentsLease-Continued qo (2) (C)Yearsixten(16)andeveryi0yearsthereafter,FixedRentistied Pe]=centaqeRent:ComencingwithYearSix,apercentagerentisduein tomarketvaluebyapraisal. theamountofsix(6%)percentofgrosincomeasdefinedinthe ApartmentsLease,inexcesof$1,125,0(the"PercentageRent ThzcesholdLevel").FortheyearendedDecember31,195,nopercentage (3)AditionalRent:ComencingJanuary21,193,CSDCwastoreceivetwothirds(2/3)ofalmoniesreceivedaspercentagerentalfromthird parties.fortheyearendeddecember31,195,csdccolectedno rentwasreceivedbycsdc. (4)BaseComercialRentParticipation:ComencingJanuary21,193,thirty percentagerentfromthirdparties. co:mercialtenantisduetocsdc.fortheyearendeddecember31,195, nobasecomercialrentparticipationwasreceivedbycsdc. (30%)percentofanybaseorfixedcomercialrentpaidbyany (5) AirRiqhtsRent:CSDCisentitledtoreceiveinadvance RightsRentintheamountof$5,70peranum,comencing ComencementDate(Decemberi,194).BeginingDecember rentwilincreaseby15%everyfiveyears.fortheyear (6) December31,195,$5,70ofAirRightsRentwasreceived LandlordAir ontherental i,20,the ended bycsdc. (7) certainminimumamountbepayableinaditiontoanyrent(otherthan Expenses.LAEshalnot ofanualrevenueforlandlordadministrative Expenses(LAE~:TheLandlordshalreceivea i

NOTESTOFINANCIALSTATEMENTS(Continued) CANALSTRETDEVELOPMENTCORPORATION December31,195 FINANCIALSTATEMENTPRESENTATION-Continued informationregardingitsfinancialpositionandactivitiesacordingto threclasesofnetasets:unrestrictednetasets,temporarilyrestricted netasets,andpermanentlyrestrictednetasets.inadition,the OrganizationisrequiredtopresentaStatementofCashFlows.Aspermited bythesenewstatements,theorganizationhasdiscontinueditsuseoffund acounting,andhasacordingly,reclasifieditsfinancialstatementsto presenthethreclasesofnetasetsrequired.thisreclasificationhad noefectonthechangeinnetasetsfor195. INCOMETAXES TheOrganizationisanot-for-profitorganizationthatisexemptfromincome taxesundersection501(c)(3)oftheinternalrevenuecode. unrestrictedhighlyliquidinvestmentswithaninitialmaturityofthre monthsorlestobecashequivalents.thecertificateofdepositand ForpurposesoftheStatementofCashFlows,the'Organizationconsidersal corespondingnotepayabletothecityofneworleansisfurtherdescribedin Note-4. Thepropertyonwhichtheprojectisbeingconstructed,designatedasthe "D.H.HolmesProperty",wasdonatedtoCSDC.Thispropertywasubsequently leasedtohistoricrestorationinc.("hri")originalyunderoneleaseand

CANALSTRETDEVELOPMENTCORPORATION FORTHEYEARENDEDECEMBER31,195 STATE/lENTOFC~SHFLOWS CASHF~)WSFROMOPERATINGACTIVITIES INC~ASEINETASETS ADJUSTMENTSTORECONCILECHANGEINETASETSTO NETCASHPROVIDEDBYOPERATINGACTIVITIES: $ 148,28 DepreciationExpense (INCREASE)DECREASEINOPERATINGASETS: AcountsReceivable 148,089 INCREASE(DECREASE)INOPERATINGLIABILITIES: AcruedInterest DueFromPrimaryGovernment (126,3) AcountsPayable (183,652) (85,130) DeferedRent NETCASHPROVIDEDBY DueToPrimaryGovernment (18,75) (3o,o1 7,367 OPERATINGACTIVITIES (140,206) CASHFLOWSFROMFINANCINGACTIVITIES NoteReceivable-Decrease ProcedsfromIsuanceofLong-TermDebt PrincipalpaymentonLong-TermDebt 1,0,0 206,67 NETCASHPROVIDEDBY 46.67 NETINCREASE(DECREASE)IN FINANCINGACTIVITIES 1,160,0 BEGININGCASHANDCASHEQUIVALENTS CASHANDCASHEQUIVALENTS 1,019,794 ENDINGCASHANDCASHEQUIVALENTS I12481794 29,0 SUPLEMENTALDISCLOSURES: InterestPaidDuring195 (Theacompanyingnotesareanintegralpartofthefinancialstatements)

