Full Text
Comprehensive Annual Financial Report City of Fernley, Nevada For the Fiscal Year Ended June 30, 2009 Prepared by: Finance Department Melville Drown Finance Director City Treasurer ---PAGE BREAK--- CITY OF FERNLEY, NEVADA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2009 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal i-vi GFOA Certificate of Achievement vii Organization Chart viii List of Principal Officials ix FINANCIAL SECTION Independent Auditor’s Report 1-2 Management’s Discussion and Analysis (required supplementary information) 3A-3L Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets 4 Statement of Activities 5 Fund Financial Statements: Balance Sheet – Governmental Funds 6 Reconciliation of the Balance Sheet to the Statement of Net Assets – Governmental Funds 7 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 8 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities – Governmental Funds 9 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual for the General Fund 10-12 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual for the Residential Construction Tax District #1 Special Revenue Fund 13 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual for the Streets and Storm Drains Special Revenue Fund 14 Statement of Net Assets – Proprietary Funds 15 Statement of Revenues, Expenses and Changes in Net Assets – Proprietary Funds 16 Statement of Cash Flows – Proprietary Funds 17 Statement of Fiduciary Assets and Liabilities 18 Notes to Financial Statements 19-40 ---PAGE BREAK--- CITY OF FERNLEY, NEVADA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2009 TABLE OF CONTENTS (Continued) Combining and Individual Fund Statements and Schedules: Governmental Funds: Nonmajor Special Revenue Funds Combining Balance Sheet 41 Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances 42 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Municipal Court Administrative Fees Special Revenue Fund 43 Municipal Court Facilities Fees Special Revenue Fund 44 Residential Construction Tax District #2 Special Revenue Fund 45 Grants Special Revenue Fund 46 Private Sector Community Support Special Revenue Fund 47 Capital Projects Fund 48 Proprietary Funds: Schedule of Revenues, Expenses and Changes in Net Assets – Budget and Actual: Water Utility Enterprise Fund 49 Sewer Utility Enterprise Fund 50 Non-Potable Water Enterprise Fund 51 Fiduciary Funds: Municipal Trust Fund Statement of Changes in Assets and Liabilities 52 Schedule No. Page STATISTICAL SECTION Financial Trends Information: Net Assets by Component 1 53 Change in Net Assets 2 54-55 Fund Balances, Governmental Funds 3 56 Changes in Fund Balances, Governmental Funds 4 57 Revenue Capacity Information: Assessed and Estimated Actual Value of Taxable Property 5 58 Property Tax Rates - Direct and Overlapping Governments (Per $100 of Assessed Value) 6 59 Principal Property Owners 7 60 ---PAGE BREAK--- CITY OF FERNLEY, NEVADA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2009 TABLE OF CONTENTS (Continued) Schedule No. Page Water User Fees 8 61 Principal Water Users 9 62 Debt Capacity Information Ratios of Outstanding Debt by Type 10 63 Ratios of General Bonded Debt Outstanding 11 64 Computation of General Obligation Direct and Overlapping Debt 12 65 Computation of Legal Debt Margin 13 66 Water and Sewer Funds Revenue Bond Coverage 14 67 Demographic and Economic Information: Demographic Statistics 15 68 Major Employers 16 69 Operating Information: Full-time Equivalent City Government Employees by Function – Last Eight Fiscal Years 17 70 Operating Indicators by Function – Last Seven Fiscal Years 18 71 Capital Asset Statistics by Function/Program – Last Eight Fiscal Years 19 72 COMPLIANCE SECTION Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 73-74 Independent Auditor’s Report on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 75-76 Schedule of Expenditures of Federal Awards 77 Notes to Schedule of Expenditures of Federal Awards 78 Schedule of Findings and Questioned Costs 79-83 ---PAGE BREAK--- CITY OF FERNLEY, NEVADA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2009 TABLE OF CONTENTS (Continued) Summary Schedule of Prior Year Audit Findings 84 AUDITOR’S COMMENTS Statute Compliance 85 Progress on Prior Year Statute Compliance 85 Prior Year Recommendations 85 Current Year Recommendations 85 Schedule of Fees Imposed Subject to the Provisions of NRS 354.5989 Limitation of Fees for Business Licenses 86 Independent Accountant’s Report on NRS 354.6241 87 ---PAGE BREAK--- INTRODUCTORY SECTION ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- viii ---PAGE BREAK--- ix City Council Mayor Todd Cutler Council Member Ward 1 Kelly Malloy Council Member Ward 2 Don Parsons Council Member Ward 3 Monte Martin Council Member Ward 4 Curt Chaffin Council Member Ward 5 Cal Eilrich The Fernley City Council meets in regular session the first and third Wednesday of the month in the Council Chambers in City Hall located at 595 Silver Lace Boulevard, Fernley Nevada. Staff City Manager Greg Evangelatos City Attorney Stephen Jeff McGowan Chief of Police Allen Veil Municipal Court Judge Daniel Bauer Building Official Randy Rudy City Clerk Lena Shumway Community Development Director Fred Turnier Finance Director/City Treasurer Susan Fairfield (Interim) Parks and Recreation Director Keith Penner Public Works Director Lowell Patton ---PAGE BREAK--- FINANCIAL SECTION ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- 3-A Management’s Discussion and Analysis As management of the City of Fernley, we offer readers of the City of Fernley’s financial statements this narrative overview and analysis of the financial activities of the City of Fernley for the fiscal year ended June 30, 2009. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i through vi of this report. Financial Highlights The assets of the City of Fernley exceeded its liabilities at the close of the most recent fiscal year by $152,125,715 (net assets). Of this amount, $ 16,800,352 (unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors. The government’s total net assets increased by $11,595,046. The majority of the increase is not cash and is primarily attributable to capital grants and capital contributions. As of the close of the current fiscal year, the City of Fernley’s governmental funds reported combined ending fund balances of $2,622,168, a decrease of $156,136 in comparison with the prior year. With the exception of the reserved balance of $394,251 the funds are available for spending at the government’s discretion (unreserved, undesignated fund balance). At the end of the current fiscal year, fund balance for the general fund was $688,868. Of the $688,868 in fund balance, $394,251 is reserved for prepaid items and future capital projects leaving an unreserved, undesignated fund balance of $294,617 or 9% of general fund expenditures. This ending fund balance is within the targeted ending fund balance of 8% to 17% of general fund expenditures. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City of Fernley’s basic financial statements. The City of Fernley’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Fernley’s finances, in a manner similar to a private-sector business. The Statement of Net Assets presents information on all of the City of Fernley’s assets and liabilities, with the differences between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Fernley is improving or deteriorating. ---PAGE BREAK--- 3-B The Statement of Activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Fernley that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Fernley include general government, judicial, public works, culture and recreation, community development, and health. The business- type activities of the City of Fernley are water and sewer operations. The government-wide financial statements can be found on pages 4 through 5 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Fernley, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Fernley can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government- wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Fernley maintains nine individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund and the three funds, which are considered major funds. Data for the other five governmental funds are combined into a single, aggregated presentation. Individual fund data for each of ---PAGE BREAK--- 3-C these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of Fernley adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 6 through 14 of this report. Proprietary funds. The City of Fernley maintains two proprietary funds as enterprise funds to account for its potable water and sewer (wastewater) operations. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer operations. The Water Fund and Sewer Fund are considered to be major funds of the City of Fernley. The basic enterprise fund financial statements can be found on pages 15 through 17 of this report Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City of Fernley’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on page 18 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 19 through 40 of this report Other Information. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the notes to the financial statements. Combining and individual fund statements and schedules can be found on pages 41 through 52 of this report. ---PAGE BREAK--- 3-D Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City of Fernley, assets exceeded liabilities by $152,125,715 at the close of the most recent fiscal year. A large portion of the City of Fernley’s net assets (89%) reflects its investment in capital assets land, buildings, machinery, and equipment); net of any related outstanding debt used to acquire those assets. The City of Fernley uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Fernley’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Fernley’s Net Assets Governmental Activities Business-type Activities Totals FY09 FY08 FY09 FY08 FY09 FY08 Current & other assets $3,465,285 $3,886,753 $31,366,903 $78,199,907 $34,832,188 $34,086,660 Capital assets, net 44,156,258 40,354,010 167,459,162 112,405,170 211,615,420 152,759,180 Total assets 47,621,543 44,240,763 199,416,403 190,605,077 247,037,946 234,845,840 Long-term liabilities 4,402,477 4,583,974 80,701,818 82,540,544 85,104,295 87,124,518 Other liabilities 898,828 1,221,910 8,909,108 5,968,744 9,807,936 7,190,654 Total liabilities 5,305,305 5,805,884 89,610,926 88,509,288 94,916,231 94,315,172 Net assets: Invested in capital assets, net of related debt 39,652,258 35,677,010 95,281,505 77,070,390 134,933,763 112,747,400 Restricted 391,600 362,289 - - 391,600 362,289 Unrestricted 2,276,380 2,395,580 14,523,972 25,025,399 16,800,352 27,420,979 Total net assets $42,320,238 $38,434,879 109,805,477 $102,095,789 $152,125,715 $140,530,668 A small portion of the City of Fernley’s net assets (less than represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($16,800,352) may be used to meet the government’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Fernley is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. The government’s net assets increased $11,595,046 during the current fiscal year. The increase is primarily due to donated capital assets reported for governmental activities and capital contributions reported for the business-type activities that were greater than the related program expenses. Net assets invested in capital assets, net of related debt, ---PAGE BREAK--- 3-E increased about $22 million due to the ongoing construction of the water treatment plant and associated conveyance systems. Governmental activities. Governmental activities increased the City of Fernley’s net assets by $3,885,359. Key elements of this increase are donated (dedicated) infrastructure and purchased infrastructure for streets and storm drains. Property tax revenue increased 29% between FY08 and FY09, but unrestricted interest income declined 77% due to lower cash balances and lower interest rates. The following table summarizes the change in net assets for the current fiscal year: Governmental Activities Business-Type Activities Total FY09 FY08 FY09 FY08 FY09 FY08 Revenues: Program revenues: Charges for services $1,732,998 $ 1,731,740 $5,663,909 $5,104,415 $7,396,907 $6,836,156 Operating grants and contributions 60,383 60,000 562,372 424,671 622,755 484,671 Capital grants and contributions 5,613,270 4,869,410 7,146,143 4,579,348 12,759,413 9,448,756 General revenues: Property taxes 1,381,621 1,074,726 - - 1,381,621 1,074,726 Shared revenues 604,295 597,779 - - 604,295 597,779 Other revenues 97,264 600,515 1,046,710 1,510,813 1,143,974 2,111,330 Total revenues 9,489,831 8,934,170 14,419,134 11,619,248 23,908,965 20,553,418 Expenses: General government 1,626,115 1,572,115 - - 1,626,115 1,572,115 Judicial 243,889 252,189 - - 243,889 252,189 Public works 1,778,649 997,891 - - 1,778,649 997,891 Culture & recreation 685,706 689,281 - - 685,706 689,281 Community develop. 811,701 1,977,586 - - 811,701 1,977,586 Health 252,320 280,743 - - 252,320 280,743 Water - - 4,127,466 3,152,845 4,127,466 3,152,845 Sewer - - 2,581,981 2,012,862 2,581,981 2,012,862 Inerest 206,092 - - 212,651 206,092 212,651 Total expenses 5,604,472 5,769,805 6,709,447 5,378,358 12,313,919 11,148,163 Increase in net assets 3,885,359 3,164,365 7,709,687 6,240,890 11,595,046 9,405,255 Net assets, July 1 38,434,879 35,270,514 102,095,790 95,854,899 140,530,669 131,125,414 Net assets, June 30 $42,320,238 $38,434,879 109,805,477 $102,095,789 $152,125,715 $140,530,669 ---PAGE BREAK--- 3-F FY09 Program Revenues and Expenses- Governmental Activities 0 1,000 2,000 3,000 4,000 5,000 6,000 General Govt Revenue General Govt Expenses Judicial Revenues Judicial Expenses Public Works Revenues Public Works Expenses Culture & Rec Revenues Culture & Rec Expenses Comm. Dev. Revenues Comm Dev Expenses Health Expenses Program $ in thousands Program Expenses Capital Grants and Contributions Operating G&C Charges for services The major sources of program revenues for general government activities are business licenses and public utility license/franchise fees. The program expenses associated with general government activities include the operations of the Office of the City Manager, the Office of the City Clerk, Mayor and City Council activities and a portion of the expense for the Finance Department. The sources of program revenue for judicial activities include fines and fees (unrestricted) as well as administrative assessment and court facility fees (restricted). The program expenses associated with judicial activities include expenses for the Judge, City Prosecutor, Public Defender, and direct court costs. Overhead costs are not allocated. The major sources of program revenues for public works activities are dedications (non- cash transactions) of streets and storm drain systems from developers, regional transportation commission distributions, fuel taxes, and shared county property tax revenues. The program expenses associated with public works activities are operating costs and depreciation related to streets and storm drain activities. Overhead costs are not allocated. The major sources of program revenues for culture and recreation activities include grants, dedications of park property and improvements, and residential construction tax. The program expenses associated with culture and recreation activities include the operating costs in the general fund parks budget and depreciation related to two residential construction tax funds for which the Parks Department is responsible. Overhead costs are not allocated. The major source of program revenues for community development activities is building permits and fees. Planning fees are also included in program revenues. The program ---PAGE BREAK--- 3-G expenses associated with these revenues include the operations of the Community Development Department. Overhead costs are not allocated. The health operations of the City include animal control and vector control activities. Neither of these activities produces significant revenue. The program revenue consists of animal license fees and donations. The major sources of general revenues (revenues that are not specifically allocated to a particular program) are property