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HomeMy Public PortalAbout2014 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, 2014 CITY OF PARKVILLE, MISSOURI TABLE OF CONTENTS Independent Auditor's Report ..................................................................................................... 1 -2 Management's Discussion and Analysis ..................................................................................... 3 -11 Basic Financial Statements Government-wide Financial Statements Statement of Net Position ............................................................................................... 12 Statement of Activities ................................................................................................... 13 Fund Financial Statements Governmental Funds Balance Sheet .......................................................................................................... 14 Reconciliation of the Balance Sheet oftl1e Governmental Funds to the Statement of Net Position .................................................................................. 15 Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds ........................................... 16 -I 7 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................................................................ 18 Proprietary Funds Statement of Net Position ......................................................................................... 19 Statement of Revenues, Expenditures and Changes in Fund Balances .................... 20 Statement of Cash Flows .......................................................................................... 21 Agency Funds Statement of Assets and Liabilities .......................................................................... 22 Notes to Basic Financial Statements ..................................................................................... 23 -53 Required Supplementary Inforn1ation Schedule of Revenues, Expenditures, and Changes in Fund Balances, Budget and Actual General Fund ............................................................................. 54-58 Schedule of Funding Progress ............................................................................................... 59 Other Supplementary Information Combining and Individual Fund Statement Schedules Combining Balance Sheet-Nonmajor Governmental Funds ........................................ 61 -62 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds ............................................................. 63 -64 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ..................................................................... 65 -66 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, as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility My responsibility is to express opinions on these financial statements based on my audit. I conducted our 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, I express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions. 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, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementmy Information Accounting principles generally accepted in the United States of America require that the budgetary comparison information, and the schedule of funding progress as listed in the table of contents presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. I have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to my inquiries, the basic financial statements, and other knowledge I obtained during my audit of the basic frnancial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Gladstone, Missouri August 5, 2015 2 CITY OF PARKVILLE, 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, 2014. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. Financial Highlights 1. The City's total net position increased by $549,202. The net position increase is found in govermnental activities where there is a positive $371,541 net change, and a positive $177,661 increase in net position reported in business-type activities. The only business type activity operated by the City is the sewer system. The City's total net position increased $868,148 in 2013 ($839,404 increase in govermnent activities and $29,108 in business type activities). 2. The City refinanced the temporary notes on the Brush Creek Sewer Project and Brink Myers Road Project into long term bonds. The City now has twenty year financing on both projects. The first assessments were due December 31, 2014, for debt payments beginning in 2015. Approximately 40% of total assessments were paid. The City is vigorously pursuing its options to enforce payment and is financially positioned to cover all debt payments in the interim with emergency reserves if needed. 3. The City continued to pay down its existing debt aside from the temporary notes as indicated above. Debt connected with the general government activities decreased $520,000 and the debt connected with the business activities decreased $150,590. 4. As of the close of the current year, the City's government funds showed a combined ending balance of $5,758,998, an increase of $1,116,218 from the prior year. Much of the increase comes from the debt refinancing requiring that debt reserve funds. In 2013, the City showed a decrease in government funds of $178,988. 5. Major capital expenditures were made to complete the Brink Myers Road Project. The City spent money for some equipment and made a major expenditure on a park building. 6. The City completed a major sewer plant expansion in 2014. The project involves construction of a UV disinfectant chamber to meet EPA requirements. 7. Subsequent to December 31, 2014, the City retired the capital lease connected with the sewer plant that provided a good use of funds. 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; govermnent-wide financial statements (Pages 12 through 13), fund financial statements (Pages 14 through 22), and notes to the financial statements beginning on Page 23. This report also contains other supplementary information in addition to the basic financial statements themselves. 3 Government-wide Financial Statements. The government-wide financial statements (Pages 12 -13) are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business. The statement of net position (Page 12) presents information on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities (Page 13) presents information showing how the government's net position 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 foes 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 Afimd 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 fuod 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 fuods and proprietary funds. Govemmental F1111ds Governmental fimds are used to account for essentially the same fuoctions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental fuods is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental fimds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental fimds and governmental activities. 4 The City maintains five 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, debt service fund, and the reserve fund, each of which are considered to be major funds. Data from the other eleven governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non­ major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its general fund for the operation of the sewer department. 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 I 4 through I 8 of this report. Proprietary F1111ds The City maintains one type of proprietary fund. Ente1prise 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 I 9 through 21 of this report. Agency F1111ds The agency funds held by the City are for court bonds paid by defendants and funds held in a settlement for property taxes payable in future years. 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 through 51 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report presents certain required supplemental information concerning the City's infrastructure reporting. As recommended by American Public Works Association, the modified approach for infrastructure was developed as a compromise to provide an alternative to depreciating eligible infrastructure assets. The basic premise behind the modified approach is that no depreciation is incurred if infrastructure assets are being maintained or preserved at a certain level. The City provides an up-to-date inventory of eligible assets by location, type and physical parameters and performs replicable condition assessments, triennially. Results are 5 summarized using a measurement scale, seen on Pages 55 -56 of this report. Estimated amounts needed to maintain and preserve these assets at the City's established service level are budgeted for annually. This City has also provided information on the funding of its pension plan through LAGERS in this section of the audit. The combining and individual fund statements referred to earlier in connection with non­ major or governmental funds are presented on Pages 61 through 64 of this report. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City, assets exceeded liabilities by $8,987,561 at the close of the most recent fiscal year. Govemmental Activities Governmental activities increased the City's net position by $371,541. B 11si11ess-type Activities During the year, the change in net pos1t10n for business-type activities increased net assets by $177,661. The net assets for business-type activities in the current fiscal year are $3,400,421. Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental F1111ds The focus of the City's governmental fimds 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 $5,761,810. Of that, $2,954,499 is non-spendable, restricted or assigned for various purposes. The general fund is the chief operating fund of the City. At the end of the current fiscal year the general fund balance was $1,296,496, an increase of $336,062. As a measure of the general fund's liquidity, it is useful to compare both unreserved fund balance to total fund expenditures. Unreserved, undesignated fund balance represents 36% of total general fund expendihrres. That compares favorably with a 28% of general fund expendihrre in 2013. The City's fund balance of the general fund increased by $336,061 during the current fiscal year. The City's 2013 revenues and transfers in from other funds totaled $4,318,432 which is $158,345 higher than 2013. The City's 2014 expenses and transfers out to other funds totaled $3,982,080, which is $112,242 less than 2013. 