CITY OF PAPILLION, NEBRASKA

Transcription

1 CITY OF PAPILLION, NEBRASKA COMPREHENSIVE ANNUAL FINANCIAL REPORT for the fiscal year ended September 30,2012 Prepared by: The Finance Department

2 TABLE OF CONTENTS September 30, 2012 Page(s) INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organization Chart... 7 Listing of Officials... 8 FINANCIAL SECTION independent Auditors' Report,. Management's Discussion and Analysis BASIS FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS Statement of Net Assets.. '.. 21 Statement of Activities FUND FINANCIAL STATEMENTS Governmental Funds Financial Statements Balance Sheet '".. 23 Reconciliation of the Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities.. 26 Proprietary Funds Financial Statements Statement of Net Assets Statement of Revenues, Expenditures and Changes in Net Assets Statement of Cash Flows Fiduciary Funds Financial Statements Statement of Net Assets. Statement of Changes in Net Assets Notes to Financial Statements REQUIRED SUPPLIEMENTARY INFORMATION Schedule of Revenues and Expenditures - Budget and Actual - Budgetary Basis- General Fund, 53 Schedule of Revenues and Expenditures - Budget and Actual - Budgetary Basis - All Special Revenue Funds. Note to Required Supplementary Information - Budgetary Comparison Scheduies

3 TABLE OF CONTENTS September 30,2012 Page(s) OTHER SUPPLEMENTARY INFORMATION Schedule of Revenues and Expenditures - Budget and Actual - Budgetary Basis - Capital Improvement Fund Debt Service Fund Schedules of General Fund Cash Expenditures - Budget and Actual - Budgetary Basis General and Administrative..... Building Permits and Inspections... Planning..... Library..... Parks Department Police Department..... Fire Department..... Street Department..... Recreation Department Senior Center..... Information Systems Department.... Amphitheater Schedules of Bond Principal and Interest Requirements by Fiscal Year of Maturity Governmental Funds. Proprietary Funds Fiduciary Fund Combining Schedules Scheduie of Net Assets. Scheduie of Changes in Net Assets

4 TABLE OF CONTENTS September 30,2012 Page(s) STATISTICAL SECTION Table # Net Assets by Components 1 74 Changes in Net Assets Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Total City Taxable Sales Sales Tax Rates Net Taxable Sales by Business Classification Assessed and Estimated Actual Value of Taxable Property Property Tax Rates-Direct and Overlapping Governments Principal Property Taxpayers Property Tax Levies and Collections Ratios of Outstanding Dept by Type Ratios of General Bonded Dept Outstanding Direct and Overlapping Governmental Activities Debt Pledged Revenue Coverage Demographic and Economic Statistics Principal Employers Full-Time Equivalent City Governmental Employees by Function Operating Indicators by Function Capital Asset Statistics by Function INTERNAL CONTROL AND COMPLIANCE AUDIT SECTION Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards

5 INTRODUCTORY SECTION

6 CITY OF PAPILLION David P. Black, Mayor Nancy Purscell, Finance Director 122 Ease Third Street Papillion, Nebraska Phone Fa, February 26, 2013 Honorable Mayor, City Council, And Citizens of Papillion City of Papillion, Nebraska The comprehensive annual financial report of the City of Papillion, Nebraska (the "City" or "City of Papillion") for the fiscal year ended September 30,2012 is hereby submitted. State law requires cities to issue within six months of fiscal year end a set of audited financial statements. This report fulfills this requirement for the fiscal year ended September 30, Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the management. In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss, theft, or misuse, and to ensure the reliability of financial records for preparing financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") and maintaining accountability of assets. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal, state and local financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure the document compliance with applicable laws and regulations related to these programs. The federal government, under the revised OMB Circular A-133, requires local governments that expend $500,000 or more in federal funds in any fiscal year to have a financial and compliance audit performed. The City was not required to have a Single Audit for the year ended September 30, To the best of management's knowledge and belief, the enclosed data are accurate in all material respects and reported in a manner designed to present fairly the financial position and financial activities of the City. All disclosures necessary to enable the reader to gain an understanding of the government's financial activities as specified by all currently effective statements of the Governmental Accounting Standards Board have been included. The City's financial statements have been audited by HSMC Orizon LLC, a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended September 30, 2012, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified ("clean") opinion that the City's financial statements for the fiscal year ended September 30, 2012 are fairly presented in conformity with generally accepted accounting principles ("GAAP"). The independent auditor's report is presented as the first com~onent of the financial section of 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 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. The City's MD&A can be found in the Financial Section immediately following the independent auditors' report. -1-

