Document Woodburn_doc_996804e5f4

WOODBURN URBAN RENEWAL AGENCY (A COMPONENT UNIT OF THE CITY OF WOODBURN, OREGON) ANNUAL FINANCIAL REPORT Year Ended June 30, 2015 ---PAGE BREAK--- WOODBURN URBAN RENEWAL AGENCY (A Component Unit of the City of Woodburn, Oregon) AGENCY OFFICIALS June 30, 2015 MAYOR AND COUNCIL MEMBERS Name Term Expires Mayor Figley December 31, 2016 Council Members Frank Lonergan, President December 31, 2018 Teresa Alonso Leon December 31, 2016 Robert Carney December 31, 2018 Lisa Ellsworth December 31, 2016 Eric Morris December 31, 2016 Sharon Schaub December 31, 2018 The above individuals may be contacted at the address below. Staff Scott Derickson, City Administrator N. Robert Shields, City Attorney Sarah Head, Finance Director City of Woodburn, Oregon 270 Montgomery Street Woodburn, Oregon 97071 ---PAGE BREAK--- WOODBURN URBAN RENEWAL AGENCY (A Component Unit of the City of Woodburn, Oregon) TABLE OF CONTENTS JUNE 30, 2015 Page INDEPENDENT AUDITOR’S REPORT i-iii MANAGEMENT’S DISCUSSION AND ANALYSIS iv-vi BASIC FINANCIAL STATEMENTS Government-wide Financial Statement Statement of Net Position – Governmental Activities 7 Statement of Activities – Governmental Activities 8 Fund Financial Statements Balance Sheet – Governmental Fund 9 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Fund 10 Notes to Basic Financial Statements 11-17 REQUIRED SUPPLEMENTARY INFORMATION Schedules of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual Urban Renewal Fund 18 SUPPLEMENTARY INFORMATION Schedule of Property Tax Transactions 19 COMPLIANCE SECTION Independent Auditor’s Report Required by State Regulations 20-21 ---PAGE BREAK--- - i - 475 Cottage Street NE, Suite 200, Salem, Oregon 97301 (503) 581-7788 INDEPENDENT AUDITOR’S REPORT Board of Directors City of Woodburn Urban Renewal Agency 270 Montgomery Street Woodburn, Oregon 97071 Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and each major fund of the Urban Renewal Agency of the City of Woodburn, Oregon (a component unit of the City of Woodburn, Oregon) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Agency’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. ---PAGE BREAK--- - ii - Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Urban Renewal Agency of the City of Woodburn, as of June 30, 2015, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that management’s discussion and analysis (MD&A) (pages iv through vi) and the schedule of revenues, expenditures and changes in fund balances - budget to actual on page 18 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to management's discussion and analysis 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency’s basic financial statements. The budgetary schedule described above was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The budgetary schedule has been subject 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 budgetary schedule is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency’s basic financial statements. The supplementary information is presented for purposes of additional analysis and is not a required part of the financial statements. The supplementary 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 supplementary information is fairly stated in all material respects in relation to the basic financial statements as a whole. ---PAGE BREAK--- - iii - Report on Other Legal and Regulatory Requirements In accordance with Minimum Standards for Audits of Oregon Municipal Corporations, we have issued our report dated November 3, 2015, on our consideration of the Agency’s compliance with certain provisions of laws and regulations, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules. The purpose of that report is to describe the scope of our testing of compliance and the results of that testing and not to provide an opinion on compliance. GROVE, MUELLER & SWANK, P.C. CERTIFIED PUBLIC ACCOUNTANTS By: Ryan T. Pasquarella, A Shareholder November 3, 2015 ---PAGE BREAK--- MANAGEMENT’S DISCUSSSION AND ANALYSIS ---PAGE BREAK--- - iv - WOODBURN URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the Woodburn Urban Renewal Agency (the Agency), we offer readers of the Agency’s basic financial statements this narrative overview and analysis of the financial activities of the Agency as of June 30, 2015 and for the fiscal year then ended. We encourage readers to consider the information presented here in conjunction with the Agency’s basic financial statements in the financial section of this report. Financial Highlights The Agency’s net assets exceeded liabilities by $1,318,996. The Agency currently has two assets, cash and investments ($1,355,604) and receivables ($38,643). The Agency’s receivables are comprised solely of property taxes due at June 30, 2015. Liabilities are comprised of accounts payable and accrued payroll liabilities of $18,893, debt of $56,338, and the accrued interest due at June 30, 2015 of $20. 