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HomeMy WebLinkAbout2007-02-06 Pre~ ~~t C11'1' OF -- _ ~.; ~~` e~~~i~n ~~~~ ~~J .~~ 'SET, Y gC ~ Tixe,~tii:s~ v^~ 199 MERIDIAN CITY COUNCIL PRE-COUNCIL MEETING AGENDA Tuesday, February 6, 2007 at 6:00 p.m. City Council Chambers 33 East Idaho Avenue, Meridian, Idaho "Although the City of Meridian no longer requires sworn testimony, all presentations before the Mayor and City Counal are expected to be truthful and honesf to best of the ability of the presenter." 1. Roll-call Attendance: David Zaremba ,~ Joe Borton -~-Charlie Rountree ~ Keith Bird ,~ Mayor Tammy de Weerd 2. Adoption of the Agenda: ~~ ~- tGp3 f c /~ 3. Executive Session per Idaho State Code 67-2345(1 Hcj - (to conduct deliberations concerning labor negotiations or to acquire an interest in real property, which is not owned by a public agency} and (f) - (to consider and advise its legal representatives in pending litigation}: ('"`30 min) ~ "~ /C~ f f2 4. 2006 FY Audit Report: 5. Movie Night at the Park Event by Doug Strong: * Approximate allowable time set for agenda item may change depending on the discussion. Please us tl~e designated minutes as a guideline only. Meridian City Council Pre-Counal Meeting Agenda -February 6, 2007 Page 1 of 1 All materials presented at public meetings shall became properly of the City of Meridian. Anyone desiring axommodation for disabilities related to documents and/or hearing, please contact the City Clerk's Office at 888-4433 at least 48 hours prior to tits public meeting. .1 { _~ nip} ~ 'rj CITY OF + 74.- " = p ~' '!~ ~~~~Y'l eY1G~IG~"YI ~ ~ '~ i. IDAHO y, ~~ SINCE 1003 MAYOR Tammy de Weerd CITY COUNCIL MEMBERS Keith Bird Joseph W. Borton Charles M. Rountree Shaun Wardle CITY DEPARTMENTS City Attorney/HR 703 Main Street 898-5506 (City Attorney) 898-5503 (HR) Fax 884-8723 Fire 540 E. Franklin Road 888-1234/fax 895-0390 Parks & Recreation 11 W. Bower Street 888-3579/fax 898-5501 Planning 660 E. Watertower Lane Suite 202 884-5533/fax 888-6854 Police 1401 E. Watertower Lane 888-6678/fax 846-7366 Public Works 660 E. Watertower Lane Suite 200 898-5500/fax 898-9551 - Building 660 E. Watertower Lane Suite 150 887-2211/fax 887-1297 - Wastewater 3401 N. Ten Mile Road 888-2191/fax 884-0744 - Water 2235 N.W. 8th Street 888-5242 /fax 884-1159 MERIDIAN CITY COUNCIL NOTICE OF PRE-COUNCIL MEETING NOTICE IS HEREBY GNEN that the City Council of the City of Meridian will hold aPre-Council Meeting at City Council Chambers, Meridian City Hall, 33 East Idaho Avenue, Meridian, Idaho, on Tuesday, February 6, 2007 at 6:00 P.M. The Meridian City Council will be discussing the following agenda items: Executive Session per Idaho State Code 67-2345(1)(c)&(t) Audit Report Movie Night at the Park by Doug Strong The public is welcome to attend the meeting. DATED this 2nd day of February, 2007. N WILLIAM G. BERG, JR. ~h<': . C~`~~ d ~~ ~I ERK ~ '% Q` ~ v° ,, \,. ~, ,~.~ ~ ~.~ ///~~~~lltt~rgo ~e111\\` Meridian City Pre-Council Meeting Agenda - Februaey 6, 2007 Page 1 of 1 All materials presented at public meetings shall become property of the City of Meridian. Anyone desiring accommodation for disabilfies related to documents and/or hearings, please contact the City Clerk's Office at 888.4433 at least 48 hours prior to the public meeting. CITY HALL 33 EAST IDAHO AVENUE MERIDIAN, IDAHO 83642 (208) 888-4433 CITY CLERK -FAX SSS-4215 FINANCE & UTILITY BILLING -FAX 887-4813 MAYOR'S OFFICE -FAX 884-81 ]9 Printed on recycled paper PI-~as~} ~ Pu.b~rc Ndt-cc~fhar~KSi ~~- ~rno~ _`. e.~IG~IG~yI - ~ ~~ s ~C,~. ~~ ~ frtensi.FttVn~~ ' i~ai MERIDIAN CITY COUNCIL PRE~OUNCIL MEETING AGENDA Tuesday, February 6, 2007 at 6:00 p.m. City Council Chambers 33 East Idaho Avenue, Meridian, fdaho "Although the City of Meridian no longer requires sworn testimony, alt presentations before fhe Mayor and City Council are expected to be truthful and honest to best of the ability of the presenter." 1. Roll-call Attendance: David Zaremba Joe Borton Charlie Rountree Keith Bird Mayor Tammy de Weerd 2. Adoption of the Agenda: 3. Executive Session per Idaho State Code 67-2345(7 j(c) - (to conduct deliberations concerning labor negotiations or to acquire an interest in real property, which is not owned by a public agency) and (f) - (to consider and advise its legal representatives in pending litigation): (*30 min) 4. 2006 FY Audit Report: 5. Movie Night at the Park Event by Doug Strong: * Approximate allowable time set for agenda item may change depending on the discussion. Please us tfie designated minutes as a guideline only. Meridian City Council Pre-Counal Meting Agenda -February 6, 2007 Page 1 of 1 All materials presented at public meetings shall become property of the City of Meridian. Anyone desiring acxommodation for disabilities related to documerrts and/or hearing, please coMad the Cry Clerk's Oiftce at 88&4433 at feast 48 hours prior to the public meeting. P~Ctse~ ~Fa~ ~ublrc ~lo-h'cL~lahrSl' k r . s 7 CITY OF ~~~ .,'` ~,,.A ,~ '.~ ~ " ~Yd l~ yl • ~ IDAHO y~. • ~i Mnar /a Tire,~su~Vw ~Y ggWW 79U9 MAYOR Tammy de Weerd N®TICE OF PRE-C®UNCIL MEETING CITY COUNCIL MEMBERS Keith Bird Joseph W. Borton MERfIDIAN CITY Ci®UNCIL Charles M. Rountree Shaun Wardle NOTICE IS HEREBY GIVEN that the Ciiy Council of the City of CITY DEPARTMENTS City Attorney/HIZ Meridian will hold aPre-Council Meeting at City Council Chambers, 703 Main Street 898-5506 (City Attorney) 898-5503 (HR) Meridian City Hall, 33 East Idaho Avenue, Meridian, Idaho, on Fax 884-8723 Fire Tuesday, February 6, 2007 at 6:00 P.M. The Meridian City Council 540 E. Franklin Road 888-1234 /fax 895-0390 will be discussing the following agenda items: Parks & Recreation 11 W. Bower Street 888-3579 /fax 898-5501 ~ Executive Session per Idaho State Code 67-2345(')(c)&(~ Planning 660 E. Watertower Lane ^' AUd/t Report Suite 202 884-5533 /fax 888-6854 ~ Movie Night at the Park by Doug Strong Police 1401 E. Watertower Lane .~h~;: y`1ih-b110JNI/d , ~.~~• b 888-6678 /fax 846-7366 ~ , i ~ The public is welcome to attend the meeting. ~` ~~ti~~~ ~````<•o Public Works , ~~~°°'~ °, 660 E. Watertower Lane DATED this 2nd day Of February 2007. Suite 200 , 898-5500 /fax 898-9551 ,2 %/ ., /~ e ,~~~ ,~i~..._~ -Building 660 E. Watertower Lane ' WILLIAM G. BERG, JR. £I ERI4 ~ Suite 150 887 2211 /fax 887 1297 y~ ~ ~T t~ . Q '~, ,,: ` ,'' - Wastewater {t\4\~~`'\ ,//,,III/,IF?e. q, 3401 N. Ten Mile Road _ 888-2191/fax 884-0744 - Water 2235 N.W. 8th Street 888-5242 /fax 884-1159 Meridian City Pre-Council Meeting Agenda -February 6, 2007 Page 1 of 1 All materials presented at publ'IC meetings shall become property of the City of Meridian. Anyone desiring accommodation for disabilities related to documents andlor hearings, please contact the City Clerk's Office at 888-4433 at least 48 hours prior to the public meeting. CITY 1 [ALL 33 EAST IDAHO AVENUE ~/IERIDIAN, IDAHO 83~ (208) 888-4433 CITY CLERK - FAX 588-4218 FINANCE & UTILI'T'Y BILLING -FAX 887-4813 MAYOR'S OFFICE- FAX 884-81]9 ['tinted on recycled paper M CJ Meridian City Pre-Council Meeting February 6, 2007 The Meridian City Pre-Council meeting was called to order at 6:00 P.M. on Tuesday, February 6, 2007 by President Councilman Joe Borton. Members Present: Mayor Tammy de Weerd, Keith Bird, Charlie Rountree and Joe Borton. Staff Present: Bill Nary, Ted Baird, Bob Stowe, Stacy Kilchenmann, Colin Moss, Doug Strong and Will Berg. Item 1. Roll-call Attendance: Roll call. O David Zaremba X Charlie Rountree X X Joe Borton X Keith Bird Mayor Tammy de Weerd Item 2. Adoption of the Agenda: Bird: Mr. President. Borton: Mr. Bird. Bird: I move we adopt the agenda as published. Rountree: Second. Borton: It has been moved and seconded to adopt the agenda as published. All those in favor say aye. THREE AYES. ONE ABSENT. MOTION CARRIED. Item 3. Executive Session per Idaho State Code 67-2345(1)(c) - (to conduct deliberations concerning labor negotiations or to acquire an interest in real property, which is not owned by a public agency) and (fl - (to consider and advise its legal representatives in pending litigation): Bird: Mr. President. Borton: Mr. Bird. Meridian City Pre-Council Meeting February 6, 2007 Page 2 of 8 Bird: I move we go into Executive Session as per Idaho State Code 67- 2345(1)(c) and (1)(f). Rountree: Second. Borton: It has been moved and seconded to go into Executive Session. Mr. Berg if you will call roll. Roll Call Vote: Rountree, aye; Bird, aye; Borton, aye and Zaremba is absent. THREE AYES. ONE ABSENT. MOTION CARRIED. EXECUTIVE SESSION: Rountree: I move to come out of Executive Session. Bird: Second. Borton: It has been moved and seconded to come out of Executive Session. All those in favor say aye. THREE AYES. ONE ABSENT. MOTION CARRIED. Item 4. 2006 FY Audit Report: Borton: Stacy I don't know if you are going to introduce Kevin or Kevin if you are ready to go. Kevin Smith with (inaudible). Everyone has a copy of the audit and a chance to review it. I appreciate you coming by to present it. K. Smith: Thank you, I appreciate the opportunity to be involved with the city once again this year. My name is Kevin Smith with the audit from (inaudible) Bailey and just a few highlights on the financial statements that I would like to go over. First of all a little bit about the scope of the engagement as the audited - the financial statement is a full audit and the objective of the audit is to provide reasonable assurance that the financial statements are fairly presented in our material respects and also to consider the city's intemal control over financial reporting to determine the audit procedures that we will perform. I am happy to report again this year as in other years that we have issued an unqualified or a clean opinion on the financial statements and also issued an opinion in the back of the financial statements on the compliance with laws and regulations as they relate to intemal controls. Some observation and comments related to the Meridian City Pre-Council Meeting February 6, 2007 Page3of8 financial statements this year. Once again the management discussion and analysis in the front of the report is written by management and that is authored by them, Stacy and those that she works with. We read that to make sure that it is consistent with the financial statement as a whole. The one for the City of Meridian is one of the best written ones that I have had the opportunity to read. So, Stacy does a great job with that. Provides explanation to the financial statements and also provides some charts and graphs and things with expenditures and you can kind of see where the monies going this year and give a little bit of a plan for what is coming up in the future, some of the projects. A couple of highlights in the financial statements report that expenditures were less than the budgeted amounts this year, even after the amended budget by about $5.5 million. So, that is some very prudent spending and (inaudible) management on your part. The general fund balance has a balance of about $22.7 million and of course, $2.2 million of that is set aside for the payment of the Police Station. About $16.5 million of that $22 million is unreserved and to be used for general expenditures of the city. Retained earnings in the enterprise fund equal about $179 million currently and the net income that the enterprise funds was about $21 million this year, which about half of that about $10 million is the result of donated water lines and connection assessment fees. As you also note in the footnotes of the financial statement there are several projects ongoing in the water and sewer fund, which I think we projected for the last few years as you continue to build that retained earns as net reserve to be used on sewer projects and water projects and now we are seeing some of those happening in some fairly large dollar amounts. One thing that I wanted to point out this year that is a little bit new for this coming year, there are some new auditing standards and we have talked to the Mayor about this and also with Mr. Borton, some of the new auditing standards have come out this year. There have been 11 new standards that have come out and two of them are effective for this coming year, which have a direct impact on the city's audit. Some of those relate directly to the auditors and some to management and one of them relates to the auditors, to us, as we are required to do more documentation in the work papers and receive more documentation of the explanations that management provides to us. The rest of it is more related to management and some of their obligation and some of the reason for the new standards is still kind of some of the downfall, the Enr®n situation where the standards are trying to get more separation between management of an entity or a city in this case and the auditors themselves. So, what they are asking is that we are required to provide or to present to you a management letter and the language has changed and they have given -before it was more of an auditor judgment where those fell and now they have given us some more description of where they should fall. If we are required to make adjustments to the financial statements or to the trial balance when we come to audit we would be required to present City Council and management with a management letter saying that is a significant deficiency or a material weakness depending on the magnitude of those adjustments. It also goes on to talk about the preparation of a financial statement so the document that you have is now -should be prepared by management or by Meridian