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CAFR Comp Financial ReportMEMORANDUM February 11,2004 TO: FROM: SUBJECT: The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager Submission of Fiscal Year Ended June 30, 2003 Comprehensive Annual Financial Report (CAFR), Parking Facilities Financial Statements, Management Letter and Responses to Management Letter Finance Director Ken TeKippe is transmitting the Fiscal Year 2003 Comprehensive Financial Report (CAFR), Parking Facilities Financial Statements, Management Letter and City Responses to the Management Letter. The City's independent auditor found no instances of material non-compliance with all applicable laws, regulations, contracts, and grants; and found the general-purpose financial statements free of material misstatement. The auditor's report also notes that there are no matedal weaknesses in the City's internal control structure. A separate section in the CAFR for Fiscal Year 2003 details specific findings and recommendations, as well as City responses. Pages 107-109 of the report provide this information. In addition to the comments in the report, a management letter dated December 16, 2003, was issued which includes more general comments relative to improving the City's overall accounting and control systems. The Auditor's comments are attached, as well as Finance Department responses. I concur with the recommendation and respectfully request Mayor and City Council approval. MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager Kenneth J. TeKippe, Finance Director CITY OF DUBUQUE, IOWA MEMORANDUM TO: FROM: SUBJECT: DATE: Michael C. Van Milligen, City Manager Kenneth J. TeKippe, Finance Director ~*'~:~. ~ ,~ Submission of Fiscal Year Ended June 30, 2003 Comprehensive Annual Financial Report (CAFR), Parking Facilities Financial Statements, Management Letter and Responses to Management Letter February 4, 2004 INTRODUCTION The purpose of this memorandum is to submit the Fiscal Year 2003 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 found no instances of material non-compliance with all applicable laws, regulations, contracts, and grants; and issued an unqualified opinion on the financial statements. The auditor's report also notes that there are no material weaknesses in the City's internal control structure. BACKGROUND The City of Dubuque is required to have an annual audit in accordance with generally accepted auditing standards, Chapter 11 of the Code o_f Iowa, Government Auditing Standards and U.S. Office of Management and Budget (OMB) Circular A-133. 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 City of Dubuque implemented a new financial reporting model, as required by the provisions of GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003. 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 Comprehensive Annual Financial Report. 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 attached as well as Finance Department responses. ACTION STEP It is recommended that the City Council receives and files the Fiscal Year 2003 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 2003 CAFR Parking Facilities Financial Statements Auditor Management Letter Responses to Comments in Auditor Management Letter CITY OF DUBUQUE, IOWA MEMORANDUM TO: FROM: SUBJECT: DATE: Michael C. Van Milligen, City Manager Kenneth J. TeKippe, Finance Director ~-~...¢..~:~. ~,,~:~:~ Responses to Audit Management Letter-Fiscal Year Ended June 30, 2003 February 4, 2004 INTRODUCTION Responses to the "other comments" section of the December 16, 2003 management letter issued by Eide Bailly LLP subsequent to completion of the Fiscal Year 2003 audit of the City are hereby submitted. BACKGROUND A separate section in the Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2003 details specific findings and recommendations as well as City responses. Pages 107-109 of the report provide this information. In addition to the comments in the report, a management letter dated December 16, 2003 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. A/though 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. The size of the City's professional accounting staff limits available resources to fully accomplish this goal. The current audit engagement arrangement, which has two years remaining, provides for the auditing firm to convert the records and prepare the financial statements. A change or upgrade in accounting software and continued staff development may assist in our efforts to implement their recommendation. However, the limited number of professional accounting staff will most likely result in the audit firm continuing to prepare the financial statements. Policies and Procedures Auditor comment We noted that the City is continuing the process of developing a written manual of accounting policies and procedures but the manual is not complete at this time. A manual defining the roles and duties of employees is complete, but the detailed accounting manual is in process. Such a manual will assist the consistent application of policies and procedures. The City should continue to develop the manual of accounting policies and procedures and complete it as soon as possible. City of Dubuque response The Finance Department has prepared a manual the past two years to help define roles and duties of employees. This manual is beneficial in cross training employees and training new employees and is reviewed annually for changes in duties. Another manual has been developed to detail significant accounting policies and procedures. Many accounting policies and procedures currently are documented in the manual, which will be expanded to include additional information on City of Dubuque procedures during the current fiscal year. 2 Capital Assets Auditor comment 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 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. Due to this increased complexity, the City's capital assets records should be closely reviewed for errors by other staff with knowledge of capital asset policies. The compilation and review of all of the City's capital asset records, including department summaries, should be completed prior to the beginning of the October audit fieldwork. City of Dubuque response The Assistant Finance Director and I will work closely with the individual primarily assigned to maintain capital asset records for the City to ensure that the update of records is completed by October audit fieldwork. GASB 39 Auditor comment The governmental Accounting Standards Board has issued Statement No. 39, Determining Whether Certain Organizations are Component Units which will be effective for the City for the fiscal year ending June 30, 2004. This statement provides additional guidance to determine whether certain organizations for which the City is not financially accountable should be reported as component units based on the nature and significance of their relationship with the City. Generally, it requires reporting, as a component unit, an organization that raises and holds economic resources for the direct benefit ora governmental unit. City of Dubuqu~ response The City Finance Department will coordinate with the CPA audit firm any information required by GASB 39. 1 do not anticipate the GASB being applicable to the City of Dubuque. 3 GASB 40 Auditor comment The Governmental Accounting Standards Board has issued Statement No. 40, Deposit and Investment Risk Disclosures which will be effective for the City for the fiscal year ending June 30, 2005. This statement addresses common deposit and investment risks related to credit risk, concentration of credit risk, interest rate risk, and foreign currency risk. City of Dubuque response The City Finance Department will coordinate with the CPA audit firm any information required by GASB 40. Since the implementation is two fiscal years away, time is available to research any requirements applicable to the City of Dubuque. KJT/]mg 4 EideBaillyLL, Consultants · Certified Public Accountants To the Honorable Mayor and Members of the City Council City of Dubuque Dubuque, Iowa We have audited the financial statemants of the City of Dubuque, Iowa, for the year ended June 30, 2003, and have issued our report thereon dated December 16, 2003. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under Auditin~ Standards Generally Accepted in the United States of America and OMB Circular A-133 As stated in our engagement letter dated May 9, 2001, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the financial statements are free of mater/al misstatement and are fairly presented in accordance with accounting principles generally accepted in the United States of America. Because an audit is designed to provide reasonable, but not absolute, assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. In planning and parforming 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 opinion on the fmancial statements and not to provide assurance on the internal control over financial reporting. We also considered 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 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 financial statements are free of mater/al misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and mater/al 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 expressing 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. 3999 Pennsylvania Ave. · Suite 100 · Dubuque, Iowa 52002.2639 · 563.556.1790 · Fax 563.557.7842 Offices in Arizona, Iowa, Minnesota, Montana, North Dakota and South Dakota · Equal Opportunity Employer To the Honorable Mayor and Members of the City Council City of Dubuque Page 2 Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the tea'ms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City of Dubuque, Iowa, are described in Note 1 to the financial statements. For the year ended June 30, 2003, the City adopted Govemmentai Accounting Standards Board Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements; Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis for State and Local Governments; Statement No. 37, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments: Omnibus; and Statement No. 38, Certain Financial Statement Note Disclosures. Interpretation No. 6 mod/ties when compensated absence liabilities are recorded under the modified accrual basis of accounting. Statements No. 34 and No. 37 establish new £mancial reporting requirements for state and local governments. These statements create a new reporting model which creates new information and restructures much of the information that governments have presented in the past. Statement No. 38 modifies, establishes, and rescinds certain financial statement disclosure requirements. The statements now have an additional level of reporting, government-wide statements presented on the full accrual basis of accounting, which have not been presented in the past. The genemI fixed assets and general long- term debt of the City, which had previously been reported separately in account groups, are now reported as part of the governmental activities in the government-wide presentation. The government-wide statement of activities has a new focus in that it attempts to show whether the programs of the City are self-supporting or if they need to be supported by the general revenues of the City. The fond level statements have also been revised in that they no longer report aggregated totals for each fund type, but rather present individual major funds of both the governmental type and business type, with all of the non-major funds combined into one column. These statements also present a reconciliation between their totals and the totals on the government-wide statements. We noted no transactions entered into by the City during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. Accounting Estimates Accounting estimates are an integral par~ 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. To the Honorable Mayor and Members of the City Council City of Dubuque Page 3 Audit Adjustments For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the financial statements that, in our judgmant, may not have been detected except tJu'ough our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the City's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the City, either individually or in the aggregate, indicate matters that could have a significant effect on the City's financial reporting process. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter 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. Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtainhag 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. Issues Discussed Prior to Retention of Independent Auditors 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 om' retention. Difficulties Encountered in Performing the Audit We encountered no diff~culties in dealing with management in performing and completing our audit. 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. Our observations indicate that overall financial operations of the City continue to be conducted in an efficient and effective manner. To the Honorable Mayor and Members of the City Cotmcit City of Dubuque Page 4 This report, a public record by law, is intended solely for the information and use of the officials, cnnployees, and citizens of the City of Dubuque, Iowa, and other parties to whom the City of Dubuque, Iowa, may report. 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. Dubuque, Iowa December 16, 2003 CITY OF DUBUQUE, IOWA YEAR ENDED JUNE 30, 2003 OIHER 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 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 mounts used in the CAFR. At this time, the City is preparing the worlcpapers 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. Policies and Procedures We noted that the City is continuSng the process of developing a written manual of accounting policies and procedures but that the manual is not complete at this time. A manual defining the roles and duties of employees is complete, but the detailed accounting manual is hi process. Such a manual will assist the consistent application of policies and procedures. The City should continue to develop the manual of accounting polices and procedures and complete it as soon as possible. Capital Assets 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 fiscal year, the City adopted Governmental Accounting Standards Board Statement No. 34. This statement increased the complexity of the capital assets by requiring governmental infi'astmcture and depreciation on governmental capital assets be reported. Due to this increased complexity, the City's capital assets records should be closely rev/ewed for errors by other staff with knowledge of capital asset policies. The compilation and review of all of the City's capital asset records, including department summaries, should be completed prior to the beginning of the October audit fieldwork. GASB 39 The Governmental Accounting Standards Board has issued Statement No. 39, Determining Whether Certain Organizations are Component Units which will be effective for the City for the fiscal year ending June 30, 2004. This statement provides additional guidance to determine whether certain organizations for which the City is not financially accountable should be reported as component units based on the nature and significance o£ their relationship with the City. Generally, it requires reporting, as a component un/t, an organization that raises and holds economic resources for the direct benefit of a governmental unit. GASB 40 The Governmental Accounting Standards Board has issued Statement No. 40, Deposit and Investment Risk Disclosures which will be effective for the City for the fiscal year ending June 30, 2005. This statement addresses common deposit and investment risks related to credit risk, concentration of credit risk, interest rote risk, and foreign currency risk. CITY OF DUBUQUE, IOWA For the Fiscal Year ending June 30, 2003 CITY OF DUBUQUE, IOWA Comprehensive Annual Financial Report For the fiscal year ended June 30, 2003 Prepared by: Department of Finance INTRODUCTORY SECTION CITY OF DUBUQUE, IOWA Table of Contents INIRODUCTORY SECTION Table of Contents Letter of Transmittal City Organizational Chart Officials Certificate of Ach/evement for Excellence in Financial Reporting FINANCIAL SECTION Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements Government-wide Financial Statements Statement of Net Assets Statement of Activities Fund Financial Statements Balance Sheet - Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Asscts Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds Notes to Financial Statements Required Supplementary Information Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis General Fund Employee Benefits Special Revenue Fund Community Development Special Revenue F?nd Notes to Required Supplementary Information - Budgetary Reporting Combining Fund Statements Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -Nonmaj or Goverrunental Funds Combining Statement of Net Assets - Nonmajor Enterprise Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - Nonmajor Enterprise Funds Combining Statement of Cash Flows - Nonmajor Enterprise Funds Combining Statement of Net Assets - Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - Intmmal Service Funds Combining Statement of Cash Flows - Internal Service Funds Exhibit 1 2 3 '3-i 4 4-1 5 6 7 A-1 A-2 B-1 B-2 B-3 C-1 C-2 C-3 Page 1-2 3-12 13 14 15 16-17 18-25 26 27 28 29 30 31 32-33 34 35-36 37-61 62 63 64 65-66 67-68 69-70 7I 72 73-74 75 76 77478 CITY OF DUBUQUE, IOWA Table of Contents STATISTICAL SECTION (Unaudited) Government-wide Information Government-wide Expenses by Function Government-wide Revenues Fund Information General Governmental Expenditures by Function G~neral Govermnental Revenues by Source General Governmental Tax Revenues by Source Property Tax Levies and Collectio~s Assessed and Estimated Actual Value of Property Property Tax Rates - Direct and Overlapping Governments Principal Taxpayers Special Assessment Billings and Collections Computation of Legal Debt Margin Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt Per Capita Ratio of Amaual Debt Service Expenditures for General Obligation Bonded Debt to Total General Governmental Expenditures Computation of Direct and Overlapping Bonded Debt - General Obligation Bonds Revenue Bond Coverage - Parking Bonds Property Value, Construction Permits, and Bank Deposits Demographic Statistics Schedule of Insurance in Force Miscellaneous Statistics COMPLIANCE SECTION Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-t 33 Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Find'rags and Questioned Costs Table 3 4 4A 5 6 7 8 9 10 11 '12 13 14 15 16 17 18 Page 79 8O 8t 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96-97 98 99-i00 101-102 103-105 106 I07-109 2 Finance Department 50 West 13th Street Dubuque, Iowa 520014864 December 16, 2003 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, 2003, is hereby submitted. 