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Comprehensive Financial Annual Report (CAFR)THE CITY OF DUBUQUE Masterpiece on the Mississippi Dubuque All-American City 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Submission of Fiscal Year Ended June 30, 2008 Comprehensive Annual Financial Report (CAFR), Parking Facilities Financial Statements, Management Letter and Responses to Management Letter DATE: January 14, 2009 Finance Director Ken TeKippe is transmitting the Fiscal Year 2008 Comprehensive Financial Report (CAFR), Parking Facilities Financial Statements, Management Letter and City Responses to the Management Letter. The Auditor's comments are attached, as well as Finance Department responses. Michael C. Van Milligen MCVM:Iw Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager THE CITY OF DUBUQUE Masterpiece on the Mississippi Dubuque All-American City 2007 TO: Michael C. Van Milligen, City Manager FROM: Kenneth J. TeKippe, Finance Director SUBJECT: Submission of Fiscal Year Ended June 30, 2008 Comprehensive Annual Financial Report (CAFR), Parking Facilities Financial Statements, Management Letter and Responses to Management Letter DATE: December 29, 2008 INTRODUCTION The purpose of this memorandum is to submit the Fiscal Year 2008 CAFR and Parking Facilities Financial Statements audited by Eide Bailly, LLP, and to enclose the Auditor's Management Letter along with the City Finance staff's response. The City's independent auditor issued an unqualified opinion on the financial statements. BACKGROUND The City of Dubuque is required to have an annual audit in accordance with generally accepted auditing standards, Chapter 11 of the Code of Iowa, Government Auditina Standards and U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. This Comprehensive Annual Financial Report is in conformance with the standards set by OMB Circular A-133. This federal regulation mandates audit standards for federal programs. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Separate financial statements are required for Parking Facilities and Dubuque Metropolitan Area Solid Waste Agency and have been received. The financial information for these entities is included in the City of Dubuque CAFR. AUDITOR'S MANAGEMENT LETTER As part of the annual audit, the Auditor provides comments in a management letter for improving the financial management system of the City. The Auditor's comments are enclosed as well as Finance Department responses. ACTION STEP It is recommended that the City Council receives and files the Fiscal Year 2008 reports identified above and receives and files this communication and related enclosures. Copies of the financial statements for the Dubuque Metropolitan Area Solid Waste Agency are available in the Finance Department if desired by Council members. KJT/jmg Enclosures: Fiscal Year 2008 CAFR Parking Facilities Financial Statements Auditor Management Letter Responses to Comments in Auditor Management Letter 2 THE CITY OF DUBUQUE Masterpiece on the Mississippi Dubuque All-American City 2007 TO: Michael C. Van Milligen, City Manager FROM: Kenneth J. TeKippe, Finance Director SUBJECT: Responses to Audit Management Letter - Fiscal Year Ended June 30, 2008 DATE: December 29, 2008 INTRODUCTION Responses to the "other comments" section of the December 16, 2008 management letter issued by Eide Bailly LLP subsequent to completion of the Fiscal Year 2008 audit of the City are hereby submitted. BACKGROUND A separate section in the Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2008 details specific findings. Pages 106-108 of the report provide this information. In addition to the comments in the report, a management letter dated December 16, 2008 was issued which includes more general comments relative to improving the City's overall accounting and control systems. DISCUSSION Finance Department responses to the Auditor's other comments (listed in italics) follow: Conversion of Accounting Records Auditor comment The City maintains its records using the cash basis of accounting. However, in order to comply with accounting principles generally accepted in the United States of America, the comprehensive annual financial report (CAFR) must be prepared using the modified accrual/accrual basis of accounting. Eide Bailly LLP currently posts all adjustments at year-end which are necessary to convert the City's cash-basis amounts to the amounts used in the CAFR. At this time, the City is preparing the workpapers needed to convert the accounting records to the modified accrual/accrual basis at year-end. Eide Bailly LLP posts the journal entries and prepares the financial statements. Although it may require increased staffing levels, we encourage the Finance Department to continue in their advancement of converting to the modified accrual/accrual basis and preparation of the financial statements required in the CAFR. City of Dubuque response As noted in the management letter, City staff prepared all workpapers to convert records to the modified accrual/accrual basis. City staff will continue to work towards converting records from cash to GAAP at year end and preparation of the financial statements. In order for the City to prepare its own CAFR, we would need to hire additional professional staff and provide required annual training. The cost of this would exceed the anticipated reduction in audit fees. The current audit engagement arrangement (covers FY'06-FY'10) provides for the auditing firm to convert the records and prepare the financial statements. New Governmental Accounting Standards Board (GASB) Statements Auditor comment The Governmental Accounting Standards Board (GASB) has issued six statements not yet implemented by the City of Dubuque. The statements, which might impact the City, are as follows: GASB Statement No. 45 Auditor comment Accounting and Financial Reaortino by Emalovers for Postemalovment Benefits Other Than Pensions, issued June 2004, will be effective for the City for the fiscal year ending June 30, 2009. This statement establishes standards for the measurement, recognition, and display of OPEB expense%xpenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information in the financial reports of state and local governmental employers. City of Dubuque response The City Finance Department will coordinate with the CPA audit firm and Personnel Department to provide any information required by GASB 45. Implementation is next 2 fiscal year, with consultant dollars budgeted in FY'09 to assist in gathering required information. A preliminary consultant report has been received. GASB Statement No. 47 Auditor comment Accounting for Termination Benefits, issued June 2005, establishes accounting standards for termination benefits. For termination benefits provided through an existing defined benefit OPEB plan, the provisions of this statement should be implemented simultaneously with the requirements of Statement No. 45. For all other termination benefits, this statement is effective for the fiscal year ending June 30, 2006. City of Dubuque response The City Finance Department will coordinate with the CPA audit firm and Personnel Department to provide any information required by GASB 47 that will be implemented with GASB 45. A portion of GASB 47 was implemented during FY'06. GASB Statement No. 49 Auditor comment Accounting and Financial Reporting for Pollution Remediation Obligations, issued November 2006, will be effective for the fiscal year ending June 30, 2009. This statement establishes standards for accounting and financial reporting for obligations to address the current or potential detrimental effects of existing pollution. City of Dubuque response The City Finance Department will coordinate with the CPA audit firm and other City departments to provide any information required by GASB 49. Implementation is next fiscal year. GASB Statement No. 51 Auditor comment Accounting and Financial Reporting for Intangible Assets, issued June 2007, will be effective for the fiscal year ending June 30, 2010. This statement requires that all intangible assets not specifically excluded by its scope be classified as capital assets. City of Dubuque response 3 The City Finance Department will coordinate with the CPA audit firm to provide any information required by GASB 51. Since the implementation is two fiscal years away, time is available to research any requirements applicable to the City of Dubuque. GASB Statement No. 52 Auditor comment Land and Other Real Estate Held as Investments by Endowments. issued November 2007, will be effective for the fiscal year ending June 30, 2009. This statement establishes consistent standards for the reporting of land and other real estate held as investments by essentially similar entities. City of Dubuque response The City Finance Department will coordinate with the CPA audit firm and other City departments to provide any information required by GASB 49. Implementation is next fiscal year. GASB Statement No. 53 Auditor comment Accounting and Financial Reaortina for Derivative Instruments, issued June 2008, will be effective for the fiscal year ending June 30, 2010. This statement addresses the recognition, measurement, and disclosure of information regarding derivative instruments entered into by state and local governments. City of Dubuque response The City Finance Department will coordinate with the CPA audit firm to provide any information required by GASB 51. Since the implementation is two fiscal years away, time is available to research any requirements applicable to the City of Dubuque. KJT/jmg Enclosure 4 Eide Bailly CPAs & BUSINESS ADVISORS To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented c.,~uYOnent unit, each major fund, and the aggregate remaining fund information of the City of Dubuque, Iowa, for the year ended June 30, 2008, and have issued our report thereon dated December 16, 2008. Professional standards require that we provide you with the following information related to our audit. Our Responsibilities under U.S. Generally Accepted Auditing Standards and OMB Circular A-133 As stated in our engagement letter dated May 14, 2008, our responsibility, as described by professional standards, is to express opinions about whether the fmancial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide assurance on the internal control over fmancial reporting. We also considered internal control over c.,u~Yliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of :,,~Y. essing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. As part of obtaining reasonable assurance about whether the City's fmancial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, 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. Also in accordance with OMB Circular A-133, we examined, on a test basis, evidence about the City's compliance with the types of compliance requirements described in the "U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement" applicable to each of its major federal programs for the purpose of ~xr~essing an opinion on the City's compliance with those requirements. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City's compliance with those requirements. Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing previously communicated to you in our engagement letter dated May 14, 2008, and in our meeting about planning matters on August 7, 2008. PEOPLE. PRINCIPLES. POSSIBILITIES. www.eidebailly.com 3999 Pennsylvania Ave., Ste. 100 1 Dubuque, Iowa 52002-2273 1 Phone 563.556.1790 1 Fax 563.557.7842 1 EOE To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Page 2 Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Dubuque are described in Note 1 to the financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during 2008. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: Management's estimate of the depreciable lives is based on past history of life cycles of capital assets. We evaluated the key factors and assumptions used to develop the depreciable lives in determining that they are reasonable in relation to the financial statements taken as a whole. Management's estimate of the cost of contributed infrastructure from developers is based on estimated unit cost on City funded projects. We evaluated the key factors and assumptions used to develop the contributed infrastructure costs in determining that they are reasonable in relation to the financial statements taken as a whole. Management's estimates of the incurred but not reported health and workers' compensation liabilities are based on third-party administrator's calculations and estimates. We evaluated the key factors and assumptions used to develop the incurred but not reported liabilities in determining that they are reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Page 3 Management Representations We have requested certain representations from management that are included in the management representation letter dated December 16, 2008. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Comments We have included additional comments regarding the financial statements and operations. These comments are not a result of in-depth study of any specific areas but are based on observations made during the course of our audit. This information, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Dubuque, Iowa, and other parties to whom the City of Dubuque, Iowa, may report, including federal awarding agencies and pass-through entities. This report is not intended to be and should not be used by anyone other than these specified parties. As always, we will be happy to discuss these or any other topics at your convenience. We would like to take this opportunity to express our appreciation to you and your staff for the fine cooperation that we received during the course of the audit. We look forward to many years of continued service to the City of Dubuque, Iowa. ~G~ Dubuque, Iowa December 16, 2008 CITY OF DUBUQUE YEAR ENDED JUNE 30, 2008 O i t~;R COMMENTS Conversion of Accounting Records The City maintains its records using the cash basis of accounting. However, in order to comply with accounting principles generally accepted in the United States of America, the comprehensive annual financial report (CAFR) must be prepared using the modified accruaUaccrual basis of accounting. Eide Bailly LLP currently posts all adjustments at yeaz-end which are necessary to convert the City's cash-basis amounts to the amounts used in the CAFR. At this time, the City is preparing the worlcpapers needed to convert the accounting records to the modified accruaUaccnial basis at year-end. Eide Bailly LLP posts the journal entries and prepazes the fmancial statements. Although it may require increased staffmg levels, we encourage the Finance Department to continue in their advancement of converting to the modified accrual/accrual basis and Y~..Yazation of the fmancial statements required in the CAFR. Governmental Accounting Standards Board (GASB) The Governmental Accounting Standazds Boazd (GASB) has issued six statements not yet implemented by the City of Dubuque. The statements, which might impact the City of Dubuque, are as follows: Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, issued June 2004, will be effective for the fiscal yeaz ending June 30, 2009. This statement establishes standards for the measurement, recognition, and display of other postemployment benefit (OPEB) expense/expenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information in the fmancial reports of state and local governmental employers. Statement No. 47, Accounting for Termination Benefits, issued June 2005, establishes accounting standazds for termination benefits. For termination benefits provided through an existing defined benefit OPEB plan, the provisions of this statement should be implemented simultaneously with the requirements of Statement No. 45. For all other termination benefits, this statement was effective for the fiscal year ended June 30, 2006. Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, issued November 2006, will be effective for the fiscal year ending June 30, 2009. This statement establishes standards for accounting and financial reporting for obligations to address the current or potential detrimental effects of existing pollution. Statement No. 51, Accounting and Financial Reporting for Intangible Assets, issued June 2007, will be effective for the fiscal year ending June 30, 2010. This statement requires that all intangible assets not specifically excluded by its scope be classified as capital assets. Statement No. 52, Land and Other Real Estate Held as Investments by Endowments, issued November 2007, will be effective for the fiscal year ending June 30, 2009. This statement establishes consistent standazds for the reporting of land and other real estate held as investments by essentially similar entities. Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, issued June 2008, will be effective for the fiscal year ending June 30, 2010. This statement addresses the recognition, measurement, and disclosure of information regazding derivative instruments entered into by state and local governments. COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2008 CITY OF DUBUQUE, IOWA Prepared by: Department of Finance INTRODUCTORY SECTION CITY OF DUBUQUE, IOWA CITY OF DUBUQUE, IOWA Table of Contents Exhibit Page INTRODUCTORY SECTION Table of Contents 1-2 Letter of Transmittal 3-9 City Organizational Chart 10 Officials 11 Certificate of Achievement for Excellence in Financial Reporting 12 FINANCIAL SECTION Independent Auditor's Report 13-14 Management's Discussion and Analysis 15-22 Basic Financial Statements Government-wide Financial Statements Statement of Net Assets 1 23-24 Statement of Activities 2 25 Fund Financial Statements Balance Sheet -Governmental Funds 3 26 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 3-1 27 Statement of Revenues, Expenditures, and Changes in Fund Balances -Governmental Funds 4 28 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 4-1 29 Statement of Net Assets -Proprietary Funds 5 30-31 Statement of Revenues, Expenses, and Changes in Fund Net Assets (Deficit) -Proprietary Funds 6 32 Statement of Cash Flows -Proprietary Funds 7 33-34 Statement of Fiduciary Assets and Liabilities 8 35 Notes to Financial Statements 36-60 Required Supplementary Information Schedule of Receipts, Expenditures, and Changes in Balances -Budget and Actual (Budgetary Basis) -Governmental Funds and Enterprise Funds 61 Notes to Required Supplementary Information -Budgetary Reporting 62 Combining Fund Statements Combining Balance Sheet -Nonmajor Governmental Funds A-1 63-64 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -Nonmajor Governmental Funds A-2 65-66 Combining Statement of Net Assets -Nonmajor Enterprise Funds B-1 67 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets -Nonmajor Enterprise Funds B-2 68 Combining Statement of Cash Flows -Nonmajor Enterprise Funds B-3 69-70 Combining Statement of Net Assets -Internal Service Funds C-1 71 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets (Deficit) -Internal Service Funds C-2 72 Combining Statement of Cash Flows -Internal Service Funds C-3 73 Combining Statement of Changes in Assets and Liabilities -Agency Funds D-1 74 CITY OF DUBUQUE, IOWA Table of Contents Table Page STATISTICAL SECTION (Unaudited) Statistical Section 75 Financial Trends Net Assets by Component 1 76 Changes in Net Assets 2 77-78 Fund Balances of Governmental Funds 3 79 Changes in Fund Balances of Governmental Funds 4 80 Revenue Capacity Taxable and Assessed Value of Property 5 81 Property Tax Rates -Direct and Overlapping Governments 6 82 Principal Property Taxpayers 7 83 Property Tax Levies and Collections 8 84 Debt Capacity Ratios of Outstanding Debt by Type 9 85 Ratios of General Bonded Debt Outstanding 10 86 Direct and Overlapping Governmental Activities Debt 11 87 Legal Debt Margin Information 12 88 Revenue Bond Coverage -Parking Bonds 13 89 Water and Sewer Receipt History 14 90 Water Meters by Rate Class 15 91 Largest Water and Sewer Customers 16 92 Demographic and Economic Information Demographic and Economic Statistics 17 93 Principal Employers 18 94 Full-Time Equivalent City Government Employees by Function/Department 19 95 Operating Information Operating Indicators by Function/Program 20 96 Capital Asset Statistics by Function/Program 21 97 COMPLIANCE SECTION Report on Internal Control over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed in Accordance with GovernmentAuditing Standards 98-99 Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 100-101 Schedule of Expenditures of Federal Awards 102-104 Notes to the Schedule of Expenditures of Federal Awards 105 Schedule of Findings and Questioned Costs 106-108 2 THE CITY OF DUBUQUE Masterpiece on the Mississipip Dubuque All-American City 2007 December 16, 2008 Dubuque Finance Department 50 West 13th Street Dubuque, Iowa 52001-4805 Office (563) 589-4133 Fax (563) 589-6689 TTY (563) 690-6678 financeQcityofdubuque. org 2007 www.cityofdubuque.org Honorable Mayor, City Council Members, and Citizens of the City of Dubuque The Comprehensive Annual Financial Report (CAFR) of the City of Dubuque, Iowa, for the fiscal year ended June 30, 2008, is hereby submitted as required by various state and federal regulations. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects, and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and activities of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial operations have been included. State code requires an annual audit by independent certified public accountants or the State Auditor. The accounting firm of Eide Bailly LLP conducted the audit for fiscal year 2008. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of an annual single audit in conformity with the U.S. Office of Management and Budget Circular A-133, Audits of States, Local GoveNnments and Non-Profit Organizations. Information related to this single audit, including the Schedule of Expenditures of Federal Awards, findings and recommendations, and the auditor's report on internal control over financial reporting and compliance with requirements applicable to laws, regulations, contracts, and grants, are included in the Compliance Section of this report. The independent auditors report is included in the Financial Section of this report. This report includes all funds of the City of Dubuque, as well as its component unit. Component units are legally separate entities for which the City of Dubuque is financially accountable. The City provides a full range of services including; police and fire protection, sanitation services, the construction and maintenance of roads, streets, and infrastructure, inspection and licensing functions, maintenance of grounds and buildings, municipal airport, library, recreational activities and cultural events. In addition to general government activities, the municipality owns and operates enterprises for a water system, water pollution control facility, stormwater system, 3 Service People Integrity Responsibility Innovation Teamwork parking facilities, refuse collection, and public transportation. Also, the governing body is financially accountable for the operations of the Dubuque Library Board, Airport Commission, Civic Center Commission, Cable TV Commission, Transit Board, and the Park and Recreation Commission. These activities are not legally separate entities, and therefore, are included in the reporting entity. This report includes the Dubuque Metropolitan Area Solid Waste Agency (DMASWA) as a discretely presented component unit. The discretely presented component unit is reported in a separate column- in the government-wide financial statements to emphasize that it is legally separate from the City of Dubuque and to differentiate its financial position and results of operations from those of the City. The City of Dubuque appoints a voting majority to the DMASWA governing board and operates the landfill. Generally Accepted Accounting Principles (GAAP) require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Dubuque's MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE GOVERNMENT The City of Dubuque is located on the Mississippi River in northeast Iowa, adjacent to the states of Illinois and Wisconsin. Julien Dubuque began mining lead in the area now known as Dubuque in 1788. Dubuque is the oldest city in Iowa and has a unique combination of the old and new, ranging from cable cars, Victorian architecture, and a Civil War era shot tower, to an enclosed shopping mall, riverboat casino, a parrmutuel dog track with a casino and the National Mississippi River Museum and Aquarium (a Smithsonian affiliate). Dubuque has a stable and diversified business or economic base and is the major tri-state retail center. Employment growth was strong throughout the year, as Dubuque ended the fiscal year with an unemployment rate of approximately 3.54 percent. The City of Dubuque currently has a land area of 29.94 square miles, and a census 2000 population of 57,686. As the largest city in the tri-state area, Dubuque serves as the hub of a trade area with a population estimated at 250,000. The City of Dubuque is empowered to levy a property tax on real property located within the City limits. The City has operated under acouncil-manager form of government since 1920. Policymaking and legislative authorities are vested in the governing council, which consists of a mayor and asix-member council. The governing council is responsible for, among other things, setting policy, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, Corporation Counsel, and City Clerk. The City Manager is responsible for overseeing the day-to-day operations of the government, making recommendations to the City Council on the budget and other matters, appointing the heads of the government's departments, and hiring employees. The council is elected on anon-partisan basis. Council members are elected to four-year staggered terms with three council members elected every two years. The mayor is elected to a four-year term. Four of the council members are elected within their respective wards; the mayor and the two remaining council members are elected at large. 4 ECONOMIC CONDITION Significant continued development in the Port of Dubuque has begun or is in final planning stages. Projects include: a $32 million expansion by the National Mississippi River Museum and Aquarium; an $80 million Diamond Jo Casino entertainment expansion; a $60 million Briggs/ Durrant mixed-use development project; an $8 million renovation of City-owned Dubuque Star Brewery by a private developer for office, restaurant, and retail use (complete), and a new $20 million City parking ramp. The $32 million McGraw-Hill Higher Education office building and the LEED-certified remodeling of the former Adams facility by Durrant were completed in August 2007 and April 2008, respectively. Development of the Dubuque Industrial Center West continues with several business expansions underway, including: Kendall/Hunt Publishing (80,000 square foot distribution center); Art's Way Manufacturing; National Dentex; Giese Manufacturing; Dubuque Screw Products; Hormel Foods (340,000 square foot food processing plant); Medline Industries (67,100 square foot office building); ITC Development; Vanguard Countertops (30,200 square foot fabrication building); and Theisen Supply. Many of these projects were completed as of October 2008 with the exceptions of Medline, Vanguard, and Hormel. The Dubuque Technology Park on the south side of the City had three new facilities completed in 2007 which added 230 new jobs and $6,000,000 of capital investment (Kunkel, Bounds, and Associates, Sedgwick CMS/Straka Johnson Architects, and Entegee Engineering). Downtown development continues at a brisk pace with the following projects: the $7 million expansion by Cottingham and Butler, which will add 90 new jobs and is scheduled to be completed in October 2008; a $1.5 million restoration of the historic German Bank building was completed in January of 2008; renovation- of the former Hartig Drug Stores fora $2.5 million expansion of McGladrey & Pullen CPA's Dubuque Office was completed in late 2007, and the renovation of the former Interstate Power Company headquarters is scheduled to be completed in December 2008. A $6.2 million renovation project at the Carnegie Stout Public Library is scheduled to begin in early 2009. Conversion of the former Dubuque Casket Factory, a $6 million project, was completed in spring 2007. The project included 36 apartments and offices for Crescent Community Health Center and Project Concern, a Gronen Restoration project. The Washington Neighborhood revitalization strategy includes more than $2 million public-private partnership in lending activities to promote home ownership. The City Council approved a Revitalization Strategy for the Warehouse District in August 2007. The strategy defines six primary goals to be achieved in rehabilitating the area. The revitalization is expected to amount to $200 million in investment from private and public sectors over the next ten years. A master plan for the redevelopment of the district is expected to be completed by early 2009. 5 Other major construction projects include completion of the new Athletic and Wellness Center at Loras College in November 2007 and the University of Dubuque Chlapaty Recreation and Wellness Center, which opened in the Fall of 2008. In September 2008, Loras College also proposed construction of the 32 dwelling unit Oaks Housing project on the north side of the campus. Walgreens has begun construction of a new store at the intersection of 20~' and Elm Street and will serve as their third location in Dubuque. Additionally, Holiday Inn Express has broken ground on a new hotel on Holliday Drive on the west side of town. Construction has also begun on two new residential subdivisions. Pebble Cove #1 and #2, located near the southwest corner of the Northwest Arterial and John F. Kennedy Road, will provide 46 new building lots for single and two-family homes. English Ridge subdivision, located east of the intersection of U.S. 20 and Stone Valley Drive, will create 45 single-family lots. A third new subdivision named North Fork Trails is close to being approved. North Fork Trails will provide 17 building lots for two-family homes and will incorporate sustainable land management and building construction practices on an infill site located at the end of Keymont Drive. Demolition was recently completed on the former meat packing plant, opening 30 acres for future retail development on the Highway 151 /61 corridor. Nearly all of the materials from the former facility have been recycled. The City continues to receive awards and recognition from a variety of sources including: • 2008 Most Livable Small City in the U.S., by the U.S. Conference of Mayors; • One of the 2008 & 2007 100 Best Communities for Young People, by America's Promise Alliance for Youth; • 2007 All-America City, by the National Civic League; • Ranked 22nd among the "Top 25 Boomtowns" in the nation, by Inc. magazine in May 2007; • 2006 Iowa Great Place, by the Iowa Department of Cultural Affairs Citizen Advisory Board; • Ranked 22°d for job growth among 387 U.S. cities between 2005 and October 2006, by Moody's/Economy.com; and • Ranked 18th in nation in 2008's "Best Small Places for Business and Careers", by Forbes magazine. The operation of an expanded land-base Diamond Jo Casino in December, 2008 may have a negative impact on City revenue from Dubuque Greyhound Park and Casino. However, a plan to address this impact was approved by the City Council as part of the FY 2009 budget process. MAJOR INITIATIVES For the Year. The City of Dubuque staff, following the adopted priorities of the Mayor and City Council, has been involved in a variety of projects throughout the year. These projects reflect the City's commitment to continue to provide high quality services to the citizens of Dubuque within the budget guidelines set by the Mayor and City Council. 