HomeMy Public PortalAbout2010 AuditMember American Institute of
Certified Public Accountants
BRUCE D. CULLEY, C.P.A., P.C.
3000 BROOKTREE LANE, SUITE 210
GLADSTONE, MISSOURI 64119
816-453-1040 FAX: 816-453-0721
bruceculley@sbcglobal.net
CITY OF PARKVILLE, MISSOURI
AUDITED FINANCIAL STATEMENTS
Member Missouri Society of
Certified Public Accountants
FOR THE YEAR ENDED DECEMBER 31, 2010
CITY OF PARKVILLE, MISSOURI
TABLE OF CONTENTS
Independent Auditor's Report ..................................................................................................... I - 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 ................... 16
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities ............................................................................... 17
Statement of Revenues, Expenditures and Changes in Fund
Balances -Budget and Actual -General Fund ................................................. 18
Proprietary Funds
Statement of Net Assets ........................................................................................... 19
Statement of Revenues, Expenditures and Changes in Fund Balances ................... 20
Statement of Cash Flows ......................................................................................... 21 -22
Notes to Basic Financial Statements ..................................................................................... 23 -49
Required Supplementary Information ......................................................................................... 50-51
Other Supplementary Information
Combining and Individual Fund Statement Schedules
Combining Balance Sheet -Nonmajor Governmental Funds ....................................... 53 -54
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances -Nonmajor Governmental Funds ............................................................ 55 -56
BRUCE D. CULLEY C.P.A., P.C.
3000 Brooktree Lane, Suite 210
Gladstone, MO. 64119
816-453-1040 Fax: 816-453-0721
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Board of Aldermen
City of Parkville, Missouri
I have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the
City of Parkville, Missouri (the City) as of and for the year ended December 31, 2010, which
collectively comprise the City's basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the City's management. Our responsibility
is to express opinions on these financial statements based on our audit.
I conducted my audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that I plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. I believe that
my audit provides a reasonable basis for my opinions.
In my opinion, the financial statements referred to above present fairly, in all material
respects, the respective financial position of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of
Parkville, Missouri, as of December 31, 2010, and the respective changes in financial position
and cash flows, where applicable, thereof and the respective budgetary comparison for the
general fund for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
The Management's Discussion and Analysis and the Required Supplementary Information on
pages 3 through 12 and 52 through 53, respectively, are not a required part of the basic
financial statements but are supplementary information required by accounting principles
generally accepted in the United States of America. I have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of
measurement and presentation of the required supplementary information. However, I did not
audit the information and express no opinion on it.
1
My audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying introductory
section and supplementary section are presented for purposes of additional analysis and are
not a required part of the basic financial statements. The supplementary information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and,
in my opinion, is fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
Gladstone, Missouri
November 7, 2011
/
2
r .I
Bruce Culley
Certified Public Accoillrt:lllTI~
CITY OF PARJ(VILLE, MISSOURI
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Parkville, we offer readers of the City of Parkville's financial
statements this narrative overview and analysis of the financial activities of the City of
Parkville for the fiscal year ended December 31, 2010. We encourage readers to consider the
information presented here in conjunction with additional information that we have furnished
in our letter of transmittal.
Financial Highlights
• The assets of the City exceeded its liabilities at the close of the most recent fiscal year
by $6,300,000 (net assets).
• The government's total net assets increased by $993,504. The net assets increase is
found in governmental activities where there is a positive $719, 797 net change, and a
positive $273, 707 change in net assets reported in business-type activities.
• As of the close of the current fiscal year, the City's governmental funds reported
combined ending fund balances of $3,765,526, an increase of $403,884 in
comparison with the prior year.
• At the end of the current fiscal year, fund balance for the general fund was $602,071,
or approximately 19% of total 2010 general fund expenditures.
• General fund revenues were $187,915 over budgeted revenue for 2010.
• General fund expenses were $115,531 less than budgeted for 2010.
• The City's total debt decreased by $552,733, (2.9%) during the fiscal year.
• The City expensed $537,549 to improve the sewer plant. A major grant for $201,111
was received to fund a portion of the improvements.
• The City refinanced its general obligation bonds during the year.
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 financial statements comprise three components;
government-wide financial statements (pages 13 -14), fund financial statements (pages 15 -
23), and notes to the financial statements beginning on page 24. This report also contains
other supplementary information in addition to the basic financial statements themselves.
3
Government-wide Financial Statements. The government-wide financial statements (pages
13 -14) are designed to provide readers with a broad overview of the City's finances, in a
manner similar to a private-sector business.
The statement of net assets (page 13) 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 14) 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 fimd 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.
Govenz111e11tal Funds. Governmental fimds 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 ouiflows 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 governmentalfimds
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
4
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 fimds 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
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 governmental fund financial statements can be found on pages 14 -18 of this
report.
Proprietary Funds. The City maintains one type of proprietary fund. Enterprise fimds 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 19 -22 of this report.
Notes to the Financial Statements. The notes provide additional information that is
essential to a full understanding of the data provided in the government-wide and fund
financial statements. The notes to the financial statements can be found on pages 23 -49 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
5
eligible assets by location, type and physical parameters and performs replicable condition
assessments, triennially. Results are summarized using a measurement scale, seen on pages
50-51 of this report. Estimated amounts needed to maintain and preserve these assets at the
City's established service level are budgeted for annually.
The combining and individual fund statements referred to earlier in connection with non
major or governmental funds are presented on pages 53 -56 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 $6,300,000 at the
close of the most recent fiscal year.
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.
