COMPREHENSIVE ANNUAL FINANCIAL REPORT

Transcription

1 COMPREHENSIVE ANNUAL FINANCIAL REPORT City of Nampa, Idaho for Fiscal Year Ended September 30, 2012

2 COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF NAMPA, IDAHO Fiscal Year Ended September 30, 2012 Submitted by: Department of Finance, City of Nampa rd Street South Nampa, Idaho (208)

3 CITY OF NAMPA, IDAHO Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal 1 Certificate of Achievement for Excellence in Financial Reporting 5 City of Nampa Organizational Charts 6 Chart of Elected Officials and Appointed Citizen Commissions 7 Mayoral Appointments 8 INDEPENDENT AUDITOR S REPORT 9 MANAGEMENT S DISCUSSION AND ANALYSIS 11 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Statement of Net Assets 20 Statement of Activities 22 Fund Financial Statements Balance Sheet Governmental Funds 24 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 25 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds 26 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 27 Statement of Net Assets Proprietary Funds 28 Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds 30 Statement of Cash Flows Proprietary Funds 32 Statement of Fiduciary Net Assets Fiduciary Funds 36 Statement of Changes in Fiduciary Net Assets Fiduciary Funds 37 Notes to the Financial Statements 38 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund 59 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Nampa Development Corporation Special Revenue Fund 60 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Streets Special Revenue Fund 61 Notes to Required Supplementary Information 62 OTHER FINANCIAL INFORMATION Combining Statements and Individual Fund Schedules Combining Balance Sheet Nonmajor Governmental Funds 64 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds 66 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Nonmajor Special Revenues Funds Airport Special Revenue Fund 68

4 Cemetery Special Revenue Fund 69 Civic Center Special Revenue Fund 70 Electric Franchise Fee Downtown Development Special Revenue Fund 71 Golf Course Special Revenue Fund 72 Grants and Contracts Special Revenue Fund 73 Idaho Center Special Revenue Fund 74 Library Special Revenue Fund 75 Parks and Recreation Special Revenue Fund 76 Recreation Center Special Revenue Fund Fee Special Revenue Fund 78 Development Impact Fee Capital Projects Fund 79 Capital Projects Fund 80 GO Bond Debt Service Fund 81 Combining Statement of Net Assets Nonmajor Enterprise Funds 83 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Nonmajor Enterprise Funds 84 Combining Statement of Cash Flows Nonmajor Enterprise Funds 85 Combining Statement of Net Assets Internal Service Funds 86 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Internal Service Funds 87 Combining Statement of Cash Flows Internal Service Funds 88 STATISTICAL SECTION (UNAUDITED) Net Assets by Component 90 Changes in Net Assets 92 Fund Balances, Governmental Funds 96 Changes in Fund Balances, Governmental Funds 98 Assessed Value and Actual Value of Taxable Property 102 Property Tax Rates, Direct and Overlapping Governments 104 Principal Property Taxpayers 105 Property Tax Levies and Collections 106 Ratios of Outstanding Debt by Type 108 Ratios of General Bonded Debt Outstanding 110 Direct and Overlapping Government Activities Debt 111 Legal Debt Margin Information 112 Pledged Revenue Coverage 114 Demographic and Economic Statistics 116 Principal Employers 117 Full-time Equivalent City Government Employees by Function/Program 119 Operating Indicators by Function/Program 120 Capital Asset Statistics by Function/Program 124 SINGLE AUDIT SECTION Schedule of Expenditures of Federal Awards 125 Notes to Schedule of Expenditures of Federal Awards 128 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 129 Independent Auditor s Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Findings and Questioned Costs 133

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6 The City has developed an accounting system that is continually evaluated to assure the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute assurance in two areas: 1) safeguarding assets against loss from unauthorized use or disposition and 2) reliability of financial records and convenient access for preparing financial statements and maintaining accountability. The concept of reasonable assurance adopted by the City of Nampa recognizes that a) the evaluation of cost and benefit requires estimates and judgments by management and b) that the cost of the control should not exceed the benefits likely to be derived. Every effort is made to evaluate all internal controls against these criteria. It is our belief that the City s internal accounting controls adequately safeguard the City s assets and also provides reasonable assurance of properly recorded financial transactions. Cost centers are monitored within the City budget by both revenue and expenditure categories. In addition, while individual department and division heads are responsible for their budgets, the total budget is monitored by the Finance Department with quarterly updates to the City Council. BUDGET PROCESS The City of Nampa is a municipal corporation governed by an elected mayor and four-member council. As required by Idaho Code Section , the City Council shall, prior to passing the annual appropriation ordinance, prepare a budget estimating the revenues and expenditures for the ensuing fiscal year. After proper publication, a public hearing is held for any interested person to appear and show cause why such proposed budget should or should not be adopted. City Council may amend the budget during the fiscal year by following the same procedure as used in adopting the original appropriation ordinance. However, in order to amend the budget to a greater amount than originally adopted, additional revenue must accrue to the City equal to the proposed expenditures. ECONOMIC CONDITIONS Economic recovery gain momentum in Nampa. The unemployment rate has declined to 7.6% and several businesses have expanded or established themselves during FY Commitments of more businesses and restaurants have already been made through the permitting process with other deals being considered by community partners. The Department of Development Services that issues permits saw Project Values double in FY 2012 over FY Although assessed property values were negatively affected by the number of foreclosed properties on the market over the past two years, foreclosures have become rarer in the marketplace. New construction of multi-family homes and starter homes have significantly increased, therefore assessed values are expected to increase and allow some mobility within the housing market via demand for larger homes with better valuations. These positive factors will also signal the return of consumer confidence, which will continue to reduce the fragility of the economic recovery. LONG-TERM FINANCIAL PLANNING The City is using historically low interest rates to refinance current debt, as well as fund ordinary and necessary capital expansion for wastewater treatment facilities through debt instruments. This will help to 2

