Document Millcreek_doc_fb2db48fe7

h.HBME COMMITTED. EXPERIENCED. TRUSTED. MILLCREEK Basic Financial Statements and Independent Auditor’s Report As of and for the Year Ended June 30, 2024 ---PAGE BREAK--- MILLCREEK Table of Contents Page FINANCIAL SECTION Independent Auditor’s Report 1-3 Management's Discussion and Analysis ..4-9 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 11 Statement of Activities 12 Fund Financial Statements: Balance Sheet - Governmental Funds 13 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 14 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds 15 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities 16 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund 17 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Community Reinvestment Agency – Special Revenue Fund 18 Statement of Net Position – Proprietary Fund 19 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Fund 20 Statement of Cash Flows – Proprietary Fund 21 Statement of Fiduciary Net Position – Fiduciary 22 Statement of Changes in Fiduciary Net Position – Fiduciary Fund 23 Notes to Financial Statements 24-48 Required Supplementary Information: Schedule of the Proportionate Share of Net Pension Liability 49 Schedule of Pension Contributions 50 Notes to the Required Supplementary Information 51 Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet – Nonmajor Governmental Funds 52 Combining Statement of Revenues, Expenditures, and Changes In Fund Balances – Nonmajor Governmental Funds 53 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Capital Projects Fund 54 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Park Impact Special Revenue Fund 55 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Millcreek Community Foundation Fund 56 ---PAGE BREAK--- MILLCREEK Table of Contents COMPLIANCE SECTION Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 57-58 Independent Auditor’s Report on Compliance and on Internal Control Over Compliance in Accordance with the State Compliance Audit Guide 59-61 ---PAGE BREAK--- 1 INDEPENDENT AUDITOR’S REPORT Honorable Mayor and Members of the City Council Millcreek, Utah Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business-type activities, and each major fund of Millcreek, Utah (the City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2024, and the respective changes in financial position, and where applicable, cash flows thereof for the year then ended in conformity 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 (GAAS) 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 City 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 The City’s management is responsible for the preparation and fair presentation of the 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. C O M M I T T E D . E X P E R I E N C E D . T R U S T E D . H B M E , L L C I S A C E R T I F I E D P U B L I C A C C O U N T I N G F I R M 5 5 9 W E S T 5 0 0 S O U T H B O U N T I F U L , U T 8 4 0 1 0 O : 8 0 1 . 2 9 6 . 0 2 0 0 H B M E . C O M PARTNERS MICHAEL L. SMITH, CPA JASON L. TANNER, CPA ROBERT D. WOOD, CPA AARON R. HIXSON, CPA TED C. GARDINER, CPA JEFFREY B. MILES, CPA JESSE S. MALMROSE, EA JANICE ANDERSON, EA TROY F. NILSON, CPA ---PAGE BREAK--- 2 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 City’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. 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 GAAS 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 GAAS, 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 City’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 City’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 on pages 4 through 10 and the pension schedules on pages 49 through 51 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 ---PAGE BREAK--- 3 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. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying budgetary comparison information is presented for the purpose of additional analysis and is not a required part of the basic financial statements. The budgetary comparison information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2024, on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. December 16, 2024 Bountiful, Utah ---PAGE BREAK--- 4 Management’s Discussion and Analysis As management of Millcreek (the City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2024. We encourage readers to consider the information presented here in conjunction with the financial statements which follow this section. To help the reader with navigation of this report, the City’s activities are classified in the following manner: governmental activities refer to general administration, streets, parks, public safety, planning, recreation and community events, etc., while business-type activities refer to the Stormwater Utility Fund. The Stormwater fund was established in fiscal year 2021 to account for storm sewer utility charges for services and expenses related to the City’s stormwater system. Fees are collected by PacifiCorp through their current billing system and then remitted to the City. FINANCIAL HIGHLIGHTS As of the end of the current fiscal year, • The total assets of the City plus deferred outflows of resources exceeded its liabilities plus deferred inflows of resources by $222,514,853 (net position). This amount included an unrestricted net position of $40,723,436; which may be used to meet the City’s ongoing obligations to citizens and creditors. • The total net position of governmental activities of $197,845,475 is made up of $162,194,893 in capital assets such as land, infrastructure and equipment, net of any related debt outstanding; $439,896 restricted for capital projects and the remaining $35,210,686 of unrestricted net position. • The total net position of business-type activities of $24,669,378 was made up of $19,156,628 in capital assets, such as equipment and infrastructure, less any long-term debt outstanding, and $5,512,750 which is considered unrestricted. • Total liabilities of the City plus deferred inflows of resources was $82,980,306. Of that amount, $82,770,935 was related to governmental activities and $209,371 to business-type activities. • All long-term debt of the City is held by its governmental activities, with the exception of any compensated absences and pension-related liabilities that are held by its business-type activities. REPORTING THE CITY AS A WHOLE This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also includes required supplementary information and other supplementary information in addition to the basic financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. • The statement of net position presents information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. However, you will also need to consider other nonfinancial factors. • The statement of activities presents information showing how the City’s net position changed during the fiscal year reported. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, all the current year’s revenues and expenses are considered regardless of when cash is received or paid. Both government-wide financial statements distinguish functions of Millcreek that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The government-wide financial statements include not only the City itself, but the following blended component units: The Millcreek Community Reinvestment Agency (Reinvestment Agency) and the Millcreek Community Foundation (Community Foundation or Foundation). Both the Reinvestment Agency and the Community ---PAGE BREAK--- 5 Foundation are legally separate entities governed by boards consisting of the City Council members. For financial reporting purposes, they are reported as if they were part of the City’s operations because their governing boards are the City Council; therefore, the City Council is financially accountable and has significant influence over the programs, projects, activities, and level of services performed or provided by these organizations. REPORTING THE CITY’S MOST SIGNIFICANT FUNDS A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City also uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. • Governmental funds - These funds are used to account for the same functions reported as governmental activities in the government-wide financial statements. The fund statements focus on how money flows into and out of these funds and the balances of spendable resources available at the end of the year. year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and other financial assets that can be readily converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps users determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in a reconciliation included with the fund financial statements. • The City maintains five individual governmental funds, three of which are major funds. The funds include the General Fund, the Community Reinvestment Agency, the Capital Projects Fund, the Park Impact Fee Fund (non-major) and the Community Foundation special revenue fund (non-major). Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for each of these funds. The basic governmental fund financial statements can be found on pages 13-18 of this report. The City adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. • Proprietary funds - The City also maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Millcreek’s Stormwater Utility Fund is accounted for as an enterprise fund; information about this fund can be found on pages 19-21. • Fiduciary funds - The City maintains one fiduciary fund. Fiduciary funds are used to account for assets held by a government in a trustee capacity or as an agent for individuals, private organizations, or other governmental units. Millcreek serves in this capacity for the Community Renewable Energy Agency (CRE). The CRE is a coalition of counties and other municipalities that are working to launch a renewable electricity option for customers of Rocky Mountain Power, a major utility provider, in their respective communities. Information about the CRE fiduciary fund can be found on pages 22-23 of this report. Notes to the financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Notes to the financial statements are located after the statements for major funds as listed in the table of contents. ---PAGE BREAK--- 6 GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows exceeded liabilities and deferred inflows by $222,514,853 at the close of the most recent fiscal year. The City’s overall financial position improved in fiscal year 2024. Total net position increased by $3,102,080; net position from current year activities for governmental activities increased by $1,793,275 while net position of business-type activities increased by $1,308,805. By far, the largest portion of the City’s net position (82%) reflects its investment in capital assets land, buildings, infrastructure, machinery, and equipment) net of accumulated depreciation and less any related outstanding debt that was used to acquire those assets. The City uses its capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although, the City’s investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves connect be used to liquidate these liabilities. STATEMENT OF NET POSITION Governmental activities’ net position benefitted from an increase of $15.8 million in capital assets and increases in sales tax and municipal energy tax contributed to a $4.5 million increase in governmental activities’ unrestricted net position. The governmental activities experienced a decrease in restricted net position of $4.5 million owing to the completion of the new City Hall building. Unrestricted business-type activities’ net position increased by $1.8 million, which resulted due to timing of several large storm drain maintenance projects that began in fiscal year 2024 but were not completed at June 30. Business-type activities increased the City’s net position by $1,308,805. During FY2024 the Stormwater fund collected $3,242,279 from charges for services and expended $2,138,306 in operating expenses. Governmental Activities Business-Type Activities Total 2024 