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CITY OF PARKVILLE
NET ASSETS SUMMARY
DECEMBER 31,2010 AND 2009
Governmenull Activities Business-t):'.2e Activilies Total
2010 2009 2010 2009 2010 2009
Current and
Other Assets $ 5,620,015 $ 5,117,535 $ 903,619 $ 1,074,549 $ 6,523,634 $ 6,192,084
Capital Assets 15,552,076 15,587,951 4,446,068 4,216,163 19,998,144 19,804,114
Total Assets 21,172,091 20,705,486 5,349,687 5,290,712 26,521,778 25,996,198
Bonds and Notes
Outstanding 15,963,816 16,305,617 2,357,877 2,568,809 18,321,693 18,874,426
Other Liabilities 1,824,986 1,736,376 75,100 78,900 1,900,086 1,815,276
Total Liabilities 17,788,802 18,041,993 2,432,977 2,647,709 20,221,779 20,689,702
Net Assets
Invested in Capital Asset• 2,088,190 1,436,591 2,088,190 1,436,591
Restricted 2,292,713 1,776,401 28,338 2,321,051 1,776,401
Unrestricted 1,090,577 887,092 800,182 1,206,412 1,890,759 2,093,504
Total Net Assets $ 3,383,290 $ 2,663,493 $ 2,916,710 $ 2,643,003 $ 6,300,000 $ 5,306,496
7
CITY OF PARKVILLE
STATEMENT OF ACTIVITIES SUMMARY
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
Governmental Activities BusinesS-!l'.Ee Activities Total
2010 2009 2010 2009 2010 2009
Program Revenues
Charges for Services $ 399,215 $ 302,420 $ 1,005,579 $ 970,397 $ 1,404,794 $ 1,272,817
Operating Grants and
Contributions 36,268 27,259 36,268 27,259
Capital Grants and
Contributions 330,722 437,074 201,111 531,833 437,074
General Revenues
Property Taxes 1,329,000 1,152,712 1,329,000 1,152,712
Franchise Taxes 829,936 750,218 829,936 750,218
Sales Taxes 1,459,937 1,400,775 1,459,937 1,400,775
Investment Earnings 72,849 61,868 72,849 61,868
Intergovernmental 40,675 38,860 40,675 38,860
Se\ver Admin Fee 77,496 77,496
TIF 450,768 434,153 450,768 434,153
Other 177,003 165,317 177,003 165,317
Total Revenues 5,203,869 4,770,656 1,206,690 970,397 6,410,559 5,741,053
Expenses
General Government 807,441 825,578 807,441 825,578
Public Safety -Police 960,098 987,369 960,098 987,369
Public Safety -Court 138,436 150,736 138,436 150,736
Public Works 694,216 1,038,797 694,216 1,038,797
Culture and Recreation 320,244 309,750 320,244 309,750
Economic Development 279,239 293,343 279,239 293,343
Depreciation 224,206 268,174 224,206 268,174
TIF 451,225 434,850 451,225 434,850
Interest and Fees 438,103 422,631 438,103 422,631
Other Capital Expenditures 170,864 170,864
Sewer 932,983 939,179 932,983 939,179
Total Expenses 4,484,072 4,731,228 932,983 939,179 5,417,055 5,670,407
Change in Net Assets 719,797 39,428 273,707 31,218 993,504 70,646
Net Assets,
Beginning of Year 2,663,493 2,624,065 2,643,003 2,611,785 5,306,496 5,235,850
Net Assets, End of Year $ 3,383,290 $ 2,663,493 $ 2,916,710 $ 2,643,003 $ 6,300,000 $ 5,306,496
8
Governmental Activities. Governmental activities increased the City's net assets by
$719,797 and business-type activities increased by $273,707. Key elements of this increase
are as follows:
• The increase in all tax categories was in excess of $315,000, including property taxes,
franchise taxes and sales taxes.
• Major departmental expenses increased by $47,643 which represented only 1.5% of
the City's departmental expenses.
• During 2009 the City expended $341,614 on public works projects for the Brink
Meyer retaining wall repairs and bridge construction.
Business-type Activities. The change in net assets for business-type activities increased the
City's net assets by $273,707. $201,111 of this increase 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 $2,916,710.
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.
Go11em111e11tal fimds. The focus of the City's governmental jimds 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, 765,526. Of that,
$35,482 is reserved or designated to indicate that it is not available for new spending because
it has already been committed to prepaid items in the general fund.
The general fund is the chief operating fund of the City. At the end of the current fiscal year
the general fund balance was $602,071. As a measure of the general fund's liquidity, it may
be useful to compare both unreserved fund balance to total fund expenditures. Unreserved,
undesignated fund balance represents 18% of total general fund expenditures.
The City's fund balance of the general fund increased by $322,682 during the current fiscal
year. The City's 2010 revenues and transfers in from other funds totaled $3,802,216 which is
$343,986 higher than 2009. This increase largely relates to the increases in property,
franchise and sales taxes. The City's 2010 expenses and transfers out to other funds totaled
$3,469,534, which is $309,483 lower than the prior year (which included $341,614 m
expenditures for a retaining wall and bridge construction).
9
The debt service fund has a total fund balance of $823,675, all of which is reserved for the
payment of debt service. There was a net increase in the debt service fund balance of $938.
Expenses in the debt service fund exceeded revenue by $287,260. This was offset by
transfers to the debt service fund of $220,992. The city refinanced its general obligation
bonds during the year.
The capital projects fund has a total fund balance of $975,494. There were considerable
expenditures on capital projects during the year including Brink Meyer Road and Brush
Creek. The funds are to be used to finish the projects.
Proprietary F1111ds. 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 $2,916,710. The sewer fund had revenues exceeding
expenditures by $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 $187,915 more than projected. Property and franchise tax showed an
increase over budget while sales tax was only slightly less than budget.
General fund expenses were $115,531 less than projected.
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, 2010, totals $19,998,144. Approximately 60% of the new
capital expenditures were for sewer plant improvements.
City of Parkville, Missouri
Capital Assets (Net of Depreciation)
Governmental Business-type
Activities activities
2010 2010
Buildings and Improvements $ 3,598,963 $ 2,657,031
Machinery and Equipment 286,850 32,006
Infrastructure 3,473,485 1,697,056
Land 869,880 59,975
Construction in Process 7,322,898
Total $15,552,016 $ Ol:,446,068
Total
2010
$ 6,255,994
318,856
5,170,541
929,855
7,322,898
$19,998, 144
Additional information on the City's capital assets can be found in Note 5 of this report.
10
Long-Term Debt. At the end of the current fiscal year, the City had total debt outstanding of
$18,321,693.
General Obligation Bonds
Certificates of Participation
NID Limited Obligation
City of Parkville, Missouri
Outstanding Debt
Governmental Activities Business-type Activities
2010 2009 2010 2009
$ 2,830,000 $ 2,990,000 $ -$
5,800,000 5,990,000
Temporary Notes 7,465,000 7,465,000
Sewer Revenue Bonds -1998
Revenue Bonds (SRF) 2004A
Capital Leases/
Lease-Purchase
Deferred Amounts
Total
70,000 135,000
2,005,000 2,135,000
188,744 197,435
(131.184) (139,383) 94 133 101 374
ill,963 816 lli.305.617 $2 357.877 $_2,568 809
Total
2010
$ 2,830,000
5,800,000
7,465,000
70,000
2,005,000
188,744
(37.051)
$18 321.693
2009
$ 2,990,000
5,990,000
7,465,000
135,000
2,135,000
197,435
(38,009)
ill 874 426
The City's total lease note and bond debt decreased by $552,733 during the current fiscal
year.
Economic Factors and Next Year's Budgets and Rates
For 2011, the City of Parkville is expecting Property Tax revenue to increase about 1.5%
over 2010. This continues a pattern of fairly stable real estate values coupled with the very
slow pace of new residential construction since 2008. Building permits are anticipated to
hold steady or decline slightly, fueled by home repairs and remodeling projects along with a
small number of new construction starts. Franchise taxes are expected to continue to grow
over 2010 revenues by about 5%, with the City benefitting from increased customer demand
for telecommunication products and services. With vacancy rates remaining low for housing
in Parkville, utility franchise fees are expected 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 rebound to about 6% above 2010 levels,
finally recovering to and exceeding the levels of the 2006 -2008 periods. Over all, the City
of Parkville is expecting modest, but positive growth in revenue for 2011. Revenue receipts
for the first 6 months of 2011 give confidence that the budgetary goals for 2011 will be met
or exceeded. City expenditures are well within levels anticipated in the 2011 budget.
