$8,220,000 Albany-Dougherty Inner City Authority Revenue Refunding Bonds (Dougherty County, Georgia Public Purpose Project), Series 2010

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1 NEW ISSUE (Book-Entry Only) RATINGS: Standard & Poor s: AA- See MISCELLANEOUS - Ratings herein. In the opinion of Bond Counsel, under current law and subject to conditions described in the Section herein TAX EXEMPTION, interest on the Bonds (a) will not be included in gross income for Federal income tax purposes, (b) will not be an item of tax preference for purposes of the Federal alternative minimum income tax imposed on individuals and corporations, (c) will be taken into account in determining adjusted current earnings for the purposes of computing the alternative minimum tax imposed on certain corporations and (d) will be exempt from income taxation in the State of Georgia. A holder may be subject to other Federal tax consequences as described in the Section herein TAX EXEMPTION. Further, in the opinion of Bond Counsel, under current law and subject to conditions described in the Section herein DESIGNATION FOR PURCHASE BY FINANCIAL INSTITUTIONS, the Bonds are qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code. $8,220,000 Albany-Dougherty Inner City Authority Revenue Refunding Bonds (Dougherty County, Georgia Public Purpose Project), Series 2010 Dated: Date of Delivery Due: January 1, as shown on inside front cover The Albany-Dougherty Inner City Authority Revenue Refunding Bonds (Dougherty County, Georgia Public Purpose Project), Series 2010 (the Bonds ), are being issued by the Albany-Dougherty Inner City Authority ( ADICA ), a public body corporate and politic and an instrumentality of the State of Georgia pursuant to an Indenture of Trust, dated as of March 1, 2010 (the Indenture ), between ADICA and The Bank of New York Mellon Trust Company, N.A., Atlanta, Georgia, as trustee (the Trustee ). The Bonds will be issued in book-entry form registered in the name of Cede & Co., the nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Bonds. Individual purchases may be made only in book-entry form through DTC participants in DTC in the principal amounts of $5,000 or any integral multiple thereof. No physical delivery of the Bonds will be made to beneficial owners of the Bonds. So long as Cede & Co. is the registered owner of the Bonds, payment of the principal of the Bonds and interest thereon will be made to Cede & Co., as nominee for DTC, which in turn will remit such principal and interest to the DTC participants for subsequent disbursement to the beneficial owners of the Bonds. See THE BONDS Book-Entry System of Registration. The proceeds from the sale of the Bonds will be used for the purpose of (i) providing funds to prepay the outstanding principal amount of the Albany-Dougherty Inner City Authority Certificates of Participation (Dougherty County, Georgia Public Purpose Project), Series 1999, issued in the original aggregate principal amount of $14,720,000, (ii) providing funds to finance certain improvements to the Project (as defined herein), and (iii) paying certain costs incurred in connection with the execution and delivery of the Bonds. See PLAN OF FINANCE. The Bonds are limited obligations of ADICA. The Bonds are payable solely from payments to be made by the County pursuant to an Intergovernmental Lease Agreement, dated as of March 1, 2010 (the Intergovernmental Agreement ), between ADICA and Dougherty County, Georgia (the County ). The County s obligation under the Intergovernmental Agreement to make payments to ADICA sufficient in time and amount to enable ADICA to pay the principal of and interest on the Bonds is absolute and unconditional, is secured by a pledge of the County s full faith and credit and taxing powers and will not expire so long as any of the Bonds remain outstanding and unpaid. The County has agreed to make payments directly to the Trustee, as paying agent. See THE BONDS Security and Sources of Payment for the Bonds and COUNTY AD VALOREM TAXATION. Interest on the Bonds is payable semiannually on January 1 and July 1 (each such date, an Interest Payment Date ), commencing July 1, 2010, to the owners thereof as shown on the registration books maintained by the Trustee, as bond registrar. The Bonds bear interest from the Interest Payment Date next preceding their date of authentication, except as provided herein. See THE BONDS Description. The Bonds shall not be subject to redemption prior to their maturity. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION. The Bonds are offered when, as, and if issued by ADICA and accepted by the Underwriter, subject to prior sale, to the withdrawal or modification of the offer without notice, subject to validation by the Superior Court of Dougherty County, Georgia, and subject to the approving opinion of Hunton & Williams, LLP, Atlanta, Georgia, Bond Counsel. Certain legal matters will be passed on for ADICA by its counsel, C. Nathan Davis, Esq., Albany, Georgia, for the County by its counsel, W. Spencer Lee IV, Esq., Albany, Georgia, and for the Underwriter by its counsel, Miller & Martin PLLC, Atlanta, Georgia. The Bonds are expected to be delivered through The Depository Trust Company, New York, New York on April 13, Dated: March 18, 2010

2 MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, AND YIELDS Maturity (January 1) Principal Amount Interest Rate Yield 2011 $940, % 0.60% ,350, ,400, ,470, ,560, ,500,

3 ALBANY-DOUGHERTY INNER CITY AUTHORITY Andrew Reid, Sr. Elvis Muldrow LaNicia Hart Phil Cannon Thelma Adams Johnson Robert Kraselsky David Prisant DOUGHERTY COUNTY, GEORGIA Jeff Sinyard, Chairman John Hayes, Vice Chairman Muarlean C. Edwards Gloria Gaines Lamar Hudgins Dr. Charles Lingle Jack Stone AUTHORITY COUNSEL C. Nathan Davis, Esq. Albany, Georgia COUNTY COUNSEL W. Spencer Lee IV, Esq. Albany, Georgia UNDERWRITER Merchant Capital, L.L.C. Atlanta, Georgia BOND COUNSEL Hunton & Williams, LLP Atlanta, Georgia UNDERWRITER S COUNSEL Miller & Martin PLLC Atlanta, Georgia AUDITOR Mauldin & Jenkins, Certified Public Accountants, LLC Macon, Georgia

4 No dealer, broker, salesman or other person has been authorized to give any information or to make any representations, other than those contained in this Official Statement in connection with the offering contained herein, and if given or made, such other information or representations must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information contained in this Official Statement has been obtained from representatives of ADICA, the County, public documents, records and other sources considered to be reliable. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities under the Federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The delivery of this Official Statement at any time does not imply that any information herein is correct as of any time subsequent to its date. Any statements in this Official Statement involving estimates, assumptions and matters of opinion, whether or not so expressly stated, are intended as such and not representations of fact. NO REGISTRATION STATEMENT RELATING TO THE BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ( SEC ) OR ANY STATE SECURITIES AGENCY. THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE SECURITIES AGENCY, NOR HAS THE SEC OR ANY STATE SECURITIES AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE UNDERWRITER INTENDS TO OFFER THE BONDS TO THE PUBLIC INITIALLY AT THE OFFERING PRICES SET FORTH ON THE INSIDE FRONT COVER PAGE OF THIS OFFICIAL STATEMENT, WHICH MAY SUBSEQUENTLY CHANGE WITHOUT ANY REQUIREMENT OF PRIOR NOTICE. THE UNDERWRITER RESERVES THE RIGHT TO JOIN WITH DEALERS AND OTHER UNDERWRITERS IN OFFERING THE BONDS TO THE PUBLIC. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS (INCLUDING DEALERS DEPOSITING THE BONDS INTO INVESTMENT TRUSTS) AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE. In making an investment decision, investors must rely on their own examination of ADICA and the County and the terms of the offering, including the merits and risks involved. The Bonds have not been recommended by any federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Official Statement. Any representation to the contrary is a criminal offense. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

5 TABLE OF CONTENTS INTRODUCTION...1 ADICA and the County...1 Security and Sources of Payment for the Bonds...1 Purpose of the Bonds...2 Description of the Bonds...2 Tax Exemption...2 Bond Registrar, Paying Agent and Custodian of Funds...3 Professionals Involved in the Offering...3 Authority for Issuance...3 Offering and Delivery of the Bonds...3 Continuing Disclosure...3 Other Information...3 PLAN OF FINANCE...5 Estimated Sources and Applications of Funds...5 THE BONDS...6 Description...6 Security and Sources of Payment for the Bonds...6 Redemption...8 Registration Provisions; Transfer and Exchange...8 Book-Entry System of Registration...8 Authority for Issuance...10 PRINCIPAL AND INTEREST REQUIREMENTS...11 ALBANY-DOUGHERTY INNER CITY AUTHORITY...12 GENERAL INFORMATION REGARDING THE COUNTY...12 Introduction...12 Governing Body...13 Employee Relations and Pension Plan...13 Demographic Information...13 Economic Information...15 COUNTY DEBT STRUCTURE...18 Summary of County Direct and Overlapping Debt By Category...18 Debt Ratios...19 Limitations on County Debt...20 COUNTY AD VALOREM TAXATION...20 Introduction...20 Property Subject to Taxation...20 Assessed Value...21 Annual Tax Levy...21 Property Tax Collections...21 Ad Valorem Property Tax Digest...22 Tax Collection...23 Property Tax Millage Rates...23 Ten Largest Taxpayers...24 COUNTY FINANCIAL INFORMATION...25 Accounting System and Policies...25 i

6 Five Year General Fund History...26 Budget...28 Management Comments Concerning Material Trends in Revenues and Expenditures...29 Budgetary Process...30 Insurance Coverage and Governmental Immunity...30 Investment of Bond Proceeds and Other Moneys...30 LEGAL MATTERS...31 Pending Litigation...31 Authorization and Validity of Bonds...32 Validation Proceedings...32 Closing Certificates...32 TAX EXEMPTION...32 Opinion of Bond Counsel...32 Other Tax Matters...33 DESIGNATION FOR PURCHASE BY FINANCIAL INSTITUTIONS...33 MISCELLANEOUS...34 Ratings...34 Underwriting...34 Independent Professionals...34 Additional Information...34 CERTIFICATION...35 APPENDIX A: APPENDIX B: APPENDIX C: APPENDIX D: APPENDIX E: FINANCIAL STATEMENTS OF THE COUNTY FORM OF OPINION OF BOND COUNSEL DEFINITIONS AND SUMMARY OF THE INDENTURE FORM OF INTERGOVERNMENTAL LEASE AGREEMENT CONTINUING DISCLOSURE CERTIFICATE ii

7 OFFICIAL STATEMENT of ALBANY-DOUGHERTY INNER CITY AUTHORITY relating to its $8,220,000 REVENUE REFUNDING BONDS (DOUGHERTY COUNTY, GEORGIA PUBLIC PURPOSE PROJECT) SERIES 2010 INTRODUCTION The purpose of this Official Statement, which includes the cover page and the Appendices hereto, is to furnish certain information in connection with the sale by the Albany-Dougherty Inner City Authority (the Authority ) of $8,220,000 in aggregate principal amount of its Revenue Refunding Bonds (Dougherty County, Georgia Public Purpose Project), Series 2010 (the Bonds ). This introduction is not a summary of this Official Statement and is intended only for quick reference. It is only a brief description of and guide to, and is qualified in its entirety by reference to, more complete and detailed information contained in the entire Official Statement, including the cover page and the Appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement and of the documents summarized or described herein, if necessary. The offering of the Bonds to potential investors is made only by means of the entire Official Statement, including the Appendices hereto. No person is authorized to detach this Introduction from the Official Statement or to otherwise use it without the entire Official Statement including the Appendices hereto. ADICA and the County ADICA is a public body corporate and politic and an instrumentality of the State of Georgia. See ALBANY-DOUGHERTY INNER CITY AUTHORITY. Dougherty County, Georgia (the County ) is a political subdivision of the State of Georgia. See GENERAL INFORMATION REGARDING THE COUNTY. Security and Sources of Payment for the Bonds The Bonds are limited obligations of ADICA payable solely from and secured by a lien upon and pledge of the security assigned to the Trustee by ADICA (the Trust Estate ), pursuant to a Trust Indenture, dated as of March 1, 2010 (the Indenture ), between ADICA and The Bank of New York Mellon Trust Company, N.A., Atlanta, Georgia, as trustee (the Trustee ). Pursuant to the Indenture, the Bonds are secured by the Trust Estate, which includes ADICA s rights, title, interest and remedies in and to an Intergovernmental Lease Agreement, dated as of March 1, 2010 (the Intergovernmental Agreement ), between ADICA and the County. The Intergovernmental Agreement obligates the County to make payments to ADICA sufficient in time and amount to enable ADICA to pay the principal of and interest on the Bonds. The County s obligations to make payments under the Intergovernmental Agreement is absolute and unconditional, is secured by a pledge of the County s full faith and credit and taxing powers and will not expire so long as any of the Bonds remain outstanding and unpaid. The County has agreed to make payments directly to the Trustee, as paying agent. See THE BONDS -- Security and Sources of Payment for the Bonds, COUNTY AD VALOREM TAXATION. 1

8 Purpose of the Bonds The proceeds from the sale of the Bonds will be used for the purpose of (i) providing funds to prepay the outstanding principal amount of the Albany-Dougherty Inner City Authority Certificates of Participation (Dougherty County, Georgia Public Purpose Project), Series 1999, (ii) providing funds to finance certain improvements to the Project (as defined herein), and (iii) paying certain costs incurred in connection with the execution and delivery of the Bonds. See PLAN OF FINANCE. Description of the Bonds Redemption. The Bonds shall not be subject to redemption prior to their maturity. See THE BONDS -- Redemption. Denominations. The Bonds are issuable in denominations of $5,000 and integral multiples thereof. Registration, Transfers and Exchanges. The Bonds will be issued in fully registered form. When in bookentry form, the purchasers of the Bonds (the Beneficial Owners ) will not receive certificates representing their ownership interest in the Bonds. Instead, such Bonds will be held by a securities depository, initially The Depository Trust Company ( DTC ) and registered in the name of DTC or its nominee, Cede & Co. Any transfer or exchange of the ownership interest in Bonds held in book-entry form will be made through computerized book-entry changes on the books of DTC through DTC s Direct and Indirect Participants in the manner described herein under THE BONDS Book-Entry System of Registration. When not in book-entry form, ownership of any Bond may be transferred upon surrender of such Bond to the Trustee, as bond registrar, together with an assignment duly executed by the registered owner or his attorney or legal representative, subject to the conditions hereinafter described. When not in book-entry form, the Bonds are exchangeable for a like aggregate principal amount of Bonds of the same maturity in denominations of $5,000 or integral multiples thereof, subject to the conditions hereinafter described. See THE BONDS -- Registration Provisions; Transfer and Exchange. Payments. Interest on the Bonds is payable on January 1 and July 1 of each year (each such date, an Interest Payment Date ), commencing July 1, Payment of the principal of and interest on the Bonds will be made by the Trustee, as paying agent, directly to Cede & Co., as nominee of DTC, and will subsequently be disbursed to Participants hereinafter defined) and thereafter to Beneficial Owners of the Bonds. When not in bookentry form, interest on the Bonds is payable by check or draft mailed by first class mail on the Interest Payment Date to the owners thereof as shown on the books and records of the Trustee, as bond registrar, on the 15 th day of the calendar month next preceding the Interest Payment Date. When not in book-entry form, principal on the Bonds is payable upon surrender thereof at the corporate trust office of the Trustee located in Atlanta, Georgia. See THE BONDS -- Description. Tax Exemption For a more complete description of the Bonds, see THE BONDS. In the opinion of Bond Counsel, under current law and subject to conditions described in the Section herein TAX EXEMPTION, interest on the Bonds (a) is not included in gross income for Federal income tax purposes, (b) is not an item of tax preference for purposes of the Federal alternative minimum income tax imposed on individuals and corporations, (c) is taken into account in determining adjusted current earnings for the purposes of computing the alternative minimum tax imposed on certain corporations and (d) is exempt from income taxation in the State of Georgia. See APPENDIX B hereto for the form of the opinion Bond Counsel proposes to deliver in connection with the issuance of the Bonds. For more complete discussion of such opinion and certain other tax consequences of owning the Bonds, including certain exceptions to the exclusion of the interest on the Bonds from gross income, see TAX EXEMPTION and DESIGNATION FOR PURCHASE BY FINANCIAL INSTITUTIONS. 2

9 Bond Registrar, Paying Agent and Custodian of Funds The Bank of New York Mellon Trust Company, N.A., Atlanta, Georgia, as trustee under the Indenture, will act as bond registrar, as paying agent for the Bonds, and as the Bond Fund Custodian, the Project Fund Custodian, and the Revenue Fund Custodian (as defined in the Indenture). Professionals Involved in the Offering Certain legal matters pertaining to ADICA and its authorization and issuance of the Bonds are subject to the approving opinion of Hunton & Williams, LLP, Atlanta, Georgia, Bond Counsel. Copies of such opinion will be available at the time of delivery of the Bonds, and a copy of the proposed form of such opinion is attached hereto as Appendix B. Certain legal matters will be passed on for ADICA by its counsel, C. Nathan Davis, Esq., Albany, Georgia and for the County by its counsel, W. Spencer Lee IV, Esq., Albany, Georgia. Certain matters will be passed on by Miller & Martin PLLC, Atlanta, Georgia, as Underwriter s Counsel. The financial statements of the County attached hereto as Appendix A have been audited by Mauldin & Jenkins, Certified Public Accountants, LLC, Macon, Georgia, to the extent and for the period indicated in their report thereon which appears in Appendix A hereto. Authority for Issuance The Bonds are being issued in accordance with and pursuant to the Constitution and laws of the State of Georgia and pursuant to that certain Trust Indenture, dated as of March 1, 2010 (the Indenture ), between ADICA and The Bank of New York Mellon Trust Company, N.A., Atlanta, Georgia, as trustee (the Trustee ). See THE BONDS -- Authority for Issuance. Offering and Delivery of the Bonds The Bonds are offered when, as, and if issued by ADICA and accepted by the Underwriter, subject to prior sale, to the withdrawal or modification of the offer without notice, subject to validation by the Superior Court of Dougherty County, Georgia, and subject to the approving opinion of Hunton & Williams, LLP, Bond Counsel. The Bonds in definitive form are expected to be delivered through The Depository Trust Company, New York, New York, on April 13, Continuing Disclosure The County has covenanted for the benefit of the owners of the Bonds in a Disclosure Certificate (the Disclosure Certificate ) to provide certain financial information and operating data relating to the County (the Annual Report ) by not later than 180 days after the end of each fiscal year of the County, commencing with fiscal year 2010, and to provide notices of the occurrence of certain events, if deemed by the County to be material (the Material Events Notices ). The Annual Report and the Material Events Notices will be filed with the Municipal Securities Rulemaking Board through the operation of the Electronic Municipal Market Access System ( EMMA ). The County s undertaking to provide the Annual Report and Material Events Notices pursuant to the Continuing Disclosure Certificate is described in Appendix E. The covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12 (the Rule ). The County has failed to file its annual reports in connection with previous disclosure undertakings made pursuant to the Rule. Annual reports for the past five fiscal years have now been submitted. The County has put in place controls to ensure that its annual reports will be submitted to EMMA in the future. Other Information change. This Official Statement speaks only as of its date, and the information contained herein is subject to This Official Statement and the Appendices hereto contain brief descriptions of, among other matters, ADICA, the County, the Bonds, and the security and sources of payment for the Bonds. Such descriptions and information do not purport to be comprehensive or definitive. The summaries of various constitutional provisions, 3

10 statutes, the Indenture, the Intergovernmental Agreement, and other documents are intended as summaries only and are qualified in their entirety by reference to such documents, and references herein to the Bonds are qualified in their entirety to the form thereof included in the Indenture. Copies of the Indenture, the Intergovernmental Agreement and other documents and information are available, upon request and upon payment to the County of a charge for copying, mailing and handling, from Dougherty County, 222 Pine Avenue, Suite 540, Albany, Georgia 31701, telephone: (229) During the period of the offering of the Bonds, copies of such documents are available upon request and upon payment of a charge for copying, mailing, and handling from Merchant Capital, L.L.C., One Buckhead Plaza, Suite 1700, 3060 Peachtree Road, N.W., Atlanta, Georgia 30305, telephone: (404) [Remainder of Page Intentionally Left Blank.] 4

11 Estimated Sources and Applications of Funds PLAN OF FINANCE The sources and applications of funds in connection with the issuance of the Bonds are estimated below. Sources of Funds: Par Amount $8,220, Plus: Net Original Issue Premium: 417, Total Sources $8,637, Uses of Funds: Deposit to the Refunding Fund $8,186, Deposit to the Project Fund 250, Costs of Issuance (1) 201, Total Uses $8,637, (1) Includes Underwriter s discount, legal and accounting fees, rating agency fees, printing and engraving costs, validation court costs and other costs of issuance. The Albany-Dougherty Inner City Authority Certificates of Participation (Dougherty County, Georgia Public Purpose Project), Series 1999 (the Certificates ) were issued pursuant to that certain Indenture of Trust and Assignment of Public Purpose Master Lease, dated as of November 1, 1999 between ADICA and The Bank of New York Mellon Trust Company, N.A., as trustee. The Certificates were issued in the original principal amount of $14,720,000, by ADICA on behalf of the County to finance the costs of (i) acquiring, constructing, and equipping a new facility to serve as the local and regional offices of the Department of Human Resources (the Project ) and (ii) paying certain costs incurred in connection with the execution and delivery of the Certificates, including the municipal bond insurance premium and the reserve fund surety bond premium. A portion of the proceeds of the Bonds will be deposited into the Albany-Dougherty Inner City Authority Refunding Fund Series 2010 (the Refunding Fund ), created pursuant to the Indenture, and used to prepay the outstanding principal amount of the Certificates in full on or about May 10, 2010 at 101% of the principal amount being redeemed. Such prepayment will provide debt service costs saving to the County. A portion of the proceeds of the Bonds will be deposited into the Albany-Dougherty Inner City Authority Project Fund Series 2010 (the Project Fund ), created pursuant to the Indenture, and used to provide funds to finance certain improvements to the Project. [Remainder of Page Intentionally Left Blank.] 5

12 THE BONDS Description The Bonds will be dated as of their date of delivery. Interest on the Bonds is payable on January 1 and July 1 of each year (each such date, an Interest Payment Date ), commencing July 1, The Bonds will bear interest from the Interest Payment Date next preceding their date of authentication to which interest has been paid (unless their date of authentication is an Interest Payment Date, in which case from such Interest Payment Date, or unless their date of authentication is after a record date and prior to the corresponding Interest Payment Date, in which case from such corresponding Interest Payment Date or unless their date of authentication is prior to July 1, 2010 in which case from their date of issuance) at the rates per annum set forth on the inside front cover of this Official Statement (computed on the basis of a 360-day year comprised of twelve 30-day months). Payment of the principal of and interest on the Bonds will be made by the Trustee, as paying agent, directly to Cede & Co., as nominee of DTC, and will subsequently be disbursed to DTC s Direct Participants and thereafter to the Beneficial Owners of the Bonds. See THE BONDS Book-Entry System of Registration. Interest on the Bonds is payable by check or draft mailed by first class mail on the Payment Date to the owners thereof as shown on the books and records of the Trustee, as bond registar, on the 15th day of the calendar month next preceding the Payment Date. Interest on the Bonds is payable to any registered owner of more than $1,000,000 in aggregate principal amount of Bonds by wire transfer to such registered owner if written wire transfer instructions are given to the Trustee, as paying agent prior to the 15 th day of the calendar month preceding the Interest Payment Date. When not in book-entry form, principal on the Bonds is payable upon surrender thereof at the corporate trust office of the Trustee, as paying agent located in Atlanta, Georgia. Security and Sources of Payment for the Bonds Indenture Pursuant to the Indenture, the Bonds are special limited obligations of ADICA payable solely from and secured by a lien upon and pledge of the security assigned to the Trustee by ADICA (the Trust Estate ). The Bonds are secured by the Trust Estate, which includes ADICA s rights, title and interest and remedies in and to the Intergovernmental Agreement. The Intergovernmental Agreement obligates the County to make payments to ADICA in the amounts calculated to be sufficient to enable ADICA to pay, when due, the principal of and interest on the Bonds. ADICA has covenanted in the Indenture not to create or permit to create any lien, security interest, or charge upon the Trust Estate, other than the pledge and assignment created by the Indenture. See THE INDENTURE Security; Limited Obligation in Appendix C hereto. ADICA has not granted any lien on or security interest in the Project or any other assets of ADICA or the revenues therefrom (other than Pledged Revenues (as defined in the Indenture)) to secure the Bonds. The Indenture permits the issuance of additional parity bonds, which, if issued, would be equally and ratably secured on a parity basis with the Bonds. See THE INDENTURE Additional Bonds in Appendix C hereto. ADICA may issue other bonds for the purpose of financing unrelated projects, which are not and will not be secured by the Indenture or the Intergovernmental Agreement. Such bonds, except for parity bonds issued under the Indenture, will be secured by instruments separate and apart from the Indenture and the Intergovernmental Agreement. Intergovernmental Agreement Pursuant to the Intergovernmental Agreement, the County has agreed to pay to ADICA payments in such amounts and at such times as will be sufficient to enable ADICA to pay the principal of and interest on the Bonds, as and when the same become due and payable. The absolute and unconditional obligation of the County to make the payments required by the Intergovernmental Agreement is an obligation of the County, payable from any 6

