2004 Comprehensive Annual Financial Report 1
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SCITY pokane
� jvalley
Comprehensive Annual
Financial Report
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� For the Fiscal Year Ended
' December 31 , 2004
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I City of Spokane Valley I
I Washington
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I Comprehensive Annual Financial Report
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I For the Fiscal Year
January 1, 2004 Through December 31, 2004
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i Department of Finance
i Ken Thompson
I Finance and Administrative Services Director
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. TABLE OF CONTENTS I
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Introductory Section
Table of Contents i
Letter of Transmittal 1
Principal Officials 5
Organization Chart 6
Financial Section
Independent Auditor's Report 7
Management's Discussion and Analysis 9
Basic Financial Statements '
Government-Wide Financial Statements:
Statement of Net Assets 18
Statement of Activities 19
Fund Financial Statements:
Balance Sheet—Governmental Funds 20
Reconciliation of Total Governmental Fund Balances to Net
Assets of Governmental Activities 21
Statement of Revenues, Expenditures and Changes in Fund
Balances—Governmental Funds 22
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances of Governmental Funds to the Statement of Activities 23
Statement of Revenues, Expenditures, and Changes in Fund Balances—Budget and Actual:
General Fund 24
Street Fund 25
Mirabeau Point Project 26
Community Development Block Grant Fund 27
Statement of Net Assets—Proprietary Funds 28
Statement of Revenues, Expenses, and Changes in Fund Net Assets-Proprietary Funds 29
Statement of Cash Flows—Proprietary Funds 30
Notes tote Financial Statements 31
Combining and Individual Fund Statements and Schedules
Governmental Funds:
Description of Special Revenue, Debt Service, and Capital Project Funds 48
Combining Balance Sheet—Nonmajor Governmental Funds 50
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds 51
Combining Balance Sheet—Nonmajor Special Revenue Funds 52
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
• Nonmajor Special Revenue Funds • 53
Combining Balance Sheet—Nonmajor Capital Project Funds 54
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Special Revenue Funds 55
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Financial Section (Continued)
I Schedule of Revenues, Expenditures, and Changes in Fund Balance—Budget&Actual:
Arterial Street Fund 56
Trails and Paths Fund 57
I Hotel/Motel Fund 58
Debt Service LTGO 03 Fund 59
Capital Projects Fund 60
Special Capital Projects Fund 61
I Street Capital Projects Fund 62
Street Bond Capital Projects Fund 63
Capital Grants Fund 64
I Barker Bridge Project Fund 65
Proprietary Funds:
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Description of Internal Service Funds 66
I Combining Statement of Net Assets—Internal Service Funds 67
Combining Statement of Revenues, Expenses, and Changes in Fund Equity—
Internal Service 68
Combining Statement of Cash Flows—Internal Service 69
IStatistical Section
Net Assets by Component 71
I Changes in Net Assets 72
Governmental Activities Tax Revenue by Source 74
Fund Balances of Governmental Funds 74
I Changes in Fund Balances of Governmental Funds 75
General Governmental Tax Revenues by Source 76
Assessed and Estimated Actual Value of Taxable Property 77
Property Tax Levies and Collections 77
I Property Tax Rates—Direct and Overlapping Governments 78
Principal Property Taxpayers 79
Ratio of Outstanding Debt by Type 80
I Ratio of General Bonded Debt Outstanding 80
Direct and Overlapping Governmental Activities Debt 81
Legal Debt Margin 82
Demographic and Economic Statistics 83
I Principal Employers 84
Full-time Equivalent City Government Employees by Function 85
Capital Asset Statistics by Function 85
IOther Supplementary Schedules
'Schedule of Long-term Debt 86
I Computation of Limitation of Indebtedness 87
Schedule of Expenditures of Federal Awards 88
Schedule of State and Local Financial Assistance 89
Notes to Expenditures of Federal Awards and State and Local Financial Assistance 90
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I Introduction
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1 "mfee\'''
Salle
11707 E Sprague Ave Suite 106 • Spokane Valley WA 99206
' 509.921.1000 • Fax: 509.921.1008 • cityhall @spokanevalley.org
November 23, 2005
To the Honorable Mayor, Members of the City Council, and Citizens of the City of
Spokane Valley:
The Comprehensive Annual Financial Report of the City of Spokane Valley, for
the fiscal year ended December 31, 2004, is submitted herewith. This report
consists of management's representations concerning the finances of the City of
Spokane Valley. Consequently, management assumes full responsibility for the
completeness and reliability of all of the information presented in this report. To
provide a reasonable basis for making these representations, management of the
City of Spokane Valley has established a comprehensive internal control
framework that is designed to both protect the government's assets from loss,
theft, or misuse and to compile sufficient reliable information for the preparation
of the City of Spokane Valley's financial statements in conformity with GAAP.
Because the cost of internal controls should not outweigh their benefits, The City
of Spokane Valley's comprehensive framework of internal controls has been
designed to provide reasonable rather than absolute assurance that the financial
statements will be free from material misstatement. As management, we assert
that, to the best of our knowledge and belief, this financial report is complete and
reliable in all material respects.
' The City of Spokane Valley's financial statements have been audited by the
Washington State Auditor's Office. The goal of the independent audit was to
provide reasonable assurance that the City's financial statements for the fiscal
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year ended December 31, 2004, are free of material misstatement. The
independent audit involved examining, on a test basis, evidence supporting the
amounts and disclosures in the City of Spokane Valley's financial statements;
assessing the accounting principles used and significant estimates made by
management; and evaluating the overall financial statement presentation. The
independent auditor concluded, based upon the audit, that there was a
reasonable basis for rendering an unqualified opinion that the City of Spokane
Valley's financial statements for the fiscal year ended December 31, 2004 are
fairly presented in conformity with generally accepted accounting principles
(GAAP). The independent auditor's report is present as the first component of
the financial section of this report.
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Generally accepted accounting principles require that management provide a
narrative introduction, overview, and analysis to accompany the basic financial
statements in the form of Management's Discussion and Analysis (MD&A). This
letter of transmittal is designed to complement MD&A and should be read in
conjunction with it. The City of Spokane Valley's MD&A can be found following
the independent auditor's report.
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Profile of the Government
The City of Spokane Valley is a Noncharter optional code City, operating under I
Section 35A of the Revised Code of Washington. It has a Council-City Manager
form of government with a seven-member City Council elected by the voters of
the City. Councilmembers are elected at large rather than by district, are
responsible for establishing the general guidelines and policies for the City, and
each serves a four-year term. The Council elects the Mayor and Deputy Mayor
from within its ranks. The Council appoints the City Manager as the City's chief
executive officer responsible for carrying out the policies and direction set by the
Council. This includes the enforcement of laws and ordinances, the execution of
contracts and agreements, and maintenance of peace and order in the City. I
Incorporated on March 31, 2003, Spokane Valley is located in the eastern part of
Spokane County adjacent on the east by the City of Liberty Lake and on the west
by the City of Spokane. The City encompasses an area of 38.5 square miles and
is linked to established transportation corridors.
The City of Spokane Valley provides a full range of local government services.
These services include police protection, construction and maintenance of the
streets and traditional municipal infrastructure, planning and zoning, and park
and recreational activities. In addition, the City operates an equipment
maintenance/rental fund and sewer and stormwater utilities. The City contracts
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with Spokane County for police protection, jail and court services, park
maintenance, and street maintenance. Library services were contracted through
the Spokane County Library District in 2004 and 2005, but will be provided by I
The Library District in 2006 as part of the District's operations.
Factors Affecting Financial Condition
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The information presented in the financial statements is perhaps best understood
when it is considered from the broader perspective of the specific environment
within which the City of Spokane Valley operates.
Local Economy
The City of Spokane Valley is the second largest city in Spokane County with a
population of 83,950. A diversified mix of industries exists within Spokane Valley
with retail and service sectors being the largest. Department stores, automobile
dealerships, and electronic/computer stores lead the retail sector. The service '
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I sector includes real estate companies, service call centers, financial institutions,
accounting firms, and computer software companies.
I The Spokane Industrial Park, located in the City, is the largest operating
industrial park in the Pacific Northwest with 545 zoned acres and over 4.2 million
square feet of enclosed space in 67 separate buildings. The park has
Iapproximately 120 tenants employing over 4,500 people.
The City of Spokane Valley is recovering well from the effects of the recession
Ithat began in 2001. Building permits increased 150% over 2003 and remained
strong in the first quarter of 2005. Sales tax revenues were 23% higher than
I projected in 2004. Regional economists predict that the Spokane area economy
will continue to grow at 5% per year in 2005.
ILong-term Financial Planning
The City is currently developing a six-year strategic plan for future budgetary
I impacts. Long-term revenue projections show sales tax revenues increasing by
2% per year with property taxes increasing 2 — 3 percent per year. Residential
home sales are expected to remain strong through 2005 and commercial building
Ihas increased by 65%.
On the expense side of the City's budget, employee health benefits stand out as
I a significant challenge, as the recent inflation rate in medical care has exceeded
the general inflation rate. Health care costs are expected to influence not only
employee benefit costs but also contract costs with Spokane County for law
Ienforcement and street maintenance.
The governing body is committed to establishing and maintaining a healthy
I general fund budget reserve. The goal over the next seven years is to maintain a
general fund unreserved balance of between 8 and 15% of revenues. The City is
committed to working with the citizens, businesses, and other governmental
agencies in delivering efficient and effective services to the community.
Cash Management
IIThe City Finance Director, pursuant to the City's investment policy, manages the
daily cash and investment activity. Spokane Valley structures its investments to.
Iminimize risk while maintaining reasonable yields on its portfolio.
Cash temporarily idle during the year was invested in the Washington State Local
I Government Investment Pool and money market funds. The average yield was
1.35% which produced earnings of $246,097 on all investments for the year
ended December 31, 2004. In accordance with the requirements set by State
I law, the State Deposit Protection Commission also insures deposits with in-state
banks.
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Risk Management
The City of Spokane Valley is a member of the Washington Cities Insurance
Authority ( CIA) for general liability and property Y dams a coverage. The City is
self-insured for unemployment compensation benefits and uses the Washington
State Department of Labor and Industries 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 accounts for its risk management activities in internal service funds and
charges the operating funds annually for the insurance costs. Please refer to
Note 7, Risk Management in the notes section of this report.
Retirement Systems
The City and its employees contribute to a mandatory retirement system
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managed by the State of Washington. The Public Employees Retirement System
(PERS) (Plans 1,2, and 3) covers all non-uniformed regular employees. During
2004, the City contributed $27,509 toward these plans.
The City has replaced the Federal Social Security Program with a defined ,
contribution savings program. The City contributes to the program at social
security tax rates but incurs no unfunded liability since the program is a defined
contribution plan. ,
For information on the City of Spokane Valley's pension plans, refer to Note 6 in
the notes to the financial statements.
Acknowledgements
The preparation of this report could not have been accomplished without the
efficient and dedicated service of those individuals and departments who have
contributed to its publication. Special recognition goes to Accounting Manager,
Brad Johnson, who started with the City in July of 2005, but quickly became the
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' City's accounting expert. I would like to express my appreciation to everyone
who contributed to its preparation. I would also like to thank the Mayor and
members of the City Council for their interest and support in planning and
conducting the financial operations of the City in a responsible manner.
Respectfully submitted,
Ken Thompson
Finance and Administrative Services Director
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CITY OF SPOKANE VALLEY
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City Council Members
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Diana Wilhite, Mayor Richard Muson, Deputy Mayor
Position #1 Position #5
Steve Taylor Michael DeVieming -
Position #2 Position #3
Gary Schimmels Mike Flanigan
IPosition #4 Position #6
Dick Denenny
IPosition #7
Staff
IDavid Mercier, City Manager
Nina Regor, Deputy City Manager
IKen Thompson, Finance &Administrative Services Director
IMarina Sukup, Community Development Director
Mike Jackson, Parks & Recreation Director
Neil Kersten, Public Works Director
ICary Driskell, Deputy City Attorney
Tom Scholtens, Building Official
Chris Bainbridge, City Clerk
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CITY COUNCIL MEMBERS
Dick Denenny Diana Wilhite,Mayor Gary Schimmels .1
Mike Flanigan Rich Munson,Deputy Mayor Steve Taylor
Mike DeVleming
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CITY MANAGER/CEO LEGAL
Dave Mercier
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DEPUTY CITY
MANAGER/COO
Nina Regor
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- City Clerk d Patrol
Capital Parks Operations
- Improvement (Contract) Oversight
Plan
Legislative d Aquatics
Investigation d
_ Finance
Relations Development (Contract)
Engineering
_ Intergovernmental Prevention J Recreation Contract
Coordination Programs Administration
Stormwater
d Emergency d Senior I Administrative
Management Center Services
Transportation
Planning/
GIS Building
CenterPlace
Transportation _
I I Planning
Long Code Permits/
Current Stree
Range Compliance Inspections
Neighborhood Maintenance
Traffic — (Contract)
Management
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i Financial Section
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Independent Auditor's Report on Financial
Statements
City of Spokane Valley -
111 Spokane County
January 1, 2004 through December 31, 2004 •
I Mayor and City Council
City of Spokane Valley
Spokane,Washington
We have audited the accompanying basic financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the City of
I Spokane Valley, Spokane County, Washington, as of and for the year ended December 31, 2004, which
collectively comprise the City's basic financial statements as listed on page 5. These financial statements
are the responsibility of the City's management. Our responsibility is to express opinions on these
financial statements based on our audit.
IWe 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
I perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on.a test basis, evidence supporting the amounts .
and disclosures in the financial statements. An audit also includes assessing the accounting principles •
I used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinions. .
In our opinion, the financial statements referred to above present fairly, in all material respects, the
I 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, as of December 31, 2004,
and the respective changes in financial position and cash flows, where applicable, thereof, and the
respective budgetary comparison for the General, Street, Mirabeau Point .Project and Community
I Development Block Grant funds, .for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report on our consideration
I 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. The purpose of that
report is to describe the scope of.our testing of internal control over financial reporting and compliance
I and the results of that testing, and not to provide an opinion on the internal control over financial reporting
or on compliance. That report is an integral part of an audit performed in accordance with Government -
Auditing Standards and should be considered in assessing the results of our audit.
I The management's discussion and analysis on pages 6 through 14 is not a required part of the basic
financial statements but is supplementary information required by the Governmental Accounting
Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of
Washington State Auditors Office
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management regarding the methods of measurement and presentation of the required supplE
information. However,we did not audit the information and express no opinion on it.
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BRIAN SONNTAG, CGFM c
STATE AUDITOR
November o ember 23,2005
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Washington State Auditors Office •
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I MANAGEMENT'S DISCUSSION AND ANALYSIS
I This section of the City of Spokane Valley's annual financial report provides a narrative
overview of the City's financial activities for the fiscal year ended December 31, 2004 and
financial position as of December 31, 2004. This information should be read in
I conjunction with the preceding letter of transmittal and the financial statements and notes
to the financial statements that follow.
IFINANCIAL HIGHLIGHTS
• Net assets, the amount by which total assets exceed total liabilities, equal $82.4
million. A total of 75.3%, or $62.0 million, of total net assets is invested in capital
assets, such as streets, land, and buildings, and $8 million is restricted for capital
projects. Of the remaining net assets, $12.3 million is available to meet the
Igovernment's ongoing activities and obligations.
• The government's net assets increased by $11.5 million in 2004. This increase was
a result of higher than anticipated revenues and lower than appropriated
Iexpenditures.
• Governmental fund balances at year end were $16.9 million. Of this amount, a total
I of $300 thousand is an operating reserve for the CenterPlace Community Center.
Of the unreserved balance $7.9 million is designated for capital projects with the
balance available to fund ongoing activities.
I • Unreserved fund balance in the general fund was $4.7 million. This represents an
increase of$7.2 million over the December 31, 2003 unreserved fund balance.
I • Total City debt decreased by $146 thousand to $9.25 million during the current
fiscal year. The City did not issue any additional debt in 2004.
IOVERVIEW OF THE FINANCIAL STATEMENTS
The City's basic financial statements are presented in three parts: 1) government-wide
Ifinancial statements, 2) fund financial statements, and 3) notes to the financial statements.
This section of the management's discussion and analysis is intended to introduce and
explain the basic financial statements.