CANALSTRETDEVELOPMENTCORPORATION NOTESTOFINANCIALSTATEMENTS December31,195 CanalStretDevelopmentCorporation("Organization"or"CSDC")isa nonprofit,publicbenefitcorporationwhichwasformedonaugust8,1989 undertheinternalrevenuecodesection501(c)(3).theorganization'smain asetsconsistofthedonationofthebuildingknownasthed.h.holmes buildinglocatedinthe80blockofcanalstret,neworleans,louisiana ("Building")whichwasdevelopedintotheChateauSonestaHotel("Hotel") comprisedof243separatedwelingunitswithaproximately29,0square fetofcomercialretailspacelocatedonrealpropertyandthereal propertyknownasthed.h.holmesanexwhichconsistsofan87-unit apartmentcomplexwithaproximately32,0squarefet,andaparkingarage withaproximately150spaces.theorganizationwasestablishedforthesole andexclusivepurposetostimulatebusinesdevelopmentinthecentral Busines~sDistrictandtheadaptivereuseanddevelopmentofCanalStretfor comercialpurposes.thisobjectiveiscurentlybeingmetthrough renovationsandtheleasingofdonatedrealestate.canalstretdevelopment CorporationisaProprietaryFund,componentunit,thatisalsoreported underitsprimarygovernmentunitwhichisthecityofneworleans, Louisiana.TheOrganizationBoardofDirectorsiscomprisedoftwo CouncilmenfromtheCityandotherboardmembersthatareapointedbythe MayoroftheCityofNewOrleans,Louisiana. BASISOFACOUNTING TheOrganizationusedtheacrualbasisofacounting. Theorc!anizationalsoelectedtoadoptSFASNo.16,Acountinqfor

CANALSTRETDEVELOPMENTCORPORATION FORTHEYEARENDEDECEMBER31,195 BTAT~ OFACTIVITIES REVENUES SuportServices InvestmentIncome TotalRevenues $798,105 PROGR~EXPENSES: InterestExpense ProfesionalFes RepairsandMaintenance 354,071 SUPORTSERVICES: TotalProgramExpenses 42,292 63,83 4,38 EmployeBenefits Insurance OficeSuplies PayrolTaxes Salaries Telephone TotalSuportServices INCREASE(DECREASE)IN UNRESTRICTEDNETASETS 296,317 RESTRICTEDNETASETS DepreciationExpense NETASETSATBEGININGOFYEAR INCREASEINNETASETS 148,28 NETASETSATENDOFYEAR (Theacompanyingnotesareanintegralpartofthefinancialstatements)

OI~tICtAL DONOTSENDOUT FILECOPY (Xeroxneces~ry copieslrorlth~ CopyandPLACE ~CK#l/It-E) FINANCIALSTATEMENTSI~FD~UDITOR,sREPORT CANALSTRETDEVELOP~NTCORX~ORATION (AcomponentunitoftheCityofNewOrleanșLouisiana) FortheyearendedDecember31,195 Jnaerprovisions,ofstatelaw,this reportisapublicdocument.a copyoftherepr~rihashe.~qsubmittedtoth,:;r~udited,o~oviewed, ef~ti;"/,~rmu,~h~:~,~:,pro!>,:i:.[ep'~blic ofic~al~.}i,~;~eportisavaitab!efor public-#n.;p3ctionathebaton Rougeof,caofthe.Ịegisla[iveAuditorand,whereapropriate,athe oficeoftl~eparishclerkofcourt D.~lr~aseDateJAN29197

CONTENTS Auditor'sReport 3 StatementofFinancialPosition 4 StatementofActivities 5 StatementofCashFlows 6 NotestoFinancialStatements IndependentAuditor'sReportOn StructureBasedOnAnAuditOf FinancialStatementsPerformed InternalControl 7-17 GovernmentAuditingStandards GeneralPurpose InAcordanceWith IndependentAuditor'sReportOnComplianceWithLaws, 18-19 Regulations,ContractsAndGrantsBasedOnAnAuditOf GeneralPurposeFinancialStatementsPerformedIn AcordanceWithGovernmentAuditingStandards 20