7 stabilize the requirement for fee increases to wastewater customers over the long-term. The need for capital improvements has caused the dedication of certain revenues for that purpose, e.g. electric franchise fees. The long-term outlook requires more significant reserves for deferred capital maintenance projects. The City s urban renewal agency, The Nampa Development Corporation, has entered an agreement with a developer for construction of a new library and parking garage funded with tax increment financing in downtown Nampa. RELEVANT FINANCIAL POLICIES As a result of the City of Nampa s aggressive pursuit of not using reserves for operations coupled with tight management of department budgets, the General Fund ended FY 2012 by adding to reserves for the first time in several years. The City currently complies with its own fund balance policy of maintaining 25% of annual expenditures in reserve for cash flow and emergent purposes. MAJOR INITIATIVES Concern has developed over the levy cap within Idaho State Code and the decrease in total assessed property values. The maximum levy rate has been reached in two funds, although there is capacity in both Streets and Capital funds. Careful consideration is being given to avoid loss of revenues that would impact delivery of critical services in the General fund, such as public safety. Expected increases in property values, as well as new construction, would provide relief to this concern. Economic growth is crucial to sustainable service delivery, therefore, Council and directors seek creative methods to partner with community stakeholders and businesses to promote economic activity. Federal regulations continue to drive costs and concern, especially with respect to clean water. The City s Public Works Department works with consultants, develops master plans, confers with regulators and advises legislators to determine direction that often changes, is unclear and always expensive. The burden of unfunded federal mandates continues to be unwieldy at best. The City of Nampa has a professional team that is diligent to bring success to the process if not to the conclusion. CERTIFICATE OF ACHIEVEMENT The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Nampa for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City of Nampa has received a Certificate of Achievement for the last thirty consecutive years. We believe our current report continues 3

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10 Organizational Chart September 30, 2012 CITIZENS OF NAMPA Administrative/ Executive Branch Legislative Branch Citizens Commissions Mayor Tom Dale CITY COUNCIL Martin Thorne, Pres. Bob Henry Stephen Kren Pam White City Clerk Finance Library Fire Police Economic Planning Building Parks & Human Information Public Director Director Chief Chief Development & Zoning Safety Recreation Resources Systems Works Director Director Director Director Director Director Director Legal, Civic & Criminal Treasurer/Central Services/Utility Billing Family Justice Center Idaho Center Community Development Code Enforcement Facilities Parks Recreation Civic Center Development Center Engineering Golf Airport Waterworks Cemetery Storm Water Wastewater Nampa Traffic Streets Development Corporation Vehicle Maintenance 6

11 Elected Officials & Appointed Citizen Commissions City of Nampa, Idaho September 30, 2012 CITIZENS OF NAMPA Administrative/ Legislative Executive Branch Branch MAYOR COUNCIL MEMBER COUNCIL MEMBER COUNCIL MEMBER COUNCIL PRESIDENT Tom Dale Curtis Homer Stephen Kren Martin Thorne Pam White Nampa Central Nampa Idaho Center Building Site Impact Fee Development Development Advisory Design Standards Advisory Corporation Commission Commission Committee Committee Historic Preservation Commission Fire/Building Golf Course Library Nampa Housing Airport Code Appeals Commission Board Authority Commission Board Planning & Zoning Commission 7

12 Mayoral Appointments City of Nampa, Idaho September 30, 2012 CITIZENS OF NAMPA MAYOR Tom Dale FINANCE DIRECTOR Vikki Chandler CITY CLERK Deborah Bishop POLICE CHIEF Leroy Forsman PUBLIC WORKS DIRECTOR Michael Fuss FIRE CHIEF Karl Malott LIBRARY DIRECTOR Mark Rose TREASURER Deborah Spille 8