IGovernment-wide financial statements
I The government-wide financial statements are designed to give the reader a picture of the
financial condition and activities of the City as a whole. This broad overview is similar to
the financial reporting of the private-sector businesses. The government-wide financial
I statements have separate columns for governmental activities and business-type
activities. Governmental activities of the City include general government (finance,
executive, human resources), public safety (police), physical environment, economic
I environment, transportation, mental and physical health, and culture and recreation. The
City's business-type activities consist of the sewer and stormwater utilities.
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The statement of net assets presents information on all of the City's asset and liabilities,
with the difference reported as net assets. This statement is similar to the balance sheet of
a private sector business. Over time, increases or decreases in net assets may serve as
useful indicator of improvement or deterioration in the City's overall financial position.
The statement of activities presents information showing how the government's net assets
changed during the most recent fiscal year. This statement distinguishes revenue
generated by specific functions from revenue provided by taxes and other sources not
related to a specific function. The revenue generated by the specific functions (charges
for services, grants, and contributions) is compared to the expenses for those functions to
show how much each function either supports itself or relies on taxes and other general
funding sources for support. All activity on the statement is reported on the accrual basis
of accounting, requiring that revenues are reported when they are earned and expenses
are reported when they are incurred, regardless of when cash is received or disbursed.
Items such as uncollected taxes, unpaid vendor invoices for goods or services received
during the year, and earned but unused vacation leave are included in the statement of
activities as revenue and expenses even though no cash has changed hands.
The government-wide financial statements can be found immediately following this
Management Discussion and Analysis (MD&A).
Fund financial statements
The annual financial report includes fund financial statements in addition to the
government-wide financial statements. While the government-wide statements present
the City's finances based on the type of activity, general government versus business-
type, the fund financial statements are presented by fund type such as the general fund,
special revenue funds, and proprietary funds. A fund is a fiscal and accounting entity with
a self-balancing set of accounts used to account for specific activities or meet certain
objectives. Funds are often set up in accordance with special regulations, restrictions or
limitations. The City of Spokane Valley, like other state and local governments, use fund
accounting to ensure and show compliance with finance-related legal requirements. The
City's funds are divided into two categories, governmental and proprietary.
Governmental funds are used to account for essentially the same functions as are
reported as governmental activities in the government-wide financial statements. The
basis of accounting is different between the governmental fund statements and the
government-wide financial statements. The governmental fund statements focus on near
term revenues/financial resources and expenditures while the government-wide financial
statements include both near term and long term revenues/financial resources and
expenses. The information in the governmental fund statements can be used to evaluate
the City's near term financing requirements and immediate fiscal health. Comparing the
governmental fund statements with the government-wide statements can help the reader
better understand the long term impact of the City's current year financing decisions. To
assist in this comparison, reconciliations between the governmental fund statements and
the government-wide financial statements are included with the governmental fund
balance sheet and the governmental fund statement of revenues, expenditures, and
changes in fund balances.
The City of Spokane Valley maintains nine individual governmental funds. The City's four
major governmental funds, the general fund, street fund, Mirabeau Point project fund and
street bond capital projects fund are presented separately in the governmental fund
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I balance sheet and the governmental fund statement of revenues, expenditures and
changes in fund balances. The remaining governmental funds are combined into a single
column labeled other governmental funds. Individual fund data for each of the other
IIgovernmental funds can be found in the combining statements later on in this report.
The City maintains budgetary control over its operating funds through the adoption of an
annual budget. Budgets are adopted at the fund level and according to state law. A
I budgetary comparison statement is presented for the major funds as a basic financial
statement. Other budgetary comparison schedules are included following the other
governmental funds' combining statements in this report.
IProprietary funds are used by governments to account for their business-type activities.
Business-type activities provide specific goods or services to a group of customers that
I are paid for by fees charged to those customers. There is a direct relationship between
the fees paid and services received.
I The City of Spokane Valley has two types of proprietary funds, enterprise funds and
internal service funds. Enterprise funds are used to account for goods and services
provided to citizens. Internal service funds are used to account for goods and services
Iprovided internally to various City departments.
Enterprise funds of the City are used to report the same functions presented as business-
type activities in the government-wide statements with the fund statements providing more
I detail then is reported in the government-wide statements. The enterprise fund statements
provide information for the City's wastewater and stormwater utilities.
I Internal service funds are an accounting device used to accumulate and allocate costs
internally among the City's various functions. The City uses internal service funds to
account for its fleet of vehicles, computer equipment, and insurance claims. Internal
I service fund assets and liabilities are predominantly governmental and have been included
in the governmental activities column of the government-wide statement of net assets.
INotes to the financial statements
The notes to the financial statements provide additional information that is important to a
full understanding of the data in the government-wide and fund financial statements. The
I ,notes are located immediately following the basic financial statements.
Other information
IThe combining statements for other governmental funds and internal service funds are
presented immediately following the required supplementary information.
IGOVERNMENT-WIDE FINANCIAL ANALYSIS
1 Statement of Net Assets
The statement of net assets can serve as a useful indicator of the City's financial position.
I The City of Spokane Valley's net assets at December 31, 2004 total $82,382,997.
Following is a condensed version of the government-wide statement of net assets.
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Table 1
City of Spokane Valley's Net Assets i
(in thousands)
Governmental Business-Type Total Primary
Activities Activities Government
2004 2003 2004 2003 2004 2003
Current and other assets $20,830 $16,204 $1,345 $ 1,249 $22,175 $ 17,453
Capital assets(net of depreciation) 71,433 64.240 - - 71,433 64.240
Total assets 92,263 80,444 1,344 1,249 93,608 81,693
Long-term liabilities 9,488 9,555 - - 9,488 9,555
Other liabilities 1,662 812 75 455 1,737 1,267
Total liabilities 11,150 10,367 75 455 11,225 10,822
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Net assets:
Invested in capital assets, net of
related debt 62,079 63,878 - - 62,079 63,878
Restricted 7,994 1,322 - - 7,994 1,322
Unrestricted 11.040 4,877 1,270 794 12,310 5,671
Total net assets $81,113 $70,077 $1,270 $ 794 $82,383 $70,871
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The largest component of the City's net assets, 75.3% or $62.0 million, is its investment in
capital assets net of any related outstanding debt issued to acquire those assets. These
capital assets such as streets, bridges, parks, and equipment, are used to provide
services to the citizens. Consequently, these assets are not available to sell and convert
to cash for future spending. The majority of these assets were donated by Spokane
County at the time of incorporation.
Approximately 9.7% or $7.9 million of the total net assets of the City are earmarked for
construction projects such as street and infrastructure construction. These assets for
construction come from dedicated taxes.
Other functions of the City may access the remaining net assets of $12.3 million.to meet
ongoing obligations to citizens and creditors. Examples of other City obligations which
these net assets may be used for are public safety, employee salaries, park maintenance, I
and ongoing street maintenance (street sweeping, lane striping, resurfacing).
At the end of the fiscal year, the City of Spokane Valley reported positive balances in all
'three categories of net assets, for the government as a whole, as well as for the separate
governmental and business-type activities.
Changes I
anges �n net assets
The changes in net assets table illustrates the increases or decreases in net assets of the
City resulting from its operating activities. The City of Spokane Valley's net assets
increased approximately $11.5 million in 2004.
Following is a condensed version of the City's changes in net assets. The table shows the
revenues, expenses, and related changes in net assets in tabular form for the
governmental activities separate from the business-type activities.
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Change in City of Spokane Valley's Net Assets
(in thousands)
I Governmental Business-Type Total Primary
Activities Activities Government
2004 2003 2004 2003 2004 2003
I Revenues:
Program Revenues"
Charges for services $ 3,119 $ 1,677 $ 777 $ 559 3,896 $ 2,236
Operating grants&contributions 90 20 - - 90 20
I Capital grants&contributions 11,690 70,688 - - 11,690 70,688
General Revenues:
Property taxes 8,981 6,996 - - 8,981 6,996
Sales taxes 16,532 9,982 - - 16,532 9,982
I Excise taxes 5,796 3,537 - - 5,796 3,537
Other taxes 1,103 1,270 - - 1,103 1,270
Loss on sale of capital assets (10) - - - (10) -
Investment interest 233 54 13 - 246 54
ITotal revenues 47,534 94,224 790 559 48,324 94,783 .
Expenses:
General government 3,360 2,989 - - 3,360 2,989
I Public safety 13,328 7,395 - - 13,328 7,395
Physical environment 1,124 822 - - 1,124 822
Transportation 13,361 9,055 - - 13,361 9,055
Economic environment 1,562 752 - - 1,562 752
I Mental and physical health 43 9 - - 43 9
Culture and recreation 3,444 933 - - 3,444 933
Interest on long-term debt 513 36 - - 513 36
Sewer - - 2 720 2 720
I Stormwater management - - 75 4 75 4
Total expenses 36,735 21,991 77 724 36,812 22,715
I Increase in net assets before transfers 10,799 72,233 713 (165) 11,512 72,068
Transfers 237 959 (237) 959 - -
Increase in net assets 11,036 71,274 476 794 11,512 72,068
I Net assets-beginning 70.077 (1.197) 794 - 70,871 (1,197)
Total net assets $81,113 $70,077 $ 1,270 $ 794 $82,383 $70,871
Governmental activities contributed $11.0 million of the total change in net assets of
I $11.5 million. Key elements of the increase are as follows:
f
• Donation of infrastructure from Spokane County and private donations for the
I CenterPlace facility accounted for most of the increase in governmental activities
net assets. Additionally, the City received $90,305 in grants for developing a
growth management plan. Grants and donations are recorded as program
Irevenues in the statement of activities.
• Sales taxes accounted for approximately $16.5 million in revenues in year 2004.
The City received $8.9 million in property taxes. Other taxes received were real
estate excise taxes ($2.0 million), motor vehicle fuel taxes ($1.1 million), and
hotel/motel room taxes ($ 363 thousand).
• This being the second year of incorporation the City aggressively monitored
contract service costs and staffing levels. The net result was a second year
unrestricted reserve of$16.9 million for governmental activities.
13
Business-type activities of the City's sewer and wastewater utilities increased the City of
Spokane Valley's net assets by $476 thousand, accounting for 4.1% of the total growth in
the government's net assets. Key elements of this increase are as follows:
• The Stormwater Management fund accounted for an increase of $714 thousand of
the increase. The primary revenue source is a stormwater management fee
imposed upon real property.
• The Sewer fund utility was discontinued in 2004. Residual funds in the amount of
$237 thousand were transferred to the Street Capital Projects.
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As discussed earlier, the City of Spokane Valley uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements.
Governmental funds
The purpose of the City's governmental funds is to report on near term revenues/financial
resources and expenditures. This information helps determine the City's financial
requirements in the near future. In particular, unreserved fund balance is a good indicator
of the City's resources available for spending at the end of the year.
At the end of the current year the City's combined ending governmental fund balance was
$16.9 million. Of the total ending fund balance, $300 thousand is reserved as an
operating reserve for the CenterPlace facility. Of the remaining fund balance, $7.9 million
is earmarked for capital construction projects, $4.2 million resides with special revenue
funds, and the General fund has an unreserved fund balance of$4.7 million.
Major governmental funds
The general fund is the primary operating fund of the City through which all receipts and
payments of ordinary City operations are processed, unless they are required to be
accounted for in another fund. Taxes are the major revenue source however the city does
•
not receive property tax in its first year of incorporation. At the end of 2004 the fund
balance of the general fund was $4.7 million.
The general fund increased fund balance by $7.2 million eliminating the $2.4 million deficit
fund balance from 2003. Revenues exceeded projections by $3.9 million primarily from
increased sales tax revenues. Expenditures were $3.2 million less than budget primarily
in the area of general government functions.
The street fund has a fund balance of$3.3 million, a decrease of$1.7 million for the year.
The fund did receive the full interfund loan repayment from the general fund which
increased cash by $2.9 million. The primary source of revenue for the street fund is motor
fuel tax. Road maintenance costs were $600 thousand under the original budget
projection.
The Mirabeau Point capital project fund has an ending fund balance of $3.8 million.
Construction costs drew down the fund balance by $6.0 million however contributions to
the project increased the fund balance by $2.9 million. The fund accounts for bond
proceeds issued for the construction of the CenterPlace recreation center.
14
The street bond capital projects fund has an ending fund balance of$1.3 million. The fund
accounts for bond proceeds issued for street construction projects. Transfers for
construction projects reduced the fund balance by $1.2 million. As road construction
projects continue in 2005 the fund will continue to be drawn down.
Proprietary funds
The City of Spokane Valley's proprietary fund statements provide the same type of
information found in the government-wide financial statements, but in more detail. Factors
concerning the finances of the City's proprietary funds have been already been addressed
in the discussion of the City's business-type activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
The City Council amended the revenue and expenditure budgets during 2004. The
amendments resulted in a decrease of the revenue budget for property taxes to the actual
' amount assessed. Adjustments to the expenditure budget removed revenue reserves and
increased funding for public safety to fund settle and adjust charges for 2003.
The revenue budget for the first full year of incorporation was conservatively based upon
Boundary Review Board projections made during the incorporation study. In many areas
revenues exceeded these projections by substantial amounts. Sales taxes exceeded
budget projections by 23%, gambling taxes by 27%, and state shared revenues by 25%. A
resurgence of the economy sparked increased construction resulting in building permit
fees increasing by 57% over final budget projections. Overall general revenues exceeded
budget projections by $3.8 million.
On the expenditure side of the budget all major work areas came in under their original
budgeted appropriations. Since budgeted reserves were not needed general government
was able to save $2.3 million. Overall general fund operation expenditures came in under
budget by 12% or$3.2 million.
CAPITAL ASSETS AND.DEBT ADMINISTRATION
Capital Assets
The City of Spokane Valley's investment in capital assets, including construction in
progress, for its governmental type activities as of December 31, 2004 amounts to $71.4
million, net of accumulated depreciation. This investment in capital assets includes land,
buildings, improvements, machinery and equipment, construction in progress, and
infrastructure. The year-end balance represents a net increase (additions less retirements
and depreciation) of $7.2 million from the end of last year. Additional information can be
found in Note 5 of this report.
Major additions to capital assets during the fiscal year included the following:
• Spokane County donated $9.4 million dollars in street improvements related to the
valley road and valley sewering projects. An additional $923 thousand of city funds
were expended for street improvements in 2004.
15
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• Additional equipment purchases related to the start-up of new city totaled $248
thousand. The equipment included vehicles, computers, telephone system and
leasehold improvements for city hall.
• Construction in progress for the CenterPlace Regional Recreation Center totaled
$6.0 million dollars. Total construction in progress for CenterPlace was $6.5 million
at the end of 2004.
The following table provides a listing of the capital assets (net of accumulated
depreciation) at December 31, 2004.
Governmental
Activities I
Land $ 1,597,585
Buildings 321,456
Other improvements 967,144 f
Infrastructure 56,725,200
Machinery and equipment 635,595
I
Construction in progress 11,186,032
Total $ 71,433,012
I
Long-Term Debt I
At the end of the current fiscal year, the City of Spokane Valley has total bonded debt
outstanding of $9,285,000. This amount is backed by the full faith and credit of the City
(general obligation bonds) with debt service fully funded by general government revenues.
Under State of Washington statutes general obligation indebtedness for general purposes I
pursuant to a vote of the electorate is limited to 2'/2% of actual value of taxable property
located within the City. 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.
The assessed valuation of the City for the year 2004 for purposes of determining the legal
I
•debt margin is $4,527,968,717. Remaining debt capacities for the City for general voted
and non-voted purposes (2 '/%) is limited to $103,830,375.
. The City of Spokane Valley maintains a A3 rating from Moody's for its non-voted general
obligation debt. Additional information regarding the debt limitations and capacities can be
found in Note 11 and in the Statistical Section of this report.
ECONOMIC FACTORS AND NEXT YEARS' BUDGETS AND RATES
Several factors that affect the economic climate in the City of Spokane Valley were
considered when preparing the City's 2005 budget. The outlook for the regional economy
was weighed in relation to its expected impact on the City of Spokane Valley. The
character of the City, including its current and future business activity and its attraction as
a place to live, was evaluated. Based on the budget analysis, the City's future is
promising. '
16
Healthy economic numbers emerged in 2004 though employment gains were modest.
Spokane County employment increased by 1,800 jobs or 1 percent. The unemployment
rate dropped from 6.8% to 6.6%. Job growth for Spokane County is expected to be 3,200
jobs in 2005. A recent contract for aircraft aluminum is expected to increase employment
at the Kaiser Trentwood aluminum mill by 200 jobs in 2005.