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 account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The CAFR is presented in four sections: Introductory Section, Financial Section, Statistical Section and Compliance Section. The Introductory Section includes this transmittal letter, the City's organizational chart, the list of principal officials, a Certificate of Achievement for Excellence in Financial Reporting from the Governmental Finance Officers Association of the United States and Canada and a table of contents. The Financial Section includes the independent auditor's report, management's discussion and analysis, the basic financial statements, required supplementary information and other supplementary information. The Statistical Section includes unaudited financial and demographic information, generally presented on a multi-year basis. The City is required to undergo an annual single audit in conformity with the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments 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 fmancial reporting and compliance with requirements applicable to laws, regulations, contracts, and grants, are included in the Compliance 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 fnce 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, parking facilities, refuse collection, and public transportation. Beginning with the 2001 fiscal year, the City is required by its Vision Iowa contract to report its America's River Project funds as a separate Service People Integrity Responsibility Innovation Teamwork enterprise fund. 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 fi.om those of the City. The City of Dubuque appoints a voting majority to the DMASWA governing board and operates the landfill. Generally Accepted Accotmting Principals (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 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. ECONOMIC CONDITION AND OUTLOOK The City of Dubuque is located on the Mississippi River in northeast Iowa, adjacent to the states of Illinois and Wisconsin. The City was founded by Julien Dubuque in 1785 and is the oldest City in Iowa. The City of Dubuque has a unique combination of the old and new, ranging from cable cars, Victorian architecture, and a Civil War shot tower, to an enclosed shopping mai1, riverboat casino, and a pari-mutuel dog track with a slot machine casino. Dubuque has a stable and diversified manufacturing 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 3.7 percent. The City of Dubuque currently has a land area of 28 square miles and a 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 a council-manager form of government since 1920. Policymaking and legislative authorities are vested in the governing council, which consists of a mayor and a six-member council. The governing council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, Corporate Counsel, and City Clerk. The City Manager is responsible for overseeing the day-to- day operations of the government, and for appointing the heads of the government's departments. The council is elected on a non-partisan basis. Council members are elected to four-year staggered terms with tkree 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. Development of Dubuque Industrial Center West continues. The first phase of the 550-acre development of City owned land made 135 acres available for medium to heavy industrial uses. Dubuque Area Industrial Development Corporation continues to market to developers its 40,000 4 square foot speculative industrial building located on twelve acres of Dubuque Industrial Center West, now being partially leased by DDI, Inc. The McGraw-Hill Company completed a 330,000 square foot warehouse and distribution center at Dubuque Industrial Center West last year. Also, the sale of 17 acres to Alliant Energy for a new operations facility is complete with construction slated for 2004. Giese Manufacturing completed construction of a 30,000 square foot manufacturing facility on a 5-acre site. Construction recently began on the Adams Company Manufacturing facility. The John G. Bergfeld Recreation Area provides recreation oppommity for employees who work in the park, as well as the public. Dubuque Industrial Center West complements the city-owned, 100-acre Dubuque Technology Park that has four occupants: Advanced Data-Comm, Cartegraph, Integreat, and McLeod USA. Eagle Window & Door completed construction of a new 400,000 square foot manufacturing facility in the Kerper Boulevard industrial area, and moved into the facility in December 2000. This $17,000,000 project added 168 employees. Flynn Ready Mix constructed a new state-of- the-art facility on Kerper Court in 2002. CIGNA celebrated its grand opening in June 2001 following completion of a new 115,000 square foot office building in downtown Dubuque. SISCO, a Dubuque based third party insurance administrator, renovated the historic Town Clock Building adjacent to their downtown Dubuque facility. The renovation provides SISCO the potential to house another 100 employees. Other downtown development includes the construction of the three-story Harbor View Building at 300 Main Street. The building is home to the Chamber of Commerce and the Greater Dubuque Development Corporation and offers additional office space for lease. The $2.5 million renovation of the basement, first and second floors of the Cooper Wagon Works building (Bricktown) at Third and Main Street is complete. The building houses a restaurant, lounge, and banquet facilities. The Iowa Inn, former downtown YMCA, located at 9th and Iowa Street, has recently completed a $3.3 million renovation to convert to 33 units for low-income senior housing. Pepper Sprout Restaurant offers gourmet dining in a renovated historic building in the Old Main District. Caf~ Manna Java is a bakery and coffee shop serving light lunch and dinner. The Weber Paper building is being remodeled to house Shepherd Publishing, which will bring 70 jobs to downtown Dubuque. On Dubuque's west side, development of 330,000 square feet of retail space in Asbury Plaza began in July 2001. The plaza encompasses 190 acres and is anchored by Hy-Vee Food Store. During the past year Hallmark, Michael's, Old Navy, Bed, Bath & Beyond, Dress Barn, Famous Footwear, Pier One, Petco, Sally Beauty, EB Games and Next Generation Wireless were added to the Asbury Plaza. It has been announced that Kohl's Department Store will open in late 2004. Menards relocated to a new 162,340 square foot retail facility on the west side in May 2002, with Hobby Lobby taking over its old facility. With the recent economic growth, the City has annexed almost 3000 acres since 1995. In contrast, only 40 acres were annexed in the first half of the 1990's. Another 700-acre annexation is awaiting state approval. This is consistent with the non-residential construction numbers in the community. From 1990-1997 the City averaged 300,000 square feet of non-residential construction per year. In the five years from 1998-2002, the City has averaged almost 1,000,000 square feet of non-residential construction. MAJOR INITIATIVES For the Year. The City of Dubuque staff, following the adopted priorities of the Mayor and City Council, Ixas 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. Downtown revitalization continued as a high priority of City Council, with programs such as the Downtown Rehabilitation Loan Program and Facade Grant Program providing incentives for property improvement in the downtown area. The opening of Eighth Street to traffic through the plaza was the first phase of a multi-million-dollar update of the Town Clock Plaza to meet the current development and functional needs of the downtown. The second phase was to open the Town Clock Plaza from Fifth to Eighth Street to vehicle traffic, which was completed and opened to traffic on August 2, 2002. The balance of the reconstruction of the Town Clock Plaza is budgeted in the City's 5-year Capital Improvement Program. The City continued implementation of major parking expansion to meet the increased parking demand in the downtown area. Included in the expansion was a three-level, 240-space addition to the existing parking ramp at Fifth and Iowa Street, and construction ora new 400 space parking ramp facility at Third and Iowa Street, which opened in June 2002. The City also sponsored a downtown visioning process in conjunction with state and local partners. The next phase of this process is a comprehensive planning process for the downtown, which is currently underway. Construction for the last phase of the Northwest Arterial, from JFK Road to U.S. 52, was completed in September 2002. Grading for this project took place in 2001, and paving in 2002. The road was opened to traffic on September 13, 2002. American Airlines has maintained service in Dubuque following the tragic events ofg-11. In the past year the airline industry has undergone major economic losses causing them to cut flights to cities large and small. The Dubuque Regional Airport was down only 3.38% in calendar year 2001 for a total of 56,353 passengers. The Dubuque Regional Airport has recently taken a proactive approach by embarking on a vigorous marketing campaign designed to awaken the community to the need to retain air service with FLYDBQ campaign. United Express and Northwest Airline have both discontinued commemial service to the airport. The Dubuque Regional Airport celebrated the conversion of Runway 18/36 to a primary runway during the fall of 2002 with a ribbon cutting ceremony. This new primary runway should greatly reduce weather related flight cancellations. The Terminal Area Study was concluded in March 2003. The object of the report was to define the long-term air service facility needs at the Dubuque Regional Airport including a comprehensive study of the existing terminal building and future expansion and relocation options. Airport staff is currently working on two new airport improvement level projects, updating the Airport Master Plan and a Benefit Cost Analysis / Environmental assessment. Taxiway Charlie and Delta Rehabilitation Project was completed in the spring 2003. The project included a pavement overlay ofTaxiway Charlie and new taxiway lights for Charlie and Delta. Due to on-going operational problems, replacement of taxiway Alpha NW lights was added to the project. The DeparWaent of Transportation passed a bill called the Small Community Air Service Development Pilot Program Grant. This bill has $20 million that will be dispersed to thirty-five communities across the United States. The Dubuque Regional Airport, being one of the chosen communities, will receive approximately $610, 000 with additional travel bank pledge dollars. The Airport has two main goals for the grant; the first is to maintain the current level of service in the tri-state region with American Eagle. The second goal is to utilize the remaining dollars to expand air service by adding more frequencies and/or access another hub. The City is currently served by one major commuter airline, American Eagle, with three daily round trips to Chicago. American Eagle continues to fly 50 passenger seat regional jets. As of September 2003, revenue passenger enplanements are at 29,136, somewhat lower than 2002 figures. The airport has two on-demand charter services available on the field with a variety of aircraft. Customers have numerous options and destinations to choose from to suit their traveling needs. In October 2003, The Dubuque Regional Airport received its 13t~ consecutive year of a perfect FAA Part 139 inspection compliance. Dubuque is the only airport in the nation to currently hold this record. Implementation of the City Council's Neighborhood Reinvestment Strategy provided many 'quality of life' improvements for City residents. The Community Oriented Policing Program expanded to include other City Departments in landlord/tenant training and building code enforcement. Dubuque is one of the safest places to live in the Midwest, and 15 police officer positions have been added since 1994 to implement new programs and enhance police coverage. The Housing and Community Development Department continued housing rehabilitation efforts including various home ownership initiatives. During the past fiscal year, 23 families were assisted in purchasing their first home through use of Community Development Block Grant (CDBG) funds. Housing rehabilitation assistance included $1.2 million in grants to remove lead paint hazards in single and multi-family housing units. Through loans of $110,524 in CDBG funds, 13 rental units were rehabilitated. In total, the Housing and Community Development Department invested more than $2.5 million in homeowner and rental housing projects, matched by $2.2 million in private investment. Neighborhood park development included the installation of new play units in several neighborhood parks during the year. Seven million dollars has been invested in the park system over a five-year period. The City's ambitious riverfront development continued to move forward as planned during the year and was awarded $40 million (with $20 m/Ilion going to the City) from the State of Iowa Vision Iowa program. The America's River project is a public/private partnership between the City of Dubuque, the Dubuque County Historical Society, the Dubuque Area Chamber of Commerce, and Dubuque County, to carry out a comprehensive $188 million fiverfront development in the Port of Dubuque. This area already includes historic sites, such as a Civil War Shot Tower, the William M. Black steamboat, Mississippi River Museum, Dubuque Star Brewery, and the Ice Harbor. Recent progress on fiverfront development included the following: 7 Port of Dubuque Master Plan A strategic plan for the Port of Dubuque with land uses, economic analyses, and design standards was adopted in 2002. Mississippi River Discovery Center and Aquarium-opened June 2003 The River Discovery Center and Aquarium is a world-class national museum for the entire Mississippi River. The Center includes 15 aquariums, including five that measure 30 feet across. A dynamic immersion theater surrounds visitors with the story of the Mississippi River's creation, its floods, its history, and its underwater life. An outdoor wetland features natural and living history with floating laboratories and classrooms. Stream tables let visitors create their own rivers, and the educational overnight program will let visitors sleep on a "Boat and Breakfast" on a National Historic Landmark steamboat. Heritage Trail Riverfront System-mostly completed Two and one-half miles of an 18-mile extension of the Heritage Bike Trail from the north end of Dubuque through downtown, to the Mines of Spain State Recmatian Area were recently completed, with the opening of the North End Neighborhood Trail and the Heron Pond Wetlands Nature Trail. Construction is proceeding on 13 miles of additional off-road and on-street segments of the trail extension. When completed, Heritage Trail Riverfront System, with links to riverfront parks and the Port of Dubuque, will create a major recreational system. River's Edge Plaza-opened in 2002 Construction was completed on a 5,000 square foot plaza outside the floodwall gate at the historic Ice Harbor. This plaza serves as the City's riverfront gateway, as well as a landing for large steamboats. Mississippi Riverwalk-opened in 2003 The City acquired a riverfront property on the 4th Street Peninsula for construction of a one-third mile Riverwalk. This 15-foot wide promenade was completed during the fiscal year. The walk includes benches, historic lighting, shade structures, and casqading Stairs to the river. Grand Harbor Resort and Waterpark-opened November 2002 ' A 196-room seven-story hotel, and a 24,000 square foot indoor water park were opened. Grand River Center-opened October 2003 A }15,000 square foot education and conference center had a ribbon cutting. The City's share of State Vision Iowa funds was utilized for the center and related public improvements. Star Brewery Building-S6.5 renovation under negotiation A proposal for a mixed-use complex was received in November 2002 for the renovation and reuse of the 40,000 square foot historic building. Plans and financing have not been finalized for the project. The $188 million America's River Project is fully funded with all the large components completed and others under construction. The Port of Dubuque has an additional 60 acres available for private development. The City has acquired additional property and is relocating existing property owners to assemble into new development parcels for private development based on the adopted Port of Dubuque Master Plan. The new plan guides the redevelopment in the downtown rivert~ont area. A consultant study indicates that another $150 million in private development can be expected. 