taxes, consolidated taxes, fuel taxes and interest earnings. FY09 Revenues by Source - Governmental Activities (in thousands of Charges for Serv., $1,733 , 18% Oper. Grants & Contr., $60 , 1% Shared Revenues, $604 , 6% Other, $97 , 1% Capital Grants & Cont., $5,613 , 59% Property Tax, $1,382 , 15% The Charges for Services category includes primarily fees, fines, and licenses. The Capital Grants and Contributions primarily includes donated (dedicated) infrastructure (streets and storm drains). The Shared Revenue category includes primarily consolidated tax, fuel tax and gaming licenses. The Other category includes interest income and other miscellaneous sources of revenue. Capital grants and donated (dedicated) infrastructure represent the largest part of the increase. Business-type activities. Business-type activities increased the City of Fernley’s net assets by $7,709,687. Key elements of this increase are higher revenues for water and sewer use fees, donated (dedicated) infrastructure and connection fees. Charges for services for business-type activities increased by $927,098 or 18% due to a rate increase which took effect 7/01/08. Capital contributions increased by $2,566,797 or 56%, primarily as a result of the acceptance of subdivision improvements whose 1 year warranty had been reached. Investment earnings decreased due to lower interest rates and lower levels of cash available for investment. ---PAGE BREAK--- 3-H FY09 Program Revenues and Expenses Business-type Activities 0 2,000 4,000 6,000 8,000 10,000 12,000 Water Revenues Water Expenses Sewer Revenue Sewer Expenses Program $ in thousands Expenses Capital Grants and Contributions Operating Grants & Contributions Charges for Serv. Revenues include both cash and non-cash capital contributions in the “Capital Grants and Contributions” section. FY09 Revenue by Source Business Type Activities (in thousands of Unrestricted Interest Income, $477 , 3% Capital Grants & Contr., $7,709 , 54% Charges for Serv., $5,664 , 39% Other, $569 , 4% ---PAGE BREAK--- 3-I Financial Analysis of the Government’s Funds As noted earlier, the City of Fernley uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City of Fernley’s governmental funds is to provide information on the near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Fernley’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of Fernley’s governmental funds reported combined ending fund balances of $2,622,168, a decrease of $156,136 in comparison with the prior year. $394,251 is reserved for capital projects and prepaid items leaving the remaining unreserved, undesignated fund balance available for spending at the government’s discretion. The general fund is the chief operating fund of the City of Fernley. At the end of the current fiscal year, unreserved, undesignated fund balance of the general fund was $294,617, while total fund balance reached $688,868. As a measure of the general fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total general fund expenditures. Unreserved, undesignated fund balance represents 9% of total general fund expenditures, while total fund balance also represents about 21% of that same amount. The balance of the City of Fernley’s general fund increased by $43,001 during the current fiscal year. Key factors in this increase are as follows: Staff reduction of 14 FTE’s through attrition and/or layoffs of staff in early 2009. A citywide effort to reduce spending for non-essential goods and services. Expenditures exceeded estimates in several cost centers in the general fund, however in aggregate the general fund ended with operating revenues exceeding expenditures by $69,001. The expenditures that did exceed budget were primarily in salaries and benefits. The Residential Construction Tax District #1 Fund is used to account for the receipt and use of a special tax that is dedicated to specific purposes of construction of parks in accordance with the Park Plan. At the end of the current fiscal year, unreserved, undesignated fund balance of the fund was $9,313. Revenues in this fund are significantly lower than originally projected due to the slow down in the residential housing market. No projects are planned for this fund during FY10. The Streets and Storm Drains Fund is used to account for gas taxes that must be used for street maintenance and capital expenditures as well as other revenues that may be used for projects associated with street and storm drains. At the end of the current fiscal year, unreserved, undesignated fund balance of the fund was $408,749. Unreserved, ---PAGE BREAK--- 3-J undesignated fund balance represents 34% of total fund expenditures. The City is currently considering the implementation of impact fees for streets to provide the necessary funding for street construction projects. The Capital Projects Fund is used to accrue funds under a “pay as you go” program to provide funding for future projects involving replacement of equipment and buildings or new facilities and equipment. At the end of the current fiscal year fund balance of the Capital Fund was $1,145,372. Projects planned for FY10 include purchase of technology upgrades and replacements. Proprietary funds. The City of Fernley’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of the Water Fund at the end of the year amounted to $6,334,263; those for the Sewer Fund amounted to $8,189,709 resulting in total unrestricted net assets of $14,523,972. The total growth in net assets for these funds was $8,798,574 and $769,429 respectively. Other factors concerning the finances of these funds have already been addressed in the discussion of the City of Fernley’s business-type activities. General Fund Budgetary Highlights During the year there was a $326,425 decrease in revenues between the original and final amended budget, primarily due to an unrealized expectation of franchise fee revenue and reduced revenue estimates for building permits and other revenues directly associated with development. There was a $436,991 decrease in appropriations between the original and final amended budget. Following are the main components of the decrease: Appropriations were reduced for employee benefits in most cost centers due to an anticipated increase in health insurance premiums which did not materialize. Appropriations for the General Government, Culture and Recreation, and Community Development decreased due to staff reductions. Capital Asset and Debt Administration Capital assets. The City of Fernley’s investment in capital assets for its governmental and business-type activities as of June 30, 2009 amounts to $211,615,420 (net of accumulated depreciation). This investment in capital assets includes land, construction in progress, buildings, improvements, machinery and equipment, infrastructure (streets and bridges), and other capital assets. The total increase in the City of Fernley’s investment in capital assets for the current fiscal year was 38.5% (a 9% increase for governmental activities and a 49% increase for business-type activities). Major capital asset events during the current fiscal year included the following: ---PAGE BREAK--- 3-K Donation of capital assets from developers Construction costs for the water treatment plant Construction costs for conveyance system associated with the water treatment plant Sewer interceptor improvements Street improvements City of Fernley Capital Assets (net of depreciation) Governmental activities Business-type activities Totals FY09 FY08 FY09 FY08 FY09 FY08 Land $3,909,626 $3,909,624 $1,195,948 $ 677,677 $5,105,574 $4,587,301 Water rights 36,814,699 34,223,899 36,814,699 34,223,899 Construction in progress 361,206 638,614 73,705,225 32,921,280 74,066,431 33,559,894 Buildings 7,362,231 7,706,195 1,662 2,661 7,363,893 7,708,856 Improvements other than buildings 6,855,047 6,049,808 54,081,331 42,864,900 60,936,378 48,914,708 Machinery & Equipment 338,214 441,849 629,915 602,911 968,129 1,044,760 Infrastructure 25,329,934 21,607,920 - - 25,329,934 21,607,920 Other capital assets 1,030,382 1,111,840 1,030,382 1,111,840 TOTAL $44,156,258 $40,354,010 $167,459,162 $112,405,170 $211,615,420 $152,759,180 Additional information on the City of Fernley’s capital assets can be found in note 4 of this report. Long-term debt. At the end of the current fiscal year, the City of Fernley had total bonded debt outstanding of $86,976,729. All of the debt is backed by the full faith and credit of the government. Governmental activities Business-type activities Totals 7/1/09 7/1/08 7/1/09 7/1/08 7/1/09 7/1/08 General obligation/revenue bonds 4,504,000 4,677,000 $82,472,729 $83,595,329 $86,976,729 $88,272,329 Unamortized bond premium - - $54,824 $70,652 $54,824 $70,652 Compensated absences $104,477 $104,974 $52,101 $52,042 $156,578 $157,016 TOTAL $4,608,477 $4,781,974 $82,579,654 $83,718,023 $87,188,131 $88,499,997 ---PAGE BREAK--- 3-L The City of Fernley’s total debt decreased by $1,311,866 during the current fiscal year due to the payment of budgeted debt service amounts. State statutes limit the amount of general obligation debt a city may issue to 30% of its total assessed valuation. The current debt limitation for the City of Fernley is approximately $153 million, which is significantly in excess of the City of Fernley’s outstanding general obligation debt of $87,188,131. Additional information of the City of Fernley’s long-term debt can be found in note 7 on pages 36 through 37 of this report. Economic Factors and Next Year’s Budget and Rates Both water rates and sewer rates were increased for the second consecutive year effective July 1, 2009 to pay for operating expenses, capital expansion and debt service. Residential development has slowed to a standstill, but limited commercial development has continued. The new state of the art water treatment plant was essentially completed. The operation costs will have a significant impact on future operating costs for the water fund. The city has begun to aggressively seek grant funding to enhance the community, to fund capital projects and to defray the expense of building and maintaining operations of the new water treatment plant. All of these factors were considered in preparing the City of Fernley budget for FY10. During the current fiscal year, unreserved, undesignated fund balance in the general fund increased to $294,617. The FY10 General Fund budget assumed a beginning unreserved, undesignated fund balance of $283,578. The cost saving measures put into place at the beginning of the calendar year enabled the city to reflect a small improvement in the general fund balance. The rates for the enterprise funds went up again effective July 1, 2009 to provide the necessary funds to operate the water and sewer utility funds. Additional increases are scheduled to be implemented on July 1 each subsequent two years. Requests for Information This financial report is designed to provide a general overview of the City of Fernley’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the City Treasurer/Finance Director, 595 Silver Lace Blvd, Fernley NV 89408. ---PAGE BREAK--- BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- BUSINESS- GOVERNMENTAL TYPE ACTIVITIES ACTIVITIES TOTAL Current assets: Cash and investments 2,388,484 $ 19,223,865 $ 21,612,349 $ Restricted cash and investments Refundable deposits - 636,936 636,936 Bond proceeds - 10,349,897 10,349,897 Interest receivable 2,632 34,267 36,899 Taxes receivable 124,604 - 124,604 Accounts receivable, net 391,322 590,206 981,528 Accounts receivable, other 40,399 136,736 177,135 Due from other governments 527,243 250,557 777,800 Internal balances (12,050) 12,050 - Inventories - 127,389 127,389 Prepaid expenses 2,651 5,000 7,651 Total Current Assets 3,465,285 31,366,903 34,832,188 Noncurrent assets: Deferred charges - 590,338 590,338 Capital assets: Land and construction in progress 4,270,832 111,715,872 115,986,704 Other capital assets, net of depreciation 39,885,426 55,743,290 95,628,716 Total Capital Assets 44,156,258 167,459,162 211,615,420 Total Noncurrent Assets 44,156,258 168,049,500 212,205,758 Total Assets 47,621,543 $ 199,416,403 $ 247,037,946 $ Current liabilities: Accounts payable and accrued expenses 420,683 $ 594,560 $ 1,015,243 $ Payable from restricted assets: Accounts payable - 4,240,524 $ 4,240,524 Accrued interest - 1,559,252 1,559,252 Refundable deposits - 636,936 636,936 Due to developers 269,667 - 269,667 Due to other governments 1,545 - 1,545 Due within one year 206,000 1,877,836 2,083,836 Unearned revenue 933 - 933 Total Current Liabilities 898,828 8,909,108 9,807,936 Noncurrent liabilities: Due in more than one year 4,402,477 80,701,818 85,104,295 Total Liabilities 5,301,305 89,610,926 94,912,231 NET ASSETS Invested in capital assets, net of related debt 39,652,258 95,281,505 134,933,763 Restricted for capital projects 391,600 - 391,600 Unrestricted 2,276,380 14,523,972 16,800,352 Total Net Assets 42,320,238 $ 109,805,477 $ 152,125,715 $ ASSETS LIABILITIES CITY OF FERNLEY STATEMENT OF NET ASSETS JUNE 30, 2009 See accompanying notes. 4 ---PAGE BREAK--- CHARGES OPERATING CAPITAL BUSINESS- FOR GRANTS AND GRANTS AND GOVERNMENTAL TYPE FUNCTIONS/PROGRAMS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES TOTAL Governmental Activities: General government 1,626,115 $ 1,243,230 $ - $ - $ (382,885) $ - $ (382,885) $ Judicial 243,889 161,819 - - (82,070) - (82,070) Public works 1,778,649 65,129 - 5,533,993 3,820,473 - 3,820,473 Culture and recreation 685,706 200 60,000 79,277 (546,229) - (546,229) Community development 811,701 258,801 - - (552,900) - (552,900) Health 252,320 3,819 383 - (248,118) - (248,118) Debt Service: - Interest and fiscal charges 206,092 - - - (206,092) - (206,092) Total Governmental Activities 5,604,472 1,732,998 60,383 5,613,270 1,802,179 - 1,802,179 Business-type Activities: Water 4,127,466 3,833,095 562,372 5,812,399 - 6,080,400 6,080,400 Sewer 2,581,981 1,830,814 - 1,333,744 - 582,577 582,577 Total Business- type Activities 6,709,447 5,663,909 562,372 7,146,143 - 6,662,977 6,662,977 Total 12,313,919 $ 7,396,907 $ 622,755 $ 12,759,413 $ 1,802,179 6,662,977 8,465,156 General Revenues: Property taxes 1,381,621 - 1,381,621 Consolidated taxes 202,188 - 202,188 Fuel taxes 309,896 - 309,896 Unrestricted gaming licenses 92,211 - 92,211 Unrestricted interest income 41,085 477,258 518,343 Miscellaneous revenue 56,179 569,452 625,631 Total General Revenues 2,083,180 1,046,710 3,129,890 Change in Net Assets 3,885,359 7,709,687 11,595,046 NET ASSETS, July 1 38,434,879 102,095,790 140,530,669 NET ASSETS, June 30 42,320,238 $ 109,805,477 $ 152,125,715 $ PROGRAM REVENUES AND CHANGES IN NET ASSETS CITY OF FERNLEY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2009 NET (EXPENSE) REVENUES See accompanying notes. 5 ---PAGE BREAK--- CITY OF FERNLEY GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2009 See accompanying notes. 6 STREETS RESIDENTIAL AND CONSTRUCTION STORM CAPITAL OTHER TOTAL GENERAL TAX DISTRICT DRAINS PROJECTS GOVERNMENTAL GOVERNMENTAL FUND #1 FUND FUND FUND FUNDS FUNDS Cash and investments 596,575 $ 9,302 $ 325,500 $ 642,466 $ 814,641 $ 2,388,484 $ Interest receivable 597 11 376 727 921 2,632 Accounts receivable 402,184 - - - 3,850 406,034 ASSETS Due from other governments 124,604 - 191,401 - 211,238 527,243 Due from other funds - - - 506,600 - 506,600 Prepaid items 2,651 - - - - 2,651 Total Assets 1,126,611 $ 9,313 $ 517,277 $ 1,149,793 $ 1,030,650 $ 3,833,644 $ Liabilities: Accounts payable and BALANCE LIABILITIES AND FUND accrued liabilities 282,675 $ - $ 108,528 $ 4,421 $ 25,059 $ 420,683 $ Due to developers 140,542 - - - 129,125 269,667 Due to other governments 1,545 - - - - 1,545 Due to other funds 12,050 - - - 506,600 518,650 Deferred revenue 931 - - - - 931 Total Liabilities 437,743 - 108,528 4,421 660,784 1,211,476 Fund Balance: Reserved for: Prepaid items 2,651 - - - - 2,651 Capital projects 391,600 - - - - 391,600 Unreserved - reported in: General Fund 294,617 - - - - 294,617 Special revenue funds - 9,313 408,749 - 369,866 787,928 Capital projects funds - - - 1,145,372 - 1,145,372 Total Fund Balance 688,868 9,313 408,749 1,145,372 369,866 2,622,168 Total Liabilities and Fund Balance 1,126,611 $ 9,313 $ 517,277 $ 1,149,793 $ 1,030,650 $ 3,833,644 $ See accompanying notes. 6 ---PAGE BREAK--- CITY OF FERNLEY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2009 See accompanying notes. 