Eagle County, Colorado. Comprehensive Annual Financial Report. For the Year Ended December 31, 2014

Transcription

1 Eagle River Fire Protection District Eagle County, Colorado Comprehensive Annual Financial Report For the Year Ended December 31, 2014 Eagle River Fire Protection District Administration 90 Benchmark Road, Suite 101 Post Office Box 7980 Avon, Colorado 81620

2 EAGLE RIVER FIRE PROTECTION DISTRICT EAGLE COUNTY, COLORADO COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2014 Prepared by: Administrative Staff

3 EAGLE RIVER FIRE PROTECTION DISTRICT LIST OF ELECTED AND APPOINTED OFFICIALS December 31, 2014 BOARD OF DIRECTORS Jennifer Cartmell-Hays, Chairperson Clint Janssen, Al Bosworth, Vice-President, Assistant Secretary and Assistant Treasurer Darell Wegert, Treasurer Clark Shivley, Secretary MANAGEMENT Karl Bauer, General Manager and Fire Chief Kristen Nash, Human Resources Director Jessica Costabile, Finance Director INDEPENDENT AUDITORS Hamblin and Associates, LLC Certified Public Accountants Evergreen, Colorado

4 EAGLE RIVER FIRE PROTECTION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2014 TABLE OF CONTENTS INTRODUCTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organization Chart FINANCIAL SECTION Report of Independent Auditor Management s Discussion and Analysis Basic Financial Statements Government-wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Statement of Net Position Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds Statement of Cash Flows Proprietary Funds Notes to the Financial Statements Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual General Fund Notes to Required Supplemental Information Other Supplemental Information Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Debt Service Fund Comparative Statements of Revenues, Expenditures and Changes in Fund Balances Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Capital Impact Fee Fund Comparative Statements of Revenues, Expenditures and Changes in Fund Balances Capital Impact Fee Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Equipment Replacement Fund Page iii-vii viii ix i

5 EAGLE RIVER FIRE PROTECTION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2014 TABLE OF CONTENTS - CONTINUED STATISTICAL SECTION Net Position by Component Changes in Net Position Changes in Fund Balances, Governmental Funds Fund Balances, Governmental Funds Tax Revenues by Source, Governmental Funds Capital Impact Fees Collected Assessed Value and Estimated Actual Value of Taxable Property Direct and Overlapping Property Tax Rates Principal Property Tax Payers Property Tax Levies and Collections Ratios of Outstanding Debt by Type Legal Debt Margin Information Direct and Overlapping Governmental Activities Debt Demographic and Economic Statistics Principal Employers Full-time Equivalent Employees by Function / Program Operating Indicators by Function / Program Capital Asset Statistics by Function / Program Page ii

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7 Letter of Transmittal Eagle River Fire Protection District, Colorado April 16, 2015 GAAP 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 District s MD&A can be found immediately following the report of the independent auditors. Profile of the District The District is a quasi-municipal corporation and a political subdivision authorized and organized in 2000 as a regional fire district. The successful election in May of that year merged twelve municipal and metropolitan district fire authorities and certain unincorporated areas of Eagle County into a single fire district. The District s primary purpose is to provide fire suppression, rescue, emergency medical treatment, hazardous materials response, fire prevention and public education to its residents, businesses and taxpayers. The District s boundaries encompass a physical area of approximately 186 square miles in Eagle County; however, the majority of that land is owned by the federal government. The total non-federal land served by the District totals approximately 76 square miles, including the Towns of Avon, Minturn and Red Cliff, and the communities of Arrowhead, Bachelor Gulch, Cordillera, Eagle-Vail, Edwards, and portions of Wolcott. The District estimates that it currently serves a resident population of approximately 25,000, based upon United States census data. The population served increases significantly during the summer and winter tourist seasons. In addition, the District serves the Beaver Creek Metropolitan District service area, including Beaver Creek Resort, pursuant to an Agreement for Fire Protection and Emergency Services. The District is governed by a Board of Directors which, pursuant to the Special District Act, consists of five members. Board members must be eligible electors of the District and reside in one of five ward areas as defined by State law, and are elected to staggered four year terms of office at successive biennial elections. Vacancies on the Board are filled by appointment of the remaining directors; the appointee to serve until the next regular election, at which time the vacancy is filled by election for any remaining unexpired portion of the term. The directors hold regular meetings on the third Thursday of each month and, as needed, special meetings. Each director is entitled to one vote on all questions before the Board when a quorum is present. The Board is responsible for the overall management and administration of the District including policy making, budget adoption, long-range planning, and hiring of the District s General Manager/Fire Chief who oversees the day-to-day operations of the District. The District has four staffed fire stations and three reserve fire stations used to house equipment and provide residences, and employed 63 uniformed and 3 administrative personnel at year-end. As previously discussed, the District provides fire iv