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 · Planned and managed growth · Diverse, strong Dubuque economy · Riverfront developed · Partnering for a better Dubuque Specific programs are being implemented by City staff to meet the City Council's five-year goals. Some of the most significant programs include: · Riverfront Development - The City has partnered with several other agencies to enhance one of Dubuque's greatest treasures, the Mississippi riverfront area. A $188 million comprehensive plan for riverfront improvements has been developed, with completion scheduled by June 2005. Redevelopment is guided by the Port of Dubuque Master Plan. · Industrial Park Development - The City has acquired over 900 acres of industrial land and has completed the first phase of construction for these industrial parks. City staff and the Greater Dubuque Development Corporation are working to attract new businesses and meet the expansion needs of current businesses. The GDDC recently completed a $2.3 million fundralsing campaign to support their operations. · Neighborhood Reinvestment - The highly successful Community Oriented Policing and Uptown Recreation programs will continue. Work will continue on neighborhood empowerment programs including property management and tenant training. The City Street, Historic Preservation and Housing programs are also being expanded to affect quality of life improvements at the neighborhood level. Downtown Redevelopment - Dubuque's downtown, situated between the Mississippi River and tall Wee-lined bluffs, is the home to many unique and historic buildings as well as being the center of commerce and tourism. The City Council adopted Vision Downtown, a community consensus for the future of Downtown Dubuque, in December 2001. Several initiatives with other public and private organizations have been completed for the downtown areas, including improvements to Flat Iron Park, continued reconstruction of Town Clock Plaza, and a master plan for the Five Flags Civic Center. The Downtown Master Plan is currently being developed. · Transportation Improvements - The City will maintain its aggressive program to improve local streets. Plans are in place to reconstruct or overlay sixty miles of streets over the next five years. In a sixteen-year period from 1990-2006, the City will have completed sixty- nine percent of the streets. All of the traffic signals along U.S. 20 will be interconnected by 2004 to improve traffic flow and lessen travel delays. Other new roadway connections, such as a new connection off University Avenue to U.S. 20 will be constructed. The schedule for this phase is yet to be determined. U.S. 20 will be widened to five lanes from the Northwest Arterial to old U.S. 20 in 2004 to improve safety. Corridor studies will be completed for the Southwest Arterial and the Julien Dubuque Bridge four-lane replacement. Plans are also in place to expand U.S. Highway 15 I, providing Dubuque with a four-lane link to Madison, Wisconsin, and Cedar Rapids, Iowa, by 2004. The four-lanes of U.S. Highway 20 from Dubuque to Fort Dodge, Iowa was completed in 2003. U.S. Highway 61 was opened as a four-lane from Dubuque to Davenport, Iowa in 1999. The four-lane of U.S. Highway 218 from Waterloo, Iowa to Mason City, Iowa connects to U.S. Highway 20 and opened in2003. The City, in partnership with local stakeholders, also will implement a comprehensive way finding signage program throughout the City with IDOT support. All of this is being done while the City maintains fiscal integrity. Through efficient operation, revenue diversification, and debt reduction, the City has not increased the average homeowners property taxes in nine years. These are a few of the many activities being addressed by the community, City Council, and City staff to improve the quality of life in Dubuque. FINANCIAL INFORMATION Internal Control. 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 fmancial statements in conformity with generally accepted accounting principles. The internal controls are 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. 10 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 a part 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, 2003, 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 appropriated budget. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established by function. 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, repurchase agreements, U.S. Treasury securities, federal agency obligations, and authorized mutual funds. The City recorded investment earnings of $1,962,308 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. The coverage for general and auto liability, as well as public official and police professional liability are acquired through this agency. Worker's compensation coverage up to $400,000 for each accident is provided through self-insurance. The accumulated reserve provision for such claims equaled $516,678 as of June 30, 2003. The City has also established self-insurance plans for medical, dental, prescription drug, and short-term disability. The accumulated reserve provision for such claims equaled $108,976 as of June 30, 2003. All self-insured health plans are certified as actuarially sound and certificates of compliance have been filed with the State of Iowa. 11 OTHER INFORMATION Independent Audit. State Code requires an annual audit by independent certified public accountants or the State Auditor. The accounting firm ofEide Bailly LLP conducted the audit for fiscal year 2003. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The independent auditor's report on the basic financial statements and combining fund statements is included in the Financial Section of this report. The auditor's report related specifically to the single audit is included in the Compliance Section. 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, 2002. This was the 15th consecutive year that the government 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 only. We believe our current comprehensive annual fmancial 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. 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 City Manager Kenneth J. TeKippe, CPA Finance Director 12 CITY OF DUBUQUE ORGANIZATIONAL CHART Corporation Counsel Library Assistant City Manager Human Resources CITY COUNCIL CITY MANAGER City Clerk Airport Public Information Ofricer Neighborhood Development Administrative Services Manager Budget Cable TV Emergency Communications Building Services Department Economic Development Department Parkhtg System Transit Division Finance Department Leisure Services Department Civic Center Park Recreation Operations & Maintenance Department I Planning Services Department Fire Health Housing & Human Information Department Services Community Rights Services Department Development Department Department Emergency Department Management I I I I Police Public Works/ Water Water Pollution Department Engineering Department Control Department Department CITY OF DUBUQUE, IOWA OFFICIALS JUNE 30, 2003 CITY COUNCIL Terrance M. Duggan Daniel E. Nicholson Ann E. Michalski John H. Markham Roy D. BuoI Joyce E. Cormors Patricia A. Cline Mayor Council Member - At Large Council Member - At Large Council Member- 1st Ward Council Member - 2~d Ward Council Member - 3~d Ward Council Member- 4t~ Ward COUNCIL APPOINTED OFFICIALS Michael C. Van Milligen Barry A. Lindahl William G. Blum James A. O'Brien Jeamae F. Schneider City Manager Corporation Counsel City Solicitor Assistant City Attorney City Clerk DEPARTMENT MANAGERS Pauline J. Joyce Andrew D. Perry Cynthia M. Steinhauser Richard R. Russell William J. Baum Kenneth J. TeKippe E. Daniel Brown Mary Rose Corrigan David W. Hairis, 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 Michael A. Koch Robert M. Green Paul J. Horsfall Administrative Services Manager Airport Manager Assistant City Manager Building Services Manager Economic Development Director Finance Director Fire Cb2ef Health Services Manager Housing and Community Development Manager Human Rights Director Personnel Manager Information Services Manager Leisure Services Manager Library Director Operations & Maintenance Manager Planning Services Manager Police Chief Public Works Director/Engineering Division Water Department Manager Water Pollution Control Plant Manager 14 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, 2002 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 comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. President Executive Director 15 FINANCIAL SECTION EideBailly=, Consultants · Certified Public Accountants INDEPENDENT AUDITOR'S REPORT To the Honomble Mayor and Members of the City Council City of Dubuque, Iowa We have audited the accompanying financial statements of the govern_mental activities, the business-type activities, the discretely presented component-unit, each major fund, end the aggregate remaining fund information of the City of Dubuque, Iowa, as o£and for the year ended June 30, 2003, wh/ch 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 an opinion on these fmancial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; Chapter 11 of the Code of Iowa; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller Genemt of the United States. Those standards and provisions require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are flee of material misstatement. An audit includes examinJmg, on a test basis, evidence supporting the mounts 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 that our audit provides a reasonable basis for our opinion. 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 Jane 30, 2003, and the respective changes in fmancial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 14, the City has implemented a new financial reporting model, as required by the provisions of GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments, as of June 30, 2003. Irt accordance with Government Auditing Standards, we have also issued our report dated December 16, 2003, on our consideration of the City's intemaI control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. 3999 Pennsylvania Ave. · Suite '100 ° Dubuque, Iowa 52002-2639 · 563.556.1790 ° Fax 563.557.7842 Offices in Arizona, Iowa, Minnesota. Montana, North Dakota and South Dakota · Equal OppormniU Employer 16 The management's discussion and analysis and budgetary comparison information, listed in the table of contents are not a requ/red 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, wi'rich 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 fmancial statements that collectively comprise the basic financial statements of the City of Dubuque, Iowa. The introductory section, combining nonmajor fund financial statements, statistical tables, and the Schedule of Expenditures of Federal Awards required by the U.S. Office of Management and Budget (OMB) Circular A-133 are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining nonmajor land financial statements and the Schedule of Expenditures of Federal Awards have been subjected to the auditing procedures applied in the audit of the basic f'mancial 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 section and statistical tables 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, 2003 17 CITY OF DUBUQUE MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2003 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, 2003. 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 HIGHI,IGHTS · The assets of the City of Dubuque exceeded its liabilities at the close of the fiscal year by $359,170,765 (net assets). Th/s was an increase of $19,808,619 over net assets at June 30, 2002. Unrestricted net assets at June 30, 2003 in the amount of $17,837,445 may be used to meet the City's ongoing obligations to citizens and creditors. · The revenues of the general fund exceeded expenses by $470,195. · The ending general fund balance was $16,792,510. · Within the City's business-type activities, revenues and transfers exceeded expenses by $18,374,650. · For the year, the revenues of the City's governmental activities exceeded expenses and transfers by $1,433,969. · The City's debt decreased by $155,390 due to principal repayments exceeding the issuance of new debt. OVERVIEW OF THE FINANCIAL STATEMENTS The City's basic financial statements consist of government-wide financial statements, fund f'mancial statements, and notes to the financial statements. This discussion and analysis are intended to serve as an introduction to the basic fmancial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Due to the City's implementing Governmental Accounting Standards Board Statement Number 34 in 2003, comparative data is not available for a comprehensive discussion of the City's change in net assets. However, a comparative analysis of government-wide data will be presented in future years. 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. 18 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 consider additional non-financial factors such as changes in the City's property tax base and the condition of the City's infi-astructure. 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. Th/s category consists of services provided by the City that are principally supported by taxes and intergovernmental revenues. Basic City services such as police, tim, public works, planning, parks, the library, and general administration are governmental activities. Business-rgpe activities. These activities are supported primarily by user fees. The services provided the City in this category include water, sewer, 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 19 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 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 three 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, and community development fund, all of which are considered to be major funds. Data from the other seventeen 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 for the general, employee benefits, and community development funds 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 fimds to account for its sewer, water, and refuse utilities. Enterprise funds are also used 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 govemmentai 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 no fiduciary funds during fiscal year 2003. 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. 20 Other information. The combining statements referred to earlier in connection with non- major governmental funds, non-major enterprise funds, and internal service funds 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 $359,170,765 at the close of the most recent fiscal year. The largest part of the City's net assets (86.7%) reflects it's 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 Type Activities Activities 2003 2003 Total Currant and Other Assets $ 69,832,586 $ I2,398,014 $ 82,230,600 Capital Assets 230,511,I51 104,475,331 334,986,482 TotaI Assets 300,343,737 116,873,345 417,217,082 Long-term Liabilities 38,517,320 6,475,I07 44,992,427 Other Liabilities 8,224,246 4,829,644 13,053,890 Total Liabilities ' 46,741,566 I 1,304,751 58,046,317 Net Assets: Invested in Capital Assets, Net of Reiated Debt 212,767,403 98,706,116 311,473,519 Restricted 29,306,125 553,677 29,859,802 UnreshScted 11,528,643 6,308,801 17,837,444 Total Net Assets $ 253,602,171 $105,568,594 $ 359,170,765 A portion of the City's net assets (8.3%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of net assets (5.0%) may be used to meet the City's ongoing obligations to citizens and creditors. At the close of fiscal year 2003, 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 $1,433,969 or 7.2% of the total increase in net assets in 2003. Taxes are the largest source of governmental revenues with property taxes of $18,041,049 in 2003. Other 21 governmental revenues included gaming of $9,539,598, local option sales taxes of $6,492,203 and hotel/motel tax of $970,232. Governmental expenses during 2003 totaled 53,702,231. The largest programs were public safety of $15,817,052, public works of $14,453,558, and community and economic development of $9,431,702. The State of Iowa changed the reporting requirements for expenses fi:om four programs to eight fimctions effective with the 2003 fiscal year. CITY OF DUBUQUE CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Governmental Type Activities Activities 2003 2003 Total 7,861,142 $ 12,033,067 $ 19,894,209 13,677,503 880,822 14,558,325 3,447,052 11,938,797 15,385,849 Property taxes Local option sales taxes Hotal/motal tax Gaming Unrestricted invesh'nent eam/ngs Los~ on sale of capital assets Other $ 18,041,049 $ 506,054 $ 18,547,103 6,492,203 6,492,203 970,232 970.232 9,539,598 9,539,598 1,749,301 321,447 2,070,748 (149,650) (I68,001) (317,651) 1,228,232 1.228.232 $ 62,856,662 $ 25,512,186 $ 88368,848 Public safe~y Public works Health and social services Calture and recreation Community and economic development General goverament Interest on long-term debt Sewage Disposal Works Water Utility Parking Facilities $ 15,817,052 14,453,558 815,524 7,367,147 9,431,702 4,211,922 1,605,326 4,655,696 4,145,983 1,445,434 414,830 2,140,807 2,055,248 $ 15,817,052 14,453,558 815,524 7,367, I47 9,431,702 4,211,922 1,605,326 4,655,696 4, I45,983 1,445,434 414,830 2,140,807 2,055,248 Total expenses $ 53,702,23I $ 14,857,998 $ 68,560,229 22 Inereases in net assets before transfers $ 9,154,431 $ 10,654,188 $ 19,808,619 Transfers (7,720,462) 7,720,462 Increase in net assets 1,433,969 I8,374,650 19,808,619 Net assets ~ July i, 2002 252,168,202 87,193,944 339,362,146 Net assets - June 30, 2003 $ 253,602,171 $105,568,594 $ 359,170,765 Business-type activities. Business type activities increased net assets by $18,374,650 accounting for 92.8% of the City of Dubuque's growth in net assets at June 30, 2003. FI2qANCIAL ANALYSIS OF TIlE 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.