2023 2024 2023 2024 2023 Current and other assets 56,099,584 $ 68,637,575 $ 5,601,005 $ 4,024,319 $ 61,700,589 $ 72,661,894 $ Capital assets 223,461,571 207,679,423 19,156,628 19,662,887 242,618,199 227,342,310 Total assets 279,561,155 276,316,998 24,757,633 23,687,206 304,318,788 300,004,204 Deferred outflows of resources: Deferred outflows related to pensions 1,055,255 745,571 121,116 82,841 1,176,371 828,412 Current and other liabilities 7,264,446 4,585,280 94,210 325,700 7,358,656 4,910,980 Long-term liabilities outstanding 62,237,450 63,245,323 114,309 83,136 62,351,759 63,328,459 Total liabilities 69,501,896 67,830,603 208,519 408,836 69,710,415 68,239,439 Deferred inflows of resources: Deferred property tax revenue 13,261,573 13,174,031 - - 13,261,573 13,174,031 Deferred inflows related to pensions 7,466 5,735 852 638 8,318 6,373 Total deferred inflows of resources 13,269,039 13,179,766 852 638 13,269,891 13,180,404 Net Position: Invested in capital assets, net of related debt 162,194,893 149,632,237 19,156,628 19,662,887 181,351,521 169,295,124 Restricted for: Capital projects 439,896 4,949,244 - 439,896 4,949,244 Unrestricted 35,210,686 41,470,719 5,512,750 3,697,686 40,723,436 45,168,405 Total net position 197,845,475 $ 196,052,200 $ 24,669,378 $ 23,360,573 $ 222,514,853 $ 219,412,773 $ ---PAGE BREAK--- 7 CHANGES IN NET POSITION ANALYSIS OF GOVERNMENT’S FUNDS The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. As of June 30, 2024, the City’s governmental fund balances totaled $35,771,106, which is a decrease of $15,314,666 from the prior year. The major contributor to the decrease in the aggregate governmental fund balances was the increase in capital expenditures related to construction of the new city hall. This project was accounted for in the Capital Projects Fund. The General Fund is the chief operating fund of the City. All activities, which are not required to be accounted for in separate funds either by state or local ordinance or by a desire to maintain a matching of revenues and expenditures, are accounted for in this fund. At the end of the current fiscal year, unassigned fund balance of the general fund was $15,211,799, while total fund balance was $15,248,366. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. At June 30, 2024, unassigned fund balance in the General Fund represents 44% of total general fund expenditures. The City maintains only one type of proprietary fund, an enterprise fund, which is used to report the same type of information found in the government-wide financial statements’ business-type activities, but in greater detail. Net position of the stormwater fund at the end of the year was $24,669,378. Net position increased by $1,308,805 from the preceding year. Unrestricted net position of the Stormwater Utility Fund at the end of the year was $5,512,750 an increase of $1,815,064 over the prior year. Many of the stormwater maintenance projects that have been identified are extremely costly, it will take the enterprise fund several years to accumulate reserves sufficient to address some of its stormwater maintenance concerns. Governmental Activities Business-Type Activities Total Revenues 2024 2023 2024 2023 2024 2023 Program revenues: Charges for services 5,265,705 $ 4,008,537 $ 3,242,279 $ 3,200,912 $ 8,507,984 $ 7,209,449 $ Operating grants & contributions 2,856,271 4,620,932 - 114,824 2,856,271 4,735,756 Capital grants & contributions 3,446,643 6,137,765 - - 3,446,643 6,137,765 General revenues: Property taxes 12,902,345 12,666,442 - - 12,902,345 12,666,442 Cable franchise taxes 548,288 688,940 - - 548,288 688,940 General sales taxes 16,587,264 15,216,279 - - 16,587,264 15,216,279 Energy sales and use taxes 3,714,872 1,725,540 - - 3,714,872 1,725,540 Interest income 2,413,974 2,354,471 204,832 96,034 2,618,806 2,450,505 Other 851,049 420,203 - - 851,049 420,203 Total Revenues 48,586,411 47,839,109 3,447,111 3,411,770 52,033,522 51,250,879 Expenses: General government 9,066,654 11,470,993 - - 9,066,654 11,470,993 Public safety 16,823,177 14,922,319 - - 16,823,177 14,922,319 Streets / public works 15,971,914 7,674,709 - - 15,971,914 7,674,709 Parks and recreation 2,678,864 1,794,175 - - 2,678,864 1,794,175 Community revitalization 626,373 233,438 - - 626,373 233,438 Interest on long-term debt 1,626,154 1,630,656 - - 1,626,154 1,630,656 Stormwater - - 2,138,306 1,615,181 2,138,306 1,615,181 Total Expenses 46,793,136 37,726,290 2,138,306 1,615,181 48,931,442 39,341,471 Inrease in Net Position 1,793,275 10,112,819 1,308,805 1,796,589 3,102,080 11,909,408 Net position beginning 196,052,200 185,939,381 23,360,573 21,563,984 219,412,773 207,503,365 Net position ending 197,845,475 $ 196,052,200 $ 24,669,378 $ 23,360,573 $ 222,514,853 $ 219,412,773 $ ---PAGE BREAK--- 8 GENERAL FUND BUDGETARY HIGHLIGHTS During the fiscal year, the General Fund’s original budget was amended when needed, resulting in an increase in revenues from the original budget of $33,771,595 to $42,699,313 which is an increase of $8,927,718. The majority of this increase, $3.4 million, was due to mid-year budget amendments for various types of ad valorem taxes and fees in lieu of taxes that are distributed by Salt Lake County along with the regular distributions of property taxes collected.. These additional tax categories were not considered in the original budget. Another contributing factor to the increase in the General Fund revenue budget was the inclusion of the City’s share of the gasoline taxes. The original budget did not include this distribution from the State of Utah; however, the final budget included $2.3 million in intergovernmental revenue for the gasoline tax distribution. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets – The City’s investment in capital assets for its governmental activities as of June 30, 2024, amounts to $223,461,571 (net of accumulated depreciation). This investment in capital assets includes land, infrastructure (streets, curb, gutter, and sidewalks, bridges, etc.), facilities, and equipment. The City’s investment in capital assets for its business-type activities as of June 30, 2024, equals $19,156,628 (net of accumulated depreciation). This investment in capital assets includes storm drain infrastructure and equipment. The City’s additions to capital asset (includes both governmental and business-type activities) during fiscal year 2024 total $59,699,489, which includes the following: • Land, buildings (City Hall and other buildings within Millcreek Common) and buildings in progress (parking structure) in the amount of $57,687,358. • Infrastructure, streets, vehicles and equipment of $2,012,128. CAPITAL ASSETS Additional information on the City’s capital assets can be found in Note 5 to this financial report and the supplemental section. Long-term debt – At June 30, 2024, the City had $51,375,000 in bonds payable. To fund the acquisition of real property and construction of public space within the City Center Community Reinvestment Area (CRA), the City issued sales tax revenue bonds for $17,345,000 in June of 2019. On August 5, 2021, the City issued Series 2021 Sales Tax Revenue Bonds in the amount of $36,265,000. Proceeds from the sale of the Series 2021 bonds were used to finance expenses associated with building a new city hall. In fiscal year 2024, the City paid interest on all bonds in the amount of $1,787,050. Both Series 2019 and Series 2021 were issued at a premium. LONG-TERM DEBT Governmental Activities Business-Type Activities Total 2024 2023 2024 2023 2024 2023 Capital Assets Land 90,545,178 $ 92,342,604 $ - $ - $ 90,545,178 $ 92,342,604 $ Construction in progress 8,182,364 36,783,491 - - 8,182,364 36,783,491 Buildings 51,194,827 3,449,259 - - 51,194,827 3,449,259 Improvements 10,256,244 11,605,046 - - 10,256,244 11,605,046 Machinery and equipment 1,457,978 798,819 298,521 298,521 1,756,499 1,097,340 Infrastructure 73,974,317 72,621,348 22,327,698 22,327,698 96,302,015 94,949,046 Accumulated depreciation (12,149,337) (9,921,144) (3,469,591) (2,963,332) (15,618,928) (12,884,476) Total Capital Assets 223,461,571 $ 207,679,423 $ 19,156,628 $ 19,662,887 $ 242,618,199 $ 227,342,310 $ Governmental Activities Business-Type Activities Total 2024 2023 2024 2023 2024 2023 Sales tax revenue bonds 51,375,000 $ 52,090,000 $ - $ - $ 51,375,000 $ 52,090,000 $ Bond premium 4,991,842 5,237,990 - - 4,991,842 5,237,990 Note payable 4,899,836 5,200,000 - - 4,899,836 5,200,000 Compensated absences 402,923 382,505 48,900 42,501 451,823 425,006 Net pension liability 567,849 334,828 65,409 40,635 633,258 375,463 Total long-term debt 62,237,450 63,245,323 114,309 83,136 62,351,759 63,328,459 ---PAGE BREAK--- 9 ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES At June 30, 2024, the Unemployment rate for Salt Lake County (of which the City is part) was 3.1% compared with the State unemployment rate of 3.0% and a national rate of 4.1%. This compares with the prior year’s rates of 2.5%. 2.6% and 3.6% respectively (Source: Utah Department of Workforce Service). These factors were considered when preparing for the City’s FY2025 budget. The City’s FY2025 budget will include the cost of continued outsourced services: • Police protection (Unified Police Department) • Animal services (Salt Lake County Animal Services) • Park Maintenance (Salt Lake County Parks Department) • Public works services (Salt Lake County Public Works) The FY2025 budget will also include project budgets for additional pavement preservation, the completion of roadway reconstruction projects (including 900 E, 1300 E, and 2000 a multi-use path along 3900 S, the completion of a parking structure attached to City Hall, and the completion of a 10-court pickleball complex. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any information provided in this report or requests for additional financial information should be addressed to: Millcreek Finance Director 1330 E Chambers Avenue Millcreek, UT 84106 ---PAGE BREAK--- ---PAGE BREAK--- MILLCREEK Statement of Net Position June 30, 2024 The accompanying notes are an integral part of this financial statement. 11 Governmental Business-type Activities Actitities Total ASSETS Cash and cash equivalents 35,629,934 $ 4,896,985 $ 40,526,919 $ Receivables: Property and other taxes 15,449,603 - 15,449,603 Accounts 97,385 704,020 801,405 Due from other governments 2,387,800 - 2,387,800 Prepaid expenses 50,470 - 50,470 Restricted cash and cash equivalents 2,484,392 - 2,484,392 Capital assets: Land 90,545,178 - 90,545,178 Construction in progress 8,182,364 - 8,182,364 Buildings and improvements 51,194,827 - 51,194,827 Improvements 10,256,244 - 10,256,244 Machinery and equipment 1,457,978 298,521 1,756,499 Infrastructure 73,974,317 22,327,698 96,302,015 Accumulated depreciation (12,149,337) (3,469,591) (15,618,928) Total assets 279,561,155 24,757,633 304,318,788 DEFERRED OUTFLOWS OF RESOURCES Related to pensions 1,055,255 121,116 1,176,371 Total deferred outflows of resources 1,055,255 121,116 1,176,371 LIABILITIES Accounts payable 5,152,621 82,500 5,235,121 Accrued interest payable 197,541 - 197,541 Accrued liabilites 151,112 11,710 162,822 Deposits 6,105 - 6,105 Development bonds 1,757,067 - 1,757,067 Non-current liabilities: Due within one year 1,504,875 36,675 1,541,550 Due in more than one year 60,164,726 12,225 60,176,951 Net pension liability 567,849 65,409 633,258 Total liabilities 69,501,896 208,519 69,710,415 DEFERRED INFLOWS OF RESOURCES Unavailable property tax revenue 13,261,573 - 13,261,573 Related to pensions 7,466 852 8,318 Total deferred inflows of resources 13,269,039 852 13,269,891 NET POSITION Net investment in capital assets 162,194,893 19,156,628 181,351,521 Restricted for: Capital projects 439,896 - 439,896 Unrestricted 35,210,686 5,512,750 40,723,436 Total net position 197,845,475 $ 24,669,378 $ 222,514,853 $ ---PAGE BREAK--- MILLCREEK Statement of Activities For the Year Ended June 30, 2024 The accompanying notes are an integral part of this financial statement. 