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20. Audited Annual Financial Report Fiscal 2008CITY OF AUDITED ANNUAL FINANCIAL REPORT FISCAL YEAR 2008 July 1, 2007 - June 30, 2008 CITY OF KALISPELL ANNUAL FINANCIAL REPORT TABLE OF CONTENTS INTRODUCTORY SECTION Letterof Transmittal............................................................................................................................................ 3-5 ElectedOfficials.................................................................................................................................................... F FINANCIAL SECTION Management's Discussion and Analysis............................................................................................................. 7-17 IndependentAuditor's Report............................................................................................................................18-19 Basic Financial Statements: Government -wide Financial Statements: Statementof Net Assets........................................................................................................................ 20 Statementof Activities......................................................................................................................... 21 Fund Financial Statements: BalanceSheet — Governmental Funds................................................................................................ 22 Reconciliation of the Balance Sheet — Governmental Funds to the Statement of Net Assets ........ 23 Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds.. 24 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities...................................................................... 25 Balance Sheet — Proprietary Funds.................................................................................................... 26 Statement of Revenues, Expenses, and Changes in Net Assets — Proprietary Funds ..................... 27 Statement of Cash Flows — Proprietary Funds.................................................................................. 28 Statement of Fiduciary Net Assets — Fiduciary Funds...................................................................... 29 Notes to the Financial Statements............................................................................................................ 30-57 Required Supplementary Information: Single Audit Section: Scheduleof Expenditures of Federal Awards................................................................................... 58 Notes to the Schedule of Expenditures of Federal Awards............................................................... 59 Budgetary Comparison Schedule — General and Major Special Revenue Funds ........................... 60 Budgetary Comparison Schedule — Budget to GAAP Reconciliation — General and Major SpecialRevenue Funds......................................................................................................................... 61 Report on Compliance and on Internal Control over Financial Reporting based on an Audit of Financial Statements Performed in Accordance with Government AuditingStandards......................................................................................................................... 62-63 Report on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in accordance with OMB Circular A-133 ..........................................64-65 Schedule of Findings and Questioned Costs.......................................................................................66-67 Report on other Compliance, Financial, and Internal Accounting Control Matters ........................................................................................................................................................... 68 Report on Prior Audit Report Recommendations............................................................................. 69 CITY OF KALISPELL ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Supplementary Information: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds.......................................................... 70-77 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — NonmajorGovernmental Funds...................................................................................................... 78-85 Budgetary Comparison Schedule — MajorDebt Service Fund................................................................................................................. 86 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Nonmajor Governmental Funds.................................................................. 87-101 CombiningBalance Sheet — Nonmajor Enterprise Funds................................................................ 102 Combining Statement of Revenues, Expenditures, and Changes in Net Assets — Nonmajor EnterpriseFunds............................................................................................................................... 103 Combining Statement of Cash Flows — Nonmajor Enterprise Funds .............................................. 104 MISCELLANEOUSSTATISTICS...................................................................................................................105-109 INTRODUCTORY SECTION The City Of Kalispell Incorporated 1892 Telephone (406) 758-7700 FAX (406) 758-7758 Post Office Box 1997 Kalispell, MT 59903-1997 November 24, 2008 To the Honorable Mayor, members of the City Council, and Citizens of the City of Kalispell, Montana State law requires that all general-purpose local governments publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, the annual financial report for the City of Kalispell, Montana for the fiscal year ended June 30, 2008, is submitted for your review. The Finance Office prepared this report. Responsibility for the accuracy and completeness of the presented data, including all disclosures, rests with the City. We believe the data, as presented, is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain an understanding of the City's financial affairs have been included. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Kalispell's MD&A immediately precedes the City's basic financial statement within this report. Reporting Entity and Services Provided The City of Kalispell, incorporated in 1892, is located in the western part of the state, which is considered to be one of the top growth areas in the state. The City of Kalispell is empowered to levy a property tax on both real and personal properties located within its boundaries. It also is empowered by state statute to extend its corporate limits by annexation, which occurs periodically when deemed appropriate by the governing council. The City of Kalispell is operated under the council-manager form of government. Policy-making and legislative authority are vested in a governing council consisting of the mayor and eight other members. The governing council is responsible, among other things, for passing ordinances, adopting the budget, appointing boards, and hiring the City Manager. The City Manager is responsible for carrying out the policies and ordinances of the governing council, and for overseeing the day-to- day operations of the City. The council is elected on a non-partisan basis. Council members are elected by district to serve four-year staggered terms, with four council members elected every two years. The mayor is elected at large for a four-year term. All significant operations of the City, as defined by the National Council of Governmental Accounting, Statement #3, have been included in the accompanying financial statements. The City provides a full range of municipal services including police, fire, building safety, planning and zoning, city court, parks and recreation, streets, community development and general administrative services. The City also operates as Enterprise funds: water, sewer, solid waste, and an airport. In addition, the City presents financial data for two component units on the combined statements. The Kalispell Parking Commission is a discretely presented proprietary type component unit. The Downtown Business Improvement District is a discretely presented governmental type component unit. The annual budget serves as the foundation for the City of Kalispell's financial planning and control. All departments of the City of Kalispell are required to submit requests for appropriation to the City Manager. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the council for review. The council is required to hold public hearings on the proposed budget and to adopt a final budget. The appropriated budget is prepared by fund, function, and department. Budget -to -actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund and any major special revenue fund, the comparison is part of the basic financial statements. Accounting System and Budgetary Control The City's accounting records for general governmental operations are maintained on a modified accrual basis. Under this method, revenues are recorded when measurable and available; expenditures are recorded when services or goods are received and the liabilities are incurred. Accounting records for enterprise funds are recorded on the accrual basis. Under this method, revenues are recorded when the services are performed; expenditures are recorded when the goods or services are received and the liabilities are incurred. In developing the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal controls are designed to provide reasonable assurance regarding the safeguarding of assets and the accuracy and reliability of accounting data used for preparing financial data and maintaining accountability for assets. Budgetary control is maintained by an annual appropriation system. The Mayor and Council evaluate the budget proposals of the various City departments to determine the appropriate level of the operating and public service programs. After giving due consideration to the input received from the citizens, the City Council adopts the budget. The budget is controlled through an on line accounting system. The control is decentralized to the point that individual department heads are responsible for expending within budgetary limits. Cash Management The City's demand deposits are interest bearing money market accounts. The City also utilizes the Statewide Investment Pool (S.T.I.P), and obligations of the U.S. Treasury for cash temporarily idle during the year. Rates of return vary based on markets. Insurance The City joined other Montana cities and towns to form a self-insurance pool offering worker's compensation and liability coverage. On October 1, 2004, MMIA established, and the City joined, the Employee Benefits Program for its members, providing a more affordable health and dental insurance option for members to offer their employees. Postemployment Benefits The City of Kalispell provides pension benefits for substantially all of its full-time employees. These benefits are provided through the Montana Public Employees' Retirement System (PERS); Municipal Police Officer's Retirement System (MPORS): and the Firefighters' Unified Retirement System (FURS). The City of Kalispell has no obligation in connection with employee benefits offered through this plan beyond its matching contributions. Additional information on the City of Kalispell's pension arrangements can be found in the notes to the financial statements. Prospects for the Future Since November 1986 and the passage of Initiative 105, which limited certain property taxes to the 1986 levels, the ability of the City to raise revenue for basic services is increasingly difficult. Then, the legislature, with SB 184, lowered tax rates forcing the City to increase mill levies to maintain the same level of revenue. The City's cash reserves in most funds vary between 10% and 20% of appropriations. State law allows for reserves of 50%. Reserves provide for cash flow between tax revenue receipts to keep the City from having to borrow funds for operations. Additional revenues generated by increased taxable valuation come with the additional costs of an increased service area. The City of Kalispell's Police and Fire 11 Departments, Courts system, Building Department, Public Works and Parks have felt the increased pressure from the influx of people to Flathead County. These pressures impact the budgets of all departments. The outlook for the City of Kalispell is to continue providing basic services while looking for additional ways to fund the increasing costs of those services. Acknowledgments In conclusion, I am able to report that, although the general fund is struggling to deal with the increased cost associated with the City's growth, overall the City of Kalispell is in good financial condition. I wish to express my thanks to Amy Robertson and Deb Deist of the finance department as well as the administrative staff of the various departments. Without your help and input this report would not be possible. I would also like to give recognition to the mayor, governing council, and the city manager for their consistent support for maintaining the highest standards in the management of the City of Kalispell's finances. In accordance with Section 7-6-4111, MCA I hereby transmit the City of Kalispell Annual Financial Report as of June 30, 2008 for the fiscal year then ended. bo le IS,.,e ully submitted, y Dat Rick Wills Assistant Finance Director CITY OF KALISPELL ANNUAL FINANCIAL REPORT JUNE 30, 2008 ELECTED OFFICIALS Manager/Council form of Government Mayor Pamela B. Kennedy 12/2009 Council members: Kari Gabriel Ward I 12/2011 Jim Atkinson Ward III 12/2009 Robert Hafferman Ward I 12/2009 Randy Kenyon Ward III 12/2011 Wayne Saverud Ward II 12/2011 M. Duane Larson Ward IV 12/2011 Hank Olsen Ward II 12/2009 Tim Kluesner Ward IV 12/2009 Other City Officials: City Manager Jim Patrick Attorney Charles Harball Police Chief Roger Nasset Acting Fire Chief Dan Diehl Finance Director Amy Robertson City Treasurer Deb Diest City Judge Heidi Ulbricht Public Works Director James Hansz Parks Director Michael Baker Community Development Director Kellie Danielson Planning Director Tom Jentz Human Resource Director Terry Mitton Assistant Finance Director Rick Wills C FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Kalispell, we offer readers of the City of Kalispell's financial statements this narrative overview and analysis of the financial activities of the City of Kalispell for the fiscal year ended June 30, 2008. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. FINANCIAL HIGHLIGHTS ➢ The assets of the City of Kalispell exceeded its liabilities at the close of the recent fiscal year by $147,993,689(net assets). Of this amount, $15,021,993 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. ➢ As of the close of fiscal year 2008, the City of Kalispell's governmental funds reported combined ending net assets of $75,826,749, a slight increase. ➢ The City of Kalispell's total net assets increased by $10,255,403. Most of this increase ($9,146,015) is invested in capital assets, net of related debt, mostly attributable to capital contributions from developers in the city's business -type activities. ➢ As of the close of fiscal year 2008, the City of Kalispell's governmental funds reported combined ending fund balances of $7,445,902, a decrease of $1,258,179 from the prior fiscal year. Most of this amount, $5,741,503, is available for spending at the City of Kalispell's discretion (unreserved fund balance). ➢ At the end of fiscal year 2008, unreserved fund balance for the general fund was $614,283, or 6% of fiscal year 2008 general fund expenditures. ➢ Revenues of the governmental funds increased about 7%. Investment revenue was down 44% due to lower interest rates and less invested funds. The reclassification of the ambulance service to a special revenue fund helped offset a decrease in building and zoning fees (charges for services). Substantial decreases were seen in licenses and permit revenue (-$645,014), and investment earnings (-$218,035), largely because of the stale housing market (building permits) and lower interest rates in conjunction with less invested funds. These losses were offset by a 541% increase in miscellaneous revenue ($330,614 donation for equipment to the police department) and a 29% increase in charges for services (ambulance charges are now governmental revenue). Taxes and assessments revenue also increased by $436,813 or 7%. ➢ Governmental fund expenditures increased $903,564 from fiscal year 2007. Capital outlay decreased $1,873,068 however this decrease was more than offset by increased spending for public safety ($1,796,207), and general government ($510,521). ➢ At the end of the current fiscal year, unreserved fund balance for the general fund decreased $1,087,080 (64%) to $614,283. This fund balance represents 6 percent of total general fund expenditures. ➢ General fund expenditures were up over $1 million. The majority of this increase can be attributed to personal services expenditures of the fire and police departments (public safety), which were up more than $500,000. ➢ The City of Kalispell's total debt increased by $11,303,809 during fiscal year 2008. The majority of the new debt is related to the expansion of the wastewater treatment plant. ➢ Net assets of the City's business -type activities increased to $72,166,940, up $9,456,375 from the prior fiscal year. Most of this increase ($9,146,015) is invested in capital assets, net of related debt. $8,621,068 is unrestricted net assets. 7 ➢ In the City's business -type activities, capital grants and contributions revenue was $9,486,451. The majority of this is water, sewer and storm water infrastructure contributed by developers. ➢ Reclassifying the ambulance as a governmental fund resulted in a decrease of total charges for services of the City's business -type activities, with a corresponding decrease in expenses. AN OVERVIEW OF THE FINANCIAL STATEMENTS There are three main components to the City of Kalispell's financial statements: 1) government - wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. Other supplementary material is included in this report in addition to the basic financial statements themselves. The City of Kalispell intends for this discussion and analysis to be used in conjunction with the basic financial statements and other material as an introduction and also as a means to help the user better understand the information. Government -wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the City of Kalispell's finances. The way information is presented in these statements is comparable to how the financial information of a private -sector business would be presented. The statement of net assets presents information on all of the City of Kalispell's assets and liabilities. The difference between these two (assets minus liabilities) is reported as net assets. Net assets can be a useful tool in evaluating the financial health of an entity. A substantial decrease in net assets may be a sign of deteriorating financial position. The change in net assets during the most recent fiscal period is presented by the statement of activities. The statement of activities reports changes in net assets at the time the event takes place without regard to the corresponding cash transaction. This results in some revenues and expenses being reported in this statement that will not result in cash flow until a future fiscal period. Some examples of this would be uncollected but earned taxes and earned leave benefits. The government -wide financial statements of the City of Kalispell are segregated to distinguish between functions supported predominantly by taxes and intergovernmental revenues (governmental activities) and those that are intended to recover the majority of their costs through user fees and charges for services (business -type activities). The governmental activities of the City of Kalispell include general government/administration, public safety, public works, culture and recreation, and housing and community development. The business -type activities of the City of Kalispell include water distribution, sewer collection and treatment, solid waste collection, and an airport. The government -wide financial statements include, in addition to the primary government described in the above paragraph, a legally separate parking commission, and a legally separate Business Improvement District. The financial information of these component units is reported separately on the Government -wide financial statements. Fund Financial Statements The City of Kalispell, like most other governmental entities, uses fund accounting. Funds are set up to account for specific activities or objectives of the government. Funds also aide in ensuring compliance with legal requirements. The City of Kalispell categorizes its funds as either governmental, proprietary, or fiduciary. ➢ Governmental funds correspond with the functions reported as governmental activities in the government -wide financial statements. Governmental fund financial statements, by focusing on near-term inflows and outflows of spendable resources, may be more useful in evaluating a government's short-term fiscal health than the government -wide financial statements. A reconciliation has been prepared to help users more easily compare the governmental fund balance sheet to the government -wide statement of net assets and the governmental fund statement of revenues, expenditures, and changes in fund balance to the government -wide statement of activities. These reconciliations can be useful in contrasting, comparing and understanding the long-term impact (government -wide statements) of near-term decisions (governmental fund statements). The City of Kalispell maintains numerous individual governmental funds. The governmental fund balance sheet and statement of revenues, expenditures, and changes in fund balance present information separately only for funds which are considered major. Major funds are determined by a formula which considers the percentage of total governmental assets, liabilities, revenues, and expenditures contained in each individual fund. The City of Kalispell has three major governmental funds; the General Fund (always a major fund), the Community Development Loan Revolving (special revenue) Fund, and the Special Improvement District 344 (debt service) Fund. All non -major funds are presented as a group. The City of Kalispell adopts an annual appropriated budget for its funds. A budgetary comparison statement has been provided for the general fund and the major special revenue fund to demonstrate compliance with this budget. ➢ The City of Kalispell maintains two different types of proprietary funds. Enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. Water, sewer, solid waste, and the airport make up the City of Kalispell's enterprise funds. The City of Kalispell uses an internal service fund to accumulate and allocate its data processing transactions internally among its various functions. Under the old reporting model internal service funds were reported as proprietary funds because they recovered most of their cost through user fees from other funds. Under this new model these funds are eliminated through an allocation process and categorized as either a governmental or business -type activity. Because the City of Kalispell's internal service fund benefits governmental more so than business -type functions, it has been included within the governmental activities in the government -wide financial statements. Information in the proprietary fund financial statements is of the same type as that provided in the government -wide financial statements, however, it is more detailed. 0 Individual fund data is provided for the water fund, and the sewer fund. Individual data is not required for the airport fund or the solid waste fund, because they are not classified as major funds. ➢ The City of Kalispell maintains two funds to account for resources held by the government for the benefit of outside parties. These fiduciary funds are not reflected in the government -wide financial statements because the resources are not available to support the City of Kalispell's own programs. The City of Kalispell must ensure that the assets reported in these funds are used for their intended purpose. The accounting method used for fiduciary funds is similar to that used for proprietary funds. Notes to the Financial Statements The information contained in the government -wide and fund financial statements is meant to be used in concurrence with the notes to the financial statements. The notes present further detail of the data provided by these statements. ANALYZING THE CITY AS A WHOLE As mentioned prior, net assets can be an important indicator of an entities financial well-being. For the period ending June 30, 2008, the City of Kalispell's assets exceeded liabilities by $147,993,689. Net Assets overnmental Business -type, Activities Activities Change -08 Change FY08 FY07 Inc Dec FY FY07 Inc Dec Current and other assets $ 17,176,175 $ 18,769,410 $ _(1,593,235) $ 20121 474 $ 18,442,828 $ 1,678,646 Capital assets 77,355,310 75,162,059 2,193,251 74,254,307 51,910,530 22,343,777 Total assets 94,531,485 93,931,469 600,016 94,375,781 70,353,358 24,022,423 . Long-terrn _debt outstanding 16,809,743 16,383,061 $ 426,682 18,064,868 7,181,741 $ 10,883,127 ,Other liabilities 1,894,993 2,520,687 _ (625,694)1 4,143,973 455,052 3,688,921 Total liabilities 18,704,736 18,903,748 (199,012)', 22,208,841 7,636,793 14,572,048 Invested in capital assets, net of debt 62,594,205 60,554,766 2,039,439 54,143,386 44,997,371 9,146,015 Restricted 6,831,619 6,996,834 (165,215) 9,402,486 11,708,419 (2,305;933)' Unrestricted (deficit) 6,400,925 7,476,121 (1,075,196) 8,621,068 6,004,775 2,616,293 Total net assets $ 75,826,749 $ 75,027,721 $ 799,028 $ 72,166,940 $ 62,710,565 $ 9,456,375 Investment in capital assets (e.g., land, buildings, machinery, and equipment), net of any related debt still outstanding on those assets makes up 79% of the City of Kalispell's net assets. These capital assets are used to provide services to the citizens of Kalispell and are not spendable. Therefore, repayment of the debt related to capital assets must be provided from other sources. Restricted net assets equal $16,234,105 or 11% of total net assets. Over $9,000,000 of this is restricted in the enterprise funds to remain in compliance with enabling legislation and third party restrictions. The $6,831,619 restricted in governmental activities consists of $1,159,643 for debt service, $544,756 for capital projects, and $5,127,220 for special projects. The remaining balance ($15,021,993) of unrestricted net assets may be used to meet the City of Kalispell's ongoing obligations to citizens and creditors. At the end of fiscal year 2008, the City of Kalispell is able to report positive balances in all categories of net assets. 