PAlLeT.I]ICUI41eRblBLAI4C Cerli~:dpublicAcountonls man~qemenlconsuhanls TOtheBoardofDirectors CanalStretDevelopmentCorporation Wehaveauditedtheacompanyinggeneralpurposefinancialstatementsof CanalStretDevelopmentCorporation,acomponentunitoftheCityofNew Orleans,StateofLouisiana,anonprofitorganizationunderInternalRevenue ServiceCodeSection501(C)(3),asofandfortheyearthenendedDecember 31,19195.Thesefinancialstatementsaretheresponsibilityofthe organization'smanagement.ouresponsibilityistoexpresanopinionon thesegeneralpurposefinancialstatementsbasedonouraudit. Weconductedourauditinacordancewithgeneralyaceptedauditing performtheauditobtainreasonableasuranceaboutwhetherthegeneral standardsandgovernmentauditinqstandards,isuedbythecomptroler purposefinancialstatementsarefreofmaterialmistatement.anaudit GeneraloftheUnitedStates.Thosestandardsrequirethatweplanand includesexaminingonatestbasis,evidencesuportingtheamountsand madebymanagement,aswelasevaluatingtheoveralgeneralpurpose disclosuresinthegeneralpurposefinancialstatements.anauditalso includesasesingtheacountingprinciplesusedandsignificantestimates financialstatementpresentation.webelievethatourauditprovidesa reasonablebasisforouropinion. Inouropinionthegeneralpurposefinancialstatementsreferedtoabove presentfairly,inalmaterialrespects,thefinancialpositionofcanal Stret:DevelopmentCorporation,acomponentunitoftheCityofNewOrleans, StateofLouisiana,asofDecember31,195andtheresultsofits proprietaryfundtypefortheyearthenendedinconformitywithgeneraly aceptedacountingprinciples. InacordancewithGovernmentAuditingStandards,wehavealsoisueda reportdatedseptember17,196,onourconsiderationofcanalstret DevelopmentCorporation'sinternalcontrolstructureandareportdated September17,196,onitscompliancewithlawsandregulations. NewOrleans,Louisiana September17,196 3421NCausewayBIvdSure701~MetairieLA702~:e201S[CharlesAveSuite259~NewOrleansLA70170 Telephone(504)8374~70~Fax(504)837-7102 ~k~ternationajgroupofacountmgfins~memberf~rmsinprincipalcities Memberof Telephone(504)52-0504~Fax(504)837-7102 AICPASECPractice$ectlo~~AICPAPrivsteCompsniesPracticeSection

PRIL~T,FR~LInI~R Cerli~iedpuloli~Acounlonls L~BLAFIC,L.L.P [l]~q~m~nl~onsuhonts OFGENERALPURPOSEFZNANcIALSTATEMENTSPERFORMEDINACORDANCE~TH LAWS,REGULATIONS,cONTRACTSANDGRANTSBASEDONANAUDIT INDEPENDENTAUDITOR'SREPORTONCOMPLIANCEWITH TotheCityCouncil GOVERNMENTAUDITINGSTANDARDS citycfneworleans,stateoflouisiana WehaveauditedthegeneralpurposefinancialstatementsofCanalStret endeddecember31,195,andhaveisuedoureportthereondatedseptember DevelopmentCorporation(anonprofitorganization)asofandfortheyear 17,196. Weconductedourauditinacordancewithgeneralyaceptedauditing standardsandgovernmentauditinastandards,isuedbythecomptroler GeneraloftheUnitedStates.Thosestandardsrequirethatweplanand perfor~theaudittobtainreasonableasuranceaboutwhetherthefinancial statementsarefreofmaterialmistatement. Compliancewithlaws,regulations,contracts,andgrantsaplicabletothe OrganizationistheresponsibilityoftheOrganization'smanagement.Aspart ofobtainingreasonableasuranceaboutwhetherthefinancialstatementsare freofmaterialmistatement,weperformedtestsoftheorganization's compliancewithcertainprovisionsoflaws,regulations,contracts,and grants.however,theobjectiveofourauditofthefinancialstatementswas nottoprovideanopiniononoveralcompliancewithsuchprovisions. Acordingly,wedonotexpresuchanopinion. Theresultofourtestsindicatethat,excludingthelatefilingoftheaudit reportwiththestatelegislativeauditorsofice,withrespecttotheitems tested,theorganizationcomplied,inalmaterialrespects,withthe provisionsreferedtointheprecedingparagraph.withrespectoitemsnot tested,nothingcametoouratentionthatcausedustobelievethathe Organizationhadnotcomplied,inalmaterialrespects,withthose provisions. ThisreportisintendedfortheinformationoftheBoardofDirectors, management,andaplicablefederalandstateagencies.however,thisreport isamaterofpublicrecordanditsdistributionisnotlimited. NewOrleans,Louisiana SepteE~er17,196 20 3421N.CausewayBlvd,SuHe701~Metairie,LA702~:~201St.CharlesAve.,Suite259~NewOrleans,LA70170 Telephone(504)837~70~Fax(504)837-7102 ointernatk~nalgroupacounting of Memberof R~.s*MemberRrmsinPrincipalCities "~etephone(504)52-0504~fax(504)b37-7102 AICPASECPracticeSect~n~AICPAPrivateCompanie8PrsctlcsSection