8 Letter of Transmittal Eagle River Fire Protection District, Colorado April 16, 2015 suppression, rescue, emergency medical treatment, hazardous materials response, fire prevention and public education services to residents, businesses, taxpayers and visitors within its boundaries and the boundaries of the Beaver Creek Metropolitan District service area. The annual budget serves as the foundation for the District s financial planning and control. No later than October 15 th, the General Manager/Fire Chief submits to the Board of Directors a proposed budget for the calendar year that will commence the following January 1 st. The budget is prepared by fund, program, activity and line item and includes information on the prior year, current year budget and year-end estimates and requested appropriations and estimated revenues for the upcoming year. The Board must cause to be published a notice that such proposed budget is open for inspection by the public. Prior to adoption, any elector of the District may make his or her objections to the proposed budget at a budget hearing held by the District Board of Directors prior to adoption. The District must adopt its budget by December 15 th in order to certify its mill levy for collection in the following year by enacting a corresponding appropriation resolution. In general, the District cannot expend money in excess of the amount appropriated. However, in the case of an emergency or some contingency which was not reasonably foreseeable, the Board may authorize the expenditure of funds in excess of the budget by adopting a resolution. If the District receives revenues which were unanticipated at the time of adoption of the budget, the Board may authorize the expenditure of such revenues by adopting a supplemental budget after notice and hearing. Budget to actual comparisons are provided in this report for all funds and are presented with a higher level of detail than legally required in order to facilitate closer financial analysis. Factors Affecting Financial Condition The information presented in the financial statements is best understood when considered from a broader perspective rather than just the specific environment in which the District operates. Local Economy. Year-round tourism and winter recreation-related businesses account for a significant portion of the employment and earned income of area residents. Skier and snowboarder visits at Vail and Beaver Creek Resort account for almost 20% of the total such visits in Colorado. Called A skier s Disneyland Skinet.com ranked Vail as the #5 ski resort in the Western United States for the season, while Beaver Creek Resort was ranked 11th. In addition to skiing and associated winter-time activities, the area promotes a number of summer pursuits. Several communities within Eagle County have earned v

9 Letter of Transmittal Eagle River Fire Protection District, Colorado April 16, 2015 recognition on TravelandLeisure.com s list of the top 100 golfing communities in which to live. Other summer activities include hiking, horseback riding, bicycling, kayaking and rafting, as well as other recreational sports. Property Values. Property tax, which is based on assessed property values and a mill rate, represents approximately eighty-two percent of the District s total revenues. Assessed values are dependent upon real property growth and market values of property, along with assessment ratios established by the State legislature. Overall, real property values in Eagle County dropped by 4.82 percent for the 2013 reassessment, after dropping percent from the previous re-assessment in 2011, resulting in workforce and service reductions for many local governments. Anticipating a loss of approximately $1.7 million in property tax for 2012, the District asked voters in November, 2011, to approve a temporary mill levy replacement, which they rejected. Consequently, the loss of approximately 25% in property tax revenues for 2012 compelled the District to take a very conservative approach to the 2012 budget by eliminating an upper-level management position and implementing various cost-cutting measures, such as rolling station closures, which resulted in significant service level reductions. The District went to the ballot again in November, 2012, asking voters to approve a floating mill levy increase which will be reduced as assessed values begin to grow in the future. The voters approved this request and, as a consequence, subsequent budgets have reflected restoration of the District s property tax revenues to 2010 levels, adjusted for inflation and local growth. Current Initiatives Long-term Financial Planning. Long-range financial projections are updated annually by District staff and consultants, and are regularly reviewed by management and the Board of Directors to ensure they are integrated into the annual budget process. The 2014 budget continued the District s focus on staffing its four operational fire stations 24/7, retaining personnel and prioritizing its critical capital needs to replace aging apparatus and enhance its wildland response. In addition, the District filled a position dedicated to working with communities to reduce the risk posed by wildfires and other potential disasters, and continued its intergovernmental agreement with the Town of Vail for a joint training program that includes sharing the cost of necessary training personnel. The District remained committed to seeking additional shared service opportunities. In order to encourage employee retention and remain competitive with fire departments of similar complexity, the District continued to implement conservative payroll adjustments for the first time since January, The District will continue vi

