3. Management's Discussion & AnalysisMANAGEMENT'S DISCUSSION
AND ANALY S I S
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, 2013. 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 $158,995,215 (net position). Of this amount, $15,502,070 (unrestricted net position) may
be used to meet the government's ongoing obligations to citizens and creditors.
➢ Total net position decreased by $3,102,801 over the prior fiscal year.
➢ As of June 30 the City's governmental funds reported combined ending fund balances of
$9,929,202, a decrease of $1,227,057 over the prior year. Of this amount, $1,970,900 is
available for spending at the government's discretion (committed, assigned, and unassigned
fund balances).
➢ The City's total debt, excluding compensated absences, decreased by $2,410,555 (8%)
during fiscal year 2013. The result of minimal new borrowing.
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 position 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 position.
Net position can be a useful tool in evaluating the financial health of an entity. A substantial
decrease in net position may be a sign of deteriorating financial outlook.
The change in net position during the most recent fiscal period is presented by the statement of
activities. The statement of activities reports changes in net position 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.
14
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,
parks and recreation, 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 Business Improvement District and a legally
separate Tourism 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 four major governmental funds; the General Fund
(always a major fund), the Airport TIF (special revenue) 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 funds to demonstrate compliance with this budget.
15
➢ 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 the 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.
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 three 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.
Other Information
All required supplementary information other than GASB Statement 45 — Other Postemployment
Benefits (OPEB) schedules and the general and major special revenue funds budgetary
comparison schedules is included in the basic financial statements or the accompanying notes.
Therefore, the only information presented in the section for required supplementary information
is the OPEB information and required budgetary comparison schedules on pages 76 - 78.
The combining statements for non -major governmental and non -major proprietary funds are
presented immediately following the required supplementary information section. Combining
and individual fund statements and schedules can be found beginning on page 79 of this report.
16
ANALYZING THE CITY AS A WHOLE
As mentioned prior, net position can be an important indicator of an entities financial well-being.
For the period ending June 30, 2013, the City of Kalispell's assets exceeded liabilities by
$158,995,215.
The largest portion of the City's net position ($129,012,117 or 82%) reflects its investment in
capital assets (e.g., land, buildings, machinery and equipment, infrastructure); less any related
debt used to acquire those assets that is still outstanding. The City uses these capital assets to
provide services to citizens; consequently, these assets are not available for future spending.
Although the City's investment in capital assets is reported net of related debt, it should be noted
that the resources needed to repay this debt must be provided from other sources, since the
capital assets themselves cannot be used to liquidate these liabilities. A summary of net position
is shown in the following table.
City of Kalispell - Net Position
Governmental
Business
-type
Activities
Activities
Change
Change
FY13
FY12
Inc(Dec)FY13
FY12
Inc(Dec)
Current and other assets
$ 18,227,470
$ 19,553,747
$ (1,326,277) $
14,907,429
$ 13,982,496 $
924,933
Capital assets
83,322,670
87,036,537
(3,713,867)
73,437,357
74,325,687
(888,330)
Total assets
101,550,140
106,590,294
(5,040,144)
88,344,786
88,308,183
36,603
Long-term debt outstanding
$ 12,391,631
$ 13,335,311
$ (943,680) $
16,201,715
$ 17,578,117 $
(1,376,402)
Other liabilities
1,688,022
2,487,969
(799,947)
618,343
309,474
308,869
Total liabilities
14,079,653
15,823,280
(1,743,627)
16,820,058
17,887,591
(1,067,533)
Net position:
Net investment in capital assets
72,872,788
75,621,152
(2,748,364)
56,139,329
56,992,686
(853,357)
Restricted
7,745,994
9,296,513
(1,550,519)
6,735,034
6,107,459
627,575
Unrestricted (deficit)
6,851,705
5,849,339
1,002,366
8,650,365
7,320,447
1,329,918
Total net position
$ 87,470,487
$ 90,767,004
$ (3,296,517) $
71,524,728
$ 70,420,592 $
1,104,136
An additional portion of the City's net position ($14,481,028 or 8%) represents resources that are
subject to external restrictions on how they may be used. The remaining balance of unrestricted
net assets ($15,502,070 or 10%) may be used to meet the City's ongoing obligations to citizens
and creditors.