6 The debt service fund has a total fund balance of$1,215,795, all of which is reserved for the payment of bond principal, interest and fees. There was a net increase in the debt service fund balance of$95,713. Expenses in the debt service fund exceeded revenue by $125,226. This was offset by transfers to the debt service fund of$220,939. The capital projects fund has a total fund balance of $693,772. The notes payable in connection with Brink Myers Road Project and Brush Creek Sewer Project were refinanced during the year requiring large debt reserves. The City uses capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. CITY OF PARKVILLE, MISSOURI NET POSITION SUMMARY DECEMBER 31, 2014 AND 2013 Governmental Activities Business-t}'.Ee Activities Total 2014 2013 2014 2013 2014 2013 Cush $ 5,816,263 $ 4,872,416 $ 1,175,331 $ 1,106,308 $ 6,991,594 $ 5,978,724 Account Receivables 2,399,164 1,744,044 95,077 105,141 2,494,241 1,849,185 Capital Assets 16,334,878 16,399,235 3,862,277 4,119,971 20,197,155 20,519,206 Other Assets 84,969 244,779 1,839 82,499 86,808 327,278 Total Assets $ 24,635,274 $ 23,260,474 $ 5,134,524 $ 5,413,919 $ 29,769,798 $ 28,674,393 Account Payables $ 260,731 $ 478,014 $ 43,398 $ 259,545 $ 304,129 $ 737,559 Unearned Revenue 1,590,255 1,590,255 Bonds and Notes Payable 16,160,246 15,528,413 1,675,620 1,834,129 17,835,866 17,362,542 Other Liabilities 347,061 150,456 15,085 15,579 362,146 166,035 Total Liabilities 16,768,038 17,747,138 1,734,103 2,109,253 18,502,141 19,856,391 Deferred Inflo\vs of Resources Property Taxes -Subsequent Year 2,280,096 2,280,096 1..iet Position 5,587,140 5,513,336 3,400,421 3,304,666 8,987,561 8,818,002 Total Liabilities and Net Position $ 24,635,274 $ 23,260,474 $ 5,134,524 $ 5,413,919 $ 29,769,798 $ 28,674,393 7 CITY OF PARKVILLE STATEMENT OF ACTIVITIES SUM~IARV FOR TIIE YEARS ENDED DECE!HBERJI, 2014 AND 2013 Governmental Activities Business-t}'.EC Aclivitics Total 2014 2013 2014 2013 2014 2013 Program Revenues Charges for Services $ 660,567 $ 519,975 $ 1,093,424 $ 995,785 $ 1,753,991 $ l,515,760 Capital Grunts nnd Contributions 39,577 462,702 39,577 462,702 General Revenues Property Ta"<es 1,564,539 1,392,706 1.564,539 1,392,706 Franchise Ta"<es 1,048,320 846,520 l,048,320 846,520 Sales Tuxes 1,569,034 1,408,629 1,569,034 1,408,629 lnvcsLinent Earnings 25,189 36,372 25,189 36,372 lntergovcmmentul 369,860 317,827 369,860 317,827 Sewer Admin Fee 100,000 100,000 100,000 100,000 TIF 436,968 408,625 436,968 408,625 Other 109,959 159,071 8,981 10,404 118,940 169,475 Total Revenues 5,924,013 5,652,427 1,102,405 1,006,189 7,026,418 6,658,616 Expenses General Government 965,064 1,003,472 965,064 1,003,472 Public Safety-Police 1,132,022 1,098,927 1,132,022 1,098,927 Public Safety-Court 141,034 135,530 141,034 135,530 Public Works 812,168 1,030,345 812,168 973,772 Economic Development 252,486 274,998 3,050,288 3,211,701 Depreciation 251,002 243,545 251,002 243,545 Amortization 20,833 20,833 TIF 433,247 413,460 433,247 413,460 Interest and Fees 636,129 290,939 636,129 290,939 Other Capital Expenditures 421,874 154,291 421,874 154,291 Financing Costs 182,044 174,616 182,044 174,616 Brink Meyer Road Expense 316,466 316,466 Other 8,936 8,936 Sewer 924,744 949,512 924,744 949,512 Total Expenses 5,552,472 4,840,956 924,744 949,512 6,477,216 5,790,468 Change in Net Assets Before Transfer 371,541 811,471 177,661 56,677 549,202 868,148 Transfer 27,569 (27,569) Change in Net Assets Aficr Transfer $ 371,541 $ 839,040 $ 177,661 $ 29,108 $ 549,202 $ 868,148 8 PropriefmJI Funds The City's proprietary funds provide the same type of infonnation found in the government-wide financial statements, but in more detail. The net position of the sewer service at the end of the year total $3,400,421. The sewer fund had revenues exceeding expenditures by $177,661 in 2014. This compares favorably with an increase in the net assets of$29,108 in 2013. 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, 2014, totals $11,724,379. The largest capital expenditure was connected with a park building. The City completed work on two real estate projects during the year. The investment in the projects is shown on the Statement of Net Position as Land Held for Investments and the amount has been removed from Construction in Process. Land Buildings and Improvements Machinery and Equipment Infrastructure Construction in Process Total City of Parkville, Missouri Capital Assets {Net of Depreciation) Governmental Activities Business-type Activities 2014 2013 2014 2013 $ 869,880 $869,880 $ 59,975 $ 59,975 3,284,127 3,310,108 2,255,875 l,973,41 l 299,263 335,087 48,825 72,315 3,408,832 3,411,384 l,497,602 1,547,465 8,472.776 466.805 Total 2014 $ 929,855 5,540,002 348,088 4,906,434 LJ.86? 102 $16.399.235 Ull.62.2-1'.ZU l 19.'l7l $11.724.17.2 2013 $ 929,855 5,283,519 407,402 4,958,849 7,743.129 $20 519,206 Additional infonnation on the City's capital assets can be found in Note 5 of this report. 9 Long-Term Debt At the end of the current fiscal year, the City had total debt (bonds and leases) outstanding of$17,835,866. Certificates of Participation NID Limited Obligation Temporary N ates NID General Obligation Bonds River Park Brush Creek Brink Meyer Revenue Bonds (SRF) 2004A Capital Leases/ Lease-Purchase Deferred Amounts Total City of Parkville, Missouri Outstanding Debt Governmental Activities Business-tyge Activities 2014 2013 2014 2013 $ 4,866,626 $ 5,150,000 $ - $ 8,460,000 1,755,000 2,025,000 5,596,310 3,942,310 1,455,000 1,595,000 149,350 159,940 (106.587) 71.270 79.189 lli,]60 246 $15 5?8,4]3 $.1,675 620 $] 834..12.2 Total 2014 2013 $ 4,866,626 $5,150,000 8,460,000 1,755,000 2,025,000 5,596,310 3,942,310 1,455,000 1,595,000 149,350 159,940 71 270 (27,398) $17,835.866 $11362.542 The general government indebtedness increased $631,833 and the business government indebtedness decreased $158,509. Economic Factors and Next Year's Budgets and Rates City of Parkville revenue for 2015 is projected to show modest gains over 2014 as economy activity within the City and the region continues to improve. The City's property tax revenue will increase by about 2.8% over 2014. This continues a pattern of stable real estate values coupled with an increasing pace of new construction since 2011. A dramatic increase in residential construction began in early 2013 and is continuing into 2015, with new building permits being issued at a pace not seen since before the recession. At the same time, residential property sales have strengthened with the improving real estate market. This bodes well for City revenue for 2015 and beyond as the tax base continues to grow. Commercial construction has also continued to increase with several projects under development during 2015. These properties should produce additional property and sales ta'< revenue in future years. At the same time, vacancy rates for existing commercial properties have remained fairly stable, with sufficient market demand for vacated commercial space to maintain good occupancy levels. These increases in residential and commercial properties should add 2 to 3% to the property tax base for 2016. Since franchise taxes correlate with the number of homes and commercial buildings in use, this revenue should keep pace with continued development. The strong construction environment should ensure that building permit fee revenue reaches 2015 budget expectations. While the overall economy has improved, the City's sales tax base has come under pressure from competition from businesses located outside the City, including expansion of a nearby specialty shopping district. The overall effects of this competition appear to have been minimal, with sales la'< receipts for the first 5 months of 2015 exceeding the same 2014 10 period by nearly 5%, which, in turn, was up 5% over 2013. If this trend continues, 2015 sales tax revenue wiJI be 6% or more above the level that was budgeted. Overall, the City's General Fund 2015 revenue is expected to reach or exceed the budgeted total. As in prior years, the City has budgeted cautiously, holding 2015 revenue and expenditure budgets at near 2014 levels. However, City personnel remain optimistic, expecting overall modest, but positive growth in revenue for 2015. Revenue receipts for the first 5 months of 2015 give confidence that the budgetary goals will be met or exceeded. City expenditures are well within levels anticipated in the 2015 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. 11 CITY OF PARKVILLE, MISSOURI STATEMENT OF NET POSITION DECEMBER 31, 2014 2014 Governmental Business-Type Activities Activities Total Assets Cash and Cash Equivalents $ 4,603,589 $ 1,146,993 $ 5,750,582 Restricted Cash and Investments 1,212,674 28,338 1,241,012 Receivables, Net of Allowance for Uncol!ectibles Taxes 2,388,636 2,388,636 Accounts I 0,528 95,077 105,605 Deferred Charges Prepaid Items 84,969 1,839 86,808 Land Held for Resale 8,472,776 8,472,776 Capital Assets Not Being Depreciated Land 869,880 59,975 929,855 Construction in Progress Infrastructure 3,375,653 3,375,653 Capital Assets, Net of Accumulated Depreciation Buildings and Improvements 3,284,127 2,255,875 5,540,002 Machinery and Equipment 299,263 48,825 348,088 Infrastructure 33, 179 1,497,602 1,530,781 Total Assets 24,635,274 5, 134,524 29,769,798 Liabilities Accounts Payable and Other Current Liabilities 207,584 43,177 250,761 Wages Payable 53, 147 221 53,368 Accrued Interest Payable 297,397 1,600 298,997 Customer Deposits 13,485 13,485 Unearned Revenue Accrued Vacation 49,092 49,092 Other 572 572 Bonds and Notes Due Within One Year 566,869 164,045 730,914 Due in More Than One Year 15,593,377 1,511,575 17,104,952 Total Liabilities 16,768,038 1,734,103 18,502,141 Deferred Inflows of Resources Property Taxes -Subsequent Year 2,280,096 2,280,096 Net Position Invested in Capital Assets, Net of Capital Related Debt 174,632 174,632 Restricted for Debt Service 1,215,795 1,215,795 Capital Projects 693,771 693,771 Reserve 1,387,966 1,387,966 Endowment Fund 557,891 557,891 Unrestricted 1,557,085 3,400,421 4,957,506 Total Net Position $ 5,587,140 $ 3,400,421 $ 8,987,561 The accompanying notes are an integral part of the financial statements. 12 CITY OF PARKVILLE, MISSOURI STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2014 Net (Expense) Revenue and ProS:ram Revenues Changes in Net Assets Operating Capital Prima!):'. Government Charges for Grants and Grants and Governmental Business-type Functions/Programs E--.:penses Services Contributions Contributions Activities Activities Total Primary government: Governmental Activities Gcnerul Government $ 965,064 $ 382,582 $ $ 39,577 $ (542,905} $ $ (542,905) Public Safety -Police 1,132,022 277,985 (854,037) (854,037) Public Safety-Court 141,034 (141,034) (141,034) Public \Vorks 812,168 (812,168) (812,168) Economic Development 252,486 (252,486) (252,486) Depreciation 251,002 (251,002) (251,002) Amortimtion TIF 433,247 (433,247) (433,247) Interest and Fees 636,129 (636,129) (636,129) Financing Cost 182,044 (182,044) (182,044) Brink Meyer Road Expense 316,466 (316,466) (316,466) Other Capital Expenditures 421,874 (421,874) (421,874) Miscelluncous 8,936 (8,936) (8,936) Totu[ Govemmentnl Aclivities 5,552,472 660,567 39,577 (4,852,328) (4,852,328) Business-type Activities Sewer 946 270 I 093-424 168,680 147,154 Totul Business-type Activities 946,270 1,093.424 168,680 147,154 Totnl Primnry Government $ 6.498,742 $ 1,753,991 $ $ 39,577 (4,852,328) 168,680 (4,705,174) General Revenues Property Tux 1,564,539 1,564,539 Franchise Tux 1,048,320 1,048,320 Snles Tax 1,569,034 1,569,034 Unrestricted Investment Earnings 25,189 25,189 Intergovemmentnl 369,860 369,860 Sewer Admin Fees 100,000 100,000 TIF 436,968 436,968 Other 109,959 8,981 118,940 Total General Revenues 5,223.869 8,981 5,232,850 Chunge in Net Assets 371,541 177,661 549,202 Transfer Net Position, Beginning of the Year us Adjusted 5,215,599 3,222,760 8,438,359 Net Position, End of Year $ 5,587,140 $ 3,400,421 $ 8,987,561 The accompanying notes are an integral part of the financial statements. 