Town of Castle Rock Comprehensive Annual Financial Report For the year ended December 31, 2008 Excellence Dedication Service
2008 Comprehensive Annual Financial Report For the Year Ended December 31, 2008 Prepared by the Finance Department
Finance Department Charles Montoya Trish Muller Linda Been Accounting Staff Edward McWilliams Lavern Farina LaVona Fisher Angela Ahlene Debi Judish Robbie Schonher Anna Crumm Finance Staff Penny Schlaff Nicole Carner Jamie Authier Jay Richards Finance Director Assistant Finance Director Administrative Assistant Accounting Manager Accounting Supervisor Accounting Technician Accounts Payable Specialist Payroll Technician Accounting Specialist Accounting Specialist Finance Manager Budget Analyst Financial Analyst Financial Analyst For questions regarding this report please contact: Town of Castle Rock, Colorado Finance Department 100 North Wilcox Street Castle Rock, Colorado 80104 Phone: 303-660-1015 E-mail: tmuller@crgovcom
COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2008 INTRODUCTORY SECTION Letter of Transmittal Organizational Chart Directory of Town Officials Certificate of Achievement for Excellence in Financial Reporting Page Number i iv v vi FINANCIAL SECTION Independent Auditors Report 1 Management's Discussion and Analysis 3 Basic Financial Statements Town-wide Financial Statements Statement of Net Assets 15 Statement of Activities 16 Fund Financial Statements Governmental Funds Balance Sheet 17 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 18 Statement of Revenues, Expenditures, and Changes in Fund Balances 19 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 20 Proprietary Funds Statement of Net Assets 22 Reconciliation of the Proprietary Funds Statement of Net Assets to the Statement of Net Assets 24 Statement of Revenues, Expenses and Changes in Net Assets 26 Reconciliation of the Enterprise Funds Statement of Revenues, Expenses and Changes in Net Assets to the Statement of Activities 28 Statement of Cash Flows 30 Fiduciary Funds Statement of Fiduciary Assets and Liabilities 33 Notes to the Basic Financial Statements 35
COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2008 Supplementary Information Required Supplementary Information Volunteer Firefighters' Pension Plan Analysis of Funding Progress 71 Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) General Fund 72 Transportation Fund 73 Note to Required Supplementary Information 74 Combining and Individual Fund Statements and Schedules Non-major Governmental Funds Combining Balance Sheet 75 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 76 Non-major Special Revenue Funds Combining Balance Sheet 77 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 78 Conservation Trust Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 79 PS Miller Trust Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 80 Non-major Capital Projects Funds Combining Balance Sheet 81 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 82 Parks Capital Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 83 Municipal Facilities Capital Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 84 Fire Capital Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 85 Police Capital Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 86 Recreation Capital Fund Schedule of Revenues, Expenditures, and Changes in Funds Available Budget and actual (Non-GAAP Budgetary Basis) 87 Enterprise Funds Water Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 89 Water Resources Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 90
COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2008 Supplementary Information (continued) Enterprise Funds (continued) Stormwater Fund Schedule of Revenues, Expenditures, and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 91 Wastewater Fund Schedule of Revenues, Expenditures, and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 92 Golf Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 93 Community Center Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 94 Development Services Fund Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) 95 Internal Service Funds Combining Statement of Net Assets 97 Combining Statement of Revenues, Expenses and Changes in Net Assets 98 Statement of Cash Flows 99 Schedule of Revenues, Expenditures and Changes in Funds Available Budget and Actual (Non-GAAP Budgetary Basis) Employee Benefits Fund 100 Fleet Services Fund 101 Agency Fund Statement of Changes in Fiduciary Assets and Liabilities 103 STATISTICAL SECTION Financial Trends Town-wide Net Assets by Component 107 Town-wide Changes in Net Assets 108 Program Revenues by Function 110 Fund Balances, Governmental Funds 111 Changes in Fund Balances, Governmental Funds 112 Revenue Capacity Tax Revenue by Source, Governmental Funds 113 Town-wide Expenses by Activity and Function 114 Governmental Expenditures by Function 115 Property Tax Levies and Collections 116 Assessed Value and Actual Value of Taxable Property 117 Property Tax Rates, Direct and Overlapping Governments 118 Taxable Sales by Category 119 Direct and Overlapping Sales Tax Rates 120 Principal Sales Tax Remitters 121 Debt Capacity Ratio of Outstanding Debt by Type 123
COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2008 STATISTICAL SECTION (continued) Debt Capacity (continued) Ratio of General Bonded Debt to Assessed Value and Bonded Debt per Capita 124 Computation of Direct and Overlapping Bonded Debt General Obligation Bonds 125 Legal Debt Margin Information 126 Pledged Revenue Coverage 127 Demographic and Economic Information Demographic Information and Economic Statistics 131 Principal Employers 132 Principal Property Taxpayers 133 Operating Information Full-Time Equivalent Town Employees by Function/Program 135 Operating Indicators by Function/Program 136 Capital Assets Statistics by Function/Program 137 Miscellaneous Statistics 138 COMPLIANCE SECTION Local Highway Finance Report 139
INTRODUCTORY SECTION Letter of Transmittal Organizational Chart Directory of Town Officials Certificate of Achievement for Excellence in Financial Reporting
June 16, 2009 To the Honorable Mayor, Members of Town Council, and Citizens of the Town of Castle Rock, Colorado Colorado state law and the Town of Castle Rock (the Town) Home Rule Charter require an annual audit of the Town s financial statements The goal of an audit is to provide reasonable assurance that the financial statements of the Town are presented in conformity with generally accepted accounting principles The audit must be performed by an independent firm of licensed certified public accountants In accordance with this requirement, we submit for your information and review, the Comprehensive Annual Financial Report (CAFR) of the Town for the year ended December 31, 2008 Management of the Town is responsible for the completeness and reliability of the information presented in this report To provide a reasonable basis for making these representations, the Town has established a comprehensive internal control framework that is designed to protect the Town s assets from loss, theft, or misuse and to provide sufficient reliable information for the preparation of the financial statements Because the cost of internal controls should not exceed the benefits, the internal controls have been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement Bondi & Co, LLC has issued an unqualified opinion on the Town s financial statements An unqualified opinion means that the financial statements meet the in conformity with generally accepted accounting principles requirement The auditor s report is located at the front of the financial section of this report Management provides a narrative introduction, overview, and analysis of the basic financial statements Management s Discussion and Analysis (MD&A) provides an overview of the financial statements and is intended to compliment this letter of transmittal The MD&A can be found in the Financial Section of this CAFR immediately following the report of the independent auditors PROFILE OF THE TOWN Castle Rock is located in Douglas County along Interstate 25 approximately halfway between Denver and Colorado Springs Castle Rock encompasses 33 square miles and serves a population of approximately 46,000 residents The Town s location, view of the mountains, mesas and the small town feel make Castle Rock a desirable location for residential development The Town was incorporated in 1881 and adopted its Home Rule Charter in 1987 The Town operates under the council-manager form of government The policy-making and legislative authority are vested with the Town Council (the Council), which consists of seven members elected by district on a non-partisan basis Council members serve two-year staggered terms with three or four council members being elected each year The Council elects the mayor and the mayor pro-tem from its members The Council is responsible for passing ordinances, adopting the budget, appointing boards and commissions, hiring the Town Manager (Manager), Town Attorney and Municipal Judge The i
Manager is responsible for carrying out the policies and ordinances approved by Council, and appointing the heads of the departments and for overseeing the operations of the Town The Town provides a full range of services including: police and fire protection, courts, emergency medical services, municipal water, water resources, storm water, sanitary sewer, construction and maintenance of streets, public transit, parks and open spaces, golf course, recreation center, cultural events, community support, planning, development, code enforcement and general governmental services LOCAL ECONOMY Sales taxes provide approximately 59% of the Town s General Fund revenues Sales taxes are used to support ongoing services such as police, fire, parks, open space, municipal court, and general governmental services The major sources of sales taxes within the Town include a retail outlet mall, department stores, home improvement stores and grocery stores The Town is the county seat for Douglas County and the site of the Douglas County School District Office These two governments along with the Town are the top three employers within the Castle Rock area Because of its close proximity to both Denver and Colorado Springs many of the Castle Rock residents commute to these two cities to work Growth, primarily in the area of single-family residential homes, continues to have a major impact on the Town s economy The Town issued 302 building permits for new residential units in 2008 The Town assesses impact fees, which are collected when a building permit is issued Impact fees are used to pay for growth-related improvements to parks, fire, police, transportation, recreation and general municipal facilities These fees are used solely for growth related costs and cannot be used to provide new services or amenities In addition to impact fees, the Town collects system development fees for the development of water resources and water, storm water and sewer infrastructure Like impact fees, these fees are collected when a building permit is issued These fees are used for the construction of utility infrastructure that is necessary as a result of growth LONG-TERM FINANCIAL PLANNING The annual budget serves as the foundation for the Town s planning and control All departments and agencies of the Town are required to submit budget requests for the following year to Finance by August These requests are used as a starting point for developing a proposed budget Finance and the Town Manager present the proposed budget to Council for their review by October 18 th The Town holds public hearings on the proposed budget and the Council adopts the original budget by December 15 th The Town also prepares and adopts a five-year capital improvement program Each year, this fiveyear capital plan is reviewed and updated for projects that are intended to be either designed or constructed within the next five years RELEVANT FINANCIAL POLICIES In November, 1992, Colorado voters approved a State Constitutional Amendment, TABOR, the general purpose of which is to restrain government growth (as measured by revenues) without a vote of the local citizens TABOR further requires emergency reserves of at least 3% of fiscal year spending (excluding bonded debt service) Town s management has implemented policies and procedures to ensure compliance with the provisions of TABOR ii
MAJOR INITIATIVES The Town goals for 2008 included the maintenance of core services during the economic downturn, with primary emphasis on Police, Parks, Transportation (Streets), Utilities and Development Services Commitment to employee compensation as a key element in employee attraction, retention and productivity, including improvements to the public safety pay plan Accomplishing Measure 2A commitments and priorities focused on the areas of police, fire, transportation, parks, recreation, trails and open space In 2008 Rhyolite Regional Park and Bison Park were opened The Town issued $748 million in Certificates of Participation to begin the longterm renewal water project for the Town including the 2008 acquisition of a portion of the expansion of the Rueter Hess Reservoir currently under construction In addition, the Town issued $10 million in Transportation Bonds to complete the Southwest Arterial connection at Plum Creek Numerous trail improvements were completed in the Meadows, Founders and other areas AWARDS AND ACKNOWLEDGMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded the Town of Castle Rock the Certificate of Achievement for Excellence in Financial Reporting for its 2007 CAFR The Certificate of Achievement is a prestigious national award that is the highest form of recognition in the area of governmental accounting and financial reporting The attainment of this award represents a significant accomplishment by the Town In order to receive this award, a government must publish an easily readable and efficiently organized Comprehensive Annual Financial Report that satisfies both generally accepted accounting principles and applicable legal requirements A Certificate of Achievement is valid for a period of one year This is the eighteenth consecutive year that the Town has received this award We would like to thank the Town Council for their support throughout the year We would also like to thank the Finance Staff for their dedicated efforts in the preparation of this report Thanks for your hard work Sincerely, Mark C Stevens Charles A Montoya Patricia L Muller Town Manager Finance Director Assistant Finance Director iii
Citizens of Castle Rock Municipal Judge Mayor and Members of Town Council December 2008 Town Manager Finance Development Services Office of Town Manager Fire Town Attorney Police Parks and Recreation Boards and Commissions Town Clerk Public Works Utilities iv
Town of Castle Rock, Colorado Directory of Town Officials As of December 31, 2008 Town Council Council Member - District 1 Council Member - District 2 (Mayor) Council Member - District 3 Council Member - District 4 Council Member - District 5 Council Member - District 6 (Mayor pro-tem) Council Member - District 7 Paul Donahue Randy Reed Ryan Reilly Chip Wilson Mitchell Dulleck Doug Lehnen Joe Procopio Town Manager Town Attorney Municipal Judge Appointed Officials Department Directors Mark C Stevens Robert J Slentz Louis Gresh Deputy Town Manager Director of Development Services Director of Finance Fire Chief Director of Parks and Recreation Police Chief Director of Public Works Director of Utilities Town Clerk Fritz Sprague Bill Detweiler Charles Montoya Art Morales Rob Hanna Tony Lane Bob Goebel Ron R Redd Sally Misare V v
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FINANCIAL SECTION Independent Auditors Report Management s Discussion and Analysis Basic Financial Statements Required Supplementary Information Combining and Individual Fund Statements and Schedules
DRAFT Honorable Mayor and Members of the Town Council Town of Castle Rock Castle Rock, Colorado Independent Auditors Report We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Town of Castle Rock, Colorado (Town), as of and for the year ended December 31, 2008, which collectively comprise the Town s basic financial statements as listed in the table of contents These financial statements are the responsibility of the Town s management Our responsibility is to express opinions on these financial statements based on our audit We conducted our audit in accordance with auditing standards generally accepted in the United States of America Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation We believe that our audit provides a reasonable basis for our opinions In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Town as of December 31, 2008, 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
Honorable Mayor and Members of the Town Council Town of Castle Rock Castle Rock, Colorado DRAFT The Management s Discussion and Analysis, Schedule of Funding Program and Budgetary Comparison Schedules, on pages 3 through 14, page 71, and pages 72 and 73, are not a required part of the basic financial statements, but are supplementary information required by accounting principles generally accepted in the United States of America We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information However, we did not audit the information and express no opinion on it Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town s basic financial statements The combining and individual fund statements and schedules, the introductory section, the statistical tables and the Local Highway Finance Report are presented for purposes of additional analysis and are not a required part of the basic financial statements The combining and individual fund statements and schedules and the Local Highway Finance Report have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them May 29, 2009 BONDI & Co LLC 2
Management s Discussion and Analysis As management of the Town of Castle Rock, Colorado (the Town) we offer the readers of the Town s financial statements this narrative overview and analysis of the financial activities of the Town for the year ended December 31, 2008 We encourage readers to consider the information presented here in conjunction with additional information contained in the Notes to the Basic Financial Statements and our Letter of Transmittal, which can be found in the Introductory Section of the Town s Comprehensive Annual Financial Report (CAFR) Financial Highlights The assets of the Town exceeded its liabilities at December 31, 2008 by $5589 million (net assets) Of this amount, $1195 million (unrestricted net assets) may be used to meet the Town s ongoing obligations to citizens and creditors The Town s total net assets increased by $214 million (4%) As of December 31, 2008, the Town s governmental funds reported combined ending fund balances of $435 million, a decrease of $25 million compared to 2007 On December 31, 2008, unreserved and undesignated fund balance for the General Fund was $52 million, which was 184% of total General Fund expenditures The Town s total long-term debt was $126 million at the end of 2008 This increase of $823 million (188%) was due the issuance of $10 million in sales and use tax revenue bonds and $74 million in certificates of participation netted down by scheduled debt payments Overview of Financial Statements This discussion and analysis is intended to serve as an introduction to the Town s basic financial statements The basic financial statements are comprised of three components: 1) Town-wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Basic Financial Statements This report also contains Other Supplementary Information in addition to the basic financial statements Town-wide Financial Statements The Town-wide financial statements are designed to provide readers with a broad overview of the Town s finances presented in a manner similar to a private-sector business The Statement of Net Assets presents information about the Town-wide assets and liabilities, with the difference between the two being reported as net assets Increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating The Statement of Activities presents information showing how the Town s net assets changed during the year Changes in net assets 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 result in cash flows in a future period (eg, uncollected taxes and earned but unused vacation leave) The Town-wide financial statements distinguish functions of the Town that are primarily 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) Governmental activities of the Town include: general government, public safety (police and fire), public works (streets and transportation), and culture and recreation (parks, - 3 -
open space and recreation) The business-type activities of the Town include: water, water resources, stormwater, wastewater, golf course, community (recreation) center and development services Fund Financial Statements The Town, like other governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements 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 funds of the Town can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the Town-wide financial statements However, unlike the Town-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 year Such information may be useful in evaluating a Town s near-term financing requirements Because the focus of governmental funds is narrower than that of the Town-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the Town-wide financial statements By doing so, readers may better understand the long-term impact of the Town s near-term financing decisions Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities The Town maintains nine individual governmental funds Information on the Town s major governmental funds: the General Fund and the Transportation Fund are presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances Data from the other seven governmental funds are aggregated into a single Other Governmental Funds column Individual fund data for each of these non-major governmental funds is provided in the Combining and Individual Statements under the Supplemental Information tab The Town adopts an annual budget for all governmental funds A schedule of revenues, expenditures and changes in funds available budget and actual (non-gaap budgetary basis) has been provided to demonstrate compliance with the budget Proprietary Funds The Town maintains two types of proprietary funds, enterprise and internal service funds Enterprise funds are used to report the same functions presented as business-type activities in the Town-wide financial statements The Town uses enterprise funds to account for its Water, Water Resources, Stormwater, Wastewater, Golf Course, Community Center and Development Services Funds Internal service funds are an accounting device used to accumulate and allocate costs internally among the Town s funds and departments The Town uses internal service funds to account for its fleet of vehicles and to accumulate and pay employee benefits The internal service funds are included within governmental activities in the Town-wide financial statements since these services predominantly benefit governmental rather than business-type functions Proprietary funds provide the same type of information as the Town-wide financial statements, only in more detail The proprietary fund financial statements provide separate information for the enterprise funds: Water, Water Resources, Stormwater, Wastewater, Golf, Community Center and Development Services The internal services funds are aggregated into a single column on the - 4 -
proprietary fund financial statements Individual fund data for internal service funds are provided in the form of Combining Statements under the Supplemental Information tab Fiduciary Fund Fiduciary funds are used to account for resources held for the benefit of parties outside the Town Fiduciary funds are not reflected in the Town-wide financial statement because the resources of those funds are not available to support the Town s own programs The Town has one fiduciary fund, the Founders Parkway Local Improvement District Supplemental Information In addition to the basic financial statements and accompanying notes, this report also presents certain Required Supplementary Information concerning the Town s progress in funding its obligation to provide pension benefits for the volunteer firefighters and various fund statements and schedules The General Fund and Transportation Fund budgets are presented as part of Required Supplementary Information The combining and individual fund statements and schedules include detailed information about the non-major governmental funds (non-major special revenue funds and non-major capital projects funds) and the internal service funds Town-wide Financial Analysis The chart on the following page shows a summary comparison of the Town s assets, liabilities and net assets for 2008 and 2007 Based on that comparison, assets exceed liabilities (net assets) by $5589 million at the close of 2008 Net assets may serve over time as a useful indicator of the Town s financial position - 5 -
Town-wide Financial Analysis (continued) NET ASSETS DECEMBER 31, 2008 (In thousands) 2008 2007 Governmental Business-type Governmental Business-type Activities Activities Total Activities Activities Total ASSETS Current and other assets $ 68,025 $ 112,072 $ 180,097 $ 58,494 $ 78,307 $ 136,801 Capital assets 240,419 290,738 531,157 222,706 238,606 461,312 Total assets 308,444 402,810 711,254 281,200 316,913 598,113 LIABILITIES Long-term liabilities 16,819 103,454 120,273 7,575 32,287 39,862 Other liabilities 21,130 10,986 32,116 10,117 10,684 20,801 Total liabilities 37,949 114,440 152,389 17,692 42,971 60,663 NET ASSETS Invested in capital assets net of related debt 223,166 214,484 437,650 214,703 205,883 420,586 Reserved/Restricted 1,716-1,716 1,679-1,679 Unrestricted 45,613 73,886 119,499 47,126 68,059 115,185 Total net assets $ 270,495 $ 288,370 $ 558,865 $ 263,508 $ 273,942 $ 537,450 By far the largest portion of the net assets (78%) is reflected in the Town s investment in capital assets (eg, land, buildings, machinery and equipment and infrastructure) less any related outstanding debt used to acquire those assets The Town uses capital assets to provide services to citizens; consequently, these assets are not available for future spending Although the Town 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 are not liquidated to pay these liabilities An additional portion of the Town s net assets $17 million (3%) represents resources that are subject to external restrictions on how they may be used The remaining balance of unrestricted net assets ($1195 million) consists primarily of development impact fees that will be used to fund infrastructure needs caused by growth Remaining funds may be used to meet the Town s ongoing obligations to citizens and creditors At the end of 2008, the Town reported positive balances in all three categories of net assets, both for the Town as a whole, as well as for its separate governmental and business-type activities The Town s net assets increased $214 million during 2008, the $69 million increase in the net assets for governmental activities resulted from the following items: street infrastructure assets that were received from developers valued at $41 million, park land valued at $36 million, offset by an overall decline in revenues and a minimal increase in expenditures of the governmental activities Total net assets of the business-type activities increased $144 million This increase was primarily the result of water, stormwater and wastewater infrastructure valued at $92 million that was contributed to the utilities enterprise by developers The remaining $52 million consists of system - 6 -