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, 2010
Governmental Business-Type
Activities Activities Total
Assets
Cash and Cash Equivalents $ 1,823,717 $ 631,667 $ 2,455,384
Restricted Cash and Investments 1,872,064 28,338 1,900,402
Receivables, Net of Allowance for Uncollectibles
Taxes 1,672, 134 1,672,134
Accounts 19,252 135,087 154,339
Deferred Charges 197,366 107,807 305,173
Prepaid Items 35,482 720 36,202
Capital Assets not being Depreciated
Land 869,880 59,975 929,855
Construction in Progress 7,322,898 7,322,898
Infrastructure 3,435,203 3,435,203
Capital Assets, Net of Accumulated Depreciation
Buildings and Improvements 3,598,963 2,657,031 6,255,994
Machinery and Equipment 286,850 32,006 318,856
Infrastructure 38,282 1,697,056 I, 735,338
Total Assets 21,172,091 5,349,687 26,521,778
Liabilities
Accounts Payable and Other Current Liabilities 161,249 59,518 220,767
Accrued Interest Payable 128,920 2,096 131,016
Customer Deposits 13,485 13,485
Unearned Revenue 1,495,875 1,495,875
Other 38,942 38,942
Bonds and Notes
Due Within One Year 476,801 214,131 690,932
Due in More Than One Year 15,487,015 2,143,747 17,630,762
Total Liabilities 17, 788,802 2,432,977 20,221,779
Net Assets
Invested in Capital Assets, Net of
Capital Related Debt 2,088,190 2,088,190
Restricted for
Debt Service 823,675 28,338 852,013
Capital Projects 939,824 939,824
Permanent Fund 529,214 529,214
Unrestricted 1,090,577 800,182 1,890,759
Total Net Assets $ 3,383,290 $ 2,916,710 $ 6,300,000
The accompanying notes are an integral part of the financial statements.
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Functions/Programs
Primary government:
Governmental Activities
General Government
Public Safety -Police
Public Safety -Court
Public Works
Culture and Recreation
Economic Development
Depreciation
TIF
Interest and Fees
Other Capital Expendihires
Total Governmental Activities
Business-type Activities
Se\ver
Total Business-type Activities
Total Primary Government
CITY OF PARKVILLE, MISSOURI
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2010
Net (Expense) Revenue and
Program Revenues Changes in Net Assets
Operating Capital Prima!):'. Government
Charges for Grants and Grants and Governmental Business-type
Expenses Services Contributions Contributions Activities Activities ---
$ 807,441 $ 161,227 s 36,268 $ 330,722 $ (279,224) $ $
960,098 237,988 (722,110)
138,436 (138,436)
694,216 (694,216)
320,244 (320,244)
279,239 (279,239)
224,206 (224,206)
451,225 (451,225)
438,103 (438,103)
170,864 (170,864)
4,484,072 399,215 36,268 330,722 (3,717,867)
932 983 1.005 579 201.111 -273,707
932,983 1,005,579 201,111 273,707
$ 5,417,055 $ 1,404,794 $ 36,268 s 531,833 (3,717,867) 273,707
General Revenues
Property Tax 1,329,000
Franchise Tax 829,936
Sales Tax 1,459,937
Unrestricted Investment Earnings 72,849
Intergovernmental 40,675
Se\ver Admin Fees 77,496
TIF 450,768
Parkland Dedication Contribution 60,000
Other 117,003
Total General Revenues 4,437,664 -
Change in Net Assets 719,797 273,707
Net Assets, Beginning of the Year 2,663,493 2,643,003
Net Assets, End of Year s 3,383,290 $ 2,916,710 $
The accompanying notes are an integral part of the financial statements.
13
Total
(279,224)
(722,110)
(138,436)
(694,216)
(320,244)
(279,239)
(224,206)
(451,225)
(438,103)
(170,864)
(3,717,867)
273,707
273,707
(3,444, 160)
1,329,000
829,936
1,459,937
72,849
40,675
77,496
450,768
60,000
117,003
4,437,664
993,504
5,306,496
6,300,000
CITY OF PARKVILLE, MISSOURI
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2010
Transportntion Capital Debt Other
General Special Revenue Projects Service Governmental
Fund Fund Fund Fund Funds
Assets
Cash and Cash Equivalents $ 470,357 $ 35,011 $240,966 $ 214,737 $ 862,646
Restricted Cash Investments 698,858 643,992 529,214
Receivables (Net of Allowance
for Uncollectibles)
Taxes 1,069,963 602,171
Accounts Receivable 19,252
Prepaid Items 34,823 659
Total Assets $ 1,594,395 $ 35,670 $939,824 $ 1,460,900 $ 1,391,860
Liabilities and Fund Balance
Liabilities
Accounts Payable $ 133,624 $ 1,410 $ $ 50 $ 26,165
Unearned Revenue 858,700 637,175
Total Liabilities 992,324 1,410 637,225 26,165
Fund Balances
Reserved For
Debt Service 823,675
Permanent Fund 529,214
Unreserved, Reported In
General Fund 602,071
Special Revenue Funds 34,260 836,481
Capital Projects Funds 939,824
Total Fund Balances 602,071 34,260 939,824 823,675 1,365,695
Total Liabilities and
Fund Balance $1,594,395 $ 35,670 $939,824 $ 1,460,900 $ 1,391,860
The accompanying notes are an integral part of the financial statements.
14
Total
Government
Funds
$ 1,823,717
1,872,064
1,672,134
19,252
35,482
$ 5,422,649
$ 161,249
1,495,875
1,657,124
823,675
529,214
602,071
870,741
939,824
3,765,525
$ 5,422,649
CITY OF PARKVILLE, MISSOURI
RECONCILIATION OF THE BALANCE SHEET OF THE GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
DECEMBER31, 2010
Total Fund Balance in Governmental Fund Balance Sheet
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)
Net Assets of Governmental Activities
$ 3,765,526
15,552,076
(15,934,312)
$ 3,383,290
The accompanying notes are an integral part of the financial statements.