Retail sales taxes are projected to increase by 2 percent for 2005. Sales tax revenues
have trended slightly upward over the same period in 2004. The addition of the public
safety sales tax will result an estimated $450 thousand to be used for public safety service
delivery.
Coming off a record sales year for residential real estate, 2005 is expected to be another
strong year for sales. Mortgage rates are remaining steady and that has helped
homebuilding in the city remain strong with building permits exceeding 2004 levels for the
1st quarter of 2005. Commercial construction has increased significantly and is expected to
remain strong through 2006.
The City contracts with Spokane County for a majority of city services including public
safety and street maintenance. These contracts were expected to increase moderately in
2005. The city has also increased staffing in public works and building services to facilitate
the rapid growth in construction and infrastructure development.
' These factors were considered when adopting the City's budget for 2005. The City
adopted the maximum property tax levy as allowed by law, $2.10 per thousand dollars of
assessed valuation for its own purposes. Budgetarily, no general fund tax increases were
made in the 2004. Expenditures were budgeted at levels to maintain service delivery at
2004 levels. The overall financial outlook of the city is positive and is expected to improve
as economic growth continues.
I
REQUESTS FOR FINANCIAL INFORMATION
This financial report is designed to provide a general overview of the City of Spokane
Valley's finances and to demonstrate the City's accountability. If you have questions about
this report or need would like to request additional information, contact the City's Finance
Department, 11707 E. Sprague Ave, Suite 106, Spokane Valley, Washington 99206.
I1
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IStatement of Net Assets
December 31, 2004
Primary Government
Governmental Business Type
I Activities Activities Total
Assets:
Current assets:
I Cash, cash equivalents and
pooled investments $ 14,713,889 $ 1,225,745 $ 15,939,634
Receivables (net):
I Taxes 4,150,228 64,718 4,214,946
Accounts 2,020,130 - 2,020,130
Internal balances (54,005) 54,005 -
Total current assets 20,830,242 1,344,468 22,174,710
Capital assets (net of accumulated
depreciation):
I Land 1,597,585 - 1,597,585
Building and system 321,456 - 321,456
Improvements other than buildings 967,144 - 967,144
I Machinery & equipment 635,595 - 635,595
Infrastructure 56,725,200 - 56,725,200
Construction in progress 11,186,032 - 11,186,032
ITotal capital assets 71,433,012 - 71,433,012
Total assets 92,263,254 1,344,468 93,607,722
I Liabilities:
Current liabilities:
Accounts payable 1,473,758 42,679 1,516,437
I Taxes payable - - -
Accrued liabilities 108,324 - 108,324
Bonds &deposits payable 76,370 32,100 108,470
Other current liabilities 3,174 - 3,174
Total current liabilities 1,661,626 74,779 1,736,405
Noncurrent liabilities:
I Due within one year 165,000 - 165,000
Due in more than one year 9,323,320 9,323,320
Total noncurrent liabilities 9,488,320 - 9,488,320
Total liabilities 11,149,946 74,779 11,224,725
Net assets:
I Invested in capital assets net of related debt 62,079,431 - 62,079,431
Restricted for:
Capital Projects 7,994,118 - 7,994,118
Unrestricted 11,039,759 1,269,689 12,309,448
Total net assets $ 81,113,308 $ 1,269,689 $ 82,382,997
The notes to the financial statements are an integral part of this statement.
1 18
Statement of Activities
For the Year Ended December 31,2004
Program Revenues Net(Expenses)Revenue and Changes in Net Assets
Operating Capital Primary Governement
Charges for Grants and Grants and Governmental Business-type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Primary Government:
Government activities:
General government $ 3,359,728 $ 2,306 $ - $ - $ (3,357,422) $ - $ (3,357,422)
Public safety 13,327,807 1,261,955 - - (12,065,852) - (12,065,852)
Physical environment 1,124,472 73,279 - - (1,051,193) - (1,051,193)
Transportation 13,360,562 - - 8,739,255 (4,621,307) - (4,621,307)
Economic environment 1,562,221 1,629,613 90,305 - 157,697 . - 157,697
Mental and physical health 42,513 - - - - (42,513) - (42,513)
Culture and recreation 3,443,688 152,034 - 2,950,566 (341,088) - (341,088)
Interest on long-term debt 514,531 - - - (514,531) - (514,531)
Total governmental activities 36,735,522 3,119,187 90,305 11,689,821 (21,836,209) - (21,836,209)
Business-type activities:
Sewer 1,597 - - - - (1,597) (1,597)
Stormwater Management 75,041 776,859 - - - 701,818 701,818
Total business-type activities 76,638 776,859 - - - 700,221 700,221
Total primary government $ 36,812,160 $ 3,896,046 $ 90,305 $ 11,689,821 (21,836,209) 700,221 (21,135,988)
General Revenues:
Taxes
Property taxes 8,980,837 - 8,980,837
Sales and use tax 16,531,976 - 16,531,976
Excise taxes 5,796,164 - 5,796,164
Other taxes 1,103,277 - 1,103,277
Loss on sale of capital assets (10,696) - (10,696)
Investment earnings 233,368 12,729 246,097
Transfers 237,344 (237,344) -
Total general revenues and transfers 32,872,270 (224,615) 32,647,655
Change in net assets 11,036,061 475,606 11,511,667
Net assets at beginning of year 70,077,247 794,083 70,871,330
Net assets at end of year $ 81,113,308, $ 1,269,689 $ 82,382,997
•
• The notes to the financial statements are an integral part of this statement.
19
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IBalance Sheet
Governmental Funds
December 31,2004
Other Total
I General Street Mirabeau CD Block Governmental Governmental
Fund Fund Point Project Grant Funds Funds Funds
Assets:
Cash,cash equivalents and
I pooled investments $ 3,402,948 $ 3,412,774 $ 2,695,091 $ - $ 5,046,922 $ 14,557,735
Receivables(net)
Taxes 1,984,600 266,838 - - 242,185 2,493,623
Accounts 122,899 - 1,546,525 267,803 81,004 2,018,231
I Due from other funds 22,996 53 - 129,630 117,970 270,649
Total assets $ 5,533,443 $ 3,679,665 $ 4,241,616 $ 397,433 $ 5,488,081 $ 19,340,238
Liabilities and fund balances:
1 Liabilities:
Accounts payable 294,726 214,319 455,561 397,433 109,719 1,471,758
Taxes payable - - - - - -
Due to other funds 55,206 - - - 324,653 379,859
I Bonds&deposits payable 76,370 - - - 76,370
Other accrued liabilities 72,787 1,122 - - - 73,909
Other current liabilities 324 - 2,850 - - 3,174
Deferred revenues 240,570 156,327 - - - 396,897
ITotal Liabilities 739,983 371,768 458,411 397,433 434,372 2,401,967
Fund Balances:
Reserved for:
I CenterPlace Operating 300,000 - - - - 300,000
Unreserved,reported in:
General Fund 4,493,460 - - - - 4,493,460
Special Revenue - 3,307,897 - - 842,796 4,150,693
Capital Projects - - 3,783,205 - 4,210,913 7,994,118
Total fund balances 4,793,460 3,307,897 3,783,205 - 5,053,709 16,938,271
Total liabilities&fund balances $ 5,533,443 $ 3,679,665 $ 4,241,616 $ 397,433 $ 5,488,081 $ 19,340,238
I -
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The notes to the financial statements are an integral part of this statement.
20
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Reconciliation of Total Governmental Fund Balances to I
Net Assets of Governmental Activities
For the Year Ended December 31;2004 `
Total government fund balances $ 16,938,271 ,
Amounts reported for governmental activities in the statement of net assets
are different because:
Capital assets used in governmental activities are not financial resources and
therefore are not reported in the funds. 70,956,713
These assets consist of:
Land 1,597,585 I
Construction in progress 11,186,032
.Buildings 944,297
Improvements other than buildings 2,123,571
Machinery and equipment-General Government 213,052
Infrastructure 203,684,605
Less: Accumulated Depreciation (148,792,429)
Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of timing of related cash flows. Property taxes are recognized
as revenues in the year for which they are levied. Grants and similar items are I
recognized as revenue as soon as all the eligibility requirements imposed by the
provider have been met. These revenues are therefore not reported in the funds. 1,658,504
These revenues consist of:
1
Sales and use tax 1,487,358
Excise tax 148,556
Other taxes 20,691
Investment earnings 1,899 t
Long-term liabilities, including bonds payable are not due and payable in the I
current period and therefore are not reported in the funds. (9,125,839)
These long-term liabilities consist of:
Bonds payable (9,404,478)
Accrued interest (34,415) (
Compensated absences (83,843)
Deferred revenue 396,897
(
Internal service funds are used by management to charge the costs of certain
activities, such as equipment rental, self-insurance, information technology
and facility services to individual funds. The assets and liabilities of the internal If
service funds are included in governmental activities in the statement of net assets. 685,659
Net assets of governmental activities $ 81,113,308 (
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The notes to the financial statements are an integral part of this statement.
21 ,
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Statement of Revenues,Expenditures,and Changes in Fund Balances
• Governmental Funds
For the Year Ended December 31,2004
Other Total
I General Street Mirabeau CD Block Governmental Governmental
Fund Fund Point Project Grant Fund Funds Funds
Revenues:
Taxes $ 24,545,844 $ 203,203 $ - $ - $ 2,373,483 $ 27,122,530
I Licenses and permits 1,779,081 - - - - 1,779,081
Intergovernmental revenues 1,196,962 1,144,237 - 267,803 1,024,117 3,633,119
Charges for services 792,482 - - - - 792,482
Fines and forfeitures 1,196,234 - - - - 1,196,234
I Miscellaneous 75,628 56,694 76,895 - 73,171 282,388
Total revenues 29,586,231 1,404,134 76,895 267,803 3,470,771 34,805,834
Expenditures:
I Current:
General government 3,178,887 - - - - 3,178,887
Public safety 13,324,116 - - - - 13,324,116
Physical environment 1,098,404 - - - - 1,098,404
Transportation 34,300 3,112,922 - - - 3,147,222
I Economic environment 1,138,009 - - - 450,383 1,588,392
Mental and physical health 42,513 - - - - 42,513
Culture and recreation 3,376,724 - - - - 3,376,724
Debt Service:
1 Principal - _ _ _ 145,000 145,000
Interest 43,058 435,928 478,986
Bond issue costs - - 826 - 304 1,130
Capital Outlay 176,660 - 6,050,359 402,744 1,612,974 8,242,737
I Total expenditures 22,412,671 3,112,922 6,051,185 402,744 2,644,589 34,624,111
Excess(deficiency)of revenue
over(under)expenditures 7,173,560 (1,708,788) (5,974,290) (134,941) 826,182 181,723
I Other financing sources(uses):
Contributions - - 2,880,670 - 3,021 2,883,691
Transfers in 57,296 - - 134,941 1,796,649 1,988,886
Transfers out - (34,300) - - (1,717,242) (1,751,542)
ITotal other financing sources(uses) 57,296 (34,300) 2,880,670 134,941 82,428 3,121,035
Net change in fund balance 7,230,856 (1,743,088) (3,093,620) - 908,610 3,302,758
I Fund balance-beginning
(2,437,396) 5,050,985 6,876,825 - 4,145,100 13,635,514
Fund balance-ending $ 4,793,460 $ 3,307,897 $ 3,783,205 $ - $ 5,053,710 $ 16,938,272
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The notes to the financial statements are an integral part of this statement.
22
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Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balances
Governmental Funds to the Statement of Activities
For the Year Ended December 31,2004
Net change in fund blances-total governmental funds $ 3,302,757
Amounts reported for governmental activities in the statement of activites
are different because:
Governmental funds report capital outlays as expenditures. However,
in the statement of activities the cost of these assets is allocated over their
useful lives and reported as depreciation expense. This is the amount by
which capital outlays exceeded depreciation in the current period. 2,601,596
This is comprised of:
Capital outlays 13,123,169
Current year depreciation (10,521,573)
The net effect of various miscellaneous transactions involving capital assets 3,082,986
(i.e.,sales,trade-ins,and donations)is to increase net assets.
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds. 2,055,401
This is comprised of:
Deferred taxes 396,897
Sales and use tax 1,487,358
Excise tax 148,556
Other taxes 20,691
Investment earnings 1,899
Bond proceeds provide current financial resources to governmental funds,but
issuing debt increases long-term liabilities in the statement of net assets. '
Repayment of long-term debt is an expenditure in the governmental funds,yet,
the repayment reduces long-term liabilities in the statement of net assets.
This is the amount by which repayments exceeded proceeds. 149,845
This is comprised of:
Repayment of long-term debt. 149,845
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
the governmental funds. (118,258)
This is comprised of: I
Accrued interest expense (34,415)
Accrued compensating absence expense (83,843)
Internal service funds are used by management to charge the cost of certain
activities,such as equipment rental,self-insurance, information technology and
facility services to the individual funds. The net revenue(expense)of these
internal service funds is reported with governmental activities. (38,266)
Change in net assets of governmental activities $ 11,036,061
The notes to the financial statements are an integral part of this statement.
23
I
General Fund
Statement of Revenues, Expenditures,and Changes in Fund Balances
Budget and Actual
For the Year Ended December 31,2004
I Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
I Original Final Budgetary Basis (Negative)
Revenues:
Taxes $ 23,122,500 $ 21,878,309 $ 24,545,844 $ 2,667,535
Licenses and permits 1,275,000 1,350,029 1,779,081 429,052
I Intergovernmental revenues 882,816 882,816 1,196,962 314,146
Charges for services 566,800 580,503 792,482 211,979
Fines and forfeitures 366,200 966,200 1,196,234 230,034
I Miscellaneous 20,500 23,768 75,628 51,860
Total revenues 26,233,816 25,681,625 29,586,231 3,904,606
Expenditures:
I Current:
General government 6,619,053 5,317,392 3,178,887 2,138,505
Public safety 12,438,625 13,068,625 13,324,116 (255,491)
Physical environment 1,079,909 1,079,909 1,098,404 (18,495)
1 Transportation 42,500 42,500 34,300 8,200
Economic environment 1,242,984 1,242,984 1,138,009 104,975
Mental and physical health 40,800 40,800 42,513 (1,713)
Culture and recreation 3,737,941 3,629,941 3,376,724 253,217
Debt service:
Principal 800,000 800,000 - 800,000
Interest 75,000 75,000 43,058 31,942
Capital outlay 279,504 279,504 176,660 102,844
Total expenditures 26,356,316 25,576,655 22,412,671 3,163,984
Excess(deficiency)of revenue
over(under)expenditures (122,500) 104,970 7,173,560 7,068,590
Other financing sources(uses):
Transfers in 122,500 122,500 57,296 (65,204)
ITotal other financing sources(uses) 122,500 122,500 57,296 (65,204)
Net change in fund balance - 227,470 7,230,856 7,003,386
I Fund balance-beginning (2,437,396) (2,437,396) (2,437,396) -
Fund balance-ending $ (2,437,396) $ (2,209,926) $ 4,793,460 $ 7,003,386
1
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The notes to the financial statements are an integral part of this statement.
1 24
1
Street Fund
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual
For the Year Ended December 31, 2004
•
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues:
Taxes $ - $ - $ 203,203 $ 203,203 '
Intergovernmental revenues 1,187,200 1,187,200 1,144,237 (42,963)
Miscellaneous 75,000 75,000 56,694 (18,306)
Total revenues 1,262,200 1,262,200 1,404,134 141,934
Expenditures:
Current:
Transportation 3,730,684 3,730,684 3,112,922 617,762 1
Total expenditures 3,730,684 3,730,684 3,112,922 617,762
Excess (deficiency)of revenue
over(under)expenditures (2,468,484) (2,468,484) (1,708,788) 759,696
Other financing sources(uses): '
Transfers in 800,000 800,000 - (800,000) '
Transfers out (42,500) (42,500) (34,300) 8,200 ‘
Total other financing sources(uses) 757,500 757,500 (34,300) (791,800)
II
Net change in fund balance (1,710,984) (1,710,984) (1,743,088) (32,104)
Fund balance-beginning 5,050,985 5,050,985 5,050,985 - I
Fund balance-ending $ 3,340,001 $ 3,340,001 $ 3,307,897 $ (32,104)
1
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The notes to the financial statements are an integral part of this statement.