City Pre-Council Meeting February 6, 2007 Page 4 of 8 accounting staff rather than the auditors; where before we always prepared that entire document and so they have asked the audit team to just review that document rather than prepare it. It still is a decision to be made by management or the Council on who is to prepare that. If auditors prepare that then we would be required to present a material weakness again, in a separate document. It would not be attached to the (inaudible). It would just be a separate document. I think from discussions with Stacy and the Mayor and Mr. Borton, I think that decisions have been made that management would like to prepare that document and have that separation from the audit team, which is a good suggestion. I think a management has the ability to do that in the future. Once again, I would like to thank the staff. Stacy and her group do a great job in preparing the documentation for us and are very responsive to our requests and in a very timely manner. Any questions of me related to the financial statements or the documents that we provided tonight. Borton: Thank you, Kevin. Council any questions? Bird: I have none; just another great audit and I know our staff makes it nice for you guys, but you guys also, the people that you send our here Kevin are very, very good too. I appreciate the work you guys do. K. Smith: Thank you. Borton: Okay, thank you Kevin. Stacy anything you want to add? A little more responsibility coming your way. Rountree: Mr. President just a comment on my part to Stacy and staff as well as the directors for another good year and another good job. Borton: Council, if there are no questions we can entertain a motion to accept the 2006 audit. Rountree: So moved. Bird: Second. Gorton: It has been moved and seconded to accept the 2006 fiscal year audit report. Roll call? Roll Call Vote: Rountree, aye; Bird, aye; Gorton, aye; Zaremba is absent. THREE AYES. ONE ABSENT. MOTION CARRIED. Meridian City Pre-Council Meeting February 6, 2007 Page 5 of 8 Borton: And for the record, we indicate that Mayor De Weerd is absent. She had to leave before we began the presentation. Thank you, Kevin. Item 5. Movie Night at the Park Event by Doug Strong: Strong: Thank you Mr. President, Members of the Council - Borton: We have your budget amendment in front of us. Strong: -- you have a budget amendment in front of you that is a new program that we are putting together right now for the coming summer months that is kind of an exciting opportunity to bring community residents to the park and I have asked Colin to be here tonight to describe the program to you since it is really his program that we are putting together and he can provide the details to you. So, I will tum it over to Colin. Moss: Thank you Mr. President, Members of the Council if you look up on the screen to your right, you will see what kind of what we are going to be getting at this summer. The screen that is in the budget amendment there, will be this 1,000 viewer capacity screen. It is 25 feet by 14 feet and basically what we are going to do is these are inflatable screens and so they are very portable and what we will do is we will just set up this screen in Settler's Park and invite the public to come and view a family friendly movie for free, once a week probably between June and August, every summer. We have already secured Cable One as our title sponsor for the program. They are going to be supplying us with the funds to purchase the screen. We have also secured another major sponsor with Integrity Audio Visual, who is a company that is based here in Meridian. They are going to be providing us with the audio visual equipment and labor needed for this program basically at cost. The audio visual equipment needed for the entire summer and based on a 12 show schedule throughout the summer would be about $19,000 to just rent the audio visual equipment needed. They are going to be providing it to us for about $6,000 for the entire summer. The amendment that you have in front of you is basically to approve the spending of the dollars needed to make this program go. As it says in here, the movie screen is going to be paid for by Cable One. The rest of the dollars, currently will be out of the city general fund, but I am going to continue looking for more funding options to cover the rest of those costs. The need to get this through right now is that the movie screen that we are looking at purchasing is on sale and we will save about $1,000 by purchasing it right now as opposed to waiting until we have the rest of the funding and then asking for the money. So, are there any questions? Borton: Thank you, Colin. I do have one question. The screen -you might have mentioned this is going to be purchased and then it is going to be owned, controlled by the city? Meridian City Pre-Council Meeting February 6, 2007 Page 6 of 8 Moss: Right. Cable One actually has a check ready for us right now. We are just waiting for approval. It is made out to the City of Meridian and we will purchase the screen ourselves, so the city will own the screen. Borton: The expenses that you have listed, I assume that there will be movies every week - if you were to run them once a month or - Moss: Correct. All the costs on here are based on a 12 show schedule between about the first weekend in June to the last weekend in August and so there is not set schedule right now, but it would be once a week probably on a Friday or a Saturday evening. Nary: Mr. President. Borton: Mr. Nary. Nary: Just for further information, Mr. President, Members of the Council. Mr. Baird had worked with Colin on this agreement, this sponsorship agreement and my recollection from our discussion was essentially what Cable One is doing is sort of prepaying their sponsorship costs for this program. They have no right to reclaim any costs back if the program doesn't continue to be on this summer. This is just part of their contribution to be a part and be a named sponsor of the program. But, I think the intent was for them to pay it upfront and then be able to purchase this now, but the city would retain the ownership of this equipment. If I got that wrong, Colin, you can correct me, but that is what I understood. Moss: That is correct. Cable One for the money that they are providing us with, we have agreed to allow them to be the title sponsor of the program for the next - for the first five years of the program and so when you see it advertised, I mean, if this goes through and we are able to run the program, you will see it advertised as Cable One Movie Night in Meridian when we do all of the promotional stuff. That is correct. Even if this program does not go beyond the first year, we will retain the money, even though -there is more of a chance that it is going to continue on because it is almost certain to become a popular event in the community. Borton: Council any other questions? other expenses -set up, maintenance, other income sources as well? know as you go forward there will be supervision, concessions and perhaps Moss: Right. We are looking at that - we will have a concession stand there. There already is a concessions building at Settler's Park and so we are looking at running a concession stand and so that certainly will be a source of income. As far as setup and take down, we are looking to get volunteers to help us out with that. There are several sources in the community of volunteers that would be willing to help out with this and really the setup for one of these inflatable Meridian City Pre-Council Meeting February 6, 2007 Page 7 of 8 screens, it would only take a couple of people, honestly, to set up one of these. It doesn't take very long at all. So, setting it up and then just having monitors there, I guess, the entire time is all we would really need and so the staff costs is pretty minimal. Borton: I take it you are seeking a decision tonight on it? Moss: That is correct. We would like to move forward as quickly as possible because like I said because the movie screen that we are looking to purchase is on sale for $1,000 cheaper than what we would normally get it at. Borton: Council what is your desire? Rountree: Mr. President I am looking at the budge amendment request and I don't see any indication for wages and that sort of thing and I have heard of setup time. I don't know if there is going to be some insurance required for gathering. So, I think there are some costs that haven't necessarily been identified and I don't see any place on this budget amendment for anticipated revenue. That being said, I think it is an opportunity to get the community together on a routine basis and not only as advertising for Cable One, but maybe advertising for things that are happening in Meridian as well, to and including the youth programs, the drug programs, the activities that are going to occur in the community in the upcoming week. So, I am favorable towards the request. Borton: Is that a motion? Rountree: I will move that we accept the Parks and Recreation request and budget amendment. Borton: I will second. It has been moved and seconded to approve the budget amendment request for the Parks Department. Mr. Berg, will you please call roll? Roll Call Vote: Rountree, aye; Borton, aye; Bird, nay; and Zaremba is absent. TWO AYES. ONE NAY. ONE ABSENT. MOTION CARRIED. Borton: Thank you that brings us to the end of the Pre-Council meeting. We will start the regular meeting in about three minutes. Motion to adjoum? Rountree: Move to adjoum. Bird: Second. Meridian City Pre-Council Meeting February 6, 2007 Page 8 of 8 M Borton: It has been moved and seconded to adjourn. All those in favor say aye. THREE AYES. ONE ABSENT. MOTION CARRIED. MEETING AJDOURNED AT 6:45 P.M. (TAPE ON FILE OF THESE PROCEEDINGS) APPROVED: 9~~~, i°r'Pfi~`~~" :~ ~ - ~ f ~ry .~QY~~E?&h ~ ~~, E3. \hp\ ~ i '41' A ES~I~b ' ~ ~' W AMA ~io~ "~~ ~ ~ ~~ ' ~ ~4~~ ee/s//~~~~~+~rr~i~ ro~eeeeea~~~`~04< DATE APPROVED • C J February 2, 2007 MERIDIAN CITY COUNCIL MEETING February 6, 2007 APPLICANT ITEM NO. 3 REQUEST Executive Session per Idaho State Code 67-2345{1)(c)&{f) AGENCY COMMENTS CITY CLERK: CITY ENGINEER: CITY PLANNING DIRECTOR: CITY ATTORNEY CITY POLICE DEPT: CITY FIRE DEPT: CITY BUILDING DEPT: CITY WATER DEPT: CITY SEWER DEPT: CITY PARKS DEPT: MERIDIAN SCHOOL DISTRICT: ADA COUNTY HIGHWAY DISTRICT: SANITARY SERVICE COMPANY CENTRAL DISTRICT HEALTH: NAMPA MERIDIAN IRRIGATION: SETTLERS IRRIGATION: IDAHO POWER: US WEST: INTERMOUNTAIN GAS: MERIDIAN POST OFFICE: OTHER: Contacted: Date: Phone: Emailed: Staff Initials: Materials presented at public meetings shall become property of the Ctiy of Meridian. February 2, 2~7 MERIDIAN CITY COUNCIL MEETING APPLICANT • February 6, ~7 REM NO. ~ REQUEST 2~b FY Audit Report AGENCY COMMENTS CITY CLERK: CITY ENGINEER: CITY PLANNING DIRECTOR: CITY ATTORNEY CITY POLICE DEPT: CITY FIRE DEPT: CITY BUILDING DEPT: CITY WATER DEPT: CITY SEWER DEPT: ~ f) CITY PARKS DEPT: G ~~ f MERIDIAN SCHOOL DISTRICT: ADA COUNTY HIGHWAY DISTRICT: SANITARY SERVICE COMPANY CENTRAL DISTRICT HEALTH: NAMPA MERIDIAN IRRIGATION: SETTLERS IRRIGATION: IDAHO POWER: US WEST: INTERMOUNTAIN GAS: MERIDIAN POST OFFICE: OTHER: Contacted: Date: Phone: Emailed: Staff Initials: Materials presented at public meeHnps shall become properly of fibs City of Meridian. v } . FINANCIAL STATEMENTS SEPTEMBER 30, 2006 RECEIVE6 FEB - 2 2007 City of Meridian City Cierk ®ffise CITY OF MERIDIAN, I~?AHO • • CITY OF MERIDIAN, IDAHO Table of Contents Paee INDEPENDENT AUDITORS' REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL SECTION BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Assets ~ 17 Statement of Activities 19 Fund Financial Statements: - Balance Sheet -Governmental Funds. 