$9,000,000 VILLAGE OF LAKEMOOR MCHENRY AND LAKE COUNTIES, ILLINOIS

Transcription

1 $9,000,000 VILLAGE OF LAKEMOOR MCHENRY AND LAKE COUNTIES, ILLINOIS SPECIAL TAX REFUNDING BONDS, SERIES 2006 (LAKEMOOR SPECIAL SERVICE AREA NUMBER 97-1) ANNUAL CONTINUING DISCLOSURE REPORT FOR THE PERIOD ENDING SEPTEMBER 30, 2008 Prepared by MUNICAP, INC. January 9, 2009

2 $9,000,000 Village of Lakemoor McHenry and Lake Counties, Illinois Special Tax Refunding Bonds, Series 2006 (Lakemoor Special Service Area Number 97-1) Annual Continuing Disclosure Report For the Period Ending September 30, 2008 I. UPDATED INFORMATION 1 II. INTRODUCTION 2 III. TRUSTEE ACCOUNTS 5 IV. DISTRICT OPERATIONS 6 A. Village s Audited Financial Statements 6 B. Special Tax Requirement 6 C. Delinquency History 9 D. Tax Collection Efforts 10 V. DISTRICT FINANCIAL INFORMATION 11 A. Special Tax and Debt Service Coverage 11 B. Representative Property Taxes 11 C. Demographic Information 13 VI. SIGNIFICANT EVENTS 16

3 I. UPDATED INFORMATION Information provided below is updated as of September 30, 2008: Neumann Homes Inc. filed for Chapter 11 bankruptcy protection in October 2007, due to the significant downturn in the Detroit, Chicago and Denver housing markets, leaving approximately 66 units undeveloped in Discrete Component 12b. Neumann Homes Inc. was the developer for 219 townhouses in Discrete Components 12a and 12b. Special taxes were levied in 2007 for collection in 2008 in the aggregate amount of $605,043. Special taxes in the amounts of $208,453 and $396,590 were to be collected in 2008 by McHenry County and Lake County, respectively. As of December 5, 2008, McHenry County has reported collecting and disbursing to the village $206,363 in special taxes, representing 99.0 percent of special taxes to be collected by McHenry County in The outstanding balance of $2,090 was to be collected at tax sale on December 2, 2008, and the final distribution of special taxes will be transferred to the trustee in January As of December 5, 2008, Lake County has reported collecting and disbursing to the village $389,914 in special taxes, representing 98.4 percent of special taxes to be collected by Lake County in The uncollected balance of $6,676 was to be collected at tax sale on December 1 st and 2 nd 2008, and the final distribution of special taxes will be transferred to the trustee in January As of December 10, 2008, the treasurers offices for McHenry and Lake County report that the calendar year 2007 tax sale collection information was unavailable. Special taxes were levied in 2008 for collection in 2009 in the aggregate amount of $586,997. Special taxes in the amounts of $200,449 and 236,548 are to be collected in 2009 by McHenry and Lake County, respectively. The special taxes are due in June and September As a result, there are no delinquent special taxes for calendar year 2008 at this time. According to the Lake County Treasurer s website, the representative calendar year 2007 tax rate for a single family home and a townhouse unit located within School District 38 was per $100 of assessed value. According to the Lake County Treasurer s website, the tax rate applicable to School District 38 was and per $100 of assessed value. According to the McHenry County Treasurer s website, the representative calendar year 2007 tax rate for a single family home and a townhouse unit was per $100 of assessed value. According to the McHenry County Treasurer s website, the tax rate applicable to School District 15 was per $100 of assessed value. According to the U.S. Census Bureau s 2007 American Community Survey, the median household income for McHenry County, Lake County and the State of Illinois, were $73,286, $77,834 and $54,124, respectively. According to the U.S. Census Bureau s 2007 American Community Survey, the median value of homes in McHenry County, Lake County and the State of Illinois, were $262,100, $310,700 and $208,800, respectively. According to the Village of Lakemoor, the number of building permits issued for units located within the corporate limits of the village and the estimated construction costs associated with those units for 2007 were 93 and $20,599,500, respectively. There have been three rating changes on Radian Asset Assurance Inc., the Series 2006 Special Tax Refunding Bonds insurer by Standard & Poor s and Fitch Ratings. 1

4 II. INTRODUCTION The Village of Lakemoor, McHenry and Lake Counties, Illinois, Special Service Area Number 97-1 issued the $9,000,000 Series 2006 Special Tax Refunding Bonds to refund and defease the $9,000,000 Series 1997 Special Tax Bonds Lakemoor Special Service Area Number 97-1, which was created and bonds issued in 1997 by the Village of Lakemoor, Illinois, pursuant to and in accordance with (i) the Illinois Constitution of 1970, (ii) the Special Service Area Tax Law, (iii) an Ordinance of the village adopted on July 21, 1997, providing for the issuance of the bonds, and (iv) a trust indenture dated as of July 1, 1997, between the Village of Lakemoor and J.P. Morgan Trust Company (formerly American National Bank and Trust Company of Chicago, Illinois). The Series 2006 Special Tax Refunding Bonds were issued pursuant to and in accordance with (i) the Illinois Constitution of 1970, (ii) the Special Service Area Tax Law, (iii) Ordinance Number 06-O-12, which was adopted by the village on June 8, 2006, providing for the issuance of the bonds, and (iv) a trust indenture dated as of June 1, 2006, between the Village of Lakemoor and Bank of New York Trust Company (formerly J.P. Morgan Trust Company, National Association Chicago, Illinois). The special service area is located in Lakemoor, Illinois, and consists of acres of land located on the north side of Illinois Route 120 at the intersection with Darrell Road. The project is on the county line between Lake and McHenry Counties and is located in both counties. Principal access to the project is by means of Illinois Route 120 and Route 31. Route 31 is located four miles west of the project. Route 12 is located approximately two miles east of the project. Lakemoor is approximately 50 miles northwest of downtown Chicago and 40 miles northwest of O Hare International Airport. The property in the special service area was developed by Burnside s Lakemoor Farms, LLC (the Developer ), which is an affiliate of Burnside Construction Company. The Developer and William Ryan Homes, Inc. have completed building all homes under their respective contracts in the special service area. According to a company press release dated October 22, 2007, Neumann Homes Inc., the developer for 219 townhomes platted in Discreet Components 12a and 12b, filed for Chapter 11 bankruptcy protection in October, Upon completion, the special service area is expected to include 715 homes. The property these homes are being built on is the taxable property in the special service area. The bonds are payable solely from special taxes levied on taxable property within the special service area. Pursuant to the Official Statement, $9,000,000 in Special Tax Refunding Bonds (Series 2006) were sold and used to refund and defease the $9,000,000 in Special Tax Bonds (Series 1997). Series 1997 bond proceeds in the amount of $6,298,000 were used to construct the public improvements, consisting of roads, water and sewer improvements, and a park to serve the property within the special service area (this figure excludes interest earnings on the improvement fund, which will also be used to fund public improvements). The information provided herein is not intended to supplement or otherwise relate to the information provided in the Limited Offering Memorandum and any such intent is expressly disavowed. Rather, this report responds to the specific requirements of the continuing disclosure agreement. No representation is made as to the materiality or completeness of the information provided herein or as to whether other relevant information exists with respect to the period covered by this report. Other matters or events may have occurred or become known during or since that period that may be material. All information is provided as of September 30, 2008, unless otherwise stated, and no representation is made that the information contained in this report is indicative of information that may pertain since the end of the period covered by this report or in the future. 2