10 Changes in Net Assets Governmental Business -type Activities Activities Change Change FY08 FY07 Inc Dec FY08 FY07 Inc Dec Revenues Program revenues (by major source): Charges for services $ 6,146,108 $ 5,597,623 $ 548,485 $ 7,628,401 $ 8,312,692 $ (684,291) Operating grants and contributions 2,108,149 1,742,613 365,536 10,465 121,264 (110,799) Capital grants and contributions 6,318,780 5,473,543 845,237 9,486,451 10,087,410 (600,959) General revenues (by major source): Property taxes for general purposes 6,272,894 5,374,150 898,744 - - Interest/investment earnings 278,957 496,992 (218,035) 832,296 898,491 (66,195) State entitlement 2,160,593 2,106,049 54,544 - - Gas tax 342,226 324,774 17,452 Contributions & donations 60,913 143,796 (82,883) Licenses and permits - 52,031 (52,031) Gain (loss) on sale of capital asset 1,210,868 (1,210,868) Total revenues $ 23,688,620 $ 22,522,439 $ 1,166,181 $ 17,957,613 $ 19,419,857 $ (1,462,244) Program expenses General government $ 7,230,428 $ 5,851,576 $ 1,378,852 Public safety $ 9,608,419 $ 7,684,804 1,923,615 Public works $ 2,326,750 $ 1,979,249 347,501 Culture and recreation $ 2,302,240 $ 1,895,781 406,459 Housing and community development $ 979,002 $ 3,706,504 (2,727,502) Debt service - interest $ 701,786 $ 736,927 (35,141) Miscellaneous $ - $ (14,839) 14,839 Airport Enterprise $ 202,122 $ 174,865 $ 27,257 Water $ 2,394,777 $ 2,080,954 313,823 Sewer $ 4,716,788 $ 4,037,350 679,438 Ambulance $ - $ 1,707,121 (1,707,121) Solid Waste $ 762,782 $ 654,839 107,943 Total expenses _$__23,148,625 $ 21,840,002 $ 1,308,623 $ 8,076,469 $ 8,655,129 $ (578,660) Excess (deficiency) before special items and transfers 539,995 682,437 (142,442) 9,881,144 10,764,728 (883,584) Transfers - net 415,503 (1,514,159) 1,929,662 (415,503) 1,514,159 (1,929,662) Increase(decrease)In net assets $ 955,498 $ (831,722) $ 1,787,220 $ 9,465,641 $ 12,278,887 $ (2,813,246) Governmental activities. Net assets of the City's governmental activities increased $955,498. Overall, revenues were up by $1,166,181. Charges for services increased $548,485. This increase can be attributed to the reclassification of the ambulance services to a special revenue fund. Governmental funds capital grants and contributions (program revenue) was $6,318,780, compared to $5,473,543 in fiscal year 2007. The majority of this revenue ($5,026,771) is streets annexed or contributed by developers. Governmental funds expenditures increased 6% to $23,148,625. Over 75% of this increase ($988,567) is attributable to the reclassification of ambulance services. Business -type activities. Business -type activities increased the City of Kalispell's net assets by $9,465,641. If the reclassification of the ambulance service is disregarded, revenues and expenses of the City's business -type activities increased moderately. 11 ANALYZING THE CITY'S INDIVIDUAL FUNDS Governmental Funds The focus of the City of Kalispell's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources (fund balance). Unreserved fund balance is a useful tool when assessing the net resources a government has available to spend at the end of a fiscal period. At the end of fiscal year 2008, the City of Kalispell's governmental funds reported combined ending fund balances of $7,445,902, a decrease of $1,258,179 in comparison with the prior fiscal year. Of the ending fund balance, $1,704,399 is reserved for either debt service or capital projects and, therefore, is not available for new spending. The general fund is the chief operating fund of the City of Kalispell. At the end of fiscal year 2008 unreserved fund balance of the general fund was $614,283. Unreserved fund balance as a percentage of total fund expenditures can be a good tool to use to measure the liquidity of the general fund. For fiscal year 2008, unreserved fund balance represented 6% of total general fund expenditures. The general fund experienced a 64% decrease in the fund balance during fiscal year 2008. This substantial decrease was mainly due to an increase in expenditures of $1,121,567. Almost half of this total increase relates to the City's public safety operations. The Community Development Loan Revolving fund is a special revenue fund used to make low interest housing and commercial loans within a designated area. Principal and interest from these loans or the purchase and subsequent resale of a fixed asset are the only sources of revenue in this fund. At June 30, 2008, the fund balance of this fund was $259,130, a decrease of $90,500 over June 30, 2007. Special Improvement District 344 (debt service) fund was established by the City of Kalispell in fiscal year 2006 for the purpose of servicing the debt attributable to the construction of the infrastructure needed in the industrial/commercial development known as Old School Station. Fund balance at June 30, 2008, for SID 344 was $317,897. 12 12000000 10000000 8000000 E 6000000 a 4000000 2000000 0 Expenses and Program Revenues - Governmental Activities for fiscal year 2008 gen govt pub safety pub works culturelrec comm dev debt service Activity Revenue by Source - Governmental Activities fiscal year 2008 State entitlement 9% �Ad Property taxes 26 Other 3% Capital /contrib 271 Operating rants/contributions 9% 13 Proprietary Funds The City of Kalispell's proprietary funds financial statements provide the same type of information found in the government -wide financial statements, but in more detail. Unrestricted net assets of all proprietary funds at the end of the fiscal year amounted to $8,621,068. Of this amount, $2,520,015 was attributable to the water fund and $5,532,485 to the sewer. The total growth in net assets of all proprietary funds equaled $9,456,375. The water funds increase in net assets for fiscal year 2008 was $3,473,755. $507,175 of this was attributable to operations (operating income). The sewer funds net assets increased $6,530,704, however, operations of the sewer fund showed expenses exceeding revenues by $348,272. System development charges (impact fees), a non-operating revenue of the Water and Sewer funds accounted for 14% or $1,267,925 of the proprietary fund increase in net assets. Other factors concerning the finances of the water and sewer funds have already been addressed in the discussion of the City of Kalispell's business -type activities. 12D00000 10000000 8000000 E 6000000 w ao00000 2000000 0 Expenses and Program Revenues- B-nessiype Activities for fiscal year 2008 airport water sewer Activity Revenues by Source - B-ness-type Activities for focal year 2008 Investment Earnings 14 GENERAL FUND BUDGETARY HIGHLIGHTS The City of Kalispell's general fund expenditures budget of $12,020,911 was revised to $12,147,391 during fiscal year 2008. Actual expenditures for the year were $11,920,864, a favorable variance of $226,527. Actual revenues of the general fund were $10,331,334, which failed to meet the budgeted amount of $10,882,706. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At the end of 2008, the City of Kalispell has $151,609,617, net of depreciation, invested in a broad range of capital assets, including police and fire equipment, streets, buildings, land, park facilities, garbage collection equipment, and water and sewer lines. The City of Kalispell as of 2008, in accordance with GASB, has now booked all infrastructure, including streets. Major capital asset events during the fiscal year 2008 included the following: ➢ Finished remodeling the Wells Fargo bank building to be used as a consolidated City Hall for $1,503,853. ➢ Began the process of purchasing a new fire truck. ➢ Streets valued at over $5 million were contributed by developers or annexed. ➢ A 6000# hyster was purchased by public works with the cost being shared between the water, sewer, street, storm, and solid waste departments. ➢ Finished construction of a new street department building. ➢ Invested $63,571 in sidewalks and curbs. ➢ Completed the updated transportation plan. ➢ Continued work on the Woodland Connector Trails. ➢ Replaced three (3) police patrol cars. ➢ Purchased a $300,000 armored emergency response vehicle for the police department with a gift from a private donor. ➢ Continued construction on a new water storage tank at Sheepherder Hill and the related delivery system. ➢ Developer's installed 98 new fire hydrants valued at $398,453. ➢ 64,043 linear feet of new water main valued at $2,393,142 was installed and contributed to the City by developers. ➢ The water department replaced 299 meters, and installed 262 new meters. ➢ 54,779 linear feet of new sewer main valued at $2,379,943 was installed and contributed to the City by developers. ➢ Replaced back-up generators at three (3) lift stations. ➢ Developer's contributed 3 new lift stations valued at $904,397. ➢ Continued expansion of the wastewater treatment plant. ➢ Storm water collection mains (37,324 linear feet) contributed by developer's totaled $2,530,162. 15 CITY OF KALISPELL'S CAPITAL ASSETS (NET OF DEPRECIATION) Governmental Business -type Total activities activities Source of Supply 2008 2007 2008 2007 2008 2007 Land $ 2,502,775 $ 2,502,765 $ 1,699,194 $ 1,610,492 $ 4,201,969 $ 4,113,257 Buildings $12,741,089 11,520,303 141,191 156,873 $ 12,882,280 11,677,176 Improvements not buildings $10,347,324 10,549,229 2.236.182 $ 10,347,324 10,549,229 Machinery and equipment $ 2,256,131 1,925,759 582,902 799,390 $ 2,839,033 2,725,149 Infrastructure $49,388,113 48,418,031 Construction in Prooress $ 119.879 245.973 18.322.889 2.450.107 $ 18.442.768 2.696.080 Source of Supply 404,048 388,186 $ 404,048 388,186 Pumping Plant 1,688,644 1,784,939 $ 1,688,644 1,784,939 Treatment Plant 3,362,159 4,071,584 $ 3,362,159 4,071,584 Transmission and Distribution 36,981,170 31,863,016 $ 36,981,170 31,863,016 General Plant 2.180.723 2.236.182 $ 2.180.723 2.236.182 Total $77,355,311 $75,162,060 $74,254,310 $51,910,530 $ 151,609,621 $ 127,072,590 Governmental activities machinery and equipment includes the assets of the City s Data Processing fund. Debt At the end of fiscal year 2008, the City of Kalispell had total long-term debt outstanding of $33,483,149. Of this amount, $5,475,000 comprises debt backed by the full faith and credit of the government and $4,380,073 represents bonds secured solely by specified revenue sources (i.e., revenue bonds). The remainder consists of $11,379,713 outstanding on SRF loans for construction/expansion of the wastewater treatment plant, and another SRF loan for $1,257,000 which financed the extension of sewer lines south on Highway 93. There is also an SRF loan for the construction of a water storage facility and the related distribution/supply system with an outstanding amount of $1,608,000. There is also $5,079,534 of special assessment debt for which the City of Kalispell is liable in the event of default by the property owners subject to the assessment, and $952,117 of loans for the purchase of equipment. The City of Kalispell also has debt outstanding on the books of $1,369,341 for the purchase of the Wells Fargo bank building, a USDA — Intermediary Relending Program loan for $77,258, and a $205,113 for the financing of the Courtyard Apartments. The Courtyard debt is paid for by the rent proceeds attributed to those apartments. CITY OF KALISPELL'S OUTSTANDING DEBT Governmental Business -type Total activities activities 2008 2007 2008 2007 2008 2007 General obligation bonds Revenue/Urban Renewal bonds $ 1,833,073 2,012,868 2,547,000 4,204,159 $ 4,380,073 $ 6,217,027 SRF loans 15.244.713 2.709.000 $ 15.244.713 $ 2.709.000 Contract Other obligations of the City of Kalispell include accrued vacation pay and sick leave (compensated absences). More detailed information about the City's long-term liabilities is presented in the notes to the financial statements. 16 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES ➢ Flathead County's unemployment rate (unadjusted) stood at 4.4% as of June of 2008, which is almost double the June 2007 rate of 2.4 percent. This is worse than the State's unemployment rate of 4.1 %, but compares favorably to the nations seasonally adjusted rate of 5.5 percent. ➢ Applications for building permits and other internal indicators of growth dropped off severely in fiscal year 2008. Short-term future forecast are not favorable. ➢ The rapid population growth Flathead County and Northwest Montana have been experiencing for many years is expected to slow considerably. The City of Kalispell's population grew 19.4% between the 1990 and 2000 census, and is estimated to have grown 31% from 2000-2005. Kalispell and the rest of Flathead County have experienced a 15% population growth rate since 2000, which exceeds all other Montana counties except Gallatin. ➢ The City's growth (estimated population of almost 20,000 in 2006) through the annexation of adjacent area continues to put more strain on all City departments, from Fire and Police to Solid Waste, Water and Sewer. ➢ Energy costs continue to rise. The City's electric and natural gas costs have approximately doubled since fiscal year 2000. ➢ Cost of labor, health, liability, and property insurance continue to rise. All of these factors were considered in preparing the City of Kalispell's budget for the 2009 fiscal year. During fiscal year 2008, unreserved fund balance in the General Fund decreased to $614,283. The City of Kalispell has not appropriated any of this amount for spending in the 2009 fiscal year budget. The City has determined that preserving this available fund balance/reserve is necessary. The City continues to levy the maximum mills permitted by law. Request for Information This financial report is designed to provide a general overview of the City of Kalispell's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Kalispell, Finance Director, P.O. Box 1997, Kalispell, MT 59903-1997. 17 Denning, Downey & Associates, P.C. CERTIFIED P UBLIC A CCO UNTANTS 1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957 INDEPENDENT AUDITOR'S REPORT Mayor and City Council City of Kalispell Flathead County Kalispell, Montana We have audited the accompanying 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 City of Kalispell, Flathead County, Montana, as of and for the year ended June 30, 2008, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of City of Kalispell management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the 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 Kalispell, Flathead County, Montana, as of June 30, 2008, and the respective changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 18, 2009, on our consideration of the City of Kalispell's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. -18- Robert K. Denning, CPA • Kim M Downey, CPA The management's discussion and analysis and budgetary information on pages 2 through 17 and pages 60 through 61, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual nonmajor fund financial statements and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and is not a required part of the basic financial statements of City of Kalispell, Flathead, County, Montana. The Schedule of Expenditures of Federal Awards has been subjected to the auditing procedures applied in the audit of the basic financial statements and , in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. February 18, 2009 -19- BASIC FINANCIAL STATEMENTS City of Kalispell, Flathead County, Montana Statement of Net Assets June 30, 2008 20 Governmental Business -type Downtown Parking Activities Activities Total BID Commission ASSETS Current assets: Cash and investments $ 6,046,868 $ 7,150,394 $ 13,197,262 $ 114,350 $ 70,954 Taxes and assessments receivable, net 1,441,909 85,938 1,527,847 6,179 Accounts receivable - net 509,072 411,890 920,962 11,290 Notes and loans receivaple_ 110,183 - 110,183 Contracts receivable 38,264 - 38,264 Due from other governments 1,413,562 2,477,812 3,891,374 Prepaid expenses 136,831 - 136,831 1,775 Inventories 148,323 148,323 Total current assets $ 9,696,689 $ 10,274,357 $ 19,971,046 $ 120,529 $ 84,019 Noncurrent assets - Restricted cash and investments $ 658,283 $ 9,847,117 $ 10,505,400 $ $ Deferred assessments receivable 4,569,202 - 4,569,202 Long term portion of loans receivable 2,252,001 - 2,252,001 Capital assets - land 2,502,775 1,699,194 4,201,969 Capital assets - construction in progress 119,879 18,322,889 18,442,768" Capital assets - depreciable, net 74,732,656 54,232,224 128,964,880 40,022 Toll noncurrent assets $ 84,834,796 $ 84,101,424 $ 168,936,220 $ - $ 40,022 Total assets $ 94,531,485 $ 94,375,781 $ 188,907,266 $ 120,529 $ 124,041 LIABILITIES Current liabilities Accounts payable 388,946 3,322,122 3,711,068 2,267 622 Retainage - 750,517 750,517 Accrued payroll 358,582 60,915 419,497 1,405 Revenues collected in advance - 10,419 10,419 15,830 Current portion of long-term liabilities 91,069 - 91,069 Current portion of long-term capital liabilities 996,984 1,053,090 2,050,074 Current portion of compensated absences payable 86,650 - 86,650 Other current liabilities 134,802 134,802 Total current liabilities $ 2,057,033 $ 5,197,063 $ 7,254,096 $ 2,267 $ 17,857 Noncurrent liabilities Deferred revenue -noncurrent portion loans receivable 1,012,663 1,012,663 Noncurrent portion of long-term liabilities 839,262 - 839,262 Noncurrent portion of long-term capital liabilities 13,764,121 16,738,623 30,502,744 Noncurrent portion of compensated absences 1,031,657 273,155 1,304,812 5,143 Total noncurrent liabilities $ 16,647,703 $ 17,011,778 $ 33,659,481 $ - $ 5,143 Total liabilities $ 18,704,736 $ 22,208,841 $ 40,913,577 $ 2,267 $ 23,000 NET ASSETS Invested in capital assets, net of related debt $ 62,594,205 $ 56,462,594 $ 119,056,799 $ $ 40,022 Restricted for capital projects 544,756 6,493,706 7,038,462 Restricted for debt service 1,159,643 1,948,497 3,108,140 Restricted for special pr jects 5,127,220 747,283 5,874,503 Restricted for other purp) ses - 213,000 213,000 Unrestricted 6,400,925 6,301,860 12,702,785 118,262 61,019 Total net assests $ 75,826,749 $ 72,166,940 $ 147,993,689 $ 118,262 $ 101,041 Total liabilities and net assets $ 94,531,485 $ 94,375,781 $ 188,907,266 $ 120,529 $ 124,041 See accompanying Notes to the Financial Statements 20 21 N O < V M N N N C by H m b9 b 3 m O D E bN y_�I Gi _ m Nm me O NN if ag b r A m 6 •c E a _ <V Omi_Y ONi. tOOd d ^m Nm� 1p _ hNO� n 1p nmm vOf «pn�n � V YN E e YV _ r0 CJ O -- a"Ja � Nm � U df M H m r � «cq N �o@ E 4 c E g N of d r14- m m c aJga m K O� .Noncan uoi 16 ra N < K 2N 12.2 E_.� L O C r y z K z z 9 Q 9 U r �y Vi e9 b9 c ' w mm 2 N b 0 N mo w r« tD o § goal LL v n o pt "I `ea rN�.mrn Oi N N N W N mNe og m cm E f m o c .s E E E`i0� „O10'o F a'aci ffi� F 21 N City of Kalispell, Flathead County, Montana Balance Sheet Governmental Funds June 30, 2008 Other Total Community Dev. Governmental Governmental General Fund Loan Revolving SID 344 Funds Funds ASSETS Current assets: Cash and investments $ 281,663 $ 210,130 $ 146,171 $ 5,292,110 $ 5,930,074 Taxes and assessments receivable, net 450,172 - 412,508 579,229 1,441,909 Accounts receivable - net 1,702 - - 507,370 509,072 Notes and loans receivable 20,612 32,486 - 57,085 110,183 Contracts receivable 38,264 - - - 38,264 Due from other funds 50,861 16,000 - 19,498 86,359 Due from other governments 540,633 - 171,726 701,203 1,413,562 Prepaid expenses 133,762 133,762 Total current assets $ 1,517,669 $ 258,616 $ 730,405 $ 7,156,495 $ 9,663,185 Noncurrent assets: Restricted cash and investments $ - $ - $ - $ 658,283 $ 658,283 Advances to other funds - 48,000 - 14,000 62,000 Deferred assessments receivable - - 3,661,172 908,030 4,569,202 Long tens portion of loans receivable 1,574,147 677,854 2,252,001 Total noncurrent assets $ $ 1,622,147 $ 3,661,172 $ 2,258,167 $ 7,541,486 Total assets $ 1,517,669 $ 1,880,763 $ 4,391,577 $ 9,414,662 $ 17,204,671 LIABILITIES Current liabilities: Accounts payable 163,718 15,000 - 186,024 364,742 Accrued payroll 282,059 - - 74,623 356,682 Due to other funds - - - 86,359 86,359 Deferred revenue 450,172 - 412,508 980,730 1,843,410 Deferred revenue -current portion loans receivable - 32,486 - 57,085 89,571 Other current liabilities 7,437 127,365 134,802 Total current liabilities $ 903,386 $ 47,486 $ 412,508 $ 1,512,166 $ 2,875,566 Noncurrent liabilities: Advances payable - - - 62,000 62,000 Deferred revenue -noncurrent portion loans receivable - 1,574,147 - 677,854 2,252,001 Deferred revenue -deferred assessments receivable 3,661,172 908,030 4,569,202 Total noncurrent liabilities $ $ 1,574,147 $ 3,661,172 $ 1,647,884 $ 6,883,203 Total liabilities $ 903,386 $ 1,621,633 $ 4,073,680 $ 3,160,070 $ 9,758,769 FUND BALANCES Reserved for debt service - - 317,897 841,746 1,159,643 Reserved for capital projects - - - 544,756 544,756 Unreserved reported in general fund 614,283 - - - 614,283 Unreserved reported in special revenue funds 259,130 4,868,090 5,127,220 Total fund balance $ 614,283 $ 259,130 $ 317,897 $ 6,254,592 $ 7,445,902 Total liabilities and fund balance $ 1,517,669 $ 1,880,763 $ 4,391,577 $ 9,414,662 $ 17,204,671 See accompanying Notes to the Financial Statements City of Kalispell, Flathead County, Montana Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2008 Total fund balances - governmental funds Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Property taxes receivable will be collected this year, but are not available soon enough to pay for the current period's expenditures, and therefore are deferred in the funds. An internal service fund is used by management to charge the costs of providing services within the government. The assets and liabilities of the internal service funds are included in governmental activities in the government -wide statement of net assets Long-term liabilities are not due and payable in the current period and therefore are not reported as liabilities in the funds. Deferred revenue - loans receivable that will be collected at some future date that are recognized as revenues on the statement of activities. - current portion - non current portion - portion that will be recognized as revenue on the statement of activities in future years Total net assets - governmental activities See accompanying Notes to the Financial Statements 23 $ 7,445,902 77,322,850 6,412, 612 122,840 (16,806,364) 89,571 2,252,001 (1,012,663) $ 75,826,749 City of Kalispell, Flathead County, Montana Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2008 Fund balance - ending $ 614,283 $ 259,130 $ 317,897 $ 6,254,592 $ 7,445,902 See accompanying Notes to the Financial Statements 24 Other Total Community Dev. Governmental Governmental General Fund Loan Revolving SID 344 Funds Funds REVENUES Taxes and assessments $ 4,560,938 $ - $ 448,285 $ 1,870,757 $ 6,879,980 Licenses and permits 514,557 - - 214,673 729,230 Intergovernmental 3,266,133 - - 1,452,388 4,718,521 Charges for services 1,239,659 78,666 - 3,351,309 4,669,634 Fines and forfeitures 554,518 - - - 554,518 Miscellaneous 69,752 - - 457,356 527,108 Investment earnings 125,777 6,584 3,321 143,275 278,957 Total revenues $ 10,331,334 $ 85,250 $ 451,606 $ 7,489,758 $ 16,357,948 EXPENDITURES General government $ 2,429,642 $ - $ - $ 204,653 $ 2,634,295 Public safety 7,013,600 - - 2,182,360 9,195,960 Public works 650,542 - - 1,543,955 2,194,497 Culture and recreation 1,570,894 - - 283,255 1,854,149 Housing and community development - 165,000 - 805,861 970,861 Debt service -principal 89,876 - 225,000 1,613,429 1,928,305 Debt service -interest 33,819 - 196,058 471,909 701,786 Capital outlay 132,491 30,000 2,317,924 2,480,415 Total expenditures $ 11,920,864 $ 195,000 $ 421,058 $ 9,423,346 $ 21,960,268 Excess (deficiency) of revenues over expenditures $ (1,569,530) $ (109,750) $ 30,548 $ (1,933,588) $ (3,602,320) OTHER FINANCING SOURCES (USES) Proceeds of general long term debt $ - $ - $ - $ 2,162,081 $ 2,162,081 Proceeds from the sale of general capital asset disposition 3,317 - - - 3,317 Transfers in 542,945 - 27,349 959,210 1,529,504 Transfers out (43,812) (1,150,479) (1,194,291) Total other financing sources (uses) $ 502,450 $ - $ 27,349 $ 1,970,812 $ 2,500,611 Net Change in Fund Balance $ (1,087,080) $ (109,750) $ 57,897 $ 37,224 $ (1,101,709) Fund balances - beginning $ 1,701,363 $ 349,631 $ 260,000 $ 6,393,087 $ 8,704,081 Restatements 19,249 (175,719) (156,470) Fund balances - beginning, restated $ 1,701,363 $ 368,880 $ _ 260,000 $ 6,217,368 $ 8,547,611 Fund balance - ending $ 614,283 $ 259,130 $ 317,897 $ 6,254,592 $ 7,445,902 See accompanying Notes to the Financial Statements 24 City of Kalispell, Flathead County, Montana Reconciliation of the Statement of Revenues, Expenditures. and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2008 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ (1,101,709) Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the assets: Capital assets purchased 2,480,415 Depreciation expense (5,466,975) In the Statement of Activities, the loss or gain on the sale or disposal of capital assets is recognized. The fund financial statements recognize only the proceeds from the sale of these assets: Proceeds from the sale of capital assets Gain on the sale of capital assets (3,317) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds: Donated capital assets 5,026,771 Long-term receivables (deferred revenue) 303,901 In the Statement of Activities, the transfer of capital assets and long-term debt from an enterprise fund is recognized. Fund financial statements do not recognize these transactions, because there is no flow of current financial resources. Transferred capital assets 132,986 Long-term debt (compensated absences) (52,696) The change in compensated absences is shown as an expense in the Statement of Activities (138,674) Repayment of debt principal is an expenditures in the governmental funds, but the repayment reduces long-term debt in the Statement of Net Assets: - Long-term debt principal payments 1,928,305 Long term debt proceeds provide current financial resources to the governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets: - Proceeds from the sale of long-term debt (2,162,081) Internal service funds are used by management to chare the costs of certain activities, to individual funds. The net revenue of the internal service funds is reported with the governmental activities of the Government -Wide Statement of Activities net of the amounts allocated to business -type activities and depreciation expense. 