21 Reconciliation of the Balance Shot of Govenunental Funds to the Statement of Net Assets 22 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmentnl Funds 23 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities 24 Statement of Net Assets -Proprietary Fund 25 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Fund 26 Statement of Cash Flows -Proprietary Fund 27 Notes to Financial Statements 29 REQUIRED SUPPLEMENTARY IlVFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balance -Budget and Actual -General Fund 45 Notes to Required Supplementary Information 47 OTHER INFORMATION Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 49 INDEPENDENT AUDITORS' REPORT Mayor and Members of the City Council City of Meridian, Idaho Meridian, Idaho We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, and each major fund of the City of Meridian, Idaho, as of and for the year ended September 30, 2006, which collectively comprise the Citv's basic financial statements as listed in the table of contents. These financial statements arc the responsibility of City of Meridian, Idaho's, management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audit. contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standarel5 require that we plan and perform the audit to obtain reasonable assurance about whether the.financial -statcm.;nts-.are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the sovernmental activities, the business-type activities, the discretely presented component unit, and each major fund ot` the City of Meridian, Idaho, as of September 30, 2006, and the respective changes in financial position and where applicable, cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in" e United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2006, on our consideration of City of Meridian, Idaho's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. i ~ • The management's discussion and analysis and budgetary comparison information listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Boise, Idaho December 21, 2006 2 CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 This section of the City of Meridian's annual financial report presents management's discussion and analysis of the City's financial performance during the year ended September 30, 2006. Please use this information in conjunction with the information furnished in the City's financial statements. Financial Highlights • The total assets of the City of Meridian exceeded its liabilities at September 30, 2006 by $222,560,182. Of this amount $65,596,949 is unrestricted and available to meet the City's on-going obligations to citizens and creditors. • During fiscal year 2006 the City's total net assets increased $28,861,089 as compazed to an increase of $29,471,994 during fiscal year 2005. Net assets of the governmental activities increased $7,847,727 and net assets of business type activities increased $21,013,362. • Total fund balance of governmental funds at September 30, 2006 was $28,636,821 compazed to a total governmental fund balance at September 30, 2005 of $26,32,629. Of the September 30, 2006 balance $3,481,254 is restricted for new pazk development costs, ~8,2t}8,157 is reserved for capital projects, and $400,000 is reserved due to a long term lease agreement. The remaining $16,565,858 is unreserved. • The City has $2,195,000 in long-term debt due ,tu a capital lease and trust agreement with Wells Fazgo Bank for the construction of the police station. The ab eement was executed in fiscal year 2002 and has a term often yeazs. Overview of the Financial Statements This annual report consists of five parts ,uu,7cr~,~c„icrur discussion and analysis, the government-wide financial statements, fund financial statements. raores to tlac~ Ji,urr,cial statements, and required supplementary information. Government -Wide Financial Statements These statements report information about. all of-the operations of the City using accounting methods similar to those used by private sectar com}x,nics. -These statements are prepared using the flow of economic resources measurement focus and ~,ccn,al basi.5 of accounting. The current year's revenues and expenses are recorded as transactions occur rather tliaa, when cash is received or paid. The government-wide financial, statements aze divided into two categories: Statement of Net Assets -Reports 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 may serve as a useful indicator of whether the fmancial position of the City is improving or deteriorating. Statement of Activities -Reports all of the City's revenues and expenses for the yeaz by function. Examples of functions aze public safety, administration, and water and sewer activities. Revenues, such as property tax which cannot be traced to a specific function, aze reported as General Revenues. Fund Financial Statements The Fund financial statements provide information about the City's major funds, not the City as a whole. The City uses a method of accounting, called fund accounting, to separate specific sources of funds and corresponding expenditures. Funds may be required by law or may be established by the City Council. ~- CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 The City of Meridian has the following funds: Governmental Funds: These funds encompass the City's basic services, public safety, community planning and development, administration, and parks and recreation. Governmental fund financial statements focus on short- term inflows and outflows of spendable resources, an accounting approach known as the flow of current financial resources measurement focus and the modified accrual basis of accounting. Information provided by these statements provides ashort-term view of what resources will be available to meet needs. The City of Meridian has two governmental funds: General Fund -The general fund is the general operating fund of the City. It derives most of its income from property tax and funds the operafions of the City. It includes the Special Services Fund, used to account for revenue and expenses of the community planning and development function and the Park Impact Fee Fund, used to account for the park impact fee revenue and park development costs. Capital Projects Fund -The Capital Projects Fund is u~cd to account for financial resources to be used for the acquisition of major capital facilities. Proprietary Fund: User fees finance activities in these fiuid~. "flee City of Meridian only has one type of propriety fund, the enterprise fund. The water and sewer utilities and'all the activities necessary to support their operation are accounted for in this fund. Accounting for t his fund is the same as a private business on a full accrual basis. Notes to the Financial Statements The notes provide additional information that is necessary to fully understand the date presented in the government-wide and fund financial tatements. Required Supplementary; Infarraation This section has infom~ation that further explains and supports the information in the financial statements by including a comparison of the City's budget data for the year. FINANCIAL ANALYSIS OF THE CITY OF MERIDIAN AS A WHOLE Net Assets Net assets measure the difference between what the City owns (assets) versus what the City owes (liabilities). At September 30, 2006 the City's combined assets exceeded liabilities by $222,560,182. In comparison at September 30, 2005 combined assets exceeded liabilities by $193,699,093. T1ne largest portion of the City's net assets, 66%, is invested in capital assets net of related debt. This is an increase of 4% from the prior fiscal year when the investment in capital assets was 62%. Capital assets include land, building, equipment and machinery, and sewer and water utility infrastructure. Assets restricted to a particular use are 4% of net assets. The City of Meridian restricted funds are principally the park impact fee fund (portion of building permit collected for new park development) and the capital improvement fund. The City puts excess funds generated from building permit sales into a fund marked specifically for general fund capital projects. Unrestricted net assets equa129% of net assets as opposed to 33% last year. Some portion of the unrestricted net asset balance has been designated by the City Council for specific 4 CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 purposes. The table below has been condensed from the Statement of Net Assets. Current and Other Assets Capital Assets Total Assets Current Liabilities Long-term Liabilities Total LiablliUes Net Assets: Invested in Capital Assets Net of Related Debt Restricted Unrestricted Total Net Assets Changes in Net Assets Primary Government Governmental Business -type Activities Activities Total 2006 2005 2006 2005 2006 2005 $44,284,438 $39,417,898 $49,910,324 $50,618,580 $94,194,762 $90,036,478 $26,214,606 $20,855,809 $123,190,093 $101,766,901 $149,404,699 $122,622,710 $16,052,434 $13,370,523 $2,457,246 $2,803,530 $18,509,680 $16,174,053 $2,375,040 $2,679,341 $154,559 $106,701 $2,529,599 $2,786,042 $18,427,474 $16,049,864 $2,611,805 $2,910,231 $21,039,279 $18,960,095 $24,019,606 $18,270,809 X123,190,093 5101,766,901 $147,209,699 $120,037,710 $9,753,534 $9,387,176 $9,753,534 $9,387,176 $18,298,430 $16,565,856 $47,298,519 $47,708,349 $65,596,949 $64,274,207 $52,071,570 $44,223,843 $17Q488,612 $149,475,250 $222,560,182 $193,699,093 5 CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 • During the year the City's financial position improved by $28,861,089. The following condensed financial information was derived from the government-wide Statement of Activities and shows how the City's net assets changed during the yeaz. Changes in Net Assets for Fiscal Year Ending September 30, 2006 Revenues Program Revenues Charges for services Operating grants and contributions Capital Grants and Contributions General Revenue: Property taxes Franchise fees Sales tax and other governmental Unrestricted Investment Earnings Other Revenue Total Revenues F~cpenses General Govemment Administration Law Enforcement Fire Department Parks and Recreation Community Planning and Devip Interest on long-term debt Enterprise -sewer and water Total Expenses Governmental Business-Tvoe Totai Primary ctivities ctivities Govemment FY06 FY05 FY06 FY05 FY06 FY05 $7,942,422 $7,806,291 $10,806,035 $11,735,802 $18,748,457 $19,542,083 $178,536 $624,550 $9,240,851 $10,530,370 $9,419,387 $11,154,920 $1,737,964 $3,199,253 $9,906,020 $9,933,965 $11,643,984 $12,533,218 $10,841,757 $8,550,028 $10,841,757 $8,550,028 $1,255,866 $913,877 $1,255,866 $913,877 $3,136,161 $2,549,958 $3,.136,161 $2,549,958 $1,270,380 $600,473 $2,OZ5,172 $1,239,370 $3,345,552 $1,839,843 $6,292 $18,703 $281,551 $172,101 $287,843 $190,804 $26,369,378 $24,263,133 $32,3D9,62~ $33,011,608 $58,679,007 $57,274,741 $2,325,338 $2,345,255 $2,325,338 $2,345,255 $6,687,345 $5,613,930 $6,687,345 $5,613,930 $5,018,662 $3,G28,724 $5,018,662 $3,628,724 $1,412.907 81 A52,7M3 $1,412,907 $1,052,744 $3,43µ,°,22 53.217,099 $3,434,322 $3,217,099 8107,406 x127,450 $107,406 $127,450 $10,831,938 $11,817545 $10,831 938 $11 817 545 $18,98598D` $15,985,202., $10,831,938 $11,817,545 $29,817,918 $27,802,747 Excess of revenues over expenditures before transfers 57,$83,398 Sf',277,931 $21,477,691 $21,194,063 $28,861,089 $29,471,994 Transfers -internal activities _ 5469.329 $397,698 -$464,329 -$397,698 0 $0 Increase in net assets $7,847,727 $8,675,629 $21,013,362 $20,796,365 $28,861,089 $29,471,994 Net Assets, Beginning of Year $44,223,843 $35,548,214 $149,475,250 $128 678 885 $193 699 093 $164 227 099 Net Assets, Ending of Year $52,071,570 $44,223,843 $170,488,612 $149,475,250 $222,560,182 $193,699,093 Governmental Activities: Governmental activities increased the City's net assets by $7,847,727. At the end of FY06 sales of building permits dropped sharply with the result that residential building permit sales of 2006 were well under the 3,227 sold in FY05. 66% of Charges for Services in Changes in Net Asset table above are building permits and related fees. In contrast to residential building permit revenue commercial building permit revenue in FY06 was more then it was in FY05. When building permit sales increase or decrease, pazk impact fees also increase or decrease. Park impact fees are charged when the building permit is sold. Park impact fees aze included in Capital Grants and Contributions and decreased about $650,000 in FY06 from the FY05 level. Pazk impact fees can only be used for new park development. CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 Property tax revenue increased substantially in FY06 from FY05. This is due to the utilization of new construction in the property tax levy formula. New construction values for tax year 2005 (used to calculate the FY06 property tax levy) increased $759 million from the prior year. This increased FY06 property tax revenue 27%. Property tax is 41% of all general fund income and property tax and charges for services are 71% of all general fund income. Public Safety accounts for 62% of governmental expenses. Police and Fire expenses increased 19% and 38% respectively. The Police Department budgeted 11 additional positions in FY06 and was able to fill several previously budgeted positions that had been vacant. The Fire Department opened a new fire station and added 12 paramedics to their staff of firefighters. Community Planning and Development expenses were 18% of governmental expenses. This number is made up of the cost of doing inspections for building permits and the cost of the Planning Department. The inspection costs are incurred by contractors, so as building permits dropped uspcction costs decreased. The Development Services Fund also includes Street Lights, Economic Development, and Code Enforcement. Statement of Activities Expenses Governmental Activities FY06 - $18,985,980 Planning and Devlp 18% Parks and Rec - -: ~~ "y. r Fire 26% Business-Type Activities: Business-type activities, the provision of water and sewer services, increased net assets by $21 million. Capital assets increased $21.4 million. $9.9 million of the capital asset increase was the result of developer contributed sewer and water lines. Developers put lines in subdivisions they develop and if certain size criteria are met, the lines are turned over to the City when they are completed. Other assets decreased by $708,256. Business activities have three principal sources of revenue. One is operating revenue from selling water and sewer services, two is from fees that new homes pay to connect to the utility system and three is "donated" revenue, the value of the developer connected lines discussed above. Developer contributions are not a cash CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 r: inflow. Operating and connection revenue is available to pay operating costs, donated lines are obviously not. Total propriety revenue for FY06 as compared to FY05 is as follows: of % of FY06 Total FY05 Total Charges for Service $10,806,035 36% $11,735,802 37% Connection Revenue $9,240,851 31 % $10,530,370 33% Donated Lines .y'i.A.,A.