Farmington City, Utah

Transcription

1 NEW ISSUE Rating: Moody s Aa2 See MISCELLANEOUS Bond Rating herein. In the opinion of Ballard Spahr LLP, Bond Counsel to the City, interest on the 2015 Bonds is excludable from gross income for purposes of federal income tax assuming continuing compliance with the requirements of the federal tax laws. Interest on the 2015 Bonds is not a preference item for purposes of either individual or corporate federal alternative minimum tax; however, interest paid to corporate holders of the 2015 Bonds may be indirectly subject to federal alternative minimum tax under circumstances described under LEGAL MATTERS herein. Bond Counsel is also of the opinion that, under currently existing law, interest on the 2015 Bonds is exempt from State of Utah individual income taxes. See LEGAL MATTERS herein. The 2015 Bonds are qualified tax exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See LEGAL MATTERS Federal Income Tax Matters Bank Qualification herein. $6,000,000 Farmington City, Utah General Obligation Bonds, Series 2015 The $6,000,000 General Obligation Bonds, Series 2015 are issued by the City, as fully registered bonds and, when initially issued, will be in book entry form, registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York. DTC will act as securities depository for the 2015 Bonds. Principal of and interest on the 2015 Bonds (interest payable April 1 and October 1 of each year, commencing October 1, 2015) are payable by Zions Bank, Corporate Trust Department, Salt Lake City, Utah, as Paying Agent, to the registered owners thereof, initially DTC. See THE 2015 BONDS Book Entry System herein. The 2015 Bonds are subject to optional redemption prior to maturity and may be subject to mandatory sinking fund redemption at the option of the successful bidder(s). See THE 2015 BONDS Redemption Provisions herein. The 2015 Bonds will be general obligations of the City payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the City, fully sufficient to pay the 2015 Bonds as to both principal and interest. Dated: Date of Delivery 1 Due: April 1, as shown on inside front cover See the inside front cover for the maturity schedule of the 2015 Bonds. The 2015 Bonds were awarded pursuant to competitive bidding received by means of the PARITY electronic bid submission system on February 19, 2015 as set forth in the OFFICIAL NOTICE OF BOND SALE (dated February 10, 2015) to Raymond James & Associates, Inc., Dallas, Texas at a true interest rate of 2.56%. Zions Bank Public Finance, Salt Lake City, Utah, acted as Municipal Advisor. 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 the making of an informed investment decision. This OFFICIAL STATEMENT is dated February 19, 2015, and the information contained herein speaks only as of that date. 1 The anticipated date of delivery is Thursday, March 5, 2015.

2 $6,000,000 General Obligation Bonds, Series 2015 Dated: Date of Delivery 1 Due: April 1, as shown below Due CUSIP Principal Interest April Amount Rate Yield 2017 BT5 $255, % 0.65% 2018 BU2 265, BV0 270, BW8 275, BX6 280, BY4 285, BZ1 290, CA5 295, CB3 300, CC1 310, CD9 315, CE7 325, CF4 330, CG2 345, CH0 355, CJ6 360, CK3 370, CL1 380, CM9 395, The anticipated date of delivery is Thursday, March 5, CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services (CSG) is managed on behalf of the American Bankers Association by S&P Capital IQ.

3 Table Of Contents Page INTRODUCTION... 1 Public Sale/Electronic Bid... 1 Farmington City, Utah... 1 The 2015 Bonds... 2 Authorization For And Purpose Of The 2015 Bonds... 2 Security... 2 Redemption Provisions... 2 Registration, Denominations, Manner Of Payment... 3 Tax Exempt Status Of The 2015 Bonds; Deductibility Of Interest... 3 Professional Services... 4 Conditions Of Delivery, Anticipated Date, Manner And Place Of Delivery... 4 Limited Continuing Disclosure Undertaking... 4 Basic Documentation... 4 Contact Persons... 5 LIMITED CONTINUING DISCLOSURE UNDERTAKING... 5 THE 2015 BONDS... 6 General... 6 Sources And Uses Of Funds... 6 Security And Sources Of Payment... 7 Redemption Provisions... 7 Registration And Transfer; Record Date... 8 Book Entry System... 8 Debt Service On The 2015 Bonds... 9 FARMINGTON CITY, UTAH... 9 General... 9 Form Of Government Employee Workforce And Retirement System; No Post Employment Benefits Risk Management Investment Of Funds Population Employment, Income, Construction, And Sales Taxes Within Farmington City; Davis County And The State Of Utah) Largest Employers Rate Of Unemployment Annual Average DEBT STRUCTURE OF FARMINGTON CITY, UTAH.. 16 Outstanding Municipal Debt Future Issuance Of Debt; Other Financial Considerations Debt Service Schedule Of Outstanding General Obligation Bonds By Fiscal Year Debt Service Schedule Of Outstanding Sales Tax Revenue Bonds By Fiscal Year Debt Service Schedule Of Outstanding Redevelopment Agency Bonds By Fiscal Year Debt Service Schedule Of Outstanding Special Assessment Bonds By Fiscal Year Page Overlapping And Underlying General Obligation Debt General Obligation Legal Debt Limit And Additional Debt Incurring Capacity No Defaulted Obligations FINANCIAL INFORMATION REGARDING FARMINGTON CITY, UTAH Fund Structure; Accounting Basis Budget And Budgetary Process Financial Controls Sources of General Fund Revenues Financial Summaries Tax Levy And Collection Public Hearing On Certain Tax Increases Property Tax Matters Historical Tax Rates Historical Property Tax Rates Direct and Overlapping Governments Comparative Total Property Tax Rates Within The County Taxable Value Of Property Historical Summaries Of Taxable Value Of Property Tax Collection Record Some Of The Largest Taxpayers Sales And Use Taxes; Franchise Taxes LEGAL MATTERS Absence Of Litigation Concerning The 2015 Bonds Federal Income Tax Matters State of Utah Income Tax No Further Opinion Changes In Federal And State Tax Laws General MISCELLANEOUS Bond Rating Municipal Advisor Independent Auditors Additional Information APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FArMINGTON CITY, UTAH FOR FISCAL YEAR A 1 APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL... B 1 APPENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING... C 1 APPENDIX D BOOK ENTRY SYSTEM... D 1 iii

4 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 2015 Bonds (as defined herein), by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than those contained herein, and if given or made, such other informational representations must not be relied upon as having been authorized by either Farmington City, Utah (the City ); Zions Bank, Corporate Trust Department, Salt Lake City, Utah (as Bond Registrar and Paying Agent); Zions Bank Public Finance, Salt Lake City, Utah (as Municipal Advisor); the successful bidder(s); or any other entity. All other information contained herein has been obtained from the City, The Depository Trust Company, New York, New York and from other sources which are believed to be reliable. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this OFFI- CIAL STATEMENT nor the issuance, sale, delivery or exchange of the 2015 Bonds, shall under any circumstance create any implication that there has been no change in the affairs of the City since the date hereof. The 2015 Bonds have not been registered under the Securities Act of 1933, as amended, or any state securities laws in reliance upon exemptions contained in such act and laws. Neither the Securities and Exchange Commission nor any state securities commission has passed upon the accuracy or adequacy of this OFFICIAL STATEMENT. Any representation to the contrary is unlawful. The yields at which the 2015 Bonds are offered to the public may vary from the initial reoffering yields on the inside cover page of this OFFICIAL STATEMENT. In addition, the bidders may allow concessions or discounts from the initial offering prices of the 2015 Bonds to dealers and others. In connection with the offering of the 2015 Bonds, the bidders may engage in transactions that stabilize, maintain, or otherwise affect the price of the 2015 Bonds. Such transactions may include overallotments in connection with the purchase of 2015 Bonds, the purchase of 2015 Bonds to stabilize their market price and the purchase of 2015 Bonds to cover the bidders short positions. Such transactions, if commenced, may be discontinued at any time. Forward Looking Statements. Certain statements included or incorporated by reference in this OFFI- CIAL STATEMENT constitute forward looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used, such as plan, project, forecast, expect, estimate, budget or other similar words. The achievement of certain results or other expectations contained in such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. The City does not plan to issue any updates or revisions to those forward looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. The CUSIP (the Committee on Uniform Securities Identification Procedures) identification numbers are provided on the inside cover page of this OFFICIAL STATEMENT and are being provided solely for the convenience of bondholders only, and the City makes no representation with respect to such numbers or undertakes any responsibility for their accuracy. The CUSIP numbers are subject to being changed after the issuance of the 2015 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of the 2015 Bonds. The information available at websites referenced in this OFFICIAL STATEMENT has not been reviewed for accuracy and completeness. Such information has not been provided in connection with the offering of the 2015 Bonds and is not a part of this OFFICIAL STATEMENT. v

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7 OFFICIAL STATEMENT RELATED TO $6,000,000 Farmington City, Utah General Obligation Bonds, Series 2015 INTRODUCTION This introduction is only a brief description of the 2015 Bonds, as hereinafter defined, the security and source of payment for the 2015 Bonds and certain information regarding Farmington City, Utah (the City ). The information contained herein is expressly qualified by reference to the entire OFFICIAL STATEMENT. Investors are urged to make a full review of the entire OFFICIAL STATEMENT, as well as of the documents summarized or described herein. See the following appendices that are attached hereto and incorporated herein by reference: APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 ; APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL ; APPENDIX C PROPOSED FORM OF LIMITED CONTINUING DISCLOSURE UN- DERTAKING ; and APPENDIX D BOOK ENTRY SYSTEM. When used herein the terms Fiscal Year[s] 20YY or Fiscal Year[s] End[ed][ing] June 30, 20YY shall refer to the year ended or ending on June 30 of the year indicated and beginning on July 1 of the preceding calendar year. Capitalized terms used but not otherwise defined herein have the same meaning as given to them in the Resolution (as defined herein). Public Sale/Electronic Bid The 2015 Bonds were awarded pursuant to competitive bidding received by means of the PARITY electronic bid submission system on February 19, 2015 as set forth in the OFFICIAL NOTICE OF BOND SALE (dated February 10, 2015) to Raymond James & Associates, Inc., Dallas, Texas at a true interest rate of 2.56%. The 2015 Bonds may be offered and sold to certain dealers (including dealers depositing the 2015 Bonds into investment trusts) at prices lower than the initial public offering prices set forth on the inside cover page of the OFFICIAL STATEMENT and such public offering prices may be changed from time to time. Farmington City, Utah The City, incorporated in 1892, covers an area of approximately 7.1 square miles and is located in the geographical center of Davis County, Utah (the County ). The City is located approximately 13 miles north of Salt Lake City, Utah. The City had 21,599 residents according to the 2013 population estimate by the U.S. Census Bureau. See the map above of the City s location within the State of Utah (the State ). The County, incorporated in 1853, covers an area of approximately 304 (land area) square miles and is located in the north central portion of the State. The southern boundary of the County adjoins the north- 1

8 ern boundary of Salt Lake City and Salt Lake County, Utah. The northern boundary is approximately eight miles south of Ogden City, Utah. The County had 322,094 residents according to the 2013 population estimate by the U.S. Census Bureau, ranking the County as the 3 rd most populated county in the State (out of 29 counties). The 2015 Bonds This OFFICIAL STATEMENT, including the cover page, introduction and Appendices (the OFFI- CIAL STATEMENT ), provides information in connection with the issuance and sale of $6,000,000 aggregate principal amount of General Obligation Bonds, Series 2015 (the 2015 Bonds or 2015 Bond ), initially issued in book entry form only. Authorization For And Purpose Of The 2015 Bonds Authorization. The 2015 Bonds are being issued pursuant to (i) the Local Government Bonding Act, Title 11, Chapter 14 (the Local Government Bonding Act ), Utah Code; the Registered Public Obligations Act, Title 15, Chapter 7, Utah Code; and the applicable provisions of Title 53A of the Utah Code, (ii) the resolution of the City adopted on February 17, 2015 (the Resolution ), which provides for the issuance of the 2015 Bonds, and (iii) other applicable provisions of law. The 2015 Bonds were authorized at a special bond election held for that purpose on November 4, 2014 (the 2014 Bond Election ). The proposition submitted to the voters of the City was as follows: Shall the City Council of Farmington City, Utah (the City ), be authorized to issue General Obligation Bonds in an amount not to exceed Six Million Dollars ($6,000,000) (the Bonds ) for the purpose of paying all or a portion of the costs of the construction of a public park and recreational facility, and related improvements (the Project ) and the authorization and issuance of the Bonds; said Bonds to be due and payable in not to exceed twenty-one (21) years from the date of issuance of the Bonds? At the 2014 Bond Election there were 2,443 votes cast in favor of the issuance of bonds and 2,418 votes cast against the issuance of bonds, for a total vote count of 4,861, with approximately 50.3% in favor of the issuance of bonds. The 2015 Bonds are the first and final block of bonds to be issued from the 2014 Bond Election. After the sale and delivery of the 2015 Bonds, the City will have no remaining authorization. Purpose. The 2015 Bonds are being issued to fund the acquisition, construction, remodeling and updating of the projects set forth in the 2014 Bond Election proposition and to pay certain costs of issuance. See THE 2015 BONDS Sources And Uses Of Funds below. Security The 2015 Bonds will be general obligations of the City, payable from the proceeds of ad valorem taxes to be levied, without limitation as to rate or amount, on all of the taxable property in the City, fully sufficient to pay the 2015 Bonds as to both principal and interest. See THE 2015 BONDS Security And Sources Of Payment and FINANCIAL INFORMATION REGARDING FARMINGTON CITY, UTAH Tax Levy And Collection below. Redemption Provisions The 2015 Bonds are subject to optional redemption prior to maturity and may be subject to mandatory sinking fund redemption at the option of the successful bidder(s). See THE 2015 BONDS Redemption Provisions below. 2

9 Registration, Denominations, Manner Of Payment The 2015 Bonds are issuable only as fully registered bonds and, when initially issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, ( DTC ). DTC will act as securities depository of the 2015 Bonds. Purchases of 2015 Bonds will be made in book entry form only, in the principal amount of $5,000 or any whole multiple thereof, through brokers and dealers who are, or who act through, DTC s Participants (as defined herein). Beneficial Owners (as defined herein) of the 2015 Bonds will not be entitled to receive physical delivery of bond certificates so long as DTC or a successor securities depository acts as the securities depository with respect to the 2015 Bonds. Direct Participants, Indirect Participants and Beneficial Owners are defined under APPENDIX D BOOK ENTRY SYSTEM. Principal of and interest on the 2015 Bonds (interest payable April 1 and October 1 of each year, commencing October 1, 2015) are payable by Zions Bank, Corporate Trust Department, Salt Lake City, Utah ( Zions Bank ), as paying agent (the Paying Agent ) for the 2015 Bonds, to the registered owners of the 2015 Bonds. So long as Cede & Co. is the registered owner of the 2015 Bonds, DTC will, in turn, remit such principal and interest to its Direct Participants, for subsequent disbursements to the Beneficial Owners of the 2015 Bonds, as described in APPENDIX D BOOK ENTRY SYSTEM. So long as DTC or its nominee is the sole registered owner of the 2015 Bonds, neither the City, the Underwriter, nor the Paying Agent will have any responsibility or obligation to any Direct or Indirect Participants of DTC, or the persons for whom they act as nominees, with respect to the payments to or the providing of notice for the Direct Participants, Indirect Participants or the Beneficial Owners of the 2015 Bonds. Under these same circumstances, references herein and in the Resolution to the Bondowners or Registered Owners of the 2015 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the 2015 Bonds. Tax Exempt Status Of The 2015 Bonds; Deductibility Of Interest In the opinion of Ballard Spahr LLP, Bond Counsel to the City, interest on the 2015 Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the 2015 Bonds, assuming the accuracy of the certifications of the City and continuing compliance by the City with the requirements of the Internal Revenue Code of Interest on the 2015 Bonds is not an item of tax preference for purposes of either individual or corporate federal alternative minimum tax; however, interest on 2015 Bonds held by a corporation (other than an S corporation, regulated investment company, or real estate investment trust) may be indirectly subject to federal alternative minimum tax because of its inclusion in the adjusted current earnings of a corporate holder. The City has designated the 2015 Bonds as, and the 2015 Bonds constitute, qualified tax exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the deductibility of a financial institution s interest expenses allocable to tax exempt interest. Bond Counsel is also of the opinion that interest on the 2015 Bonds is exempt from State of Utah individual income taxes under currently existing law. Bond Counsel expresses no opinion regarding any other tax consequences relating to the ownership or disposition of, or the accrual or receipt of interest on, the 2015 Bonds. See LEGAL MATTERS below. 3

10 Professional Services In connection with the issuance of the 2015 Bonds, the following have served the City in the capacity indicated. Attorney for the City Bond Counsel Hayes Godfrey Bell, P.C. Ballard Spahr LLP 2118 E 3900 S Ste S Main St Ste 800 Salt Lake City, UT Salt Lake City UT f f tjgodfrey@hgblaw.net larsen@ballardspahr.com Bond Registrar and Paying Agent Municipal Advisor Zions First National Bank Zions Bank Public Finance Corporate Trust Department Zion Bank Building One S Main St 12th Fl One S Main St 18th Fl Salt Lake City UT Salt Lake City UT f f dawn.richards@zionsbank.com johnathan.ward@zionsbank.com Conditions Of Delivery, Anticipated Date, Manner And Place Of Delivery The 2015 Bonds are offered, subject to prior sale, when, as and if issued and received by the successful bidder(s), subject to the approval of legality of the 2015 Bonds by Ballard Spahr LLP, Bond Counsel to the City, and certain other conditions. Certain legal matters will be passed on for the City by the attorney for the City, Hayes Godfrey Bell, P.C., Salt Lake City, Utah. It is expected that the 2015 Bonds, in book entry form only, will be available for delivery in Salt Lake City, Utah for deposit with Zions Bank, a fast agent of DTC, on or about Thursday, March 5, Limited Continuing Disclosure Undertaking The City will enter into a Limited Continuing Disclosure Undertaking (the Undertaking ) for the benefit of the beneficial owners of the 2015 Bonds to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board ( MSRB ) through its Electronic Municipal Market Access ( EMMA ) pursuant to the requirements of paragraph (b)(5) of Rule 15c2 12 (the Rule ) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. See LIMITED CONTINUING DISCLOSURE UNDERTAKING below for further discussion and information regarding the Undertaking and APPENDIX C PROPOSED FORM OF LIMITED CONTINUING DISCLOSURE UNDERTAKING for the proposed form of the Undertaking. Basic Documentation This OFFICIAL STATEMENT speaks only as of its date and the information contained herein is subject to change. Brief descriptions of the City, the 2015 Bonds, and the Resolution are included in this OF- FICIAL STATEMENT. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Resolution are qualified in their entirety by reference to such document and references herein to the 2015 Bonds are qualified in their entirety by reference to the form thereof included in the Resolution. The basic documentation which includes the Resolution, the closing documents and other documentation, authorizing the issuance of the 2015 Bonds and establishing the rights and responsibilities of the City and other parties to the transaction may be obtained from the contact persons as indicated below. 4

11 Contact Persons As of the date of this OFFICIAL STATEMENT, additional requests for information may be directed to Zions Bank Public Finance, Salt Lake City, Utah (the Municipal Advisor ) to the City: Johnathan Ward, Vice President, johnathan.ward@zionsbank.com Eric John Pehrson, Vice President, eric.pehrson@zionsbank.com Zions Bank Public Finance Zions Bank Building One S Main St 18 th Fl Salt Lake City UT f As of the date of this OFFICIAL STATEMENT, the chief contact persons for the City concerning the 2015 Bonds are: Dave Millheim, City Manager, dmillheim@farmington.utah.gov Keith Johnson, Assistant City Manager, kjohnson@farmington.utah.gov Farmington City 160 S Main (PO Box 160) Farmington UT f The City maintains a website that may be accessed at The information available at this website is provided by the City in the course of its normal operations and has not necessarily been reviewed for accuracy or completeness. Such information is not a part of this OFFICIAL STATEMENT. LIMITED CONTINUING DISCLOSURE UNDERTAKING Because at the time of delivery of the 2015 Bonds the City will be an obligated person (as such term is defined in the Rule) with respect to less than $10 million in aggregate amount of outstanding municipal securities, including the 2015 Bonds, the City will enter into a limited Continuing Disclosure Undertaking (the Undertaking ) to send certain information annually and to provide notice of certain events to the MSRB through EMMA pursuant to the requirements of the Rule. No person, other than the City, has undertaken, or is otherwise expected, to provide continuing disclosure with respect to the 2015 Bonds. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and other terms of the Undertaking, including termination, amendment and remedies, are set forth in the proposed form of Undertaking in APPENDIX C PROPOSED FORM OF LIMITED CONTINUING DISCLOSURE UNDERTAKING. As of the date of this OFFICIAL STATEMENT, the City has not failed in any material respect to comply with disclosure undertakings previously entered into pursuant to the Rule within the last five years. The City will submit its comprehensive annual financial report for Fiscal Year Ending June 30 (the CAFR ) and other operating and financial information on or before January 26 (not more than 210 days from the end of the Fiscal Year). The City will submit the Fiscal Year 2015 financial report and other operating and financial information for the 2015 Bonds on or before January 26, 2016, and annually thereafter on or before each January 26. 5

12 A failure by the City to comply with the Undertaking will not constitute a default under the Resolution and Beneficial Owners of the 2015 Bonds are limited to the remedies described in the Undertaking. See APPENDIX C PROPOSED FORM OF LIMITED CONTINUING DISCLOSURE UNDERTAK- ING. A failure by the City to comply with the Undertaking must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the 2015 Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the 2015 Bonds and their market price. Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of the Rule. General THE 2015 BONDS The 2015 Bonds will be dated the date of their original issuance and delivery 1 (the Dated Date ) and will mature on February 1 of the years and in the amounts and pay interest on the dates and at the rates shown on the cover page. The 2015 Bonds will bear interest from their Dated Date at the rates set forth on the cover page of this OFFICIAL STATEMENT. Interest on the 2015 Bonds is payable semiannually on each January 1 and July 1, commencing July 1, Interest on the 2015 Bonds will be computed on the basis of a 360 day year comprised of 12, 30 day months. Zions Bank is the initial Registrar (the Registrar ) and Paying Agent for the 2015 Bonds under the Resolution. If any date for the payment of principal or interest on the 2015 Bonds is not a business day, then the payment will be due on the first day thereafter that is a business day and no interest will accrue during such period. The 2015 Bonds will be issued as fully registered bonds, initially in book entry form, in the denomination of $5,000 or any whole multiple thereof, not exceeding the amount of each maturity. The 2015 Bonds are being issued within the constitutional debt limit imposed on cities of in the State. See DEBT STRUCTURE OF FARMINGTON CITY, UTAH General Obligation Legal Debt Limit And Additional Debt Incurring Capacity below. Sources And Uses Of Funds The proceeds from the sale of the 2015 Bonds are estimated to be applied as set forth below: Sources: Par amount of 2015 Bonds... $6,000, Reoffering premium , Total... $6,145, Uses: Deposit to Construction Fund... 6,022, Costs of Issuance (1)... 64, Underwriter s discount... 58, Total... $6,145, (1) Includes legal fees, Municipal Advisor fees, rating agency fees, Bond Registrar and Paying Agent fees, rounding amounts and other miscellaneous costs of issuance. 1 The anticipated date of delivery is Thursday, March 5,

13 Security And Sources Of Payment The 2015 Bonds are general obligations of the City, payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the City, fully sufficient to pay the 2015 Bonds as to both principal and interest. See FINANCIAL INFORMATION REGARDING FARMINGTON CITY, UTAH Property Tax Matters below. Redemption Provisions Optional Redemption for the 2015 Bonds. The 2015 Bonds maturing on and after April 1, 2025 are subject to redemption prior to maturity in whole or in part at the option of the City on October 1, 2024 or on any date thereafter, from such maturities or parts thereof as shall be selected by the City at the redemption price of 100% of the principal amount of the 2015 Bonds to be redeemed plus accrued interest (if any) thereon to the redemption date. Selection for Redemption. If less than all 2015 Bonds of any maturity are to be redeemed, the particular 2015 Bonds or portion of 2015 Bonds of such maturity to be redeemed will be selected at random by the Bond Registrar in such manner as the Bond Registrar in its discretion may deem fair and appropriate. The portion of any registered 2015 Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or a whole multiple thereof, and in selecting portions of such 2015 Bonds for redemption, the Bond Registrar will treat each such 2015 Bond as representing that number of 2015 Bonds of $5,000 denomination that is obtained by dividing the principal amount of such 2015 Bond by $5,000. Notice of Redemption. Notice of redemption will be given by the Bond Registrar by registered or certified mail, not less than 30 nor more than 45 days prior to the redemption date, to the owner, as of the Record Date, as defined under THE 2015 BONDS Registration And Transfer; Record Date below, of each 2015 Bond that is subject to redemption, at the address of such owner as it appears on the registration books of the City kept by the Bond Registrar, or at such other address as is furnished to the Bond Registrar in writing by such owner on or prior to the Record Date. Each notice of redemption will state the Record Date, the principal amount, the redemption date, the place of redemption, the redemption price and, if less than all of the 2015 Bonds are to be redeemed, the distinctive numbers of the 2015 Bonds or portions of 2015 Bonds to be redeemed, and will also state that the interest on the 2015 Bonds in such notice designated for redemption will cease to accrue from and after such redemption date and that on the redemption date there will become due and payable on each of the 2015 Bonds to be redeemed the principal thereof and interest accrued thereon to the redemption date. Each notice of optional redemption may further state that such redemption will be conditioned upon the receipt by the Paying Agent, on or prior to the date fixed for redemption, of moneys sufficient to pay the principal of and premium, if any, and interest on such 2015 Bonds to be redeemed and that if such moneys have not been so received the notice will be of no force or effect and the City will not be required to redeem such 2015 Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption will not be made and the Bond Registrar will within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. Any such notice mailed will be conclusively presumed to have been duly given, whether or not the Bondowner receives such notice. Failure to give such notice or any defect therein with respect to any 2015 Bond will not affect the validity of the proceedings for redemption with respect to any other 2015 Bond. In addition to the foregoing notice, further notice of such redemption will be given by the Bond Registrar to DTC and certain registered securities depositories and national information services as provided in the Resolution, but no defect in such further notice nor any failure to give all or any portion of such 7

14 notice will in any manner affect the validity of a call for redemption if notice thereof is given as prescribed above and in the Resolution. For so long as a book entry system is in effect with respect to the 2015 Bonds, the Bond Registrar will mail notices of redemption to DTC or its successor. Any failure of DTC to convey such notice to any Direct Participants or any failure of the Direct Participants or Indirect Participants to convey such notice to any Beneficial Owner will not affect the sufficiency of the notice or the validity of the redemption of 2015 Bonds. Registration And Transfer; Record Date In the event the book entry system is discontinued, any 2015 Bond may, in accordance with its terms, be transferred, upon the registration books kept by the Bond Registrar, by the person in whose name it is registered, in person or by such owner s duly authorized attorney, upon surrender of such 2015 Bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Bond Registrar. No transfer will be effective until entered on the registration books kept by the Bond Registrar. Whenever any 2015 Bond is surrendered for transfer, the Bond Registrar will authenticate and deliver a new fully registered 2015 Bond or 2015 Bonds of the same series, designation, maturity and interest rate and of authorized denominations duly executed by the City, for a like aggregate principal amount. The 2015 Bonds may be exchanged at the principal corporate office of the Bond Registrar for a like aggregate principal amount of fully registered 2015 Bonds of the same series, designation, maturity and interest rate of other authorized denominations. For every such exchange or transfer of the 2015 Bonds, the Bond Registrar must make a charge sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or transfer of the 2015 Bonds. The term Record Date means with respect to each interest payment date, the day that is 15 days preceding such interest payment date, or if such day is not a business day for the Bond Registrar, the next preceding day that is a business day for the Bond Registrar. The Bond Registrar will not be required to transfer or exchange any 2015 Bond after the Record Date with respect to any interest payment date to and including such interest payment date. The City, the Bond Registrar and the Paying Agent may treat and consider the person in whose name each 2015 Bond is registered in the registration books kept by the Bond Registrar as the holder and absolute owner thereof for the purpose of receiving payment of, or on account of, the principal thereof and interest due thereon and for all other purposes whatsoever. Book Entry System DTC will act as securities depository for the 2015 Bonds. The 2015 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 2015 Bond certificate will be issued for each maturity of the 2015 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC or a fast agent of DTC. See APPENDIX D BOOK ENTRY SYSTEM for a more detailed discussion of the book entry system and DTC. In the event the book entry system is discontinued, interest on the 2015 Bonds will be payable by check or draft of the Paying Agent, mailed to the registered owners thereof at the addresses shown on the registration books of the City kept for that purpose by the Bond Registrar. The principal of all 2015 Bonds will be payable at the principal office of the Paying Agent. 8

15 Debt Service On The 2015 Bonds The 2015 Bonds Payment Date Principal Interest Period Total Fiscal Total October, 1, $ 0.00 $ 86, $ 86, April 1, , , $161, October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , October 1, , , April 1, , , , , Totals... $6,000, $1,931, $7,931, General FARMINGTON CITY, UTAH The City, incorporated in 1892, covers an area of approximately 7.1 square miles and is located in the geographical center of the County. The City is located approximately 13 miles north of Salt Lake City, Utah. The City had 21,599 residents according to the 2013 population estimate by the U.S. Census Bureau. See the map above of the City s location within the State. The County, incorporated in 1853, covers an area of approximately 304 (land area) square miles and is located in the north central portion of the State. The southern boundary of the County adjoins the northern boundary of Salt Lake City and Salt 9

