OFFICIAL STATEMENT NEW ISSUES Book-Entry Only RATINGS: See RATINGS herein In the opinion of Kutak Rock LLP, Kansas City, Missouri, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series 790, 790A and 960 Bonds and Notes (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. In the opinion of Bond Counsel, the interest on the Series 959 Bonds is included in gross income for federal income tax purposes. Bond Counsel is further of the opinion that interest on the Bonds and Notes is excluded from the computation of Kansas adjusted gross income, The Bonds and Notes are not qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. (See LEGAL AND TAX MATTERS herein.) $12,740,000 GENERAL OBLIGATION BONDS SERIES 790 CITY OF WICHITA, KANSAS $2,575,000 GENERAL OBLIGATION BONDS SERIES 790A $4,390,000 GENERAL OBLIGATION BONDS SERIES 959 (TAXABLE UNDER FEDERAL LAW) $7,385,000 GENERAL OBLIGATION BONDS SERIES 960 $65,140,000 GENERAL OBLIGATION TEMPORARY RENEWAL AND IMPROVEMENT NOTES SERIES 220 DATED DATES, MATURITIES, INTEREST RATES AND YIELDS AS HEREINAFTER SHOWN THE BONDS AND THE NOTES AND THE INTEREST THEREON CONSTITUTE GENERAL OBLIGATIONS OF THE CITY, AND THE FULL FAITH, CREDIT AND RESOURCES OF THE CITY ARE PLEDGED FOR THE PAYMENT THEREOF. (SEE THE BONDS -- Security for the Bonds AND THE NOTES -- Security for the Notes HEREIN.) The scheduled payment of the principal and interest on the Series 790A Bonds, when due, will be guaranteed by a financial guaranty insurance policy to be issued by Ambac Assurance Corporation simultaneously with the delivery of the Series 790A Bonds. The scheduled payment of the principal of and interest on the Series 959 Bonds, when due, will be insured by a municipal bond insurance policy to be issued by MBIA Insurance Corporation simultaneously with the delivery of the Series 959 Bonds. The Bonds and the Notes are offered when, as and if issued by the City, subject to the approval of legality by Kutak Rock LLP, Kansas City, Missouri, Bond Counsel. Certain matters will be passed on for the City by Gary E. Rebenstorf, Director of Law and City Attorney. It is expected that delivery of the Bonds and Notes will be made on or about August 9, 2007. Official Statement is dated July 10, 2007.
$12,740,000 GENERAL OBLIGATION BONDS SERIES 790 DATED AUGUST 1, 2007 The Series 790 Bonds will be issued in book-entry only form and individual purchases may be made in denominations of $5,000 or integral multiples thereof. Interest on the Series 790 Bonds will be payable semiannually on March 1 and September 1, commencing March 1, 2008. Certain of the Series 790 Bonds are subject to redemption and payment prior to their maturities. (See THE BONDS - Redemption of Bonds - Series 790 Bonds herein.) Maturity Date Maturing Principal Interest Rate Yield Cusip 1 967244 Maturity Date Maturing Principal Interest Rate Yield Cusip 1 967244 09/01/08 $630,000 4.250% 3.730% AA 2 09/01/16 $ 870,000 4.500% 4.210% AJ 3 09/01/09 660,000 4.250 3.800 AB 0 09/01/17 910,000 4.500 4.270 AK 0 09/01/10 685,000 4.250 3.860 AC 8 09/01/18 945,000 4.250 4.350 AL 8 09/01/11 715,000 4.250 3.930 AD 6 09/01/19 980,000 4.375 4.410 AM 6 09/01/12 740,000 4.250 3.980 AE 4 09/01/20 1,020,000 4.375 4.470 AN 4 09/01/13 770,000 4.250 4.030 AF 1 09/01/21 1,065,000 4.375 4.520 AP 9 09/01/14 805,000 4.500 4.090 AG 9 09/01/22 1,105,000 4.500% 4.550 AQ 7 09/01/15 840,000 4.500 4.160 AH 7 (Plus accrued interest from August 1, 2007) $2,575,000 GENERAL OBLIGATION BONDS SERIES 790A DATED AUGUST 1, 2007 The Series 790A Bonds will be issued in book-entry only form and individual purchases may be made in denominations of $5,000 or integral multiples thereof. Interest on the Series 790A Bonds will be payable semiannually on March 1 and September 1, commencing March 1, 2008. Certain of the Series 790A Bonds are subject to redemption and payment prior to their maturities. (See THE BONDS - Redemption of Bonds - Series 790A Bonds herein.) Maturity Date Maturing Principal Interest Rate Yield Cusip 1 967244 Maturity Date Maturing Principal Interest Rate Yield Cusip 1 967244 09/01/08 $ 85,000 4.000% 3.750% AR 5 09/01/18 $130,000 4.500% 4.330% BB 9 09/01/09 90,000 4.000 3.820 AS 3 09/01/19 135,000 4.500 4.420 BC 7 09/01/10 90,000 4.000 3.880 AT 1 09/01/20 140,000 4.500 4.480 BD 5 09/01/11 95,000 4.000 3.940 AU 8 09/01/21 145,000 4.500 4.540 BE 3 09/01/12 100,000 4.375 4.000 AV 6 09/01/22 150,000 4.500 4.580 BF 0 09/01/13 105,000 4.375 4.040 AW 4 09/01/23 155,000 4.600 4.600 BG 8 09/01/14 110,000 4.375 4.080 AX 2 09/01/24 160,000 4.625 3.630 BH 6 09/01/15 115,000 4.500 4.130 AY 0 09/01/25 170,000 4.650 4.680 BJ 2 09/01/16 120,000 4.500 4.180 AZ 7 09/01/26 175,000 4.700 4.700 BK 9 09/01/17 125,000 4.500 4.230 BA 1 09/01/27 180,000 4.750 4.750 BL 7 1 See CUSIP NUMBERS herein. (Plus accrued interest from August 1, 2007)
$4,390,000 GENERAL OBLIGATION BONDS SERIES 959 (TAXABLE UNDER FEDERAL LAW) DATED AUGUST 1, 2007 The Series 959 Bonds will be issued in book-entry only form and individual purchases may be made in denominations of $5,000 or integral multiples thereof. Interest on the Series 959 Bonds will be payable semiannually on March 1 and September 1, commencing March 1, 2008. Certain of the Series 959 Bonds are subject to redemption and payment prior to their maturities. (See THE BONDS - Redemption of Bonds - Series 959 Bonds herein.) Maturity Date Maturing Principal Interest Rate Yield Cusip 1 967244 Maturity Date Maturing Principal Interest Rate Yield Cusip 1 967244 09/01/08 $205,000 6.250% 5.350% BM 5 09/01/16 $300,000 5.750% 5.690% BV 5 09/01/09 215,000 6.250 5.310 BN 3 09/01/17 315,000 5.700 5.720 BW 3 09/01/10 225,000 6.250 5.370 BP 8 09/01/18 330,000 5.750 5.770 BX 1 09/01/11 235,000 6.250 5.410 BQ 6 09/01/19 345,000 5.750 5.820 BY 9 09/01/12 245,000 6.250 5.470 BR 4 09/01/20 365,000 5.750 5.850 BZ 6 09/01/13 260,000 6.250 5.510 BS 2 09/01/21 385,000 5.875 5.900 CA 0 09/01/14 275,000 6.250 5.650 BT 0 09/01/22 400,000 5.875 5.900 CB 8 09/01/15 290,000 5.750 5.670 BU 7 (Plus accrued interest from August 1, 2007) $7,385,000 GENERAL OBLIGATION BONDS SERIES 960 DATED AUGUST 1, 2007 The Series 960 Bonds will be issued in book-entry only form and individual purchases may be made in denominations of $5,000 or integral multiples thereof. Interest on the Series 960 Bonds will be payable semiannually on March 1 and September 1, commencing March 1, 2008. Certain of the Series 960 Bonds are subject to redemption and payment prior to their maturities. (See THE BONDS - Redemption of Bonds - Series 960 Bonds herein.) Maturity Date Maturing Principal Interest Rate Yield Cusip 1 967244 Maturity Date Maturing Principal Interest Rate Yield Cusip 1 967244 09/01/08 $365,000 4.250% 3.730% CC 6 09/01/16 $505,000 4.500% 4.210% CL 6 09/01/09 380,000 4.250 3.800 CD 4 09/01/17 525,000 4.500 4.270 CM 4 09/01/10 400,000 4.250 3.860 CE 2 09/01/18 550,000 4.250 4.350 CN 2 09/01/11 410,000 4.250 3.930 CF 9 09/01/19 570,000 4.375 4.410 CP 7 09/01/12 430,000 4.250 3.980 CG 7 09/01/20 590,000 4.375 4.470 CQ 5 09/01/13 450,000 4.250 4.030 CH 5 09/01/21 620,000 4.375 4.520 CR 3 09/01/14 465,000 4.500 4.090 CJ 1 09/01/22 640,000 4.500 4.550 CS 1 09/01/15 485,000 4.500 4.160 CK 8 (Plus accrued interest from August 1, 2007)
$65,140,000 GENERAL OBLIGATION TEMPORARY RENEWAL AND IMPROVEMENT NOTES SERIES 220 DATED AUGUST 9, 2007 The Notes will be issued in book-entry only form and individual purchases may be made in denominations of $5,000 or integral multiples thereof. Principal and interest on the Notes will be payable on February 7, 2008. The Notes are not subject to redemption and payment prior to their maturity. Maturity Date Maturing Principal Interest Rate Yield Cusip 1 967244 2/7/2008 $65,140,000 4.500% 3.695% CT9 (Plus accrued interest, if any, from August 9, 2007) 1 See CUSIP NUMBERS herein.
No dealer, broker, salesman or other person has been authorized by the City of Wichita, Kansas, to give information or to make any representations with respect to the Bonds or the Notes other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. In certain instances, as noted herein, information contained in this Official Statement has been obtained from historical records and sources other than the City. Although the City believes such outside sources of information are reliable, the City does not guarantee the accuracy or completeness of information contained herein which was obtained from sources other than the City. The financial and other information presented herein is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past performance, as might be shown by such financial and other information, will necessarily continue or be expected in the future. The information and expressions of opinion in this Official Statement are subject to change without notice and neither the delivery of this Official Statement nor any sale made after such delivery shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date of this Official Statement.
CITY OF WICHITA, KANSAS OFFICIAL STATEMENT Table of Contents CITY OFFICIALS Mayor Carl Brewer Vice Mayor Sharon Fearey (District VI) City Council Lavonta Williams (District I) Sue Schlapp (District II) Jim Skelton (District III) Paul Gray (District IV) Jeff Longwell (District V) City Manager George Kolb Director of Finance Kelly Carpenter Director of Law Gary E. Rebenstorf BOND COUNSEL Kutak Rock, LLP Kansas City, Missouri Introduction... 1 General Matters... 1 Purpose... 2 Security... 3 Continuing Disclosure... 3 Additional Information... 3 The Bonds... 3 Description of Bonds... 3 Redemption of Bonds... 4 Selection of Bonds to be Redeemed... 5 Notice of Redemption of Bonds... 5 Effect of Call for Redemption... 6 Paying Agent and Bond Registrar... 6 Payment of Principal and Interest... 6 Security for the Bonds... 7 Bond Insurance... 8 The Notes... 14 Description of Notes... 14 Redemption of Notes... 14 Payment of Principal and Interest... 14 Security for the Notes... 14 Book-Entry-Only Issuance... 15 The Improvements... 17 Sources and Uses of Funds... 18 Legal and Tax Matters... 21 Approval of Bonds and Notes; Opinion of Bond Counsel... 21 State Tax Exemption... 21 Federal Tax Exemption... 21 Ratings...... 21 Absence of Litigation... 24 Financial Information... 25 CUSIP Numbers... 25 Underwriting... 25 Miscellaneous... 25 Approval of Official Statement... 27 APPENDIX A General Information... A-1 Retirement Systems... A-10 Historical Summary of Economic Indicators... A-13 APPENDIX B Independent Auditor s Report... B-1 Management s Discussion and Analysis... B-3 Basic Financial Statements... B-13 Notes to the Financial Statements... B-36 2006 Pension Required Supplementary Information... B-73 APPENDIX C Financial Information... C-1 Statement of Outstanding Debt... C-12 Statement of Legal Debt Margin... C-13 Statement of Direct and Overlapping Debt... C-14 Summary of General Obligation Debt Service Charges... C-16 Assessed Value and Estimated True Value of All Taxable Tangible Property... C-18 Tax Rates... C-18 General Fund Assumptions/Budget... C-19 Recent General Obligation Bond Sales... C-22 APPENDIX D Form of Bond Counsel s Opinions... D-1 APPENDIX E Capital Improvements... E-1 APPENDIX F Continuing Disclosure...F-1 APPENDIX G AMBAC Insurance Specimen... G-1 APPENDIX H MBIA Insurance Specimen... H-1
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OFFICIAL STATEMENT OF THE CITY OF WICHITA, KANSAS RELATING TO $12,740,000 GENERAL OBLIGATION BONDS, SERIES 790 $2,575,000 GENERAL OBLIGATION BONDS, SERIES 790A $4,390,000 GENERAL OBLIGATION BONDS, SERIES 959 (TAXABLE UNDER FEDERAL LAW) $7,385,000 GENERAL OBLIGATION BONDS, SERIES 960 $65,140,000 GENERAL OBLIGATION TEMPORARY RENEWAL AND IMPROVEMENT NOTES, SERIES 220 INTRODUCTION General Matters This Official Statement presents information relating to: (1) $12,740,000 principal amount of General Obligation Bonds, Series 790, dated August 1, 2007 (the Series 790 Bonds ); (2) $2,575,000 principal amount of General Obligation Bonds, Series 790A, dated August 1, 2007 (the Series 790A Bonds ); (3) $4,390,000 principal amount of General Obligation Bonds, Series 959 (Taxable Under Federal Law), dated August 1, 2007 (the Series 959 Bonds ); and (4) $7,385,000 General Obligation Bonds, Series 960, dated August 1, 2007 (the Series 960 Bonds ); and (5) $65,140,000 principal amount of General Obligation Temporary Renewal and Improvement Notes, Series 220, dated August 9, 2007 (the Notes ). The term Bonds as used herein shall pertain to either the Series 790 Bonds, the Series 790A, the Series 959 or the Series 960 Bonds described herein. The Bonds and Notes are issued under the constitution and authority of the statutes of the State of Kansas, including K.S.A. 10-101 et seq., as amended and supplemented.
Each series of the Bonds and the Notes are authorized and issued pursuant to an Ordinance and a Resolution adopted by the Governing Body. Each such Ordinance and accompanying Resolution are herein referred to as the Series 790 Bond Ordinance, the Series 790A Bond Ordinance, the Series 959 Bond Ordinance, the Series 960 Bond Ordinance or the Note Ordinance, as the case may be, and the term Bond Ordinance as used herein shall pertain to the Series 790 Bond Ordinance, the Series 790A Bond Ordinance, the Series 959 Bond Ordinance or the Series 960 Bond Ordinance, as applicable. Purpose The Series 790 Bonds. The proceeds of the Series 790 Bonds will be used for the purpose of permanently financing the costs of constructing multiple capital improvements in the City (the Series 790 Bond Improvements, as more particularly described herein), which costs have been specially assessed against benefiting properties and the owners of such properties have chosen to pay the special assessments in installments over a period of 15 years. The Series 790 Bond Improvements are described in Appendix E to this Official Statement, and discussed more fully in the section of this Official Statement entitled THE IMPROVEMENTS. Sources and uses of funds in connection with the Series 790 Bonds are discussed more fully in the section of this Official Statement entitled SOURCES AND USES OF FUNDS -- The Series 790 Bonds. The Series 790A Bonds. The proceeds of the Series 790A Bonds will be used for the purpose of permanently financing the costs of constructing capital improvements in the City (the Series 790A Bond Improvements, as more particularly described herein), which costs have been specially assessed against benefiting properties and the owners of such properties have chosen to pay the special assessments in installments over a period of 20 years. The Series 790A Bond Improvements are described in Appendix E to this Official Statement, and discussed more fully in the section of this Official Statement entitled THE IMPROVEMENTS. Sources and uses of funds in connection with the Series 790A Bonds are discussed more fully in the section of this Official Statement entitled SOURCES AND USES OF FUNDS -- The Series 790A Bonds. The Series 959 Bonds. The proceeds of the Series 959 Bonds will be used for the purpose of permanently financing the costs of constructing certain privately-owned capital improvements in connection with a tax increment redevelopment district in the City (the Series 959 Bond Improvements, as more particularly described herein). The Series 959 Bond Improvements are described in Appendix E to this Official Statement, and discussed more fully in the section of this Official Statement entitled THE IMPROVEMENTS. Sources and uses of funds in connection with the Series 959 Bonds are discussed more fully in the section of this Official Statement entitled SOURCES AND USES OF FUNDS -- The Series 959 Bonds. The Series 960 Bonds. The proceeds of the Series 960 Bonds will be used for the purpose of permanently financing the costs of constructing certain publicly-owned capital improvements in a tax increment redevelopment district in the City (the Series 960 Bond Improvements, as more particularly described herein). The Series 960 Bond Improvements are described in Appendix E to this Official Statement, and discussed more fully in the section of this Official Statement entitled THE IMPROVEMENTS. Sources and uses of funds in connection with the Series 960 Bonds are discussed more fully in the section of this Official Statement entitled SOURCES AND USES OF FUNDS -- The Series 960 Bonds. 2
The Notes. The proceeds of the Notes will be used (i) for the purpose of renewing a portion of the principal amount of the City s outstanding General Obligation Renewal and Improvement Temporary Notes, Series 218 (the Series 218 Notes ), such portion of said Series 218 Notes having been heretofore issued for the purpose of providing temporary financing for acquiring, constructing and installing certain previously undertaken multiple capital improvements within the City, and (ii) for the purpose of providing temporary financing for acquiring, constructing and installing certain newly undertaken multiple capital improvements within the City (collectively, the Note Improvements, as more particularly described herein). The final costs of certain of the Note Improvements will be specially assessed to the properties benefiting therefrom. The Note Improvements are described in Appendix E to this Official Statement, and discussed more fully in the section of this Official Statement entitled THE IMPROVEMENTS. Sources and uses of funds in connection with the Notes are discussed more fully in the section of this Official Statement entitled SOURCES AND USES OF FUNDS -- The Notes. Security The Bonds and the Notes constitute general obligations of the City, and the full faith, credit and resources of the City are pledged to the payment of the Bonds and the Notes and the interest thereon. Reference is made to the entire text of each Bond Ordinance and each Note Ordinance for a full and complete description of the covenants of the City relating to the security for the Bonds and the Notes. Security for the Bonds is discussed more fully in the section of this Official Statement entitled THE BONDS -- Security for the Bonds. Security for the Notes is discussed more fully in the section of this Official Statement entitled THE NOTES -- Security for the Notes. Continuing Disclosure The City has adopted ordinances establishing master undertakings to provide ongoing disclosure concerning the City in connection with its general obligation bonds and in connection with its general obligation notes for the benefit of owners of such bonds and notes, including the Bonds and Notes described herein, as required under Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12. Those ordinances are included as Appendix F to this Official Statement. The City is in full compliance in all material respects with all such undertakings made by it pursuant to Securities and Exchange Commission Rule 15c2-12. Additional Information Additional information regarding the City and the Bonds and Notes may be obtained from Ms. Catherine Gilley, Debt Coordinator, Department of Finance, City of Wichita, City Hall, Twelfth Floor, 455 North Main, Wichita, Kansas 67202-1679, telephone number 316-268-4143, telefacsimile number 316-858-7520, e-mail cgilley@wichita.gov. Additional Official Statements may be obtained at www.onlinemunis.com. Description of Bonds THE BONDS The Bonds bear a Dated Date of August 1, 2007, and mature serially on September 1 (the Maturity Date ) in the years and principal amounts as shown on the inside cover page of the Official Statement. The interest on the Bonds accrues from the Dated Date, and shall be payable semiannually on 3
March 1 and September 1 of each year (the Interest Payment Dates ), commencing March 1, 2008, until the Series 790 Bonds are paid in full. The Bonds are issued as fully registered bonds in denominations of $5,000, or integral multiples thereof not excluding the principal amount maturing on any Maturity Date. The Bonds shall initially be issued in book-entry only form and individual purchases may be made in denominations of $5,000, or integral multiples thereof (See BOOK-ENTRY-ONLY ISSUANCE for a further discussion of the book-entry-only form of issuance.) Redemption of Bonds Series 790 Bonds. The Series 790 Bonds maturing in the years 2008 through 2014, inclusive, shall become due on their stated maturity dates without the option of prior payment. At the option of the City, the Series 790 Bonds maturing September 1, 2015, and thereafter, may be called for redemption and payment prior to their respective maturities on and after September 1, 2014, in whole or in part at any time, Series 790 Bonds called for redemption and payment shall be redeemed at a price (expressed as a percentage of the principal amount) as follows, plus accrued interest to the date established for redemption and payment: Redemption Dates (Inclusive) Redemption Prices September 1, 2014, through August 31, 2015 101.00% September 1, 2015, through August 31, 2016 100.50% September 1, 2016, and thereafter 100.00% Series 790A Bonds. The Series 790A Bonds maturing in the years 2008 through 2017, inclusive, shall become due on their stated maturity dates without the option of prior payment. At the option of the City, the Series 790A Bonds maturing September 1, 2018, and thereafter, may be called for redemption and payment prior to their respective maturities on and after September 1, 2017, in whole or in part at any time. Series 790A Bonds called for redemption and payment shall be redeemed at a price (expressed as a percentage of the principal amount) as follows, plus accrued interest to the date established for redemption and payment: Redemption Dates (Inclusive) Redemption Prices September 1, 2017, through August 31, 2018 101.00% September 1, 2018, through August 31, 2019 100.50% September 1, 2019, and thereafter 100.00% Series 959 Bonds. The Series 959 Bonds maturing in the years 2008 through 2014, inclusive, shall become due on their stated maturity dates without the option of prior payment. At the option of the City, the Series 959 Bonds maturing September 1, 2015, and thereafter, may be called for redemption and payment prior to their respective maturities on and after September 1, 2014, in whole or in part at any time. Series 959 Bonds called for redemption and payment shall be redeemed at a price (expressed as a percentage of the principal amount) as follows, plus accrued interest to the date established for redemption and payment: 4
Redemption Dates (Inclusive) Redemption Prices September 1, 2014, through August 31, 2015 101.00% September 1, 2015, through August 31, 2016 100.50% September 1, 2016, and thereafter 100.00% Series 960 Bonds. The Series 960 Bonds maturing in the years 2008 through 2014, inclusive, shall become due on their stated maturity dates without the option of prior payment. At the option of the City, the Series 960 Bonds maturing September 1, 2015, and thereafter, may be called for redemption and payment prior to their respective maturities on and after September 1, 2014, in whole or in part at any time. Series 960 Bonds called for redemption and payment shall be redeemed at a price (expressed as a percentage of the principal amount) as follows, plus accrued interest to the date established for redemption and payment: Redemption Dates (Inclusive) Redemption Prices September 1, 2014, through August 31, 2015 101.00% September 1, 2015, through August 31, 2016 100.50% September 1, 2016, and thereafter 100.00% Selection of Bonds to be Redeemed If less than all outstanding Bonds are called for redemption on a specified date, the method of selection of the Bonds to be so called shall be designated by the City in such equitable manner as it may determine. If the City elects to call for redemption less than all Bonds at the time outstanding, it shall, in the case of Bonds registered in denominations greater than $5,000, treat each $5,000 of face value of a Bond so registered as though it were a separate Bond in the denomination of $5,000. If it is determined that one or more, but not all, of the $5,000 units of face value represented by any fully registered Bond is selected for redemption, then the registered owner of such Bond or such owner s legal representative shall forthwith present and surrender such Bond to the Paying Agent, hereinafter described (i) for payment of the redemption price (including premium if any, and interest to the redemption date) of the $5,000 unit or units of face value called for redemption, and (ii) for exchange, without charge to the registered owner thereof for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the registered owner of any such Bond of a denomination greater than $5,000 shall fail to present such Bond to the Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of the principal amount thereof called for redemption (and to that extent only). Notice of Redemption of Bonds At the direction of the City, written notice of the call for any redemption identifying the Bonds or portions thereof to be redeemed shall be given by the Paying Agent, in the name of the City, by mailing a copy of the redemption notice by first class mail not less than 30 days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the registered owners address shown on the registration books maintained by the Bond Registrar hereinafter described, and to the Treasurer of the State of Kansas; provided, however, that failure to give such notice by mailing as aforesaid, or any defect therein, shall not affect the validity of any proceedings for the redemption of the Bonds. Any notice of redemption shall state the date of redemption, the place or places at which such Bonds shall be 5
presented for payment, the maturity dates and certificate numbers and CUSIP numbers of the Bonds or portions of Bonds to be redeemed (and in the case of the redemption of a portion of any Bond, the principal amount thereof being redeemed), the redemption price and shall state that interest on the Bonds described in such notice will cease to accrue from and after the redemption date. Effect of Call for Redemption On or prior to the date fixed for any redemption, funds or government securities maturing on or before the date fixed for redemption shall be deposited by the City with the Paying Agent or deposited in escrow as provided in the applicable Bond Ordinance in amounts sufficient to provide for payment of the Bonds called for redemption, the accrued interest thereon to the redemption date and the redemption premium, if any. Upon the deposit of such funds or government securities, and notice of such redemption having been given, the Bonds or portions of the principal amount of Bonds called for redemption shall cease to bear interest on the specified redemption date. Paying Agent and Bond Registrar The Treasurer of the State of Kansas, Topeka, Kansas, has been appointed and designated by the Bond Ordinance as the initial Paying Agent and Bond Registrar for the Bonds; provided, however, the City reserves the right, in its sole discretion, to designate successor Paying Agents and Bond Registrars with respect to the Bonds upon 15 days written notice to the then acting Paying Agent and Bond Registrar. The Bond Registrar shall maintain registration books on behalf of the City for the registration of the names and addresses of the registered owners of the Bonds. Payment of Principal and Interest The Bonds will be issued in book-entry-only form. The principal amount of, premium, if any, and the interest on the Bonds shall be paid by the Paying Agent by wire transfer of same day funds to The Depository Trust Company, New York, New York ( DTC ). DTC s Direct Participants shall be responsible for making payment to Beneficial Owners. (See BOOK-ENTRY-ONLY ISSUANCE for a further discussion of payment of the Bonds and the book-entry-only form of issuance.) Replacement Bonds Upon Termination or Failure of Book-Entry-Only System. In the event the Bonds are issued in book-entry-only form and, subject to the Operational Arrangements of DTC, (i) DTC determines not to continue to act as securities depository for the Bonds, or (ii) the City determines that continuation of the book-entry-only system of evidence and transfer of ownership of the Bonds would adversely affect the interests of the Beneficial Owners of the Bonds, the City will discontinue the book-entry-only system with DTC. If the City fails to identify another qualified securities depository to replace DTC, the City will cause replacement Bonds in the form of fully registered certificates in denominations of $5,000, or integral multiples thereof not exceeding the principal amount thereof maturing on any Maturity Date, to be authenticated and delivered to the Beneficial Owners. If issued in certificated form, the certificates representing the Bonds shall be numbered in such manner as the Bond Registrar shall determine. 6
Security for the Bonds Series 790 Bonds. The Series 790 Bonds constitute general obligations of the City, and the full faith, credit and resources of the City are pledged by the Series 790 Bond Ordinance to the payment of the Series 790 Bonds and the interest thereon. Reference is made to the entire text of the Series 790 Bond Ordinance for full and complete descriptions of the covenants of the City relating to security for the Series 790 Bonds. The principal of, premium if any, and interest on the Series 790 Bonds will be payable from the collection over a 15-year period of special assessment taxes which have been levied against real properties in the City which have benefited from the Series 790 Bond Improvements, and, if not so paid, said principal of, premium if any, and the interest thereon shall be paid from ad valorem taxes which may be levied without limitation as to rate or amount upon all of the taxable tangible property within the territorial limits of the City. The Governing Body covenants in the Series 790 Bond Ordinance to make provision for payment of the principal of, premium, if any, and interest on the Series 790 Bonds as and when the same becomes due and payable by collecting the necessary special assessment taxes levied therefor as provided by law; and further covenants that if the amounts collected from such special assessment taxes are insufficient to fully pay the maturing principal of, premium if any, and interest on the Series 790 Bonds when due, to make provision for payment of such principal and interest and any premium by the levying of such ad valorem taxes as provided by law in such amounts as are necessary to rectify any deficiency in the amount of special assessment taxes collected. The Series 790A Bonds. The Series 790A Bonds constitute general obligations of the City, and the full faith, credit and resources of the City are pledged by the Series 790A Bond Ordinance to the payment of the Series 790A Bonds and the interest thereon. Reference is made to the entire text of the Series 790A Bond Ordinance for full and complete descriptions of the covenants of the City relating to security for the Series 790A Bonds. See the section of this Official Statement entitled BOND INSURANCE - - The Series 790A Bonds for a discussion of bond insurance relating to the Series 790A Bonds. The principal of, premium if any, and interest on the Series 790A Bonds will be payable from the collection over a 20-year period of special assessment taxes which have been levied against real properties in the City which have benefited from the Series 790A Bond Improvements, and, if not so paid, said principal of, premium if any, and the interest thereon shall be paid from ad valorem taxes which may be levied without limitation as to rate or amount upon all of the taxable tangible property within the territorial limits of the City. The Governing Body covenants in the Series 790A Bond Ordinance to make provision for payment of the principal of, premium, if any, and interest on the Series 790A Bonds as and when the same becomes due and payable by collecting the necessary special assessment taxes levied therefor as provided by law; and further covenants that if the amounts collected from such special assessment taxes are insufficient to fully pay the maturing principal of, premium if any, and interest on the Series 790A Bonds when due, to make provision for payment of such principal and interest and any premium by the levying of such ad valorem taxes as provided by law in such amounts as are necessary to rectify any deficiency in the amount of special assessment taxes collected. Series 959 Bonds. The Series 959 Bonds constitute general obligations of the City, and the full faith, credit and resources of the City are pledged by the Series 959 Bond Ordinance to the payment of the Series 959 Bonds and the interest thereon. Reference is made to the entire text of the Series 959 Bond Ordinance for full and complete descriptions of the covenants of the City relating to security for the Series 959 Bonds. See the section of this Official Statement entitled BOND INSURANCE - - The Series 959 Bonds for a discussion of bond insurance relating to the Series 959 Bonds. 7
` The principal of, premium if any, and interest on the Series 959 Bonds will be payable from certain incremental increases in real property taxes within a redevelopment district (the Tax Increment Revenues ) established by the City, and, if not so paid, said principal of, premium if any, and the interest thereon shall be paid from ad valorem taxes which may be levied without limitation as to rate or amount upon all of the taxable tangible property within the territorial limits of the City. The Governing Body covenants in the Series 959 Bond Ordinance to make provision for payment of the principal of, premium, if any, and interest on the Series 959 Bonds as and when the same becomes due and payable by pledging the Tax Increment Revenues as provided by law; and further covenants that if the amounts collected from Tax Increment Revenues are insufficient to fully pay the maturing principal of, premium if any, and interest on the Series 959 Bonds when due, to make provision for payment of such principal and interest and any premium by the levying of such ad valorem taxes as provided by law in such amounts as are necessary to rectify any deficiency in the amount of Tax Increment Revenues collected. The Series 959 Bonds are equally and ratably secured by a pledge of the Tax Increment Revenues on a parity with the Series 960 Bonds, pursuant to the Series 959 Bond Ordinance. Series 960 Bonds. The Series 960 Bonds constitute general obligations of the City, and the full faith, credit and resources of the City are pledged by the Series 960 Bond Ordinance to the payment of the Series 960 Bonds and the interest thereon. Reference is made to the entire text of the Series 960 Bond Ordinance for full and complete descriptions of the covenants of the City relating to security for the Series 960 Bonds. The principal of, premium if any, and interest on the Series 960 Bonds will be payable from certain incremental increases in real property taxes within a redevelopment district (the Tax Increment Revenues ) established by the City, and, if not so paid, said principal of, premium if any, and the interest thereon shall be paid from ad valorem taxes which may be levied without limitation as to rate or amount upon all of the taxable tangible property within the territorial limits of the City. The Governing Body covenants in the Series 960 Bond Ordinance to make provision for payment of the principal of, premium, if any, and interest on the Series 960 Bonds as and when the same becomes due and payable by pledging the Tax Increment Revenues as provided by law; and further covenants that if the amounts collected from Tax Increment Revenues are insufficient to fully pay the maturing principal of, premium if any, and interest on the Series 960 Bonds when due, to make provision for payment of such principal and interest and any premium by the levying of such ad valorem taxes as provided by law in such amounts as are necessary to rectify any deficiency in the amount of Tax Increment Revenues collected. The Series 960 Bonds are equally and ratably secured by a pledge of the Tax Increment Revenues on a parity with the Series 959 Bonds, pursuant to the Series 960 Bond Ordinance. The Series 790A Bonds BOND INSURANCE Payment Pursuant to Financial Guaranty Insurance Policy. Ambac Assurance Corporation ("Ambac Assurance") has made a commitment to issue a financial guaranty insurance policy (the "Financial Guaranty Insurance Policy") relating to the Series 790A Bonds, effective as of the date of issuance of the Series 790A Bonds. Under the terms of the Financial Guaranty Insurance Policy, Ambac Assurance will pay to The Bank of New York, in New York, New York, or any successor thereto (the "Insurance Trustee"), that portion of the principal of and interest on the Series 790A Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor (as such terms are defined in the Financial Guaranty Insurance Policy). Ambac Assurance will make such payments to the Insurance Trustee on the later of the date on which such principal and/or interest becomes Due for Payment or within one business day following the date on which Ambac Assurance shall have 8
received notice of Nonpayment from the Paying Agent. The insurance will extend for the term of the Series 790A Bonds and, once issued, cannot be canceled by Ambac Assurance. The Financial Guaranty Insurance Policy will insure payment only on stated maturity dates and on mandatory sinking fund installment dates, in the case of principal, and on stated dates for payment, in the case of interest. If the Series 790A Bonds become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Series 790A Bonds, Ambac Assurance will remain obligated to pay the principal of and interest on outstanding Series 790A Bonds on the originally scheduled interest and principal payment dates, including mandatory sinking fund redemption dates. In the event of any acceleration of the principal of the Series 790A Bonds, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration, except to the extent that Ambac Assurance elects, in its sole discretion, to pay all or a portion of the accelerated principal and interest accrued thereon to the date of acceleration (to the extent unpaid by the Obligor). Upon payment of all such accelerated principal and interest accrued to the acceleration date, Ambac Assurance's obligations under the Financial Guaranty Insurance Policy shall be fully discharged. In the event the Paying Agent has notice that any payment of principal of or interest on a Series 790A Bond that has become Due for Payment and that is made to a holder by or on behalf of the Obligor has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code in accordance with a final, non-appealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available. The Financial Guaranty Insurance Policy does not insure any risk other than Nonpayment (as set forth in the Financial Guaranty Insurance Policy). Specifically, the Financial Guaranty Insurance Policy does not cover: 1. payment on acceleration, as a result of a call for redemption (other than mandatory sinking fund redemption) or as a result of any other advancement of maturity; 2. payment of any redemption, prepayment or acceleration premium; and 3. nonpayment of principal or interest caused by the insolvency or negligence of the Trustee, Paying Agent or Bond Registrar, if any. If it becomes necessary to call upon the Financial Guaranty Insurance Policy, payment of principal requires surrender of the Series 790A Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit ownership of such Series 790A Bonds to be registered in the name of Ambac Assurance to the extent of the payment under the Financial Guaranty Insurance Policy. Payment of interest pursuant to the Financial Guaranty Insurance Policy requires proof of holder entitlement to interest payments and an appropriate assignment of the holder's right to payment to Ambac Assurance. Upon payment of the insurance benefits, Ambac Assurance will become the owner of the Series 790A Bonds, appurtenant coupon, if any, or right to payment of the principal of or interest on such Series 790A Bonds and will be fully subrogated to the surrendering holder's rights to payment. Ambac Assurance Corporation. Ambac Assurance is a Wisconsin-domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin, and is licensed to do business in 50 states, the District of Columbia, the Territory of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, 9
with admitted assets of approximately $10,194,000,000 (unaudited) and statutory capital of approximately $6,557,000,000 (unaudited) as of March 31, 2007. Statutory capital consists of Ambac Assurance's policyholders' surplus and statutory contingency reserve. Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., Moody's Investors Service, Inc. and Fitch Ratings have each assigned a triple-a financial strength rating to Ambac Assurance. Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that the insuring of an obligation by Ambac Assurance will not affect the treatment for federal income tax purposes of interest on such obligation and that insurance proceeds representing maturing interest paid by Ambac Assurance under policy provisions substantially identical to those contained in the Financial Guaranty Insurance Policy shall be treated for federal income tax purposes in the same manner as if such payments were made by the Obligor. Ambac Assurance makes no representation regarding the Series 790A Bonds or the advisability of investing in the Series 790A Bonds and makes no representation regarding, nor has it participated in the preparation of, this Official Statement other than the information supplied by Ambac Assurance and presented under the heading "BOND INSURANCE - - The Series 790A Bonds". Available Information. The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Company"), is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). These reports, proxy statements and other information can be read and copied at the SEC's public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC, including the Company. These reports, proxy statements and other information can also be read at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. Copies of Ambac Assurance's financial statements prepared in accordance with statutory accounting standards are available from Ambac Assurance. The address of Ambac Assurance's administrative offices is One State Street Plaza, 19th Floor, New York, New York 10004, and its telephone number is (212) 668-0340. Incorporation of Certain Documents by Reference. The following documents filed by the Company with the SEC (File No. 1-10777) are incorporated by reference in this Official Statement: 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and filed on March 1, 2007; 2. The Company s Current Report on Form 8-K dated and filed on April 25, 2007; and 3. The Company s Quarterly Report on Form 10-Q for the fiscal quarterly period ended March 31, 2007 and filed on May 10, 2007. All documents subsequently filed by the Company pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in the same manner as described 10
above in "BOND INSURANCE - -The Series 790A Bonds - -Available Information." The Series 959 Bonds The MBIA Insurance Corporation Insurance Policy. The following information has been furnished by MBIA Insurance Corporation ("MBIA") for use in this Official Statement. Reference is made to Appendix H for a specimen of MBIA's policy (the Policy ). MBIA does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Policy and MBIA set forth under the heading BOND INSURANCE - - The Series 959 Bonds. Additionally, MBIA makes no representation regarding the Series 959 Bonds or the advisability of investing in the Series 959 Bonds. The MBIA Policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the City to the Paying Agent or its successor of an amount equal to (i) the principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Series 959 Bonds as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by the MBIA Policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless MBIA elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any Owner of the Series 959 Bonds pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Owner within the meaning of any applicable bankruptcy law (a Preference ). MBIA's Policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Series 959 Bonds. MBIA's Policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of Series 959 Bonds upon tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. MBIA's Policy also does not insure against nonpayment of principal of or interest on the Series 959 Bonds resulting from the insolvency, negligence or any other act or omission of the Paying Agent or any other paying agent for the Series 959 Bonds. Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by MBIA from the Paying Agent or any owner of a Series 959 Bond the payment of an insured amount for which is then due, that such required payment has not been made, MBIA on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such Series 959 Bonds or presentment of such other proof of ownership of the Series 959 Bonds, together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the Series 959 Bonds as are paid by MBIA, and appropriate instruments to effect the appointment of MBIA as agent for such owners of the Series 959 Bonds in any legal proceeding related to payment of insured amounts on the Series 959 Bonds, such instruments being 11
in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the insured amounts due on such Series 959 Bonds, less any amount held by the Paying Agent for the payment of such insured amounts and legally available therefor. MBIA Insurance Corporation. MBIA Insurance Corporation ( MBIA ) is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed company (the Company ). The Company is not obligated to pay the debts of or claims against MBIA. MBIA is domiciled in the State of New York and licensed to do business in and subject to regulation under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the Territory of Guam. MBIA, either directly or through subsidiaries, is licensed to do business in the Republic of France, the United Kingdom and the Kingdom of Spain and is subject to regulation under the laws of those jurisdictions. In February 2007, MBIA Corp. incorporated a new subsidiary, MBIA Mexico, S.A. de C.V. ( MBIA Mexico ), through which it intends to write financial guarantee insurance in Mexico beginning in 2007. To date, MBIA Mexico has had no operating activity. The principal executive offices of MBIA are located at 113 King Street, Armonk, New York 10504 and the main telephone number at that address is (914) 273-4545. Regulation. As a financial guaranty insurance company licensed to do business in the State of New York, MBIA is subject to the New York Insurance Law which, among other things, prescribes minimum capital requirements and contingency reserves against liabilities for MBIA, limits the classes and concentrations of investments that are made by MBIA and requires the approval of policy rates and forms that are employed by MBIA. State law also regulates the amount of both the aggregate and individual risks that may be insured by MBIA, the payment of dividends by MBIA, changes in control with respect to MBIA and transactions among MBIA and its affiliates. The Policy is not covered by the Property/Casualty Insurance Security Fund specified in Article 76 of the New York Insurance Law. Financial Strength Ratings of MBIA. Moody's Investors Service, Inc. rates the financial strength of MBIA Aaa. Standard & Poor's, a division of The McGraw-Hill Companies, Inc. rates the financial strength of MBIA AAA. Fitch Ratings rates the financial strength of MBIA AAA. Each rating of MBIA should be evaluated independently. The ratings reflect the respective rating agency's current assessment of the creditworthiness of MBIA and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the Series 959 Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the Series 959 Bonds. MBIA does not guaranty the market price of the Series 959 Bonds nor does it guaranty that the 12
ratings on the Series 959 Bonds will not be revised or withdrawn. MBIA Financial Information. As of December 31, 2006, MBIA had admitted assets of $10.9 billion (audited), total liabilities of $6.9 billion (audited), and total capital and surplus of $4.0 billion (audited), each as determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of March 31, 2007, MBIA had admitted assets of $11.2 billion (unaudited), total liabilities of $7.0 billion (unaudited), and total capital and surplus of $4.2 billion (unaudited), each as determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. For further information concerning MBIA, see the consolidated financial statements of MBIA and its subsidiaries as of December 31, 2006 and December 31, 2005 and for each of the three years in the period ended December 31, 2006, prepared in accordance with generally accepted accounting principles, included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2006 and the consolidated financial statements of MBIA and its subsidiaries as of March 31, 2007 and for the three month period ended March 31, 2007 and March 31, 2006 included in the Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2007, which are hereby incorporated by reference into this Official Statement and shall be deemed to be a part hereof. Copies of the statutory financial statements filed by MBIA with the State of New York Insurance Department are available over the Internet at the Company s web site at http://www.mbia.com and at no cost, upon request to MBIA at its principal executive offices. Incorporation of Certain Documents by Reference. The following documents filed by the Company with the Securities and Exchange Commission (the SEC ) are incorporated by reference into this Official Statement: 1. The Company s Annual Report on Form 10-K for the year ended December 31, 2006; and 2. The Company s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007. Any documents, including any financial statements of MBIA and its subsidiaries that are included therein or attached as exhibits thereto, filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the Company s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, and prior to the termination of the offering of the Series 959 Bonds offered hereby shall be deemed to be incorporated by reference in this Official Statement and to be a part hereof from the respective dates of filing such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this Official Statement, shall be deemed to be modified or superseded for purposes of this Official Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement. The Company files annual, quarterly and special reports, information statements and other information with the SEC under File No. 1-9583. Copies of the Company s SEC filings (including (1) the Company s Annual Report on Form 10-K for the year ended December 31, 2006, and (2) the Company s 13