25
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• Mirabeau Point Project
I Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual
For the Year Ended December 31, 2004
Variance with
Final Budget
Budgeted Amounts _ Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues:
Miscellaneous $ - $ - $ 76,895 $ 76,895
Total revenues - - 76,895 76,895
Expenditures:
I Debt Service:
Bond issuance costs - - 826 (826)
Capital outlay 9,500,000 9,500,000 6,050,359 3,449,641
I Total expenditures 9,500,000 9,500,000 6,051,185 3,448,815
Excess(deficiency)of revenue
over(under)expenditures (9,500,000) (9,500,000) . (5,974,290) 3,525,710
IOther financing sources(uses):
Contributions - 3,000,000 2,880,670 (119,330)
ITotal other financing sources(uses) - 3,000,000 2,880,670 (119,330)
Net change in fund balance (9,500,000) (6,500,000) (3,093,620) 3,406,380
Fund balance-beginning 6,876,825 6,876,825 6,876,825 -
Fund balance-ending $ (2,623,175) $ 376,825 $ 3,783,205 $ 3,406,380
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The notes to the financial statements are an integral part of this statement.
26
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Community Development Block Grant Fund '
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual
For the Year Ended December 31, 2004
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues:
Intergovenmental $ - $ 375,965 $ 267,803 $ (108,162)
Total revenues - 375,965 267,803 (108,162) I
Expenditures:
Capital outlay - 504,000 402,744 101,256
Total expenditures - 504,000 402,744 101,256
r
Excess (deficiency)of revenue
over(under)expenditures - (128,035) (134,941) (6,906)
Other financing sources(uses): '
Transfers in - 128,035 134,941 6,906
Total other financing sources(uses) - 128,035 134,941 6,906
Net change in fund balance - - - -
I
Fund balance-beginning - - - -
Fund balance-ending $ - $ - $ - $ I-
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If
The notes to the financial statements are an integral part of this statement.
27
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Statement of Net Assets
I Proprietary Funds
December 31, 2004
Business-type Activities -Enterprise Funds
I Non Major Major Governmental
Fund Fund Activities -
Stormwater Internal Service
Sewer Management Total Funds
I Assets:
Current assets
II Cash, cash equivalents and
pooled investments $ - $ 1,225,745 $ 1,225,745 $ 156,154
Assessments receivables(net) - 64,718 64,718 -
Due from other funds - 54,005 54,005 55,206
Total current assets - 1,344,468 1,344,468 211,360
Capital assets:
I Machinery Equipment& E ui ment - - - 691,670
Less accumulated depreciation - - - (215,371)
I Total capital assets (net of
accumulated depreciation) - - - 476,299
ITotal assets - 1,344,468 1,344,468 687,659
Liabilities:
I Current Liabilities:
Accounts payable - 42,679 42,679 2,000
Deposits and other payables - 32,100 32,100 -
' Total liabilities - 74,779 74,779 2,000
Net Assets:
I Invested in capital assets - - - 476,299
Unrestricted - 1,269,689 1,269,689 209,360
Total net assets $ - $ 1,269,689 $ 1,269,689 $ 685,659
I
IIIThe notes to the financial statements are an integral part of this statement.
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Statement of Revenues, Expenses, and Changes in Fund Net Assets
Proprietary Funds
For the Year Ended December 31, 2004
Business-type Activities-Enterprise Funds
I
Non Major Major Governmental
Fund Fund Activities-
Stormwater Internal Service
Sewer Management Total Funds
Operating Revenues:
Charges for services $ - $ 776,859 $ 776,859 $ 262,634
Total operating revenues - 776,859 776,859 262,634
Operating Expenses:
Operations 1,597 75,041 76,638 120,300
Depreciation - - 181,842
Total Operating expenses 1,597 75,041 76,638 302,142
Operating income (1,597) 701,818 700,221 (39,508)
Nonoperating revenues(expenses):
Interest income 334 12,395 12,729 1,242
I
Total nonoperating revenues(expenses) 334 12,395 12,729 1,242
Income before contributions and transfers (1,263)- 714,213 712,950 (38,266)
Contributions and transfers:
Transfers in - - - -
Transfers out (237,344) - (237,344) -
Capital Contributions 42,776
Change in net assets
•
(238,607) 714,213 475,606 4,510
Net assets beginning of the year 238,607 555,476 794,083 681,149 I
Net assets end of year $ - $ 1,269,689 $ 1,269,689 $ 685,659
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•
The notes to the financial statements are an integral part of this statement.
29
Statement of Cash Flows
I Proprietary Funds
For the Year Ended December 31, 2004
IBusiness-type Activities-Enterprise Funds
Non Major Major Governmental
Fund Fund Activities-
II Stormwater Internal Service
Sewer Management Total Funds
Cash flows from operating activities:
Cash received from customers and users $ - $ 767,369 $ 757,369 $ -
Receipts from interfund services provided 659,000 - 659,000 264,672
Payments to suppliers and for services (425,326) - (86,366) (511,692) (175,762)
1 Net cash provided(used)by operating activities 233,674 - 681,003 914,677 _ 88,910
Cash flows from noncapital financing activities:
Transfers in(out) (237,345) - (237,345) -
Net cash provided(used)by noncapital
and related financing activities _ (237,345) - (237,345) -
II
Cash flows from capital and related financing activities:
Acquisition of capital assets - - (2,387
Net cash provided (used)by capital
and related financing activities - - - (2,387)
IICash flows from investing activities:
interest received 334 12,394 12,728 1,242
Net cash provided(used)by investing activities _ 334 12,394 12,728 1,242
Net increase in cash&cash equivalents (3,337) 693,397 690,060 87,765
Cash&cash equivalents,January 1,2004 3,337 532,348 535,685 68,389
Cash&cash equivalents, December 31,2004 $ - $ 1,225,745 $ 1,225,745 $ 156,154
IReconciliation of operating income to net cash provided
(used)by operating activities:
IOperating income(loss) $ (1,596) $ 701,818 $ 700,222 $ (39,508)
Adjustments to reconcile operating income to net
cash provided (used)by operating activities:
Depreciation - - - 181,842
Changes in assets and liabilities:
(Increase)decrease in assessments receivable - (9,489) (9,489) -
(Increase)decrease in due from other funds
659,000 (54,005) 604,995 (52,439)
Increase(decrease)in accounts payable (423,730)
42,679
(381,051) (256)
Increase(decrease)in due to other funds -- - - - - - (729)
ITotal adjustments 235,270 (20,815) 214,455 128,418
Net cash provided(used)by operating activities $ 233,674 $ _681,003 $ 914,677 $ 88,910
I Noncash investing,capital,and financing activities:
Contributions of capital assets from other funds - - - 27,555
I The notes to the financial statements are an integral part of this statement.
30
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II CITY OF SPOKANE VALLEY
NOTES TO THE FINANCIAL STATEMENTS
IFor the year ended December 31, 2004
I
Note Page
Ii SUMMARY OF ACCOUNTING POLICIES 32
2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABLILTY 36
3 DEPOSITS AND INVESTMENTS 38
1 4 PROPERTY TAXES 39
5 CAPITAL ASSETS AND DEPRECIATION 39
6 PENSION PLANS 41
1 7 RISK MANAGEMENT 49
8 INTERFUND BALANCES AND TRANSFERS 44
9 SHORT-TERM DEBT 44
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10 LONG-TERM DEBT 44
11 SUBSEQUENT EVENTS 46
I12 CONTINGENCIES AND LITIGATION 46
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1 31
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NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
The City of Spokane Valley 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 code city, include planning & zoning, public
safety, public works, and recreation &culture.
The accounting and reporting policies of the City relate to the funds included in the accompanying
financial statements conform to generally accepted accounting principles (GAAP) applicable to state
and local governments. GAAP for local governments include those principles prescribed by the
Governmental Accounting Standards Board (GASB), 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 Interpretation.
A. Reporting Entity
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.
B. Government-Wide and Fund Financial Statements
The City's basic financial statements include both government-wide (reporting the City as a whole)
and fund financial statements (reporting the City's major funds). Both the government-wide and
fund financial statements categorize primary activities as either government or business-type.
The government-wide financial statements (i.e., the statement of net assets and the statement of
changes in net assets) report information on all of the nonfiduciary activities of the primary
government. For the most part, the effect of interfund activity has been removed from these
statements. Governmental activities, which normally are supported by taxes and intergovernmental
revenues, are reported separately from business-type activities, which rely to a significant extent on '
fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function
or segment are offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific function or segment. Program revenues include 1) charges to customers or
applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a
given function or segment and 2) grants and contributions that are restricted to meeting the
operational or capital requirements of a particular function or segment. Taxes and other items not
properly included among program revenues are reported as general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary
funds. The city has no fiduciary funds. Major individual funds are reported as separate columns
while the remaining funds are combined for presentation purposes in the governmental funds
statements and the proprietary funds statements.
C. Measurement Focus, Basis of Accounting,and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are proprietary funds. Under this
approach, 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
32
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Iin the year for which they are levied. Grants and similar items are recognized as revenue as soon as
all the eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources
I 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 collectable within the current period or soon enough thereafter to pay liabilities of the
I current period. For this purpose, the government 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
Iwhen the payment is due.
Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are
I all considered to be susceptible to accrual and so have been recognized as revenues of the current
fiscal period. Only the portion of special assessments receivable due within the current fiscal period
is considered to be susceptible to accrual as revenue of the current period. All other revenue items
are considered to be measurable and available only when cash is received by the government.
IThe city reports the following major governmental funds:
I The General Fund is the City's primary operating fund. It accounts for all financial resources of •
the general government, except those required to be accounted for in another fund.
The Street Fund is responsible for the maintenance of all city streets and bridges. Also,
I construction activities for city streets are coordinated through this fund.
��
ccounts for monies received from bond roceedss t�ed
I The Mirabeau Point Protect Fund a p
for the construction of a multi-use community center and acquisition of furnishings.
The Community Development (CD) Block Grant Fund accounts for grant monies received as
part of the federal community development block grant program.
IThe city reports the following major proprietary fund:
I 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.
IAdditional, the government reports the following fund types:
Special revenue funds account for arterial street construction and maintenance, hotel/motel tax •
I revenues and expenditures, and revenues&expenditures for paths and trails maintenance.
Debt service funds account for the resources accumulated and payments made for principal and
interest on general government debt except those to be accounted for in another fund.
ICapital project funds account for the acquisition or development of capital facilities for
governmental activities. Their major sources of revenues are from proceeds of general
I obligation bonds, grants from other agencies and contributions from other funds.
Internal service funds account for data processing and risk management services provided to
other departments on a cost reimbursement basis.
I
33
Private-standards of accounting and financial reporting issued prior to December 1, 1989, generally
are followed in both the government-wide and proprietary fund financial statements to the extent that
those standards do not conflict with or contradict guidance of the Governmental Accounting
Standards Board. Governments also have the option of following subsequent private-sector
guidance for their business-type activities and enterprise funds, subject to this same limitation. The
City has elected not to follow subsequent private-sector guidance.
As a general rule interfund activity has been eliminated from the government-wide financial
statements. Exceptions are payments in lieu of taxes, external type transactions within internal
service funds (revenues and expenses for interest or services to other governmental organizations)
and other charges for wastewater or stormwater services. Elimination of these charges would
distort the direct cost and program revenues reported for these functions.
Amounts reported as program revenues include 1) charges to customers or applicants for goods,
services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and
contributions, including special assessments. Internally dedicated resources are reported as general
revenues rather than program revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expense generally result from providing services and producing and delivering goods
in connection with a proprietary fund's principal ongoing operations. The principle operating
revenues of the stormwater enterprise fund is a stormwater assessment fee. Operating expenses of
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.
When both restricted and unrestricted resources are available for use, it is the policy's olio to
Y Y use
restricted resources first, and then unrestricted resources as they are needed.
D. Assets, Liabilities, & Fund Equity
1. Cash and Cash Equivalents
The City considers all highly liquid assets including demand deposits, money market accounts,
CD's, investment in the State Treasurer's Investment Pool, 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 assets within cash and cash
equivalents in the various funds. The interest on these investments is prorated to the applicable
funds.
2. Investments—(Refer to Note 3).
3. Receivables and Payables
Taxes receivable consists of property taxes and related interest and penalties. Accrued interest
receivable consists of amounts earned on investments, notes, and contracts. Accrued interest
payable consists of amounts owed on notes, loans, and contracts.
Customer accounts receivable/payable consist of amounts owed from/to private individuals or
organizations for goods and services including amounts owed. If the transactions are with another
governmental unit, it is accounted for within "due from/to other governments".
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.
Activity between funds that are representative of lending/borrowing arrangements outstanding at the
end of the fiscal year are referred to either "due to/from other funds" (i.e., the current portion of
34
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I interfund loans) or "interfund loans receivable/payable" (i.e., the non-current portion of interfund
loans). All other outstanding balances between the governmental activities and business-type
activities are reported in the government-wide financial statements as "internal balances". (Refer to
I Note 9.)
Advances, between funds, as reported in the fund financial statements, are offset by a fund balance
reserve account in applicable governmental funds to indicate that they. are not available for
Iappropriation and are not expendable available financial'resources.
In the government-wide financial statements, and proprietary fund types in the fund financial
I statements, long-term liabilities are reported in applicable governmental activities, business-type
activities, or proprietary fund type statement of net assets.
4. Inventories and prepaid items
IReported inventories in governmental funds consist of expendable supplies held for consumption.
The cost thereof has been recorded as an expenditure at the time individual inventory items were
I purchased (purchase method). .
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.
1 5. Capital Assets and Deprecation (Refer to Note 5).
I 6. Long-term Debt
Liabilities for long-term debt are recorded in the government-wide statement of net assets and in the
proprietary funds balance sheet. The liabilities include bond premiums and discounts, as well as
I issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported
net of the applicable bond premium or discount. Issuance costs are reported as deferred charges.
Long-term debt outstanding at year end is outlined in Note 11.
I For governmental funds financial statements, bond issuance costs are expended at the time of
issuance. Bond premiums and discounts are deferred and amortized over the life of the bonds.
Bond proceeds are reported as an other financing source net of the applicable premium or discount.
Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service
expenditures. The nature of debt in the governmental activity is specific to a program and,
therefore; debt service costs are not an allocated expense.
I7. Deferred Revenues
The deferred revenues account is used to offset receivables established in the governmental fund
I financial statements for certain revenues that are measurable but not considered available to
finance payment of current obligations, and, therefore, 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. Deferred revenues represented in this manner on
I the accompanying financial statements are uncollected property taxes levied and uncollected road
taxes levied.
I8. 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,
I retirement, or death. All vacation pay is accrued when incurred in the government-wide, proprietary
and fiduciary fund financial statements. An additional amount has been accrued for the city's share
of deferred compensation and Medicare taxes related to the vacation accrual. A liability for these
I amounts is reported in the government fund statements only if they have matured, for example, as a
result of employee resignations and retirements.
35
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9. Fund Balance Designations and Reservations I
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or are legally restricted by outside parties for use for I
a specific purpose. Designations of fund balance represent tentative management plans that are
subject to change. The City has reserved $300,000 in the General Fund as an operating reserve for
the CenterPlace facility.
E. Revenues, Expenditures, and Expenses
1. Program Revenues
Program revenues include charges for services to customers for goods or services provided,
operating grants and contributions, and nonoperating grants and contributions within the
Government-wide Statement of Activities. Charges for services include business licenses, r
construction permits, and recreation program fees.
2. General Revenues
Property taxes, retail taxes, business taxes, excise taxes, and associated penalties & interest, and
interest & investment earnings are classified as general revenues within the Government-wide
Statement of Activities.
3. Interfund Transfers I
Permanent reallocations of resources between funds of the reporting entity are classified as
interfund transfers. For the purposes of the Government-wide Statement of Activities, all interfund r
transfers between individual governmental funds have been eliminated. iI
4. Expenses/Expenditures '
Expenses in the Government-wide Statement of Activities are reported by function as a
governmental activity (general government, security of persons & property, physical environment,
• transportation, economic environment, culture & recreation, or interest on long-term debt) or
business-type activity (wastewater, or stormwater). Certain indirect costs are included in program
expenses by function. In the fund financial statements, expenditures of governmental funds are I
classified current by function, debt service principle and interest payments, or purchases of capital •
items. Proprietary expenditures are classified as operating or non-operating. `
-5. Operating and Nonoperating Revenues and Expenses P 9 P 9 P
Operating revenues and expenses for proprietary funds are those that result from providing services
and producing and delivering goods and/or services in connection to the proprietary fund's principal
I
ongoing operations. It also includes all revenue and expenses not related to capital and related ,
financing, non-capital financing, or investing activities. All revenue and expenses not meeting this ,
definition are nonoperating revenues and expenses.
