HomeMy Public PortalAbout2011 AuditBRUCE D. CULLEY, C.P.A., P.C.
3000 BROOKTREE LANE, SUITE 210
GLADSTONE, MISSOURI 64119
816-453-1040 FAX: 816-453-0721
bruceculiey@sbcglobal.net:
Member American Institute of Member Missouri Society of
Certified Public Accountants Certified Public Accountants
CITY OF PARKVILLE, MISSOURI
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2011
CITY OF PARKYILLE, MISSOURI
TABLE OF CONTENTS
Independent Auditor's Report 1 —2
Management's Discussion and Analysis 3 —11
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Assets 12
Statement of Activities 13
Fund Financial Statements
Governmental Funds
Balance Sheet 14
Reconciliation of the Balance Sheet of the Governmental Funds to the
Statement of Net Assets 15
Statement of Revenues, Expenditures and
Changes in Fund Balances — Governmental Funds 16 —17
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 18
Statement of Revenues, Expenditures and Changes in Fund
Balances — Budget and Actual — General Fund 19
Proprietary Funds
Statement of Net Assets 20
Statement of Revenues, Expenditures and Changes in Fund Balances 71
Statement of Cash Flows 22
Notes to Basic Financial Statements ?3 — 51
Required Supplementary Information 52 — 53
Other Supplementary Information
Combining and Individual Fund Statement Schedules
Combining Balance Sheet — Nomnajor Governmental Funds 55 — 56
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances—Nonmajor Governmental Funds 57 — 58
BRUCE D. CULLEY C.P.A., P.C.
3000 Broolttree 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, 2011,
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. My
responsibility is to express opinions on these financial statements based on my 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, 2011, 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 11 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.
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 fmancial statements and,
in my opinion, is fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
nice Culley
Certified Public Accountant
Gladstone, Missouri
August 15, 2012
CITY OF PARKVILLE, MISSOURI
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Parkville, we offer readers of the City of Parlcville's financial
statements this narrative overview and analysis of the fnancial activities of the City of
Parkville for the fiscal year ended December 31, 2011. 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
1. The assets of the City exceeded its liabilities at the close of the most recent fiscal year
by $7,150,022 (net assets).
2. The government's total net assets increased by $850,021. The net assets increase is
found in governmental activities where there is a positive $692,755 net change, and a
positive $157,267 change in net assets reported in business -type activities.
3. As of the close of the current fiscal year, the City's governmental funds reported
combined ending fund balances of $3,810,977, an increase of $45,452 from the prior
year.
4. At the end of the current fiscal year, fund balance for the general fund was $603,176,
or approximately 17% of total 2011 general fund expenditures.
5. General fund revenues were $199,841 over budgeted revenue for 2011.
6. General fund expenses were $110,314 less than budgeted for 2011.
7. The City's total debt decreased by $453,173, (2.5%) during the fiscal year.
8. The City expended $183,574 on capital equipment for the City and $480,157 for
BrinlcMeyer Road and Brush Creek including interest that was capitalized.
9. The City refinanced the temporary notes on BrinkMeyer Road and Brush Creek
adding an additional $245,000 to the temporary notes.
10. The City's proprietary fund showed an increase in net assets of $157,267.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic
financial statements. The City's basic fnancial statements comprise three components;
government -wide financial statements (Pages 12 through 13), fund financial statements
(Pages 14 through 19), and notes to the financial statements beginning on Page 23. This
report also contains other supplementary information in addition to the basic financial
statements themselves.
Government -wide Financial Statements. The government -wide financial statements (Pages
12 — 13) are designed to provide readers with a broad overview of the City's finances, in a
manner similar to a private -sector business.
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The statement of net assets (Page 12) presents information on all of the City's assets and
liabilities, with the difference between the two reported as net assets. Over time, increases or
decreases in net assets may serve as a useful indicator of whether the financial position of the
City is improving or deteriorating.
The statement of activities (Page 13) 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 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 include general government, public safety, streets, economic development, and culture
and recreation. The business -type activities of the City include sewer service.
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, 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
can be divided into two categories: governmental funds and proprietary funds.
Governmental Funds. Governmental 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
provide a reconciliation to facilitate this comparison between governmental fluids and
governmental activities.
The City maintains four 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, transportation
special revenue fund, capital projects fund, and debt service fund, each of which are
considered to be major funds. Data from the other twelve governmental funds are combined
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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 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 govermnental fund financial statements can be found on Pages 14 through 19 of
this report.
Pr•aprietwy Funds. The City 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 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.
The basic proprietary fund financial statements can be found on Pages 20 through 22 of this
report.
Notes to the Financial Statements. The notes provide additional infoi ation 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 23 through
51 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'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 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
52 — 53 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 55 through 58 of this report.
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, assets exceeded liabilities by $7,150,022 at the
close of the most recent fiscal year.
5
Governmental Activities. Governmental activities increased the City's net assets by
$692,755 and business -type activities increased by $157,267. Revenues were up $137,190
and expenses were up $164,232 from 2010.
Business -type Activities. The change in net assets for business -type activities increased net
assets by $157,267 of which $39,998 related to the receipt of a grant to improve the sewer
system. The net assets for business -type activities in the current fiscal year are $3,073,977.
Financial Analysis of the Government's Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with
finance -related legal requirements.
Governmental funds. The focus of the City'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'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's
governmental funds reported combined ending fund balances of $3,810,977. Of that,
$2,318,809 is nonspendable, restricted or assigned for various purposes.
The general fund is the chief operating fund of the City. At the end of the current fiscal year
the general fund balance was $603,176. As a measure of the general fund's liquidity, it is
useful to compare both unreserved fund balance to total fund expenditures. Unreserved,
undesignated fund balance represents 17% of total general fund expenditures.
The City's fund balance of the general fund increased by $1,105 during the current fiscal
year. The City's 2011 revenues and transfers in from other funds totaled $3,896,941 which is
$94,725 higher than 2010. The City's 2011 expenses and transfers out to other funds totaled
$3,896,836, which is $426,302 higher than the prior year.
The debt service fund has a total fund balance of $930,939, all of which is reserved for the
payment of debt service. There was a net increase in the debt service fund balance of
$107,264. Expenses in the debt service fund exceeded revenue by $110,736. This was offset
by transfers to the debt service fund of $218,000.
The capital projects fund has a total fund balance of $460,398. There were considerable
expenditures on capital projects during the year including BrinkMeyer Road and Brush
Creek. The notes payable in connection with Brinklvleyer Road and Brush Creek were
refinanced during the year. The major reason for the decline in fund balance was for the
payment of interest on the notes and improvements on the projects.
6
The City uses capital assets to provide services to citizens; consequently, these assets are not
available for future spending. Although the City'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.