~,OpO 33% ~,3~,~ 30% $29 06 31 600 137 Investment Interest ,~,~ $2,075,172 $ , , $1,239,370 Miscellaneous $281,551 $172,101 Operating fees are matched to the cost of providing water and sewer service and the connections fees are to pay for new capital, system build out and capacity increase. Miscellaneous income includes charges for extra customer services such as tenant/landlord milling agreements. Additionally, investment interest income is considered to be directed for .new construction. Since operating cost was $11,296,267 ($10,831,938 direct cost and $464,329 in allocated general fund administrative cost) there was an operating loss of $235,586. This indicates that the City will need to readjust the fees charged for water and sewer service. However at the s time all cash flows are available to meet the City's obligations because there are no existing restrictions directing sources of revenue to one particular purpose. It appears in total that utility oper~tiug expenditures decreased in FY06. This is the result of the FY05 pay-off of large agreements with developers. ` In actuality Water personnel and operating expenditures increased 18% in FY06 from FY05. Increases in FY06 operating costs were generally due to servicing additional accounts. Water operations had the highest percentage of increase. Some factors increasing cost included increased depreciation due to finishing construction prc~jcct, reimbursing citizens for back flow testing, write- offs of old uncollectible accounts, and adding additit~nal opcratars. Wastewater Treatment Plant personnel and operating expenditures increased 10%. Their depreciation expense increased as well as the overhead allocated to them for Public Works administration and some of their maintenance expenses. c CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 Enterprise Utility Operating Expense $a,ooo,ooo- $3,500,000 $3, 000, 000 " $2,500,000-~~ $2,000,000-' $1,500,000- $1,000,000 ~ " $500,000 Water Water WWTP WWTP Personnel Operations Personnel Operating ^ FY05 p FY06 The following graph shows the distribution of operating cost by category for both Water and Wastewater. Public Works administration, engineers and inspectors az;d tl~c Utility Billing Department expenses are split equally and allocated to the two utilities. FY06 Business-Type Activities Operating Expenses City Utilites Overhead Supplies 4% 4% 13% _ Personnel 37% .M:~~ ~~, ~'~ w ~:w . { 3 I ix Depreciation Operating 25% 17% 9 i CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 • A few lazge capital projects were completed, well #26, the Franklin Road sewer line and the Wastewater Treatment Plant head works. Depreciation expense increased during FY06 by $225,713 to just slightly under $2.9 million. The Wastewater Treatment Plant and Water Construction accounts aze used to track assessment revenue and the costs of construction. At the end of the year the construction in progress and completed construction projects are moved into the balance sheet and the depreciation is recognized in the Water and Wastewater Operating accounts. During FY06 $13.3 million dollars was added to construction in progress, slightly more then the $10.8 million added in FY05. Large projects under construction include the Black Cat Trunk sewer line and lift station with almost $5 million added to CIP during the year and the wastewater plant expansion with almost $7 million added. The following graph compares dollars budgeted for total construction with dollars actually spent for construction. Most projects take several years from budget to completion. Proprietary Construction Budget to Actual $35,000,000 ~ ~' $30,000,000 ~~ a Amount Budgeted $25,000,000 ; ^ Actual Spent $20,000,000 $15,000,000 .1 $10,000,000 -, $5, 000, 000 $0 _ FY06 FY05 FINANCIAL ANALYSIS OF THE CITY'S FUNDS Governmental Funds General Fund -the general fund is the principal fund used for the City's major operations including public safety, planning and development, pazks, and City administration. The fund balance at September 30, 2006 was $22,764,541, an increase of 8% over the prior September 30 balance of $21,073,231. This is a reduction in growth rate from the 30% fund increase between FY05 and FY04. Residential building permit sales started the fiscal yeaz strong but building hit the brakes the last few months of the year. Total FY06 Building Department revenues (includes commercial building permits, plumbing and electrical permits and interest income) were $5.2 slightly under the prior year record revenue of $5.6 million dollars. Correspondingly pazk impact fees, collected when a residential building permit is sold, decreased from $2 million dollars in FY05 to just under $1.4 million dollazs in FY06. 10 CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 City of Meridian -Residential Building Permit Sales -,_ ~FY2003 FY2004 450 - ~~ ~ FY2005 400 I -~- FY2006 350 -' 300 _ - -- .~ 200 '~~-.y _ - ___ _ 150 I, _ _. 100 ~ - y __ 50 0 ~- ~ T- Oct Nov Dec Jan Feb Mar April May June July Aug Sept City of Meridian -Commercial Building Permit Sales 25 -L - - 20 -! 15 _! 10 -~ 5I 0- - '" '_. ~` ~ . ~'~ ;~ FY2003 FY2004 ~~ FY2005 •- FY2006 Oct Nov Dec Jan Feb Mar April May June July Aug Sept The general fund balance is composed of several reserved and restricted funds. The restricted Park Impact Fee balance of $3,481,254 may be spent only for the development of new parks. The City Council has set aside $8,208,157 to be used for capital improvement projects, and $400,000 is reserved for the last payment on the lease for the construction of the police station. The general fund is the principal fund used for the City's major operations. The unreserved balance in this fund of $16,467,410 increased $3,791,461 from the end of fiscal year 2005 to the end of fiscal year 2006. 11 CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 Approxunately a million dollazs of the increase in the unreserved fund balance resulted from funds reserved to partner with ACRD in building the Locust Grove Overpass not being expended. Since the City's portion of the project is over the funds were moved from a reserved fund to the unreserved fund balance. In fiscal year 2006 the unreserved fund balance was S 1.5% of the final personnel and operating budget compazed to 67% last yeaz. General Fund Budgetary Highlights In total, actual revenues were 23% more then the original revenue budget. Interest income, state sharing revenue (intergovernmental), and franchise fees for gas and electricity all exceeded the original budgeted amounts The aforementioned three revenue sources can differ yeaz to year depending on the economy, weather conditions (in the case of the utilities), and state legislation so the City takes a conservative approach to budgeting them. Because of the lazge dollar value of new construction property tax revenue was more then originally anticipated. Finally strong sales from residential building permits for the first three quarters of the yeaz resulted in building permit revenue exceeding budget. The graph below compares the principal revenue sources for the last two fiscal years to the final amended FY06 budget. Revenue -Governmental Fund Comparison -Amended Budget~to Actual FY05 & FY06 ^ Flnal Budget ^ Actual FY06 ~~ Ss,ooo,ooo- $s,aoo,ooo-F ^ Actual FY05 i ;_ A`O?.p~, a~'~i0o ~o~®~ ~~~i,0dc ~'`°s~ '~~ o c'~~ae~ ~sf at ~~ 'tee ''s~, ''~~ e® Gr ea 't,~ ¢ot, a s Actual Governmental personnel and operating costs increased 23% from FY05 to FY06. Personnel and operating expenditures in FY06 were 6% under the original budget. The majority of govennmental expenditures occur in 12 s • CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 Public Safety. As discussed above both Fire and Police added several positions. The Police were budgeted for 11 new positions in FY06. Police were still filling new positions appropriated in prior years. Although personnel costs increased they were still almost $500,000 under the budgeted amount. The Fire Department opened a new station with 12 new positions. Governmental Fund Personnel ~ Operating Expenditures - Budget to Actual - FY06 Ss,ooo,oao -I $7,000,000 -,` " , hcluded $6,0,000 -'' ~ 512 n, bn '~ for Locust $5,000,000 ~, Dove Overpass 3 RO,f $4,000,000 on LG O; erp W.,,II~Q,t100 $2,000,000 '' $1,000,000 -y ~ Y+ ~: ~ ;„ 7 p: Administration Planning/Davlp Parks and Rae f Police Fire 13 Orginal Budget ^ Amended Budget 0 Actual • CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 • Governmental Funds Personnel and Operating Expenses FY05 Compared to FY06 __ $7,000,000- $6,000,000-~" o Actual FY06 $5,000,000'" _ ^ Actual FY05 $4,000,000 $3,000,000- $2, 000, 000 - " $1,000,000- "~ $0--- =x: y :F ~: e..~ _~~ , --- AgAi;q;S~a~~p°~% Fire p~agn;n9ip°`~pa~SangR° p c There were numerous small amendments made to the original FY06 general fund budget. All expenditure increases were matched by revenue increases. The ghost significant change was in Planning and Development Services where the Building Department revenue was increased $1,000,000 for increased building permit revenue. This offset the Building Department increase in building inspector contractor costs of $620,000. The Building Department also amendedthe budget for a a~cw position as did the Planning Department. The Parks Department. amended the capital budget several times due to insufficient budget amounts for construction projects. The total amendment for the Park Impact Fee Fund was $1,223,585. Other departments had minor capital amendments, generally offset by donation or grant revenue. Capital Asset and Debt Administration Capital Assets At the end of fiscal year 2006 the City had $149.4 million invested in capital assets (net of accumulated depreciation). During fiscal year 2006 the City's total investment in net assets increased 21%. 85% of that increase was due to business activities. See table below: 14 • CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 Capital Assets as of September 30,2006 (net of depreciation) Governmental Business -type Total Primary Activities AcUvitles Government 2006 2005 2006 2005 2006 2005 Land $10,158,993 $7,447,008 $781,894 $781,814 $10,940,807 $8,228,822 Buildings and Improvements other than buildings $8,509,456 $8,049,330 $13,054,711 $12,006,331 $21,564,167 $20,055,661 Sewer and Water Lines $76,191,962 $65,877,932 $76,191,962 $65,877,932 Equipment $2,607,448 $2,114,534 $8,407,495 $7,395,823 $11,014,943 $9,510,357 Construction in Progress $4,938,709 $3,244,937 $24,754,111 $15,705,001 $29,692,820 $18,949,938 TOTALS $26,214,606 $20,855,809 $123,190,093 $101,766,901 $149,404.699 $122.622.710 The City's investment in capital assets includes land, buildings, sewer and waster lines, buildings, automobiles and equipment and street lights. Sidewalks, bridges, and roads belong to the Ada County Highway District. Major capital asset events in the general govemrncnt funds in FYOG included: • $2.4 million for land for a new Ciri~ Hall • $400,000 for a fire truck • $1.87 million in construction in pro~ress for park development Major capital asset events in the business -type funds in FY06 included: • Head works exp<uision for ~ 1.6 million • Well #26 for $790;000 • $1.2 million for waterline construction • $4.9 million in donated waterlines • $5 million in donated sewerlines • $13.3 million in waste water plant construction The City booked $1,027,448 in depreciation expense for governmental City functions and $2,859,699 for business-type activities. Long-Term Debt The City has a capital lease and trust agreement with Wells Fargo Bank. This agreement was entered into, as the result of a judicial review on August of 2001 in the amount of $4,000,000 for the purpose of constructing a police station. At September 30, 2006 the long-term balance was $2,195,000. 1FY07 Budgetary Considerations The City of Meridian bases the budget on a revenue analysis and projection. The City starts the budget process in 15 • CITY OF MERIDIAN, IDAHO MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 the spring of the year for the next fiscal year. FY2005 and the first three quarters of FY06 the City experienced record building growth. Population and new construction drives most of the City's revenues from property tax to utility accounts. Based on the first six months of FY06 the assumption was made that the numbers of residential housing permits would stay around FY05 rates. However at the end of FY06 building permits sales dropped dramatically. The City will closely monitor the Development Service Fund whose revenue streams are dependant on building activity. Part of the Development Service Fund costs will drop with revenue, the costs incurred for contracted building inspections. Those costs that are fixed have the potential to be moved to the general fund or cut back. Population and commercial growth challenges the City's ability to provide general services like public safety and parks and recreation. Statutory limitations on property tax collections Ymean that in periods of rapid growth the revenue does not keep up with demand for services. Meeting those needs will be the City's biggest challenge the rest of this decade. When building growth slows down it will bc~otne even more challenging to meet general government service needs without the extra income generated by growth. The City is making long range financial planning a priority. Requests for Information This report is designed to provide a general o~c»ic~r ~~f the City of Meridian's finances for our citizens and customers. If you have questions about this report or neca addirional financial information, contact: City of Meridian Finance Office 33 E. Idaho Ave. Meridian, Idaho 83642 Phone: (208) 888-443 16 CITY OF MERIDIAN, IDAHO STATEMENT OF NET ASSETS SEPTEMBER 30, 2006 Primary Government Governmental Business-type Component Activities Activities Total Unit ASSETS CURRENT