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7 III. TRUSTEE ACCOUNTS The trustee for the Series 2006 Refunding Bonds is the Bank of New York Trust Company (formerly J.P. Morgan Trust Company). The balance as of September 30, 2007, interest paid, disbursements and account balances as of September 30, 2008 are shown by the following table. Table III-1 Account Balances Balance 9/30/07 Interest Paid Additional Proceeds Disbursements Balance 9/30/08 Bond & Interest Fund $712,651 $23,584 $702,849 $662,325 $776,758 Special Redemption Fund $0 $241 $17,171 $21 $17,392 Reserve Fund $853,443 $29,679 $0 $20,808 $862,314 Administrative Expense Fund $20,921 $607 $32,000 $26,721 $26,806 Special Reserve Fund $50,926 $1,784 $0 $190 $52,520 Total $1,637,961 $55,896 $752,020 $710,066 $1,735,811 Additional proceeds to the Bond and Interest Fund represent transfers of special tax collections from McHenry and Lake Counties and a transfer of investment income in excess of the reserve requirement from the Reserve Fund. Additional proceeds to the Special Redemption Fund were from special tax prepayments on two townhouse units. Additional proceeds to the Administrative Expense Fund represent a transfer from the Bond and Interest Fund pursuant to Section 7.1 of the Trust Indenture for the payment of calendar year 2007 administrative expenses. Disbursements from the Bond and Interest Fund were for the payment of debt service and investment management fees. Disbursements from the Special Reserve Fund were for the payment of investment management fees. Proceeds in the Reserve Fund are invested in a Money Market Fund, which pays interest of approximately 2.01 percent. Table III-2 shows the rate of return on the funds and accounts held by the trustee as of September 30, Investment income in the Reserve Fund will be made available, first, to replenish the Reserve Fund, if the balance in the fund is at less than the reserve requirement; and second, applied to the payment of debt service. Investment income in the Special Reserve Fund will be made available, first, to replenish the Special Reserve Fund, if the balance in the fund is at less than the reserve requirement; and second, applied to the payment of debt service. Investment income on the Administrative Expense Fund will remain in that fund and be used for the purposes of that fund. Investment income on the Escrow Account will remain in that account and be used for the purposes of that account. Table III-2 Rate of Return Account Rate of Return Bond and Interest Fund 1.96% Special Redemption Fund 2.02% Reserve Fund 2.01% Administrative Expense Fund 2.01% Special Reserve Fund 1.90% 5

8 IV. DISTRICT OPERATIONS A. VILLAGE S AUDITED FINANCIAL STATEMENTS A copy of the village s audited financial statements for the fiscal year ending April 30, 2008 has been provided under separate cover. B. SPECIAL TAX REQUIREMENT The $9,000,000 Village of Lakemoor McHenry and Lake Counties, Illinois Special Service Area Number 97-1 Series 1997 Special Tax Bonds were refunded with the $9,000,000 Village of Lakemoor McHenry and Lake Counties, Illinois Special Service Area Number 97-1 Series 2006 Special Tax Refunding Bonds on June 21, A special tax is to be imposed each year within the Village of Lakemoor Special Service Area Number 97-1 in an amount sufficient to fund the Special Tax Requirement. The special tax requirement, generally, is equal to (i) annual debt service and administration expenses, less (ii) investment income and available capitalized interest. Special taxes are collected in June and September in the year after special taxes are levied. Special taxes collected in June 2009 will be made available to pay debt service on the bonds on September 1, 2009 and special taxes collected in September 2009 will be made available to pay debt service on the bonds on March 1, Accordingly, the special tax requirement for the special tax levied in December 2008 is based on the payments due on the bonds on September 1, 2009 and March 1, Table IV-1 provides a summary of the special tax requirement for The expenses of the special service area are expected to exceed the available revenues, excluding special taxes, by $587,000. An explanation of the estimated expenses and revenues follows. Table IV Special Tax Requirement Debt Service: Interest September 1, 2009 $209,732 Interest March 1, 2010 $209,732 Principal March 1, 2010 $230,000 Total Debt Service 2010 $649,464 Administration Expenses $32,640 Funding of Special Reserve Fund Requirement $0 Funding of Reserve Fund Requirement $0 Contingency $315,821 Sub-total Expenses $997,925 Reserve Fund Investment Income ($21,943) Special Reserve Fund Investment Income ($1,205) Surplus from Prior Year ($387,777) Special Tax Requirement for 2008 $587,000 6