13 Independent Auditor s Report Honorable Mayor, Members of the City Council and Finance Director City of Nampa, Idaho Nampa, Idaho We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Nampa, Idaho (the City), as of and for the year ended September 30, 2012, which collectively comprise the City s basic financial statements as listed in the table of contents. These financial statements are the responsibility of City of Nampa, Idaho s management. Our responsibility is to express opinions 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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 the City of Nampa, Idaho, as of September 30, 2012, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 22, 2013, on our consideration of the City of Nampa, Idaho 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. 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 W. Main St., Ste. 800 Boise, ID T F EOE 9

14 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Nampa, Idaho s financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations, and is also not a required part of the financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards 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. Boise, Idaho February 22,

15 Management s Discussion and Analysis September 30, 2012 This discussion and analysis is provided by management in accordance with Governmental Accounting Standards Board (GASB) requirements to assist the reader in identifying and reviewing key issues and financial activity for the fiscal year ended September 30, Since this discussion and analysis focuses on the current fiscal year s activities and is a summary analysis, the reader is encouraged to review the financial statements which follow this section and the letter of transmittal which precedes this section, to acquire the full information contained in this report. Financial Highlights Assets of the City of Nampa, Idaho (City) exceeded its liabilities at the close of fiscal year 2012 by $376.8 million (net assets). Of this amount, $323.1 million is invested in capital assets (net of debt), $9.4 million is restricted, and $44.3 million is unrestricted net assets. The City s total net assets increased by $2.2 million in fiscal year The governmental net assets increased by $863,000 while the business-type activities net assets increased by $1.3 million. At fiscal year close, the City s governmental funds reported a combined ending fund balance of $36.7 million, a decrease of $1 million compared with the prior year. Approximately $7.7 million, or 21.0%, of the fund balance is unassigned and available for subsequent year budgeted projects. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City s basic financial statements. The financial statements in this report focus on both the City as a whole (City-wide) and on the major individual funds. Viewing governmental activity both as a whole and by individual major fund gives the reader a broader perspective, increases the City s accountability, and provides a fuller picture of the financial health and activities of the City. The City s basic financial statements are composed of three parts: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements The government-wide financial statements are designed to more closely parallel the reporting used in privatesector businesses, in that all governmental and business-type activities are reported using the same basis of accounting (accrual), and that the statements include a total column to provide information on the City as a whole. These statements should better answer the question As a whole, is the City financially better off or worse off than it was a year ago? The Statement of Net Assets provides information on all of the City s assets and liabilities, with the difference between the two reported as net assets. Historical trending of the City s net assets can provide a useful indicator as to whether the financial position of the City is improving or deteriorating. The Statement of Activities provides information showing changes made to the City s net assets during fiscal year Financial activity shown on this statement is reported on an accrual basis (at the time the underlying event causing the change occurs, rather than at the time the cash flows happen). Thus revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods. 11

16 Management s Discussion and Analysis September 30, 2012 Fund Financial Statements The fund financial statements are similar to the financial statements presented before implementation of GASB Statement 34 with the exception that the focus is on major funds, as opposed to the previous focus on fund types. A fund is a self-balancing set of accounts that is used to keep track of specific revenues and expenditures related to certain activities or objectives. All of the funds of the City can be divided into two categories: Governmental funds and Proprietary funds. Governmental funds Governmental funds use modified accrual accounting, which measures current economic resources and focuses on changes to the current financial resources. This information can be useful in evaluating a government s short term financial needs. The City maintains four fund types within the Governmental fund group: the General fund, Special Revenue funds, Debt Service funds, and Capital Projects funds. The City maintains one General fund, 12 Special Revenue funds (911 Fees, Airport, Cemetery, Civic Center, Electric Franchise Fees, Grants and Contracts, Golf Course, Idaho Center, Library, Parks & Recreation, Recreation Center, Streets), two Debt Service funds, two Capital Projects funds, and one blended component unit shown as a Special Revenue fund. In the Governmental fund statements, the General fund, Nampa Development Corporation, Streets fund, and the Local Improvement Districts fund are shown separately as major funds with all other governmental funds being aggregated. Individual fund information is presented in the combining statements beginning on page 63. Proprietary funds Proprietary funds use full accrual accounting, which measures total economic resources and focuses on changes to all economic resources. This accounting basis is similar to the accounting used in private-sector business and is used to account for business-type activities. This information is useful in evaluating a fund s net economic resources. There are two fund types contained within the Proprietary fund group: Enterprise funds and Internal Service funds. The City maintains four Enterprise funds (Water, Sewer, Sanitation, and Development Services) and four Internal Service funds (Utility Billing, Unemployment Compensation, Workers Compensation, and Wellness). The Proprietary fund statements present Water, Sewer, and Sanitation as major funds. The Internal Service funds are combined into a single aggregate presentation on the proprietary fund financial statements. Combining statements for the internal service funds are provided elsewhere in this report. Notes to the Financial Statements and Other Information The notes provide additional information that is essential to a full understanding of the information provided in the government-wide and fund financial statements. The notes to financial statements start on page