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12 Eagle River Fire Protection District 2014 BOARD of DIRECTORS Jennifer Hays Chairperson Al Bosworth and Clint Janssen Vice -President, Assistant Secretary and Assistant Treasurer Darell Wegert - Treasurer Clark Shivley - Secretary James P. Collins Legal Counsel Scott Wright CPA Kris Nash HR Director Karl Bauer General Manager and Fire Chief Jessica Costabile Finance Director Department Organizational Structure TRAINING Joint Training Program with Vail Fire and Emergency Services FIRE PREVENTION AND COMMUNITY RISK MANAGEMENT OPERATIONS Health and Safety Community Risk Management LOGISTICS Jonathan Bradley Division Chief of Training Gail McFarland Assistant Fire Marshal Tracy LeClair Community Risk Manager George Wilson Battalion Chief of Planning and Logistics Chris Sutton A Shift Battalion Chief Todd Marty B Shift Battalion Chief Michael Warmuth C Shift Battalion Chief Minturn Station 5 Eagle-Vail Station 6 Avon Station 7 Wildridge Station 8 Beaver Creek Station 11 Edwards Station 12 Cordillera Station 15 Cordillera Station 16 A Shift Lieutenant Engineer Firefighter Firefighter Reserve Station Firefighter Housing A Shift Lieutenant Engineer Firefighter Firefighter Reserve Station Firefighter Housing A Shift Lieutenant Engineer Firefighter Firefighter A Shift Lieutenant Engineer Firefighter Firefighter A Shift Lieutenant Engineer Firefighter Firefighter Reserve Station Firefighter Housing B Shift Lieutenant Engineer Firefighter Firefighter B Shift Lieutenant Engineer Firefighter Firefighter B Shift Lieutenant Engineer Firefighter Firefighter B Shift Lieutenant Engineer Firefighter Firefighter B Shift Lieutenant Engineer Firefighter Firefighter C Shift Lieutenant Engineer Firefighter Firefighter C Shift Lieutenant Engineer Firefighter Firefighter C Shift Lieutenant Engineer Firefighter Firefighter C Shift Lieutenant Engineer Firefighter Firefighter C Shift Lieutenant Engineer Firefighter Firefighter * Beaver Creek Station 11 is owned by Beaver Creek Metropolitan District. Lieutenant and Engineer positions are staffed by ERFPD. Firefighter positions are staffed by Beaver Creek Public Safety.

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14 Hamblin and Associates, LLC Certified Public Accountants Member of the American Institute of Certified Public Accountants 3082 Evergreen Parkway, Suite 2 Evergreen, CO (303) Board of Directors Eagle River Fire Protection District Eagle County, Colorado INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Eagle River Fire Protection District as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express 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. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Eagle River Fire Protection District as of December 31, 2014, 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. 1

15 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and budgetary comparison schedules on pages 3 through 11 and 35 through 36 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, which considers it to be an essential part of financial reporting for placing the basic financial statements in appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Eagle River Fire Protection District s basic financial statements. The introductory section, comparative statements of revenue, expenditures, and changes in fund balances, and budgetary comparison schedules for the Capital Impact Fee Fund, Debt Service Fund, Equipment Replacement Fund, and the statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The comparative statements of revenue, expenditures, and changes in fund balances and budgetary comparison schedules for the Capital Impact Fee Fund, Debt Service Fund, and Equipment Replacement Fund are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such 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 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. Hamblin and Associates Evergreen, Colorado March 6,

