HomeMy Public PortalAbout2009 AuditBRUCE D. CULLEY, C.P.A., P.C.
3000 BROOKTREE LANE, SUITE 210
GLADSTONE, MISSOURI 64119
816-453-1040 FAX: 816-453-0721
brucecuIley@sbcglobal.net
Member American Institute of Member Missouri Society of
Certified Public Accountants Certified Public Accountants
CITY OF PARKVILLLE, MISSOURI
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2009
CITY OF PARKVII,LE,IVIISSOUR.I
TABLE OF CONTENTS
Independent Auditor's Report 1 - 2
Management's Discussion and Analysis 3 - 12
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Assets 13
Statement of Activities 14
Fund Financial Statements
Balance Sheet -- Governmental Funds 15
Reconciliation of the Balance Sheet of the Governmental Funds to the
Statement of Net Assets 16
Statement of Revenues, Expenditures and Changes in Fund
Balances — Governmental Funds 17
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities — Cash Basis 18
Statement of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual — General Fund 19
Statement of Net Assets — Proprietary Funds 20
Statement of Revenues, Expenditures and Changes in Fund
Balances — Proprietary Funds 21
Statement of Cash Flows — Proprietary Funds 22 - 23
Notes to Basic Financial Statements 24 - 50
Required Supplementary Information
Other Supplementary Information
51 -52
Combining and Individual Fund Statement Schedules:
Combining Balance Sheet—Nonmajor Governmental Funds 54 - 55
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances —Nonmajor Governmental Funds 56 - 57
BRUCE D. CULLEY C.P.A., P.C.
3000 Brooktree Lane, Suite 210
Gladstone, MO. 64119
816-453-1040 Fax: 816-453-0721
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Board of Aldermen
City of Parkville, Missouri
I have audited the accompanying financial statements of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the
City of Parkville, Missouri (the City) as of and for the year ended December 31, 2009, which
collectively comprise the City's basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the City's management. Our responsibility
is to express opinions on these financial statements based on our audit.
I conducted my audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that I plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. I believe that
my audit provides a reasonable basis for my opinions.
In my opinion, the financial statements referred to above present fairly, in all material
respects, the respective financial position of the governmental activities, the business -type
activities, each major fund, and the aggregate remaining fund information of the City of
Parkville, Missouri, as of December 31, 2009, and the respective changes in financial position
and cash flows, where applicable, thereof and the respective budgetary comparison for the
general fund for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
The Management's Discussion and Analysis and the Required Supplementary Information on
pages 3 through 12 and 52 through 53, respectively, are not a required part of the basic
financial statements but are supplementary information required by accounting principles
generally accepted in the United States of America. I 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, I did not
audit the information and express no opinion on it.
1
My audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying introductory
section and supplementary section are presented for purposes of additional analysis and are
not a required part of the basic financial statements. The supplementary information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
Gladstone, Missouri
July 1, 2010
Bruce Culley
Certified Public Accountant
2
CITY OF PARICVI LLE, MISSOURI
Parkville, Missouri 64152
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Parkville, we offer readers of the City of Parkville's financial
statements this narrative overview and analysis of the financial activities of the City of
Parkville for the fiscal year ended December 3I, 2009. We encourage readers to consider the
information presented here in conjunction with additional information that we have furnished
in our letter of transmittal.
Financial Highlights
• The assets of the City of Parkville exceeded its liabilities at the close of the most
recent fiscal year by $5,306,496 (net assets).
• The government's total net assets increased by $70,646. The net assets increase is
found in governmental activities where there is a positive $39,428 net change, and a
positive $31,218 change in net assets reported in business -type activities.
• As of the close of the current fiscal year, the City of Parkville's governmental funds
reported combined ending fund balances of $3,361,642, a decrease of $899,271 in
comparison with the prior year. The major reason for the decline in the fund balance
was for expenditures in Neighborhood Improvement projects including Brink Meyer
Road and Rush Creek. These projects were financed by limited obligation temporary
notes.
• At the end of the current fiscal year, fund balance for the general fund was $269,389,
or approximately 8.5% of total general fund expenditures. The decline in the general
fund was primarily caused by the transfer of funds.
• The City of Parkville's total debt, including compensated absences, increased by
$603,464, (3.2%) during the fiscal year.
• There was a total of $1,190,000 borrowed on the Neighborhood Improvement District
Limited Obligation Notes when they were refinanced during the year.
• The City paid $233,000 to the State of Missouri as the City's share of repairing the
Highway 9 bridge. The City also paid $108,614 to repair a retaining wall on the
Brink Meyer Road project.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City of Parkville's
basic financial statements. The City of Parkville's basic financial statements comprise three
components: 1) government -wide financial statements, 2) fund financial statements, and 3)
notes to the financial statements. This report also contains other supplementary information
in addition to the basic financial statements themselves.
3
Government -wide Financial Statements. The government -wide financial statements are
designed to provide readers with a broad overview of the City of Parkville's finances, in a
manner similar to a private -sector business.
The statement of net assets presents information on all of the City of Parkville's assets and
liabilities, with the difference between the two reported as net assets. Over time, increases or
decreases in net assets may serve as a useful indicator of whether the financial position of the
City of Parkville is improving or deteriorating.
The statement of activities presents information showing how the government's net assets
changed during the most recent fiscal year. All changes in net assets are reported as soon as
the underlying event giving rise to the change occurs, regardless of the timing of related cash
flows. Thus, revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods (e. g., uncollected taxes and earned but
unused vacation leave).
Both of the government -wide financial statements distinguish functions of the City of
Parkville that are principally supported by taxes and intergovernmental revenues
(governmental activities) from other functions that are intended to recover all or a significant
portion of their costs through user fees and charges (business -type activities). The
governmental activities of the City of Parkville include general government, public safety,
streets, economic development, and culture and recreation. The business -type activities of the
City of Parkville include sewer service.
The government -wide financial statements can be found on pages 13 - 14 of this report.
Fund Financial Statements. A fund is a grouping of related accounts that is used to
maintain control over resources that have been segregated for specific activities or objectives.
The City of Parkville, like other state and local governments, uses fund accounting to ensure
and demonstrate compliance with finance -related legal requirements. All of the funds of the
City of Parkville can be divided into two categories: governmental funds and proprietary
funds.
Governmental Funds. Governrrzental funds are used to account for essentially the same
functions reported as governmental activities in the government -wide financial statements.
However, unlike the government -wide financial statements, governmental fund financial
statements focus on near -term inflows and outflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Such information may
be useful in evaluating a government's near -term financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide
financial statements, it is useful to compare the information presented for governmental funds
with similar information presented for governmental activities in the government -wide
financial statements. By doing so, readers may better understand the long-term impact of the
government's near -term financing decisions. Both the governmental fund balance sheet and
the governmental fund statement of revenues, expenditures, and changes in fund balances
4
provide a reconciliation to facilitate this comparison between governmental funds and
governmental activities.
The City of Parkville maintains three individual major or governmental funds. Information is
presented separately in the governmental fund balance sheet and in the governmental fund
statement of revenues, expenditures, and changes in fund balances for the general fund,
capital projects fund, and debt service fund, each of which are considered to be major funds.
Data from the other eleven governmental funds are combined into a single, aggregated
presentation. Individual fund data for each of these non -major governmental funds is
provided in the form of combining statements elsewhere in this report.
The City of Parkville adopts an annual appropriated budget for its general fund. A budgetary
comparison statement has been provided for the general fund to demonstrate compliance with
this budget.
The basic governmental fund financial statements can be found on pages 15 - 19 of this
report.
Proprietary Funds. The City of Parkville maintains one type of proprietary fund. Enterprise
funds are used to report the same functions presented as business -type activities in the
government -wide financial statements. The City of Parkville uses enterprise funds to account
for its sewer service operations.
Proprietary funds provide the same type of information as the government -wide financial
statements, only in more detail. The proprietary fund is a major fund of the City of Parkville.
The basic proprietary fund financial statements can be found on pages 20 - 23 of this report.
Notes to the Financial Statements. The notes provide additional information that is
essential to a full understanding of the data provided in the government -wide and fund
financial statements. The notes to the financial statements can be found on pages 24 - 50 of
this report.
Other Information. In addition to the basic financial statements and accompanying notes,
this report presents certain required supplemental information concerning the City of
Parkville's infrastructure reporting. As recommended by American Public Works
Association, the modified approach for infrastructure was developed as a compromise to
provide an alternative to depreciating eligible infrastructure assets. The basic premise behind
the modified approach is that no depreciation is incurred if infrastructure assets are being
maintained or preserved at a certain level. The City of Parkville provides an up-to-date
inventory of eligible assets by location, type and physical parameters and performs replicable
condition assessments, triennially. Results are summarized using a measurement scale, seen
on pages 50 - 51 of this report. Estimated amounts needed to maintain and preserve these
assets at the City's established service level are budgeted for annually.
The combining and individual fund statements referred to earlier in connection with non -
major or governmental funds are presented on pages 54 - 57 of this report.
5
Government -wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's
financial position. In the case of the City of Parkville, assets exceeded liabilities by
$5,306,496 at the close of the most recent fiscal year.