NOTE 2-STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Scope of Budget
r
Annual appropriated budgets are adopted for all funds on a basis consistent with generally accepted
accounting principals. Legal budgetary control 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.
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B. Procedures for Adopting the Original Budget .
IThe 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 2006 budget process and may be changed for future processes:
I • 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
Idepartments at this time.
• 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 reaffirm
I
overall City priorities, vision, and mission at a mid-year retreat. Additional policy guidance is
provided throughout the year.
I • In July the Finance department submits the preliminary budget to the City Manager.
• In August the City Manager submits estimates on 2005 revenues and preliminary 2006
Irevenues and expenditures to Council. .
• During September, 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
Ithe public. The Council set the dates of the preliminary and final budget hearings.
• Before December 31st the City Council, by a majority vote, will adopt the budget by
Iordinance, 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.
I • Quarterly budget monitoring reports are published by the Finance Department to report on
actual performance compared to budget estimates and to identify any remedial actions that
Imay be needed.
C. Amending the Budget
IThe 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
I the appropriation for a particular fund, it may do so by ordinance approved by one more than the
majority after holding a public hearing.
I The City's budget was amended two times during the fiscal year. 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. All appropriations lapse at year
Iend. Unexpended resources must be reappropriated in the subsequent period.
D. Compliance
I There have been no material violations of finance-related legal or contractual provisions, and there
have been no expenditures exceeding legal appropriations in any of the funds of the City.
I37
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E. Deficit Fund Balances
•
As of December 31, 2004 a deficit fund balance of $52 exists in the Barker Bridge Construction
Fund. This fund accounts for the construction costs of the Barker Bridge reconstruction which is
financed through a federal grant. The deficit will be eliminated when the grant funds are received.
NOTE 3-DEPOSITS AND INVESTMENTS
A. Deposits
The City's deposits and certificates of deposit are entirely covered by the federal depository
insurance(FDIC)or by 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. .
B. Investments
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 Poo! (LGIP), or certificate of
deposit with Washington State banks and savings and loan institutions.
The Washington Local Government Investment Pool operates in a manner consistent with the
9 P
SEC's Rule 2a-7 of the Investment Company Act of 1940. The fair value of the portfolio is
calculated by the master custodian or by an independent pricing service under contract with the
State Treasurer's Office. The fair value of the City's position in the State of Washington Local
Government Investment Pool is the same as the value of the pool shares
Investments are shown on entity-wide Statement of Net Assets at fair market value or 2a7-like-pools
at amortized cost. Investments are reported within Cash & Investments of Governmental Activities
and within Cash&Cash Equivalents of Business-type Activities.
The City's investments are categorized to give an indication of risk assumed at year-end. The
following summary shows the City's investments at year-end categorized by risk.
• 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, 2004.
C. Deposit and Investment Reconciliation
Amounts reported in the fund statements are as follows:
Fair Value
Carrying Cash
Amount Investments Equivalents
Investments Not Subject to Credit Risk
State Investment Pool $ 9,990,682 - $ 9,990,682
Money Market Account 5.389,102 - 5,389,102
Total Investments Not Subject to Credit Risk $ 15,379,784 - $ 15,379,784
38
NOTE 4-PROPERTY TAXES
IThe 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
I are, based upon the.monies requested by the taxing districts and the assessed valuation within
these districts.
Taxes are levied annually on January 1 on property values listed as of the prior May 31. Assessed
values are established by the County Assessor at 100 percent of fair market value. A revaluation of
all property is required every four years. Taxes are due in two equal installments on April 30 and
October 31. Tax liens are automatic at the point the taxes are levied.
IProperty taxes levied for the current year are recorded as a receivable when levied, offset by
deferred 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
I Treasurer in January. No allowance for uncollectible taxes is established because delinquent taxes
are considered fully collectible
I 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, #8, and #9, which leaves the City with the authority to levy $2.10 for its own purposes. This
amount may be reduced for any of the following reasons:
I (1) The Washington State Constitution limits the total regular roe taxes to one percent of
( ) g 9 property rtY
assessed valuation or $10 per $1,000 of value. If the taxes of all districts exceed this amount,
Ieach 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
I 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.
I (3) The City may voluntarily levy taxes below the legal limit.
For 2004, the City levied $9,265,808 on an assessed valuation of$4,409,259,851.
NOTE 5-CAPITAL ASSETS AND DEPRECIATION
•
I Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads,
,bridges, sidewalks, an similar items), are reported in the applicable governmental or business-like
columns in the government-wide financial statements. The City defines capital assets as assets
with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year.
I Such assets are recorded at historical cost or estimated historical cost if purchased or constructed.
Other donated assets are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
Iextend assets lives are not capitalized. .
Major outlays for capital assets and improvements are capitalized as projects are constructed.
I Interest incurred during the construction phase of capital assets of business-type activities is
included as part of the capitalized value of the assets constructed.
A summary of changes in governmental capital assets follows:
I 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. These assets are shown as capital
contributions on the statement of activities.The following schedule details the assets transferred.
39
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Capital Assets Donated From Spokane County
Historical Accumulated Depreciated
Cost Depreciation Cost
Infrastructure t
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 assets 4,574,292 1,672,125 2,902.167
Total County assets donated $207,126,886 $ 136,439,272 $70,687,614
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A summary of changes in governmental capital assets follows:
I
Beginning Ending
Balance Balance
Governmental activities: 01/01/04 Increases Decreases 12/31/04
Capital assets,not being depreciated: i
p 9 p
Land $ 1,548,655 $ 68,830 $ 19,900 $1,597,585 `
Construction in progress 398,826 10,787,206 - 11,186,032 '
Total capital assets, not being depreciated 1,947,481 10,856,036 19,900 12,783,617
Capital assets,being depreciated:
Buildings and leasehold improvements 936,420 56,603 48,726 944,297
Improvements other buildings 2,123,571 - - 2,123,571 I
• Infrastructure 202,552,594 1,132,011 - 203,684,605
Machinery and equipment • 735,446 192.358 23,082 904,722
Total capital assets,being depreciated 206,348,031 1,380,972 71,808 207,657,195
Less accumulated depreciation for:
I
Buildings and leasehold improvements 620,593 40,278 38,030 622,841
Improvements other buildings 1,102,472 53,955 - 1,156,427
Infrastructure 142,280,597 10,206,618 5,527,810 146,959,405
• Machinery and equipment 52,116 220,722 3.711 269,127
Total accumulated depreciation 144,055,778 10,521,573 5,569,551 149,007,800
Total assets being depreciated, net 62,292,253 1.380.972 (5.023.830) 58.649,395
Governmental activities capital assets,net $ 64,239,734 $12,237,008 $(5,043,730) $71,433,012
Business-type activities:
The city has no business-type capital assets. ,
Depreciation
Property, plant, and equipment of the primary government is depreciated using the straight line
method over the estimated service life as follows: .
Buildings and improvements 10-60 years
Infrastructure 40 years
Light/Heavy Transportation Equipment 5-10 years
Other Equipment 2-20 years .
Office Equipment 3-5 years
Computer Equipment 3-5 years
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Depreciation expense was charged to functions/programs of the primary government as follows:
IGovernmental Activities
General government services $ 185,812 .
Public safety 5,009
I Physical environment 25,163
Transportation 1 0,211,968
Economic environment 11,831.
I Culture and recreation 81,790
Total depreciation—governmental activities $-10,521,573
I Construction commitments
The City of Spokane Valley has active construction projects as of December 31, 2004. The projects
II include the CenterPlace Recreation Center and various street construction projects. At year end the
City's commitments with contractors are as follows:
Remaining
Spent-to-Date Commitments
CenterPlace Recreation Center $ 6,050,359 $ 3,783,205
Various street construction projects 5,135,673 3,017,439
Total $ 11,186,432 $ 6,800,644
IThe CenterPlace Recreation Center is being funded by existing resources in Fund 304-Mirabeau
Point Project. The various street construction projects are being funded by state and local grants,
Ias well as, existing resources in various City Funds.
NOTE 6-PENSION PLANS
I Substantially all City of Spokane Valley 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 and defined contribution retirement plans. The Department of Retirement Systems (DRS), a
I department with the primary government of the State of Washington, issues a publicly available
comprehensive annual financial report (CAFR) than 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. The following disclosures are made pursuant to GASB Statement 27, Accounting for Pensions
by State and Local Government Employers.
IPublic Employees' Retirement System (PERS) Plans 1, 2, and 3
Plan Description
I 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 combination defined
benefit/defined contribution plan. Membership in the system includes; elected officials, state
employees, employees of the Supreme, Appeals, and Superior courts (other than judges in a judicial
I retirement system), employees of legislative committees, community and technical colleges, college
and university employees (not in national higher education retirement programs), judges of district
and municipal courts, and employees of local governments. PERS participants who joined the
I system by September 30, 1977 are Plan 1 members. Those joined on or after August 31,2002 for
local government employees, are Plan 2 members unless they exercise an option to transfer their
membership to Plan 3. PERS participants joining the system on or after September 1, 2002 for local
government employees have the option of choosing membership in either PERS Plan 2 or PERS
I Plan 3. The option must be exercised within 90 days of employment. An employee is reported in
Plan 2 until a choice is made. Employees who fail to choose within 90 days default to PERS Plan 3.
PERS defined benefit retirement benefits are financed from a combination of investment earnings
I
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and employer and employee contributions. Retirement benefit provisions are established in state I
statute and may be amended by the State Legislature.
Plan 1 retirement benefits are vested after an employee completes five years of eligible service.
Plan 1 members are eligible for retirement at any age after 30 years of service, or at age 60 with five
years of service or at the age of 55 with 25 years of service. The annual pension is 2 percent of the
average final compensation per year of service, capped at 60 percent. The average final
compensation is based on the greatest compensation during any 24 eligible consecutive
compensation months. If qualified, after reaching the age of 66 a cost-of-living allowance is granted
based on years of service and is capped at 3 percent annually.
Plan 2 retirement benefits are vested after an employee completes five years of eligible service.
Plan 2 members may retire at the age of 65 with five years of service, or at the age of 55 with 20
years of service, with an allowance of 2 percent of the average final compensation per year of
service. The average final compensation is based on the greatest compensation during any eligible
consecutive 60-months period. Plan 2 retirements prior to the age of 65 receive reduced benefits. If
retirement is at age 55 or older with at least 30 years of service, a 3 percent per year reduction
applies; otherwise an actuarial reduction will apply. There is no cap on years of service credit; and a
cost-of-living allowance is granted (indexed to the Seattle Consumer Price Index), capped at 3
percent annually.
Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component,
and member contributions finance a defined contributions component. The defined benefit portion
provides a benefit calculated at 1 percent of the average final compensation per year of service.
The average final compensation is based on the greatest compensation during any eligible
consecutive 60-month period. Plan 3 members become eligible for retirement if they have: at least
ten years of service; or five years including twelve months that were earned after age 54; or five
service credit years earned in PERS Plan 2 prior to June 1, 2003. Plan 3 retirements prior to age 65
receive reduced benefits. If retirement is at age 55 or older with at least 30 years of service, a 3
percent per year reduction applies; otherwise an actuarial reduction will apply. There is no cap on
years of service credit; and Plan 3 provides the same cost-of-living allowance as Plan 2. The
defined contribution portion can be distributed in accordance with an option selected by the member,
either as a lump sum or pursuant to other options authorized by the Employee Retirement Benefits
Board.
There are 1,168 participating employers in PERS. Membership in PERS consisted of the following
as of the latest actuarial valuation date for the plans of September 30, 2003:
Retirees and Beneficiaries Receiving Benefits 65,362
Terminated Plan Members Entitled to But Not Yet Receiving Benefits 20,001
Active Plan Members Vested 100,469
Active Plan Members Nonvested 54,081
Total 239,913
Funding Policy
Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates, Plan
2 employer and employee contribution rates, and 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 7.5 percent for state government elected officers. 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 defined benefit portion of Plan
3. All employers are required to contribute at the level established by the Legislature. PERS Plan 3
defined contribution is a non-contributing plan for employers. Employees who participate in the
defined contribution portion of PERS Plan 3 do not contribute to the defined benefit portion of PERS
Plan 3. The Employee Retirement Benefits Board set Plan 3 employee contribution rates. Six rate
options are available ranging from 5 to 15 percent; two of the options have graduated rates
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I dependant on the employee's age_ The methods used to determine the contribution requirements
are established under state statute in accordance with chapters 41.40 and 41.45 RCW.
I PERS Plan 1 PERS Plan_2 PERS Plan 3
Employer* 1.38% 1.38% 1.38%**
Employee 6.00% 1.18% ***
* The employer rates include the employer administrative expense fee currently set at 0.19%.
I ** Plan 3 defined benefit portion only.
***Variable form 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 required contributions for the years ending December 31 were as follows.
PERS Plan 1 PERS Plan 2 PERS Plan 3
I 2004 Employer Contributions $ 1,284 $ 18,910 $7,315
2003 Employer Contributions 276 10,567 3,448
INOTE 7--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 by 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
I wage replacement when the injury or illness is serious enough to miss work. The City is self-insured
for unemployment compensation benefits.
IThe Risk Management Fund is used to account for, and finance the liability and unemployment
insurance costs. All 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.
The Washington Cities Insurance Authority (WCIA) was originally formed on January 1, 1981
utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal
Cooperation Act) 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 108
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.
I Liability coverage is written on an occurrence basis, without deductibles. Coverage includes
general, automobile, police professional, public officials' errors and omissions, stopgap, and
employee benefits liability. Limits are $3 million per occurrence self insured layer, and $11 million
per occurrence in the re-insured excess layer with no annual aggregate except $10 million per
I member for public officials errors and omissions. The excess layer is insured by the purchase of
reinsurance and insurance. Total limits are $14 million per occurrence. The Board of Directors
determines the limits and terms of coverage annually.
IInsurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and
machinery are purchased on a group basis. Various deductibles may apply by type of coverage.
Property insurance and auto physical damage are self-funded from the members' deductible to
I
$250,000 and $500,000 effective July 1, 2004 for all perils other than flood and earthquake and
insured above that amount by the purchase of reinsurance.
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
Ifor personnel issues and land use problems, insurance brokerage and lobbyist services.
43
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WCIA is fully funded by its members, who make annual assessments on prospectively rate basis, as
determined by an outside independent actuary. The assessments cover loss, loss adjustment, and
administrative expenses. As outlined in the Interlocal, WCIA retains the right to additionally assess r
the membership for any funding shortfall. I
An investment committee, using investment brokers produces additional revenue by investment of
WCIA's assets in financial instruments which comply with State guidelines. These revenues directly
offset portions of the membership's annual assessment.
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 the WCIA.
The City is self-insured on a reimbursement basis for unemployment compensation. The City did not i
have any claims for unemployment compensation in 2004.
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NOTE 8--INTERFUND BALANCES AND TRANSFERS
Interfund Balances '
c
Loans between funds are classified as interfund loans receivable or payable on the fund financial '
statements. Within the city, one fund may borrow from another when specifically authorized by r
Council resolution. Due to other funds and due from other funds result from goods issued, work
performed or services rendered to or for the benefit of another fund of the same government. The {
amount of interfund loans payable within one year is also included in due to and due from other
funds.
i
Due to other fund and due from other fund balances at December 31, 2004 were: ,
IDue From Due To _
Other Funds Other Funds
General Fund $ 22,996 $ 55,206
Street Fund 53 -
CD Block Grant Fund 129,630 -
Nonmajor governmental funds 63,964 216,643
Internal service funds 55,206 -
Total government wide $ 271,849 $271,849
Interfund transfers are the flow of assets with a reciprocal return of assets, goods, or services in
return. The City uses transfers to (1) move revenues from the fund that stature or budget requires to
'collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted
to debt service from the funds collecting the receipts to the debt service fund as debt service
payments become due, and (3) use unrestricted revenues collected in the general and street funds
to finance various programs accounted for in other funds in accordance with budgetary
authorizations.
Interfund transfer activity for the year is as follows:
Transfers Out
Arterial Capital Special Street
Street Street Projects Capital Proj. Bond Sewer
Total Fund Fund Fund Fund Fund Fund
Transfers In:
General Fund $ 57,296 $34,300 $ - $ 22,996 $ - $ - $ - f
CD Block Grant Fund 134,941 - 134,941 - - - -
Debt Service Fund 185,286 - - 92,643 92,643 - -
Street Capital Projects 1,518,613 - - - 200,000 1,081,269 237,344
Capital Grants Fund 92,750 - - - - 92.750
Total $1,988,886 534,300 ., 134,941 $115‘639 $292,643 $1,174,013 $237,344 `
IAll transfers were to fund routine budgeted capital projects.