16 Lake County, Utah. The northern boundary is approximately eight miles south of Ogden City, Utah. The County had 322,094 residents according to the 2013 population estimate by the U.S. Census Bureau, ranking the County as the 3 rd most populated county in the State (out of 29 counties). The City is part of a line of approximately 10 cities located directly north of Salt Lake City along interstate Highway I 15, all within the County. These cities comprise a portion of a continuous area of development from the south end to the northern end of the County. Form Of Government The City is currently governed by a Mayor and City Council, which council consists of six persons, (five council members and the mayor), elected at large by voters in the City. A measure of continuity is provided in the City Council by the election of the council members to four year overlapping terms. Duties of the council members include the responsibility for all City affairs in general. The City Council must approve and may revise the budget of any City department or elected official. The Mayor and City Council serves as the legislative and governing body of the City and appropriates funds for the various City functions. The City Council is the tax levying body, determining the necessary City property tax levy each year. The City Council also licenses and regulates businesses, exhibitions, and recreation within the incorporated City area. Other appointed officials are the City Administrator, Finance Director, City Recorder, Treasurer, Police Chief, and other department heads. Current members of the City Council and other officers of the City and their respective terms in office are as follows: Years Office Person of Service Expiration of Term Mayor... H. James Talbot 5 January 2018 Council Member... Doug Anderson 1 January 2016 Council Member... John Bilton 5 January 2018 Council Member... Brigham Mellor 1 January 2018 Council Member... Cory Ritz 7 January 2016 Council Member... Jim Young 3 January 2016 City Manager... Dave Millheim 4 Appointed Assistant City Manager... Keith Johnson 16 Appointed City Recorder... Holly Gadd 9 Appointed City Treasurer... Shannon Harper 6 Appointed Employee Workforce And Retirement System; No Post Employment Benefits Employee Workforce and Retirement System. As of Fiscal Year 2014 the City employed approximately 60 full time employees. The City is a member of the Utah State Retirement System which also provides and administers deferred and defined compensation plans for City employees. For a detailed discussion regarding the City s retirement plans see APPENDIX A COMPREHENSIVE ANNUAL FI- NANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Notes to Financial Statements Note 5. Other Information Retirement Plans (page 66). No Post Employment Benefits. The City does not provide or offer any post employment benefits (under the Governmental Accounting Standards Board GASB definition) to current employees and has no annual required contribution. As of the date of this OFFICIAL STATEMENT, the City currently does not expect its current or future policies regarding post employment benefits to have a negative financial impact on the City. 10

17 Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance. All general liability is insured through Utah Risk Management Mutual Association, a risk pool to which the City belongs, along with 19 other cities in Utah. Rights and responsibilities of member cities are governed by an interlocal risk pool agreement. The City believes its risk management policies and coverages are normal and within acceptable coverage limits for the type of services the City provides. As of the date of this OFFICIAL STATEMENT, all policies are current and in force. See APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Notes to Financial Statements Note 5. Other Information Risk Management (page 66). Investment Of Funds The State Money Management Act. The State Money Management Act, Title 51, Chapter 7 of the Utah Code (the Money Management Act ), governs and establishes criteria for the investment of all public funds held by public treasurers in the State. The Money Management Act provides a limited list of approved investments, including qualified in state and permitted out of state financial institutions, obligations of the State and political subdivisions of the State, U.S. Treasury and approved federal government agency and instrumentality securities, certain investment agreements and repurchase agreements and investments in corporate securities meeting certain ratings requirements. The Money Management Act establishes the State Money Management Council (the Money Management Council ) to exercise oversight of public deposits and investments. The Money Management Council is comprised of five members appointed by the Governor of the State for terms of four years, after consultation with the State Treasurer and with the advice and consent of the State Senate. The City is currently complying with all of the provisions of the Money Management Act for all City operating funds. The Utah Public Treasurers Investment Fund. A significant portion of City funds may be invested in the Utah Public Treasurers Investment Fund ( PTIF ). The PTIF is a local government investment fund, established in 1981, and managed by the State Treasurer. All investments in the PTIF must comply with the Money Management Act and rules of the Money Management Council. The PTIF invests primarily in money market securities. Securities in the PTIF include certificates of deposit, commercial paper, short term corporate notes, and obligations of the U.S. Treasury and securities of certain agencies of the federal government. By policy, the maximum weighted average adjusted life of the portfolio is not to exceed 90 days and the maximum final maturity of any security purchased by the PTIF is limited to five years. Safekeeping and audit controls for all investments owned by the PTIF must comply with the Money Management Act. All securities purchased are delivered versus payment to the custody of the State Treasurer or the State Treasurer s safekeeping bank, assuring a perfected interest in the securities. Securities owned by the PTIF are completely segregated from securities owned by the State. The State has no claim on assets owned by the PTIF except for any investment of State moneys in the PTIF. Deposits are not insured or otherwise guaranteed by the State. Investment activity of the State Treasurer in the management of the PTIF is reviewed monthly by the Money Management Council and is audited by the State Auditor. The PTIF is not rated. See APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Notes to Financial Statements Note 4. Detailed Notes on All Funds Deposits and Investments (page 55). 11

18 Population The following population information is provided for the City and the County. % % Change From Change From City Prior Period County Prior Period 2013 Estimate (1)... 21, % 322, % 2010 Census... 18, , Census... 12, , Census... 9, , Census... 5, , Census... 2, , Census... 1, , Census... 1,468 30, (1) U.S. Bureau of the Census estimates for July 1, Percentage change is calculated from the 2010 Census. (Source: U.S. Department of Commerce, Bureau of the Census.) (The remainder of this page has been intentionally left blank.) 12

19 Employment, Income, Construction, And Sales Taxes Within Davis County And Farmington City Labor Force, Nonfarm Jobs and Wages within Davis County Calendar Year (1) % change from prior year Civilian labor force 151, , , , , , (1.3) 0.3 (1.2) Employed persons 145, , , , , , (0.4) (0.9) (3.9) Unemployed persons 6,341 7,752 8,943 10,275 8,614 4,782 (18.2) (13.3) (13.0) Total nonfarm jobs , , , ,364 99, , (3.6) Mining (2.8) (16.6) 1.2 Construction 7,622 7,157 6,870 6,742 7,285 9, (7.5) (19.5) Manufacturing 10,861 10,505 9,815 8,991 8,894 9, (8.3) Trade, transportation, utilities 20,975 20,108 19,453 19,241 19,717 20, (2.4) (5.1) Information 1,509 1,409 1,357 1,102 1,041 1, (1.0) Financial activity 3,595 3,452 3,561 3,708 3,955 4, (3.1) (4.0) (6.2) (1.7) Professional and business services 14,467 13,140 12,545 11,805 11,447 12, (5.5) Education and health services 12,189 12,156 11,725 11,071 10,500 10, Leisure and hospitality 11,656 10,426 9,940 9,712 9,472 9, (4.4) Other services. 3,164 2,943 3,122 2,781 2,869 3, (5.7) 12.3 (3.1) (5.5) Government 24,534 26,531 26,825 25,073 24,625 23,779 (7.5) (1.1) Total payroll (in millions) $ 4,328 $ 4,221 $ 4,057 $ 3,769 $ 3,676 $ 3, (0.8) Average monthly wage $ 3,257 $ 3,256 $ 3,216 $ 3,129 $ 3,066 $ 2, Average employment 110, , , ,375 99, , (3.4) Establishments 7,444 7,143 7,010 6,890 7,040 7, (2.1) (1.4) Personal Income; Per Capita Personal Income; Median Household Income within Davis County and State of Utah Calendar Year (2) % change from prior year Total Personal Income (in $1,000 s): Davis County.. $ 12,359,481 $ 11,724,122 $ 11,142,507 $ 10,394,285 $ 10,217,489 $ 10,282, (0.6) State of Utah ,288, ,162,690 96,175,091 90,112,698 88,270,188 91,248, (3.3) Total Per Capita Personal Income (in $): Davis County.. 38,372 37,124 35,727 33,762 33,837 34, (0.2) (2.7) State of Utah... 36,640 35,430 34,173 32,472 32,412 34, (5.4) Median Household Income (in $): Davis County.. 70,456 69,019 68,974 64,840 66,220 67, (2.1) (1.2) State of Utah... 59,715 57,067 55,802 54,740 55,183 56, (0.8) (2.9) (1) Utah Department of Workforce Services. (2) U.S. Department of Commerce; Bureau of Economic Analysis and U.S. Census Bureau. 13

20 Construction Within Farmington City (1) Calendar Year % change from prior year Number new dwelling units (48.0) (37.8) New (in thousands): Residential Value $ 38,077.4 $ 46,640.6 $ 46,946.8 $ 47,319.0 $ 38,848.0 $ 26,948.0 (18.4) (0.7) (0.8) Non residential value 9, , , , , ,480.5 (66.1) (5.6) Additions, alterations, repairs (in thousands): Residential Value 1, , , , ,879.8 (22.5) (39.6) (34.5) Non residential value 16, , , (14.3) (57.8) Total construction value (in thousands) $ 66,073.6 $ 82,649.2 $ 85,037.3 $ 66,479.0 $ 46,392.7 $ 34,512.3 (20.1) (2.8) Sales Taxes Within Farmington City, Davis County and the State of Utah (2) Calendar Year % change from prior year Gross Taxable Sales (in thousands): Farmington City.. $ 238,418.0 $ 194,547.0 $ 158,302.0 $ 118,543 $ 107,524 $ 129, (17.0) Davis County.. 4,268,195 3,984,034 3,751,942 3,600,214 3,943,161 4,002, (8.7) (1.5) State of Utah.. 49,404,045 47,806,988 44,154,882 41,907,568 44,409,394 47,360, (5.6) (6.2) Fiscal Year % change from prior year Local Sales and Use Tax Distribution: Farmington City.. $ 2,541,741 $ 2,313,040 $ 1,911,925 $ 1,784,598 $ 2,005,827 $ 2,026, (11.0) (1.0) Davis County (and all cities) 45,626,942 42,920,410 39,657,466 38,362,708 42,584,066 45,386, (9.9) (6.2) (1) University of Utah Bureau of Economic and Business Research, Utah Construction Report. (2) Utah State Tax Commission. 14

21 Additional Information. For a 10 year history of the City s presentation of demographic and economic statistics (population, personal income, per capital income, median age, school enrollment and unemployment rate) are provided in APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Table 16. Demographic and Economic Statistics (page 109). Largest Employers The following is a list of the largest employers in the City and County. Firm Business Employees City: Lagoon Corporation, Inc.... Arts, entertainment and recreation 1,000 2,000 Farmington City... Public administration Alta Therapies... Health care and social assistance Harmon s at Station Park... Retail trade Smith s Food and Drug... Retail trade Thormasarts Holding, Inc.... Professional, scientific, & technical Café Zupas... Professional, scientific, & technical Cornerstone Programs Corporation... Manufacturing The Gym at Station Park, LLC... Arts, entertainment, and recreation Station Park... Retail trade Twigs Bistro and Martini Bar... Accommodation and food service World of Jeans and Tops, Inc... Retail trade County (location): Department of Defense (Hill Air Force Base) (1).. Public administration 10,000 15,000 Davis School District (county wide)... Educational services 5,750 12,100 Wal Mart (county wide)... Retail trade 1,050 2,100 Lifetime Products (Clearfield)... Manufacturing 1,000 2,000 Kroger Group (county wide)... Retail trade/manufacturing 750 1,750 Davis County (county wide)... Public administration (2) 650 1,400 Kroger Group (Layton City)... Transportation and warehousing 550 1,100 Alliant (Clearfield)... Manufacturing 500 1,000 ATK Space Systems (Clearfield)... Manufacturing 500 1,000 Black Turtle Services (Layton)... Admin., support, waste mgmt., remediation 500 1,000 Davis Hospital and Med. Center (Layton City)... Health care and social assistance 500 1,000 Lakeview Hospital (Bountiful City)... Health care and social assistance 500 1,000 Lexington Law Firm (Bountiful)... Professional, scientific, & technical 500 1,000 Ralcorp Frozen Bakery Products (South Ogden)... Manufacturing 500 1,000 Smith s Distribution Center (Layton)... Transportation and warehousing 500 1,000 South Davis Comm. Hospital (Bountiful City)... Health care and social assistance 500 1,000 Utility Trailer and Manufacturing (Clearfield)... Manufacturing 500 1,000 YES (North Salt Lake)... Admin., support, waste mgmt., remediation 500 1,000 (1) Hill Air Force Base is located south of the City of Ogden, and its boundaries overlap the cities of Clearfield, Riverdale, Roy, Sunset and Layton, Utah. (2) Includes public administration; information; health care and social assistance; arts, entertainment and recreation; construction; and other services. (Source: Utah Department of Workforce Services. Updated April 2014, reflecting information as of September 2013.) Additional Information. For a presentation of the largest employers in the City in Calendar Years 2014 and 2005 see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF 15

22 FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Table 17 Principal Employers (page 110). Rate Of Unemployment Annual Average Davis State United Year County of Utah States % 3.7% 6.2% (Source: Utah Department of Workforce Services.) Outstanding Municipal Debt DEBT STRUCTURE OF FARMINGTON CITY, UTAH Outstanding General Obligation Bonded Indebtedness Original Current Principal Final Principal Series Purpose Amount Maturity Date Outstanding 2015 (1)... Recreation $ 6,000,000 January 1, 2035 $6,000, (2)... Refunding 1,193,000 April 1, , (2)... Land/bldg. 2,500,000 April 1, ,711, (1) (3)... Various 1,900,000 January 1, ,000 Total... $9,054,000 (1) For purposes of this OFFICIAL STATEMENT, the 2015 Bonds will be considered issued and outstanding. Rated Aa2 by Moody s Investor s Service ( Moody s ), as of the date of this OFFICIAL STATEMENT. (2) Not rated; no rating applied for. These bonds were privately placed. (3) These bonds are insured by Ambac Assurance. Outstanding Sales Tax Revenue Bonds Indebtedness Original Current Principal Final Principal Series (1) Purpose Amount Maturity Date Outstanding City hall $ 821,000 June 1, 2024 $595, B... Roads 1,093,000 June 1, ,000 Total principal amount of outstanding debt... $725,000 (1) Not rated; no rating applied for. These bonds were privately placed. 16

23 Outstanding Redevelopment Agency Bonded Indebtedness Original Current Principal Final Principal Series Purpose Amount Maturity Date Outstanding 2012 (1)... Road $1,036,000 April 1, 2017 $640,000 (1) Not rated; no rating applied for. These bonds were privately placed. Outstanding Special Assessment Bonded Indebtedness Original Current Principal Final Principal Series Purpose Amount Maturity Date Outstanding 2005 (1)... SID No $312,476 October 1, 2015 $73,000 (1) Not rated; no rating applied for. These bonds were privately placed. Also see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMING- TON CITY, UTAH FOR FISCAL YEAR 2014 Notes to the Financial Statements Note 4. Detailed Notes on All Funds Long Term Debt (pages 62 through 65). Future Issuance Of Debt; Other Financial Considerations Future issuance of debt. Other than the issuance of the 2015 Bonds (and any refunding opportunities) the City does not anticipate the issuance of any other general obligation debt within the next three years. The City intends to issue approximately $2 million of sales tax bonds within the next few months. In November 2014, Farmington City residents approved a special sales tax to pay for the debt service of these special sales tax bonds. Other Financial Considerations. The City s has also entered into a capital lease agreement for financing its capital equipment needs. As of Fiscal Year 2014, the present value of the minimum lease payments of the City s capital leases totals $1,782,676, with annual payments scheduled through Fiscal Year See APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Notes to the Financial Statements Note 4. Detailed Notes on All Funds E. Leases (page 61). (The remainder of this page has been intentionally left blank.) 17

24 Debt Service Schedule of Outstanding General Obligation Bonds By Fiscal Year Fiscal Year Ending June 30 Series 2015 Series 2012 Series 2007 Series 2003 Totals $6,000,000 $1,193,000 $2,500,000 $1,900,000 Total Total Total Debt Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Service 2014 $ 0 $ 0 $ 130,000 $ 22,318 $ 178,000 $ 76,316 $ 200,000 $ 23,900 $ 508,000 $ 122,534 $ 630, ,000 20, ,000 69, ,000 16, , , , , ,000 18, ,000 61, ,000 7, , , , , , ,000 15, ,000 53, , , , , , ,000 12, ,000 45, , , , , , ,000 8, ,000 37, , , , , , ,000 4, ,000 28, , , , , , ,000 19, , , , , , ,000 9, , , , , , , , , , , , , , , , , , , ,000 99, ,000 99, , ,000 92, ,000 92, , ,000 84, ,000 84, , ,000 76, ,000 76, , ,000 67, ,000 67, , ,000 58, ,000 58, , ,000 48, ,000 48, , ,000 37, ,000 37, , ,000 26, ,000 26, , ,000 13, ,000 13, ,825 Totals $ 6,000,000 $ 1,931,885 $ 1,068,000 $ 101,655 $ 1,889,000 $ 401,778 $ 605,000 $ 47,700 $ 9,562,000 $ 2,483,017 $ 12,045,017 18

25 Debt Service Schedule Of Outstanding Sales Tax Revenue Bonds By Fiscal Year Fiscal Series 2009 Series 2005B Totals Year Ending $821,000 $1,093,000 Total Total Total Debt June 30 Principal Interest Principal Interest Principal Interest Service 2014 $ 47,000 $ 27,130 $ 125,000 $ 10,583 $ 172,000 $ 37,712 $ 209, ,000 25, ,000 5, ,000 30, , ,000 23,268 51,000 23,268 74, ,000 21,029 53,000 21,029 74, ,000 18,565 55,000 18,565 73, ,000 15,859 58,000 15,859 73, ,000 (t) 12,831 61,000 12,831 73, ,000 (t) 10,452 63,000 10,452 73, ,000 (t) 7,995 66,000 7,995 73, ,000 (t) 5,421 68,000 5,421 73, ,000 (t) 2,769 71,000 2,769 73,769 Totals $ 642,000 $ 170,615 $ 255,000 $ 15,978 $ 897,000 $ 186,592 $ 1,083,592 19

26 Debt Service Schedule of Outstanding Redevelopment Agency Bonds By Fiscal Year Fiscal Year Series 2012 Ending $1,036,000 Total Debt June 30 Principal Interest Service 2014 $ 203,000 (t) $ 20,654 $ 223, ,000 (t) 15, , ,000 (t) 10, , ,000 (t) 5, ,366 Totals $ 843,000 $ 52,283 $ 895,283 (t) Mandatory sinking fund payments from a $1,036, % term bond due April 1, Debt Service Schedule Of Outstanding Special Assessment Bonds By Fiscal Year Fiscal Series 2005 Year Ending $312,476 Total Debt June 30 Principal Interest Service 2014 $ 35,000 $ 4,482 $ 39, ,000 3,030 39, ,000 1,536 38,536 Totals $ 108,000 $ 9,047 $ 117,047 20

27 Additional Information. For Fiscal Year debt service schedules for the general obligation, revenue bonds, notes payable and capital leases of the City, see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Ratios of Outstanding Debt by Type (page 104). Overlapping And Underlying General Obligation Debt Entity s 2014 City s City s General City s Taxable Portion of Tax Per Obligation Portion of Taxing Entity Value (1) able Value centage Debt G.O. Debt Overlapping: State of Utah... $210,954,472,304 $1,374,899, % $2,833,715,000 $19,836,005 WBWCD (2)... 45,852,419,512 1,374,899, ,888, ,655 Davis County School District... 18,087,117,346 1,374,899, ,635,000 30,980,260 Davis County... 18,087,117,346 1,374,899, ,800,000 1,276,800 Total overlapping... 52,809,720 Underlying: Total underlying... 0 Total overlapping and underlying general obligation debt... $52,809,702 Total overlapping general obligation debt (excluding the State) (3)... $32,973,715 Total direct general obligation bonded indebtedness... 9,054,000 Total direct and overlapping general obligation debt (excluding the State) (3)... $42,027,715 (1) Preliminary; subject to change. Taxable value used in this table excludes the taxable value used to determine uniform fees on tangible personal property. (2) The Weber Basin Water Conservancy District ( WBWCD ) covers all of Morgan County, most of the County and Weber County, and portions of Box Elder and Summit Counties. Principal and interest on WBWCD general obligation bonds are paid from sales of water. WBWCD s outstanding general obligation bonds are limited ad valorem tax bonds. By law, WBWCD may levy a tax rate of up to to pay, first, for any outstanding general obligation indebtedness, then for operation and maintenance expenses, and then for any other lawful purpose. (3) The State s general obligation debt is not included in overlapping debt because the State currently levies no property tax for payment of general obligation bonds. Additional Information. For overlapping and underlying debt of the City as of Fiscal Year 2014 see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Direct and Overlapping Governmental Activities Debt (page 106). Debt Ratios The following table sets forth the ratios of general obligation debt (excluding any additional principal amounts attributable to unamortized original issue bond premium and deferred amount on refunding) that is expected to be paid from taxes levied specifically for such debt and not from other revenues over the taxable value of property within the City, the estimated market value of such property and the population of the City. The State s general obligation debt is not included in the debt ratios because the State currently levies no property tax for payment of general obligation debt. 21

28 To 2014 To 2014 To 2013 Estimated Estimated Population Taxable Market Estimate Per Value (1) Value (2) Capita (3) Direct general obligation debt % 0.41% $ 419 Direct and overlapping general obligation debt ,946 (1) Based on an estimated 2014 Taxable Value of $1,374,899,926, which value excludes the taxable value used to determine uniform fees on tangible personal property. (2) Based on an estimated 2014 Market Value of $2,230,873,412, which value excludes the taxable value used to determine uniform fees on tangible personal property. (3) Based on the 2013 estimated population of 21,599, according to the U.S. Census Bureau. See FINANCIAL INFORMATION REGARDING FARMINGTON CITY, UTAH Property Tax Matters Uniform Fees and Taxable, Fair Market And Market Value Of Property Within The City. Additional Information. For a 10 year history of general obligation debt ratios calculated by the City see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Ratio of Net General Bonded Debt And Net General Bonded Debt Outstanding Last Ten Fiscal Years (page 105). General Obligation Legal Debt Limit And Additional Debt Incurring Capacity The general obligation indebtedness of the City is limited by State law to 12% of the fair market value of taxable property in the City (4% for general purposes and an additional 8% for sewer, water and electric purposes). The legal debt limit and additional debt incurring capacity of the City (after the issuance of the 2015 Bonds) are based on the estimated fair market value for 2014 and the calculated valuation value from 2013 uniform fees, and are calculated as follows: Estimated 2014 Fair Market Value... $2,230,873, Valuation from Uniform Fees (1)... 12,526,774 Estimated 2014 Fair Market Value for Debt Incurring Capacity... $2,243,400,186 8% Sewer, Water and 4% Other 12% Electric Purposes Total Fair Market Value times 8%... $179,472,015 $ 0 $179,472,015 Fair Market Value times 4% ,736,007 89,736,007 Total Debt Incurring Capacity ,472,015 89,736, ,208,022 Less: Current Outstanding General Obligation Debt... (0) (9,045,000) (9,045,000) Additional Debt Incurring Capacity... $179,472,015 $80,691,007 $260,163,022 (1) 2014 final information is not available. For debt incurring capacity only, in computing the fair market value of taxable property in the City, the value of all motor vehicles and state assessed commercial vehicles (which value is determined by dividing the uniform fee revenue by 1.5%) will be included as a part of the fair market value of the taxable property in the City. Additional Information. For a 10 year Fiscal Year history of the City s general obligation legal debt limit and debt capacity see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF 22

29 FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Legal Debt Margin Information (page 107). No Defaulted Obligations The City has never failed to pay principal of and interest on any of its financial obligations when due. FINANCIAL INFORMATION REGARDING FARMINGTON CITY, UTAH Fund Structure; Accounting Basis The accounts of the City are organized on the basis of funds or groups of accounts, each of which is considered to be a separate accounting entity. The operations of each fund or account group are accounted for by providing a separate set of self balancing accounts which comprise its assets, liabilities, fund balance, revenues and expenditures or expenses. The various funds are grouped by type in the combined financial statements. Revenues and expenditures are recognized using the modified accrual basis of accounting in all governmental funds. Revenues are recognized in the accounting period in which they become both measurable and available. Measurable means that amounts can be reasonably determined within the current period. Available means that amounts are collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues on cost reimbursement grants are accrued when the related expenditures are incurred. In proprietary funds, revenues and expenses are recognized using the accrual basis of accounting. Revenues are recognized in the accounting period in which they are earned and become measurable, and expenses are recognized in the period incurred. Budget And Budgetary Process The budget and appropriation process of the City is governed by the Fiscal Procedures Act. Pursuant to the Fiscal Procedures Act, the budget officer of the City is required to prepare budgets for the general fund, special revenue funds, debt service funds and capital improvement funds. These budgets are to provide a complete financial plan for the budget (ensuing fiscal) year. Each budget is required to specify, in tabular form, estimates of anticipated revenues and appropriations for expenditures. Under the Fiscal Procedures Act, the total of anticipated revenues must equal the total of appropriated expenditures. On or before the first regular meeting of the City Council of the City in May of each year, the budget officer is required to submit to the City Council tentative budgets for all funds for fiscal year commencing July 1. Various actual and estimated budget data are required to be set forth in the tentative budgets. The budget officer may revise the budget requests submitted by the heads of City departments, but must file these submissions with the City Council together with the tentative budget. The budget officer is required to estimate in the tentative budget the revenue from non property tax sources available for each fund and the revenue from general property taxes required by each fund. The tentative budget is then tentatively adopted by the City Council, with any amendments or revisions that the City Council deems advisable prior to the public hearing on the tentative budget. After public notice and hearing, the tentative budget is adopted by the City Council, subject to further amendment or revisions by the City Council prior to adoption of the final budget. Prior to June 22 of each year, the final budgets for all funds are adopted by the City Council. The Fiscal Procedures Act prohibits the City Council from making any appropriation in the final budget of any fund in excess of the estimated expendable revenue of such fund. The adopted final budget is subject to amendment by the City Council during the fiscal year. However, in order to increase the budget total of 23

30 any fund, public notice and hearing must be provided. Intra and inter department transfers of appropriation balances are permitted upon compliance with the Fiscal Procedures Act. The amount set forth in the final budget as the total amount of estimated revenue from property taxes constitutes the basis for determining the property tax levy to be set by the City Council for the succeeding tax year. Financial Controls The City utilizes a computerized financial accounting system which includes a system of budgetary controls. State law requires budgets to be controlled by individual departments, but the City has also empowered the City Manager to maintain control of major categories within departments. These controls are such that a requisition will not be entered into the purchasing system unless the appropriated funds are available. The Assistant City Manager checks for sufficient funds again prior to the purchase order being issued and again before the payment check is issued. Voucher payments are also controlled by the Assistant City Manager for sufficient appropriations. Sources of General Fund Revenues Set forth below are brief descriptions of the various sources of revenues available to the City s general fund. The percentage of total general fund revenues represented by each source is based on the City s Fiscal Year 2014 period (total general fund revenues were $8,394,398). Taxes Approximately 78% (or $6,528,003) of general fund revenues are from taxes. Licenses and Permits Approximately 8% (or $691,139) of general fund revenues are from State shared revenues. Intergovernmental Revenue Approximately 7% (or $617,645) of general fund revenues are from State shared revenues. Fines and Forfeitures Approximately 3% (or $211,843) of general fund revenues are collected from fines and forfeitures. Charges for Services Approximately 2% (or $195,756) of general fund revenues are from charges for services. Miscellaneous Less than 2% (or $141,974) of general fund revenues are collected from other miscellaneous sources. Interest Less than 1% (or $8,038) of general fund revenues are collected from interest. Additional Information. For a 10 year Fiscal Year history of the City s total revenues by source see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Governmental Activities Tax Revenue by Source (page 96). Financial Summaries The summaries contained herein were extracted from the City s basic financial statements. The summaries have not been audited. 24