15
CITY OF PARKVILLE, MISSOUIU
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2010
Transportation Capital Debt Other Total
General Special Revenue Projects Service Govcmmentnl Government
Fund Fund Fund Fund Funds Funds
Revenues
Taxes $ 2,641,445 $ 734,165 $ $ 243,263 $ $ 3,618,873
Licenses nnd Pcnnits 139,142 139,142
Intergovernmentnl 40,675 40,675
Charges for Seivices 22,085 22,085
Fines and Fees 237,988 237,988
Special Assessments 330,722 330,722
Investment Earnings 28,893 5,600 798 11,407 26,151 72,849
Grants 36,268 36,268
TIF Revenue 450,768 450,768
Se\ver Service Fees 77,496 77,496
Parkland Dedication Donation 60,000 60,000
MisceU nneous 74,669 1,473 18,552 94,694
Totnl Revenues 3,298,661 739,765 2,271 585,392 555,471 5,181,560
Expenditures
Current
GenernJ Government 782,943 37,561 820,504
Public Safety -Police 996,341 996,341
Public Safety -Court 138,436 138,436
Public Works 962,782 962,782
Economic Development 330,917 330,917
Debt Service
Principal 415,000 415,000
Interest 454,059 454,059
Other 3,593 3,593
TIF Expense 451,224 451,224
Capital Outlay 190,505 6,131 63,394 260.030
Total Expenditures 3,211,419 190,505 6,131 872,652 552,179 4.832,886
Excess (Deficiency) of Revenues
Over (Under) Expenditures 87,242 549,260 (3,860) (287,260) 3,292 348,674
Other Financing Sources (Uses)
Bond Proceeds 2,787,206 2,787,206
Bond Retirement from Refinancing (2,720,000) (2, 720,000)
Transfers In 503,555 220,992 48,567 773,114
Transfers (Out) (258,I 15) (515,000) (773,115)
Other (Uses) [9,939) [2,057) (11,996)
Total Other Financing Sources 245,440 [515,000) [9,939) 288.198 46,510 55,209
Ncl Changes in Fund Balances
Afier Other Financing Sources 332,682 34,260 (13,799) 938 49,802 403,883
Fund Balance, Beginning ofYenr 269,389 953,623 822,737 1,315.893 3,361,642
Fund Balnnce, End of Year $ 602,071 $ 34,260 $939,824 $ 823,675 $ 1,365,695 $ 3,765,525
Tbe accompanying notes are an integral part of the financial statements.
16
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, 2010
Amounts reported for governmental activities in the statement of activities are
different because:
Net Change in Fund Balances -Total Government Funds
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. This
is the amount depreciation expense exceeds capital asset additions.
The net effect of various miscellaneous transactions involving capital
assets (e.g., sales, trade-ins and donations) is to increase net assets.
The issuance of long-term debt (e.g., bonds, leases) provides current
financial resources to governmental funds, while the repayment of the
principaloflong-term debt consumes the current financialresources 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
$ 403,884
(35,374)
22,309
415,000
(67,206)
(18,816)
$ 719,797
The accompanying notes are an integral part of the financial statements.
17
CITY OF PARKVILLE, MISSOURI
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2010
Original Variance with
and Final Final Budget -
Budgeted Actual Positive
Amounts Amounts (Negative)
Revenues
Taxes
Property $ 966,000 $ 973,235 $ 7,235
Franchise 735,000 829,936 94,936
Sales 840,700 838,274 (2,426)
Intergovernmental 40,000 40,675 675
Licenses and Permits I 13,300 139,142 25,842
Charges for Services 25,000 22,085 (2,915)
Fines and Fees 199,200 237,988 38,788
Investment Earnings 24,000 28,893 4,893
Grants 52,500 36,268 (16,232)
Sewer Service Fees 77,496 77,496
Miscellaneous 37,550 74,669 37,J 19
Total Revenues 3,110,746 3,298,661 187,915
Expenditures
Current:
General Government 804,500 782,943 21,557
Public Safety -Police 1,034,400 996,341 38,059
Public Safety -Court 138,700 138,436 264
Public Works I 10,300 I 05,988 4,312
Community Development 259,800 250,145 9,655
Street 586,100 588,228 (2,128)
Parks 325,450 268,566 56,884
Nature Sanctuary 34,400 51,678 (17,278)
Channel 2/Website 33,300 29,094 4,206
Total Expenditures 3,326,950 3,211,419 115,531
Excess of Revenues over Expenditures $ (216,204) $ 87,242 $ 303,446
The accompanying notes are an integral part of the financial statements.
18
Assets
Current Assets
CITY OF PARKVILLE, MISSOURI
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
DECEMBER 31, 2010
Cash and Cush Equivalents
Restricted Cash and Investments
Accounts Receivable
Prepaid Items
Total Current Assets
Noncurrent Assets
Deferred Charges
Capital Assets
Land
Buildings and Improvements
Machinery and Equipment
Construction in Progress
Infrastructure
Less Accumulated Depreciation
Total Capital Assets
Liabilities
Total Noncurrent Assets
Total Assets
Current Liabilities
Accounts Payable and Other Current Liabilities
Accrued Interest Payable
Customer Deposits Payable
Current Portion of Revenue Bonds Payable
Current Portion of Leases Payable
Total Current Liabilities
Noncurrent Liabilities
Revenue Bonds Payable, Net
Lease Payable
Total Noncurrcnt Liabilities
Total Liabilities
Net Assets
Restricted
Debt Service
Invested in Capital Assets, Net of Related Debt
Unrestricted
Total Net Assets
$
$
Major Fund
Se\ver
Service
631,667
28,338
135,087
720
795,812
107,807
59,975
5,273,545
197,573
136,854
1,843,839
(3,065,718)
4,446,068
4,553,875
5,349,687
59,518
2,096
13,485
205,000
9,131
289,230
1,964,133
179,614
2,143,747
2,432,977
28,338
2,088,190
800,182
2,916,710
The accompanying notes are an integral part of the financial statements.
19
CITY OF PARKVILLE, MISSOURI
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2010
Operating Revenues
Charges for Sales and Services
Sewer Charges
Total Operating Revenues
Operating Expenses
Cost of Sales and Services
Depreciation
Total Operating Expenses
Operating Income
Nonoperating Revenues (Expenses)
Interest Revenue
Interest Expense
Grant
Total Net Non operating Revenues
Change in Net Assets
Total Net Assets, Beginning of Year
Total Net Assets, End of Year
Major Fund
Sewer
Service
$ 995,158
995,158
628,980
272,508
901,488
93,670
10,421
(31,495)
201,111
180,037
273,707
2,643,003
$ 2,916,710
The accompanying notes are an integral part of the financial statements.
20
CITY OF PARKVILLE, MISSOURI
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2010
Cash Flows from Operating Activities
Receipts from Customers
Payments to Suppliers
Net Cash Provided by Operating Activities
Cash Flows from Capital and Related Financing Activities
Payments on Leases Payable
Acquisition and Construction of Capital Assets
Grant Income for Capital Asset Acquisitions
Principal Paid on Capital Debt
Interest Paid on Capital Debt
Net Cash (Used) by Financing Activities
Cash Flows from Investing Activities
Interest Received
Net Cash Provided by Investing Activities
(Decrease) in Cash and Cash Equivalents
Cash, Beginning ofYear
Cash, End ofYear
Major Fund
Sewer
Service
$ 1,017,791
(607,011)
410,780
(8,691)
(540,716)
201,111
(213,657)
(34,232)
(596,185)
10,421
10,421
(174,984)
834,989
$ 660,005
The accompanying notes are an integral part of the financial statements.
21
CITY OF PARK.VILLE, MISSOURI
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2010
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities
Operating Income
Adjustments to Reconcile Operating Income
to Net Cash Provided by Operating Activities
Depreciation Expense
Changes in Assets and Liabilities
Accounts Receivable
Accounts Payable
Other
Net Cash Provided by Operating Activities
Major Fund
Sewer
Service
$ 93,670
272,508
22,633
9,535
12,434
$ 410,780
The accompanying notes are an integral part of the financial statements.