17 Management s Discussion and Analysis September 30, 2012 Government-wide Financial Analysis As noted earlier, net assets over time can serve as a useful indicator of changes in an entity s financial position. As of September 30, 2012, the city s assets exceeded liabilities by $376.8 million. Current assets increased by $0.5 million, largely due to a decrease in grants receivable and an increase in prepaid accounts. Capital assets decreased by $1.8 million, largely due to the impairment of buildings to be demolished with the transfer of property from the government to Nampa Development Corporation in preparation for the development of Library Square in downtown Nampa. The following Table 1 reflects the condensed FY11 and FY12 Statement of Net Assets. Prior year data is presented for comparison purposes. Table 1 Statement of Net Assets as of September 30, 2011 and 2012 FY 2011 FY 2012 Govern- Business- Govern- Businessmental Type mental Type Activities Activities Total Activities Activities Total Current and other assets $ 90,836,724 $ 20,099,206 $ 110,935,930 $ 88,695,095 $ 22,746,056 $ 111,441,151 Capital assets 262,355, ,392, ,747, ,252, ,732, ,984,807 Total assets 353,191, ,491, ,683, ,947, ,478, ,425,958 Current liabilities 49,061,410 3,093,425 52,154,835 48,065,970 3,291,075 51,357,045 Noncurrent liabilities 53,234,196 4,685,203 57,919,399 51,122,513 4,186,776 55,309,289 Total liabilities 102,295,606 7,778, ,074,234 99,188,483 7,477, ,666,334 Net assets: Invested in capital assets, net of related debt 221,550, ,374, ,925, ,852, ,235, ,088,098 Restricted 7,882,961-7,882,961 9,375,751-9,375,751 Unrestricted 21,462,702 17,337,983 38,800,685 24,530,842 19,764,933 44,295,775 Total net assets $ 250,896,267 $ 123,712,604 $ 374,608,871 $ 251,759,189 $ 125,000,435 $ 376,759,624 By far the largest portion of the City s net assets, 85.8%, reflects its investment in capital assets, less any related outstanding debt used to acquire those assets. These assets include buildings, land, equipment, infrastructure, and intangibles. Although the City s investment in capital assets is reported net of related debt, it should be noted that the resources to repay the debt must be provided from other sources, since capital assets may not be used to liquidate these liabilities. For the purpose of debt retirement, $3.1 million of the City s net assets has been restricted for debt service. The balance of restricted net assets comprises $3.4 million for Development Impact Fee Capital Projects, $0.9 million for 911 Emergency Services, and $2.0 million for NDC Urban Renewal Projects, for a total of $9.4 million in Restricted net assets. The balance of $44.3 million or 11.8% of total net assets is available to fund the City s ongoing obligations to citizens and creditors. In FY11 and FY12, the City has positive balances in all three categories of net assets. 13

18 Management s Discussion and Analysis September 30, 2012 Table 2 provides a summary of the City s operation for the fiscal year ended September 30, Prior year data is presented for comparison purposes. Table 2 Statement of Activities for years ended September 30, 2011 and 2012 FY 2011 FY 2012 Govern- Business- Govern- Businessmental Type mental Type Activities Activities Total Activities Activities Total Revenues: Program revenues Charges for services $ 11,296,952 $ 25,547,195 $ 36,844,147 $ 13,195,025 $ 26,795,386 $ 39,990,411 Operating grants and contributions 7,789,286-7,789,286 6,483,237-6,483,237 Capital grants and contributions 3,763, ,404 4,659,217 3,697, ,789 4,318,888 General revenues Property taxes 37,100,951-37,100,951 37,560,710-37,560,710 Agreements/shared revenue 5,633,251-5,633,251 5,942,129-5,942,129 Other 1,774,698 55,279 1,829,977 1,514,631 45,579 1,560,210 Total Revenues 67,358,951 26,497,878 93,856,829 68,392,831 27,462,754 95,855,585 Expenses: Governmental activities General government 6,894,165-6,894,165 7,089,426-7,089,426 Police 18,441,578-18,441,578 18,964,566-18,964,566 Fire 11,327,067-11,327,067 11,339,523-11,339,523 Culture and recreation 15,468,317-15,468,317 15,827,938-15,827,938 Streets 7,837,856-7,837,856 7,401,113-7,401,113 Other 15,148,395-15,148,395 8,651,050-8,651,050 Business-type activities Water - 6,865,801 6,865,801-7,367,871 7,367,871 Sewer - 7,967,317 7,967,317-8,459,515 8,459,515 Sanitation - 6,234,665 6,234,665-6,591,720 6,591,720 Stormwater - 548, , Development services - 870, , , ,605 Total Expenses 75,117,378 22,486,975 97,604,353 69,273,616 23,397,711 92,671,327 Increase in net assets before transfers and special items (7,758,427) 4,010,903 (3,747,524) (880,785) 4,065,043 3,184,258 Special items (1,033,505) - (1,033,505) Transfers 2,053,587 (2,053,587) - 2,777,212 (2,777,212) - Increase (decrease) in net assets (5,704,840) 1,957,316 (3,747,524) 862,922 1,287,831 2,150,753 Net assets-beginning 256,601, ,755, ,356, ,896, ,712, ,608,871 Net assets-ending $ 250,896,267 $ 123,712,604 $ 374,608,871 $ 251,759,189 $ 125,000,435 $ 376,759,624 14