2015 2014 ASSETS Cash and investments $ 1,355,604 $ 1,908,678 Other assets 38,643 44,362 Total Assets 1,394,247 1,953,040 LIABILITIES Other liabilities 18,913 25,652 Long-term liabilities 56,338 275,872 Total Liabilities 75,251 301,524 NET POSITION Restricted 56,338 227,732 Unrestricted 1,262,658 1,423,784 Total Net Position $ 1,318,996 $ 1,651,516 Statements of Net Position June 30, Property taxes totaling $595,049 comprise 98% of the Agency’s revenue and are derived from the tax increment assessment within the Agency’s boundaries. The remaining revenue of $9,593 is from interest earnings. Expenses for the year ended June 30, 2015 were $8,098 for interest on long-term debt. Additionally, the Agency expended $124,020 on personnel costs and $805,044 on the Agency’s Downtown Grant and Loan program, which included a grant for the Woodburn Fire District in the amount of $676,000. The Agency maintains a single fund used to account for activities supported by the property tax increment. ---PAGE BREAK--- - v - 2015 2014 Property taxes 595,049 $ 596,003 $ Miscellaneous 9,593 10,266 Total Revenues 604,642 606,269 EXPENSES Community development 929,064 298,250 Interest on long-term debt 8,098 16,636 Total Expenses 937,162 314,886 CHANGE IN NET POSITION (332,520) 291,383 NET POSITION, beginning of year 1,651,516 1,360,133 NET POSITION, end of year 1,318,996 $ 1,651,516 $ REVENUES Statements of Activities Year Ended June 30, Overview of the Basic Financial Statements The Agency’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. Government-wide financial statements. The government-wide financial statements are comprised of the Statement of Net Position and the Statement of Activities. These two statements are designed to provide readers with a broad overview of the Agency’s finances utilizing the full accrual method of accounting, in a manner similar to a private-sector business. Under the full accrual method of accounting, transactions are reported as soon as the underlying event(s) giving rise to the change occurs, regardless of the timing of related cash flows. Thus, assets, liabilities, revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (i.e. uncollected revenues and accrued but unpaid interest). The Statement of Net Position presents information on all of the Agency’s assets and liabilities, including capital assets and long-term liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Agency as a whole is improving or deteriorating. The Statement of Activities presents information showing how the Agency’s net position changed during the most recent fiscal year. Fund financial statements. The fund financial statements focus on current available resources and are organized on the basis of funds, each of which is defined as a fiscal and accounting entity with a self-balancing set of accounts established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. ---PAGE BREAK--- - vi - Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 11-17. Financial Analysis of Funds As of June 30, 2015 the Agency’s governmental fund reported a fund balance of $1,341,687 or a decrease of $547,013 over the prior year. This is due to payments of the Agency for approved Downtown Grant and Loan projects and annual debt service. Budgetary Highlights There was one change to the adopted budget in the current year that increased materials and services by $676,000 and decreased capital outlay by $676,000, to allow for a one-time grant to be issued to the Woodburn Fire District in the amount of $676,000. Capital Assets and Debt Administration The Agency has no capital assets. All assets constructed with urban renewal funds are property of the City (see the City of Woodburn financial statements). As of June 30, 2015 the Agency has $56,338 of long-term debt outstanding. Additional information on the long- term debt can be found in the notes to the basic financial statements. Financial Contact The Agency’s financial statements are designed to present users (citizens, taxpayers, customers, investors, and creditors with a general overview of the Agency’s finances and to demonstrate the Agency’s accountability. Any questions or request for additional information should be directed to the Agency’s Finance Director at 270 Montgomery Street, Woodburn, Oregon. ---PAGE BREAK--- BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 7 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES JUNE 30, 2015 ASSETS Cash and investments $ 1,355,604 Property taxes receivable 38,643 Total Assets 1,394,247 LIABILITIES Accounts payable 10,755 Accrued payroll and payroll liabilities 8,138 Accrued interest payable 20 Noncurrent liabilities Due within one year Bonds payable 56,338 Total Liabilities 75,251 NET POSITION Restricted 56,338 Unrestricted 1,262,658 Total Net Position $ 1,318,996 ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 8 