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007) are available (i) over the Internet at the SEC s web site at http://www.sec.gov; (ii) at the SEC s public reference room in Washington, D.C.; (iii) over the Internet at the Company s web site at http://www.mbia.com; and (iv) at no cost, upon request to MBIA at its principal executive offices. Description of Notes THE NOTES The Notes are issued in the total principal amount of $65,140,000, bear a Dated Date of August 9, 2007, and a Maturity Date of February 7, 2008. The interest on the Notes, at the rate shown on the inside cover page of the Official Statement, accrues from the Dated Date and shall be payable on the Maturity Date. The Notes are issued as fully registered notes in book-entry-only form, and individual purchases may be made in denominations of $5,000, or integral multiples thereof not exceeding the principal amount of the Notes. Redemption of Notes The Notes are not subject to call for redemption and payment prior to their Maturity Date. Payment of Principal and Interest The Notes will be issued in book-entry-only form, and so long as the Notes remain in book-entryonly form, the City shall act as Paying Agent and Note Registrar. The principal amount of and the interest on the Notes shall be paid by the City by wire transfer of same day funds to The Depository Trust Company, New York, New York ( DTC ). DTC s Direct Participants shall be responsible for making payment to Beneficial Owners. (See BOOK-ENTRY-ONLY ISSUANCE for a further discussion of payment of the Notes and the book-entry-only form of issuance.) Replacement Notes Upon Termination or Failure of Book-Entry-Only System. In the event the Notes are issued in book-entry-only form and, subject to the Operational Arrangements of DTC, (i) DTC determines not to continue to act as securities depository for the Notes, or (ii) the City determines that continuation of the book-entry-only system of evidence and transfer of ownership of the Notes would adversely affect the interests of the Beneficial Owners of the Notes, the City will discontinue the bookentry-only system with DTC. If the City fails to identify another qualified securities depository to replace DTC, the City will cause replacement Notes in the form of fully registered certificates to be authenticated and delivered to the Beneficial Owners. If issued in certificated form, the certificates representing the Notes shall be numbered in such manner as the Note Registrar shall determine. Security for the Notes The Notes constitute general obligations of the City, and the full faith, credit and resources of the City are pledged by the Note Ordinance to the payment of the Notes and the interest thereon. The Notes are payable as to both principal and interest from the collection of special assessment taxes which will be levied against real properties in the City benefiting from certain of the Note Improvements, from the proceeds of general obligation bonds which will subsequently be issued by the City for such purpose and/or from current revenues of the City available for such purpose, or the Notes may be payable from the proceeds of renewal temporary notes which the City may in the future issue for such purpose. The Governing Body covenants in the Note Ordinance to make provision for the payment of the principal of and interest on the Notes on the Maturity Date by the levying and collecting of the necessary 14
special assessment taxes upon real properties in the City which benefit from and are liable for costs of certain of the Note Improvements, and if the amounts collected from such special assessment taxes are insufficient to fully pay the principal of and interest on the Notes on the Maturity Date, or if any of such Note Improvements are not then completed or the Governing Body is otherwise hindered from then levying and collecting such special assessment taxes, and for the costs of the Note Improvements which are to be paid by the City-at-large, the Governing Body covenants to make provision for the payment of the Notes and the interest thereon by the issuance of renewal temporary notes for that purpose or by the issuance of general obligation bonds of the City, as is warranted by the circumstances then existing. The Governing Body further covenants in the Note Ordinance that if the amounts collected from the special assessment taxes and/or the proceeds of such renewal temporary notes or general obligation bonds are insufficient to fully pay the principal and interest on the Notes on the Maturity Date, then it shall levy ad valorem taxes upon all of the taxable tangible property located within the territorial limits of the City in such amounts as are necessary to rectify any deficiency in the amounts otherwise available for payment of the Notes and the interest thereon. Reference is made to the entire text of the Note Ordinance for full and complete descriptions of the covenants of the City relating to the security for the Notes. BOOK-ENTRY-ONLY ISSUANCE The Depository Trust Company, New York, New York ( DTC ), will act as securities depository for the Bonds and Notes (referred to in this discussion of Book-Entry-Only Issuance as the Securities ). One fully registered Security per maturity, due on the respective Maturity Dates as set forth on the inside cover page hereof, each in the aggregate principal amount of the Securities maturing on such Maturity Date, will be issued as fully registered securities registered in the name of Cede & Co. (DTC s partnership nominee,) and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-u.s. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC s records. The ownership interest of each actual purchaser of each Security ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect 15
Participants records, Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Securities unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption and interest payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from the City or Paying Agent on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the City or the Paying Agent, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to the City or Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and delivered. 16
Subject to the operational arrangements of DTC, the City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the City believes to be reliable, and the City is depending upon such sources for the accuracy thereof. THE IMPROVEMENTS General Obligation Procedures. Pursuant to and under the authority of various Kansas statutes, the Governing Body of the City has heretofore duly taken various actions, including the adoption, and publication where necessary, of various resolutions, ordinances and other proceedings as required by said laws, to authorize the Series 790 Bond Improvements, the Series 790A Bond Improvements, the Series 959 Bond Improvements, the Series 960 Bond Improvements, the Note Improvements (collectively, the Improvements ) as described in Appendix E to this Official Statement and has authorized and provided that the costs of such Improvements may be paid, either in whole or in part, by the issuance of general obligation bonds of the City. Financing costs and, in some cases, administrative costs are included in the final cost of an Improvement. Series 790 and 790A Bond Improvements. Upon completion of construction and determination of the total final costs of a capital improvement payable in whole or in part by special assessments, Kansas statutes require that the special assessments be calculated and levied against the respective real properties liable therefor, and the owners of such properties be notified and given a prescribed time period in which the special assessments can be paid in cash. The City is authorized by the laws of the State of Kansas to issue general obligation bonds in order to provide necessary funds for the permanent financing of the costs and expenses of capital improvements levied as special assessments against benefited properties and not paid in cash within the time provided by law. The proceeds of the Bonds will be used to pay unpaid specially assessed costs of the Improvements by the applicable series of Bonds which are completed. The special assessments for the Improvements which are being permanently financed from the proceeds of each series of Bonds, and which were not paid in cash within the time provided by law, have been spread over a 15-year period for the Series 790 Bonds and a 20-year period for the Series 790A Bonds. Such assessments will be levied annually against the real property liable therefor and as collected and will be used to pay the principal of and interest on the applicable series of Bonds. Series 959 and 960 Bond Improvements. The City is authorized under the laws of the State of Kansas to establish redevelopment districts and to adopt redevelopment project plans for the redevelopment of project areas within a redevelopment district. Each redevelopment district is treated as a separate taxing unit for the purpose of computation and levy of taxes. All property within a redevelopment district is assessed and taxed for ad valorem tax purposes in the same manner that such property would be assessed and taxed if located outside the district; however, certain incremental increases in real property ad valorem taxes within the redevelopment district (the Tax Increment Revenue ) that occur after the establishment of a redevelopment district may be pledged to the payment of bonds issued by the City to pay eligible costs of the redevelopment project plan. Redevelopment project costs may include the acquisition of land for and certain improvements to private, as well as publicly-owned property. Beginning with the first payment of taxes following the date a redevelopment district is established, the county treasurer allocates the Tax Increment Revenue and distributes it to the City in the same manner as other ad valorem taxes. Tax Increment Revenues received by the City are deposited into a special fund to finance the redevelopment project plan costs, including the payment of bonds issued pay such costs. Upon compliance with certain procedures, the City is also authorized to 17
pledge its full faith and credit to the payment of such bonds. Note Improvements. The City is authorized by the laws of the State of Kansas to issue temporary notes for interim financing during the construction of capital improvements which may be permanently financed by the issuance of general obligation bonds and is further authorized by the laws of the State of Kansas to issue renewal temporary notes in order to refund previously issued temporary notes when the City is hindered or delayed from the issuance of such general obligation bonds or the levying of such special assessments. The proceeds of the Notes will be used to refund a portion of the principal amount of the City s Series 218 Notes previously issued for construction financing for certain Improvements which are not yet complete, and to temporarily finance construction costs for certain other newly undertaken or newly incurred expenses of Improvements during their period of construction. Improvement Listing. Reference is made to Appendix E to this Official Statement for a complete listing of the Improvements, and to the section of this Official Statement entitled SOURCES AND USES OF FUNDS. Series 790 Bonds SOURCES AND USES OF FUNDS Sources of funds Principal amount $12,740,000.00 Accrued interest 12,369.03 Premium 15,678.60 Special assessments paid in cash 104,852.41 Costs paid from City at large 48,550.00 Main benefit fee funds 109,488.00 Water/Sewer Utility Fund transfer 458,161.50 Cash paid from other 2,088.09 Total sources of funds $13,491,187.63 Uses of funds Water distribution $1,852,800.00 Sanitary sewer 3,512,340.00 Storm sewer 3,052,700.00 Paving 5,045,300.00 Deposit to Debt Service Fund 28,047.63 Total uses of funds $13,491,187.63 [Remainder of Page Intentionally Left Blank] 18
Series 790A Bonds Sources of funds Principal amount $2,575,000.00 Accrued interest 2,557.57 Premium 1,055.75 Special assessments paid in cash 42,715.40 Cash paid from other 2,784.60 Total sources of funds $2,624,113.32 Uses of funds Water distribution $ 49,800.00 Sanitary sewer 830,500.00 Storm sewer 693,500.00 Paving 1,046,700.00 Deposit to Debt Service Fund 3,613.32 Total uses of funds $2,624,113.32 Series 959 Bonds Sources of funds Principal amount $4,390,000.00 Accrued interest 5,812.19 Premium 6,086.55 Total sources of funds $4,401,898.74 Uses of funds Water Walk Redevelopment District Project Plan Costs (land, architectural engineering, demolition) $4,390,000.00 Deposit to Debt Service Fund 11,898.74 Total uses of funds $4,401,898.74 [Remainder of Page Intentionally Left Blank] 19
Series 960 Bonds Sources of funds Principal amount $7,385,000.00 Accrued interest 7,169.72 Premium 3,760.85 Total sources of funds $7,395,930.57 Uses of funds Water Walk Redevelopment District Project Plan Costs Land, architectural engineering, demolition $3,369,557.00 Waterway 1,524,605.00 Streets 2,490,838.00 Deposit to Debt Service Fund 10,930.57 Total uses of funds $7,395,930.57 Series 220 Notes Sources of funds Principal amount $65,140,000.00 Premium 254,046.00 Total sources of funds $65,394,046.00 Uses of funds New capital projects Arterial street improvements $12,106,666.00 Bridge improvements 2,435,300.00 Public improvements 10,828,400.00 Park improvements 1,595,500.00 Storm sewer 2,290,000.00 Water distribution 3,105,600.00 Sanitary sewer 5,717,000.00 Paving 6,763,300.00 Facade improvements 551,234.00 Flood mitigation 894,000.00 Renewal of portion of principal of Series 218 Notes 18,853,,000.00 Deposit to Debt Service Fund 254,046.00 Total uses of funds $65,394,046.00 20
LEGAL AND TAX MATTERS Approval of Bonds and Notes; Opinions of Bond Counsel All matters incident to authorization and issuance of the Bonds and the Notes are subject to the approval of Kutak Rock LLP, Kansas City, Missouri, the City s Bond Counsel. The form of Bond Counsel s opinions are included as Appendix D to this Official Statement. Certain legal matters in connection with the issuance of the Bonds and the Notes, and the authorities for the Improvements, have been passed upon for the City by Gary E. Rebenstorf, Director of Law and City Attorney. Bond Counsel has participated in the preparation of this Official Statement (except for the factual and financial information appearing herein) and Appendix D hereto; however, Bond Counsel has not participated in the preparation of Appendices A, B, C, E, F G and H to this Official Statement. The factual and financial information herein and Appendices A, B, C, E, F G and H have been supplied or reviewed by certain officials and staff of the City and experts, as referred to herein, and, accordingly, Bond Counsel expresses no opinion to the accuracy or sufficiency thereof. State Tax Exemption Bonds and Notes. In the opinion of Bond Counsel, the interest on the Bonds and Notes is excludable from the computation of Kansas adjusted gross income and the Bonds and Notes are exempt from the tax imposed by Kansas counties, cities or townships upon the gross earnings derived from money, notes and other evidence of debt. Federal Tax Exemption Series 790, 790A and 960 Bonds and Notes. In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Series 790, 790A, and 960 Bonds (the Tax-Exempt Bonds ) and Notes is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the City with covenants designed to satisfy the requirements of the Code that must be met subsequent to the issuance of the Tax-Exempt Bonds and Notes. Failure to comply with such requirements could cause interest on the Tax-Exempt Bonds or the Notes to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Tax-Exempt Bonds or the Notes, as applicable. The City has covenanted to comply with such requirements. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Tax-Exempt Bonds or the Notes. Notwithstanding Bond Counsel s opinion that interest on the Tax-Exempt Bonds and the Notes is not a specific preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of such corporations adjusted current earnings over their alternative minimum taxable income (determined without regard to such adjustment and prior to reduction for certain net operating losses). The accrual or receipt of interest on the Tax-Exempt Bonds and the Notes may otherwise affect the federal income tax liability of the owners of the Tax-Exempt Bonds and the Notes. The extent of these other tax consequences will depend upon such owner s particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. 21
Purchasers of the Tax-Exempt Bonds and the Notes, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of social security or railroad retirement benefits, taxpayers otherwise entitled to claim the earned income credit, or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry taxexempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Tax-Exempt Bonds or the Notes. Changes in Federal and State Tax Law. From time to time, there are legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to above or adversely affect the market of the Bonds and Notes. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds and notes issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Bonds and Notes. An example of such litigation is the case of Davis v. Kentucky Department of Revenue, 97 S.W.3d 557 (2006), which the U.S. Supreme Court has agreed to hear pursuant to a writ of certiorari grated on May 21, 2007, challenging Kentucky s taxation of bonds issued by other states and their political subdivisions differently than it taxes bonds and notes issued by Kentucky and its political subdivisions. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Bonds or Notes or the market value thereof would be impacted thereby. Purchasers of the Bonds or Notes should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds and Notes and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation. Not Bank-Qualified Obligations. The City has not designated the Bonds or the Notes as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Code relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. Original Issue Discount. The Series 790 Bonds maturing in 2018 through 2022, the Series 790A Bonds maturing in 2021, 2022 and 2025 and the Series 960 Bonds maturing in 2018 through 2022 (the Discount Bonds ) are being sold at an original issue discount. The difference between the initial public offering prices, as set forth on the inside cover page of the Official Statement, of such Discount Bonds and their stated amounts to be paid at maturity, constitutes original issue discount treated as interest which is excluded from gross income for federal income tax purposes, as described above. The amount of original issue discount which is treated as having accrued with respect to such Discount Bond is added to the cost basis of the owner in determining, for federal income tax purposes, gain or loss upon disposition of such Discount Bond (including its sale, redemption or payment at maturity). Amounts received upon disposition of such Discount Bond which are attributable to accrued original issue discount will be treated as tax-exempt interest, rather than as taxable gain, for federal income tax purposes. Original issue discount is treated as compounding semiannually, at a rate determined by reference to the yield to maturity of each individual Discount Bond, on days which are determined by reference to the maturity date of such Discount Bond. The amount treated as original issue discount on such discount Bond for a particular semiannual accrual period is equal to the product of (i) the yield to maturity for such Discount Bond (determined by compounding at the close of each accrual period) and (ii) the amount which would have been the tax basis of such Discount Bond at the beginning of the particular accrual 22
period if held by the original purchaser, less the amount of any interest payable for such Discount Bond during the accrual period. The tax basis is determined by adding to the initial public offering price on such Discount Bond the sum of the amounts which have been treated as original issue discount for such purposes during all prior periods. If such Discount Bond is sold between semiannual compounding dates, original issue discount which would have been accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period. Additionally, interest on the Bonds is not payable until a date that is more than one (1) year after the date of issue. The interest payments on the Bonds are not qualified stated interest for federal income tax purposes, and will accordingly be included in the computation of original issue discount as described below. The difference between the Issue Price of the Bonds and the sum of all interest payments thereon plus the amount payable at maturity is original issue discount. The Issue Price for the Bonds is the price at which a substantial amount of the Bonds is first sold to the public. The Issue Price of each maturity of the Bonds is expected to be the amount set forth on the inside cover page to this Official Statement, but is subject to change based on actual sales. For an investor who purchases a Bond in the initial public offering at the Issue Price and who holds such Bond to its stated maturity, subject to the condition that the City complies with the covenants discussed under LEGAL AND TAX MATTERS, Federal Tax Exemption, Bonds and Series 220 Notes above, (a) the full amount of original issue discount with respect to such Bond constitutes interest which is not includible in the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing an adjustment used in determining the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. If a Bond issued with original issue discount is purchased at any time for a price that is less than the Issue Price plus accreted original issue discount reduced by payments of principal and interest previously paid (the Revised Issue Price ), the purchaser will be treated as having purchased such Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimus rule applies). Such treatment would apply to any purchaser who purchases any such Bonds for a price that is less than its Revised Issue Price even if the purchase price exceeds par. Owners of the Bonds who dispose of the Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Bonds in the initial public offering, but at a price different from the Issue Price or purchase Bonds subsequent to the initial public offering should consult their own tax advisors. Owners of Bonds issued with original issue discount should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such Bonds. Original Issue Premium. The Series 790 Bonds maturing in 2008 through 2017; the Series 790A Bonds maturing in 2008 through 2020 and 2024 and the Series 960 Bonds maturing in 2008 through 2017 (collectively, the Premium Bonds ) are being sold at a premium. An amount equal to the excess of the issue price of a Premium Bond over its stated redemption price at maturity constitutes premium on such Premium Bond. An initial purchaser of a Premium Bond must amortize any premium over such Premium Bond s term using constant yield principles, based on the purchaser s yield to 23
maturity (or, in the case of Premium Bonds callable prior to their maturity, by amortizing the premium to the call date, based on the purchaser s yield to the call date and giving effect to the call premium). As premium is amortized, the purchaser s basis in such Premium Bond is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser s basis may be reduced, no federal income tax deduction is allowed. Purchasers of the Premium Bonds should consult with their tax advisors with respect to the determination and treatment of amortizable premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Premium Bond. Original Issue Premium. The Series 220 Notes maturing in 2008 (the Premium Notes ) are being sold at a premium. An amount equal to the excess of the issue price of a Premium Notes over its stated redemption price at maturity constitutes premium on such Premium Note. An initial purchaser of a Premium Note must amortize any premium over such Premium Note s term using constant yield principles, based on the purchaser s yield to maturity (or, in the case of Premium Notes callable prior to their maturity, by amortizing the premium to the call date, based on the purchaser s yield to the call date and giving effect to the call premium). As premium is amortized, the purchaser s basis in such Premium Note is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Note prior to its maturity. Even though the purchaser s basis may be reduced, no federal income tax deduction is allowed. Purchasers of the Premium Notes should consult with their tax advisors with respect to the determination and treatment of amortizable premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Premium Note. Series 959 Bonds. In the opinion of Kutak Rock LLP, Bond Counsel, interest on the Series 959 Bonds is subject to federal income taxation, and Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Series 959 Bonds. RATINGS Standard & Poor s, a Division of The McGraw-Hill Companies, Inc. ( S&P ), and Moody s Investors Service ( Moody s ), has assigned a rating of AA and Aa2, respectively, to the Series 790 Bonds and the Series 960 Bonds and a rating of SP-1+ and MIG 1, respectively, to the Notes. The City has received a commitment from Ambac Assurance Corporation to issue a Financial Guaranty Insurance policy for the Series 790A Bonds, which is described in the section captioned BOND INSURANCE The Series 790A Bonds and in Appendix G herein. Upon the issuance of such policy for the Series 790A Bonds, Moody s and S&P will assign a rating of Aaa and AAA, respectively, to the Series 790A Bonds. Moody s and S&P has also assigned an underlying rating of AA and Aa2, respectively, to the Series 790A Bonds. The City has received a commitment from MBIA to issue a municipal bond insurance policy for the Series 959 Bonds, which is described in the section captioned BOND INSURANCE - - The Series 959 Bonds and in Appendix H herein. Upon the issuance of such policy for the Series 959 Bonds, Moody s and S&P will assign a rating of Aaa and AAA, respectively, to the Series 959 Bonds. Moody s and S&P has also assigned an underlying rating of AA and Aa2, respectively, to the Series 959 Bonds. Such ratings reflect only the view of such rating agencies and an explanation of the significance of such ratings may be obtained therefrom. There is no assurance that a particular rating will remain in effect for any given period of time or that it will not be revised, either downward or upward, or withdrawn entirely, if in the judgment of the agency originally establishing such rating, circumstances so warrant. 24
Any downward revision or withdrawal of any rating may have an adverse affect on the market price of the Bonds or the Notes. ABSENCE OF LITIGATION The City is a defendant in various actions pending or in process for property damages, civil rights, personal injury and other miscellaneous claims. The ultimate liability that might result from the final resolution of these matters is not presently determinable. City staff and the City s legal department are of the opinion that the final outcome of these cases will not have an adverse material effect on the City s financial status. There is currently no controversy, suit or other proceedings of any kind pending or, to the knowledge of the Governing Body, City staff or the City s legal department, threatened which would adversely affect the validity of the Bonds and the Notes, or the ability of the City to provide for the payment of the principal of and the interest on the Bonds and the Notes in the manner described herein. Concurrently with the delivery of the Bonds and the Notes, the City will deliver an executed nonlitigation certificate in the form required by the statutes of the State of Kansas. FINANCIAL INFORMATION An independent audit of the City s financial transactions is conducted annually by an outside firm of certified public accountants appointed by the Governing Body. The opinion of such certified public accountants is contained each year in the City s Comprehensive Annual Financial Report ( CAFR ) which is filed in the Office of the City Clerk. The certified public accounting firm of Allen Gibbs & Houlik, L.C. audited the City s complete financial statements for the years ended December 31, 1997 and thereafter, contained in each year s CAFR. The City s audited financial statements for the fiscal year ended December 31, 2006, together with the opinion of Allen, Gibbs & Houlik, L.C., are included in Appendix B to this Official Statement. A portion of the financial information presented in Appendix C to this Official Statement has been taken from the City s audited financial statements for the fiscal year ended December 31, 2006. A copy of the City s CAFR for the year ended December 31, 2006, may be obtained on line at www.wichita.gov. CUSIP NUMBERS Any CUSIP numbers for the Bonds or Notes included in this Official Statement are provided for the convenience of the owners of the Bonds and Notes and prospective investors. The CUSIP numbers for the Bonds and Notes have been assigned by an organization unaffiliated with the City. The City is not responsible for the selection of the CUSIP numbers and makes no representation as to the accuracy thereof as printed on the Bonds and Notes or as set forth in this Official Statement. No assurance can be given that the CUSIP numbers for the Bonds and Notes will remain the same after the date of issuance of the Bonds and Notes. 25
UNDERWRITING The Bonds and Notes are being purchased through a public sale on August 9, 2007. The Series 790 Bonds were purchased by an account managed by Morgan Keegan & Company, Inc., Memphis, Tennessee, at a price of 100% of the principal amount, plus a premium of $15,678.60, plus accrued interest to the date of closing. The Series 790A Bonds were purchased by an account managed by UBS Securities, LLC, Dallas, Texas, at a price of 100% of the principal amount, plus a premium of $1,055.75, plus accrued interest to the date of closing. The Series 959 Bonds were purchased by an account managed by Griffin, Kubik, Stephens & Thompson, Inc., Chicago, Illinois, at a price of 100% of the principal amount, plus a premium of $6,086.55, plus accrued interest to the date of closing. The Series 960 Bonds were purchased by an account managed by Morgan Keegan & Company, Inc., Memphis, Tennessee, at a price of 100% of the principal amount, plus a premium of $3,760.85, plus accrued interest to the date of closing. The Notes were purchased by an account managed by Lehman Brothers, New York, New York, at a price of 100% of the principal amount, plus a premium of $254,046.00, plus accrued interest to the date of closing. MISCELLANEOUS References herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to this Official Statement, they will be furnished on request. So far as any statements are made in this Official Statement involving matters of opinion, estimates, projections or forecasts, whether or not expressly stated as such, they are not to be construed as representations of fact. The information and expressions of opinion in this Official Statement are subject to change, and neither the delivery of this Official Statement nor any sale made hereunder shall create any implication that there has been no change in the affairs of the City since the date hereof. The agreement of the City with the owners of the Bonds is fully set forth in the applicable Bond Ordinance, and neither any advertisement for the Bonds nor this Official Statement is to be construed as constituting an agreement with any owner of the Bonds. Each Bond Ordinance is on file in the Office of the City Clerk. The agreement of the City with the owners of the Notes is fully set forth in the Note Ordinance, and neither any advertisement for the Notes nor this Official Statement is to be construed as constituting an agreement with the owner of the Notes. The Note Ordinance is on file in the Office of the City Clerk. OFFICIAL STATEMENT CERTIFICATION At the closing, the City will deliver to the original purchasers of the Bonds and Notes a certificate to the effect that as of the date hereof and as of the date of closing, to the best of their knowledge, the City has not made an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made, not misleading. (The Remainder of This Page Was Intentionally Left Blank) 26
APPROVAL OF OFFICIAL STATEMENT This Official Statement, and the distribution thereof, was duly approved by the City s Governing Body on July 10, 2007. CITY OF WICHITA, KANSAS ATTEST: Carl Brewer, Mayor Karen Sublett, City Clerk 27
APPENDIX A GENERAL INFORMATION
CITY OF WICHITA, KANSAS GENERAL INFORMATION Location Wichita, the largest city in Kansas, population 354,865 1, is the county seat of Sedgwick County. Major highways, including the Kansas Turnpike and Interstate I-35, link the City with a large trade area that encompasses a population of more than 1.0 million people 2 within a 100-mile radius. The nearest large cities are Denver to the west, Kansas City to the northeast and Oklahoma City and Tulsa to the south and southeast. Historical Background The City became a town in 1868, was incorporated in 1870 and has been a city of the first class since 1886. The original stimulus to the City's economic development was the extension of the Santa Fe Railway into Wichita in 1872. The City's early growth paralleled the expanding agricultural productivity of the central plains states and by 1900 the City was an important regional center for the processing of agricultural products and the distribution of farm equipment. In 1914, the discovery of oil broadened the economic base, drawing numerous services, distributive enterprises and metal-working industries to the City. From the earliest days of the aircraft industry Wichita has been a leading producer of general aviation and commercial aircraft. McConnell Air Force Base was activated in 1951 and has remained an important factor in the community. Government In 1917, Wichita became one of the first municipalities in the United States to adopt the Commission-Manager form of government. Effective April 14, 1987, the title "City Commission" was changed to "City Council" and instead of being elected at-large, five council members were nominated by district and elected at-large. In November 1988, Wichita voters approved a referendum to elect a five-member City Council by pure district elections and a full-time Mayor by city-at-large 1 Source: U.S. Department of Commerce, Bureau of the Census, 2005 population estimates. 2 Source: Estimated by the Center for Economic Development and Business Research, W. Frank Barton School of Business, Wichita State University, based on Claritas 2006 population estimates. Estimate includes Kansas population only; not the portion of population within the 100-mile radius located in Oklahoma. A-1
elections. On February 10, 1989, Charter Ordinance 115 was adopted and provided for the five council member seats to be increased to six by subdividing the City into six districts based on the 1990 Census. The six Council members and the Mayor serve four-year terms with the Council members' terms being overlapping. The City Council and Mayor conduct all legislative functions for the City of Wichita and establish general policies, which are executed by the City Manager. Employees Total authorized positions for 2007/08 for the City of Wichita were as follows: Locally Funded Non-locally Funded Full-Time Total Full-Time Full-Time Equivalents Full-Time Equivalents Equivalents Total Employees 3,111 3,185.55 158 3,269 Kansas law prohibits strikes by public employees and provides procedures for the resolution of disputes. In the event an agreement cannot be reached between the City and a public employees union, an impasse is declared. Upon declaration of an impasse in the negotiations, the State s Public Employee Relations Board appoints an independent arbitrator. The arbitrator's recommendations are not binding upon the parties to the negotiations and all contracts must be approved by the City Council. Industry Wichita metropolitan area manufacturers, numbering approximately 750, produce a wide variety of products from computers to aircraft. 3 The City is a growing manufacturing city with a diverse economic base. About 82 percent of all manufacturing establishments are small firms employing less than 50 workers. Local aircraft companies are important to the economic mix in Wichita and combine to produce a significant number of the world's general aviation and commercial aircraft. Service-related firms, particularly regional health care firms, are also an important sector for Wichita s long-term growth. These strengths, combined with a skilled labor force and the City's central location, provide for Wichita's prominence as a regional market. Largest Private Industries: Wichita Metro Area Industry Average Quarterly Employment Second Quarter 2006 4 Total 245,969 Transportation equipment manufacturing 35,257 Food services and drinking places 21,708 Administrative and support services 16,915 Ambulatory health care services 12,683 Specialty trade contractors 9,669 Hospitals 9,605 Professional and technical services 8,614 General merchandise stores 7,034 Nursing and residential care facilities 6,676 Social assistance 6,545 Merchant wholesalers, durable goods 6,066 3 Source: 2004 County Business Patterns, NAICS, U.S. Department of Commerce, Bureau of the Census 4 Source: Kansas Department of Labor, Wichita MSA Covered Employment Second Quarter 2006 for Private Industries. A-2
Largest Employers Wichita Metro Area 5 Aircraft Manufacturing Company 1. Cessna Aircraft Co. 2. Spirit AeroSystems, Inc. 3. Hawker-Beechcraft Corp. 4. United States Government 5. USD 259 Wichita 6. Via Christi Health System 7. State of Kansas 8. Boeing Integrated Defense Systems Wichita 9. City of Wichita 10. Sedgwick County Wichita has a rich history in aviation and is one of the largest aircraft manufacturing cities in the world. The local aircraft companies have a diversified mix between military, commercial and general aviation products and services which are supported by divisions specializing in research and development, new production, modernization (refurbishing), training, subcontract work and computer services. Agriculture The South Central Kansas Farm, Crop, and Livestock District, which includes Wichita, lies in the heart of the winter wheat belt. Kansas is one of the nation s leaders in wheat production, wheat flour milling, sorghum grain and sorghum silage production, wheat flour milling capacity, and cattle slaughtering. Kansas also leads the nation in wheat and flour exports (more than $1.1 billion in 2004). By virtue of being Kansas' largest city and transportation hub, Wichita plays an important role in the agricultural and agri-related business sector. Petroleum Wichita is located near the center of the mid-continent petroleum field. Even though the petroleum industry is a small portion of the total economy, Wichita is the headquarters for several companies engaged in oil and natural gas production. There are several industrial oil and grease manufacturers. Koch Industries, the largest privately held company in the United States, performs a variety of petroleum-related manufacturing and transportation activities throughout the world from its Wichita headquarters. Medical Care First class medical care is the standard in Wichita s medical community. Because of a heavy emphasis on research and training, Wichita has emerged as a nationally recognized, state-of-the-art health care center. The Wichita MSA (Metropolitan Statistical Area) boasts 17 acute care and freestanding specialty hospitals providing the community with more than 3,100 licensed beds. There are approximately 50 nursing homes and assisted living facilities, more than 1,000 physicians and more than 260 dentists in the four-county area. The health care industry employs approximately 37,000 people in the MSA. In addition, there are several research institutions in the area. Numerous health care and specialty clinics provide comprehensive patient care and same-day surgery. There are at least six emergency centers in the Wichita area that provide medical care with no appointments and offer extended hours. Several medical referral services and a complete 911 emergency medical service are available throughout Sedgwick County. Cultural and Recreational Facilities Wichita has developed into a civic center that offers many cultural and recreational opportunities. The Wichita Center for the Arts, Whittier Fine Arts Gallery, Edwin A. Ulrich Museum of Art and the Wichita Art Museum all house fine art collections. Quality theater groups such as the Wichita Community Theater, Music Theater of Wichita, Stage One, Wichita Children s Theater, and Music Theater for Young People visit the Wichita stages throughout the year. Interesting museums such as the Wichita/Sedgwick County Historical Museum, the Mid-America All Indian Center, the Old Cowtown 5 Source: 2006 Book of Lists published by the Wichita Business Journal. A-3
Museum, the Kansas Aviation Museum, the Museum of World Treasures, the Kansas Sports Hall of Fame, and the Kansas African American Museum each reveal their own view of the past. Demonstrating potential strength for tourism in Wichita, Exploration Place, the $62 million science center and museum, opened in 2000. It recently completed its first complete renovation of one of its exhibit pavilions, providing a threestory, stone-covered castle where children can experience medieval adventures. The nearby Wichita Art Museum completed a $10.5 million renovation in June 2003. Recreational opportunities in and around Wichita are immense. Inside the city are 117 municipal parks and greenways covering more than 4,300 acres. At least 160,000 trees are planted on Wichita's public grounds. 6 The Lake Afton Observatory features astronomy displays and space-related phenomena. Botanica, the Wichita Gardens is the city s living museum of plants and flowers. The Sedgwick County Zoo is nationally acclaimed in natural habitat design and has become one of the top zoos in the world. The city's compact size allows minimal travel time (average 30 minutes) to outlying areas with open prairie and lakes. Century II is the convention headquarters downtown. The $30 million Hyatt Regency hotel in downtown Wichita has added to the large selection of hotels in the city. The former Printing, Inc. building in Old Town was converted into a 128-room Courtyard by Marriott that opened in December 2006. Wichita is the leading convention and tourism center in Kansas. In November 2004, the citizens of Sedgwick County approved a one-cent sales tax increase to fund the construction of a new downtown regional events center. However, construction on the $133 million facility is not expected to start until fall 2007. The Kansas Coliseum is located just north of the city and is ideal for a variety of activities, ranging from rodeos to Ice Capades. Adjacent to the Coliseum is the Wichita Greyhound Park, a pari-mutuel greyhound racetrack. Minor league baseball, professional hockey and indoor football are examples of other major attractions in the Wichita area. The twin-sheet ice skating arena, Wichita Ice Center, is available for additional sporting events. Wichita has five City-owned golf courses, four other golf courses for public play and six membership-only courses. Water sports and fishing are available on two federal reservoirs and one county lake that are within 30 minutes of Wichita. Additionally, eighteen recreational areas are within a 200-mile radius of the City. Because Wichita lies within the central waterfowl flyway, huge flocks of waterfowl are a common sight in our area during the spring and fall. Deer, pheasant, quail, wild turkey and ducks are just a few examples of wild game that may be hunted in the area. Public Air Transportation Wichita Mid-Continent Airport, the largest commercial air carrier and general aviation complex in Kansas, provides accommodations for all aircraft, as well as the latest innovations in passenger convenience, safety and efficiency. Mid- Continent Airport's campus of 3,300 acres is home to more than 70 businesses including air cargo, airport concessions (restaurants, hotel, ground transportation), fixed-base operators, government, including control tower, weather services, Federal Aviation Administration, and Transportation Security Administration, and two aircraft manufacturers. Col. James Jabara Airport, a general aviation airport, includes a 6,100-foot runway, an instrument landing system, associated taxiways and aprons, as well as a first-class fixed base operation complete with T-hangar storage. The total impact on the Wichita community of 2002 airport payroll earnings was $1.6 billion. 7 The local share of the financing of major improvements has been derived from the sale of general obligation bonds and passenger facility charges. These bonds have either been retired or are currently being repaid from airport revenues. Federal grants, general obligation bonds, and passenger facility charges, along with airport revenues, will finance the majority of the planned improvements. Passenger service is available through the following airlines AirTran Airways, Allegiant Air, US Airways (operated by Mesa), American (operated by American, American Eagle, and Chautauqua), Continental Express (operated by ExpressJet), Delta (operated by Atlantic Southeast), Northwest Airlink (operated by Pinnacle), United (operated by United Express and United). Four major carriers, including DHL, Federal Express, UPS Supply Chain Solutions, and UPS, provide cargo service. General aviation is served by specialized retailers who provide aircraft related accessories, service, rental, storage and flight training. Since its inception, the Wichita Airport System, consisting of both Mid-Continent Airport and Colonel James Jabara Airport, has been operated and developed without local tax support. 6 Source: City of Wichita Park and Recreation Administration 7 Center for Economic Development and Business Research, Wichita Mid-Continent Airport Economic Impact: 2003 Wichita Area Economic Outlook Team Community Service Research Project, November 2003. A-4
Military Installations McConnell Air Force Base borders southeast Wichita. The host unit is the 22 nd Air Refueling Wing flying KC-135 Stratotankers supporting worldwide air-to-air refueling and airlift. McConnell also houses tenant units, which include the Air Force reserve unit, the 931 st Air Refueling Group, and the 184 th Air Refueling Wing. The base had military active duty and civilian payroll of more than $361.6 million in fiscal year 2006. The total impact of McConnell Air Force Base on the local economy in fiscal year 2006 was $393.3 million. Based on the latest round of recommendations from The Base Realignment and Closure Commission (BRAC), Wichita s McConnell Air Force Base will remain open and is expected to add more than 700 jobs as a result of the commission s recommendations. Education Institutions The City of Wichita is served by eight unified school districts (USDs). The Wichita Public Schools (USD 259), the largest in the area, operates approximately 100 schools, including elementary, middle, and high schools as well as alternative, magnet and special schools. On April 4, 2000, a $284.5 million bond issue was approved to upgrade or replace school facilities in the district. In addition to the public schools, there are dozens of private and parochial schools serving preschool through high school students, as well as those needing special education. Fifteen colleges and universities in the local area serve Wichita, including Wichita State University, University of Kansas-School of Medicine, Friends University, Newman University, and the Wichita Area Technical College. ENROLLMENT FIGURES School Year 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02 USD 259 8 High School 12,763 12,823 12,556 12,697 12,620 13,753 Middle School 9,921 10,198 10,235 10,340 10,297 10,495 Elementary 24,271 24,047 23,984 23,754 23,627 23,136 Other 9 1,815 1,797 2,322 2,274 2,418 1,763 Total 48,770 48,865 51,034 49,065 48,962 49,147 PAROCHIAL 10 Total 8,898 8,312 8,156 8,580 8,611 8,468 UNIVERSITIES 11 Wichita State 14,298 14,076 14,297 14,896 15,534 14,854 Friends 2,849 2,798 2,749 2,887 3,112 3,190 Newman 2,104 2,103 2,179 2,063 1,929 2,071 Growth Increases in land area and the number and size of manufacturing firms have highlighted the City's growth. This growth is reflected in annexations that have increased the City's total land area from 22 square miles in 1940, to 157.5 square miles as of March 2006. World War II, with its enormous demand for aircraft production, brought about a fifty percent increase in the City's population. Continued diversification of industry since then, mixed with abundant resources and a skilled labor force, has contributed to the steady economic growth of the area. Demographic Trends The metropolitan statistical area (MSA) includes Butler, Harvey, Sedgwick and Sumner counties. Its 2006 population totaled 592,126. Sedgwick County represents the largest portion of the area's population with an estimated 470,895 residents in 2006. 12 8 Elementary includes grades K through 5, middle school includes grades 6 through 8 and high school includes grades 9 through 12. 9 Other refers to alternative, pre-kindergarten and/or special school enrollment. 10 Parochial enrollment figures furnished by the Catholic School Office (for all of Sedgwick County) and Wichita Collegiate School. 11 University enrollment figures furnished by each school's registrar - figures are for fall enrollment. 12 U.S. Bureau of the Census, 2006 population estimates. A-5