19 Management s Discussion and Analysis September 30, 2012 Charges for Services includes water, irrigation, sewer, building permits and fees, Civic Center, Idaho Center, golf and recreation center fees, airport revenues, and other service charges. Charges for services in the governmental activities increased $1.9 million over the previous year. This was in part due to a reclassification from grants to contracted services of $883,000. The balance of $1.1 million was due to increased activity at the city s venues, e.g. Civic Center, Idaho Center, golf courses and recreation center. Property taxes increased by 1.2% due to increases in new construction, annexations, and collection of delinquent taxes. Agreements/shared revenue increase of $300,000, or 5.5%, was due to increases in consumer sales and the resulting state sales tax shared revenues. The significant reduction of 42.9% in Other expenses in FY 2012 was due to a local improvement district established and completed in FY Business-type Activities of Water, Sewer and Sanitation had increased expenses in FY 2012 due to the allocation of the internal service fund, Utility Billing, that had an impairment and decreased revenues. Stormwater was paid from the General Fund in FY Development Services experienced an increase of 12.4% in expenses due to an expense for support service through an administrative allocation. The following chart displays City revenue for the fiscal year Revenue Sources FY 2012 Agreements/ Shared Revenue 6% Other 2% Charges for Services 42% Property Taxes 39% Capital Grants and Contributions 4% Operating Grants and Contributions 7% 15

20 Management s Discussion and Analysis September 30, 2012 The following chart displays the City s expenses for the fiscal year Sewer 9% Expenses by Type FY 2012 Sanitation 7% Development Services 1% General Government 8% Water 8% Police 21% Other 9% Streets 8% Culture and Recreation 17% Fire 12% Financial Analysis of the City s Funds Governmental Funds: The focus of the City s governmental fund statement is to provide information on shortterm cash inflows and outflows. This information is helpful in assessing the City s near-term financing needs. In particular, unreserved fund balance serves as a useful measure of a government s net resources available for spending at the end of the fiscal year. The City reports four major funds in FY12; General, Nampa Development Corporation (NDC), Streets, and Local Improvement Districts. As of fiscal year end, the City s governmental ending combined fund balance totaled $36,720,822, a decrease of $994,397 from the previous year, due primarily to the use of cash reserves for capital outlay by Nampa Development Corporation, a component unit of the City. Of the combined ending fund balance, approximately 8.6% is Nonspendable, a combination of inventory, prepaid expenses and receivable accounts; 23.8% is Restricted for debt retirement, or by the revenue source; 46.6% is Assigned, including all special revenue funds; 16

21 Management s Discussion and Analysis September 30, 2012 and the balance of 21.0% is unassigned fund balance and available to meet uneven cash flow, emergent needs and budgetary needs in the next fiscal year. General Fund The General fund balance increased by $416,050, compared to a decrease in FY 2011 of $646,846. The addition to General Fund reserves in FY 2012 is tied to the application of an administration allocation and a resulting increase in transfers into the General fund. The unassigned fund balance increased by $514,080. Revenues decreased by 5.7% and expenses decreased by 5.0%. The changes in property taxes revenue and Culture and Recreation expenses offset each other with the establishment of a separate fund for culture and recreation funded by property taxes. $4,747,519 was transferred in from other funds, including Sanitation, Water, Wastewater, Utility Billing, Development Services, Library, and Streets to fund a proportional share of administrative expenses. In addition, $783,608 was transferred from Fire Impact Fees to the General Fund to reimburse construction expenses for fire station #5, completed in January, 2008 and paid from General fund. In view of the economic recession and resulting population slow-down, there was no projection for a fire station to be built in the near future. $2,885,266 was transferred out of the General fund, primarily to the Parks and Recreation, Civic Center, Idaho Center, and to Streets fund for Stormwater capital projects. These transfers provided support for operations and community services. Nampa Development Corporation As of the fiscal year end, NDC s ending combined fund balance totaled $3.3 million, a decrease of $2.4 million or 42.5% from the previous year, due to the outlay of expenditures associated with the completion of the public safety building. Of the total ending fund balance, 34.2% is restricted for the debt service reserve fund, 19.3% is restricted for debt service payments and the remaining 46.5% is restricted to fund reserves and to fund expenditures for urban renewal projects in the next year. Local Improvement Districts At September 30, 2012, the restricted fund balance was $937,298, an increase of $364,268, due to timing difference of capital outlay, debt service and receipt of assessments. All is restricted for debt service. Proprietary Funds: The City s proprietary fund statements provide additional detail for the business-type activity information that is shown in city-wide statements. The proprietary fund statements show individual information on each of the City s four enterprise funds and four internal service funds. Unrestricted net assets of the proprietary funds with their corresponding percent of the total are: Water $7,650,227, with 39.6%; Sewer $11,170,253, with 57.7%; and Other $526,072, with 2.7% of the total. The combined proprietary unrestricted net asset total is $19,346,552. The increase (decrease) in total net assets resulting from fiscal year 2012 proprietary fund operations is: Water $(332,254); Sewer $1,814,282; and Other $460,977. The total increase (decrease) to net assets of the proprietary funds is $1,943,005. The changes in net assets were due to increases in operating income as planned for regulatory requirements. General Fund Budgetary Highlights Actual to budget comparisons are found following the Notes to the Financial Statements. Below is discussion regarding the general fund budget-to-actual comparison. The City Council approved one revision to the original FY12 budget. The budget amendment was due to new secured grant funding, variances in spending for multiple-year projects, and increases in transfers for operational 17