13 unencumbered funds, to which its full faith and credit and taxing power are pledged. The County has agreed in the Intergovernmental Agreement to levy an annual tax on all taxable property located within the County, at such rates, without limitation, as may be necessary to make the payments called for by the Intergovernmental Agreement and to make available and use for such payments all taxes levied and collected for that purpose together with funds received from any other sources. The County has also agreed in the Intergovernmental Agreement that in order to make funds available to make the payments required by the Intergovernmental Agreement in each fiscal year, it will, in its general revenue, appropriation, and budgetary measures through which its tax funds or revenues and the allocation thereof are controlled or provided for, include sums sufficient to satisfy the payments required to be made under the Intergovernmental Agreement until all payments required to be made under the Intergovernmental Agreement have been made in full. The County s obligation to make the payments required under the Intergovernmental Agreement is absolute and unconditional and will not expire so long as any of the Bonds remain outstanding and unpaid. See Appendix D hereto for the form of the Intergovernmental Agreement. The obligations of the County under the Intergovernmental Agreement will, before the Bonds are issued and delivered, be determined by the Superior Court of Dougherty County, Georgia to be legal, valid, binding, and enforceable obligations of the County. See LEGAL MATTERS Validation Proceedings herein. Limited Obligations The Bonds are special limited obligations of ADICA payable solely from payments to be made by the County to ADICA pursuant to the Intergovernmental Agreement. The Bonds are not payable from and are not secured by a charge, lien, or encumbrance upon any funds or assets of ADICA other that the Pledged Revenues and the funds created and held under the Indenture. The Bonds, however, do not constitute direct obligations of the County and are not directly secured by the general faith and credit or the taxing power of the County, the State of Georgia, or any other political subdivision thereof, and the Bonds will not be or be deemed to constitute debt of the State of Georgia, ADICA, or the County or any other political subdivision of the State of Georgia within the meaning of any constitutional or statutory limitation on indebtedness. ADICA has no taxing power and has no legal right to receive appropriations from the State of Georgia or the County, except under the Intergovernmental Agreement. No owner of any Bonds shall, by virtue of being such owner and without regard to any rights such owner may have under other instruments and agreements, including the Intergovernmental Agreement, ever have the right to compel the exercise of the taxing power of the State of Georgia or any political subdivision thereof, including the County, to pay the Bonds or the interest thereon, or to enforce the payment thereof against any property of the County (other than property assigned and pledged under the Indenture), the State of Georgia, or any political subdivision thereof, including the County. Enforceability of Remedies. The realization of value from the pledge of the taxing power of the County upon any default will depend upon the exercise of various remedies specified by the Indenture and the Intergovernmental Agreement. These and other remedies may require judicial actions, which are often subject to discretion and delay and which may be difficult to pursue. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by state and federal laws, rulings, and decisions affecting remedies and by bankruptcy, reorganization, or other laws affecting the enforcement of creditors rights generally. Section of the Official Code of Georgia Annotated provides that no county or authority created under the Constitution or the laws of the State of Georgia shall be authorized to file a petition for relief from payment of its debts as they mature or a petition for consolidation of its debts under any federal statute providing for such relief or consolidation or otherwise to take advantage of any federal statute providing for the adjustment of debts of political subdivisions and public agencies and instrumentalities. Section of the Official Code of Georgia Annotated also provides that no chief executive, mayor, board of commissioners, city council or other governmental officer, governing body, or organization shall be empowered to cause or authorize the filing by or on 7

14 behalf of any authority or county created under the Constitution or laws of the State of Georgia of any petition for federal relief from payment of its debts as they mature or a petition for consolidation of its debts under any federal statute providing for such relief or consolidation or otherwise to take advantage of any federal statute providing for the adjustment of debts of political subdivisions and public agencies and instrumentalities. Redemption The Bonds shall not be subject to redemption prior to their maturity. Registration Provisions; Transfer and Exchange The Bonds will be issued only as fully registered bonds without coupons in denominations of $5,000 and integral multiples thereof. ADICA and the Trustee may deem and treat the registered owner as the absolute owner of such Bond for purposes of receiving payment of or on account of principal and interest payable thereon, and for all other purposes; ADICA and the Trustee will not be affected by any notice to the contrary. When in book-entry form, the purchasers of the Bonds (the Beneficial Owners ) will not receive certificates representing their ownership interest in the Bonds. Instead, such Bonds will be held by a securities depository, initially The Depository Trust Company ( DTC ) and registered in the name of DTC or its nominee, Cede & Co. Any transfer or exchange of the ownership interest in Bonds held in book-entry form will be made through computerized book-entry changes on the books of DTC through DTC s Direct and Indirect Participants in the manner described herein under THE BONDS Book-Entry System of Registration. When not in book-entry form, ownership of any Bond is transferable upon surrender thereof to the Trustee, as bond registrar, together with an assignment duly executed by the registered owner or his attorney, in such form as shall be satisfactory to the Trustee, as bond registrar. Upon any such transfer of ownership, the Trustee, as bond registrar, will cause to be authenticated and delivered a new Bond or Bonds registered in the name of the transferee in the authorized denomination in the same aggregate principal amount and interest rate as the Bonds surrendered for such transfer. When not in book-entry form, the Bonds may be exchanged for a like principal amount of Bonds of the same interest rate of other authorized denominations. For every exchange or registration of transfer, the Trustee, as bond registrar, may charge an amount sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer, but no other charge may be made to the owner for any exchange or registration of transfer of the Bonds. Book-Entry System of Registration DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other Bond transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of Bond certificates. Direct Participants include both U.S. and non-u.s. Bond brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. Securities brokers and dealers, banks, trust companies, and clearing corporations that clear 8

15 through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments and redemption proceeds on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from ADICA or the Trustee, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with the Bonds held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Trustee or ADICA, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest payments and redemption proceeds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of ADICA or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to ADICA or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. 9

16 ADICA or the County may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor Securities depository). In that event, certificated Bonds will be printed and delivered. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that ADICA and the County believe to be reliable, but ADICA, the County and the Underwriter take no responsibility for the accuracy thereof, and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with DTC or the DTC Participants, as the case may be. None of ADICA, the County, the Underwriter, or the Trustee will have any responsibility or obligations to any Direct Participants or Indirect Participants or the persons for whom they act with respect to (i) the accuracy of any records maintained by DTC or any such Direct Participants or Indirect Participants; (ii) the payment by any Participant of any amount due to any Beneficial Owner in respect of the principal of, premium, if any, or interest on the Bonds; (iii) the delivery by any such Direct Participant or Indirect Participants of any notice to any Beneficial Owner that is required or permitted under the terms of the Indenture to be given to the holders of the Bonds; (iv) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Bonds; or (v) any consent given or other action taken by DTC as holder of the Bonds. Authority for Issuance The Bonds are being issued in accordance with the Albany-Dougherty Inner City Authority Act (1977 Ga. Laws 4220 et seq.) approved March 30, 1977, as amended by an act of the General Assembly of the State of Georgia (1980 Ga. Laws 3184 et seq.) approved March 27, 1980, as amended further by an act of the General Assembly of the State of Georgia (1980 Ga. Laws 4688 et seq.) approved February 26, 1981 (collectively, the Act ) and the Revenue Bond Law (O.C.G.A. Section et seq., as amended); and pursuant to the resolution adopted by ADICA on March 18, 2010; and to the Indenture. A summary of the Indenture is set forth in Appendix D. Article IX, Section III, Paragraph I of the Constitution of the State of Georgia authorizes any county, municipality or other political subdivision of the State to contract for any period not exceeding fifty (50) years with each other or with any other public agency, public corporation or public authority for joint services, for the provision of services, for the joint or separate use of facilities or equipment, but such contracts must deal with activities, services or facilities which the contracting parties are authorized by law to undertake or provide; and ADICA has the power under the Act to make contracts and to execute all instruments necessary or convenient, including contracts for construction of projects and leases of projects or contracts with respect to the use of projects which it causes to be erected or acquired, all public corporations, private legal entities and all departments, institutions, agencies counties, municipalities or political subdivisions of the State of Georgia are authorized under the Act to enter into the contracts or additional instruments with ADICA upon such terms and for such purposes as they deem advisable. The execution, delivery, and performance of the Intergovernmental Agreement by the County will be authorized and approved pursuant to a resolution adopted by the Board of Commissioners of the County on March 18, [Remainder of Page Intentionally Left Blank.] 10

17 PRINCIPAL AND INTEREST REQUIREMENTS Set forth below are the principal and interest requirements for the County s participation in the Georgia Municipal Association Lease Pool Certificates of Participation and the Bonds. (1) See COUNTY DEBT STRUCTURE Summary of Debt by Category and Overlapping Debt herein for a summary of other tax supported indebtedness of the County. Year Ending December 31 GMA Lease Pool (2) Bonds Total Principal Interest Total Total Debt Service Requirements 2010 $64,315 $0 $51,870 $51,870 $116, , , ,000 1,170,000 1,234, ,315 1,350, ,100 1,557,100 1,621, ,315 1,400, ,600 1,579,600 1,643, ,315 1,470, ,200 1,606,200 1,670, ,315 1,560,000 83,400 1,643,400 1,707, ,315 1,500,000 30,000 1,530,000 1,594, , , , , , , , , , , , , , , , , , , , , , , ,418, ,418,315 Total $2,575,985 $8,220,000 $918,170 $9,138,170 $11,714,155 (1) Assumes the Albany-Dougherty Inner City Authority Certificates of Participation (Dougherty County, Georgia Public Purpose Project), Series 1999 have been fully prepaid as described herein. (2) In June 1998, the County entered into a lease pool agreement with the Georgia Municipal Association (the Association ). The funding for the lease pool was provided by the issuance of $150,126,000 Certificates of Participation by the Association. The Association passed the net proceeds through to the participating governments with the County s original participation totaling $4,333,000. The lease pool agreement provides that the County owns its portion of the assets invested by the pool and is responsible for the payment of its portion of the principal and interest of the Certificates of Participation. During the fiscal year ended June 30, 2008, the County repaid $1,282,000 of its original commitment. During the fiscal year ended June 30, 2010, the County repaid $1,697,000 of its original commitment. The remaining principal amount of $1,354,000 is due in a lump some payment on June 1, [Remainder of Page Intentionally Left Blank.] 11

18 ALBANY-DOUGHERTY INNER CITY AUTHORITY ADICA is a public body corporate and politic and an instrumentality of the State of Georgia created pursuant to the Act. ADICA was created for the general purpose of... eliminating and improving slum or blighted areas by the revitalization and redevelopment of the project areas for any commercial, business, office, public, or other use determined by the members of ADICA to further the redevelopment of the project areas... located in Dougherty, County, Georgia, and has the requisite power to enter into and perform its obligations under the Indenture with the Trustee and the Intergovernmental Agreement with the County. ADICA HAS NO TAXING POWERS AND HAS NO LEGAL RIGHT TO RECEIVE APPROPRIATIONS OR OTHER PAYMENTS FROM THE COUNTY OF ANY OTHER GOVERNMENTAL BODY, EXCEPT FOR THE PAYMENTS THE COUNTY HAS CONTRACTED TO MAKE UNDER THE INTERGOVERNMENTAL AGREEMENT. ADICA consists of the Mayor of the City of Albany, who is a non-voting ex-officio member, six members appointed by the Albany City Council for terms of two years each, and a seventh member who is appointed by the other six members for a term of one year. All members are eligible to succeed themselves, except that the Mayor s term shall be co-extensive with his term of office as Mayor. The current members and officers of ADICA, the expiration dates of their current terms and their present principal occupations are set forth below. Name and Office Held Expiration of Term Principal Occupation Andrew Reid, Sr. January, 2011 Retired Elvis Muldrow January, 2012 CEO of Destiny Transportation Group, Inc. LaNicia Hart January, 2011 Business Owner Phil Cannon January, 2011 Attorney Thelma Adams Johnson January, 2012 CEO of Albany Community Together, Inc. Robert Kraselsky January, 2012 Attorney David Prisant February, 2012 Business Owner Introduction GENERAL INFORMATION REGARDING THE COUNTY Dougherty County, Georgia (the County ) is a political subdivision created and existing under the laws of the State of Georgia. The County is located in the southern portion of the State, approximately 176 miles South of the City of Atlanta. The County has an area of approximately 326 square miles, ranking 87 th in size among Georgia s 159 counties. The County ranks 25 th in population in the State of Georgia as of The only incorporated community in the County is the County seat of Albany. [Remainder of Page Intentionally Left Blank.] 12

19 Governing Body The County is governed by a Board of Commissioners. The official representative of the County is the Chairman of the Board of Commissioners, who is elected at large by the voters of the County to serve a term of four years until a successor is elected and qualified. The Board of Commissioners consists of six members elected by the six election districts within the County. Members of the Board of Commissioners serve concurrent four-year terms until their respective successors are elected and qualified, except that a Commissioner appointed to fill a vacancy may serve only for the balance of the unexpired term. The Chairman of the Board of Commissioners, and the members of the Board of Commissioners, their respective terms of office and occupations are as follows: Name and Office Held Expiration of Term Principal Occupation Jeff Sinyard, Chairman December 31, 2010 Pest Control Business John Hayes, Vice Chairman December 31, 2010 Banker, Capitol City Bank Muarlean C. Edwards December 31, 2012 Retired, Part-Time Adjunct Professor Gloria Gaines December 31, 2012 Transportation Consultant Lamar Hudgins December 31, 2012 Construction Designer Dr. Charles Lingle December 31, 2010 Retired Veterinarian Jack Stone December 31, 2010 Auto Dealership, RV Park Employee Relations and Pension Plan The County employed 658 full-time persons and 38 part-time in all departments of government as of January 1, No employees of the County are represented by labor organizations or are covered by collective bargaining agreements, and the County is not aware of any union organizing efforts at the present time. The County believes that employee relations are good. The County s employees are covered by worker s compensation, social security, long-term disability, health and life insurance and a retirement plan. See Note 9 to the Audited Financial Statements of the County attached hereto as Appendix A for further discussion of the County s Defined Benefit Pension Plan. Demographic Information The following information is provided to give prospective investors an overview of certain demographic information of the County. These statistics have not been adjusted to reflect population or economic trends and are not to be relied upon as a representation or guarantee of ADICA, the County or the Underwriter. The following table presents population statistics for the County and the State of Georgia for the census years 1970, 1980, 1990 and 2000 and for calendar year 2008, the most recent information available. Population Year Dougherty County State of Georgia ,754 9,685, ,065 8,186, ,311 6,506, ,710 5,462, ,639 4,587,930 Source: U.S. Department of Commerce, Bureau of the Census. [Remainder of Page Intentionally Left Blank.] 13

20 The following table shows the median home value in the County for the census years 1970 through Year Dougherty County State of Georgia United States 2000 $73,900 $111,200 $120, ,100 71,300 79, ,100 36,900 47, ,200 14,600 17,000 Source: U.S. Department of Commerce, Bureau of the Census. The following table reflects the per capita income of the County, the State of Georgia and the United States for the years 2003 through 2007, the most recent information available. Year Dougherty County State of Georgia United States 2007 $26,381 $33,499 $38, ,684 32,299 36, ,379 31,260 34, ,962 29,723 33, ,115 28,720 31,530 Source: U.S. Department of Commerce, Bureau of Economic Analysis. Set forth below is information concerning banking deposits in the County for the fiscal years ending 2005 through Banking Deposits Year Total Deposits as of June 30 (in millions) Source: Federal Deposit Insurance Corporation $1, , , , ,328 [Remainder of Page Intentionally Left Blank.] 14

21 Economic Information The following table reflects the total number and aggregate dollar value of building permits issued in the unincorporated portions of the County for the years 2005 through These figures do not include the number or value of permits issued in the City of Albany. Permits are categorized between commercial and residential with each category including both new construction and additions, alterations and conversions. For presentation purposes, permits issued for industrial, public utilities, apartments, schools, hospitals, hotels and motels, churches and outbuildings are included in the non-residential totals. Set forth below are the number of single-family residential, with the exception of mobile homes, and nonresidential building permits applied for in the County, and the value of those permits, for the last five calendar years: Single Family Detached Non-Residential Total Year Number Value Number Value Number Value $5,446, $2,595, $8,041, ,775, ,910, ,685, ,926, ,982, ,909, ,385, ,464, ,850, ,681, ,956, ,637,476 Source: Albany-Dougherty Planning & Development Office. Set forth below are the ten largest private employers located in the County as of December 31, 2009, their industries and their approximate number of employees. There can be no assurance that any employer listed below will continue to be located in the County or will continue employment at the level stated. No independent investigation has been made of, and no representation can be made as to, the stability or financial condition of the companies listed below. Employer Industry Number of Employees Phoebe Putney Memorial Hospital Medical Service 3,200 Proctor & Gamble Manufacturing Paper Products 1,600 MillerCoors Manufacturing Malt Beverages 586 Coats & Clark Manufacturing Textiles 514 HCA Palmyra Medical Centers Medical Service 454 Fred Taylor Company Trucking, Leasing, Warehousing 450 Georgia Pacific Manufacturing Containers 200 Southern Concrete Construction Manufacturing Concrete Beams 225 Tara Foods Manufacturing Peanut Butter 145 Sunnyland Farms Manufacturing Pecans, Packaged Bakery Items 130 Source: Albany Area Chamber of Commerce. 15

22 Set forth below are the five largest public employers located in the County as of December 31, 2009, their service and their approximate number of employees. There can be no assurance that any employer listed below will continue to be located in the County or will continue employment at the level stated. No independent investigation has been made of, and no representation can be made as to, the stability or financial condition of the employers listed below. Employer Service Number of Employees USMC Logistics Base (Civilian/Military/ Contractors) National Defense 4,900 Dougherty County Board of Education Education 2,934 City of Albany Public Service 1,387 Dougherty County Public Service 669 Albany State University Education 550 Source: Albany Area Chamber of Commerce. The following table sets forth the labor force of the County and the unemployment rates for the County, the State of Georgia and the United States for the years 2004 through 2008, the most recent information available. Calendar Year Unemployment Rates Dougherty County Labor Force Dougherty County State of Georgia United States , % 6.2% 5.8% , , , , Source: Georgia Department of Labor. [Remainder of Page Intentionally Left Blank.] 16

23 The following table shows the industry mix for the County for the year 2008, the most recent information available. The table is intended to provide information regarding the types of industries employing residents in the County and the compensation paid to those employees. The tables do not provide information with respect to all industries and firms. Industry Number of Firms Average Monthly Employment Average Weekly Wages Agriculture, forestry and fishing $541 Mining, quarrying, oil and gas extraction Construction 173 2, Manufacturing 82 5,612 1,036 Utilities ,271 Wholesale Trade 148 1, Retail Trade 521 6, Transportation and warehousing 96 2, Information Finance and Insurance 191 1, Real Estate, rental and leasing Professional, scientific and technical services 221 1, Management of companies and enterprises ,618 Administrative, support, waste management 118 3, Educational services Health Care and social assistance 323 7, Arts, entertainment and recreation Accommodation and food services 216 4, Other services 250 1, Unclassified Federal Government 36 3,014 1,236 State Government 34 2, Local Government 48 4, ALL INDUSTRIES 2,784 50,216 $688 Source: Georgia Department of Labor. [Remainder of Page Intentionally Left Blank] 17

24 COUNTY DEBT STRUCTURE Summary of County Direct and Overlapping Debt By Category Set forth below is information concerning the tax-supported debt of the County following the issuance of the Bonds. In addition to the County s debt obligations, property owners in the County are responsible for any debt obligations of other taxing entities in the proportion to which the jurisdiction of the County overlaps such entities. Also set forth below is the estimated overlapping tax-supported debt of such overlapping entities as of as of February 1, 2010 (except as otherwise indicated). Although the County has attempted to obtain accurate information as to the outstanding overlapping debt, it does not warrant its completeness or accuracy, as there is no central reporting entity which has this information available, and the amounts are based on information supplied by others. The information set forth below should be read in conjunction with the County s financial statements included as Appendix A hereto. Percentage Amount Debt Applicable to Applicable to Category of Debt Outstanding County County Direct Debt: Intergovernmental Contracts Obligation: (1) ADICA Refunding Revenue Bonds, Series 2010 $8,220, % $8,220,000 Capital Leases (2), (3) $1,354, % 1,354,000 Total Direct Debt: $9,574,000 Overlapping Debt: City of Albany (4) Intergovernmental Contracts Obligation: (1) ADICA Refunding Revenue Bonds, Series 2002 $2,530, % $1,816,540 ADICA Revenue Bonds, Series ,490, % 6,813,820 ADICA Revenue Bonds, Series ,000, % 4,308,000 Capital Leases: (5) $10,000, % 7,180,000 Dougherty County School District: General Obligation Debt $18,000, % $18,000,000 Total Overlapping Debt: $38,118,360 Total Direct and Overlapping Debt: $47,692,360 (1) (2) (3) (4) (5) Intergovernmental Contracts under Georgia law, while not debt, are binding obligations of the County or City to make payments. Assumes the Bonds have been issued and the Albany-Dougherty Inner City Authority Certificates of Participation (Dougherty County, Georgia Public Purpose Project), Series 1999 have been fully prepaid as described herein. The financial obligations of the County under the capital leases do not constitute general obligations of the County to which its faith and credit or taxing power are pledged, but are subject to and dependent upon lawful appropriations of general revenues being made by the Board of Commissioners to pay the lease payments due in each fiscal year under the leases. The County s obligations under the leases are from year to year only and do not constitute mandatory payment obligations of the County in any fiscal year in which funds are not appropriated by the County to pay the lease payments due in such fiscal year. The County s obligations under the leases do not constitute debt of the County for purposes of the constitutional debt limit described in COUNTY DEBT STRUCTURE--Limitations on County Debt herein and do not count against the County s debt limitation. Represents the City of Albany s applicable percentage of the County s 2009 net assessed property valuation for bond purposes ($1,725,417,952/ $2,404,370,378). The financial obligations of the City of Albany under the capital leases do not constitute general obligations of the City to which its faith and credit or taxing power are pledged, but are subject to and dependent upon lawful appropriations of general revenues being made by the City Council to pay the lease payments due in each fiscal year under the leases. The City s obligations under the leases are from year to year only and do not constitute mandatory payment obligations of the City in any fiscal year in which funds are not appropriated by the City to pay the lease payments due in such fiscal year. 18

