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2014 Comprehensive Annual Financial Report . . City of Spokane Valley, Washington Comprehensive Annual Financial Report For the Fiscal Year Ended December 31, 2014 4.,.. 1 lipk16, , t )1111k, 4. 4-'& '01 lit -.N. r ,,,,,, , ,,,,,_ ., 4, ,,! - * milfrimp* • ' Vr -....( d a i1/4 A-- - „ 4.., J9!, ' 4-.,1" *" 4* I'sr"- AP 04.. w,,A'r ." ..,*tic- -' . ' OWV--46111 .-"(r "9• • o. ---,-- _ ... -.- ,1.„ _, ... ---., ,-.:1,-------- - - _ , , - City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 City of Spokane Valley, Washington Comprehensive Annual Financial Report For the Fiscal Year Ended December 31 , 2014 Dean Grafos Mayor Mike Jackson City Manager Mark S Calhoun Finance Director Deputy City Manager Daniel C Duffey Accounting Manager City Hall 11707 E. Sprague Ave., Suite 106 Spokane Valley, WA 992016-6124 Website: www.spokanevalley.org Phone: (509) 921-1000 Fax: (509) 688-0236 To follow after this cover sheet CITY OF SPOKANE VALLEY, WA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31 , 2014 TABLE OF CONTENTS Introductory Section List of Elected Officials and Department Directors/Division Managers i City of Spokane Valley's Organizational Chart ii Financial Section Independent Auditor's Report 1 Management's Discussion and Analysis 7 Basic Financial Statements Government-Wide Financial Statements: Statement of Net Position 21 Statement of Activities 22 Governmental Fund Financial Statements: Balance Sheet- Governmental Funds 23 Reconciliation of Total Governmental Funds Balances to Statement of Net Position 25 Statement of Revenues,Expenditures and Changes in Fund Balances Governmental Funds 26 Reconciliation of the Statement of Revenues,Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 28 Proprietary Financial Statements: Statement of Net Position-Proprietary Funds 29 Statement of Revenues,Expenses, and Changes in Fund Net Position Proprietary Funds 30 Statement of Cash Flows-Proprietary Funds 31 Notes to Financial Statements Notes index 34 Required Supplementary Section Statement of Revenues, Expenditures, and Changes in Fund Balances-Budget to Actual: General Fund 65 Street Fund 66 Other Post-Employment Benefits (OPEB GASB No's 43 & 46) 67 Supplementary Information Non-major Governmental funds, Special Revenue Funds, defined 70 Non- major Governmental funds, Capital Projects Funds, defined 71 Non- major Governmental funds,Debt Service Fund, defined 72 Combining Financial Statements (Non-major): Combining Balance Sheet all Non-major Governmental Funds 74 Combining Balance Sheet Non-major Special Revenue Funds 75 Combining Balance Sheet Non-major Debt Service Funds 76 Supplementary Information - continued Combining Balance Sheet Non-major Capital Projects Funds 77 Combining Statement of Revenues,Expenditures & Changes in Fund Balances,Non-major Governmental Funds 79 Combining Statement of Revenues,Expenditures & Changes in Fund Balances,Non-major Special Revenue Funds 80 Combining Statement of Revenues,Expenditures & Changes in Fund Balances,Non-major Debt Service Fund 81 Combining Statement of Revenues,Expenditures & Changes in Fund Balances,Non-major Capital Projects Funds 82 Schedule of Revenues,Expenditures & Changes in Fund Balances,Non-Major Budget&Actual: Trails &Paths& Hotel Motel Special Revenue Funds 84 Solid Waste& CenterPlace Operating Reserve Special Revenue Funds 85 Service Level Stabilization Reserve &Winter Weather Reserve Special Revenue Funds 86 Civic Facilities Replacement&REET 1, Capital Projects Funds 87 REET 2 Capital Projects & Street Capital,Capital Projects Funds 88 Parks Capital& Civic Buildings, Capital Projects Funds 89 Pavement Preservation & Capital Reserve,Capital Projects Funds 90 Debt Service LTGO 03,Debt Service Funds 91 Internal Service Funds defined 92 Combining Statement of Net Position Equipment Rental&Replacement and Risk Management,Internal Service Funds 93 Combining Statement of Revenues,Expenses, and Changes in Net Position Equipment Rental&Replacement and Risk Management,Internal Service Funds 94 Combining Statement of Cash Flows Equipment Rental&Replacement and Risk Management,Internal Service Funds 95 Statistical Section Statistical Section index 98 Net Position by Component(last 10 fiscal years) 99 Changes in Net Position (last 10 fiscal years) 100 Fund Balances of Governmental Funds (last 10 fiscal years) 102 Changes in Fund Balances of Governmental Funds (last 10 fiscal years) 103 Assessed Value & Estimated Actual Value of Taxable Property 104 Direct& Overlapping Property Tax Rates Governments 105 Principal Property Taxpayers (current year & 10 years ago) 106 Property Tax Levy and Collections 107 Ratios of Outstanding Debt by Type 108 Ratios of General Bonded Debt Outstanding 109 Direct& Overlapping Governmental Units(District) Debt 110 City of Spokane Valley's Legal Debt Margin Information 111 Demographic and Economic Statistics 112 Principal Employers (current year & 10 years ago) 113 Full-time Equivalent(FTE) Employees by Function and Program 114 Operating Indicators by Function 115 Capital Asset Statistics by Function and Program 116 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Introductory Section SCITY OF poKane ValleyK City of Spokane Valley, Washington List of Elected Officials and Department Directors December 31, 2014 Elected Officials Mayor Position 2 Dean Grafos Deputy Mayor Position 3 Arne Woodard Councilmember Position 5 Charles "Chuck"Hafner Councilmember Position 1 Rod Higgins Councilmember Position 6 Ben Wick Councilmember Position 4 Ed Pace Councilmember Position 7 Bill Bates * # * •- X, ' ' '... 1 .:.,.-' dr 41. II .4;sP pf* * ,t Ilid, Nr`dir .:1146411 liT 141 1 _ ar h 1Q.,57,,j..,c;s: :i .ikotioh, ItIPLIZr' ' .-:.-— 4°- n Vgii S 4 1 4. ~ — ► I t,. _ . ., 41 �.• r 2014 City Council I to r(front to back): Deputy Mayor Arne Woodard, Mayor Dean Grafos, Rod Higgins, Bill Bates, Ben Wick, Charles "Chuck"Hafner, and Ed Pace. Department Directors and Division Managers City Manager Administration Department Mike Jackson City Attorney Administration Department Cary Driskell City Clerk Administration Department Chris Bainbridge Deputy City Manager& Finance Director Finance Department Mark Calhoun Human Resources Manager Administration Department John Whitehead Police Chief Administration Department Rick Van Leuven Parks& Recreation Director Parks& Recreation Department Mike Stone Community Development Director Community Development Department John Hohman Public Works Director Public Works Department Eric Guth Senior Engineer-CIP Public Works Department Steve Worley Senior Engineer-Traffic Public Works Department Sean Messner Senior Engineer-Development Services Engineering Division Gabe Gallinger Senior Planner Planning Division Lori Barlow Senior Planner Planning Division Mike Basinger Building Official Building Division Doug Powell OF SCITYo�ane ..........ovall .K Organizational Chart CityManager iii nan&ma*mn. Admin.Assistant Admin Assistant POteChief City Attorney an — ices (City Candi Cnntraci] +'rT r,"r :epi oinciar City Clerk Adminisuailve AcrbunGrg st Assistant Manager -, IT(2,0 Parks and REC. II Director Ali Deputy City Clerk Deputy City Accountant/Budget Database Attcmey Analyst - Adminstrator I'nisnative (3-75 FTE) Administrative Recreatie! Analyst Assistant --- Ccadinator Accounting Technician LenterRace 2 Q FE) Maintenance Off cer ForrImurily RelauonsrFaciliiies 1207E) Worker Facilities-- Coadinator pmemDuctn (2 Q FTE) Senior Center CanrerPlacoAdmin. Administrative Specialist --- Assistant - i Assistant CenterPlaceOfllce i PuhlldlnklaAssistant Manning Manager Sliding Oficial **Wiwi Director Ent oring Molter Adlinigrall Moe Assistant l Senior Planner Engineer eke Asaistent Assistant Senior Plans lHrvimement I2.0 FIE) Examner SrrricasGoordimlor (1'5 FE) •Public Works Cade Enf ant Flannel Assistant Engineer Engineering SenwrEngneer- Engineer- Senor Engineer Officer Tachnfcian Memtenansi (2.0 FE) PlasEtamner Permit Facilitator supednanmant 7�fc Slomwaia CIP (2.0 Mt) �.SFIE) (2.0 FIE) 0.5 PTO Matntelixel meintenanret NOW Inspector Conswctlan Assistant Engineer Assistant Engineer Senior Engineer- Administrative CoostructIon SWAIN Impiatior Planner Inspector •Traffic • •Stonmwater Project Manager Assistant Inspecux (3E) p.tr MI 1.5 FIE) (2.Q FTE A FT 7achni Engineering AsslstantEngnaa mg. Techniciant Office Assistant( Stonewalen MWfttenaaCe Engineering Cansl ucUon Technician I Inspector).5 FIE) (2Q FTE) )1.5 FTE) City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Financial Section SCITY OF pokane ValleyK oFt OF E',r i a 4 of,,.tet'Q . w,q�H1NG�:,✓' Washington State Auditor's Office INDEPENDENT AUDITOR'S REP T° 6' INANCIAL STATEMENTS September 3,2015 Mayor and City Council City of Spokane Valley Spokane Valley,Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Spokane Valley, Spokane County, Washington, as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion 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, each major fund and the aggregate remaining fund information of the City of Spokane Valley, Spokane County, Washington, as of December 31, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Report on Summarized Comparative Information The financial statements include partial prior year comparative information. Such information does not include all of the information required for a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the City's financial statements for the year ended December 31, 2013, from which such partial information was derived. We have previously audited the City's 2013 financial statements and we expressed unmodified opinions on the respective financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information in our report dated September 15,2014. In our opinion,the partial comparative information presented herein as of and for the year ended December 31, 2013, is consistent, in all material respects, with the audited financial statements from which it has been derived. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 7 through 18,budgetary comparison information on pages 65 through 66 and information on postemployment benefits other than pensions on page 67 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries,the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 2 Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying information listed as combining financial statements and supplementary information on pages 70 through 95 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional analysis and is not a required part of the basic financial statements of the City. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly,we do not express an opinion or provide any assurance on it. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated September 3, 2015, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, cf,,,_) )77,c2e.eZZC., JAN M. JUTTE, CPA, CGFM ACTING STATE AUDITOR OLYMPIA, WA 3 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 This page is intentionally blank. S1okic Valleyk City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Management's Discussion and Analysis SCITY of pokane ValleyK City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 This page is intentionally blank. S1okic Valleyk CITY OF SPOKANE VALLEY MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended December 31, 2014 As management of the City of Spokane Valley, Washington, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2014.All amounts in this discussion and analysis,unless otherwise indicated, are expressed in thousands of dollars. Also, this discussion contains comparative analysis based on information from the prior year. FINANCIAL HIGHLIGHTS The key financial highlights for 2014 are as follows: The City of Spokane Valley's financial position improved. At the end of the current fiscal year, assets exceeded liabilities by $137,179 thousand (net position). Of this amount, $50,762 thousand represents the primary government's unrestricted net position, which may be used and is available to meet the City's ongoing activities and obligations to the citizens and creditors. The City of Spokane Valley's total net position from Governmental and Business-type activities increased$3,781 thousand or 2.8% from the prior fiscal year,primarily explained by revenues continuing to outpace expenditures and the current year's increase in the City's Net Investment in capital assets. At the close of the current fiscal year, the City of Spokane Valley's governmental funds reported combined fund balances of $49,661 thousand, an increase of $3,317 thousand in comparison with the prior year. Approximately 60.3% of this amount or $29,973 thousand (unassigned fund balance) is available for spending at the City's discretion. Also, at the end of the current fiscal year,unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) for the general fund was $29,973 thousand, or approximately 89.6% of the total general fund expenditures, and the net change in actual fund balance increased by$996 thousand during the current fiscal year. Total Long-term liabilities for Governmental type activities decreased by $194 thousand to $7,708 thousand during the current fiscal year; primarily due to annual scheduled debt principal payments. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of a series of financial statements. These statements are organized so the reader can understand the City as a financial whole or as an entire operating entity. The statements also provide a detailed look at specific fmancial conditions. The following discussion and analysis are intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: 1) the government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. 7 The following figure summarizes the major features of the financial statements. This overview section below also describes the structure and contents of each of the statements in more detail. Government-wide Fund Financial Statements Statement Governmental Proprietary Entire entity The day to day operating The day to day operating (except fiduciary funds) activities of the City activities of the City Scope for basic governmental for business-type services enterprises Accounting Accrual accounting and Modified accrual and Accrual accounting and basis and economic resources current financial resources economic resources focus measurement focus measurement focus focus All assets and liabilities, Current assets and liabilities All assets and liabilities, Type of asset both financial and that come due during the both financial and capital, and liability capital, short-term and year or soon thereafter;no short-term and long-term information long-term capital assets included All revenues and Revenues when cash is All revenues and expenses Type of inflow expenses during year, received during the year or during year,regardless of and outflow regardless of when cash soon thereafter;expenditures when cash is received or information is received or paid when goods or services have paid been received and the related liability is due and payable GOVERNMENT-WIDE FINANCIAL ANALYSIS The government-wide fmancial statements are designed to provide readers with a broad overview of the City of Spokane Valley's finances,in a manner similar to a private-sector business. Statement of Net Position and Statement of Activities The statement of net position presents financial information on all of the City's assets, liabilities, and deferred inflows/outflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the current fiscal year.All changes in net position are reported as soon as the underlying event giving rise to the change occurs,regardless of the timing of related cash flows. Thus, revenues and expenses are reported for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). This statement distinguishes revenue generated by specific functions, from revenue provided by taxes and other sources not related to a specific function. Revenue generated by specific functions(charges for services,fines and forfeitures,grants and other contributions)is compared to the expenses for those functions to demonstrate how much each function either supports itself or relies on taxes and other general funding sources for support. The change in net position is important because it tells the reader whether, for the City as a whole,the financial position of the City has improved or diminished in capacity. However, in evaluating the overall position of the City, nonfinancial information such as changes in the City's tax base and the condition of the City's capital assets will also need to be evaluated. These government-wide financial statements can be found in the Basic section of this annual financial report. 8 In the statement of net position and the statement of activities, The City of Spokane Valley is divided into two distinct functions or types of primary government: • Governmental-type Activities Most of the City's programs and services are reported here, including general government, public safety, physical environment, transportation, economic environment, community development, and culture &recreation. These services are funded and supported primarily by taxes and intergovernmental revenues,including federal and state grants,and other shared revenues. • Business-type Activities—These services are provided on a charge for goods or user fee services basis to recover all or a significant portion of the cost of services provided;including State Grants. The City's Stormwater Utility Management Fund and Aquifer Protection Area Fund activity is reported here. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives, and a fiscal accounting entity with a self-balancing set of accounts used to account for specific activities. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with fmance-related legal requirements. All the funds of the City can be divided into two categories: governmental fund types, and proprietary fund types. Fund financial statements provide detailed information about the City's major funds. Based on the restriction of the use of resources and money, the City has established many funds that account for the multitude of services provided to our residents. Governmental Funds — Governmental funds are used to account for essentially the same functions reported as governmental activities on the government-wide financial statements.However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in assessing the City's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains seventeen individual governmental funds. Information on the City's three major governmental funds; General Fund, Street Fund, and Capital Reserve Fund are presented separately in the governmental fund balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. These basic governmental fund financial statements can be found in the Basic section of this report. Proprietary Funds—The City of Spokane Valley maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Enterprise funds are used to account for goods and services provided to the citizens on a user fee basis. The City provides information on its two enterprise funds, the Stormwater Utility Management Fund and the Aquifer Protection Area Fund, both major funds, under Proprietary Funds. The City's two Internal Service Funds; Equipment Rental and Replacement and Risk Management accounts for the accumulated and allocated internal costs of fleet vehicles, computer equipment, and 9 insurance claims. Also, both provide internally for the goods and services among the City's various departments and functions. Because both of these services predominantly benefit governmental-type functions rather than business-type functions in nature,they have been included within governmental- type activities in the government-wide financial statements. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided on the government-wide and fund fmancial statements. The notes are located immediately following the basic financial statements. Other Information In addition to the basic financial statements and accompanying notes,this report also presents combining and individual fund statements and schedules for other governmental and internal service funds. This information can be found in the supplemental section of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of net position-As noted earlier, net position over time,may serve as a useful indicator of the City of Spokane Valley's financial position. The City's total assets exceeded total liabilities by $137,179 thousand as of December 31, 2014. The following table summarizes and compares the City's net position for 2014 and 2013 (see Table 1, below): City of Spokane Valley's Net Position(amounts in thousands) Governmental Business-type Table 1 Activities Activities Total 2014 2013 2014 2013 2014 2013 Current and other assets $ 65,359 $ 55,116 $ 3,096 $ 3,096 $ 68,455 $ 58,212 Capital assets(net of depreciation) 83,212 83,388 5,382 4,176 88,594 87,564 Total assets 148,571 138,504 8,478 7,272 157,049 145,776 Long-term liabilities 7,708 7,901 - - 7,708 7,901 Other liabilities 11,002 4,034 1,161 412 12,163 4,446 Total liabilities 18,710 11,935 1,161 412 19,871 12,347 Total deferred inflows of resources - - - 31 - 31 Net position: Net investment in capital, assets 75,907 75,837 5,382 4,176 81,289 80,013 Restricted 5,128 4,986 - - 5,128 4,986 Unrestricted 48,827 45,746 1,935 2,653 50,762 48,399 Total net position $ 129,862 $ 126,569 $ 7,317 $ 6,829 $ 137,179 $ 133,398 In this case, the Primary Governments assets exceeded liabilities by $137,179 thousand ($129,861 thousand in governmental activities and $7,317 in business activities) as of December 31, 2014. By far, the largest portion of the City's net position ($81,289 thousand or 59.26%), reflects its investment in capital assets ( e.g., land and improvements, buildings and building improvements, improvements other than buildings, machinery and equipment, vehicles, and infrastructure), less any related outstanding debt that was used to acquire those assets. The City of Spokane Valley uses these capital assets to provide a variety of services to its citizens. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The majority of these capital assets were donated by Spokane County at the time of incorporation in 2003. An additional portion (3.74%) of the City of Spokane Valley's net position represents restricted resources that are subject to external restrictions on how they may be used. The remaining balance of$50,762 thousand or 37.0% is unrestricted and may be used to meet the city's ongoing obligations to citizens and creditors. 10 At the end of the current fiscal year,the City is able to report positive balances in all categories of net position, both for government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. City of Spokane Valley's Net Position December 31, 2014 and 2013 ay . a� a� a <2'4") nil mei 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 ■2014 [12013 As highlighted earlier,the City of Spokane Valley's total net position increased by $3,781 thousand or 2.8% from the prior year. This is primarily explained by revenues outpacing expenditures. More discussion will follow for the overall increase in net position in the sections for governmental-type and business-type activities. Governmental-type Activities — During the current fiscal year total net position for governmental activities increased by $3,294 thousand from the prior year for an ending balance of $129,862 thousand. The increase in the overall net position of governmental activities is the result of management taking various steps (e.g., increasing rates for certain revenue sources like charges for services, delaying certain nonrecurring expenses, and reducing expenses related to non-essential ongoing programs in the utilities & physical environment and community development functions) to achieve such positive effects on the governmental activities ending net position. The City's capital grants and operating grants and contribution revenues from Federal and State sources made up the fourth largest sources of program revenue combined, $3,964 thousand or 7.9% of total governmental activities revenues. The major recipients of intergovernmental program revenues were Public Safety, Transportation, Utilities and Physical Environment, General Government, and Culture & Recreation functions of the primary government. Property tax general revenues in the governmental funds account for $11,042 thousand of the $49,927 thousand total revenues (less transfers) for governmental-type activities, or 22.1% of total revenues, and the general fund property tax revenues increased by $157 thousand. Sales Tax general revenue accounted for approximately $19,779 thousand or 39.6% of total revenues in year 2014,the largest single source of revenue for the City of Spokane Valley. Excise and other taxes received were Real Estate Excise Taxes of$1,565 thousand, Liquor Board Excise Tax of $157 thousand, Utility Phone Tax of $2,461 thousand, Leasehold Excise Taxes of $8 thousand, 11 Gambling Taxes of$447 thousand, Hotel/Motel Taxes of$551 thousand and Motor Fuel Excise Taxes of$1,886 thousand. The Transportation function accounted for $8,779 thousand of the $46,672 thousand in total expenses for governmental activities, or 18.8% of the total in expenses. The largest function was Public Safety, accounting for $22,190 thousand and representing 47.5% of total governmental expenses and an decrease of(1.3%) in contracted Law Enforcement services compared to the prior year (see table 2, below). City of Spokane Valley's Changes in Net Position Table 2 as of December 31,2014 and 2013(amounts in thousands) Governmental Business-type Activities Activities Total Change Revenues 2014 2013 2014 2013 2014 2013 2014-2013 Program revenues Charges for services $ 8,009 $ 6,825 $ 1,867 $ 1,873 $ 9,876 $ 8,698 13.5% Operating grants&contributions 707 787 475 956 1,182 1,743 -32.2% Capital grants&contributions 3,257 3,679 814 620 4,071 4,299 -5.3% General revenues Taxes 37,897 36,605 - - 37,897 36,605 3.5% Other 56 83 1 2 57 85 -32.9% Total revenues 49,926 47,979 3,157 3,451 53,083 51,430 3.2% Expenses General government 5,004 4,644 - - 5,004 4,644 7.8% Public safety 22,190 22,486 - - 22,190 22,486 -1.3% Utilities&physical environment 2,462 3,029 - - 2,462 3,029 -18.7% Transportation 8,779 7,714 - - 8,779 7,714 13.8% Economic environment 912 849 - - 912 849 7.4% Community development 1,848 2,031 - - 1,848 2,031 -9.0% Culture and recreation 5,234 3,534 - - 5,234 3,534 48.1% Interest on long term debt 243 369 - - 243 369 -34.1% Aquifer protection area - - 982 306 982 306 220.9% Stormwater management - - 1,649 1,767 1,649 1,767 -6.7% Total expenses 46,672 44,656 2,631 2,073 49,303 46,729 5.5% Increase(decrease)in net position before transfers 3,254 3,323 526 1,378 3,780 4,701 -19.6% Transfers In(out) 39 13 (39) (13) - - 0.0% Increase(decrease)in net position 3,294 3,336 488 1,365 3,782 4,702 -19.6% Net position-beginning 126,568 123,232 6,829 5,464 133,397 128,696 Net position-ending $ 129,862 $ 126,568 $ 7,317 $ 6,829 $ 137,179 $ 133,398 12 Program Revenues and Expenses - Governmental Activities 25,000,000 - 20,000,000 15,000,000 10,000,000 5,000,000 erg �e�� e�� \,\• e� erg tion ca\�cJe�r� e�a\`cSa a\e��\�o�� a�sPo��a �ce�NO° ��deJe\opt a�d�e0- •Program revenues Expenses Transportation activity capital grants increased in the current year by $1,900 thousand; these contributions are used to fund the on-going general government capital outlays of$7,202 thousand, or 15.5%of the total for governmental funds expenditure activity(see the preceding graph). Business-type Activities—For the City of Spokane Valley's business-type activities,the results for the current fiscal year were positive in that the overall net position increased to reach an ending balance of$7,317 thousand. The increase in net position for business-type activities(stormwater and aquifer protection funds)was $487 or 7.1%from the prior fiscal year.Additional revenues collected by Spokane County from aquifer protection fees assessed to the citizens and remitted to the City of Spokane Valley resulted in an decrease in operating intergovernmental revenues of($23)thousand for the current fiscal year. In both business-type funds,the major program revenue sources were charges for services of$1,867 thousand and intergovernmental revenues of$1,289 thousand. The primary source of revenues is a Stormwater management fee imposed upon real property and the Aquifer area protection fee mandated by the voting public. FINANCIAL ANALYSIS OF THE CITY OF SPOKANE VALLEY'S FUNDS As noted earlier, the City of Spokane Valley uses fund accounting to ensure and demonstrate compliance with finance related requirements. Governmental Funds-The focus of the City's governmental funds is to provide information on near- term inflows,outflows,and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular,unassigned fund balance may serve as a useful measure of the City's net resources available for spending at the end of the year and represent the portion of fund balance which has not been limited to use for a particular purpose by either an external party,the City of Spokane Valley itself,or from a group or individual that has delegated authority to assign these resources to be used for particular purposes by the City of Spokane Valley's Council. 