7 CITY PROFILE The City of Papillion, incorporated on May 9, 1883, is the county seat of Sarpy County and is located approximately ten miles south of the City of Omaha. It occupies a land area of approximately 6.65 square miles with opportunities to grow in all direction except to the north. The City has legal control over the development (planning, zoning and building permit issuance) within approximately 2 miles of city limits in the directions where growth exists. Papillion is empowered by state statute to extend its corporate limits by annexation, which it has done from time to time. The City of Papillion utilizes the mayor and council form of government. The Council is elected on a nonpartisan basis. Council members serve four year staggered terms with four counch members elected every two years. The Mayor serves a four-year term. The City is divided into four wards and each ward is represented by two council members with staggered terms. The City of Papillion provides a full range of services, including public safety (police and fire); the construction and maintenance of highways, streets, and other infrastructure; planning and zoning; a public library; two 18-hole golf courses; an aquatic facility; parks and recreation; water and sewer utilities. Many of these services are also used by those within the extra territorial jurisdiction ('ETJ"), including but not limited to the fact the City provides water and sewer utilities to those in sanitary and improvement districts within the City's ETJ. The Council is required to adopt a final budget by no later than September 20 of the prior fiscal year. This annual budget serves as the foundation for the City's financial planning and control. The budget is prepared by fund, and department. The budget includes all funds of the City except fiduciary funds (Pension Trust Funds). Department directors may transfer resources within a department as they see fit. Transfers between departments or additional appropriations need special approval from the City Council. LOCAL ECONOMY The City continues its transformation from the residential suburb to a major retail and commercial area within the metropolitan area. This transformation is helping to diversify the tax base of the City and at the same time increase the sales tax revenue for the City. Shadow Lake Towne Center, located in Papillion, is one of the largest retail shopping areas in the Omaha metro area. The City has seen continuing commercial development within its zoning jurisdiction. During the fiscal year the City sold 10.5 acres of land, which was acquired during the construction of 72" Street, for business purposes. The City has annexed this area affective October 31, At this time a large professional building is being constructed on the site. The City was selected as the site location for a large national company data center. Additional retah and commercial development is occurring elsewhere in PapHlion. Two national retahers are constructing stores at 72" and Cornhusker, one mile north of Shadow Lake Towne Center. Midlands Place, located at Highway 370 and 84 1h Street, half mile east of Shadow Lake Towne Center, is nearly complete with the necessary infrastructure and the developer has been issued a building permit for the first building to be built within this development. During the last five years there has been continual construction of single family homes within the City's zoning jurisdiction. Currently, there are two large residential developments proceeding through the zoning and platting process. Together these developments will plat an additional 437 residential lots and 11 mixed used lots on approximately 264 acres. The federal government has a significant economic presence thanks to STRATCOM (Offutt AFB) located approximately 7 miles to the east. -2-