6 The Dubuque Regional Airport inaugurated service from Northwest Airlines through their Minneapolis, MN hub beginning in June 2008. This service is in addition to the regional jet service from American Airlines through their Chicago hub. The land required to support the new airline terminal as depicted in the FAA approved Airport Layout Plan has entered the eminent domain phase and final disposition of the land should be resolved in 2009. This action will lead to the funding and implementation of the planned airport expansion and upgrade. The City continues to implement components of the $38 million Drainage Basin Master Plan. The $4 million West 32°d Street Detention Basin Project and $32 million, Bee Branch Creek Restoration Project have involved significant property acquisitions and engineering design to date. Additionally, the City has begun a comprehensive study to provide added capacity for traffic flow and improved connectivity between the western growth areas and the downtown area. Currently the US 20 Corridor serves as the single primary route for east-west travel in the City. Beginning in 2006, the Dubuque City Council identified Green City Designation as one of its top priorities. Since then, many initiatives have been underway to make Dubuque a more sustainable community. The City is in the process of completing several projects that will help it achieve the Council's goal. These include participation in the Sustainable Design Assessment Team program, preparation of the Unified Development Code, completion of a green resources and energy use profile, and a variety of neighborhood-based green initiatives. For the Future. The Mayor and City Council will continue to take action to achieve their goals of maintaining a strong local economy, sustaining stable property tax levies, and enhancing the safety and security of citizens through neighborhood vitality. The City staff will work to implement the City Council's vision that Dubuque is a "Masterpiece on the Mississippi." A program of comprehensive service reviews has continued as a vehicle for analyzing City services, identifying opportunities for improvement, and determining areas of possible cost reductions. The goal of the service review program is to ensure that services desired by the citizens are provided in the most cost effective and efficient method possible. The City Council's goals for the next five years and beyond include the following: • Improved Connectivity: Transportation and Telecommunications • Diverse, Strong Dubuque Economy • Planned and Managed Growth • Partnering for a Better Dubuque • Sustainable City FINANCIAL INFORMATION Internal Controls. City management is responsible for establishing and maintaining internal controls to ensure that the assets of the government are protected from loss, theft, or misuse, and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal controls are 7 designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Single Audit. As a recipient of federal and state financial assistance, the City of Dubuque's government is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws, regulations, contracts, and grants related to those programs. These internal controls are subject to periodic evaluation by management. As apart of the City's single audit described earlier, tests are made to determine the adequacy of internal controls, including that portion related to federal programs, as well as to determine that the government has complied with applicable laws, regulations, contracts, and grants. The results of the government's single audit for the fiscal year ended June 30, 2008, provided no instances of material weaknesses in internal control over compliance, or significant violations of applicable laws,- regulations, contracts, and grants. Budgeting Controls. In addition, the government maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. All funds are included in the annual budget process. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established by state programs. The government also maintains an encumbrance accounting system as one technique for accomplishing budgetary control. Encumbered amounts lapse at year-end, however, encumbrances generally are re-appropriated as part of the following year's budget. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. Cash Management. Cash temporarily idle during the year was invested in demand deposits, certificates of deposit, federal agency obligations, and authorized mutual funds. The City (including DMASWA) received cash basis investment earnings of $3,926,402 for the year. The investment policy adopted by the City Council stresses the importance of capital preservation. The policy directives intend to minimize credit and market risks while maintaining a competitive yield on the portfolio. Accordingly, deposits were either covered by federal depository insurance or collateralized. All collateral on uninsured deposits was held either by the State Treasurer, the government, its agent, or a financial institution's trust department in the government's name. All of the investments subject to risk categorization were classified in the category of lowest credit risk as defined by the Governmental Accounting Standards Board. The non-classified investments include mutual funds. Risk Management. The City of Dubuque is a member of a statewide risk pool for local governments, the Iowa Communities Assurance Pool (ICAP). The coverage for general and auto liability, as well as public official and police professional liability are acquired through this pool. Worker's compensation coverage up to $450,000 for each accident is provided through self- insurance. The accumulated reserve provision for such claims reflected a $119,142 deficit as of 8 June 30, 2008. Provision for three large claims were accrued at fiscal year end with funds to cover payment available in next fiscal year. The City has also established aself-insurance plan for medical, prescription drug, and short-term disability. The accumulated reserve provision for such claims equaled $3,334,742 as of June 30, 2008. All self-insured health plans are certified as actuarially sound and certificates of compliance have been filed with the State of Iowa. Bond Rating. The rating for the City's outstanding general obligation bonded debt was upgraded by Moody's Investors Service to "Aa2" from a previous rating of "Aa3" in September 2003. This upgrade was due in part to the City's sound financial position, anticipated growth of the City's tax base, and low overall debt burden. The rating was continued for bonds issued since 2003. AWARDS AND ACKNOWLEDGEMENTS Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Dubuque, Iowa, for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2007. This was the 20th consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement program requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Recognition for Budget Preparation to the City of Dubuque, Iowa, for its annual budget for the fiscal year ended June 30, 2008. In addition we received the award for the fiscal year ending June 30, 2009. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. This award is valid for a period of one year. Acknowledgments. We compliment the staff of the Finance Department for their assistance in preparing this report. We also commend the Mayor and City Council and all department and division managers for their interest -and support in planning and conducting the financial operations of the City of Dubuque in a responsible and progressive manner. We also thank the independent certified public accountants, Eide Bailly LLP, whose competent assistance and technical expertise have enabled the production of this report. Sincerely, ~. Michael C. Van Milligen Kenneth J. TeKippe, CPA City Manager Finance Director 9 CITY ~F aU BUQU E ORGAN IZATI~NAL CHART City Attorney CITY COUNCIL City Clerk Library Assistant City Manager Personnel Manager Budget Director Airport Public Infarmatian Officer CITY MANAGER Cable TV Geographic Information Systems Neighborhood Development Building Economic Emergency Finance Fire Heal#h Housing 8~ Human Information Services Development Communications Department Department Services Community Rights Services Department Department Department Development Department Department Emergency Department Parking System Management Transit Division Leisure Services Department Civic Center Park Recreation 0 Public Wvrks Department Pianning Services Department Police Engineering Water Department Department Department Water Pollution Control Department 12107 CITY OF DUBUQUE, IOWA OFFICIALS JUNE 30, 2008 CITY COUNCIL Roy D. Buol Richard W. Jones David T. Resnick Kevin J. Lynch Karla A. Braig Joyce E. Connors Dirk N. Voetberg COUNCIL APPOINTED OFFICIALS Michael C. Van Milligen Barry A. Lindahl Crenna M Brumwell-Sahm James A. O'Brien Jeanne F. Schneider DEPARTMENT MANAGERS Robert A. Grierson Therese H. Goodmann Cynthia M. Steinhauser Jenny M. Larson Richard R. Russell David J. Heiar Kenneth J. TeKippe E. Daniel Brown Mary Rose Corrigan David W. Harris, Jr. Kelly R. Larson Randall K Peck Christine A. Kohlmann Gil D. Spence Susan A. Henricks Donald J. Vogt Laura B. Carstens Kim B. Wadding Gus N. Psihoyos Robert M. Green Jonathan R. Brown Mayor Council Member - At Large Council Member - At Large Council Member - 1St Ward Council Member - 2nd Ward Council Member - 3rd Ward Council Member - 4tn Ward City Manager City Attorney Assistant City Attorney Assistant City Attorney City Clerk Airport Manager Assistant City Manager Assistant City Manager Budget Director Building Services Manager Economic Development Director Finance Director Fire Chief Health Services Manager Housing and Community Development Manager Human Rights Director Personnel Manager Information Services Manager Leisure Services Manager Library Director Public Works Director Planning Services Manager Police Chief Public Works Director Water Department Manager Water Pollution Control Plant Manager 11 Certificate of Achievement for Excellence in Financial Reporting Presented to City of Dubuque Iowa For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2007 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose c.,...t.a~hensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. 12 FINANCIAL SECTION CITY OF DUBUQUE, IOWA ~,,"" ,~ - INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Dubuque, Iowa, (the City) as of and for the year ended June 30, 2008, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the management of the City of Dubuque, Iowa. 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Dubuque, Iowa, as of June 30, 2008, 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. In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2008, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. ~..w~ ~ . ~.~~~ ~ ~~9 ..~a ~~~ i Q k ° ° . ~ ~~ ~~~. _ ~,,,~ ,oi~~,i ~v~., ~P~~. n ~¢~~ ~ QF~ukar~~ge~~, I~~w~i ~[~~k~1~ ~.~~':~ ~~ L ` i ',`..:~,5t~.1 T'~U 1 Fc ::r i'ri.~'~ ~ ~'~~ The management's discussion and analysis and budgetary comparison information, listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements of the City of Dubuque, Iowa. The introductory section, combining nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations, and is also not a required part of the basic financial statements of the City of Dubuque, Iowa. The combining nonmajor fund financial statements and the schedule of expenditures of federal awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion on them. ~~~~ Dubuque, Iowa December 16, 2008 14 CITY OF DUBUQUE, IOWA MANAGEMENT' S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2008 This section of the City of Dubuque annual financial report presents our discussion and analysis of the City's financial performance during the fiscal year that ended on June 30, 2008. Please read it in conjunction with the transmittal letter at the front of this report and the City's financial statements found in the next section of this report. FINANCIAL HIGHLIGHTS • The assets of the City of Dubuque exceeded its liabilities at the close of the fiscal year by $454,073,902 (net assets). This was an increase of $16,020,278 over net assets at June 30, 2007. Unrestricted net assets at June 30, 2008 in the amount of $30,300,647 may be used to meet the City's ongoing obligations to citizens and creditors. • The expenses of the general fund exceeded revenues by $2,151,941. • The ending general fund balance was $19,681,841. • Within the City's business-type activities, revenues exceeded expenses and transfers by $3,719,136. • For the year, the revenues of the City's governmental activities exceeded expenses and transfers by $12,301,142. • The City's debt increased by $22,037,072 due to issuance of new debt exceeding principal payments. OVERVIEW OF THE FINANCIAL STATEMENTS The City's basic financial statements consist of government-wide financial statements, fund financial statements, and notes to the financial statements. This discussion and analysis is intended to serve as an introduction to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to private-sector business. The paragraphs below provide a brief description of the government-wide financial statements. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. To assess the overall health of the City you need to 15 consider additional non-financial factors such as changes in the City's property tax base and the condition of the City's infrastructure. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods such as uncollected taxes and earned but unused vacation leave. The government-wide financial statements include not only the City itself (known as the primary government), but also one other legally separate entity, the Dubuque Metropolitan Area Solid Waste Agency, for which the City of Dubuque is considered financially accountable. Financial information for the Agency is reported separately from the financial information presented for the primary government. The Dubuque Metropolitan Area Solid Waste Agency issues separate financial statements. The government-wide financial statements are divided into two categories: Governmental activities. This category consists of services provided by the City that are principally supported by taxes and intergovernmental revenues. Basic City services such as police, fire, public works, planning, parks, library, and general administration are governmental activities. Business-type activities. These activities are supported primarily by user fees. The services provided the City in this category include water, sewer, storm water, refuse, parking, transit and America's River Project. Fund Financial Statements A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with legal requirements for financial transactions and reporting. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental 16 funds with similar information presented for governmental activities in the government- wide financial statements. By doing so, readers may better understand the long-term impact of the City's near term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances are followed by a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains four individual major governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, employee benefits fund, street construction fund, and community development fund, all of which are considered to be major funds. Data from all other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City legally adopts an annual budget by function. A budgetary comparison schedule has been provided. Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprises funds to account for its sewer, water, storm water, refuse utilities and for transit, parking, and America's River Project. Internal service funds are accounting devices used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its general/engineering service, garage service, stores/printing, health insurance, and workers' compensation. The City's internal service funds predominately benefit the governmental activities and have been included in the governmental activities in the government-wide financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City has two fiduciary funds, an agency fund reporting resources held for the Dubuque Racing Association for improvements at the greyhound racing facility and an agency fund used for reporting resources from Mediacom for purchasing equipment relevant to public, educational and governmental (PEG) access broadcasting. 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. Required supplementary information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the budget and actual results of the City. 17 Other information. The combining statements referred to earlier in connection with non- major governmental funds, non-major enterprise funds, and internal service funds, as well as an individual agency fund statement, are presented immediately following the required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets. As noted earlier, net assets may serve as a useful indicator of a government's financial position when observed over time. In the case of the City, assets exceeded liabilities by $454,073,902 at the close of the most recent fiscal year. The largest part of the City's net assets (86.2%) reflects its investment in capital assets such as land, buildings, infrastructure, machinery, and equipment less any related debt used to acquire those assets that are still outstanding. These capital assets are used to provide services to the citizens and are not available for future spending. CITY OF DUBUQUE'S NET ASSETS Governmental Activities Business-type Activities Total 2008 2007 2008 2007 2008 2007 Current and other assets $ 97,492,862 $ 76,852,268 $ 13,705,545 $ 16,342,247 $ 111,198,407 $ 93,194,515 Capital assets 325,611,587 310,552,621 107,186,474 100,384,974 432,798,061 410,937,595 Total assets 423,104,449 387,404,889 120,892,019 116,727,221 543,996,468 504,132,110 Long-term liabilities 50,451,804 29,187,528 12,817,868 11,897,067 63,269,672 41,084,595 Other liabilities 25,550,629 23,416,487 1,102,265 1,577,404 26,652,894 24,993,891 Total liabilities 76,002,433 52,604,015 13,920,133 13,474,471 89,922,566 66,078,486 Net assets: Invested in capital assets, net of related debt 296,143,451 288,978,975 95,104,575 91,483,532 391,248,026 380,462,507 Restricted 31,970,724 23,900,328 554,505 554,318 32,525,229 24,454,646 Unrestricted 18,987,841 21,921,571 11,312,806 11,214,900 30,300,647 33,136,471 Total net assets $ 347,102,016 $ 334,800,874 $ 106,971,886 $ 103,252,750 $ 454,073,902 $ 438,053,624 A portion of the City's net assets (72%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of net assets (6.7%) maybe used to meet the City's ongoing obligations to citizens and creditors. At the close of fiscal years 2008 and 2007, the City is able to report positive balances in all three categories of net assets, both for the government as a whole and separate governmental and business-type activities. Governmental activities. Governmental activities increased the net assets of the City by $12,301,142 or 76.8% of the total increase in net assets in 2008 and $30,212,972 or 97.9% of the total increase in net assets in 2007. Taxes are the largest source of governmental revenues with property taxes of $22,744,563 in 2008. Other governmental revenues included gaming of $15,346,468, local option sales taxes of $8,020,889, hotel/motel tax of $1,622,455, and $9,643,066 of charges for services. 18 Governmental expenses during 2008 totaled $67,814,257. The largest programs were public safety of $16,966,210, public works of $18,847,068, community and economic development of $11,961,584 and culture and recreation of $10,857,409. The State of Iowa changed the reporting requirements for expenses from four to eight programs effective with the 2003 fiscal year. CITY OF DUBUQUE CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS Governmental Activities Business-type Activities Total 2008 2007 2008 2007 2008 2007 Revenues: Program revenues Charges for services $ 9,643,066 $ 10,023,217 $ 17,176,090 $ 16,090,766 $ 26,819,156 $ 26,113,983 Operating grants and contributions 11,709,123 11,641,904 1,209,636 1,167,344 12,918,759 12,809,248 Capital grants and contributions 8,032,602 23,741,282 2,830,263 1,670,874 10,862,865 25,412,156 General revenues Property taxes 22,744,563 21,656,908 - - 22,744,563 21,656,908 Local option sales tax 8,020,889 7,817,403 - - 8,020,889 7,817,403 HoteUmotel tax 1,622,455 1,569,743 - - 1,622,455 1,569,743 Utility franchise fees 1,516,123 1,492,920 - - 1,516,123 1,492,920 Gaming 15,346,468 15,556,551 - - 15,346,468 15,556,551 Unrestricted investment earnings 2,741,499 1,870,403 630,049 796,636 3,371,548 2,667,039 Gain on sale of capital assets 92,525 - 11,736 - 104,261 - Other 898,241 586,931 - - 898,241 586,931 Total revenues 82,367,554 95,957,262 21,857,774 19,725,620 104,225,328 115,682,882 Expenses: Public safety 16,966,210 20,326,724 - - 16,966,210 20,326,724 Public works 18,847,068 16,506,560 - - 18,847,068 16,506,560 Health and social services 800,566 759,367 - - 800,566 759,367 Culture and recreation 10,857,409 9,837,299 - - 10,857,409 9,837,299 Community and economic development 11,961,584 11,965,805 - - 11,961,584 11,965,805 General government 5,804,003 4,940,154 - - 5,804,003 4,940,154 Interest on long-term debt 2,577,417 1,400,748 - - 2,577,417 1,400,748 Sewage disposal works - - 6,141,524 5,814,076 6,141,524 5,814,076 Water utility - - 4,814,692 4,780,063 4,814,692 4,780,063 Stormwater utility - - 1,706,735 1,198,675 1,706,735 1,198,675 Parking facilities - - 2,173,110 1,611,447 2,173,110 1,611,447 America's River Project - - 126,699 434,667 126,699 434,667 Refuse collection - - 2,724,050 2,496,018 2,724,050 2,496,018 Transit system - - 2,703,983 2,760,459 2,703,983 2,760,459 Total expenses 67,814,257 65,736,657 20,390,793 19,095,405 88,205,050 84,832,062 Increase in net assets before transfers 14,553,297 30,220,605 1,466,981 630,215 16,020,278 30,850,820 Transfers (2,252,155) (7,633) 2,252,155 7,633 - - Increase (decrease) in net assets 12,301,142 30,212,972 3,719,136 637,848 16,020,278 30,850,820 Net assets, beginning 334,800,874 304,587,902 103,252,750 102,614,902 438,053,624 407,202,804 Net assets, ending $ 347,102,016 $ 334,800,874 $ 106,971,886 $ 103,252,750 $ 454,073,902 $ 438,053,624 19 Business-type activities. Business type activities increased net assets by $3,719,136 while the City's net assets increased by $16,020,278 at June 30, 2008. FINANCIAL ANALYSIS OF THE GOVERNMENT' S FUNDS Governmental 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. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. The City's governmental funds reported a combined fund balance of $66,910,216 at June 30, 2008. A portion of the fund balance is reserved and not available for new spending because it has already been committed for encumbrances, endowments, debt service and state statute restricted purposes. The general fund's fund balance reserve goal is 10% of budgeted annual expenditures. Our balance is slightly higher than the goal at year-end. The unreserved fund balance of special revenue employee benefits fund increased by $10,242 to $117,274. The unreserved fund balance of special revenue community development decreased by $594,753 to $2,158,078. Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The combined net assets of the enterprise funds at June 30, 2008 totaled $106,971,886 of which 10.6% ($11,312,806) is unrestricted. The net assets of the internal service funds are $3,418,227 a $593,727 increase from the 2007 total net assets. The unrestricted net assets of the internal service funds are $3,366,107 (98.5%). The increase in internal service funds is primarily due to favorable results in the employee health insurance reserve fund. The sewer disposal works had an increase in net assets of $353,183 for total net assets of $39,445,257 at June 30, 2008. The water utility had an increase in net assets of $500,745 for total net assets of $24,624,242. The storm water utility had an increase in net assets of $1,943,316 for total net assets of $24,033,641. The parking facilities had an increase in net assets of $1,033,643 for total net assets of $15,163,116. The America's River Project had an increase in net assets of $106,667 for total net assets deficit of $30,947. 20 BUDGETARY HIGHLIGHTS There were two amendments to the City's 2007-2008 budget. The first amendment was passed in October 2007 to reflect operating and capital budget carryovers (continuing appropriation authority) from 2007 and amends the FY 2008 budget for operating and capital City Council actions since the beginning of the fiscal year. The second budget amendment was passed in May 2008 to reflect City Council actions since the first budget amendment and amendments to add additional appropriation authority due to increased revenues. The final budget for total receipts increased by $30,027,918. The increase was primarily attributable to revenue associated with capital projects and operating carryovers which mainly include grants to intergovernmental funds. The final budget for total expenditures increased $65,175,509 from the original budget. The increase was primarily attributable to purchase order encumbrances carryover, capital projects and operating carryovers from the prior year and expenditures associated with new grants received. Actual receipts were $29,154,1871ess than the final amended budget, and expenditures were $68,475,3191ess than the final amended budget due primarily to projected capital projects not completed by fiscal year end. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. The City's investment in capital assets for its governmental and business- type activities as of June 30, 2008, amounts to $432,798,061 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements other than buildings, machinery and equipment, infrastructure, and construction in progress. Additional information on the City's assets can be found in the note 5 to the financial statements in this report. CAPITAL ASSETS (net of accumulated depreciation) Governmental Activities Business-type Activities Total 2008 2007 2008 2007 2008 2007 Land $ 57,171,699 $ 51,912,748 $ 3,364,857 $ 3,364,857 $ 60,536,556 $ 55,277,605 Buildings 106,145,708 101,663,541 61,828,335 60,964,620 167,974,043 162,628,161 Improvements other than buildings 15,245,857 15,028,954 62,082,852 55,727,107 77,328,709 70,756,061 Machinery and equipment 28,679,138 25,636,645 49,217,914 47,778,284 77,897,052 73,414,929 Infrastructure 187,542,063 178,774,083 - - 187,542,063 178,774,083 Construction in progress 14,044,930 16,067,956 6,390,937 5,298,854 20,435,867 21,366,810 Accumulated depreciation (83,217,808) (78,531,306) (75,698,421) (72,748,748) (158,916,229) (151,280,054) $ 325,611,587 $ 310,552,621 $ 107,186,474 $ 100,384,974 $ 432,798,061 $ 410,937,595 Major expenditures during 2007-2008 were for Historic Federal Building renovations; Bee Branch Storm Water Project, multifunction copiers, parking lot at City Hall, Port of Dubuque Parking Ramp, Cedar Street Lift Station, and streets, water and sewer projects. 21 Long-term debt At year end the City had $60,398,027 of debt outstanding. This is an increase of $22,037,072 from June 30, 2007. New debt issued during the current year included general obligation bonds for sewer improvements of $1,055,000 and refinancing $2,965,000 of existing debt at more favorable rates. The City's bond rating was Aa2 for these issues. $23,025,000 of urban renewal tax increment revenue bonds were issued for Port of Dubuque parking ramp. The City also received disbursements from the State Revolving Fund construction loan program of $453,336 for drinking water, $19,113 storm water and $56,538 sewer projects. An additional $83,989 disbursement was taken from the SRF planning loans program for sewer project. The City continues to operate well under the State debt capacity limitations. The State limits the amount of general obligation debt outstanding to 5% of the assessed value of all taxable property in the community. Thus our debt capacity is $148,824,003. With general obligation debt of $60,484,713 we are utilizing 40.64% of this limit. Additional information on the City's long-term debt can be found in note 6 of this report. ECONOMIC FACTORS The City's unemployment rate ended the fiscal year at 3.8%, a .1% increase from the prior year, and is slightly lower than the State of Iowa rate of 4.0 %, and lower than the 5.5% national rate. The City continues to enjoy growth in assessed valuation of taxable property net of exemptions (2.4% for total of $1,814,365,000). In fiscal year 2008, the minimum monthly refuse rate increased $0.43 to $9.89, sewer rates increased 5%, water rates increased 5% and the storm water monthly fee increased $1.00 to $3.25 per single family unit (SFU). 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 government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 50 West 13th Street, Dubuque, Iowa 52001-4864. 22 BASIC FINANCIAL STATEMENTS CITY OF DUBUQUE, IOWA CITY OF DUBUQUE, IOWA EXHIBIT 1 STATEMENT OF NET ASSETS JUNE 30, 2008 Component Unit Dubuque Primary Government Metropolitan Governmental Business-type Area Solid Activities Activities Total Waste Agency ASSETS CURRENT ASSETS Cashandpooledcashinvestments $ 39,784,125 $ 9,915,602 $ 49,699,727 $ 7,168,906 Receivables Property tax Delinquent 237,828 - 237,828 - Succeedingyear 18,963,071 - 18,963,071 - Accounts and other 2,146,076 2,463,612 4,609,688 250,525 Special assessments 328,204 - 328,204 - Accrnedinterest 302,357 62,102 364,459 163,657 Notes 610,311 - 610,311 - Intergovernmental 3,238,706 976,184 4,214,890 - Internalbalances 735,095 (735,095) - - Inventories 283,608 463,296 746,904 - Prepaid items 33,757 5,339 39,096 55,286 Total Current Assets 66,663,138 13,151,040 79,814,178 7,638,374 NONCURRENT ASSETS Temporarily restricted cash and pooled cash investments 20,610,313 554,505 21,164,818 3,625,224 Permanently restricted cash and pooled cash investments 88,061 - 88,061 - Notes receivable 10,131,350 - 10,131,350 - Capital assets Land 57,171,699 3,364,857 60,536,556 1,586,092 Buildings 106,145,708 61,828,335 167,974,043 65,922 Improvements other than buildings 15,245,857 62,082,852 77,328,709 7,468,652 Machinery and equipment 28,679,138 49,217,914 77,897,052 2,361,686 Infrastructure 187,542,063 - 187,542,063 - Constrnctioninprogress 14,044,930 6,390,937 20,435,867 - Accumulated depreciation (83,217,808) (75,698,421) (158,916,229) (7,085,925) Total Noncurrent Assets 356,441,311 107,740,979 464,182,290 8,021,651 Total Assets 423,104,449 120,892,019 543,996,468 15,660,025 (continued) 23 CITY OF DUBUQUE, IOWA STATEMENT OF NET ASSETS JUNE 30, 2008 LIABILITIES CURRENT LIABII,ITIES Accounts payable Accrued payroll Notes payable General obligation bonds payable Revenue bonds payable Tax increment financing bonds payable Accrued compensated absences Accrned interest payable Intergovernmental payable Unearned revenue Succeeding year property tax Other Total Current Liabilities NONCURRENT LIABILITIES Notes payable General obligation bonds payable Revenue bonds payable Landfill closure and postclosure care Tax increment financing bonds payable Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for/by Bond ordinance Debt service Employee benefits Community development Streets Capital projects Franchise agreement Endowments Expendable Nonexpendable Other State statute Minority interest Unrestricted Total Net Assets EXHIBIT 1 (continued) Component Unit Dubuque Primary Government Metropolitan Governmental Business-type Area Solid Activities Activities Total Waste Agency $ 4,694,165 $ 847,782 $ 5,541,947 $ 93,415 945,379 208,719 1,154,098 27,620 114,873 22,070 136,943 - 1,305,000 700,000 2,005,000 - - 240,000 240,000 - 524,727 - 524,727 - 2,540,145 331,500 2,871,645 63,649 237,895 39,347 277,242 - 3,256 - 3,256 69,545 18,963,071 - 18,963,071 - 706,863 6,417 713,280 - 30,035,374 2,395,835 32,431,209 254,229 1,164,763 589,927 1,754,690 - 20,447, 907 10,684,371 31,132,278 - - 250,000 250,000 - - - - 3,136,395 24,354,389 - 24,354,389 - 45,967,059 11,524,298 57,491,357 3,136,395 76,002,433 13,920,133 89,922,566 3,390,624 296,143,451 95,104,575 391,248,026 4,396,427 5,114,998 554,505 5,669,503 - 3,155 - 3,155 - 117,274 - 117,274 - 13,583,759 - 13,583,759 - 2,430,580 - 2,430,580 - 8,868,704 - 8,868,704 - 401,434 - 401,434 - 33,958 - 33,958 - 88,061 - 88,061 - 1,328,801 - 1,328,801 - - - - 239,146 - - - 1,732,879 18,987,841 11,312,806 30,300,647 5,900,949 $ 347,102,016 $ 106,971,886 $ 454,073,902 $ 12,269,401 See notes to financial statements. 