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INOTE 9—SHORT-TERM DEBT
As of December 31, 2004, the city had no short-term debt.
INOTE 10—LONG-TERM DEBT AND LEASES
General Obligation Bonds
I .
The City issues 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.
I General obligation bonds are direct obligations and pledge the full faith and credit of the government.
General obligation bonds are either created by 3/5th majority vote of the people and, therefore,
financed by a special tax levy; or created by ordinance, adopted by the City Council, and normally
I financed from general revenues (councilmanic bonds). General obligation bonds currently
outstanding are as follows:
In 2003 the City issued $9,430,000 in councilmanic bonds to finance the construction of the
I CenterPlace Community Center and for various street construction projects. The City does expect to
receive intergovernmental payments from the Spokane Public Facilities District pursuant to an
interlocal agreement dated as of July 2003, which if and when received by the City will be available
Ifor debt service associated with the Center for up to$7 million of bonds.
General obligation bonds currently outstanding are as follows:
Debt
I Name of Issuance Purpose Interest Rate Outstanding
2003 LTGO Bonds Governmental Activities 2.00%-5.00% $9,285,000
I The annual debt service requirements to maturity for general obligation bonds are as follows:
Governmental Activities
Total
Principal Interest Requirements
I 2005
165,000 417,835
582,835
2006
175,000 000 414,535 589,535
• 2007 185,000 411,035 596,035 .
I 2008
190,000 406,872 596,872
2009 205,000 401,173 606,173
2010-2014 1,200,000 1,885,112 3,085,112
2015-2019 1,655,000 1,612,068 3,267,068
2020-2024 2,480,000 1,135,250 3,615,250
2025-2029 2,090,000 519,250 2,609,250
2030-2033 940,000 112,500 1,052,500
$9,285,000 $ 7,315,630 $ 16,600,630
Long-term debt on the Statement of Net Assets is presented net of any premium/discount incurred at
the time of issuance. The 2003 LTGO Bonds were sold at a premium of $124,321 and were
Ireported at the net amount of$9,554,321. The premium will be amortized over the life of the bonds.
Changes in Long-Term Liabilities
IDuring the year ended December 31, 2004, the following changes occurred in long-term liabilities:
Balance Balance Due Within
I Jan. 1,2004 Additions Reductions Dec.31,2004 One Year
Governmental Activities:
General Obligation Bonds $9,430,000 $ - . $145,000 $9,285,000 $ 165,000
Compensated Absences 56,398 27,445 - 83,843 -
Governmental Activity
Long-Term Liabilities $ 9,486,398 $ 27,445 $145,000, $9,368,843 $ 165,000
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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 assessed valuation of the City for the year 2004 for purposes of determining the legal debt
margin is $4,527,968,717. Under State of Washington statutes general obligation indebtedness
pursuant to a vote of the electorate is limited to 2%% of actual value of taxable property located ,
within the City. Indebtedness without a vote of the people is limited to 1 A% of actual value subject to
the limitation that total general purpose indebtedness may not exceed 2%% of total valuation. There
is a 2'/2% limitation each for utility purposes and open space and park facilities purposes.
The remaining debt capacities of the City are as follows:
Amount
• General Purposes Voted and Non-voted Debt—2%2% (1) $ 103,830,375
Utility Voted Debt—2%2% 113,199,218
Open Space and Park Facilities Voted Debt-2'/2% 113,199,218
• Total Remaining Debt Capacity $ 330,228,810
(1) Includes$58,550,688 debt capacity for non-voted debt.
Leases
Capital Leases The City had no capital leases as of December 31, 2004
Operating Leases The City entered into a six year operating lease agreement with Northwest
Christian Schools for the rental of office space. The lease commenced on February 1, 2003. Rental
rates vary between $15.48 and $19.93 per square foot per annum. Lease payments for the year
ended December 31, 2004 amounted to$270,872.
Schedule of Minimum Future Rental Payments
Year Ended Dec. 31 Amount
2005 $ 693,406
2006 708,317
2007 729,780
2008 733,437
2009 452,103
2010 77,713
Total minimum future rental payments $3,394,756
NOTE 11 —SUBSEQUENT EVENTS
On May 10, 2005 an election was held that annexed library services to the Spokane County Library
District. The district will assume responsibility for all city library services on January 1, 2006.
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.
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The City participates in a number of federal-and-state assisted programs. These grants are subject
to audit by the grantors 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.
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1
1
1
1
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� Combining and Individual
Fund Statements and
Schedules
1
1
1
1
1
1
1
1
1
1
1
1
1
1
� Government Funds
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1
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1
1
1
1
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INonmajor Governmental Funds
Special Revenue Funds
Special revenue funds are used to account for specific revenues that are legally
restricted to expenditure for particular purposes.
IArterial Street Fund —This fund is used to account for the receipt and expenditure
of the State-levied motor vehicle fuel tax distributed to the City in accordance with
I RCW 82.36.020. Revenues are restricted in use for the construction, improvement,
and repair of arterial streets.
I Trails and Paths Fund — This fund is used to account for the receipt and
expenditure of the State-levied motor vehicle fuel tax dedicated to the building and
maintenance of trails and paths as per RCW 47.30.
•
I Hotel/Motel Fund —This fund accounts for the receipt and expenditure of a special
excise tax for tourism promotion and the acquisition or operation of tourism related
Ifacilities.
Debt Service Funds
IDebt service funds account for the accumulation of resources for, and the payment
of, general long-term debt principal and interest.
I Debt Service LTGO 03 Fund — This fund accounts for principal and interest
payments made on the Limited Tax General Obligation bonds issued in 2003 for
street improvements and the construction of the CenterPlace Community Center.
ICapital Projects Funds
I Capital projects funds are used to account for the acquisition and construction of
major capital facilities and infrastructure other than those financed by proprietary
funds.
I , Capital Projects Fund — This fund accounts for collection and expenditure of the
quarter percent real estate excise tax levied on all sales of real estate. The excise
I tax must be spent on capital improvements identified in a capital improvements
plan.
Special Capital Projects Fund —This fund accounts for collection and expenditure
Iof the second quarter real estate excise tax levied on all sales of real estate. The
excise tax must be used for public works projects or for streets, water systems, or
sewers.
IStreet Capital Projects Fund — This fund accounts for monies used to finance the
six year transportation improvement plan. Revenues are transfers from the Arterial
I Street Fund, Capital Projects Fund, Special Capital Projects Fund and Street Bond
Fund.
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Street Bond Fund —This fund accounts for monies received from the sale of bonds '
for street repair and maintenance. Funds are transferred to other capital projects
funds as needed.
Capital Grants Fund — This fund accounts for monies received as capital grants
from various state and federal programs for street and road projects.
Barker Bridge Construction — This fund accounts for expenditures made for the
reconstruction of the Barker Road bridge.
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ICombining Balance Sheet
Nonma'J or Governmental Funds
December 31, 2004
I
Total
11 Nonmajor
Special Debt Capital Governmental
Revenue Service Projects Funds
IAssets:
Cash, cash equivalents and
pooled investments $ 917,270 $ - $ 4,129,652 $ 5,046,922
IReceivables (net)
Taxes 68,683 - 173,502 242,185
I Accounts - - 81,004 81,004
Due from other funds - - 63,965 63,965
Total assets $ 985,953 $ - $ 4,448,123 $ 5,434,076
Liabilities and fund balances:
Liabilities:
Accounts payable 13,527 - 96,192 109,719
Due to other funds 129,630 - 87,013 216,643
Total liabilities 143,157 - 183,205 326,362
IFund balance:
Unreserved 842,796 - 4,264,918 5,107,714
Total fund balances 842,796 - 4,264,918 5,107,714
ITotal liabilities and fund balances $ 985,953 $ - $ 4,448,123 $ 5,434,076
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Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances I
Nonmajor Governmental Funds
For the Year Ended December 31, 2004
Special Debt Capital Total
Revenue Service Projects December 31,
Funds Funds Funds 2004
Revenues:
Taxes $ 363,443. $ - $ 2,010,040 $ 2,373,483
Intergovernmental revenues 547,470 395,643 97,050 1,040,163
Miscellaneous 8,842 - 64,329 73,171
Total revenues 919,755 395,643 2,171,419 3,486,817
Expenditures: t
Current:
Economic environment 450,383 - - 450,383
Debt service: I
Principal - 145,000 - 145,000
Interest - 435,928 - 435,928
Bond issue costs - - 304 304
Capital outlay - - 1,362,971 1,362,971
Total expenditures 450,383 580,928 - 1,363,275 2,394,586
Excess(deficiency)of revenue
over(under)expenditures 469,372 (185,285) _ 808,144 1,092,231
Other financing sources(uses):
I
Contributions - - 3,021 3,021
Transfers in - 185,285 1,345,315 1,530,600
Transfers out (134,941) - (1,528,297) (1,663,238)
Total other financing sources(uses) (134,941) 185,285 (179,961) (129,617)
Net change in fund balance 334,431 - 628,183 962,614 1
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Fund balance-beginning 508,365 - 3,636,735 4,145,100
Fund balance-ending $ 842,796 $ - $ 4,264,918 $ 5,107,714
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51 I
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Combining Balance Sheet
INonmajor Special Revenue Funds
December 31, 2004
Total Non-
Arterial Trails & Paths Hotel/Motel Major Special
IStreet Fund Fund Fund Revenue Funds
Assets:
Cash, cash equivalents and
pooled investments $ 781,900 $ 8,492 $ 126,878 $ 917,270
Receivables (net)
Taxes 45,540 - 23,143 68,683
Total assets $ 827,440 $ 8,492 $ 150,021 $ 985,953
Liabilities and fund balances:
ILiabilities:
Accounts payable - - 13,527 13,527
Due to other funds 129,630 - - 129,630
Total liabilities 129,630 - 13,527 143,157
Fund balances:
Unreserved 697,810 8,492 136,494 842,796
Total fund balances 697,810 - 8,492 136,494 842,796
Total liabilities and fund balances $ 827,440 $ 8,492 $ 150,021• $ 985,953
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52
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• Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances
I
Nonmajor Special Revenue Funds
For the Year Ended December 31, 2004
•
Arterial Trails& Paths Hotel/Motel
Street Fund Fund Fund Total
Revenues:
Taxes $ - $ - $ 363,443 $ 363,443
Intergovernmental revenues 538,978 8,492 - 547,470
Miscellaneous 7,235 - 1,607 8,842
Total revenues 546,213 8,492 365,050 919,755 '
I
Expenditures:
Current:
Economic environment - - 450,383 450,383
Total expenditures - - 450,383 450,383
Excess (deficiency)of revenue 'I
over(under) expenditures 546,213 8,492 (85,333) 469,372
Other financing sources (uses):
Transfers out (134,941) - - (134,941)
Total other financing sources(uses) (134,941) - - (134,941)
Net change in fund balance 411,272 8,492 (85,333) 334,431
Fund balance- beginning 286,538 - 221,827 508,365
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Fund balance-ending $ 697,810 $ 8,492 $ 136,494 $ 842,796
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53
M r MI - • - • - MI • - MI M MI M MI - 1 r
Combining Balance Sheet
Nonmajor Capital Projects Funds
December 31,2004
Total Non-
Special Street Street Bond Capital Grants Barker Bridge Major Capital
• Capital Projects Capital Projects Capital Projects Fund Fund Construction Projects Funds
Assets:
Cash,cash equivalents and
pooled investments $ 1,505,731 $ 1,163,419 $ 34,048 $ 1,426,430 $ 24 $ - $ 4,129,652
Receivables(net)
Taxes 86,751 86,751 - - - - 173,502
Accounts - - - - 81,004 - 81,004
Due from other funds - - 117,970 - - - 117,970
Total assets $ 1,592,482 $ 1,250,170 $ 152,018 $ 1,426,430 $ 81,028 $ - $ 4,502,128
Liabilities and fund balances:
Liabilities: •
Accounts payable - - 96,192 - - - 96,192
Due to other funds 22,996 - 54,005 117,970 - 52 195,023
Total Liabilities 22,996 - 150,197 117,970 - 52 291,215
Fund balances:
Unreserved 1,569,486 1,250,170 1,821 1,308,460 81,028 (52) 4,210,913
Total fund balances 1,569,486 1,250,170 1,821 1,308,460 81,028 (52) 4,210,913
Total liabilities and fund balances $ 1,592,482 $ 1,250,170 $ 152,018 $ 1,426,430 $ 81,028 $ - $ 4,502,128
•
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances
Nonmajor Capital Projects Funds
For the Year Ended December 31, 2004
Special Street Street Bond Capital Barker
Capital Capital Capital Capital Grants Bridge
Projects Projects Projects Projects Fund Project Total
Revenues:
Taxes $ 1,037,920 $ 972,120 $ - $ - $ - $ - $ 2,010,040
Intergovenmental - - - - 81,004 - 81,004
Miscellaneous 14,658 11,593 352 37,726 - - 64,329
Total revenues 1,052,578 983,713 352 37,726 81,004 - 2,155,373
Expenditures:
Debt Service:
Bond issue costs - - - 304 304
v Capital outlay - - 1,515,896 - 97,026 52 1,612,974
Total expenditures - - 1,515,896 304 97,026 52 1,613,278
Excess (deficiency)of revenue
over(under) expenditures 1,052,578 983,713 (1,515,544) 37,422 (16,022) (52) 542,095
Other financing sources (uses):
Contributions - - 3,021 - - - 3,021
Transfers in - - 1,514,314 - 97,050 - 1,611,364
Transfers out (115,639) (292,643) - (1,174,020) - - (1,582,302)
Total other financing sources (uses) (115,639) (292,643) 1,517,335 (1,174,020) 97,050 - 32,083
Net change in fund balance 936,939 691,070 1,791 (1,136,598) 81,028 (52) 574,178
Fund balance- beginning 632,547 559,100 30 2,445,058 - - 3,636,735
Fund balance-ending $ 1,569,486 $ 1,250,170 $ 1,821 $ 1,308,460 $ 81,028 $ (52) $ 4,210,913
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_ - M - 111111111- IMF MIMS MIMI - ME - E --air- -Imo- M - mot - N - r -- -r - - -
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I Schedule of Revenues, Expenditures,
1 and Changes in Fund Balance —
' Budget & Accrual
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Arterial Street Fund
ISchedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
For the Year Ended December 31, 2004
• Variance with
I
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues:
Intergovernmental revenues $ 542,000 $ 542,000 $ 538,978 $ (3,022)
Miscellaneous - - - 7,235 7,235
Total revenues 542,000 542,000 546,213 4,213
Other financing sources (uses):
Transfers out (600,000) (600,000) (134,941) 734,941
Total other financing sources(uses) (600,000) (600,000) (134,941) 734,941
Net change in fund balance (58,000) (58,000) 411,272 739,154
Fund balance-beginning 286,538 286,538 286,538 -
Fund balance-ending $ 228,538 $ 228,538 $ 697,810 $ 739,154
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Trails & Paths Fund I
Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
For the Year Ended December 31, 2004
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues:
I
Intergovernmental revenues $ 12,800 $ 12,800 $ 8,492 $ (4,308)
Total revenues 12,800 12,800 8,492 (4,308)
I
Net change in fund balance 12,800 12,800 8,492 (4,308)
Fund balance-beginning - - - -
Fund balance-ending $ 12,800 $ 12,800 $ 8,492 $ (4,308)
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Hotel/Motel Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
IFor the Year Ended December 31, 2004 •
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
I Original Final Budgetary Basis (Negative)
Revenues:
Taxes $ 380,000 $ 380,000 $ 363,443 $ (16,557)
Miscellaneous - - 1,607 1,607
Total revenues 380,000 380,000 365,050 (14,950)
IExpenditures:
Current:
Economic environment 475,000 475,000 450,383 24,617
ITotal expenditures 475,000 475,000 450,383 24,617
Excess (deficiency) of revenue
Iover(under) expenditures (95,000) (95,000) (85,333) 2,827
Net change in fund balance (95,000) (95,000) (85,333) 9,667
IFund balance- beginning 221,827 221,827 221,827 -
Fund balance- ending $ 126,827 $ 126,827 $ 136,494 $ 9,667
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58
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1
Debt Service LTGO 03
Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
For the Year Ended December 31, 2004
•
Variance with
•
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues: I
Intergovernmental revenues $ 600,000 $ 600,000 $ 395,643 $ (204,357)
Total revenues 600,000 • 600,000 395,643 (204,357)
Expenditures: •
Debt service:
Principle 364,072 • 364,072 145,000 (219,072)
Interest 435,928 435,928 435,928 -
Total expenditures 800,000 800,000 580,928 (219,072)
Excess (deficiency) of revenue ,
over(under) expenditures N (200,000) (200,000) (185,285) 14,715
Other financing sources (uses):
Transfers in 200,000 . 200,000 185,285 (14,715)
Total other financing sources (uses) 200,000 200,000 185,285 (14,715)
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Net change in fund balance - - - -
1
Fund balance-beginning - - - -
Fund balance-ending $ - $ - $ - $ -
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Capital Projects Fund
ISchedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
•
For the Year Ended December 31, 2004
I Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
IRevenues:
Taxes $ 840,000 $ 840,000 $ 1,037,920 $ 197,920
Miscellaneous - - 14,658 14,658
Total revenues 840,000 840,000 1,052,578 212,578
•
Other financing sources (uses):
ITransfers out (180,000) (180,000) (115,639) 513,446
Total other financing sources (uses) (180,000) (180,000) (115,639) 513,446
INet change in fund balance 660,000 660,000 936,939 726,024
Fund balance- beginning 632,547 632,547 632,547 -
' Fund balance-ending $ 1,292,547 $ 1,292,547 $ 1,569,486 $ 726,024
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Special Capital Projects Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
For the Year Ended December 31, 2004
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues:
Taxes $ 840,000 $ 840,000 $ 972,120 $ 132,120
Miscellaneous - - 11,593 11,593
Total revenues 840,000 840,000 983,713 143,713
Other financing sources (uses): r
Transfers out (300,000) (300,000) (292,643) 440,000
Total other financing sources (uses) (300,000) (300,000) (292,643) 440,000
Net change in fund balance 540,000 540,000 691,070 151,070
1
Fund balance-beginning 559,100 559,100 559,100 -
Fund balance-ending $ 1,099,100 $ 1,099,100 $ 1,250,170 $ 151,070
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Street Capital Projects Fund
IISchedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
For the Year Ended December 31, 2004
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
I Qriqinal Final Budgetary Basis (Negative)
Revenues:
Miscellaneous $ - $ - $ 352 $ 352
Total revenues - - - 352 352
Expenditures:
Capital outlay 3,219,700 3,219,700 1,515,896 1,703,8 04
Total expenditures 3,219,700 3,219,700 1,515,896 1,703,804
Excess (deficiency) of revenue
Ilover(under) expenditures (3,219,700) (3,219,700) (1,515,544) (1,703,452)
Other financing sources (uses):
I Contributions - - 3,021 3,021
Transfers in 3,230,000 3,230,000 1,514,314 (1,715,686)
Total other financing sources(uses) 3,230,000 3,230,000 _ 1,517,335 (1,712,665)
INet change in fund balance - - 1,791 1,791
I Fund balance- beginning 30 30 _ 30 -
Fund balance-ending $ 30 $ 30 $ 1,821 $ 1,791
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Street Bond Capital Projects
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual
For the Year Ended December 31, 2004
Variance with I
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues:
Miscellaneous $ - $ 30,000 $ 37,726 $ 7,726
Total revenues - 30,000 37,726 7,726
Expenditures:
Debt Service:
Bond issuance costs - - 304 (304)
Total expenditures - - 304 (304)
Excess(deficiency)of revenue I
over(under)expenditures - 30,000 37,422 7,422
Other financing sources(uses):
Transfers out (2,430,000) (2,460,000) (1,174,020) 1,285,980
Total other financing sources(uses) (2,430,000) (2,460,000) (1,174,020) 1,285,980
Net change in fund balance (2,430,000) (2,430,000) (1,136,598) 1,293,402
Fund balance-beginning 2,445,058 2,445,058 2,445,058 -
Fund balance-ending $ 15,058 $ 15,058 $ 1,308,460 $ 1,293,402 I
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1 .