31 Farmington City Statement of Net Position Primary Government (This summary has not been audited) June Assets Cash and cash equivalents $ 8,702,359 $ 9,636,337 $ 7,184,131 $ 7,003,255 $ 7,672,813 Cash with fiscal agents 39,719 43,271 46, ,466 1,949,741 Accounts receivable net 679, , , , ,313 Property, sales and franchise taxes receivable 3,376,437 3,161,340 3,062,514 2,805,818 2,716,673 Other receivables 55,085 61, ,964 25,609 55,818 Capital lease receivable 385,000 Special assessments receivable 42,273 56,424 83, , ,312 Deferred bond financing cost net 129, , ,967 Restricted cash and cash equivalents 4,143,150 4,014,684 3,796,616 1,991,293 Capital assets (net of depreciation): Land 26,811,538 23,274,043 22,531,545 20,376,762 18,794,836 Water rights and easements 25,717 25,717 25,717 25,717 25,717 Buildings... 11,118,474 12,239,879 12,618,796 12,962,026 9,094,637 Improvements 16,373,155 15,476,650 15,319,451 15,200,613 22,385,266 Machinery and equipment 2,108,459 2,032,868 1,779,957 1,947,008 1,775,474 Infrastructure 29,225,861 28,824,547 29,037,826 29,821,019 19,431,599 Construction in progress 4,774,909 Total assets 102,702,144 99,567,583 96,445,675 94,011,128 89,912,075 Deferred Outflows of Resources: Deferred bond financing costs - net 108,085 Liabilities Accounts payable and accrued liabilities 2,074,919 1,049, ,703 1,648,619 1,469,234 Construction bonds held 1,233,596 2,027,153 1,323, , ,422 Due to subdividers and land owners 57,151 55,048 57,956 9,134 39,059 Accrued interest payable 84,154 97,158 Deferred revenue.. 2,257,716 2,093,595 1,854,459 Noncurrent liablities: Due within more than one year 1,487,722 1,274,705 1,179,760 8,023,024 9,363,958 Due within one year 4,991,357 4,965,726 6,187,611 1,434,843 1,574,441 Total liabilities 9,844,745 9,371,748 12,006,296 13,879,567 14,824,731 Deferred Inflows of Resources: Unearned revenue - property taxes 2,408,191 2,265,854 Net Position Invested in capital assets, net of related debt 79,181,108 75,796,474 74,099,780 71,319,056 66,874,903 Restricted for: Class C roads 115,928 60,879 75,731 31,594 Liquor law. 17,150 20,346 23,661 12,146 4,801 Perpetual care - expendable , , , ,353 Perpetual care - nonexpendable 204,869 Debt service. 115, , , ,448 Impact fees 4,143,150 4,014,684 3,796,616 2,766,463 Redevelopment 996, , , ,129 Unrestricted... 5,790,856 6,962,156 5,677,283 4,591,165 7,985,693 Total net position $ 90,449,208 $ 88,038,066 $ 84,439,379 $ 80,131,561 $ 75,087,344 (Source: Information extracted from the City s audited basic financial statements. This summary itself has not been audited.) 25

32 Farmington City Statement of Activities Primary Government (This summary has not been audited) Net (Expense) Revenues and Changes in Net Assets Fiscal Year Ended June Governmental activities: General government $ (2,760,316) $ (981,291) $ (1,028,694) $ (1,458,736) $ (607,934) Public safety (2,651,394) (2,325,162) (2,192,175) (1,934,372) (1,835,029) Highways and public works (102,951) (957,287) (1,512,970) (354,156) 5,253,308 Community development (916,442) (880,994) 1,064,522 (369,472) (652,521) Parks and cemetery (1,092,352) (623,558) (520,882) (340,531) (102,637) Interest on long term debt (189,562) (252,239) (331,769) (381,702) (335,986) Total governmental activities (7,713,017) (6,020,531) (4,521,968) (4,838,969) 1,719,201 Business type activities: Water utility 243, , , , ,529 Sewer utility 36,637 34,832 34,462 31,272 32,443 Garbage utility 63,791 51,234 62,999 88,908 66,593 Storm water utility 147, , , ,919 1,116,635 Ambulance service 1,003 (4,352) (30,017) 75,476 21,643 Recreation (352,485) (319,389) (288,464) (257,430) (277,382) Total business type activities 139, , , ,068 1,729,461 Total primary government (7,573,246) (5,642,809) (4,259,446) (4,042,901) 3,448,662 General revenues: Property taxes 4,076,021 3,404,425 2,689,552 2,597,720 2,552,025 General sales and use tax 3,087,473 2,581,678 2,380,246 1,970,478 1,802,477 Franchise tax 995, , , , ,926 Energy use tax 484, , , , ,763 Impact fees 1,052,073 1,708,097 1,979,624 3,107,484 Interest earnings 62,596 78,075 73, , ,523 Insurance proceeds 105,784 Gain (loss) on sale of assets 309,372 23,429 18,478 55, ,033 Miscellaneous 24,543 48,755 42,405 40,207 68,578 Total general revenues 10,092,473 9,241,496 8,567,264 9,087,112 6,733,325 Change in net position 2,519,227 3,598,687 4,307,818 5,044,211 10,181,987 Net position beginning (as adjusted). 87,929,981 84,439,379 80,131,561 75,087,350 64,905,357 Net position ending.. $ 90,449,208 $ 88,038,066 $ 84,439,379 $ 80,131,561 $ 75,087,344 (1) This report is presented is summary format concerning the single item of Net (Expense) Revenue and Changes in Net Assets Primary Government and is not intended to be complete. For a detailed itemized report see BASIC FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2014 Statement of Activities For The Year Ended June 30, 2014 below. (Source: Information extracted from the City s audited basic financial statements. This summary itself has not been audited.) 26

33 Farmington City Governmental Fund Types Balance Sheet General Fund (This summary has not been audited) Fiscal Year Ending June Assets Cash and cash equivalents... $ 2,207,259 $ 2,967,658 $ 1,559,511 $ 1,649,504 $ 860,093 Receivables: Sales, property, and franchise taxes 2,728,437 2,514,870 2,444,012 2,241,093 2,149,251 Accounts 50,955 57,798 27,090 21,482 29,614 Due from other funds 295, , ,100 Total assets $ 4,986,651 $ 5,540,326 $ 4,326,313 $ 4,167,979 $ 3,277,058 Liabilities and fund balances Liabilities: Accounts payable and accrued liabilities $ 487,244 $ 411,156 $ 336,801 $ 294,881 $ 190,669 Construction bonds held 1,114,896 1,919,653 1,199, , ,972 Deferred revenue... 1,659,066 1,553,520 1,482,008 Total liabilities 1,602,140 2,330,809 3,195,017 2,328,149 2,002,649 Deferred Inflows of Resources: Unavailable revenue - property taxes 1,792,603 1,649,987 Fund balances: Restricted: Class C roads 115,928 60,879 75,731 31,594 Liquor law 17,150 20,346 23,661 12,146 4,801 Assigned, reported in: Self insurance 100,000 85,000 85,000 80,000 75,000 Trails. 5,403 5,750 2, Unassigned, reported in: General fund 1,469,355 1,332, ,059 1,670,962 1,162,445 Total fund balances 1,591,908 1,559,530 1,131,296 1,839,830 1,274,409 Total liabilities and fund balances $ 4,986,651 $ 5,540,326 $ 4,326,313 $ 4,167,979 $ 3,277,058 (Source: Information extracted from the City s audited basic financial statements. This summary itself has not been audited.) 27

34 Farmington City Statement of Revenues, Expenditures, and Changes in Fund Balance General Fund (This summary has not been audited) Fiscal Year Ended June Revenues: Taxes $ 6,528,003 $ 5,770,331 $ 5,445,295 $ 4,849,462 $ 4,698,186 Licenses and permits 691, , , , ,510 Intergovernmental 617, , , , ,897 Charges for services 195, , , , ,850 Fines and forfeitures 211, , , , ,012 Interest 8,040 8,264 7,679 5,227 5,653 Miscellaneous 141, , ,862 83,965 77,658 Total revenues 8,394,400 7,928,922 7,416,456 6,934,878 6,497,766 Expenditures: General government 1,133,535 1,038,399 1,018, , ,365 Public safety 2,766,223 2,458,063 2,360,421 2,124,323 2,166,346 Highways and public works 827, , , , ,927 Community development 1,011, , , , ,837 Parks and cemetery 676, , , , ,869 Total expenditures 6,414,860 6,015,074 5,684,792 5,239,418 5,098,344 Excess of revenues over expenditures 1,979,540 1,913,848 1,731,664 1,695,460 1,399,422 Other financing sources (uses): Sale of capital assets 34,932 24,208 18,478 14,679 Loan to RDA (17,800) Operating transfers in 1, ,500 7,559 1,000 1,000 Operating transfers (out) (1,983,094) (1,737,321) (2,448,435) (1,145,718) (1,067,694) Total other financing sources (uses) (1,947,162) (1,435,613) (2,440,198) (1,130,039) (1,066,694) Excess of revenues and other financing sources over expenditures and other financing (uses) 32, ,235 (708,534) 565, ,728 Fund balance at beginning of year 1,559,530 1,131,295 1,839,830 1,274, ,681 Fund balance at end of year $ 1,591,908 $ 1,609,530 $ 1,131,296 $ 1,839,830 $ 1,274,409 (Source: Information extracted from the City s audited basic financial statements. This summary itself has not been audited.) 28

35 For a 10 year financial history of various City funds see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section at the indicated pages as set forth below. (i) Net position by component see Net Assets by Component (page 93); (ii) Changes in net position see Changes in Net Assets (pages 94 and 95); (iii) Fund balances of governmental funds see Fund Balances of Governmental Funds (page 97); and (iv) Changes in fund balances see Changes in Fund Balances of Governmental Funds (page 98). The administration of the City prepared a narrative discussion, overview, and analysis of the financial activities of the City for Fiscal Year See APPENDIX A COMPREHENSIVE ANNUAL FI- NANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Management s Discussion and Analysis (after the Independent Auditor s Report) (page 18). The City s audited financial report for Fiscal Year 2015 must be completed under State law by December 31, Tax Levy And Collection The Utah State Tax Commission (the State Tax Commission ) must assess all centrally assessed property (as defined under Property Tax Matters below) by May 1 of each year. County assessors must assess all locally assessed property (as defined under Property Tax Matters below) before May 22 of each year. The State Tax Commission apportions the value of centrally assessed property to the various taxing entities within each county and reports such values to county auditors before June 8. The governing body of each taxing entity must adopt a proposed tax rate or, if the tax rate is not more than the certified tax rate, a final tax rate before June 22. County auditors must forward to the State Tax Commission a statement prepared by the legislative body of each taxing entity showing the amount and purpose of each levy. Upon determination by the State Tax Commission that the tax levies comply with applicable law and do not exceed maximum permitted rates, the State Tax Commission notifies county auditors to implement the levies. If the State Tax Commission determines that a tax levy established by a taxing entity exceeds the maximum levy permitted by law, the State Tax Commission must lower the levy to the maximum levy permitted by law, notify the taxing entity that the rate has been lowered and notify the county auditor (of the county in which the taxing entity is located) to implement the rate established by the State Tax Commission. On or before July 22 of each year, the county auditors must mail to all owners of real estate shown on their assessment rolls notice of, among other things, the value of the property, itemized tax information for all taxing entities and the date their respective county boards of equalization will meet to hear complaints. Taxpayers owning property assessed by a county assessor may file an application within statutorily defined time limits based on the nature of the contest with the appropriate county board of equalization for the purpose of contesting the assessed valuation of their property. The county board of equalization must render a decision on each appeal in the time frame prescribed by the Property Tax Act, Chapter 2, Title 59, Utah Code (the Property Tax Act ). Under certain circumstances, the county board of equalization must hold a hearing regarding the application, at which the taxpayer has the burden of proving that the property sustained a decrease in fair market value. Decisions of the county board of equalization may be appealed to the State Tax Commission, which must decide all appeals relating to real property by March 1 of the following year. Owners of centrally assessed property or any county with a showing of reasonable cause, may, on or before the later of June 1 or a day within 30 days of the date the notice of assessment is mailed by the State Tax Commission, apply to the State Tax Commission for a hearing to contest the assessment of centrally assessed property. The State Tax Commission must render a written 29

36 decision within 120 days after the hearing is completed and all post hearing briefs are submitted. The county auditor makes a record of all changes, corrections and orders, and delivers before November 1 the corrected assessment rolls to the county treasurers. By November 1, each county treasurer furnishes each taxpayer a notice containing the kind and value of the property assessed to the taxpayer, the street address of the property, where applicable, the amount of the tax levied on the property and the year the property is subject to a detailed review. Taxes are due November 30 (and if a Saturday, Sunday or holiday, the next business day). Each county treasurer is responsible for collecting all taxes levied on real property within that county. There are no prior claims to such taxes. As taxes are collected, each county treasurer must pay to the State and each taxing entity within the county its proportionate share of the taxes, on or before the tenth day of each month. Delinquent taxes are subject to a penalty of 2.5% of the amount of the taxes or $10 whichever is greater. Unless the delinquent taxes and penalty are paid before January 31 of the following year, the amount of delinquent taxes and penalty bears interest at the federal funds rate target established by the Federal Open Market Committee plus 6% from the January 1 following the delinquency date until paid (provided that said interest may not be less than 7% nor more than 10%). If delinquent taxes have not been paid by March 15 following the lapse of four years from the delinquency date, the affected county advertises and sells the property at a final tax sale held in May or June of the fifth year after assessment. The process described above changes if a county or other taxing entity proposes a tax rate in excess of the certified tax rate (as described under Public Hearing On Certain Tax Increases below). If such an increase is proposed, the taxing entity must adopt a proposed tax rate before June 22. In addition, the county auditor must include certain information in the notices to be mailed by July 22, as described above, including information concerning the tax impact of the proposed increase on the property and the time and place of the public hearing described in Public Hearing On Certain Tax Increases below. In most cases, notice of the public hearing must also be advertised by publication. After the public hearing is held, the taxing entity may adopt a resolution levying a tax in excess of the certified tax rate. A resolution levying a tax in excess of the certified tax rate must be forwarded to the county auditor by August 17. The final tax notice is then mailed by November 1. Public Hearing On Certain Tax Increases Each taxing entity that proposes to levy a tax rate that exceeds the certified tax rate may do so, by resolution, only after holding a properly noticed public hearing. Generally, the certified tax rate is the rate necessary to generate the same property tax revenue that the taxing entity collected for the prior year, with certain exclusions. For purposes of calculating the certified tax rate, county auditors are to use the taxable value of property on the assessment rolls, exclusive of new growth. New growth is any increase in taxable value of the taxing entity from the previous calendar year to the current year less the amount of increase to locally assessed real property taxable values resulting from factoring, reappraisal, other adjustments, or changes in the method of apportioning taxable value. With certain exceptions, the certified tax rate for the minimum school levy, debt service voted on by the public and certain state and county assessing and collecting levies are the actual levies imposed for such purposes and no hearing is required for these levies. Among other requirements, on or before July 22 of the year in which such an increase is proposed, the county auditor must mail to all property owners a notice of the public hearing. In most cases, the taxing entity must advertise the notice of public hearing by publication in a newspaper. Such notices must state, among other things, the value of the property, the time and place of the public hearing, and the tax impact of the proposed increase. Property Tax Matters The Property Tax Act provides that all taxable property is required to be assessed and taxed at a uniform and equal rate on the basis of its fair market value as of January 1 of each year, unless otherwise 30

37 provided by law. Fair market value is defined in the Property Tax Act as the amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Pursuant to an exemption for residential property provided for under the Property Tax Act and Article XIII of the State Constitution, the fair market value of residential property is reduced by 45%. The residential exemption is limited to one acre of land per residential unit and to one primary residence per household, except that an owner of multiple residential properties may exempt his or her primary residence and each residential property that is the primary residence of a tenant. The Property Tax Act provides that the State Tax Commission shall assess certain types of property ( centrally assessed property ), including (i) properties that operate as a unit across county lines that must be apportioned among more than one county or state, (ii) public utility (including railroad) properties, (iii) airline operating properties, (iv) geothermal resources and (v) mines, mining claims and appurtenant machinery, facilities and improvements. All other taxable property ( locally assessed property ) is required to be assessed by the county assessor of the county in which such locally assessed property is located. Each county assessor must update property values annually based upon a systematic review of current market data and must also complete a detailed review of property characteristics for each parcel of property at least once every five years. The Property Tax Act requires that the State Tax Commission conduct an annual investigation in each county to determine whether all property subject to taxation is on the assessment rolls and whether the property is being assessed at its fair market value. The State Tax Commission and the county assessors utilize various valuation methods, as determined by statute, administrative regulation or accepted practice, to determine the fair market value of taxable property. Uniform Fees. An annual statewide uniform fee is levied on tangible personal property in lieu of the ad valorem tax. The uniform fee is based on the value of motor vehicles, watercraft, recreational vehicles, and all other tangible personal property required to be registered with the State. The current uniform fee is established at 1.5% of the fair market value of motor vehicles that weigh 12,001 pounds or more, watercraft, recreational vehicles and all other tangible personal property required to be registered with the State, excluding exempt property such as aircraft and property subject to a fixed age based fee. Motor vehicles weighing 12,000 pounds or less and certain other vehicles are subject to an age based fee that is due each time the vehicle is registered. The revenues collected from the various uniform fees are distributed by the county to the taxing entity in which the property is located in the same proportion in which revenue collected from ad valorem real property is distributed. Historical Tax Rates The maximum rate of levy applicable to the City for general fund operations authorized by Utah law is per dollar of taxable value of taxable property within the City. Tax Rate Maximum Limit General Operations Bond Sinking Fund (1)... unlimited Total Levy (1) Amount needed to pay current principal and interest on legally issued general obligation bonds is unlimited. (Source: Utah State Tax Commission.) 31

38 Historical Property Tax Rates Direct and Overlapping Governments Total Tax Rate Within Taxing Area Tax Levying Entity (1) Farmington City Davis County School District Davis County Weber Basin Water Mosquito Abatement Central Davis Sewer Benchland Water Davis County Library Total Levy for Farmington City (Source: Utah State Tax Commission.) Comparative Total Property Tax Rates Within The County This table reflects those municipal entities and the total property tax rates within the County. Total Tax Rate Within Taxing Area Tax Levying Entity (1) Davis School District: Bountiful City Centerville City Clearfield City Clinton City Farmington City Fruit Heights City Kaysville City Layton City North Salt Lake City South Weber City Sunset City Syracuse City West Bountiful City West Point City Woods Cross City Unincorporated areas (2) (1) These tax rates represent a taxing district within the city or town with the highest combined total tax rates of all overlapping taxing districts. (2) These tax rates represent a taxing district within the unincorporated municipalities within the County with the highest combined total tax rates of all overlapping taxing districts. (Source: Reports from the Utah State Tax Commission.) Additional Information. For a 10 year history of direct and overlapping property tax rates see AP- PENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Property Tax Rates Direct and Overlapping Governments (page 101). 32

39 Taxable Value Of Property % Change % Change Tax Taxable Over Fair Market/ Over Year Value (1) Prior Year Market Value (2) Prior Year 2014 (3)... $1,374,899, % $2,230,873, % ,128,898, ,820,628, ,046,556, ,691,896, ,019,613 (3.7) 1,611,495,305 (2.9) ,022,593,752 (1.2) 1,659,195,127 (0.6) (1) Taxable valuation includes redevelopment agency valuation. The estimated redevelopment agency valuation for Calendar Year 2014 is estimated at $213.0 million; for Calendar Year 2013 was approximately $95.1 million; for Calendar Year 2012 was approximately $20.7 million; Calendar Year 2011 was approximately $22.8 million; and for Calendar Year 2010 was approximately $27.3 million;. (Source: Utah State Tax Commission.) (2) Estimated fair market values were calculated by dividing the taxable value of primary residential property by 55%, which eliminates the 45% exemption on primary residential property granted under the Property Tax Act. (Source: Municipal Advisor.) (3) Preliminary; subject to change. See Historical Summaries Of Taxable Value Of Property below. (The remainder of this page has been intentionally left blank.) 33

40 Historical Summaries Of Taxable Values Of Property Within The City Taxable % of Taxable Taxable Taxable Taxable Set by State Tax Commission Value (1) T.V. Value Value Value Value (Centrally Assessed) Total centrally assessed $ 32,993, % $ 36,412,014 $ 31,994,547 $ 31,007,957 $ 33,536,473 Set by County Assessor (Locally Assessed) Real property: Primary residential 1,046,184, ,442, ,743, ,686, ,063,032 Other residential 6,302, ,093,508 4,849,635 4,931,773 4,944,648 Commercial and industrial 175,155, ,546, ,520,490 91,343,625 97,811,994 FAA (greenbelt) 498, , , , ,778 Unimproved non FAA (vacant) 71,167, ,511,590 59,812,235 65,231,139 88,046,268 Agricultural 567, , , , ,860 Total real property 1,299,876, ,050,456, ,900, ,057, ,700,580 Personal property (2): Primary mobile homes 5, ,399 5,399 5,543 5,315 Secondary mobile homes Other business personal 42,024, ,024,404 37,656,256 25,949,038 19,351,384 Total personal property 42,029, ,029,803 37,661,655 25,954,581 19,356,699 Total locally assessed 1,341,906, ,092,486,383 1,014,562, ,011, ,057,279 Total taxable value $ 1,374,899, % $ 1,128,898,397 $ 1,046,556,675 $ 985,019,613 $ 1,022,593,752 (1) Preliminary; subject to change. (2) Does not include taxable valuation associated with SCME (semi-conductor manufacturing equipment). (Source: Property Tax Division, Utah State Tax Commission.) 34

41 Tax Collection Record (3) Deliq., % of % of Personal Current Total Tax (1) (2) Property (4) Collec Collec Year Total Trea Current and Miscel Total tions to tions to End Taxes surer s Net Taxes Col leous Col Col Net Taxes Net Taxes 12/31 Levied Relief Assessed lections lections lections Assessed Assessed 2013 $2,351,226 $21,590 $2,329,636 $2,267,300 $117,092 $2,384, % 102.4% ,223,261 21,555 2,201,706 2,125, ,376 2,241, ,197,536 20,677 2,176,859 2,062,716 93,918 2,156, ,102,583 17,422 2,085,161 1,983, ,233 2,127, ,075,900 16,910 2,058,990 1,956, ,764 2,070, Ad valorem property taxes are due on November 30 th of each year. (1) Excludes redevelopment agencies valuation. (2) Treasurer s Relief includes abatements established by statue to low income, elderly and for hardship situations. These Treasurer s Relief items are levied against the property, but are never collected and paid to the entity. (3) Delinquent Collections include interest; sales of real and personal property; and miscellaneous delinquent collections. (4) In addition to the Total Collections indicated above, the City collected Uniform Fees (fees in lieu payments) for tax year 2013 of $187,902; for tax year 2012 of $177,451; for tax year 2011 of $177,217; for tax year 2010 of $179,554; and for tax year 2009 of $205,029; from tax equivalent property associated with motor vehicles, watercraft, recreational vehicles, and all other tangible personal property required to be registered with the State. (Source: Information taken from the Utah State Tax Commission.) Additional Information. For the City s presentation of a 10 year history of property tax levies and collections see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMING- TON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Property Tax Levies and Collections Last Ten Fiscal Years (page 102). Some Of The Largest Taxpayers The City s single largest property taxpayer in Fiscal Year 2014 was Station Park Centercal LLC (a large retail space that includes outdoor shopping, movie theaters and restaurants.) located in the City. This taxpayer comprised approximately 6.6% of the City s total taxable valuation for Fiscal Year The top 10 largest property tax payers comprised approximately 14.6% of the City s total taxable valuation for Fiscal Year Additional Information. For a list of the City s 10 largest property tax payers for Fiscal Year 2014 and Fiscal Year 2005 see APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 Statistical Section Principal Taxpayers Current Year and Ten Years Ago (page 103). Sales And Use Taxes; Franchise Taxes Sales and Use Taxes. State Wide Sales and Use Tax. The State levies a state wide sales and use tax, which is currently imposed at a rate of 4.70% of the purchase price of taxable goods and services and 3% on unprepared food and food ingredients. The State also imposes a 2.5% tax on all short term leases and rentals of motor vehicles. Sales of gas, electricity and fuel oil for residential use are taxed by the State at a rate of 2.0%. 35

42 In addition to the state sales and use tax, counties, cities and towns have the authority to impose a local sales and use tax of up to 1% of the purchase price of goods or services. The City has adopted a tax ordinance imposing local sales and use taxes of 1% upon all retail sales within its borders ( Local Sales and Use Taxes ). Local Sales and Use Taxes are collected by the State Tax Commission and distributed on a monthly basis to each city. The distributions are based on a formula that, in general, provides (i) 50% of each dollar of Local Sales and Use Taxes collections will be distributed to the city in which the tax was collected and (ii) 50% of each dollar of sales and use taxes collections will be distributed proportionately among all counties imposing the tax, based on the total population of each city. The minimum Local Sales and Use Taxes a city may receive is a tax revenue distribution not less than ¾ of 1% of the taxable sales within its boundaries. The County imposes sales and use taxes county wide as follows: (i) 0.25% county option tax; (ii) a 0.25% mass transit tax; (iii) a 0.25% additional mass transit tax; (iv) a 0.05% supplemental state sales and use tax; (v) a 4.25% transit room tax; (vi) a 1% municipal transient room tax; (vii) a 2.5% motor vehicle rental tax; (viii) a 3.00% tourism short term leasing tax; (ix) a 4.00% tourism short term leasing population tax; (x) and a 1% tourism restaurant tax. Utility Franchise Taxes and Fees; Telecommunications. Under State law, municipalities have the authority to impose a tax, license, fee, license fee, license tax, energy sales and use tax or similar charge at a rate not exceeding 6% of gross revenues of public utilities collected within the boundaries of the municipality (or, in the case of gas and electric service providers, not exceeding 6% of the delivered value of taxable energy ). Utilities upon which these taxes and fees may be levied include telephone, natural gas, electric energy service companies and city public utilities. Utility franchise taxes and fees are collected by the utility and remitted on a monthly basis to the local government. Energy sales and use taxes are, in certain circumstances, remitted by the energy service provider to the State Tax Commission and then to the municipality. Currently, the City levies a 6.00% municipal energy tax. The City also levies a 3.5% municipal telecommunications license tax. LEGAL MATTERS Absence Of Litigation Concerning The 2015 Bonds The attorney for the City, Hayes Godfrey Bell, P.C. have officially advised that, to their knowledge, there is no pending or threatened litigation that would legally stop, enjoin, or prohibit the issuance, sale or delivery of the 2015 Bonds or the levy or collection of taxes for the payment of the 2015 Bonds or have a material adverse effect on the City s financial position. Federal Income Tax Matters Excludability of Interest. In the opinion of Ballard Spahr LLP, Bond Counsel to the City, interest on the 2015 Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the 2015 Bonds, assuming the accuracy of the certifications of the City and continuing compliance by the City with the requirements of the Internal Revenue Code of Interest on the 2015 Bonds is not an item of tax preference for purposes of either individual or corporate federal alternative minimum tax ( AMT ); however, interest on 2015 Bonds held by a corporation (other than an S corporation, regulated investment company, or real estate investment trust) may be indirectly subject to AMT because of its inclusion in the adjusted current earnings of a corporate holder. Bank Qualification. The 2015 Bonds are qualified tax-exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986 (the Code ) and therefore the interest expense of a financial institution will not be subject to allocation to the interest on the 2015 Bonds under Section 265(b) of the Code 36

43 (but the interest on the 2015 Bonds will be subject to treatment as a financial institution preference item under Section 291 of the Code). Original Issue Premium. The 2015 Bonds are offered at a premium ( original issue premium ) over their principal amount (collectively, the 2015 Premium Bonds ). For federal income tax purposes, original issue premium is amortizable periodically over the term of a 2015 Premium Bond through reductions in the holders tax basis in the 2015 Premium Bond for determining taxable gain or loss from the sale or from redemption prior to maturity. Amortization of premium does not create a deductible expense or loss. Holders of 2015 Premium Bonds should consult their tax advisors for an explanation of the amortization rules. State of Utah Income Tax Bond Counsel is also of the opinion that interest on the 2015 Bonds is exempt from State of Utah individual income taxes under currently existing law. No Further Opinion Bond Counsel expresses no opinion regarding any other tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the 2015 Bonds. Changes In Federal And State Tax Laws From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the 2015 Bonds or otherwise prevent holders of the 2015 Bonds from realizing the full benefit of the tax exemption of interest on the 2015 Bonds. Further, such proposals may impact the marketability or market value of the 2015 Bonds simply by being proposed. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to 2015 Bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the 2015 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the 2015 Bonds would be impacted thereby. Purchasers of the 2015 Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the 2015 Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. General Certain legal matters incident to the authorization, issuance and sale of the 2015 Bonds are subject to the approving legal opinion of Ballard Spahr LLP, Bond Counsel to the City. Certain legal matters will be passed upon for the City by the City Attorney, Hayes Godfrey Bell, P.C. The approving opinion of Bond Counsel will be delivered with the 2015 Bonds. A copy of the opinion of Bond Counsel in substantially the form set forth in APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL of this OFFICIAL STATEMENT will be made available upon request from the contact persons as indicated under INTRODUCTION Contact Persons above. 37

44 The various legal opinions to be delivered concurrently with the delivery of the 2015 Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. Bond Rating MISCELLANEOUS As of the date of this OFFICIAL STATEMENT, the 2015 Bonds have been rated Aa2 by Moody s. An explanation of this rating may be obtained from Moody s. The City has not applied to S&P or Fitch for a rating on the 2015 Bonds. Any explanation of the significance of these outstanding rating may only be obtained from the rating service furnishing the same. There is no assurance that the rating given the outstanding general obligation bonds will continue for any given period of time or that the ratings will not be revised downward or withdrawn entirely by the rating agencies if, in their judgment, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2015 Bonds. Municipal Advisor The City has entered into an agreement with the Municipal Advisor whereunder the Municipal Advisor provides financial recommendations and guidance to the City with respect to preparation for sale of the 2015 Bonds, timing of sale, tax exempt bond market conditions, costs of issuance and other factors related to the sale of the 2015 Bonds. The Municipal Advisor has read and participated in the drafting of certain portions of this OFFICIAL STATEMENT and has supervised the completion and editing thereof. The Municipal Advisor has not audited, authenticated or otherwise verified the information set forth in the OFFICIAL STATEMENT, or any other related information available to the City, with respect to accuracy and completeness of disclosure of such information, and the Municipal Advisor makes no guaranty or warranty respecting the accuracy and completeness of the OFFICIAL STATEMENT or any other matter related to the OFFICIAL STATEMENT. Independent Auditors The basic financial statements of the City as of June 30, 2014 and for the year then ended, included in this OFFICIAL STATEMENT, have been audited by Ulrich & Associates, PC, Certified Public Accountants, Ogden City, Utah ( Ulrich & Associates ), as stated in their report in APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FIS- CAL YEAR Ulrich & Associates has not participated in the preparation or review of this OFFICIAL STATE- MENT. Based upon their non participation, they have not consented to the use of their name in this OF- FICIAL STATEMENT. Additional Information All quotations contained herein from, and summaries and explanations of, the State Constitution, statutes, programs, laws of the State, court decisions, the Indenture and the Assignment do not purport to be complete, and reference is made to said State Constitution, statutes, programs, laws, court decisions, Indenture and Assignment for full and complete statements of their respective provisions. 38

45 Any statements in this OFFICIAL STATEMENT involving matters of opinion, whether or not expressly so stated, are intended as such and not as a representation of fact. The appendices attached hereto are an integral part of this OFFICIAL STATEMENT and should be read in conjunction with the foregoing material. This OFFICIAL STATEMENT and its distribution and use have been duly authorized by the City. Farmington City, Utah By: /s/ Jim Talbot Jim Talbot, Mayor 39

46 (This Page Has Been Intentionally Left Blank.) 40

47 APPENDIX A COMPREHENSIVE ANNUAL FINANCIAL REPORT OF FARMINGTON CITY, UTAH FOR FISCAL YEAR 2014 The Comprehensive Annual Financial Report for Fiscal Year 2014 is contained herein. Copies of current and prior financial reports are available upon request from the City s contact person as indicated under INTRODUCTION Contact Persons above. The City s Comprehensive Annual Financial Report for the Fiscal Year 2015 must be completed under State law by December 31, Government Finance Officers Association; Certificate of Achievement for Excellence in Financial Reporting Certificate of Achievement for Excellence in Financial Reporting. The Government Finance Officers Association of the United States and Canada ( GFOA ) have awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report ( CAFR ) for Fiscal Years 2001 through In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. The award is valid for a period of one year only. (The remainder of this page has been intentionally left blank.) A 1

48 (This page has been intentionally left blank.)