At June 30, the City is able to report positive balances in all three categories of net position, both
for the City as a whole, as well as for its separate governmental and business -type activities.
Net position of the City decreased by just about 2% for fiscal year 2013 in comparison to fiscal
year 2012 ($159 million compared to $161.2 million).
17
City of Kalispell - Changes in Net Position
Governmental
Business -type
Activities
Activities
Change
Change
FY13
FY12
Inc(Dec)FY13
FY12
Inc Dec
Revenues
Program revenues (by major source):
Charges for services
$
5,681,989 $
5,707,941 $
(25,952) $
8,694,254
$ 7,912,67 $
781,584
Operating grants and contributions
2,688,746
2,554,322
134,424
8,354
2,41
5,938
Capital grants and contributions
1,378,649
1,385,939
(7,290)
1,012,027
679,69
332,337
General revenues (by major source):
Property taxes for general purposes
8,092,684
7,469,972
622,712
Video poker apportionment
59,801
57,415
2,386
Miscellaneous
91,261
106,783
(15,522)
Interest/investment earnings
71,573
130,836
(59,263)
(39,988)
State entitlement
2,657,356
2,546,534
110,822
Gas Tax
360,650
361,157
(507)
-
-
Gain (loss) on sale of capital asset
-
(212,127)
212,127
-
(41,786
41,786
Total revenues
$
21,082,709 $
20,108,772 $
973,937 $
9,816,946
$ 8,695,289 $
1,121,657
Program expenses
General government
$
6,709,523 $
6,995,454 $
(285,931)
Public safety
$
9,293,138 $
8,536,332
756,806
Public works
$
3,074,630 $
2,844,000
230,630
Parks and recreation
$
1,991,585 $
1,913,920
77,665
Community development
$
3,616,337 $
1,426,377
2,189,960
Debt service - interest
$
390,770 $
-
390,770
Airport
$
225,974
$ 217,616 $
8,358
Water
$
2,660,877
$ 2,592,628
68,249
Sewer
$
5,255,654
$ 5,564,219
(308,565)
Solid Waste
783,967
$ 749,481
34,486
Total expenses
$
25,075,984 $
21,716,083 $
3,359,901 $
8,926,472
$ 9,123,944 $
(197,472)
Excess (deficiency) before
special items and transfers
(3,993,275)
(1,607,311)
(2,385,964)
890,474
(428,655)
1,319,129
Transfers - net
(358,169)
'�
(385,357)
358,169
4
358,169
Increase (decrease) in net position
$
(4,351,444) $
(1,580,123) $
(2,771,321) $
1,248,643
$ (428,655) $
1,677,298
Governmental Activities. Governmental activities in fiscal year 2013 decreased the City's net
position by $4,351,444. Specifically, revenues increased about 5%, and expenses increased
16%. The key elements of the overall net position change were:
➢ Total revenue increased slightly ($973,937 or 4.7%). Sixty-six percent ($622,712) of this
increase is tax revenue.
➢ Operating grants and contributions increased $134,424, an increase of about 5%. An
increase in Community Development operating grants and contributions of
approximately $500,000 can be attributed to a Neighborhood Stabilization Program grant
of $822,217.
➢ Governmental activities expenses increased $3,359,901. Sixty-seven percent
($2,266,336) of this total increase is due to the acquisition of the permanent easement on
the Kidsports property.
➢ Public Safety expenses accounted for another twenty-three percent ($756,806) of this
governmental activities expense increase. Of this $756,806, over $400,000 is personal
services, related mostly to contracted increases and overtime. Fiscal year 2013 was also
the first full year of the police department accounting for parking services, formerly a
component unit. Another part of this increase in public safety expenditures results from
the fee for the Countywide 911 Center being classified as public safety in fiscal year
2013. This fee was classified in the prior year as general government, so it is offset
somewhat by the related decrease in general government expenses.
➢ Debt service interest is now reported, on the statement of activities, as a separate line
item rather than being allocated to individual functions.