ASSETS Cash and cash equivalents $ 6,907,790 $ 4,261,958 $ 11,169,748 $ 387,325 Investments 18,313,244 43,570,635 61,883,879 - Receivables Accounts (net of $20,945 allowance for enterprise fund uncollectibles) 686,293 1,717,983 2,404,276 - Propettytaxes 13,027,051 - 13,027,051 859,654 Assessments - 6,164 6,164 - Due from other governmental units 1,317,948 - 1,317,948 - Interest 143,026 "348,934 491,960 - Prepaids 18,982 4,650 23,632 - Total Current Assets 40,414, X34 4y.910,324 90,324,658 1,246,979 NONCURRENT ASSETS Restricted cash and cash equivalents 1, j 67,054 - 1,367,054 - Restricted investments 2.503.00 - 2,503,050 - Capital assets Land, infrastructure, and other assets not depreciated 15,(197,702 25,535,925 40,633,627 - Buildings, improvements and etluipnunt, net of depreciation 11,116,904 97,654,168 108,771,072 - ~ 70,499,044 $173,100,417 $243,599,461 $ 1,246,979 See Notes to Financial Statements 17 CITY OF MERIDIAN, IDAHO STATEMENT OF NET ASSETS SEPTEMBER 30, 2006 ~.D~- Primary Government Governmental Business-type Component Activities Activities Total Unit LIABILTTIES AND NET ASSETS CURRENT LIABILITIES Accounts payable Accrued payroll and taxes Accrued vacation, current portion Interest payable Deferred revenue Customer deposits Capital leases -current portion Total Current Liabilities NONCURRENT LIABILITIES Accrued vacation -less current portion Capital leases -less current portion NET ASSETS Invested in capital assets, net of related debt Restricted for: Park improvements Capital improvements Police center debt sen~icc Unrestricted Total Net Assets $ 1,527,699 $ 2,158,073 $ 3,685,772 $ 27,871 823,809 247,600 1,071,409 - 65,004 17,173 82,177 - 29,267 - 29,267 - 12,880,952 - 12,880,952 852,493 320,703 34,400 355,103 - 405,000 - 405,000 - 16,052,434 2,457,246 18,509,680 880,364 585,040 154,559 739,599 - `~1,790,OOfi ~ ~~ - 1,790,000 - 18,427.474 2,611,805 21,039,279 880,364 ..24;019,606 123,190,093 147,209,699 - 3,481,254 - 3,481,254 - 5,872,280 - 5,872,280 - 4 4 - 18,298,430 47,298,519 65,596,949 366,615 52,071,570 170,488,612 222,560,182 366,615 $ 70,499,044 $173,100,417 $243,599,461 ~ 18 CITY OF MERIDIAN, IDAHO STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2006 Functions/Programs PRIMARY GOVERNMENT GOVERNMENTAL ACTIVITIES General government Administration Public safety Law Enforcement Fire Department Parks and Recreation Community Planning and Development Interest on long-term debt Total Governmental Activities BUSINESS-TYPE ACTIVITIES Water and wastewater Total Business-Type Activities TOTAL PRIMARY GOVERNMENT COMPONENT UNIT Downtown development Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions $ 2,325,338 $ 405,152 $ 19,550 $ - 6,687,345 638,385 30,178 3,000 5,018,662 1,024,102 128,293 - 1,412,907 224,299 515 1,734,964 3,434,322 5,650,484 - - 107,406 - - - 18,985,980 7,942,42? 178,536 1,737,964 10,831,938 10:806,035 9,240,851 9,906,020 lf1,~31.938 10,806,035 9,240,851 9,906,020 $29,817,918 $18,?48,457 $ 9,419,387 $ 11,643,984 $ 243, 3 53 $ - $ - $ - General revenues Shared revenues Property taxes, levied for general purposes Franchise fees Sales tax and other governmental Unrestricted investment earnings Net increase (decrease) in fair value of investments Miscellaneous Gain (loss) on sale of fixed assets Transfers -internal activities TOTAL GENERAL REVENUES AND TRANSFERS CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, ENDING OF YEAR See Notes to Financial Statements 19 Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business-type Component $ (1,900,636) $ - $ (1,900,636) $ - (6,015,782) - (6,015,782) - (3,866,267) - (3,866,267) - 546,871 - 546,871 - 2,216,162 - 2,216,162 - (107,406) - (107,406) - (9,127,058) - (9,127,058) - 19,120,968 19,120,968 19,120,968 19,120,96$ $ (9,127,058) $ 19,120,968 $ 9,993,910 5 - $ - $ - ~ - S (243,153) 10,841,757 - 10,841; 757 413,557 1,255,866 - 1,255,566 - 3,136,161 - 3,136,161 - 1,273,260 2,102,077 3,375,337 14,069 (2,880) (26,905).. . (29,785) - 28,255 282,194 310,449 - (21,963) (643) (22,606) - 464,329 (464,329) - - 16,974,785 1,892,394 18,867,179 427,626 7,847,727 21,013,362 28,861,089 184,473 44,223,843 149,475,250 193,699,093 182,142 $ 52,071,570 $170,488,612 $222,560,182 $ 366,615 20 • ! CITY OF MERIDIAN, IDAHO BALANCE SHEET -GOVERNMENTAL FUNDS SEPTEMBER 30, 2006 ASSETS Cash and cash equivalents Investments Receivables Accounts Property taxes Due from other governmental units Interest Prepaid items Restricted assets Cash and cash equivalents Investments Capital General Projects $ 6,539,634 $ 368,156 12,843,303 5,469,941 686,293 - 13,027,090 - 1,317,94b - 104962 38,064 18,98? - Total Governmental Funds $ 6,907,790 18,313,244 686,293 13,027,090 1,317,948 143,026 18,982 1,3~i7,054 - 1,367,054 2,503,050 - 2,503,050 $ ~ 8,408,316 $ 5,876,161 $ 44,284,477 LIABILITIES AND FUND BALANCES Lnabilities Accounts payable $ 1,523,818 $ 3,881 Accrued payroll and taxes 823,809 - Deferred revenue 12,975,445 - Customer deposits 320,703 - 15,643,775 3,881 Fund balances Reserved for park improvements' Reserved for capital improvements Reserved for police center debt service Designated for fire truck purchases Unreserved $ 1,527,699 823,809 12,975,445 320,703 15,647,656 3,481,254 - 3,481,254 2,335,877 5,872,280 8,208,157 400,000 - 400,000 80,119 - 80,119 16,467,291 - 16,467,291 22,764,541 5,872,280 28,636,821 $ 38,408,316 $ 5,876,161 $ 44,284,477 See Notes to Financial Statements 21 CITY OF MERIDIAN, IDAHO RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2006 Fund balance -total governmental funds $ 28,636,821 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 26,214,606 Some of the property taxes receivable are not available to pay for current-period expenditures and therefore are deferred in the funds. 94,454 Long-term debt is not due and payable in the current period a rid`therefore is not reported in the funds. (2,195,000) Accrued vacation is not due and payable in the currenf period and therefore is not reported in the funds. (650,044) Interest on long-term debt is not due and payable in the current period and therefore is not reported in the funds. (29,267) Net assets of governmental actin ;tics ,, $ 52,071,570 See Notes to Financial Statements 22 ! ~ CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2006 REVENUES Taxes Licenses and permits Intergovernmental Franchise fees Fines and forfeitures Charges for services Interest Miscellaneous Total Revenues General Total Capital Governmental Projects Funds EXPENDITURES General government Public safety Community planning and development Parks and recreation Debt service Principal Interest Capital outlay Total Expenditures EXCESS OF REVENUE'S OVER 1`XP[~N~tITURES OTHER FINANCING SOURCES (USES) Operating transfer in Operating transfer out Unrealized gain (loss) on investments Proceeds from sale of capital assets Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES FUND BALANCE, BEGINNING OF YEAR FUND BALANCE, END OF YEAR $ 10,840,325 $ - $ 10,840,325 5,222,880 - 5,222,880 4,296,518 - 4,296,518 1,255,866 - 1,255,866 417,133 - 417,133 2,664,077 - 2,664,077 975,136 298,124 1,273,260 80,129 - 80,129 25,75?,064 298,124 26,050,188 2,255,084 7,660 2,262,744 l Q,908,612 - 10,908,612 3,416,884 - 3,416,884 1,151,000 - 1,151,000 390,000 - 390,000 112,606 - 112,606 3,491,241 2,587,849 6,079,090 21,725,427 2,595,509 24,320,936 4,026,637 (2,297,385) 1,729,252 464,329 2,815,539 3,279,868 (2,815,539) - (2,815,539) 2,392 (5,272) (2,880) 13,491 - 13,491 (2,335,327) 2,810,267 474,940 1,691,310 512,882 2,204,192 21,073,231 5,359,398 26,432,629 $ 22,764,541 $ 5,872,280 $ 28,636,821 See Notes to Financial Statements 23 i • CITY OF MERIDIAN, IDAHO RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2006 Net change in fund balances -total governmental funds $ 2,204,192 Amounts reported for governmental activities in the statement of activities are dii~erent because: Governmental funds report capital outlay 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 outlays ($6,079,090) exceeded depreciation ($1,027,447) in the current peri~~d. 5,051,643 Capital assets contributed by developers are not a source of fi naneial resources and thus, are not recognized in the governmental funds. 342,610 In the statement of activities, only the gain or loss on disposal of assets is reported, whereas in the governmental funds, the gains from the disposal increase financial resources. Thus, the change in net assets differs from the change in fund balance by the net book value of the assets disposed of. ~ (35,455) Some property tax revenue in the st;,aement of activities that does not provide current financial resources is not reported as rc<<ue in the funds. 1,424 Repayment of long-term debt principal is an expenditure in the governmental funds, but the repayment reduces long-t~Tm debt in tl~e statement of net assets. 390,000 In the statement of activities, accru~;d vacation is measured by the amounts earned during the year. In governmental fiends; however, expenditures for these items are measured by the amount of financial resources used. This is the amount by which benefits earned exceeded benfits paid in the current year. (111,887) Interest expense accrued but not paid reported in the statement of activities does not require the use of current financial resources and therefore is not reported as expenditures in governmental funds. 5,200 Change in net assets of governmental activities $ 7,847,727 See Notes to Financial Statements 24 CITY OF MERIDIAN, IDAHO STATEMENT OF NET ASSETS -PROPRIETARY FUND YEAR ENDED SEPTEMBER 30, 2006 Enterprise Fund Water and Sewer ASSETS CURRENT ASSETS Cash and cash equivalents Investments Receivables Accounts (net of $20,945 allowance for uncollectibles) Interest Prepaid items Total Current Assets NONCURRENT ASSETS Capital assets Land Construction in progress Buildings and improvements other than buildings Sewer and water lines Machinery and equipment Less accumulated depreciation LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable Accrued payroll and taxes Accrued vacation, current portion Customer deposits Total Current Liabilities NONCURRENT LIABILITIES Accrued vacation -less current portion NET ASSETS Invested in capital assets, net of related debt Unrestricted Total Net Assets $ 4,261,958 43,570,635 1,724,147 348,934 4,650 49,910,324 781,814 24,754,111 21,142,940 88,622,000 12,956,727 (25,067,499) $ 173,100,417 $ 2,158,073 247,600 17,173 34,400 2,457,246 154,559 123,190,093 47,298,519 170,488,612 $ 173,100,417 See Notes to Financial Statements 25 • CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS- PROPRIETARY FUND YEAR ENDED SEPTEMBER 30, 2006 Enterprise Fund Water and Sewer OPERATING REVENUES Charges for services Water revenues $ 3,859,768 Sewer revenues 5,381,348 Sale of meters 599,670 Latecomers fees 540,800 Engineering fees 424,449 Miscellaneous 282,194 Total Operating Revenues 11,088,229 OPERATING EXPENSES Personnel services 4,081,610 Other services and charges 1,900,598 Depreciation 2,859,699 Supplies 1,489,842 Heat, lights and power 500,189 Total Operating Expenses 10,831,938 OPERATING INCOME 256,291 NONOPERATING REVI;NU]?~ (EXPENSI~S) Interest revenue 2,102,077 Connection assessment fees 9,240,851 Loss on sale of fixed assets (6q.3) Net decrease in fair value of investments (26,905) Total Nonoperating Revenues (Expenses) 11,315,380 INCOME BEFORE CONTRIBUTIONS AND TRANSFERS 11,571,671 Donated waterlines and sewerlines 9,906,020 Operating transfers out (464,329) CHANGE IN NET ASSETS 21,013,362 NET ASSETS, BEGINNING OF YEAR 149,475,250 NET ASSETS, END OF YEAR $ 170,488,612 See Notes to Financial Statements 26 CITY OF MERIDIAN, IDAHO STATEMENT OF CASH FLOWS-PROPRIETARY FUND YEAR ENDED SEPTEMBER 30, 2006 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 11,139,881 Payments to suppliers (4,306,899) Payments to employees (3,968,416) NET CASH PROVIDED BY OPERATING ACTIVITIES 2,864,566 CASH FLOWS FROM NONCAPITAL FINANCING ACTMTIES Operating transfer to general fund (464,329) NET CASH USED BY NONCAPITAL FINANCING ACTTVITII~S (464,329) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Connection assessment fees 9,240,851 Proceeds from sale of capital assets 429 Acquisition of capital assets (14,377,943) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTT V l "T I I: S (5,136,663) CASH FLOWS FROM INVESTING ACTMTTLS Purchase of investments (21,123,608) Sale of investments 21,168,431 Interest received 1,967,976 NET CASH PROVIDED BY INVESTING ACTMTIES 2,012,799 NET DECREASE IN CASH (723,627) CASH, BEGINNING OF YEAR 4,985,585 CASH, END OF YEAR $ 4,261,958 See Notes to Financial Statements 27 . ~ • i CITY OF MERIDIAN, IDAHO STATEMENT OF CASH FLOWS-PROPRIETARY FUND YEAR ENDED SEPTEMBER 30, 2006 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTMTIES Operating income Adjustments to reconcile operating income to net cash provided by operating activities Depr~iation Changes in assets and liabilities Accounts receivable Due from other governments Prepaid items Accounts payable Accrued payroll and taxes Customer deposits NET CASH PROVIDED BY OPERATING ACTIVITIES SUPPLEMENTAL DISCLOSURE OF CASH FLOW 1NFORyIATION Developer and customer contributed sewer and water lines $ 256,291 2,859,699 (211,619) 263,271 (4,650) (43,421) 113,194 (368,199) $ 2,864,566 $ 9,906,020 See Notes to Financial Statements 2g ~ i CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 1- SUNIIVIARY OF SIGNIFICANT ACCOUNTING POLICIES City of Meridian, Idaho (City) was incorporated August, 1903. The City operates under a mayor and council form of government and provides the following services as authorized by its charter. public safety (police and fire), community planning and development, parks and recreation, and general ar~rninictrative services. The financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standazds Boazd (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies aze described below. The accounting and reporting policies of the City relating to the funds included in the accompanying basic financial statements conform to generally accepted accounting principles applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the GASB, the American Institute of Certified Public Accountants in the publication entitled :ludir.