13 As of December 31, 2014, the City's total governmental funds reported a combined ending fund balance of $49,662 thousand, a net increase of $3,317 thousand in comparison with the prior year. Approximately 60.3% of this amount or $29,974 thousand is composed of unassigned fund balance, which is available for spending at the City's discretion. The City's remainder or residual fund balance is either nonspendable, restricted, committed, or assigned to indicate that it is 1)not spendable in form ($99 thousand), 2) restricted for particular purposes ($5,029 thousand), 3) committed for particular purposes($504 thousand),or 4)assigned for particular purposes($14,056 thousand). The General Fund is the primary operating governmental fund of the City of Spokane Valley where most receipts and payments of ordinary city operations are processed.See table 3,below. General Fund Components of Fund Balance December 31, 2014 &2013 Table 3 Fiscal Year 2014 2013 Unassigned $ 29,973,504 $ 29,070,514 Assigned - - Restricted 255,330 204,147 Nonspendable 98,263 56,185 Total fund balances $ 30,327,097 $ 29,330,846 Sales and property taxes are the major revenue sources. At the end of 2014, unassigned fund balance was $29,973 thousand, while total fund balance increased to $30,327 thousand. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total governmental funds expenditures. Unassigned fund balance in the general fund represents approximately 64.6% of the total governmental funds expenditures,while total general fund balance of $30,327 thousand represents approximately 65.3% of that same amount in total governmental funds expenditures See table 3. All Remaining Governmental Funds Components of Fund Balance December 31,2014&2013 Table 4 Fiscal Year 2014 2013 Assigned $ 14,056,357 $ 11,784,861 Committed 504,020 503,565 Restricted 4,773,476 4,725,257 Nonspendable 675 - Total fund balances $ 19,334,528 $ 17,013,683 Major Governmental Funds The General Fund— The fund balance of the City of Spokane Valley's general fund increased by $996 thousand, compared to last year, for the fiscal year ending December 31, 2014. In the Budget to Actual Schedule,revenues trended slightly higher than expected in the 2014 budget by$921 thousand, while the total expenditures were $3,681 thousand (including transfers out) less than the amended budget. Ultimately, the General Fund in the Governmental funds statement reports an increase in excess of revenues over expenditures, positive variance with final budget over of $3,676 thousand compared to the last fiscal year of 2013 of$2,849 thousand. 14 The Street Fund— had an ending fund balance of $1,705 thousand, a decrease of$(358) thousand compared to the prior year. The primary source of revenues for the Street fund is the Telephone Utility taxes of$2,461 thousand, and the Motor Vehicle Gas tax of$1,878 thousand, both slightly changed from the prior year (approximately -4.0% and 0.6% respectively). Expenditures (including transfers out) outpaced revenues, which contributed to the slight decrease in ending fund balance compared to last year. Capital Reserve Fund — had an ending fund balance of $8,582 thousand. Actual expenditures (including transfers out)were $293 thousand less than the final budgeted projections. Overall, the net change in fund balance was greater than the final budgeted projections. Proprietary Funds-The City's enterprise funds, Stormwater Management and Aquifer Protection Area provide the same type of information found in the government-wide financial statements,and are also major proprietary funds.Unrestricted net position of the Stormwater Management Fund at December 31,2014 was$1,934 thousand and for the Aquifer Area Protection fund was $2 thousand. GENERAL FUND BUDGETARY HIGHLIGHTS Original budget compared to final budget: By State law, Title 35A of the Revised Code of Washington (RCW)requires all cities to prepare and adopt a balanced budget prior to the beginning of the City's fiscal year; the annual operating budget for the City is effective the first day of January. The City Council amended the original budget revenue and expenditures once during 2014. Final budget compared to actual results: The most significant differences between final estimated revenues and actual revenues were as follows: Revenue Final Estimated Actual Source revenues revenues difference Taxes $ 30,731,800 $ 31,351,004 $ 619,204 Licenses and permits 2,102,100 2,372,020 269,920 Intergovernmental revenues 1,934,000 1,903,987 (30,013) Charges for services 874,600 1,024,003 149,403 Fines &forfeitures 564,300 544,407 (19,893) Investment Interest 65,000 46,607 (18,393) Miscellaneous 1,125,200 1,076,293 (48,907) In the General Fund, the variance between actual expenses and the final amended budget was a savings in expenditures of$2,755 thousand; giving the City a positive variance in excess of revenues over expenditures of$3,676 thousand for 2014. Actual negative revenue variances in miscellaneous revenues of ($49) thousand, ($30) thousand in intergovernmental and ($18) in investment interest coupled with revenue increases in tax revenue of $619 thousand, licenses and permits of $270 thousand, and charges for services of$149 thousand paired with a positive variance in revenues over expenditures contributed overall to an increase in fund balance of$996 thousand for the fiscal year of 2014. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets: The City of Spokane Valley's investment in capital assets for its governmental and business type activities as of December 31, 2014, amounts to $88,594 thousand (net of depreciation). This investment in capital assets includes land, buildings, improvements, infrastructure, machinery 15 and equipment, and construction in progress. The total increase in the city's investments in capital assets for the current fiscal year was $1,030 thousand or 1.2% (see table 5,following). City of Spokane Valleys Capital Assets (net of depreciation, amounts in 000) Governmental Business-type Total % Table 5: Activities Activities Total Change 2014 2013 2014 2013 2014 2013 2014-2013 Land $ 6,892 $ 7,045 $ - $ - $ 6,892 $ 7,045 -2.2% Buildings 9,420 9,735 336 341 9,756 10,076 -3.2% Improvements other than Buildings 5,325 5,761 - - 5,325 5,761 -7.6% Infrastructure 54,892 55,110 4,908 3,639 59,800 58,749 1.8% Machinery and Equipment 507 385 36 50 543 435 24.8% Construction in Progress 6,176 5,352 102 146 6,278 5,498 14.2% Total $ 83,212 $ 83,388 $ 5,382 $4,176 $ 88,594 $ 87,564 1.2% Major capital asset events during the current fiscal year included the following: • Construction in Progress increased by 14.2%or$780 thousand due to several major street and infrastructure projects being started in 2014 along with ongoing work on the CIP projects in the Aquifer Protection Area Fund, a business type activity. • There was a total of$108 thousand or an increase of 24.8% in Machinery and Equipment for fiscal year 2014 due to the purchase of various pieces of equipment. • Infrastructure increased 1.8%or$1,051 thousand for 2014 due mostly to the depreciation of the assets. • Overall change in capital assets for 2014 increased by 1.2%compared to the prior year of 2013. Additional information on the City's capital assets can be found in Note 6 (Capital Assets)to the financial statements. Long-Term Liabilities -At December 31, 2014, the City had total Limited Tax General Obligation debt outstanding of$6,675 thousand. This amount is backed by the full faith and credit of the City of Spokane Valley with debt service funded by general government revenues and contributions from the Public Facilities District. The City's long-term liabilities decreased by ($194) thousand or (2.5%) during fiscal year 2014. (See table 6, below). City of Spokane Valleys Outstanding Debt Table 6 (amounts in 000) Governmental Total Percentage Activities Change 2014 2013 2014-2013 General obligation bonds $ 6,675 $ 7,435 -10.2% Bond premium 631 117 439.3% Compensated absences 402 350 14.9% Total $ 7,708 $ 7,902 -2.5% In addition to the General obligation bonded debt and premium, the City's long-term liabilities also include compensated absences (vacation and sick leave accruals). Additional information on the City's long-term debt can be found in Note 11 (General Long-Term Liabilities) in the notes to the financial statements. Under Washington State statutes, general obligation indebtedness for general purposes is pursuant to a vote of the electorate and is limited to 2.5% of actual value of taxable property located within the City of Spokane Valley. Non-voted general purpose indebtedness is limited to 1.5% of assessed valuation and the combination of voted and non-voted general purpose indebtedness, cannot exceed 2.5% of assessed valuation. 16 The 2013 assessed valuation of the City of Spokane Valley for the levy year of 2014, for purposes of determining the legal debt margin is; $7,168,991,028. Remaining debt capacities for the City under general voted and non-voted purposes(2.5%)is limited to: $172,147,670. The City of Spokane Valley maintains an Aa3 rating from Moody's for its non-voted general obligation debt. Additional information regarding debt limitations and capacities can be found in Note 11 (Legal Debt Margin) in the notes to the financial statements. ECONOMIC FACTORS The following economic factors currently affect the City of Spokane Valley and were considered in developing the 2014-2015 fiscal year budgets. The outlook for the City of Spokane Valley economy was projected based on statistics generated in Spokane County. There is estimated to be over 4,000 businesses located in Spokane Valley with estimated taxable retail sales of$1.97 billion for 2014. The City of Spokane Valley received $19,779 thousand, an increase of$1,058 thousand from the prior year,in sales tax dollars for 2014. Overall, Spokane County gained about 1,500 jobs in 2014, compared to 250 jobs in 2013. The current year's increase in jobs left the county with an estimated average of 208,950 jobs for the year,which is down more than 9,500 jobs from the peak in 2008. Despite the modest gain of jobs in 2014, the Spokane County area wide unemployment rate fell to 7.1%, down (.8%) from the previous year. Spokane County's fastest growing non-farm employment sector is professional services. This sector is predicted to grow the most through 2022. Population growth has been steady within the City of Spokane Valley,increasing to 92,050 and growing over 12% since incorporation in 2003. The total number of Single family residential building permits Spokane County area-wide (including the City of Spokane and the City of Spokane Valley) decreased to 828 in 2014 (down from 1,009 permits issued in 2013). Additionally, total 2014 nonresidential building permits for the City of Spokane Valley jumped to 233 permits, an increase of 142 from the prior year. Housing prices and sales increased for the fourth straight year in the Spokane area for 2014. The median price of a home in the Spokane metropolitan area was approximately $178,300 in 2014,which is roughly ($30,000) lower than the U.S. median price of$208,700. The 2014 average reported price of a home in the area was $186,275, up 2% from 2013. The City of Spokane Valley's assessed value increased 3.1% to 7.2 billion in 2014. The City's property tax levy rate for 2014 was near $1.545 per thousand of assessed value. The City of Spokane Valley contracts with Spokane County and several public service districts for many city services including street maintenance,public safety, library, and fire protection. This allows the City to hold the number of full-time employees to 87.25. Employee salaries and related benefits are the leading cost for much of the city's operations. In a 2014 study, a comparison of 31 cities with a populations of 100,000 or less was conducted within the State of Washington and the City of Spokane Valley had the fewest number of employees based on Washington cities with a population greater than 50,000 and over. No significant general fund tax increases were implemented in 2014, nor are any anticipated for the 2015 general fund budget. A telephone utility tax of 6%was collected during 2014 in the City's Street Fund. During the fiscal year of 2014,unassigned fund balance in the general fund was$29,973,504. The City of Spokane Valley's total recurring 2015 general fund expenditure budget is $38,338,882 as compared 17 to $36,898,910 in 2014. This means that the general fund recurring expenditure budget only increased by 3.90% as compared to 2014. The 2015 budget presumes service levels that are consistent with those provided in 2014 with neither significant enhancements nor reductions in any area of operations. REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the City of Spokane Valley's finances for those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to: City of Spokane Valley Finance Department Chelsie Taylor, Interim Finance Director 11707 E. Sprague Ave. Suite 106 Spokane Valley, Washington 99206. 18 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Basic Financial Statements SCITY ofValley ,,,., poKane K City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 This page is intentionally blank. S1okic Valleyk City of Spokane Valley, Washington Statement of Net Position December 31, 2014 Primary Government Governmental Business-type Activities Activities Total ASSETS Cash and cash equivalents $ 50,852,374 $ 2,115,893 $ 52,968,267 Taxes receivable 4,666,916 37,599 4,704,515 Taxes delinquent-receivable 139,996 22,418 162,414 Accounts receivable,(net) 1,259,237 - 1,259,237 Interest receivable 4,769 151 4,920 Grants receivable 751,955 860,088 1,612,043 Due from other funds 7,585,000 60,000 7,645,000 Prepaids 98,938 121 99,059 Capital Assets: Land 6,892,688 - 6,892,688 Depreciable assets,(net) 70,143,926 5,279,651 75,423,577 Construction in progress 6,175,886 101,862 6,277,748 Total Assets $ 148,571,685 $ 8,477,783 $157,049,468 LIABILITIES Accounts payable $ 1,862,103 $ 62,542 $ 1,924,645 Interest payable 29,819 - 29,819 Due to other funds 7,585,000 60,000 7,645,000 Deposits and other payables 1,049,933 117,413 1,167,346 Other accrued liabilities 474,986 30,007 504,993 Compensated absences - 26,688 26,688 Unearned revenues - 864,284 864,284 Long-term liabilities: Due within one year 391,347 - 391,347 Due in more than one year 7,316,315 - 7,316,315 Total Liabilities 18,709,503 1,160,934 19,870,437 NET POSITION Net Investment in capital assets 75,906,943 5,381,512 81,288,455 Restricted for: Capital projects,REET,roads&streets 4,529,650 - 4,529,650 Parks&recreation programs - - - Hotel/motel tourism promotion 209,949 - 209,949 Comcast PEG,communications 255,330 - 255,330 Debt service LTGO refunding bonds 2014 4,049 - 4,049 Trails&paths 29,828 - 29,828 Leases&subscriptions 98,938 - 98,938 Unrestricted : Governmental type activities 48,827,495 - 48,827,495 Business type activities - 1,935,337 1,935,337 Total Net Position: 129,862,182 7,316,849 137,179,031 Total Liabilities and Net Position $ 148,571,685 $ 8,477,783 $ 157,049,468 The notes to the financial statements are an integral part of this financial statement. 21 City of Spokane Valley, Washington Statement of Activities For the Year Ended December 31, 2014 Net(Expense)Revenue and Program Revenues Changes in Net Position Operating Charges for Grants and Capital Grants Governmental Business-Type Functions/Programs Expenses Services Contributions &Contributions Activities Activities Total Primary government: Governmental activities: General government $ 5,004,383 $3,431,863 $ 423,844 $ (634,925) $ (1,783,601) $ - $ (1,783,601) Public safety 22,189,742 1,473,393 59,265 - (20,657,084) - (20,657,084) Utilities and physical environment 2,461,512 933,847 208,186 192,460 (1,127,019) - (1,127,019) Transportation 8,778,976 9,955 15,000 3,687,268 (5,066,753) - (5,066,753) Economic environment 911,952 - - - (911,952) - (911,952) Community development 1,848,332 1,560,804 - - (287,528) - (287,528) Culture and recreation 5,233,969 599,406 750 12,475 (4,621,338) - (4,621,338) Interest on long-term debt 243,397 - - - (243,397) - (243,397) Total governmental activities 46,672,263 8,009,268 707,045 3,257,278 (34,698,672) - (34,698,672) Business-type activities: Aquifer protection area 982,007 - 461,828 699,913 - 179,734 179,734 Stormwater management 1,648,901 1,866,913 13,723 113,867 - 345,602 345,602 Total business-type activities 2,630,908 1,866,913 475,551 813,780 - 525,335 525,335 Total primary government $49,303,171 $9,876,181 $ 1,182,596 $ 4,071,058 (34,698,672) 525,335 (34,173,337) General revenues: Taxes: Property taxes 11,042,435 - 11,042,435 Sales and use taxes 19,779,078 - 19,779,078 Excise taxes 3,615,983 - 3,615,983 Other taxes 3,459,132 - 3,459,132 Interest and investment earnings 56,525 1,342 57,867 Transfers 39,243 (39,243) - Total general revenues and transfers 37,992,396 (37,901) 37,954,495 Change in net position 3,293,724 487,434 3,781,158 Net position--beginning of year 126,568,458 6,829,415 133,397,873 Net position--ending $ 129,862,182 $ 7,316,849 $ 137,179,031 The notes to the financial statements are an integral part of this financial statement. 22 City of Spokane Valley, Washington Comprehensive Annual Financial Report-Fiscal Year 2014 Balance Sheet Governmental Funds December 31, 2014 General Street Capital Reserve Assets Fund Fund Fund Cash and cash equivalents $ 37,043,102 $ 1,727,441 $ 1,081,715 Taxes receivable 4,124,956 503,966 - Accounts receivable,(net) 1,227,840 31,397 - Interest receivable 3,719 167 - Due from other funds - 55,000 7,500,000 Grants receivable - - - Prepaids 98,263 625 - Total Assets $ 42,497,880 $ 2,318,596 $ 8,581,715 Liabilities Liabilities: Accounts payable 590,900 353,602 - Accrued wages and benefits payable 395,687 45,166 - Interest payable - - - Due to other funds 7,500,000 - - Deposits and other payables 818,552 - - Retainage payable 33,979 61,918 - Unearned revenues 2,811,665 152,666 - Total Liabilities 12,150,783 613,352 - Deferred Inflows of Resources Unavailable traffic mitigation revenue 20,000 - - Total Deferred Inflows of Resources 20,000 - - Fund Balances: Nonspendable: Operating leases&subscriptions $ 98,263 $ 625 $ - Restricted for: Comcast PEG contributions 255,330 - - Hotel/motel tourism promotion - - - Motor vehicle fuel tax roads&streets - 1,704,619 - Debt service LTGO refunding bonds 2014 - - - Street capital construction&grants - - - Trails&paths - - - Capital projects REET 1&2 roads&streets - - - Committed to: Winter weather operations - - - Assigned to: Civic bldg capital replacement - - - Governmental type Capital projects - - 8,581,715 Civic facilities capital replacement - - - Parks&recreation capital improvements - - - Street capital improvements p&m - - - Solid waste services - - - Unassigned 29,973,504 - - Total Fund Balances 30,327,097 1,705,244 8,581,715 Total Liabilities,deferred inflows of $42,497,880 $ 2,318,596 $ 8,581,715 resources,and Fund Balances The notes to the financial statements are an integral part of this statement. continued 23 City of Spokane Valley, Washington Annual Financial Report-Fiscal Year 2014 Balance Sheet Governmental Funds December 31, 2014 Other Total Governmental Governmental Assets Funds Funds Cash and cash equivalents $ 9,595,494 $ 49,447,752 Taxes receivable 177,990 4,806,912 Accounts receivable,(net) - 1,259,237 Interest receivable 793 4,679 Due from other funds 30,000 7,585,000 Grants receivable 751,955 751,955 Prepaids 50 98,938 Total Assets $ 10,556,282 $ 63,954,473 Liabilities Liabilities: Accounts payable 916,892 1,861,394 Accrued wages and benefits payable 34,133 474,986 Interest payable - - Due to other funds 85,000 7,585,000 Deposits and other payables - 818,552 Retainage payable 135,484 231,381 Unearned revenues 296,362 3,260,693 Total Liabilities 1,467,870 14,232,005 Deferred Inflows of Resources Unavailable traffic mitigation revenue 40,843 60,843 Total Deferred Inflows of Resources 40,843 60,843 Fund Balances: Nonspendable: Operating leases&subscriptions $ 50 $ 98,938 Restricted for: Comcast PEG contributions - 255,330 Hotel/motel tourism promotion 209,949 209,949 Motor vehicle fuel tax roads&streets - 1,704,619 Debt service LTGO refunding bonds 2014 4,049 4,049 Street capital construction&grants 72,930 72,930 Trails&paths 29,828 29,828 Capital projects REET 1&2 roads&streets 2,752,101 2,752,101 Committed to: Winter weather operations 504,020 504,020 Assigned to: Civic bldg capital replacement 1,919,550 1,919,550 Governmental type Capital projects - 8,581,715 Civic facilities capital replacement 1,174,070 1,174,070 Parks&recreation capital improvements 451,720 451,720 Street capital improvements p&m 1,921,963 1,921,963 Solid waste services 7,339 7,339 Unassigned - 29,973,504 Total Fund Balances 9,047,569 49,661,625 Total Liabilities,deferred inflows of $ 10,556,282 $ 63,954,473 resources,and Fund Balances The notes to the financial statements are an integral part of this statement. 24 City of Spokane Valley, Washington Reconciliation of the Balance sheet of Governmental Funds To the Statement ofNet Position December 31, 2014 Total governmental fund balances: $49,661,625 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources. This amount reflects the initial investment in capital assets and are not reported in the funds. 83,212,500 Certain earned tax revenues will be collected after year end and will not be available until after year end to pay for current expenditures; and therefore reported as unearned revenues in the funds. These revenues consist of: Sales and use taxes 1,964,818 Motor fuel taxes 152,598 Hotel/Motel taxes 27,092 Total 2,144,508 Other long-term assets are not available to pay for current- period expenditures and therefore are reported as unearned in the funds: Property taxes 321,108 Intergovernmental 330,113 Charges for services 66,358 Miscellaneous 459,449 Total 1,177,028 Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. (29,819) Internal service funds are used by management to charge the cost of certain activities, such as equipment rental and self insurance, to the individual funds. The assets and liabilities of the internal service fund are included in governmental activities in the statement of net position. 1,404,002 Long-term liabilities, including capital leases payable and accrued interest payable, are not due and payable in the current period and therefore are not reported in the funds: Bonds payable (6,675,000) Premium on bond issuance (630,556) Compensated Absences (402,106) Total (7,707,662) Total Net position of Governmental Activities as shown on the Statement of Net Position: $129,862,182 The notes to the financial statements are an integral part of this financial statement. 25 City of Spokane Valley, Washington Comprehensive Annual Financial Report-Fiscal Year 2014 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended December 31, 2014 General Street Capital Reserve Fund Fund Fund Revenues Taxes $ 31,351,004 $ 2,461,060 $ - Licenses and permits 2,372,020 - - Intergovernmental 1,903,987 1,893,626 - Charges for services 1,024,003 3,889 - Fines and forfeitures 544,407 - - Investment interest 46,607 2,037 - Miscellaneous 1,076,293 5,524 4,675 Total Revenues 38,318,321 4,366,136 4,675 Expenditures Current: General government 4,505,635 - - Public safety 22,131,472 - - Utilities and physical environment 1,887,560 140,244 - Transportation - 4,161,311 - Economic environment 355,237 - - Community development 1,848,332 - - Culture and recreation 2,582,052 - - Debt Service: Principal retirement - - - Interest expense 435 - - Refunding bonds issuance costs - - - Capital Outlay: Capital expenditures 134,821 50,653 - Construction in progress - 19,354 - Total Expenditures 33,445,544 4,371,562 - Excess of Revenues Over(Under) 4,872,777 (5,426) 4,675 Expenditures Other Financing Sources(Uses) Transfers In 83,100 23 2,443,507 Transfers(out) (3,959,628) (352,586) (1,608,766) Refunding bonds issued - - - Premium on refunding bonds issued - - - Payments to refunded bonds escrow agent - - - Total Other Financing Sources(Uses) (3,876,528) (352,563) 834,741 Net Change in Fund Balances(deficit) 996,249 (357,989) 839,416 Fund Balances Beginning of Year 29,330,848 2,063,233 7,742,299 Fund Balances End of Year S 30,327,097 $ 1,705,244 $ 8,581,715 The notes to the financial statements are an integral part of this statement. continued 26 City of Spokane Valley, Washington Comprehensive Annual Financial Report-Fiscal Year 2014 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended December 31, 2014 Other Total Governmental Governmental Funds Funds Revenues Taxes $ 2,116,696 $ 35,928,760 Licenses and permits - 2,372,020 Intergovernmental 4,300,406 8,098,019 Charges for services 641 1,028,533 Fines and forfeitures - 544,407 Investment interest 7,085 55,729 Miscellaneous 847,085 1,933,577 Total Revenues 7,271,913 49,961,045 Expenditures Current: General government 2,202 4,507,837 Public safety - 22,131,472 Utilities and physical environment 52,661 2,080,465 Transportation 291,710 4,453,021 Economic environment 546,545 901,782 Community development - 1,848,332 Culture and recreation - 2,582,052 Debt Service: - Principal retirement 360,000 360,000 Interest expense 242,962 243,397 Refunding bonds issuance costs 107,341 107,341 Capital Outlay: - Capital expenditures 184,953 370,427 Construction in progress 6,812,412 6,831,766 Total Expenditures 8,600,786 46,417,892 Excess of Revenues Over(Under) (1,328,873) 3,543,153 Expenditures Other Financing Sources(Uses) Transfers In 4,861,613 7,388,243 Transfers(out) (1,804,712) (7,725,692) Refunding bonds issued 7,035,000 7,035,000 Premium on refunding bonds issued 625,694 625,694 Payments to refunded bonds escrow agent (7,549,304) (7,549,304) Total Other Financing Sources(Uses) 3,168,291 (226,059) Net Change in Fund Balances 1,839,418 3,317,094 Fund Balances Beginning of Year 7,208,151 46,344,531 Fund Balances End of Year $ 9,047,569 $ 49,661,625 The notes to the financial statements are an integral part of this statement. 