24 CITY OF DUBUQUE, IOWA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 Functions/Programs Primary government Governmental activities Public safety Public works Health and social services Culture and recreation Community and economic development General government Interest on long-term debt Total governmental activities Business-type activities Sewage disposal works Water utility Stormwater utility Parking facilities America's River Project Refuse collection Transit system Total business-type activities Total primary government Component unit Dubuque Metropolitan Area Solid Waste Agency Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions $ 16,966,210 $ 2,088,723 $ 625,105 $ 394,081 18,847,068 4,061,883 4,962,158 7,100,463 800,566 112,580 65,156 - 10,857,409 2,109,571 129,409 373,671 11,961,584 343,881 5,927,295 123,574 5,804,003 926,428 - 40,813 2,577,417 - - - 67,814,257 9,643,066 11,709,123 8,032,602 6,141,524 5,484,079 - 799,394 4,814,692 4,875,530 - 368,410 1,706,735 1,766,334 - 927,344 2,173,110 2,141,607 - 698,577 126,699 2,140 - 36,538 2,724,050 2,710,583 13,078 - 2,703,983 195,817 1,196,558 - 20,390,793 17,176,090 1,209,636 2,830,263 $ 88,205,050 $ 26,819,156 $ 12,918,759 $ 10,862,865 $ 3,501,071 $ 3,213,432 $ 29,294 $ General revenues Property taxes Local option sales tax HoteUmotel tax Utility franchise fees Gaming Unrestricted investment earnings Gain on sale of capital assets Other Transfers Total general revenues and transfers Change in net assets Net assets, beginning Net assets, ending See notes to financial statements. EXHIBIT 2 Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business-type Activities Activities Total Component Unit Dubuque Metropolitan Area Solid Waste Agency $ (13,858,301) $ - $ (13,858,301) $ - (2,722,564) - (2,722,564) - (622,830) - (622,830) - (8,244,758) - (8,244,758) - (5,566,834) - (5,566,834) - (4,836,762) - (4,836,762) - (2,577,417) - (2,577,417) - (38,429,466) - (38,429,466) - - 141,949 141,949 - - 429,248 429,248 - - 986,943 986,943 - - 667,074 667,074 - - (88,021) (88,021) - - (389) (389) - - (1,311,608) (1,311,608) - - 825,196 825,196 - (38,429,466) 825,196 (37,604,270) - - - - (258,345) 22,744,563 - 22,744,563 - 8,020,889 - 8,020,889 - 1,622,455 - 1,622,455 - 1,516,123 - 1,516,123 - 15,346,468 - 15,346,468 - 2,741,499 630,049 3,371,548 462,185 92,525 11,736 104,261 - 898,241 - 898,241 - (2,252,155) 2,252,155 - - 50,730,608 2,893,940 53,624,548 462,185 12,301,142 3,719,136 16,020,278 203,840 334,800,874 103,252,750 438,053,624 12,065,561 $ 347,102,016 $ 106,971,886 $ 454,073,902 $ 12,269,401 25 CITY OF DUBUQUE, IOWA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 ASSETS Cash and pooled cash investments Receivables Property tax Delinquent Succeeding year Accounts and other Special assessments Accrued interest Notes Intergovernmental Due from other funds Inventories Advances to other funds Prepaid items Restricted cash and pooled cash investments Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 1,068,481 $ - $ 82,685 $ Accrued payroll 795,521 - 23,169 Intergovernmental payable - - - Deferred revenue Succeeding year property tax 16,478,894 2,094,685 - Other 942,539 3,466 54,879 Total Liabilities 19,285,435 2,098,151 160,733 FUND BALANCES Reserved for/by Encumbrances 1,445,442 - 167,591 Long-term notes receivable - - 10,129,575 Advances 254,383 - - Bond ordinance - - - Debt service - - - Franchise agreement - - - Endowments - - - Unreserved Designated for Future equipment and capital maintenance 6,635,215 - - Future cash flow 3,822,769 - - Undesignated reported in General fund 7,524,032 - - Special revenue funds - 117,274 2,158,078 Capital projects funds - - - Permanentfunds - - - Total Fund Balances 19,681,841 117,274 12,455,244 Total Liabilities and Fund Balances $ 38,967,276 $ 2,215,425 $ 12,615,977 $ See notes to financial statements EXHIBIT 3 Special Revenue Capital Projects Other Employee Community Street General Governmental General Benefits Development Construction Construction Funds Total $ 18,014,113 $ 88,657 $ 1,558,929 $ 1,871,105 $ 4,876,570 $ 8,502,503 $ 34,911,877 200,727 32,083 - - - 5,018 237,828 16,478,894 2,094,685 - - - 389,492 18,963,071 1,913,144 - - 95,734 - 16,506 2,025,384 - - - - - 328,204 328,204 118,131 - 42,420 14,535 1,146 100,580 276,812 - - 10,739,186 - - 2,475 10,741,661 1,263,775 - 259,112 1,045,333 - 670,486 3,238,706 480,712 - - - - - 480,712 225,970 - - - - - 225,970 254,383 - - - - - 254,383 17,427 - 16,330 - - - 33,757 - - - - 15,441,355 5,257,019 20,698,374 $ 38,967,276 $ 2,215,425 $ 12,615,977 $ 3,026,707 $ 20,319,071 $ 15,272,283 $ 92,416,739 369,417 $ 1,246,816 $ 259,303 $ 3,026,702 - - 84,135 902,825 - - 3,256 3,256 - - 389,492 18,963,071 723,730 - 886,055 2,610,669 1,093,147 1,246,816 1,622,241 25,506,523 1,245,241 14,457,176 678,134 17,993,584 - - 1,775 10,131,350 - - - 254,383 - - 5,114,998 5,114,998 - - 3,155 3,155 - - 1,332 1,332 - - 88,061 88,061 - - - 6,635,215 - - - 3,822,769 - - - 7,524,032 - - 5,156,579 7,431,931 688,319 4,615,079 2,572,050 7,875,448 - - 33,958 33,958 1,933,560 19,072,255 13,650,042 66,910,216 3,026,707 $ 20,319,071 $ 15,272,283 $ 92,416,739 Lb CITY OF DUBUQUE, IDWA EXHIBIT 3-1 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2008 Total fund balances -governmental funds $ 66,910,216 Amounts reported for the governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Cost of capital assets $ 408,727,361 Accumulated depreciation (83,167,894) 325,559,467 Some of the City's revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures and therefore are deferred in the funds. Those revenues consist o£ Property tax 30,594 Special assessments 294,581 Other 1,578,630 1,903,805 Internal service funds are used by the City's management to charge the costs of equipment maintenance and self-insurance programs to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. 3,418,227 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Those liabilities consist of: General obligation bonds (21,752,907) Tax increment financing bonds (24,879,116) Notes payable (1,279,636) Accrued interest (237,895) Compensated absences (2,540,145) (50,689,699) Net assets of governmental activities $ 347,102,016 See notes to financial statements. 27 CITY OF DUBUQUE, IDWA EXHIBIT 4 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 Special Revenue Capital Projects Other Employee Community Street General Governmental General Benefits Development Construction Construction Funds Total REVENUES Taxes $ 22,568,857 $ 2,453,174 $ - $ 2,406,267 $ - $ 6,470,394 $ 33,898,692 Special assessments - - - - - 177,585 177,585 Licenses and permits 1,153,429 - - - - - 1,153,429 Intergovernmental 1,578,336 - 1,556,808 1,776,163 - 9,345,216 14,256,523 Charges for services 7,648,503 - - - - 184,648 7,833,151 Fines and forfeits 188,603 - - - - - 188,603 Investment earnings 1,251,166 - 147,449 49,502 766,303 517,533 2,731,953 Contributions 239,254 - - 255,500 5,544,825 94,423 6,134,002 Gaming 15,346,468 - - - - - 15,346,468 Miscellaneous 587,653 - 18,342 72 - 663,309 1,269,376 Total Revenues 50,562,269 2,453,174 1,722,599 4,487,504 6,311,128 17,453,108 82,989,782 EXPENDITURES Current Public safety 21,444,125 - - - - 98,536 21,542,661 Public works 10,494,051 - 67,240 - - 5,769,816 16,331,107 Health and social services 684,712 - 85,047 - - 27,885 797,644 Culture and recreation 10,071,036 - 110,366 - - 96,385 10,277,787 Community and economic development 4,296,730 - 2,015,661 - - 5,535,121 11,847,512 General government 5,670,049 337 - - - 640,553 6,310,939 Debt service 53,507 - - - - 4,115,299 4,168,806 Capital projects - - - 3,599,493 10,088,188 1,664,167 15,351,848 Total Expenditures 52,714,210 337 2,278,314 3,599,493 10,088,188 17,947,762 86,628,304 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (2,151,941) 2,452,837 (555,715) 888,011 (3,777,060) (494,654) (3,638,522) OTHER FINANCING SOURCES (USES) Issuance of debt - - - - 23,025,000 58,696 23,083,696 Discount onbonds - - - - (266,158) - (266,158) Issuance of refunding bonds - - - - - 2,965,000 2,965,000 Payment to refunded bond escrow agent - - - - - (2,875,000) (2,875,000) Transfers in 3,810,467 - 377,213 1,059,041 660,806 8,894,062 14,801,589 Transfers out (4,373,258) (2,442,595) (123,226) (699,523) (7,038,997) (3,507,510) (18,185,109) Sale of capital assets 113,639 - - - 2,635,276 152,275 2,901,190 Total Other Financing Sources (Uses) (449,152) (2,442,595) 253,987 359,518 19,015,927 5,687,523 22,425,208 NET CHANGE IN FUND BALANCES (2,601,093) 10,242 (301,728) 1,247,529 15,238,867 5,192,869 18,786,686 FUND BALANCES, BEGINNING 22,282,934 107,032 12,756,972 686,031 3,833,388 8,457,173 48,123,530 FUND BALANCES, ENDING $ 19,681,841 $ 117,274 $ 12,455,244 $ 1,933,560 $ 19,072,255 $ 13,650,042 $ 66,910,216 See notes to financial statements. 28 CITY OF DUBUQUE, IDWA EXHIBIT 4-1 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 Net change in fund balances -total governmental funds $ 18,786,686 Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities, the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense. In the current period, these amounts are: Capital assets expended in governmental funds $ 22,984,500 Transfers of capital assets from enterprise funds 1,477,783 Transfers of capital assets to enterprise funds (339,982) Depreciation expense (6,264,027) 17,858,274 In the statement of activities, only the gain or loss on the sale of capital assets is reported, whereas in the governmental funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the book value of the asset being disposed. (2,808,665) Because some revenues will not be collected for several months after the City's fiscal year ends, they are not considered "available" revenues and are deferred in the governmental funds. Deferred revenues increased (decreased) by these amounts this year: Property tax 1,887 Special assessments (116,741) Other (599,898) Debt proceeds provide current fmancial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of debt principal is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net assets and does not affect the statement of activities. Also, governmental funds report the effect of issuance discounts when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Debt proceeds (26,048,696) Discounts on bonds issued 266,158 Debt repayments 4,637,374 Some items 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. These items consist of: (714,752) (21,145,164) Increase in accrued interest (149,852) Amortization of bond discount (21,133) Increase in compensated absences (97,979) Total additional expenses (268,964) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of the internal service funds is reported with governmental activities. 593,727 Change in net assets of governmental activities $ 12,301,142 See notes to financial statements. 29 CITY OF DUBUQUE, IOWA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2008 Business-type Activities - ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Accounts Accrued interest Intergovernmental Inventories Prepaid items Total Current Assets NONCURRENT ASSETS Restricted cash and pooled cash investments Capital assets Land Buildings Improvements other than buildings Machinery and equipment Construction in progress Accumulated depreciation Net Capital Assets Total Noncurrent Assets Total Assets Sewage Disposal Water Stormwater Parking Works Utility Utility Facilities $ 5,001,756 $ 788,310 $ 2,753,958 $ 626,425 1,080,432 784,220 227,581 67,922 27,589 6,551 14,903 8,772 - 445,921 - - 5,339 - - - 6,115,116 2,025,002 2,996,442 703,119 - - - 554,505 167,855 37,449 1,827,344 1,296,209 31,590,936 8,214,651 - 20,135,184 32,309,642 520,295 27,318,976 1,933,939 6,908,215 34,957,465 925,265 1,184,471 858,508 378,995 5,137,779 14,910 (36,938,914) (18,840,008) (7,941,292) (7,228,750) 34,896,242 25,268,847 27,268,072 17,335,963 34,896,242 25,268,847 27,268,072 17,890,468 41,011,358 27,293,849 30,264,514 18,593,587 EXHIBIT 5 Enterprise Funds America's Other River Enterprise Project Funds Total Governmental Activities- Internal Service Funds $ - $ 745,153 $ 9,915,602 $ 4,872,248 - 303,457 2,463,612 120,692 - 4,287 62,102 25,545 - 976,184 976,184 - - 17,375 463,296 57,638 - - 5,339 - - 2,046,456 13,886,135 5,076,123 - - 554,505 - 36,000 3,364,857 - - 1,887,564 61,828,335 - - - 62,082,852 - - 5,242,498 49,217,914 102,034 745 - 6,390,937 - - (4,749,457) (75,698,421) (49,914) 745 2,416,605 107,186,474 52,120 745 2,416,605 107,740,979 52,120 745 4,463,061 121,627,114 5,128,243 (continued) 30 CITY OF DUBUQUE, IOWA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2008 LIABILITIES CURRENT LIABILITIES Accounts payable Accrued payroll General obligation bonds payable Revenue bonds payable Capital loan notes payable Accrued compensated absences Accrued interest payable Due to other funds Unearned revenue Advances from other funds Total Current Liabilities NONCURRENT LIABILITIES General obligation bonds payable (net of discount of $78,593 and deferred amount on refunding of $107,036) Revenue bonds payable Capital loan notes payable Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted by bond ordinance Unrestricted Total Net Assets (Deficit) Business-type Activities - Sewage Disposal Water Stormwater Parking Works Utility Utility Facilities $ 232,845 $ 196,946 $ 314,533 $ 20,335 47,507 54,222 233 18,978 100,000 155,000 270,000 175,000 - - - 240,000 5,032 16,348 690 - 92,911 106,230 4,173 21,624 3,098 5,218 20,041 10,990 - - - 6,417 - 254,383 - - 481,393 788,347 609,670 493,344 950,212 1,444,272 5,602,760 2,687,127 - - - 250,000 134,496 436,988 18,443 - 1,084,708 1,881,260 5,621,203 2,937,127 1,566,101 2,669,607 6,230,873 3,430,471 33,706,502 23,216,239 21,780,648 13,983,836 - - - 554,505 5,738,755 1,408,003 2,252,993 624,775 $ 39,445,257 $ 24,624,242 $ 24,033,641 $ 15,163,116 See notes to financial statements. EXHIBIT 5 (continued) Enterprise Funds America's Other River Enterprise Project Funds $ 31,692 $ 51,431 $ - 87,779 - 106,562 - 480,712 31,692 726,484 Total Governmental Activities- Internal Service Funds 847,782 $ 1,667,462 208,719 42,554 700,000 - 240,000 - 22,070 - 331,500 - 39,347 - 480,712 - 6,417 - 254,383 - 3,130,930 1,710,016 - - 10,684,371 - - - 250,000 - - - 589,927 - - - 11,524,298 - 31,692 726,484 14,655,228 1,710,016 745 2,416,605 95,104,575 52,120 - - 554,505 - (31,692) 1,319,972 11,312,806 3,366,107 $ (30,947) $ 3,736,577 $ 106,971,886 $ 3,418,227 31 CITY OF DUBUQUE, IOWA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS (DEFICIT) PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2008 Business-type Activities - OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Intergovernmental Investment earnings Interest expense Gain on disposal of assets Net Nonoperating Revenues (Expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS TRANSFERS IN TRANSFERS OUT CHANGE IN NET ASSETS NET ASSETS (DEFICIT), BEGINNING NET ASSETS (DEFICIT), ENDING Sewage Disposal Water Stormwater Parking Works Utility Utility Facilities $ 5,444,622 $ 4,871,861 $ 1,764,959 $ 2,137,826 39,457 3,669 1,375 3,781 5,484,079 4,875,530 1,766,334 2,141,607 1,871,101 1,962,860 149,987 685,305 556,933 550,192 167 106,753 370,564 127,471 273 108,085 2,107,506 1,240,107 938,846 558,970 83,547 77,930 - 35,710 1,130,184 764,908 364,773 513,575 6,119,835 4,723,468 1,454,046 2,008,398 (635,756) 152,062 312,288 133,209 218,444 56,972 239,773 82,432 (21,689) (91,224) (252,689) (164,712) 4,491 147 - - 201,246 (34,105) (12,916) (82,280) (434,510) 117,957 299,372 50,929 799,394 368,410 927,344 1,038,559 121,449 21,953 850,732 - (133,150) (7,575) (134,132) (55,845) 353,183 500,745 1,943,316 1,033,643 39,092,074 24,123,497 22,090,325 14,129,473 $ 39,445,257 $ 24,624,242 $ 24,033,641 $ 15,163,116 See notes to financial statements. EXHIBIT 6 Enterprise Funds Governmental America's Other Activities- River Enterprise Internal Project Funds Total Service Funds $ - $ 2,904,958 $ 17,124,226 $ 10,262,147 2,140 1,442 51,864 240,694 2,140 2,906,400 17,176,090 10,502,841 - 2,933,883 7,603,136 2,247,384 - 75,425 1,289,470 24,009 - 756,212 1,362,605 28,123 126,699 1,167,421 6,139,549 7,278,350 - 71,991 269,178 536,356 - 423,101 3,196,541 5,671 126,699 5,428,033 19,860,479 10,119,893 (124,559) (2,521,633) (2,684,389) 382,948 36,538 1,209,636 1,246,174 - - 32,428 630,049 214,110 - - (530,314) - - 7,098 11,736 3,105 36,538 1,249,162 1,357,645 217,215 (88,021) (1,272,471) (1,326,744) 600,163 - - 3,133,707 - 1,766,447 1,070,053 3,830,634 - (1,571,759) (16,000) (1,918,461) (6,436) 106,667 (218,418) 3,719,136 593,727 (137,614) 3,954,995 103,252,750 2,824,500 $ (30,947) $ 3,736,577 $ 106,971,886 $ 3,418,227 32 CITY OF DUBUQUE, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash payments to suppliers for goods and services Cash payments to employees for services Other operating receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Proceeds from interfund balances Payment of interfund balances Intergovernmental grant proceeds NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets Acquisition and construction of capital assets Proceeds from issuance of debt Payment of debt Interest paid Intergovernmental grant proceeds NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Interest received NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING Business-type Activities - Sewage Disposal Water Stormwater Parking Works Utility Utility Facilities $ 5,465,016 $ 4,883,309 $ 1,690,560 $ 2,127,773 (3,727,758) (1,932,906) (692,152) (980,112) (1,875,699) (1,942,036) (149,506) (690,810) 39,457 3,669 1,375 3,781 (98,984) 1,012,036 850,277 460,632 121,449 21,953 850,732 - (133,150) (7,575) (134,132) (55,845) - (43,204) - - (11,701) (28,826) 716,600 (55,845) 4,491 147 - - (1,492,489) (1,460,754) (3,484,749) (843,440) 1,188,620 453,336 19,133 - - (150,000) (260,000) (395,000) (17,471) (91,554) (249,305) (160,550) (316,849) (1,248,825) (3,974,921) (1,398,990) 243,513 66,257 248,275 95,836 ~184,021~ ~199,3s8~ ~2,1s9,769~ ~898,367~ 5,185,777 987,668 4,913,727 2,079,297 e c nni ~cti e X44 y i n e ~ ~c~ oc4 e i i Qn o~n EXHIBIT 7 Enterprise Funds Governmental America's Other Activities- River Enterprise Internal Project Funds Total Service Funds $ - $ 2,876,976 $ 17,043,634 $ 10,148,229 (126,699) (2,065,381) (9,525,008) (7,376,366) - (2,867,367) (7,525,418) (2,272,492) 2,140 1,442 51,864 240,694 (124,559) (2,054,330) 45,072 740,065 1,766,447 1,070,053 3,830,634 - (220,726) (16,000) (567,428) (6,436) - 480,712 480,712 - (500,722) - (543,926) (15,722) - 270,324 270,324 - 1,044,999 1,805,089 3,470,316 (22,158) - 7,098 11,736 3,105 ~9s6,978~ ~28,000~ ~8,266,410~ ~ls,o28~ - - 1,661,089 - - - ~8os,ooo~ - - - ~s 18,880 - 36,538 - 36,538 - (920,440) (20,902) (7,880,927) (11,923) - 34,008 687,889 223,050 - (236,135) (3,677,650) 929,034 - 981,288 14,147,757 3,943,214 $ - $ 745,153 $ 10,470,107 $ 4,872,248 (continued) 33 CITY OF DUBUQUE, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2008 Business-type Activities - Sewage Disposal Water Stormwater Parking Works Utility Utility Facilities RECONCII,IATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) $ (635,756) $ 152,062 $ 312,288 $ 133,209 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation Change in assets and liabilities (Increase) decrease in receivables (Increase) decrease in inventories and prepaid items Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities Increase in unearned revenue Total Adjustments NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Contributions of capital assets from other funds and outside sources 1,130,184 764,908 364,773 513,575 20,394 11,448 (74,399) (16,470) - (1,174) - - (609,208) 63,968 247,134 (170,594) (4,598) 20,824 481 (5,505) - - - 6,417 536,772 859,974 537,989 327,423 $ (98,984) $ 1,012,036 $ 850,277 $ 460,632 $ 799,394 $ 368,410 $ 927,344 $ 1,038,559 Contributions of capital assets to Governmental Activities $ 126,750 $ - $ - $ - See notes to financial statements. EXHIBIT 7 (continued) Enterprise Funds America's Other River Enterprise Project Funds Total Governmental Activities- Internal Service Funds $ (124,559) $ (2,521,633) $ (2,684,389) $ 382,948 - 423,101 3,196,541 5,671 - (27,982) (87,009) (113,918) - (8,079) (9,253) (2,889) - 13,747 (454,953) 493,361 - 66,516 77,718 (25,108) - - 6,417 - - 467,303 2,729,461 357,117 $ (124,559) $ (2,054,330) $ 45,072 $ 740,065 $ - $ - $ 3,133,707 $ - - $ 1,477,783 $ - 34 CITY OF DUBUQUE, IOWA EXHIBIT 8 STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUNDS JUNE 30, 2008 Agency Funds ASSETS Cash and pooled cash investments $ 959,930 Accounts receivable 7,235 Accrued interest 3,445 Total Assets $ 970.610 LIABILITIES Accounts payable $ - Due to other agency 970,610 Total Liabilities $ 970,610 See notes to financial statements. 35 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 The notes to financial statements contain a summary of significant accounting policies and other notes considered necessary for an understanding of the financial statements of the City and are an integral part of this report. The index to the notes is as follows: 1. Summary of Significant Accounting Policies 2. Deficit Fund Equity 3. Cash on Hand, Deposits, and Investments 4. Interfund Balances and Transfers 5. Capital Assets 6. Long-term Debt 7. Risk Management 8. Commitments and Contingent Liabilities 9. Postemployment Health Care Benefits 10. Employee Retirement Systems 11. Conduit Debt 12. Landfill Closure and Postclosure Care 13. Leases Where City is Lessor 14. Subsequent Events 15. New Governmental Accounting Standards Board (GASB) Standards 36 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The City of Dubuque, Iowa, is a municipal corporation governed by an elected mayor and asix-member council. As required by accounting principles generally accepted in the United States of America, these financial statements present the City and its component unit, an entity for which the City is considered to be financially accountable. The City has no blended component units. The discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the City. The component unit also has a June 30 year end. Discretely Presented Component Unit The Dubuque Metropolitan Area Solid Waste Agency was created under the provisions of Chapter 28E of the Code of Iowa by the City of Dubuque and Dubuque County. The Agency's purpose is to provide solid waste management for the Dubuque metropolitan area. The City appoints a voting majority of the Agency's governing board and has authority over those persons responsible for the day-to-day operations of the Agency. The Agency is presented as a proprietary fund type. Complete financial statements for the Agency may be obtained from the City of Dubuque. City of Dubuque Finance Department 50 West 13th Street Dubuque, Iowa 52001 Jointly Governed Organizations The City also participates in several jointly governed organizations that provide goods or services to the citizenry of the City but do not meet the criteria of a joint venture since there is no ongoing financial interest or responsibility by the participating governments. City officials are members of the following boards and commissions: City of Dubuque Conference Board Dubuque County E-911 Committee Dubuque Drug Task Force Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component unit. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for services. Likewise, the primary government is reported separately from the legally separate component unit for which the primary government is financially accountable. (continued on next page) 37 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants, contributions, and interest 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 a fiduciary fund, even though the latter is excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise 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, as are the proprietary fund and fiduciary fund financial statements. 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. 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. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, interest, special assessments, and grants are susceptible to accrual. Sales taxes are considered measurable and available at the time the underlying transaction occurs, provided they are collected by the City within 60 days after year-end. All other revenue items are considered to be measurable and available only when cash is received 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 Employee Benefits Fund is used to account for pension and related employee benefit costs for those employees paid wages from the General Fund. The Community Development Fund is used to account for the use of Community Development Block Grant funds as received from federal and state governmental agencies. The Street Construction Fund is used to account for the resources and costs related to street capital improvements. (continued on next page) 38 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 The General Construction Fund is used to account for the resources and costs related to nonassignable capital improvements. The City reports the following major proprietary funds: The Sewage Disposal Works Fund is used to account for the operations of the City's sewage disposal works and services. The Water Utility Fund is used to account for the operations of the City's water facilities and services. The Stormwater Utility Fund is used to account for the operations of the City's stormwater services. The Parking Facilities Fund is used to account for the operations of the City-owned parking ramps and other parking facilities. The America's River Project is used to account for the construction of all projects covered by the Vision Iowa Grant, including all matching funds.. Additionally, the City reports the internal service fund type. Internal service funds are used to account for general, garage, stores/printing, health insurance, and worker's compensation insurance services provided by one department to other departments of the City on acost-reimbursement basis. Fiduciary funds account for assets held by the City in a trustee or agency capacity for the benefit of others and cannot be used to support City activities. Fiduciary funds, other than agency funds, use the economic resources measurement focus and the full accrual basis of accounting. Agency funds use the full accrual basis of accounting but do not have a measurement focus and therefore report only assets and liabilities. The City reports Agency Funds to account for assets held by the City as an agent under the cable franchise agreement and for the Dubuque Racing Association. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City's water and sewer function and various other functions of the City. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. (continued on next page) 39 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 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 the City's enterprise funds and of the City's internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. Assets, Liabilities, and Equity Deposits and Investments The City'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. Investments are stated at fair value or amortized cost. Amortized cost is used only for money market investments that have a remaining maturity at time of purchase of one year or less. 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 either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Property tax receivable is recognized in the funds on the levy or lien date, which is the date that the tax asking is certified by the City to the County Board of Supervisors. Current year delinquent property tax receivable represents unpaid taxes from the current year. The succeeding year property tax receivable represents taxes certified by the City to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. By statute, the City is required to certify its budget to the County Auditor by March 15 of each year for the subsequent fiscal year. However, by statute, the tax asking and budget certification for the following fiscal year becomes effective on the first day of that year. Although the succeeding year property tax receivable has been recorded, the related revenue is deferred in both the government-wide and fund financial statements and will not be recognized as revenue until the year for which it is levied. (continued on next page) 40 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Property taxes are levied as of July 1 on property values assessed as of January 1 of the previous year. The tax levy is divided into two billings. The billings are due September 1 and March 1. On September 30 and March 31, the bill becomes delinquent, and penalties and interest may be assessed by the government. Inventories and Prepaid Items Inventories included in the governmental funds are valued at cost using the first-in, first-out (FIFO) basis. The costs of governmental fund inventories are recorded as expenditures when consumed rather than when purchased. Inventories of materials and supplies in the enterprise funds are determined by actual count and priced on the FIFO basis. Inventories included in internal service funds are stated at the lower of cost (FIFO basis) or market and consist of consumable supplies. The cost of these supplies is recorded as an expense at the time they are removed from inventory for use. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. Restricted Assets Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet/statement of net assets because their use is limited by applicable bond covenants. The "revenue bond operating" account is used to report resources set aside to subsidize potential deficiencies from the enterprise fund's operation that could adversely affect debt service payments. The "revenue bond sinking" account is used to segregate resources accumulated for debt service payments over the next twelve months. The "revenue bond reserve" account is used to report resources set aside to make up potential future deficiencies in the revenue bond sinking account. Certain assets of the special revenue funds and capital project funds are classified as restricted assets because their use is limited by debt agreements and the City's cable television franchise agreement. Certain assets of the Dubuque Metropolitan Area Solid Waste Agency are classified as restricted assets because their use is restricted by state statute for certain specified uses. (continued on next page) 41 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide statement of net assets and in the proprietary funds statement of net assets. Capital assets are defined by the government as assets with an initial, individual cost of more than $100,000 for infrastructure assets, $20,000 for building assets, and $10,000 for the remaining assets, and an estimated useful life of more than a year. 