~ of State and Local Governmental Units and by the Financial Accounting Standazds Boazd (when applicablej. .As allowed in Section P80 of GASB's Cod cation of Governmental Accounting and Financial Reporting Stcltzdards, the City has elected not to apply to its proprietary activities Financial Accounting Standazds Board Statements ar-d Interpretations, Accounting Principles Boazd Opinions, and Accounting Research Bulletins of the COmmittcc ~f Accounting Procedure issued after November 30, 1989. Financial Reporting Entity As required by generally accepted accounting principles, these basic financial statements present the City in conformance with GASB Statern~nt Nu. a9, '7~etermining Whether Certain Organizations are Component Units." Under Statement No. 39, component:-units are organizations that aze included in the reporting entity because of the significance of their operational or financial relationships with the City. The component unit calun,n in the combined financial statements is the financial data of the City's single component unit, the Meridian Develvpment Corporation (NIDC). MDC is a separate and distinct legal entity created by state statute. The directors of MDC .arc at~pointed by the Mayor and approved by the City Council. MDC provides urban development services for the citizens of the City. Complete financial statements can be obtained from the City of Meridian Division of Financial Management, 33 East Idaho, Meridian, Idaho. The City contributes to the multi-employer Public Employer Retirement System of Idaho (the System). The System is administered by the State of Idaho and the City is not the major participant in the plan; therefore, the plans financial statements are not included in this report. (continued on next page) 29 GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government. For the most part, the effect of interfimd 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. 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. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. MEASUREMENT FOCUS, BASIS OF ACCOUNTIlVG, AND FINANCIA L STATEMENT PRESENTATION The govemment-wide financial statements are reported... using the ~>cunomic t~esources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues aze recorded when earned and expenses are recorded when a lia'{~ility is incurred, regardless of the timing of related cash flows. Properly 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 reyuue~nents imposed'by the provider have been met. Govemmental fund financial statements are reported. using the current financial resources measurement focus and the mod~d accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available ~~ hen t]lcv are collectible within the current period or soon enough thereafter to pay liabilities of the current period, For this purpose, the govemment considers revenues to be available if they aze collected within 60 days of the end of drs~ ~~irrrcnt fiscal period Expenditures generally are recorded when a liability is incurred, as under accrual accouming. `However, debt service expenditures, as well as expenditures related to compensated absences and clauns and judgments, are recorded only when payment is due. Property taxes, franchise taxes; licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so hay a 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 All other revenue items are considered to be measurable and available only when cash is received by the govemment. The City reports the following major governmental funds: General Fund -The General Fund is the general operating fund of the City. It is used for all financial resources except those required to be accounted for in another fund. Capital Projects Fund- The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds). 30 The City reports the following major proprietary fund: Enterprise Fund -The Enterprise Fund is used to account for operations financed and operated in a manner similaz to private business when the intent of the governing body is that costs (ex~nses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user chazges, or the governing body has decided that periodic determination of revenues earned, expenditures incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. As a general rule, the effect of interfiind activity has been eliminated from the government wide financial statements. Exceptions to this general rule aze charges between various functions of the government when elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) chazges 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 aze reported as general revenues rather than as program revenues. Proprietary funds distinguished operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and products and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revers u cs o P the City's enterprise funds are charges for services to customers for sales and services. The Water and Scwcr Fuiuls also recognizes as operating revenue the portion of hook-on fees intended to recover the cost of connecting new custo,ncrS to the system. Operating expenses for enterprise funds include the cost of sales and services, adlninistr,~tive expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition aze reported as nonoperating revenues and expenses. Cash and Cash Equivalents For purposes of the statement of cash flows, the proprietary ..funds consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. dnvestments Idaho Code provides authorix~ition for the investment of funds as well as specific direction as to what constitutes an allowable investment. City policy is consistent with this direction. The City currently invests in interest bearing bank accounts, certificates of deposit and U. Government and U.S. Govenatnent Agency bonds. Property Taxes Receivable and De~pr•~ cd Revenue Within the governmental fund financial statement, property taxes are recognized as revenue when the amount of taxes levied is measurable, and proceeds are available to finance current period expenditures. Available tax proceeds include property tax receivables expected to be collected within sixty days after yeaz end Property taxes attach as liens on properties on January 1, and are levied in September of each year. Tax notices are sent to taxpayers during November, with tax payments scheduled to be collected on or before December 20. Taxpayers may pay all or one half of their tax liability on or before December 20, and if one half of the amount is paid, they may pay the remaining balance by the following June 20. Since the City is on a September 30 fiscal yeaz end, property taxes levied during September for the succeeding year's collection aze recorded as deferred revenue at the City's yeaz end and recognized as revenue in the following fiscal yeaz. Ada County bills and collects taxes for the City. Customer Services Receivable 31 Amounts owed to the City for customer services are due from area residents and businesses and relate to water, sewer and trash services provided by the City. Capital Assets Capital assets, which include property, plant, equipment, and infi~astructure 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 by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. All material fixed assets are valued at cost. Donated fixed assets are valued at their estimated fair value on the date donated. Public domain fixed assets consisting of roads, bridges, streets and sidewalks, and lighting systems are also reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Depreciation is recorded by use of the straight-line method. The book value of each asset is reduced by equal amounts over its estimated useful life as follows: Buildings Sewer plant Sewer and water lines Improvements other than buildings Equipment Public domain infrastructure Estimated Useful Liie~Years) ~0 -,$ 50 10-50 5-20 40 Maintenance, repairs and minor renewals are clargCd to operations as incurred. When an asset is disposed of, accumulated depreciation is deducted from the original cost,. andany gain or loss arising from its disposal is credited or charged to operations. Major outlays for capital assets a1u} improvements are capitalized as projects are constructed. Interest costs incurred during construction of capital assets of business-type'activities are capitalized when they are material. There were no interest costs included as part,c~f the cysts of capital assets under construction in the current year. Compensated Absences Puy~crhle The City provides vacation and sick leave to its full-time employees. Earned vacation is paid to employees when taken or paid to employees or beneficiaries upon the employees' temvnation, retirement or death. The City does not pay earned sick pay upon the employees' termination, retirement or death for non-union employees. The fire department union members are paid ten percent of their sick leave accrual upon the employees' termination, retirement or death. The amount of unused vacation accumulated by City employees is accrued as expense when incurred in the Proprietary Fund, which use the accrual basis of accounting. In the Governmental Funds, only the amount that normally would be liquidated with expendable available financial resources is accrued as current year expenditures. Unless it is anticipated that compensated absences will be used in excess of a normal year's accumulation, no additional expenditures are accrued Capital Leases The City is the lessee under a capital lease and trust agreement with Wells Fargo Bank for the law enforcement building. Under the terms of the agreement the City constructed the project on behalf of the lessor. The lease requires 32 • annual payments. The City will acquire the asset at the end of the lease for a bazgain purchase price of $1. Risk Management The City is exposed to various risks of loss related to theft of, damage to, or destruction of assets. The City participates in a public entity risk pool, Idaho Counties Risk Management Pool (ICRMP), for liability, medical and disability insurance. The City's exposure to loss from its participation in ICRMP is limited only to the extent of their deductible. Equity In the fund financial statements, reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of retained earnings aze limited to enabling legislation or outside third- party restrictions. Designations of fund balance represent tentative management plans that aze subject to change. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers or other funds. It is the government's policy to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available, unless otherwise required. The City has established reserves to account for the resources received from impact fees to be used for future park development. The City has also established a reserve for the.. police cenkr and has designated funds for future fire truck purchases. In the government wide financial statements, restrictions of net assets are limited to enabling legislation or outside third-party restrictions. As of September 30, 2006, S9,353,534 of the restricted net assets were restricted due to enabling legislation. Encumbrances Encumbrance accounting, under uvl~ich pnrchasc ordcis, contracts, and other commitments for the expenditure of monies aze recorded in order to reserve that portiorx of the applicable appropriation, is not employed by the City. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2 -CASH AND INVESTMENTS Cash and investments as of September 30, 2006 aze classified in the accompanying financial statements as follows: Cash and cash equivalents $ 11,169,748 Cash and cash equivalents -restricted 1,367,054 Total $ 12,536,802 Investments $ 61,883,879 Investments -restricted 2,503,050 Total $ 64,386,929 33 Investments Authorized by the State of Idaho and the City of Meridian's Investment Policy Investment types that are authorized for the City of Meridian by the Idaho Code and the City's investment policy are as follows: 1. Local and State Agency Bonds 2. U. S. Agency Bonds 3. U. S. Agency Securities 4. Certificates of Deposit Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely impact the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. One of the ways the City manages its exposure to interest rate risk is by purchasing a combination of long and short-term investments. The City keeps funds needed for operations in short-term liquid investments while maintaining a stable longer-term investment portfolio with duration matched to expected completion of capital projects. Generally, overall portfolio duration is maintained between 3 and 3.5, but the City has no specific limitations. Deposit and investments subject to duration measurement: Commercial Paper Agency Bonds Certificates of Deposit Fair Value $ 4,555,000 29,330,457 Duration 0.3 3.6 Total deposits and investments subject io ciuratior~ measureprtent Deposits and investments not subject to duration measurement: Idaho Diversified Bond Pool (DBF) Idaho Local Government In~~strncnt Pool i LGTP) Money Market Fund Other Cash and Cash ~tluival~nts Total deposits and investments,not subject to duration measuement Total deposits and investments Disclosures Relating to Credit Risk 9,901,874 3.0 43,787,331 3.1 2,830,815 19,127,161 50,053 11,128,371 33,136,400 $ 76,923,731 Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City's investment policy requires a rating of A or better by Standard & Poor's or other nationally recognized rating agency. The ratings of investments subject to credit risk are as follows: 34 ~~ • Investment Type Amount Rating Commercial Paper $ 4,555,000 A-1 Agency Bonds Idaho Diversified Bond Pool (DBF) Idaho Local Government Investment Pool (LGIP) 29,330,457 AAA 2,830,816 Unrated 19,127,161 Unrated Concentration of Credit Risk The City's investment policy has no limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than State investment pools) that represents 5% or more of total City investments are as follows: Issuer Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association Home Federal Savings Idaho Banking Co. Investment Type Reported Amount Percentage U.S. Agency Bond $ 11,425,914 18% U.S. Agency Bond $ 12,007,635 19% U.S. Agency Bond $ 5,896,908 9% Certificate ofh}epositi~ $ 3,613,099 6% Certificate of Deposit $ 3,252,630 5% Custodial Credit Risk Custodial credit risk for deposits is the risk that, in he event. of the failure of a depository financial institution, a government will not be able to recover its deposits or ~;~ill not be able to recover collateral securities that are in possession of an outside party. The custodial c>'edit risk for i~wcstments is the risk that in the event of the failure of the counterparty (e.g. broker-dealer) to a transactionti a government will not be able to recover the value of its investment or collateral securities that are. in the possession of another party. The City does not have a policy restricting the amount of deposits and invest~ncnts subject to custodial credit risk. At year end, the carrying anu~unt of the C'ity's deposits was $12,536,802 and the bank balance was $12,871,498. Gf the bank balance, $300,000 wus covered by federal depository insurance and $12,571,498 was uninsured and uncollateralized. All cash is held in Farmers & Merchants State Bank, Wells Fargo National Bank, Washington Federal Savings Bank and Charles Schwab & Co located in Ada County, Idaho. The City minimizes exposure to custodial credit risk by requiring that investments, to the extent possible, be identified as to City of Meridian ownership and be held in the City's name. All commercial paper, agency bonds and money market funds are held in custody by Charles Schwab & Co. in the City's name. Investment in State Investment Pools The City is a voluntary participant in the State of Idaho Local Government Investment Pool (LGIP) and the State of Idaho Diversified Bond Fund (DBF). Both the LGIP and the DBF are regulated by State of Idaho code under the oversight of the Treasurer of the State of Idaho. The fair value of the City's investment in the pools is reported in the accompanying financial statements at amounts based on the City's pro-rata share of the fair market value provided by the fund for the entire portfolio. Neither the LGIP nor the DBF are rated by a nationally recognized statistical rating organization. 35 ~ i NOTE 3 -DUE FROM OTHER GOVERNMENTAL UNITS The following siirr,m~ri~es the intergovernmental receivables at September 30, 2006: State of Idaho State Liquor Dispensary State Tax Commission Idaho Transportation Depatment Other Meridian Rural Fire District FEMA Ada County Total $ 78,854 896,739 4,431 614 179,364 123,159 34,787 $ 1,317,948 36 • NOTE 4 -CAPITAL ASSETS Changes to capital assets are as follows: Balance Oct. 1, 2005 Additions Deletions Governmental Activities: Capital assets, not depreciated: Land $ 7,447,008 $ 2,727,193 $ 15,208 Construction in progress 3,244,937 2,222,591 528,819 Total capital assets, not depreciated 10,691,945 4,949,784 544,027 Capital assets, depreciated: Balance Sept. 30, $10,158,993 4,938,709 15,097,702 Buiidmgs 6,365,757 169,703 - 6,535,460 Improvements other than buildings 3,894,919 726,348 - 4,621,267 Equipment 5,219,174 1,102,886 194,434 6,127,626 Total capital assets, depreciated 15,479,850 1,998,937 194,434 17,284,353 Less accumulated depreciation for: Buildings 1,142,Oy9 218,118 - 1,360,217 Improvements other than buildings 1,069,247 217,805 - 1,287,052 Equipment 3.10~,(i40 591,524 175,984 3,520,180 Total accumulated degreciatc+n 5,315,986 1,027,447 175,984 6,167,449 Total net capital assets, depreciated ` 10,163,864 971,490 18,450 11,116,904 Governmental activities capital assets, net $ 20,855,809 $ 5,921,274 $ 562,477 $ 26,214,606 37 Balance Balance Oct. 1, Sept. 30, 2005 Additions Deletions 2006 Business-type activities Capital assets, not depreciated: Land $ 781,814 $ - $ - $ 781,814 Construction in progress 15,705,001 13,296,708 4,247,598 24,754,111 Total capital assets, not depreciated 16,486,815 13,296,708 4,247,598 25,535,925 Capital assets, depreciated: Buildings and improvements other than buildings 19,528,307 1,614,633 - 21,142,940 Sewer and water lines 76,627,553 11.994,447 - 88,622,000 Machinery and equipment 11,359,134 1.625,774 28,181 12,956,727 Total capital assets, depreciated 107,514,994 15,2~4,~54 28,181 122,721,667 Less accumulated depreciation for: Buildings and improvements other than buildings 7,521,976 566,253 - 8,088,229 • Sewer and water lines 10,749,62.1. 1,680,417 - 12,430,038 Machinery and equipment 3,963;311 613,029 27,108 4,549,232 Total accumulated depreciation 22,234,908 2,859,699 27,108 25,067,499 Total net capital assets, depreciated 85,280,086 12,375,155 1,073 97,654,168 Business-type activities capital assets, net $ 101,766,901 $ 25,671,863 $ 4,248,671 $ 123,190,093 38 Depreciation expense was charged to functions/programs of the City as follows: Governmental activities: General government $ 55,188 Public safety 700 484 Community planning and development 11,739 Parks and recreation 260,036 Total depreciation expense -governmental activites $ 1,027,447 Business-type activities: Water and Sewer $ 2,859,699 Total depreciation expense -business-type activities $ 2,859,699 NOTE 5 - INTERFUND BALANCES AND TRANSFERS The following transfers were made for the purpose of funding operations: Transfer ln: Transfer out: General fund Enterprise fund Total transfers Capital . General Projects Fund Fund Total $ - $ 2,815,539 464,329 - $ 464,329 $ 2,815,539 $ 2,815,539 464,329 $ 3,279,868 As of September 30, ?(~Of, there «~erc n©iuternal balances due to or from other funds. NOTE 6 - CHANGES IN LONGTERM DEBT The City is the lessee under a capital lease and trust agreement with Wells Fargo Bank for the law enforcement building. Under the terms of the agreement the City constructed the project on behalf of the lessor. The lease requires annual payments. At the end of the lease, the City has the option to purchase the facility for $1. The lease has a term often years with annual principal payments of $405,000 to $475,000 and interest rates of 4.0% to 4.5%. The following is a summary of changes in long-term debt of the City for the year ended September 30, 2006. 39 ' • Balance Oct.l, Debt 2005 Issued Due Balance Within Debt Sept. 30, One n ~__~ nnni v___ Governmental activities: Capital leases Building $ 2,585,000 $ - $ 390,000 $ 2,195,000 $ 405,000 Accrued vacation 538,157 111,887 - 650,044 65,004 Governmental activities long-term liabilities $ 3,123,157 $ 111,887 $ 390,000 $ 2,845,044 $ 470,004 Business-type activities: Accrued vacation $ 118,556 $ 53,176 $ - $ 171,732 $ 17,173 The future minimum lease obligation and the net present value of the rri_inimum lease payments as of September 30, 2006 are as follows: Fiscal Year ' P,ri7cipal Interest Total 2007 $ =105,000 $ 47,300 $ 452,300 2008 420,000 39,200 459,200 2009. 444,000 30,275 470,275 2010 455,000 20,925 475,925 2011 475,000 10,688 485,688 $ 2,195,000 $ 148,388 $ 2,343,388 The City leases the la«~ entorccrncnt building under anon-cancelable capital lease. The cost and accumulated depreciation by funds/account activity group are as follows at September 30, 2006: Cost Governmental activities Accumulated Depreciation $ 3,582,021 $ 487,543 40 NOTE 7 -DEFINED BENEFIT PENSION PLAN Public Employee Retirement System of Idaho (PERSI) -The PERSI Base Plan, a cost sharing multiple-employer public retirement system, was created by the Idaho State Legislature. It is a defined benefit plan requiring that both the member and the employer contribute. The Plan provides benefits based on members' years of service, age, and compensation. In addition, benefits aze provided for disability, death, and survivors of eligible members or beneficiaries. The authority to establish and amend benefit provisions is established in Idaho Code. Designed as a mandatory system for eligible state and school district employees, the legislation provided for other political subdivisions to participate by contractual agreement with PERSI. Financial reports for the plan are available on the PERSI website or in print upon request. After 5 years of credited service, members become fully vested in retirement benefits earned to date. Members are eligible for retirement benefits upon attainment of the ages specified for their employment classification. For each month of credited service, the annual service retirement allowance is 2.0% (2.3% police/firefighter) of the average monthly salary for the highest consecutive 42 months. The contribution requirements of the City of Meridian and its employees are established and may be amended by the PERSI Boazd of Trustees. For the year ended September 30, 2006, the required contribution rate as a percentage of covered payrolls for members was 6.23% for general. members and 7.65% for police/firefighters. The employer rate as a percentage of covered payroll «~as 10.39"~~ )'or general members and 10.73% for police/firefighter members. For PERSI's yeaz ended June 30, 2006, the required contributian rates, as determined by PERSI, aze as follows: General Member Police and Fire Member Emplovee 6.60-6.97% 8.09-8.53% Employer 11.00-11.61% 11.34-11.95% Contributions required and paid ~~cr.. $1,206,43, X992,266 and $864,765 for the three years ended September 30, 2006, 2005, and 2004, respecfively. 41 NOTE 8 -OTHER COMMITMENTS The City has the following commitments at September 30, 2006: Commitment Purpose of Agreement Amount Bitterroot Construction Locust Grove sewer and water lines $ 155,115 Bodiford Construction Black Cat pressure sewer $ 127,826 Boise City Attorney Prosecutorial and police legal advisor $ 200,196 Carollo Engineering Waste water treatment plant expansion project $ 989,131 CH2M Hill Waste water treatment plant NPDES permit, Mason Creek lift station predesign, floodway encroachment $ 99,206 City Survey Consultants Design for new water/sewer mains, Well #27 design, Overland Road sewer/water improvements $ 72,806 Ewing Company, Inc. Waste water treatment plant Biosolids upgrade $ 10,313,000 HDR Engineering Waste water treatment plant process enhancement $ 20,504 Hydro Logic Well #20b design, water rights, ground ~~atar studies, Well #27 design and testing $ 127 004 Idaho Demolition Services Demolish new city hall site $ 390,800 JC Contractors Waste water treatment plant lacility cxpansi~n $ 3,174,984 JUB Engineers Black Cat trunk & lift station design $ 607,811 LCA Architects Architects for new City Hall $ 789,947 Marsh Advantage USA Broker of employee benefits $ 20,000 McAlvain Construction Youth.baseball comE~lcx iii Settlers'~'ark . $ 1,758,226 Petra. Inc Construction managcn,ent far new City Hall $ 574,000 R.R. Davis Properties, Inc. Municipal golf course upgades $ 649,760 Sommer Construction 20b7 trunk sewer projc~t $ 3,858,529 Star Construction Remove, install 2 new submersible sewage pumps $ 111,572 NOTE 9 -CONTINGENT' LIAI3i1.ITIES The City has been named as a defendant in various legal actions, the results of which are not presently determinable. However, in the opinion of the City Attorney, the amount of losses that might be sustained, if any, would not materially affect the City's financial position. Under the terms of federal and state grants, periodic audits are required and certain costs may be questioned as not being appropriate expenditures under the terms of the grants. Any disallowed claims, including amounts ah'eady collected, could become a liability of the City. City management believes disallowances, if any, will not be material. NOTE 10 -COMPONENT UNIT 'T'he Meridian Development Corporation (1VIDC) is created by and exists under the Idaho Urban Renewal Law of 1965, as amended, and is a separate and legal entity. 42 The following is a summary of the disclosures required for a fair presentation of the component unit in the City's financial statements. Cash At year-end, the bank balance and carrying amount of deposits, reported as cash was $390,457, of which $290,457 was uninsured and uncollateralized and exposed to custodial credit risk. All cash is held in a financial institution located in Idaho. 43 ` ~ • CITY OF MERIDIAN, IDAHO REQUIRED SUPPLEMENTARYINFORMATION • • CITY OF MERIDIAN, IDAHO SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL -GENERAL FUND YEAR ENDED SEPTEMBER 30, 2006 Budgeted Amounts Variance Actual With Original Final Amounts Final Budget REVENUES Taxes $ 10,258,311 $ 10,258,311 $ 10,840,325 $ 582,014 Licenses and permits 4,067,893 5,067,893 5,222,880 154,987 Intergovernmental 3,035,000 3,243,850 4,296,518 1,052,668 Franchise fees 790,000 790,000 1,255,866 465,866 Fines and forfeitures 275,500 275,500 417,133 141,633 Charges for services 2,078,600 2,110,386 2,664,077 553,691 Interest 489,800 ~9b,479 975,136 378,657 Miscellaneous 12,000 65,000 80,129 15,129 Total Revenues 21,007,104 ..:.22,407,419 25,752,064 3,344,645 EXPENDITURES General govennment 3,39,9,2?