27 City of Spokane Valley, Washington Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended December 31, 2014 Net change in fund balances -total governmental funds: $3,317,094 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities,the cost of those assets is allocated over their estimated useful lives as depreciation expense.This is the amount by which capital outlays and contributions exceeded depreciation in the current period: Depreciation (5,877,410) Capital outlay 7,202,193 1,324,783 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds: Sales and use taxes 71,403 Property taxes (86,942) Excise taxes (2,582) Other taxes (57,480) Miscellaneous 448,968 Capital-operating grants and contributions (511,209) (137,842) Net effect of various and miscellaneous transactions involving capital assets (i.e,sales,donations, and disposals)is a decrease to Net Position: (1,603,598) The issuance of long-term debt(e.g., bonds, leases) provides cuurent financial resources to governmental funds,while the repayment of the principal of long-term debt consumes current financial resources of governmental funds. Neither transaction, however has nay effect on net position.Also,governmental funds report the effect of issuance costs, premiums,discounts, and similar transactions when debt is first isssued or refunded,whereas these amounts are deferred and amortized in the statement of activities.This amount is the net effect of these differences in the application of long-term debt and related items: 985,694 Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Compensated absences (52,241) Premium espense on LTGO'14 refunding bonds (625,127) Accrued LTGO'03 bond Interest expense (114,304) (791,672) Internal service funds are used by management to charge the costs of fleet and risk management individual funds.The net revenue (expense)of certain activities of internal service funds is reported with governmental activities: 199,265 Total Change in Net Position of Governmental Activities as shown on the Statement of Activities: $3,293,724 The notes to the financial statements are an integral part of this statement. 28 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Statement of Net Position - Proprietary Funds December 31, 2014 and 2013 Business-type Activities Enterprise Funds Aquifer Protection Governmental Stormwater Management Area Fund Activities Internal Total Proprietary Service Funds Assets 2014 2013 2014 2013 Funds 2014 2014 Current Assets: Cash and cash equivalents $ 1,990,086 $ 2,380,675 $ 125,807 $ 402,451 $ 2,115,893 $ 1,404,622 Taxes delinquent-receivable 60,017 68,381 - - 60,017 - Accounts receivable,(net) - 51,492 - - - - Interest receivable 151 124 - - 151 90 Due from other funds 60,000 - - - 60,000 - Grants receivable 233,825 162,959 626,263 29,772 860,088 - Prepaids 121 - - - 121 - Total Current Assets 2,344,200 2,663,631 752,070 432,223 3,096,270 1,404,712 Capital Assets: Buildings&structures 382,881 375,791 - - 382,881 - Machinery and equipment 199,196 183,649 - - 199,196 151,531 Infrastructure 3,008,250 2,274,354 2,464,353 1,706,217 5,472,603 - Construction in progress 60,748 116,756 41,114 29,062 101,862 - Less accumulated depreciation (679,427) (502,338) (95,602) (7,109) (775,029) (13,455) Total capital assets 2,971,648 2,448,212 2,409,865 1,728,170 5,381,513 138,076 (net of accumulated depreciation) Total Assets $ 5,315,848 $ 5,111,843 $ 3,161,935 $ 2,160,393 $ 8,477,783 $ 1,542,788 Liabilities Current Liabilities: Accounts payable $ 51,229 $ 124,058 $ 11,313 $ 44,166 $ 62,542 $ 709 Accrued payroll and benefits payable 27,780 23,270 2,227 248 30,007 - Due to other funds - - 60,000 - 60,000 - Compensated absences 26,688 23,133 - - 26,688 - Deposits and other payables 32,100 33,600 - - 32,100 - Retainage payables 52,500 30,111 32,813 24,427 85,313 - Unearned revenue 220,340 108,765 643,944 - 864,284 Total Current Liabilities 410,637 342,937 750,297 68,841 1,160,934 709 Total Liabilities 410,637 342,937 750,297 68,841 1,160,934 709 Deferred Inflows of Resources Unavailable Grant receipts - 1,271 - 29,772 - - Total Deferred Inflows of Resources - 1,271 - 29,772 - - Net Position Net investments in capital assets 2,971,647 2,448,212 2,409,865 1,728,170 5,381,512 138,076 Restricted - - - - - - Unrestricted 1,933,564 2,319,423 1,773 333,610 1,935,337 1,404,003 Total Net Position 4,905,211 4,767,635 2,411,639 2,061,780 7,316,849 1,542,079 Total Liabilities and Net Position $ 5,315,848 $ 5,111,843 $ 3,161,935 $ 2,160,393 $ 8,477,783 $ 1,542,788 The notes to the financial statements are an integral part of this statement. 29 City of Spokane Valley, Washington Comprehensive Annual Financial Report-Fiscal Year 2014 Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended December 31, 2014 and 2013 Business-type Activities Enterprise Funds Stormwater Aquifer Protection Governmental Management Fund Area Fund Activities Internal Total Proprietary Service Funds Operating Revenues 2014 2013 2014 2013 Funds 2014 2014 Charges for services $ 1,865,413 $ 1,869,081 $ - $ 150 $ 1,865,413 $ - Intergovernmental revenues 76,097 233,165 511,031 484,344 587,129 102,744 Miscellaneous revenues 52,992 4,143 - - 52,992 - Total Operating Revenues 1,994,502 2,106,389 511,031 484,494 2,505,534 102,744 Operating Expenses Personal services 365,723 447,895 - - 365,723 8,531 Professional services 106,857 38,872 - - 106,857 272,435 Materials and supplies 59,560 106,234 - - 59,560 - Other services and expenses 939,672 1,037,607 - - 939,672 - Depreciation and amortization 177,089 136,086 88,493 7,109 265,582 9,799 Total Operating Expenses 1,648,900 1,766,694 88,493 7,109 1,737,394 290,765 Operating Income(loss) 345,602 339,695 422,538 477,385 768,140 (188,021) Non-Operating Revenues(Expenses) Intergovernmental revenues - - 650,710 288,830 650,710 - Interest and investment income 1,342 1,992 - - 1,342 796 Miscellaneous revenues - - - - - - Other services&expenses - - (893,514) (299,319) (893,514) - Total Non-Operating Revenues (Expenses) 1,342 1,992 (242,804) (10,489) (241,462) 796 Income(loss)before Capital Contributions and Transfers 346,944 341,687 179,734 466,896 526,678 (187,225) Contributions and Transfers Capital contributions - - - 570,331 - - Transfers In - - 170,125 - 170,125 376,692 Transfers(out) (209,368) (13,400) - - (209,368) - Change in Net Position 137,576 328,287 349,859 1,037,227 487,434 189,467 Net Position-Beginning of Year 4,767,635 4,439,348 2,061,780 1,024,553 6,829,415 1,352,612 Net Position-End of Year $ 4,905,211 $ 4,767,635 $ 2,411,639 $ 2,061,780 $ 7,316,849 $ 1,542,079 The notes to the financial statements are an integral part of this statement. 30 City of Spokane Valley, Washington Comprehensive Annual Financial Report-Fiscal Year 2014 Statement of Cash Flows -Proprietary Funds For the Year Ended December 31, 2014(with comparative totals for 2013) Business-type Activities Enterprise Funds Aquifer Protection Total Governmental type Stormwater Management Area Fund Proprietary Activities Internal Cash Flows from Operating Activities 2014 2013 2014 2013 Funds 2014 Service FDs 2014 Cash received from customers $ 1,925,269 $ 1,825,743 $ (596,491) $ 637,000 $1,328,778 $ - Cash paid to employees (357,658) (428,824) 1,979 (706) (355,679) (8,531) Cash payments to suppliers for goods and services (1,179,039) (1,012,288) (32,853) (716,133) (1,211,892) (278,591) Other cash receipts (1,776) 283,940 511,031 484,343 509,255 - Receipts from interfund activity - - - - - 102,744 Other cash payments 131,193 (56,917) 682,558 38,375 813,750 - Net cash(used for)provided by operating activities 517,988 611,654 566,224 442,879 1,084,212 (184,378) Cash Flows from Noncapital Financing Activities Non-Capital grant/project receipts - - (242,804) 288,830 (242,804) - Customer supplies/project expense reimbursements - - - (299,319) - - Operating subsidies&transfers in(out)other funds (209,368) (13,400) 170,125 - (39,243) 376,692 Net cash(used for)noncapital financing activities (209,368) (13,400) (72,679) (10,489) (282,047) 376,692 Cash Flows from Capital and Related Financing Activities Acquisition, construction &(transfers)of capital assets (700,524) (842,284) (770,189) (31,737) (1,470,713) (102,782) Purchases of capital assets - - - - - - Intergovernmental revenues/materials&supplies(net) - - - - - - Net cash provided by(used for)capital and related financing activities (700,524) (842,284) (770,189) (31,737) (1,470,713) (102,782) Cash Flows from Investing Activities Interest received 1,315 2,063 - - 1,315 780 Net cash provided by investing activities 1,315 2,063 - - 1,315 780 Net increase(decrease)in Cash and Cash Equivalents (390,589) (241,967) (276,644) 400,654 (667,233) 90,312 Cash and Cash Equivalents-January 1,2014 2,380,675 2,622,642 402,451 1,797 2,783,126 1,314,310 Cash and Cash Equivalents-December 31,2014 $ 1,990,086 $ 2,380,675 $ 125,807 $ 402,451 $2,115,893 $ 1,404,622 Reconciliation of Operating Income(Loss)to Net Cash Provided(Used)by Operating Activities Operating Income(loss) $ 345,602 $ 339,695 $ 422,538 $ 477,385 $ 768,140 $ (188,021) Adjustments to reconcile operating income to net cash provided (used)by operating activities: Depreciation 177,089 136,086 88,493 7,109 265,582 9,799 (Increase)Decrease in Assets: (Increase)Decrease: Receivables(net) 59,856 (43,338) (596,491) 636,850 (536,635) - (Increase): Other Operating Receivables (130,866) 46,632 - - (130,866) - (Increase)Decrease: Inventory (121) - - - (121) - Increase(Decrease)in Liabilities: Increase(Decrease):Accounts payable to suppliers (72,829) 88,189 (32,853) 38,374 (105,682) (6,156) Increase(Decrease): Payroll and benefits payable 4,509 (4,062) 1,979 (706) 6,488 - Increase(Decrease): Other Accounts Payables 131,193 25,319 682,558 (716,133) 813,751 Increase(Decrease): Compensated Absences 3,555 23,133 - - 3,555 - Increase: Deferred revenues - - - - - - Total adjustments 172,386 271,959 143,686 (34,506) 316,072 3,643 Net Cash Provided by(Used for)by Operating Activities $ 517,988 $ 611,654 $ 566,224 $ 442,879 $1,084,212 $ (184,378) The notes to the financial statements are an integral part of this statement. 31 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 This page is intentionally blank. S1okic Valleyk City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Notes to the Financial Statements SCITY OF pokane ValleyK City of Spokane Valley, Washington Comprehensive Annual Financial Report For the Fiscal Year Ended December 31, 2014 NOTES TO THE FINANCIAL STATEMENTS Contents Page Note 1: Summary of Significant Accounting policies 35 Note 2: Reconciliation of Government-Wide and Fund Financial Statements 42 Note 3: Stewardship, Compliance and Accountability 44 Note 4: Deposits and Investments 44 Note 5: Property Taxes 45 Note 6: Capital Assets and Depreciation 46 Note 7: Pension Plans 49 Note 8: Risk Management 53 Note 9: Interfund Services Activity and Transfers 54 Note 10: Short-Term Debt 55 Note 11: Long-Term Obligations and Leases 55 Note 12: Contingencies and Litigation 57 Note 13: Receivable and Payable Balances 58 Note 14: Other Postemployment Benefits (OPEB) 60 Note 15: Subsequent Events 62 34 City of Spokane Valley Notes to Financial Statements NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A.Description of government-wide financial statements The government-wide financial statements(i.e.,the statement of net position and the statement of activities)report information on all of the nonfiduciary activities of the primary government. Governmental-type activities, which normally are supported by taxes,intergovernmental revenues, and other nonexchange transactions,are reported separately from Business-Type Activities, which rely to a significant extent on fees and charges generated by external customers for support. B.Reporting entity The City of Spokane Valley,Washington(the City)was incorporated on March 31,2003. The City operates under a Council–Manager Form of government. The City's major operations,as authorized under the laws of the State of Washington applicable to a non-charter city code,include planning and zoning,public safety,public works, and recreation and culture. The accounting and reporting policies of the City relate to the accompanying financial statements of the City of Spokane Valley,Washington which have been prepared in conformity with generally accepted accounting principles(GAAP) as applied to state and local governmental entities. GAAP for local governments include those principles prescribed by the Governmental Accounting Standards Board(GASB)which is the accepted standard-setting body for establishing governmental accounting and financial reporting principles,the Financial Accounting Standards Board(FASB),when applicable,and the American Institute of Certified Public Accountants(AICPA)pronouncements that have been made applicable by GASB Statements or Interpretations. As required by GAAP the City's financial statements present the City of Spokane Valley–the primary government. There are no component units(either blended or discretely presented)included in these statements. C.Basis of presentation -government-wide and fund financial statements While separate government-wide (reporting the City as a whole) and fund financial statements(reporting the City's major funds) are presented to report the City's financial position and the results of operations,they are both interrelated. The governmental-type activities column incorporates data from the governmental funds and internal service funds,while business-type activities categorize data from the government's enterprise funds. As a general rule,the effect of interfund activity has been removed from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes where amounts are reasonably equivalent in value to the interfund services provided and other charges between the City's Stormwater functions and various other functions and activities within the government. Elimination of these charges would distort the direct costs and program revenues reported in these various functions concerned.As discussed earlier, 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 created by those external customers. 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. Our policy is not to allocate indirect costs to a specific function or segment. Program revenues include 1)charges to customers or applicants who purchase,use,or directly benefit from goods, services,or privileges provided by a given function or segment and 2)grants and contributions that are restricted to meeting the operational or capital requirements or a particular function or segment.Taxes and other items not properly included among program revenues are reported instead as general revenues. 35 City of Spokane Valley Notes to Financial Statements NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued: Separate fund financial statements are provided for governmental funds and proprietary funds. The City has no fiduciary funds.Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.All remaining governmental and enterprise funds are combined,aggregated, and reported as non-major funds. D.Measurement focus,basis of accounting, and financial statement presentation The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting.Measurement focus indicates the type of resources being measured such as,current financial resources or economic resources.The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting,as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred,regardless of the timing of related cash flows.Property taxes are recognized as revenues in the year 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. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period.For this purpose,the City considers revenues to be available if they are collected within 30 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred,as under accrual accounting.However,debt service expenditures, as well as expenditures related to compensated absences and claims and judgments,are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources. Property taxes,franchise fees,licenses, and interest associated within the current period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessment receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been satisfied, and the amount is received during the period or within the availability period for this revenue source usually within 60 days of the fiscal year end.All other revenue items are considered to be measurable and available only when cash is received by the City (modified basis of accounting). The city reports the following major governmental funds: The General Fund: is the City's primary operating fund. It accounts for all fmancial resources of the City's general government,except those required to be accounted for in another fund. The Street Fund: This Special revenue fund is responsible for the street operating and maintenance service levels of all Spokane Valley city streets and bridges. It utilizes the receipts received from the motor vehicle fuel tax(MVFT) distributed to the City in accordance with the State Revised Codes of Washington(RCW 82.36.020) and receipts from the City Telephone Tax implemented in 2009. Most of the service levels to the city streets during 2014 are the same or greater than provided for compared to 2013. Capital Reserve Fund: accounts for the accumulation of resources for a number of future capital projects. Revenues include transfers from the General Fund. 36 City of Spokane Valley Notes to Financial Statements NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued: The city reports the following major proprietary funds: The Stormwater Management Fund: accounts for the receipt and expenditure of the stormwater management fee. The expenditures are used for stormwater control,construction, and management. The Aquifer Protection Area Fund: accounts for aquifer protection area fees collected by Spokane County and remitted to the City. The expenditures are used for projects that protect the aquifer. Additionally,the government reports the following non-major fund types: Special revenue funds: accounts for Arterial Street construction,Hotel/Motel tax revenues and expenditures,Winter Weather Reserve, and revenues and expenditures for the Trails and Paths Fund. Debt service fund: accounts for the resources accumulated and payments made for principal and interest on general government debt except those to be accounted for in another fund. Capital project funds: accounts for the acquisition or development of capital facilities for governmental activities. Their major sources of revenues are from proceeds of general obligation bonds,grants from other agencies,and contributions from other funds. Internal service funds: accounts for computer hardware/software,equipment,vehicle replacement,and risk management services provided to other departments on a cost reimbursement basis. Amounts reported as program revenues include 1)charges to customers,2)operating grants and contributions,and 3) capital grants and contributions,including special assessments. Internally dedicated resources are reported as general revenues rather than program revenues. General revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Stormwater Management Fund and Aquifer Protection Area Fund are stormwater management fees, aquifer protection area fees from Spokane County,and government grants. Operating expenses for enterprise funds and internal service 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 nonoperating revenues and expenses. E.Budgetary information 1. Budgetary basis of accounting Annual appropriated budgets are adopted for all funds on a basis consistent with generally accepted accounting principles. The governmental funds are budgeted on the modified accrual basis of accounting whereas the basis of accounting for proprietary funds is full accrual. Legal budgetary control(i.e.,the level at which expenditures may not legally exceed appropriations)is established at the fund level. Subsidiary revenue and expenditure ledgers are used to compare the budgeted amounts with actual revenues and expenditures. As a management control device,the subsidiary ledgers are used to monitor expenditures for individual functions and activities by object class. 2. Procedures for adopting the original budget The City's budget procedures are mandated by the Revised Code of Washington 35A.33. The following are key procedural steps in the City's budget development process. Note that the process and dates are for the 2014 budget process and may be changed for future processes: • In April,the official"budget call"required by State law is made to all department directors or fund managers. Budget development instructions and other materials are provided to the departments at this time. 37 City of Spokane Valley Notes to Financial Statements NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued: • In June departments submit revenue and expenditure estimates to the Finance department. The City Council and City management staff discuss City goals and priorities and reaffirms overall City priorities,vision,and mission at a mid-year retreat. Additional policy guidance is provided throughout the year. • In July the Finance department submits the preliminary budget to the City Manager. • In August the City Manager submits estimates on the current year's revenue and expenditures for the upcoming year to the council.During August,preliminary budget documents were prepared,printed and filed with City Clerk. This proposed budget is presented to the City Clerk and copies are made available to the public. The Council sets the dates of the preliminary and final budget hearings. • Before December 31St the City Council,by a majority vote,will adopt the budget by ordinance,establishing the budget appropriation for the year. • The approved budget is published and distributed during the first quarter of the following year. Copies are made available to the public. • Monthly budget monitoring reports are produced by the Finance Department to report on actual performance compared to budget estimates and to identify any remedial actions that may be needed. 3. Amending the budget The budget, as adopted,constitutes the legal authority for expenditures. The City's budget is adopted at the fund level,so that expenditures may not legally exceed appropriations at that level of detail. The City Manager is authorized to transfer budgeted amounts within a fund;however, any revisions that alter the total expenditures of a fund,or that effect the number of authorized employee positions, salary ranges,or other conditions of employment must be approved by the City Council. When the City Council determines that it is in the best interest of the City to increase or decrease the appropriation for a particular fund,it may do so by ordinance approved by one more than the majority after holding a public hearing. The City's budget was amended once during fiscal year 2014. The financial statements contain the original and final budget information. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves,transfers, allocations, supplemental appropriations, and other legally authorized changes. Annual appropriations for all funds lapse at the end of the fiscal period even if they have related encumbrances. Unexpended resources must be re-appropriated and become part of the subsequent period's budget pursuant to Washington States regulations. 4. Excess of expenditures over appropriations For the year ending December 31,2014,no material violations of finance related legal or contractual provisions occurred. The Civic Buildings Capital Projects Fund exceeded legal appropriations for the fiscal year. The Street Fund Special Revenue type fund exceeded its legal appropriation by$9,047 or .021%. The overage resulted from receiving unexpected invoices related to a Transportation Street project and was funded by miscellaneous revenues in excess of the amount expected and from beginning fund balance. 5. Deficit Net Position The City did not have any funds with a deficit fund net position as of December 31,2014. F.Assets,liabilities,unearned revenues, deferred inflows of resources, and net position/fund balance 1. Cash and cash equivalents The City considers all highly liquid assets including demand deposits,petty cash,money market accounts,certificates of deposit(CD's),investments in the Washington State Treasurer's Local Government Investment Pool(LGIP),and short- term investments with a maturity of three months or less from the date of acquisition as cash and cash equivalents. These amounts are classified on the balance sheet or in the statement of net position within cash and cash equivalents in the various funds. The interest on these investments is prorated to the applicable funds and the City's policy has been to hold its investments until maturity in an attempt to reduce market fluctuation risk. Investments of the City can be drawn down on demand. 38 City of Spokane Valley Notes to Financial Statements NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued: 2.Investments As authorized by Washington state law,the City is allowed to invest in obligations of: the U.S.Treasury,commercial paper,certificates of deposits,money market funds,mutual funds,and the Washington State Treasurer's Local Government Investment Pool(LGIP). Investments for the City of Spokane Valley are reported at fair value at December 31,2014.The Washington State Treasurer's Local Government Investment Pool(LGIP)operates in accordance with the Security Exchange Commission's (SEC)Rule 2a-7 of the Investment Company Act of 1940 and other appropriate state laws and regulations. The fair value of the LGIP portfolio is calculated by a master custodian or by an independent pricing service under contract with the State Treasurer's Office.The reported fair value of the City's pool position in the State of Washington's LGIP is the same as the fair value of the pool shares(refer to note 4). 3.Receivables Taxes receivable consists of property taxes and related interest and penalties. Accrued interest receivable consists of amounts earned on investments,notes, and contracts.Grants receivable consist of amounts due from other governments for work performed on reimbursement-type grants. Customer accounts receivable/payable consist of amounts owed from/to private individuals or organizations for goods and services including amounts owed. Receivables have been reported net of estimated uncollectible accounts. Because property taxes and special assessments are considered liens on property,no estimated uncollectible amounts are established. Grants receivable are considered fully collectible and no estimated uncollectible amounts are established. 4.Amounts due to and from other funds,interfund loans and advances receivable During the course of operations the City of Spokane Valley has activity between funds for various purposes.Any residual balances outstanding at year end are reported as due from/to other funds.While these balances are reported in the fund financial statements,certain eliminations are made in the preparation of the government-wide financial statements. Balances between funds included in governmental-type activities(i.e.,the governmental and internal service funds) are eliminated so that only the net amount is included as internal balances in the governmental-type activities column. Similarly,balances between the funds included in business-type activities(i.e.,the proprietary funds) are eliminated so that only the net amount is included as internal balances in the business-type activities column (refer to note 9). Further,certain activity occurs during the year involving transfers of resources between funds. In the fund financial statements these amounts are reported at gross amounts of transfers in/out.While reported in fund fmancial statements, certain eliminations are made in the preparation of the government-wide fmancial statements. Transfers between the funds included in governmental-type activities are eliminated so that only the net amount is included as transfers in the governmental-type activities column. Similarly,balances between the funds included in business-type activities are eliminated so that only the net amount is included as transfers in the business-type activities column(refer to note 9). 