16 Management s Discussion and Analysis As Management of Eagle River Fire Protection District (the District ), we offer readers of the District s financial statements this discussion and analysis of the financial activities of the District for the fiscal years ended December 31, 2014 and The Management s Discussion and Analysis (MD&A) should be read in conjunction with the District s basic financial statements. Financial Highlights The assets of the District exceeded its liabilities and deferred inflows of resources at the close of its fiscal year ended December 31, 2014 by $8,603,498 (net position). Of this amount, $3,526,232 is unrestricted and may be used to meet the District s ongoing obligations to citizens and creditors in accordance with the District s fund designation and fiscal policies as more fully described below. The District s total net position increased by $681,896. As of the close of the fiscal year, the District s governmental funds reported combined fund balances of $4,235,683, a decrease of $772,920 in comparison to the prior year. Approximately seventy-seven percent (77%) of this amount ($3,270,192) is available for spending at the District s discretion (unassigned fund balance). At the end of the current fiscal year, unassigned fund balance for the general fund represents 32% of 2014 total general fund expenditures. The District s total debt decreased by a net $72,253 during the current fiscal year. Regular principal payments were made on certificates of participation in the amount of $135,000; new capital leases were issued in the amount of $571,620; and principal payments on capital leases were made in the amount of $364,367. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District s basic financial statements, which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains required supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the District s assets, liabilities, and deferred inflows/outflows with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. 3

17 The Statement of Activities presents information showing how the District s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the District that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The functions of the District include fire protection and emergency medical services and are considered as entirely governmental activities. The District has no business-type activities. The government-wide financial statements can be found on pages of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District are categorized as governmental funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the governmentwide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains three individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the debt service fund, and the capital impact fee fund, all of which are presented as major funds. Proprietary funds. Proprietary funds are used to account for business-like operations where goods or services are provided to the general public for a fee (enterprise fund), or to account for goods or services provided by one department or agency of a government 4

18 to another department or agency on a cost-reimbursement basis (internal service fund). The District maintains one internal service fund as a proprietary fund. The District uses an internal service fund to account for the rental of vehicles and equipment to District departments for the accumulation of funds for future replacement. Because the internal service fund serves only governmental activities this fund is included in governmental activities in the government-wide financial statements. The basic governmental fund financial statements can be found on pages of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages of this report. Required Supplemental Information. In addition to the basic financial statements and accompanying notes, this report also presents certain other required supplemental information. The District adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with the budget and can be found on page 42 of this report. Other Supplemental Information. Individual fund statements and schedules can be found on pages of this report. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government s financial position. In the case of the District, assets exceeded liabilities and deferred inflows of resources by $8,603,498 as of December 31, A large portion of the District s net position (48.5%) reflects its investment in capital assets, less any related debt used to acquire those assets that is still outstanding. The District uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the District 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. An additional portion of the District s net position (10.6%) represents resources that are subject to external restriction on how they may be used. The remaining balance of unrestricted net position (40.9%) may be used to meet the District s ongoing obligations to citizens and creditors. 5

19 Condensed Net Position Current and Other Assets Restricted Assets Capital Assets $12,324, ,761 9,811,240 $12,660, ,621 8,466,735 Total Assets 22,757,672 21,931,357 Current and Other Liabilities Noncurrent Liabilities 361,030 5,802, ,031 5,813,438 Total Liabilities 6,163,374 6,147,469 Deferred Inflows of Resources 7,990,800 7,862,286 Net Position: Net Investment in Capital Assets Restricted Unrestricted 4,168, ,666 3,526,232 2,896, ,364 4,261,890 Total Net Position $ 8,603,498 $ 7,921,602 Changes in Net Position REVENUES Program Revenues: Charges for Services Operating Grant General Revenues: Property and Specific Ownership Taxes Intergovernmental Unrestricted Investment Earnings Miscellaneous Gain (Loss) on Disposal of Capital Assets $ 1,150,786-8,210, ,456 6,214 18,956 - $ 1,043,144 50,500 7,316, ,326 6,380 23,990 (1,028) Total Revenues 9,637,182 8,584,544 EXPENSES Program Expenses: Fire Protection Operations Interest on Long-term Debt Total Expenses 8,647, ,597 8,955,286 7,708, ,609 8,006,703 Change in Net Position 681, ,841 Net Position, Beginning of Year Net Position End of Year 7,921,602 $ 8,603,498 7,343,761 $ 7,921,602 6