22
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2010
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting E11tity
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.
Govemment-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 Acco11nti11g, a11d 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, 2010
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Measurement Focus, Basis of Accounting, and Financial Statement Presentation -
Co11ti1111ed
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 t11e 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.
24
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Meas!tre111e11t Focz:s, Basis of Accoliiiti;ig, a;;d .,_-c;i;za11cial State111e1zt Prese11tatio11 -
Continued
The City reports the following major governmental funds:
General Fund -This fund is the City's primary operating fund. It accounts for
all financial resources of the general government, except those required to be
accounted for in another fund.
Debt Service -This fund accounts for the accumulation of resources for, and
the payment of, principal and interest on long-term general obligation debt of
governmental funds.
Capital Projects Fund -This fund accounts for the financing and acquisition
and construction of various citywide improvements.
The City reports the following major proprietary fund:
Sewer Service -This fund accounts for the provision of waste and sewer
services to the general public. All activities necessary to provide such services
are accounted for in this fund, including administration, operations,
maintenance, financing and related debt service, and billing and collection.
Private-sector standards of accounting and financial reporting issued prior to
December I, 1989, generally are followed in both the government-wide and
proprietary fund financial statements to the extent that those standards do not conflict
with or contradict guidance of the Governmental Accounting Standards Board
(GASB). Governments also have the option of following subsequent private-sector
guidance for their business-type activities and enterprise funds, subject to this same
limitation. The City has elected not to follow subsequent private-sector guidance.
As a general rule the effect of inter-fund activity has not been eliminated from the
government-wide financial statements. Elimination of these charges would distort the
direct costs and program revenues reported for the various functions concerned.
25
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Measi1re11ze11t Foc11s, Basis of Accoliiiti;;g, a;;d .1.11'i;ia;icial State1ne1it Prese11tlltio11 -
Co11ti11ued
Amounts reported as program revenues include 1) charges to customers or applicants
for goods, services, or privileges provided, 2) operating grants and contributions, and
3) capital grants and contributions, including special assessments. Internally
dedicated resources are reported as general revenues rather than as program revenues.
Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non-operating
items. Operating revenues and expenses generally result from providing services and
producing and delivering goods in connection with a proprietary fund's principal
ongoing operations. The principal operating revenues of the sewer fund are charges to
customers for sales and services. Operating expenses for the sewer fund include the
cost of sales and services, administrative expenses, and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as non-operating
revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's
policy to use restricted resources first, then unrestricted resources as they are needed.
Cash, Cash Equivale11ts a11d l11vest111e11ts
Cash and investments of the individual funds are combined to form a pool which is
managed by the Finance Department. Each fund's equity in the pool is included in
"cash and cash equivalents" in the financial statements. Investment earnings,
including interest income, are allocated to the funds required to accumulate interest. If
a fund is not required to account for its own earnings by law or regulation, the
earnings are allocated to the General Fund.
Missouri state statutes authorize the City, with certain restrictions, to deposit funds in
open accounts and certificates of deposit. Missouri state statutes also require that
collateral pledged must have fair market value equal to 100% of the funds on deposit,
less amounts insured by federal deposit insurance. Collateral securities must be held
by the City or a disinterested third party and may include U.S. Government and
government agency bonds and securities; general obligation bonds of any of the 50
states; general obligation bonds of any Missouri county, certain cities, and special
districts; and revenue bonds of certain Missouri agencies. Obligations pledged to
secure deposits are delivered to the banks' joint custody accounts at the custodial
26
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Casi!, Casi! Equivalents and I11vestme11ts -Continued
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, 2010,
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 deferred revenue is reported as follows:
General Fund Property Tax Receivable
Debt Service Fund Property Tax Receivable
Property Taxes
$ 858,700
637 175
$1.495.875
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.
27
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Property Taxes -Continued
The City is permitted by Missouri state statutes to levy taxes up to $1.00 per $100 of
assessed valuation for general governmental services other than the payment of
principal and interest on long-term debt and in unlimited amounts for the payment of
principal and interest on long-term debt.
The tax levy per $100 of assessed valuation which supports the 2010 budget was:
General Fund
General Revenue -Temporary
$ 0.4748
0.1795
$ 0.6543
Taxes receivable represent property taxes levied for 2010 and prior years that have
not yet been collected, net of estimated uncollectibles. The assessed value of
property located within the City totaled $178,951,034.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and
are recorded as prepaid items in both government-wide and fund financial statements.
Restricted Cash and I11vestme11ts
The City is statutorily required to maintain customer utility deposits separate from
City assets. Restricted cash and investments are also set aside for debt service
payments and for required debt reserves.
Capital Assets
Capital assets, which include property, plant, equipment, infrastructure (e.g., roads,
bridges, sidewalks and similar items) and construction in progress are reported in the
applicable governmental or business-type activities columns in the government-wide
financial statements.
28
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Capital Assets -Continued
As the City is a Phase III government under Governmental Accounting Standards
GASB 34, it has elected to exercise its option to forego retroactively reporting
governmental infrastructure assets acquired prior to December 31, 2003.
Governmental infrastructure assets on the statement of net assets include only roads,
bridges, sidewalks and similar items acquired subsequent to December 31, 2003.
Capital assets, excluding land, are defined by the City as assets with a cost of more
than $2,500 and an estimated useful life of at least one year. All land purchases are
capitalized regardless of cost. All purchased capital assets are valued at cost where
historical records are available and at an estimated historical cost where no historical
records exist. Donated capital assets are valued at their estimated fair market value on
the date received.
The costs of normal maintenance and repairs that do not add to the value of the asset
or materially extend the life of the asset are not capitalized.
Major outlays for capital improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of the business-type
activities is included as part of the capitalized value of the assets constructed. If the
expenditure is depreciable, it will be written off from the time it is put in service.
The City defines infrastructure as !lie 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.
29
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Capital Assets -Co11tin11ed
Capital assets are depreciated usmg the straight-line method over the following
estimated useful lives:
Buildings
Sewer Plant and Collection System
Machinery and Equipment
Compensated Absences
20-40 years
20-50 years
5-7 years
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 goverrunent-wide financial statements and proprietary
fund statements. In the goverrunental fund financial statements, a liability is accrued
when it has matured, for example, as a result of employee resignations and
retirements.
Long-Term Obligations
In the goverrunent-wide financial statements, and proprietary fund types in the fund
financial statements, long-term debt and other Jong-term obligations are reported as
liabilities in the applicable goverrunental 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, goverrunental 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.