8,572 Change in net assets - Statement of Activities $ 955,498 See accompanying Notes to the Financial Statements 25 See accompanying Notes (o the Financial Statements 26 City of Kalispell, Flathead County, Montana Balance Sheet Proprietary Funds June 30, 2008 Governmental Business -Type Activities - Enterprise Funds Activities Non -major Internal Service Water - Sewer.. - Enterprise- -. Totals. Funds ASSETS Current assets: Cash and investments $ .3,000,576 $ .3,591,650 . $ 55B,168 $ 7,150,394 $ 116,794 Taxes and assessments receivable, net - 40,682 45,256 85,938 - Accountsreceivable -rjet 173,177 237,723 990 411,890 - Due from other governments - 2,398,351 79,461 2,477,812 - Prepaid expenses - - - - - 3,069 Inventories 148,323 148,323 Total current assets $ 3,322,076 $ 6,268,406 $ 683,875 $ 10,274,357 $ 119,863 Noncurrent assets: Restricted cash and inveslrnents $ 1,600,668 $ 8,246,449 $ - $ 9,847,117 $ - Capital assets - land 103263 248,063 1,347,868. 1,699,194 - Capital assets - construction in progress 4,003,427 14,227,654 91,808 18,322,889 - Capital assets- depreciable, net 21,351,015 30,584,583 2,296,626 54,232,224 32,460 Total noncurrent assets $ 27,058,373 $ 53,306,749 $ 3,736,302 $ 84,101,424 $ 32,460 Total assets $ 30,380,449 $, 59.575,155 $ 4,420,177 $ 94,375,781 $ 152.323 LIABILITIES Current liabilities: Accounts payable 536,252 2,752,145 33,725 3,322,122 24,204 Retainage 166,835 583,682 - 750,517 - Accrued payroll 19,141 31,178 10,596 60,915 1,900 Revenues collected in advance - - 10,419 10;419 - Current portion of long-�erm capital liabilities 341,000 712,090 - 1,053,090 - Totalcurrentliabilitirs $ 1,063,228 $ 4,079,095 $ 54,740 $ 5,197,063 $ 26,104 Noncurrent liabilities: Noncurrent portion of long-term capital liabilities 4,149,000 12,589,623 - 16,738,623 - Noncurrent portion of compensated absences ao,115 132,473 -60,567 - 273,155 3.379 Total noncurrent liabilities $ 4,229,115 $ 12,722,096 $ 60,567 $ 17,011,778 $ 3,379 Total liabilities $ 5,292,343 $ 16,801,191 $ 115,307 $ 22,208,841 $ 29,483 NET ASSETS Invested in capital assets, net of related debt $ 20,967,705 $ 31,758,587 $ 3,736,302 $ 56,452,594 $ 32,460 Restricted for capital projects 1,085,220 5,408,486 - 6,493,706 - Restricted for debt service 515,449 1,433,048 - 1,948,497 - Restricted for special projects.. - 747,283. - 747,283 - Restrictedforotherpurposes - 213,000 - 213,000 - Unrestricted 2,519,732 3,213,560 568,568 6,301,860 90,380 Total net assets $ 25,088,106 $ 42,773,964 $ 4,304,870 $ 72,166,940 $ 122,840 Total liabilities and net assets $ 30,380,449 $ 59,575,155 $ 4,420,177 $ 94,375,781 $ 152,323 See accompanying Notes (o the Financial Statements 26 City of Kalispell, Flathead County, Montana Statement of Revenues, Expenses, and Changes in Net Assets Proprietary Funds For the Fiscal Year Ended June 30, 2008 OPERATING REVENUES Charges for services Miscellaneous revenues Special assessments Total revenues OPERATING EXPENSES Personal services Supplies Purchased services Building materials Fixed charges Losstbad debt expense Depreciation Total expenditures Excess (deficiency) of revenues over expenditures NON-OPERATING REVENUES (EXPENSES) Intergovernmental revenue Interest revenue System development charges Debt service interest expense (Gain) loss disposal Capital contributions Transfers out Total other financing sources (uses) Change in net assets Net Assets - Beginning of the year Restatements Net Assets - Beginning of the year- Restated Net Assets - End of the year See accompanying Notes to the Financial Statements Pel Governmental Business -Type Activities - Enterprise Funds Activities Non -major Internal Service Water .Sewer Enterprise Totals Funds $ 2,562,980 $ 3,432,319 $ 801,472 $ 6,796,771 $ 112,972 159,441 5,936 - 165,377 7i0 666,253 666,253 $ 2,722,421 $ 4,104,508 $ 801,472 $ 7,628,401 $ 113,682 $ 929,728 $ 1,401,673 $ 458,855 $ 2,800,256 $ 82,186 83,171 116,096 74,148 273,415 59,616 338,984 934,911 91,969 1,365,864 46,804 33,905 25,150 - 59,055 - 149,979 312,407 86,247 548,533 23,176 6,119 10 - 6,129 - 673,360 1,662,533 243,685 2,579,578 4,877 $ 2,215,246 $ 4,452,780 $ 964,904 $ 7,632,930 $ 216,659 $ 507,175 $ (348,272) $ (163,432) $ (4,529) $ (102,977) - 10,465 - 10,465 105,000 268,437 533,008 30,851 832,296 6,549 430,330 837,595 - 1,267,925 - (179,531) (264,008) - (443,539) - - - (80,290) (80,290) - 2,462,716 5,755,810 - 8,218,526 - (335,213) (335,213) $ 2,981,952 $ 6,872,870 $ (384,652) $ 9,470,170 $ 111,549 $ 3,489,127 $ 6,524,598 $ (548,084) $ 9,465,641 $ 8,572 $ 21,614,351 $ 36,243,260 $ 4,852,954 $ 62,710,565 $ 114,268 (15,372) 6,106 (9,266) $ 21,598,979 3 36,249,366 3 4,852,954 3 52,701,299 $ 114,268 $ 25,088,106 $ 42,773,964 $ 4,304,870 $ 72,166,940 $ 122,840 Pel Non cash contributions from developers was $11,463,395 See accompanying notes to the financial statements 28 City of Kalispell, Flathead County, Montana Combined Statement of Cash Flows All Proprietary Fund Types For the Fiscal Year Ended June 30, 2008 Governmental Business - Type Activities Activities Non -major Internal Service Water Sewer Enterprise Totals Fund Cash flows from operating activities: Cash received from customgrs $ $2,539,981 $ $3,385,706 $ $133,363 $ $6,059,050 $ 113,682 Cash received from assessrr(ents $614,002 $696,737 $1,310,739 Cash received from miscellaneous sources 159,441 $16,536 $175,977 Cash payments for claims (401,050) ($979,752) ($233,012) ($1,613,814) ($80,062) Cash payments to employees ($929,980) ($1,399,101) ($492,694) ($2,821,775) ($127,259) Net cash provided (used) by operating activities $ 1,368,392 $ 1,637,391 $ 104,394 $ 3,110,177 $ (93,639) Cash flows from capital and related financing activities: Principal paid on bonds, loans and advances ($344,159) ($844,000) - ($1,188,159) - Interest paid on bonds, loans and advances (179,531) ($264,008) - ($443,539) - Acquisition and construction ofcapital assets ($3,594,973) ($9,983,781) ($124,972) ($13,703,726) (28,248) Proceeds from bonds, loans and advances $1,500,000 $8,264,559 $9,764,559 Net cash provided (used) by capital and related financing activities $ ($2,618,663) $ (2,827,230) $ (124,972) $ (5,570,865) $ (28,248) Cash flows from non -capital financing activities: Transfers between funds - ($97,075) (97,075) - Intergovernmental revenue - $10,465 - 10,465 105,000 Proceeds of licenses and permits for non operating 430,330 $837,595 1,267,925 Net cash provided (used) from non -capital financing activities $ 430,330 $ 848,060 $ (97,075) $ 1,181,315 $ 105,000 Cash flows from investing activities: Interest on investments 268,437 $533,008 $30,850 832,295 6,549 Net cash provided (used) by investing activities $ 268,437 $ 533,008 $ 30,850 $ 832,295 $ 6,549 Net increase (decrease)in cash and cash equivalents $ (551,504) $ 191,229 $ (86,803) $ (447,078) $ (10,338) Cash and cash equivalents at beginning $5,149,876 $11,640,765 $644,971 $17,435,612 127,132 Restatements $2,872 $6,106 $8,978 Cash and cash equivalents_at end $4,601,244 $ 11 838,100 $ 558,168 $ 16,997,512 $ 116,794 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ 507,175 $ ($348,272) $ ($163,432) $ (4,529) $ (102,977) Adjustments to reconcile operating income to net cash provided (used) by operatigg activities: Depreciation 673,360 $1,662,533 243,685 2,579,578 4,877 Changes in assets and liabilities: Accounts receivable - net _ ($16,880) ($36,013) $41,404 (11,489) - Taxes and assessments receivable, net - ($52,251) ($12,777) (65,028) - Prepaid expenses - - Inventories $37,469 - 37,469 - Accounts payable $167,520 $408,822 $14,323 590,665 2,337 Accrued payroll ($252) $2,572 ($18,810) (16,490) $2,124 Net cash provided (used) by operating activities $ 1,368,392 " $ 1,637,391 $ 104,393 $ 3,110,176 ' $ (93,639) Non cash contributions from developers was $11,463,395 See accompanying notes to the financial statements 28 City of Kalispell, Flathead County, Montana Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2005 Pension Trust Funds ASSETS Cash and short-term investments $ 170,420 Total assets $ 170,420 LIABILITIES Due to others 170,420 Total liabilities $ 170,420 See accompanying Notes to the Financial Statements 29 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City complies with generally accepted accounting principles (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. In the government -wide financial statements and the fund financial statements for the proprietary funds, Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions issued on or before November 30, 1989, have been applied unless those pronouncements conflict with or contradict GASB pronouncements, in which case GASB prevails. For enterprise funds GASB statement Nos. 20 and 34 provide the City the option of electing to apply FASB pronouncements issued after November 30, 1989. The City has elected not to apply those pronouncements. Financial Reporting Entity In determining the financial reporting Entity, the city complies with the provisions for GASB statement No. 14, The Financial Reporting Entity, and includes all component units of which the City appointed a voting majority of the units' board; the City is either able to impose it's will on the unit or a financial benefit or burden relationship exists. Primary Government The City of Kalispell is a political subdivision of the State of Montana governed by an elected Mayor and Council duly elected by the registered voters of the City. The City utilizes the City Manager form of government. The City is considered a primary government because it is a general purpose local government. Further, it meets the following criteria: (a) It has a separately elected governing body (b) It is legally separate and (c) It is fiscally independent from the State and other local governments. The accompanying financial statements present the primary government and its component units, entities for which the government is considered to be financially accountable. These financial statements include all funds, agencies, boards, commissions and authorities which meet the criteria for inclusion in the City's financial report. These criteria include financial accountability, appointment of a majority of the secondary government and the financial benefit or burden derived by the primary government from a secondary government. Ambulance Fund Reclassification The City of Kalispell's ambulance service was reclassified as a special revenue fund on July 1, 2007. Prior to July 1, 2007, the ambulance service had operated as a proprietary fund. As a special revenue fund, revenues are recognized when collected (modified accrual accounting) rather than when billed (full accrual accounting). Because revenues are recognized when collected, there will be no bad debt expense. Accounts deemed uncollectible are shown as a reduction in accounts receivable and deferred revenue. Capital assets of proprietary funds are accounted for within that fund. Governmental fund assets are accounted for in the General Fixed Assets Account Group. For more on the transfer of the capital assets of the ambulance fund to the GFAAG, see note 2 (D). Discretely Presented Component Units Discretely presented component units are separate legal entities that meet the component unit criteria described above but do not meet the criteria for blending. The Cities' two discretely presented component units, the Kalispell Parking Commission, and the Downtown Business Improvement District are legally separate organizations of the City, but the City is financially accountable. The component units are reported in a separate column to emphasize that they are legally separate from the City. 30 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Kalispell Parking Commission The Kalispell City Council passed Resolution 4103, a Resolution of intention to create Special Parking District #2 on June 21, 1993. Also passed was Resolution 4104, a resolution of intention to provide for funding the cost of maintaining, operating, repairing, and improving Special Parking Maintenance District #2 and Resolution 4105, a Resolution declaring the need for a Parking Commission to function in the City of Kalispell and declaring a jurisdictional area wherein said Parking Commission is authorized to function. The Mayor and City Council appointed the Board of Directors composed of City residents who operate businesses within the district. The Parking Commission opened their doors on February 1st 1994. The City transferred $53,000 in Fiscal 1994 to the district as start up money; no further City funds have been given to the district. It is intended that the Parking Commission be operated as a Proprietary type fund and has been classified as such in the City's financial statements. Downtown Business Improvement District On May 17, 2004, by resolution 4891A, the City created the Downtown Business Improvement District. The purpose of which appears to promote the health, safety, prosperity, security and general welfare of the inhabitants of the City of Kalispell and the proposed district, and appears to be of special benefit to the property within the District. The District boundaries are roughly 2nd Avenue East to 2nd Avenue West between Center Street and 4d' Street South. Publicly owned property and owner occupied single family dwellings are exempt from the assessments related to the District. Basis of Presentation, Measurement Focus, and Basis of Accounting Government -wide Financial Statements The government -wide financial statements (i.e., the Statement of Net Assets and the Statement of Activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. Eliminations have been made to minimize the double -counting of business -type activities. 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. The general government function of the City includes expenses which are, in essence, indirect expenses of other functions. These expenses are allocated to each related function. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Certain eliminations have been made as prescribed by GASB 34 in regards to inter -fund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and business -type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business -type activities have not been eliminated. 31 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Measurement Focus and Basis of Accounting On the government -wide Statement of Net Assets and the Statement of Activities, both governmental and business -type activities are presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred, regardless of the timing of the cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The City generally applies restricted resources to expenses incurred before using unrestricted resources when both restricted and unrestricted net assets are available. Fund Financial Statements Basis of Presentation Fund financial statements of the City are organized into funds. A fund is an independent fiscal and accounting entity with a self -balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance -related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. Funds are organized into three categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. Each major fund is displayed in a separate column in the governmental funds statements. All of the remaining funds are aggregated and reported in a single column as non -major funds. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type; and b. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise funds are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. Measurement focus and Basis of Accounting Governmental funds are used to account for the City's general government activities. Governmental fund types use the flow of current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual. (i.e., when they are "measurable and available") "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers all revenues available if they are collected within 60 days after year-end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Real and personal property taxes, special assessments, charges for current services, and interest earnings are susceptible to accrual. Other receipts and taxes become measurable and available when cash is received by the City and are recognized as revenue at that time. The City recorded real and personal property taxes and assessments levied for the current year as revenue. Taxes and assessments receivable remaining unpaid at year-end and not expected to be collected soon enough thereafter to be available to pay obligations of the current year were recorded as deferred revenue, with a corresponding reduction in revenues, as required by generally accepted accounting principles. In addition, prior period delinquent taxes and assessments collected in the current period were recorded as revenue in the current period as required by generally accepted 32 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 accounting principles. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Major Funds The City reports the following major governmental funds: The General Fund is always a major fund. This is the City's primary operating fund and it accounts for all financial resources of the City except those required to be accounted for in other funds. The Community Development Loan Revolving Fund was established to account for the lending and repayment of monies loaned to businesses and individuals for projects approved by the City's Community Development department. SID 344 is a debt service fund established to account for the resources accumulated and payments made for principal and interest on the 20 year bonds sold to finance the construction of the Old School Station Industrial and Technology Park. Proprietary funds are accounted for using the accrual basis of accounting. These funds account for operations that are primarily financed by user charges. The flow of economic resources focus concerns determining costs as a means of maintaining the capital investment and management control. Revenues are recognized when earned and expenses are recognized when incurred. Allocations of costs, such as depreciation, are recorded in proprietary funds. 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 connections with a proprietary fund's principal ongoing operations. The principal operating revenues for enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds 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. Major Funds The City reports the following major proprietary funds: The Water Fund accounts for the activities of the City's water distribution operations. The Sewer Fund accounts for the activities of the City's sewer collection and treatment operations and includes the storm sewer system. Fiduciary funds account for assets held by the government in a trustee capacity or as an agent on behalf of others. The agency fund is custodial in nature and does not present results of operations or have a measurement focus. Agency funds are accounted for using the modified accrual basis of accounting. This fund is used to account for assets that the City holds for others in an agency capacity. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements, and the internal service funds have been absorbed pro -ratably into governmental -type and business -type activities on the government - wide financial statements. Exceptions to this general rule are charges for services between various functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 33 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Budgets Budget Process An annual appropriated operating budget is adopted each fiscal year for the general fund, special revenue funds, debt service funds and capital projects funds on the modified accrual basis. In addition, a budget is adopted for the enterprise and internal service funds on a full accrual basis. The appropriated budget is prepared by fund, function, and for the general fund and certain other funds, by department. The final budget is legally enacted by the City Council, after holding public hearings as required by State statutes, and within forty-five days of the State providing final shared revenue figures. Budget appropriation transfers may be made between general classifications of salaries and wages, maintenance and operation and capital outlay. Reported budget amounts represent the originally adopted budget as amended by resolution of the City Council. It is management's responsibility to see that the budget is followed to the budgetary line item. The City Council may amend a final budget when shortfalls in budgeted revenues require reductions in approved appropriations to avert deficit spending; when savings result from unanticipated adjustments in projected expenditures; when unanticipated state or federal monies are received; or when a public emergency occurs which could not have been foreseen at the time of adoption. The procedure to amend the budget in total can be made only after the City prepares a resolution, notice is published of a public hearing, and a public hearing is held in accordance with state law. All material budget amendments and transfers during FY 2008 are described below: Increased general fund appropriations by $126,477. $30,000 provided for severance pay in the police department. $10,500 was to correct the total budget of the fire department (formula error). $16,000 was needed for rent/lease payments because the planning and parks departments could not move into the new city hall building (Wells Fargo). $5000 was for contract services expense of the City Attorney. The Central Garage budget increased $37,476 for the increased cost of fuel and salaries. The budget for retirement was increased by $27,501. Increased Airport TIF fund (special revenue) appropriations by $11,500 to provide for unforeseen professional fees. Increased Street Maintenance fund (special revenue) appropriations by $140,000 to provide funds for the Northridge Drive Overlay Project. Increased Law Enforcement Grants fund (special revenue) appropriations by $37,293 to provide authority for spending grant revenue. Increased the Fire Grants fund (special revenue) appropriations by $14,311 to provide authority for spending grant revenue. Increased ISTEA fund (special revenue) appropriations by $55,883 to provide funds for the Meridian Trail Project progress. Increased 2002 G.O. Bond fund (debt service) appropriations by $50 to cover an increase in fiscal agent fees. Increased City Hall Debt Service fund (debt service) appropriations by $906,225 to provide the necessary authority to refinance the loan. Increased SID Revolving fund (debt service) appropriations by $19,568 to cover an excess funds transfer to the general fund. Increased City Hall Construction fund (capital project) appropriations by $3,633 to close out the fund. 34 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Assets, Liabilities, and Net Assets or Equity 1. Cash, Cash Equivalents, and Investments The City's cash and cash equivalents are considered to be cash on hand, demand and time deposits, government backed securities, bonds and warrants, and investments with the State of Montana's short-term investment pool (STIP). The cash resources of the individual funds are combined to form a pool of cash and investments which is managed by the City Treasurer. Investments are carried at cost, which does approximate fair value as described in Note III, A, except for investments in STIP and particular bonds, which are reported at fair value. For purposes of the statement of cash flows, the enterprise and internal services funds consider all funds (including restricted assets) held in the City's cash management pool to be cash equivalents. 