$49,120,499 at June 30, 2003. A portion of the fund balance is reserved and not available for new spending because it has already been committed for encumbrances, endowments, inventories and prepaid items, 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 decreased by $7,521 to $102,530. The unreserved fund balance of special revenue community development decreased by $131,178 to $2,472,514. 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, 2003 totaled $105,568,594 of which 6.0% ($6,308,801) is unrestricted. The net assets of the internal service fimds are $706,152, a $678,321 decrease from the 2002 total net assets. The unrestricted net assets of the internal service funds are $641,732 (90.9%). The sewer disposal works had an increase in net assets of $396,015 for total net assets of $36,164,271 at June 30, 2003. The water utility had a decrease in net assets of $87,163 for total net assets of $23,512,680. The parking facilities had an increase in net assets of $6,610,980 for total net assets of $13,023,931. The increase is primarily attributable to a $6,716,575 transfer for the completion of a parking facility. The America's River Project had an increase in net assets orS11,906,955 for total net assets of $27,768,156. The increase is primarily attributable to Vision Iowa funds received. 23 BUDGETARY HIGHI.IGHTS There were two amendments to the City's 2002-2003 budget. The first amendment was passed in October 2002 primarily to reflect operating and capital encumbrance carryovers. The second budget amendment was in May 2003 to reflect projected year-end expenditures and revenues. General fund. The final budget for total revenues increased $4,532,567 from the original budget. The increase was primarily attributable to grants received and other miscellaneous revenues. The final budget for total expenditares increased $13,541,214 from the original budget. The increase was primarily attributable to purchase order encumbrances carryover, capital projects carryover from prior year and expenditures associated with new grants received. Actual revenues were $2,642,287 less than the final amended budget, and expenditures were $11,039,526 less than the final amended budget. 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, 2003, amounts to $334,986,482 (net of accumulated depreciation). This investment in capital assets includes land, buildings, infrastructure, machinery and equipment. Additional information on the City's assets can be found in the note 5 to the fmancial statements in this report. CAPITAL ASSETS (net of accumulated depreciation) Governmental Type Activities Aetivitie* 2003 2003 Total Land $ 48,575,050 $ 1,584,577 $ 50,159,627 Buildings 37,989,032 59,619,714 97,608,746 Improvements and other buildings 8,829,528 25,742,378 34,571,906 Machinery and equipment 21,748,273 40,303,626 62,051,899 Infi'astmcUa'e 164,517,860 I64,517,860 Constraction ia progress I6,345,691 32,215,865 48,561,556 Accumulated depreciation (67,494,283) (54,990,829) (122,485,112) $ 230,511,151 $104,475,331 $ 334,986,482 Major expenditures during 2002-2003 were for the Grand River Center, Riverwalk, Flat Iron park renovation, Main Street project, water, storm and sanitary sewer projects, completion of new parking ramp, airport taxiway and runway, and (2) Solid Waste Collection vehicles. Long-term deba At year end the City had $31,768,205 of debt outstanding. This is a decrease of $155,390 from June 30, 2002. New debt issued during the current year 24 included $2,500,000 for new water main and new water tower project and $650,000 to refinance existing debt. The City maintained its Aa3 bond rating for the issue. 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 $115,896,000. With outstanding general obligation debt of $30,271,000 we are utilizing 26.1% of this limit. Additional information on the City's long-term debt can be found in note 6 of this report. ECONOMIC FACTORS The slowing of the national economy had a relatively mild impact on the City of Dubuque and has been less sev~e than for many local governments. The City's unemployment rate ended the fiscal year at 3.7%, slightly higher than the 3.6% rate for the prior year, but well under the State of Iowa rote of 4.2% and the 6.4% national rate. The City continues to enjoy moderate growth in assessed valuation of taxable property net of exemptions (8.0% for total of $1,530,066,000). The minimum refuse rate decreased $0.30 to $7.20 with the implementation of a unit based pricing system. Sewer rotes increased 1% and water rates increased 2%. The news has not been as good for the State of Iowa as most of the shared revenue and property tax replacement funds provided to local governments were cut for the 2003-2004 fiscal year. Requests for information. This financial report is designed to provide a general overview of the City's fmances 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. 25 BASIC FINANCIAL STATEMENTS CITY OF DUBUQUE, IOWA STATEMENT OF NET ASSETS JUNE 30, 2003 ASSETS CLrRRENT ASSETS Cash and pooled cash investments Receivables Property tax Delinquent Succeeding year Accounts and other Special assessments Accrued interest Notes - current Intergovernmental Intemat balances Inventories Prepaid items RESTRICTED ASSETS Temporarily restricted Cash and pooled cash investments Permanently reslricted Cash and pooled cash investments NONCURRENT ASSETS Notes receivable - long-term Capital assets Land Buildings Improvements other than buildings Machinery and equipment Infi'astmcture Construction in progress Accumulated depreciation Total Assets Primary Government Governmental Business-type Activities Activities Total Component Ul~/t Dubuque Metropolitan Area Solid Waste Agency $ 37,I86,961 $ 9,959,062 $ 47,146,023 $ 6,936,033 130,198 4,124 134,322 15,664,637 513,259 16,177,896 1,293,123 1,301,030 2,594,153 534,465 534,465 256,653 45,289 301,942 787,433 787,433 2,209,798 126,614 2,336,412 449,021 (449,021) 124,255 338,943 463,198 10,630 5,037 15,667 200,411 30,975 240,310 553,677 793,987 3,078,860 22,391 22,391 10,922,711 10,922,71I 48,575,050 1,584,577 50,159,627 37,989,032 59,619,714 97,608,746 8,829,528 25,742,378 34,571,906 21,748,273 40,303,626 62,051,899 164,517,860 164,517,860 16,345,691 32,215,865 48,561,556 (67,494,283) (54,990,829) (122,485,112) 300,343,737 116,873,345 417,217,082 552,528 44,349 5,893,766 1,827,636 (5,018,985) 13,545,573 See notes to financial statements. EXHIBIT 1 LIABILITIES CURRENT LIABILITIES Accounts payable Accrued payroll Notes payable - current General obligation bonds payable - current Revenue bonds payable - current Tax-increment financing bonds payable - current Accrued compensated absences Accrued interest payable Intergovernmental payable Deferred revenue Succeedhag year property tax Other NONCURRENT LIABILITIES Notes payable General obligation bonds payable Revenue bonds payable Landfill closure and postclosure care Tax-increment financing bonds payable Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for/by Bond ordinance Debt service Dog track Employee benefits Community development Streets Capital projects Franchise agreement Endowments Expendable Nonexpendable Other State statute Minority interest Um'eslricted Total Net Assets Compone~ U~t Dubuque Primary Govermment Metropolitan Governmental Business-type Area Solid Activities Activities Total Waste Agency 3,429,800 $ 3,454,315 $ 6,884,I15 $ 65,844 275,588 86,241 361,829 10,437 922,167 283,188 1,205,355 855,000 485,000 1,340,000 190,000 190,000 340,590 340,590 2,248,606 274,850 2,523,456 40,273 133,230 56,050 189,280 19,265 19,265 74,569 I5,664,637 513,259 16,177,896 122,271 122,271 40,000 40,000 19,010,000 4,630,514 23,640,514 1,331,334 1,331,334 1,904,315 3,680,412 3,680,412 46,741,566 11,304,751 58,046,317 2,095j38 311,473,519 3,299,294 704,203 83,833 1,049,091 211,290 14,130,192 6,295,301 6,307,172 897,297 70,09I 22,391 88,940 212,767,403 t50,526 83,833 1,049,091 211,290 14,130,192 6,295,301 6,307,172 897,297 70,091 22,391 88,940 98,706,116 553,677 329,903 1,775,353 11,528,644 6,308,801 17,837,445 6,045,585 $ 253,602,171 $ i05,568,594 $ 359,170,765 $ 11,450,135 26 CITY OF DUBUQUE, IOWA STATEMENT OF ACTMTIES FOR YEAR ENDED JUNE 30, 2003 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 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 Services Contributions Contributions 15,817,052 $ 1,583,255 $ 374,193 $ 14,453,558 3,367,720 5,352,970 2,579,412 815,524 102,524 102,235 7,367,147 2,145,435 119,819 233,075 9,431,702 280,116 7,521,349 634,565 4,211,922 382,092 206,937 1,605,326 53,702,23I 7,861,142 13,677,503 3,447,052 4,655,696 4,300,156 - 1,031,754 4,145,983 3,975,598 198,409 1,445,434 1,427,146 75,300 414,830 147,695 10,633,334 2,140,807 1,981,105 2,055,248 201,367 880,822 14,857,998 12,033,067 880,822 11,938,797 68,560,229 $ 19,894,209 $ 14,558,325 $ 15,385,849 $ 2,259,828 $ 2,367,776 $ 18,239$ Property taxes Local option sales tax Hotel/motel tax Gaming Urmestricted investment earnings Loss 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 £mancial statements. Net (Expense) Revenue and Changes in Net Assets Primary Government Component Unit Governmental Business-type Dubuque Metropolitan Activities Activities Total Area Solid Waste Agency $ (13,859,604) $ $ (13,859,604) (3,153,456) (3,153,456) (610,765) (610,765) (4,868,818) (4,868,818) (995,672) (995,672) (3,622,893) (3,622,893) (1,605,326) (1,605,326) (28,716,534) (28,716,534) 676,214 676,214 28,024 28,024 57,012 57,012 10,366,199 10,366,199 (159,702) (159,702) (973,059) (973,059) 9,994,688 9,994,688 (28,716,53{) 9,994,688 (18,721,846) 126,187 18,041,049 506,054 18,547,103 6,492,203 6,492,203 970,232 970,232 9,539,598 9,539,598 1,749,301 321,447 2,070,748 (I49,650) (168,001) (317,651) 1,228,232 1,228,232 (7,720,46~) 7,720,462 30,150,503 8,379,962 38,530,465 1,433,969 18,374,650 19,808,619 252,168,202 87,193,944 339,362,146 $ 253,602,i71 184,815 $ 105,568,594 184,815 311,002 11,139,133 $ 359,170,76~5 $ I1,450,13~5 27 CITY OF DUBUQUE, IOWA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2003 EXH][BIT 3 ASSETS Cash and pooled cash investments Receivables Property tax Delinquent Succeeding year Accounts and other · Special assessments Accrued interest Notes Intergovernmental Due from other fimds Inventories Advances to other funds Prepaid items Resh-lcted assets Cash and pooled cash investments Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Accrued payroll Intergovernmental payable Due to other funds Deferred revenue Succeeding year property lax Other Total Liabilities FUND BALANCES Reserved for~oy Encumbrances Long-term notes receivable Advances Bond ordinance Debt service Dog track Franchise agreement Endowments Unreserved, reported in General fund Designated for future equipment and capital maintenance Designated for future cash flow Undesignated Special revenue ftmds Capital projects fimds Permanent funds Total Fund Balances Total Liabilities and Fund Balances See notes to financial statements. Special Revenue Other Employee Community Governmental General Benefits Development Funds Total $ 15,869,856 $ 89,384 $ 1,781,241$ 17,773,509 $ 35,513,990 106,839 16,092 7,267 12,746,383 2,379,236 539,018 1,271,256 21,867 534,465 I52,440 53,453 42,704 11,701,642 8,502 223,118 1,261,357 725,323 372,691 97,010 449,02I 4,352 6,278 I30,198 15,664,637 1,293,123 534,465 248,597 11,710,144 2,209,798 372,691 97,010 449,02I 10,630 262,701 262,701 $ 31,795,I71 $ 2,484,712 $ 13,765,732 $ 20,451,390 $ 68,497,005 $ 1,786,772 $ - $ 34,213 $ 566,638 $ 2,387,623 212,621 108 7,398 31,098 251,225 19,265 19,265 372,691 372,691 12,746,383 2,379,236 539,018 15,664,637 256~885 2,838 421,342 681,065 15~002,661 2,382,182 41,611 1,950,052 I9,376,506 4,124,702 449,021 336,698 10,914,909 1,940,674 6,402,074 7,802 I0,922,711 449,021 150,526 150,526 83,833 83,833 1,049,091 1,049,091 19,327 19,327 22,391 22,391 9,018,759 9,018,759 2,556,000 2,556,000 644,028 644,028 102,530 2,472,514 9,311,587 11,886,631 5,846,016 5,846,016 70,091 70,09I 16,792,510 102,530 13,724,121 18,501,338 49,I20,499 31,795,171 $ 2,484,712 $ 13,765,732 $ 20,451,390 $ 68,497,005 28 CITY OF DUBUQUE, IOWA RECONCII,IATION OF ']'H ~; GOVERNMENTAL FUNDS BALANCE S H ~;ET TO THE, STATEMENT OF NET ASSETS JUNE 30, 2003 EX H I giT 3-1 Total fund balances - governmental funds Amounts reported for tlie 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 Accumulated depreciation 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 fands. Those revenues consist of: Property tax Special assessments Other Internal service funds are used by the City's management to charge the cost of equipment maintenance and self-insurance programs to individual fands. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. 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 Tax-increment financing bonds Notes payable Accrued interest Compensated absences Net assets of govermnental activities $ 297,880,195 (67,433,464) 22,965 420,060 115,769 (19,865,000) (4,021,002) (962,167) (133,230) (2,248,606) $ 49,I20,499 230,446,731 558,794 706,152 (27,230,005 $ 253,602,171 See notes to financial statements. 29 CITY OF DUBUQUE, IOWA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2003 EXHIBIT 4 REVENUES Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Contributions Gaming Miscellaneous Total Revenues EXPENDITURES Current Public safety Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital projects Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Issuance of reftmding bonds Pa3anent of refunded bonds Transfers in Transfers out Sale of capital assets Total Other Financing Sources (Uses) CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING, AS RESTATED FUND BALANCES, ENDING General Special Revenue Other Employee Community Governmental Benefits Development Funds $ 17,169,640 $ 1,873,514 $ Total 753,990 1,969,135 5,134,207 465,787 1,105,081 325,003 9,404,598 461,801 - $ 6,465,782 $ 25,508,936 561,406 561,406 753,990 2,434,803 12,845,352 I7,249,290 190,824 5,325,031 465,787 184,197 461,241 1,750,519 I22,957 447,960 I35,000 9,539,598 81,045 769,502 1,312,348 36,789,242 1,873,514 2,700,045 21,552,064 62,914,865 15,278,654 15,278,654 8,707,189 87,632 3,065,183 11,860,004 606,316 122, I25 20,994 749,435 7,340,738 134,830 39,954 7,515,522 1,259,356 2,733,799 5,017,713 9,010,868 3,071,021 51,691 93,175 619,722 3,835,609 55,773 3,622,232 3,678,005 9,930,311 9,930,311 36,319,047 51,691 3,171,561 22,316,109 61,858,408 470,195 1,821,823 (471,516) (764,045) 1,056,457 150,000 150,000 (IS0,000) (150,000) 2,577,555 43,872 390,421 2,356,138 5,367,986 (8,i20,144) (1,873,216) (4,838) (I1,075,607) (21,073,805) I17,239 ~ 117,239 (5,425,350) (1,829,344) 385,583 (8,719,469) (15,588,580) (4,955,155) (7,521) (85,933) (9,483,514) (I4,532;123) 21,747,665 110,051 13,810,054 27,984,852 63,652,622 $ I6,792,510 $ 102,530 $ 13,724,121 $ 18,501,338 $ 49,120,499 See notes to £mancial statements. 30 CITY OF DUBUQUE, IOWA RECONCILIATION OF TIlE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2003 EX}[IBIT 4-1 Net change in fund balances - total governmental funds Amounts reported for governmental activities/n the statement of activities are different because: Capital outlays are reported as expenditures in govemmentaI funds. However, in the statement of activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. In the current period, these mounts are: Capital assets expended in governmental funds Transfers of capital assets from enterprise funds Depreciation expense 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 govermnental funds. Deferred revenues increased (decreased) by these amounts this year: Property tax Special assessments Other Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond 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. The bond repayments ($2,159,986) exceeded the bond proceeds ($150,000) by $2,009,986. 