Document Jerome_doc_8e1395305f

1 REQUEST FOR PROPOSALS DATE: March 19, 2025 TO: Financial Partners FROM: Cameron Arial, Municipal Advisor, Urban Renewal Agency of the City of Jerome (JURA) RE: $5,110,000 TIF Revenue Allocation Bonds Dear Financial Partners, JURA is seeking proposals to assist with the financing of projects listed in JURA’s Area 4 plans, which include the East Yakima Road Reconstruction Project, featuring full-depth roadway reconstruction, intersection improvements, utility upgrades, and enhanced drainage systems to support infrastructure modernization, traffic safety, and future development. Responses are due on or before 3 pm MDT on Monday, Apil 21, 2025. Reponses must be emailed directly to [EMAIL REDACTED]. If you have any questions, please email them by 3 pm MDT on Friday, April 4, 2025. Included in this proposal are the submission criteria, list of questions, scoring metric, and response form for your response. Also included are the following pieces of information to assist you in your credit review. Additional information regarding JURA and the City of Jerome can be found at Renewal-Agency and 1. JURA History and Project Description 2. JURA Incremental Revenues and Cash Reserve Analysis 3. Project Lists, Engineers Cost Estimates, and Construction Budgets 4. JURA’s 2025 Budget and Last 3 Years of Audited Financial Statements (Attached) Please note JURA welcomes innovations and alternative forms of financing. Thank you for your ongoing support of Idaho municipalities, JURA and the city of Jerome. Sincerely, Cameron Arial ---PAGE BREAK--- 2 SUBMISSION CRITERIA All proposals submitted for evaluation must include, but are not limited to, the following information. This information should be submitted in 5 pages or less. Proposals will be evaluated based on responses to the questions below. A recommendation will then be presented to JURA for consideration and approval. 1. Assigned Professionals and Firm Description a. Please provide the name, title, address, telephone, and e-mail of the representative who will serve as your firm’s lead contact. Please include a brief resume for this individual. b. Please provide the name, title, address, telephone, and e-mail of any other individuals who will be involved in the process. c. If applicable, disclosure of any conflicts of interest, as stated in MSRB Rule G-17, including finder’s fees, fee splitting, or other contractual arrangements of the firm that could present a real or perceived conflict of interest. Additionally, the firm should disclose any pending investigations, enforcement or disciplinary actions imposed on the firm within the past three years by the SEC or other regulatory bodies. 2. Municipal Finance Experience and Banking Capability a. Provide a list of Idaho municipal financings your firm has assisted with since January 1, 2021. Include the total dollar amount of this list and number of financings. 3. Timing, Structure, and Terms a. JURA would like to close this financing on or before July 21, 2025. Please discuss any concerns or suggestions you may have regarding the timing of this closing. b. JURA plans to set semi-annual payment dates for March 1 and September 1 and structure the financing with a 10-year term. The first two years will be capitalized interest. Regardless, the term of the financing will correspond with the termination date of the Urban Renewal Plan for the Area 4 Urban Renewal Project and the corresponding Area 4 Revenue Allocation Area on December 31, 2034, recognizing the Area 4 Revenue Allocation Area may receive revenue allocation proceeds in 2035. Please discuss any concerns or suggestions you may have regarding this structure. JURA is also open to a construction/perm structure. c. JURA would like to consider a 5-year prepayment option without penalty. Please discuss any concerns or suggestions you may have regarding prepayment. d. JURA anticipates a coverage ratio of 1.25x net annual revenues. Please indicate if this is acceptable or if an alternative is required. If so, a lower ratio is preferred. e. JURA anticipates receiving updated project cost estimates that may impact the borrowing amount. Please discuss any concerns or suggestions you may have if the borrowing amount is adjusted $500,000. 4. Debt Service Reserve Fund (DSRF) a. JURA would prefer not to provide a DSRF. If one is required, please specify the terms and conditions associated with it. If required, a delayed or a funded over time reserve is preferred. If a DSRF is required, JURA would prefer to fund it via the financing. 5. Interest Rate and Fees a. Provide proposed interest rate and structure. b. If any, provide a detailed breakdown of fees and expenses. ---PAGE BREAK--- 3 6. Other a. Provide any insight into the Idaho municipal finance market or any additional information JURA should consider. This may include other financing options, retail banking services or reinvestment options. b. Identify timeline for final credit approval by your bank and a short description of the credit approval process. WRITTEN AGREEMENT REQUIRED The selected firm must be willing to enter into a written Purchase Agreement with JURA. Such Agreement between JURA and the selected responder will be dependent upon the successful negotiation of terms. CONTRACT AND PROPOSAL INFORMATION Submitting a proposal acknowledges your firm has read, understands, and agrees to be bound by and fulfill the requirements and terms and conditions of this RFP and response. 1. Firm Pricing: All fees and expenses as detailed in the proposal are to remain firm through the closing. Any proposal that does not offer to remain firm for the required period shall be considered to be non-responsive. 2. Conflict of Interest: Any officer, employee, agent, representative or member of the council, board, committee, or commission of the responder must disclose any interest or conflict they have in their proposal. 3. Cover Letter: The proposal shall have a cover letter indicating the firm’s willingness to enter into an agreement with JURA. An officer of the company who has the authority to commit the firm to the proposed engagement must sign this letter. Proposals will include the full name, legal status (corporation, state of incorporation, partnership, proprietorship, etc.), business address of the responder, and telephone number. The proposal must be signed by a principal of the business who is authorized to execute any subsequent contract. 4. Costs: All costs associated with the preparation of the proposal, as well as any other related materials and delivery will be borne by the responder. All proposals become the property of JURA. JURA is not responsible for said costs in any event, including but not limited to, termination of the project in whole or in part, rejection of a proposal as non-responsive, or rejection of the responder as unqualified. The entire response to this RFP shall be considered a public record as defined by chapter 1, title 74, Idaho Code. 5. Changes or Modifications: Any changes or modifications to the RFP will be accomplished in writing by addendum. Responders submitting a proposal based on any information other than that contained in this RFP, or any addendum thereto, do so at their own risk. 6. Modifying or Withdrawing Proposals: Responders may modify or withdraw their proposals at any time prior to the submittal deadline mentioned above. JURA requests that any desire to retrieve a proposal for the purpose of withdrawing or to modify a proposal must be submitted in a written request to JURA. Responders may withdraw their offer if JURA and the successful responder ---PAGE BREAK--- 4 cannot agree on contract terms. 7. Rejection of Proposals: JURA reserves the right to reject any or all proposals. JURA may waive any minor irregularity or technical error in the form of a proposal or in compliance with the instructions of the bank. JURA may alter the selection process at any time it is considered to be in the best interest of JURA. Any proposal containing significant deviations from the specifications of the RFP shall be rejected as non-responsive. Responders claiming minor irregularities or technical errors must assume the burden of identifying them and justifying them to JURA in order for the proposal to receive consideration. 8. Free and Competitive Selection: Any agreement or collusion among prospective responders to fix a price or limit competition shall render the proposal void, and such conduct may be unlawful and subject to further proceedings. By submitting a proposal, responders certify that neither the responder nor anyone in its firm or company has either directly or indirectly restrained free and competitive selection, participated in any collusion, or otherwise taken any action unauthorized by JURA or applicable law. 9. Release and Waiver: Responses shall include an authorized signature on the cover letter that the representative of the responder is authorized to bind the responder. By responding to this RFP, the responders acknowledge and agree that the respondent assumes all risks associated with the preparation and submission of its proposal and any subsequent negotiations. The responders hereby unconditionally release and waive any and all claims, causes of action, liabilities and damages against JURA, its officers, commissioners, employees, agents, and affiliates arising from or relating to the issuance, evaluation or rejection of any proposal; any errors or omissions in the RFP process; and/or any modifications, clarifications or withdrawal of the RFP by JURA ---PAGE BREAK--- 5 SCORING METRIC ---PAGE BREAK--- 6 FORM OF PROPOSAL ---PAGE BREAK--- 7 JEROME URBAN RENEWAL AGENCY THE AGENCY The Jerome Urban Renewal Agency (“JURA” or “Agency”), an independent public body corporate and politic duly organized and existing under and by virtue of the Laws of the state of Idaho (State), was formed October 20, 1994, and serves the city of Jerome in south central Idaho. The population of the city of Jerome is approximately 13,135. The following map provides some definition of JURA consisting of approximately 6,555 acres. The Urban Renewal Plan for the Area 4 Urban Renewal Project and the corresponding Revenue Allocation Area (“Area was established by the adoption of City Council Ordinance No. 1134 on November 4, 2014. Area 4 is approximately 77.41 acres. JURA’s designated function is to provide opportunities and tools for attracting and retaining businesses, generating economic development, promoting job creation, remediating deteriorated or deteriorating conditions, and encouraging development of deteriorating and underutilized areas. PROJECT DESCRIPTION The East Yakima Road Reconstruction Project aims to enhance roadway infrastructure, improve traffic flow, and upgrade water utilities along a designated stretch of East Yakima Road to support economic development activity in Area 4. The work is being planned and executed under the guidance of the City of Jerome Engineering Department. The project involves removing existing pavement, excavating and preparing the subgrade, and installing an 8-inch crushed aggregate base, a 12-inch subbase, and a 6-inch asphalt surface. A new concrete intersection at Lincoln Avenue, curb and gutter installations, and improved drainage systems will enhance traffic flow and safety. Utility work includes adjustments to finish grade, a 12-inch C-900 water main extension, and new sewer and water service connections. This will create a water redundancy loop in the area ensuring water flows. Additional work includes erosion control, traffic control, dust abatement, and site restoration. These improvements aim to modernize infrastructure, improve road safety, and support future development. For additional information about JURA, please visit their website at: The video below provides an overview of Jerome’s thriving industrial sector and highlights the role of urban renewal in supporting economic growth. It specifically focuses on Idaho Milk Products’ new ice cream plant facility project, detailing the infrastructure enhancements necessary to accommodate this major investment. Additionally, the video does mention the recently completed Western Dairy Trucking facility and warehouse, as well as the Nelson-Jameson Trucking Logistics Center. Prospective responders will gain valuable context on how this project fits into the broader vision for economic development in the region. ---PAGE BREAK--- 8 JURA AREA MAP Source: JURA AREA 4 ---PAGE BREAK--- 9 JURA BOARD OF COMMISSIONERS The Jerome Urban Renewal Agency Board of Commissioners (“Board”) sets the policies and procedures of JURA, which are implemented by the Administrator of JURA under the direction of the Board. Following is a list of current Board members, their occupations, and their terms of office. Name Position Occupation Service Began Term Expires Kathy Cone Commission Member, Chair Retired February 2016 February 2027 Shonna Fraser Commission Member, Vice Chair Retired January 2018 February 2029 Jason Peterson Commission Member CPA February 2015 February 2025 Bryan Craig Commission Member Insurance Agency June 2018 February 2027 BJ Hess Commission Member Attorney September 2021 February 2029 KEY ADMINISTRATIVE OFFICIALS Administrator. The Administrator is hired by the Board and handles the day-to-day administration and operations of JURA. Mike Williams is JURA’s Administrator. Mike has served as the Jerome City Administrator for 11 years and Administrator for the Agency for the past 10 years. He has extensive experience with municipal planning, project management, and finance. Mike holds a bachelor’s degree in communications and a master’s in public administration. The City of Jerome also provides accounting and engineering services to the Agency. Ross Hyatt (CPA) and Lori McRae handle the accounting and finances for the Agency and Tyson Carpenter (P.E) provides engineering oversite on Agency projects. BUDGETARY PROCESS JURA’s fiscal year begins October 1 and ends September 30 of the following year. The Administrator, together with the Agency Treasurer, is responsible for preparing a draft budget for the Board. The budget is prepared by fund, function and activity, and includes revenue and expense information on the past year and current year estimates and projected expenses for the next fiscal year. Prior to the first Monday in August, the Administrator submits the proposed budget to the Board for review. The Board holds a public hearing and may subtract from or change the proposed budget. No later than September 1, the budget is approved by the Board and filed with the appropriate entities. HISTORY The Idaho Legislature determined that remediating deteriorated and/or deteriorating conditions, redevelopment and revitalization, and economic development within the state of Idaho is an important public purpose, and that the creation of independent urban renewal agencies, separate and distinct from cities, to administer these activities is an efficient and cost-effective method of meeting the goals of Title 50, Chapter 20 (the Idaho Urban Renewal Law) and Chapter 29 (the Local Economic Development Act) Idaho Code. The Local Economic Development Act authorized revenue allocation (tax increment) financing (TIF), a tool that helps fund public infrastructure to support redevelopment and/or development of undeveloped land that is infrastructure challenged, brownfield development, and economic development opportunities. Prior to 2011, an agency was formed when a city or county adopted a resolution to create an urban renewal agency such as JURA. The boundary of an urban renewal district is determined by examining ---PAGE BREAK--- 10 areas of the city that are appropriate for redevelopment (downtown) or development (future business and/or industrial areas). These areas are evaluated to determine eligibility. Eligibility criteria, per Idaho Code, includes deteriorating buildings or sites, defective street layouts, faulty lot layout, insanitary or unsafe conditions, diversity of ownership, tax delinquency, defective and unusual conditions of title, or endangerment of life or property. An additional requirement is that the combined base values of the existing revenue allocation areas must be less than 10 percent of the total assessed taxable value of the city of Jerome. AREA 4 Area 4, managed by JURA was formed to facilitate economic development by improving public infrastructure, encouraging private investment, and addressing deteriorating conditions within Area 4. Covering approximately 80 acres near South Tiger Drive and 200 South Road East, the project focuses on revitalizing underutilized industrial and commercial land through strategic public and private partnerships. Key Objectives • Public Infrastructure Enhancements: Construction and improvement of roads, sidewalks, curbs, gutters, storm drainage, and water and sewer systems to support industrial and commercial growth. • Public and Private Development: Facilitating site preparation, property acquisition, and redevelopment to attract businesses and stimulate economic activity. • Utility Upgrades: Expansion of water supply, fire flow improvements, underground utilities, and fiber optic installations to modernize the area. • Traffic and Safety Improvements: Upgraded roadway corridors, improved vehicular circulation, and enhanced pedestrian accessibility. • Environmental Remediation: Addressing potential environmental concerns and ensuring compliance with land use regulations. PROJECT MAP Source: JURA ---PAGE BREAK--- 11 REVENUE SOURCES The revenues of JURA include all earnings, revenues and moneys received by JURA from or on account of the operation of the Agency, including TIF revenues, and are available to fund the activities of JURA. TIF is generated once a revenue allocation area is established. Then property tax revenues begin to be separated into two groups – the base assessed value and the increment value. See the figure below for more detail on how TIF revenues are generated. THE BASE THE INCREMENT The revenues that are collected based on the value of properties within the boundaries of the revenue allocation area at the time the district is formed are allocated to the overlapping taxing districts. Revenues collected based on increased property values within the revenue allocation area from the time the revenue allocation area is created until it is closed are allocated to the urban renewal agency. The revenues allocated to the agency are then used to fund eligible projects consistent with the urban renewal plan. The increased investment and/or public projects completed in the revenue allocation area is likely to generate more taxable value than was originally possible. This revenue from the increased value is allocated to JURA for the duration of the revenue allocation area. These are the revenues that are primarily pledged to pay debt service. Once the revenue allocation area sunsets, the increment values are available to taxing entities for budget and levy setting, plus budget capacity increases subject to certain budgetary limitations. A separate ad valorem tax levy is not authorized for the payment of the principal and interest on the financing as JURA does not have taxing authority. TAX INCREMENT FINANCING GRAPH 1 TAX INCREMENT FINANCING GRAPH 2 This graph shows how budget increases would look for taxing districts without a TIF. Without a TIF, many areas see no major development for many years. This graph shows economic growth due to TIF. At termination of a revenue allocation area, the overlapping taxing districts can use the increased values in budget-levy setting, including for budget capacity increases. ---PAGE BREAK--- 12 AUTHORIZATION FOR ISSUANCE The financing with the selected responder will be entered into pursuant to a bond resolution adopted by the JURA Board and under and in accordance with the Idaho Urban Renewal Law and the Local Economic Development Act. REDEMPTION PROVISIONS Optional Redemption. It is anticipated that the financing will be subject to redemption without penalty in whole or in part, at the discretion of JURA. It is the preference of the Agency to prepay its bonds without penalty. JURA is open to any standard redemption requirements of the selected responder. SECURITY FOR THE FINANCING The financing represents a revenue obligation of JURA. TIF revenues from Area 4 are pledged to the payment of the financing, subject to agency operations and existing developer reimbursement agreements. The revenues include TIF revenues and earnings thereon received by JURA from or on account of the operation of Area 4. A separate ad valorem tax levy is not authorized for the payment of the principal and interest on the financing as JURA does not have separate taxing authority. The financing is not an obligation of the State or any political subdivision thereof other than JURA. The financing is payable from amounts on deposit in JURAs Area 4 Bond Fund (Bond