18
The table and charts below and on the following page help illustrate the information
presented above. The table and bar chart present the cost and net cost (total cost less
revenues generated by the activity) of each of the City's largest programs; General
Government (administration), Public Safety (police and fire), Public Works (streets, light
maintenance and signs and signals), Culture and Recreation (parks, urban forestry, pool,
etc.), and Community Development. Net cost shows the financial burden placed on City
taxpayers by each of these functions. The pie chart illustrates the different revenue sources
for the City's governmental activities and how much each source contributes.
10000000
9000000
8000000
7000000
6000000
a 5000000
4000000
3000000
2000000
1000000
Governmental Activities
by function (in Millions)
Total Cost Net Cost
of Services of Services
FY13
FY12
Public Safety
9.3
8.5
Public Works
3.1
2.9
Parks and Recreation
2.0
1.9
Community Development
3.6
1.3
General Government
6.7
6.5
Debt Service
0.4
-
Totals
$ 25.1
$ 21.1
Expenses and Program Revenues -Governmental Activities for fiscal year2013
o expenses
• prag rev
gen gov't pub safety pubworks
parks/rec comm dev
Acbvity
19
FY13 FY12
5.1 4.9
0.3 0.3
1.2 1.2
2.4 0.6
5.9 4.5
0.4 -
$ 15.3 $ 11.5
Governmental activities percentage of revenue by source:
■ Other
■ gateentitlement 1
13%
■ Chargesfor services
27
■ Propertytaxes Operating
39 Fgantstoontributions
13%
■ Capital
grants/ oontri butions
7%
Business -type activities. Business -type activities increased the City of Kalispell's net position
by $1,248,643. The factors leading to this result were:
➢ Revenues of the City's business -type activities increased $1,121,657. Charges for
services revenue increased almost 10% ($781,584). This was a result of a 14% increase
in volume charges (usage) for sewer and a 154% increase in water bi-monthly base
charge both of which began took effect for fiscal year 2013.
➢ Investment earnings declined again in fiscal year 2013.
➢ Capital grants and contributions revenue of business -type activities increased 49%
($332,337), attributable to the construction industry picking up and related contributed
capital (impact fees and infrastructure contributions).
➢ Expenses decreased ($197,472) a little over 2% from the prior fiscal year.
➢ Expense increases in the other enterprise funds were offset by a decrease in the sewer
fund of $308,565. The sewer fund decreases were the result of about $200,000 savings
from the refinancing of revenue bonds early in the fiscal year. Depreciation of the sewer
fund decreased substantially also, the result of a fiscal year 1993 waste water treatment
plant project valued at $11,064,294 being fully depreciated.
20
The following charts help illustrate the information presented above related to business -type
activities net assets.
6000000
5000000
4000000
E 3000000
2000000
1000000
0
Expenses and Program Revenues - Business -type Activities for fiscal year 2013
airport water sewer solid waste
Activity
Business -type activities percentage of revenue by source:
■ Investment/other
■ Capital Earnings
grants(contributi s 5%
10%
■ Operating
grants(contributions
0%
■ Chargesfor services
85%
21
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). Spendable fund balance
(restricted, committed, assigned, and unassigned) 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 2013, the City of Kalispell's governmental funds reported combined
ending fund balances of $9,929,202, a decrease of $1,241,171 in comparison with the prior fiscal
year. Of the ending fund balance, $7,745,994 (78%) is restricted, indicating that constraints
placed on the use of resources are externally imposed, or imposed by law because: assets are
limited by specific grant agreements ($197,408); assets are limited by specific voter approved
bonds ($611,274); assets are limited by specific special assessments ($1,587,359); assets are
limited by state law ($4,457,133); assets are limited by contribution restrictions ($892,820).
$1,970,900 or 19% is available for spending at the City's discretion. Below is a short analysis of
each major governmental fund.