49 Comprehensive Annual Financial Report ~~1\,MlNGTol\7 ~ I i ~ HISTORIC BEGINNINGS 1847 Farmington City Corporation Farmington, Utah Fiscal Year Ended June 30, 2014

50 COMPREHENSIVE ANNUAL FINANCIAL REPORT of FARMINGTON CITY CORPORATION FARMINGTON, UTAH Fiscal Year Ended June 30, 2014 Mayor Jim Talbot City Council Doug Anderson John Bilton Brigham Mellor Cory Ritz James Young City Manager Dave Millheim Assistant City Manager Keith Johnson

51 FARMINGTON CITY CORPORATION COMPREHENSIVE ANNUAL FINANCIAL REPORT June 30, 2014 Table of Contents I. INTRODUCTORY SECTION Letter of Transmittal GFOA Certificate of Achievement City Officials Organization Chart II. FINANCIAL SECTION Independent Auditors' Report Management's Discussion and Analysis Basic Financial Statements: Government-wide Financial Statements: Statement ofnet Position Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement ofnet Position Statement of Revenues, Expenditures, and Changes in the Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Balances of Governmental Funds to the Statement of Activities Statement of Revenues, Expenditures, and Changes in Fund Balances- Budget and Actual: General Fund Redevelopment Agency Fund - US 89 Redevelopment Agency Fund - Station Park Statement of Net Position- Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds Statement of Cash Flows - Proprietary Funds Notes to Financial Statements

52 FARMINGTON CITY CORPORATION COMPREHENSIVE ANNUAL FINANCIAL REPORT June 30,2014 Supplemental Information: Combining Balance Sheet- Nonmajor Governmental Funds 72 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances- Nonmajor Governmental Funds 74 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Nonmajor Governmental Funds): Police Sales Tax Revenue Bond - Debt Service Fund 76 Sales Tax Revenue Bond - Debt Service Fund 77 G.O. Bond 2003 Park - Debt Service Fund 78 Special Improvement District Debt Service Fund 79 Governmental Buildings Improvement- Capital Projects Fund 80 Capital Equipment- Capital Projects Fund 81 Fire Protection- Capital Projects Fund 82 Real Estate Property Asset- Capital Projects Fund 83 Cemetery Perpetual Care - Permanent Fund 84 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Major Governmental Fund) Building G.O. Bond- Debt Service Fund 85 Street Improvement- Capital Projects Fund 86 Park Improvement- Capital Projects Fund 87 Capital Assets Used in the Operation of Governmental Funds Schedule by Source 89 Schedule by Function and Activity 90 Schedule of Changes by Function and Activity 91 III. STATISTICAL SECTION Net Assets by Component Changes in Net Assets Governmental Activities Tax Revenue by Source Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds General Governmental Tax Revenue by Source

53 FARMINGTON CITY CORPORATION COMPREHENSIVE ANNUAL FINANCIAL REPORT June 30, 2014 Assessed Value and Estimated Actual Value of Taxable Property Property Tax Rates - Direct and Overlapping Governments Principal Taxpayers Property Tax Levies and Collections Ratios of Outstanding Debt by Type Ratio of General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information Pledged Revenue Bond Coverage Demographic and Economic Statistics Principal Employers Full-time Equivalent City Government Employees by Function Operating Indicators by Function Capital Asset Statistics by Function IV. OTHER REPORTS 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 115 Report on Compliance and on Internal Controls Over Compliance in Accordance with the State of Utah Legal Compliance Audit Guide 117 Schedule of Expenditures of State Grants, Contracts,and Loan Funds 121 State Legal Compliance- Schedule of Findings 122 3

54 INTRODUCTORY SECTION 4

55 FARMINGTON CITY H. JAMES TALBOT 1\UYOR DouG ANDERSON JoHN Bu..roN BRIGHAM N. MELLOR CoRY R. R.rrz JAMES YOUNG CITY COUNCIL HtsTOB.IC BEGINNINGS l84] DAVE Mu..LHEIM. CITY MANAGER November 21, 2014 Honorable Mayor and Members of the City Council and Citizens offarmington City Farmington City Corporation 160 S Main Farmington UT The Finance Department and City Manager's Office are pleased to submit the Comprehensive Annual Financial Report (CAFR) for Farmington City, Utah, for the fiscal yearendedjune30, This report is in compliance with state law that requires local government to publish within six months of the close of each fiscal year a complete set of audited financial statements. This report is published to fulfill that requirement. This report is published to provide to the City's Governing Body, staff, citizens, the State ofutah, representatives of financial institutions, and other interested persons, detailed information concerning the financial condition of Farmington City. Responsibility for both the accuracy ofthe data, and the completeness and fairness of the presentation, including all disclosures, rests with City management. The City's accounting records for general governmental operations are maintained on a modified accrual basis, with the revenue being recorded when available and measurable and expenditures being recorded when the services or goods are received and the liabilities are incurred. The City's accounting records for utilities and other proprietary activities are maintained on the accrual basis. In developing and maintaining the City's accounting system, consideration is given to the adequacy of internal control structure. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: 1. The safeguarding of assets against loss from unauthorized use or disposition; and 2. The reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that; (a) the cost of a control should not exceed the benefits likely to be derived; and (b) the evaluation of costs and benefits requires estimates and judgements by management. 160 S MAIN P.O. Box 160 FARMINGTON, UT PHONE (801) FAX (801) utah.gov

56 We believe the City's internal controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Section ofthe Utah Code Unannotated, and section III.D.01 ofthe State ofutah Uniform Accounting Manual require.fourth class cities to prepare an annual financial report, and that an annual audit be conducted by an independent certified public accountant. The City has contracted with Ulrich and Associates, P.C., Certified Public Accountants to do the audit. The independent audit report is included in this report. Generally accepted accounting principles require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of the Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. Profile of Farmington City Farmington City is a fourth class city (population between 10,000 and 30,000), operating under the Council-Mayor form of government, while delegating administrative functions and duties to a City Manager by ordinance. The City Council is comprised of five Council Members plus the Mayor. The City Council establishes policy and procedures pertaining to the overall governance ofthe City including general direction for the efficient administration, organization, operation, conduct, and business of the City. The City Council approves, adopts, and amends the budget. The City Manager is appointed by the Mayor and the City Council. The City Manager is responsible for the daily management of the City. The Mayor and Council members are elected to four-year terms. Every two years elections are held with terms overlapping which helps to facilitate the continuity of the City Council. The Combined Financial Statements of the City include all government activities, organizations and functions for which the City is financially accountable as defined by the Governmental Accounting Standards Board. Based on these criteria no other governmental organizations are included or excluded in this report. Major services provided by the City under General Government include the following, General Government General Administration Policy Implementation Budgeting Accounting Investments Records Management Equipment and Vehicle Maintenance Buildings and Grounds Maintenance Purchasing 6

57 Community Development Planning and Zoning Protective Inspection Public Safety Fire and Police Protection Highways and Streets Street Improvements and Maintenance Public Sidewalk Parks and Cemetery Park and Cemetery Maintenance The City maintains fourteen parks, which include fourteen picnic boweries, eight tennis courts, soccer and baseball fields and state of the art playground equipment. These are all available for family gatherings, parties and events. The City maintains a trail system in the city and continues to acquire and develop more trails over time. Major services provided under the Enterprise Fund include culinary water, sanitary sewer, storm drainage, waste collections and recycling services, ambulance service, and parks & recreation activities including youth sports and recreational activities and swimming pool activities. "Historic Beginnings", as stated on the logo of Farmington City, refers to the early beginnings ofthe area which began in 1847 when the first settlers arrived. Just one month after the first Mormon pioneer settlers entered the Salt Lake Valley, a few families moved further north a short distance to settle the area now known as Farmington City. The settlement was originally called North Cottonwood. Farmington City is located approximately 16 miles north of Salt Lake City and 20 miles south of Ogden along the western front of the Wasatch Mountains with the Great Salt Lake directly to the west. The City encompasses about 7.11 square miles. As was the practice in other areas of the valley, the early settlers immediately put the many mountain streams to use by forming systems of irrigation (dams and canals) to water the fertile soil. Farming was the major livelihood of the community for many years with particular emphasis on orchards of apricot, cherry and peach trees. The area of Farmington was eventually incorporated as a municipality on November 16, 1892, with a population of 1,180 and has grown to 18,27 5 by the census data. Most of the growth has come in the last three decades. In 1970 the population of Farmington was 2,500. Although most of the residents commute to work to Salt Lake City, Ogden, or nearby Hill Air Force Base, the community still enjoys a "rural atmosphere" and places significant emphasis on maintaining this element as part of its general plan goals. Farmington is a regional center for local government. Farmington is the County seat of Davis County with the first courthouse being built in The Davis County School District is also 7

58 headquartered here, which occupies most ofblock 10 in the City's downtown center. The City has always tried to be progressive in implementing the newest conveniences for its residents. The first telephone was installed in 1896, the City's culinary water system in 1906 and electricity in The City continues to be progressive today by striving to be on the cutting edge of open space conservation and trail development. Farmington City is easily accessed by Interstate 15, US Highway 89, and Legacy Highway, that transverse through the City North to South, with a major junction between all three major highways in the City. The Salt Lake International Airport can be reached in 20 minutes and Utah Transit Authority (UTA) provides daily mass transit service throughout the City and along the Wasatch Front. Commuter rail from Ogden to Salt Lake was completed in April of2008, with a station here in Farmington, it has greatly enhance commuter travel and makes Farmington a destination point with Lagoon and the new commercial development, Station Park being built. The City operates an integrated budgetary and accounting system which incorporates the adoption of a formal legal budget. The City Council adopts the annual budget prepared by the Department Heads, City Manager, and Finance Director. This is done by June 22 of each year. State statutes define the legal level of budgetary control at the department level. Expenditures should not exceed appropriations at that level. Financial reports are produced showing budget and actual expenditures, and are distributed monthly to each department head. If needed, the budget is reopened as required to consider necessary adjustments. Economic Condition and Outlook Farmington City has experienced significant growth in population during the past several years. The population has risen from 9,028 in 1990 to 12,081 in 2000 and to 18,275 in Today it is approaching 22,000. The population has doubled in the past 20 years, which is significant growth for the City. Residential developments continue to be constructed mainly in the west area of Farmington. In this past fiscal year the City issued 139 new residential building permits. This is down from the 265 that were issued the previous year. Revenue from building permits decreased as not only were residential permits down, but commercial permits for Station Park area fell as most of the buildings are now finished. Station Park has been a great benefit as sales tax from this development reached to over 1 million dollars this past year. There are several new residential developments that have started to develop, so new housing starts should continue to be around this same level for the next couple of years. The overall economic conditions continued to grow this past year for the State. In Farmington, the City has continued to see a much improved situation as sales tax increased by around 19.6 %, mainly due to the opening of new stores in the Station Park development. Sales tax had increased the previous year by 8.5%. That is a 28% increase over the past 2 years, which is one of the highest increases in the State for this time period. Property taxes increased as the Station Park properties were not included in the general property taxes as the City started the tax increment for the Redevelopment Agency (RDA) that Station Park is in, so the property taxes were adjusted this past year to reflect the correct amount that should be collected from property taxes. Franchise, energy sales and use taxes went up by about 5.8%. The fund balance in the General Fund did increased, which was not budgeted to do so in the original budget, but revenues were higher than anticipated 8

59 and expenditures were under budget which helped to increase the fund balance by over $32,000. The increase in revenues from the previous year was mainly due to the increases in sales tax and property taxes. Expenditures increased as more personnel were added in fire, police, engineering and recreation and overall increase in utilities and supplies. The General Fund balance of over $1,591,000 can be used to meet ongoing expenses, equipment, capital and personnel to keep the City services at expected levels for the future. The retail tax base continues to be a major source of funding for the City. As mentioned before, sales tax revenues during this past year increased significantly again. This is mainly due to the Station Park development opening several stores and theaters in the commuter rail area and will continue to open more stores in the next year or so. Station Park has finished with phase I of the development and is almost finished with phase II. A total of around 1,000,000 square feet of commercial, retail and office space is planned when the project is finished in the next year or so. The sales tax just off of the Station Park development reached to over $1,000,000 this past year. The City has established a Redevelopment Agency (RDA) in this area, with this mixed use development around the commuter rail station and just west of the Legacy Highway, U.S. 89, and I-15 interchange. Lagoon Corporation, the largest amusement park in the State had increases in sales over the last couple of years, which is another sign that the economy is improving. The City also built a road that will service more area from the Station Park development that has been set aside to be used for more mixed use commercial development. This will open up future commercial growth for the City in the years to come. The long-term financial planning of the City has been to look for other sources of revenue other than just residential development. That is why this new commercial area by the commuter rail station is so important to the City. Awards and Acknowledgments The City has received the Certificate of Achievement for Excellence in Financial Reporting for the past 13 years. The preparation of the comprehensive annual financial report was made possible with the dedicated service ofthe staff of Farmington City. I convey my thanks and sincere appreciation to each of them. I also wish to express appreciation to Mike Ulrich, the City's auditor and his staff, for conducting the independent audit and providing assistance in a very professional manner. In closing, I express appreciation to Mayor Talbot and members of the City Council for their sincere interest and support in planning and conducting the financial affairs of the City in a responsible and progressive manner. I also thank Dave Millheim the City Manager, and capable city staff who are dedicated and go the extra mile in providing quality and conscientious service to this community. Farmington's elected, appointed and employed City officials are confident, optimistic and excited about the future of their community, and will continue to devote whatever time and effort is needed to keep Farmington a choice place in which to live. 9

60 Assistant City Manager 10

61 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Farmington City Corporation Utah For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2013 Executive Director/CEO 11

62 Farmington City Officials June 30, 2014 Mayor Council Members City Manager Assistant City Manager Recorder Treasurer Planning Director Parks & Recreation Director Public Works Director Building Official Police Chief Fire Chief H. James Talbot John Bilton Doug Anderson Brigham Mellor Cory Ritz Jim Young Dave Millheim Keith Johnson Holly Gadd Shannon Harper David E. Petersen Neil Miller Walt Hokanson Eric Miller Wayne Hansen Guido Smith 12

63 Farmington City Organizational Chart Governing Body Mayor and City Council... w 1 Assistant City Manager Recorder Accountant/ Treasurer Clerical Support I ~--- I Cl;Manager I I --l -1 I Fire Chief Public Works City Planner/ Police Chief Parks/ Recreation Clerical Director Community Investigations Director Support Streets & Development Patrol Sports/ Duty Crew/ Highways Director Dispatch Recreation Ambulance Water Building Crossing Pool Manager Volunteer Garbage Inspector Guards Special Events Firemen/ Motorpool Zoning Enfor- Performing Arts EMTS cement Officer Parks/ Cemetery

64 FINANCIAL SECTION 14

65 Ulrich & Associates, PC Certified Public Accountants INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of the City Council Farmington City Corporation Farmington, Utah Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of Farmington City Corporation as of and for the year ended June 30, 2014, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error. Auditor's Responsibility Our responsibility is to express optmons on these financial statements based on our audit. 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Members of Utah Association of CPA's I American Institute of CPA's Charles E. Ulrich, CPA I Michael E. Ulrich, CPA Heather Christopherson, CPA 4991 South Harrison 1 Ogden, Utah Tel] I Fax] Cathie Hurst, CPA I Bruce Gulso, CPA 1 Kaela Cornwell, CPA 1 Michael Doxey, CPA website]

66 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Farmington City Corporation as of June 30, 2014, and the respective changes in financial position and cash flows, where applicable, and the respective budgetary comparison for the general fund and special revenue funds for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opmwns on the financial statements that collectively comprise the Farmington City Corporation's basic financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, individual fund budgetary comparison schedules, capital assets schedules, and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. 16

67 The combining and individual nonmajor fund financial statements, budget to actual statements on nonmajor funds, budget to actual statements on major debt service funds, budget to actual schedules on major capital projects funds, and capital assets schedules, are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 21, 2014 on our consideration of Farmington City'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 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. Ogden, UT November 21,

68 Management's Discussion and Analysis This repmi offers readers offannington City's financial statements a narrative overview and analysis from managements perspective of the financial activities of Farmington City for the fiscal year ended June 30, Readers should consider the information presented here in conjunction with additional information that is furnished in the letter of transmittal. Financial Highlights The assets of Farmington City exceeded its liabilities at the close of the most recent fiscal year by $90,449,208 This is an increase of $2,519,227. The increase was mainly due to increases in invested capital, as the City purchased land and other infrastructure was added. The amount of unrestricted assets decreased from $6,854,071 to $5,790,856 or by $1,063,215. This was mainly due to the spending of capital projects funds in the Park Improvement fund for the purchase of land and major replacement projects in water and storm drain funds. The unrestricted assets may be used to meet the City's ongoing obligations to citizens and creditors. The Governmental activities decreased by $834,420, whereas the Business-type activities had a decrease in unrestricted assets of$228,795. As of the close of the current fiscal year, Farmington City's governmental funds reported combined ending fund balance of$5,763,094. This is a decrease in fund balance from the previous year of $729,252. This decrease came mainly from the Park Improvement funds, as the City purchased land for a new park. The total fund balance in the General Fund is $1,591,908, of that $1,469,355 is unassigned for spending at the City's discretion. The City's total debt is $6,292,382. It increased by $218,670 during the current fiscal year, with debt for goverrunental activities increasing and for business-type activities decreasing. The City did issue new debt during this fiscal year of $1,217,000 real prope1iy lease for land for the new park and $547,588 for lease purchase of new street lights. The decrease in business-type debt came as debt payments were made on existing bonds or leases. Overview of Financial Statements This discussion and analysis portion of the audit report serves as an introduction to Fannington City's basic financial statements. The City's basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This portion of the audit report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of Farmington City's finances, in a format similar to what is provided by private-sector businesses. The statement of net position presents inforn1ation pe1iaining to all of Farmington City's assets and liabilities, with the difference between the two reported as net position. Over time, increases 18

69 or decreases in net position may be useful by indicating whether the financial position of Fannington City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes to net position is reported as soon as the underlying event occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for events that may result in cash flows in future fiscal periods. The City's financial statements are distinguished by two different functions. First, govemmental activities are those principally supp01ied by taxes and intergovemmental revenues. Second, City business-type activities are those that recover all or a significant portion of their costs through user fees and charges. The govemmental activities offannington City include general govenunent, public safety, highways and public works, community development, parks and cemetety. The business-type activities of the City include providing water, sewer, storm water, garbage, ambulance, and recreational services. Fund financial statements. A fund is defined as a grouping of related accounts that is used to maintain control over resources that are segregated for specific activities or objectives. Fannington City, like other state and local govenunents, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Funds offmmington City are divided into tlu ee categories: goverm11ental funds, propriety funds, and fiduciary funds. Governmental.funds. Govemmental funds are used to account for essentially the same functions reported as govemmental activities in the government-wide financial statements. However, unlike the govenunent-wide financial statements, govenunental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. This information may be useful in evaluating a govenunent's near-term financing requirements. Because the focus of govenm1ental funds is narrower than that of the govenm1ent-wide financial statements, it is useful to compare the information presented for govemmental funds with similar infonnation presented for govenunental activities in the goverrunent-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-tenn financing decisions. Both the govermnental fund balance sheet and the govenu11ental fund statement of revenue, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between govenunental funds and govenunental activities. Fam1ington City maintains fourteen (14) individual govemment funds. Information is presented separately in the govetmnental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, RDA funds, building G.O. bond fund, street, park and other govemmental funds. Data from the norunajor governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these norunajor govenm1ental funds is provided in the fonn of combining statements elsewhere in this report. 19

70 Farmington City adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds. Farmington City uses enterprise funds to account for water, sewer, garbage collection, storm water, ambulance and recreation. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Proprietary funds provide the same type of information as the govenunent-wide financial statements, but in more detail. The proprietary fund financial statements provide separate information for each of the enterprise funds, which are shown as major funds of the City. Permanent funds. Pe1manent funds are used to account for resources that are legally restricted to the extent that only earnings and not principal may be used for purposes to suppmi the City programs. The City has a cemetery perpetual care fund that falls into this category. Notes to the financial statements. The notes provide additional infmmation that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other information. The combining statements refened to earlier in cmmection with nonmajor govenm1ental funds and internal service funds are presented immediately following the notes. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of the City's financial position. In the case offannington City, this fiscal year net position improved. Total net position increased by $2,519,227 from the prior year. Increases came in both the govemmental activities, and in the business-type activities. The umestricted portion oftotal assets decreased by $1,063,215, which was from both the governn1ental and the business-type activities. The decrease in govemmental activities unrestricted net assets came as the City purchased land for a new park from the Park Improvement fund. The decrease in unrestricted net position under the business-type activities was mainly in the water and storn1 drain funds as major improvement projects were done during the year. Even with this decrease, the City is still able to meet City services for its constituents. By far the largest pmiion of the Farmington City's net position is $79,181,108 in capital assets. This reflects its investment in land, buildings, machinery and equipment, less any related debt used to acquire those assets that is still outstanding. Fannington City uses these assets to provide services to its citizens; consequently, these assets are not available for any future spending. As noted above the overall condition of the City is good, as net position did increase, which shows the City is growing and is able to meet the ongoing obligations and liabilities. Governmental activities. Governmental activities are reflected in the government-wide activities statement. The govenunental activities had an increase in net position of $1,682,620 with assets increasing. 20

71 Net Position June 30, 2014 Governmental Business-type Total Activities Activities Current and other assets 10,903,403 11,213,052 6,135,537 6,480,827 17,038, ,879 Capital assets 63,946,327 61,217,950 21,716,877 20,655,754 85,663,204 81,873,704 Total assets 74,849,730 72,431,002 27,852,414 27,136, ,702,144 99,567,583 Other liabilities 2,721,849 2,429, , ,365,666 3,131,317 Long-term liabilities outstanding 6,432,123 6,130,484 46, ,947 6,479,079 6,240,431 Total liabilities 9, ,560, , ,547 9,844,745 9, Total deferred inflows of resources 2,408,191 2,265,854 2,408,191 2,265,854 Net Position: f\let Investment in capital assets 57,698,365 55,250,667 21,482,743 20,545,807 79,181,108 75,796,474 Restricted 3,263,986 3,194,644 2,213,258 2,084,792 5,477,244 5,279,436 Unrestricted 2,325,216 3,159,636 3,465,640 3,694,435 5,790,856 6,854,071 Total net position 63,287,567 61,604,947 27,161,641 26,325,034 90,449,208 87,929,981 Overall revenues in governmental activities increased by over I 0% Jl om the previous year. This v,:as due as some ofthe revenues had significant increases while others decreased. Property taxes had the largest increase of over $67CLOOO as Station Park Redevelopment Agency (RDA) had a significant increase as many of the buildings are 110\V finished and shov,;ing on the assessed value for property taxes. General sales taxes increased by over $ as most of this increase came tl' on1thc S~Dt1on Pork dcycl cpnicnt as n1o:;t cf the stores urc 1Jovv finished. The C'ity a}.:;() traded some property for some of the nev,: park property. whi ch made the City net a gain on the traded piece of property of nearly $ Capital contributions increased as more infrastructure v<as contributed to the City from de,,ejopment such as roads and water lines. Capital contributions are not a revenue source that can be used to pay for ongoing operating needs of the City. as these contributions are capital assets. Franchise and energy use tax increased as there a more residents and businesses are paying for utilities. The main decrease came to over $ less in impact fees collected as less development fees \Vere paid during the year. Charges for services dropped by around $ as building permits were significantly lower for the year. Taxes remain the main source of non capital revenues. and account for oyer 63 % of the total revenues. Prope11y taxes account for over 4 7% of the total taxes. Prope11y taxes increased by about $ from last year. The City did not raise the prope11y tax rate. but the increase came as a result of the tax increment being receiyed from the Station Park RDA. The other significant change was in sales tax increasing by 19.6%. The Station Park de\ elopment opened many stores in the phase II area in the preyious year and no\\ the full impact of those additional store s sales came in the past year. Sales tax had increased the previous year by 8.5%. which puts total sales taxes now O\'er $3 million. Franchise tax saw a 4% increase. with energy taxes increasing eyen more at 8.5% as the City continues to grow and more are paying for utilities. 21

72 Expenses for governmental activities increased over$ L600,000 in this past year. The biggest increase came in genetal govemment as more \Vas spent on capital projects and outlay. The public safety increased as two (2) nev.; full time captains in the fire depai1ment were hired and tv io (2) nev.,; police officers \Vere hired. The fire department nov,.- has one full time captain on duty all the time. This is a significant change in the fire depm1ment. as before it v:as staffed \Vith just part time employees. Interest on long term debt fell as some debt was paid off and the new debt that V.'as issued \Vould not start to be paid for until next year. Revenue By Source Governmental Activities Property taxes 29.76% General sales and use tax 22.54% Franchise tax 7.27% Energy ') LJ.O Use tax 0 5 Yo Impact 5.64% Fees Interest 0.25% Other 2.44% Cha1 ges for 9.09% serv1ces Capital grants and 14.86% contribs Operating grants and4.61% contribs Expenses by Governmental Activitie Public Safety 25.4'1% Highways 22.30% Corrrmun ity Development 8.77% Parks & Cemetery 10.89% lnte1 est on debt '1.63% 30.99%

73 Business-type activities, Business-type activities increased the City"s net position by $ w-hich is about a 3.2% grov.rth in net position. Unrestricted assets decreased by $ , v,;ith the increase con;ing in capital assets. Totai revenues increased from the prior year. e:-~cept for strom v.. ater. ambulance and recreation. as each of the other types had increases in : evenues. This is mainly due to the grovvth of the City as more homes and development occurs and the number of utility customers continue to rise. Arnbuiance service decreased as more medcaid write offs \Vere made that offset the revenues. The ambulance fund receives reyenues from ambulance charges to patients being transported to the hospital. Storm vlater decreased as less building permits '"'ere issued \vhich meant less street cleaning fees. The majority ofrevenues in business-type activities is in charges for services. which is mainly tl-om the utility payments for water. sewer. garbage. recycling. and storm,,_-ater sen ices. Charges for services in v,:a1er and sev, er v, ere where the main increases occurred i!1. as more commercial customers. vv"l1ich are higher users of v.-ater and sev, er were added. Capital grants and contrib'.jtions increased as more infrastructure was added f] om cleyelopments. Expenses and Program Revenues Business-Type Activities 2,000,000,600,000,200, , ,000 Water Sewer Garbage Strom Ambulance Recreation Drain Program Revenues Expenses Revenues By Source Business-Type Activities Charges for services 87.83% Capital grants and contribs 7.64% Impact L'. 'i"'% 0 Fees L. Interest 0.42%