2. Receivables and Payables Transactions between funds that are representative of Iend ing/borrowing arrangements outstanding at the end of the fiscal year are referred to as either interfund receivables/payables (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Advances between funds are offset by a fund balance reserve account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. Property tax levies are set within forty-five days of the State providing shared revenue figures, in connection with the budget process. Real property (and certain attached personal property) taxes are billed within ten days after the third Monday in October and are due in equal installments on November 30 and the following May 31. After those dates, they become delinquent, and a lien is filed upon the property. After three years, the City may exercise the lien and take title to the property. Special assessments are billed in two equal installments due November 30 and the following May 31. Personal property taxes (other than those billed with real estate) are generally billed no later than the second Monday in July (normally in May or June), based on the prior November's levies. Personal property taxes, other than mobile homes, are due thirty days after billing. Mobile home taxes are billed in two halves, the first due thirty days after billing; the second due September 30. The tax billings are considered past due after the respective due dates and are subject to penalty and interest charges. An allowance for uncollectible accounts was not maintained for real and personal property taxes and special assessments receivable. The direct write-off method is used for these accounts. A reserve for estimated uncollectible accounts receivable is maintained for the Water Fund and Sewer Fund. The reserve balances are as follows for June 30, 2008: Water $ 13,606 Sewer $ 17,109 3. Inventories and Prepaid Items Inventories for materials and supplies for governmental fund types are expended at the time of purchase. Enterprise Fund inventory of materials and supplies are valued at cost and the First -In First -Out (FIFO) method is utilized. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 35 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 4. Restricted Assets Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. When an expense is incurred for which both restricted and unrestricted net assets are available, it is the City's policy to first apply the restricted resources. 5. Capital Assets Capital assets, which include property, plant, and equipment, are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of five years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. As required by GASB, the City of Kalispell has retroactively reported its streets as part of capital assets in the financial reports for fiscal year 2008. More detailed information on the City's streets and all capital assets can be found in Note D. Capital Assets. The costs of normal maintenance and repairs that do not add to the value of the assets or extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related assets. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of fixed assets is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Depreciation has been provided for the property, plant and equipment of the proprietary funds using the straight line method. The useful lives of these assets have been estimated as follows: Buildings 20-50 years Improvements Other than buildings 10-50 years Streets 20 years Machinery, vehicles and equipment 5-20 years Water and Sewer lines, pump stations 10-50 years 6. Compensated Absences It is the City's policy and state law to permit employees to accumulate a limited amount of earned but unused vacation benefits, which will be paid to employees upon separation from City service. Employees are allowed to accumulate and carry over a maximum of two times their annual accumulation of vacation. Any vacation leave time accumulated over this maximum carryover must be used within 90 days of the new calendar year. There is no restriction on the amount of sick leave that may be accumulated. Upon separation, employees are paid 100 percent of accumulated vacation and 25 percent of accumulated sick leave. The liability associated with governmental fund - type employees is reported in Governmental Activities column of the Statement of Net Assets, while the liability associated with proprietary fund -type employees is recorded in the respective fund and the Business -type Activities column of the Statement of Net Assets. 36 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 7. Long - Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, or proprietary fund type statement of net assets. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed when incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of the debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. NOTE 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Excess of expenditures over appropriations For the year ended June 30, 2008, all City funds expenditures were less than or equal to budgeted appropriations. B. Deficit Fund Balances The following Funds had deficit fund balances at June 30, 2008: Debt Service Funds: 1999 Sidewalk & Curb $ 220 2000 Sidewalk & Curb $ 315 2002 Sidewalk & Curb $ 377 2004 Sidewalk & Curb $ 1772 2005 Sidewalk & Curb $ 6 These deficits will be eliminated as delinquent assessments are collected. NOTE 3. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. Cash and Cash Equivalents Investment Income Income from pooled investments is allocated to the individual funds based on the fund's month end cash balance in relation to total pooled investments. CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Cash Composition Cash and investments may include cash and cash items; demand, time, savings, and fiscal agent deposits; investments in the State Short -Term Investment Pool (STIP); repurchase agreements; U.S. government treasury bills, notes bonds, and other treasury obligations such as state and local government series; general obligations of certain agencies of the United States such as Federal Home Loan Bank; and U.S. government security money market funds if the fund meets certain conditions. Total City's (primary governmental and component units) composition of cash, deposits and investments at fair value as of June 30, 2008, are as follows: Cash on hand $ 2,580 Cash in banks: Demand Deposits 1,592,840 Savings Deposits 47,263 Bonds/Warrants 64,532 STIP 11,211,890 Government Backed Securities 11,139,283 Total $24,058,388 Credit Risk Section 7-6-202, MCA, limits investments of public money of a local government in the following eligible securities: (a) United States government treasury bills, notes and bonds and in the United States treasury obligations, such as state and local government series (SLGLS), separate trading of registered interest and principal of securities (STRIPS), or similar United States treasury obligations; (b) United States treasury receipts in a form evidencing the holder's ownership of future interest or principal payments on specific United States treasury obligations that, in the absence of payment default by the United States, are held in a special custody account by an independent trust company in a certificate or book entry form with the federal reserve bank of New York; or (c) Obligations of the following agencies of the United States, subject to the limitations in subsection 2 (not included): (i) federal home loan bank; (ii) federal national mortgage association; (iii) federal home mortgage corporation; and (iv) federal farm credit bank. With the exception of the assets of a local government group self-insurance program, investments may not have a maturity date exceeding 5 years except when the investment is used in an escrow account to refund an outstanding bond issue in advance. Section 7-6-205 and Section 7-6-206, MCA, state that demand deposits may be placed only in banks and Public money not necessary for immediate use by a county, city, or town that is not invested as authorize in Section 7-6-202 may be placed in time or savings deposits with a bank, savings and loan association, or credit union in the state or placed in repurchase agreements as authorized in Section 7-6-213. The City of Kalispell has no investment policy that would further limit its investment choices. The City of Kalispell has the following investments and their related credit risk as reported by Standard and Poor's or Moody's investment service: 38 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Short Term Investment Pool (STIP) Credit Quality ratings by the NRSRO as of June 30, 2008: Security Investment Type Credit Quality Rating Commercial Paper $1,278,677,750 A1+ Corporate Variable -Rate $ 179,971,989 Al Certificates of Deposits $ 79,997,934 A1+ U.S. Government Agency $ 439,007,788 A1+ Money Market Funds (Unrated) $ 149,352,667 NR Money Market Funds (Rated) $ 55,000,000 A1+ Structured Investment Vehicles $ 140,000,000 D Total Investments $2.322.008.128 Al Securities Lending Collateral Investment Pool $ 101.755,297 NR Audited financial statements for the State of Montana's Board of Investments are available at 555 Fuller Avenue in Helena, Montana. Custodial Credit Risk Custodial Credit risk is the risk that, in the event of a bank failure, the government's deposits may not be returned to it. The City of Kalispell does not have a deposit policy for custodial credit risk. All deposits are carried at cost plus accrued interest. As of June 30, 2008, the City of Kalispell's bank balance was exposed to custodial credit risk as follows: Depository Account Balance Insured $ 200,000 Collateralized -Collateral held by the pledging bank's trust department, but not in the City's name $908,617 Total Deposits and Investments $1.108.617 Deposit Security Section 7-6-207, MCA, states (1) The local governing body may require security only for that portion of the deposits which is not guaranteed or insured according to law and, as to such unguaranteed or uninsured portion, to the extent of: (a) 50% of such deposits if the institution in which the deposit is made has a net worth of total assets ratio of 6% or more; or (b) 100% if the institution in which the deposit is made has a net worth of total assets ratio of less than 6%. The amount of collateral held for the City of Kalispell deposits at June 30, 2008, equaled or exceeded the amount required by State statues. Concentration of Credit Risk The City of Kalispell places no limit on the amount the entity may invest in any one issuer. The City of Kalispell's concentration of credit risk percentages follow for each investment issued that is not issued or explicitly guaranteed by the U.S. government, invested in mutual funds, external investment pools or other pooled investments: Bonds/Warrants % of credit risk <1% 39 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Interest Rate Risk The City of Kalispell does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The following is a list of individual investments as of June 30, 2008 along with their related interest rates and maturity dates. Investment STIP Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Mortgage Corp Federal Home Loan Mortgage Corp Federal Home Loan Mortgage Corp Federal Home Loan Mortgage Corp Federal Farm Credit Bank Federal Farm Credit Bank Federal National Mtg Assn Federal National Mtg Assn S&C Bonds Glacier Bank Repo B. Interfund Receivables and Payables Interest Rate N/A 5.28% 4.05% 5.1% 4.35% 5.05% 5.125% 4.350% 5.18% 4.125% 4.00% 5.00% N/A 2.17% Maturity Date N/A 4/27/12 4/3/13 6/18/09 12/15/11 10/10/12 11/5/12 12/15/12 10/9/12 4/22/13 4/1/13 11/7/12 N/A N/A The composition of interfund balances as of June 30, 2008, were as follows: Due to/from other funds: Receivable Fund General - Major Governmental CD Revolving - Major Governmental UDAG (1) SID - Revolving (1) SID - Revolving (1) SID - Revolving (1) SID - Revolving (1) SID - Revolving (1) SID - Revolving (1) (1)Non-major Governmental Funds Advances to/from other funds: Payable Fund Health (1) Street Maintenance (1) Light Maintenance (1) 1999S&C(1) 2000S&C(1) 2002S&C(1) 2003S&C(1) 2004S&C(1) 2005 S & C (1) Amount $ 11,211,890 $ 1,725,000 $ 890,000 $ 500,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 64,532 $ 546,742 Amount $ 50,862 $ 16,000 $ 15,000 $ 220 $ 315 $ 497 $ 103 $ 3,075 $ 288 Purpose S/T Loan S/T Loan S!T Loan S/T Loan S/T Loan S!T Loan S/T Loan S/T Loan S/T Loan Receivable Fund Payable Fund Amount Purpose CD Revolving - Major Governmental Street Maintenance (1) $ 48,000 L/T Loan UDAG (1) Light Maintenance (1) $ 14,000 LIT Loan (1)Non-major Governmental Funds 40 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 C. Operating Transfers The following is an analysis of transfers in and out during Fiscal Year 2008 From To Amount Purpose Health (1) General - Major Governmental $ 508,377 Operating SID Revolving (1) General - Major Governmental $ 34,568 Excess SID 344 Construction (1) SID 344 - Major Governmental $ 18,960 Close Old School Tech TIF (1) SID 344 - Major Governmental $ 5,000 Operating Old School Industrial TIF (1) SID 344 - Major Governmental $ 3,389 Operating Airport TIF - Debt Service (1) Airport TIF - Special Revenue (1) $ 250,000 Operating Westside TIF - Debt Service (1) Westside TIF - Special Revenue (1) $ 320,000 Operating General - Major Governmental Drug Enforcement Grant (1) $ 43,812 Match General - Major Governmental ISTEA (1) $ 10,185 Match Ambulance - Non -major Enterprise Ambulance (1) $ 335,213 Close (1) Non -major Governmental Fund D. Capital Assets Capital asset activity for the year ended June 30, 2008 was as follows: Transfers between fund types As of July 1, 2007, because the service could no longer support itself on the fees charged to users, the City began accounting for its ambulance service as a special revenue fund. Prior to fiscal year 2008, the ambulance service was considered an enterprise fund. From To Amount (net of depreciation) Purpose Ambulance (Enterprise) Ambulance (Special Revenue) $ 132,986 Change in accounting Capital assets transferred from enterprise funds to governmental funds are not reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances, because there has been no flow of current financial resources. The enterprise funds report it as a gain/loss in the Statement of Revenues, Expenses and Changes in Net Assets. It is reported as a transfer for both sides in the Statement of Activities. City of Kalispell streets Streets with a value of $5,014,495 were added to the City's general capital assets. On the government -wide financial statements $5,014,495 is contributed capital for fiscal year 2008. To arrive at historical cost, the City used the information provided by the outside appraisers (current replacement cost and remaining service life), an assumed 20 year service life, and the Engineering News -Record's construction cost index. The 20 year service life is also being used for depreciation purposes. IF CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Balance Balance Governmental Activities: July 1, 2007 Additions Deductions June 30, 2008 Capital assets not being depreciated: Land $ 2,502,765 $ 10 $ 2,502,775 Construction in Progress 245,973 119,879 (245,973) 119,879 Total capital assets not being depreciated 2,748,738 119,889 (245,973) 2,622,654 Capital assets being depreciated: Buildings 16,327,114 $ 1,761,246 18,088,360 Improvements other than buildings 13,271,138 335,528 13,606,666 Machinery and equipment 4,424,358 990,158 (44,981) 5,369,535 Infrastructure 69,794,882 5,014,495 74,809,377 Total capital assets being depreciated 103,817,492 8,101,427 (44,981) 111,873,938 Less accumulated depreciation for: Buildings (4,806,811) $ (540,460) (5,347,271) Improvements other than buildings (2,721,909) (537,433) (3,259,342) Machinery and equipment (2,507,688) (679,932) 41,756 (3,145,864) Infrastructure (21,376,851) (4,044,413) (25,421,264) Total accumulated depreciation (31,413,259) (5,802,238) 41,756 (37,173,741) Total capital assets being depreciated, net 72,404,233 2,299,189 (3,225) 74,700,197 City capital assets, net Internal service funds: Data Processing Less accumulated depreciation Internal service funds assets, net $ 75,152,971 $ 2,419,078 $ (249,198) $ 77,322,851 Balance Balance July 1, 2007 Additions Deductions June 30, 2008 $ 121,488 $ 28,248 $ 149,736 (112,399) (4,877) (117,276) $ 9,089 $ 23,371 $ - $ 32,460 42 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Balance Balance Business -type activities: July 1, 2007 Additions Deductions June 30, 2008 Capital assets not being depreciated: Land $ 1,610,492 $ 88,702 $ - $ 1,699,194 Construction in progress 2,450,107 15,971,059 (98,277) 18,322,889 Total capital assets not being depreciated 4,060,599 16,059,761 (98,277) 20,022,083 Capital assets being depreciated: (897,149) (96,295) (993,444) Buildings 316,731 - 316,731 Machinery and equipment 2,057,294 77,267 (468,248) 1,666,313 Source of supply 767,838 33,105 800,943 Pumping plant 2,682,088 - 2,682,088 Treatment plant 15,618,263 26,990 352,670 15,645,253 Transmission and distribution 40,279,077 6,236,446 (29,908) 46,485,615 General plant 3,880,196 171,352 $ (243,763) 4,051,548 Storm sewer system 8,655,237 2,562,200 11,217,437 Total capital assets being depreciated 74,256,724 9,107,360 (498,156) 82,865,928 Less accumulated depreciation for: Buildings (159,858) (15,682) (175,540) Machinery and equipment (1,257,904) (160,769) 335,262 (1,083,411) Source of supply (379,652) (17,243) (396,895) Pumping plant (897,149) (96,295) (993,444) Treatment plant (11,546,679) (736,415) (12,283,094) Transmission and distribution (8,416,061) (1,105,792) 17,408 (9,504,445) General plant (1,644,014) (226,811) (1,870,825) Storm sewer system (2,105,476) (220,571) (2,326,047) Total accumulated depreciation (26,406,793) (2,579,578) 352,670 (28,633,701) Total capital assets being depreciated, net $ 47,849,931 $ 6,527,782 $ (145,486) $ 54,232,227 Business -type activities capital assets, net $ 51,910,530 $ 22,587,543 $ (243,763) $ 74,254,310 Balance Balance Component Unit: July 1, 2007 Additions Deductions June 30, 2008 Parking Commission assets $ 82,748 $ 26,350 $ $ 109,098 Less accumulated depreciation (61,803) (7,273) (69,076) Component unit assets, net $ 20,945 $ 19,077 $ $ 40,022 43 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Depreciation was charged to functions/programs of the primary government as follows: Governmental Activities: General Government $ 4,586,616 Public Safety 363,882 Public Works 114,574 Parks and Recreation 403,498 Community Development 3,282 Total Governmental Activities $ 5,471,852 Business-tvpe Activities: Airport $ 99,375 Water 673,361 Sewer 1,662,532 Ambulance Additions Solid Waste 144,310 Total Business -type Activities $ 2,579,578 The depreciation on the capital assets held by the City's internal service fund is included in general government. E. Long -Term Debt During the year ended June 30, 2008, the following changes occurred in liabilities reported in long-term debt: (1)reported in long-term debt account group (2)reported in enterprise funds (3)reported in component units (4)reported in internal service fund In prior years, the general fund was used to liquidate compensated absences and claims and judgments. 44 Due within 1 year $ 330,000 579,197 663,090 327,423 224,560 16,872 86,650 $ 2,227,792 Balance Balance July 1, 2007 Additions Reductions June 30, 2008 (1)G.O. Bonds $ 5,785,000 $ - $ (310,000) $ 5,475,000 (1,2)Revenue Bonds 4,933,868 (553,795) $ 4,380,073 (2)SRF 3,992,159 12,066,713 (814,159) $ 15,244,713 (1)Assessments 5,389,846 15,407 (325,719) $ 5,079,534 (1)Contract Debt/Loans 1,642,444 1,995,165 (1,111,038) $ 2,526,571 (1)lntermediary Program 627,500 150,000 (242) $ 777,258 (1,2,3,4)Compensated Absences 1,205,531 191,073 - $ 1,396,604 Total $ 23,576,348 $14,418,358 $ (3,114,953) $ 34,879,753 (1)reported in long-term debt account group (2)reported in enterprise funds (3)reported in component units (4)reported in internal service fund In prior years, the general fund was used to liquidate compensated absences and claims and judgments. 44 Due within 1 year $ 330,000 579,197 663,090 327,423 224,560 16,872 86,650 $ 2,227,792 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 General Obligation Bonds — The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the City. General obligation bonds outstanding as of June 30, 2007 were as follows: Origination Interest Due Principal Annual Balance Purpose Date Rate Term Date Amount Payment 30 -Jun -08 Aquatic Facility 4/15/2002 2%-4.9% 20 years 2022 $ 3,675,000 varies $ 2,925,000 Fire Station #62 4/1/2005 3%-6.5% 15 years 2020 3,000,000 varies 2,550,000 Total G.O. Bonds 6.34% $ 6,675,000 2011 $ 5,475,000 Special Assessment Debt — Special assessment bonds are secured by a lien on the assessed properties. The primary source of repayment is the assessments levied against the benefiting properties. However, the City is liable, to an extent, for repayment of these special assessment bonds. The City is authorized by State law to establish and has established a revolving fund to ensure the payment of debt service on the bonds in the event that assessed property owners default. Significant Provisions of the Series 2006 Special Improvement District No. 344 Bonds Revenue Bonds — Revenue bonds are directly related to and expected to be paid from the proprietary fund. The 2000 Westside Tax Increment bonds and the 2005 Airport Tax Increment bonds are accounted for in the General Long -Term Debt Account Group. Origination Interest Due Principal Annual Balance Purpose Date Rate Term Date Amount Payment 30 -Jun -08 SID341 9/1/1995 6.06% 15 years 2011 $ 100,000 varies $ 15,000 SID342 11/1/1995 6.34% 15 years 2011 209,000 varies 20,000 SID343 6/12/2001 3.6%-5.5% 20 years 2021 1,581,500 varies 910,000 SID344 6/15/2006 3.7%-5.1% 20 years 2026 4,520,000 varies 4,070,000 2000 S&C 1/2/2001 9.50% 8 years 2009 2,315 varies 289 2002 S&C 1/2/2003 4.25% 8 years 2011 13,364 varies 5,011 2003 S&C 1/1/2004 4.00% 8 years 2012 13,758 varies 6,881 2004 S&C 1/3/2005 5.00% 8 years 2013 31,693 varies 19,808 2005 S&C 1/3/2006 7.25% 8 years 2014 22,850 varies 17,138 2007 S&C 1/3/2008 6.00% 8 years 2016 15,407 varies 15,407 Total Special Assessment Bonds $ 6,509,887 $ 5,079,534 Significant Provisions of the Series 2006 Special Improvement District No. 344 Bonds Revenue Bonds — Revenue bonds are directly related to and expected to be paid from the proprietary fund. The 2000 Westside Tax Increment bonds and the 2005 Airport Tax Increment bonds are accounted for in the General Long -Term Debt Account Group. 