13 Assets Cush and Cash Equivalents $ Restricted Cash Investments Receivables, Net of Allowrmcc for Unco\lcctiblcs Tm1.es Accounts Receivable PrcpDid Items Total Assets $ Liabilities nnd Fund Balance Liabilities Accounts Payable $ Wages Payable Other Liabilities Total Liabilities Deferred Inflows of Resources Property Taxes Subsequent) Fund Balances Nonspcndablc Prcpaids Restricted for Capitnl Projects Debt Service Assigned Cnpital Purposes Unnssigncd General Fund Special Rcvvcnuc Total Fund Bulanccs Totnl Liabilities and Fund Bulunces $ CITY OF PARKVILLE, MISSOURI BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2014 Trnnsportntion Capital Debt General Reserve Special Revenue Projects Service Fund Fund Fund Fund Fund 1,303,655 $ 1,387,966 $ 397,765 $ 693,771 $ 617,286 10,833 642,540 1,052,741 55,339 663,196 617,360 5,080 84,969 2,446,445 $ 1,387,966 $ 463.937 $ 1.356,967 $ 1.877,186 151,130 $ $ 51,031 $ $ 424 53,147 572 204,849 51,031 424 945,100 10,833 663,196 660,967 84,969 402,073 693,771 1,215,795 1,211,527 1,387,966 1.296,496 1,387.966 402,073 693,771 l,215 795 2,446,445 $ 1.387,966 $ 463,937 $ 1,356.967 $ 1,877,186 Other Governmental Funds $ 203,147 559,301 5,448 $ 767,896 $ 4,999 4,999 557,891 205,006 762,897 $ 767,896 The accompanying notes are an integral part of the financial statements. 14 Totnl Governmental Funds $ 4,603,589 1,212,674 2,388,636 10,528 84.969 $ 8,300,396 $ 207,584 53,147 572 261,303 2,280,096 84,969 402,073 1,909,566 557,891 2,599,492 205.006 5,758,998 $ 8,300.396 CITY OF PARKVILLE, MISSOURI RECONCILIATION OF THE BALANCE SHEET OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION DECEMBER 31, 2014 Total Fund Balance in Governmental Fund Balance Sheet $ 5,758,998 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. 7,862,101 Land Held for Resale 8,472,776 Long-term liabilities, including bonds payable, are not due and payable in the cunent period and therefore are not reported in the funds. (Note 2) (16,160,246) Accrued Interest Payable (297,397) Accrued Vacation (49,092) Net Position of Governmental Activities $ 5,587,140 The accompanying notes are an integral part of the financial statements. 15 CITY OF PARKVILLE, MISSOURI STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Revenues Taxes Licenses and Pennits Intergovernmental Charges for Services Fines and Fees Special Assessments Investment Earnings Grants TIF Revenue Sewer Service Fees Miscellaneous Total Revenues Expenditures Current General Government Public Safety -Police Public Safety -Court Public Works Economic Development Debt Service Principal Interest Other $ General Fund 2,935,260 379,214 66,584 35,907 269,935 6,626 690 100,000 41,246 3,835,462 955,395 1,174,585 141,034 834,418 290,278 FOR THE YEAR ENDED DECEMBER 31, 2014 Transportation Reserve Special Revenue Fund Fund $ -$ 588,854 $ - 303,276 -- - - -38,887 - 22,575 953,592 250 Capital Projects Fund -$ - 93 - - 93 272,547 Debt Service Fund 332,383 - - - 61 323,803 11 ,248 - 667,495 520,000 266,460 6,261 The accompanying notes are an integral part of the financial statements. 16 Other Governmental $ Funds 1,592 3,368 - 7,989 - 7,222 - 436,968 - 10,23 1 467,371 8, 115 6,016 354 $ Total Government Funds 3,858,090 382,582 369,860 35,907 277,985 323,803 25, 189 39,577 436,968 100,000 74,052 5,924,012 963,760 1,180,601 141 ,034 834,772 290,278 520,000 539,007 6,261 CITY OF PARKVILLE, MISSOURI STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TIF Expense Financing Costs Capital Outlay Brink Meyer Expenses Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Note Proceeds -Refinancing Notes Retired -Refinancing Transfers In Transfers (Out) Total Other Financing Sou Net Changes in Fund Balances After Other Financing Sourc Fund Balance, Beginning of Y. Fund Balance, End of Year $ GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2014 Transportation Capital Debt General Reserve Special Revenue Projects Service Fund Fund Fund Fund Fund --- --182,044 489,424 - ---- 3,395, 710 489,674 454,591 792,721 439,752 -463,918 (454,497) (125,226) ---9,552,021 ---(8,460,000) - 482,680 317,000 11,057 22 I ,000 (586,370) -(355,000) (338,393) (61) (103,690) 317 ,000 (343,943) 753,628 220,939 336,061 317,000 119,975 299,131 95,713 960,434 1,070,966 282,099 394,641 l, 120,082 1,296,496 $ 1,387,966 $ 402,073 $ 693,772 $ 1,215,795 The accompanying notes are an integral part of the financial statements. 17 Other Governmental Funds 433,247 - 5,754 316,446 769,932 (302,562) - - 339,893 (91,806) 248,088 (54,474) 817,371 $ 762,898 Total Government Funds 433,247 182,044 495,178 316,446 5,902,628 21,384 9,552,021 (8,460,000) 1,371,630 (1,371,630) J,092,021 1,113,406 4,645,593 $ 5,758,998 CITY OF PARKVILLE, MISSOUIU RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES DECEMBER 31, 2014 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 net amount that depreciation exceeded capital outlays. 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 portion, 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 Position of Governmental Activities The accompanying notes are an integral part of the financial statements. 18 $1,116,218 (64,357) 520,000 (1,092,021) (108,299) $ 371,541 Assets CITY OF PARKVILLE, MISSOURI STATEMENT OF NET POSITION PROPRIETARY FUND -SEWER SERVICE DECEMBER 31, 2014 Current Assets Cash and Cash Equivalents Restricted Cash and Investments Accounts Receivable Prepaid Items Total Current Assets Noncurrent Assets Capital Assets Land Buildings and Improvements Machinery and Equipment Infrastructure Less Accumulated Depreciation Total Capital Assets Total Noncurrent Assets Total Assets Liabilities Current Liabilities Accounts Payable and Other Current Liabilities Wages Payable 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 Noncurrent Liabilities Total Liabilities Net Position Invested in Capital Assets, Net of Related Debt Restricted Debt Service Unrestricted Total Net Position $ 1,146,993 28,338 95,077 1,839 $ 1,272,247 59,975 5,305,693 254,441 2,381,388 (4,139,220) 3,862,277 3,862,277 5,134,524 43,177 221 1,600 13,485 152,919 I 1,126 222,528 1,373,351 I38,224 1,511,575 1,734, 103 2,186,657 28,338 I ,I 85,426 3,400,421 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 FUND -SEWER SERVICE FOR THE YEAR ENDED DECEMBER 31, 2014 Operating Revenues Charges for Sales and Services Sewer Charges Total Operating Revenues Operating Expenses Management Contract Administrative Fee Water Department Charges Depreciation and Amortization Other Expenses Total Operating Expenses Operating Income Non-operating Revenues (Expenses) Interest Revenue Interest Expense Other Income Loan Fee Total Net Non-operating Revenues (Expenses) Change in Net Position Net Position, Beginning of Year as Restated Net Position, End of Year $ 1,093,424 1,093,424 275,395 100,000 76,521 257,695 189,262 898,873 194,551 4,361 (25,871) 4,620 (16,890) 177,661 3,222,760 $ 3,400,421 The accompanying notes are an integral part of the financial statements. 20 CITY OF PARKVILLE, MISSOURI STATEMENT OF CASH FLOWS PROPRIETARY FUND -SEWER SERVICE FOR THE YEAR ENDED DECEMBER 31, 2014 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 Principal Paid on Capital Debt Interest Paid on Capital Debt Miscellaneous Net Cash (Used) by Financing Activities Cash Flows from Investing Activities Interest Received Net Cash Provided by Investing Activities Increase in Cash and Cash Equivalents Cash, Beginning of Year Cash, End of Year 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 and Amortization Expenses Changes in Assets and Liabilities Accounts Receivable Accounts Payable Accrued Interest Prepaids Other Net Cash Provided by Operating Activities $ 1,103,488 (859,065) 244,423 (158,509) (25,872) 4,620 (179,761) 4,361 4,361 69,023 1,077,970 $ 1,146,993 $ 194,551 257,694 10,064 (216,368) (494) (1,246) 222 $ 244,423 The accompanying notes are an integral part of the financial statements. 21 Assets Cash CITY OF PARKVILLE, MISSOURI STATEMENT OF ASSETS AND LIABILITIES AGENCY FUND DECEMBER31,2014 Legal Municipal Settlement Court Fund $ 21.354 $ 95.957 Total Assets $ 21,354 $ 95,957 Liabilities Due to Others $ 21,354 $ 95,957 Total Liabilities $ 21,354 $ 95,957 Total $117.311 $117,311 $117,311 $117,311 The accompanying notes are an integral part of the financial statements. 22 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The City of Parkville, Missouri (the City), is incorporated under the provisions of the State of Missouri as a fourth class city, which operates under an elected Mayor/Board of Aldermen form of government. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the government. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include I) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and the major individual enterprise fund are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Acco1111ti11g, and Fi11a11cial 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, 2014 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED 11'1easurement Focus, Basis of Acco1111ting, and Financial Statement Presentation - Continued Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. A 90-day availability period is used for revenue recognition for all governmental fund revenues except property taxes for which a 30-day availability period is used. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. In one, monies must be expended for the specific purpose or project before any amounts will be paid to the City; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and are usually revocable only for failure to comply with prescribed requirements. These resources are reflected as revenues at the time of receipt, or earlier if the susceptible to accrual criteria are met. Property taxes, sales taxes, franchise taxes, interest associated with the current fiscal period, and certain state and federal grants and entitlements are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. While property taxes are shown on the balance sheet as current assets of the City, they are not recognized as revenue at year end because statutory provisions prohibit their use until the year for which they were raised and budgeted. Instead, they are offset by deferred revenue accounts. 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. 24 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2014 NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED il'feas11reme11t Focus, Basis of Acco1111ti11g, mu/ Financial Statement Presentation - Co11ti1111ed Transportation Special Revenue Fund -This fund is used to account for the sales taxes collected and a county tax distribution for capital improvements and the expenditures for the related items. Capital Projects Fund -This fund accounts for the financing and acquisition and construction of various citywide improvements. The fund is used to account for construction projects undertalcen by the City. During 2014 the fund included receipts and disbursements on the Brink Meyer Road Project and Brush Creek Project. Debt Service Fund -This fund accounts for the accumulation of resources for, and the payment of, principal and interest on long-term general obligation debt of governmental funds. Revenue and expenses for each of the several debt service obligations are kept separate and accounted for independently of the other obligations so that funds available for each debt service obligation are used only for that obligation. Emergency Reserve Fund-This fund is used to account for financial reserves that are held by the City as a reserve for future projects or other needs. The City reports the following major proprietary fund: Sewer Service -This fund accounts for the provision of waste water and sewer services to the general public. All activities necessary to provide such services are accounted for in this fund, including administration, operations, maintenance, financing and related debt service, and billing and collection. As a general rule the effect of inter-fund activity has not been eliminated from the government-wide financial statements. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. 25 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2014 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Measurement Focus, Basis of Acco1111tillg, and Financial Statement Presentation - Continued 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. Net Position Classifications In the city-wide financial statements, equity is classified as net position and displayed in three components: 1. Net investment in capital assets -Consisting of capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of these assets. 2. Restricted net position -Consisting of net position with constraints placed on their use either by (I) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. The City first utilizes restricted resources to finance qualifying activities. 3. Unrestricted net position -All other net position that do not meet the definition of"restricted" or "net investment in capital assets". 26 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Fund Ba/a11ce C/assijicatio11s The Governmental Accounting Standards Board (GASB) released Statement 54-­ "Fund Balance Reporting and Governmental Fund Type Definitions" (GASB 54) on March 11, 2009, which is effective for the City's fiscal year ending December 31, 2014. This Statement is intended to improve the usefulness of the amounts reported in fund balance by providing more structured classifications. Under GASB 54, fund balance is reported under the following five classifications: 1. Non-spendable Fund Balance -consists of amounts that are not in a spendable form or are required to be maintained intact. 2. Restricted Fund Balance -consists of amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally, or through enabling legislation. The Restricted for Debt Service and Restricted for Capital Projects balances reflect amounts that are restricted for debt service and construction or other capital outlay projects. 3. Committed Fund Balance-consists of amounts tlmt can be used only for tl1e specific purposes determined by a formal action of tl1e District's highest level of decision-making autl1ority (the Board of Aldermen) and do not lapse at year end. The committed fund balance consists of general board reserves. 4. Assigned Fund Balance -consists of amounts intended for a specific purpose by the Board of Aldermen that has been delegated autl1ority to assign amounts. This fund balance classification reflects funds assigned for capital projects. 5. Unassigned Fund Balance -consists of any remaining fund balance that has not been reported in any other classification. Caslt, Caslt Equivalents am/ Invest111e11ts 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 tile funds required to accumulate interest. If a fund is not required to account for its own earnings by Jaw or regulation, the earnings are allocated to the General Fund. 27 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED Cash, Cash Equivalents and Im•estments -Co11ti1111ed Missouri state stah1tes authorize the City, with certain restrictions, to deposit funds in open accounts and certificates of deposit. Missouri state statutes also require that collateral pledged must have fair market value equal to 100% of the funds on deposit, less amounts insured by federal deposit insurance. Collateral securities must be held by the City or a disinterested third party and may include U.S. Government and government agency bonds and securities; general obligation bonds of any of the 50 states; general obligation bonds of any Missouri county, certain cities, and special districts; and revenue bonds of certain Missouri agencies. Obligations pledged to secure deposits are delivered to the banks' joint custody accounts at the custodial bank. Written custodial agreements are required that provide, among other things, that the collateral be held separate from the assets of the custodial bank. Statement of Cash Flows The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Receivables am/ Payables All trade accounts receivable are shown net of an allowance for uncollectable. Management records a trade accounts receivable allowance based on percentages of collection estimated from the aging of accounts receivable. At December 31, 2014, management determined that no allowance was necessary. Governmental funds report unearned revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds unearned revenue is reported as follows: General Fund Property Tax Receivable Debt Service Fund Property Tax Receivable Capital Projects Fund Property Taxes $ 945,100 660,967 663.196 $2.269.263 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. 28 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED Property Taxes -Co11tin11ed The City's property taxes are levied each November I based on the assessed value as of the prior January I for all real property and personal property located within the City. Property taxes are billed immediately following the levy date and considered delinquent after December 31 following the levy date. Assessed values are established by county assessors, subject to review by the county's Board of Equalization. The City is permitted by Missouri state statutes to levy taxes up to $1.00 per $100 of assessed valuation for general governmental services other than the payment of principal and interest on long-term debt and in unlimited amounts for the payment of principal and interest on long-term debt. The tax levy per $100 of assessed valuation which supports the 2014 budget was: General Fund General Revenue -Temporary $ 0.4784 0.1759 $ 0.6543 Taxes receivable represent property taxes levied for 2013 and prior years that have not yet been collected. The assessed value of property located within the City totaled $195,553,232. Prepayme11ts Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepayments in both government-wide and fund financial statements. These items are reported in the financial statements using the consumption method. A current asset for the prepaid amounts is recorded at the time of the purchase and the expenditure/expense is reported in the year which services are consumed. At fiscal year end, because prepayments are not available to finance future governmental fund expenditures, the fund balance is considered non-spendable in an amount equal to the carrying value of the asset on the fund financial statements. Restricted Cash a11d J1111estme11ts 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. 29 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Deferred Outflowsl/11jlows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period( s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. Currently, the City does not have any item that qualifies for reporting in this category. In addition to liabilities, the statement of financial position and balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position/fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has one type of item, which arise under the modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, unavailable revenue is reported in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Capital Assets Capital assets, which include property, plant, equipment, infrastructure (e.g., roads, bridges, sidewalks and similar items) and construction in progress are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. As the City is a Phase III government under Governmental Accounting Standards GASB 34, it has elected to exercise its option to forego retroactively reporting governmental infrastructure assets acquired prior to December 31, 2003. Governmental infrastructure assets on the statement of net assets include only roads, bridges, sidewalks and similar items acquired subsequent to December 31, 2003. Capital assets, excluding land, are defined by the City as assets with a cost of more than $2,500 and an estimated useful life of at least one year. All land purchases are capitalized regardless of cost. All purchased capital assets are valued at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated capital assets are valued at their estimated fair market value on the date received. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. 30 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Capital Assets -Co11ti1111ed Major outlays for capital improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of the business-type activities is included as part of the capitalized value of the assets constructed. If the expenditure is depreciable, it will be written off from the time it is put in service. The City defines infrastructure as the basic physical assets that allow the City to function. The assets include the street network, storm drainage network, and pedestrian and vehicle bridges and buildings combined with the site amenities such as parking and landscaped areas used by the City in the conduct of its business. Each major infrastructure network can be divided into subsystems. For example, the street network can be subdivided into pavement, curbs, gutters, sidewalks, land, medians, etc. These networks and subsystems are not delineated in the basic financial statements. Governmental street and parking 1 ot assets are reported using the modified approach as defined in GASB Statement 34 for infrastructure reporting of these assets. When using the modified approach, only those projects that add efficiency or capacity to street and parking lot assets are capitalized. Street and parking lot assets are not depreciated. Expenditures that preserve those assets are expensed. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Buildings Sewer Plant and Collection System Machinery and Equipment Compeusated Absences -Vacation 20-40 years 20-50 years 5 - 7 years City policies permit full-time employees to accumulate vacation time based on the number of years of service. Accumulated vacation payable is accrued when incurred in the government-wide financial statements and proprietary fund statements. In the governmental fund financial statements, a liability is accrued when it has matured, for example, as a result of employee resignations and retirements. All vested vacation is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements, and are payable with expendable resources. 