9 (i) Debt Service Debt service includes the payments due on September 1, 2009 and March 1, The Term 2016 Bonds have been reduced with $3,000 in prepayments and $410,000 in regularly scheduled principal payments and the Term 2027 Bonds have been reduced with $9,000 in prepayments. Additional refunding bonds in the amount of $17,000 will be redeemed with special tax prepayments on townhouse unit 18 in Discreet Component 12b, which was collected in November 2007 and townhouse unit 14 in Discreet Component 12a, which was collected in May To be conservative, however, debt service is calculated based on current outstanding Term 2016 Bonds of $2,097,000 and the current outstanding Term 2027 Bonds of $6,481,000. Accordingly, each semi-annual interest payment is equal to $209,732 and is based on an annual coupon rate of 4.55 percent on the outstanding Term 2016 Bonds of $2,097,000 and 5.00 percent on the outstanding Term 2027 Bonds of $6,481,000. There is a principal payment due on March 1, 2010 equal to $230,000, resulting in total debt service of $649,464. (ii) Administrative Expenses Administration expenses generally include the trustee, the administrator, and the expenses of the village not paid directly by the developer. The annual charge of the trustee is estimated to be $4,090. The cost of the administrator for 2008 is estimated to be $20,241 (including charges for the Series 1997 and 2006 arbitrage rebate and the Series 2006 continuing disclosure services). The expenses of the village not paid directly by the developer are estimated to be $7,669. Increasing these amounts by two percent, total administration expenses for 2008 are estimated at $32,640. (iii) Funding of the Special Reserve Fund Requirement According to Section 7.3 of the Trust Indenture for the Series 2006 Refunding Bonds, special taxes shall be deposited into the Special Reserve Fund in accordance with Section 7.1(c) until the amounts on deposit in the Special Reserve Fund equal the Special Reserve Fund Requirement. The Special Reserve Fund Requirement is equal to $50,000. As of October 31, 2008, the balance in the Special Reserve Fund was $52,605. As a result, the Special Reserve Fund has been fully funded. (iv) Funding of the Reserve Fund Requirement According to Section 7.2 of the Series 2006 Refunding Bonds Trust Indenture, the balance of the reserve requirement, which is equal to $112,523 ($850,500 - $737,978 - $15,978 = $112,523), is to be funded with deposits to the Reserve Fund from special taxes, investment income and recapture payments until the reserve requirement of $850,500 is fully funded. As of October 31, 2008, the balance in the Reserve Fund was $863,807. As a result, the Reserve Fund Requirement has been fully funded. (v) Contingency A contingency has been added in the event there are tax delinquencies, unanticipated expenses, or investment income is less than estimated. The contingency will be reduced pro-rata each year over the remaining lifetime of the Series 2006 Refunding Bonds by dividing the current contingency by the number of years remaining until the Term 2027 Bonds are redeemed in full. (vi) Reserve Fund Investment Income As of October 31, 2008, the Reserve Fund balance was $863,807, which includes the reserve requirement of $850,500 and investment income posted to the fund in the amount of $13,307. According to Section 7.2 of the Trust Indenture for the Series 2006 Refunding Bonds, funds in excess of the reserve requirement are to be transferred to the Bond Fund to pay debt service. The reserve requirement is invested in a J.P. Morgan Liquid Assets Money Market Fund currently earning 2.58 percent per annum. As a result, 7

10 an estimated $7,314 in investment income will be earned on the Reserve Fund through March 1, 2009, which together with the $13,307 investment income currently available in the Reserve Fund, will be used to pay debt service on March 1, An additional $21,943 in annual investment income is estimated to be earned in the Reserve Fund through March 1, 2010, which may be used to pay debt service on September 1, 2009 and March 1, (vii) Special Reserve Fund Investment Income As of October 31, 2008, the Special Reserve Fund balance was $52,605, which includes the special reserve fund requirement of $50,000 and investment income posted to the fund in the amount of $2,605. According to Section 1.3 of the Trust Indenture for the Series 2006 Refunding Bonds, the special reserve fund requirement is not to exceed $50,000 in any year. As a result, funds in excess of the special reserve fund requirement are to be transferred to the Bond Fund to pay debt service. The special reserve fund requirement is invested in a J.P. Morgan Liquid Assets Money Market Fund currently earning 2.41 percent per annum. As a result, an estimated $402 in investment income will be earned on the Special Reserve Fund through March 1, 2009, which together with the $2,605 investment income currently available in the Special Reserve Fund, will be used to pay debt service on March 1, An additional $1,205 in annual investment income is estimated to be earned in the Special Reserve Fund through March 1, 2010, which may be used to pay debt service on September 1, 2009 and March 1, (viii) Surplus from Prior Year The estimated surplus from the prior year that may be applied to pay debt service and pay administrative expenses for calendar year 2008 is shown in Table IV-2. Special taxes were levied in 2007 for collection in 2008 in the amount of $605,043. Special taxes were due on June 5 th and September 5 th, McHenry County was to collect $208,453 in special taxes and Lake County was to collect $396,590 in special taxes. As of November 18, 2008, the McHenry County Treasurer has reported collecting $205,152 in special taxes. Of this amount, $204,468 had been transferred to the trustee as of October 31, The balance of the special taxes collected by McHenry County in the amount of $684 will be transferred to the trustee in November The outstanding balance of $3,302 is to be collected at tax sale on December 2, 2008 and the final distribution of special taxes will be transferred to the trustee in January As of November 18, 2008, the Lake County Treasurer has reported collecting $389,914 in special taxes. Of this amount, $382,383 had been transferred to the trustee as of October 31, The balance of the special taxes collected in the amount of $7,531 will be transferred to the trustee in November The uncollected balance of $6,676 will be collected at tax sale on December 1 st and 2 nd 2008 and the final distribution of special taxes will be transferred to the trustee in January The delinquent balances for each county are not included in the calculation of the surplus. 8

11 Table IV-2 Surplus from the Prior Year Account Balances Available: CY07 Special taxes to be transferred in November 2007 ($8,215) Available Reserve Fund ($20,622) Available Special Reserve Fund ($3,007) Bond Fund balance at October 31, 2008 ($780,363) Cost of Issuance balance at October 31, 2008 ($21) Administrative Expense Fund balance at October 31, 2008 ($26,853) Sub-total available funds ($839,080) Debt service March 1, 2008 $429,623 Administrative expenses $21,680 Surplus from prior year ($387,777) Account balances and investment income estimated to be available to pay debt service on March 1, 2009 and pay the balance of the calendar year 2007 administrative expenses include $20,622 in the Reserve Fund (i.e., the current surplus of $13,307 plus Reserve Fund investment income of $7,314 earned through March 1, 2009), $3,007 in the Special Reserve Fund (i.e., the current surplus of $2,605 plus Reserve Fund investment income of $402 earned through March 1, 2009), $780,363 in the Bond Fund and $21 in the Cost of Issuance Account. As of October 31, 2008, the balance in the Administrative Expense Fund was $26,853. The annual administrative expense budget for the special service area was $32,000 for calendar year As of October 31, 2008, administrative expenses totaling $10,320 had been paid. As a result, a balance of $21,680 ($32,000 $10,320 = $21,680) in administrative expenses will have to be funded with special taxes collected in Debt service includes the semi-annual interest and principal payments due on March 1, The Term 2016 Bonds have been reduced with $3,000 in prepayments and $195,000 in regularly scheduled principal payments and the Term 2027 Bonds have been reduced with $9,000 in prepayments. As a result, debt service is calculated based on the outstanding Term 2016 Bonds of $2,312,000 and an annual coupon rate of 4.55 percent and the outstanding Term 2027 Bonds of $6,481,000 and an annual coupon rate of 5.00 percent. Accordingly, the March 1, 2009 semi-annual interest payment is equal to $214,623. There is a principal payment due on March 1, 2009 equal to $215,000, resulting in total debt service of $429,623. Subtracting out the March 1, 2009 debt service payment and the balance of the administrative expenses for calendar year 2007 results in an estimated surplus from the prior year of $387,777 that may be applied to pay debt service and administrative expenses for calendar year C. DELINQUENCY HISTORY Special taxes were levied in 2007 for collection in 2008 in the aggregate amount of $605,043. Special taxes in the amount of $208,453 were to be collected in 2008 by McHenry County. As of December 5, 2008, McHenry County has reported collecting and disbursing to the village $206,363 in special taxes, representing 99.0 percent of special taxes to be collected by McHenry County in The outstanding balance of $2,090 was to be collected at tax sale on December 2, 2008, and the final distribution of special taxes will be transferred to the trustee in January As of December 10, 2008, the treasurer s office for McHenry County reports that the calendar year 2007 tax sale collection information was unavailable. Special taxes in the amount of $396,590 were to be collected in 2008 by Lake County. As of 9