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 repair that do not add to the value of the asset or materially extend asset lives are not capitalized. All of the City's infrastructure has been recorded, including infrastructure acquired prior to June 30, 1980. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is not included as part of the capitalized value of the assets constructed. Property, plant, and equipment of the primary government, as well as the component unit, is depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 40 to 125 Improvements other than buildings 15 to 50 Machinery and equipment 2 to 30 Infrastructure 15 to 75 Compensated Absences The City allows employees to accumulate earned but unused vacation and sick pay benefits. Vacation pay is payable to employees upon retirement or termination. Sick pay is payable only upon retirement, in which event employees are paid for 25% of all eligible hours (50% in the case of police and fire employees). All vacation pay and applicable sick pay benefits are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, 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 assets. Bond premiums and discounts, bond issuance costs, and deferred amounts on refunding are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount and deferred amount on refundings. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are 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. (continued on next page) 42 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Equity The Dubuque Metropolitan Area Solid Waste Agency's restricted net assets represent outside third-party restrictions and amounts restricted for minority interest of the Agency. The Agency is restricted to using certain amounts for purposes specified by state statute. The net assets restricted for minority interest is calculated at 22.7% of unrestricted net assets, based on the 1976 revenue bond resolution authorizing the issuance of revenue bonds for the construction of the landfill. In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. Budgets and Budgetary Accounting The budgetary comparison and related disclosures are reported as Required Supplementary Information. During the year ended June 30, 2008, disbursements did not exceed the amounts budgeted in any function. NOTE 2 -DEFICIT FUND EQUITY The following funds have deficit net asset amounts as of June 30, 2008: Enterprise America's River Project $ 30,947 Internal Service General Service $ 12,405 Workers' Compensation Reserve $ 119,142 The America's River Project deficit is a result of expenses incurred that are eligible for reimbursement as projects are completed. The General Service deficit will be addressed during next fiscal year's reallocation of expenses. The Worker's Compensation Reserve deficit is a result of a number of projected settlements at fiscal year end that will be paid during next fiscal year with additional funding to cover. NOTE 3 -CASH ON HAND, DEPOSITS, AND INVESTMENTS Cash on Hand. Cash on hand represents authorized change funds and petty cash funds used for current operating purposes. The carrying amount at year-end was $11,262 for the City and $450 for the Dubuque Metropolitan Area Solid Waste Agency. Deposits. At year-end, the City's carrying amount of deposits was $45,234,910, and the bank balance was $46,041,956. The City's deposits in banks at June 30, 2008, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. The carrying amount of deposits for the Dubuque Metropolitan Area Solid Waste Agency was $10,793,680, and the bank balance was $11,130,680. The Agency's deposits in banks at June 30, 2008, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. (continued on next page) 43 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Investments. As of June 30, 2008, the City had the following investments and maturities. (The City assumes callable bonds will not be called): Investment Maturities (In Yearsl Investment Tvbe Less than 1 1 to 5 6 to 10 More than 10 Total Mutual Funds U.S. Treasury $ 2,759,138 $ - $ - $ - $ 2,759,138 U.S. Treasury Securities - 701,679 - - 701,679 Federal Agency Obligations 443,936 8,771,224 4,070,524 9,843,802 23,129,486 Corporate Stock 76,061 - - - 76,061 $ 3279,135 ~ 9.472.903 $ 4,070,524 ~ 9.843.802 $ 26,666,364 The City and the Dubuque Metropolitan Solid Waste Agency are authorized by statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured depository institutions approved by the City Council or Board of Trustees and the Treasurer of the State of Iowa; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; certain registered open-end management investment companies; certain joint investment trusts; and warrants or improvement certificates of a drainage district. Corporate stock was donated in 1957 to the City to establish the Ella Lyons Peony Trail Permanent Trust Fund. Interest Rate Risk. The City's investment policy limits the investment of operating funds (funds expected to be expended in the current budget year or within 15 months of receipt) to instruments that mature within 397 days. Funds not identified as operating funds may be invested in instruments with maturities longer than 397 days, but the maturities shall be consistent with the needs and use of the City. Credit Risk. The City's investment policy limits investments in commercial paper and other corporate debt to the top two highest classifications. The City did not invest in any commercial paper or other corporate debt during the year. Concentration of Credit Risk. The City's investment policy does not allow for a prime bankers' acceptance or commercial paper and other corporate debt balances to be greater than ten percent of its total deposits and investments. The policy also limits the amount that can be invested in a single issue to five percent of its total deposits and investments. The City held no such investments during the year. Custodial Credit Risk -Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City's deposits are entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. Custodial Credit Risk Investments. For an investment, this 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 or collateral securities that are in the possession of an outside party. The City had no custodial risk with regards to investments, since all investments were held by the City or its agent in the City's name. (continued on next page) 44 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Due to legal and budgetary reasons, the general fund is assigned a portion of the investments earnings associated with other funds. These funds are the employee benefits, community development, tort liability, road use tax, cable TV, general construction, transit system, general service, garage service, and stores/printing funds. The Dubuque Metropolitan Area Solid Waste Agency had no investments at June 30, 2008. A reconciliation of cash and investments as shown on the government-wide statement of net assets for the primary government and statement of fiduciary assets and liabilities follows: Cash on hand Carrying amount of deposits Carrying amount of investments Total Government-wide Cash and pooled cash investments Cash and pooled cash investments -temporarily restricted Cash and pooled cash investments -permanently restricted Fiduciary Cash and pooled cash investments $ 11,262 45,234,910 26,666,364 71.912.536_ $ 49,699,727 21,164,818 88,061 959.930 Total ~ 71.912.5 3 6_ A reconciliation of cash and investments as shown on the government-wide statement of net assets for the Dubuque Metropolitan Solid Waste Agency follows: Cash on hand Carrying amount of deposits $ 450 10.793.680 Total $ 10.794.130 Cash and pooled cash investments $ 7,168,906 Cash and pooled cash investments -temporarily restricted 3.625224 Total ~ 10.794.130_ NOTE 4 - INTERFUND BALANCES AND TRANSFERS Interfund balances at June 30, 2008, include amounts due to/from other funds and advances due to/from other funds. Due to/from other funds balances represent amounts due to the general fund from the nonmajor enterprise funds ($480,712) for deficit pooled cash balances. Advances to/from other fund balance of $254,383 represent amounts due to the general fund from the water utility fund for a construction loan. (continued on next page) 45 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Interfund transfers for the year ended June 30, 2008, consisted of the following: Transfer from Transfer to General Community development Street construction General construction Nonmajor governmental Sewage disposal works Water utility Stormwater utility America's River Project Nonmajor enterprise Transfer to General Community development Street construction General construction Nonmajor governmental Sewage disposal works Water utility Stormwater utility America's River Project Nonmajor enterprise Nonmajor Sewage Employee Community Street General Governmental Disposal General Benefits Development Construction Construction Funds Works $ - $ 2,442,595 $ 123,226 $ 23,950 $ 421,949 $ 637,672 $ 6,400 23,394 - - - - 353,819 - 168,816 - - - - 890,225 - 215,562 - - - - 339,910 - 1,429,936 - - 14,189 6,395,049 1,054,888 - - - - - - 121,449 - - - - - - 21,953 - 634,066 - - - - 69,133 - 831,431 - - 661,384 221,999 18,461 - 1,070,053 - - - - - - $ 4,373,258 $ 2,442,595 $ 123,226 $ 699,523 $ 7,038,997 $ 3,507,510 $ 6,400 Transfer from America's Nonmajor Internal Water Stormwater Parking River Enterprise Service Utility Utility Facilities Project Funds Funds Total $ 7,575 $ 100,960 $ 9,900 $ 13,804 $ 16,000 $ 6,436 $ 3,810,467 - - - - - - 377,213 - - - - - - 1,059,041 - - 45,945 59,389 - - 660,806 - - - - - - 8,894,062 - - - - - - 121,449 - - - - - - 21,953 - - - 147,533 - - 850,732 - 33,172 - - - - 1,766,447 - - - - - - 1,070,053 $ 7,575 $ 134,132 $ 55,845 $ 220,726 $ 16,000 $ 6,436 18,632,223 Transfer to governmental activities capital assets from enterprise funds 1,477,783 $ 20,110,006 (continued on next page) 46 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 In the fund financial statements, total transfers out of $20,110,006 are greater than total transfers in of $18,632,223 because of the treatment of transfers of capital assets to the governmental activities capital assets. During the year, capital assets related to America's River Project and street projects with a book value of $1,477,783 were transferred to governmental activities capital assets. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of financial resources. However, America's River Project and Sewage Disposal Works did report transfers out for the capital resources given. Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, and (4) fund capital projects. During the year ended June 30, 2008, according to grant requirements, the City made various transfers into the America's River Project Fund to finance capital assets. When completed, these capital assets are transferred to their respective fund. NOTE 5 -CAPITAL ASSETS Capital asset activity for the year ended June 30, 2008, was as follows: Primary Government: Governmental activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total capital assets, being depreciated Beginning Transfers Balance In $ 51,912,748 $ 16.067.956 67,980,704 101,663,541 15,028,954 25,636,645 178,774,083 321.103.223 Transfers Ending Out Increases Decreases Balance - $ - $ 8,003,356 $ (2,744,405) $ 57,171,699 - - 24.164.260 (26.187.2861 14.044.930 - - 32,167,616 (28,931,6911 71,216,629 - - 4,482,167 - 106,145,708 202,296 (339,982) 354,589 - 15,245,857 755,944 (37,594) 3,478,384 (1,154,241) 28,679,138 519,543 - 8,704,058 (455,6211 187,542,063 1.477.783 (377.5761. 17.019.198 (1.609.8621 337.612.766 (continued on next page) 47 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Beginning Transfers Transfers Ending Balance In Out Increases Decreases Balance Less accumulated depreciation for: Buildings $ (20,461,542) $ - $ - $ (1,700,670) $ - $ (22,162,212) Improvements other than buildings (4,551,420) - - (490,042) - (5,041,462) Machinery and equipment (10,860,285) - 37,594 (2,557,838) 1,473,172 (11,907,357) Infrastructure (42.658.0591 - - (1,521,1481 72,430 (44,106,7771 Total accumulated depreciation (78.531.3061 - 37.594 (6.269.6981 1.545.602 (83217.8081 Total capital assets, being depreciated, net 242,571,917 1,477,783 (339,9821 10,749,500 (642601 254,394,958 Governmental activities capital assets, net $ 310.552.621 $ 1.477.783 $ (339.982 $ 42,917,116 $ (28,995.95 $ 325,611,587 Business-type activit ies: Beginning Transfers Transfers Ending Balance In Out Increases Decreases Balance Capital assets, not being depreciated: Land $ 3,364,857 $ - $ - $ - $ - $ 3,364,857 Construction in progress 5298.854 147.533 (1.625.3161, 10.794.957 (8225.0911 6.390.937 Total capital assets, not being depreciated 8.663.711 147.533 (1.625.3161. 10.794.957 (8225.0911 9.755.794 Capital assets, being depreciated: Buildings 60,964,620 - - 863,715 - 61,828,335 Improvements other than buildings 55,727,107 339,982 - 6,015,763 - 62,082,852 Machinery and equipment 47,778284_ 37,594 - 1,686,498 (284,4621 49217,914 Total capital assets, being depreciated 164.470.011 377.576 - 8.565.976 (284.4621 173.129.101 Less accumulated depreciation for: Buildings (36,917,800) - - (987,101) - (37,904,901) Improvements other than buildings (15,906,606) - - (1,028,096) - (16,934,702) Machinery and equipment (19.924.3421 (37,5941 - (1,181,3441 284,462 (20,858,8181 Total accumulated depreciation (72.748.7481 (37.5941 - (3.196.5411 284.462 (75.698.4211 Total capital assets, being depreciated, net 91.721263 339.982 - 5.369.435 - 97.430.680 Business-type activities capital assets, net ~ 100.384.974_ $ 487.515 $ (1.625.3161 $ 16,164,392 $ (8225.0911 $ 107.186.474 (continued on next page) 48 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Depreciation expense was charged to functions/programs for the primary government as follows: Governmental activities Public safety $ 731,380 Public works 3,545,681 Health and social services 7,068 Culture and recreation 1,789,502 Community and economic development 35,243 General government 155,153 Capital assets held by the government's internal service funds are charged to various functions based on their usage of their assets 5.671 Total depreciation expense -governmental activities ~ 6269.698 Business-type activities Sewage disposal works $ 1,130,184 Water utility 764,908 Stormwater utility 364,773 Parking facilities 513,575 Refuse collection 115,891 Transit system 307210 Total depreciation expense -business-type activities x,196.541 Component Unit: Beginning Ending Balance Increases Decreases Balance Dubuque Metropolitan Area Solid Waste Agency: Capital assets, not being depreciated: Land $ 1.586.092 $ - $ - $ 1.586.092 Capital assets, being depreciated: Buildings 65,922 - - 65,922 Improvements other than buildings 7,468,652 - - 7,468,652 Machinery and equipment 2201.318 459.686 (299.3181 2.361.686 Total capital assets, being depreciated 9.735.892 459.686 (299.3181 9.896260 Less accumulated depreciation for: Buildings (45,068) (719) - (45,787) Improvements other than buildings (5,134,490) (435,385) - (5,569,875) Machinery and equipment (1,354,390) (276,362) 160,489 (1,470263) Total accumulated depreciation (6.533.9481 (712.4661 160.489 (7.085.9251 Total capital assets, being depreciated, net 320L944 (252.7801 (138.8291 2.810.335 Dubuque Metropolitan Area Solid Waste Agency capital assets, net $ 4.788.036 ~~252.7801 $ (138 829 4 396.427_ Depreciation expense of $712,466 was charged to the Dubuque Metropolitan Area Solid Waste Agency. (continued on next page) 49 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 6 -LONG-TERM DEBT General Obligation Bonds. The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. The original amount of general obligation bonds issued in prior years was $43,940,000. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds generally are issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. General obligation bonds outstanding at June 30, 2008, are as follows: In a prior year, the City defeased general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. On June 30, 2008, $3,345,000 of bonds outstanding are considered defeased. These bonds will remain outstanding until they are called on June 1, 2009. Purpose Corporate purpose Corporate purpose Corporate purpose Corporate purpose Corporate purpose Corporate purpose and refunding Corporate purpose Corporate purpose Corporate purpose Corporate purpose Refunding Corporate purpose and refunding Corporate purpose Amount Amount Date of Interest Originally Outstanding Issue Maturity Dates Rates Issued End of Year 06/01/00 06/01/02-06/01/09 5.80% $ 2,750,000 $ 125,000 11/O1/00 06/01/02-06/01/17 5.13 6,265,000 285,000 12/27/01 06/01/05-06/01/21 4.00-4.90 9,500,000 7,815,000 01/09/02 06/01/04-06/01/21 4.10-4.95 2,860,000 2,205,000 03/26/02 06/01/03-06/01/21 4.00-5.00 1,000,000 780,000 12/03/02 06/01/03-06/01/17 3.50-4.30 3,105,000 1,600,000 10/15/03 06/01/04-06/01/23 3.20-4.75 2,110,000 1,680,000 04/18/05 06/01/06-06/01/24 3.15-5.00 9,015,000 7,865,000 04/03/06 06/01/07-06/01/25 3.80-4.20 2,900,000 2,705,000 04/03/06 06/01/07-06/01/21 3.60-4.20 910,000 825,000 04/03/06 06/01/10-06/01/20 3.65-4.10 3,525,000 3,525,000 12/01/07 06/10/10-06/01/17 3.75 2,965,000 2,965,000 12/01/07 06/10/09-06/01/17 3.40-3.65 1,055,000 1,055,000 $ 47.960.000 $ 33.430.000 Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Ending June 30 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2025 Total Governmental Activities Principal Interest 1,305,000 $ 951,006 1,470,213 896,949 1,532,340 837,529 1,584,468 774,282 1,628,723 707,570 8,917,766 2,423,343 5,421,490 491,789 Business-tube Activities Principal Interest 700,000 $ 460,020 684,787 432,882 712,660 408,862 740,532 383,151 761,277 355,869 4,187,234 1,314,061 3,218,510 484,377 565,000 33,570 $ 2L860,000 $ 7.082.468 $ 1L570,000 $ 3.872.792 (continued on next page) 50 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Tax Increment Financing Bonds. The City issues tax increment financing bonds to provide funds for urban renewal projects. The City pledges property tax revenues from the tax increment financing districts to pay debt service. These bonds generally are issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. The original amount of tax increment financing bonds issued in prior years was $4,568,538. Tax increment financing bonds outstanding at June 30, 2008, are as follows: Date of Issue Advanced Data- Comm 03/18/99 Cartegraph Systems 12/01/99 Eagle Window & Door 02/15/00 Vessel Systems 12/30/03 Diamond Jo Parking Ramp 10/ 16/07 Amount Amount Interest Originally Outstanding Maturity Dates Rates Issued End of Year 12/31/01-06/30/11 6.0% $ 900,000 $ 279,220 12/31/01-12/31/10 8.8 360,000 112,607 12/31/02-06/30/12 9.1 3,168,538 1,610,775 12/30/05-06/30/15 8.0 140,000 108,799 06/01/11-06/01/37 7.5 23.025.000 23.025.000 27.593.538 ~ 25.136.402_ Annual debt service requirements to maturity for tax increment financing bonds are as follows: Fiscal Year Ending June 30 Governmental Activities Principal Interest 2009 $ 524,727 $ 1,898,128 2010 569,630 1,853,225 2011 774,204 1,805,199 2012 778,939 1,742,354 2013 346,617 1,686,616 2014-2018 2,097,285 8,006,677 2019-2023 2,965,000 7,104,000 2024-2028 4,245,000 5,814,375 2029-2033 6,100,000 3,963,750 2034-2039 6,735,000 1,308,376 Total $ 25.136.402 $ 35.182.700 Revenue Bonds. The City also issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service. These bonds generally are issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. Revenue bonds outstanding at June 30, 2008, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Parking facilities 03/01/98 05/01/98-OS/O1/10 4.70-4.75% $ 2.515.000 ~ 490.000 (continued on next page) 51 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Revenue bond debt service requirements to maturity are as follows Fiscal Year Ending Business-tube Activities June 30 Principal Interest 2009 $ 240,000 $ 23,155 2010 250.000 11.875 Total ~ 490.000 ~ 35.030 Notes Payable. Notes payable have been issued to provide funds for economic development and for the purchase of capital assets. Notes payable at June 30, 2008, are as follows: Amount Amount Date of Interest Originally Outstanding Issue Maturity Dates Rates Issued End of Year Adams Company 02/13/04 06/01/05-06/01/15 4.07% $ 500,000 $ 318,182 Lower Main Development 06/30/04 12/31/06-06/30/16 8.00 182,000 155,415 Theisen Supply 11/22/06 12/31/08-06/30/18 8.25 806,039 806,039 $ 1.488.039 $ 1279.636_ Annual debt service requirements to maturity for notes payable are as foll ows: Fiscal Year Ending Governmen tal Activities June 30 Principal Interest 2009 $ 114,873 $ 90,844 2010 120,679 83,187 2011 126,973 75,044 2012 133,792 66,374 2013 141,183 55,284 2014-2018 642.136 129.615 Total $ 1279.636 ~ 500.348 Capital Loan Notes. Capital loan notes have been issued for the planning and construction of sewer, stormwater, and water capital projects through the State of Iowa State Revolving Loan F unds. Planning Northfork Catfish Creek Project 1 Construction Drinking Water Northfork Catfish Creek Project 2 Northfork Catfish Creek Project 3 Amount Date Interest Amount Outstanding Authorized Maturity Dates Rates Authorized End of Year 12/28/06 12/01/2008-06/01/2028 3.25% $ 85,000 $ 82,990 10/01/07 12/01/2008-06/01/2028 3.25% 12/28/06 12/01/2008-06/01/2028 3.25% 12/28/06 12/01/2008-06/01/2028 3.25% 1,037,000 453,336 231,700 19,133 168.850 56.538 522.550 $ 611.997_ 52 (continued on next page) CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Annual Debt Service Requirements to maturity for state revolving fund loans are as follows: Fiscal Year Ending June 30 Business-Tube Activities Principal Interest 2009 $ 22,070 $ 19,711 2010 22,867 18,985 2011 23,617 18,236 2012 24,390 17,462 2013 25,190 16,663 2014-2018 138,882 70,382 2019-2023 163,174 46,090 2024-2028 191.807 17,549 Total $ 611.997 $ 225.078_ At June 30, 2008, the City of Dubuque had $910,553 of capital loan note funds available. These funds are available to the City by filing a disbursement request with the State of Iowa. The City expects to use the remaining available funds in fiscal year 2009. Changes in Long-term Liabilities. Long-term liability activity for the year ended June 30, 2008, was as follows: Beginning Ending Balance Additions Reductions Balance Governmental activities: General obligation bonds $ 22,990,000 $ 2,965,000 $ (4,095,000) $ 21,860,000 Less: Unamortized discounts (49,015) (26,050) 32,901 (42,164) Deferred amount on refunding (70.3391 - 5.410 (64.9291 Total general obligation bonds 22,870,646 2,938,950 (4,056,689) 21,752,907 Tax increment financing bonds 2,594,831 23,025,000 (483,429) 25,136,402 Less: Unamortized discounts - (266.1581 8.872 (2572861 Total tax increment financing bonds 2,594,831 22,758,842 474,557 24,879,116 Notes payable 1,279,885 58,696 (58,945) 1,279,636 Compensated absences 2.442.166 2.540.145 (2.442.1661 2.540.145 29.187.528 ~ 28.296.633 ~ (7.032.3571 ~ 50.451.804 Due Within One Year $ 1,305,000 1,305,000 524,727 524,727 114,873 2.540.145 $ 4.484.745_ (continued on next page) 53 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Beginning Ending Due Within Balance Additions Reductions Balance One Year Business-type activities: General obligation bonds $ 11,090,000 $ 1,055,000 $ (575,000) $ 11,570,000 $ 700,000 Less: Unamortized discounts (78,452) (5,908) 5,767 (78,593) - Deferred amount on refunding (115.9551 - 8.919 (107.0361 - Total general obligation bonds 10,895,593 1,049,092 (560,314) 11,384,371 700,000 Revenue bonds 720,000 - (230,000) 490,000 240,000 Capital loan notes - 611,997 - 611,997 22,070 Compensated absences 281,474 331,500 (281,474) 331.500 331,500 11.897.067 ~ 1.992.589 ~ (1.071.7881 ~ 12.817.868 ~ 1.293.570 For the governmental activities, compensated absences are generally liquidated by the General Fund, Community Development Fund, and Section VIII Housing Fund. NOTE 7 -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 for which the government carries commercial insurance and participates in a local government risk pool. The City has established a Health Insurance Reserve Fund for insuring benefits provided to City employees and covered dependents which is included in the Internal Service Fund Type. Health benefits were self-insured up to an individual stop loss amount of $85,000, and an aggregate stop loss of $6,075,095 for 2008. Coverage from a private insurance company is maintained for losses in excess of the stop loss amount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. The City has established a Workers' Compensation Reserve Fund for insuring benefits provided to City employees which is included in the Internal Service Fund Type. Workers' compensation benefits were self-insured up to a specific stop loss amount of $450,000, and an aggregate stop loss consistent with statutory limits for 2008. Coverage from a private insurance company is maintained for losses in excess of the stop loss amount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. (continued on next page) 54 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 All funds of the City participate in both programs and make payments to the Health Insurance Reserve Fund and the Workers' Compensation Reserve Fund based on actuarial estimates of the amounts needed to pay prior- and current-year claims. The claims liability of $829,027 in the Health Insurance Reserve Fund and $774,612 in the Workers' Compensation Reserve Fund is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in reported liabilities for the fiscal years ended June 30, 2008 and 2007, are summarized as follows: Health Workers' Insurance Compensation Reserve Fund Reserve Fund Liabilities at June 30, 2006 $ 657,846 $ 356,082 Claims and changes in estimates during fiscal year 2007 4,771,063 336,207 Claim payments (4.714.3631 (273.9091 Liabilities at June 30, 2007 714,546 418,380 Claims and changes in estimates during fiscal year 2008 5,012,424 969,483 Claim payments (4.897.9431 (6132511 Liabilities at June 30, 2008 ~ 829.027 ~ 774.612 The City is a member in the Iowa Communities Assurance Pool, as allowed by Chapter 670.7 of the Code of Iowa. The Iowa Communities Assurance Pool (Pool) is a local government risk-sharing pool whose 570 members include various governmental entities throughout the State of Iowa. The Pool was formed in August 1986 for the purpose of managing and funding third-party liability claims against its members. The Pool provides coverage and protection in the following categories: general liability, automobile liability, automobile physical damage, public officials liability, police professional liability, property, inland marine, and boiler/machinery. The City acquires automobile physical damage coverage through the Pool. All other property, inland marine and boiler/machinery insurance is acquired through commercial insurance. There have been no reductions in insurance coverage from prior years. Each member's annual casualty contributions to the Pool fund current operations and provide capital. Annual operating contributions are those amounts necessary to fund, on a cash basis, the Pool's general and administrative expenses, claims, claims expenses and reinsurance expenses due and payable in the current year, plus all or any portion of any deficiency in capital. Capital contributions are made during the first six years of membership and are maintained to equa1200 percent of the total current members' basis rates or to comply with the requirements of any applicable regulatory authority having jurisdiction over the Pool. The Pool also provides property coverage. Members who elect such coverage make annual operating contributions which are necessary to fund, on a cash basis, the Pool's general and administrative expenses and reinsurance premiums, all of which are due and payable in the current year, plus all or any portion of any deficiency in capital. Any year-end operating surplus is transferred to capital. Deficiencies in operations are offset by transfers from capital and, if insufficient, by the subsequent year's member contributions. The City has property insurance coverage in addition to the Pool. (continued on next page) 55 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 The City's property and casualty contributions to the risk pool are recorded as expenditures from its operating funds at the time of payment to the risk pool. The City's annual contributions to the Pool for the year ended June 30, 2008, were $540,570. The Pool uses reinsurance and excess risk-sharing agreements to reduce its exposure to large losses. The Pool retains general, automobile, police professional, and public officials liability risks up to $350,000 per claim. The next $2,650,000 in claims are covered with another pool (APEEP). Claims exceeding $3,000,000 are reinsured. Property and automobile physical damage risks are retained by the Pool up to $100,000 each occurrence, each location, with excess coverage reinsured on an individual-member basis. The Pool's intergovernmental contract with its members provides that in the event a casualty claim or series of claims exceeds the amount of risk-sharing protection provided by the member's risk-sharing certificate, or in the event that a series of casualty claims exhausts total members' equity plus any reinsurance and any excess risk-sharing recoveries, then payment of such claims shall be the obligation of the respective individual member. As of June 30, 2008, settled claims have not exceeded the risk pool or reinsurance company coverage since the Pool's inception. Members agree to continue membership in the Pool for a period of not less than one full year. After such period, a member who has given 60 days' prior written notice may withdraw from the Pool. Upon withdrawal, payments for all claims and claims expenses become the sole responsibility of the withdrawing member, regardless of whether a claim was incurred or reported prior to the member's withdrawal. Members withdrawing within the first six years of membership may receive a partial refund of their capital contributions. If a member withdraws after the sixth year, the member is refunded 100 percent of its capital contributions. However, the refund is reduced by an amount equal to the annual operating contribution which the withdrawing member would have made for the one-year period following withdrawal. NOTE 8 -COMMITMENTS AND CONTINGENT LIABILITIES Grants The City has received financial assistance from numerous federal and state agencies in the form of grants and entitlements. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the general fund or other applicable funds. However, in the opinion of management, liabilities resulting from disallowed claims, if any, will not have a material effect on the City's financial position as of June 30, 2008. Litigation The City's corporation counsel reported that as of June 30, 2008, various claims and lawsuits were on file against the City. The corporation counsel estimated that all potential settlements against the City not covered by insurance would not materially affect the financial position of the City. The City has authority to levy additional taxes (outside the regular limit) to cover uninsured judgments against the City. (continued on next page) 56 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Construction Contracts The City has recognized as a liability only that portion of construction contracts representing construction completed through June 30, 2008. The City has additional commitments for signed construction contracts of $18,316,799 as of June 30, 2008. These commitments will be funded by federal and state grants, cash reserves, and bond proceeds. NOTE 9 - POSTEMPLOYMENT HEALTH CARE BENEFITS In addition to providing pension benefits, the City provides certain health care benefits for retired disabled police officers and firefighters as mandated by the Code of Iowa. The cost of health care benefits for retired disabled police officers and firefighters is recognized as an expenditure as claims are paid. As of June 30, 2008, 55 retirees were eligible for these benefits, and the cost of the benefits for the fiscal year ended June 30, 2008, totaled $13,421. NOTE 10 -EMPLOYEE RETIREMENT SYSTEMS MFPRSI The City contributes to the Municipal Fire and Police Retirement System of Iowa (the Plan), which is a cost-sharing, multiple-employer defined benefit pension plan administered by a Board of Trustees. The Plan provides retirement, disability, and death benefits which are established by state statute to plan members and beneficiaries. The Plan issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to Municipal Fire and Police Retirement System of Iowa, 7155 Lake Drive, Suite 201, West Des Moines, Iowa, 50266. Plan members are required to contribute 9.35% of earnable compensation, and the City is required to contribute 25.48% of earnable compensation. Contribution requirements are established by state statute. The City's contributions to the Plan for the years ended June 30, 2008, 2007, and 2006, were $2,632,282, $2,730,207, and $2,704,451, respectively, which met the required minimum contribution for each year. IPERS The City contributes to the Iowa Public Employees Retirement System (IPERS) which is acost-sharing multiple-employer defined benefit pension plan administered by the State of Iowa. IPERS provides retirement and death benefits which are established by state statute to plan members and beneficiaries. IPERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to IPERS, P.O. Box 9117, Des Moines, Iowa, 50306-9117. Plan members are required to contribute 3.90% of their annual covered salary, and the City is required to contribute 6.05% of annual covered payroll. Contribution requirements are established by state statute. The City's contributions to IPERS for the years ended June 30, 2008, 2007, and 2006, were $1,200,182, $1,071,260, and $1,016,907, respectively, equal to the required contributions for each year. (continued on next page) 57 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 11-CONDUIT DEBT From time to time, the City has issued Industrial Revenue Bonds to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2008, there was one series of Industrial Revenue Bonds outstanding, with an aggregate principal amount payable of $650,000. NOTE 12 -LANDFILL CLOSURE AND POSTCLOSURE CARE State and federal laws and regulations require the Dubuque Metropolitan Area Solid Waste Agency to place a final cover on each cell of its landfill site when filled and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that each cell stops accepting waste, the Agency reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each statement of net assets date. The $3,136,395 reported as landfill closure and postclosure care liability at June 30, 2008, represents the cumulative amount reported to date based on the use of 100% of the estimated capacity of cells 3 and 4, the use of 90% of the estimated capacity of cells 5 and 6, and the use of 30% of the estimated capacity of cells 7 and 8. The Agency will recognize the remaining estimated cost of closure and postclosure care of $961,405 as the remaining capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in 2008. The Agency expects to close cells 3 and 4 in 2009, cells 5 and 6 in 2011, and cells 7 and 8 in 2014. The Agency is making plans to construct a second generation of cells to extend the life of the landfill to 2050. Actual cost may be higher due to inflation, changes in technology, or changes in regulations. The Agency has begun to accumulate resources to fund these costs in accordance with state and federal financial assurance requirements. At June 30, 2008, funds have been restricted for closure and postclosure costs in the amount of $3,386,078, which exceeds the liability currently recognized. NOTE 13 -LEASES WHERE CITY IS LESSOR The City of Dubuque leases riverfront property, airport property (hangars and terminal space), farm land, parking areas, space for antennas on top of water towers, and concession areas under operating leases. The most significant lease is the lease of the greyhound racing and gambling facility and related parking area to the Dubuque Racing Association (DRA). The City's cost of the leased DRA assets total $10,144,771. The carrying amount of the assets at June 30, 2008 is $7,581,159, with $142,423 of depreciation expense during the year ended June 30, 2008. The DRA lease amount is based on the association's gross gambling receipts. During the year ended June 30, 2008, the DRA lease generated $9,720,429 in lease revenue. (continued on next page) 58 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 14 -SUBSEQUENT EVENTS On October 6, 2008, the City authorized $3,885,000 of General Obligation Bonds, Series 2008A to support stormwater management facilities and improvements, including costs associated with Bee Branch Creek Restoration Project. The interest rate on the bonds range from 3.75% to 4.80% with a maturity date of June 1, 2028. The funds to repay the bonds will be generated via stormwater user fees. On October 6, 2008, the City authorized $3,290,000 of Greater Downtown Urban Renewal District General Obligation Bonds Series 2008B to support the Library Renovation Project and building renovations and improvements to the former Kephart's Building and the non-taxable portion of bonds ($455,000) for the Dubuque Industrial Center West, North Siegert Farm demolition and grading project. The interest rate on the bonds range from 3.75% to 4.25% with a maturity date of June 1, 2023. The funds to repay the debt will be tax increment revenues of the Greater Downtown Urban Renewal District. On October 6, 2008, the City authorized $2,465,000 of Urban Renewal General Obligation Bonds for Urban Renewal taxable Series 2008C to support the Dubuque Industrial Center West Economic Development District, North Siegert Farm demolition and grading project. The interest rate on the bonds range from 5.25% to 5.50% with a maturity date of June 1, 2018. The funds to repay the bonds will be tax increment revenues. On October 6, 2008, the City authorized $1,195,000 Water Revenue Bonds Series 2008D to support water main replacements and repairs, construction of water main extensions, and the installation of pump station radio communication equipment and facilities. The interest rate on the bonds range from 3.00% to 5.00% with a maturity date of June 1, 2023. The funds to repay the bonds will be generated from water utility fees. The City will be borrowing funds for a number of sanitary sewer and stormwater projects and for significant upgrades to the Water Pollution Control Plant. Plans provide for the use of Clean Water State Revolving Fund (SRF) through the Iowa Finance Authority. The loans include construction and planning and design with Intended Use Plans (IUP) for approximately $65,000,000 filed. Construction loans provide a 3% interest rate, .25% annual service fee and a 1% origination fee. Planning and Design Loans have no interest for three years, no initiation fee and no servicing fee. NOTE 15 -NEW GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) STANDARDS The Governmental Accounting Standards Board (GASB) has issued six statements not yet implemented by the City of Dubuque. The statements, which might impact the City of Dubuque, are as follows: Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, issued June 2004, will be effective for the fiscal year ending June 30, 2009. This statement establishes standards for the measurement, recognition, and display of other postemployment benefit (OPEB) expense/expenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information in the financial reports of state and local governmental employers. (continued on next page) 59 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Statement No. 47, Accounting for Termination Benefits, issued June 2005, establishes accounting standards for termination benefits. For termination benefits provided through an existing defined benefit OPEB plan, the provisions of this statement should be implemented simultaneously with the requirements of Statement No. 45. For all other termination benefits, this statement was effective for the fiscal year ended June 30, 2006. Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, issued November 2006, will be effective for the fiscal year ending June 30, 2009. This statement establishes standards for accounting and financial reporting for obligations to address the current or potential detrimental effects of existing pollution. Statement No. 51, Accounting and Financial Reporting for Intangible Assets, issued June 2007, will be effective for the fiscal year ending June 30, 2010. This statement requires that all intangible assets not specifically excluded by its scope be classified as capital assets. Statement No. 52, Land and Other Real Estate Held as Investments by Endowments, issued November 2007, will be effective for the fiscal year ending June 30, 2009. This statement establishes consistent standards for the reporting of land and other real estate held as investments by essentially similar entities. Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, issued June 2008, will be effective for the fiscal year ending June 30, 2010. This statement addresses the recognition, measurement, and disclosure of information regarding derivative instruments entered into by state and local governments. The City's management has not yet determined the effect these Statements will have on the City's financial statements. 60 REQUIRED SUPPLEMENTARY INFORMATION CITY OF DUBUQUE, IOWA CITY OF DUBUQUE, IOWA SCHEDULE OF RECEIPTS, EXPENDITURES, AND CHANGES IN BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS) GOVERNMENTAL FUNDS AND ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2008 RECEIPTS Property tax Tax increment fmancing Other City tax Licenses and permits Use of money and property Intergovernmental Charges for fees and service Special assessments Miscellaneous Total Receipts EXPENDITURES Public safety Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital projects Business-type activities Total Expenditures EXCESS (DEFICIENCY) OF RECEIPTS OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES, NET EXCESS (DEFICIENCY) OF RECEIPTS AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES BALANCE, BEGINNING BALANCE, ENDING Final to Budgeted Amounts Actual Actual Original Final Variance $ 17,383,349 $ 17,430,933 $ 18,006,072 $ (622,723) 4,482,540 4,357,984 4,357,984 124,556 10,969,356 11,197,760 11,222,621 (253,265) 3,449,744 3,354,041 3,354,041 95,703 20,117,201 17,729,706 17,862,548 2,254,653 14,502,333 17,157,450 37,022,711 (22,520,378) 18,400,042 24,035,801 24,228,348 (5,828,306) 244,117 700,000 1,382,627 (1,138,510) 12,250,378 4,961,654 13,516,295 (1,265,917) 101,799,060 100,925,329 130,953,247 (29,154,187) 20,736,955 20,906,502 21,543,195 806,240 12,885,957 10,578,404 13,477,845 591,888 853,367 846,181 961,972 108,605 8,479,941 8,336,448 8,502,032 22,091 8,756,397 8,512,576 9,430,480 674,083 5,464,091 5,674,587 6,048,553 584,462 3,089,509 3,107,249 3,107,249 17,740 27,032,019 21,808,077 67,573,130 40,541,111 26,220,817 37,048,839 51,349,916 25,129,099 113,519,053 116,818,863 181,994,372 68,475,319 (11,719,993 (15,893,534 (51,041125 39,321,132 27,461,966 12,508,224 33,761,093 (6,299,127) 15,741,973 (3,385,310) (17,280,032) 33,022,005 49,212,310 49,212,310 49,212,310 - $ 64,954,283 $ 45,827,000 $ 31,932,278 $ 33,022,005 61 CITY OF DUBUQUE, IOWA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION -BUDGETARY REPORTING FOR THE YEAR ENDED JUNE 30, 2008 The budgetary comparison is presented as Required Supplementary Information in accordance with Governmental Accounting Standards Board Statement No. 41 for governments with significant budgetary perspective differences resulting from not being able to present budgetary comparisons for the General Fund and each major Special Revenue Fund. The Code of Iowa requires the adoption of an annual budget on or before March 15 of each year which becomes effective July 1 and constitutes the appropriation for each function specified therein until amended. The legal level of control (the level on which expenditures may not legally exceed appropriations) is the function level for the City as a whole, rather than at the fund or fund type level. The internal service fund or agency fund activity is not included in the adopted budget. The City's budget is prepared on the cash basis of accounting with an adjustment for accrued payroll following required public notice and hearings. After the initial annual budget is adopted, it may be amended for specified purposes. Budget amendments must be prepared and adopted in the same manner as the original budget. Management is not authorized to amend the budget or to make budgetary transfers between functions without the approval of the City Council. Management may make budgeting transfers between funds as long as the transfers are within the same function. The City has adopted a policy relative to budgetary control and amendment which provides for control at the line-item level and review of the current year's budget at the time the next year's budget is prepared. This usually results in amending the appropriations of all functions to adjust to current conditions. Supplemental appropriations are only provided when unanticipated revenues or budget surpluses become available. Appropriations as adopted lapse at the end of the fiscal year. The budget for the fiscal year ended June 30, 2008, was amended two times during the year to allow the City to increase function expenditures by $65,175,509, primarily for the carry-forward of unfinished capital improvement projects and expenditure of additional grants for capital improvements. The following is a reconciliation of the budgetary basis to the modified accrual basis of accounting: Modified Governmental Enterprise AccruaU Funds Funds Budgetary Accrual Accrual Modified Basis Adiustments Basis Accrual Basis Accrual Basis Total Receipts/revenues $ 101,799,060 $ 254,771 $ 102,053,831 $ 82,989,782 $ 19,064,049 $ 102,053,831 Expenditures/expenses 113.519.053 (6.499.9561 107.019.097 86.628.304 20.390.793 107.019.097 Deficiency of receipts/ revenues under expenditures/expenses (11,719,993) 6,754,727 (4,965,266) (3,638,522) (1,326,744) (4,965,266) Other financing sources, net 27.461.966 9.122 27.471.088 22.425.208 5.045.880 27.471.088 Net 15,741,973 6,763,849 22,505,822 18,786,686 3,719,136 22,505,822 Balance, beginning 49,212,310 102,163,970 151,376,280, 48,123,530 103252,750 151,376280 Balance, ending ~ 64.954283 $ 108.927.819 $ 173.882.102. $ 66.910216 $ 106,971.886 $ 173.882.102 62 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Road Use Tax Fund -This fund is used to account for state revenues allocated to the City for maintenance and improvement of City streets. Section VIII Housing Fund -This fund is used to account for the operations of federal Section VIII existing, voucher, and moderate rehabilitation projects. Tort Liability Fund -This fund is used to collect a special property tax levy which is then transferred to the General Fund. The General Fund accounts for the administration and payment of damage claims against the City. Special Assessments Fund -This fund is used to account for the financing of public improvements that are deemed to benefit primarily the properties against which special assessments are levied and to accumulate monies for the payment of principal and interest on the outstanding long-term debt service. Tax Increment Financing Fund -This fund is used to account for the receipt of property taxes, for the payment of projects within the tax increment financing district, and for the payment of remaining principal and interest costs on the tax increment financing districts' long-term debt service. Cable TV Fund -This fund is used to account for the monies and related costs as set forth in the cable franchise agreement between the City of Dubuque and the cable franchisee. Library Expendable Gifts Trust -This fund is used to account for contributions given to the library to be spent for specific purposes. DEBT SERVICE FUND The debt service fund is used to account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the government is obligated in some manner for the payment. NONMAJOR GOVERNMENTAL FUNDS CAPITAL PROJECTS FUNDS Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. Airport Construction Fund -This fund is used to account for the resources and costs related to airport capital improvements. Sales Tax Construction Fund -This fund is used to account for the resources and costs related to capital improvements financed through the local option sales tax. PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting City's programs. Ella Lyons Peony Trail Trust Fund -This fund is used for dividends and maintenance cost related to the City Peony Trail, per trust agreement. Library Gifts Trust Fund -This fund is used to account for testamentary gifts to the City library. CITY OF DUBUQUE, IOWA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2008 ASSETS Cash and pooled cash investments Receivables Property tax Delinquent Succeeding year Accounts and other Special assessments Accrued interest Notes Intergovernmental Restricted cash and pooled cash investments Total Assets LIABILITIES AND FUND BALANCES LIABII,ITIES Accounts payable Accrued payroll Intergovernmental payable Deferred revenue Succeeding year property tax Other Total Liabilities FUND BALANCES Reserved for/by Encumbrances Long-term notes receivable Bond ordinance Debt service Franchise agreement Endowments Unreserved, undesignated reported in Special revenue funds Capital projects funds Permanent funds Total Fund Balances Total Liabilities and Fund Balances Road Section VIII Tort Use Tax Housing Liability $ 2,212,075 $ 1,128,495 $ 18,457 - - 5,018 - - 389,492 - 4,687 - - 2,475 - 395,682 13,206 - - 18,919 - $ 2,607,757 $ 1,167,782 $ 412,967 $ 118,427 $ 20,252 $ - 58,750 15,759 - - 3,256 - - - 389,492 - - 655 177,177 3 9, 267 3 90,147 143,316 3,961 - - 1,775 - 2,287,264 1,122,779 22,820 2,430,580 1,128,515 22,820 $ 2,607,757 $ 1,167,782 $ 412,967 EXHIBIT A-1 Special Revenue Tax Library Special Increment Expendable Debt Assessments Financing Cable TV Gifts Trust Service $ - $ 1,172,296 $ 985,834 $ 116,043 $ 3,155 - - 16,506 - - 328,204 - - - - - 73,756 2,805 660 - - 5,114,998 1,332 - - $ 328,204 $ 6,361,050 $ 1,006,477 $ 116,703 $ 3,155 $ - $ 55,888 $ 4,598 $ 886 $ - - - 9,626 - - 294,581 - 590,819 - - 294,581 55,888 605,043 886 - - - 13,924 2,066 - - 5,114,998 - - - - - - - 3,155 - - 1,332 - - 33,623 1,190,164 386,178 113,751 - 33,623 6,305,162 401,434 115,817 3,155 $ 328,204 $ 6,361,050 $ 1,006,477 $ 116,703 $ 3,155 63 CITY OF DUBUQUE, IOWA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2008 Capital Projects Airport Sales Tax Construction Construction ASSETS Cash and pooled cash investments $ 599,732 $ 2,266,416 Receivables Property tax Delinquent - - Succeedingyear - - Accounts and other - - Special assessments - - Accrued interest 1,922 16,501 Notes - - Intergovernmental - 261,598 Restricted cash and pooled cash investments - - Total Assets $ 601,654 $ 2,544,515 LIABILITIES AND FUND BALANCES LIABII,ITIES Accounts payable $ 6,243 $ 53,009 Accrued payroll - - Intergovernmental payable - - Deferred revenue Succeeding year property tax - - Other - - Total Liabilities 6,243 53,009 FUND BALANCES Reserved for/by Encumbrances 183,948 330,919 Long-term notes receivable - - Bond ordinance - - Debt service - - Franchise agreement - - Endowments - - Unreserved, undesignated reported in Special revenue funds - - Capital projects funds 411,463 2,160,587 Permanent funds - - Total Fund Balances 595,411 2,491,506 Total Liabilities and Fund Balances $ 601,654 $ 2,544,515 EXHIBIT A-1 (continued) Permanent Funds Total Ella Lyons Library Nonmajor Peony Trail Gifts Governmental Trust Trust Funds - $ - $ 8,502,503 - - 5,018 - - 389,492 - - 16,506 - - 328,204 130 119 100,580 - - 2,475 - - 670,486 100,140 21,630 5,257,019 $ 100,270 $ 21,749 $ 15,272,283 - $ - $ 259,303 - - 84,135 - - 3,256 - - 389,492 - - 886,055 - - 1,622,241 - - 678,134 - - 1,775 - - 5,114,998 - - 3,155 - - 1,332 76,061 12,000 88,061 - - 5,156,579 - - 2,572,050 24,209 9,749 33,958 100,270 21,749 13,650,042 $ 100,270 $ 21,749 $ 15,272,283 64 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 Road Section VIII Use Tax Housing REVENUES Taxes $ - $ - Special assessments - - Intergovernmental 4,945,039 4,313,421 Charges for services - - Investmentearnings - 52,809 Contributions - - Miscellaneous 2,615 5,861 Total Revenues 4,947,654 4,372,091 EXPENDITURES Current Public safety - 21,750 Public works 5,769,816 - Health and social services - - Culture and recreation - - Community and economic development - 4,508,283 General government - - Debt service - - Capital projects - - Total Expenditures 5,769,816 4,530,033 EXCESS (DEFICIENCY OF REVENUES OVER (UNDER) EXPENDITURES (822,162) (157,942) OTHER FINANCING SOURCES (USES) Issuance of debt - - Issuance of refunding bonds - - Payment to refunded bond escrow agent - - Transfers in 1,062,338 - Transfers out (115,134) (23,990) Sale of capital assets 15,275 - Total Other Financing Sources (Uses) 962,479 (23,990) NET CHANGE IN FUND BALANCES 140,317 (181,932) FUND BALANCES, BEGINNING 2,290,263 1,310,447 FUND BALANCES, ENDING $ 2,430,580 $ 1,128,515 EXHIBIT A-2 Special Revenue Tax Tort Special Increment Liability Assessments Financing $ 383,675 $ - $ 4,482,541 $ - 177,585 - - - 5 - 67,705 218,224 - 16,171 - 383,675 261,461 4,700,770 Library Expendable Debt Cable TV Gifts Trust Service - $ - $ - 36,417 4,394 - - 94,423 - 636,863 - - 673,280 98,817 - - - - 76,786 - - - - - 27,885 - - - - - - 94,127 - - - 1,026,838 - - - - 35 - 550,518 - 90,000 - - 3,078,186 - - 1,037,113 - 35 4,105,024 655,189 94,127 1,127,113 383,675 261,426 595,746 18,091 4,690 (1,127,113) - - 58,696 - - - - - - - - 2,965,000 - - - - - (2,875,000) - - 6,395,049 36,660 - 1,037,114 (382,596) (919,215) (1,316,308) (106,949) - - - - 137,000 - - - (382,596) (919,215) 5,274,437 (70,289) - 1,127,114 1,079 (657,789) 5,870,183 (52,198) 4,690 1 21,741 691,412 434,979 453,632 111,127 3,154 $ 22,820 $ 33,623 $ 6,305,162 $ 401,434 $ 115,817 $ 3,155 (continued) 65 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 Capital Projects Airport Sales Tax Construction Construction REVENUES Taxes $ - $ 1,604,178 Special assessments - - Intergovernmental 86,756 - Charges for services 184,643 - Investment earnings 16,815 135,108 Contributions - - Miscellaneous - 1,799 Total Revenues 288,214 1,741,085 EXPENDITURES Current Public safety - - Public works - - Health and social services - - Culture and recreation - - Community and economic development - - General government - - Debt service - - Capital projects 109,066 1,555,101 Total Expenditures 109,066 1,555,101 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 179,148 185,984 OTHER FINANCING SOURCES (USES) Issuance of debt - - Issuance of refunding bonds - - Payment to refunded bond escrow agent - - Transfers in 234,043 128,858 Transfers out (1,860) (641,458) Sale of capital assets - - Total Other Financing Sources (Uses) 232,183 (512,600) NET CHANGE IN FUND BALANCES 411,331 (326,616) FUND BALANCES, BEGINNING 184,080 2,818,122 FUND BALANCES, ENDING $ 595,411 $ 2,491,506 EXHIBIT A-2 (continued) Permanent Funds Ella Lyons Library Peony Trail Gifts Trust Trust Total Nonmajor Governmental Funds - $ - $ 6,470,394 - - 177,585 - - 9,345,216 - - 184,648 (14,945) 1,006 517,533 - - 94,423 - - 663,309 (14,945) 1,006 17,453,108 - - 98,536 - - 5,769,816 - - 27,885 2,258 - 96,385 - - 5,535,121 - - 640,553 - - 4,115,299 - - 1,664,167 2,258 - 17,947,762 (17,203) 1,006 (494,654) 58,696 - - 2,965,000 - - (2,875,000) - - 8,894,062 - - (3,507,510) - - 152,275 - - 5,687,523 (17,203) 1,006 5,192,869 117,473 20,743 8,457,173 $ 100,270 $ 21,749 $ 13,650,042 66 NONMAJOR ENTERPRISE FUNDS Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises -- where the intent of the City Council is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the City Council has decided that periodic determination of net income is appropriate for accountability purposes. Refuse Collection Fund -This fund is used to account for the operations of the City's refuse collection services. Transit System Fund -This fund is used to account for the operations of the City's bus and other transit services. CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS JUNE 30, 2008 ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Accounts Accrued interest Intergovernmental Inventories Total Current Assets NONCURRENT ASSETS Capital assets Land Buildings Machinery and equipment Accumulated depreciation Net Capital Assets Total Assets LIABILITIES CURRENT LIABILITIES Accounts payable Accrued payroll Accrued compensated absences Due to other funds Total Liabilities NET ASSETS Invested in capital assets, net of related debt Unrestricted Total Net Assets EXHIBIT B-1 Total Other Refuse Transit Enterprise Collection System Funds $ 745,153 $ - $ 745,153 297,023 6,434 303,457 4,287 - 4,287 - 976,184 976,184 - 17,375 17,375 1,046,463 999,993 2,046,456 - 36,000 36,000 - 1,887,564 1,887,564 1,636,150 3,606,348 5,242,498 (1,476,857) (3,272,600) (4,749,457) 159,293 2,257,312 2,416,605 1,205,756 3,257,305 4,463,061 37,822 13,609 51,431 42,518 45,261 87,779 83,900 22,662 106,562 - 480,712 480,712 164,240 562,244 726,484 159,293 2,257,312 2,416,605 882,223 437,749 1,319,972 $ 1,041,516 $ 2,695,061 $ 3,736,577 67 CITY OF DUBUQUE, IOWA EXHIBIT B-2 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2008 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING LOSS NONOPERATING REVENUES (EXPENSES) Intergovernmental Investment earnings Gain on disposal of assets Net Nonoperating Revenues INCOME (LOSS) BEFORE TRANSFERS TRANSFERS IN TRANSFERS OUT CHANGE IN NET ASSETS NET ASSETS, BEGINNING NET ASSETS, ENDING Total Other Refuse Transit Enterprise Collection System Funds $ 2,709,854 $ 195,104 $ 2,904,958 729 713 1,442 2,710,583 195,817 2,906,400 1,663,486 1,270,397 2,933,883 14,730 60,695 75,425 270,020 486,192 756,212 633,793 533,628 1,167,421 26,130 45,861 71,991 115,891 307,210 423,101 2,724,050 2,703,983 5,428,033 (13,467) (2,508,166) (2,521,633) 13,078 1,196,558 1,209,636 32,428 - 32,428 7,098 - 7,098 52,604 1,196,558 1,249,162 39,137 (1,311,608) (1,272,471) - 1,070,053 1,070,053 (16,000) - (16,000) 23,137 (241,555) (218,418) 1,018,379 2,936,616 3,954,995 e ~ nn~ c~~ e ~ Inc n~~ e ~ -~~~ c-~-~ 68 CITY OF DUBUQUE, IDWA EXHIBIT B-3 COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2008 Total Other Refuse Transit Enterprise Collection System Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 2,687,742 $ 189,234 $ 2,876,976 Cash payments to suppliers for goods and services (932,557) (1,132,824) (2,065,381) Cash payments to employees for services (1,602,927) (1,264,440) (2,867,367) Other operating receipts 729 713 1,442 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 152,987 (2,207,317) (2,054,330) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds - 1,070,053 1,070,053 Transfers to other funds (16,000) - (16,000) Proceeds from interfund balances - 480,712 480,712 Intergovernmentalgrantproceeds 13,078 257,246 270,324 NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES (2,922) 1,808,011 1,805,089 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets 7,098 - 7,098 Acquisition and construction of capital assets - (28,000) (28,000) NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES 7,098 (28,000) (20,902) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 34,008 - 34,008 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 191,171 (427,306) (236,135) CASH AND CASH EQUIVALENTS, BEGINNING 553,982 427,306 981,288 CASH AND CASH EQUIVALENTS, ENDING $ 745,153 $ - $ 745,153 (continued) 69 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2008 RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating loss Adjustments to reconcile operating loss to net cash provided (used) by operating activities Depreciation Change in assets and liabilities Increase in receivables Increase in inventories Increase in accounts payable Increase in accrued liabilities Total Adjustments NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES EXHIBIT B-3 (continued) Business-type Activities -Enterprise Funds Total Other Refuse Transit Enterprise Collection System Funds $ (13,467) $ (2,508,166) $ (2,521,633) 115,891 307,210 423,101 (22,112) (5,870) (27,982) - (8,079) (8,079) 12,116 1,631 13,747 60,559 5,957 66,516 166,454 300,849 467,303 $ 152,987 $ (2,207,317) $ (2,054,330) 70 INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one department to other departments of the government and to other government units on a cost- reimbursementbasis. General Service Fund -This fund is used to account for engineering, street, and general services supplied to other departments. Garage Service Fund -This fund is used to account for maintenance and repair services for the City's automotive equipment. Stores/Printing Fund -This fund is used to account for printing, supplies, and other services provided to other departments. Health Insurance Reserve Fund -This fund is used to account for health costs. Workers' Compensation Reserve Fund -This fund is used to account for workers' compensation costs. CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS JUNE 30, 2008 ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Accounts Accrued interest Inventories Total Current Assets NONCURRENT ASSETS Capital assets Machinery and equipment Accumulated depreciation Net Capital Assets Total Assets LIABILITIES CURRENT LIABILITIES Accounts payable Accrued payroll Total Liabilities NET ASSETS Invested in capital assets, net of related debt Unrestricted Total Net Assets (Deficit) General Garage Stores/ Service Service Printing $ 6,732 $ 184,154 $ 8,360 - 55,217 2,421 6,732 239,371 10,781 - 102,034 - - (49,914) - - 52,120 - 6,732 291,491 10,781 - 63,728 95 19,137 23,417 - 19,137 87,145 95 - 52,120 - (12,405) 152,226 10,686 $ (12,405) $ 204,346 $ 10,686 EXHIBIT C-1 Health Workers' Insurance Compensation Reserve Reserve Total $ 4,021,249 $ 651,753 $ 4,872,248 120,692 - 120,692 21,828 3,717 25,545 - - 57,638 4,163,769 655,470 5,076,123 - - 102,034 - - (49,914) - - 52,120 4,163,769 655,470 5,128,243 829,027 774,612 1,667,462 - - 42,554 829,027 774,612 1,710,016 - - 52,120 3,334,742 (119,142) 3,366,107 $ 3,334,742 $ (119,142) $ 3,418,227 71 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS (DEFICIT) INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2008 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES Investment earnings Gain on disposal of assets Total Nonoperating Revenues INCOME (LOSS) BEFORE TRANSFERS TRANSFERS OUT CHANGE 1N NET ASSETS NET ASSETS (DEFICIT), BEGINNING NET ASSETS (DEFICIT), ENDING General Garage Stores/ Service Service Printing $ 1,539,021 $ 1,983,876 $ 25,574 1,539,021 1,983,876 25,574 1,473,234 774,150 - - 24,009 - - 28,123 - 5,631 1,056,029 30,407 10,631 12,751 - - 5,671 - 1,489,496 1,900,733 30,407 49,525 83,143 (4,833) - 3,105 - - 3,105 - 49,525 86,248 (4,833) - (6,436) - 49,525 79,812 (4,833) (61,930) 124,534 15,519 $ (12,405) $ 204,346 $ 10,686 EXHIBIT C-2 Health Workers' Insurance Compensation Reserve Reserve Total $ 6,195,666 $ 518,010 $ 10,262,147 222,409 18,285 240,694 6,418,075 536,295 10,502,841 - - 2,247,384 - - 24,009 - - 28,123 5,189,378 996,905 7,278,350 488,747 24,227 536,356 - - 5,671 5,678,125 1,021,132 10,119,893 739,950 (484,837) 382,948 177,722 36,388 214,110 - - 3,105 177,722 36,388 217,215 917,672 (448,449) 600,163 - - (6,436) 917,672 (448,449) 593,727 2,417,070 329,307 2,824,500 $ 3,334,742 $ (119,142) $ 3,418,227 72 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash payments to suppliers for goods and services Cash payments to employees for services Other operating receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to other funds Payment of interfund balances NET CASH USED BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets Acquisition and construction of capital assets NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Interest received NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING RECONCII,IATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation Change in assets and liabilities Increase in receivables Increase in inventories Increase (decrease) in accounts payable Increase (decrease)in accrued liabilities Total Adjustments NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES General Garage Stores/ Service Service Printing $ 1,539,021 $ 1,983,876 $ 25,574 (16,262) (1,100,210) (31,350) (1,500,305) (772,187) - 22,454 111,479 (5,776) - (6,436) - (15,722) - - (15,722) (6,436) - - 3,105 - - (15,028) - - (11,923) - 6,732 93,120 (5,776) - 91,034 14,136 $ 6,732 $ 184,154 $ 8,360 $ 49,525 $ 83,143 $ (4,833) - 5,671 - - (2,175) (714) - 22,877 (229) (27,071) 1,963 - (27,071) 28,336 (943) $ 22,454 $ 111,479 $ (5,776) EXHIBIT C-3 Health Workers' Insurance Compensation Reserve Reserve Total $ 6,081,748 $ 518,010 $ 10,148,229 (5,563,644) (664,900) (7,376,366) - - (2,272,492) 222,409 18,285 240,694 740,513 (128,605) 740,065 - - (6,436) - - (15,722) - - (22,158) - - 3,105 - - (15,028) - - (11,923) 182,968 40,082 223,050 923,481 (88,523) 929,034 3,097,768 740,276 3,943,214 $ 4,021,249 $ 651,753 $ 4,872,248 $ 739,950 $ (484,837) $ 382,948 - - 5,671 (113,918) - (113,918) - - (2,889) 114,481 356,232 493,361 - - (25,108) 563 356,232 357,117 $ 740,513 $ (128,605) $ 740,065 73 AGENCY FUNDS The agency fund is used to report resources held by the City in a purely custodial capacity. Cable Equipment Fund -This fund is used to account for resources received under the cable franchise agreement to support public, educational, and governmental access and Internet use grants. Dog Track Depreciation Fund -This fund is used to account for the resources held for improvements at the greyhound racing facility. CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED JUNE 30, 2008 CABLE EQUIPMENT FUND ASSETS Cash and pooled cash investments Accounts receivable Accrued interest Total Assets LIABILITIES Accounts payable Due to other agency Total Liabilities EXHIBIT D-1 Balance Balance Beginning End of Year Additions Deductions of Year $ 285,721 $ 236,797 $ 208,133 $ 314,385 - 7,235 - 7,235 - 6,314 6,314 - $ 285,721 $ 250,346 $ 214,447 $ 321,620 $ 21,317 $ - $ 21,317 $ - 264,404 250,346 193,130 321,620 $ 285,721 $ 250,346 $ 214,447 $ 321,620 DOG TRACK DEPRECIATION FUND ASSETS Cash and pooled cash investments $ 497,059 $ 148,486 $ - $ 645,545 Accrued interest 4,368 27,563 28,486 3,445 Total Assets $ 501,427 $ 176,049 $ 28,486 $ 648,990 LIABILITIES Due to other agency TOTAL AGENCY FUNDS ASSETS Cash and pooled cash investments Accounts receivable Accrued interest Total Assets LIABILITIES Accounts payable Due to other agency Total Liabilities $ 501,427 $ 176,049 $ 28,486 $ 648,990 $ 782,780 $ 385,283 $ 208,133 $ 959,930 - 7,235 - 7,235 4,368 33,877 34,800 3,445 $ 787,148 $ 426,395 $ 242,933 $ 970,610 $ 21,317 $ - $ 21,317 $ - 765,831 426,395 221,616 970,610 74 STATISTICAL SECTION (UNAUDITED) CITY OF DUBUQUE, IOWA CITY OF DUBUQUE, IOWA STATISTICAL SECTION This statistical section of the City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. 