31 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED Premium 011 Bonds Payable The premium on bonds payable at December 31, 2014 of $488,620 (net of accumulated amortization of $13,312) is being amortized over the term of the respective bonds using the straight line method. Amortization of the premium on bonds payable is included in interest and paying agent fees in the Statement of Revenues, Expenses and Changes in Net Position was $211,654 for the year ended December 31, 2014. Long-Term Obligatio11s In the government-wide financial statements, and proprietary fund types in the fund financial statements, Jong-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs as of the bond issuance date. The face amount of debt issued is reported as a financing source. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 32 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 2 -RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Explanation of Certain Differences behveen tlze Govemmental Fund Balance S/zeet and tlze Govemment-Wide Statement of Net Position (Page 15) The governmental fund balance sheet includes a reconciliation between fund balance -total governmental funds and net assets of governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains that "long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds". The details of this $(16,160,246) difference are as follows: Bonds Payable Certificates of Participation Payable Neighborhood Improvement District Limited General Obligation Bonds Issuance Premium and Discount Other: Net Reconciling Item for Long-term Liabilities (Page 15) Compensated Absences Accrued Interest Payable $ (1,755,000) (4,900,000) (9,050,000) (455.246) $ (] 6.160.246) (49,092) (297.397) $ (346.489) Explanation of Certain Differences behveen tlze Go11emmental Fund Statement of Revenues, Expenditures and Changes ill Fund Balances and tlze Government-Wide Statement of Activities (Page 18) The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances -total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that "Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this difference are as follows: Capital Outlay: Machinery and Equipment Parks Building Depreciation Expense Net Reconciling Item for Capital Outlays/Depreciation (Page 18) 33 $ 113,341 73,304 (251.002) $ (64.357) CITY OF PARKVILLE, MISSOUill NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 2-RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS-CONTINUED Expla11atio11 of Certain Differences between lite Govemmental F1111d Stateme11t of Revenues, Expenditures and Clta11ges ill F1111d Ba/a11ces and tlte Go11emme11t-Wide Statement of Activities (Page J 8)-Conti1111ed Another element of that reconciliation states that "The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of goverrunental funds. Neither transaction, however, has any effect on net assets. Also, goverrunental 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 Brush Creek Sewer NID New Bond Indebtedness Premium and Other Sources Debt Retired with Refinancing Total Refinancing of Brink Meyer Road NID New Bond Indebtedness Premium and Other Sources Debt Retired with Refinancing Total Principal Repayments General Obligation Bonds Certificates of Participation Total $ 5,375,000 227,543 (4.935.000) $ 667.543 $ 3,675,000 290,287 (3,525.000) $ 440,287 $ 270,000 250.000 $ 520.000 Another element of that reconciliation states that "Some expenses reported in tl1e statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in goverrunental funds." The details ohhis $(5,419) difference are as follows: Compensated Absences Amortization of Bond Discounts and Premium Interest Expense Other Net Reconciling Item Relating to Certain Expenses (Page 18) 34 $ (5,620) (10,530) (97,122) 4.973 $ (108,299) CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 3 -STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Budgets a11d Budgetmy Acco1mtiug Missouri statutes require that all political subdivisions of the State prepare an annual budget. Governmental funds required to have legally adopted annual budgets are the general fund, the special revenue funds, and the debt service fund. Legally adopted annual budgets are not required for the capital projects fund and the pennanent fund. 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. The reported budgetary data represents the final approved budget as adopted by the Board of Aldermen. There were no amendments to the budget in 2014. NOTE 4 -DEPOSITS AND INVESTMENTS As of December 31, 2014, the City had the following deposits and investments: US Treasuries and Agency Securities Deposits: Checking and Money Market Reported Amount I Fair Value $ 91,942 6,899,652 $6,991,594 Reconciliation of Government-wide Statement of Net Position to total deposits and investments: Cash and Cash Equivalents Restricted Cash and Investments Total Deposits and Investments /11terest Rate Risk $ 5,750,582 1,241,012 $6,991.594 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 fonnal 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-tenn investments are placed in Treasury securities having relatively short maturities. These consist of funds whose use is restricted and are unlikely to be needed prior to maturity (e.g. the Fewson Trust). 35 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 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 insured money market funds and CDs, including brokered CDs, whose value at maturity is guaranteed. 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, 2014, the carrying amount of the City's deposits was Jess 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 -I11vest111e11ts 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, 2014, the City's investments were not exposed to custodial credit risk. 36 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2014 NOTE 5 -CAPITAL ASSETS Capital asset activity for the year ended December 31, 2014, was as follows: Governmental Activities Capital Assets not being Depreciated Land Construction in Progress Infrastructure Total Capital Assets not being Depreciated Capital Assets being Depreciated Buildings and Improvements Machinery and Equipment Infrastructure Total Capital Assets being Depreciated Less Accumulated Depreciation for Buildings and Improvements Machinery and Equipment Infrastructure Total Accumulated Depreciation Total Capital Assets being Depreciated, Net Governmental Activities Capital Assets, Net Business-type Activities Capital Assets not being Depreciated Land Construction in Progress Total Capital Assets not being Depreciated Capital Assets being Depreciated Buildings and Improvements Machinery and Equipment Infrastructure Total Capital Assets being Depreciated Less Accumulated Depreciation for Buildings and Improvements Machinery and Equipment Infrastructure Total Accumulated Depreciation Total Capital Assets being Depreciated, Net Business-type Activities Capital Assets, Net $ Beginning Balance 869,880 8,472,776 3,375,653 12,718,309 4,!53,323 I,993,661 44,663 6,!91,647 (843,215) (1,657,298) (I0,208) (2,510, 721) 3,680,926 $ 16,399,235 $ 59,975 466,805 526,780 4,838,888 254,44! 2,38!,388 7,474,7!7 (2,865,477) (182,126) (833,923) (3,881,526) 3,593,!9! $ 4,I !9,97! 37 Increases Decreases $ $ 8,472,776 8,472,776 73,304 1 !3,34! 186,645 (99,285) (!50,44!) (1,276) (25!,002) (64,357) $ (64,357) $ 8,472,776 $ -$ (466,805) (466,805) 466,805 466,805 (184,341) (23,490) (49,863) (257,694) 209,I I I $ 209,I 11 $ (466,805) $ Ending Balance 869,880 3,375,653 4,245,533 4,226,627 2,107,002 44,663 6,378,292 (942,500) (I,807,739) (I I,484) (2,76!,723) 3,6!6,569 $ 7,862,102 $ 59,975 59,975 5,305,693 254,44! 2,381,388 7,94!,522 (3,049,818) (205,616) (883,786) (4,!39,220) 3,802,302 $ 3,862,277 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2014 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 Works Parks Nature Sanctuary Publice Information Total Depreciation Expense Business-type Activities -Sewer Operations $ $ $ 122,127 56,436 39,830 26,416 2,941 3,252 251,002 257,695 Construction in Progress consists of costs incurred to construct infrastructure assets (i.e. -streets, curbs, retaining wall, storm drainage network, and similar items) for two development projects: Brink Myers Road and Brush Creek Sewer. Both of these real estate developments are currently owned in part by financial institutions and developers and are at various stages of completion. 38 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2014 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, 2014: Due Beginning Ending Witl1in Balance Additions Reductions Balance One Year Governmental Activities: Certificates of Participation $ 5, 150,000 $ $ (250,000) $ 4,900,000 $ 270,000 Neighborhood Improvement District Limited Obligation Temp Notes 4,935,000 ( 4,935,000) 3,525,000 (3,525,000) Less Deferred Amounts for Issue Discounts (36,156) 2,782 (33,374) (2,782) for Deferred Refunding Difference (70,431) 70,431 Neighborhood Improvement General Obligation Bonds River Park 2,025,000 (270,000) 1,755,000 275,000 Brush Creek Bond 5,375,000 5,375,000 Brush Creek Premium 227,454 (6,144) 221,310 11,377 Brink Meyer Bond 3,675,000 3,675,000 Brink Meyer Premium 274,478 (7,168) 267,310 13,274 Governmental Activity Liabilities $ I 5,528,413 $ 9,551,932 $ (8,920,099) $ 16,160,246 $ 566,869 Business-D:ge Activities: Bonds payable Revenue Bonds (SRF) 2004A $ 1,595,000 $ $ (140,000) $ 1,455,000 • 145,000 • Lease Purchase Agreement 159,940 (I 0,590) 149,350 11,126 Plus Deferred Amounts for Jssue Premiums 79,189 (7,919) 71,270 7,919 Business-type Activity Long-term Liabilities $ 1,834,129 $ -$ (158,509) $ 1,675,620 $ 164,045 $1,755,000 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. The Neighborhood Improvement District Limited Obligation Temp Notes shown above will in 2014 be refinanced as permanent financing as special assessment debt with governmental commitment. 39 CITY OF PARKVILLE, MISSOUIU NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 6 -LONG-TERM OBLIGATIONS -CONTINUED Ge11eral Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition, construction and renovation of major capital assets. General obligation bonds cmTently outstanding consist of the following: General Obligation Bonds Governmental Activities Interest Rates Original Issue Series 2010 2.7% to 3.25% $ 2,785,000 Final Maturity Date 3/1/2020 Principal Payments 2014 Outstanding December 31, 2014 $ 270,000 $ 1,755,000 $ 270,000 $ 1,755,000 On December 23, 2010, tl1e City refinanced the 2001 General Obligation Bonds. The City issued $2, 785,000 of new bonds to retire tl1e old bonds. The interest rates on the. bonds vary from 2% to 3.25%. The annual requirements to amortize governmental activities general obligation bonds outstanding as of December 31, 2014, are as follows: Governmental Activities PrinciEal Interest 2015 $ 275,000 $ 46,256 2016 280,000 40,700 2017 285,000 33,275 2018 295,000 24,575 2019 305,000 15,194 2020 315,000 5,119 $ 1,755,000 $ 165,119 $1,755,000 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. 