5.Inventories and prepaid items Reported inventories in the governmental and proprietary funds consist of expendable supplies held for consumption and are valued at cost using first-in/first-out(FIFO)method. The cost of such inventories is recorded as expenditure/expenses at the time individual inventory items when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund statements.The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when it was purchased. 6. Capital assets Capital assets include: property,plant,equipment,infrastructure assets(e.g.roads,bridges, sidewalks, and similar items), and are reported in the applicable governmental or business-type columns in the government-wide financial statements. The City defines capital assets,including infrastructure assets as assets with an initial and individual cost of more than $5,000, and an estimated useful life in excess of four years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated assets are recorded at estimated fair market value at the date of 39 City of Spokane Valley Notes to Financial Statements NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued: donation.The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of proprietary/business-type activities is included as part of the capitalized value of the assets constructed and the amount of interest capitalized depends on the specific circumstances(refer to note 6).There were no interest expenses incurred during 2014 that were included as part of the cost of capital assets under construction. Land and construction in progress(CIP)are not depreciated. The other property,plant,equipment, and infrastructure of the primary government are depreciated using the straight line method over the following estimated service lives: Buildings and improvements 10 - 60 years Infrastructure 5 - 40 years Light/Heavy duty transportation equipment 5 - 10 years Other equipment 2 - 20 years Office and computer equipment 3 - 5 years 7.Unearned revenues and deferred outflows/inflows of resources The City of Spokane Valley currently has one source that qualifies for reporting as a deferred outflow/inflow of resources for fiscal year 2014 under this standard. This source consists of traffic mitigation fees and Washington State Office of Public Defense grant funds received in advance. 8. Compensated absences Compensated absences are absences for which employees will be paid,such as vacation and sick leave. Vacation pay, which may be accumulated up to 360 hours,is payable upon resignation,retirement,or death. All vacation pay is accrued when incurred in the government-wide,proprietary and fund financial statements. An additional amount has been accrued for the city's share of Medicare taxes and the Social Security substitute plan related to vacation accruals.A liability for these amounts is reported in the government fund statements only if they have matured for example,the result of an employee resignation and or retirement. 9. Other Accrued Liabilities These accounts consist primarily of accrued wages and employee benefits and deposits payable. Refer to note 13—Receivable and Payable Balances. 10.Long-Term Debt Refer to note 11—Long-Term Obligations and Leases. 11.Unearned Revenues The unearned revenues account is used to offset receivables established in the governmental fund financial statement for certain revenues that are measurable but not considered available to finance payment of current obligations, and, therefore,are not susceptible to accrual on the modified accrual basis.When the receivable amounts are collected in future periods,this liability account is reduced and corresponding revenue is recorded.Unearned revenues represented in this manner on the accompanying financial statements are: uncollected property taxes levied,uncollected road taxes levied, sales and use taxes,motor fuel taxes,hotel/motel taxes,and reimbursement-type grants received outside the period of availability. 12.Net position flow assumption (GASB Statement No.63) Sometimes the City of Spokane Valley will fund outlays for a particular purpose from both restricted(e.g.,grant proceeds or street construction and maintenance) and unrestricted resources. In order to calculate these amounts to report as restricted--net position and unrestricted--net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which these resources are considered to be applied and used.The City considers restricted—net position to have been depleted before unrestricted--net position is applied. 40 City of Spokane Valley Notes to Financial Statements NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued: 13.Fund balance flow assumptions Sometimes the City of Spokane Valley will fund outlays for a particular purpose from both restricted and unrestricted resources(the total committed, assigned and unassigned fund balance). In order to calculate the amounts to report as restricted,committed,assigned, and unassigned fund balance in the City's governmental fund financial statements, a flow assumption must be made about the order in which these resources are considered to be applied and used.When both restricted and unrestricted fund balances are available for use;the City depletes restricted fund balance first before using any of the components of unrestricted fund balance. Similarly,within unrestricted fund balance can be used for the same purpose,committed fund balance amounts are reduced first, followed by assigned fund balance, and then unassigned fund balance amounts are used when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be applied. 14.Fund balance policies Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of these financial resources for specific purposes.The City of Spokane Valley itself can establish limitations on the use of its financial resources through either a commitment(committed fund balance)or an assignment(assigned fund balance). Nonspendable fund balance includes items that cannot be spent. This includes activity that is not in a spendable form (inventories,prepaid amounts,long-term portion of loans/notes receivable,or property held for resale unless the proceeds are restricted,committed or assigned) and activity that is legally or contractually required to remain intact, such as a principal balance in a permanent fund. Restricted fund balances have constraints placed upon the use of the resources either by an external party or imposed by law through a constitutional provision or enabling legislation. Committed fund balance classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by a formal action of the City Council,the City's highest level of decision-making authority. The City council is the highest level of decision-making authority for the City that can,by adoption of an ordinance prior to the end of the fiscal year,commit fund balance. Once adopted,the limitation imposed by the ordinance remains in place until similar action is taken(adoption of another ordinance)to remove or revise the limitation. Assigned fund balance includes amounts that are constrained by the City's intent to be used for a specific purpose,but are neither restricted nor committed. The City Council can by resolution authorize the Finance Director to assign fund balance.Unlike commitments,assignments generally only exist temporarily.No formal or additional action is required by the City Council to remove an assignment.For governmental funds,other than the General Fund,this is the residual amount within the fund that is not restricted or committed. Unassigned fund balance is the residual amount of the General Fund not included in the four categories described above. Also, any deficit fund balances within the other governmental fund types are reported as unassigned. As discussed earlier,the City does not have a fund balance spending prioritization policy. Therefore,restricted resources are used first when expenditures are incurred for purposes for which either restricted or unrestricted(committed, assigned, and unassigned)amounts are available. Similarly,within unrestricted fund balance,committed amounts are reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. Minimum Fund Balance–The City has a policy of maintaining a minimum General Fund ending fund balance of at least fifty percent of recurring general fund expenditures,which represents approximately six months of General Fund operations. 41 City of Spokane Valley Notes to Financial Statements NOTE 2—RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS: A. Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net position The governmental fund statements include reconciliations between the fund statements and the government-wide statements. Differences that make reconciliations necessary include the two differing measurement focuses and basis of accounting, accrual and modified accrual between the statements. The governmental fund balance includes reconciliations between fund balance—total governmental funds and net position —governmental activities as reported in the government—wide statement of net position. One element of that reconciliation explains that "long-term liabilities, including bonds payable and accrued interest, are not due and payable in the current period and therefore are not reported in the funds."The details of the $(7,707,662)difference are as follows: Bonds payable $ (6,675,000) Premium on bond issuance (630,556) Compensated absences (402,106) Net adjustment to reduce fund balance-total governmental funds to arrive at net position-governmental activities $ (7,707,662) Another element of that reconciliation explains the "Internal service funds are used by management to charge the cost of certain activities, such as health insurance costs to the individual funds. The assets and liabilities of the internal service fund are included in governmental activities in the statement of net position."The details of the $1,404,002 difference are as follows. Net position of the internal service fund $ 1,542,079 Less: Governmental type Internal Service Capital Assets (138,077) Net adjustment to increase fund balance-total governmental funds $ 1,404,002 to arrive at net position governmental activities Also,another element of the reconciliation explains that capital assets used in governmental activities are not financial resources and the balance reflects the initial investment in capital assets therefore,"governmental funds do not report capital assets."The details of the $83,913,708 difference are as follows: Land $ 6,892,688 Construction in Progress 6,175,886 Total non-depreciable capital assets 13,068,574 Depreciable capital assets $ 310,218,879 Less: Accumulated depreciation-depreciable assets (240,074,953) Total depreciable capital assets,net of accumulated depreciation 70,143,926 Net adjustment to increase fund balance-total governmental funds to arrive at net position-governmental activities $ 83,212,500 42 City of Spokane Valley Notes to Financial Statements NOTE 2—RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS continued: Certain earned tax revenues were collected and other long-term assets will not be available until after the year end to pay for current expenditures; and therefore represent an acquisition of net position that applies to future period(s)and will not be recognized as an inflow of resources (revenue)until that time and accordingly,these items will be reported as unearned revenues in the governmental fund balance sheet.The details of the $3,321,536 reconciled difference presented as follows: Unearned revenue-property tax $ 321,108 Unearned revenue-sales&use tax 2,144,508 Unearned revenue-deposits&liens 855,920 Net adjustment to increase fund balance-total governmental $ 3,321,536 funds to arrive at net position governmental activities B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities The governmental fund statement of revenues,expenditures,and changes in fund balances includes this reconciliation between net changes in fund balances—total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that "governmental funds report capital outlays as expenditures.However,in the statement of activities,the cost of these assets is allocated over their estimated useful lives as depreciation expense.This is the amount by which capital outlays exceeded depreciation expenses in the current period."The details of this$1,324,783 difference are as follows: Capital outlay $ 7,202,193 Depreciation expense (5,877,410) Net adjustment to increase net changes in fund balances-total governmental funds to arrive at changes in net position of governmental activities $ 1,324,783 This is the amount by which Bond payable repayments in the amount of$985,694 exceeded bond proceeds. Net effect of disposals of Capital Assets($1,603,598)decreasing net position. Another element of the reconciliation states that"some long-term revenues in the statement of activities that do not provide current financial resources to governmental funds are not reported as revenues in the funds." The details of this $(137,842)difference are as follows: Unearned revenue-property taxes $ (86,942) Unearned revenue-sales&use taxes 71,403 Unearned revenue-excise taxes (2,582) Unearned revenue-other taxes (57,480) Unearned revenue-charges for services 448,968 Unearned revenue-capital grants&contributions (511,209) Net adjustment to decrease net changes in fund balances-total governmental funds to arrive at changes in net position of governmental activities S (137,842) 43 City of Spokane Valley Notes to Financial Statements NOTE 2—RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS continued: Another element of the reconciliation states that"some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds".The details of this$(791,672)difference are as follows: Compensated absences $ (52,241) Premium on LTGO'14 refunding bonds (625,127) Accrued LTGO'03 bond interest expense (114,304) Net adjustment to decrease net changes in fund balances-total governmental funds to arrive at changes in net position of govenmental activities $(791,672) Another element of the reconciliation states the "internal service funds are used by management to charge the cost of certain activities, such as self-insurance and equipment rental and replacement, to individual funds." The details of this $199,265 difference are as follows: Revenues: Interest and investment income,miscellaneous revenues $ 103,540 Total Revenues 103,540 (Less)expenses, depreciation governmental funds type and net transfers: 95,725 Net adjustment to increase net changes in fund balances-total governmental funds to arrive at changes in net position of governmental activities $ 199,265 NOTE 3—STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY: At December 31,2014,there have been no material violations of finance-related legal or contractual provisions. NOTE 4—DEPOSITS AND INVESTMENTS: A.Deposits and investments As of December 31,2014,the City of Spokane Valley had the following investments: Weighted Investment Type Average (amounts are in thousands) Fair Value Maturity(YRS) Commercial paper $ 5,067 0.63 State Treasurer's investment pool(LGIP) 43,283 0.45 Total fair value of investments: $ 48,350 - Portfolio weighted average maturity 0.47 Interest rate risk. In accordance with its investment policy,the City of Spokane Valley manages its exposure to declines in fair values by limiting the weighted average maturity(WAM)of its investment portfolio to less than six months. 44 City of Spokane Valley Notes to Financial Statements NOTE 4—DEPOSITS AND INVESTMENTS continued: Credit risk: As required by state law, all investments of the City's funds are obligations of the U.S. Government,U.S. agency issues,obligations of the State of Washington,general obligation of Washington State municipalities the State Treasurer's Local Government Investment Pool(LGIP Revised Code of Washington RCW 43.250),and certificates of deposit(CDs)with Washington State banks and savings and loan institutions.Also, State law limits these investments to the highest ratings issued by nationally recognized statistical rating organizations(NRSROs). It is the City of Spokane Valley's policy to limit its investments in these investment types to the highest ratings issued by NRSROs.As of December 31,2014,the City of Spokane Valley's investment in the State Treasurer's investment pool was rated AA+by Standard&Poor's. The City of Spokane Valley's investments in commercial paper was rated Al by Standard&Poor's. Concentration of credit risk: The City of Spokane Valley's investment policy does not allow for an investment in any one issuer that is in excess of the Federal Depository Insurance (FDIC)coverage and the Washington Public Deposit Protection Commission (PDPC)of the City's total investments. Custodial credit risk-deposits: In the case of deposits,this is the risk that in the event of a bank failure,the City's deposits may not be returned or recovered.The City of Spokane Valley maintains a deposit policy for custodial credit risk by limiting deposits and certificates of deposits to be covered by(FDIC)or through collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission(PDPC). The PDPC is a statutory authority established under Chapter 39.58 of the Revised Code of Washington and provides an additional level of security for The City of Spokane Valley's deposits.As of December 31,2014,the City of Spokane Valley's total bank balance of$5,232,154 was insured and covered by the FDIC and the Washington State PDPC pool and therefore,was not exposed to any custodial credit risk-deposits. These banks deposits were in a State authorized public depository and were within the State limit of the depositaries(bank's)net worth per RCW 39.58.010 and RCW 39.58.135. Custodial credit risk-investments: Investments in the State's LGIP are shown on the entity-wide Statement of Net Position at fair market value and comparable to a Rule 2a-7 money market fund regulated by The Securities and Exchange Commission (SEC, 17CFR.270.2a-7). The City's investments can be categorized to give an indication of risk assumed at year-end. Category 1 includes investments that are insured,registered,or held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments,which are held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty's trust department or agent,but not in the City's name. The City had no Category 1,2,or 3 type investments in their investment portfolio as of December 31,2014. NOTE 5—PROPERTY TAXES: The County Treasurer acts as an agent to collect property taxes levied in the county for all taxing authorities. The County Assessor is responsible for determining what the individual property taxes are,based upon the monies requested by the taxing districts and the assessed valuation within these districts. Taxes are levied annually on January 1st on property values assessed as of the prior year May 31St. Assessed values are established by the County Assessor at 100% of fair market value. A revaluation of all property is required every four years. Taxes are due in two equal installments on April 30th and October 31St. Tax liens are automatic at the point the taxes are levied. Property taxes levied for the current year are recorded as a receivable when levied,offset by unearned revenue. During the year,property tax revenues are recognized when cash is collected. At year-end,property tax revenues are recognized for collections to be distributed by the County Treasurer in January. No allowance for uncollectible taxes is established because delinquent taxes are considered fully collectible. Prior year tax levies were recorded using the same principal, and delinquent taxes are evaluated annually.For 2014,the City's regular levy was $11,077,144 based on the 2013 assessed value of$7,168,991,028. 45 City of Spokane Valley Notes to Financial Statements NOTE 5—PROPERTY TAXES continued: The tax rate for general City operations is limited by State law (RCW 84.52.043)to $3.60 per$1,000 of assessed valuation,deducting from there the levy of$1.50 by the Spokane County Fire Districts#1 and#8, and$.50 for Library Districts,which leaves the City with the authority to levy$1.60 for its own purposes. This amount may be reduced for any of the following reasons: (1) The Washington State Constitution limits the total regular property taxes to one percent of assessed valuation or$10 per$1,000 of value. If the taxes of all districts exceed this amount,each is proportionately reduced until the total is at or below the one-percent limit. (2) Initiative 747 passed by the voters in November of 2001 limits the amount by which a taxing jurisdiction can increase the amount of its regular property tax levy to the lesser of the Implicit Price Deflator(IPD)or one percent,plus adjustments for new construction and annexations. Tax increases higher than one percent must be approved by the voters at an election held according to(RCW 84.55.050.) A simple majority vote is required. (3) The City may voluntarily levy taxes below the legal limit. NOTE 6—CAPITAL ASSETS AND DEPRECIATION: Donated capital assets received from Spokane County at the time of incorporation were recorded at cost and the accumulated depreciation at the time of transfer.The following schedule details capital assets donated and transferred during the year ended December 31,2003: Balance after Historical Accumulated Depreciation Cost Depreciation Cost Infrastructure: Roadways $ 187,732,531 $ 127,418,027 $ 60,314,504 Signs,signals,beacons 9,056,000 4,528,000 4,528,000 Crosswalks 130,084 13,008 117,076 Bridges 5,633,979 2,808,112 2,825,867 Total infrastructure 202,552,594 134,767,147 67,785,447 Parks: Land 1,548,655 - 1,548,655 Buildings 898,729 609,824 288,905 Improvements other buildings 2,123,571 1,059,298 1,064,273 Machinery and equipment 3,337 3,003 334 Total parks 4,574,292 1,672,125 2,902,167 Total County assets donated 5 207,126,886 5 136,439,272 5 70,687,614 Governmental-type Capital asset activity for the year ended December 31,2014,is summarized as follows: Beginning Ending Balance Governmental-type activities Balance 1/1/2014 Additions Reductions 12/31/2014 Land(non depreciable) $ 7,044,498 $ 687,475 $ (839,285) $ 6,892,688 Construction in progress 5,352,394 2,520,665 (1,697,173) 6,175,886 Total non-depreciable assets 12,396,892 3,208,140 (2,536,458) 13,068,574 Buildings 12,876,766 7,090 - 12,883,856 Leasehold improvements 130,021 10,031 - 140,052 Improvements other than buildings 9,784,331 158,809 - 9,943,140 Infrastructure 279,627,461 4,594,830 - 284,222,291 Machinery and equipment 2,770,605 271,135 (12,200) 3,029,540 Total depreciable assets 305,189,184 5,041,895 (12,200) 310,218,879 Total capital assets $ 317,586,076 $ 8,250,035 $ (2,548,658) $ 323,287,453 46 City of Spokane Valley Notes to Financial Statements NOTE 6—CAPITAL ASSETS AND DEPRECIATION continued: Beginning Ending Balance Balance Less accumulated depreciation for: 1/1/2014 Additions Reductions 12/31/2014 Buildings $ 3,141,588 $ 321,887 $ - $ 3,463,475 Leasehold improvements 130,021 334 - 130,355 Improvements other than buildings 4,023,226 605,056 - 4,628,282 Infrastructure 224,516,961 4,813,143 - 229,330,104 Machinery and equipment 2,385,747 149,190 (12,200) 2,522,737 Total accumulated depreciation $ 234,197,543 $ 5,889,610 $ (12,200) $ 240,074,953 Capital assets,net of accumulated depreciation $ 83,388,533 $ 2,360,425 $ (2,536,458) $ 83,212,500 Business-type Capital asset activity for the year ended December 31,2014,is summarized as follows: Balance Balance Business-type activities; 1/01/2014 Additions Reductions 12/31/2014 Construction in progress $ 145,818 $ 70,548 $ (114,504) $ 101,862 Total non-depreciable assets 145,818 70,548 (114,504) 101,862 Buildings and structures 375,791 7,090 - 382,881 Infrastructure 3,980,571 1,492,032 - 5,472,603 Machinery and equipment 183,649 15,546 - 199,195 Total depreciable assets 4,540,011 1,514,668 - 6,054,679 Total capital assets $ 4,685,829 $ 1,585,216 $ (114,504) $ 6,156,541 (Less)accumulated depreciation for: Buildings and structures $ 34,447 $ 12,787 $ - $ 47,234 Infrastructure 341,160 223,000 - 564,160 Machinery and equipment 133,840 29,795 - 163,635 Total accumulated depreciation 509,447 265,582 - 775,029 Capital assets,net of accumulated depreciation $ 4,176,382 $ 1,319,634 $ (114,504) $ 5,381,512 47 City of Spokane Valley Notes to Financial Statements NOTE 6-CAPITAL ASSETS AND DEPRECIATION continued: Depreciation expense was charged to current functions of the primary government for 2014 as follows(includes Internal Service Funds Governmental type): Governmental Activities: General Government $ 82,498 Public Safety 54,339 Physical Environment 1,238,551 Transportation 3,638,158 Economic Environment 20,726 Culture and Recreation 843,138 Total governmental activities current year depreciation expense $ 5,877,410 Business-type activity: StormWater $ 177,089 Aquifer Protection Area 88,493 Total business-type activities current year depreciation expense S 265,582 Construction commitments The City of Spokane Valley was involved in many construction projects as of December 31,2014. The projects include various street and park construction projects with a total of$17,713,877 of contracts in place. At year end the City's commitments with contractors are as follows: Remaining Construction Commitments Original Spent to Date Commitment at Commitment 12/31/14 Appleway Trail $ 1,176,594 $ 791,462 $ 385,132 Argonne Rd&Sprague Street Preservation 1,248,319 1,172,592 75,726 Argonne Road Corridor Upgrade 296,999 283,502 13,497 Broadway,Havana to Fancher Storm Drain Retrofit 4,460 2,524 1,936 Browns Park Volleyball Courts 15,900 7,865 8,035 Discovery Playground Equipment 5,425 5,202 223 EdgecliffPicnic Shelter Replacement 10,450 7,297 3,153 Mansfield Avenue Connection 87,294 77,514 9,780 Mission Avenue-Flora to Barker 57,915 29,300 28,615 Pines Road&Grace Avenue Intersectoin Safety 45,273 29,367 15,906 Sidewalk Infill 212,519 195,643 16,876 Sprague Ave Street Preservation 18,442 16,524 1,918 Stormwater-Porous Asphalt Projects 152,807 15,268 137,540 Sullivan Road Preservation 8,820 4,540 4,280 Sullivan Road West Bridge Replacement 14,372,660 2,189,737 12,182,924 Total Construction Commitments $ 17,713,877 $ 4,828,337 $ 12,885,540 The various street,bridge, and parks construction projects are being funded by state and local grants, as well as,existing resources in various City Funds. 48 City of Spokane Valley Notes to Financial Statements NOTE 7—PENSION PLANS: Substantially all City of Spokane Valley's full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems,under cost- sharing multiple-employer public employee defined benefit retirement plans. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington,issues a publicly available comprehensive annual financial report(CAFR)that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia,WA 98504-8380; or it may be downloaded from the DRS website at www.drs.wa.gov. The following disclosures are made pursuant to GASB Statements 27,Accounting for Pensions by State and Local Government Employers and 50,Pension Disclosures, an Amendment of GASB Statements 25 and 27. Public Employees' Retirement System (PERS)Plans 1, 2, and 3 Plan Description The Legislature established PERS in 1947. Membership in the system includes: elected officials; state employees; employees of the Supreme,Appeals, and Superior courts; employees of legislative committees; employees of district and municipal courts; and employees of local governments. Membership also includes higher education employees not participating in higher education retirement programs. Approximately 49 percent of PERS salaries are accounted for by state employment. PERS retirement benefit provisions are established in Chapters 41.34 and 41.40 RCW and may be amended only by the State Legislature. PERS is a cost-sharing multiple-employer retirement system comprised of three separate plans for membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defmed benefit plan with a defmed contribution component. PERS members who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or after October 1, 1977, and by either,February 28,2002,for state and higher education employees,or August 31,2002, for local government employees,are Plan 2 members unless they exercised an option to transfer their membership to Plan 3. PERS members joining the system on or after March 1,2002,for state and higher education employees,or September 1,2002, for local government employees have the irrevocable option of choosing membership in either PERS Plan 2 or Plan 3. The option must be exercised within 90 days of employment. Employees who fail to choose within 90 days default to Plan 3. PERS is comprised of and reported as three separate plans for accounting purposes: Plan 1,Plan 2/3, and Plan 3. Plan 1 accounts for the defined benefits of Plan 1 members. Plan 2/3 accounts for the defined benefits of Plan 2 members,and the defined benefit portion of benefits for Plan 3 members. Plan 3 accounts for the defined contribution portion of benefits for Plan 3 members. Although members can only be a member of either Plan 2 or Plan 3,the defined benefit portions of Plan 2 and Plan 3 are accounted for in the same pension trust fund. All assets of this Plan 2/3 may legally be used to pay the defined benefits of any of the Plan 2 or Plan 3 members or beneficiaries,as defined by the terms of the plan. Therefore,Plan 2/3 is considered to be a single plan for accounting purposes. PERS Plan 1 and Plan 2 retirement benefits are financed from a combination of investment earnings and employer and employee contributions. Employee contributions to the PERS Plan 1 and Plan 2 defined benefit plans accrue interest at a rate specified by the Director of DRS. During DRS' Fiscal Year 2013,the rate was five and one-half percent compounded quarterly. Members in PERS Plan 1 and Plan 2 can elect to withdraw total employee contributions and interest thereon,in lieu of any retirement benefit,upon separation from PERS-covered employment. PERS Plan 1 members are vested after the completion of five years of eligible service. PERS Plan 1 members are eligible for retirement from active status at any age with at least 30 years of service,at age 55 with 25 years of service,or at age 60 with at least 5 years of service. Plan 1 members retiring from inactive status prior to the age of 65 may receive actuarially reduced benefits. 49 City of Spokane Valley Notes to Financial Statements NOTE 7—PENSION PLANS continued: The monthly benefit is 2 percent of the average final compensation(AFC)per year of service,but the benefit may not exceed 60 percent of the AFC. The AFC is the monthly average of the 24 consecutive highest-paid service credit months. PERS Plan 1 retirement benefits are actuarially reduced to reflect the choice,if made,of a survivor option. Plan 1 members may elect to receive an optional COLA that provides an automatic annual adjustment based on the Consumer Price Index. The adjustment is capped at 3 percent annually. To offset the cost of this annual adjustment,the benefit is reduced. PERS Plan 1 provides duty and non-duty disability benefits. Duty disability retirement benefits for disablement prior to the age of 60 consist of a temporary life annuity. The benefit amount is $350 a month,or two-thirds of the monthly AFC, whichever is less. The benefit is reduced by any workers' compensation benefit and is payable as long as the member remains disabled or until the member attains the age of 60, at which time the benefit is converted to the member's service retirement amount. A member with five years of covered employment is eligible for non-duty disability retirement. Prior to the age of 55,the benefit amount is 2 percent of the AFC for each year of service reduced by 2 percent for each year that the member's age is less than 55. The total benefit is limited to 60 percent of the AFC and is actuarially reduced to reflect the choice of a survivor option. Plan 1 members may elect to receive an optional COLA amount(based on the Consumer Price Index), capped at 3 percent annually. To offset the cost of this annual adjustment,the benefit is reduced. PERS Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members are eligible for normal retirement at the age of 65 with five years of service. The monthly benefit is 2 percent of the AFC per year of service. The AFC is the monthly average of the 60 consecutive highest-paid service months. There is no cap on years of service credit; and a cost-of-living allowance is granted(based on the Consumer Price Index),capped at 3 percent annually. PERS Plan 2 members who have at least 20 years of service credit,and are 55 years of age or older,are eligible for early retirement with a reduced benefit. The benefit is reduced by an early retirement factor(ERF)that varies according to age, for each year before age 65. PERS Plan 2 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions,if hired prior to May 1,2013: • With a benefit that is reduced by 3 percent for each year before age 65;or • With a benefit that has a smaller(or no)reduction(depending on age)that imposes stricter return-to-work rules. PERS Plan 2 members hired on or after May 1,2013 have the option to retire early by accepting a reduction of 5 percent for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30 years of service. PERS Plan 2 retirement benefits are actuarially reduced to reflect the choice,if made,of a survivor option. PERS Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component and member contributions finance a defined contribution component. As established by Chapter 41.34 RCW,employee contribution rates to the defined contribution component range from 5 percent to 15 percent of salaries,based on member choice. Members who do not choose a contribution rate default to a 5 percent rate. There are currently no requirements for employer contributions to the defined contribution component of PERS Plan 3. 50 City of Spokane Valley Notes to Financial Statements NOTE 7—PENSION PLANS continued: PERS Plan 3 defined contribution retirement benefits are dependent upon the results of investment activities. Members may elect to self-direct the investment of their contributions. Any expenses incurred in conjunction with self-directed investments are paid by members. Absent a member's self-direction,PERS Plan 3 contributions are invested in the Retirement Strategy Fund that assumes the member will retire at age 65. For DRS' Fiscal Year 2013,PERS Plan 3 employee contributions were $99.0 million, and plan refunds paid out were $69.4 million. The defined benefit portion of PERS Plan 3 provides members a monthly benefit that is 1 percent of the AFC per year of service. The AFC is the monthly average of the 60 consecutive highest-paid service months. There is no cap on years of service credit,and Plan 3 provides the same cost-of-living allowance as Plan 2. Effective June 7,2006,PERS Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service,if twelve months of that service are earned after age 44; or after five service credit years earned in PERS Plan 2 by June 1,2003. Plan 3 members are immediately vested in the defined contribution portion of their plan. Vested Plan 3 members are eligible for normal retirement at age 65,or they may retire early with the following conditions and benefits: • If they have at least ten service credit years and are 55 years old,the benefit is reduced by an ERF that varies with age,for each year before age 65. • If they have 30 service credit years and are at least 55 years old, and were hired before May 1,2013,they have the choice of a benefit that is reduced by 3 percent for each year before age 65;or a benefit with a smaller(or no) reduction factor(depending on age)that imposes stricter return-to-work rules. • If they have 30 service credit years, are at least 55 years old, and were hired after May 1,2013,they have the option to retire early by accepting a reduction of 5 percent for each year before age 65. PERS Plan 3 benefits are actuarially reduced to reflect the choice,if made,of a survivor option. PERS Plan 2 and Plan 3 provide disability benefits. There is no minimum amount of service credit required for eligibility. The Plan 2 monthly benefit amount is 2 percent of the AFC per year of service. For Plan 3,the monthly benefit amount is 1 percent of the AFC per year of service.These disability benefit amounts are actuarially reduced for each year that the member's age is less than 65, and to reflect the choice of a survivor option. There is no cap on years of service credit, and a cost-of-living allowance is granted(based on the Consumer Price Index)capped at 3 percent annually. PERS members meeting specific eligibility requirements have options available to enhance their retirement benefits. Some of these options are available to their survivors. A one-time duty-related death benefit is provided to the beneficiary or the estate of a PERS member who dies as a result of injuries sustained in the course of employment,or if the death resulted from an occupational disease or infection that arose naturally and proximately out of the member's covered employment,if found eligible by the Department of Labor and Industries. There are 1,176 participating employers in PERS. Membership in PERS consisted of the following as of the latest actuarial valuation date for the plans of June 30,2013,as reported by The Washington State Department of Retirement Systems(DRS): 51 City of Spokane Valley Notes to Financial Statements NOTE 7—PENSION PLANS continued: Retirees and Beneficiaries receiving benefits 85,328 Terminated Plan Members entitled to but,not yet receiving benefits 31,047 Active Plan Members Vested&Nonvested 150,706 Terminated Plan Members Nonvested 101,191 Total 368,272 Funding Policy Each biennium,the state Pension Funding Council adopts PERS Plan 1 employer contribution rates,PERS Plan 2 employer and employee contribution rates,and PERS Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are established by statute at 6 percent for state agencies and local government unit employees, and at 7.5 percent for state government elected officials. The employer and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. Under PERS Plan 3,employer contributions finance the defined benefit portion of the plan and member contributions finance the defined contribution portion. The Plan 3 employee contribution rates range from 5 percent to 15 percent. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.40 and 41.45 RCW. The required contribution rates expressed as a percentage of current-year covered payroll: as of December 31,2014, are as follows: PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer * 9.21%** 9.21%** 9.21%*** Employee 6.00%**** 4.92%**** ***** * The employer rates include the employer administrative expense fee currently set at 0.18%. ** The employer rate for state elected officials is 13.73% for Plan 1 and 9.21% for Plans 2 and 3. *** Plan 3 defined benefit portion only. **** The employee rate for state elected officials is 7.50% for Plan 1 and 4.92% for Plan 2. ***** Variable from 5.0%minimum to 15.0%maximum based on rate selected by PERS 3 member. Both the City of Spokane Valley and the employees made the required contributions. The City of Spokane Valley's required contributions for the years ending December 31,2014 were as follows: PERS Plan 1 PERS Plan 2 PERS Plan 3 2014 Employer contributions $ - $ 190,778 $ 149,244 2013 Employer contributions 1,803 299,980 162,679 2012 Employer contributions 1,803 251,140 128,105 52 City of Spokane Valley Notes to Financial Statements NOTE 8—RISK MANAGEMENT: The City of Spokane Valley is exposed to financial loss resulting from City-caused damage to property or persons,bodily injuries or illness of employees,and unemployment compensation. The City is insured and a member of the Washington Cities Insurance Authority(WCIA) for general liability and property damage coverage. The City uses the Washington State Department of Labor and Industries Insurance Services for coverage to pay for medical care for job-related injuries and illnesses,and wage replacement when the injury or illness is serious enough to miss work. The City is self-insured for unemployment compensation benefits.The Risk Management Fund is used to account for,and finance the liability and Unemployment insurance costs. Departments of the City make payments through interfund assessments to the fund on estimates of the amounts needed to pay prior and current year claims. Utilizing Chapter 48.62 RCW(self-insurance regulation) and Chapter 39.34 RCW(Interlocal Cooperation Act),nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance,jointly self-insuring, and/or jointly contracting for risk management services. WCIA has a total of 176 Members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis,without deductibles. Coverage includes general,automobile,police, public officials' errors or omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self- insured layer, and$16 million per occurrence in the re-insured excess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate sublimits in the excess layers. The Board of Directors determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage,fidelity,inland marine, and boiler and machinery are purchased on a group basis.Various deductibles apply by type of coverage. Property insurance and auto physical damage are self-funded from the members' deductible to $750,000,for all perils other than flood and earthquake, and insured above that amount by the purchase of insurance. In-house services include risk management consultation,loss control field services,claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members,who make annual assessments on a prospectively rated basis,as determined by an outside,independent actuary. The assessment covers loss,loss adjustment, and administrative expenses. As outlined in the interlocal,WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee,using investment brokers,produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A Board of Directors governs WCIA,which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. The City of Spokane Valley is self-insured on a reimbursement basis for unemployment compensation. The City incurred $8,531 in claims for unemployment compensation in 2014 and did not have any settlements that exceeded insurance coverage in the last three prior years. 53 City of Spokane Valley Notes to Financial Statements NOTE 9—INTERFUND SERVICES ACTIVITY AND TRANSFERS: Interfund services activity Sometimes during the course of operations, and as a part of the City's regular programmatic activity,one fund will sell goods,have work performed or services provided to another fund in return for equal or almost equal value.As a result of such exchanges,an interfund services provided and used applies to any residual balances outstanding at year end and the City reports this type of activity as due from/to other funds.Due to other fund and due from other fund balances at December 31,2014,were: Due from Due to other funds other funds General fund $ - $ 7,500,000 Street fund 55,000 - Capital reserve fund 7,500,000 - Nonmajor governmental funds 30,000 85,000 Total governmental funds 7,585,000 7,585,000 Stormwater mangement fund 60,000 - Aquifer protection area fund - 60,000 Total proprietary funds 60,000 60,000 Total government-wide $ 7,645,000 $ 7,645,000 All remaining interfund balances resulted from the time lag between year end and beginning fiscal year dates that(1)interfund goods and services are provided or reimbursable expenditures occur,(2)from actual fiscal year end transactions recorded in the accounting system,(3)to payments between funds are made,and(4)temporarily eliminate fiscal year end(negative credit balances)in the City's pooled cash positions. Interfund transfers are the flow and reassignment of resources between funds without the exchange of equal or almost equal value between the funds,typically referred to as a nonexchange transaction or nonreciprocal interfund activity. The City(1)transfers revenues from the fund that statutes or budget requires to collect them to the fund that the statute or budget requires to expend them, (2) transfers restricted resources for the purpose of debt service from the funds collecting the receipts to the debt service fund for debt service payments,and(3) transfers unrestricted revenues collected in the general and street funds to finance various programs accounted for in other funds in accordance with budgetary authority. Interfund transfer activity for 2014 is as follows: Transfers - in Transfers - (out) General fund $ 83,100 $ 3,959,628 Street fund 23 352,586 Trails 8c paths fund - 50,000 Hotel/Motel fund - 30,000 Solid waste fund 60,000 - Civic facilities replacement fund - 616,284 Debt service fund 179,118 - Capital projects fund - 332,638 Special capital projects fund - 775,790 Street capital projects fund 1,262,713 - Parks capital projects fund 1,203,731 - Street capital improvement fund 2,156,051 - Capital reserve fund 2,443,507 1,608,766 Stormwater management fund - 209,368 Aquifer protection are fund 170,125 - Internal service funds 376,692 - Total government-wide $ 7,935,060 $ 7,935,060 54 City of Spokane Valley Notes to Financial Statements NOTE 10—SHORT-TERM DEBT: As of December 31,2014,the City incurred no short-term debt. NOTE 11—LONG-TERM OBLIGATIONS AND LEASES: General Obligation Bonds The City of Spokane Valley issued general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for governmental-type activities.These General obligation bonds are direct obligations and pledge the full faith and credit of the government.General obligation bonds are either created by 315th majority vote of the people and,therefore,financed by a special tax levy; or created by ordinance, adopted by the City Council, and normally financed from general revenues(i.e.,councilmanic bonds). In 2003,the City issued $9,430,000 of councilmanic bonds to finance construction of the CenterPlace Community Center and for various street construction projects. The City expects to receive intergovernmental payments from the Spokane Public Facilities District pursuant to an inter-local agreement dated July 2003,for$7 million of the bonds. Refunded Bonds On August 27,2014,The City of Spokane Valley issued$7,035,000 of Limited Tax General Obligation 2014 Refunding Bonds to provide resources to purchase U.S. Government and State and Local Government Series securities that were placed in an irrevocable trust for the purpose of generating resources for all future debt service payments on the old $7,435,000 of refunded debt.As a result,the refunded bonds are now considered defeased,retired,and the liability has been removed subsequently from the City of Spokane Valley's governmental activities fmancial statements of net position. This refunding was undertaken to reduce total debt service payments over the life of the bonds and resulted in an economic gain of: $1,283,730. General obligation refunding bonds,2014 currently outstanding as December 31,2014, are as follows: Debt Name of Issuance Purpose Interest Rate Outstanding LTGO'14 Refunding Bonds Governmental Activities 2.00%-4.00% $6,675,000 The annual debt service requirements to maturity for general obligation refunding bonds,2014 are as follows: Governmental - Type Activities Total Principal Interest Requirements 2015 300,000 238,100 538,100 2016 315,000 232,100 547,100 2017 320,000 222,650 542,650 2018 365,000 213,050 578,050 2019 395,000 202,100 597,100 2020-2024 2,370,000 796,000 3,166,000 2025-2029 1,910,000 343,400 2,253,400 2030-2033 700,000 65,400 765,400 Totals $ 6,675,000 $ 2,312,800 $ 8,987,800 Long-term debt on the Statement of Net Position is presented net of any premium/discount incurred at the time of issuance. The 2014 LTGO'14 Refunding Bonds were sold at a premium of$625,694 and were reported at the net amount of$669,663 including the underwriters discount expense. The premium will be amortized over the life of the bonds and the outstanding liability balance as of December 31,2014,is$630,556. 55 City of Spokane Valley Notes to Financial Statements NOTE 11—LONG-TERM OBLIGATIONS AND LEASES continued: Changes in Long-Term Liabilities During the year ended December 31,2014,the following changes occurred in long-term liabilities: Amounts Balance Balance Due within Governmental-type activities 1/1/2014 Additions Reductions 12/31/2014 One Year Bonds and notes payable: General obligation bonds LTGO'14 $ 7,435,000 $ 225,694 $ (985,694) $ 6,675,000 $ 300,000 Premium on LTGO'14 bonds 116,818 669,663 (155,925) 630,556 39,106 Other liabilities: Compensated absences 349,865 52,241 - 402,106 52,241 Governmental activities long-term liabilities $ 7,901,683 $ 947,598 $ (1,141,619) $ 7,707,662 $ 391,347 Long-term liabilities for business-type activities consist of compensated absences in the Stormwater Management Fund. The balance of these compensated absences was $26,688 as of December 31,2014. Legal Debt Margin RCW 39.36.020 provides cities with three segments of debt capacity,each equal to two and one-half percent of the city's assessed valuation,for a total debt capacity of seven and one-half percent. The 2013 assessed valuation of the City for the Levy year of 2014,for purposes of determining the legal debt margin is $7,168,991,028. Under State of Washington statutes general obligation indebtedness pursuant to a vote of the electorate is limited to 2.5% of actual value of taxable property located within the City. Indebtedness without a vote of the people is limited to 1.5% of actual value subject to the limitation that total general purpose indebtedness may not exceed 2.5%of total valuation. There is a 2.5%limitation each for utility purposes and open space and park facilities purposes.The remaining voted and non-voted GO debt capacities for General purposes of the City at December 31,2014,are as follows: Amount General Purposes Voted and Non-voted Debt-2.5%(1) $ 172,147,670 Utility Voted Debt-2.5% 179,224,776 Open Space and Park Facilities Voted Debt-2.5% 179,224,776 Total Remaining Debt Capacity $ 530,597,222 (1)Includes:$100,457,759 General purpose indebtedness without a vote. Leases Operating Leases—The City of Spokane Valley leases buildings and other equipment under noncancelable operating lease agreements. Operating leases do not give rise to property rights or lease debt obligations, and therefore the results of these agreements are not reflected in the General Long-term Obligations of government activities.Total costs for such leases were $465,626 for the fiscal year ending December 31,2014.The future minimum lease payments for these leases are presented as follows(table follows): 56 City of Spokane Valley Notes to Financial Statements NOTE 11—LONG-TERM OBLIGATIONS AND LEASES continued: Year ending Dec.31 Amount 2015 $ 460,285 2016 463,667 2017 120,502 2018 - Total minimum future lease payments $ 1,044,454 Under the City's building lease for city hall,there is an option for the City to terminate the lease at the end of the 36th month,or March 2016. To exercise this option,the City would have to pay a fee of$34,680 and provide six months prior written notice. If the City exercises the early termination option,future minimum lease payments in 2016 and 2017 would be reduced by$434,661. NOTE 12—CONTINGENCIES AND LITIGATION: In the normal course of governmental operations the City has claims filed against it for various losses related to tort actions for such things as wrongful acts,injuries,or damages for which a civil action can be brought, and other routine legal proceedings. At any given point in time,there is a recurring volume of tort and other claims for compensation and damages against the City,which could impact expenditures. The City's Risk Management fund provides for these claims, and insurance is available to pay a portion of damages for certain types of claims. The collective impact of these claims is not likely to have a material impact on the City's financial position. The City participates in a number of federal-and-state assisted programs. These grants are subject to audit by the granting agencies and or their representatives. Such audits could result in requests for reimbursement to grantor agencies for expenditures disallowed under the terms of the grants. City management does not believe that such disallowances,if any, will be material. During fiscal year 2003,the City of Spokane Valley acquired 31 acres of land from Spokane County to be used for a city park. After acquisition,it was determined that a concrete company on the adjacent parcel had, at some point in the past, contaminated the property the City was acquiring. The Department of Ecology(DOE)ordered an analysis of the environmental impact and potential options. The concrete company is highly likely,under federal environmental law,to be found solely responsible for cleaning up all of the contaminants. Although no formal agreement has been signed by the parties to accomplish this outcome,it is the likely result. The City does not currently anticipate incurring any significant expense through the remainder of this process,which is anticipated to be concluded by the end of 2016. In September 2012 the City entered into an interlocal agreement with the Spokane County Library District(Library) for the purpose of acquiring an 8.4 acre parcel of land that would in the future be developed as a joint City park and library. In the agreement the Library agreed to purchase between 2.5 and 3.5 acres of this parcel at a cost that was proportional to the amount of land they held relative to the purchase price. The agreement further provided that the City hold title to the entire 8.4 acre parcel until a joint site development plan was completed and the specific land configuration could be determined for each party. In October 2012 the City then purchased the 8.4 acre parcel of land at a cost of approximately$2.5 million and the Library gave the City$744,047 for its proportional share of the 2.5 acres allocated to their estimated needs. At that time the City recorded the entire $2.5 million purchase as land owned by the City and the $744,047 received from the Library as deferred revenue with the understanding that when a joint site development plan was complete the City would recognize the $744,047 received from the Library as revenue,transfer title for this land to the Library,and remove $744,047 of land from its capital assets. 