The City of Parkville uses capital assets to provide services to citizens; consequently, these
assets are not available for future spending. Although the City of Parkville's investment in its
capital assets is reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
6
CITY OF PARKVILLE'S NET ASSETS
Governmental Activities Business -type Activities Total
2009 2008 2009 2008 2009 2008
Current and
Other Assets S 5,117,535 $ 6,180,539 $ 1,074,549 $ 938,147 $ 6,192,084 $ 7,118,686
Capital Assets 15,587,951 13,905,600 4,216,163 4,494,905 I9,804,114 18,400,505
Total Assets 20,705,486 20,086,139 5,290,712 5,433,052 25,996,198 25,519,191
Long -Term
Liabilities
Outstanding 15,898,816 15,154,433 2,385,535 2,568,550 18,284,351 17,722,983
Other Liabilities 2,143,177 2,307,642 262,174 252,717 2,405,351 2,560,359
Total
Liabilities 18,041,993 17,462,075 2,647,709 2,821,267 20,689,702 20,283,342
Net Assets:
Invested in
Capital Assets,
Net of Related
Debt (717,666) (1,636,847) 1,436,591 I,733,082 7I8,925 96,235
Restricted 1,776,401 3,670,735 1,776,401 3,670,735
Unrestricted 1,604,758 590,177 1,206,412 878,703 2,811,170 1,468,880
Total Net
Assets $ 2,663,493 $ 2,624,065 S 2,643,003 $ 2,611,785 $ 5,306,496 $ 5,235,850
7
CITY OF PARKVILLE'S CHANGES IN NET ASSETS
Governmental Activities Business -type Activities Total
2009 2008 2009 2008 2009 2008
Program Revenues
Charges for Services $ 302,420 $ 391,782 $ 958,758 $ 994,950 $1,261,178 $1,386,732
Operating Grants and
Contributions 27,259 25,425 27,259 25,425
Capital Grants and '
Contributions 437,074 438,631 437,074 438,631
General Revenues
Property Taxes 1,152,712 1,175,054 - - 1,152,712 1,175,054
Other Taxes 38,860 42,238 38,860 42,238
Franchise Taxes 750,218 698,430 750,218 698,430
Sales Taxes 1,400,775 1,507,003 - - 1,400,775 1,507,003
TIF 434,153 421,422 -
434,153 421,422
Other 165,317 142,603 165,317 142,603
Transfers -
Sale of Capital Assets - - - -
Unrestricted Investment
Earnings 61,868 220,553 11,639 10,465 73,507 231,018
Total Revenues 4,770,656 5,063,141 970,397 1,005,415 5,741,053 6,068,556
Expenses
General Government 825,578 891,316 - 825,578 891,316
Public Safety 987,369 1,058,107 987,369 1,058,107
Municipal Court 150,736 166,05] 150,736 166,051
Public Works 1,038,797 938,312 1,038,797 938,312
Economic
Development 293,343 362,573 - - 293,343 362,573
Culture and Recreation 309,750 311,990 - 309,750 311,990
Interest on Long-term
Debt 422,631 421,335 - 422,631 421,335
Depreciation 268,174 270,077 - - 268,174 270,077
TIF 434,850 422,575 -
434,850 422,575
Sewer - 939,179 942,241 939,179 942,241
Grinder Pump - - - 34,792 - 34,792
Total Expenses 4,731,228 4,842,336 939,179 977,033 5,670,407 5,819,369
Change in Net Assets 39,428 220,805 31,218 28,382 70,646 249,187
Net Assets,
Beginning of Year
2,624,065 2,403,260 2,611,785 2,583,403 5,235,850 4,986,663
Net Assets 12/31/09 $2,663,493 $2,624,065 $2,643,003 $2,611,785 $5,306,496 $5,235,850
8
Governmental Activities. Governmental activities increased the City of Parkville's net
assets by $39,428 and business -type activities increased by $31,218. Key elements of this
increase are as follows:
• Positive revenue results compared to 2008 occurred from increases in franchise taxes
of $51,788.
• The decline in interest rates brought about a decline in interest income of $158,685.
This decline in interest rates is likely to continue into the future.
• Revenue from police ticketing decreased $35,964.
• Sales tax decreased by $106,228, reflecting the general economic trend of consumers
spending less.
Business -type Activities. The change in net assets for business -type activities increased the
City of Parkville's net assets by $31,218. The net assets for business -type activities in the
current fiscal year are $2,643,003.
Financial Analysis of the Government's Funds
As noted earlier, the City of Parkville uses fund accounting to ensure and demonstrate
compliance with finance -related legal requirements.
Governmental funds. The focus of the City of Parkville's governmental funds is to provide
information on near -term inflows, outflows, and balances of spendable resources. Such
information is useful in assessing the City of Parkville's financing requirements. In
particular, unreserved fund balances may serve as a useful measure of a government's net
resources available for spending at the end of the fiscal year.
As mentioned earlier in this analysis, at the end of the current fiscal year, the City of
Parkville's governmental funds reported combined ending fund balances of $3,361,642. Of
that, $13,154 is reserved or designated to indicate that it is not available for new spending
because it has already been committed to prepaid items in general fund.
The general fund is the chief operating fund of the City of Parkville. At the end of the current
fiscal year the general fund balance was $269,389. The major reason for the decline in the
general fund balance during the year was the transfer of $615,243 of funds. As a measure of
the general fund's liquidity, it may be useful to compare both unreserved fund balance to
total fund expenditures. Unreserved, undesignated fund balance represents 8.5% of total
general fund expenditures.
The fund balance of the City of Parkville's general fund decreased by $320,787 during the
current fiscal year. The City's actual revenue was less than the budget by $39,135. Actual
expenses were less than budget by $50,183 which helped to offset the decline in revenue.
9
The debt service fund has a total fund balance of $822,737, all of which is reserved for the
payment of debt service. There was a net increase in the debt service fund balance of
$656,101. This was brought about by the transfer of reserve funds held in the capital projects
fund. Expenses in the debt service fund exceeded revenue by $211,781. There was an
increase in the prior year deficit of $190,523 by $21,258.
The capital projects fund has a total fund balance of $953,623. There were considerable
expenditures on capital projects during the year including Brink Meyer Road and Brush
Creek. Additional funds of $1,190,000 were borrowed on the notes when they were
refinanced in 2009. The funds are to be used to finish the projects.
Proprietary Funds. The City of Parkville's proprietary funds provide the same type of
information found in the government -wide financial statements, but in more detail.
The net assets of the sewer service at the end of the year total $2,643,003. The sewer fund
showed a profit of $31,218 in 2009 and $63,174 in 2008. Revenue showed a decline of 2%
and expenses were about the same as 2008.
General Fund Budgetary Highlights
There were no amendments to the general fund budget for the current fiscal year. Revenues
were slightly less than one percent below projected figures and expenditures were 1.6%
below expected amounts.
General fund revenues were $95,491 less than projected. Revenues that fell below budget
projections include sales taxes at $178,079 less than expected which is indicative of the
economy as a whole. Licenses and permit fees were also down due to a decline in new
construction by $37,530. An increase in franchise fees of $54,218 helped offset some of the
revenue decline.
General fund expenses were $50,183 less than projected. The largest portion of costs over
budget occurred in legal fees incurred by administrative needs. The public works (street
department) exceeded budget because of increased activity including street improvements.
Capital Asset and Debt Administration
Capital Assets. The City of Parkville's investment in capital assets for its governmental and
business -type activities as of December 31, 2009, totals $19,804,I14. Over 97% of the
increase came from increases in capital expenditures from the Neighborhood Improvement
District projects.
10
General Obligation Bonds
Revenue Bonds
NID Limited Obligation
Temp Notes - 7,465,000
Certificates of Participation 5,990,000
Compensated Absences 41,816
Capital Leases/
Lease -Purchase
Total
City of Parkville's Capital Assets
(Net of Depreciation)
Buildings and Improvements
Machinery and Equipment
Infrastructure
Land
Construction in Process
Infrastructure not being Depreciated
Total
Governmental
Activities
2009
$ 3,698,248
310,457
3,449,862
806,486
7,322,898
$15,587,951
Business -type
activities
2009
$ 2,788,843
31,893
59,975
136,854
1,198,598
$ 4,216.163
Total
2009
$ 6,487,091
342,350
3,449,862
866,461
7,459,752
1,198,598
$19,804,114
Additional information on the City of Parkville's capital assets can be found in Note 5, of
this report.
Long -Term Debt. At the end of the current fiscal year, the City of Parkville had total debt
outstanding of $20,689,702.
City of Parkville's Outstanding Debt
General Obligation Revenue Bonds and Compensated Absences
Governmental Activities Business -type Activities
2009 2008 2009 2008
$2,990,000 $ 3,200,000 $ - $ -
- 2,270,000 2,455,000
6,165,000
6,275,000
38,816
3,453
3,453
Total
2009 2008
$ 2,990,000 $ 3,200,000
2,270,000 2,455,000
7,465,000 6,165,000
5,990,000 6,275,000
45,269 42,269
11,263 197,435 205,708 197,435 216,971
$16,486,816 S15,690,079 $12,470,888 $2,664,161 $18,957,704 $18,354,240
The City of Parkville's total long-term debt increased by $603,464 during the current fiscal
year.
11
Economic Factors and Next Year's Budgets and Rates
For 2010, the City of Parkville is expecting property tax revenue to increase about 1.4% over
2009. This is a continuation of the slow growth rate of the last two years caused by the very
slow pace of new residential construction since 2008. Building permits are anticipated to
hold steady, although conservative budgeting allowed for a drop of as much as 34% to
$68,500 for 2010 in case the construction market should slow even further. Franchise taxes
are expected to show a modest increase over 2009 revenues of about 1.6%. With vacancy
rates remaining low for housing in Parkville, utility franchise fees yield a fairly predictable
and dependable revenue stream for the City. Anticipating a gradual improvement in overall
economic activity, the City expects Sales Tax receipts to rebound to about 5% above 2009
levels, though still about 2% below receipts seen in the 2006 — 2008 period. Over all, the
City of Parkville is expecting modest, but positive growth in revenue and expenditures for
2010. Revenue receipts for the first 6 months of 2010 give confidence that the budgetary
goals will be met or exceeded.
Contacting the City's Financial Management
This report is designed to provide our citizens, taxpayers, customers and creditors with a
general overview of the City's finances and to demonstrate the City's accountability for the
money it receives. If you have questions about this report or need additional financial
information, contact the City Clerk's office, Parkville, Missouri.
