Madison, Wisconsin FINANCIAL STATEMENTS From Date of Creation Through December 31, 2008
TABLE OF CONTENTS From Dale of Creation Through December 31,2008 Independent Auditors' Report Tax Incremental District No. 33 - Balance Sheet Tax Incremental District No. 33 - Historical Summary of Project Costs, Project Revenues and Net Cost to be Recovered Through Tax Increments Tax Incremental District No. 33 - Historical Summary of Sources. Uses, and Status of Funds Notes to Financial Statements 1-2 3 4 5 6-9 Supplemental Information Tax Incremental District No. 33 - Detailed Schedule of Sources, Uses, and Status of Funds Tax Incremental District No. 33 - Detailed Schedule of Capital Expenditures Independent Auditors' Report on Compliance 10 11 12
~AKER TILLY B.kcrTilly V;rcho,,' Krause, LLP T.n Tor... " Ct, PO Box 7398 Madison, WI 53707 7398 tel 608 249 6622 fax 608 249 8532 b.kcrrijly.com INDEPENDENT AUDITORS' REPORT To the City Council City of Madison Madison, Wisconsin We have audited the accompanying Balance Sheet. Historical Summary of Project Costs, Project Revenues and Net Cost to be Recovered Through Tax Increments and the related Historical Summary of Sources, Uses and Status of Funds of the City of Madison Tax Incremental District No. 33 (the "District") as of December 31, 2008 and from the date the District was created through December 31, 2008. These financial statements are the responsibility of the city's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 opinion. As discussed in Note 1, the financial statements present only the transactions of the District and do not purport to, and do not. present fairly the financial position of the City of Madison as of December 31,2006, and the changes in its financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position and the net project costs to be recovered through tax increments as of December 31, 2006 and the sources, uses and status of funds from the creation date of the District through December 31, 2006, in conformity with accounting principles generally accepted in the United States of America. The City of Madison, Wisconsin, has not presented the management's discussion and analysis that accounting principles generally accepted in the United States of America require to supplement. although not be part of, the financial statements. ~ "~."-,.. ",,,, BA KER TI LLY INTERNATIOr-iAL Page 1
To the City Council City of Madison Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The detailed schedules included as supplemental information, as identified in the table of contents, are presented for purposes of additional analysis and are not a required part of the financial statements of the City of Madison, Wisconsin. The information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. We have also previously audited, in accordance with auditing standards generally accepted in the United States of America, the financial statements of the City of Madison, Wisconsin as of December 31, 2004-2008 and for the years then ended (none of which is presented herein). In our opinion, the detailed schedule of sources, uses and status of funds is fairly stated in all material respects in relation to the financial statements from which it has been derived. Madison, Wisconsin September 8, 2009 Page 2
~~IAXJNCREMENTALDISIRICI_N0--33~~~~~~~~~~~ BALANCE SHEET December 3-1, 2008 ASSETS Taxes receivable Capital Projects Fund $ 346,815 TOTAL ASSETS LIABILITIES AND FUND BALANCE liabilities Deferred revenue Advances from other funds Total liabilities Fund Balance Unreserved Undesignated (deficit) Total Fund Balance (Deficit) TOTAL LIABILITIES AND FUND BALANCE $ 346,815 $ 346,815 1,211,991 1,558,806 (1,211,991 ) (1,211,991 ) $ 346,815 See accompanying notes to financial statements. Page 3
TAX INCREMENTAL DIS lblcli'lo~-->- HISTORICAL SUMMARY OF PROJECT COSTS, PROJECT REVENUES AND NET COST TO BE RECOVERED THROUGH TAX INCREMENTS From Date of Creation Through December 31, 2008 PROJECT COSTS Capital expenditures Issuance costs Discount on borrowing Interest on advances Interest on long-term debt Total Project Costs $ 2,946,401 18,205 14,525 98,423 300,915 3, 378,469 PROJECT REVENUES Tax increments Exempt computer aid Miscellaneous T alai Project Revenues 356, 140 1,127 6,692 363,959 NET COSTS TO BE RECOVERED THROUGH TAX INCREMENTS - DECEMBER 31. 2008 $ 3.014,510 RECONCILIATION OF RECOVERABLE COSTS G.O. debt payable Plus: Fund balance deficit $ 1.802.519 1.21 1.991 NET COSTS TO BE RECOVERED THROUGH TAX INCREMENTS - DECEMBER 31. 2008 $ 3.014,510 See accompanying notes to financial statements. Page 4
HISTORICAL SUMMARY OF SOURCES. USES. AND STATUS OF FUNDS From Dale of Creation Through December 31, 2008 SOURCES OF FUNDS Tax increments Exempt computer aid Miscellaneous Long-term debt issued Total Sources of Funds $ 356.140 1,127 6,692 2,551,125 2.915,084 USES OF FUNDS Capital expenditures Issuance costs Discount on borrowing Interest on advances Principal on long-term debt Interest on long-term debt Total Uses of Funds 2,946,401 18,205 14,525 98,423 748,606 300,915 4,127,075 FUND BALANCE (DEFICIT) - DECEMBER 31, 2008 $ (1.211,991) See accompanying notes to fi nancial statements. Page 5
NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Madison's Tax Incremental District No. 33 (the "Districn conform to accounting principles as applicable to governmental units and as defined by Wisconsin Statutes Section 66.1105. The city uses the criteria set forth by the Governmental Accounting Standards Board to determine the scope of the City of Madison's Tax Incremental District No. 33 reporting entity_ The accompanying financial statements reflect all the significant operations of the City of Madison's Tax Incremental District No. 33. A. DESCRIPTION OF FUND STRUCTURE This report contains the financial information of the City of Madison's Tax Incremental District No. 33. The summary statements were prepared from data recorded in the following city funds and the city's long-term debt: General Fund Capital Projects Fund Detailed descriptions of the purpose of these funds can be found in the City of Madison's basic financial statements. The data was consolidated for purposes of this report. Therefore, the amounts shown in the accompanying statements will not directly correlate with amounts shown in the basic financial statements of the city. The District was created under the provisions of Wisconsin Statute Section 66. 11 05. The purpose of thai section is to allow a municipality to recover development and improvements costs in a designated area from the property taxes generated on the increased value of the property after the creation date of the District. The tax on the increased value is called a tax increment. The statutes allow the municipality to collect tax increments until the net project cost has been fully recovered, or until 27 years after the creation date, whichever occurs first. Project costs uncollected at the dissolution date are absorbed by the city. Project costs may be incurred up to five years before the unextended termination date of the District. Creation Date District No. 33 January 1, 2004 l ast Date to Incur Project Costs September 21, 2026 last Year to Collect Increment 2031 Page 6
NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE 1 - S UMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. BASIS OF ACCOUNnNG The modified accrual basis of accounting was followed in the preparation of these statements. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual. Le. both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Project costs, other than interest on long-term debt, are recorded when the related fund liability is incurred. District increments are recorded as revenues in the year due. Intergovernmental aids and grants are recognized as revenues in the period the related expenditures are incurred, if applicable, or when the city is entitled to the aids. Special assessments are recorded as revenues when collected. Annual install ments due in future years are accounted for as receivables and deferred revenues. Other general revenues are recognized when received in cash or when measurable and available under the criteria described above. C. USE OF E s n MATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. D. MEASUREMENT Focus The measurement focus of all governmental funds is the funds flow concept. Under the funds flow concept, sources and uses of financial resources, including capital outlays, debt proceeds and debt retirements are reflected in operations. Resources not available to finance expenditures and commitments of the current period are recognized as deferred revenue or a reservation of fund equity. Liabilities for claims, judgments, compensated absences and pension contributions which will not be currently liquidated using expendable available financial resources are shown in the long-term debt footnote disclosure. The related expenditures are recognized when the liabilities are liquidated. E. PROJECT P LAN B UDGET The estimated revenues and expenditures of the District are adopted in the project plan. Those estimates are for the entire life of the District, and may not be comparable to interim results presented in this report. Page 7
NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) F. LONG-TERM DEBT Short-term liabilities are recorded as fund liabilities. All other long-term liabilities are shown in the longterm debt footnote disclosure. Proceeds of long-term debt issues not recorded as fund liabilities are reflected as Sources of Funds" in the operating statement of the recipient fund. Retirement of these issues is reported as an expenditure in the year in which the debt matures or is repaid, whichever is earlier. G. CLAIMS AND JUDGMENTS Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. Claims and judgments that would normally be liquidated with expendable available financial resources are recorded during the year as expenditures in the governmental funds. If they are nolliquidated with expendable available financial resources, a liability is presented in the long-term debt footnote disclosure. The related expenditure is recognized when the liability is liquidated. NOTE 2 - CASH AND TEMPORARY INVESTMENTS The District invests its funds in accordance with the provisions of the Wisconsin Statutes 66.0603(1m) and 67.11(2). Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. The District, as a fund of the city, maintains separate and common cash and investment accounts at the same financial institutions utilized by the city. Federal depository insurance and the State of Wisconsin Guarantee fund insurance apply to the City of Madison as an individual municipality and, accordingly, the amount of insured funds is not determinable for the District. NOTE 3 - LONG-TERM DEBT A. GENERAL OBLIGATION DEBT All general obligation notes payable are backed by the full faith and credit of the city. Notes borrowed to finance District expenditures will be retired by tax increments accumulated by the TIF fund. If those revenues are not sufficient. payments will be made by future tax levies. Page B
NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE 3 - LONG-TERM DeBT (cont.) A. GENERAL OSUGAnON DEBT (cont.) Title of Issue Date of Issue Original Due Interest Indebted- Balance Date Rates ness Repaid 12-31-08 G.O. Promissory Notes G,O. Promissory Notes 10-01-05 10-01-06 10-01-15 10-01-16 4.3-4.6% $ 2,353,100 $ 5.25% 198,025 709,001 $ 1,644,099 39,605 158.420 Totals $ 2,551,125 $ 748.606 $ 1,802,519 Aggregate maturities of au long-term debt relating to the District are as follows: Calendar Year Principal Interest 2009 $ 256.439 $ 81.716 2010 256. 171 70.514 2011 256.171 59.312 2012 253.484 47.402 2013 253.484 35.840 2014 253.484 24.278 2015 253.484 12.719 2016 19.802 1.040 Totals $ 1.802.519 $ 332.821 Totals $ 338.155 326.685 315.483 300.886 289.324 277.762 266.203 20.842 $ 2.135.340 NOTE 4 - ADVANCES FROM THE GENERAL FUND The general fund is advancing funds to TIF District No. 33 when the District is in a negative cash position. The general fund is charging the TIF District interest on the advance based on the outstanding advance balance at the end of the year at a rate based on the cost of funds to the city. No repayment schedule has been established. NOTE 5 - GUARANTEED REVENUE The City of Madison has entered into a development agreement with Monroe Neighbors, LLC. The agreement guarantees that Monroe Neighbors, LLC shall pay th e difference between the guaranteed tax increment and the tax increment actually levied. The guarantee obligation shall terminate when the city has collected from the tax increment generated from the District or been paid under this agreement the full amount of the project costs of not less than $2,517,000. Page 9
SUPPLEMENTAL INFORMATION
DETAILED SCHEDULE OF SOURCES, USES, AND STATUS OF FUNDS From Date of Creation Through December 31, 2008 SOURCES OF FUNDS Tax increments Exempt computer aid Miscellaneous Long-term debt issued Total Sources of Funds $ 2004 2005 2006 2007 2008 $ $ 566 $ 48,809 $ 306,765 1,127 6,692 2,353,100 198,025 2,353,100 198,591 48,809 314,584 Totals $ 356,140 1,127 6,692 2,551,125 2.915,084 Project Plan Estimate $4,267,000 3,347,000 7,614,000 USES OF FUNDS Capital expenditures Issuance costs Discount on borrowing Interest on advances Principal on long-term debt Interest on long-term debt Total Uses of Funds 31,592 2,352,999 348,143 203,301 10,366 16,575 1,630 14,525 344 1,454 13,922 40,857 41,846 236,316 256,119 256, 171 103,882 104,117 92,916 31,936 2,385,553 703,893 604,394 401,299 2,946.401 18,205 14,525 98,423 748,606 300,915 4,127,075 3.347,000 3,347,000 920.000 7,614,000 FUND BALANCE (DEFICIT) DECEMBER 31, 2008 $1 1,211,991) Page 10
DETAILED SCHEDULE OF CAPITAL EXPENDITURES From Date of Creation Through December 31. 2008 Actual Capital Expenditures Parking plaza acquisition $ Parking plaza improvements Contingency Street, sidewalk repair, replacement 336,163 Streetscape Affordable housing set-aside Revitalization loans to private development 2,517,000 Organizational costs 93,238 TOTAL CAPITAL EXPENDITURES $ 2,946,401 Project Plan Estimate $ 200.000 350.000 93.000 250,000 100,000 334,000 1,670,000 350,000 $ 3,347,000 Page 11
~AKER TILLY BakuTIllyy;rchowK"'....,.lLP Ten Terrace CI. PO Soz7398 Madison, W I 53707 7398.1 608 249 6622 fu6082498s)2 b".unilly.com INDEPENDENT AUDITORS' REPORT ON COMPLIANCE To the City Council City of Madison Madison, Wisconsin We have audited the accompanying Balance Sheet, Historical Summary of Project Costs, Project Revenues and Net Cost to be Recovered Through Tax Increments and the related Historical Summary of Sources, Uses and Status of Funds of the City of Madison, Wisconsin Tax Incremental District No. 33 (the "Districf') as of December 31, 2008 and from the date the District was created through December 31, 2008 and have issued our report thereon dated September 8, 2009. 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. Compliance with lax increment financing District laws. regulations and the project plan is the responsibility of City of Madison, Wisconsin management. As part of obtaining reasonable assurance about whether the aforementioned financial statements are free of material misstatement, we performed tests of city's compliance with Wisconsin State Statutes Section 66.1105 and the project plan. However, it should be noted that our objective was not to provide an opinion on overall compliance with such provisions. The results of our tests indicate that. with respect to the items tested, the City of Madison, Wisconsin complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the City of Madison, Wisconsin had not complied, in all material respects, with those provisions. This report is intended solely for the information and use of the city, its management, and the overlapping taxing Districts and is not intended to be, and should not be, used by anyone other than the specified parties. Madison, Wisconsin September 8, 2009 ~.. -.. -... BAK ER TIllY I NTERNATION"L Page 12