The city's population density has decreased by 52 percent in the past few decades. Today there are approximately 2,219 persons per square mile in Wichita compared to 4,625 per square mile in 1960 when growth within the city limits peaked. The trend of perimeter growth, and the associated increase in demand for local government services, is expected to continue for Wichita. In recent years, the majority of population and housing growth has occurred along the far west/northwest and far east/northeast peripheries of the city, and into the unincorporated portions of the county. The racial and ethnic composition of Wichita's population is comparable to that of the nation. Current trends indicate the fastest growth rate to be among the Asian population and persons of Hispanic origin. The median age in Wichita is 34.2 years, slightly less than the county s 34.8 years and younger than the nation s 36.4 years. Among Wichita s population 25 years and over, 86.1 percent are high school graduates and 26.6 percent have a bachelor s degree or higher. 13 For total households, the estimated median household income in Wichita was $40,115 and the estimated per capita income was $22,379. 14 For non-family households, the median earnings for female full-time, year round workers is $29,842, about 74 percent of the male median of $40,174. The number of individuals living in poverty totals 52,478 (about 15 percent of the resident population). 15 Population Growth Trends Year City of Wichita Percentage Change Sedgwick County Percentage Change 1950 168,300 222,300 1960 254,700 51.3% 343,200 54.4% 1970 276,600 8.6% 350,700 2.2% 1980 279,300 1.0% 367,100 4.7% 1990 304,000 8.8% 403,700 10.0% 2000 344,300 13.3% 452,900 12.2% Source: U.S. Bureau of the Census, Population of the 100 Largest Cities and Other Urban Places in the United States: 1790 to 1990, Working Population Paper No. 27 and Census 2000 population counts from the U.S. Bureau of the Census. City of Wichita Age Distribution Percent of Total Sedgwick County Percent of Total Wichita MSA* Percent of Total Under 5 years 29,202 8.3% 36,088 7.8% 43,149 7.5% 5 to 9 years 25,162 7.1% 33,116 7.2% 40,778 7.1% 10 to 14 years 25,598 7.2% 35,338 7.7% 43,578 7.5% 15 to 19 years 22,749 6.4% 32,111 7.0% 41,264 7.2% 20 to 24 years 26,221 7.4% 30,806 6.7% 38,316 6.7% 25 to 34 years 52,426 14.8% 63,857 13.9% 77,316 13.4% 35 to 44 years 50,327 14.2% 67,575 14.7% 83,530 14.5% 45 to 54 years 49,647 14.0% 67,643 14.7% 86,876 15.1% 55 to 59 years 19,169 5.4% 26,095 5.7% 32,688 5.7% 60 to 64 years 13,532 3.8% 17,209 3.7% 22,373 3.9% 65 to 74 years 21,314 6.0% 26,070 5.7% 33,957 5.9% 75 to 84 years 14,902 4.2% 18,887 4.1% 25,133 4.4% 85 years and over 4,333 1.2% 5,107 1.1% 6,548 1.1% Total population all ages 354,582 100.0% 459,902 100.00% 575,506 100.0% Median Age (years) 34.2 34.8 35.5 Source: U.S. Bureau of the Census, 2005 American Community Survey. *The Wichita MSA includes Butler, Harvey and Sedgwick counties. 13 U.S. Bureau of the Census, 2005 American Community Survey. 14 Ibid. Amounts are in 2005 inflation-adjusted dollars. 15 U.S. Bureau of the Census, 2005 American Community Survey. A-6
Economic Outlook 16 Introduction 17 The local economic signposts are sending mixed signals. The aircraft industry is soaring again with increased orders and shipments, improved balance sheets and the need to hire a significant number of workers. The labor market continues to improve with employment up and initial claims for unemployment insurance down. Despite the national housing slump, local housing sales continue at a brisk pace, up 3 percent in 2006 compared to 2005. Despite these signals of growth, there are several indications of economic weakness. Chief among these are weak retail sales growth and languishing consumer expectations. On balance, the economy in 2007 should continue to exhibit steady growth with employment projected to increase 1.6 percent, adding 4,600 jobs. Consumer Expectations, Income and Spending The WSU Current Conditions Index declined 2.1 percent from June through December 2006, yet quarterly data indicated a 3.5 percent increase from fourth quarter 2005 to fourth quarter 2006. Although six months of decline in the index appears to be a fairly solid trend, the 2006 annual average for the Current Conditions Index was higher than it s been since 1998. At the close of 2006, the WSU Leading Economic Indicators Index remained at an all-time high after four months of continuing growth. From third to fourth quarter 2006, it grew 1.4 percent from 116.8 to 118.5. It grew 2.2 percent from fourth quarter 2005 to fourth quarter 2006. This year-over-year quarterly growth is primarily due to a 27.1 percent decrease in initial unemployment claims in the Wichita area, a 26.8 percent increase in the value of nonresidential building permits, a 23.8 percent increase in the aerospace stock index and a 35.8 percent increase in wheat price futures. The index implies a favorable economic outlook for mid-year 2007. The WSU Consumer Expectations Index averaged 44.2 in 2006. The index started 2007 at slightly more than 46. As of February 2007, nearly two-thirds of respondents believed their personal finances would be the same in six months as when they were surveyed, and more than half the respondents believed the economy would be the same in six months. The Consumer Expectations Index continues to remain below 50, as it s done for slightly more than two years. The index will need to rise above 50 for a sustained period of time before we can assume that consumers feel predominantly positive about the economy and confident enough to spend freely. Labor Market Employment increased 2.1 percent in 2006 and is forecasted to increase by 1.6 percent in 2007. Wichita s recovery since the 2001 recession has been marked by decidedly sluggish job growth. Despite four years of employment growth, at the end of 2007 total employment will stand 1,000 jobs shy of its most recent 2001 peak. In 2007, the production sectors are expected to increase 2.8 percent for a net gain of 2,250 jobs. The trade and transportation sectors are expected to hold steady at 2006 levels. The service sectors are expected to increase 1.5 percent for a net gain of 1,900 jobs, while the government sector is expected to increase 1.4 percent for a net gain of 575 jobs. While overall employment levels will not return to pre-recession levels in 2007, that will not be true for all industry sectors. By the end of 2007: The production sectors are anticipated to stand 7,750 jobs shy of 2001 employment levels, a decline of 8.7 percent. The trade and transportation sectors are anticipated to stand 1,125 jobs shy of 2001 employment levels, a decline of 2.2 percent. On the other hand, the service sectors are anticipated to surpass 2001 employment levels with a net gain of 4,800 jobs, an increase of 4 percent. The government sectors are anticipated to surpass 2001 employment levels with a net gain of 3,075 jobs, an increase of 8.2 percent. Housing and Construction The natural resources and construction industry accounted for 5.5 percent of all wage and salary employment in the Wichita MSA in 2006. The industry saw an employment gain of 500 jobs in 2006. In 2005, total payroll for the industry was $574.9 million and the average earnings per job totaled $35,427. 16 Sources: Wichita State University, W. Frank Barton School of Business, Center for Economic Development and Business Research. See their home page at http://www.wichita.edu/cedbr for the latest economic indicators. 17 Throughout this section, unless otherwise noted, the data presented are for the Wichita MSA (metropolitan statistical area), which includes Butler, Harvey, Sedgwick and Sumner counties. Sumner County was added to the MSA following the 2000 Census. A-7
In 2006, the residential construction sector slowed somewhat, with the value of inflation-adjusted new residential construction permits decreasing 4.5 percent compared to 2005. It was a slower year for the new commercial construction sector as well, with the value of inflation-adjusted new non-residential construction permits down 41.9 percent compared to 2005. Although home sales have slowed, there was still a 3 percent increase in 2006 compared to 2005. It appears, though, that the housing boom may be waning. Overall, natural resources, mining and construction employment is expected to increase by 2.8 percent or 450 jobs in 2007, having added 500 jobs in 2006. Manufacturing Manufacturing accounted for 21.5 percent of all wage and salary jobs in the Wichita MSA as of December 2006. Payroll earnings for the industry totaled $3.266 billion in 2005. The average earnings per job in 2005 were $53,861. The major manufacturing story in recent months was the sale of Raytheon Aircraft to Onex Corporation, the same company that purchased Boeing Wichita s commercial aircraft operations in 2005. After six years of employment losses totaling more than 17,000 jobs, manufacturing employment started to rebound in 2005. Over the past two years Wichita has added 4,600 manufacturing jobs. Projections for this year call for an additional 2.9 percent growth in employment, for a net gain of 1,800 jobs. All of the growth in manufacturing will be among the durable goods sub-sectors, which are slated to increase 3.7 percent, adding 2,000 jobs. On the other hand, employment in the non-durable goods sub-sectors is expected to continue its longterm decline losing 200 jobs, a 2.2 percent decrease. Durable goods employment growth is driven by the aviation sector. Supporting the employment growth in aviation manufacturing are increased deliveries and rising orders. Nationally, the General Aviation Manufacturing Association announced that shipments and billings of general aviation airplanes achieved a solid first quarter for 2007 following last year's strong numbers. Shipments of general aviation airplanes for the first three months of this year totaled 842 units, in line with last year's 847 airplanes, while industry-wide billings were $4.5 billion, up 11.3 percent. 18 The first quarter data indicate that the industry is sustaining the delivery rates of last year and are maintaining announced production schedules. In first quarter 2007 the deliveries for Boeing Commercial Airplanes were up 8 percent compared to first quarter 2006. Its contractual backlog rose to a record $188 billion, increasing 42 percent in the last year to more than six times its 2006 revenues. Overall, employment gains in durable goods manufacturing, specifically in aviation, are enough to offset the employment losses in non-durable goods manufacturing. Wholesale and Retail Trade Wholesale trade gained 500 jobs in 2006. Employment growth is expected to slow in 2007 increasing 1.4 percent for a net gain of 150 jobs. Consumer s weak expectations are reflected in weak retail sales. In absolute dollars, Wichita s taxable retail sales have regained their pre-recession levels. However, taking into account the impact of inflation, the true value of those sales in 2006 was still nearly 10 percent below their 1998 peak. As interest rates and prices continue to rise throughout the remainder of the year, retail sales are expected to increase by 4.2 percent in 2007. With the expected rate of inflation forecasted to be in the range of 3 to 4 percent, retail sales adjusted for inflation are not expected to exhibit much growth in 2007. Information Services The information sector continues its long-term downward employment trend into 2006 and 2007. The information sector lost 100 jobs for a net decrease of 1.7 percent in 2006. In 2007 employment is expected to decline another 1.7 percent for a net loss of 100 jobs. 18 Source: GAMA news releases, complete copies of which can be found on the GAMA home page at http://www.gama.aero/home.php. A-8
Since peaking at 7,000 jobs in 2002, the information sector will have shed 1,300 jobs for a net decline of nearly 19 percent by year-end 2007. This trend is not unique to Wichita. Nationally the information sector lost 565,000 jobs between 2000 (when the industry s employment last peaked) and 2005. Most of the job losses nationally since 2000 have been in the telecommunications sectors, which shed 263,900 jobs, a 20.9 percent decline. Professional and Business Services In the Wichita area, most firms in the professional and business services sub-sector are rather small, with temporary employment agencies, security service companies and call centers among the larger employers. Nonetheless, this sector is expecting strong employment growth. After a modest increase in 2005, the professional and business services sector saw employment gains of 1,300 jobs, a 4.8 percent increase in 2006. In 2007 employment is expected to rise 3.7 percent for a net gain of 1,050 jobs. Educational and Health Care Services During the past three years, the educational and health care services sub-sector added 2,900 jobs and is forecasted to add another 950 jobs this year. Most of these job gains are expected in the health care sector, with the majority of job growth occurring outside of the hospital setting. The lack of skilled labor is the major factor limiting employment growth in the health care sector. Leisure and Hospitality Services After several years of employment losses, the leisure and hospitality services sub-sector has had steady employment growth the past three years and last year employment finally recovered to pre-recession levels. Despite high gasoline prices, this sector is expected to continue to add jobs in 2007 increasing 0.4 percent for a net gain of 100 jobs Government Aside from agricultural employment, government sector employment is the most difficult economic variable to predict since employment decisions often rely on variables other than economic relationships. With this caveat, our estimates of 2007 government employment reflect an increase of 575 jobs or 1.4 percent. With substantial new state funding for K-12 education, most of these job gains are expected in the local government sector with little state or Federal government job growth. Forecast Summary 2007 Forecast Wage & Salary Employment, Wichita MSA 2006 2007 (f) Level Change Percent Change Total Non-farm 293,000 297,600 4,600 1.6% Production Sectors 79,200 81,450 2,250 2.8% Natural Resources, Mining, and Cons. 16,200 16,650 450 2.8% Manufacturing 63,000 64,800 1,800 2.9% Durable Goods 54,000 56,000 2,000 3.7% Non-Durable Goods 9,000 8,800 (200) -2.2% Trade, Transportation, and Utilities 49,800 49,775 (25) -0.1% Wholesale Trade 11,100 11,250 150 1.4% Retail Trade 30,500 30,525 25 0.1% Transportation and Utilities 8,200 8,000 (200) -2.4% Service Sectors 123,800 125,700 1,900 1.5% Information 5,800 5,700 (100) -1.7% Financial Activities 11,200 11,200-0.0% Professional & Business Services 28,200 29,250 1,050 3.7% Educational and Health Services 40,600 41,550 950 2.3% Leisure and Hospitality 26,900 27,000 100 0.4% Other Services 11,100 11,000 (100) -0.9% Government 40,100 40,675 575 1.4% *Detail may not sum to total due to rounding errors. (f) = forecast A-9
CITY OF WICHITA, KANSAS RETIREMENT SYSTEMS Wichita Employees Retirement System The Wichita Employees' Retirement System (WERS), covering all full-time civilian employees of the City, was established January 1, 1948, with Plan 1. All employees hired or rehired on or after July 18, 1981, were automatically members of Plan 2 and employees hired or rehired after January 1, 1994 are automatically members of Plan 3. Plan 1 members contribute 6.4%, and Plan 2 and Plan 3 members contribute 4.7%. The City's contribution rate for all plans is 4.7% in 2007. The 2006 contribution rate was 4.7%. Under the provisions of Plan 1, the normal retirement age is 60 with vesting of seven years. The retirement benefit is based on age and length of service, computed at 2.5% per year of service, multiplied by final average salary, from the highest three consecutive years within the last ten years of service. Early retirement is permitted between the ages of 55 and 60, but benefits are reduced for those with less than 30 years of service. Employees with 30 years of service may retire regardless of age at the maximum 75% of final average salary. There is an annual 3%, non-compounded, post-retirement adjustment to the base pension, beginning 12 months after retirement. The retirement age under Plan 2 is 62, with vesting of seven years. The retirement benefit is computed at 2.25% per year of service, multiplied by final average salary, from the highest three consecutive years within the last ten years of service. Early retirement is permitted between the ages of 55 and 62, but benefits are reduced for each month of age under 62. The maximum retirement benefit under Plan 2 is 75% of final average salary. There is an annual 2% post-retirement adjustment, noncompounded, to the base pension, beginning 12 months after retirement. Plan 3, a defined contribution plan, became effective January 1, 1994. All employees hired on or after January 1, 1994, automatically become members of Plan 3. Each employee participating in the plan contributes 4.7% of their salary and that contribution is matched by the City's contribution of 4.7%. The vesting schedule for Plan 3 is staggered at 25% after three years, 50% after five years and 100% after seven years. Additionally, at the end of seven years, employees have a one-time, irrevocable option to remain in Plan 3; otherwise they will convert to Plan 2 at a cost of 100% of their total Plan 3 account value. Beginning in October, 2000, Plan 3, defined contribution funds, had separate management and custody from the defined benefit funds. In January 2004, Plan 3 defined contribution funds were liquidated and the proceeds were reinvested with the defined benefit funds for management and custody as a combined single fund. Employees of Plans 1 and 2, eligible to retire after January 1, 2000, may elect to participate in the Deferred Retirement Option Plan (DROP) for a period of one to 60 months. The employee s retirement benefit is calculated as of the DROP election date. During the DROP period, the employee and employer continue to make required contributions to the WERS plan. During this period, additional pension benefits are not accrued and the employee s retirement benefit plus five percent annual interest accumulates in their notational DROP account. At termination of service, the employee receives a lump sum distribution of the DROP account and begins to receive their pension benefit calculated as of the DROP date, plus applicable post-retirement adjustments. As of December 31, 2006, there were 1,932 active members (134 under Plan 1, 922 under Plan 2 and 876 under Plan 3). Of these active members, 72 employees are participants in the DROP. There were 1,102 retirees, including survivors, receiving benefits. The total annual pension payroll as of December 31, 2006 was $22,201,856. The Wichita Employees Retirement Board of Trustees and the Police & Fire Retirement Board of Trustees combined their assets into a joint fund for investment purposes on October 1, 1999. A Joint Investment Committee comprised of members of both Boards and a City Manager appointee was established to manage these assets. The Boards of Trustees have adopted a Strategic Plan and Investment Policies Statement that establishes the specific asset allocation, manager structure, rebalancing, restrictions, and other policies the Joint Investment Committee utilize in its management of the joint fund. The Joint Investment Committee employs professional money managers to invest the assets of the joint fund in a diversified mix of domestic and international equities, domestic fixed income securities, real estate commingled funds, and cash equivalents. Net assets of the Wichita Employees Retirement System, including Plan 3 assets, available as of December 31, 2006 were $525,160,093, as compared to $472,469,932 on December 31, 2005. Callan Associates, Inc., Denver, Colorado, is the fund's investment consultant, evaluating the fund on a quarterly basis. The Board retains Milliman, Inc., Omaha, Nebraska, as its consulting actuary, and the latest actuarial report is for the period of January 1 through December 31, 2006. A-10
CITY OF WICHITA, KANSAS RETIREMENT SYSTEMS (CONTINUED) Police and Fire Retirement System The Wichita Police and Fire Retirement System covers all commissioned police and fire personnel of the City of Wichita and was established January 1, 1965, when a policy was adopted of funding the cost of pensions over the employees' working career. Members contribute 6%, 7%, or 8% of payroll, depending upon the plan to which they belong. The City's contribution rate for all plans is 17.5% in 2007. The 2006 contribution rate was 18.4%. The "20 and Out" plan was adopted June 11, 1975, for Plans A and B. This permits commissioned police and fire personnel to retire after 20 years of service, regardless of age, at 50% of final average salary, plus 2.5% per year of service above 20 years to a maximum of 75% of final average salary for 30 years of service. Final average salary is derived from the highest three consecutive years within the last ten years of service. Members under 55 years old with less than 20 years of service will have their pension payments deferred until age 55, and receive no survivor benefits. The Police & Fire Retirement Plan was revised January 1, 1979, with all commissioned officers hired or rehired after that date automatically becoming members under the Plan C-79, and are eligible for retirement after 20 years of service; payment of pension is deferred until age 50, except no age limits apply with completion of 30 years of service. The formula for calculating pensions is the same as Plans A and B. Payment of pension is deferred until age 55 for members with at least 10 years of service but less than 20 years. Participants of the Police & Fire Retirement Plan eligible for normal retirement, and prior to retirement, may elect the Backward Deferred Retirement Option Plan (DROP) for a period of one to 60 months. The participant s retirement benefit is computed as of the Backward DROP date by multiplying the monthly benefit by the number of months in the DROP period plus five percent annual interest. Upon withdrawal from service, the member receives the DROP account and begins to receive their pension benefit calculated as of the Backward DROP date, plus applicable post-retirement adjustments. As of December 31, 2006, there were 1,081 active members in the Plan (59 in Plan A, 1 in Plan B, and 1,021 in Plan C-79). Of these active members, 638 were police officers and 443 were fire officers. There were a total of 840 retirees, including survivors, receiving pensions. The total annual pension payroll as of December 31, 2006 was $18,783,420. The Wichita Employees Retirement Board of Trustees and the Police & Fire Retirement Board of Trustees combined their assets into a joint fund for investment purposes on October 1, 1999. A Joint Investment Committee comprised of members of both Boards and a City Manager appointee was established to manage these assets. The Boards of Trustees has adopted a Strategic Plan and Investment Policies Statement that establishes the specific asset allocation, manager structure, rebalancing, restrictions, and other policies the Joint Investment Committee utilize in its management of the joint fund. The Joint Investment Committee employs professional money managers to invest the assets of the joint fund in a diversified mix of domestic and international equities, domestic fixed income securities, real estate commingled funds, and cash equivalents. Net assets of the Police and Fire Retirement System available as of December 31, 2006 were $460,758,908, as compared to $406,745,584 on December 31, 2005. Callan Associates, Inc., Denver, Colorado, is the fund's investment consultant, evaluating the fund on a quarterly basis. The Board retains Milliman, Inc., Omaha, Nebraska, as its consulting actuary, and the latest actuarial report is for the period of January 1 through December 31, 2006. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] A-11
Wichita Employees Retirement System: RETIREMENT SYSTEMS TEN-YEAR TREND INFORMATION Employer Contributions Employee Contributions Net Investment Income (Loss) 1 Net Assets Available Unfunded Actuarial Accrued Liability 2 Funded Ratio % 3 12/31/97 $ 4,459,652 $ 2,123,914 $ 48,727,209 $ 353,876,359 $ (33,132,000) 112.6 12/31/98 4,140,164 2,038,926 67,792,546 413,442,824 (63,437,318) 122.9 12/31/99 4,134,826 1,920,760 66,070,347 469,885,573 (64,048,588) 120.1 12/31/00 4 2,751,084 2,026,021 (11,149,067) 447,346,792 (85,252,768) 125.9 12/31/01 1,843,213 2,066,480 (21,590,153) 413,882,535 (75,047,315) 121.2 12/31/02 1,957,922 2,236,973 (49,114,617) 352,529,850 (62,966,792) 117.0 12/31/03 2,007,656 2,397,597 76,871,558 415,827,707 (59,757,147) 115.4 12/31/04 5 2,084,558 2,279,422 38,840,471 440,141,428 (49,834,811) 112.1 12/31/05 2,170,650 2,358,466 36,074,046 459,562,082 (45,977,631) 110.6 12/31/06 2,264,339 2,445,103 67,028,887 510,438,289 (46,693,853) 110.2 Wichita Employees Retirement System Plan 3: Employer Contributions Employee Contributions Net Investment Income Loss) 1 Net Assets Available 12/31/97 $ 494,161 $ 494,161 $ 254,924 $ 2,486,224 12/31/98 620,831 620,831 557,354 4,009,453 12/31/99 751,608 751,608 756,271 5,899,835 12/31/00 4 1,020,209 1,020,209 (110,047) 7,372,472 12/31/01 1,214,229 1,214,229 (449,836) 7,809,138 12/31/02 1,203,471 1,203,471 (797,704) 7,528,030 12/31/03 1,214,823 1,214,823 1,602,631 10,003,274 12/31/04 5 1,219,589 1,219,589 1,107,359 11,587,178 12/31/05 1,281,156 1,281,156 978,703 12,907,850 12/31/06 1,369,009 1,369,009 1,876,517 14,721,804 Police and Fire Retirement System: Employer Contributions Employee Contributions Net Investment Income (Loss) 1 Net Assets Available Unfunded Actuarial Accrued Liability 2 Funded Ratio% 3 12/31/97 $ 6,343,027 $ 2,862,803 $ 38,432,637 $ 309,517,163 $ (4,109,000) 101.6 12/31/98 6,429,744 3,072,713 33,985,681 340,034,626 (20,725,000) 107.5 12/31/99 6,043,455 2,935,486 58,430,577 393,405,208 (38,438,835) 113.2 12/31/00 5,540,575 2,899,385 (9,376,292) 377,390,026 (45,150,420) 114.6 12/31/01 4,796,863 2,926,844 (18,244,453) 351,100,148 (37,158,039) 111.4 12/31/02 4,746,504 3,104,036 (41,805,821) 300,758,347 (21,162,994) 106.2 12/31/03 5,043,505 3,296,499 65,824,556 356,890,172 (23,726,429) 106.8 12/31/04 6,925,467 3,482,237 33,716,897 383,074,060 901,952 99.8 12/31/05 7,308,916 3,652,348 31,745,327 406,745,584 1,203,822 99.7 12/31/06 9,849,536 3,789,743 59,897,041 460,758,908 (5,318,695) 101.2 1 Investments and related appreciation and/or depreciation are reported at fair value. 2 The unfunded actuarial accrued liability is calculated under the entry age actuarial cost method. This method produces the highest amount of actuarial accrued liabilities of any of the commonly used actuarial cost methods. 3 The Funded Ratio is the actuarial value of assets expressed as a percentage of the actuarial accrued liability. 4 Beginning with 12/31/00, Plan 3 funds were held in separate custody. 5 Beginning with 12/31/04, defined benefit funds and Plan 3 funds were held in joint custody. A-12
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CITY OF WICHITA, KANSAS HISTORICAL SUMMARY OF ECONOMIC INDICATORS 1997 1998 1999 2000 Economic Base Demographics Population Wichita 1 328,576 333,680 335,562 344,284 MSA 2 556,313 565,914 569,949 572,015 Population profile (MSA) Total personal income (in millions of $) 3 Nominal $ 14,054 $ 15,027 $ 15,137 $ 15,918 Real 4 8,757 9,219 9,086 9,244 Personal income, per capita (in dollars) 3 Nominal 25,263 26,553 26,558 27,828 Real 4 15,741 16,290 15,941 16,160 Banking and finance 5 Commercial banks, Sedgwick County Deposits (in thousands of $) 3,807,705 3,966,725 4,156,833 3,491,000 Number of institutions 26 28 30 29 Number of offices (branches) 106 110 114 114 Tax Base Assessed valuation (in thousands of dollars) Assessed value (total equalized) 1,676,766 1,759,148 1,898,996 2,078,567 Real property 1,322,922 1,398,595 1,521,203 1,666,014 Tangible personal property 233,094 240,785 258,933 291,867 Property assessed by State 120,751 119,768 118,859 120,686 Tangible valuation of motor vehicles 338,948 312,087 314,398 306,303 Local source of revenue (in dollars) 10 Taxes 63,692,486 66,415,469 68,046,858 75,663,130 Special assessment taxes 26,894,346 24,778,035 23,915,289 25,876,797 Franchise fees 26,455,348 27,208,461 27,636,037 29,088,392 Local sales taxes 35,359,410 39,129,814 38,237,574 37,778,881 Intergovernmental 59,292,126 58,699,654 75,954,075 73,681,578 Licenses and permits 4,484,107 4,657,614 4,714,786 5,272,042 Fines and penalties 6,515,083 8,998,905 9,181,475 7,399,707 Rentals 2,815,832 3,245,227 3,949,500 4,147,772 Interest earnings 7,101,566 7,881,271 8,489,135 10,211,981 Charges for services and sales 18,936,042 21,238,172 18,722,159 19,775,297 Other 12,028,020 22,486,769 17,038,890 13,470,521 Total $ 263,574,366 $ 284,739,391 $ 295,885,778 $ 302,366,098 1 Source: U.S. Department of Commerce, Bureau of the Census or estimated by the Center for Economic Development and Business Research, Wichita State University 2 Source: U.S. Department of Commerce, Bureau of Economic Analysis. 3 Source: U.S. Department of Commerce, Bureau of Economic Analysis. 4 Real dollars are calculated using the Consumer Price Index for All Urban Consumers. U.S. city average (1982-84=100). 5 FDIC (for the most up-to-date information see the FDIC's home page at http://www.fdic.gov). 6 Office of Central Inspection, City of Wichita. 7 Derived from Kansas Department of Revenue Tax Collection reports by the Center for Economic Development and Business Research, Wichita State University. 8 Kansas Department of Human Resources, Labor Market Information Services. 9 Data for 1990 through 2003 are NAICS classification. 10 General, Special Revenue (excluding Federal and State Assistance Funds) and Debt Service Funds. 11 Includes all long-term general obligation debt. A-13
2001 2002 2003 2004 2005 2006 352,160 354,306 354,490 353,823 354,865 358,412 574,792 579,533 581,666 583,860 587,055 592,126 $ 17,197 $ 17,297 $ 17,556 $ 18,556 $ 19,763 $ 20,892 9,710 9,615 9,530 9,804 10,119 N/A 29,919 29,846 30,182 31,782 33,665 35,283 16,893 16,591 16,384 16,792 17,237 N/A 3,977,000 4,317,000 4,547,000 4,695,000 4,897,000 5,563,000 30 32 32 33 32 34 119 124 125 127 127 132 2,190,263 2,281,662 2,458,947 2,545,942 2,668,035 2,833,713 1,787,594 1,888,530 2,064,518 2,147,334 2,265,832 2,434,211 273,783 277,106 276,057 275,516 276,669 284,827 128,886 116,026 118,372 123,092 125,534 114,675 324,709 342,600 352,820 360,861 369,682 379,910 81,585,715 86,915,250 90,843,658 99,288,559 102,805,256 107,306,811 26,294,749 27,557,210 25,875,386 26,371,062 27,099,006 29,101,554 31,521,170 28,792,310 29,259,353 29,555,657 30,701,805 31,850,592 40,187,186 40,952,104 39,735,404 44,738,968 45,180,964 47,704,546 71,329,574 66,352,482 90,491,983 96,078,213 87,952,788 98,988,324 6,382,478 6,331,427 5,614,375 6,069,181 6,493,663 7,047,515 6,851,819 8,139,288 8,453,523 7,933,219 8,666,239 8,801,227 4,331,335 4,601,521 4,175,241 4,061,404 3,847,629 3,956,188 10,441,337 7,827,183 5,053,383 5,395,775 7,698,830 9,944,236 18,443,762 9,950,483 9,841,535 10,414,054 10,309,977 10,398,167 16,592,383 12,925,040 15,340,542 18,053,333 18,036,451 12,178,701 $ 313,961,508 $ 300,344,298 $ 324,684,383 $ 347,959,425 $ 348,792,608 $ 367,277,861 A-14
CITY OF WICHITA, KANSAS HISTORICAL SUMMARY OF ECONOMIC INDICATORS (CONTINUED) 1997 1998 1999 Construction (MSA) 6 New dwelling units single family homes 1,309 1,535 1,271 Value of construction permits (in dollars) $ 363,253,891 $ 385,392,078 $ 304,571,991 New residential 128,730,153 188,768,305 120,516,042 Non-residential 121,744,890 114,368,536 75,482,601 Additions, remodels and repairs 112,778,848 82,255,237 108,573,348 Mill levy per $1,000 Assessed valuation 107.304 100.027 99.131 Retail Sales (MSA) 7 Annually (in millions of $) Nominal 6,031.2 6,271.1 6,238.0 Real 4 3,757.3 3,847.1 3,744.9 Per capita Nominal 13,730 14,004 13,811 Employment Base(MSA) 8 Total civilian labor force N/A N/A N/A Unemployment rate N/A N/A N/A Employment - all industries (establishment data) 9 282,200 294,100 294,500 Manufacturing 70,900 75,500 75,100 Services 111,900 116,900 117,300 All others 99,500 101,600 102,200 Bonded Debt (in dollars) Gross bonded debt 11 279,215,000 293,130,366 305,885,369 Debt service monies available 2,525,891 10,598,695 15,490,109 Debt payable from proprietary/component unit revenues 31,522,790 25,267,501 19,098,427 Debt payable from special assessments 132,085,952 140,993,973 149,115,000 Debt payable from local sales tax 47,500,000 40,000,000 32,500,000 Debt payable from transient guest tax 8,650,000 17,407,988 17,509,400 Net bonded debt 56,930,367 58,862,209 72,172,433 Ratio of bonded debt to market value (%) Net bonded debt 0.55 0.53 0.60 Special assessment debt 1.27 1.28 1.24 Bonded debt per capita (Wichita)($) Net bonded debt 173.26 176.40 215.08 Special assessment debt 402.00 422.54 444.37 1 Source: U.S. Department of Commerce, Bureau of the Census or estimated by the Center for Economic Development and Business Research, Wichita State University 2 Source: U.S. Department of Commerce, Bureau of Economic Analysis. 3 Source: U.S. Department of Commerce, Bureau of Economic Analysis. 4 Real dollars are calculated using the Consumer Price Index for All Urban Consumers. U.S. city average (1982-84=100). 5 FDIC (for the most up-to-date information see the FDIC's home page at http://www.fdic.gov). 6 Office of Central Inspection, City of Wichita. 7 Derived from Kansas Department of Revenue Tax Collection reports by the Center for Economic Development and Business Research, Wichita State University. 8 Kansas Department of Human Resources, Labor Market Information Services. 9 Data for 1990 through 2003 are NAICS classification. 10 General, Special Revenue (excluding Federal and State Assistance Funds) and Debt Service Funds. 11 Includes all long-term general obligation debt. A-15
2000 2001 2002 2003 2004 2005 2006 1,009 1,245 1,419 1,454 1,604 1,625 1,525 $ 348,359,305 $ 441,732,034 $ 416,043,674 $ 489,707,232 $ 546,941,473 $ 485,564,803 $ 427,440,317 103,993,857 135,607,690 155,648,679 162,804,719 192,825,017 190,407,489 188,903,588 124,365,396 157,027,904 111,698,290 114,804,272 151,531,343 151,275,832 91,991,661 120,000,052 149,096,440 148,696,707 212,098,241 202,585,113 143,881,483 146,545,069 107.622 116.554 113.960 113.630 113.387 113.456 116.064 6,082.1 6,101.3 6,253.8 6,165.5 6,369.7 6,548.9 6,952.9 3,532.0 3,445.1 3,476.2 3,350.8 3,372.0 3,353.3 3,448.8 13,413 13,377 13,591 13,350 13,746 14,052 14,765 297,014 298,682 302,620 301,319 290,928 306,988 308,581 4.2 4.2 6.0 6.9 6.6 5.6 4.8 295,200 298,900 292,500 281,000 283,100 287,000 293,000 73,100 72,900 65,700 58,600 58,400 60,700 63,000 118,700 120,900 122,800 119,000 120,800 121,700 123,800 103,300 104,800 104,000 103,400 103,900 104,600 106,200 314,685,359 279,827,300 327,648,632 380,223,390 458,231,536 433,103,758 418,305,139 25,036,511 6,393,033 20,079,218 26,286,111 65,957,965 57,287,100 40,944,582 25,062,472 21,278,480 18,689,488 18,822,156 15,845,844 12,770,542 16,400,562 158,375,000 149,255,000 148,540,000 160,865,000 206,720,000 210,370,000 217,705,000 25,000,000 17,500,000 56,000,000 92,690,000 122,180,000 113,500,000 104,505,000 16,203,204 14,397,547 12,519,875 10,552,208 10,110,180 8,890,213 6,716,614 65,008,172 71,003,240 71,820,051 71,007,915 37,417,547 30,285,903 32,033,381 0.49 0.51 0.49 0.45 0.23 0.17 0.17 1.20 1.06 1.01 1.02 1.25 1.21 1.18 188.82 201.62 202.71 200.31 105.75 85.34 89.38 460.01 423.83 419.24 453.79 584.25 592.82 607.42 A-16
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APPENDIX B AUDITED FINANCIAL INFORMATION
B-1
B-2
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS This discussion and analysis of the City of Wichita s financial performance provides an overview of the City s financial activities for the fiscal year ended December 31, 2006. The management discussion and analysis is presented in conjunction with the transmittal letter at the front of this report and the City of Wichita s financial statements, which follow this section. Financial Highlights The City s net assets increased $52.9 million during the fiscal year ending 2006. The cost of governmental activity was $353.8 million. The amount paid by taxpayers through property and sales tax was $137.4 million or 38.8 percent. The amount paid from intergovernmental resources was $98.9 million or 28.0 percent. Long term liabilities in the governmental activities decreased by $20.3 million, following a $14.0 million decrease in 2005. Long-term liabilities in the business type activities increased $41.7 million as the Water and Sewer Utilities completed long term financing of cash funded projects. The General Fund, on a budgetary basis, reported $158,373 in revenue and other financing resources in excess of expenditures and other uses. On December 31, 2006, the General Fund reported a budgetary fund balance of 11.5 percent of the following year s appropriated budget. The City maintains a positive bond rating and a progressive capital improvement program. Overview of the Financial Statements The Comprehensive Annual Financial Report consists of four major sections: introductory, financial, statistical and single audit. The financial statements include government-wide financial statements, fund financial statements and notes to the financial statements. Supplementary information, provided in addition to the basic financial statements, is located in the sections titled Additional Information, Statistical and Water and Sewer. The Water and Sewer section provides specific information for water and sewer revenue bond holders. The City presents two kinds of statements, each providing a different snapshot of the City s finances. The reporting focus is on both the City as a whole (government-wide) and the fund financial statements. The government-wide financial statements provide both long-term and short-term information about the City s overall financial status. The fund financial statements focus on the individual parts of the City government, reporting the City s operations in more detail than the government-wide statements. Both perspectives allow the user to address relevant questions, broaden the basis of comparison and enhance the City s accountability. GOVERNMENT-WIDE FINANCIAL STATEMENTS The government-wide statements are prepared using accounting methods similar to those used by private-sector companies. The statement of net assets presents information on all of the City s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets will serve as a useful indicator of whether or not the financial position of the City is improving or deteriorating, absent extraordinary events. The statement of activities reports how the government s net assets changed during the most recent fiscal year. All changes in net assets (current year s revenues and expenses) are taken into account regardless of when cash is received or paid. Thus, revenues and expenses are reported in the statement of activities for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). The government-wide statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from functions that are intended to recover all or a portion of their costs through user fees and B-3
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS charges (business-type activities), and from the City s component unit, the Wichita Public Building Commission. Governmental activities of the City include public safety, culture and recreation, public works, environmental health, housing and highways and streets. Business-type activities include the City s water, sewer, airport and transportation activities. FUND FINANCIAL STATEMENTS A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Wichita, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The fund financial statements provide more information about the City s most significant funds not the City as a whole. All of the funds of the City of Wichita can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. Governmental fund financial statements focus on cash flows and other financial assets that can be readily converted to cash and are available in the near future to finance the City s programs. The differences between the short-term view of governmental fund statements and the long-term view of the governmental activities on the entity-wide financial statements are provided in reconciliations on pages A-18 and A-22. Primary differences are the impact of accounting for capital assets and their long term financing. The City maintains 26 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the funds considered to be major funds. Information on the other 22 governmental funds is combined into a single, aggregated presentation. Individual fund data for each nonmajor governmental fund is provided in the form of combining statements found beginning on page B-1. The City of Wichita adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund on page A-23 to demonstrate compliance with the appropriated budget. A more detailed budgetary statement is also provided beginning on page B-16 with the supplementary budgetary governmental fund statements. Proprietary funds account for services for which the City charges customers a fee and include both enterprise and internal services funds. Proprietary funds, like the government-wide statements, provide both long-term and short-term financial information. Enterprise funds account for Water and Sewer, Airport, Golf, Storm Water, and Transit operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City s various functions. Internal Service funds account for the City s fleet, technology, office supplies, and self-insurance programs. Because internal services primarily benefit governmental rather than business-type functions, the assets and activities of the internal service funds have predominately been included with governmental activities in the government-wide financial statements. Proprietary funds report the same types of information as the government-wide financial statements, however in greater detail. The proprietary fund financial statements provide separate information for the Water, Sewer and Airport funds all of which are considered to be major funds of the City. The nonmajor funds are consolidated into an aggregated presentation on the proprietary fund financial statements, as are the internal service funds. Individual fund data for proprietary funds (enterprise and internal service funds) can be found on pages C-1 through D-13 of this report. Fiduciary funds report on activities for which the City is the trustee, or fiduciary, and like proprietary funds, present information based on the full accrual basis of accounting. Fiduciary funds include the employees pension plans and other funds that because of a trust arrangement can be used only for the specified purpose. The City is responsible for ensuring that the assets reported in fiduciary funds be used for the intended purposes only. Activities conducted in a fiduciary capacity are excluded from the City s government-wide financial statements because the City is prohibited from using fiduciary assets to finance its operations. B-4
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS Notes to the financial statements provide information essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements immediately follow the basic financial statements. Other information In addition to the basic financial statements and accompanying notes, the report also presents certain required supplementary information concerning the City s progress in funding its obligation to provide pension benefits to its employees. The required supplementary information follows the notes to the financial statements, with additional information in the sections titled Additional Information, Statistical Section and the Single Audit Section. The Water and Sewer Section provides for the specific informational needs of the Water and Sewer Revenue Bondholders. GOVERNMENT WIDE FINANCIAL ANALYSIS Net assets of the Primary Government. Over time, net assets can serve as a useful indicator of the City s financial position. The net assets of the City of Wichita increased $52.9 million during the 2006 fiscal year. Approximately 74 percent of the City s net assets reflect investment in capital assets (e.g. land, buildings, improvements, equipment), less any related outstanding debt used to acquire those assets. The City uses the capital assets to provide services to citizens; consequently the capital assets are not available for future spending. An additional portion of these assets represents resources that are subject to external restrictions on how they may be spent. The unrestricted portion of the net assets is $24.3 million and may be used to meet the government s ongoing obligations. The $30.9 million increase in net assets in business-type activities as shown in Table 1 includes increases in the Water, Sewer and Storm Water Utilities and the Airport. System improvements and expansions represent the increases in the Water and Sewer Utilities. The increase in the Storm Water Utility largely represents improvements in a western area of the City that has historically flooded with heavy rainfall. The increase in Airport net assets is largely a stronger cash position, pending implementation of capital projects. Net Assets Primary Government Table 1 As of December 31, 2006 (with comparative totals for December 31, 2005) (in millions of dollars) Total Governmental Activities Business-type Activities Primary Government 2006 2005 2006 2005 2006 2005 Current and other assets $ 464.4 $ 521.3 $ 200.3 $ 186.6 $ 664.7 $ 707.9 Capital assets 926.4 870.2 1,016.8 961.0 1,943.2 1,831.2 Total assets 1,390.8 1,391.5 1,217.1 1,147.6 2,607.9 2,539.1 Long-term liabilities 402.8 423.1 399.9 358.2 802.7 781.3 Other liabilities 233.1 235.5 30.3 33.5 263.4 269.0 Total liabilities 635.9 658.6 430.2 391.7 1,066.1 1,050.3 Net assets: Capital assets, net of debt 457.4 376.6 683.9 664.1 1,141.3 1,040.7 Restricted 306.3 327.7 69.9 56.6 376.2 384.3 Unrestricted (8.8) 28.6 33.1 35.2 24.3 63.8 Total net assets $ 754.9 $ 732.9 $ 786.9 $ 755.9 $ 1,541.8 $ 1,488.8 Capital asset increases in the governmental activities consist largely of street improvements, which included right-of-way purchases for the continued conversion of the east-west thoroughfare, Kellogg or U.S. 54 highway, to a controlled access freeway through the City. Improvements along the Arkansas River bank connecting the WaterWalk to the City s museum B-5
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS Table 1 (continued) Net Assets Wichita Public Building Commission As of December 31, 2006 (with comparative totals for December 31, 2005) (in millions of dollars) 2006 2005 Current and other assets $ 29.0 $ 31.8 Capital assets - - Total assets 29.0 31.8 Long-term liabilities 24.2 26.6 Other liabilities 4.8 5.2 Total liabilities 29.0 31.8 Net assets: Capital assets, net of debt - - Restricted - - Unrestricted - - Total net assets $ - $ - General government 10% Operating grants 13% 2006 Expenses of the Primary Government Public safety 22% Interest 4% Franchise fees 9% Investment earnings 3% Sewer 7% Highways & streets 24% 2006 Revenues by Source Governmental Activities Capital grants 23% Sales taxes 13% Water 8% Health, welfare & sanitation 8% Airport 5% Property taxes 23% Charges for services 9% Other taxes 5% Misc 2% district also represented a significant portion of the capital investment with continued investment in the WaterWalk development, a retail and entertainment complex adjacent to the City s convention center. The City s expenses totaled $469.1 million with the combined expenses of the business-type activities representing 24.6 percent of the total expenses. Within the governmental activities, public safety, highways and streets represent the largest expenditure categories, with public safety consuming 22.3 percent of total expenditures and highways and streets consuming 23.4 percent of total each of the City s total expenditures, consistent with past years. Overall, the City s total 2006 expenses were 6.8 percent above those of 2005, with governmental activities increasing 7.0 percent and the business-type expenses increasing 6.1 percent. Combined program revenue increased 5.8 percent in 2006. Program revenue in governmental funds remained flat while increased storm water, water and sanitary sewer rates in the business-type activities provided revenue growth, as did the increased volume of water sales. Capital grants and contributions in governmental activities increased primarily due to intergovernmental revenue associated with railroad bridge projects. In the business-type activities, capital contributions returned to levels comparable to years prior to 2005, with 2005 excluded due to $18 million in capital contributions, which were received by the Airport from a combination of private and governmental resources. Culture & recreation 7% Other business type 5% General revenues of the governmental funds, which are taxes, franchise fees, interest earnings and other miscellaneous income, increased by 8.8 percent. The City continued a long-standing policy of maintaining a flat mill levy, however growing property values provided 4.8 percent more in property tax revenue than in 2005, generating an additional $4.1 million. The City s portion of the local sales tax distribution generated $2.5 million more in 2006 than 2005, reflecting a strong local economy, with franchise fees growing $1.1 million. Investment earnings reflected the increasing market interest rates and increased by $2.5 million or 31 percent. Governmental Activities. Major sources of local revenue of the governmental activities continue to be property and sales taxes, as illustrated in the accompanying graph. Governmental activities increased the net assets of the City by $22.0 million. Table 2 provides a comparison between the revenues and expenses of fiscal years 2005 and 2006, with additional comparative information provided in the Statistical Section. B-6
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS Both governmental revenues and expenses increased in fiscal 2006 over those in 2005. The primary revenue increase was in intergovernmental capital grants associated with street and bridge projects. Revenue from property and sales tax increased, as did franchise fees and income from investments. The amount paid by taxpayers through sales and property taxes totaled $137.4 million or 38.8 percent, comparable to prior years. City of Wichita Table 2 Changes in Net Assets For the Year Ended December 31, 2006 (with comparative totals for year ended December 31, 2005) (in millions of dollars) Governmental Activities Business-type Activities Total Primary Government 2006 2005 2006 2005 2006 2005 Revenues Program revenues: Charges for services $ 33.0 $ 33.7 $ 103.0 $ 94.8 $ 136.0 $ 128.5 Operating grants and contributions 50.2 50.7 4.8 4.1 55.0 54.8 Capital grants and contributions 86.3 67.8 31.2 47.1 117.5 114.9 General revenues Property taxes 89.7 85.6 - - 89.7 85.6 Sales taxes 47.7 45.2 - - 47.7 45.2 Franchise fees 31.9 30.7 - - 31.9 30.7 Other taxes 17.6 17.2 - - 17.6 17.2 Investment earnings 10.9 8.3 7.3 6.2 18.2 14.5 Miscellaneous 7.7 12.3 0.9 0.5 8.6 12.8 Total revenues 375.0 351.5 147.2 152.7 522.2 504.2 Expenses General government 47.2 36.8 - - 47.2 36.8 Public safety 104.8 98.0 - - 104.8 98.0 Highways and streets 109.6 104.6 - - 109.6 104.6 Sanitation 3.7 2.7 - - 3.7 2.7 Health and welfare 34.7 33.8 - - 34.7 33.8 Culture and recreation 33.2 33.8 - - 33.2 33.8 Interest on long-term debt 20.6 20.9 - - 20.6 20.9 Water - - 36.2 34.4 36.2 34.4 Sewer - - 31.0 29.3 31.0 29.3 Storm Water - - 5.3 4.1 5.3 4.1 Golf - - 5.0 4.6 5.0 4.6 Airport - - 25.6 24.3 25.6 24.3 Transit - - 12.2 11.9 12.2 11.9 Total expenses 353.8 330.6 115.3 108.6 469.1 439.2 Excess before prior period adjustments and transfers 21.2 20.9 31.9 44.1 53.1 65.0 Prior period adjustment 0.3 (0.8) (0.4) - (0.1) (0.8) Transfers 0.5 (10.0) (0.5) 10.0 - - Increase in net assets $ 22.0 $ 10.1 $ 31.0 $ 54.1 $ 53.0 $ 64.2 Business-type Activities. The Water and Sewer Utilities are the largest business-type activity funds of the City of Wichita. Capital improvements have required significant capital investment placing pressure on rates. Water and Sewer rates increased three percent in each year between 2000 and 2004 with an additional 4 percent water increase in 2004 for taste and odor treatment. Water rates did not increase in 2005, but a six percent increase was implemented for 2006. A three percent increase B-7