NOTESTOFINANCIALSTATEMENTS(Continued) CANALSTRETD~VELOPM~NTCORPORATION December31,195 lateramendedintoseparateleases,forthepurposeofdevelopingresidential 3- apartments,afirst-clashotelandaparkinggaragetoservethepublic. Theoriginalleaseandthehotelandapartmentsevenleaseamendmentshave benaprovedbythecouncilofthecityofneworleans. TheseparateleasesignedbyandbetwenCSDC(Landlord)andHRIinclude: (i)seventhamendmentandrestatementofapartmentsleaseagrementdated March30,194,(2)theSixthAmendmentandRestatementofHotelLeasedated September15,193,(3)theSixthAmendmentoGarageLeasedatedSeptember 15,1913,(4)TheHotelParkingLeasedatedSeptember15,193and(5)the ApartmentsParkingLeasedatedSeptember15,193,asamendedbyFirst AmendmentandRestatementoApartmentsParkingLease. OnMarch30,194,HRIasignedandtransferedtheleasedpremisesmentioned intheseventhamendmentandrestatementofapartmentleaseagremento80 IbervileStretLimitedPartnership("Ibervile"). AnartmentsLease Thete~msoftheApartmentsLeaseasignedto80IbervileStretLimited Partnershipareasfolows: ThetermoftheApartmentsLeaseisefectiveDecemberi,1989,theLease ComencementDate,andends9yearsthereafter. (i)fixedrent: tenantshal folows: (Decemberi, ComencingwiththeRentalComencementDate 194)andcontinuinguntilthendoftheterm, payafixedminimumrentocsdconamonthlybasisas (a)yearone-$32,40fortheyear. (b)yearstwothroughthexpirationorterminationof thelease,fixedrentshalbeadjustedanualy aniversaryoftherentalcomencementdatein acordancewiththecpiadjustmentandfixedrent (butnotdecreased)comencingonthefirst ApraisalprovisionsoftheApartmentsLease. i0

CANALSTRETD~v~LOPMENTCORPORATION STATEMENTOFINANCIALPOSITION DECEMBER31,195 Cash CertificateofDeposit AcountsReceivable InterestReceivable DueFromPrimaryGovernment TotalCurentAsets ASETS $248,794 1,0,0 308,130 148,3 183,652 1,8,909 NoteReceivable-80CanalStretLimitedPartnership5,393,3 RESTRICTED Land PropertyandEquipment LesAcumulatedDepreciation TotalAsets UNRESTRICTED CURENT $896,124 8.065,125 8,961,249 (148,089) LIABILITIESANDNETASETS AcountsPayable NotePayable-PrimaryGovernment DeferedRent TotalCurentLiabilities NotePayable-PrimaryGovernment NotePayable-PrimaryGovernment TotalLong-TermLiabilities NETASETS UNRESTRICTED RESTRICTEDTotalNetAsets TotalLiabilitiesandNetAsets 8.813.160 $16,095,402 $ 42,367 160,0 5125 207,592 1,0,0 5,393,3 6,393,3 681,317 8,813,160 9,494,47 (Theacompanyingnotesareanintegralpartofthefinancialstatements) 4