7 Total Fund Balances - Governmental Funds 2,622,168 $ 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 governmental funds: Capital assets 50,531,444 Less: Accumulated depreciation 6,375,186 44,156,258 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the fund. 150,289 resources are not reported as revenues in the fund. 150,289 Certain liabilities are not reported in the governmental funds because they are not due and payable in the current period: Bonds payable (4,504,000) Compensated absences (104,477) (4,608,477) Total Net Assets - Governmental Activities 42,320,238 $ See accompanying notes. 7 ---PAGE BREAK--- STREETS RESIDENTIAL AND CONSTRUCTION STORM CAPITAL OTHER TOTAL GENERAL TAX DISTRICT DRAINS PROJECTS GOVERNMENTAL GOVERNMENTAL FUND #1 FUND FUND FUND FUNDS FUNDS REVENUES Taxes 1,315,878 $ 1,001 $ - $ - $ - $ 1,316,879 $ Licenses and permits 1,598,061 - 65,123 - - 1,663,184 Intergovernmental 262,188 - 1,330,781 - 38,091 1,631,060 Fines and forfeits 142,030 - - - 19,790 161,820 Miscellaneous 94,662 171 2,000 11,991 29,194 138,018 Total Revenues 3,412,819 1,172 1,397,904 11,991 87,075 4,910,961 EXPENDITURES Current: General government 1,290,272 - - - - 1,290,272 Judicial 243,866 - - - 848 244,714 Public works - - 457,243 - - 457,243 Culture and recreation 517,945 - - - 28,547 546,492 Community development 679,800 - - 12,910 94,346 787,056 Health 232,843 - - - - 232,843 Total Current 2,964,726 - 457,243 12,910 123,741 3,558,620 Debt service: Principal 173,000 - - - - 173,000 Interest 206,092 - - - - 206,092 Total Debt Service 379,092 - - - - 379,092 Capital outlay: Public works - - 741,736 - - 741,736 Culture and recreation - - - - 373,047 373,047 Community development - - - 14,602 - 14,602 Health - - - - - - Total Capital Outlay - - 741,736 14,602 373,047 1,129,385 Total Expenditures 3,343,818 - 1,198,979 27,512 496,788 5,067,097 Excess (Deficiency) of Revenues over (under) Expenditures 69,001 1,172 198,925 (15,521) (409,713) (156,136) OTHER FINANCING SOURCES (USES) Transfers out (26,000) - - - - (26,000) Transfers in - - - - 26,000 26,000 Total Other Financing Sources (Uses) (26,000) - - - 26,000 - Net Change in Fund Balance 43,001 1,172 198,925 (15,521) (383,713) (156,136) FUND BALANCE, JULY 1 645,867 8,141 209,824 1,160,893 753,579 2,778,304 FUND BALANCE, JUNE 30 688,868 $ 9,313 $ 408,749 $ 1,145,372 $ 369,866 $ 2,622,168 $ CITY OF FERNLEY GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2009 See accompanying notes. 8 ---PAGE BREAK--- Net Change if Fund Balances - Governmental Funds (156,136) $ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures and the proceeds from the sale of assets as other financing sources. However, in the statement of activities, the cost of those assets is depreciated over their useful lives and only the gain or loss is recorded when assets are sold. Expenditures for capital assets 1,138,513 Less: Current year depreciation (1,849,373) (710,860) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental fund statements: Donated capital assets 4,513,108 Intergovernmental revenues 65,750 The issuance of long-term debt (i.e. bonds) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. 173,000 Generally expenditures recognized in the fund financial statements are limited to only those that use current financial resources but expenses are recognized in the statement of activities when incurred: Change in long-term compensated absences payable 497 Change in Net Assets - Governmental Activities 3,885,359 $ CITY OF FERNLEY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, FOR THE YEAR ENDED JUNE 30, 2009 EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES See accompanying notes. 9 ---PAGE BREAK--- ORIGINAL FINAL ORIGINAL FINAL ACTUAL TO FINAL TO ACTUAL REVENUES Taxes: Ad valorem 1,351,000 $ 1,450,000 $ 1,315,878 $ 99,000 $ (134,122) $ Licenses and permits: Business licenses 150,000 180,000 168,379 30,000 (11,621) Franchise fees 1,235,000 940,000 1,031,452 (295,000) 91,452 Liquor licenses 30,000 37,000 31,809 7,000 (5,191) City gaming licenses 105,000 90,000 92,211 (15,000) 2,211 Building permits and fees 500,000 190,000 204,466 (310,000) 14,466 Planning and zoning permits and fees 100,000 16,000 54,335 (84,000) 38,335 Other permits 15,000 16,545 15,409 1,545 (1,136) 2,135,000 1,469,545 1,598,061 (665,455) 128,516 Intergovernmental revenues: Consolidated tax distribution 196,000 196,000 202,188 - 6,188 Fernley park agreement 60,000 60,000 60,000 - - 256,000 256,000 262,188 - 6,188 Fines and forfeits: Municipal court fines 140,000 135,000 122,017 (5,000) (12,983) Municipal court fees 21,000 20,900 20,013 (100) (887) 161,000 155,900 142,030 (5,100) (13,870) Miscellaneous: Interest 40,000 13,000 12,643 (27,000) (357) Park development - 200 200 200 - Miscellaneous 6,000 277,930 81,819 277,947 (196,111) 46,000 291,130 94,662 251,147 (196,468) Total Revenues 3,949,000 3,622,575 3,412,819 (320,408) (209,756) EXPENDITURES General government: Finance: Salaries and wages 79,300 89,300 81,963 (10,000) 7,337 Employee benefits 35,900 30,200 28,016 5,700 2,184 Services and supplies 52,700 57,600 56,606 (4,900) 994 Total Finance 167,900 177,100 166,585 (9,200) 10,515 Information Technology Salaries and wages 48,800 37,620 38,272 11,180 (652) Employee benefits 23,600 13,375 12,857 10,225 518 Services and supplies 48,000 40,525 35,077 7,475 5,448 Total Information Technology 120,400 91,520 86,206 28,880 5,314 CITY OF FERNLEY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL GENERAL FUND BUDGET VARIANCE WITH FOR THE YEAR ENDED JUNE 30, 2009 (Page 1 of 3) See accompanying notes. 10 ---PAGE BREAK--- ORIGINAL FINAL ORIGINAL FINAL ACTUAL TO FINAL TO ACTUAL Office of the City Clerk: Salaries and wages 127,400 $ 119,000 $ 120,484 $ 8,400 $ (1,484) $ Employee benefits 66,700 40,960 40,741 25,740 219 Services and supplies 44,250 19,365 21,036 24,885 (1,671) Total City Clerk 238,350 179,325 182,261 59,025 (2,936) Office of the City Manager: Salaries and wages 176,000 194,241 196,977 (18,241) (2,736) Employee benefits 75,000 54,161 48,085 20,839 6,076 Services and supplies 52,800 96,040 99,598 (43,240) (3,558) Total City Manager 303,800 344,442 344,660 (40,642) (218) Office of the City Attorney: Salaries and wages 54,200 54,760 55,517 (560) (757) Employee benefits 21,900 23,200 19,243 (1,300) 3,957 Services and supplies 46,600 40,228 26,840 6,372 13,388 Total City Attorney 122,700 118,188 101,600 4,512 16,588 Mayor/City Council: Salaries and wages 55,700 57,000 59,725 (1,300) (2,725) Employee benefits 10,300 11,087 11,147 (787) (60) Services and supplies 43,000 24,860 24,508 18,140 352 Total Mayor/City Council 109,000 92,947 95,380 16,053 (2,433) Facilities (City Hall) & General Salaries and wages 91,500 61,400 60,555 30,100 845 Employee benefits 47,700 20,700 17,114 27,000 3,586 Services and supplies 226,300 233,000 235,911 (6,700) (2,911) Total City Hall 365,500 315,100 313,580 50,400 1,520 Total General Government 1,307,250 1,227,102 1,290,272 80,148 23,036 Judicial: Municipal court: Salaries and wages 143,600 140,239 139,836 3,361 403 Employee benefits 66,800 62,600 59,767 4,200 2,833 Services and supplies 42,500 41,000 44,263 1,500 (3,263) Total Judicial 252,900 243,839 243,866 9,061 (27) Culture and Recreation: Parks: Salaries and wages 227,300 188,624 191,071 38,676 (2,447) Employee benefits 127,100 56,725 64,158 70,375 (7,433) Services and supplies 253,200 268,615 262,716 (15,415) 5,899 Total Culture and Recreation 607,600 513,964 517,945 93,636 (3,981) CITY OF FERNLEY GENERAL FUND BUDGET STATEMENT OF REVENUES, EXPENDITURES, AND FOR THE YEAR ENDED JUNE 30, 2009 (Page 2 of 3) CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL VARIANCE WITH See accompanying notes. 11 ---PAGE BREAK--- ORIGINAL FINAL ORIGINAL FINAL ACTUAL TO FINAL TO ACTUAL Community development: Building: Salaries and wages 290,200 $ 241,790 $ 243,764 $ 48,410 $ (1,974) $ Employee benefits 152,200 88,486 73,176 63,714 15,310 Services and supplies 37,020 22,794 20,320 14,226 2,474 Total Building 479,420 353,070 337,260 126,350 15,810 Planning: Salaries and wages 269,200 206,165 205,804 63,035 361 Employee benefits 124,800 75,793 60,756 49,007 15,037 Services and supplies 43,980 89,547 75,980 (45,567) 13,567 Total Planning 437,980 371,505 342,540 66,475 28,965 Total Community Development 917,400 724,575 679,800 192,825 44,775 Health: Animal control: Salaries and wages 70,500 67,400 66,673 3,100 727 Employee benefits 28,900 20,200 17,117 8,700 3,083 Services and supplies 21,000 18,429 17,285 2,571 1,144 Total Animal Control 120,400 106,029 101,075 14,371 4,954 Vector control: Salaries and wages 47,800 62,000 59,046 (14,200) 2,954 Employee benefits 23,500 17,400 15,596 6,100 1,804 Services and supplies 119,010 63,960 57,126 55,050 6,834 Total Vector Control 190,310 143,360 131,768 46,950 11,592 Total Health 310,710 249,389 232,843 61,321 16,546 Debt service: Principal 173,000 173,000 173,000 - - Interest 206,113 206,113 206,092 - 21 Total Debt Service 379,113 379,113 379,092 - 21 Total Expenditures 3,774,973 3,337,982 3,343,818 (436,991) (80,370) Excess of Revenues Over Expenditures 174,027 284,593 69,001 110,566 (215,592) OTHER FINANCING SOURCES (USES) Contingency (50,000) - - 50,000 - Transfer out: Privates Sectore Community Support (20,000) (26,000) (26,000) (6,000) - Total Other Financing Sources (Uses) (70,000) (26,000) (26,000) 44,000 - Net Change in Fund Balance 104,027 258,593 43,001 154,566 (215,592) FUND BALANCE, July 1 489,161 645,867 645,867 156,706 - FUND BALANCE, June 30 593,188 $ 904,460 $ 688,868 $ 311,272 $ (215,592) $ CITY OF FERNLEY GENERAL FUND BUDGET STATEMENT OF REVENUES, EXPENDITURES, AND FOR THE YEAR ENDED JUNE 30, 2009 (Page 3 of 3) CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL VARIANCE WITH See accompanying notes. 12 ---PAGE BREAK--- ORIGINAL FINAL ORIGINAL FINAL ACTUAL TO FINAL TO ACTUAL REVENUES Taxes: Residential construction tax 10,000 $ 1,333 $ 1,001 $ (8,667) $ (332) $ Miscellaneous: Interest 250 173 171 (77) Excess (Deficiency) of Revenues Over (Under) Expenditures 10,250 1,506 1,172 (8,744) (334) OTHER FINANCING SOURCES (USES) Transfers in (out:) Residential construction tax district #2 (10,000) - - 10,000 - Net Change in Fund Balance 250 1,506 1,172 1,256 (334) FUND BALANCE, July 1 - 8,141 8,141 8,141 - FUND BALANCE, June 30 250 $ 9,647 $ 9,313 $ 9,397 $ (334) $ BUDGET VARIANCE WITH FOR THE YEAR ENDED JUNE 30, 2009 CITY OF FERNLEY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL RESIDENTIAL CONSTRUCTION TAX DISTRICT #1 FUND See accompanying notes. 13 ---PAGE BREAK--- ORIGINAL FINAL ORIGINAL FINAL ACTUAL TO FINAL TO ACTUAL REVENUES Licenses and permits: Public works fees 11,000 $ 51,000 $ 65,123 $ 40,000 $ 14,123 $ Intergovernmental revenues: Motor vehicle fuel tax 311,831 275,831 309,896 (36,000) 34,065 Regional transportation commission 808,158 938,158 1,020,885 130,000 82,727 1,119,989 1,213,989 1,330,781 94,000 116,792 Miscellaneous: Interest 10,000 1,500 2,000 (8,500) 500 Total Revenues 1,140,989 1,266,489 1,397,904 125,500 131,415 EXPENDITURES Public works: Salaries and wages 131,200 120,200 115,338 11,000 4,862 Employee benefits 74,950 55,050 51,419 19,900 3,631 Services and supplies 266,400 294,661 290,486 (28,261) 4,175 Capital outlay 667,213 785,000 741,736 (117,787) 43,264 Total Expenditures 1,139,763 1,254,911 1,198,979 (115,148) 55,932 Excess (Deficiency) of Revenues Over (Under) Expenditures 1,226 11,578 198,925 10,352 187,347 FUND BALANCE, July 1 701,982 209,819 209,824 (492,163) 5 FUND BALANCE, June 30 703,208 $ 221,397 $ 408,749 $ (481,811) $ 187,352 $ BUDGET VARIANCE WITH FOR THE YEAR ENDED JUNE 30, 2009 CITY OF FERNLEY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL STREETS AND STORM DRAINS FUND See accompanying notes. 14 ---PAGE BREAK--- WATER SEWER OTHER TOTAL UTILITY UTILITY ENTERPRISE ENTERPRISE FUND FUND FUND FUNDS CITY OF FERNLEY STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2009 BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS See accompanying notes. 15 Current assets: Cash and investments 10,851,343 $ 8,372,522 $ - $ 19,223,865 $ Restricted cash and investments: Refundable deposits 332,110 304,826 - 636,936 Bond proceeds 8,049,169 2,300,728 - 10,349,897 Interest receivable 21,813 12,454 - 34,267 Accounts receivable net 425 820 164 386 - 590 206 ASSETS Accounts receivable, net 425,820 164,386 - 590,206 Accounts receivable, other 121,285 15,451 - 136,736 Due from other governments 250,557 - - 250,557 Due from other funds 12,050 - - 12,050 Inventories 120,753 6,636 - 127,389 Prepaid expenses 5,000 - - 5,000 Total Current Assets 20,189,900 11,177,003 - 31,366,903 Noncurrent assets: Noncurrent assets: Deferred charges 533,358 56,980 - 590,338 Capital assets: Not being depreciated 110,859,962 855,910 - 111,715,872 Depreciable assets 36,211,370 34,587,845 - 70,799,215 147,071,332 35,443,755 - 182,515,087 Less: Accumulated depreciation 8,449,799 6,606,126 - 15,055,925 Total Capital Assets 138,621,533 28,837,629 - 167,459,162 Total Noncurrent Assets 139,154,891 28,894,609 - 168,049,500 Total Assets 159,344,791 40,071,612 - 199,416,403 Current liabilities: Accounts payable and accrued liabilities 361,054 233,506 - 594,560 LIABILITIES p y , , , Payable from restricted assets: Accounts payable 4,228,598 11,926 4,240,524 Accrued interest 1,392,014 167,238 - 1,559,252 Refundable deposits 332,110 304,826 - 636,936 Debt due within one year 1,575,530 302,306 - 1,877,836 Total Current Liabilities 7,889,306 1,019,802 - 8,909,108 Noncurrent liabilities: Bonds payable, due after one year 72,544,038 8,157,780 - 80,701,818 Total Liabilities 80,433,344 9,177,582 - 89,610,926 NET ASSETS Invested in capital assets, net of related debt 72,577,184 22,704,321 - 95,281,505 Unrestricted 6,334,263 8,189,709 - 14,523,972 Total Net Assets 78,911,447 $ 30,894,030 $ - $ 109,805,477 $ See accompanying notes. 15 ---PAGE BREAK--- WATER SEWER OTHER TOTAL UTILITY UTILITY ENTERPRISE ENTERPRISE FUND FUND FUND FUNDS CITY OF FERNLEY STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2009 BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS See accompanying notes. 16 User fees 4,187,553 1,843,961 - $ 6,031,514 $ Operating grants 562,372 - - 562,372 Total Operating Revenue 4,749,925 1,843,961 - 6,593,886 Salaries and wages 681,882 461,770 - 1,143,652 OPERATING REVENUES OPERATING EXPENSES g , , , , Employee benefits 243,794 175,579 - 419,373 Services and supplies 1,887,542 717,481 - 2,605,023 Depreciation 1,126,147 940,822 - 2,066,969 Total Operating Expenses 3,939,365 2,295,652 - 6,235,017 Operating Income (Loss) 810,560 (451,691) - 358,869 I t t d i t t 303 555 173 703 477 258 NONOPERATING REVENUE (EXPENSE) Interest earned on investments 303,555 173,703 - 477,258 In lieu of water rights fees 201,845 - - 201,845 Interest expense (188,101) (286,329) - (474,430) Total Nonoperating Revenue (Expense) 317,299 (112,626) - 204,673 Income (Loss) Before Capital Contributions and Transfers 1,127,859 (564,317) - 563,542 CAPITAL CONTRIBUTIONS Customer connection fees 223,932 289,776 - 513,708 Developer agreements 5,790 175 - 5,965 Developer contributed infrastructure 2,991,877 1,043,795 - 4,035,672 Developer contributed water rights 2,590,800 - - 2,590,800 Total Capital Contributions 5,812,399 1,333,746 - 7,146,145 TRANSFERS IN (OUT) Transfers in 963,114 - - 963,114 Transfers out - - (963,114) (963,114) Capital asset transfer 895,202 - (895,202) - Total Transfer In (Out) 1,858,316 - (1,858,316) - Change in Net Assets 8,798,574 769,429 (1,858,316) 7,709,687 NET ASSETS, July 1 70,112,873 30,124,601 1,858,316 102,095,790 NET ASSETS, June 30 78,911,447 $ 30,894,030 $ - $ 109,805,477 $ See accompanying notes. 