development fees, charges for services, sales taxes and other revenues less capital and operating expenses 2008 CHANGES IN NET ASSETS (in thousands) 2008 2007 Governmental Business-type Governmental Business-type activities activities Total activities activities Total REVENUES Program revenues Charges for services $ 7,693 $ 29,239 $ 36,932 $ 9,012 $ 27,396 $ 36,408 Operating grants and contributions 3,158-3,158 3,806-3,806 Capital grants and contributions 9,680 17,579 27,259 14,622 35,684 50,306 General revenues Property taxes 1,020-1,020 941-941 Sales taxes 23,338 1,906 25,244 23,217 2,011 25,228 Use taxes 2,735-2,735 4,393-4,393 Other revenues 5,613 2,320 7,933 6,808 3,394 10,202 Total revenues 53,237 51,044 104,281 62,799 68,485 131,284 EXPENSES General government 8,139-8,139 8,674-8,674 Public safety 16,155-16,155 14,409-14,409 Public works 17,461-17,461 17,051-17,051 Culture and recreation 4,809-4,809 4,787-4,787 Interest on long-term debt 380-380 405-405 Water - 13,386 13,386-11,688 11,688 Water Resources - 2,227 2,227-1,126 1,126 Storm water - 2,334 2,334-1,806 1,806 Sewer - 7,823 7,823-6,940 6,940 Golf - 2,418 2,418-2,451 2,451 Community center - 4,340 4,340-4,112 4,112 Development services - 3,394 3,394-4,239 4,239 Total expenses 46,944 35,922 82,866 45,326 32,362 77,688 Increase in net assets before transfers 6,293 15,122 21,415 17,473 36,123 53,596 Transfers 694 (694) - 573 (573) - Increase in net assets 6,987 14,428 21,415 18,046 35,550 53,596 Net assets - January 1 263,508 273,942 537,450 245,462 238,392 483,854 Net assets - December 31 $ 270,495 $ 288,370 $ 558,865 $ 263,508 $ 273,942 $ 537,450-7 -
Governmental activities The following chart shows the governmental activities revenues by source Sales taxes provide 44% of the total revenues of the governmental activities Program revenues including charges for services and grants and contributions provide 38% of revenues in the governmental activities Only 2% of the revenues of the governmental activities are provided by property taxes Revenues by Source - Governmental Activities Property taxes 2% Capital grants and contributions 18% Sales taxes 44% Operating grants and contributions 6% Use taxes 5% Motor vehicle taxes 4% Other revenues 7% Charges for services 14% Governmental activities increased the Town s net assets by $69 million thereby accounting for 33% of the total growth in the net assets of the Town Key elements of this increase are as follows: Sales taxes increased by $1 million (5%) in 2008 Use taxes decreased by $16 million (38%) in 2008 Operating grants and contributions include various intergovernmental revenues for highways and streets and reimbursements for public works projects Also included is a small amount of federal operating grants for transportation and police Capital grants and contributions are primarily assets contributed by developers - 8 -
The chart below shows the extent to which expenses of the various functions of governmental activities are covered by program revenues Certain program revenues of public works are used for the construction of capital assets These construction costs are not expensed in the year that the revenues are received but are instead capitalized and depreciated over the life of the assets $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- Revenues Expenses General government Expenses and Program Revenues Governmental Activities (In thousands) Public safety Public works Culture and recreation Note: This chart does not include tax revenues, which are the primary source of funding for most governmental activities Business-type activities Business-type activities increased the Town s net assets by $144 million, accounting for 67% of the total growth in the Town s net assets Key elements of this increase are as follows: The change in net assets in business-type activities resulted primarily from Water, Water Resources, Stormwater and Wastewater Fund system development fees of $84 million and contributed infrastructure from developers of $92 million offset by an overall increase in total expenses The chart on the next page reflects all revenues of the enterprise funds including impact fees and system development fees These impact and development fees can only be used for growth related costs, which are primarily the construction of infrastructure assets - 9 -
Expenses and Program Revenues - Business-type Activities (in thousands) Development Services Community Center Golf Wastewater Stormwater Water Resources Water Expense Revenue $0 $5,000 $10,000 $15,000 $20,000-10 -
Revenues by Source - Business-type Activities Other 8% Capital grants and contributions 35% Charges for services 57% Financial Analysis of the Town s Funds Governmental funds The focus of the governmental fund financial statements is to provide information on near-term inflows, outflows, and balances of spendable resources Such information is useful in assessing the Town s financing requirements In particular, unreserved fund balances may serve as a useful measure of a Town s net resources available for spending at the end of the year As of December 31, 2008, the governmental funds reported combined ending fund balances of $435 million, which was a decrease of $25 million over 2007 Fund balance is reserved to indicate that it is not available for general spending The General Fund reported $38 million in reserves at the end of 2008, which consists of: 1) $11 million for emergency reserves; and 2) $27 million for loans to proprietary funds At the end of 2008 the Transportation Fund reported $2 million in reserves for loans to proprietary funds and the Conservation Trust fund had reserves of $7 million for parks and open space Approximately 895% of the combined ending fund balances, $389 million, constitutes unreserved fund balance, which is available for spending Of these available funds, the Town has designated $7 million to cover 2008 budgeted general fund expenditures, $3 million for special revenue fund expenditures and an additional $6 million for capital project funds Funds designated for capital projects in the general fund are $6 million, in special revenue funds are $138 million, and other governmental funds are $04 million The Town designates a 3-month cash flow reserve of $54 million in the general fund and $16 million in the transportation fund The remaining $159 million is available to spend for other purposes ($53 million general fund, $83 million special revenue funds, and $23 million capital projects fund) The General Fund is the chief operating fund of the Town At the end of 2008, fund balance of the General Fund was $158 million, of which $121 was unreserved As a measure of the General - 11 -
Fund s liquidity, unreserved fund balance represents 43% of the General Fund expenditures The fund balance of the General Fund decreased by $1 million, (-6%), during 2008 The gradual economic downturn is evident in the decrease contributed to fund balance in 2008 when compared to the increase in 2007 ($6 million) Inflation is also a contributing factor to the minimal increase in the General Fund balance as expenditures were 60% higher in 2008 than in 2007 At the end of 2008, total fund balance of the Transportation Fund was $233 million Of this amount, $138 million was set aside for capital projects, $16 million was designated as a cash flow reserve and $77 million was available for future spending Fund balance for the Transportation Fund increased by $2 million in 2008 Overall, the Transportation Fund revenues decreased $51 million or 25% in 2008 In 2008, non-major governmental funds, which rely heavily on growth revenues, experienced a decline of 38% or $18 million when compared to the same funds in 2007 Expenditures increased by 6% or $4 million in 2008 over 2007 specifically in the area of capital projects The combination of these factors lead to a draw down of reserves of $25 million Proprietary funds Unrestricted net assets of the combined enterprise funds at the end of 2008 were $739 million There were no restricted net assets at the end of 2008 Net assets for all enterprise funds increased $144 million with $27 million from Water, $68 million from Water Resources, $30 million from Stormwater, $31 million from Wastewater, $3 million from Golf, $003 million from Community Center, and ($14) million from Development Services Charges for services coupled with capital grants and contributions exceeded expenses by $108 million In addition, investment earnings and sales taxes contributed another $42 million resulting in the increase to net assets of $144 million Capital Asset and Debt Administration CAPITAL ASSETS (net of depreciation) (In Millions) Governmental Activities Business-type Activities Total 2008 2007 2008 2007 2008 2007 Land $ 14,214 $ 10,338 $ 3,742 $ 3,742 $ 17,956 $ 14,080 Artwork 176 129 - - 176 129 Water rights - - 5,824 5,824 5,824 5,824 Buildings and improvements 22,853 22,784 8,143 8,497 30,996 31,281 Machinery and equipment 3,890 5,105 1,634 778 5,524 5,883 Infrastructure 180,787 175,593 223,702 216,042 404,489 391,635 Construction in progress 18,499 8,757 47,693 3,723 66,192 12,480 Total $ 240,419 $ 222,706 $ 290,738 $ 238,606 $ 531,157 $ 461,312-12 -
The Town s investment in capital assets for its governmental and business-type activities as of December 31, 2008, amounts to $5312 million (net of accumulated depreciation) This investment in capital assets includes land, water rights, buildings and improvements, machinery and equipment, infrastructure (roads, highways, bridges, water and sewer systems) and construction in progress Major capital asset events during 2008 included the following: Construction of Bison Park for $27 million Construction and expansion of various streets and bridges Construction in progress at the end of 2008 was $185 million for governmental activities This included the Plum Creek Interchange and the SE Arterial Connection Construction and improvement of several major water and wastewater facilities and infrastructure Construction in progress at the end of 2008 was $477 million for business-type activities This included water storage rights in the Reuter Hess Reservoir Contributed assets from developers totaled $92 million, primarily water, stormwater and wastewater infrastructure, in the business-type funds and $77 million, primarily streets and park land, in the governmental funds Additional information concerning the Town s capital assets can be found in the Notes to the Basic Financial Statements on page(s) 50-51 Long-term debt OUTSTANDING DEBT Governmental Activities Business-type Activities Total 2008 2007 2008 2007 2008 2007 Revenue bonds $ 14,818,251 $ 5,118,687 $ 30,909,151 $ 32,259,351 $ 45,727,402 $ 37,378,038 Certificates of participation - - 74,795,000-74,795,000 - Notes - - 571,813 887,278 571,813 887,278 Capital leases 2,434,640 2,991,548 96,069 196,263 2,530,709 3,187,811 Accrued leave 1,904,136 1,745,345 560,402 508,950 2,464,538 2,254,295 Total $ 19,157,027 $ 9,855,580 $ 106,932,435 $ 33,851,842 $ 126,089,462 $ 43,707,422 At the end of 2008, the Town had total long-term debt outstanding of $126 million Of this amount, there were no general obligation bonds outstanding There were revenue bonds of $457 million secured by specific revenue sources, $748 million in certificates of participation and $6 million in notes payable for financing of capital projects, which are secured by revenues in the Water, and Wastewater Funds The remainder of the debt ($50 million) consists of capital leases and accrued leave The Town s total long-term debt increased by $823 million (188%) in 2008 due to the issuance of $10 million in transportation revenue bonds and $748 million in certificates of participation offset by scheduled debt payments - 13 -
Additional information on the Town s long-term debt can be found in the Notes to the Basic Financial Statements on page(s) 53-58 General Fund Budgetary Highlights Unspent capital project appropriations do not automatically carry over into the new year, but unspent amounts are re-appropriated in the following year The increase of $16 million between the total original budgets and the final amended budgets for the General Fund was due to the re-appropriation of unspent capital project funds When comparing budgeted to actual expenditures in the General Fund, there was a positive variance of $21 million This was made up of unspent capital funds of $9 million (43%) for projects not completed in 2008, personnel costs of $5 million (24%) due to position vacancies and the balance of $7 million (33%) due to savings and planned expenditures being deferred or cancelled Economic Factors and Next Year s Budgets and Rates In the development of the budget for the General Fund, the Town considered the following economic factors: The Town continued to experience a decline in growth during 2008 Major revenues impacted by this economic downturn include sales taxes, building use taxes and development impact fees The unemployment rate for the State of Colorado Inflation as measured by the change in the Denver-Boulder consumer price index (CPI) The Town collects ten different development and impact fees to defray the costs of new infrastructure needs that are caused by growth The Town has a fee schedule for its various development and system impact fees that increases on average roughly 6% per year from 2008 through 2011 These schedules are included in the Town s Municipal Code Water rates did increase in 2008 Fees for 2008 were calculated based on meter size and gallons utilized A full schedule of water fees can be found in the Town s Municipal Code The monthly service charge and volume usage charge for existing wastewater customers increased by 5% in 2008 These two charges are scheduled to increase by 5% in 2009 Renewable water rates increased by 21% in 2008 and are scheduled to increase 17% in 2009 Requests for Information This financial report is designed to provide a general overview for all those with an interest in the Town s finances Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Finance Department, 100 North Wilcox Street, Castle Rock, Colorado 80104-14 -
Basic Financial Statements Town-wide Financial Statements Fund Financial Statements Notes to the Basic Financial Statements
Town-wide Financial Statements
EXHIBIT II TOWN-WIDE STATEMENT OF NET ASSETS DECEMBER 31, 2008 Primary Government Governmental Business-Type Activities Activities Total ASSETS Cash and investments $ 59,088,878 $ 76,435,453 $ 135,524,331 Restricted cash and investments - 14,277,846 14,277,846 Receivables Property taxes 1,094,548-1,094,548 Sales taxes 2,324,344-2,324,344 Accounts, net of allowance of $103,310 3,595,893 3,829,426 7,425,319 Internal balances 1,328,189 (1,328,189) - Prepaid items 247,022 521,073 768,095 Inventory - 88,207 88,207 Deferred charges 346,317 1,493,847 1,840,164 Capital assets Land 14,214,166 3,741,972 17,956,138 Water rights - 5,824,299 5,824,299 Artwork 175,483-175,483 Construction in progress 18,499,160 47,692,766 66,191,926 Buildings and improvements 27,856,707 11,574,941 39,431,648 Infrastructure 254,735,353 270,821,420 525,556,773 Machinery and equipment 15,777,555 3,844,706 19,622,261 Accumulated depreciation (90,839,377) (52,762,171) (143,601,548) Investment in joint venture - 16,754,108 16,754,108 Total Assets 308,444,238 402,809,704 711,253,942 LIABILITIES Accounts payable 13,572,148 2,657,972 16,230,120 Retainage payable 345,076 81,370 426,446 Accrued liabilities 132,860 96,444 229,304 Deposits 194,359 81,321 275,680 Deferred revenues 4,547,334 4,590,409 9,137,743 Non-current liabilities Due within one year 2,338,381 3,478,165 5,816,546 Due beyond one year 16,818,646 103,454,270 120,272,916 Total Liabilities 37,948,804 114,439,951 152,388,755 NET ASSETS Invested in capital assets, net of related debt 223,166,157 214,483,839 437,649,996 Restricted for: Parks and open space 654,771-654,771 Emergencies 1,061,254-1,061,254 Unrestricted 45,613,252 73,885,914 119,499,166 Total net assets $ 270,495,434 $ 288,369,753 $ 558,865,187 The notes to the financial statements are an integral part of the financial statements -15-
EXHIBIT III TOWN-WIDE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2008 Net (Expense) Revenue and Program Revenues Changes in Net Assets Capital Charges Operating Grants Primary Government for Grants and and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental activities General government $ 8,138,960 $ 3,150,233 $ - $ 30,024 $ (4,958,703) $ - $ (4,958,703) Public safety 16,154,832 2,429,796 463,232 270,000 (12,991,805) - (12,991,805) Public works 17,460,565 848,239 2,322,167 4,843,346 (9,446,813) - (9,446,813) Culture and recreation 4,809,409 1,264,955 373,054 4,536,168 1,364,768-1,364,768 Interest on long-term debt 380,805 - - - (380,805) - (380,805) Total governmental activities 46,944,571 7,693,223 3,158,453 9,679,538 (26,413,358) - (26,413,358) Business-type activities Water 13,386,008 10,231,612-5,563,808-2,409,412 2,409,412 Water resources 2,227,048 4,006,253-3,800,195-5,579,400 5,579,400 Stormwater 2,334,010 1,649,253-3,759,131-3,074,374 3,074,374 Wastewater 7,822,600 6,266,648-4,455,984-2,900,032 2,900,032 Golf 2,418,108 2,683,065 - - - 264,957 264,957 Community center 4,339,934 2,626,082 - - - (1,713,852) (1,713,852) Development services 3,394,458 1,775,919 - - - (1,618,539) (1,618,539) Total business-type activities 35,922,166 29,238,832-17,579,118-10,895,784 10,895,784 Total all activities $ 82,866,737 $ 36,932,055 $ 3,158,453 $ 27,258,656 (26,413,358) 10,895,784 (15,517,574) General revenues Taxes Property 1,020,058-1,020,058 Sales 23,338,214 1,905,580 25,243,794 Use 2,735,480-2,735,480 Motor vehicle 1,972,231-1,972,231 Other 1,826,197-1,826,197 Unrestricted investment earnings 1,511,299 2,319,817 3,831,117 Other revenues not restricted for a specific purpose 303,788-303,788 Transfers 693,513 (693,513) - Total general revenues and transfers 33,400,780 3,531,884 36,932,664 Changes in net assets 6,987,421 14,427,668 21,415,089 Net assets - January 1 263,508,013 273,942,085 537,450,098 Net assets - December 31 $ 270,495,434 $ 288,369,753 $ 558,865,187 The notes to the financial statements are an integral part of the financial statements -16-
Fund Financial Statements
GOVERNMENTAL FUNDS Major governmental funds include the General Fund and any governmental fund that comprises 10% or more of a total governmental fund classification (assets, liabilities, revenues or expenditures) and at least 5% of the combined governmental and enterprise funds total for the same classification MAJOR FUNDS General Fund The General Fund is the primary operating fund of the Town This fund accounts for all financial resources of the Town except those required to be accounted for in another fund Transportation Fund The Transportation Fund is a special revenue fund that accounts for the accumulation of financial resources and expenditures for the construction, acquisition, installation, repair and maintenance of streets, bridges, sidewalks, and public transit and the acquisition of easements and right-of-ways, development of transportation facilities and for the operations of the department responsible for the construction and maintenance of such facilities NON-MAJOR FUNDS Other Governmental Funds The other governmental funds column is an aggregate of the following non-major governmental funds Special Revenue Funds Conservation Trust PS Miller Trust Capital Project Funds Parks Capital Municipal Facilities Capital Fire Capital Police Capital Recreation Capital
EXHIBIT IV GOVERNMENTAL FUNDS BALANCE SHEET DECEMBER 31, 2008 Other Total Governmental Governmental General Transportation Funds Funds ASSETS Cash and investments $ 12,013,658 $ 35,594,408 $ 6,154,038 $ 53,762,104 Receivables Property taxes 1,094,548 - - 1,094,548 Sales taxes 1,769,299 555,045-2,324,344 Accounts, net of allowance of $103,310 1,330,210 1,096,273 1,121,638 3,548,121 Prepaid expenses 7,201 - - 7,201 Loans to other funds 2,722,798 157,314-2,880,112 Total assets $ 18,937,714 $ 37,403,040 $ 7,275,676 $ 63,616,430 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 1,620,475 $ 11,046,822 $ 210,431 $ 12,877,728 Retainage payable 60,427 284,649-345,076 Deposits 194,359 - - 194,359 Deferred revenue 1,236,993 2,288,703 1,021,638 4,547,334 Loans from other funds - 485,697 1,629,658 2,115,355 Total liabilities 3,112,254 14,105,871 2,861,727 20,079,852 Fund Balances Reserved Parks and open space - - 654,771 654,771 Emergencies 1,061,254 - - 1,061,254 Interfund loans 2,722,798 157,314-2,880,112 Unreserved Designated General fund 6,759,223 - - 6,759,223 Special revenue funds - 15,401,214 312,116 15,713,330 Capital projects funds - - 623,010 623,010 Undesignated General fund 5,282,185 - - 5,282,185 Special revenue funds - 7,738,641 521,016 8,259,657 Capital projects funds - - 2,303,036 2,303,036 Total fund balances 15,825,460 23,297,169 4,413,949 43,536,578 Total liabilities and fund balances $ 18,937,714 $ 37,403,040 $ 7,275,676 $ 63,616,430 The notes to the financial statements are an integral part of the financial statements -17-
EXHIBIT V RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS DECEMBER 31, 2008 Total governmental funds - fund balances $ 43,536,578 Amounts reported for governmental activities in the Statement of Net Assets are different from governmental fund balances because: Net capital assets used in governmental activities are not financial resources and therefore are not reported in the funds 236,851,409 Internal service funds are used by management to charge the costs of insurance, employee benefits, vehicle replacement, and other activities to individual funds The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets, net of the amount allocated to business-type activities Long-term liabilities, including bonds payable, net of deferred charges, capital leases, compensated absences, and accrued interest payable are not due and payable in the current period and therefore are not reported in the governmental funds 9,036,207 (18,928,760) Net Assets of the governmental activities $ 270,495,434 The notes to the financial statements are an integral part of the financial statements -18-
EXHIBIT VI GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2008 Other Total Governmental Governmental General Transportation Funds Funds REVENUES Taxes Property $ 1,020,058 $ - $ - $ 1,020,058 Sales 16,233,422 7,104,792-23,338,214 Use - 2,735,480-2,735,480 Motor vehicle 1,972,231 - - 1,972,231 Other 1,826,197 - - 1,826,197 Development impact fees - 837,444 1,678,044 2,515,488 Licenses and permits 79,232-53,382 132,614 Charges for services 1,400,531 10,795-1,411,326 Management fees 2,800,785 - - 2,800,785 Fines and forfeitures 504,647 - - 504,647 Intergovernmental 193,916 2,428,387 373,054 2,995,357 Investment earnings 427,214 760,846 179,057 1,367,117 Contributions and donations 67,424 651,860 732,331 1,451,615 Other 785,402 472,776-1,258,178 Total revenues 27,311,059 15,002,380 3,015,868 45,329,307 EXPENDITURES Current General government 7,726,041-58,784 7,784,825 Public safety 15,767,056-12,000 15,779,056 Public works - 9,775,063-9,775,063 Culture and recreation 2,549,877-613,569 3,163,446 Capital outlay 2,099,264 13,780,607 4,369,701 20,249,572 Debt service Principal 15,090 565,000 541,818 1,121,908 Interest 3,710 195,700 112,646 312,056 Bond issue costs - 253,405-253,405 Agency fees - 400-400 Total expenditures 28,161,038 24,570,175 5,708,518 58,439,731 Excess (deficiency) of revenues over (under) expenditures (849,979) (9,567,795) (2,692,650) (13,110,424) OTHER FINANCING SOURCES (USES) Bond proceeds - 10,000,000-10,000,000 Bond premium - 239,652-239,652 Transfers in 812,478 12,676 200,000 1,025,154 Transfers out (63,558) (522,973) (35,339) (621,870) Total other financing sources (uses) 748,920 9,729,355 164,661 10,642,936 Net change in fund balances (101,059) 161,560 (2,527,989) (2,467,488) Fund balances - January 1 15,926,519 23,135,609 6,941,938 46,004,066 Fund balances - December 31 $ 15,825,460 $ 23,297,169 $ 4,413,949 $ 43,536,578 The notes to the financial statements are an integral part of the financial statements -19-
EXHIBIT VII RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2008 Net change in fund balances total governmental funds $ (2,467,488) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay $20,249,572 as an expenditure while in the statement of activities the cost of those assets are capitalized and allocated over the estimated useful lives and reported as depreciation expense ($10,049,092) This amount is the net difference between capital outlay and depreciation reported in the current period Contributed assets do not require the use of current financial resources of governmental funds, but are treated as revenues in the statement of activities In 2008 the Town received capital assets from developers for streets (public works) valued at $4,082,266 and park land (culture and recreation) valued at $3,638,553 10,200,480 7,723,819 Loss on disposals of capital assets do not require the use of current financial resources of the governmental funds, but are treated as program expenses in the statement of activities The Town reported losses on the disposal of general government capital assets with net book value $12,489 (12,489) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds Neither transaction has any effect on net assets Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities This amount is the net effect of these differences in the treatment of long-term debt (9,094,978) Internal service funds are used by management to charge the costs of insurance, employee benefits to individual funds and to provide vehicle repair, maintenance and replacement The net revenue (expenditures) of the internal service funds is reported with the governmental activities, net of the amount allocated to business-type activities 638,077 Changes in net assets of governmental activities $ 6,987,421 The notes to the financial statements are an integral part of the financial statements -20-
PROPRIETARY FUNDS Major proprietary funds are enterprise funds that comprise 10% or more of a total enterprise fund classification (assets, liabilities, revenues or expenditures) and at least 5% of the combined governmental and enterprise funds total for the same classification Enterprise funds account for operations that are financed and operated in a manner similar to private business where costs are predominantly supported by user charges or where management has decided periodic determination of revenues, expenses and / or changes in net assets is appropriate for capital maintenance, public policy, management control, accountability or other purposes MAJOR FUNDS Water Fund The Water Fund accounts for the activities related to water well development and extraction, water treatment, water transportation systems and for the repair and maintenance of such facilities Water Resources Fund The Water Resources Fund accounts for the Town s activities related to the analysis and measurement of the long-term water needs of the Town including conservation promotion and the development and maintenance of ground water and renewable water sources Stormwater Fund The Stormwater Fund accounts for the development, operation and maintenance of infrastructure related to storm water run off including storm sewers, detention ponds and other drainage ways within the Town Wastewater Fund The Wastewater Fund accounts for the development and operation of activities related to the collection and treatment of wastewater Golf Fund The Golf Fund accounts for the activities related to the construction, operation and maintenance of the Town owned golf course, Red Hawk Ridge, at Castle Rock Community Center Fund The Community Center Fund accounts for the Town s recreational facilities including a recreation center, two outdoor pools, inline skating rinks, multi-purpose ball fields, and a skateboard park This fund also accounts for recreational and child care programs Development Services Fund The Development Services Fund accounts for revenues and expenses related to community development within the Town Primary revenues are from user fees to include building and electrical permits, plan reviews and inspections