12 December 5, 2008, Lake County has reported collecting and disbursing to the village $389,914 in special taxes, representing 98.4 percent of special taxes to be collected by Lake County in The uncollected balance of $6,676 will be collected at tax sale on December 1 st and 2 nd 2008, and the final distribution of special taxes will be transferred to the trustee in January As of December 10, 2008, the treasurer s office for Lake County reports that the calendar year 2007 tax sale collection information was unavailable. Special taxes were levied in 2008 for collection in 2009 in the aggregate amount of $586,997. Special taxes in the amounts of $200,449 and 236,548 are to be collected in 2009 by McHenry and Lake County, respectively. The special taxes are due in June and September As a result, there are no delinquent special taxes for calendar year 2008 at this time. Table IV-3 below provides the summary of special tax collection and delinquency history for the village prior to tax sale. The table includes the calendar year in which special taxes were levied, the special tax levied, the special tax collected, the special taxes uncollected prior to the tax sale and percent delinquent prior to the tax sale. Special taxes are due in June and September in the following year in which special taxes are levied. The tax sale typically takes place in late November each year. Table IV-3 Special Tax Collections and Delinquency History Calendar Year Special Tax Levied Special Tax Collected Special Taxes Uncollected Prior to Tax Sale Percent Delinquent Prior to Tax Sale 2000 $708,290 $689,712 $18, % 2001 $680,000 $611,041 $68, % 2002 $680,000 $676,145 $3, % 2003 $773,806 $762,417 $11, % 2004 $750,122 $726,254 $23, % 2005 $789,554 $760,886 $28, % 2006 $647,430 $637,948 $9, % 2007 $605,043 $605,043 $8, % D. TAX COLLECTION EFFORTS As of December 5, 2008, the treasurer s office for McHenry County reports that calendar year 2007 special taxes in the amount of $2,090 remain outstanding. The uncollected balance was to be collected by McHenry County at tax sale on December 2, 2008, and the final distribution of special taxes will be transferred to the trustee in January As of December 10, 2008, the treasurer s office for McHenry County reports that the calendar year 2007 tax sale collection information was unavailable. As of December 5, 2008, the treasurer s office for Lake County reports that calendar year 2007 special taxes in the amount of $6,675 remain outstanding. The uncollected balance was to be collected by Lake County at tax sale on December 1 st and 2 nd 2008, and the final distribution of special taxes will be transferred to the trustee in January As of December 10, 2008, the treasurer s office for Lake County reports that the calendar year 2007 tax sale collection information was unavailable. 10

13 V. DISTRICT FINANCIAL INFORMATION A. SPECIAL TAX AND DEBT SERVICE COVERAGE The following debt service schedule is adjusted to reflect the actual debt service and debt service reserve earnings as per the Continuing Disclosure Agreement. The Reserve Fund earnings, trustee and administrative fees, and adjusted debt service for the bond year ending 2008 are actual figures. Debt service reflects an additional $12,000 in Series 2006 Refunding Bonds redeemed with prepayments through September 30, As of September 30, 2008, the outstanding Series 2006 Refunding Bonds were equal to $8,793,000. Bond Year Ending Debt Service Table V-1 Special Tax and Debt Service Coverage Estimated Trustee and Administrative Fees Estimated Reserve Fund Earnings Projected Adjusted Debt Service Maximum Special Taxes Projected Debt Service Coverage 2008 $633,119 $31,834 ($36,629) $628,324 $969, $644,246 $32,000 ($40,059) $636,187 $988, $649,464 $32,640 ($21,943) $660,161 $1,008, $663,999 $21,227 ($25,515) $659,711 $1,028, $672,396 $21,546 ($25,515) $668,427 $1,049, $684,884 $21,869 ($25,515) $681,238 $1,070, $690,234 $22,197 ($25,515) $686,916 $1,091, $700,719 $22,530 ($25,515) $697,734 $1,113, $715,067 $22,868 ($25,515) $712,420 $1,135, $729,050 $23,211 ($25,515) $726,746 $1,158, $733,800 $23,559 ($25,515) $731,844 $1,181, $751,300 $23,912 ($25,515) $749,697 $1,205, $757,850 $24,271 ($25,515) $756,606 $1,229, $772,900 $24,635 ($25,515) $772,020 $1,253, $785,950 $25,005 ($25,515) $785,440 $1,279, $797,000 $25,380 ($25,515) $796,865 $1,304, $811,050 $25,760 ($25,515) $811,295 $1,330, $822,850 $26,147 ($25,515) $823,482 $1,357, $837,400 $26,539 ($25,515) $838,424 $1,384, $849,450 $26,937 ($25,515) $850,872 $1,412, B. REPRESENTATIVE PROPERTY TAXES Table V-2 on the following page describes the general ad valorem taxes based on the current tax rate that was assessed against a randomly selected single family home and a townhouse unit in Lake County for calendar year According to the Lake County Treasurer s website, the representative calendar year 2007 tax rate for a single family home and a townhouse unit located within School District 38 was per $100 of assessed value. According to the Lake County Treasurer s website, the tax rate applicable to School District 38 was per $100 of assessed value. 11