40 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 6-LONG-TERM OBLIGATIONS-CONTINUED 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 I 0% of the assessed value of taxable tangible property and to incur additional general obligation indebtedness not exceeding, in the aggregate, an additional I 0% of the assessed value of taxable tangible property for the purpose of acquiring rights-of-way, construction, extending and improving streets and avenues and/or storm sewer systems, and purchasing or construction of waterworks, electric, or other light plants, provided that the total general obligation indebtedness of the city does not exceed 20% of the assessed valuation of taxable property. The City debt limit does not exceed the State Constitution limits. By Resolution No. 09-01-14, the City adopted a debt management policy to voluntarily limit its debt burden to no more than 80% of the limit prescribed by state law. 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. Certificates of Participatio11 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, 2014, is $4,900,000. Proceeds from the certificates of participation were used for City Hall construction. Rush Creek stabilization, land acquisition and other scheduled capital improvements. The annual requirements to amortize these certificates of participation are as follows: 2015 2016 2017 2018 2019 2020-2024 2025-2027 41 Principal $ 270,000 290,000 305,000 330,000 355,000 2,140,000 1,210,000 $4.900.000 Interest $ 204,890 193,758 181,781 168,840 154,443 513,600 109,120 $1.526.492 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2014 NOTE 6 -LONG-TERM OBLIGATIONS -CONTINUED Neighborhood /111proveme11t District Limited Obligatio11 Bonds A. Brush Creek Sewer Project During the year, the City refinanced the Brush Creek Sewer Project Temporary Notes by issuing long term bonds. The funds were used to retire the temporary notes by issuing long term bonds. The interest notes on the bonds vary from 3% to 4% based upon the maturity. The principal payments on the bonds vary from $210,000 to $765,000 in 2034, the maturity date of the bonds. The City issued 20 year bonds connected with the project. The annual requirements to amortize the bonds are as follows: 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 Principal $ 210,000 215,000 220,000 1,210,000 1,425,000 2,095.000 $5.375.000 B. Brink Meyer Road Neighborhood Improvement District Interest $ 228,663 187,088 183,938 177,563 171,038 749,888 538,981 245.713 $2.482.875 During the year, the City refinanced the Brink Meyer Road Neighborhood Improvement District Temporary Notes by issuing long term bonds. The City issued twenty year bonds at initial notes. The interest rate on the bonds varies form 3% to 5% based upon the maturity. The principal payment on the bonds varies from $140,000 to $550,000 in 2034, the maturity date of the bonds. The annual requirements to amortize the bonds are as follows: 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 42 Principal $ 140,000 145,000 150,000 810,000 955,000 1.475.000 $3.675.000 Interest $ 180,874 147,988 145,888 141,613 137,188 614,988 466,594 219.125 $?.054.258 CITY OF PARKVILLE, MISSOUill NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2014 NOTE 6-LONG-TERM OBLIGATIONS-CONTINUED Revenue Bonds (SRF) 2004A The City issued Sewerage System Revenue Bonds Series 2004 in the original amount of $2,750,000 with interest rates ranging from 3.0% to 5.25% and with a final maturity in 2025. Principal payments are scheduled annually ranging from $30,000 to $170,000. The balance at December 31, 2014, is $1,455,000. Bonds maturing on January 1, 2015, and thereafter may be called at the option of the City for redemption and payment prior to maturity in whole or in part on any date with the consent of the bondholder, or on each June 1 and December 1, commencing December 1, 2013, at the redemption price of 100% of principal amount of the bonds redeemed, plus accrued interest to the redemption date. Bonds maturing on January 1, 2019, January 1, 2020, and January 1, 2021, are not subject to redemption prior to maturity. Series 2004A (SRF) Sewage System Refunding Revenue Bonds (SRF) are special, limited obligations of the City payable solely from, and secured by a pledge of, the net revenues. The taxing power of the City is not pledged to the payment of the bonds. The bonds do not constitute a general obligation of the City or an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction. The annual requirements to amortize these bonds outstanding as of December 31, 2014, are as follows: Principal Interest 2015 $ 145,000 $ 72,938 2016 150,000 65,688 2017 150,000 58, 188 2018 155,000 50,688 2019 160,000 42,550 2020-2024 695 000 87.750 $ 1 455.000 $-3.11,802 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. 43 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 6 -LONG-TERM OBLIGATIONS -CONTINUED Restricted assets of the principal and interest account are to be used for payment of current principal and interest on bonds. Restricted assets of debt service are available to pay principal and interest in the event of a deficiency in the principal and interest account. Restricted assets of the depreciation and replacement account are available to operate, maintain, or improve the system, call bonds or for payment of debt service in the event of a deficiency in other restricted assets. Lease Purchase Agreement In July 2003, the City entered into a lease-purchase agreement wherein the City sold its sewer plant for $585,000 and leased it back for a period of twenty-two years. The proceeds from the lease-purchase were used to make certain improvements to the sewer plant property. Under the lease the City will have the full use of the property and will make rental payments, which will apply to the principal and interest under the lease. Required payments under the lease purchase agreement on the sewer plant are as follows: Principal Interest 2015 $ 11,126 $ 7,330 2016 11,689 6,767 2017 12,281 6,175 2018 12,902 5,553 2019 13,555 4,900 2020-2024 78,794 13,486 2025 -2027 13 554 225 $ H2,35Q $ 44,436 During the year the temporary notes on the Brush Creek Drainage and the Brink Meyer Road Neighborhood Improvement Districts were refinanced into permanent bond financing with a 20-year life. The Brush Creek funds were used to finance the costs of constructing sewer lines for the Brush Creek Sewer Area and other related improvements, including interest and issuance costs. The Brink Meyer funds were used for the Brink Meyer Road Neighborhood Improvement District for the extension of Brink Myers Road and the related retaining wall and the extension of electric and water utilities. The bonds constitute a valid and legally binding indebtedness of the City, payable from special assessments on property within the NIDs which is benefited by the improvements. The faith, credit and resources of the City are irrevocably pledged for principal and interest on the bonds if the assessments are inadequate to support annual debt payments. The first assessments were due December 31, 2014, with revenues dedicated for paying bond debt beginning in 2015. Although no assessments were collected for the Brink Meyer NID, approximately 64% of assessments were collected for the Brush Creek NID (the larger of the two 44 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 6-LONG-TERM OBLIGATIONS-CONTINUED issues). All of the delinquent properties are owned by several bank subsidiaries due to foreclosures. While the City is vigorously pursuing its options to enforce payment of the assessments, there is considerable uncertainty as to when, and how much, of the outstanding and future assessments will be collected. Anticipating possible shortfalls with collections, the City has for the past several years accumulated reserves that, at current collection rates, will be sufficient to cover the NID debt payments through 2022, should that be necessary. Additional options are being developed that would extend the ability to cover payments for as long as may be necessary. While the City is confident that most if not all of the assessments will eventually be collected, the City is financially positioned to cover all debt payments in the interim, and as may be needed. 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. 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 tbat 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, 2014. 45 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 7 -RISK MANAGEMENT -CONTINUED MPR's financial statements are presented in its Comprehensive Annual Financial Report for the year ended December 31, 2014. 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. J11vestme11ts -Trust Fund The City was the recipient of funds from a resident's estate during the calendar year 2002. One-half of annual earnings are distributed to the City to be used on various city capital projects. The funds were previously held by a trustee for the benefit of the City. In 2011, the City took over management of the fund as a Special Revenue Fund. By Resolution No. 12-01-13, the Board of Aldermen enacted a policy restricting the use of the fund to follow the intentions of the original donor of the fund. The balance of the annual net income after distributions to the City is reinvested in the principal of the fund. On December 31, 2014 the trust assets had an account balance of $575,112. NOTE 8 -COMMITMENTS AND CONTINGENCIES Litigation The City is a defendant in various lawsuits relating to easements, condemnations and other matters as a result of the ordinary course of City activities. The City's management and legal counsel anticipate that the potential claims against the City not covered by insurance, if any, resulting from such matters would not materially affect the financial position of the City. Co111plia11ce with State Rules 011 ll!faximum Percent of Revenue Allowed from Traffic Fines Statement of compliance with State rules on maximum percent of revenue allowed from traffic fines in fulfillment of HB I 03, amending Section 302.341.2 RSMO, effective August 28, 2013, requiring municipalities to report the percent of annual general operating revenue derived from fines and court costs for traffic violations: General Operating Revenue for 2014 All Fines and Court Costs from Traffic Violations Occurring with the City Percent of Total Operating Revenue 46 $5,387,044 $ 269,935 5.01% CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 8 -COMMITMENTS AND CONTINGENCIES Complia11ce with State Rules 011 il'Iaxi11111111 Percent of Re11e1111e Allowed from Traffic Fines-Co11ti1111ed The City Court software does not accmmt separately for traffic fines and court costs from other police fines and court costs. However, since total Court revenue, including amended charges, from all sources for 2014 was 5.01% of the General Fund annual operating revenue, the traffic-related portion of that court revenue was 5.01% or Jess, which is well below the maximum percentage allowed. NOTE 9 -INTER-FUND TRANSACTIONS Inter-fund transfers for the year ended December 31, 2014, consisted of the following: Transfer to Reserve Fund (Net) Transfer from Capital Projects Fund (Net) Transfer from Transportation Special Revenue Fund (Net) Transfer to Debt Service Fund (Net) Transfer to Non-Major Funds Transfer from General Fund (Net) $317.000 $(338.393) $(343.943) $ 220.939 $ 248.088 $(] 03.690) Transfers are used to (I) 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 ft.md to finance various programs accounted for in other funds in accordance with budgetary authorizations. NOTE 10 -PENSION PLAN Plan Description The City participates in the Missouri Local Government Employees Retirement System (LAGERS), an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for local government entities in Missouri. LAGERS is a defined benefit pension plan, which provides retirement, disability, and death benefits to plan members and beneficiaries. 