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) STATEMENT OF ACTIVITIES – GOVERNMENTAL ACTIVITIES YEAR ENDED JUNE 30, 2015 Revenues Taxes and assessments $ 595,049 Miscellaneous 9,593 Total Revenues 604,642 Expenses Community development 929,064 Interest on long-term debt 8,098 Total Expenses 937,162 CHANGE IN NET POSITION (332,520) NET POSITION, June 30, 2014 1,651,516 NET POSITION, June 30, 2015 $ 1,318,996 ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 9 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) BALANCE SHEET – GOVERNMENTAL FUND JUNE 30, 2015 ASSETS Cash and investments $ 1,355,604 Property taxes receivable 38,643 Total Assets $ 1,394,247 LIABILITIES, DEFERRED INFLOWS, AND FUND BALANCE Liabilities Accounts payable $ 10,755 Accrued payroll and payroll liabilities 8,138 Total Liabilities 18,893 Deferred Inflows Unavailable revenue 33,667 Fund Balance Restricted Debt service 56,338 Unrestricted 1,285,349 Total Fund Balance 1,341,687 Total Liabilities, Deferred Inflows, and Fund Balance $ 1,394,247 RECONCILIATION TO THE STATEMENT OF NET POSITION Fund Balance $ 1,341,687 The Statement of Net Position reports receivables at their net realizable value. However, receivables not available to pay for current-period expenditures are reported as unavailable revenue in governmental funds. 33,667 All liabilities are reported in the Statement of Net Position. However, if they are not due and payable in the current period, they are not recorded in governmental funds. Bonds payable (56,338) Accrued interest payable (20) Net Position of Governmental Activities $ 1,318,996 ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 10 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE – GOVERNMENTAL FUND YEAR ENDED JUNE 30, 2015 REVENUES Taxes and assessments $ 600,190 Miscellaneous 9,593 Total Revenues 609,783 EXPENDITURES Current Personal services 124,020 Materials and services 805,044 Debt service Principal 219,534 Interest 8,198 Total Expenditures 1,156,796 NET CHANGE IN FUND BALANCE (547,013) FUND BALANCE, Beginning of year 1,888,700 FUND BALANCE, End of year $ 1,341,687 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Net Change in Fund Balance $ (547,013) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the fund financial statements. (5,141) Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of long-term debt obligation principal is an expenditure in the governmental funds, but the repayment reduces long-term obligations in the statement of net position. This is the amount of repay- ments in the current year. 219,534 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 government funds. 100 Change in Net Position $ (332,520) ---PAGE BREAK--- - 11 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The City of Woodburn Urban Renewal Agency (the Agency) was created to provide for rehabilitation of blighted and deteriorated areas within the City’s designated urban renewal areas. Through the Downtown Grant and Loan program the Agency enables property owners to rehabilitate properties. The Agency is governed by a seven- member board of directors that include the City’s mayor and other council members and is included as a component unit in the City’s financial statements. Urban Renewal Areas Tax Allocation bonds for urban renewal plan areas are authorized by state law to 1) “…eliminate and prevent the development or spread of urban blight and deterioration; and 2) encourage needed urban conservation and rehabilitation and provide for redevelopment of blighted or deteriorated areas.” Projects are financed in urban renewal plan areas as follows:  The Agency (City Council) selects an urban renewal plan area and defines its boundaries.  The County Assessor “freezes” the assessed value of property within the urban renewal area. This is referred to as the “frozen” value.  Any increase in assessed value above the frozen value is called the “incremental value.” The tax revenue generated by the tax rate times the incremental value is provided for use in paying the principal and interest on any indebtedness incurred to finance the Urban Renewal project.  Urban Renewal tax increment revenues are used to repay the indebtedness of the Agency. The proceeds of the indebtedness finance the Agency’s activities. As required by ORS 457.190(3)(a), the Agency has included in its current plan the maximum amount of indebtedness that may be issued or incurred under the plan in the amount of $29,300,000. Measurement Focus and Basis of Accounting Basic Financial Statements Basic financial statements are presented at both the government-wide and fund financial level. Governmental activities are normally supported by taxes and intergovernmental revenues. Government-wide financial statements display information about the reporting government as a whole. These statements focus on the sustainability of the Agency as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. These