CITY 01? PARKVILLE, MISSOURI
NET ASSETS SUMMARY
DECEMBER 31, 2011 AND 2010
Governmental Activities Business -type Activities Total
2011 2010 2011 2010 2011 2010
Current and
Other Assets
Capital Assets
Total Assets
$ 5,781,039 $ 5,620,015 $ 1,086,971 $ 903,619 $ 6,868,010 $ 6,523,634
15,973,693 15,552.076 4.174,774 4,446.068 20,148,467 19,998,144
21,754,732 21,172,091 5,261,745 5,349,687 27,016,477 26,521,778
Bonds and Notes
Outstanding 15,732,015 15,963,816 2,136,721 2,357,877 17,868,736 18,321,693
Other Liabilities 1,946,672 1,824,986 51,047 75,100 1,997,719 1,900,086
Total Liabilities 17,678,687 17,788,802 2,187,768 2,432,977 19,866,455 20,221,779
Net Assets
Invested in Capital Asset: 241,678 (411,740) 2,038,053 2,088,190 2,279,731 1,676,450
Restricted 1,929,825 2,292,713 28,338 28,338 1,958,163 2,321,051
Unrestricted 1,904,542 1,502,317 1,007,586 800,182 2,912,128 2,302,499
Total Net Assets $ 4,076,045 $ 3,383,290 $ 3,073,977 $ 2,916,710 $ 7,150,0?2 $ 6,300,000
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CITY OF PARKVILLE
STATEMENT OF ACTIVITIES SUMMARY
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
Governmental Activities Business -type Activities Total
2011 2010 2011 2010 2011 2010
Program Revenues
Charges for Services $ 343,913 $ 399,215 $ 947,588 $ 1,005,579 $ 1,291,501 $ 1,404,794
Operating Grants and
Contributions 8,076 36,268 8,076 36,268
Capital Grants and
Contributions 446,314 330,722 35,998 201,111 482,312 531,833
General Revenues
Property Taxes 1,314,778 1,329,000 1,314,778 1,329,000
Franchise Taxes 898,765 829,936 - 898,765 829,936
Sales Taxes 1,549,084 1,459,937 - 1,549,084 1,459,937
Investment Earnings 76,726 72,849 76,726 72,849
Intergovernmental 41,992 40,675 - 41,992 40,675
Sewer Admin Fee 70,000 77,496 - 70,000 77,496
TIF 458,121 450,768 458,121 450,768
Other 133,290 177,003 - - 133,290 177,003
Total Revenues 5,341,059 5,203,869 983,586 1,206,690 6,324,645 6,410,559
Expenses
General Government 1,074,457 807,441 - 1,074,457 807,441
Public Safety - Police 977,504 960,098 977,504 960,098
Public Safety - Court 141,755 138,436 141,755 138,436
Public Works 768,341 694,216 768,341 694,216
Culture and Recreation 243,818 320,244 243,818 320,244
Economic Development 296,799 279,239 296,799 279,239
Depreciation 224,206 ?24,206 - - 224,206 224,206
TIF 458,028 451,225 458,028 451,225
Interest and Fees 288,257 438,103 - 288,257 438,103
Other Capital Expenditures 175,139 170,864 - - 175,139 170,864
Sewer - - 826,319 932,983 826,319 932,983
Total Expenses 4,648,304 4,484,072 826,319 932,983 5,474,623 5,417,055
Change in Net Assets 692,755 719,797 157,267 273,707 850,022 993,504
Net Assets,
Beginning of Year 3,383,290 2,663,493 2,916,710 2,643,003 6,300,000 5,306,496
Net Assets, End of Year $ 4,076,045 $ 3,383,290 $ 3,073,977 $ 2,916,710 $ 7,150,022 $ 6,300,000
8
Proprietary Funds. The City'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 $3,073,977. The sewer fund had revenues exceeding
expenditures by $157,266 in 2011. This compares unfavorably with an increase in the net
assets of $273,707 in 2010.
General Fund Budgetary Highlights
There were no amendments to the general fund budget for the current fiscal year. General
fund revenues were $199,841 more than projected. Property taxes, franchise taxes and sales
tax showed an increase over budget.
General fund expenses were $110,314 less than projected. The budget results for other
departments are not shown,
Capital Asset and Debt Administration
Capital Assets. The City's investment in capital assets for its governmental and business -
type activities as of December 31, 2011, totals $20,148,467. Approximately 72% of the 2011
capital expenditures were connected with BrinkMeyer Road and Brush Creek which are
being accumulated in the Construction in Progress.
City of Parkville, Missouri
Capital Assets (Net of Depreciation)
Buildings and Improvements
Machinery and Equipment
Infrastructure
Land
Construction in Process
Total
Governmental
Activities
2011
$ 3,499,678
308,170
3,492,910
869,880
7.803.055
$15.973.693
Business -type
activities
2011
$ 2,427,007
40,600
1,647,192
59,975
$ 4.174.774
Total
2011
$ 5,926,685
348,770
5,140,102
929,855
7.803.055
$20.148,467
Additional information on the City's capital assets can be found in Note 5 of this report.
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Long -Term Debt. At the end of the current fiscal year, the City had total debt outstanding of
$17,868,736.
City of Parkville, Missouri
Outstanding Debt
Governmental Activities Business -type Activities
2011 2010 2011
General Obligation Bonds $ 2,545,000 $ 2,830,000 $
Certificates of Participation 5,600,000 5,800,000
NID Limited Obligation
Temporary Notes 7,710,000 7,465,000
Sewer Revenue Bonds — 1998
Revenue Bonds (SRF) 2004A
Capital Leases/
Lease -Purchase
Deferred Amounts
Total
Total
2010 2011 2010
$ - $ 2,545,000 $ 2,830,000
5,600,000 5,800,000
70,000
- 1,870,000 2,005,000
7,710,000
1,870,000
7,465,000
70,000
2,005,000
179,613 18 8, 744 179,613 18 8, 744
(122,985) (131,184) 87,108 94,133 (35.877) (37.051)
15,732,015 $15,963.816 82,136,721 $?,357382.7 $.1 L8.6L,7 $18,321,61a
The general government indebtedness decreased $231,801 and the business government
indebtedness decreased $221,156.
Economic Factors and Next Year's Budgets and Rates
For 2012, the City of Parkville is expecting Property Tax revenue to increase about 2.6%
over 2011. This continues a pattern of fairly stable real estate values coupled with the very
slow pace of new construction since 2008. Although building permits are anticipated to
continue to increase, fueled by a gradually increasing number of new construction starts, both
residential and commercial, along with home repair and remodeling projects, the City has
budgeted conservatively and assumed permit revenue will remain flat. Franchise taxes are
expected to drop about 2% from 2011 revenues, which included a one-time telecom company
settlement. Otherwise, the City expects continued slow growth in franchise fees with steady
customer demand for telecommunication products and services and recent increases in
electricity rates. A mild winter and lower gas prices will reduce natural gas franchise tax
receipts for the first half of 2012, but this may be offset by summer electric use if the summer
weather is severe. All in all, vacancy rates have remained low for housing in Parkville, so
utility franchise fees tend to average out and can be depended upon to 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 hold steady after inflation
and to be about 2.6% above 2011 levels, holding near to the levels of the 2006-2008 period.
However, we note that competition from a new grocery store outside the City may reduce
sales tax revenue for the City from one of the City's major sales tax generators. Excluding
anticipated grants (see below); the City has budgeted very cautiously, holding 2012 revenue
and expenditure budgets at near 2011 levels. However, City personnel remain optimistic,
expecting overall modest, but positive growth in revenue for 2012. Revenue receipts for the
first 6 months of 2012 give confidence that the budgetary goals will be met or exceeded.
City expenditures are well within levels anticipated in the 2012 budget.