30
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Use of Esti;;iates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2-RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
Explanation of Certain Differences between the Govem111e11tal Fund Balance
Sheet and the Govemment-Wide Statement of Net Assets (page 16)
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
$(15,934,312) difference are as follows:
Bonds Payable
Certificates of Participation Payable
Neighborhood Improvement District Limited General
Obligation Temporary Notes
Accrued Interest Payable
Compensated Absences
Issuance Discount
Cost of Issuance
Deferred Refunding Difference and Other
Net Adjustment to Reduce Fund Balance
Net Reconciling Item for Long-term
Liabilities (page 16)
31
$ (2,830,000)
(5,800,000)
(7,465,000)
(128,920)
(38,942)
44,502
197,366
86,682
$(] 5.934.312)
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 2 -RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS -CONTINUED
Explanation of Certain Differences between the Govem111ental F1111d State111ent of
Revenues, Expenditures and Changes ill Fund Balances a11d the Govem111e11t-Wide
State111ent of Activities (page 17)
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:
Capital Outlay
Depreciation Expense
Net Reconciling Item for Capital
Outlays/Depreciation (page 17)
$ 188,831
(224.205)
$ (35.374)
Another element of tliat reconciliation states that "The issuance of long-term debt
(e.g., bonds, leases) provides current financial resources to governmental funds, while
the repayment of the principal of long-term debt consumes the current financial
resources of governmental funds. Neither transaction, however, has any effect on net
assets. Also, governmental funds report the effect of issuance costs, premiums,
discounts, and similar items when debt is first issued, whereas these amounts are
deferred and amortized in the statement of activities." The details of this difference
are as follows:
Refinancing of General Obligation Bonds
New Bond Indebtedness
Debt Retired with Refinancing
Interest and Other Costs
Principal Repayments
General Obligation Bonds
Certificates of Participation
Net Reconciling Item for Long-term Debt
Activity (page 17)
32
$ 2,785,000
(2, 720,000)
(65,000)
225,000
190 000
$ 415.000
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
NOTE 2 -RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS-CONTINUED
Exp/a11atio11 of Certai11 Differe11ces betwee11 tlze Gover11111e11tal Fu11d State111e11t of
Revenues, Expenditures and Cha11ges in Fund Balances a11d tlze Government-Wide
Statement of Acti11ities (page 17) -Co11ti11ued
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 govermnental funds." The details of this
$(18,816) difference are as follows:
Compensated Absences
Amortization oflssuance Costs
Amortization of Deferred Refunding Difference
Amortization of Bond Discounts
Other
Net Reconciling Item Relating to Certain
Expenses (page 17)
NOTE 3-STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Budgets a11d Budgetary Accou11tbzg
$ (5,874)
(12,634)
(5,417)
(2,782)
7 891
$ (18.816)
Missouri statutes require that all political subdivisions of the State prepare an annual
budget. Govermnental 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 govermnental funds are adopted using the modified accrual
basis of accounting, further modified by the encumbrance method of accounting, that
is, commitments such as purchase orders, contracts and other commitments, in
addition to disbursements and accounts payable are recorded as expenditures.
Budgeted expenditures cannot exceed budgeted revenues and unencumbered positive
fund balances as required by Section 67.010 RSMo. 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.
33
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 3 -STEW ARDS HIP, COMPLIANCE AND ACCOUNTABILITY -CONTINUED
Budgets and Budgeta;y 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 2010.
NOTE 4 -DEPOSITS AND INVESTMENTS
As of December 31, 2010, the City had the following deposits and investments:
US Treasuries and Agency Securities
Deposits
Checking Accounts
Certificates of Deposit
Money Market Accounts
Reported
Amount/
Fair Value
$ 823,560
229,639
784,017
2.518,571
$4.355.787
Reconciliation of Government-wide Statement of Net Assets to total deposits and
investments:
Cash and Cash Equivalents
Restricted Cash and Investments
Total Deposits and Investments
Interest Rate Risk
$2,455,385
1,900,402
$4.355.787
Interest rate risk is the risk that changes in interest rates will adversely affect the fair
value of an investment. The City does not have a formal investment policy that limits
investment maturities as a means of managing its exposure to fair value losses arising
from increasing interest rates. It is the City's practice to place operating funds in
either money market accounts or savings accounts. All longer-term investments are
placed in certificates of deposit or Treasury securities having maturities of 1 to 5
years. These consist of funds whose use is restricted and are unlikely to be needed
prior to maturity (e.g. the Fewson Trust and Sewer Debt Reserve).
34
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
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, 2010, 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 -I11vestme11ts
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,
2010, 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.
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.
35
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 5 -CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2010, was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities
Capital Assets not being Depreciated
Land $ 806,486 $ 63,394 $ $ 869,880
Construction in Progress 7,322,898 7,322,898
Infrastructure 3,410,303 24,900 3,435,203
Total Capital Assets not being Depreciated 11,539,687 88,294 11,627,981
Capital Assets being Depreciated
Buildings and Improvements 4,153,323 4,153,323
Machinery and Equipment 1,410,546 100,037 1,510,583
Infrastructure 44,663 44,663
Total Capital Assets being Depreciated 5,608,532 100,037 5,708,569
Less Accumulated Depreciation for
Buildings and Improvements (455,075) (99,285) (554,360)
Machinery and Equipment {l,100,089) (123,644) {l,223,733)
Infrastructure (5,104) (1,277) (6,381)
Total Accumulated Depreciation (1,560,268) (224,206) {1,784,474)
Total Capital Assets being Depreciated, Net 4,048,264 (124,169) 3,924,095
Governmental Activities Capital Assets, Net $ 15,587,951 $ (35,875) $ $15,552,076
Business-type Activates
Capital Assets not being Depreciated
Land $ 59,975 $ $ $ 59,975
Construction in Progress 136,854 (136,854)
Total Capital Assets not being Depreciated 196,829 {136,854) 59,975
Capital Assets being Depreciated
Buildings and Improvements 4,735,996 98,552 4,834,548
Machinery and Equipment 194,406 3,167 197,573
Infrastructure 1,843,839 537,549 2,381,388
Total Capital Assets being Depreciated 6,774,241 639,268 7,413,509
Less Accumulated Depreciation for
Buildings and Improvements (1,947,153) (230,364) (2,177,517)
Machinery and Equipment (162,513) (3,054) {165,567)
Infrastructure (645,241) (39,091) (684,332)
Total Accumulated Depreciation (2, 754,907) (272,509) (3,027,416)
Total Capital Assets being Depreciated, Net 4,019,334 366,759 4,386,093
Business-type Activities Capital Assets, Net $ 4,216,163 $ 366,759 $ (136,854) $ 4,446,068
36
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 5 -CAPITAL ASSETS -CONTINUED
Depreciation expense related to the functions/programs of the primary government is as
follows:
Governmental Activities
General Government
Public Safety
Public W arks
Parks
Other
Total Depreciation Expense
Business-type Activities -Sewer Operations
$ 121,576
33,759
39,199
29,099
573
$ 224,206
$ 272,509
Construction in Progress consists of costs incurred to construct infrastructure assets (ie -
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.
One component of Construction in Progress consists of the costs to build the Brink Meyer
Road retaining wall. Tills wall partially collapsed in the Spring of 2009. The City's general
fund incurred expenditures in 2009 and 2010 related to tills collapse.