22 Management s Discussion and Analysis September 30, 2012 support. As indicated in the table below, expenditures were 1.3% less than budget, reflecting tight operational budgets with little flexibility. Table 3 Budget to Actual Comparison - General Fund FY 2011 FY2012 Original Budget $ 39,609,588 $ 38,631,995 Final Budget 39,833,873 37,507,007 Actual Expenditures 38,959,663 37,020,107 Variance $ 874,210 $ 486,900 Capital Assets At fiscal year end, the City s investment in capital assets, net of accumulated depreciation, totals $371,984,807 for both governmental activities and business-type activities. Capital asset investments include land, building and improvements, equipment, infrastructure, intangible assets and construction in progress. The net decrease in the City s capital asset investment for the current fiscal year is $1,762,368 and is shown in greater detail in Note 7 of the financial statements. Major Capital items during the year include: Completion of the Public Safety Building $5,003,276 in FY 2012, for a total of $17,429,327 Building impairment for construction of Library Square $(1,585,223) New construction of Utility Billing Building $629,477 Remodel of Police Training Facility for Economic Development Dept. $615,448 Primary Digester Retrofit $759,907 Debt Administration According to state statutes, all cities have a legal limitation on their general obligation debt equal to two percent of their assessed valuation. Using this formula, the City of Nampa has a legal debt margin of $58,983,127 (2% times $2,949,156,366). During FY 2012, the City made the final payment on the fire pumper truck. Local improvement districts issued new debt in the amount of $463,519. With this exception, the City issued no new debt and continued to meet all debt obligations on time. The total long-term debt obligation as of September 30, 2012 was equal to $55,931,978. See Note 9 for more detailed information. Financial planning included the successful refinancing of the General Obligation Bonds and the Department of Environmental Quality Water Bonds before the end of the calendar year

23 Management s Discussion and Analysis September 30, 2012 Economic Factors FY 2012 demonstrated significant recovery in Nampa s economy. For the first time since 2008, unemployment rates fell below 10%, ending the year at 7.6% and below the national average. The corresponding number of jobs in Nampa increased by approximately 1,600 to a level less than 400 jobs shy of the record employment numbers of This past year represented a recovery year for construction activity in Nampa. After four years of decreases, the average home sale price in Nampa in 2012 increased from $98,351 to $115,494. The number of newly constructed dwelling units also rose from 217 in 2011 to more than 524 in 2012, an increase of over 141% Positive signs of economic expansion: Lactalis American Group created 70 new jobs with a $40 million project and $250 million in additional revenue to the local dairy industry. Ventana Medical Building (Saltzer/ St. Luke s) created 300 new jobs with their $25 million project. Jobs were also created at Sportsman s Warehouse, Discount Tire, US Bank, Carl s Junior, Texas Roadhouse, Hastings, Dutch Brothers, Dickey s BBQ, and Gordman s. The College of Western Idaho completed its new 180,000 square foot Micron Center for Professional Technical Education bringing 8 new vocational program to the Nampa campus. Other CWI buildings are currently under construction, including a new library facility. Enrollment has expanded to over 9,000 full-time for-credit students. Continued improvements are expected in the coming year: St. Alphonsus Nampa Medical Center is constructing a new ER, Cardiac Care and Labor and Delivery Center. This $30 million project will add 85 new full time jobs and 500 construction jobs. Walmart will construct a new Neighborhood Market store New restaurants include Jimmy John s and Cracker Barrel, creating additional jobs in Nampa. Request for Information This financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the City s finances. If you have questions about this report or need any additional information, contact the Department of Finance, City Hall, rd Street South, Nampa, ID 83651, or call (208)