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Other factors affecting the City's 2012 financial outlook include receipt of FEMA grants to
cover extraordinary expenditures in 2011 for flood -related damage to the City parks along
the Missouri River. Also, the City anticipates reaching favorable settlements to litigation
related to the collapsed retaining wall along BrinkMeyer Road. As of this writing, FEMA
grants have been received, and the City is satisfied that favorable settlements have been
obtained in all litigation cases, with no further litigation expected.
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.
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CITY OF PARKVILLE, MISSOURI
STATEMENT OF NET ASSETS
DECEMBER 31, 2011
Governmental Business -Type
Activities Activities Total
Assets
Cash and Cash Equivalents $ 2,168,500 $ 868,150 $ 3,036,650
Restricted Cash and Investments 1,670,188 28,338 1,698,526
Receivables, Net of Allowance for Uncollectibles
Taxes 1,673,961 1,673,961
Accounts 28,645 92,796 121,441
Deferred Charges 184,732 97,687 282,419
Prepaid Items 55,013 55,013
Capital Assets not being Depreciated
Land 869,880 59,975 929,855
Construction in Progress 7,803,055 - 7,803,055
Infrastructure 3,455,903 3,455,903
Capital Assets, Net of Accumulated Depreciation
Buildings and Improvements 3,499,678 2,427,007 5,926,685
Machinery and Equipment 308,170 40,600 348,770
Infrastructure 37,007 1,647,192 1,684,199
Total Assets 21,754,732 5,261,745 27,016,477
Liabilities
Accounts Payable and Other Current Liabilities 251,830 34,656 286,486
Accrued Interest Payable 102,869 2,906 105,775
Customer Deposits 13,485 13,485
Unearned Revenue 1,533,500 - 1,533,500
Other 58,473 - 58,473
Bonds and Notes
Due Within One Year 461,801 149,594 611,395
Due in More Than One Year 15,270,214 1,987,127 17,257,34]
Total Liabilities 17,678,687 2,187,768 19,866,455
Net Assets
Invested in Capital Assets, Net of
Capital Related Debt 241,678 2,038,053 2,279,731
Restricted for
Debt Service 930,939 28,338 959,277
Capital Projects 460,398 460,398
Permanent Fund 538,488 538,488
Unrestricted 1,904,542 1,007,586 2,912,128
Total Net Assets $ 4,076,045 $ 3,073,977 $ 7,150,022
The accompanying notes are an integral part of the financial statements.
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CITY OF PARKVILLE, MISSOURI
STATEMENT OF ACTI VITIES
F OR THE YEAR E NDED DECEMBER 31, 2011
Net (Expense) Revenue a nd
Program Reve nues Changes in Net Assets
Operati ng Capital Primary Government
Charges for Grants and Grants and Governmental Business -type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Primary government:
Go vernmental Activities
General Government $ 1,074.457 $ 147,310 $ 8,076 $ 446,314 $ (472,757) $ $ (472,757)
Public Safety - Police 977,504 196,603 (780,901) - (780 .901)
Public Safety - Court 141,755 - (141.755) - (141,755)
Public Wo rks 768.341 - (768,341) - (768.341)
Culture and Recreation 243.818 - - (243,818) (243.818)
Economic Development 296,799 - - (296,799) - (296.799)
Depreciation 234.267 - - (234,267) (234,267)
TIF 458.028 - (458,028) - (458,028)
Interest and Fees 288.257 - (288.257) - (288,257)
Other Capital Expenditures 165,078 - - (165.078) - (165,078)
Total Go vernmental Activities 4.648.304 343,913 8,076 446.314 (3.850.001) (3.850.001)
Business -type Activities
Sewer 826.319 947.588 35.998 - 157,267 157.267
Total Business -type A ctivities 826,319 947,588 35.998 157.267 157,267
Total Primary Government $ 5,474,623 5 1291,501 5 8.076 5 482,312 (3,850.001) 157.267 (3,692,734)
General Revenues
Property Tax 1.314.778 - 1,314,778
Franchise Tax 898,765 898.765
Sales Tax 1.549.084 - 1,549,084
Unrestricted Investment Earnings 76,726 76,726
Intergovernmental 41,992 - 41.992
Sewer Admin Fees 70,000 70,000
TIF 458,121 458,121
Other 133,290 - 133,290
Total General Revenues 4 ,542,756 4,542,756
Change in Net Assets 692.755 157,267 850,022
Net Assets, Beginnin g of the Year 3,383.290 2,916,710 6,300 .000
Net Assets, End of Year 5 4,076,045
$
3 .073,977 $ 7,150,022
The accompan yin g notes are an integral part of the finan cial statements.
CITY OF PARKVILLE, MISSOURI
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2011
Transportation Capital Debt Other Total
General Special Revenue Projects Service Governmental Governmental
Fund Fund Fund Fund Funds Funds
Assets
Cash and Cash Equivalents 5 579,669 $ 332,987 $ (23,063) $ 334,902 $ 944,005 $ 2,168,500
Restricted Cash Investments 984 486,724 643,992 538,488 1,670,188
Receivables, Net of Allowance
for Uncollectibles
Taxes 1,076,666 597,295 - 1,673,961
Accounts Receivable 28,645 - 28,645
Prepaid Items 55,013 - 55,013
Total Assets $1,739,993 $ 333,971 $ 463,661 $1,576,189 $ 1,482,493 $ 5,596,307
Liabilities and Fund Balance
Liabilities
Accounts Payable
Bonds Payable
Unearned Revenue
Total Liabilities
$ 248,318 $
888,500
1,136,818
- $ 3,262 $ 250 $ - $ 251,830
645,000 1,533,500
3,262 645,250 1,785,330
Fund Balances
Nonspendable
Prepaids 55,013 55,013
Restricted for
Capital Projects 333,971 460,398 - 794,369
Debt Service 930,939 930,939
Assigned
Capital Purposes - 538,488 538,488
Unassigned
General Fund 548,163 548,163
Special Revenue 944,005 944,005
Total Fund Balances 603,176 333,971 460,398 930,939 1,482,493 3,810,977
Total Liabilities and
Fund Balances $1,739,994 $ 333,971 $ 463,660 $1,576,189 $ 1,482,493 $ 5,596,307
The accompanying notes are an integral part of the financial statements.
14
CITY OF PARKVILLE, MISSOURI
RECONCILIATION OF THE BALANCE SHEET OF THE
GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS
DECEMBER 31, 2011
Total Fund Balance in Governmental Fund Balance Sheet $ 3,810,977
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.
Long-term liabilities, including bonds payable, are not due
and payable in the current period and therefore are not
reported in the funds. (Note 2)
15,973,693
(15,708,625)
Net Assets of Governmental Activities $ 4,076,045
The accompanying notes are an integral part of the financial statements.