74 Business-type activities increased in expenses as all the funds increased except the garbage and ambulance fund decreased in expenses. The overall increase was around 7. 7%. The main increase came in storm water as some large capital maintenance and replacement projects were done this past year. The City \\'ants to stay ahead of these projects to ensure that as the system gets older that new lines and systems are put into place to keep the storm water system in good condition. The City continues to try and hold expenses down to ensure that these business-type activities stay strong financially. But the cost to run and maintain these business-type activities continues to put pressure on increases in costs in order to provide these essential services to the residents. The water fund had additional projects and capital upgrades. Charges for services did cover the expenses in all the other business-type activities except for water, storm \Vater and the recreation fund. The recreation fund normally uses general fund transfers to cover the overhead costs associated \Vith if s operations. This transfer is done every year. The program revenues from the recreation programs are just to cover the costs of running those programs \Vithout the overhead and personnel. Changes inn et Position June Governmental Activities Business-ty:12e Activities Total Revenues: Program revenues: Charges for services 1,245,402 1,493,933 5,969,913 5,930,706 7,215,315 7,424,639 Operating grants and contribs 631, , , ' ,006 Capital grants and contribs 2,035,626 1,620, , ,979 2,554,580 1,955,486 General revenues: Property taxes 4,076,021 3,404,425 4,076,021 3,404,425 General sales and use tax 3,087,473 2,581,678 3,087,473 2,581,678 Franchise tax 995, , , ,579 Energy & use tax 484, , , ,458 Interest earnings 34,262 41,761 28,334 36,314 62,596 78,075 Impact Fees 772,265 1,099, , ,294 1,052, Gain I (loss) sale of assets 309,372 23, ,372 23,429 Other 24,543 48,755 24,543 48,755 Total revenues 13,696,460 12,369,740 6,797,009 6,917,887 20,493,469 19,287,627 Expenses: General government 3,602,333 2,184,987 3,602,333 2,184,987 Public safety 2,954,347 2,631,075 2,954,347 2,631,075 Highways and public works 2,592,916 2,569,319 2,592,916 2,569,319 Community Development 1,019, ,309 1,019, ,309 Parks and recreation 1,266,291 1,276,539 1,266,291 1,276,539 Interest on long-term debt 189, , , ,239 Water Utility 1,858,817 1,672,536 1,858,817 1,672,536 Sewer Utility 1,403,225 1,340,504 1,403,225 1,340,504 Garbage Utility 1 '113,238 1,125,646 1 '113,238 1 '125,646 Storm Water Utility 821, , , ,977 Ambulance Service 283, , , ,921 Recreation 868, , , ,973 Total expenses 11,625,146 9,901,468 6,349,096 5,895,557 17,974,242 15,797,025 Increase in net assets before transfers 2.071,314 2,468, ,913 1,022,330 2,519,227 3,490,602 Transfers (388,694) (333,436) 388, ,436 Increase in net assets 1,682,620 2,134, ,607 1,355,766 2,519,227 3,490,602 Net position - beginning 61,604,947 59,470,111 26,325,034 25,969,268 87,929,981 84,439,379 1\let position -ending 63,287,567 61,604,947 27,161,641 26,325,034 90,449,208 87,929,981 24

75 Financial Analysis of the Government's Funds The focus of the City's govemmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's financing requirements. As of June 30, 2014 the City's governmental funds reported combined ending fund balance of $5,763,094. This is a decrease of$729,252 from last year. The decrease came from the capital park improvement fund, as it decreased by $1,284,265, as the City purchased around 23 acres of property for the new park in west Farmington. Much of the park improvement fund balance was spent on purchasing this property. The General Fund increased over $32,000 as revenues came in higher and expenses were kept under budget. The station park RDA also increased as the tax increment was received and monies were set aside for the housing component for the RDA. The capital street fund increased as a transfer from the general fund, a contribution from a developer and a lease for the street lights was added to the revenues. The General Fund is the main fund of the City that is reported under Governmental Activities, and is the chief operating fund of the City. The General Fund ended with a fund balance of$1,591,908, which again was an increase from the previous year and shows that the City is financially strong as revenues are out pacing expenses. In looking at the General Fund, it was budgeted in the beginning to reduce the fund balance by $568,637, and the modified budget was set to decrease the fund balance by $396,113, as overall revenues were anticipated to be higher. At year end revenues were about $141,000 more than budgeted and expenditures were around $242,000 less than budgeted. Overall revenues were up 5.9% from the year before, with taxes increasing by 13% overall or by over $757,000. Taxes continue to be the largest source of revenue and represents about 77% of the total General Fund revenues. The largest element of taxes is sales tax in the General Fund as it makes up for over 4 7% of total taxes collected. It increased significantly this past year mainly due to the increase in local sales tax, as new stores continue to open in the Station Park development. The amount increased by over $500,000 or about 19.6% from a year ago. The City anticipated some ofthe increase, but wasn't sure just what it was going to be with the opening of all the stores in the previous year in the Station Park development. Property taxes increased by over 11% or $176,000. The City did not raise property taxes, but the increase came to make up for the difference that was not given to the City because of the miscalculation the County had done in the previous year's calculations. Building permit revenues dropped off by over 31% to around $607,000, as commercial and residential pennits decreased from last year. Residential pem1its issued fell to 139, this is down from the 265 that were issued last year. The development of Station Park has slowed down as almost all of the buildings are completed now. There are only 2 or 3 buildings left to construct in their development. They will start on some of those this coming year. Energy use and franchise taxes increased as usage has increased with the growth of the City continues in both residential and commercial users. Miscellaneous revenue increased by $40,000 with more rentals of City buildings and the sale of some used vehicles and equipment that was surplused. All other revenues seemed to stay steady. As far as expenditures in the General Fund, the overall increase was around 6. 7%. The largest increase was in public safety, which was due mainly to the addition of two (2) new full time fire captains and two (2) full time police officers. The City needed to increase staffing in these two departments to make sure service levels are were they need to be. General government increased by around $95,000 with the addition ofhiring a mechanic and the cost of maintenance and utilities to the City buildings. Community development increased slightly with the addition of hiring a full time 25

76 City engineer. Highways and public works stayed level and parks and cemete1y went down a little with less being spent on part time employees and benefits. Transfers out to other funds were increased by about $210,000 from previous year as more was put into street maintenance projects. As mentioned before, the expenditures were held under budget by around $242,000, as every department continued to hold costs down as much as possible. The Depatiment heads should all be commended for the fine effort they have done for keeping costs down and stretching evety dollar to the maximum. Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The City maintains several enterprise funds which account for proprietmy funds. As reported on the Statement of Activities, all of the proprietary funds, except for the water, storm water and recreation, had charges for services sufficient to cover expenses. This is a good sign that charges for services are covering the cost of providing these services to the residents. Charges for services increased by 1%. The water fund did not cover expenses only by a small amount as several water capital maintenance projects were done this past year to apgrade old lineg and gy~tem improvements. These projects were needed to be done and the City will continue to upgrade and improve the water system to maintain the system in good operating order. The water fund the last couple of years started to cover operating expenses with charges for services. The water fund still improved in net position. The City will continue to need the depreciation in the water fund to pay for future repairs, improvements and replacements of the system. The sewer fund seen the largest increase in revenues as increases in residential and commercial users continues to grow. The Storm water fund revenues stayed almost the same as development fees went down with less residential and commercial permits being issued. Overall expenditures increased by 7. 7% with the stom1 water and water funds seeing the largest increases, as several capital maintenance and improvement projects were done this past year. One of the improvements that all of the utility funds paid for was the addition to the public works building and storage shed for equipment. This added to the expenses of all these funds. The City was able to use these funds to pay cash for the addition and storage shed, which will greatly enhance the public works department and utility departments. The recreation fund receives a transfer from the General Fund to cover for the overhead costs to run the recreation department, but the individual programs do cover their own expenses. General Fund Budgetary Highlights Budgeted revenues were increased by over $964,000, with sales tax being increased from the original budget by $400,000 as taxes were coming in much higher than anticipated. Property taxes were. increased by $140,000 as they were higher than expected due to the change from the previous year to make up for the difference in the miscalculation made at the County. Franchise and energy taxes were increased by $130,000, with more revenue coming in from those taxes. Intergovernmental was increased as more was coming in from grants, but B&C road funds ended up falling shm1 of projections. Charges for services was increased to accommodate the increase in development fees that were being paid. Licences and permits were raised as building petmits were higher than anticipated in the beginning. Miscellaneous revenues were increased as building rentals and the sale 26

77 of surplused vehicles was added. During the fiscal year, the General Fund original budget was amended from an original budget expenditure and transfer total of$7,859,621 to the final budget of$8,682,149. This increase was due to more transfers to capital project funds including an additional $675,000 to the capital streets fund. Also more in planning and zoning and inspections in professional fees needed for inspections and plan reviews in the inspection depmiment. In the end all the Department Heads did a great job by staying under budget for the year and making cuts to keep costs down during this past year Capital Assets and Debt Administration. The governmental activities capital assets increased from the previous year, as the City purchased more land for the new park. The City however did not receive as much in contributed infrastructure for the streets, sidewalks and other infrastructure from developers and depreciation offset some of the added infrastructure. The business-type activities had increases due to improvements being done and capital assets being added to the City. Please refer to the notes on pages 58 and 59 for more detailed infom1ation for capital asset activity and pages 62 to 65 for details on long-tenn debt activity. (net of depreciation) Capital Assets Land Construction in Progress Water rights & easements Buildings Improvements Machinery & Equipment Infrastructure Total Governmental Business-type Activities Activities ,662,226 23,124, , ,312 25,717 25,717 10,931,296 12,239, ,178 4,989,977 4,799,824 11,383,178 10,676,826 1,266,466 1,331, , ,158 20,096,362 19,721,806 9,129,499 9,102, ,217,950 21,716,877 20, Total ,811,538 23,274,043 25,717 25,717 11,118,474 12,239,879 16,373,155 15,476,650 2,108,459 2,032,868 29,225,861 28,824,547 85,663,204 ~ Outstanding Debt General Obligation Bonds Revenue Bonds Short Term Notes Special Assessment Bonds Capital Leases Total Governmental Business-Type Activities Activities ,054,000 3,562,000 1,335,750 1,686,305 29,250 53,695 73, ,000 1,782, ,460 17,706 56,252 6,245,426 5,963,765 46, ,947 Total ,054,000 3,562,000 1,365,000 1,740,000 73, ,000 1,800, ,712 6,292,382 6,073,712 27

78 The City issued a lease purchase for replacement of street lights for $54 7,588 and a lease purchase of park property for $1,217,000 for new debt in this fiscal year. The City paid all the other scheduled bond payments during the year which resulted in lowering the outstanding amounts of each bond. Economic Factors and Next Year's Budgets and Rates The major economic factors that have affected Fannington City this past year has been the continued growth in sales tax because of Station Park opening stores from the previous years and this past year. Sales tax increased by 19.6% or over $500,000 this past year. Station Park is nearing the completion of phase II with only 2 or 3 more buildings to be built. The City is working hard to ensure this area is developed into an attractive and top quality development that will not have any negative impact on Farmington as a nice and beautiful area to live. It is anticipated that sales tax will continue to grow this next year, probably not as much as it did this fiscal year. The City has anticipated about a 4% increase in sales tax for this next fiscal year but it looks to be more like 8 to 1 0% increase for this next year. Other taxes, including property and franchise taxes are anticipated to grow between 2 to 4% in this coming year. Building pem1its are expected to be lower this next year as Station Park is nearing completion and residential permits appear to be at about what they were this past year. All the other revenues will most likely stay fairly steady. The General Fund balance was planned to decrease by over $568,000, but with the increase in revenues and the decreases in expenditures the fund balance actually increased by $32,000. The General Fund balance ended over $1,591,000 and the City was able to pay for some major street projects during the year. With the General Fund balance over $1.5 million, the City will be able to continue to meet ongoing needs and keep service levels the same or higher throughout the City. The future looks good for the City, as revenues are increasing from the growth of commercial and residential tax base. The hotel also opened this past spring, which will bring additional taxes and revenues to the City. Expenses look to continue to rise which will continue to put pressure on the City to keep costs down and to find ways to stretch budgets to meet the needs of the City. This is always an ongoing struggle to find ways to be as efficient as the City possibly can be. The City has been able to stretch every dollar as far as it can in the past and will continue to do so in the future. Along with the Station Park development there are a couple hundred acres to the nmih that are not in the RDA which will be opened up for development. This area is plruu1ed on having mixed use of office, residential and commercial. This will help in opening up jobs and more commercial tax base here in the community, which will greatly enhance the tax base for the City. Request for information This financial repm1 is designed to provide a general overview offam1ington City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this repm1 or requests for additional financial information should be addressed to: Fannington City, Assistant City Manager, P.O. Box 160, Fannington UT

79 BASIC FINANCIAL STATEMENTS 29

80 FARMINGTON CITY CORPORATION Statement of Net Position June 30, 2014 Primary Government Governmental Business-type Activities Activities Total Assets Cash and cash equivalents $ 5,464,127 3,238,232 8,702,359 Cash with fiscal agents 39,719 39,719 Accounts receivable - net 679, ,917 Property, sales, & franchise taxes receivable 3,376,437 3,376,437 Other receivables 50,955 4,130 55,085 Special assessments receivable 42,273 42,273 Restricted cash and cash equivalents 1,929,892 2,213,258 4,143,150 Capital assets not being depreciated: Land 26,662, ,312 26,811,538 Water stock and rights 25,717 25,717 Capital assets (net of accumulated depreciation): Buildings 10,931, ,178 11,118,474 Improvements 4,989,977 11,383,178 16,373,155 Machinery and equipment 1,266, ,993 2,108,459 Infrastructure 20,096,362 9,129,499 29,225,861 Total assets 74,849,730 27,852, ,702,144 Liabilities Accounts payable and accrued liabilities 1,550, ,779 2,074,919 Construction bonds held 1,114, ,700 1,233,596 Accrued interest payable 56, ,151 Noncurrent liabilities Due within one year 1,440,766 46,956 1,487,722 Due in more than one year 4,991,357 4,991,357 Total liabilities 9,153, ,773 9,844,745 Deferred Inflows of Resources Unearned revenue - property taxes 2,408,191 2,408,191 Total deferred inflo~s of resources 2,408,191 2,408,191 Net Position Net investment in capital assets 57,698,365 21,482,743 79,181,108 Restricted for: Liquor law 17,150 17,150 Perpetual care - expendable Perpetual care - nonexpendable 204, ,869 Debt service 115, ,282 Impact fees 1,929,892 2,213,258 4,143,150 Redevelopment 996, ,743 Unrestricted 2,325,216 3,465,640 5,790,856 Total net position $ 63,287,567 27,161,641 90,449,208 The notes to the financial statements are an integral part of this statement. 30

81 FARMINGTON CITY CORPORATION Statement of Activities For the Year Ended June 30,2014 Function/Programs Primary government: Govenunental activities: General govenunent Public safety Highways and public works Community development Parks and cemetery Interest on long-term debt Total govenunental activities Business-type activities: Water utility V) ~ Sewer utility Garbage utility Storm water utility Ambulance service Recreation Total business-type activities Total primary govenunent Expenses $ 3,602,333 2,954,347 2,592,916 1,019,697 1,266, ,562 11,625,146 1,858,817 1,403,225 1,113, , , ,186 6,349,096 $ 17,974,242 Charges for Services 818, , ,255 53,107 1,245,402 Program Revenues Operating Grants and Contributions 23,071 32, , ,101 1,849,649 1,439,862 1,177, , , ,701 5,969,913 7,215, ,101 General revenues: Property taxes General sales and use tax Franchise tax Energy use tax Impact fees Interest earnings Gain on sale of capital assets Miscellaneous Transfers in( out) Total general revenues Change in net position Net position- beginning (as adjusted) Net position- ending Capital Grants and Contributions 1,914, ,832 2,035, , , ,954 2,554,580 Net (Expense) Revenues & Changes in Net Assets Primary Government Governmental Business-type Activities Activities Total $ (2,760,316) (2,651,394) (102,951} (916,442) (1,092,352) (189,562) (7,713,017) 243,460 36,637 63, ,365 1,003 (352,485) 139,771 (7,713,017) 139,771 4,076,021 3,087, , , ,265 34, ,372 24,543 (388,694) 9,395,637 1,682,620 61,604,947 $ 63,287, ,808 28, , , ,607 26,325,034 27,161,641 (2,760,316) (2,651,3 94) (102,951) (916,442) (1,092,352) (189,562} (7,713,017} 243,460 36,637 63, ,365 1,003 (352,485) 139,771 (7,573,246) 4,076,021 3,087, , ,678 1,052,073 62, ,372 24,543 10,092,473 2,519,227 87,929,981 90,449,208 The notes to the ~mancial statements are an integral part of this statement.

82 FARMINGTON CITY CORPORATION Balance Sheet Governmental Funds June 30, 2014 Special Revenue Debt Service Capital Projects Station Other Total General US-89 Park Building Street Park Governmental Governmental Fund RDA RDA G.O.Bond hnprovement hnprovement Funds Funds Assets Cash and cash equivalents $2,207, ,556 1,428,996 4, ,638 40, ,013 5,464,127 Cash with fiscal agents ,388 39,719 Receivables (net): Sales, property, & franchise taxes 2,728, , ,000 3,376,437 Accounts 50,955-50,955 Special assessments - 42,273 42,273 Restricted cash and cash equivalents - 488, , ,704 1,929,892 Total assets 4,986, ,609 1,428, ,372 1,156, ,487 1,770,378 10,903,403 Liabilities Accounts payable & accrued liabilities 487, , , ,550,140 Construction bonds held 1,114,896 1,114, w 1\) Total liabilities 1,602, , , I 2,665,036 Deferred Inflows of Resources Unavailable revenue - property taxes 1,792, , ,000 2,433,000 Unavailable revenue - special assessments 42,273 42,273 Total deferred inflows of resources 1,792, ,397 ~~.273 2,475,273 Fund Balances Restricted: Liquor law 17,150 17,150 Perpetual care 204, ,919 Debt service 11, , ,282 Impact fee 488, , ,704 1,929,892 Redevelopment 469, , ,743 Assigned, reported in: General fund - self insurance 100, ,000 General fund - trails 5,403 5,403 Debt service funds 139, ,796 Capital projects funds 507,633 40, , ,554 Unassigned, reported in: General fund 1,469, ,469,355 Total fund balances 1,591, , ,134 11, , ,459 ~),104 5,763,094 Total liabilities, deferred inflows and fund balances $4,986, ,609 1,428, ,372 1,156, ,487 1,770,378 10,903,403 The notes to the financial statements are an integral part of this statement.

83 FARMINGTON CITY CORPORATION Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2014 Total fund balances- governmental fund types: $ 5,763,094 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. Long-term assets not available to pay for current period expenditures and, therefore, are deferred in the funds. 63,946,327 67,082 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Also, issuance costs, premiums, discounts are not currently expensed but amortized over the life of the loan. Net position of government activities (6,488,936) $ 63,287,567 The notes to the financial statements are an integral part of this statement. 33

84 FARMINGTON CITY CORPORATION Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2014 c.v REVENUES Special Revenue Debt Service Capital Projects Station Other Total General US-89 Park Building Street Park Governmental Governmental Fund RDA RDA G.O.Bond Improvement Improvement Funds Funds Taxes $ 6,528, ,744 1,178, , ,564 8,643,889 Special assessments 12,342 12,342 Licenses and permits 691, ,139 Intergovernmental 617,645 14, ,645 Charges for services 195, ,756 Impact fees 423, , , ,265 Fines and forfeitures 211, ,843 Interest 8,040 2,286 2, ,059 7,494 9,079 33,214 Miscellaneous revenue 141,974 8,750 20, ,207 Contributions 152, , ,879 Total revenues 8,394, ,030 1,181, , , , ,900 1_1,636,179 EXPENDITURES Current: General government 1,133,535 32,736 9,247 1,175,518 ~ Public safety 2,766,223 2,766,223 Highways and public works 827, ,071 Community development 1,011,833 1,011,833 Parks and cemetery 676, ,198 Capital outlay 61, ,990 2,093,999 4,199, ,379 7,563,033 Debt service: Principal retirement 203, , ,622 1,464,622 Interest 20,643 99,634 85, ,527 Total expenditures 6,414, , , ,634 2,093,999 4,199,706 1,303,251 15,690,025 Excess revenues over (under) expenditures 1,979,540 (5,308) 229,401 (11,438) (I,515,060) (3,876,630) (854,351) (4,053,846) OTHER FINANCING SOURCES (USES) Sale of capital assets 34,932 48, ,865,000 1,948,450 Capital lease - 547,838 1,217,000 1,764,838 Transfers in 1,000 5,000 1,227,000 20,000 1,025,275 2,278,275 Transfers (out) (1,983,094) (66,464) (46,776) (509,635) (61,000) (2,666,969) Total other financing sources and (uses) (1,947,162) (17,946) 5,000 1,728,062 2,592, ,275 3,324,594 Net change in fund balances 32,378 (23,254) 229,401 (6,438) 213,002 (1,284,265) 109,924 (729,252) Fund balances- beginning of year 1,559, , ,733 18, ,903 1,954,724 1,386,180 6,492,346 Fund balances - end of year $ 1,591, , ,134 I 1, , ,459 1,496,104 5,763,094 = The notes to the financial statements are an integral part of this statement.

85 FARMINGTON CITY CORPORATION Reconciliation of the Statement of Revenues, Expenditures, and Changes in Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30,2014 Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances- total governmental funds. $ (729,252) The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase (decrease) net assets. 123,125 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 amount by which capital outlays exceeded depreciation in the current period. 2,605,252 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (12,276) The issuance oflong-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current fmancial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long-term debt and related items. (280,679) 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. Change in net assets of governmental activities $ (23,550) 1,682,620 The notes to the financial statements are an integral part of this statement. 35

86 FARMINGTON CITY CORPORATION Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2014 Variance with Budgeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) REVENUES: Taxes $ 5,720,000 6,400,000 6,528, ,003 Licenses and permits 513, , ,139 12,139 Intergovernmental 608, , ,645 (24,443) Charges for services 143, , ,756 (13,708) Fines and forfeitures 200, , ,843 11,843 Interest 7,100 6,900 8,038 1,138 Miscellaneous revenue 95, , ,974 26,890 Total revenues 7,287,784 8,252,536 8,394, ,862 EXPENDITURES: Current: General government: Legislative 125, , ,916 8,334 Administrative 607, , ,568 32,407 Government buildings 450, , ,051 4,112 Total general government 1,183,588 1,178,388 1,133,535 44,853 Public safety: Police 2,026,845 2,030,700 1,991,309 39,391 Fire 797, , ,914 15,486 Total public safety 2,824,773 2,821,100 2,766,223 54,877 Highways and public works 846, , ,071 33,529 Community development: Engineering 67,000 61,000 53,476 7,524 Planning and zoning 548, , ,480 37,729 Inspection 414, , ,877 24,928 Total community development 1,029,232 1,082,014 1,011,833 70,181 Parks and cemetery 732, , ,198 39,246 Total expenditures 6,617,448 6,657,546 6,414, ,686 Excess revenues over (under) expenditures 670,336 1,594,990 1,979, ,548 OTHER FINANCING SOURCES (USES) Sale of capital assets 2,000 6,000 34,932 28,932 Transfers in 1,200 27,500 1,000 (26,500) Transfers (out) (1,242,173) (2,024,603) (1,983,094) 41,509 Total other financing sources and (uses) (1,238, 973) (1,991,103) (1,947,162) 43,941 Net change in fund balances (568,637) (396,113) 32, ,489 Fund balances - beginning of year 1,559,530 1,559,530 1,559,530 Fund balances - end of year $ 990,893 1,163,417 1,591, ,489 The notes to the financial statements are an integral part of this statement. 36

87 FARMINGTON CITY CORPORATION Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - US 89 Redevelopment Agency Fund For the Year Ended June 30, 2014 Variance with Budgeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 310, , , Interest 3,000 3,000 2,286 (714) Total revenues 313, , , EXPENDITURES Current: General government 39,340 35,100 32,736 2,364 Capital outlay 62,000 61, Bond issuance cost 2,000 2,000 1, Principal retirement 203, , ,000 Interest 22,660 20,660 20, Total expenditures 267, , ,838 2,922 Excess revenues over (under) expenditures 46,000 (9,760) (6,808) 2,952 OTHER FINANCING SOURCES (USES) Sale of capital assets 48,518 48,518 Transfers (out) (50,000) (65,000) (66,464) (1,464) Total other financing sources and uses (50,000) (65,000) (17,946) 47,054 Net change in fund balance (4,000) (74,760) (24,754) 50,006 Fund balances - beginning of year 492, , ,863 Fund balances - end of year $ 488, , ,109 50,006 The notes to the fmancial statements are an integral part of this statement. 37

88 FARMINGTON CITY CORPORATION Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - Station Park Redevelopment Agency Fund For the Year Ended June 30,2014 REVENUES Taxes Interest Total revenues EXPENDITURES Current: General government Capital outlay Total expenditures Net change in fund balance Fund balances - beginning of year Fund balances - end of year Variance with Budgeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) $ 1,000,000 1,178,000 1,178, ,000 1,000 2,901 1,901 1,001,000 1,179,000 1,181,638 2,638 12,800 12,800 9,247 3, , , ,990 1,010 1,001, , ,237 4, , ,401 7, , , ,733 $ 297, , ,134 7,201 The notes to the fmancial statements are an integral part of this statement. 38

89 FARMINGTON CITY CORPORATION Statement of Net Position Proprietary Funds June 30, 2014 Business-Type Activities - Ente!:Erise Water Sewer Garbage Storm Water Ambulance Utili~ Utility Utili!X Utility Service Recreation Total ASSETS Current assets: Cash and cash equivalents $ 1,217, , , , , ,824 3,238,232 Accounts receivable 502, ,571 3, ,620 Allowance for doubtful accounts (90,703) (90,703) Other receivables 4,130 4,130 Restricted cash and cash equivalents 1,041,356 1,171,902 2,213,258 Total current assets 2,765, , ,031 1,810, , ,411 6,135,537 Noncurrent assets: Capital assets: Water stock & rights 25,717 25,717 Land, equipment, buildings and improvements 20,713,358 38, ,756 9,675, ,180 81,629 31,900,189 Less: accumulated depreciation (6,321,551) (5,601) (437,826) (2,944,255) ~445,758) (54,038) ( 10,209,029) Total noncurrent assets 14,417,524 32, ,930 6,731,698 97,422 27,591 21,716,877 Total assets 17,183, , ,961 8,542, , ,002 27,852,414 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 162, ,220 83,692 49,870 8,993 30, ,779 Accrued capital lease interest Accrued revenue bond interest Capital lease - current 17,706 17,706 Revenue bonds - current 29,250 29,250 Total current liabilities 191, , ,534 49,870 8,993 30, ,073 Noncurrent liabilities: Developer construction bonds 118, ,700 Total noncurrent liabilities 118, ,700 Total liabilities 191, , , ,570 8,993 30, ,773 NET POSITION Net investment in capital assets 14,388,274 32, ,224 6,731,698 97,422 27,591 21,669,921 Restricted Impact fees 1,041,356 1,171,902 2,213,258 Unrestricted 1,561, , , , , ,643 3,278,462 Total net position $ 16,991, , ,427 8,373, , ,234 27,161,641 The notes to the fmancial statements are an integral part of this statement. 39

90 FARMINGTON CITY CORPORATION Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2014 Business-Type Activities - Ente!Erise Funds Water Sewer Garbage Storm Water Ambulance Utility Utility Utility Utility Service Recreation Total Operating revenues Charges for services $ 1,784,608 1,439,862 1,177, , , ,701 5,904,444 Connection and servicing 47,194 47,194 Miscellaneous 17, ,275 Total operating revenues 1,849,649 1,439,862 1,177, , , ,701 5,969,913 Operating expenses Salaries and wages 408,445 45,416 71, ,772 56, ,207 1,066,619 Employee benefits 198,875 21,570 33,210 70,501 49, , ,787 Contract services 105,901 1,290, , ,579 22,625 2,447,136 Maintenance and supplies 469,878 22,579 24, ,142 44, ,546 1,095,133 Administration and overhead 119,543 22,857 29,345 38,531 64,950 48, ,734 Depreciation 476, , ,390 45,439 6, ,293 Water purchases 77,522 77,522 Total operating expenses 1,856,293 1,403,225 1,111, , , ,186 6,345,224 Operating income (loss) (6,644) 36,637 65,134 (118,956) 1,003 (352,485) (375,311) Nonoperating revenues (expenses) Interest revenue 11,588 2,473 2,130 9,701 1,433 1,009 28,334 Interest expense and fiscal charges (2,524) (1,343) (5) (3,872) Development/Impact fees 136, , ,808 Total nonoperating revenues (expenses) 145,742 2, ,826 1,433 1, ,270 Income (loss) before contributions and transfers: 139,098 39,110 65,921 33,870 2,436 (351,476) (71,041) Contributions 252, , ,954 Transfers in 388, ,694 Change in net position 391,726 39,110 65, ,196 2,436 37, ,607 Total net position - beginning 16,599, , ,506 8,073, , ,016 26,325,034 Total net position- ending $16,991, , ,427 8,373, , ,234 27,161,641 The notes to the fmancial statements are an integral part of this statement. 40