24 Statement of Net Assets September 30, 2012 ASSETS Current Assets Governmental Business-type Activities Activities Total Cash and Investments $ 32,586,491 $ 18,804,759 $ 51,391,250 Receivables: Property Taxes 39,512,327-39,512,327 Accounts 1,459,059 4,503,870 5,962,929 Franchise Fees 218, ,574 Special Assessments 6,932,263-6,932,263 Interest 44,549-44,549 Intergovernmental 962, ,800 Grants 456, ,694 Notes 281, ,730 Inventory 186, ,584 Internal Balances 565,641 (565,641) - Prepaids 765,954 1, ,966 Restricted Cash and Investments 4,135,170-4,135,170 Total Current Assets 88,107,836 22,744, ,851,836 Noncurrent Assets Debt Issuance Costs, Net 587,259 2, ,315 Capital Assets Primary Government Land and other assets not depreciated 49,778,647 5,641,265 55,419,912 Buildings and Improvements, net of depreciation 58,383,491 10,877,773 69,261,264 Equipment, net of depreciation 6,400,323 93,213,192 99,613,515 Infrastructure, net of depreciation 147,690, ,690,116 Total Noncurrent Assets 262,839, ,734, ,574,122 Total Assets $ 350,947,672 $ 132,478,286 $ 483,425,958 The notes to the financial statements are an integral part of this statement. 20

25 Statement of Net Assets September 30, 2012 LIABILITIES AND NET ASSETS Current Liabilities Governmental Primary Government Business-type Activities Activities Total Accounts Payable $ 2,699,785 $ 2,284,512 $ 4,984,297 Accrued Liabilities 715,920 90, ,306 Claims Payable 888, ,863 Unearned Revenue 37,994,749-37,994,749 Deposits Payable 66,076 80, ,274 Accrued Interest 317,731 14, ,080 Current Portion of Compensated Absences 2,600, ,000 2,890,000 Current Portion of Long-term Liabilities 2,782, ,630 3,314,476 Total Current Liabilities 48,065,970 3,291,075 51,357,045 Noncurrent Liabilities Compensated Absences 2,470, ,678 2,691,787 Notes Payable - 3,576,149 3,576,149 Special Assessment Debt with Government Commitment 6,437,423-6,437,423 Bonds Payable 42,214, ,949 42,603,930 Total Noncurrent Liabilities 51,122,513 4,186,776 55,309,289 Total Liabilities 99,188,483 7,477, ,666,334 NET ASSETS Invested in Capital Assets, Net of Related Debt 217,852, ,235, ,088,098 Restricted for: Debt Service 3,085,762-3,085,762 Development Impact Fee Capital Projects 3,398,510-3,398, , ,759 NDC Urban Renewal Projects 2,026,720-2,026,720 Unrestricted 24,530,842 19,764,933 44,295,775 Total Net Assets 251,759, ,000, ,759,624 Total Liabilities and Net Assets $ 350,947,672 $ 132,478,286 $ 483,425,958 The notes to the financial statements are an integral part of this statement. 21

26 Statement of Activities For the Fiscal Year Ended September 30, 2012 Program Revenues Operating Capital Charges for Grants and Grants and Net (Expense) Functions Expenses Services Contributions Contributions Revenue Primary Government: Governmental Activities: General Government $ 7,089,426 $ 138,508 $ 38,969 $ - $ (6,911,949) Police 18,964,566 1,547, ,309 5,615 (17,023,415) Engineering and Public Works 3,053, ,534 65, ,318 (2,351,660) Fire 11,339,523 1,885,026 13,693 79,561 (9,361,243) Streets 7,401, ,066 4,858,132 1,098,815 (522,100) Culture and Recreation 15,827,938 8,371, ,621 - (7,262,053) Community Development 2,985, , ,855 2,054, ,638 Interest on Long-Term Liabilities 2,612, (2,612,473) Total Governmental Activities 69,273,616 13,195,025 6,483,237 3,697,099 (45,898,255) Business-Type Activities: Water 7,367,871 6,885, , ,071 Sewer 8,459,515 10,628, ,169,111 Sanitation 6,591,720 7,620, ,029,052 Development Services 978,605 1,660, ,230 Total Business-Type Activities 23,397,711 26,795, ,789 4,019,464 Total Primary Government $ 92,671,327 $ 39,990,411 $ 6,483,237 $ 4,318,888 $ (41,878,791) The notes to the financial statements are an integral part of this statement. 22