15
CIT Y OF PARK VILLE, MISSOURI
ST ATEMENT OF REVENUES, E XPENDITURES AND CHAN GES IN F UND BALAN CES
GOVERNMENTAL F UN DS
F OR THE YEAR ENDED DECEMBER 31, 2011
Transportati on Capital Debt Other Total
General Special Revenue Projects Service Governmental Government
Fund Fund F und Fund Funds Funds
Revenues
Taxes $ 2,776,351 $ 650,319 $ - $ 318,692 $ - $ 3,745,362
Licenses and Permits 140,065 - - 140,065
Intergov ernmen tal 41,992 - - - 41,992
Charges for Services 7,245 7,245
Fines and Fees 196,603 60 196,663
Special Assessments - 114,870 331,444 446,314
Investment Earnings 28,113 305 16,893 31,414 76,725
Grants 8,076 8,076
TIF Revenue - - 458,121 458,121
Sewer Service Fees 70,000 - 70,000
Miscellaneous 114,496 - - - 18,794 133,290
Total Revenues 3,382,941 765,189 305 667,089 508,329 5,323,853
Expenditures
Current
General Government 1,021,294 875 - 48,595 1,070,764
Public Safety - Police 1,031,850 - - 1,031,850
Public Safety - Court 141,755 - - 141,755
Public Wo rks 1,054,809 - - 1,054,809
Econo mic Dev elopmen t 336,997 - 336,997
Debt Service
Principal - - 485,000 485,000
Interest - 336,392 288,257 - 624,649
Other - - 4,568 - 4,568
The accompan ying notes are an integral part of the financial statements.
16
CIT Y OF PARKVILL E, MISSOURI
ST ATEMENT OF RE VENUES, EXPE NDIT URES AND CHA NGES IN F UND B AL ANCES
GO VERNMENTAL FUN DS
FOR THE YEAR E NDED DECEMBER 31, 2011
Transport ation C apital Debt Other Total
General Special Revenue Projects Service Governmental Government
Fund Fund Fund Fund Funds Funds
TiF Expense - - 458,028 458,028
Capital Outlay - 171,177 143,765 - 39 314,981
Total Expenditures 3,586,705 172,052 480,157 777,825 506,662 5,523,401
Excess (Deficiency) of Revenues
Over (Under) Expenditures (203,764) 593,137 (479,852) (110,736) 1,667 (199,548)
Other Financing Sources (Uses)
Note Proceeds - Refinancing - - 7,710,000 - - 7,710,000
Notes Retired - Refinancing - (7,465,000) - (7,465,000)
Tra nsfers In 514,000 244,574 218,000 115,131 1,091,705
Transfers (Out) (309,131) (538,000) (244,574) - - (1,091,705)
Total Other Financing Sources 204,869 (293,426) 426 218,000 115,131 245,000
Net Changes in Fund Balances
After Other Financing Sources
1,105 299,711 (479,426) 107,264 116,798 45,452
Fund Balance, Beginning of Y ear 602,071 34,260 939,824 823,675 1,365,695 3,765,525
Fund Ba lan ce, End of Year
603,176 $ 333,971 $ 460,398 $ 930,939 $ 1,482,493 $ 3,810 ,977
The acco mpanyin g notes are an integral part of the fin ancial 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, 2011
Amounts reported for governmental activities in the statement of activities are
different because:
Net Change in Fund Balances - Total Government Funds $ 45,452
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 is the net amount of bond principal payments and retired certificates of
participation.
Refinancing transaction in which the bond proceeds exceeded the bonds
retired reported as increase in the fund balance.
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.
Change in Net Assets of Governmental Activities
414,185
485,000
(245,000)
(6,882)
$ 692,755
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 AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2011
Revenues
Taxes
Property
Franchise
Sales
Intergovernmental
Licenses and Permits
Charges for Services
Fines and Fees
Investment Earnings
Grants
Sewer Service Fees
Miscellaneous
Transfer In
Total Revenues
Expenditures
Current:
General Government
Public Safety - Police
Public Safety - Court
Public Works
Community Development
Street
Parks
Nature Sanctuary
Channel21Website
Transfer Out
Total Expenditures
Excess of Revenues over Expenditures
Original
and Final
Budgeted
Amounts
$ 980,300
767,000
860,000
41,500
141,050
25,600
222,200
26,000
14,000
70,000
25,450
524,000
3,697,100
1,014,300
1,113,800
149,750
166,550
280,650
653,350
337,450
23,900
48,400
218,000
4,006,150
$ (309,050)
Actual
Amounts
$ 996,086
898,765
881,500
41,992
140,065
7,245
196,603
28,113
8,076
70,000
114,496
514,000
3,896,941
1,021,294
1,031,850
141,755
154,507
269,984
674,557
225,745
23,939
43,074
309,131
3,895,836
$ 1,105
Variance with
Final Budget -
Positive
(Negative)
$ 15,786
131,765
21,500
492
(985)
(18,355)
(25,597)
2,113
(5,924)
75,046
(10,000)
199,841
(6,994)
81,950
7,995
12,043
10,666
(21,207)
111,705
(39)
5,326
(91,131)
110,314
310,155
The accompanying notes are an integral part of the financial statements.
19
CITY OF PARKVILLE, MISSOURI
STATEMENT OF NET ASSETS
PROPRIETARY FUND - SEWER SERVICE
DECEMBER 31, 2011
Assets
Current Assets
Cash and Cash Equivalents S 868,150
Restricted Cash and Investments 28,338
Accounts Receivable 92,796
Total Current Assets 989,284
Noncurrent Assets
Deferred Charges 97,687
Capital Assets
Land 59,975
Buildings and Improvements 5,252,588
Machinery and Equipment 209,573
Construction in Progress 155,473
Infrastructure 1,850,517
Less Accumulated Depreciation (3,353,352)
Total Capital Assets 4,174,774
Total Noncurrent Assets 4,272,461
Total Assets 5,261,745
Liabilities
Current Liabilities
Accounts Payable and Other Current Liabilities 34,656
Accrued Interest Payable 2,906
Customer Deposits Payable 13,485
Current Portion of Revenue Bonds Payable 140,000
Current Portion of Leases Payable 9,594
Total Current Liabilities 200,641
Noncurrent Liabilities
Revenue Bonds Payable, Net 1,817,108
Lease Payable 170,019
Total Noncurrent Liabilities 1,987,127
Total Liabilities 2,187,768
Net Assets
Restricted
Debt Service 28,338
Invested in Capital Assets, Net of Related Debt 2,038,053
Unrestricted 1,007,586
Total Net Assets S 3,073,977
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 FUND - SEWER SERVICE
FOR THE YEAR ENDED DECEMBER 31, 2011
Operating Revenues
Charges for Sales and Services
Sewer Charges $ 938,491
Total Operating Revenues 938,491
Operating Expenses
Cost of Sales and Services 499,176
Depreciation and Amortization 297,754
Total Operating Expenses 796,930
Operating Income 141,561
Nonoperating Revenues (Expenses)
Interest Revenue 9,061
Interest Expense (29,389)
Other Income 36
Grant 35,998
Total Net Nonoperating Revenues 15,706
Change in Net Assets 157,267
Total Net Assets, Beginning of Year 2,916,710
Total Net Assets, End of Year $ 3,073,977
The accompanying notes are an integral part of the financial statements.