8 The City continues to receive national recognition. In January 2013, Bloomberg BusinessWeek released its 2013 list of best communities in which to raise kids. For the state of Nebraska, Papillion was at the top of the list. Papillion has been recognized several times by national rankings and publications over the course of the last decade. During 2012, Papillion was named the Best Small Town in America by Liviability.com, a service that focuses on ranking the best places to live and visit. In 2011, Money Magazine ranked Papillion #5 on its list of America's Best Small Towns to live in. This is the fourth consecutive award from Money Magazine. In 2010, Bloomberg BusinessWeek named Papillion the Best Affordable Suburb in Nebraska, as well as the #2 Best Affordable Suburb in the United States. These national recognitions have helped promote the City at a nationallevei sparking additional business and residential interest in the City and surrounding area. During 2012, Moody's rated the City of Papillion's bonds at Aa2. This positive rating helped provide the City with low interest rates on refunding of various purpose bonds. LONG-TERM FINANCIAL PLANNING On September 7, 2010, the City Council approved a General Fund Cash Reserve Policy (the "Policy"). The purpose of the Policy is to ensure that the General Fund Cash Reserve balance will be accumulated and maintained to protect the stability of tax rates, fiscal solvency and creditworthiness of the City. The Policy establishes a minimum limit of 28% of general fund expenditures and a maximum of 40%. Based on the fiscal 2013 budget and the unrestricted cash balance in the General Fund at September 30, 2012, the City was at 35%, therefore, within the policy limits. The Policy requires an annual review during the budget process. The City has recently adopted a Capital Improvement Plan Polioy (the "Plan") to establish a proactive approach to assessing existing and future oapital needs. The Plan will cover a period of five years and be updated annually in conjunction with the budget process. The Plan will establish priorities and funding of capital project requirements whioh the City of Papillion should make to assure its continued eoonomic viability and to protect public health and safety. MAJOR INITIATIVES The City of Papillion wastewater is sent to the City of Omaha for treatment. The federal government has mandated the separation of sanitary and storm sewer systems, which will result in inoreased costs to the City of Papillion. This is going to have a major impact on the sewer fund and Papillion's utility customers. The City has already implemented a change in user fees due to this program. The approved resolution contains annual rate changes for the next three years based on a rate study which included the increased charges from the City of Omaha. The City is required by state statute to approve a one and six year road plan annually by March 1. The next major improvement scheduled is the Washington Street (84 th Street) reconstruction from Cedardale Road to Capehart Road. Federal funding of 80% is antioipated for this project, along with cost sharing from Sarpy County and Sanitary and Improvement Distriot 264. The improvement is neoessary in part due to the oommercial and residential development oocurring in this southern seotion of the City, as well as inoreasing the safety and traffio flow of the area. Based on a City Council retreat, they established the five following goals including strategies and objectives for the next three years in order to accomplish the goals. 1. Preserve Mid-Town Papillion 2. Expand/Improve Recreational Faoilities 3. Maintain a Strong Financial Position 4. Improve and Maintain the Road System to Foster Efficient Movement of Traffio 5. Proteot the Small-Town Feel and Sense of Community -3-

9 The City will be starting the construction of a new public works facility in This facility will be an investment in the City's future both as it relates to the City being able to service the community and remove the public works maintenance facility from "Mid-town Papillion". Since fiscal year end, the City has purchased acres of land adjacent to other City property, which will become the site for the new public works facility. An opportunity to expand recreational facilities occurred after fiscal year end when the City was able to purchase approximately 2.91 acres adjacent to currently-owned recreational facilities of the City. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association ("GFOA") awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Papillion for its comprehensive annual finance report ("CAFR"j for the fiscal year ended September 30, This was the second consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, the government had to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR will meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for a certificate. The preparation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Department. I would like to express my appreciation to all members of the department who assisted and contributed to its preparation. I would also like to thank the Mayor and members of the City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfully submitted, {}~ty- Nancy Purscell, CPA Finance Director I1w cd! -4-

10 The Government Finance Officers Association ("GFOA") awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Papillion for its comprehensive annual financial report ("CAFR") for the fiscal year ended September 30, In order to be awarded a Certificate of Achievement, the government had to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR will meet the Certificate of Achievement Programs' requirements and we are submitting it to the GFOA to determine its eligibility for a certificate. -5-

11 Certificate of Achievement for Excellence in Financial Reporting Presented to City ofpapillion Nebraska For its Comprehensive Annual' Financial Report for the Fiscal Year Ended September 30, 20 II A Certificate ofachievement for Excellence in Fhlancial Reporting is presented by the Government Finance Officers Association ofthe United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. ~P~ President ~".?~ Executive Director -6-