14 Table V-2 Parcels in Lake County Single Family Home Townhouse Market Value $256,128 $173,322 Assessed Value $85,376 $57,774 Multiplier 1 1 Average Homeowner's Exemption $5,000 $5,000 Taxable Valuation $80,376 $52,774 Taxing Agency Tax Rate Per $100 of Assessed Value Tax Rate Per $100 of Assessed Value County of Lake Village of Lakemoor Road and Bridge Fox Lake Fire Protection District Fox lake Public Library District School District College of Lake County High School Special Road Improvement Grant Gravel Northern Moraine Wastewater Reclamation Forest Preserve Township of Grant Total Tax Rate Representative Ad Valorem Tax $5,586 $3,668 Table V-3 on the following page describes the general ad valorem taxes based on the current rate that was assessed against a randomly selected single family home and a townhouse unit in McHenry County for calendar year According to the McHenry County Treasurer s website, the representative calendar year 2007 tax rate for a single family home and a townhouse unit was per $100 of assessed value. According to the McHenry County Treasurer s website, the tax rate applicable to School District 15 was per $100 of assessed value. 12

15 C. DEMOGRAPHIC INFORMATION (i) Household Income Table V-3 Parcels in McHenry County Single Family Home Townhouse Market Value $275,211 $154,002 Assessed Value $91,737 $51,334 Multiplier 1 1 Average Homeowner Exemption $5,000 $5,000 Taxable Valuation $86,737 $46,334 Taxing Agency Tax Rate Per $100 of Assessed Value Tax Rate Per $100 of Assessed Value McHenry County McHenry County Conservation McHenry CC School District School District McHenry Fire District McHenry Nunda Library Northern Moraine W R McHenry Township Road and Bridge Lakemoor Village Total Tax Rate Representative Ad Valorem Tax $5,636 $3,011 Table V-4 on the following page provides the 2007 projected household income distributions for McHenry County, Lake County, and the State of Illinois. According to the U.S. Census Bureau s 2007 American Community Survey, the median household income for McHenry County, Lake County and the State of Illinois, were $73,286, $77,834 and $54,124, respectively. The distribution of the household income for the Village of Lakemoor is based on the 2000 Census with a median income of $56,217, as shown in the Official Statement. 13

16 Table V-4 Household Income Village of Income Lakemoor McHenry County Lake County State of Illinois Number Percent Number Percent Number Percent Number Percent $0 - $24, % 12, % 28, % 1,058, % $25,000 - $49, % 19, % 42, % 1,131, % $50,000 - $74, % 22, % 41, % 925, % $75,000 - $99, % 18, % 35, % 623, % $100,000 -$199, % 28, % 61, % 812, % $200,000 or more 7 0.7% 5, % 24, % 208, % Total 1, % 106, % 233, % 4,759, % Source: U.S Census Bureau: 2007 American Community Survey (ii) Age Statistics Table V-5 below provides the 2007 age group statistics for McHenry County, Lake County, and the State of Illinois as reported by the U.S. Census Bureau s 2007 American Community Survey. The age group statistics for the Village of Lakemoor are based on the 2000 Census as shown in the Official Statement. Age Groups Source: U.S Census Bureau: 2007 American Community Survey Table V-5 Age Statistics Village of Lakemoor McHenry County Lake County State of Illinois Number Percent Number Percent Number Percent Number Percent 0-14 years % 70, % 163, % 2,643, % years % 84, % 190, % 3,615, % years % 114, % 258, % 4,462, % years % 42, % 89, % 1,904, % 85 + years % 3, % 7, % 226, % Total 2, % 315, % 710, % 12,852, % (iii) Median Home Value Table V-6 on the following page provides the 2007 median home value for McHenry County, Lake County, and the State of Illinois. According to the U.S. Census Bureau s 2007 American Community Survey, the median value of homes in McHenry County, Lake County and the State of Illinois, were $262,100, $310,700 and $208,800, respectively. The distribution of median home value for the Village of Lakemoor is based on the 2000 Census with a median value of $147,200, as shown in the Official Statement. 14

17 Year Village of Lakemoor Table V-6 Median Home Value McHenry County Lake County State of Illinois 2007 n/a $262,100 $310,700 $208, $147,200 $168,100 $198,200 $130, n/a $111,000 $136,700 $80, n/a n/a $62,900 $52,800 Source: US Census Bureau 2007 American Community Survey (iv) Building Permits According to the Village of Lakemoor, the number of building permits issued for the construction of privately owned residential units within the corporate limits of the village and the estimated construction costs associated with those units from 1997 through 2007 are provided in Table V-7 below. Table V-7 Building Permits Year Number of Permits Construction Cost $4,017, $17,555, $46,560, $20,830, $11,325, $54,250, $31,555, $26,815, $6,450, $34,864, $20,599,500 15

18 VI. SIGNIFICANT EVENTS Pursuant to the continuing disclosure agreement, listed events include the following: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) principal or interest payment delinquencies; non-payment related defaults; modification to rights of owners of the bonds; optional, contingent or unscheduled calls of the bonds; defeasances; rating changes; adverse tax opinions or events affecting the tax-exempt status of the bonds; unscheduled draws on any reverse fund for the bonds reflecting financial difficulties; unscheduled draws on any credit enhancements reflecting financial difficulties; substitution of any credit of liquidity facility providers or their failure to perform; release, substitution or sale of property (other than the sale of homes in the ordinary course) securing repayment of the bonds. Neumann Homes Inc. filed for Chapter 11 bankruptcy protection in October 2007, due to the significant downturn in the Detroit, Chicago and Denver housing markets, leaving approximately 66 units undeveloped in Discrete Component 12b. Neumann Homes Inc. was the developer for 219 townhouses in Discrete Components 12a and 12b. The notices listed below were filed with the NRMSIR on September 20, 2007, June 23, 2008 and August 28, (i) (ii) (iii) On September 5, 2007, Fitch Ratings downgraded Radian Asset Assurance Inc. insured ratings from AA to A+ On June 16, 2008, Standard & Poor s downgraded Radian Asset Assurance Inc. insured ratings from AA to A. On August 26, 2008, Standard & Poor s downgraded Radian Asset Assurance Inc. insured ratings from A to BBB+. Other than the filing for Chapter 11 bankruptcy protection by Neumann Homes and the rating changes described above, the administrator is not aware of the occurrence of any other significant events as of the date of this report. 16