21
CITY OF PARKVILLF, MISSOURI
STATEMENT OF CASH FLOWS
PROPRIETARY FUND - SEWER SERVICE
FOR THE YEAR ENDED DECEMBER 31, 2011
Cash Flows from Operating Activities
Receipts from Customers $ 980,782
Payments to Suppliers (523,318)
Net Cash Provided by Operating Activities 457,464
Cash Flows from Capital and Related Financing Activities
Payments on Leases Payable (9,131)
Acquisition of Capital Assets (16,340)
Grant Income 35,998
Principal Paid on Capital Debt (205,000)
Interest Paid on Capital Debt (28,579)
Other (6,990)
Net Cash (Used) by Financing Activities (230,042)
Cash Flows from Investing Activities
Interest Received 9,061
Net Cash Provided by Investing Activities 9,061
Increase in Cash and Cash Equivalents 236,483
Cash, Beginning of Year 660,005
Cash, End of Year $ 896,488
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities
Operating Income $ 141,561
Adjustments to Reconcile Operating Income
to Net Cash Provided by Operating Activities
Depreciation Expense 297,754
Changes in Assets and Liabilities
Accounts Receivable 42,291
Accounts Payable (24,862)
Prepaids 720
Net Cash Provided by Operating Activities $ 457,464
The accompanying notes are an integral part of the financial statements.
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entitle
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 1) charges to customers or applicants who purchase, use, or directly benefit
from goods, services, or privileges provided by a given function or segment and 2)
grants and contributions. that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes and other items not properly
included among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds and proprietary
funds. Major individual governmental funds and 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 following the year the taxes are levied.
Grants and similar items are recognized as revenue as soon as all eligibility
requirements imposed by the provider have been met.
23
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 1— SUMMARY 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 fund 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.
2.
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
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.
Transportation Special Revenue Fund — This fund is used to account for the
sales tax collected for capital improvements and the expenditures for the
related items.
Capital Projects Fund — This fund accounts for the financing and acquisition
and construction of various citywide improvements.
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. Revenue and expenses for each of the several debt
service obligations are kept separate and accounted for independently of the
other obligations so that funds available for each debt service obligation are
used only for that obligation.
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.
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
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.
?5
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
Measurement Focus, Basis of Accounting, and Financial Statement Presentation —
Contiruued
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.
Equity Classifications
In the city-wide financial statements, equity is classified as net assets and displayed in
three components:
1. Invested in capital assets, net of related debt — Consists of capital assets,
net of accumulated depreciation and reduced by the outstanding balances of
any bonds, mortgages, notes or other borrowings that are attributable to the
acquisition, construction or improvement of these assets.
2. Restricted net assets — Consists of net assets with constraints placed on their
use either by (a) external groups such as creditors, grantors, contributors or
laws or regulations of other governments; or (b) imposed by law through
constitutional provisions or enabling legislation.
3. Unrestricted net assets — All other net assets that do not meet the definition
of "invested in capital assets, net of related debt" or "restricted".
26
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
Fund Balance Classifications
The Governmental Accounting Standards Board (GASB) released Statement 54 —
"Fund Balance Reporting and Governmental Fund Type Definitions" (GASB 54) on
March 11, 2009, which is effective for the City's fiscal year ending December 31,
2011, This Statement is intended to improve the usefulness of the amounts reported
in fund balance by providing more structured classifications. Under GASB 54, fund
balance is reported under the following five classifications:
1. Nonspendable Fund Balance — consists of amounts that are not in a
spendable form or are required to be maintained intact.
2. Restricted Fund Balance — consists of amounts that can be spent only for the
specific purposes stipulated by external resource providers, constitutionally, or
through enabling legislation. The Restricted for Debt Service and Restricted
for Capital Projects balances reflect amounts that are restricted for debt
service and construction or other capital outlay projects.
3. Committed Fund Balance — consists of amounts that can be used only for the
specific purposes determined by a formal action of the District's highest level
of decision -making authority (the Board of Aldermen) and do not lapse at year
end. The committed fund balance consists of general board reserves.
4. Assigned Fund Balance — consists of amounts intended for a specific purpose
by the Board of Aldermen that has been delegated authority to assign
amounts. This fund balance classification reflects funds assigned for capital
projects.
5. Unassigned Fund Balance — consists of any remaining fund balance that has
not been reported in any other classification.
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.
27
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
Cash, Cash Equivalents and Investments — Continued
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
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, 2011,
management determined that no allowance was necessary.
Governmental funds report unearned revenue in connection with receivables for
revenues that are not considered to be available to liquidate liabilities of the current
period. Governmental funds unearned revenue is reported as follows:
General Fund Property Tax Receivable
Debt Service Fund Property Tax Receivable
$ 888,500
645.000
$1.533.500
28
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
Property Taxes
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.
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 2011 budget was:
General Fund
General Revenue - Temporary
$ 0.4748
0.1795
$ 0,6543
Taxes receivable represent property taxes levied for 2011 and prior years that have
not yet been collected. The assessed value of property located within the City totaled
$185,288,906.
Prepayments
Certain payments to vendors reflect costs applicable to future accounting periods and
are recorded as prepayments in both government -wide and fund financial statements.
These items are reported in the financial statements using the consumption method.
A current asset for the prepaid amounts is recorded at the time of the purchase and the
expenditure/expense is reported in the year which services are consumed. At fiscal
year end, because prepayments are not available to finance future governmental fund
expenditures, the fund balance is considered nonspendable in an amount equal to the
carrying value of the asset on the fund financial statements.
29
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
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.
Unamortized Bond Issuance Costs and Bond Premium and Discount
On government -wide financial statements, issuance costs are deferred and amortized
over the term of the bonds using the straight-line method. Unamortized issuance
costs are recorded as a separate line item on the statement of net assets.
Bond premiums are deferred and amortized over the term of the bonds using the
straight-line method, which approximates the effective interest method. Bond
premiums are presented as an addition to the face amount of the bonds.
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.
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.
30
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
Capital Assets — Continued
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. If the
expenditure is depreciable, it will be written off from the time it is put 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.
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
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.
31
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED
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 as of the bond issuance date. The face
amount of debt issued is reported as a 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.
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.
32
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
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 (Page .l S)
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
$(15,708,625) difference are as follows:
Bonds Payable $ (2,545,000)
Certificates of Participation Payable (5,600,000)
Neighborhood Improvement District Limited General
Obligation Temporary Notes (7,710,000)
Accrued Interest Payable (102,869)
Compensated Absences (42,982)
Issuance Discount 41,720
Cost of Issuance 184,732
Deferred Refunding Difference and Other
Net Adjustment to Reduce Fund Balance 81,265
Other (15.491)
Net Reconciling Item for Long-term
Liabilities (Page 16) $(15.708.625)
Explanation of Certain Differences between the Governmental Fund Statement of
Revenues, Expenditures and Changes in Fund Balances and the Government -Wide
Statement of Activities (Page 18)
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. However,
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:
33
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
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 (Page 18) — Continued
Capital Outlay $ 647,391
Depreciation Expense (234,267)
Other 1.061
Net Reconciling Item for Capital
Outlays/Depreciation (Page 18) $ 414.185
Another element of that reconciliation states that "The issuance of long-term debt
(e.g., bonds, leases) provides current fnancial 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:
Refinancing of General Obligation Bonds
New Bond Indebtedness $(7,710,000)
Debt Retired with Refinancing 7,465.000
Total $ (245.000)
Principal Repayments
General Obligation Bonds $ 285,000
Certificates of Participation 200.000
Total $ 485,000
34
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
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 (Page 18) — 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
$(6,882) difference are as follows:
Compensated Absences $ (4,040)
Amortization of Issuance Costs (12,634)
Amortization of Deferred Refunding Difference (5,417)
Amortization of Bond Discounts (2,782)
Other 17.991
Net Reconciling Item Relating to Certain
Expenses (Page 18) 6 882)
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 conunitments, 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. 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
appropriated balance from one department to another.