20 Analysis of the District s Operations During the current fiscal year, the District s net position increased $681,896 from the prior fiscal year for an ending balance of $8,603,498. The primary reason for this increase was the purchase of over $1.6 million in critical capital equipment including $446,905 in respiratory protection equipment, and $1,028,283 in vehicles and apparatus including the replacement of the Engine 119 pumper truck (now classified as a reserve apparatus) with a Pierce XT Arrow PUC pumper truck through the use of capital lease financing. The 2014 budget also focused on staffing the District s four operational fire stations on a 24/7 basis and implementing certain planned salary adjustments in order to improve employee retention and become more competitive with fire departments of similar complexity. In addition, the District continued to participate in a joint training program with a neighboring fire agency, including sharing the cost of training personnel. Expenses and Program Revenues Governmental Activities $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Fire Protection Operations Program Expenses Program Revenues Net Interest on Debt General Revenues by Source Governmental Activities Specific Owership Tax 3.84% Intergovernmental 2.95% Miscellaneous 0.22% Property Taxes 92.12% 7

21 Financial Analysis of Governmental Funds The following schedule presents a summary of governmental fund revenues for the year ended December 31, 2014 and the amount and percentage of increases and decreases in relation to the prior year. Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Investment Earnings Miscellaneous 2014 Amount $ 8,210,770 53, ,456 1,024,069 6,214 18,956 Percent of Total 85.86%.55% 2.62% 10.71%.06%.20% 2013 Amount $ 7,316,232 43, ,826 1,000,138 6,380 23,990 Amount of Increase (Decrease) $ 894,538 10,013 54,630 23,931 (166) (5,034) Total $ 9,563, % $ 8,585,572 $ 977,912 Percent Increase (Decrease) 12.23% 23.29% 27.90%.67% (2.39%) (20.98%) As a result of an additional mill levy approved by voters in November, 2012, restoring property tax revenues to 2010 levels, 2014 property tax revenues increased by $874,934. In addition, specific ownership tax collections increased by $111,052. Property tax abatements of $39,626 reduced the overall tax increase to $894,538. Total assessed values of all property within the District decreased by $80,077,510, or 8.6% from the previous year, causing the aforementioned voter approved mill levy to increase from mills to mills. Intergovernmental revenues increased from $195,826 in 2013 to $250,456 in 2014 due to an increase in reimbursements for federal wildfire deployments, the new wildland fire program, and an increase in impact fees. Charges for services increased in 2014 primarily as a result of a small rise in the consumer price index as applied to the contractual amount billed for fire protection services to Beaver Creek Metropolitan District. The following schedule presents a summary of governmental fund expenditures for the year ended December 31, 2014 and the amount and percentage of increases and decreases in relation to the prior year. In the process of preparing and adopting its 2014 budget, the District instituted a program-based budget which identified four functional programs (support services, operations, health, wellness and safety, and fire prevention and community risk management). This revised budget format allows for enhanced capabilities of tracking the activities of the District and provides much improved and detailed financial information to the Board and the public. However, due to this change, it is necessary to summarize current expenditures rather than showing the breakdown by department/program. Future years will revert to the normal format. 8