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EXHIBIT VIII PROPRIETARY FUNDS STATEMENT OF NET ASSETS DECEMBER 31, 2008 Water Water Resources Stormwater Wastewater Golf ASSETS Current assets Cash and investments $ 9,925,676 $ 52,878,615 $ 2,637,345 $ 5,610,277 $ 60,407 Restricted cash and investments 1,313,921 10,000,000-1,870,785 1,093,140 Receivables 1,352,092 567,816 557,278 1,133,668 17,545 Prepaid expenses - 520,870-203 - Inventory - - - - 88,207 Total current assets 12,591,689 63,967,301 3,194,623 8,614,933 1,259,299 Non-current assets Capital assets Land 1,709,958 - - 867,259 976,690 Water rights 5,408,277 416,022 - - - Construction in progress 1,871,777 45,185,089 425,806 210,094 - Buildings and improvements 1,235,356 61,486 11,685 1,439,526 1,993,734 Infrastructure 158,733,814 1,464,400 37,010,684 68,770,612 4,722,006 Machinery and equipment 2,378,350 82,680 25,928 213,410 965,665 Accumulated depreciation (35,596,760) (148,059) (2,642,697) (10,270,213) (1,244,169) Total capital assets (net of accumulated depreciation) 135,740,772 47,061,618 34,831,406 61,230,688 7,413,926 Deferred Charges 392,332 910,757-66,516 124,242 Investment in joint venture - - - 16,754,108 - Loans to other funds - 1,113,867 - - - Total non-current assets 136,133,104 49,086,242 34,831,406 78,051,312 7,538,168 Total assets 148,724,793 113,053,543 38,026,029 86,666,245 8,797,467 LIABILITIES Current liabilities Accounts payable 1,185,987 120,162 125,572 833,667 61,340 Retainage payable 47,157-16,749 17,464 - Accrued interest payable 56,333 - - 14,223 25,888 Deposits 67,146 - - - 33 Revenue bonds payable-current 973,000 - - 192,000 250,000 Certificates of participation-current - 1,270,000 - - - Notes payable-current - - - 324,525 - Capital leases-current - - - - 73,482 Accrued leave-current 210,197 3,497 11,440 15,015 42,048 Deferred revenues 2,288,435 15,952 44,304 2,236,076 5,642 Total current liabilities 4,828,255 1,409,611 198,065 3,632,970 458,433 Non-current liabilities Due within more than one year Revenue bonds net of unamortized premiums(discounts) and deferred amount on refunding 20,496,951 - - 3,674,482 5,322,719 Certificates of Participation - 73,525,000 - - - Leases payable - - - - 22,587 Notes payable - - - 247,288 - Accrued leave 63,852 1,722 5,634 7,395 34,401 Loans from other funds 1,457,974-354,517 220,665 1,250,454 Total non-current liabilities 22,018,777 73,526,722 360,151 4,149,830 6,630,161 Total liabilities 26,847,032 74,936,333 558,216 7,782,800 7,088,594 NET ASSETS Invested in capital assets, net of related debt 114,270,821 2,384,555 34,831,406 56,792,393 1,745,140 Unrestricted 7,606,940 35,732,655 2,636,407 22,091,052 (36,267) Total net assets $ 121,877,761 $ 38,117,210 $ 37,467,813 $ 78,883,445 $ 1,708,873 The notes to the financial statements are an integral part of the financial statements -22-
Governmental Activities Total Internal Community Development Enterprise Service Center Services Funds Funds $ 2,866,807 $ 2,456,326 $ 76,435,453 $ 5,326,774 - - 14,277,846-190,938 10,089 3,829,426 47,772 - - 521,073 239,821 - - 88,207-3,057,745 2,466,415 95,152,005 5,614,367 181,965 6,100 3,741,972 - - - 5,824,299 - - - 47,692,766-6,577,356 255,798 11,574,941-119,904-270,821,420-116,369 62,304 3,844,706 11,828,009 (2,818,693) (41,580) (52,762,171) (8,260,371) 4,176,901 282,622 290,737,933 3,567,638 - - 1,493,847 - - - 16,754,108 - - 1,404,986 2,518,853-4,176,901 1,687,608 311,504,741 3,567,638 7,234,646 4,154,023 406,656,746 9,182,005 246,893 84,351 2,657,972 694,421 - - 81,370 - - - 96,444-437 13,705 81,321 - - - 1,415,000 - - - 1,270,000 - - - 324,525 - - - 73,482-65,564 47,397 395,158 9,923 - - 4,590,409-312,894 145,453 10,985,681 704,344 - - 29,494,152 - - - 73,525,000 - - - 22,587 - - - 247,288-7,539 44,700 165,243 4,887 - - 3,283,610-7,539 44,700 106,737,880 4,887 320,433 190,153 117,723,561 709,231 4,176,902 282,622 214,483,839 3,567,638 2,737,311 3,681,248 74,449,346 4,905,136 $ 6,914,213 $ 3,963,870 $ 288,933,185 $ 8,472,774-23-
EXHIBIT IX RECONCILIATION OF THE PROPRIETARY FUNDS STATEMENT OF NET ASSETS TO THE STATEMENT OF NET ASSETS DECEMBER 31, 2008 Total enterprise net assets $ 288,933,185 Amounts reported for business-type activities in the Statement of Net Assets are different from the enterprise funds net assets because: Internal balances between the governmental activities and the business-type activities result from the allocation of the internal service funds profit / loss that are attributable to the business-type activities: water, water resources, stormwater, wastewater, golf, community center and development services (563,432) Net assets of the business-type activities $ 288,369,753 The notes to the financial statements are an integral part of the financial statements -24-
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EXHIBIT X PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2008 Water Water Resources Stormwater Wastewater Golf OPERATING REVENUES Charges for services $ 9,629,375 $ 3,707,410 $ 1,545,042 $ 6,123,998 $ 2,669,402 Fines and forfeitures 319,610 223,967 - - - Intergovernmental - - - - - Other 282,627 74,876 104,211 142,650 13,663 Total operating revenues 10,231,612 4,006,253 1,649,253 6,266,648 2,683,065 OPERATING EXPENSES Cost of sales and services - - - - - Operations 8,038,114 1,225,330 1,448,261 6,111,438 1,888,688 Depreciation 4,406,491 50,696 871,722 1,709,383 168,161 Amortization 13,056 10,233-4,589 41,927 Total operating expenses 12,457,661 1,286,259 2,319,983 7,825,410 2,098,776 Operating income (loss) (2,226,049) 2,719,994 (670,730) (1,558,762) 584,289 NON-OPERATING REVENUES (EXPENSES) Taxes - - - - - Investment earnings 333,140 1,426,254 55,106 312,431 18,261 Gain (Loss) on disposal of capital assets (54,129) - - (12,609) - Interest expense (876,960) (637,348) - (185,631) (310,441) Agency and other fees (378) (297,319) - (72) (150) Net income from joint venture - - - 194,474 - Total non-operating revenues (expenses) (598,327) 491,587 55,106 308,593 (292,330) Net income (loss) before contributions and transfers (2,824,376) 3,211,581 (615,624) (1,250,169) 291,959 CONTRIBUTIONS AND TRANSFERS System development fees 2,039,275 3,800,195 1,195,398 1,317,771 - Capital asset contributions 3,524,533-2,563,733 3,138,213 - Transfer in - - - - 37,000 Transfer out (22,719) (200,000) (174,521) (72,913) (57,604) Total contributions and transfers 5,541,089 3,600,195 3,584,610 4,383,071 (20,604) Change in net assets 2,716,713 6,811,776 2,968,986 3,132,902 271,355 Total net assets - January 1 119,161,048 31,305,434 34,498,827 75,750,543 1,437,518 Total net assets - December 31 $ 121,877,761 $ 38,117,210 $ 37,467,813 $ 78,883,445 $ 1,708,873 0 The notes to the financial statements are an integral part of the financial statements -26-
Governmental Activities Total Internal Community Development Enterprise Service Center Services Funds Funds $ 2,599,934 $ 1,676,566 $ 27,951,727 $ 5,577,804 - - 543,577 - - - - 23,329 26,148 99,353 743,528 849,603 2,626,082 1,775,919 29,238,832 6,450,736 - - - 5,231,054 4,155,260 3,328,014 26,195,105-168,147 18,518 7,393,118 1,085,808 - - 69,805-4,323,407 3,346,532 33,658,028 6,316,862 (1,697,325) (1,570,613) (4,419,196) 133,874 1,905,580-1,905,580-57,807 116,818 2,319,817 144,182 - (33,696) (100,434) 19,912 - - (2,010,380) - - - (297,919) - - - 194,474-1,963,387 83,122 2,011,138 164,094 266,062 (1,487,491) (2,408,058) 297,968 - - 8,352,639 - - - 9,226,479 - - 66,455 103,455 290,229 (269,211) - (796,968) - (269,211) 66,455 16,885,605 290,229 (3,149) (1,421,036) 14,477,547 588,197 6,917,362 5,384,906 274,455,638 7,884,577 $ 6,914,213 $ 3,963,870 $ 288,933,185 $ 8,472,774 0-27-
EXHIBIT XI RECONCILIATION OF THE ENTERPRISE FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2008 Net change in fund balances total enterprise funds $ 14,477,547 Amounts reported for business-type activities in the statement of activities are different because: Internal balances between the governmental activities and the business-type activities result from the allocation of the internal service funds profit / loss that are attributable to the business-type activities: water, water resources, stormwater, wastewater, golf, community center and development services (49,879) Changes in net assets of business-type activities $ 14,427,668 The notes to the financial statements are an integral part of the financial statements -28-
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EXHIBIT XII PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2008 Water Water Resources Strormwater Wastewater Golf CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 10,473,178 $ 3,868,965 $ 1,328,020 $ 5,977,618 $ 2,670,586 Receipts from interfund services provided - - - - - Payments to suppliers (6,284,399) (1,281,029) (624,200) (3,841,374) (791,808) Payments to employees (2,549,550) (528,487) (885,978) (1,100,842) (1,056,203) Net cash provided (used) by operating activities 1,639,229 2,059,449 (182,158) 1,035,402 822,575 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Cash transfers in - - - - 37,000 Cash transfers out (22,719) (200,000) (174,521) (72,913) (57,604) Proceeds from interfund loans 1,113,867 - - - - Payment of interfund loans - (1,113,867) - (151,104) Receipts from taxes - - - - - Net cash provided (used) by non-capital financing activities 1,091,148 (1,313,867) (174,521) (72,913) (171,708) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from capital debt - 74,795,000 - - - System development fees 2,039,275 3,800,195 1,195,398 1,317,771 - Acquisition and construction of capital assets (2,969,638) (44,748,064) (545,380) (2,135,634) - Principal paid on bonds and cops payable (943,000) - - (192,000) (240,000) Interest paid on bonds and cops payable (876,960) (637,348) - (162,328) (304,710) Principal paid on notes payable - - - (315,465) - Interest paid on notes - - - (23,303) - Principal paid on capital leases - - - - (100,195) Interest paid on leases - - - - (4,126) Bond issue costs and agency fees (378) (1,218,309) - (72) (150) Cash contributions for sewer capacity - - - (2,555,013) - Proceeds from sales of property and equipment - - - - - Net cash provided (used) by capital and related financing activities (2,750,701) 31,991,474 650,018 (4,066,044) (649,181) CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings 333,140 1,426,254 55,106 312,431 18,261 Net cash provided (used) by investing activities 333,140 1,426,254 55,106 312,431 18,261 Net increase (decrease) in cash and investments 312,816 34,163,310 348,445 (2,791,124) 19,947 Cash and investments - January 1 10,926,781 28,715,305 2,288,900 10,272,186 1,133,600 Cash and investments - December 31 $ 11,239,597 $ 62,878,615 $ 2,637,345 $ 7,481,062 $ 1,153,547 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) $ (2,226,049) $ 2,719,994 $ (670,730) $ (1,558,762) $ 584,289 Adjustments to reconcile operating income (loss) to Net cash provided by operating activities Depreciation 4,406,491 50,696 871,722 1,709,383 168,161 Amortization 13,056 10,233-4,589 41,927 Changes in operating assets and liabilities (Increase) decrease in assets Accounts receivable (387,553) (141,295) (318,921) (375,595) (12,088) Prepaid items - (520,870) - (203) - Inventory - - - - 20,936 Investment in sewer capacity - - - 1,882,720 - Increase (decrease) in liabilities Accounts payable (840,881) (62,250) (69,909) (729,404) 11,552 Retainage payable 31,157-16,749 14,231 - Accrued liabilities (17,581) - - (480) (1,967) Accrued leave 31,470 (1,064) (8,757) 2,358 10,156 Deferred revenue 632,589 4,005 (2,312) 86,565 1,076 Deposits (3,470) - - - (1,467) Total adjustments 3,865,278 (660,545) 488,572 2,594,164 238,286 Net cash provided (used) by operating activities $ 1,639,229 $ 2,059,449 $ (182,158) $ 1,035,402 $ 822,575 NON-CASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Contributed Infrastructure $ 3,524,533 $ - $ 2,563,733 $ 3,138,213 $ - The notes to the financial statements are an integral part of the financial statements -30-
Governmental Activities Total Internal Community Development Enterprise Service Center Services Funds Funds $ 2,640,573 $ 1,779,725 $ 28,738,665 $ 913,005 - - - 5,577,804 (1,527,165) (1,764,118) (16,114,093) (4,840,321) (2,629,630) (1,629,250) (10,379,940) (452,149) (1,516,222) (1,613,643) 2,244,632 1,198,339-66,455 103,455 290,229 (269,211) - (796,968) - - - 1,113,867 - - - (1,264,971) - 1,905,580-1,905,580-1,636,369 66,455 1,060,963 290,229 - - 74,795,000 - - - 8,352,639 - - - (50,398,716) (952,447) - - (1,375,000) - - - (1,981,346) - - - (315,465) - - - (23,303) - - - (100,195) - - - (4,126) - - - (1,218,909) - - - (2,555,013) - - - - 85,708 - - 25,175,566 (866,739) 57,807 116,818 2,319,817 144,182 57,807 116,818 2,319,817 144,182 177,954 (1,430,370) 30,800,978 766,011 2,688,853 3,886,696 59,912,321 4,560,763 $ 2,866,807 $ 2,456,326 $ 90,713,299 $ 5,326,774 $ (1,697,325) $ (1,570,613) $ (4,419,196) $ 133,874 168,147 18,518 7,393,118 1,085,808 - - 69,805-14,054 19,236 (1,202,162) 40,074 - - (521,073) (63,317) - - 20,936 - - - 1,882,720 - (14,619) (69,562) (1,775,073) 10,287 - - 62,137 - - - (20,028) - 13,084 4,208 51,455 (8,387) - - 721,923-437 (15,430) (19,930) - 181,103 (43,030) 6,663,828 1,064,465 $ (1,516,222) $ (1,613,643) $ 2,244,632 $ 1,198,339 $ - $ - $ 9,226,479 $ - -31-
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FIDUCIARY FUNDS Fiduciary funds are used to report assets held for others in a trustee or agency capacity The assets of these funds are not available to support Town programs and are therefore not included in the town-wide statements Agency Fund The Founders Parkway Local Improvement District (LID) This LID issued special assessment bonds to finance the construction and acquisition of various public improvements These bonds are not an obligation of the Town The Town collects special assessments levied against the property owners who benefited from the improvements Once collected, the Town remits the collected amounts to the paying agent responsible for paying the bondholders
EXHIBIT XIII STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES DECEMBER 31, 2008 Agency Fund ASSETS Cash and investments $ - Accounts receivable - Total assets $ - LIABILITIES Payable to others $ - The notes to the financial statment are an integral part of the financial statements -33-
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Notes to the Basic Financial Statements
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 SUMMARY OF NOTES TO THE BASIC FINANCIAL STATEMENTS 1 Summary of Significant Accounting Policies A Financial Reporting Entity B Financial Statement Presentation C Measurement Focus and Basis of Accounting D Cash and Investments E Restricted Assets F Inventories G Capital Assets H Property Taxes I Deferred Charges J Accrued Leave K Pension Plans and other Post Retirement Benefits L Non-current Liabilities M Fund Balances and Net Assets 2 Reconciliation of Town-wide and Fund Financial Statements 3 Deposits and Investments 4 Restricted, Reserved and Designated 5 Capital Assets 6 Investment in Wastewater Capacity 7 Long-Term Debt 8 Fund Balance and Net Assets 9 Pension Plans 10 Deferred Compensation Plans 11 Risk Management 12 Commitments and Contingencies 13 Interfund Transactions -35-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of Castle Rock, Colorado (the Town) was incorporated in 1881 and was voted by the citizens as a home-rule municipality in 1987 under the provisions of Article XX of the Constitution of the State of Colorado The Town operates under a Council-Manager form of government These financial statements are prepared in accordance with accounting principles applicable to governments generally accepted in the United States of America (GAAP) The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles A summary of the Town s significant accounting policies and descriptions of the financial statements are described below: A Financial Reporting Entity The financial reporting entity is based upon the concept that elected officials are accountable to their constituents for their actions The objective of the financial reporting entity is to provide users of the financial statements with a basis for assessing the accountability of the elected officials The financial reporting entity consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the Town's financial statements to be misleading or incomplete These financial statements include all funds and activities of the Town Founder's Parkway Local Improvement District - Agency Fund The Town of Castle Rock, Colorado, Local Improvement District No 1988-2 (Founders LID) was created to finance the construction and acquisition of various public improvements (primarily streets infrastructure) The LID is not a legally separate entity from the Town and has no separate formal governing board The LID issued $10,800,000 of special assessment bonds in December 1988 for the construction of the public improvements These bonds are not a general obligation of the Town nor has the Town committed to share in repayment of the bonds The debt is to be repaid solely from special assessments levied against the property owners who benefited from the improvements The Town acts as an agent for the LID by collecting the special assessments, forwarding the collections to the paying agent and initiating foreclosure procedures, if appropriate The activities of the LID are reported in these financial statements as a Fiduciary - Agency Fund As of December 31, 2008, the final installment of the outstanding special assessment were collected and distributed to the bondholders This distribution concludes the Town s financial obligation of the LID B Financial Statement Presentation The basic financial statements consist of the Town-wide financial statements, the fund financial statements and the notes to the basic financial statements Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, are followed in both the Town-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of GASB Governments also have the option of following subsequent private sector guidance for its business-type activities and enterprise fund statements The Town has elected not to follow subsequent private-sector guidance Town-wide financial statements The Town-wide financial statements ( statement of net assets and statement of activities ) report information on all activities of the primary government except fiduciary funds Fiduciary funds are not included in the Town-wide statements because resources of these funds are not available to support Town programs -36-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B Financial Statement Presentation (continued) Town-wide financial statements (continued) The activities of the primary government are aggregated into two activity types: governmental and businesstype Governmental activities reflect most of the Town s services including: general government, public safety (police and fire), public works (transportation and streets) and culture and recreation (parks and open space), which are normally supported by taxes and intergovernmental revenues Business-type activities include water, water resources, stormwater and wastewater utilities, a golf course, a community center (recreation), and development services These activities rely to a significant extent on fees and charges for services The statement of net assets reports what the Town owns (assets) and what the Town owes (liabilities) with the difference being reported as net assets The statement of activities demonstrates the degree to which direct expenses of a function were funded by program revenues Direct expenses are clearly identifiable with a specific function or segment Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment Taxes and other revenues not specifically identifiable with a given program are reported as general revenues Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds Fiduciary funds are excluded from the Town-wide financial statements since these funds are not available to support Town programs Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements Fund Financial Statements The Town uses fund accounting to control and manage money intended for a particular purpose or to demonstrate compliance with finance-related legal requirements Fund statements are grouped into three fund categories: governmental, proprietary and fiduciary The fund financial statements report Town operations in more detail than the Town-wide financial statements by providing information about financially significant funds called major funds Individual financial information is reported for each major fund with the remaining non-major funds being aggregated into a single other column Governmental Funds The Town reports the following major governmental funds: The General Fund is The Town s primary operating fund It accounts for all financial resources of the Town, except those required to be accounted for in another fund -37-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B Financial Statement Presentation (continued) Fund Financial Statements (continued) Governmental Funds (continued) The Transportation Fund is used to account for monies collected and expended for the purpose of financing the costs of construction, acquisition, installation and repair and maintenance of streets, sidewalks, bicycle and pedestrian trails, bridges and drainage facilities; public transit, landscaping of public rights-of-way, easement and right-of-way acquisition necessary to develop such transportation facilities and for the operations of municipal departments responsible for construction and maintenance of such facilities Proprietary Funds The Town reports the following major proprietary funds: The Water Fund is used to account for the Town s activities related to water well development, water extraction, treatment, and transportation systems, and for the repair and maintenance of such facilities The Water Resource Fund is used to account for the Town s activities related to the analysis and measurement of the long-term water needs of the Town including conservation promotion and the maintenance and development of groundwater and renewable water sources The Stormwater Fund is used to account for long-term stormwater planning, implementation of capital improvement projects, and administration of the Town s floodplain program The Wastewater Fund is used to account for the activities related to wastewater collection and treatment The Golf Course Fund is used to account for the activities related to the operations and maintenance of the Red Hawk Ridge Golf Course The Development Services Fund accounts for revenues and expenses related to development services within the Town The Community Center Fund accounts for the operations of the Town s recreation center and the activities that are provided at that facility Internal Service Funds are used to finance and account for goods and services provided to other funds, on a cost reimbursement basis These funds are used to account for the operations of the Employee Benefits, and Fleet Services Funds -38-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B Financial Statement Presentation (continued) Fund Financial Statements (continued) Proprietary Funds (continued) The proprietary fund statement of revenues, expenses and changes in net assets classifies revenues and expenses directly related to the service provided as operating Operating revenues are primarily charges for services (exchange-like transactions) for utility services (water, water resources, stormwater, wastewater), recreation services (golf, and community center) and for development services Golf operating revenues include sales of merchandise Operating revenues for internal service funds are charges for services provided to other funds and departments All other revenues in the proprietary funds are reported as nonoperating revenues Operating expenses for proprietary funds include cost of sales and services, administrative expenses and depreciation of capital assets All other expenses are reported as non-operating Fiduciary Fund The Founders Parkway Local Improvement District (LID) Fund is an agency fund that accounts for the assets and liabilities held for the benefit of others The special assessments collected by the LID are payable to bondholders C Measurement Focus and Basis of Accounting The Town-wide and the proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows Property taxes are recognized as revenues in the year for which they are levied Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting Revenues are recognized as soon as they are both measurable and available Revenues are considered to be available within the current period or soon enough thereafter to pay liabilities of the current period For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the year Expenditures are recorded when the liability is incurred However, debt service and compensated absences are recorded when the payment is due Sales taxes, use taxes, motor vehicle use, property taxes, franchise fees, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual These are recognized as revenues of the current fiscal period All other revenue items are considered to be measurable and available only when cash is received The agency fund uses the accrual basis of accounting and reports only assets and liabilities -39-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C Measurement Focus and Basis of Accounting (continued) As a general rule the effect of interfund activity has been eliminated from the Town-wide financial statements Exceptions to this general rule are charges between the Town s water and wastewater funds and various other functions of the government Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned D Cash and Investments To facilitate the recording of cash transactions and maximize earnings on investments, the Town pools cash and investments of all funds, except for unspent bond proceeds The Town maintains accountability for each fund's equity in pooled cash and investments Unspent bond proceeds are separately accounted for in accordance with the bond requirements All unrestricted funds of the Town are eligible for investment Investment earnings related to combined funds are distributed to each fund on a pro rata basis For financial statement presentation, each fund s share of the cash and investment pool is reported as cash and investments of that fund at year-end The Town defines cash equivalents as highly liquid investments with a maturity of three months or less at the date of purchase All of the proprietary fund investments are considered cash equivalents for purposes of the statement of cash flows Investments are reported at fair value Investment income includes increases and decreases in the fair value of investments Changes in fair value during the year do not necessarily represent trends that will continue; nor is it always possible to realize such amounts, especially in the case of temporary changes in the fair value of investments that the government intends to hold to maturity E Restricted Assets Certain resources, such as those set aside for the repayment of debt, are classified as restricted assets on the balance sheet because their use is limited by bond covenants or other agreements These assets are generally not available to pay current obligations F Inventories Inventory is maintained in the Golf Fund for resale merchandise Inventory is valued at cost, which approximates market, using the first in / first-out (FIFO) method The cost of this inventory is recorded as an expense when consumed rather than when purchased G Capital Assets All capital assets, including infrastructure capital assets such as streets and sidewalks are reported in the