25 There has never been a default in payment of the principal of or interest on any obligations issued by or on behalf of the County. Debt Ratios The following table sets forth certain debt ratios following issuance of the Bonds. Direct Tax Supported Debt (1) Overlapping Tax Supported Debt (2) Overall Tax Supported Debt (3) Per Capita Debt (4) $99.98 $ $ Percentage of Gross Tax Digest (5) 0.40% 1.59% 1.98% Percentage of Fair Market Value (6) 0.16% 0.63% 0.79% Per Capita Debt as Percentage of Per Capita Income (7) 0.38% 1.51% 1.89% (1) (2) (3) (4) (5) (6) (7) Based upon direct debt of $9,574,000. Based upon overlapping debt of $38,118,360. Based upon overall debt chargeable to the County of $47,692,360. Based upon estimated 2008 population figure of 95,754. Based upon 2009 Gross Tax Digest of $2,404,370,377. Based upon 2009 estimated actual value of $6,010,925,945. Based upon 2007 per capita income figure of $26,381. [Remainder of Page Intentionally Left Blank.] 19

26 Limitations on County Debt The Constitution of the State of Georgia provides that the County may not incur long-term obligations payable out of general property taxes without the approval of a majority of the qualified voters of the County voting at an election called to approve the obligations. In addition, under the Constitution of the State of Georgia, the County may not incur long-term obligations payable out of general property taxes in excess of ten percent of the assessed value of all taxable property within the County. The Dougherty County School District and each municipality within the County may also incur general obligation debt up to the ten percent limitation. Short-term obligations (those payable within the same fiscal year in which they are incurred), lease and installment purchase obligations subject to annual appropriation, and intergovernmental obligations are not subject to the legal limitations described above. In addition, refunded obligations cease to count against the County s debt limitations. As computed in the table below, based upon the 2009 assessed value, the County could incur (upon necessary voter approval) approximately $240,437,038 in additional long-term obligations payable out of general property taxes (or general obligation bonds). Computation of Legal Debt Margin Gross Tax Digest as of December 31, 2009 (1) $2,404,370,377 Debt Limit (10% of Assessed Value) 240,437,038 Amount of Debt Applicable to Debt Limit 0 Legal Debt Margin $240,437,038 (1) The legal debt margin should be based upon the Net General Obligation Bond Digest, not the Gross Tax Digest. Because the County has no general obligation debt, the Net General Obligation Bond Digest is not available. The Net General Obligation Bond Digest is less than the Gross Tax Digest. Therefore, if the Net General Obligation Digest were available, the legal debt margin would be slightly smaller. COUNTY AD VALOREM TAXATION Introduction An important source of revenue to fund the operations of the County is ad valorem property taxation. Ad valorem property taxes accounted for an annual average of approximately 45% percent of the County s general fund revenues for the fiscal year ended June 30, Ad valorem property taxes are levied annually in mills (one tenth of one percent) upon each dollar of assessed property value. Property Subject to Taxation Ad valorem property taxes are levied, based upon value, against real and personal property within the County. Certain classes of property, however, are exempt from taxation, including public property, religious property, charitable property, property of nonprofit hospitals, nonprofit homes for the aged, and nonprofit homes for the mentally handicapped, college and certain educational property, public library property, certain farm products, certain air and water pollution control property, and personal effects. In addition, the County allows exemptions from ad valorem taxation for homesteads, or owner-occupied residences, and an additional homestead exemption for elderly persons and certain veterans. Manufacturing and distribution businesses within the County are allowed a freeport exemption of 100% as authorized by the Constitution of the State of Georgia. 20

27 Assessed Value Assessed valuation, which represents the value upon which ad valorem property taxes are levied, is calculated as a percentage of fair market value. Georgia law requires taxable real and tangible property to be assessed, with certain exceptions, at 40% of its fair market value and to be taxed on a levy made by each respective tax jurisdiction according to 40% of the property s fair market value. Georgia law requires certain agriculture real property to be assessed for ad valorem property tax purposes at 75% of the value of which other real property is assessed, requires certain historical property to be valued at a lower fair market value for ad valorem property tax purposes and requires certain agricultural, timber and environmentally sensitive real property and certain singlefamily real property located in transitional developing areas to be valued at their current use value (as opposed to market value). The chief appraiser of the County is required to submit a certified list of assessments for all taxable property within the County, except motor vehicles and property owned by public utilities, which are valued by the State Revenue Department, to the Dougherty County Board of Tax Assessors (the Board ). The Board has three members appointed by the Board of Commissioners of Dougherty County for staggered six year terms. The Board is required to complete its revision and assessment of returns by June 1 of each year and to forward a copy of the completed digest to the State of Georgia Revenue Commissioner for examination and approval. The State of Georgia Revenue Commissioner has the authority to examine the digest for the purpose of determining if the valuations of property are reasonably uniform and equalized between and within counties. Assessments may also be subject to review at various stages by appeal of the property owners to the County Board of Equalization and to state court. The State of Georgia Motor Vehicle Tax Unit assesses the value of motor vehicles by make, model and year by county and provides this information to each county tax office. The State of Georgia Property Tax Unit assesses the value of the property of public utilities based on the State of Georgia recommended valuations and divides the assessment into two parts: assessed value of property and assessed value of franchise, and provides these amounts to each county which bills these taxes to the utilities. Annual Tax Levy The County determines a rate of levy for each fiscal year by computing a rate which, when levied upon the assessed value of taxable property within its corporate limits, will produce the necessary amount of property tax revenues. The Dougherty County Board of Education annually recommends to the County the amount of property tax revenues needed to support and maintain the Dougherty County School District. Under Georgia law, there is no limitation on the annual rate of levy for the payment of principal of and interest on bonded indebtedness of the County. Ad valorem property taxes received for the payment of debt service on general obligation bonds of the County are required by law to be held and accounted for separately from other funds of the County. Property Tax Collections State law requires that property taxes be based on assessed value which is 40% of fair market value. All real and personal property (including motor vehicles) are valued as of January 1 of each year and must be returned for tax purposes by March 1. With the exception of motor vehicles and the property of public utilities, which are valued by the State Revenue Department, all assessments are made by a joint Board of Tax Assessors of Dougherty County. This board has five members appointed by the Board of Commissioners of Dougherty County for staggered two-year terms. The Board of Tax Assessors is required to complete its revision and assessment of returns by June 1 of each year and shall submit to the County Tax Commissioner. The County Tax Commissioner submits the completed digest to the State of Georgia Revenue Commissioner for examination and approval. The County Tax Commissioner distributes tax notices and collects tax payments. Motor vehicle taxes must be paid by the birth date of the vehicle owner. Property taxes are usually billed on October 20 of each year. Real and personal property taxes must be paid in full on or before December 20. Tax executions are issued for delinquent taxes as of December 20 (lien date). All taxes levied on real and personal property, together with interest thereon and penalties for late payment, constitute a perpetual lien on and against the property taxed. Georgia law provides that taxes must be paid before 21

28 any other debt, lien, or claim of any kind, except for certain claims against the estate of a decedent and except that the title and operation of a security deed is superior to the taxes assessed against the owner of property when the tax represents an assessment upon property of the owner other than the property specifically subject to the title and operation of the security deed. Collection of delinquent real property taxes is enforceable by the tax sale of such realty. Delinquent personal property taxes are similarly enforceable by seizure and sale of the taxpayer s personal property. There can be no assurance, however, that the value of property sold, in the event of a tax sale, will be sufficient to produce the amount required to pay in full the delinquent taxes, including any interest or penalties thereon or collection expenses incurred in connection therewith. When the last day for the payment of taxes has arrived, the Tax Commissioner may notify the taxpayer in writing of the fact that the taxes have not been paid and that, unless paid, an execution will be issued. At any time after thirty days from giving the notice described in the preceding sentence, the Tax Commissioner or Ex-Officio Sheriff issues an execution for nonpayment of taxes. The Ex-Officio Sheriff may then publish a notice of the sale in a local newspaper weekly for four weeks and gives the taxpayer ten days written notice by registered or certified mail. A public sale of the property is then made at the County Courthouse on the first Tuesday of the month after the required notices are given. Ad Valorem Property Tax Digest Set forth below is information concerning the assessed value (i.e., 40% of the fair market value except timber which is assessed at 100%) of taxable property within the County for fiscal years 2005 through Amounts are expressed in thousands Assessed Value Real and Personal Property $1,786,623 $1,816,833 $1,820,338 $2,171,620 $2,164,720 Utility 66,313 61,641 59,597 65,344 65,455 Motor Vehicles 176, , , , ,460 Mobile Homes 11,247 11,072 11,167 11,789 10,946 Timber 1,936 1,485 1,844 1, Heavy Equipment 543 1,749 1, ,420 Gross Tax Digest 2,043,000 2,064,033 2,058,493 2,420,081 2,417,808 Less M&O Exemptions 168, , , , ,006 Net M&O Digest $1,874,220 $1,888,791 $1,880,191 $2,239,339 $2,242,802 Source: Dougherty County Tax Director. [Remainder of Page Intentionally Left Blank.] 22

29 Tax Collection Set forth below is information concerning tax levies and collections of the County reported as of the County s fiscal years ended June 30, 2005 through 2009, for the prior calendar year s maintenance and operations tax levy, the most current information available. Amounts are expressed in thousands. Fiscal Years ended June Current Year s M&O Tax Levy (1) $24,660,986 $24,852,726 $24,718,882 $26,641,428 $26,675,892 Total Tax Collections Collection of Current Year s Taxes $23,984,180 $24,474,002 $24,632,790 $26,021,552 $26,191,127 Collection of Prior Year s Taxes 94, , , , ,928 Total Tax Collections $24,078,528 $24,713,214 $24,878,772 $26,290,902 $26,558,054 Current Year s Tax Collections as a Percentage of Current Year s Levy 97.6% 99.4% 100.6% 98.7% 99.6% Uncollected Current Year s Real and Personal Property Taxes $676,806 $378,724 $86,092 $619,876 $484,765 (1) Current Year s M&O Tax Levy is derived from the County s five-year history of tax digest and current year s digest values published pursuant to O.C.G.A and is prior to adjustments and items not on the Digest. Source: Dougherty County Tax Director. Property Tax Millage Rates Set forth below is information concerning the rate of levy of property taxes per $1,000 of assessed value, or millage rates, of the County and all overlapping governments for the tax years 2005 through In addition to the millage rate for the County, residents of the City of Albany were subject to an additional mills for 2005, mills for 2006, mills for 2007, mills for 2008 and mills for Tax Year County Operations and Maintenance County Debt Service School Operations and Maintenance School Debt Service State of Georgia Total Unincorporated Special Services District Source: Dougherty County Tax Director. [Remainder of Page Intentionally Left Blank] 23

30 Ten Largest Taxpayers Set forth below are the ten largest taxpayers of the County for the tax year A determination of the largest taxpayers of the County can be made only by manually reviewing individual tax records. Therefore, it is possible that owners of several small parcels may have an aggregate assessment in excess of those set forth in the table below. Furthermore, the taxpayers shown in the table below may own additional parcels within the County. No independent investigation has been made of, and consequently no representation can be made as to, the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the County. Amounts are expressed in thousands. Percentage Assessed of Valuation Gross Tax Taxes Taxpayer (1) Type of Business at 40% Digest (2) Levied (3) Procter & Gamble Manufacturer -Paper Products $82, % $3,113 MillerCoors Manufacturer - Malt Beverages 58, % 2,320 Georgia Power Co. Utility 24, % 937 Bellsouth Utility 17, % 708 Palymyra Park Hospital Hospital 15, % 603 Albany Mall, LLC Mall Developer 14, % 574 M&M Mars/Div of Mars, Inc. Confectioner 13, % 552 Merck & Company Pharmaceuticals 13, % 494 Flint River Services Warehousing 11, % 443 Alltel Communications Communications 9, % 376 TOTAL $260, % $10,120 (1) Selection is based on the taxpayers with the largest assessed valuation. (2) Based on the 2009 Gross Tax Digest of $2,404,370,377. (Public Utilities assessed at 36.89% for 2009). (3) Includes taxes collected by the County for State, County, School and City of Albany taxes. Source: Dougherty County Tax Director. [Remainder of Page Intentionally Left Blank] 24

31 COUNTY FINANCIAL INFORMATION Accounting System and Policies The accounting policies of the County conform to generally accepted accounting principles as applicable to governments. The accounts of the County are organized on the basis of funds and accounts groups which is considered a separate accounting entity. The various funds are grouped into the following fund types and account groups: (i) Governmental Funds the major funds include the General Fund, DHR Building Lease Fund, Capital Improvement Fund, and 2005 One Percent Sales Tax Fund; (ii) Proprietary Funds Solid Waste Landfill Enterprise Fund; (iii) (iii) Fiduciary Funds; and Account Groups include the General Fixed Assets Account Group and the General Long-Term Debt Account Group. The modified accrual basis of accounting (revenues are recognized when susceptible to accrual and expenditure are recorded when the related fund liability is incurred) is used by all governmental fund types, expendable trust funds and agency funds. The accrual basis of accounting (revenues are recorded when earned and expenses are recorded at the time liabilities are incurred) is utilized by proprietary fund types and pension trust funds. See Note 1 to the Audited Financial Statements of the County attached hereto as Appendix A for further discussion of the County s accounting policies. [Remainder of Page Intentionally Left Blank] 25

32 Five Year General Fund History Set forth below is a summary of the revenues, expenditures, and changes in fund balance of the County s General Fund for the past five fiscal years and for the 6-month periods ending December 31, 2008 and Information in the following table for fiscal years 2005 through 2009 has been extracted from audited financial statements of the County. Although the information for these five years was taken primarily from audited financial statements, no representation is made that the information is comparable from year to year, or that the information as shown taken by itself presents fairly the financial condition of the County for the fiscal years shown. For more complete information, reference is made to the audited financial statements, copies of which are available from the County upon request. General Fund Fiscal Year Ended June 30 6-Month Period Ended December 31 (Unaudited) Revenues: Property Taxes $23,022,705 $24,079,183 $24,397,620 $25,447,968 $26,277,815 $20,527,866 $20,920,874 Sales Taxes 6,562,169 7,144,733 7,089,388 7,498,871 6,032,795 (1) 2,332,094 2,512,390 Other Taxes 235, , , ,223 91,173 56,114 Charges for Services 8,928,264 8,483,360 9,905,162 9,131,777 9,627,758 3,698,585 4,286,415 Fines and Forfeitures 1,530,858 1,190,980 1,496,693 1,488,222 1,284, , ,809 Interest 269, , , , ,413 85,930 2,000 Other 2,616,416 2,298, , , ,250 28,761 45,578 TOTAL REVENUES 43,165,334 43,802,260 44,340,918 44,924,903 44,091,389 27,259,447 28,257,180 Expenditures: Current: General Government 6,517,681 6,287,997 6,533,558 6,905,203 7,145,000 5,522,333 3,870,920 Judicial 5,882,325 5,973,212 6,465,129 6,498,994 6,607,886 3,059,898 3,040,075 Public safety 19,605,440 20,471,008 21,273,294 22,220,980 22,634,634 10,347,377 10,247,997 Public Works 2,491,583 2,489,379 2,492,413 2,473,050 2,663,210 1,177,611 1,038,905 Health and Welfare 1,620,923 1,644,431 3,285,067 3,856,780 3,710, , ,181 Culture and Recreation 2,291,865 2,332,762 2,610,340 2,827,342 2,652,261 1,323,065 1,114,729 Housing and Development 833, , ,944 1,026,511 1,012, , ,752 Insurance, employee benefits, and social services 1,186,675 1,119, Debt service: Principal Interest TOTAL EXPENDITURES 40,429,782 41,033,960 43,388,745 45,808,860 46,425,775 22,580,671 20,414,559 26

33 Fiscal Year Ended June 30 6-Month Period Ended December 31 (Unaudited) EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 2,735,552 2,768, ,173 (883,957) (2,334,386) Other Financing Sources (Uses): Proceeds from sale of assets ,921 22,696 9,136 2, Transfers In 65,000 65, , Transfers Out (25,691) (300,000) (150,000) (150,000) TOTAL OTHER FINANCING SOURCES (USES) 39,309 65,000 6,921 22,696 (277,435) (147,321) (150,000) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES 2,774,861 2,833, ,094 (861,261) (2,611,821) 4,531,455 7,692,621 Fund Balances July 1 10,816,090 13,590,951 17,341,042 (2) 18,300,136 17,438,875 Fund Balances June 30 $13,590,951 $16,424,251 $18,300,136 $17,438,875 $14,827,054 (1) Reflects a refund of sales tax to a local manufacturer for years prior to fiscal year This manufacturer was exempt from paying sales tax but had inadvertently been making payments to the State for several years. (2) Includes a restatement of the fiscal year 2006 general fund balance to appropriately eliminate the liability for compensated absences in accordance with the modified accrual basis of accounting. [Remainder of Page Intentionally Left Blank] 27

34 Budget Set forth below is a summary of the County s budget for its General Fund for the fiscal year ending June 30, Dougherty County General Fund Budget (unaudited) Fiscal Year Ending June 30, 2010 REVENUES Property Taxes $25,430,465 Sales Taxes 6,850,000 Other Taxes 194,000 Fines and forfeitures 1,156,500 Charges for services 9,037,800 Interest Income 170,000 Miscellaneous 64,370 Funds Re-appropriated from Fund Balance 1,938,135 TOTAL REVENUES $44,841,270 EXPENDITURES General government $11,227,277 Judicial System 10,181,287 Public Works 3,184,028 Public Safety 13,394,399 Health and welfare 6,443,629 Agricultural Services 110,650 Interfund Transfer Out 300,000 TOTAL EXPENDITURES $44,541,270 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES $300,000 Other Financing Sources (Uses): Proceeds from sale of assets $ -- Transfers In -- Transfers Out (300,000) TOTAL OTHER FINANCING SOURCES (USES) (300,000) Net change in fund balances -- Fund Balances July 1 $14,827,054 Fund Balances June 30 $14,827,054 The County has been able to keep the departmental actual expenditures close to the budgeted expenditures for the past five fiscal years. The County expects to conform to its budget, as amended, for the current fiscal year. Very few, if any, adjustments will be needed to keep the actual expenditures for the current fiscal year in conformity with the budgeted amounts, as amended. 28

35 The County has not conformed to its General Fund budget in many instances for the fiscal years ended June 30, 2005 through Set forth below is a summary of unfavorable variances between budgeted and actual amounts for the fiscal years ended June 30, 2005 through General Fund Unfavorable Variances (GAAP Budgetary Basis of Accounting) Year Ended June Revenues Property Taxes ($107,996) $-- $-- $-- $-- Sales Taxes (817,205) Other Taxes (139,897) (273,000) -- (79,561) -- Charges for services (114,194) -- Fines and Forfeitures -- (41,020) (163,587) Interest Income (439,587) Miscellaneous (1,812,628) (3,346,282) (3,994,361) Funds Reappropriated -- ($1,501,615) Expenditures General Government (167,206) Judicial Public Safety (6,199,523) (6,719,294) (251,416) Public Works Health and Welfare (392,032) -- (600,204) Recreation and Culture (245,676) -- Housing and Development (183,955) (2,681) -- Agricultural Services Insurance, employee benefits, and social services (28,555) Net Cumulative Variance Favorable (Unfavorable) $2,735,552 ($203,015) $222,828 ($1,032,666) ($2,611,821) The County expects to conform to its adopted budget, as amended, for its General Fund for fiscal year Management Comments Concerning Material Trends in Revenues and Expenditures For a narrative overview and analysis of the financial activities of the county for fiscal year 2009, see Management s Discussion and Analysis included in Appendix A to this Official Statement. The Management s discussion and Analysis is not a required part of the basic financial statements of the County but is supplementary information required by the Governmental Accounting Standards Board that has not been audited by the County s independent auditor. The County s General Fund balance increased from $13,590,951 as of June 30, 2005 to $18,300,136 as of June 30, 2007, and then decreased to $17,438,875 as of June 30, 2008 and then to $14,827,054 as of June 30, The County Commission planned and budgeted to use General Fund reserves in 2008 and 2009 budgets instead of levying more ad valorem property taxes. The General Fund balance decreases from 2007 to 2009 were due primarily to the economic downturn, which caused a decrease in consumer spending lowering sales tax collections. Also, due to the economic climate, there was a decrease in number of building permits issued, and collections of real estate transfer taxes, intangible recording taxes, and personal property taxes. In March of 2009, the County implemented measures to keep expenditures in line with declining revenues. The measures included freezing vacant employee positions, freezing capital purchases unless for public safety, 29

36 eliminating travel expenses unless mandated by law. The County will continue cost-saving measures to bring expenditures in line with lower revenues. The County has an active Economic Development Commission and Payroll Development Authority which is proactive in bringing new industry to the County and maintaining cooperative working relationships with existing industries. Wal-Mart Corporation will begin construction of a new store within the County in The County anticipates an increase in sales tax collections upon the completion of this project. Budgetary Process Annual operating budgets are adopted and amended through the adoption of a resolution by the Board of Commissioners. A modified cash basis (budget basis) is used in preparing the budgets. The County maintains its records on the budgetary basis and uses supplementary information to convert the budget-based information to the modified accrual basis ( GAAP basis ) for financial reporting purposes. The County chooses this approach as the modified cash basis is more consistent with the statutory and financing requirements and is better understood by legislators. Financial reporting standards do not require that a budget be prepared on a GAAP basis. Project budgets are spanning more than one fiscal year for all Special Revenue Funds (SPLOST) and Capital Improvement Program Fund. Budgetary control is exercised at the departmental level with the County Administrator as the legal appointed budget officer. The County Administrator and Finance Director are entrusted with budget oversight. Insurance Coverage and Governmental Immunity Under Georgia law, the defense of sovereign immunity is available to the County, except for actions for the breach of written contracts and actions for the recovery of damages for any claim for which liability insurance protection has been provided, but only to the extent of the liability insurance provided. The County, however, may be made to rely upon the defense of sovereign immunity and may be subject to liability in the event of suits alleging causes of action founded upon various federal laws, such as suits filed pursuant to 42 U.S.C alleging the deprivation of federal constitutional or statutory rights of an individual and suits alleging anti-competitive practices and violations of the federal antitrust laws by the County in the exercise of its delegated powers. The County carries liability insurance for the types of claims and in amounts that are customary for similar entities for those categories of claims that are not subject to the defense of sovereign immunity. The County also carries property and casualty damage insurance on buildings and other physical assets. Investment of Bond Proceeds and Other Moneys Investment of Bond Proceeds. The proceeds of the sale of the Bonds will be invested pending their disbursement. Section of the Official Code of Georgia Annotated provides that the proceeds of the Bonds may be invested and reinvested in the following investments, and no others: (1) the local government investment pool created in Chapter 83 of Title 36 of the Official Code of Georgia Annotated, as amended; (2) bonds or obligations of the State of Georgia or other counties, municipal corporations, and political subdivisions of the State of Georgia; (3) bonds or other obligations of the United States or of subsidiary corporations of the United States government which are fully guaranteed by such government; (4) obligations of agencies of the United States government issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, and the Central Bank for Cooperatives; 30