22 Expenditures Current: Operations and Support Services Debt Service: Principal Interest and Fiscal Charges Capital Outlay 2014 Amount $ 8,171, , ,060 1,602,466 Percent of Total 77.28% 4.72% 2.85% 15.15% 2013 Amount $ 7,217, , , ,527 Amount of Increase (Decrease) $ 953, ,145 4, ,939 Percent Increase (Decrease) 13.21% 36.36% 1.68% 94.59% Total $10,574, % $ 8,703,717 $ 1,870,335 Overall, operating expenditures increased a total of $953,272 or 13.21% from 2013 due largely to increased personnel costs from the implementation of salary adjustments and a holiday pay policy, as well as additional overtime and the deployment of a wildland fire program in Debt service expenditures increased slightly in 2014 due to the final payoff of one of the District s capital leases in 2014 and an increase in the principal paid on the District s 2010 Certificates of Participation. Capital outlays increased in 2014 due to the purchase of a Pierce XT Arrow PUC Pumper truck, respiratory protection equipment and staff vehicles. Fund Balances The focus of the District s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by an external party, the District, or a group or individual that has been delegated authority to assign resources for use for particular purposes by the District s Board of Directors. As of the end of the current fiscal year, the District s governmental funds reported combined fund balances of $4,235,683, a decrease of $772,920 in comparison to the prior year. This decrease is due primarily to the large increase in expenditures discussed above, offset by an increase in property tax revenues which occurred because of the additional voter approved mill levy. In addition, in 2014 the District created an Equipment Replacement internal service fund by transferring $333,972 from the General Fund to initially establish the fund and charging equipment rentals of $73,698. Of total fund balances, $908,666 is restricted due to external limitations on its use, such as by debt covenants and legal restrictions. A total of $56,825 is considered unspendable because it has been used for prepaid items. The remaining $3,270,192 is unassigned and can be used for any lawful purpose. The general fund constitutes the main operating fund of the District. As a measure of the general fund s liquidity, it may be useful to compare the unassigned fund balance and total fund balance to total fund expenditures and other financing sources. Unassigned fund balance represents approximately 32 percent of total general fund expenditures, or 4 9

23 months of operations. This fulfills a Board objective of ensuring adequate funds for maintaining emergency response capabilities during challenging economic conditions or large-scale disasters. The capital impact fee fund had an $118,938 increase in fund balances during the current fiscal year which put its overall fund balance at $222,256 at December 31, The increase in fund balance was due in part to the Board s decision to discontinue utilizing capital impact fee fund balances toward debt service expenditures on the District s 2010 Certificates of Participation which were used to finance the purchase of land for a future regional fire station. General Fund Budgetary Highlights The 2014 budget focused on continuing to fully staff the District s four operational fire and emergency response stations on a 24/7 basis, retaining personnel and prioritizing its critical capital needs in order to replace operationally inefficient apparatus. In addition, the District continued its joint training program that was begun in 2013 with neighboring fire agencies, including sharing the cost of necessary training personnel. As stated previously, the District continues to evaluate and prioritize its critical capital needs. Major capital outlays in 2014 included the completion of the purchase of a Pierce Arrow XT PUC Pumper truck, the purchase of a second Pierce Arrow XT PUC Pumper truck, respiratory protection equipment, and staff vehicles. Original budget compared to final budget. The Board approved two supplemental budget amendments during the year, increasing overall estimated revenues and other sources by $175,113 and increasing appropriations by $354,660. The supplemental budget amendment recognized additional revenues for the Wildland Fire Module and an increase in specific ownership tax revenues, and appropriated funds for the 2013 contractual commitment for final payment on the Pierce Arrow XT PUC Pumper truck, an increase in personnel costs for the Wildland Fire Module, overtime wages and a holiday pay policy. Capital Assets and Debt Administration Capital Assets. The District s investment in capital assets at December 31, 2014 totals $9,811,240, net of accumulated depreciation. This investment in capital assets includes land, buildings and improvements, vehicles and equipment. Capital assets in the amount of $1,916,222 were purchased during the year. Capital assets are classified as follows (net of depreciation): Land Buildings and Improvements Machinery and Equipment Vehicles and Rolling Stock $ 4,089,240 2,251, ,057 2,819,320 $ 4,089,240 2,355, ,877 1,810,366 Total $ 9,811,240 $ 8,466,735 10