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 off Decrease in accrued interest Increase in compensated absences Total additional expenses Internal service funds are used by management to charge the costs of certain activities to individual feuds. The net revenue of the internal service funds is reported with governmental activities. Change in net assets of governmental activities 11,986,141 7,432,958 (4,708,7O3 (5,450) (18,872) 115,769 62,692 (230,108) $ (14,532,123) 14,710,396 91,447 2,009,986 (167,416) (678,321) $ 1,433,969 See notes to financial statements. 31 CITY OF DUBUQUE, IOWA STATEMENT OF NET ASSETS PROPRIETARY FLYNDS JUNE 30, 2003 ASSETS CURRENT ASSETS Cash and pooled cash Lnvestments Receivables Property tax Delinquent Succeed'mg year Accounts Accrued interest Intergovernmental Inventories Prepaid items Total Current Assets RESTRICTED ASSETS Cash and pooled cash investments CAPITAL ASSETS Land Buildings Improvements other than buildings Mackinery and equdpment Constmetion in progress Accumulated depreciation Net Capital Assets Total Assets BusinessqypeActivities- Sewage Disposal Water Parking Works Utility Facil~ies $ 4,590,500 $ 3,518,407 $ 638,925 625,639 439,949 8,390 24,997 13,238 7,054 120,159 330,072 5,037 5,366,332 4,301,666 654,369 553,677 175,671 76,697 1,296,209 31,603,036 7,166,720 I8,956,368 24,975,122 520,295 246,961 6,269,877 28,522,900 598,197 58,721 1,699,950 86,300 (31,609,181) (15,459,740) (5,160,077) 31,473,246 22,526,822 16,023,958 36,839,578 26,828,488 17,232,004 EXHIBIT 5 Enterprise Funds Governmental America's Other Activities- River Entc'xprise Internal Project Funds Total Service Funds $ 11,664 $ 1,199,566 $ 9,959,062 $ 1,672,971 30,763 4,124 4,124 513,259 513,259 196,289 1,301,030 45,289 8,056 6,455 126,614 8,871 338,943 27,245 5,037 42,427 1,928,564 12,293,358 1,708,272 553,677 36,000 1,584,577 1,893,590 59,619,714 25,742,378 4,912,652 40,303,626 125,239 30,370,894 32,215,865 (2,761,831) (54,990,829) (60,819) 30,370,894 4,080,411 104,475,331 64,420 30,413,321 6,008,975 117,322,366 1,772,692 (continued) 32 CITY OF DUBUQUE, IOWA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2003 LIABILITIES Business-type Activities Sewage Disposal Water Parking Works Utility Facilities CURRENT LIABILITIES Accounts payable Accrued payroll Notes payable - current General obligation bonds payable - current Revenue bonds payable - current Accrued compensated absences Accrued interest payable Advances from other funds Deferred revenue - succeeding year property tax Total Current Liabilities 88,455 $ 353,459 $ 75,889 23,827 22,018 8,191 283,188 170,000 220,000 95,000 190,000 85,186 80,249 36,807 24,651 7,172 24,227 449,021 675,307 1,131,919 430,114 NONCURRENT LIABILITIES General obligation bonds payable (net of d/scount of $24,486) Revenue bonds payable (net of $18,666 deferred amount on refunding) Total Nuncurrent Liabilities 2,183,889 2,446,625 1,331,334 2,183;889 3,777,959 675,307 3,315,808 4,208,073 31,020,058 21,273,754 11,960,999 553,677 5,144,213 2,238,926 509,255 $ 36,164,271 $ 23,512,680 $13,023,931 Total Liabilities NET ASSETS Invested/n capital assets, net of related debt Restricted by bond ordinance Unrestricted Total Net Assets See notes to financial statements. EXH ! ~IT 5 (continued) Enterprise Funds America's Other River Enterprise Project Funds Total Governmental Activities- Internal Service Funds $ 2,645,165 $ 291,347 $ 3,454,315 $ 1,042,177 32,205 86,241 24,363 283,188 485,0O0 190,000 72,608 274,850 56,050 449,021 513,259 513,259 2,645,165 909,419 5,791,924 1,066,540 4,630,514 1,331,334 5,961,848 2,645,I65 909,419 11,753,772 1,066,540 30,370,894 4,080,411 98,706,116 553,677 (2,602,738) 1,019,145 6,308,801 $ 27,768,156 $ 5,099,556 $105,568,594 $ 64,420 641,732 706,152 33 CITY OF DUBUQUE, IOWA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR TH I~; YEAR ENDED JUNE 30, 2003 OPER2kTING REVENUES Charges for sales and services Other Total Opiating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Lnsurance Depreciation Total OpemtLng Expenses OPERATING INCOME (LOSS) NONOPERATING REVENLrES (EXPENSES) Taxes Intergovernmental Investment earnings Contributions Interest expense Gain (loss) on disposal of assets Total Nonoperating Revenues (Expeuses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS TRANSFERS IN TRANSFERS OUT CHANGE IN NET ASSETS NET ASSETS, BEGINNING, AS RESTATED NET ASSETS, ENDING Business-type Activities - Sewage Disposal Watm' Parking Works Utility Facilities $ 4,293,740 $ 3,964,302 $ 1,425,991 6,416 11,296 1,155 4,300,156 3,975,598 1,427,146 1,581,034 1,555,020 549,283 416,990 372,952 80,906 241,906 77,177 32,803 1,224,987 1,149,860 i63,097 71,170 65,194 21,408 1,086,685 829,564 362,503 4,622,772 4,049,767 1,210,000 (322,616) (74,169) 217,146 146,850 99,839 56,379 96,300 (32,924) (96,216) (235,434) 263 (68,192) 210,489 (64,569) (179,055) (112,127) (138,738) 38,091 935,454 198,409 75,300 6,716,575 (427,312) (146,834) (218,986) 396,015 (87,163) 61610,980 35,768,256 23,599,843 6,412,951 $ 36,164,271 $ 23,512,680 $ 13,023,931 See notes to fir~mcial statements. Enterprise Funds Project Governmental Other Activities- Enterprise Internal Funds Total Service Funds $ $ 147,695 147,695 2,165,822 $ 11,849,855 $ 5,727,900 16,650 183,212 3,688 2,182,472 I2,033,067 5,731,588 479 414,276 75 414,830 (267,135) 2,115,805 5,801,142 1,527,874 54,148 925,475 17,19t 311,427 663,313 10,021 1,080,618 4,032,838 5,149,435 126,910 284,757 290,141 507,147 2,785,899 9,068 4,196,055 14,493,424 7,003,730 (2,013,58~) (2~60,357) (1,272,142) 506,054 506,054 10,452,571 880,822 11,333,393 18,379 321,447 41,301 I50,000 246,300 (364,574) (100,072) (168,001) 12! I0,620,950 1,286,804 11,874,619 41,422 10,353,815 (726,779) 9,414,262 (1,230,720) 30,763 1,239,926 15,671,910 283,600 22,672,085 553,639 (14,149,533) (8,958) (14,951,623) (1,240) 11,906,955 (452,137) 18,374,650 (678,32I) 15,861,20I 5,551,693 87,193,944 1,384,473 $ 27,768,156 $ 5,099,~556 $ 105,568,594 $ 706,152 EXmmlT 6 34 CITY OF DUBUQUE, IOWA STATEMENT OF CASE[ FLOWS PROPRIETARY FUNDS FOR TEIE YEAR ENDED JUNE 30, 2003 CASH FLOWS FROM OPERATING ACTMTIES Cash received from customers Cash payments to suppliers for goods and services Cash payments to employees for services Other opemfmg receipts NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Payment of interfimd balances Property tax receipts Intergovernmental grant proceeds NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds fi-om sale of property and equipment Acquisition and construction of property and equipment Business-type Activities - Sewage Disposal Water Parking Works Utility Facilities $ 4,335,847 $ 4,016,428 $ 1,424,066 (1,997,390) (1,513,989) (241,368) (1,569,951) (1,534,999) , (545,930) 6,416 11,296 1,155 774,922 978,736 637,923 (427,312) (I46,834) (218,986) (438,750) (33,056) 263 (1,490) (2,171,749) (124,284) Proceeds from issuance of debt Payment of debt Interest paid Contributions Intergovernmental grant proceeds 315,000 2,640,000 (458,335) (371,111) (270,958) (t5,432) (89,044) (237,116) 96,300 3,335 NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM IN-VESTING ACTIVITIES Interest received NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, EN!?ING (60,359) 8,096 (632,358) 157,569 105,026 56,895 6,070 911,968 (156,526) 4,584,430 2,606,439 1,349,128 $ 4,590,500 $ 3,518,407 $ 1,192,602 (866,062) (179,890) (218,98~) Enterprise Funds River Project Governmental Other Activities- Enterprise Internal Funds Total Service Fu2ads 1,854,597 147,695 $ 2,183,082 $ 11,959,423 $ 5,903,697 (1,611,936) (3,510,086) (5,373,971) (2,110,220) (5,761,I00) (1,521,532) 16,650 183,212 3,688 2,002,292 (1,522,424) 2,871,449 (988,118) 15,671,910 283,600 15,955,510 553,639 (8,958) (802,090) (1,240) (471,806) (65,020) 509,190 509,190 1,080,669 1,080,669 15,671,910 1,864,501 16,271,473 487,379 (28,283,488) 263 121 (270,964) (30,851,975) 2,955,000 (1,100,404) (341,592) 150,000 246,300 10,452,571 10,455,906 (17,680,917) (270,964) (I8,636,502) 12t 18,379 7,376 345,245 49,388 11,664 78,489 851,665 (451,230) 1,121,077 9,661,074 2,124,201 $ 11,664 $ 1,199,566 $ 10,512,739 $ 1,672,971 (continued) 35 CITY OF DUBUQUE, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2003 RECONCILIATION OF OPERATING INCOM]~ (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTMTIES Operating income (loss) Adjustments to reconcile operating income (less) to net cash provided (used) by operating activities Depreciation Change in assets and liabilities Decrease (increase) in receivables Decrease (increase) in inventories and prepaid items Increase (decrease) in accounts payable Increase in accrued liabilities Total Adjustments NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Business-type Activities Sewage Disposal Water Parking Works Ufdity Facilities $ (322,616) $ (74,169) $ 217,146~ t,086,685 829,564 362,503 42,107 52,126 (1,925) (18,694) (42,337) 16~,888 56,846 11,083 20,021 3,353 1,097,538 1,052,905 420,777 $ 774,922 $ 978,73~6 $ 637,923 NONCASH CAPITAL AND RELATED FINANCING ACTMTIES Contn'butions of capital assets from other funds and outside sources Contributions of capital assets to other funds $ 935,454 $ 198,409 $ 6,791,875 $ $ $ See notes to financial statements. EXH~IT 7 (continued) Enterprise Funds Governmental America's Other Activities- R/ver Enterprise Internal Project Funds Total Service Funds $ (267,135) $ (2,013,583) $ (2,460,357) $ (1,272,142) 2,269,427 507,147 2,785,899 9,068 17,260 109,568 175,797 (3,541) (22,235) 2,146 (35,292) 2,418,532 90,67I 5,585 40,042 6,342 2,269,427 491,159 5,331,806 284,024 $ 2,002,292 $ (1,522,424) $ 2,871,449 $ (988,Ii8) $ 30,763 $ $ 7,956,50I $ $ 14,149,533 $ $ 14,149,533 $ 36 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 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. Stewardship, Compliance, and Accountability 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. Post-Employment Health Care Benefits I0. Employee Retirement Systems 11. Conduit Debt 12. Landfill Closure and Postclosure Care t3. Vision Iowa Grant 14. Accounting Change 15. Restatement of Begininng Balances I6. Subsequent Event 17. New Governmental Accounting Standards Board (GASB) Standards 37 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUN'I'I~'qG POLICIES Reporting Entity The City of Dubuque, Iowa, is a municipal corporation governed by an elected mayor and a six-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 coluran 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 Sohd 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 Drag 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 govm'nment and its component unSt. 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 support. Likewise, theprimary government is reported separately from certain legally separate component units for which the primary government is financially accountable. (continued on next page) 38 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 The statement of activities demonstrates the degree to winch the direct expenses of a given fimction or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include I) charges to customers or applicants who purchase, use, or directly benefit fi-om goods, services, or privileges provided by a given function or segment and 2) grants and contr/butions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary fm~ds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounffng, 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 fired 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 recogn/zed as revenues in the year for winch 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 with2n the current period or soon enough thereafter to pay liabilities of the current period. For tins purpose, the government 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, francinse 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 Mt/fin 60 days after year-end. Other receipts and taxes become measurable and available when cash is received by the City and are recognized as revenue at that time. 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 Fun& The Community Development Fund is used to account for the use of Commurfity Development Block Grant funds as received fi:om federal and state governmental agencies. (continued on next page) 39 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 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 Parla'ng 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 ail matching funds.. Additiotmlly, 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 a cost-reimbursement basis. Private-sector standards of accounting and financial reporting issued prior to Decmnbar 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 cuntmdict guidance of the Govermental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to tiffs same limitation. The City has elected not to follow subsequent private-sector guidance. As a general nde the effect of interfimd activity has been eliminated from the government-wide fmancial statements. Exceptions to tiffs general nde 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. ~ Propfi~ary 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. Ail revenues and expenses not meeting this definition are reported as nonopemting revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. (continued on next page) 40 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 Assets, Liabilities, and Equity Deposits and Investments 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. State statute authorizes'the City and the Dubuque Metropolitan Area Solid Waste Agency 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 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 fimds, 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. Current year delinquent property taxes 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 tins been recorded, the related revenue is deferred and wig not be recognized as revenue until the year for which it is levied. 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 first billing is mailed on July I and the second billkng is mailed on January 1. The billings are considered due upon receipt by the taxpayer; however, the actuai due date is based on a period ending three months after the tax bill mailing. On these dates (September 30 and March 31), the bill becomes delhiquent, and penalties and interest may be assessed by the government. (continued on next page) 41 CITY OF DUBUQUE, IOWA NOTES TO FI2NANCIAL STATEMENTS JUNE 30, 2003 Inventories and Prepaid Items Inventories included in the governmental funds is 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 is deterrmned by actual count and priced on the FIFO basis. Inventories included in internal service funds is stated at the lower of cost (FIFO basis) or market and consists of consumable supplies. The cost of these supplies is recorded as au 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 itmus. Restricted Assets Certain proceeds of the City's 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 lira/ted 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 sink/rig" 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 are classified as restricted assets because their use is limited by 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. 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 financial statements. 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 $5,000 for the remaining assets, and an est/mated 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 est/mated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the vaiue of the asset or materially extend assets lives are not capitalized. 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. (continued on next page) 42 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 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 usefal lives: Assets Buildings Improvements other than buildings Machinery and equipment Infrastructure Years 40 to 125 15 to 50 2 to 30 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 term/nation. 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 frre employees). All vacation pay and applicable sick pay benefits are accrued when incurred in the government-wide, proprietary, and fiduciary fund financial statements. A liability for these mounts 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 firmncial 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, business4ype 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 fond financial statements, governmental fund types recognized bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other finaucing sources. Premiums received on debt issuances are reported as other-financing sources while discounts on debt issuances are reported as othei financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 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 Agancy is restricted to uskng 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 anthorizing 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 fand balance represent tentative management plans that are subject to change. (continued on next page) 43 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 NOTE 2 - STEWARDSWIP, CO~h~PLIANCE, AND ACCOUNTABH~ITY Budgetary Information The Code of Iowa requires the adoption of an annual budget on or before March I5 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 level. The City's budget is prepared on the cash basis of accounting with an adjustment for accrual payroll. 