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS for sewerage was implemented for 2005 and a seven percent increase for 2006. Currently the City has a water supply plan in place to support growth and development through 2050 and is making capital investments in securing that future water supply. In 2003, Mid-Continent Airport was recognized as one of the fastest growing airports in the nation, with a record number of passengers using the airport. The majority of the increased passenger load has been sustained through 2006, accomplished through subsidies to low-fare carriers and through community programs committing support to the low-fare carriers. Additional acreage was acquired to improve entrance to airport, provide additional runway protection, as well as provide for future development of both Mid-Continent and Jabara Airports. The Airport Fund accounts for activities of Mid-Continent, a commercial service airport and Jabara, a general aviation reliever airport. Eleven carriers serve Mid-Continent Airport. AirTran Airways continues as the City s eastbound low-cost carrier, while Allegiant Air provides low-cost services directly to Las Vegas. The City has identified the need for an additional westbound lowcost carrier. Transit operations are funded from fares, General Fund subsidies and state and federal grants. Federal and state funding has remained relatively stable for public transportation providing for the replacement of 75 percent of the buses since 2001. Transit continues to update the fleet as resources allow. Transit also operates a fleet of para-transit vans, replaced on a rotating basis with federal and state grant funds. A new transit operations center was placed in service in 1999, with computerized scheduling for para-transit service implemented in 2002, electronic fareboxes in 2003, and current considerations for an automated vehichle locator system. The Transit operation remains free of long-term debt. The City operates five golf courses with approximately 188,000 rounds of golf played in 2006. The City s newest golf course, Auburn Hills, has been in operation for five years and is ranked by golf publications as one of the top five and alternately one of the top ten public courses in Kansas. Operational restructuring has been implemented at several of the courses to maintain a quality attraction with a fee structure that encourages golfing as a leisure activity. Golf play has been down since 2001, but 2006 recorded an additional, 6,949 rounds of play above 2005. To spur play, the City has initiated promotional activities and continues to groom young golfers through a junior golf program. The Storm Water Utility is funded from fees paid by property owners and in past years, has been subsidized by the General Fund. The subsidies were on a phase-out schedule, with 2005 being the final year of subsidy. A rate increase was implemented in 2006 to insure sufficient funds for operations and capital investment. Currently the utility operates and maintains eight pump stations to move excess surface water from heavy rains. Additional pump stations will be added in conjunction with new development and redevelopment projects as needed. The utility maintains existing drainage systems, investigates drainage problems, is responsible for the design and construction of drainage projects, and monitors construction sites to ensure compliance with the Storm Water Pollution Prevention Ordinance. ANALYSIS OF THE GOVERNMENT S FUNDS Governmental Funds. The City of Wichita uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The governmental funds reported a combined fund balance at year-end of $54.8 million, a decrease of $68.0 million in 2006. Reservations of the fund balances for inventories, encumbrances and prepaid items totaled $140.3 million. The Most notable are decreases in the Street Improvement and other capital project funds, a result of timing of project expenditures and an increase in projects funded with temporary notes pending permanent financing upon completion. The Debt Service Fund also reflects a planned decrease in fund balance as available cash was utilized to fund projects in lieu of long-term financing. Included in the capital projects are three major investments of the City; the continuation of street improvement program; the continuation of construction of the WaterWalk shopping and entertainment development on the Arkansas River bank, the results of a private/public partnership, and the railroad overpass project which will elevate the railroad tracks through the center of the City to facilitate improved traffic flow and safety. In addition, the City has Arkansas River corridor improvements underway B-8
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS connecting the WaterWalk district to the museum district. Numerous other economic development projects are ongoing through both public and private/public partnerships. The General Fund is the major operating and taxing fund of the City of Wichita. At the close of 2006, the unreserved fund balance of the General Fund was $23.0 million compared to $22.8 million and $22.0 million at the close of 2005 and 2004 respectively. Major revenue sources in the General Fund are: Property taxes, which increased $4.1 million under a long standing policy of maintaining a flat mill levy. 180 175 The City s portion of the local sales tax generated $2.5 million 170 more in 2006 compared to 2005. 165 Franchise fees from the communication industry continue to 160 decline with the growth of wireless technology. Higher natural 155 gas prices, however, yielded a 3.7 percent overall growth in 150 franchise fees above 2005. 145 140 Intergovernmental transfers from the State consist of liquor tax and gas tax providing a combined $17.1 million 2006. Earnings on investments were $4.2 million in 2006, compared to $3.8 million in 2005. General Fund Revenue (transfers excluded) for fiscal years 2002 through 2006 2002 2003 2004 2005 2006 General Fund expenses, excluding transfers, totaled $169.4 million, $11.7 million above 2005. Throughout the economic recovery, the City has carefully evaluated expenses, deferring expenditures where possible in response to the revenue shortfall. As a result, the General Fund maintained a strong cash position, continued essential services expanded funding of economic development initiatives and restored funding to areas of service in critical need. Subsidies to other funds for services and transfers for discretionary programs continue to be re-evaluated and re-prioritized each year. The Debt Service Fund carried a fund balance of $40.9 million at year-end, down from $57.3 million at the close of 2005 due to the programmed cash funding of projects in lieu of securing long-term financing. At the close of 2006, $16.0 million was held in escrow dedicated to defeasement of debt in a crossover refunding bond sale in 2004, compared to $25.2 million last year. The remaining fund balance is dedicated for the payment of debt service first, with funds in excess of the target dedicated directly to the Capital Improvement Program. Proprietary Funds: The Water and Sewer Utilities have been investing in improvements to existing capital and expanding the systems. Capital projects are temporarily financed from available cash in the Utilities and permanently financed with revenue bonds. The Utilities sold revenue bonds in 2006, replenishing their cash reserves and increasing the long-term debt. Operating income in both utilities was higher than the planned budget. The Airport Fund is in the early stages of capital expansion. A program manager has been selected to plan and construct a new terminal with a target completion date of 2010. During 2005, the passenger facility charge was increased from $3.00 to $4.50 to support the capital program at Mid-Continent Airport, reflected in growing cash reserves. Cash and temporary investments at the close of 2004 were $14.1 million compared to $24.0 million at the close of 2006. The operating expenses of the Transit Fund increased $805,856 or 7 percent above 2005. Increased fuel costs alone account for 27.9 percent of the increased expenditures. Revenue from operations decreased four percent in 2006, consistent with reports of declining ridership. The Fund receives approximately 50 percent of its operating revenue from state and federal grants and 30 percent of its revenue from local subsidies, with the balance from operations. Federal grants have provided approximately 80 percent of funds for capital investment. The Storm Water Utility increased the billing rate in 2005 and 2006, which is reflected in the increased charges for services. The increased revenue is intended for operations and capital improvements. Non-cash capital contribution of $6.1 million was the most significant element in the $7.8 million increase in net assets. The non-cash capital contributions reflect the spreading of B-9
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS special assessments to property owners in the benefit districts for completed improvement projects, accompanied by the finalization of long-term financing. The Golf Fund revenue increased 21.4 percent in 2006, with operating expenses increasing 12.1 percent. The growth in operating revenue and expenditures is largely attributed to the financial and operating re-structuring of several courses, completed to yield increased operational control and increased revenue. In addition, rounds played in 2006 increased 3.8 percent above 2005. In order to accomplish the restructuring, an interfund loan has been extended from the Debt Service Fund for debt service payments made on behalf of the Golf Fund until operations generate sufficient resources to meet all golf obligations. Millions of Dollars 24.0 23.0 22.0 General Fund Balance Fiscal 2002 through 2006 General Fund Budgetary Highlights. Actual revenue and other financing sources exceeded the expectations of the original budget by 0.6 percent. A 3.9 percent growth in revenue was lead by increases in property tax, franchise fees, and sales tax revenue. 21.0 11.0% Growth in property values contributed increased 20.0 10.0% property tax revenue to the General Fund, 2002 2003 2004 2005 2006 consistent with projections. Franchise fees increased 3.7 percent, $1.1 million above 2005, Fund Balance Percent of Subsequent Annual Budget largely reflecting the increased market price of natural gas. Sales tax revenue grew 5.6 percent, $1.3 million above 2005, which reflects an improving local economy. General Fund transfers increased by $2.04 million over 2005 including several one-time transfers as planned. Fiscal 2006 closed with revenue (including transfer revenue) exceeding expenditures and transfers-out by $158,373 on a budgetary basis. As the revenue increased, the City addressed needs General Fund Expenditures - Budgetary Basis in all service areas, with public safety absorbing the for Fiscal Years 2002 through 2006 greatest portion of the revenue increase, as shown in 120 (in millions) the accompanying graph. Public Safety 100 expenditures increased $7.7 million or 8.7 percent 2002 above public safety expenditures in 2005. 80 2003 Annually, the adopted budget is revised internally as approved by Council. Customarily, the revised budget does not increase as the City seeks cost savings and opportunities for one-time expenditures for improvements across the City. CAPITAL ASSETS AND DEBT ADMINISTRATION 60 40 20 0 15.0% 14.0% 13.0% 12.0% General Government Public Safety Highways Streets Culture Recreation Other* * Other expenditures include Health & Welfare, Sanitation and transfers to other funds. Capital Assets. At the end of 2006, the City of Wichita had invested $1.9 billion (net of depreciation) in a broad range of capital assets, including water and sewer facilities, police and fire equipment, buildings, parks, airfields, roads, bridges, and land (Table 3). Capital assets, net of depreciation, increased $111.9 million during 2006 with approximately 50 percent of the increase in proprietary activities and 50 percent in governmental funds. Construction in progress in proprietary funds increased $48.2 million. Water projects represent $39.7 million of the increase and include phase II of an automated meter reading program and a multi year project to recharge aquifers during periods of excess surface water. A major element in the 50-year water supply plan, the recharge project is near completion. Construction in Percent 2004 2005 2006 B-10
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS progress in the Sewer Utility includes $4.3 million for system expansion in the growing areas of the City while the Airport fund construction in progress includes $5.5 million invested in taxiways and $1.2 million for airport access improvements. Capital Assets Net of Depreciation Table 3 As of December 31, 2006 (with comparative totals for December 31, 2005) (in millions of dollars) Governmental Activities Business-type Activities Total Primary Government 2006 2005 2006 2005 2006 2005 Percent Change Land $ 228.9 $ 222.6 $ 34.5 $ 34.6 $ 263.4 $ 257.2 2.4% Airfield - - 34.9 38.6 34.9 38.6 (9.6)% Buildings & improvements 172.1 175.4 705.5 690.0 877.6 865.4 1.4% Equipment 34.9 28.8 43.0 47.1 77.9 75.9 2.6% Infrastructure 315.5 311.9 - - 315.5 311.9 1.2% Construction in progress 175.0 131.5 198.9 150.7 373.9 282.2 32.5% Total $ 926.4 $ 870.2 $ 1,016.8 $ 961.0 $ 1,943.2 $ 1,831.2 6.1% Construction in progress in governmental activities increased $43.5 million. Major arterial street improvement projects added $18.7 million, while improvements to the Arkansas River corridor added $12.3 million. Street improvement projects represent approximately 80 percent of the assets placed into service in 2006. Additional information on changes in capital assets can be found in Note 6 to the Financial Statements. Major capital asset additions in governmental activities include the following: Finalization of 30 separate street projects in 2006, each with an average investment of $391,000 ($11.8 million). Arkansas River corridor improvements totaled $15.2 million including street and pedestrian bridges, WaterWalk and other improvements that connect the convention area to the museum district in addition to prior years investments. Long-term Debt. The City finances capital projects with general obligation bonds/notes, revenue bonds, grants, and cash. The most significant of the financing tools is general obligation bonds based on the full faith and credit of the City. The City has approximately 10 mills of the total mill levy dedicated to general obligation capital financing. Projects that rely most heavily upon property taxes for repayment of general obligation bonds are arterial streets, bridges, storm water, parks, transit, core area projects, and public buildings. Capital costs are also funded through enterprise, internal service and special revenue funds. The City adopts a ten year Capital Improvement Program (CIP). Two years are a capital budget for purposes of project initiation and the remaining period is a planning tool. The City of Wichita maintains an Aa2 rating from Moody s and AA from Standard and Poor s. The Water and Sewer Utilities maintain a rating of A1 from Moody s and AAA insured. At year-end the City had $834.9 million in bonds and $58.8 million in temporary notes outstanding, illustrated in Table 4. Debt outstanding for the City of Wichita increased by net of $19.0 million, due to new issues offset by retirements and refundings. Included in the outstanding debt figures is $16.0 million for which an escrow account has been established to fully meet debt service requirements and all repayment costs until such time that the specified bonds (general obligation) can be legally defeased. Total new debt was $88.7 million with total retirements of $69.7 million, excluding temporary notes, which decreased $7.3 million in 2006. More detail is located in the Notes to the Financial Statements, in the Additional Information and in Statistical sections of this report. Kansas State Statutes limit the amount of general obligation bonds a City can issue to 30 percent of the equalized tangible valuation. The current limitation for the City is $964.1 million, significantly higher than the general obligation outstanding debt ($401.9 million). Additional information can be found in Note 9 to the Financial Statements. B-11
MANAGEMENT DISCUSSION AND ANALYSIS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS General Obligation and Revenue Bonds Table 4 As of December 31, 2006 (with comparative totals for December 31, 2005) (in millions of dollars) Governmental Activities Business-type Activities Total 2006 2005 2006 2005 2006 2005 Ad valorem property taxes $ 51.3 $ 62.2 $ - $ - $ 51.3 $ 62.2 Special assessments 217.7 210.4 - - 217.7 210.4 Tax Increment 21.7 25.4 - - 21.7 25.4 Transient guest tax 6.7 8.9 - - 6.7 8.9 Local sales tax 104.5 113.5 - - 104.5 113.5 G.O. and Revenue - - 407.2 366.2 407.2 366.2 Wichita Public Building Commission - - 26.6 29.3 26.6 29.3 Total $ 401.9 $ 420.4 $ 433.8 $ 395.5 $ 835.7 $ 815.9 ECONOMIC FACTORS AND NEXT YEAR S BUDGET 1 The unemployment rate for the Wichita Metropolitan Statistical Area in 2006 was own to 4.2 percent from 4.7 percent in the 2005. The general aviation industry has continued spurring the local economy, however employment is reported up in all nonfarm labor segments except transportation, warehousing and utilities, information and finance, professional science and technical services. Some segments are only reporting slight employment gains. In the City of Wichita, the value of construction activity in the fourth quarter of 2006 declined 14.6 percent from the fourth quarter of 2005. The value of construction permits for single family and small multi-family units declined, while large multifamily residential permits increased as did as did new non-residential construction permits. Home sales continued to be strong in 2006, with sales in the fourth quarter only slightly higher than in the fourth quarter of 2005. The City s has five labor bargaining units. Contracts of three bargaining units expire at the end of 2007 and contract negotiations have begun. The labor contract for the Police and Fire units expired in December of 2006 with negotiations ongoing. The State of Kansas has continued its elimination of demand transfers to cities during 2006 and has passed legislation to eliminate property tax on new business machinery and equipment with the first impact on the 2008 budget. The City of Wichita continues to partner with other local governments and the private sector to replace jobs lost to international outsourcing, capitalizing on the strengths of the City and region, such as the existing labor market, professional and business services, education, healthcare and tourism. Spurring economic development and maintaining infrastructure and essential services were all factors considered in preparing the City s budget for 2007 budget and capital improvement program. CONTACTING THE CITY S FINANCIAL MANAGEMENT This financial report is designed to provide a general overview of the City of Wichita s finances for individuals with an interest in the City s finances. Additional information is provided within the Notes to the Financial Statements, beginning on page A-36. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance, 455 North Main, City of Wichita, Kansas, Wichita, KS 67202. 1 Economic information was drawn from compiled information by Wichita State University, Center for Economic Development and Business Research, supplemented with information provided by the Bureau of Economic Analysis. B-12
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CITY OF WICHITA, KANSAS STATEMENT OF NET ASSETS December 31, 2006 Primary Government Component Unit Wichita Public Governmental Business-Type Building Activities Activities Total Commission ASSETS Cash and cash equivalents $ 131,916,191 25,697,260 $ 157,613,451 $ - Investments 2,728,239-2,728,239 - Receivables (net) 323,896,098 9,181,275 333,077,373 - Internal balances 2,366,290 (2,366,290) - - Prepaid items 561,450 28,155 589,605 - Inventories 48,800 1,311,979 1,360,779 - Due from other agencies 1,612,491 581,069 2,193,560 - Notes receivable 1,011,635-1,011,635 - Restricted assets: - Temporarily restricted: Cash and cash equivalents - 84,829,254 84,829,254 43,262 Investments - - - 1,685,146 Receivables - 359,381 359,381 380,362 Net investment in direct financing leases - 76,556,761 76,556,761 26,909,731 Permanently restricted: Cash and cash equivalents 235,437-235,437 Investments - - - - Other assets - 4,107,439 4,107,439 - Capital assets: Land and construction in progress 403,909,323 233,412,932 637,322,255 - Other capital assets, net of depreciation 522,496,559 783,362,985 1,305,859,544 - Total capital assets 926,405,882 1,016,775,917 1,943,181,799 - Total assets 1,390,782,513 1,217,062,200 2,607,844,713 29,018,501 LIABILITIES Accounts payable and other current liabilities 15,719,832 3,558,509 19,278,341 - Accrued interest payable 5,801,027 4,172,597 9,973,624 380,362 Temporary notes payable 39,735,562 1,052,000 40,787,562 - Deposits 1,451,427 2,468,422 3,919,849 - Unearned revenue 95,192,832-95,192,832 - Due to other agencies - - - 1,728,408 Noncurrent liabilities, including claims payable: Due within one year 75,163,462 19,045,848 94,209,310 2,325,000 Due in more than one year 402,818,384 399,881,960 802,700,344 24,230,000 Other liabilities - - - 354,731 Total liabilities 635,882,526 430,179,336 1,066,061,862 29,018,501 NET ASSETS Invested in capital assets, net of related debt 457,432,209 683,949,945 1,141,382,154 - Restricted for: Capital projects 25,275,439 10,455,926 35,731,365 - Highways and streets 8,898,232-8,898,232 - Debt service 252,782,832 3,660,081 256,442,913 - Revenue bond reserves - 55,714,369 55,714,369 - Cemetery: Expendable 595,342-595,342 - Nonexpendable 235,437-235,437 - Other purposes 18,523,687-18,523,687 - Unrestricted (8,843,191) 33,102,543 24,259,352 - Total net assets $ 754,899,987 $ 786,882,864 $ 1,541,782,851 $ - The accompanying notes to the financial statements are an integral part of this statement. B-13
CITY OF WICHITA, KANSAS STATEMENT OF ACTIVITIES For the year ended December 31, 2006 Program Revenues Charges for Operating Grants Capital Grants Expenses Services and Contributions and Contributions Functions/Programs Primary government: General government $ 47,248,184 $ 14,389,863 $ 2,519,932 $ - Public safety 104,819,018 5,949,091 1,239,362 - Highways and streets 109,642,759 5,077,098 15,518,123 85,898,373 Sanitation 3,680,755 978,189 - - Health and welfare 34,560,783 1,767,288 26,880,904 - Culture and recreation 33,241,889 4,876,062 4,008,776 429,054 Interest on long-term debt 20,605,080 - - - Total governmental activities 353,798,468 33,037,591 50,167,097 86,327,427 Business-type activities: Water 36,233,228 40,657,832-7,318,678 Sewer 31,000,348 28,867,696-7,523,301 Storm Water 5,270,316 7,063,388-6,134,287 Golf Course System 5,017,040 4,365,294 - - Airport 25,618,959 20,320,823-9,785,425 Transit 12,185,279 1,708,486 4,848,349 447,660 Total business-type activities 115,325,170 102,983,519 4,848,349 31,209,351 Total primary government $ 469,123,638 $ 136,021,110 $ 55,015,446 $ 117,536,778 Component unit: Wichita Public Building Commission $ - $ - $ - $ - General revenues: Property taxes Sales taxes Franchise fees Other taxes Investment earnings Miscellaneous Transfers Total general revenues, special items and transfers Change in net assets Net assets, beginning of year as previously reported Prior period adjustments Net assets, beginning of year as restated Net assets, end of year The accompanying notes to the financial statements are an integral part of this statement. B-14
Governmental Activities Net (Expense) Revenue and Changes in Net Assets Primary Government Component Unit Wichita Business-type Public Building Activities Total Commission $ (30,338,389) $ - $ (30,338,389) $ - (97,630,565) - (97,630,565) - (3,149,165) - (3,149,165) - (2,702,566) - (2,702,566) - (5,912,591) - (5,912,591) - (23,927,997) - (23,927,997) - (20,605,080) - (20,605,080) - (184,266,353) - (184,266,353) - - 11,743,282 11,743,282 - - 5,390,649 5,390,649 - - 7,927,359 7,927,359 - (651,746) (651,746) - - 4,487,289 4,487,289 - - (5,180,784) (5,180,784) - - 23,716,049 23,716,049 - (184,266,353) 23,716,049 (160,550,304) - - - - - 89,705,604-89,705,604-47,704,546-47,704,546-31,850,592-31,850,592-17,601,207-17,601,207-10,866,162 7,277,028 18,143,190-7,747,542 855,601 8,603,143-545,302 (545,302) - - 206,020,955 7,587,327 213,608,282-21,754,602 31,303,376 53,057,978-732,894,721 755,961,948 1,488,856,669 250,664 (382,460) (131,796) - 733,145,385 755,579,488 1,488,724,873 - $ 754,899,987 $ 786,882,864 $ 1,541,782,851 $ - B-15
CITY OF WICHITA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2006 Federal/State General Assistance Debt Service Fund Fund Fund ASSETS Cash and cash equivalents $ 34,344,991 $ 1,576,191 $ 24,911,257 Cash with fiscal agent - - 16,033,325 Investments - 2,647,803 - Receivables, net: - - Property taxes 60,349,020-28,155,880 Due from other agencies - 1,308,991 - Special assessments - - 217,705,000 Accounts 292,630 3,862,374 - Interest - 13,736 - Due from other funds - 1,157,543 2,131,978 Prepaid items 75 79,807 - Notes receivable - 1,011,635 - Inventories - 48,800 - Total assets $ 94,986,716 $ 11,706,880 $ 288,937,440 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and other liabilities $ 6,778,242 $ 402,122 $ - Accrued interest payable - - - Temporary notes payable - - - Deposits 1,149,548 219,271 - Due to other funds - 1,157,543 - Unearned revenue 61,265,829 5,100,843 247,992,858 Total liabilities 69,193,619 6,879,779 247,992,858 Fund balances (deficits): Reserved for: Inventories - 48,800 - Encumbrances 2,767,209 2,491,979 - Prepaid items 75 79,807 - Cemetery perpetual care - - - Unreserved: Designated 13,097,514-24,911,257 Designated, crossover refunded bonds - - 16,033,325 Undesignated 9,928,299 2,206,515 - Undesignated, reported in Special Revenue Funds - - - Undesignated, reported in Capital Projects Funds - - - Undesignated, reported in Permanent Fund - - - Total fund balances (deficits) 25,793,097 4,827,101 40,944,582 Total liabilities and fund balances $ 94,986,716 $ 11,706,880 $ 288,937,440 The accompanying notes to the financial statements are an integral part of this statement. B-16
Street Improvement Fund Other Governmental Funds Total Governmental Funds $ 1,083,642 $ 17,814,757 $ 79,730,838 - - 16,033,325-80,436 2,728,239 - - - - 88,504,900-303,500 1,612,491 - - 217,705,000 12,207,987 840,553 17,203,544 - - 13,736-60,191,545 63,481,066 - - 79,882 - - 1,011,635 - - 48,800 $ 13,291,629 $ 79,230,791 $ 488,153,456 $ 4,243,505 $ 3,668,801 $ 15,092,670 271,038 378,120 649,158 11,827,120 27,908,442 39,735,562 6,554 76,054 1,451,427 37,106,753 23,084,792 61,349,088-670,280 315,029,810 53,454,970 55,786,489 433,307,715 - - 48,800 113,477,731 21,196,911 139,933,830 - - 79,882-235,437 235,437 - - 38,008,771 - - 16,033,325 - - 12,134,814-55,180,596 55,180,596 (153,641,072) (53,762,794) (207,403,866) - 594,152 594,152 (40,163,341) 23,444,302 54,845,741 $ 13,291,629 $ 79,230,791 $ 488,153,456 B-17
CITY OF WICHITA, KANSAS Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets December 31, 2006 Amounts reported for governmental activities in the statement of net assets are different because: Total fund balance -- governmental funds $ 54,845,741 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Cost 1,163,042,597 Accumulated Depreciation (248,166,887) 914,875,710 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. General Obligation Bonds Payable 184,199,577 Special Assessment Bonds Payable 217,705,000 Premium on Bonds Payable 8,426,049 Deferred Refunding on Bonds Payable (1,224,952) Accrued Interest Payable on the Bonds 5,151,869 Section 108 Loan 2,075,000 Bond anticipation notes 18,057,438 Accreted interest 2,846,859 Compensated Absences 7,918,407 Liability for landfill closure and postclosure costs 24,543,916 (469,699,163) The amount due from other funds is not considered available to liquidate liabilites of the current period, and therefore is deferred in the funds. However it is properly recognized as revenue in the entity-wide statements. 2,131,978 Special assessments are not considered available to liquidate liabilities of the current period, and are therefore deferred in the funds. However, they are properly recognized as revenue in the entity-wide statements as soon as the related improvement has been completed. 217,705,000 Internal service funds are used by management to charge the costs of certain activities, such as insurance, to individual funds. The assets and liabilities of certain internal service funds are included in governmental activities in the statement of net assets. 35,040,721 Total net assets -- governmental activities $ 754,899,987 The accompanying notes to the financial statements are an integral part of this statement. B-18
B-19
CITY OF WICHITA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended December 31, 2006 Federal/State General Assistance Debt Service Fund Fund Fund REVENUES Taxes $ 65,064,691 $ - $ 30,274,546 Special assessments 5,629-28,013,024 Franchise fees 31,850,592 - - Local sales tax 23,852,273 - - Intergovernmental 17,090,771 27,745,667 - Licenses and permits 1,916,765 - - Fines and penalties 8,801,227 - - Rentals 2,088,815 - - Interest earnings 4,182,203 220,178 2,383,230 Charges for services and sales 7,632,004 - - Other 6,831,666 3,258,477 237,499 Total revenues 169,316,636 31,224,322 60,908,299 EXPENDITURES Current: General government 22,221,846 3,925,635 - Public safety 95,525,720 916,908 - Highways and streets 21,573,807 1,259,674 - Sanitation 2,152,162 - - Health and welfare 3,426,720 27,437,604 - Culture and recreation 24,506,224 647,889 - Debt service: Principal retirement - - 41,237,203 Interest and fiscal charges - - 18,593,531 Capital outlay - - - Total expenditures 169,406,479 34,187,710 59,830,734 Excess (deficiency) of revenues over (under) expenditures (89,843) (2,963,388) 1,077,565 OTHER FINANCING SOURCES (USES) Issuance of long-term capital debt - - - Premiums on bonds sold - - 158,637 Payments on refunded bonds - - (8,845,000) Transfers from other funds 8,447,508 505,319 19,740,231 Transfers to other funds (9,318,912) (826,184) (28,473,951) Total other financing sources (uses) (871,404) (320,865) (17,420,083) Net change in fund balances (961,247) (3,284,253) (16,342,518) Fund balances - beginning 26,754,344 8,023,506 57,287,100 Prior period adjustment - 87,848 - Fund balances - ending $ 25,793,097 $ 4,827,101 $ 40,944,582 The accompanying notes to the financial statements are an integral part of this statement. B-20
Street Improvement Fund Other Governmental Funds Total Governmental Funds $ - $ 11,967,574 $ 107,306,811 704,152 378,749 29,101,554 - - 31,850,592-23,852,273 47,704,546 49,334,265 4,817,621 98,988,324-5,130,750 7,047,515 - - 8,801,227-1,867,373 3,956,188 423,014 2,735,611 9,944,236-2,766,163 10,398,167 198,656 1,652,403 12,178,701 50,660,087 55,168,517 367,277,861-8,045,283 34,192,764-6,872,510 103,315,138 - - 22,833,481-1,152,306 3,304,468-2,617,234 33,481,558-4,496,353 29,650,466 9,819,950 8,809,460 59,866,613 883,755 940,327 20,417,613 116,427,166 53,702,149 170,129,315 127,130,871 86,635,622 477,191,416 (76,470,784) (31,467,105) (109,913,555) 27,655,429 21,223,779 48,879,208 - - 158,637 - - (8,845,000) 37,981,361 28,115,195 94,789,614 (271,602) (54,082,331) (92,972,980) 65,365,188 (4,743,357) 42,009,479 (11,105,596) (36,210,462) (67,904,076) (29,057,745) 59,860,032 122,867,237 - (205,268) (117,420) $ (40,163,341) $ 23,444,302 $ 54,845,741 B-21
CITY OF WICHITA, KANSAS Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended December 31, 2006 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances -- total governmental funds $ (67,904,076) Governmental funds report capital asset acquisition as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital asset acquisitions exceeded depreciation in the current period. Depreciation expense (22,779,557) Capital asset acquisition 95,030,640 72,251,083 In the statement of activities, the gain or loss from the sale of capital assets is reported, whereas in the governmental funds, only cash proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the cost of capital assets sold. (14,470,545) In the statement of activites, transfers of capital assets from governmental activities to business type activities are reported as transfers, whereas in the governmental funds, there is no event to report as there was no outward flow of current financial resources. (1,594,643) Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. (48,852,438) Bond premium proceeds provide current financial resources to governmental funds, but premiums on sales do not increase long-term liabilities in the statement of net assets. (158,637) The amortization of bond premiums decrease the long term liabilities in the statement of net assets but do not provide current financial resources to governmental funds. 1,043,139 The amortization of refunding costs increases the long term liabilities in the statement of net assets but do not (163,971) provide current financial resources to governmental funds. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. General obligation bonds 25,763,639 Special assessment bonds 23,460,000 Temporary notes 18,629,410 Section 108 HUD loan 3,235,000 71,088,049 Debt service payments on behalf of proprietary funds are recorded as expenditures in governmental funds and interfund loans on the statement of net assets. 623,564 In the statement of activities, interest is accrued on outstanding bonds, whereas in governmental funds, and interest expenditure is reported when due. (201,982) In the statement of activities compensated absences are measured by the amounts earned during the year. In the governmental funds, however, expenditures are measured by the amount of financial resources used (essentially, the amounts actually paid). The compensated absences earned that exceed benefits paid is shown as an expense on the statement of activities. (327,319) Internal service funds are used to charge the costs of certain activities, such as insurance, to the individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. 3,280,127 Special assessments are not considered available to liquidate liabilities of the current period, and are therefore deferred in the funds. However, they are properly recognized as revenue in the statement of activities as soon as the related improvement has been completed. 7,335,000 In the statement of activities, costs estimated to be incurred for closure and post-closure care of the landfill are recorded as incurred. In the governmental funds, however, expenditures are measured by the amount of financial resources used (or paid). The change in estimated costs incurred in excess of the amounts paid is shown as an expense on the statement of activities (207,264) In the statement of activities, interest is accreted on outstanding bonds, whereas in governmental funds, interest is accreted when interest payments are due. 14,515 Change in net assets of governmental activities $ 21,754,602 The accompanying notes to the financial statements are an integral part of this statement. B-22
CITY OF WICHITA, KANSAS GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - BUDGETARY BASIS For the year ended December 31, 2006 Budgeted Amounts Original Final Actual Amounts Variance with Final Budget - Positive (Negative) REVENUES Taxes $ 64,939,670 $ 65,360,370 $ 65,064,691 $ (295,679) Special assessments 29,350 29,350 5,629 (23,721) Franchise fees 31,784,690 31,761,170 31,850,592 89,422 Local sales tax 23,501,940 23,501,940 23,852,273 350,333 Intergovernmental 17,525,180 17,645,790 17,090,771 (555,019) Licenses and permits 2,476,500 2,020,910 1,916,765 (104,145) Fines and penalties 9,297,070 9,089,770 8,801,227 (288,543) Rentals 2,835,080 2,421,100 2,088,815 (332,285) Interest earnings 3,378,800 4,250,000 4,182,203 (67,797) Charges for services and sales 8,549,280 7,898,630 7,632,004 (266,626) Other 5,360,970 5,480,380 7,246,892 1,766,512 Total revenues 169,678,530 169,459,410 169,731,862 272,452 EXPENDITURES Current: General government 31,014,255 29,417,558 23,815,345 5,602,213 Public safety 95,410,790 96,880,180 95,967,748 912,432 Highways and streets 22,299,480 22,050,280 21,036,509 1,013,771 Sanitation 2,339,520 2,224,410 2,169,959 54,451 Health and welfare 3,490,800 3,691,850 3,472,532 219,318 Culture and recreation 27,072,373 25,803,380 22,239,992 3,563,388 Total expenditures 181,627,218 180,067,658 168,702,085 11,365,573 Excess (deficiency) of revenues over (under) expenditures (11,948,688) (10,608,248) 1,029,777 11,638,025 OTHER FINANCING SOURCES (USES) Transfers from other funds 7,346,640 8,955,230 8,447,508 (507,722) Transfers to other funds (7,920,250) (9,479,810) (9,318,912) 160,898 Total other financing sources (uses) (573,610) (524,580) (871,404) (346,824) Net change in fund balances (12,522,298) (11,132,828) 158,373 11,291,201 Fund balance - beginning 21,999,672 22,867,515 22,867,515 - Fund balance - ending $ 9,477,374 $ 11,734,687 $ 23,025,888 $ 11,291,201 The accompanying notes to the financial statements are an integral part of this statement. B-23
CITY OF WICHITA, KANSAS BALANCE SHEET PROPRIETARY FUNDS December 31, 2006 Business-type Activities - Enterprise Funds Water Sewer Airport Utility Utility Authority ASSETS Current assets: Cash and temporary investments $ 4,688,125 $ 3,250,844 $ 13,570,527 Receivables, net 6,953,972 926,062 918,212 Due from other agencies - - - Inventories 976,223 165,767 - Prepaid items 1,054-27,101 Restricted assets: Cash and temporary investments 17,971,382 7,786,432 10,445,097 Receivables - - 359,381 Net investment in direct financing leases - - 1,359,317 Total current assets 30,590,756 12,129,105 26,679,635 Noncurrent assets: Restricted assets: Cash and temporary investments 27,735,718 20,890,625 - Net investment in direct financing leases - - 75,197,444 Capital assets: Land 8,743,026 3,542,450 16,228,947 Airfield - - 111,267,534 Buildings 62,604,898 85,384,560 40,530,501 Improvements other than buildings 353,066,069 261,139,320 35,141,227 Machinery, equipment and other assets 36,520,735 24,742,426 20,592,774 Construction in progress 92,657,620 57,360,169 43,346,604 Less accumulated depreciation (139,618,369) (82,858,257) (139,575,521) Total capital assets (net of accumulated depreciation) 413,973,979 349,310,668 127,532,066 Other assets 2,135,653 1,955,413 16,373 Total noncurrent assets 443,845,350 372,156,706 202,745,883 Total assets $ 474,436,106 $ 384,285,811 $ 229,425,518 The accompanying notes to the financial statements are an integral part of this statement. B - 24
Business-type Activities - Enterprise Funds Governmental Activities Other Enterprise Funds Totals Internal Service Funds $ 4,187,764 $ 25,697,260 $ 36,387,465 383,029 9,181,275 468,918 581,069 581,069-169,989 1,311,979 481,568-28,155 - - 36,202,911 - - 359,381 - - 1,359,317-5,321,851 74,721,347 37,337,951-48,626,343 - - 75,197,444-5,972,834 34,487,257 71,340-111,267,534-14,029,572 202,549,531 3,332,437 109,151,330 758,497,946-21,439,925 103,295,860 42,743,097 5,561,282 198,925,675 - (30,195,739) (392,247,886) (34,616,701) 125,959,204 1,016,775,917 11,530,173-4,107,439-125,959,204 1,144,707,143 11,530,173 $ 131,281,055 $ 1,219,428,490 $ 48,868,124 (Continued) B - 25
CITY OF WICHITA, KANSAS BALANCE SHEET (CONTINUED) PROPRIETARY FUNDS December 31, 2006 Business-type Activities - Enterprise Funds Water Sewer Airport Utility Utility Authority LIABILITIES Current liabilities: Accounts payable and accrued expenses $ 1,497,505 $ 919,196 $ 547,014 Accrued interest payable 334,550-46,258 Temporary notes payable - - - Deposits 2,452,677-14,211 Current portion of long-term obligations: General obligation bonds payable - - 605,000 Claims payable - - - Compensated absences 472,507 284,499 278,192 Current liabilities payable from restricted assets: Accounts payable and accrued expenses - - 68,285 Accrued interest payable 1,789,936 1,581,434 359,381 Revenue bonds payable 8,181,446 6,204,998 1,359,317 Total current liabilities 14,728,621 8,990,127 3,277,658 Noncurrent liabilities: Due to other funds - - - General obligation bonds payable - - 1,920,000 Revenue bonds 159,291,889 140,604,546 75,197,444 Unamortized deferred refunding (1,489,781) (920,836) - Unamortized revenue bond premium 6,616,043 5,909,169 - Claims payable - - - Compensated absences 66,747 40,189 37,889 Total noncurrent liabilities 164,484,898 145,633,068 77,155,333 Total liabilities 179,213,519 154,623,195 80,432,991 NET ASSETS Invested in capital assets - - - Invested in capital assets, net of related debt 247,785,727 202,405,987 124,960,808 Restricted for: Capital projects - - 10,445,097 Debt Service 1,912,551 1,747,530 - Revenue bond reserves 35,259,472 20,454,897 - Unrestricted - undesignated 10,264,837 5,054,202 13,586,622 Total net assets 295,222,587 229,662,616 148,992,527 Total liabilities and net assets $ 474,436,106 $ 384,285,811 $ 229,425,518 The accompanying notes to the financial statements are an integral part of this statement. B - 26
Business-type Activities - Enterprise Funds Governmental Activities Other Enterprise Funds Totals Internal Service Funds $ 526,509 $ 3,490,224 $ 627,162 61,038 441,846-1,052,000 1,052,000-1,534 2,468,422-1,311,402 1,916,402 - - - 4,172,143 348,487 1,383,685 295,386-68,285 - - 3,730,751 - - 15,745,761-3,300,970 30,297,376 5,094,691 2,131,978 2,131,978-12,564,160 14,484,160 - - 375,093,879 - - (2,410,617) - - 12,525,212 - - - 8,922,812 44,501 189,326 44,212 14,740,639 402,013,938 8,967,024 18,041,609 432,311,314 14,061,715 - - 11,530,173 108,797,423 683,949,945-10,829 10,455,926 - - 3,660,081 - - 55,714,369-4,431,194 33,336,855 23,276,236 113,239,446 787,117,176 34,806,409 $ 131,281,055 $ 1,219,428,490 $ 48,868,124 Total net assets $ 787,117,176 Some amounts reported for business-type activities in the statement of net assets are different because certain internal service fund assets and liabilities are included with business-type activities (234,312) Net assets of business-type activities $ 786,882,864 B - 27
CITY OF WICHITA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the year ended December 31, 2006 Business-type Activities - Enterprise Funds Water Sewer Airport Utility Utility Authority OPERATING REVENUES Charges for services and sales $ 40,646,567 $ 28,867,696 $ 3,508,996 Fees - - 3,041,503 Rentals 11,265-13,770,324 Employer contributions - - - Employee contributions - - - Other 180,418 3,138 66,210 Total operating revenues 40,838,250 28,870,834 20,387,033 OPERATING EXPENSES Personal services 8,318,212 9,258,622 6,200,576 Contractual services 7,352,595 4,964,095 3,155,987 Materials and supplies 3,448,326 2,675,652 3,953,256 Cost of materials used - - - Administrative charges 937,010 234,470 196,810 Franchise fees and payments in lieu of delinquent specials 2,132,460 1,718,550 - Depreciation 10,031,079 8,108,087 7,205,783 Employee benefits - - - Insurance claims - - - Total operating expenses 32,219,682 26,959,476 20,712,412 Operating income (loss) 8,618,568 1,911,358 (325,379) NONOPERATING REVENUES (EXPENSES) Operating grants - - - Interest on investments 1,281,474 519,808 5,277,624 Other revenues (expenses) (1,314) (15,124) (15,405) Interest expense (4,271,103) (4,066,631) (5,080,167) Gain (loss) from sale of assets 34,186 (117,341) 17,474 Bond premium (discount) amortization 287,259 235,172 (5,508) Total nonoperating revenues (expenses) (2,669,498) (3,444,116) 194,018 Income (loss) before contributions and transfers 5,949,070 (1,532,758) (131,361) Capital contributions and operating transfers: Capital contributions - cash 4,138,811 1,981,646 9,785,425 Capital contributions - non cash 3,254,867 5,541,655 187,755 Transfers from other funds - - - Transfers to other funds (2,016,763) (1,257,365) (740,920) Increase (decrease) in net assets 11,325,985 4,733,178 9,100,899 Net assets - as previously reported 283,896,602 224,929,438 139,891,628 Prior period adjustment - - - Net assets - beginning, as restated 283,896,602 224,929,438 139,891,628 Total net assets - ending $ 295,222,587 $ 229,662,616 $ 148,992,527 The accompanying notes to the financial statements are an integral part of this statement. B-28
Business-type Activities - Enterprise Funds Governmental Activities Other Enterprise Funds Totals Internal Service Funds $ 9,276,101 $ 82,299,360 $ 10,180,326 2,864,506 5,906,009-996,561 14,778,150 9,280,205 - - 23,877,887 - - 6,203,254 31,744 281,510 725,660 13,168,912 103,265,029 50,267,332 8,975,114 32,752,524 6,674,387 4,926,845 20,399,522 4,407,195 2,904,880 12,982,114 4,885,673 - - 2,240,591 535,520 1,903,810 669,100-3,851,010-4,409,387 29,754,336 3,871,404 - - 23,076,033 - - 1,418,458 21,751,746 101,643,316 47,242,841 (8,582,834) 1,621,713 3,024,491 4,848,349 4,848,349-198,122 7,277,028 932,036 (120,737) (152,580) - (620,831) (14,038,732) (2,691) (151,764) (217,445) (212,947) - 516,923-4,153,139 (1,766,457) 716,398 (4,429,695) (144,744) 3,740,889 503,272 16,409,154-6,185,964 15,170,241 1,224,599 3,475,080 3,475,080 566,710 (375,378) (4,390,426) (1,468,000) 5,359,243 30,519,305 4,064,198 108,262,663 756,980,331 30,742,211 (382,460) (382,460) - 107,880,203 756,597,871 30,742,211 $ 113,239,446 $ 787,117,176 $ 34,806,409 Increase in net assets per fund statements $ 30,519,305 Some amounts reported for business-type activities in the statement of activities are different because the net revenue (expense) of certain internal service funds is reported with business-type activities 784,071 Change in net assets of business-type activities $ 31,303,376 B-29
CITY OF WICHITA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the year ended December 31, 2006 Business-type Activities - Enterprise Funds Water Sewer Airport Utility Utility Authority CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 41,283,410 $ 29,118,098 $ 20,472,260 Cash payments to suppliers for goods and services (11,272,646) (7,575,630) (7,045,671) Cash payments to employees for services (8,286,938) (9,244,347) (6,184,377) Franchise fees and payments in lieu of delinquent specials (2,132,460) (1,718,550) - Other operating revenues 180,418 3,138 66,210 Net cash provided by (used in) operating activities 19,771,784 10,582,709 7,308,422 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Operating grant received - - - Transfers from other funds - - - Transfers to other funds (2,016,763) (1,257,365) (740,920) Net cash provided by (used in) noncapital financing activities (2,016,763) (1,257,365) (740,920) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Payment of temporary notes - - - Additions to property, plant and equipment (41,661,842) (12,486,531) (8,533,536) Issuance of bonds 28,860,000 22,280,000 - Premium on bonds sold 1,074,819 844,501 - Accrued interest on bonds sold 46,239 36,330 - Bond issuance costs paid (162,778) (127,897) - Debt service - principal (7,146,144) (5,357,549) (625,000) Debt service - interest (6,800,490) (6,163,699) (164,059) Proceeds from sale of assets 53,333 50,185 17,474 Capital contributions 4,138,811 1,981,646 9,770,020 Net cash provided by (used in) capital and related financing activities (21,598,052) 1,056,986 464,899 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale and maturity of investment securities - - - Interest on investments 1,281,474 519,808 350,100 Net cash provided by investing activities 1,281,474 519,808 350,100 Net increase (decrease) in cash and temporary investments (2,561,557) 10,902,138 7,382,501 Cash and temporary investments - January 1 52,956,782 21,025,763 16,633,123 Cash and temporary investments - December 31 $ 50,395,225 $ 31,927,901 $ 24,015,624 The accompanying notes to the financial statements are an integral part of this statement. B-30
Business-type Activities - Enterprise Funds Governmental Activities Other Enterprise Funds Totals Internal Service Funds $ 13,101,917 $ 103,975,685 $ 49,186,612 (8,217,278) (34,111,225) (46,521,754) (8,948,761) (32,664,423) (6,669,104) - (3,851,010) - 31,744 281,510 725,660 (4,032,378) 33,630,537 (3,278,586) 4,730,712 4,730,712-3,475,080 3,475,080 566,710 (375,378) (4,390,426) (1,468,000) 7,830,414 3,815,366 (901,290) (5,446,000) (5,446,000) - (3,407,206) (66,089,115) (3,015,427) 6,805,000 57,945,000 - - 1,919,320 - - 82,569 - - (290,675) - (1,926,416) (15,055,109) - (608,824) (13,737,072) - 63,337 184,329 180,170 485,926 16,376,403 - (4,034,183) (24,110,350) (2,835,257) - - 241,206 198,122 2,349,504 932,036 198,122 2,349,504 1,173,242 (38,025) 15,685,057 (5,841,891) 4,225,789 94,841,457 42,229,356 $ 4,187,764 $ 110,526,514 $ 36,387,465 (Continued) B-31
CITY OF WICHITA, KANSAS STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS Year ended December 31, 2006 Business-type Activities - Enterprise Funds Water Sewer Airport Utility Utility Authority RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss) $ 8,618,568 $ 1,911,358 $ (325,379) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 10,031,079 8,108,087 7,205,783 Changes in assets and liabilities: (Increase) decrease in accounts receivable 509,148 250,402 171,207 (Increase) decrease in inventory 27,280 (27,258) - (Increase) decrease in prepaid items - - 43,881 (Decrease) increase in accounts payable/accrued expenses 438,005 325,845 216,501 (Decrease) increase in deposits 116,430 - (19,770) Increase in claims payable - - - (Decrease) increase in compensated absences 31,274 14,275 16,199 Total adjustments 11,153,216 8,671,351 7,633,801 Net cash provided by (used in) operating activities $ 19,771,784 $ 10,582,709 $ 7,308,422 Supplemental Schedule of Non-Cash Investing and Financing Activities Assets contributed by benefit districts $ 2,649,607 $ 5,082,741 $ - Contribution of capital assets 75,000 8,978 187,755 Capital contributed for capital purposes 530,260 449,936 - (Increase) decrease in net investment in direct financing leases - - 1,268,219 Increase (decrease) in revenue bonds payable - - (1,268,219) (Increase) decrease in interest receivable on direct financing leases - - 10,044 Increase (decrease) in accrued interest payable on revenue bonds - - (10,044) Interest income on investment in direct financing leases - - 4,927,524 Interest expense on revenue bonds payable - - 4,927,524 The accompanying notes to the financial statements are an integral part of this statement. B-32
Business-type Activities - Enterprise Funds Governmental Activities Other Enterprise Funds Totals Internal Service Funds $ (8,582,834) $ 1,621,713 $ 3,024,491 4,409,387 29,754,336 3,871,404 (36,286) 894,471 (355,060) 111,977 111,999 153,881-43,881 32,925 37,990 1,018,341 (2,394,816) 1,035 97,695-26,353 26,353 (7,616,694) - 61,748 5,283 4,550,456 32,008,824 (6,303,077) $ (4,032,378) $ 33,630,537 $ (3,278,586) $ - $ 7,732,348 $ - 201,100 472,833 1,224,599-980,196 - - 1,268,219 - - (1,268,219) - - 10,044 - - (10,044) - - 4,927,524 - - 4,927,524 - B-33