37 (5) bonds or other obligations issued by any public housing agency or municipal corporation in the United States, which such bonds or obligations are fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States government, or project notes issued by any public housing agency, urban renewal agency, or municipal corporation in the United States which are fully secured as to payment of both principal and interest by a requisition, loan, or payment agreement with the United States government; (6) certificates of deposit of national or state banks located within the State of Georgia which have deposits insured by the Federal Deposit Insurance Corporation and certificates of deposit of federal savings and loan associations and state building and loan or savings and loan associations located within the State of Georgia which have deposits insured by the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation or the Georgia Credit Union Deposit Insurance Corporation, including the certificates of deposit of any bank, savings and loan association, or building and loan association acting as depository, custodian, or trustee for any such bond proceeds, provided the portion of the certificates of deposit in excess of the amount insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation, or the Georgia Credit Union Deposit Insurance Corporation, if any, must be secured by deposit, with the Federal Reserve Bank of Atlanta, Georgia, or with any national or state bank or federal savings and loan association or state building and loan or savings and loan association located within the State of Georgia, of one or more of the following securities in an aggregate principal amount equal at least to the amount of such excess: direct and general obligations of the State of Georgia or of any county or municipal corporation in the State of Georgia, obligations of the United States or subsidiary corporations described in (3) above, obligations of the agencies of the United States government described in (4) above, or bonds, obligations, or project notes of public housing agencies, urban renewal agencies, or municipalities described in (5) above; (7) securities of or other interests in any no-load, open-end management type investment company or investment trust registered under the Investment Company Act of 1940, as from time to time amended, or any common trust fund maintained by any bank or trust company which holds such proceeds as trustee or by an affiliate thereof so long as: (a) the portfolio of such investment company or investment trust or common trust fund is limited to the obligations described in paragraph (3) above and repurchase agreements fully collateralized by any such obligations; (b) such investment company or investment trust or common trust fund takes delivery of such collateral either directly or through an authorized custodians; (c) such investment company or investment trust or common trust fund is managed so as to maintain its shares at a constant net asset value; and (d) securities of or other interests in such investment company or investment trust or common trust fund are purchased and redeemed only through the use of national or state banks having corporate trust powers and located within the State of Georgia; and (8) any other investments authorized by the laws of the State of Georgia. Pending Litigation LEGAL MATTERS Except as disclosed below, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, known to be pending or threatened against or affecting the County nor to the best knowledge of the County is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated by the Indenture, the Intergovernmental Agreement, 31

38 or any other agreement or instrument to which the County is a party and which is used or contemplated for use in the consummation of the transactions contemplated by the Indenture and the Intergovernmental Agreement. Authorization and Validity of Bonds Certain legal matters relating to the authorization and validity of the Bonds will be subject to the approving opinion of Hunton & Williams, Atlanta, Georgia, Bond Counsel, which will be furnished at the expense of ADICA upon delivery of the Bonds, in substantially the form set forth as Appendix B (the Bond Opinion ). The Bond Opinion will be limited to matters relating to authorization and validity of the Bonds and to the tax-exempt status of interest thereon as described in the section TAX EXEMPTION. Bond Counsel has not been engaged to investigate the financial resources of ADICA or its ability to provide for payment of the Bonds and the Bond Opinion will make no statement as to such matters or as to the accuracy or completeness of this Official Statement or any other information that may have been relied on by anyone in making the decision to purchase the Bonds. Validation Proceedings The County and ADICA will cause proceedings to be instituted in the Superior Court of Dougherty County to validate the Bonds. The State of Georgia will be the plaintiff in the proceeding, and the County and ADICA will be the defendants. A final judgment confirming the validation of the Bonds is a condition to the issuance and purchase thereof. Closing Certificates ADICA and the County will deliver to the Underwriter a certificate that no litigation is pending or threatened against it which would have a material effect on the issuance or validity of the Bonds or the execution, delivery and performance of the Intergovernmental Agreement or on the financial condition of the County. In addition, ADICA and the County will represent to the Underwriter in the Bond Purchase Agreement that the information contained in this Official Statement does not contain any misrepresentation of a material fact and does not omit or state any material fact necessary to make the statements herein contained, in light of the circumstances under which they were made, not misleading. Opinion of Bond Counsel TAX EXEMPTION In the opinion of Bond Counsel, under current law, interest on the Bonds (including any original issue discount properly allocable to the owner thereof) (a) will not be included in gross income for Federal income tax purposes, (b) will not be an item of tax preference for purposes of the Federal alternative minimum income tax imposed on individuals and corporations; however, with respect to corporations (as defined for Federal income tax purposes) subject to the alternative minimum income tax, such interest is taken into account in determining adjusted current earnings for purposes of computing such tax, and (c) will be exempt from income taxation by the State of Georgia. No other opinion is expressed by Bond Counsel regarding the Federal tax consequences of the ownership of or the receipt or accrual of interest on the Bonds. Bond Counsel s opinion with respect to the Bonds is given in reliance on certifications by representatives of ADICA, the County and the Department of Human Resources for the State of Georgia ( DHR ) as to certain facts relevant to both the opinion and requirements of the Internal Revenue Code of 1986, as amended (the Code ) and is subject to the condition that there is compliance subsequent to the issuance of the Bonds with all requirements of the Code that must be satisfied in order for interest thereon to remain excludable from gross income for Federal income tax purposes. ADICA and the County have covenanted to comply with the current provisions of the Code regarding, among other matters, certain tax-exempt obligations and the use, expenditure and investment of the proceeds of the Bonds and, as to the County, the timely payment to the United States of any arbitrage rebate amounts with respect to the Bonds. Failure by ADICA or the County to comply with such covenants, among other things, could cause interest on the Bonds (including any original issue discount properly allocable to the owner thereof) to be included in gross income for Federal income tax purposes retroactively to their date of issue. 32

39 Other Tax Matters In addition to the matters addressed above, prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations may result in collateral Federal income tax consequences to certain taxpayers, including without limitation, financial institutions, property and casualty insurance companies, S corporations, foreign corporations subject to the branch profits tax, corporations subject to the environmental tax, recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as to the applicability and impact of such consequences. The Internal Revenue Service (the Service ) has a program to audit state and local government obligations to determine whether the interest thereon is includible in gross income for Federal income tax purposes. If the Service does audit the Bonds, under current Service procedures, the Service will treat ADICA as the taxpayer and the owners of the Bonds will have only limited rights, if any, to participate. In the opinion of Bond Counsel, under current law, interest on the Bonds will be exempt from income taxation by the State of Georgia. Each prospective purchaser of the Bonds should consult his or her own tax advisor as to the status of interest on the Bonds under the tax laws of any state other than Georgia. Bond Counsel will render no opinion as to the treatment for Federal or state income tax purposes of any moneys received by any registered owner of the Bonds subsequent to non-appropriation by ADICA. In certain circumstances, payments received by the registered owners of the Bonds subsequent to such event may be subject to Federal or state income taxation. Bond Counsel s opinion represents its legal judgment based in part upon the representations and covenants referenced therein and its review of current law, but is not a guarantee of result or binding on the Service or the courts. Bond Counsel assumes no duty to update or supplement its opinion to reflect any facts or circumstances that may thereafter come to Bond Counsel s attention to reflect any changes in law or the interpretation thereof that may thereafter occur or become effective. There are many events which could affect the value and liquidity or marketability of the Bonds after their issuance, including but not limited to public knowledge of an audit of the Bonds by the Service, a general change in interest rates for comparable securities, a change in Federal or state income tax rates, Federal or state legislative or regulatory proposals affecting state and local government securities and changes in judicial interpretation of existing law. In addition, certain tax considerations relevant to owners of the Bonds who purchase Bonds after their issuance may be different from those relevant to purchasers upon issuance. Neither the opinion of Bond Counsel nor this Official Statement purport to address the likelihood or effect of any such potential events or such other tax considerations and purchasers of the Bonds should seek advice concerning such matters as they deem prudent in connection with their purchase of Bonds. DESIGNATION FOR PURCHASE BY FINANCIAL INSTITUTIONS The Code generally provides that financial institutions may not deduct any of the interest expense (the cost of carry ) allocable to tax-exempt obligations acquired after August 7, 1986, other than qualified tax-exempt obligations. Financial institutions may not deduct 20% of the cost of carry allocable to qualified tax-exempt obligations. An obligation s status as a qualified tax-exempt obligation is dependent upon an affirmative act of designation by the issuer and is subject to, among other things, the issuer and its subordinate entities, within the meaning of Section 265(b)(3) of the Code, complying with limitations on the amount of obligations that may be issued and designated in the same calendar year. ADICA and the County have designated the Bonds as qualified tax-exempt obligations and has covenanted to comply with the provisions of Section 265(b)(3). In the opinion of Bond Counsel, under current law, the Bonds are qualified tax-exempt obligations within the meaning of Section 265(b)(3). Such opinion is given in reliance upon certifications by representatives of ADICA and the County as to certain facts material to both such opinion and the requirements of Section 265(b)(3). 33

40 MISCELLANEOUS Ratings Standard & Poor s Ratings Services, a division of The McGraw-Hill Companies, Inc. ( S&P ), has assigned a rating of AA- to the Bonds. The rating reflects only the view of S&P, and any desired explanation of the significance of each rating should be obtained from S&P, at the following address: Standard & Poor s Ratings Services, a division of The McGraw-Hill Companies, Inc., 55 Water Street, 45 th Floor, New York, New York Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies, and assumptions of its own. There is no assurance that either or both of such ratings will remain unchanged for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agency furnishing the same, if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the liquidity and market price of the Bonds. Underwriting Merchant Capital, L.L.C. (the Underwriter ) has agreed to purchase the Bonds pursuant to a Bond Purchase Agreement entered into among ADICA, the County and the Underwriter. The price and other terms regarding underwriting of the Bonds were established through negotiation. The Underwriter has agreed to purchase the Bonds at a purchase price of $8,575, (par, plus net original issue premium of $417,632.90, less Underwriter s discount of $61,650.00). The Bond Purchase Agreement provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase Agreement. The Underwriter intends to offer the Bonds initially at the offering prices shown on the inside front cover page hereof, which prices may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with other dealers and underwriters in offering the Bonds to the public. The Underwriter may offer and sell the Bonds to certain dealers at prices lower than the public offering. Independent Professionals Legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approval of Hunton & Williams, LLP, Atlanta, Georgia, Bond Counsel. Certain legal matters will be passed on for the County by W. Spencer Lee IV, Esq., Albany, Georgia, for ADICA by C. Nathan Davis, Esq., Albany, Georgia, and for the Underwriter by its counsel, Miller & Martin PLLC, Atlanta, Georgia. The financial statements of the County attached hereto as Appendix A have been audited by Mauldin & Jenkins, Certified Public Accountants, LLC, Macon, Georgia, to the extent and for the period indicated in their report thereon, which appears in Appendix A. Such financial statements have been included herein in reliance upon the report of Mauldin & Jenkins, Certified Public Accountants, LLC. Additional Information Use of the words shall or will in this Official Statement in summaries of documents to describe future events or continuing obligations is not intended as a representation that such event or obligation will occur but only that the document contemplates or requires such event to occur or obligation to be fulfilled. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or matters of opinion will be realized. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of the Bonds. [Remainder of Page Intentionally Left Blank.] 34

41 CERTIFICATION The execution and delivery of this Official Statement, and its distribution and use by the Underwriter, have been duly authorized and approved by ADICA and the County. ALBANY-DOUGHERTY INNER CITY AUTHORITY By: s/ Andrew Reid, Sr.. Chairman DOUGHERTY COUNTY, GEORGIA By: s/ Jeff Sinyard. Chairman, Board of Commissioners 35

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43 APPENDIX A AUDITED FINANCIAL STATEMENTS OF THE COUNTY

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45 DOUGHERTY COUNTY, GEORGIA FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2009

46 INTRODUCTORY SECTION

47 DOUGHERTY COUNTY, GEORGIA FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2009 TABLE OF CONTENTS Page INTRODUCTORY SECTION Table of Contents... i and ii List of Principal Officials...iii FINANCIAL SECTION Independent Auditor's Report... 1 and 2 Management s Discussion and Analysis Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets and 15 Statement of Activities and 17 Fund Financial Statements: Balance Sheet Governmental Funds and 19 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds and 21 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities General Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget (Non GAAP) and Actual Statement of Net Assets Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds Statement of Cash Flows Proprietary Funds Statement of Fiduciary Net Assets Fiduciary Funds Statement of Changes in Fiduciary Net Assets Fiduciary Funds Notes to Financial Statements Required Supplementary Information: Schedule of Funding Progress Defined Benefit Plan Schedule of Employer Contributions Defined Benefit Plan Schedule of Employer Contributions Other Post-Employment Benefit Plan Combining and Individual Fund Statements and Schedules: Combining Balance Sheet Nonmajor Governmental Funds and 62 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds and 64 Schedule of Expenditures of Special Purpose Local Option Sales Tax Proceeds Combining Balance Sheet Agency Funds and 69 i

48 DOUGHERTY COUNTY, GEORGIA FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2009 TABLE OF CONTENTS Page COMPLIANCE SECTION Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards and 71 Schedule of Findings and Responses Schedule of Prior Year Findings Independent Accountant s Report on Local Assistance Grants State of Georgia Grant Certification Form and 82 ii

49 DOUGHERTY COUNTY BOARD OF COMMISSIONERS Jeff Sinyard, Chairman Jack Stone, Vice Chairman Muarlean Cain Edwards John Hayes Lamar Hudgins Dr. Charles Lingle Gloria Gaines Art Searles COUNTY ADMINISTRATOR Richard Crowdis FINANCE DIRECTOR Karen Goff iii

50 FINANCIAL SECTION

51 INDEPENDENT AUDITOR S REPORT Board of Commissioners of Dougherty County, Georgia Albany, Georgia We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Dougherty County, Georgia, as of and for the year ended June 30, 2009, which collectively comprise the County s basic financial statements as listed in the table of contents. These financial statements are the responsibility of Dougherty County, Georgia s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Dougherty County Board of Health, which statements reflect total assets of $3,235,025 as of June 30, 2009, and total revenues of $14,093,061 for the year ended June 30, Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion on the basic financial statements, insofar as it relates to the amounts included for the Dougherty County Board of Health in the component unit column is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 and the reports of the other auditors provide a reasonable basis for our opinions. In our opinion and based on our audit and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Dougherty County, Georgia as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparisons for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. 439 MULBERRY STREET POST OFFICE BOX 1877 MACON, GEORGIA FAX MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

52 In accordance with Government Auditing Standards, we have also issued our report dated December 29, 2009, on our consideration of Dougherty County, Georgia s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Management s Discussion and Analysis (on pages 3 through 13) and the Required Supplementary Information on pages 59 and 60 are not a required part of the basic financial statements, but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Dougherty County, Georgia s basic financial statements. The combining and individual nonmajor fund financial statements listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of Dougherty County, Georgia. The schedule of expenditures of special purpose local option sales tax proceeds is presented for purposes of additional analysis as required by the Official Code of Georgia Annotated , and is not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of special purpose local option sales tax proceeds have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Macon, Georgia December 29,

53 DOUGHERTY COUNTY, GEORGIA MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2009 As management of Dougherty County, Georgia, (the County) we offer readers of the County s financial statements this overview and analysis of the County s financial activities for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in the financial statements and the notes to the financial statements. Financial Highlights The County s statement of net assets (page 14) reflected a decrease of $1,788,160. This statement is a combined view of all the County s financial activities including SPLOST funds which naturally decrease as projects are completed. The statement of net activities (page 16) reflects revenue collected through service charges and grants to provide services are 24% of total revenue needed. The balance of revenue comes from property and sales taxes. The 2008 county-wide tax digest residential values increased 0.34%, conservation use values increased 22.7%, commercial property values increased 1.16%, and industrial property value decreased 6.16%. The General Fund (the operating fund) fund balance (unreserved and reserved) decreased $2,611,821. The Board of Commissioners budgeted re-appropriation of fund balance of $3.9 million in order hold the millage rate at the same level as last year and prevent a tax increase to the citizens of Dougherty County. The Special Tax District Fund records services to the unincorporated area of the county. The 2008 millage rate decreased to mills from The fund balance decreased $23,614. For this fiscal year, this fund is categorized as a non-major governmental fund. The Solid Waste Fund (the only enterprise fund) experienced an increase in net assets of $1,234,303. This increase is discussed later in this document. The actual operating income was $1,157, One Percent Sales Tax Fund sales tax revenues totaled $15,081,557 (64% or $9,675,998 distributed to the City of Albany through an inter-governmental agreement for capital projects). Sales tax collections were down 18.9% for the same time frame last year. Overview of the Financial Statements This Management Discussion and Analysis document introduces the County s basic financial statements. The basic financial statements include: (1) government-wide financial statements, (2) fund financial statements, and (3) notes to the basic financial statements. (1) The government-wide financial statements include two statements, the Statement of Net assets and the Statement of Activities (pages 14-17). These statements provide information about the activities of the County as a whole and present both long-term and short-term views of the County s financial status. In the Statement of Net Assets and the Statement of Activities, we divide the County into three kinds of activities: Governmental Activities Most of the County s basic services are reported here, including courts, public works and public safety. The majority of these activities are financed through property taxes, fees and fines. Dougherty County receives very little State and Federal funds for its governmental activities. 3

54 MANAGEMENT S DISCUSSION AND ANALYSIS Business-Type Activities Dougherty County charges a fee to customers to cover the cost of operations for its enterprise fund. No tax dollars are used to operate the landfill. The Solid Waste Landfill is the only enterprise fund that the County maintains. Tipping fees are set to sufficiently operate facility. Component Units Dougherty County includes the Dougherty County Health Department as a Component Unit. The Health Department legally is a separate entity but the County is required by GAAP to include its financial statements. (2) Fund financial statements begin on page 18. A fund is an accountability unit used to maintain control over resources segregated for specific activities or objectives. Fund financial statements focus on individual sections of the County, reporting the County s operations in more detail than the panoramic picture presented by the government-wide statements. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. (3) The Notes section of the basic financial statements explains some of the information contained in the financial statements in greater detail. This section begins on page 31. Government Wide Statement Analysis One of the most important questions asked about the County s finances is, Is the County, as a whole, better off or worse off as a result of this year s activities? The Statement of Net Assets and Statement of Activities report information about the County as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year s revenues and expenditures are taken into account regardless of when cash is received or paid. These two statements report the County s net assets and changes in them. You can think of the County s net assets the difference between assets and liabilities as one way to measure the County s financial health or financial position. Over time, increases or decreases in the County s net assets are one indicator of whether its financial health is improving or deteriorating. Other non-financial factors that must be considered include changes in the County s property tax base and the conditions of the County s infrastructure, to assess the overall health of the County. The net assets for Governmental Activities decreased between fiscal years 2008 and Business-Type Activities net assets increased between fiscal years 2008 and Our analysis below focuses on the net assets (Table 1) and changes in net assets (Table 2) of the County s governmental and business-type activities. 4

55 MANAGEMENT S DISCUSSION AND ANALYSIS Table 1 Net Assets (in Millions) Governmental Business-type Activities Activities Current and other assets $ 63.1 $ 53.6 $ 6.1 $ 6.6 Capital assets Total Assets Current liabilities $ 6.5 $ 5.9 $ 0.1 $ 0.1 Long-term liabilities Total Liabilities Net assets: Invested in capital assets, net of debt Restricted Unrestricted Total Net Assets $ $ $ 11.4 $

56 MANAGEMENT S DISCUSSION AND ANALYSIS Table 2 Changes in Net Assets (In Millions) Governmental Business-Type Activities Activities Revenues Program revenues: Charges for services $ 12.2 $ 13.6 $ 2.8 $ 2.7 Operating grants and contributions Capital grants and contributions General revenues: Property taxes Sales tax Other taxes Investment income Gain on sale of assets Total revenues Program Expenses General government Judicial Public safety Public works Health and welfare Culture and recreation Economic Development Interest on long-term debt Solid waste operating expenses Intergovernmental Total expenses Excess (deficiency) of revenues over (under) expenses before transfers - (2.8) (0.3) 1.2 Transfers Increase (decrease) in net assets - (2.8) (0.3) 1.2 Net assets, beginning of year, restated Net assets, end of year $ $ $ 11.4 $ 12.6 In years prior to 2007, intergovernmental expenses included non-county capital outlay for assets that will not be owned by the County. This includes capital projects completed by the City of Albany and funded by the County s Special Local Option Sales Tax. This reporting year the expenditures were allocated to the applicable function. The County and City have several agreements that allow sharing of SPLOST proceeds. During the current year, the County reported the gross revenue of SPLOST received and the expenditures to the City. 6

57 MANAGEMENT S DISCUSSION AND ANALYSIS Governmental Activities Total revenues decreased 4.5% ($3.4 million) from FY Total expenses decreased 0.5% ($0.4 million) from FY The County is heavily reliant on property taxes and sales taxes to support governmental operations. Property taxes provided $31.8 million in revenue or 44.5% of the County s total governmental revenues as compared to 41.9 % in The county-wide millage rate applied to the 2008 Tax Digest remained at mils. The special services district millage rate applied to the 2008 Tax Digest decreased from to mils. Local Option Sales Tax and Special Local Option Sales Tax revenue provided $22.3 million in revenue or 31.5% of the County s total governmental revenues in FY 2009 as compared to $26.1 million or 34.8 % of the County s total governmental revenues in FY Sales tax revenue decreased 14.7% between 2008 and Also notable, investment earnings continued to decrease due to low interest rates. Governmental Activities Revenues Charges for services 19% Investment Earnings 1% Other Taxes 3% Property Taxes 45% Sales Taxes 32% 7

58 MANAGEMENT S DISCUSSION AND ANALYSIS Total expenses show a decrease of $0.4 million. Expenses decreased from $75 million in 2008 to $74.7 million in Governmental activities include the functions of general government, judicial system, public safety, public works, health and welfare, culture and recreation and economic development operating expenses as well as SPLOST capital projects. The chart below shows the percentages of expenses by function or service. Governmental Activities Expenses Culture & Recreation 9% Public Health & Social Svcs 5% Economic Development 5% Interest on long-term debt 1% General Government 16% Public Works 13% Judicial System 10% Public Safety 41% The Public Safety activities make up approximately 41% of the total governmental activities expenses. General Government activities, which include Facilities Management, Tax and Tag Collections and County Administration/Finance, make up approximately 16%. The Judicial System activities, which included Superior, State, Magistrate and Probate Court, make up approximately 10%. Public Works activities cost approximately 13%. Table 3 presents the cost of services by category as well as the net cost (total cost less revenues generated by that activity). The Net Cost of Services shows the financial burden that is placed on the County s taxpayers through taxes by function or service provided. Of course, Public Safety, which includes the Jail Facility and Dougherty County Police, generates only a small fraction of the revenue needed to operate. 8

59 MANAGEMENT S DISCUSSION AND ANALYSIS Table 3 Governmental Activities (In Millions) Total Cost Net Cost of Services of Services General government $ 8.5 $ 11.8 $ (4.8) $ (7.0) Judicial (7.2) (6.9) Public safety (23.2) (22.3) Public works (9.8) (9.4) Health and welfare (4.3) (4.1) Culture and recreation (7.9) (6.1) Housing and development (3.6) (3.3) Interest on long-term debt (0.7) (0.6) Intergovernmental Total Governmental Activities $ 75.1 $ 74.7 $ (61.5) $ (59.7) Business-type Activities The Dougherty County Solid Waste Landfill is the County s only business-type activity. This enterprise is primarily funded through tipping fees. Each year liabilities and expenses are recorded for estimated closure and post-closure care as required by law. No revenue is received from taxes for this activity. The Solid Waste net assets increased $1,234,303 primarily because of an adjustment in closure and post closure accrued expense due to the issuance of a vertical expansion permit which increases the capacity and life of the Landfill. More discussion on this topic can be found in the analysis of proprietary funds in the next section. Charges for services revenue was 3.6% lower than last year and expenditures were 51.5 lower (affected by the reduction in closure and post-closure accrued expense). Analysis of the Fund Level Statements The fund financial statements begin on page 18 and provide detailed information about the County s most significant funds. The establishment of some funds is required by State law; however, the County Commission establishes many other funds to help control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes or grants. The County s governmental and proprietary funds use different accounting approaches. Governmental funds Most of the County s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the remaining, spending balances. The County Governmental Funds include the General Fund, Special Tax District Fund, DHR Building Lease Fund, the Confiscated Assets Fund, the Grant Fund, the Lease Commercial Property Fund, the Law Library Fund, the 2005 One Percent Sales Tax Fund. The 1995 One Percent Sales Tax Fund, the One Percent Sales Tax Road Projects Fund, the 1990 One Percent Sales Tax Fund, the 2000 One Percent Sales Tax Fund and the Capital Improvement Program Fund. This reporting year the 9