12
CITY OF PARKVILLE, MISSOURI
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
Governmental Business -Type
Activities Activities Total
Assets
Cash and Cash Equivalents $ 1,479,I28 $ 695,896 $ 2,175,024
Receivables, Net of Allowance for Uncollectibles
Taxes 1,535,771 - 1,535,771
Accounts 2,380 112,454 114,834
Restricted Cash and Investments 1,877,102 139,093 2,016,195
Deferred Charges 210,000 117,927 327,927
Prepaid Items 13,154 720 13,874
Other Assets - 8,459 8,459
Capital Assets not being Depreciated
Land 806,486 59,975 866,461
Construction in Progress 7,322,898 136,854 7,459,752
Infrastructure 3,410,303 3,410,303
Capital Assets, Net of Accumulated Depreciation
Buildings and Improvements 3,698,248 2,788,843 6,487,091
Machinery and Equipment 310,457 31,893 342,350
Infrastructure 39,559 1,198,598 1,23 8,157
Total Assets 20,705,486 5,290,712 25,996,198
Liabilities
Accounts Payable and Other Current Liabilities 168,842 50,165 219,007
Accrued Interest Payable 147,510 4,833 152,343
Customer Deposits - 13,485 13,485
Unearned Revenue 1,411,571 1,411,571
Other 8,453 -
8,453
Non Current Liabilities
Due Within One Year 406,801 193,691 600,492
Due in More Than One Year 15,898,816 2,385,535 18,284,351
Total Liabilities 18,041,993 2,647,709 20,689,702
Net Assets
Invested in Capital Assets, Net of Related Debt (717,666) 1,436,591 718,925
Restricted for
Debt Service 822,737 - 822,737
Capital Projects 953,664 953,664
Other Purposes 1,604,758 - 1,604,758
Unrestricted - 1,206,412 1,206,412
Total Net Assets $ 2,663,493 $ 2,643,003 .$ 5,306,496
The accompanying notes are an integral part of the financial statements.
13
CIT Y OF PA RKVIL LE, MISS OU RI
ST ATEMEN T OF ACTIVITIES
FOR THE YEAR ENDED DECEMBE R 31, 2009
Net (Expense) Revenue and
Program Revenues Changes in Net Assets
Operating Capital Primary G overnment
Charges for Grants and Grants and Governmental Business -type
Functions/Programs Expenses Services Contributions C ontrib utio ns Acti vities Activities Total
Primary government:
Governmental Activities
General Government $ 825,578 S 123 ,921 S 27,259 5 437 ,074 $ (237,324) $ - 5 (237,324)
Public Safety- Police 987,369 - (987,369) (987,369)
Public Safety - Court 150,736 178,499 27,763 - 27,763
Public Works 664,165 - - (664,165) (664,165)
Culture and Recreation 309,750 (309,750) - (309,750)
Econo mic Development 293,343 - (293,343) (293,343)
Depreciation and Amortization 268,174 (268 ,174) (268,174)
TIF 434,850 - (434,850) (434,850)
Interest and Fees 422,631 - (422,631) (422,631)
Retaining Wall and Bridge Payment 341,614 - (341,614) - (341,614)
Other Capital Expenditu res 33,018 (33,018) - (33,018)
Total Governmental Activities 4,731,228 302,420 27,259 437,074 (3,964,475) - (3 ,964,475)
Business -type Activities
Sewer 939.179 970.397 31,218 31 ,218
Total Business -type Activities 939,179 970,397 31,218 31,218
Total Primary Government $ 5, 670,407 $ 1,272,817 $ 27,259 $ 437 ,074 (3,964,475) 31,218 (3,933,257)
General Revenues
Property Tax 1,152,712 1,152,712
Franchise Tax 750,218 750,218
Sales Tax 1,400,775 1,400,775
Unrestricted Investment Earnings 61,868 61,868
Intergo vernmental 38,860 38,860
Other 165,317 165,317
TIF 434,153 434,153
Total General Revenues 4,003,903 - 4,003 ,903
Change in Net Assets 39,428 31,218 70,646
Net Assets, Beginning of the Year 2,624,065 2,611,785 5 ,235,850
Net Assets, End of Y ear S 2,663,493 $ 2,643,003 $ 5,306,496
The accompan ying notes are an in tegral part of the financial statements.
14
CITY OF PARKVILLE, MISSOURI
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2009
General
Assets
Other Total
Capital Debt Governmental Government
Projects Service Funds Funds
Cash and Cash Equivalents $ 207,716 $ 237,730 $ 202,313 $ 831,369 $ 1,479,128
Receivables (Net of Allowance
for Uncollectibles)
Taxes 989,405 - 546,366 1,535,771
Accounts Receivable 2,380 - - 2,380
Restricted Cash Investments 716,362 641,197 519,543 1,877,102
Prepaid Items 12,495 659 - 13,154
Total Assets $ 1,211,996 $ 954,751 $1,389,876 $ 1,350,912 $ 4,907,535
Liabilities and Fund Balance
Liabilities
Accounts Payable $ 90,219 $ 1,128 $ - $ 35,019 $ 126,366
Bonds Payable
Accrued Payroll Liabilities 660 - - 660
Unearned Revenue 845,000 - 566,571 - 1,411,571
Other Liabilities 6,728 - 568 7,296
Total Liabilities 942,607 1,128 567,139 35,019 1,545,893
Fund Balances
Reserved For
Prepaid Items
Unreserved, Reported In
General Fund
Special Revenue Funds
Capital Projects Funds
Permanent Fund
Debt Service Fund
Total Fund Balances
12,495 659 13,154
256,894 - 256,894
796,350 796,350
- 952,964 952,964
- 519,543 519,543
- - . 822,737 - 822,737
269,389 953,623 822,737 1,315,893 3,361,642
Total Liabilities and
Fund Balance $ 1,211,996 $ 954,751 $1,389,876 S 1,350,912 $ 4,907,535
The accompanying notes are an integral part of the financial statements.
15
CITY OF PARKVILLE, MISSOURI
RECONCILIATION OF THE BALANCE SHEET OF 1HE
GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS
DECEMBER 31, 2009
Total Fund Balance in Governmental Fund Balance Sheet $ 3,361,642
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. 15,587,951
Long-term liabilities, including bonds payable, are not due
and payable in the current period and therefore are not
reported in the funds.
(16,286,100)
Net Assets of Governmental Activities $ 2,663,493
The accompanying notes are an integral part of the financial statements.
16
CITY OF PARKVILLE, MISSOURI
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
FOR 'ME YEAR ENDED DECEMBER 31, 2009
Other Total
Capital Debt Governmental Government
General Projects Service Funds Funds
Revenues
Taxes $2,928,709 5 123,554 S 251,443 $ - $3,303,706
Licenses and Permits 102,470 - - - 102,470
Intergovernmental 38,860 - - - 38,860
Charges for Services 21,45 I 21,451
Fines and Fees 178,499 178,499
Special Assessments - I07,617 329,457 - 437,074
Investment Earnings 27,139 16,531 2,316 15,882 61,868
Grants 27,259 27,259
TIF Revenue - - 434,153 434,153
Miscellaneous 127,923 2,816 34,578 165,317
Total Revenues 3,452,310 250,518 583,2I6 484,613 4,770,657
Expenditures
Current
General Government 758,411 56,494 814,905
Public Safety - Police 987,369 - - - 987,369
Public Safety - Court 150,736 - - - 150,736
Public Works 952,486 - - - 952,486
Economic Development 314,772 314,772
Debt Service
Principal - 385,000 - 385,000
Interest - 403,824 - 403,824
Other 6,173 - 6,173
TO Expense 434,850 434,850
Capital Outlay 1,782,784 - 1,782,784
Capitalized Interest 627,028 - 627,028
Total Expenditures 3,163,774 2,409,812 794,997 491,344 6,859,927
Excess (Deficiency) of Revenues
Over (Under) Expenditures 288,536 (2,159,294) (211,781) (6,731) (2,089,270)
Other Financing Sources (Uses)
Bond Issue 1,190,000 - - 1,190,000
Transfers In 5,920 502,340 867,882 167,975 1,544,117
Transfers Out (615,243) (928,875) - -
(1,544,118)
Total Other Financing Sources (609,323) 763,465 867,882 167,975 1,189,999
Net Changes in Fund Balances
After Other Financing Sources
(320,787) (1,395,829) 656,101 161,244 (899,271)
Fund Balance, Beginning of Year 590,176 2,349,452 166,636 1,154,649 4,260,913
Fund Balance, End of Year $ 269,389 $ 953,623 $ 822,737 S 1,315,893 $3,361,642
The accompanying notes are an integral part of the financial statements.
17
CITY OF PARKVILLE, MISSOURI
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
DECEMBER 31, 2009
Amounts reported for governmental activities in the statement of activities are
different because:
Net Change in Fund Balances - Total Government Funds $ (899,271)
Governmental funds report capital outlays 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.
The issuance of long-term debt (e.g., bonds, leases) provides current
financial resources to governmental funds, while the repayment of the
principal of long-term debt consumes the current Financial resources of
governmental funds. Neither transaction, however, has any effect on net
assets. Also, governmental funds report the effect of issuance costs,
premiums, discounts and similar items when debt is first issued,
whereas these amounts are deferred and amortized in the statement of
activities. This amount is the net effect of these differences in the
treatment of long-term debt and related items.
The net effect of various miscellaneous transactions involving capital
assets (i.e., sales, trade-ins, and donations) is to decrease net assets
Some expenses reported in the statement of activities do not require the
use of current financial resources and, therefore, are not reported as
expenditures in governmental funds.
1,734,090
(793,737)
(16,333)
Other 14,679
Change in Net Assets of Governmental Activities $ 39,428
The accompanying notes are an integral part of the financial statements.
18
CITY OF PARKVILLE, MISSOURI
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET TO ACTUAL - GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2009
Original Variance with
and Final Final Budget -
Budgeted Actual Positive
Amounts Amounts (Negative)
Revenues
Taxes
Property $ 951,500 $ 901,269 S (50,231)
Franchise 696,000 750,218 54,218
Sales 1,455,300 1,277,221 (178,079)
Intergovernmental 38,860 38,860
Licenses and Permits 140,000 102,470 (37,530)
Charges for Services 21,000 21,451 451
Fines and Fees 233,000 178,499 (54,501)
Investment Earnings 28,000 27,139 (861)
Grants - 27,259 27,259
Miscellaneous 23,000 127,923 104,923
Total Revenues
3,547,800 3,452,309 (95,491)
Expenditures
Current:
General Government 709,766 758,411 (48,645)
Public Safety - Police 1,069,539 987,369 82,170
Public Safety - Court 169,341 150,736 18,605
Public Works 92,944 95,711 (2,767)
Community Development 284,261 259,470 24,791
Street 617,370 568,455 48,915
Parks 300,929 288,321 12,608
Neighborhood Development 5,000 21,429 (16,429)
Nature Sanctuary 15,509 6,200 9,309
Channel 2/Website 32,991 27,674 5,317
Total Expenditures 3,297,650 3,163,776 133,874
Excess of Revenues over Expenditures
S 250,150 $ 288,533 $ 38,383
The accompanying notes are an integral part of the financial statements.