12 Operating Capital Charges for Grants and Grants and Governmental Business-type Expenses Services Contributions Contributions Activities Activities Total GOVERNMENTAL ACTIVTITIES General government 9,066,654 $ 5,265,705 $ - $ - $ (3,800,949) $ (3,800,949) $ Public safety 16,823,177 - - - (16,823,177) (16,823,177) Streets and public works 15,971,914 - 2,856,271 821,321 (12,294,322) (12,294,322) Parks and recreation 2,678,864 - - 333,638 (2,345,226) (2,345,226) Community revitalization 626,373 - - 2,291,684 1,665,311 1,665,311 Interest expense 1,626,154 - - - (1,626,154) (1,626,154) Total governmental activities 46,793,136 5,265,705 2,856,271 3,446,643 (35,224,517) (35,224,517) BUSINESS TYPE ACTIVITIES Storm Water 2,138,306 3,242,279 - - 1,103,973 1,103,973 Total business-type activities 2,138,306 3,242,279 - - 1,103,973 1,103,973 Total primary government 48,931,442 $ 8,507,984 $ 2,856,271 $ 3,446,643 $ (35,224,517) 1,103,973 (34,120,544) GENERAL REVENUES Taxes: Property taxes 12,902,345 - 12,902,345 Cable franchise taxes 548,288 - 548,288 General sales taxes 16,587,264 - 16,587,264 Energy sales taxes 3,714,872 - 3,714,872 Interest income 2,413,974 204,832 2,618,806 Miscellaneous 851,049 - 851,049 Total general revenues 37,017,792 204,832 37,222,624 Change in net position 1,793,275 1,308,805 3,102,080 Net position - beginning 196,052,200 23,360,573 219,412,773 Net position - ending 197,845,475 $ 24,669,378 $ 222,514,853 $ Net (Expense) Revenues and Changes in Net Position Program Revenues ---PAGE BREAK--- MILLCREEK Balance Sheet – Governmental Funds June 30, 2024 The accompanying notes are an integral part of this financial statement. 13 Special Revenue Capital Total Totals General Community Projects Nonmajor Governmental Fund Reinvestment Agency Fund Funds Funds ASSETS Cash and cash equivalents 13,926,164 $ 3,232,913 $ 18,470,857 $ - $ 35,629,934 $ Restricted cash and investments 1,760,046 490 37 723,819 2,484,392 Receivables: Sales, property and franchise taxes 15,125,176 324,427 - - 15,449,603 Accounts 95,385 - - 2,000 97,385 Intergovernmental 577,800 1,350,000 460,000 - 2,387,800 Prepaid expenditures 36,567 - 13,903 - 50,470 Total assets 31,521,138 $ 4,907,830 $ 18,944,797 $ 725,819 $ 56,099,584 $ LIABILITIES Accounts payable 2,446,915 $ 1,092 $ 2,679,997 $ 24,617 $ 5,152,621 $ Accrued liabilities 151,112 - - - 151,112 Deposits 6,105 - - - 6,105 Development bonds 1,757,067 - - - 1,757,067 Total liabilities 4,361,199 1,092 2,679,997 24,617 7,066,905 DEFERRED INFLOWS OF RESOURCES Deferred property tax revenue 11,911,573 1,350,000 - - 13,261,573 Total deferred inflows of resources 11,911,573 1,350,000 - - 13,261,573 FUND BALANCE Nonspendable 36,567 - 13,903 - 50,470 Restricted Community foundation - - - 54,325 54,325 Capital projects - 490 37 646,877 647,404 Total restricted - 490 37 701,202 701,729 Assigned to: Special revenue fund - 3,556,248 - - 3,556,248 Capital projects fund - - 16,250,860 - 16,250,860 Total assigned - 3,556,248 16,250,860 - 19,807,108 Unassigned 15,211,799 - - - 15,211,799 Total fund balances 15,248,366 3,556,738 16,264,800 701,202 35,771,106 Total liabilities, deferred inflows of resources, and fund balances 31,521,138 $ 4,907,830 $ 18,944,797 $ 725,819 $ 56,099,584 $ ---PAGE BREAK--- MILLCREEK Reconciliation to the Balance Sheet of Governmental Funds To the Statement of Net Position June 30, 2024 The accompanying notes are an integral part of this financial statement. 14 Amounts reported for governmental activities in the Statement of Net Position are different because: Total Fund Balances - Total Governmental Funds 35,771,106 $ Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds. 223,461,571 Net pension assets and liabilities and deferred pension outflows and inflows are not available to pay for current period expenditures and, therefore, are either deferred or not applicable to funds. 479,940 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. (61,867,142) Net Position - Governmental Activities 197,845,475 $ ---PAGE BREAK--- MILLCREEK Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds For the Year Ended June 30, 2024 The accompanying notes are an integral part of this financial statement. 15 Special Revenue Capital Total Totals General Community Projects Nonmajor Governmental Fund Reinvestment Agency Fund Funds Funds REVENUES Taxes 33,427,382 $ 325,387 - $ - $ 33,752,769 $ Impact fees - - - 333,638 333,638 Licenses and permits 2,840,394 - - - 2,840,394 Charges for services 2,390,717 - - - 2,390,717 Intergovernmental 2,856,271 2,291,684 818,821 2,500 5,969,276 Fines and forfeitures 34,594 - - - 34,594 Interest 1,386,186 155,665 837,388 34,735 2,413,974 Miscellaneous 313,888 36 460,000 77,125 851,049 Total revenues 43,249,432 2,772,772 2,116,209 447,998 48,586,411 EXPENDITURES Current General government 6,663,442 - - - 6,663,442 Public safety 16,823,177 - - - 16,823,177 Streets and public works 6,782,886 - 7,733,549 - 14,516,435 Parks and recreation 2,610,097 - - 683 2,610,780 Community revitalization - 626,373 - - 626,373 Debt service: Principal 715,000 - 300,164 - 1,015,164 Interest 1,065,262 721,804 95,203 - 1,882,269 Capital outlay - - 21,059,719 - 21,059,719 Total expenditures 34,659,864 1,348,177 29,188,635 683 65,197,359 Excess of revenues over (under) expenditures 8,589,568 1,424,595 (27,072,426) 447,315 (16,610,948) OTHER FINANCING SOURCES (USES) Transfers in 24,617 - 7,500,000 - 7,524,617 Transfers out (7,500,000) - - (24,617) (7,524,617) Sale of land - - 1,671,509 - 1,671,509 Contributions to other governments (375,227) - - - (375,227) Total other financing sources (uses) (7,850,610) - 9,171,509 (24,617) 1,296,282 Net change in fund balances 738,958 1,424,595 (17,900,917) 422,698 (15,314,666) Fund balances, beginning of year 14,509,408 2,132,143 34,165,717 278,504 51,085,772 Fund balances, end of year 15,248,366 $ 3,556,738 $ 16,264,800 $ 701,202 $ 35,771,106 $ ---PAGE BREAK--- MILLCREEK Reconciliation of the Statement of Revenues, Expenditures, and Change in Fund Balances of Governmental Funds To the Statement of Activities For the Year Ended June 30, 2024 The accompanying notes are an integral part of this financial statement. 16 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds (15,314,666) $ Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation and asset transfers exceed capital outlays and contributions in the current period. 15,782,148 The issuance of long-term debt bonds, leases) provides current financial resources to governmental funds, while the payment of the principal of long- term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Repayment of principal on debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. This amount is the net effect of these differences in the treatment of long-term debt and related items. 1,271,279 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 54,514 Change in net position - governmental activities 1,793,275 $ ---PAGE BREAK--- MILLCREEK Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund For the Year Ended June 30, 2024 The accompanying notes are an integral part of this financial statement. 17 Variance With Final Budget - Original Final Positve Budget Budget Actual (Negative) REVENUES Taxes 29,728,095 $ 33,130,595 $ 33,427,382 $ 296,787 $ Licenses and permits 2,000,500 2,825,500 2,840,394 14,894 Charges for service 1,060,000 2,237,918 2,390,717 152,799 Intergovernmental 213,000 2,600,300 2,856,271 255,971 Fines and forfeitures 20,000 35,000 34,594 (406) Interest 750,000 1,500,000 1,386,186 (113,814) Miscellaneous - 370,000 313,888 (56,112) Total revenues 33,771,595 42,699,313 43,249,432 550,119 EXPENDITURES Current: General government: Mayor and city council 536,000 543,500 482,728 60,772 City management 311,000 311,250 300,159 11,091 Recorder 247,100 167,100 146,925 20,175 Comunications and programs 555,250 625,250 532,551 92,699 Emergency management 150,700 150,700 128,462 22,238 Justice court 215,000 215,000 113,047 101,953 Legal 512,250 407,250 315,453 91,797 Information center 223,900 185,800 135,291 50,509 IT management 547,000 640,000 570,681 69,319 Economic development 148,600 169,350 136,069 33,281 Business licenses 203,750 219,000 208,863 10,137 Finance 603,500 665,950 642,818 23,132 Human resources 69,500 63,000 42,221 20,779 Nondepartmental 280,000 334,500 200,814 133,686 Facilities 936,250 997,250 846,250 151,000 Fleet 75,000 228,500 205,818 22,682 Planning and zoning 1,407,500 1,332,500 1,303,449 29,051 Promise program 356,000 430,350 351,843 78,507 Public safety 17,015,485 17,024,985 16,823,177 201,808 Streets and public works 4,772,752 7,125,452 6,782,886 342,566 Parks and recreation 1,985,450 2,849,650 2,610,097 239,553 Debt service: Principal 715,000 715,000 715,000 - Interest 1,065,250 1,065,250 1,065,262 (12) Total expenditures 32,932,237 36,466,587 34,659,864 1,806,723 Excess of revenues over expenditures 839,358 6,232,726 8,589,568 (1,256,604) Transfers in - - 24,617 24,617 Transfers out (1,198,804) (6,035,528) (7,500,000) 1,464,472 Contributions to other governments (61,000) (125,500) (375,227) 249,727 Total other financing sources (uses) (1,259,804) (6,161,028) (7,850,610) 1,738,816 Net change in fund balance (420,446) 71,698 738,958 482,212 Fund balance, beginning of year 14,509,408 14,509,408 14,509,408 - Fund balance, end of year 14,088,962 $ 14,581,106 $ 15,248,366 $ 667,260 $ ---PAGE BREAK--- MILLCREEK Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Community Reinvestment Agency – Special Revenue Fund For the Year Ended June 30, 2024 The accompanying notes are an integral part of this financial statement. 18 Variance With Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES Taxes 390,000 $ 325,980 $ 325,387 $ (593) $ Intergovernmental 1,560,000 2,291,749 2,291,684 (65) Interest 250 250 155,665 155,415 Miscellaneous - - 36 36 Total revenue 1,950,250 2,617,979 2,772,772 154,793 EXPENDITURES Community revitalization 687,500 565,394 626,373 (60,979) Debt service 721,800 721,800 721,804 Total expenditures 1,409,300 1,287,194 1,348,177 (60,983) Excess of revenues over expenditures 540,950 1,330,785 1,424,595 93,810 OTHER FINANCING SOURCES (USES) Loan proceeds 445,300 1,864,640 - (1,864,640) Transfer out (445,300) (3,214,980) - 3,214,980 Total other financing sources (uses) - (1,350,340) - 1,350,340 Net change in fund balance 540,950 (19,555) 1,424,595 1,444,150 Fund balance, beginning of year 2,132,143 2,132,143 2,132,143 - Fund balance, end of year 2,673,093 $ 2,112,588 $ 3,556,738 $ 1,444,150 $ ---PAGE BREAK--- MILLCREEK Statement of Net Position – Proprietary Fund June 30, 2024 The accompanying notes are an integral part of this financial statement. 19 Storm Water ASSETS Current assets: Cash and cash equivalents 4,896,985 $ Accounts receivable, net 704,020 Total current assets 5,601,005 Property, plant and equipment: Infrastructure 22,327,698 Machinery and equipment 298,521 Accumulated depreciation (3,469,591) Net property, plant and equipment 19,156,628 Total assets 24,757,633 DEFERRED OUTFLOWS OF RESOURCES Related to pensions 121,116 Total deferred outflows of resources 121,116 LIABILITIES Current liabilities: Accounts payable 82,500 Accrued liabilities 11,710 Compensated absences, current 36,675 Total current liabilities 130,885 Noncurrent liabilities: Compensated absences 12,225 Net pension liability 65,409 Total noncurrent liabilities 77,634 Total liabilities 208,519 DEFERRED INFLOWS OF RESOURCES Related to pensions 852 Total deferred inflows of resources 852 NET POSITION Net investment in capital assets 19,156,628 Unrestricted 5,512,750 Total net position 24,669,378 $ ---PAGE BREAK--- MILLCREEK Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Fund For the Year Ended June 30, 2024 The accompanying notes are an integral part of this financial statement. 20 Storm Water OPERATING REVENUES Charges for services 3,227,157 $ Miscellaneous 15,122 Total operating revenues 3,242,279 OPERATING EXPENSES Wages and fringe benefits 558,516 Repairs, maintenance, and admistrative 865,333 Professional services 204,220 Depreciation 506,259 Other 3,978 Total operating expenses 2,138,306 Operating income 1,103,973 NON-OPERATING REVENUES (EXPENSES) Interest income 204,832 Total non-operating revenues 204,832 Income before transfers and contributions 1,308,805 Total net position, beginning of year 23,360,573 Total net position, end of year 24,669,378 $ ---PAGE BREAK--- MILLCREEK Statement of Cash Flows – Proprietary Fund For the Year Ended June 30, 2024 The accompanying notes are an integral part of this financial statement. 