37
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
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, 2010:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities:
Bonds Payable
General Obligation Bonds $ 2,990,000 $ 2, 785,000 $ (2,945,000) $ 2,830,000 $ 285,000
Certificates of Participation 5,990,000 (190,000) 5,800,000 200,000
Neighborhood Improvement District
Limited Obligation Temp Notes 7,465,000 7,465,000
Less Deferred Amounts
for Issue Discounts (47,284) 2,782 (44,502) (2, 782)
for Deferred Refunding Difference (92,099) 5,417 (86,682) (5,417)
Governmental Activity
Liabilities $ 16,305,617 $ 2,785,000 $ (3,126,801) $15,963,816 $ 476,801
Business-tme Activities:
Bonds payable
Sewer Revenue Bonds -1998 $ 135,000 $ $ (65,000) $ 70,000 $ 70,000
Revenue Bonds (SRF) 2004A 2,135,000 (130,000) 2,005,000 135,000
Lease Purchase Agreement 197,435 (8,691) 188,744 9,131
Plus Deferred Amounts
for Issue Premiums 101,374 (7,241) 94,133 7,241
Business-type Activity Long-term
Liabilities s 2,568,809 s $ (210,932) $ 2,357,877 $ 221,372
$2,830,000 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.
38
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 6 -LONG-TERM OBLIGATIONS -CONTINUED
General Obligation Bonds
The City issues general obligation bonds to provide funds for the acquisition and
construction of major capital assets.
General obligation bonds currently outstanding consist of the following:
Final Principal Outstanding
Payments/
Interest Original Maturity Refinancing December 31,
Rates Issue Date During 2010 2010
General Obligation Bonds
Governmental Activities
Series 1998 3.70% to 4.45% $ 325,000 9/1/2011 $ 40,000 $ 45,000
Series 2001 4.50% to 5.50% $ 3,985,000 3/1/2021 2,905,000
Series 2010 2.7% to 3.25% $ 2,785,000 3/1/2020 2,785,000
$ 2,945,000 $ 2,830,000
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 sources and uses of the funds were as follows:
2010 Refunding Bonds
Issue Premium
Underwriters Discount
Issuance Fund
Proceeds to City
$ 2,785,000
34,787
(13,925)
(18,656)
$ 2,787,206
The annual requirements to amortize governmental activities general obligation
bonds outstanding as of December 31, 2010, are as follows:
Governmental Activities
PrinciEal Interest
2011 $ 285,000 $ 47,317
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
$ 2,830,000 $ 382,425
39
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
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, 2010, is $5,800,000.
Proceeds from the certificates of participation were used for City Hall renovation.
Rush Creek stabilization, land acquisition and other scheduled capital improvements.
The annual requirements to amortize these certificates of participation are as follows:
Princi12al Interest
2011 $ 200,000 $ 240,940
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
$5,800,000 $2,440,130
Neighborhood Improveme11t District Limited Obligatio11 Temporary Notes
The original temporary notes were paid off on August 1, 2009, in a refinancing
transaction in which the City borrowed funds to repay the principal amount due on
the notes, plus interest and the financing costs. A total $3,020,000 at 2.25% was
borrowed on the Brink Meyer Road Project and $4,445,000 at 2.25% was borrowed
on the Brush Creek Road Project. The principal and interest on both notes are due
August 1, 2011. Additionally, these notes were refinanced again in 2011. See Note
12-Subsequent Event for a description of the 2011 refinancing details.
Notes Due in 2011
Princi12al
$7 465.000
40
Interest Total
$ 335.424 $7.800.424
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
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. Principal payments are scheduled annually ranging from $25,000
to $70,000. The balance at December 31, 2010 is $70,000.
The bonds are special obligations of the City payable solely from, and secured as to
the payment of principal and interest by a pledge of, the net income and revenues
derived from the operation of the sewer system. The bonds shall not be or constitute a
general obligation of the City.
The annual requirements to amortize these bonds outstanding as of December 31,
2010, are as follows:
2011
Revenue Bonds (SRF) 2004A
Principal
$ 70.000
Interest
$ 3.255
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, 2010, is $2,005,000.
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 l, 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.
41
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 6-LONG-TERM OBLIGATIONS-CONTINUED
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,
2010, are as follows:
Princinal Interest
2011 $ 135,000 $ 94,158
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
$2.005.000 $ 726,578
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.
42
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 6 -LONG-TERM OBLIGATIONS -CONTINUED
Lease Pure/lase Agree111e11t
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:
Princigal Interest
2011 $ 9,131 $ 9,325
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
$ 188, 744 $ 78,867
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 ofloss, 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.
43
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
NOTE 7 -RISK MANAGEMENT -CONTINUED
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 ofa liability as of December 31, 2010.
MPR's financial statements are presented in its Comprehensive Annual Financial
Report for the year ended December 31, 2010.
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.
I11vest111e11ts -Trust F1111d
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, 2010, the trust assets had an account balance of $529,214 and
$8,555 was transferred to the general fund.
44
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 8 -COMMITMENTS AND CONTINGENCIES
Litigatio1z
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, 2010, consisted of the
following:
Transfer from Transportation Special Revenue Fund
Transfer to Debt Service Fund
Transfer to Non-Major Governmental Funds
Transfer to General Fund (Net)
$ (515.000)
$ 220.992
$ 36 445
$ 257.563
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.
45
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
NOTE 10 -PENSION PLAN
Plan Descriptio11
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 2010 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 Pe11sion Cost (APC) and Net Pe11sio11 Ohligatio11 (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 ofYear
46
$ 52,274
$
52,274
52,274
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED
DECEMBER 31, 2010
NOTE 10 -PENSION PLAN -CONTINUED
The annual required contribution (ARC) was determined as parl 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 7.5%
per year, compounded annually (b) projected salary increases of 4.0% 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 RP-2000
Combined Health Table set back 0 years for men and 0 years for women, and (e)
post-retirement mortality based on the 1971 Group Annuity Mortality table for males
projected to 2000 set back I year for men and 7 years for women. The actuarial value
of assets was determined using techniques that smooth the effects of short-term
volatility in the market value of investments over a five-year period. The unfunded
actuarial accrued liability is being amortized as a level percentage of projected
payrolls on a closed basis. The amortization period as of the initial actuarial
valuation was 30 years for the General division and 30 years for the Police division.
One-Year Trend Information
Year Annual Percentage Net
Ended Pension ofAPC Pension
June 30, Cost (APC) Contributed Obligation
2010 $ 52,274 100.0% $
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress
(b) [(b-a)/c]
(a) Actuarial (b-a) (c) UAALasa
Actuarial Actuarial Accrued Un-funded (alb) Annual Percentage of
Valuation Value Liability Liability Funded Covered Covered
Date of Assets Entry Age ll!AAL) Ratio Payroll Payroll
02-28-10 $ 70,422 $ 274,694 $ 204,272 26% $1,331,420 15%
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,
2006, 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.
47
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
NOTE 11-DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
ASC Topic 820, Fair Value A1easurements, 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.
I11vestme11ts
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.
48
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 2010
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, 2010.