76 Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. 81 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 85 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. 93 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 95 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2003; schedules presenting government-wide information include information beginning in that year. 75 CITY OF DUBUQUE, IOWA NET ASSETS BY COMPONENT LAST SIX FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Table 1 Fiscal Year 2003 2004 2005 2006 2007 2008 Governmental activities Invested in capital assets, net of related debt $ 212,767,403 $ 231,863,231 $ 249,881,646 $ 267,762,059 $ 288,978,975 $ 296,143,451 Restricted 29,306,124 31,931,803 24,180,874 21,693,357 23,900,328 31,970,724 Unrestricted 11,528,644 11,322,661 11,236,870 15,132,486 21,921,571 18,987,841 Total governmental activities net assets $ 253,602,171 $ 275,117,695 $ 285,299,390 $ 304,587,902 $ 334,800,874 $ 347,102,016 Business-type activities Invested in capital assets, net of related debt $ 98,706,116 $ 92,301,043 $ 93,036,089 $ 88,802,536 $ 91,483,532 $ 95,104,575 Restricted 553,677 554,005 554,205 554,294 554,318 554,505 Unrestricted 6,308,801 10,502,939 12,854,730 13,258,072 11,214,900 11,312,806 Total business-type activities net assets $ 105,568,594 $ 103,357,987 $ 106,445,024 $ 102,614,902 $ 103,252,750 $ 106,971,886 Primary government Invested in capital assets, net of related debt $ 311,473,519 $ 324,164,274 $ 342,917,735 $ 356,564,595 $ 380,462,507 $ 391,248,026 Restricted 29,859,801 32,485,808 24,735,079 22,247,651 24,454,646 32,525,229 Unrestricted 17,837,445 21,825,600 24,091,600 28,390,558 33,136,471 30,300,647 Total primary government net assets $ 359,170,765 $ 378,475,682 $ 391,744,414 $ 407,202,804 $ 438,053,624 $ 454,073,902 76 CITY OF DUBUQUE, IOWA CHANGES IN NET ASSETS LAST SIX FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Table 2 Fiscal Year 2003 2004 2005 2006 2007 2008 Expenses Governmental activities: Public safety $ 15,817,052 $ 16,605,481 $ 18,636,877 $ 18,892,980 $ 20,326,724 $ 16,966,210 Public works 14,453,558 12,847,410 17,088,983 16,390,322 16,505,560 18,847,068 Health and social services 815,524 1,290,619 654,469 678,748 759,367 800,566 Culture and recreation 7,367,147 7,849,114 8,474,183 9,627,505 9,837,299 10,857,409 Community and economic development 9,431,702 12,662,552 9,680,046 8,541,167 11,965,805 11,961,584 General government 4,211,922 3,773,136 4,048,475 3,868,687 4,940,154 5,804,003 Interest on long-term debt 1,605,326 1,248,498 1,298,367 1,460,730 1,400,748 2,577,417 Total governmental activities expenses 53,702,231 56,276,810 59,881,400 59,460,139 65,735,657 67,814,257 Business-type activities: Sewage disposal works 4,655,696 5,282,016 4,656,172 5,298,353 5,814,076 6,141,524 Water utility 4,145,983 4,368,738 4,232,489 4,700,483 4,780,063 4,814,692 Stormwater utility - 1,184,968 1,114,811 1,153,628 1,198,675 1,706,735 Parking facilities 1,445,434 1,655,429 1,604,071 1,629,427 1,611,447 2,173,110 America's River Project 414,830 1,064,701 515,570 82,617 434,667 126,699 Refuse collection 2,140,807 2,238,254 2,202,800 2,463,795 2,496,018 2,724,050 Transit system 2,055,248 2,257,078 2,326,908 2,555,080 2,760,459 2,703,983 Total business-type activities expenses 14,857,998 18,051,184 16,652,821 17,883,383 19,095,405 20,390,793 Total primary government expenses $ 68,560,229 $ 74,327,994 $ 76,534,221 $ 77,343,522 $ 84,831,062 $ 88,205,050 Program Revenues Governmental activities: Charges for services Public safety $ 1,586,255 $ 1,785,787 $ 1,900,938 $ 1,809,481 $ 1,857,324 $ 2,088,723 Public works 3,367,720 3,392,650 3,371,073 3,370,291 4,839,781 4,061,883 Culture and recreation 2,145,435 2,282,983 2,143,246 2,218,315 2,251,562 2,109,571 Other activities 764,732 873,457 945,712 895,920 1,074,550 1,382,889 Operating grants and contributions 13,677,503 12,197,307 14,603,106 12,902,410 11,641,904 11,709,123 Capital grants and contributions 3,447,052 5,153,258 6,919,296 6,881,573 23,741,282 8,032,602 Total governmental activities program revenues 24,988,697 25,685,442 29,883,371 28,077,990 45,406,403 29,384,791 Business-type activities: Charges for services Sewage disposal works 4,300,156 4,719,491 4,552,587 5,077,491 5,259,432 5,484,079 Water utility 3,975,598 4,307,238 4,224,074 4,669,340 4,743,896 4,875,530 Stormwater utility - 754,101 684,570 928,850 1,227,243 1,766,334 Parking facilities 1,427,146 1,643,490 1,889,937 1,886,642 1,977,757 2,141,607 America's River Project 147,695 881,089 26,061 51,373 3,099 2,140 Refuse collection 1,981,105 2,157,285 2,283,677 2,397,525 2,642,251 2,710,583 Transit system 201,367 319,216 389,106 341,743 237,088 195,817 Operating grants and contributions 880,822 825,538 651,967 920,762 1,167,344 1,209,636 Capital grants and contributions 11,938,797 11,007,676 3,030,378 2,769,657 1,670,874 2,830,263 Total business-type activities program revenues 24,852,686 26,615,124 17,732,357 19,043,383 18,928,984 21,215,989 Total primary government program revenues $ 49,841,383 $ 52,300,566 $ 47,615,728 $ 47,121,373 $ 64,335,387 $ 50,600,780 (continued) 77 CITY OF DUBUQUE, IOWA Table 2 CHANGES IN NET ASSETS (continued) LAST SIX FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal Year 2003 2004 2005 2006 2007 2008 Net (Expense)Bevenue Governmental activities Business-type activities Total primary government net expense General Revenues and Other Changes in Net Assets Governmental activities: General Revenues Property taxes Local option sales tax HoteUmotel tax Utility franchise fees Gaming Unrestricted investment earnings Gain/(loss) on sale of capital assets Other Transfers Total governmental activities Business-type activities: General Revenues Property taxes Unrestricted investment earnings Gain/(loss) on sale of capital assets Transfers Total business-type activities Total primary government Change in Net Assets Governmental activities Business-type activities Total primary government $ (28,713,534) $ (30,591,368) $ (29,998,029) $ (31,382,149) $ (20,329,254) $ (38,429,466) 9,994,688 8,563,940 1,079,536 1,160,000 (166,421) 825,196 $ (18,718,846) $ (22,027,428) $ (28,918,493) $ (30,222,149) $ (20,495,675) $ (37,604,270) $ 18,041,049 $ 18,588,367 $ 19,767,492 $ 19,716,620 $ 21,656,908 $ 22,744,563 6,492,203 7,105,183 6,963,124 7,336,124 7,817,403 8,020,889 970,232 1,314,114 1,383,660 1,862,439 1,569,743 1,622,455 - 862,275 1,310,064 1,521,201 1,492,920 1,516,123 9,539,598 11,631,022 11,694,105 14,034,847 15,556,551 15,346,468 1,749,301 497,361 1,190,337 1,081,141 1,870,403 2,741,499 (149,650) 175,231 170,642 77,627 - 92,525 1,228,232 638,681 560,789 572,602 586,931 898,241 (7,720,462) 10,956,246 (1,684,581) 5,033,974 (7,633) (2,252,155) 30,150,503 51,768,480 41,355,632 51,236,575 50,543,226 50,730,608 506,054 - - - - - 321,447 181,674 322,884 339,599 796,636 630,049 (168,001) 25 36 703 - 11,736 7,720,462 (10,956,246) 1,684,581 (5,033,974) 7,633 2,252,155 8,379,962 (10,774,547) 2,007,501 (4,693,672) 804,269 2,893,940 $ 38,530,465 $ 40,993,933 $ 43,363,133 $ 46,542,903 $ 51,347,495 $ 53,624,548 $ 1,436,969 $ 21,177,112 $ 11,357,603 $ 19,854,426 $ 30,213,972 $ 12,301,142 18,374,650 (2,210,607) 3,087,037 (3,533,672) 637,848 3,719,136 $ 19,811,619 $ 18,966,505 $ 14,444,640 $ 16,320,754 $ 30,851,820 $ 16,020,278 78 CITY OF DUBUQUE, IOWA FUND BALANCES OF GOVERNMENTAL FUNDS LAST SIX FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Table 3 Fiscal Year 2003 2004 2005 2006 2007 2008 General Fund Reserved $ 4,573,723 $ 3,233,335 $ 3,169,453 $ 1,477,141 $ 4,455,303 $ 1,699,825 Unreserved 12,218,787 13,685,063 13,706,134 16,050,997 17,827,631 17,982,016 Total general fund ~l6.792.510 X16.918398 X16.875.587 X17.528.138 X22282.934 $19.681.841 All Other Governmental Funds Reserved $14,525,251 $14,231,390 $13,607,759 $15,564,016 $13,942,519 $31,887,038 Unreserved, reported in: Special revenue funds 11,886,631 9,720,412 5,777,233 7,277,471 7,586,898 7,431,931 Debt service fund - (68,569) (56,320) - - - Capitalprojectsfunds 5,846,016 7,353,593 11,191,461 (981,248) 4,195,354 7,875,448 Permanent funds 70,091 71,373 73,628 83,367 115,825 33,958 Total all other governmental funds X32327.989 $31.308.199 X30.593 761 X21.943.606 25.840.596 X47228375 79 CITY OF DUBUQUE, IOWA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST SIX FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Table 4 Fiscal Year 2003 2004 2005 2006 2007 2008 Revenues Taxes $ 25,508,936 $ 27,861,273 $ 29,430,135 $ 30,043,167 $ 32,526,525 $ 33,898,692 Special assessments 561,406 717,305 197,195 322,214 586,459 177,585 Licenses and permits 753,990 1,063,081 1,078,722 965,712 1,052,896 1,153,429 Intergovernmental 17,249,290 17,057,994 18,370,358 15,021,722 16,744,703 14,256,523 Charges for services 5,325,031 5,666,307 5,918,542 6,620,243 7,351,191 7,833,151 Fines and forfeits 465,787 241,572 267,536 204,201 158,360 188,603 Investment earnings 1,750,519 502,932 1,197,691 1,096,445 1,913,420 2,731,953 Contributions 447,960 345,415 306,809 246,908 1,168,463 6,134,002 Gaming 9,539,598 11,631,022 11,694,105 14,034,847 15,556,551 15,346,468 Miscellaneous 1,312,348 1,139,057 1,573,305 1,106,991 1,149,546 1,269,376 Total revenues 62,914,865 66,225,958 70,034,398 69,662,450 78,208,114 82,989,782 Expenditures Current Public safety 15,278,654 16,764,510 18,652,246 19,535,369 20,743,196 21,542,661 Public works 11,860,004 10,723,527 21,301,239 11,605,567 12,506,378 16,331,107 Health and social services 749,435 721,906 662,231 715,598 783,209 797,644 Culture and recreation 7,515,522 7,470,264 8,180,832 9,998,462 10,244,244 10,277,787 Community and economic development 9,010,868 11,924,011 9,825,470 9,981,645 11,695,902 11,847,512 General government 3,835,609 4,227,335 4,022,785 4,090,866 4,441,043 6,310,939 Debt service Principal 2,009,986 2,117,773 1,769,960 1,325,970 1,663,339 1,762,375 Interest 1,668,019 1,304,802 1,240,427 1,493,504 1,412,012 2,406,431 Capital projects 9,930,311 6,865,119 8,226,840 14,528,340 8,227,257 15,351,848 Total expenditures 61,858,408 62,119,247 73,882,030 73,275,321 71,716,580 86,628,304 Excess (deficiency) of revenues over (under) expenditures Other Financing Sources (Uses) Issuance of bonds Issuance of refunding bonds Discount on bonds Payment to refunded bonds escrow agent Transfers in Transfers out Sale of capital assets Total other financing sources (uses) Net change in fund balances Debt service as a percentage of noncapital expenditures 1,056,457 4,106,711 (3,847,632) (3,612,871) 6,491,534 (3,638,522) - - - 13,682 743,591 150,000 795,000 7,277,665 1,515,750 - - - (58,487) - - (150,000) - - (1,494,371) - 5,367,986 8,662,300 12,981,655 7,334,605 10,394,726 (21,073,805) (15,060,669) (16105184) (11,904,890) (11,789,548) 117,239 264,344 170,642 150,491 2,811,483 (15,588,580) (5,339,025) 4,266,291 (4,384,733) 2,160,252 $~14 532 123) ~ (12323141 ~ 418 659 ~ (7.997.6041 ~ 8.651.786 7.37% 6.32% 5.46% 4.99% 5.01% 23,083,696 2,965,000 (266158 (2,875,000 14,801,589 (18185109 2,901,190 22,425,208 $ 18.786.686 6.55% 80 CITY OF DUBUQUE, IOWA TAXABLE AND ASSESSED VALUE OF PROPERTY LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) Real Property Exemptions Total Levy Fiscal Taxable Assessed Taxable Assessed Year Year Value Value Real Property Value Value 1997 1999 $ 1,354,421 $ 1,987,466 $ 10,319 $ 1,344,102 $ 1,987,466 1998 2000 1,389,352 1,990,428 10,018 1,379,334 1,990,428 1999 2001 1,377,518 2,014,897 10,194 1,367,324 2,014,897 2000 2002 1,429,025 2,050,019 10,097 1,418,928 2,050,019 2001 2003 1,540,206 2,317,926 10,141 1,530,065 2,317,926 2002 2004 1,572,776 2,350,317 9,694 1,563,082 2,350,317 2003 2005 1,666,033 2,575,400 9,599 1,656,434 2,575,400 2004 2006 1,710,334 2,679,078 9,862 1,700,472 2,679,078 2005 2007 1,780,354 2,804,568 9,122 1,771,232 2,804,568 2006 2008 1,823,304 2,870,178 8,939 1,814,365 2,870,178 Table 5 Ratio of Total Taxable Value to Total Assessed Total Direct Value Tax Rate 67.63 11.07340 69.30 10.71601 67.86 11.06712 69.22 10.76080 66.01 10.21200 66.51 10.27303 64.32 10.07200 63.47 9.69910 63.16 9.98030 63.21 10.31690 81 CITY OF DUBUQUE, IOWA PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS (TAX RATES PER $1,000 ASSESSED VALUE) Dubuque Levy Fiscal Dubuque School Year Year C ity Dis trict 1997 1999 $ 11. 07340 $ 11 .98226 $ 1998 2000 10. 71601 11 .53111 1999 2001 11. 06712 12 .17096 2000 2002 10. 76080 13 .50444 2001 2003 10. 21200 13 .73882 2002 2004 10. 27303 13 .84768 2003 2005 10. 07200 14 .27491 2004 2006 9. 69910 15 .09695 2005 2007 9. 98033 15 .92538 2006 2008 10. 31690 16 .40925 Board of Education and Area 1 Voc. Dubuque Independents Tech County To tal 0.50368 $ 0.48592 $ 5.52169 $ 29 .56695 0.56187 0.55128 5.54016 28 .90043 0.50467 0.56995 5.60750 29 .92020 0.54806 0.57072 5.73669 31 .12071 0.55492 0.57507 5.60064 30 .68145 0.61686 0.57791 5.59515 30 .91063 0.57269 0.59804 6.08923 31 .60687 0.60226 0.60517 6.08416 32 .08764 0.60802 0.61127 6.17924 33 .30424 0.63160 0.61270 6.42691 34 .39736 Source: Dubuque County Auditor's Office. Table 6 Ratio of Dubuque City to Total 37.45 37.08 36.99 34.58 33.28 33.23 31.87 30.23 29.97 29.99 82 CITY OF DUBUQUE, IOWA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO (IN THOUSANDS OF DOLLARS) Table 7 2008 1999 Percentage of Percentage of Total City Total City Taxable Taxable Taxable Assessed Taxable Assessed Taxuaver Assessed Value Rank Value Assessed Value Rank Value Kennedy Mall $ 26,372 1 .92 % $ 19,990 3 1.13 Otto A LLC 17,500 2 .61 Nordstrom, Inc. 16,834 3 .59 12,854 4 .72 Medical Associates Realty 13,631 4 .47 9,955 5 .56 McGraw Hill 11,437 5 .40 7,366 9 .41 Walter Development 11,288 6 .39 Platinum Holdings 11,179 7 .39 Minglewood Limited Partnership 9,948 8 .35 American Trust & Savings Bank 9,947 9 .35 7,278 10 .41 Asbury Dubuque 9,896 10 .34 Plaza 20 Inc. 7,861 8 .44 Interstate Power Comparry 53,944 1 3.04 Peoples Natural Gas 20,395 2 1.15 A.Y. McDonald Manufacturing Co. 8,150 7 .46 U. S. West Communications 9,199 6 .52 $ 138032 4.81% $ 156992 8.84% Effective 2001 utility companies (Alliant Energy/Interstate Power and Aqu ila Natural Gas) pay excise tax on re venue to the state rather than property taxes. Source: Dubuque County Auditor's Office 83 CITY OF DUBUQUE, IOWA Table 8 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) Ratio of Total Tax Ratio of Percent of Delinquent Collections to Outstanding Delinquent Fiscal Total Tax Current Tax Current Taxes Tax Total Tax Total Tax Delinquent Taxes to Total Year Levy (1) Collections Collected Collections Collections (2) Levy Taxes Tax Levy 1999 16,587 16,528 99.6 121 16,649 100.4 129 0.8 2000 16,497 16,380 99.3 115 16,495 100.0 138 0.8 2001 17,163 16,662 97.1 120 16,782 97.8 150 0.9 2002 17,147 16,941 98.8 127 17,068 99.5 238 1.4 2003 15,328 15,215 99.3 216 15,431 100.7 130 0.8 2004 16,208 15,937 98.3 11 15,948 98.4 207 1.3 2005 16,408 16,383 99.8 20 16,403 100.0 196 1.2 2006 16,229 16,146 99.5 2 16,148 99.5 182 11 2007 17,216 17,193 99.9 4 17,197 99.9 174 1.0 2008 18,211 18,160 99.7 3 18,163 99.7 215 1.2 (1) Includes tax increment levy. (2) Includes taxes collected in June by the County but not received by the City until July. 84 CITY OF DUBUQUE, IOWA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Table 9 Governmental Activities Business-Type Activities Tax Tax General Increment Increment General Percentage Per Fiscal Obligation Financing Financing Obligation Capital Loan Revenue Total Primary of Personal Capita Year Bonds Bonds Notes Bonds Notes Bonds Government Income (1) (1) 1999 $ 5,300,000 $ 2,445,500 $ - $ 1,890,000 $ - $ 2,210,000 $ 11,845,500 0.86% 210 2000 4,522,500 4,378,669 - 3,572,500 - 2,055,000 14,528,669 1.00% 257 2001 3,405,000 5,963,585 - 9,005,000 - 1,890,000 20,263,585 1.34% 351 2002 20,945,000 5,873,155 - 3,105,000 - 1,720,000 31,643,155 2.05% 549 2003 19,865,000 4,943,169 - 5,140,000 - 1,540,000 31,488,169 1.98% 546 2004 19,010,000 3,820,394 655,000 6,660,000 - 1,350,000 31,495,394 1.85% 546 2005 24,960,000 3,450,820 622,211 8,090,000 - 1,150,000 38,273,031 2.16% 663 2006 24,165,750 3,040,304 590,439 11,619,250 - 940,000 40,355,743 2.17% 700 2007 22,990,000 2,594,831 1,279,885 11,090,000 - 720,000 38,674,716 2.01% 670 2008 21,860,000 25,136,402 1,279,636 11,570,000 611,977 490,000 60,948,015 * 1,057 Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Population and personal income data can be found in Table 17. * Personal Income unavailable at report date. 85 CITY OF DUBUQUE, IOWA Table l0 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS, EXCEPT PER CAPITA AMOUNT) General Percentage of Percentage of Fiscal Obligation Taxable Value Taxable Value of Assessed Value Assessed Value Per Year Bonds (1) of Property Property of Property of Property Capita 1999 $ 5,300 $ 1,344,102 0.39% $ 1,987,466 0.27% 94 2000 4,523 1,379,334 0.33% 1,990,428 0.23% 80 2001 3,405 1,367,324 0.25% 2,014,897 0.17% 59 2002 20,945 1,418,928 1.48% 2,050,019 1.02% 363 2003 19,865 1,530,057 1.30% 2,317,926 0.86% 344 2004 19,010 1,563,082 1.22% 2,350,317 0.81% 330 2005 24,960 1,656,434 1.51% 2,575,400 0.97% 433 2006 24,166 1,700,472 1.42% 2,679,078 0.90% 419 2007 22,990 1,771,232 1.30% 2,804,568 0.82% 399 2008 21,860 1,814,365 1.20% 2,870,178 0.76% 379 (1) Excludes general obligation bonds reported in enterprise funds. 86 CITY OF DUBUQUE, IOWA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2008 Jurisdiction Direct, City of Dubuque, Iowa Overlapping: Dubuque County Dubuque Public School District Northeast Iowa Community College Total Overlapping Total Net (Ueneral Obligation Bonded Debt Outstanding Percentage Applicable to City Table 11 Amount Applicable to Government $ 21,860,000 (1) 100.00% $ 21,860,000 1,380,000 1,080,000 2,460,000 $ 24,320,000 Source: Dubuque County Auditor and Northeast Iowa Community College (1) Excludes general obligation bonds reported in enterprise funds. $ 22,897,015 Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Dubuque. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government. 57.34 791,268 22.75 245,747 1,037,015 87 CITY OF DUBUQUE, IOWA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) Debit limit Total net debt applicable to limit Legal debit margin The net debt applicable to the debt limit as a percentage of debt limit Table 12 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 $ 99,373 $ 99,521 $ 100,745 $ 102,359 $ 115,896 $ 117,516 $ 133,149 $ 138,789 $ 145,401 $ 148,824 8,545 10,511 18,687 30,250 30,271 30,185 37,177 39,443 38,060 60,485 $ 90,828 $ 89,010 $ 82,058 $ 72,109 $ 85,625 $ 87,331 $ 95,972 $ 99,346 $ ]07,34] $ 88,339 8.60% 10.56% 18.55% 29.55% 26.12% 25.69% 27.92% 28.42% 26.18% 40.64% Legal Debt Margin Calculation for Fiscal Year 2008 Estimated actual value $ 2,976,480,060 Debt limit - 5% of total actual valuation $ 148,824,003 Debt applicable to limit (Tncluding GO Debt, TTF Debt, and Lease Obligations Paid from General Fund) 60,484,713 Legal debt margin $ 88,339,290 CITY OF DUBUQUE, IOWA REVENUE BOND COVERAGE PARHING BONDS LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) Table 13 Net Revenue Available Fiscal Gross Operating For Debt Debt Service Requirements Year Revenues (1) Expenses (2) Service Principal Interest Total Coverage (3) 1999 $ 1,303 $ 584 $ 719 $ 155 $ 98 $ 253 2.84 2000 1,278 582 696 165 93 258 2.70 2001 1,552 717 835 170 86 256 3.26 2002 1,452 737 715 180 79 259 2.76 2003 1,484 847 637 190 71 261 2.44 2004 1,659 971 688 200 63 263 2.62 2005 1,934 960 974 210 54 264 3.69 2006 1,933 977 956 220 44 264 3.62 2007 2,113 1,014 1,099 230 34 264 4.16 2008 2,224 1,495 729 240 23 263 2.77 (1) Total revenues (including interest). (2) Total operating expenses, exclusive of depreciation. (3) Coverage is computed by dividing net revenue available for debt service by debt service requirements. Bond ordinance requires 1.3 minimum coverage. 89 CITY OF DUBUQUE, IOWA WATER AND SEWER RECEIPT HISTORY LAST TEN FISCAL YEARS Fiscal Year Water Receipts Sewer Receipts 1999 $ 3,770,976 $ 4,806,765 2000 4,055,270 4,834,413 2001 4,135,930 4,387,111 2002 4,233,908 4,319,655 2003 4,154,899 4,252,098 2004 4,350,338 4,466,035 2005 4,340,789 4,478,205 2006 4,798,408 4,920,376 2007 4,856,353 5,276,454 2008 5,020,001 5,481,074 Source: Cash basis receipt ledgers. Table 14 90 CITY OF DUBUQUE, IOWA WATER METERS BY RATE CLASS LAST THREE FISCAL YEARS Fiscal Table 15 Year Residential Commercial Industrial Government Total 2006 19,813 1,820 73 35 21,741 2007 19,914 1,839 74 38 21,865 2008 19,970 1,878 70 45 21,963 *Prior seven years information not available. 91 CITY OF DUBUQUE, IOWA LARGEST WATER AND SEWER CUSTOMERS FISCAL YEAR 2008 Customer Rousselot Inc. Swiss Valley Farms Mercy Medical Center Alliant Power Compairy Jeld-Wen Finley Hospital Clarke College Loras College City of Dubuque Sewer Treatment Premier Linen & Dry Cleaning Inland Protein Corporation Western Dubuque Biodiesel Tablemound Mobile Home Park Total Receipts Percentage of Water Total Water Sewer Receipts Rank Receipts Receipts $ 185,763 1 3.70 % $ 345,941 57,357 2 1.14 194,950 56,450 3 1.12 81,875 49,560 4 0.99 37,782 5 0.75 31,495 6 0.63 42,389 31,203 7 0.62 40,555 29,628 8 0.59 48,190 29,096 9 0.58 29,011 10 0.58 45,533 117,438 52,389 43,665 $ 5,020,001 $ 5,481,074 Table 16 Percentage of Total Sewer Rank Receipts 1 6.31 2 3.56 4 1.49 9 0.77 10 0.74 6 0.88 7 3 5 8 0.83 2.14 0.96 0.80 92 CITY OF DUBUQUE, IOWA Table 17 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS Public Per Capital School Personal Median Enrollment Unemployment Year Population Personal Income Income (1) Age (2) (3) Rate (4) 1999 56,467 $ 2,173,097,000 $ 24,435 34 9,735 2.6 2000 56,467 2,293,137,000 25,691 34 9,697 2.7 2001 57,686 2,345,539,000 26,309 34 9,680 4.0 2002 57,686 2,421,441,000 26,760 37 9,906 3.9 2003 57,686 2,491,982,000 27,631 37 10,122 4.0 2004 57,686 2,695,504,000 29,549 37 10,428 4.4 2005 57,686 2,807,625,000 30,650 37 10,547 4.5 2006 57,686 2,983,000,000 32,290 37 10,733 3.5 2007 57,686 3,074,666,000 33,290 37 10,727 3.7 2008 57,686 * * 38 10,614 3.8 Sources: (1) U. S. Department of Commerce, Bureau of Economic Analysis. (2) Bureau of Census: 2000 Census. (3) Dubuque Community School District. (4) Iowa Department of Employment Services as of June 30. * Unavailable at report date. 93 CITY OF DUBUQUE, IOWA PRINCIPAL EMPLOYERS CURRENT YEAR AND YEAR 2000 2008 2000 Table 18 Percentage of Percentage of # of Total City # of Total City Emnlover Employees Rank Employment (1) Employees Rank Employment (1) John Deere (2) 1,800 1 3.44 % 2,250 1 4.64 Dubuque Community Schools 1,627 2 3.10 1,500 2 3.10 Mercy Medical Center 1,324 3 2.53 1,500 2 3.10 Finley Hospital 920 4 1.76 850 8 1.75 Eagle Window & Door 750 5 1.43 450 10 .93 Medical Associates 743 6 1.42 950 6 1.96 City of Dubuque 604 7 1.15 Prudential Retirement 550 8 1.05 Holy Family Catholic Schools 500 9 .95 Flexsteel 450 10 .86 825 9 1.70 Dubuque County 450 10 .86 Farmland Foods 1,300 4 2.68 Times Mirror (Formerly Wm C. Brown) 1,000 5 2.06 Interstate Power Company 930 7 1.92 9,718 11,555 Source: Greater Dubuque Development Corp. (1) Based on the percentage of total employment for Dubuque area from the U.S. Department of Labor, Bureau of Labor Statistics. (2) Located just outside City Limits. 2000 is the closest year to 1998 with employment information available. 94 CITY OF DUBUQUE, IOWA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/DEPARTMENT LAST TEN FISCAL YEARS Full-Time Equivalent Employees as of June 30 1999 2000 2001 2002 2003 2004 2005 Public Safety Table 19 2006 2007 2008 Emergency Communications 9.00 9.00 10.00 10.00 10.00 10.00 10.00 11.00 11.00 11.00 Fire 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 Police 90.00 95.00 95.00 96.00 97.00 97.00 97.00 99.00 100.00 101.00 Building Services 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 Public Works Public Worlcs 80.00 81.00 81.00 83.00 86.02 87.30 88.55 87.00 87.00 87.00 Engineering 22.00 22.00 24.00 24.00 24.00 24.00 24.00 25.00 25.00 25.00 Health & Social Services Health Services 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.00 Human Rights 2.00 2.00 2.00 2.00 2.00 2.00 2.00 3.00 3.00 3.00 Culture and Recreation Civic Center 9.15 9.15 9.15 9.15 9.15 9.15 9.15 1.15 0.15 0.15 Library 17.00 17.00 18.00 18.00 18.00 18.00 18.00 18.00 18.00 18.00 Park 20.92 20.92 20.92 21.92 21.92 21.92 21.92 21.92 21.92 21.92 Recreation 8.93 8.93 8.93 8.93 8.93 8.93 8.93 8.93 7.93 7.93 Community & Economic Development Community /Economic Dev 5.00 5.00 5.00 5.00 3.00 3.00 3.00 3.00 3.00 3.00 Housing Services 18.00 18.00 18.00 20.00 20.25 20.00 21.00 21.00 20.25 18.00 Planning Services 7.00 7.00 7.00 7.00 7.00 7.00 7.00 8.00 8.00 8.00 General Government Airport 13.00 l 3.00 13.00 ] 3.00 14.00 l 3.00 13.00 13.00 l 3.23 12.00 Cable TV 3.00 3.00 3.00 3.00 2.00 2.00 2.00 2.00 2.00 2.00 City Clerk's Office 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 City Manager's Office 9.00 9.00 9.00 9.00 11.00 10.00 10.00 11.00 11.00 11.00 Finance 16.00 16.00 16.00 16.00 16.00 15.00 14.00 14.00 14.00 14.00 Legal 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.62 3.00 3.00 Information Services 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 7.00 Business Type Water 23.00 23.00 23.00 23.00 23.00 23.00 23.00 23.00 23.00 23.00 Water Pollution Control 19.00 19.00 19.00 18.00 18.00 18.00 18.00 18.00 18.00 18.00 Parking 8.00 8.00 9.00 11.00 11.50 10.50 10.50 8.00 8.00 7.00 Transit 12.00 12.00 12.00 7.50 8.00 7.00 7.00 8.55 8.00 7.00 Total 505.00 511.00 516.00 518.50 523.77 519.80 521.05 518.17 516.48 512.00 Source: City Budget Records. Departments with employees who are allocated to more than one function are reflected in area with largest number of employees cJ, CITY OF DUBUQUE, IOWA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year 1999 2000 2001 2002 2003 Public Safety Police Physical arrestsl 2,825 2,807 2,564 - 4,000 Traffic violationsZ - - - 2,462 2,126 Parking violations3 - - - - 51,162 Fire Number of calls answered 3,336 3,158 3,736 4,774 3,974 Inspections conducted 742 829 805 841 524 Sewer Sewage system Daily average treatment in gallons 10,200,000 10,200,000 9,000,000 9,000,000 8,000,000 Maximum daily capacity of treatment plant in gallons 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 Water systems Daily average consumption in gallons 8,519,740 8,000,000 8,000,000 8,000,000 8,000,000 Maximum daily capacity of plant in gallons 18,000,000 18,000,000 18,000,000 18,000,000 18,000,000 Refuse (Municipal Collection) Tonnage 14,171 14,279 13,979 13,594 10,435 Sources: Various City Departments. ' Statistics not available for fiscal year 2002. z Statistics begin in fiscal year 2002. s Statistics begin in fiscal year 2003. Table 20 Fiscal Year 2004 2005 2006 2007 2008 4,550 4,795 4,790 5,078 5,090 2,427 2,171 2,111 1,986 6,881 49,985 51,004 46,575 42,530 40,741 4,181 4,300 4,176 4,454 4,699 408 1,135 409 360 624 8,000,000 8,500,000 8,500,000 8,000,000 10,310,000 15,000,000 13,500,000 13,500,000 13,500,000 13,500,000 8,000,000 7,720,000 7,360,000 7,647,685 5,793,309 18, 000, 000 18, 000, 000 18, 000, 000 18, 000, 000 17, 000, 000 10,330 10,428 10,573 10,807 11,798 96 CITY OF DUBUQUE, IOWA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Public safety Police Stations Patrol units Fire Stations Aerial trucks Public works Streets Miles (1) Street lights (1) Health and social services Hospital Number of patient beds Cultural and recreation Library Golf Parks Acreage Recreation Civic center Swimming pools Softball fields Baseball fields Tennis courts Sewer Sewage system Miles of sanitary sewer (1) Miles of storm sewers (1) Number of treatment plants Number of service connectors Water systems Miles of water mains Number of service connectors Number of city owned fire hydrants Sources: Various City Departments. (1) City GIS System (* information not available). Fiscal Year 1999 2000 2001 2002 2003 1 1 1 1 1 18 18 18 18 18 6 6 6 6 6 3 3 3 3 3 * * * * 273 * * 1,191 1,195 1,500 2 2 2 2 2 649 478 478 478 584 1 1 1 1 1 1 1 1 1 1 33 38 38 39 42 741 833 833 834 850 1 1 1 1 1 2 2 2 2 2 7 7 7 7 7 1 1 1 1 1 20 20 20 20 20 * * * * * * * * * * 1 1 1 1 1 20,000 20,550 20,550 20,200 20,800 250 301 302 305 305 20,000 21,130 21,000 20,550 21,032 2,004 2,635 2,685 2,712 2,713 Table 21 Fiscal Year 2004 2005 2006 2007 2008 1 1 1 1 1 18 19 19 19 19 6 6 6 6 6 3 3 3 3 3 290 290 295 307 317 1,591 1,631 1,755 1,802 1,855 2 2 2 2 2 560 421 421 405 405 1 1 1 1 1 1 1 1 1 1 42 44 44 47 47 850 855 845 898 898 1 1 1 1 1 2 2 2 2 2 7 7 7 8 7 1 1 1 1 1 20 20 19 19 20 * * 263 286 290 * * 116 120 122 1 1 1 1 1 21,000 21,000 21,443 21,568 21,633 310 312 313 315 316 21,206 21,016 21,257 21,210 21,243 2,736 2,770 2,780 2,798 2,812 97 COMPLIANCE SECTION CITY OF DUBUQUE, IOWA ~. c~ ~~ ,,w~ ~,,- "~. 