35
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 2011
NOTE 3 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY — CONTINUED
Budgets and Budgetary Accounting — Continued
The reported budgetary data represents the final approved budget as adopted by the
Board of Aldermen. There were no amendments to the budget in 2011.
NOTE 4 — DEPOSITS AND INVESTMENTS
As of December 31, 2011, the City had the following deposits and investments:
Reported
Amount /
Fair Value
US Treasuries and Agency Securities $1,462,769
Deposits
Checking Accounts 1,436,517
Money Market Accounts 1 835.890
$4,735,176
Reconciliation of Government -wide Statement of Net Assets to total deposits and
investments:
Cash and Cash Equivalents $3,036,650
Restricted Cash and Investments 1,698.526
Total Deposits and Investments $4.735.176
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 Treasury securities having relatively short maturities. 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).
36
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 4 — DEPOSITS AND INVESTMENTS — CONTINUED
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 funds.
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, 2011, the carrying amount of the
City's deposits was less than pledged securities plus federal deposit insurance. 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,
2011, the City's investments were not exposed to custodial credit risk.
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. The City debt limit does not exceed the State
Constitution limits.
Defeased Debt — Series 2004
In prior years, the City defeased these 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.
37
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2011
NOTE 5 - CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2011, was as follows:
Beginning
Balance
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
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 Capital Assets, Net
Ending
Increases Decreases Balance
S 869,880 $ - $
7,322,898 480,157
3,435,703 20,200
11,628,481 500,357
4,153,323
1,518,575 147,034
44,663
5,708,569 147,034
(554,360) (99,285)
(1,223,733) (133,706)
(6,380) (1,276)
(1,784,473) (234,267)
3,924,096 (87,233)
5 15,552,577 S 413,124 $
- 5 869,880
- 7,803,055
3,455,903
- 12,128,838
- 4,153,323
1,665,609
- 44,663
5 59,975 $
59,975
4,834,548
197,573
2,381,388
4,340
12,000
7,413,509 16,340
S
(2,177,517) (234,364)
(165,567) (3,406)
(684,332) (49,864)
(3,027,416) (287,634)
4,386,093 (271,294)
$ 4,446,068 $ (271,294) $
5,863,595
(653,645)
(1,357,439)
(7,656)
(2,018,740)
3,844,855
515,973,693
$ 59,975
59,975
4,838,888
209,573
2,381,388
- 7,429,849
(2,411,881)
(168,973)
(734,196)
(3,315,050)
4,114,799
$ 4,174,774
38
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2011
NOTE 5 - CAPITAL ASSETS - CONTINUED
Depreciation expense related to the functions/programs of the primary government is as
follows:
Governmental Activities
General Government $ 124,841
Public Safety 42,602
Public Works 34,729
Parks 28,070
Nature Sanctuary 1,383
Channel 2 2,642
Total Depreciation Expense $ 234,267
Business -type Activities - Sewer Operations $ 287,634
Construction in Progress consists of costs incurred to construct infrastructure assets (i.e. -
streets, curbs, retaining wall, storm drainage network, and similar items) for two
development projects: Brink Meyer Road and Brush Creek. Both of these real estate
developments are currently owned in part by financial institutions and developers and are
at various stages of completion.
Road retaining wall. This wall partially collapsed in the Spring of 2009. The City's general
fund incurred expenditures in 2009 and 2011 related to this collapse. As of August 1,
2012, assuming no further legal action (filing of appeals), the City can acknowledge receipt
of settlement monies expected to cover the cost of rebuilding the wall.
39
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2011
NOTE 6 - LONG-TERM OBLIGATIONS
The following is a summary of the debt transactions (bonds, notes and leases) of the City
for the year ended December 31, 2011:
Due
Beginning Ending Within
Balance Additions Reductions Balance One Year
Governmental Activities:
Bonds Payable
General Obligation Bonds $ 2,830,000 $ - $ (285,000) $ 2,545,000 $ 255,000
Certificates of Participation 5,800,000 - (200,000) 5,600,000 215,000
Neighborhood Improvement District
Limited Obligation Temp Notes 7,465,000 7,710,000 (7,465,000) 7,710,000 7,710,000
Less Deferred Amounts
for Issue Discounts (44,502) - 2,782 (41,720) (2,782)
for Deferred Refunding Difference (86,682) 5,417 (81,265) (5,417)
Governmental Activity
Liabilities $ 15,963,816 $ 7,710,000 $ (7,941,801) $ 15,732,015 $ 8,171,801
Business -type Activities:
Bonds payable
Sewer Revenue Bonds - 1998 $ 70,000 $ $ (70,000) $ - $ -
Revenue Bonds (SRF) 2004A 2,005,000 - (135,000) 1,870,000 140,000
Lease Purchase Agreement 188,744 - (9,131) 179,613 9,594
Plus Deferred Amounts
for Issue Premiums 94,133 - (7,025) 87,108 7,241
Business -type Activity Long-term
Liabilities $ 2,357,877 $ - $ (221,156) $ 2,136,721 $ 156,835
$2,545000 in general obligation debt shown above is special assessment debt with
governmental commitment.
For governmental activities, long-term debt is generally liquidated by the general fund.
40
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 2011
NOTE 6 - LONG-TERM OBLIGATIONS - CONTINUED
General Obligation Bonds
The City issues general obligation bonds to provide funds for the acquisition,
construction and renovation of major capital assets.
General obligation bonds currently outstanding consist of the following:
Final Principal Outstanding
Payments/
Interest Original Maturity Refinancing December 31,
Rates Issue Date During 2011 2011
General Obligation Bonds
Governmental Activities
Series 20I 0 2.7% to 325% $ 2,785,000 3/1/2020 $ - 5 2,545,000
$ - 5 2,545,000
On December 23, 2010, the City refinanced the 2001 General Obligation Bonds. The
City issued $2,785,000 of new bonds to retire the old bonds. The interest rates on the
bonds vary from 2% to 3.25%. The annual requirements to amortize governmental
activities general obligation bonds outstanding as of December 31, 2011, are as
follows:
Governmental Activities
Principal Interest
2012 $ 255,000 $ 61,913
2013 265,000 56,713
2014 270,000 51,363
2015 275,000 46,256
2016 - 2020 1,480,000 118,863
$ 2,545,000 $ 335,108
41
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 2011
NOTE 6 — LONG-TERM OBLIGATIONS — CONTINUED
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, 2011, is $5,600,000.
Proceeds from the certificates of participation were used for City Hall construction.
Rush Creek stabilization, land acquisition and other scheduled capital improvements.