19 Village oflakemoor Financial Statements with Supplementary Information For the Year Ended April 30, 2008

20 VILLAGE OF LAKEMOOR, ILLINOIS CONTENTS Pages Management's Discussion and Analysis 1-4 Independent Auditors' Report 5 Financial Statements Exhibit Government-wide Statement ofnet Assets A 6 Government-wide Statement ofactivities and Changes in Net Assets B 7 Governmental Funds Combined Balance Sheet C 8 Governmental Funds Combined Statement of Revenue, Expenditures And Changes in Fund Balances 0 9 Enterprise Fund Type Combined Statement ofincome, Expenses And Changes in Municipal Equity E 10 Enterprise Fund Type Combined Statement ofcashflows F II Notes to Financial Statements Supplementary Infonnation General Fund Statement ofrevenue and Comparison with Estimated Revenue 18 Comparison ofexpenditures and Appropriations

21 VILLAGE OF LAKEMOOR, ILLINOIS CONTENTS (Continued) Supplementary Information (Continued) Special Revenue Funds Schedule Motor Fuel Tax Fund Statement ofrevenue and Expenditures (and Comparison with Estimated Revenue and Appropriations) and Changes in Fund Balance Enterprise Funds Water and Garbage Funds Combining Balance Sheet Comparison ofexpenditures with Appropriations Fiduciary Funds Statement ofcbanges in Assets and Liabilities

22 VILLAGE OF LAKEMOOR, ILLINOIS MANAGEMENTS DISCUSSION AND ANALYSIS As management of the Village of Lakemoor, Illinois (Village), we offer readers of the Village's statement this narrative overview and analysis of the financial activities of the Village for the fiscal year ended April 30, We encourage readers to consider the information presented here in conjunction with the additional information found in the notes to the financial statements. FINANCIAL HIGHLIGHTS l' The assets ofthe Village exceeded its liabilities at April 30, 2008 by $19,955,861 (net assets). Unrestricted net assets, which are assets that may be used to meet the Village's ongoing obligations to citizens and creditors, are $6,979,003 at April 30, l' The Village's total net assets increased. l' At April 30, 2008, the Village's governmental funds reported combined ending fund halances of$6,287,572. l' At April 30, 2008, the unreserved fund balance for the General Fund was $5,626,452. OVERVIEW OF THE FINANCIAL HIGHLIGHTS TIlls discussion and analysis is intended to serve as an introduction to the Village's basic financial statements. The Village's basic fmancial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) noted to the financial statements. Both perspectives (government-wide and fund level financial statements) allow the user to address relevant questions, broaden a basis for comparison (year to year or government to government) and enhance the Village's accountability. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements - The government-wide financial statements are designed to provide readers with a broad overview ofthe Village's finances, in a manner similar to a private-sector business. The Statement ofnet Assets presents information on all ofthe Village's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position ofthe Village is improving or deteriorating. The Statement of Activities presents information showing how the Village's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless ofthe timing ofrelated 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., uncollected taxes and earned but unpaid salaries). Both of the government-wide financial statements distinguish functions ofthe Village 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 (husiness-type activities). The governmental activities of the Village include general government, public works, emergency services and police protection, and parks and recreation. The business-type activities include water and garbage operations. Fund financial statements - A fund is a grouping of related accounts this is used to maintain control over resources that have been segregated for specific activities and objectives. The Village, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All ofthe funds ofthe Village can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. -1-

23 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 fmancial 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 ofthe government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the Village'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 Village maintains one individual government fund. 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, which is considered to be a major fund. Information on the other governmental fund is presented as nonrnajor governmental funds in total. Proprietary funds - The Village maintains two proprietary funds/enterprise funds. Enterprise funds are used to report the same functions presented as business-type activities in the government wide financial statements. The Village uses enterprise funds to account for its waterand garbageoperations. Proprietary funds provide the same type of information as the government-wide fmancial statements, only in more detail. The proprietary funds' financial statements provide information for the water and garbage operations. Fiduciary funds - Fiduciary funds are used to account for resources held for the benefit of parties outside the Village. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the Village's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the financial statements - The notes provide additional information that is essential to a full understanding ofthe data provided in the government-wide and fund financial statements. Other information - In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Village's progress in meeting its obligation to provide as fully adequate as possible services to its citizens. The Village adopts an annual appropriation ordinance for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with the appropriation ordinance. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator ofa government's financial position. In the case of the Village, assets exceeded liabilities by $19,955,861 at April 30, The largest portion of the Village's net assets reflects its investment in capital assets (e.g., land, buildings and improvements, office equipment, vehicles, and equipment), less any related debt used to acquire those assets that is still outstanding. The Village uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. -2-

24 The remaining portion of the Village's net assets represents resources that are subject to external restrictions on how they may be used. Unrestricted net assets, which are assets which may be used to meet the Village's ongoing obligations to citizens and creditors, are $6,979,003 at April 30, Current assets Capital assets TOTAL ASSETS $ 7,564,689 $ 7,954,286 12,372,009 12,602,545 19,936,698 20,556,831 Other liabilities TOTAL LIABILITIES 571, , , ,970 Net Assets Investment in capital assets, net of debt Designated assets 12,372, ,734 12,602, ,313 Unrestricted assets 6,582,759 6,979,003 TOTAL NET ASSETS $ 19,365,502 $ 19,955,861 Revenue Property tax Other $ 435,825 3,859,869 $ 462,664 3,239,607 TOTAL Revenue 4,295,694 3,702,271 Expenses - Village Services 4,012,121 3,615,180 CHANGES $ 283,573 $ 87,091 Governmental funds - The focus of the Village's governrnental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Village's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the Village's net resources available for spending at the end ofthe fiscal year. At April 30, 2008, the Vi11age's governrnental funds reported combined ending fund balances of $6,287,572. The General Fund is the chief operating fund of the Vi11age. At April 30, 2008, unreserved fund balance of the General Fund was $5,626,452. As a measure ofthe General Fund's liquidity, it may be useful to compare unreserved fund balance to total General Fund expenditures. Proprietary funds - The Village's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Other factors concerning the finances of these funds have already been addressed in the discussionofthe Vi11age's business-type activities. GENERAL FUND BUDGETARY HIGHLIGHTS The Vi11age did notamend theappropriation ordinance during theyear endedapril 30, However, the Board did approve several line item transfers within the funds. The difference between budgeted expenditures and actual expenditures was $4,301,539 (favorable). -3-