21 Storm Water Cash flows from operating activities: Cash received from customers (including cash deposits) 3,185,651 $ Cash paid to suppliers (1,305,863) Cash paid to employees (564,562) Net cash from operating activities 1,315,226 Cash flow from capital and related financing activities: Interest income received 204,832 Net cash from capital and related financing activities 204,832 Net increase in cash and cash equivalents 1,520,058 Cash and cash equivalents at beginning of year 3,376,927 Cash and cash equivalents at end of year 4,896,985 $ Reconciliation of operating income to net cash provided by operating activities: Operating income 1,103,973 $ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization expense 506,259 Changes in assets and liabilities: Increase in accounts receivable (56,628) Increase in deferred ouflows (38,275) Decrease in accounts payable (232,332) Increase in accrued liabilities 9,107 Increase in deferred inflows 214 Increase in net pension liability 22,908 Total adjustments 211,253 Net cash provided by operating activities 1,315,226 $ ---PAGE BREAK--- MILLCREEK Statement of Fiduciary Net Position Fiduciary Fund June 30, 2024 The accompanying notes are an integral part of this financial statement. 22 Custodial Funds ASSETS Cash and cash equivalents 325,356 $ Total assets 325,356 LIABILITIES Accounts payable 14,165 Total liabilities 14,165 NET ASSETS Restricted for Community Renewable Energy Program 311,191 Total net assets 311,191 $ ---PAGE BREAK--- MILLCREEK Statement of Changes in Fiduciary Net Position Fiduciary Fund For the Year Ended June 30, 2024 The accompanying notes are an integral part of this financial statement. 23 Custodial Funds ADDITIONS Contributions from other governments - $ Total additions - DEDUCTIONS Payments for Community Renewable Energy Program initiatives 154,025 Total deductions 154,025 Net increase in fiduciary net position (154,025) Total net position, beginning of year 465,216 Total net position, end of year 311,191 $ ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements June 30, 2024 24 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Millcreek, Utah (the City) was incorporated in 2017 under the laws of the State of Utah. The City operates under a Mayor-Council form of government. The City is a municipal corporation governed by an elected five-member Council, which includes the Mayor. The City provides the following services: general administrative services, public safety, highways and streets, planning and engineering, parks and recreation, community events, and stormwater collection. The City’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The more significant accounting policies established in GAAP and used by the City are discussed below. Reporting Entity In evaluating how to define the City for financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in the related GASB pronouncement. The basic, but not the only, criterion for including a potential component unit within the reporting entity is the governing body's ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. Other manifestations of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations and accountability of fiscal matters. The other criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the City is able to exercise oversight responsibilities. Component units that do not meet the criteria for being blended into the City’s primary government are reported discretely. Government-Wide Financial Statements and Fund Financial Statements The City’s basic financial statements include both government-wide (reporting the City as a whole) and fund financial statements. The City’s general administrative services, public safety, highways and streets, planning and engineering, and parks are all classified as governmental activities. Storm water collection services are classified as business-type activities. The government-wide financial statements the Statement of Net Position and the Statement of Activities) report information on all activities of the City and its component units. As a general rule, the effect of inter-fund activity has been eliminated from the government-wide financial statements. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 25 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government-Wide Financial Statements and Fund Financial Statements (Continued) The Statement of Activities demonstrates the degree to which the direct expenses of a given function or a segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds. Major individual governmental funds and proprietary funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Financial resources used to acquire capital assets are capitalized as assets, rather than reported as expenditures, in the government-wide financial statements. Proceeds of long-term debt are recorded as a liability in the government-wide financial statements, rather than other financing source. Amounts paid to reduce long-term debt of the City are reported as a reduction of the related liability, rather than an expenditure in the government-wide financial statements. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, expenditures related to claims and judgments are recorded only when payment is due. Sales taxes, franchise taxes, and earned but unreimbursed state and federal grants associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Property taxes are measurable as of the date levied (assessed) and are recognized as revenues when they become available. Available means when due, or past due, and received within the current period or collected soon enough thereafter (within 60 days) to be used to pay liabilities of the current period. All other revenues are considered to be measurable and available only when cash is received by the City. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 26 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, reserves, fund balance, revenues, and expenditures or expenses as appropriate. The various funds are summarized by type in the financial statements. The following fund types are used by the City: The City reports the following major governmental funds: • The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. • The Capital Projects Fund accounts for the acquisition and construction of the government’s major capital facilities. • The CRA special revenue fund is used to account for financial resources to be used for the revitalization of blighted areas within the City. This fund is a blended component unit. The City reports the following major proprietary fund: • The Stormwater Fund accounts for the operation and maintenance of the storm water system and capital projects for the storm water system. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of all enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales, services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Additionally, the City reports the following fund types: • Millcreek Community Foundation fund: The City accounts for community foundation funds in a special revenue fund. • Park Impact fund: The City accounts for park impact fees in a special revenue fund. • Custodial fund: The City accounts for monies held for the Community Renewable Energy Agency, a local government cooperative to achieve net-100% renewable electricity on behalf of participating communities. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 27 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) When both restricted and unrestricted resources are available for use, it is the government’s practice to use restricted resources first, then unrestricted resources as they are needed. Budgets Annual budgets are prepared and adopted by ordinance by total for each department, in accordance with State law, by the Mayor and City Council on or before June 30 for the following fiscal year, beginning July 1. Estimated revenues and appropriations may be increased or decreased by resolution of the City Council at any time during the year. A public hearing must be held prior to any proposed increase in a fund's appropriations. Budgets include activities in the General Fund and Special Revenue Funds. Annual budgets are also adopted for Capital Projects Fund which may include activities that overlap several fiscal years. The level of the City's budgetary control (that is, the level at which the City's expenditures cannot legally exceed the appropriated amounts) is established at the department level. Each department head is responsible to the Mayor and City Council for operating within the budget for their department. All annual budgets lapse at fiscal yearend. Utah State law prohibits the appropriation of the sum of unassigned, assigned, and committed General Fund balance until it exceeds 5% of the General Fund revenues. Until the sum of the stated categories of fund balance is greater than the above amount, it cannot be budgeted, but is used to provide working capital until tax revenue is received, to meet emergency expenditures, and to cover unanticipated deficits. Utah State law prohibits the accumulation of the stated fund balance categories in any amount greater than 35% of the current year’s actual revenues. Once adopted, the budget can be amended by subsequent City Council action. The City Council can amend the budget to any extent, provided the budgeted expenditures do not exceed budgeted revenues and appropriated fund balance, in which case a public hearing must be held. With the consent of the Mayor, department heads may reallocate unexpended appropriated balances from one expenditure account to another within that department during the budget year. Budgets for the General Fund, Special Revenue Funds, and Capital Projects Fund are prepared on the modified accrual basis of accounting. Encumbrance accounting is not used by the City. Expenditures in the Capital Projects Fund are budgeted annually on a project-by-project basis. Although it is the intention of the City that each project be funded by a specific revenue source, the adopted budget reflects only total anticipated revenues by source. Since it is not practicable or appropriate to separate revenues and fund balance on a project-by-project basis, the Capital Projects Fund is reported as an individual fund in the accompanying financial statements. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance Cash and Cash Equivalents The government’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 28 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance (Continued) Investments City policy allows for the investment of funds in time certificates of deposit with federally insured depositories, investment in the Utah Public Treasurer’s Investment Fund and other investments allowed by the State of Utah’s Money Management Act. Investments are reported at fair value. The State Treasurer’s Investment Fund operates in accordance with state laws and regulations. The reported value of the Fund is the same as the fair value of the Fund shares. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to or due from other funds.” Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate they are not available for appropriation and are not available financial resources. Taxes, intergovernmental, and other receivables at June 30, 2024, consisted of property tax, sales tax, franchise tax, grants, utility billings, and other miscellaneous items. Taxes, grants, and utility charges are deemed collectible in full, so no allowance for uncollectibles is recorded. Restricted Assets Certain assets are classified as restricted because their use is restricted by an independent third party, enabling legislation, or other laws and statutes. These restrictions may include future debt service payments, unexpended portions of bonds issued for capital construction, impact fees, and other agreements with third parties. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an individual cost of more than $10,000 and an estimated useful life in excess of three years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Infrastructure 50 years Buildings 50 years Machinery and equipment 5 years ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 29 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance (Continued) Compensated Absences For governmental funds, amounts of vested or accumulated personal time off (PTO) are not expected to be liquidated with expendable available financial resources are reported as liabilities in the government-wide statement of net position and as expenses in the government- wide statement of activities. No expenditures are reported for these amounts in the fund financial statements. PTO is capped at 320 hours. Once an employee’s PTO accumulates to 320 hours, the employee’s bi-weekly accrual of PTO hours ceases until PTO is taken and drops below the cap. Compensated absences are paid by the individual funds as they become due. For governmental funds, most of the, most of the costs are paid by the General Fund. Taxes On or before June 22 of each year, the City sets the property tax rate for various municipal purposes. If the City intends to increase property tax revenues above the tax rate of the previous year, state law requires the City to provide public notice to property owners and hold public hearings. When these special public hearings are necessary, the adoption of the final budget is made subsequent to June 22. All property taxes levied by the City are assessed and collected by Salt Lake County. Taxes are levied as of January 1 and due November 30; any delinquent taxes are subject to a penalty. Unless the delinquent taxes and penalties are paid before January 15, a lien is attached to the property, and the amount of taxes and penalties bears interest from January 1 until paid. If after five years, delinquent taxes have not been paid, the County sells the property at a tax sale. Tax collections are remitted to the City from the County on a basis. Sales taxes are collected by the Utah State Tax Commission and remitted to the City Franchise taxes are collected by utility companies and remitted to the City periodically. Energy and Use Taxes are collected by the service providers of electricity and natural gas and they forward the taxes to the City on a basis. Cable Franchise Fees are also collected by the service providers and remitted periodically to the City. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Utah Retirement Systems Pension Plan (URS) and additions to/deductions from URS's fiduciary net position have been determined on the same basis as they are reported by URS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 30 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Deferred Outflows and Inflows of Resources Deferred outflows of resources represent a consumption of net assets that applies to a future period, and is, therefore, deferred until that time. A deferred loss on refunding results from the difference in the carrying value of the refunded debt and the reacquisition price. Deferred inflows of resources represent an acquisition of net assets that applies to a future period, and is, therefore, deferred until that time. Governmental funds report unavailable revenue from property taxes as deferred inflows of resources until such time they can be recognized as revenue in the period that they become available. Long-term Obligations In the government-wide financial statements and proprietary fund types, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the applicable debt. 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 while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Balance Governmental fund balance is reported in five separate categories: nonspendable, restricted, committed, assigned, and unassigned. When both restricted and unrestricted fund balance is available for use, it is the City’s policy to use restricted fund balance first. When expenditures qualify for more than one unrestricted fund balance classification, it is the City’s policy to use resources in the following order: Committed, assigned, and then unassigned. Inter-fund Transactions During the course of normal operations, the City has transactions between funds to construct assets, to distribute grant proceeds, etc. These transactions are generally reflected as transfers, which are transfers from a fund authorized to receive certain revenues to the fund through which the resources are to be expended. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues, expenditures and expenses during the reporting period. Actual results could differ from those estimates. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 31 2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet includes a reconciliation between total governmental fund balances and net position of governmental activities as reported in the government-wide statement of net position. This difference primarily results from the long-term economic focus of the statement of net position versus the current financial resources focus of the governmental funds balance sheet. Capital related items: When capital assets (property, plant and equipment) that are to be used in governmental activities are purchased or constructed, the costs of those assets are reported as expenditures in governmental funds. However, the statement of net position includes those capital assets among the assets of the City as a whole. Cost of capital assets 235,610,908 $ Accumulated depreciation (12,149,337) Capital assets, net 223,461,571 $ Long-term debt transactions: Long-term liabilities applicable to the City’s governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities in the fund financials. All liabilities (both current and long-term) are reported in the statement of net position. Balances at June 30, 2024 were: Sales Tax Revenue bonds 51,375,000 $ Note payable 4,899,836 Premiums on sales tax revenue bonds 4,991,842 Accrued interest payable on long-term debt 197,541 Compensated absences 402,923 61,867,142 $ ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 32 2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) Explanation of Certain Differences Between Governmental Funds Operating Statements and the Statement of Net Activities The governmental funds statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net change in fund balances - total governmental funds and change in net position of governmental activities as reported in the government-wide statement of activities. The first element of this reconciliation states that capital outlays and contributions are reported in the governmental fund as expenditures while the government-wide statement of activities allocates these costs over the useful lives of the assets as depreciation. While shown in the reconciliation as the net difference, the elements of this difference are as follow: Capital outlays and contributions 22,915,995 $ Depreciation expense (2,425,829) Cost of capital assets sold (4,708,018) Net difference, as reported 15,782,148 $ 3. DEPOSITS AND INVESTMENTS The City maintains a cash and investment pool that is available for use by all funds. Cash includes amounts in demand deposits and cash on hand. Investments are stated at cost, which approximates fair value. Each fund’s portion of this pool is displayed on the combined balance sheet as “cash and cash equivalents,” which also includes cash accounts that are separately held by several of the City’s funds. As of June 30, 2024, the City’s demand deposits and cash on hand amounted to $43,319,247. Deposits – Utah State law requires that City funds be deposited with a "qualified depository" as defined by the Utah Money Management Act. "Qualified depository" includes any depository institution which has been certified by the Utah State Commissioner of Financial Institutions as having met the requirements as defined in Rule 11 of the Utah Money Management Act. Rule 11 establishes the formula for determining the amount of public funds which a qualified depository may hold in order to minimize risk of loss and defines capital requirements which an institution must maintain to be eligible to accept public funds. Investments – The State of Utah Money Management Council has the responsibility to advise the State Treasurer about investment policies, promote measures and rules that will assist in strengthening the banking and credit structure of the state, and review the rules adopted under the authority of the State of Utah Money Management Act (UMMA) that relate to the deposit and investment of public funds. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 33 3. DEPOSITS AND INVESTMENTS (CONTINUED) The City follows the requirements of UMMA (Utah Code, Title 51, Chapter 7) in handling its depository and investment transactions. The Act requires the depositing of City funds in a qualified depository, which is defined as a financial institution whose deposits are insured by an agency of the Federal Government and which has been certified by the State Commissioner of Financial Institutions as meeting the requirements of the Act and adhering to the rules of the Utah Money Management Council. UMMA defines types of securities authorized as appropriate investments for the City’s funds and the conditions for making investment transactions. Investment transactions may be conducted only through qualified depositories, certified dealers, or directly with issuers of the investment securities. Statutes authorize the City to invest in negotiable or nonnegotiable deposits of qualified depositories and permitted negotiable depositories; repurchase and reverse repurchase agreements; commercial paper that is classified as “first tier” by two nationally recognized statistical rating organizations; bankers’ acceptances; obligations of the United States Treasury including bills, notes, and bonds; obligations, other than mortgage derivative products, issued by U.S. government sponsored enterprises (U.S. Agencies) such as the Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation (Freddie Mac), and Federal National Mortgage Association (Fannie Mae); bonds, notes, and other evidence of indebtedness of political subdivisions of the State; fixed rate corporate obligations and variable rate securities rated or higher, or the equivalent of or higher, by two nationally recognized statistical rating organizations; shares or certificates in a money market mutual fund as defined in UMMA; and the Utah State Public Treasurers’ Investment Fund. The City has complied with the UMMA and rules of the Money Management Council with regard to deposits and investments. The City has a separate deposit and investment policy which requires City to follow UMMA. The Utah State Treasurer’s Office operates the Public Treasurers’ Investment Fund (PTIF). The PTIF is available for investment of funds administered by any Utah public treasurer and is not registered with the SEC as an investment company. The PTIF is authorized and regulated by UMMA. The Act established the Money Management Council which oversees the activities of the State Treasurer and the PTIF and details the types of authorized investments. Deposits in the PTIF are not insured or otherwise guaranteed by the State of Utah, and participants share proportionally in any realized gains or losses on investments. The PTIF operates and reports to participants on an amortized cost basis. The income, gains, and losses of the PTIF, net of administration fees, are allocated based upon the participant’s average daily balance. The fair value of the PTIF investment pool is approximately equal to the value of the pool shares. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 34 3. DEPOSITS AND INVESTMENTS (CONTINUED) Fair Value of Investments The City measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows: • Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges. • Level 2: Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. • Level 3: Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instruments. The prices are determined using significant unobservable inputs or valuation techniques. Quoted prices for identical investments in active markets. At June 30, 2024, the City had the following recurring fair value measurements. 