CITY OF WICHITA, KANSAS STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS December 31, 2006 Pension Agency Trust Funds Funds ASSETS Cash and temporary investments $ 863,080 $ 8,450,340 Receivables: Investment sales pending 9,722,748 - Interest and dividends 1,952,025 - Accounts 21,794 158,905 Total receivables 11,696,567 158,905 Investments, at fair value: Government short-term investment fund 11,975,477 - Government securities: long term 15,347,590 353,417 Corporate debt instruments: long term 62,364,512 - Corporate stocks 576,140,760 - Real estate 51,760,689 - Mortgage-backed securities 55,638,349 - Value of interest in pooled funds 211,646,199 - Securities lending short-term collateral investment pool 101,955,339 - Total investments 1,086,828,915 353,417 Capital assets: Work in progress 955,282 - Total capital assets 955,282 - Total assets 1,100,343,844 8,962,662 LIABILITIES Accounts payable and accrued expenses 1,623,823 2,691,779 Compensated absences 33,939 - Investment purchases pending 10,811,742 - Security lending obligations 101,955,339 - Deposits - 6,270,883 Total liabilities 114,424,843 8,962,662 NET ASSETS Held in trust for: Employees' pension benefits 985,919,001 - Total net assets $ 985,919,001 $ - The accompanying notes to the financial statements are an integral part of this statement. B-34
CITY OF WICHITA, KANSAS STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS For the year ended December 31, 2006 2006 Pension Trust Funds ADDITIONS Contributions: Employer $ 13,482,884 Employee 7,603,855 Total contributions 21,086,739 Investment income: From investment activities Net appreciation (depreciation) in fair value of investments 106,691,297 Interest and dividends 25,985,366 Commission recapture 59,140 Total investment earnings 132,735,803 Less investment expense 4,223,988 Net income (loss) from investing activities 128,511,815 From securities lending activities Securities lending income 4,252,157 Securities lending activities expenses: Borrower rebates 3,869,651 Management fees 91,876 Total securities lending activities expenses 3,961,527 Net income from securities lending activities 290,630 Total net investment income (loss) 128,802,445 Transfers from other funds 1,983,067 Total additions 151,872,251 DEDUCTIONS Pension benefits 39,395,916 DROP and Back DROP payments 1,589,360 Pension administration 742,232 Employee contributions refunded 1,458,191 Transfers to other funds 1,983,067 Total deductions 45,168,766 Change in net assets 106,703,485 Net assets - beginning 879,215,516 Net assets - ending $ 985,919,001 The accompanying notes to the financial statements are an integral part of this statement. B-35
CITY OF WICHITA, KANSAS NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTES PAGE 1. Summary of Significant Accounting Policies... B-37 2. Budgetary Control... B-42 3. Budgetary Basis of Accounting... B-43 4. Fund Balance Deficits... B-44 5. Cash, Investments and Securities Lending... B-44 6. Capital Assets... B-51 7. Retirement Funds... B-52 8. Self - Insurance Fund... B-55 9. Long - Term Debt... B-57 10. Prior - Year Defeasance of Debt... B-62 11. Temporary Notes Payable... B-62 12. Leases... B-63 13. Conduit Debt Obligations... B-64 14. Interfund Transfers... B-65 15. Interfund Receivables/Payables... B-66 16. Reserves and Designations of Fund Balances... B-66 17. Passenger Facility Charges... B-67 18. Landfill Closure and Postclosure Care... B-67 19. Prior Period Adjustments... B-68 20. Contingencies and Commitments... B-68 21. Subsequent Events... B-72 B - 36
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 1. Summary of Significant Accounting Policies A. Reporting Entity The City of Wichita is a municipal corporation governed by an elected mayor and six-member council. The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. A blended component unit, although a legally separate entity, is, in substance, part of the government s operations and so data from the blended component unit is combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in the combined financial statements to emphasize that it is legally separate from the government. Blended Component Unit - The Wichita Airport Authority (WAA) serves all citizens of the government and is governed by a board comprised of the government s elected council. Bond issuance authorizations are approved by the governing body of the primary government and the legal liability for the general obligation portion of the Authority s debt remains with the government. The Wichita Airport Authority is reported as an enterprise fund. Discretely Presented Component Unit - The Wichita Public Building Commission (WPBC) acquires and finances buildings or facilities for the City of Wichita or other local, state and federal agencies, school districts, and the Wichita State University Board of Trustees. The nine-member board is appointed by the Mayor and City Council. Of the nine members, one member is recommended for appointment by the County Commissioners of Sedgwick County, Kansas, and one by the President of Wichita State University. The Kansas Secretary of Administration and the Superintendent of Unified School District Number 259 serve as provisional members of the board of the WPBC. Members of the WPBC Board may only be removed for just cause. The City of Wichita provides staff support and legal representation by the Department of Law. Additionally, the City of Wichita is liable on a contingent basis and will make rental payments, if necessary, to supplement rental payments in connection with the City/County wrap-around obligation for the State Office Building. (Refer to Note 20.E. - Public Building Commission Lease, for further disclosure.) The WPBC is presented as a proprietary fund type. Separate audited financial statements are not prepared by the Wichita Airport Authority or the Wichita Public Building Commission. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets on page A-13 and the statement of changes in net assets on page A-14) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported discretely from the legally separate component unit for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that 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 items not properly included among program revenues are reported instead as general revenues. B - 37
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 1. Summary of Significant Accounting Policies (continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary and fiduciary fund financial statements. 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 they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if collectible within 60 days of the end of the current fiscal period. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when the payment is due. Property taxes, franchise fees, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. Special assessments receivable that are not due within the current fiscal period and not susceptible to accrual are recorded as deferred revenue. All other revenue items are considered to be measurable and available only when cash is received. The following major governmental funds are reported: The General Fund is the principal fund of the City that accounts for all financial transactions not accounted for in other funds. The majority of current operating expenditures of the City, other than proprietary fund activities, are financed through revenues received by the General Fund. The Federal/State Assistance Fund accounts for assistance received from Federal and State grant sources providing benefits to the community. The City maintains a separate fund for each Federal or State grant program. Because of the large number of such funds, the funds that are similar in nature or are funded by the same grantor agency have been consolidated. The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds. The Street Improvement Fund accounts for capital improvements related to streets, arterials and freeway projects that are financed through the issuance of general obligation bonds, special assessments, local sales tax, Federal grants and other City funds. The government reports the following major proprietary funds: The Water Utility Fund accounts for the operation and maintenance of the water component of the combined utility, providing an adequate, quality supply of water and means of wastewater disposal. The Sewer Utility Fund accounts for the operation and maintenance of the sewer component of the combined utility, including wastewater treatment plants and more than 2,000 miles of sewer laterals and mains. The Wichita Airport Authority Fund accounts for the provision of air transportation services for the public, business and industry, while maintaining the safe operation of assets. B - 38
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 1. Summary of Significant Accounting Policies (continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) The government also reports the following fund types: A permanent fund is used to report resources that are restricted for the maintenance and perpetual care of municipal cemeteries. Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City on a cost reimbursement basis and to account for the City's self-insurance activities. Pension trust funds account for the activities of the Wichita Employees Retirement System, Wichita Police and Fire Retirement System and the Wichita Employees Retirement System Plan 3, all of which accumulate resources for pension benefits for qualified employees. Agency funds are used to report resources held by the City in a custodial capacity for remittance of fiduciary resources to individuals, private organizations or other governments. Agency funds account for payroll liabilities, prepayments of special assessments, special neighborhood revitalization funds, and payments in lieu of taxes related to industrial revenue bonds. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financials statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private- sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private-sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes and other charges between the government s Enterprise funds and various other functions of the government. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include [1] charges to customers or applicants for goods, services, or privileges provided, [2] operating grants and contributions, and [3] capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary funds principal ongoing operations. Principal operating revenues of the proprietary funds are charges to customers for sales and services. Operating expenses for Enterprise and Internal Service Funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting these criteria are reported as nonoperating revenues and expenses. D. Pooled Cash and Temporary Investments Cash resources of the individual funds are combined to form a pool of cash and temporary investments, which is managed by the Director of Finance (except for investments of the pension trust funds and those of the Wichita Public Building Commission). The pool has the general characteristics of demand deposit accounts, in that each fund may deposit additional cash at any time and also, effectively, may withdraw cash at any time without prior notice or penalty. Investments of the pooled accounts consist primarily of certificates of deposits, and U.S. government agency securities, carried at amortized cost, which approximates fair value. Interest income earned B - 39
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 1. Summary of Significant Accounting Policies (continued) E. Investments is allocated to contributing funds based on average daily cash balances and in accordance with the adopted budget. Investments of all funds (except the pension trust funds) and the component unit are recorded at amortized cost, which approximates fair value. For the pension trust funds, investments are reported at fair value. Investments traded on national or international exchanges are valued at the last trade price of the day. Mortgages are valued on the basis of future principal and interest payments, and are discounted at prevailing interest rates for similar investments. Investments that do not have an established market are reported at their estimated fair value. The pension trust funds invest in Treasury strips and various asset backed securities, such as collateralized mortgage obligations and credit card trusts. F. Property Taxes and Other Receivables In accordance with governing State statutes, property taxes levied during the current year are a revenue source to be used to finance the budget of the ensuing year. Taxes are assessed as of January 1 and become a lien on the property on November 1 of each year. The County Treasurer is the tax collection agent for all taxing entities within the County. Property owners have the option of paying one-half or the full amount of the taxes levied on or before December 20 during the year levied, with the balance to be paid on or before June 20 of the ensuing year (May 10 for 2004 through 2008). State statutes prohibit the County Treasurer from distributing taxes collected in the year levied prior to January 1 of the ensuing year. Consequently, for revenue recognition purposes, the taxes levied during the current year are not due and receivable until the ensuing year. At December 31, such taxes are a lien on the property and are recorded as taxes receivable, net of anticipated delinquencies, with a corresponding amount recorded as deferred revenue on the balance sheet of the appropriate funds. It is not practicable to apportion delinquent taxes held by the County Treasurer at the end of the year and, further, the amounts thereof are not material in relationship to the financial statements taken as a whole. Recognized State-shared taxes represent payments received during the current fiscal period. State statutes specify distribution dates for such shared taxes. For revenue recognition purposes, amounts collected and held by the State on behalf of the City at year-end are not due and receivable until the ensuing year. Federal and State grant aid is reported as revenue when the related reimbursable expenditures are incurred. Unrestricted aid is reported as revenue in the fiscal year the entitlement is received. G. Revenue Recognition for Proprietary Funds The proprietary funds recognize revenue on sales when services are rendered. The Water, Sewer, and Storm Water Utilities recognize revenues for unbilled services. All users, including other City departments are charged for services provided by the respective proprietary fund. Accounts receivable represent uncollected charges (both billed and unbilled) at December 31, net of amounts estimated to be uncollectible. H. Special Assessments Kansas statutes require projects financed in part by special assessments to be financed through the issuance of general obligation bonds, which are secured by the full faith and credit of the City. Special assessments paid prior to the issuance of general obligation bonds are recorded as revenue in the appropriate project. Special assessments received after the issuance of general obligation bonds are recorded as revenue in the Debt Service B - 40
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 1. Summary of Significant Accounting Policies (continued) H. Special Assessments (continued) Fund or a liability in a City of Wichita revocable escrow account for prepaid special assessments. The escrow is revocable and, therefore, not technically public funds. The prepayment amount is discounted for the estimated interest earnings realized from investing the prepayment amount. The amount of interest plus prepayment equals the amount of debt service paid on outstanding bonds. State statutes allow levying additional ad valorem property taxes in the City's debt service fund to finance delinquent special assessments receivable, if necessary. Special assessments receivable are accounted for within the debt service fund. Special assessments are levied over a ten to twenty year period and the annual installments are due and payable with annual ad valorem property taxes. Delinquent assessments against property benefited by special assessments constitute a lien against such property. When assessments are two years in arrears, they may be collected by foreclosure. At December 31, the special assessment taxes levied are a lien on the property and are recorded as special assessments receivable in the debt service fund with a corresponding amount recorded as deferred revenue. I. Inventories and Prepaid Expenses Inventories and prepaid expenses that benefit future periods, other than those recorded in the proprietary fund are recorded as expenditures during the year of purchase. Inventories are stated at the lower of cost or market, cost being determined by the first-in, first-out method except for Transit and the Water Utility and Sewer Utilities, which utilize an average unit cost method. J. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined as assets with an initial individual minimum cost ranging from $5,000 to $250,000, depending on the type of asset. Capital assets are valued at historical cost, or estimated historical cost (if actual historical cost is not available). Donated capital assets are valued at their estimated fair market value on the date donated. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of an asset are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. For proprietary funds, interest costs incurred to bring certain assets to the condition and location necessary for their intended use are capitalized as part of the historical cost of acquiring the assets. Additionally, in situations involving the acquisition of certain assets financed with the proceeds of tax-exempt borrowing, any interest earned on related interest-bearing investments from such proceeds are offset against the related interest costs in determining either capitalization rates or limitations on the amount of interest costs to be capitalized. Capital assets of the primary government and its component unit are depreciated using the straight-line method over the following estimated useful lives: Assets Classification Year Buildings and improvements 1-42 Improvements other than buildings 1-50 Equipment 1-33 Vehicles 1-20 Public domain infrastructure 15-60 Water/Sewer mains and drainage 75-85 B - 41
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS Airfields 5-40 1. Summary of Significant Accounting Policies (continued) K. Payment of Franchise Fees Annually, the Water Utility and Sewer Utility pay to the General Fund of the City franchise fees in an amount not to exceed five percent of gross revenues for the preceding year, which is appropriated by the City and included in the annual budget. L. Compensated Absences The City s policy permits employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for unpaid accumulated sick leave since the City does not have a policy to pay any amounts to employees who separate from service with the government. All vacation pay is accrued when incurred in the government-wide, proprietary, and fiduciary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee terminations and retirements. M. Statement of Cash Flows The reporting entity defines cash and cash equivalents used in the statement of cash flows as all cash and temporary investments (both restricted and unrestricted). N. Estimates Preparation of financial statements in conformity with GAAP requires making estimates and assumptions that affect: [1] the reported amounts of assets and liabilities, [2] disclosures such as contingencies, and [3] the reported amounts of revenues and expenditures or expenses included in the financial statements. Actual results could differ from those estimates. O. Pending Governmental Accounting Standards Board Statements GASB Statement No. 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, was issued June 2004 and establishes guidance for accounting and reporting of postemployment benefits other than pension if provided separately from a pension plan. Statement No. 45 will apply to the financial statements of the City beginning with fiscal year 2007. GASB Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues, was issued in September 2006 and establishes guidance for accounting and reporting of transactions in which a government receives or is entitled to receive resources in exchange for future cash flows. The requirements of this statement will apply to the financial statement of the City beginning with the fiscal year 2007. GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, was issued in November 2006. This statement establishes accounting and reporting requirements for pollution remediation obligations, which are obligations that address the current or potential detrimental effects of existing pollution by participating in pollution remediation activities. The requirements of this statement will apply to the financial statements of the City beginning with fiscal year 2008. 2. Budgetary Control Applicable Kansas statutes require that annual budgets be legally adopted for all funds (including proprietary funds) unless exempted by a specific statute. Specific funds exempted from legally adopted budgets are all Federal and B - 42
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS State assistance funds, all capital projects funds (including capital projects of proprietary funds), the Wichita Airport 2. Budgetary Control (continued) Authority, Golf Course System, Transit, Self-Insurance, and all trust and agency funds. The component unit (Wichita Public Building Commission) is also exempt from legally adopted budgets. Controls over spending in funds and the component unit that are not subject to legal budgets are maintained by the use of internal spending limits established by management. K.S.A. 79-2926 et seq provides the following sequence and timetable for adoption of budgets: [1] Preparation of budget for the succeeding calendar year on or before August 1 of each year. [2] Publication of proposed budget on or before August 5 of each year. A minimum of ten days notice of public hearing, published in local newspaper, on or before August 15 of each year. [3] Adoption of final budget on or before August 25 of each year. K.S.A. 79-2927 requires that all money to be raised by taxation and from all other sources for the ensuing budget year must be appropriated. The law does not permit an appropriation for sundry or miscellaneous purposes in excess of ten percent of the total. The budget for each fund may include a non-appropriated balance not to exceed five percent of the total of each fund. The City of Wichita appropriates amounts for fund balance reserves in the various governmental funds on a budgetary basis; appropriated fund balance reserves are not intended to finance routine expenditures. Kansas statutes prohibit creating expenditures in excess of the total amount of the adopted budget of expenditures of individual funds. In accordance with Kansas statutes, the legal level of control for the City is established at the individual fund level, also permitting the transfer of budgeted amounts from one object or purpose to another with the same fund. All annual appropriations lapse at the end of the year, except for outstanding encumbrances, which are reappropriated in the following fiscal year. Kansas statutes permit original budgets to be increased for previously unbudgeted increases in revenue other than ad valorem property taxes. The City must first publish a notice of hearing to amend the budget. Ten days after publication, a public hearing is held at which time the governing body may amend the budget. 3. Budgetary Basis of Accounting Budgets are prepared on a basis (budgetary basis) different from generally accepted accounting principles (GAAP basis). For budgeting, revenues are recognized when they become both measurable and available to finance expenditures of the current period, except for special assessments of the debt service fund that are recognized on the cash basis. The major difference between GAAP and budgetary basis is the reporting of encumbrances (purchase orders, contracts, and other commitments) as a reservation of fund balance (GAAP) as opposed to the equivalent of expenditures (budgetary). Adjustments necessary to convert the net change in fund balances and the ending fund balances from GAAP basis to budgetary basis for the general fund are provided as follows: Net Change in Fund Balance from Prior Year Fund Balances at End of Year General Fund - GAAP Basis $ (961,247) $ 25,793,097 Increase (decrease) affecting basis: Expenditures due to prior year encumbrances 2,897,816 - Cancellation of prior year encumbrances 415,226 - Expenditures due to current year encumbrances (2,193,422) (2,767,209) Budgetary Basis $ 158,373 $ 23,025,888 B - 43
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 4. Fund Balance Deficits At December 31, 2006, fund balance deficits were as follows: Fund Balance Primary Government Deficits Street Improvement fund $ 40,163,341 Nonmajor governmental funds: Water Main Extension 5,678,213 Park Bond Construction 3,096,343 Public Improvement Construction 21,215,743 Sewer Construction 23,944,643 Total Reporting Entity $ 94,098,283 The Street Improvement and nonmajor governmental fund balance deficits will be financed through the sale of bonds authorized by the City Council but not yet sold at December 31, 2006. 5. Cash, Investments and Securities Lending The City of Wichita has adopted a formal investment policy. The primary objectives of the investment activities are, in priority order, safety, liquidity and yield. The standard of care to be used by investment officials shall be the prudent person standard as contemplated by K.S. A. 17-5004(1), and shall be applied in the context of managing an overall portfolio. Custodial Credit Risk: Custodial credit risk is the risk that in the event of a bank failure or failure of the investment counterparty, the City s deposits may not be returned to the City, or the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. To address custodial credit risk, the City requires compliance with the provisions of the state law and the more restrictive provisions of the City s investment policy. The City requires that all investment transactions be settled delivery versus payment with an independent third party safekeeping agent under contract with the City. State law requires collateralization of all deposits with instruments from the following categories: 1. Federal depository insurance 2. Bonds or obligations of the U.S. Treasury, U.S. agencies or instrumentalities 3. Advance refunded bonds of any State of Kansas municipality 4. State of Kansas bonds, general obligation bonds or notes of any municipality within the State of Kansas 5. Approved Kansas municipality revenue bonds 6. Warrants of any Kansas municipality payable from a mandatory tax levy 7. Bonds of a Kansas not-for-profit corporation rated at least Aa by Moody s Investors Service or AA by Standard & Poor s Corp. 8. Commercial paper that does not exceed 270 days to maturity and which has received one of the two highest ratings 9. Negotiable promissory notes from first lien mortgages on one to four family residential real estate located in Kansas 10. Surety bond having an aggregate value at least equal to the amount of deposits. The City does not accept Government National Mortgage Pools as collateral and requires surety bonds and letters of credit to have an aggregate value of at least 105 percent. As of December 31, 2006, the City had deposits in nine banks totaling $20,242,242 with assets pledged by the banks as collateral with a fair value of $37,183,322. 5. Cash, Investments and Securities Lending (continued) B - 44
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS A. Pooled Investments of the Primary Government State law (K.S.A. 12-1675-12-1677) allows monies, not otherwise regulated by statute, to be invested in the following instruments: 1. Temporary notes of the City of Wichita 2. Time deposits, open accounts or certificates of deposits with maturities of not more than four years 3. Repurchase agreements with commercial banks, state or federally chartered savings and loan associations, which have offices located in Wichita 4. United States treasury bills or notes with maturities not exceeding four years 5. U.S. Government agency securities with a maturity of not more than four years that do not have any more interest rate risk than U.S. Government obligations or similar maturities 6. The municipal investment pool fund operated by the Kansas State Treasurer 7. A municipal investment pool established through the trust department of commercial banks, which have offices located in Wichita. On December 31, 2006, the City had the following investments in pooled funds. Percent of Investment type Book Value Modified Duration (yrs) Total Pooled Funds U.S. agency coupon securities $ 68,656,940 0.594 29.0% U.S. agency callable securities 43,515,997 0.930 18.4% U.S. agency discount securities 90,848,996 0.443 38.4% Municipal Investment Pool 16,324,547-6.9% Collateralized Deposits 17,277,428-7.3% Total Value $ 236,623,908 100.0% Portfolio Modified Duration 0.592 Interest Rate Risk: The City of Wichita uses the methodology of modified duration to construct a portfolio of bonds to fund its future cash needs and to disclose the portfolio s exposure to changes in interest rates. The investment policy of the City of Wichita seeks to limit the modified duration of the portfolio to 1.4 years. The investment policy also requires that portfolio maturities be staggered in a way that avoids undue concentration of assets in a specific maturity sector, and that the investment portfolio remain sufficiently liquid to enable the City to meet all operating requirements which might reasonably be anticipated. Additionally, the investment policy limits investments to a maximum stated maturity of four years. Credit Risk: As described earlier in this section, Kansas law limits the types of investments that can be made by the City of Wichita. The City s investment policy does not impose limitations beyond those of the State of Kansas. On December 31, 2006, the City s investments in U.S. agency obligations not directly guaranteed by the U.S. Government included only instruments rated Aaa by Moody s. The City also held investments in the Kansas Municipal Investment Pool, which is rated AAAf/S1+. Concentration of Credit Risk: The City s investment policy limits the amount of investments that can be placed with a single U.S. agency to 35 percent of the total portfolio. The following maximum limits, by instrument, are also established for the City s investments of pooled funds. B - 45
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 5. Cash, Investments and Securities Lending (continued) A. Pooled Investments of the Primary Government (continued) Instrument Maximum Demand deposit/repurchase agreement 5% Municipal Investment Pool 10% Certificates of deposit 10% Temporary notes 10% U.S. Treasury notes and bills 100% U.S. agency obligations 95% Bullet/Discount 95% Agency callable 30% Agency floater 10% To allow efficient and effective placement of bond proceeds and County tax distributions, the limit of repurchase agreements and deposits with the Municipal Investment Pool may be exceeded up to 50 percent for a maximum of ten days following receipt of proceeds during adverse market conditions. Additionally, to allow for investment maturity timing prior to bond payment dates, the limit on repurchase agreements and Municipal Investment Pool deposits may be exceeded up to the amount of the bond payment for a maximum of five days prior to a bond payment date. At December 31, 2006, the City s investments in pooled funds by issuer were as follows: Investment Type Book Value Percent of Total Pooled Funds Federal Farm Credit Bank $ 5,906,400 2.5% Federal Home Loan Bank 64,726,664 27.3% Federal Home Loan Mortgage Corp. 76,114,754 32.2% Federal National Mortgage Assoc. 56,274,115 23.8% Municipal Investment Pool 16,324,547 6.9% Collateralized deposits 17,277,428 7.3% Total value $ 236,623,908 100.0% B. Investments of the Primary Government Not Pooled In addition to the following, State law (K.S.A. 10-131) allows investment of the proceeds of bonds and temporary notes: 1. U.S. Government and agency obligations 2. Time deposits with banks and trust companies in Sedgwick County 3. FNMA, FHLB and FHLMC obligations 4. Collateralized repurchase agreements 5. Investment agreements with financial institutions including broker/dealers whose obligations are rated in one of the three highest rating categories by either Moody's or Standard & Poor s 6. Mutual funds with portfolios consisting entirely of obligations of the U.S. Government, U.S. Government agencies, FNMA, FHLB and FHLMC 7. Certain Kansas municipal bonds. On December 31, 2006, all bond and temporary note proceeds were invested in the more restrictive City pooled investment portfolio. City Ordinance (34-671; section 2.52.100) authorizes the Group Life Insurance Fund to hold investments in the following categories: B - 46
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 5. Cash, Investments and Securities Lending (continued) B. Investments of the Primary Government Not Pooled 1. U.S. Government securities 2. Corporate bonds of A quality or better, as listed in Moody's or Standard & Poor s 3. Not more than 50 percent may be invested in equity mutual funds On December 31, 2006 no investments were held directly by the Group Life Insurance Fund and all cash was invested in the City s pooled investment portfolio. The City does not maintain a formal investment policy pertaining to investments held in the Special Assessment Advance Payments Fund, the Cemetery Fund, the Federal and State Assistance Fund for the Wichita Housing Authority or the Housing and Urban Development Section 108 Loan Program. Funds for which a formal investment policy is not maintained are authorized to be prudently invested at the discretion of the City s Director of Finance. On December 31, 2006, these Funds held investments in U.S. Treasury instruments, stocks and money markets instruments. Interest Rate Risk: The City of Wichita uses a duration methodology to construct a portfolio of bonds to fund its future cash needs and utilizes a modified duration to disclose the portfolio s exposure to changes in interest rates. The City seeks to limit the modified duration of the Group Life Insurance portfolio to five years. Credit Risk: City ordinance limits the types of investments of the Group Life Insurance Fund to U.S. Government securities, corporate bonds of A quality or better and mutual funds. C. Investments of the Wichita Public Building Commission Deposits and investments of $1,728,408 for the Wichita Public Building Commission are invested by trustees and are held under trust indentures. A formal investment policy is not maintained. On December 31, 2006, $1,685,146 was invested in taxable Treasury money market funds. D. Investments of the Pension Trust Funds All of the deposits and investments of the Wichita Employees and Police and Fire Retirement Systems are held in a joint investment fund that is invested by outside money managers and are held under a custodial agreement. City Ordinance (44-812; section 2.28.090) authorizes the Wichita Employees' Retirement System and City ordinance (Charter Ordinance 176) authorizes the Police and Fire Retirement System to invest in the following financial instruments: 1. Common stock (not more than 70 percent) 2. Direct or indirect obligations of the U.S. Government 3. Corporate bonds rated A or better 4. Commercial paper of high quality 5. Foreign securities (not more than 25 percent) 6. Real estate (pooled) (not more than 10 percent). The pension funds follow an overall strategic allocation policy that includes investments in four asset types: domestic equities, international equities, domestic fixed income, and international fixed income. Additionally, the pension funds invest in various asset-backed securities such as collateralized mortgage obligations (CMO's) and credit card trusts to maximize yields and reduce the impact of interest rate changes. These securities are based on cash flows from principal and interest payments on the underlying assets. For example, CMO's break up the cash flows from mortgages into categories with defined risk and return characteristics called tranches. The tranches are differentiated by when the principal payments are received from the mortgage pool. Changes in interest and mortgage prepayment rates may affect the amount and timing of cash flows, which would also affect the reported estimated fair values. The pension funds utilize a combination of asset-backed securities, which vary B - 47
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 5. Cash, Investments and Securities Lending (continued) D. Investments of the Pension Trust Funds (continued) in their degree of volatility. Although considerable variability is inherent in such estimates, management believes the estimated fair values are reasonable estimates. The investments of the Wichita Retirement System on December 31, 2006 are listed as follows. Type of Investment Fair Value Government short-term investment fund $ 11,975,477 Government securities, long-term 15,347,590 Corporate debt instruments, long-term 62,364,512 Mortgage-backed securities 55,638,349 Corporate stocks, common domestic 351,761,433 Corporate stocks, common international 209,737,171 Real estate 51,760,689 Value of interest in pooled funds, domestic fixed income 101,445,634 Value of interest in pooled funds, domestic equities 110,124,939 Value of interest in pooled funds, international equities 14,717,782 Securities lending short-term collateral investment pool 101,955,339 Total investments $ 1,086,828,915 Custodial Credit Risk: The custodial credit risk for deposits is the risk that in the event of a bank failure, the Wichita Retirement Systems (WRS) deposits may not be recovered. On December 31, 2006, the WRS s cash deposits in the amount of $863,080 were included in the City s pooled cash and temporary investments. The WRS debt securities investments were registered in the name of WRS and were held in the possession of the WRS custodial bank, State Street. Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The interest rate risk is managed using the modified duration methodology. Duration is a measure of a fixed income s cash flow using present values, weighted for cash flows as a percentage of the investment s full price. Modified duration estimates the sensitivity of a bond s price to interest rate changes. The Wichita Retirement Systems manage their exposure to fair value loss arising from increasing interest rates by complying with the following policy: 1. Fixed income managers have full discretion over the issues selected and may hold any mix of fixed income securities and cash equivalents. 2. Portfolio duration must not be less than 80 percent nor more than 120 percent of the duration of the Lehman Brothers Aggregate Bond Index, unless the Joint Investment Committee prospectively grants a written exception. The minimum and maximum of the index range on December 31, 2006 was 3.57 and 5.35, respectively. The modified duration of investments on December 31, 2006 are as follows: Investment Type Fair Value Modified Duration (yrs) Government securities, long-term $ 15,347,590 5.65 Corporate debt 62,364,512 4.88 Mortgage-backed securities 55,638,349 3.92 Actively managed investment totals 133,350,451 4.51 Government short-term investment fund 11,975,477 - Passive Bond Index Market Fund 101,445,634 4.42 Total investment in debt securities $ 246,771,562 B - 48
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 5. Cash, Investments and Securities Lending (continued) D. Investments of the Pension Trust Funds (continued) Credit Risk of Debt Securities: Credit risk is the risk that an issuer of an investment will not fulfill its obligations. The Wichita Retirement System manages exposure to investment credit risk by adhering to the following policy: At the time of purchase, bonds and preferred stocks must be rated at least A by either Moody s or Standard and Poor s. On December 31, 2006, no individual debt security in the investment manager s portfolio was outside of the policy guidelines. On December 31, 2006, debt investments held by the Wichita Retirement System as rated by Standard and Poor s or an equivalent nationally recognized statistical rating organization are as follows. Total Domestic Quality Rating Debt Securities AAA $ 73,495,914 AA+ 470,262 AA 3,583,328 AA- 9,404,764 A+ 17,999,138 A 23,343,631 A- 5,053,414 Total debt securities subject to credit risk 133,350,451 Government Short-term Investment Fund * 11,975,477 Passive Bond Index Market Fund ** 101,445,634 Total investment in debt securities $ 246,771,562 * The average quality of the holdings of the Government Short Term Investment Fund on December 31, 2006 was A1+. ** The average quality of the holdings of the Passive Bond Market Fund on December 31, 2006 was AA2. Concentration Credit Risk: Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government s investment with a single issuer. The Wichita Retirement Systems investment in debt securities had no single issuer of investments that represented five percent or more of the plan assets, with exception of investments issued or implicity guaranteed by the U.S. government and investments in mutual funds. Foreign Currency Risk: Currency risk arises due to foreign exchange rate fluctuations. The Wichita Retirement System manages the exposure to foreign currency risk by allowing the international securities investment managers to enter into forward exchange or future contracts on foreign currency provided such contracts have a maturity of less than one year. Currency contracts are only to be utilized for the settlement of securities transactions and defensive hedging of currency positions. All forward foreign currency contracts are carried at fair value by the Retirement Systems. As of December 31, 2006, the Systems had sold forward currency contracts with a fair value of $6,844,623. Sales of forward currency contracts are receivables and are reported as investment sales pending in the financial statements. The Wichita Retirement Systems exposure to foreign currency risk on December 31, 2006 is presented in the following table: B - 49
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 5. Cash, Investments and Securities Lending (continued) D. Investments of the Pension Trust Funds (continued) Equity at Fair Value Currency (U.S. Dollars) International equities: Australian dollar $ 19,499,839 Euro 86,288,283 Hong Kong dollar 5,100,992 Japanese yen 36,807,023 New Zealand dollar 1,506,624 Norwegian krone 1,382,406 Pound sterling 46,092,700 Singapore dollar 3,150,788 Swedish krona 2,826,811 Swiss franc 7,081,705 International equity mutual fund (various currencies) 14,717,782 Total securities subject to foreign currency risk $ 224,454,953 Securities Lending Transactions: Policies of the Board of Trustees for the Wichita Employees Retirement and Police and Fire Retirement Systems permit the lending of securities to broker-dealers and other entities (borrowers) with a simultaneous agreement to return the collateral for the same securities in the future. The custodian of the City s pension plans is an agent in lending the plans domestic securities for collateral of 102 percent and international securities for collateral of 105 percent. Collateral may consist of cash, securities issued or guaranteed by the U.S. Government or its agencies, or irrevocable letters of credit issued by a bank (including an affiliate of the agent), other than the securities borrower or affiliate, which is either insured by the Federal Deposit Insurance Corporation or a foreign bank that has complied with applicable requirements of the Federal Reserve Board. The collateral securities cannot be pledged or sold by the City unless the borrower defaults. The agent shall require additional collateral from the borrower whenever the value of loaned securities exceeds the value of the collateral in the agent s possession, so that collateral always equals or exceeds the required value of the loaned securities. Contracts with the lending agent require them to indemnify the Systems, if the borrowers fail to return the securities (and if the collateral is inadequate to replace the securities lent) or fail to pay the Systems for income distributions by the securities issuers while the securities are on loan. At year-end, the Systems had nocredit risk exposure to borrowers becasue the amounts the Systems owe the borrowers exceed the amounts the borrowers owe the Systems. Securities loaned can be terminated on demand by the Systems or the borrower. At year-end, all loans were secured with cash collateral, involving both domestic and international equities and fixed income securities. For all loans, the term to maturity of the securities loaned is matched with the term to maturity of the investment of the cash collateral. Such matching existed at year-end. However in lending securities, a portion of the cash collateral is invested in the lending agent s short-term investment pool, which at year-end had a weighted average maturity of 59 days. The relationship between the maturities of the investment pool and the Systems loans is affected by the maturities of the securities loans made by other entities that use the agent s pool, which the Systems cannot determine. Custodial Credit Risk Related to Securities Lending: Custodial credit risk for lent securities is the risk that, in the event of the failure of the counterparty, the Systems will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. Consistent with the System s securities lending policy, $101,955,339 was held by the counterparty acting as the Systems agent in securities lending transactions on December 31, 2006. B - 50
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 6. Capital Assets Capital asset activity of the primary government for the year ended December 31, 2006 was as follows (expressed in thousands of dollars): Beginning Balance Increases Decreases Ending Balance Governmental Activities: Capital assets, not being depreciated: Land $ 222,665 $ 17,071 $ (10,806) $ 228,930 Construction in progress 131,490 63,070 (19,581) 174,979 Total capital assets, not being depreciated 354,155 80,141 (30,387) 403,909 Capital assets, being depreciated: Buildings 229,381 4,562 (1,003) 232,940 Improvements other than buildings 42,910 521 (125) 43,306 Machinery, equipment and other assets 77,025 15,806 (5,421) 87,410 Infrastructure 426,671 17,820 (2,867) 441,624 Total capital assets being depreciated 775,987 38,709 (9,416) 805,280 Less accumulated depreciation for: Buildings (82,671) (6,289) 533 (88,427) Improvements other than buildings (14,260) (1,543) 102 (15,701) Machinery, equipment and other assets (48,251) (7,343) 3,129 (52,465) Infrastructure (114,715) (11,475) - (126,190) Total accumulated depreciation (259,897) (26,650) 3,764 (282,783) Total capital assets, being depreciated, net 516,090 12,059 (5,652) 522,497 Governmental activities capital assets, net $ 870,245 $ 92,200 $ (36,039) $ 926,406 Business-type activities: Capital assets, not being depreciated: Land $ 34,591 $ 260 $ (364) $ 34,487 Construction in progress 150,739 65,579 (17,392) 198,926 Total capital assets, not being depreciated 185,330 65,839 (17,756) 233,413 Capital assets, being depreciated: Airfields 111,143 272 (148) 111,267 Buildings 202,417 133-202,550 Improvements other than buildings 725,420 33,230 (153) 758,497 Machinery, equipment and other assets 101,519 4,073 (2,296) 103,296 Total capital assets being depreciated 1,140,499 37,708 (2,597) 1,175,610 Less accumulated depreciation for: Airfields (72,502) (4,022) 148 (76,376) Buildings (85,611) (4,938) - (90,549) Improvements other than buildings (152,307) (12,668) - (164,975) Machinery, equipment and other assets (54,396) (8,126) 2,175 (60,347) Total accumulated depreciation (364,816) (29,754) 2,323 (392,247) Total capital assets, being depreciated, net 775,683 7,954 (274) 783,363 Business-type activities capital assets, net $ 961,013 $ 73,793 $ (18,028) $ 1,016,776 B - 51
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 6. Capital Assets (continued) Beginning Balance Increases Decreases Ending Balance Fiduciary Activities Capital assets, not being depreciated: Construction in progress $ 557,031 $ 398,251 $ - $ 955,282 Fiduciary activities capital assets, net $ 557,031 $ 398,251 $ - $ 955,282 Depreciation expense was charged to function/programs of the primary government, as follows (in thousands of dollars): Current Year Depreciation Governmental activities: General government $ 3,601 Public safety 2,225 Highways and streets, including depreciation of general infrastructure 11,674 Sanitation 129 Health and welfare 1,318 Culture and recreation 3,833 Capital assets held by the government's internal services funds are charged to the various functions based on their usage of the assets 3,871 Total depreciation expense-governmental activities $ 26,651 Business-type activities: Water 10,031 Sewer 8,108 Airport Authority 7,206 Nonmajor enterprise funds 4,409 Total depreciation expense-business-type activities $ 29,754 7. Retirement Funds The reporting entity contributes to two single-employer defined benefit pension plans and a single-employer defined contribution plan, covering all full-time employees. The defined benefit plans include the Wichita Employees' Retirement System (WERS) and the Wichita Police and Fire Retirement System (WPFRS). Each system is administered by a separate Board of Trustees. The single-employer defined contribution plan consists of the Wichita Employees' Retirement System Plan 3 that is also governed by the Wichita Employees' Retirement System Board of Trustees. The Wichita Retirement System issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for WERS and WPFRS. The financial report may be obtained by writing to the Wichita Retirement System, City Hall, 12 th Floor, 455 N. Main, Wichita, KS 67202 or by calling (316) 268-4544. Summary of Significant Accounting Policies and Plan Asset Matters Basis of Accounting: The Wichita Employees' Retirement System, Wichita Police and Fire Retirement System, and the Wichita Employees Retirement System Plan 3 are reported as pension trust funds in the City's financial statements and use the accrual basis of accounting. Employee and employer contributions are recognized as revenues in the period in which employee services are performed. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. B - 52