91 FARMINGTON CITY CORPORATION Statement of Cash Flows Proprietary Funds For the Year Ended June 30,2014 Business-Tl::Ee Activities- Ente!Erise Funds Water Sewer Garbage Storm Water Ambulance Utili!): Utili!): Utili!): Utility Service Recreation Total CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers $ 1,854,727 1,439,862 1,177, , , ,114 6,009,891 Payments to suppliers (799,141) (I,403,303) (964,124) (308,486) (129,955) (407,718) (4,0 12,727) Payments to employees (607,320) (66,986) (104,565) (223,273) (105,835) {460,427) (1,568,406) Net cash provided (used) by operating activities 448,266 (30,427) 108, ,207 87,403 (356,031) 428,758 CASH FLOWS FROM NONCAPIT AL FINANCING ACTIVITIES Developmentllmpact fees 136, , ,808 Transfers from other funds 388, ,694 Net cash provided (used) by noncapital financing activities 136, , , ,502 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Receipt of developer canst. bonds 83,310 83,310 Refund of developer canst. bonds (71,600) (71,600) Contributions 76,000 76,000 Purchases of capital assets (891,244) (32,879} (93,172} (416,505) (17,662) (1,451,462) Principal paid on capital debt (27,853) (34,456) (682) (62,991) Interest paid on capital debt (2,524) (1,610) (29) (4,163) Net cash provided (used) by capital and related financing activities (921,621) (32,879) (129,238) (329,506) (17,662) (1,430,906) CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends received 11,588 2,473 2,130 9,701 1,433 1,009 28,334 Net cash provided (used) by investing activities 11,588 2,473 2,130 9,701 1,433 1,009 28,334 Net increase (decrease) in cash and cash equivalents (325,089) (60,833) (18,768) (5,468} 71,174 33,672 (305,312) Cash and cash equivalents - beginning 2,584, , ,799 1,815, ,152 5,756,802 Cash and cash equivalents -end $2,259, , ,031 1,810, , ,824 5,451,490 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) $ (6,644) 36,637 65,134 (118,956) 1,003 (352,485) (375,311) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense , ,390 45,439 6, ,293 (lnc)/decrease in accounts receivable 5, ,480 (3,587) 39,978 Increase/(decr) in accounts payable (26,297) (67,567) 79 28,766 2,481 (6,664) (69,202) Total adjustments 454,910 (67,064) 43, ,163 86,400 (3,546) 804,069 Net cash provided (used) by operating activities $ 448,266 (30,427) 108, ,207 87,403 (356,031) 428,758 Noncash Investing, Capital and Financing Activities: Contribution of capital assets from private developers $ 252, , ,954 The notes to the financial statements are an integral part of this statement. 41

92 NOTES TO FINANCIAL STATEMENTS 42

93 FARMINGTON CITY CORPORATION Notes to Financial Statements June 30, 2014 Note 1- Summary of Significant Accounting Policies A. Description of government-wide fmancial statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. All fiduciary activities are reported only in the fund financial statements. Governmental activities, which normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are reported separately from business-type activities which rely to a significant extent on fees and charges to external customers for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. B. Reporting entity Farmington City (City) is a municipal corporation governed by an elected mayor and a five member governing council (council). The accompanying financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units are, in substance, part of the primary government's operations, even though they are legally separate entities. Thus, the blended component units are appropriately presented as funds of the primary government. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the City. Blended component units. financial statements: The following entities are blended in the accompanying general purpose Farmington City Redevelopment Agency- US 89 Farmington City Redevelopment Agency- Station Park Blending means that component unit balances and transactions are combined with balances and transactions of the primary government. Although legally separate from the City, the above component units are blended because they are governed by boards comprised of the City council members. The City retains fiscal responsibility for these entities. These entities are reported as special revenue funds and do not issue separate financial statements. Discretely presented component units. The City currently has no discretely presented component units. Farmington Area Pressurized Irrigation District (F APID), is not a part of Farmington City Corporation as it is governed by a separate elected board. Accordingly, it is not included with this report. 43

94 FARMINGTON CITY CORPORATION Notes to Financial Statements - Continued June 30, 2014 Note 1- Summary of Significant Accounting Policies (continued) C. Basis of presentation - government-wide financial statement While separate government-wide and fund financial statements are presented, they are interrelated. The governmental activities column incorporates data from governmental funds and intemal service funds, while business-type activities incorporate data from the govemment's enterprise funds. Separate financial statements are provided for govemmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the govemment-wide financial statements. As a general rule, the effect of interfund activity has been eliminated from the govemment-wide financial statements. Exceptions to this general rule are reasonable allocations of costs where the amounts are reasonably equivalent in value to the interfund services provided and other charges between the government's General Fund and utility functions and various other functions of the govemment. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. D. Basis of presentation - fund financial statements The fund financial statements provide information about the govemment's funds, including its fiduciary funds and blended component units. Separate statements for each fund category - govemmental and proprietary - are presented. The emphasis of fund financial statement is on major govemmental and enterprise funds, each displayed in a separate column. All remaining govemmental and enterprise funds are aggregated and reported as nonmajor funds. Major individual govemmental and enterprise funds are reported as separate columns in the fund financial statements. The City reports the following major governmental funds: The general fund is the City's primary operating fund. It accounts for all financial resources of the general govemment, except those required to be accounted for in another fund. The US-89 redevelopment agency special revenue fund accounts for redevelopment agency transactions conducted by Farmington City, including property acquisition, site improvements, preparation cost, installation of public improvements, and administration cost. The station park redevelopment agency special revenue fund accounts for redevelopment agency transactions conducted by Farmington City, including property acquisition, site improvements, preparation cost, installation of public improvements, and administration cost. The building g.o. bond debt service fund is used to account for principal and interest on the general obligation bonds used to finance construction of the City's police station. The street improvement capital projects fund accounts for the major replacement and repair of City streets. 44

95 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 1 -Summary of Significant Accounting Policies (continued) The park improvement capital projects fund accounts for the ongomg acquisition, repair, and maintenance of the City parks. The City reports the following major proprietary funds: The water utility fimd accounts for the operations of the government's water utility system. The sewer utility fimd accounts for the operations of the government's sewer utility system. The garbage utility fund accounts for the revenues and expenses associated with providing garbage collection services. The storm water utility fimd accounts for the revenues and expenses associated with the storm water utility system. The ambulance service fund accounts for the revenues and expenses associated with providing ambulance transportation services. The recreation fund accounts for the activities of the government's recreation program. During the course of operations, the government has activity between funds for various purposes. Any residual balances outstanding at year end are reported as due to/from other funds and advances to/from other funds. While these balances are reported in fund fmancial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in governmental activities (i.e., the governmental funds) are eliminated so that only the net amount is included as internal balances in the governmental activities column. Similarly, balances between the funds included in business-type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as internal balances in the business-type activities column. Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in business-type activities are eliminated so that only the net amount is included as transfers in the business-type activities column. E. Measurement focus and basis of accounting The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the fmancial statements. 45

96 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 1- Summary of Significant Accounting Policies (continued) The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of 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. The governmental fund financial statements are reported using the current fmancial 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 government 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. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisition under capital leases are reported as other financing sources. Property taxes, sales taxes, franchise taxes, licenses, and interest 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. Entitlements are recorded as revenues when all eligibility requirements are met, including any time requirements, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year end). Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year end). All other revenue items are considered to be measurable and available only when cash is received by the government. F. Budgetary information 1. Budgetary basis of accounting Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the general fund, special revenue funds, debt service funds, and capital projects funds. The appropriated budget is prepared by fund, function, and department. The government's department heads may make transfers of appropriations within a department. Transfers of appropriations between departments require the approval of the council. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the department level. Appropriations in all budgeted funds lapse at the end of the fiscal year. 46

97 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 1- Summary of Significant Accounting Policies (continued) 2. Excess of expenditures over appropriations For the year ended June 30, 2014, expenditures exceeded appropriations in the Park Improvement Capitol Projects fund in the amount of $1,106,606. The expenditures were funded by the sale of property. G. Assets, liabilities, deferred outflows/inflows of resources, and net position/fund balance 1. Deposits and investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. State statues authorize the City to invest in obligations of the U.S. Treasury, commercial paper, corporate bonds, repurchase agreements, and the State Treasurer's Investment Fund. Investments for the City, as well as for its component units, are reported at fair value. The State Treasurer's Investment Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares. 2. Receivables and payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds". Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances". All trade, property, sales, and franchise tax receivables are shown net of an allowance for uncollectibles. Trade accounts receivable in excess of 180 days comprise the trade accounts receivable allowance for uncollectibles. Property taxes are collected by the County Treasurer and remitted to the City shortly after collection. Property taxes are levied based on property values as of January 1 of each year, with liens posted as of the same date. Taxes are due and payable on November 1 and delinquent after 12 o'clock noon on November 30 of each year. Sales taxes are collected by the State Tax Commission and remitted to the City monthly. Franchise taxes are collected by the telephone, natural gas and electric utilities, and by cable TV operations. Taxes are remitted to the City monthly. 47

98 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 1 -Summary of Significant Accounting Policies (continued) 3. Restricted cash and cash equivalents Certain resources of the City's governmental funds are set aside for repayment of debt, capital projects, and impact fees. 4. Capital assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, and similar items), are reported in the applicable government or business-type activities columns in the government-wide fmancial statements. Capital assets are separated into 4 types as defined by the City's asset management policy. The four types and their definition are as follows: 1) Equipment are assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess oftwo years; 2) Buildings are assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of five years; 3) Improvements are assets with an initial, individual cost of$20,000 or more and an estimated useful life in excess of five years; 4) Infrastructure are assets with an initial, individual cost of $20,000 or more and an estimated useful life in excess of five years. Such assets are recorded at historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset's life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Property, plant, equipment, and infrastructure of the primary government, as well as the component units, is depreciated using the straight line method over the following estimated useful lives: Assets Buildings Building improvements Public domain infrastructure System infrastructure Vehicles Machinery and equipment Years

99 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 1 - Summary of Significant Accounting Policies (continued) 5. Compensated absences City employees are granted vacation and sick leave in varying amounts based on length of service. Unused vacation up to 240 hours may carryover into the next year and is paid upon termination. Sick leave in excess of 320 hours is forfeited. Upon retirement, any unused sick leave up to 320 hours is paid out in cash. The City uses a first in, frrst out approach to the use of vacation and thus considers all amounts to be paid in the next fiscal year. Unpaid compensated absences in proprietary funds are recorded as a liability in those funds as the vested benefits to employees accrue. 6. Deferred outflows/inflows of resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on issuance costs reported in the government-wide statement of net position. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate fmancial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future periods and so will not be recognized as an inflow of resources (revenue) until that time. The government has two types of items, which arises only under a modified accrual basis of accounting, that qualifies for reporting in these categories. Accordingly, the items, unavailable revenue and deferred revenue, are reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. 7. 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 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. 49

100 FARMINGTON CITY CORPORATION Notes to Financial Statements Continued June 30, 2014 Note 1- Summary of Significant Accounting Policies (continued) In the fund financial statements, goverrunental fund types recognize bond premiums and discount, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other fmancing 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. 8. Net position flow assumption Sometimes the goverrunent will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government's policy to consider restricted net position to have been depleted before unrestricted net position is applied. 9. Fund balance flow assumptions Sometimes the government will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the goverrunental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government's policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. 10. Net position/fund balance Government-wide financial statements Equity is classified in the government-wide financial statements as net assets and is displayed in three components: Invested in capital assets, net of related debt - Capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balance of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted net position -Net assets with constraints placed on the use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or 2) law through constitutional provisions or enabling legislation. Unrestricted net position -All other net assets that do not meet the defmition of "restricted" or "invested in capital assets, net of related debt." 50

101 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 1 -Summary of Significant Accounting Policies (continued) Fund financial statements In the fund financial statements, governmental fund equity is classified as fund balance. Fund balance is further classified as Nonspendable, Restricted, Committed, Assigned, or Unassigned. Descriptions of each follow: Nonspendable fund balance - Amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. Restricted fund balance - Amounts restricted by enabling legislation. Also reported if, (a) externally imposed by creditors, grantors, contributors, or laws regulations or other governments, or (b) imposed by law through constitutional provisions or enabling legislation. Committed fund balance - Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision making authority, the City Council. The commitment can only be changed or removed through the same action (for example, by resolution or an ordinance) of the City Council. Assigned fimd balance - Amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed. This intent is expressed by a resolution from the City Council or delegated by resolution to the finance director. It also includes all remaining amounts that are reported in governmental funds other than the General Fund that are not classified as nonspendable, restricted, nor committed, or in the General Fund and are intended to be used for specific purposes. Unassigned fimd balance - Residual classification of the General Fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purpose within the General Fund. It is the City's policy to apply expenditures first to committed fund balance, then assigned, and finally unassigned. H. Revenues and expenditures/expenses 1. Program revenues Amounts reported as 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 (including special assessments) that are restricted to meeting the operational or capital requirements of a particular function or segment. All taxes, including those dedicated for specific purposes, and other internally dedicated resources are reported as general revenues rather than as program revenues. 51

102 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 1- Summary of Significant Accounting Policies (continued) 2. Property taxes Property taxes attach as an enforceable lien on real property on January 1st of each year. Taxes are levied on property owners in July and are payable by November 30th. Collections are periodically distributed to the taxing entities, with final settlement due March 31st of the subsequent year. The City records a receivable and deferred revenue for delinquent taxes, but no allowance for doubtful accounts is made as uncollected taxes are deemed to be substantially collectible or recoverable through foreclosure. 3. Compensated absences City employees are granted vacation and sick leave in varying amounts based on length of service. Unused vacation up to 240 hours may carryover into the next year and is paid upon termination. Employees can carry up to 320 hrs of sick leave into the next year. Up to 320 hours can be cashed out upon retirement, otherwise sick leave in excess of 320 hours is forfeited upon termination. The government's policy permits employees to accumulate earned but unused vacation benefits which are eligible for payment upon separation from government service. The liability for such leave is reported as incurred in the government-wide and proprietary fund financial statements. A liability for those amounts is recorded in the governmental funds only if the liability has matured as a result of employee resignations or retirements. The liability for compensated absences includes salary-related benefits, where applicable. 4. Proprietary funds operating and nonoperating revenues and expenses 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 services. Operating expenses for enterprise 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. Note 2 -Reconciliation of Government-wide and Fund Financial Statements A. Explanation of certain differences between the governmental fund balance sheet and the governmentwide statement of net assets The governmental fund balance sheet includes a reconciliation between total governmental fund balances and net assets of governmental activities as reported in the government-wide statement of net assets. This difference primarily results from the long-term economic focus of the statement of net assets versus the current fmancial resources focus of the governmental fund balance sheets. 52

103 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 2- Reconciliation of Government-wide and Fund Financial Statements (continued) Capital related items: When capital assets (property, plant, and equipment) that are to be used in governmental activities are purchased or constructed, the cost of those assets are reported as expenditures in governmental funds. However, the statement of net assets includes those capital assets among the assets of the City as a whole. Cost of capital assets Accumulated depreciation Total difference $ 96,894,534 (32,948,207) $ 63,946,327 Deferred revenue: Long-term assets applicable to the City's governmental activities are not available to pay for current expenditures and thus are deferred in government funds. The statement of net assets includes these as revenue: Deferred revenue $ 67,082 Long-term debt transactions: Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities in the fund financials. All liabilities (both current and long-term) are reported in the statement of net assets. Balances at June 30, 2014 were: Sales tax revenue bonds $ 1,633,750 General obligation bonds 2,116,000 Special assessment bonds 73,000 Redevelopment bonds 640,000 Capital leases 1,782,676 Interest payable on long-term debt 56,813 Compensated absences 184,161 Bond premium 12,765 Accumulated amortization (10,229) Total difference $ 6,488,936 53

104 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30,2014 Note 2- Reconciliation of Government-wide and Fund Financial Statements (continued) B. Explanation of differences between governmental fund operating statements and the statement of revenues, expenditures and changes in balances 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. The first element of this reconciliation states that capital outlays are reported in the governmental funds as expenditures while the government-wide statement of activities allocates these costs over the useful lives of the assets as depreciation. While shown in the reconciliation as the net difference, the elements of this difference are as follows: Capital outlay Depreciation expense Net differences as reported $ 5,494,787 (2,889,535) $ 2,605,252 Another element of that reconciliation states that "the issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of longterm debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities." The details of this $(280,679) difference is as follows: Debt issued or incurred: Capital lease proceeds $ (1,764,838) Amortization of premium 982 Principal repayments: General obligation debt 378,000 Revenue bonds 515,555 Capital lease payments 589,622 Net difference as reported $ (280,679) Another element of that reconciliation states 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 the $(23,550) difference is as follows: Compensated absences Accrued interest Net difference as reported $ $ (20,960) (2,590) (23,550) 54

105 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 3 - Stewardship, Compliance, and Accountability A. Budgetary information Budgets are prepared and adopted in accordance with State law by the Farmington City Council on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the general, special revenue, debt service, and capital projects funds. Tentative budgets must be adopted on or before June 22nd for the following fiscal year, beginning July 1. Final adoption of the budget must be no later than August 17th. Budgets may be increased by resolution of the City Council at any time during the year. A public hearing must be held regarding any proposed increase in a fund's appropriations. The budget is adopted by fund, function, and department. The government's department heads may make transfers of appropriations within a department. Transfers of appropriations between departments require the approval of the City Council. The legal level of budgetary control is at the department level. Appropriations lapse at June 30. During the year, supplemental appropriations were made increasing General Fund expenditures by $40,098. Utah State law allows for any undesignated fund balance in excess of 5% of total revenues of the General Fund to be utilized for budget purposes. The law also allows for the accumulation of a fund balance in the General Fund in an amount equal to 25% of the total estimated revenue of the General Fund. In the event that the fund balance at the end of the fiscal year is in excess of that allowed, the City has one year to determine an appropriate use, then the excess must be included as an available resource in the General Fund budget. The City's General Fund balance is in compliance with State law. B. Excess of expenditures over appropriations The details of this were previously discussed at note l.e.2 Note 4- Detailed Notes on all Funds A. Deposits and investments The City maintains cash accounts with local institutions and investment pools with the Utah Public Treasurer's Investment Fund, which is available for use by all funds. Utah State law requires that City funds be deposited with a "qualified depository" as defined by the Utah Money Management Act. "Qualified depository" includes any depository institution which has been certified by the Utah State Commissioner of Financial Institutions as having met the requirements as defined in Rule 11 of the Utah Money Management Act. Rule 11 establishes the formula for determining the amount of public funds which a qualified depository may hold in order to minimize risk of loss and defmes capital requirements which an institution must maintain to be eligible to accept public funds. Deposits and investments for local government are governed by the Utah Money Management Act (Utah Code Annotated, Title 51, Chapter 7, "the Act") and by rules of the Utah Money Management Council ("the Council"). Following are discussions of the City's exposure to various risks related to its cash management activities. 55

106 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 4- Detailed Notes on All Funds (continued) Custodial credit risk - Deposits. This is the risk that in the event of a bank failure, the government's deposits may not be recovered. The City's policy for managing custodial credit risk is to adhere to the Money Management Act. The Act requires all deposits of the City to be in a qualified depository, defmed as any fmancial institution whose deposits are insured by an agency of the federal government and which has been certified by the Commissioner of Financial Institutions as meeting the requirements of the Act and adhering to the rules of the Utah Money Management Council. As of June 30, 2014, $647,130 of the $927,547 balance of deposits was exposed to custodial credit risk because it was uninsured and uncollateralized. Custodial credit risk- Investments. This is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments that are in the possession of an outside party. The City's investment in the Utah Public Treasurer's Investment Fund has no custodial credit risk. As of June 30, 2014, the City had the following deposits and investments: Fair Value Cash on deposit $ 927,547 State Treasurer's investment pool 12,147,086 $ 13,074,633 Credit risk. This is the risk that the counterparty to an investment will not fulfill its obligations. The City's policy for limiting the credit risk of investments is to comply with the Money Management Act. The Money Management Act authorizes the City to invest in negotiable or nonnegotiable deposits of qualified depositories and permitted negotiable depositories; repurchase and reverse repurchase agreements; commercial paper that is classified as "first tier" by two nationally recognized statistical ratings organizations, one if which must be Moody's Investors Services or Standard & Poor's; bankers' acceptances; obligations of the United States Treasury, including bills, notes, and bonds; bonds, notes, and other evidence of indebtedness of political subdivisions of the State; fixed rate corporate obligations and variable rate securities rated "A" or higher, or the equivalent of "A" or higher, by two nationally recognized statistical rating organizations; shares or certificates in a money market mutual fund as defined in the Act; and the Utah State Public Treasurer's Investment Fund. The Utah Public Treasurer's Investment Fund (PTIF) is an external pooled investment fund managed by the Utah State Treasurer and subject to the Act and Council requirements. The PTIF is not registered with the SEC as an investment company, and deposits in the PTIF are not insured or otherwise guaranteed by the State of Utah. The PTIF operates and reports to participants on an amortized cost basis. The income, gains, and losses, net of administration fees, of the PTIF are allocated based upon the participants' average daily balances. 56

107 FARMINGTON CITY CORPORATION Notes to Financial Statements - Continued June 30, 2014 Note 4- Detailed Notes on All Funds (continued) For the year ended June 30, 2014, the City had investments of $12,147,086 with the PTIF. The entire balance had a maturity less than one year. The City's fair value of its investments with the PTIF is the same as the value of the pool shares. The PTIF pool has not been rated. Interest rate risk. This is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The City does not have a formal policy relating to investment related risk, but manages its exposure to declines in fair value by investing mainly in the PTIF and by adhering to the Utah State Money Management Act. The Act requires that the remaining term to maturity of investments may not exceed the period of availability of the funds to be invested. Concentration of credit risk. This is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The City's investment in the Utah Public Treasurer's Investment Fund has no concentration of credit risk. Components of cash and investments (including interest earning deposits) at June 30, 2014, are as follows: Cash on hand Cash on deposit Utah State Treasurer's Investment Fund $ ,328 12,147,086 $ 12,885,228 Cash and investments are included in the accompanying combined statement of net assets as follows: Cash and cash equivalents Cash with fiscal agents Restricted cash and cash equivalents $ 8,702,359 39,719 4,143,150 $ 12,885,228 B. Receivables Amounts are aggregated into a single accounts receivable (net of allowance for uncollectibles) line for certain funds and aggregated columns. Below is the detail of receivables for the general, building g o bond, and the nonmajor governmental funds in the aggregate, including the applicable allowances for uncollectible accounts as follows: 57

108 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 4- Detailed Notes on all Funds (continued) Receivables General Accounts $ 50,955 Property taxes 36,848 Road Funds 106,716 Sales and use taxes 599,426 Franchise taxes 107,809 Energy/telecom taxes 44,068 Transient room taxes 4,013 Deferred property tax 1,792,603 Court fines 36,954 Special assessments Gross receivables $ 2,779,392 Debt Service 7,603 Nonmajor Governmental 408, ,000 42, , ,273 Total 50,955 44, , , ,809 44,068 4,013 2,433,000 36,954 42,273 3,469,665 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. C. Capital assets Capital asset activity for the year ended June 30, 2014 was as follows: Primary Government Beginning Ending Governmental activities: Balance Increases Decreases Balance Capital assets not being depreciated: Land $23,124,731 4,219, ,000 26,662,226 Total capital assets not being depreciated 23,124,731 4,219, ,000 26,662,226 Capital assets being depreciated: Buildings 15,259,537 6,850 1,115,250 14,151,137 Improvements 10,420, ,950 11,252,648 Machinery and equipment 5,277, ,172 86,699 5,494,713 Infrastructure 37,439,287 1,894,523 39,333,810 Total capital assets being depreciated 68,396,762 3,037,495 1,201,949 70,232,308 Less accumulated depreciation for: Buildings 3,019, , ,172 3,219,841 Improvements 5,620, ,797 6,262,671 Machinery and equipment 3,945, ,416 86,699 4,228,247 Infrastructure 17,717,481 1,519,967 19,237,448 Total accumulated depreciation 30,303,543 2,889, ,871 32,948,207 Total capital assets, being depreciated, net 38,093, , ,078 37,284,101 Governmental activities capital assets, net $61,217,950 4,367,455 1,639,078 63,946,327 58

109 FARMINGTON CITY CORPORATION Notes to Financial Statements - Continued June 30, 2014 Note 4- Detailed Notes on all Funds (continued) Beginning Business-type activities Balance Increases Decreases Capital assets not being depreciated: Land $ 149,312 Water stock and rights 25,717 Total capital assets not being depreciated 175,029 Capital assets being depreciated: Buildings 187,178 hnprovements 15,105,618 1,114,394 Infrastructure 12,801, ,003 Machinery and equipment 1,976, ,841 27,241 Total capital assets being depreciated 29,883,702 1,894,416 27,241 Less accumulated depreciation for: hnprovements 4,455, ,277 Infrastructure 3,698, ,245 Machinery and equipment 1,248, ,771 27,241 Total accumulated depreciation 9,402, ,293 27,241 Total capital assets, being depreciated, net 20,480,725 1,061,123 Business-type activities capital assets, net $20,655,754 1,061,123 Ending Balance 149,312 25, , ,178 16,220,012 13,103,593 2,240,094 31,750,877 4,836,834 3,974,094 1,398,101 10,209,029 21,541,848 21,716,877 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government Public safety Highways and public works Community development Parks and cemetery $ 337, ,124 1,765,845 7, ,093 Total depreciation expense- governmental activities Business-type activities: Water Sewer Garbage Storm water Ambulance Recreation Total depreciation expense- business-type activities Total depreciation expense $ 2,889, , , ,390 45,439 6, ,293 3,722,828 59

110 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30,2014 Note 4- Detailed Notes on all Funds (continued) D. Interfund receivables, payables, and transfers Interfund Transfers: Transfers In General Building Park Street Transfers Out: Fund GO Bond Improvement Improvement General Fund $ 5,000 20,000 1,227,000 US-89 RDA Street Improvement Park Improvement Non-major Governmental 1,000 Total transfers in $ 1,000 5,000 20,000 1,227,000 Transfers Out: Transfers In (continued) Non-major Governmental Recreation Enterprise Total Transfers Out General Fund US-89RDA Street Improvement Park Improvement Non-major Governmental Total transfers in 342,400 66,464 46, ,635 60,000 1,025, ,694 $ 1,983,094 66,464 46, ,635 61, ,694 $ 2,666,969 ==:::::i:::::==== Transfers are used to: 1) move revenues from the fund with collection authorization to the debt service fund as debt service principal and interest payments become due or 2) move unrestricted fund revenues to finance various programs that the government must account for in the other funds in accordance with budgetary authorizations. (The rest of page intentionally left blank.) 60

111 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 4- Detailed Notes on all Funds (continued) E. Leases Capital Leases The City has entered into lease agreements as lessee for financing the acquisition of a building, a dump truck, a front-end loader, and recycling garbage cans. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The assets acquired through capital leases are as follows: Assets: Land Vehicles Equipment Infrastructure Less: accumulated depreciation Total Governmental Activities Garbage Enterprise Fund $ 1,755, , , ,838 (21,81 0),_( 4_9'--, 7_90-'-) $ 2,630, ,150 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2014 were as follows: Year Ending June 30: Total minimum lease payments Less: amount representing interest Present value of minimum lease payments Governmental Activities 276, , , , , ,328 13,344 Garbage Enterprise Fund 18,033 1,977,912 18,033 (195,236) (,_3_27-'-) $ 1,782,676 17,706 61

112 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 4- Detailed Notes on all Funds (continued) F. Long-term debt General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. The original amount of general obligation bonds issued in prior years was $5,650,000. General obligation bonds are direct obligations and pledge the full faith and credit of the government. These bonds generally are issued as 9 to 20 years serial bonds with increasing amounts of principal maturing each year. General obligation bonds currently outstanding are as follows: Purpose City office building Municipal purpose Parks and municipal buildings Interest Rates % 4.04% % Amount $ 938,000 1,711, ,000 $ 3,054,000 Annual debt service requirements to maturity for general obligation bonds are as follows: Year Ending June 30: Total Governmental Activities Principal Interest $ 539,000 $ 105, ,000 87, ,000 69,229 1,624, ,352 $ 3,054, ,597 Special Assessment Bonds The government also issued $258,441 of special assessment debt in 2001 and $312,476 of special assessment debt in 2005 to provide funds for the construction of curb, gutter, and sidewalks. These bonds will be repaid from amounts levied against the property owners benefited by this construction. In the event that a deficiency exists because of unpaid or delinquent special assessments at the time a debt service payment is due, the government must provide resources to cover the deficiency until other resources, for example, foreclosure proceeds, are received. The bonds have a stated rate of interest of 5.5 percent and are payable annually. 62