~8 3,238,167 2,255,084 983,083 Public safety Police 6,702,928 6,746,834 6,226,279 520,555 Fire 4,715.785 ..4,960,382 4,682,332 278,050 Community planninganddevelopment• 3,37$,108 4,054,819 3,416,884 637,935 Parks and recreation 1,247,Q16 `' 1,293,802 1,151,000 142,802 Debt service Principal 390,000 390,000 390,000 - Interest 11'0,000 110,000 112,606 (2,606) Capital outlay General government 180,866 218,266 34,095 184,171 Public safety Police 403,360 504,550 441,111 63,439 Fire 580,200 674,505 586,538 87,967 Community planning anal dcvclupment 26,835 87,805 60,051 27,754 Parks and recreation 3,810,538 5,034,123 2,369,446 2,664,677 Total Expenditures 24,939,874 27,313,253 21,725,426 5,587,827 EXCESS (DEFICIENCI~ OF REVENUES OVER (UNDER) EXPENDITURES (3,932,770) (4,905,834) 4,026,638 8,932,472 4.4 ~ . • CITY OF MERIDIAN, IDAHO SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL -GENERAL FUND YEAR ENDED SEPTEMBER 30, 2006 OTHER FINANCING SOURCES (USES) Budgeted Amounts Variance Actual With Original Final Amounts Final Budget Operating transfer in 640,362 638,962 464,329 (174,633) Operating transfer out - (127,342) (2,815,539) (2,688,197) Unrealized loss on investments - - 2,392 2,392 Sale of capital assets - - 13,491 13,491 Total Other Financing Sources (Uses) 640,362 51 I ,620 (2,335,327) (2,846,947) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES (USES) OVER (UNDER) EXPENDITURES (3,292,408) (4,394,214) 1,691,311 6,085,525 FUND BALANCE, BEGINNING OF YEAR 21,073;231 21,073,231 21,073,231 - FUND BALANCE, END OF YEAR $ ....17,780,823 ' $ 16,679,017 $ 22,764,542 $ 6,085,525 45 ~ • • CITY OF MERIDIAN, IDAHO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED SEPTEMBER 30, 2006 Budgets and Budgetary Accounting The City follows these procedures in establishing the budgetary data reflected in the financial statements: Prior to September 1, the Finance Officer, Mayor and City Council prepare a proposed operating budget for the fiscal year commencing on October 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings aze conducted at City Hall to obtain taxpayer comments. Prior to October 1, the budget is legally enacted through passage of an ordinance. Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for the general fund. Budgets for enterprise funds aze not legally required but are adopted on a non-GAAP basis. All annual appropriations lapse at fiscal year-end Revisions that alter the total expenditure apprn~r;~tion of any fund must be approved by the City Council. State law does not allow fund expenditures to exceed fund apprc~t-riations. The budget presented in the report has been amended Formal budgetary integration is employed as a management con mil device during the yeaz for all funds. 46 4 ,, - • . CITY OF MERIDIAN, IDAHO OTHER INFORMATION c• , ` M ~ • INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH G O VER NMENT A UD I TI NG S TA NDA R D S Mayor and Members of the City Council City of Meridian, Idaho Meridian, Idaho We have audited the accompanying financial statements ofthe governmental activities, the business-type activities, the discretely presented component unit, and each major fund of City of i~~Icridian, Idaho, as of and for the year ended September 30, 2006, which collectively comprise the City of Meridian, ldaho's basic financial statements and have issued our report thereon dated December 21, 2006. We conducted our audit in accordance with auditing standards generally accepted in the United States of Atnerica"`tend the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered (:ity-af Meridian, Idaho's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial r`eportint ~~oulcJ not necessarily disclose all matters in the internal control over financial reporting that might be materlat~wcakucsscs. material weakness ~; a rcportahle condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the i i n ancial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be mate ' we esses. However, we noted other matters involving the internal control over financial reporting that we have reported to management of City of City of Meridian, Idaho, in a separate letter dated December 21, 2006. J 4~ Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Meridian, Idaho's financial statements aze free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncom fiance or other matters that aze required to be reported under Government Auditing an ar s. We noted certain matters that we reported to management of City of Meridian, Idaho, in a separate letter dated December 21, 2006. This report is intended solely for the information and use of the audit committee, management, City Council and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Boise, Idaho December 21, 2006 49 • . To the Mayor and Members of the City Council City of Meridian, Idaho We have audited the financial statements of City of Meridian, Idaho for the year ended September 30, 2006, and have issued our report thereon dated December 21, 2006. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under Auditing Standards Generally Accepted in the United States of America and Government Auditing Standards As stated in our engagement letter dated September 21, 2006, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement and are fairly presented in accordance with accounting principle generally accepted in the United States of America. Because an audit is designed to provide reasonable, but not absolute assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. As part of our audit, we considered the internal control of the City. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions. Significant Accounting Policies Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2006. We noted no transactions entered into by the City during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were those estimates related to collectiblity of receivables and the useful lives on fixed assets depreciation. Management's estimates are based on prior history and recent information. We evaluated the key factors and assumptions used to develop the estimates in determining that they are reasonable in relation to the financial statements taken as a whole. Audit Adjustments For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the City`s financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the City, either individually or in the aggregate, indicate matters that could have a significant effect on the City's financial reporting process. In addition, the attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Consnltations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing our audit. This information is intended solely for the use of the Mayor and Members of the City Council and management of the City and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, Boise, Idaho December 21, 2006 2 i City of Meridian Adjustments Passed Year ended September 30, 2006 SCOPE: All known and projected misstatements and/or classification errors -General Fund Effect Debit (Credit) of misstatements and classification errors on: Net Description Asset Liability Revenue Expense Income Equity Reversed prior year misstatements To adjust accrued interest revenue under modified 60 day accrual To adjust insurance expense for amounts improperly accrued at year end. Current year misstatements To adjust accrued interest revenue under mod~ed 60 day accrual To adjust insurance expense for amounts improperly accrued at current and prior year end. Total (65,102) (65,102) 65,102 97,458 97,458 (97,458) 41,431 (41,431) (41,431) 124,323 (124,323) (124,323) - 165,754 (106,533) (26,865) (133,398) (32,356) (133,398) City of Meridian Adjustments Passed Year ended September 30, 2006 • SCOPE: All laiown and projected misstatements and/or classification errors -Capital Projects Fund Effect Debit (Credit) of misstatements and classification errors on: Net Description Asset Liability Revenue Expense Income Equity Reversed prior year misstatements To adjust accrued interest revenue under modified 60 day accrual (28,184) (28,184) 28,184 Current year misstatements To adjust accrued interest revenue under mod~ed 60 day accrual 6,568 (6,568) (6,568) Total - 6,568 (34,752) - (34,752) 28,184 (34,752) Cumulative Misstatement Errors (6,568) December 21, 2006 Mayor and Members of the City Council City of Meridian, Idaho Meridian, Idaho In planning and performing our audit of the financial statements of City of Meridian, Idaho, for the year ended September 30, 2006, we considered the City's internal control structure to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on the internal control structure. However, during our audit we became aware of opportunities for strengthening internal controls and operating efficiency. The memorandum that accompanies this letter summarizes our comments and suggestions regarding those matters. We previously reported on the City's internal control structure in our report dated December 21, 2006. This letter does not affect our report dated December 21, 2006 on the financial statements of City of Meridian, Idaho. We have akeady discussed many of these comments and suggestions with various City personnel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations. Very truly yours, Boise, Idaho • OTHER CONDITIONS Journal Entries Condition: During the audit it was noted that journal entries are being eviewed but no Indic 'on was made on the journal entry support to verify the journal entry was reviewed. Recommendation: We recommend that verification of the review process of journal entries is maintained on the journal entry support documentation. Management Response: We will resume signing off on journal entries to document review. /w Bank Reconciliations S~ Condition: During the audit it was noted that the bank reconciliations were being reviewed but no indication was made on the bank reconciliation to verify that it was reviewed. ~- r. Recommendation: We recommend that verification of the review process of bank reconciliations is maintained with the bank reconciliation support documentation. Management Response: We will resume signing off on reconciliations to document review. New Auditing Standard Condition: Statement on Auditing Standard No. 112 Communicating Internal Control Related Matters Identified in an Audit will change and expand the definition of a material weakness resulting in more findings being reported as a material weakness. These standards will also remove the term "r ortable condition" and use "si ign- deficiencies". These standards will define a significant deficiency to include more fin ings than what a reportable condition would have defined. Due to these expanded definitions, clients must be able to accurately prepare their own financial statements without assistance or adjustment by the auditor. Failure to do so will result in disclosure of a material weakness or significant deficiency. Recommendation: Management should implement procedures to prepare complete and accurate financial statements that do not require significant assistance or adjustment by the auditor. 2 ~ ~ MANAGEMENT LETTER SEPTEMBER 30, 2006 CITY OF MERIDIAN, IDAHO February 2, 2007 MERIDIAN CITY COUNCIL MEETING APPLICANT • February 6, 2007 ITEM NO. S REQUEST Movie Night at the Park by Doug Strong AGENCY COMMENTS CITY CLERK: CITY ENGINEER: CITY PLANNING DIRECTOR: CITY ATTORNEY CITY POLICE DEPT: CITY FIRE DEPT: CITY BUILDING DEPT: CITY WATER DEPT: CITY SEWER DEPT: CITY PARKS DEPT: MERIDIAN SCHOOL DISTRICT: ADA COUNTY HIGHWAY DISTRICT: SANITARY SERVICE COMPANY CENTRAL DISTRIGT HEALTH: NAMPA MERIDIAN IRRIGATION: SETTLERS IRRIGATION: IDAHO POWER: US WEST: INTERMOUNTAIN GAS: MER-DIAN POST OFFICE: OTHER: n~~ ~~G~ 1 r~U Contacted: Date: Phone: Emailed: Staff initials: Matertals presenfed at public meetings shall become property of the City of Meridian. v G ~, m m B~ 0 m .a O a a 0 O W s m ~. ~ ~~~~ ~ ~~ ~~ ~~_~~~~ ~~ ~~~,~g ~~~~ ~,~~ LL~~ ~ ~~ o~~ ~~~~ ~~~ ~g~ G~ 0 gW LL..~~ W4 ~ ~ _~ yo t7 F- Vm i ~ a m~~ ~ $~ ~ ~ ~~ ~ ~~_~ ~`~~ ~~~~ ~ ~a~ ~~~~U ~~ ~B~Q m m ~~Qm~ ~~a g~,~~~g~ E~~ ~Y ~ ~~~ ~~ ~~~` ~~ €~~°~~ ~~ offi~.~ ~~ C Q ~ ~ Q n ~~z W J a z W ~ ~ o~~~ Om=p pZl-~ ~ ~ ~ ~ g m ~ ~ o ~ z ~ N ~ ~ ~ m c ~ 3 3 ~ ~ ~ ~ Q ~ ~ a Lc . ~i - u~i Cl ~ 2 ~~ V ~ Q ~ v Qg di v F1 a g ~ v Ft ~ q O a t~V ~ a ~ ~~ ~Q ~m ~~ ~~ n ~ m ~~ c ~ ~~ ~=m ~~ °~~ `o ~m~~. ~ ~ a~a~ W Q Q Z w w m 0 W ~ ~ O W W ~ ~a ~ ~ y W ~O LL W ~a LL w a ~ ~ ~ Q' ~~ z°z ~~ ~ '~ w Nm JJ ~6 S$i ~ ~ S ~ O L~ av 4JU a ~~~~ ~~ ~~ ~~~ a ~~~~ ~ ~fie'a ~~ r ~~ ~~ LLa~ s~~ ~~ ~~~ °~ ~P~_S~v Z W ® yzj W~ ~~~ O 0 V m ~~~ ~g~~~~ ~~ ~ $~ ~~~~s ~~~~~ ~ ~ C $ ~ $ ~ E ~~.~ n~~ m Y ~ a~~~$~ c ~~ oo~ ~~~~~ om~8~ ~~ W ~~~ m ~~ ~m~~~o W J Z zwa~n o~~~ 00°=0 o?~~ n ~ ~ ~ ~ ~ g 'D c 0 ~ ~ Z ~ ~ ~ ~ € ~ U ~ C yy F ~ ~ 3 ~ ~ Q ~ a 3 uEi z g~ gg gg a ~ aV L 2 c3 a etii V Fi d ~ V g ~~dd ~ ~ v ~ a ~ ~ d F a ~$ _~~ ~~ U ~~~ ~ U ~~~ ~8~ ~g ~~~ a ~~~ ~ ~ ®~~ i ~$~ ~~ ~ a~~ ~~ ~~ ~ ~8@ ~~~ ~ ~~~~~~ a~ . s~ ~ ~~~ ~ ~ ~ ~ ~ ~~ ~ ~$E ~~~~ a ~ ~ ~ s ~~ ~ ~o ~Z ~ ~ ~~a N ti a ~ ~~ ~ ~g~~ ~a~g' ~ t~JFeT$m n r W ~qq?1 yy (~A G7 O z v ~ ~ F G ~ O F ~ o 0 K 64 a a 0 W 0 0 W g Q F Z W O g ~ w a ~ ~ ~ w ~O LL~ U y LL 0 ~ ~G 2 W ~ ~ ~ ~ a as m ~ m ~ ~ a ~~ s Z" g 1-i ~ ~ VJ U