Fund). The Bond Fund will at all times be completely segregated and set apart from all other funds and accounts of JURA for the security and the payment of the principal and interest on the financing as payments become due. The financing is not a direct obligation of the City of Jerome, the State or any political subdivision thereof other than JURA, which does not have taxing powers. SECURITY INFORMATION The financing is secured by a pledge payable solely from the Net TIF Revenues of Area 4. Net TIF Revenues are defined as the TIF Revenues of Area 4 less Operating Expenses and payments under existing developer reimbursement agreements. The financing is not a general obligation of JURA, and neither the full faith and credit of JURA, Jerome County, or the state of Idaho. SOURCE OF PAYMENT In connection with the issuance of the financing, JURA has the power to pledge all TIF revenues from only Area 4 for the repayment of the financing. FUNDS AND ACCOUNTS The bond resolution creates funds and/or accounts that will be held and administered by a Trustee or JURA. These funds may include a Revenue Fund, Construction Fund, Cost of Issuance Fund, Debt Service Reserve Fund, and Bond Fund. ADDITIONAL COVENANTS For the protection and security of the financing, JURA is open to considering the following covenants: A. Annual Budget. JURA shall complete its budget no later than September 1 of each year and shall confirm a budgeted amount equal to the required debt service on the financing. ---PAGE BREAK--- 13 B. Complete Project. JURA, either directly or in coordination with the city of Jerome, will complete the procurement and acquisition assets, in anticipation of completing the construction of the Project, with all practical dispatch and in a sound and economical manner. C. Professional Operations. JURA or the City of Jerome will construct improvements in an efficient and economical manner consistent with Idaho procurement laws, and projects will be delivered in Area 4 at the lowest possible cost consistent with sound economy and prudent management. D. Good Repair. JURA will operate, maintain, preserve, and keep the Projects and every part thereof in good repair, working order, and condition. E. Preserve Security. JURA will preserve and protect the security of the financing and the rights of the selected responder. F. Service Financing. JURA will pay and cause to be paid punctually the principal of the financing and the interest thereon on the date or dates and at the place or places and in the manner described in the Financing. G. Pay Claims. JURA will pay and discharge any and all lawful claims for labor, materials, and supplies which, if unpaid, might by law become a lien or charge upon the revenue of the system, or any part of said revenue, prior or superior to the lien of the financing or which might impair the security of the financing, to the end that the priority and security of the financing shall be fully preserved and protected. H. Accounts. JURA will keep proper and separate accounts and records in which complete and separate entries shall be made of all transactions relating to the system and will furnish financial audits in accordance with a future Information Reporting Agreement. I. Continuing Disclosure. JURA, if applicable, shall comply with and carry out all of the provisions of a future Information Reporting Agreement as may be necessary and appropriate. ---PAGE BREAK--- 14 AREA 4 INCREMENTAL REVENUES & CASH RESERVE ANALYSIS Source: JURA, Idaho Milk Products and Clearwater Financial; Hypothetical and subject to change; Assumes 3% inflation. O&M expenses are allocated based on District activity rather than a fixed budget percentage. Historically, Area 4 has incurred minimal expenses due to low activity. However, with the ongoing financing and reimbursement agreement, 2025 expenses may appear elevated but are expected to normalize in subsequent years. Additionally, reimbursement). Property Owner Taxable Value Northside Development $346,094 Nelson Jameson $4,555,507 Western Dairy Transport $1,871,418 Idaho Milk Products $52,453,778 ---PAGE BREAK--- 15 AREA 4 BUDGET & PROJECTS LIST Source: JURA; Preliminary estimates ---PAGE BREAK--- 16 AREA 4 SCHEDULE OF EVENTS Distribute RFP March 19, 2025 Questions Due (3:00 PM MDT) April 4, 2025 Submissions Due (3:00 PM MDT) April 21, 2025 RFP Selection May 1, 2025 Closing July 21, 2025 ---PAGE BREAK--- FY 2022-23 FY 2024-25 ACTUAL BUDGET ACTUAL PROPOSED (Est.) REVENUE: Area 3 Cash Carryover and Reserve Funds - $ 4,170,825 $ - $ 3,959,582 $ Tax Increment Revenue 268,182 $ 320,726 $ 256,000 $ 414,924 $ Property Tax Replacement 6,591 $ 6,389 $ 6,390 $ 6,390 $ Bond Proceeds - $ - $ - $ - $ Other Revenue (Governmental or Inv. Earnings) 199,554 $ 32,562 $ 201,400 $ 106,590 $ Area 4 Cash Carryover and Reserve Funds - $ 110,821 $ - $ 110,455 $ Tax Increment Revenue 22,717 $ 32,440 $ 32,944 $ 37,250 $ Property Tax Replacement 673 $ 673 $ 672 $ 673 $ Other Revenue (Governmental or Inv. Earnings) 3,298 $ 375 $ 4,000 $ 2,620 $ Area 5 Cash Carryover and Reserve Funds - $ 4,163,386 $ - $ 3,596,267 $ Tax Increment Revenue 241,725 $ 240,784 $ 239,000 $ 212,457 $ Property Tax Replacement 6,188 $ 6,389 $ 6,390 $ 6,390 $ Bond Proceeds - $ - $ - $ - $ Other Revenue (Governmental or Inv. Earnings) 2,442,918 $ 37,812 $ 400,944 $ 135,885 $ TOTAL REVENUES 3,191,844 $ 9,123,182 $ 1,147,740 $ 8,589,482 $ EXPENDITURES: Area 3 Office Supplies and Postage - $ 24 $ - $ 24 $ Operating Supplies - $ 48 $ 70 $ 48 $ Professional Services 19,498 $ 24,393 $ 29,300 $ 40,353 $ Advertising and Publishing 321 $ 356 $ 450 $ 359 $ Insurance 861 $ 974 $ 960 $ 1,152 $ Dues and Subscriptions 2,254 $ 2,185 $ 594 $ 641 $ Debt Service 212,425 $ 233,200 $ 233,200 $ 261,000 $ Other Purchased Services 1,507 $ 595 $ 221 $ 500 $ Misc. Expense - $ 25 $ 8 $ 25 $ Economic Dev. Reimbursement Payments 58,208 $ 60,000 $ 146,348 $ 4,026,624 $ Administration Expense 7,789 $ 9,020 $ 9,020 $ 9,186 $ Economic Development Support 12,250 $ 11,875 $ 11,875 $ 11,875 $ Capital Outlay - $ 4,187,809 $ - $ 135,701 $ Area 4 Office Supplies and Postage - $ 3 $ - $ 3 $ Operating Supplies - $ 5 $ 7 $ 5 $ Professional Services 3,127 $ 1,115 $ 1,946 $ 2,795 $ Advertising and Publishing 33 $ 38 $ 49 $ 38 $ Insurance 88 $ 103 $ 101 $ 121 $ Dues and Subscriptions 230 $ 230 $ 62 $ 68 $ Debt Service - $ - $ - $ - $ Misc. Expense - $ 25 $ - $ 25 $ Administration Expense 935 $ 949 $ 949 $ 967 $ Economic Development Support 1,250 $ 1,250 $ 1,250 $ 1,250 $ Capital Outlay - $ 140,592 $ - $ 145,727 $ Area 5 Office Supplies and Postage - $ 24 $ - $ 24 $ Operating Supplies - $ 48 $ 20 $ 48 $ Professional Services 33,215 $ 10,593 $ 15,690 $ 16,203 $ Advertising and Publishing 302 $ 356 $ 313 $ 359 $ Insurance 808 $ 974 $ 960 $ 1,152 $ Dues and Subscriptions 2,116 $ 2,185 $ 594 $ 641 $ Debt Service 234,404 $ 218,050 $ 218,050 $ 218,050 $ Misc. Expense 1,042 $ 1,042 $ 110 $ 500 $ Economic Dev. Reimbursement Payments 968,893 $ - $ 762,634 $ 2,667,000 $ Administration Expense 6,880 $ 9,020 $ 9,020 $ 9,186 $ Economic Development Support 11,500 $ 11,875 $ 11,875 $ 11,875 $ Capital Outlay - Construction 376,826 $ 4,194,205 $ 804,617 $ 1,025,963 $ TOTAL EXPENDITURES 1,956,762 $ 9,123,182 $ 2,260,293 $ 8,589,482 $ I, Lori S. McCrae, Treasurer of the Jerome Urban Renewal Agency, do hereby certify that the foregoing is a true and correct statement of the proposed expenditures and revenues for fiscal year 2024-25, all of which have been tentatively approved. Lori S. McCrae Lori S. McCrae, Agency Treasurer FY 2023-24 Jerome Urban Renewal Agency Adopted Budget for Fiscal Year 2024-25 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY A COMPONENT UNIT OF THE CITY OF JEROME, IDAHO FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2021 ---PAGE BREAK--- TABLE OF CONTENTS PAGE Independent Auditors’ Report 1-2 Management’s Discussion and Analysis 3-8 Basic Financial Statements: Government-wide Financial Statements: Statement of Net 9 Statement of Activities 10 Fund Financial Statements: Governmental Funds: Balance Sheet 11 Statement of Revenue, Expenditures and Changes in Fund Balance 12 Notes to Financial Statements 13-20 Required Supplementary Information: Budgetary Comparison Schedules 21-24 Notes to Required Supplementary Information 25 Independent Auditors’ 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 26-27 ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2021 I. Background. The City of Jerome Urban Renewal Agency offers readers an overview of its financial activities in a narrative form called the “Management’s Discussion and Analysis.” This report highlights the general fiscal health of the Agency, outlines key financial decisions that were initiated by the Agency’s leadership and identifies future financial priorities and activities. In order to fully understand the financial statements included in the Agency’s Audit, residents should first read the Management’s Discussion and Analysis document. It is our goal that through its reading, our citizens will be better informed and involved. II. Understanding this Report. This Management’s Discussion and Analysis report is broken into three major components that include Government-wide financial statements which provide information for the Agency as a whole; fund financial statements which provide detailed information for the Agency’s significant funds; and notes to the financial statements which provide additional information that is essential to understanding the government-wide and fund statements. This report covers the Fiscal Year that began on October 1, 2020 and ended on September 30, 2021. It provides financial comparisons and analyzes financial trends, designed to provide the reader with better understanding of the Agency’s overall financial health. The Agency’s financial statements are broken into two categories: Government-Wide Financial Statements and Fund Financial Statements. a. Government-Wide Financial Statements. Government-wide financial statements, presented on pages 9-10 of the financial statements, are designed to provide readers with a broad overview of the Agency’s finances, in a manner similar to a private sector business. The statement of net position presents information on all of the City of Jerome Urban Renewal Agency’s assets and liabilities with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Agency is improving or deteriorating. In other words, it will help to show the solvency of the Agency. The statement of activities presents information showing how the government’s net position and liabilities changed during the most recent fiscal year. All changes in net position are reported as they occur, regardless of the timing of related cash flows. This is accrual accounting and thus, revenues and expenditures are reported in this statement for some items that might not reflect actual cash flows until future fiscal periods. The government-wide financial statements include all of the Agency’s services, which are primarily supported by property taxes (tax increment revenue) and interest income. The Agency has no business-type activities. The governmental activities of the City of Jerome Urban Renewal Agency include general government administration and operations. 3 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2021 b. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been separated for specific activities or objectives. Government Funds. Government funds are used to account for essentially the same activities as previously identified under governmental activities in the government-wide financial statement. However, unlike the government-wide financial statements, governmental fund financial statements, presented on pages 11-12 of the financial statements, focus on near- term inflows and outflows of Agency liquid resources as well as balances of liquid resources at the end of the fiscal year. Such information is helpful when determining the Agency’s near-term financing requirements and health. 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 both as readers may better understand the long-term impact of the government’s near-term financing decisions. The City of Jerome Urban Renewal Agency currently maintains four governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for these major funds. The Agency adopts an annual budget. Budgetary comparison statements for all 4 fund areas are found on Pages 21 to 24. Revenues exceeded expenditures by $984,964 for Area 2; revenues exceeded expenditures by $186,751 for Area 3; revenues exceeded expenditures by $21,923 for Area 4; and revenues exceeded expenditures by $223,351 for Area 5. If the reader comes upon “Notes to the Financial Statements” or “Other Information,” these sections are to provide additional narrative and required supplementary information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. III. Health of the Agency – Financial Statements Overview a. Government-Wide Financial Analysis. One important question to ask about the Agency’s finances is, “Is the Agency better or worse off as a result of the previous year’s activities?” The information in the government-wide financial statement helps answer this question because it captures all agency assets and liabilities using the accrual basis of accounting. In this way, all of the Agency’s financial transactions both in revenues and expenditures are captured for the long-term and the near-term and one can see the true financial health of the Agency. 4 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2021 For the City of Jerome Urban Renewal Agency for the Fiscal Year 2021, changes in governmental assets and liabilities were as follows: As indicated in Table 3.1, for the year ended September 30, 2021, cash and investments made up 83% of the Agency assets. Over the previous two years the Agency acquired land in Area 3. Typically when the Agency purchases capital assets, they are donated to the City of Jerome. In this instance the Agency plans to improve the property to be more appealing to developers and eventually sell it to a private party. At the end of the fiscal year, the Agency is able to report a positive net position of $3,074,153. When looking at the Agency’s net position, the other area to look at is the restricted and unrestricted totals. The $458,416 designated as committed funds represent amounts that are subject to external restrictions on how they may be used. These assets are related to debt service required for the issuance of revenue related debt. 5 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2021 Table 3.2, Change in Net Position, reflects the overall change in net position for the City of Jerome Urban Renewal Agency. For the fiscal year 2021, the Agency’s total revenues were $2,824,092 while total expenses were $382,980. The Agency reports a $2,441,112 increase in net position. A more detailed accounting of the fund activities can be found on page 12 of the audit. b. Fund Financial Analysis. As noted earlier, the City of Jerome Urban Renewal Agency uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Government Funds. The focus of the Agency’s governmental fund reporting is to provide information on near-term inflows, outflows, and balances of spendable resources. Perhaps the key area to look at in government fund balance sheets is the final unrestricted fund balance as they indicate resources available for spending at the end of the fiscal year. At the end of this last fiscal year, the Agency reported a positive fund equity balance of $3,272,570 of which $2,814,154 is committed for spending by the Agency. The remainder of the fund balance of $458,416 is restricted to indicate that it is not available for new spending because it has already been reserved to pay for debt service. In summary, the City of Jerome Urban Renewal Agency is financially healthy with a combined total of $3,272,570 in restricted and committed assets. 6 Table 3.2 Change in Net Position Governmental Governmental Total Total Activities Activities FY 2020 FY 2021 FY 2020 FY 2021 Revenues Program Revenues: Charges for Service $0 $0 $0 $0 Operating grants and contributions $0 $268,965 $0 $268,965 General Revenues: Property Taxes $2,193,402 $2,544,521 $2,193,402 $2,544,521 Investment Earnings $14,836 $10,606 $14,836 $10,606 Total Revenues $2,208,238 $2,824,092 $2,208,238 $2,824,092 Expenses Urban Renew al Projects: Southeast Industrial Area 2 $186,166 $37,413 $186,166 $37,413 Dow ntow n Area 3 $284,360 $0 $284,360 $0 Support Services $71,441 $345,567 $71,441 $345,567 Total Expenses $541,967 $382,980 $541,967 $382,980 Change in Net Position $1,666,271 $2,441,112 $1,666,271 $2,441,112 Net Position - beginning as reported ($1,033,230) $633,041 ($1,033,230) $633,041 Net Position - ending $633,041 $3,074,153 $633,041 $3,074,153 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2021 IV. Capital Assets and Debt Management Administration a. Capital Assets. Capital Assets such as streets, street improvements, water, sewer, and other capital improvements, which the Agency pays for, are most-often donated to the City of Jerome, Idaho. However, over the previous two years the Agency purchased real property and will not be donating it to the City. There were no major assets paid for by the Agency and donated to the City of Jerome. b. Debt Management and Administration. As of September 30, 2021, the Agency had total debt of $301,433. This amount reflects revenue bond debt and loan proceeds to pay the cost of acquisition and construction of various urban renewal projects. The table of long-term debt is as follows: The City of Jerome Urban Renewal Agency pledges the incremental tax revenues and all funds in the bond fund and the debt service reserve fund for the payment of the bonds. 7 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2021 V. Fiscal Year 2022 Fiscal Priorities In August of 2021, the City of Jerome Urban Renewal Agency Commissioners and City Staff developed the Fiscal Year 2022 spending priorities to help focus the efforts of the Agency’s resources in the current fiscal year that began on October 1, 2021 and ends on September 30, 2022. Those priorities and their associated dollar amounts are as follows: As an urban renewal agency operating in the State of Idaho, the Agency’s revenue flexibility is quite limited, but conversely, quite stable. Property tax resources flow to the agency through the tax increment process of “revenue allocation” as it is termed in Idaho law. The City of Jerome Urban Renewal Agency currently has four separate revenue allocation areas. Area 2 is commonly referred to as the “Southeast Industrial Project Area”. Area 3 is called the “Downtown Improvement Project Area. As well as Area 4 and Area 5 that have not yet been assigned project names. Previously, the Agency had an additional revenue allocation area. Area 1 was commonly referred to as the “South Lincoln Project Area”. The Agency filed the South Lincoln Area termination ordinance with the Office of the Jerome County Recorder, County Assessor and Idaho State Tax Commissioner on October 11, 2012. Prior to September 30, 2014 existing surplus was remitted to the County Treasurer for distribution to the taxing entities within the revenue allocation area. Conclusion. This financial report is designed to provide a general overview of the City of Jerome Urban Renewal Agency’s finances for all those with an interest in the government’s finances and activities. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Mike Williams, Executive Director, 152 East Avenue A, Jerome, Idaho 83338. Mike Williams Executive Director City of Jerome Urban Renewal Agency 8 Table 5.1 2022 Fiscal Priorities Item Area Projected Cost Explanation Infrastructure Area 2 $4,037,232 Projects to be determined Infrastructure Area 3 $596,831 Projects to be determined Infrastructure Area 4 $77,918 Projects to be determined Infrastructure Area 5 $722,460 Projects to be determined Total Projects $5,434,441 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY STATEMENT OF NET POSITION SEPTEMBER 30, 2021 The accompanying notes are an integral part of the financial statements 9 Governmental ASSETS: Activities Cash and Investments 2,836,053 $ Deferred charges 165 Restricted assets: Cash and investments 458,416 Capital assets: Land 102,851 Total Assets 3,397,485 LIABILITIES: Accounts payable - trade and other accrued liabilities 6,899 Refundable Deposits 15,000 Long-term liabilities: Current portion 174,552 Noncurrent portion 126,881 Total Liabilities 323,332 NET POSITION Net investment in capital assets 102,851 Restricted for debt repayment and reimbursable deposits 458,416 Unrestricted 2,512,886 Total Net Position 3,074,153 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2021 The accompanying notes are an integral part of the financial statements 10 Operating Charges for Grants and Governmental Functions/Programs: Expenses Services Contributions Activities Governmental Activities: Urban renewal projects 37,413 $ - $ - $ (37,413) $ Support services 345,567 - 268,965 (76,602) Total governmental activities 382,980 $ - $ 268,965 $ (114,015) General Revenues: Property taxes 2,544,521 Unrestricted investment earnings 10,606 Total general revenues 2,555,127 Change in net position 2,441,112 Net position beginning of year 633,041 Net position-ending 3,074,153 $ Net (Expense) Revenue and Changes in Net Position Program Revenues ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BALANCE SHEET - GOVERNMENTAL FUNDS SEPTEMBER 30, 2021 The accompanying notes are an integral part of the financial statements 11 Southeast Downtown Industrial Improvements Project Project Total Area 2 Area 3 Area 4 Area 5 Governmental ASSETS: Pooled cash and investments 1,989,130 $ 378,041 $ 54,669 $ 414,213 $ 2,836,053 $ Restricted cash 458,416 - - - 458,416 TOTAL ASSETS 2,447,546 $ 378,041 $ 54,669 $ 414,213 $ 3,294,469 $ LIABILITIES: Accounts payable - trade 1,445 $ 4,795 $ 167 $ 492 $ 6,899 $ Refundable deposits - 15,000 - - 15,000 TOTAL LIABILITIES 1,445 19,795 167 492 21,899 FUND BALANCES: Restricted for debt repayment 458,416 - - - 458,416 Committed 1,987,685 358,246 54,502 413,721 2,814,154 TOTAL FUND BALANCES 2,446,101 358,246 54,502 413,721 3,272,570 TOTAL LIABILITIES AND FUND BALANCES 2,447,546 $ 378,041 $ 54,669 $ 414,213 $ 3,294,469 $ Reconciliation to the Statement of Net Position: Total fund equity 3,272,570 $ Capital assets used in governmental activites are not financial resources and, therefore, are not reported in the funds 102,851 Deferred charges and related amortization are recognized in full in the year incurred and are not capitalized and amortized in the funds 165 Long-term liabilities are not due and payable in the current period, and therfore, are not reported in the funds (301,433) Total Net Position 3,074,153 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2021 The accompanying notes are an integral part of the financial statements 12 Southeast Downtown Industrial Improvements Project Project Total Area 2 Area 3 Area 4 Area 5 Governmental REVENUE: Property Taxes 2,038,172 $ 277,532 $ 22,888 $ 205,929 $ 2,544,521 $ Grant Income 215,281 22,945 2,736 28,003 268,965 Interest Earned 7,242 1,252 252 1,860 10,606 Other - - - - - 2,260,695 301,729 25,876 235,792 2,824,092 EXPENDITURES: Current: Professional services 6,260 26,401 1,915 8,069 42,645 Advertising and publishing 164 217 22 45 448 Insurance and bonds 564 750 77 155 1,546 Dues and subscriptions 1,679 2,231 230 460 4,600 Personnel training - - - - - Administration expense 3,309 5,812 459 1,212 10,792 Economic development support 269,125 12,125 1,250 2,500 285,000 Inside engineering expense - - - - - Other purchased services - 536 - - 536 Miscellaneous expense - - - - - Capital Outlay: Urban Renewal Projects - - - - - Debt service 994,630 66,906 - - 1,061,536 1,275,731 114,978 3,953 12,441 1,407,103 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES 984,964 186,751 21,923 223,351 1,416,989 FUND BALANCE SEPTEMBER 30, 2020 1,461,137 171,495 32,579 190,370 1,855,581 FUND BALANCE SEPTEMBER 30, 2021 2,446,101 $ 358,246 $ 54,502 $ 413,721 $ 3,272,570 $ Reconciliation to the Statement of Activities: Total net change in fund balances 1,416,989 $ Repayment of note principal is reported as an expenditure in the governmental funds, but the payment reduces long-term liabilities in the Statement of Net Assets 928,904 Revenues and expenditures in the Statement of Activities that do not provide or use current financial resources are not reported as revenues or expenditures in the funds 100,000 Amortization of deferred charges is recognized in the Statement of Activities, but not in the Fund Financial Statement (4,781) Change in Net Position 2,441,112 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2021 Note 1 - Summary of Significant Accounting Policies A) Basis of Presentation The financial statements of the Jerome Urban Renewal Agency (Agency) are presented in conformity with accounting principles generally accepted in the United States of America for governmental units as prescribed by the Governmental Accounting Standards Board (GASB) and other authoritative sources. GASB is responsible for establishing generally accepted accounting principles (GAAP) for state and local governments through its pronouncements. B) Financial Reporting Entity The Jerome Urban Renewal Agency (Agency) was organized in 1994 under the Idaho Urban Renewal Law of 1965. The Agency is governed by a five-person Board of Commissioners appointed by the Mayor of the City of Jerome with the advice and consent of the City Council. Generally accepted accounting principles require government financial statements to include the primary government and its component units. Component units of a governmental entity are legally separate entities for which the primary government is considered to be financially accountable and for which the nature and significance of their relationship with the primary government are such that exclusion would cause the combined financial statements to be misleading or incomplete. The primary government is considered to be financially accountable if it appoints a majority of an organization’s governing body and imposes its will on that organization. The primary government may also be financially accountable if an organization is fiscally dependent on the primary government, regardless of the authority of the organization’s governing board. Based on the application of the criteria set forth by the Governmental Accounting Standards Board, management has determined that there are no entities which would be component units of the Agency. For financial reporting purposes, in conformity with governmental accounting standards, the Agency is included as a component unit of the City of Jerome, Idaho’s financial statements. The Agency provides urban renewal services to the City and its citizens. These statements present only the funds of the Agency and are not intended to present the financial position and results of operations of the City of Jerome, Idaho in conformity with generally accepted accounting principles. C) Government-Wide and Fund Financial Statements The Agency’s financial statements include the activities of the Agency. The Agency’s government-wide financial statements provide both short-term and long- term information about the Agency’s overall financial status. Fund financial statements focus on the individual activities of the Agency, reporting the Agency’s operations in more detail than the government-wide financial statements. Government-wide financial statements - The government-wide financial statements are designed to provide readers with a broad overview of the Agency’s finances in a manner similar to a private-sector business. The government-wide financial statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities for the Agency accompanied by a total column. Fiduciary activities of the Agency are not included in these statements. These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. 13 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2021 The Statement of Net Position presents information on all of the Agency’s assets and liabilities, including capital assets as well as infrastructure assets and long-term liabilities, with the difference between the two presented as net position (deficit). Net position is divided into three components: a. Invested in capital assets, net of related debt - consists of the historical cost of capital assets less accumulated depreciation and less any debt that remains outstanding that was used to finance those assets. b. Restricted net position - consists of balances that are restricted by the Agency’s creditors (for example, through debt covenants), by state enabling legislation (through restrictions on shared revenues), by grantors (both federal and state), and by other contributors (including those who have donated to the Agency). c. Unrestricted - all other balances are reported in this category. The Statement of Activities presents information showing how the net position changed during the most recent year. All changes in net position are reported as soon as the underlying event gives rise to the change that occurs, regardless of the timing of the 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). Amounts reported as program revenues on the government-wide financial statements include charges for services - amounts received from customers or applicants who purchase, use or directly benefit from the goods, services or privileges provided by the Agency, program-specific operating grants and contributions, and program-specific capital grants and contributions. General revenues consist of taxes and all other revenues that do not meet the definition of program revenues. Special items are significant transactions or events within the control of management that are either unusual in nature or infrequent in occurrence. Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. Fund Financial Statements – The Agency, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. 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 use a current financial resources measurement focus and the modified accrual basis of accounting, focusing on the near-term inflows and outflows of spendable resources, and balances of spendable resources available at fiscal year-end. 14 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2021 Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual when they are measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collected within the current period or expected to be collected soon enough thereafter (usually 60 days) to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt, which is recognized when the obligations are expected to be liquidated with expendable available financial resources. Property taxes are susceptible to accrual. Other receipts become measurable and available when the cash is received by the government and are recognized as revenue at that time. 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 balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds. An accompanying schedule is presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net position and changes in net position presented in the Government-Wide financial statements. The Agency has presented all major funds that met those qualifications. In addition, the Agency has presented certain funds as major funds because the Agency believes the financial position and activities of these funds are significant to the Agency as a whole. The Agency reports the following major governmental funds: a. Southeast Industrial Project Area – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Southeast Industrial Project revenue allocation area. b. Downtown Improvement Project Area – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Downtown Improvement Project revenue allocation area. c. Area 4 – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Area 4 revenue allocation area. d. Area 5 – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Area 5 revenue allocation area. D) Use of Restricted Funds When both restricted and unrestricted resources are available for use, it is the Agency’s policy to use restricted resources first, then unrestricted resources as they are needed. 15 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2021 E) Long-term Debt Obligations In the government-wide financial statements long-term debt is reported as a liability. Bond discounts and issuance costs are deferred and amortized over the term of the bonds using the effective interest rate method. Bond premiums/discounts are presented as an addition to/reduction of the face amount of bonds payable, whereas issuance costs are recorded as deferred charges. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums and discounts on debt issuances are reported as other financing sources and other financing uses, respectively. F) Property Tax Calendar Property taxes for each year are levied in September of that year with the first half of real property taxes and all personal property and mobile home taxes due on December 20th. Taxes not paid on or before December 20th are considered to be delinquent. The second half of the real property taxes is due June 20th of the following year and is considered to be delinquent on June 21st. An initial late penalty of 2% of tax plus 1% per month interest charge is assessed on all delinquent taxes. A tax lien is filed for property whose taxes become three years delinquent. Taxes collected by the County are remitted to the Agency on a basis. Property tax revenue is recognized when it becomes available. Available means when due, or past due and receivable within the current period, or expected to be collected soon enough thereafter to be used to pay liabilities of the current period, which period is not to exceed 60 days. G) Interfund Activity Permanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For the purpose of the statement of activities, all interfund transfers between individual governmental funds have been eliminated. H) Capital Assets Capital assets, which includes only land, are reported in the government-wide financial statements. Assets are capitalized when they have a useful life in excess of one year and have a cost of $5,000 or more. Purchased or constructed capital assets are valued at cost or estimated historical cost if actual cost is unavailable. Donated assets are reported at fair value at the time received. There is no depreciation recorded for land. I) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Note 2 - Cash and Investments Cash balances of the Agency’s funds are pooled for investment purposes. The individual funds’ portions of the pool’s cash and investments are reported as “pooled cash and investments.” Investments are stated at fair value (quoted market price or the best available estimate). The Agency does not have a written investment policy. 16 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2021 For deposits, custodial credit risk is the risk that, in the event of a bank failure, the government’s deposits may not be returned to it. The Agency does not have a deposit policy for custodial credit risk. At September 30, 2021, the carrying amount of the Agency’s deposits with financial institutions (after considering outstanding and other reconciling items) was $60,057 and the bank balance was $60,057. All funds were insured or collateralized. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Agency will not be able to recover the value of its investments that are in the possession of an outside party. The elected State Treasurer, following Idaho Code Section 67-2328, is authorized to sponsor an investment pool in which the Agency voluntarily participates. The Pool is not registered with the Securities and Exchange Commission or any other regulatory body. Oversight is with the State Treasurer and Idaho Code defines allowable investments. All investments are entirely insured or collateralized with securities held by the Pool or by its agent in the Pool’s name and the fair value of the Agency’s position in the external investment pool is the same as the value of the pool shares. The fund was assigned an AAAf fund credit quality rating and S1+ volatility rating by Standard & Poor’s Rating Service in 2009. The Agency’s investment in the State of Idaho Local Government Investment Pool as of September 30, 2021, was $3,234,412. The Agency receives peak net cash inflows during the first quarter of the fiscal year. Cash and investments meeting the criteria as uninsured may, at times during the fiscal year, significantly exceed the uninsured balance at the September 30th fiscal year-end. All of the Agency’s restricted assets are reserved for debt repayment. Reconciliation of carrying amount to cash numbers on the financial statements: Sources of cash: Deposits with financial institutions $ 60,057 Local Government Investment Pool, at fair value 3,234,412 $3,294,469 Cash on financial statements: Pooled cash and investments $2,836,053 Restricted assets 458,416 $3,294,469 Note 3 – Capital Assets Capital asset activity for the fiscal year ended September 30, 2021 was as follows: 17 Balance Balance October September Governmental activities: 1, 2020 Increases Decreases 30, 2021 Land 102,851 $ - $ - $ 102,851 $ Net capital assets 102,851 $ - $ - $ 102,851 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2021 Note 4 – Changes in Long Term Liabilities As of September 30, 2021, the Agency had incurred other obligations which were payable in future fiscal periods. Since payment of these obligations is outside of the Agency's current operating cycle, they did not require current appropriation and expenditure of governmental fund-type resources. These obligations are as follows: Bonds Payable - Series 2008 The Agency issued a note to provide financing to pay the cost of construction of an Urban Renewal Project. The interest rate is 4.6% for Series A and 6.55% for Series B with semi-annual interest payments due each April 1st and October 1st and annual principal payments of varying principal amounts due each April 1st. Additional principal payments of $169,479 for Series A and $343,981 for Series B were also made during the year ended September 30, 2021. The principal balance as of September 30, 2021, is $110,451. Miscellaneous Payable – Commercial Creamery Company of Idaho, Inc. The Agency entered into a reimbursement participation agreement with Commercial Creamery on December 18, 2018. The Agency shall disburse a portion of the revenue allocation for actual eligible costs not to exceed $300,000. As the payable carries no interest rate, the unamortized discount was calculated using an effective interest rate of 5.5%. For the year ended September 30, 2021 cash payments of $66,906 less amortized discount of $3,488 for a total of $63,418 were made. Subsequent payments are required on or before March 1 and September 1 of each year through September 1, 2034 or at which time the maximum reimbursement has been distributed. Based on previous payments, it is projected full payment will occur on or before September 1, 2024. The principal balance as of September 30, 2021 is $201,486 less unamortized discount of $10,504 for a total of $190,982. Long-term liability activity for the year ended September 30, 2021, was as follows: Balance Addi- Balance Amounts October tional September Due Within 1, 2020 Debt Payments 30, 2021 One Year Bonds payable - Series 2008 $ 972,449 $ $ 861,998 $ 110,451 $ 110,451 Commercial Creamery (net of amortized discount) 254,400 63,418 190,982 64,101 $1,226,849 $ $ 925,416 $ 301,433 $ 174,552 As of September 30, 2021, debt service requirements to maturity for principal and interest, for general long-term debt obligations, are as follows: 18 Year Ended Principal Interest Total 2022 174,552 $ 6,848 $ 181,400 $ 2023 64,101 3,525 67,626 2024 62,780 3,452 66,232 2025 - - - 2026 - - - 2027 - - - 301,433 $ 13,825 $ 315,257 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2021 Note 5 - Risk The Agency is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. Commercial insurance is purchased to cover these risks. Note 6 - Pledge for Payment of the Bonds The Agency pledges the incremental tax revenues and all funds in the debt reserve fund and the debt service reserve fund for the payment of the bonds and the note. Note 7 – Fund Balances In accordance with GASB Statement No. 54, fund balances are classified as follows:  Nonspendable – amounts that cannot be spent because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.  Restricted – amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments.  Committed – amounts that can be used only for specific purposes determined by a formal action of the Board of Commissioners. The Board of Commissioners is the highest level of decision-making authority for the Agency. Commitments may be established, modified, or rescinded only through ordinances or resolutions approved by the Board of Commissioners.  Assigned – amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. Intent can be expressed by the Agency Commissioners or by an official or body to which the Agency delegates the authority.  