113 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 4- Detailed Notes on all Funds (continued) Purpose 2005 Special assessment bond Interest Rates 4.15% Amount $ 73,000 Annual debt service requirements to maturity for special assessment bonds are as follows: Revenue Bonds Year Ending June 30: Total Governmental Activities Principal Interest $ 36,000 $ 3,030 37,000 1, '--- $ 73,000 $ 4,565 ========= The City issues bonds where the government pledges income derived from the acquired or constructed assets to pay debt service. The City has three debts which it treats as revenue type debt because of the nature of the debt and the revenues being used to fund the related debt service. In June of 2005, the City issued sales tax revenue bonds which are secured by the collection of sales taxes. The Series 2005B revenue bonds were issued for $1,093,000 and were used for street and park construction projects and to purchase equipment under a capital lease in the water fund. The Series B bonds are being repaid in annual installments of $106,000 to $130,000 thru June In addition the City has issued a sales tax revenue bonds series 2009 for $821,000 for the remodel of the fire station. The bonds are being repaid in annual installments of$43,000 to $71,000 thru June In 2012 the City, through the RDA, issued tax increment revenue bonds series 2012 for $1,036,000 for the development of the station park redevelopment area. The bonds are being repaid in annual installments of $193,000 to $219,000 thru April2017. (The rest of page intentionally left blank.) 63

114 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30,2014 Note 4 -Detailed Notes on all Funds (continued) Sales & Franchise tax revenue bonds series 2010 for $1,971,000 were issued for the construction of infrastructure in the station park RDA project. The bonds are being repaid in annual installments of $59,000 to $137,000 thru June At year end, these debt balances are as follows: Governmental Activities Interest Rates Amount 2005B Sales Tax Revenue Bonds 4.15% $ 100, Sales Tax Revenue Bonds 2.26 to 5.22% 595, RDA Tax Increment Revenue Bonds 2.45% 640,000 Business-type Activities 1,335, B Sales Tax Revenue Bonds 4.15% 29,250 Total City reflected revenue bonds $ 1,365,000 Revenue bond debt service requirements to maturity are as follows: Governmental Activities Business-type Activities Year Ending June 30: Principal Interest Principal Interest 2015 $ 357,750 $ 43,594 $ 29,250 $ 2, ,000 33, , , ,000 65, ,000 8,190 Totals $ 1,335, ,723 29,250 2,778 Total governmental and business-type revenue bonds $ 1,365, ,501 {The rest of page intentionally left blank.) 64

115 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 4- Detailed Notes on all Funds (continued) Changes in long-term liabilities Long-term liability activity for the year ended June 30, 2014, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: General obligation bonds $ 3,562,000 (508,000) 3,054, ,000 Special assessment debt with governmental commitment 108,000 (35,000) 73,000 36,000 Revenue bonds 1,686,305 (350,555) 1,335, ,750 Bond premium 3,518 (982) 2,536 Total bonds payable 5,359,823 (894,537) 4,465,286 1,071,750 Capital leases 607,460 1,764,838 (589,622) 1,782, ,895 Compensated absences 163, ,161 (163,201) 184, ,121 Governmental activity Long-term liabilities $ 6,130,484 1,948,999 (1,647,360) 6,432,123 1,440,766 Business-type activities: Bonds payable: Revenue bonds $ 53,695 (24,445) 29,250 29,250 Capital leases 56,252 (38,546) 17,706 17,706 Business-type activity Long-term liabilities $ 109,947 (62,991) 46,956 46,956 Compensated absences are generally liquidated by the general fund. (The rest of page intentionally left blank.) 65

116 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 5- Other Information A. Risk management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance. There have been no settlements paid in excess of insurance nor has insurance coverage been significantly reduced in the past three years. B. Retirement plans Local Government - Cost Sharing Defined Benefit Plan Description Farmington City Corporation (City) contributes to the Local Governmental Noncontributory Retirement System, Public Safety Retirement System Other Division A Noncontributory, and Firefighters System Division A for employers with (without) Social Security coverage, all of which are cost-sharing multipleemployer defmed benefit pension plans administered by the Utah Retirement Systems (Systems). The Systems provide refunds, retirement benefits, annual cost of living adjustments and death benefits to plan members and beneficiaries in accordance with retirement statutes. The Systems are established and governed by the respective sections of Chapter 49 of the Utah Code Annotated 1953 as amended. The Utah State Retirement Office Act in Chapter 49 provides for the administration of the Utah Retirement Systems and Plans under the direction of the Utah State Retirement Board (Board) whose members are appointed by the Governor. The Systems issue a publicly available financial report that includes financial statements and required supplementary information for the Local Governmental Contributory Retirement System, Local Governmental Noncontributory Retirement System, and Public Safety Retirement System for employers with (without) Social Security coverage. A copy of the report may be obtained by writing to the Utah Retirement Systems, 540 East 200 South, Salt Lake City, UT or by calling Funding Policy The City is required to contribute a percent of covered salary to the respective systems, % to the Local Government Contributory Tier 2, % to the Local Government Noncontributory Tier 1, % to the Public Safety Contributory Tier 2 system, % to the Public Safety Noncontributory Tier 1 system, and % to the Firefighters Tier 1 system. The contribution rates are the actuarially determined rates. The contribution requirements of the Systems are authorized by statute and specified by the Board. 66

117 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 5- Other Information (continued) The City's contributions to the Local Governmental Contributory Retirement System for the years ended June 30, 2014, 2013, and 2012, were, $22,073, $11,795, and $0, respectively; for the Local Government Noncontributory System $350,853, $312,501, and $267,966, respectively; for the Public Safety Contributory 49,255, $3,957, AND $3,278, respectively; for the Public Safety Noncontributory Tier 1, $234,253,$213,181, and $193,021, respectively; for the Firefighters Tier 1 system, $42,736,$17,411, and $19,589, respectively. The contributions were equal to the required contributions for each year. Defmed Contribution Plan The City participates in a supplemental defined contribution plan (401(a)) for all full-time employees, administered by ICMA. Plan contributions vary according to which state retirement plan the employee participates in and range from 4.48% to 12.28%. For full-time employees hired prior to January 1, 1987, vesting begins after 4 years of service at 40% with 10% increments for each additional year of service. Full vesting occurs after 10 years service. As of July 1, 2001, full-time employees are not eligible to participate until 1 year of service has been completed, at which time the participant is 100% vested. The City council is responsible for establishing the plan and can amend the plan provisions at any time. The City's required and actual contribution to this plan was $184,308 for the fiscal year ended June 30, The City also participates in defmed contribution plans ( 401 (k) and 457) sponsored and administered by the Utah Retirement Systems. The plans, available to all City employees, permit them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Total contributions for the year made by the City were $24,841 for the 401(k) plan and $0 for the 457 plan; contributions by plan members totaled $14,203 for the 401 (k) plans and $6,021 for the 457 plan. Investments are managed by the plans' trustees under several investment options. The choice of the investment options is made by the participants. C. Contingent liabilities Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. There are several pending lawsuits in which the City is involved. The City's attorney estimates that the potential claims against the City resulting from such litigation not covered by insurance would not materially affect the fmancial statements of the City. 67

118 FARMINGTON CITY CORPORATION Notes to Financial Statements- Continued June 30, 2014 Note 5- Other Information (continued) D. Redevelopment agency Tax increment money was generated from the following project area within the Redevelopment Agency: Area: US-89 Neighborhood Development Area: Station Park Total Tax increment paid to other taxing entity (Davis School District) $ 310,744 1,178,737 $ 1,489,481 $ 21,843 Outstanding debt of the RDA consists of the following: Tax increment revenue bonds 2012 $ 640,000 During the year, the RDA expended monies in the categories below as follows: Site improvements/preparation costs Administration costs Debt Service $ 1,004,949 $ 20,140 $ 223,643 E. Reclassification of prior year amounts Certain amounts from the prior year report have been reclassified to conform to the current year presentation. F. Prior period adjustment The City has implemented GASB 65 Items Previously Reported as Assets and Liabilities. Standards require that costs of issuance no longer be amortized over the term of the debt, but are expensed in the period incurred. As a result, the net position reported of the governmental activities on the government - wide financial statements has decreased by $108,085. G. Subsequent events Subsequent events have been evaluated through November 21, 2014, the date that the financial statements were available to be issued. No additional disclosures are required. 68

119 SUPPLEMENTAL INFORMATION 69

120 FARMINGTON CITY CORPORATION Nonmajor Governmental Funds June 30, 2014 Debt Service Funds Debt service funds are used to account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the government is obligated in some manner for the payment. Police Sales Tax Revenue Bond Fund - This fund is used to account for principal and interest on the sales tax revenue bonds used to construct the police station. Sales Tax Revenue Bond Fund - This fund is used to account for principal and interest on the sales tax revenue bonds used to refund current debt and other general improvements. G.O. Bond 2003 Park Fund -This fund is used to account for principal and interest on the general obligation bonds used to finance construction of the City's community center and park projects. Special Improvement District This fund is used to account for receipt of special assessment levies and payment of special assessment bond principal and interest for the special improvement project. Capital Projects Funds Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those fmanced by proprietary and trust funds. Government Buildings Improvement Fund - This fund accounts for the replacement, repairs and future improvements to the government buildings and the City. General government resources provide the primary source of funding with grants providing additional funding as available. Capital Equipment Fund -This fund accounts for the ongoing acquisition and replacement of major capital assets needed to maintain the operations of the City. General government resources provide the primary source of funding with grants and other government resources providing additional funding as available. Fire Protection Fund -This fund accounts for the acquisition of major capital assets needed for adequate fire protection. Federal grants and building permit fees are the primary source of funding for these acquisitions. Real Estate Property Asset Fund -This fund accounts for the acquisition of real property for the City. 70

121 FARMINGTON CITY CORPORATION Nonmajor Governmental Funds June 30, 2014 Permanent Fund Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government's programs. Cemetery Perpetual Care Fund - This fund is used to account for principal trust amounts received and related interest income. The interest portion of the trust is used to maintain the City's cemetery. MAJOR GOVERNMENTAL FUNDS Debt Service Funds Building G. 0. Bond Fund - This fund is used to account for principal and interest on the general obligation bonds used to fmance construction of the City's police station. Capital Projects Funds including Class C roads. General government resources and contributions from developers provide the funding. Park Improvement Fund - This fund accounts for the ongoing acquisition and replacement of major capital assets needed to maintain the park operations of the City. General government resources provide the primary source of funding with grants and other government resources providing additional funding as available. 71

122 FARMINGTON CITY CORPORATION Combining Balance Sheet- Nonmajor Governmental Funds June 30, 2014 Debt Service Capital Projects Police Special Government Sales Tax Sales Tax G.O. Bond Improvement Buildings Revenue Bond Revenue Bond 2003 Park Dist Improvement Assets Cash and cash equivalents $ 128,348 11,406 32,831 31,130 98,572 Cash with fiscal agents ,101 31,245 Receivables: Property taxes ,000 Special assessments ,273 Restricted cash and cash equivalents ,704 Total assets 128,362 11, , , ,276 Liabilities -...! Accounts payable \) Total liabilities Deferred Inflows of Resources Unavailable revenue - property taxes ,000 Unavailable revenue- special assessments ,273 Total deferred inflows of resources ,000 42,273 Fund Balances Restricted Perpetual care Impact fees ,704 Debt service ,932 62,375 Assigned Debt service 128,362 11,434 Capital projects ,571 Total fund balances 128,362 11,434 40,932 62, ,275 Total liabilities and fund balances $ 128,362 11, , , ,276

123 FARMINGTON CITY CORPORATION Combining Balance Sheet- Nonmajor Governmental Funds (continued) June 30,2014 CaEital Projects Permanent Total Real Estate Cemetery Nonmajor Capital Fire Property Perpetual Governmental Equipment Protection Asset Care Fund Assets Cash and cash equivalents $ 35, , , ,013 Cash with fiscal agents ,388 Receivables: Property taxes ,000 Special assessments ,273 Restricted cash and cash equivalents - 777, ,704 Total assets 35, , ,919 1,770,378 Liabilities... Accounts payable w Total liabilities Deferred Inflows of Resources Unavailable revenue - property taxes ,000 Unavailable revenue - special assessments ,273 Total deferred inflows of resources ,273 Fund Balances Restricted Perpetual care , ,919 Impact fees - 777, ,704 Debt service ,307 Assigned Debt service ,796 Capital projects 35, , ,378 Total fund balances 35, , ,919 1,496,104 Total liabilities and fund balances $ 35, , ,919 1,770,378

124 FARMINGTON CITY CORPORATION Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds For the Year Ended June 30, 2014 Debt Service Capital Projects Police Special Govenunent Sales Tax Sales Tax G.O.Bond Improvement Buildings REVENUES Revenue Bond Revenue Bond 2003 Park Dist Improvement Property tax $ ,564 Special assessments ,342 Intergovernmental Impact fees ,770 Interest , Other ,908 Total ,711 14,333 78,208 EXPENDITURES -...! Capital outlay ~ Agents fees 2,000 3, Debt service: Principal retirement 47,000 96, ,000 35, ,934 Interest 27,130 8,201 23,900 4,482 14,889 Total 76, , ,400 39, ,823 Excess of revenues over (under) expenditures (75,462) (108,608) 6,311 (25,149) (467,615) OTHER FINANCING SOURCES (USES) Capital lease proceeds Transfers in 60, , ,035 Transfers (out) (60,000) Total other fmancing sources (uses) 60, , ,035 Net change in fund balances (15,462) 4,632 6,311 (25,149) 5,420 Fund balances - beginning of year 143,824 6,802 34,621 87, ,855 Fund balances - end of year $ 128,362 11,434 40,932 62, ,275

125 FARMINGTON CITY CORPORATION Combining Statement of Revenues, Expenditures, and Changes in Fund Balances- Nonmajor Governmental Funds (continued) For the Year Ended June 30, 2014 CaEital Projects Permanent Fund Total Real Estate Cemetery Nonmajor Capital Fire Property Perpetual Governmental REVENUES Equipment Protection Asset Care Funds Property tax $ ,564 Special assessments ,342 Intergovernmental 14, ,000 Impact fees 97, ,432 Interest 174 4,331-1,020 9,079 Other ,575 20,483 Total 14, ,993 8, ,900 EXPENDITURES --..J Capital outlay 264, , Agents fees ,250 Debt service: Principal retirement 43, ,622 Interest ,000 Total 308, ,303,251 Excess of revenues over (under) expenditures (294,416) 101,993-8,595 (854,351) OTHER FINANCING SOURCES (USES) Capital1ease proceeds Transfers in 319, ,025,275 Transfers (out) - (1,000) (61,000) Total other fmancing sources (uses) 319, (1,000) 964,275 Net change in fund balances 24, ,993 7, ,924 Fund balances - beginning of year 11, , ,324 1,386,180 Fund balances- end of year $ 35, , ,919 1,496,104

126 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Police Sales Tax Revenue Bond - Debt Service Fund For the Year Ended June 30,2014 REVENUES Interest Budget $ 667 Actual 668 Variance with Final Budget Positive (Negative) 1 Total revenues EXPENDITURES Agent's fees Principal retirement Interest & fees 2,000 47,000 27,200 2,000 47,000 27, Total expenditures 76,200 76, Excess revenues over (under) expenditures (75,533) (75,462) 71 OTHER FINANCING SOURCES (USES) Transfers in 60,000 60,000 Total other financing sources (uses) 60,000 60,000 Net change in fund balances (15,533) (15,462) 71 Fund balances - beginning of year 143, ,824 Fund balances - end of year $ 128, ,

127 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Sales Tax Revenue Bond - Debt Service Fund For the Year Ended June 30, 2014 REVENUES Interest $ Budget 100 Actual 218 Variance with Final Budget Positive (Negative) 118 Total revenues EXPENDITURES Agent's fees Principal retirement Interest 5,000 96,875 8,300 3,750 96,875 8,201 1, Total expenditures 110, ,826 1,349 Excess revenues over (under) expenditures (110,075) (108,608) 1,467 OTHER FINANCING SOURCES (USES) Transfers in 111, ,240 1,464 Total other financing sources (uses) 111, ,240 1,464 Net change in fund balances 1,701 4,632 2,931 Fund balances - beginning of year 6,802 6,802 Fund balances - end of year $ 8,503 11,434 2,931 77

128 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual G.O. Bond 2003 Park- Debt Service Fund For the Year Ended June 30, 2014 REVENUES Property tax Interest $ Budget 231, Actual 230, Variance with Final Budget Positive (Negative) (1,136) (53) Total revenues 231, ,711 (1,189) EXPENDITURES Agent's fees Principal retirement Interest 1, ,000 23, ,000 23, Total expenditures 224, , Excess (deficiency) of revenues over expenditures 7,000 6,311 (689) Fund balances - beginning of year 34,621 34,621 Fund balances - end of year $ 41,621 40,932 (689) 78

129 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Special Improvement District Debt Service Fund For the Year Ended June 30,2014 REVENUES Special assessments Interest $ Budget 15,000 3,800 Actual 12,342 1,991 Variance with Final Budget Positive (Negative) (2,658) (1,809) Total revenues 18,800 14,333 (4,467) EXPENDITURES Agent's fees Principal retirement Interest 1,000 35,000 5,000 35,000 4,482 1, Total expenditures 41,000 39,482 1,518 Excess (deficiency) of revenues over expenditures (22,200) (25,149) (2,949) Fund balances - beginning of year 87,524 87,524 Fund balances - end of year $ 65,324 62,375 (2,949) 79

130 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Governmental Buildings Improvement - Capital Projects Fund For the Year Ended June 30,2014 Variance with Final Budget Positive Budget Actual (Negative) REVENUES Grants $ 2,500 (2,500) Police impact fees 60,000 64,770 4,770 Interest Contributions (69) Other income 13,100 12,877 (223) Total revenues 76,100 78,208 2,108 EXPENDITURES Capital outlay 9,900 9,900 Principal retirement 531, , Interest 15,000 14, Total expenditures 555, ,823 10,077 Excess (deficiency) of revenues over expenditures (479,800) (467,615) 12,185 OTHER FINANCING SOURCES (USES) Transfers in 539, ,035 (6,865) Transfers (out) (60,000) (60,000) Total other financing sources (uses) 479, ,035 (6,865) Net change in fund balances 100 5,420 5,320 Fund balances- beginning of year 127, ,855 Fund balances - end of year $ 127, ,275 5,320 80

131 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Capital Equipment- Capital Projects Fund For the Year Ended June 30, 2014 Variance with Final Budget Positive Budget Actual (Negative) REVENUES Intergovernmental $ 14,000 14,000 Interest Total revenues 14,100 14, EXPENDITURES Capital outlay 311, ,379 46,971 Principal retirement 44,602 43, Interest Total expenditures 356, ,590 47,760 Excess (deficiency) of revenues over expenditures (342,250) (294,416) 47,834 OTHER FINANCING SOURCES (USES) Capital lease proceeds Transfers in 319, ,000 Total other financing sources (uses) 319, ,000 Net change in fund balances (23,250) 24,584 47,834 Fund balances - beginning of year 11,195 11,195 Fund balances - end of year $ (12,055) 35,779 47,834 81

132 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Fire Protection - Capital Projects Fund For the Year Ended June 30,2014 REVENUES Fire protection impact fees Interest $ Budget 96,000 3,500 Actual 97,662 4,331 Variance with Final Budget Positive (Negative) 1, Total revenues 99, ,993 2,493 EXPENDITURES Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures 99, ,993 2,493 Fund balances - beginning of year 777, ,025 Fund balances - end of year $ 876, ,018 2,493 82

133 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Real Estate Property Asset- Capital Projects Fund For the Year Ended June 30, 2014 REVENUES Interest $ Budget 590 Actual Amounts Variance with Final Budget Positive (Negative) (590) Total revenues 590 (590) EXPENDITURES Capital outlay Total expenditures Excess revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Total other financing sources and uses Net change in fund balances Fund balances - beginning of year Fund balances - end of year $

134 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Cemetery Perpetual Care - Permanent Fund For the Year Ended June 30,2014 Variance with Final Budget Positive Budget Actual (Negative) REVENUE Sale of burial rights/raised marker fees $ 9,000 7,575 (1,425) Interest 1,200 1,020 (180) EXPENDITURES Expenditures Total revenues 10,200 8,595 (1,605) Total expenditures Excess (deficiency) of revenues over expenditures 10,200 8,595 (1,605) OTHER FINANCING SOURCES (USES) Transfers (out) (1,200) (1,000) 200 Total other financing sources (uses) (1,200) (1,000) 200 Net change in fund balances 9,000 7,595 (1,405) Fund balances - beginning of year 197, ,324 Fund balances - end of year $ 206, ,919 (1,405) 84

135 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Building G.O. Bond - Debt Service Fund For the Year Ended June 30, 2014 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES Property tax $ 409, , ,841 (13,159) Interest Total revenues 409, , ,196 (13,104) EXPENDITURES Principal retirement 308, , ,000 Interest 99,635 99,635 99,634 1 Total expenditures 407, , ,634 1 Excess revenues over (under) expenditures 1,565 1,665 (11,438) (13,103) OTHER FINANCING SOURCES (USES) Transfers in 20,000 5,000 (15,000) Total other financing sources (uses) 20,000 5,000 (15,000) Net change in fund balances 1,565 21,665 (6,438) (28,103) Fund balances - beginning of year 18,413 18,413 18,413 Fund balances - end of year $ 19,978 40,078 11,975 (28,103) 85

136 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Street Improvement - Capital Projects Fund For the Year Ended June 30, 2014 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES Impact fees $ 336, , ,833 15,833 Interest 5,000 2,500 3, Contributions 45, , ,047 2,047 Total revenues 386, , ,939 18,439 EXPENDITURES Capital outlay 719,264 2,179,700 2,093,999 85,701 Total expenditures 719,264 2,179,700 2,093,999 85,701 Excess (deficiency) of revenues over expenditures (333,224) (1,619,200) (1,515,060) 104,140 OTHER FINANCING SOURCES (USES) Capital lease 547, ,838 Transfers in 480,000 1,237,000 1,227,000 (10,000) Transfers (out) (46,776) (46,776) (46,776) Total other financing sources (uses) 433,224 1,190,224 1,728, ,838 Net change in fund balances 100,000 (428,976) 213, ,978 Fund balances - beginning of year 782, , ,903 Fund balances - end of year $ 882, , , ,978 86

137 FARMINGTON CITY CORPORATION Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Park Improvement- Capital Projects Fund For the Year Ended June 30, 2014 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Impact fees $ 136, , ,000 (45,000) Interest 6,000 7,000 7, Contributions 121, ,832 (168) Other income 9,000 9,000 8,750 (250) Total revenues 151, , ,076 (44,924) EXPENDITURES Capital outlay 177,000 3,093,100 4,199,706 (1 '1 06,606) Total expenditures 177,000 3,093,100 4,199,706 (1,106,606) Excess revenues over (under) expenditures (25,500) (2,725, 100) (3,876,630) (1 '151,530) OTHER FINANCING SOURCES (USES) Sale of assets 744,745 1,865,000 1,120,255 Capital Lease 1,217,000 1,217,000 Transfers in 25,500 20,000 20,000 Transfers (out) (510,000) (509,635) 365 Total other financing sources and uses 25,500 1,471,745 2,592,365 1,120,620 Net change in fund balances (1,253,355) (1,284,265) (30,910) Fund balances - beginning of year 1,954,724 1,954,724 1,954,724 Fund balances - end of year $1,954, , ,459 (30,910) 87

138 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 88

139 FARMINGTON CITY CORPORATION Capital Assets Used in the Operation of Governmental Funds Schedule By Source June 30, 2014 Governmental funds capital assets Land Buildings Improvements other than buildings Machinery and equipment Infrastructure Investment in governmental funds capital assets by source General fund Capital projects funds Grants and contributions $ $ $ $ ,662,226 14,151,137 11,252,648 5,494,713 39,333,810 96,894,534 25,196,944 51,406,683 20,290,907 96,894,534 89

140 FARMINGTON CITY CORPORATION Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity June 30, 2014 Improvements Machinery Other than and Land Buildings Buildings Equipment Infrastructure Totals c.o FUNCTION AND ACTIVITY General Government Administration $ 4,777,774-14,156 27,415-4,819,345 Government Buildings - 8,630, , ,249-10,078,666 Public Safety 4,777,774 8,630, , ,664-14,898,011 0 Police Protection - 1,777,917-1,133,845-2,911,762 Fire Protection - 2,305, ,595,744-3,900,845 4,083,018-2,729,589-6,812,607 - Highways and Streets 15,591,440-4,970,799 1,615,831 37,896,218 60,074,288 Planning and Inspection , ,692 Parks and Recreation 6,293,012 1,437,336 5,396, ,937 1,437,592 14,984,936 $ 26,662,226 14,151,137 11,252,648 5,494,713 39,333,810 96,894,534

141 FARMINGTON CITY CORPORATION Capital Assets Used in the Operation of Governmental Funds Schedule of Changes by Function and Activity For the Year Ended June 30,2014 FUNCTION AND ACTIVITY Governmental Fund Capital Assets 2013 Additions Deletions Governmental Funds Capital Assets 2014 General Government Administration Government Buildings $ 4,791,930 11,197,203 27,415 21,477 1,140,014 4,819,345 10,078,666 15,989,133 48,892 1,140,014 14,898,011 Public Safety Police Protection Fire Protection 2,842,326 3,870, ,177 38,800 39,741 8,692 2,911,762 3,900,845 6,713, ,977 48,433 6,812,607 Highways and Streets 56,939,998 3,134,290 60,074,288 Planning and Inspection 95,347 29, ,692 Parks and Recreation 11,783,952 3,896, ,502 14,984,936 Fund balance - end of year $ 91,521,493 7,256,990 1,883,949 96,894,534 91

142 STATISTICAL SECTION This part of the Farmington City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity Page These schedules present information to help the reader assess the affordability of the city's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information 109 These schedules offer demographic and economic indicators to help the reader understand how the information in the City's financial report relates to the services the government provides and the activities it performs. Operating Information 111 These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 92

143 FARMINGTON CITY CORPORATION Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Years Governmental activities Invested in capital assets, net of related debt $ 25,744,226 $ 28,034,286 $ 30,386,930 $ 35,606,841 $ 39,839,027 $ 48,560,830 $51,571,321 $54,488,777 $ 55,250,667 $ 57,698,365 Restricted 1,046,300 2,184,899 3,299,428 2,752,927 2,161,006 3,049,279 2,708,105 2,459,575 3,194,644 3,263,936 Unrestricted 4,174,529 4,915,276 4,582,106 5,250,475 2,943,825 1,823,476 2,158,861 2,521,759 3,159,636 2,325,216 Total governmental activities net assets 30,965,055 35,134,461 38,268,464 43,610,243 44,943,858 53,433,585 56,438,287 59,470,111 61,604,947 63,287,517 <0 (,) Business-type activities Invested in capital assets, net of related debt 12,768,839 13,404,648 14,295,300 16,388,914 16,890,045 18,314,073 19,747,735 19,611,003 20,545,807 21,482,743 Restricted 36, , ,221 1,170,968 1,168,495 1,434,901 1,513,235 2,202,741 2,084,792 2,213,258 Unrestricted 1,711,128 1,573,850 1,958,685 1,653,501 1,902,959 1,904,785 2,432,304 3,155,524 3,694,435 3,465,640 Total business-type activities net assets 14,516,218 15,564,051 17,154,206 19,213,383 19,961,499 21,653,759 23,693,274 24,969,268 26,325,034 27,161,641 Primary government Invested in capital assets, net of related debt 38,513,065 41,438,934 44,682,230 51,995,755 56,729,072 66,874,903 71,319,056 74,099,780 75,796,474 79,181,108 Restricted 1,082,551 2,770,452 4,199,649 3,923,895 3,329,501 4,484,180 4,221,340 4,662,316 5,279,436 5,477,194 Unrestricted 5,885,657 6,489,126 6,540,791 6,903,976 4,846,784 3,728,261 4,591,165 5,677,283 6,854,071 5,790,856 Total primary government net assets $ 45,481,273 $ 50,698,512 $ 55,422,670 $ 62,823,626 $ 64,905,357 $ 75,087,344 $80,131,561 $ 84,439,379 $87,929,981 $90,449,158