19
CITY OF PARKVI LLE, MISSOURI
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
DECEMBER 31, 2009
Major Fund
Sewer
Service
Assets
Current Assets
Cash and Cash Equivalents S 695,896
Accounts Receivable 112,454
Restricted Cash and Investments 139,093
Prepaid Items
720
Other Assets
8,459
Total Current Assets 956,6/9
Noncurrent Assets
Deferred Charges 117,927
Capital Assets
Land 59,975
Buildings and Improvements 4,735,996
Machinery and Equipment I94,406
Construction in Progress 136,854
Infrastructure 1,843,839
Less Accumulated Depreciation (2,754,907)
Total Capital Assets 4,216,163
Total Noncurrent Assets 4,334,090
Total Assets
5,290,712
Liabilities
Current Liabilities
Accounts Payable and Other Current Liabilities 48,899
Accrued Interest Payable 4,833
Accrued Compensated Absences 1,266
Customer Deposits Payable 13,485
Current Portion of Revenue Bonds Payable 185,000
Current Portion of Leases Payable 8,691
Total Current Liabilities 262,174
Noncurrent Liabilities
Revenue Bonds Payable, Net 2,196,790
Lease Payable 188,745
Total Noncurrent Liabilities 2,385,535
Total Liabilities
Net Assets
Invested in Capital Assets, Net of Related Debt
Unrestricted
Total Net Assets
Difference
2,647,709
2,643,003
S 2,643,003
The accompanying notes are an integral part of the financial statements.
20
CITY OF PARKVILLE, MISSOURI
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2009
Major Fund
Sewer
Service
Operating Revenues
Charges for Sales and Services
Sewer Charges $ 958,758
Grinder Pump Fees
Total Operating Revenues 958,758
Operating Expenses
Cost of Sales and Services 627,922
Depreciation 278,742
Total Operating Expenses 906,664
Operating Income (Loss) 52,094
Nonoperating Revenues (Expenses)
Interest Revenue 11,639
Interest Expense (32,515)
Loss on Equipment _
Total Nonoperating Revenues (Expenses) (20,876)
Transfers In (Out)
Change in Net Assets
Total Net Assets, Beginning of Year
Total Net Assets, End of Year
31,218
2,611,785
$ 2,643,003
The accompanying notes are an integral part of the financial statements.
2I
CITY OF PARKVILLE, MISSOURI
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
FOR'1'1th YEAR ENDED DECEMBER 31, 2009
Major Fund
Sewer
Service
Cash Flows from Operating Activities
Receipts from Customers $ 976,904
Payments to Suppliers (560,130)
Payments to Employers (44,353)
Net Cash Provided (Used) by Operating Activities 372,421
Cash Flows from Capital and Related Financing Activities
Payments on Leases Payable (8,272)
Acquisition and Construction of Capital Assets (14,912)
Principal Payed on Capital Debt (174,325)
Interest Paid on Capital Debt (34,372)
Net Cash Provided (Used) by Financing Activities (231,881)
Cash Flows from Investing Activities
Interest Received 11,639
Net Cash Provided (Used) by Investing Activities 11,639
Increase in Cash and Cash Equivalents
Cash, Beginning of Year
Cash, End of Year
152,179
682,810
$ 834,989
The accompanying notes are an integral part of the financial statements.
CITY OF PARKVILLE, MISSOURI
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2009
Major Fund
Sewer
Service
Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities
Operating Income $ 52,094
Adjustments to Reconcile Operating Income (Loss)
to Net Cash Provided (Used) by Operating Activities
Depreciation Expense 278,242
Changes in Assets and Liabilities
Accounts Receivable 18,146
Accounts Payable 9,319
Accrued Compensated Absences 2,187
Other 12,433
Net Cash Provided (Used) by Operating Activities $ 372,421
The accompanying notes are an integral part of the financial statements.
23
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
The City of Parkville, Missouri (the City), is incorporated under the provisions of the
State of Missouri as a fourth class city, which operates under an elected Mayor/Board
of Aldermen form of government.
Government -Wide and Fund Financial Statements
The government -wide financial statements (i.e., the statement of net assets and the
statement of activities) report information on all of the activities of the government.
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 is offset by program revenues. Direct expenses are those
that are clearly identifiable with a specific function or segment. Program revenues
include I) 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 the major individual enterprise fund
are reported as separate columns in the fund financial statements.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government -wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund
financial statements. Revenues are recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of related cash flows. Property
taxes are recognized as revenues in the year for which they are levied. Grants and
similar items are recognized as revenue as soon as all eligibility requirements
imposed by the provider have been met.
24
CITY OF PARICVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 1 SUMIVIARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Measurement Focus, Basis of Accounting, and Financial Statement Presentation -
Continued
Governmental fund financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Revenues
are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. A 90 -day availability period
is used for revenue recognition for all governmental funds revenues except property
taxes for which a 30 -day availability period is used. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt
service expenditures, as well as expenditures related to compensated absences and
claims and judgments, are recorded only when payment is due.
In applying the susceptible to accrual concept to intergovernmental revenues, the
legal and contractual requirements of the numerous individual programs are used as
guidance. There are, however, essentially two types of these revenues. In one, monies
must be expended for the specific purpose or project before any amounts will be paid
to the City; therefore, revenues are recognized based upon the expenditures recorded.
In the other, monies are virtually unrestricted as to purpose of expenditure and are
usually revocable only for failure to comply with prescribed requirements. These
resources are reflected as revenues at the time of receipt, or earlier if the susceptible
to accrual criteria are met.
Property taxes, sales taxes, franchise taxes, interest associated with the current fiscal
period, and certain state and federal grants and entitlements are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal
period. Only the portion of special assessments receivable due within the current
fiscal period is considered to be susceptible to accrual as revenue of the current
period. All other revenue items are considered to be measurable and available only
when cash is received by the City. While property taxes are shown on the balance
sheet as current assets of the City, they are not recognized as revenue at year end
because statutory provisions prohibit their use until the year for which they were
raised and budgeted. Instead, they are offset by deferred revenue accounts.
25
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Measurement Focus, Basis of Accounting, and Financial Statement Presentation -
Continued
The City reports the following major governmental funds:
General Fund - This fund is the City's primary operating fund. It accounts for
all financial resources of the general government, except those required to be
accounted for in another fund.
Debt Service - This fund accounts for the accumulation of resources for, and
the payment of, principal and interest on long-term general obligation debt of
governmental funds.
Capital Projects - This fund accounts for the financing and acquisition and
construction of various citywide improvements.
The City reports the following major proprietary fund:
Sewer Service - This fund accounts for the provision of waste and sewer
services to the general public. All activities necessary to provide such services
are accounted for in this fund, including administration, operations,
maintenance, financing and related debt service, and billing and collection.
Private -sector standards of accounting and financial reporting issued prior to
December 1, 1989, generally are followed in both the government -wide and
proprietary fund financial statements to the extent that those standards do not conflict
with or contradict guidance of the Governmental Accounting Standards Board
(GASB). Governments also have the option of following subsequent private -sector
guidance for their business -type activities and enterprise funds, subject to this same
limitation. The City has elected not to follow subsequent private -sector guidance.
As a general rule the effect of inter -fund activity has not been eliminated from the
government -wide financial statements. 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) charges to customers or applicants
for goods, services, or privileges provided, 2) operating grants and contributions, and
26
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Continued
3) capital grants and contributions, including special assessments. Internally
dedicated resources are reported as general revenues rather than as program revenues.
Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non -operating
items. Operating revenues and expenses generally result from providing services and
producing and delivering goods in connection with a proprietary fund's principal
ongoing operations. The principal operating revenues of the sewer fund are charges to
customers for sales and services. Operating expenses for the sewer fund include the
cost of sales and services, administrative expenses, and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as non -operating
revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's
policy to use restricted resources first, then unrestricted resources as they are needed.
Cash, Cash Equivalents and Investments
Cash and investments of the individual funds are combined to form a pool which is
managed by the Finance Department. Each fund's equity in the pool is included in
"cash and cash equivalents" in the financial statements. Investment earnings,
including interest income, are allocated to the funds required to accumulate interest. If
a fund is not required to account for its own earnings by law or regulation, the
earnings are allocated to the General Fund.
Missouri state statutes authorize the City, with certain restrictions, to deposit funds in
open accounts and certificates of deposit. Missouri state statutes also require that
collateral pledged must have fair market value equal to 100% of the funds on deposit,
less amounts insured by federal deposit insurance. Collateral securities must be held
by the City or a disinterested third party and may include U.S. Government and
government agency bonds and securities; general obligation bonds of any of the 50
states; general obligation bonds of any Missouri county, certain cities, and special
districts; and revenue bonds of certain Missouri agencies. Obligations pledged to
secure deposits are delivered to the banks' joint custody accounts at the custodial
27
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Cash, Cash Equivalents and Investments
bank. Written custodial agreements are required that provide, among other things,
that the collateral be held separate from the assets of the custodial bank.
Statement of Cash Flows
The City's cash and cash equivalents are considered to be cash on hand, demand
deposits, and short-term investments with original maturities of three months or less
from the date of acquisition.
Receivables and Payables
All trade accounts receivable are shown net of an allowance for uncollectibles.
Management records a trade accounts receivable allowance based on percentages of
collection estimated from the aging of accounts receivable. At December 31, 2009,
management determined that no allowance was necessary.