25 CAPITAL ASSETS Capital assets - The Village's investment in capital assets for its governmental and business-type activities as ofapril 30, 2008 ammmts to $12,602,545 (net ofaccumulated depreciation). This investment in capital assets includes land, buildings and improvements, office equipment, vehicles, and equipment. Land System and improvements Building and improvements Vehicles and equipment $ ,747,684 5,042,191 1,705, ,637 $ ,747,684 5,042,191 2,045, ,072 TOTAL ASSETS 14,165,383 14,667,060 Accumulated depreciation (1,793,374) (2,064,515) TOTAL CAPITAL ASSETS $ 12,372,009 $ 12,602,545 ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES Major factors utilized to prepare Village Budget for fiscal year 2008 and affecting the Appropriation Ordinance for fiscal year 2008 include: ~ Appropriations oflarger amounts in Public Works and Roads accounts for capital expenditures in Real Property in anticipation ofpurchase/construction ofa Public Works facility. ~ Increase in garbage contract rates and implementation ofvillage administration charge, per household, to avoid shortfall in Garbage Fund. REQUESTS FOR INFORMAnON This fmancial report is designed to provide a general overview of the Village's finances for all those with an interest in the Village's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to: Village Treasurer Village of Lakemoor 234 W. Rand Road Lakemoor, IL

26 To the President and Members ofthe Board oftrustees Village oflakemoor, Illinois GEORGE ROACH & ASSOCIATES, P.e. 44 N. Walkup Ave. Crystal Lake, IL 600 I4 (815) Fax: (815) INDEPENDENT AUDITORS' REPORT We have audited the accompanying basic fmancial statements ofthe Village oflakemoor, Illinois April 30, 2008, and for the year then ended, as listed in the table ofcontents. These fmancial statements are the responsibility ofthe Village of Lakemoor management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofamerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the basic fmancial statements referred to above present fairly, in all material respects, the fmancial position ofthe Village oflakemoor, Illinois as ofapril 30, 2008, and the changes in fmancial position for the year then ended, in conformity with accounting principles generally accepted in the United States ofamerica. Our audit was made for the purpose offorming an opinion on the basic fmancial statements taken as a whole. The required supplemental information listed in the fmancial section ofthe table ofcontents is presented for the purpose ofadditional analysis and is not a required part ofthe basic fmancial statements ofthe Village oflakemoor, Illinois. This information has been subjected to the procedures applied in the audit ofthe basic fmancial statements and, in our opinion, is fairly stated in all material respects in relation to the basic fmancial statements taken as a whole. The management discussion and analysis included in the fmancial section ofthe table ofcontents is presented for the purpose ofadditional analysis and is not a required part ofthe basic fmancial statements ofthe Village oflakemoor. We did not examine this data and, accordingly, do not express an opinion thereon. -5-

27 EXHIBIT A VILLAGE OF LAKEMOOR, ILUNOS GOVERNMENT WIDE STATEMENT OF NET ASSETS Year Ended April 30, 2008 Primary Government Governmental Business-Type Activities Activities Total ASSETS Cash and investments, at cost $ 5,935,296 $ 1,021,903 $ 6,957,199 Accounts receivable 29,058 71, ,588 Property tax receivable 502,358 7, ,946 Prepaid expenses 41,256 7,071 48,327 Due from other governments 229, ,124 Intangible assets 109, ,102 Fixed Assets 8,579,857 4,022,688 12,602,545 TOTAL ASSETS $ 15,426,051 $ 5,130,780 $ 20,556,831 LIABILITIES Accounts payable/accruals Deferred property taxes $ 56,264 $ 502,358 34,760 $ 7,588 91, ,946 TOTAL LIABILITIES 558,622 42, ,970 NET ASSETS Investment in capital assets, net of related debt Designated fund balance Unrestricted fund balance 8,579, ,313 5,913,259 4,022,688 1,065,744 12,602, ,313 6,979,003 Total Net Assets $ 14,867,429 $ 5,088,432 $ 19,955,861 The accompanying notes are an integral part of these statements. -6-

28 EXHIBIT B VILLAGE OF LAKEMOOR, ILUNOS GOVERNMENT WIDE STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS Year Ended April 30, 2008 Primary Government Governmental Business-Type Activities Activities Total REVENUE Property taxes $ 455,752 $ 6,911 $ 462,663 User fees 657, ,083 Intergovernmental revenue 1,154,530 1,154,530 Licenses, fees, and permits 337, ,802 Utility taxes 217, ,926 Fines 168, ,363 Grants and donations 35,643 35,643 Interest income 283,280 39, ,203 Miscellaneous revenue 342,808 2, ,058 TOTAL REVENUE 2,996, ,167 3,702,271 EXPENDITURES Executive and legislative 305,924 '305,924 Legal and judiciary 155, ,801 Clerk's office 14,180 14,180 Planning and zoning department 11,814 11,814 Police department 1,083,372 1,083,372 Operation and maintenance 339, , ,933 Public works 430, ,409 Road department 349, ,509 Economic development 7,111 7,111 Parks department 107, ,986 Depreciation 133, , ,141 TOTAL EXPENDITURES 2,938, ,638 3,615,180 Net increase In assets 57,562 29,529 87,091 MUNICIPAL NET ASSETS Balance, beginning of year 14,809,867 5,058,903 19,868,770 TOTAL MUNICIPAL NET ASSETS $ 14,867,429 $ 5,088,432 $ 19,955,861 The accompanying notes are an integral part of these statements. -7-

29 VILLAGE OF LAKEMOOR, ILLINOIS GOVERNMENTAL FUNDS COMBINED BALANCE SHEET Year Ended April 30, 2008 EXHIBITC Other General Governmental ASSETS Fund Funds Total Cash and Investments $ 5,659,160 $ 276,136 $ 5,935,296 Accounts receivable, net 29,058 29,058 Property taxes receivable, current levy net of 1% allowance for loss 502, ,358 Prepaid expenses 41,256 41,256 Due from other governmental units 218,453 10, ,124 Intangible assets 109, ,102 TOTAL ASSETS $ 6,559,387 $ 286,807 $ 6,846,194 LIABILITIES Accounts payable and accrued expenses $ 56,264 $ $ 56,264 Deferred revenue 502, ,358 TOTAL LIABILITIES 558, ,622 MUNICIPAL EQUITY Designated fund balance 374, ,313 Fund balance 5,626, ,807 5,913,259 TOTAL MUNICIPAL EQUITY 6,000, ,807 6,287,572 TOTAL LIABILITIES AND MUNICIPAL EQUITY $ 6,559,387 $ 286,807 Adjustments to reconcile to Net Assets Amounts reported for governmental acttvttles In the statementl of net assets are dtfferent because: Capital assets used In governmental fund, are not flnanclal resources and therefore anll not reported In the funds. 8,579,857 The accompanying notes are an integral part of these statements. Total Net Assets $ 14,867,429-8-