Unassigned – all other spendable amounts. As required by GASB 54, the Agency’s establishment, modification, and rescinding of a committed fund balance is decided upon by passage of an annual appropriations resolution by the Agency Commissioners, acting as the highest level of decision-making authority. When expenditures are incurred for which both restricted and unrestricted fund balance are available, the Agency considers restricted to have been spent first. In the case of an expenditure being incurred for purposes for which amounts in any of the unrestricted fund balances could be used, the Agency does not have a formal policy, but defaults to the order as follows: first against committed, then assigned and finally unassigned fund balances as considered to have been spent. As of September 30, 2021, fund balances are composed of the following: 19 Southeast Downtown Industrial Improvement Area 2 Area 3 Area 4 Area 5 Total Debt payment from bond proceeds 458,416 $ - $ - $ - $ 458,416 $ Committed Fund Balances: Operations 1,987,685 358,246 54,502 413,721 2,814,154 Total Fund Balance 2,446,101 $ 358,246 $ 54,502 $ 413,721 $ 3,272,570 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2021 Note 8 – Interest Expense Interest Expense in the following amounts is included under direct expenses on the Statement of Activities: Southeast Industrial Area Project Area 2 $ 32,632 Downtown Improvement Area Project Area 3 3,488 Note 9 – Grant revenue received from the City of Jerome In 2021, the City of Jerome participated in the Governor’s Public Safety Grants Initiative (GPSGI). This initiative used Coronavirus Aid, Relief, and Economic Security (CARES) funds to provide funding for approximately 42% of public safety payroll expenses. As a result, the City’s levy rate decreased providing tax relief to its citizens. However, this also decreased the tax increment revenue to be received by the Agency. The Governor’s executive order stated that participating cities and counties pay the affected urban renewal agencies. As a result, the Jerome Urban Renewal Agency received $268,965 from the City of Jerome. These funds were allocated to each area of the Agency based on the proportional percentage of the property tax received in fiscal year 2020. The funds were utilized for the operation and maintenance of each area. 20 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE SOUTHEAST INDUSTRIAL PROJECT AREA FUND YEAR ENDED SEPTEMBER 30, 2021 21 Over REVENUE: Original Final Actual (Under) Property Taxes 1,748,973 $ 1,748,973 $ 2,038,172 $ 289,199 $ Grant Income - - 215,281 215,281 Interest Earned 23,374 23,374 7,242 (16,132) Total Revenue 1,772,347 1,772,347 2,260,695 488,348 EXPENDITURES: Current: Office supplies and postage 18 18 - (18) Operating supplies 37 37 - (37) Professional services 10,220 10,220 6,260 (3,960) Advertising and publishing 152 152 164 12 Insurance and bonds 564 564 564 - Dues and subscriptions 602 602 1,679 1,077 Administration expense 4,140 4,140 3,309 (831) Economic Development support 9,125 9,125 269,125 260,000 Miscellaneous 25 25 - (25) Capital Outlay - Construction 1,581,440 1,581,440 - (1,581,440) Debt Service 994,065 994,065 994,630 565 Total expenditures 2,600,388 2,600,388 1,275,731 (1,324,657) EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (828,041) $ (828,041) $ 984,964 $ 1,813,005 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE DOWNTOWN IMPROVEMENT AREA FUND YEAR ENDED SEPTEMBER 30, 2021 22 Over REVENUE: Original Final Actual (Under) Property Taxes 191,587 $ 191,587 $ 277,532 $ 85,945 $ Grant Income - - 22,945 22,945 Interest Earned 7,442 7,442 1,252 (6,190) Total Revenue 199,029 199,029 301,729 102,700 EXPENDITURES: Current: Office supplies and postage 24 24 - (24) Operating supplies 49 49 - (49) Professional services 13,580 13,580 26,401 12,821 Advertising and publishing 203 203 217 14 Insurance and bonds 750 750 750 - Dues and subscriptions 800 800 2,231 1,431 Administration expense 5,501 5,501 5,812 311 Economic Development support 12,125 12,125 12,125 - Other purchased services - - 536 536 Miscellaneous 25 25 - (25) Capital Outlay - Construction 238,867 238,867 - (238,867) Debt Service 67,614 67,614 66,906 (708) Total expenditures 339,538 339,538 114,978 (224,560) EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (140,509) $ (140,509) $ 186,751 $ 327,260 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE AREA 4 FUND YEAR ENDED SEPTEMBER 30, 2021 23 Over REVENUE: Original Final Actual (Under) Property Taxes 22,757 $ 22,757 $ 22,888 $ 131 $ Grant Income - - 2,736 2,736 Interest Earned 767 767 252 (515) Total Revenue 23,524 23,524 25,876 2,352 EXPENDITURES: Current: Office supplies and postage 3 3 - Operating supplies 5 5 - Professional services 1,400 1,400 1,915 515 Advertising and publishing 21 21 22 1 Insurance and bonds 77 77 77 - Dues and subscriptions 82 82 230 148 Administration expense 567 567 459 (108) Economic Development support 1,250 1,250 1,250 - Miscellaneous 25 25 - (25) Capital Outlay - Construction 39,184 39,184 - (39,184) Debt Service - - - - Total expenditures 42,614 42,614 3,953 (38,661) EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (19,090) $ (19,090) $ 21,923 $ 41,013 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE AREA 5 FUND YEAR ENDED SEPTEMBER 30, 2021 24 Over REVENUE: Original Final Actual (Under) Property Taxes 228,111 $ 228,111 $ 205,929 $ (22,182) $ Grant Income - - 28,003 28,003 Interest Earned 1,534 1,534 1,860 326 Total Revenue 229,645 229,645 235,792 6,147 EXPENDITURES: Current: Office supplies and postage 5 5 - Operating supplies 10 10 - (10) Professional services 2,800 2,800 8,069 5,269 Advertising and publishing 42 42 45 3 Insurance and bonds 155 155 155 - Dues and subscriptions 165 165 460 295 Administration expense 1,134 1,134 1,212 78 Economic Development support 2,500 2,500 2,500 - Miscellaneous 25 25 - (25) Capital Outlay - Construction 378,384 378,384 - (378,384) Total expenditures 385,220 385,220 12,441 (372,779) EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (155,575) $ (155,575) $ 223,351 $ 378,926 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED SEPTEMBER 30, 2021 NOTE 1 - BUDGETARY INFORMATION A) Budgetary-GAAP Reporting Reconciliation The accompanying Budgetary Comparison Schedule for all Areas compares the legally adopted budget with actual data on a budgetary basis. Accounting principles applied for purposes of developing data on the budgetary basis do not differ significantly from those used to present financial statements in conformity with generally accepted accounting principles (GAAP). B) Budgetary Policies Jerome Urban Renewal Agency prepares an annual budget of revenue and expenditures prior to the beginning of the fiscal year. The budget is prepared on the modified accrual basis of accounting. Budget figures are based on prior levels of revenue and expenditures taking into account specific items which may be planned in advance by the District such as capital outlay expenditures. Any excess of budgeted expenditures over budgeted revenue are temporary situations and are budgeted so as to utilize cash balances in the individual fund. C) Excess of Expenditures Over Appropriations None of the Budgetary Comparison Schedules show an excess of expenditures over appropriations. 25 ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY A COMPONENT UNIT OF THE CITY OF JEROME, IDAHO FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2022 ---PAGE BREAK--- TABLE OF CONTENTS PAGE Independent Auditors’ Report 1-3 Management’s Discussion and Analysis 4-9 Basic Financial Statements: Government-wide Financial Statements: Statement of Net 10 Statement of Activities 11 Fund Financial Statements: Governmental Funds: Balance Sheet 12 Statement of Revenue, Expenditures and Changes in Fund Balance 13 Notes to Financial Statements 14-21 Required Supplementary Information: Budgetary Comparison Schedules 22-25 Notes to Required Supplementary Information 26 Independent Auditors’ 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 27-28 ---PAGE BREAK--- Certified Public Accountants March 29, 2023 Independent Auditor’s Report Board of Commissioners Jerome Urban Renewal Agency Jerome, Idaho 83338 Report on the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities and each major fund of the Jerome Urban Renewal Agency (Agency), a component unit of the City of Jerome, Idaho, as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the Agency as of September 30, 2022, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Agency and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Agency's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 1 ---PAGE BREAK--- Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Agency's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis; the budgetary comparison information; and the Notes to Required Supplementary Information as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 2 ---PAGE BREAK--- Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2023, on our consideration of the Agency's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Agency's internal control over financial reporting and compliance. 3 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2022 I. Background. The City of Jerome Urban Renewal Agency offers readers an overview of its financial activities in a narrative form called the “Management’s Discussion and Analysis.” This report highlights the general fiscal health of the Agency, outlines key financial decisions that were initiated by the Agency’s leadership and identifies future financial priorities and activities. In order to fully understand the financial statements included in the Agency’s Audit, residents should first read the Management’s Discussion and Analysis document. It is our goal that through its reading, our citizens will be better informed and involved. II. Understanding this Report. This Management’s Discussion and Analysis report is broken into three major components that include Government-wide financial statements which provide information for the Agency as a whole; fund financial statements which provide detailed information for the Agency’s significant funds; and notes to the financial statements which provide additional information that is essential to understanding the government-wide and fund statements. This report covers the Fiscal Year that began on October 1, 2021 and ended on September 30, 2022. It provides financial comparisons and analyzes financial trends, designed to provide the reader with better understanding of the Agency’s overall financial health. The Agency’s financial statements are broken into two categories: Government-Wide Financial Statements and Fund Financial Statements. a. Government-Wide Financial Statements. Government-wide financial statements, presented on pages 10-11 of the financial statements, are designed to provide readers with a broad overview of the Agency’s finances, in a manner similar to a private sector business. The statement of net position presents information on all of the City of Jerome Urban Renewal Agency’s assets and liabilities with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Agency is improving or deteriorating. In other words, it will help to show the solvency of the Agency. The statement of activities presents information showing how the government’s net position and liabilities changed during the most recent fiscal year. All changes in net position are reported as they occur, regardless of the timing of related cash flows. This is accrual accounting and thus, revenues and expenditures are reported in this statement for some items that might not reflect actual cash flows until future fiscal periods. The government-wide financial statements include all of the Agency’s services, which are primarily supported by property taxes (tax increment revenue) and interest income. The Agency has no business-type activities. The governmental activities of the City of Jerome Urban Renewal Agency include general government administration and operations. 4 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2022 b. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been separated for specific activities or objectives. Government Funds. Government funds are used to account for essentially the same activities as previously identified under governmental activities in the government-wide financial statement. However, unlike the government-wide financial statements, governmental fund financial statements, presented on pages 12-13 of the financial statements, focus on near- term inflows and outflows of Agency liquid resources as well as balances of liquid resources at the end of the fiscal year. Such information is helpful when determining the Agency’s near-term financing requirements and health. 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 both as readers may better understand the long-term impact of the government’s near-term financing decisions. The City of Jerome Urban Renewal Agency currently maintains four governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for these major funds. The Agency adopts an annual budget. Budgetary comparison statements for all 4 fund areas are found on Pages 22 to 25. Expenditures exceeded revenues by $1,563,383 for Area 2. The spending in excess of revenues was intentional as Area 2 was in the final phase of being closed out. Revenues exceeded expenditures by $3,919,338 for Area 3; revenues exceeded expenditures by $22,701 for Area 4. Area 5 had revenues exceeding expenditures by $4,111,758. If the reader comes upon “Notes to the Financial Statements” or “Other Information,” these sections are to provide additional narrative and required supplementary information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. III. Health of the Agency – Financial Statements Overview a. Government-Wide Financial Analysis. One important question to ask about the Agency’s finances is, “Is the Agency better or worse off as a result of the previous year’s activities?” The information in the government-wide financial statement helps answer this question because it captures all agency assets and liabilities using the accrual basis of accounting. In this way, all of the Agency’s financial transactions both in revenues and expenditures are captured for the long-term and the near-term and one can see the true financial health of the Agency. 5 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2022 For the City of Jerome Urban Renewal Agency for the Fiscal Year 2022, changes in governmental assets and liabilities were as follows: As indicated in Table 3.1, for the year ended September 30, 2022, cash and investments made up 14% of the Agency assets. During this year the Agency acquired land in Area 5. Typically when the Agency purchases capital assets, they are donated to the City of Jerome. In this instance the Agency plans to develop the property into a sports and recreational park that will be donated to the Jerome Recreational District once completed. At the end of the fiscal year, the Agency is able to report a positive net position of $1,147,184. When looking at the Agency’s net position, the other area to look at is the restricted and unrestricted totals. The $8,350,537 designated as committed funds represent amounts that are subject to external restrictions on how they may be used. These assets are related to debt service required for the issuance of revenue related debt and the bond proceeds restrict for infrastructure construction projects in Area 3 and Area 5. 6 Table 3.1 Net Position Governmental Governmental Total Total Activities Activities FY 2021 FY 2022 FY 2021 FY 2022 Current Assets Cash and Investments $2,836,053 $1,473,207 $2,836,053 $1,473,207 Restricted Assets $458,416 $8,350,537 $458,416 $8,350,537 Deferred Charges $165 $0 $165 $0 Non Current Assets $102,851 $821,699 $102,851 $821,699 Total Assets $3,397,485 $10,645,443 $3,397,485 $10,645,443 Current Liabilities Payables and Deposits $21,899 $987,134 $21,899 $987,134 Current Portion LTD $174,552 $84,711 $174,552 $84,711 Non‐Current Liabilities $126,881 $8,426,414 $126,881 $8,426,414 Total Liabilities $323,332 $9,498,259 $323,332 $9,498,259 Net Position: Invested in Capital Assets $102,851 $821,699 $102,851 $821,699 Committed $458,416 $8,350,537 $458,416 $8,350,537 Unrestricted $2,512,886 ‐$8,025,052 $2,512,886 ‐$8,025,052 Total Net Position: $3,074,153 $1,147,184 $3,074,153 $1,147,184 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2022 Table 3.2, Change in Net Position, reflects the overall change in net position for the City of Jerome Urban Renewal Agency. For the fiscal year 2022, the Agency’s total revenues were $2,800,086 while total expenses were $4,727,055. The Agency reports a decrease in net position of $1,926,969. A more detailed accounting of the fund activities can be found on page 13 of the audit. b. Fund Financial Analysis. As noted earlier, the City of Jerome Urban Renewal Agency uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Government Funds. The focus of the Agency’s governmental fund reporting is to provide information on near-term inflows, outflows, and balances of spendable resources. Perhaps the key area to look at in government fund balance sheets is the final unrestricted fund balance as they indicate resources available for spending at the end of the fiscal year. At the end of this last fiscal year, the Agency reported a positive fund equity balance of $9,762,984 of which $1,412,447 is committed for spending by the Agency. The remainder of the fund balance of $8,350,537 is restricted to indicate that it is not available for new spending because it has already been reserved to pay for debt service and infrastructure construction projects. In summary, the City of Jerome Urban Renewal Agency is financially healthy with a combined total of $9,762,984 in restricted and committed assets. 7 Table 3.2 Change in Net Position Governmental Governmental Total Total Activities Activities FY 2021 FY 2022 FY 2021 FY 2022 Revenues Program Revenues: Charges for Service $0 $0 $0 $0 Operating grants and contributions $268,965 $0 $268,965 $0 Capital grants and contributions $0 $200,000 $0 $200,000 General Revenues: Property Taxes $2,544,521 $2,591,920 $2,544,521 $2,591,920 Investment Earnings $10,606 $7,962 $10,606 $7,962 Refunds and reimbrsements $10,606 $204 $10,606 $204 Total Revenues $2,824,092 $2,800,086 $2,834,698 $2,800,086 Expenses Urban Renew al Projects: Southeast Industrial Area 2 $37,413 $863,319 $37,413 $863,319 Dow ntow n Area 3 $0 $0 $0 $0 Cash to County for Area 2 closure $0 $3,421,917 $0 $3,421,917 Support Services $345,567 $155,434 $345,567 $155,434 Bond issuance costs $0 $216,689 $0 $216,689 Interest on long-term liabilities $0 $69,696 $0 $69,696 Total Expenses $382,980 $4,727,055 $382,980 $4,727,055 Change in Net Position $2,441,112 ($1,926,969) $2,441,112 ($1,926,969) Net Position - beginning as reported $633,041 $3,074,153 $633,041 $3,074,153 Net Position - ending $3,074,153 $1,147,184 $3,074,153 $1,147,184 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2022 IV. Capital Assets and Debt Management Administration a. Capital Assets. Capital Assets such as streets, street improvements, water, sewer, and other capital improvements, which the Agency pays for, are donated to the City of Jerome, Idaho. Over past several years the Agency purchased real property and will not be donating it to the City. Previous years purchased land will be held for resale at a later date while the land purchase in fiscal year 2022 will be developed and donated to the Jerome Recreation District of Jerome, Idaho. There were no major assets paid for by the Agency and donated to the City of Jerome in fiscal year 2022. b. Debt Management and Administration. As of September 30, 2022, the Agency had total debt of $8,511,125. This amount reflects revenue bond debt and loan proceeds to pay the cost of acquisition and construction of various urban renewal projects. The table of long-term debt is as follows: The City of Jerome Urban Renewal Agency pledges the incremental tax revenues and all funds in the bond fund and the debt service reserve fund for the payment of the bonds. 8 Table 4.2 Long-Term Debt Balance Additions Payment Balance 1-Oct-21 Adjustments 30-Sep-22 Governmental Activities: Bonds Payable $110,451 $8,377,305 ($110,451) $8,377,305 Commercial Creamery $190,982 $0 ($57,162) $133,820 Total $301,433 $8,377,305 ($167,613) $8,511,125 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2022 V. Fiscal Year 2023 Fiscal Priorities In August of 2022, the City of Jerome Urban Renewal Agency Commissioners and City Staff developed the Fiscal Year 2022 spending priorities to help focus the efforts of the Agency’s resources in the current fiscal year that began on October 1, 2022 and ends on September 30, 2023. Those priorities and their associated dollar amounts are as follows: As an urban renewal agency operating in the State of Idaho, the Agency’s revenue flexibility is quite limited, but conversely, quite stable. Property tax resources flow to the agency through the tax increment process of “revenue allocation” as it is termed in Idaho law. The City of Jerome Urban Renewal Agency currently has three active revenue allocation areas. Area 3 is called the “Downtown Improvement Project Area. As well as Area 4 and Area 5 that have not yet been assigned project names. On September 27, 2022 the Agency filed the termination ordinance with the Office of the Jerome County Recorder, County Assessor and Idaho State Tax Commission to dissolve the Southeast Industrial Project Area, commonly known as Area 2. Prior to September 30, 2022 all existing surplus, except $882,718 that was held for expenses payable in 2023, was remitted to the County Treasurer for distribution to the taxing entities within the revenue allocation area. Previously the Agency had a fifth revenue allocation area known as the “South Lincoln Project Area”. This area was terminated September 30, 2014. Conclusion. This financial report is designed to provide a general overview of the City of Jerome Urban Renewal Agency’s finances for all those with an interest in the government’s finances and activities. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Mike Williams, Executive Director, 152 East Avenue A, Jerome, Idaho 83338. Mike Williams Executive Director City of Jerome Urban Renewal Agency 9 Table 5.1 2023 Fiscal Priorities Item Area Projected Cost Explanation Infrastructure Area 3 $473,349 Projects to be determined Infrastructure Area 4 $99,813 Projects to be determined Infrastructure Area 5 $2,415,845 South Side Park project & miscellaneous projects to be determined Total Projects $2,989,007 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY STATEMENT OF NET POSITION SEPTEMBER 30, 2022 The accompanying notes are an integral part of the financial statements 10 Governmental ASSETS: Activities Cash and Investments 1,473,207 $ Restricted assets: Cash and investments 8,350,537 Capital assets: Land and construction in progress 821,699 Total Assets 10,645,443 LIABILITIES: Accounts payable - trade and other accrued liabilities 909,079 Refundable Deposits 15,000 Interest payable 63,055 Long-term liabilities: Current portion 84,711 Noncurrent portion 8,426,414 Total Liabilities 9,498,259 NET POSITION Net investment in capital assets 821,699 Restricted for debt repayment and construction projects 8,350,537 Unrestricted (8,025,052) Total Net Position 1,147,184 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2022 The accompanying notes are an integral part of the financial statements 11 Operating Capital Charges for Grants and Grants and Governmental Functions/Programs: Expenses Services Contributions Contributions Activities Governmental Activities: Urban renewal projects 4,285,236 $ - $ - $ 200,000 $ (4,085,236) $ Support services 155,434 - - - (155,434) Bond issuance costs 216,689 - - - (216,689) Interest on long-term liabilities & obligations 69,696 - - - (69,696) Total governmental activities 4,727,055 $ - $ - $ 200,000 $ (4,527,055) General Revenues: Property taxes 2,591,920 Unrestricted investment earnings 7,962 Refunds and reimbursements 204 Total general revenues 2,600,086 Change in net position (1,926,969) Net position beginning of year 3,074,153 Net position-ending 1,147,184 $ Net (Expense) Revenue and Changes in Net Position Program Revenues ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BALANCE SHEET - GOVERNMENTAL FUNDS SEPTEMBER 30, 2022 The accompanying notes are an integral part of the financial statements 12 Southeast Downtown Industrial Improvements Project Project Total Area 2 Area 3 Area 4 Area 5 Governmental ASSETS: Pooled cash and investments 885,906 $ 337,477 $ 77,651 $ 172,173 $ 1,473,207 $ Restricted Cash: Construction funds - 3,770,857 - 4,170,946 7,941,803 Debt service reserve funds - 187,972 - 220,762 408,734 TOTAL ASSETS 885,906 $ 4,296,306 $ 77,651 $ 4,563,881 $ 9,823,744 $ LIABILITIES: Accounts payable - trade 3,188 $ 3,722 $ 448 $ 38,402 $ 45,760 $ Refundable deposits - 15,000 - - 15,000 TOTAL LIABILITIES 3,188 18,722 448 38,402 60,760 FUND BALANCES: Restricted for debt repayment - 187,972 - 220,762 408,734 Restricted for infrastructure construction - 3,770,857 - 4,170,946 7,941,803 Committed 882,718 318,755 77,203 133,771 1,412,447 TOTAL FUND BALANCES 882,718 4,277,584 77,203 4,525,479 9,762,984 TOTAL LIABILITIES AND FUND BALANCES 885,906 $ 4,296,306 $ 77,651 $ 4,563,881 $ 9,823,744 $ Reconciliation to the Statement of Net Position: Total fund equity 9,762,984 $ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 821,699 Payables expected to be paid in the next year but not soon enough use the current period's revenues are not included in the funds (926,374) Long-term liabilities are not due and payable in the current period, and therefore, are not reported in the funds (8,298,820) Deferred premiums and related amortization are recognized in full in the year incurred and are not capitalized and amortized in the funds (212,305) Total Net Position 1,147,184 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2022 The accompanying notes are an integral part of the financial statements 13 Southeast Downtown Industrial Improvements Project Project Total Area 2 Area 3 Area 4 Area 5 Governmental REVENUE: Property Taxes 1,996,274 $ 294,710 $ 26,144 $ 274,792 $ 2,591,920 $ Interest Earned 5,942 1,375 22 623 7,962 Other 204 - - - 204 2,002,420 296,085 26,166 275,415 2,600,086 EXPENDITURES: Current: Professional services 13,889 38,505 1,220 28,831 82,445 Advertising and publishing 795 438 1 425 1,659 Insurance and bonds 602 820 84 167 1,673 Dues and subscriptions 1,679 2,231 230 460 4,600 Personnel training - - - - - Administration expense 4,135 6,673 680 2,998 14,486 Economic development support 9,000 37,250 1,250 2,500 50,000 Other purchased services - 536 - - 536 Miscellaneous expense - 33 - - 33 Cash to County for Area Closure 3,421,917 - - - 3,421,917 Bond issuance costs - 99,583 - 117,106 216,689 Capital Outlay: Urban Renewal Projects - - - 718,848 718,848 Debt service 113,786 60,305 - - 174,091 3,565,803 246,374 3,465 871,335 4,686,977 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (1,563,383) 49,711 22,701 (595,920) (2,086,891) OTHER FINANCING SOURCES (USES) Capital Contributions - - - 200,000 200,000 Bond Proceeds - 3,755,000 - 4,410,000 8,165,000 Bond Premiums - 114,627 - 97,678 212,305 - 3,869,627 - 4,707,678 8,577,305 EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (1,563,383) 3,919,338 22,701 4,111,758 6,490,414 FUND BALANCE SEPTEMBER 30, 2021 2,446,101 358,246 54,502 413,721 3,272,570 FUND BALANCE SEPTEMBER 30, 2022 882,718 $ 4,277,584 $ 77,203 $ 4,525,479 $ 9,762,984 $ Reconciliation to the Statement of Activities: Total net change in fund balances 6,490,414 $ Governmental funds report bond proceeds and premiums as revenue, but the proceeds increase long-term liabilities in the Statement of Net Position (8,377,305) Repayment of note principal is reported as an expenditure in the governmental funds, but the payment reduces long-term liabilities in the Statement of Net Position 170,757 Governmental funds report the acquistion or construction of capital assets as expenditures, but the payment increases capital assets in the Statement of Net Assets 718,848 Revenues and expenditures in the Statement of Activities that do not provide or use current financial resources are not reported as revenues or expenditures in the funds (926,374) Amortization of deferred charges and debt discounts are recognized in the Statement of Activities, but not in the Fund Financial Statements (3,309) Change in Net Position (1,926,969) $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2022 Note 1 - Summary of Significant Accounting Policies A) Basis of Presentation The financial statements of the Jerome Urban Renewal Agency (Agency) are presented in conformity with accounting principles generally accepted in the United States of America for governmental units as prescribed by the Governmental Accounting Standards Board (GASB) and other authoritative sources. GASB is responsible for establishing generally accepted accounting principles (GAAP) for state and local governments through its pronouncements. B) Financial Reporting Entity The Jerome Urban Renewal Agency (Agency) was organized in 1994 under the Idaho Urban Renewal Law of 1965. The Agency is governed by a five-person Board of Commissioners appointed by the Mayor of the City of Jerome with the advice and consent of the City Council. Generally accepted accounting principles require government financial statements to include the primary government and its component units. Component units of a governmental entity are legally separate entities for which the primary government is considered to be financially accountable and for which the nature and significance of their relationship with the primary government are such that exclusion would cause the combined financial statements to be misleading or incomplete. The primary government is considered to be financially accountable if it appoints a majority of an organization’s governing body and imposes its will on that organization. The primary government may also be financially accountable if an organization is fiscally dependent on the primary government, regardless of the authority of the organization’s governing board. Based on the application of the criteria set forth by the Governmental Accounting Standards Board, management has determined that there are no entities which would be component units of the Agency. For financial reporting purposes, in conformity with governmental accounting standards, the Agency is included as a component unit of the City of Jerome, Idaho’s financial statements. The Agency provides urban renewal services to the City and its citizens. These statements present only the funds of the Agency and are not intended to present the financial position and results of operations of the City of Jerome, Idaho in conformity with generally accepted accounting principles. C) Government-Wide and Fund Financial Statements The Agency’s financial statements include the activities of the Agency. The Agency’s government-wide financial statements provide both short-term and long- term information about the Agency’s overall financial status. Fund financial statements focus on the individual activities of the Agency, reporting the Agency’s operations in more detail than the government-wide financial statements. Government-wide financial statements - The government-wide financial statements are designed to provide readers with a broad overview of the Agency’s finances in a manner similar to a private-sector business. The government-wide financial statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities for the Agency accompanied by a total column. Fiduciary activities of the Agency are not included in these statements. These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. 14 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2022 The Statement of Net Position presents information on all of the Agency’s assets and liabilities, including capital assets as well as infrastructure assets and long-term liabilities, with the difference between the two presented as net position (deficit). Net position is divided into three components: a. Invested in capital assets, net of related debt - consists of the historical cost of capital assets less accumulated depreciation and less any debt that remains outstanding that was used to finance those assets. b. Restricted net position - consists of balances that are restricted by the Agency’s creditors (for example, through debt covenants), by state enabling legislation (through restrictions on shared revenues), by grantors (both federal and state), and by other contributors (including those who have donated to the Agency). c. Unrestricted - all other balances are reported in this category. The Statement of Activities presents information showing how the net position changed during the most recent year. All changes in net position are reported as soon as the underlying event gives rise to the change that occurs, regardless of the timing of the 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). Amounts reported as program revenues on the government-wide financial statements include charges for services - amounts received from customers or applicants who purchase, use or directly benefit from the goods, services or privileges provided by the Agency, program-specific operating grants and contributions, and program-specific capital grants and contributions. General revenues consist of taxes and all other revenues that do not meet the definition of program revenues. Special items are significant transactions or events within the control of management that are either unusual in nature or infrequent in occurrence. Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. Fund Financial Statements – The Agency, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. 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 use a current financial resources measurement focus and the modified accrual basis of accounting, focusing on the near-term inflows and outflows of spendable resources, and balances of spendable resources available at fiscal year-end. 15 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2022 Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual when they are measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collected within the current period or expected to be collected soon enough thereafter (usually 60 days) to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt, which is recognized when the obligations are expected to be liquidated with expendable available financial resources. Property taxes are susceptible to accrual. Other receipts become measurable and available when the cash is received by the government and are recognized as revenue at that time. 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 balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds. An accompanying schedule is presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net position and changes in net position presented in the Government-Wide financial statements. The Agency has presented all major funds that met those qualifications. In addition, the Agency has presented certain funds as major funds because the Agency believes the financial position and activities of these funds are significant to the Agency as a whole. The Agency reports the following major governmental funds: a. Southeast Industrial Project Area – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Southeast Industrial Project revenue allocation area. This area is in the final phase of termination. b. Downtown Improvement Project Area – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Downtown Improvement Project revenue allocation area. c. Area 4 – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Area 4 revenue allocation area. d. Area 5 – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Area 5 revenue allocation area. D) Use of Restricted Funds When both restricted and unrestricted resources are available for use, it is the Agency’s policy to use restricted resources first, then unrestricted resources as they are needed. 16 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2022 E) Long-term Debt Obligations In the government-wide financial statements long-term debt and obligations are reported as a liability in the statement of net position. Bond premiums and discounts are deferred and amortized over the term of the bonds using the effective interest rate method. Bond payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. F) Property Tax Calendar Property taxes for each year are levied in September of that year with the first half of real property taxes and all personal property and mobile home taxes due on December 20th. Taxes not paid on or before December 20th are considered to be delinquent. The second half of the real property taxes is due June 20th of the following year and is considered to be delinquent on June 21st. An initial late penalty of 2% of tax plus 1% per month interest charge is assessed on all delinquent taxes. A tax lien is filed for property whose taxes become three years delinquent. Taxes collected by the County are remitted to the Agency on a basis. Property tax revenue is recognized when it becomes available. Available means when due, or past due and receivable within the current period, or expected to be collected soon enough thereafter to be used to pay liabilities of the current period, which period is not to exceed 60 days. G) Interfund Activity Permanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For the purpose of the statement of activities, all interfund transfers between individual governmental funds have been eliminated. H) Capital Assets Capital assets, which includes only land, are reported in the government-wide financial statements. Assets are capitalized when they have a useful life in excess of one year and have a cost of $5,000 or more. Purchased or constructed capital assets are valued at cost or estimated historical cost if actual cost is unavailable. Donated assets are reported at fair value at the time received. There is no depreciation recorded for land. I) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Note 2 - Cash and Investments Cash balances of the Agency’s funds are pooled for investment purposes. The individual funds’ portions of the pool’s cash and investments are reported as “pooled cash and investments.” Investments are stated at fair value (quoted market price or the best available estimate). The Agency does not have a written investment policy. 17 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2022 For deposits, custodial credit risk is the risk that, in the event of a bank failure, the government’s deposits may not be returned to it. The Agency does not have a deposit policy for custodial credit risk. At September 30, 2022, the carrying amount of the Agency’s deposits with financial institutions (after considering outstanding and other reconciling items) was $50,204 and the bank balance was $204. All funds were insured or collateralized. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Agency will not be able to recover the value of its investments that are in the possession of an outside party. The elected State Treasurer, following Idaho Code Section 67-2328, is authorized to sponsor an investment pool in which the Agency voluntarily participates. The Pool is not registered with the Securities and Exchange Commission or any other regulatory body. Oversight is with the State Treasurer and Idaho Code defines allowable investments. All investments are entirely insured or collateralized with securities held by the Pool or by its agent in the Pool’s name and the fair value of the Agency’s position in the external investment pool is the same as the value of the pool shares. The fund was assigned an AAAf fund credit quality rating and S1+ volatility rating by Standard & Poor’s Rating Service in 2009. The Agency’s investment in the State of Idaho Local Government Investment Pool as of September 30, 2022, was $9,364,806. The Agency receives peak net cash inflows during the first quarter of the fiscal year. Cash and investments meeting the criteria as uninsured may, at times during the fiscal year, significantly exceed the uninsured balance at the September 30th fiscal year-end. All of the Agency’s restricted assets are reserved for debt repayment. Reconciliation of carrying amount to cash numbers on the financial statements: Sources of cash: Deposits with financial institutions $ 50,204 Local Government Investment Pool, at fair value 9,364,806 US Bank Debt Service Reserve Funds 408,734 $ 9,823,744 Cash on financial statements: Pooled cash and investments $ 1,473,207 Restricted assets 8,350,537 $ 9,823,744 Note 3 – Capital Assets Capital asset activity for the fiscal year ended September 30, 2022 was as follows: 18 Balance Balance October September Governmental activities: 1, 2021 Increases Decreases 30, 2022 Land 102,851 $ 680,246 $ - $ 783,097 $ Construction in progress - 38,602 - 38,602 Net capital assets 102,851 $ 718,848 $ - $ 821,699 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2022 Note 4 – Changes in Long Term Liabilities As of September 30, 2022, the Agency had incurred other obligations which were payable in future fiscal periods. Since payment of these obligations is outside of the Agency's current operating cycle, they did not require current appropriation and expenditure of governmental fund-type resources. These obligations are as follows: Bonds Payable - Series 2008 The Agency issued a note to provide financing to pay the cost of construction of an Urban Renewal Project. The interest rate is 4.6% for Series A and 6.55% for Series B with semi-annual interest payments due each April 1st and October 1st and annual principal payments of varying principal amounts due each April 1st. Principal payments of $29,296 for Series A and $81,155 for Series B were made on March 1, 2022. These payments paid the debt off. Bonds Payable - Series 2022 The Agency issued a note to provide financing to pay the cost of construction of multiple Urban Renewal Projects. The notes consist of both Serial and Term bonds. The interest rate for the Serial bonds is 4% and the Term bonds interest rate is 5% for both Series A and B. The true interest cost rate is 4.5714% for Series A and 4.8291% for Series B with semi-annual interest payments due each March 1st and September 1st. In addition, annual principal payments of varying principal amounts are due each September 1st. No principal payments were made during the year ended September 30, 2022. The principal balance as of September 30, 2022 is $8,165,000 plus amortized premium of $212,305 for a total of $8,377,305. Miscellaneous Payable – Commercial Creamery Company of Idaho, Inc. The Agency entered into a reimbursement participation agreement with Commercial Creamery on December 18, 2018. The Agency shall disburse a portion of the revenue allocation for actual eligible costs not to exceed $300,000. As the payable carries no interest rate, the unamortized discount was calculated using an effective interest rate of 5.5%. For the year ended September 30, 2022 cash payments of $60,306 less amortized discount of $3,144 for a total of $57,162 were made. Subsequent payments are required on or before March 1 and September 1 of each year through September 1, 2034 or at which time the maximum reimbursement has been distributed. Based on previous payments, it is projected full payment will occur on or before September 1, 2024. The principal balance as of September 30, 2022 is $141,181 less unamortized discount of $7,361 for a total of $133,820. Long-term liability activity for the year ended September 30, 2022, was as follows: Balance Balance Amounts October Additional September Due Within 1, 2021 Debt Payments 30, 2022 One Year Bonds payable - Series 2008 $ 110,451 $ $ 110,451 $ $ Bonds payable - Series 2022 (including amortized premium) 8,377,305 8,377,305 20,610 Commercial Creamery (net of amortized discount) 190,982 57,162 133,820 64,101 $ 301,433 $ 8,377,305 $ 167,613 $ 8,511,125 $ 84,711 19 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2022 As of September 30, 2022, debt service requirements to maturity for principal and interest, for general long-term debt obligations, are as follows: Note 5 - Risk The Agency is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. Commercial insurance is purchased to cover these risks. Note 6 - Pledge for Payment of the Bonds The Agency pledges the incremental tax revenues and all funds in the debt reserve fund and the debt service reserve fund for the payment of the bonds and the note. Note 7 – Fund Balances In accordance with GASB Statement No. 54, fund balances are classified as follows:  Nonspendable – amounts that cannot be spent because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.  