24 Additional information on the District s capital assets can be found in Note 4 on page 32 of this report. Long-term debt. As of December 31, 2014, the District had total outstanding debt in the amount of $5,642,640. The majority of this debt, a total of $3,860,000, is in the form of Certificates of Participation (COPs) which evidence assignments of proportionate interest in base rentals and other revenues under an annually renewable lease purchase agreement. The Certificates were issued in 2010 in order to finance the purchase of land as a site for a future regional fire station. The remainder of the District s debt, a total of $1,782,640, represents capital lease obligations which are renewable on an annual basis, at the option of the District, for consecutive one year periods. Upon final payment, title to the leased assets pass to the District. The District s debt increased by $72,253 during the current fiscal year. One new capital lease was issued for equipment financing and all regularly scheduled debt service payments were made. Colorado State statutes limit the amount of general obligation debt the District may issue to 50% of assessed valuation of all taxable property within the District. The current legal debt margin for the District is $431,593,145. The District has no general obligation debt outstanding. Additional information on the District s long-term debt can be found in Note 5 on pages of this report. Economic Factors and Next Year s Budgets and Rates The District s net total assessed valuation in 2014 (effective for taxes collectible in 2015) decreased by $271,690 or.03% in comparison to the previous year to a total value of $850,809,220. The 2015 budget reflects the aforementioned 2012 voter approval of an additional floating mill levy over the base rate of 5.55 mills. Due to this approval, the District s mill rate for general operating purposes will increase from the current mills, including the base rate of 5.55 mills, to mills for The District anticipates this to be a net increase from 2014 of $85,980 in property tax revenues. In addition to the general operating mill levy, the District elected to certify an abatement/refund mill levy of mills in order to recapture $61,258 in property tax abatements identified by the Eagle County Assessor in The 2015 budget focuses on staffing the District s four operational fire and emergency response stations 24/7, retaining personnel, prioritizing its critical capital needs to replace operationally inefficient apparatus and staff a seasonal wildland module. In addition, the District will continue to pursue a joint training program with neighboring fire agencies, including sharing the cost of necessary training personnel. It will continue to seek other shared service opportunities. 11

25 Requests for Information This financial report is designed to provide a general overview of the District s finances for all those with an interest therein. Questions concerning any of the information provided in this report or requests for additional information should be addressed to: Karl Bauer, General Manager and Fire Chief, Eagle River Fire Protection District, P.O. Box 7980, Avon, Colorado

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27 EAGLE RIVER FIRE PROTECTION DISTRICT STATEMENT OF NET POSITION DECEMBER 31, 2014 Total Governmental Activities ASSETS Cash and Cash Equivalents $ 4,193,256 Receivables (net) 8,068,622 Other Assets 62,793 Restricted Assets - Cash and Cash Equivalents 621,761 Capital Assets, net of accumulated depreciation Nondepreciable 4,089,240 Depreciable 5,722,000 Total Assets 22,757,672 LIABILITIES Accounts Payable 66,521 Accrued Liabilities 204,258 Accrued Interest Payable 48,751 Deposits and Reserves 6,500 Unearned Revenue 35,000 Noncurrent Liabilities: Due Within One Year 608,418 Due In More Than One Year 5,193,926 Total Liabilities 6,163,374 DEFERRED INFLOWS OF RESOURCES Deferred Revenue - Property Taxes 7,990,800 NET POSITION Net Investment in Capital Assets 4,168,600 Restricted For: Emergencies 286,905 Debt Service 399,505 Capital Improvements 222,256 Unrestricted 3,526,232 Total Net Position $ 8,603,498 The accompanying notes are an integral part of the financial statements. 14

28 EAGLE RIVER FIRE PROTECTION DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2014 Total Governmental Activities Expenses Fire Protection: Support Services $ 1,771,741 Operations 6,656,896 Health, Wellness and Safety 48,925 Fire Prevention and Community Risk Management 170,127 Debt Service: Interest 307,597 Total Expenses 8,955,286 Program Revenues Charges for Services 1,150,786 Total Program Revenues 1,150,786 Net Program Expense 7,804,500 General Revenues Property and Specific Ownership Taxes 8,210,770 Intergovernmental 250,456 Investment Earnings 6,214 Miscellaneous 18,956 Total General Revenues 8,486,396 Change in Net Position 681,896 Net Position, Beginning of Year 7,921,602 Net Position, End of Year $ 8,603,498 The accompanying notes are an integral part of the financial statements. 15