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 o£ 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, 2003, was amended two times during the year to allow the City to increase function expenditures by approximately $73,159,000, primarily for the carry-forward' of unfinished capital improvement projects, expenditure of additional grants for capital improvements, and the expenditure of additional intergovernmental revenue for commtmity development projects. The following table, which includes all funds with function budgets, has been prepared to demonstrate legal compliance with budget control: Function Budget Actual Variance Public Safety Pubhc Works Health and Social Services Culture and Recreation Community and Economic Development General Government Debt Service Capital Projects Business-type Activities $ 15,376,633 $ 15,118,148 $ 258,485 7,836,612 7,003,174 833,438 995,112 724,045 271,067 6,683,382 6,683,508 (126) 9,643,537 8,955,522 688,015 4,082,502 4,016,214 66,288 3,977,525 3,683,088 294,437 44,359,316 18,140,060 26,219,256 82,584,825 43,036,278 39,548,547 Expenditures/expenses - budgetary basis $ 175.539.444 107,360,037 $ 68.179.40~77 Accrual adjustments (30,643,631) Expenditures/expenses - GAAP basis $ 76.716,406 In additior~ annual budgets are similarly adopted in accordance with the Code of Iowa by the Dubuque Metropolitan Area Solid Waste Agency's governing body. (continued on next page) 44 CITY OF DUBUQUE, IOWA NOTES TO FINANCIA~L STATEMENTS JUNE 30, 2003 Deficit Fund Equity The following funds had deficit fo_nd balances/net assets mounts as of June 30, 2003: Capital Projects Airport Construction $ 10,233 Internal Service General Service 8,981 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 mount at year-end was $8,906 for the City a~d $450 for the Dubuque Metropolitan Area Solid Waste Agency. Deposits. At year-end, the City's carrying amount of deposits was $23,004,584 and the bank balance was $28,382,301. The City's deposits in banks at June 30, 2003, 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 fimds. The carry/rig amount of deposits for the Dubuque Metropolitan Area Solid Waste Agency was $10,014,443 and the bank balance was $10,549,975. The Agency's deposits in banks at June 30, 2003, were entirely covered by federal depository insurance or by the State Sinking Ftmd in accordance with Chapter 12C of the Code of Iowa. Investments. The City classifies its investments into categories which present an indication of the level of credit risk in relation to the nature of the investment and the custodial provisions. Category 1 records securities that are insured, registered, held by the City, or held by the City's agent in the City's name. Category 2 denotes uninsured and unregistered securities that are held by a counterparty's trust department or agent in the City's name. Category 3 specifies uninsured and unregistered securities that are held by a counterparty% trust department or agent in other than the City's name. The City's investments at June 30, 2003, are as follows: Categories Fair 1 2 3 Value U.S. Treasury Securities $ 306,188 Federal Agency Obligations 23,028,057 Corporate Stock 58,734 $ $ $ 306,188 23,028,057 58,734 ~ $ Investment Pools: Mutual U.S. Government Bond Fund 23,392,979 1,555,932 Total Investments $ 24.948.91 t (continued on next page) 45 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 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, commurfity development, tort liability, road use tax, cable tv, general construction, refuse collection, transit system, general service, garage service, and stores/printing funds. The Dubuque Metropolitan Area Solid Waste Agency had no investments at June 30, 2003. A reconciliation of cash and investments as shown on the government-wide statement of net assets for the primary government follows: Cash on hand Carrying mount of deposits Carrying amount of investments 8,906 23,004,584 24,948,911 Total Cash and pooled cash investments Cash and pooled cash investments - temporarily restricted Cash and pooled cash investments - permanently restricted 47,146,023 793,987 22,391 Total 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 10,014.443 Total $ 10.014.8 9~3 Cash and pooled cash investments Cash and pooled cash investments - temporarily restricted $ 6,936,033 3,078.860 Total $ 10.014.89~3 NOTE 4 - INTERFUND BALANCES AND TRANSFERS Interfund balances at June 30, 2003, include amounts due to/from other funds and advances due to/from other funds. Due to/fi'om other funds balances represent amounts due to the general fund from the airport construction fund ($228,173) and the tax increment financing fend ($144,518) for deficit pooled cash balances. Advances to/from other fund balance of $449,02I represent amounts due to the general fund from the water utility fund for a construction loan. Interfimd transfers for the year ended June 30, 2003, consisted of the following: (continued on next page) 46 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 Transfer from Nonmajor Sewage Employee Community Governmental Disposal Water General Benefits Development Funds Works Utility Transfer to General $ Employee benefits Commmfity development 300,421 Nonmajor governmental 925,169 Parking facilities America's fiver project 6,297,991 Nonmaj or enterprise 100,000 Internal service 496,563 $ 1,873,216 $ $ 703,099 $ $ 43,872 90,000 877,413 416,879 136,677 200 9,158,905 183,600 4,638 18,718 10,433 10,157 $ 8,120,144 $ 1,873,216 $ 4,838 $ 11,075,607 $ 427,312 $ 146,834 Transfer to General Employee benefits Community development Nonmajor govemmentaI Parking facilities America's river project Nonmajor enterprise Internal service Transfer from America's Nonmaj or Internal Parking River Enterpr/se Service Facilities Project Funds Funds Total $ $ $ $ 1,240 $ 2,577,555 43,872 - 390,421 2,356,138 6,716,575 6,716,575 214,814 15,671,910 283,600 4,172 8,958 553,639 $ 218,986 $ 6,716,575 $ 8,958 $ 1,240 28,593,710 Transfer to general capital assets fi:om America's river project Total transfers out 7,432,958 $ 36,026,668 (continued on next page) 47 CITY OF DUBUQUE, IOWA NOTES TO FINA~NCIAL STATEMENTS JUNE 30, 2003 In the fund statements, total transfers out of $36,026,668 are greater than total transfers in of $28,593,710 because of the treatment of transfers of capital assets to the general capital assets. During the year capital assets related to America's River Project, with a book value of $7,432,958 were transferred to general capital assets. No mounts were reported in the governmental funds as the mounts did not involve the transfer of financial resources. However, the Amer/ca's River Project did report a transfer 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 thmn, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. In the year ended June 30, 2003, according to grant requ/raments the City made various transfem 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, 2003, was as follows: Primary Government: Governmental activities: Begin~ng Balance Ending as Restated Increases Decreases Balance Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated $ 42,201,537 $ 6,942,473 $ (568,960) $ 48,575,050 14.524,286 15,944.253 (14,122.848) 16,345,691 56,725,823 22,886,726 (14,691~808) 64.920,741 Capital assets, being depreciated: Bu/ldings Improvements other than builcFmgs Machinery and equipment Infrastructure Total capital assets being depreciated 38,054,919 461,264 (527,151) 37,989,032 8,412,173 629,020 (211,665) 8,829,528 20,740,035 1,902,580 (894,342) 21,748,273 155,772,187 8,745,673 164.517,860 222,979,314 11,738,537 (1,633.158) 233,084,693 (continued on next page) 48 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation Beginning Balance Ending as Restated Increases Decreases Balance $(i5,618,453) $ (693,602) $ 351,686 $(15,960,369) (3,038,260) (303,727) 164,092 (3,I77,895) (8,471,905) (1,534,053) 604,519 (9,401,439) (36,766,696) (2,187,884) (38,954.580) (63,895,314) (4,719,266) 1,120.297 (67.494.283) Total capital assets, being depreciated, net Gov~mmantal activities capital assets, net 159,084.000 7,019,271 (512,861) 165,590,410 $215.809.82~3 $ 29.905.99~7 $(15.204.669~ $230.511.151 Business-type activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated $ 6,335,936 $ 1,450,717 $ (6,202,076) $ 1,584,577 12,470,388 32,025,293 (12,279,816) 32,215,865 18,806,324 33,476.010 (18,481,892) 33,800,442 Capital assets, being depreciated: Buildings Improvements other thzm buildings Machinery and equipment Total capital assets being depreciated 52,529,264 7,090,450 59,619,714 24,280,566 1,461,812 25,742,378 39,624,852 1,557,486 (878.712) 40,303,626 116.434,682 10,109,748 (878,712) 125,665,718 Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation (32,279,791) (876,384) (33i156,175) (5,311,349) (604,645) (5,915,994) (15,097.320) (I.441,424) 620.084 (15,918,660) (52,688.460) (2,922.453) 620,084 (54,990,829) Total capital assets, being depreciated, net 63,746,222 7.187,295 (258,628) 70.674,889 BusineSs-type activities capital assets, net $ 82.552.54~6 $ 40.663_30~5 $(18.740.520~) $104.475.33~1 (continued on next page) 49 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS J-tYNE 30, 2003 Depreciation expense was charged to functions/programs for the primary government as follows: Governmental activities: Public safety Public works Health and social services Culture and recreation Community and economic development General government $ 473,292 3,236,918 7,718 839,106 26,658 125,011 Total depreciation expense - governmantal activities $ 4.708.703 Bus/ness-type activities: Sewage disposal works Water utility Parking facilities Refuse collection Transit system $ 1,086,685 829,564 362,503 184,386 322,761 Total depreciation expense - business-type activities $ 2.785.899 Component Unit: Dubuque Metropolitan Area Solid Waste Agency: Beginning Ending Balance Increases Decreases Balance Capital assets, not being depreciated: Land $ 552,528 $ $ $ 552,528 Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total capital assets being depreciated 44,349 44,349 5,893,766 5,893,766 1,827,636 1,827.636 7.765,751 7,765,751 Less accumulated depreciation for: Bnildings Improvements other than buildings Machinery and equipment Total accumulated depreciation (44,349) (44,349) (3,277,773) (282,549) (3,560,322) (1,222,358) (191.956) (1,414,314) (4,544,480) (474.505) (5,018,985) Total capital assets, being depreciated, net 3,221,271 (474,505) 2,746,766 Dubuque Metropolitan Area Solid Waste Agency capital assets, net ~ $ (474.505] $ ~ Depreciation expense of $474,505 was charged to the Dubuque Metropolitan Area Solid Waste Agency. (continued on next page) 50 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 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 $24,375,000. During the year, general obligation bonds totaling $3,I05,000 were issued to refund general obligation bonds and to fund a new water main and tower. General obligation bonds are direct obligations and pledge the f01i 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, 2003, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Corporate purpose 07/01/95 Corporate purpose 06/01/00 Corporate purpose 11/01/00 Corporate purpose 12/27/01 Corporate purpose 01/09/02 Corporate purpose 03/26/02 Corporate purpose and refunding 12/03/02 05/01/96-05/01/05 4.804.90% $ 2,000,000 $ 650,000 06/01/02-06/01/20 5.80-5.88 2,750,000 2,565,000 06/01/02-06/01/20 5.00-5.25 6,265,000 5,845,000 06/01/05-06/01/21 4.00-4.90 9,500,000 9,500,000 06/01/04-06/01/21 4.00-4.95 2,860,000 2,860,000 06/01/03-06/01/2I 3.75-5.00 1,000,000 980,000 06/01/03-06/01/17 2.50-4.30 3,105,000 2,605,000 $ 27.480~000 $ 25.005.000 Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Ending Governmental Activities June 30 Principal Interest Business-type Activities Principal Interest 2004 $ 855,000 $ 929,474 $ 485,000 $ 239,232 2005 1,315,000 890,361 240,000 223,971 2006 590,000 832,911 250,000 213,972 2007 830,000 806,598 265,000 203,531 2008 875,000 770,530 270,000 192,362 2009-2013 5,175,000 3,220,722 1,520,000 769,441 2014-2018 6,225,000 1,925,845 1,675,000 372,204 2019-2021 4.000,000 377,888 435.000 38,616 Total $ 19.865.00~0 $ 9.754.329 $ 5.I40~000 $ 2.253.32~9 (continued on next page) 51 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 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 f'mancing d/stricts to pay debt service. These bonds generally are issued as serial bonds with varying mounts of principal maturing annually and with interest payable semi-annually. Tax-incremant financing bonds outstanding at June 30, 2003, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Advanced Data- Com 03/18/99 12/31/01-06/30/1I 6.0-9.0% $ 900,000 $ 754,069 Categraph Systems 12/01/99 12/31/01-12/31/10 8.8 360,000 303,798 Eagle Window & Door 02/15/00 12/31/02-06/30/12 9.1 3,168,538 2,963,135 $ 4.428.53~88 $ 4.021.002 Annual debt service requirements to maturity for tax-increment financing bonds are as follows: Fiscal Year Ending Governmental Activities June 30 Principal Interest 2004 $ 340,590$ 334,782 2005 369,501 305,871 2006 400,911 274,461 2007 435,061 240,311 2008 472,192 203,180 2009-2012 2,002,747 385,239 Total $ 4.021.00~2 $ 1.743.84~44 Revenue Bonds. The City also issues bonds where the City pledges income derived from 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, 2003, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Parking facilities 03/01/98 05/01/984)5/01/10 4.404.75% $ 2.515.00~0 $ 1.540.000 (continued on next page) 52 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 Revenue bond debt service requirements to maturity are as follows: Fiscal Year Ending June 30 Business-Type Activities Principal Interest 2004 $ 190,000 $ 70,885 2005 200,000 62,525 2006 210,000 53,525 2007 220,000 43,970 2008 230,000 33,850 2009-2012 490,000 35.030 Total $ 1.540.000 $ 299.785 Notes Payable. Notes payable have been issued to prov/de funds for economic development and for the purchase of fixed assets. Notes payable at June 30, 2003, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Economic development 02/27/98 07/01/03 4.40% $ 655,500 $ 655,500 Economic development 07/15/99 07/01/00-07/01/04 None 800,000 266,667 Land purchase 06/30/00 07/01/03 6.00 320,000 283,188 Fiber optic line 02/25/02 07/01/04 None 40,000 40,000 $ 1.815.500 Debt service requirements to maturity for notes payable are as follows: Fiscal Year Ending Governmental Activities June 30 Principal Interest Business-type Activities Principal Interest 2004 $ 922,167 $ 28,842 $ 283,i88 $ 24,398 2005 40,000 Total $ 962.167 $ 28.842 $ 283.188 $ 24.398 Current Refunding. The City issued $605,000 of general obligation bonds for a current refunding of $595,000 of general obligation bonds. The refunding was undertaken to reduce interest rates from 5.13% to 2.50%. ~ne reacquisition price equaled the net canying amount of the old debt. The transaction resulted in an economic gain of $10,898 and a reduction of $10,278 in futare debt service payments. (continued on next page) 53 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 Changes in Long-term Liabilities. Long-term liability activity for the year ended June 30, 2003, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: General obligation bonds $ 20,945,000 $ 150,000 $ (1,230,000) $ 19,865,000 $ 855,000 Tax-increment financing bonds 4,334,988 (313,986) 4,021,002 340,590 Notes payable 1,578,167 (616,000) 962,167 922,167 Compensated absences 2,018,498 2,248,606 (2,018,498) 2,248,606 2,248,606 $ 28.876.653 ~ $ (4.178.484) $ 27.096,775 $ 4.366_363 Business-type activities: General obligation bonds $ 3,105,000 Less: Unamortized discounts (24,750) Total general obligation bonds 3,080.250 Revenue bonds 1,720,000 Less: Deferred amounts on refunding (21,333) Total revenue bonds 1,698,667 Notes payable 286,523 Compensated absences 265,866 $ 2,955,000 $ (920,000) $ 5,140,000 $ 485,000 (1,111) 1,375 (24,486) 2,953,889 (918,625) 5,115,514 485,000 (t80,000) 1,540,000 190,000 2,667 (18,666) (177,333) 1,521,334 190,000 (3,335) 283,188 283,188 274,850 (265,866) 274,850 274,850 $ 5.331.306 ~ $ (1.365.159) $ 7.194.886 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 governmant 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 $80,000, and an aggregate stop loss of approximately $5,520,000 for 2003. Coverage fi.om a private insunmce company is maintained for losses in excess of the stop loss amount. All claims handling procedures are performed by a third-party claims adminish-ator. Incurred but not reported claims have been aecmed 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 clawing adjustment expense. (cominued on next page) 54 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 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 $400,000, and an aggregate stop loss consistent with statutory limits for 2003. 