Restricted – amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments.  Committed – amounts that can be used only for specific purposes determined by a formal action of the Board of Commissioners. The Board of Commissioners is the highest level of decision-making authority for the Agency. Commitments may be established, modified, or rescinded only through ordinances or resolutions approved by the Board of Commissioners.  Assigned – amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. Intent can be expressed by the Agency Commissioners or by an official or body to which the Agency delegates the authority.  Unassigned – all other spendable amounts. As required by GASB 54, the Agency’s establishment, modification, and rescinding of a committed fund balance is decided upon by passage of an annual appropriations resolution by the Agency Commissioners, acting as the highest level of decision-making authority. 20 Year Ended Principal Interest Total 2023 84,101 $ 430,355 $ 514,456 $ 2024 124,719 400,085 524,804 2025 85,000 394,050 479,050 2026 140,000 390,650 530,650 2027 200,000 385,050 585,050 2028 - 2032 2,265,000 1,729,300 3,994,300 2033 - 2037 3,930,000 914,000 4,844,000 2038 - 2039 1,470,000 113,000 1,583,000 8,298,820 4,756,490 $ 13,055,310 $ Premium on bond less accumulated amortization 212,305 8,511,125 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2022 When expenditures are incurred for which both restricted and unrestricted fund balance are available, the Agency considers restricted to have been spent first. In the case of an expenditure being incurred for purposes for which amounts in any of the unrestricted fund balances could be used, the Agency does not have a formal policy, but defaults to the order as follows: first against committed, then assigned and finally unassigned fund balances as considered to have been spent. As of September 30, 2022, fund balances are composed of the following: Note 8 – Grant revenue received from the City of Jerome The City of Jerome received funds as a part of the American Rescue Plan Act (ARPA). A committee was formed to determine the best possible use of the funds in relation to the federal rules on how the funds could be spent. The committee recommended the City use some of the funds to support a green space and connectivity project that would serve disadvantaged parts of Jerome. Based on the recommendation of the committee, the City of Jerome council elected to award the Agency $200,000 as a subrecipient of the ARPA funds. The Agency had identified property in Area 5 to be purchased and developed as a public recreational and sports park. These funds were used towards the purchase of the land. Note 9 – Commitments The Agency entered into a capital reimbursement agreement with developer Jerome Pacific Associates on July 7, 2022. The developer intends to construct affordable housing in Area 3. The project will also include the construction and installation of certain public infrastructures adjacent to the project. Once completed the Agency will reimburse Jerome Pacific a portion of the eligible costs not to exceed $778,329. As of September 30, 2022, the project was in the beginning phase of construction. Note 10 – Subsequent Event On November 3, 2022, the Agency passed Resolution 11-22 authorizing the reimbursement agreement between the Agency and the business Nelson-Jameson for site remediation costs. The reimbursement will be 75% of the tax increment generated after the completion of the project but not to exceed $354,000. Note 11 – Closure of Southeast Industrial Project Area On September 27, 2022, the Agency filed the termination ordinance with the Office of the Jerome County Recorder and the Idaho State Tax Commission to terminate Southeast Industrial Project Area, more commonly known as Area 2. Prior to the end of the fiscal year of 2022 the existing surplus of $3,421,917 was remitted to the Jerome County Treasurer to be distributed to the taxing districts within the Area. $882,718 of the Area funds were held back by the Agency to pay for expenses payable in 2023. Any surplus after these expenses are paid will be remitted to the County Treasurer by September 30, 2023. 21 Southeast Downtown Industrial Improvement Restricted Fund Blalances: Area 2 Area 3 Area 4 Area 5 Total Debt payment from bond proceeds - $ 187,972 $ - $ 220,762 $ 408,734 $ Restrict for infrastructure construction - 3,770,857 - 4,170,946 7,941,803 Committed Fund Balances: Operations 882,718 318,755 77,203 133,771 1,412,447 Total Fund Balance 882,718 $ 4,277,584 $ 77,203 $ 4,525,479 $ 9,762,984 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE SOUTHEAST INDUSTRIAL PROJECT AREA FUND YEAR ENDED SEPTEMBER 30, 2022 22 Over REVENUE: Original Final Actual (Under) Property Taxes 2,201,016 $ 2,001,017 $ 1,996,274 $ (4,743) $ Grant Income - - - - Refunds and reimbursements - - 204 204 Interest Earned - 3,936 5,942 2,006 Total Revenue 2,201,016 2,004,953 2,002,420 (2,533) EXPENDITURES: Current: Office supplies and postage 18 - - - Operating supplies 36 - - - Professional services 15,012 8,930 13,889 4,959 Advertising and publishing 171 295 795 500 Insurance and bonds 602 602 602 - Dues and subscriptions 1,656 1,679 1,679 - Administration expense 4,696 4,696 4,135 (561) Economic Development support 9,000 9,000 9,000 - Miscellaneous 25 25,000 - (25,000) Cash to County for Area Closure - 4,828,031 3,421,917 (1,406,114) Capital Outlay 4,037,232 - - - Debt Service 113,786 763,786 113,786 (650,000) Total expenditures 4,182,234 5,642,019 3,565,803 (2,076,216) EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (1,981,218) (3,637,066) (1,563,383) 2,073,683 OTHER FINANCING SOURCES (USES) Capital Contributions - - - - Bond Proceeds - - - - Bond Premiums - - - - Total other financing sources(uses) - - - - EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (1,981,218) $ (3,637,066) $ (1,563,383) $ 2,073,683 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE DOWNTOWN IMPROVEMENT AREA FUND YEAR ENDED SEPTEMBER 30, 2022 23 Over REVENUE: Original Final Actual (Under) Property Taxes 332,052 $ 332,052 $ 294,710 $ (37,342) $ Grant Income - - - - Interest Earned - - 1,375 1,375 Total Revenue 332,052 332,052 296,085 (35,967) EXPENDITURES: Current: Office supplies and postage 25 25 - (25) Operating supplies 49 49 - (49) Professional services 20,433 20,433 38,505 18,072 Advertising and publishing 233 233 438 205 Insurance and bonds 820 820 820 - Dues and subscriptions 2,254 2,254 2,231 (23) Administration expense 6,392 6,392 6,673 281 Economic Development support 37,250 37,250 37,250 - Other purchased services - - 536 536 Miscellaneous 25 25 33 8 Bond issuance costs - - 99,583 99,583 Capital Outlay - Construction 596,831 596,831 - (596,831) Debt Service 68,490 68,490 60,305 (8,185) Total expenditures 732,802 732,802 246,374 (486,428) EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (400,750) (400,750) 49,711 450,461 OTHER FINANCING SOURCES (USES) Capital Contributions - - - - Bond Proceeds - - 3,755,000 3,755,000 Bond Premiums - - 114,627 114,627 Total other financing sources(uses) - - 3,869,627 3,869,627 EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (400,750) $ (400,750) $ 3,919,338 $ 4,320,088 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE AREA 4 FUND YEAR ENDED SEPTEMBER 30, 2022 24 Over REVENUE: Original Final Actual (Under) Property Taxes 28,132 $ 28,132 $ 26,144 $ (1,988) $ Grant Income - - - - Interest Earned - - 22 22 Total Revenue 28,132 28,132 26,166 (1,966) EXPENDITURES: Current: Office supplies and postage 3 3 - Operating supplies 5 5 - Professional services 2,085 2,085 1,220 (865) Advertising and publishing 24 24 1 (23) Insurance and bonds 84 84 84 - Dues and subscriptions 230 230 230 - Administration expense 652 652 680 28 Economic Development support 1,250 1,250 1,250 - Miscellaneous 25 25 - (25) Capital Outlay - Construction 77,918 77,918 - (77,918) Debt Service - - - - Total expenditures 82,276 82,276 3,465 (78,811) EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (54,144) (54,144) 22,701 76,845 OTHER FINANCING SOURCES (USES) Capital Contributions - - - - Bond Proceeds - - - - Bond Premiums - - - - Total other financing sources(uses) - - - - EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (54,144) $ (54,144) $ 22,701 $ 76,845 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE AREA 5 FUND YEAR ENDED SEPTEMBER 30, 2022 25 Over REVENUE: Original Final Actual (Under) Property Taxes 311,745 $ 311,745 $ 274,792 $ (36,953) $ Grant Income - - - - Interest Earned - - 623 623 Total Revenue 311,745 311,745 275,415 (36,330) EXPENDITURES: Current: Office supplies and postage 5 5 - Operating supplies 10 10 - (10) Professional services 4,170 4,170 28,831 24,661 Advertising and publishing 48 48 425 377 Insurance and bonds 167 167 167 - Dues and subscriptions 460 460 460 - Administration expense 1,304 1,304 2,998 1,694 Economic Development support 2,500 2,500 2,500 - Miscellaneous 25 25 - (25) Bond issuance costs - - 117,106 117,106 Capital Outlay - Construction 722,460 722,460 718,848 (3,612) Debt Service - - - - Total expenditures 731,149 731,149 871,335 140,186 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (419,404) (419,404) (595,920) (176,516) OTHER FINANCING SOURCES (USES) Capital Contributions - - 200,000 200,000 Bond Proceeds - - 4,410,000 4,410,000 Bond Premiums - - 97,678 97,678 Total other financing sources(uses) - - 4,707,678 4,707,678 EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (419,404) $ (419,404) $ 4,111,758 $ 4,531,162 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED SEPTEMBER 30, 2022 NOTE 1 - BUDGETARY INFORMATION A) Budgetary-GAAP Reporting Reconciliation The accompanying Budgetary Comparison Schedule for all Areas compares the legally adopted budget with actual data on a budgetary basis. Accounting principles applied for purposes of developing data on the budgetary basis do not differ significantly from those used to present financial statements in conformity with generally accepted accounting principles (GAAP). B) Budgetary Policies Jerome Urban Renewal Agency prepares an annual budget of revenue and expenditures prior to the beginning of the fiscal year. The budget is prepared on the modified accrual basis of accounting. Budget figures are based on prior levels of revenue and expenditures taking into account specific items which may be planned in advance by the District such as capital outlay expenditures. Any excess of budgeted expenditures over budgeted revenue are temporary situations and are budgeted so as to utilize cash balances in the individual fund. C) Excess of Expenditures Over Appropriations The Budgetary Comparison Schedules show an excess of expenditures over appropriations for Area 5. All other Area Funds Budgetary Comparison Schedules show less expenditures than appropriated. 26 ---PAGE BREAK--- Certified Public Accountants March 29, 2023 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 Board of Commissioners Jerome Urban Renewal Agency Jerome, Idaho 83338 We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the Jerome Urban Renewal Agency (Agency), a component unit of the City of Jerome, Idaho, as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements and have issued our report thereon dated March 29, 2023. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Agency’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 27 ---PAGE BREAK--- Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. 28 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY A COMPONENT UNIT OF THE CITY OF JEROME, IDAHO FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2023 ---PAGE BREAK--- TABLE OF CONTENTS PAGE Independent Auditors’ Report 1-3 Management’s Discussion and Analysis 4-9 Basic Financial Statements: Government-wide Financial Statements: Statement of Net 10 Statement of Activities 11 Fund Financial Statements: Governmental Funds: Balance Sheet 12 Statement of Revenue, Expenditures and Changes in Fund Balance 13 Notes to Financial Statements 14-22 Required Supplementary Information: Budgetary Comparison Schedules 23-26 Notes to Required Supplementary Information 27 Independent Auditors’ 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 28-29 ---PAGE BREAK--- Certified Public Accountants March 21, 2024 Independent Auditor’s Report Board of Commissioners Jerome Urban Renewal Agency Jerome, Idaho 83338 Report on the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities and each major fund of the Jerome Urban Renewal Agency (Agency), a component unit of the City of Jerome, Idaho, as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the Agency as of September 30, 2023, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Agency and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Agency's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 1 ---PAGE BREAK--- Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Agency's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis; the budgetary comparison information; and the Notes to Required Supplementary Information as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 2 ---PAGE BREAK--- Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 21, 2024, on our consideration of the Agency's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Agency's internal control over financial reporting and compliance. 3 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2023 I. Background. The City of Jerome Urban Renewal Agency offers readers an overview of its financial activities in a narrative form called the “Management’s Discussion and Analysis.” This report highlights the general fiscal health of the Agency, outlines key financial decisions that were initiated by the Agency’s leadership and identifies future financial priorities and activities. In order to fully understand the financial statements included in the Agency’s Audit, residents should first read the Management’s Discussion and Analysis document. It is our goal that through its reading, our citizens will be better informed and involved. II. Understanding this Report. This Management’s Discussion and Analysis report is broken into three major components that include Government-wide financial statements which provide information for the Agency as a whole; fund financial statements which provide detailed information for the Agency’s significant funds; and notes to the financial statements which provide additional information that is essential to understanding the government-wide and fund statements. This report covers the Fiscal Year that began on October 1, 2022 and ended on September 30, 2023. It provides financial comparisons and analyzes financial trends, designed to provide the reader with better understanding of the Agency’s overall financial health. The Agency’s financial statements are broken into two categories: Government-Wide Financial Statements and Fund Financial Statements. a. Government-Wide Financial Statements. Government-wide financial statements, presented on pages 10-11 of the financial statements, are designed to provide readers with a broad overview of the Agency’s finances, in a manner similar to a private sector business. The statement of net position presents information on all of the City of Jerome Urban Renewal Agency’s assets and liabilities with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Agency is improving or deteriorating. In other words, it will help to show the solvency of the Agency. The statement of activities presents information showing how the government’s net position and liabilities changed during the most recent fiscal year. All changes in net position are reported as they occur, regardless of the timing of related cash flows. This is accrual accounting and thus, revenues and expenditures are reported in this statement for some items that might not reflect actual cash flows until future fiscal periods. The government-wide financial statements include all of the Agency’s services, which are primarily supported by property taxes (tax increment revenue) and interest income. The Agency has no business-type activities. The governmental activities of the City of Jerome Urban Renewal Agency include general government administration and operations. 4 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2023 b. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been separated for specific activities or objectives. Government Funds. Government funds are used to account for essentially the same activities as previously identified under governmental activities in the government-wide financial statement. However, unlike the government-wide financial statements, governmental fund financial statements, presented on pages 12-13 of the financial statements, focus on near- term inflows and outflows of Agency liquid resources as well as balances of liquid resources at the end of the fiscal year. Such information is helpful when determining the Agency’s near-term financing requirements and health. 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 both as readers may better understand the long-term impact of the government’s near-term financing decisions. The City of Jerome Urban Renewal Agency currently maintains four governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for these major funds. The Agency adopts an annual budget. Budgetary comparison statements for all 4 fund areas are found on Pages 23 to 26. Expenditures exceeded revenues by $882,718 for Area 2. This area was officially closed September 30, 2022. Expenditures were the outstanding liabilities of the fund and remitting the surplus funds to the County. Revenues exceeded expenditures by $159,214 for Area 3, by $21,024 for Area 4 and by $1,053,099 for Area 5. If the reader comes upon “Notes to the Financial Statements” or “Other Information,” these sections are to provide additional narrative and required supplementary information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. III. Health of the Agency – Financial Statements Overview a. Government-Wide Financial Analysis. One important question to ask about the Agency’s finances is, “Is the Agency better or worse off as a result of the previous year’s activities?” The information in the government-wide financial statement helps answer this question because it captures all agency assets and liabilities using the accrual basis of accounting. In this way, all of the Agency’s financial transactions both in revenues and expenditures are captured for the long-term and the near-term and one can see the true financial health of the Agency. 