applicable governmental or business-type activities columns in the Town-wide financial statements and in the proprietary funds financial statements Purchases and construction of capital assets are reported at cost Donated assets are valued at the fair market value at the date of donation The Town has established a capitalization threshold of individual assets costing $5,000 or more with a useful life greater than one year Costs incurred for the purchase or construction of capital assets for governmental activities are recorded as capital outlay expenditures in the governmental funds Infrastructure assets (eg, streets, sidewalks, and trails) have been capitalized for all infrastructure acquired since 1980-40-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Costs incurred for the purchase or construction of capital assets for business-type activities are reported as assets in the proprietary funds Depreciation of exhaustible capital assets is charged as an expense against operations Accumulated depreciation is reported on the Town-wide and proprietary fund financial statements Depreciation has been provided over the estimated useful lives using the straight-line method The estimated useful lives are as follows: Machinery and equipment Buildings and improvements Infrastructure 5-10 years 20-40 years 15-50 years H Property Taxes Property taxes attached as a lien on property on January 1, are certified to the county by December 15 th and are levied the following January 1 st Property taxes are payable in full by April 30, or in two equal installments due February 28 th and June 15 th Taxes collected by the county are remitted to the Town by the 10 th of the following month Property taxes are reported as receivables and deferred revenue when liened and as revenue when collected in the following year I Deferred Charges For governmental funds, bond issuance costs are recognized as expenditures in the current period Bond issuance costs for the Town-wide and proprietary fund financial statements are deferred and amortized over the term of the bonds J Accrued Leave The Town allows employees to accumulate unused vacation and sick benefits up to certain maximum hours Accrued compensated absences are recognized as expenses when earned by the employee for the Townwide statements and the proprietary fund statements Compensated absences are recognized as expenditures when paid in the governmental fund statements K Pension Plans and other Post Retirement Benefits The Town sponsors several pension plans An Internal Revenue Service Code Section (Section) 401(a) pension plan is provided for general employees This plan requires contributions for all eligible employees of 4% of salary by employees and 6% of salary by the Town A Section 457 deferred compensation plan is available for voluntary contributions by all employees The Town provides a defined benefit plan for fire employees This plan requires contributions from both the employees and the Town The Town also participates in the state sponsored multiple employer plan which provides retirement benefits for volunteer firefighters Additionally, the Town contributes 2% of fire employee s salary to a Section 457 deferred compensation plan The defined benefit plan for fire employees, the volunteer firefighter retirement plan, and the fire employee deferred compensation plans are all administered by the Fire and Police Pension Association (FPPA) The Town does not provide post-retirement benefits other than pensions -41-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) L Non-current Liabilities Non-current liabilities include: bonds, notes, certificates of participation, capital leases, and earned but not used compensated absences The accounting and reporting treatment for a fund s non-current liabilities is determined by its measurement focus Governmental Funds For governmental funds, the liability is recorded when payment is due or the resources have been accumulated for payment early in the following year Proceeds from the issuance of debt are reported in the governmental funds as other financing sources Payments of principal on debt are shown as expenditures In the governmental fund financial statements, bond premiums and discounts, and bond issuance costs, are reported as expenditures of the current period Town-wide (governmental and business-type activities) and Proprietary Funds The Town-wide and proprietary fund financial statements use the economic resources measurement focus Proprietary funds report long-term liabilities in the fund Long-term liabilities expected to be repaid by governmental funds are reported in the governmental activities column of the Town-wide statements Under the economic resources measurement focus, debt issuances are reported as increases in non-current liabilities Principal payments are shown as decreases in non-current liabilities The outstanding amounts of non-current liabilities are reported on the statement of net assets Amounts due within the next twelve months are reported as due within one year with the remaining amount being reported as due within more than one year Bond premiums and discounts and bond issue costs are deferred and amortized over the life of the bonds using the straight-line method M Fund Balances and Net Assets Fund Balances Fund balances reflect assets minus liabilities using the current financial resources measurement focus Fund balances are only reported in the governmental fund statements and are divided into two classifications: reserved and unreserved Fund balance reserves reflect amounts legally segregated for a specific future use Fund balance reserves include reserves for debt service, emergencies, and Interfund loans Unreserved fund balance is further divided into designated and undesignated Designated fund balances represent Town policy or budgetary plans for future use of financial resources Designations of fund balances are only shown on the governmental fund statements These amounts are reported as unrestricted net assets on the Town-wide statement of net assets Net Assets Net assets are assets minus liabilities using the economic resources measurement focus and the accrual basis of accounting Net assets are reported in three classifications Investments in capital assets net of related debt which reflects capital assets (net of accumulated depreciation) reduced by the outstanding amount of the debt that was used to acquire or construct the capital assets Restricted net assets report amounts legally segregated for a specific use The remaining net assets are reported as unrestricted When both restricted and unrestricted resources are available for use, it is the Town s practice to use restricted resources first, than unrestricted resources as needed -42-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 2 RECONCILIATION OF TOWN-WIDE AND FUND FINANCIAL STATEMENTS A Explanation of Certain Differences Between the Government Fund Balance Sheet and the Townwide Statement of Net Assets The reconciliation of total governmental funds on the governmental funds balance sheet to the governmental activities on the statement of net assets includes an amount for long-term liabilities including bonds payable and accrued leave that are not due and payable in the current period and therefore are not reported in the governmental funds The details of the $18,928,760 difference relating to governmental activities long-term liabilities are as follows: 2004 Sales and use tax bonds $ 4,800,000 2008 Sales and use tax bonds 10,000,000 Capital lease obligations 2,434,640 Accrued leave 1,889,326 Bond premium 293,759 Accrued interest payable 132,860 Less: deferred charge - loss refunding to be amortized over life of bond (275,508) Less: deferred charge - bond issue costs to be amortized over the life of the bonds (346,317) Net adjustments to governmental funds fund balances to arrive at net assets for governmental activities $ 18,928,760 B Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Town-wide Statement of Activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances, total governmental funds and changes in net assets of governmental activities as reported in the Town-wide statement of activities One element of that reconciliation states repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets This amount is the net effect of these differences in the treatment of long-term debt and related items -43-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 2 RECONCILIATION OF TOWN-WIDE AND FUND FINANCIAL STATEMENTS (continued) B Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Town-wide Statement of Activities The details of the $(9,094,978) difference are as follows: Principal payments 2004 Sales and use tax bonds $ 565,000 Capital leases 556,908 Proceeds from sales and use tax bonds (10,000,000) Bond premium (239,652) Bond issue costs 253,406 Amortization of bond premium 9,526 Amortization of bond issue costs (13,990) Amortization of refunding loss (34,439) Accrued interest on debt (29,447) Net increase in accrued leave (162,290) Net adjustments to governmental fund revenues and expenditures to arrive at the change in net assets for governmental activities $ (9,094,978) -44-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 3 DEPOSITS AND INVESTMENTS Summary Of Deposits By Fund Type And Fund Equity in Fund Petty Cash Deposits Investments Town Pool Totals Governmental Activities General Fund Cash and investments $ 1,700 $ 637,558 $ 10,235,471 $ 1,138,929 $ 12,013,658 Transportation Cash and investments - 153,266 35,376,955 64,187 35,594,408 Other Governmental Funds Cash and investments - - 4,059,404 2,094,634 6,154,038 Internal Service Funds Cash and investments - 163,404 4,798,639 364,731 5,326,774 Total governmental activities 1,700 954,228 54,470,469 3,662,481 59,088,878 Business-type Activities Water Cash and investments 200-9,747,784 177,692 9,925,676 Restricted assets - - 1,313,921-1,313,921 Water Resources Cash and investments - - 52,334,825 543,790 52,878,615 Restricted assets - - 10,000,000-10,000,000 Stormwater Cash and investments - - 2,402,971 234,374 2,637,345 Wastewater Cash and investments - - 5,417,387 192,890 5,610,277 Restricted assets - - 1,870,785-1,870,785 Golf Cash and investments 2,000 1,691-56,716 60,407 Restricted assets - 103,896 635,787 353,457 1,093,140 Community Center Cash and investments 1,820 47,895 2,462,675 354,417 2,866,807 Development Services Cash and investments - - 2,331,924 124,402 2,456,326 Total business-type activities 4,020 153,482 88,518,059 2,037,738 90,713,299 Agency Funds Founders LID Cash and investments - - - - - Total agency funds - - - - - Total All Funds $ 5,720 $ 1,107,710 $ 142,988,528 $ 5,700,219 $ 149,802,177 Deposits in Town Pool - 2,214,053 - (2,214,053) - Investments in Town Pool - - 3,486,166 (3,486,166) - Totals $ 5,720 $ 3,321,763 $ 146,474,694 $ - $ 149,802,177-45-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 3 DEPOSITS AND INVESTMENTS (continued) A Inherent Risks The Town s deposits and investments, (like those of other governments), are subject to various risks: 1) Custodial Credit Risk The custodial credit risk of deposits is the risk that in the event of failure of a depository financial institution, the Town would not be able to recover collateral securities that are in the possession of an outside party The custodial risk for investments is the risk that in the event of the failure of a counterparty to the transaction, the Town would not be able to recover the value of the investment or collateral securities that are in the possession of an outside party 2) Concentration of Credit Risk State statutes do not limit the amount the Town may invest in one issuer At December 31, 2008, the Town s investment in any one issuer was less than five percent of the Town s total investments B Town Deposit and Investment Policies The risk exposure is essentially the same for both governmental and business-type activities Deposits Deposits are exposed to custodial credit risks if they are not covered by depository insurance and the deposits are uncollateralized The Town s deposit and investment policy allows Town funds to be deposited in any state or national bank located in Colorado, which is a member of the Federal Deposit Insurance Corporation (FDIC) and which complies with the Colorado Public Deposit Protection Act (PDPA) The PDPA requires that all local governments deposit cash in eligible public depositories State regulators determine eligibility Amounts on deposit in excess of federal insurance levels must be collateralized The eligible collateral is determined by the PDPA PDPA allows the institution to create a single collateral pool for all public funds The pool is to be maintained by another institution or held in trust for all the uninsured public deposits as a group The market value of the collateral must be at least equal to 102% of the uninsured public deposits The PDPA has the effect of perfecting the security interest in the name of the local government agency Temporary Liquidity Guaranty Program - The Town s banks participate in the FDIC's Transaction Account Guarantee Program under which all non-interest bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account Funds automatically transferred to a non- deposit account or other account not subject to this Program will void the FDIC's guarantee with respect to the transferred funds Coverage under this Program is in addition to and separate from the coverage available under the FDIC's general deposit insurance rules Investments To limit its exposure to the various investment risks the Town, through its investment policy adopted the Colorado Revised Statues dealing with deposits and investments to restrict investments of Town funds to the securities and transactions meeting certain established criteria The ratings shown in the following list are by Standard and Poor s (S&P) An investment may also receive an equivalent rating by another rating agency such as Moody s or Fitch Maturity time limitations are measured from the date of purchase State statutes do not address custodial risk -46-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 3 DEPOSITS AND INVESTMENTS (continued) The Town s Investment Policy allows the following investments: 1) United States Treasury obligations, federal agency securities and federal instrumentality securities, S&P rated AAA with maturities not exceeding five years 2) Prime commercial paper issued on US companies and denominated in US currency, S&P rated A-1, with maturities not exceeding 270 days 3) Eligible bankers acceptances, with maturities not exceeding 180 days, where banks meet certain capital and rating requirements 4) Repurchase agreements and flexible repurchase agreements meeting certain criteria 5) Local government investment pools, with a constant net asset value of $1 per share, S&P rated AAAm, and which invests under the Colorado Revised Statutes dealing with local government deposits and is overseen by the Colorado Securities Commissioner 6) Time certificates of deposit or savings accounts, with maturities not exceeding one year, meeting both the FDIC and PDPA requirements 7) Money market funds, which are registered, with a constant weighted average maturity and S&P rating of AAAm No more than 25% of the Town s aggregated portfolio may be invested in this type of investment 8) Corporate and Municipal bonds 9) Guaranteed investment contracts The Town s investments on December 31, 2008 were as follows: Investment maturities (in years) Investment Type S&P Rating Fair Value Less than 1 1-5 US Treasuries AAA $ 6,242,539 $ 3,043,399 $ 3,199,140 US Agencies AAA 13,655,968 3,078,724 10,577,244 Money Market Funds AAAm 32,112,545 32,112,545 - Certificate of Deposits N/A 400,000 400,000 - Government Investment Pools AAAm 94,063,642 94,063,642 - $146,474,694 $ 132,698,310 $ 13,776,384-47-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 3 DEPOSITS AND INVESTMENTS (continued) Local Government Investment Pool At December 31, 2008 the Town had $94,063,642 invested in the Colorado Local Government Liquid Asset Trust, (COLOTRUST) This is an investment vehicle established by State Statute for local government entities in Colorado to pool surplus funds The State Securities Commissioner administers and enforces the requirements of creating and operating the pools The pools operate similarly to a money market fund and each share is equal in value to $100 The pools are rated AAAm by S&P Investment of the pools is limited to those allowed by State Statutes A designated custodial bank provides safekeeping and depository services in connection with the direct investment and withdrawal functions Substantially all securities are held by the Federal Reserve Bank in the account maintained for the custodial bank The custodian s internal records identify the investments owned by the participating governments Information regarding the COLOTRUST s financial statements are available at its website wwwcolotrustcom -48-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 4 RESTRICTED, RESERVED AND DESIGNATED Restricted Cash and Investments Balance Fund Purpose December 31 Business-type activities Water Agreements $ 1,313,921 Wastewater Agreements 1,870,785 Water Resources Certificates of Participation, Series 2008 10,000,000 Golf 2005 Refunding Revenue Bonds Debt Ser vice Reserve 1,093,140 Total Business-type Activities $ 14,277,846 Water and Wastewater Funds The restricted cash in the Water and Wastewater Funds relate to agreements the Town made with metropolitan districts that provide water and wastewater services to the Woodlands and the Meadows residential neighborhoods Per the agreements, certain fees collected by the Town are to be used to build additional water and wastewater infrastructure to serve those neighborhoods These restricted cash amounts are offset by deferred revenues for the same amount The Town will recognize the revenue in future periods as construction of qualifying assets occurs Water Resources Fund The restricted cash in the Water Resources Fund is in accordance with the Master Lease Purchase Agreement dated August 28, 2008 and the Reimbursement Agreement dated August 28, 2008 as required by Wells Fargo Bank to support the issuing of the direct pay letter of credit backing the Certificates of Participation, Series 2008 The Town shall maintain at all times a minimum balance in the Water Resources Fund equal to or greater than $10,000,000, unless the Issuing Bank (along with Participating Bank(s)), shall agree in writing to the maintenance of a lesser minimum balance Golf Fund In 2005, the Golf Fund refunded its outstanding 1997 Golf Course Enterprise Bonds The 2005 Golf Course Enterprise Refunding Bond covenants require that the Golf Fund maintain a debt service reserve and a supplemental debt service reserve Both the reserve and supplemental reserve amounts are $546,570 for a total debt service reserve of $1,093,140 It is anticipated that this restricted cash and investment amount will be available to make the final debt service payment due in December 2025 in addition, the Bonds require the Town maintain a debt coverage ratio greater than 150 The Town is in compliance with this covenant at December 31, 2008-49-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 5 CAPITAL ASSETS Changes In Capital Asset Activity For The Year Ended December 31, 2008 Beginning Ending Balance Additions Deletions Transfers Balance Governmental activities Capital assets not being depreciated Land $ 10,337,827 $ 3,876,339 $ - $ - $ 14,214,166 Artwork 128,800 46,683 - - 175,483 Construction in progress 8,757,482 13,871,306 - (4,129,628) 18,499,160 Total capital assets, not being depreciated 19,224,109 17,794,328 - (4,129,628) 32,888,809 Capital assets being depreciated Buildings 27,157,889 731,658 (86,275) 53,435 27,856,707 Infrastructure 241,403,763 9,333,561 (78,164) 4,076,193 254,735,353 Machinery and equipment 15,687,989 1,176,198 (1,086,631) - 15,777,555 Total capital assets being depreciated 284,249,641 11,241,417 (1,251,070) 4,129,628 298,369,615 Less accumulated depreciation Buildings (4,373,637) (711,988) 81,962 - (5,003,663) Infrastructure (65,810,757) (8,215,740) 78,164 - (73,948,333) Machinery and equipment (10,582,959) (2,207,172) 902,750 - (11,887,381) Total accumulated depreciation (80,767,353) (11,134,900) 1,062,876 - (90,839,377) Total capital assets, being depreciated, net 203,482,288 106,517 (188,193) 4,129,628 207,530,238 Total governmental activities capital assets, net of accumulated depreciation $ 222,706,397 $ 17,900,845 $ (188,193) $ 0 $ 240,419,047 Depreciation expense charged to functions Governmental activities General government $ 213,654 Public safety 310,068 Public works 7,833,082 Culture and recreation 1,692,288 Fleet internal service fund 1,085,808 Total governmental activities depreciation expense $ 11,134,900-50-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 5 CAPITAL ASSETS (continued) Changes In Capital Asset Activity For The Year Ended December 31, 2008 Beginning Ending Balance Additions Deletions Transfers Balance Business-type activities Capital assets not being depreciated Land $ 3,741,972 $ - $ - $ - $ 3,741,972 Water rights 5,824,299 - - - 5,824,299 Construction in Progress 3,722,670 45,980,337 (19,567) (1,990,674) 47,692,766 Total capital assets, not being depreciated 13,288,941 45,980,337 (19,567) (1,990,674) 57,259,037 Capital assets being depreciated Buildings and improvements 11,606,439 - (31,498) - 11,574,941 Infrastructure 256,489,288 12,482,808 (85,110) 1,934,434 270,821,420 Machinery and equipment 3,270,525 1,162,049 (644,108) 56,240 3,844,706 Total capital assets being depreciated 271,366,252 13,644,857 (760,716) 1,990,674 286,241,067 Less accumulated depreciation for Buildings and improvements (3,109,411) (322,170) - - (3,431,581) Infrastructure (40,447,130) (6,727,302) 54,702 - (47,119,730) Machinery and equipment (2,492,362) (343,646) 625,148 - (2,210,860) Total accumulated depreciation (46,048,903) (7,393,118) 679,850 - (52,762,171) Total capital assets, being depreciated, net 225,317,349 6,251,739 (80,866) 1,990,674 233,478,896 Capital assets, net $ 238,606,290 $ 52,232,076 $ (100,433) $ - $ 290,737,933 Business-type activities Water $ 4,406,491 Water Resources 50,696 Stormwater 871,722 Wastewater 1,709,383 Golf Course 168,161 Community Center 168,147 Development Services 18,518 Total business-type activities depreciation expense $ 7,393,118-51-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 6 INVESTMENT IN WASTEWATER CAPACITY In 1989, the Town, Castle Pines Metropolitan District and Castle Pines North Metropolitan District agreed to establish the Plum Creek Wastewater Authority (PCWA) The Town accounts for this agreement as a joint venture, in which the Town has an equity interest The purpose of PCWA is to provide wastewater treatment to the members through the operation of wastewater treatment plants As part of this agreement, the Town transferred title of the Castle Rock treatment plant to PCWA in 1990 Additionally, the Town shared in the costs of constructing the Castle Pines plant The PCWA is required by state statute to have an annual audit The audit can be obtained by writing to PCWA, 5880 Country Club Drive, Castle Rock, CO 80104 At December 31, 2008, the Town had an equity interest in PCWA of $16,754,108 This represents an 8838% interest in the net assets of the PCWA During 2008, PCWA charged the Town $1,937,011 for the treatment of wastewater The Town also paid to PCWA $2,555,013 which represents the Town s share of debt service payments for the treatment plant expansion Investment balance January 1 $15,887,341 Net income from joint venture 194,474 Town contributions 672,293 Investment balance December 31 $16,754,108-52-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 7 LONG-TERM DEBT The following is a summary of long-term debt activity for the year ended December 31, 2008: Changes In Long-Term Liabilities Balance Balance Due within Due beyond January 1 Additions Reductions December 31 One Year One Year Governmental activities Bonds payable 2004 Sales and use tax $ 5,365,000 $ - $ (565,000) $ 4,800,000 $ 585,000 $ 4,215,000 2008 Sales and use tax - 10,000,000-10,000,000-10,000,000 Bond premiums 63,634 239,652 (9,526) 293,760-293,760 Refunding loss (309,947) - 34,438 (275,509) - (275,509) Capital leases 2,991,548 - (556,908) 2,434,640 578,620 1,856,020 Accrued leave 1,745,345 1,557,039 (1,398,248) 1,904,136 1,174,761 729,375 Total governmental activities $ 9,855,580 $ 11,796,691 $ (2,495,244) $ 19,157,027 $ 2,338,381 $ 16,818,646 Business-type activities Bonds payable 2006 Water & Wastewater $ 9,360,000 $ - $ (335,000) $ 9,025,000 $ 350,000 $ 8,675,000 2003 Water & Wastewater 8,460,000 - (400,000) 8,060,000 415,000 7,645,000 2004 Water & Wastewater 8,460,000 - (400,000) 8,060,000 400,000 7,660,000 2005 Golf Course 6,385,000 - (240,000) 6,145,000 250,000 5,895,000 Bond premiums & discounts 175,110 - (9,362) 165,748-165,748 Refunding loss (580,759) - 34,162 (546,597) - (546,597) Certificates of participation - 74,795,000-74,795,000 1,270,000 73,525,000 Notes payable 1990 Sewer CWRPDA 887,278 - (315,465) 571,813 324,525 247,288 Capital leases 196,263 - (100,194) 96,069 73,482 22,587 Accrued leave 508,950 576,110 (524,658) 560,402 395,158 165,244 Total business-type activities $ 33,851,842 $ 75,371,110 $ (2,290,517) $ 106,932,435 $ 3,478,165 $ 103,454,270 A Revenue Bonds In August 2004, the Town issued $6,130,000 Sales and Use Tax Refunding Bonds to refund $5,770,000 of the Series 1996 Sales and Use Tax Refunding Bonds The purpose of the 1996 bonds was to finance the Perry Street extension project to preserve the historic downtown area The purpose of the 2004 refunding was to reduce the interest rate paid on the Town s debt A portion of the 1996 bonds maturing in 2005 and 2007 totaling $810,000 were not refunded Principal payments are due annually on December 1 through 2016 Interest payments are due semi-annually on June 1 and December 1 As of December 31, 2008, the outstanding balance including principal and interest was $5,593,911 The bonds are payable solely from the revenue derived from sales and use tax at the rate of 135% pledged from the General, Transportation and Community Center funds During the year ended December 31, 2008, revenues of $10,290,472 were available to pay annual debt service of $760,700-53-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 7 LONG-TERM DEBT (continued) A Revenue Bonds (continued) In November 2008, the Town issued $10,000,000 Sales and Use Tax Revenue Bonds The purpose of the 2008 bonds was to finance certain transportation projects approved by the Town s voters in April 2005 Principal payments are due annually on June 1 through 2028 commencing June 1, 2012 Interest payments are due semi-annually on June 1 and December 1 commencing June 1, 2009 As of December 31, 2008, the outstanding balance including principal and interest was $17,028,084 The bonds are payable solely from the revenue derived from sales and use tax at the rate of 135% pledged from the General, Transportation and Community Center funds together with certain investment income as provided in the bond ordinance These bonds constitute an irrevocable lien on all of the pledged revenues on a parity with the lien of the 2004 bonds In 2003, 2004, and 2006, the Town issued Water and Wastewater Revenue Bonds to construct water and wastewater system improvements Principal payments are due annually on December 1 Interest payments are due semi-annually on June 1 and December 1 The bonds are payable solely from the net revenues of the Town s Water and Wastewater Funds after the payment of the operation and maintenance expenses of the systems These bonds constitute an irrevocable lien upon the net pledged revenues on a parity with the lien on the outstanding principal obligation of the 1990 Colorado Water Resources and Power Development Authority (CWRPDA) loan During