60 MANAGEMENT S DISCUSSION AND ANALYSIS General Fund, DHR Building Lease Fund, 2005 One Percent Sales Tax Fund, and Capital Improvements Fund (CIP), are categorized as major funds. The County s governmental funds reported combined fund balances of $46.9 million, a decrease of 2.8%. The General Fund fund balance decreased by $2.6 million. In consideration to the taxpayers of the County, the County Commission budgeted to use $3.9 million from reserves. Due to controlled, efficient monitoring of budgets by department managers, a lesser amount of reserves were required. Actual expenses of $46.4 million were less than budgeted expenses by $1.1 million. Employees received 2.8% merit salary increase with satisfactory performance evaluations but no cost-of-living adjustment. Five (5) new positions were approved out of the 12 requested. The required pension plan contribution was higher due to less than anticipated market returns. Two new options for employee health insurance increased the County s share of premiums by 15%. The Commission voted to provide funding for another year to the Flint RiverQuarium in the amount of $250,000 an effort to keep the recreational facility open as it is a main component of downtown revitalization. An interfund transfer to the Special Tax District was established to align the revenue generated by traffic fines with the expenses of County Police traffic enforcement. The DHR Building Lease Fund was established to record the lease transactions between the State of Georgia, acting by and through the Georgia Department of Human Resources, and Dougherty County, the leasing agent for a building located at 200 West Oglethorpe Boulevard, Albany, Georgia. The DHR Building houses the Department of Family & Children Services (DFACS). The lease agreement went into effect December, A bond for $14.7 million was sold in 1999 through Albany-Dougherty Inner City Authority to facilitate the construction of the building. Bond and interest payments due by the County are secured by the full faith and credit of the State of Georgia. This is the first reporting year that this fund was categorized as a major governmental fund. In the 2005 One Percent Sales Tax Fund (SPLOST V) total sales tax revenues received were $15.1 million of which the City of Albany received $9.4 million (64%). Actual sales tax revenue received for County projects was $5.7 million. Actual expenditures for County projects were $4.2 million. Current projects include Judicial Building renovations for Juvenile Court relocation, Northwest Library relocation and renovations, Radium Springs improvements and upgrades to computer technology. Proprietary funds The County s Solid Waste Landfill is reported as an enterprise fund. The level of fees charged for services at the Landfill is based on the operational cost of running the Landfill. Proprietary funds are reported in the same way all other activities are reported in the Statement of Net Assets and the Statement of Activities. The County s enterprise fund (proprietary fund) reporting (pages 26-28) is the same as the business-type activities we report in the government-wide statements but provide more detail and additional information, such as cash flows. The net assets of the fund increased by $1.2 million. The tipping fee rates charged for Landfill services were unchanged from Revenues from tipping fees were 2% lower attributable to the decreased tonnage received. An anomaly this fiscal year is the vertical expansion permit issued by the State DNR for cells 7-12 of the municipal solid waste (MSW) area of the Landfill and the construction/demolition area. This expansion adds capacity and life to the Landfill. Since closure and post-closure costs are calculated on used and remaining capacity, the estimated costs for one year is reduced by $1.2 million. 10

61 MANAGEMENT S DISCUSSION AND ANALYSIS This year the County established a new internal service fund to capture the activities of the Dougherty County Employees Group Health Plan. This a self-insurance health care plan. Previously, the County participated in a pooled plan with the City of Albany. The County employs the services of an insurance broker to advise on cost containment and negotiate service and coverage contracts. Fiduciary Funds Dougherty County is the trustee for its employees pension fund. The Dougherty County Pension Fund is overseen by an appointed Board which chooses a third-party investment manager through an RFP process. The County is responsible for ensuring that the assets reported in these funds are used for their intended purposes. The funds are in a protected trust fund. The County reviews, reconciles and records the statements from the investment manager on a quarterly basis. The total net assets decreased $4,979,332 from last year. This decrease is directly tied to the stock market performance and return on investment. The County s required annual contribution increased by 12.7% to $2,163,585. From the actuarial valuation report, the plan s funded ratio is 81.0%. General Fund Budgetary Highlights The General Fund Budget is developed to cover the costs of services and the tax millage is set to generate enough revenue to cover costs. Budget figures are not calculated on the modified-accrual basis whereas the actual expenditures listed on page 23 are on the modified-accrual basis. As can be seen in Note 3 on page 41, only two departments exceeded their budgets, but under expending in other departments compensated. Revenues were budgeted at $47.8 million and actually received $44.1 million, a difference $3.7 million. The budgeted use of fund balance was partially realized. $3.98 million was budgeted from reserves and only $2.6 million was used. No major amendments to this budget were passed. Capital Assets and Debt Administration Capital Assets At the end of FY 2009, the County s governmental activities had invested $147.9 million net capital assets (costs less accumulated depreciation) invested in a broad range of capital assets, including police and fire equipment, public works heavy equipment, buildings, roads, and bridges. This is a decrease of $0.3 million from last year. The Business-type activity (Solid Waste Landfill) has $10 million net capital assets (costs less accumulated depreciation), a decrease of $0.6 million. Table 4 is summary data of capital assets. More details can be found on pages 44-45, Note 6 of the financial statements. 11

62 MANAGEMENT S DISCUSSION AND ANALYSIS Table 4 Capital Assets at Year-end (Net of Depreciation, in Millions) Governmental Activities Business-type Activities Land $ 35.0 $ 35.7 $ 2.1 $ 2.1 Construction in Progress Building & Improvements Infrastructure Vehicles Equipment Totals $ $ $ 10.6 $ 10.0 Debt At year-end the County had no outstanding debt for bonds or notes payable. The capital lease payable listed on page 46 of the financial statements is a bond issued through the Albany-Dougherty Intercity Authority (ADICA) for the purpose of building construction of a building on 200 Oglethorpe Boulevard. The bond principal and interest payments are funded through a lease agreement with the State of Georgia, acting by and through the Georgia Department of Human Resources, and the County, the leasing agent for a building which houses the Department of Family & Children Services. The County is obligated until This is the third year the certificates of participation were included in the debt section of the financial statements. This reflects the lease pool agreement with the Georgia Municipal Association (GMA). The purpose of the pool is to finance capital purchases. The County currently does not have any outstanding principal due before the end of the bond period. The County s capacity to drawdown funds from the pool decreased this year to $3.0 million due to the aging of unused funds. The County retains the capacity to use these funds for capital purchases approved by the bond insurer if so desired. Readers can find more details on page 47. The business-type activity that the County operates is the Landfill. The County has been able to maintain and run a state of the art landfill without ever having to borrow money for capital projects or maintenance. The County is required by law to set aside funding for the closure and post-closure of the landfill. These costs include a final cover over the landfill and maintenance and monitoring for 30 years after closure. These laws ensure against negative environmental impact from garbage gases and leachate. Calculations are made each year to estimate these costs. See page 48. None of the County s debt payments are currently funded through ad valorem taxes. 12

63 MANAGEMENT S DISCUSSION AND ANALYSIS Table 5 Outstanding Debt at Year-end (in millions) Activities Activities Capital leases $ 9.9 $ 9.0 $ - $ - Certificates of participation Compensated absences Landfill closure/postclosure Totals $ 16.1 $ 15.1 $ 5.2 $ 3.9 Economic Factors and Next Year s Budgets and Rates The County is impacted by the same economic conditions impacting the State of Georgia and the nation as a whole. Economic conditions were taken into account in developing the County s 2010 budget. Some of the issues impacting the County s future are: Enhanced operations at the Marine Corp Logistics Base located in Dougherty County Slight rebound in building and related permits issued Development of a new industrial park with railroad access County-wide 2007 property revaluation; 2007 Tax Digest was approved by Department of Revenue for collection, but is in pending litigation. Elimination by the State of Georgia of the Homeowner Tax Relief Grant. The economic down turn and closing of small businesses and employment layoffs. GASB s other post-employment benefits (OPEB) reporting requirement and possible increased funding Minimal increase in the county-wide tax digest growth Reduced household spending resulting in lower sales tax collections State of Georgia budgetary constraints, shifting operating costs to the County (i.e., Tax collection costs) Increase in healthcare costs affecting the County s self-insured health care plan Contacting the County s Financial Management This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the County s finances and to show the County s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the County Finance Office at 222 Pine Avenue, Suite 430, Albany, Georgia Complete financial statements for the Dougherty County Health Department (a component unit) may be requested from its administrative office at (229)

64 DOUGHERTY COUNTY, GEORGIA STATEMENT OF NET ASSETS JUNE 30, 2009 Primary Government Governmental Business-type ASSETS Activities Activities Total Cash and cash equivalents $ 4,703,854 $ 824,026 $ 5,527,880 Investments 43,124,939 5,446,442 48,571,381 Taxes receivable 3,183,995-3,183,995 Accounts receivable 1,300, ,427 1,641,528 Internal balances 52,776 (52,776) - Due from other governments 1,098,580-1,098,580 Inventories 152,653 2, ,084 Capital assets, non-depreciable 40,037,441 2,309,661 42,347,102 Capital assets, depreciable, net of accumulated depreciation 107,856,337 7,698, ,555,140 Total assets 201,510,676 16,570, ,080,690 LIABILITIES Accounts payable 1,699,857-1,699,857 Accrued liabilities 1,713,885-1,713,885 Due to other governments 2,511,204-2,511,204 Unearned revenues 56,927-56,927 Other liabilities 2,480,241-2,480,241 Capital leases due within one year 1,015,000-1,015,000 Capital leases due in more than one year 7,945,000-7,945,000 Compensated absences due within one year 928,296 30, ,856 Compensated absences due in more than one year 2,161,000 63,763 2,224,763 Closure and postclosure care cost - 3,877,526 3,877,526 Certificates of participation due in more than one year 3,051,000-3,051,000 Total liabilities 23,562,410 3,971,849 27,534,259 NET ASSETS Invested in capital assets, net of related debt 138,933,778 10,008, ,942,242 Restricted for: Capital projects 25,438,511-25,438,511 Special use Unrestricted 13,575,977 2,589,701 16,165,678 Total net assets $ 177,948,266 $ 12,598,165 $ 190,546,431 The accompanying notes are an integral part of these financial statements. 14

65 Component Unit Board of Health $ 2,167, ,025, ,412 3,235, , , , ,293,539 42,412-1,329, ,950 $ 1,941,486 15

66 DOUGHERTY COUNTY, GEORGIA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2009 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government $ 11,870,595 $ 4,844,132 $ - $ - Judicial 7,690, , ,494 - Public safety 30,253,470 7,840,367 86,302 - Public works 9,659, ,711 13,683 17,099 Health and welfare 4,100,316-14,756 - Culture and recreation 6,612, ,156 7,567 3,583 Housing and development 4,011,583 4, ,805 Interest on long-term debt 584, Total governmental activities 74,782,185 13,573, , ,487 Business-type activities: Solid waste 1,576,709 2,734, Total business-type activities 1,576,709 2,734, Total primary government $ 76,358,894 $ 16,307,907 $ 703,802 $ 742,487 Component unit: Board of Health $ 14,095,051 $ 3,124,359 $ 10,968,702 $ - Total component unit $ 14,095,051 $ 3,124,359 $ 10,968,702 $ - General revenues: Property taxes Sales taxes Other taxes Unrestricted investment earnings Gain on sale of assets Total general revenues Change in net assets Net assets, beginning of year, as restated Net assets, end of year The accompanying notes are an integral part of these financial statements. 16

67 Net (Expense) Revenue and Changes in Net Assets Component Unit Governmental Business-type Board Activities Activities Total of Health $ (7,026,463) $ - $ (7,026,463) $ - (6,935,785) - (6,935,785) - (22,326,801) - (22,326,801) - (9,404,681) - (9,404,681) - (4,085,560) - (4,085,560) - (6,112,761) - (6,112,761) - (3,285,203) - (3,285,203) - (584,843) - (584,843) - (59,762,097) - (59,762,097) - - 1,157,399 1,157, ,157,399 1,157,399 - $ (59,762,097) $ 1,157,399 $ (58,604,698) $ - $ - $ - $ - $ (1,990) $ - $ - $ - $ (1,990) 31,764,337-31,764,337-22,270,986-22,270,986-2,099,112-2,099, ,199 73, , ,668 3,668-56,739,634 76,904 56,816,538 - (3,022,463) 1,234,303 (1,788,160) (1,990) 180,970,729 11,363, ,334,591 1,943,476 $ 177,948,266 $ 12,598,165 $ 190,546,431 $ 1,941,486 17

68 DOUGHERTY COUNTY, GEORGIA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2009 DHR Building 2005 Lease One Percent Capital ASSETS General Fund Sales Tax Improvement Cash and cash equivalents $ 2,337,938 $ 186,655 $ 46,487 $ 609,263 Investments 10,848, ,058 16,918,207 6,067,423 Taxes receivable 859,992-2,248,651 - Accounts receivable 1,300, Notes receivable - 8,627, Due from other funds 1,283, Due from other governments 1,021, Inventory 152, Total assets $ 17,803,672 $ 9,629,551 $ 19,213,345 $ 6,676,686 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 1,221,096 $ - $ 333,845 $ - Accrued expenses 624, Due to other funds 41,570 4, ,590 75,340 Due to other governments 218,733-2,290,452 - Deferred revenue 870,299 8,627, ,892 - Total liabilities 2,976,618 8,631,962 3,687,779 75,340 FUND BALANCES Fund balances: Reserved for: Capital projects ,969,197 Drug treatment education 57, Victim witness program 66, Unreserved, undesignated reported in: General fund 14,702, Special revenue funds Capital projects funds - 997,589 15,525,566 3,632,149 Total fund balances 14,827, ,589 15,525,566 6,601,346 Total liabilities and fund balances $ 17,803,672 $ 9,629,551 $ 19,213,345 $ 6,676,686 The accompanying notes are an integral part of these financial statements. Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Internal service funds are used by management to charge the costs of risk management to individual funds. The assets and liabilities of the internal service funds are included in governmental activities. The net pension and OPEB obligations are not due and payable in the current period and therefore are not reported in governmental funds. Net assets of governmental activities 18

69 Other Governmental Funds Total $ 1,275,618 $ 4,455,961 7,900,871 42,549,976 75,352 3,183,995-1,300,101-8,627,838 99,739 1,383,303 77,573 1,098, ,653 $ 9,429,153 $ 62,752,407 $ 8,690 $ 1,563, , ,605 1,086,229 2,019 2,511,204 28,327 10,051, ,641 15,837,340-2,969,197-57,975-66,897-14,702,182 2,019,764 2,019,764 6,943,748 27,099,052 8,963,512 46,915,067 $ 9,429, ,893,778 1,366,591 (15,120,855) (626,074) (2,480,241) $ 177,948,266 19

70 DOUGHERTY COUNTY, GEORGIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2009 DHR Building 2005 Lease One Percent Capital General Fund Sales Tax Improvement Revenues: Property taxes $ 26,277,815 $ - $ - $ 1,104,876 Sales taxes 6,032,795-15,081,557 - Other taxes 594, Licenses and permits Intergovernmental ,805 - Charges for services 9,627,758 52, Fines and forfeitures 1,284, Interest 110,413 13, , ,842 Other revenues 164,250 1,508, ,632 Total revenues 44,091,389 1,573,788 16,008,356 1,543,350 Expenditures: Current: General government 7,145,000 62, Judicial 6,607, Public safety 22,634, Public works 2,663, Health and welfare 3,710, Culture and recreation 2,652, Housing and development 1,012, Intergovernmental payments - - 9,675,998 - Capital outlay - - 4,199,204 1,050,689 Debt service: Principal - 940, Interest - 791,636-66,138 Total expenditures 46,425,775 1,793,710 13,875,202 1,116,827 Excess (deficiency) of revenues over (under) expenditures (2,334,386) (219,922) 2,133, ,523 Other financing sources (uses): Proceeds from sale of assets 9, ,691 Transfers in 13, Transfers out (300,000) Total other financing sources (uses) (277,435) ,691 Net change in fund balances (2,611,821) (219,922) 2,133, ,214 Fund balances, beginning of year 17,438,875 1,217,511 13,392,412 6,016,132 Fund balances, end of year $ 14,827,054 $ 997,589 $ 15,525,566 $ 6,601,346 The accompanying notes are an integral part of these financial statements. 20

71 Other Governmental Funds Total $ 4,743,553 $ 32,126,244-21,114,352 1,504,889 2,099, , , ,385 1,429,190 9,727 9,690, ,949 1,503, , ,199 91,952 2,064,947 7,731,013 70,947, ,624 7,319, ,467 7,283,353 6,216,387 28,851, ,958 2,793,168-3,710, ,307 2,850, ,799 1,507,900 1,423,344 11,099,342-5,249, , ,774 9,251,886 72,463,400 (1,520,873) (1,515,504) 1, , , ,429 (13,429) (313,429) 288, ,600 (1,232,529) (1,345,904) 10,196,041 48,260,971 $ 8,963,512 $ 46,915,067 21

72 DOUGHERTY COUNTY, GEORGIA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2009 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ (1,345,904) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the difference between depreciation expense and capital outlay in the current period. (132,636) The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to decrease net assets. (191,292) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Deferred revenues decreased during the year by this amount. 794,727 In governmental funds, debt service payments are considered a use of funds, but in the statement of net assets, the payments are a reduction of a liability. 940,000 The internal service fund is used by management to charge the cost of workers' compensation insurance to individual funds. The net revenue of the internal service fund is reported with governmental activities. (901,880) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (2,185,478) $ (3,022,463) The accompanying notes are an integral part of these financial statements. 22

73 DOUGHERTY COUNTY, GEORGIA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 Variance Budgeted Amounts with Final Original Final Actual Budget Revenues: Property taxes $ 25,216,793 $ 25,216,793 $ 26,277,815 $ 1,061,022 Sales taxes 6,850,000 6,850,000 6,032,795 (817,205) Other taxes 475, , , ,223 Charges for services 9,137,400 9,137,400 9,627, ,358 Fines and forfeitures 1,447,500 1,447,500 1,284,135 (163,365) Interest income 550, , ,413 (439,587) Miscellaneous 4,158,611 4,158, ,250 (3,994,361) Total revenues 47,835,304 47,835,304 44,091,389 (3,743,915) Expenditures: Current: General government: Administrative and legislative 944, , ,261 93,989 Auditing 61,000 61,000 59,367 1,633 Computer information 640, , ,653 98,347 Contingency 150, , ,538 38,462 Facilities management 2,379,545 2,379,545 2,290,258 89,287 Human resources 494, , ,202 30,598 Legal services 221, , ,901 30,899 Mail and security system 246, , ,948 5,752 Purchasing 111, , ,216 - Registration and elections 468, , ,974 55,876 Tax and tag collections 1,948,530 1,948,530 1,871,682 76,848 Total general government 7,666,691 7,666,691 7,145, ,691 Judicial: Clerk of courts 943, , ,124 74,626 District attorney 1,719,712 1,719,712 1,700,007 19,705 Juvenile court 837, , ,050 45,350 Magistrate court 853, , ,308 24,492 Probate court 368, , ,839 22,966 Public defender 1,079,709 1,079, , ,427 State court 506, , ,251 17,924 Superior court 839, , , ,665 Total judicial 7,149,041 7,149,041 6,607, ,155 (Continued) 23

74 DOUGHERTY COUNTY, GEORGIA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 Variance Budgeted Amounts with Final Original Final Actual Budget Expenditures: (Continued) Current: (Continued) Public safety: Coroner $ 137,300 $ 137,300 $ 131,838 $ 5,462 Drug squad 886, , ,000 56,726 Emergency management 75,885 75,885 63,388 12,497 Emergency medical services 4,461,450 4,461,450 4,251, ,925 Environmental control 635, , ,421 41,879 Jail 13,788,237 13,638,669 13,623,285 15,384 Sheriff's department 2,918,035 3,063,027 3,137,177 (74,150) Total public safety 22,902,357 22,902,357 22,634, ,723 Public works: Engineering 349, , ,437 3,563 Public works 2,025,325 2,025,325 1,991,872 33,453 Vehicle maintenance 360, , ,901 34,149 Total public works 2,734,375 2,734,375 2,663,210 71,165 Health and welfare: Department of Family and Children Services 124, ,860 99,484 25,376 Health services 2,985,619 2,985,619 3,611,199 (625,580) Total health and welfare 3,110,479 3,110,479 3,710,683 (600,204) Culture and recreation: Library 2,857,350 2,857,350 2,652, ,089 Total culture and recreation 2,857,350 2,857,350 2,652, ,089 Housing and development: Agricultural services 119, ,025 80,265 38,760 Community development 674, , ,955 31,331 Natural resources 24,300 24,300 15,348 8,952 Small and disadvantaged business 297, , ,533 23,867 Total housing and development 1,115,011 1,115,011 1,012, ,910 (Continued) Total expenditures 47,535,304 47,535,304 46,425,775 1,109,529 Excess (deficiency) of revenues over (under) expenditures 300, ,000 (2,334,386) (2,634,386) 24

75 DOUGHERTY COUNTY, GEORGIA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 Variance Budgeted Amounts with Final Original Final Actual Budget Other financing sources (uses): Proceeds from sale of assets $ - $ - $ 9,136 $ 9,136 Transfers in ,429 13,429 Transfers out (300,000) (300,000) (300,000) - Total other financing sources (uses) (300,000) (300,000) (277,435) 22,565 Net change in fund balances - - (2,611,821) (2,611,821) Fund balance, beginning of year 17,438,875 17,438,875 17,438,875 - Fund balance, end of year $ 17,438,875 $ 17,438,875 $ 14,827,054 $ (2,611,821) The accompanying notes are an integral part of these financial statements. 25

76 DOUGHERTY COUNTY, GEORGIA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2009 Major Enterprise Internal Service Funds Fund Workers' Self Solid Waste Compensation Insurance ASSETS Fund Fund Fund CURRENT ASSETS Cash and cash equivalents $ 824,026 $ 244,720 $ 3,173 Investments 5,446, ,963 - Accounts receivable, net of allowances 341, Inventories 2, Total current assets 6,614, ,683 3,173 NONCURRENT ASSETS Capital assets: Nondepreciable 2,309, Depreciable, net of accumulated depreciation 7,698, Total noncurrent assets 10,008, Total assets 16,622, ,683 3,173 LIABILITIES CURRENT LIABILITIES Accounts payable ,226 Accrued expenses - 513, ,000 Due to other funds 52, , ,609 Current portion - compensated absences 30, Total current liabilities 83, , ,835 LONG-TERM LIABILITIES Compensated absences, net of current portion 63, Accrued landfill closure/postclosure care costs 3,877, Total long-term liabilities 3,941, Total liabilities 4,024, , ,835 NET ASSETS (DEFICIT) Invested in capital assets 10,008, Unrestricted 2,589, ,588 (796,662) Total net assets $ 12,598,165 $ 170,588 $ (796,662) The accompanying notes are an integral part of these financial statements. 26