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 A UDITING STANDARDS To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Dubuque, Iowa, as of and for the year ended June 30, 2008, which collectively comprise the City's basic financial statements and have issued our report thereon dated December 16, 2008. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Rebortin~ In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing our opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies, including a deficiency we consider to be a material weakness. A control deficiency exists when the design or operation of the control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process, or report financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood a misstatement of the City's financial statements that is more than inconsequential will not be prevented or detected by the City's internal control. We consider the deficiencies in internal control described in Part II of the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood a material misstatement of the financial statements will not be prevented or detected by the City's internal control. ,,.. b n ~ ..... ........... ~~~~',~ V''~a'rob.r~~~+rc~p'wl¢'r /hv~ , ~7~W,1. ~C.tl ~ aak'ao~a°.~u~, luwwar ~i~"d,V(;o~~~.. "~ ~ I'~'Va~~r~ti~ ~~"y~~,.ro,r~r.lJ¢r~~l ~ F'c~~ ~it„r.$.wrow~J.~k"~rCd. N F~„;Dka'. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we believe item II-A-08 is a material weakness. 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, non-compliance 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 non-compliance or other matters that are required to be reported under GovernmentAuditing Standards. Comments involving statutory and other legal matters about the City's operations for the year ended June 30, 2008, are based exclusively on knowledge obtained from procedures performed during our audit of the financial statements of the City and are reported in Part III of the accompanying Schedule of Findings and Questioned Costs. Since our audit was based on tests and samples, not all transactions that might have had an impact on the comments were necessarily audited. The comments involving statutory and other legal matters are not intended to constitute legal interpretations of those statutes. The City's responses to findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. While we have expressed our conclusions on the City's responses, we did not audit the City's responses, and accordingly, we express no opinion on them. We noted certain matters that we reported to management of the City of Dubuque, Iowa, in a separate letter dated December 16, 2008. This report, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Dubuque, Iowa, and other parties to whom the City of Dubuque, Iowa, may report, including federal awarding agencies and pass-through entities. This report is not intended to be and should not be used by anyone other than these specified parties. We would like to acknowledge the many courtesies and assistance extended to us by personnel of the City of Dubuque, Iowa, during the course of our audit. Should you have any questions concerning any of the above matters, we shall be pleased to discuss them with you at your convenience. -,, <<~ Dubuque, Iowa December 16, 2008 99 / ' ~ s,wi ."".~" REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Compliance We have audited the compliance of the City of Dubuque, Iowa, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2008. The City's major federal programs are identified in the summary of the independent auditor's results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grant agreements applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether non-compliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City of Dubuque, Iowa, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2008. Internal Control Over Compliance The management of the City of Dubuque, Iowa, is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grant agreements applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. ~'E~P~~. f~~~l'CI~~L~~. ~~~~IILI'8~~~.. 100 ... ~'_....re~,}~Rv~aw~a'ia~~t «Mva~ , ;ykr~~. '~ k~C~ ~ ~}auk~rar~u.ac~p ICi~ _. _ . .~ ~ P'~remvrs . . ~. '~,~C„) ~ Fr~sx :vd'~ ~.„~"a~~.l'~V 1~ ~ [:~~~:. A control deficiency in the City's internal control over compliance 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 non-compliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to administer a federal program such that there is more than a remote likelihood that non-compliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the City's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material non-compliance with a type of compliance requirement of a federal program will not be prevented or detected by the City's internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Dubuque, Iowa, and other parties to whom the City of Dubuque, Iowa, may report, including federal awarding agencies and pass-through entities. This report is not intended to be and should not be used by anyone other than these specified parties. ~-,, <<~ Dubuque, Iowa December 16, 2008 101 CITY OF DUBUQUE, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2008 CFDA Agency or Program Grantor/Pro~ram Number Pass-through Number Expenditures Direct: Department of Housing and Urban Development: Community Development Block Grants/ Entitlement Grants 14.218 B-OS-MC-19-0004 $ 1.199.696 Community Development Block Grants/ Special Purpose Grants/Insular Areas 14.225 IAOSSPG23 48.318 Shelter Plus Care 14.238 IA26C601021 5.482 Fair Housing Assistance Program -State and Local 14.401 FF207K077006 26.700 Lower Income Housing Assistance Program -Section 8 Moderate Rehabilitation 14.856 KC-9004MR-002 1,112 Lower Income Housing Assistance Program -Section 8 Moderate Rehabilitation 14.856 KC-9004MR-005 58.474 59.586 Section 8 Housing Choice Vouchers 14.871 KC-9004V 4244.775 Lead-Based Paint Hazard Control in Privately-Owned Housing 14.900 IALHB0375-07 225,099 Department of Justice: Bulletproof Vest Partnership Program 16.607 2006BUBX050 2,529 Bulletproof Vest Partnership Program 16.607 2005BUBX050 8 2.537 Department of Transportation: Airport Improvement Program 20.106 3-19-0028-43 47,531 Airport Improvement Program 20.106 3-19-0028-38 22,909 Airport Improvement Program 20.106 3-19-0028-42 16,316 Airport Improvement Program 20.106 3-19-0028-44 30,247 117.003 Federal Transit -Capital Investment Grants 20.500 IA-90-X339-00 947,561 Department of Homeland Security: Assistance to Firefighters Grant 97.044 EMW-2006-FG-07317 394.081 Total Direct 7270.838 (continued) 102 CITY OF DUBUQUE, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2008 Grantor/Pro~ram CFDA Agency or Number Pass-through Number Program Expenditures Indirect: Department of Housing and Urban Development: Iowa Department of Economic Development: Community Development Block Grants/ Entitlement Grants 14.218 03-CDTA-DUB Department of the Interior: State Historical Society of Iowa: Historic Preservation Fund Grants-In-Aid 15.904 2007-02 Department of Justice: Attorney General's Crime Victim Assistance Division: Violence Against Women Formula Grants 16.588 VW-08-24C Dubuque County, Iowa: Public Safety Partnership and Community Policing Grants Helping Services for Northeast Iowa, Inc.: Enforcing Underage Drinking Laws Program Enforcing Underage Drinking Laws Program 16.710 07 JAG/C06-A16 16.727 20-JD06-F07 16.727 20-JD04-F506 $ 15.000 8200 2.104 7.315 5,196 2.730 7,926 20,619 Dubuque County, Iowa: Edward Byrne Memorial Justice Assistance Grant Program 16.738 07 JAG/C06-F07 Department of Transportation: Iowa Department of Transportation: Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Capital Assistance Program for Elderly Persons and Persons with Disabilities Job Access -Reverse Commute 20.205 STP-ES-2100(617)- -8I-31 20.205 STP-U-2100(635)- -70-31 20.205 STP-U-2100(634)- -70-31 20.205 STP-E-2100(631)- -8V-31 20.205 STP-E-2100(628)- -8V-31 20.205 STP-A-020-9(187)- -22-31 20.205 STP-A-020-9(186)- -22-31 20.205 STP-U-2100(623)- -70-31 20.205 STP-E-2100(618)- -8V-31 20.205 ER-2100-(636)- -58-31 20.513 16-X001-210-07 20.516 37-X006-210-01 32,280 151,268 761,709 28,412 144,842 59,272 201,098 1,004,667 39,999 223.544 2.647.091 28.623 33.912 (continued) 103 CITY OF DUBUQUE, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2008 CFDA Agency or Grantor/Pro~ram Number Pass-through Number Indirect: (continued) Department of Transportation: (continued) Governor's Traffic Safety Bureau: State and Community Highway Safety 20.600 PAP 08-03, TASK 06 State and Community Highway Safety 20.600 07-04, TASK 12 Safety Incentives to Prevent Operation of Motor Vehicles by Intoxicated Persons 20.605 PAP 07-163, TASK 27 Environmental Protection Agency: Iowa Finance Authority: Capitalization Grants for Clean Water State Revolving Funds 66.458 PD-CW-06-41 Capitalization Grants for Clean Water State Revolving Funds 66.458 PD-CW-06-39 Department of Health and Human Services: Iowa Department of Public Health: Childhood Lead Poisoning Prevention Projects -State and Local Childhood Lead Poisoning Prevention and Surveillance of Blood Lead Levels in Children 93.197 5888LP05 Childhood Lead Poisoning Prevention Projects -State and Local Childhood Lead Poisoning Prevention and Surveillance of Blood Lead Levels in Children 93.197 5887LP05 Centers for Disease Control and Prevention - Investigations and Technical Assistance 93.283 3107 Corporation for National and Community Service: Iowa Commission on Volunteers: AmeriCorps Department of Homeland Security: Iowa Department of Public Defense: Disaster Grants -Public Assistance Total Indirect Total 94.006 07-AF-13 97.036 FEMA-DR-1763- DR-IA See notes to the Schedule of Expenditures of Federal Awards. Program Expenditures $ 25,640 5.360 31,000 14.347 20,414 3,271 23.685 19,057 2.875 21.932 7.772 109.479 94.870 3.073.875 $ 10.344.713_ 104 CITY OF DUBUQUE, IOWA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2008 NOTE 1-BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of Dubuque, Iowa, and is presented on the accrual basis of accounting. The information on this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. NOTE 2 - SUBRECIPIENTS Of the federal expenditures presented in the schedule, the City of Dubuque, Iowa, provided federal awards to subrecipients as follows: Program Title Federal Amount Provided CFDA Number to subrecipients Community Development Block Grants/ Entitlement Grants 14.218 $ 232,060 105 CITY OF DUBUQUE, IOWA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2008 Part I: Summary of the Independent Auditor's Results: (a) Unqualified opinions were issued on the financial statements. (b) Significant deficiencies in internal control over financial reporting were disclosed by the audit of the financial statements, including a material weakness. (c) The audit did not disclose any non-compliance which is material to the financial statements. (d) No material weaknesses in internal control over the major programs were noted. (e) An unqualified opinion was issued on compliance with requirements applicable to the major programs. (f) The audit disclosed no audit findings which were required to be reported in accordance with the Office of Management and Budget Circular A-133, Section .510(a). (g) The major programs were: • CFDA Number 14.871 -Section 8 Housing Choice Vouchers • CFDA Number 97.044 -Assistance to Firefighters Grant (h) The dollar threshold used to distinguish between Type A and Type B programs was $310,341 (i) The City of Dubuque, Iowa, qualified as a low-risk auditee. Part II: Findings Related to the Financial Statements: SIGNIFICANT DEFICIENCY/MATERIAL WEAKNESS II-A-08 Preparation of Financial Statements - As auditors, we were requested to draft the financial statements and accompanying notes to the financial statements. It is the responsibility of management and those charged with governance to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Recommendation - We recognize that with a limited number of office employees, preparation of the financial statements is difficult. However, we recommend that City officials continue reviewing operating procedures in order to obtain the maximum internal control possible under the circumstances. Response -The American Institute of Certified Public Accountants implemented new auditing standards in 2007. There have been no changes in City procedures. A cost benefit analysis reflects that the City continue with the current contractual agreement that the CPA firm prepare our financial statements. Conclusion -Response accepted. 106 CITY OF DUBUQUE, IOWA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2008 Part IL• Findings Related to the Financial Statements: (continued) SIGNIFICANT DEFICIENCY II-B-08 Capital Assets -During our audit, there were adjustments to capital asset amounts. The City has a centralized custodian in the Finance Department who maintains a record of the City's capital assets, including additions and deletions made during the year. During the 2003 fiscal year, the City adopted Governmental Accounting Standards Board Statement No. 34. This statement increased the complexity of the capital assets by requiring governmental infrastructure and depreciation on governmental capital assets be reported. Adding to the complexity, the City has many large projects that are funded from more than one source, including transfers from multiple funds, bond proceeds, and grant revenue. In addition, the capital asset records are accumulated using many individual worksheets by fund and by department, leaving many opportunities for error. Recommendation -Due to this increased complexity, the City's capital asset records should be closely reviewed for errors by management with knowledge of capital asset policies. Response -The Director and/or the Assistant Finance Director will continue to monitor the preparation of capital asset records. The adjustments made during the audit were not significant as a percent of total capital assets, current year capital additions, or current and future depreciation expense. Conclusion -Response accepted. Part III: Other Findings Related to Reauired Statutory Renortin~: III-A-08 Certified Budget -Function disbursements during the year ended June 30, 2008, did not exceed the amount budgeted. III-B-08 Questionable Expenditures - No expenditures that may not meet the requirements of public purpose as defined in an Attorney General's opinion dated Apri125, 1979, were noted. III-C-08 Travel Expense - No expenditures of City money for travel expenses of spouses of City officials or employees were noted. III-D-08 Business Transactions -Business transactions between the City and City officials or employees are detailed as follows: Name, Title, and Business Connection Stacie Scott, employee, spouse is owner of Scott Elite Concrete Melissa McGinnis, employee, spouse is owner of Quality Brick Transaction Description Amount Construction $ 7,120 Construction 6,238 107 CITY OF DUBUQUE, IOWA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2008 Part III: Other Findings Related to Reauired Statutory Renortin~: (continued) Name, Title, and Business Connection Dick Voetberg, council member, part-owner of Shepherd, Inc. Kevin Lynch, council member, owner of Net Smart Jim Welty, employee, spouse is owner of Circle DD Trucking, Inc. Transaction Description Airport Services Services Services Cheryl Pregler, employee, spouse is owner Services of Pregler Photography John Hefel, employee, spouse is owner of Services A Frame of Mind Framing & Gallery Ric Jones, council member, owner of RJ Services Productions Amount 3,014 670 523 415 395 300 In accordance with Chapter 362.5(10) of the Code of Iowa, the transactions with Net Smart, Circle DD Trucking, Inc., Pregler Photography, A Frame of Mind Framing & Gallery, or RJ Productions do not appear to represent conflicts of interest since total transactions with each individual were less than $1,500 during the fiscal year. In accordance with Chapter 362.5(4) of the Code of Iowa, the transactions with Scott Elite Concrete, Quality Brick, and Shepard, Inc., do not appear to represent conflicts of interest since the transactions were entered into through competitive bidding. III-E-08 Bond Coverage -Surety bond coverage of City officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to insure the coverage is adequate for current operations. III-F-08 Council Minutes - No transactions were found that we believe should have been approved in the Council minutes but were not. III-G-08 Deposits and Investments - No instances of non-compliance with the deposit and investment provisions of Chapters 12B and 12C of the Code of Iowa and the City's investment policy were noted. III-H-08 Revenue Bonds - No instances of non-compliance with the provisions of the City's revenue bond resolutions were noted. III-I-08 Solid Waste Fees Retaina~e -The Dubuque Metropolitan Area Solid Waste Agency, a component unit of the City, used or retained the solid waste fees in accordance with Chapter 455B.310(2) of the Code of Iowa. 108 FINANCIAL STATEMENTS JUNE 30, 2008 CITY OF DUBUQUE, IOWA PARKING FACILITIES -, I~~~~~>1~~~~ ,lam ~~lr I~Il~lll r;,~~F>.~_~l~~l~illilf~'~`~, --- ---. CITY OF DUBUQUE, IOWA PARING FACILITIES Table of Contents _ _ __. Page OFFICIALS 1 INDEPENDENT AUDITOR'S REPORT 2-3 MANAGEMENT'S DISCUSSION AND ANALYSIS 4-7 FINANCIAL STATEMENTS Statement of Net Assets 8-9 Statement of Revenues, Expenses, and Changes in Net Assets 10 Statement of Cash Flows 11-12 Notes to Financial Statements 13-20 SLrrl,EMENTARY INFORMATION Combining Statement of Net Assets 21-22 Combining Statement of Revenues, Expenses, and Changes in Net Assets 23 Bond Ordinance Requirements 24 Schedule of Insurance Coverage 25-26 Schedule of Statistical Data 27 REPORT ON BOND ORDINANCE COMPLIANCE 28 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE Wt'1'tl GOVERNMENT AUDITING STANDARDS 29-30 SCHEDULE OF FINDINGS AND RESPONSES 31 Name Roy D. Buol Mayor Richard W. Jones David T. Resnick Kevin J. Lynch Karla A. Braig Joyce E. Connors Dirk N. Voetberg Michael C. Van Milligen Barry A. Lindahl Jeanne F. Schneider Kenneth J. TeKippe Timothy M. Horsfield Title Council Member - At Large Council Member - At Large Council Member - l sc Ward Council Member - 2114 Ward Council Member - 3ra Ward Council Member - 4~' Ward City Manager City Attorney City Clerk Finance Director/Treasurer Parking Division Manager 1 i` i i e ai y~, a CPAs Si BUSINESS ADVISORS INDEPENDENT AUDITOR'S REPORT __ _ _ _ To the Honorable Mayor and Members of the City Council: We have audited the accompanying financial statements of the Parking Facilities of the City of Dubuque, Iowa, as of and for the year ended June 30, 2008 as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. As discussed in Note 1, the financial statements referred to above present only the Parking Facilities of the City of Dubuque, Iowa, and are not intended to present fairly the financial position of the City of Dubuque and the changes in financial position and cash flows of its proprietary fund types in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Parking Facilities of the City of Dubuque, Iowa, as of June 30, 2008 and the changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2008, on our consideration of the Parking Facilities' 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 and should be considered in assessing the results of our audit. PEOPLE. PRINCIPLES. POSSIBILITIES. 2 wvvw.eidob~silly.<:c~m 3999 Pennsylvania Ave., Ste. 100 A Dubuque, Iowa 52002-2273 1 Phone 563.556.1790 /Fax 563.557.7842 1 EOE The management's discussion and analysis listed in the table of contents is not a required part of the financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements of the Parking Facilities of the City of Dubuque. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the financial statements. The combining financial statements have been subjected to the auditing procedures applied in the audit of the fmancial statements and, in our opinion, are fairly stated in all material respects in relation to the fmancial statements taken as a whole. The bond ordinance requirements, schedule of insurance coverage, and schedule of statistical data have not been subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we express no opinion on them. ~~~~ Dubuque, Iowa December 16, 2008 CITY OF DUBUQUE PARING FACILITIES MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2008 This section of the financial report of the City of Dubuque Parking Facilities presents our discussion and analysis of the financial performance during the fiscal year that ended on June 30, 2008. Please read it in conjunction with the financial statements of the City of Dubuque Parking Facilities found in this report. FINANCIAL HIGHLIGHTS • The assets of the Parking Facilities exceeded its liabilities at the close of the fiscal year by $15,163,116 (net assets). This was an increase of $1,033,643 over net assets at June 30, 2007. Unrestricted net assets at June 30, 2008 in the amount of $624,775 may be used to meet the ongoing obligations of the Parking Facilities. • Total operating and construction fund operating revenues exceeded expenses by $133,209. • Within the Parking Facilities' operating fund, revenues and transfers exceeded expenses by $1,691,427. • Within the Parking Facilities' construction fund, expenses exceeded revenues and transfers by $657,784. OVERVIEW OF THE FINANCIAL STATEMENTS The Parking Facilities' financial statements consist of a statement of net assets, a statement of revenues, expenses, and changes in net assets, and a statement of cash flows. This discussion and analysis is intended to serve as an introduction to the financial statements. This report also contains other supplementary information in addition to the financial statements themselves. The statement of net assets presents information on all of the Parking Facilities' assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position is improving or deteriorating. The statement of revenues, expenses, and changes in net assets presents information showing how the Parking Facilities' net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The statement of cash flows reports cash receipts, cash payments, and net changes in cash and cash equivalents resulting from four defined types of activities. It provides answers to such questions as where did cash come from, what cash was used for, and what was the change in cash and cash equivalents during the reporting year. 4 FINANCIAL ANALYSIS Net assets As noted earlier, net assets may serve as a useful indicator of a facility's financial position when observed over time. In the case of the Parking Facilities, assets exceeded liabilities by $15,163,116 at the close of the most recent fiscal year. The largest part of the Parking Facilities' assets (93.2%) reflects its investment in capital assets such as land, buildings, machinery, and equipment less any related debt used to acquire those assets that are still outstanding. These capital assets are used to provide services to the citizens and customers and are not available for future spending. PARKING FACILITIES NET ASSETS 2008 2007 Total Total Current and Other Assets $ 1,257,624 $ 2,152,925 Capital Assets 17,335,963 15,967,539 Total Assets 18,593,587 18,120,464 Long-term Liabilities 2,937,127 3,342,755 Other Liabilities 493,344 648,236 Total Liabilities 3,430,471 3,990,991 Net Assets Invested in Capital Assets, Net of Related Debt 13,983,836 12,562,187 Restricted 554,505 554,318 Unrestricted 624,775 1,012,968 Total Net Assets $ 15,163,116 $ 14,129,473 The decrease in long-term liabilities reflects principal paid during the past year. Certain proceeds of revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net assets because their use is limited by applicable bond covenants. At the close of fiscal year 2008, the Parking Facilities reported total operating income of $133,209 and an increase in net assets of $1,033,643. 5 PARKING FACILITIES CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS 2008 2007 Total Total Operating Revenues $ 2,141,607 $ 1,977,757 Operating Expenses 2,008,398 1,410,309 Operating Income 133,209 567,448 Non-operating Expenses (82,280) (66,001) Income Before Transfers 50,929 501,447 Capital Contributions 1,038,559 -0- Transfers to City of Dubuque (55,845) (68,243) Change in Net Assets 1,033,643 433,204 Net Assets, Beginning 14,129,473 13,696,269 Net Assets, Ending $ 15,163,116 $ 14,129,473 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital assets The Parking Facilities' investment in capital assets for its operating and construction funds as of June 30, 2008, amounts to $17,335,963 (net of accumulated depreciation). This investment in capital assets includes land, buildings, machinery and equipment. Additional information on the Parking Facilities' assets can be found in Note 4 to the financial statements in this report. CAPITAL ASSETS (net of accumulated depreciation) 2008 2007 Total Total Land $ 1,296,209 $ 1,296,209 Buildings 20,13 5,184 20,13 5,184 Improvements other than buildings 1,933,939 237,121 Machinery and equipment 1,184,471 587,628 Construction in progress 14,910 453,604 Accumulated depreciation (7,228,750) (6,742,207) $ 17,335,963 $ 15,967,539 6 During fiscal year 2003 the financial statements reflected a transfer in for the completion of the Fourth Street parking ramp. Funding for the ramp was provided by a general obligation bond issue with repayment through tax increment financing. The general obligation bond debt for the ramp is not reflected in these financial statements. During fiscal year 2009, the financial statements will reflect a transfer in for the completion of the Port of Dubuque Parking Ramp. Funding for the ramp is being provided by Urban Renewal Tax Increment Revenue Bonds. The debt for the ramp will not be reflected in the financial statements. Long-term debt At year end the Parking Facilities had $3,352,127 of debt outstanding. This is a decrease of $385,628 from June 30, 2007. Additional information on the Parking Facilities' long- term debt can be found in Note 5 to the financial statements in this report. ECONOMIC FACTORS Revenue and expenses from parking enforcement activities were reflected with parking facilities beginning in fiscal year ended June 30, 2004. Previously this activity was part of the general fund of the City. Requests for information. This financial report is designed to provide a general overview of the Parking Facilities' finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Dubuque, Finance Director, 50 West 13~ Street, Dubuque, Iowa 52001-4864. 7 CITY ®F DUBUQUE, I®A A NG FACILITIES STATEMENT OF NET ASSETS JUNE 30, 2008 ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Accounts Accrued interest Total Current Assets NON-CURRENT ASSETS Restricted cash and pooled cash investments Capital assets Land Buildings Improvements other than buildings Machinery and equipment Construction in progress Accumulated depreciation Net Capital Assets Total Non-current Assets Total Assets $ 626,425 67,922 8,772 703,119 554,505 1,296,209 20,135,184 1,933,939 1,184,471 14,910 (7,228,750) 17,335,963 17,890,468 18,593,587 (continued) 8 CITY ®F tTUE, I®~VA PA NG FACIL,I~'IES ~; STATEMENT OF NET ASSETS JUNE 30, 2008 LIABILITIES CURRENT LIABII,11~1r;S Accounts payable Accrued payroll General obligation bonds payable Revenue bonds payable Accrued compensated absences Accrued interest payable Unearned revenue Total Current Liabilities NON-CURRENT LIABILITIES General obligation bonds payable (net of discount of $5,837 and deferred amount on refunding of $107,036) Revenue bonds payable Total Non-current Liabilities Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted by bond ordinance Unrestricted Total Net Assets 20,335 18,978 175,000 240,000 21,624 10,990 6,417 493,344 2,687,127 250,000 2,937,127 3,430,471 13,983,836 554,505 624,775 $ 15,163,116 See notes to financial statements. 9 CITY OF DiTtTITE, IOWA PA I~TG FACILITIES STATEMENT OF REVENUES, EXPENSES, AND CFIANGES IN NET ASSETS FOR ~1 ttr; FISCAL YEAR ENDED JUNE 30, 2008 OPERATING REVENUES Charges for sales and services $ 2,137,826 Other 3,781 Total Operating Revenues 2,141,607 OPERATING EXPENSES Employee expense 685,305 Utilities 106,753 Repairs and maintenance 108,085 Supplies and services 558,970 Insurance 35,710 Depreciation 513,575 Total Operating Expenses 2,008,398 OPERATING INCOME 133,209 NON-OPERATING REVENUES (EXPENSES) Investment earnings 82,432 Interest expense (164,712) Total Non-operating Expenses (82,280) INCOME BEFORE TRANSFERS 50,929 CAPITAL CONTRIBUTIONS 1,038,559 TRANSFERS TO THE CITY OF DUBUQUE (55,845) CHANGE IN NET ASSETS 1,033,643 NET ASSETS, BEGINNING 14,129,473 NET ASSETS, ENDING $ 15,163,116 See notes to financial statements. 10 CITY OFD UQUE, IWA P NG FACILITIES STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 2,127,773 Cash payments to suppliers for goods and services (980,112) Cash payments to employees for services (690,810) Other operating receipts 3,781 NET CASH PROVIDED BY OPERATING ACTIVr1~S 460,632 CASH FLOWS FROM NON-CAPTI'AL FINANCING ACTIV ri i~S Transfers to the City of Dubuque (55,845) CASH FLOWS FROM CAPITAL AND RELA1~1~ FINANCING ACTIVITIES Acquisition and construction of capital assets (843,440) Payment of debt (395,000) Interest paid (160,550) NET CASH USED FOR CAPITAL AND RELATED FINANCING ACTIV 1115 (1,398,990) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 95,836 NET DECREASE IN CASH AND CASH EQUIVALENTS (898,367) CASH AND CASH EQUIVALENTS, BEGINNING 2,079,297 CASH AND CASH EQUIVALENTS, ENDING $ 1,180,930 (continued) 11 CITY ®F DUDUQUE, I®A P l~TG FACILITIES ~ STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIV111~S Operating income $ 133,209 Adjustments to reconcile operating income to net cash provided by operating activities Depreciation 513,575 Change in assets and liabilities Increase in receivables (16,470) Decrease in accounts payable (170,594) Decrease in accrued liabilities (5,505) Increase in unearned revenue 6,417 Total Adjustments 327,423 NET CASH PROVIDED BY OPERATING ACTIVtl ~S $ 460,632 NON-CASH CAPITAL AND RELA1~1~ FINANCING ACTIV 1115 Contributions of capital assets from other funds and outside sources $ 1,038,559 See notes to financial statements. 