144 FARMINGTON CITY CORPORATION Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) Fiscal Years Expenses Governmental activities: General govenunent $ 1,445,119 $ 1,475,878 $ 1,313,104 $ 2,242,538 $ 1,532,496 $ 1,506,018 $ 2,406,573 $ 1,862,212 $ 2,184,987 $ 3,602,333 Public safety 1,587,507 1,740,778 1,900,958 2,062,359 2,268,989 2,349,593 2,299,079 2,531,443 2,631,075 2,954,347 Highways and public works 1,492,849 1,632,737 1,849,453 1,955,439 1,976,611 2,166,407 2,288,759 2,488,745 2,569,319 2,592,916 Community development 603, , , , , , , , ,309 1,019,697 Parks and cemetery 716, , , , ,504 1,019,920 1,140,691 1,173,396 1,276,539 1,266,291 Interest on long-term debt 396, , , , , , , , , ,562 Total governmental activities 6,240,879 6,764,683 6,993, ~,38Jl.J27 7,916,175 8,116,208 9,299,896 9,266,319 9,901,468 11,625,146 Business-type activities: Water utility 1,169,108 1,271,429 1,338,703 1,432,943 1,476,694 1,591,333 1,528,688 1,681,880 1,672,536 1,858,817 Sewer utility 831, , ,088 1,022,993 1,171,283 1,196,500 1,272,821 1,299,053 1,340,504 1,403,225 Garbage utility 720, , , , , ,602 1,033,108 1,088,756 1,125,646 1,113,238 Storm water utility 425, , , , , , , , , ,920 Ambulance service 107, , , , , , , , , ,710 co Recreation 508, , , , , ,745.j:>. 690, , , ,186 Total business-type activities 3,763,121 4,086,627 4,393,273 4,782,178 5,024,887 5,162,222 5,350,624 5,723,059 5,895,557 6,349,096 Total primary government $ 10,004,000 $ 10,851,310 $ II,386,639 $ 13,170,305 $ 12,941,062 $ 13,278,430 $ 14,650,520 $ 14,989,378 $ 15,797,025 $ 17,974,242 Program Revenues Governmental activities: Charges for services General govenunent $ 718,546 $ 945,345 $ 809,872 $ 684,816 $ 524,467 $ 889,535 $ 936,588 $ 823,371 $ 1,086,677 $ 818,946 Public safety 242, , , , , , , , , ,094 Highways and public works Cmmnunity development 136, , , ,382 98,856 54, , , , ,255 Parks and cemetery ,492 44,231 44,698 53,107 Operating grants and contributions 441, , , , , , , , , ,101 Capital grants and contributions 198,995 3,217,049 1,907,632 5,370,165 1,575,090 6,933,011 2,329,453 2,771,571 1,620,507 2,035,626 Total governmental activities 1,738,529 5,231,647 3,889,766 7,117,152 3,087,535 8,752,721 4,460,927 4,744,351 3,772,852 3_,912,129 Business-type activities: Charges for services Water utility 1,046,396 1,091,094 1,137,039 1,157,594 1,202,189 1,241,475 1,653,143 1,760,264 1,838,707 1,849,649 Sewer utility 847, , ,432 1,025,723 1,195,147 1,228,943 1,304,093 1,333,515 1,375,336 1,439,862 Garbage utility 763, , , , ,416 1,015,195 1,122,016 1,151,755 1,176,880 1,177,029 Stonn water utility 419, , , , , , , , , ,959 Ambulance service 200, , , , , , , , , ,713 Recreation 256, , , , , , , , , ,701

145 FARMINGTON CITY CORPORATION Changes in Net Assets (continued) Last Ten Fiscal Years (accrual basis of accounting) Fiscal Years Operating grants and contributions 6,315 12,110 16,463 9,911 5,930 4,892 2,620 7,594 Capital grants and contributions 117, , ,253 1,786, ,203 1,786, , , , ,954 Total business-type activities 3,658,912 4,242,322 4,937,488 5,947,709 5,279,586 6,543,849 6,146,692 5,985,581 6,273,279 6,488,867 Total primary government 5,397,441 9,473,969 8,827,254 13,064,861 8,367,121 15,296,570 10,607,619 10,729,932 10,046,131 10,400,996 Net (expense) I revenue Governmental activities (4,502,350) {I,533,036) (3,103,600) {1,270,975) (4,828,640) 636,513 {4,838,969) (4,521,968) (6,128,616) (7,713,017) Business-type activities (104,209) 155, ,215 1,165, ,699 1,381, , , , ,771 Total primary government $ ( 4,606,559) $ (1,377,341) $ (2,559,385) $ (105,444) $ (4,573,941) $ _bq!8,140 _j_j4,042,901) $ (4,259,1_46) U5,750,894l $ (7,573,246) General Revenue and Other Changes in Net Position Governmental activities: Property taxes $ 1,946,627 $ 1,963,024 $ 2,042,419 $ 2,326,605 $ 2,450,496 $ 2,552,025 $ 2,597,720 $ 2,689,552 $ 3,404,425 $ 4,076,021 co ()1 General sales and use tax 1,342,693 1,576,348 1,870,311 2,064,308 1,916,700 1,802,477 1,970,478 2,380,246 2,581,678 3,087,473 Franchise tax 583, , , , , , , , , ,717 Energy use tax 273, , , , , , , , , ,678 Impact fees 534,298 1,235,366 1,211, , ,407 1,082,688 2,264,262 1,142,059 1,099, ,265 Interest earnings 175, , , , ,344 98,377 97,841 40,439 41,761 34,262 Gain (loss) on sale of assets {8,631) 2,151 14,782 25, , ,033 (19,318) 18,478 23, ,372 Miscellaneous 20,924 29,088 26,609 26,896 7,800 68,578 40, ,189 48,755 24,543 Transfers (217,751) (244,273) (312,923) (304,784) {308,655) 59,347 (307,249) (143,298) (333,436) (388,694) Total governmental activities 4,651,001 5,819,989 6,237,603 6,612,754 6,162,255 7,853,214 7,843,671 7,553,792 8,263,452 9,395,637 Business-type activities: Impact fees 556, , , , , , , , , ,808 Interest earnings 43,123 81, , ,425 60,057 22,146 18,470 32,609 36,314 28,334 Gain (loss) on sale of assets (11,187) (1,418) 8,868 74,500 Miscellaneous Transfers 217, , , , ,655 (59,347) 307, , , ,694 Total business-type activities 817, ,138 1,045, , , ,633 1,243,441 1,013, , ,836 Total primary government $ 5,468,328 $ 6,712,127 $ 7,283,543 $ 7,506,710 $ 6,655,362 $ 8,163,847 $ 9,087,112 $ 8,567,264 $ 9,241,496 $10, Change in Net Position Governmental activities $ 148,651 $ 4,286,953 $ 3,134,003 $ 5,341,779 $ 1,333,615 $ 8,489,727 $ 3,004,702 $ 3,031,824 $ 2,134,836 $ 1,682,620 Business-type activities 713,118 1,047,833 1,590,155 2,059, ,806 1,692,260 2,039,509 1,275,994 1,355, ,607 Total primary government $ 861,769 $ 5,334,786 $ 4,724,158 $ 7,401,266 $ 2,081,421 $ 10,181,987 $ 5,044,21 I $ 4,307,818 $ 3,490,602 $ 2,519,227 -

146 FARMINGTON CITY CORPORATION Governmental Activities Tax Revenue by Source Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year General Property Tax 1,946,627 1,963,024 2,042,419 2,326,605 2,450,496 2,552,025 2,597,720 2,689,552 3,404,425 4,076,021 Sales Franchise Energy Total Tax Tax Tax Use Tax Revenue 1,342, , ,371 4,146,558 1,576, , ,841 4,540,695 1,870, , ,295 4,947,487 2,064, , ,869 5,512,974 1,916, , ,488 5,548,903 1,802, , ,763 5,561,191 1,970, , ,383 5,767,928 2,380, , ,065 6,347,925 2,581, , ,458 7,383,140 3,087, , ,678 8,643,889 96

147 FARMINGTON CITY CORPORATION Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) General fund Restricted $ $ 76,981 $ 61,722 $ 59,094 Assigned 30,000 50,000 70,000 75,000 Unassigned 1,118,341 1,082,238 1,132, ,911 $ 5,210 75, ,471 $ 36,395 75,569 1,162,445 $ 87,877 $ 84,540 $ 136,274 $ 17,150 80,991 87,697 90,750 I 05,403-1,670, ,059 1,332,506 1,469,355 Total general fund $ 1, $ 1,209,219 $ 1,263,942 $1,041,005 $ 941,681 $ 1,274,409 $1,839,830 $1,131,296 $1,559,530 $ 1,591,908 All other governmental funds Restricted for: <0 Perpetual care $ 259,252 $ 287,687 $ 338,225 $ 374, j Debt service 579, , , ,893 Impact fees 330, ,886 1,772,826 1,177,078 Redevelopment 398, , , ,811 Assigned, reported in: Debt service funds 32,308 35,265 35,556 37,615 Capital projects funds 366,286 1,682,814 4,209,965 3,827,773 $ 158, ,424 1,119, ,709 36,362 2,037,176 $ 190, , ,938 1,577, ,462 1,367,185 $ 231,423 $ 186,669 $ 197,324 $ 204, , , , ,282 1,253,228 1,593,875 1,929,892 1,929, , , , , , , , , ,321 1,331,500-1,723, ,554 Total all other governmental funds $1,966,754 $3,828,997 $7,483,227 $6,559,261 $4,229,334 $4,517,531 $3,283,978 $3,826,611 $4,932,818 $4,171,186

148 FARMINGTON CITY CORPORATION Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) REVENUES Taxes $4,045,347 $4,423,145 $4,947,487 $5,512,974 $5,548,903 $5,561,191 $5,767,928 $6,347,925 $7,383,140 $8,643,889 Special assessments 21,430 1,093,111 83,552 43,117 30,900 28,591 36,552 28,036 23,713 12,342 Leases 433, , , , , , ,950 3,389 Licenses and pennits 550, , , , , , , , , ,139 Intergovernmental 517, , , , , , , , , ,645 Grants ,500 49,264 Charges for services 231, , , , , , , , , ,756 Impact fees 534,298 1,235,366 1,211, , ,407 1,082,688 2,264,262 1,142,059 1,099, ,265 Fines and forfeitures 242, , , , , , , , , ,843 Interest 56, , , , ,948 44,596 45,909 36,068 40,777 33,214 Miscellaneous revenue 94, , , ,223 96, , , , , ,207 Contributions 101, , , , , , ,550 1,889, , ,879 Total revenues 6,828,719 9,922,936 9,415,608 9,685,611 8,892,235 9,248,467 11,465,914 11,516,951 11,210,705 11,636,179 EXPENDITURES Current: General government 804, , , , , ,474 1,022,353 1,073,937 1,082,052 1,175,518 CD co Public safety 1,460,340 1,599,474 1,754,514 1,900,803 2,099,499 2,166,346 2,124,323 2,360,421 2,458,063 2,766,223 Highways and public works 505, , , , , , , , , ,071 Community development 598, , , , , , , , ,889 1,011,833 Parks and cemetery 468, , , , , , , , , ,198 Capital outlay 2,413,883 1,485,920 1,927,390 4,127,677 4,925,741 7,811,657 4,862,462 3,567,400 2,245,506 7,563,033 Debt service: Principal retirement 1,633,270 1,885,959 1,013,193 1,077,914 1,331,899 1,246,081 1,272,630 4,162, ,153 1,464,622 Interest and fiscal charges 373, , , , , , , , , ,527 Bond issuance costs 12,572 26,196 21, ,500 65,230 Total expenditures 8,269,673 8,070,169 7,903,451 10,615,430 11,781,586 14,647,293 11,844,445 13,892,816 9,467,034 15,690,025 Excess (deficiency) revenues over (under) expenditures (I,440,954} 1,852,767 1,512,157 (929,819) (2,889,351) (5,398,826) (378,531) (2,375,865) 1,743,671 (4,053,846) OTHER FINANCING SOURCES (USES) Proceeds of bonds 2,391, ,476 2,500,000 4,042,000-2,246,800 Payment to refunding bonds escrows (749,088) Insurance proceeds ,983 Proceeds of capital leases 174, , ,000 1,764,838 Proceeds from sale of fixed assets 209,888 2,151 9,720 87, ,363 1,296,404 17,645 18,478 24,208 1,948,450 Transfers in 1,056,939 1,580,607 1,437,063 1,670,860 1,319,481 2,139,084 1,396,560 4,316,863 1,845,584 2,278,275 Transfers (out) (1,274,690) (1,824,880) (1,749,986) (1,975,644) (1,628,136) (2,079,737) (I,703,809) (4,460,161) (2, 179,020) (2,666,969) Total other financing sources (uses) 1,634,132 70,354 2,196,797 (217,084) 460,102 6,019,751 (289,604) 2,209,963 (209,228) 3,324,594 Excess (deficiency) of revenues and other sources over (under) expenditures and other uses 193,178 1,923,121 3,708,954 (1,146,903) (2,429,249) 620,925 (668,135) (165,902} 1,534,443 (729,252) Fund balances - beginning of year 2,921,917 3,115,095 5,038,216 8,747,169 8,747,169 5,171,015 5,791,940 5,123,805 4,957,903 6,492,346 Fund balances - end of year $3,115,095 $5,038,216 $8,747,170 $7,600,266 $6,317,920 $5,791,940 $5,123,805 $4,957,903 $6,492,346 $5,763,094 Debt service as a percentage ofnoncapital expenditures 31.14% 32.56% 21.47% 22.41% 24.26% 22.27% 20.89% 42.27% 14.78% 16.38%

149 FARMINGTON CITY CORPORATION General Governmental Tax Revenue by Source Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year General Property Tax 1,845,416 1,845,474 2,042,419 2,326,605 2,450,496 2,552,025 2,597,720 2,330,302 2,284,627 2,501,443 Sales Energy Franchise Total Tax Tax Use Tax Tax Revenue 1,342, , ,867 4,045,347 1,576, , ,482 4,423,145 1,870, , ,462 4,947,487 2,064, , ,192 5,512,974 1,916, , ,219 5,548,903 1,802, , ,926 5,561,191 1,970, , ,347 5,767,928 2,380, , ,062 5,988,675 2,581, , ,579 6,263,342 3,087, , ,717 7,069,311 Includes General, Special Revenue, and Debt Service Funds. 99

150 Farmington City Corporation Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Real ProEerty 1 Residential Commercial Fiscal Property Property Year (in thousands) (in thousands) ,747 82, , , , , , , , , , , , , , , ,253 98, , , , ,546 Total Taxable Estimated Assessed Personal Assessed Actual Value as a Property Value Total Direct Value Percentage of (in thousands) (in thousands) Tax Rate (in thousands) Actual Value 24, , % 895, % 23, , % 916, % 22, , % 1,020, % 22, , % 1,220, % 23, , % 1,605, % 34,995 1,039, % 1,730, % 34,703 1,034, % 1,724, % 19,357 1,022, % 1,695, % 25, , % 1,829, % 37,662 1,046, % 1,691, % 42,029 1,170, % 1,833, % Sources: Davis County Auditor's Office Utah State Tax Commission 1 Taxable value is 55% of market value for residential property and 100% for commercial property. 100

151 FARMINGTON CITY CORPORATION Property Tax Rates- Direct and Overlapping Governments Last Ten Fiscal Years...>. 0...>. Overlapping Rates Total Farmington Davis County Davis County School District Total Direct and Fiscal Operating Debt Service Total City Operating Debt Service Total County Operating Debt Service Total School Special Overlapping Year Rate Rate Rate Rate Rate Rate Rate Rate Rate Districts 1 Rates % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % Source: Utah State Tax Commission Percentages are applied to the taxable value of property as stated. 1 Special districts includes a tax levy for only part of the City connected to Benchland water.

152 FARMINGTON CITY CORPORATION Property Tax Levies and Collections Last Ten Fiscal Years Total Tax Collected within the Collections of Fiscal Levy for Fiscal Year of the Levy Previous Years Total Collections to Date Year Fiscal Year Amount Percentage of Levy Tax Levy Amount Percentage oflevy ,343,492 1,280, % 63,197 1,343, % ,387,547 1,312, % 39,704 1,352, % ,567,755 1,490, % 75,271 1,565, % ,853,274 1,748, % 104,617 1,853, % ,018,605 1,885, % 129,597 2,015, % ,072,825 1,953, % 113,764 2,067, % ,100,558 1,988, % 105,072 2,093, % ,195,140 2,165, % 21,742 2,187, % ,211,848 2,114, % 84,764 2,199, % ,342,310 2,324, % 2,324, % Source: Davis County Auditor's Office 102

153 FARMINGTON CITY CORPORATION Principal Taxpayers Current Year and Ten Years Ago Taxpayer Taxable Assessed Value 2014 Rank 2005 Percentage of Taxable Percentage of Total Taxable Assessed Total Taxable Assessed Value Value Rank Assessed Value Station Park Centercal LLC Lagoon Investment Corporation PacifiCorp Park Lane Village Partners LLC Smith's Food King Properties SLC Pipeline LLC Harmons Station Park Oakridge Golf & Country Questar Rose Cove Senior Housing LP $ 65,839,286 22,179, ,676, ,674, ,407, ,477, ,380, ,334, ,958, ,604, % 2.25% $ 20,815, % 1.69% 3,487, % 1.08% 0.65% 5,596, % 0.56% 0.55% 0.44% 4,096, % 0.40% 0.37% Excel Legacy Corporation QWest Communication Ivy Properties LLC Paul & Elanor Sade - trustees Boyer Medical Surgical Associates Cal-Wai Properties LLC Totals $ 144,532,259 5,792, % 5,021, % 4,440, % 3,819, % 2,108, % 1,613, % 14.67% $ 56,792, % Sources: Davis County Assessor's Office Davis County Auditor's Office 103

154 FARMINGTON CITY CORPORATION Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities General Special Fiscal Obligation Revenue Assessment Capital Year Bonds Bonds Bonds Leases Business-T~Ee Activities Total Percentage Revenue Capital Primary of Personal Per Bonds Leases Government Income Capita ~ 0 ~ ,765,000 4,811, , , ,515,000 4,226, , , ,745,000 3,608, ,000 50, ,369,000 2,991, ,000 19, ,994,000 2,132, , , ,830,000 4,204, , , ,435,000 3,441, , , ,043,000 2,017, , , ,562,000 1,686, , , ,054,000 1,335,750 73,000 1,782, ,328 92,919 8,383, % ,147, ,414 8,754, % ,025, ,121 9,975, % ,120 64,881 8,727, % ,170 18,900 7,393, % , ,683 10,795, % , ,191 9,326, % ,695 93,397 7,209, % ,695 56,252 6,073,712 n/a ,250 17,706 6,292,382 n/a Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See page 111 for personal income and population data. n/a = information not available

155 FARMINGTON CITY CORPORATION Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years Fiscal Year General Obligation Bonds Less: Amounts Available in Debt Service Funds 1 Percentage of Estimated Actual Taxable Value 2 of Per Total Property c. 3 ap1ta ,765,000 2,515,000 4,745,000 4,369,000 3,994,000 4,830,000 4,435,000 4,043,000 3,562,000 3,054,000 57,284 62, , , ,356 83,937 57,454 38,161 38,161 52,907 2,707, % ,452, % ,588, % ,240, % ,869, % ,746, % ,377, % ,004, % ,523, % ,001, % Externally restricted for payment of debt principal. 2 See the Schedule of Assessed Value and Estimated Actual Value of Taxable Property. 3 Population data can be found in the Schedule of Demographic and Economic Statistics. 105

156 FARMINGTON CITY CORPORATION Direct and Overlapping Governmental Activities Debt June 30, 2014 Name of Governmental Unit 2013 Taxable Value City's Percent Amount Estimated Applicable General Applicable Portion of to Obligation to Taxable Value Farmington (c) Debt 1 Farmington State of Utah (a) $ 196,999,051,171 $ 1,128,898, % $ 3,136,755,000 $ 17,879,504 Davis County School District Davis County Weber Basin Water Conservancy District 16,462,557,306 16,462,557,306 42,461,125,033 1,128,898, % 419,864,750 28,802,722 1 '128,898, % 19,155,656 1,314,078 1,128,898, % 23,888, ,434 Total overlapping debt (b) 30,752,234 Farmington City- direct (d) 1,128,898,397 1,128,898, % 6,245,426 6,245,426 Total direct and overlapping $ 36,997,660 Source: Davis County Auditor/Clerk's Office. Includes general obligation bonded debt only. a The State's general obligation debt is not included in the total because the State currently levies no ad valorem tax for the payment of general obligation bonds. b Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government. c For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of another governmental unit's taxable assessed value that is within the City's boundaries and dividing it by each unit's total taxable assessed value. d Direct debt for the City includes all long-term debt instruments of the governmental activities. 106

157 FARMINGTON CITY CORPORATION Legal Debt Margin Information Last Ten Fiscal Years Debt limit 36,673,200 40,821,400 48,814,840 64,234,240 69,228,720 68,962,640 67,837,360 73,190,800 67,675,880 73,326, l'lll.284 Total net debt applicable to limit J,~-~. 2,452,332 4,588,303 4,240,496 3,869,644 4,746,063 4,377,546 4,004,839 3,508,966 3,001,093 Legal debt margin 33,652,916 38,369,068 44,226,537 59,993,744 65,359,076 64,216,577 63,459,814 69,185,961 64,166,914 70,325,107 Total net debt applicable to the limit as a percentage of debt limit 8.24% 6.01% 9.40% 6.60% 5.59% 6.88% 6.45% 5.47% 5.18% 4.09% Legal Debt Margin Calculation for Fiscal Year ! Total Estimated Actual Value (in thousands) $ I,833,155 Debt limit- 4% of total actual value 73,326,200 Total amount of debt applicable to debt limit 3,001,093 Note: Under state finance law, the City's outstanding general obligation debt should not exceed 4% of total actual property value. Legal debt margin $ 70,325,107

158 FARMINGTON CITY CORPORATION Pledged Revenue Bond Coverage Last Ten Fiscal Years Water and Storm Sewer Revenue Bonds Net Revenue Direct Available Debt Service Reguirements Fiscal Gross Operating For Debt Year Revenue_ I Expenses 2 Service PrinciEal Interest Total Covera~e 2005 $ 2,049,930 $ 1,173,030 $ 876,900 $ 177,000 $ 43,682 $ 220, ,186,582 1,294, , ,320 51, , ,303,673 1,402, , ,150 48, , ,208,187 1,514, , ,050 45, , ,922,455 1,511, , ,950 40, , ,207,735 1,513, , ,850 34, , ,342,022 1,459, , ,750 28, , ,430,612 1,573, , ,875 22, , ,557,091 1,577, , ,000 16, , ,573,897 1,943, ,679 24,445 2,524 26, Special Assessment Bonds Special Debt Service Requirements Fiscal Assessment Year Collections Principal Interest Total Coverage 2005 $ 21,430 $ 23,000 $ 12,155 $ 35, ,081 24,000 10,890 34, ,552 49,476 24,127 73, ,117 54,000 20,176 74, ,900 56,000 17,542 73, ,591 59,000 17,542 76, ,552 62,000 11,986 73, ,036 65,000 8,995 73, ,713 33,000 7,670 40, ,342 35,000 4,482 39, Includes operating and non-operating revenues. 2 Includes operating and non-operating expenses excluding depreciation. 3 Special assessment bonds (series 2005) issued no payments required in first fiscal year. 108

159 FARMINGTON CITY CORPORATION Demographic and Economic Statistics Last Ten Fiscal Years Personal Income Per (Amounts Capita Fiscal Expressed Personal Median School Unemployment Year Population In Thousands) Income Age Enrollment Rate ,890 $ 7,175,251 $ 27, , ,357 7,851,859 29, , ,800 8,527,350 30, , ,500 9,069,346 31, , ,700 9,820,631 31, , ,900 10,217,849 33, , ,275 10,394,285 33, , ,489 11,142,507 35, , ,250 11,724,122 37, , ,300 n!a nla , ,921 nla nla , Data Sources: Population: US Census Bureau for 2005 and 2010 ( and is City estimate) Personal Income: US Bureau of Economic Analysis (Davis County) Per Capita Personal Income: US Bureau of Economic Analysis (Davis County) Median Age: Estimated based on 2010 United States Census Information School Enrollment: Davis County School District (estimated) Unemployment Rate: Utah Department ofworkforce Services (Davis County) nla = information not available Note: Personal income information and per capita information are totals for the year and based on totals for Davis County in its entirety. Unemployment rate information is an adjusted yearly average for Davis County. School enrollment is based on the census at the start of the school year. 109

160 FARMINGTON CITY CORPORATION Principal Employers Current Year and Ten Years Ago 2014 Estimated Number of Employer Emeloyees Rank Percentage of Total Ci~ Employment 2005 Estimated Percentage of Number of Total City Emeloyees Rank Emeloyment Davis County School District Lagoon Corporation Davis County Smiths Food & Drug Centers Harmons ThomasARTS, Inc Farmington City State of Utah Cornerstone Programs Corporation Alta Terapies n/a n/a n/a n/a n/a n/a n/a n/a n/a Unavailable Unavailable Unavailable Unavailable Unavailable Unavailable Unavailable Unavailable Unavailable Unavailable Source: Range of employees is all that is available. Includes full time, part time, and seasonal employees. n/a = information not available 110

161 FARMINGTON CITY CORPORATION Full-time Equivalent City Government Employees By Function Last Ten Fiscal Years Function General Government 7 7 Public Safety Police Officers Civilians 3 3 Fire Firefighters & Officers Civilians Highways and Streets Maintenance 3 3 Sanitation Community Development 6 6 Parks & Cemetery 4 4 Water 7 7 Sewer Storm Water 2 2 Recreation 4 4 Total Employees Data source: Farmington City finance department n/a =not available 111

162 FARMINGTON CITY CORPORATION Operating Indicators by Function Last Ten Fiscal Years Function Recreation and culture Libraries Number of volumes 71,766 72,000 72,000 76,500 Youth in recreation program 3,400 3,400 1,995 3,720 Public works Building permits issued Water Utility customers 3,923 4,101 4,264 4,430 Average daily consumption 1,265,981 1,327,277 1,416,245 1,488, ,500 76,500 4,042 4, ,505 4,723 1,333,930 1,175, ,800 76,800 76,800 76,800 4,829 5,001 6,544 6, ,893 4,937 5,207 5,280 1,295,047 1,193,559 1,199,504 1,159,732.. IV Data source: Farmington City finance department or various City departments

163 FARMINGTON CITY CORPORATION Capital Asset Statistics by Function Last Ten Fiscal Years Function Public safety Police stations Fire stations Highways and streets Streets (miles) Streetlights Recreation Parks acreage Parks Boweries w Tennis courts Soccer fields Baseball/Softball diamonds Swimming pools 1 1 Community centers - 1 Water Water mains (miles) Fire hydrants n/a 922 1,071 Maximum daily capacity (1,000 gallons) n/a 6,550 6,550 Average daily consumption (1,000 gallons) 1,266 1,327 1,416 Data sources: Various City departments n/a = not available ,147 1,167 6,550 6,550 1,488 1, ,196 1,241 1,254 1,274 1,292 6,550 6,550 6,550 6,550 6,550 1,176 1,295 1,194 1,200 1,159

164 OTHER REPORTS 114

165 Ulrich & Associates, PC Certified Public Accountants INDEPENDENT AUDITORS' 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 The Honorable Mayor & Members of the City Council Farmington City Corporation Farmington, Utah We have audited, in accordance with the 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, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Farmington City, as of and for the year ended June 30, 2014, which collectively comprise Farmington City's, basic financial statements and have issued our report thereon dated November 21, Internal Control Over Financial Reporting In planning and performing our audit, we considered Farmington City Corporation's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Farmington City Corporation's internal control. Accordingly, we do not express an opinion on the effectiveness of the Farmington City Corporation's internal control. 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 a 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. 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 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Members of Utah Association of CPA's [ American Institute of CPA's Charles E. Ulrich, CPA I Michael E. Ulrich, CPA Heather Christopherson, CPA 4997 South Harrison 1 Ogden, Utah Tel] I Fax] Cathie Hurst, CPA I Bruce Gulso, CPA 1 Kaela Cornwell, CPA 1 Michael Doxey, CPA website]

166 Compliance and Other Matters As part of obtaining reasonable assurance about whether Farmington City Corporation'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 or other matters that are required to be reported under Government Auditing Standards. We noted no matters involving internal control over financial reporting and its operations that we consider to be material weaknesses. However, we noted certain matters that we have reported to management offarmington City Corporation, in a separate letter dated November 21, Purpose of this Report This report is intended solely to describe the scope of our testing of internal control and compliance testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Ogden, Utah November 21,

167 Ulrich a. Associates, PC Certified Public Accountants INDEPENDENT AUDITOR'S REPORT IN ACCORDANCE WITH THE STATE COMPLIANCE AUDIT GUIDE ON: -COMPLIANCE WITH GENERAL STATE COMPLIANCE REQUIREMENTS -COMPLIANCE WITH EACH MAJOR STATE PROGRAM -INTERNAL CONTROLS OVER COMPLIANCE -SHCEDULE OF EXPENDITURES OF STATE AWARDS Honorable Mayor and Members of the City Council Farmington City Corporation Farmington, Utah Report On Compliance with General State Compliance Requirements and for Each Major State Program We have audited Farmington City's compliance with the applicable general state and major state program compliance requirements described in the State Compliance Audit Guide, issued by the Office of the Utah State Auditor, that could have a direct and material effect on Farmington City or each of its major state programs for the year ended June 30, The general compliance requirements applicable to Farmington City are identified as follows: Budgetary Compliance Fund Balance Limitations Utah Retirement Systems Transfers from Utility Enterprise Funds Cash Management Conflicts of!interest Nepotism Budget Notices and Format Farmington City received the following major assistance programs from the State of Utah: Class "C" Road Allotment (Department of Transportation) Management's Responsibility Management is responsible for compliance with the general state requirements referred to above and the requirements of laws, regulations, contracts, and grants applicable to its state programs. Members of Utah Association of CPA's I American Institute of CPA's Charles E. Ulrich, CPA I Michael E. Ulrich, CPA 4997 South Harrison 1 Ogden, Utah Heather Christopherson, CPA Tel] I Fax] Cathie Hurst, CPA I Bruce Gulso, CPA 1 Kaela Cornwell, CPA 1 Michael Doxey, CPA website]