2010
Fair Value Measurements Using
Certificates of Deposit
Money Market Accounts
Government Securities
Fair Value
$ 784,017
$2,518,571
$ 823,560
Quoted Prices
In Active
Markets for
Identical
Assets
(Level I)
$ 784,017
$2,518,571
$ 823,560
NOTE 12 -SUBSEQUENT EVENT -REFINANCING
Tempormy Notes -Brush Creek Drainage NID Project
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
CLevel3)
On August I, 2011, the City refinanced the temporary notes of $4,445,000 into new
one year notes in the amount of $4,710,000. The notes have a six month call
provision. The difference of $265,000 was used to pay interest and financing costs of
the new notes.
Tempormy Notes-Brillk Meyer Road NID Project
On August I, 2011, the City refinanced the temporary notes of$3,020,000 into a new
two year note in the amount of $3,000,000. The note has a one year call provision.
Project funds were used to pay the interest that had accrued on the note and pay for
the financing costs.
49
CITY OF PARKVILLE, MISSOURI
REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2010
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)
50
CITY OF PARKVILLE, MISSOURI
REQUIRED SUPPLEMENTARY INFORMATION -CONTINUED
DECEMBER 31, 2010
9 Indicates nearly total replacement is required (limited salvage of street or parking lot area
is possible)
10 Indicates total replacement is required.
While the City has goals to maintain these systems at higher levels, minimum acceptable
condition levels have been defined as having at least 80 percent of the streets and parking lots
at or below a rating of 5. The following table compares the minimum acceptable condition
levels with the actual condition levels for the current and prior years.
Fiscal
Year
2005
2006
2007
2008
2009
2010
Minimum
Acceptable
Condition Level*
80
80
80
80
80
80
Actual Condition
Level*
94
94
94
94
94
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$190,l 72 was spent
out of the Capital Improvements Fund. The major expenditures were for an asphalt overlay
($91,591) and the curb and sidewalk program ($90,138). 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 Exgenses Exgenses
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
51
OTHER SUPPLEMENTARY INFORMATION
52
Reserve
Funds
Assets
Cash and Cash Equivalents $ 531,657
Restricted Cash and Investments
Other Receivables
Total Assets s 531,657
Liabilities
Accounts Payable s -
Fund Balances
Unreserved, Reported in:
Special Revenue Funds 531,657
Permanent Fund
Total Fund Balances 531,657
Total Liabilities and Fund Balances s 531,657
CITY OF PARKVILLE, MISSOURI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2010
SE:ecial Revenue
Municipal Equi~ Guest Room Nature Park
Reserve Tax Sanctua!2'. Donations
s 86,312 s 13,295 s 33,373 s 69,142
$ 86,312 s 13,295 s 33,373 $ 69,142
$ 25,771 $ -s -s -
60,541 13,295 33,373 69,142
60,541 13,295 33,373 69,142
$ 86,312 $ 13,295 s 33,373 $ 69,142
53
Parkland Court
Dedication Recoupment Fees
$ 43,400 $ 28,014
s 43,400 $ 28,014
s -$
43,400 28,014
43,400 28,014
s 43,400 $ 28,014
Assets
Cash and Cash Equivalents
Restricted Cash and Investments
Other Receivables
Total Assets
Liabilities
Accounts Payable
Fund Balances
Unreserved, Reported in
Special Revenue Funds
Pennanent Fund
Total Fund Balances
Total Liabilities and Fund Balances
Police Training
Fees-LET
s 32,457
$ 32,457
s -
32,457
32,457
s 32,457
CITY OF PARKVILLE, MISSOURI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2010
SEecial Revenue
TIF Market Place
Development Development Other Total
$ 12,324 $ 12,172 s 500 862,646
$ 12,324 $ 12,172 s 500 s 862,646
s -$ -s 394 $ 26,165
12,324 12,172 106 836,481
12,324 12,172 106 836,481
$ 12,324 $ 12,172 s 500 s 862,646
54
Total
Pennanent Nonmajor
Fe\vson Governmental
Project Funds
s $ 862,646
529,214 529,214
s 529,214 $ 1,391,860
s -s 26,165
836,481
529,214 529,214
529,214 l,365,695
$ 529,214 $ 1,391,860
CITY OF PARKVILLE, MISSOURI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJORGOVERNMENTALFUNDS
FOR THE YEAR ENDED DECEMBER 31, 2010
S ecial Revenue
Reserve Municipal Equip Guest Room Nature Park Parkland Court
Funds Reserve Tax Snnctu~ Donations Dedication Recoupment Fees
Revenues
Parkland Dedication s $ s s $ 60,000 $
Investment Earnings 5,600
TIF Revenue
Miscellaneous 5,889 5,507 100 1,682
Total Revenues 5,600 5,889 5,507 100 60,000 1,682
Expenditures
Current
General Government 26,633 8,605
Debt Service
Principle
Interest
TIF Expense
Capital Outlay 63,394
Total Expenditures 26,633 8,605 63,394
Excess (Deficiency) of Revenues
Over (Under) Expenditures (21,033) (2,716) 5,507 JOO (3,394) 1,682
Other Financing Sources (Uses)
Other
Transfers In (Out) 45,000
Capital Leases
Total Other Financing Sources 45,000
Net Change in Fund Balances 23,967 (2,716) 5,507 JOO (3,394) 1,682
Fund Balances, Beginning of Year 531§7 36,574 16,0J I 27,866 69,042 46,794 26,332
Fund Balances, End of Year s 531~ s 60,541 $ 13,295 $ 33,373 $ 69,142 $ 43,400 $ 28,014
55
CITY OF PARKVILLE, MISSOURI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJORGOVERNMENTALFUNDS
FOR THE YEAR ENDED DECEMBER 31, 2010
Totul
SEecial Revenue Pennanent Nonmajor
Police Training TIF Market Place fe\vson Governmental
Fees-LET DeveloE!ment Devclo2ment Other Total Pro_iect Funds
Revenues
Parkland Dedication s s s s $ 60,000 $ $ 60,000
Investment Earnings 346 50 5,996 20,155 26,151
TIF Revenue 450,768 450,768 450,768
Miscellaneous 4,874 500 18,552 18,552
Total Revenues 4,874 451,114 50 500 535,316 20,155 555,471
Expenditures
Current
General Government 394 35,632 1,929 37,561
Debt Service
Principle
Interest
TIF Expense 451,224 -451,224 451,224
Capital Outlay 63,394 63,394
Total Expenditures 451,224 394 550,250 1,929 552,179
Excess (Deficiency) of Revenues
Over (Under) Expenditures 4,874 (I JO) 50 106 (14,934) 18,226 3,292
Other Financing Sources (Uses)
Other (2,057) (2,057) (2,057)
Transfers In (Out) 12,122 57,122 (8,555) 48,567
Capital Leases
Total Other Financing Sources 12,122 (2,057) 55,065 (8,555) 46,510
Net Change in Fund Balances 4,874 (110) 12,172 (l,951) 40,131 9,671 49,802
Fund Balances, Beginning of Year 27,583 12,434 2,057 796,350 519,543 1,315,893
Fund Balances, End of Year $ 32,457 $ 12,324 s 12,172 $ 106 $ 836,481 $ 529,214 $ 1,365,695
56