aggregated statements consist of the Statement of Net Assets and the Statement of Activities. The Statement of Net Position presents all the assets and liabilities of the Agency, including related debt. Net position, representing assets less liabilities and is shown as restricted. Restricted represents amounts which must be spent in accordance with legal restrictions. ---PAGE BREAK--- - 12 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus and Basis of Accounting (Continued) Basic Financial Statements (Continued) The Statement of Activities indicates how net position changed during the current period. Fund financial statements display information about the Agency’s fund. The single major fund, Urban Renewal fund, accounts for general administration of the Agency’s urban renewal areas, for acquisition and rehabilitation of blighted and deteriorated areas within the designated urban renewal areas, and repayment of debt incurred for these activities. Basis of Presentation The financial transactions of the Agency are recorded in a single fund. The fund’s activity is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, fund equity, revenues and expenditures. Fund Balance In the fund financial statements, the fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the Agency is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Although not a major impact on the financial statements, Governmental Fund type fund balances are now reported in the following classifications. Fund balance is reported as non-spendable when the resources cannot be spent because they are either in a non- spendable form or legally or contractually required to be maintained intact. Resources in non-spendable form include inventories, prepaid amounts, deposits, and assets held for sale. Fund balance is reported as restricted when the constraints placed on the use of resources are either: externally imposed by creditors (such as debt covenants), grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. Fund balance is reported as committed when the Agency takes formal action that places specific constraints on how the resources may be used. The Agency can modify or rescind the commitment at any time through taking a similar formal action. Resources that are constrained by the Agency’s intent to use them for a specific purpose, but are neither restricted nor committed, are reported as assigned fund balance. Intent is expressed when the Agency approves which resources should be “reserved” during the adoption of the annual budget. Unassigned fund balance is the residual classification. This classification represents fund balance that has not been restricted, committed or assigned. ---PAGE BREAK--- - 13 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus and Basis of Accounting Accounting principles generally accepted in the United States of America, as promulgated by the Governmental Accounting Standards Board, define principles that should be used to report financial transactions. The government-wide and proprietary fund financial statements are reported using the economic resources and accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when the liability is incurred. The governmental fund financial statements are reported using the modified accrual basis of accounting. Under the modified accrual basis of accounting revenues are recorded when they become both measurable and available, while expenditures are recorded when the related liability is incurred. Cash and Investments The City of Woodburn maintains the Agency’s cash and investments in a common pool. Oregon Revised Statutes and the City of Woodburn investment policy authorize the City to invest in certificates of deposit, savings accounts, bank repurchase agreements, bankers’ acceptances, general obligations of U.S. Government and its agencies, certain bonded obligations of Oregon Municipalities and the State Treasurer’s Local Government Investment Pool, among others. Investments are stated at cost, which approximates fair value. Receivables and Deferred Revenues Property taxes are levied by the County Assessor and collected by the County Tax Collector. The taxes are levied and become a lien as of July 1. They may be paid in three installments payable in equal payments due November 15, February 15, and May 15. Uncollected property taxes levied for the current and prior years are recorded as receivable at year-end. The Agency’s property tax collection records show that most of the property taxes due are collected during the year of levy and delinquent taxes are collected in the next few years. Property tax receivables not available are recognized as deferred inflows in the governmental funds balance sheet. Long-Term Debt All unmatured long-term debt is recorded on the Statement of Net Position. Urban Renewal Agency bonded debt is paid from the Urban Renewal fund. Budget and Budgetary Accounting The