45 Issue Interest Final Bonds Balance Purpose Date Rate Term Maturity Issued 30 -Jun -08 2001 Water Jun -01 4.00% 20 years 2021 $ 761,000 $ 552,000 2004 Water Refunding May -04 2.5%-4.85% 20 years 2024 1,840,000 1,330,000 2002 Sewer/WWTP Apr -02 3.51% 9 years 2011 2,355,000 665,000 2000 Westside TIF Mar -00 6.21% 10 years 2010 2,500,000 153,073 2005A - Airport TIF Sep -05 3.8%-4.40% 10 years 2020 1,445,000 1,445,000 2005B - Airport TIF Sep -05 3.55%-3.95% 5 years 2010 555,000 235,000 Total Revenue Bonds $ 9,456,000 $ 4,380,073 45 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Significant Provisions of the Series 2005 Airport Urban Renewal Tax Increment Bond Reserve Account — The City shall maintain a debt service reserve account with a balance equal to the lesser of: (i) ten percent of the sum of the original principal amounts of each series of Bonds of which any Bond is Outstanding or (ii) the maximum amount of principal and interest due on the Outstanding Bonds (giving effect to any mandatory sinking fund redemption) in the then current or any future calendar year. Maximum amount of principal and interest due in any future fiscal year $182,700 City's Reserve $184,875 Significant Provisions of the Series 2000 Westside Urban Renewal Tax Increment Bond Reserve Account — The City shall keep in the reserve account an amount equal to the maximum amount of principal and interest due on all outstanding bonds of the Westside Tax Increment District in the Then current or any future fiscal year. O/S Bond Max Principal and Debt Due in any future fiscal year $82,569 City's Reserve $82,569 Significant Provisions of the Water System Revenue Bonds Debt Service Account - Monthly an amount equal to not less than 1/6 of the interest due within the next six months and 1/12 of the principal to become due within the next twelve months shall be credited to the debt service account. The debt service account was zero as of June 30, 2008, as all debt service payments were made as of the end of the fiscal year, leaving no accrued interest or principal balance. Reserve Account - The City shall keep in the reserve account an amount equal to the lesser of 10% of the original principal or the maximum amount of principal and interest required in the current or any subsequent fiscal year. For the Water fund the City complies with the 10% of the original principal of all bonds. Original bond issues $2,601,000 Total Reserve Requirement (10%) $ 260,100 Reserve balance 6/30/08 L-26-0 Property Insurance - The City will cause all buildings, properties, fixtures, and equipment to be kept insured in amounts that are ordinarily carried. Liability Insurance - The City will carry insurance against liability of the City and its employees. Rates and Charges — Rates and charges will be made and kept sufficient to provide gross income and revenues adequate to pay promptly the reasonable and current expenses of operating and maintaining the system and to produce in each fiscal year net revenues in excess of such current expenses, equal to 125% of the maximum amount of principal and interest payable from the Revenue Bond Account in any subsequent fiscal year. 46 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Cash Flow Coverage *Water Service Charges Misc. Revenue Total Operating Revenue Less: Operating Expense (before depreciation) Available for Debt Service **Maximum Debt Service Coverage FY08 *includes interest revenue **includes all debt service needs of the water fund Sewer Revenue Bonds Ordinances and Required Information $2,831,417 159,441 $2,990,858 1,541,886 i 1.448,972 $ 515,085 282% Debt Service Account - Monthly an amount equal to not less than 1/6 of the interest due within the next six months and 1/12 of the principal to become due within the next twelve months shall be credited to the debt service account. The debt service account was zero as of June 30, 2008, as all debt service payments were made as of the end of the fiscal year, leaving no accrued interest or principal balance. Reserve Account - The City shall keep in the reserve account an amount equal to the lesser of 10% of the original principal, the maximum amount of principal and interest required in the current or any subsequent fiscal year, or 125% of the average debt service payable in any fiscal year. The City is in compliance with the maximum amount of principal and interest required in the current or any subsequent year. As of June 30, 2008, the debt service reserve account contains $1,433,048. Rates and Charges — Rates and charges will be made and kept sufficient to provide gross income and revenues adequate to pay promptly the reasonable and current expenses of operating and maintaining the system and to produce in each fiscal year net revenues in excess of such current expenses, equal to 125% of the maximum amount of principal and interest payable from the Revenue Bond Account in any subsequent fiscal year. Cash Flow Coverage *Operating Revenue Less: Operating Expense (before depreciation) Available for Debt Service **Maximum Debt Service Coverage FY07 *includes interest revenue **includes all debt service needs of the sewer fund 47 $4,637,516 2,790,247 $1 847 269 $1,160,330 160% CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 State Revolving Fund — the City has five (5) loan agreements with the State Revolving Fund (SRF). These obligations are to be repaid from the operating income of the fund. SRF LOANS Purpose Sewer - WWTP (construction) Sewer (Highway 93 S extension) Water 2007 'A' (refinance) Water 2007'B' (well, storage, distribution) Sewer - WWTP (expansion) Loans/Contracted Debt Governmental Funds Purpose *Board of Housing BOI:Pick Up/Aerator BOI:Building/Plow Trucks BOI:City Hall HVAC BOI:Streets Building BOI:Fire Truck BOI:Tractor/Mower Rocky Mtn Bank - Fire Truck Capital One Public Funding - 201 1 st Ave E -City Hall USDA: Intermediary Relending Program Relending Program Origination Interest Rate FY92 4.00% FY04 3.75% FY07 3.75% FY08 3.75% FY08 3.75% Total SRF Loans Origination Amount Outstanding Term Borrowed 30 -Jun -08 20 years $ 3,913,425 $ 1,163,000 20 years 1,475,860 1,257,000 8 years 1,283,159 1,142,000 20 years 1,500,000 1,466,000 20 years 10,566,713 10,216,713 8/15/2008 $ 18,739,157 $15,244,713 Origination Interest Enterprise Funds Due Principal Balance Date Rate** Term Date Amount 30 -Jun -08 3/1/1995 6.00% 30 years 2/1/2025 $ 271,000 $ 205,113 5/16/2003 4.85% 5 years 8/15/2008 40,888 4,357 5/16/2003 4.85% 5 years 8/15/2008 99,390 10,592 7/16/2004 4.85% 10 years 2/15/2014 151,836 102,902 5/16/2003 4.85% 5 years 8/15/2008 52,000 5,924 4/22/2005 4.85% 10 years 8/15/2015 279,900 219,514 12/23/2004 4.85% 5 years 2/15/2010 77,425 33,828 3/7/2008 3.95% 10 years 3/1/2018 575,000 575,000 10/25/2007 4.85% 12 years 9/15/2019 1,420,165 1,369,341 Total BOI loans/contracted debt 2,967,604 2,526,571 10/12/2004 1.00% 30 years 10/12/2034 520,000 519,758 11/27/2006 1.00% 30 years 11/27/2036 257,500 257,500 Total loans/contracted debt $ 3,745,104 $ 3,303,829 BOI - Board of Investments Intercap Loan Program *The board of housing loan is paid from the proceeds of the rents on the Courtyard Apartments per the agreement with Northwest Human Resources. **The BOI loans interest rates are variable Compensated Absences Payable — compensated absences payable, which represent vacation, sick leave and compensatory time earned by employees, and is payable upon termination, were as follows: General Long -Term Debt Account Group $1,114,928 Enterprise Funds 273,155 Data Processing Fund 3,379 Parking Commission 5,142 Total $ 1,396,604 48 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Requirements to amortize debt The annual requirements to amortize all long-term debt outstanding, excluding compensated absences payable, as of June 30, 2008, were as follows: F. State -Wide Retirement Plans Substantially all full-time City employees are eligible for one of three retirement plans: Montana Public Employees' Retirement System (PERS); Municipal Police Officer's Retirement System (MPORS): and the Firefighters' Unified Retirement System (FURS). The plans are established by State law and administered by the State of Montana. The plans are cost-sharing multiple -employer defined benefit and/or defined contribution plans that provide retirement, disability and death benefits to plan members and beneficiaries. The City had a total payroll of $10,195,086 for FY08, of which $9,265,772 is covered by PERS, MPORS, or FURS. Component Unit payroll covered by PERS was $55,000 for the Parking Commission. Contribution rates for the plans are required and determined by State law. The contribution rates, expressed as a percentage of covered payroll for the fiscal year ended June 30, 2008, were: PERS MPORS SPECIAL Employee 6.9% 9% 10.7% Employer 6.94% 14.41% G.O. State ASSESSMENT 29.37% CONTRACTED REVENUE 49 FOR FISCAL BONDS BONDS LOANS/DEBT BONDS YEAR ENDED PRINCIPAL INTEREST PRINCIPAL INTEREST PRINCIPAL INTEREST PRINCIPAL INTEREST TOTAL 2009 330,000 233,520 327,423 234,698 904,523 552,635 579,197 182,005 3,344,002 2010 340,000 216,045 327,134 219,598 863,806 664,061 594,876 89,763 3,315,283 2011 355,000 203,645 327,134 205,700 879,389 629,146 532,000 134,758 3,266,772 2012 365,000 190,288 320,465 192,142 914,767 594,219 218,000 113,830 2,908,711 2013 385,000 176,573 313,744 178,049 1,015,747 555,215 225,000 105,215 2,954,543 2014-2018 2,160,000 638,210 1,533,634 679,327 4,956,032 2,169,658 1,277,000 378,068 13,791,929 2019-2023 1,540,000 159,795 1,240,000 352,550 4,526,233 1,272,195 864,000 109,833 10,064,606 2024-2028 690,000 70,380 4,246,174 441,303 90,000 4,365 5,542,222 2029-2033 155,995 9,015 165,010 2034-2038 85,877 1,748 87,625 TOTAL $5,475,000 $1,818,076 $5,079,534 $2,132,445 18,548,543 6,889,195 4,380,073 1,117,837 $45,440,703 F. State -Wide Retirement Plans Substantially all full-time City employees are eligible for one of three retirement plans: Montana Public Employees' Retirement System (PERS); Municipal Police Officer's Retirement System (MPORS): and the Firefighters' Unified Retirement System (FURS). The plans are established by State law and administered by the State of Montana. The plans are cost-sharing multiple -employer defined benefit and/or defined contribution plans that provide retirement, disability and death benefits to plan members and beneficiaries. The City had a total payroll of $10,195,086 for FY08, of which $9,265,772 is covered by PERS, MPORS, or FURS. Component Unit payroll covered by PERS was $55,000 for the Parking Commission. Contribution rates for the plans are required and determined by State law. The contribution rates, expressed as a percentage of covered payroll for the fiscal year ended June 30, 2008, were: The State contribution qualifies as an on behalf payment. These amounts have been recorded in the City's financial statements. The Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for all three plans. That report may be obtained by writing to Public Employees Retirement Division, P. O. Box 200131, Helena, MT 58620-0131 or by calling 1-406-444-3154. The City's contributions for the years ending June 30, 2006, 2007 and 2008, as listed below, were equal to the required contributions for each year. PERS PERS MPORS FURS Employee 6.9% 9% 10.7% Employer 6.94% 14.41% 14.36% State 0.1% 29.37% 32.61% The State contribution qualifies as an on behalf payment. These amounts have been recorded in the City's financial statements. The Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for all three plans. That report may be obtained by writing to Public Employees Retirement Division, P. O. Box 200131, Helena, MT 58620-0131 or by calling 1-406-444-3154. The City's contributions for the years ending June 30, 2006, 2007 and 2008, as listed below, were equal to the required contributions for each year. PERS MPORS FURS PARKING COMM 2006 $ 280,547 $ 211,227 $ 232,396 $ 3,174 2007 $ 313,175 $ 221,686 $ 266,289 $ 3,324 2008 $ 383,694 $ 253,371 $ 284,147 $ 3,817 49 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 G. Post Employment Health Insurance Benefits Terminated employees may remain on the City's health insurance plan for up to 18 months if they pay the monthly premiums. This benefit is required under federal C.O.B.R.A. law. Retirees may remain on the City's health plan as long as they wish, provided they pay the monthly premiums. State law requires the City to provide this benefit. No cost can be estimated for the above benefits, although there is the probability that there are higher medical costs for retirees, which would result in additional costs to the insurance program. There are no other post -employment benefits provided by the City. H. Amounts Due From and Due To other Governments On June 30, 2008, the amounts due from and due to other governments consisted of the following: General Fund Due from: Amount State of Montana $ 451 Flathead County 540,182 Total $ 540,633 Special Revenue Funds Due from: Amount Flathead County $ 326,591 MDOT-Law Enforcement Grants 38,590 MDOT-CTEP/ISTEA Grant 9981 DOJ -Domestic Violence Grant 103,519 Total $ 478,681 Debt Service Funds Due from: Amount Flathead County $ 394,248 Enterprise Funds Due from: Amount DN RC $ 2,302,154 Flathead County 175,658 $2,477,812 Total $ 3,891,374 50 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 I. Restricted Cash/Investments The following restricted cash/investments were held as of June 30, 2008. These amounts are reported within the cash/investment account on the Combined Balance Sheet. Business-tvoe Activities Water Bond Reserve (includes SRF & BOI) Plant Investment Sewer Operating Reserve Bond Contingency Plant Investment (sanitary) Plant Investment (treatment plant) Plant Investment (storm) Treatment Plant Replacement Total business -type activities restricted cash/investments Governmental Activities Impact Fees Capital Urban Forestry Developers Westside TIF Bond Reserve Airport TIF Bond Reserve Total governmental activities restricted cash/investments Total restricted cash/investments Amount $ 515,449 1,085,220 213,000 1,433,696 1,988,945 3,418,894 444,632 747,283 $ 9,847,119 242,063 148,777 82,568 184,875 658,283 $ 10,505,402 Plant investment/impact fee cash is from new services and is restricted to be used only for capital (expansion). Operating reserve cash is restricted according to bond agreement (third party). Treatment plant replacement cash is restricted by an agreement with Evergreen (third party). Urban forestry receives cash from developers to be used to plant trees in new city developments. J. Restatements During the current fiscal year, the following adjustments relating to prior years' transactions were made to fund balance and retained earnings accounts. Fund Amount Reason Ambulance - nonmajor governmental $ 158,703 Prior Fiscal Year Revenue Correction Gas Tax $ (2,233) Prior Fiscal Year Expense Correction CD Loan Revolving $ (19,249) Change in accounting Rural Development $ 19,249 Change in accounting Water $ 15,372 Prior Fiscal Year Expense/Revenue Correction Sewer $ (6,106) Prior Fiscal Year Expense Correction 51 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 K. Joint Ventures Joint ventures are independently constituted entities generally created by two or more governments for a specific purpose which are subject to joint control, in which the participating governments retain 1) an ongoing financial interest or 2) an ongoing financial responsibility. 1. City -County Health Department The City -County Health Department is operated under an interlocal agreement between Flathead County and the City of Kalispell. The Department operates under the supervision and control of the City -County Health Board. The Board consists of seven members, six of whom are appointed by the Board of County Commissioners. The Department is financed, in addition to revenue generated by providing health services, by the City and the County levying an identical mill levy, up to 5 mills, in order that all property within the City of Kalispell and all property in Flathead County outside the City limits are taxed equally. The operation is accounted for in the City Health Fund and is included in the general purpose financial statements of Flathead County within the Special Revenue Fund. 2. Courtyard Apartments/Northwest Montana Human Resources The City entered into an agreement with Northwest Montana Human Resources for a joint venture construction project of the Courtyard Apartments. The City owns 16 units of the apartment complex built with Home Grant and CDGB funds. NWMHR has built 16 units also. The agreement provides for the management of the housing complex for low income housing. All operations and maintenance of the housing complex are managed by Northwest Montana Human Resources. NWMHR maintains a trust fund in the City's name to record the revenues and expenses of the housing complex. As of June 30, 2008 the equity in the fund was $49,360. The debt payments on the mortgage are paid from the proceeds of the rents by NWMHR. The principal balance is recorded on the City's books in the Long -Term Debt Group of Accounts. The original amount of the loan was $271,000. The balance as of June 30, 2008 is $205,113. L. County Provided Services The City of Kalispell is provided various financial services by Flathead County. The County serves as cashier and treasurer for the City for tax assessment collections and other revenues received by the County which are subject to distribution to the various taxing jurisdictions located in the County. The collections made by the County on behalf of the City are accounted for in an agency fund in the City's name and are periodically remitted to the City by the County Treasurer. The County charges the City for fees associated with City Special Assessments. M. Risk Management The City faces a considerable number of risks of loss, including a) damage to and loss of property and contents, b) employee torts, c) professional liability, i.e., errors and omissions, d) environmental damage, e) workers' compensation, i.e. employee injuries, and f) medical insurance costs of employees. A variety of methods are used to provide insurance for these risks. Commercial policies, transferring all risks of loss, except for relatively small deductible amounts are purchased for property and content damage and professional liabilities. The City participates in two statewide public risk pools operated by the Montana Municipal Insurance Authority, for workers' compensation and for tort liability coverage. Employee medical insurance is provided through a state-wide health insurance pool administered by MMIA. Given the lack of coverage available, the City has no coverage for potential losses from environmental damages. Effective July 1, 1987 The City of Kalispell joined with other Montana cities to form the Montana Municipal Insurance Authority, a self-insurance pool offering Worker's Compensation and Liability Coverage. Both public entity risk pools currently operate as common risk management and insurance programs for the member governments. The liability limits for 52 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 damages in tort action are $750,000 per claim and $1.5 million per occurrence with an $11,250 deductible per occurrence. State tort law limits the City's liability to $1.5 million. The city pays an annual premium for its employee injury insurance coverage, which is allocated to the employer funds based on total salaries and wages. The agreements for formation of the pools provide that they will be self-sustaining through member premiums. The tort liability plan and workers' compensation program issued bonds in the amount of $4.41 million and $7.610 million, respectively, to immediately finance the necessary insurance reserves. All members signed a contingent note for a pro rata share of this liability in case operating revenue was insufficient to cover the debt service. The City's share is $201,445 for liability and $281,715 for Workers' Compensation to finance the necessary insurance reserves. Based on the plan's current financial position, the City doesn't expect to make any payment on these notes. Separate financial statements are available from the Montana Municipal Insurance Authority. The City of Kalispell ceased its self funded employee health insurance plan on June 30, 2004. From July 1 through September 30, 2004, the City provided employees with a fully funded plan through Blue Cross/Blue Shield. On October 1, 2004, Kalispell signed a 5 year agreement with many other Montana Cities, and through the Montana Municipal Insurance Authority, to create a state wide health insurance pool. The City pays the total monthly premium for employees who only choose to cover themselves. For employees who choose to cover additional dependents, the City pays a percentage of the extra costs. N. Pending Litigation The following is a list of litigation pending against the City and the amount of damages claimed by the Plaintiff. The City Attorney has made no evaluation as to the outcome of each case. The City has liability insurance that may cover all or part of the damages. Accordingly, no provision has been made in the financial statements for these contingent liabilities. Litigant Olson Kruckenberg West North Talmadge Lucas Business Improvement District Worth O. Loans Receivable Damages Loss Requested Potential $ 1,000 possible <10,000 none <10,000 nominal >10,000 remote >10,000 unknown none unknown unknown Status Justice Court District Court District Court District Court District Court Appeal - Supreme Court Community Development Loan Revolving The City entered into a community development program, which includes funding from a community development block grant, to make available to eligible applicants (low -to -moderate income residents), a loan for at least one-half of the required rehabilitation cost. These funds from the City, together with loans from the First Federal Savings Bank (now Glacier Bank) of Montana, the lender, must provide the total funds required for the purchase and rehabilitation of the housing unit. At the time the bank loans are closed with the borrower, the proceeds of the City's loan will be deposited into the borrower's construction account at First Federal. The City's loan is secured by the property, and filed in a third lien position. Repayment of the City loan will not begin until 30 days after the Lender's loan (second lien) for construction of the unit has been paid off. The City's loan is interest free until such time as repayment begins. The maximum amount of a private lender loan cannot exceed $20,000 per property with a ten-year pay back. In addition, when an owner -occupant is unable to afford a private lender loan at the pre -determined interest rate agreed to by the City and lender, he or she may qualify for City financing. The City may provide a direct loan of up to $25,000 with a 53 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 varying interest rate (as low as zero percent) or with a longer amortization period (maximum of fifteen years) or a deferred loan to be repaid simultaneously, at a later date, with a balloon payment, or to be released at the end of ten years. The City has $61,079 recorded as housing rehab loans receivable as of June 30, 2008 in the Community Development Loan Revolving Fund. The above mentioned loans are offset with deferred revenue accounts. Uncollected receivables in governmental funds are offset with deferred revenue accounts as explained in the "basis of accounting". Other loans receivable of the Community Development Loan Revolving Fund: A 15 year loan at 3% to Center Street Plaza in April of 1999. Original Loan amount $ 70,529 June 30, 2008 balance $ 30,772 A 15 year loan at 5% to Flathead Health and Fitness in November 2004. Original Loan amount $ 74,250 June 30, 2008 balance $ 62,373 Community Development Block Grant Economic Development Program In fiscal year 2007, the City entered into a community development program with funding from a community development block grant economic development program. Eligibility for these low interest loans is tied to the creation of jobs within Kalispell with a percentage of the jobs created to be filled by low and moderate -income persons. The following loan has been made by the City using the economic development program funds: A 15 year loan at 6.5% to Distinctive Countertops in July 2006. Original Loan amount $ 25,000 June 30, 2008 balance $ 23,901 A 15 year loan at 5% to Distinctive Countertops in October 2006. Original Loan amount $ 288,619 June 30, 2008 balance $ 279,871 A 7 year loan at 7% to the Kalispell Hotel (Hilton) in July 2007. Original Loan amount $ 150,000 June 30, 2008 balance $ 135,975 Rural Development Loan Revolving On May 5, 2003, the City Council passed Resolution No. 4780 establishing an Economic Development Revolving Loan Fund (ED RLF) for small business retention and expansion. The resolution also created an Economic Development Loan Review Committee to process all applications for assistance. Additionally, on August 16, 2004 and again on November 6, 2006, the City Council, by Resolution No. 4929 and 5158, respectively, authorized the City Manager to enter into loan agreements with the United States Department of Agriculture, Rural Development office, in the amount of $520,000 and $750,000. These monies will be used to assist in the retention and expansion of small business, which may stimulate economic development activity by assisting the private sector where a funding gap exists and alternative sources of public and private financing are not adequate. 54 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 The following loans have been made by the City using the Rural Development funds: A 15 year loan at 5% to Flathead Health and Fitness in November 2004. Original Loan amount $ 90,750 June 30, 2008 balance $ 74,567 A 10 year loan at 7% to Valley Linen in January 2006. Original Loan amount $ 150,000 June 30, 2007 balance $ 133,603 A 7 year loan at 6.25% to Little Caesar's in March 2006. Original Loan amount $ 37,500 June 30, 2008 balance $ 25,873 A 7 year loan at 7% to Unfinished Furniture Creations in April 2006. Original Loan amount $ 50,000 June 30, 2008 balance $ 35,425 A 15 year loan at 6.5% to Distinctive Countertops in July 2006. Original Loan amount $ 150,000 June 30, 2008 balance $ 143,250 A 10 year loan at 7% to Crossroads Realty in June 2007. Original Loan amount $ 150,000 June 30, 2008 balance $ 139,768 A 7 year loan at 7% to the Kalispell Hotel (Hilton) in July 2007. Original Loan amount $ 150,000 June 30, 2008 balance $ 135,975 UDAG The following loans were made by the City using Urban Development Assistance Grant (UDAG) funds: A 20 year redevelopment loan at 5% with Big Sky Manor in August 1999. Original Loan amount $ 124,000 June 30, 2008 balance $ 84,428 A 20 year redevelopment loan at 6% with United Way in January 2000. Original Loan amount $ 133,500 June 30, 2008 balance $ 95,654 P. City Court Contracts Receivable Contracts receivable of the City Court, because of the uncertainty regarding when and if they will be collected, are no longer booked as an asset on the balance sheet of the General Fund. These receivables, at June 30, 2008, amounted to $1,283,005. Q. Wastewater Treatment Plant agreement with Evergreen The City of Kalispell entered into an Interlocal Agreement with the Evergreen Sewer District #1 for treatment of sewage from the district at the City's plant. The Evergreen district sewer went into operation in July 1994. The City bills Evergreen 55 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 monthly for debt service at 22% of the principle and interest due for the plant. The City also bills for maintenance and operation and replacement costs per the agreement based on metered flows. Evergreen Sewer District has an equity interest in the replacement account carried on the City's books. The balance of the account as of June 30, 2008 is $747,283 of which Evergreen's interest is $237,577. R. Gateway West Mall Flathead County Economic Development Authority, Flathead County and the City of Kalispell entered into an inter -local agreement to purchase 59,000 square feet of the Gateway West Mall for $2.5 million and sign a ten-year lease with Stream International, Ltd. The City of Kalispell agreed to acquire the property by issuing a $2.5 million tax increment urban renewal bond. The City then conveyed the property to the Authority as "tenants in common". The County through the Authority became vested with an undivided 37% interest in the property with the City vested with the remaining 63% interest. As a result of this conveyance, the Authority recognized its portion of the building and the related debt on their books. The Authority is responsible for the operation maintenance of the property during the term of the initial ten-year lease. The Authority is also responsible for the carrying of property insurance against the property. The City has agreed to reimburse the Authority for its proportionate share of these costs. The Authority has agreed to levy up to two mills or $156,000 for the term of the bond, and has pledged $30,567 of the revenue generated each year to be remitted to the City of Kalispell in two equal installments of $15,284 that will be used toward the retirement of the tax increment bond. The authority shall also set up and contribute $3,000 to a building reserve fund each year of the lease. The reserve will be used for any repair or construction work deemed necessary in maintaining the property. The City issued the tax increment bonds in its name and agrees to be punctual in all debt payments, and will keep all proper records and meet all necessary requirements of the bond resolution. The City shall also set up and contribute $5,000 to a building reserve fund for each year of the lease. The reserve will be used for any repair or construction work deemed necessary in maintaining the property. The Authority shall manage this building reserve. The City has pledged the following revenues towards the repayment of the $2.5 million bond: 1. Tax increment money generated from the Westside Tax Increment District until the City reaches their share of the debt payment or $52,000. 