12 City of Papillion, Nebraska Organization Chart ---._--- Citizens City of Papillion ~-~ Mayor David PBlack --.~ City Council 8Members Library Board - (Mayoral Appointments) -~-"., Library Director Robin Clark -7-

13 City of Papillion, Nebraska List of Elected and Appointed Officials September 30,2012 Elected Officials Mayor Council Members - Ward I Council Members - Ward II Council Members - Ward III Council Members - Ward IV David P. Black Gene Jaworski James Glover Steve Engberg Brian Liesveld Troy Florance Lu Ann Kluch Bob Stubbe Tom Mumgaard Appointed Officials City Administrator Assistant City Administrator City Attorney City Clerk Recreation Director Public Works Director Fire Chief Police Chief Finance Director Planning Director Manager of Engineering Services Director of Golf Maintenance City Physician Dan Hoins Christine Myers Karla Rupiper Eliza Butler Lori Hansen Marty Leming Bill Bowes Len Houloose Nancy Purscell Mark Stursma Jeff Thompson Tom James Dr. Jeff Strohmyer 8-

14 FINANCIAL SECTION

15 HSMC ORIZON LLC (PAs, BUSINESS &. TECHNOLOGY CONSULTANTS FRANCES STREET OMAHA, NEBRASKA ~ HSMC ORIZON KANSAS CITY' OMAHA /PHONE / fax February 26, 2013 INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Papillion, Nebraska We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of City of Papillion, Nebraska ("City of Papillion") as of and for the year ended September 30, 2012, which collectively comprise City of Papillion's basic financial statements as listed in the table of contents. These financial statements are the responsibility of City of Papillion'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 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, and each major fund of City of City of Papillion, as of September 30, 2012, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America ("GAAP") In accordance with Government Auditing Standards, we have issued our report dated February 26, 2013 on our consideration of City of Papillion's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit -9-

16 Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis (pages 11-20) and budgetary comparison information (pages 53-55) be presented to supplement the basic financial statements. Such information although not a part of the basic financial statements, is required by the Governmentai 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 historicai 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 evidence sufficient to express an opinion or provide assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise City of Papillion's basic financial statements. The other supplementary information (pages 56-71) is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise City of Papillion's basic financial statements. The introductory section (pages 1-8) and statistical section (pages 72-93) are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has 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. ~t!..tp/' iy"-il..e.. HSMC ORIZON LLC -10-

17 MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30,2012 (UNAUDITED) This section of the City of Papillion, Nebraska's (the "City" or "City of Papillion") annual financial report presents our discussion and analysis of the City's financial performance during the fiscal year that ended on September 30, Please consider this discussion in conjunction with the additional information provided in the Letter of Transmittal and the conditions reflected in the City's financial statements. Financial Highlights At the end of the current fiscal year, unassigned fund balance for the general fund was increased to $5,598,805. The City of Papillion continued to experience growth in retail development. The two major retail developments, Market Pointe and Shadow Lake Towne Center, continued to experience construction and had retailers opening throughout the year. These developments, along with continued residential growth, have kept local and national retailers interested in development both within the City and the City's zoning jurisdiction. The City's total debt decreased by $3,080,785 during the current fiscal year, as a result of more principal payments being made compared to new debt being incurred. The City made all scheduled payments. The City issued $4,300,000 General Obligation Refunding Bonds which were used to refund General Obligation Refunding Bonds, Series 2007A originally issued to payoff warrants issued by Sanitary Improvement District No. 259 prior to annexation and Bonds Series 2003 originally issued by SID 205. The City issued $1,645,000 of Highway Allocation Refunding Bonds which were used to refund Highway Allocation Refunding Bonds, Series The City of Papillion Municipal Facilities Corporation issued $2,000,000 Lease Purchase Bonds to be used for a new public works facility. The City's certified valuation for fiscal year 2011 was $1,340,423,861 compared to $1,352,359,049 for fiscal year This equates to a 1% increase in overall valuation The certified growth for 2012 was $35,614,435 which reflects growth in new construction of $9,562,649 during the year and $26,051,786 directly related to annexation of Sanitary Improvement District 205 Sarpy County, also known as Woodland Creek. The valuation for 2013 certified by the County Assessor in August 2012 was $1,353,972,678. The certified growth for 2013 was $10,919,245 which reflects growth in new construction during the year. Overview of the Financial Statements The City's financial statements are prepared in accordance with accounting principles established by the Governmental Accounting Standards Board ("GASB"). -11-