The general fund is the chief operating fund of the City of Kalispell. At the end of fiscal year
2013 unassigned fund balance of the general fund was $1,832,060, while total fund balance was
$2,150,283. The fund balance increased $401,028 during fiscal year 2013. Taxes and
assessments revenue increased slightly less than 2% or $92,607. Intergovernmental revenue was
also up $130,555 and fines and forfeitures revenue increased by 8% or $41,382. Overall, the
increased revenue was enough to offset an increase in public safety expenditures of $860,803
(13%). The increase in public safety expenditures were partially offset by a corresponding
decrease in general government expenditures, a result of reclassifying the Countywide 911
Center fee. At the end of fiscal year 2013, unassigned fund balance represents 17% of total
general fund expenditures, a 4% improvement from fiscal year 2012. The general fund balance
of $2,150,283 is non -spendable and assigned as follows:
GENERAL FUND BALANCE - TOTAL
NONSPENDABLE
Long-term recievables
Prepaids
TOTAL NONSPENDABLE
ASSIGNMENTS
Capital Equipment
Downtown Parking
Band Shell
TOTAL ASSIGNMENTS
2,150, 283
$ 19,798
$159,585
$ 179,383
$101,906
$ 23,542
$ 13,392
$ 138,840
$ 1,832,060
The Airport TIF fund is a special revenue fund established to account for the construction and
other costs incurred by projects deemed beneficial to the City's Airport Tax Increment Financing
district. Tax increment (increased taxable value of the TIF district since base year) transferred
from the related debt service fund is the main source of the Airport TIF funds revenue. At June
30, 2013, the fund balance of this fund was $141,336, a 92% decrease from the prior fiscal year.
The 92% fund balance decrease was the result of the purchase of a permanent easement on the
22
Kidsports property located off of Highway 93 North, across from Flathead Valley Community
College. The cost of this permanent easement was $2.17 million. The Kidsports property is
home to soccer fields, football fields, softball fields, baseball fields, and a cross-country course.
Many of these activities originally were located on property within the Airport TIF district and
were part of the original Airport/Athletic Complex Redevelopment Plan to find these fields a
permanent location. This expenditure completes the relocation process.
The Community Development Loan Revolving fund is a special revenue fund used to make low
interest housing and commercial loans within the City of Kalispell. 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, 2013, the fund balance of this fund was $375,084, a 7% decrease from
fiscal year 2012. For fiscal year 2013, the Community Development Loan Revolving fund made
two $50,000 loans approved by the Urban Renewal Loan Committee.
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, 2013, for SID 344 was $44,619, a decrease of 59% from fiscal year
2012. This extraordinary reduction in fund balance is the result of the owner of many properties
within the district being 5 years delinquent on the taxes for the properties.
Propriettuy 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 position and the total growth in net position of the proprietary funds by fund are:
Proprietary Fund Net Position
% of
Unrestricted Unrestricted Change in % Change in
Net Position Net Position Net Position Net Position
Water
$ 3,551,242
41%
$ 709,325
57%
Sewer
2,757,164
32%
473,665
38%
Other
2,341,959
27%
65,653
5%
Total
$ 8,650,365
100%
$ 1,248,643
100%
For the discussion regarding major changes in net position of the proprietary funds see the
explanation above in the business -type activities of the statement of activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
The City of Kalispell's general fund expenditures budget for fiscal year 2013 was $10,875,532.
Actual expenditures for the year were $10,541,074, a favorable variance of $334,458. Actual
public safety expenditures were $111,113 less than budgeted, due to lower than expected
expenditures in some of the public safety grant funds. Actual general government expenditures
were $192,953 less than budgeted, the result of most general government departments making
efforts to hold down expenditures where possible.
23
Actual revenues of the general fund were $10,375,977, which exceeded the budgeted amount of
$10,336,490, a favorable variance of $39,487. Intergovernmental revenue was $71,989 more
than the budgeted amount of $3,623,030. This was the result of State Entitlement revenue
exceeding expected budget. This was somewhat offset by miscellaneous revenue and investment
earnings which were both short of budgeted amounts by a combined 53%, or $52,551.
Investment earnings fell short of expectations by $9,815, the result of continued poor investment
rates. The new permanent Kidsports easement affected miscellaneous revenues negatively. In
prior fiscal years, Kidsports reimbursed the City for the annual lease payment on the property;
about $44,000. Under the new agreement, there is no annual payment, thus the negative variance
of $42,716 in fiscal year 2013.
CAPITAL ASSETS AND DEBT ADNHNISTRATION
Capital Assets
At the end of 2013, the City of Kalispell has $156,760,027, 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.