the year ended December 31, 2008, revenues of $6,255,693 were available to pay annual debt service of $2,513,066 for the bonds and the CWRPDA loan As of December 31, 2008, the outstanding balance, including principal and interest, on the 2003 bonds was $10,983,648, the 2004 bonds was $11,053,236, the 2006 bonds was $12,908,400 and the CWRPDA loan was $601,808 In 2005, Golf Course Revenue Bonds were issued to refund all of the outstanding 1997 Golf Course Enterprise bonds The purpose of the 1997 bonds were to finance the acquisition, construction and equipping of the golf course facility In 2007,the defeased bonds outstanding were paid in full The 2005 bonds are payable solely from the revenues derived from the operation of the Red Hawk Ridge Golf Course after the payment of operation and maintenance expenses, the bond reserve fund and the supplemental reserve fund During the year ended December 31, 2008, net pledged revenues of $736,773 were available to pay annual debt service of $544,710 As of December 31, 2008 the outstanding balance, including principal and interest was $9,258,766-54-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 7 LONG-TERM DEBT (continued) A Revenue Bonds (continued) Revenue Bonds Outstanding at December 31, 2008 Principal Issue Maturity Interest Rates Amount Governmental activities 2004 Sales and Use Tax Bonds 6/1/2016 30%-45% $ 4,800,000 2008 Sales and Use Tax Bonds 6/1/2028 375%-600% 10,000,000 Total governmental activities $14,800,000 Business-type activities 2003 Water and Wastewater Revenue Bonds 12/1/2023 25%-45% $ 8,060,000 2004 Water and Wastewater Revenue Bonds 12/1/2023 25%-45% 8,060,000 2005 Golf Course Revenue Bonds 12/1/2025 325%-52% 6,145,000 2006 Water and Wastewater Revenue Bonds 12/1/2026 40%-60% 9,025,000 Total business-type activities $31,290,000 Revenue Bond Debt Service Requirements to Maturity Businesstype Governmental Year Activities Activities Principal Interest Principal Interest 2009 $ 585,000 $ 722,211 $ 1,415,000 $ 1,314,519 2010 540,000 683,875 1,470,000 1,265,269 2011 550,000 664,113 1,515,000 1,212,950 2012 965,000 633,551 1,575,000 1,155,613 2013 1,000,000 593,300 1,635,000 1,094,298 2014-2018 4,255,000 2,360,114 9,255,000 4,400,585 2019-2023 2,950,000 1,587,138 11,430,000 2,230,376 2024-2028 3,955,000 577,693 2,995,000 240,440 Total $14,800,000 $ 7,821,995 $31,290,000 $12,914,050-55-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 7 LONG-TERM DEBT (continued) B Certificates of Participation In September 2008, the Town issued Certificates of Participation (COPs) in the amount of $74,795,000 The purpose of the COPs was to fund the acquisition of a raw water storage easement in the Reuter-Hess Reservoir owned and operated by Parker Water and Sanitation District and to acquire, construct and install certain other water supply, storage, transmission and treatment facilities All of these assets will be owned by the Castle Rock Water Resources Leasing Trust and leased to the Town pursuant to an annually renewable Master Lease Purchase Agreement The 2008 COPs constitute variable rate securities with principal payments that are due annually on September 1 through 2037 commencing in 2009 The 2008 COPS initially bear interest at a weekly rate but may be converted at the direction of the Town to a monthly rate, a semiannual rate, an annual rate, a flexible rate or a fixed rate Interest is payable on the first business day of each calendar month commencing October 1, 2008 and is determined by the Remarketing Agent COPs Outstanding at December 31, 2008 Issue Maturity Interest Rates Business-type activities 2008 Water Resources COPs 09/01/2037 335% average COPs Debt Service Requirements to Maturity Business-type Activities Year Principal Interest Totals 2009 $1,270,000 $2,493,863 $3,763,863 2010 1,355,000 2,451,773 3,806,773 2011 1,415,000 2,405,876 3,820,876 2012 1,475,000 2,359,106 3,834,106 2013 1,550,000 2,306,856 3,856,856 2014-2018 8,850,000 10,704,450 19,554,450 2019-2023 11,050,000 9,062,481 20,112,481 2024-2028 13,800,000 7,013,441 20,813,441 2029-2033 17,225,000 4,452,755 21,677,755 2034-2037 16,805,000 1,298,494 18,103,494 Total $74,795,000 $44,549,095 $119,344,095-56-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 7 LONG-TERM DEBT (continued) C Notes Payable In 1990, the Town entered into a loan agreement with CWRPDA for the acquisition of wastewater treatment capacity in the Plum Creek Regional Wastewater Treatment facility and the development of the East Plum Creek interceptor for transmission of wastewater flows from the Town to the treatment facility Notes Outstanding at December 31, 2008 Issue Interest Rates Principal Amount Business-type activities Colorado Water Resources and Power Development Authority (CWRPDA) 625%-740% $571,813 Notes Payable Debt Service to Maturity Year Business-type Activities Principal Interest Totals 2009 $ 324,525 $ 21,600 $ 346,125 2010 247,288 8,395 255,683 Total $ 571,813 $ 29,995 $ 601,808-57-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 7 LONG-TERM DEBT (continued) D Capital Leases The Town has entered into several capital leases for the purchase of equipment and recreation center improvements The assets acquired through these leases are recorded at their cost at the original lease date Governmental assets include machinery and equipment of $80,000 less accumulated depreciation of $22,531 and buildings and improvements of $3,950,000 less accumulated depreciation of $296,250 Business-type assets include machinery and equipment of $483,415 less accumulated depreciation of $378,674 The present values of the minimum lease payments are as follows: Present Value of Minimum Lease Payments Governmental Business-type Year Activities Activities 2009 $ 673,264 $ 75,727 2010 673,264 22,954 2011 673,265-2012 654,465 - Total Minimum Lease Payments 2,674,258 98,681 Less: amount representing interest (239,618) (2,612) Present value of minimum lease payments $ 2,434,640 $ 96,069 E Interest Expense Total interest expense in the amount of $380,805 and $2,010,380 was charged to governmental type and business type funds, respectively, for the year ended December 31, 2008 No interest was capitalized in the business type funds -58-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 8 FUND BALANCE AND NET ASSETS Fund Balance Reserves Parks Loans to Fund Type / Fund Emergencies & Open Space Other funds Totals General $ 1,061,254 $ - $ 2,722,798 $ 3,784,052 Special Revenue Funds Transportation - - 157,314 157,314 Conservation Trust - 654,771-654,771 Total fund balance reserves $ 1,061,254 $ 654,771 $ 2,880,112 $ 4,596,137 Fund Balance Designations Subsequent Capital Cash Year Projects Flow Fund Type / Fund Budget Carryforward Reserves Totals General $ 725,998 $ 583,736 $ 5,449,489 $ 6,759,223 Major Special Revenue Funds Transportation - 13,772,037 1,629,177 15,401,214 Non-major Governmental Funds Special Revenue Funds Conservation Trust 166,125 45,243-211,368 PS Miller 100,748 - - 100,748 Capital Projects Funds Municipal Facilities Capital 82,681 35,674-118,355 Fire Capital 38,384 - - 38,384 Police Capital 131,724 - - 131,724 Recreation Capital 334,547 - - 334,547 Total other governmental funds 854,209 80,917-935,126 Total fund balance designations $ 1,580,207 $ 14,436,690 $ 7,078,666 $ 23,095,563-59-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 8 FUND BALANCE AND NET ASSETS (continued) Fund Balance Undesignated Balance Fund Type / Fund 12/31/2008 General $ 5,282,185 Special Revenue Funds Transportation 7,738,641 Other Governmental Funds Special Revenue Funds PS Miller Trust 521,016 Total other special revenue funds 521,016 Capital Projects Funds Parks Capital 221,695 Municipal Facilities Capital 560,803 Fire Capital 1,552,694 Police Capital (1,103,246) Recreation Capital 1,071,090 Total other capital projects funds 2,303,036 Total undesignated fund balance $ 15,844,878 Fund Deficit On December 31, 2008 the Police Capital Fund had a fund deficit of $971,522 The Town expects to eliminate the deficit with development impact fees -60-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 9 PENSION PLANS A General Employees Plan The Town provides a multi-employer defined contribution plan for all permanent full-time and part-time employees who work at least 20 hours per week on an annual basis In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings For 2008, the mandatory employee contribution was 4% of compensation The Town contributes 6% of each employee's compensation to the plan with the exception of the Town Manager and Town Attorney As part of their employment contracts, the Town Manager and the Town Attorney receive a 10% contribution from the Town and do not have a mandatory employee contribution The Town has no other obligations to fund this plan Employees are permitted to contribute additional amounts beyond their 4% mandatory contribution These additional amounts are invested in a deferred compensation plan pursuant to Internal Revenue Code (IRC) Section 457 After completion of one year of service, the employees Town contributions are fully vested Unvested contributions for terminated employees are returned to the Town, net of servicing fees Employees are fully vested for their contributions immediately All administrative costs of the plans are borne by the participants of each plan Plan provisions and contribution requirements are established by the International City Managers Association (ICMA) Retirement Corporation and may be amended with the approval of Town Council The Town made required contributions to ICMA for the year ended December 31, 2008 of $1,078,822 The ICMA employee contributions totaled $699,134 B Executive Defined Contribution Plan In 2004, the Town agreed to adopt a qualified 401(a) Executive Defined Contribution plan as part of the employment contracts for the Town Manager and the Town Attorney The Town contributed 10% of the covered employees compensation into this plan Vesting is based on years of service and an employee will not be fully vested until they have reached 10 years of service The Town s contributions to ICMA for the year ended December 31, 2008 were $30,165, equal to the required contributions Plan provisions and contribution requirements are established by ICMA and may be amended with the approval of Town Council C Fire Employees - Statewide Defined Benefit Plan The Town contributes to the State of Colorado fire employees plan, which is a cost sharing multiple-employer defined benefit pension plan administered by the Colorado Fire and Police Pension Association (FPPA) The Statewide Defined Benefit Plan provides retirement benefits for members and beneficiaries Death and disability coverage is provided for plan members hired prior to January 1, 1997 through the Statewide Death and Disability Plan, which is also administered by FPPA All full-time paid firefighters of the Town are members of the Statewide Defined Benefit Plan and the Statewide Death and Disability Plan Colorado Statutes assign the authority to establish benefit provisions to the state legislature FPPA issues a publicly available annual financial report that includes financial statements and -61-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 9 PENSION PLANS (continued) C Fire Employees - Statewide Defined Benefit Plan (continued) required supplementary information for the Statewide Defined Benefit Plan and the Statewide Death and Disability Plan That report may be obtained by calling FPPA at 303-770-3772 in the Denver Metro area and 1-800-332-FPPA (3772) from outside the metro area The contribution requirements of plan members and the Town are established by statute The contribution rate is 8% of covered salary for all plan members and 8% for the Town The Town s contributions to the Statewide Defined Benefit Plan for the years ending December 31, 2008, 2007, and 2006 were $340,625, $331,384, and $299,657, respectively, equal to the required contribution D Volunteer Firefighters' Pension Fund - FPPA Administered (a) Plan Description The Town participates in an agent multiple-employer defined benefit plan, administered by FPPA, that covers its volunteer fire fighters This plan provides retirement benefits as well as death and disability benefits The Town s volunteer fire fighters become fully vested after 20 years of active service and reaching age 50 The benefit, payable at age 50, would be equal to the retirement benefit prorated based upon the number of years of service accrued at termination Surviving spouses of deceased retirees are entitled to 50% of the retirement benefit until remarriage or their death Pre-retirement death and disability benefits are only available if incurred in the line of duty The plan also provides for a lump-sum burial benefit upon the death of an active or retired firefighter FPPA issues independent annual reports that may be obtained by calling FPPA at 303-770-3772 in the Denver Metro area and 1-800-332-3772 from outside the metro area (b) Funding Policy Funding Policy The Volunteer Firefighters Pension Plan receives contributions from the Town in an amount not to exceed one-half mill of property tax revenue As established by the legislature, the State of Colorado contributes up to ninety percent of the Town s contribution The States contribution must not exceed the greater of the actuarially required contribution or the highest State contribution during the years 1998 through 2001,which was $17,635 in 2000 The contributions are not actuarially determined The actuarial study as of January 1, 2007, indicated that the current level of contributions to the fund is adequate to support on an actuarially sound basis, the prospective benefits for the present Plan Annual Pension Costs For the year ended December 31, 2008, the Town and State actual contributions were $20,440 and $17,635, respectively, as required by the plan as part of the January 1, 2007 actuarial valuation using the entry age normal cost method Actuarial assumptions included the following: Investment rate of return 80% per annum, compounded annually, net of operating expenses Normal retirement Age 50 and 20 years of service Asset Valuation 3 year moving average of expected and actual market value Inflation rate 35% Cost of living - None Salary increase - None -62-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 9 PENSION PLANS (continued)) D Volunteer Firefighters' Pension Fund - FPPA Administered (continued) Based on an amortization period of twenty years using the level dollar method on an open basis, the Plan s expected contributions exceed the amount recommended to eliminate the unfunded actuarial accrued liability Trend information of the Plan follows: Schedule of Employer Contributions 2008 2007 2006 Annual Required Contribution $20,440 $20,440 $20,440 Percentage Contributed 100% 100% 0% Net Pension Obligation $ - $ - $ - The required schedule of funding progress can be found on page 71 This schedule provides multiyear trend information on the actuarial value of plan assets relative to the actuarial accrued liability for benefits There are no significant changes in the amounts reported, such as changes in the benefits provided, the size and composition of the employee group(s) covered by the plan, or the actuarial methods and assumptions used 10 DEFERRED COMPENSATION PLANS The Town provides employees deferred compensation plans created in accordance with IRC Section 457 These plans permit employees to defer a portion of their salary until future years The general employee plan is through ICMA All full-time and part-time employees who are covered by the ICMA general employees defined contribution pension plan are eligible to participate in the ICMA deferred compensation plan A second IRC 457 plan is established with Colorado County Officials and Employees Retirement Association (CCOERA) This plan is only available to those employees who were eligible to participate in the CCOERA defined contribution pension plan A third plan is available to fire employees who meet the eligibility requirements for FPPA membership The Town contributes 2% of each paid fire fighter's salary Employee participation in the 457 plans is optional Deferred Compensation is only available to employees upon termination, retirement, death or unforeseeable emergency Each plan s trustee manages investments Several investment options are available to participants 11 RISK MANAGEMENT The Town is exposed to various risks of loss related to torts, theft, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters The Town has agreed to partially self-insure claims for health insurance of Town employees to a maximum liability of $60,000 per covered person -63-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 11 RISK MANAGEMENT (continued) Self-insurance activities are accounted for in the Employee Benefits Fund Changes in claims payable were as follows: 2008 2007 Claims payable, January 1 $ 658,447 $ 416,982 Incurred claims 3,337,365 2,890,413 Claims paid (3,333,913) (2,648,948) Claims payable, December 31 $ 661,899 $ 658,447 For excess liability, property and workers compensation claims, the Town is involved with the Colorado Intergovernmental Risk Sharing Agency (CIRSA), a separate and independent governmental and legal entity formed by an intergovernmental agreement by member municipalities pursuant to the provision of 24-10- 1155, Colorado Revised Statutes (1982 Replacement Volume) and Colorado Constitution, Article XIV, Section 18(2) The purpose of CIRSA is to provide members defined liability and property coverage and to provide assistance in prevention of loss to municipal property and to personal injury It is the intent of the members of CIRSA to create an entity in perpetuity, which will administer and use funds contributed by the members to defend and indemnify, in accordance with the bylaws, any member of CIRSA against stated liability of loss to the limit of the financial resources of CIRSA It is also the intent of the members to have CIRSA provide continuing stability and availability of needed coverage at reasonable costs All income and assets of CIRSA shall be at all times dedicated to the exclusive benefit of its members CIRSA is a separate legal entity and the Town does not approve budgets nor does it have the ability to significantly affect the operations of the unit In 2008, the Town s CIRSA deductibles per occurrence were: Liability $50,000 Auto Liability 2,500 Property 50,000 Auto Physical Damage 50,000-64-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 12 COMMITMENTS AND CONTINGENCIES Committed Construction As of December 31, 2008 the Town had unexpended construction related commitments of $41,125,541 Litigation Although the Town is subject to pending and threatened litigation, the Town s Management and the Town Attorney believe that all lawsuits and claims, which have been filed against the Town, are either adequately covered by insurance or the final settlement of uninsured matters will not have a materially adverse effect on the financial position of the Town Taxpayer Bill of Rights (TABOR) In November 1992, Colorado voters approved a State Constitutional Amendment, TABOR, the general purpose of which is to restrain government growth (as measured by revenues) without a vote of the local citizens The key mechanisms for restraining growth without a vote are: 1) the prohibition of revenue and expenditure growth other than for inflation and a component for new construction growth, 2) the prohibition of new taxes or higher tax rates, 3) the prohibition of new debt, and 4) the refunding of any revenues collected in excess of the revenue limitations Castle Rock voters have approved certain revenue exemptions These exemptions include: 1) a $0075 exemption of sales and motor vehicle taxes approved in 1994 to be used for streets, trails, bridges and sidewalks, 2) a $004 exemption of sales and motor vehicle taxes approved in 1995 to be used for transportation and the community center, and 3) approved in 2005, an exemption of all transportation impact fees and all building use taxes to be used for transportation and the community center In addition to the revenue exemptions, in 2005, voters approved to allow the Town to retain any revenues collected in excess of the TABOR revenue limit for the period 2004 through 2008 These retained revenues are being used to finance additional police officers and fire fighters and to construct various capital improvements throughout the Town TABOR further requires emergency reserves of at least 3% of fiscal year spending (excluding bonded debt service) This reserve was recorded in the General Fund as reserved fund balance of $1,061,254 as of December 31, 2008 Local governments are prohibited from use of these emergency reserves to compensate for economic conditions, revenue shortfalls, salary or benefit increases The Town s management believes the Town is in compliance with the provisions of TABOR Capital Projects In 2002, the Town established the Parks, Municipal Facilities, Fire, Police, and Recreation Capital Projects Funds Prior to 2002, these activities were accounted for in the General Fund At the point of the transfer, certain projects completed by the General Fund were expected to be reimbursed by development impact fees that are collected in the capital project funds To assure reimbursement of the costs, the Town recorded loans between the General Fund and the capital project funds Since the expenditures had already occurred, this resulted in the capital project funds showing fund deficits in prior years Currently, only the Police Capital Project Fund remains in deficit -65-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 13 INTERFUND TRANSACTIONS INTERFUND LOANS Reporting Fund Fund loan from / to Purpose Receivable Payable GOVERNMENTAL FUNDS General Parks Capital Impact fees-reimburse General for growth related construction $ 301,959 $ - Municipal Facilities Capital Impact fees-reimburse General for growth related construction 210,891 - Police Capital Impact fees-reimburse General for growth related construction 1,116,808 - Golf Advance debt service reserve 1,093,140 - Total General Fund 2,722,798 - Transportation Golf Advance for operations 157,314 - Development Services Advance funding for capital projects 485,697 Total Transportation Fund 157,314 485,697 Other Governmental Funds Parks Capital General Impact fees-reimburse General for growth related construction - 301,959 Muncipal Facilities Capital General Impact fees-reimburse General for growth related construction - 210,891 Police Capital General Impact fees-reimburse General for growth related construction - 1,116,808 Total Other Governmental Funds - 1,629,658 ENTERPRISE FUNDS Water Water Resources Advance for operations - 1,113,867 Development Services Advance funding for capital projects - 344,107 Total Water Fund - 1,457,974 Water Resources Water Advance for operations 1,113,867 - Wastewater Development Services Advance funding for capital projects - 220,665 Stormwater Development Services Advance funding for capital projects - 354,517 Golf General Advance for debt service reserve - 1,093,140 Transportation Advance for operations - 157,314 Total Golf Fund - 1,250,454 Development Services Transportation Advance funding for capital projects 485,697 - Stormwater Advance funding for capital projects 354,517 - Wastewater Advance funding for capital projects 220,665 - Water Advance funding for capital projects 344,107 - Total Development Services Fund 1,404,986 - Total All Funds $ 5,398,965 $ 5,398,965-66-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 13 INTERFUND TRANSACTIONS (continued) Reporting Fund Transfer Transfer Fund transfer from / to Purpose In Out GOVERNMENTAL FUNDS TRANSFERS General Transportation Funding for trails and maintenance $ 500,000 $ - Parks Capital Interfund loan interest 7,858 - Municipal Facilities Capital Interfund loan interest 7,318 - Police Capital Interfund loan interest 20,163 - Golf Interfund loan interest 44,928 - Community Center Operating transfer 232,211 - Fleet Purchase of new vehicles 63,558 Total General Fund 812,478 63,558 Transportation General Funding for trails and maintenance - 500,000 Community Development Interfund loan interest - 22,973 Golf Interfund loan interest 12,676 - Total Transportation Fund 12,676 522,973 Other Governmental Funds Parks Capital General Interfund loan interest - 7,858 Water Resources Funding for park development 200,000 - Muncipal Facilities Capital General Interfund loan interest - 7,318 Police Capital General Interfund loan interest - 20,163 Total Other Governmental Funds 200,000 35,339 ENTERPRISE FUNDS Water Community Development Interfund loan interest - 16,276 Fleet Purchase of New Vehicles - 6,443 Total Water Fund - 22,719 Water Resources Parks Capital Funding for park development - 200,000-200,000-67-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 13 INTERFUND TRANSACTIONS (continued) Reporting Fund Transfer Transfer Fund transfer from / to Purpose In Out ENTERPRISE FUNDS (continued) Stormwater Community Development Interfund loan interest - 16,769 Fleet Purchase of New Vehicles - 157,752 Total Stormwater Fund - 174,521 Wastewater Community Development Interfund loan interest - 10,437 Fleet Purchase of New Vehicles - 62,476 Total Wastewater Fund - 72,913 Golf General Interfund loan interest - 44,928 Transporation Interfund loan interest - 12,676 Community Center Operating transfer 37,000 - Total Golf Fund 37,000 57,604 Community Center Golf Operating transfer 37,000 General Operating transfer 232,211 Total Community Center - 269,211 Community Development Transportation Interfund loan interest 22,973 - Water Interfund loan interest 16,276 - Stormwater Interfund loan interest 16,769 - Wastewater Interfund loan interest 10,437 - Total Community Development 66,455 - INTERNAL SERVICE FUNDS TRANSFERS (continued) Fleet General Purchase of new vehicles 63,558 - Water Purchase of new vehicles 6,443 - Wastewater Purchase of new vehicles 62,476 - Stormwater Purchase of new vehicles 157,752 - Total fleet fund 290,229 - Total All Funds $ 1,418,838 $ 1,418,838-68-
EXHIBIT XIV NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2008 13 INTERFUND TRANSACTIONS (continued) Transactions that are representative of lending / borrowing arrangements which were outstanding at the end of the year are referred to as Loans to / from Other Funds or interfund loans Any residual balances outstanding between the governmental activities and business-type activities are reported in the Town-wide financial statements as internal balances Eliminations are made in interfund activities, payables and receivables All internal balances in the Town-wide Statement of Net Assets have been eliminated except those representing balances between the governmental activities and business-type activities, which are reported as internal balances and are eliminated in the total column In the Statement of Activities, internal service fund transactions have been eliminated Transactions between governmental and business-type activities are not eliminated -69-
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SUPPLEMENTARY INFORMATION Required Supplementary Information Combining and Individual Fund Statements and Schedules
Required Supplementary Information Analysis of Funding Progress for the Volunteer Firefighters Pension Plan Schedule of Revenues and Expenditures and Changes in Funds Available General Fund Transportation Fund Note to Required Supplementary Information