30 EXHIBIT D VILLAGE OF LAKEMOOR, ILLINOIS COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUND TYPES Year Ended April 30, 2008 Other General Governmental Fund Fund Total REVENUE Property taxes $ 455,752 $ $ 455,752 Intergovernmental revenue 1,021, ,084 1,154,530 Utility taxes 217, ,926 Licenses, fees, and permits 337, ,802 Fines 168, ,363 Grants and donations 35,643 35,643 Interest income 262,371 20, ,280 Miscellaneous revenue 342, ,808 TOTAL REVENUE 2,842, ,993 2,996,104 EXPENDITURES Executive and legislative 305, ,924 Legal and judiciary 155, ,801 Clerk's office 14,180 14,180 Planning and zoning department 11,814 11,814 Economic development 7,111 7,111 Police department 1,083,372 1,083,372 Operation and maintenance 339, ,242 Public works 430, ,409 Road department 366, ,054 Parks department 107, ,986 TOTAL EXPENDITURES 2,482, ,242 2,821,893 EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES AND OTHER USES 359,460 (185,249) 174,211 MUNICIPAL EQUITY Balance, beginning of year 5,641, ,056 6,113,361 TOTAL MUNICIPAL EQUITY $ 6,000,765 $ 286,807 6,287,572 Amounts reported for governmental aetlvftles In the statements of net aueta are different because: Capital aneta used In governmental funds are not financial resources and therefore are not reported In the fund. 8,713,051 Depreciation recorded In Statement of Activities not recorded In the fund. (133,194) Total Governmental Net Assets $ 14,867,429 The accompanying notes are an Integral part of these statements. -9-

31 EXHIBIT E VILLAGE OF LAKEMOOR, ILLINOIS COMBINED WATER FUND AND GARBAGE FUND STATEMENT OF INCOME AND CHANGES IN MUNICIPAL EQUITY Year Ended April 30, 2008 Water Garbage REVENUE Fund Fund Total Water charges $ 297,421 $ $ 297,421 Garbage fees 350, Penalties 4,095 5,538 9,633 Properly tax 6, Other 2, TOTAL REVENUE 303, , ,244 EXPENSES Personal services 99, ,019 Contractual services 34, , ,143 Commodities 24,171 4,743 28,914 Maintenance and repair 39, TOTAL EXPENSES 197, ,691 OPERATING INCOME 106, BEFORE DEPRECIATION DEPRECIATION 137, OPERATING INCOME (31,905) (10.394) OTHER INCOME/{EXPENSE) Interest income 39, ,923 TOTAL OTHER INCOME (EXPENSE) 39, ,923 NET INCOME/(LOSS) 7,736 21,793 29,529 MUNICIPAL EQUITY Balance, beginning of year 5.014,829 44, ,903 TOTAL MUNICIPAL EQUITY $ 5,022,565 $ 65,867 $ 5,088,432 The accompanying notes are an integral part of these statements. -10-

32 EXHIBIT F VILLAGE OF LAKEMOOR, ILLINOIS COMBINED ENTERPRISE FUND - WATER FUND AND GARBAGE FUND STATEMENT OF CASHFLOWS Year Ended April 30, 2008 Water Garbage Fund Fund Total CASHFLOWS FROM OPERATING ACTIVITIES Net income! (loss) for the year $ 7,736 $ 21,793 $ 29,529 ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation!Amortization 137, ,947 (Increase)/decrease in accounts receivable (14) (5,538) (5,552) (Increase)/decrease in property tax (830) (830) (Increase)/decrease in prepaid expenses Increasel(decrease) in accounts payable 3,747 28,616 32,363 Increasel(decrease) in deferred revenue NET CASH PROVIDED BY OPERATING ACTIVITIES 150,105 45, ,201 CASHFLOWS FROM INVESTING ACTIVITIES CASHFLOWS FROM FINANCING ACTIVITIES NET INCREASE! (DECREASE) IN CASH 150,105 45, ,201 CASH AT BEGINNING OF YEAR 818,421 8, ,702 CASH AT END OF YEAR $ 968,526 $ 53,377 $ 1,021,903 The accompanying notes are an integral part of these statements

33 (1) Summary of significant accounting policies VILLAGE OF LAKEMOOR, ILLINOIS NOTES TO FINANCIAL STATEMENTS Year Ended April 30, 2008 The accounting policies ofthe Village oflakemoor, Illinois (the Village) confonn to accounting principles generally accepted in the United States ofamerica (GAAP) as applicable to governmental units. The following is a summary ofthe significant accounting policies used by the Village of Lakemoor, Illinois. A. Reporting Entity The Village has developed criteria to detennine whether outside agencies with activities that benefit the citizens of the Village should be included within its financial reporting entity. The criteria include, but are not limited to, whether the Village exercises oversight responsibility on financial interdependency, selection of governing authority, designation ofmanagement, ability to significantly influence operations and accountability for fiscal matters, scope ofpublic service and special fmancial relationships. B. Government-wide Financial Statements The government-wide fmancial statements (i.e., the statement ofnet assets and the statement ofactivities) report infonnation on all ofthe non-fiduciary activities ofthe primary government and its component units. For the most part, the effect ofinterfund activity has been removed from these statements. Governmental activities, nonnally supported by taxes and intergovernmental revenues, are reported separately from business type activities, which rely significantly on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is fmanciallyaccountable. The statement ofactivities demonstrates the degree to which the direct expenses ofa given function or identifiable activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: (a) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or identifiable activity; and (b) grants and contributions that are restricted to meeting the operational or capital requirements ofa particular function or identifiable activity. Taxes and other items not properly included among program revenues are reported instead as general revenue. In the proprietary fund statements, operating revenues and operating expenses consist ofthose items that have a clear and direct relation to the function ofthe fund. Examples include program revenues, as well as all direct program expenses. Non-operating revenues and non-operating expenses consist ofother items that do not bear a direct relation to the perfonnance ofthe function ofthe fund. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund fmancial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide fmancial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenue is recognized when earnedand expenses are recognized when a liabilityis incurred, regardless ofthetimingofrelated cash flows. Property taxes are recognized as revenue in the year for which theyare levied. Grants and similaritems are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. -12-