The annual requirements to amortize these certificates of participation are as follows:
Principal Interest
2012 $ 215,000 $ 233,105
2013 235,000 224,496
2014 250,000 215,097
2015 270,000 204,890
2016 — 2020 1,650,000 837,584
2021 — 2025 1,950,000 424,178
2026 -- 2027 1.030.000 59.840
$5.600.000 $2.199,190
Neighborhood Improvement District Limited Obligations Temporary Notes
The temporary notes (dated July 2009) were refinanced on July 27, 2011, 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 $3,000,000 at
2% was borrowed on the Brink Meyer Road Project and $4,710,000 at 2% was
borrowed on the Brush Creek Road Project. The principal on both notes is due as
follows:
Notes Due in 2013
Notes Due in 2012
Principal
$3,000,000
4.710,000
$7.710,000
42
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 6 — LONG-TERM OBLIGATIONS — CONTINUED
Sewer Revenue Bonds -1998
The City issued Sewer System Refunding Revenue Bonds Series 1998 in the original
amount of $640,000 with interest rates ranging from 3.75% to 4.65% and with a final
maturity in 2011. The remaining principal on the bonds in the amount of $70,000
was paid in 2011.
Revenue Bonds (SRF) 2004A
The City issued Sewerage System Revenue Bonds Series 2004 in the original amount
of $2,750,000 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, 2011, is $1,870,000.
Bonds maturing on January 1, 2015, and thereafter may be called at the option of the
City 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 (SRF) Sewage System Refunding Revenue Bonds (SRF) 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,
2011, are as follows:
Principal Interest
2012 $ 135,000 $ 89,703
2013 140,000 84,978
2014 140,000 79,938
2015 145,000 72,938
2016-2020 775,000 251,263
2021 — 2025 535.000 53,600
$1.870.000 $ 632.420
43
CITY OF PARICVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 6 — LONG-TERM OBLIGATIONS — CONTINUED
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.
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.
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
2012 $ 9,594 $ 8,862
2013 10,079 8,377
2014 10,590 7,866
2015 11,126 7,330
2016 — 2020 64,670 27,610
2021 — 2025 73.554 9,497
$ 179.613 $ 69.542
44
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 2011
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 Midwest Public Risk of Missouri (MPR), a not -
for -profit corporation consisting of governmental entities incorporated in 1984 to
acquire insurance for its members. MPR 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. MPR 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 MPR.
MPR manages the cash and investment pool, funded by insurance premiums, on
behalf of its members. MPR'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 MPR for which the
City was a participant at any time during such year, and in the event that MPR
determines that an assessment is required in order to provide additional funds for the
obligations of MPR 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 MPR at the time of such
assessment. Management of the City is not aware of any deficit situation in MPR that
would require an accrual of a liability as of December 31, 2011.
MPR's financial statements are presented in its Comprehensive Annual Financial
Report for the year ended December 31, 2011.
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.
45
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 7 — RISK MANAGEMENT — CONTINUED
Investments — Trust Fund
The City 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 trust fund income to be used on various city capital projects.
The balance of the annual net income is to be reinvested in the principal of the fund.
At December 31, 2011, the trust assets had an account balance of $538,486.
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.
NOTE 9 — INTER -FUND TRANSACTIONS
Inter -fund transfers for the year ended December 31, 2011, consisted of the
following:
Transfer from Capital Projects Fund $_(244.574)
Transfer from Transportation Special Revenue Fund (Net) $ (293,426)
Transfer to Debt Service Fund $ 218,000
Transfer to Non -Major Governmental Funds $ 115,131
Transfer to General Fund (Net) $ 204,869
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.
46
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 2011
NOTE 10 — PENSION PLAN
Plan Description
The City participates 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 401(a) and it is tax exempt.
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 by calling 1-800-447-4334.
Funding Status
Full-time employees of the City contribute 4% of their gross pay to the pension plan.
The 2011 statutorily required employer contribution rates are 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 (APC) and Net Pension Obligation (NPO)
The subdivision's annual pension cost and net pension obligation for the current year
were as follows:
Annual Required Contribution
Interest on Net Pension Obligation
Adjustment to Annual Required Contribution
Annual Pension Cost
Actual Contributions
Increase (Decrease) in NPO
NPO Beginning of Year
NPO End of Year
$ 54,957
54,957
54-957
$
47
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 10 — PENSION PLAN — CONTINUED
The annual required contribution (ARC) was determined as part of the initial 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 7.25%
per year, compounded annually (b) projected salary increases of 3.5% per year,
compounded annually, attributable to inflation (c) additional projected salary
increases ranging from 0.0% to 6.0% per year, depending on age and division,
attributable to seniority/merit, (d) pre -retirement mortality based on the 75% of the
RP -2000 Combined Healthy table set back 0 years for men and 0 years for women,
and (e) post -retirement mortality based on 105% of the 1994 Group Annuity
Mortality table set back 0 years for men and 0 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 a closed basis. The amortization period as of February 28, 2011 the initial
actuarial valuation was 27 years for the General division and 27 years for the Police
division.
One -Year Trend Information
Year
Ended
June 30
2010
2011
(a)
Actuarial Actuarial
Valuation Value
Date of Assets
02-28-10 $ 70,422
02-28-11 $186,859
Annual
Pension
Cost (APC)
$ 52,274
$ 54,957
Percentage
of APC
Contributed
100.0%
100.0%
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress
(b)
Actuarial (b -a)
Accrued Un-funded (alb)
Liability Liability Funded
Entry Age (UAAL) Ratio
$ 274,694 $ 204,272 26%
$ 415,164 $ 228,205 45%
Net
Pension
Obligation
$ -
(c)
Annual
Covered
Payroll
$1,331,420
$1,335,830
[(b-a)/c]
UAAL as a
Percentage of
Covered
Payroll
15%
17%
The above assets and actuarial accrued liability do not include assets and present
value of benefits associated with the Benefit Reserve Fund and the Casualty Reserve
Fund. The actuarial assumptions were changed in conjunction with the February 28,
2011, annual actuarial valuations. A three-year comparison of trend information and
the three year required supplementary information have not been provided since the
City has not been in LAGERS for two full years. For a complete description of the
actuarial assumptions used in the annual valuations, please contact the LAGERS
office in Jefferson City.
48
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
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
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.
49
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 2011
NOTE 11— DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES —
CONTINUED
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, 2011.
2011
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)
Government Securities:
Trust Fund $332,060 $332,060
Construction Escrow $486,717 $486,717
NOTE 12 — SUBSEQUENT EVENT - REFINANCING
Tennporary Notes — Brush Creek Drainage NID Project
On July 26, 2012, the City refinanced the Brush Creek temporary notes of $4,471,000
into new one-year notes totaling $4,855,000.
NOTE 13 — UPCOMING ACCOUNTING PRONOUNCEMENTS
In November 2010, the GASB issued Statement No. 60, Accounting and Financial
Reporting for Service Concession Arrangements. This statement addresses financial
reporting related to service concession arrangements which are a type of public -
private or public -public partnership. An SCA is an arrangement between a transferor
(a government) and an operator (whether a government or nongovernment) in which
the transferor conveys to an operator the right and relation obligation to provide
services through the use of infrastructure or another public asset in exchange for
significant consideration and the operator collects and is compensated by fees from
third parties. The statement will be effective for the City's 2013 fiscal year.
50
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS — CONTINUED
DECEMBER 31, 2011
NOTE 13 — UPCOMING ACCOUNTING PRONOUNCEMENTS — CONTINUED
In December 2010, the GASB issued Statement No. 62, Codification of Accounting
and Financial Reporting Guidance Contained in Pre -November 30, 1989 FASB and
AICPA Pronouncements. This statement incorporates into GASB literature certain
accounting and financial reporting guidance issued on or before November 30, 1989,
that is included in FASB Statements and Interpretations, APB Opinions, and
Accounting Research Bulletins of the AICPA Committee on Accounting Procedure.