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 trove been accrued as a liability based upon the claims administrator's est/mate. Settled claims have not exceeded commercial coverage in any of the last three fiscal years. Tlie 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 Resmwe Fund based on actuarial estimates of the amounts needed to pay prior- and current-year cia/ms. The claims liability of $757,~44 in the Health Insurance Reserve Fund and $281,128 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 stataments and the amount of the loss can be reasonably estimated. Changes in reported liabilities for the fiscal years ended June 30, 2002 and 2003, are summarized as follows: Health Workers' Insurance Compensation Reserve Fund Reserve Fund Liabilities at June 30, 2001 Claims and changes in estimates during fiscal year 2002 Claim payments 536,508 $ 176,549 3,706,029 459,078 (3,634,035) (309,876) LiabiI/ties at June 30, 2002 Claims and changes in estimates during fiscal year 2003 Claim payments 608,502 325,751 4,336,860 297,067 (4,187,418) (341,690) Liabilities at June 30, 2003 $ 75~944 $ 281.128 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 with over 475 members from various governmental entities throughout the State of Iowa. The Pool was formed in August 1986 for the purpose of manag/ng and funding th/rd-party liability claims against its members. The Pool provides coverage and protection in the following categories: general liability, automobile liability, automobile physical damage, publ/c officials liability, police professional liability, property, irdand marine, and boiler/mach/nery. There have been no reductions in insurance coverage from prior years. (continued on next page) 55 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 Each member's annual casualty contributions to the Podl fund current operations and a reserve fund. Annual operating contributions are those mounts 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. During the first six years of membership, a portion of the member's contribution is allocated to a Cumulative Reserve Fund. TherealSer, no further annual contribution shall be made to the Cumulative Reserve Fund unless the Board shall require further annual contributions for the purpose of maintaining the Cumulative Reserve Fund at a level equal to 300 percent of the total current members' basis rates or to comply with the reqMrements of any applicable regulatory authority having jurisdiction over the Pool. The PooI 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'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, 2003, were $404,978. 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 $250,000 per claim. Claims exceeding $250,000 are reinsured in an amount not to exceed $1,750,000 per claim and $5,000,000 in aggregate per year. For members requiring specific coverage from $2,000,000 to $15,000,000, such excess coverage is also reinsured. Automobile physical damage risks are retained by the Pool up to $50,000 each accident, each location, with excess coverage reinsured on an individual- member basis. All property risks are also 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 claim~ exceeds the amount of risk-sharing protection provi~ted by the member's fisk-shadng certificate, or in the event that a series of casualty claims exhausts total members' equity plus any reinsurance and any excess risk-shafing recoveries, then payment of such claims shall be the obligation of the respective individual member. The City does not report a liability for losses in excess of reinsurance or excess risk-sharing recoveries unless it is deemed probable that such losses have occurred and the amount of such loss can be reasonably estimated. Accordingly, at June 30, 2003, no liability has been recorded in the City's financial statements. As of June 30, 2003, 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 may withdraw from the Pool at anniversary. If the notice to withdraw is within a 60 day period of the anniversary date, the member forfeits all fights to their interest in the vested Cumulative Reserve Fund. Upon withdrawal, payments for all clainm 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 reserve contributions. If a member withdraws after the s/xth year, the member is reflmded 100 percent of its Cumulative Reserve Fund, 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. (continued on next page) 56 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 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 fands received under these programs generally requires compliance with terms and condkions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting fi.om such audits could become a liability of the general fund or other applicable funds. However, in the opinion of management, liabilities resulting fi.om disallowed claims, if any, will not have a material effect on the City's financial position as of June 30, 2003. Litigation The City's corporation counsel reported that as of June 30, 2003, 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. Construction Contracts The City has recognized as a liability only that portion of construction contracts representing construction completed through June 30, 2003. The City has additional commitments for signed construction contracts of approximately $15,219,000 as of June 30, 2003. These commitments will be funded by federal and state grants, cash reserves, and bond proceeds. NOTE 9 -POST-EMPLOYMENT HEALTH CARE BENEFITS In addition to providing pension benefits, the City provides certain health care benefits for retired disabled police officers and £zrefighters as mandated by the Code of Iowa. The cost of health care benefits for retired disabled police offiders and firefighters is recogni×ed as an expenditure as claims are paid. As of June 30, 2003, 57 retirees were eligible for these benefits, and the cost of the benefits for the fiscal year ended June 30, 2003, totaled $22,396. 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 defmed 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 £mancial statements and required supplementary information. The report may be obtained by writing to Municipal Fire and Police Retirement System of Iowa, 2836 104th Street, Urbandale, Iowa, 50322. (continued on next page) 57 · CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 Plan members are required to contribute 9.35% of eamable compensation, and the City's contribution rote may not be less than 17% of eamable compensation. Contribution requirements are established by state statute. The City's contributions to the Plan for the years ended June 30, 2003, 2002, and 2001, were $1,425,337, $1,338,824, and $1,327,178, respectively, winch met the required minimum contribution for each year. IPERS The City contributes to the Iowa Public Employees Retirement System (IPERS) winch is a cost-sharing multiple-employer defined benefit pension plan administered by the State of Iowa. IPERS provides retirement and death benefits winch are established by state statute to plan members and baneficiaries. [PERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by whting to I?ERS, P.O. Box 9117, Des Moines, Iowa, 50306-9I 17. Plan members are reqrfired to contribute 3.70% of their annual covered salary, and the City is required to contribute 5.75% of annual covered payroll. Contribution requirements are established by state statute. The City's contributions to IPERS for the years ended June 30, 2003, 2002, and 2001, were $918,374, $834,972, and $828,947, respectively, equal to the required contributions for each year. 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, ownersinp 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 maimer for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements· As of June 30, 2003, there were four series of Industrial Revenue Bonds outstanding, with an aggregate principal amount payable of $8,353,474. 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 ceil 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 $1,904,315 reported as landfill closure and postclosure care liability at June 30, 2003, represents the cumulative amount reported to date based on the use of 95 percent of the estimated capacity of cells 3 and 4 and the use of 55 percent of the estimated capacity of ceils 5 and 6. The Agency will recognize the rcmaalning estimated cost of closure and postclosure care of $844,642 as the remaining capacity is filled. (continued on next page) 58 CITY OF DUBUQUE, IOWA NOTES TO FhNANCIAL STATEMENTS JUNE 30, 2003 These amounts are based on what it would cost to perform ail closure and postclosure care in 2003. The Agency expects to close cells 3 and 4 in 2004 and to close the current generation of permitted cells in 2012. The Agency is making plans to construct a second and th/rd generation of ceils to extend the life of the landfill to 2050. Actual cost may be kigher 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 fedeml £mancial assurance requirements. At June 30, 2003, funds have been restricted for closure and postclosure costs in the amount of $2,748,957, which exceeds the liability currently recognized. NOTE 13 - VISION IOWA GRANT The City, along with the Dubuque County Historical Society, has entered into a $40 million Vision Iowa Grant for the construction of the America's River Project. As part of the agreement, the City has issued $12,360,000 in general obligation bonds and is to receive approximately $20 million of the grant proceeds, with the Historical Society receiving the remaining proceeds. As of June 30, 2003, the City has received 11 million of the grant proceeds. NOTE 14 - ACCOUNTING CltANGE Governmental Accounting Standards Board Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements was implemented during the year ended June 30, 2003. The interpretation modifies when compensated absence liabilities are recorded under the modified accrual basis of accounting. Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments; Statement No. 37, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments: Omnibus; and Statement No. 38, Certain Financial Statement Note Disclosures; were implemented during fiscal year 2003. The statements create new basic financial statements for reporting the City's fmancial activities. The financial statements now include government-wide fmancial statements prepared on an accrual basis of accounting and fund financial statements which present information for individual major funds rather than by fund type. Nonmajor funds are presented in total in one colunm. The government-wide financial statements report the City's governmental activities, business-type activities, and component unit. Governmental activities now include capital assets, the Internal Service Fund and the changes in assets and liabilities at July 1, 2002, resulting from the conversion to the accrual basis of accounting. (continued on next page) 59 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 NOTE 15 - RESTATEMENT OF BEGINN-fiNG BALANCES The restatement of fund balances/net assets was due to the following: Goveramental Accounting Standards Board (GASB) Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements was implemented during the year ended June 30, 2003. The interpretation modifies when compensated absence liabilities are recorded under the modified accrual basis of accounting. The expendable ~fts of the previously reported Library Gifts Trust fund balance were restated into the Library Expendable Gifts Trust. A note payable, which was inadvertently recorded as a general government liability previously, was restated as a Sewage Disposal Works liability. Several notes receivable, which were inadvertently expensed in the previous year, have been recorded. Restatement of fund balances/net assets previously reported are as follows: Fund balances/net assets June 30, 2002, as previously reported $21,361,226 Library Library Sewage Commtmity Section VIII Expendable Gifts Disposal Development Housin~ Gifts Trust Trust Works $13,477,608 $ 453,616 $ $ 64,738 $35,814,896 Adjustments Effect of implementing GASB interpretation No. 6 Effect of restatement of expendable gifts Effect of restatemant of note payable Effect of restatement of notes receivable 386,439 7,284 26,372 325.162 44,928 (44,928) (46,640) Fund balances/net assets June 30, 2002, as restated $ 21.747.665 $13.810_054 $ 47~9_988 $ 44.928 $ 19:810 $35.768.256 NOTE 16 - SUBSEQUENT EVENT On September 15, 2003, the City issued $2,110,000 in General Obligation Bonds to finance storm water projects. The interest rates on the bonds range from 3.204.75% percent and the final maturity date is June 1, 2023. (continued on next page) 60 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 NOTE 17 - NEW GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) STANDARDS The Governmental Accounting Standards Board (GASB) has issued two statements not yet implemented by the City of Dubuque. The statements, which might impact the City of Dubuque are as follows: Statement No. 39, Determining Whether Certain Organizations are Component Units, issued May 2002, will be effective for the City for the fiscal year ending June 30, 2004. This statement amends Statement No. 14, The Financial Reporting Entity, to provide additional guidance to determine whether certain organizations for which the City is not £mancially accountable should be reported as component units based on the nature and significance of their relationship with the City. Statement No. 40, Deposit and Investment Risk Disclosures issued March 2003, will be effective for the City for the fiscal year ending June 30, 2005. This statement addresses common deposit and investment risks related to credit risk, concentration of credit risk, interest rate risk, and foreign currency risk. The City's management has not yet determined the effect these Statements will have on the City's financial statements. 61 REQUIRED SUPPLEMENTARY INFORMATION CITY OF DUBUQUE, IOWA SCH EOULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - BUDGETARY BASIS GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2003 Variance with Final Original Final Budget-Positive Budget Budget Actual (Negative) REVENUES Taxes $ 17,417,330 $ 17,417,330 $ 17,195,739 $ (221,591) Licenses and permits 866,391 866,391 745,538 (120,853) Intergovernmental 1,567,257 5,224,985 2,I49, I37 (3,075,848) Charges for services 8,147,846 5,169,885 5,056,960 ( I 12,925) Fines and forfeits 395,323 395,323 4i 1,584 16,261 Investment earnings 783,753 783,753 1,018,513 234,760 Contributions 120,308 735,795 325,003 (410,792) Gaming 5,093,954 8,297,267 9,400,210 1,102,943 Miscellaneous 515,095 549,095 494,854 (54,241 ) Total Revenues 34,907,257 39,439,824 36,797,537 (2,642,287) EXPENDITURES Current Public safety 15,238,412 16,044,074 15,355,160 688,915 Public works 5,841,686 16,727,033 9,139,887 7,587,146 Health and social services 509,089 681,827 618,165 63,662 Cultare and recreation 7,174,686 9,119,003 7,283,700 1,835,304 Community and economic develol~nent 2,599,951 2,311,168 1,570,303 740,865 General goverament 3,750,604 3,772,536 3,648,925 123,611 Debt service 55,796 55,796 55,773 23 Total Expenditures 35,170,224 48,711 ~438 37,671,912 11,039,526 DEFICIENCY OF REVENUES UNDER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Sale of capital assets Total Other Financing Sources (Uses) CHANGE 1N FUND BALANCES FUND BALANCES, BEGINNING FUND BALANCES, ENDING (262,967) (9,271,614.) (874,375) 8,397,239 3,078,465 3,617,725 3,190,820 (426,905) (5,423,176) (I2,595,408) (7,793,257) 4,802,151 1,692,025 1,167,239 (524,786) (2,344,711) (7,285,658) (3,435,198) (2,607,678) (16,557,272) (4,309,573) 19,868,670 I9,868,670 19,868,670 3,850,460 12,247,699 $ 17,260,992 $ 3,311,398 $ 15,559,097 $ 12,247,699 62 CITY OF DUBUQUE, IOWA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - BUDGETARY BASIS EMPLOYEE BENEFITS SPECIAL REVENUE FUND FOR ~ YEAR ENDED JUNE 30, 2003 Variance with Final Original Final Budget-Positive Budget Budget Actual (Negative) REVENUES Tmxes $ 1,924,368 $ 1,924,368 $ 1,897,825 $ (267543) EXPENDITURES Current Gen~raI government EXCESS OF REVENUES OVER EXPENDITURES 204 53,204 51,583 1,62 I 1,924,164. 1,871, 164 1,846,243 (24,921 ) OTHER FINANCING SOURCES (USES) Transfers in 43,872 43,872 43,872 Transfers out (1,968,036) (1,968,036) (I,873,216) Total Other Financing Sources (Uses) (1.924,164) (1,924,164) (I,829,344) CHANGE IN FUND BALANCES FUND BALANCES, BEGhNN1NG FUND BALANCES, ENDING 94,820 94,820 (53,000) I6,898 69,898 72,486 72,486 72,486 72,486 $ 19,486 $ 89,384 $ 69,89~8 63 CITY OF DUBUQUE, IOWA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - BUDGETARY BASIS COMMUNI'IY DEVELOPMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2003 Variance with Final Original Final Budget-Positive Budget Budget AcmaI (Negative) REVENUES Intergovernmental $ 6,215,155 $ 5,946,862 $ 3,024,062 $ (2,922,800) Investment earnings 97,493 97,493 120,517 23,024 Miscellaneous 568,863 741,864 939,831 197,967 Total Revenues 6,881,51 I. 6,786,219 4,084,410 (2,701,809) EXPENDITURES Current Public works 404,187 404,187 89,848 314,340 Health and social services 142,876 142,876 127,712 15,165 Culture and recreation 126,761 159,557 143,841 15,717 Community and economic development 6,187,667 6,995,003 4,096,685 2,898,317 General government 246,265. 89,902 81,280 8,622 Total Expenditures 7,107,756. 