Capital Grants Fund
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual
For the Year Ended December 31, 2004
IVariance with
Final Budget
I Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues:
Intergovernmental $ - $ 547,000 $ 81,004 $ (465,996)
Total revenues - 547,000 81,004 (465,996)
Expenditures:
I Capital Outlay - 837,000 97,026 739,974
Total expenditures - 837,000 97,026 739,974
Excess(deficiency)of revenue •
Iover(under)expenditures - (290,000) (16,022) 273,978
Other financing sources(uses):
Transfers in - 290,000 97,050 (192,950)
Total other financing sources(uses) - 290,000 97,050 (192,950)
INet change in fund balance - - 81,028 81,028
Fund balance-beginning - - - -
Fund balance-ending $ - , $ - $ 81,028 $ 81,028
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Barker Bridge Project Fund '
Statement of Revenues, Expenditures, and Changes in Fund Balances I
Budget and Actual
For the Year Ended December 31, 2004
Variance with
t
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final Budgetary Basis (Negative)
Revenues:
Intergovernmental • $ - $ 702,000 $ $ (702,000)
Total revenues - 702,000 - (702,000)
. Expenditures:
Capital Outlay - 702,000 52 701,948
I
Total expenditures - 702,000 52 701,948
Excess(deficiency)of revenue
over(under)expenditures - - (52) (52)
Net change in fund balance - - (52) (52)
Fund balance-beginning - - - -
Fund balance-ending $ - $ - $ (52) $ (52)
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i Proprietary Funds
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Internal Service Funds
Internal service funds are used to account for the financing of goods or
services provided by one department or agency to other departments or
agencies of the government and to other governments units, on a cost
reimbursement basis.
Equipment Rental and Replacement Fund — This fund accounts for the
operation of the computer equipment, communications equipment, the
maintenance of city vehicles and equipment, and reserves for replacement
of designated equipment. Rates charged to user departments are based on
full cost of operations and maintenance, including the recovery of related
depreciation expense.
�. Risk Management Fund — This fund accounts for the City's insurance
9 ty
programs for property and casualty losses, unemployment compensation,
and general loss control activities. Premiums received by the fund are used
to pay insurance premiums and unemployment claims.
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Combining Statement of Net Assets
Internal Service Funds
December 31, 2004
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1
Equipment Rental Risk ,
& Replacement Management Total
Assets:
Current assets:
Cash, cash equivalents and
pooled investments 126,037 30,117 156,14 I
Due from other funds 55,206 - 55,206
Total current assets 181,243 30,117 211,360 I
Capital assets:
Machinery & Equipment 691,670 - 691,670
Less accumulated depreciation (215,371) - (215,371)
Total capital assets (net of I
accumulated depreciation) 476,299 - 476,299 ;
Total assets 657,542 30,117 687,659 1
Liabilities:
Current liabilities:
Accounts payable 2,000 - 2,000 -
Due to other funds - - -
Total.liabilities 2,000 - 2,000 1
Net assets:
Invested in capital assets 476,299 - 476,299
Unrestricted 179,243 30,117 209,360
Total net assets $ 655,542 $ 30,117 $ 685,659
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67 I
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I Combining Statement of Revenues, Expenses,
And Changes in Fund Net Assets
Internal Service Funds
For the Year Ended December 31, 2004
III Equipment Risk
Rental Management Total
I Operating Revenues:
Charges for services $ 128,134 $ 134,500 $ 262,634
Total operating revenues 128,134 134,500 262,634
Operating Expenses:
Operations 9,234 111,066 120,300
Depreciation 181,842 - 181,842
Total Operating expenses 191,076 111,066 302,142
IOperating income (62,942) 23,434 (39,508) .
Nonoperating revenues (expenses):
Interest income 937 305 1,242
Total nonoperating revenues (expenses) 937 305 1,242
Income before contributions and transfers (62,005) 23,739 (38,266)
1 Contributions and transfers:
Capital contributions 42,776 - 42,776
IChange in net assets (19,229) 23,739 4,510
Net assets beginning of the year 674,771 6,378 681,149
IINet assets end of year $ 655,542 $ 30,117 $ 685,659
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Statement of Cash Flows
Internal Service Funds
For the Year Ended December 31, 2004
Equipment Rental Risk
& Replacement Management Total
Cash flows from operating activities:
11
Receipts from interfund services provided $ 130,172 $ 134,500 $ 264,672
Payments to suppliers (64,696) (111,066) (175,762)
Net cash provided (used) by operating activities 65,476 23,434 88,910 1
(
Cash flows from capital& related financing activities:
Acquisition of capital assets (2,387) - (2,387)
Net cash provided (used)for capital activites (2,387) - (2,387)
Cash flows from investing activities:
Interest received 937 305 1,242
Net cash provided (used) by investing activities 937 305 1,242
Net increase in cash &cash equivalents 64,026 23,739 87,765
Cash &cash equivalents, January 1, 2004 62,011 6,378 68,389
Cash &cash equivalents, December 31, 2004 $ 126,037 $ 30,117 $ 156,154
Reconciliation of operating income to net cash provided (
(used) by operating activities:
Operating income(loss) $ (62,942) $ 23,434 $ (39,508)
I
Adjustments to reconcile operating income to net 1
cash provided (used)by operating activities:
Depreciation 181,842 - 181,842
Changes in assets and liabilities:
(Increase)decrease in due from other funds (52,439) - (52,439)
Increase(decrease)in accounts payable (256) - (256)
Increase(decrease) in due to other funds (729) - (729)
Total adjustments 128,418 - 128,418
Net cash provided (used) by operating activities $ 65,476 $ 23,434 $ 88,910
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Noncash investing, capital, and financing activities:
Contributions of capital assets from other funds $ 27,555 - $ 27,555
69
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i Statistical Section
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II
ISTATISTICAL SECTION
This part of the City of Spokane Valley's comprehensive annual financial report presents detailed
I information as a context of understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the government's overall
financial health.
Financial Trends
These schedules contain trend information to help the reader understand how the
Igovernment's financial performance and well-being have changed over time.
Net Assets by Component 71
Changes in Net Assets 72
I Governmental Activities Tax.Revenue by Source 74
Fund Balances of Governmental Funds 74
Changes in Fund Balances of Governmental Funds 75
IGeneral Governmental Tax Revenues by Source 76 •
Revenue Capacity
These schedules contain information to help the reader assess the governmental
Imost significant local revenue source, the property tax.
Assessed Value and Estimated Actual Value of Taxable Property 77
I Property Tax Levies and Collections 77
Property Tax Rates—Direct and Overlapping Governments 78
Principle Property Taxpayers 79
I Debt Capacity
These schedules present information to help the reader assess the affordability of the
government's current levels of outstanding debt and the government's ability to issue
Iadditional debt in the future.
Ratios of Outstanding Debt by Type 80
Ratios of General Bonded Debt Outstanding 80
I Direct and Overlapping Governmental Activities Debt 81
Legal Debt Margin 82
I Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the government's financial activities take
place.
IDemographic and Economic Statistics 83
Principle Employers 84
I Full-time Equivalent City Government Employees by Function 85
Operating Information
These schedules contain service and infrastructure data to help the reader
I understand how the information in the government's financial report relates to the
services the government provides and the activities it performs.
Capital Assets Statistics by Function 85
Il
1 70
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City of Spokane Valley
Net Assets by Component
Last Two Fiscal Years 1
•
Fiscal Year
2003 2004
Governmental activities
Invested in capital assets, net of related debt $ 63,878,148 $ 62,079,431
Restricted 1,322,142 7,994,118
Unrestricted 4,876,957 11,039,759
Total governmental activities net assets $ 70,077,247 $ 81,113,308
Business-type activities
Invested in capital assets, net of related debt $ - $ _
I
Restricted
Unrestricted 794,083 1,269,689
Total business-type activities net assets $ 794,083 $ 1,269,689
Primary government
Invested in capital assets, net of related debt $ 63,878,148 $ 62,079,431
Restricted 1,322,142 7,994,118
Unrestricted 5,671,040 12,309,448
Total primary government net assets $ 70,871,330 $ 82,382,997
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City of Spokane Valley
IChanges in Net Assets
Last Two Fiscal Years
I Fiscal Year
2003 2004
Expenses
I Governmental activities:
General government $ 2,989,605 $ 3,359,728
Public safety • 7,394,944 13,327,807
I Physical environment 821,886 1,124,472
Transportation 9,054,667 13,360,562
Economic environment 752,172 1,562,221
I Mental and physical health 8,858 42,513
Culture and recreation 932,713 3,443,688
Interest on long-term debt 35,923 514,531
I Total governmental activities expenses 21,990,768 36,735,522
Business-type activities
Sewer 720,393 1,597
Stormwater management 4,142 75,041
Total business type activities expenses 724,535 76,638
ITotal primary government expenses $ 22,715,303 $ 36,812,160
Program Revenues
I Governmental activities:
Charges for services:
General government $ 207 $ 2,306
I Public safety 617,859 1,261,955
Physical environment 28,498 73,279
Transportation 20,284 -
Economic environment 887,886 1,629,613
Culture and recreation 122,152 152,034
Operating grants and contributions 19,807 90,305
Capital grants and contributions(Note 2) 70,687,614 11,689,821
Total governmental activities program revenues 72,384,307 14,899,313
Business-type activities:
I Charges for services:
Stormwater management 559,510 776,859
Total business-type activities program revenues 559,510 776,859
ITotal primary government revenues $ 72,943,817 $ 15,676,172
Net(expense)/revenue
I Governmental activities 50,393,539 (21,836,209)
Business-type activities (165,025) 700,221
Total primarygovernment net expense $ 50,228,514 $ (21,135,988)
Continued
1 72
City of Spokane Valley
Changes in Net Assets
Last Two Fiscal Years, Continued
General Revenues and Other Changes in
Net Assets
Governmental activities:
Taxes
Property taxes 6,995,965 8,980,837
Sales taxes 9,981,719 16,531,976
Excise taxes. 3,537,370 5,796,164
Other taxes 1,269,878 1,103,277
Loss on sale of capital assets - (10,696)
Investment earnings 54,468 233,368
Transfers (959,000) 237,344
Total governmental activities 20,880,400 32,872,270
Business-type activities:
Investment earnings 108 12,729
Transfers 959,000 (237,344)
Total business-type activities 959,108 (224,615)
Total primary government $ 21,839,508 $ 32,647,655
Change in Net Assets
Governmental Activities 71,273,939 11,036,061
Business-type activities 794,083 475,606
Total primary government $ 72,068,022 $ 11,511,667
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1. Year 2003 is the first year of incorporation and for 9 months only. '
• 2. In the first year of incorporation the County donated$70,687,614 in infrastructure assets.
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ICity of Spokane Valley
Governmental Activities Tax Revenues By.Source
Last Two Fiscal Years
(accrual basis of accounting)
Sales& Use
IFiscal Year Property Tax Taxes Excise Tax Other Taxes
2003 $6,995,965 $ 9,981,719 $ 3,537,370 $ 1,269,878
1 2004 8,980,837 16,531,976 5,796,164 1,103,277
1.Year 2003 is the first year of incorporation and for 9 months only.