18 Management's Discussion and Analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The two kinds of statements in the basic financial statements present different views of the City: The first two statements are government-wide financial statements that provide both long-term and short-term information about the City's overall financial status. The remaining statements are fund financial statements that focus on individual parts of the City government, reporting the City's operations in more detail than the governmentwide statements. The governmental fund statements indicate how general governmental services like public safety were financed in the short-term as well as what remains for future spending. Proprietary fund statements offer short and long-term financial information about the activities the government operates like businesses, such as the golf courses, water system, and sewer system. Fiduciary fund statements provide information about the financial relationships - like the retirement plan for the City's employees - in which the City acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. Figure A-1 shows how the required parts of the annual report are arranged and relate to one another. Figure A-1 Required Components of City of Papillion's Annual Financial Report Management's Discussion And Analysis Basic Financial Statements Required Supplementary Information Governmentwide Financial Statements Fund Financial Statements Notes To the Financial Statements Summary< > Detail -12-

19 Figure A-2 summarizes the major features of the City's financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of the Management's Discussion and Analysis explains the structure and contents of each of the statements. Figure A-2 Major Features of the City ofpapillion's Government-wide and Fund Financial Statements I I I I I Fund Statements I I II II Government-wide Governmental Statements Funds I Pro~rietary Funds I [ Fiduciary Funds I Scope Entire City The activities of the Activities the City Instances in which government (except City which are not operates similar to the City is the trustee fiduciary funds) and proprietary or private businesses or agent for the City's component fiduciary, such as such as the water someone else's units. police, fire, and system, sewer resources, such as parks. system and golf the retirement plan courses. for City employees. Required Statement of Net Balance Sheet; Statement of Net Statement of Financial Assets: Statement of Assets: Fiduciary Net Assets: Statements Statement of Revenues, Statement of Statement of Activities. Expenditures and Revenues, Changes in Fiduciary Changes in Fund Expenses, and Net Assets. Balances. Changes in Net Asset.s: Statement of Cash Flows. Accounting Accrual accounting Modified accrual Accrual accounting Accrual accounting I Basis and and economic accounting and and economic and economic Measurement resources focus. current financial resources focus. resources focus. Focus resources focus. Type of All assets and Only assets All assets and All assets and Asset! liabilities, both expected to be used liabilities both liabilities, both short- Liability financial and capital, and liabilities that financial and capital, term and long-term, Information and short-term and come due during the and ~hort~term and the City's funds do long-term. year or soon long-term. not currently contain thereafter, no capital capital assets, assets included. althouah thev can. Type of All revenues and Revenues for which All revenues and All additions and inflow! expenses during cash is received expenses during the deductions during outflow year, regardless of during or soon after year, regardless of year, regardless of information when cash is the end of the year, when cash is when cash is received or paid. expenditures when received or paid. received or paid. goods or services have been received and payment is due. -13-