47 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 10 -PENSION PLAN-CONTINUED 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 40l(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. F111u/i11g Status Full-time employees of the City contribute 4% of their gross pay to the pension plan. The June 30, 2013 statutorily required employer contribution rates are 3.7% (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. A111111al Pe11sio11 Cost (APC) a11d Net Pe11sio11 Obligatio11 (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 ofYear NPO End of Year 48 $ 62,687 $ 62,687 62,687 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 10-PENSION PLAN-CONTINUED The annual required contribution (ARC) was determined as part of the February 29, 2012 and February 28, 2013 annual valuation using the entry age actuarial cost method. The actuarial assumptions as of February 28, 2014 included: (a) a rate of return on the investment of present and future assets of7.25% per year, compounded annually (b) projected salary increases of 3.5% per year, compounded annually, attributable to inflation (c) additional projected salary increases ranging from 0.0% to 6.0% per year, depending on age and division, attributable to seniority/merit, (d) pre­ retirement mortality based on the 75% of the RP-2000 Combined Healthy table set back 0 years for men and 0 years for women, and (e) post-retirement mortality based on 105% of the 1994 Group Annuity Mortality table set back 0 years for men and 0 years for women. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a five-year period. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payrolls on a closed basis. The amortization period as of February 29, 2012 was 30 years for the General division and 28 years for the Police division. The amortization period as of February 28, 2013 was 29 years for the General division and 26 years for the Police division. One-Year Trend lnfonnation Year Annual Percentage Net Ended Pension of APC Pension June 30, Cost CAPCJ Contributed Obligation 2012 $ 61,229 100.0% $ 0 2013 $ 62,067 100.0% $ 0 2014 $ 62,687 100.0% $ 0 The above assets and actuarial accrued liability do not include assets and present value of benefits associated with the Benefit Reserve Fund and the Casualty Reserve Fund. The actuarial assumptions were changed in conjunction with the February 28, 2011, annual actuarial valuations. For a complete description of the actuarial assumptions used in the annual valuations, please contact the LAGERS office m Jefferson City, Missouri. 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. 49 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 11 -DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES­ CONTINUED Level I Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level I 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 I of the valuation hierarchy. Level I 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 I or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The following table presents the fair value measurements of assets and liabilities recognized in the accompanying Statement of Financial Position measured at fair value on a recurring basis and level within the FAS 157 fair value hierarchy in which the fair measurements fall at December 31, 2014. Fair Value Measurements Using Quoted Prices In Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Fair Value (Level I) (Level 2) (Level3) Government Securities: Trust Fund $ 91,942 $ 91,942 50 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER31, 2014 NOTE12-SUBSEQUENTEVENTS The City has evaluated subsequent events through August 4, 2015, the date on which the financial statements were available to be issued. The City entered into a lease purchase agreement for the sewer plant in prior years that expired in 2025. The City decided in February 2015 that it would be beneficial to retire the lease obligation based upon current interest rates and paid off the lease obligation. The City changed its classification with LAGERS from tier one to tier three. NOTE 13 -UPCOMING ACCOUNTING PRONOUNCEMENTS o Statement No. 68, Accounting and Financial Reporting for Pensions -an amendment of GASB Statement No. 27 -This statement will require the City to change the accounting for the pension costs related to the City's participation in the Missouri Local Government Employees Retirement System (LAGERS). In addition, the City will also be recognizing a net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to the City's proportionate share of the collective amounts in LAGERS. o Statement No. 69, Government Combinations and Disposals of Government Operations -This statement is not likely to impact the City until there is a combination or disposal of operations that is subject to this guidance. o Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees -Management will review the special assessment bonds to determine whether there are any changes required by this statement. o GASBS No. 69, Government Combinations and Disposals of Government Operations, which is effective for government combinations and disposals of government operations occurring in financial reporting periods beginning after December 15, 2013, with earlier implementation encouraged. o GASBS No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, which is effective for reporting periods beginning after June 15, 2013, with earlier implementation encouraged. 51 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2014 NOTE 14-RESTATEMENT OF BEGINNING BALANCES J111pleme11tatio11 of New GASB Pro1101111ce111e11ts a11d J11terest Expense Adj11st111e11t In 2014 the City adopted the following new accounting standard in order to conform to the following Governmental Accounting Standards Board Statement. GASE Statement No. 65, Items Previously Reported as Assets and Liabilities. The Statement reclassified items from assets or liabilities in the statement of financial position into the new categories of deferred outflow or deferred inflow of resources. As a result, costs related to the issuance of debt, previously deferred, were restated as if they had been reported as an outflow ofresources when incurred. The City did not accrue interest expense on temporary notes at the end of 2013 requiring an adjustment to accrued interest payable and net position. The impact on the financial statements was a decrease in beginning net position as follows: Net Position-January I, 2014, as previously reported Restatement of deferred charge for debt issuance costs Deferred Refunding Difference Restatement oflnterest Expense and Interest Payable Net Position-January I, 2014, restated Statement of Activities Governmental Business-type Activities Activities $5,513,336 (143,043) (70,43 I) (84,263) $5 215,5.22 $3,304,666 (81,906) $3.,222 760 NOTE 15 -INVESTMENT -LAND AND DEVELOPMENT COSTS Two projects that were classified as construction in progress at the end of 2013 were completed in 2014 and moved from temporary to permanent (20-year) financing. Upon completion in 2014, these projects, the Brush Creek Drainage Area Neighborhood Improvement District and the Brink Meyer Road Neighborhood Improvement District, were reclassified as capital assets, with the expenditures considered as investment in land and development costs. Assessments on the benefitted properties were levied in late 2014, with the first payments due on December 31, 2014. 52 CITY OF PARKVILLE, MISSOURI NOTES TO BASIC FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2014 NOTE 15 -INVESTMENT -LAND AND DEVELOPMENT COSTS-CONTINUED The projects are intended to provide sewer and certain road services needed to enable residential and commercial development of several tracts of land in Parkville, and were begun in 2007. Several events and difficulties caused delays in completing the projects, including the financial and housing market collapses of the Great Recession. At the request of the developers, the initial phase of the Brush Creek project was expanded to include an additional tract, drawing out the construction by several years. The Brink Meyer project experienced construction difficulties which drew out that project as well. The final costs include both the construction costs and the temporary note refinancing costs, including capitalized interest. 53 REQUIRED SUPPLEMENTARY INFORMATION Required supplementary information (RSI) includes financial information and disclosures that are required by the GASB but are not considered a part of the basic financial statements. Such information includes: • Modified Approach to Infrastructure Reporting • Budgetary Comparison Schedule -General Fund 54 CITY OF PARKVILLE, MISSOURI REQUIRED SUPPLEMENTARY INFORMATION DECEMBER 31, 2014 Information needed to support the use of the Modified Approach for Infrastructure Reporting: Street Assets The street condition rating is accomplished every other year or triennially. Every street 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 rated at a 6.0 or above and to maintain all streets within the City at a service level of 5.0 or below for each respective type of street. A field rating scale has been developed to indicate the overall condition of the observed street. 1 Indicates an equivalent of a newly constructed street (crack sealing and minor patching) 2 Indicates slight imperfections in the street condition (crack sealing, slurry sealing, and/or patching) 3 Indicates some deterioration has occurred and minor maintenance may be required (street needs various repairs to maintain condition; patches; possible milling and overlay) 4 Indicates noticeable deterioration maintenance is required (deterioration is significant and visually noticeable; repair mill and overlay) 5 Indicates significant maintenance is required (considerable cracking, potholes or other fatigue demands repair work and overlay) 6 Indicates serious deficiency (deterioration mandates edge milling, to prevent total base failure, needs overlay) 7 Indicates severe deficiency (severe deterioration needing various repairs) 8 Indicates major failure (some good street is left within a total replacement street or parking lot condition) 9 Indicates nearly total replacement is required (limited salvage of street or parking lot area is possible) I 0 Indicates total replacement is required. 55 CITY OF PARKVILLE, MISSOURI REQUIRED SUPPLEMENTARY INFORMATION -CONTINUED DECEMBER 31, 2014 While the City desires to maintain these systems at higher levels in order to avoid significant deferred maintenance costs, minimum acceptable condition levels have been defined as having at least 80 percent of the streets at or below a rating of 5. The following table compares the minimum acceptable conditions levels with the actual condition levels for current and prior years. Fiscal Number of Streets Number of Streets Actual Condition Minimum Year Rated Rated :S 5 Level Acceptable Condition Level 2001 149 140 94.0% 80.0% 2003 174 154 88.5% 80.0% 2005 186 175 94.1% 80.0% 2008 200 196 98.0% 80.0% 2011 203 199 98.0% 80.0% 2014 208 203 98.0% 80.0% The City's goal is to continually improve the condition of its streets and parking Jots. 