EXHIBIT XV REQUIRED SUPPLEMENTARY INFORMATION (UN-AUDITED) VOLUNTEER FIREFIGHTERS' PENSION PLAN ANALYSIS OF FUNDING PROGRESS DECEMBER 31, 2008 A schedule of funding progress for the Volunteer Firefighters' Pension Plan resulting from the last six actuarial valuations is shown below Due to the size of the plan, actuarial valuations are only performed every two years UAAL as a Actuarial Percentage Actuarial Actuarial Accrued Unfunded Funded Covered of Covered Valuation Value of Liability (AAL) UAAL Ratio Payroll Payroll Date Assets (a) Entry Age (b) (b-a) (b-a) ( c ) ((b-a)/c) January 1, 1999 $ 855,592 $ 538,764 $ (316,828) 1588% N/A N/A January 1, 2000 938,612 512,837 (425,775) 1830% N/A N/A January 1, 2001 995,438 633,936 (361,502) 1570% N/A N/A January 1, 2003 863,820 709,876 (153,944) 1217% N/A N/A January 1, 2005 841,327 671,287 (170,040) 1253% N/A N/A January 1, 2007 991,491 797,689 (193,802) 1243% N/A N/A See the accompanying independent auditor's report -71-
EXHIBIT XVI GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Taxes $ 21,254,709 $ 21,254,709 $ 21,051,908 $ (202,801) Licenses and permits 85,560 85,560 79,232 (6,328) Charges for services 1,052,087 1,052,087 1,400,531 348,444 Management fees 2,878,081 2,878,081 2,800,785 (77,296) Fines and forfeitures 459,997 459,997 504,647 44,650 Intergovernmental 25,000 155,565 193,916 38,351 Investment earnings 584,985 584,985 427,214 (157,771) Other 255,870 255,870 852,826 596,956 Total revenues 26,596,289 26,726,854 27,311,059 584,205 EXPENDITURES General government Town council 355,952 355,952 322,538 33,414 Town manager 2,206,944 2,210,746 1,828,500 382,246 Town attorney 462,002 462,002 438,050 23,952 Organizational services 3,966,772 3,966,772 3,851,439 115,333 Municipal court 233,932 233,932 236,002 (2,070) Non-departmental 408,266 408,266 333,584 74,682 Long-range planning 846,340 869,715 715,928 153,787 Total general government 8,480,208 8,507,385 7,726,041 781,344 Public Safety Police 7,438,921 7,413,498 7,248,674 164,824 Fire 8,668,681 8,665,994 8,518,382 147,612 Total public safety 16,107,602 16,079,492 15,767,056 312,436 Culture and recreation Parks and open space 2,688,377 2,693,758 2,549,877 143,881 Total culture and recreation 2,688,377 2,693,758 2,549,877 143,881 Capital outlay 1,400,368 2,961,278 2,099,264 862,014 Debt service Principal - 15,090 15,090 - Interest - 3,710 3,710 - Agency fees 2,500 2,500-2,500 Total debt service 2,500 21,300 18,800 2,500 Total expenditures 28,679,055 30,263,213 28,161,038 2,102,175 Excess (deficiency) of revenues over (under) expenditures (2,082,766) (3,536,359) (849,979) 2,686,380 OTHER FINANCING SOURCES (USES) Transfers in 868,711 868,711 732,211 (136,500) Interfund loan principal 389,735 389,735 389,735 - Interfund loan interest 80,267 80,267 80,267 - Transfers out - (36,000) (63,558) (27,558) Total other financing sources (uses) 1,338,713 1,302,713 1,138,655 (164,058) Net change in funds available (744,053) (2,233,646) 288,676 2,522,322 Funds available - January 1 10,029,798 12,813,985 12,813,985 - Funds available - December 31 $ 9,285,745 $ 10,580,339 13,102,661 $ 2,522,322 RECONCILIATION OF FUNDS AVAILABLE TO GAAP FUND BALANCE Loans to other funds 2,722,799 Fund balance - December 31 $ 15,825,460 The notes to the financial statements are an integral part of the financial statements -72-
EXHIBIT XVII TRANSPORTATION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Sales taxes $ 7,256,480 $ 7,256,480 $ 7,104,792 $ (151,688) Intergovernmental 2,194,364 2,194,364 2,428,387 234,023 Charges for services 3,825 3,825 10,795 6,970 Other 608,732 608,732 1,124,636 515,904 Building use taxes 3,093,773 3,093,773 1,807,284 (1,286,489) Vehicle use taxes 980,374 980,374 928,196 (52,178) Impact fees 1,359,197 1,359,197 837,444 (521,753) Investment earnings 814,171 814,171 760,846 (53,325) Total revenues 16,310,916 16,310,916 15,002,380 (1,308,536) EXPENDITURES Street operations 2,376,773 2,376,773 2,310,870 65,903 Administration 1,605,470 1,605,470 1,417,756 187,714 Traffic operations 1,485,513 1,485,513 1,429,756 55,757 Public transit 899,471 899,471 824,109 75,362 Engineering 1,209,249 1,209,249 986,444 222,805 Street improvement program 3,300,000 3,300,000 2,806,128 493,872 Total public works 10,876,476 10,876,476 9,775,063 1,101,413 Capital outlay 27,675,100 32,097,307 13,780,607 18,316,700 DEBT SERVICE Principal 789,392 789,392 565,000 224,392 Interest 645,700 645,700 195,700 450,000 Bond issue costs - - 253,405 (253,405) Agency fees 2,500 2,500 400 2,100 Total debt service 1,437,592 1,437,592 1,014,505 423,087 Total expenditures 39,989,168 44,411,375 24,570,175 19,841,200 Excess (deficiency) of revenues over (under) (23,678,252) (28,100,459) (9,567,795) 18,532,664 expenditures OTHER FINANCING SOURCES (USES) Bond proceeds 10,000,000 10,000,000 10,000,000 - Bond premium - - 239,652 239,652 Interfund loan principal 151,104 151,104 151,104 - Interfund loan interest received 12,676 12,676 12,676 - Interfund loan interest paid (22,973) (22,973) (22,973) - Transfers out (500,000) (500,000) (500,000) - Total other financing sources (uses) 9,640,807 9,640,807 9,880,459 239,652 Net change in operating funds available (14,037,445) (18,459,652) 312,664 18,772,316 Total Funds available - January 1 17,412,427 23,312,888 23,312,888 - Total Funds available - December 31 $ 3,374,982 $ 4,853,236 23,625,552 $ 18,772,316 RECONCILIATION OF FUNDS AVAILABLE TO GAAP FUND BALANCE Loans to other funds 157,314 Loans from other funds (485,697) Fund balance - December 31 $ 23,297,169 The notes to the financial statements are an integral part of the financial statements -73-
EXHIBIT XVIII NOTE TO REQUIRED SUPPLEMENTARY INFORMATION DECEMBER 31, 2008 1 Budgets and Budgetary Accounting Annual appropriations are adopted for all funds, except the Agency Fund For the governmental funds, the Town budgets on a basis consistent with generally accepted accounting principles (GAAP), except that interfund loans are treated as revenues of the receiving fund and expenditures of the loaning fund in the year that the loan is made Principal payments of interfund loans are treated as expenditures of the paying fund and revenues of the receiving fund For proprietary funds, the Town budgets on a basis consistent with GAAP except as follows: (1) purchases of capital assets are reported expenditures (capital outlay), (2) debt service principal payments are treated as budgetary expenditures, (3) proceeds from bond issues are treated as revenues, (4) bond issue and discount costs are treated as expenditures of the period, (5) amortization and depreciation of capital assets are not budgeted and (6) interfund loans are treated as revenues of the receiving fund and expenditures of the loaning fund in the year that the loan is made Principal payments of interfund loans are treated as expenditures of the paying fund and revenues of the receiving fund The Town follows these procedures in establishing the budgetary data reflected in the financial statements: (a) Prior to November 1, the Town Manager submits to the Town Council a proposed operating and capital budget for the fiscal year commencing the following January 1 The budget includes proposed expenditures and the means of financing them (b) Public hearings are conducted at special Town Council Meetings to obtain taxpayer comments (c) The Town s mill levy is formally certified to the Douglas County Treasurer prior to December 15, based on the budget (d) Prior to December 31, the budget is legally enacted through passage of an ordinance Adoption of the budget ordinance constitutes appropriations of amounts specified therein as expenditures from the funds indicated If during the year, the Town Manager certifies that there are revenues available for appropriation in excess of those estimated in the budget, the Council may, by ordinance, make supplemental appropriations for the year up to the amount of such excess If during the year, the Town Manager determines that the revenues available will be insufficient to meet the amount appropriated, the Council may by ordinance reduce one or more appropriations At any time during the year, the Town Manager may transfer part or all of any unencumbered appropriation balance amount between departments within a fund (e) Expenditures may not legally exceed budgeted appropriations at the fund level Appropriations may not legally exceed estimated revenues and budgetary fund balances (reserves) estimated as available (f) All appropriations lapse at year-end For the year ended December 31, 2008, the Parks Capital Fund actual expenditures exceeded the amended expenditure budget by $23,850 This is a potential violation of Colorado Budget Law -74-
Combining and Individual Fund Statements and Schedules
OTHER GOVERNMENTAL FUNDS The statements that follow combine the non-major governmental funds as other governmental funds These totals are comprised of non-major special revenue funds and non-major capital project funds, which are aggregated into the Other Governmental Funds column Non-major Special Revenue Funds Special revenue funds account for revenues from specific sources that are legally or by management decision required to be used for particular activities This column combines all non-major special revenue funds Non-major Capital Project Funds Capital project funds account for financial resources used for the construction and acquisition of major capital projects such as streets, parks, information systems and Town facilities This column aggregates all capital project funds of the Town
EXHIBIT B-1 NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET DECEMBER 31, 2008 Total Non-major Non-major Other Special Capital Governmental Revenue Projects Funds ASSETS Cash and investments $ 1,518,273 $ 4,635,765 $ 6,154,038 Accounts receivable 1,021,638 100,000 1,121,638 Total assets $ 2,539,911 $ 4,735,765 $ 7,275,676 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 30,370 $ 180,061 $ 210,431 Deferred revenues 1,021,638-1,021,638 Loans from other funds - 1,629,658 1,629,658 Total liabilities 1,052,008 1,809,719 2,861,727 Fund balances Reserved Parks and open space 654,771-654,771 Unreserved Designated Special revenue funds 312,116-312,116 Capital projects funds - 623,010 623,010 Undesignated Special revenue funds 521,016-521,016 Capital projects funds - 2,303,036 2,303,036 Total fund balances 1,487,903 2,926,046 4,413,949 Total liabilities and fund balances $ 2,539,911 $ 4,735,765 $ 7,275,676 See the accompanying independent auditors' report -75-
EXHIBIT B-2 NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2008 Total Non-major Non-major Other Special Capital Governmental Revenue Projects Funds REVENUES Impact fees $ - $ 1,678,044 $ 1,678,044 Licenses and permits 53,382-53,382 Intergovernmental 373,054-373,054 Investment earnings 6,223 172,834 179,057 Contributions and donations 362,331 370,000 732,331 Total revenues 794,990 2,220,878 3,015,868 EXPENDITURES Current General government - 58,784 58,784 Public safety - 12,000 12,000 Culture and recreation 344,999 268,570 613,569 Capital outlay 152,903 4,216,798 4,369,701 Debt Service Principal - 541,818 541,818 Interest - 112,646 112,646 Total expenditures 497,902 5,210,616 5,708,518 Excess (deficiency) of revenues over (under) expenditures 297,088 (2,989,738) (2,692,650) OTHER FINANCING SOURCES (USES) Transfers in - 200,000 200,000 Transfers out - (35,339) (35,339) Total other financing sources (uses) - 164,661 164,661 Net change in fund balances 297,088 (2,825,077) (2,527,989) Fund balances - January 1 1,190,815 5,751,123 6,941,938 Fund balances - December 31 $ 1,487,903 $ 2,926,046 $ 4,413,949 See the accompanying independent auditors' report -76-
NON-MAJOR SPECIAL REVENUE FUNDS Special revenue funds account for revenues from specific sources that are legally or by management decision required to be used for specific activities Conservation Trust Fund The Conservation Trust Fund accounts for lottery proceeds that are received directly from the State of Colorado or received from Douglas County through a share-back agreement and for fees charged for the use of sports and multi-purpose fields The monies collected are used for the development and renovation of qualifying parks, recreation facilities and parks infrastructure P S Miller Trust Fund This fund accounts for donations made to the Town from the Phillip S Miller Trust These funds are used to finance community service programs including financial support for the senior center, the museum, public art, and the local chamber of commerce
EXHIBIT C-1 NON-MAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET DECEMBER 31, 2008 Total Non-major Conservation PS Miller Special Trust Trust Revenue ASSETS Cash and investments $ 896,509 $ 621,764 $ 1,518,273 Accounts receivable 1,021,638-1,021,638 Total assets $ 1,918,147 $ 621,764 $ 2,539,911 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 30,370 $ - $ 30,370 Deferred revenue 1,021,638-1,021,638 Total liabilities 1,052,008-1,052,008 Fund balances Reserved Parks and open space 654,771-654,771 Unreserved Designated 211,368 100,748 312,116 Undesignated - 521,016 521,016 Total fund balances 866,139 621,764 1,487,903 Total liabilities and fund balances $ 1,918,147 $ 621,764 $ 2,539,911 See the accompanying independent auditors' report -77-
EXHIBIT C-2 NON-MAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2008 Total Non-major Conservation PS Miller Special Trust Trust Revenue REVENUES Licenses and permits $ 53,382 $ - $ 53,382 Intergovernmental 373,054-373,054 Investment earnings 3,359 2,864 6,223 Contributions and donations 2,331 360,000 362,331 Total revenues 432,126 362,864 794,990 EXPENDITURES Current Culture and recreation 70,614 274,385 344,999 Capital outlay 106,220 46,683 152,903 Total expenditures 176,834 321,068 497,902 Excess(deficiency) of revenues over (under) expenditures 255,292 41,796 297,088 Fund balance - January 1 610,847 579,968 1,190,815 Fund balance - December 31 $ 866,139 $ 621,764 $ 1,487,903 See the accompanying independent auditors' report -78-
EXHIBIT C-3 CONSERVATION TRUST FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Licenses and permits $ 62,053 $ 62,053 $ 53,382 $ (8,671) Intergovernmental 772,320 772,320 373,054 (399,266) Investment earnings 16,545 16,545 3,359 (13,186) Contributions and donations - - 2,331 2,331 Total revenues 850,918 850,918 432,126 (418,792) EXPENDITURES Culture and recreation - - 70,614 (70,614) Capital outlay 90,000 232,394 106,220 126,174 Total expenditures 90,000 232,394 176,834 55,560 Excess (deficiency) of revenues over (under) expenditures 760,918 618,524 255,292 (363,232) Funds available - January 1 403,546 610,847 610,847 - Funds available - December 31 $ 1,164,464 $ 1,229,371 $ 866,139 $ (363,232) See the accompanying independent auditors' report -79-
EXHIBIT C-4 PS MILLER TRUST FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Investment earnings $ 12,348 $ 12,348 $ 2,864 $ (9,484) Donations 350,000 350,000 360,000 10,000 Total revenues 362,348 362,348 362,864 516 EXPENDITURES Culture and recreation 293,380 293,380 274,385 18,995 Capital outlay 75,000 75,000 46,683 28,317 Total expenditures 368,380 368,380 321,068 47,312 Net change in funds available (6,032) (6,032) 41,796 47,828 Funds available - January 1 550,901 579,968 579,968 - Funds available - December 31 $ 544,869 $ 573,936 $ 621,764 $ 47,828 See the accompanying independent auditors' report -80-
NON-MAJOR CAPITAL PROJECT FUNDS Capital project funds account for financial resources used to construct and acquire all major capital projects such as parks and town facilities except for those capital projects that are required to be accounted for in an enterprise fund Parks Capital Fund The Parks Capital Fund accounts for resources that are spent for the construction, expansion and improvement of Town parks The primary source of revenue for this fund is from development impact fees that are collected at the time a building permit is issued Certain projects in this fund were financed through an interfund loan from the General Fund Municipal Facilities Capital Fund The Municipal Facilities Capital Fund accounts for resources and expenditures for the construction, expansion and improvement of Town facilities The primary source of revenue in this fund is from development impact fees that are collected at the time a building permit is issued Certain projects in this fund were financed through a loan from the General Fund Fire Capital Fund The Fire Capital Fund accounts for resources and expenditures for the construction, expansion and improvement of fire facilities and other capital needs of the Fire Department The primary source of revenue in this fund is from development impact fees, which are collected at the time a building permit is issued Police Capital Fund The Police Capital Fund accounts for resources and expenditures for the construction, expansion and improvement of police facilities and to provide for other capital needs of the Police Department The primary source of revenue in this fund is from development impact fees that are collected at the time a building permit is issued Certain projects in this fund were financed through an interfund loan from the General Fund Recreation Capital Fund The Recreation Capital Fund accounts for resources and expenditures for the construction, expansion and improvement of recreation facilities and other capital needs related to recreational services The primary source of revenue in this fund is from development impact fees, which are collected at the time a building permit is issued
EXHIBIT D-1 NON-MAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET DECEMBER 31, 2008 Total Municipal Non-major Parks Facilities Fire Police Recreation Capital Capital Capital Capital Capital Capital Projects ASSETS Cash and investments $ 554,919 $ 892,893 $ 1,637,030 $ 145,286 $ 1,405,637 $ 4,635,765 Accounts receivable 100,000 - - - - 100,000 Total assets $ 654,919 $ 892,893 $ 1,637,030 $ 145,286 $ 1,405,637 $ 4,735,765 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 131,265 $ 2,844 $ 45,952 $ - $ - $ 180,061 Loans from other funds 301,959 210,891-1,116,808-1,629,658 Total liabilities 433,224 213,735 45,952 1,116,808-1,809,719 Fund balances (deficits) Unreserved Designated - 118,355 38,384 131,724 334,547 623,010 Undesignated 221,695 560,803 1,552,694 (1,103,246) 1,071,090 2,303,036 Total fund balances (deficits) 221,695 679,158 1,591,078 (971,522) 1,405,637 2,926,046 Total liabilities and fund balances $ 654,919 $ 892,893 $ 1,637,030 $ 145,286 $ 1,405,637 $ 4,735,765 See the accompanying independent auditors' report -81-
EXHIBIT D-2 NON-MAJOR CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2008 Total Municipal Non-major Parks Facilities Fire Police Recreation Capital Capital Capital Capital Capital Capital Projects REVENUES Impact fees $ 863,817 $ 157,036 $ 251,370 $ 64,415 $ 341,406 $ 1,678,044 Investment earnings 75,518 26,349 40,025 900 30,042 172,834 Contributions 100,000-270,000 - - 370,000 Total revenues 1,039,335 183,385 561,395 65,315 371,448 2,220,878 EXPENDITURES General government - 58,784 - - - 58,784 Public safety - - 12,000 - - 12,000 Culture and recreation 181,362 - - - 87,208 268,570 Capital outlay 3,580,474 42,792 533,722-59,810 4,216,798 Debt service Principal - - - - 541,818 541,818 Interest - - - - 112,646 112,646 Total expenditures 3,761,836 101,576 545,722-801,482 5,210,616 Excess (deficiency) of revenues over (under) expenditures (2,722,501) 81,809 15,673 65,315 (430,034) (2,989,738) OTHER FINANCING SOURCES (USES) Transfers in 200,000 - - - - 200,000 Transfers out (7,858) (7,318) - (20,163) - (35,339) Total other financing sources (uses) 192,142 (7,318) - (20,163) - 164,661 Net change in fund balance (2,530,359) 74,491 15,673 45,152 (430,034) (2,825,077) Fund balances (deficits) - January 1 2,752,054 604,667 1,575,405 (1,016,674) 1,835,671 5,751,123 Fund balances (deficits) - December 31 $ 221,695 $ 679,158 $ 1,591,078 $ (971,522) $ 1,405,637 $ 2,926,046 See the accompanying independent auditors' report -82-
EXHIBIT D-3 PARKS CAPITAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Intergovenmental $ - $ 58,274 $ - $ (58,274) Development impact fees 1,430,473 1,430,473 863,817 (566,656) Investment earnings 243,195 243,195 75,518 (167,677) Contributions - 168,443 100,000 (68,443) Total revenues 1,673,668 1,900,385 1,039,335 (861,050) EXPENDITURES Culture and recreation 114,362 181,362 181,362 - Capital outlay 2,200,000 3,556,624 3,580,474 (23,850) Total expenditures 2,314,362 3,737,986 3,761,836 (23,850) Excess (deficiency) of revenues over (under) expenditures (640,694) (1,837,601) (2,722,501) (884,900) OTHER FINANCING SOURCES (USES) Transfers in - 200,000 200,000 - Interfund loan principal (147,096) (147,096) (147,096) - Interfund loan interest (7,858) (7,858) (7,858) - Total other financing sources (uses) (154,954) 45,046 45,046 - Net change in funds available (795,648) (1,792,555) (2,677,455) (884,900) Funds available - January 1 2,455,012 3,201,109 3,201,109 - Funds available - December 31 $ 1,659,364 $ 1,408,554 523,654 $ (884,900) RECONCILIATION OF FUNDS AVAILABLE TO GAAP FUND BALANCE Loans from other funds (301,959) Fund Balance - December 31 $ 221,695 See the accompanying independent auditors' report -83-
EXHIBIT D-4 MUNICIPAL FACILITIES CAPITAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Development impact fees $ 269,928 $ 269,928 $ 157,036 $ (112,892) Interest earnings 64,095 64,095 26,349 (37,746) Total revenues 334,023 334,023 183,385 (150,638) EXPENDITURES General government 67,266 67,266 58,784 8,482 Capital outlay 78,600 78,600 42,792 35,808 Total expenditures 145,866 145,866 101,576 44,290 Excess (deficiency) of revenues over (under) expenditures 188,157 188,157 81,809 (106,348) OTHER FINANCING SOURCES (USES) Interfund loan principal (207,265) (207,265) (207,265) - Interfund loan interest (7,318) (7,318) (7,318) - Total financing sources (uses) (214,583) (214,583) (214,583) - Net change in funds available (26,426) (26,426) (132,774) (106,348) Funds available - January 1 992,904 1,022,823 1,022,823 - Funds available - December 31 $ 966,478 $ 996,397 890,049 $ (106,348) RECONCILIATION OF FUNDS AVAILABLE TO GAAP FUND BALANCE Loans from other funds (210,891) Fund balance - December 31 $ 679,158 See the accompanying independent auditors' report -84-
EXHIBIT D-5 FIRE CAPITAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Development impact fees $ 398,690 $ 398,690 $ 251,370 $ (147,320) Investment earnings 88,469 88,469 40,025 (48,444) Contributions - - 270,000 270,000 Total revenues 487,159 487,159 561,395 74,236 EXPENDITURES Public safety 12,000 12,000 12,000 - Capital outlay - 605,740 533,722 72,018 Total expenditures 12,000 617,740 545,722 72,018 Excess (deficiency) of revenues over (under) expenditures 475,159 (130,581) 15,673 146,254 OTHER FINANCING SOURCES (USES) Interfund loan principal - - - - Interfund loan interest - - - - Total other financing sources (uses) - - - - Net change in funds available 475,159 (130,581) 15,673 146,254 Funds available - January 1 708,244 1,575,405 1,575,405 - Funds available - December 31 $ 1,183,403 $ 1,444,824 $ 1,591,078 $ 146,254 See the accompanying independent auditors' report -85-
EXHIBIT D-6 POLICE CAPITAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Development impact fees $ 151,386 $ 151,386 $ 64,415 $ (86,971) Investment earnings 8,880 8,880 900 (7,980) Total revenues 160,266 160,266 65,315 (94,951) EXPENDITURES Public safety - 5,555-5,555 Total expenditures - 5,555-5,555 Excess (deficiency) of revenues over (under) expenditures 160,266 154,711 65,315 (89,396) OTHER FINANCING SOURCES (USES) Interfund loan principal (35,375) (35,375) (35,375) - Interfund loan interest (20,163) (20,163) (20,163) - Total other financing sources (uses) (55,538) (55,538) (55,538) - Net change in funds available 104,728 99,173 9,777 (89,396) Funds available - January 1 120,700 135,509 135,509 - Funds available - December 31 $ 225,428 $ 234,682 145,286 $ (89,396) RECONCILIATION OF FUNDS AVAILABLE TO GAAP FUND BALANCE Loans from other funds (1,116,808) Fund deficit - December 31 $ (971,522) See the accompanying independent auditors' report -86-
EXHIBIT D-7 RECREATION CAPITAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Development impact fees $ 590,478 $ 590,478 $ 341,406 $ (249,072) Investment earnings 73,150 73,150 30,042 (43,108) Total revenues 663,628 663,628 371,448 (292,180) EXPENDITURES Culture and recreation - - 87,208 (87,208) Capital outlay - 160,713 59,810 100,903 Debt service Principal 541,818 541,818 541,818 - Interest 112,646 112,646 112,646 - Total expenditures 654,464 815,177 801,482 13,695 Excess (deficiency) of revenues over (under) expenditures 9,164 (151,549) (430,034) (278,485) Funds available - January 1 1,657,245 1,835,671 1,835,671 - Funds available - December 31 $ 1,666,409 $ 1,684,122 $ 1,405,637 $ (278,485) The notes to the financial statements are an integral part of the financial statements -87-
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ENTERPRISE FUNDS BUDGETARY SCHEDULES WATER FUND WATER RESOURCES FUND STORMWATER FUND WASTEWATER FUND GOLF FUND COMMUNITY CENTER FUND DEVELOPMENT SERVICES FUND
EXHIBIT E-1 WATER FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Charges for services $ 9,805,008 $ 9,805,008 $ 9,629,375 $ (175,633) System development fees 3,441,187 3,441,187 2,039,275 (1,401,912) Fines and forfeitures 289,183 289,183 319,610 30,427 Investment earnings 966,040 966,040 333,140 (632,900) Other 133,670 133,670 282,627 148,957 Total revenues 14,635,088 14,635,088 12,604,027 (2,031,061) OPERATING EXPENDITURES Administration 712,723 712,723 711,976 747 Operations support 7,852,553 8,320,487 7,326,138 994,349 Capital outlay 3,925,000 11,382,384 2,969,638 8,412,746 Total operating expenditures 12,490,276 20,415,594 11,007,752 9,407,842 DEBT SERVICE Principal 943,000 943,000 943,000 - Interest 894,541 894,541 876,960 17,581 Agency fees 2,500 2,500 378 2,122 Total debt service 1,840,041 1,840,041 1,820,338 19,703 Total expenditures 14,330,317 22,255,635 12,828,090 9,427,545 Excess (deficiency) of revenues over (under) expenditures 304,771 (7,620,547) (224,063) 7,396,484 OTHER FINANCING SOURCES (USES) Interfund loan proceeds - 1,113,867 1,113,867 - Interfund loan interest (16,276) (16,276) (16,276) - Transfers out - - (6,443) (6,443) Total other financing sources (uses) (16,276) 1,097,591 1,091,148 (6,443) Net change in funds available 288,495 (6,522,956) 867,085 7,390,041 Funds available - January 1 2,718,032 9,127,853 9,127,853 - Funds available - December 31 $ 3,006,527 $ 2,604,897 $ 9,994,938 $ 7,390,041 RECONCILIATION OF NET CHANGE IN FUNDS AVAILABLE TO CHANGE IN NET ASSETS (GAAP BASIS) Net change in funds available $ 867,085 Capital asset contributions 3,524,533 Loss on disposal of capital assets (54,129) Depreciation expense (4,406,491) Amortization expense (13,056) Capital outlay 2,969,638 Principal payments 943,000 Interfund loan proceeds (1,113,867) Change in net assets $ 2,716,713 See the accompanying independent auditors' report -89-
EXHIBIT E-2 WATER RESOURCES FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Charges for services $ 3,482,281 $ 3,482,281 $ 3,707,410 $ 225,129 System development fees 9,000,000 9,000,000 3,800,195 (5,199,805) Fines and forfeitures 187,578 187,578 223,967 36,389 Investment earnings 969,672 969,672 1,426,254 456,582 Other 96,164 96,164 74,876 (21,288) Total revenues 13,735,695 13,735,695 9,232,702 (4,502,993) OPERATING EXPENDITURES Administration 2,053,023 2,410,607 1,225,330 1,185,277 Capital outlay 62,195,500 65,407,187 44,748,062 20,659,125 Total operating expenditures 64,248,523 67,817,794 45,973,392 21,844,402 DEBT SERVICE Principal 411,099 411,099-411,099 Interest 1,980,000 1,980,000 637,348 1,342,652 Bond issuance costs - - 920,990 (920,990) Agency and other fees - - 297,319 (297,319) Total debt service 2,391,099 2,391,099 1,855,657 535,442 Total expenditures 66,639,622 70,208,893 47,829,049 22,379,844 Excess (deficiency) of revenues over (under) expenditures (52,903,927) (56,473,198) (38,596,347) 17,876,851 OTHER FINANCING SOURCES (USES) Proceeds from issuance of debt 44,000,000 44,000,000 74,795,000 30,795,000 Interfund loan disbursements - (1,113,867) (1,113,867) - Transfers out - (200,000) (200,000) - Total other financing sources (uses) 44,000,000 42,686,133 73,481,133 30,795,000 Net change in funds available (8,903,927) (13,787,065) 34,884,786 48,671,851 Funds available - January 1 24,702,967 28,992,494 28,992,494 - Funds available - December 31 $ 15,799,040 $ 15,205,429 $ 63,877,280 $ 48,671,851 RECONCILIATION OF NET CHANGE IN FUNDS AVAILABLE TO CHANGE IN NET ASSETS (GAAP BASIS) Net change in funds available $ 34,884,786 Depreciation expense (50,696) Amortization expense (10,233) Bond issuance cost 920,990 Capital outlay 44,748,062 Proceeds from issuance of debt (74,795,000) Interfund loan disbursements 1,113,867 Change in net assets $ 6,811,776 See the accompanying independent auditors' report -90-