20 Government-wide Statements The government-wide statements report information about the City as a whole using accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the government's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the City's net assets and how they have changed. Net assets - the difference between the City's assets and liabilities - is one way to measure the City's financial health, or position. Over time, increases or decreases in the City's net assets are an indicator of whether its financial health is improving or deteriorating, respectively. " To assess the overall health of the City you need to consider additional non-financial factors such as changes in the City's property tax base and the condition of the City's capital assets. Over the last year, the City's net assets increased by $3,197,885 and the City's property tax base increased by $1,613,629 during the fiscal year The government-wide financial statements of the City are divided into two categories: " Governmental activities - Most of the City's basic services are included here, such as the police, streets, fire, library, planning, building inspection, parks, recreation departments and general administration. Property and sales taxes, charges for services, and state and federal grants finance most of these activities. Business-type activities - The City charges fees to customers to help it cover the costs of certain services it provides. The City's golf courses, water system and sower system are included here. Fund Financial Statements The fund financial statements provide more detailed information about the City's funds - not the City as a whole. Funds are accounting devices that the City uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by State law and bond covenants. The City Council establishes other funds to control and manage money for particular purposes. The City has three kinds of funds: Governmental Funds - Most of the City's basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether or not there are more cr fewer financial resources that can be spent in the near.future to finance the City's programs. Because this information does not encompass the additional long-term focus of the governmentwide statements, we provide additional information on the subsequent page that explains the relationship (or differences) between them. -14-

21 Proprietary Funds - Services for which the City charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long and short-term financial information. In fact, the City's enterprise funds (one type of proprietary fund) are the same as its business-type activities, but provide more detail and additional information, such as cash flows. Fiduciary Funds - The City is the trustee, or fiduciary, for its employees' pension plans. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the City's fiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. We exclude these activities from the City's government-wide financial statements because the City cannot use these assets to finance its operations. Financial Analysis of the City as a Whole Net Assets. As noted earlier, net assets over time may serve as a useful indicator of a government's financial position. In the case of the City of Papillion, assets exceed iiabilities by $64,448,175 at the close of the most recent fiscal year. The largest portion of the City of Papillion's net assets (62%) reflects its investment in capital assets (e.g. land, infra-structure, buildings, machinery, and equipment) less any related debt to acquire those assets that is still outstanding. The City of Papillion uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Papillion's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Unrestricted net assets may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Papillion is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. Current and other assets Capital assets Total assets Long-term liabilities Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets Government Activitie. Business-type Activities Total < $ 20,666,214 $ 19,126,297 $ 8,718,636 $ 7,261,035 $ 28,384,850 $ 26,387,332 62,390, , ,057,086 83, ,296,654 40,382,822 12,297,876 19,808,886 57,094,530 60,191,708 5,348,250 5, ,650,710 7, , ,621, ,292,272 20,732,642 18,505,646 18,762,335 39,797,918 39,494,977 10,883,178 10,705, ,034 1,045,153 11,699,212 11,750,554 7,236, , ,852, ,045 10,004,731 $ $ $ $ $ $ Changes in Net Assets Governmental Activities: Governmental activities increased the City of Papillion's net assets by $1,821,745. The key elements of this increase relates to the collection of property taxes and city sales tax exceeding the activities losses. For the most part, the department with increases in expenses closely paralleled inflation and growth in the demand for services. The City sold a business lot for $800,076, The land was acquired during the construction of 72" Street. The City sales tax revenue grew at 8% over the prior year which was greater than anticipated at budget time and therefore not used to fund current expenditures. -15-