The statement will be effective for the City's 2013 fiscal year.
In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of Resources, and Net Position. The
statement will be effective for the City's 2013 fiscal year. The statement incorporates
deferred outflows of resources and deferred inflows of resources, as defined by
GASB Concepts Statement No. 4, into the definitions of the required components of
the residual measure of net position, formerly net assets. This statement also provides
a new statement of net position format to report all assets, deferred outflows of
resources, liabilities, deferred inflows of resources, and net position. Once
implemented, this statement will affect the format and reporting of the balance sheet
at the government -wide level and also at the fund level.
51
CITY OF PARKVILLE, MISSOURI
REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2011
Information needed to support the use of the Modified Approach for Infrastructure Reporting:
Street and Parking Lot 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)
9 Indicates nearly total replacement is required (limited salvage of street or parking lot area
is possible)
10 Indicates total replacement is required.
52
CITY OF PARKVILLE, MISSOURI
REQUIRED SUPPLEMENTARY INFORMATION — CONTINUED
DECEMBER 31, 2011
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
2010 80 94
2011 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 $349,000 annually. A total of $171,177 was spent
out of the Capital Improvements Fund. The major expenditures were for an asphalt overlay
($70,917), the curb and sidewalk program ($80,000), and the Highway 9 bridge. 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
2010 $ 234,000 $ 190,172
2011 $ 205,000 $ 171,177
53
OTHER SUPPLEMENTARY INFORMATION
54
CITY OF PARK VILLE, MISSOU RI
COMBINING BALANCE SHEET
N ONM AJ OR GOVERNMENTAL FU NDS
DECEMBER 31, 2011
Special Revenue
Reserve Municipal Equip Guest Room Nature Park Parkland Court
Funds Reserve Tax Sanctuary D onations Dedication Recoupment Fees
Assets
Cash and Cash Equivalents
Restricted Cash and Investments
Other Receivables
Total Assets
Liabilities
Accou nts Payable
Fund Balances
Unreserved. Reported in:
Special Revenue Funds
Permanent Fund
Total Fund Balances
$ 622 .788 $ 84,541 $ (2,691) $ 34.533 $ 69 .452 $ 43.361 $ 30,715
$ 622.788 $ 84.541 $ (2,691) $ 34,533 $ 69.452 $ 43.361 $
$ - $ $ - $ $ $ S
622.788 84,541 (2.691) 34.533 69,452 43,361
622. 788 84.541 (2 .691) 34.533 69.452 43,361
30,715
30,715
30,715
Total Liabilities and Fund Balances $ 622, 788 $ 84.541 $ (2,691) $ 34.533 $ 69,452 $ 43,361 $ 30.715
CITY OF PARKVILLE, MISS OURI
C OMBINI NG B ALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2011
Total
Special Revenue Permanent Nonmajor
P olice Training TIE Market Place Fewson Governmental
Fees - LET Development Development Other Total Project Funds
Assets
Cash and Cash Equivalents $ 36.575 $ 12.417 $ 12.208 $ 106 944.005 $ - $ 944,005
Restricted Cash and Investments - - - - - 538,488 538.488
Other Receivables - - - - -
Total Assets $ 36,575 $ 12,417 $ 12.208 $ 106 $ 944.005 $ 538,488 $ 1,482,493
Liabilities
Accounts Payable S S S - $ - $ S $
Fund Balances
Unreserved. Reported in
Special Revenue Funds 36,575 12. 417 13,208 106 944,005 - 944.005
Permanent Fund - - - - - 538,488 538.488
To tal Fu nd Balances 36.575 12.417 12,208 106 944,005 538,488 L482.493
Total Liabilities and Fund Balances $ 36.575 $ 12.417 $ 12.208 $ 106 $ 944.005 $ 538.488 $ 1.482,493
CITY OF PARKVILLE, MISSO URI
COMBINING STATEMENT OF REVENUES, E XPENDITURES AND CHA NGES IN FU ND BALANCES
NO NMAJO R GOVER NME NTAL FUNDS
FOR THE YE AR E NDE D DECEMBER 31, 2011
Speci al Reve nue
Reserve Municipal Equip Guest Room Nature Park Parkland Court
Funds Reserve Ta x Sa nctuary Donations Dedication Recoupment Fees
Revenues
Parkland Dedication $ - $ - $ - $ - - $ - $
Investment Earnings - - -
T1F Revenue - - - - - -
Miscellaneous - 4.014 7 ,454 310 - 2.701
Total Revenues - 4,014 7.454 310 2.701
Expenditures
Current
General Government - - 20,000 6.294 - -
Debt Service
Principle - - - -
Interest - - - - -
T1F Expense - - - - - -
Capital Outlay - - - - 39
Total Expenditures - - 20,000 6.294 39
Excess (Deficiency) of Revenues
Over(Under)Ex penditures - - (15.986) 1,160 310 (39) 2,701
Other Financing Sources (Uses)
Other - -
Transfers In (Out) 91. 131 24,000
Capital Leases - -
Total Other Financing Sources 91,131 24,000 - - -
Net Change in Fund Balances 91.131 24.000 (15,986) 1.160 310 (39) 2,701
Fund Balances, Beginning of Year 531,657 60,541 13,295 33.373 69.142 43,400 28,014
Fund Balances, End of Y ear $ 622.788 $ 84.541 $ (2,691) $ 34,533 $ 69.452 $ 43,361 $ 30.715
CITY OF PA RK VI LLE, MISSOU RI
C OMBINI NG STATEMENT OF REVENUES, E XPENDITURES AND CHANGES IN FUN D BALAN CES
NO NMAJOR GO VE RNMENT AL FUNDS
FOR THE YEAR E NDE D DECEM BER 31, 2011
Total
Special Revenue Permanent Nonmajor
Police Training TIF Market Place Fewson Governmental
Fees - LET Development Development Other Total Project Funds
Revenues
Parkland Dedication $ - $ - $ - $ - $ - $ - $ -
Investment Earnings - 36 36 31.378 31.414
TIF Revenue - 458,121 - 458,121 - 458.121
M iscellaneous 4,315 - - - 18,794 18.794
To tal Revenues 4.315 458 ,121 36 - 476.951 31.378 508,329
Expenditures
Current
General Government 197 - 26,491 22,104 48,595
Debt Service
Prin ciple - -
Interest - - - - - -
TIF Expense - 458. 028 458,028 458.028
Capital Outlay - - - - 39 39
Total Expenditures 197 458.028 484.558 22,104 506.662
Excess (Deficiency) of Revenues
Over (Under) Ex penditures
Other Financing Sources (Uses)
Other
Transfers In (Out)
Capital Leases
Total Other Financin g Sources
Net Change in Fund Balances
Fund Balances. Beginning of Year
Fund Balances, End of Year
4.118 93 36 - (7.607) 9.274 1.667
- 115.131 - 115.131
115.131 - 115,131
4,118 93 36 107.524 9.274 116.798
32.457 12,324 12.172 106 836.481 529,214 1,365 ,695
36,575 $ 12.417 $ 12,208 $ 106 $ 944,005 $ 538.488 $ 1.482 .493
58