Governmental funds report deferred revenue in connection with receivables for
revenues that are not considered to be available to liquidate liabilities of the current
period. Governmental funds deferred revenue is reported as follows:
General Fund Property Tax Receivable
Debt Service Fund Property Tax Receivable
Property Taxes
$ 804,943
580,114
$ 1,385,057
Property taxes are legally restricted for use in financing operations of the ensuing
year. Accordingly, the City defers revenue recognition until the year for which they
are to be used.
The City's property taxes are levied each November 1 based on the assessed value as
of the prior January 1 for all real property and personal property located within the
City. Property taxes are billed immediately following the levy date and considered
delinquent after December 31 following the levy date. Assessed values are
established by county assessors, subject to review by the county's Board of
Equalization.
28
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Property Taxes - Continued
The City is permitted by Missouri state statutes to levy taxes up to $1.00 per $100 of
assessed valuation for general governmental services other than the payment of
principal and interest on long-term debt and in unlimited amounts for the payment of
principal and interest on long-term debt.
The tax levy per $100 of assessed valuation which supports the 2009 budget was:
General Fund $ 0.4748
General Revenue - Temporary 0.1224
$ 0.5972
Taxes receivable represent property taxes levied for 2009 and prior years that have
not yet been collected, net of estimated uncollectibles. The assessed value of
property located within the City totaled $176,374,821.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and
are recorded as prepaid items in both government -wide and fund financial statements.
Restricted Cash and Investments
The City is statutorily required to maintain customer utility deposits separate from
City assets. Restricted cash and investments are also set aside for debt service
payments and for required debt reserves.
Capital Assets
Capital assets, which include property, plant, equipment, infrastructure (e.g., roads,
bridges, sidewalks and similar items) and construction in progress are reported in the
applicable governmental or business -type activities columns in the government -wide
financial statements.
29
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Capital Assets - Continued
As the City is a Phase III government under Governmental Accounting Standards
GASB 34, it has elected to exercise its option to forego retroactively reporting
governmental infrastructure assets acquired prior to December 31, 2003.
Governmental infrastructure assets on the statement of net assets include only roads,
bridges, sidewalks and similar items acquired subsequent to December 31, 2003.
Capital assets, excluding land, are defined by the City as assets with a cost of more
than $2,500 and an estimated useful life of at least one year. All land purchases are
capitalized regardless of cost. All purchased capital assets are valued at cost where
historical records are available and at an estimated historical cost where no historical
records exist. Donated capital assets are valued at their estimated fair market value on
the date received.
The costs of normal maintenance and repairs that do not add to the value of the asset
or materially extend the life of the asset are not capitalized.
Major outlays for capital improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of the business -type
activities is included as part of the capitalized value of the assets constructed. Interest
costs of $627,028 on note obligations connected with the Brink Meyer Road project
and the Brush Creek Neighborhood Improvement District have been capitalized.
These costs together with construction costs will be amortized when the project is
placed in service.
The City defines infrastructure as the basic physical assets that allow the City to
function. The assets include the street network, storm drainage network, and
pedestrian and vehicle bridges and buildings combined with the site amenities such as
parking and landscaped areas used by the City in the conduct of its business. Each
major infrastructure network can be divided into subsystems. For example, the street
network can be subdivided into pavement, curbs, gutters, sidewalks, land, medians,
etc. These networks and subsystems are not delineated in the basic financial
statements.
Governmental street and parking lot assets are reported using the modified approach
as defined in GASB Statement 34 for infrastructure reporting of these assets. When
using the modified approach, only those projects that add efficiency or capacity to
street and parking lot assets are capitalized. Street and parking lot assets are not
depreciated. Expenditures that preserve those assets are expensed.
30
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Capital Assets - Continued
Capital assets are depreciated using the straight-line method over the following
estimated useful lives:
Buildings 20 - 40 years
Sewer Plant and Collection System 20 - 50 years
Machinery and Equipment 5 - 7 years
Infrastructure 35 years
Compensated Absences
City policies permit full-time employees to accumulate sick pay benefits and vacation
time based on the number of years of service. Accumulated vacation payable is
accrued when incurred in the government -wide financial statements and proprietary
fund statements. In the governmental fund financial statements, a liability is accrued
when it has matured, for example, as a result of employee resignations and
retirements.
Long -Term Obligations
In the government -wide financial statements, and proprietary fund types in the fund
financial statements, long-term debt and other long-term obligations are reported as
liabilities in the applicable governmental activities, business -type activities, or
proprietary fund type statement of net assets. Bond premiums and discounts, as well
as issuance costs, are deferred and amortized over the life of the bonds using the
effective interest method. Bonds payable are reported net of the applicable bond
premium or discount. Bond issuance costs are reported as deferred charges and
amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums
and discounts, as well as bond issuance costs, during the current period. The face
amount of debt issued is reported as another financing source. Premiums received on
debt issuances are reported as other financing sources while discounts on debt
issuances are reported as other financing uses. Issuance costs, whether or not withheld
from the actual debt proceeds received, are reported as debt service expenditures.
31
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2 - RECONCILIATION OF GOVERNMENT -'WIDE AND FUND FINANCIAL,
STATEMENTS
Explanation of Certain Differences between the Governmental Fund Balance
Sheet and the Government -Wide Statement of Net Assets
The governmental fund balance sheet includes a reconciliation between fund balance
- total governmental funds and net assets of governmental activities as reported in the
government --wide statement of net assets. One element of that reconciliation explains
that "long-term liabilities, including bonds payable, are not due and payable in the
current period and therefore are not reported in the funds." The details of this
$(16,286,100) difference are as follows:
Bonds Payable
Certificates of Participation Payable
Neighborhood Improvement District Limited General
Obligation Temporary Notes
Accrued Interest Payable
Compensated Absences
Issuance Discount
Cost of Issuance
Deferred Refunding Difference
Other
Net Adjustment to Reduce Fund Balance
Total Governmental Funds to Arrive
at Net Assets - Governmental Activities
$ (2,990,000)
(5,990,000)
(7,465,000)
(147,510)
(41,816)
47,284
210,000
72,099
18,843
$(16,286,100)
32
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 2 - RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL
STATEMENTS - CONTINUED
Explanation of Certain Differences between the Governmental Fund Statement of
Revenues, Expenditures and Changes in Fund Balances and the Government -Wide
Statement of Activities
The governmental fund statement of revenues, expenditures, and changes in fund
balances includes a reconciliation between net changes in fund balances - total
governmental funds and changes in net assets of governmental activities as reported
in the government -wide statement of activities. One element of that reconciliation
explains that "Governmental funds report capital outlays as expenditures. I-Iowever,
in the statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense." The details of this difference are
as follows:
Capital Outlay
Depreciation Expense
Net Adjustment to Increase Net Change in Fund
Balances - Total Governmental Funds to Arrive at
Change in Net Assets of Governmental Activities
$ 1,993,065
(258,975)
$ 1,734,090
Another element of that reconciliation states that "The issuance of long-term debt
(e.g., bonds, leases) provides current financial resources to governmental funds, while
the repayment of the principal of long-term debt consumes the current financial
resources of governmental funds. Neither transaction, however, has any effect on net
assets. Also, governmental funds report the effect of issuance costs, premiums,
discounts, and similar items when debt is first issued, whereas these amounts are
deferred and amortized in the statement of activities." The details of this difference
are as follows:
Debt Issued or Incurred
Neighborhood Improvement District Debt $ 1,190,000
Principal Repayments
General Obligation Bonds (210,000)
Certificates of Participation (175,000)
Leases (11,263)
Net Adjustment to Increase Net Changes in Fund
Balances - Total Governmental Funds to Arrive
at Changes in Net Assets of Governmental Activities $ 793,737
33
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 2 - RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL
STATEMENTS - CONTINUED
Explanation of Certain Differences between the Governmental Fund Statement of
Revenues, Expenditures and Changes in Fund Balances and the Government -Wide
Statement of Activities - Continued
Another element of that reconciliation states that "Some expenses reported in the
statement of activities do not require the use of current financial resources and
therefore are not reported as expenditures in governmental funds." The details of this
$(1,654) difference are as follows:
Prepaid Insurance $ 1,500
Compensated Absences 3,000
Amortization of Issuance Costs (12,634)
Amortization of Deferred Refunding Difference (5,417)
Amortization of Bond Discounts (2,782)
Other 14,679
Net Adjustment to Decrease Net Changes in Fund
Balances — Total Governmental Funds to Arrive
at Changes in Net Assets of Governmental Activities $ (1,654)
NOTE 3 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Budgets and Budgetary Accounting
Missouri statutes require that all political subdivisions of the State prepare an annual
budget. Governmental funds required to have legally adopted annual budgets are the
general fund, the special revenue funds, and the debt service fund. Legally adopted
annual budgets are not required for the capital projects fund and the permanent fund.
Annual budgets for all governmental funds are adopted using the modified accrual
basis of accounting, further modified by the encumbrance method of accounting, that
is, commitments such as purchase orders, contracts and other commitments, in
addition to disbursements and accounts payable are recorded as expenditures.
Budgeted expenditures cannot exceed budgeted revenues and unencumbered positive
fund balances as required by Section 67.010 RSMo.
34
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 3 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED
Budgets and Budgetary Accounting - Continued
The appropriated budget is prepared by fund, function, and department. State statutes
set the legal level of budgetary control at the fund level (i.e., the level at which
expenditures may not legally exceed appropriations). Department heads may make
transfers of appropriations within their departments. Upon written request, the City
Administrator or the Board of Aldermen may by ordinance transfer part or all of any
unencumbered appropriate balance from one department to another.
The reported budgetary data represents the final approved budget after amendments
as adopted by the Board of Aldermen.
NOTE 4 - DEPOSITS AND INVESTMENTS
As of December 31, 2009, the City had the following deposits and investments:
Reported
Amount /
Fair Value
US Treasuries and Agency Securities $ 1,342,633
Deposits
Checking Accounts 1,564,601
Certificates of Deposit 889,532
Money Market Accounts 394,453
$ 4,191,219
Reconciliation of Government -wide Statement of Net Assets to total deposits and
investments:
Cash and Cash Equivalents
Restricted Cash and Investments
Total Deposits and Investments
$ 2,175,024
2,016.195
$ 4,191,219
35
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 4 - DEPOSITS AND INVESTMENTS - CONTINUED
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair
value of an investment. The City does not have a formal investment policy that limits
investment maturities as a means of managing its exposure to fair value losses arising
from increasing interest rates. It is the City's practice to place operating funds in
either money market accounts or savings accounts. All longer -term investments are
placed in certificates of deposit or Treasury securities having maturities of 1 to 5
years. These consist of funds whose use is restricted and are unlikely to be needed
prior to maturity (e.g. the Fewson Trust and Sewer Debt Reserve).