06/30/24 Level 1 Level 2 Level 3 Debt Securities PTIF 42,170,906 $ - $ 42,170,906 $ - $ Total debt securities 42,170,906 $ - $ 42,170,906 $ - $ Fair Value Measurements Using The City’s cash and cash equivalents and investments are exposed to certain risks as outlined below: Custodial credit risk – deposits is the risk that in the event of a bank failure, the City’s deposits may not be returned. As of June 30, 2024, $898,340 of the City’s $1,148,340 balance of deposits was exposed to custodial credit risk because it was uninsured and uncollateralized. UMMA does not require deposits to be insured or collateralized and the City has no formal policy regarding deposit credit risk. UMMA requires that the City keep deposits in a qualified depository, which the City has done. Custodial credit risk – investments is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments that are in the possession of an outside party. Of the City’s investment in the PTIF of $42,170,906, the City has no custodial credit risk exposure as the PTIF is an external investment pool managed by the Utah State Treasurer and is not categorized as to custodial credit risk. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 35 3. DEPOSITS AND INVESTMENTS (CONTINUED) Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City’s policy for limiting the credit risks of investments is to comply with UMMA. Interest rate risk is the risk that changes in the interest rates will adversely affect the fair value of an investment. The City has no formal policy relating to specific investment-related interest rate risk. The City manages its exposure by investing mainly in the PTIF and by adhering to UMMA. The Act requires that the remaining term to maturity may not exceed the period of availability of the funds to be invested. The Act further limits the remaining term to maturity on all investments in commercial paper, bankers’ acceptances, fixed rate negotiable deposits, and fixed rate corporate obligations to 270 days - 15 months or less. The Act further limits the remaining term to maturity on all investments in obligations of the United States Treasury; obligations issued by U.S. government sponsored enterprises; and bonds, notes, and other evidence of indebtedness of political subdivisions of the State to five years. In addition, variable rate negotiable deposits and variable rate securities may not have a remaining term to final maturity exceeding three years. As of June 30, 2024, the City’s investments had the following maturities and ratings: Investment Type Fair Value Less Than 1 1-5 Quality Ratings PTIF 42,170,906 $ 42,170,906 $ - $ Unrated 42,170,906 $ 42,170,906 $ - $ Investment Maturities (in Years) Concentration of credit risk is the risk of loss attributed to the magnitude of a City’s investment in a single issuer. The City’s policy for reducing this risk of loss is to comply with the rules of the Money management Council. Rule 17 of the Money Management Council limits investments in a single issuer of commercial paper and corporate obligations to 5-10% depending upon the total dollar amount held in the portfolio. The City’s investment in the PTIF has no concentration of credit risk as the PTIF is an external investment pool managed by the Utah State Treasurer. The PTIF invests in high-grade securities which are delivered to the custody of the Utah State Treasurer, assuring a perfected interest in the securities, and, therefore, there is very little credit risk except in the most unusual and unforeseen circumstances. The maximum weighted average life of the portfolio does not exceed 90 days. Twice a year, at June 30 and December 31, which are the accounting periods for public entities, the investments are valued at fair value and participants are informed of the fair value valuation factor. Additional information is available at the Utah State Treasurers’ Office. The City did not enter into any reverse repurchase agreements during the year. Bond deposits are held by an appointed trustee in accordance with the Bond Resolutions. Repurchase agreements are secured by uninsured, unregistered securities held by the counter party but not in the City’s name. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 36 4. ACCOUNTS RECEIVABLE Receivables as of June 30, 2024 for the City’s individual major funds, including the applicable allowances for uncollectible accounts, are as follows: Community Nonmajor Capital Storm Reinvestment Governmental Projects Water General Agency Fund Fund Fund Total Receivables: Taxes 15,125,176 $ 324,427 $ - $ - $ - 15,449,603 $ Accounts and others 95,385 - 2,000 - 704,020 801,405 Intergovernmental 577,800 1,350,000 - 460,000 - 2,387,800 Gross receivables 15,798,361 1,674,427 2,000 460,000 704,020 18,638,808 Less: allowance for uncollectibles - - - - - - Net total receivables 15,798,361 $ 1,674,427 $ 2,000 $ 460,000 $ 704,020 $ 18,638,808 $ Governmental funds report deferred revenue as deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At June 30, 2024, the various components of deferred revenue and unearned revenue reported in the government funds were as follows: Deferred Inflows of Resources Unearned Property taxes receivable 12,236,000 $ - $ Intergovernmental receivable 1,350,000 - Total deferred inflows of resources/ unearned revenue, governmental funds 13,586,000 $ - $ ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 37 5. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2024 was as follows: 7/1/2023 Increases Decreases 6/30/2024 Governmental activities Capital assets: Land 92,342,604 $ 202,904 $ (2,000,330) $ 90,545,178 $ Construction in progress 36,783,491 8,182,364 (36,783,491) 8,182,364 Buildings and improvements 3,449,259 48,894,827 (1,149,259) 51,194,827 Other improvements 11,605,046 407,263 (1,756,065) 10,256,244 Infrastructure 72,621,348 1,352,969 - 73,974,317 Vehicles, machinery and equipment 798,819 659,159 - 1,457,978 Total capital assets 217,600,567 59,699,486 (41,689,145) 235,610,908 Accumulated depreciation: Buildings and improvements (139,249) (616,440) 89,416 (666,273) Other improvements (422,828) (205,125) 108,220 (519,733) Infrastructure (8,791,323) (1,455,479) - (10,246,802) Vehicles, machinery and equipment (567,744) (148,785) - (716,529) Total accumulated depreciation (9,921,144) (2,425,829) 197,636 (12,149,337) Net governmental capital assets 207,679,423 $ 57,273,657 $ (41,491,509) $ 223,461,571 $ 7/1/2023 Increases Decreases 6/30/2024 Business-type activities Capital assets: Storm water infrastructure 22,327,698 $ - $ - $ 22,327,698 $ Equipment 298,521 - - 298,521 Total capital assets 22,626,219 - - 22,626,219 Accumulated depreciation: Storm water infrastructure (2,846,410) (446,554) - (3,292,964) Equipment (116,922) (59,705) - (176,627) Total accumulated depreciation (2,963,332) (506,259) - (3,469,591) Net business-type capital assets 19,662,887 $ (506,259) $ - $ 19,156,628 $ In the government-wide financial statements depreciation was charged as follows by program or activity: Governmental activities: General government 902,266 $ Highways and public improvements 1,455,479 Parks and recreation 68,084 Total depreciation expense - governmental activities 2,425,829 $ Business-type activities: Storm water 506,259 $ ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 38 6. LONG-TERM DEBT Changes in Long-Term Liabilities Long-term liability activity for the year ended June 30, 2024 was as follows: 7/1/2023 Additions Reductions 6/30/2024 Due in One Year Governmental activities Bonds payable: Sales tax revenue 52,090,000 $ - $ (715,000) $ 51,375,000 $ 890,000 $ Premium 5,237,990 - (246,148) 4,991,842 - Total bonds payable 57,327,990 - (961,148) 56,366,842 890,000 Note payable 5,200,000 - (300,164) 4,899,836 312,683 Compensated absences 334,828 425,165 (357,070) 402,923 302,192 Net pension liability 382,505 185,344 - 567,849 - Governmental activity long-term liabilities 63,245,323 $ 610,509 $ (1,618,382) $ 62,237,450 $ 1,504,875 $ 7/1/2023 Additions Reductions 6/30/2024 Due in One Year Business-type activities Compensated absences 40,635 $ 47,262 $ (38,997) $ 48,900 $ 36,675 $ Net pension liability 42,501 22,908 - 65,409 - Business-type activity long-term liabilities 83,136 $ 70,170 $ (38,997) $ 114,309 $ 36,675 $ Revenue Bonds Bond Description Original Issue Annual Principal Interest Rate Final Due Date Outstanding as of 6/30/24 Sales Tax Revenue $140,000 to Bonds, Series 2019 17,345,000 $ $1,770,000 4% to 5% 12/1/2039 17,345,000 $ Sales Tax Revenue $680,000 to 2.125% to Bonds, Series 2021 36,265,000 $1,740,000 5.00% 6/1/1951 34,030,000 53,610,000 $ 51,375,000 $ ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 39 6. LONG-TERM DEBT (CONTINUED) Revenue bond debt service requirements to maturity are as follows: Principal Interest Total 890,000 $ 1,747,800 $ 2,637,800 $ 1,065,000 1,699,800 2,764,800 1,220,000 1,643,675 2,863,675 1,390,000 1,579,550 2,969,550 1,565,000 1,506,675 3,071,675 2030 - 2034 10,935,000 6,238,650 17,173,650 2035 - 2039 13,990,000 3,943,350 17,933,350 2040 - 2044 8,865,000 1,837,950 10,702,950 2045 - 2049 8,010,000 883,788 8,893,788 2050 - 2051 3,445,000 110,181 3,555,181 51,375,000 $ 21,191,419 $ 72,566,419 $ 2025 2026 2027 2028 2029 Note Payable On July 12, 2022, the City entered into a note payable agreement with the Utah Department of Transportation for $5,200,000 to enable the City to construct transportation infrastructure projects. The note bears interest at 1.69% and matures in October 2037. Debt service requirements to maturity are as follows: Principal Interest Total 312,683 $ 82,683 $ 395,366 $ 317,968 77,399 395,367 323,341 72,025 395,366 328,806 66,561 395,367 334,363 61,004 395,367 2030 - 2034 1,758,509 218,362 1,976,871 2035 - 2038 1,524,166 64,624 1,588,790 4,899,836 $ 642,658 $ 5,542,494 $ 2025 2026 2027 2028 2029 7. RETIREMENT SYSTEMS AND PENSION PLANS General Information About the Pension Plan Plan Description Eligible plan participants are provided with pensions through the Utah Retirement Systems. The Utah Retirement Systems are comprised of the following pension trust funds: Public Employees Noncontributory Retirement System (Noncontributory System); is a multiple employer, cost sharing, public employee retirement system. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 40 7. RETIREMENT SYSTEMS AND PENSION PLANS (CONTINUED) Tier 2 Public Employees Contributory Retirement System (Tier 2 Public Employees System) is a multiple employer, cost sharing, public employee retirement system. The Tier 2 Public Employees System became effective July 1, 2011. All eligible employees beginning work on or after July 1, 2011, who has no previous service credit with any of the Utah Retirement Systems, are members of the Tier 2 Retirement System. The Utah Retirement Systems (Systems) are established and governed by the respective sections of Title 49 of the Utah Code Annotated 1953, as amended. The Systems’ defined benefit plans are amended statutorily by the State Legislature. The Utah State Retirement Office Act in Title 49 provides for the administration of the Systems under the direction of the Board, whose members are appointed by the Governor. The Systems are fiduciary funds defined as pension (and other employee benefit) trust funds. URS is a component unit of the State of Utah. Title 49 of the Utah Code grants the authority to establish and amend the benefit terms. URS issues a publicly available financial report that can be obtained by writing Utah Retirement System, 560 E 200 S, Salt Lake City, Utah 84102 or visiting the website: www.urs.org/general/publications. Summary of Benefits by System URS provides retirement, disability, and death benefits. Retirement benefits are as follows: System Final Average Salary Years of Service Required and/or Age Eligible for Benefit Benefit Percent Per Year of Service COLA** Noncontributory System Highest 3 years 30 years any age 25 years any age* 20 years age 60* 2.0% per year all years Up to 4% 10 years age 62* 4 years age 65 Tier 2 Public Employees System Highest 5 years 35 years any age 20 years any age 60* 1.5% per year all years Up to 10 years age 62* 2.50% 4 years age 65 *with actuarial reductions **All post-retirement cost-of-living adjustments are non-compounding and are based on the original benefit except for Judges, which is a compounding benefit. The cost-of-living adjustments are also limited to the actual Consumer Price Index (CPI) increase for the year, although unused CPI increases not met may be carried forward to subsequent years. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 41 7. RETIREMENT SYSTEMS AND PENSION PLANS (CONTINUED) Contribution Rate Summary As a condition of participation in the Systems, employers and/or employees are required to contribute certain percentages of salary and wages as authorized by statute and specified by the URS Board. Contributions are actuarially determined as an amount that, when combined with employee contributions (where applicable), is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded actuarial accrued liability. Contribution rates as of June 30, 2024 are as follows: Employer Employer Employee Contribution Rate for Paid Rates 401(k) Plan Contributory System 111- Local Governmental Division Tier 2 N/A 16.01% 0.18% Noncontributory System 15- Local Governmental Division Tier 1 N/A 17.97% N/A Tier 2 DC Only 211 - Local Government N/A 6.19% 10.00% Tier 2 rates include a statutory required contribution to finance the unfunded actuarial accrued liability of the Tier 1 plans. For fiscal year ended June 30, 2024, the employer and employee contributions to the System were as follows: Employer Employee System Contributions Contributions Noncontributory System 390,642 $ N/A Tier 2 Public Employees System 195,689 - Tier 2 DC Only System 67,265 N/A Total Contributions 653,596 $ - $ Contributions reported are the URS Board-approved required contributions by System. Contributions in the Tier 2 Systems are used to finance the unfunded liabilities in the Tier 1 Systems. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 42 7. RETIREMENT SYSTEMS AND PENSION PLANS (CONTINUED) Combined Pension Assets, Liabilities, Expense, and Deferred Outflows and Inflows of Resources Relating to Pensions At June 30, 2024, the City reported a net pension asset of $0 and a net pension liability of $425,006. Net Net Proportionate Pension Pension Proportionate Share Asset Liability Share December 31, 2022 Change Noncontributory System - $ 548,201 $ 0.2363378% 0.2188781% 0.0174597% Tier 2 Public Employees System - 85,057 0.0437005% 0.0460303% -0.0023298% Total Net Pension Asset / Liability - $ 633,258 $ (Measurement Date): December 31, 2023 The net pension asset and liability was measured as of December 31, 2023, and the total pension liability used to calculate the net pension asset and liability was determined by an actuarial valuation as of January 1, 2023 and rolled-forward using generally accepted actuarial procedures. The proportion of the net pension asset and liability is equal to the ratio of the employer’s actual contributions to the Systems during the plan year over the total of all employer contributions to the System during the plan year. For the year ended June 30, 2024, the City recognized pension expense of $514,564. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources relating to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience 411,100 $ 1,393 $ Changes in assumptions 213,190 67 Net difference between projected and actual earnings on pension plan investments 187,875 - Changes in proportion and differences between contributions and proportionate share of contributions 25,661 6,858 Contributions subsequent to the measurement date 338,545 - Total 1,176,371 $ 8,318 $ $338,545 reported as deferred outflows of resources related to pensions results from contributions made by the City prior to the fiscal year end, but subsequent to the measurement date of December 31, 2023. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 43 7. RETIREMENT SYSTEMS AND PENSION PLANS (CONTINUED) These contributions will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions, will be recognized in pension expense as follows: Year Ended December 31, Net Deferred Outflows (Inflows) of Resources 2024 255,843 $ 2025 236,599 2026 355,246 2027 (67,894) 2028 9,437 Thereafter 40,278 Noncontributory System Pension Expense and Deferred Outflows and Inflows of Resources For the year ended June 30, 2024, the City recognized pension expense of $403,015. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources relating to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience 383,857 $ - $ Changes in assumptions 164,504 - Net difference between projected and actual earnings on pension plan investments 178,270 - Changes in proportion and differences between contributions and proportionate share of contributions 10,100 4,356 Contributions subsequent to the measurement date 202,752 - Total 939,483 $ 4,356 $ $202,752 reported as deferred outflows of resources related to pensions results from contributions made by the City prior to the fiscal year end, but subsequent to the measurement date of December 31, 2023. These contributions will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions, will be recognized in pension expense as follows: ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 44 7. RETIREMENT SYSTEMS AND PENSION PLANS (CONTINUED) Year Ended December 31, Net Deferred Outflows (Inflows) of Resources 2024 247,360 $ 2025 224,728 2026 335,160 2027 (74,874) Tier 2 Public Employees System Pension Expense and Deferred Outflows and Inflows of Resources For the year ended June 30, 2024, the City recognized pension expense of $111,550. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources relating to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience 27,243 $ 1,393 $ Changes in assumptions 48,687 67 Net difference between projected and actual earnings on pension plan investments 9,605 - Changes in proportion and differences between contributions and proportionate share of contributions 15,561 2,501 Contributions subsequent to the measurement date 135,793 - Total 236,889 $ 3,961 $ $135,793 reported as deferred outflows of resources related to pensions results from contributions made by the City prior to the fiscal year end, but subsequent to the measurement date of December 31, 2023. These contributions will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions, will be recognized in pension expense as follows: Year Ended December 31, Net Deferred Outflows (Inflows) of Resources 2024 8,843 $ 2025 11,871 2026 20,086 2027 6,980 2028 9,437 Thereafter 40,278 ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 45 7. RETIREMENT SYSTEMS AND PENSION PLANS (CONTINUED) Actuarial Assumptions The total pension liability in the December 31, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.50 percent Salary increases 3.25 - 9.5 percent, average, including inflation Investment rate of return 6.85 percent, net of pension plan investment expense, including inflation Mortality rates were adopted from an actuarial experience study dated January 1, 2023. The retired mortality tables are developed using URS retiree experience and are based upon gender, occupation, and age as appropriate with projected improvement using the ultimate rates from the MP-2020 improvement scale using a base year of 2020. The mortality assumption for active members is the PUB-2010 Employees Mortality Table for public employees, teachers, and public safety members, respectively. The actuarial assumptions used in the January 1, 2023 valuation were based on the results of an actuarial experience study for the period ending December 31, 2022. The long-term expected rate of return of pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return or each major asset class are summarized in the following table: Real Return Long-Term Expected Target Asset Arithmetic Portfolio Real Asset Class Allocation Basis Rate of Return Equity securities 35% 6.87% 2.40% Debt securities 20% 1.54% 0.31% Real assets 18% 5.43% 0.98% Private equity 12% 9.80% 1.18% Absolute return 15% 3.86% 0.58% Cash and cash equivalents 0% 0.24% 0.00% Totals 100% 5.45% Inflation 2.50% Expected arithmetic nominal return 7.95% Expected Return Arithmetic Basis ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 46 7. RETIREMENT SYSTEMS AND PENSION PLANS (CONTINUED) The 6.85% assumed investment rate of return is comprised of an inflation rate of 2.50% and a real return of 4.35% that is net of investment expense. Discount Rate The discount rate used to measure the total pension liability was 6.85 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that contributions from all participating employers will be made at contractually required rates that are actuarially determined and certified by the URS Board. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The discount rate does not use the Municipal Bond Index Rate. Sensitivity to the Proportionate Share of the Net Pension Asset and Liability to Changes in the Discount Rate The following presents the proportionate share of the net pension liability calculated using the discount rate of 6.85 percent, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.85 percent) or 1-percentage-point higher (7.85 percent) than the current rate: 1% Discount 1% Decrease Rate Increase System (5.85%) (6.85%) (7.85%) Noncontributory System 2,845,133 $ 548,201 $ (1,375,324) $ Tier 2 Public Employees System 292,246 85,058 (75,617) Total 3,137,379 $ 633,259 $ (1,450,941) $ ***Pension plan fiduciary net position: Detailed information about the fiduciary net position of the pension plans is available in the separately issued URS financial report. Defined Contribution Savings Plans The Defined Contribution Savings Plans are administered by the Utah Retirement Systems Board and are generally supplemental plans to the basic retirement benefits of the Retirement Systems but may also be used as a primary retirement plan. These plans are voluntary tax-advantaged retirement savings programs authorized under sections 401(k), 457(b) and 408 of the Internal Revenue Code. Detailed information regarding plan provisions is available in the separately issued URS financial report. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 47 7. RETIREMENT SYSTEMS AND PENSION PLANS (CONTINUED) Defined Contribution Savings Plans (Continued) Millcreek City participates in the following Defined Contribution Savings Plans with Utah Retirement Systems: • 401(k) Plan • 457(b) Plan • Roth IRA Plan Employee and employer contributions to the Utah Retirement Defined Contribution Savings Plans for fiscal year ended June 30 were as follows: 2024 2023 2022 401(k) Plan* Employer contributions 417,698 $ 382,366 $ 292,028 $ Employee contributions 309,981 276,667 221,260 457 Plan Employer contributions - - - Employee contributions 97,394 88,892 47,375 Roth IRA Plan Employer contributions N/A N/A N/A Employee contributions 18,870 18,254 11,030 * The employer paid 401(k) contributions include the totals paid for employees in the Tier 2 Defined Contribution 401(k) Plan. 8. COMMITMENTS The City has entered into several contracts with other governmental agencies to provide various services. These services include Public Safety (police and animal services) and Public Works. The term of each of these contracts is one year or less. 9. CONTINGENT LIABILITIES The City is involved in various claims and legal actions arising in the ordinary course of events. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the City’s financial position or results of operations. ---PAGE BREAK--- MILLCREEK Notes to the Financial Statements (Continued) June 30, 2024 48 10. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of; damage to and destruction of assets; errors and omissions and natural disasters. The City participates in the Utah Local Government Insurance Trust, a public entity risk pool to manage its risk of loss. The City pays an annual premium to the trust for its general insurance coverage. The Trust was created to be self- sustaining through member premiums and will reinsure through commercial companies for claims in excess of one million dollars for each insured event. As of June 30, 2024, there were no outstanding unpaid claims for the City. Also, the City had no claim settlements during the three years ending June 30, 2024 which exceeded its insurance coverage. The City also has fidelity bond coverage with a private carrier. ---PAGE BREAK--- MILLCREEK Schedule of the Proportionate Share of the Net Pension Liability Last Ten Fiscal Years 49 Proportionate Share Plan Fiduciary Proportionate of the Net Pension Net Position as Proportion of Share of the Liability (Asset) as a Percentage As of Net Pension Net Pension Covered a Percentage of its of its Covered December 31, Liability (Asset) Liability (Asset) Payroll Covered Payroll Payroll Noncontributory System 2018 0.1140939% 840,156 $ 920,290 $ 91.29% 87.00% 2019 0.1684213% 634,758 1,297,950 48.90% 93.70% 2020 0.1752062% 89,871 1,329,498 6.76% 99.20% 2021 0.1893139% (1,084,221) 1,446,729 -74.94% 108.70% 2022 0.2188781% 374,884 1,789,538 20.95% 97.50% 2023 0.2363378% 548,201 2,045,511 26.80% 96.90% Tier 2 Public Employees System 2018 0.0350169% 14,997 $ 406,399 $ 3.69% 90.80% 2019 0.0595987% 13,404 828,342 1.62% 96.50% 2020 0.0517776% 7,447 827,639 0.90% 98.30% 2021 0.0505277% (21,385) 938,349 -2.28% 103.80% 2022 0.0460303% 50,122 1,003,094 5.00% 92.30% 2023 0.0437005% 85,058 1,129,804 7.53% 89.58% Note: * This schedule usually covers the 10 most recent fiscal years; however, this is the information available as of the implementation year of GASB 68. ---PAGE BREAK--- MILLCREEK Schedule of Pension Contributions Last Ten Fiscal Years 50 Contributions in Relation to the Contributions As of fiscal Actuarial Contractually Contribution as a Percentage year ended Determined Required Deficiency Covered of Covered June 30, Contributions Contribution (Excess) Payroll Payroll Noncontributory System 2018 83,431 $ 83,431 $ - $ 451,711 $ 18.47% 2019 214,893 214,893 - 1,165,396 18.44% 2020 246,160 246,160 - 1,332,755 18.47% 2021 253,244 253,244 - 1,371,109 18.47% 2022 293,166 293,166 - 1,587,253 18.47% 2023 342,354 342,354 - 1,925,131 17.78% 2024 390,642 390,642 - 2,226,684 17.54% Tier 2 Public Employees System* 2018 28,752 28,752 - 190,281 15.11% 2019 103,052 103,052 - 663,143 15.54% 2020 128,272 128,272 - 819,108 15.66% 2021 142,376 142,376 - 901,108 15.80% 2022 148,876 148,876 - 926,421 16.07% 2023 175,483 175,483 - 1,101,363 15.93% 2024 195,689 195,689 - 1,222,292 16.01% Tier 2 Public Employees DC Only System* 2018 942 942 - 14,080 6.69% 2019 5,844 5,844 - 87,351 6.69% 2020 15,459 15,459 - 228,177 6.78% 2021 24,831 24,831 - 369,975 6.71% 2022 32,775 32,775 - 489,912 6.69% 2023 51,637 51,637 - 834,195 6.19% 2024 67,265 67,265 - 1,086,669 6.19% Note: This schedule usually covers the 10 most recent fiscal years; however, this is the information available as of the implementation year of GASB 68. Contributions as a percentage of covered-employee payroll may be different than the Board certified rate due to rounding or other administrative issues. * Contributions in Tier 2 include an amortization rate to help fund the unfunded liabilities in the Tier 1 systems. Tier 2 systems were created effective July 1, 2011. ---PAGE BREAK--- MILLCREEK Notes to the Required Supplementary Information June 30, 2024 51 1. CHANGE IN ASSUMPTIONS Changes include updates to the mortality improvement assumption, salary increase assumption, disability incidence assumption, assumed retirement rates, and assumed termination rates, as recommended with the January 1, 2023 actuarial experience study. ---PAGE BREAK--- MILLCREEK Combing Balance Sheet – Nonmajor Governmental Funds June 30, 2024 52 Total Millcreek Non-major Community Special Revenue Governmental Foundation Park Impact Funds ASSETS Restricted cash and investments 76,942 $ 646,877 $ 723,819 $ Receivables: Accounts 2,000 - 2,000 Total assets 78,942 $ 646,877 $ 725,819 $ LIABILITIES Liabilities: Accounts payable 24,617 $ - $ 24,617 $ Total liabilities 24,617 - 24,617 FUND BALANCE Fund balance: Restricted: Community Foundation 54,325 - 54,325 Capital projects - 646,877 646,877 Total fund balance 54,325 646,877 701,202 Total liabilities and fund balance 78,942 $ 646,877 $ 725,819 $ ---PAGE BREAK--- MILLCREEK Combing Statement of Revenues, Expenditures and Changes In Fund Balances – Nonmajor Governmental Funds For the Year Ended June 30, 2024 53 Millcreek Total Community Special Revenue Nonmajor Foundation Park Impact Governmental Fund Fund Funds REVENUES Impact fees - $ 333,638 $ 333,638 $ Intergovernmental 2,500 - 2,500 Grants and donations 77,125 - 77,125 Interest - 34,735 34,735 Total revenue 79,625 368,373 447,998 EXPENDITURES Current operating: Parks and recreation 683 - 683 Total expenditures 683 - 683 Excess of revenues over expenditures 78,942 368,373 447,315 OTHER FINANCING SOURCES (USES) Transfers out (24,617) - (24,617) Total other financing sources (uses) (24,617) - (24,617) Net change in fund balance 54,325 368,373 422,698 Fund balance - beginning of year - 278,504 278,504 Fund balance - end of year 54,325 $ 646,877 $ 701,202 $ ---PAGE BREAK--- MILLCREEK Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Capital Projects Fund For the Year Ended June 30, 2024 54 Variance With Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES Intergovernmental - $ 2,500,000 $ 818,821 $ (1,681,179) $ Interest 400,000 425,883 837,388 411,505 Miscellaneous - - 460,000 460,000 Total revenues 400,000 2,925,883 2,116,209 (809,674) EXPENDITURES Capital outlay 1,622,304 40,016,044 28,793,268 11,222,776 Debt service - 395,367 395,367 - Total expenditures 1,622,304 40,411,411 29,188,635 11,222,776 Excess (deficiency) of revenues over (under) expenditures (1,222,304) (37,485,528) (27,072,426) 10,413,102 OTHER FINANCING SOURCES Transfers in 1,198,804 6,035,528 7,500,000 1,464,472 Sale of land - - 1,671,509 1,671,509 Total other financing sources 1,198,804 6,035,528 9,171,509 3,135,981 Net change in fund balance (23,500) (31,450,000) (17,900,917) 13,549,083 Fund balance at beginning of year 34,165,717 34,165,717 34,165,717 - Fund balance at end of year 34,142,217 $ 2,715,717 $ 16,264,800 $ 13,549,083 $ ---PAGE BREAK--- MILLCREEK Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Park Impact Special Revenue Fund For the Year Ended June 30, 2024 55 Variance With Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES Impact fees - $ - $ 333,638 $ 333,638 $ Interest - - 34,735 34,735 Total revenues - - 368,373 368,373 Net change in fund balance - - 368,373 368,373 Fund balance at beginning of year 278,504 278,504 278,504 - Fund balance at end of year 278,504 $ 278,504 $ 646,877 $ 368,373 $ ---PAGE BREAK--- MILLCREEK Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Millcreek Community Foundation Fund For the Year Ended June 30, 2024 56 Variance With Final Budget Budgeted Amounts Positive Original Final Actual (Negative) REVENUES Intergovernmental - $ 20,000 $ 2,500 $ (17,500) $ Grants and donations - 145,000 77,125 (67,875) Total revenues - 165,000 79,625 (85,375) EXPENDITURES Parks and recration - - 683 (683) Total expenditures - - 683 (683) Excess (deficiency) of revenues over (under) expenditures - 165,000 78,942 (86,058) OTHER FINANCING SOURCES Transfers out - (172,989) (24,617) 148,372 Total other financing sources - (172,989) (24,617) 148,372 Net change in fund balance - (7,989) 54,325 62,314 Fund balance at beginning of year - - - - Fund balance at end of year - $ (7,989) $ 54,325 $ 62,314 $ ---PAGE BREAK--- 57 INDPENDENT 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 Mayor and City Council Millcreek, Utah We have audited, 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, the financial statements of the governmental activities and each major fund of Millcreek, Utah (the City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated December 16, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered City’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 City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’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 a 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 over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. C O M M I T T E D . E X P E R I E N C E D . T R U S T E D . H B M E , L L C I S A C E R T I F I E D P U B L I C A C C O U N T I N G F I R M 5 5 9 W E S T 5 0 0 S O U T H B O U N T I F U L , U T 8 4 0 1 0 O : 8 0 1 . 2 9 6 . 0 2 0 0 H B M E . C O M PARTNERS MICHAEL L. SMITH, CPA JASON L. TANNER, CPA ROBERT D. WOOD, CPA AARON R. HIXSON, CPA TED C. GARDINER, CPA JEFFREY B. MILES, CPA JESSE S. MALMROSE, EA JANICE ANDERSON, EA TROY F. NILSON, CPA ---PAGE BREAK--- 58 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free of 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 City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. December 16, 2024 ---PAGE BREAK--- 59 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE AS REQUIRED BY THE STATE COMPLIANCE AUDIT GUIDE Mayor and City Council Millcreek, Utah Report On Compliance We have audited Millcreek, Utah's (the City) compliance with the state compliance requirements described in the State Compliance Audit Guide issued by the Office of the Utah State Auditor, for the year ended June 30, 2024. State compliance requirements were tested for the year ended June 30, 2024 in the following areas: Budgetary Compliance Fund Balance Fraud Risk Assessment Restricted Taxes and Related Revenues Government Fees Enterprise Fund Transfers, Reimbursements, Loans, and Services Opinion on Compliance In our opinion, Millcreek, Utah complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on the City for the year ended June 30, 2024. Basis for Opinion We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the State Compliance Audit Guide (Guide). Our responsibilities under those standards and the State Compliance Audit Guide are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with 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 opinion. Our audit does not provide a legal determination of the City's compliance with the compliance requirements referred to above. C O M M I T T E D . E X P E R I E N C E D . T R U S T E D . H B M E , L L C I S A C E R T I F I E D P U B L I C A C C O U N T I N G F I R M 5 5 9 W E S T 5 0 0 S O U T H B O U N T I F U L , U T 8 4 0 1 0 O : 8 0 1 . 2 9 6 . 0 2 0 0 H B M E . C O M PARTNERS MICHAEL L. SMITH, CPA JASON L. TANNER, CPA ROBERT D. WOOD, CPA AARON R. HIXSON, CPA TED C. GARDINER, CPA JEFFREY B. MILES, CPA JESSE S. MALMROSE, EA JANICE ANDERSON, EA TROY F. NILSON, CPA ---PAGE BREAK--- 60 Responsibilities of Management on Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s government programs. Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. 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 GAAS, Government Auditing Standards, and the Guide will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City's compliance with the requirements of the government program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Guide, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, 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 City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the State Compliance Audit Guide but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. ---PAGE BREAK--- 61 Report on Internal Control Over Compliance Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses or significant deficiencies, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or to detect and correct noncompliance with a state compliance requirement on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a state compliance requirement will not be prevented or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a state compliance requirement that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. Purpose of This Report The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control and compliance and the results of that testing based on the requirements of the State Compliance Audit Guide. Accordingly, this communication is not suitable for any other purpose. December 16, 2024