2. The Authority's annual contribution of $30,567. The County has agreed that it will approve the Authority's levy for an ad valorem property tax of up to two mills on all taxable property in the County, until the tax increment bond is paid. Within 180 days of the payment in full of the Bond, either the authority or the City may give notice to each other of intent to purchase the property. The purchase price to be paid will be equal to the total debt service paid by the other party. The Authority has the first option of buying the property from the City. If neither the Authority nor the City wants to purchase the property outright, then the City has granted American Capital a right of first refusal to purchase the property. The proceeds from the sale of the property shall be distributed based on the equity interest each entity holds. In August of 2003, Stream International closed their computer support call center in the Gateway West Mall building, and subsequently bought out the remaining portion of their 10 year contract with the City. In February of 2004 the City entered into an agreement with TeleTech Holdings, Inc. TeleTech, which will operate a call-in center, similar to Stream's operation, entered into a lease structured similar to Stream's. Rent abatement is tied to jobs 56 CITY OF KALISPELL NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 created and maintained and pay. TeleTech will also pay the guaranteed minimum tax payment of $140,000/year. This ensures that the City will be able to meet its portion of the debt obligation related to the Gateway West Mall building. S. Long Term Loans Receivable Communitv Development Loan Revolvin Hampstead Partners In August of 2002, the City of Kalispell entered into two (2) notes receivable agreements with 2nd Avenue West Partners, L.P. (Hampstead Partners) for property on 2nd Avenue West in Kalispell. The property consists of a 40 -unit low-income apartment complex known as 2nd Avenue West Independent Living Center. As stipulated in the agreement, this property is restricted as low income housing, and shall remain as such for a period of thirty-five years. One of these notes is for $480,000, and bears interest at 1% per annum. The second of these notes is for $400,000, and bears interest at 4.81% per annum. These loans mature on February 28, 2032. Payments of interest on the note are due on or before the last day of the taxable year, to the extent there is surplus cash, as defined by the note. Unpaid interest shall accrue until paid, but not compound on the first loan. Payments of principal are not required until the maturity date of the loans. The notes are secured by a deed of trust on the property. Accrued interest as of June 30, 2008, is $28,455, and $104,208, respectively. T. Subsequent Events Glacier State Apartments Project On November 17, 2008 the City Council passed resolution #5322 authorizing the sale of a revenue bond totaling $5,000,000 to finance the Glacier State Apartment Project. The debt service on the bond is payable solely from revenues and resources of Glacier State Associates, LP, a Montana limited partnership (the "Borrower"). The bond does not constitute indebtedness, liability, general or moral obligation, or a pledge of the faith and credit or any taxing power of the City, the State, or any political subdivision thereof. Western Montana Mental Health Center Project On November 17, 2008 the City Council passed resolution #5323 authorizing the sale of a revenue note for $1,600,000 to finance the Western Mental Health Center Project. The debt service on the note is payable solely from revenues and resources of Western Montana Mental Health Center, a Montana nonprofit corporation (the "Borrower"). The note does not constitute indebtedness, liability, general or moral obligation, or a pledge of the faith and credit or any taxing power of the City, the State, or any political subdivision thereof. 57 REQUIRED SUPPLEMENTARY INFORMATION 0 0 w � � � L �A O a` c � = 0 0 tj`o y aUU `a y as x' a y yc5 ax a w 'e7. d, a q o q aOq C G F L� F D F 58 y W ry •%+ U3 w ozz 'z 0 0 w � � � L �A O a` c � = 0 0 tj`o y aUU `a y as x' a y yc5 ax a w 'e7. d, a q o q aOq C G F L� F D F 58 CITY OF KALISPELL FLATHEAD COUNTY, MONTANA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Fiscal Year Ended June 30, 2008 Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of City of Kalispell, Flathead County, Montana, and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local governments, andNon-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in preparation of, the basic financial statements. 59 / _\ \ -- 2|!!!I E- ! `§`^ / •! ! 7!.*!§� o }j#j L)E _ ;}!` &\{77{\\l/ ! r! ��•,_ � - )}\/ )}} )}))\)///} §)}It »» City of Kalispell, Flathead County, Montana Budgetary Comparison Schedule Budget -to -GAAP Reconciliation Note A - Explanation of differences between budgetary inflows and outflows and GAAP Revenues and Expenditures Sources/Inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule Total revenues as reported on the statement of revenues, expenditures and changes in fund balances -governmental funds. Uses/Outflows of resources Actual amounts (Budgetary basis) "total charges to appropriations" from the budgetary comparison schedule Total expenditures as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds Community Dev. General Fund Loan Revolving $ 10,331,334 $ 85,250 $ 10,331,334 $ 85,250 $ 11,920,864 $ 195,000 $ 11,920,864 $ 195,000 61 Denning, Downey & Associates, P.C. CERTIFIED P UBLIC A CCO UNTANTS 1740 US. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS Mayor and City Council City of Kalispell Flathead County Kalispell, Montana We have audited 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 City of Kalispell, Flathead County, Montana, as of and for the year ended June 30, 2008, which collectively comprise the City of Kalispell's basic financial statements and have issued our report thereon dated February 18, 2009. We 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Kalispell internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Kalispell's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Kalispell's internal control over financial reporting. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City of Kalispell's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control. -62- Robert K Denning, CPA • Kim M. Downey, CPA Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Kalispell's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the Mayor and City Council, management, the Montana Department of Administration, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. 4,4 Q U� CPQ 5 2e. February 18, 2009 -63- Denning, Downey & Associates, P. C. CERTIFIED P UBLIC A CCO UNTANTS 1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Mayor and City Council City of Kalispell Flathead County Kalispell, Montana Compliance We have audited the compliance of City of Kalispell, Flathead County, Montana, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2008. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion of the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments and Non -Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, City of Kalispell complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2008. -64- Robert K. Denning, CPA • Kim M. Downey, CPA Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing an opinion on compliance but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended for the information of the audit committee, management, the Mayor and City Council, the Montana Department of Administration, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. 4,vul, 6&UXX7 a,� CPQ 5 Pc. February 18, 2009 -65- CITY OF KALISPELL FLATHEAD COUNTY, MONTANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS Fiscal Year Ended June 30, 2008 Section I — Summary of Auditor's Results Financial Statements Type of auditor's report issued Unqualified Internal control over financial reporting: Material weakness(es) identified? No Significant deficiency(s) identified not considered to be material weaknesses None Reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weakness(es) identified? No Significant deficiency(s) identified not considered to be material weaknesses None Reported Type of auditor's report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section .510(a)? No Identification of major programs: CFDA Number Name of Federal Program or Cluster 20.205 Highway Planning and Construction 16.590 Grants to Encourage Arrest Policies and Protection Order Program 66.468 Capitalization Grants for Drinking Water State Revolving Fund Dollar threshold used to distinguish between Type A and Type B programs: $ 300,000 Auditee qualified as low-risk auditee? No SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Section II — Financial Statement Findings There were no financial statement findings reported. Section III — Federal Award Findings and Questioned Costs There were no federal award findings or questioned costs. -67- Denning, Downey & Associates, P.C. CERTIFIED P UBLIC A CCO UNTANTS 1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957 REPORT ON OTHER COMPLIANCE, FINANCIAL, AND INTERNAL ACCOUNTING CONTROL MATTERS Mayor and City Council City of Kalispell Flathead County Kalispell, Montana There were no other compliance, financial, or internal accounting matters. February 18, 2009 -68- Robert K Denning, CPA • Kim M. Downey, CPA Denning, Downey & Associates, P.C. CERTIFIED P UBLIC A CCO UNTANTS 1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957 REPORT ON PRIOR AUDIT REPORT RECOMMENDATIONS Mayor and City Council City of Kalispell Flathead County Kalispell, Montana The prior audit report contained one recommendation. The action taken on the recommendation is as follows: Recommendation Domestic Violence Action Team February 18, 2009 Action Taken Implemented -69- Robert K. Denning, CPA • Kim M. Downey, CPA SUPPLEMENTARY INFORMATION ASSETS Current assets: Cash and investments Taxes and assessments receivable, net Accounts receivable - net Notes and loans receivable Contracts receivable Due from other funds Due from other governments Prepaid expenses Total current assets Noncurrent assets: Restricted cash and investments Advances to other funds Deferred assessments receivable Long term portion of loans receivable Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Due to other funds Deferred revenue Deferred revenue -loans receivable Other current liabilities Total current liabilities Noncurrent liabilities: Advances payable Deferred revenue - loans receivable Deferred revenue -deferred assessments receivable Total noncurrent liabilities Total liabilities FUND BALANCES Reserved for debt service Reserved for capital projects Unreserved reported in general fund Unreserved reported in special revenue funds Total fund balance Total liabilities and fund balance See accompanying notes to the financial statements City of Kalispell, Montana Nonmajor Governmental Funds Combining Balance Sheet June 30, 2008 Old School Tech Old School Airport TIF Westside TIF Parks in Lieu Ambulance TIF Industrial TIF 90,613 1,581,849 57,857 47,648 672 178 (488) - - - 792 460 - 507,370 - - 5,568 2,929 90,125 1,581,849 57,857 555,018 7,032 3,567 90,125 1,581,849 57,857 555,018 7,032 3,567 14,418 7,950 1,767 6,190 982 553 - 32,972 (488) 401,501 792 460 14,912 8,503 1,767 440,663 792 460 14,912 8,503 1,767 440,663 792 460 75,213 1,573,346 56,090 114,355 6,240 3,107 75,213 1,573,346 56,090 114,355 6,240 3,107 90,125 1,581,849 57,857 555,018 7,032 3,567 FAX ASSETS Current assets: Cash and investments Taxes and assessments receivable, net Accounts receivable - net Notes and loans receivable Contracts receivable Due from other funds Due from other governments Prepaid expenses Total current assets Noncurrent assets: Restricted cash and investments Advances to other funds Deferred assessments receivable Long term portion of loans receivable Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Due to other funds Deferred revenue Deferred revenue -loans receivable Other current liabilities Total current liabilities Noncurrent liabilities: Advances payable Deferred revenue -loans receivable Deferred revenue -deferred assessments receivable Total noncurrent liabilities Total liabilities FUND BALANCES Reserved for debt service Reserved for capital projects Unreserved reported in general fund Unreserved reported in special revenue funds Total fund balance Total liabilities and fund balance See accompanying notes to the financial statements City of Kalispell, Montana Nonmajor Governmental Funds Combining Balance Sheet June 30, 2008 Building Light Dec. Light Health Levy Department Impact Fees Maintenance Maintenance Gas Tax - 263,740 100,786 3,282 438,954 49,569 - 10,939 199 - 59,519 28,233 1,425 109,088 263,740 - 139,958 4,906 438,954 - - 242,063 - - - - - 242,063 - - - 109,088 263,740 242,063 139,958 4,906 438,954 359 28,558 - 8,580 - 11,624 160 28,558 - 13,089 125 - - 50,861 - 15,000 - 49,569 109,088 10,939 199 - 7,221 - - - 100,430 28,890 37,688 359 28,558 - - 14,000 - - - - 14,000 - - 100,430 28,890 51,688 359 28,558 8,658 234,850 242,063 88,270 4,547 410,396 8,658 234,850 242,063 88,270 4,547 410,396 109,088 263,740 242,063 139,958 4,906 438,954 71 ASSETS Current assets: Cash and investments Taxes and assessments receivable, net Accounts receivable - net Notes and loans receivable Contracts receivable Due from other funds Due from other governments Prepaid expenses Total current assets Noncurrent assets: Restricted cash and investments Advances to other funds Deferred assessments receivable Long term portion of loans receivable Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Due to other funds Deferred revenue Deferred revenue -loans receivable Other current liabilities Total current liabilities Noncurrent liabilities: Advances payable Deferred revenue - loans receivable Deferred revenue -deferred assessments receivable Total noncurrent liabilities Total liabilities FUND BALANCES Reserved for debt service Reserved for capital projects Unreserved reported in general fund Unreserved reported in special revenue funds Total fund balance Total liabilities and fund balance See accompanying notes to the financial statements City of Kalispell, Montana Nonmajor Governmental Funds Combining Balance Sheet June 30, 2008 Street Community Dev. Rural Dev. Loan Maintenance Forestry Courtyard Operations Revolving Drug Grant 716,091 34,464 47,932 515,131 331,970 2,442 88,216 9,796 - - - - 822,943 199,465 11,628 45,457 - - 15,000 - 207,445 21,329 - 143 1,011,752 65,589 47,932 541,759 377,427 2,585 148,777 - - 14,000 - 168,454 509,400 - 148,777 - 182,454 509,400 - 1,011,752 214,366 47,932 724,213 886,827 2,585 20,841 1,627 2,068 15,752 3,478 5,462 16,000 - - 88,216 9,796 - - - - 11,628 45,457 140,809 14,901 19,158 45,457 48,000 - - - 168,454 509,400 48,000 - 168,454 509,400 188,809 14,901 187,612 554,857 822,943 199,465 47,932 536,601 331,970 2,585 822,943 199,465 47,932 536,601 331,970 2,585 1,011,752 214,366 47,932 724,213 886,827 2,585 72 ASSETS Current assets: Cash and investments Taxes and assessments receivable, net Accounts receivable - net Notes and loans receivable Contracts receivable Due from other funds Due from other governments Prepaid expenses Total current assets Noncurrent assets: Restricted cash and investments Advances to other funds Deferred assessments receivable Long term portion of loans receivable Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Due to other funds Deferred revenue Deferred revenue -loans receivable Other current liabilities Total current liabilities Noncurrent liabilities: Advances payable Deferred revenue - loans receivable Deferred revenue -deferred assessments receivable Total noncurrent liabilities Total liabilities FUND BALANCES Reserved for debt service Reserved for capital projects Unreserved reported in general fund Unreserved reported in special revenue funds Total fund balance Total liabilities and fund balance See accompanying notes to the financial statements City of Kalispell, Montana Nonmajor Governmental Funds Combining Balance Sheet June 30, 2008 CDBG- Domestic Violence Law Enforcement Economic Fire Grants / Total Special Grant Grants Development Donations ISTEA Revenue Funds (79,452) 18,862 23,700 66,970 9,641 4,273,330 - - - - 159,483 507,370 57,085 - - - 15,000 103,519 38,590 9,981 478,681 24,067 57,452 23,700 66,970 19,622 5,490,949 390,840 14,000 677,854 - - - - 1,082,694 24,067 57,452 23,700 66,970 191622 6,573,643 21,857 45,028 13,257 183,925 2,210 - - 74,623 - 81,861 560,984 57,085 - - - 7,221 24,067 45,028 13,257 965,699 - - - 62,000 677,854 - - - 739,854 24,067 45,028 13,257 1,705,553 12,424 23,700 53,713 19,622 4,868,090 - 12,424 23,700 53,713 19,622 4,868,090 24,067 57,452 23,700 66,970 19,622 6,573,643 73 ASSETS Current assets: Cash and investments Taxes and assessments receivable, net Accounts receivable - net Notes and loans receivable Contracts receivable Due from other funds Due from other governments Prepaid expenses Total current assets Noncurrent assets: Restricted cash and investments Advances to other funds Deferred assessments receivable Long term portion of loans receivable Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Due to other funds Deferred revenue Deferred revenue -loans receivable Other current liabilities Total current liabilities Noncurrent liabilities: Advances payable Deferred revenue - loans receivable Deferred revenue -deferred assessments receivable Total noncurrent liabilities Total liabilities FUND BALANCES Reserved for debt service Reserved for capital projects Unreserved reported in general fund Unreserved reported in special revenue funds Total fund balance Total liabilities and fund balance See accompanying notes to the financial statements City of Kalispell, Montana Nonmajor Governmental Funds Combining Balance Sheet June 30, 2008 50,995 57,517 20,648 87,973 221,881 254,657 - - - 184,875 82,568 - - - - 184,875 82,568 - 50,995 57,517 20,648 272,848 304,449 254,657 26,150 City Hall Debt Airport TIF Westside TIF 2002 G.O. Bond 2004 G.O. Bond Service Debt Service Debt Service SID Revolving (5,449) (2,424) 20,648 (85,046) 32,564 250,158 26,150 27,630 - 74,974 129,962 - - - - - 4,499 30,294 32,311 98,045 59,355 - 50,995 57,517 20,648 87,973 221,881 254,657 - - - 184,875 82,568 - - - - 184,875 82,568 - 50,995 57,517 20,648 272,848 304,449 254,657 26,150 27,630 74,974 129,962 26,150 27,630 74,974 129,962 26,150 27,630 - 74,974 129,962 - 24,845 29,887 20,648 197,874 174,487 254,657 24,845 29,887 20,648 197,874 174,487 254,657 50,995 57,517 20,648 272,848 304,449 254,657 74 ASSETS Current assets: Cash and investments Taxes and assessments receivable, net Accounts receivable - net Notes and loans receivable Contracts receivable Due from other funds Due from other governments Prepaid expenses Total current assets Noncurrent assets: Restricted cash and investments Advances to other funds Deferred assessments receivable Long term portion of loans receivable Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Due to other funds Deferred revenue Deferred revenue -loans receivable Other current liabilities Total current liabilities Noncurrent liabilities: Advances payable Deferred revenue - loans receivable Deferred revenue -deferred assessments receivable Total noncurrent liabilities Total liabilities FUND BALANCES Reserved for debt service Reserved for capital projects Unreserved reported in general fund Unreserved reported in special revenue funds Total fund balance Total liabilities and fund balance See accompanying notes to the financial statements City of Kalispell, Montana Nonmajor Governmental Funds Combining Balance Sheet June 30, 2008 1999 S& C 2000 S& C 2002 S& C 2003 S& C 2004 S& C 2005 S& C - - 55 - - 240 344 1,884 1,996 4,953 4,100 65 348 1,303 282 240 344 2,004 2,344 6,256 4,382 289 3,605 4,969 17,302 13,468 - 289 3,605 4,969 17,302 13,468 240 633 5,609 7,313 23,558 17,850 220 315 497 103 3,075 288 240 344 1,884 1,996 4,953 4,100 7,068 25,330 17,856 460 659 2,381 2,099 8,028 4,388 289 3,605 4,969 17,302 13,468 - 289 3,605 4,969 17,302 13,468 460 948 5,986 7,068 25,330 17,856 (220) (315) (377) 245 (1,772) (6) (220) (315) (377) 245 (1,772) (6) 240 633 5,609 7,313 23,558 17,850 75 ASSETS Current assets: Cash and investments Taxes and assessments receivable, net Accounts receivable - net Notes and loans receivable Contracts receivable Due from other funds Due from other governments Prepaid expenses Total current assets Noncurrent assets: Restricted cash and investments Advances to other funds Deferred assessments receivable Longterm portion of loans receivable Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Due to other funds Deferred revenue Deferred revenue -loans receivable Other current liabilities Total current liabilities Noncurrent liabilities: Advances payable Deferred revenue - loans receivable Deferred revenue -deferred assessments receivable Total noncurrent liabilities Total liabilities FUND BALANCES Reserved for debt service Reserved for capital projects Unreserved reported in general fund Unreserved reported in special revenue funds Total fund balance Total liabilities and fund balance See accompanying notes to the financial statements City of Kalispell, Montana Nonmajor Governmental Funds Combining Balance Sheet June 30, 2008 2007 S & C SID 341 SID 342 SID 343 Total Debt Service Funds - 8,512 12,966 119,796 351,780 3,313 6,300 6,300 131,600 419,746 - 979,619 - 4,499 118 401 222,522 3,313 14,930 19,266 251,797 998,547 267,443 12,094 3,281 5,003 848,019 908,030 12,094 3,281 5,003 848,019 1,175,473 15,407 18,211 24,269 1,099,816 2,174,020 - - - 4,498 37313 6,300 6,300 131,600 419,746 3,313 6,300 6,300 131,600 424,244 12,094 3,281 5,003 848,019 908,030 12,094 3,281 5,003 848,019 908,030 15,407 9,581 11,303 979,619 1,332,274 $630 12,966 120,197 841,746 - 8,630 12,966 120,197 841,746 15,407 18,211 24,269 1,099,816 2,174,020 76 City of Kalispell, Montana Nonmajor Governmental Funds Combining Balance Sheet June 30, 2008 LIABILITIES Current liabilities Accounts payable 2,099 2,099 186,024 Total Nonmajor - - Wells Fargo Total Capital Governmental Fire Truck Project Project Funds Funds ASSETS Deferred revenue -loans receivable - - 57,085 Current assets: 120,144 120,144 127,365 Total current liabilities Cash and investments 544,756 122,243 666,999 $ 5,292,109 Taxes and assessments receivable, net - - - 579,229 Accounts receivable - net - 62,000 Deferred revenue - loans receivable 507,370 Notes and loans receivable 677,854 Deferred revenue -deferred assessments receivable 57,085 Contracts receivable Total noncurrent liabilities - - - Due from other funds 122,243 122,243 $ 3,160,070 19,499 Due from other governments FUND BALANCES 701,203 Prepaid expenses - - - - Total current assets 544,756 122,243 666,999 $ 71156,495 - - Noncurrent assets: - - 4,868,090 Total fund balance Restricted cash and investments - - - 658,283 Advances to other funds $ 9,414,662 14,000 Deferred assessments receivable 908,030 Long term portion of loans receivable 677,854 Total noncurrent assets - - - $ 2,258,167 Total assets 544,756 122,243 666,999 $ 9,414,662 LIABILITIES Current liabilities Accounts payable 2,099 2,099 186,024 Accrued payroll - - 74,623 Due to other funds 86,359 Deferred revenue 980,730 Deferred revenue -loans receivable - - 57,085 Other current liabilities 120,144 120,144 127,365 Total current liabilities 122,243 122,243 $ 1,512,186 Noncurrent liabilities: Advances payable - - 62,000 Deferred revenue - loans receivable 677,854 Deferred revenue -deferred assessments receivable 908,030 Total noncurrent liabilities - - $ 1,647,884 Total liabilities 122,243 122,243 $ 3,160,070 FUND BALANCES Reserved for debt service - - - 841,746 Reserved for capital projects 544,756 544,756 544,756 Unreserved reported in general fund - - - Unreserved