77 DOUGHERTY COUNTY, GEORGIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Major Enterprise Internal Service Funds Fund Workers' Self Solid Waste Fund Compensation Fund Insurance Fund OPERATING REVENUES Charges for services $ 2,700,202 $ 600,000 $ 4,467,705 Miscellaneous 33, ,110 - Total operating revenues 2,734, ,110 4,467,705 OPERATING EXPENSES Salaries and benefits 860, Cost of sales and services 598, ,850 4,510 Supplies 390, Claims - 504,622 4,280,334 Insurance - 65, ,523 Closure/Post-closure care cost (1,240,132) - - Depreciation 967, Total operating expenses 1,576, ,273 5,264,367 Operating income (loss) 1,157,399 (112,163) (796,662) NONOPERATING INCOME Interest income 73,236 6,945 - Gain on sale of assets 3, Total nonoperating income 76,904 6,945 - Change in net assets 1,234,303 (105,218) (796,662) NET ASSETS, beginning of year 11,363, ,806 - NET ASSETS (DEFICIT), end of year $ 12,598,165 $ 170,588 $ (796,662) The accompanying notes are an integral part of these financial statements. 27

78 DOUGHERTY COUNTY, GEORGIA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Major Enterprise Internal Service Funds Fund Workers' Self Solid Waste Fund Compensation Fund Insurance Fund CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 2,772,470 $ 854,799 $ 4,576,314 Payments to suppliers (1,071,782) (326,651) (847,807) Payments for insurance claims - (281,254) (3,725,334) Payments to employees (877,521) - - Net cash provided by operating activities 823, ,894 3,173 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (417,722) - - Proceeds from sale of capital assets 3, Net cash used in capital and related financing activities (414,054) - - CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (325,830) (117,013) - Interest on investments 73,236 6,945 - Net cash used in investing activities (252,594) (110,068) - Net increase in cash and cash equivalents 156, ,826 3,173 Cash and cash equivalents: Beginning of year 667, ,894 - End of year $ 824,026 $ 244,720 $ 3,173 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) $ 1,157,399 $ (112,163) $ (796,662) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation expense 967, Landfill closure/postclosure care expense (1,240,131) - - Increase in accounts receivable (4,035) - - Decrease in inventory 12, Increase (decrease) in accounts payable (95,749) - 136,226 Increase (decrease) in accrued expenses (13,105) 223, ,000 Decrease in due to other funds 42, , ,609 Decrease in compensated absences (4,129) - - Net cash provided by operating activities $ 823,167 $ 246,894 $ 3,173 The accompanying notes are an integral part of these financial statements. 28

79 DOUGHERTY COUNTY, GEORGIA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2009 Employee Agency Retirement ASSETS Funds Plan Cash $ 2,131,506 $ 2,091,418 Investments, at fair value: U.S. Government securities - 3,621,685 Corporate bonds - 1,522,263 Common stock - 15,281,900 Mutual funds - 5,146,022 Accounts receivable - 4,869 Accrued dividends Taxes receivable 3,751,044 - Prepaid expenses - 33,641 Total assets $ 5,882,550 $ 27,702,384 LIABILITIES Due to others $ 2,131,506 $ - Uncollected taxes 3,751,044 - Total liabilities 5,882,550 - NET ASSETS Held in trust for pension benefits (a schedule of funding progress is presented as required supplementary information on page 59) $ - $ 27,702,384 The accompanying notes are an integral part of these financial statements. 29

80 DOUGHERTY COUNTY, GEORGIA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 ADDITIONS Employee Retirement Plan Contributions: Employer $ 2,103,475 Other receipts 12,147 Total contributions 2,115,622 Investment earnings Dividend income 20,835 Net decrease in fair value of investments (5,261,049) Less investment expenses (177,576) Net investment earnings (5,417,790) Total additions (3,302,168) DEDUCTIONS Benefits 1,612,159 Administrative expenses 65,005 Total deductions 1,677,164 Change in net assets (4,979,332) NET ASSETS, beginning of year 32,681,716 NET ASSETS, end of year $ 27,702,384 The accompanying notes are an integral part of these financial statements. 30

81 DOUGHERTY COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of Dougherty County, Georgia (the County ) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the County's accounting policies are described below. A. Reporting Entity Dougherty County was incorporated in 1853 under the laws of the State of Georgia. The County operates under a commission-administrator form of government, and provides the following services: public safety (police and fire), highways and streets, landfill, courts and sheriff s department, health and social services, public improvements, planning and zoning, and general administrative services. As required by accounting principles generally accepted in the United States of America, the financial statements of the reporting entity include those of Dougherty County, Georgia (the primary government ) and its component unit. The component unit discussed below is included in the County s reporting entity because of the significance of its operational or financial relationship with the County. In conformity with accounting principles generally accepted in the United States of America, as set forth in Governmental Accounting Standards Board Statement No. 14, The Financial Reporting Entity", the financial statements of the component unit are discretely presented in the government-wide financial statements. Discretely Presented Component Units The Dougherty County Board of Health (the Board of Health ) is governed by a seven-member board consisting of four members appointed by the County Commissioners. The County has the authority to modify and approve the Board of Health s budget and the ability to approve environmental health service fees. The Board of Health has a June 30 th year-end. The Board of Health s financial statements can be obtained by writing to the Dougherty County Board of Health, P.O. Box 3048, Albany, Georgia

82 NOTES TO FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the non-fiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and the fiduciary fund financial statements, although the agency funds have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 32

83 NOTES TO FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the County considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, intergovernmental income, licenses, and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the County. The County reports the following major governmental funds: The General Fund is the County s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The DHR Building Lease Fund is a capital projects fund used to account for the receipt of rental funds from the Georgia Department of Human Resources (DHR) that are used to amortize debt incurred in the construction of a DHR building in Albany, Georgia. The Capital Improvement Fund is a capital projects fund used to account for the receipt of property taxes and other funds to be used for capital projects of the County. The 2005 One Percent Sales Tax Fund is a capital projects fund used to account for the County s receipt and expenditure of special purpose sales tax from the 2005 sales tax referendum. 33

84 NOTES TO FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Basis of Presentation (Continued) The County reports the following major proprietary fund: The Solid Waste Fund is used to account for the operation, maintenance, and development of the County landfill and disposal sites. Additionally, the County reports the following fund types: The special revenue funds account for specific revenues that are legally restricted to expenditure for particular purposes. The internal service fund accounts for a self-insured program for health insurance and workers' compensation. These Funds were created to accommodate the payment of claims and administrative expenses for the self-insured programs. The employee retirement plan trust fund accounts for all activities of the County s defined benefit pension plan. The agency funds are used to account for the collection and disbursement of monies by the County on behalf of other governments and individuals, such as cash bonds, traffic fines, support payments and ad valorem and property taxes. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent privatesector guidance for their business-type activities and enterprise funds, subject to this same limitation. The County has elected not to follow subsequent private-sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the County s solid waste function and various other functions of the County. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. 34

85 NOTES TO FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Basis of Presentation (Continued) Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services provided. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the County s policy to use restricted resources first, then unrestricted resources as they are needed. D. Deposits and Investments The County considers highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. State statutes authorize the County to invest in obligations of the State of Georgia or other states, obligations issued by the U.S. Government, obligations fully insured or guaranteed by the U.S. Government or by a government agency of the United States, prime bankers acceptances, the local government investment pool established by state law, repurchase agreements, and obligations of other political subdivisions of the State of Georgia. The Defined Benefit Pension Plan may also invest in equities, corporate bonds and U.S. government securities. Cash in excess of current requirements is invested in the State of Georgia s Local Government Investment Pool (Georgia Fund 1). Georgia Fund 1, created by OCGA , is a stable net asset value investment pool which follows Standard & Poor s criteria for AAAm rated money market funds and is regulated by the Georgia Office of Treasury and Fiscal Services. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool s primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings net of management fees on a monthly basis and determines participants' shares sold and redeemed based on $1.00 per share. 35

86 NOTES TO FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. For the most part, the effect of interfund activity has been removed from the government-wide statement of net assets. Any residual balances outstanding between the governmental and business-type activities are reported in the government-wide statement of net assets as internal balances. In the major fund balance sheets, these receivables and payables are classified as due from other funds and due to other funds. F. Inventories Inventories consist of supplies. Inventories are valued at cost, which approximates market, using the first-in, first-out (FIFO) method. The consumption method is used to account for inventories. Under the consumption method, inventory items are recognized as expenditures when used. G. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. In accordance with GASB 34, infrastructure assets acquired after June 30, 1980 have been capitalized. Capital assets are defined by the County as assets with an initial, individual cost of $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend useful lives are expensed as incurred. Capital assets are depreciated using the straight line method over the following useful lives: Asset Category Years Infrastructure 30 Buildings 50 Building improvements 20 Vehicles 2-15 Equipment

87 NOTES TO FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Compensated Absences County employees are entitled to certain compensated absences based on their length of employment. It is the County s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. Only employees with 15 or more years of service may be paid for sick leave benefits. All compensated absences are accrued when incurred in the government-wide, proprietary, and fiduciary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations or retirements. I. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight line method, which is not materially different from the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. J. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. K. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from these estimates. 37

88 NOTES TO FINANCIAL STATEMENTS NOTE 2. RECONCILIATION OF GOVERNMENT-WIDE FINANCIAL STATEMENTS AND FUND FINANCIAL STATEMENTS A. Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net assets The governmental fund balance sheet includes a reconciliation between fund balance total governmental funds and net assets governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains that long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. The details of this $15,120,855 difference are as follows: Capital leases $ (8,960,000) Accrued interest (20,559) Certificates of participation (3,051,000) Compensated absences (3,089,296) Net adjustment to reduce fund balance - total governmental funds to arrive at net assets - governmental activities $ (15,120,855) B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their useful lives and reported as depreciation expense. The details of this $132,636 difference are as follows: Capital outlay $ 4,188,498 Depreciation expense (4,321,134) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ (132,636) 38

89 NOTES TO FINANCIAL STATEMENTS NOTE 2. RECONCILIATION OF GOVERNMENT-WIDE FINANCIAL STATEMENTS AND FUND FINANCIAL STATEMENTS (CONTINUED) B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities (Continued) Another element of the reconciliation states that The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase net assets. The details of this $191,292 difference are as follows: Donations of capital assets increase net assets in the statement of activities, but do not appear in the governmental funds because they are not financial resources. $ 17,099 In the statement of activities, only the gain or loss on the sale of capital assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balance by the net book value of the capital assets sold. (208,391) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ (191,292) Another element of that reconciliation explains that Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. The details of this $794,727 difference are as follows: Deferred property tax revenue $ (361,907) Deferred sales tax revenue 1,156,634 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 794,727 39

90 NOTES TO FINANCIAL STATEMENTS NOTE 2. RECONCILIATION OF GOVERNMENT-WIDE FINANCIAL STATEMENTS AND FUND FINANCIAL STATEMENTS (CONTINUED) B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities (Continued) Another element of that reconciliation explains that Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. The details of this $2,185,478 difference are as follows: Compensated absences $ (32,969) Net pension obligation (63,817) Net OPEB obligation (2,361,623) Accrued interest 272,931 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ (2,185,478) NOTE 3. BUDGETS AND BUDGETARY ACCOUNTING Budget Policies Formal budgetary accounting is employed as a management control device for all funds of the County. Annual operating budgets are adopted each fiscal year through passage of an annual budget ordinance and amended as required for all governmental funds. The GAAP basis of accounting is used in preparing the budgets of all budgeted funds. The GAAP basis of accounting is used to reflect actual revenues and expenditures/expenses recognized which is not consistent with accounting principles generally accepted in the United States of America. Budgets for Capital Project Funds are adopted on a project basis, spanning more than one fiscal year. Budgetary control is exercised at the departmental level or by projects. Budget Process The County distributes budget forms to all department managers for their preparation and the requests are submitted to the Finance Director. The department budgets are formed during the various work sessions that include the department managers, elected officials, the Finance Director, and the County Administrator. The budget is next presented to the Finance Committee of the County Commission and work sessions are held where a formal budget is prepared. The formal budget is presented to the County Commission and a public hearing is conducted. One week after the public hearing, the final budget is adopted by the County Commission. All annual budget appropriations, except project budgets, lapse at the end of the year. 40

91 NOTES TO FINANCIAL STATEMENTS NOTE 3. BUDGETS AND BUDGETARY ACCOUNTING (CONTINUED) Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by Dougherty County. Excess of Expenditures over Appropriations For the year ended June 30, 2009, expenditures exceeded budget, as follows: Department Excess General Fund: Sheriff's department 74,150 Health services 625,580 These overexpenditures were funded by greater than anticipated revenues and underexpenditures in other departments of the General Fund. NOTE 4. DEPOSITS AND INVESTMENTS At June 30, 2009, the County had the following investments Investment Maturities (in Years) Investment Type Fair Value Less than Rating Government bonds $ 3,621,685 $ - $ 44,862 $ 617,501 $ 453,212 $ 45,587 $ 606,532 $ 1,853,991 $ - $ - AAA Common stock 15,281,900 N/A N/A Mutual funds 5,146,022 N/A N/A Corporate bonds 614,871 7, , ,666 64,339 31,901 89, ,073 32,918 - AAA Corporate bonds 17,768-17, AA+ Corporate bonds 135,405-21,300 67,255 18, ,777 1,037 - AA Corporate bonds 108,717 3,649 27,250 17, ,750 54, AA- Corporate bonds 80,731-34,106 41, ,781-2,094 A+ Corporate bonds 78,009-29,639 36,101-3,640-5,614 3,015 - A Corporate bonds 79,469-25,327 32, ,084 19, A- Corporate bonds 137,334 7,831 84,780 21, , BBB+ Corporate bonds 97,926-58,792 29, ,822 3, BBB Corporate bonds 42,190-5,443 29, , BBB- Corporate bonds 1, , BB+ Corporate bonds 21,629-18,059 3, BB Corporate bonds 80, ,384 18,777 7,260 B+ Corporate bonds 21, ,864 16,454 - B Corporate bonds 4, , CC Certificates of deposit 230, , N/A Guar. Inv. Contract 2,969, ,969, AA- Georgia Fund 1 45,371,481 45,371, AAAm Total fair value $ 74,143,251 $ 45,620,993 $ 470,545 $ 1,012,487 $ 540,735 $ 3,050,325 $ 713,037 $ 2,225,652 $ 72,201 $ 9,354 Of the investments listed above, the certificates of deposit, guaranteed investment contract and Georgia Fund 1, which total $48,593,470 are included as investments on the Statement of Activities. All other investments are included in the Employee Retirement Plan Fund. 41

92 NOTES TO FINANCIAL STATEMENTS NOTE 4. DEPOSITS AND INVESTMENTS (CONTINUED) Interest Rate Risk. The County does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. State statutes authorize the County to invest in obligations of the State of Georgia or other states; obligations issued by the U.S. government; obligations fully insured or guaranteed by the U.S. government or by a government agency of the United States; obligations of any corporation of the U.S. government; prime bankers acceptances; the local government investment pool established by state law; repurchase agreements; and obligations of other political subdivisions of the State of Georgia. Custodial Credit Risk Deposits. Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the County will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. State statutes require all deposits and investments (other than federal or state government instruments) to be collateralized by depository insurance, obligations of the U.S. government, or bonds of public authorities, counties, or municipalities. As of June 30, 2009, the County had no uncollateralized deposits. Custodial Credit Risk Investments. Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State statutes require all investments (other than federal or state government instruments) to be collateralized by depository insurance, obligations of the U.S. government, or bonds of public authorities, counties, or municipalities. Interest Rate Risk Dougherty County Health Department. The Health Department does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Custodial Credit Risk Deposits Dougherty County Health Department. Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the Health Department will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. State statutes require all deposits and investments (other than federal or state government instruments) to be collateralized by depository insurance, obligations of the U.S. government, or bonds of public authorities, counties, or municipalities. As of June 30, 2009, the Health Department did not have any balances exposed to custodial credit risk as uninsured and uncollateralized as defined by GASB pronouncements. 42

93 NOTES TO FINANCIAL STATEMENTS NOTE 5. RECEIVABLES Receivables at June 30, 2009, for the County s individual major and nonmajor funds in the aggregate are as follows: DHR Building 2005 General Lease Fund Sales Tax Receivables: Taxes $ 1,283,570 $ - $ 2,248,651 Accounts 3,329, Notes - 8,627,838 - Gross receivables 4,612,693 8,627,838 2,248,651 Less allowance for uncollectibles (2,452,600) - - Net receivables $ 2,160,093 $ 8,627,838 $ 2,248,651 Nonmajor and Other Solid Funds Waste Total Receivables: Taxes $ 75,352 $ - $ 3,607,573 Accounts - 449,264 3,778,387 Notes - - 8,627,838 Gross receivables 75, ,264 16,013,798 Less allowance for uncollectibles - (107,837) (2,560,437) Net receivables $ 75,352 $ 341,427 $ 13,453,361 Property taxes were levied on July 21, Bills are payable on or before December 20, 2008, after which the applicable property is subject to lien and penalties and interest as assessed. The County bills and collects its own property taxes. Property taxes levied for 2008 are recorded as receivables, net of estimated uncollectibles. The net receivables collected during the year ended June 30, 2009, and collected by August 31, 2009, are recognized as revenues in the year ended June 30, Net receivables estimated to be collected subsequent to August 31, 2009 are recorded as revenue when received. Prior year levies were recorded using substantially the same principles, and remaining receivables are reevaluated annually. Property taxes attached as an enforceable lien on property as of January 1, Notes receivable of $8,627,838 represent the amount due from the Georgia Department of Human Resources (DHR) for the lease of the Albany Department of Human Resources building. Rental payments received are used to repay the County s debt obligation for this building. 43

94 NOTES TO FINANCIAL STATEMENTS NOTE 6. CAPITAL ASSETS A. Primary Government Capital asset activity for the year ended June 30, 2009, was as follows: Beginning Ending Balance Increases Decreases Transfers Balance Governmental Activities: Capital assets, not being depreciated: Land and improvements $ 34,950,635 $ 736,733 $ - $ - $ 35,687,368 Construction in progress 2,121,775 2,228, ,350,073 Total capital assets, not being depreciated 37,072,410 2,965, ,037,441 Capital assets, being depreciated: Buildings 86,630, ,630,208 Infrastructure 77,703, ,703,894 Vehicles 8,935, ,692 (1,076,274) 367,216 8,830,419 Equipment 3,664, ,874 (5,911) (445,099) 3,849,968 Total capital assets, being depreciated 176,933,991 1,240,566 (1,082,185) (77,883) 177,014,489 Less accumulated depreciation for: Buildings (14,863,375) (1,496,017) - - (16,359,392) Infrastructure (44,525,090) (1,524,836) - - (46,049,926) Vehicles (3,886,423) (791,176) 521, ,008 (3,990,651) Equipment (2,513,807) (509,105) 351,854 (87,125) (2,758,183) Total accumulated depreciation (65,788,695) (4,321,134) 873,794 77,883 (69,158,152) Total capital assets, being depreciated, net 111,145,296 (3,080,568) (208,391) - 107,856,337 Governmental activities capital assets, net $ 148,217,706 $ (115,537) $ (208,391) $ - $ 147,893,778 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 470,540 Judicial 939,589 Public safety 13,390 Public works 385,383 Health and welfare 164,264 Culture and recreation 1,107,608 Housing and development 1,240,360 Total depreciation expense - governmental activities $ 4,321,134 44

95 NOTES TO FINANCIAL STATEMENTS NOTE 6. CAPITAL ASSETS (CONTINUED) A. Primary Government (Continued) Beginning Ending Balance Increases Decreases Transfers Balance Business-type Activities: Capital assets, not being depreciated: Land $ 2,064,045 $ - $ - $ - $ 2,064,045 Construction in progress 196, ,356 - (63,644) 245,616 Total capital assets, not being depreciated 2,260, ,356 - (63,644) 2,309,661 Capital assets, being depreciated: Building and improvements 11,211, ,397-63,644 11,449,395 Equipment and vehicles 4,619, ,969 (26,443) 77,893 4,801,466 Total 15,830, ,366 (26,443) 141,537 16,250,861 Less accumulated depreciation for: Building and improvements (4,847,160) (349,920) - - (5,197,080) Equipment and vehicles (2,685,541) (617,987) 26,443 (77,893) (3,354,978) Total (7,532,701) (967,907) 26,443 (77,893) (8,552,058) Total capital assets, being depreciated, net 8,297,700 (662,541) - 63,644 7,698,803 Business-type activities capital assets, net $ 10,558,649 $ (550,185) $ - $ - $ 10,008,464 B. Discretely Presented Component Unit Department of Public Health Beginning Ending Balance Increases Decreases Balance Capital assets, being depreciated: Machinery and equipment $ 364,145 $ - $ - $ 364,145 Total capital assets, being depreciated 364, ,145 Less accumulated depreciation for: Machinery and equipment (305,871) (15,862) - (321,733) Total accumulated depreciation (305,871) (15,862) - (321,733) Total capital assets, net $ 58,274 $ (15,862) $ - $ 42,412 45

96 NOTES TO FINANCIAL STATEMENTS NOTE 7. LONG-TERM DEBT The following is a summary of long-term debt activity for the year ended June 30, 2009: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: Capital leases payable $ 9,900,000 $ - $ (940,000) $ 8,960,000 $ 1,015,000 Certificates of participation 3,051, ,051,000 - Compensated absences 3,056,327 2,259,870 (2,226,901) 3,089, ,296 Governmental activities long-term liabilities $ 16,007,327 $ 2,259,870 $ (3,166,901) $ 15,100,296 $ 1,943,296 Business-type activities: Landfill closure/ postclosure cost $ 5,117,657 $ - $ (1,240,131) $ 3,877,526 $ - Compensated absences 98,452 65,380 (69,509) 94,323 30,560 Business-type activities long-term liabilities $ 5,216,109 $ 65,380 $ (1,309,640) $ 3,971,849 $ 30,560 For governmental funds, compensated absences are liquidated by the General Fund. The capital lease debt is normally paid by the Building Fund and the Capital Projects Fund. Capital Leases. The County has entered into a lease agreement as lessee for a building with a purchase price of $14,720,000. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of its future minimum lease payments as of the inception date. The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2009, were as follows: Year ending Governmental June 30, Activities 2010 $ 1,482, ,516, ,539, ,566, ,596, ,141,640 Total minimum lease payments 10,843,075 Less: amount representing interest (1,883,075) Present value minimum lease payments $ 8,960,000 46

97 NOTES TO FINANCIAL STATEMENTS NOTE 7. LONG-TERM DEBT (CONTINUED) Certificates of participation. In June 1998, the County entered into a lease pool agreement with the Georgia Municipal Association (the Association ). The funding of the lease pool was provided by the issuance of $150,126,000 Certificates of Participation by the Association. The Association passed the net proceeds through to the participating governments with the County participation totaling $4,333,000. The lease pool agreement with the Association provides that the County owns their portion of the assets invested by the pool and is responsible for the payment of their portion of the principal and interest of the Certificates of Participation. During the fiscal year ended June 30, 2008 the County repaid $1,282,000 of its original commitment. The principal of $3,051,000 is due in a lump sum payment on June 1, Interest is payable at a rate of 4.75% each year. The County draws from the investment to lease equipment from the Association. The lease pool agreement requires the County to make lease payments back into its investment account to fund the principal and interest requirements of the 1998 GMA Certificates of Participation. As part of the issuance of the certificates of participation, the County entered into an interest rate swap agreement. Under the Swap Agreement, the County is required to pay (1) a semi-annual (and beginning July 1, 2003, a monthly) floating rate of interest based on the TBMA Municipal Swap Index (plus a spread) to, or on behalf of, the Swap Counterparty (the Swap Payment ); and the Swap Counterparty will pay to, or on behalf of, the County a semi-annual payment based on a rate equal to the fixed rate on the Contract times a notional amount specified in the Swap Agreement, but generally equal to the outstanding unpaid principal portion of such Contract, less the amount originally deposited in the Reserve Fund relating to the Contract, and (ii) a one-time Swap Premium to be paid on the effective date of the Swap Agreement. The semi-annual payments from the Swap Counterparty with respect to the County are structured, and expected, to be sufficient to make all interest payments due under the Contract, and related distributions of interest on the Certificates. Under the Swap Agreement, the County s obligation to pay floating payments to the Swap Counterparty in any calendar year may not exceed an amount equal to the TBMA Municipal Swap Index plus 5% to be determined on the first business day of December in the preceding year. This agreement matures on June 1,