12 CITY ®F ITZTE, IVVA P NG FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1-SUMMARY OF SIGNtH'iCANT ACCOiTNTING POLICIES Reporting Entity The financial statements include only those funds of the Parking Facilities and are not intended to present all funds of the City of Dubuque, Iowa. Basis of Accounting The Parking Facilities' accounting records are maintained on the cash basis. However, for financial reporting purposes, the accounting records have been adjusted to the accrual method, recognizing revenue when earned and expenses when liabilities are incurred. Budgets and Budgetary Accounting In accordance with the Code of Iowa, the City Council annually adopts a budget on the cash basis of accounting with an adjustment for accrued payroll following required public notice and hearing for all funds. The annual budget may be amended during the year utilizing similar statutorily prescribed procedures. Formal and legal budgetary control is based upon nine major classes of expenditures known as functions, not by fund. These nine functions are public safety, public works, health and social services, culture and recreation, community and economic development, general government, debt service, capital projects, and business-type activities. Deposits and Investments The Parking Facilities' 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. Restricted Assets Certain proceeds of revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net assets because their use is limited by applicable bond covenants. Capital Assets Capital assets include property, plant, and equipment. Capital assets are defined by the government as assets with an initial, individual cost of more than $20,000 for building assets and $10,000 for the remaining assets, and an estimated useful life of more than a year. 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 asset lives are not capitalized. (continued on next page) 13 CITY ®F D ITZTE, IWA P 1~1G FACII..ITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets is not included as part of the capitalized value of the assets constructed. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 40 to 125 Improvements other than buildings 15 to 50 Machinery and equipment 2 to 30 Compensated Absences The Parking Facilities allow employees to accumulate earned, but unused, vacation and sick pay benefits. Such benefits are accrued when earned and are reported as liabilities. Equity Restrictions of net assets represent amounts restricted by applicable bond covenants. NOTE 2 -DEPOSITS AND INVESTMENTS The Parking Facilities are authorized by state statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured depository institutions approved by the City Council; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; certain registered open-end management investment companies; certain joint investment trusts; and warrants or improvement certificates of a drainage district. Investments are stated at fair value. The Parking Facilities' investments are pooled with other investments of the City. It is, therefore, not possible to list the types of investments held by the Parking Facilities at June 30, 2008. Interest Rate Risk. The City's investment policy limits the investments of operating funds (funds expected to be expended in the current budget year or within 15 months of receipt) to instruments that mature within 397 days. Funds not identified as operating funds may be invested in instruments with maturities longer than 397 days, but the maturities shall be consistent with the needs and use of the City. Credit Rislz The City's investment policy debt to the top two highest classifications. corporate debt during the year. limits investments in commercial paper and other corporate The City did not invest in any commercial paper or other (continued on next page) 14 CITY ®F UUE, IVVA P I~ FACII.,I'I'IES NOTES TO FINANCIAL STATEMENTS JITNE 30, 2008 Concentration of Credit Risk. The City's investment policy does not allow for a prime bankers' acceptance or commercial paper and other corporate debt balances to be greater than ten percent of its total deposits and investments. The policy also limits the amount that can be invested in a single issue to five percent of its total deposits and investments. The City held no such investments during the year. Custodial Credit Rislz -Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The City's deposits are entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. Custodial Credit Risli -Investments. For an investment, this is the risk that, in the event of the failure the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City had no custodial risk with regards to investments, since all investments were held by the City or the agent in the City's name. NOTE 3 -TRANSFERS Transfers for the year ended June 30, 2008, consisted of the following: Transfers from Parking Facilities to: General General construction $ 9,900 45.945 $ 55.845 NOTE 4 -CAPITAL ASSETS Capital asset activity for the year ended June 30, 2008, was as follows: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total capital assets, being depreciated Beginning Balance $ 1,296,209 $ 453.604 1.749.813 20,135,184 237,121 587.628 20.959.933 Increases 1.055.723 1.055.723 1,696,818 623.875 2.320.693 Ending Decreases Balance $ - $ 1,296,209 (1.494.4171 14.910 (1.494.4171 1.311.119 - 20,135,184 - 1,933,939 (27.0321 1184.471. (27.0321 23.253.594 (continued on next page) 15 CITY ®F DUBUQUE, I®A I~1G FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation Beginning Ending Balance Increases Decreases Balance $ (6,273,141) $ (433,685) $ - $ (6,706,826) (116,109) (35,862) - (151,971) (352.9571 (44,0281 27.032 (369.953 (6.742.2071 (513.5751 27.032 (7.228.750) Total capital assets, being depreciated, net 14.217.726 1.807.118 - 16.024.844 Capital assets, net $ 15.967.539 2 862.841 $ (1.494.41 $ 17.335.963 NOTE 5 -LONGTERM DEBT General Obligation Bonds. The City issued general obligation bonds to provide financing for the acquisition and construction of parking facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds were issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. General obligation bonds outstanding at June 30, 2008, are as follows: Amount Amount Date of Maturity Interest Originally Outstanding Purnose Issue Dates Rates Issued End of Year Corporate purpose 06/01/00 06/01/02-06/01/09 5.80% $ 2,750,000 $ 125,000 Corporate purpose 04/03/06 06/01/07-06/01/21 3.60-4.20% 910,000 825,000 Corporate purpose - refunding 04/03/06 06/01/10-06/01/20 3.65-4.10% 2.025.000_ 2.025.000 ~ 5.685.000_ $ 2.975.000 Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Endine June 30 Principal Interest 2009 2010 2011 2012 2013 2014-2018 2019-2021 Total $ 175,000 $ 119,725 144,787 110,675 152,660 105,390 155,532 99,741 161,277 93,909 1,152,234 372,119 1.033.510 69.298 $ 2.975.000 ~ 970 857 (continued on next page) 16 CITY ®F LTLTE, I®~'A PA loTG FACII.,ITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Revenue Bonds. The City issued parking revenue bonds to provide financing for the acquisition and construction of parking facilities. These bonds were issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. Parking revenue bonds outstanding ~ at June 30, 2008, are as follows: Amount Amount Date of Maturity Interest Originally Outstanding Purnose Issue Dates Rates Issued End of Year Parking facilities 03/01/98 OS/Ol/OS-OS/O1/10 4.70-4.75% $ 2.515.000 ~ 490.000 Revenue bond debt service requirements to maturity are as follows: Fiscal Year Ending June 30 Principal Interest 2009 $ 240,000 $ 23,155 ZO10 250.000 11.875 Total ~ 490.000 ~ 35,030 The resolution providing for the issuance of the revenue bonds includes the following provisions: ~ a. A sum equal to one-tenth (1/10) of the principal of all bonds maturing on May 1 next succeeding, plus j a sum equal to one-fifth (1/5) of the interest coming due on the next succeeding interest payment date on all of the then outstanding bonds, shall be set aside into a restricted sinking account from the net ~ revenue of the Operating Fund until the full amount of such installments is on hand. b. A restricted reserve account shall maintain the lesser of 1) the maximum amount of principal and interest coming due in any fiscal year; or 2) ten percent of the proceeds of the sale of the bonds. c. $5,000 shall be set apart and paid into a restricted depreciation account from the balance of the net off-street parking revenues and net on-street parking revenues remaining after first making the ~ required payments into the sinking account and the reserve account on the first day of each month of ~ each year up to a maximum of $250,000. Changes in Long-term Liabilities. Long-term liability activity for the year ended June 30, 2008, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year General obligation bonds $ 3,140,000 $ - $ (165,000) $ 2,975,000 $ 175,000 Less: Unamortized discounts (6,290) - 453 (5,837) - Deferred amount on refunding (115.9551 - 8.919 (_107.0361 - [ Total general obligation bonds 3.017.755 - (155.6281 2.862.127 175.000 Revenue bonds 720.000 - (230.0001 490.000 240.000 Compensated absences 29.393 21.624 (29.3931 21.624 21.624 $ 3,767.148 ~ 21.624 $ (415.0211 $ 3,373.751 ~ 436. (continued on next page) 17 CITY ®F D VIJEy I® VY'A PA NG FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, .2008 In a prior year, the Parking Facilities defeased general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the Parking Facilities' fmancial statements. On June 30, 2008, $2,025,000 of bonds outstanding are considered defeased. These bonds will remain outstanding until they are called on June 1, 2009. NOTE 6 -PENSION AND RETIREMENT BENEFITS The Parking Facilities of the City of Dubuque, Iowa, contribute to the Iowa Public Employees Retirement System (Il'ERS), which is acost-sharing multiple-employer defined benefit pension plan administered by the State of Iowa. IPERS provides retirement and death benefits which are established by state statute to plan members and beneficiaries. IPERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to IPERS, P.O. Box 9117, Des Moines, Iowa, 50306-9117. Plan members are required to contribute 3.90% of their annual covered salary, and the Parking Facilities are required to contribute 6.05% of annual covered payroll. Contribution requirements are established by state statute. The Parking Facilities' contributions to II'ERS for the years ended June 30, 2008, 2007, and 2006, were $26,571, $23,221, and $23,798, respectively, equal to the required contributions for each year. NOTE 7 -LEGAL COMPLIANCE WITH BUDGET The City of Dubuque, Iowa, adopts a budget annually as required by Iowa law. The budget, which is prepared on the cash basis of accounting with an adjustment for accrued payroll, includes those funds of the Parking Facilities. As required by Iowa law, the City prepares its budget based upon nine major classes of expenditures known as functions, not by individual fund. Therefore, the City must amend the budget only if the entire City's function amounts will be exceeded. For the year ended June 30, 2008, the City's actual disbursements were less than budgeted amounts for the business-type activities function. NOTE 8 -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 for which the government carries commercial insurance and participates in a local government risk pool. (continued on next page) 18 CITY OF DUBUQUE, IOWA PA l~G FACILITIES NOTES TO FINANCTAT, STATEMENTS JUNE 30, 2008 The City of Dubuque has established a Health Insurance Reserve Fund for insuring benefits provided to City employees and covered dependents which is included in the Internal Service Fund Type. Health benefits were self-insured up to an individual stop loss amount of $85,000 and an aggregate stop loss of $6,075,095 for 2008. Coverage from a private insurance company is maintained for losses in excess of the stop loss amount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. The City of Dubuque has established a Workers' Compensation Reserve Fund for insuring benefits provided to City employees which is included in the Internal Service Fund Type. Workers' compensation benefits were self-insured up to a specific stop loss amount of $450,000, and an aggregate stop loss consistent with statutory limits for 2008. Coverage from a private insurance company is maintained for losses in excess of the stop loss amount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the last three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. All funds of the City participate in both programs and make payments to the Health Insurance Reserve Fund and the Workers' Compensation Reserve Fund based on actuarial estimates of the amounts needed to pay prior- and current-year claims. The City is a member in the Iowa Communities Assurance Pool, as allowed by Chapter 670.7 of the Code of Iowa. The Iowa Communities Assurance Pool (Pool) is a local government risk-sharing pool whose 570 members include various governmental entities throughout the State of Iowa. The Pool was formed in August 1986 for the purpose of managing and funding third-party liability claims against its members. The Pool provides coverage and protection in the following categories: general liability, automobile liability, automobile physical damage, public officials' liability, police professional liability, property, inland marine, and boiler/machinery. The City acquires automobile physical damage coverage through the Pool. All other property, inland marine, and boiler/machinery insurance is acquired through commercial insurance. There have been no reductions in insurance coverage from prior years. Each member's annual casualty contributions to the Pool fund current operations and provide capital. Annual operating contributions are those amounts necessary to fund, on a cash basis, the Pool's general and administrative expenses, claims, claims expenses and reinsurance expenses due and payable in the current year, plus all or any portion of any deficiency in capital. Capital contributions are made during the first six years of membership and are maintained to equa1200 percent of the total current members' basis rates or to comply with the requirements of any applicable regulatory authority having jurisdiction over the Pool. The Pool also provides property coverage. Members who elect such coverage make annual operating contributions which are necessary to fund, on a cash basis, the Pool's general and administrative expenses f - and reinsurance premiums, all of which are due and payable in the current year, plus all or any portion of ~ any deficiency in capital. Any year-end operating surplus is transferred to capital. Deficiencies in operations are offset by transfers from capital and, if insufficient, by the subsequent year's member contributions. The City has property insurance in addition to the Pool. (continued on next page) 19 CITY OFD ITQIJE, IOWA P NG FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 The Pool uses reinsurance and excess risk-sharing agreements to reduce its exposure to large losses. The Pool retains general, automobile, police professional, and public officials' liability risks up to $350,000 per claim. The next $2,650,000 in claims are covered with another pool (APEEP). Claims exceeding $3,000,000 are reinsured. Property and automobile physical damage risks are retained by the Pool up to $100,000 each occurrence, each location, with excess coverage reinsured on an individual-member basis. The Pool's intergovernmental contract with its members provides that in the event a casualty claim or series of claims exceeds the amount of risk-sharing protection provided by the member's risk-sharing certificate, or in the event that a series of casualty claims exhausts total members' equity plus any reinsurance and any excess risk-sharing recoveries, then payment of such claims shall be the obligation of the respective individual member. As of June 30, 2008, settled claims have not exceeded the risk pool or reinsurance company coverage since the Pool's inception. Members agree to continue membership in the Pool for a period of not less than one full year. After such period, a member who has given 60 days' prior written notice may withdraw from the Pool. Upon withdrawal, payments for all claims and claims expenses become the sole responsibility of the withdrawing member, regardless of whether a claim was incurred or reported prior to the member's withdrawal. Members withdrawing within the first six years of membership may receive a partial refund of their capital contributions. If a member withdraws after the sixth year, the member is refunded 100 percent of its capital contributions. However, the refund is reduced by an amount equal to the annual operating contribution which the withdrawing member would have made for the one-year period following withdrawal. 20 CITY OFD UQUE, IOWA PA l~TG FACILITIES COMBINING STATEMENT OF NET ASSETS JI7NE 30, 2008 ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Accounts Accrued interest Total Current Assets NON-CURRENT ASSETS Restricted cash and pooled cash investments Capital assets - Land Buildings Improvements other than buildings Machinery and equipment Construction in progress Accumulated depreciation Net Capital Assets Total Non-current Assets Total Assets Operating Construction Fund Fund Total $ 202,696 $ 423,729 $ 626,425 67,922 - 67,922 8,772 - 8,772 279,390 423,729 703,119 554,505 - 554,505 1,296,209 - 1,296,209 20,135,184 - 20,135,184 1,933,939 - 1,933,939 1,184,471 - 1,184,471 - 14,910 14,910 (7,228,750) - (7,228,750) 17,321,053 14,910 17,335,963 17, 875, 55 8 14,910 17, 890,468 18,154,948 438,639 18,593,587 (continued) 21 CITY ®F D U~UE, I®WA PA NG FACILITIES COMBINING STATEMENT OF NET ASSETS JUNE 30, 2008 LIABILITIES CURRENT LIABILITIES Accounts payable Accrued payroll General obligation bonds payable Revenue bonds payable Accrued compensated absences Accrued interest payable Unearned revenue Total Current Liabilities NON-CURRENT LIABILITIES General obligation bonds payable (net of discount of $5,837 and deferred amount on refunding $107,036) Revenue bonds payable Total Non-current Liabilities Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted by bond ordinance Unrestricted Total Net Assets Operating Construction Fund Fund Total $ 9,945 $ 10,390 $ 20,335 18,978 - 18,978 175,000 - 175,000 240,000 - 240,000 21,624 - 21,624 10,990 - 10,990 6,417 - 6,417 482,954 10,390 493,344 2,687,127 - 2,687,127 250,000 - 250,000 2,937,127 - 2,937,127 3,420,081 10,390 3,430,471 13,983,836 - 13,983,836 554,505 - 554,505 196,526 428,249 624,775 $ 14,734,867 $ 428,249 $ 15,163,116 22 CITY i' D V II V~ V Ey I®l~ P NG FACILITIES COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING INCOME (LOSS) NON-OPERATING REVENUES (EXPENSES) Investment earnings Interest expense Total Non-operating Revenues (Expenses) INCOME (LOSS) BEFORE TRANSFERS CAPITAL CONTRIBUTIONS TRANSFERS FROM (TO) OTHER FUNDS TRANSFERS TO THE CITY OF DUBUQUE CHANGE IN NET ASSETS NET ASSETS, BEGINN7~1G NET ASSETS, ENDING Operating Construction Fund Fund Total $ 2,137,826 $ - $ 2,137,826 3,781 - 3,781 2,141,607 - 2,141,607 685,305 - 685,305 106,753 - 106,753 108,085 - 108,085 276,067 282,903 558,970 35,710 - 35,710 513,575 - 513,575 1,725,495 282,903 2,008,398 416,112 (282,903) 133,209 72,953 9,479 82,432 (164,712) - (164,712) (91,759) 9,479 (82,280) 324,353 (273,424) 50,929 1,038,559 - 1,038,559 328,515 (328,515) - - (55,845) (55,845) 1,691,427 (657,784) 1,033,643 13,043,440 1,086,033 14,129,473 $ 14,734,867 $ 428,249 $ 15,163,116 23 CI 1 ~ ®i' L~BU~ V Ey I®A NG FACII.,I'I'IES BOND ORDINANCE REQUIREMENTS JUNE 30, 2008 Following is a summary of the bond ordinance requirements of the parking revenue refunding bond issue dated March 1, 1998. 1. A sum equal to one-tenth (1/10) of the principal of all bonds maturing on May 1 next succeeding, plus a sum equal to one-fifth (1/5) of the interest coming due on the next succeeding interest payment date on all of the then outstanding bonds, shall be set aside into a restricted sinking account from the net revenue of the Operating Fund until the full amount of such installments is on hand. 2. A restricted reserve account shall maintain the lesser of 1) the maximum amount of principal and interest coming due in any fiscal year; or 2) ten percent of the proceeds of the sale of the bonds. 3. $5,000 shall be set apart and paid into a restricted depreciation account from the balance of the net off-street parking revenues and net on-street parking revenues remaining after first making the required payments into the sinking account and the reserve account on the first day of each month of each year up to a maximum of $250,000. 4. The City will cause an audit of such books and accounts of the Parking Facilities to be made by a certified public accountant not in the regular employ of the City showing the receipts and disbursements for each account of the Parking Facilities. The audit report required shall include, but not be limited to, the following: a. An evaluation of the manner in which the City has complied with the covenants of this resolution, including particularly the rate covenants included herein; b. A statement of net revenues and current expenses; c. Analyses of each fund and account created, including deposits, withdrawals, and beginning and ending balances; d. A statement of net assets; e. The rates in effect at the end of the fiscal year, and the number of customers of the Parking Facilities; f. A schedule of insurance policies and fidelity bonds in force at the end of the fiscal year, showing with respect to each policy and bond the nature of the risks covered, the limits of liability, the name of the insurer, and the expiration date; g. An evaluation of the issuer's system of internal financial controls and the sufficiency of fidelity bond and insurance coverage in force; h. The names and titles of the principal officers of the City; and i. A general statement covering any events or circumstances which might affect the financial status of the Parking Facilities. 24 CITY ®F I)LTBLTUE, I®A PA leT FACILITIES SCHEDULE OF INSURANCE COVERAGE FOR THE FISCAL YEAR ENDED JUNE 30, 2008 At June 30, 2008, the property of the Parking Facilities was insured through a blanket fire and extended coverage policy with the Cincinnati Insurance Company in the amount of $28,893,547. This policy expired July 1, 2008. The Parking Facilities were also insured against general, vehicle, and personal liability through the Iowa Communities Assurance Pool. These policies expired July 1, 2008. Also in force at June 30, 2008, was aself-funded workers' compensation plan and an employers' liability policy which expired July 1, 2008. Listed below is a detailed schedule of the policies in effect at June 30, 2008: FIRE AND EXTENDED COVERAGE VALUES Building and Descrintion Structure Contents Total Concrete Parking Ramp 601-795 Iowa Street $ 8,540,093 $ 12,102 $ 8,552,195 Concrete Parking Ramp 801-899 Locust Street 6,012,225 49,886 6,062,111 Concrete Parking Ramp 501-599 Iowa Street 8,540,093 - 8,540,093 Concrete Parking Ramp 100 West Fourth Street 5.739.148 - 5.739.148 $ 28.831.559 X61.988_ 28 8 3.547 BUSINESS INCOME on earnings - $297,900* at 601-795 Iowa Street - 80% co-insurance. on earnings - $221,500* at 801-899 Locust Street - 80% co-insurance. on earnings - $297,270* at 501-599 Iowa Street- 80% co-insurance. on earnings - $180,000* at 100 West Fourth Street - 80% co-insurance. * No change per Friedman Insurance. (continued on next page) 25 CITY F DLT~LTLTE, IWA 1~1G FACILITIES SCHEDULE OF INSURANCE COVERAGE (continued) FOR THE FISCAL YEAR ENDED JUNE 30, 2005 SYSTEMS BREAKDOWN COVERAGE -EQUIPMENT Each Occurrence $ 2,500,000 GENERAL LIABILITY INSURANCE BODILY INJURY -PROPERTY DAMAGE -PRODUCTS ICAP Each Occurrence $ 12,000,000 VEHICLES ICAP Each Occurrence $ 12,000,000 EXCESS WORKERS' COMPENSATION & EMPLOYERS' LIABILITY Each Accident $ 450,000 Retention Each Disease $ 450,000 Retention Limit Workers' Compensation -Statutory Employers' Liability $ 1,000,000 FIDELITY BOND COVERAGE Each employee $ 100,000 City Manager, Budget Director, Finance Director, and Assistant Finance Director - $900,000 additional. The above insurance policies have been renewed through July 1, 2009. 26 CITY ®F I) UQUE, I®WA PA NG FACILITIES SCHEDULE OF STATISTICAL DATA FOR TAE FISCAL YEAR ENDED JUNE 30, 2008 Number of Customers: (Estimated) Locust Ramp: Cash customers Monthly customers, rental spaces Iowa Ramp: Cash customers Monthly customers, rental spaces Fourth Street Ramp: Cash customers Monthly customers, rental spaces Fifth Street Ramp: Cash customers Monthly customers, rental spaces Rates in Effect per Month: Locust Ramp: Reserved stalls (Bay) Reserved stalls (Undercover) Roof stalls Iowa Ramp: Reserved stalls Top of ramp stalls Fourth Street Ramp: Non-assigned stalls Fifth Street Ramp: Non-assigned stalls Other: Residential Street Meters Lot #1 Lot #2 Lot #3 Lot #4 Lot #10 Lot #12 Federal Building Lot N/A =Not Applicable 28,432 385 45,364 447 8,466 180 N/A 674 $ 60 55 43 55 43 40 47 50.00/qtr 32 32 37 32 42 30 37 27 /` ~.i CPAs Si BUSINESS ADVISORS REPORT ON BOND ORDINANCE COMPLIANCE To the Honorable Mayor and Members of the City Council: We have audited the fmancial statements of the Parking Facilities of the City of Dubuque, Iowa, as of June 30, 2008, and for the year then ended, and have issued our report thereon dated December 16, 2008. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. In the course of our audit, nothing came to our attention that caused us to believe there had been a lack of compliance with the accounting or reporting requirements of the bond ordinance governing the parking revenue refunding bond issue dated March 1, 1998. ~~~~ Dubuque, Iowa December 16, 2008 PEOPLE. PRINCIPLES. POSSIBILITIES. 28 www.c~id~b~ illy.~~111 3999 Pennsylvania Ave., Ste. 1001 Dubuque, Iowa 52002-2273 1 Phone 563.556.17901 Fax 563.557.7842 1 EOE / i e ". o ice a~ y„ I -~- CPAs & BUSINESS ADVISORS 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 A UDITING STANDARDS To the Honorable Mayor and Members of the City Council: We have audited the accompanying fmancial statements of the Parking Facilities of the City of Dubuque, Iowa, as of and for the year ended June 30, 2008, which collectively comprise the Parking Facilities' basic financial statements listed in the table of contents, and have issued our report thereon dated December 16, 2008. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Re>7ortin>? In planning and performing our audit, we considered the Parking Facilities' internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing our opinion on the effectiveness of the Parking Facilities' internal control over fmancial reporting. Accordingly, we do not express an opinion on the effectiveness of the Parking Facilities' internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the internal control over fmancial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over fmancial reporting that we consider to be a significant deficiency, including a deficiency we consider to be a material weakness. A control deficiency exists when the design or operation of the control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Parking Facilities' ability to initiate, authorize, record, process, or report financial data reliably in accordance with U.S. generally accepted accounting principles such that there is more than a remote likelihood a misstatement of the Parking Facilities' fmancial statements that is more than inconsequential will not be prevented or detected by the Parking Facilities' internal control. We consider the deficiency in internal control described in Part I of the accompanying Schedule of Findings and Responses to be a significant deficiency in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood a material misstatement of the financial statements will not be prevented or i detected by the Parking Facilities' internal control. PEOPLE. PRINCIPLES. POSSIBILITIES. 29 www.~ic~ebclilly.cc~m 3999 Pennsylvania Ave., Ste. 1001 Dubuque, Iowa 52002-2273 A Phone 563.556.1790 1 Fax 563.557.7842 1 EOE Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe the significant deficiency described is a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Parking Facilities' fmancial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, non-compliance 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 non-compliance or other matters that are required to be reported under Government Auditing Standards. Comments involving statutory and other legal matters about the Parking Facilities' operations for the year ended June 30, 2008, are based exclusively on knowledge obtained from procedures performed during our audit of the fmancial statements of the Parking Facilities and are reported in Part II of the accompanying Schedule of Findings and Responses. Since our audit was based on tests and samples, not all transactions that might have had an impact on the comments were necessarily audited. The comments involving statutory and other legal matters are not intended to constitute legal interpretations of those statutes. The Parking Facilities' responses to findings identified in our audit are described in the accompanying Schedule of Findings and Responses. While we have expressed our conclusions on the Parking Facilities' responses, we did not audit the Parking Facilities' responses, and accordingly, we express no opinion on them. This report, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Dubuque and other parties to whom the City of Dubuque may report. This report is not intended to be and should not be used by anyone other than these specified parties. We would like to acknowledge the many courtesies and assistance extended to us by personnel of the City of Dubuque during the course of our audit. Should you have any questions concerning any of the above matters, we shall be pleased to discuss them with you at your convenience. ~~~~ Dubuque, Iowa December 16, 2008 30 CITY OF I)U~U~UE, IOWA PA NG FACILITIES SCHEDULE OF FINDINGS AND RESPONSES FOR '1'ti1: FISCAL YEAR ENDED JUNE 30, 2008 Part I: Findings Related to the Financial Statements: SIGNIFICANT DEFICIENCY/MATERIAI. WEAKNESS I-A-08 Preparation of Financial Statements - As auditors, we were requested to draft the financial statements and accompanying notes to the financial statements. It is the responsibility of management and those charged with governance to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Recgmmendation - We recognize that with a limited number of office employees, preparation of the financial statements is difficult. However, we recommend that Parking Facilities officials continue reviewing operating procedures in order to obtain the maximum internal control possible under the circumstances. Response -The American Institute of Certified Public Accountants implemented a new auditing standard in 2007. There have been no changes in city procedures. The cost benefit analysis reflects that the City continue with the current contractual agreement that the CPA firm prepare our financial statements. Conclusion -Response accepted. Part H: Other Findings Related to Statutory Reporting: H-A-08 Certified Budget -For the City of Dubuque as a whole, disbursements of the business-type activities during the year ended June 30, 2008, did not exceed the amounts budgeted. H-B-08 Questionable Expenditures - No expenditures that fail to meet the requirements of public purpose as defined in an Attorney General's opinion dated Apri125, 1979, were noted. II-C-08 Travel Expense - No expenditures of Parking Facilities money for travel expenses of spouses of Parking Facilities officials or employees were noted. lI-D-08 Business Transactions - No business transactions between the Parking Facilities and its officials or employees were noted. II-E-08 Bond Coverage -Surety bond coverage of Parking Facilities officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to insure that the coverage is adequate for current operations. II-F-08 Council Minutes - No transactions were found that we believe should have been approved in the Council minutes but were not. H-G-08 Revenue Bonds -The provisions of the Parking Facilities' Revenue Refunding Bond resolution have been met for the year ended June 30, 2008. II-H-08 Deposits and Investments - No instances of non-compliance with the deposit and investment provisions of Chapters 12B and 12C of the Code of Iowa and the City's investment policy were noted. 31