Credit Risk
Missouri statutes prohibit municipalities from investing in derivative, leveraged, or
speculative securities. City agents invest funds for restricted debt reserves and
unexpended debt proceeds in money market mutual funds, guaranteed investment
contracts and repurchase agreements. The City's investments in money market mutual
funds are rated AAA by Standard & Poor's, and the repurchase agreements and
guaranteed investment contracts are unrated.
Custodial Credit Risk - Deposits
In the case of deposits, this is the risk that in the event of a bank failure, the City's
deposits may not be returned. As of December 31, 2009, the carrying amount of the
City's deposits was $2,847,537. The City had bank balances of deposits of $2,909,527
which were covered by federal depository insurance or by collateral held by the City's
agent in the City's name. The City does not have a formal deposit policy for custodial
credit risk. It is City practice to require banks to provide collateral equal to any
deposited amounts exceeding federal depository insurance limits.
Custodial Credit Risk - Investments
For an investment, custodial credit risk is the risk that, in the event of the failure of
the counterparty, the City will not be able to recover the value of its investments or
collateral securities that are in the possession of an outside party. At December 31,
2009, the City's investments were not exposed to custodial credit risk.
36
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 5 - CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2009, was as follows:
Governmental Activities
Capital Assets not being Depreciated
Land
Construction in Progress
Infrastructure
Total Capital Assets not being Depreciated
Capital Assets being Depreciated
Buildings and Improvements
Machinery and Equipment
Infrastructure
Total Capital Assets being Depreciated
Less Accumulated Depreciation for
Buildings and Improvements
Machinery and Equipment
Infrastructure
Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Governmental Activities Capital Assets, Net
Business -type Activates
Capital Assets not being Depreciated
Land
Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated
Buildings and Improvements
Machinery and Equipment
Infrastructure
Total Capital Assets being Depreciated
Less Accumulated Depreciation for
Buildings and Improvements
Machinery and Equipment
Infrastructure
Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Business -type Activities Capita] Assets, Net
Beginning
Balance
$ 806,486
5,432,397
3,410,303
9,649,186
4,102,498
1,410,546
44,663
5,557,707
(329,339)
(968,126)
(3,828)
(1,301,293)
4,256,414
$ 13,905,600
Ending
Increases Decreases Balance
- $
1,890,501
1,890,501
50,825
$ 806,486
7,322,898
3,410,303
11,539,687
4,153,323
1,410,546
44,663
50,825 5,608,532
(125,736)
(131,963)
(1,276)
(258,975)
(208,150)
$ 1,682,351 $
$ 59,975 $
136,854
196,829
4,735,996
194,406
1,843,839
6,774,241
(1,7I2,789)
(155,003)
(608,373)
(2,476,165)
4,298,076
$ 4,494,905
(455,075)
(1,100,089)
(5,104)
(1,560,268)
4,048,264
$15,587,95I
$ 59,975
136,854
196,829
4,735,996
194,406
1,843,839
6,774,241
(234,364) - (1,947,153)
(7,510) - (162,513)
(36,868) - (645,241)
(278,742) (2,754,907)
(278,742) 4,019,334
$ (278,742) $ - $ 4,216,163
37
CITY OF PARKVILLE, IVIISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 5 - CAPITAL ASSETS - CONTINUED
Depreciation expense was charged to functions/programs of the primary government as
follows:
Governmental Activities
General Government $ 123,367
Public Safety 40,917
Public Works 54,991
Culture and Recreation 39,700
Total Depreciation Expense $ 258,975
Business -type activities
Water and Sewer
Total Depreciation Expense
$ 278,742
$ 278,742
38
CITY OF PARKY1LLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 6 - LONG-TERM OBLIGATJONS
The following is a summary of the debt transactions of the City for the year ended
December 31, 2009:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities
Bonds Payable
General Obligation Bonds $ 3,200,000 $ - $ (210,000) $ 2,990,000 $ 225,000
Certificates of Participation 6,165,000 - (175,000) 5,990,000 190,000
Neighborhood Improvement District
Limited Obligation Temp Notes 6,275,000 1,190,000 7,465,000 -
Less Deferred Amounts
for Issue Discounts (50,066) 2,782 (47,284) (2,782)
for Deferred Refunding Difference (97,516) 5,417 (92,099) (5,417)
Capital Leases 11,263 - (11,263) -
Compensated Absences 38,816 3,000 41,816
Governmental Activity Long-term
Liabilities $ 15,542,497 $ 1,193,000 $ (388,064) $ 16,347,433 $ 406,801
Business -type Activities
Bonds payable
Refunding Revenue Bonds $ 2,455,000 $ - $ (185,000) $ 2,270,000 $ 185,000
Plus Deferred Amounts
for Issue Premiums 108,615 - (7,241) 101,374 7,241
Lease Purchase Agreement 205,708 - (8,273) 197,435 8,691
Compensated Absences 3,453 - - 3,453
Other (10,953) - - (10,953) 4,975
Business -type Activity Long-term
Liabilities $ 2,761,823 $ - $ (200,514) $ 2,561,309 5 205,907
$2,990,000 in general obligation debt shown above is special assessment debt with
governmental commitment.
For governmental activities, compensated absences and other long-term debt are
generally liquidated by the general fund.
39
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 6 - LONG-TERM OBLIGATIONS - CONTINUED
General Obligation Bonds
The City issues general obligation bonds to provide funds for the acquisition and
construction of major capital assets.
General obligation bonds currently outstanding consist of the following:
Final Principal Outstanding
Interest Original Maturity Payments December 31,
Rates Issue Date During 2009 2009
General Obligation Bonds
Governmental Activities
Series 1998
Series 2001
3.70% to 4.15% $ 325,000 9/1/2011 $ 35,000 $ 85,000
4.50% to 5.50% $3,985,000 3/1/2021 175,000 2,905,000
$ 210,000 $ 2,990,000
The annual requirements to amortize governmental activities general obligation
bonds outstanding as of December 31, 2009, are as follows:
Governmental Activities
Principal Interest
2010 $ 225,000 $ 142,641
2011 235,000 132,140
2012 200,000 121,313
2013 210,000 111,880
2014 220,000 101,772
2015 - 2019 1,285,000 329,495
2020 - 2021 615,000 32,059
$ 2,990,000 $ 971,300
40
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 6 - LONG-TERM OBLIGATIONS - CONTINUED
General Obligation Debt Margin
The State Constitution permits a city, by vote of two-thirds of the voting electorate, to
incur general obligation indebtedness for "city purposes" not to exceed 10% of the
assessed value of taxable tangible property and to incur additional general obligation
indebtedness not exceeding, in the aggregate, an additional 10% of the assessed value
of taxable tangible property for the purpose of acquiring rights -of -way, construction,
extending and improving streets and avenues and/or storm sewer systems, and
purchasing or construction of waterworks, electric, or other light plants, provided that
the total general obligation indebtedness of the city does not exceed 20% of the
assessed valuation of taxable property.
Certificates of Participation
The City issued certificates of participation series 2006 in the original amount of
$6,405,000 with interest rates ranging from 3.5% to 4.4% and with a final maturity in
2027. Principal payments are scheduled annually ranging from $75,000 to $490,000.
The balance at December 31, 2009, is $5,990,000.
Proceeds from the certificates of participation were used for City Hall renovation.
Rush Creek stabilization, land acquisition and other scheduled capital improvements.
The annual requirements to amortize these certificates of participation are as follows:
Principal Interest
2010 $ 190,000 $ 248,205
2011 200,000 240,940
2012 215,000 233,105
2013 235,000 224,496
2014 250,000 215,097
2015 - 2019 1,550,000 903,711
2020 - 2024 2,140,000 513,650
2025 - 2027 1,210,000 110,120
$ 5,990,000 $ 2.689.324
41
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 6 - LONG-TERM OBLIGATIONS - CONTINUED
Neighborhood Improvement District Limited Obligation Temporary Notes
The City issued Neighborhood Improvement District Limited Financial Obligation
Temporary Notes Series 2006A and 2007 in the original amount of $3,575,000 and
$2,700,000, respectively, with an interest rate of 4.0% and a final maturity of August
1, 2009. Proceeds from the temporary notes are being for the Brink Meyer Road
Neighborhood Improvement Project and the Brush Creek Drainage Area
Neighborhood Improvement.
The Temporary Notes were paid off on August 1, 2009, in a refinancing transaction in
which the City borrowed funds to repay the principal amount due on the notes, plus
interest and the financing costs. A total $3,020,000 at 2.25% was borrowed on the
Brink Meyer Road Project and $4,445,000 at 2.25% was borrowed on the Brush
Creek Road Project. The principal and interest on both notes are due August 1, 2011
The annual requirements to amortize these notes are as follows:
Principal Interest Total
2010 $ _ $ $ _
2011 $ 7,465,000 $ 335,424 $ 7,800,424
Capital Leases - Governmental Funds
The City has entered into a capital lease for autos. The debt service for the capital
lease was paid off during the year as follows:
Principal Interest Total
2009 $ 11,994 $ 547 $ 12,541
42
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 6 - LONG-TERM OBLIGATIONS - CONTINUED
Revenue Bonds
The bonds are special obligations of the City payable solely from, and secured as to
the payment of principal and interest by a pledge of, the net income and revenues
derived from the operation of the system. The bonds shall not be or constitute a
general obligation of the City.
The City issued Sewerage System Revenue Bonds Series 2004 in the original amount
of $2,740,000 with interest rates ranging from 3.0% to 5.25% and with a final
maturity in 2025. Principal payments are scheduled annually ranging from $30,000 to
$170,000. The balance at December 31, 2009, is $2,270,000.