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 7. Retirement Funds (continued) Method Used to Value Investments: Investments are reported at fair value. Short-term investments are reported at cost plus accrued interest, which approximates market or fair value. Securities traded on national or international exchanges are valued at the last trade price of the day. If no close price exists, then a bid price is used. Mortgages are valued on the basis of future principal and interest payments, and are discounted at prevailing interest rates for similar investments. Investments that do not have an established market are reported at their estimated fair value. Management of Plan Assets: The Board of Trustees of all Systems have contractual arrangements with independent investment counselors for management of the assets of the Systems. The firms have been granted discretionary authority concerning purchases and sales of investments within guidelines established by City ordinances. The Boards of Trustees of the pension systems also have contractual arrangements with independent firms which monitor the investment decisions of the Systems investment counselors. Reserves and Concentrations of Credit Risks: There are no assets legally reserved for purposes other than the payment of plan member benefits. The plans held no individual investments (other than U.S. Government and U.S. Government guaranteed obligations) where the market value exceeded five percent or more of net assets available for benefits. There are no long-term contracts for contributions. A. Wichita Employees' Retirement System Plan Description: The WERS was established to provide retirement and survivor annuities, disability benefits, death benefits, and other benefits for all regular full-time civilian employees of the reporting entity and their dependents. Plan 1 was established by City ordinance on January 1, 1948 and became closed to new entrants as of July 19, 1981. With the initiation of Plan 2, which was established by City ordinance on July 18, 1981, all covered employees of Plan 1 were given the option of converting to the new plan. Plan 2 was also closed to new entrants with the establishment of Plan 3, effective January 1, 1994. However, upon completion of seven years of service, employees participating in Plan 3 may convert to participation in Plan 2. Establishment of and amendments to the benefit provisions for the WERS are authorized by the City Council. Funding Policy: The contribution requirements of plan members and the reporting entity are established by City ordinance and may be amended by the governing body. Members of Plan 1 and 2 are required to contribute 6.4 and 4.7 percent of covered salaries, respectively. The City is required to contribute at an actuarially determined rate; the rate for 2006 was 4.7 percent of annual covered payroll for both Plans 1 and 2. The City provides for pension expenses by levying ad valorem property taxes each year in the amount necessary to meet its obligation as determined by the WERS consulting actuary. Funding Policy: The contribution requirements of plan members and the reporting entity are established by City ordinance and may be amended by the governing body. Members of Plan 1 and 2 are required to contribute 6.4 and 4.7 percent of covered salaries, respectively. The City is required to contribute at an actuarially determined rate; the rate for 2006 was 4.7 percent of annual covered payroll for both Plans 1 and 2. The City provides for pension expenses by levying ad valorem property taxes each year in the amount necessary to meet its obligation as determined by the WERS consulting actuary. Annual Pension Cost and Net Pension Obligation: The net pension obligation (NPO) is defined as the cumulative difference between the employer s annual pension cost and the employer s annual required contributions to the plan. For 2006, the City s annual pension cost of $2,264,339 was equal to the required and actual contributions. The employer s annual required contribution for the current year was determined as part of the December 31, 2004 actuarial valuation using the individual entry age actuarial cost method. Significant actuarial assumptions used include (a) a rate of return on the investment of present and future assets of 7.75 percent per year compounded annually, (b) projected salary increases of 4.5 percent per year compounded annually (4.0 percent attributable to inflation and 0.5 percent attributable to productivity), (c) additional projected salary increases B - 53
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 7. Retirement Funds (continued) A. Wichita Employees' Retirement System (continued) ranging from 0 percent to 5.5 percent per year, depending on age, attributable to seniority/merit, and (d) the assumption that benefits will increase 3.0 percent per year (non-compounded) after retirement for Plan 1 and 2.0 percent per year (non-compounded) for Plan 2. The actuarial accrued liability, as determined by the individual entry age actuarial cost method, is the portion of the actuarial present value of pension plan benefits and expenses not provided for by future normal costs. An asset valuation method is used to smooth the effect of market fluctuations. The actuarial value of assets is equal to the Expected Value (calculated using the actuarial assumed rate of 7.75 percent) plus 25 percent of the difference between the market and expected value. This is the fifth year this smoothing method has been used. As of December 31, 2006, the actuarial liability was fully covered by the valuation assets. The City s funding policy is to amortize the surplus over a rolling 20 year period. The amortization of the existing surplus results in a temporary amortization credit. Three Year Trend Information SCHEDULE OF EMPLOYER CONTRIBUTIONS Fiscal Year Ending Annual Required Contribution Percentage Contributed Net Pension Obligation 12/31/04 $ 2,084,558 100% $ 0 12/31/05 $ 2,170,650 100% $ 0 12/31/06 $ 2,264,339 100% $ 0 B. Police and Fire Retirement System Plan Description: The WPFRS is divided into three plans - Plan A, Plan B, and Plan C-79. The plans were established to provide retirement and survivor annuities, death benefits, and other benefits for Police and Fire Officers of the reporting entity and their dependents. All full-time active commissioned Police and Fire department personnel are required to participate in the plans. Plans A and B were established by City ordinance on January 1, 1965 and Plan C-79 was established January 1, 1979 by City ordinance. Plan B was closed to new entrants as of January 1, 1965 and Plan A was closed to new entrants as of December 31, 1978. Establishment of and amendments to the benefit provisions for the WPFRS are authorized by the City Council. Funding Policy: The contribution requirements of plan members and the reporting entity are established by City ordinance and may be amended by the governing body. WPFRS members are required to contribute six to eight percent of covered salaries. The City is required to contribute at an actuarially determined rate; the rate for 2006 was 18.4 percent of annual covered payroll. The City provides for pension expenses by levying ad valorem property taxes each year in the amount necessary to meet its obligation as determined by the consulting actuary. Annual Pension Cost and Net Pension Obligation: The net pension obligation (NPO) is defined as the cumulative difference between the employer s annual pension cost and the employer s annual required contributions to the plan. For 2006, the City s annual pension cost of $9,849,536 was equal to the required and actual contributions. The employer s annual required contribution was determined as part of the December 31, 2004 actuarial valuation using the individual entry age actuarial cost method. Significant actuarial assumptions used include (a) a rate of return on the investment of present and future assets of 7.75 percent per year compounded annually, (b) projected salary increases of 4.5 percent per year compounded annually (4.0 percent attributable to inflation and 0.5 percent attributable to productivity), (c) additional projected salary increases ranging from 0 percent to 2.5 B - 54
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 7. Retirement Funds (continued) B. Police and Fire Retirement System (continued) percent per year, depending on age, attributable to seniority/merit, and (d) the assumption that benefits will increase 2.0 percent per year (non-compounded) commencing 36 months after retirement. The actuarial accrued liability, as determined by the individual entry age normal actuarial cost method, is the portion of the actuarial present value of pension plan benefits and expenses not provided for by future normal costs. An asset valuation method is used to smooth the effect of market fluctuations. The actuarial value of assets is equal to the Expected Value (calculated using the actuarial assumed rate of 7.75 percent) plus 25 percent of the difference between the market and expected value. This is the fifth year this smoothing method has been used. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. At December 31, 2006, the amortization period was 20 years. Fiscal Year Ending Three Year Trend Information SCHEDULE OF EMPLOYER CONTRIBUTIONS Annual Required Contribution Percentage Contributed Net Pension Obligation 12/31/04 $ 6,925,467 100% $ 0 12/31/05 $ 7,308,916 100% $ 0 12/31/06 $ 9,849,536 100% $ 0 C. Wichita Employees' Retirement System Plan 3 The reporting entity provides pension benefits for all of its full-time civilian employees hired or rehired on or after January 1, 1994. This is a defined contribution plan; therefore, benefits depend solely on amounts contributed to the plan plus investment earnings. At December 31, 2006, current membership totaled 876. Plan 3, established by City ordinance on April 9, 1993 and amended on February 8, 2000, requires that both the employee and the reporting entity contribute an amount equal to 4.7 percent of salary (base pay plus longevity) each pay period. The reporting entity's contributions and earnings for each employee are 25 percent vested after three years of service, 50 percent vested after five years and are fully vested after seven years of continuous service. Upon completion of seven years of service, employees participating in the plan may, within 90 days thereafter, advise the Board of the employee's decision to convert to participation in the Wichita Employees' Retirement System Plan 2, a defined benefit plan. If an employee elects to convert to Plan 2, the employee's account on the date of election shall become part of Plan 2. Fully vested employees who elect to continue participation in Plan 3 beyond seven years, may contribute additional amounts into the plan as permitted by the rules of the Internal Revenue Code in effect at the time of the contribution. Contributions of the reporting entity and earnings forfeited by employees who leave employment before seven years of service are used to reduce the reporting entity's contribution requirements. For the year ending December 31, 2006, employee and employer contributions to Plan 3 totaled $1,369,009 and $1,369,009 respectively. 8. Self-Insurance Fund The City established a self-insurance fund in 1987 to account for self-insurance programs of workers' compensation, group health insurance, group life insurance, employee liability, property damage, auto liability and general liability for the reporting entity. B - 55
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 8. Self-Insurance Fund (continued) Beginning in 2006, the City converted the flexi-funded life insurance program to a fully insured program. The contributions and premiums for this plan are accounted for in the Self Insurance Fund. For those funds paying insurance costs, the contributions are recorded as expenditures/expenses in the paying fund and revenues in the Self-Insurance Fund. The City records liabilities for known claims and estimated liabilities incurred but not reported at year-end. The claims are reflected under accounts payable and accrued liabilities in the internal service funds. A. Health Insurance The employee health insurance program was a fully insured program with health insurance offered to all fulltime employees of the reporting entity. The employee health insurance in 2006 was provided through Coventry Health Care of Kansas, a preferred provider network (PPO) with out of area health benefits. A monthly premium was paid to the Coventry Health Care of Kansas for payment of all medical and prescription costs. On December 31, 2006, the City had $3,294,695 of net assets available for future health insurance benefits. Beginning on January 1, 2007, the City converted to a self-insured health insurance program with the City selfinsuring health benefits up to $400,000 per member and a stop-loss secondary coverage for costs above $400,000. A self-insured prescription drug plan is included in the monthly premium paid to Coventry Health Care of Kansas. B. Workers Compensation The workers' compensation program is a partially self-funded program covering substantially all full-time and part-time employees of the reporting entity. The annual requirements of the workers compensation program are determined based on current claims outstanding and estimates of future liability based on pending claims, maintaining a 90 percent confidence level. The City has reinsured for liabilities exceeding $750,000 per occurrence with coverage provided through Employers Reinsurance Corporation. The deductible is taken into consideration in actuarial projections of the City s liability. The City maintains a reserve to meet State and actuarial requirements and to provide contingency funding. At December 31, 2006, the City recorded a liability of $7,913,656 for estimated probable claims pending. Net assets at December 31, 2006 were $2,871,407. C. Life Insurance Prior to 2006, the City maintained a flexi-funded life insurance program administered by Minnesota Mutual Life Insurance Company, which provided basic life, dependent life, and accidental death and dismemberment with conversion privileges to participants. Beginning in December 2005, the life insurance program was converted to a fully insured program offering the same benefits to employees. The cost of basic employee life insurance is funded approximately one third by the employee and two thirds by the City. Benefit levels are based on employee compensation. The City offers additional supplemental, voluntary accidental death and dismemberment insurance for both employees and eligible dependents, the total cost of which is paid by the employee. Contributions (employee and employer), plus interest earned on investments, are used for premium payments. All full-time employees of the reporting entity are eligible to participate in the plans. Coverage is terminated, if the participant fails to make contributions toward the cost of insurance, if the participant terminates employment with the City and does not elect the conversion or portability option, or if the plan is terminated. At December 31, 2006, net assets totaled $2,501,641. The City's general liability program provides for legal defense and claims against employees of the reporting entity when an incident occurs during the course of employment. The program also includes vehicle liability and B - 56
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 8. Self-Insurance Fund (continued) C. Life Insurance (continued) building and content insurance. The deductible portion of the building and content insurance coverage is paid from the self-insurance fund. The deductible is $100,000 per occurrence. D. General Liability The City is self-insured for tort liability claims against the reporting entity. The Kansas Tort Claims Act provides a liability limitation of $500,000 per occurrence. Effective June 13, 2006, the City purchased an excess policy of insurance for federal actions because the limitations under the State s Tort Claims Act do not apply to federal actions. The policy provides coverage of $10 million with a $2 million self-insured retention. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. At December 31, 2006, the City recorded a liability of $5,181,299 for pending claims (maintaining a confidence level of 90 percent) and to provide for the loss of excess liability coverage and potential environmental liability exposure. At December 31, 2006, net assets totaled $8,524,628. Fund Claims Paid Beginning Balance Changes in Actuarial Estimate Ending Balance Short Term Portion Worker s Compensation 2004-2005 2,593,360 10,181,169 (339,558) 9,841,611 3,504,288 2005-2006 2,920,594 9,841,611 (1,927,955) 7,913,656 2,715,687 General Liability 2004-2005 3,422,192 8,903,451 (1,966,587) 10,870,038 2,918,689 2005-2006 5,175,819 10,870,038 (5,688,739) 5,181,299 1,456,456 9. Long-Term Debt A. General Obligation Bonds General obligation bonds are issued to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations of the City and pledge the full faith and credit of the government. The bonds generally are issued as 20-year serial bonds with equal amounts of principal maturing each year. General obligation bonds outstanding (expressed in thousands of dollars) at December 31, 2006 are as follows: Payable from Interest Rates Amount Governmental activities: Ad valorem property taxes 2.25% - 6.50% $ 51,314 Transient guest tax 5.00% - 6.87% 6,716 Tax increment financing 2.30% - 5.00% 21,664 Local sales tax 3.40% - 5.00% 104,505 Subtotal - governmental activities 184,199 Business-type activities: Storm Water Utility 2.50% - 4.00% 8,782 Golf Course System 4.625% - 5.20% 5,094 Wichita Airport Authority 5.00% - 8.80% 2,525 Subtotal business-type activities 16,401 Total general obligation bonds $ 200,600 B - 57
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 9. Long-Term Debt (continued) A. General Obligation Bonds (continued) Annual debt service requirements to maturity for general obligation bonds are as follows (expressed in thousands of dollars): Year ending Governmental Activities Business-type Activities December 31 Principal Interest Principal Interest 2007 $ 21,047 $ 8,152 $ 1,917 $ 693 2008 20,268 7,385 1,992 606 2009 19,868 6,607 2,077 514 2010 17,769 5,881 1,972 416 2011 17,012 5,212 1,583 338 2012-2016 65,585 14,074 6,860 710 2017-2021 22,650 1,460 - - Totals $ 184,199 $ 48,771 $ 16,401 $ 3,277 The City of Wichita also issues special assessment bonds to provide funds for the construction of infrastructure in residential developments. Special assessment bonds will be repaid from amounts levied against the property owners benefited by this construction. In the event that a deficiency exists because of unpaid or delinquent special assessments at the time a debt service payment is due, the government must provide resources to cover the deficiency until other resources, for example, foreclosure proceeds, are received. Annual debt service requirements to maturity for special assessment bonds are as follows (expressed in thousands of dollars): B. Revenue Bonds Year ending Governmental Activities December 31 Principal Interest 2007 $ 23,490 $ 8,728 2008 19,680 8,015 2009 19,395 7,267 2010 19,785 6,505 2011 19,140 5,717 2012-2016 79,035 17,206 2017-2021 36,315 3,944 2022-2026 865 105 Totals $ 217,705 $ 57,487 Revenue bonds are also issued by the City of Wichita and the Wichita Public Building Commission, where income derived from the acquired or constructed assets is pledged to pay debt service. Revenue bonds outstanding at year-end are as follows (expressed in thousands of dollars): Interest Final Maturity Amount Rates Date Outstanding Primary Government Enterprise Funds: Water and Sewer: 1998-Water & Sewer 4.25% - 4.70% 2012 $ 13,400 1999-Water & Sewer 4.00% - 6.00% 2018 7,380 2000A-Water 4.69% 2021 2,189 2000B-Water 4.69% 2021 3,769 2001-Water & Sewer 3.30% - 5.00% 2009 6,890 2003-Water & Sewer 2.00% - 5.25% 2028 117,365 2005A-Water & Sewer Refunding 3.00% - 5.00% 2016 39,665 2005B-Water & Sewer Refunding 3.25% - 5.00% 2016 26,695 2005C-Water & Sewer 3.25% - 5.125% 2030 45,790 2006-Water & Sewer 4.50% - 5.00% 2031 51,140 B - 58
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 9. Long-Term Debt (continued) B. Revenue Bonds (continued) CITY OF WICHITA KANSAS Interest Final Maturity Amount Rates Date Outstanding Wichita Airport Authority: Airborne Freight Corp, Series A, 1994 6.50% - 6.75% 2009 335 Federal Express - Series A&B, 1997 6.45% 2013 740 Learjet, Inc.-Series A, 1997 7.00% 2007 1,069 Executive Aircraft Corp.-Series 1999 6.10% - 6.75% 2014 2,400 Cessna Aircraft Company-Series 2000 8.00% 2009 11,203 Yingling Aircraft-Series 2001 7.50% 2021 1,300 Cessna Aircraft Corp. - Series A, 2002 6.25% 2032 49,300 FlightSafety - Series A, 2003 Variable* 2031 2,860 Yingling Aircraft - Series A 2005 6.00% 2025 1,500 Cessna Aircraft Company - Series A 2005 5.00% 2025 5,850 Total Primary Government $ 390,840 Component Unit Wichita Public Building Commission: Wichita State University, Series L, 2001 4.00%- 5.00% 2017 13,520 Kansas Sports Hall of Fame, Series M, 2003 2.10% - 4.40% 2023 1,520 State Office Building Refunding Series N, 2003 2.00% - 4.00% 2014 11,515 Total Component Unit - Wichita Public Building Commission $ 26,555 *The FlightSafety Series A, 2003 bonds have a variable interest rate, adjustable weekly based on the rate at which the bonds can be remarketed at par, as determined by a remarketing agent, with an interest rate ceiling of 15 percent. The interest rate utilized to calculate the debt service requirements was the effective rate on December 31, 2006 of 3.97 percent. Revenue bond debt service requirements to maturity are as follows (expressed in thousands of dollars): Component Unit Year ending Business-type Activities WPBC December 31 Principal Interest Principal Interest 2007 $ 15,746 $ 19,238 $ 2,325 $ 1,026 2008 14,500 18,997 2,425 949 2009 26,991 18,421 2,505 866 2010 15,463 16,837 2,595 773 2011 16,744 16,099 2,695 678 2012-2016 89,231 68,153 11,725 1,777 2017-2021 69,795 47,876 2,045 157 2022-2026 63,380 30,979 240 16 2027-2031 29,690 18,807 - - 2032-2036 49,300 1,541 - - Totals $ 390,840 $ 256,948 $ 26,555 $ 6,242 C. Section 108 Loans In April 1999, the City entered into a loan agreement with the U.S. Department of Housing and Urban Development (HUD) for funding of $3,610,000 for the construction of a manufacturing, training and employment center on 21st Street. The City entered into an operating lease with Cessna Aircraft Company for rental of the facility, with rental payments designed to cover principal and interest owed by the City on the loan. Footnote 12.A. Operating Leases, provides further disclosure. Interest rates for amounts outstanding under the loan range from 5.75 percent to 6.33 percent. Debt service requirements to maturity for the HUD Section 108 loan is as follows (expressed in thousands of dollars): B - 59
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 9. Long-Term Debt (continued) C. Section 108 Loans Year ending Governmental Activities December 31 Principal Interest 2007 $ 250 $ 126 2008 260 112 2009 280 96 2010 295 80 2011 310 62 2012-2016 680 65 Totals $ 2,075 $ 541 D. Other Long-Term Obligations The City s municipal solid waste facility, Brooks Landfill, closed operations October 9, 2001. Kansas and federal laws and regulations require the City to perform certain maintenance and monitoring functions at the site for thirty years after closure. Estimated postclosure costs for the required remaining 26.56 years totaled $24,089,176, or $906,972 annually. Additionally, closure costs totaling $387,384 and $67,356 have been reported for the construction and demolition landfill and the industrial monofill landfill for asbestos waste, respectively. These costs will be liquidated from prior years landfill fees accumulated in the Landfill Postclosure Fund. Footnote 18.-Landfill Closure and Postclosure Care provides further disclosure. E. Changes in Long-Term Debt Internal Service Funds predominantly serve the governmental funds. Accordingly, long-term liabilities of the internal service funds are included as part of the following totals for governmental activities. At year-end, compensated absences totaling $339,598 were in the governmental amounts below. Compensated absences for the governmental funds are generally liquidated by the General Fund. Long-term liability activity for the year ended December 31, 2006, follows (expressed in thousands of dollars): Beginning Balance Additions Reductions Ending Balance Due Within One Year Governmental Activities Bonds Payable: General obligation bonds $ 209,963 $ - $ (25,763) $184,200 $ 21,047 Special assessment debt with government commitment 210,370 30,795 (23,460) 217,705 23,490 Deferred amount on refunding (1,021) (368) 164 (1,225) - Unamortized premium 9,311 158 (1,043) 8,426 - Total bonds payable 428,623 30,585 (50,102) 409,106 44,537 Bond anticipation notes 18,629 18,057 (18,629) 18,057 18,057 Section 108 loan 5,310 - (3,235) 2,075 250 Accreted interest 2,861 497 (511) 2,847 - Compensated absences 7,925 8,169 (7,836) 8,258 7,240 Landfill closure/postclosure care 24,337 288 (81) 24,544 907 Total long-term liabilities Governmental activities $ 487,685 $ 57,596 $ (80,394) $464,887 $ 70,991 B - 60
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 9. Long-Term Debt (continued) E. Changes in Long-Term Debt (continued) Beginning Balance Additions Reductions Ending Balance Due Within One Year Business-type activities Bonds payable: General obligation bonds $ 12,771 $ 6,805 $ (3,175) $ 16,401 $ 1,916 Revenue bonds 353,472 51,140 (13,772) 390,840 15,746 Bond anticipation notes 6,233 - (6,233) - - Deferred amount on refunding (2,705) - 294 (2,411) - Unamortized premium 11,392 1,919 (786) 12,525 - Total bonds payable 381,163 59,864 (23,672) 417,355 17,662 Compensated absences 1,485 1,581 (1,493) 1,573 1,384 Total long-term liabilities Business-type activities $ 382,648 $ 61,445 $ (25,165) $418,928 $ 19,046 Wichita Public Building Commission Bonds payable: Revenue bonds $ 29,315 $ - $ (2,760) $ 26,555 $ 2,325 Unamortized premium 387 - (32) 355 - Total long-term liabilities- WPBC $ 29,702 $ - $ (2,792) $ 26,910 $ 2,325 F. Revenue Bond Ordinance Provisions and Reserve Requirements Revenue bond ordinances related to the issuance of revenue bonds of the respective enterprise funds provide for specific deposits to debt service and other related bond reserve and maintenance accounts. At December 31, 2006, the City was in compliance with all significant reserve requirements of the respective Water and Sewer Utility revenue bond ordinances. G. Crossover Refunding of Long-Term Debt Cross-over Refunding. On December 1, 2004, the City issued $41,730,000 in general obligation bonds with a net interest cost of 3.60 percent for a crossover refunding of 1998 Series 750 with a net interest cost of 3.43 percent, 1998 Series 752 with a net interest cost of 3.42 percent, 1999 Series 756 with a net interest cost of 3.58 percent, 2000 Series 758 with a net interest cost of 3.74 percent, 2000 Series 760 with a net interest cost of 3.75 percent, 1998 Series 950 with a net interest cost of 3.48 percent and 1999 Series 955 with a net interest cost of 3.63 percent. The proceeds of the crossover advance refunding bonds have been placed into an escrow account to temporarily pay the interest on the new bonds up to each crossover date and meet the costs of the refunding on the call date. The debt service requirements on the old bonds, up to the crossover date, are paid from the resources in the Debt Service Fund. The City completed the crossover advance refunding to reduce the total debt service payments over the following 11 years by $2,132,722 and to obtain an economic gain of $1,754,273. At the crossover date, the resources in the escrow account will cease to pay scheduled interest payments on the new debt, but will pay the outstanding balance of the old bonds and accrued interest. Until the balance of the old bonds are fully paid, the bonds are not considered to be legally defeased and continue to be recorded as a B - 61
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 9. Long-Term Debt (continued) G. Crossover Refunding of Long-Term Debt (continued) liability of the City. The City has recorded the outstanding liability of the bonds issued on December 1, 2004 and the corresponding funds in escrow. General obligation bond Series 750, Series 752 and Series 950 had a crossover date of September 1, 2005 and were legally defeased at that date. Series 756 and Series 955 have a crossover date of September 1, 2006; and Series 758 and Series 760 have a crossover date of September 1, 2007. Upon the final payment on each of the bond series, the bonds will be considered legally defeased and the liability will be removed from the long-term debt of the City. On December 31, 2006, the City held $16,033,325 in escrow to legally defease the bonds. 10. Prior-Year Defeasance of Debt In prior years, the City and the Wichita Public Building Commission defeased certain general obligation, revenue, and other bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the financial statements of the reporting entity. At December 31, 2006, $7,580,000 from the Wichita Public Building Commission are considered defeased. 11. Temporary Notes Payable Kansas Statutes permit the issuance of temporary notes to finance certain capital improvement projects that will be refinanced with general obligation bonds. Prior to the issuance of temporary notes, the governing body must take Primary Government Capital Projects Funds: Interest Rate Amount Outstanding necessary legal steps to authorize the issuance of general obligation bonds. Temporary notes issued may not exceed the aggregate amount of bonds authorized, are interest bearing, and have a maturity date not later than four years from the date of issuance. Temporary notes outstanding at December 31, 2006 are payable as follows: During 2006, the City issued $115,215,000, retired $122,550,000 and reclassified $18,057,438 of temporary notes for various capital improvement projects activities. Ending Beginning Balance Additions Reductions Balance $66,180,000 $115,215,000 $122,550,000 $58,845,000 Maturity Date Street and Bridge Improvements - Series 216 4.25% $ 21,960,000 02/08/07 Water Improvements -Series 216 4.25% 3,261,000 02/08/07 Sewer Improvements - Series 216 4.25% 8,726,000 02/08/07 Storm Sewer Improvements Series 216 4.25% 4,534,000 02/08/07 Public Improvements -Series 216 4.25% 14,028,000 02/08/07 Public Improvements -Series 217 5.75% 4,390,000 02/08/07 Park Improvements -Series 216 4.25% 894,000 02/08/07 Enterprise funds: Storm Water Utility Improvements - Series 216 4.25% 1,052,000 02/08/07 Total Reporting Entity $ 58,845,000 B - 62
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 12. Leases A. Rentals Under Operating Leases The City and the Airport Authority lease facilities and land to various airlines, concessionaires, commercial entities and others. The leases are for varying periods, from one month to 40 years, and require the payment of minimum annual rentals. The following are future minimum rentals of non-cancelable operating leases: Minimum Rentals of Noncancelable Operating Year ending December 31 Leases 2007 6,611,979 2008 4,064,990 2009 3,651,850 2010 3,062,384 2011 2,746,292 2012-2016 13,392,337 2017-2021 9,812,598 2022-2026 7,312,327 2027-2031 2,704,813 2032-2036 2,106,590 2037-2041 1,482,189 2042-2046 889,493 Total minimum future rentals $ 57,837,842 The above amounts do not include contingent rentals that may be received under certain leases; such contingent rentals totaled $1,877,669.09 in 2006. The Wichita Airport Authority (WAA) has authorized the construction of buildings on Authority- owned land by 21 tenants. The tenants lease the land from the WAA for periods ranging from two months to 40 years with renewal options ranging from five to 25 years. The WAA has assisted in the financing of certain of these buildings through the issuance of Airport Facility Revenue Bonds. The Wichita Public Building Commission (WPBC) has assisted in the financing of buildings and facilities for Wichita State University, the State of Kansas and the Kansas Sports Hall of Fame through the issuance of revenue bonds and by entering into lease agreements with the Board of Trustees of the University, the State of Kansas and the Kansas Sports Hall of Fame. The bonds are payable from lease payments that are made directly to a trustee for the purpose of retiring the principal and interest of the related bonds as they mature. Additionally, lease payments for Wichita State University are secured by a pledge of the surplus on an ad valorem tax levy in amounts sufficient to guarantee the rentals under the leases. Such surplus consists of the proceeds of one and one-half (1½) mill tax levy on all tangible property within the City of Wichita which is not needed to guarantee the rentals due under certain leases from the WPBC to the Board of Trustees of Wichita State University. Pursuant to lease agreements for the financing of the Finney State Office Building, the City of Wichita and Sedgwick County are contingently liable and will make rental payments, as necessary, to supplement the rental payments to be paid by the State of Kansas so that the total shall be sufficient to pay the debt service on the revenue bonds. B - 63
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 12. Leases (continued) A. Rentals Under Operating Leases (continued) The financing of these facilities by the WAA and the WPBC represent direct financing leases and accordingly, the net investments of such leases are recorded on the respective enterprise fund and component unit balance sheets as restricted assets. The following lists the components of the net investment in direct financing leases as of December 31, 2006: WAA WPBC Total Total minimum lease payments to be received $ 170,226,842 $ 32,796,644 $ 203,023,486 Less: unearned income 93,670,080 6,241,644 99,911,724 Net investment in direct financing leases $ 76,556,762 $ 26,555,000 $ 103,111,762 The future minimum lease rentals to be received under direct financing leases are as follows: Year ending December 31 Airport Authority Wichita Public Building Commission Total 2007 $ 6,212,847 $ 3,350,824 $ 9,563,671 2008 5,078,364 3,374,209 8,452,573 2009 16,506,329 3,370,586 19,876,915 2010 4,277,648 3,368,228 7,645,876 2011 4,278,632 3,372,553 7,651,185 2012-2016 19,964,995 13,501,728 33,466,723 2017-2021 19,596,231 2,202,456 21,798,687 2022-2026 24,637,210 256,060 24,893,270 2027-2031 18,833,960-18,833,960 2032-2036 50,840,626-50,840,626 Total minimum future rentals $ 170,226,842 $ 32,796,644 $ 203,023,486 13. Conduit Debt Obligations From time to time the City has issued industrial revenue bonds to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The industrial revenue bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. At December 31, 2006, 124 series of industrial revenue bonds were outstanding, with an aggregate principal amount payable of $3,229,782,802. Special facility revenue bonds have been issued by the Wichita Airport Authority to provide for the construction of buildings on Authority-owned land. The bonds are special limited obligations of the Authority, payable solely from and secured by a pledge of rentals to be received from lease agreements between the Authority and various tenants. The bonds do not constitute a debt or pledge of the faith and credit of the City or the Airport Authority. At December 31, 2006, 10 series of special facility revenue bonds were outstanding totaling $76,556,762. Note 12 provides further disclosure. B - 64
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 13. Conduit Debt Obligations (continued) To assist in the financing of buildings, facilities, and equipment for other governmental units, the Wichita Public Building Commission has issued four series of revenue bonds. The bonds are secured by the property financed and are payable from payments received based on underlying lease agreements. As of December 31, 2006, the aggregate principal amount payable was $26,555,000. Note 12.B., Direct Financing Leases, provices further disclosure. 14. Interfund Transfers Interfund transfers reflect the flow of resources from one fund to another fund, generally from the fund in which the resources are received or reside to the fund in which the resources will be expended. During the year ended December 31, 2006, interfund transfers totaled $98,831,405, that is, both transfer revenue and expenditures were each $98,831,405. Non-routine transfers from the General Fund to nonmajor governmental funds consisted primarily of $1.9 million for economic development activities. The Debt Service Fund transfers of $28.5 million to nonmajor governmental funds, nonmajor enterprise funds and the Street Improvement Fund reflect transfers to capital projects to retire temporary notes and cash fund projects. Summary information is provided in the following table. Fund Transfers Out Major Funds: General Fund $ 9,318,912 Federal/State Assistance Fund 826,184 Debt Service Fund 28,473,951 Street Improvement Fund 271,601 Water Utility Fund 2,016,763 Sewer Utility Fund 1,257,365 Airport Fund 740,920 Nonmajor governmental funds 54,082,331 Nonmajor enterprise funds 375,378 Internal service funds 1,468,000 Total Transfers Out $ 98,831,405 Fund Transfers In Major Funds: General Fund $ 8,447,508 Debt Service Fund 19,740,231 Federal/State Assistance Fund 505,319 Street Improvement Fund 37,981,362 Nonmajor governmental funds 28,115,195 Nonmajor enterprise funds 3,475,080 Internal service funds 566,710 Total Transfers In $ 98,831,405 B - 65
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 15. Interfund Receivables/Payables Interfund receivables/payables result from product or services provided to other funds or loans between funds. Individual fund receivable/payable balances at December 31, 2006 are presented in the following table: Interfund Fund Receivables Debt Service Fund $ 2,131,978 Federal and State Assistance Fund: Police federal grants 868,157 Community Development Block Grant 289,386 Nonmajor governmental funds: Local Sales Tax CIP Fund 19,007,369 Landfill Postclosure Fund 25,000,000 Landfill Fund 4,077,423 TIF Districts Fund 12,106,753 Total $ 63,481,066 Interfund Fund Payables Street Improvement Fund $ 37,106,753 Federal and State Assistance Fund: Unified Work Program 656,691 Emergency Shelter HUD 28,034 Federal Health Projects 133,771 Emergency Shelter SRS 8,288 HOME Program 330,759 Nonmajor governmental funds: Water Main Extension Fund 4,077,423 Park Bond Construction Fund 2,100,156 Public Improvement Construction Fund 1,293,294 Sewer Construction Fund 15,613,919 Nonmajor enterprise funds: Golf Fund 2,131,978 Total $ 63,481,066 Interfund receivables/payables at the end of December 2006 include a cash advance from the Police federal grants to the various federal and state assistance subfunds for which grant drawdowns are pending, and a Golf Fund payable to the Debt Service Fund while the Golf Fund operations are being restructured. Most significant are the receivables in the Local Sales Tax CIP Fund, the Landfill Post Closure Fund, the Landfill Fund and the TIF Districts Fund to the capital project funds until projects are completed and long term financing has been secured. 16. Reserves and Designations of Fund Balances Reserved fund balance is reported to denote portions of fund balance that are either (1) legally restricted for a specific future use or (2) not available for appropriation or expenditures. The following reservations of fund balance are used by the City: [1] reserved for encumbrances - used to segregate a portion of fund balance for expenditures upon vendor performance; [2] reserved for inventory used to segregate a portion of fund balance to indicate that B - 66
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 16. Reserves and Designations of Fund Balances (continued) inventories do not represent available or spendable resources, and [3] reserved for prepaid items used to segregate a portion of fund balance to indicate that prepaid items do not represent available or spendable resources. The following designations of fund balances are reflected in the governmental fund financial statements. A fund balance designation is reported in the amount of $13,097,514for the General Fund for the subsequent year s appropriation. Of the unreserved fund balance of the Debt Service Fund, $24,911,257 is designated for future debt service requirements. In the Debt Service Fund, $16,033,325 of the balance is held in escrow as a result of a cross over refunding bond sale and is designated for repayment and defeasement of general obligation bonds Series 758 and Series 760. Additional information regarding the crossover refunding is located in Note 9-G to the financial statements. The City maintains the Cemetery Fund, a permanent fund for the perpetual care of the Jamesburg and Highland Cemeteries. The non-expendable portion of the fund balance is $235,437. The remainder is expendable for care of the cemeteries. 17. Passenger Facility Charges In 1994, the Wichita Airport Authority first received approval from the Federal Aviation Administration to impose and use a passenger facility charge (PFC) of $3 for each eligible passenger utilizing Wichita Mid-Continent Airport, effective December 1, 1994. The first funds were received by the Wichita Airport Authority in January 1995. On May 1, 2005 the PFC increased to $4.50 for each eligible passenger. The charge is collected by all carriers and remitted to the Airport Authority, less an $.08 per passenger handling fee from January 1, through April 2004. Beginning May 1, 2004, the handling fee increased to $.11 per passenger. The proceeds from the PFC are restricted for certain FAA approved capital improvement projects. As of December 31, 2006, the Airport Authority has submitted and received approval on five applications with four applications approved. Approval of the fifth application was received in 2007. The approved applications represent a total amended authorized amount of $25,595,809 of which $24,292,620 has been collected. 18. Landfill Closure and Postclosure Care The City s municipal solid waste facility, Brooks Landfill, closed operations October 9, 2001. Applicable Kansas and federal laws and regulations require the City to place a final cover on the municipal solid waste facility when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after the regulatory closure date of July 25, 2003. Accordingly, a liability of $24,089,176 for postclosure care for the remaining 26.56 years has been reported as a long-term liability of governmental activities on the Statement of Net Assets as of December 31, 2006. During 2001, the City was granted permission to operate a construction and demolition (C&D) landfill at the existing Brooks site. The C & D landfill began operation on October 1, 2001. Applicable Kansas and federal laws and regulations require the City to place a final cover when it closes. The City is required to report a portion of the closure costs as a liability in each period based on the landfill capacity used as of each balance sheet date. As of December 31, 2006, a long-term liability of $387,384 has been recorded under governmental activities on the Statement of Net Assets, representing the cumulative amount reported to date based on the use of 35.0 percent of the estimated capacity of the landfill. The City will recognize the remaining closure costs of $719,426 as the remaining capacity is filled. Based on activity to date, the City of Wichita expects the C&D landfill to close in approximately 2016, or as capacity is reached. In May 2002, the City began operation of an industrial monofill landfill for asbestos waste at the existing Brooks Landfill site. Applicable Kansas and federal laws and regulations require the City to place a final cover when it B - 67
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 18. Landfill Closure and Postclosure Care (continued) closes. The City is required to report a portion of the closure costs as a liability in each period based on the landfill capacity used as of each balance sheet date. As of December 31, 2006, a long-term liability of $67,356 has been recorded under governmental activities on the Statement of Net Assets, representing the cumulative amount reported to date based on the use of 13.2 percent of the estimated capacity of the landfill. The City will recognize the remaining closure costs of $442,919 as the remaining capacity is filled. Based on activity to date, the industrial monofill landfill is expected to close in approximately 2040, or as capacity is reached. The estimates are subject to change due to inflation, deflation, technology, laws and regulations. Financial assurance for closure and post-closure care costs of the landfills has been demonstrated by the local government financial test, as specified in 40 CFR 258.74(f), adopted by reference for use in Kansas by K.A.R. 28-29-98. The Landfill Postclosure Fund and landfill tipping fees will provide the primary source of funding for the landfills closure and postclosure costs. Additional financing needs beyond those met by the fund and user fees will potentially require the sale of bonds. 19. Prior Period Adjustments A prior period adjustment of $87,848 is recorded in the Federal/State Fund to reclassify prior period revenue as amounts due to the U.S. Department of Housing and Urban Development. A prior period adjustment of $205,268 is recorded in the State Office Building Fund to reclassify governmental revenue of prior periods as funds held for the purpose of future economic development. In addition, a prior period adjustment of $382,460 is recorded in the Transit Fund for expenditures of prior years classified as components of Capital Assets, Construction in progress, which ultimately did not meet capitalization criteria. The entity wide financial statements include a prior period adjustment of $368,084 in the governmental activities to establish the deferred refunding account associated with a cross-over refunding in 2004. 20. Contingencies and Commitments A. Legal Matters The reporting entity generally follows the practice of recording liabilities resulting from claims and legal actions only when it is probable that a liability has been incurred and the amount can be reasonably estimated. The reporting entity is vigorously defending its interest in all of the various legal actions and claims against the reporting entity presently pending involving personal injury (including workers compensation claims), property damages, civil rights complaints, and other miscellaneous claims. The ultimate liability that might result from the final resolution of the above matters is not presently determinable. In the opinion of management and its legal counsel, the probability of material aggregate liabilities resulting from these claims will not have an adverse material effect on the reporting entity's basic financial statements. Under Kansas Statutes, should the courts sustain any of the litigation against the reporting entity, the City may issue no-fund warrants to cover any resulting over-expenditures not anticipated in the current year budget. The City is then required to levy sufficient ad valorem property taxes in the first levying period following issuance to retire such warrants. This tax levy is without limitation. B. Grant Programs The City participates in a number of Federal and State assisted grant programs, which are subject to financial and compliance requirements with each applicable grant. Any disallowed costs resulting from financial and B - 68
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 20. Contingencies and Commitments (continued) B. Grant Programs (continued) compliance audits could become a liability of the City. In the opinion of management, any such disallowed costs will not have a material effect on the basic financial statements of the City at December 31, 2006. C. Environmental Matters Gilbert and Mosley Groundwater Contamination Site: An area near the City's downtown has been designated by the Kansas Department of Health and Environment (KDHE) as the Gilbert and Mosley groundwater contamination site. In order to address this site - protect human health and the environment, develop a clean-up plan and avert property value decline within the site - the City entered into an agreement with KDHE to conduct a Remediation Investigation and Feasibility Study (RI/FS). Through the RI/FS agreement, the City has undertaken the obligation to perform the RI/FS and to perform such corrective measures as may be indicated by the RI/FS. A tax increment financing district (TIF) was established to raise funds for obligations the City may incur under the agreement with KDHE. The City also pursued cost recovery from potentially responsible parties (PRPs), and portions of the costs have been recovered. In January 1994, the KDHE completed its review of the RI portion of the report and made it available for review by the public. The RI report describes the nature and extent of contamination at the site. The FS portion of the report was approved by the State in 1994 and the Corrective Action Decision for Interim Groundwater Remediation was issued by the Kansas Department of Health and Environment for the site. The FS outlined the methods that are to be used for clean-up of the site and the Corrective Action Decision for Interim Groundwater Remediation specified the conditions the City must meet in terms of clean-up levels and containment of the down gradient contamination. The Gilbert and Mosley Site Final Design Report, Final Interim Groundwater Remediation Plumes ABE, was approved by KDHE on October 5, 2000, and the Remedial Action Work Plan was approved by KDHE on March 1, 2001. The remediation system for plumes ABE has been constructed including thirteen pumping wells and five and one half miles of pipeline. Cleanup of the groundwater commenced in December of 2002. At the end of December 2005, the City had cleaned over one billion gallons of contaminated groundwater. Twenty-four source locations have been identified as contributing to the down gradient groundwater contamination. Five of the 24 sources are now under the jurisdiction of the Dry Cleaner s Trust Fund that is administered by KDHE and will not require further remedial action from the City. Another seven source properties have been proven to be non-continuing or non-active sources and will not require active remediation work by the City, only monitoring as approved by KDHE. One source property (Bus Barn) was cleaned by the City in 1998 and only requires monitoring under the sitewide monitoring activities. Another site (Water Walk) was discovered during revitalization of a portion of the downtown corridor. Although the site is not a continuing source to the groundwater contamination, removal of the contaminated soil is required when encountered during construction. The investigation of the site is complete and removal of the contaminated soil is being incorporated into the construction budget of the revitalization project. Two source properties are being addressed by the responsible parties under KDHE guidance and will not require action by the City. Four source properties, now under the City s remediation goals, have been combined into two sites where they will be addressed under one remediation plan. Six source locations (sites) require action according to KDHE of which four require City action (Harcros/TriState, TriState-North, S. Washington and English (SWE), and Automotive Fleet Services (AFS)). The City has investigated three of the sites and remedial activity is planned. The remedial action for Harcros/TriState was partially completed in 2006 by the excavation and removal of contaminated soils from three residential properties and the adjacent alley. Construction of an B - 69