Agency budgets in accordance with requirements of State law. Annual appropriated budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. The Agency begins its budgeting process by appointing budget committee members. The budget officer prepares a budget, which is reviewed by the Budget Committee. The budget is then published in proposed form and is presented for public hearings to obtain taxpayer comments and approval from the Budget Committee. The budget is legally adopted by the Agency’s Board by resolution prior to the beginning of the Agency’s fiscal year. ---PAGE BREAK--- - 14 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Budget and Budgetary Accounting (Continued) The Board resolution authorizing appropriations for each fund sets the level by which expenditures cannot legally exceed appropriations. Appropriations are made at the object level. Appropriations lapse at year end. Appropriation authority may be transferred from one level of control to another by Board resolution. Supplemental appropriations may occur if the Board approves them due to a need which exists which was not determined at the time the budget was adopted. There was one change to the adopted budget in the current year to allow for a one-time grant to be issued to the Woodburn Fire District in the amount of $676,000. Use of Estimates The preparation of basic financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the basic financial statements and reported amounts of revenues and expenses/expenditures during the reporting period. Actual results may differ from those estimates. CASH AND INVESTMENTS The Agency’s deposits with financial institutions and investments are pooled with the City of Woodburn. Cash and investments for the City of Woodburn are disclosed in the City’s financial statements. Other disclosures about the City’s cash and investment that are applicable to the Agency are as follows. Deposits Bank deposits are secured to legal limits by federal deposit insurance. The remaining amount is secured in accordance with ORS 295 under a collateral program administered by the Oregon State Treasurer. Custodial Credit Risk - Deposits This is the risk that in the event of a bank failure, the City’s deposits may not be returned. The Federal Depository Insurance Corporation (FDIC) provides insurance for the City’s deposits with financial institutions up to $250,000 each for the aggregate of all non-interest bearing accounts and the aggregate of all interest bearing accounts at each institution. Deposits in excess of FDIC coverage are with institutions participating in the Oregon Public Funds Collateralization Program. The PFCP is a shared liability structure for participating bank depositories, better protecting public funds though still not guaranteeing that all funds are 100% protected. Barring any exceptions, a bank depository is required to pledge collateral valued at least 10% of their quarter-end public fund deposits if they are well capitalized, 25% of their quarter-end public fund deposits if they are adequately capitalized, or 110% of their quarter-end public fund deposits if they are undercapitalized or assigned to pledge 110% by the Office of the State Treasurer. In the event of a bank failure, the entire pool of collateral pledged by all qualified Oregon public funds bank depositories is available to repay deposits of public funds of government entities. ---PAGE BREAK--- - 15 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 CASH AND INVESTMENTS (Continued) Investments The State Treasurer of the State of Oregon maintains the Oregon Short-Term Fund, of which the Local Government Investment Pool is part. Participation by local governments is voluntary. The State of Oregon investment policies are governed by statute and the Oregon Investment Council. In accordance with Oregon Statutes, the investment funds are invested as a prudent investor would do, exercising reasonable care, skill and caution. The Oregon Short-Term Fund is the LGIP for local governments and was established by the State Treasurer. It was created to meet the financial and administrative responsibilities of federal arbitrage regulations. The investments are regulated by the Oregon Short-Term Fund Board and approved by the Oregon Investment Council (ORS 294.805 to 294.895). At June 30, 2015, the fair value of the position in the Oregon State Treasurer’s Short-Term Investment Pool was approximately equal to the value of the pool shares. The investment in the Oregon Short-Term Fund is not subject to risk evaluation. LGIP is not rated for credit quality. Separate financial statements for the Oregon Short-Term Fund are available from the Oregon State Treasurer. Interest Rate Risk In accordance with its investment policy, the City manages its exposure to declines in fair value of its investments by limiting the weighted average maturity of its investments through use of the Local