29 EAGLE RIVER FIRE PROTECTION DISTRICT BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2014 Debt Capital General Service Impact Fee Fund Fund Fund Total ASSETS Cash and Cash Equivalents $ 3,785,586 $ - $ - $ 3,785,586 Receivables: - Taxes 8,061, ,061,713 - Intergovernmental Accounts, net of Allowance for Doubtful Accounts of $1,768 6, ,909 Prepaid Expenses 56, ,825 Deposits 5, ,968 Restricted Assets - Cash and Cash Equivalents - 399, , ,761 Total Assets $ 11,917,001 $ 399,505 $ 222,256 $ 12,538,762 LIABILITIES AND FUND BALANCES Accounts Payable $ 66,521 $ - $ - $ 66,521 Accrued Liabilities 204, ,258 Deposits and Reserves 6, ,500 Unearned Revenues 35, ,000 Total Liabilities 312, ,279 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 7,990, ,990,800 FUND BALANCES Nonspendable: Prepaid Expenses 56, ,825 Restricted For: TABOR Emergency Reserve 286, ,905 Debt Service - 399, ,505 Capital Improvements , ,256 Unassigned 3,270, ,270,192 Total Fund Balances 3,613, , ,256 4,235,683 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 11,917,001 $ 399,505 $ 222,256 $ 12,538,762 The accompanying notes are an integral part of the financial statements. 16

30 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION DECEMBER 31, 2014 Total Fund Balances - Governmental Fund $ 4,235,683 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the fund balance sheet. Capital Assets 14,674,385 Accumulated Depreciation (4,863,145) 9,811,240 Some liabilities, including bonds, notes and leases payable, and compensated absences are not due and payable in the current period and therefore are not reported in the fund balance sheet. Certificates of Participation (3,860,000) Capital Leases (1,782,640) Compensated Absences (159,704) (5,802,344) Accrued interest payable is recognized for governmental activities, but is not due and payable in the current period and therefore is not reported as a liability in the governmental funds. (48,751) The internal service fund is used by management to charge the rental cost of certain vehicles and equipment to individual departments. The assets and liabilities of the internal service fund is included in governmental activities in the statement of net position. 407,670 Net Position of Governmental Activities $ 8,603,498 17

31 EAGLE RIVER FIRE PROTECTION DISTRICT STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2014 Debt Capital General Service Impact Fee Fund Fund Fund Total Revenues Taxes $ 8,210,770 $ - $ - $ 8,210,770 Licenses and Permits 53, ,019 Intergovernmental 124, , ,456 Charges for Services 1,024, ,024,069 Investment Earnings 5, ,214 Miscellaneous 18, ,956 Total Revenues 9,436, ,518 9,563,484 Expenditures Current: Support Services 1,763,218-7,580 1,770,798 Operations 6,180, ,180,777 Health, Wellness and Safety 48, ,925 Fire Prevention and Community Risk Mgmt. 170, ,691 Debt Service: Principal 364, , ,335 Interest 34, , ,060 Fiscal Charges - 3,000-3,000 Capital Outlay 1,602, ,602,466 Total Expenditures 10,164, ,993 7,580 10,574,052 Excess (Deficiency) of Revenues Over (Under) Expenditures (727,555) (401,951) 118,938 (1,010,568) Other Financing Sources (Uses) Capital Lease Issuance 571, ,620 Transfers In - 397, ,558 Transfers Out (731,530) - - (731,530) Total Other Financing Sources (Uses) (159,910) 397, ,648 Net Change in Fund Balances (887,465) (4,393) 118,938 (772,920) Fund Balances, Beginning of Year 4,501, , ,318 5,008,603 Fund Balances, End of Year $ 3,613,922 $ 399,505 $ 222,256 $ 4,235,683 The accompanying notes are an integral part of the financial statements. 18

32 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2014 Net change in fund balances - Total Governmental Funds $ (772,920) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, for governmental activities, those capital outlays other than noncapitalizable items are shown in the Statement of Activities and the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital Outlay 1,614,339 Depreciation (571,717) 1,042,622 Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Compensated Absences 83,347 Proceeds received from the issuance of capital leases provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Activities. (571,620) Repayment of principal on debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. Certificate of Participation Principal Payments 135,000 Capital Lease Principal Payments 364, ,335 In the Statement of Activities, interest is accrued on outstanding bonds, whereas in governmental funds, an interest expenditure is reported when due. (6,538) The internal service fund is used by management to charge the rental cost of certain vehicles and equipment to individual departments. The increase in net position of the internal service fund is included in governmental activities. 407,670 Change in Net Position of Governmental Activities $ 681,896 19