98 NOTES TO FINANCIAL STATEMENTS NOTE 7. LONG-TERM DEBT (CONTINUED) Annual debt service requirements are as follows: Principal Interest Total Fiscal Year Ending June 30, 2010 $ - $ 144,923 $ 144, , , , , , , , , , , , , ,051, ,692 3,630,692 Total capital assets, net $ 3,051,000 $ 2,753,537 $ 5,804,537 Landfill closure and postclosure care costs. State and federal laws and regulations require that Dougherty County, Georgia place a final cover on its landfill when closed and perform certain maintenance and monitoring functions at the landfill site for 30 years after closure. The amount of costs recognized in each period is based on the relative amount of waste received during the period, even though some of the closure and postclosure care costs will be paid after the landfill is closed. During the current year, the Dougherty County Fleming/Gaissert Rd Municipal Solid Waste Landfill ( DSL) was approved for a major modification of the landfill which consisted of available vertical expansion to cells 7-12 and the Construction and Demolition (C&D) areas. The $3,877,526 reported as an estimated liability for closure and postclosure care costs represents the estimated cost for landfill closure and postclosure care based upon the capacity of the landfill used to date. The amount of the remaining estimated cost for landfill closure and postclosure care of $14,813,369 will be recognized on a pro rata basis as the remaining estimated capacity of 9,454,517 cubic yards of useable space is filled. Approximately 26% of the landfill s capacity has been used to date, and the County expects the landfill to close the Municipal Solid Waste area in 2053 and the Construction and Demolition area in

99 NOTES TO FINANCIAL STATEMENTS NOTE 7. LONG-TERM DEBT (CONTINUED) Landfill closure and postclosure care costs (Continued) All amounts recognized are based on what it would cost to perform all closure and postclosure care in Actual costs may be higher due to inflation, changes in technology, or changes in regulations. It is anticipated that future inflation costs will be in part financed from earnings on investments. The remaining portion of anticipated future inflation costs (including inadequate earning on investments, if any) and additional costs that might arise from changes in postclosure requirements (due to changes in technology or more rigorous environmental regulations, for example), may need to be covered by charges to future landfill users, taxpayers, or both. The financial assurance requirements are being met through the proper maintenance of cash balances and financial ratios. NOTE 8. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2009, is as follows: Due to/from other funds: Receivable Fund Payable Fund Amount General Fund 2005 One Percent Sales Tax Fund $ 480,421 General Fund Solid Waste Fund 52,776 General Fund Capital Improvement Fund 75,340 General Fund DHR Building Fund 4,124 General Fund Nonmajor Governmental Funds 426,605 General Fund Internal Service Fund - Workers' Compensation 135,689 General Fund Internal Service Fund - Self Insurance 108,609 Nonmajor Governmental 2005 One Percent Sales Tax Fund 58,169 Nonmajor Governmental General Fund 41,570 $ 1,383,303 These balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. 49

100 NOTES TO FINANCIAL STATEMENTS NOTE 8. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Interfund transfers: Transfers Out Nonmajor General Governmental Transfers In Fund Funds Total General Fund $ - $ 13,429 $ 13,429 Nonmajor Governmental Funds 300, ,000 Total $ 300,000 $ 13,429 $ 313,429 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that the statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. NOTE 9. DEFINED BENEFIT PENSION PLAN Plan Description The Dougherty County Retirement Plan (the DCRP) is a single employer defined benefit pension plan administered by Silverstone Group, Inc. Pension assets are invested in A.G. Edwards Trust Collective Funds. The DCRP provides retirement, disability, and death benefits to plan members and beneficiaries. Section 9.01 of the DCRP adopted by the Dougherty County Board of Commissioners gives the Board the right to amend the provisions of the plan. The DCRP s obligations to funding are provided within the Georgia State Code. Separate publicly available financial statements are not issued for the DCRP. 50

101 NOTES TO FINANCIAL STATEMENTS NOTE 9. DEFINED BENEFIT PENSION PLAN (CONTINUED) All employees who are employed on a basis to work 1,000 hours or more per year, and who, as of the plan anniversary date have been employed for six months or longer, are eligible to participate in the plan. Participants normal retirement date is the first day of the month coinciding with or following the later of attainment of age 65 or completion of five years of plan participation. Early retirement can be elected by participants on the first day of the month coinciding with or next following age 55 with 15 years of service. Special early retirement is available to participants on the first day of the month coinciding with or next following age 55 with 25 years of service. A participant who retires under the normal retirement criteria will receive a monthly annuity equal to one-twelfth of the participant s years of benefit accrual service multiplied by 1.5% of average compensation, plus.25% of average compensation for each year of service prior to January 1, A participant that elects to retire under the early retirement criteria will receive a monthly annuity equal to the accrued benefit reduced by 5/12 of 1% per month for each of the first 120 months by which the early retirement date precedes the normal retirement date. Under the special early retirement criteria, the participant will receive a monthly annuity equal to the unreduced accrued benefit on the special early retirement date. The financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. The County s contributions are recognized when due and a formal commitment to provide the contributions has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. All plan investments are reported at fair value. Securities traded on a national exchange are valued at the last reported sales price on the County s balance sheet date. Securities without an established market value are reported at estimated fair value. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitation, if applicable Participant Data At July 1, 2009, the date of the most recent actuarial valuation, there were 867 participants as follows: Active participants 605 Retirees and beneficiaries 152 Vested terminated 107 Disabled

102 NOTES TO FINANCIAL STATEMENTS NOTE 9. DEFINED BENEFIT PENSION PLAN (CONTINUED) Funding Policy The County is required to contribute an actuarially determined amount annually to the DCRP. The current contribution rate is 5.4% of annual covered payroll. The contribution requirements are established and may be amended by the Dougherty County Board of Commissioners. Plan participants are not required to contribute to the plan. Annual Pension Cost and Net Pension Obligation The County s annual pension cost and net pension obligation for the pension plan for the current year is as follows: June 30, 2008 June 30, 2009 Derivation of Annual Pension Cost Annual Required Contribution $ 1,919,838 $ 2,165,728 Interest on Net Pension Obligation (668) 4,657 Amortization of Net Pension Obligation 975 (6,800) Annual Pension Cost $ 1,920,145 $ 2,163,585 Derivation of Net Pension Obligation Annual Pension Cost for Fiscal Year $ 2,163,585 Actual Contributions to Plan for Fiscal Year 2,096,768 Increase (Decrease) in Net Pension Obligation 66,817 Net Pension Obligation (Asset) as of June 30, ,801 Net Pension Obligation (Asset) as of June 30, 2009 $ 118,618 The annual required contribution for the current year was determined as part of the July 1, 2008 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions include the following: Annual Return on Invested Plan Assets 8.0% Projected Annual Salary Increases 4.0% Expected Annual Inflation 3.5% Actuarial Value of Assets Market Value Actuarial Funding Method Entry Age Normal Amortization Method Level Dollar Amount Remaining Amortization Period 15 52

103 NOTES TO FINANCIAL STATEMENTS NOTE 9. DEFINED BENEFIT PENSION PLAN (CONTINUED) Three year trend information for the Dougherty County Retirement Plan is as follows: Fiscal Year Ending Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation (Asset) 06/30/06 $ 2,005, % $ (84,196) 06/30/07 2,336, (11,446) 06/30/08 1,919, ,801 06/30/09 2,163, ,618 An analysis of funding progress for the fiscal year ending June 30, 2009 is as follows: Unfunded Actuarial Accrued Unfunded Liability as Actuarial Actuarial Actuarial Actuarial a Percentage Valuation Value of Accrued Accrued Funded Covered of Covered Date Assets Liability Liability Ratio Payroll Payroll 7/1/2009 $ 34,585,554 $ 42,714,485 $ 8,128, % $ 22,347, % NOTE 10. DEFINED CONTRIBUTION PLAN The County s defined contribution plans include the (1) Nationwide Retirement Solutions, Inc. Plan, administered by Nationwide, and (2) the ACCG Deferred Compensation Program, administered by the Government Employee Benefits Corporation of Georgia. Both plans are 457 deferred compensation agreements. The Plans were adopted by the Dougherty County Board of Commissioner s passing of resolutions. Amendments to the Plans are also under the control of the Board of Commissioners. Employer contributions are established by the County Commissioners and the allowable employee contributions are established by the Internal Revenue Service limits. The County contributes 5% of the gross wages to a 457 plan for all department managers. All employees may contribute amounts up to the annual ceiling established by the Internal Revenue Service. All contributions vest at the time they are made. All employees are eligible to participate in the Plans. The fiscal year contributions made under the Plans were as follows: 457 Plan Name Employer Employee Nationwide Retirement Solutions $ 26,872 $ 431,167 ACCG Deferred Compensation Program 18, ,751 53

104 NOTES TO FINANCIAL STATEMENTS NOTE 11. RISK MANAGEMENT The County is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. These risks are covered by commercial insurance purchased from independent third parties. The General Fund is used to account for the employee life, health, property and liability, unemployment and disability insurance programs of the County. The County retains the risk of loss for workers compensation up to the reinsurance amount of $325,000, and maintains an internal service fund (the Workers Compensation Fund) to account for these activities. There have been no significant reductions of insurance coverage from coverage in the prior year, and settlement amounts have not exceeded insurance coverage for the current year or the three prior years. The County records an estimated liability for indemnity workers compensation claims against the County. Claim liabilities are based on estimates of the ultimate cost of reported claims (including future claim adjustment expenses). Claims liabilities include specific, incremental claim adjustment expenses and allocated loss adjustment expenses. Because all workers' compensation claims are expected to be settled within one year, the related unpaid claims liability is not discounted. Changes in the balances of claims liabilities during the last two years ended June 30, are as follows: June 30, 2009 June 30, 2008 Unpaid claims, beginning of fiscal year $ 290,038 $ 94,632 Incurred claims and changes in estimates 504, ,960 Claim payments (281,254) (406,554) Unpaid claims, end of fiscal year $ 513,406 $ 290,038 The County maintains a self-insured medical benefit plan for their employees. The plan is accounted for as an internal service fund of the County, is funded according to plan experience, and serves to reduce overall healthcare costs of the County and their employees. The County purchases specific and aggregate stop loss insurance coverage to protect itself in unusual circumstances. Claims payable at June 30, 2009 were estimated based on the loss analysis report provided by a third-party administrator and pending specific stop loss reimbursements. 54

105 NOTES TO FINANCIAL STATEMENTS NOTE 11. RISK MANAGEMENT (CONTINUED) Changes in medical claims payable for the years ended June 30 are as follows: June 30, 2009 June 30, 2008 Unpaid claims, beginning of fiscal year $ - $ - Incurred claims and changes in estimates 5,159,857 - Claim payments (4,604,857) - Unpaid claims, end of fiscal year $ 555,000 $ - NOTE 12. COMMITMENTS AND CONTINGENCIES Litigation: The County is involved in several pending lawsuits. Liability, if any, which might result from these proceedings, would not, in the opinion of management and legal counsel, have a material adverse effect on the financial position of the County. Grant Contingencies: The County has received Federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to the disallowance of certain expenditures previously reimbursed by those agencies. Based upon prior experience, County management believes such disallowances, if any, will not be significant. Construction: As of June 30, 2009, the County has the following commitments with respect to unfinished capital projects: Capital Project Remaining Construction Commitment Expected Date Of Completion Radium Springs Improvement Project Phase I $ 72,500 November 30, 2009 Radium Springs Botanical Garden 830,271 December 31, 2009 NW Library Renovations/Relocation 1,242,888 October 31, 2009 NW Library Renovations/Relocation 164,450 July 31, 2009 Public Works Building 51,060 January 31, 2011 $ 2,361,169 55

106 NOTES TO FINANCIAL STATEMENTS NOTE 13. JOINT VENTURES Under Georgia law, the County, in conjunction with other cities and counties in the Southwest Georgia area, is a member of the Southwest Georgia Regional Development Center (RDC) and is required to pay annual dues thereto. During the year ended June 30, 2009, the County paid $47,362 in such dues. Membership in the RDC is required by the Official Code of Georgia Annotated (OCGA) Section which provides for the organizational structure of regional development commissions in Georgia. The RDC Board membership includes the chief elected official of each county and municipality of the area. OCGA provides that the member governments are liable for any debts or obligations of a regional development commission. Separate financial statements may be obtained from Southwest Georgia Regional Development Center, 30 West Broad Street, Camilla, Georgia NOTE 14. OTHER POSTEMPLOYMENT BENEFITS The County offers post employment benefits other than pension benefits as follows: (1) health insurance, (2) dental insurance, and (3) life insurance. Employee groups that are covered include: Classified Employees that work a minimum of 40 hours per week Classified part-time Employees that work a minimum of 29 hours per week Unclassified Elected or appointed officials An individual must be 55 with at least 15 years or 65 with at least five years of service in order to be eligible for these benefits. Employer and employee obligations to contribute are as follows: Eligible Participants County Retiree Health insurance 67 50% 50% Dental insurance % Life insurance % 25% The County Commissioners adopted, by resolution, a health plan document (known as the Dougherty County Group Health Plan). The dental and life insurance benefits are offered by motion of the Dougherty County Board of Commissioners. Funding for these benefits is annually appropriated in the County s budget. 56

107 NOTES TO FINANCIAL STATEMENTS NOTE 14. OTHER POSTEMPLOYMENT BENEFITS (CONTINUED) Annual OPEB Cost and Net OPEB Obligation The County contributed $166,877 and retirees contributed $178,054 to the OPEB Plan in the year ended June 30, The annual required contribution amount is determined using actuarial methods and assumptions approved by the Commission. The Commission establishes and may amend the funding policy for the OPEB Plan. Annual required contribution $ 2,706,554 Annual pension cost 2,706,554 Contributions for period ending June 30, ,931 Increase in net OPEB obligation 2,361,623 Net OPEB obligation beginning of year - Net OPEB obligation end of year $ 2,361,623 Trend Information Fiscal Year Annual OPEB Percentage of Net OPEB Ending Cost (APC) APC Contributed Obligation 6/30/2009 $ 2,706,554 13% $ 2,361,623 As of the most recent valuation date, July 1, 2007, the funded status of the OPEB Plan is as follows: Schedule of Funding Progress Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liability Unfunded Actuarial Accrued Liability Funded Ratio Annual Covered Payroll Unfunded Actuarial Accrued Liability as a Percentage of 7/1/2008 $ - $ 27,627,658 $ 27,627,658 0% $ 20,767, % The required schedule of funding progress immediately following the notes to the financial statements presents multiyear trend information about whether the actuarial value of plan net assets is increasing or decreasing over time relative to the actuarial accrued liability. 57

108 NOTES TO FINANCIAL STATEMENTS NOTE 14. OTHER POSTEMPLOYMENT BENEFITS (CONTINUED) Actuarial Assumptions Actuarial valuations involve estimates of the value of reported amount and assumptions about the probability of events far into the future, and actuarially determined amounts are subject to continued revision as results are compared to past expectations and new estimates are made about the future. Actuarial calculations reflect a long-term perspective. Calculations are based on the plan in effect at July 1, The assumptions used in the July 1, 2007 actuarial valuation are as follows: Valuation date July 1, 2007 Actuarial cost method Entry Age Normal Amoritzation method Level Percent of Pay Amortization period 30 years Asset valuation method Market Value Actuarial assumptions: Investment rate of return (includes inflation) 5.00% Projected salary increases (includes inflation) 4.00% NOTE 15. PRIOR PERIOD ADJUSTMENT The County has determined that a restatement of net assets is required to properly eliminate a notes receivable balance in accordance with FASB 13 in the June 30, 2008 financial report. The restatement is as follows: Governmental Activities Net assets as previously reported $ 190,579,913 Adjustment needed to properly eliminate a note receivable (9,609,184) Net assets as restated $ 180,970,729 NOTE 16. DEFICIT FUND BALANCES / NET ASSETS The Self Insurance reported a deficit net asset of $696,662 for June 30, The Self Insurance deficit is intended to be eliminated through increased charges to other funds. 58

109 REQUIRED SUPPLEMENTARY INFORMATION DEFINED BENEFIT RETIREMENT PLAN SCHEDULE OF FUNDING PROGRESS Unfunded Actuarial Accrued Unfunded Liability as Actuarial Actuarial Actuarial Actuarial a Percentage Valuation Value of Accrued Accrued Funded Covered of Covered Date Assets Liability Liability Ratio Payroll Payroll 7/1/2009 $ 34,585,554 $ 42,714,485 $ 8,128, % $ 22,347, % 7/1/ ,042,809 39,846,752 4,803, ,259, /1/ ,873,079 36,728,212 3,855, ,887, /1/ ,472,059 34,288,994 8,816, ,994, /1/ ,546,191 30,580,325 7,034, ,156, /1/ ,316,874 28,060,084 5,743, ,763, SCHEDULE OF EMPLOYER CONTRIBUTIONS (1) (2) (3) (4) Percentage Annual Total Total Total of ARC Plan Required Employer Employee Contribution Contributed Year Contribution Contribution Contribution (2) + (3) (4) / (1) 2008 $ 2,163,585 $ 2,096,768 $ - $ 2,096, % ,919,838 1,853,591-1,853, ,336,743 2,263,993-2,263, ,005,392 2,089,588 58,348 2,147, ,818,783 1,818,783-1,818, ,700,005 1,700,005-1,700, ,569,278 1,569,278-1,569, ,286,654 1,286,654-1,286, ,000,697 1,000,697-1,000, Notes to the Schedule of Employer Contributions 1. The cost method used to determine the Annual Required Contribution is the Entry Age Normal Cost Method. 2. Economic assumptions are as follows: Investments return 8.0% per year; and Salary Scale 4.0% per year. 59

110 REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFIT PLAN SCHEDULE OF FUNDING PROGRESS Unfunded Actuarial Accrued Unfunded Liability as Actuarial Actuarial Actuarial Actuarial a Percentage Valuation Value of Accrued Accrued Funded Covered of Covered Date Assets Liability Liability Ratio Payroll Payroll 7/1/2007 $ - $ 27,627,658 $ 27,627,658 - % $ 20,767, % 60

111 NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special Tax District Fund is used to account for the receipts and expenditures of additional taxes from unincorporated areas to pay for police and fire protection. Confiscated Assets Fund is used to account for confiscated assets awarded to the County to be spent on law enforcement at the discretion of the Sheriff. Grant Fund is used to account for grant revenues and expenditures related to various short-term projects. Lease Commercial Property Fund is used to account for receipt of rent revenues from the East and West parking decks and five tenant retail spaces. Revenues will be used for the upkeep and maintenance of both parking decks and tenant retail spaces as needed. Law Library Fund is used to account for revenues generated through special filing charges in the County court system which are used to acquire and maintain library materials. Capital Projects Funds 1995 One Percent Sales Tax Fund is used to account for the County s receipt and expenditure of special purpose sales tax from the 1995 sales tax referendum. One Percent Sales Tax Road Projects Fund is used to account for road projects financed by a special purpose sales and use tax One Percent Sales Tax Fund is used to account for the County s receipt and expenditure of special purpose sales tax from the 1990 sales tax referendum One Percent Sales Tax Fund is used to account for the County s receipt and expenditure of special purpose sales tax from the 2000 sales tax referendum.

112 DOUGHERTY COUNTY, GEORGIA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2009 Special Revenue Lease Special Confiscated Commercial Law Tax District Assets Grant Property Library Cash and cash equivalents $ 255,737 $ 394,308 $ 106,896 $ 152,892 $ 129,005 Investments 908, ,703 Taxes receivable 75, Due from other funds Due from other governments ,406 4,167 - Total assets $ 1,239,234 $ 394,308 $ 180,302 $ 157,059 $ 359,708 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ - $ - $ 2,000 $ - $ 6,690 Due to other funds 79,051 14, ,956 23,964 6,383 Due to other governments - - 2, Deferred revenue , Total liabilities 79,051 14, ,302 23,964 13,073 FUND BALANCES Unreserved, undesignated 1,160, , , ,635 Total fund balances 1,160, , , ,635 Total liabilities and fund balances $ 1,239,234 $ 394,308 $ 180,302 $ 157,059 $ 359,708 61

113 Capital Projects 1995 One Percent One Percent Sales Tax - One Percent One Percent Sales Tax Road Projects Sales Tax Sales Tax Total $ 16,416 $ 121,135 $ 27,654 $ 71,575 $ 1,275,618 2,676,586 91,458 1,008,637 2,985,342 7,900, ,352 41, ,169 99, ,573 $ 2,734,572 $ 212,593 $ 1,036,291 $ 3,115,086 $ 9,429,153 $ - $ - $ - $ - $ 8, , , , , , , , ,641 2,734, ,424 1,031,292 2,965,460 8,963,512 2,734, ,424 1,031,292 2,965,460 8,963,512 $ 2,734,572 $ 212,593 $ 1,036,291 $ 3,115,086 $ 9,429,153 62

114 DOUGHERTY COUNTY, GEORGIA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Special Revenue Lease Special Confiscated Commercial Law Tax District Assets Grant Property Library Revenues: Property taxes $ 4,743,553 $ - $ - $ - $ - Other taxes 1,504, Licenses and permits 315, Intergovernmental , Charges for services 9, Fines and forfeitures - 54, ,779 Interest income 9,953 2, ,755 Other revenues 11, ,246 8,079 Total revenues 6,595,484 56, ,760 72, ,613 Expenditures: Current: General government 112, Judicial , ,141 Public safety 6,036, ,820 48, Public works 129, Culture and recreation 197,062-1, Housing and development 444, ,959 - Capital outlay Total expenditures 6,920, , ,751 50, ,141 Excess (deficiency) of revenues over (under) expenditures (325,387) (75,275) 168,009 21,821 (4,528) Other financing sources (uses): Proceeds from sale of assets 1, Transfers in 300, Transfers out - - (13,429) - - Total other financing sources (uses) 301,773 - (13,429) - - Net change in fund balances (23,614) (75,275) 154,580 21,821 (4,528) Fund balances, beginning of year 1,183, ,126 (154,580) 111, ,163 Fund balances, end of year $ 1,160,183 $ 379,851 $ - $ 133,095 $ 346,635 63

115 1995 One Percent One Percent Sales Tax - One Percent One Percent Sales Tax Road Projects Sales Tax Sales Tax Total $ - $ - $ - $ - $ 4,743, ,504, , , , ,949 41,486 2,125 13,747 60, , ,952 41,486 2,125 13,747 60,473 7,731, , , ,216, , , , , ,770 20, ,467 1,423, , ,770 20, ,467 9,251,886 (470,852) (109,645) (7,022) (717,994) (1,520,873) , , (13,429) ,344 (470,852) (109,645) (7,022) (717,994) (1,232,529) 3,205, ,069 1,038,314 3,683,454 10,196,041 $ 2,734,572 $ 212,424 $ 1,031,292 $ 2,965,460 $ 8,963,512 64