16 ---PAGE BREAK--- WATER SEWER OTHER TOTAL UTILITY UTILITY ENTERPRISE ENTERPRISE FUND FUND FUND FUNDS Cash received from customers 4,491,996 $ 1,855,472 $ 299 $ 6,347,767 $ Cash paid for employees services (915,726) (637,349) - (1,553,075) Cash paid to vendors for services and supplies (1,529,297) (698,214) (10,862) (2,238,373) Net Cash Provided (Used) by Operating Activities 2,046,973 519,909 (10,563) 2,556,319 ACTIVITIES: Transfer (to) from other funds 963,114 - (963,114) - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Principal payments on debt (899,800) (222,800) - (1,122,600) Interest paid on debt (2,639,595) (331,600) - (2,971,195) Deferred charges 19,029 2,039 - 21,068 In lieu of water rights fees 201,845 - - 201,845 Acquisition of capital assets (45,742,687) (402,130) - (46,144,817) Developer agreements 5,790 175 - 5,965 Connection fees 223,932 289,774 - 513,706 Net Cash Provided (Used) by Capital and Related Financing Activities (48,831,486) (664,542) - (49,496,028) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on investments 454,930 189,837 2,567 647,334 Net Increase (Decrease) in Cash and Cash Equivalents (45,366,469) 45,204 (971,110) (46,292,375) 64,599,091 10,932,872 971,110 76,503,073 19,232,622 $ 10,978,076 $ - $ 30,210,698 $ REPRESENTED BY: Cash and cash equivalents 10,851,343 $ 8,372,522 $ - $ 19,223,865 $ Cash - refundable deposits 332,110 304,826 - 636,936 Cash - bond proceeds 8,049,169 2,300,728 - 10,349,897 19,232,622 $ 10,978,076 $ - $ 30,210,698 $ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) 456,102 $ (464,840) $ - $ (8,738) $ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 1,126,147 940,822 - 2,066,969 Miscellaneous revenues 354,458 13,149 - 367,607 Changes in assets and liabilities: (Increase) decrease in: Accounts receivable, net (12,659) 11,507 299 (853) Accounts receivable, other 17,337 - - 17,337 Due from other funds (12,050) - - (12,050) Inventories 5,263 7 - 5,270 Increase (decrease) in: Accounts payable 331,111 13,861 (10,862) 334,110 Accrued liabilities 9,950 - - 9,950 Compensated absences payable 29 29 - 58 Refundable deposits 21,842 5,374 - 27,216 Total Adjustments 1,841,428 984,749 (10,563) 2,815,614 Net Cash Provided (Used) by Operating Activities 2,297,530 $ 519,909 $ (10,563) $ 2,806,876 $ SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND CAPITAL AND RELATED FINANCING ACTIVITIES Contribution of capital assets from developers 5,582,677 $ 1,043,795 $ - $ 6,626,472 $ Transfer of capital assets - other enterprise fund 895,202 $ - $ (895,202) $ - $ CASH AND CASH EQUIVALENTS, June 30 CASH FLOWS FROM OPERATING ACTIVITIES: CASH AND CASH EQUIVALENTS, July 1 CITY OF FERNLEY STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2009 BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS CASH FLOWS FROM NONCAPITAL FINANCING See accompanying notes. 17 ---PAGE BREAK--- AGENCY FUND Cash and cash equivalents 12,055 $ Bail bond deposits held for others 10,773 Other liabilities 1,282 Total Liabilities 12,055 $ ASSETS LIABILITIES CITY OF FERNLEY STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUND JUNE 30, 2009 See accompanying notes. 18 ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 19 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The financial statements of the City of Fernley, Nevada (“the City”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Government Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. A summary of the more significant accounting policies consistently applied in the preparation of the accompanying general purpose financial statements follows. A. Reporting Entity: The City of Fernley, Nevada was incorporated on July 1, 2001. The City operates under a Council-Manager form of government and provides the following services as authorized by law: water and sewer utilities, streets, culture and recreation, planning and zoning, animal control, and general administrative services. Prior to July 1, 2001, the entity was organized as an unincorporated town in accordance with Nevada Revised Statutes 269. The financial statements present the financial position and results of operations and changes in fund balances for those funds under the direct jurisdiction of the Mayor and City Council of the City of Fernley for which the Mayor and City Council are financially accountable. B. Government-wide and Fund Financial Statements: The government-wide financial statements report information on all of the non- fiduciary activities of the City of Fernley, Nevada. 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 business-type activities are offset by program revenues. Direct expenses are those that are specifically associated with a specific function or business-type activity. 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 business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items properly not included among program revenues are reported instead as general revenues. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 20 The fund financial statements provide information about the City’s funds, including its fiduciary funds. Separate statements for each fund category – governmental, proprietary and fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. 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 the proprietary funds and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when liabilities are incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be measurable when the amount of the transaction can be determined and available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. When revenues are due, but will not be collected within this 60 day period, the receivable is recorded and an offsetting deferred revenue account is established. Deferred revenues also arise when the government receives resources before it has legal claim to them, and thus in subsequent periods, when both revenue recognition criteria are met, or when the government has a legal claim to the resources, the liability for deferred revenue is removed and revenue is recognized. Expenditures generally are recorded when liabilities are incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgment are recorded only when payment is due. Property taxes, consolidated tax revenue (sales tax, cigarette taxes, business services tax, liquor taxes), gaming taxes, gasoline taxes, grants and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when the City receives cash. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 21 In accordance with GASB Statement No. 20 “Accounting and Financial Reporting for Proprietary Funds and other Governmental Entities That Use Proprietary Fund Accounting”, the City applied all applicable FASB pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. The City has elected not to apply FASB pronouncements issued after November 30, 1989. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are interfund services provided and used and other charges between the City’s business-type activities and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from an exchange transaction such as providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. Nonoperating revenues and nonoperating expenses result from nonexchange transactions and ancillary services. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, and then unrestricted resources as they are needed. The City reports the following major governmental funds: The General Fund is the City’s general operating fund and is used to account for all financial resources except those required to be accounted for in other funds. The Residential Construction Tax District #1 Special Revenue Fund is used to account for a tax to be used for park development in the District #1 identified in the City of Fernley park plan. The Streets and Storm Drains Special Revenue Fund is used to account for gas taxes that must be used for street maintenance and capital expenditures as well as other revenues that may be used for projects associated with streets and storm drains. The Capital Projects Fund is used to accrue funds under a “pay as you go” program to provide funding for future projects involving replacement of equipment or buildings or new facilities and equipment. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 22 The City reports the following major enterprise funds: The Water Utility Fund is used to account for the provision of water services to the residents of the City and some residents of Lyon County. All activities necessary to provide services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, financing and related debt. The Sewer Utility Fund is used to account for the provision of sewer services to the residents of the City and some residents of Lyon County. All activities necessary to provide services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, financing and related debt. Additionally, the City reports the following fund types: Agency funds are custodial in nature and do not present results of operations or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting. These funds are used to account for assets that the City holds for others in an agent capacity. Included are bonds posted with the municipal court. These funds are excluded from the government-wide financial statements. D. Assets, Liabilities and Net Assets or Equity: Cash and Investments: Cash resources of the individual funds are combined to form a pool of cash and investments, which is managed by the City Treasurer. The City invests in the State of Nevada Local Government Pooled Investment Fund, which is reported at fair value. Interest income earned is distributed to the appropriate funds based on each fund’s equity in the investment. Pursuant to NRS 355 and NRS 355.170, the City of Fernley may only invest in the following types of securities: Certain rated notes and bonds purchased by a registered broker-dealer that are issued by corporations organized and operating in the United States and that mature within five years from the date of purchase; asset-backed securities and collateralized mortgage obligations rated “AAA” or higher by a nationally recognized rating service. These investments must not, in the aggregate, exceed 20 percent of the total portfolio at the time of purchase, nor include notes and bonds issued by any one corporation in excess of 25 percent of such investments United States bonds and debentures maturing within ten (10) years from the date of purchase Certain farm loan bonds Bills and notes of the United States Treasury, maturing within ten (10) years from the date of purchase ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 23 Obligations of an agency of the United States or a corporation sponsored by the government, maturing within ten (10) years from the date of purchase Obligations of state and local governments if, the interest is exempt for federal income tax purposes and the obligations have been rated or higher by a nationally recognized bond credit rating agency Negotiable and nonnegotiable certificates of deposit from commercial banks and insured savings and loan associations State of Nevada Local Government Pooled Investment Fund Certain securities issued by local governments of the State of Nevada Certain bankers’ acceptances Certain short-term paper issued by a corporation organized and operating in the United States Other securities expressly provided by other statutes, including repurchase agreements Certain “AAA” rated mutual funds that invest in securities issued by the Federal Government or agencies of the Federal Government, Master, bank notes or other short-term commercial paper rates as “A-1” or “P-1” issued by a corporation or depository institution organized, licensed and operating in the United States and/or Repurchase agreements that are fully collateralized by and above. Cash Equivalents: Cash equivalents include short-term highly liquid investments (with maturities of 3 months or less when purchased) that are both readily convertible to known amounts of cash, and so near their maturity that they present insignificant risk in changes in value. Based on the nature of the investment policies, all amounts are available on demand and are, therefore, classified as cash equivalents on the Statements of Cash Flows. Receivables and Payables: Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds.” Any residual balances outstanding between governmental activities and business- type activities are reported in the government-wide financial statements as “internal balances.” Significant receivable balances not expected to be collected within one year are classified as notes receivable on the government-wide financial statements. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 24 Real property taxes result in a lien on the property and attach on July 1 (the levy date) of the year for which the taxes are levied. Taxes may be paid in four installments payable on the third Monday in August, and the first Mondays in October, January and March to the County Clerk/Treasurer of Lyon County in which the City of Fernley is located. Penalties are assessed if a taxpayer fails to pay an installment within ten days of the installment due date. After a two year waiting period, if taxes remain unpaid, a tax deed is issued conveying the property to Lyon County with a lien for back taxes and accumulated charges. Redemption may be made by the owner and such persons as described by statute by paying all back taxes and accumulated penalties, interest and costs before sale. As such, real property taxes receivable reflect only those taxes receivable from the delinquent roll years, and current taxes collected within 60 days of year end and delinquent taxes from all roll years prior to 2003-2004 have been written off. No provision for uncollectible accounts has been established, as management does not anticipate any material collection losses with respect to the remaining balances. Taxes on personal property are collected currently. Personal property declarations are mailed out annually and the tax is computed using percentages of taxable values established by the Department of Taxation at the tax rates described above. Receivables in proprietary fund types have arisen in the ordinary course of business, and are shown net of an allowance for uncollectible accounts, if applicable. Inventories and Prepaids: All inventories are valued at cost using the first in/first out (FIFO) method. Inventories of governmental funds in the fund financial statements are considered consumable supplies and as such are recorded as expenditures at the time of purchase. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Restricted Assets: City policy requires that certain resources be set aside for various purposes in the City’s water and sewer utility funds. These amounts are reported as restricted assets. When both restricted and unrestricted assets are available for the same purpose, restricted assets are used first. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 25 Capital Assets: Capital assets, which include land, construction in progress, water rights, property, plant, equipment and infrastructure, are capitalized and reported in the applicable governmental activities and business-type activities columns of the government- wide financial statements. For governmental fund types, outlays for capital assets are expensed during the current period. The City defines capital assets as assets with an initial, individual cost of more than $5,000 for non-infrastructure assets and $100,000 for infrastructure assets and an estimated useful life in excess of two years. Water rights are considered real property. A water right can be conveyed or transferred. Water rights, however, are appurtenant to the land and are conveyed by deed with the land unless the seller specifically reserves the water right in the deed. Water rights are not depreciable or amortizable. Capital assets are recorded at cost for purchased or constructed assets. 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. Donated capital assets are recorded at estimated fair value at the date of donation. Depreciation is computed using the straight-line method over the following estimated useful lives: Buildings 25-40 years Improvements other than buildings 10-20 years Machinery and equipment 5-10 years Other capital assets 25-40 years Infrastructure 20-40 years GASB Statement No. 34 requires the City to report and depreciate new infrastructure assets effective fiscal year June 30, 2004, the initial year of implementation. Infrastructure assets include roads, bridges, underground pipe (other than related to utilities), traffic signals, etc. These infrastructure assets are likely to be the largest asset class of the City. Neither their historical cost nor related depreciation has been reported in prior years’ financial statements. The retroactive reporting of infrastructure is not required for the City based on its size. As such, the City has elected not to retroactively report all major general infrastructure acquired between July 1, 1980 and June 30, 2003. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 26 Long-Term Liabilities: In the government-wide financial statements and the proprietary fund types in the fund financial statements, long-term debt and other long-term liabilities are reported as liabilities in the applicable government activities, business-type activities, or proprietary fund type statement of net assets. It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. The liability for compensated absences is calculated under the provisions of GASB Statement No. 16, “Accounting for Compensated Absences.” All vacation and sick pay is accrued when incurred in the government-wide and proprietary fund statements. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. For current and advance refunding resulting in a defeasance of debt, the difference between the reacquisition price and the net carrying amount of the old debt is deferred and amortized as a component of interest expense using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. A liability for compensated absences is reported in the governmental funds, primarily the General Fund, only if they have matured as a result of employee resignations, terminations and retirements. For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized during the current period. The face amount of bonds is reported as other financing sources, as are bond premiums. Bond discounts are recorded as other financing uses. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 27 Equity Classification: In the government-wide financial statements, equity is classified as net assets and displayed in three components: Invested in Capital Assets, Net of Related Debt – Consists of capital assets, net of accumulated depreciation and reduced by outstanding balances of any bonds, notes, or other borrowings that are attributable to the acquisition, construction or improvement of those assets. Restricted Net Assets – Consists of net assets with constraints placed on their use either by external groups such as creditors, grantors, contributors, or laws and regulations or other governments; law through constitutional provisions or enabling legislation. Unrestricted Net Assets – All other net assets that do not meet the definition of “restricted” or “invested in capital assets, net of related debt.” In the fund financial statements, governmental fund equity is reported as fund balances and is displayed as reserved, unreserved/designated and unreserved/undesignated. Reservations of fund balance are established for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Unreserved/designated fund balance represents amounts that are designated by management for a specific purpose. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 28 The following amounts are restricted for future capital projects: Developer/ Development Balance at June 30, 2009 Project Description Upland Ranches $ 22,258 Farm District Rd Bike Lane Upland Ranches – Phase 7 29,311 Farm District Rd Turn Lane Sundance 4,140 Farm District Rd Bike Lane Country Ranch Estates 936 Farm District Rd Bike Lane Aspen Meadows 5,100 Farm District Rd Bike Lane Mt View Estates 10,282 Farm District Rd Bike Lane Silverland Estates, Ph 1 19,387 Farm District Rd Bike Lane Truckee River Ranch, Ph 1 & 2 40,673 Farm District Rd Bike Lane Skyridge II 7,866 Farm District Rd Bike Lane Sierra Vista 14,670 95A Turn Lane Shady Grove 5,925 95A Turn Lane Fernley Chiropractic 7,260 95A Curb, Gutter & Sidewalk Renslow Commercial Bldg 14,200 95A Curb, Gutter & Sidewalk Nevada State Bank 9,328 95A Curb, Gutter & Sidewalk Quick Stop Markets 3,850 95A Curb, Gutter & Sidewalk North Seneca Falls 27,180 Hardie Ln Improvements SVWW II, LLC 105,381 Shadow Ln Improvements Willow Springs Apartments 63,853 Willow Springs Park Total $ 391,600 NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY: A. Budgetary Information: The City of Fernley adheres to the Local Government Budget and Finance Act (Act) incorporated within the statutes of the State of Nevada, in which annual budgets are legally adopted for all funds except Agency funds. The Act and City policy include the following procedures to establish the budgetary data, which is reflected in these financial statements: 1. On or before April 15, the City Manager submits to the Fernley City Council a tentative budget for the fiscal year commencing the following July 1, to be filed with the Nevada Department of ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 29 2. Public hearings on the tentative budget are held on the third Tuesday in May to obtain taxpayer comments. 3. Prior to June 1, at a public hearing, the Council indicates changes, if any, to be made to the tentative budget and adopts a final budget by the favorable vote of a majority of the members of the Council. The final budget must then be forwarded to the Nevada Tax Commission for final approval. 4. The City may not amend the budget without approval by the City Council. The City Manager is authorized to transfer appropriations between accounts within any department, with notification to the City Council. Any revisions that alter the total appropriations of a function or fund must be approved in advance by the City Council. Formal budgetary integration in the financial records of all funds is employed to enhance management control during the year. The City does not use the encumbrance method of accounting. 5. Budgets for all fund types are adopted on a basis consistent with accounting principles generally accepted in the United States of America (GAAP). Appropriations lapse at year end. 6. In accordance with State statute, actual expenditures may not exceed budgeted appropriations of the various governmental functions of the General, Special Revenue, and Capital Project Funds. Per NRS 354.626, expenditures over budgeted appropriations are allowed for bond repayments, medium term obligation repayments, and other long-term contracts expressly authorized by law. The sum of operating and nonoperating expenses in Proprietary Funds also may not exceed total appropriations. The budget reflected in the financial statements has been amended from the original budget amounts in accordance with State statute. Such amendments included augmentations for prior obligations, as well as supplemental appropriations needed for grants, contingencies, and other uses. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 30 B. Excess of Expenditures/Expenses Over Appropriations: The City conformed to all significant statutory constraints on its financial administration during the year with the following possible exceptions: Actual expenditures exceeded appropriations in the Judicial function of the General Fund by $27. Actual expenditures exceeded appropriations in the Culture and Recreation function of the General Fund by $3,981. Actual expenditures exceeded appropriations in the Residential Construction Tax District #2 Fund by $4,047. Actual expenditures exceeded appropriations in the Private Sector Community Support Fund by $2,547. Actual operating and nonoperating expenses exceeded appropriations in the Water Enterprise Fund by $56,315 and $178,301, respectively. Actual operating and nonoperating expenses exceeded appropriations in the Sewer Enterprise Fund by $219,452 and $262,029, respectively. These are apparent violations of NRS 354.626. C. Other Compliance Matters: The City did not complete a physical inventory over capital assets within the last two years. The above appears to be a potential violation of NAC 354.750. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 31 NOTE 3 – CASH AND INVESTMENTS: A summary schedule of cash and investments for the City of Fernley at June 30, 2009, is as follows: Cash and Investment Balances Held by: Governmental Funds $ 2,388,484 Fiduciary Funds 12,055 Proprietary Funds Unrestricted 29,573,762 Restricted 636,936* Total Cash and Investments $ 32,611,237 *Restricted cash in the Proprietary Funds consists of refundable customer deposits. Balances Classified by: On hand $ 400 Wells Fargo Bank: Checking 1,148,091 EFT Transaction Account 11,306 NVEST 11,723,403 Local Government Investment Pool 19,728,037 Total Cash and Investments $ 32,611,237 As of June 30, 2009, the City of Fernley had the following investments and maturities: Investment Maturities (in Years) Investment Type Fair Value Less Than 1 1-5 6-10 More Than 10 U.S. Treasuries $ 1,373,439 $ - $ 1,373,439 $ - $ - U.S. Agencies 6,647,540 1,896,267 4,751,273 - - Mortgage-Backed 1,692,819 - 679,397 704,251 309,171 Corporate Bonds 1,642,012 438,294 1,203,718 - - Money Market Fund 367,593 367,593 - - - State of Nevada Local Government Investment Pool 19,728,037 19,728,037* - - - Total $31,451,440 $22,430,191 $8,007,827.00 $704,251 $309,171 * represents average weighted maturity ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 32 The City is a voluntary participant in the State of Nevada Local Government Investment Pool (LGIP), which has regulatory oversight from the Board of Finance of the State of Nevada. The City’s investment in the LGIP is equal to its original investment plus allocation of interest income, and realized and unrealized gains and losses, which is the same as the value of the pool shares. The City’s investment in the LGIP is reported at fair value. Nevada Revised Statutes (NRS 355.170) set forth acceptable investments for Nevada local governments. The City has not adopted a formal investment policy that would further limit its investment choices nor further limit its exposure to certain risks as set forth below. Interest Rate Risk. Interest rate risk is the risk of possible reduction in the value of a security, especially a bond, resulting from a rise in interest rates. As noted above, the City does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates beyond those specified in the statute. Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligation and is a function of the credit quality ratings of its investments. As of June 30, 2009, the City’s investments in Mortgage-Backed securities were rated AAA by Standard and Poor’s and Aaa by Moody’s Investors Service. Of the City’s investments in corporate bonds, $1,205,292 was rated AAA/Aaa, $202,278 was rated AA/Aa, $204,942 was rated A and $29,500 has a withdrawn rating. The State of Nevada Local Government Investment Pool is an unrated external investment pool. As noted above, the City does not have a formal investment policy that specifies minimum acceptable credit ratings beyond those specified in statute. Custodial Credit Risk- Deposits. Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned. All of the bank balance was covered by FDIC insurance or collateralized by the Office of the State Treasurer/Nevada Collateral Pool. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 33 NOTE 4 – CAPITAL ASSETS: Capital asset activity for the year ended June 30, 2009, was as follows: Balance July 1, 2008 Additions or Transfers In Deletions or Transfers Out Balance June 30, 2009 Governmental Activities: Capital assets, not being depreciated Land $ 3,909,626 $ - $ - $ 3,909,626 Construction in progress 638,614 1,138,513 (1,415,921) 361,206 Total capital assets, not being depreciated 4,548,240 1,138,513 (1,415,921) 4,270,832 Capital assets, being depreciated Buildings 8,599,098 - - 8,599,098 Improvements other than buildings 6,881,037 1,319,543 - 8,200,580 Machinery and Equipment 1,060,429 96,377 - 1,156,806 Infrastructure 23,791,019 4,513,108 - 28,304,127 Total capital assets, being depreciated 40,331,583 5,929,028 - 46,260,611 Less accumulated depreciation for: Buildings (892,903) (343,964) - (1,236,867) Improvements other than buildings (831,229) (514,304) - (1,345,533) Machinery and Equipment (618,580) (200,012) - (818,592) Infrastructure (2,183,099) (791,094) - (2,974,193) Total accumulated depreciation (4,525,811) (1,849,374) - (6,375,185) Total capital assets, being depreciated, net 35,805,772 4,079,654 - 39,885,426 Governmental activities capital assets, net $ 40,354,012 $ 5,218,167 $ (1,415,921) $ 44,156,258 ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 34 Balance July 1, 2008 Additions or Transfers In Deletions or Transfers Out Balance June 30, 2009 Business-Type Activities: Capital assets, not being depreciated Land $ 677,677 $ 518,271 $ - $ 1,195,948 Water rights 34,223,899 2,590,800 - 36,814,699 Construction in progress 32,921,280 49,751,487 (8,967,542) 73,705,225 Total capital assets, not being depreciated 67,822,856 52,860,558 (8,967,542) 111,715,872 Capital assets, being depreciated Buildings 17,530 - - 17,530 Improvements other than buildings 54,381,956 13,019,997 - 67,401,953 Machinery and Equipment 1500,154 207,948 - 1,708,102 Other capital assets 1,671,630 - - 1,671,630 Total capital assets, being depreciated 57,571,270 13,227,945 - 70,799,215 Less accumulated depreciation for: Buildings (14,869) (999) - (15,868) Improvements other than buildings (11,517,056) (1,803,566) - (13,320,622) Machinery and Equipment (897,241) (180,946) - (1,078,187) Other capital assets (559,790) (81,458) - (641,248) Total accumulated depreciation (12,988,956) (2,066,969) - (15,055,925) Total capital assets, being depreciated, net 44,582,314 11,160,976 - 55,743,290 Business-type activities capital assets, net $ 112,405,170 $ 64,021,534 $ (8,967,542) $ 167,459,162 ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 35 Depreciation expense was charged to functions/programs of the City as follows: Governmental Activities: General government $ 454,804 Public works 1,228,940 Culture and recreation 139,359 Health 17,654 Community development 8,617 Total depreciation expense – governmental activities $ 1,849,374 Business-type Activities: Water $ 1,126,147 Sewer 940,822 Total depreciation expense – business-type activities $ 2,066,969 NOTE 5 – DEFINED BENEFIT PENSION PLAN: Plan Description. The City of Fernley contributes to the Public Employees Retirement System of the State of Nevada (PERS), a cost sharing, multiple employer, defined benefit plan administered by the Public Employees Retirement System of the State of Nevada. PERS provides retirement benefits, disability benefits, and death benefits, including annual cost of living adjustments, to plan members and their beneficiaries. Chapter 286 of the Nevada Revised Statutes establishes the benefit provisions provided to the participants of PERS. These benefit provisions may only be amended through legislation. The Public Employees Retirement System of the State of Nevada issues a publicly available financial report that includes financial statements and required supplementary information for PERS. That report may be obtained by writing to the Public Employees Retirement System of the State of Nevada, 693 West Nye Lane, Carson City, NV 89703- 1599 or by calling (775) 687-4200. Funding Policy. Benefits for plan members are funded under one of two methods; the employer (ER) pay contribution plan or the employer/employee (ER/EE) paid contribution plan. Under the ER contribution plan, the City is required to contribute all amounts due under the plan. Under the ER/EE contribution plan, employees are required to contribute a percentage of their compensation to the plan, while the City is required to match that contribution. The contribution requirements of the City are established by Chapter 286 of Nevada Revised Statutes. The funding mechanism may only be amended through legislation. The City's contribution rates and amounts contributed (equal to the required contributions for the year) for the last three years are as follows: ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 36 Fiscal Year Contribution Rate ER Contribution Rate ER/EE Total Contribution 2008-2009 20.50% 10.50% $468,921 2007-2008 20.50% 10.50% $509,714 2006-2007 20.50% 10.50% $391,872 NOTE 6 – INTERFUND TRANSFERS: The composition of interfund balances as of June 30, 2009, is as follows: Due to/from other funds: Receivable Fund Payable Fund Amount Water Utility Fund General Fund $ 12,050 Capital Projects Fund Grants Fund 505,000 Private Sector Community Support Fund 1,600 Total $ 518,650 Transfers to/from other funds: Transfer In: Transfer Out: Water Utility Fund Other Governmental Funds Total General Fund $ - $ 26,000 $ 26,000 Nonmajor business fund 963,114 - - Total $ 963,114 $ 26,000 $ 989,114 Transfers were used to transfer unrestricted general fund revenues to finance other programs and move cash and other noncapital assets from a Nonmajor business fund now accounted for within the Water Utility Fund. In the current fiscal year, the City made a one-time transfer of $895,202 in capital assets (reported as capital contributions in fund statements) and $963,114 of noncapital assets (as noted above) for the transfer of all assets in a Nonmajor business fund that will be accounted for as part of the Water Utility Fund. NOTE 7 – LONG-TERM DEBT: A. The City was, in accordance with Nevada Revised Statutes, within the legal debt limit at June 30, 2009. B. The following schedule summarizes the changes in long-term debt: ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 37 Issue Date Interest Rate Maturity Date Authorized and Issued Outstanding July 1, 2008 Additions (Deletions) Outstanding June 30, 2009 Due in 2009-2010 Governmental Activities: Compensated absences payable - - - $ - $ 104,974 $ 35,259 $ (35,756) $ 104,477 $ 25,000 City Hall Expansion Bonds 12/29/05 4.49% 12/01/2025 $ 5,000,000 4,677,000 - (173,000) 4,504,000 181,000 Total governmental activities 4,781,974 35,259 (208,756) 4,608,477 206,000 Business-type Activities: State Water Pollution Control Revolving Fund 10/28/92 4.00% 6/30/2012 $ 2,000,000 640,329 - (132,600) 507,729 137,957 2003 Refunding Bonds 11/25/03 3% - 5% 5/01/2010 $ 950,000 355,000 - (170,000) 185,000 185,000 2007 Water/Sewer Bonds 3/28/07 4% - 5% 2/01/2037 $50,000,000 50,000,000 - (820,000) 49,180,000 860,000 2008 Water/Sewer Bonds 4/01/08 3.25% - 5% 2/01/2038 $32,600,000 32,600,000 - - 32,600,000 640,000 83,595,329 - (1,122,600) 82,472,729 1,822,957 Unamortized Bond Discount/(Premium) 70,652 - (15,828) 54,824 14,879 Compensated Absences payable 52,042 78,479 (78,420) 52,101 40,000 Total business-type activities 83,718,023 78,479 (1,216,848) 82,579,654 1,877,836 Total Long-Term Debt $ 88,499,997 $ 113,738 $ (1,425,604) $ 87,188,131 $ 2,083,836 ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 38 The following schedule reflects debt service requirements to maturity of the City's long-term debt: Debt Supported by General Obligation Debt Supported by Sewer Fund Revenues Debt Supported by Water Fund Revenues Total Requirements to Maturity Fiscal Year Principal Interest Principal Interest Principal* Interest* Principal Interest 2010 181,000 198,166 281,637 376,829 1,541,320 3,362,170 2,003,957 3,937,165 2011 189,000 189,860 292,595 365,759 1,405,937 3,308,617 1,887,532 3,864,236 2012 198,000 181,172 304,493 354,377 1,459,836 3,256,950 1,962,329 3,792,499 2013 207,000 172,079 238,010 342,526 1,513,902 3,203,231 1,958,912 3,717,836 2014 216,000 162,583 168,131 334,810 1,576,869 3,145,884 1,961,000 3,643,277 2015- 2019 1,238,000 654,687 960,764 1,558,493 8,974,236 14,655,451 11,173,000 16,868,631 2020- 2024 1,551,000 342,924 1,205,148 1,307,639 11,199,852 12,347,236 13,956,000 13,997,799 2025- 2029 724,000 32,867 1,522,754 1,007,747 14,107,246 9,552,084 16,354,000 10,592,698 2030- 2034 - - 1,919,067 617,381 17,755,933 5,891,338 19,675,000 6,508,719 2035- 2038 - - 1,524,930 154,522 14,520,069 1,529,141 16,044,999 1,683,663 Total $ 4,504,000 $ 1,934,338 $ 8,417,529 $ 6,420,083 $ 74,055,200 $ 60,252,102 $ 86,976,729 $ 68,606,523 * Exclusive of unamortized premium and issuance costs. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 39 The liability for compensated absences is included in noncurrent liabilities on the government- wide Statement of Net Assets. The liability will be liquidated primarily by the General Fund for governmental activities and the Water and Sewer Funds for business-type activities. NOTE 8 – POSTEMPLOYMENT RETIREMENT HEALTH INSURANCE BENEFIT: In addition to the pension benefit described in Note 5, the City provides a subsidy for postemployment health care benefits, in accordance with NRS 287.023, to all retired employees who enroll with the Nevada Public Employee’s Benefits Program (PEBP). As of June 30, 2009, there were 6 retirees belonging to the program. Enrolled retirees pay premiums for health insurance benefits directly to the program, while the City is required to subsidize the partial or total costs of the premium based incrementally on a retiree’s number of years of service with the City. The unsubsidized state premiums for retirees range from $323 to $736, while retiree subsidies range from $103 for five years of service to $564 for 20 years of service, with incremental increase for years in between. As of June 30, 2009, the City paid $18,592 for retirees participating in PEBP. Premium payments are funded by operating resources as incurred and no provision has been made to permanently fund future liabilities. NOTE 9 – RISK MANAGEMENT: The City, like any governmental entity, is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries of employees; and natural disasters. The City has joined together with similar public agencies (cities, counties and special districts) throughout the State of Nevada to create a pool under the Nevada Interlocal Cooperation Act. The Nevada Public Agency Pool Insurance (Pool) is a public entity risk pool currently operating as a common risk management and insurance program for its members. The City pays an annual premium and specific deductibles, as necessary, to the Pool for its general insurance coverage. The Pool is considered a self-sustaining risk pool that will provide coverage for its members for up to $10,000,000 per event and a $13,000,000 general aggregate per member The City has also joined together with similar public agencies, under the Nevada Interlocal Cooperation Act, to create an intergovernmental self-insured association for workers compensation insurance, the Public Agency Compensation Trust (PACT). The City pays premiums based on payroll costs to the PACT. The PACT is considered a self-sustaining pool that will provide coverage based on established statutory limits. ---PAGE BREAK--- CITY OF FERNLEY, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2009 40 The City continues to carry commercial insurance for other risks of loss, including specific risks of loss not covered by the Pool, including bonding and employee health and accident insurance. Settled claims resulting from these risks have not exceeded commercial coverage for the past three years. NOTE 10 – COMMITMENTS AND CONTINGENGIES: There are lawsuits and unresolved disputes involving the city or its employees in which the City is represented by outside counsel. However, in the opinion of the outside counsel, these actions will not, in aggregate, have a material adverse effect upon the operations or financial position of the City. At June 30, 2009, the City had several construction contracts in progress. Management has estimated that of the $66,006,057 in contracts awarded, approximately $10,680,000 will be billed for work completed over the next fiscal year. NOTE 11 – SUBSEQUENT EVENTS: Effective July 1, 2009, new water and sewer rates went into effect, primarily due to increasing operating costs and debt service demands. On average, the water rate increase is approximately 25%, and the sewer rates increase is 2.5%. These amounts are consistent with the rate study completed during fiscal year 2007, which recommended a water rate increase of 180% over a five year period beginning July 1, 2007, and a sewer rate increase of approximately 10% over a five year period beginning July 1, 2007. ---PAGE BREAK--- COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES ---PAGE BREAK--- CITY OF FERNLEY NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET JUNE 30, 2009 41 MUNICIPAL RESIDENTIAL PRIVATE MUNICIPAL COURT COURT CONSTRUCTION SECTOR ADMINISTRATIVE FACILITIES TAX DISTRICT GRANTS COMMUNITY FEES FUND FEES FUND #2 FUND FUND SUPPORT FUND TOTAL Cash and investments 17,316 $ 28,055 $ 296,004 $ 462,397 $ 10,869 $ 814,641 $ Interest receivable 19 32 335 523 12 921 Accounts receivable 1,638 2,212 - - - 3,850 Due from other governments - - 38,091 169,072 4,075 211,238 Total Assets 18,973 $ 30,299 $ 334,430 $ 631,992 $ 14,956 $ 1,030,650 $ ASSETS , , , , , , , Liabilities: Accounts payable - $ - $ 25,059 $ - $ - $ 25,059 $ Due to developers - - 129,125 - - 129,125 Due to other funds - - - 505,000 1,600 506,600 Total Liabilities - - 154,184 505,000 1,600 660,784 Fund Balance: Unreserved: U d i d 18 973 30 299 180 246 126 992 13 356 369 866 LIABILITIES AND FUND BALANCE Undesignated 18,973 30,299 180,246 126,992 13,356 369,866 Total Liabilities and Fund Balance 18,973 $ 30,299 $ 334,430 $ 631,992 $ 14,956 $ 1,030,650 $ 41 ---PAGE BREAK--- MUNICIPAL RESIDENTIAL PRIVATE MUNICIPAL COURT COURT CONSTRUCTION SECTOR ADMINISTRATIVE FACILITIES TAX DISTRICT GRANTS COMMUNITY FEES FUND FEES FUND #2 FUND FUND SUPPORT FUND TOTAL CITY OF FERNLEY NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2009 42 REVENUES Intergovernmental Grant - $ - $ 38,091 $ - $ - $ 38,091 $ Fines and forfeits: Municipal administrative fees 8,418 11,372 - - - 19,790 Miscellaneous: Interest earnings 261 437 9,876 3,688 16 14,278 Other - - - - 14,916 14,916 T t l R 8 679 11 809 47 967 3 688 14 932 87 075 Total Revenues 8,679 11,809 47,967 3,688 14,932 87,075 EXPENDITURES Services and supplies: Judicial 848 - - - - 848 Culture and recreation - - - - 28,547 28,547 Community development - - - 94,346 - 94,346 Total Services and supplies 848 - - 94,346 28,547 123,741 Capital outlay: Culture and recreation 373 047 373 047 Culture and recreation - - 373,047 - - 373,047 Total Expenditures 848 - 373,047 94,346 28,547 496,788 Excess (Deficiency) of Revenues over (under) Expenditures 7,831 11,809 (325,080) (90,658) (13,615) (409,713) OTHER FINANCING SOURCES (USES) Transfers in (out) - - - - 26,000 26,000 Net Change in Fund Balance 7,831 11,809 (325,080) (90,658) 12,385 (383,713) FUND BALANCE, JULY 1 11,142 18,490 505,326 217,650 971 753,579 FUND BALANCE, JUNE 30 18,973 $ 30,299 $ 180,246 $ 126,992 $ 13,356 $ 369,866 $ 42 ---PAGE BREAK--- BUDGET ACTUAL VARIANCE REVENUES Fines and forfeits: Municipal administrative fees 7,800 $ 8,418 $ 618 $ Miscellaneous: Interest earnings 300 261 (39) Total Revenues 8,100 8,679 579 EXPENDITURES Judicial Services and supplies 7,000 848 6,152 Excess (Deficiency) of Revenue Over Expenditures 1,100 7,831 6,731 FUND BALANCE, July 1 11,142 11,142 - FUND BALANCE, June 30 12,242 $ 18,973 $ 6,731 $ FOR THE YEAR ENDED JUNE 30, 2009 CITY OF FERNLEY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL MUNICIPAL COURT ADMINISTRATIVE FEES FUND 43 ---PAGE BREAK--- BUDGET ACTUAL VARIANCE REVENUES Fines and forfeits: Municipal administrative fees 10,500 $ 11,372 $ 872 $ Miscellaneous: Interest earnings 450 437 (13) Total Revenues 10,950 11,809 859 FUND BALANCE, July 1 18,490 18,490 - FUND BALANCE, June 30 29,440 $ 30,299 $ 859 $ FOR THE YEAR ENDED JUNE 30, 2009 CITY OF FERNLEY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL MUNICIPAL COURT FACILITY FEES FUND 44 ---PAGE BREAK--- BUDGET ACTUAL VARIANCE REVENUES Intergovernmental: Grant 77,775 $ 38,091 $ (39,684) $ Miscellaneous: Interest earnings 12,000 9,876 (2,124) Total Revenues 89,775 47,967 (41,808) EXPENDITURES Culture and recreation: Capital outlay 369,000 373,047 (4,047) Excess (Deficiency) of Revenue Over Expenditures (279,225) (325,080) (45,855) FUND BALANCE, July 1 505,326 505,326 - FUND BALANCE, June 30 226,101 $ 180,246 $ (45,855) $ FOR THE YEAR ENDED JUNE 30, 2009 CITY OF FERNLEY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL RESIDENTIAL CONSTRUCTION TAX DISTRICT #2 FUND 45 ---PAGE BREAK--- BUDGET ACTUAL VARIANCE REVENUES Miscellaneous: Interest earnings 2,600 $ 3,688 $ 1,088 $ EXPENDITURES Community Development: Services and supplies 158,099 94,346 63,753 Excess (Deficiency) of Revenues Over Expenditures (155,499) (90,658) 64,841 FUND BALANCE, July 1 217,650 217,650 - FUND BALANCE, June 30 62,151 $ 126,992 $ 64,841 $ FOR THE YEAR ENDED JUNE 30, 2009 CITY OF FERNLEY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL GRANTS FUND 46 ---PAGE BREAK--- BUDGET ACTUAL VARIANCE REVENUES Miscellaneous: Interest earnings 3 $ 16 $ 13 $ Other - 14,916 14,916 Total Revenues 3 14,932 14,929 EXPENDITURES Culture and Recreation: Services and supplies 26,000 28,547 (2,547) Excess (Deficiency) of Revenues Over Expenditures (25,997) (13,615) 12,382 OTHER FINANCING SOURCES Transfers in: 26,000 26,000 - Net Change in Fund Balance 3 12,385 12,382 FUND BALANCE, July 1 (625) 971 1,596 FUND BALANCE, June 30 (622) $ 13,356 $ 13,978 $ FOR THE YEAR ENDED JUNE 30, 2009 CITY OF FERNLEY PRIVATE SECTOR COMMUNITY SUPPORT FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL 47 ---PAGE BREAK--- BUDGET ACTUAL VARIANCE REVENUES Miscellaneous: Interest earnings 75,000 $ 11,991 $ (63,009) $ EXPENDITURES Community development: Services and supplies - 12,910 (12,910) Capital outlay 364,650 14,602 350,048 Total Expenditures 364,650 27,512 337,138 FUND BALANCE, July 1 1,160,893 1,160,893 - FUND BALANCE, June 30 871,243 $ 1,145,372 $ (274,129) $ FOR THE YEAR ENDED JUNE 30, 2009 CITY OF FERNLEY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL CAPITAL PROJECTS FUND 48 ---PAGE BREAK--- CITY OF FERNLEY SCHEDULE OF REVENUES, EXPENSES, AND WATER UTILITY ENTERPRISE FUND FOR THE YEAR ENDED JUNE 30, 2009 CHANGES IN NET ASSETS - BUDGET (GAAP BASIS) AND ACTUAL 49 BUDGET ACTUAL VARIANCE User fees 3,717,700 $ 3,833,095 $ 115,395 $ Operating Grant 582,009 562,372 (19,637) Total Operating Revenues 4,299,709 4,395,467 95,758 OPERATING REVENUES OPERATING EXPENSES Salaries and wages 699,800 681,882 17,918 Employee benefits 258,050 243,794 14,256 Services and supplies 1,965,200 1,887,542 77,658 Depreciation 960,000 1,126,147 (166,147) Total Operating Expenses 3,883,050 3,939,365 (56,315) Operating Income (Loss) 416,659 456,102 39,443 OPERATING EXPENSES Interest earned on investments 5,000 303,555 298,555 In lieu of water rights fees 140,100 201,845 61,745 Miscellaneous 218,000 354,458 136,458 Interest expense (9,800) (188,101) (178,301) Total Nonoperating Revenue (Expense) 353,300 671,757 318,457 Income (Loss) Before Capital Contributions NONOPERATING REVENUE (EXPENSE) Income (Loss) Before Capital Contributions and Transfers 769,959 1,127,859 357,900 Customer connection fees 160,500 223,932 63,432 Developer agreements 5,816 5,790 (26) Developer contributed infrastructure 2,930,000 2,991,877 61,877 Developer contributed water rights 2,100,000 2,590,800 490,800 Total Capital Contributions 5,196,316 5,812,399 616,083 CAPITAL CONTRIBUTIONS p , , , , , TRANSFER IN (OUT) Transfer in 963,114 963,114 - Capital asset transfer - other enterprise fund 895,202 895,202 - Total Transfers In (Out) 1,858,316 1,858,316 - Change in Net Assets 7,824,591 8,798,574 973,983 NET ASSETS, July 1 70,112,873 70,112,873 - NET ASSETS, June 30 77,937,464 $ 78,911,447 $ 973,983 $ 49 ---PAGE BREAK--- CITY OF FERNLEY SCHEDULE OF REVENUES, EXPENSES, AND SEWER UTILITY ENTERPRISE FUND FOR THE YEAR ENDED JUNE 30, 2009 CHANGES IN NET ASSETS - BUDGET (GAAP BASIS) AND ACTUAL 50 BUDGET ACTUAL VARIANCE User fees 1,830,000 $ 1,843,961 $ 13,961 $ Salaries and wages 481,900 461,770 20,130 Employee benefits 205,400 175,579 29,821 Services and supplies 758 900 717 481 41 419 OPERATING REVENUES OPERATING EXPENSES Services and supplies 758,900 717,481 41,419 Depreciation 630,000 940,822 (310,822) Total Operating Expenses 2,076,200 2,295,652 (219,452) Operating Income (Loss) (246,200) (451,691) (205,491) Interest earned on investments - 173,703 173,703 Miscellaneous 1 525 - (1 525) NONOPERATING REVENUE (EXPENSE) Miscellaneous 1,525 - (1,525) Interest expense (24,300) (286,329) (262,029) Total Nonoperating Revenue (Expense) (22,775) (112,626) (89,851) Income (Loss) Before Capital Contributions (268,975) (564,317) (295,342) Customer connection fees 280,000 289,776 9,776 Developer agreements 200 175 (25) CAPITAL CONTRIBUTIONS Developer contributed infrastructure 2,506,000 1,043,795 (1,462,205) Total Capital Contributions 2,786,200 1,333,746 (1,452,454) Change in Net Assets 2,517,225 769,429 (1,747,796) NET ASSETS, July 1 30,124,601 30,124,601 - NET ASSETS, June 30 32,641,826 $ 30,894,030 $ (1,747,796) $ 50 ---PAGE BREAK--- BUDGET ACTUAL VARIANCE TRANSFER IN (OUT) Transfer out (963,114) (963,114) - Capital asset transfer out - other enterprise fund (895,202) (895,202) - Total