reported in special revenue funds - - 4,868,090 Total fund balance 544,756 - 544,756 $ 6,254,592 Total liabilities and fund balance 544,756 122,243 666,999 $ 9,414,662 See accompanying notes to the financial statements IrA City of Kalispell, Montana Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended June 30, 2008 78 Old School Tech Old School REVENUES Airport TIF Westside TIF Parks in Lieu Ambulance TIF Industrial TIF Taxes and assessments - 11,079 6,335 Licenses and permits - - - Intergovernmental 5,153 - 223,536 Charges for services 57,778 70,285 737,918 Fines and forfeitures - - - Miscellaneous - 894 95 Investment earnings 50 1,327 2,268 - - Total revenues 62,981 72,506 963,817 11,079 6,335 EXPENDITURES Current: General government - - - - - - Public safety 988,567 Public works - - - Culture and recreation 11,605 - 6,544 Housing and community development 300,216 40,776 - - - - Debt service - principal - - - - - - Debt service - interest - - - - - - Capital outlay 25,125 7,453 16,381 37,405 Total expenditures 336,946 48,229 22,925 1,025,972 Excess (deficiency) of revenues over expenditures (273,965) (48,229) 49,581 (62,155) 11,079 6,335 OTHER FINANCING SOURCES (USES) Proceeds of general long term debt - - - - - - Proceeds from the sale of general capital asset disposition - - - Transfers in 250,000 320,000 335,213 Transfers (out) - - (10,185) (5,000) (3,389) Total other financing sources and uses 250,000 320,000 (10,185) 335,213 (5,000) (3,389) Net change in fund balance (23,965) 271,771 39,396 273,058 6,079 2,946 Fund balances- beginning 99,178 1,301,575 16,694 - 161 161 Restatements - - - (158,703) - - Fund balances- beginning restated 99,178 1,301,575 16,694 (158,703) 161 161 Fund balances -ending 75,213 1,573,346 56,090 114,355 6,240 3,107 See accompanying notes to the financial statements 78 City of Kalispell, Montana Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended June 30, 2008 REVENUES Taxes and assessments Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Investment earnings Total revenues EXPENDITURES Current: General government Public safety Public works Culture and recreation Housing and community development Debt service - principal Debt service - interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Building Dec. Light Health Levy Department Impact Fees Light Maintenance Maintenance Gas Tax 503,098 214,673 169,144 137,395 205,676 6,557 342,225 - 16,307 6,574 14,643 503,098 400,124 143,969 205,676 6,557 356,868 502,877 - - - 188,110 6,547 289,562 37,200 - 16,191 2,733 - 40,500 56,712 596,768 190,843 6,547 346,274 503,098 (196,644) 143,969 14,833 10 10,594 OTHER FINANCING SOURCES (USES) Proceeds of general long term debt Proceeds from the sale of general capital asset disposition Transfers in - - - - - - Transfers (out) (508,377) - - - Total other financing sources and uses (508,377) - - - - Net change in fund balance (5,279) (196,644) 143,969 14,833 10 10,594 Fund balances - beginning 13,937 431,494 98,094 73,437 4,537 397,569 Restatements - - - - 2,233 Fund balances - beginning restated 13,937 431,494 98,094 73.437 4,537 399,802 Fund balances -ending 8,658 234,850 242,063 88,270 4,547 410,396 See accompanying notes to the financial statements 79 City of Kalispell, Montana Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended June 30, 2008 :1, Street Community Dev. Rural Dev. Loan REVENUES Maintenance Forestry Courtyard Operations Revolving Drug Grant Taxes and assessments Licenses and permits - - - - Intergovernmental 15,000 1,000 15,000 - 34,333 Charges for services 1,406,940 187,728 77,012 21,297 231,039 - Fines and forfeitures - - - - - Miscellaneous 176 - - Investment earnings 24,951 7,745 299 28,793 2,107 Total revenues 1,447,067 196,473 77,311 65,090 233,146 34,333 EXPENDITURES Current: General government - - - - - Public safety - 75,560 Public works 1.059.736 - - Culture and recreation - 257,051 - - - - Housing and community development - - 48,568 259,819 153,801 Debt service - principal 36,942 - - - 242 - Debt service - interest 5,936 26,090 5,704 Capital outlay 148,841 - - - Total expenditures 1,251,455 257,051 74,658 259,819 159,747 75,560 Excess (deficiency) of revenues over expenditures 195,612 (60,578) 2,653 (194,729) 73,399 (41,227) OTHER FINANCING SOURCES (USES) Proceeds of general long term debt - - 150,000 Proceeds from the sale of general capital asset disposition - - Transfers in 43,812 Transfers (out) Total other financing sources and uses - - 150,000 43,812 Net change in fund balance 195,612 (60,578) 2,653 (194,729) 223,399 2,585 Fund balances- beginning 627,331 260,043 45,279 731,330 127,820 - Restatements - - (19,249) Fund balances- beginning restated 627,331 260,043 45,279 731,330 108,571 Fund balances - ending 822,943 199,465 47,932 536,601 331,970 2,585 See accompanying notes to the financial statements :1, City of Kalispell, Montana Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended June 30, 2008 REVENUES Taxes and assessments Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Investment earnings Total revenues EXPENDITURES Current: General government Public safety Public works Culture and recreation Housing and community development Debt service - principal Debt service - interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Proceeds of general long term debt Proceeds from the sale of general capital asset disposition Transfers in Transfers (out) Total other financing sources and uses Net change in fund balance Fund balances - beginning Restatements Fund balances - beginning restated Fund balances - ending See accompanying notes to the financial statements Domestic Violence Law Enforcement Cultural Arts CDBG - Economic Fire Grants / Grant Grants Nurturing Center Grants Development Donations 258,548 59,725 14,853 8,055 26,381 310,961 330,614 54,977 258,548 390,339 14,853 8,055 26,381 365,938 258,548 27,968 14,853 313,987 (540) 8,055 - - 2,681 - 362,911 - 32,282 258,548 390,879 14,853 8,055 2,681 346,269 - (540) 23,700 19,669 81 (540) 23,700 19,669 12,964 - 34,044 12,964 - 34,044 12,424 23,700 53,713 81 City of Kalispell, Montana Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended June 30, 2008 REVENUES Taxes and assessments Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Investment earnings Total revenues EXPENDITURES Current General government Public safety Public works Culture and recreation Housing and community development Debt service - principal Debt service - interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Proceeds of general long term debt Proceeds from the sale of general capital asset disposition Transfers in Transfers (out) Total other financing sources and uses Net change in fund balance Fund balances - beginning Restatements Fund balances - beginning restated Fund balances - ending See accompanying notes to the financial statements 150,000 918,774 10,185 959,210 - (526,951) (250.000 10,185 Total Special - City Hall Debt Airport TIF Debt ISTEA Revenue Funds 2002 G.O. Bond 2004 G.O. Bond Service Service 520,512 261,703 278,713 4,295,268 386,493 - 214,673 - - - 65,700 1,380,470 4,119,549 46,518 20,745 - 233,973 - 3,308,769 24,845 29,887 20,648 197,874 386,756 - - 70,600 - 105,064 4,012 3,587 11,136 65,700 5,916,244 265,715 282,300 70,600 397,629 - 2,182,360 - - - - 1,543,955 283,255 805,861 - - - - 74,384 145,000 165,000 948,532 110,000 56,654 142,388 108,158 20,194 73,728 75,883 803,493 75,883 5,749,962 287,388 273,158 968,726 183,728 (10,183) 166,282 (21,673) 9,142 (898,126) 213.901 150,000 918,774 10,185 959,210 - (526,951) (250.000 10,185 582,259 - 918,774 (250,000) 2 748,541 (21,673) 9,142 20,648 (36,099) 19,620 4,295,268 46,518 20,745 - 233,973 (175,719) - - 19,620 4,119,549 46,518 20,745 - 233,973 19,622 4,868,090 24,845 29,887 20,648 197,874 82 City of Kalispell, Montana Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended June 30, 2008 REVENUES Taxes and assessments Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Investment earnings Total revenues EXPENDITURES Current: General government Public safety Public works Culture and recreation Housing and community development Debt service - principal Debt service - interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Westside TIF Debt Service 264,535 71,918 42,540 19995&C 279 2000 S& C 2002 S& C 2003 S& C 401 1,805 2,121 i,w4 r1,Y/G 386,497 11,972 279 401 1,805 2,121 69,795 221 289 1,670 1,720 12,773 19 55 284 344 82,568 - 240 344 1,954 2,064 303.929 11.972 39 57 (149) 57 OTHER FINANCING SOURCES (USES) Proceeds of general long term debt - - - - - - Proceeds from the sale of general capital asset disposition - - - - - - Transfers in Transfers (out) (320,000) (34,568) Total other financing sources and uses (320,000) (34,568) Net change in fund balance (16,071) (22,596) 39 57 (149) 57 Fund balances - beginning Restatements Fund balances - beginning restated Fund balances - ending See accompanying notes to the financial statements 190,558 277,253 (259) (372) (228) 188 190,558 277,253 (259) (372) (228) 188 174,487 254,657 (220) (315) (377) 245 83 City of Kalispell, Montana Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended June 30, 2008 REVENUES Taxes and assessments Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Investment earnings Total revenues EXPENDITURES Current: General government Public safety Public works Culture and recreation Housing and community development Debt service - principal Debt service - interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Proceeds of general long term debt Proceeds from the sale of general capital asset disposition Transfers in Transfers (out) Total other financing sources and uses Net change in fund balance Fund balances - beginning Restatements Fund balances - beginning restated Fund balances - ending See accompanying notes to the financial statements Total Debt Service 2004 S & C 2005 S & C SID 341 SID 342 SID 343 Funds 2,856 5,092 5.660 12,223 128,364 1,350,245 71,918 42,540 70,600 - - - 38,211 2,856 5,092 5,660 12,223 128,364 1,573,514 3,962 2,856 5,000 5,000 80,000 1,539,045 1,188 1,431 1,230 1,863 51,600 415,255 5,150 4,287 6,230 6,863 131,600 1,954,300 (2,294) 805 (570) 5,360 (3,236) (380,786) 918,774 (604,568) 314,206 (2,294) 805 (570) 5,360 (3,236) (66,580) 522 (811) 9,200 7,606 123,433 908,326 522 (811) 9,200 7,606 123,433 908,326 (1,772) (6) 8,630 12,966 120,197 841,746 M City of Kalispell, Montana Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended June 30, 2008 REVENUES Taxes and assessments Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Investment earnings Total revenues EXPENDITURES Current: General government Public safety Public works Culture and recreation Housing and community development Debt service - principal Debt service - interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Proceeds of general long term debt Proceeds from the sale of general capital asset disposition Transfers in Transfers (out) Total other financing sources and uses Net change in fund balance Fund balances - beginning Restatements Fund balances - beginning restated Fund balances - ending See accompanying notes to the financial statements Other Wells Fargo SID 344 S & C Total Capital Governmental Fire Truck Project Construction Construction Project Funds Funds $ 1,870,757 214,673 1,452,388 3,351,309 457,356 143,275 $ 7,489,758 204,653 204,653 $ 204,653 - - 2,182,360 1,543,955 283,255 805,861 1,613,429 - - - - 471,909 30,244 1,469,514 - 14,673 1,514,431 2,317,924 30,244 1,469,514 204,653 14,673 1,719,084 $ 9,423,346 (30,244) (1,469,514) (204,653) (14,673) (1,719,084) $ (1,933,588) 575,000 503,634 14,673 1,093,307 $ 2,162,081 959,210 (18,960) - (18,960) (1,150,479) 575,000 503,634 (18,960) 14,673 1,074,347 $ 1,970,812 544,756 (965,880) (223,613) (644,737) $ 37224 965,880 223,613 1,189,493 $ 6,393,087 (175,719) 965,880 223,613 1,189,493 $ 6,217,368 544,756 544,756 $ 6,254,592 85 RESOURCES (INFLOWS): Taxes and assessments Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Investment earnings Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS); General government Public safety Public works Culture and recreation Housing and community development Debt service -principal Debt service - interest Capital outlay Total charges to appropriations OTHER FINANCING SOURCES (USES) Proceeds from the sale of general capital asset disposition Transfers in Transfers out Total other financing sources (uses) Net change io fund balance Fund balance - beginning of the year Restatements Fund balance - beginning of the year - resetated Fund balance - end of the year City of Kalispell, Flathead County, Montana Budgetary Comparison Schedule -Major Debt Service Fund For the Fiscal Year Ended June 30, 2008 SID 344 ACTUAL AMOUNTS VARIANCE BUDGETED AMOUNTS (BUDGETARY WITH FINAL ORIGINAL FINAL BASIS) See Note A BUDGET $ 448,000 $ 448,000 $ 448,285 $ 285 4,590 4,590 3,321 (1,269) $ 452,590 $ 452,590 $ 451,606 $ (984) 225,000 225,000 225,000 196,058 196,058 196,058 $ 421,058 $ 421,058 $ 421,058 $ 27,349 27,349 $ $ $ 27,349 $ 27,349 $ 57,897 $ 250,000 $ 260,000 $ 317,897 City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 87 Airport TIF Westside TIF Parks in Lieu BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ BUDGETARY WITHFINAL ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL FINAL BASIS) See Note A BUDGET FINAL BASIS) See Nate A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Taxes and assessments S 600 S - S (600) S S - S - S S - 5 - Licenses and p-, - - - - - - - - - Intergovemmental 5,153 5,153 - - - - - - Charges for services 55.000 57.778 3.778 - - 47.555 70.285 32,730 Miscellaneous - - - - - - - 894 894 mvenmenteamings 50 50 5,000 1,327 (3.673) Amoums available far appropriation S 60,753 S 62,981 5 21228 5 5 S S 524555 S 72,506 S 19,951 CHARGES TO APPROPRIATIONS (OUTFLOWS): Public safety - - - - - - - - - Public works - - - - - - - - - Cutture and recreation 10,000 11,605 (1,605) - - - - 6.544 (6,544) Housing and community developmem 299.453 300,216 (763) 145,709 40.776 104.933 - - Debts -e -principal - - - - - - - - - Debt- Capitalouday 95,000 25,125 69,875 1,435,629 7,453 1,428.176 66,500 16,381 50,119 Total charges to appropriations S 404,453 S 336,946 S 67,507 $ 1.581,338 S 48,229 $ 1,533,109 S 66,500 S 22,925 S 43.575 OTHER FINANCING SOURCES (USES): Proceeds of general long tens debt S - 5 - S - 5 - S - S - 5 S - S - Pmceeds Gom the sale of general capital ass,( disposition - - - - - - - Transfersin 250,000 250,000 - 320.000 320,000 - - - - Transf- (out) (2,684) (10,185) (7.501) Total Omer Finanemg Sources (Uses) 5 250,000 S 250,000 $ S 320,000 $ 320,000 S S (2,684) S (10,185) S (7.501) Net change m fund balance S (23,965) S 271 771 S 39,396 Fund balances -beginning of the year 99.178 1,301,575 16,694 R-.temeru Fund balances- beginning of the year-ra-d S 99,178 S 1.301.575 S 16,694 Fund balance end of the year S 75,213 5 1,573,346 5 56,090 See accompanying notes rn the financial statements 87 City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 Public Works Culture and recreation Housing and commwity development - Ambulance - 5.000 Old School Tech TIF Debtservice-principal - Old School Industrial TIF - - BUDGETED ACTUAL Debtservice-interest BUDGETED ACTUAL - BUDGETED ACTUAL Capital omlay 147,000 AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITHFINAL ORIGINAL/ (BUDGETARY WITH FINAL - $ FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): 335,213 327.713 - - Transfem (out) (5.000) Taxes and assessments S - S - 5 - S 10,200 S 11,079 S 879 S 7,150 S 6,335 S (815) Licea and permits - - - - - - - - Restatements Intergovemmental 225,000 233.536 (1.464) - - - - - - Charge for service 940,000 737.918 (202.082) - - - - - - Miscellaneous - 95 95 - - - - - - Investmentearrings 3,000 2.268 (7321 Amowts available for appropriation S 1,168,000 S 963,817 S (204.183) S 10,200 S 11,079 S 879 S 7,150 S 6,335 S (815) CHARGES TO APPROPRIATIONS (OUTFLOWS), Public safety 1,071,147 988.567 82,580 - - - - - - Public Works Culture and recreation Housing and commwity development - - - 5.000 - Debtservice-principal - - - - - - Debtservice-interest - - - - - Capital omlay 147,000 37,405 109.595 Total charges to appropriations S 1218,147 S 11025,972 S 192.175 S 5,000 S OTHER FINANCING SOURCES (USES): Proceeds of geo" long term debt S - S - S - $ - S - Proceeds from the sale o(general capital asset disposition - - - - - Transfersin 7.500 335,213 327.713 - - Transfem (out) (5.000) (5.000) Total Other Financing Sources (Uses) S 7,500 S 335,213 S 327,713 S (5,000) S (5.000) Net change in fwd balance $ 273,058 S 6.079 Fund ba)ances - beginning of the year - 161 Restatements (158,703) Fund balances - beginning of the year - restated S (158,703) S 161 Fond balance end of the year S 114.355 S 6,240 See accompanying note to the fnwcial stat 88 RM S 5,000 S S S S - S - S S (3,500) (3,389) 111 S (3,500) S (3,389) S 111 S 2.946 161 S T6 -1 — S 3,107 City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 89 Health Levy Building Department Impact Fees BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITHFINAL ORIGINAL/ (BUDGETARY WITH FINAL FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Taxes and assessor S 516,500 S 503,098 5 (13,402) S - S - S - S - S - S - Lleensee and permits - - - 340,300 214,673 (125,627) - - - Intergovernmeotal - - - - - - - - Chargesto, services - - - 300,000 169,144 (130,856) 130,000 137,395 7,395 Miscellaneous - - - - - - - - - Investmeot earrings 35,000 .16,307 (8,693) 800 6,574 51774 Amounts available for apprornniou S 516,500 S 503,098 S (13.402) S 665,300 S 400,124 5 (365,176) S 130,800 S 143,969 S 13,169 CHARGES TO APPROPRIATIONS (OUTFLOWS): Public safety - - - 560,093 503,877 57,215 - - - Public works - - - - - - - - Cultom and recreation - - - - - - - - - Housmg and community development - - - - Debt service -principal - - - 37200 37,200 - - - - Debtservice-interest - - - 18.000 16,191 1,809 - - - Capital outlay 57,500 40,500 17,000 130,000 120,000 Total charges to appropriations S $ S S 672,792 S 596,768 S 76,034 S 120,000 S S 130,000 OTHER FINANCING SOURCES (USES): Proceeds of general long tens debt S - S - S - S - S - S - S -- Proceeds 6om the sale of general capital asses disposition - - - - - - - - - Transfers - - - - - - - - - Transfers (out) (508.377) (508,377) Total Other Financing Sources (Uses) S (508,377) S (508.377) S S S $ S S S Net change to fiord balance S (5,279) S (196,644) S 143,969 Fund balances - beg. -tug of the year 13,937 431.494 98,094 Restatements Fund balances - begiming of the year - restored S 13.937 S 431,494 S 98,094 Fund balance end of the year S 8,658 $ 234,850 S 242,063 See accompanying tes to the Gnaucial statements 89 City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 • o] Light Maintenance Dec. Light Maintenance Gas Tax BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE .AMOUNTS AMOUNTS VARIANCE ORIGINAL/ BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITHFINAL ORIGINAL/ BUDGETARY WITH FINAL FINAL BASIS) See Note A BUDGET FINAL BASIS) See Now A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Taxes and assessmenu S - S - S - S 5 - S - S - S - S - Licenamandpermits- Interg-orran ntal - - - - - - 324,774 342,225 17,451 Charges for services 201.000 205,676 4,676 6.315 6,557 242 - - - Miscellaneous - - - - - - - - - Investmea earnings 12,000 1043 2,643 Amounts available far appropriation S 301,000 S 205,676 S 076 S 61315 S 6,557 S 242 S 336,774 S 356,868 S 20,094 CHARGES TO APPROPRIATIONS (OUTFLOWS): Publicsafety Public works 182,613 188,110 (5,497) 6,547 6,547 - 470,300 289.562 180,738 Culture and recreation - - - - - - - - Housingand communitydevelapment Debtservice-pnncipal - - - - - - - - Debt -.-- interest 2,733 2,733 - - - - - - - Capital outlay 70,000 56,712 13,288 Total charges to appropn,non, S 185.346 S 190,843 S (5,497) S 6,547 S 6,547 S S 540.300 S 346.274 S 194,026 OTHER FINANCING SOURCES (USES): Proceeds of general Ion, term debt S - S - $ - S - S - S - S - S - S - Procaeds fiorn the sale of genual capital asset disposition - - - - - - - - Transfers in- Transf- (out) Total Otho, Financing Sources (Uses) S $ S S S S S $ S Net change in fund balance S 14,833 S 10 S 10,594 Fund balances - beginning of the year 73,437 4,537 397,569 Restatements 2,233 Fund balances- beginning of the year -restated 5 73.437 S 4,537 $ 399,802 Fund balance end of the year S 88,270 S 4,547 S 410,396 See accompanying notes to the Intancial statements • o] City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 91 Street Maintenance Forestry Courtyard BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ BUDGETARY WITH FINAL ORIGINAL/ BUDGETARY WITHFINAL ORIGINAL/ (BUDGETARY WITH FINAL FINAL BASIS) See Now A BUDGET FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Taxes and assessments S - 5 - S - S - S- Licensesandpermits - - - - - - - - - lntergovemmental 15.000 15,000 - - 1,000 1.000 - - - Charges for services 1,266,000 1,406,940 140,940 187,000 187,728 728 75,000 77,012 2,012 Miscellaneous - 176 176 - - - - - - nves Ivnent earnings 15,000 24,951 9,951 10,000 7,745 (2,255) 299 299 Amounts available for appropriation S 1.296,000 S 1,447,067 S 151,067 S 197,000 S 196,473 S (527) S 75,000 S 77.311 $ 2,311 CHARGES TO APPROPRIATIONS (OUTFLOWS): Public safety - - - - - - - - - Public works 1,145.147 1,059,736 85,411 - - - - - - Culture and recreation - - - 430.102 257,051 173,051 - - - Housing and communi y developmem - - - - - - 60,000 48,568 11,432 Debt service - principal 36,942 36,942 - - - - - - - Debt service - nue-, 22,413 5,936 16,477 - - - 30,000 26,090 3,910 Capital outlay 310,500 148,841 161,659 Total charges m appropriations S 11515,002 S 1,251,455 S 263,547 5 430,102 S 257,051 S .173,051 S 90,000 S 74,658 S 15,342 OTHER FINANCING SOURCES (USES): Proceeds of general long ierm debt S - 5 - 5 - 5 - S - S - S - S - S - Proceeds 6om the sale of general apical asset disposition - - - - - - - - Transfers - - - - - - - - - T-fers (out) Total Other Financing Sources (Uses) S 5 5 S S S S 5 5 Net change in fund balance S 195,612 S (60,578) S 2,653 Fund balances - beginning of the year 627,331 260,043 45.279 Restatem- Fund balances - beginning of the year - rmta(ed S 627331 S 260,043 5 45.279 Fund balance end of Ore year S 822,943 S 199,465 5 47,932 See accompanying notes 10 the financial --e- 91 City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 Community Dev. Operations Rural Dev. Loan Revolving Drug Grant BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Taxes and assessments S - S - S - S - S - S - S - 5 - S Loco- and permits - - - - - - - Intergovemmental 15,000 15,000 - - - - 39,000 34,333 (4,667) Charges forservices 30,000 21,297 (8,703) 66,100 231,039 164,939 - - - Mu-11aneous - - - - - - _ In-unctnearnings 20.000 28,793 8,793 2,107 2,107 Amounts available forapprmpriation S 65.000 S 65.090 S 90 S 66.100 S 2331146 S 167,046 S 39.000 S 34,333 S (4,667) CHARGES TO APPROPRIATIONS (OUTFLOWS), Public safety - - - - - - 82,812 75,560 7,252 Public Warks - - - - - - - - - Culture and recreation - - - - - - - - Housingandcornmunilydevelopotmt 387,625 259.819 127,806 648.213 153,801 494,412 - - - Debt service -principal - - - 500 242 258 - - - Debtservice- inter- - - - 14.500 5.704 8,796 - - - Capital outlay Total charges to appropriations 5 387,625 S 259,819 S 127,806 $ 663,213 5 159,747 S 503,466 $ 82,612 5 75,560 5 7,252 OTHER FINANCING SOURCES (USES): Proceeds of general long tern debt S - 5 - S - 5 642,500 5 150,000 S (492,500) S -- Proceeds f om the sale of general capital asset disposition - - - - - - - - - Transfcrsin - - - - - - 43.812 43,812 - Transfers (out) Total Other Financing Sources (Uses) S S S 5 642,500 S 150,000 S (492,500) S 43.812 S 43,812 5 Not change in fund balance S (194,729) $ 223,399 S 2.585 Fund balances -beginning of the year 731,330 127,820 - R. aiemencs (19,249) Fund balances - begirming ofthe year - restated S 731,330 S 108.571 5 Fund balance end of the year S 536,601 $ 331,970 S 2,585 See accompanying tcs -h,, financial statements City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 93 Domestic Violence Grant Law Enforcement Grants Nurturing Center BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Tax. and ass.smcnu $ - S - s - S - S - S - 5 - 5 - S - Licen and pecrom - - - - - - - - - Intergovemmental 260,800 258,548 (2252) 68,090 59,725 (8,365) 103,300 14,853 (88,447) Charsm fur -i- - - - - - - - - - Miacellaneous - - - 339.793 330,614 (9,179) - - - Inv.unent earnings Amounts available for appropriation S 260,800 S 258,548 S (2,252) S 407,883 S 390,339 S (17,544) S 303,300 S 14,853 S (88,447) CHARGES TO APPROPRIATIONS (OUTFLOWS), Public safety 260,800 25&548 2,252 40,000 27.968 12,032 103,300 14,853 88,447 Public works - - - - - - - - - Cultur and recreation - - - - - - - - H...gand communitydevelopment - - - - - - - - - Debt service - principal - - - - - - - - - Debt service - intent - - - - - - - - - Capitol outlay 379,883 362,911 16,972 Total charges to appropriations S 260,800 S 258,548 S -71252 S 419,883 S 390,879 S 29,004 S 103,300 S 14,853 S 88,447 OTHER FINANCING SOURCES (USES): Proceeds of general long term debt S - S - s - S - S - S - S - S - S - Proceeds from the sale of general capital asset disposition - - - - - - - - - Transfers to- - - - - - - - - Transfers (out) Total Other Financing Sourc. (Us.) S $ S S 5 S S S S Net change m fiord balance S 5 (540) S Fund halm= - beginning of the year - 12,964 - R.tatements Fund balances - beginning of the year - restated S S 12,964 S Fund balance end of the year s 5 12,424 S See accompanying not. to the financial statements 93 City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 ti7.1 Cultural Arts Grants CDBG - Economic Development Fire Grants/ Donations BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ BUDGETARY WITH FINAL ORIGINAL/ BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITHFINAL FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Taxes and assessments 5 - S - S - S - S - 5 - S - S - S - Licensesandperrols - - - - - - - - - Intergovemm W 13,000 8,055 (4,945) 26,381 26,381 - 1,254,746 310,961 (943.785) Charges for services - - - - - - - - - Miscellaneous - - - - - - 315.000 54,977 (260,023) Investment earninps Amounts available for approprie- S 13.000 S 8,055 S (4,945) S 26,381 S 26,381 S S 1.569.746 5 365,938 S (1 203,808) CHARGES TO APPROPRIATIONS (OUTFLOWS): Public safety - - - - - - 707,213 313,987 393,226 Public works - - - - - - - - - Culture and recreation 13,000 8,055 4,945 - - - - - - Housing and community development - 26.391 2,681 23,700 - - Debtservice -principal - - - - - - - - - Debt service - interest - - - - - - - - - Capital outlay 887,716 32,282 855,434 Total charges to appropriations S 13,000 S 8,055 S 4.945 5 26,381 5 2,681 S 23,700 S 1,594,929 5 346,269 5 1248,660 OTHER FINANCING SOURCES (USES): Proceeds of gmaal long tens debt S - S - S - S - S - S - S - S - S - Pox-& It- the sale of general capital asset disposition - - - - - - - - - Transfas - - - - - - - - - Transfers (-,) Total Other Financing Sources (Uses) 5 S S S S S S S S Net change m fund balance 5 S 23,700 S 19,669 Fund balances - beginning of the year - - 34,044 Reaatements Fund baiances- beginning of the year - restated S 5 S 34,044 Fund balance end of the year S S 23,700 S 53,713 See accompanying te< to the financial statements ti7.1 City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 95 ISTEA 2002 G.O. Bond 2004 G.O. Bond BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITHFINAL FINAL BASIS) See Now A BUDGET FINAL BASIS) See Now A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Taxes and assessments S - S - S - S :63,200 S 261,703 5 (1,497) S 280,010 S 278,713 S (1297) Licenses and peivam - - - - - - - - - hoergovernmental 67,316 65,700 (1,616) - - - - - - Charges for services - - - - - - - - - Mismllaneous - - - - - - - - - Invatment earnings 31500 44012 512 3,000 3,587 587 Amounts available for appropriation S 67,316 S 65,700 S (1,616) S 266,700 S 265.715 S (985) S 283,010 5 282,300 5 (710) CHARGES TO APPROPRIATIONS (OUTFLOWS): Public safety - - - - - - - - - Pubh. works - - - - - - - - - Culture - - Housing and community development - - - - - - - - - Debt service -principal - - - 145,000 145,000 - 165,000 165,000 - Debtservi--int- - - - 142,338 142,388 (50) 108,158 108,158 - Capiw outlay 75,883 75,883 Total charges w appropriations S 75,883 5 75,883 S - S 287,338 S 287,388 S (50) S 273,158 S 273,158 S OTHER FINANCING SOURCES (USES): Proceeds of general long term debt S - 5 - S - S - S - S - S - S - S - Proceeds from the sale of general capital asset disposition - - - - - - - - - Transfers in 2,684 10.185 7,501 - - - - - - Transfers (oap Total Other Financing S. -.