57 City of Spokane Valley Notes to Financial Statements NOTE 12—CONTINGENCIES AND LITIGATION continued: In January 2014 the joint site development plan was complete and it was determined that the Library required an additional 0.32 acres of land,bringing their share of the original 8.4 acre purchase up to 2.82 acres. The Library paid the City an additional $95,238 for the proportional share of the .32 acres relative to the purchase price of the entire 8.4 acre purchase. This brought the Library's share of the land purchase up to a total of 2.82 acres at a cost of$839,285. In January 2014 the City declared this 2.82 acres surplus to its needs,transferred title for this land to the Spokane County Library District,recognized$839,285 as revenue and removed the land from capital assets. The interlocal agreement also provided that if the Library had not within five years following the acquisition of the land(in October 2017), secured voter approval of a construction bond for the library building and ancillary improvements,that the land would be reconveyed back to the City at the same price paid by the Library($839,285). NOTE 13—RECEIVABLE AND PAYABLE BALANCES: A)Receivables: Receivables at December 31,2014,were as follows: Governmental Type Accounts Taxes Grants Due from Prepaids&other Total Activities receivable(net) receivable receivable other funds receivables receivables General fund $ 1,231,030 $ 4,124,956 $ - $ - $ 98,263 5,454,249 Street fund 31,564 503,966 - 55,000 625 591,155 Civic buildings capital projects fund - - - - - - Capital reserve fund - - - 7,500,000 - 7,500,000 Other Governmental funds 1,322 177,990 751,955 30,000 50 961,317 Reconciliation of balances in the fund financial statements to government-wide financial statements - - - - 90 90 Total Governmental type activities $ 1,263,916 $ 4,806,912 $ 751,955 $ 7,585,000 $ 99,028 $ 14,506,811 Business Type Accounts Taxes Grants Due from Prepaids&other Total Activities receivable(net) receivable receivable other funds receivables receivables Stormwater management fund $ 151 $ 60,017 $ 233,825 $ 60,000 $ 121 $ 354,114 Aquifer protection area fund - - 626,263 - - 626,263 Total Business type activities $ 151 $ 60,017 $ 860,088 $ 60,000 $ 121 $ 980,377 58 City of Spokane Valley Notes to Financial Statements NOTE 13-RECEIVABLE AND PAYABLE BALANCES continued: B)Payables: Payables at December 31,2014,were as follows: Governmental Type Accounts Accrued wages& Due to Deposits Other Unearned Deferred Activities payables benefits payable other funds payable liabilities revenues inflows Total General fund $ 590,900 $ 395,687 $ 7,500,000 $ 852,531 $ - $ 2,811,665 $ 20,000 $ 12,170,783 Street fund 353,602 45,166 - 61,918 - 152,666 - 613,352 Capital reserve fund - - - - - - - - Other Governmental funds 916,892 34,133 85,000 135,484 - 296,362 40,843 1,508,714 Reconciliation of balances in the fund financial statements to government-wide financial statements 709 - - - 29,819 (3,260,693) (60,843) (3,291,008) Total Governmental type activities $ 1,862,103 $ 474,986 $ 7,585,000 $ 1,049,933 $ 29,819 $ - $ - $ 11,001,841 Business Type Accounts Accrued wages& Due to Deposits Other Unearned Deferred Activities payables benefits payable other funds payable liabilities revenues inflows Total Stormwater management fund $ 51,229 $ 27,780 $ - $ 32,100 $ 79,188 $ 220,340 $ - $ 410,637 Aquifer protectiona area fund 11,313 2,227 60,000 - 32,813 643,944 - 750,297 Total Business type activities $ 62,542 $ 30,007 $ 60,000 $ 32,100 $ 112,001 $ 864,284 $ - $ 1,160,934 Estimates related to receivables-The City contracts with Spokane County for various services,including animal control,district court,emergency management,detention services,pretrial,prosecution,public defense, and law enforcement. Payments made on these contracts throughout the year are based upon costs incurred in prior year and reconciled to actual costs incurred during the current year through a settle and adjust process. Because,the reconciliation of the underlying supporting data between City and County staff is a time consuming process, an estimate is made at year end for the settle and adjust amounts expected for each services contract.The estimate is then recorded as either a liability or receivable,depending on whether the City estimates that additional funds will be owed to the County or that the City will receive a refund for overpayment, along with a corresponding increase or decrease in expenditure. Liability and receivable balances related to settle and adjust estimates as of December 31,2014,are: (Liability) or New Amount (Liability) or Receivable Balance Estimates Settled in Receivable Balance Contract Year 1/1/2014 Made FY'2014 12/31/2014 2011 $ (19,763) $ - $ - $ (19,763) 2012 (646,364) - 625,516 (20,848) 2013 (577,088) - (24,739) (601,827) 2014 - 764,390 764,390 59 City of Spokane Valley Notes to Financial Statements NOTE 13—RECEIVABLE AND PAYABLE BALANCES continued: For 2014,the City estimated that it would receive a net refund from the County on the contracted services for a total recorded receivable of$764,390.However,$449,448 of this amount was deferred and no adjustment to expense was recorded due to several of the estimates having a greater amount of uncertainty. Subsequent to the year end,the emergency management contract for 2014 was settled and the County determined that the City had overpaid for this contract in the amount of$296,564,which was$20,309 less than the City's recorded estimate of$316,873 for this contract.Although the City did know this portion of the total estimate,the County has not settled the remainder of the total estimate for 2014 at the time the financial statements were prepared.Therefore,the City elected to report the estimate for 2014 of$764,390 and will make any necessary adjustments in their financial statements in 2015 based on the amount settled. NOTE 14—OTHER POSTEMPLOYMENT BENEFITS(OPEB): Association of Washington Cities Employee Benefit Trust("Trust") Trust Description: In addition to the Public Employee's Pension Plans described in Note 7,the City of Spokane Valley is a participating Employer in the Association of Washington Cities Employee Benefit Trust Health Care Program (AWCEBTHCP), a cost-sharing multiple employer welfare benefit plan administered by the Association of Washington Cities(AWC). The Trust provides medical benefits to certain eligible retired employees of Participating Employers and their eligible family members.Under Article VII of the Trust document,the Trustees have the authority and power to amend the amount and nature of the medical and other benefits provided by the Trust.The Trust issues a publicly available financial report that includes financial statements and required supplementary information for the Trust.That report,along with a copy of the Trust document,may be obtained by writing to: The Association of Washington Cities Employee Benefit Trust at 1076 Franklin Street SE,Olympia,WA 98501-1346 or by calling your request at 1-800-562- 8981. Funding Policy: The plan is administered by a trust or equivalent arrangement in which employer contributions to the trust are irrevocable; these plan assets are for the sole purpose of providing OPEB to eligible retirees and their beneficiaries in accordance with the guidelines of the plan, and plan assets are legally protected from creditors of the employers or plan administrator. As of December 31,2014,there were an estimated 263 employers enrolled and participating in the AWC Employee Benefits Trust HCP.All the risks,rewards, and costs,including benefit costs, are shared and are not individually attributed to the employers.A single actuarial valuation conducted biennially,covers all plan participants, and the same contribution rate(s)apply to all enrolled employers. January 1,2008,was the first year of the AWC Employee Benefits Trusts GASB OPEB implementation and corresponded with the first actuarial valuation of OPEB. The Trust provides that contribution requirements of Participating Employer and of participating employees,retirees and other beneficiaries,if any, are established and may be amended by the Board of Trustees of the Trust.Retirees of the City receiving medical benefits from the Trust contribute the following monthly amounts: Monthly AWC HealthFirst 1000 Amounts Non-Medicare enrolled retiree coverage $ 830.01 Non-Medicare enrolled retiree& spouse coverage $ 837.26 Medicare enrolled retiree coverage $ 443.30 Medicare enrolled retiree&spouse coverage $ 456.13 Monthly AWC HealthFirst 2500 Amounts Non-Medicare enrolled retiree coverage $ 724.72 Non-Medicare enrolled retiree&spouse coverage $ 729.99 Medicare enrolled retiree coverage $ 388.08 Medicare enrolled retiree&spouse coverage $ 398.04 60 City of Spokane Valley Notes to Financial Statements NOTE 14—OTHER POSTEMPLOYMENT BENEFITS(OPEB) continued: Monthly Group Health Retiree Amounts Non-Medicare enrolled retiree coverage $ 1,049.73 Non-Medicare enrolled spouse coverage $ 1,019.13 Medicare enrolled retiree coverage $ 399.46 Medicare enrolled spouse coverage $ 399.46 Participating employers are not contractually required to contribute to the Trust. The retirees who elect coverage through the Trust pay 100 percent of the premium.As such,the City of Spokane Valley did not have any contributions to the Trust for the year ended December 31,2014 Funding Status and Funding Progress: The funded status of the AWC Employee Benefits Trust Health Care Program as of January 1, 2014,which was the date of the last actuarial valuation,was as follows(dollars in thousands): Actuarial accrued liability(AAL) $ 34,407 Actuarial value of plan assets - Unfunded actuarial accrued liability(UAAL) $ 34,407 Funded ratio(actuarial value of plan assets/A 0% Covered payroll(active plan members) N/A 1 UAAL as a percentage of covered payroll N/A 1 1)Covered Payroll information was not provided to the AWC Trust The schedule of funding progress is also presented as required supplementary information(RSI) following these Notes to the Financial Statements, and the schedule presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The AWC Employees Benefits Trust had substantial assets recorded as of December 31,2014. Because those assets have not been placed into an irrevocable trust for the sole purpose of providing the above OPEB benefits, the AWC understands that they cannot be reflected as "actuarial assets"in the precedent table under GASB 43 in determining the remaining values for this Trust. The AWC Employee Benefits Trust's annual OPEB costs, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2014 will be determined with the next conducted biennial actuarial analyses scheduled for January 1, 2015, the reported years of 2008 thru 2010, and 2012 to 2014 were as follows (dollars in thousands): Fiscal Annual OPEB Cost Net OPEB Year Ended OPEB Cost Contributed Obligation 12/31/2008 $ 29,579 5.88% $ 27,839 12/31/2009 29,872 7.86% 55,364 12/31/2010 27,892 4.42% 82,022 12/31/2012 12,885 7.77% 130,474 12/31/2013 11,858 9.20% 141,241 12/31/2014 1,273 1 61.19% 1 34,407 1)Adjustments to Net OPEB Obligation reported. 61 City of Spokane Valley Notes to Financial Statements NOTE 14—OTHER POSTEMPLOYMENT BENEFITS(OPEB) continued: The Governmental Accounting Standards Board(GASB)reporting standards and Statements numbers 43 &45 mandates the precedent reporting requirements and disclosures for Postemployment Benefits Plan other than Pension Plans,or OPEB. The AWC has chosen to adopt and provide these reporting standards to the participating employers within the AWC Employee Benefits Trust.Also,it is important to note that only those jurisdictions that follow Generally Accepted Accounting Principles(GAAP)must comply and report under GASB Statements 43 and 45.All costs,liabilities,interest rates, and other factors have been determined on the basis of actuarial assumptions and methods which are individually reasonable,taking into account experience and reasonable expectations, and which combinations offer the best estimate of anticipated experience. NOTE 15—SUBSEQUENT EVENTS: A. The City of Spokane Valley has begun planning for the future development of a New City Hall building and on April 1,2015 the City has contracted with Architects West,Inc.,toward that pupose,the City purchased 3.38 acres of land for$1,128,118 on January 27,2015 as the future site of the City Hall. 62 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Required Supplementary Information SCITY of pokane ValleyK City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 This page is intentionally blank. S1okic Valleyk City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual General Fund,Major Fund For the Year Ended December 31, 2014 Budgeted Amounts Variance with Approved Final Final Budget Original Budget Amended Budget Actual 1 Over(Under) Revenues Taxes $ 30,131,800 $ 30,731,800 $ 31,351,004 $ 619,204 Licenses and permits 2,102,100 2,102,100 2,372,020 269,920 Intergovernmental revenues 1,934,000 1,934,000 1,903,987 (30,013) Charges for services 874,600 874,600 1,024,003 149,403 Fines and forfeitures 564,300 564,300 544,407 (19,893) Investment interest 65,000 65,000 46,607 1 (18,393) Miscellaneous 1,068,600 1,125,200 1,076,293 (48,907) Total Revenues 36,740,400 37,397,000 38,318,321 921,321 Expenditures Current: General government 4,746,772 4,899,272 4,505,635 (393,637) Public safety 23,895,643 23,895,643 22,131,472 (1,764,171) Utilities and physical environment 2,150,350 2,211,170 1,887,560 (323,610) Economic environment 361,000 361,000 355,237 (5,763) Community development 2,035,703 2,004,883 1,848,332 (156,551) Culture and recreation 2,720,569 2,720,569 2,582,052 (138,517) Debt service: Interest expense - - 435 435 Capital Outlay: Capital expenditures 982,123 107,800 134,821 27,021 Construction in progress - - - - Total Expenditures 36,892,160 36,200,337 33,445,544 (2,754,793) Excess(Deficiency) of Revenues (151,760) 1,196,663 4,872,777 3,676,114 Over(Under) Expenditures Other Financing Sources(Uses) Transfers in 83,100 83,100 83,100 - Transfers(out) (517,500) (3,964,830) (3,959,628) (5,202) Total Other Financing Sources (Uses) (434,400) (3,881,730) (3,876,528) (5,202) Net Change in Fund Balances (deficit) (586,160) (2,685,067) 996,249 1 3,681,317 Fund Balances Beginning of Year: 29,330,848 29,330,848 29,330,848 1 - Fund Balances End of Year: $ 28,744,688 $ 26,645,781 $ 30,327,097 1 $ 3,681,317 While applying the GASB-54 reporting standard,total fund balance end of the year increased by$996,249,the net change in fund balances of$991,552,increased by$4,697 due to investment interest and rounding of+3,resulting in an increase of$996,249 to beginning fund balance from the two combined Non-major Special Revenue Funds;as reported in the General Fund on the Statement of Rev,Expend,and Changes in Fund Balances. 65 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Street Fund, Major Fund For the Year Ended December 31, 2014 Budgeted Amounts Variance with Approved Final Final Budget Original Budget Amended Budget Actual Over(Under) Revenues Taxes $ 2,750,000 $ 2,750,000 $ 2,461,060 $ (288,940) Intergovernmental revenues 1,858,600 1,858,600 1,893,626 35,026 Charges for services - - 3,890 3,890 Investment interest 3,000 3,000 2,037 (963) Miscellaneous - - 5,525 5,525 Total Revenues 4,611,600 4,611,600 4,366,137 (245,463) Expenditures Current: Utilities and physical environment 190,000 190,000 140,244 (49,756) Transportation 4,106,516 4,106,516 4,161,311 54,795 Debt Service: Principal retirement - - - - Capital Outlay: Capital expenditures 55,000 66,000 50,653 (15,347) Construction in progress - - 19,354 19,354 Total Expenditures 4,351,516 4,362,516 4,371,563 9,047 Excess (Deficiency) of Revenues 260,084 249,084 (5,426) 254,510 Over(Under) Expenditures Other Financing Sources (Uses) Transfers in - - 23 23 Transfers(out) (336,700) (355,530) (352,587) (2,943) Total Other Financing Sources (Uses) (336,700) (355,530) (352,563) (2,967) Net Change in Fund Balances (deficit) (76,616) (106,446) (357,989) (251,543) Fund Balances Beginning of Year 2,063,234 2,063,234 2,063,234 - Fund Balances End of Year(Deficit) $ 1,986,618 $ 1,956,788 $ 1,705,244 $ (251,543) 66 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 OTHER POST EMPLOYMENT BENEFITS(OPEB) Schedule of Funding Progress (six year trend)1 GASB Statements No's 43&45 Association of Washington Cities Employee Benefits Trust(AWCEBT) (dollars in thousands) Projected Unit Credit Actuarial Actuarial Unfunded Actuarial UAAL as a Valuation Actuarial Value Accrued Accrued Liabilities Funded Covered %of Covered Date of Assets Liability (UAAL) Ratio Payroll Payroll 1/1/2008 $ - $ 281,454 $ 281,454 0% N/A 2 N/A 2 1/1/2010 - 262,602 262,602 0% N/A 2 N/A 2 1/1/2012 - 3 120,317 120,317 0% N/A 2 N/A 2 1/2/2013 - 3 132,860 132,860 0% N/A 2 N/A 2 1/1/2014 - 3 34,407 34,407 0% N/A 2 N/A 2 1) January 1, 2008 was the first year of OPEB implementation and corresponded with the first actuarial valuation of OPEB. Actuarial analyses was be conducted bienially until the valuation as of 1/1/2012.Beginning as of 1/1/2013,funding progress will be reported annually. 2)Covered payroll information was not provided to the AWC Trust. 3)Association of Washington Cities Employee Benefits Trust(AWCEBT)had substantial assets as of December 31,2014. Because those assets have not been placed into an irrevocable trust for the sole purpose of providing OPEB benefits to retirees,it is AWC's understanding that they cannot be reflected as"actuarial assets"under GASB 43 in determining the values for this Trust. OPEB Actuarial Assumptions Valuation Date: January 1,2014 Demographic Assumptions: In general,demographic assumptions are based on the Office of the State Actuary 2001-2006 Experience Study.Assumed that 15%of Non-LEOFF I future retirees will elect subsidized post-retirement medical coverage,as provided by the AWC Trust. Economic Assumptions Health Experience Trend Rate: See expected rates for the next five years in the trend table below. Discount rate: A 3.75%discount rate is used for the January 1,2014 valuation. Valuation Method: Prepared results using the Projected Unit Credit Method with an open 30-year amortization of the unfunded AAL. Health Experience Trend Rates Year Pre-Medicare Post-Medicare 2015 8.93% 7.70% 2016 8.46% 7.30% 2017 7.96% 6.90% 2018 7.46% 6.50% 2019 6.96% 6.10% 67 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 This page is intentionally blank. S1okic Valleyk City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Supplementary Information SCITY OF pokane ValleyK City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Non-Major Special Revenue Funds Special Revenue Funds: are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specific purposes and activities other than debt service or capital projects. Trails&Paths Special Revenue Fund accounts for the receipts and expenditures from the State-Levied motor vehicle fuel tax distributed to the City according to State RCW 47.30.050. These revenues originate from a share of.42%from the motor vehicle fuel tax that's attributable to Street Maintenance. These funds are restricted for the primary purpose of constructing and maintaining new trails and paths throughout the City. Hotel/Motel Special Revenue Fund accounts for both receipts and expenditures related to a special excise tax of two percent from the sale or charge made of furnishing lodging under State RCW 67.28.180. These funds are solely used for the purpose of paying all or any part of the cost from tourist promotion, acquisition or operation of tourism related facilities, and marketing those special events and festivals designed to attract more attention to the City increasing tourism. Solid Waste Fund revenues are collected by way of a contract with Sunshine Recyclers and the City of Spokane Valley, effective as of November 17, 2014. The Ten year contract imposes an annual administrative fee of$125,000 for solid waste disposal and waste transfer services provided to the Valley Public by Sunshine Recyclers. Winter Weather Reserve Fund allocated reserve of money and financial resources specifically designated for the purpose of providing emergency road-infrastructure services during extreme and harsh winter weather circumstances. 70 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Non-Major Capital Project Funds Capital Project Funds: are used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays including the acquisition or construction of capital facilities, improvements, and other capital assets. Civic Facilities Replacement Fund Delegated authorized reserves of funding and financial resources specifically established for the purpose of setting aside capital replacement funds for the City's Buildings. Capital Projects Fund The Capital Projects Fund serves as a restricted REET 1 service and matching fund for various major construction projects. This fund accounts for the collection and expenditure of the real estate excise tax (REET) revenue, the 1st quarter of 1% is levied on all sales of real estate property within the city. This 1st quarter is a restricted portion of tax receipts collected, received, and spent on specific capital improvements identified in the City's Capital Improvements Plan. Special Capital Projects Fund The Special Capital Projects Fund serves as a matching fund for various special construction projects. This fund accounts for the collection and expenditure of the real estate excise tax (REET) revenue, the 2nd quarter of 1% is levied on all sales of real estate property within the city. This 2nd quarter REET 2 is a restricted portion of tax receipts received, collected, and spent on specific capital improvements identified in the City's Capital Improvements Plan. Street Capital Projects Fund The Street Capital Projects Fund accounts for monies used to finance the six year transportation improvement plan. Revenues include transfers from the Arterial Street Fund, Capital Projects Fund and Special Capital Projects Fund, as well as Federal, State and local grants and private source contributions. Parks Capital Projects Fund Accounts for the City's Park capital improvement projects funded by revenues that are allocated as reserve or specifically designated for Parks and Rereational Capital plans including: future expansion of Parks, constructions, improvements, and lont-term maintenance of all the City's Park facilities. Civic Buildings Capital Projects Fund Accounts for capital improvement projects funded by revenues allocated as a reserve or specifically designated for future expansion and construction of Civic Buildings for the City of Spokane Valley. Revenues are in the form of transfers from the General Fund. Pavement Preservation Fund Accounts for pavement preservation projects. Revenues include transfers from the General Fund, Street Fund, Civic Facilities Replacement Fund, Capital Projects Fund, and Special Capital Projects Fund, as well as Federal, State and local grants. 71 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Non-Major Debt Service Funds Debt Service Funds: are used to account for financial resources accumulated for the purposes of payments made to the principal and interest on long-term debt of the City of Spokane Valley's governmental funds. LTGO Refunding Bonds 2014 Fund The City of Spokane Valley's Debt Service Fund collects and distributes financial resources received and paid for the payment of refunded long-term debt obligations. Revenue consists of funding received from the Public Facility District and City revenue. These financial resources are used to pay the required annual obligations on these outstanding refunding bonds. 72 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Financial Statements Non-Major Funds SCITY OF poKane ValleyK City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Combining Balance Sheet Non-major Governmental Funds December 31, 2014 Non-major Non-major Non-major Total Special Debt Capital Non-major Revenue Service Projects Governmental Funds Fund Funds Funds Assets Cash and cash equivalents $ 850,450 $ 4,049 $ 8,740,995 $ 9,595,494 Taxes receivable 60,348 - 117,642 177,990 Accounts receivable, (net) - - - - Interest receivable 84 - 709 793 Due from other funds - - 30,000 30,000 Grants receivable - - 751,955 751,955 Prepaids - - 50 50 Total Assets $ 910,882 $ 4,049 $ 9,641,351 $ 10,556,282 Liabilities and Fund Balances Liabilities: Accounts payable $ 102,654 $ - $ 814,238 $ 916,892 Accrue payroll payable - - 34,133 34,133 Retainage payable - - 135,484 135,484 Interest payable - - - - Due to other funds 30,000 - 55,000 85,000 Unearned revenue 27,092 - 269,270 296,362 Other accrued liabilities - - - - Total Liabilities 159,746 - 1,308,124 1,467,870 Deferred Inflows of Resources Unavailable traffic mitigation revenue - - 40,843 40,843 Total Deferred Inflows of Resources - - 40,843 40,843 Fund Balances: Nonspendable: Prepaid expenses - 50 50 Restricted for: Trails& paths 29,828 - - 29,828 Hotel & motel tourism promotion 209,949 - - 209,949 Debt service LTGO refunding bonds 2014 - 4,049 - 4,049 Capital projects REET 1 roads&streets - - 1,426,957 1,426,957 Capital projects REET 2 roads&streets - - 1,325,144 1,325,144 Street capital construction - - 72,930 72,930 Committed to: Winter weather street operations 504,020 - - 504,020 Assigned to: Civic city facilities replacement - - 1,174,070 1,174,070 Civic bldg's capital replacement - - 1,919,550 1,919,550 Parks& recreation capital improvements - - 451,720 451,720 Solid Waste Services 7,339 - - 7,339 Street capital improvement p&m - 1,921,963 1,921,963 Total Fund Balances $751,136 $ 4,049 8,292,384 9,047,569 Total Liabilities, Deferred inflows of Resources, and Fund Balances $910,882 $ 4,049 $ 9,641,351 $ 10,556,282 74 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Balance Sheet Non-major Special Revenue Funds December 31, 2014 Trails & Hotel Solid Winter Weather Total Non-major Paths Motel Waste Reserve Special Revenue Fund Fund Fund Fund Funds Assets Cash and cash equivalents $39,824 $ 289,918 $ 16,738 $ 503,969 $ 850,450 Taxes receivable - 60,348 - - 60,348 Accounts receivable, (net) - - - - - Interest receivable 4 29 - 51 84 Due from other funds - - - - - Grants receivable - - - - - Total Assets $39,828 $ 350,295 $ 16,738 $ 504,020 $ 910,882 Liabilities and Fund Balances Liabilities: Accounts payable $ - $ 93,255 $ 9,399 $ - $ 102,654 Accrued payroll payable - - - - - Due to other funds 10,000 20,000 - - 30,000 Unearned revenue - 27,092 - - 27,092 Other accrued liabilities - - - - - Total Liabilities 10,000 140,347 9,399 - 159,746 Fund Balances: Restricted for: Trails & paths 29,828 - - - 29,828 Hotel & motel tourism promotion - 209,949 - - 209,949 Committed to: Winter weather street operations - - - 504,020 504,020 Assigned to: Solid Waste Services - - 7,339 - 7,339 Unassigned: 1 CenterPlace services - - - - - City service operations - - - - - Total Fund Balances 29,828 209,949 7,339 504,020 751,136 Total Liabilities and Fund Balances $39,828 $ 350,295 $ 16,738 $ 504,020 $ 910,882 75 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Balance Sheet Non-major Debt Service LTGO Refunding Bonds 2014 December 31, 2014 Non-major Non-major Non-major Total LTGO Refunding Debt Debt Non-major Bonds 2014 Service Service Debt Service Fund Fund Fund Funds Assets Cash and cash equivalents $ 4,049 $ - $ - $ 4,049 Taxes receivable - - - - Accounts receivable, (net) - - - - Interest receivable - - - - Due from other funds - - - - Grants receivable - - - - Total Assets $ 4,049 $ - $ - $ 4,049 Liabilities and Fund Balances Liabilities: Accounts payable $ - $ - $ - $ - Accrue payroll payable - - - - Retainage payable - - - - Interest payable - - - - Due to other funds - - - - Unearned revenue - - - - Other accrued liabilities - - - - Total Liabilities $ - - - - Fund Balances: Restricted for: Arterial street projects - - - - Trails &paths - - - - Hotel & motel tourism promotion - - - - LTGO Refunding Bonds 2014 4,049 - - 4,049 Capital projects REET 1 roads &streets - - - - Capital projects REET 2 roads &streets - - - - Capital grants - - - - Committed to: Winter weather street operations - - - - Assigned to: Solid Waste Services - - - - Civic city facilities replacement - - - - Civic bldg's capital replacement - - - - Parks &recreation capital improvements - - - - Unassigned: CenterPlace services - - - - City service operations - - - - Total Fund Balances $ 4,049.00 $ - - $ 4,049 Total Liabilities and Fund Balances $ 4,049.00 $ - $ - $ 4,049 76 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Balance Sheet Non-major Capital Project Funds December 31, 2014 Civic Facilities REET 1 REET 2 Street Parks Capital Replacement Capital Projects Capital Projects Capital Projects Projects Fund Fund Fund Fund Fund Assets Cash and cash equivalents $ 1,198,948 $ 1,368,047 $ 1,266,221 $ 229,334 $ 699,597 Taxes receivable - 58,821 58,821 - - Accounts receivable, (net) - - - - - Interest receivable 122 90 102 2 50 Due from other funds - - - 30,000 - Grants receivable - - - 690,430 - Prepaids - - - - - Total Assets $ 1,199,070 $ 1,426,957 $ 1,325,144 $ 949,767 $ 699,647 Liabilities and Fund Balances Liabilities: Accounts payable $ - $ - $ - $ 522,831 $ 210,610 Accrued payroll payable - - - 23,383 4,451 Retainage payable - - - 56,480 32,866 Due to other funds 25,000 - - - - Unearned revenue - - - 233,301 - Other accrued liabilities - - - - - Total Liabilities 25,000 - - 835,994 247,927 Deferred Inflows of Resources Unavailable traffic mitigation revenue - - - 40,843 - Total Deferred Inflows of Resources - - - 40,843 - Fund Balances: Nonspendable: Prepaids - - - - - Restricted for: Capital projects REET 1 roads & streets - 1,426,957 - - - Capital projects REET 2 roads &streets - - 1,325,144 - - Street capital construction - - 72,930 - Assigned to: Civic city facilities replacement 1,174,070 - - - - Civic building capital replacement - - - - Parks & recreation capital improvements - - - - 451,720 Street capital improvements p&m - - - - - Total Fund Balances 1,174,070 1,426,957 1,325,144 72,930 451,720 Total Liabilities, Deferred inflows of Resources and Fund Balances $ 1,199,070 $ 1,426,957 $ 1,325,144 $ 949,767 $ 699,647 continued 77 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Balance Sheet Non-major Capital Project Funds December 31, 2014 Civic Buildings Pavement Total Non-major Capital Projects Preservation Capital Projects Fund Fund Funds Assets Cash and cash equivalents $ 1,924,336 $ 2,054,512 $ - $ - $ 8,740,995 Taxes receivable - - - - 117,642 Accounts receivable, (net) - - - - - Interest receivable 134 209 - - 709 Due from other funds - - - - 30,000 Grants receivable - 61,525 - - 751,955 Prepaids - 50 - - 50 Total Assets $ 1,924,470 $ 2,116,296 $ - $ - $ 9,641,351 Liabilities and Fund Balances Liabilities: Accounts payable $ 4,921 $ 75,876 $ - $ - $ 814,238 Accrued payroll payable - 6,299 - - 34,133 Retainage payable - 46,138 - - 135,484 Due to other funds - 30,000 - - 55,000 Unearned revenue - 35,969 - - 269,270 Other accrued liabilities - - - - - Total Liabilities 4,921 194,282 - - 1,308,124 Deferred Inflows of Resources Unavailable traffic mitigation revenue - - - - 40,843 Total Deferred Inflows of Resources - - - - 40,843 Fund Balances: Nonspendable: Prepaids - 50 - - 50 Restricted for: Capital projects REET 1 rd's & st. - - - - 1,426,957 Capital projects REET 2 rd's & st. - - - - 1,325,144 Street capital construction - - - - 72,930 Assigned to: Civic city facilities replacement - - - - 1,174,070 Civic building capital replacement 1,919,550 - - - 1,919,550 Parks & recreation capital improvements - - - - 451,720 Street capital improvements p&m - 1,921,963 - - 1,921,963 Total Fund Balances 1,919,550 1,922,013 - - 8,292,384 Total Liabilities, Deferred inflows of Resources and Fund Balances $ 1,924,470 $ 2,116,295 $ - $ - $ 9,641,351 78 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Governmental Funds For the Year Ended December 31, 2014 Nonmajor Nonmajor Nonmajor Total Special Debt Capital Nonmajor Revenue Service Projects Governmental Funds Fund Funds Funds Revenues Taxes $ 549,267 $ - $ 1,567,429 $ 2,116,696 Intergovernmental revenues 7,923 423,844 3,868,639 4,300,406 Charges for services - - 641 641 Investment interest 789 - 6,296 7,085 Miscellaneous revenues - - 847,085 847,085 Total Revenues 557,979 423,844 6,290,090 7,271,913 Expenditures Current: General government - - 2,202 2,202 Utilities and physical environment 52,661 - - 52,661 Transportation - - 291,710 291,710 Economic environment 546,545 - - 546,545 Culture and recreation - - - - Debt service: Principal retirement - 360,000 - 360,000 Interest expense - 242,962 - 242,962 Refunding bonds issuance costs - 107,341 - 107,341 Capital Outlay: Capital expenditures - - 184,953 184,953 Construction in progress - - 6,812,412 6,812,412 Total Expenditures 599,206 710,303 7,291,277 8,600,786 Excess(Deficiency) of Revenues (41,227) (286,459) (1,001,187) (1,328,873) Over(Under) Expenditures Other Financing Sources Transfers In 60,000 179,118 4,622,495 4,861,613 Transfers (out) (80,000) - (1,724,712) (1,804,712) Refunding bonds issued - 7,035,000 - 7,035,000 Premium on refunding bonds issued - 625,694 - 625,694 Payments to refunded bonds escrow agent - (7,549,304) - (7,549,304) Total Other Financing Sources (20,000) 290,508 2,897,783 3,168,291 Net Change in Fund Balances(deficit) (61,227) 4,049 1,896,596 1,839,418 Fund Balances Beginning of Year 812,363 - 6,395,788 7,208,151 Prior period adjustment - - - Fund Balances End of Year $ 751,136 $ 4,049 $ 8,292,384 $ 9,047,569 79 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Special Revenue Funds For the Year Ended December 31, 2014 Total Trails & Hotel Solid Winter Weather Non-major Paths Motel Waste Reserve Special Revenue Fund Fund Fund Fund Funds Revenues Taxes $ - $ 549,267 $ - $ - $ 549,267 Licenses and permits - - - - - Intergovernmental revenues 7,923 - - - 7,923 Charges for services - - - - - Fines and forfeitures - - - - - Investment interest 34 299 - 456 789 Miscellaneous revenues - - - - - Total Revenues 7,957 549,567 - 456 557,979 Expenditures Current: General government - - - - - Public safety - - - - - Utilities and physical environment - - 52,661 - 52,661 Transportation - - - - - Economic environment - 546,545 - - 546,545 Community development - - - - - Culture and recreation - - - - - Debt service: Principal retirement - - - - - Interest expense - - - - - Capital Outlay: Capital expenditures - - - - - Construction in progress - - - - - Total Expenditures - 546,545 52,661 - 599,206 Excess(Deficiency) of Revenues 7,957 3,022 (52,661) 456 (41,227) Over(Under) Expenditures Other Financing Sources Transfers in - - 60,000 - 60,000 Transfers (out) (50,000) (30,000) - - (80,000) Total Other Financing Sources (50,000) (30,000) 60,000 - (20,000) Net Change in Fund Balances(deficit) (42,043) (26,978) 7,340 456 (61,227) Fund Balances Beginning of Year 71,871 236,927 - 503,565 812,363 Fund Balances End of Year $ 29,828 $ 209,949 $ 7,340 $ 504,020 $ 751,136 80 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Debt Service Funds For the Year Ended December 31, 2014 Debt Service LTGO Refunding Bonds 2014 Fund Revenues Taxes $ - Intergovernmental revenues 423,844 Investment interest - Miscellaneous revenues - Total Revenues 423,844 Expenditures Current: General government - Debt service: Principal retirement 360,000 Interest expense 242,962 Refunding bonds issuance costs 107,341 Capital Outlay: Capital expenditures - Construction in progress - Total Expenditures 710,303 Excess(Deficiency) of Revenues (286,459) Over(Under) Expenditures Other Financing Sources Transfers In 179,118 Transfers (out) - Refunding bonds issued 7,035,000 Premium on refunding bonds issued 625,694 Payments to refunded bond escrow agent (7,549,304) Total Other Financing Sources 290,508 Net Change in Fund Balances 4,049 Fund Balances Beginning of Year - Fund Balances End of Year $ 4,049 81 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Capital Project Funds For the Year Ended December 31, 2014 Civic Facilities REET 1 REET 2 Street Replacement Capital Projects Capital Projects Capital Projects Fund Fund Fund Fund Revenues Taxes $ - $ 790,781 $ 776,648 $ - Licenses and permits - - - - Intergovernmental revenues - - - 1,825,974 Charges for services - - - 541 Fines and forfeitures - - - - Investment interest 1,083 793 909 21 Miscellaneous revenues - - - - Total Revenues 1,083 791,574 777,557 1,826,536 Expenditures Current: General government - - - - Public safety - - - - Utilities and physical environment - - - - Transportation - - - 236,417 Economic environment - - - - Culture and recreation - - - - Debt service: Principal retirement - - - - Interest expense - - - - Capital Outlay: Capital expenditures - - - 62,519 Construction in progress - - - 2,779,210 Total Expenditures - - - 3,078,146 Excess(Deficiency) of Revenues 1,083 791,574 777,557 (1,251,610) Over(Under) Expenditures Other Financing Sources Transfers in - - - 1,262,713 Transfers (out) (616,284) (332,638) (775,790) - Total Other Financing Sources (616,284) (332,638) (775,790) 1,262,713 Net Change in Fund Balances(deficit) (615,201) 458,936 1,767 11,103 Fund Balances Beginning of Year 1,789,271 968,021 1,323,378 61,827 Fund Balances End of Year $ 1,174,070 $ 1,426,957 $ 1,325,145 $ 72,930 continued 82 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Capital Project Funds For the Year Ended December 31, 2014 Parks Capital Civic Bldgs Street Capital Total Non-major Projects Capital Projects Improvements Capital Projects Fund Fund Fund Funds Revenues Taxes $ - $ - $ - $ 1,567,429 Licenses and permits - - - - Intergovernmental revenues - - 2,042,665 3,868,639 Charges for services 50 - 50 641 Fines and forfeitures - - - - Investment interest 444 1,193 1,853 6,296 Miscellaneous revenues 7,800 839,285 - 847,085 Total Revenues 8,294 840,478 2,044,568 6,290,090 Expenditures Current: General government - 2,202 - 2,202 Public safety - - - - Utilities and physical environment - - - - Transportation - - 55,293 291,710 Economic environment - - - - Culture and recreation - - - - Debt service: Principal retirement - - - - Interest expense - - - - Capital Outlay: Capital expenditures 101,804 20,630 - 184,953 Construction in progress 1,011,280 - 3,021,922 6,812,412 Total Expenditures 1,113,084 22,832 3,077,215 7,291,277 Excess(Deficiency) of Revenues (1,104,790) 817,646 (1,032,647) (1,001,187) Over(Under) Expenditures Other Financing Sources Transfers in 1,203,731 - 2,156,051 4,622,495 Transfers (out) - - - (1,724,712) Total Other Financing Sources 1,203,731 - 2,156,051 2,897,783 Net Change in Fund Balances 98,941 817,646 1,123,404 1,896,596 Fund Balances Beginning of Year 352,779 1,101,903 798,609 6,395,788 Fund Balances End of Year $ 451,720 $ 1,919,549 $ 1,922,013 $ 8,292,384 83 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Trails&Paths and Hotel/Motel, Non-major Special Revenue Funds For the Year Ended December 31, 2014 Trails &Paths Hotel/Motel Special Revenue Fund Special Revenue Fund Variance with Variance with Final Budgeted Actual Final Budget Final Budgeted Actual Final Budget Amounts Amounts Over(Under) Amounts Amounts Over(Under) Revenues Taxes $ - $ - $ - $ 530,000 $ 549,267 $ 19,267 Intergovernmental revenues 7,800 7,923 123 - - - Investment interest - 34 34 300 299 (1) Miscellaneous revenues - - - - - Total Revenues 7,800 7,957 157 530,300 549,567 19,266 Expenditures Current: General government - - - - - - Economic environment - - - 547,000 546,545 455 Culture and recreation - - - - - - Debt service: Principal retirement - - - - Interest expense - - - - - - Capital Outlay: Capital expenditures - - - - - - Construction in progress - - - - - - Total Expenditures - - - 547,000 546,545 455 Excess(Deficiency)of Revenues 7,800 7,957 157 (16,700) 3,022 (13,678) Over(Under) Expenditures Other Financing Sources Transfers In - - - - - - Transfers(out) (50,000) (50,000) - (30,000) (30,000) - Total Other Financing Sources (50,000) (50,000) - (30,000) (30,000) - Net Change in Fund Balances(deficit) (42,200) (42,043) 157 (46,700) (26,978) 19,722 Fund Balances Beginning of Year 71,871 71,871 - 236,927 236,927 - Fund Balances End of Year(deficit) $ 29,671 $ 29,828 $ 157 $ 190,227 $ 209,949 $ 19,722 84 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Solid Waste and CenterPlace Reserve, Non-major Special Revenue Funds For the Year Ended December 31, 2014 Solid Waste Center Place Operating Reserve Special Revenue Fund Special Revenue Fund ' Variance with Variance with Final Budgeted Actual Final Budget Final Budgeted Actual Final Budget Amounts Amounts Over(Under) Amounts Amounts Over(Under) Revenues Taxes $ - $ - $ - $ - $ - $ - Intergovernmental revenues - - - - - - Investment interest - - - - - - Miscellaneous revenues - - - - - - Total Revenues - - - - - - Expenditures Current: General government - - - - - - Utilities and physical environment 60,000 52,661 7,340 - - - Culture and recreation - - - - - - Debt service: Principal retirement - - - - - - Interest expense - - - - - - Capital Outlay: Capital expenditures - - - - - - Construction in progress - - - - - - Total Expenditures 60,000 52,661 7,340 - - - Excess(Deficiency)of Revenues (60,000) (52,661) 7,340 - - - Over(Under) Expenditures Other Financing Sources Transfers In 60,000 60,000 - - - - Transfers (out) - - - - - - Total Other Financing Sources 60,000 60,000 - - - - Net Change in Fund Balances - 7,340 7,340 - - - Fund Balances Beginning of Year - - - 300,000 300,000 - Fund Balances End of Year $ - $ 7,340 $ 7,340 $ 300,000 $ 300,000 $ - 1)Fund Balances,CenterPlace Operating Reserve consolidated and collasped into General Fund(GASB 54). 85 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Service Level Stabilization Reserve and Winter Weather Reserve, Non-major Special Revenue Funds For the Year Ended December 31, 2014 Service Level Stabilization Reserve Winter Weather Reserve Special Revenue Fund ' Special Revenue Fund Variance with Variance with Final Budgeted Actual Final Budget Final Budgeted Actual Final Budget Amounts Amounts Over(Under) Amounts Amounts Over(Under) Revenues Taxes $ - $ - $ - $ - $ - $ - Intergovernmental revenues - - - - - - Investment interest 7,300 4,697 (2,603) 700 456 (244) Miscellaneous revenues - - - - - - Total Revenues 7,300 4,697 (2,603) 700 456 (244) Expenditures Current: General government - - - - - - Transportation - - - 500,000 - 500,000 Economic environment - - - - - - Culture and recreation - - - - - - Debt service: - - Principal retirement - - - - Interest expense - - - - - - Capital Outlay: Capital expenditures - - - - - - Construction in progress - - - - - - Total Expenditures - - - 500,000 - 500,000 Excess(Deficiency)of Revenues 7,300 4,697 (2,603) (499,300) 456 499,756 Over(Under) Expenditures Other Financing Sources Transfers In - - - - - - Transfers(out) - - - - - - Total Other Financing Sources - - - - - - Net Change in Fund Balances(deficit) 7,300 4,697 (2,603) (499,300) 456 499,756 Fund Balances Beginning of Year 5,448,502 5,448,502 - 503,565 503,565 - Fund Balances End of Year(deficit) $ 5,455,802 $ 5,453,199 $ (2,603) $ 4,265 $ 504,020 $ 499,756 1)Fund Balances,Service Level Stablization Reserve consolidated and collasped into General Fund(GASB 54). 86 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Civic Facilities Replacement and REET 1,Non-Major Capital Projects Funds For the Year Ended December 31, 2014 Civic Facilities Replacement Fund REET 1 Capital Projects Fund Variance with Variance with Final Budgeted Actual Final Budget Final Budgeted Actual Final Budget Amounts Amounts Over(Under) Amounts Amounts Over(Under) Revenues Taxes $ - $ - $ - $ 600,000 $ 790,781 $ 190,781 Intergovernmental revenues - - - - - - Investment interest 1,700 1,083 (617) 1,000 793 (207) Miscellaneous revenues - - - - - Total Revenues 1,700 1,083 (617) 601,000 791,574 190,574 Expenditures Current: General government - - - - - - Transportation - - - - - - Economic environment - - - - - - Culture and recreation - - - - - - Debt service: - - Principal retirement - - - - Interest expense - - - - - - Capital Outlay: Capital expenditures - - - - - - Construction in progress - - - - - - Total Expenditures - - - - - - Excess(Deficiency)of Revenues 1,700 1,083 (617) 601,000 791,574 190,574 Over(Under) Expenditures Other Financing Sources Transfers In - - - - - - Transfers(out) (616,284) (616,284) - (553,199) (332,638) 220,561 Total Other Financing Sources (616,284) (616,284) - (553,199) (332,638) 220,561 Net Change in Fund Balances(deficit) (614,584) (615,201) (617) 47,801 458,936 411,135 Fund Balances Beginning of Year 1,789,271 1,789,271 - 968,021 968,021 - Fund Balances End of Year(deficit) $ 1,174,687 $ 1,174,070 $ (617) $ 1,015,822 $ 1,426,957 $ 411,135 87 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual REET 2 Capital Projects&Street Non-Major, Capital Projects Funds For the Year Ended December 31, 2014 REET 2 Street Capital Projects Fund Capital Projects Fund Variance with Variance with Final Budgeted Actual Final Budget Final Budgeted Actual Final Budget Amounts Amounts Over(Under) Amounts Amounts Over(Under) Revenues Taxes $ 600,000 $ 776,648 $ 176,648 $ - $ - $ - Intergovernmental revenues - - - 8,324,808 1,825,974 (6,498,834) Charges for services - - - - 541 541 Investment interest 1,000 909 (91) - 21 21 Miscellaneous revenues - - - 166,020 - (166,020) • Total Revenues 601,000 777,557 176,557 8,490,828 1,826,536 (6,664,292) Expenditures Current: General government - - - - - - Utilities and physical environment - - - - - - Transportation - - - - 236,417 (236,417) Culture and recreation - - - - - - Debt service: - - Principal retirement - - - - Interest expense - - - - - - Capital Outlay: Capital expenditures - - - - 62,519 (62,519) Construction in progress - - - 9,841,431 2,779,210 7,062,221 Total Expenditures - - - 9,841,431 3,078,146 6,763,285 Excess(Deficiency)of Revenues 601,000 777,557 176,557 (1,350,603) (1,251,610) 98,993 Over(Under) Expenditures Other Financing Sources Transfers In - - - 1,350,603 1,262,713 (87,890) Transfers(out) (876,720) (775,790) 100,930 - - - Total Other Financing Sources (876,720) (775,790) 100,930 1,350,603 1,262,713 (87,890) Net Change in Fund Balances(deficit) (275,720) 1,767 277,487 - 11,103 11,103 Fund Balances Beginning of Year 1,323,378 1,323,378 - 61,827 61,827 - Fund Balances End of Year $ 1,047,658 $ 1,325,145 $ 277,487 $ 61,827 $ 72,930 $ 11,103 88 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Parks Capital Projects& Civic Buildings Capital Projects, Non-Major Capital Projects Funds For the Year Ended December 31, 2014 Parks Civic Buildings Capital Projects Fund Capital Projects Fund Variance with Variance with Final Budgeted Actual Final Budget Final Budgeted Actual Final Budget Amounts Amounts Over(Under) Amounts Amounts Over(Under) Revenues Taxes $ - $ - $ - $ - $ - $ - Charges for services - 50 50 - - - Investment interest 500 444 (56) 1,900 1,193 (707) Miscellaneous revenues 500 7,800 7,300 839,285 839,285 - Total Revenues 1,000 8,294 7,294 841,185 840,478 (707) Expenditures Current: General government - - - - 2,202 (2,202) Transportation - - - - - - Economic environment - - - - - - Culture and recreation - - - - - - Debt service: - - Principal retirement - - - - Interest expense - - - - - - Capital Outlay: Capital expenditures - 101,804 (101,804) 30,000 20,630 9,370 Construction in progress 1,653,000 1,011,280 641,720 - - - Total Expenditures 1,653,000 1,113,084 539,916 30,000 22,832 7,168 Excess(Deficiency)of Revenues (1,652,000) (1,104,790) 547,210 811,185 817,646 6,461 Over(Under) Expenditures Other Financing Sources Transfers In 1,749,600 1,203,731 (545,869) - - - Transfers(out) - - - - - - Total Other Financing Sources 1,749,600 1,203,731 (545,869) - - - Net Change in Fund Balances 97,600 98,941 1,341 811,185 817,646 6,461 Fund Balances Beginning of Year 352,779 352,779 - 1,101,903 1,101,903 - Fund Balances End of Year $ 450,379 $ 451,720 $ 1,341 $ 1,913,088 $ 1,919,549 $ 6,461 89 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Pavement Preservation Fund& Capital Reserve,Non-Major Capital Projects Fund For the Year Ended December 31, 2014 Pavement Capital Preservation Fund Reserve Fund Final Variance with Final Variance with Budgeted Actual Final Budget Budgeted Actual Final Budget Amounts Amounts Over(Under) Amounts Amounts Over(Under) Revenues Taxes $ - $ - $ - $ - $ - $ - Intergovernmental revenues 2,886,736 2,042,665 (844,071) - - - Charges for services - 50 50 - - - Investment interest - 1,853 1,853 - - - Miscellaneous revenues - - - - 4,675 4,675 Total Revenues 2,886,736 2,044,568 (842,168) - 4,675 4,675 Expenditures Current: General government - - - - - - Transportation 50,000 55,293 (5,293) - - - Economic environment - - - - - - Culture and recreation - - - - - - Debt service: - Principal retirement - - - - - - Interest expense - - - - - - Capital Outlay: - Capital expenditures - - - - - - Construction in progress 3,866,386 3,021,922 844,464 - - - Total Expenditures 3,916,386 3,077,215 839,171 - - - Excess(Deficiency) of Revenues (1,029,650) (1,032,647) (2,997) - 4,675 4,675 Over(Under) Expenditures Other Financing Sources(Uses) Transfers In 2,156,051 2,156,051 - 2,443,507 2,443,507 - Transfers (out) - - - (1,902,100) (1,608,766) 293,334 Total Other Financing Sources(Uses) 2,156,051 2,156,051 - 541,407 834,741 293,334 Net Change in Fund Balances(deficit) 1,126,401 1,123,404 (2,997) 541,407 839,416 298,009 Fund Balances Beginning of Year 798,609 798,609 - 7,742,299 7,742,299 - Fund Balances End of Year(deficit) $1,925,010 $1,922,013 $ (2,997) $8,283,706 $8,581,715 $ 298,009 90 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Debt Service LTGO Refunding Bonds 2014,Non-Major Debt Service Funds For the Year Ended December 31, 2014 Debt Service LTGO Refunding Bonds 2014 Fund Variance with Final Budgeted Actual Final Budget Amounts Amounts Over(Under) Revenues Taxes $ - $ - $ - Intergovernmental revenues 441,520 423,844 (17,676) Investment interest - - - Miscellaneous revenues - - - Total Revenues 441,520 423,844 (17,676) Expenditures Current: General government - - - Transportation - - - Economic environment - - - Culture and recreation - - - Debt service: Principal retirement 258,000 360,000 (102,000) Interest expense 369,823 242,962 126,861 Refunding bonds issuance costs 112,000 107,341 4,659 Capital Outlay: Capital expenditures - - - Construction in progress - - - Total Expenditures 739,823 710,303 29,520 Excess(Deficiency)of Revenues (298,303) (286,459) 11,844 Over(Under)Expenditures Other Financing Sources Transfers In 186,303 179,118 (7,185) Transfers(out) - - - Refunding bonds issued 7,035,281 7,035,000 (281) Premium on refunding bonds issued 625,719 625,694 (25) Payments to refunded bond escrow agent (7,549,000) (7,549,304) (304) Total Other Financing Sources 298,303 290,508 (7,795) Net Change in Fund Balances - 4,049 4,049 Fund Balances Beginning of Year - - - Fund Balances End of Year $ - $ 4,049 $ 4,049 91 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Internal Service Funds Internal service funds: are used to account for the financing of goods, services, and operations provided by one department or agency to other departments or agencies of the government and it's other governmental units, on a cost reimbursement basis. Equipment Rental&Replacement Fund The City of Spokane Valleys Equipment Rental & Replacement Fund (ER&R)accounts for the activities and costs of maintaining and replacing the City's vehicles and equipment for all City departments. The fund accumulates resources for vehicle and equipment replacements and purchases. Funds or Departments within using the vehicle or equipment, pay associated replacement fees. Replacement funds are collected on the telephone system, computer network system, desktop computers, and vehicles. Maintenance and service charges for copiers, telephones, and internet are also charged to the funds. The ER&R Fund also finances and administers a fleet of pool cars for use by City Departments. Risk Management Fund The City of Spokane Valley's Risk Management Fund has been established to account for insurance costs, claims settlement, and administration of a risk management safety program. This fund also accounts for the funding of unemployment claims through the State of Washington. 92 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Statement of Net Position-Internal Service Funds Equipment Rental and Replacement&Risk Management Funds For the Year Ended December 31, 2014 Governmental-type activities Equipment Rental and Risk Replacement Management Fund Fund Totals Assets Current Assets: Cash and cash equivalents $ 1,235,705 $ 168,917 $ 1,404,622 Accounts receivable, (net) - - - Interest receivable 89 1 90 Total Current Assets 1,235,794 168,918 1,404,712 Capital Assets: Machinery and equipment 151,531 - 151,531 Less: accumulated depreciation (13,455) - (13,455) Total Current Assets 138,076 - 138,076 Total Assets $ 1,373,870 $ 168,918 $ 1,542,788 Liabilities Current Liabilities: Accounts payable $ - $ 709 709 Total Current Liabilities - 709 709 Total Liabilities - 709 709 Net Position Net Investments in Capital Assets 138,076 - 138,076 Unrestricted 1,235,794 168,209 1,404,003 Total Net Position 1,373,870 168,209 1,542,079 Total Liabilities and Net Position $ 1,373,870 $ 168,918 $ 1,542,788 93 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Statement of Revenues, Expenses, and Changes in Net Position Equipment Rental and Replacement&Risk Management-Internal Service Funds For the Year Ended December 31, 2014 Governmental-type activities Equipment Rental and Risk Replacement Management Fund Fund Totals Operating Revenues: Charges for services (net of returns and allowances) $ - $ - $ - Intergovernmental revenues 102,744 - 102,744 Total Operating Revenues 102,744 - 102,744 Operating Expenses: Personal services - 8,531 8,531 Professional services - 272,435 272,435 Depreciation and amortization 9,799 - 9,799 Total Operating Expenses 9,799 280,966 290,765 Operating Income (loss) 92,945 (280,966) (188,021) Non-Operating Revenues (Expenses) Investment income 792 4 796 Intergovernmental revenues - - - Total Non-Operating Revenues (Expenses) 792 4 796 Income (loss) before contributions and Transfers 93,737 (280,962) (187,225) Contributions and Transfers: Transfers in 51,692 325,000 376,692 Transfers (out) - - - Capital contributions - - - Total contributions and transfers 51,692 325,000 376,692 Change in Net Position 145,429 44,038 189,467 Net Position-Beginning of Year 1,228,441 124,171 1,352,612 Net Position-End of Year $ 1,373,870 $ 168,209 $ 1,542,079 94 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Combining Statement of Cash Flows -Internal Service Funds Equipment Rental and Replacement&Risk Management-Internal Service Funds For the Year Ended December 31, 2014 Governmental -Type Activities Internal Service Funds Equipment Rental Risk and Replacement Management Fund Fund Totals Cash Flows from Operating Activities Cash payments to employees $ - $ (8,531) $ (8,531) Cash payments to suppliers for goods and services - (278,591) (278,591) Receipts from interfund activity 102,744 - 102,744 Net cash provided(used) by operating activities 102,744 (287,122) (184,378) Cash Flows from Noncapital Financing Activities Operating subsidies &transfers in (out)from other funds 51,692 325,000 376,692 Net Cash (used)provided by noncapital related financing activities 51,692 325,000 376,692 Cash Flows from Capital and Related Financing Activities Acquistion, construction &(transfers)of capital assets to governmental funds (102,782) - (102,782) Net Cash provided by capital related financing activities (102,782) - (102,782) Cash Flows from Investing Activities Interest received 776 4 780 Net Cash provided by investing activities 776 4 780 Net Increase (decrease)in Cash and Cash Equivalents 52,430 37,882 90,312 Cash and Cash Equivalents-January 1, 2014 1,183,275 131,035 1,314,310 Cash and Cash Equivalents- December 31, 2014 $ 1,235,705 $ 168,917 $ 1,404,622 Reconciliation of Operating Income to Net Cash Provided by Operating Activities: Operating Income (Loss) $ 92,945 $ (280,966) $ (188,021) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 9,799 9,799 (Increase) Decrease in Assets: Interest receivable - - - Due from other funds - - - Increase (Decrease) in Liabilities: Decrease in:Accounts payable to suppliers - (6,156) (6,156) Due to other governments - - - Deposits and other payables - - - Total adjustments 9,799 (6,156) 3,643 Net Cash Provided (used) by Operating Activities $ 102,744 $ (287,122) $ (184,378) 95 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 This page is intentionally blank. S1okic Valleyk City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 Statistical Section SITY OFm pokane ValleyK City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 STATISTICAL SECTION This part of the City of Spokane Valley's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. CONTENTS Page # Financial Trends 99 - 103 These schedules contain trend information to help the reader understand how the government's financial performance and well- being have changed over time. Revenue Capacity 104 - 107 These schedules contain information to help the reader assess the government's most significant local revenue (inflow) source, property taxes. Debt Capacity These schedules present information to help the reader assess the 108 - 111 affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information 112 - 113 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 104 - 116 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted,the information in these schedules is derived from the annual financial reports for the relevant year. 98 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 City of Spokane Valley, Washington Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Governmental activities Net investment in capital assets $ 56,029 $ 53,865 $ 45,201 $ 52,370 $ 63,074 $ 64,370 $ 68,426 $ 74,478 $ 75,837 $ 75,907 Restricted 7,248 13,358 16,230 13,966 3,689 6,896 5,654 5,104 4,985 5,128 Unrestricted 18,712 21,965 29,497 34,611 44,587 44,497 44,807 43,650 45,746 48,827 Total governmental activities net position: $ 81,989 $ 89,188 $ 90,928 $100,947 $111,350 $115,763 $118,887 $123,232 $126,568 $129,862 Business-type activities Net investment in capital assets $ - $ 327 $ 685 $ 690 $ 683 $ 1,018 $ 1,500 $ 2,875 $ 4,176 $ 5,382 Restricted - - - - - 4 4 0 0 0 Unrestricted 1,277 1,614 2,036 2,381 2,267 2,285 2,796 2,589 2,653 1,935 Total business-type activities net position: $ 1,277 $ 1,941 $ 2,721 $ 3,071 $ 2,950 $ 3,307 $ 4,300 $ 5,464 $ 6,829 $ 7,317 Primary government Net investment in capital assets $ 56,029 $ 54,192 $ 45,886 $ 53,060 $ 63,757 $ 65,388 $ 69,926 $ 77,353 $ 80,013 $ 81,289 Restricted 7,248 13,358 16,230 13,966 3,689 6,900 5,658 5,104 4,985 5,128 Unrestricted 19,989 23,579 31,533 36,992 46,854 46,782 47,603 46,239 48,399 50,762 Total primary government net position: $ 83,266 $ 91,129 $ 93,649 $104,018 $114,300 $119,070 $123,187 $128,696 $133,397 $137,179 Note:Totals may not foot due to rounding. 