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 $400,000 annually. A total of $41,260 was spent out of the Transportation Fund. The expenditures were for crack seal project ($! 7,564), street striping ($6,902), street materials ($9,010), and the curb and sidewalk program ($7,784). The following table compares the budgeted expenditures planned to maintain the system at a minimum acceptable condition level with actual amounts spent for the current and prior years. Fiscal Estimated Actual Year Expenses Expenses 2005 $ 246,519 $ 241,190 2006 $ 292,227 $ 292,579 2007 $ 246,819 $ 213,183 2008 $ 256,481 $ 246,886 2009 $ 233,000 $ 233,000 2010 $ 234,000 $ 190,172 2011 $ 205,000 $171,177 2012 $ 205,000 $ 193,150 2013 $ 135,000 $ 91,236 2014 $ 245,000 $ 41,260 56 CITY OF PARKVILLE, MISSOURI NOTES TO REQUIRED SUPPLEMENTARY INFORMATION BUDGET ARY DISCUSSION FOR THE YEAR ENDED DECEMBER 31, 2014 Budgetary Accounting The City prepares its budget for the General Fund and Other funds on the cash basis of accounting which approximates the accrual basis. Capital expenditures are budgeted and shown similar to the way the expenditures appear in the Statement of Revenues, Expenditures and Changes in Fund Balance. This basis is consistent with the basis of accounting used in presenting the General Fund in the basic financial statements. All unexpended appropriations lapse at year end. Through the budget, the Board of Aldermen sets the direction of the City, allocates its resources and establishes its priorities. The Annual Budget assures the efficient and effective uses of the City's economic resources, as well as establishing that the highest priority objectives are accomplished. The Annual Budget covers the period from January 1, to December 31, and is a vehicle that accurately and openly communicates these priorities to the community, businesses, vendors, employees and other public agencies. Additionally, it establishes the foundation of effective financial planning by providing resource planning, performance measures and controls that permit the evaluation and adjustment of the City's performance. The City's budget is prepared and based on various expenditure categories; personnel, supplies and services, minor capital outlay and capital improvement programs. The first three listed are considered operational in nature or known as recurring costs. Capital improvement projects are asset acquisitions, facilities, systems, and infrastructure improvements typically over $1,000 and/or those items 'outside' of the normal operational budget. These are known as one-time costs. The City collects and records revenue and expenditures within the Governmental Activities. All fimding sources are kept separate for both reporting and use of the money. The General Fund is where most City services are fimded that are not required to be segregated. The budget process begins as a tean1 effort in August of each year. Then the individual departments use projected revenue assumptions to prioritize and recommend the next fiscal year's objectives. The City Administrator's Office review all budget proposals and revenue assumptions, as well as all current financial obligations before preparing the document that is proposed to the Board of Aldermen. The Board of Aldermen reviews the Proposed Budget and the final adoption of the budget is scheduled for approval in December. 57 CITY OF PARKVILLE, MISSOURI STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2014 Original Variance with and Final Final Budget - Budgeted Actual Positive Amounts Amounts (Negative) Revenues Taxes $ 1,067,700 $ 1,071,870 $ 4,170 Licenses 40,900 47,469 6,569 Permits 201,000 331,745 130,745 Franchise Fees 837,000 779,169 (57,831) Sales Ta.xes 910,000 1,084,221 174,221 Other Revenue 28,200 103,181 74,981 Court Revenue 290,000 269,935 (20,065) Interest Income 22,000 6,626 (15,374) Miscellaneous Revenue 37,000 41,246 4,246 Transfer In 455,000 582,680 127,680 Total Revenues 3,888,800 4,318,142 429,342 Expenditures Administration 909,886 907,279 2,607 Police 1,268,586 1, 174,585 94,001 Municipal Court 147,313 141,034 6,279 Public Works 241,414 147,694 93,720 Community Development 335,366 290,278 45,088 Street Department 360,137 346,824 13,313 Parks Department 327,008 312,283 14,725 Nature Sanctuary 28,300 27,618 682 Channel 2 & Website 17,600 15,749 1,851 Transfer Out 538,000 538,000 IT 46,900 34,167 12,733 Total Expenditures 4,220,510 3,935,509 285,001 Excess of Revenues over Expenditures $ (331,710) $ 382,633 $ 714,343 The accompanying notes are an integral part of the financial statements. 58 Actuarial Valuation Date 02-28-12 02-29-13 02-28-14 CITY OF PARKVILLE, MISSOURI NOTES TO REQUIRED SUPPLEMENT ARY INFORMATION SCHEDULE OF FUNDING PROGRESS FOR THE YEAR ENDED DECEMBER 31, 2014 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress (b) (a) Actuarial (b-a) (c) Actuarial Accrued Un-funded (alb) Annual Value Liability Liability Funded Covered of Assets Entry Age CUAAL) Ratio Payroll $288,350 $ 517,839 $ 229,489 56% $1,491,820 $446,213 $ 678,863 $ 232,650 66% $1,546,387 $600,063 $ 796,059 $ 195,996 75% $1,586,224 59 [(b-a)/c] UAAL as a Percentage of Covered Pavroll 15% 15o/o 12°/o OTHER SUPPLEMENT ARY INFORMATION 60 Assets Cash and Cash Equivalents Restricted Cash and Investments Other Receivables Total Assets Liabilities Accounts Payable Fund Balances Unreserved, Reported in: Special Revenue Funds Community Betterment Total Fund Balances Total Liabilities and Fund Balances CITY OF PARKVILLE, MISSOURI COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2014 SEeciaI Revenue Municipal Equip Guest Room Nature Park Court Reserve Tax Sanctua!)' Donations Recoupment Fees $ 3,281 $ 404 $ 42,781 $ 45,794 $ 38,892 $ $ $ - 3,281 $ 404 $ 42,781 $ 45,794 $ 38,892 1,530 $ -$ -$ -$ 14 1,751 404 42,781 45,794 38,878 1,751 404 42,781 45,794 38,878 3,281 $ 404 $ 42,781 $ 45,794 $ 38,892 The accompanying notes are an integral part of the financial statements. 61 Police Training Fees -LET $ 46,262 $ 46,262 $ 2,045 44,217 44,217 $ 46,262 Assets Cash and Cash Equivalents $ Restricted Cash and Investments Other Receivables Total Assets $ Liabilities Accounts Payable $ Fund Balances Unreserved, Reported in Special Revenue Funds Community Betterment Total Fund Balances Total Liabilities and Fund Balances $ TIF DeveloEment 12,355 - 5,448 17,803 - 17,804 - 17,804 17,804 CITY OF PARKVILLE, MISSOURI COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2014 SEecial Revenue Permanent Market Place Police Fewson DeveloEment ShoE Total Project $ 9,407 $ 3,971 $ 203,147 $ - - - -559,301 - -5,448 - $ 9,407 $ 3,971 $ 208,595 $ 559,301 $ -$ -$ 3,589 $ 1,410 9,407 3,971 205,006 - - --557,891 9,407 3,971 205,006 557,891 $ 9,407 $ 3,971 $ 208,595 $ 559,301 The accompanying notes are an integral part of the financial statements. 62 Total Nonmajor Governmental Funds $ 203,147 559,301 5,448 $ 767,896 $ 4,999 205,006 557,891 762,897 $ 767,896 CITY OF PARKVILLE, MISSOURI COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31,2014 SEecial Revenue Municipal Equip Guest Room Nature Park Court Police Training Reserve Tax Sanctuai::y Donations Recoupment Fees Fees -LET Revenues Investment Earnings $ -$ -$ -$ -$ -$ TIFRevenue Legal Settlement Miscellaneous -1,592 6,539 332 3,368 3,424 Total Revenues 1,592 6,539 332 3,368 3,424 Expenditures Current General Government -5,000 354 --2,588 TIF foqJense Capital Outlay 1,530 -4,225 Total foqJenditures 1,530 5,000 4,579 --2,588 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,530) (3,408) 1,960 332 3,368 836 Other Financing Sources (Uses) Other Transfers In (Out) -1,500 Total OU1er Financing Sources -1,500 Net Change in Fund Balances (1,530) (1,908) 1,960 332 3,368 836 Fund Balances, Beginning of Year 3,281 2,312 40,821 45,462 35,510 43,381 Fund Balances, End of Year $ 1,751 $ 404 $ 42,781 $ 45,794 $ 38,878 $ 44,217 The accompanying notes are an integral part of the financial statements. 63 CITY OF PARKVILLE, MISSOURI COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31,2014 Total SEecial Revenue Permanent Nonmajor Major TIF Market Place Police Fewson Governmental Projects DeveloEment Development Shop Total Project Funds Revenues Investment Earnings $ 188 $ 100 $ 10 $ $ 298 $ 6,924 $ 7,222 TIF Revenue -436,968 -436,968 -436,968 Legal Settlement Miscellaneous 3,360 -4,565 23,180 -23,180 Total Revenues 3,548 437,068 10 4,565 460,446 6,924 467,370 E>qiendi tu res Current General Government - - -3,428 11,370 3,115 14,485 TIFExpense -431,609 1,638 433,247 -433,247 Capital Outlay -- -5,755 5,755 Brink Meyer foqienses 316,446 - --330, 143 -330,143 Total foqienditures 316,446 431,609 1,638 3,428 766,818 3,115 769,933 Excess (Deficiency) of Revenues Over (Under) foqienditures (312,898) 5,459 (1,628) 1,137 (306,372) 3,809 (302,563) Other Financing Sources (Uses) Other Transfers In (Out) 249,520 -251,020 (2,932) 248,088 Total OU1er Financing Sources 249,520 - - -251,020 (2,932) 248,088 Net Change in Fund Balances (63,378) 5,459 (1,628) 1,137 (55,352) 877 (54,475) Fund Balances, Beginning of Year 63,378 12,345 11,034 2,834 260,358 557,014 817,372 Fund Balances, End of Year $ -$ 17,804 $ 9,406 $ 3,971 $ 205,006 $ 557,891 $ 762,897 The accompanying notes are an integral part of the financial statements. 64 tvlcmber Americun Inslitutc of Certified Public Accountunts BRUCE D. CULLEY, C.P.A., P.C. 3000 HROOKTREE LANE, SUITE 2111 GLADSTONE, MISSOURI 64119 816-153-I040 FAX: 816-153-0721 brucecullcy@sbcglobnl.net Member Missouri Socicly of Certified Public Accountants INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNAJENT A UDITJNG STANDARDS The Board of Directors City of Parkville Parkville, Missouri I have audited, in accordance with the 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, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Parkville, as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City of Parkville's basic financial statements, and have issued my report thereon dated July 5, 2015. Internal Control over Financial Reporting In planning and performing my audit of the financial statements, I considered the City of Parkville's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing my opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Parkville's internal control. Accordingly, I do not express an opinion on the effectiveness of the City of Parkville's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material wealmess, yet important enough to merit attention by those charged with governance. My consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material wealmesses or, significant deficiencies. Given these limitations, during my audit I did not identify any deficiencies in internal control that I consider to be material wealmesses. However, material wealmesses may exist that have not been identified. 65 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Parkville's financial statements are free from material misstatement, I performed tests of its compliance with certain provisions of Jaws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of my testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Gladstone, Missouri August 5, 2015 ---~~~e~u~~ Certified Public Accountant 66 (