Bonds maturing on January 1, 2015, and thereafter may be called for redemption and
payment prior to maturity in whole or in part on any date with the consent of the
bondholder, or on each June 1 and December 1, commencing December 1, 2013, at.
the redemption price of 100% of principal amount of the bonds redeemed, plus
accrued interest to the redemption date. Bonds maturing on January 1, 2019, January
1, 2020, and January 1, 2021, are not subject to redemption prior to maturity.
Series 2004A Sewage System Refunding Revenue Bonds are special, limited
obligations of the City payable solely from, and secured by a pledge of, the net
revenues. The taxing power of the City is not pledged to the payment of the bonds.
The bonds do not constitute a general obligation of the City or an indebtedness of the
City within the meaning of any constitutional, statutory or charter provision,
limitation or restriction.
The annual requirements to amortize these bonds outstanding as of December 31,
2009, are as follows:
Principal Interest
2010 $ 195,000 $ 106,870
2011 205,000 97,413
2012 135,000 89,702
2013 140,000 84,978
2014 - 2018 740,000 327,438
2019 - 2023 825,000 86,826
2024 30,000 1.350
$ 2,270,000 $ 794,577
43
CITY OF PARKYILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE b - LONG-TERM OBLIGATIONS - CONTINUED
Lease Purchase Agreement
In July 2003, the City entered into a lease -purchase agreement wherein the City sold
its sewer plant for $585,000 and leased it back for a period of twenty-two years. The
proceeds from the lease -purchase were used to make certain improvements to the
sewer plant property. Under the lease the City will have the full use of the property
and will make rental payments, which will apply to the principal and interest under
the lease.
Required payments under the lease purchase agreement on the sewer plant are as
follows:
Principal Interest
2010 $ 8,691 $ 9,764
2011 9,131 9,325
2012 9,594 8,862
2013 10,079 8,377
2014-2018 58,588 33,692
2019-2023 74,997 17,282
2024-2028 26,355 1,329
$ 197,435 $ 88,631
Defused Debt — Series 2004
In prior years, the City defeased certain bonds by placing the proceeds of new bonds
in an irrevocable trust to provide for all future debt service payments on the old
bonds. Accordingly, the liability for the defeased bonds is not included in the City's
financial statements.
Combined Waste Water and Sewerage Revenue Bonds
The Sewerage Revenue Bond ordinance requires that the Sewerage System Fund be
accounted for in a separate Enterprise Fund. It also requires that, after sufficient
current assets have been set aside to operate the system, all remaining monies held in
the Sewerage System Fund be segregated and restricted in separate special reserves
and accounts. In accordance with the bond ordinance, these bonds are serviced by the
Sewerage System Fund operations and are included as a liability of that fund.
44
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 6 - LONG-TERM OBLIGATIONS - CONTINUED
Restricted assets of the principal and interest account are to be used for payment of
current principal and interest on bonds. Restricted assets of debt service are available
to pay principal and interest in the event of a deficiency in the principal and interest
account. Restricted assets of the depreciation and replacement account are available
to operate, maintain, or improve the system, call bonds or for payment of debt service
in the event of a deficiency in other restricted assets.
NOTE 7 - RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; employee injuries and illnesses; natural
disasters; and employee health, dental and accident benefits. To protect itself against
risks of loss, the City is a member of the Mid -America Regional Council Insurance
Trust (MARCIT), a not -for-profit corporation consisting of governmental entities
incorporated in 1984 to acquire insurance for its members. MARCIT operates as a
purchasing pool and is not a joint venture activity of the City. The City has no control
over budgeting, financing, management selection, or the governing body. MARCIT
provides both conventional and self-insurance coverage for its members, including
medical, dental, property, casualty, general liability, and workers' compensation. The
City participates in property, casualty, general liability, and workers' compensation
insurance coverage through MARCIT.
MARCIT manages the cash and investment pool, funded by insurance premiums, on
behalf of its members. MARCIT's investment pool consists of interest -bearing
deposits, U.S. Treasury strips, U.S. Governmental agency obligations, and
collateralized mortgage obligations.
In the event that a deficit occurs with respect to any fiscal year of MARCIT for which
the City was a participant at any time during such year, and in the event that
MARCIT determines that an assessment is required in order to provide additional
funds for the obligations of MARCIT for such year, and further, in the event that the
City was covered by the types of benefits requiring the assessment during the time
period in which the assessment arose, the City is obligated to pay its pro rata share of
any such assessment whether or not the City is a member of MARCIT at the time of
such assessment. Management of the City is not aware of any deficit situation in
MARCIT that would require an accrual of a liability as of December 31, 2009.
45
CITY OF PARKVI LLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 7 - RISK MANAGEMENT - CONTINUED
MARCIT's financial statements are presented in its Comprehensive Annual Financial
Report for the year ended December 31, 2009.
There has been no significant change in insurance coverage from the previous fiscal
year. Settled claims have not exceeded insurance coverage in any of the past three
years.
Retirement Plan
During the first seven months of the year, the City retirement plan consisted of
individual retirement accounts established for employees. All full-time employees
after six months of service were eligible to participate. The City contributed five
percent of the employee's gross earnings on a monthly basis to the individual
retirement accounts. The City's contribution for the first seven months of the year was
$34,597. Effective August, the City adopted a defined benefit pension plan called
LAGERS which is further described in Note 10.
Investments - Trust Fund
The City of Parkville was the recipient of funds from a resident's estate during
calendar year 2002. The funds are held by a trustee for the benefit of the City. The
trustee of the fund is to distribute one-half of the income from the fund to be used on
various city projects. The balance of the annual net income is to be reinvested in the
principal of the fund. At December 31, 2009, the trust assets had an account balance
of $5I9,543 which are recorded in the permanent trust fund.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Litigation
The City is a defendant in various lawsuits relating to easements, condemnations and
other matters as a result of the ordinary course of City activities. The City's
management and legal counsel anticipate that the potential claims against the City not
covered by insurance, if any, resulting from such matters would not materially affect
the financial position of the City.
46
CITY OF PARKVTLLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 9 — INTER -FUND TRANSACTIONS
Inter -fund transfers for the year ended December 31, 2009, consisted of the
following:
Transfer from Capital Projects Fund $ (426,535)
Transfer to Debt Service Fund $ 867,882
Transfer to Non -Major Governmental Funds $ 167,975
Transfer from General Fund 1(609,323)
Transfers are used to (1) move revenues from the fund that statute or budget requires
to collect them to the fund that statute or budget requires to expend them, (2) move
receipts restricted to debt service from the funds collecting the receipts to the debt
service fund as debt service payments become due, and (3) use unrestricted revenues
collected in the general fund to finance various programs accounted for in other funds
in accordance with budgetary authorizations.
NOTE 10 — PENSION PLAN
Plan Description
The City of Parkville began participating August I, 2009, in the Missouri Local
Government Employees Retirement System (LAGERS), an agent multiple -employer
public employee retirement system that acts as a common investment and
administrative agent for local government entities in Missouri.
LAGERS is a defined benefit pension plan, which provides retirement, disability, and
death benefits to plan members and beneficiaries. LAGERS was created and is
governed by statute, section RSMo. 70.600-70.755. As such, it is the system's
responsibility to administer the law in accordance with the expressed intent of the
General Assembly. The plan is qualified under the Internal Revenue Code Section
401a, and it is tax exempt.
47
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 10 — PENSION PLAN - CONTINUED
The Missouri Local Government Employees Retirement System issues a publicly
available financial report that includes financial statements and required
supplementary information. That report may be obtained by writing to LAGERS,
P.O. Box 1665, Jefferson City, MO 65102 or calling 1-800-447-4334.
Funding Policy
The City of ParkvilIe's full-time employees contributed 4% of their salary to the
pension plan. The political subdivision is required by state statute to contribute at an
actuarially determined rate; the current rate is 4.1% (general) and 4.3% (police) of
annual covered payroll. The contribution requirements of plan members are
determined by the governing body of the political subdivision. The contribution
provisions of the political subdivision are established by state statute.
Annual Pension Cost
For 2009, the political subdivision's annual pension cost of $47,624 was equal to the
required and actual contributions. The required contribution was determined as part
of the March 12, 2009, annual actuarial valuation using the entry age actuarial cost
method. The actuarial assumptions included (a) a rate of return on the investment of
present and future assets of 7.5% per year, compounded annually, (b) projected salary
increases 4.0% per year, compounded annually, attributable to inflation, (c) additional
projected salary increases ranging from 0.0% to 4.2% per year, depending on age,
attributable to seniority/merit, (d) pre -retirement mortality based on the 1983 Group
Annuity Mortality table, and (e) post -retirement mortality based on the 1971 Group
Annuity Mortality table projected to 2000 setback 1 year for men and 7 years for
women. The actuarial value of assets was determined using techniques that smooth
the effects of short-term volatility in the market value of investments over a five-year
period. The unfunded actuarial accrued liability is being amortized as a level
percentage of projected payrolls on an open basis. The remaining amortization period
at December 31, 2009, was 30 years.
48
CITY OF PARICVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 10 — PENSION PLAN - CONTINUED
Three -Year Trend Information
Fiscal Annual Percentage Net
Year Pension of APC Pension
Ending Cost (APC) Contributed Obligation
12/31/09 $ 47,624 100% 0%
Required Supplementary Information
Schedule of Funding Progress
(a) (b) (b -a) (a/b) (c) [(b-a)/c]
Entry Age Unfunded UAL as a
Actuarial Actuarial Actuarial Accrued Annual Percentage of
Valuation Value Accrued Liability Funded Covered Covered
Date of Assets Liability (UAL) Ratio Payroll Payroll
12/31/09 $47,624 $819,972 $772,348 6 $1,344,639 57
Note: The above assets and actuarial accrued liability do not include the assets and
present value of benefits with the Benefit Reserve Fund and the Casualty Reserve
Fund.
NOTE 11— DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
ASC Topic 820, Fair Value Measurements, defines fair value as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Topic 820 also specifies a fair
value hierarchy which requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. The standard
describes three levels of inputs that may be used to measure fair value.