(Uses) S 2,684 S 10,185 S 7,501 S S S S S 5 Net change in fund balance S _ S (210673) S 9,142 Fund balances - beginning of the year 19,620 46,518 20,745 Restatements Fund balances- beginning of the year- resiated S 19,620 5 46.518 S 20,745 Fund balance end of the year 5 19,622 S 24,845 S 29,887 Sec accompanying notes to the f ancial -1e.- 95 RESOURCES (INTLOWS): Tax and as ems Lic nsea and pennon, Intergovenunental Charges for services Miscellneous Inveatmnt earnings Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Public safety Public works Culm and recreation Hous nd co unity developmem Debt service -principal Debt service -m serest Capital outlay Total charges in approfnnion, OTHER FINANCING SOURCES (USES): Proceeds of general long term debt Proceeds bom the sale of general capital asset disposition Trnsfers in Transfers (out) Total Other Financing Sources (Uses) Net change in fund balance Fund bAmcm - beg-ing of the year Restatements Fund balm= - beginning of dre year - --d Fund balance end of the year Sec n-pnymg notes to the financial slate City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 M City HaB Debt Service Airport TIF Debt Service Westside TIF Debt Service BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL FINAL BASIS) See NOW A BUDGET FINAL BASIS) See No. .A BUDGET FINAL BASIS) See Now A BUDGET S - 5 - S - S 379.000 5 386,493 S 7,493 S 219,500 S 364,535 S 45,035 - - - - - - 71.918 71,918 - - - - - - - 39,339 42,540 3.211 88.820 70,600 (18,220) - - - - - - 13,000 11,136 (1,864) )4,358 7,504 (6,854) S 88,820 5 70,600 S (18,220) S 392.000 S 397.629 S 5,639 5 345,105 5 386,497 S 41,392 948,531 948.533 (1) 110.000 110,000 - 69,795 69,795 - 20.194 30,194 - 74,028 73,728 300 12,772 12,773 (1) S 968,725 $ 968.726 S (1) $ 184,028 S 183,728 S 300 S 82,567 S 82,568 S (1) S 906,225 S 918,774 S 12,549 S - S - S - S - S - S - (250,000) (250,000) (320,000) (320,000) 5 906,225 S 918,774 S 12.549 S (250,000) S (250,000) S S (320,000) S (320.000) S S 20.648 S (36,099) S (16.071) - 233,973 190,558 5 S 233,973 $ 190,558 S 20,648 S 197,874 S 174,487 M City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 97 SID Revolving 1999 S & C 2000 S & C BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE .AMOUNTS AMOUNTS VARIANCE ORIGINAU (BUDGETARY WITH FINAL ORIGINAU (BUDGETARY WITH FINAL ORIGINAL BUDGETARY WITH FINAL FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Taxes and assessments $ - $ - S - $ 241 $ 279 $ 38 $ 345 S 401 $ 56 Licenses and permits _ _ _ - _ _ _ _ Intergovenunental Charges for services Miscellanea - - - - - - - - - Invemnenteamings 1,000 11,972 9,972 Amounts available for appropriation $ 2,000 $ 11,972 S 9,972 $ 241 $ 279 S 38 $ 345 $ 401 $ 56 CHARGES TO APPROPRIATIONS(OUTFLOWS), Gamest government $ - $ - $ - $ - $ - S - S - $ - S - Public safety - - - - - - - - - Public works - - - - - - - - - Culhue and recreation - - - - - - - - - Housing and community development - - - - - - - - - Debtservice -principal - - - 222 221 1 290 289 1 Debt service -imterest - - - 19 19 - 55 55 - Capital outlay - - Total charges to appropnatioms $ $ $ $ 241 $ 240 $ 1 $ 345 $ 344 $ I OTHER FINANCING SOURCE (USES): Proceeds of genera] long tern 4ebt $ $ - S - S - $ - S - $ - $ - $ - Proceeds from the sale of general capital asset disposition - - - - - - - - - Transfers to- - - - - - - - - Trensf (out) (15,000) (34,568) (19,568) Total Other Financing Sources(Uses) $ (15,000) $ (34,568) $ (79,568) $ $ $ S $ S Net change in fund balance $ (22,596) $ 39 $ 57 Fund balances - beginning of the year 277,253 (259) (372) Restatements Fund balances - beginning ing of the year - restated $ 277,253 $ (259) $ (372) Fund balance and of the year $ 254,657 $ (220) S (315 ) See accompanying notes to the financial statements 97 City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 Public safety Public works Culture and recreation Housing and unuounity development Debt service -principal 1,671 2002 S& C 1 1,720 2003 S& C Debt service-inlerert 284 2004 S& C - 344 BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL 1,955 S 1954, S AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE Proceeds of gen 1 long term deb, S ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL - FINAL BASIS)See Note BUDGET FINAL BASIS)See Note BUDGET FINAL BASIS)S. Note BUDGET RESOURCES (INFLOWS): Toul Other Financing Sources (Uses) S S S S $ S T.—tutdasse ot— S 1,955 S 1,805 S (150) 5 2,064 S 2,121 S 57 S 5,151 $ 2,856 S (2.195) Licenses and p—u1,t 188 Restatements Fund balances - bee..... oftheyear-restated S Intergovemmeotal - (377) - - 245 Charges for services - - - - - - Miscellaneous - - - - - - - Investment earnings Amounts available forappropriation S 1,955 S 1,805 S (150) S 2,064 S 2,121 5 57 5 5351 S 2,856 5 (2295) CHARGES TO APPROPRIATIONS (OUTFLOWS), General government S - S S - S - S - S - S - S - $ Public safety Public works Culture and recreation Housing and unuounity development Debt service -principal 1,671 1,670 1 1,720 1,720 Debt service-inlerert 284 284 - 344 344 Capital outlay Total charges to appropriations S 1,955 S 1954, S l 5 2.064 S 2,064 S OTHER FINANCING SOURCES (USES): Proceeds of gen 1 long term deb, S - S - S - S - S - S Proceeds 6om ,he sale of general capful ass., disposition - - - - Toottfom - - - Transfers (on,) Toul Other Financing Sources (Uses) S S S S $ S Not change in fund balance S (149) S 57 Fund balances - beginning of the year (228) 188 Restatements Fund balances - bee..... oftheyear-restated S (228) S 188 Fund balance end of,he year S (377) S 245 See accompanying nates to the f a—a -m* 3,962 3,962 - 1,189 1,188 1 S 5.151 $ 5,150 S 1 S 5 S 5 S S S (2,294) 52 S 57— S (1772) City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 See accompanying notes to the fiott.- l�1 2005 S & C 2007 S & C SID341 BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL] (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET FINAL BASIS) See Note A BUDGET RESOURCES (INFLOWS): Taxes and assessments S 4,288 S 5,092 S 804 S - 5 S - S 6,065 S 5,660 S (405) Licenses and p—t, - - - - - - - Iotergovernmental - - - - - - - Charges for services - - - - - - - Mi—llaneous - - - - - - - Nve—ns ... Amounts available for appoopnation S 4,288 S 5,092 S 804 S 5 S S 6,065 S 5,660 S (405) CHARGES TO APPROPRIATIONS (OUTFLOWS): General government S - 5 S - 5 - S - 5 - S - S - 5 - Public safe y - - - - - - Public works - - - - - - - Culture and recreation - - - - - - - Housing and community development - - - - - - - Debtservice-principal 2,857 2,856 1 - - - 5,000 5,000 Debtservice -interest 1.431 1431 - - 1,530 1.230 300 Capital outlay Total charges to appropriations S 4,288 5 4,287 S 1 S S S S 6,530 S 6P230 S 300 OTHER FINANCING SOURCES (USES): Proceeds of general long rerm debt S - 5 S $ - S - S- Promeds from the sale of general capital asset disposition - - - - - - - Transfers in - - - - - - - - Tmnsfes (ora) Tout Other Financing Sources (Uses) 5 5 S S S S S S S Net ,haoge in fund balance 5 805 S S (570) Fund balances - beginning of the year (811) - 9,200 Restatements Fund b.1..— - bep0000gof We yea, -resisted S (811) S 5 9,200 Food balance end of the year S (6) S S 8.630 See accompanying notes to the fiott.- l�1 City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 See accompanying notes to the fimncia I SID 342 SID 343 Fire Truck BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL ORIGINAL/ (BUDGETARY WITH FINAL FINAL BASIS)See Note BUDGE FINAL BASIS)See Note BUDGET FINAL BASIS)See Note BUDGET RESOURCES (INFLOWS): To- to d assessments 5 5,182 S 12.223 S 7,041 S 131,629 S 128.364 S (3,265) S - 5 - 5 - Licenses and permits - - - - - - - - huergov ental - - - - - Chargesfor scmees - - - - - - - - - N iscellaneous - - - - - - - htvestment earun gs Amounts available fe-propritum S 5,182 S 1221-3 S 7,041 S 131,629 5 128,364 5 (3,265) S S S CHARGES TO APPROPRIATIONS (OUTFLOWS): General government S - S - 5 - S - S - 5 S - 5 - S - Pubh safety - - - - - Public works - - - - - - - - Culture and recreation - - - - - - Housing and cununurnly development - - - - - - - Debts mea -principal 5,000 5,000 - 80,000 80,000 - - - Dabt service -interest 2,175 1,863 312 57,500 51,600 5,900 - - - Capital outlay 575,000 30.244 544,756 Total charges to appropriations S 7,175 S 6,863 5 312 S 137,500 S 131,600 5 5,900 S 575,000 S 30,244 5 544,756 OTHER FINANCING SOURCES (USES): Proceeds of general long term debt S S S - S - S - 5 5 575.000 S 575,000 S - Promeds from the sale of general capital asset disposition - - - - - - Tranxfers Transfers (out) Total Other Financing Sources (Uses) S S 5 S S S S 575,000 5 5750000 5 Net changer. fund balance $ 5,360 $ (3 _36) 5 544,756 Fund balances - beginning of the year 7.606 123,433 - Resteterru- Fund balances - bee ening of the year -restated 5 7.606 S 123.433 S Fund balance end of the year S ]2,966 S 120,197 S 544.756 See accompanying notes to the fimncia I City of Kalispell, Montana Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual For the Year Ended June 30, 2008 • Wells Fargo Project SID 344 Construction S & C Construction BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE AMOUNTS AMOUNTS VARIANCE ORIGINAL/ (BUDGETARY 87TH FINAL ORIGINAL/ (BUDGETARY PVTFH FINAL ORIGINAL/ (BUDGETARY WITH FINAL FINAL BASIS)See Note BUDGET FINAL BASIS)See Note BUDGET FINAL BASIS)See Note BUDGET RESOURCES (INFLOWS): Taxes and assessments - S - b - - S - S - - S - 8 Licenses and pentiou - - - - - - - - Innugovemsnental - - - - - - - - ChargesIn, se- - - - Miscellaneous - - - - - Investmem earnings Amounts available for appropriation 5 5 5 S S S CHARGES TO APPROPRIATIONS (OUTFLOWS): General gmemment - 5 - S - 204.775 S 204,653 S 122 - S S Publicsafety - - - - - - Public works - - - - - - 5.000 - 5,000 Culture and recreation - - - - - - Hou and co unity development - - - - - - - Debtservim-pnncipal - - - - - - Debt service Capital outlay 5007000 11469,514 (969,514) 45,000 14,673 307327 Total charges toappropriations 500,000 $ 1,469,514 S (969,514) 204,775 S 304,653 S 122 50,000 S 14,673 S 35,327 OTHER FINANCING SOURCES (USES): Proceeds of general long term debt 1,465,880 S 503,634 S (962,246) - S S 50.000 S 14,673 S (35,327) Proceeds born the sale of general capital asset disposition - - - - - - - Transfers in- - - - - - Transfers (out) (19,000) (18.960) 40 Total Other Financing Sources(Uses) 1.465.880 S 503,634 S (962.246) (19.000) $ (18,960) S 40 50.000 S 147673 S (35,327) Net change in fund balance S (965,880) S (223,613) S Fund balances beginning of the year 965,880 223,613 - Renatements Fund balances - beginniug of the year - restated S 965.880 S 223.613 S Fund balance end of the year S S S See accompanying notes to the fi--1 statements 101 City of Kalispell, Flathead County, Montana Combining Balance Sheet Nonmajor Proprietary Funds June 30, 2008 See accompanying notes to the financial statements 102 Airport Enterprise Ambulance Solid Waste Totals ASSETS Current assets: Cash and investments $ 257,262 $ $ 300,906 $ 558,168 Taxes and assessments receivable, net - 45,256 45,256 Accounts receivable - net 990 - 990 Due from other governments - 79,461 79,461 Total current assets $ 258,252 $ $ 425,623 $ 683,875 Noncurrent assets: Capital assets - land 1,347,868 - 1,347,868 Capital assets - construction in progress 91,808 - 91,808 Capital assets - depreciable, net 1,709,443 587,183 2,296,626 Total noncurrer}tassets $ 3,149,119 $ $ 587,183 $ 3,736,302 Total assets $ 3,407,371 $ $ 1,012,806 $ 4,420,177 LIABILITIES Current liabilities: Accounts payable $ 16,265 $ 17,460 $ 33,725 Accrued payroll 1,458 9,138 10,596 Other current liabilities 10,419 - 10,419 Total current liabilities $ 28,142 $ $ 26,598 $ 54,740 Noncurrent liabilities: Noncurrent portion of compensated absences 2,230 58,337 60,567 Total noncurrent liabilities $ 2,230 $ $ 58,337 $ 60,567 Total liabilities $ 30,372 $ $ 84,935 $ 115,307 NET ASSETS Invested in capital assets, net ofrelated debt $ 3,149,119 $ $ 587,183 $ 3,736,302 Unrestricted 227,880 340,688 568,568 Total net assets $ 3,376,999 $ $ 927,871 $ 4,304,870 Total liabilities and net assets $ 3,407,371 $ $ 1,012,806 $, _ 4,420,177 See accompanying notes to the financial statements 102 City of Kalispell, Flathead County, Montana Combining Statement of Revenues, Expenses, and Changes in Net Assets Nonmajor Proprietary Funds For the Fiscal Year Ended June 30, 2008 Capital contributions Transfers in Transfers (out) $ Airport $ (335,213) Solid $ (335,213) Special items Enterprise Ambulance Waste - Totals OPERATING REVENUES Charges for services $ 91,958 $ $ 709,514 $ 801,472 Miscellaneous revenues $ - $ 415,503 - - Special assessments - - - Total operating revenues - $ 91,958 $ $ 709,514 $ 801,472 OPERATING EXPENSES $ 3,376,999 $ - $ 927,871 $ 4,304,870 Personal services $ 38,334 $ $ 430,521 $ 468,855 Supplies 3,689 70,459 74,148 Purchased services 48,675 43,294 91,969 Building materials - - - Fixed charges 12,049 74,198 86,247 Loss/bad debt expense - - - Depreciation 99,375 144,310 243,685 Total operating expenses $ 202,122 $ $ 762,782 $ 964,904 Operating income {loss} $ (110,164) $ $ (53,268). $ (163,432). NONOPERATING REVENUES (EXPENSES) Taxes/assessments revenue $ $ $ $ Licenses/permits revenue Intergovernmental revenue - Interest revenue 14,297 16,554 30,851 Debt service interest expense - - - Gain (loss) sale of capital asset - (80,290) (80,290) Total non-operating revenues (expenses) $ 14,297 $ (80,290) $ 16,554 $ (49,439) Income (loss) before contributions and transfe $ (95,867) $ (80,290) $ (36,714) $ (212,871) Capital contributions Transfers in Transfers (out) $ - $ (335,213) $ $ (335,213) Special items - Extraordinary items Change in net assets $ (95,867) $ (415,503) $ (36,714) $ (548,084) Net assets - beginning $ 3,472,866 $ 415,503 $ 964,585 $ 4,852,954 Restatements - - - Net assets - beginning restated $ 3,472,866 $ 415,503 $ 964,585 $ 4,852,954 Net assets - ending $ 3,376,999 $ - $ 927,871 $ 4,304,870 See accompanying notes to the financial statements 103 City of Kalispell, Flathead County, Montana Combining Statemgnt of Cash Flows Nonmajor Proprietary Funds For the Fiscal Year Ended June 30, 2008 Cash flows from operating activities: Cash received from customers Cash received from assessments Cash received from miscellaneous sources Cash payments for claims Cash payments to employees Net cash provided (used}by operating activities, - Cash flows from capital and related financing activities: Principal paid on bonds, loans and advances Interest paid on bonds, loans and advances Acquisition and construction of capital assets Net cash provided (used) by capital and related financing activities Cash flows from non,capital financing activities- - Transfers between funds Intergovernmental revenue Proceeds of licenses and permits for non operating Net cash provided- (used) from non -capital financing activities Cash flows from investing activities: Interest on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning Cash and cash equivalents at end Reconciliation of operating income (loss} to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation Changes in assets and liabilities: Accounts receivable - net Taxes and assessments receivable, net Prepaid expenses Inventories Accounts payable Accrued payroll Net cash provided (used) by operating activities See accompanying notes to the financial statements 104 Airport Enterprise Ambulance Solid Waste - Totals $ $103,522 ($78,090) $29,841 $696,737 $ $830,100 $ I4,296 - 16,554 $ $0 $0 ($53,612) ($1,737) ($177,663) ($233,012) ($37,844) ($28,104) ($426,746) ($492,694) $ 12,066 - 92,328 $ 104,394- 04,394 ($78,090) ($46,882) (124,972) $ (78,090) - (46,882) $ (124,972) ($97,075) ($97,075) $0 $0 $ (97,075) $ (97,075)- $14,296 $16,554 30,850 $ I4,296 - 16,554 $ 30,850 $ (51,728) - (97,075) 62,000 $ (86,803) $308,990 $97,075 $238,906 $644,971 $ 257,262 - - 300,906 $ 558,168 $ ($110,164) ($53,268) $ (163,432) 99,375 144,310 243,68-5 $11,563 $29,841 ($12,777) $28627 $0 $0 $0 $11,815 ($1,737) $4,245 $14,323 ($524) ($28,104) $9,818 ($18,810) $ 12,065 - 92,328 $ 104,393 MISCELLANEOUS STATISTICS CITY OF KALISPELL, MONTANA Miscellaneous Statistics (unaudited) Class of City Date of Organization County Form of Governmpm Number of employees (non -elected) Seasonal employees Elected Mayor, 8 Council persons, Municipal Judge Population of the City - estimated Land area Registered Voters; City Services: Police protection 1st 1892 Flathead Council/ Manager 201.2 100+ 10 20,500 7201 acres active 9,341 inactive 2,273 11,614 Fire Department, Ambulance Service and Building Inspection Parks & Recreation Community Development Public Works -Streets, Water, Sewer, Wastwater Treatment, Storm Sewer General Administration -City Manager, Attorney, Finance, City Clerk, Municipal Court Planning Airport Number of building permits issued 348 Miles of Streets & Alleys 133 Municipal Water/Sewer: Number of consumers 8,357 Average daily water consumption (millions) 2.15 Miles of water main 116 Miles of sewer main 119 Miles of storm main 47 Water rate per 1,000 gallons $ 2.43 Sewer rate per 1,000 gallons $ 4.19 Irrigation per 1,000 gallons $ 1.55 Customer service costs $3.75 each (water/sewer) per billing period. 105 CITY OF KALISPELL, MONTANA General Revenues by Source Last Ten Fiscal Years (unaudited) Fiscal licenses Intergovern- Charges Fines and Investment year Taxes and fees mental for services Forfeitures Earnings Miscellaneous Total 1999 $ 5,267,252 $ 362,190 $ 3,315,493 $ 901,911 $ 351,973 $ 407,284 $ 102,494 $ 10,708,597 2000 $ 5,050,429 $ 459,656 $ 3,071,032 $ 863,632 $ 379,517 $ 393,118 $ 109,289 $ 10,326,673 2001 $ 4,429,943 $ 522,917 $ 3,732,442 $ 989,851 $ 391,665 $ 713,357 $ 157,551 $ 10,937,726 2002 $ 4,920,674 $ 340,099 $ 4,294,120 $ 1,106,812 $ 399,861 $ 672,551 $ 134,291 $ 11,868,408 2003 $ 4,936,790 $ 610,299 $ 4,150,234 $ 802,377 $ 453,892 $ 909,145 $ 549,155 $ 12,411,892 2004 $ 5,509,021 $ 426,713 $ 4,135,311 $ 1,003,640 $ 443,646 $ 1,162,252 $ 695,778 $ 13,376,361 2005 $ 4,929,980 $ 463,152 $ 3,922,052 $ 2,898,718 $ 535,875 $ 330,746 $ 132,327 $ 13,212,850 2006 $ 5,762,480 $ 712,654 $ 4,302,142 $ 3,307,364 $ 519,391 $ 358,754 $ 113,855 $ 15,076,640 2007 $ 6,443,167 $ 1,374,244 $ 4,616,415 $ 3,638,633 $ 579,287 $ 496,992 $ 82,243 $ 17,230,981 2008 $ 6,879,980 $ 729,230 $ 4,718,521 $ 4,669,634 $ 554,518 $ 278,957 $ 527,108 $ 18,357,948 Component units were excluded to comply with GASB reporting requirements. Sources: FY1999-2008 data from the City's Annual Financial Report, Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 106 CITY OF KALISPELL, MONTANA General Governmental Expenditures by Function Last Ten Fiscal Years (unaudited) Fiscal year Legislative, Administrative and support services Public Safety Public Works Parks Recreation & Culture Housing & Community Development Capital Outlay Debt Service Total 1999 $ 1,208,880 $ 3,116,875 $ 1,501,822 $ 660,359 $ 1,795,463 $ 2,829,146 $ 406,509 $ 11,519,054 2000 $ 1,223,943 $ 3,342,327 $ 1,398,926 $ 723,360 $ 2,019,148 $ 4,370,624 $ 499,804 $ 13,578,132 2001 $ 1,253,352 $ 3,422,810 $ 1,699,238 $ 862,953 $ 1,583,421 $ 773,633 $ 718,962 $ 10,314,369 2002 $ 1,521,457 $ 3,739,192 $ 2,639,936 $ 1,073,442 $ 1,539,580 $ 1,195,946 $ 930,689 $ 12,640,242 2003 $ 1,519,186 $ 4,780,182 $ 1,443,451 $ 988,015 $ 1,123,497 $ 3,394,947 $ 986,612 $ 14,235,890 2004 $ 1,658,495 $ 5,150,657 $ 1,515,246 $ 1,071,506 $ 768,038 $ 4,342,922 $ 2,213,388 $ 16,720,252 2005 $ 1,525,640 $ 5,604,169 $ 1,791,913 $ 1,236,972 $ 1,109,542 $ 2,051,190 $ 700,182 $ 14,019,608 2006 $ 2,127,825 $ 6,650,069 $ 2,085,890 $ 1,350,474 $ 1,478,928 $ 7,667,087 $ 1,207,499 $ 22,567,772 2007 $ 2,124,714 $ 7,399,753 $ 1,864,465 $ 1,508,943 $ 2,062,332 $ 4,353,483 $ 1,743,014 $ 21,056,704 2008 $ 2,634,295 $ 9,195,960 $ 2,194,497 $ 1,854,149 $ 970,861 $ 2,480,415 S 2,630,091 $ 21,960,268 Component units were excluded to comply with GASB reporting requirements. Sources: FY 1999-2008 data from the City's Annual Financial Report, Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds CITY OF KALISPELL, MONTANA Consolidated Tax Rates -Mill Levies Last Ten years (unaudited) 108 SD75 State School Flathead Valley Consolidated City Fiscal City of High School Elementary Equaliztion Community County County TOTAL year Kalispell Levy Levy Levies College Levy Health MILLS 1999 111.160 61.720 126.33 133.95 10.410 78.793 1.561 523.924 2000 114.250 66.430 133.74 137.62 11.010 80.922 4.402 548.374 2001 122.000 67.500 124.760 138.630 11.920 84.224 4.652 553.686 2002 129.420 78.040 149.840 140.880 12.030 89.973 4.652 604.835 2003 152.600 80.350 152.040 142.890 11.760 94.115 4.930 638.685 2004 144.650 80.000 153.120 148.420 11.570 96.120 5.090 638.970 2005 155.000 77.810 147.310 146.760 11.140 103.040 5.000 646.060 2006 170.000 99.400 160.770 147.030 14.310 107.328 5.300 704.138 2007 166.900 94.670 144.000 151.060 17.500 110.760 5.100 689.990 2008 162.850 98.170 136.900 147.010 15.010 114.620 5.340 679.900 Source: Montana Tax Foundation General Fund 132.6 G.O. Bond - 2002 7.5 G.O. Bond - 2004 8 Permissive Health Levy 14.75 162.85 108 CITY OF KALISPELL, MONTANA Assessed Value of Taxable Property Last Ten Fiscal Years (unaudited) Urban Renewal Fiscal districts City taxable value # mills . dollars year Market Value % chg CPI Taxable Value Tax Increment without increment 1 mill levied generated 1999 $ 588,649,254 2.0% 2.20% $ 25,500,927 $ 4,330,212 $ 21,170,715 $ 21,170 111.16 $ 2,353,257 2000 $ 574,721,869 -2.4% 3.40% $ 24,932,008 $ 3,593,853 $ 21,338,155 $ 21,338 114.25 $ 2,437,867 2001 $ 592,339,335 3.0% 2.80% $ 23,087,996 $ 1,934,202 $ 21,153,794 $ 21,153 122.00 $ 2,580,666 2002 $ 622,610,786 4.9% 1.60% $ 23,411,193 $ 2,059,458 $ 21,351,734 $ 21,351 129.42 $ 2,763,246 2003 $ 678,031,534 8.2% 2.30% $ 24,412,901 $ 754,554 $ 23,658,347 $ 23,654 152.6 $ 3,609,600 2004 $ 743,576,508 8.8% 2.70% $ 25,270,432 $ 817,184 $ 24,453,248 $ 24,453 144.65 $ 3,537,126 2005 $ 818,605,572 9.2% 3.40% $ 27,839,549 $ 925,426 $ 26,914,123 $ 26,914 155 $ 4,171,689 2006 $ 893,657,570 8.4% 3.30% $ 29,770,487 $ 1,119,387 $ 28,651,100 $ 28,651 170 $ 4,870,687 2007 $ 1,013,012,511 11.8% 5.00% $ 32,494,223 $ 701,179 $ 31,793,044 $ 31,793 166.9 $ 5,306,259 2008 $ 1,148,424,990 . 11.8% 5.00% -$ 35,810.,.453 -$ 923,445 $ . 34,887,008 $ 34,887 1626 - $ 5,672,628 Notes: FY2003 includes 12 mills for Health insurance premium increases authorized by the legislature. An additional 12 mills was approved by the voters for the construction of an aquatics facility. The Downtown Urban Renewal District ended in FY2002. The two remaining districts are the Westside and the Airport Districts. 109