EXHIBIT E-3 STORMWATER FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Charges for services $ 1,605,484 $ 1,605,484 $ 1,545,042 $ (60,442) System development fees 982,578 982,578 1,195,398 212,820 Investment earnings 128,414 128,414 55,106 (73,308) Other 184,647 184,647 104,211 (80,436) Total revenues 2,901,123 2,901,123 2,899,757 (1,366) OPERATING EXPENDITURES Administration 389,310 325,674 267,593 58,081 Operations support 1,224,732 1,367,887 1,180,668 187,219 Capital outlay 1,381,668 2,410,996 545,380 1,865,616 Total operating expenditures 2,995,710 4,104,557 1,993,641 2,110,916 Excess (deficiency) of revenues over (under) expenditures (94,587) (1,203,434) 906,116 2,109,550 OTHER FINANCING SOURCES (USES) Interfund loan interest (16,769) (16,769) (16,769) - Transfer out (245,000) (250,503) (157,752) 92,751 Total other financing sources (uses) (261,769) (267,272) (174,521) 92,751 Net change in funds available (356,356) (1,470,706) 731,595 2,202,301 Funds available - January 1 1,009,802 2,278,602 2,278,602 - Funds available - December 31 $ 653,446 $ 807,896 $ 3,010,197 $ 2,202,301 RECONCILIATION OF NET CHANGE IN FUNDS AVAILABLE TO CHANGE IN NET ASSETS (GAAP BASIS) Net change in funds available $ 731,595 Capital asset contributions 2,563,733 Depreciation expense (871,722) Capital outlay 545,380 Change in net assets $ 2,968,986 See the accompanying independent auditors' report -91-
EXHIBIT E-4 WASTEWATER FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Charges for services $ 6,148,073 $ 6,148,073 $ 6,123,998 $ (24,075) Development fees 2,639,890 2,639,890 1,317,771 (1,322,119) Investment earnings 711,821 711,821 312,431 (399,390) Other 138,946 138,946 142,650 3,704 Total revenues 9,638,730 9,638,730 7,896,850 (1,741,880) OPERATING EXPENDITURES Administration 373,654 301,080 295,190 5,890 Operations support 4,207,686 4,260,316 3,933,528 326,788 Contributions toward sewer capacity 2,284,383 2,284,383 2,555,013 (270,630) Capital outlay 2,069,838 5,546,545 2,135,634 3,410,911 Total operating expenditures 8,935,561 12,392,324 8,919,365 3,472,959 DEBT SERVICE Principal 507,465 507,465 507,465 - Interest 188,408 188,408 185,631 2,777 Agency fees 35,800 35,800 72 35,728 Total debt service 731,673 731,673 693,168 38,505 Total expenditures 9,667,234 13,123,997 9,612,533 3,511,464 Excess (deficiency) of revenues over (under) expenditures (28,504) (3,485,267) (1,715,683) 1,769,584 OTHER FINANCING SOURCES (USES) Interfund loan interest (10,437) (10,437) (10,437) - Transfers out (90,000) (95,503) (62,476) 33,027 Total other financing sources (uses) (100,437) (105,940) (72,913) 33,027 Net change in funds available (128,941) (3,591,207) (1,788,596) 1,802,611 Funds available - January 1 5,893,066 8,064,593 8,064,593 - Funds available - December 31 $ 5,764,125 $ 4,473,386 $ 6,275,997 $ 1,802,611 RECONCILIATION OF NET CHANGE IN FUNDS AVAILABLE TO CHANGE IN NET ASSETS (GAAP BASIS) Net change in funds available $ (1,788,596) Capital asset contributions 3,138,213 Loss on disposal of capital assets (12,609) Depreciation expense (1,709,383) Amortization expense (4,589) Capital outlay 2,135,634 Principal payments 507,465 Investment in joint venture 866,767 Change in net assets $ 3,132,902 See the accompanying independent auditors' report -92-
EXHIBIT E-5 GOLF FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Charges for services $ 2,750,475 $ 2,750,475 $ 2,669,402 $ (81,073) Investment earnings 37,192 37,192 18,261 (18,931) Other - - 13,663 13,663 Total revenues 2,787,667 2,787,667 2,701,326 (86,341) OPERATING EXPENDITURES Administration 327,478 327,478 304,021 23,457 Operations support 635,846 635,846 567,014 68,832 Food and beverages 327,744 327,744 338,838 (11,094) Maintenance 726,146 726,146 678,815 47,331 Total operating expenditures 2,017,214 2,017,214 1,888,688 128,526 DEBT SERVICE Principal 282,696 282,696 340,194 (57,498) Interest 308,661 308,661 310,441 (1,780) Agency fees 2,500 2,500 150 2,350 Total debt service 593,857 593,857 650,785 (56,928) Total expenditures 2,611,071 2,611,071 2,539,473 71,598 Excess (deficiency) of revenues over (under) expenditures 176,596 176,596 161,853 (14,743) OTHER FINANCING SOURCES (USES) Transfers in 37,000 37,000 37,000 - Interfund loan principal paid (151,104) (151,104) (151,104) - Interfund interest paid (57,604) (57,604) (57,604) - Total other financing sources (uses) (171,708) (171,708) (171,708) - Net change in funds available 4,888 4,888 (9,855) (14,743) Funds available - January 1 1,127,653 1,159,049 1,159,049 - Funds available - December 31 $ 1,132,541 $ 1,163,937 $ 1,149,194 $ (14,743) RECONCILIATION OF NET CHANGE IN FUNDS AVAILABLE TO CHANGE IN NET ASSETS (GAAP BASIS) Net change in funds available $ (9,855) Loss on disposal of capital assets - Depreciation expense (168,161) Amortization expense (41,927) Principal payments 340,194 Interfund loan principal paid 151,104 Change in net assets $ 271,355 See the accompanying independent auditors' report -93-
EXHIBIT E-6 COMMUNITY CENTER FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Taxes $ 2,000,995 $ 2,000,995 $ 1,905,580 $ (95,415) Charges for services 2,526,883 2,526,883 2,599,934 73,051 Investment earnings 114,294 114,294 57,807 (56,487) Other - - 26,148 26,148 Total revenues 4,642,172 4,642,172 4,589,469 (52,703) OPERATING EXPENDITURES Administration 250,948 250,948 245,866 5,082 Operations support 1,434,419 1,434,419 1,419,670 14,749 Marketing 56,000 56,000 58,372 (2,372) Outdoor programs 14,316 14,316 11,343 2,973 Aquatics 1,237,238 1,237,238 1,146,107 91,131 Athletics 365,349 365,349 359,909 5,440 Kids club 415,604 415,604 304,252 111,352 Cultural arts 45,550 45,550 50,020 (4,470) Fitness and wellness 244,340 244,340 262,453 (18,113) Youth programs 290,881 290,881 297,268 (6,387) Transfers out 269,211 269,211 269,211 - Total expenditures 4,623,856 4,623,856 4,424,471 199,385 Net change in funds available 18,316 18,316 164,998 146,682 Funds available - January 1 2,521,399 2,653,445 2,653,445 - Funds available - December 31 $ 2,539,715 $ 2,671,761 $ 2,818,443 $ 146,682 RECONCILIATION OF NET CHANGE IN FUNDS AVAILABLE TO CHANGE IN NET ASSETS (GAAP BASIS) Net change in funds available $ 164,998 Depreciation expense (168,147) Change in net assets $ (3,149) See the accompanying independent auditors' report -94-
EXHIBIT E-7 DEVELOPMENT SERVICES FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Charges for services $ 2,525,615 $ 1,991,856 $ 1,676,566 $ (315,290) Investment earnings 266,732 266,732 116,818 (149,914) Other 24,080 24,080 99,353 75,273 Total revenues 2,816,427 2,282,668 1,892,737 (389,931) OPERATING EXPENDITURES Operations support 4,366,592 3,398,288 3,328,014 70,274 Total expenditures 4,366,592 3,398,288 3,328,014 70,274 Excess of (deficiency) of revenues over (under) expenditures (1,550,165) (1,115,620) (1,435,277) (319,657) OTHER FINANCING SOURCES (USES) Interfund loan interest 66,455 66,455 66,455 - Total other financing sources (uses) 66,455 66,455 66,455 - Net change in funds available (1,483,710) (1,049,165) (1,368,822) (319,657) Funds available - January 1 3,510,215 3,747,588 3,747,588 - Funds available - December 31 $ 2,026,505 $ 2,698,423 $ 2,378,766 $ (319,657) RECONCILIATION OF NET CHANGE IN FUNDS AVAILABLE TO CHANGE IN NET ASSETS (GAAP BASIS) Net change in funds available $ (1,368,822) Depreciation expense (18,518) Loss on disposal of capital assets (33,696) Change in net assets $ (1,421,036) See the accompanying independent auditors' report -95-
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INTERNAL SERVICE FUNDS Internal service funds account for the financing of goods or services provided by one department to another Revenues are from user charges to funds and departments, which are calculated on a cost reimbursement basis Employee Benefits Fund The Employee Benefits Fund accounts for the accumulation and payment of health insurance claims; for the payment of premiums for various employee insurance policies (life insurance, long-term disability, accidental death and dismemberment, stop-loss insurance) and for the payment of fees to third-party administrators; and for disbursement of cafeteria plan monies Fleet Services Fund The Fleet Services Fund accounts for centralized acquisition and maintenance of Town owned vehicles Operations and vehicle replacements are funded by charges to user departments
EXHIBIT F-1 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET ASSETS DECEMBER 31, 2008 Total Internal Employee Fleet Service Benefits Services Funds ASSETS Current assets Cash and investments $ 1,172,329 $ 4,154,445 $ 5,326,774 Receivables 43,588 4,184 47,772 Prepaid expenses 239,821-239,821 Total current assets 1,455,738 4,158,629 5,614,367 Non-current assets Capital assets Machinery and equipment - 11,828,009 11,828,009 Accumulated depreciation - (8,260,371) (8,260,371) Total non-current assets - 3,567,638 3,567,638 Total assets 1,455,738 7,726,267 9,182,005 LIABILITIES Current liabilities Accounts payable 661,899 32,522 694,421 Current portion of accrued leave - 9,923 9,923 Total current liabilities 661,899 42,445 704,344 Non-current liabilities Accrued leave - 4,887 4,887 Total non-current liabilities - 4,887 4,887 Total liabilities 661,899 47,332 709,231 NET ASSETS Invested in capital assets - 3,567,638 3,567,638 Unrestricted 793,839 4,111,297 4,905,136 Total net assets $ 793,839 $ 7,678,935 $ 8,472,774 See the accompanying independent auditors' report -97-
EXHIBIT F-2 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2008 Total Internal Employee Fleet Service Benefits Services Funds OPERATING REVENUES Charges for services $ 3,131,721 $ 2,446,083 $ 5,577,804 Intergovernmental - 23,329 23,329 Other 839,478 10,125 849,603 - - Total operating revenues 3,971,199 2,479,537 6,450,736 OPERATING EXPENSES Cost of sales and services 4,379,275 851,779 5,231,054 Depreciation - 1,085,808 1,085,808 Total operating expenses 4,379,275 1,937,587 6,316,862 Operating income (loss) (408,076) 541,950 133,874 NON-OPERATING REVENUES Investment earnings 25,273 118,909 144,182 Gain on disposal of capital assets - 19,912 19,912 Total non-operating revenues 25,273 138,821 164,094 Net income (loss) before contributions and transfers (382,803) 680,771 297,968 TRANSFERS Transfers in - 290,229 290,229 Total contributions and transfers - 290,229 290,229 Change in net assets (382,803) 971,000 588,197 Total net assets - January 1 1,176,642 6,707,935 7,884,577 Total net assets - December 31 $ 793,839 $ 7,678,935 $ 8,472,774 See the accompanying independent auditors' report -98-
EXHIBIT F-3 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2008 Total Internal Employee Fleet Service Benefits Services Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 871,474 $ 41,531 $ 913,005 Receipts from interfund services provided 3,131,721 2,446,083 5,577,804 Payments to suppliers (4,439,140) (401,181) (4,840,321) Payments to employees - (452,149) (452,149) Net cash provided (used) by operating activities (435,945) 1,634,284 1,198,339 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Cash transfers in - 290,229 290,229 Net cash provided by non-capital financing activities - 290,229 290,229 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets - (952,447) (952,447) Proceeds from the sale of capital assets - 85,708 85,708 Net cash used by capital and related financing activities - (866,739) (866,739) CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings 25,273 118,909 144,182 Net cash provided in investing activities 25,273 118,909 144,182 Net increase (decrease) in cash and investments (410,672) 1,176,683 766,011 Cash and investments - January 1 1,583,001 2,977,762 4,560,763 Cash and investments - December 31 $ 1,172,329 $ 4,154,445 $ 5,326,774 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income (loss) $ (408,076) $ 541,950 $ 133,874 Adjustments to reconcile income from operations to net cash provided (used) by operating activities Depreciation expense - 1,085,808 1,085,808 (Increase) decrease in assets Accounts receivable 31,996 8,078 40,074 Prepaid expenses (63,317) - (63,317) Increase (decrease) in liabilities Accounts payable 3,452 6,835 10,287 Accrued leave - (8,387) (8,387) Total adjustments (27,869) 1,092,334 1,064,465 Net cash provided (used) by operating activities $ (435,945) $ 1,634,284 $ 1,198,339 See the accompanying independent auditors' report -99-
EXHIBIT F-4 EMPLOYEE BENEFITS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Charges for services $ 3,463,984 $ 3,463,984 $ 3,131,721 $ (332,263) Investment earnings 56,411 56,411 25,273 (31,138) Other 760,000 760,000 839,478 79,478 Total revenues 4,280,395 4,280,395 3,996,472 (283,923) EXPENDITURES Operations 4,288,984 4,938,984 4,379,275 559,709 Total expenditures 4,288,984 4,938,984 4,379,275 559,709 Changes in funds available (8,589) (658,589) (382,803) 275,786 Funds available - January 1 1,434,090 1,176,642 1,176,642 - Funds available - December 31 $ 1,425,501 $ 518,053 $ 793,839 $ 275,786 See the accompanying independent auditors' report -100-
EXHIBIT F-5 FLEET SERVICES FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS AVAILABLE BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER 31, 2008 Variance with Budgets Final Budget Budgetary Positive Original Final Actual (Negative) REVENUES Charges for services $ 2,519,419 $ 2,519,419 $ 2,446,083 $ (73,336) Intergovernmental - 23,330 23,329 (1) Investment earnings 132,121 132,121 118,909 (13,212) Transfers in 371,000 371,000 290,229 (80,771) Proceeds from sale of capital assets 150,000 150,000 85,710 (64,290) Other - 26,634 10,125 (16,509) Total revenues 3,172,540 3,222,504 2,974,385 (248,119) EXPENDITURES Operations 875,150 875,150 851,779 23,371 Capital outlay 1,271,400 1,371,864 952,447 419,417 Total expenditures 2,146,550 2,247,014 1,804,226 442,788 Net change in funds available 1,025,990 975,490 1,170,159 194,669 Funds available - January 1 2,952,896 2,955,061 2,955,061 - Funds available - December 31 $ 3,978,886 $ 3,930,551 $ 4,125,220 $ 194,669 RECONCILIATION OF NET CHANGE IN FUNDS AVAILABLE TO CHANGE IN NET ASSETS (GAAP BASIS) Net change in funds available $ 1,170,159 Depreciation expense (1,085,808) Proceeds from sale of capital assets (85,710) Gain on disposal of capital assets 19,912 Capital outlay 952,447 Change in net assets $ 971,000 See the accompanying independent auditors' report -101-
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AGENCY FUND Founders Parkway Local Improvement District (LID) The LID issued special assessment bonds to finance the construction and acquisition of various public improvements The bonds are not considered to be an obligation of the Town The Town collects special assessments levied against the property owners who benefited from the improvements The Town remits the amounts collected to the paying agent responsible for paying the bondholders
EXHIBIT G-1 AGENCY FUND STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES FOR THE YEAR ENDED DECEMBER 31, 2008 Balance Founders LID Balance January 1 Additions Deductions December 31 ASSETS Cash $ 13 $ 42,866 $ (42,879) $ - Accounts receivable 4,990 42,708 (47,698) - Total assets $ 5,003 $ 85,574 $ (90,577) $ - LIABILITIES Payable to others $ 5,003 $ 42,866 $ (47,869) $ - Total liabilities $ 5,003 $ 42,866 $ (47,869) $ - See the accompanying independent auditors' report -103-
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STATISTICAL SECTION Financial Trends Revenue Capacity Debt Capacity Demographic and Economic Information Operating Information
STATISTICAL SECTION This section of the Town of Castle Rock s Comprehensive Annual Financial Report provides detailed information to help readers better understand what the information in the financial statements, note disclosures, and required supplemental information says about the Town s overall financial health Contents Page Financial Trends 107 These schedules contain trend information to help the reader understand how the financial performance and well-being of the Town has changed over time Revenue Capacity 113 These schedules contain information to help the reader assess the Town s most significant local revenue source, sales tax Debt Capacity 123 These schedules present information to help the reader assess the affordability of the Town s current levels of outstanding debt and the Town s ability to issue additional debt in the future Demographic and Economic Information 131 These schedules provide demographic and economic indicators to help the reader understand the environment within which the Town operates Operating Information 135 These schedules contain service and infrastructure data to help the reader understand how the information in the Town s financial report relates to the services the Town provides and the activities it performs Sources: Unless otherwise noted, the information in the following schedules is derived from the comprehensive annual financial reports for the relevant years The Town implemented GASB Statement 34 in 2003; schedules presenting government-wide information begin in that year -105-
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Financial Trends
TOWN-WIDE NET ASSETS BY COMPONENT LAST SIX YEARS ACCRUAL BASIS OF ACCOUNTING TABLE 1 (UNAUDITED) 2003 (1) 2004 2005 2006 (2) 2007 2008 GOVERNMENTAL ACTIVITIES Invested in capital assets, net of related debt $ 34,298,523 $ 54,905,121 $ 75,474,246 $ 198,282,562 $ 214,703,063 $ 223,166,157 Restricted 1,398,825 2,622,621 7,850,946 6,344,778 1,679,336 1,716,025 Unrestricted 23,126,697 26,885,340 33,977,551 40,834,696 47,125,614 45,613,252 Total governmental activities net assets 58,824,045 84,413,082 117,302,743 245,462,036 263,508,013 270,495,434 BUSINESS-TYPE ACTIVITIES Invested in capital assets, net of related debt 112,265,665 122,537,777 169,151,106 192,276,933 205,882,867 214,483,839 Restricted - - - - - - Unrestricted 23,359,682 41,211,010 31,124,940 48,042,183 68,059,218 73,885,914 Total business-type activities net assets 135,625,347 163,748,787 200,276,046 240,319,116 273,942,085 288,369,753 TOTAL GOVERNMENT Invested in capital assets, net of related debt 146,564,188 177,442,898 244,625,352 390,559,495 420,585,930 437,649,996 Restricted 1,398,825 2,622,621 7,850,946 6,344,778 1,679,336 1,716,025 Unrestricted 46,486,379 68,096,350 65,102,491 88,876,879 115,184,832 119,499,166 Total government net assets $ 194,449,392 $ 248,161,869 $ 317,578,789 $ 485,781,152 $ 537,450,098 $ 558,865,187 (1) The Town of Castle Rock implemented GASB 34 as of December 31, 2003 (2) The Town of Castle Rock implemented the GASB 34 retroactive reporting of infrastructure as of December 31, 2006 The net assets of the governmental activities for 2006 have been restated -107-
TOWN-WIDE CHANGES IN NET ASSETS LAST SIX YEARS ACCRUAL BASIS OF ACCOUNTING TABLE 2 (UNAUDITED) 2003 2004 2005 2006 2007 2008 EXPENSES Governmental activities: General government $ 4,257,467 $ 3,488,142 $ 5,731,500 $ 5,671,399 $ 8,673,831 $ 8,138,960 Public safety 9,186,857 10,002,217 12,769,928 14,179,480 14,409,291 16,154,832 Public works 5,855,393 5,842,081 8,842,738 11,304,040 17,050,843 17,460,565 Cultural and recreation 2,429,877 3,120,344 3,621,794 3,086,244 4,786,876 4,809,409 Interest on long-term debt 565,304 474,471 534,420 433,898 405,383 380,805 Total governmental activities expenses 22,294,898 22,927,255 31,500,380 34,675,061 45,326,224 46,944,571 Business-type activities: Water 7,843,787 9,151,310 9,503,176 10,980,010 11,688,177 13,386,008 Water resources - - 600,294 743,335 1,126,154 2,227,048 Stormwater 450,095 665,180 1,047,795 1,569,598 1,805,530 2,334,010 Wastewater 3,639,507 4,188,689 4,270,012 6,090,191 6,940,250 7,822,600 Golf 2,561,169 2,503,104 2,549,730 2,534,880 2,451,124 2,418,108 Community center 3,011,024 2,831,979 3,038,386 3,837,624 4,111,916 4,339,934 Ambulance 1,407,429 1,176,510 - - - - Development services 2,258,484 2,043,689 3,422,104 3,982,314 4,239,402 3,394,458 Total business-type activities expenses 21,171,495 22,560,461 24,431,497 29,737,952 32,362,553 35,922,166 PROGRAM REVENUES Governmental activities: Charges for services: General government 4,800 633,415 4,306,067 2,240,964 2,749,634 3,150,233 Public safety 387,997 32,294-1,454,437 2,708,126 2,429,796 Public works 4,000-98,099 100,727 1,424,409 848,239 Cultural and recreation 80,918 61,930 39,722 72,983 2,129,717 1,264,955 Operating grants and contributions 3,269,517 2,805,284 3,586,337 3,780,178 3,805,519 3,158,453 Capital grants and contributions 11,481,854 15,944,017 20,331,435 22,112,073 14,622,112 9,679,538 Total governmental activities program revenues 15,229,086 19,476,940 28,361,660 29,761,362 27,439,517 20,531,214 Business-type activities: Charges for services: Water 6,690,235 6,618,737 8,417,460 9,136,946 8,964,679 10,231,612 Water resources - - 595,886 1,819,707 3,351,644 4,006,253 Stormwater 524,706 1,068,424 1,219,337 1,355,622 1,573,849 1,649,253 Wastewater 3,843,862 4,208,439 5,030,341 5,358,395 5,768,644 6,266,648 Golf 2,647,267 2,580,215 2,611,932 2,526,982 2,731,281 2,683,065 Community center 2,924,035 3,257,616 1,756,400 2,109,683 2,454,161 2,626,082 Ambulance 906,018 848,344 - - - - Development services 2,708,462 4,648,864 6,206,164 4,300,571 2,551,457 1,775,919 Capital grants and contributions 19,935,492 27,608,479 34,535,331 39,148,138 35,684,117 17,579,118 Total business-type activities program revenues 40,180,077 50,839,118 60,372,851 65,756,044 63,079,832 46,817,950 Total government program revenues $ 55,409,163 $ 70,316,058 $ 88,734,511 $ 95,517,406 $ 90,519,349 $ 67,349,164 Note: The Town of Castle Rock implemented GASB 34 as of December 31, 2003-108-
TOWN-WIDE CHANGES IN NET ASSETS (CONTINUED) LAST SIX YEARS ACCRUAL BASIS OF ACCOUNTING TABLE 2 (UNAUDITED) 2003 2004 2005 2006 2007 2008 NET (EXPENSE) REVENUE Governmental activities $ (7,065,812) $ (3,450,315) $ (3,138,720) $ (4,913,699) $ (17,886,708) $ (26,413,358) Business-type activities 19,008,582 28,278,657 35,941,354 36,018,092 30,717,278 10,895,784 Total government net expense $ 11,942,770 $ 24,828,342 $ 32,802,634 $ 31,104,393 $ 12,830,570 $ (15,517,574) GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental activities Taxes Property taxes $ 741,818 $ 766,826 $ 819,763 $ 870,361 $ 941,391 $ 1,020,058 Sales taxes 15,782,644 17,900,524 19,894,610 21,810,687 23,216,922 23,338,214 Use taxes 4,522,413 5,748,529 8,260,032 5,938,006 4,393,392 2,735,480 Motor vehicle 1,938,177 2,455,392 2,577,040 2,675,727 2,136,879 1,972,231 Other taxes 908,609 1,170,553 1,698,224 1,828,490 1,852,393 1,826,197 Interest and investment earnings 181,803 350,770 989,481 2,092,365 2,655,005 1,511,299 Other revenues 1,893,018 88,561 323,999 193,569 163,511 303,788 Transfers (645,000) 558,197 1,465,232 81,701 573,193 693,513 Total governmental activities 25,323,482 29,039,352 36,028,381 35,490,906 35,932,686 33,400,780 Business-type activities Sales taxes - - 2,051,137 2,049,965 2,011,282 1,905,580 Interest and investment earnings 137,060 402,980-2,056,714 3,394,747 2,319,817 Other 568,426 Transfers 645,000 (558,197) (1,465,232) (81,701) (573,193) (693,513) Total business-type activities 1,350,486 (155,217) 585,905 4,024,978 4,832,836 3,531,884 Total primary government $ 26,673,968 $ 28,884,135 $ 36,614,286 $ 39,515,884 $ 40,765,522 $ 36,932,664 CHANGE IN NET ASSETS Governmental activities $ 18,257,670 $ 25,589,037 $ 32,889,661 $ 30,577,207 $ 18,045,977 $ 6,987,421 Business-type activities 20,359,068 28,123,440 36,527,259 40,043,070 35,550,115 14,427,668 Total primary government $ 38,616,738 $ 53,712,477 $ 69,416,920 $ 70,620,277 $ 53,596,092 $ 21,415,089 Note: The Town of Castle Rock implemented GASB 34 as of December 31, 2003-109-
PROGRAM REVENUES BY FUNCTION LAST SIX YEARS ACCRUAL BASIS OF ACCOUNTING TABLE 3 (UNAUDITED) REVENUE SOURCE 2003 2004 2005 2006 2007 2008 PROGRAM REVENUES Charges for services $ 20,722,300 $ 23,958,278 $ 30,281,408 $ 30,477,017 $ 36,407,601 $ 36,932,055 Operating grants and contributions 3,269,517 2,805,284 3,586,337 3,780,178 3,805,519 3,158,453 Capital grants and contributions 31,417,346 43,552,496 54,866,766 61,260,211 50,306,229 27,258,656 Total program revenues 55,409,163 70,316,058 88,734,511 95,517,406 90,519,349 67,349,164 GENERAL REVENUES Property taxes 741,818 766,826 819,763 870,361 941,391 1,020,058 Sales taxes 15,782,644 17,900,524 21,945,747 23,860,652 25,228,204 25,243,794 Use tax-building and motor vehicle 6,460,590 8,203,921 10,837,072 8,613,733 6,530,270 4,707,710 Other taxes 908,609 1,170,553 1,698,224 1,828,490 1,852,393 1,826,197 Investment earnings 318,863 753,750 989,481 4,149,079 6,049,753 3,831,117 Other 2,461,444 88,561 323,999 193,569 163,511 303,788 Total general revenues 26,673,968 28,884,135 36,614,286 39,515,884 40,765,522 36,932,664 Total revenues $ 82,083,131 $ 99,200,193 $ 125,348,797 $ 135,033,290 $ 131,284,871 $ 104,281,828 Note: The Town of Castle Rock implemented GASB 34 as of December 31, 2003-110-
FUND BALANCES, GOVERNMENTAL FUNDS LAST SIX YEARS ACCRUAL BASIS OF ACCOUNTING TABLE 4 (UNAUDITED) 2003 2004 2005 2006 2007 2008 GENERAL FUND Reserved $ 2,467,246 $ 6,149,124 $ 5,892,273 $ 5,465,217 $ 4,181,023 $ 3,784,052 Unreserved 6,977,925 5,627,094 8,107,618 9,872,267 11,745,496 12,041,408 Total general fund $ 9,445,171 $ 11,776,218 $ 13,999,891 $ 15,337,484 $ 15,926,519 $ 15,825,460 ALL OTHER GOVERNMENTAL FUNDS Reserved $ 392,565 $ (2,028,552) $ 3,861,992 $ 879,561 $ 919,265 $ 812,085 Unreserved, reported in: Special revenue funds 17,079,961 13,415,058 16,195,489 22,292,061 23,407,159 23,972,987 Capital projects funds (3,345,747) 5,035,869 5,712,415 6,210,482 5,751,123 2,926,046 Total all other governmental funds $ 14,126,779 $ 16,422,375 $ 25,769,896 $ 29,382,104 $ 30,077,547 $ 27,711,118 Note: The Town of Castle Rock implemented GASB 34 as of December 31, 2003-111-
CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN YEARS MODIFIED ACCRUAL BASIS OF ACCOUNTING TABLE 5 (UNAUDITED) REVENUES 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Taxes Property $ 1,563,510 $ 1,587,830 $ 671,913 $ 706,424 $ 741,818 $ 766,826 $ 819,763 $ 870,361 $ 941,391 $ 1,020,058 Special assessments 8,639 - - - - - - - - - Sales 11,347,945 12,933,097 13,719,814 14,411,075 15,782,643 17,900,524 19,894,610 21,810,687 23,216,922 23,338,214 Use 2,025,989 3,447,451 3,424,876 3,450,727 4,522,413 5,748,529 8,260,032 5,938,006 4,393,392 2,735,480 Motor vehicle 1,454,556 1,729,074 2,065,860 2,084,104 1,844,827 2,455,392 2,577,040 2,675,727 2,136,879 1,972,231 Other 675,330 702,968 743,265 528,780 908,609 1,170,553 1,698,224 1,828,490 1,852,393 1,826,197 Development impact fees - - - - 3,189,045 6,780,786 9,561,448 7,005,437 4,343,944 2,515,488 Licenses and permits 2,121,985 1,311,639 1,233,455 1,964,439 99,318 140,023 115,885 138,323 153,230 132,614 Charges for services 588,292 726,551 163,132 78,287 113,419 86,870 1,257,999 1,276,844 1,226,138 1,411,326 Management fees - - 1,400,220 1,650,119 1,766,221 1,991,018 2,090,951 2,107,213 2,283,438 2,800,785 Fines and forfeitures 143,553 122,623 140,904 137,888 167,629 208,872 250,537 293,668 464,507 504,647 Intergovernmental 1,971,548 1,576,124 1,756,253 1,973,045 2,394,720 2,346,193 2,676,149 3,262,255 3,396,669 2,995,357 Investment earnings 951,954 1,520,511 1,101,926 622,042 173,337 338,620 943,912 2,092,365 2,435,336 1,367,117 Contributions and donations 485,962 392,653 467,143-615,398 546,512 468,849 487,100 3,258,237 1,451,615 Other 538,294 469,772 608,126 282,196 1,020,199 158,595 360,983 1,068,922 1,135,163 1,258,178 Total revenues 23,877,557 26,520,293 27,496,887 27,889,126 33,339,596 40,639,313 50,976,382 50,855,398 51,237,639 45,329,307 EXPENDITURES Current General government 3,598,272 6,307,852 6,844,300 5,578,974 4,249,709 4,671,164 5,268,340 6,226,569 7,864,921 7,784,825 Public safety 5,074,971 5,661,071 7,089,723 8,519,814 9,076,880 9,200,759 11,864,030 13,918,171 14,164,937 15,779,056 Public works 2,613,924 3,374,360 2,588,619 3,113,188 9,631,908 5,271,109 7,838,540 9,449,985 10,041,639 9,775,063 Culture and recreation 1,074,065 1,351,172 1,510,088 1,728,589 3,974,902 2,333,988 2,792,525 2,416,433 3,531,567 3,163,446 Capital projects 7,103,193 10,795,628 10,289,051 9,960,594 2,238,102 13,481,932 15,320,796 11,636,450 12,243,105 20,249,572 Debt service Principal 825,000 850,000 908,131 982,311 1,043,181 1,092,237 1,241,702 1,788,872 1,816,062 1,121,908 Interest 709,355 673,328 638,212 609,480 565,304 415,837 356,665 451,353 383,914 312,056 Debt issue costs - - - - - 154,413 56,375 - - 253,405 Agency fees - - - - 2,450 2,525 2,418 2,450 2,300 400 Total expenditures 20,998,780 29,013,411 29,868,124 30,492,950 30,782,436 36,623,964 44,741,391 45,890,283 50,048,445 58,439,731 Excess of revenues over (under) expenditures 2,878,777 (2,493,118) (2,371,237) (2,603,824) 2,557,160 4,015,349 6,234,991 4,965,115 1,189,194 (13,110,424) OTHER FINANCING SOURCES (USES) Inception of capital lease - - - - - - 3,950,000 80,000 - - Bond issuance - - - - - 6,130,000 - - - 10,000,000 Premium on bonds - - - - - 97,880 - - - 239,652 Payment to escrow agent - - - - - (6,174,783) - - - - Transfers in - - - - 10,000 2,122,318 2,010,064 648,478 847,607 1,025,154 Transfers out - - - - (645,000) (1,564,121) (623,861) (743,792) (752,323) (621,870) Total other financing sources (uses) - - - - (635,000) 611294 5,336,203 (15,314) 95,284 10,642,936 Net change in fund balances Fund balances $ 2,878,777 $ (2,493,118) $ (2,371,237) $ (2,603,824) $ 1,922,160 $ 4,626,643 $ 11,571,194 $ 4,949,801 $ 1,284,478 $ (2,467,488) Debt service as a percentage of noncapital expenditures 1104% 836% 790% 775% 564% 719% 563% 655% 583% 442% -112-
Revenue Capacity
GOVERNMENTAL FUNDS TAX REVENUE BY SOURCE LAST TEN YEARS TABLE 6 (UNAUDITED) Property Sales and Use Motor Other Year Taxes Taxes Vehicle Taxes Total 1999 $ 1,563,510 $ 13,373,934 $ 1,454,556 $ 683,969 $ 17,075,969 2000 1,587,830 16,380,548 1,729,074 702,968 20,400,420 2001 671,913 17,144,690 2,065,860 743,265 20,625,728 2002 706,424 17,861,802 2,084,104 528,780 21,181,110 2003 741,818 20,305,056 1,844,827 908,609 23,800,310 2004 766,826 23,649,053 2,455,392 1,170,553 28,041,824 2005 819,764 28,154,642 2,577,040 1,698,224 33,249,670 2006 870,361 27,748,693 2,675,727 1,828,490 33,123,271 2007 941,391 27,610,314 2,136,879 1,852,393 32,540,977 2008 1,020,058 26,073,694 1,972,231 1,826,197 30,892,180-113-
TOWN-WIDE EXPENSES BY ACTIVITY AND FUNCTION LAST SIX YEARS TABLE 7 (UNAUDITED) 2003 2004 2005 2006 2007 2008 GOVERNMENTAL ACTIVITIES General government $ 4,257,467 $ 3,488,142 $ 5,731,500 $ 5,671,399 $ 8,673,831 $ 8,138,960 Public safety 9,186,857 10,002,217 12,769,928 14,179,480 14,409,291 16,154,832 Public works 5,855,393 5,842,081 8,842,738 11,304,040 17,050,843 17,460,565 Cultural and recreation 2,429,877 3,120,344 3,621,794 3,086,244 4,786,876 4,809,409 Interest on long-term debt 565,304 474,471 534,420 433,898 405,383 380,805 Total governmental activities 22,294,898 22,927,255 31,500,380 34,675,061 45,326,224 46,944,571 BUSINESS-TYPE ACTIVITIES Water 7,843,787 9,151,310 9,503,176 10,980,010 11,688,177 13,386,008 Water resources - - 600,294 743,335 1,126,154 2,227,048 Stormwater 450,095 665,180 1,047,795 1,569,598 1,805,530 2,334,010 Wastewater 3,639,507 4,188,689 4,270,012 6,090,191 6,940,250 7,822,600 Golf course 2,561,169 2,503,104 2,549,730 2,534,880 2,451,124 2,418,108 Community center 3,011,024 2,831,979 3,038,386 3,837,624 4,111,916 4,339,934 Ambulance 1,407,429 1,176,510 - - - - Development services 2,258,484 2,043,689 3,422,104 3,982,314 4,239,402 3,394,458 Total business-type activities 21,171,495 22,560,461 24,431,497 29,737,952 32,362,553 35,922,166 Total all activities $ 43,466,393 $ 45,487,716 $ 55,931,877 $ 64,413,013 $ 77,688,777 $ 82,866,737 Note: The Town of Castle Rock implemented GASB 34 as of December 31, 2003-114-
GOVERNMENTAL FUNDS GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN YEARS TABLE 8 (UNAUDITED) General Public Public Culture and Capital Debt Year Government Safety Works Recreation Outlay Service Total 1999 $ 3,363,283 $ 5,074,971 $ 2,613,924 $ 1,309,054 $ 7,103,193 $ 1,534,355 $ 20,998,780 2000 6,043,395 5,661,071 3,374,360 1,615,629 10,795,628 1,523,328 29,013,411 2001 6,495,246 7,089,723 2,588,619 1,859,142 10,289,051 1,546,343 29,868,124 2002 5,160,419 8,519,814 3,113,188 2,147,144 9,960,594 1,591,791 30,492,950 2003 3,269,151 9,076,880 6,096,554 4,368,242 6,360,674 1,610,935 30,782,436 2004 4,671,164 9,200,759 5,271,109 2,333,988 13,481,932 1,665,012 36,623,964 2005 5,268,340 11,864,030 7,838,540 2,792,525 15,320,796 1,657,160 44,741,391 2006 6,226,569 13,918,171 9,449,985 2,416,433 11,636,450 2,242,675 45,890,283 2007 7,864,921 14,164,937 10,041,639 3,531,567 12,243,105 2,202,276 50,048,445 2008 7,784,825 15,779,056 9,775,063 3,163,446 20,249,572 1,687,769 58,439,731-115-
PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN YEARS TABLE 9 (UNAUDITED) Collection (1) Within The Total Collections Fiscal Year Of The Levy To Date Fiscal Year Taxes Levied Collections Ended Collection For The Percentage In Subsequent Percentage December 31, Year Fiscal Year (3) Amount of Levy Years (4) Amount Of Levy 1997 1998 $ 1,533,524 $ 1,520,591 9916% $ - $ 1,520,591 9916% 1998 1999 1,581,667 1,563,510 9885% - 1,563,510 9885% 1999 2000 1,613,971 1,587,830 9838% 14 1,587,844 9838% 2000 2001 682,562 (2) 671,913 9844% 5 671,918 9844% 2001 2002 709,485 706,424 9957% - 706,424 9957% 2002 2003 748,525 741,818 9910% - 741,818 9910% 2003 2004 767,054 766,826 9997% (109) 766,717 9996% 2004 2005 820,783 819,764 9988% - 819,764 9988% 2005 2006 884,424 870,361 9841% (7,779) 862,582 9753% 2006 2007 965,457 941,391 9751% (4,408) 936,983 9705% 2007 2008 1,050,636 1,020,058 9709% - 1,020,058 9709% (1) Does not include Douglas County's collection fee, which is shown as an expenditure in the General and Water funds (2) The property tax for the Water fund debt service was eliminated (3) Source: Douglas County Assessor's Office (4) Subsequent collections/(abatement) information is not available by levy year prior to 2008-116-
ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY LAST SIX YEARS TABLE 10 (UNAUDITED) Total Estimated Assessed Less: Total Taxable Direct Actual Value As a Levy Residential Vacant Commercial Industrial State Personal Tax Exempt Assessed Tax Taxable Percentage of Year Property Land Property Property Assessed Property Property Value Rate Value Actual Value 2003 $ 195,328,340 $ 32,498,840 $ 167,716,220 $ 5,376,190 $ 778,408 $ 27,033,305 $ 69,791,600 $ 358,939,703 214 $ 2,933,545,736 1224% 2004 213,012,770 38,966,750 177,874,680 5,554,980 789,870 27,140,481 72,256,860 391,082,671 206 3,197,168,316 1223% 2005 247,931,900 45,817,060 205,583,990 7,144,290 960,070 30,862,530 81,429,290 456,870,550 190 3,729,837,690 1225% 2006 283,144,130 52,227,670 212,624,530 7,549,450 930,877 32,768,044 80,999,040 508,245,661 186 4,221,336,520 1204% 2007 338,618,140 77,299,160 265,316,670 10,082,730 1,020,079 37,377,521 124,090,860 605,623,440 171 5,046,547,203 1200% 2008 358,832,850 78,728,280 288,246,110 11,921,680 577,230 38,776,186 135,104,230 641,978,106 171 5,351,319,611 1200% Note: Information is not available prior to 2003 Source: Douglas County Assessor's Office -117-
PROPERTY TAX RATES (MILLS) DIRECT AND OVERLAPPING GOVERNMENTS (1) LAST TEN YEARS TABLE 11 (UNAUDITED) Douglas Metro Districts (2) Dougals Cherry Creek County Villages Crystal Levy Collection County School Douglas Cedar Hill Basin Library Dawson Meadows At Castle Valley Plum Castlewood Maher Castle Crowfoot Year Year Town District RE-1 County Cemetery Authority District Ridge 1-5 1-7 Rock 1-9 I & II Creek Ranch Ranch Oaks Valley Ranch Lanterns 1999 2000 8930 49362 23274 0548 0396 4034 1189-35000 29000 0-56982 4824-16026 34779 45000 n/a n/a n/a n/a 2000 2001 3272 47000 23274 0521 0395 4023 1757-35000 29000 0-56982 4824-16026 34779 45000 n/a n/a n/a n/a 2001 2002 2592 43584 24274 0454 0344 4031 35000 29000 0-60656 16026-40000 34779 53224 n/a 45000 n/a n/a 2002 2003 2422 43584 24274 0044 0362 4022 35000 34991 0-60656 40000-40000 34779 53224 40000 47579 n/a n/a 2003 2004 2137 35568 24274 0396 0378 4020 35000 35000 0-69724 40000-48940 25000 53224 45232 50000 n/a n/a 2004 2005 2058 46500 24274 0384 0397 4052 35000 35000 0-79146 40000-46940 23000 53224 45232 50000 n/a 45000 2005 2006 1898 46500 24274 0348 0392 4020 45000 35000 0-79146 40000-46940 23000 50000 45232 50000 35000 45000 2006 2007 1856 46500 24274 0275 0417 4025 45000 35000 0-79146 40000-46940 23000 40000 45232 50000 50000 45000 2007 2008 1709 46500 24274 0167 0398 4044 45000 35000 0-70000 40000-46940 23000 40000 45232 50000 60000 45000 2008 2009 1705 47103 24274 0114 0408 4052 45000 35000 0-88981 40000-46940 23000 40000 45232 50000 66750 45000 (1) (2) (3) Because no single parcel of property located within the Town's boundaries is located within every entity shown, the table is not indicative of the actual or potential burden upon any single property The metropolitan districts fall within the Town's limits and property taxes are collected to fund debt repayment The mill levy assessed represents ranges based on the individual district's mill levy Includes law enforcement authority levy beginning in 1996 Source: Douglas County Assessor's Office -118-
TAXABLE SALES BY CATEGORY LAST TEN YEARS TABLE 12 (UNAUDITED) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Apparel stores $ 3,208,708 $ 3,068,529 $ 2,929,525 $ 2,734,562 $ 2,490,106 $ 2,668,181 $ 2,822,690 $ 3,019,490 $ 3,434,146 $ 3,799,691 Food & general merchandise 2,912,776 3,929,391 4,411,791 4,753,937 5,068,753 5,440,677 5,855,714 6,468,756 6,810,492 7,073,068 Eating and drinking establishments 1,181,235 1,319,830 1,476,808 1,577,036 1,645,888 1,946,477 2,099,314 2,315,525 2,487,760 2,596,770 Home furnishings and appliances 460,482 471,894 478,218 486,148 565,997 674,720 673,324 743,286 717,771 1,285,231 Building materials 175,769 256,448 224,414 177,930 149,061 213,567 270,954 298,275 299,326 - Auto dealers and supplies 611,383 723,327 868,007 839,770 942,652 995,403 980,558 1,028,019 1,034,101 915,794 Service stations 159,741 165,927 219,554 242,220 262,512 307,209 342,200 397,866 600,116 - Leasing & rentals 148,392 184,506 217,397 182,827 213,479 264,478 310,764 352,272 463,085 519,329 Home and garden 265,679 302,484 315,055 799,727 1,166,807 1,299,751 1,384,297 1,847,950 1,576,296 1,104,342 Other retail stores 1,302,940 1,427,283 1,403,895 1,343,926 1,410,069 1,683,240 1,619,507 1,830,845 2,173,946 2,184,867 All other outlets 920,840 1,083,478 1,175,150 1,272,992 1,532,915 2,109,022 2,964,238 3,003,975 2,985,664 3,357,773 Total $ 11,347,945 $ 12,933,097 $ 13,719,814 $ 14,411,075 $ 15,448,239 $ 17,602,725 $ 19,323,560 $ 21,306,259 $ 22,582,703 $ 22,836,865 Town of Castle Rock Sales Tax Rate 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% Note: Information does not include 1% County Sales Tax Source: Town of Castle Rock Sales Tax Department -119-
DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN YEARS TABLE 13 (UNAUDITED) Town Regional Football State Fiscal Direct Douglas Transportation Stadium of Year Rate County District (1) District (2) Colorado 1999 36% 10% 10% 01% 29% 2000 36% 10% 10% 01% 29% 2001 36% 10% 10% 01% 29% 2002 36% 10% 10% 01% 29% 2003 36% 10% 10% 01% 29% 2004 36% 10% 10% 01% 29% 2005 36% 10% 10% 01% 29% 2006 36% 10% 10% 01% 29% 2007 36% 10% - - 29% 2008 36% 10% - - 29% (1) The voters of the Town of Castle Rock elected to be removed from the Regional Transportation District, effective July 1, 2006 (2) The voters of the Town of Castle Rock elected to be removed from the Football Stadium District, effective July 1, 2006 Source: Colorado Department of Revenue -120-
PRINCIPAL SALES TAX REMITTERS CURRENT YEAR AND NINE YEARS AGO TABLE 14 (UNAUDITED) 2008 1999 Number Percentage Tax Percentage Number Percentage Tax Percentage Remitter of Filers of Total Liability of Total of Filers of Total Liability of Total Food/general merchandise 63 540% $ 7,073,068 3097% Not available Not available Not available Not available Apparel/accessories 116 995% 3,799,691 1664% Accomodations, restaurants, bars 135 1158% 2,596,770 1137% Miscellaneous retail 312 2676% 2,184,867 957% Home/garden 40 343% 1,104,234 484% Utilities 3 026% 1,372,675 601% Communications 150 1286% 996,966 437% Automobiles/auto items 80 686% 915,794 401% Furniture/home décor 87 746% 1,285,231 563% Wholesale/manufacturing 180 1544% 289,353 127% Total top ten filers 1,166 10000% $ 21,618,649 9467% All other filers 000% $ 1,218,108 533% Total 1,166 10000% $ 22,836,757 10000% Note: Information is not available prior to 2000 Source: Town of Castle Rock Sales Tax Department -121-
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Debt Capacity
RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN YEARS TABLE 15 (UNAUDITED) Governmental Activities Business-type Activities Percentage Revenue Bonded Certificates of General Obligation Revenue Bonded Certificates of Total of Personal Per Year Debt Participation Bonded Debt Debt Participation Government Income Capita 1999 $ 8,285,000 $ 5,060,000 $ 1,870,000 $ 10,672,610 $ - $ 25,887,610 382 1,495 2000 7,980,000 4,515,000 1,200,000 10,044,264-23,739,264 270 1,174 2001 7,655,000 3,950,000 700,000 9,324,063-21,629,063 205 865 2002 7,315,000 3,360,000-8,931,528-19,606,528 177 700 2003 6,955,000 2,745,000-18,416,224-28,116,224 234 907 2004 6,940,000 2,100,000-27,167,812-36,207,812 247 1,035 2005 6,445,000 1,430,000-26,790,947-34,665,947 205 900 2006 5,915,000 730,000-35,175,673-41,820,673 289 998 2007 5,365,000 - - 33,552,278-38,917,278 237 876 2008 14,800,000 - - 31,861,813 74,795,000 121,456,813 621 2,625-123-
RATIO OF GENERAL BONDED DEBT TO ASSESSED VALUE AND BONDED DEBT PER CAPITA LAST TEN YEARS TABLE 16 (UNAUDITED) Percent of Gross Assessed General Net Property Obligation Bonded Tax Per Year Population Bonds Debt Value Capita 1999 18,815 $ 1,870,000 $ 1,870,000 105% 99 2000 20,224 1,200,000 1,200,000 060% 59 2001 25,000 700,000 700,000 026% 28 2002 28,000 - - - - 2003 31,000 - - - - 2004 35,000 - - - - 2005 38,500 - - - - 2006 42,236 - - - - 2007 44,442 - - - - 2008 46,261 - - - - Source: Town of Castle Rock Finance Department -124-
COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT GENERAL OBLIGATION BONDS AS OF DECEMBER 31, 2008 TABLE 17 (UNAUDITED) 2008 Assessed Bonds Applicable Net Debt Valuation Outstanding % Amount Governmental Entity Overlapping Debt: (1) Meadows Metro Districts #1-7 $ 126,977,840 $ 70,000,000 100000% $ 70,000,000 Villages at Castle Rock Metro Districts # 4 & 7 27,877,690 29,191,000 100000% 29,191,000 Plum Creek Metro District 21,363,240 2,650,000 100000% 2,650,000 Douglas County School District Re-1 4,678,184,640 637,134,744 13723% 87,432,343 Castle Pines Metro District 140,727,510 9,545,000 100000% 9,545,000 Crystal Valley Metro District #1-2 18,992,560 20,740,000 100000% 20,740,000 Dawson Ridge Metro District #1-5 173,330 21,054,000 100000% 21,054,000 Castle Oaks Metro District #2-3 11,397,460 16,000,000 100000% 16,000,000 Castlewood Ranch Metro District 30,160,350 22,245,000 100000% 22,245,000 Maher Ranch Metro District #4-5 27,205,510 21,085,000 100000% 21,085,000 Total Overlapping Debt $ 5,083,060,130 $ 849,644,744 $ 299,942,342 (1) The following entities also overlap the Town, but have no general obligation debt outstanding: Douglas County, Douglas County Law Enforcement Authority, Douglas County Public Library District, Cedar Hills Cemetery District, Cherry Creek Basin Water Quality Authority, Castle Rock Fire Protection District, Castleton Center Water and Sanitation District, Crowfoot Valley Ranch Districts #1-2, Franktown Fire Protection District, Silver Heights Water and Sanitation District, Castle Pines Commercial Metropolitan Districts #1-5, Lanterns Metro District and Maher Ranch Metropolitan Districts #1-3 Sources: Douglas County Assesor's Office Douglas County Finance Department -125-
LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS TABLE 18 (UNAUDITED) Estimated Actual Property Value: $5,351,319,611 Debt Limit: 3% of Estimated Actual Real Estate Value 160,539,588 Amount of Debt Applicable to Debt Limit: Gross bonded debt 121,456,813 Less: Wastewater Revenue Notes (571,813) Sales Tax Revenue Bonds (14,800,000) Golf Course Revenue Bonds (6,145,000) Water & Wastewater Revenue Bonds (25,145,000) Water Resources COPs (74,795,000) Total (121,456,813) Total Debt Applicable to Debt Limit - $160,539,588 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Debt limit $ 35,527,065 $ 40,549,469 $ 59,119,232 $ 70,256,221 $ 90,605,189 $ 96,843,401 $ 115,058,044 $ 127,849,460 $ 151,396,416 $ 160,539,588 Total net debt applicable to limit - - - - - - - - - - Legal debt margin $ 35,527,065 $ 40,549,469 $ 59,119,232 $ 70,256,221 $ 90,605,189 $ 96,843,401 $ 115,058,044 $ 127,849,460 $ 151,396,416 $ 160,539,588 Total net debt applicable to the limit as a percentage of debt limit - - - - - - - - - - Sources: Douglas County Assessor's Office Town of Castle Rock Finance Department -126-
PLEDGED REVENUE COVERAGE LAST TEN YEARS TABLE 19 (UNAUDITED) Transportation Revenue Bonds Sales and Use Tax Coverage Year Revenues (1) Principal Interest Total Ratio (2) 1999 $ 6,622,738 $ 295,000 $ 466,835 $ 761,835 869 2000 8,004,951 305,000 452,883 757,883 1056 2001 8,290,299 325,000 437,915 762,915 1087 2002 8,515,794 340,000 421,785 761,785 1118 2003 8,029,370 360,000 404,245 764,245 1051 2004 9,568,023 375,000 284,550 659,550 1451 2005 11,184,652 495,000 258,290 753,290 1485 2006 11,076,157 530,000 234,000 764,000 1450 2007 10,824,287 550,000 213,131 763,131 1418 2008 10,290,472 565,000 195,700 760,700 1353 (1) Revenues from 2003 through 2007 were restated to more accurately reflect pledged revenues as defined in the bond documents (2) Coverage ratio equals net pledged revenue divided by total bond principal and interest -127-
PLEDGED REVENUE COVERAGE (CONTINUED) LAST EIGHT YEARS TABLE 20 (UNAUDITED) Water and Wastewater Fund Revenue Bonds and Notes Gross Net Pledged Coverage Year Resources (1) Expenses (2) Revenue (3) Principal Interest Total Ratio (4) 2001 $ 16,199,785 $ 5,550,444 $ 10,649,341 $ 1,165,201 $ 206,399 $ 1,371,600 776 2002 17,578,609 8,121,738 9,456,871 237,534 164,181 401,715 2354 2003 15,664,093 8,472,354 7,191,739 250,304 148,054 398,358 1805 2004 18,991,495 8,852,237 10,139,258 998,443 869,382 1,867,825 543 2005 26,285,360 9,759,594 16,525,766 1,021,833 858,063 1,879,896 879 2006 23,754,115 12,061,826 11,692,289 1,055,273 828,114 1,883,387 621 2007 21,730,936 12,571,172 9,159,764 1,393,395 1,079,615 2,473,010 370 2008 20,500,877 14,245,184 6,255,693 1,450,465 1,062,601 2,513,066 249 Note: Information for 2001 through 2003 has been restated Information prior to 2001 is not presented as it is not comparable (1) Gross resources include all operating revenues, system development fees and investment earnings (2) Expenses include all operating expenses less depreciation and amortization, plus transfers out In 2005, water resource activity was transferred to a separate fund Water resource fees were meant to be used solely for development related to growth (3) Net pledged revenue equals gross resources minus expenses (4) Coverage ratio equals net pledged revenue divided by total bond principal and interest -128-
PLEDGED REVENUE COVERAGE (CONTINUED) LAST TEN YEARS TABLE 21 (UNAUDITED) Golf Fund Revenue Bonds Gross Net Pledged Coverage Year Resources (1) Expenses (2) Revenue (3) Principal Interest Total Ratio (4) 1999 $ 2,005,878 $ 1,839,160 $ 166,718 $ - $ 339,238 $ 339,238 049 2000 2,420,594 1,704,381 716,213-488,247 488,247 147 2001 2,701,791 2,106,746 595,045 55,000 544,683 599,683 099 2002 2,624,252 1,993,753 630,499 155,000 470,614 625,614 101 2003 2,672,948 1,980,496 692,452 220,000 457,406 677,406 102 2004 2,580,215 1,921,706 658,509 245,000 399,841 644,841 102 2005 2,590,806 1,999,200 591,606-232,413 232,413 255 2006 2,526,982 2,027,120 499,862 225,000 320,813 545,813 092 2007 2,731,281 1,966,579 764,702 230,000 312,829 542,829 141 2008 2,683,065 1,946,292 736,773 240,000 304,710 544,710 135 (1) Gross resources include all operating revenues (2) Expenses include all operating expenses less depreciation and amortization, plus transfers out (3) Net pledged revenue equals gross resources minus expenses (4) Coverage ratio equals net pledged revenue divided by total bond principal and interest -129-
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Demographic and Economic Information
DEMOGRAPHIC INFORMATION AND ECONOMIC STATISTICS LAST TEN YEARS TABLE 22 (UNAUDITED) Personal Income (2) Average Public Estimated (Thousands Per Capita Median Household Unemployment School Year Population (1) of Dollars) Income (5) Age (5) Size (5) Rate (3) Enrollment (4) 1999 18,815 $ 6,626,008 $ 40,684 327 295 15% 5,527 2000 20,224 7,843,681 43,471 320 297 14% 6,261 2001 25,000 8,379,662 42,294 341 288 28% 6,686 2002 28,000 8,336,227 39,671 341 289 49% 8,524 2003 31,000 8,702,221 38,809 337 252 46% 8,508 2004 35,000 9,934,022 41,822 340 300 43% 9,525 2005 38,500 11,347,684 43,919 364 288 36% 9,939 2006 42,236 12,993,222 34,496 344 294 40% 9,721 2007 44,442 14,706,467 36,904 341 287 32% 10,193 2008 46,261 Not available 42,246 353 286 51% 11,920 Sources: (1) Town of Castle Rock Finance Department 2000 figure from 2000 Census of Population (2) (3) U S Bureau of Economic Analysis Information is for Douglas County Colorado Department of Labor Information is for Douglas County (4) Douglas County School District (5) Castle Rock Economic Development Council -131-
PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO TABLE 23 (UNAUDITED) 2008 1999 Percentage Percentage of Total of Total Number Town Number Town Company of FTEs* Rank Employment of FTEs* Rank Employment Douglas County School District 1000-1500 1 11% Not available Not available Douglas County 1000-1500 2 11% Town of Castle Rock 251-500 3 4% Wal-Mart 251-500 4 4% Castle Pines Golf Club Inc 101-250 5 2% Medved Autoplex 101-250 6 2% Brookside Inn 101-250 7 2% Lowe's 101-250 8 2% Sunset Stone 101-250 9 2% Philip S Miller Library 101-250 10 2% Note: Information is not available prior to 2003 * Full time employee equivalents that work in the Castle Rock area Source: Castle Rock Economic Development Council (CREDCO) -132-
PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND NINE YEARS AGO TABLE 24 (UNAUDITED) 2008 1999 % of Town % of Town Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Type of Business Rank Valuation Valuation Rank Valuation Valuation Non-Utility Castle Rock Factory Stores Retail 1 $ 13,324,547 746% The Premier Group, Inc Real Estate 3 3,003,615 168% Empak, Inc Manufacturing 5 1,805,695 101% Dillon Real Estate Company, Inc Real Estate 6 1,716,762 096% Castle Partners One, Ltd Manufacturing 7 1,690,864 095% Castle Partners Two, Ltd Real Estate 8 1,656,260 093% Engle Homes Colorado, Inc Real Estate 9 1,600,245 090% Plum Creek Centre LLC Various 9 $ 4,093,410 064% 10 1,375,452 077% Craig Realty Group Castle Rock, LLC Commercial 3 18,630,000 290% Lowe's HIW Inc Retail 7 4,438,110 069% Wal-Mart Stores Inc Retail 6 4,942,930 077% TOTAL NON-UTILITY $ 32,104,450 500% $ 26,173,440 1465% Utilities U S West Communications Telecommunications 1 $ 44,969,900 4674% 2 $ 3,725,403 209% Intermountain Rural Electric Assoc Electric 2 30,653,100 3186% 4 2,401,670 134% MCI Worldcom Network Services TL390 Telecommunications 4 7,050,900 733% Verizon Wireless Telecommunications 5 5,510,200 573% Comcast Telecommunications 8 4,189,980 435% Burlington Northern Santa Fe Railway Company Railroad 10 3,846,300 400% TOTAL UTILITIES $ 96,220,380 1499% $ 6,127,073 343% Other Taxpayers $ 513,650,276 8001% $ 146,315,227 8192% Assessed Valuation $ 641,975,106 10000% $ 178,615,740 10000% Source: Douglas County Treasurer's Office -133-
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Operating Information
FULL-TIME EQUIVALENT TOWN EMPLOYEES BY FUNCTION/PROGRAM LAST SIX YEARS TABLE 25 (UNAUDITED) Function/Program 2003 2004 2005 2006 2007 2008 General government 33 41 40 40 45 42 Public safety 133 129 131 132 142 141 Public works 34 34 34 39 46 45 Cultural and recreation 16 18 19 19 19 14 Water 31 31 32 32 33 49 Water resources - - 3 4 4 2 Wastewater 14 13 15 15 14 7 Stormwater 0 2 2 3 6 9 Golf 13 11 11 10 10 10 Community center 24 20 20 20 15 20 Development services 25 22 30 28 24 22 Total 323 321 336 343 358 361 Note: Information not available prior to 2003 Source: Town of Castle Rock Finance Department -135-
OPERATING INDICATORS BY FUNCTION/PROGRAM AS OF DECEMBER 31, 2008 TABLE 26 (UNAUDITED) Function/Program 2008 2007 2006 Governmental activities: General government Number of payroll checks issued 15,392 15,318 13,673 Number of new employees hired 188 195 275 Number of resolutions passed 119 157 160 Number of ordinances passed 45 55 59 Public safety Number of arrests 821 981 838 Number of police calls 61,666 62,899 53,179 Number of fire calls 101 61 99 Number of medical calls 2,547 2,434 2,226 Public works Number of snow removal hours 5,571 6,754 4,995 Culture and recreation Number of golf rounds 37,429 39,522 38,022 Recreation center attendance 249,294 223,884 196,254 Business-type activities: Water Number of customer accounts 14,862 14,293 14,281 Average daily consumption - million gallons 568 542 483 Development Services Number of new construction permits issued 311 592 1,151 Number of remodel permits issued 1,861 2,687 2,994 Note: Information is not available prior to 2006 Sources: Town of Castle Rock Finance, Town Clerk, Police, Fire, Public Works, and Utilities Departments -136-
CAPITAL ASSETS STATISTICS BY FUNCTION/PROGRAM AS OF DECEMBER 31, 2008 TABLE 27 (UNAUDITED) Function/Program 2008 2007 2006 Governmental activities: General government Number of Town-owned facilities 10 10 10 Public safety Number of police stations 1 1 1 Number of vehicular patrol units 24 21 18 Number of fire stations 4 4 4 Public works Miles of streets 530 518 468 Number of traffic signals 27 25 25 Number of street lighting fixtures 434 452 452 Culture and recreation Acres of developed parks 265 251 212 Acres of open space 2,725 2,612 2,250 Number of pools 3 3 3 Golf courses 1 1 1 Number of tennis courts 11 5 5 Number of ball fields 12 14 14 Business-type activities: Water Miles of water mains 342 334 306 Sanitary sewer and storm: Miles of sewer lines 229 168 Not availabl Miles of storm sewers 170 31 31 Note: Information is not available prior to 2006 Sources: Town of Castle Rock Finance, Police, Fire, Public Works, Parks and Recreation, and Utilities Departments -137-
MISCELLANEOUS STATISTICS AS OF DECEMBER 31, 2008 TABLE 28 (UNAUDITED) Date of incorporation 1881 Home rule charter adopted 1987 Form of government Council - Manager Area - Square miles 33 Population (estimate) 46,261 Fire Protection Number of stations 4 Number of paid firefighters 60 Number of volunteer firefighters 6 Police Protection Number of stations 1 Number of commissioned officers 54 Number of reserve officers 0 Education - Douglas County School District Number of students (Castle Rock schools) 10,474 Charter Schools 2 Number of elementary schools 7 Number of middle schools 2 Number of high schools 3 Building permits issued 2,172 value $93,218,742 Employees: (excluding Police and Fire) Full-time 226 Part-time 181 Sources: Town of Castle Rock Finance, Police, Fire, and Development Services Departments Douglas County School District -138-
COMPLIANCE SECTION Local Highway Finance Report