116 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF EXPENDITURES OF SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Expenditures Original Estimated Project Description Costs Costs Prior Years Current Year Total 1985 REFERENDUM Road Projects *** *** $ 55,793,364 $ 111,770 $ 55,905, REFERENDUM County Jail $ 31,379,437 $ 31,285,885 $ 31,264,850 $ 4,169 $ 31,269,019 County Mental Health 3,892,487 3,892,483 3,892,483-3,892,483 County Public Health 5,225,205 5,225,202 5,225,202-5,225,202 Industrial Parks 5,000,000 5,000,000 5,000,000-5,000,000 Central Square Building 3,750,530 3,750,530 3,750,530-3,750,530 Chehaw Park 6,000,000 6,000,000 6,000,000-6,000,000 Albany Street Lighting 2,500,000 2,500,000 1,577,552 16,600 1,594,152 Conference Center 4,700,000 5,157,565 5,155,391-5,155,391 Administrative 4,338,498 4,338,495 4,338,498-4,338,498 Totals $ 66,786,157 $ 67,150,160 $ 66,204,506 $ 20,769 $ 66,225, REFERENDUM City Street & Road Projects $ 10,000,000 $ 10,075,000 $ 9,858,852 $ - $ 9,858,852 County Street & Road Projects 5,000,000 5,652,343 5,652,343-5,652,343 Water & Sewer Extensions 8,000,000 10,698,078 10,679,969-10,679,969 Storm Drainage Improvements 15,200,000 15,123,948 13,556, ,424 14,061,671 Recycling Program 1,500, , , ,397 Geographic Information System 1,000,000 1,063,717 1,063,717-1,063,717 City Fire Stations & Equipment 2,500,000 2,500,000 2,499,876-2,499,876 County Fire Stations & Equipment 1,000,000 1,070,574 1,071,538-1,071,538 West EMS Station 1,000, , , ,439 Community Policing Centers 1,500,000 1,543,054 1,539,140-1,539,140 Courtroom Addition 3,500,000 4,101,338 4,108,858 (7,519) * 4,101,339 Emergency Operations Center 3,000,000 2,956,946 2,956,947-2,956,947 Downtown Improvements 2,500,000 8,213,104 7,867,895 14,430 7,882,325 Recreation Improvements 10,500,000 10,500,000 9,852,957-9,852,957 Agricultural Service Center 2,000,000 2,064,056 2,064,057-2,064,057 Industrial Speculative Building 750, , , ,313 Thronateeska Heritage Center 750, , , ,000 Third Floor Renovation ,137-21,137 Mt. Zion Civil Rights Museum 750, , , ,839 Government Center Debt 3,500,000 4,088,662 4,088,662-4,088,662 Administration/Disparity Study 500,000 1,084,298 1,084,298-1,084,298 Contingency - 2, Totals $ 74,450,000 $ 84,661,729 $ 81,386,478 $ 512,338 $ 81,898,816 * Represents a refund received from project developer for prior year SPLOST expenditures. *** Estimated costs are not budgeted by project or in total. Projects are approved according to need at least annually. 65

117 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF EXPENDITURES OF SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Expenditures Original Estimated Project Description Costs Costs Prior Years Current Year Total 2000 REFERENDUM Administrative $ 1,175,227 $ 8,612,153 $ 8,228,847 $ 6,144 $ 8,234,991 Albany River Walk 6,000,000 6,405,000 6,504, ,504,649 Chehaw Park Improvements 700, , , ,611 City Debt Retirement 8,611,094 7,023,979 7,023,979-7,023,979 City Street Improvements 6,500,000 6,525,000 6,474,677-6,474,677 City Traffic Safety 725, , , ,999 County Water Extensions 600, , , ,548 County EMS Station 500, , , ,811 Hugh Mills Stadium 1,170,000 1,204,434 1,204,434-1,204,434 Thronateeska Heritage 500, , ,325 7, ,045 Central Square 15,300,000 15,306,177 15,306,178-15,306,178 Economic Development 8,013,679 6,463,679 4,975, ,803 5,162,921 County Animal Shelter 700, , , ,991 City Law Enforcement Center 14,500,000 14,500,000 14,299,387 9,847 14,309,234 Storm Drainage Improvements 11,000,000 4,187,173 3,719,633 22,166 3,741,799 County Road Improvements 2,000,000 4,800,000 3,567, ,847 4,101,978 Public Safety GSP Building 500, , , ,179 City Fire Station 2,000,000 2,000,000 1,990,632 9,790 2,000,422 County Fire Equipment 500, , , ,679 Recreation Improvements 9,130,000 3,285,000 3,272, ,273,085 Albany First Tee Program 875, , , ,471 County Debt Retirement 30,000,000 30,000,000 30,131,767-30,131,767 Contingency - 31,544 (31,766) - (31,766) Totals $ 121,000,000 $ 116,244,217 $ 112,498,215 $ 778,467 $ 113,276,682 66

118 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF EXPENDITURES OF SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Expenditures Original Estimated Project Description Costs Costs Prior Years Current Year Total 2005 REFERENDUM Government Center Improvements $ 1,000,000 $ 1,000,000 $ 556,926 $ 31,181 $ 588,107 Judicial Building Improvements 2,000,000 2,000, , , ,051 Mental Health Building Improvements 1,400,000 1,400, , ,605 Public Health Building Improvements 700, , ,260 3, ,748 DOCO Jail Facility Improvements 3,825,000 3,825,000 2,185,572 16,432 2,202,004 EMS Headquarter Improvements 2,000,000 2,000, , , ,543 New Library and Library Improvements 6,000,000 6,000,000 2,622,704 1,138,840 3,761,544 County Police Building Improvements 140, , , ,174 County Fire Station Improvements 100, ,000 12,020 11,440 23,460 S.R. 133 Road Widening Project 400, , County Roads, Streets and Bridges 1,186,800 1,186, County Sewer Extensions 1,000,000 1,000, New Public Works Facility 700, ,000 13,713 34,121 47,834 Election Equipment 100, ,000 74,564 27, ,703 Radium Springs Improvements 2,500,000 2,500,000 74, , ,992 Tennis Court Facility 2,700,000 2,700, Gillionville Road Widening 1,800,000 1,800,000 34,498 84, ,071 Criminal Justice Information System 4,000,000 4,000,000 58, , ,961 I.T. Equipment and Software 2,440,000 2,440,000 1,002, ,194 1,562,824 Greenspace Acquisition 535, , ,723 (25,052) * 359,671 Mule Barn Presentation 500, ,000 74,868 1,132 76,000 Museum of Art Relocation 3,000,000 3,000,000 9, ,773 Flint Rivercenter 1,000,000 1,000, ,991 86,321 1,030,312 Albany-Dougherty Payroll Development 3,000,000 3,000, , ,679 Riverfront Projects 100, , , ,000 Administrative 300, ,000 80,435 50, ,106 City of Albany Projects 65,873,200 65,873,200 35,970,527-35,970,527 Totals $ 108,300,000 $ 108,300,000 $ 45,729,290 $ 3,477,399 $ 49,206,689 * Expense includes a reimbursement from the State of Georgia for the purchase of wetlands. 67

119 AGENCY FUNDS Tax Commissioner Tax Department This fund is used to account for all property taxes collected and forwarded to the County and other government units. Tax Commissioner Tag Department This fund is used to account for all personal property taxes collected and forwarded to the County and other government units. The following agency funds are used to account for fines, fees and other moneys collected by the courts and remitted to other parties in accordance with court orders and state law: Clerk of Courts Probate Court Magistrate Court Juvenile Court Sheriff This fund is used to account for collection of fees, proceeds from judicial sales, and cash bonds, which are disbursed to other agencies, the County, and individuals. Drug Squad Fund This fund is used to account for funds received from drug related arrests, which are disbursed to the County. Escrow Fund This fund is used to account for funds received on open cases. These funds will be disbursed as the cases are settled.

120 DOUGHERTY COUNTY, GEORGIA COMBINING BALANCE SHEET AGENCY FUNDS JUNE 30, 2009 Tax Commissioner Tax Tag Clerk of Probate Magistrate ASSETS Department Department Courts Court Court Cash $ 577,352 $ 59,211 $ 808,665 $ 6,952 $ 129,453 Taxes receivable 3,751, Total assets $ 4,328,396 $ 59,211 $ 808,665 $ 6,952 $ 129,453 LIABILITIES Due to others $ 577,352 $ 59,211 $ 808,665 $ 6,952 $ 129,453 Uncollected taxes 3,751, Total liabilities $ 4,328,396 $ 59,211 $ 808,665 $ 6,952 $ 129,453 68

121 Juvenile Court Sheriff Drug Squad Escrow Total $ 1,255 $ 329,840 $ 98,221 $ 120,557 $ 2,131, ,751,044 $ 1,255 $ 329,840 $ 98,221 $ 120,557 $ 5,882,550 $ 1,255 $ 329,840 $ 98,221 $ 120,557 $ 2,131, ,751,044 $ 1,255 $ 329,840 $ 98,221 $ 120,557 $ 5,882,550 69

122 COMPLIANCE SECTION

123 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Commissioners of Dougherty County, Georgia Albany, Georgia We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of Dougherty County, Georgia as of and for the year ended June 30, 2009, which collectively comprise Dougherty County, Georgia s basic financial statements, and have issued our report thereon dated December 29, We did not audit the financial statements of the Dougherty County Board of Health. Those financial statements were audited by other auditors whose reports have been furnished to us. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Dougherty County, Georgia s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose expressing an opinion on the effectiveness of Dougherty County, Georgia's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Dougherty County, Georgia s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and responses, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies. 439 MULBERRY STREET POST OFFICE BOX 1877 MACON, GEORGIA FAX MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

124 A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and responses as items , , and to be material weaknesses. A significant deficiency is a deficiency or a combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies in the accompanying schedule of findings as responses as items , , and to be significant deficiencies. Compliance and Other Matters As part of obtaining reasonable assurance about whether Dougherty County, Georgia s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that is required to be reported under Government Auditing Standards. We also noted certain additional matters that we reported to the management of Dougherty County, Georgia in a separate letter dated December 29, Dougherty County, Georgia's responses to the findings identified in our audit are described in the accompanying schedule of findings and responses. We did not audit Dougherty County, Georgia s responses and accordingly, we express no opinion on them. This report is intended solely for the information and use of management and the Board of Commissioners of Dougherty County, Georgia, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Macon, Georgia December 29,

125 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED JUNE 30, 2009 SECTION I SUMMARY OF AUDIT RESULTS Financial Statements Type of auditor s report issued Unqualified Internal control over financial reporting: Material weaknesses identified? X yes no Significant deficiencies identified not considered to be material weaknesses? X yes none reported Noncompliance material to financial statements noted? X yes no Federal Awards There was not an audit of major federal award programs as of June 30, 2009 due to the total amount expended being less than $500,000. SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES Management of Due To / From (Interfund and Internal) Accounts Criteria: Generally accepted accounting principles require reporting of interfund activity expected to be repaid within a reasonable time as due to/from (interfund receivables and payables) accounts. As part of that process, the County should review the amounts that should be included in due to/from accounts in each fund to determine the proper amounts to be reported at any given time during the fiscal year. Condition: We noted the County did not properly report the due to/from other funds accounts in the General Fund, Capital Improvement Fund, and Non-Major Funds. Context: See above condition. Effect: Adjustments to increase the due from other funds balance in the amount of $707,672, increase revenues by $16,647, and decrease expenditures by $691,025 was required to be recorded in the General Fund. Adjustments to increase the due from other funds balance in the amount of $9,329 and to decrease expenditures in the same amount was required to be recorded in the Capital Improvement Fund. An adjustment to increase the due from other funds balance in the amount of $20,280, increase revenues by $10,614, and to decrease expenditures by $9,666 was required in the Non-Major Funds. Cause: All due to/from activity between funds is not being properly recorded at the end of each financial reporting cycle. Recommendation: We recommend the County implement procedures to properly record, reconcile and review all due to/from activity on a monthly basis. 72

126 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED JUNE 30, Management of Due To / From (Interfund and Internal) Accounts (Continued) Views of Responsible Officials and Planned Corrective Action: We concur. We will work to record and reconcile all due to/from transactions at the end of each financial reporting cycle Taxes Receivable Criteria: Generally accepted accounting principles require revenue to be recognized in the accounting period in which it becomes both measurable and available to finance expenditures of the current period. Condition: The County did not properly record the property taxes receivable in the General Fund and Non-Major Funds during the year ended June 30, Context: We addressed this balance with County management, and they were able to determine the appropriate property tax receivable balance that should be recorded as of June 30, Effect: An audit adjustment to increase taxes receivable by $1,006,111, increase allowance for uncollectible taxes by $332,017, increase deferred revenues by $445,845 and increase tax revenues by $228,249 was required to be recorded in the General Fund. An adjustment to increase taxes receivable by $81,300, increase allowance for uncollectible taxes by $28,829, and increase tax revenues by $54,471 was required to be recorded in the Non-Major Funds as of June 30, Cause: The County did not review all tax revenue transactions after year-end to determine reporting in the proper period. Recommendation: We recommend the County begin recognizing and recording all necessary tax adjustments at the end of each financial reporting cycle. Views of Responsible Officials and Planned Corrective Action: We concur with the finding. We will record all taxes receivable based on the above criteria Management of Accounts Receivable Accounts Criteria: Generally accepted accounting principles require revenues to be recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. As a part of these processes, the County should review all revenue transactions to determine reporting in the proper period. Condition: The County did not properly record fees receivable in the General Fund and Solid Waste Fund as of June 30, Context: See above condition. 73

127 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED JUNE 30, Management of Accounts Receivable Accounts (Continued) Effect: An adjustment to decrease allowance for uncollectible accounts receivable in the amount of $400,662 and to increase revenues in the same amount was required to be recorded in the General Fund. An adjustment to decrease accounts receivable in the amount of $250,552, and to decrease revenues in the same amount was required to be recorded in the Solid Waste Fund. Cause: The County did not review all revenue transactions after year-end to determine reporting in the proper period. Recommendation: We recommend the County establish procedures to review all revenue transactions after year-end to determine reporting in the proper period. Views of Responsible Official and Planned Corrective Action: We concur. We will establish procedures to review all revenue transactions after year-end to determine reporting in the proper period Management of Accounts Payable Criteria: Generally accepted accounting principles require reporting of all current liabilities whose liquidation is expected to require the use of current assets when the goods have been received or services have been performed. Condition: The County did not properly address the above criteria as of June 30, 2009 as it relates to accounts payable within the 2005 SPLOST Fund and the Non-Major Funds. Context: We addressed this matter with County officials and they were able to determine the amount of accounts payable that should be recorded in these funds as of June 30, Effect: An adjustment to increase accounts payable by $333,845 and increase expenditures in the same amount was required to be made in the 2005 SPLOST Fund. An adjustment to increase accounts payable by $2,019, increase deferred revenues by $27,299, decrease revenues by $45,159, and increase transfers from other funds by $15,841 was required to be recorded in the Non-Major Funds as of June 30, Cause: Reconciliations of accounts payable are not being performed on a monthly basis. Recommendation: We recommend the County implement procedures to reconcile all accounts subsidiary ledgers to the general ledger on a monthly basis. 74

128 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED JUNE 30, Management of Accounts Payable (Continued) Views of Responsible Officials and Planned Corrective Action: We concur. We will establish procedures to reconcile subsidiary ledgers with the general ledger on a monthly basis Journal Entry Review Process Criteria: All standard and nonstandard journal entries should be reviewed by an appropriate level of management. Condition: The County does not have policies or procedures in place for the initiation, approval, and recording of journal entries. Context: See above condition. Effect: By not having policies and procedures in place for the initiation, approval, and recording of journal entries, there is potential for misuse or misappropriation of funds. Recommendation: The County should establish policies and procedures for initiating, approving, and recording all standard and nonstandard journal entries. Views of Responsible Officials and Planned Corrective Action: We concur with the finding. The County will establish policies and procedures to properly initiate, approve, and record all journal entries Segregation of Duties Criteria: Internal controls should be in place which provide reasonable assurance that an individual cannot misappropriate funds without such actions being detected during the normal course of business. Condition: For the fiscal year ending June 30, 2009, we noted a lack of proper segregation of duties within several areas of Dougherty County, Georgia s operations, including the Clerk of Court, Probate Court, Sheriff's Office, and County Finance Department. Examples of segregation of duties issues include: Cash receipts are handled by the same individual(s) who also opens the incoming mail, makes bank deposits, reconciles the bank accounts, and posts activity to the general ledger. Authorized check signers are not independent of voucher preparation and approval. NSF and similar cash items are investigated by employees that also maintain the chart of accounts, post journal entries, monitor suspense or clearing accounts, prepare deposits, and post receipts. Custody of checks after signature and before mailing is handled by an employee that is not independent of all payable, disbursing and receiving of cash, and other general ledger functions. 75

129 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED JUNE 30, 2009 SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES (Continued) Segregation of Duties (Continued) Reconciliations are not made by someone who is independent of the cash receipt and disbursement functions. The billing department is not completely separate from the accounts receivable and collection functions. There is not a clear separation of duties between all receivable ledger clerks and the cash/cashier function. Recording and approval of credit adjustments and refunds is performed by individuals not independent of the cash handling, and other accounts receivable bookkeeping functions. The payroll is not subject to final approval before payment by someone who is independent of the payroll preparation function. Unclaimed paychecks are not returned to an employee that is not associated with the payroll function. Personnel in the payable function are not independent from the general ledger function. Context: Several instances of overlapping duties were noted during interviews regarding internal control procedures. Effect: Failure to properly segregate duties between recording, distribution, and reconciliation of accounts can lead to misappropriation of funds that is not detected during the normal course of business. Recommendation: The duties of recording, distribution, and reconciliation of accounts should be segregated between employees. Views of Responsible Officials and Planned Corrective Action: We concur. We will work with staff to segregate duties and apply compensating controls to the extent possible. SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS Not Applicable 76

130 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF PRIOR YEAR FINDINGS FOR THE YEAR ENDED JUNE 30, Fund Balance Criteria: Internal controls should be in place to ensure that any prior year audit adjustments are posted and fund balance reconciles to the prior year s financial statements. Condition: For the fiscal year ending June 30, 2008, the County did not reconcile its fund balances to the prior year s financial statements for the General Fund and Law Library Fund. Auditee Response/Status: The above finding was corrected for the fiscal year ending June 30, Taxes Receivable Criteria: Generally accepted accounting principles require revenue to be recognized in the accounting period in which it becomes both measurable and available to finance expenditures of the current period. Condition: The County did not properly record the year end local option sales taxes receivable in the General Fund and the special local option sales tax receivable in the 2005 One Percent Sales Tax Fund during the year ended June 30, Auditee Response/Status: No finding related to sales tax receivable was cited in the fiscal year ending June 30, However, see current year financial audit finding for finding related to property taxes receivable Management of Accounts Receivable Accounts Criteria: Generally accepted accounting principles require revenues to be recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. As a part of these processes, the County should review all revenue transactions to determine reporting in the proper period. Condition: The County did not properly record fees receivable in the General Fund, Special Tax District Fund, Grant Fund, Law Library Fund, Capital Improvement Fund, 2000 SPLOST Fund, and Solid Waste Fund as of June 30, Auditee Response/Status: Unresolved See current year financial audit finding Management of Accounts Payable and Accrued Expense Liabilities Criteria: Generally accepted accounting principles require reporting of all current liabilities whose liquidation is expected to require the use of current assets when the goods have been received or services have been performed. 77

131 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF PRIOR YEAR FINDINGS FOR THE YEAR ENDED JUNE 30, Management of Accounts Payable and Accrued Expense Liabilities (Continued) Condition: The County did not properly address the above criteria as of June 30, 2008 as it relates to accounts payable within the Law Library and 2005 SPLOST Funds, and accrued expenses in the Solid Waste Fund. Auditee Response/Status: Unresolved See current year financial audit finding Closure and Postclosure Care Cost Criteria: The Governmental Accounting Standards Board (GASB) issued Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs in August of This pronouncement applies to all governmental entities that are required by federal, state, or local laws or regulations to incur closure and postclosure care costs associated with the operation of a landfill. This pronouncement requires a governmental entity with landfill operations to calculate and accrue the closure and postclosure care costs incurred to date based on the total expected costs to fulfill such obligations prorated for the usage to date of the landfill against the expected total usage available of the landfill. Condition: The County did not properly record the year end closure and postclosure care cost liability in the Solid Waste Fund for the year ended June 30, Auditee Response/Status: The above finding was corrected for the fiscal year ending June 30, Journal Entry Review Process Criteria: All standard and nonstandard journal entries should be reviewed by an appropriate level of management. Condition: The County does not have policies or procedures in place for the initiation, approval, and recording of journal entries. Auditee Response/Status: Unresolved See current year financial audit finding Segregation of Duties Criteria: Internal controls should be in place which provide reasonable assurance that an individual cannot misappropriate funds without such actions being detected during the normal course of business. Condition: For the fiscal year ending June 30, 2008, we noted a lack of proper segregation of duties within several areas of Dougherty County, Georgia s operations, including the Clerk of Court, Probate Court, Sheriff's office, and County Finance Department. Examples of segregation of duties issues include: 78

132 DOUGHERTY COUNTY, GEORGIA SCHEDULE OF PRIOR YEAR FINDINGS FOR THE YEAR ENDED JUNE 30, Segregation of Duties (Continued) Cash receipts are handled by the same individual(s) who also makes bank deposits, reconciles the bank accounts, and posts activity to the general ledger. Authorized check signers are not independent of voucher preparation and approval. NSF and similar items are investigated by employees that also prepare deposits and post receipts. Custody of checks after signature and before mailing is handled by an employee that is not independent of all payable, disbursing, cash, receiving and general ledger functions. Reconciliations are not made by someone who is independent of the cash receipt and disbursement functions. The billing department is not completely separate from the accounts receivable and collection functions. There is not a clear separation of duties between all receivable ledger clerks and the cash/cashier function. The payroll is not subject to final approval before payment by someone who is independent of the payroll preparation function. Unclaimed paychecks are not returned to an employee that is not associated with the payroll function. Personnel in the payable function are not independent from the general ledger function. Auditee Response/Status: Unresolved See current year financial audit finding Adoption of Budgets Criteria: House Bill 1364 of the 1998 session of the Georgia General Assembly requires an annual balanced budget for the General Fund, each special revenue fund, and each debt service fund and requires a project length balanced budget for each capital projects fund. Condition: For the fiscal year ending June 30, 2008 a budget was not adopted for the Law Library Fund, which is a special revenue fund, in accordance with the Official Code of Georgia (OCGA) Sections through Auditee Response/Status: The above finding was corrected for the fiscal year ending June 30,

133 INDEPENDENT ACCOUNTANT S REPORT ON LOCAL ASSISTANCE GRANTS To the Dougherty County Board of Commissioners Albany, Georgia We have examined management's assertion included in the accompanying State of Georgia Grant Certification Form about Dougherty County, Georgia s compliance during the year ended June 30, 2009, with the requirement to use grant proceeds solely for the purpose or purposes for which the grant was made for Local Assistance Grants 02-C-L-755 and 08-C-L-152. Management is responsible for Dougherty County, Georgia s compliance with this requirement. Our responsibility is to express an opinion on management s assertion about Dougherty County, Georgia s compliance based on our examination. Our examination was made in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence supporting Dougherty County, Georgia s compliance with the above mentioned requirement and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on Dougherty County, Georgia s compliance with the specified requirement. In our opinion, management's assertion that Dougherty County, Georgia complied with the aforementioned requirement for the year ended June 30, 2009, is fairly stated, in all material respects. This report is intended solely for the information and use of the Dougherty County, Georgia Board of Commissioners and the Georgia Department of Audits and Accounts, and is not intended to be and should not be used by anyone other than these specified parties. Macon, Georgia December 29, MULBERRY STREET POST OFFICE BOX 1877 MACON, GEORGIA FAX MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

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