22 Business-type Activities: Business-type activities increased the City of Papillion's net assets by $1,376,140. One of the key elements of this change is the increased Water Fund revenues as a result of a rate increase as well as increased usage as a result of the Midwest drought of The Sewer Fund has also had a scheduled rate increase which has resulted in an operating income this year compared to an operating loss in the prior year. The City has continued to improve its business model at the golf courses to ensure operating income is available to off-set debt payments including principal. Government Activities Business-tvpe Activities Total Revenues: Program revenues: Charges for services $ 2,857,443 $ 2,486,382 $10,714,146 $ 7,926,343 $13,564,089 $ 10,412,725 Operating grants and contributions 4,532,204 4,359,578 4,532,204 4,389,578 Capital grants and contributions 241, ,819 64, , ,552 General revenues: Property taxes 6,754,498 5,603,682 6,754,498 5,603,682 Special assessments 465, , , ,265 City sales tax 7,019,662 6,486,671 7,019,662 6,486,671 Other taxes 896, , , ,626 Interest income 26,742 47,483 10,905 15,006 37,647 62,489 Other 800, , , ,053 1,009, ,200 Total revenues 23,593,518 21,225,653 10,927,086 8,342,135 34,520,604 29,567,788 Expenses: General government 1,069,045 1,006,700 1,069,045 1,006,700 Building permits and 444, , , ,533 Planning 356, , , ,322 Library 925, , , ,236 Park department 1,193,064 1,461,796 1,193,064 1,461,796 Police department 4,957,666 4,694,852 4,957,666 4,694,852 Fire department 4,999,167 4,727,101 4,999,167 4,727,101 Street department 4,548,781 4,366,631 4,548,781 4,366,631 Recreation department 540, , , ,132 Senior center 135, , , ,930 Information services 263, , , ,609 Amphitheatre 296, , , ,328 Water park 619, , , ,092 Community betterment 89,156 64,188 89,156 54,188 Interest expense 1,332,098 1,402,414 1,332,098 1,402,414 Water 4,399,428 4,446,831 4,399,428 4,446,831 Sewer 2,802,164 2,482,154 2,802,164 2,482,154 Golf courses 2,297,841 2,112,164 2,297,841 2,112,164 Business park 51,513 51,579 51,513 51,579 Total expenses 21,771,773 21,057,864 ~50,946 9,092,728 30,864,501 30,150,592 Increase (decrease) in net assets before other items 1,821, ,789 1,376,140 (750,593) 3,197,885 (582,804) Transfers 492,675 (492,675) Net assets assumed from annexation 566, , ,804 Changes in net assets 1,821,745 1,226,904 1,376,140 (959,904) 3.197, ,000 Net assets, October 1 37,590,437 36,363,533 23,659,853 24,219,757 61,250,190 60,983,290 Net assets, September 30 $ $ $ $ $ $

23 Financial Analysis of the City's Funds As noted earlier, the City of Papillion uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City of Papillion's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Papillion's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As the City completed the year, its governmental funds reported a combined fund balance of $15,389,086. Of that fund balance, $5,598,805 constitutes unassigned fund balance. The general fund is the main operating fund of the City of Papillion. At the end of the current fiscal year, unassigned fund balance of the general fund was $5,598,805. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 34% of total 2012 general fund expenditures, while total fund balance represents 40% of that same amount. General Fund Budgetary Highlights 20,000,000 15,000,000 10,000,000 5,000, [J Expenditures Revenues DUnassigned Balance otetai Balance -17-

24 2012 GENERAL FUND EXPENDITURES Amphitheater Recreation 2%. 3% Senior center 1% Street 11% Fire 31% Police 29% Parks 7% IS 1% Planning 2% LibraryBU~ding S% 3,o 2012 GENERAL FUND REVENUES Rural Fire District 16% All other sources 1% Property Tax 20% Permits & Fees 13% City Sales Tax 38% -18-

25 Over the course of the year, the City Council revised the City budget once. The changes were all the result of unforeseen circumstances: The Amendment Included: Various Grants approved during the year to allow for the related expenditures Various donations received during the year to allow for the expenditures of these donations as intended. Re-allocation of property and liability insurance to more appropriately reflect actual costs between various City departments. Increase to health insurance costs within the fire department as a result of the number of employees moving from single to family coverage during the year. Additional special event fees and expenditures to host an Extreme 5K Race. To allow for the repair of the Library roof and air compressor. To allow net proceeds from the sale of land to be transferred to the Debt Service Fund. To allow for the payment to Sanitary Improvement Districts for outfall money's collected. Proprietary Funds 6,000,000 4,000,000 Expenses Compared to Revenues 2,000,000 f]i-iiiiiii----i_f Water Sewer Golf Business Park _ Expenses _ Revenues The City of Papillion's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The total of the proprietary funds unrestricted net assets at the end of the year was $5,714,