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for
similar assets or liabilities; quoted prices in active markets that are not
active; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or
liabilities
49
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2009
NOTE 11— DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
— CONTINUED
Level 3 Unobservable inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or liabilities
Following is a description of the valuation methodologies used for instruments
measured at fair value on a recurring basis and recognized in the accompanying
statement of financial position, as well as the general classification of such
instruments pursuant to the valuation hierarchy.
Investments
Where quoted market prices are available in an active market, securities are classified
within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid
money market funds, U.S. Treasuries and exchange traded equities and mutual funds.
If quoted market prices are not available, then fair values are estimated by using
pricing models, quoted prices of securities with similar characteristics or discounted
cash flows. Level 2 securities include fixed income securities and pooled
investments. In certain cases where Level 1 or Level 2 inputs are not available,
securities are classified within Level 3 of the hierarchy.
The following table presents the fair value measurements of assets and liabilities
recognized in the accompanying Statement of Financial Position measured at fair
value on a recurring basis and level within the FAS 157 fair value hierarchy in which
the fair measurements fall at December 31, 2009.
2009
Fair Value Measurements Using
Quoted Prices
In Active Significant
Markets for Other Significant
Identical Observable Unobservable
Assets Inputs Inputs
Fair Value (Level 1) (Level 2) (Level3)
Certificates of Deposit $ 889,532 $ 889,532
Money Market Accounts $ 394,453 $ 394,453
Government Securities $1,342,633 $1,342,633
50
CITY OF PARKVIL,LE, MISSOURI
REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2009
Information needed to support the use of the Modified Approach for Infrastructure
Reporting:
Street and Parking Lat Assets
The street and parking lot condition rating is accomplished every other year or triennially.
Every street and parking lot of Parkville is visually rated for observed structural conditions to
determine the level of preservation need. The field rating reflects the condition of the type of
street or parking lot being reviewed. It is the City's goal to repair all streets and parking lots
rated at a 6.0 or above and to maintain all streets within the City at a service level of 5.0 for
each respective type of street or parking lot.
A field rating scale has been developed to indicate the overall condition of the observed
street or parking lot.
1 Indicates an equivalent of a newly constructed street or parking lot (crack sealing and
minor patching)
2 Indicates slight imperfections in the street or parking lot condition (crack sealing, slurry
sealing, and/or patching)
3 Indicates some deterioration has occurred and minor maintenance may be required (street
or parking lot needs various repairs to maintain condition; patches; possible milling and
overlay)
4 Indicates noticeable deterioration maintenance is required (deterioration is significant and
visually noticeable; repair mill and overlay)
5 Indicates significant maintenance is required (considerable cracking, potholes or other
fatigue demands repair work and overlay)
6 Indicates serious deficiency (deterioration mandates edge milling (to prevent total base
failure) needs overlay)
7 Indicates severe deficiency (severe deterioration needing various repairs)
8 Indicates major failure (some good street is left within a total replacement street or
parking lot condition)
51
9 Indicates nearly total replacement is required (limited salvage of street or parking lot area
is possible)
10 Indicates total replacement is required.
While the City has goals to maintain these systems at higher levels, minimum acceptable
condition levels have been defined as having at least 80 percent of the streets and parking lots
at or below a rating of 5. The following table compares the minimum acceptable condition
levels with the actual condition levels for the current and prior years.
Minimum
Fiscal Acceptable Actual Condition
Year Condition Level* Level *
2005 80 94
2006 80 94
2007 80 94
2008 80 94
2009 80 94
* Percentage of streets and parking lots rated a 5 or below
The City's goal is to continually improve the condition of its streets and parking lots. To
achieve this goal, it is necessary to perform maintenance activities and replace those assets
that can no longer be economically maintained. To maintain the City's streets and parking
lots at or above the stated minimum condition level, it is estimated that annual preservation
and replacement expenditures must exceed $292,000 annually. The only expenditures for
streets were the payment to the State of Missouri for a bridge replacement project on
Highway 9. The following table compares the estimated expenditures needed to maintain the
system at a minimum acceptable condition level with actual amounts spent for the current
and prior years.
Fiscal Estimated Actual
Year Expenses Expenses
2005 $ 246,519 $ 241,190
2006 $ 292,227 $ 292,579
2007 $ 246,819 $ 213,183
2008 $ 256,481 $ 246,886
2009 $ 233,000 $ 233,000
52
OTHER SUPPLEMENTARY INFORMATION
53
CITY OF PARI{VILLE, MISS OURI
COMBINING BALANCE SHEET
N ONMAJO R GOVE RNMENTAL FUNDS
FOR THE YEAR END ED DECEMBER 31, 2009
Special Revenue
Reserve Municipal Equip Guest Room Nature Park Parkland Train Depot
Funds Reserve Tax Sanctuary Donations Dedication Restoration
Assets
Cash and Cash Equivalents $ 531,657 $ 36,574 $ 13,008 $ 27,866 $ 71 ,832 $ 46,794 $
Restricted Cash and Investments
Other Receivables -
Total A ssets S 531,657 $ 36,574 $ 13,008 $ 27 ,866 $ 71,832 $ 46,794
Liabilities
Accounts Payable - (3,003) - 2,790
Fund Balances
Unreserved, Reported in:
Special Revenue Funds 531,657 36,574 16,011 27,866 69,042 46,794
Permanent Fund -
Total Fund Balances 531,657 36,574 16,011 27,866 69,042 46,794
To tal Liabilities and Fund Balances $ 531,657 $ 36,574 $ 13,008 $ 27,866 $ 71,832 $ 46,794 $
CI TY OF PARICVILLE, MISS OURI
C OMBINING BA LAN CE SHEET
N ONMAJOR GOVERNM ENTAL FUN DS
F OR TELE YEAR ENDED DECEMBER 31, 2009
Special Revenue Permanent Total
Court Police Training T1F Fewson Governmental
Recoupment Fees Fees - LET Court Development Total Project Funds
Assets
Cash and Cash Equivalents $ 26,332 $ 27,583 $ 37,289 $ 12,434 831,369 $ - $ 831,369
Restricted Cash and Investments - - - 519,543 519,543
Other Receivables
- -
Total Assets $ 26,332 $ 27,583 $ 37 ,289 $ 12,434 $ 831,369 $ 519,543 $ 1 ,350,912
Liabilities
Accounts Payable 35,232 35,019 - 35,019
Fund Balances
Unreserved, Reported in
Special Revenue Funds 26,332 27,583 2,057 12,434 796,350 796,350
Permanent Fund - - - - - 519,543 519,543
Total Fund Balances 26,332 27,583 2,057 12 ,434 796 ,350 5I9,543 1,315 ,893
Total Liabilities and Fund Balances $ 26,332 $ 27,583 $ 37,289 $ 12,434 $ 83.1,369 $ 519,543 $ 1,350 ,912
55
CITY OF P ARKVJLLE, MISSO URI
COMBI NING STATEMENT OF REVENUES, E XPENDITURES AND CHA NGES IN FUND BALA NCES
NONMAJOR GOVERNMENT AL FUNDS
FOR TEM YEAR E NDED DECEMBER 31, 2009
Special Revenue
Revenues
Investment Earnings
TIF Revenue
Miscellaneo us 9,159 4,581 13,439
Reserve Municipal Equip Guest Room Nature Park Parkland Train Depot
Funds Reserve Tax Sanctuary Donations Dedication Restoration
Total Revenues
9,159 4,581 13,439
Expenditures
Current
General Government 19,993 12,681 7,226 4,185
Debt Service
Principle
Interest _
TIF Expense _
Capital Outlay
Total Expenditures 19,993 12,681 7,226 4,185
Excess (Deficiency) of Revenues
Over (Under) Expenditures
(19,993) (12,681) 1,933 4,581 9,254
Other Financing Sources (Uses)
Other (1,819) - (2,397)
Transfers In (Out) 90, 561 49,255 - (5,920) 56,000
Capital Leases -
Total Other Financing Sources 88,742 49,255 (5,920) 56,000 - (2,397)
N et Change in Fund Balances 68,749 36,574 1,933 (1,339) 65,254 - (2,397)
Fund Balances, Beginning of Year 462,908 - 14,078 29,205 3,788 46,794 2,397
Fund Balances, End of Year $ 531,657 $ 36,574 $ 16,011 $ 27,866 $ 69,042 $ 46,794 $
56
CITY OF PARKVI LLE, MISSOURI
COMBINING STATEMENT OF REVENUES, EXPENDI TURES AND CHANGES IN FUN D BALANCES
NONMAJOR GOVE RNMENTAL FUNDS
FOR THE YEAR EN DE D DECEMBE R 31, 2009
Special Revenue Permanent Total
Nonmajor
Co urt Police Training TIF Fewson Governmental
Recoupment Fees Fees - LET Court Development Total Project Funds
Revenues
Investment Earnings $ $ $ - S 616 S 616 $ 15,266 $ 15,882
TIF Revenue - -
- 434,153 434,153 434,153
Miscellaneous 2,621 2,721 2,057 - 34,578 34,578
Total Revenues 2,621 2,721 2,057 434,769 469,347 15,266 484,613
Expenditures
Current
General Government - - - 44,085 8,193 52,278
Debt Service
Principle - _
Interest
TIF Expense - - 434,850 434,850 434,850
Capital Outlay -
Total Expenditures - 434 ,850 478,935 8,193 487,128
Excess (Deficiency) of Rev enues
Over (Under) Expenditures 2,621 2, 721 2,057 (81) (9,588) 7,073 (2,515)
Other Financing Sources (Uses)
Other (4,216) - (4,216)
Transfers In (Out) 189,896 (21,921) 167,975
Capital Leases -
Total Other Financing Sources - - 185,680 (21,921) 163 ,759
Net Change in Fund Balances 2,621 2,721 2,057 (81) 176,092 (14,848) 161,244
Fund Balances, Beginning of Year 23,711 24,862 - 12,515 620 ,258 534,391 1,154,649
Fund Balances, End of Year $ 26,332 $ 27,583 $ 2,057 $ I2,434 $ 796,350 $ 519,543 5 1,315,893
57