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 20. Contingencies and Commitments (continued) C. Environmental Matters (continued) air-sparge/soil vapor extraction system will be completed and in operation by the end of 2007. The system will reduce levels of contamination in the area, which will reduce or eliminate the amount of material that must be excavated and removed or entombed on site. TriState-North, the second source site that the City will address will have a remediation strategy implemented by the end of 2007. The South Washington and English (SWE) site has a KDHE Corrective Action Decision approved and the City of Wichita plans to select the vendor for design and construction of the remedial system in late 2007 with implementation in 2008. The AFS site may need further investigation and remediation as required by KDHE. Two source sites, APCO and Reid Supply, have pending legal decisions. However, the City plans to start investigations of the APCO site, as it is a potential public health risk. Indoor air sampling is planned for 2007 and 2008 for the adjacent residential homes. Selection of a consultant for investigation of the site is planned for 2007 with projected implementation in 2008. In 1998, the City filed a lawsuit to recover its costs to cleanup and protect the groundwater. The action was filed against 26 defendants that owned or operated businesses at fifteen locations within the site. Settlements with a value of $10 million (cash payments, future payments and reduced City responsibilities) were made with a number of the potentially responsible parties (PRPs) before and during litigation. The efforts were intended to seek recovery from the parties responsible for the contamination and minimize the use of the tax increment financing (TIF) district. In 2004, the Kansas Legislature approved changes to the law that would allow the City to extend the TIF district ten additional years (from 2011 to 2021) provided the two effected taxing districts (Sedgwick County and Unified School District 259) extend their approval. The City received these approvals in 2006. The Federal Court trial of the claims against four defendants was held in 2002 with the Court rendering its decision in 2004. The Court found three defendants liable for groundwater contamination and allocated to each of those defendants liability for a portion of the past and future costs of investigation and remediation. In addition, the Coleman Company had initially committed to paying its share of the cleanup cost through a joint agreement with the City of Wichita. Arbitration of the allocation of those costs also concluded in 2004. The City received reimbursement for the allocated share of past costs from each of these PRPs and the Coleman Company. The City continues to invoice for reimbursement of future costs from these parties as they occur. The APCO Liquidating Trust (APCO) was one of the responsible parties found liable for the contamination by the Court. In August 2005, APCO filed for bankruptcy. APCO had already settled and paid its obligation to the City for past costs, but remains liable for 100 percent of future source control costs at this site. If APCO does not assume responsibility for this source control, KDHE will demand that the City be responsible for future source control actions. The City has filed a bankruptcy claim of $1.3 million in projected future costs. The Environmental Protection Agency and the State of Oklahoma have also filed claims against the assets for environmental damages. The extent of the recovery by the City of Wichita from APCO can not yet be determined. The City has not incurred any costs for this source control. In January of 2002, the net present value of the proposed down gradient plume cleanup plan was estimated to total approximately $16.4 million. Source area investigations and control were projected to be another $9.7 million. Since the estimate was prepared, additional investigations, work plans and settlements have occurred. A recalculation of the net present value of the estimated total costs is planned after the City has more specific cost projections based on recent modeling (re-calibration) of the site-wide remediation effectiveness, the source properties are investigated and the remedial activities are determined. B - 70
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 20. Contingencies and Commitments (continued) C. Environmental Matters (continued) North Industrial Corridor Groundwater Contamination Site: In 1995, the City took action to apply the Gilbert and Mosley model to another portion of the community, known as the North Industrial Corridor (NIC). The City of Wichita signed an agreement with KDHE to conduct a Remediation Investigation and Feasibility Study (RI/FS) with conditions similar to those identified in the Gilbert and Mosley site. Since the 1995 signing of the agreement, the City has had the NIC Site removed from the National Priority List. The City has created a tax increment financing district to finance portions of the project. In addition, the City has entered into an agreement with more than 25 businesses in the area, called the NIC Participant Group, that have provided partial funding for the RI/FS for the NIC site. The investigation and cleanup plan is in the initial stages. To date, the City has created a tax incrementfinancing district and has signed an agreement with the Kansas Department of Health and Environment (KDHE) to conduct a Remediation Investigation and Feasibility Study (RI/FS) with conditions similar to those identified in the Gilbert and Mosley site. The NIC Site Final Remedial Investigation Report has been completed and has been submitted to KDHE for approval (June 2004). KDHE approved all but a few sections of the RI and requested additional source investigation. The City of Wichita completed the additional source investigation and submitted the information to KDHE. The NIC RI Addendum (November 2005) was submitted to KDHE for approval and in December of 2005, KDHE provided comments on the RI and RI Addendum. Full approval of the NIC RI and RI Addendum is anticipated in the spring of 2007. Upon full approval of the RI, the feasibility study will be completed and submitted to KDHE. Until the remedial investigation and feasibility study for the NIC area is complete, a final resolution of cost sharing by potentially responsible parties and the NIC Participants cannot be finalized; therefore a meaningful estimation of the total cost of investigation and cleanup activities is not currently available. Brooks Landfill: In 1996, groundwater contamination was identified at the City-owned Brooks Landfill. As a result of the finding, the City entered into the appropriate agreements and permitting conditions regarding the investigation and cleanup of the contamination. The City installed and is operating cleanup facilities at the site to address the contamination. In 2003, an additional contamination plume was found and a limited groundwater investigation was conducted by the City to evaluate the adequacy of the existing groundwater monitoring network along the south side of the Brooks site. As of December 31, 2006, the work under the Release Assessment Plan has been completed and as a result, KDHE has indicated a need for additional monitoring wells. The City is proceeding with the placement of those additional wells. The related liability for the groundwater contamination cleanup is included in the total landfill closure and postclosure costs reflected in the general long-term debt, as of December 31, 2006. Note 18 - Landfill Closure and Post Closure Care, provides further disclosure regarding the future funding of landfill liabilities. D. Construction Commitments The City has outstanding construction commitments for freeway and arterial street construction and other capital improvements of $132,606,575 at December 31, 2006. This amount is reflected as reserve for encumbrances in capital projects funds. E. Public Building Commission Lease The City of Wichita, in cooperation with Sedgwick County, entered into a lease agreement dated March 1, 1993 B - 71
NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED DECEMBER 31, 2006 CITY OF WICHITA KANSAS 20. Contingencies and Commitments (continued) E. Public Building Commission Lease (continued) with the Wichita Public Building Commission in conjunction with the issuance of $18,620,000 Revenue Bonds, Series H, 1993, to finance the acquisition, renovation, construction, and other specified improvements of a State Office Building and related parking facilities in downtown Wichita. In 2003, the original bonds on the State Office Building were refunded with the issuance of $13,880,000 Revenue Bonds, Series N, 2003, to refinance the remaining debt at a lower interest cost. The Wichita Public Building Commission previously entered into a lease agreement for the project with the State of Kansas regarding the acquisition and renovation of the former "Dillard's" building to provide rentable office space. Agencies of the State, including the Department of Social and Rehabilitation Services, lease office space in the State Office Building. The City/County lease is intended to be a "wrap-around" obligation wherein the City and County are contingently liable and will make rental payments, if necessary, to supplement the rental payments to be paid by the State pursuant to the State lease so that the total shall be sufficient to pay the principal of, premium, if any, and interest on the bonds. In 2006, no such payments were required. The City of Wichita also serves as the Property Manager for the State Office Building and related parking facilities for the term of the lease. F. Economic Development Activities The City has established tax increment financing districts to support economic development activities, including the East Bank, 21st and Grove, and Old Town Redevelopment Districts. The City s contributions to these projects include streets, a waterwalk, meeting rooms for Expo Hall (adjacent to the downtown convention hotel), and a parking garage adjacent to the Hotel at Old Town, which are financed through the issuance of bonds of which $21.7 million are outstanding. In the event that property and guest tax revenues generated by the tax increment financing districts and the Hotel at Old Town are not sufficient, and other revenue sources are not available, under State law, the City would be required to levy additional property tax on all taxable tangible property in the City to meet debt service requirements for these projects. In 2001, the City acquired the Hyatt Hotel adjacent to the Century II and Expo Hall Convention Center to insure that the hotel maintained premiere service for convention business. The Hyatt Hotel is managed under contract by the Hyatt Corporation and the operations of the Hyatt Hotel are not related to the operations of the City in any manner. 21. Subsequent Events On February 1, 2007, the City issued $14,865,000 of 15-year general obligation bonds (Series 788) with an average interest rate of 4.03 percent. The City also issued $4,985,000 in general obligation bonds (Series 788A) with an average interest rate 4.26 percent. In addition, on February 1, 2007, the City issued $57,703,000 general obligation renewal and improvement temporary notes (Series 218) with an average interest rate of 4.25 percent and $4,390,000 general obligation temporary notes (Series 219 which are taxable under federal law) with an average interest rate of 5.5 percent. Accordingly, temporary notes payable totaling $18,057,438 were reclassified as bond anticipation notes and are recorded as long-term liabilities in the governmental funds of the City as of December 31, 2006. The notes in the amount of $18,057,438 were refinanced through the issuance of general obligation bonds (Series 788 and Series 788A) on February 1, 2007. B - 72
CITY OF WICHITA, KANSAS 2006 PENSION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS Wichita Employees' Retirement System (Dollar amounts in thousands) Actuarial Actuarial Accrued Unfunded Annual UAAL as a Actuarial Value of Liability (AAL) AAL Funded Covered Percentage of Valuation Assets Entry Age (UAAL) Ratio Payroll Covered Payrol Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) 12/31/04 $ 462,994 $ 413,159 $ (49,835) 112.1 $ 72,154 (69.1) 12/31/05 479,275 433,297 (45,978) 110.6 72,367 (63.5) 12/31/06 505,756 459,062 (46,694) 110.2 75,881 (61.5) Wichita Police and Fire Retirement System (Dollar amounts in thousands) Actuarial Actuarial Accrued Unfunded Annual Actuarial Value of Liability (AAL) AAL Funded Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Date (a) (b) (b-a) (a/b) (c) 12/31/04 $ 392,485 $ 393,387 $ 902 99.8 50,414 UAAL as a Percentage of Covered Payrol ((b-a)/c) $ 1.8 12/31/05 412,823 414,027 1,204 99.7 52,207 2.3 12/31/06 444,498 439,179 (5,319) 101.2 53,530 (9.9) B-73
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APPENDIX C OTHER FINANCIAL INFORMATION
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CITY OF WICHITA, KANSAS FINANCIAL INFORMATION An independent audit is conducted annually by an outside firm of certified public accountants which is appointed by the City Council. Their opinion is contained every year in the Comprehensive Annual Financial Report on file with the City Clerk. Some of the financial information presented in this Official Statement has been taken from the Comprehensive Annual Financial Report for the year ended December 31, 2005. However, this represents an incomplete financial statement presentation. For complete financial presentation, the City of Wichita Annual Financial Report is on file with the City Clerk. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Wichita for its Annual Financial Report for the fiscal year ended December 31, 2005. The Certificate of Achievement for Excellence has been awarded to the City of Wichita for each year it has been submitted to GFOA, starting in 1955. In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, and contents of such report must conform to industry standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. The Government Finance Officers Association of the United States and Canada (GFOA) presented an award for Distinguished Budget Presentation to the City of Wichita for its annual budget for the fiscal year beginning January 1, 2007. The Distinguished Budget Presentation Award has been awarded to the City of Wichita each year since 1989. The City anticipates receipt of the award for the fiscal year beginning January 1, 2008. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. In 1994, the City of Wichita budget was cited as "An Outstanding Operations Guide," a distinction that had been awarded to only three other cities in the United States and Canada. C-1
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The Government Finance Officers Associations of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to the City of Wichita, Kansas for its annual budget for the fiscal year beginning January 1, 2007. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. The award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine eligibility for another award. THE CITY OF WICHITA DEPARTMENT OF FINANCE HAS EARNED THE DISTINGUISHED BUDGET AWARD CONSISTENTLY FOR 19 YEARS. C-3
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CITY OF WICHITA, KANSAS FINANCIAL INFORMATION Assessed Valuation All of Sedgwick County has been reappraised by an outside firm of professional appraisers as a result of a bill passed by the 1986 session of the Kansas Legislature requiring county assessors to reevaluate all real property at market value to be used for tax purposes beginning January 1, 1989. The principal taxpayers (Sedgwick County and the City of Wichita) and their assessed valuation as of December 31, 2006 are as follows: City of Wichita 1 Percent of Total Assessed Valuation Assessed 3 $3,213,622,569 2 Valuation 1. KS Gas & Electric-A Westar Energy Co. 1.26 $40,418,000 2. Southwestern Bell 1.23 39,395,000 3. Wesley Medical Center, LLC (HCA) 1.11 35,673,000 4. Simon Property Group 0.94 30,097,000 5. Kansas Gas Service-Div. on Oneok 0.37 11,835,000 6. Target Corporation 0.35 11,249,000 7. Builders, Inc. 0.33 10,471,000 8. Wal-Mart Real Estate Business 0.29 9,439,000 9. Koch Real Estate Holdings 0.29 9,231,000 10. Bradley Fair One, LLC 0.25 8,070,000 Sedgwick County 1 Percent of Total Assessed Valuation Assessed 3 $3,793,419,298 Valuation 1. KS Gas & Electric-A Westar Energy Co. 1.93 $73,163,000 2. Southwestern Bell 1.31 49,683,000 3. Mid-Western Aircraft Systems, Inc. 1.26 47,959,000 4. Wesley Medical Center LLC (HCA) 0.98 37,343,000 5. Wesley Medical Center, LLC 0.94 35,672,000 6. Simon Property Group, LP 0.79 30,097,000 7. Weststar Energy - Electric Div. 0.54 20,520,000 8. Raytheon Aircraft Company 0.48 18,303,000 9. Kansas Gas Service-Div on Oneok 0.42 15,855,000 10. Basic Chemicals Co., LLC 0.34 12,798,000 1 Source: Sedgwick County Clerk s Office, 2006. 2 Includes motor vehicle property assessed valuation for 2006. 3 Dollars expressed in thousands. C-5
CITY OF WICHITA, KANSAS FINANCIAL INFORMATION Impact of Reappraisal/Classification In accordance with the State Constitution, real property is reappraised a minimum of once every four years. As a result of a modification to the State Constitution approved by electors in the November 3, 1992 general election, real and personal property for taxable years commencing January 1, 1993 and thereafter is divided into classes and assessed at the following percentages of fair market value: Class of Property Assessed Value/ Appraised Value Residential 11.5% Vacant lots 12% Real property of non-profit organizations 12% Manufacturers machinery/equipment 25% Commercial/industrial real property; buildings and other improvements located on land devoted to agricultural use 25% Land used for agricultural purposes 30% All other property 30% Public utilities 33% Among other things, the November, 1992 reclassification referendum reduced residential and commercial assessment rates while increasing the assessment rate for utilities. Contrary to expectations, the 1992 reclassification referendum was not revenue neutral for local governments. Instead, it resulted in an estimated reduction in the City's assessed valuation in 1993 of $102 million, which was partially offset by an estimated $78 million increase due to new improvements and normal growth in personal and real property values. The net result was an estimated $24 million reduction in the City's assessed valuation. The City Council approved a 1994 budget which raised property taxes 1.9 mills -- the result primarily of the net reduction in assessed value caused by the 1992 reclassification referendum. The adopted 1995 budget resulted in a slight reduction in property taxes for City taxpayers, a reduction of.182 mills. The adopted budgets have had no effective change in property tax rate since the 1995 adopted budget. Tax Record Taxes are assessed as of January 1 and become a lien on the property on November 1 of each year. The County Treasurer is the tax collection agent for all taxing entities within the County. Property owners have the option of paying one-half or the full amount of the taxes levied on or before December 20 during the year levied, with the balance to be paid on or before May 10 of the ensuing year. If the first half is not paid before December 21 and the second half before May 11, unpaid taxes accrue interest at a rate of 18% per annum until paid. All real estate bearing unpaid taxes is subject to tax foreclosure if not paid within two years. One-half of the tangible personal property tax, excluding vehicle tax, is due and payable by December 20. If not paid by that time, the tax is due in full plus interest and warrants will be issued for collection by the Sheriff. 1. Percent of 2004 tax levy collected for 2005 operations 94.35% current and 97.68% including delinquent collections. The percent of the 2005 tax levy collected as of December 31, 2006 for 2006 operations 94.82% current and 97.20% with delinquent collections. C-6
CITY OF WICHITA, KANSAS FINANCIAL INFORMATION Tax Record (continued) 2. Tax limitations - The State of Kansas discontinued the tax lid for local units of government in 1999 (for the FY 2000 budgets). The tax lid never extended to property taxes levied for debt service. Other exemptions included employee benefits and tort expenses. The previous lid was based on taxes levied in 1988 and was adjusted for growth factors such as new territory added and new improvements, but not for market increases in property values. Since the base year of 1988, the City of Wichita had incrementally built a cushion of 9% under the lid. The lid was replaced with only a requirement to disclose in the public notice and in the annual budget ordinance the portion of taxes being levied which exceeds "allowable" growth adjustments. Those adjustments are new territory added, increases in the value of personal property, new improvements, and changes in property use. As with the old tax lid law, market-driven increases in property values are not allowable adjustments and would require an offsetting decrease in the tax rate or disclosure in the budget ordinance. There is no other requirement beyond simple disclosure. Also, as with the old tax lid law, the new disclosure requirements do not extend to property taxes levied for debt service and certain other exempted areas. 3. Priority of tax collections [1] specials; [2] taxes; [3] interest. Tax collections are remitted in accordance with pro rata levies. Vehicle tax is due in full and paid at the time of vehicle registration according to an alphabetical schedule. County Sales Tax In July 1985, the Sedgwick County voters approved a one percent (1%) County sales tax. Wichita's estimated 2007 annual share of that tax is $48,405,920. The governing body of the City of Wichita, Kansas has pledged one half of any revenue received from the City of Wichita's portion of a one percent sales tax to relieve the tax levies of the City of Wichita upon the taxable tangible property within the City of Wichita and pledged the remaining one-half of the one percent of any revenues received to Wichita road, highway and bridge projects, including right-of-way acquisitions, as well as debt service. Debt Record The City of Wichita has never defaulted in payment of bond principal or interest. Operating deficits are prohibited under the Kansas Cash Basis Law. Twelve point one percent (12.1%) of the general obligation debt outstanding as of January 1, 2006, was retired during 2006. The City anticipates retiring 11.1% of the general obligation debt outstanding during 2007. Capital Improvements Each year, the City of Wichita includes as a part of its operating budget a ten-year Capital Improvement Program in order to reflect the total activities to be carried out with City funds and to relate present activities with future needs. This Capital Improvement Program functions to establish a priority system among the many-needed projects, matching the projects against available resources. C-7
CITY OF WICHITA, KANSAS Year Ended December 31 1 Total Tax Levy PROPERTY TAX LEVIES AND COLLECTIONS General and Debt Service Funds For years ended December 31, 1997 through December 31, 2006 (dollars expressed in thousands) Current Tax Collections Percentage of Current Levy Collected Collections of Delinquent Taxes Total Tax Collections Ratio of Total Collections to Current Levy 1997 $ 50,128 $ 48,453 $ 96.66 % $ 1,060 $ 49,513 $ 98.77 % 1998 52,357 50,553 96.55 893 51,446 98.26 1999 54,979 52,895 96.21 1,119 54,014 98.24 2000 59,641 56,957 95.50 1,050 58,007 97.26 2001 65,180 61,319 94.08 1,139 62,458 95.82 2002 68,935 65,483 94.99 1,509 66,992 97.18 2003 72,659 68,607 94.42 1,579 70,186 96.60 2004 78,450 74,180 94.56 2,863 77,043 98.21 2005 81,030 76,454 94.35 2,694 79,148 97.68 2006 85,103 80,692 94.82 2,031 82,723 97.20 Year Ended December 31 1 Total Tax Levy PROPERTY TAX LEVIES AND COLLECTIONS Tax Increment Financing Districts For years ended December 31, 1997 through December 31, 2006 (dollars expressed in thousands) (Includes taxes on real property only) Current Tax Collections Percentage of Current Levy Collected Collections of Delinquent Taxes Total Tax Collections Ratio of Total Collections to Current Levy 1997 $ 926 $ 884 $ 95.46 % $ 17 $ 901 $ 97.30 % 1998 800 750 93.75 22 772 96.50 1999 1,896 1,376 72.57 22 1,398 73.73 2000 2,656 2,149 80.91 34 2,183 82.19 2001 4,422 3,823 86.45 52 3,875 87.63 2002 4,467 3,851 86.21 95 3,946 88.34 2003 4,138 4,280 103.43 141 4,421 106.84 2004 6,033 4,524 74.99 242 4,766 79.00 2005 6,163 5,361 86.99 303 5,664 91.90 2006 6,169 5,766 93.47 353 6,119 99.19 Year Ended December 31 1 Assessments Certified to County 2 SPECIAL ASSESSMENT LEVIES AND COLLECTIONS For Fiscal Years 1997 through 2006 (dollars expressed in thousands) Total Assessment Collections Percentage of Current Assessments Collected Collections of Delinquent Assessments Total Assessments Collected Ratio of Total Collections to Current Assessment 1997 $ 25,263 $ 24,094 95.37 % $ 901 $ 24,995 98.94 % 1998 22,135 21,152 95.56 823 21,975 99.28 1999 21,625 20,815 96.25 989 21,804 100.83 2000 22,965 21,993 95.77 758 22,751 99.07 2001 24,538 23,290 94.91 751 24,041 97.97 2002 24,206 22,953 94.82 1,245 24,198 99.97 2003 23,788 22,645 95.20 1,084 23,729 99.75 2004 24,659 23,355 94.71 481 23,836 96.66 2005 25,034 23,958 95.70 1,258 25,216 100.73 2006 27,137 25,902 95.45 778 26,680 98.32 1 The year shown is the year in which the collections were received. The levy or assessment is certified to the county the previous year. 2 Special assessments of proprietary funds and advance payments are not included. C-8
CITY OF WICHITA, KANSAS GENERAL FUND BALANCE SHEET December 31, 2006 (with comparative figures for years ended December 31, 2003, 2004 and 2005) 2003 2004 2005 2006 ASSETS Cash $ 30,067,059 $ 32,639,107 $ 33,375,186 $ 34,344,991 Tangible property taxes receivable 51,438,040 53,894,490 56,541,740 60,349,020 Accounts receivable 740,787 571,235 431,854 292,630 Prepaid items - - 76 75 Due from other funds 50,000 25,000 - - Total assets $ 82,295,886 $ 87,129,832 $ 90,348,856 $ 94,986,716 LIABILITIES AND FUND BALANCE Liabilities: Accounts payable and other liabilities $ 6,827,696 $ 5,869,386 $ 5,422,455 $ 6,778,242 Deposits 529,302 1,646,160 1,468,517 1,149,548 Unearned revenue 51,486,880 53,939,645 56,703,540 61,265,829 Total liabilities 58,843,878 61,455,191 63,594,512 69,193,619 Fund balance: Reserved for encumbrances 2,682,940 3,674,971 3,886,829 2,767,209 Reserved for prepaid items - - 76 75 Unreserved, designated 12,242,494 12,979,625 13,390,142 13,097,514 Unreserved, undesignated 8,526,574 9,020,045 9,477,297 9,928,299 Total fund balance 23,452,008 25,674,641 26,754,344 25,793,097 Total liabilities and fund balance $ 82,295,886 $ 87,129,832 $ 90,348,856 $ 94,986,716 C-9
CITY OF WICHITA, KANSAS GENERAL FUND COMPARATIVE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGETARY BASIS Years ended December 31, 2003, 2004, 2005 and 2006 Actuals 2003 2004 2005 2006 Revenues and other sources: Taxes $ 55,106,918 $ 60,546,778 $ 62,376,117 $ 65,064,691 Special assessments 1 31,597 8,173 7,633 5,629 Franchise fees 29,259,353 29,555,657 30,701,805 31,850,592 Licenses and permits 1,743,499 1,958,895 1,827,977 1,916,765 Fines and penalties 8,453,523 7,933,219 8,666,239 8,801,227 Revenue from uses of money and property 5,136,603 5,549,290 6,042,781 6,271,018 Intergovernmental 15,937,542 16,468,762 16,939,202 17,090,771 Transfers from other funds 3,189,193 5,289,223 6,399,595 8,447,508 Charges for sales and services 6,953,578 7,292,035 7,693,087 7,632,004 Local sales tax 19,867,702 22,369,484 22,590,513 23,852,273 Other 4,495,833 5,382,073 6,468,673 7,246,892 Total revenues and other sources 150,175,341 162,353,589 169,713,622 178,179,370 Expenditures and other uses: Personal services 105,899,665 112,442,168 116,800,166 125,385,869 Contractual services 30,426,726 33,340,581 34,513,040 36,165,706 Materials and supplies 4,549,844 4,851,695 5,913,270 5,665,798 Capital outlay 198,428 597,315 618,291 1,329,439 Transfers to other funds 9,260,068 8,717,480 10,741,574 9,318,912 Other 197,229 1,173,747 259,437 155,273 Total sxpenditures and other uses 150,531,960 161,122,986 168,845,778 178,020,997 Revenues and other sources over (under) expenditures and other uses (356,619) 1,230,603 867,844 158,373 Unencumbered fund balance, January 1 18,893,681 20,769,068 21,999,671 22,867,515 Unencumbered fund balance, December 31 $ 18,537,062 $ 21,999,671 $ 22,867,515 $ 23,025,888 Mill Levy 21.886 21.852 21.876 21.936 1 Special Assessments from Weed Cutting, Lot Improvements, and Snow Removal. C-10
CITY OF WICHITA, KANSAS DEBT SERVICE FUND COMPARATIVE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGETARY BASIS Years ended December 31, 2003, 2004, 2005 and 2006 Actuals 2003 2004 2005 2006 Revenues and other sources: Property taxes $ 22,651,562 $ 24,560,183 $ 25,152,962 $ 26,335,635 Special assessments 25,042,498 25,216,017 26,452,343 28,013,024 Motor vehicle tax 3,526,033 3,737,757 3,815,858 3,938,911 Interest earnings 698,547 495,875 817,730 1,407,561 Premiums on bonds sold 395,112 771,070 83,118 158,637 Transfers from other funds 10,832,846 17,041,300 21,676,080 19,740,231 Other 372,376 615,561 559,561 237,499 Total revenues and other sources 63,518,974 72,437,763 78,557,652 79,831,498 Expenditures and other uses: Interest on general obligation bonds 6,968,794 8,653,841 10,179,792 8,850,859 Interest on special assessment bonds 7,512,729 7,819,476 7,121,129 8,324,877 Interest on HUD Section 108 loan 174,233 163,508 152,069 139,595 Retirement of general obligation bonds 24,756,278 23,190,487 25,471,458 23,902,203 Retirement of special assessment bonds 15,485,000 14,905,000 16,640,000 17,100,000 Retirement of HUD Section 108 loan 195,000 205,000 220,000 235,000 Transfers to other funds - Retirement of temporary notes 2,102,804 23,149,969 7,051,672 28,473,951 Other 117,243 129,513 115,118 7,250 Total expenditures and other uses 57,312,081 78,216,794 66,951,238 87,033,735 Revenues and other sources over (under) expenditures and other uses 6,206,893 (5,779,031) 11,606,414 (7,202,237) Unencumbered fund balance, January 1 20,079,218 26,286,111 20,507,080 32,113,494 Unencumbered fund balance, December 31 $ 26,286,111 $ 20,507,080 $ 32,113,494 $ 24,911,257 Mill Levy 10.019 9.976 10.022 10.017 C-11
CITY OF WICHITA, KANSAS UNAUDITED STATEMENT OF OUTSTANDING DEBT AS OF AUGUST 1, 2007 Bonded debt - payable from property taxes $45,732,087 Bonded debt - payable from other than property taxes 237,086,088 Series 790 12,740,000 Series 790A 2,575,000 252,401,088 General obligation bonds payable from: Airport revenues 2,140,000 Golf Course System 5,084,884 Freeway G.O./local sales tax 99,925,000 Storm Water Utility 8,781,643 Tax increment financing 21,664,395 Series 959 4,390,000 Series 960 7,385,000 Transient guest tax 6,506,045 155,876,967 Total general obligation debt 454,010,142 * Bonded debt - revenue bonds - payable from revenue Water-Sewer Utility Refunding Revenue Bonds - 1998 11,825,000 Water-Sewer Utility Revenue Bonds - 1999 7,380,001 Water-Sewer Utility Revenue Bonds - 2000A 2,085,699 Water-Sewer Utility Revenue Bonds - 2000B 3,590,736 Water-Sewer Utility Refunding Revenue Bonds - 2001 5,720,000 Water-Sewer Utility Revenue Bonds - 2003 117,365,000 Water-Sewer Utility Refunding Revenue Bonds - 2005A 42,540,000 Water-Sewer Utility Refunding Revenue Bonds - 2005B 26,695,000 Water-Sewer Utility Revenue Bonds - 2005C 46,975,000 Water-Sewer Utility Revenue Bonds - 2006 51,140,000 Airport Facility Revenue Bonds 77,824,980 Wichita Public Building Commission 28,385,000 421,526,416 Gross City bonded debt 875,536,558 Less: Water-Sewer Utility Refunding Revenue Bonds - 1998 11,825,000 Water-Sewer Utility Revenue Bonds - 1999 7,380,001 Water-Sewer Utility Revenue Bonds - 2000A 2,085,699 Water-Sewer Utility Revenue Bonds - 2000B 3,590,736 Water-Sewer Utility Refunding Revenue Bonds - 2001 5,720,000 Water-Sewer Utility Revenue Bonds - 2003 117,365,000 Water-Sewer Utility Refunding Revenue Bonds - 2005A 42,540,000 Water-Sewer Utility Refunding Revenue Bonds - 2005B 26,695,000 Water-Sewer Utility Revenue Bonds - 2005C 46,975,000 Water-Sewer Utility Revenue Bonds - 2006 51,140,000 Airport Facility Revenue Bonds 77,824,980 Wichita Public Building Commission 28,385,000 421,526,416 General obligation temporary notes Internal Improvements - Series 218, Dated 02/08/07 57,703,000 ** Taxable Improvements - Series 219, Dated 02/08/07 4,390,000 ** Internal Improvements - Series 220, Dated 08/09/07 65,140,000 Total Outstanding Debt $581,243,142 * * $15,615,000 outstanding principal held in escrow until 2007 call date as part of 2004D Crossover Refunding. ** The Series 218 and 219 Temporary Notes will be retired 08/09/07 from a portion of the Series 790 and 790A Bonds, the Series 220 Temporary Notes and other available funds of the City. C-12
CITY OF WICHITA, KANSAS UNAUDITED STATEMENT OF LEGAL DEBT MARGIN AS OF AUGUST 1, 2007 2006 taxable tangible valuation $2,833,712,791 2006 motor vehicle property assessed value 379,909,778 Equalized tangible valuation for computation of bonded indebtedness limitation $3,213,622,569 Debt limit 1 964,086,771 Bonded indebtedness 454,010,141 Temporary notes 2 127,233,000 Total net debt 581,243,142 Less: Exemptions allowed by law 3 Airport 4 2,140,000 Sewer Improvements 4 106,882,016 Park Improvements 5 8,578,022 Sales Tax 99,925,000 Storm Water Utility 10,458,643 Total deductions allowed by law 227,983,681 Legal debt applicable to debt limit 353,259,461 Legal debt margin $610,827,310 1 Kansas Statute 10-308 (30.0%) Bond Anticipation Temporary Notes: Internal Improvements - Series 218 Dated 02/08/07 Due 08/09/07 $57,703,000 Taxable Improvements - Series 219 Dated 02/08/07 Due 08/09/07 $4,390,000 Internal Improvements - Series 220 Dated 08/09/07 Due 02/07/08 $65,140,000 NOTE: The Series 218 and 219 Temporary Notes will be retired from a portion of the proceeds of the Series 790 and 790A Bonds, the Series 220 Notes and other available funds of the City. 3 Kansas Statutes Annotated 10-307 and 10-308 4 Bonds and Notes issued for any improvement to the Airport and Sewer system, including those payable from Special Assessments. 5 Exempted from Debt Limitation as of July 1, 1975. C-13
CITY OF WICHITA, KANSAS UNAUDITED STATEMENT OF DIRECT AND OVERLAPPING DEBT AS OF DECEMBER 31, 2004, 2005, 2006 AND AUGUST 1, 2007 December 31, 2004 December 31, 2005 Percentage of City of Percentage of City of Debt Applicable Wichita Debt Applicable Wichita to City* Share of Debt to City* Share of Debt Direct Debt: General obligation bonded debt payable from ad valorem taxes $75,253,087 $62,211,489 Temporary note debt 52,300,000 66,180,000 Total direct debt 127,553,087 128,391,489 Less - assets in Debt Service Fund available for payment of principal 20,507,080 32,113,494 Total net direct debt 107,046,007 96,277,995 Overlapping Debt: Sedgwick County 74.61 105,047,150 74.45 109,258,275 USD 259 65.41 179,747,968 64.59 *** 194,147,852 Wichita Public Building Commission Revenue Bonds payable from Wichita State Univ. tax levy 100.00 16,550,000 100.00 14,950,000 Total overlapping debt 301,345,118 318,356,127 Total direct and overlapping debt $408,391,125 $414,634,122 * Percentage of overlapping debt based on assessed valuation. ** Estimate *** USD 259: $70,875,000 outstanding principal held in escrow until call date as part of 2004 and 2005 Crossover Refundings with $33,085,000 (Series 2004) to be called in 2010 and $37,790,000 (Series 2005) to be called in 2011. **** Includes Series 216 and 217 Renewal and Improvement Temporary Notes dated 08/10/06 in the amount of $58,845,000 that will be retired on 02/08/07 from a portion of the Series 788 and 788A bonds, the Series 218 and 219 Temporary Notes and other available funds of the City. C-14
UNAUDITED December 31, 2006 August 1, 2007 Percentage of City of Percentage of City of Debt Applicable Wichita Debt Applicable Wichita to City* Share of Debt to City* Share of Debt $51,313,569 $45,732,087 58,845,000 **** 127,233,000 110,158,569 172,965,087 24,911,257 ** 54,800,000 85,247,312 118,165,087 74.70 115,747,914 74.70 115,747,914 65.41 *** 192,464,576 65.41 *** 196,612,649 100.00 13,520,000 100.00 12,560,000 321,732,490 324,920,563 $406,979,802 $443,085,650 C-15
CITY OF WICHITA, KANSAS UNAUDITED SUMMARY OF GENERAL OBLIGATION DEBT SERVICE CHARGES BASED ON BONDED DEBT AS OF DECEMBER 31, 2006 PAYABLE FROM PAYABLE FROM TAXES TRANSIENT GUEST TAX Debt Service Debt Service Year Principal Interest Charges Principal Interest Charges 2007 10,757,493 1,821,728 12,579,221 1,162,385 731,702 1,894,088 2008 9,757,139 1,431,818 11,188,957 915,686 751,669 1,667,355 2009 8,788,137 1,051,780 9,839,917 901,477 778,128 1,679,605 2010 6,710,580 742,556 7,453,136 889,911 796,976 1,686,887 2011 5,381,076 505,070 5,886,146 891,553 811,924 1,703,477 2012 5,390,073 308,154 5,698,227 891,264 824,992 1,716,256 2013 3,509,069 125,146 3,634,215 896,914 829,966 1,726,880 2014 1,020,000 16,830 1,036,830 167,424 8,371 175,795 $ 51,313,568 $ 6,003,083 $ 57,316,649 $ 6,716,614 $ 5,533,728 $ 12,250,343 PAYABLE FROM PAYABLE FROM TAX INCREMENT FINANCING LOCAL SALES TAX Debt Service Debt Service Year Principal Interest Charges Principal Interest Charges 2007 2,327,121 876,839 3,203,960 6,800,000 4,721,538 11,521,538 2008 2,505,303 784,453 3,289,756 7,090,000 4,416,688 11,506,688 2009 2,693,485 680,838 3,374,323 7,485,000 4,095,981 11,580,981 2010 2,348,636 574,765 2,923,401 7,820,000 3,766,475 11,586,475 2011 2,534,849 478,398 3,013,247 8,205,000 3,417,000 11,622,000 2012 2,724,091 374,141 3,098,232 8,555,000 3,042,913 11,597,913 2013 1,893,334 260,536 2,153,870 8,955,000 2,635,200 11,590,200 2014 932,576 177,243 1,109,819 9,335,000 2,193,825 11,528,825 2015 700,000 141,429 841,429 9,730,000 1,746,300 11,476,300 2016 735,000 116,339 851,339 10,150,000 1,272,888 11,422,888 2017 765,000 89,153 854,153 10,600,000 806,250 11,406,250 2018 795,000 59,985 854,985 6,710,000 392,388 7,102,388 2019 350,000 28,760 378,760 3,070,000 69,075 3,139,075 2020 360,000 14,760 374,760 - - - $ 21,664,395 $ 4,657,638 $ 26,322,033 $ 104,505,000 $ 32,576,519 $ 137,081,519 TOTAL PAYABLE FROM PAYABLE FROM PROPERTY TAXES SPECIAL ASSESSMENTS Debt Service Debt Service Year Principal Interest Charges Principal Interest Charges 2007 21,046,999 8,151,808 29,198,807 23,490,000 8,728,331 32,218,331 2008 20,268,128 7,384,627 27,652,755 19,680,000 8,014,494 27,694,494 2009 19,868,100 6,606,727 26,474,826 19,395,000 7,266,798 26,661,798 2010 17,769,127 5,880,772 23,649,900 19,785,000 6,505,063 26,290,063 2011 17,012,478 5,212,392 22,224,870 19,140,000 5,717,300 24,857,300 2012 17,560,427 4,550,200 22,110,628 18,415,000 4,934,303 23,349,303 2013 15,254,317 3,850,848 19,105,165 17,670,000 4,158,828 21,828,828 2014 11,455,000 2,396,270 13,851,269 16,375,000 3,391,498 19,766,498 2015 10,430,000 1,887,729 12,317,729 15,000,000 2,687,348 17,687,348 2016 10,885,000 1,389,227 12,274,227 11,575,000 2,034,240 13,609,240 2017 11,365,000 895,403 12,260,403 10,650,000 1,556,228 12,206,228 2018 7,505,000 452,373 7,957,373 9,710,000 1,116,531 10,826,531 2019 3,420,000 97,835 3,517,835 7,560,000 712,634 8,272,634 2020 360,000 14,760 374,760 5,570,000 397,963 5,967,963 2021 - - - 2,825,000 160,665 2,985,665 2022 - - - 195,000 38,820 233,820 2023 - - - 205,000 30,155 235,155 2024 - - - 210,000 21,015 231,015 2025 - - - 185,000 11,615 196,615 2026 - - - 70,000 3,395 73,395 $ 184,199,577 $ 48,770,970 $ 232,970,546 $ 217,705,000 $ 57,487,224 $ 275,192,224 C-16
CITY OF WICHITA, KANSAS UNAUDITED SUMMARY OF GENERAL OBLIGATION DEBT SERVICE CHARGES PAYABLE FROM PROPRIETARY FUND REVENUES BASED ON BONDED DEBT AS OF DECEMBER 31, 2006 PROPRIETARY FUNDS Golf Storm Airport Course Water Authority System Utility Year Principal Interest Principal Interest Principal Interest 2007 605,000 129,149 464,026 254,256 847,377 309,648 2008 640,000 94,933 479,947 232,213 872,377 279,135 2009 675,000 58,306 504,947 208,958 897,377 246,564 2010 525,000 19,563 525,000 184,243 922,378 211,934 2011 80,000 4,240 555,000 158,255 947,378 175,639 2012 - - 590,000 130,228 972,378 139,845 2013 - - 620,000 99,990 997,378 104,245 2014 - - 660,000 67,750 745,000 72,675 2015 - - 695,000 34,750 775,000 44,928 2016 - - - - 805,000 15,295 $ 2,525,000 $ 306,192 $ 5,093,920 $ 1,370,643 $ 8,781,642 $ 1,599,908 Totals Debt Service Year Principal Interest Charges 2007 1,916,403 693,053 2,609,456 2008 1,992,324 606,281 2,598,604 2009 2,077,324 513,828 2,591,152 2010 1,972,378 415,739 2,388,118 2011 1,582,378 338,134 1,920,513 2012 1,562,378 270,073 1,832,451 2013 1,617,378 204,235 1,821,614 2014 1,405,000 140,425 1,545,425 2015 1,470,000 79,678 1,549,678 2016 805,000 15,295 820,295 $ 16,400,563 $ 3,276,742 $ 19,677,305 C-17
CITY OF WICHITA, KANSAS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY For years ended December 31, 1997 through December 31, 2006 (dollars expressed in thousands of dollars) Year 1 Real Property Estimated Actual Assessed Value Value Assessed Value Personal Property Estimated Actual Value State Assessed Property Assessed Value Estimated Actual Value 1997 $ 1,322,922 $ 9,116,263 $ 233,094 $ 943,478 $ 120,761 $ 365,911 1998 1,398,595 9,660,784 240,785 987,508 119,768 362,934 1999 1,521,203 10,572,931 258,933 1,067,548 118,859 360,180 2000 1,666,014 11,620,283 291,867 1,214,678 120,686 365,715 2001 1,787,594 12,475,185 273,783 1,153,727 128,886 390,562 2002 1,888,530 13,132,043 277,106 1,154,747 116,026 351,594 2003 2,064,518 14,310,944 276,057 1,147,884 118,372 358,702 2004 2,147,334 14,958,321 275,516 1,142,836 123,092 373,006 2005 2,265,832 15,804,145 276,669 1,136,938 125,534 380,408 2006 2,434,211 16,932,177 284,827 1,165,037 114,675 347,499 Totals Assessed Property Year Assessed Value Estimated Actual Value Assessed Value as a Percent of Actual Value Total Direct Tax Rate 2 Tangible Valuation of Motor Vehicles Total Valuation for Bonded Debt Limitations 1997 $ 1,676,777 $ 10,425,652 16.08% $ 4.90 $ 338,948 $ 2,015,725 1998 1,759,148 11,011,226 15.98% 4.83 312,087 2,071,235 1999 1,898,995 12,000,659 15.82% 4.74 314,395 2,213,390 2000 2,078,567 13,200,676 15.75% 4.72 306,303 2,384,870 2001 2,190,263 14,019,474 15.62% 4.96 324,709 2,514,972 2002 2,281,662 14,638,384 15.59% 5.01 342,600 2,624,262 2003 2,458,947 15,817,530 15.55% 4.86 352,820 2,811,767 2004 2,545,942 16,474,163 15.45% 5.13 360,861 2,906,803 2005 2,668,035 17,321,491 15.40% 5.03 369,682 3,037,717 2006 2,833,713 18,444,713 15.36% 4.95 379,910 3,213,623 1 The assessed value and tax rate of the referenced year supports the budget of the subsequent year. For example, the assessed value multiplied by the tax rate supports the budget of fiscal 2007. Excludes valuation of motor vehicles. 2 Direct tax rates are per $1,000 of assessed value. Source: Sedgwick County Clerk and Sedgwick County Appraiser C-18
GENERAL FUND ASSUMPTIONS REVENUE ASSUMPTIONS: REVENUES (OVERALL)... will grow 5.1% in the current year, due to strong growth in the assessed valuation of property, steady growth in the other major revenue sources (local sales tax, franchise fees, and the motor fuel tax), and one-time windfalls to the General Fund; will grow 4.0% in 2007, 3.1% in 2008, and 2.6% through the remainder of the planning period (2009-2011). are affected in the out years by moderating growth in assessed valuation, an assumed rate increase for electric rates (affecting franchise fees), moderate/normative growth in most other operating revenues, and the absence of any significant one-time sources. Are affected in the out years by the impact of 2006 HB 2883, which is projected to materially impact property tax revenues beginning in 2009. CURRENT PROPERTY TAXES... represent more than 30% of total General Fund revenues. As recently as 1996, only 25% of GF revenue was derived from the current year property tax. will grow 5% in 2006 (approximately $2.6 million). will grow 6.4% in 2007, 5.4% in 2008 and 5% annually thereafter. No change in the taxing rate is assumed. have, until recent years, benefited from aggressive annexation activity. From 2000 to 2002, annexation activity accounted for 1.5%, 1.9%, and 1.4% of annual assessed valuation growth, respectively. It has accounted for 0% in each of the past two years. County growth rates are more indicative of true growth patterns (exclusive of annexation activity). relate directly to assessed valuation, which reflects the following historical budget year growth rates: Year City County 1997 3.8% 4.1% 1998 4.5% 6.0% 1999 4.9% 5.1% 2000 8.0% 6.0% 2001 9.5% 7.3% 2002 5.4% 5.1% 2003 4.2% 3.7% 2004 7.8% 7.9% 2005 3.5% 4.0% 2006 5.0% 5.0% 10 yr avg 5.6% 5.4% Prior to 1998, growth had not exceeded 4% for at least ten years. The growth in the last decade has reflected strong demand for housing and commercial real estate and has been the product of historically low mortgage rates and strong appreciation of real estate assets. The 2008 forecasted rate of assessed valuation growth is 5.4%, equal to the average of the past five years; have been slightly below the experience of the past decade, but reflective of increased level of interest rates as well as a significant decrease in annexation activity. include a reduction of $220,910 in 2008 as the estimated impact of 2006 HB 2883, which reduces the City s assessed valuation of machinery and equipment. The bill provides that all new equipment purchased is exempt from property taxation. The impact in 2008 is offset somewhat by mitigation efforts included in the bill. The impact of 2006 HB 2883 on property taxes during the planning period (net of the effect of the slider provision of the bill) is estimated at $1,095,880 in 2009, $2,253,660 in 2010 and $3,696,010 in 2011. FRANCHISE FEES... for utilities as a group are projected to increase 3.5% in the current year, 2.7% in 2007, 3.0% in 2008 and an annual average rate of 2.4% through the remainder of the planning period (2009-2011). The actual annual growth rate since 1997 has been 2.7%, although growth in this period was substantially impacted by a 17% reduction in electric rates. assumes electric franchise fee revenue will increase 3.2% in the current year, based on year-to-date collections and recent climatic conditions. Electric franchise fees account for 45% of the total franchise fees collected. assume cable receipts will increase 3.0% annually through the planning period. continue to experience substantial declines in SW Bell franchise fees due to the growing ubiquity of cell phones. This decline is offset somewhat by fees collected from other communication providers; however, the net effect is an anticipated decrease in franchise fees from communication providers of 1.5% in 2006 and 2.5% in 2007 2011. include strong revenue from the Water and Sewer utilities, based on sales demand. In addition, the mixture of demand is anticipated to change, with a decrease in residential demand in 2007. MOTOR VEHICLE PROPERTY TAXES... are extremely difficult to forecast due to highly irregular and abnormal distribution patterns. are principally determined by the level and type of vehicle sales, which have been buoyed in the past by significant dealer incentives, including low interest rates, significant pricing discounts and rebates. could be affected significantly by prolonged high gasoline prices. This effect could include increased purchases of more efficient vehicles, and an offsetting reduction in larger, more expensive SUV s. In addition, it is possible that higher gasoline prices could diminish spending on durables, such as vehicles, reducing Motor Vehicle receipts. have historically grown at 3.1% annually (1997 to 2005). C-19
GENERAL FUND ASSUMPTIONS assumed to grow an average of 3.5% annually from 2006 2008, and at a more moderate rate of 3% from 2009-2011. LOCAL SALES TAXES... were only 1% greater in 2005 than in 2004. However, that appears reflective of state distributions at year-end that were pushed into calendar year 2005. are expected to grow 4% in 2006; reflective of timing differences in state distributions from calendar year 2005 (first quarter sales tax receipts are approximately 5% higher than a year ago). Longer term, sale tax receipts are expected to moderate to a long term growth rate of 3%. are not anticipated to be materially impacted by higher gasoline prices. However, it is possible that a prolonged period of higher gasoline prices could reduce other consumer spending, reducing sales tax collections. This impact could be as much as 2% or 3%, given the percentage of disposable income that gasoline takes up. GAS TAX REVENUES... are volume based on wholesale gallons sold. High prices over the last two years would have been expected to lower the quantity sold (hence tax receipts). However, in actual experience, growth has been relatively strong in 2004 (3.5%) and 2005 (4.1%). This suggests a high degree of inelasticity in demand of gasoline (and hence tax receipts). Whether this demand remains inelastic if prices continue to increase remains to be seen. in the current year, revenue is expected to increase 3%, based primarily on collections to date. The long-term forecast assumes 3% annual growth, consistent with historical trends. STATE-SHARED REVENUES... based on the passage of 2006 HB 2583, LATVR transfers are budgeted to begin in 2009. This amount is projected to be $185,110 in 2009, $367,520 in 2010 and $547,360 in 2011. continue to include the 1/3 alcohol tax distribution and LINK and KLINK payments for the shared maintenance responsibility of state roads and highways. are projected to increase 16% in the current year (due to an decrease in KLINK receipts in 2005) and 3.6% in 2007 and 2008. FINES AND PENALTIES include two components Other, which is primarily from the Library (about 5% of total fines and penalties), and Court (about 95%). have been aided by increasingly aggressive Library collections policies including lowering the threshold amount from $40 to $25 that triggers when delinquent accounts are referred to the collection agency. are projected to increase 3.9% in the current year, based on additional Library collection efforts. Growth is estimated at -.4% in 2007, then approximately 2% annually thereafter. LICENSES AND PERMITS... appear to be increasing 11% in 2006. However, several license fees (most notably dog licenses) are expected to be increased in 2006. are continually monitored to identify areas where increasing enforcement costs require offsetting rate adjustments. CURRENT SALES AND SERVICES... fluctuate annually due primarily to engineering overhead reimbursements from capital projects these reimbursements are based on prior year expenditures and tend to vary, particularly in 2007 when the cost of new vehicles purchased in 2006 is recovered. ADMINISTRATIVE CHARGES... are reviewed by an external accounting firm and revised annually during budget development. include $675,000 annually to be received from assessing administrative charges to capital projects were inflated in 2005, due to one-time administrative charges assessed to capital projects for prior years. TRANSFERS IN... are reviewed during the budget process and many items are adjusted to reflect changes in costs. include transfers from enterprise operations to recognize and offset the costs of providing public safety services. include an annual transfer from the Landfill Post Closure Fund. As the remediation liability reduces, the reserve resources for that contingency are moved to the General Fund. include a transfer from the Property Management Fund ($473,820) in 2006 to repay the General Fund for resources initially provided to establish the PM Fund, before property acquisition resources were sufficient to make it a self-supporting operation. include a one-time transfer from the Pension Reserve Fund to offset in 2006 the increased cost of Police and Fire pension costs. The actuarial rate assessed for these costs increased from 14% in 2005 to 18.4% in 2006. This higher rate has been included in the revised budget and absorbed in 2007 and beyond. However, for 2006, consistent with Council action on May 2, 2006, an amount of up to the equivalent of 4.4% of the P&F pension base will be transferred from the Pension Reserve Fund to the General Fund, reduced by any under expenditures in the Police and Fire General Fund budgets. INTEREST EARNINGS... are improving dramatically, based on the 15 interest rate increases by the Federal Reserve over the last 18 months. will increase 11.1% in 2006 and 11.8% in 2007, before leveling out. C-20