26 Capital Asset and Debt Administration Capital Assets. The City of Papillion's capital assets for its governmental and business-type activities as of September 30, 2012 amounts to $99,329,628 (net of accumulated depreciation). This investment in capital assets includes land, buildings and system improvements, machinery and equipment, park facilities, intangibles, roads, highways, and bridges. The total decrease in the City of Papillion's capital assets for the current fiscal year was $2,635,875. This is a 2.6% decrease over the year resulting from depreciation greater than new assets. There were no major road projects or buildings constructed during this fiscal year. See Note C for additional information. Governmental Business-type Activities Activities Total Land $ 3,568,400 $ 6,187,031 $ 9,755,431 Intangible 369, ,305 Construction-in-progress 1,570, ,232 2,363,136 Land improvements 3,686,323 3,686,323 Buildings and equipment 18,534,181 6,132,770 24,666,951 Infrastructure 73,776,814 73,776,814 Distribution and collection systems 43,676,242 43,676,242 Total 101,136,622 57,157, ,294,202 Less accumulated depreciation (38,745,750) (20,218,824) (58,964,574) $ 62,390,872 $ 36,938,756 $ 99,329,628 Long-term Debt. At the end of the current fiscal year, the City of Papillion had total bonded debt outstanding of $51,3-rO,000 all backed by the full faith and credit of the government and/or secured by specific revenue sources of the Water and Golf Funds. In addition, the City had $6,500,000 of Water System Bond Anticipation Notes. The City made all scheduled payments. See Note D for additional information. Economic Factors and Next Year's Budgets and Rates The following factors were considered in preparing the City of Papillion's budget for the 2013 fiscal year. While establishing next year's budget the City was focused on the long-term future of the City rather than a one year outlook. Based on the budgetary planning done for the 2012 year, the City was able to prepare the fiscal 2013 budget without an increase to the levy The City anticipated a major increase in commercial building permits. The City was selected for a large data center for a national company. The City also expected a large permit to be issued for a professional building on the site sold by the City during fiscal There were two national retailers looking at building large retail stores within the City's zoning jurisdiction. Along with the anticipated continued build out of the two large commercial areas. Requests for Information This financial report is designed to provide a general overview of the City of Papillion's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to the Finance Director/Treasurer, 122 East Third Street, Papillion, Nebraska

27 STATEMENT OF NET ASSETS SEPTEMBER 30, 2012 ASSETS Primary Government Business- Governmental type Activities Activities Total Cash and cash equivalents $ 8,679,714 $ 2,694,689 $ 11,374,403 Investments 4,807, ,015 5,593,367 Receivables 3,948,612 1,572,039 5,520,651 Inventory 78,530 78,530 Deferred charges 1,074, ,027 1,264,130 Restricted and designated assets: Cash 2,156,433 1,944,777 4,101,210 Investments 1,452,559 1,452,559 Land 3,568,400 6,187,031 9,755,431 Construeti0 n-i n-progres 5 1,570, ,363,136 Depreciable capital assets (net of accumulated depreciation) 57,251,568 29,590,188 86,841,756 Intangible asset 369, ,305 Total assets 83,057,086 45,657, ,714,478 LtABILtTIES Accounts payable 655, ,670 1,317,718 Accrued payroll and withholding 197, ,683 Accrued interest payable 372, , ,759 Other accrued liabilities 33,190 18,825 52,015 Deferred revenue 1,221 74,525 75,746 Noncurrent Liabilities: Due within one year: Note payable 214,000 16, ,604 Bonds payable 3,245, ,000 3,860,000 Leases payable 86,662 86,662 Bond anticipation notes payable 6,500,000 6,500,000 Accrued compensated absences 629, , ,586 Due in more than one year: Note payable 1,188, ,279,203 Bonds payable 36,451,600 11,032,611 47,484,211 Leases payable 91,030 91,030 Outfall sewer liability 887, ,006 Accrued compensated absences , ,080 Total liabilities 43,644,904 20,621,399 64,266,303 NET ASSETS Invested in capital assets (net of related debt) 21,292,272 18,505,646 39,797,918 Restricted for: Capital projects 4,714, ,034 5,530,333 Debt service 6,050,888 6,050,888 Community betterment 117, ,991 Unrestricted 7,236,732 5,714,313 12,951,045 Total net assets $ 39,412,182 $ 25,035,993 $ 64,448,175 See notes to basic financial statements. -21-