CITY OF KALISPELL'S CAPITAL ASSETS
(NET OF DEPRECIATION)
Governmental Business -type Total
activities activities
Land
2013
$ 2,395,299
2012
$ 2,552,209
2013
$ 1,701,888
2012
$ 1,701,888
2013
$ 4,097,187
2012
$ 4,254,097
Buildings
$ 10,461,053
$ 12,096,974
62,784
$ 78,465
$ 10,523,837
12,175,439
Improvements (not buildings)
$ 9,029,782
$ 9,531,533
$ 9,029,782
9,531,533
Machinery and equipment
$ 3,678,116
$ 2,732,692
306,285
$ 376,110
$ 3,984,401
3,108,802
Infrastructure
$ 57,720,089
$ 59,730,572
Construction in Progress
$ 38,331
$ 392,556
772,554
$ 273,945
$ 810,885
666,501
Source of Supply
3,849,983
3,947,558
$ 3,849,983
3,947,558
Pumping Plant
2,073,864
2,116,073
$ 2,073,864
2,116,073
Treatment Plant
19,692,830
20,727,452
$ 19,692,830
20,727,452
Transmission and Distribution
33,747,465
34,420,074
$ 33,747,465
34,420,074
General Plant
1,694,840
1,779,148
$ 1,694,840
1,779,148
Storm Sewer system
9,534,864
8,904,975
$ 9,534,864
8,904,975
Total
$ 83,322,670
$ 87,036,536
$ 73,437,357
$ 74,325,688
$ 156,760,027
$ 161,362,224
Governmental activities machinery and equipment includes the assets of the City's Data Processing fund
Major Governmental funds capital asset events during the fiscal year 2013 included the
following:
➢ Conveyed the City's interest in the Old Gateway West Mall (Teletech, etc.) and property to
Flathead County Economic Development Authority. Value of the assets conveyed was
$2,231,910.
➢ Continued work on the Woodland Connector Trails. Fiscal year 2013 construction cost was
$31,340 which is 87% paid by a federal grant.
➢ Purchased (3) police department vehicles at a cost of $86,900.
➢ Used a $750,000 U.S. Department of Justice grant to purchase and install a shooting
simulator, bullet retention system, and simulator ventilation system at 2902 Highway 93
North. Through a memorandum of understanding, the owner of the property (SI Defense,
Incorporated) agreed to construct a firearm range that meets law enforcement practice and
24
the training needs of the City. The City agreed to use the grant to defray the technology cost
for the owner/developer.
➢ Used Montana Board of Investment funding to purchase a pickup, tractor, and stump grinder
for the Parks department, and two (2) dump trucks in the Street Maintenance department.
Total amount of this financed equipment was $239,698.
➢ Received a Montana Air and Congestion Initiative (MAGI) matching grant for a large
vacuum street sweeper valued at $205,614. The City's shared cost was less than 13%.
➢ Received a U.S. Department of Homeland Security grant (State Homeland Security Grant
Program) for the purchase of a hazardous materials trailer tow vehicle. Cab and chassis were
purchased for $86,097.
➢ Paved 14 alleys (over 5700 linear feet). Replaced 1,476', 4.9 blocks, of sidewalks.
➢ Upgraded the City's GIS software program for the planning, building, and public works
departments. The $65,000 cost of this software was shared by governmental and business -
type funds.
Major Business -type funds capital asset events during the fiscal year 2013 included the
following:
➢ Upgraded the City's GIS software program for the planning, building, and public works
departments. The $65,000 cost of this software was shared by governmental and business -
type funds.
➢ Completed I" Avenue East North water system improvements at a cost of $214,992.
➢ A valve maintenance trailer was purchased by the water department for $52,965.
➢ Replaced the Armory Well generator for $68,793.
➢ Developer's contributed (1) fire hydrants valued at $4,154.
➢ 769 linear feet of new water main valued at $48,454 was installed and contributed to the City
by developers.
➢ The water department installed 766 new meters, including 84 new domestic meters of various
sizes.
➢ Began project replacing water line on 2" Ave WN, fiscal year 2013 cost to construction in
progress was $162,279.
➢ Developer's contributed 640 linear feet of new sanitary sewer main valued at $16,722.
➢ Completed first (2) two phases of the South Meadows storm sewer project at a cost of
$807,876.