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I City of Spokane Valley
Fund Balances of Governmental Funds
Last Two Fiscal Years
I (modified accrual basis of accounting)
2003 2004
I General fund
Reserved $ - $ 300,000
Unreserved (2,437,396) 4,493,460
ITotal General Fund $ (2,437,396) $ 4,793,460
All other governmental funds
I Reserved $ 2,890,000 $ -
Unreserved, reported in:
Special revenue funds 2,669,350 4,150,693
Capital projects funds 10,513,560 7,994,118
Total all other funds $ 16,072,910 $12,144,811
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City of Spokane Valley
Changes in Fund Balances of Governmental Funds
Last Two Years
(modified accrual basis of accounting)
,
2003 2004
Revenues:
Taxes $ 17,486,759 $ 27,122,530
Licenses and permits 1,088,165 1,779,081
Intergovernmental revenues 2,124,965 3,633,119
Charges for services 477,342 792,482
Fines and forfeitures 533,496 1,196,234
Miscellaneous 73,110 282,388
Total revenues 21,783,837 34,805,834
Expenditures:
Current:
General government 2,874,697 3,178,887
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Public safety 7,394,857 13,324,116
Physical environment 817,532 1,098,404
Transportation 1,501,884 3,147,222
Economic environment 757,541 1,588,392
Mental and physical health 8,858 42,513
Culture and recreation 879,047 3,376,724
Debt Service:
Principal - 145,000
Interest 34,891 478,986
Bond issue costs 109,019 1,130
Capital Outlay 923,662 8,242,737
Total expenditures 15,301,988 34,624,111 '
Excess (deficiency) of revenue
over(under) expenditures 6,481,849 181,723
Other financing sources (uses):
Contributions - 2,883,691
Transfers in 312,103 1,988,886 I
Transfers out (1,271,103) (1,751,542)
Long-term debt issued 9,430,000 -
Premium on long-term debt 191,485 -
Discount on long-term debt (67,164) -
Total other financing sources (uses) 8,595,321 3,121,035
Net change in fund balance 15,077,170 3,302,758 '
Fund balance - beginning (1,441,656) 13,635,514
Fund balance - ending $ 13,635,514 $ 16,938,272
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ICity of Spokane Valley
General Governmental Tax Revenues by Source •
I Last Two Fiscal Years
(modified accrual basis of accounting)
Fiscal Property Real Estate Motor fuel Franchise Gambling State Shared
Year Tax Sales Tax Excise Tax Taxes Fees Taxes Revenues
2003 $ - $8,986,557 $ 1,377,790 $ 1,418,522 $ 466,938 $ 558,802 $ 702,236
2004 8,980,837 15,044,619 2,075,840 1,691,707 657,083 880,151 1,051,496
1.Year 2003 is the first year of incorporation and for 9 months only.
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City of Spokane Valley
Assessed and Estimated3 Actual Value of Taxable Property
Last Two Fiscal Years2
Real Property Personal Property Exemptions Total Ratio of Total
Assessed
Value to
Assessed Estimated Assessed Estimated Real Assessed Estimated Total Estimated
Tax Year Value Actual Value Value Actual Value Property Value Actual Value Actual Value
2005 $ 4,066,812,360 $ 4,530,209,970 $339,053,340 $ 339,053,340 $ 463,397,610 $4,533,703,249 $4,997,100,859 90.7%
2004 $ 3,999,483,249 $ 4,450,200,737 $309,826,177 $ 309,826,177 $ 450,717,488 $4,309,309,426 $4,760,026,914 90.5%
2003 No Data Available-Year of Incorporation
2. Less than ten years data is provided because 2003 was the first year of incorporation.
,, 3. It is the policy of the Spokane County's Assessor's Office to value property at 100%of market value. As a result,assessed and actual values are the same.
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Source:Spokane County Assessor's Office
City of Spokane Valley
Property Tax Levies and Collections'
Last Two Fiscal Years2
Current Tax Ratio of Total Tax Ratio of Delinquent
Collections and Percent of Current Delinquent Tax Total Tax Collections to Total Outstanding Taxes to Total Tax
Year Total Tax Levy Adjustments Taxes Collected Collections Collections Tax Levy Delinquent Taxes Levy
2004 $ 9,265,809 $ 9,025,239 97.4% $ 187,316 $ 9,212,555 99.4% $ 366,113 4.0%
2003 $ 7,028,939 $ 6,716,080 95.5% $ - $ 6,716,080 95.5% $ 312,859 4.5%
1. For the first year of incorporation(2003)the County is obligated to transmit county road taxes collected from the date of incorporation to the City.
These taxes are to be used for street and road maintenance and are credited to the Street Fund.
2. Less than ten years data is provided because 2003 was the first year of incorporation.
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ICity of Spokane Valley
Property Tax Rates
I Direct and Overlapping Governments
Last Two Fiscal Years
I Total Direct and
Spokane Spokane School Overlapping
Fiscal Years Valley County Fire Districts State School Districts Library Bond Other Rates
I 2004 2.108 1.497 3.169 2.911 6.053 0.083 0.000 15.821
2003 0.000 1.478 2.999 2.917 6.140 0.088 2.370 15.992
Source:Spokane County Assessors Office
Overlapping rates are those of local and county governments that apply to property owners with the City of Spokane Valley.
I Not all overlapping rates apply to all Spokane Valley property owners(e.g.,the rates for special districts apply only to the
proportion of the government's property owners whose property is located within the geographic boundaries of the special district.)
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City of Spokane Valley
Principal Property Taxpayers
December 31, 2004
2005 2004
Taxable Percent Taxable Percent
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Assessed of NV to Assessed of NV to
Taxpayer Type of Business Valuation Rank Total AN Valuation Rank Total AN
Spokane Valley Mall Retail Malls $ 56,377,080 1 1.24% $ 56,377,080 2 1.28%
Avista Corporation Electric&Gas Utility 54,933,310 2 1.21% 49,988,659 3 1.13%
Kaiser Aluminum, Inc. Aluminum Manufacture 49,422,892 3 1.09% 61,709,547 1 1.40%
Park SPE, LLC Real Estate 43,136,600 4 0.95% 41,960,700 4 0.95%
Qwest Corporation Telephone Utility 32,677,558 5 0.72% 18,957,436 5 0.43%
Honeywell Electronic Materials Electronics Manufacturer 30,089,109 6 0.66% 15,129,873 8 0.34%
v Itron Inc. Electronics Manufacturer 23,634,615 7 0.52% 16,913,447 7 0.38%
CPM Development Corp. Concrete and Asphalt 18,230,478 8 0.40% 12,765,566 6 0.29%
Wal-Mart Stores Inc. Retail Store 14,605,621 9 0.32% 12,765,566 9 0.29%
Cedar Chateau Estates Real Estate 12,659,867 10 0.28% 12,751,741 10 0.29%
Total-Ten Principal Taxpayers 335,767,130 7.41% 299,319,615 6.79%
Total-All Other Taxpayers 4,197,936,119 92.59% 4,109,940,236 93.21%
Grand Totals $4,533,703,249 $ 4,409,259,851
Source:Spokane County Treasurer
MN - NMI - - M- "r- MINN - - - - -rim- --- imi■ n -r -M- -M- r - MEI -
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City of Spokane Valley
Ratios of Outstanding Debt by Type
Last Two Fiscal Years
Govermental Activities
General Obligation Special Assessment Business Type Total Primary
Fiscal Year Bonds Bonds Capital Leases Activities Government Per Capita
2004 $9,285,000 - - - $9,285,000 $ 111
2003 $9,430,000 - - - $9,430,000 $ 115
o City of Spokane Valley
Ratios of General Bonded Debt Outstanding
To Assessed Value and Bonded Debt Per Capita
Last Two Fiscal Years
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Less Debt
Service Fund Ratio of Net
• Gross Bonded Cash and Net Direct Bonded Bonded Debt to Net Direct Bonded
Year Population Assessed Value' Debt Investments Debt Assessed Value Debt Per Capita
2004 83,950 $4,527,968,717 $9,285,000 - $ 9,285,000 0.205% $ 111
2003 82,005 $4,409,259,651 $9,430,000 - $9,430,000 0.210% $ 115
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1. Assessed valuation was for property tax year 2004.
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City of Spokane Valley
Direct and Overlapping Governmental Activities Debt
General Obligation Bonds
As of December 31,2004
G.O.Debt Percent Amount Applicable
Jurisdiction Outstanding Overlapping to Government
Direct:
City of Spokane Valley $ 9,285,000 100.00% $ 9,430,000
Overlapping:
Fire District#8 3,490,000 9.38% 327,272
Spokane County Library District 4,405,000 . 34.37% 1,513,999
Spokane School District#81 154,095,000 3.83% 5,908,987
Central Valley School District#356 94,153,708 68.39% 64,388,939
East Valley School District#361 11,539,000 57.65% 6,652,581
West Valley School District#363' 27,085,000 54.11% 14,656,582
Total Overlapping Debt $ 93,448,360
Total Direct and Overlapping $ 102,878,360
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City of Spokane Valley
Legal Debt Margin Information
ILast Two Fiscal Years
IFiscal Year
2004 2005
IDebt limit-general purposes $ 110,231,496 $ 113,199,218
.Total net debt applicable to limit 9,486,398 9,368,843
ILegal debt margin $ 100,745,098 $ 103,830,375
Total net debt applicable to the limit
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as a percentage of debt limit 8.61% 8.28%
ILegal Debt Margin Calculation for Fiscal Year 2005
Assessed Valuation (2004 for 2005 taxes) $ 4,527,968,717
IGeneral Purpose debt limit.(2.5%of total assessed value) $ 113,199,218
Debt applicable to limit:
I General obligation bonds 9,285,000
General governmental liabilities 83,843
Total net debt applicable to limit 9,368,843
IMargin of indebtness available-general purposes $ 103,830,375
Indebtedness for open space and parks facilities
Iwith a 3/5 vote(legal limit 2.5%) $ 113,199,218
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Indebtedness for utility purposes
with a 3/5 vote(legal limit 2.5%) $ 113,199,218
Total indebtness allowable(legal limit 7.5%) $ 339,597,653
ILess: lndebtness incurred-all purposes 9,368,843
Margin of indebtedness available-all purposes $ 330,228,810
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City of Spokane Valley
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Demographic and Economic Statistics
Last Two Fiscal Years
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Fiscal Per Capita Area Taxable School Unemployment
Year Population Income' Sq Miles Retail Sales2 Enrollment Rate'
2004 83,950 $ 27,218 38.5 $1,634,649,950 19,741 6.6%
2003 82,005 $ 26,107 38.5 $1,072,774,225 18,863 6.8% i
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1. Spokane metropolitan statistical area annual average.
2. For the nine months April 1-December 31,2003.
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ICity of Spokane Valley
Principal Employers
ILast Two Fiscal Years
2005 2004
Number of Number of
IEmployer Type of Business Employees Employees
Dakotah Call center 1,193 1,000
I Huntwood Industries Custom kitchen cabinets 727 638
Kaiser Aluminum Aluminum manufacture 575 650
CPM Development Corp. Concrete and Asphalt 550 449
Yoke's Washington Foods Retail grocery 479 447
I Itron Inc. Meter data readers 458 516•
Honeywell Electronic Materials High purity metals 439 473
Tidyman's LLC Retail grocery 272 272
I Wagstaff Inc. Aluminum casting 260 209
Avista Corp. Electric&Gas utility 167 167
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Source:Journal of Business Book of Lists
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City of Spokane Valley I
Full-time Equivalent City Government Employees by Function
Last Three Fiscal Years
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Function 2003 2004 2005
General government 20 21 19 I
Public Safety - - -
Physical Environment 8 9 12
Transportation 2 1 2
Economic Environment 15 19 21
Culture and recreation 5 4 7
Stormwater Management - - 2
Total 50 53 63
The city contracts with Spokane County for law enforcement, park maintenance
and street maintenance. {'
Fire protection is provided by Spokane County Fire District No. 1.
Library service is provided by the Spokane County Library District. ,
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City of Spokane Valley
Capital Asset Statisitics by Function
Last Two Fiscal Years
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Function 2003 2004
Highways and streets
Streets (miles) 424 431
Traffic Signals 72 74
Parks
Parks acreage 165 165
Parks 9 9
Swimming pools 3 3
Tennis courts
Community centers 1 1
Stormwater management
Number of swales
85
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I Other Supplementary
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CITY OF SPOKANE VALLEY
SCHEDULE OF LONG-TERM DEBT
FOR THE YEAR ENDED DECEMBER 31,2004 .
BARS Beginning Ending
Redeeming Code for Date of Date of Outstanding Amount Amount Outstanding
ID. No. Issue Fund Redemption Issue Maturity Debt Issued Dedeemed, Debt
251.11 GO Bonds of 2003 204 591.73.71 11-18-03 12-01-33 9,430,000 - 145,000 9,285,000
Total Limited Go Bonds $9,430,000 $ $ 145,000 $9,285,000
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CITY OF SPOKANE VALLEY I
COMPUTATION OF LIMITATION OF INDEBTEDNESS ,
December 31,2004
ASSESSED VALUATION (2004 FOR 2005 TAXES) $ 4,527,968,717
I. GENERAL PURPOSE INDEBTEDNESS(LEGAL LIMIT OF 2.5%OF I
TAXABLE PROPERTY VALUE) $ 113,199,218
A. GENERAL PURPOSE INDEBTEDNESS WITHOUT A VOTE
(LEGAL LIMIT 1.5%) $ 67,919,531
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INDEBTEDNESS(LIABILITIES):
1. Councilmanic Bonds $ 9,285,000
Less: Redemption Fund Assets:
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Cash&Investments in Bond Redemption Funds -
9,285,000
2. General Government Liabilities
Employee Leave Benefits 83,843
Less: Redemption Fund Assets: -
83,843
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Less: Total Net General Indebtedness-Section A (9,368,843)
Margin of Indebtedness Still Available 58,550,688
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B. GENERAL PURPOSE INDEBTEDNESS WITH A VOTE
(LEGAL LIMIT 2.5%) 113,199,218 1
No Indebtedness Incurred -
Remaining Voted G 0 Debt Capacity-General Purposes 113,199,218
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Total Indebtedness,Voted &Nonvoted Bonds (9,368,843)
REMAINING VOTED AND NONVOTED GO DEBT CAPACITY-GENERAL PURPOSES 103,830,375
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II. INDEBTEDNESS FOR OPEN SPACE AND PARKS FACILITIES
WITH A 3/5 VOTE(LEGAL LIMIT 2.5%) 113,199,218
No Indebtedness Incurred
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Remaining Voted G 0 Debt Capacity-Open Space and Park Purposes 113,199,218
III. INDEBTEDNESS FOR UTILITY PURPOSES
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WITH A 3/5 VOTE(LEGAL LIMIT 2.5%) 113,199,218
No Indebtedness Incurred -
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• Remaining Voted G 0 Debt Capacity-Open Space and Park Purposes 113,199,218
Total Indebtness Allowable(Legal Limit 7.5%) 339,597,653
Less: Indebtedness Incurred-All Purposes (9,368,843)
MARGIN OF INDEBTEDNESS AVAILABLE $ 330,228,810
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City of Spokane Valley
Schedule of Expenditures of Federal Awards
For the Year Ended December 31,2004
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Grantor/Pass-Through
Grantor Program Title
Federal CFDA Grant Current Year
Fund-Dept Number Number Expenditures
FEDERAL .
U.S. Dept.of Housing and Urban Development Passed Thru Spokane County Housing and Community Development Department
Weatherwood/Owens Street Improvements 306-000 14.218 B-04-UC-530004 267,803
Total CFDA Number 14.218 Community Dev. Block/Entitlement Grants 267,803
TOTAL FEDERAL ASSISTANCE 267,803
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The accompanying notes to the Schedule of Expenditures of Federal Awards are an integral part of this schedule.
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City of Spokane Valley
• Schedule of State and Local Financial Assistance
• For the Year Ended December 31,2004
Grant Current Year
Fund-Dept Number Expenditures
STATE
State Dept of Community,Trade and Economic Development
FY 2004 Growth Management Newly Planning Grant 001-058 SO4-62600-113 60,203
FY 2005 Growth Management Newly Planning Grant 001-058 S05-62600-003 30,102
Total State Dept of Community,Trade and Economic Development 90,305
State Transportation Improvement Board
Bowdish Road/24th Avenue Sidewalk Project 307-002 P-E-208(P01)-1 81,004
Total State Transportation Improvement Board 81,004
TOTAL STATE ASSISTANCE 171,309
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`° County
Project Grant Current Year
Fund-Dept Number Number Expenditures
LOCAL
State Dept.of Transportation Passed Thru Spokane County Road Fund
Valley Corridor EIS N/A GR2786 STPUL-9932(024) 31,180
16th-Dishman Mica to SR27 N/A GR2875 STPUL-4030(002) 1,815,052
Sullivan Road at 4th Avenue Signal N/A GR2956 STPH-0005(167) 130,062
Total State Dept.of Transportation Passed Thru Spokane County Road Fund 1,976,294
State Transportation Improvement Board Passed Thru Spokane County Road Fund
16th Avenue-Evergreen to Sullivan N/A GR2791A 8-3-032(057)-2 7,875
Mission Avenue-Evergreen to Sullivan N/A GR2846A 8-3-032-(058)-1 38,375
Evergreen Road 2nd to 16th N/A GR2903 8-3-032(059)-1 1,473,321
Park Road N/A GR2951 8-3-032(060)-1 446,730
Total State T.I.B. Passed Thru Spokane County Road Fund 1,966,301
• TOTAL LOCAL ASSISTANCE 3,942,595
The accompanying notes to the Schedule of Expenditures of Awards are an integral part of this schedule.
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