5 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2023 For the City of Jerome Urban Renewal Agency for the Fiscal Year 2023, changes in governmental assets and liabilities were as follows: As indicated in Table 3.1, for the year ended September 30, 2023, cash and investments made up 6% of the Agency assets. Normally, the purchased assets are donated to the City of Jerome. However, in recent years the Agency has purchased property with the intent to improve the land to be more appealing to developers and will eventually sell it to a private party. Also, the Agency is in the middle of developing property into a sports and recreational park. The asset will be held until completed and then donated to the Jerome Recreational District. At the end of the fiscal year, the Agency is able to report a positive net position of $2,844,475. When looking at the Agency’s net position, the other area to look at is the restricted and unrestricted totals. The $9,629,325 designated as restricted funds represent amounts that are subject to external restrictions on how they may be used. These assets are related to debt service required for the issuance of revenue related debt, the bond proceeds restricted for infrastructure construction projects in Area 3 and Area 5, and ARPA grant funds from the City of Jerome restricted for the Southside Park project in Area 5. 6 Table 3.1 Net Position Governmental Governmental Total Total Activities Activities FY 2022 FY 2023 FY 2022 FY 2023 Current Assets Cash and Investments $1,473,207 $739,989 $1,473,207 $739,989 Restricted Assets $8,350,537 $9,629,325 $8,350,537 $9,629,325 Non Current Assets $821,699 $1,198,525 $821,699 $1,198,525 Total Assets $10,645,443 $11,567,839 $10,645,443 $11,567,839 Current Liabilities Payables and Deposits $987,134 $288,022 $987,134 $288,022 Current Portion LTD $84,711 $135,326 $84,711 $135,326 Non‐Current Liabilities $8,426,414 $8,300,016 $8,426,414 $8,300,016 Total Liabilities $9,498,259 $8,723,364 $9,498,259 $8,723,364 Net Position: Invested in Capital Assets $821,699 $1,198,525 $821,699 $1,198,525 Restricted $8,350,537 $9,629,325 $8,350,537 $9,629,325 Unrestricted ($8,025,052) ($7,983,375) ($8,025,052) ($7,983,375) Total Net Position: $1,147,184 $2,844,475 $1,147,184 $2,844,475 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2023 Table 3.2, Change in Net Position, reflects the overall change in net position for the City of Jerome Urban Renewal Agency. For the fiscal year 2023, the Agency’s total revenues were $3,215,625 while total expenses were $1,518,334. The Agency reports an increase in net position of $1,697,291. A more detailed accounting of the fund activities can be found on page 13 of the audit. b. Fund Financial Analysis. As noted earlier, the City of Jerome Urban Renewal Agency uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Government Funds. The focus of the Agency’s governmental fund reporting is to provide information on near-term inflows, outflows, and balances of spendable resources. Perhaps the key area to look at in government fund balance sheets is the final unrestricted fund balance as they indicate resources available for spending at the end of the fiscal year. At the end of this last fiscal year, the Agency reported a positive fund equity balance of $10,114,313 of which $484,988 is committed for spending by the Agency. The remainder of the fund balance of $9,629,325 is restricted to indicate that it is not available for new spending because it has already been reserved to pay for debt service and infrastructure construction projects. In summary, the City of Jerome Urban Renewal Agency is financially healthy with a combined total of $10,114,313 in restricted and committed assets. 7 Table 3.2 Change in Net Position Governmental Governmental Total Total Activities Activities FY 2022 FY 2023 FY 2022 FY 2023 Revenues Program Revenues: Charges for Service $0 $0 $0 $0 Operating grants and contributions $0 $0 $0 $0 Capital grants and contributions $200,000 $2,238,908 $200,000 $2,238,908 General Revenues: Property Taxes $2,591,920 $546,075 $2,591,920 $546,075 Investment Earnings $7,962 $430,642 $7,962 $430,642 Refunds and reimbrsements $204 $0 $204 $0 Total Revenues $2,800,086 $3,215,625 $2,800,086 $3,215,625 Expenses Urban Renew al Projects: Southeast Industrial Area 2 $863,319 $0 $863,319 $0 Area 5 $0 $968,893 $0 $968,893 Cash to County for Area 2 closure $3,421,917 $42,093 $3,421,917 $42,093 Support Services $155,434 $108,128 $155,434 $108,128 Bond issuance costs $216,689 $0 $216,689 $0 Interest on long-term liabilities $69,696 $399,220 $69,696 $399,220 Total Expenses $4,727,055 $1,518,334 $4,727,055 $1,518,334 Change in Net Position ($1,926,969) $1,697,291 ($1,926,969) $1,697,291 Net Position - beginning as reported $3,074,153 $1,147,184 $3,074,153 $1,147,184 Net Position - ending $1,147,184 $2,844,475 $1,147,184 $2,844,475 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2023 IV. Capital Assets and Debt Management Administration a. Capital Assets. Capital Assets such as streets, street improvements, water, sewer, and other capital improvements, which the Agency pays for, are donated to the City of Jerome, Idaho. Over past several years the Agency purchased real property and will not be donating it to the City. Previous years’ purchased land will be held for resale at a later date while the land purchase in fiscal year 2022 will be developed and donated to the Jerome Recreation District of Jerome, Idaho. There were no major assets paid for by the Agency and donated to the City of Jerome in fiscal year 2023. b. Debt Management and Administration. As of September 30, 2023, the Agency had total debt of $8,435,342. This amount reflects revenue bond debt and loan proceeds to pay the cost of acquisition and construction of various urban renewal projects. The table of long-term debt is as follows: The City of Jerome Urban Renewal Agency pledges the incremental tax revenues and all funds in the bond fund and the debt service reserve fund for the payment of the bonds. V. Fiscal Year 2024 Fiscal Priorities In August of 2023, the City of Jerome Urban Renewal Agency Commissioners and City Staff developed the Fiscal Year 2024 spending priorities to help focus the efforts of the Agency’s resources in the current fiscal year that began on October 1, 2023 and ends on September 30, 2024. Those priorities and their associated dollar amounts are as follows: 8 Table 4.2 Long-Term Debt Balance Additions Payment Balance 1-Oct-22 Adjustments 30-Sep-23 Governmental Activities: Bonds Payable $8,377,305 $0 ($20,610) $8,356,695 Commercial Creamery $133,820 $0 ($55,173) $78,647 Total $8,511,125 $0 ($75,783) $8,435,342 Table 5.1 2023 Fiscal Priorities Item Area Projected Cost Explanation Infrastructure Area 3 $4,187,809 Dow ntow n revitilization project Infrastructure Area 4 $140,592 Projects to be determined Infrastructure Area 5 $4,194,205 South Side Park & Gravity sew erline (Nez Perce to H) projects miscellaneous projects to be determined Total Projects $8,522,606 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS For Year Ended September 30, 2023 As an urban renewal agency operating in the State of Idaho, the Agency’s revenue flexibility is quite limited, but conversely, quite stable. Property tax resources flow to the agency through the tax increment process of “revenue allocation” as it is termed in Idaho law. The City of Jerome Urban Renewal Agency currently has three active revenue allocation areas. Area 3 is called the “Downtown Improvement Project Area. As well as Area 4 and Area 5 that have not yet been assigned project names. The Southeast Industrial Project Area, commonly known as Area 2, was terminated September 30, 2022. At the time of termination, the Agent submitted $3,421,917 of surplus funds to the County Treasurer for distribution to the taxing entities within the revenue allocation area. $882,718 of the area’s funds were held back to pay expenses due in 2023. Once all liabilities were settled the Agent remitted an additional $42,093 for distribution. Previously the Agency had a fifth revenue allocation area known as the “South Lincoln Project Area”. This area was terminated September 30, 2014. Conclusion. This financial report is designed to provide a general overview of the City of Jerome Urban Renewal Agency’s finances for all those with an interest in the government’s finances and activities. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Mike Williams, Executive Director, 152 East Avenue A, Jerome, Idaho 83338. Mike Williams Executive Director City of Jerome Urban Renewal Agency 9 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY STATEMENT OF NET POSITION SEPTEMBER 30, 2023 The accompanying notes are an integral part of the financial statements 10 Governmental ASSETS: Activities Cash and Investments 739,989 $ Restricted assets: Cash and investments 9,629,325 Capital assets: Land and construction in progress 1,198,525 Total Assets 11,567,839 LIABILITIES: Accounts payable - trade and other accrued liabilities 255,001 Interest payable 33,021 Long-term liabilities: Current portion 135,326 Noncurrent portion 8,300,016 Total Liabilities 8,723,364 NET POSITION Net investment in capital assets 1,198,525 Restricted for debt repayment and construction projects 9,629,325 Unrestricted (7,983,375) Total Net Position 2,844,475 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2023 The accompanying notes are an integral part of the financial statements 11 Operating Capital Charges for Grants and Grants and Governmental Functions/Programs: Expenses Services Contributions Contributions Activities Governmental Activities: Urban renewal projects 1,010,986 $ - $ - $ 2,238,908 $ 1,227,922 $ Support services 108,128 - - - (108,128) Interest on long-term liabilities & obligations 399,220 - - - (399,220) Total governmental activities 1,518,334 $ - $ - $ 2,238,908 $ 720,574 General Revenues: Property taxes 546,075 Unrestricted investment earnings 430,642 Refunds and reimbursements - Total general revenues 976,717 Change in net position 1,697,291 Net position beginning of year 1,147,184 Net position-ending 2,844,475 $ Net (Expense) Revenue and Changes in Net Position Program Revenues ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BALANCE SHEET - GOVERNMENTAL FUNDS SEPTEMBER 30, 2023 The accompanying notes are an integral part of the financial statements 12 Southeast Downtown Industrial Improvements Project Project Total Area 2 Area 3 Area 4 Area 5 Governmental ASSETS: Pooled cash and investments - $ 295,716 $ 98,413 $ 345,860 $ 739,989 $ Restricted Cash: Construction funds - 3,948,123 - 5,255,397 9,203,520 Debt service reserve funds - 195,824 - 229,981 425,805 TOTAL ASSETS - $ 4,439,663 $ 98,413 $ 5,831,238 $ 10,369,314 $ LIABILITIES: Accounts payable - trade - $ 2,865 $ 186 $ 251,950 $ 255,001 $ Refundable deposits - - - - - TOTAL LIABILITIES - 2,865 186 251,950 255,001 FUND BALANCES: Restricted for debt repayment - 195,824 - 229,981 425,805 Restricted for infrastructure construction - 3,948,123 - 5,255,397 9,203,520 Committed - 292,851 98,227 93,910 484,988 TOTAL FUND BALANCES - 4,436,798 98,227 5,579,288 10,114,313 TOTAL LIABILITIES AND FUND BALANCES - $ 4,439,663 $ 98,413 $ 5,831,238 $ 10,369,314 $ Reconciliation to the Statement of Net Position: Total fund equity 10,114,313 $ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 1,198,525 Payables expected to be paid in the next year but not soon enough use the current period's revenues are not included in the funds (33,021) Long-term liabilities are not due and payable in the current period, and therefore, are not reported in the funds (8,223,037) Deferred premiums and related amortization are recognized in full in the year incurred and are not capitalized and amortized in the funds (212,305) Total Net Position 2,844,475 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2023 The accompanying notes are an integral part of the financial statements 13 Southeast Downtown Industrial Improvements Project Project Total Area 2 Area 3 Area 4 Area 5 Governmental REVENUE: Property Taxes - $ 274,773 $ 23,390 $ 247,912 $ 546,075 $ Interest Earned 23,780 199,554 3,298 204,010 430,642 Other - - - - - 23,780 474,327 26,688 451,922 976,717 EXPENDITURES: Current: Professional services 1,086 19,498 3,128 33,216 56,928 Advertising and publishing - 321 33 302 656 Insurance and bonds - 861 88 808 1,757 Dues and subscriptions - 2,254 230 2,116 4,600 Administration expense - 7,789 935 6,880 15,604 Economic development support - 12,250 1,250 11,500 25,000 Other purchased services - 1,507 - 1,034 2,541 Miscellaneous expense - - - 1,042 1,042 Cash to County for Area Closure 42,093 - - - 42,093 Capital Outlay: Urban Renewal Projects 863,319 - - 1,345,719 2,209,038 Debt service - 270,633 - 234,404 505,037 906,498 315,113 5,664 1,637,021 2,864,296 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (882,718) 159,214 21,024 (1,185,099) (1,887,579) OTHER FINANCING SOURCES (USES) Capital Contributions - - - 2,238,908 2,238,908 - - - 2,238,908 2,238,908 EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (882,718) 159,214 21,024 1,053,809 351,329 FUND BALANCE SEPTEMBER 30, 2022 882,718 4,277,584 77,203 4,525,479 9,762,984 FUND BALANCE SEPTEMBER 30, 2023 - $ 4,436,798 $ 98,227 $ 5,579,288 $ 10,114,313 $ Reconciliation to the Statement of Activities: Total net change in fund balances 351,329 $ Governmental funds report bond proceeds and premiums as revenue, but the proceeds increase long-term liabilities in the Statement of Net Position - Repayment of note principal is reported as an expenditure in the governmental funds, but the payment reduces long-term liabilities in the Statement of Net Position 78,208 Governmental funds report the acquistion or construction of capital assets as expenditures, but the payment increases capital assets in the Statement of Net Assets 376,826 Revenues and expenditures in the Statement of Activities that do not provide or use current financial resources are not reported as revenues or expenditures in the funds 863,319 Amortization of deferred charges and debt discounts are recognized in the Statement of Activities, but not in the Fund Financial Statements 27,609 Change in Net Position 1,697,291 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2023 Note 1 - Summary of Significant Accounting Policies A) Basis of Presentation The financial statements of the Jerome Urban Renewal Agency (Agency) are presented in conformity with accounting principles generally accepted in the United States of America for governmental units as prescribed by the Governmental Accounting Standards Board (GASB) and other authoritative sources. GASB is responsible for establishing generally accepted accounting principles (GAAP) for state and local governments through its pronouncements. B) Financial Reporting Entity The Jerome Urban Renewal Agency (Agency) was organized in 1994 under the Idaho Urban Renewal Law of 1965. The Agency is governed by a five-person Board of Commissioners appointed by the Mayor of the City of Jerome with the advice and consent of the City Council. Generally accepted accounting principles require government financial statements to include the primary government and its component units. Component units of a governmental entity are legally separate entities for which the primary government is considered to be financially accountable and for which the nature and significance of their relationship with the primary government are such that exclusion would cause the combined financial statements to be misleading or incomplete. The primary government is considered to be financially accountable if it appoints a majority of an organization’s governing body and imposes its will on that organization. The primary government may also be financially accountable if an organization is fiscally dependent on the primary government, regardless of the authority of the organization’s governing board. Based on the application of the criteria set forth by the Governmental Accounting Standards Board, management has determined that there are no entities which would be component units of the Agency. For financial reporting purposes, in conformity with governmental accounting standards, the Agency is included as a component unit of the City of Jerome, Idaho’s financial statements. The Agency provides urban renewal services to the City and its citizens. These statements present only the funds of the Agency and are not intended to present the financial position and results of operations of the City of Jerome, Idaho in conformity with generally accepted accounting principles. C) Government-Wide and Fund Financial Statements The Agency’s financial statements include the activities of the Agency. The Agency’s government-wide financial statements provide both short-term and long- term information about the Agency’s overall financial status. Fund financial statements focus on the individual activities of the Agency, reporting the Agency’s operations in more detail than the government-wide financial statements. Government-wide financial statements - The government-wide financial statements are designed to provide readers with a broad overview of the Agency’s finances in a manner similar to a private-sector business. The government-wide financial statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities for the Agency accompanied by a total column. Fiduciary activities of the Agency are not included in these statements. These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. 14 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2023 The Statement of Net Position presents information on all of the Agency’s assets and liabilities, including capital assets as well as infrastructure assets and long-term liabilities, with the difference between the two presented as net position (deficit). Net position is divided into three components: a. Invested in capital assets, net of related debt - consists of the historical cost of capital assets less accumulated depreciation and less any debt that remains outstanding that was used to finance those assets. b. Restricted net position - consists of balances that are restricted by the Agency’s creditors (for example, through debt covenants), by state enabling legislation (through restrictions on shared revenues), by grantors (both federal and state), and by other contributors (including those who have donated to the Agency). c. Unrestricted - all other balances are reported in this category. The Statement of Activities presents information showing how the net position changed during the most recent year. All changes in net position are reported as soon as the underlying event gives rise to the change that occurs, regardless of the timing of the 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). Amounts reported as program revenues on the government-wide financial statements include charges for services - amounts received from customers or applicants who purchase, use or directly benefit from the goods, services or privileges provided by the Agency, program-specific operating grants and contributions, and program-specific capital grants and contributions. General revenues consist of taxes and all other revenues that do not meet the definition of program revenues. Special items are significant transactions or events within the control of management that are either unusual in nature or infrequent in occurrence. Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. Fund Financial Statements – The Agency, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. 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 use a current financial resources measurement focus and the modified accrual basis of accounting, focusing on the near-term inflows and outflows of spendable resources, and balances of spendable resources available at fiscal year-end. 15 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2023 Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual when they are measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collected within the current period or expected to be collected soon enough thereafter (usually 60 days) to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt, which is recognized when the obligations are expected to be liquidated with expendable available financial resources. Property taxes are susceptible to accrual. Other receipts become measurable and available when the cash is received by the government and are recognized as revenue at that time. 