GENERAL FUND ASSUMPTIONS includes the Pooled Investment Management (PIM) charge, which is assessed to other funds benefiting from the investment program. are largely dependant upon market rates for investments which are permitted under the City s Investment Policy, as well as the size of the pool of investment funds. RENTAL INCOME... is derived mostly (54%) from Century II and Expo Hall. includes $50,000 beginning in 2006 and $100,000 annually thereafter, from the sand mining lease at Kingsbury. REIMBURSEMENTS... include $284,500 from USD 259 in the current year to offset costs for 10 (of the 22 total) School Resource Officers. In 2007, the budget assumes a reimbursement of $672,540 for 50% of the cost of the SRO program. For 2008, a BOE contribution of $699,990 is projected. This is projected to fund 16 SRO s in 2007. assume project balances from completed projects will be closed to the General Fund in 2006 sufficient to provide $650,000. From 2007 2011, transfers of $250,000 are anticipated. include $100,000 reimbursement from the City of Eastbourgh for Fire services. EXPENDITURE ASSUMPTIONS: EXPENDITURES (OVERALL)... increase 5.7% in the current year, 4% in 2007 and 3.1% in 2008. increase at a rate greater than the rate of increase for revenues beginning in 2009. are most impacted by growth-driven service requirements and personal services increases for wages and employee benefits. assume matching support for a grant to add 24 new Firefighters in 2007. These assumptions are in harmony with approved capital projects in the Capital Improvement Program (CIP). Failure to secure a Fire SAFER grant will require reprioritizing expenditures in 2007. OPERATING TRANSFERS OUT... are mostly subsidies or contributions to support operating functions residing in other funds, such as the joint City- County operations, the Economic Development effort, Transit, Tort liability, and Art Museum. include an on-going annual subsidy of $1,000,000 to the Economic Development Fund. ALL OTHER OPERATING EXPENDITURES... increase 8.7% in 2007 and 2.5% in 2008, primarily due to adjustments in vehicle lease rates due to increases in fuel prices. are projected to increase overall at an average annual rate of 1.7% from 2008 2011. FUND BALANCE (DECEMBER 31)... based on the assumptions shown above, will be at 12.8% of annual expenditures in 2006, 12.3% (2007), 11.9% (2008). Council policy has established 10% as the minimum level of General Fund reserves. Remediation action will be taken to avoid drawing down reserves below minimally acceptable levels. are projected to be significantly reduced beginning in 2009. This anticipated decline is due primarily to the estimated fiscal impact of 2006 HB 2883, which will materially impact property tax revenues beginning in 2009. PERSONAL SERVICES... represent 70% of General Fund expenditures (2007). assume 4.6% average annual increases between 2006 and 2011, including all personal service items, such as base wages and wage-driven benefits (pension, social security, and workers comp), health and life insurance, specialty pay, overtime.. assume a 15% increase in health insurance costs for 2008. Assumptions beyond 2008 are estimated at 10% annually. Cost containment strategies currently under consideration will likely impact this assumption. C-21
CITY OF WICHITA, KANSAS RECENT GENERAL OBLIGATION BOND SALES COUPON INTEREST SERIES DATE OF RATE RATE NO. AMOUNT BONDS MATURITY (PERCENT) (PERCENT) 1993D-Refunding 45,545,000 10-01-93 1 to 14 yrs. 2.55, 2.65, 3.1, 3.4, 3.6, 3.8, 3.95, 4.1 4.2994 735 4,700,000 02-01-94 1 to 15 yrs. 4, 4.2, 4.3, 4.4, 5.85, 5.9, 6 4.4644 1994A 1,565,000 12-01-94 1 to 15 yrs. 7, 6, 5.2, 5.4, 5.6, 5.75, 5.9, 6, 6.2, 6.25, 6.3, 6.4, 6.5 6.0579 1994B 1,825,000 12-01-94 1 to 15 yrs. 7.4, 5.7, 5.4, 5.6, 5.8, 6, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.65, 6.7 6.1020 1994C 575,000 12-01-94 1 to 15 yrs. 9, 8.3, 8.4, 8.5, 8.6, 8.7, 8.75, 8.8 8.7185 738 3,600,000 02-01-95 1 to 15 yrs. 7.5, 6, 5.5, 5.55, 5.6, 5.65, 5.7, 5.75 5.7801 NET 1996A 1,290,000 11-01-96 1 to 15 yrs. 5.5, 4.5, 4.6, 4.7, 4.8, 4.9, 5, 5.1, 5.2, 5.3 4.0910 747 5,535,000 02-01-97 1 to 10 yrs. 5.5, 5, 4.35, 4.45, 4.55, 4.6, 4.7, 4.8, 4.9 4.7407 749 8,800,000 08-01-97 1 to 10 yrs. 6, 5, 4, 4.15, 4.25, 4.3, 4.375 4.4801 951 4,285,000 02-01-98 1 to 15 yrs. 6.5 6.5000 952 1,385,000 02-01-98 1 to 15 yrs. 6, 5.5, 5.25, 4.15, 4.2, 4.3, 4.35, 4.4, 4.45, 4.55, 4.65, 4.75, 4.8 4.6142 953 6,765,366 02-12-98 1 to 15 yrs. 6.7353 754 12,500,000 02-01-99 1 to 15 yrs. 5.75, 5.625, 3.8, 3.9, 4, 4.1, 4.2, 4.25, 4.4, 4.5, 4.6 4.4207 755 9,400,000 02-01-99 1 to 10 yrs. 5.25, 4.75, 3.7, 3.8, 3.9, 4, 4.1, 4.2 4.098 756 10,215,000 08-01-99 1 to 15 yrs. 6.3, 5.1, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 5, 5.05, 5.1, 5.15 4.9494 955 3,300,000 08-01-99 1 to 15 yrs. 6.5, 6.4, 4.5, 4.6, 4.7, 4.8, 4.9, 5, 5.05, 5.1, 5.15 5.0319 758 7,675,000 02-01-00 1 to 15 yrs. 7.0, 6.625, 5.25, 5.0, 5.1, 5.15, 5.25, 5.3, 5.4, 5.5, 5.6, 5.7 5.4502 759 5,100,000 02-01-00 1 to 10 yrs. 7.0, 7.75, 5.0, 5.1 5.1494 2000A 840,000 04/01/00 1 to 10 yrs. 6, 5.85, 5 5.0773 2000B 2,755,000 04/01/00 1 to 10 yrs. 6.25, 4.9, 5, 5.1 5.2103 760 17,050,000 08/01/00 1 to 15 yrs. 6.2,6.5,5.4,4.8,4.85,4.9,4.95,5.05,5.125,5.2,5 5.1567 761 8,310,000 08/01/00 1 to 10 yrs. 5.875,5.15,5,4.625,4.7,4.75,4.8,4.85,4.9 4.8952 763 7,255,000 08/01/00 1 to 15 yrs. 6.5,5.1,4.8,4.85,4.9,4.95,5.05,5.125,5.2,5 5.1521 764 7,765,000 02/01/01 1 to 15 yrs. 5,4.5,4,4.1,4.2,4.3,4.4,4.6,4.7,4.75 4.4933 766 6,980,000 08/01/01 1 to 15 yrs. 4.5,4.25,4.15,4.3,4.4,4.55,4.65,4.75,4.85,4.9 4.5958 768 6,390,000 02/01/02 1 to 15 yrs. 5, 3.5, 3.75, 3.95, 4.1, 4.2, 4.25, 4.4, 4.5, 4.6, 4.4, 4.75 4.4020 769 9,670,000 02/01/02 1 to 10 yrs. 3.25, 3.4, 3.6, 4, 4.125 3.7728 2002-Sales Tax 46,000,000 02/01/02 1 to 15 yrs. 4, 5, 4.125 4.4237 770 8,590,000 08/01/02 1 to 15 yrs. 5.0, 3.0, 3.375, 3.5, 3.65, 3.75, 4.0, 4.1, 4.25, 4.375, 4.4 4.0400 771 9,175,000 08/01/02 1 to 10 yrs. 4.75, 2.75, 3.0, 3.25, 3.5, 3.625, 3.75, 4.0 3.4743 956 8,000,000 08/01/02 1 to 10 yrs. 3.0, 3.5, 3.7, 3.8, 3.9 3.5421 772 15,420,000 02/01/03 1 to 15 yrs. 4.5, 3.5, 2.5, 3, 3.25, 3.6, 3.75, 4, 4.1, 4.125, 4.25 3.9867 773 13,340,000 02/01/03 1 to 10 yrs. 2.5, 2.75, 3.25, 3.5, 3.65, 3.8, 4.0 3.3408 774 12,395,000 08/01/03 1 to 15 yrs. 4, 3.375, 3, 3.1, 3.25, 3.375, 3.5, 3.625, 3.8 3.5905 775 13,000,000 08/01/03 1 to 10 yrs. 2, 3, 2.55, 2.85, 3.5 2.9127 2003A-Refunding 14,375,000 08/01/03 1 to 8 yrs. 2, 4, 2.5, 2.75, 3, 3.1 2.5662 2003B-Sales Tax 48,855,000 12/01/03 1 to 15 yrs. 3.25, 4, 5 3.8619 776 13,390,000 02/01/04 1 to 15 yrs. 2, 2.25, 2.45, 2.7, 3, 3.5, 3.35, 3.55, 3.7, 3.8, 3.95, 4 3.5204 777 10,185,000 02/01/04 1 to 10 yrs. 2, 2.25, 2.45, 2.6, 2.875, 3, 3.15, 3.3 2.8070 957 4,980,000 02/01/04 1 to 14 yrs. 3, 2.75, 2.5, 3.125, 3.25, 3.5, 3.625, 3.75, 3.875 3.3749 778 12,175,000 08/01/04 1 to 15 yrs. 3.25, 3.5, 3.75, 3.6, 5, 4, 4.125, 4.2, 4.25 4.0210 778A 565,000 08/01/04 1 to 20 yrs. 4, 4.5, 4.1, 4.2, 4.25, 4.375, 4.4, 4.5, 4.7, 4.75 4.4388 2004-Sales Tax 36,000,000 08/01/04 1 to 15 yrs. 3, 5, 3.25, 3.5, 4, 4.5 4.0567 2004B-Refunding 18,180,000 12/01/04 1 to 7 yrs. 3, 4, 3.5 3.0097 2004C-Refunding 12,070,000 12/01/04 1 to 5 yrs. 3, 4, 5 2.7372 2004D-Refunding 41,730,000 12/01/04 1 to 10 yrs. 4, 5 3.6036 780 19,020,000 02/01/05 1 to 15 yrs. 4, 3.3, 3.45, 3.6, 3.7, 3.8, 3.9, 4.1 3.8464 958 4,140,0001 02/01/05 1 to 15 yrs. 4, 3.375, 3.3, 3.45, 3.6, 3.7, 3.8, 3.9, 4.1 3.8380 782 13,810,000 08/01/05 1 to 15 yrs. 3.5, 4, 4.25 3.8629 782A 1,610,000 08/01/05 1 to 20 yrs 4, 4.25 4.1471 784 19,300,000 02/01/06 1 to 15 yrs. 4, 4.375, 4.5, 4.2 4.0557 785 6,805,000 02/01/06 1 to 10 yrs. 3.5, 3.6, 3.7, 3.8, 4 3.7140 786 10,575,000 08/01/06 1 to 15 yrs. 5, 4.5, 4.25, 4.10, 4.4, 4.45 4.3665 786A 920,000 08/01/06 1 to 20 yrs. 5.75, 5.5, 5.0, 4.5, 4.3, 4.35, 4.4, 4.45, 4.55, 4.6,4.65, 4.7, 4.75, 4.8, 4.85 4.6861 788 14,865,000 02/01/07 1 to 15 yrs. 4.0, 4.125, 4.250 4.0798 788A 4,985,000 02/01/07 1 to 20 yrs. 4.0, 4.1, 4.2, 4.25, 4.625 4.2567 C-22
APPENDIX D FORM OF BOND COUNSEL'S OPINIONS
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FORM OF BOND COUNSEL S OPINION SERIES 790 KUTAK ROCK LLP Kansas City, Missouri August 9, 2007 Governing Body of the city of Wichita, Kansas Re: $12,740,000 General Obligation Bonds, Series 790, of the city of Wichita, Kansas, Dated August 1, 2007 We have acted as Bond Counsel in connection with the issuance by the city of Wichita, Kansas (the City ), of the above-captioned bonds (the Bonds ). We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The Bonds are valid and legally binding general obligations of the City, payable as to both principal and interest from special assessments levied upon the property benefited by the construction of certain improvements and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. 2. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinions set forth in this paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. D-1
Governing Body of the city of Wichita, Kansas August 9, 2007 Page 2 The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient s particular status or other items of income or deduction. We express no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers of the Bonds that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions or certain recipients of Social Security or Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit or taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations, are advised to consult their tax advisors as to the tax consequences of purchasing or holding the Bonds. The Bonds have not been designated as qualified tax-exempt obligations for purposes of Section 265(b) of the Code. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 3. The interest on the Bonds is excluded from computation of Kansas adjusted gross income and is exempt from the tax imposed by Kansas counties, cities or townships upon the gross earnings derived from money, notes and other evidence of debt. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material relating to the Bonds (except to the extent, if any, stated in the official statement) and we express no opinion relating thereto (excepting only the matters set forth as our opinion in the official statement). The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights heretofore or hereafter enacted to the extent applicable and that their enforcement may be subject to the exercise of judicial discretion in appropriate cases. D-2
FORM OF BOND COUNSEL S OPINION SERIES 790A KUTAK ROCK LLP Kansas City, Missouri August 9, 2007 Governing Body of the city of Wichita, Kansas Re: $2,575,000 General Obligation Bonds, Series 790A, of the city of Wichita, Kansas, Dated August 1, 2007 We have acted as Bond Counsel in connection with the issuance by the city of Wichita, Kansas (the City ), of the above-captioned bonds (the Bonds ). We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The Bonds are valid and legally binding general obligations of the City, payable as to both principal and interest from special assessments levied upon the property benefited by the construction of certain improvements and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. 2. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinions set forth in this paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. D-3
Governing Body of the city of Wichita, Kansas August 9, 2007 Page 2 The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient s particular status or other items of income or deduction. We express no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers of the Bonds that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions or certain recipients of Social Security or Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit or taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations, are advised to consult their tax advisors as to the tax consequences of purchasing or holding the Bonds. The Bonds have not been designated as qualified tax-exempt obligations for purposes of Section 265(b) of the Code. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 3. The interest on the Bonds is excluded from computation of Kansas adjusted gross income and is exempt from the tax imposed by Kansas counties, cities or townships upon the gross earnings derived from money, notes and other evidence of debt. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material relating to the Bonds (except to the extent, if any, stated in the official statement) and we express no opinion relating thereto (excepting only the matters set forth as our opinion in the official statement). The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights heretofore or hereafter enacted to the extent applicable and that their enforcement may be subject to the exercise of judicial discretion in appropriate cases. D-4
FORM OF BOND COUNSEL S OPINION SERIES 959 KUTAK ROCK LLP Kansas City, Missouri August 9, 2007 Governing Body of the city of Wichita, Kansas Re: $4,390,000 General Obligation Bonds, Series 959 (Taxable Under Federal Law), of the city of Wichita, Kansas, Dated August 1, 2007 We have acted as Bond Counsel in connection with the issuance by the city of Wichita, Kansas (the City ), of the above-captioned bonds (the Bonds ). We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The Bonds are valid and legally binding general obligations of the City, payable as to both principal and interest from certain incremental increases in real property taxes within the Water Walk Redevelopment District (the Tax Increment Revenues ) as defined in the Ordinance of the City authorizing the issuance of the Bonds (the Ordinance ), and, if not so paid, said principal of, premium if any, and the interest thereon shall be paid from ad valorem taxes which may be levied without limitation as to rate or amount upon all of the taxable tangible property within the territorial limits of the City. The pledge of the Tax Increment Revenues to the payment of the principal of and interest on the Bonds under the Ordinance is on a parity with the City s General Obligation Bonds, Series 960 Bonds, dated August 1, 2007. 2. The interest on the Bonds is included in gross income for federal income tax purposes. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 3. The interest on the Bonds is excluded from computation of Kansas adjusted gross income and is exempt from the tax imposed by Kansas counties, cities or townships upon the gross earnings derived from money, notes and other evidence of debt. D-5
Governing Body of the city of Wichita, Kansas August 9, 2007 Page 2 We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material relating to the Bonds (except to the extent, if any, stated in the official statement) and we express no opinion relating thereto (excepting only the matters set forth as our opinion in the official statement). The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights heretofore or hereafter enacted to the extent applicable and that their enforcement may be subject to the exercise of judicial discretion in appropriate cases. D-6
FORM OF BOND COUNSEL S OPINION SERIES 960 KUTAK ROCK LLP Kansas City, Missouri August 9, 2007 Governing Body of the city of Wichita, Kansas Re: $7,385,000 General Obligation Bonds, Series 960, of the city of Wichita, Kansas, Dated August 1, 2007 We have acted as Bond Counsel in connection with the issuance by the city of Wichita, Kansas (the City ), of the above-captioned bonds (the Bonds ). We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The Bonds are valid and legally binding general obligations of the City, payable as to both principal and interest from certain incremental increases in real property taxes within the Water Walk Redevelopment District (the Tax Increment Revenues ) as defined in the Ordinance of the City authorizing the issuance of the Bonds (the Ordinance ), and, if not so paid, said principal of, premium if any, and the interest thereon shall be paid from ad valorem taxes which may be levied without limitation as to rate or amount upon all of the taxable tangible property within the territorial limits of the City. The pledge of the Tax Increment Revenues to the payment of the principal of and interest on the Bonds under the Ordinance is on a parity with the City s General Obligation Bonds, Series 959 Bonds (Taxable Under Federal Law), dated August 1, 2007. 2. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinions set forth in this paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to D-7
Governing Body of the city of Wichita, Kansas August 9, 2007 Page 2 be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient s particular status or other items of income or deduction. We express no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers of the Bonds that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions or certain recipients of Social Security or Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit or taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations, are advised to consult their tax advisors as to the tax consequences of purchasing or holding the Bonds. The Bonds have not been designated as qualified tax-exempt obligations for purposes of Section 265(b) of the Code. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 3. The interest on the Bonds is excluded from computation of Kansas adjusted gross income and is exempt from the tax imposed by Kansas counties, cities or townships upon the gross earnings derived from money, notes and other evidence of debt. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material relating to the Bonds (except to the extent, if any, stated in the official statement) and we express no opinion relating thereto (excepting only the matters set forth as our opinion in the official statement). The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights heretofore or hereafter enacted to the extent applicable and that their enforcement may be subject to the exercise of judicial discretion in appropriate cases. D-8
APPENDIX E CAPITAL IMPROVEMENTS
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CITY OF WICHITA, KANSAS GENERAL OBLIGATION BONDS, SERIES 790 CAPITAL IMPROVEMENTS CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE WATER 448-89614 WDS Equestrian Estates Addition $ 99,100 $ 99,100 $ - 470-958 735287 448-89788 WDS Woodland Lakes Estates 3rd & 4th Additions 51,500 51,500-470-982 735311 448-89789 WDS Woodland Lakes Estates 3rd & 4th Additions 26,900 26,900-470-969 735298 448-89850 WDS Harvest Ridge Addition 61,500 61,500-470-976 735305 448-89895 WDS Liberty Park 2nd & 3rd Additions 105,200 105,200-470-977 735306 448-89957 WDS Reed's Cove 3rd Addition 49,600 49,600-470-961 735290 448-89962 WDS Turkey Creek 2nd Addition 84,400 84,400-470-975 735304 448-89984 WDS Shadow Woods Addition 67,800 67,800-470-974 735303 448-89999 WDS Fontana & Fontana 2nd Additions 181,600 181,600-470-959 735288 448-90013 WDS Evergreen 5th Addition 55,300 55,300-470-949 735278 448-90045 WDS Fontana & Fontana 2nd Additions 119,900 41,965-470-964 735293 E-1
CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE 448-90060 WDS Unplatted Tracts (Goddard School Building Addition) $ 417,200 $ 166,880 $ - 470-916 735245 448-90062 WDS North Ridge Village Addition 56,300 56,300-470-929 735258 448-90096 WDS Krug North 2nd Addition 68,300 68,300-470-981 735310 448-90112 WDS Casa Bella Addition 139,000 91,740-470-966 735295 448-90121 WDS Auburn Hills 16th Addition 155,100 134,720-470-955 735284 448-90125 WDS Timberlands Addition 20,300 20,300-470-985 735314 448-90140 WDS Eberly Farm Office Park Addition 29,400 29,400-470-965 735294 448-90160 WDS Blue Sky & Iseminger Additions 17,100 17,100-470-980 735309 448-90173 WDS Reed's Cove 4th Addition 47,300 47,300-470-978 735307 SUBTOTAL WATER 1,852,800 1,456,905 - SANITARY SEWER 468-83318 Lateral 314, Four Mile Creek Sewer 171,300 171,300-480-843 744155 468-83589 Lateral 346, Four Mile Creek Sewer 73,600 73,600-480-866 744178 E-2
CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE 468-83660 Lateral 2, Main 5, Cowskin Interceptor Sewer $ 155,600 $ 133,520 $ - 480-862 744174 468-83730 Lateral 7, Main 5, Northwest Interceptor Sewer 176,700 176,700-480-863 744175 468-83819 Lateral 2, Main 6, Cowskin Interceptor Sewer 195,500 195,500-480-861 744173 468-83842 Lateral 1, Main 15, Sanitary Sewer No. 23 302,200 302,200-480-800 744112 468-83877 Lateral 5, Main 7, Northwest Interceptor Sewer 368,600 368,600-480-844 744156 468-83972 Lateral 507, Southwest Interceptor Sewer 44,800 44,800-480-825 744137 468-83977 Lateral 21, Main 19, Southwest Interceptor Sewer 239,010 239,010-480-814 744126 468-84018 Lateral 69, Main 9, Sanitary Sewer No. 23 56,400 56,400-480-826 744138 468-84023 Lateral 1, Main 1, Boeing Sewer 541,600 501,413-480-854 744166 468-84055 Lateral 379, Four Mile Creek Sewer 147,200 147,200-480-865 744177 468-84066 Lateral 7, Main 13, Sanitary Sewer No. 23 91,600 91,600-480-836 744148 468-84072 Lateral 2, Main 18, Four Mile Creek Sewer 145,300 145,300-480-853 744165 E-3
CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE 468-84089 Lateral 12, Main 2, Cowskin Interceptor Sewer $ 180,200 $ 180,200 $ - 480-842 744154 468-84093 Lateral 385, Four Mile Creek Sewer 88,000 88,000-480-867 744179 468-84096 Lateral 9, Main 13, Sanitary Sewer No. 23 187,800 187,800-480-869 744181 468-84109 Lateral 6, Main 3, Northwest Interceptor Sewer 97,730 97,730-480-852 744164 468-84124 Lateral 5, Main 10, Four Mile Creek Sewer 66,700 66,700-480-849 744161 468-84142 Lateral 394, Four Mile Creek Sewer 74,300 74,300-480-856 744168 468-84153 Lateral 6, Main 14, Four Mile Creek Sewer 108,200 108,200-480-864 744176 SUBTOTAL SANITARY SEWER 3,512,340 3,450,074 - STORM SEWER 468-83598 Storm Water Drain #201 129,200 129,200-485-291 751400 468-83750 Storm Water Drain #224 306,300 306,300-485-265 751374 468-83793 Storm Water Drain #228 496,000 496,000-485-296 751405 468-83938 Storm Water Drain #249 193,700 193,700-485-280 751389 E-4
CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE 468-83968 Storm Water Drain #253 $ 665,800 $ 665,800 $ - 485-297 751406 468-83995 Storm Water Sewer #614 78,300 78,300-485-298 751407 468-84011 Storm Water Drain #264 169,800 169,800-485-292 751401 468-84012 Storm Water Drain #265 232,100 232,100-485-293 751402 468-84014 Storm Water Drain #267 126,300 126,300-485-288 751397 468-84092 Storm Water Drain #278 655,200 655,200-485-309 751418 SUBTOTAL STORM WATER SEWER 3,052,700 3,052,700 - PAVING 472-83485 Mainsgate, Eagle, Mainsgate Ct. 305,000 305,000-490-060 765947 472-83837 Palmetto Circle 53,300 53,300-490-044 765931 472-83838 Palmetto, Havenhurst 111,400 111,400-490-045 765932 472-83839 Palmetto 147,200 147,200-490-046 765933 E-5
CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE 472-84078 Bolin Drive $ 177,400 $ 177,400 $ - 490-019 765906 472-84082 Mainsgate/Loch Lomond, Williamsgate 253,800 253,800-490-074 765960 472-84139 Stout, Stout Court, etc. 559,300 559,300-490-033 765920 472-84209 Oak Creek Parkway, Chateau Parkway 1,243,600 1,243,600-490-049 765936 472-84225 Governour Circle 139,200 139,200-490-063 765950 472-84229 21st Street North Decel Lane 49,400 49,400-490-094 765979 472-84242 Facade @ 535 West Douglas 251,600 221,600 30,000 491-013 766012 472-84249 Castle Rock & 24th Street North; Spring Hollow; Mainsgate, etc. 463,600 463,600-490-082 765967 472-84262 Conrey, Forest Ridge, Lake Ridge, etc. 709,900 709,900-490-067 765954 472-84270 Stafford, Stoneybrook, Stafford Ct. 282,200 282,200-490-070 765957 472-84285 Fawn Grove, Smithmoor/Smithmoor Circle, etc. 224,200 224,200-490-080 765965 472-84381 Facade @ 1409 East Douglas 37,500 28,125 9,375 491-018 766017 E-6
CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE 472-84382 Facade @ 111 E. Ellis $ 36,700 $ 27,525 $ 9,175 491-019 766018 SUBTOTAL PAVING 5,045,300 4,996,750 48,550 TOTAL $ 13,463,140 $ 12,956,429 $ 48,550 TOTAL COST $ 13,463,140 CASH PAID TO CITY TREASURER 104,852 CASH PAID TO MAIN BENEFIT FEE - PAID BY CITY AT LARGE 48,550 MAIN BENEFIT FEE 109,488 TRANSFER FROM WATER/SEWER UTILITY 458,162 LESS: AMOUNT ANTICIPATED TO BE PAID 2,088 TOTAL AMOUNT FOR BOND SERIES 790 $ 12,740,000 E-7
CITY OF WICHITA, KANSAS GENERAL OBLIGATION BONDS, SERIES 790A CAPITAL IMPROVEMENTS CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE WATER 448-89857 WDS Brighton Courts Addition $ 37,300 $ 37,300 $ - 470-994 735323 448-90127 WDS R & P Addition 12,500 12,500-470-957 735286 SUBTOTAL WATER 49,800 49,800 - SANITARY SEWER 468-84005 Lateral 6, Main 4, Northwest Interceptor Sewer 215,400 215,400-480-812 744124 468-84065 Lateral 6, Main 13, Sanitary Sewer No. 23 615,100 615,100-480-835 744147 SUBTOTAL SANITARY SEWER 830,500 830,500 - STORM SEWER 468-83996 Storm Water Drain #262 173,700 173,700-485-289 751398 468-84140 Storm Water Drain #286 519,800 519,800-485-308 751417 SUBTOTAL STORM SEWER 693,500 693,500 - E-8
CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE PAVING 472-84213 Den Hollow, Westlakes Parkway, Wild Thicket Ct., etc $ 230,400 $ 230,400 $ - 490-050 765937 472-84214 Wild Thicket, Wild Thicket Courts 216,200 216,200-490-076 765962 472-84264 Kite, Marblefalls, Kite Ct., etc. 483,300 483,300-490-088 765973 472-84277 Westlakes Parkway 116,800 116,800-490-077 765963 SUBTOTAL PAVING 1,046,700 1,046,700 - TOTAL $ 2,620,500 $ 2,620,500 - TOTAL COST $ 2,620,500 CASH PAID TO CITY TREASURER 42,715 CASH PAID TO MAIN BENEFIT FEE - PAID BY CITY AT LARGE - MAIN BENEFIT FEE - TRANSFER FROM WATER/SEWER UTILITY - LESS: AMOUNT ANTICIPATED TO BE PAID 2,785 TOTAL AMOUNT FOR BOND SERIES 790A $ 2,575,000 E-9
CITY OF WICHITA GENERAL OBLIGATION TAXABLE TIF BONDS, SERIES 959 CAPITAL IMPROVEMENTS CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE PUBLIC IMPROVEMENTS 435352 Water Walk - Land, Arch./Engin., Demo. $ 4,390,000.00 $ - $ 4,390,000.00 792382 TOTAL SERIES 2007 $ 4,390,000.00 $ - $ 4,390,000.00 E-10
CITY OF WICHITA GENERAL OBLIGATION TIF BONDS, SERIES 960 CAPITAL IMPROVEMENTS CHARGEABLE CHARGEABLE STATEMENT TO BENEFIT TO CITY PROJECT DESCRIPTION OF COST DISTRICT AT LARGE PUBLIC IMPROVEMENTS 435352 Water Walk $ 7,385,000.00 $ - $ 7,385,000.00 TOTAL SERIES 2007 $ 7,385,000.00 $ - $ 7,385,000.00 E-11
CITY OF WICHITA. KANSAS GENERAL OBLIGATION TEMPORARY NOTES, SERIES 220 CAPITAL IMPROVEMENTS Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money ARTERIAL PAVING George Washington Blvd & Mt. Vernon 200246 $ 2,100,000 $ - $ 11,300 706792 2001 Arterial Design Program 201276 1,150,000-11,400 706811 2001 Bridge Design 472-83373 201282 175,000 - - 706816 21st & Rock Road (83438) 201295 2,130,000-22,000 706829 Webb @ 29th & K-96 472-83508 202306 300,000 35,000 1,000 706840 29th St.; Rock - Webb 472-83519 202307 2,885,000-21,700 706841 Central, Maize - Tyler 472-83659 203314 2,740,000-6,700 706848 Harry, Oliver-Woodlawn 472-83685 203318 3,000,000-23,300 706852 First & Hydraulic Intersection (Design) 203326 20,000 - - 706860 Central, Oliver-Woodlawn 472-83754 203328 135,000-3,500 706862 Min, Douglas-Murdock 472-83811 203330 1,465,000-21,200 706864 McCormick Realignment 472-83831 203332 1,563,000 567,000 130,500 706866 Harry / Mclean Instrsct 472-83781 204331 990,000-12,100 706865 Hillside, Kellogg-Central 472-83862 204333 4,550,000-1,000,000 706867 Pawnee, Washington-Hydraulic 472-83858 204335 2,825,000-281,000 706869 Pawnee/Washington Intersect. 472-83859 204336 1,385,000 - - 706870 Central, Oliver-Woodlawn 472-83873 204337 3,825,000-234,900 706871 Central, Woodlawn-Rock 472-83874 204338 3,865,000 - - 706872 Rock, 21st-29th 472-83889 204340 2,570,000-37,000 706874 119th St. West, 17th-21st 472-83890 204341 1,125,000 23,000 500 706875 Hydraulic, 57th-47th 472-83902 204343 5,050,000-67,700 706877 E-12
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money Maple-Ridge Intersection 472-83856 204348 $ 70,000 $ - $ - 706882 Bike Path Trailhead in Grove Park (Design) 472-84003 204349 25,000 - - 706883 Gyp Creek Bikepath-D 472-84009 204351 75,000 - - 706885 Zoo/Westdale/I-235 472-83986 204355 365,000 - - 706889 West St: Maple-Central 472-83979 204356 2,230,000-626,000 706890 Pawnee: 119th-Maize-D 472-84005 204357 210,000-48,100 706891 Pawnee: Meridian-Seneca-D 472-84012 204359 100,000-18,000 706893 Pawnee between Palisade to Broadway (Design) 204360 50,000 - - 706894 MacArthur: Meridian-Seneca Imp.-D 472-83996 204362 210,000-6,200 706896 Central: 135th W.-119th W. Imp.-D 472-84017 204364 160,000-11,900 706898 Greenwich: 13th-K-96 Imp.-D 472-84004 204365 320,000 - - 706899 Harry: K-42 Meridian Imp. 472-84001 204366 1,400,000-129,000 706900 29th: 119th W.-Maize Imp. D-472-83982 204367 95,000-10,000 706901 21st Street from Oliver to Woodlawn (Design) 204368 90,000 - - 706902 Dewey from Main to Broadway (Design) 204371 30,000 - - 706905 Pawnee-McLean Intrsctn. Imp. 472-84007 204372 1,750,000-275,000 706906 Harry-Longford Intersect Imp. 472-83998 204373 200,000 - - 706907 04/05 Traffic Signal Prg. 472-83991 204377 610,000-56,100 706911 13th St. Imp-135th W/Azure 472-84131 204379 2,100,000 - - 706913 29th St Imp Tyler-Ridge 472-83903 204380 3,700,000-438,000 706914 2005 Arterial Sidewlk/WCR prf 472-84142 205381 400,000-151,800 706915 ITS Traffic Study-'05 472-84119 205382 525,000 370,000 11,000 706916 Tyler/Yosemite Inter. 472-84185 205385 5,250,000-93,000 706919 E-13
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money 37th St. N. Tyler-Ridge 472-84186 205386 $ 5,350,000 $ - $ 1,300,000 706920 Gyp Creek Bikepath-D 472-84194 205387 1,115,000-4,600 706921 Hydraulic, 63rd S. -57th S. 472-84118 205388 2,500,000-590,200 706922 21st; Oliver-Woodlawn 4172-84235 205389 2,430,000-37,600 706923 Maize/Westport Intersect. 472-84244 205390 460,000-28,700 706924 13th/Broadway Intrsct. Imp. 472-84178 205391 2,435,000-507,000 706925 2005 Arterial St. Rehab. 472-84158 205392 400,000-105,800 706926 Ridge/Maple Intrsct. Imp. 472-84258 205393 2,230,000-308,000 706927 Greenwich: 13th-27th N. 472-84274 205395 6,000,000-180,000 706929 Boys & Girls Club Imp. 472-84282 205396 1,330,000-224,000 706930 Pawnee, Palisade-Water 472-84283 205398 2,093,892-600,000 706932 13th, I-135-Woodlawn 472-84320 205399 210,000-64,300 706933 21st/Broadway Intrsctn 472-84295 205400 140,000-33,400 706934 47th St. S. Meridian-Seneca 472-84296 205401 215,000-37,000 706935 55th St. S./Broadway Intrsctn 472-84306 205402 85,000-7,600 706936 119th St. W. Kellogg-Maple 472-84306 205403 160,000-16,700 706937 135th St. W. Maple-Central 472-84308 205404 145,000-39,800 706938 151st. St. W. Kellogg-Maple 472-84318 205405 400,000-38,000 706939 Central/Tyler Intrsctn 472-84311 205406 145,000-33,400 706940 Greenwich, Harry-Kellogg 472-84301 205407 155,000-29,800 706941 Hydraulic, Harry-Kellogg 472-84310 205408 27,500-4,600 706942 Lincoln St Imp Hillside-Oliver 472-84307 205409 25,000-10,400 706943 Meridian, 47th St. S.-31st St. S. 472-84302 205410 400,000-39,000 706944 E-14
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money Meridian, Pawnee-Orient 472-84309 205411 $ 60,000 $ - $ - 706945 Mt. Vernon, Broadway-Ark River 472-84289 205412 27,500-14,900 706946 Pawnee, K-15-Hillside 472-84303 205413 145,000-17,400 706947 Woodlawn, Lincoln-Kellogg 472-84304 205414 105,000-18,000 706948 Ark River Bike Path, Galena-GWB 472-84319 205415 155,000-53,900 706949 Central/Oliver intrsct. 472-84362 206416 1,250,000-151,200 706950 Pawnee: Maize-119th St. W. 472-84357 206417 8,000,000-179,200 706951 MacArthur: Meridian-Seneca 472-84358 206418 3,600,000-161,466 706952 17th St. N. Broadway - I-135 472-84392 206419 1,000,000-120,700 706953 21st St., K-96 to 19th St. E. 206420 100,000-11,000 706954 Greenwich, 26th-29th 472-84415 206421 1,700,000-300,000 706955 2006 Arterial Street Rehab 472-84429 206423 400,000-296,100 706957 Pawnee; Meridian - Seneca 472-84356 206424 4,900,000-253,500 706958 Greenwich Rd, Central-13th (Design) 472-84435 206425 160,000-58,300 706959 Greenwich; Central to 13th 472-84435 208220 3,623,000-48,800 706663 Central, West-McLean 472-82906 208222 4,500,000 269,000 5,000 706689 29th, Oliver - Woodlawn 472-82996 208229 1,350,000-17,800 706754 Harry, Webb - Greenwich 472-83091 209232 2,400,000-14,600 706771 River Corridor - Ark River Imp. Ph I GO 405209 27,798,214-2,385,000 706556 TOTAL ARTERIAL PAVING 153,538,106 1,264,000 12,106,666 BRIDGES 15th St. Bridge@Canal 472-83512 242103 40,000 - - 715687 Ark River Ped Bridges 472-83416 242107 35,798,214-1,970,000 715691 Oliver Street Bridge at Gypsum Creek (Design) 243110 50,000 - - 715694 E-15
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money Lincoln Street Bridge at Arkansas River (Design) 243111 $ 15,000 $ - $ - 715695 Central Bridge at Tara (Construction) 243112 720,000 - - 715696 13th Bridge@Cowskin Crk 472-83851 244113 3,120,000 82,000 8,000 751697 Murdock Bridge@Little Ark River 472-83895 244114 1,654,800-3,500 715698 Oliver Bridge@Gyp Crk 472-84184 245119 1,084,474-43,600 715703 13th St. Bridge@ LAR 472-84314 245121 105,000-45,100 715705 21st St. Overpass, Broadway-I-135 245122 175,000-13,200 715706 11th St. Bridge@Drn Canal 472-84396 246126 1,532,000-349,000 715710 Pawnee Bridge at Dry Creek (Design) 472-83045 248096 440,000-2,900 715664 TOTAL BRIDGES 44,734,488 82,000 2,435,300 PUBLIC IMPROVEMENTS Northeast Baseball Complex 435322 792352 1,000,000-24,000 Homeland Defense Readiness Center 435349 1,700,000-10,000 792379 Water Walk - Eastbank Development 435352 36,800,000-780,000 792382 Century II - Bleacher Seats 435353 2,150,000-2,000 792383 Police Property & Evidence Relocation 435376 675,000-1,100 792406 Animal Shelter Build. 435377 3,300,000-40,000 792407 City Facilities ADA Compliance 435379 300,000-5,300 792409 Expo Hall HVAC 435386 75,000 - - 792416 Fire Equip. Replc, 2005 435387 2,370,000 - - 792417 Kansas Aviation Museum Phase 2-472-84455 435389 775,000-25,000 792419 City Hall Security/Landscape 435390 3,381,000-194,000 792420 Land Acquisition - District V 435391 2,950,000-2,915,000 791421 City Hall Garage Repairs 435392 500,000-185,000 792427 E-16
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money CMP Expansion 435405 $ 150,000 $ - $ 1,000 792455 City Hall 1st Floor Remodel 435407 1,950,000-17,000 792459 Facilities Space Utilization 435408 1,500,000-237,000 792460 Arena Neighborhood Redev. 435409 250,000-64,000 792461 Police Mobile Radios 435410 1,640,000 11,000 792462 CIP Planned Savings 435411 2,250,000 73,000 792463 Indian Center Remodel 435414 600,000-1,000 792482 Park land Purchase 435415 1,125,000 18,000 792483 International Marketplace Dist. 435417 300,000-216,000 792485 Power CDC Grocery Store 435418 350,000 345,000-792486 Fire Training Grounds Imp. 435419 1,700,000-542,000 792487 Fire Station 20 - Pawnee & Greenwich 435420 7,300,000-73,000 792489 Dunbar Theater Study 436601 35,000 - - 793004 Aviation Training School 436603 1,600,000-1,594,000 793006 Fire Apparatus Replacement 436604 5,434,000-517,000 793007 Bomb Range Reloc./Imp. 436605 1,850,000-275,000 793008 Fire Apparatus 2007-08 436607 3,419,000-3,008,000 793010 TOTAL PUBLIC IMPROVEMENTS 87,429,000 345,000 10,828,400 PARK IMPROVEMENTS Central Riverside Park Imp/Mod 390148 5,450,000-48,000 785016 Skate Park 392159 200,000-3,000 785027 2004 - Swimming Pool Imp./IWF 394172 800,000 - - 785040 2004 Park Facilities Renov. 394174 400,000-2,000 785042 2004 Park - Paths/Sidewalks 394175 40,000-7,500 785143 E-17
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money Park - S. Arkansas River Park '05 Design 395179 $ 300,000 $ - $ 239,000 785047 Park 05 - Parking lots/entry drives 395180 450,000-12,000 785048 Park 05 - Swimming Pool Imp. 395181 100,000 - - 785049 Park 05 - Lighting 395182 100,000-7,000 785050 Park 05 - Paths/Sidewalks 395183 40,000-1,000 785051 Park 05 - Facilities Renov. 395184 400,000-2,000 785052 Park 05 - Grove Park Ph II 395185 600,000-6,000 785053 Park 05/06 - Athletic Courts 395186 440,000-121,000 785054 Garvey Park Improvements 395187 100,000 - - 785055 Park 05 - Schweiter Park 395188 510,000-190,000 785056 Park 05-06 Playgrounds 395190 400,000-306,000 785058 Park 05 - Century II Stage/Equip. Ren/Rplcm 395196 50,000-7,000 785064 Park 05/06 - Plainview Park Football Field 395197 500,000-41,000 785065 Park 05 - Ice Center Facility Renovat. 395200 70,000-11,000 785068 Park 05 - Irrigation Sys Rplc/Upgrd 395203 200,000-131,000 785071 Pathways/Sidewalks Schell Park 396189 40,000-35,000 785057 Park 06 Park Facilities Renovation 396192 400,000-123,000 785060 Park 06 -Swimming Pool Imp. 396199 100,000-18,000 785067 Park 06 - Land Accq. 5220 S. Meridian 396201 86,500-1,000 785069 Park 06 - Parking Lots/Entry Drives 396202 365,000-31,000 785070 Park 06 - Lighting 396204 100,000-2,000 785072 Restoration of Sim Park Memorial Entry 396205 100,000-40,000 785073 Park 06 - Wichita Ice Center 396207 105,000-10,000 785075 E-18
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money Park 06- Master Planning & Devel. 396209 $ 250,000 $ - $ 10,500 785077 Park 07 - Athletic Court Repair 396210 220,000-177,000 785078 Park 07 - Swimming Pool Imp. 397213 100,000-13,500 785082 TOTAL PARK IMPROVEMENTS 13,016,500-1,595,500 MISCELLANEOUS Cowskin Creek Basin-Flood Mitigation 860527 1,197,493-12,000 660780 Row Acquisition Cowskin Creek Improvement 864002 1,000,000-882,000 660792 TOTAL MISCELLANEOUS IMPROVEMENTS 2,197,493-894,000 NEIGHBORHOOD IMPROVEMENTS - PAVING Kellogg Dr. (84141) 490042 115,000 51,000 1,000 765929 21st St. Accel-Decel-Paving 472-84206 490048 267,120-103,000 765935 Village Parkway - paving 472-84201 490052 799,000 594,000 48,000 765939 30th St. South - Paving 472-84215 490057 95,196-54,000 765944 26th St N. Circle - paving 472-84241 490059 255,740 180,900 16,100 765946 Kellogg Frontage Rd. - NI paving 472-83962 490064 200,250 81,700 1,300 765951 Triple Crown - NI paving 472-83430 490084 610,000 512,500 39,500 765969 Mascot - NI paving 472-84298 490085 215,000 10,500 4,500 765970 Zelta - NI Paving 472-84300 490087 235,000-14,000 765972 Peckham - NI paving 472-84328 490089 625,000 208,800 184,200 765974 Tara Falls - NI paving 472-84271 490090 400,000 33,200 295,800 765975 Covington - NI paving 472-84086 490091 1,064,300 488,800 379,200 765976 Gilbert, - NI paving 472-84350 490092 216,000 101,800 101,200 765977 Zimmerly NI - paving 472-83719 490093 160,600 13,600 108,400 765978 Rosewood - NI paving 472-84367 490095 289,000 27,300 217,700 765980 E-19
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money Bayside Ct. - NI paving 472-84364 490096 $ 842,000 $ 62,000 $ 193,000 765981 City View - NI paving 472-84060 490097 430,000 91,800 283,200 765982 Jewell - NI paving 472-84029 490098 509,000 341,800 107,200 765983 Hollywood - NI paving 472-83805 490101 380,000 284,500 72,500 765984 Forestview NI paving 472-83881 490102 592,900 531,500 34,000 765985 Churchill Circle - NI paving 472-84384 490103 495,000 334,300 34,700 765986 Nevada Circle NI paving 472-84363 490104 92,880 79,700 7,300 765987 24th St N. - NI paving 472-84250 490105 444,000 326,000 5,000 765988 Zimmerly - NI paving 472-83718 490106 342,700 29,700 251,600 765989 Zimmerlly Court- paving 472-84297 490107 100,000-80,000 765990 Thoroughbred - NI paving 472-83780 490108 389,000 170,600 155,400 765991 Merton - NI paving 472-84410 490109 155,040-13,000 765992 Jade - NI paving 472-84227 490110 429,000 28,700 275,300 765993 Bracken/Troon/Wood - NI paving 472-84406 490111 497,000 28,500 11,500 765994 Fawn Grove - NI paving 472-84408 490112 276,000 26,100 194,900 765995 Westlakes Parkway - NI paving 472-84279 490113 590,790 32,600 188,400 765996 Paddock Green - NI paving 472-83817 490114 226,200 18,400 131,600 765997 Fawnwood - NI paving 472-84291 490116 974,000 115,400 606,600 765999 Grey Meadow - NI paving 472-84421 490117 675,000 51,600 252,400 766100 Loch Lomond - NI paving 472-84084 490118 667,800 41,800 469,200 766101 Wilson Estates Ct., SS & WS Legacy Park 490119 321,000 65,500 167,500 766102 Marblefalls 472-84324 490120 459,000 30,100 274,900 766103 Mainsgate - paving - 472-84246 490121 438,000-378,000 766104 E-20
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money Michelle - 472-84425 490122 $ 57,000 $ - $ 40,000 766105 Mt Vernon 472-84423 490123 467,000 12,000 254,000 766106 50th St South Paving - 472-84416 490125 259,000-19,000 766108 Grove 472-84438 490126 345,000-21,000 766109 Aksarben Paving 472-84105 490127 379,440-280,000 766110 Upland Hills (Turkey Creek 2nd) 472-84030 490128 553,000-34,000 766111 Brookside 472-84442 490129 159,120-14,000 766112 Bellechase 472-84426 490130 390,000-26,000 766113 Spring Hollow Drive 472-84448 490131 372,000-30,000 766114 143rd St E; Asphalt Mat 472-83979 490132 195,800-17,000 766115 19th St North 472-84449 490133 938,000-140,000 766116 Sunview St. 472-83626 490136 133,000-92,000 766118 Mosley Ct. - Paving 472-83891 490957 51,000-37,000 765846 37TH, Tyler-Ridge 472-83941 490963 250,000 243,500 4,200 765852 TOTAL NEIGHBORHOOD IMPROVEMENTS-PAVING 20,422,876 5,250,200 6,763,300 NEIGHBORHOOD IMPROVEMENTS - WATER WDS Santa Fe Industrial 448-90206 470001 38,000-33,000 735328 WDS Sierra Hills 448-90203 470002 70,000-59,000 735329 WDS Auburn Hills Commercial 4th 448-90138 470003 25,300-22,000 735330 WDS Sycamore Pond 448-90200 470004 84,000-59,000 735331 WDS Harrison Park 3rd 448-90188 470006 44,000-30,000 735333 WDS Turkey Creek 2nd 448-89963 470007 117,000-30,000 735334 WDS Bellechase 448-90205 470008 104,000-41,000 735335 WDS Clear Creek 448-90232 470009 73,000-56,000 735336 E-21
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money WDS Oak Creek 2nd 448-90234 470011 $ 101,000 $ - $ 63,000 735338 WDS Terradyne W. 448-90251 470014 175,000-12,000 735341 WDS Santa Fe Ind. Dist. 3rd 448-90259 470017 28,000-20,000 735344 WDS Monarch Landing 448-90275 470021 299,000-79,000 735348 WDS Pier 37 448-90272 470023 122,000-11,000 735350 WDS Hoover, N of Zoo Blvd. 448-89674 470737 1,100,000 93,000 765,000 735067 WDS Liberty 2nd/Copper Gate 448-89746 470897 307,000 12,600 253,400 735227 WDS Oak Creek/Cross Pointe 448-90066 470950 548,280 272,200 18,800 735279 WDS Unplatted Tract 448-90126 470960 35,000-14,000 735289 WDS Falcon Falls 3rd 448-90105 470962 287,000 131,400 25,600 735291 WDS Country Hollow 44890142 470963 137,000 92,500 6,500 735292 WDS Casa Bella 448-90113 470967 105,000 84,100 8,900 735296 WDS Country Hollow 448-90154 470968 73,000 59,400 4,600 735297 WDS Cross Pointe 448-90083 470970 86,000 19,800 6,200 735299 WDS Whispering Lakes 448-90166 470971 72,000 60,900 5,100 735300 WDS Emerald Bay 448-90161 470972 646,000 405,700 134,300 735301 WDS Emerald Bay 448-90162 470973 200,000 14,400 98,600 735302 WDS Krig N. 2nd 448-89933 470983 102,000-87,000 735312 WDS East Side Community Church 2nd 448-90005 470984 67,000-54,000 735313 WDS Falcon Falls 3rd 448-90128 470986 103,000 36,700 52,300 735315 WDS Auburn Hills 16th 448-90122 470987 209,000 144,300 25,700 735316 WDS Clifton Cove 448-90080 470988 1,100,000 25,000 615,000 735317 WDS Clifton Cove 448-90081 470989 140,000 11,500 84,500 735318 E-22
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money WDS Highland Springs 3rd 448-89829 470990 $ 93,000 $ 59,800 $ 6,200 735319 WDS Rainbow Lakes West 448-90195 470991 75,000-13,000 735320 WDS Crestlake 448-90192 470992 131,000 10,300 92,700 735321 WDS Fawn Grove@Sunset Lakes 448-90194 470993 38,000 30,700 2,300 735322 WDS Hawthorne 3rd 448-89996 470995 121,000 76,200 6,800 735324 WDS Copper Gate North 448-90015 470996 85,000-67,000 735325 WDS Fox Ridge 448-90204 470997 128,000-109,000 735326 WDS Fairmont 448-90093 470998 94,000 20,900 34,100 735327 TOTAL NEIGHBORHOOD IMPROVEMENTS-WATER 7,362,580 1,661,400 3,105,600 NEIGHBORHOOD IMPROVEMENTS - SANITARY SEWERS North Area Sanitary Sewer-Water Sewer 468-83682 480697 2,750,000 2,656,600 93,400 744009 Lat 109, SS#23 468-83876 480776 1,325,000 19,000 1,000 744088 Lat 506. SWI 468-93953 480795 26,244-23,000 744107 Lat 5, Main 22, SWI 468-83980 480801 170,000 10,200 800 744113 M18, FMC 468-84026 480819 537,000 443,300 91,700 744131 Lat 1, M18, FMC 468-84033 480820 338,800 310,800 6,200 744132 M22, SWI 468-83861 480828 2,000,000-193,000 744140 M4, NWI 468-83889 480837 3,600,000 647,100 1,939,900 744149 Lat 149, M4, SS#23 468-84061 480-845 36,000-18,000 744157 Lat 22, M13, SWI 468-84110 480846 13,320-13,000 744158 Lateral 386, FMC 468-84102 480850 164,000 96,100 5,900 744162 Lateral 388, FMC 468-84104 480851 530,000 249,600 17,400 744163 Lateral 5, Main 16, FMC 468-84044 480855 130,000 35,700 9,300 744167 Main 23, SWI 468-84141 480857 1,386,000 84,400 819,600 744169 E-23
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money Lateral 1, Main 23, SWI 468-84139 480858 $ 997,000 $ 437,700 $ 428,300 744170 Lift Station, Main 1 BSS 468-84022 480859 575,000 27,200 262,800 744171 Lateral 1, Main 16, SS#23 *MBF*468-84149 480860 761,600 39,700 1,300 744172 Laterial 39, Main 1 CIS (MBF) 468-84168 480868 180,000-16,000 744180 Lateral 50, CIS (MBF) 468-84090 480870 351,000 227,300 27,700 744182 Lateral 39, CIS (MBF) 468-83636 480871 179,000 126,900 2,100 744183 Lateral 396, FMC 468-84182 480872 260,000 14,900 197,100 744184 Lateral 397, FMC 468-84185 480873 88,000 69,900 4,100 744185 Lateral 84, Main 22, WIS 468-83673 480874 78,880 61,500 4,500 744186 Lateral 7, Main 12, FMC 468-83874 480875 93,000 88,000 2,000 744187 Lateral 5, Main 4, NWI 468-83974 480876 155,000 92,300 23,700 744188 Lateral 3, Main 6, Part D,NWI 468-84202 480877 298,000 124,200 124,800 744189 Lateral 4, Main 11, FMC 480878 116,000 70,200 15,800 744190 Lateral 344, FMC 468-83584 480879 96,000 11,000 64,000 744191 Lat 4, Main 20, SWI 468-84207 480880 68,000-58,000 744192 Lateral 58, Main 3, SWI 468-84191 480881 230,520 16,400 207,600 744193 Main 19, FMCS, 468-84127 480882 1,319,000-193,000 744194 Main 20, FMCS, 468-84206 480883 749,000-169,000 744195 Lat 3, Main 6, CIS 468-83820 480885 214,000-145,000 744197 Lat 398, FMCS, 468-84203 480886 252,000-169,000 744198 Lat 400, FMCS, 468-84231 480887 160,000-101,000 744199 Main 8, CIS, 468-84128 480889 97,000-29,000 744201 Lat 7, Main 15, SS # 23, 468-84258 480890 115,000-78,000 744202 E-24
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money Lat 402, FMCS, 468-84261 480891 $ 200,000 $ - $ 17,000 744203 Main 22, FMC 468-84262 480892 259,000-18,000 744204 Lat V, SS#8, 468-84281 480895 28,000-16,000 744207 Lat 1, Main 23, FMC 468-84317 480900 645,000-96,000 744212 Lat 518, SWI 468-84303 480902 238,000-14,000 744214 TOTAL NEIGHBORHOOD IMPROVEMENTS-SANITARY SEWERS 21,809,364 5,960,000 5,717,000 NEIGHBORHOOD IMPROVEMENTS - STORM SEWERS SWD 254 468-83978 485294 234,000 182,900 9,100 751403 SWD 255 468-83979 485299 148,000 104,800 5,200 751408 SWD 179 468-83319 485301 125,000 97,600 6,400 751410 SWD 236 468-83883 485302 678,408 415,500 69,500 751411 SWS 275 468-84067 485303 1,024,000 918,000 46,000 751412 SWD 280 468-84113 485304 780,000 524,500 39,500 751413 SWD 276 468-84073 485305 685,000 610,600 42,400 751414 SWD 288 468-84143 485307 376,000 357,900 41,100 751416 SWS 618 468-84099 485311 112,000 10,600 83,400 751420 SWD 269 468-84024 485312 659,000 441,300 57,700 751421 Waterman SWD 468-84167 485313 7,325,000-424,400 751422 SWD 294 468-84183 485314 568,000 34,200 260,800 751423 SWD 263 468-83997 485315 260,000 97,000 133,000 751424 SWD 296 468-84196 485316 110,000-62,000 751423 SWD 279 468-84108 485317 291,000-251,000 751426 SWD 295 468-84193 485318 894,000 36,500 424,500 751427 SWD 277 468-84079 485-319 127,720-115,000 751428 E-25
Amount Required 8/9/2007 Description Of Project Project / Index Number Preliminary Estimate Renewal Money New Money SWD Harry/Mead 468-84219 485320 $ 211,384 $ - $ 16,000 776572 SWD 297 468-84204 485-321 202,000-127,000 751320 SWD 623 468-84282 482324 40,000-32,000 751433 SWD 301 468-84230 485325 158,000-26,000 785082 SWD 311 468-84260 485326 245,000-18,000 751435 TOTAL NEIGHBORHOOD IMPROVEMENTS-STORM SEWERS 15,253,512 3,831,400 2,290,000 FACADE IMPROVEMENTS Facade @ 919 E. Douglas 491016 49,500 17,000 24,000 766015 Facade @ 820 & 900 E. 2nd 491017 600,000 442,000 135,000 766016 Façade @ 105 S. Broadway 472-84411 491020 500,000-392,234 766019 TOTAL FACADE IMPROVEMENTS 1,149,500 459,000 551,234 TOTAL TEMPORARY NOTES SERIES 220 $ 366,913,420 $ 18,853,000 $ 46,287,000 TOTAL RENEWAL MONEY $ 18,853,000 TOTAL NEW MONEY 46,287,000 TOTAL TEMPORARY NOTES SERIES 220 $ 65,140,000 E-26
APPENDIX F CONTINUING DISCLOSURE
CONTINUING DISCLOSURE The Governing Body of the City of Wichita has adopted ordinances establishing a master undertaking to provide ongoing disclosure concerning the City for the benefit of owners of its general obligation bonds and notes, including the Bonds and Notes described in this Official Statement, as required under Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12 (the Rule ). The City is in full compliance in all material respects with all such undertakings made by it pursuant to Securities and Exchange Commission Rule 15c2-12. The following are copies of the continuing disclosure ordinances. F-1
APPENDIX G SPECIMEN AMBAC POLICY
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APPENDIX G