99 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 City of Spokane Valley, Washington Changes in Net Position (continued) Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Fiscal Year Expenses 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Governmental activities: General government $ 3,471 $ 4,904 $ 4,876 $ 3,696 $ 4,592 $ 4,449 $ 4,427 $ 4,622 $ 4,644 $ 5,004 Public safety 15,935 15,742 16,263 17,664 20,616 21,186 22,614 21,722 22,486 22,190 Utilities&physical environment 986 1,484 1,573 549 2,333 3,083 3,187 2,939 3,028 2,462 Transportation 14,944 13,260 16,788 16,205 14,883 7,707 6,851 8,574 7,713 8,779 Mental and physical health 2,020 - - - - - - - - - Economic environment 44 1,867 2,259 688 574 548 663 797 849 912 Community development - - - 2,971 2,045 1,879 1,772 1,894 2,031 1,848 Culture and recreation 3,785 1,884 2,415 2,551 2,910 3,009 3,050 3,458 3,535 5,234 Interest on long-term debt 450 409 411 406 401 394 384 376 369 243 Total governmental activities expenses 41,635 39,550 44,585 44,730 48,354 42,255 42,948 44,382 44,655 46,672 Business-type activities: Sewer - - - - - - - - - - Aquifer protection area - - - - - - - - 306 982 Stormwater management 1,022 1,102 970 1,180 1,109 1,329 1,472 1,218 1,767 1,649 Total business-type activities expenses 1,022 1,102 970 1,180 1,109 1,329 1,472 1,218 2,073 2,631 Total primary government expenses $42,657 $40,652 $45,555 $45,910 $49,463 $43,584 $44,420 $ 45,600 $ 46,728 $49,303 Program Revenues Governmental activities: Charges for services: General government $ - $ 947 $ 799 $ 2,182 $ 2,358 $ 2,731 $ 2,572 $ 2,946 $ 3,008 $ 3,432 Public safety 1,180 583 631 1,823 1,864 2,057 1,647 1,651 1,553 1,473 Utilities&physical environment 106 - - 118 188 87 106 84 98 934 Transportation - - - 424 411 160 78 47 15 10 Economic environment 3,103 2,253 2,530 - - - - - - - Community development - - - 1,896 1,541 1,230 1,064 1,254 1,615 1,561 Culture and recreation 414 577 1,453 604 581 581 525 598 536 599 Operating grants and contributions 84 - - 683 611 799 1,196 1,260 787 707 Capital grants and contributions 1,393 8,039 3,522 12,157 15,668 4,528 3,611 5,038 3,678 3,257 Total governmental activities program revenues 6,280 12,399 8,935 19,887 23,222 12,173 10,799 12,878 11,290 11,973 Business-type activities: Charges for services: Aquifer protection area - - - - - - - - 1 - Stormwater management 1,252 1,558 1,658 1,687 1,706 1,748 1,833 1,835 1,873 1,867 Operating grants and contributions - - - - - - 65 622 956 476 Capital grants and contributions - - 27 25 27 20 726 50 620 814 Total business-type activities program revenues 1,252 1,558 1,685 1,712 1,733 1,768 2,624 2,507 3,450 3,157 Total primary government program revenues $ 7,532 $13,957 $10,620 $21,599 $24,955 $13,941 $13,423 $ 15,385 $ 14,740 $15,130 100 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 City of Spokane Valley, Washington Changes in Net Position (continued) Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Net(expense)/revenue Governmental activities $(35,354) $(27,151) $(35,650) $(24,844) $(25,132) $(30,083) $(32,149) $(31,503) $(33,365) $(34,698) Business-type activities 229 455 714 533 624 439 1,152 1,289 1,377 525 Total primary government net (expenses)/revenues $(35,125) $(26,696) $(34,936) $(24,311) $(24,508) $(29,644) $(30,997) $(30,214) $(31,988) $(34,173) General Revenues and other Changes in Net Position Governmental activities: Taxes: Property taxes $ 9,549 $ 8,727 $ 9,525 $ 9,881 $ 10,484 $ 10,781 $ 10,676 $ 10,802 $ 10,886 $ 11,042 Sales and use taxes 18,648 18,842 19,638 18,055 16,317 16,014 16,976 17,522 18,721 19,779 Excise taxes 5,740 3,106 2,953 2,424 3,496 3,342 3,273 3,271 3,329 3,616 Other taxes 1,534 911 3,359 3,265 4,205 4,080 3,862 3,847 3,670 3,459 Extraordinary gain,proceeds - 8 - - - - - - - - (Loss)on disposal of capital assets (62) - - - - - - - - - Capital contributions - 87 - - - - - - - - Interest and investment earnings 563 1,253 1,895 1,003 274 189 116 115 82 57 Transfers 257 29 15 235 760 90 161 128 13 39 Total governmental activities 36,229 32,963 37,385 34,863 35,536 34,496 35,064 35,685 36,701 37,992 Business-type activities: Interest and investment earnings 35 58 80 52 14 7 3 3 2 1 Transfers (257) (29) (15) (235) (760) (90) (161) (128) (13) (39) Total business-type activities (222) 29 65 (183) (746) (83) (158) (125) (11) (38) Total primary government $36,007 $32,992 $37,450 $34,680 $34,790 $34,413 $34,906 $ 35,560 $ 36,690 $37,954 Change in Net Position Governmental activities $ 875 $ 5,813 $ 1,735 $ 10,019 $ 10,403 $ 4,413 $ 2,916 $ 4,182 $ 3,336 $ 3,294 Prior period adjustment(see note 15) - - - - - - 207 163 - - Business-type activities 8 484 780 350 (121) 356 994 1,163 1,366 487 Total primary government $ 883 $ 6,297 $ 2,515 $10,369 $10,282 $ 4,769 $ 4,117 $ 5,508 $ 4,702 $ 3,781 101 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 City of Spokane Valley,Washington Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (Restated) 1 General fund Reserved $ - $ - $ - $ 19 $ - $ - Unreserved 7,047 8,706 13,747 21,673 - - Total general fund $ 7,047 $ 8,706 $13,747 $21,692 $ - $ - Nonspendable $ - $ 6 $ 12 $ 24 $ 56 $ 98 Restricted 10 204 123 180 204 255 Assigned 30 50 50 - - - Unassigned 24,587 32,976 33,727 34,389 29,071 29,974 Total general fund $ 24,627 $ 33,236 $ 33,912 $ 34,593 $ 29,331 $ 30,327 All other governmental funds Reserved $ - $ 8,325 $ 16,230 $ 13,946 $ - $ - Unreserved,reported in: Special revenue funds 8,184 5,541 6,596 6,582 - - Capital projects funds 7,248 8,927 5,444 3,369 - - Total all other governmental funds $15,432 $22,793 $28,270 $23,897 $ - $ - Nonspendable $ 4 $ 5 $ - $ - $ - $ - Restricted 7,074 6,682 5,519 4,900 4,725 4,774 Committed 500 501 502 503 503 504 Assigned 7,595 7,769 7,369 4,765 11,785 14,056 Unassigned 5,407 - - - - - Total all other $20,580 $14,957 $13,390 $10,168 $17,013 $19,334 Total fund balances $22,479 $31,499 $42,017 $45,589 $45,207 $48,193 $47,302 $44,761 $46,344 $49,661 1)Fiscal year 2009 Fund balances restated for GASB-54 conversion and implementation. 102 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 City of Spokane Valley, Washington Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year Revenues 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Taxes $30,263 $31,260 $33,498 $ 31,878 $32,093 $31,840 $32,352 $33,279 $34,487 $35,929 Licenses and permits 2,406 2,253 2,515 2,509 2,121 2,100 1,939 2,099 2,427 2,372 Intergovernmental 4,608 8,039 4,835 14,006 19,365 9,000 8,655 8,760 7,949 8,098 Charges for services 896 683 795 768 863 671 685 868 996 1,029 Fines and forfeitures 1,180 583 581 771 778 750 588 564 543 544 Investment interest - 1,214 1,892 980 269 189 114 114 81 56 Miscellaneous 964 577 1,495 3,835 1,927 1,944 1,432 1,931 1,055 1,933 Total revenues 40,317 44,609 45,611 54,747 57,416 46,494 45,765 47,615 47,538 49,961 Expenditures Current: General government 2,713 4,211 4,409 3,467 4,215 4,047 3,993 4,203 4,232 4,508 Public safety 15,927 15,733 16,247 17,606 20,558 21,130 22,554 21,664 22,429 22,132 Utilities&physical environment 954 1,473 1,528 1,178 2,071 2,441 2,300 1,984 1,923 2,080 Transportation 2,926 2,960 4,209 4,581 3,989 3,199 3,923 5,349 4,172 4,453 Economic environment 2,037 1,853 2,241 671 523 506 634 759 815 902 Mental and physical health 44 - - - - - - - - - Community development - - - 2,971 2,045 1,879 1,772 1,894 2,031 1,848 Culture and recreation 3,643 1,755 1,966 2,160 2,293 2,323 2,301 2,536 2,599 2,582 Debt Service: Principal retirement 165 213 1,058 191 205 211 225 241 254 360 Interest expense 430 415 411 406 401 395 385 377 369 243 Refunding Bond issue costs - - - - - - - - - 107 Capital Outlay: Capital expenditures 6,092 8,365 1,368 3,709 1,543 435 2,347 2,993 279 370 Construction in progress - - 1,494 14,282 20,485 6,714 6,246 8,128 6,547 6,832 Total expenditures 34,931 36,978 34,931 51,222 58,328 43,280 46,680 50,128 45,650 46,417 Excess of revenues over(under) 5,386 7,631 10,680 3,525 (912) 3,214 (915) (2,513) 1,888 3,543 expenditures Other financing sources(uses) Contributions 23 - - - - - - - - - Extraordinary gain,fire proceeds - 109 - - - - - - - - Proceeds:Long term debt issued - 1,261 - - - - - - - - Refunding bonds issued - - - - - - - - - 7,035 Premium on refunding bonds issued - - - - - - - - - 626 Pymts refunded bonds escrow agent - - - - - - - - - (7,549) Transfers in 8,086 9,090 6,800 6,160 7,673 4,293 5,127 5,314 10,251 7,388 Transfers out (7,954) (9,071) (6,962) (6,113) (7,143) (4,521) (5,310) (5,505) (10,556) (7,726) Total other financing sources(uses) 155 1,389 (162) 47 530 (228) (183) (191) (305) (226) Net change in fund balances $ 5,541 $ 9,020 $10,518 $ 3,572 $ (382) $ 2,986 $(1,098) $(2,704) $ 1,583 $ 3,317 Debt service as a percentage of noncapital expenditures 2.11% 2.24% 4.80% 1.83% 1.70% 1.71% 1.63% 1.61% 1.63% 1.84% 103 a) 10 W o MI (/) V/ ' N 0 41. 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(o A —, N) co 7 N M CO CO O y• 93 0 CD V y 00000 00000007, 7, 7, N• ° 8 V A N U) O) NI C) D D D D D W O N ; O en N `G = V V co N W N O (o U) A (o W o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o Q 9) P 0 0 0 0 0 0 0 0 0 0 o G ,to 9) X N co co 1S M N N O 01 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 City of Spokane Valley, Washington Property Tax Levy and Collections Last Ten Fiscal Years Collected within the Fiscal Year Fiscal Year of the Levy Collections Tax Collections to Date Ended Taxes Levied Percentage in Subsequent Percentage 31-Dec for the Year Amount of Levy Years Amount of Levy 2005 9,870,000 9,333,284 94.56% 176,055 9,509,339 96.35% 2006 8,084,062 7,899,666 97.72% 144,206 8,043,872 99.50% 2007 9,595,506 9,384,010 97.80% 86,812 9,470,822 98.70% 2008 9,910,479 9,687,818 97.75% 81,425 9,769,243 98.57% 2009 10,538,125 10,317,305 97.90% 80,646 10,397,951 98.67% 2010 10,836,664 10,596,232 97.78% 98,579 10,694,811 98.69% 2011 10,736,817 10,511,675 97.90% 82,060 10,593,735 98.67% 2012 10,824,167 10,606,471 97.99% 76,517 10,682,988 98.70% 2013 10,927,218 10,674,154 97.68% 102,956 10,777,110 98.63% 2014 11,079,836 10,889,763 98.28% 83,306 10,973,069 99.04% Note: 1) Source: Spokane County Assessor's Department. 107 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 City of Spokane Valley, Washington Ratios of Outstanding Debt by Type Last Ten Fiscal Years Govermental Activities LTGO'03 Spokane and Total Primary County LTGO'14 Percentage Government MSA Est. Refunding Total Primary of Personal Bonded Debt Per Capita Personal Fiscal Year Bonds Government Income Per Capita Income' Income 2005 9,120,000 9,120,000 0.35% 107 30,359 i 2,580,818,590 2006 8,945,000 8,945,000 0.32% 103 32,258 i 2,806,446,000 2007 8,760,000 8,760,000 0.29% 99 34,270 i 3,025,355,600 2008 8,570,000 8,570,000 0.27% 96 36,069 i 3,207,255,480 2009 8,365,000 8,365,000 0.27% 94 35,186 i 3,147,035,840 2010 8,155,000 8,155,000 0.26% 90 35,220 i 3,177,196,200 2011 7,930,000 7,930,000 0.24% 88 36,536 i 3,292,258,960 2012 7,690,000 7,690,000 0.23% 85 37,653 i 3,409,479,150 2013 7,435,000 7,435,000 0.21% 81 38,805 i 3,550,269,450 2014 6,675,000 6,675,000 0.18% 73 39,807 i 3,664,234,350 1)Spokane County metropolitan statistical area(MSA)annual average source: Community Indicators Initiative of Spokane. Fiscal year 2014 estimated with,2.83%increase in change per capita income from fiscal year 2013 results. 108 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 City of Spokane Valley, Washington Ratios of General Bonded Debt Outstanding To Assessed Value and Bonded Debt Per Capita Last Ten Fiscal Years Ratio of Net Bonded Debt Net Direct Total Taxable Gross Net Direct to Assessed Bonded Debt Fiscal Year Population 1 Assessed Value 2 Bonded Debt Bonded Debt Value Per Capita 2005 85,010 4,533,703,249 9,120,000 9,120,000 0.201% 107 A 2006 87,000 5,056,991,058 8,945,000 8,945,000 0.177% 103 2007 88,280 5,882,946,173 8,760,000 8,760,000 0.149% 99 2008 88,920 6,636,383,614 8,570,000 8,570,000 0.129% 96 I 2009 89,440 7,019,508,327 8,365,000 8,365,000 0.119% 94 I 2010 90,210 7,169,492,602 8,155,000 8,155,000 0.114% 90 I 2011 90,110 7,140,947,644 7,930,000 7,930,000 0.111% 88 I 2012 90,550 7,087,523,395 7,690,000 7,690,000 0.109% 85 I 2013 91,490 6,921,825,295 7,435,000 7,435,000 0.107% 81 a 2014 92,050 7,168,991,028 6,675,000 6,675,000 0.093% 73 1) Market Fact Book,Journal of Business. 2) Source: Spokane County Assessor's Office. 109 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 City of Spokane Valley, Washington Direct and Overlapping Governmental Activities Debt 1 As of December 31, 2014 Earliest Oldest Applicable to Number Net Debt Issue Date Maturity Date City of Spokane Valley of Issues Governmental Unit Outstanding (Month/Year) (Month/Year) Percentage Amount Direct Debt 2 City of Spokane Valley $ 6,675,000 12/2014 12/2033 100.00% $ 6,675,000 Total Direct Debt: 6,675,000 100.00% 6,675,000 Overlapping Debt 1 Fire District#8 1,560,000 10/2010 12/2020 7.53% 117,526 9 Spokane School District#81 375,482,617 5/2005 12/2033 3.91% 14,690,218 3 Central Valley School District#356 26,325,262 12/1998 12/2032 64.32% 16,931,979 5 East Valley School District#361 6,196,128 9/2004 6/2027 60.31% 3,736,583 7 West Valley School District#363 26,123,885 7/2004 12/2028 53.37% 13,943,252 Total Overlapping Debt: 435,687,892 11.34% 49,419,558 Total Direct and Overlapping Debt: $442,362,892 12.68% $56,094,558 1) Source:Spokane County Assessor's and Auditor's Office. 110 H % 7 0 0 0 0 = \ - CO 0 2 e -1 \ CD= a E \ \ \ ° k ®. 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CD / 0 Cl) k 11 - § Co - ƒ " 93 k 93 / � / \ CO 3 ly / v). e \ o 43. � / a» 13) w o Cee CO $ CO f ® k \ -Co \ - e e cca cca R cca § 2 / NCO - \ / / A. \ vl A lo 03 k w \ j \ \ j - \ § b City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 City of Spokane Valley, Washington Demographic and Economic Statistics Last Ten Fiscal Years Spokane Spokane County MSA County MSA Fiscal Personal Per Capita Median Taxable School Unemployment Year Population Income Income' Age Retail Sales 2 Enrollment 3 Rate 4 2005 85,010 2,580,818,590 30,359 38 1,731,672,576 20,986 5.7% 2006 87,000 2,806,446,000 32,258 38 1,882,594,225 20,483 4.9% 2007 88,280 3,025,355,600 34,270 37.1 1,966,515,200 20,329 4.7% 2008 88,920 3,207,255,480 36,069 38.6 1,797,852,179 21,528 5.7% 2009 89,440 3,147,035,840 35,186 36.6 1,613,410,134 21,150 9.7% 2010 90,210 3,177,196,200 35,220 37.3 1,585,010,451 21,537 10.1% 2011 90,110 3,292,258,960 36,536 38.1 1,678,063,524 21,573 9.4% 2012 90,550 3,409,479,150 37,653 38 1,745,839,808 21,758 8.6% 2013 91,490 3,550,269,450 38,805 37.9 1,884,116,155 21,946 7.6% 2014 92,050 3,664,234,350 39,807 1 41.7 5 1,970,385,634 22,132 7.1% 1. Spokane County metropolitan statistical area(MSA)annual average source: Community Indicators Initiative of Spokane(www.spokanetrends.org). Fiscal year 2014 estimated with a 2.83%increase in change per capita income from fiscal year 2013 compared to 2012 reported results. 2. Department of Revenue Washington, State Taxable Retail Sales Statistical Reports look-up. 3. Source: Market Fact Book,Journal of Business(Central Valley, East Valley,and West Valley school Districts icluding Private School enrollment) 4. Department of Employment Security, Washington State for Spokane County metopolitan statistical area(MSA)annual average. 5. Source: Community Indicators Initiative of Spokane(CII Summer 2014). For fiscal year 2013,estimated based on fiscal year 2013 recorded increase from 2012 of 4.74%. 112 City of Spokane Valley, Washington Comprehensive Annual Financial Report - Fiscal Year 2014 City of Spokane Valley, Washington Principal Employers Current Year and Ten Years Ago 2014 2005 Percentage Percentage FTE of Total City FTE of Total City Employer Employees ' Rank Employment Employees Rank Employment Central Valley School District ' 1,430 1 1.56% 1,196 1 1.42% Wal-Mart Stores ' 1,395 2 1.52% DND 2 - - Kaiser Aluminum ' 850 3 0.93% 600 3 0.71% West Valley School District ' 500 4 0.55% 489 6 0.58% Valley Hospital & Medical Center ' 494 5 0.54% DND 2 - - Yokes Foods, Inc. ' 466 6 0.51% 512 4 0.61% East Valley School District ' 456 7 0.50% DND 2 - - CPM Development Corporation ' 410 8 0.45% 500 5 0.60% AutoNation 1 374 9 0.41% DND 2 - - Wagstaff Inc. ' 320 10 0.35% 248 9 0.30% Avista Energy - - - 1,204 2 1.43% Honeywell Electronic Materials - - - 399 7 0.48% Itronix, General Dynamics Co - - - 384 8 0.46% Spokane Industries - - - 229 10 0.27% Total 6,695 7.32% 5,761 6.86% 1)Source for Data:Journal of Business Book of Lists January 1,2015,volume 30, issue 1. FTE employees as of Nov. 1,2014. 2) DND: means did not disclose. 113 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 City of Spokane Valley, Washington Full-time Equivalent (FTE) Employees by Function and Program Last Ten Fiscal Years Function/Department/Program 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General government Executive&legislative City manager 4.5 4.5 4.5 5 5 5 5 5 5 5 Legal 1 - - 2 3 3 3 3 3 3 3 Interns 4 - - 3 3 4.5 4.5 2 3 3 3 Operations&administrative services Deputy city manager 6 6 6 7 8 8 6 7 6 6 Finance 6 6 8 9 10 12 11 11 10.75 11.75 Legal 1 2 2 - - - - - - - - Human resources 1.5 1.5 1.5 2 2 2 2 2 2 2 Interns 4 - - - 1 1 1 2 1 1 1 Public safety 2 - - - - - - - - - - Utilities&physical environment2 Public works 9 9 10 10 7.5 7.5 7.5 7 7 7.375 Transportation Streets 2 2.8 3.8 4.4 4.4 8.5 8.5 8 8.5 8.5 8.875 Interns 4 - - - 1 - - 1 1 1 1 Economic environment Building 13 13 14.75 14.75 14.75 14.75 12.75 12.75 11.5 12.5 Planning&community development Administration 2 2 2 3 3 3 3 3 2 2 Planning 6 6 5 8 9 9 8.5 8.5 8 8 Development engineering - - - 8 8 8 6 6 8 7 Culture and recreation 3 Parks administration 2 2 2 2 2 2 2 2 2 2 Recreation 1 1 1 1 1 1 1 1 1 1 Senior center 1 1 1 1 1 1 1 1 1 1 CenterPlace 3 3 5 7 7 7 5 5 5 5 Interns 4 - - - 1 1 1 1 1 1 1 Stormwater management 2 3 4 4 4 4 4.5 4.5 4.5 4.75 Interns 4 - - - 2 2 2 2 1 1 1 Total(FTE) 61.8 63.8 71.2 89.15 93.75 95.75 86.25 87.25 85.25 87.25 Notes: Legal program re-assigned to executive and legislative program in 2008. 2 The city contracts with Spokane County for law enforcement services and fire protection is provided by Fire Districts 1&8. Winter Weather Services and snow removal was provided under contract through Spokane County in prior fiscal years 2003 thru 2009. 3 Library service provided by the Spokane County Library District. 4 Interns to various department programs"NOT"included in total for FTE's. 114 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 City of Spokane Valley, Washington Operating Indicators by Function Last Ten Fiscal Years Function/Program 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Public safety / Total number of crime offenses 2 5,065 4,460 3,733 4,093 4,067 5,183 6,237 5,390 5,691 5,691 Number of Violent Crimes per 1,000 3 3.9 3.4 3.3 3.0 3.0 1.8 1.9 2.1 2.2 2.2 Property crimes per 1,000 3 46.3 41.0 32.6 38.8 36.7 46.9 55.7 53.1 51.5 53.1 Commissioned officers per 1,000 3 1.18 1.15 1.14 1.14 1.12 1.15 1.08 1.09 1.09 1.10 Full time commissioned officers 3 100 100 101 101 101 104 97 99 99 97 Building and permits Residential dwelling permits&valuations 2,517 2,109 1,759 994 656 599 603 1,331 9 1,415 1,438 Non-residential building permits 229 263 98 167 167 160 155 95 9 91 232 Mechanical permits 1,444 1,321 1,418 1,339 1,288 1,096 953 - 9 - - Plumbing permits 943 743 734 629 523 571 586 - 9 - - Demolition permits 33 45 52 41 44 35 32 39 9 55 65 Grading permits 31 35 32 29 16 17 29 38 9 43 50 Miscellaneous bench permits&sign fees DND 10 23 8 6 5 7 8 13 9 16 122 Transportation Highways&streets(surface in miles) 4 425 431 438 438 438 438 438 438 438 461 Potholes repaired 412 430 460 458 436 540 748 1,550 2,133 607 Street right-a-way permits 245 287 328 358 296 261 390 392 467 713 Local Gov't road expenditures per capita $37 $34 $48 $61 $48 $43 $40 $41 $40 $41 Avg daily traffic counts 1-90 at Sprague 104,000 105,000 109,000 110,000 109,000 107,000 108,000 108,000 108,000 114,000 Avg daily traffic counts 1-90 at Pines 75,000 75,000 79,000 81,000 75,000 70,000 70,000 70,000 70,000 75,000 Avg daily traffic counts 1-90 at Sullivan 64,000 65,000 66,000 69,000 67,000 66,000 63,000 63,000 63,000 70,000 Parks and recreation Participants; recreation programs 274 350 720 N.A.8 N.A.8 N.A.8 N.A.8 N.A.8 N.A.8 N.A.8 Parks reservations(Fields,shelters,parks 200 241 222 227 258 252 394 407 399 428 Total participants in aquatic programs 19,727 24,695 27,096 24,409 33,688 35,910 36,484 35,978 33,681 29,820 CenterPlace reservations(by#of events) - 447 609 692 815 823 816 915 812 1,083 Centennial trail(measured in miles) 7 7 7 7 7 7 7 7 7 7 Stormwater 5 Storm ditches(measured in miles) 10 10 10 11 11 11 11 11 11 11 Ponds 23 23 24 28 35 38 38 39 39 41 Swales(measured in miles) 7 7 9 10 10 10 10 11 11 12 Public safety and Police Protection services contracted through Spokane County Sheriffs Office. 2 Offenses include:Motor vehicle theft,Larceny theft,Burglary,Simple&Aggravated assault,Robbery,Rape,and Murder(Source:Journal of Business). 3 Source:Community Indicators Initiative of Spokane(EWU). 4 Highways&Streets measured in centerline miles. 5 Stormwater programs acquired from Spokane County refer to note 6 of the notes to the financial statements. 6 Building Department converted from a paper record system to Computerized Permit record system November 2004. CenterPlace is the City of Spokane Valley's Regional Community Center,and officially opened for business on September 25th,2005.Events include: Meetings/Seminars,Community Events,Weddings/Receptions,Private Parties,Fundraisers,and other functions. 8 Operational data for participants in recreation programs collected and recorded under CenterPlace reservations by number of events. Tracking categories changed in FY 2008, separated operating indicators between Park reservations and CenterPlace events. 9 Building Department converted over to a New Permitting Software in FY'2012.Includes plumbing and mechanical permits issued as other residential valuations. 10 Did not disclose or track operational data for FY'2005. 115 City of Spokane Valley, Washington Comprehensive Annual Financial Report- Fiscal Year 2014 City of Spokane Valley, Washington Capital Asset Statistics by Function and Program Last Ten Fiscal Years Function/Program 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Public safety Public safety building - - 1 1 1 1 1 1 1 1 Transportation Street facility building and yard - - - - - - 1 1 1 1 Cement concrete pavement(in centerline miles) 3 4 5 5 5 6 6 7 7 7 Asphalt plant or road mix (in centerline miles) 322 327 334 335 335 335 335 334 334 334 Bituminous surface(in centerline miles) 90 90 88 88 88 87 87 88 88 88 Gravel or crushed rock(in centerline miles) 10 10 11 10 10 10 10 9 9 9 Bridges 4 4 4 4 4 4 4 4 4 4 Traffic Signals 74 82 86 86 86 86 86 86 86 85 Flashing beacons school zone 10 10 16 16 20 20 24 32 32 36 4-Way intersection control flashing beacons 5 5 4 4 4 4 4 4 4 3 Digital Message Sign(DMS) - - - - 1 1 1 1 1 1 Standalone Traffic Cameras - - - - 3 3 4 4 8 8 Culture and recreation Parks acreage 3 163 163 171 171 171 172 172 172 172 172 Parks 9 9 10 10 10 10 10 11 11 11 Park shelters 5 5 5 6 8 9 10 10 10 10 Turf fields 2 2 2 2 2 2 2 2 2 2 Park monuments 1 1 1 2 2 2 2 2 2 2 Swimming pools 3 3 3 3 3 3 3 3 3 3 Ball fields 4 4 4 4 4 4 4 4 4 4 Basketball courts 3 3 3 3 3 3 3 3 3 3 Volleyball courts 2 2 2 2 2 2 2 2 2 2 Tennis courts 2 2 2 2 2 2 2 2 2 2 Community center(Senior Center) 1 1 1 - - - - - - - Regional Convention center(CenterPlace) 1 1 1 1 1 1 1 1 1 1 Dance hall/arena 1 1 1 1 1 1 1 1 1 1 Horse arena 1 1 1 1 1 1 1 1 1 1 Stormwater management 5 Drywells 7,000 7,000 7,000 7,200 7,330 7,376 7,262 7,189 7,439 5,751 Catchbasins 3,000 3,000 3,000 3,400 3,410 3,607 3,627 3,687 3,831 3,906 Curb/sidewalkdrops 2,000 2,000 2,000 2,400 2,480 2,473 2,479 2,487 2,801 2,932 Manhole&stormdrain covers(square&round) 10,400 10,400 10,400 10,600 10,600 11,154 11,162 11,175 11,270 12,589 Culverts 100 100 100 100 106 106 106 106 110 51 Pump systems 2 2 4 4 4 4 4 4 4 4 Stormwater pipe(not combined with sewer, miles 15 15 18 22 22 24 24 25 27 12 1)City of Spokane Valley acquired the Public Safety Building from Spokane County in FY'2007. 2)Spokane Valley Senior Center was completely demolished in FY'2008,and Senior Center activities are housed within the 54,000 sq.ft.CenterPlace facility. 3)Park acreage information reported in City's Master Plan. 4)Park acreage increased in FY'2007 through acquistion of Greenacres Park for a total of"8"additional acres. 5)Stormwater assets acquired through Spokane County,refer to note 6 of the notes to the financial statements. Note: Acquistion of Balfour Park,Fall of 2012. 116