➢ 6 storm drain correction and/or improvement projects were completed city-wide at a cost of
$86,646.
➢ (1) pickup and snow plow purchased by the solid waste department for $34,694.
➢ Replaced the waste water treatment plant main building roof for $65,786.
➢ Continued work on the primary digester lid project. Fiscal year 2013 cost for engineering
and construction was $95,028 and 248,646, respectively.
➢ Finished work on the Colorado Street water distribution project, paid for using 93%
($265,545) Westside TIF dollars. Business -type (water fund) capital contributed from
governmental (capital project) fund.
➢ Began the "Willows" storm water project, to be partially funded by a SID. Business -type
(sewer fund) capital contributed from governmental (capital project) fund.
Additional information on capital assets can be found in the notes of the basic financial
statements (Note D. Capital Assets pages 54-56).
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Debt
At the end of fiscal year 2013, the City of Kalispell had total long-term debt outstanding of
$27,034,965. Of this amount, $3,700,000 comprises debt backed by the full faith and credit of
the government and $2,353,000 represents bonds secured solely by specific revenue sources (i.e.,
revenue bonds). The remainder consists of $15,143,483 outstanding on State Revolving Fund
loans for construction/expansion of the wastewater treatment plant, the extension of sewer lines
south on Highway 93, and the construction of a water storage facility and the related
distribution/supply system. There is also $3,457,647 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 $2,380,835 of loans for the purchase of other property and equipment.
CITY OF KALISPELL'S OUTSTANDING DEBT
Governmental Business -type Total
activities activities
2013 2012 2013 2012 2013 2012
General obligation bonds $ 3,700,000 $ 4,145,000 $ 3,700,000 $ 4,145,000
Revenue/Urban Renewal bonds $ 1,558,000 1,700,000 795,000 1,254,000 $ 2,353,000 $ 2,954,000
SRF loans 15,143,483 16,079,000 $ 15,143,483 $16,079,000
Contract debt/loans $ 2,380,835 2,422,191 $ 2,380,835 $ 2,422,191
Total $11,096,482 $12,112,520 $15,938,483 $17,333,000 $ 27,034,965 $29,445,520
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 (Note E. Long -Term Debt pages 57-62).
ECONOIVIIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The City's elected and appointed officials considered many factors when setting the fiscal year
2014 budget, including but not limited to, tax rates and fees that will be charged by the business -
type activities. Some other considerations include: Capital needs; inflation; status of the City's
agreements with the bargaining units; local economics, including the citizen's ability to pay. In
some instances, City data is unavailable and Flathead County data was used.
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Per Ca
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
)ita Personal Income (2012 data not available for Flathead County)
Rathead County Elate of Montana United Elates
2010
2011
■ 2012
Source: U.S. Department of Labor and Industry.
➢ The City of Kalispell's unemployment rate (preliminary/unadjusted) stood at 7.8% as of
December of 2013, which is an improvement of 14% over the December 2012 rate of 9
percent. This is worse than the State's unemployment rate of 5.4%, and the Nation's rate of
6.5 percent for the same month and year.
➢ Applications for building permits and other internal indicators of growth improved in fiscal
year 2013. Short-term future forecast are more optimistic than in the recent past.
➢ The rapid population growth which Flathead County and Northwest Montana experienced for
many years remains low, but has improved and is considered health growth.
➢ Energy costs continue to rise and are volatile.
➢ Cost of labor, health, liability, and property insurance continue to rise.
During fiscal year 2013, fund balance in the General Fund increased to $2,150,283. The City of
Kalispell has not appropriated any of this amount for spending in the 2014 fiscal year budget.
The City has determined that preserving this available fund balance/reserve is necessary. The
City Council did not wish to raise property taxes in fiscal year 2014 and did not levy the
maximum mills permitted by law.
The City Council approved the following rate increases for fiscal year 2014:
➢ Governmental:
➢ All 4 categories of street maintenance assessments were increased. Category 1 & 2
maximums were not increased. These changes will result in an estimated revenue
increase for the street maintenance fund of $173,500.
➢ Business -type:
➢ Water bi-monthly administrative (base) charge increased from $9.38 to $15.00.
➢ Non-residential solid waste pick-up fees were increased. Estimated revenue increase of
$25,000.
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.
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