Government Investment Pool. Custodial Risk - Investments For an investment, this is the risk that, in the event of a failure of the counterparty, the City will not be able to recover the value of its investments or collateralized securities that are in the possession of an outside party. The City's investment policy limits the types of investments that may be held and does not allow securities to be held by the counterparty. The LGIP is administered by the Oregon State Treasury with the advice of other state agencies and is not registered with the U.S. Securities and Exchange Commission. The LGIP is an open-ended no-load diversified portfolio offered to any agency, political subdivision, or public corporation of the state that by law is made the custodian of, or has control of any fund. The LGIP is commingled with the State's short-term funds. In seeking to best serve local governments of Oregon, the Oregon Legislature established the Oregon Short-Term Fund Board, which has established diversification percentages and specifies the types and maturities of the investments. The purpose of the Board is to advise the Oregon State Treasury in the management and investment of the LGIP. Professional standards indicate that the investments in external investment pools are not subject to custodial risk because they are not evidenced by securities that exist in physical or book entry form. Nevertheless, management does not believe that there is any substantial custodial risk related to investments in the LGIP. ---PAGE BREAK--- - 16 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 LONG-TERM DEBT Long-term debt transactions for the year were as follows: 2005 Urban Renewal Bonds due in quarterly installments with interest at 4.22% $ 275,872 $ - $ (219,534) $ 56,338 $ 56,338 Outstanding June 30, 2015 Due Within One Year Outstanding July 1, 2014 Issued Matured/ Redeemed During Year CONTINGENCIES The Agency purchases commercial insurance to cover all commonly insurable risks, which includes property damage, liability and employee bonds. Most policies carry a small deductible amount. No insurance claims settled in each of the prior three years have exceeded policy coverage. NEW PRONOUNCEMENTS GASB Statement No. 68 “Accounting and Reporting for Pension Plans—an amendment of GASB Statement No. 27.” The statement establishes accounting and financial reporting requirements related to pensions provided by governments. The statement was implemented in the current year. GASB Statement No. 69 “Government Combinations and Disposals of Government Operations.” The statement establishes accounting and financial reporting standards related to government combinations and disposals of government operations. The statement was implemented in the current year. GASB Statement No. 71 “Pension Transition for Contributions Made Subsequent to the Measurement Date”. The statement amends transition provisions of GASB Statement No. 68, establishes accounting and financial reporting standards for recognition of contributions made between the measurement date of the net pension liability and implementation of GASB Statement No. 68. The statement was implemented in the current year. The Agency will implement new GASB pronouncements no later than the required fiscal year. Management has not determined the effect on the financial statements from implementing any of the pronouncements. GASB Statement No. 72 “Fair Value Measurement and Application” addresses accounting and financial reporting issues related to fair value measurements. It provides guidance for determining a fair value measurement for financial reporting purposes, as well as guidance for applying fair value to certain investments, and disclosures related to all fair value measurements. The statement is effective for fiscal years beginning after June 15, 2015. GASB Statement No. 73 “Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68”, completes the suite of pension standards. The requirements in Statement 73 for reporting pensions generally are the same as in Statement 68. The statement is generally effective for fiscal years beginning after June 15, 2015. ---PAGE BREAK--- - 17 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 NEW PRONOUNCEMENTS (continued) GASB Statement No. 74, “Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans”. This statement replaces Statement No. 46, “Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans”, as amended, and Statement No. 57, “OPEB Measurements by Agent Employers and Agent Multiple- Employer Plans”. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, “Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans”, as amended, and Statement No. 50, “Pension Disclosures”. This statement is effective for financial statement periods beginning after June 15, 2016. GASB Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions”, addresses reporting by governments that provide OPEB to their employees and for governments that finance OPEB for employees of other governments. It requires governments in all types of OPEB plans to present more extensive note disclosures and required supplementary information (RSI) about their OPEB liabilities. The statement is effective for fiscal years beginning after June 15, 2016. SUBSEQUENT EVENTS Management has evaluated subsequent events through November 3, 2015, the date on which the financial statements were available to be issued. Management is not aware of any subsequent events that require recognition or disclosure in the financial statements. ---PAGE BREAK--- REQUIRED SUPPLEMENTARY INFORMATION ---PAGE BREAK--- - 18 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL - URBAN RENEWAL FUND YEAR ENDED JUNE 30, 2015 REVENUES Taxes and assessments $ 580,000 $ 580,000 $ 600,190 $ 20,190 Miscellaneous 8,000 8,000 9,593 1,593 Total Revenues 588,000 588,000 609,783 21,783 EXPENDITURES Personal services 131,064 131,064 123,573 7,491 Materials and services 309,500 985,500 805,044 180,456 Capital outlay 1,300,000 624,000 - 624,000 Debt service Principal 219,534 219,534 219,534 - Interest 8,198 8,198 8,198 - Contingency 119,704 119,704 - 119,704 Total Expenditures 2,088,000 2,088,000 1,156,349 931,651 REVENUES OVER (UNDER) EXPENDITURES (1,500,000) (1,500,000) (546,566) 953,434 NET CHANGE IN FUND BALANCE (1,500,000) (1,500,000) (546,566) 953,434 FUND BALANCE, Beginning of year 1,500,000 1,500,000 1,891,593 391,593 $ - $ - 1,345,027 $ 1,345,027 Accrued payroll (3,340) $ 1,341,687 FUND BALANCE, End of year (budgetary basis) FUND BALANCE, End of year (GAAP basis) Budgeted Amounts Original Final Actual Variance ---PAGE BREAK--- SUPPLEMENTARY INFORMATION ---PAGE BREAK--- - 19 - URBAN RENEWAL AGENCY OF THE CITY OF WOODBURN, OREGON (A Component Unit of the City of Woodburn, Oregon) SCHEDULE OF PROPERTY TAX TRANSACTIONS YEAR ENDED JUNE 30, 2015 Uncollected Uncollected 2014-2015 Balance Discounts and Balance Tax Year Levy July 1, 2014 Adjustments Turnovers June 30, 2015 2014-2015 610,828 $ - $ (17,868) $ (577,037) $ 15,923 $ 2013-2014 18,218 (194) (10,106) 7,918 2012-2013 - 10,273 (162) (4,797) 5,314 2011-2012 - 5,813 (63) (3,719) 2,031 2010-2011 - 2,242 (149) (1,329) 764 2009-2010 - 749 (39) (169) 541 2008-2009 - 398 (30) (87) 281 Prior Years - 1,115 (157) (63) 895 Total 610,828 $ 38,808 $ (18,662) $ (597,307) $ 33,667 Unsegregated Taxes 4,976 Total Receivable at June 30, 2015 $ 38,643 ---PAGE BREAK--- COMPLIANCE SECTION ---PAGE BREAK--- - 20 - 475 Cottage Street NE, Suite 200, Salem, Oregon 97301 (503) 581-7788 INDEPENDENT AUDITOR’S REPORT REQUIRED BY OREGON STATE REGULATIONS Honorable Mayor and Members of the City Council City of Woodburn Urban Renewal Agency 270 Montgomery Street Woodburn, Oregon 97071 We have audited, in accordance with auditing standards generally accepted in the United States of America, the basic financial statements of the Urban Renewal Agency of the City of Woodburn, Oregon as of and for the year ended June 30, 2015, and have issued our report thereon dated November 3, 2015. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Urban Renewal Agency of the City of Woodburn, Oregon's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162-10-000 through 162-10-320 of the Minimum Standards for Audits of Oregon Municipal Corporations, noncompliance with which could have a direct and material effect on the determination of financial statements 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. We performed procedures to the extent we considered necessary to address the required comments and disclosures which included, but were not limited to the following:  Deposit of public funds with financial institutions (ORS Chapter 295).  Indebtedness limitations, restrictions and repayment.  Budgets legally required (ORS Chapter 294).  Insurance and fidelity bonds in force or required by law.  Programs funded from outside sources.  Authorized investment of surplus funds (ORS Chapter 294).  Public contracts and purchasing (ORS Chapters 279A, 279B, 279C). In connection with our testing nothing came to our attention that caused us to believe the Agency was not in substantial compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162-10-000 through 162-10-320 of the Minimum Standards for Audits of Oregon Municipal Corporations. ---PAGE BREAK--- - 21 - Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Agency's internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control. Restriction on Use This report is intended solely for the information and use of the governing body and management of the Urban Renewal Agency of the City of Woodburn, Oregon and the Oregon Secretary of State and is not intended to be and should not be used by anyone other than these parties. GROVE, MUELLER & SWANK, P.C. CERTIFIED PUBLIC ACCOUNTANTS By: Ryan T. Pasquarella, A Shareholder November 3, 2015