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 balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds. An accompanying schedule is presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net position and changes in net position presented in the Government-Wide financial statements. The Agency has presented all major funds that met those qualifications. In addition, the Agency has presented certain funds as major funds because the Agency believes the financial position and activities of these funds are significant to the Agency as a whole. The Agency reports the following major governmental funds: a. Southeast Industrial Project Area – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Southeast Industrial Project revenue allocation area. This area is terminated and will no longer be an active fund. b. Downtown Improvement Project Area – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Downtown Improvement Project revenue allocation area. c. Area 4 – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Area 4 revenue allocation area. d. Area 5 – a special revenue fund used to account for and report property taxes (tax increment revenue) restricted or committed for the operation and maintenance of the Area 5 revenue allocation area. D) Use of Restricted Funds When both restricted and unrestricted resources are available for use, it is the Agency’s policy to use restricted resources first, then unrestricted resources as they are needed. 16 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2023 E) Long-term Debt Obligations In the government-wide financial statements long-term debt and obligations are reported as a liability in the statement of net position. Bond premiums and discounts are deferred and amortized over the term of the bonds using the effective interest rate method. Bond payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. F) Property Tax Calendar Property taxes for each year are levied in September of that year with the first half of real property taxes and all personal property and mobile home taxes due on December 20th. Taxes not paid on or before December 20th are considered to be delinquent. The second half of the real property taxes is due June 20th of the following year and is considered to be delinquent on June 21st. An initial late penalty of 2% of tax plus 1% per month interest charge is assessed on all delinquent taxes. A tax lien is filed for property whose taxes become three years delinquent. Taxes collected by the County are remitted to the Agency on a basis. Property tax revenue is recognized when it becomes available. Available means when due, or past due and receivable within the current period, or expected to be collected soon enough thereafter to be used to pay liabilities of the current period, which period is not to exceed 60 days. G) Interfund Activity Permanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For the purpose of the statement of activities, all interfund transfers between individual governmental funds have been eliminated. H) Capital Assets Capital assets, which includes only land, are reported in the government-wide financial statements. Assets are capitalized when they have a useful life in excess of one year and have a cost of $5,000 or more. Purchased or constructed capital assets are valued at cost or estimated historical cost if actual cost is unavailable. Donated assets are reported at fair value at the time received. There is no depreciation recorded for land. I) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Note 2 - Cash and Investments Cash balances of the Agency’s funds are pooled for investment purposes. The individual funds’ portions of the pool’s cash and investments are reported as “pooled cash and investments.” Investments are stated at fair value (quoted market price or the best available estimate). The Agency does not have a written investment policy. 17 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2023 For deposits, custodial credit risk is the risk that, in the event of a bank failure, the government’s deposits may not be returned to it. The Agency does not have a deposit policy for custodial credit risk. At September 30, 2023, the carrying amount of the Agency’s deposits with financial institutions (after considering outstanding and other reconciling items) was $150,295 and the bank balance was $150,683. All funds were insured or collateralized. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Agency will not be able to recover the value of its investments that are in the possession of an outside party. The elected State Treasurer, following Idaho Code Section 67-2328, is authorized to sponsor an investment pool in which the Agency voluntarily participates. The Pool is not registered with the Securities and Exchange Commission or any other regulatory body. Oversight is with the State Treasurer and Idaho Code defines allowable investments. All investments are entirely insured or collateralized with securities held by the Pool or by its agent in the Pool’s name and the fair value of the Agency’s position in the external investment pool is the same as the value of the pool shares. The fund was assigned an AAAf fund credit quality rating and S1+ volatility rating by Standard & Poor’s Rating Service in 2009. The Agency’s investment in the State of Idaho Local Government Investment Pool as of September 30, 2023, was $9,793,213. The Agency receives peak net cash inflows during the first quarter of the fiscal year. Cash and investments meeting the criteria as uninsured may, at times during the fiscal year, significantly exceed the uninsured balance at the September 30th fiscal year-end. All of the Agency’s restricted assets are reserved for debt repayment and construction projects. Reconciliation of carrying amount to cash numbers on the financial statements: Sources of cash: Deposits with financial institutions $ 150,295 Local Government Investment Pool, at fair value 9,793,213 US Bank Debt Service Reserve Funds: Cash 6,700 Money Market Funds 419,106 $10,369,314 Cash on financial statements: Pooled cash and investments $ 739,989 Restricted assets 9,629,325 $10,369,314 Note 3 – Capital Assets Capital asset activity for the fiscal year ended September 30, 2023 was as follows: 18 Balance Balance October September Governmental activities: 1, 2022 Increases Decreases 30, 2023 Land 783,097 $ - $ - $ 783,097 $ Construction in progress 38,602 376,826 0 415,428 Net capital assets 821,699 $ 376,826 $ 0 $ 1,198,525 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2023 Note 4 – Changes in Long Term Liabilities As of September 30, 2023, the Agency had incurred other obligations which were payable in future fiscal periods. Since payment of these obligations is outside of the Agency's current operating cycle, they did not require current appropriation and expenditure of governmental fund-type resources. These obligations are as follows: Bonds Payable - Series 2022 The Agency issued a note to provide financing to pay the cost of construction of multiple Urban Renewal Projects. The notes consist of both Serial and Term bonds. The interest rate for the Serial bonds is 4% and the Term bonds interest rate is 5% for both Series A and B. The true interest cost rate is 4.5714% for Series A and 4.8291% for Series B with semi-annual interest payments due each March 1st and September 1st. In addition, annual principal payments of varying principal amounts are due each September 1st. Principal payments of $20,000 for Series A was paid on August 3, 2023. No principal payment was made for Series B. The principal balance as of September 30, 2023 is $8,145,000 plus amortized premium of $211,695 for a total of $8,356,695. Miscellaneous Payable – Commercial Creamery Company of Idaho, Inc. The Agency entered into a reimbursement participation agreement with Commercial Creamery on December 18, 2018. The Agency shall disburse a portion of the revenue allocation for actual eligible costs not to exceed $300,000. As the payable carries no interest rate, the unamortized discount was calculated using an effective interest rate of 5.5%. For the year ended September 30, 2023 cash payments of $58,208 less amortized discount of $3,035 for a total of $57,173 were made. Subsequent payments are required on or before March 1 and September 1 of each year through September 1, 2034 or at which time the maximum reimbursement has been distributed. Based on previous payments, it is projected full payment will occur on or before September 1, 2024. The principal balance as of September 30, 2023 is $82,972 less unamortized discount of $4,325 for a total of $78,647. Long-term liability activity for the year ended September 30, 2023, was as follows: Balance Balance Amounts October Additional September Due Within 1, 2022 Debt Payments 30, 2023 One Year Bonds payable - Series 2022 (including amortized premium) $ 8,377,305 $ $ 20,610 $ 8,356,695 $ 56,679 Commercial Creamery (net of amortized discount) 130,820 55,173 78,647 78,647 $ 8,511,125 $ $ 75,783 $ 8,435,342 $ 135,326 19 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2023 As of September 30, 2023, debt service requirements to maturity for principal and interest, for general long-term debt obligations, are as follows: Note 5 - Risk The Agency is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. Commercial insurance is purchased to cover these risks. Note 6 - Pledge for Payment of the Bonds The Agency pledges the incremental tax revenues and all funds in the debt reserve fund and the debt service reserve fund for the payment of the bonds and the note. Note 7 – Fund Balances In accordance with GASB Statement No. 54, fund balances are classified as follows:  Nonspendable – amounts that cannot be spent because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.  Restricted – amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments.  Committed – amounts that can be used only for specific purposes determined by a formal action of the Board of Commissioners. The Board of Commissioners is the highest level of decision-making authority for the Agency. Commitments may be established, modified, or rescinded only through ordinances or resolutions approved by the Board of Commissioners.  Assigned – amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. Intent can be expressed by the Agency Commissioners or by an official or body to which the Agency delegates the authority.  Unassigned – all other spendable amounts. 20 Year Ended Principal Interest Total 2024 133,647 $ 400,575 $ 534,222 $ 2025 85,000 394,050 479,050 2026 140,000 390,650 530,650 2027 200,000 385,050 585,050 2028 270,000 377,050 647,050 2029 - 2033 2,785,000 1,622,250 4,407,250 2034 - 2038 3,820,000 717,500 4,537,500 2039 - 2039 790,000 39,500 829,500 8,223,647 4,326,625 $ 12,550,272 $ Premium on bond less accumulated amortization 211,695 8,435,342 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2023 As required by GASB 54, the Agency’s establishment, modification, and rescinding of a committed fund balance is decided upon by passage of an annual appropriations resolution by the Agency Commissioners, acting as the highest level of decision-making authority. When expenditures are incurred for which both restricted and unrestricted fund balance are available, the Agency considers restricted to have been spent first. In the case of an expenditure being incurred for purposes for which amounts in any of the unrestricted fund balances could be used, the Agency does not have a formal policy, but defaults to the order as follows: first against committed, then assigned and finally unassigned fund balances as considered to have been spent. As of September 30, 2023, fund balances are composed of the following: Note 8 – Grant revenue received from the City of Jerome The City of Jerome received funds as a part of the American Rescue Plan Act (ARPA). A committee was formed to determine the best possible use of the funds in relation to the federal rules on how the funds could be spent. The committee recommended the City use some of the funds to support a green space and connectivity project that would serve disadvantaged parts of Jerome. Based on the recommendation of the committee, the City of Jerome council elected to award the Agency $2,238,908 as a subrecipient of the ARPA funds. These funds are restricted and will be spent on the Southside Park project in Area 5. Note 9 – Commitments The Agency entered into a capital reimbursement agreement with developer Jerome Pacific Associates on July 7, 2022. The developer is constructing affordable housing in Area 3. The project also includes the construction and installation of certain public infrastructures adjacent to the project. Once completed the Agency will reimburse Jerome Pacific a portion of the eligible costs not to exceed $778,329. As of September 30, 2023, the project was in the final stage of construction. On November 3, 2022, the Agency passed Resolution 11-22 authorizing the reimbursement agreement between the Agency and the business Nelson-Jameson for site remediation costs. The reimbursement will be 75% of the tax increment generated after the completion of the project but not to exceed $354,000. As of September 30, 2023, no agreement has been signed. The Agency entered into a capital reimbursement agreement with the business Milk Specialties Company on May 23, 2023. The business is redeveloping property and constructing a manufacturing facility in Area 5. The project includes site 21 Southeast Downtown Industrial Improvement Restricted Fund Blalances: Area 2 Area 3 Area 4 Area 5 Total Debt payment from bond proceeds - $ 195,824 $ - $ 229,981 $ 425,805 $ Restrict for infrastructure construction - 3,948,123 - 5,255,397 9,203,520 Committed Fund Balances: Operations - 292,851 98,227 93,910 484,988 Total Fund Balance - $ 4,436,798 $ 98,227 $ 5,579,288 $ 10,114,313 $ ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2023 remediation costs. Once completed the Agency will reimburse Jerome Pacific a portion of the eligible costs not to exceed $606,712. As of September 30, 2023, the project is complete but the business has not provided the required information to determine the actual reimbursement amount. Note 11 – Closure of Southeast Industrial Project Area On September 27, 2022, the Agency filed the termination ordinance with the Office of the Jerome County Recorder and the Idaho State Tax Commission to terminate Southeast Industrial Project Area, more commonly known as Area 2. Prior to the end of the fiscal year of 2022 the existing surplus of $3,421,917 was remitted to the Jerome County Treasurer to be distributed to the taxing districts within the Area. $882,718 of the Area funds were held back by the Agency and paid for expenses payable in 2023. On August 24, 2023, all outstanding expenses were satisfied and additional surplus funds in the amount of $42,093 were remitted to the County Treasurer. 22 ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE SOUTHEAST INDUSTRIAL PROJECT AREA FUND YEAR ENDED SEPTEMBER 30, 2023 23 Over REVENUE: Original Final Actual (Under) Property Taxes - $ - $ - $ - $ Interest Earned - - 23,780 23,780 Total Revenue - - 23,780 23,780 EXPENDITURES: Current: Office supplies and postage - - - - Operating supplies - - - - Professional services - - 1,086 1,086 Advertising and publishing - - - - Insurance and bonds - - - - Dues and subscriptions - - - - Administration expense - - - - Economic Development support - - - - Miscellaneous 25,000 25,000 - (25,000) Cash to County for Area Closure - - 42,093 42,093 Capital Outlay - - 863,319 863,319 Debt Service 650,000 650,000 - (650,000) Total expenditures 675,000 675,000 906,498 231,498 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (675,000) (675,000) (882,718) (207,718) EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (675,000) $ (675,000) $ (882,718) $ (207,718) $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE DOWNTOWN IMPROVEMENT AREA FUND YEAR ENDED SEPTEMBER 30, 2023 24 Over REVENUE: Original Final Actual (Under) Property Taxes 294,383 $ 294,383 $ 274,773 $ (19,610) $ Interest Earned - - 199,554 199,554 Total Revenue 294,383 294,383 474,327 179,944 EXPENDITURES: Current: Office supplies and postage 25 25 - (25) Operating supplies 49 49 - (49) Professional services 28,232 28,232 19,498 (8,734) Advertising and publishing 233 233 321 88 Insurance and bonds 862 862 861 Dues and subscriptions 833 833 2,254 1,421 Administration expense 7,595 7,595 7,789 194 Economic Development support 12,250 12,250 12,250 - Other purchased services 536 536 1,507 971 Miscellaneous 25 25 - (25) Capital Outlay - Construction 473,349 473,349 - (473,349) Debt Service 276,425 276,425 270,633 (5,792) Total expenditures 800,414 800,414 315,113 (485,301) EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (506,031) (506,031) 159,214 665,245 EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (506,031) $ (506,031) $ 159,214 $ 665,245 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE AREA 4 FUND YEAR ENDED SEPTEMBER 30, 2023 25 Over REVENUE: Original Final Actual (Under) Property Taxes 26,143 $ 26,143 $ 23,390 $ (2,753) $ Interest Earned - - 3,298 3,298 Total Revenue 26,143 26,143 26,688 545 EXPENDITURES: Current: Office supplies and postage 3 3 - Operating supplies 5 5 - Professional services 1,240 1,240 3,128 1,888 Advertising and publishing 24 24 33 9 Insurance and bonds 88 88 88 - Dues and subscriptions 85 85 230 145 Administration expense 775 775 935 160 Economic Development support 1,250 1,250 1,250 - Miscellaneous 25 25 - (25) Capital Outlay - Construction 99,813 99,813 - (99,813) Total expenditures 103,308 103,308 5,664 (97,644) EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (77,165) (77,165) 21,024 98,189 OTHER FINANCING SOURCES (USES) Total other financing sources(uses) - - - - EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (77,165) $ (77,165) $ 21,024 $ 98,189 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY BUDGETARY COMPARISON SCHEDULE AREA 5 FUND YEAR ENDED SEPTEMBER 30, 2023 26 Over REVENUE: Original Final Actual (Under) Property Taxes 278,909 $ 278,909 $ 247,912 $ (30,997) $ Interest Earned - - 204,010 204,010 Total Revenue 278,909 278,909 451,922 173,013 EXPENDITURES: Current: Office supplies and postage 23 23 - (23) Operating supplies 46 46 - (46) Professional services 11,728 11,728 33,216 21,488 Advertising and publishing 219 219 302 83 Insurance and bonds 810 810 808 Dues and subscriptions 782 782 2,116 1,334 Administration expense 7,130 7,130 6,880 (250) Economic Development support 11,500 11,500 11,500 - Miscellaneous 25 25 1,042 1,017 Bond issuance costs - - - - Capital Outlay - Construction 2,415,845 2,415,845 1,345,719 (1,070,126) Debt Service 234,404 234,404 234,404 - Total expenditures 2,682,512 2,682,512 1,637,021 (1,045,491) EXCESS OF REVENUE OVER (UNDER) EXPENDITURES (2,403,603) (2,403,603) (1,185,099) 1,218,504 OTHER FINANCING SOURCES (USES) Grant Income/Capital Contributions 2,238,908 2,238,908 2,238,908 - Total other financing sources(uses) 2,238,908 2,238,908 2,238,908 - EXCESS OF REVENUE AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (164,695) $ (164,695) $ 1,053,809 $ 1,218,504 $ Budgeted Amounts ---PAGE BREAK--- JEROME URBAN RENEWAL AGENCY NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED SEPTEMBER 30, 2023 NOTE 1 - BUDGETARY INFORMATION A) Budgetary-GAAP Reporting Reconciliation The accompanying Budgetary Comparison Schedule for all Areas compares the legally adopted budget with actual data on a budgetary basis. Accounting principles applied for purposes of developing data on the budgetary basis do not differ significantly from those used to present financial statements in conformity with generally accepted accounting principles (GAAP). B) Budgetary Policies Jerome Urban Renewal Agency prepares an annual budget of revenue and expenditures prior to the beginning of the fiscal year. The budget is prepared on the modified accrual basis of accounting. Budget figures are based on prior levels of revenue and expenditures taking into account specific items which may be planned in advance by the District such as capital outlay expenditures. Any excess of budgeted expenditures over budgeted revenue are temporary situations and are budgeted so as to utilize cash balances in the individual fund. C) Excess of Expenditures Over Appropriations The Budgetary Comparison Schedules show an excess of expenditures over appropriations for Area 2. All other Area Funds Budgetary Comparison Schedules show less expenditures than appropriated. 27 ---PAGE BREAK--- Certified Public Accountants March 21, 2024 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 Board of Commissioners Jerome Urban Renewal Agency Jerome, Idaho 83338 We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the Jerome Urban Renewal Agency (Agency), a component unit of the City of Jerome, Idaho, as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements and have issued our report thereon dated March 21, 2024. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Agency’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 28 ---PAGE BREAK--- Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. 29