Transfer In (Out) (1,858,316) (1,858,316) - NET ASSETS, July 1 1,858,316 1,858,316 - NET ASSETS, June 30 - $ - $ - $ CITY OF FERNLEY NON-POTABLE WATER ENTERPRISE FUND SCHEDULE OF REVENUES, EXPENSES, AND FOR THE YEAR ENDED JUNE 30, 2009 CHANGES IN NET ASSETS - BUDGET (GAAP BASIS) AND ACTUAL 51 ---PAGE BREAK--- BALANCE BALANCE JULY 1, 2008 ADDITIONS DELETIONS JUNE 30, 2009 Cash and investments 10,936 $ 48,678 $ 47,559 $ 12,055 $ Bail bond deposits held for others 10,153 $ 38,841 $ 38,221 $ 10,773 $ Other liabilities 783 9,837 9,338 1,282 Total Liabilities 10,936 $ 48,678 $ 47,559 $ 12,055 $ ASSETS LIABILITIES CITY OF FERNLEY STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND - MUNICIPAL TRUST FUND FOR THE YEAR ENDED JUNE 30, 2009 52 ---PAGE BREAK--- STATISTICAL SECTION ---PAGE BREAK--- This part of the City of Fernley's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Section Contents Schedule # Financial Trends 1 - 4 These schedules contain trend information to help the reader understand how the City's financial performance and well being have changed over time. Revenue Capacity 5 - 9 These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property and sales taxes. Debt Capacity 10 - 14 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt, and its ability to issue additional future debt. Demographic and Economic Information 15 - 16 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. Operating Information 17 - 19 These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from comprehensive annual financial reports for the relevant year. The city implemented GASB 34 in fiscal year 2004, and schedules presenting government-wide information include information beginning in that year. CITY OF FERNLEY, NEVADA STATISTICAL SECTION ---PAGE BREAK--- SCHEDULE 1 2004 2005 2006 2007 2008 2009 GOVERNMENTAL ACTIVITIES Invested in capital assets, net of related debt 11,913,896 $ 15,883,001 $ 24,608,748 $ 30,721,447 $ 35,677,010 $ 39,652,258 $ Restricted - - - - 362,289 391,600 Unrestricted 3,927,329 5,884,904 5,535,323 4,549,063 2,395,580 2,276,380 Total Governmental Activities Net Assets 15,841,225 $ 21,767,905 $ 30,144,071 $ 35,270,510 $ 38,434,879 $ 42,320,238 $ BUSINESS-TYPE ACTIVITIES Invested in capital assets, net of related debt 32,471,737 $ 39,238,863 $ 57,581,522 $ 35,352,177 $ 77,070,390 $ 95,281,505 $ Restricted - 535,237 579,560 - - - Unrestricted 12,780,664 16,901,342 17,939,851 60,502,722 25,025,399 14,523,972 Total Business-type Activities Net Assets 45,252,401 $ 56,675,442 $ 76,100,933 $ 95,854,899 $ 102,095,789 $ 109,805,477 $ PRIMARY GOVERNMENT Invested in capital assets, net of related debt 44,385,633 $ 55,121,864 $ 82,190,270 $ 66,073,624 $ 112,747,400 $ 134,933,763 $ Restricted - 535,237 579,560 - 362,289 391,600 Unrestricted 16,707,993 22,786,246 23,475,174 65,051,785 27,420,979 16,800,352 Total Primary Government Net Assets 61,093,626 $ 78,443,347 $ 106,245,004 $ 131,125,409 $ 140,530,668 $ 152,125,715 $ Trend data is only available for the last six years due to implementation of GASB 34. FISCAL YEAR ENDED JUNE 30, CITY OF FERNLEY, NEVADA NET ASSETS BY COMPONENT LAST SIX FISCAL YEARS 53 ---PAGE BREAK--- SCHEDULE 2 2004 2005 2006 2007 2008 2009 EXPENSES Governmental Activities: General government 587,873 $ 595,912 $ 796,403 $ 1,173,360 $ 1,572,115 $ 1,626,115 $ Judicial 156,796 173,804 170,479 194,353 252,189 243,889 Public works 463,188 642,480 729,919 1,326,718 783,565 1,778,649 Culture and recreation 362,983 458,828 646,259 838,674 689,281 685,706 Community development 434,627 861,555 875,056 848,010 1,977,586 811,701 Health 50,560 102,768 263,919 295,413 280,743 252,320 Debt Service: Interest and fiscal charges - - 224,500 221,032 214,326 206,092 Total Governmental Activities Expenses 2,056,027 2,835,347 3,706,535 4,897,560 5,769,805 5,604,472 Business-type Activities: Water 2,035,646 2,134,429 2,422,583 3,058,553 3,152,845 4,127,466 Sewer 1,347,388 1,509,433 1,530,898 1,812,583 2,012,862 2,581,981 Other - - 700 9,340 212,651 - Total Business-type Activities Expenses 3,383,034 3,643,862 3,954,181 4,880,476 5,378,358 6,709,447 Total Primary Government Expenses 5,439,061 $ 6,479,209 $ 7,660,716 $ 9,778,036 $ 11,148,163 $ 12,313,919 $ PROGRAM REVENUES Governmental Activities: Charges for Services: General government 731,510 $ 887,827 $ 1,008,662 $ 1,137,510 $ 1,030,613 $ 1,243,230 $ Judicial 170,835 423,178 196,249 89,248 162,416 161,819 Public works 10,901 31,278 40,071 29,754 23,021 65,129 Culture and recreation 16,950 13,400 8,150 48,355 1,600 200 Community development 1,422,438 1,804,978 1,123,508 679,608 509,440 258,801 Health 1,766 1,611 2,341 4,318 4,650 3,819 Operating Grants and Contributions 276,701 268,632 348,627 60,000 60,000 60,383 Capital Grants and Contributions 8,112,137 4,232,398 7,531,080 6,052,749 4,869,410 5,613,270 Total Governmental Activities Program Revenues 10,743,238 7,663,302 10,258,688 8,101,542 6,661,150 7,406,651 Business-type Activities: Charges for Services: Water 1,794,430 1,975,451 2,201,916 2,306,193 3,273,625 3,833,095 Sewer 1,187,212 1,441,455 1,686,101 1,754,820 1,829,736 1,830,814 Other - 131,300 - - 1,055 - Operating Grants and Contributions - - - - 424,671 562,372 Capital Grants and Contributions: 10,829,870 11,157,733 18,729,430 19,015,856 4,579,348 7,146,143 Total Business-type Activities Program Revenues 13,811,512 14,705,939 22,617,447 23,076,869 10,108,435 13,372,424 Total Primary Government Program Revenue 24,554,750 $ 22,369,241 $ 32,876,135 $ 31,178,411 $ 16,769,585 $ 20,779,075 $ NET (EXPENSE)/REVENUE Governmental Activities 8,687,211 $ 4,827,956 $ 6,552,153 $ 3,203,982 $ 891,345 $ 1,802,179 $ Business-type Activities 10,428,478 11,062,077 18,663,266 18,196,393 4,730,077 6,662,977 Total Primary Government Net (Expense)/Revenue 19,115,689 $ 15,890,033 $ 25,215,419 $ 21,400,375 $ 5,621,422 $ 8,465,156 $ CHANGE IN NET ASSETS CITY OF FERNLEY, NEVADA FISCAL YEAR ENDED JUNE 30, 54 LAST SIX FISCAL YEARS ---PAGE BREAK--- SCHEDULE 2 2004 2005 2006 2007 2008 2009 GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental Activities: Taxes: Property 427,738 $ 496,207 $ 591,082 $ 925,297 $ 1,074,726 $ 1,381,621 $ Consolidated 137,610 163,429 189,158 188,128 197,040 202,188 Fuel 216,736 233,448 227,691 259,603 304,718 309,896 Unrestricted gaming licenses 75,015 71,271 97,121 98,753 96,021 92,211 Unrestricted interest income 22,441 97,729 329,341 361,301 175,866 41,085 Miscellaneous revenue 35,660 36,640 389,619 89,378 424,649 56,179 Total Governmental Activities 915,200 1,098,724 1,824,012 1,922,460 2,273,020 2,083,180 Business-type Activities: Unrestricted interest income 86,972 295,730 702,781 1,511,286 1,126,258 477,258 Miscellaneous revenue 37,142 65,234 59,441 46,287 384,555 569,452 Total Business-type Activities 124,114 360,964 762,222 1,557,573 1,510,813 1,046,710 Total Primary Government General Revenues 1,039,314 $ 1,459,688 $ 2,586,234 $ 3,480,033 $ 3,783,833 $ 3,129,890 $ CHANGE IN NET ASSETS Governmental activities 9,602,411 $ 5,926,680 $ 8,376,165 $ 5,126,439 $ 3,164,365 $ 3,885,359 $ Business-type activities 10,552,592 11,423,041 19,425,488 19,753,966 6,240,890 7,709,687 Total Primary Government Change in Net Assets 20,155,003 $ 17,349,721 $ 27,801,653 $ 24,880,405 $ 9,405,255 $ 11,595,046 $ Trend data is only available for the last six years due to implementation of GASB 34. 55 LAST SIX FISCAL YEARS CONTINUED FISCAL YEAR ENDED JUNE 30, CITY OF FERNLEY, NEVADA CHANGE IN NET ASSETS (CONTINUED) ---PAGE BREAK--- SCHEDULE 3 2002 2003 2004 2005 2006 2007 2008 2009 General fund Reserved 2,478 $ 287,018 $ 1,330 $ 5,205 $ 6,239 $ 6,709 $ 366,424 $ 394,251 $ Unreserved 774,938 725,358 790,990 869,817 938,757 582,237 279,443 294,617 Total general fund 777,416 $ 1,012,376 $ 792,320 $ 875,022 $ 944,996 $ 588,946 $ 645,867 $ 688,868 $ All other governmental funds Unreserved, reported in: Special revenue fund 17,234 $ 309,399 $ 1,688,126 $ 2,302,972 $ 1,398,315 $ 1,568,588 $ 971,544 $ 787,928 $ Capital projects fund - 728,195 1,499,182 2,502,129 8,032,479 2,397,510 1,160,893 1,145,372 Total all other governmental funds 17,234 $ 1,037,594 $ 3,187,308 $ 4,805,101 $ 9,430,794 $ 3,966,098 $ 2,132,437 $ 1,933,300 $ * Information presented from City incorporation on July 1, 2001 forward. CITY OF FERNLEY, NEVADA FUND BALANCES OF GOVERNMENTAL FUNDS LAST EIGHT FISCAL YEARS FISCAL YEAR ENDED JUNE 30, 56 ---PAGE BREAK--- SCHEDULE 4 2002 2003 2004 2005 2006 2007 2008 2009 REVENUES Taxes 359,112 $ 585,458 $ 1,190,598 $ 1,316,826 $ 1,787,949 $ 988,056 $ 1,077,545 $ 1,316,879 $ Licenses and permits 936,421 1,724,743 2,241,629 2,796,965 2,271,703 1,949,947 1,663,745 1,663,184 Intergovernmental 494,110 772,510 1,415,460 1,354,521 1,231,732 2,333,333 2,117,309 1,631,060 Fines and forfeits 17,643 104,330 170,836 175,167 228,424 234,353 207,465 161,820 Miscellaneous 40,306 55,149 199,081 192,613 794,352 581,833 610,883 138,018 Total revenues 1,847,592 3,242,190 5,217,604 5,836,092 6,314,160 6,087,522 5,676,947 4,910,961 EXPENDITURES General government 480,143 475,065 528,906 595,297 717,355 1,025,295 1,238,982 1,290,272 Judicial 61,567 144,797 154,514 171,868 169,163 194,518 251,829 244,714 Public works 297,293 517,855 331,318 420,500 376,571 515,394 428,988 457,243 Culture and recreation 221,460 337,677 324,629 381,962 508,797 647,542 522,392 546,492 Community development 240,811 301,269 405,298 669,105 810,965 834,503 1,226,149 787,056 Health 10,036 40,828 48,395 96,876 256,738 275,905 262,526 232,843 Debt service: Principal 84,000 90,314 - - - 158,000 165,000 173,000 Interest 10,822 5,117 - - 94,789 221,032 214,326 206,092 Capital outlay - 73,948 1,499,163 1,799,989 3,684,115 8,097,529 3,143,509 1,129,385 Total expenditures 1,406,132 1,986,870 3,292,223 4,135,597 6,618,493 11,969,718 7,453,701 5,067,097 Excess (deficiency) of revenues over expenditures 441,460 1,255,320 1,925,381 1,700,495 (304,333) (5,882,196) (1,776,754) (156,136) OTHER FINANCING SOURCES (USES) Transfers out - (950,000) (1,931,030) (1,690,000) (1,050,000) (711,712) (20,000) (26,000) Transfers in - 950,000 1,931,030 1,690,000 1,050,000 711,712 20,000 26,000 General obligations bonds issued - - - - 5,000,000 - - - Sale of capital assets - - 4,277 - - 61,450 - - Total other financing sources (uses) - - 4,277 - 5,000,000 61,450 - - Net change in fund balance 441,460 $ 1,255,320 $ 1,929,658 $ 1,700,495 $ 4,695,667 $ (5,820,746) $ (1,776,754) $ (156,136) $ Debt service as a percentage of noncapital expenditures 7.2% 5.3% 0.0% 0.0% 3.3% 10.9% 9.6% 10.7% * Information presented from City incorporation on July 1, 2001 forward. FISCAL YEAR ENDED JUNE 30, CITY OF FERNLEY, NEVADA SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST EIGHT FISCAL YEARS 57 ---PAGE BREAK--- SCHEDULE 5 Ratio of Total Real and Personal Property Assessed To Total Estimated Estimated Fiscal Assessed Actual Actual Year Value Value Value 2002* 233,552,164 $ 667,291,897 $ 35.0 2003 246,640,476 704,687,074 35.0 2004 279,452,986 798,437,103 35.0 2005 303,180,006 866,228,589 35.0 2006 377,743,200 1,079,266,286 35.0 2007 511,154,623 1,460,441,780 35.0 2008 679,959,918 1,942,742,623 35.0 2009 755,529,070 2,158,654,486 35.0 Source: State of NV Department of Taxation's "Local Government Finance Redbook" * Information presented from City incorporation on July 1, 2001 forward. CITY OF FERNLEY, NEVADA ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST EIGHT FISCAL YEARS* 58 ---PAGE BREAK--- SCHEDULE 6 CITY OF FERNLEY, NEVADA PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS (PER $100 OF ASSESSED VALUE) Fiscal City of State of School Special Year Fernley Nevada District County Districts Total 2002* 0.1528 0.1500 1.3367 0.7577 0.3431 2.7403 2003 0.1528 0.1500 1.3367 0.7839 0.3544 2.7778 2004 0.1528 0.1700 1.3367 0.8350 0.3627 2.8572 2005 0.1528 0.1700 1.3367 0.8644 0.3726 2.8965 2006 0.1528 0.1700 1.3367 0.8644 0.3736 2.8975 2007 0.3481 0.1700 1.3367 0.8644 0.0274 2.7466 2008 0.3772 0.1700 1.3367 0.8644 0.3505 3.0988 2009 0.3782 0.1700 1.3367 0.8644 0.3515 3.1008 Source: State of NV Department of Taxation's "Local Government Finance Redbook" * Information presented from City incorporation on July 1, 2001 forward. LAST EIGHT FISCAL YEARS* 59 ---PAGE BREAK--- SCHEDULE 7 CITY OF FERNLEY, NEVADA PRINCIPAL PROPERTY OWNERS* June 30, 2009 Taxable Approximate Estimated Taxable Percentage of Appraised Assessed Taxable Assessed Taxpayer Product/Service Value Value Valuation Sierra Pacific Power Utility 133,954,886 $ 46,884,210 $ 6.205% BMO Leasing US, Inc. (Quebecor) Printing 45,026,877 15,759,407 2.086% Southwest Gas Corp. Utility 37,258,460 13,040,461 1.726% Reynen & Bardis Paint Manufacturer 34,763,186 12,167,115 1.610% TREX Company, Inc. Wood Product Manufacturer 30,262,731 10,591,956 1.402% Sherwin-Williams Acceptance Corp Paint Manufacturer 26,018,991 9,106,647 1.205% 1600 East Newlands Dr., LLC Developer 25,588,063 8,955,822 1.185% Nevada Cement Company Cement Manufacturer 22,188,571 7,766,000 1.028% Amazon.com Retail Distributor 21,403,760 7,491,316 0.992% MSC Industrial Direct Co. Inc. Industrial Distributor 20,461,513 7,161,530 0.948% Totals 396,927,039 $ 138,924,464 $ 18.387% Source: Lyon County Assessor's Office Note: Estimated appraised value is based on assessed value at 35% of appraised value *Nine year period not available as date of incorporation is July 1, 2001 60 ---PAGE BREAK--- SCHEDULE 8 2002 2003 2004 2005 2006 2007 2008 2009 WATER UTILITY Number of Customers 3309 3,966 4,980 6,083 6,634 6,816 7,170 7,371 Annual Average Day Demand per customer 750 750 750 750 750 750 750 750 Gallons of water used (in thousands) 905,839 1,085,693 1,363,275 1,665,221 1,816,058 1,865,880 1,954,754 1,488,674 Direct rater per 1000 gallons 0.95 $ 0.95 $ 0.95 $ 0.95 $ 0.95 $ 0.95 $ 1.11 $ 1.50 $ Source: City of Fernley *Information presented from City incorporation on July 1, 2001 forward CITY OF FERNLEY, NEVADA WATER USER FEES LAST EIGHT FISCAL YEARS* FISCAL YEAR ENDED JUNE 30, 61 ---PAGE BREAK--- SCHEDULE 9 User User Employer Fees Rank Fees Rank Quebecor World MS #2 68,983 $ 1 31,703 $ 2 Trex Manufacturing Company 60,941 2 42,141 1 Granite Construction 41,903 3 - - Fernley High School 39,771 4 11,081 7 Veteran's Cemetery 33,015 5 15,059 4 Hollywood Investments 28,187 6 18,076 3 City of Fernley Out of Town Park 25,899 7 - - Fernley Intermediate School 15,722 8 6,318 9 Rewana Mobile Home Park 13,792 9 5,708 10 Fernley Swimming Pool 13,111 10 - - Trails End Mobile Park - - 12,016 5 Blue Beacon Wash - - 7,413 8 Green Valley Park - - 11,957 6 Source: City of Fernley * Earliest year information available is 2004 due to change in tracking system. . CITY OF FERNLEY, NEVADA PRINCIPLE WATER USERS 2009 2004* JUNE 30, 62 ---PAGE BREAK--- SCHEDULE 10 Governmental Activities General Total Percentage Fiscal Obligation Water Sewer Primary of Personal Per Year Bonds Bonds Bonds Government Income Capita 2002 90,314 $ - $ - $ 90,314 $ 0.04% 9 2003 - - - - 0.00% - 2004 - - - - 0.00% - 2005 - - - - 0.00% - 2006 5,000,000 670,000 890,282 6,560,282 1.64% 401 2007 4,842,000 45,015,000 6,267,780 56,124,780 12.20% 2,977 2008 4,677,000 74,954,997 8,640,332 88,272,329 17.12% 4,507 2009 4,504,000 74,055,200 8,417,529 86,976,729 16.90% 4,436 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. *Information presented from City incorporation on July 1, 2001 forward See the Schedule of Demographic Statistics on page 68 for personal income and population data. Business-Type Activities CITY OF FERNLEY, NEVADA RATIOS OF OUTSTANDING DEBT BY TYPE LAST EIGHT FISCAL YEARS* 63 ---PAGE BREAK--- SCHEDULE 11 Percentage General Business of Actual Fiscal Obligation Type Property Per Year Bonds Activities Total Value Capita 2002 90,314 $ 1,341,684 $ 1,431,998 $ 0.21% 150.28 $ 2003 - 1,219,713 1,219,713 0.17% 116.83 2004 - 1,108,830 1,108,830 0.14% 94.63 2005 - 1,008,027 1,008,027 0.12% 73.18 2006 5,000,000 1,560,282 6,560,282 0.61% 401.07 2007 4,842,000 51,282,780 56,124,780 3.84% 2,977.44 2008 4,677,000 83,595,329 88,272,329 4.54% 4,507.14 2009 4,504,000 82,472,729 86,976,729 4.03% 4,435.55 Note: See the Schedule of Assessed Value and Estimated Actual Value of Taxable Property for property value data. Population can be found in the Schedule of Demographic Statistics page 68. *Information presented from City incorporation on July 1, 2001 forward CITY OF FERNLEY, NEVADA RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST EIGHT FISCAL YEARS* 64 ---PAGE BREAK--- SCHEDULE 12 CITY OF FERNLEY, NEVADA COMPUTATION OF GENERAL OBLIGATION DIRECT AND OVERLAPPING DEBT June 30, 2009 Total Presently General Self-Supporting Obligation General Net Debt % Applicable Debt Obligation Debt Outstanding Net Debt Direct: City of Fernley 86,976,729 $ 82,472,729 $ 4,504,000 $ 100.00% 4,504,000 $ Overlapping: State of Nevada 2,315,460 727,545 1,587,915 0.44% 6,987 Lyon County 24,208,999 24,208,999 - 0.00% - Lyon County School District 62,983,923 - 62,983,923 35.88% 22,598,632 Total Overlapping Debt 22,605,618 Total Direct and Overlapping Debt 27,109,618 $ Source: State of Nevada Lyon County Lyon County School District Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Fernley This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Applicable 65 ---PAGE BREAK--- SCHEDULE 13 CITY OF FERNLEY, NEVADA COMPUTATION OF LEGAL DEBT MARGIN June 30, 2009 Estimated Assessed Value 755,529,070 $ Debt Limit - 30 Percent of Total Assessed Value 226,658,721 Total Amount of Debt Applicable to Debt Limit 86,976,729 Legal Debt Margin 139,681,992 $ Note: Legal debt margin as set forth in NRS 266.600 66 ---PAGE BREAK--- SCHEDULE 14 CITY OF FERNLEY, NEVADA WATER AND SEWER FUNDS REVENUE BOND COVERAGE - COMBINED LAST EIGHT FISCAL YEARS* Net Revenue Available Debt Service Requirements Fiscal Operating Operating For Debt Year Revenue Expenses(1) Service Principal Interest Total Coverage 2002* 2,201,361 $ 1,645,441 $ 555,920 $ 283,405 $ 107,847 $ 391,252 $ 142% 2003 2,501,125 1,815,858 685,267 243,778 97,428 341,206 201% 2004 2,981,642 2,096,056 885,586 248,173 84,152 332,325 266% 2005 3,416,906 2,338,729 1,078,177 262,745 72,580 335,325 322% 2006 3,888,017 2,647,912 1,240,105 277,502 60,323 337,825 367% 2007 4,061,013 2,873,207 1,187,806 287,451 620,879 908,330 131% 2008 5,528,032 3,420,207 2,107,825 1,122,600 3,531,002 4,653,602 45% 2009 5,975,722 4,168,048 1,807,674 1,122,600 3,773,565 4,896,165 37% Note: Total operating expenses exclusive of depreciation *Information presented from City incorporation on July 1, 2001 forward 67 ---PAGE BREAK--- SCHEDULE 15 Fiscal Total Personal Per Capita Unemployment Year Population Income Personal Income Rate 2002 9,529 217,089,678 $ 22,782 $ 5.60% 2003 10,440 243,617,400 23,335 5.40% 2004 11,718 285,380,172 24,354 5.20% 2005 13,775 336,110,000 24,400 5.00% 2006 16,357 399,110,800 24,400 4.70% 2007 18,850 459,940,000 24,400 7.30% 2008 19,585 515,555,540 26,324 8.90% 2009 19,609 514,677,423 26,247 15.30% Sources: Nevada Demographer's Office Bureau of Economic Analysis Nevada Employment Security Department- Lyon County Data *Information presented from City incorporation on July 1, 2001 forward CITY OF FERNLEY, NEVADA DEMOGRAPHIC STATISTICS LAST EIGHT FISCAL YEARS* 68 ---PAGE BREAK--- SCHEDULE 16 Percentage Percentage of Total County of Total County Employer Employees Rank Employment Employees Rank Employment Amazon.com 1000-1499 1 6.71% 700-799 1 6.14% Wal-Mart Associates Inc. 200-299 2 1.97% - - - MSC Industrial Supply Co. 200-299 3 1.97% 100-199 3 1.23% Quebecor World Nevada Inc. 200-299 4 1.97% 200-299 2 2.05% TREX Company 200-299 5 1.97% 100-199 4 1.23% Nevada Cement Company 100-199 6 1.18% 100-199 6 1.23% Lowe's HIW Inc. 100-199 7 1.18% - - - Silverado Casino 90-99 8 0.75% 90-99 7 0.78% Total employment statistics are for the Lyon County area, as information not available at the City level. * Information presented from calendar year 2005, the first year the Comprehensive Annual Financial Report was prepared. CITY OF FERNLEY, NEVADA MAJOR EMPLOYERS JUNE 30, . Source: Nevada Department of Employment, Training and Rehabilitation 2009 2005* 69 ---PAGE BREAK--- SCHEDULE 17 2002 2003 2004 2005 2006 2007 2008 2009 FUNCTION/PROGRAM General government 11.9 14.3 14.7 15.5 12.1 18.6 22.3 9.3 Judicial 1.7 1.7 1.9 1.9 2.0 1.9 1.9 3.0 Public works 1.2 1.2 1.3 1.3 2.0 1.5 1.8 2.5 Culture and recreation 3.5 4.5 4.5 7.5 7.5 10.9 11.5 4.8 Community development 4.5 7.0 7.0 12.0 15.5 16.0 14.0 8.1 Health - - - 2.0 3.9 2.9 2.5 3.0 Water 5.4 5.4 5.6 5.9 8.6 6.8 8.1 15.3 Sewer 5.4 5.4 5.6 5.9 9.1 6.8 8.1 9.2 Total 33.6 39.5 40.6 51.9 60.7 65.4 70.1 55.2 Source: City of Fernley, Nevada FY 2008/2009 Annual Budget *Information presented from City incorporation on July 1, 2001 forward FULL-TIME EQUIVALENT CITY OF FERNLEY, NEVADA EMPLOYEES BY FUNCTION/PROGRAM LAST EIGHT FISCAL YEARS* CITY OF FERNLEY, NEVADA 70 ---PAGE BREAK--- SCHEDULE 18 2003 2004 2005 2006 2007 2008 2009 Function/Program Judicial: Municipal Court Cases Filed: Drug 55 33 34 68 35 28 25 Driving Under Influence 82 71 75 91 81 83 68 Domestic Violence 37 48 65 45 5 3 1 Traffic 1,979 2,132 2,410 2,530 1,829 1,668 1,260 Non-Traffic 160 309 314 326 319 397 326 Other 5 0 1 0 0 3 3 Public Safety: Calls for Service: Criminal 2,292 2,760 3,072 3,382 3,866 3,633 2,791 Non-Criminal 948 828 924 1,028 1,180 1,129 1,889 Domestic Violence 312 432 684 678 866 889 463 Follow-up 1,044 1,488 1,404 1,630 1,439 1,624 1,599 Traffic Stops 1,080 672 876 1,026 1,450 1,639 2,067 Civil Papers 2,028 1,596 2,028 2,232 2,136 2,601 2,359 Animal 132 192 168 102 156 204 337 Death/Coroner 36 36 36 42 33 45 42 Public Service 1,536 1,440 1,044 1,250 927 1,191 1,111 Assist other Agencies 612 600 684 732 625 1,112 1,024 Alarms 216 252 276 346 383 377 517 Property Damage Accident 72 120 132 92 120 98 115 Injury Accident 12 12 24 24 20 5 15 Private Property Accident 60 48 48 48 73 81 65 Administrative 2,016 2,316 2,196 2,304 2,761 3,113 3,204 Total Calls for Service 12,372 12,792 13,572 15,076 16,035 17,741 17,598 Total Reports Written 1,788 1,740 1,704 1,756 2,298 2,130 1,947 Arrests: Felony 84 72 60 90 123 76 95 Gross Misdemeanor 12 12 24 16 17 27 44 Misdemeanor 192 168 120 112 143 146 121 Driving Under the Influence 48 48 36 48 84 90 76 Domestic Violence 48 48 72 52 71 53 73 Mental Health 12 12 12 8 12 11 4 Total Arrests 396 360 312 326 450 403 413 Citations: Traffic 444 240 228 274 593 464 557 Non-Traffic 240 132 168 162 209 234 328 Total Citation 684 372 408 436 802 698 885 Water Utility Customer Count 3,966 4,980 6,083 6,634 6,816 6,896 6,876 New Connections 657 1,014 1,103 551 182 80 15 Sewer Utility Customer Count 3,950 4,957 6,049 6,600 6,782 6,862 6,312 New Connections 649 1,007 1,092 551 182 80 14 Building 868 1,492 1,445 897 500 352 221 Number of Inspection Performed 7,042 15,929 19,108 13,302 5,838 3,107 1,894 Planning Number of applications processed 144 195 211 238 223 150 93 Sources: City of Fernley *Information presented for fiscal years as available FISCAL YEAR ENDED JUNE 30, CITY OF FERNLEY, NEVADA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST SEVEN FISCAL YEARS* 71 ---PAGE BREAK--- SCHEDULE 19 2002 2003 2004 2005 2006 2007 2008 2009 Function/Program Streets Public Road Mileage 89.5 92.03 95.45 104.12 106.64 116.96 125.36 126.79 Parks and Recreation: Park and Open Space 56.9 68 68.3 85.3 150 155 155 155 Developed Parks 5 7 7 8 11 11 11 11 Tennis Courts 1 1 1 1 1 1 1 1 Rodeo Arena 1 1 1 1 2 2 2 2 Playing Fields 6 6 7 8 10 19 19 19 Pavilions 1 1 1 2 2 2 3 3 Skate Park 1 1 1 1 1 1 1 1 Water Utility: Water lines (miles) 73.5 79.4 85.8 92.6 105 115.2 124.7 148.9 Fire Hydrants 700 775 [PHONE REDACTED] 1033 1083 1102 Sewer Utility: Sanitary Sewer lines 63.0 68.0 73.4 79.3 90.0 93.6 101.3 124.2 Sanitary Sewer [PHONE REDACTED] 1362 1510 1600 2126 2227 Sources: City of Fernley *Information presented from City incorporation on July 1, 2001 forward CITY OF FERNLEY, NEVADA CAPITAL ASSETS STATISTICS BY FUNCTION/PROGRAM LAST EIGHT FISCAL YEARS* 72 ---PAGE BREAK--- COMPLIANCE SECTION ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- FEDERAL FEDERAL-GRANTOR/PASS-THROUGH CFDA FEDERAL GRANTOR/PROGRAM TITLE NUMBER EXPENDITURES U.S. Department of Interior: Direct Program Bureau of Reclamation Truckee River Settlement Act Implementatin, Providing Water to At-Risk Natural Desert Terminal Lakes 15.508 548,363 Total Expenditures of Federal Awards 548,363 $ CITY OF FERNLEY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2009 77 ---PAGE BREAK--- CITY OF FERNLEY NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2009 78 A. REPORTING ENTITY: The accompanying schedule of expenditures of federal awards presents the expenditure activity of all federal awards programs of City of Fernley (the City) for the year ended June 30, 2009. The City’s reporting entity is defined in Note 1 to its basic financial statements. All expenditures of federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included in the schedule. B. BASIS OF ACCOUNTING: The accompanying schedule of expenditures of federal awards is prepared on the modified accrual basis of accounting. C. RELATIONSHIP TO BASIC FINANCIAL STATEMENTS: Expenditures of federal awards have been included in the individual funds of the City as follows: Business-Type Activities: Water Utility Fund $ 548,363 ---PAGE BREAK--- CITY OF FERNLEY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2009 79 A. SUMMARY OF AUDITORS’ RESULTS 1. The auditor’s report expresses an unqualified opinion on the basic financial statements of City of Fernley, Nevada for the year ended June 30, 2009. 2. A material weakness was identified during the audit of the financial statements as reported in the Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. 3. The audit disclosed no instances of noncompliance, which were material to the financial statements of the City of Fernley, Nevada. 4. A significant deficiency in internal control over major Federal award programs was disclosed during the audit and is being reported in the Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133. 5. The auditor’s report issued an unqualified opinion for major Federal award programs of the City of Fernley, Nevada. 6. Audit findings relative to the major federal award programs for City of Fernley, Nevada for the year ended June 30, 2009 which are required to be reported under Section .510(a) of OMB Circular A-133, are reported in Part C of this schedule. 7. The program tested as a major program was: Truckee River Settlement Act Implementation, Providing Water to At-Risk Natural Desert Terminal Lakes, CFDA 15.508 8. The dollar threshold for distinguishing Type A and B programs for the year ended June 30, 2009, was $300,000. 9. The City of Fernley, Nevada did not qualify as a low risk auditee for the year ended June 30, 2009, under the criteria set forth in Section .530 of OMB Circular A-133. ---PAGE BREAK--- CITY OF FERNLEY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2009 80 B: FINDINGS RELATING TO THE FINANCIAL STATEMENT AUDIT REPORTED IN ACCORDANCE WITH GENERALLY ACCEPTED ADITING STANDARDS (GAGAS): Finding 09-1 Condition: Personnel responsible for financial reporting over the City’s capital assets and debt activity do not possess the expertise required to calculate and record capitalized interest in accordance with generally accepted accounting principles. Criteria: Controls should be in place to provide reasonable assurance that the City’s financial statements are presented in accordance with generally accepted accounting principles. Cause: Significant turnover in the finance department created limited personnel who did not possess the skills and knowledge necessary to record transactions and apply generally accepted accounting principles with respect to the City’s capital assets financed with debt proceeds. Effect: The City’s financial statements were materially misstated given errors in reporting capital asset additions related to capitalized interest on projects constructed with bond proceeds, and required an audit adjustment of $1,644,541 in order for the financial statements to be in accordance with generally accepted accounting principles. Recommendation: Management implement procedures to ensure personnel possess the skills and knowledge necessary to record transactions and apply generally accepted accounting principles with respect to the City’s debt and capital asset activity. Managements response: See management’s response on page 82. ---PAGE BREAK--- CITY OF FERNLEY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2009 81 C: FINDINGS AND QUESTIONED COSTS FOR MAJOR FEDERAL AWARD PROGRAMS: Finding 09-2 U.S. Department of Interior Truckee River Settlement Act Implementation, Providing Water to At-Risk Natural Desert Terminal Lakes, CFDA 15.508 Condition: During our testing of reports, we found that the Financial Status Report for the quarter ending March 31, 2009 had not been reconciled with the general ledger on a timely basis. The accounting records associated with this program included costs in excess of the reports submitted. Criteria: Reports submitted to the Federal awarding agency should include all activity and be supported by the underlying data recorded in the City’s accounting system. Questioned Costs: None Cause: While the report submitted to the granting agency included only allowable costs, the accounting records were not adjusted to agree to the report submitted. Certain costs were recorded in the accounting system were not eligible for reimbursement. The City failed to follow their established procedures in place to ensure that federal reports are reconciled and agreeable to the City’s financial records. Effect: The granting agency may receive inaccurate information of actual program expenditures. Recommendation: We recommend the City ensure that during the preparation of the requests for reimbursements and reconciliation to the underlying accounting records any adjustments considered necessary to reconcile these sources be made prior to submission to the granting agency. Managements response: See management’s response on page 83. ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- CITY OF FERNLEY SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2009 84 Finding 08-2: Truckee River Settlement Act Implementation, Providing Water to At-Risk Natural Desert Terminal Lakes, CFDA 15.508 Condition: This finding was a material weakness stating that cash advances were not being limited to immediate cash needs. Cash advances were being requested prior to the related expenditures being made. Recommendation: We recommended procedures be put in place to ensure cash advance requests are not made until the invoices are due. Current status: Implemented. Finding 08-3: Truckee River Settlement Act Implementation, Providing Water to At-Risk Natural Desert Terminal Lakes, CFDA 15.508 Condition: This finding was a material weakness stating Financial Status and Performance Progress reports were not being filed timely. Recommendation: We recommended procedures be put into place to ensure all reports are filed on a timely basis. Current status: Implemented. ---PAGE BREAK--- AUDITOR’S COMMENTS ---PAGE BREAK--- 85 AUDITOR'S COMMENTS June 30, 2009 Statute Compliance The required disclosure on compliance with Nevada Revised Statutes and the Nevada Administrative Code is contained in Note 2 to the financial statements. Progress on Prior Year Statute Compliance The City monitored expenditures during the current year in order to prevent over expenditures; however, refer to Note 2 to the financial statements. Prior Year Recommendations We identified financial weaknesses that were reported as significant deficiencies and material weaknesses. The current status of these findings can be found on the Summary Schedule of Prior Year Audit Findings. Current Year Recommendations Our recommendations for the current year are included in the Schedule of Findings and Questioned Costs. ---PAGE BREAK--- 86 Schedule of Fees Imposed Subject to the Provisions of NRS 354.5989 – Limitation of Fees for Business Licenses Flat Fixed Fees: Business license revenue for the year ended June 30, 2008 $ 137,657 Adjustment to Base: Base year: 1. Percentage increase in population of the local government 0.1% 2. Percentage increase in the Consumer Price Index for the year ending on December 31, next preceding the year for which the limit is being calculated 4.1% Adjusted Base at June 30, 2009 4.1% 143,301 Actual Revenue 168,379 Actual Amount over (under) Allowable Amount $ 25,078 Fee calculated on a Percentage of Gross Revenue: Adjusted base at June 30, 2008 $ 840,310 Percentage change in CPI 1.041 Adjusted base at June 30, 2009 843,533 Actual Revenue 1,031,452 Actual Amount over (under) Allowable Amount $ 187,919 ---PAGE BREAK---