27 Statement of Activities For the Fiscal Year Ended September 30, 2012 Primary Government Governmental Business-type Activities Activities Total Changes in Net Assets Net (Expense) Revenue $ (45,898,255) $ 4,019,464 $ (41,878,791) General revenues not restricted: Shared Revenues: Property Taxes, Levied for General Purposes 34,779,611-34,779,611 Property Taxes, Levied for Debt Service 2,781,099-2,781,099 Franchise Fees 1,416,827-1,416,827 Sales Tax and Other Governmental 4,525,302-4,525,302 Earnings on Investments 627,410 45, ,989 Miscellaneous 887, ,221 Special Item - Impairment of Buildings (1,033,505) - (1,033,505) Transfers 2,777,212 (2,777,212) - Total General Revenues and Transfers 46,761,177 (2,731,633) 44,029,544 Change in Net Assets 862,922 1,287,831 2,150,753 Net Assets - Beginning 250,896, ,712, ,608,871 Net Assets - Ending $ 251,759,189 $ 125,000,435 $ 376,759,624 The notes to the financial statements are an integral part of this statement. 23

28 Balance Sheet Governmental Funds September 30, 2012 Nampa Local Other Total Development Improvement Governmental Governmental General Corporation Streets Districts Funds Funds Assets Cash and Investments $ 6,250,214 $ 2,473,422 $ 9,521,144 $ 403,469 $ 12,636,941 $ 31,285,190 Receivables: Taxes - Current 26,510,787 3,549, ,294-6,797,698 37,704,151 Taxes - Delinquent 1,265, ,880 24, ,845 1,808,176 Accounts 114, , ,346 1,459,059 Franchise Fees , ,574 Special Assessments ,932,263-6,932,263 Interest 14, ,392 44,549 Intergovernmental 962, ,800 Grants , ,694 Notes 73, , ,730 Inventory 88, , ,584 Prepaids 697, , ,976 Due From Other Funds 725, ,700 Advances to Nampa Development Corporation 1,957, ,957,987 Restricted Cash and Investments 662,000 2,830, ,528 38,201 4,118,820 Total Assets $ 39,323,053 $ 9,097,765 $ 11,197,087 $ 7,924,373 $ 21,344,975 $ 88,887,253 Liabilities and Fund Balances Liabilities: Accounts Payable $ 346,198 $ 47,907 $ 660,691 $ 54,812 $ 1,526,732 $ 2,636,340 Accrued Liabilities 583,342-22, , ,033 Advances from General Fund - 1,957, ,957,987 Unearned Revenue 27,769,179 3,792, ,532 6,932,263 7,328,227 46,691,329 Deposits Payable 9, ,666 66,076 Due to Other Funds ,666 99,666 Total Liabilities 28,708,129 5,798,022 1,552,584 6,987,075 9,120,621 52,166,431 Fund Balances: Nonspendable 2,817, ,609 3,171,277 Restricted - 3,299, ,298 4,505,110 8,742,151 Assigned 75,494-9,643,952-7,380,665 17,100,111 Unassigned 7,722, (15,030) 7,707,283 Total Fund Balances 10,614,924 3,299,743 9,644, ,298 12,224,354 36,720,822 Total Liabilities and Fund Balances $ 39,323,053 $ 9,097,765 $ 11,197,087 $ 7,924,373 $ 21,344,975 $ 88,887,253 The notes to the financial statements are an integral part of this statement. 24

29 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets September 30, 2012 Total fund balances for governmental funds $ 36,720,822 Total net assets reported for governmental activities in the statement of net assets is different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. Those assets consist of: Land and other assets not depreciated $ 49,778,647 Buildings and improvements, net of $18,172,842 accumulated depreciation 58,383,491 Equipment, net of $20,096,754 accumulated depreciation 6,400,323 Infrastructure, net of $52,193,186 accumulated depreciation 147,690, ,252,577 Some of the City's property taxes and other long-term receivables will be collected after year-end, but are not available soon enough to pay for the current period's expenditures, and therefore are reported as deferred revenue in the funds: Property taxes 1,733,936 Special assessments 6,932,263 Accrued interest 30,381 8,696,580 Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Accrued interest for special assessment debt is $57,832, for general obligation bonds is $185,640, and for revenue allocation bonds is $74,259. Bond issuance costs are reported as expenditures in the governmental funds, but are capitalized and amortized over the life of the bond on the statement of net assets. The issuance costs of the general obligation bonds is $386,889 and accumulated amortization is $215,335. The issuance costs of the revenue allocation bonds is $399,450 and accumulated amortization is $40,970. The issuance costs of the special assessment bonds is $63,583 and accumulated amortization is $6,358. Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and therefore are not reported as fund liabilities. All liabilities, both current and long-term, are reported in the statement of net assets. Balances at year-end are: (317,731) 587,259 Special assessment debt (7,134,436) Unamortized special assessment bond discount 99,167 General obligation bonds (26,680,000) Unamortized general obligation bond premium (329,546) Revenue allocation bonds (NDC) (17,475,000) Unamortized revenue allocation bond discount (NDC) 84,565 Compensated absences payable (5,070,109) (56,505,359) Internal service funds are used to charge the costs of certain employee benefits to individual funds. The assets and liabilities of certain internal service funds are included in governmental activities in the statement of net assets. 325,041 Total net assets of governmental activities $ 251,759,189 The notes to the financial statements are an integral part of this statement. 25