7,791,526 4,539,366 3,252,160 DEFICIENCY OF REVENUES UNDER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING (226,245) (1,005,307) (454,956) 550,351 FUND BALANCES, ENDING 278,900 303,900 127,982 (175,918) (356,645) (630,263) (54,545) 575,718 (77,745) (326,363) 73,437 399,800 (303,990) (1,331,670) (381,519) 950,151 2,158,80I 2,158,801 2,158,801 $ 1,854,8l~1 $ 827,I31 $ 1,777,282 $ 950,151 64 CITY OF DUBUQUE, IOWA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - BUDGETARY REPORTI1NG FOR THE YEAR ENDED JUNE 30, 2003 In accordance with the Code of Iowa, the City annually adopts a budget on the cash basis of accoUnting with an adjustment for accrued payroll following required public notice and hearing. The budget may be amended during the year utilizhxg similar statutorily prescribed procedures. Formal and legal budgetary control is based upon dine major classes of disbursements known as fanetions, not by fund or fund type. Legal budgetary compliance for the City as a whole is demonstrated in Note 2 to the financial statements. The following are reconciliations of the budget basis to the mod/fled accrual basis of accounting: General Fund Modified Budgetary Accrual Accrual Basis Adjustments Basis Revenues $ 36,797,537 $ (8,295) $ 36,789,242 Expenditures 37,671.912 (1,352,865) 36,319.047 Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) (874,375) 1,344,570 470,195 (3.435,198) (1,990,152) (5,425,350) Net Fund balance, begirming, as restated (4,309,573) (645,582) (4,955,155) 19,868,670 1,878,995 21,747,665 Fund balance, ending $ 15.559.097 $ 1.233.41~3 $ 16.792.510 Employee Benefits Fund Modified Budgetary Accrual Accrual Basis Adjustments Basis Revenues Expenditures $ 1,897,825 $ (24,311) $ 1,873,514 51,583 108 51,691 Excess (deficiency) of revenues over (under) expenditures Other £mancing sources (uses) 1,846,243 (24,420) 1,821,823 (1.829,344) (1,829,344) Net Fund balance, beg/nning 16,898 (24,419) (7,521) 72,486 37.565 110,051 Fund balance, end/ng $ 89~384 $ 13.146 $ 102.530 (continued on next page) 65 CITY OF DUBUQUE, IOWA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - BUDGETARY REPORTING FOR ~I'H E YEAR ENDED JUNE 30, 2003 Revenues Expenditures Deficiency of revenues under expenditures Other financing sources (uses) Net Fund balance, beginvSng, as restated Fund balance, ending Community Development Fund Modified Budgetary Accrual Accrual Basis Adiustments Basis $ 4,084,410 $ (1,384,365) $ 2,700,045 4,539.366 (1,367,805) 3,171,561 (454,956) (16,560) (471,516) 73,437 312,146 385,583 (381,519) 295,586 (85,933) 2,158,801 11,651,253 13,810,054 11.946.839 66 NONMAJOR GOVERNMENTAL FUNDS SPECIAI REVENUE FUNDS Special revenue funds are used to account for specific revenues tlmt 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 maLatenance and improvement of City streets. Section VIII Housing Fund - This fund is used to account for the operations of'federal Section vm existing, voucher, and mod rehab 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 cla/ms against the City. Police and Fire Retirement Fund - This fund is used to account for the balance of actuadally- determined excess pension funds as calculated when local retirement systems were terminated and combined into a statewide retirement system. The excess lands may be used to help fund the City's portion of contributions to the statewide police and fire retirement system. 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 o£projects within the tax increment financing district, and for the payment of remaining principal and interest costs on the tax increment f'mancing 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 o£Dubuque and the cable franchisee. Library Expendable Gifts Trust - This fund is used to account for contributions given to the hbrary to be spent for specific purposes. DEBT SERVICE FUND The debt service fired 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 account for resources used for the acquisition of fixed assets and construction of major capital facilities other than those fmanced by proprietary ftmds and trust fimds. Street Construction Fund - This fund is used to account for the resources and costs related to street capital improvements. Store Sewer Construction Fund - This fund is used to account for the resources and costs related to storm sewer capital improvements. Dog Track Depreciation Fund - Tiffs fund is used to account for the resources and costs related to capita/improvements and maintenance at the greyhound racing facility. General Construction Fund - This fond is used to account for the resources and costs related to non- assignable capital improvements. Airport Construction Fund - Tiffs 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 Tm/l, per trust agreement. Library Gifts Trust Fund This fund is used to account for testamentary g/f~s to the City library. CITY OF DUBUQUE, IOWA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2003 ASSETS Cash and pooled cash mvesmaents Receivables Property tax Delinquent Succeed/ng year Accounts and other Special assessments Accrued interest Notes Intergovernmental Reslricted assets Cash and pooled cash investments Total Assets LIABILITIES AND FUND BALANCES LIABILi fLES Accounts payable Accrued payroll imtergovemmantal payable Due to other funds Deferred revenue Succeeding year property tax Other Total Liabilities FUND BALANCES Reserved for/by Encumbrances Long-term notes receivable Bond ordinance Debt serv/ce Dog track Franch/se agreement Endowments Unreserved, reported in Special revenue funds Capital projects funds Permanent funds Total Fund Balances Road Section VIII Tort Use Tax Housing Liability $ 5,994,933 $ 460,512 $ 8,502 353,207 75,630 18,305 1,934 272,766 $ 6,348,140 $ 544,644 $ 293,005 272,766 341 $ 27,472 $ 34,521 $ 25,367 4,147 19,265 52,839 57,933 273,107 20,363 31,812 7,802 6,274,938 447,097 19,898 6,295,301 486,711 19,898 Total Liabilities and Fund Balances $ 6,348,140 $ 544,644 $ 293,005 EXHIBIT Aq SpecialRevenue Police Tax Library and Fire Special Increment Expendable Debt Retirement Assessments Firmacing Cable TV Gifts Trust Service $ 108,760 $ 1,610,760 $ $ 885,024 $ 70,478 $ 77,128 534,465 8,195 2,643 21,867 4,881 5,333 266,252 155 2,663 $ I08,760 $ 2,153,420 $ I50,526 19,327 153,169 $ 931,099 $ 70,633 $ 351,376 $ $ $ 420,060 420,060 - $ 144,518 22,957 $ 1,591 $ 350 1,584 266,252 941 144,518 24,541 1,591 267,543 150,526 86,561 303 19,327 83,833 108,760 1,733,360 (141,875) 800,670 68,739 I08,760 1,733,360 $ 108,760 $ 2,153,420 8,651 906,558 153,169 $ 931,099 $ 69,042 83,833 70,633 '$ 351,376 (continued) 67 CITY OF DUBUQUE, IOWA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2003 ASSETS Cash and pooled cash investments Receivables Property tax Delinquent Succeeding year Accounts and other Special assessments Accrued interest Notes Intergovernmental Restricted assets Cash and pooled cash investments Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Accrued payroll Intergovernmental payable Due to other funds Deferred revenue Succeeding year property tax Other Total Liabilities FUND BALANCES Reserved for/by Encumbrances Long-term notes receivable Bond ordinance Debt service Dog track Franchise agreement Endowments Unreserved, reported in Special revenue funds Capital projects funds Permanent funds Total Fund Balances C~ital Street Storm Sewer Dog Track Construction Construction Depreciation $ 824,051 $ 1,034,879 $ 1,043,832 4,536 3,819 5,259 349,034 2,407 $ 1,177,621 $ 1,041,105 $ 1,049,091 $ 43,247 $ 19,464 $ 43,247 19,464 1,232,550 105,404 (98,176) 916,237 1,049,091 1,134,374 1,021,641 1,049,091 Total Liabilities and Fund Balances $ 1,177,621 $ 1,041,105 $ 1,049,091 EXHIBIT A-1 (continued) Projects General Ah'port Sales Trax Consm~cfion Construct/on Construction Permanent Funds Total Ella Lyons Library Nonmajor Peony Trail Gifts Governmental Trust Trust Funds $ 4,135,508 $ $ 1,509,339 $ $ $ 17,773,509 1,365 248,390 8,901 232,689 $ 4,136,873 $ 248,390 $ 1,750,929 $ 287 7,267 539,018 21,867 534,465 42,704 8,502 1,261,357 73,688 19,160 262,701 73,688 $ 19,447 $ 20,451,390 $ 380313 $ 30,450 $ 6,173 $ $ - $ 566,638 31,098 19,265 228,173 372,691 539,018 421,342 380,413 258,623 6,173 1,950,052 429,758 19,805 13,465 3,326,702 (30,038) 1,731,291 10,391 653 1,940,674 7,802 150,526 83,833 1,049,091 19,327 12,000 22,391 63,297 6,794 3,756,460 (10,233) 1,744,756 73,688 19,447 9,311,587 5,846,016 70,091 18,501,338 $ 4,136,873 $ 248,390 $ 1,750,929 $ 73,688 $ 19,447 $ 20,451,390 68 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR TlqE YEAR ENDED JUNE 30, 2003 Road Section VIII Tort Use Tax Homing Liability REVENUES Taxes $ $ $ 225,745 Special assessments Intergovernmental 4,657,518 4,663,840 Charges for services Investment earnings 1,082 Contributions Gam/ng Miscellaneous 13,293 Total Revenues 4,657,518 4,678,215 225,745 EXPENDITURES Current Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital projects Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Issuance of refunding bonds Payment of refunded bonds Transfers in Transfers out Total Other Financ/ng Sources (Uses) CHANGE IN NET ASSETS FUND BALANCES, BEGINNinG, AS KESTATED 3,065,183 4,665,649 24,669 3,089,852 4,665,649 1,567,666 12,566 225,745 (233,59{) (233,594) (5,843) (224,795) (5,843) (224,795) 1,334,072 6,723 950 4,961,229 479,988 18,948 FUND BALANCES, ENDING $ 6,295,30~1 $ 486,711 $ 1~9,898 EXItIBIT A-2 Special Revenue Police Tax and Fire Special Increment Retirement Assessments Financing Cable TV Library Expendable Debt Gifts Trust Service $ $ 2,255,539 $ 561,406 104,584 21,526 33,576 550,377 1,988 60,205 665,990 2,277,065 583,953 $ 738,396 672,375 13,303 62,193 1,424,074 352,064 1,892,766 20,994 568,919 38,080 3,457 1,729,466 2,244,830 589,913 38,080 t,732,923 665,990 32,235 (5,960) 24,1t3 (308,849) (263,872) (112,972) (158,425) (263,872) (112,972) (I58,425) 150,000 (150,000) 174,922 (4,303) (4,303) 174,922 (263,872) 553,018 (126,190) (10,263) 24,113 (t33,927) 372,632 1,180,342 134,84I 916,821 44,929 217,760 $ 108,760. $ 1,733,~360 $ 8,651 $ 906,558 $ 69,042 $ 83,833 (continued) 69 CITY OF DUBUQUE, IOWA CONEBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2003 Capital Dog Track Depreciation REVENUES Taxes $ 1,947,661 $ $ Special assessments Intergovernmental 297,780 214,654 Charges for services Investment earnings 23,902 32,929 Contributions 62,752 Gaming 120,000 Miscellaneous 57,153 524 Total Revenues 2,365,346 239,080 152,929 EXPENDITURES Current Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital projects Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER.) EXPENDITURES OTHER FINANCING SOURCES (USES) Issuance of refunding bonds Payment ofreftmded bonds Transfers in Transfers out Total Other Financing Sources (Uses) CHANGE IN NET ASSETS FUND BALANCES, BEGINNING, AS RESTATED Street Storm Sewer Construction Construction 5,541,053 972,888 5,541,053 972,888 (3,175,707) (733,808) 152,929 802,292 1,I20,000 (142,689) 802,292 977,311 (2,373,415) 243,503 152,929 3,507,789 778,138 896,162 FUND BAJ_A2qCES, ENDING $ 1,134,374 $ 1,021,641 $ 1,049,091 EX H ~ ~IT A-2 continued) Proiects General Airport Sales Tax Construction Construction Construction $ $ $ 1,298,441 627,065 1,712,120 - 190,824 170,459 1,693 15,000 21,381 126,774 Permanent Funds Total Ella Lyons Library Nonmajor Peony Trail Gifts Governmental Trust Trust Funds $ - $ 56,969 (408) (362) $ 6,465,782 561,406 12,845,352 190,824 461,241 122,957 135,000 769,502 833,905 2,031,411 1,355,410 (408) (362) 21,552,064 22,677 674,031 1,966,989 775,350 1,874 3,065,I83 20,994 39,954 5,017,713 619,722 3,622,232 9,930,311 696,708 1,966,989 775,350 1,874 22,316,109 137,197 64,422 580,060 (2,282) (362) (764,045) 205,954 52,970 (9,091,844) (8,885,890) 52,970 (8,748,693) 117,392 12,505,153 (127,625) (837,270) (837,270) (257,210) (2,282) 2,001,966 75,970 150,000 (150,000) 2,356,I38 (11,075,607) (8,719,469) (362) (9,483,514) 19,809 27,984,852 $ 3,756,460 $ (10,233) $ 1,744,756 $ 73,688 $ 19,447 $ 18,501,338 70 NONMAJOR ENTERPRISE FUNDS Enterprise funds are used to account for operatio~ that are financed and operated in a manner similar to private business enterprises -- where the intent of the govermnent's 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 government's council has decided that periodic determination of net income is appropriate for accountabihty 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 COMBINENG STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS JUNE 30, 2003 EXHIBIT B-1 ASSETS Total Other Refuse Transit Enterprise Collection System Funds CURRENT ASSETS Cash and pooled cash investments Receivables Property tax Delhxquent Succeeding year Accounts Intergovernmental Inventories Total Current Assets CAPITAL ASSETS Land Buildings Machinery and equipment Accumulated depreciation Net Capital Assets $ 751,257 $ 448,309 $ 1,199,566 4,124 4,124 513,259 513,259 194,624 1,665 196,289 6,455 6,455 8,871 8,871 945,881 982,683 1,928,564 36,000 36,000 1,893,590 1,893,590 1,721,316 3,191,336 4,912,652 (984, t50) (1,777,681) (2,761,831) 737,166 3,343,245 4,080,411 Total Ass~s LIABILITIES 1,683,047 4,325,928 6,008,975. CURRE2~ LIABILITIES Accounts payable Accrued payroll Accrued compensated absences Deferred revenue - succeeding year property tax Total Liabilities NET ASSETS Invested/n capital assets, net of related debt Unrestricted Total Net Assets 260,595 30,752 291,347 19,641 12,564 32,205 52,611 I9,997 72,608 513,259 513,259 332,847 576,572 909,419. 737,166 3,343,245 4,080,411 613,034 406,1II 1,019,145 $ 1,350,200 $ 3,749,356 $ 5,099,556 71 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS FOR TH ~; YEAR ENDED JUNE 30, 2003 giT B-2 OPERATING REVENUES Charges for sales and services Other Total Operating Kevenuas OPERATING EXPENSES Employee expense Util/ties Repairs and maintenance Supplies and services Depreciation Total Operat~g Expenses OPEILATtNG LOSS NONOPERATING REVENUES (EXPENSES) Taxes Intergovernmental Loss on disposal of assets Total Nonoperating Revenues (Expenses) LOSS BEFORE TRANSFERS TRANSFERS IN TRAaNSFERS OUT CHANGE IN NET ASSETS NET ASSETS, BEGINNING NET ASSETS, ENI)ING Total Other Refuse Transit Enterprise Collection System Funds 1,981,066 $ 184,756 $ 2,165,822 39 16,611 16,650 1,981,105 20t,367 2,182,472 1,256,032 859,773 2,115,805 1,086 53,062 54,148 t63,591 147,836 311,427 515,416 565,202 1,080,618 20,296 106,614 126,910 184,386 322,761 507,147 2,t40,807 2,055,248 4,196,055 (159,702) (1,853,881) (2,013,583) 506,054 506,054 880,822 880,822 (100,072) (100,072) 1,286,804 1,286,804 (159,702) (567,077) (726,779) 283,600 283,600 (8,958) (8,958) (168,660) 1,518,860 1,3503200 (283,477) (452,137) 4,032,833 5,551,693 $ 3,749,356 $ 5,099,556 72 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2003 BIT B-3 CASH FLOWS FROM OPERATING ACTMTIES 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 Property tax receipts Intergovernmental grant proceeds NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND I~ELATED FINANCING ACTMTIES Acquisition and constraction of property and equipment CASH FLOWS FROM INVESTING ACTIVITIES Interest received NET INCREASE (DECREASE) 1N CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGll4NtNG CASH AND CASH EQUIVALENTS, ENDING Total Other Refuse Transit Enterprise Collection System Funds $ 1,997,854 $ 185,228 $ 2,183,082 (704,326) (907,610) (1,611,936 (1,253,291) (856,929) (2,110,220 39 16,611 16,650 40,276 (1,562,700)~ (1,522,424 (8,958) 283,600 283,600 (8,958) 509,190 509,190 1,080,669 1,080,669 (8,958) 1,873,459 1,864,501 (204,800) (66,164) (270,964) 7.376 7,376 (166,106) 244.595 78,489 917,363 203,714 1,121,077 751,257 $ 448,309 $ 1,199,566 (confmued) 73 CITY OF DUBUQUE, IOWA COMBhNING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2003 EX H I BIT B-3 (continued) RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating loss Adjusmaents to reconcile operating loss to net cash provided (used) by operating activities Depreciation Change in assets and liabilities Decrease in receivables Increase in inventories Decrease in accounts payable Increase in accrued liabilities Total Adjustmems NET CASH PROVIDED (USED) BY OPERATTNG ACTIVITIES Total Other Refuse Transit Enterprise Collection System Funds $ (159,702) $ (1,853,881) $ (2,013,583) 184,386 322,761 507, i47 16,788 472 17,260 (3,541) (3,541) (3,937) (31,355) (35,292) 2,741 2,844 5,585 199,978 291,181 491,159 $ 40,276 $ (1,562,70~) ~(1,522,424) 74 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- reimbursement basis. General Service Fund - This fund is used to account for en~neering, street, and general services supplied to other departments. Garage Service Fund - This fund is used to account for the 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 the health insurance costs of the City. Workers' Compensation Reserve Fund - This fund is used to account for the workers' compensation costs of the City. CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS JUNE 30, 2003 ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Accrued interest Inventories Total Current Assets CAPITAL ASSETS Mackinery and equipment Accumulated depreciation Net Capital Assets Total Assets LIABILI'I'IES 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 $ 3,144 $ 1,877 $ 11,279 22,508 4,737 3,144 24,385 I6,016 125,239 (60,819) 64,420 3,144 88,805 16,016 2,722 382 12,125 12,238 12,125 14,960 382 64,420 (8,981) 9,425 $ (8,981)$ 73,845 $ I5,634 15,634 Health Workers~ Insurance Compensation Reserve Reserve Total 862,996 $ 793,675 $ 1,672,~71 3,925 4,131 8,056 27,245 866,921 797,806 1,708,272 125,239 (60,819) 64,420 866,921 797,806 1,772,692 757,945 281,128 1,042,177 24,363 757,945 281,128 1,066,540 64,420 I08,976 516,678 641,732 $ 108,976 $ 516,678 $ 706,15~2 EXHIBIT C-1 75 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2003 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee exper~se Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Opera~mg Expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES Investment earnings Gain on disposal of assets Total Nonoperating Revenues General Garage Stores/ Service Service Print'mg $ 981,804 $ 854,071 $ 23,296 3,334 981,804 857,405 23,296 976,459 551,415 17,191 10,021 6,754 325,996 22,654 6,412 9,068 983,213 920,103 22,654 (1,409) (62,698) 642 I21 I21 INCOME (LOSS) BEFORE TRANSFERS TRANSFERS IN TRANSFERS OUT CHANGE IN NET ASSETS NET ASSETS (DEFICIT), BEGINNING NET ASSETS (DEFICIT), ENDING (1,409) (62,577) 1,817 124,746 (I,240) 642 408 60,929 642 (9,389) 12,916 14,992 $ (8,981) $ 73,845 $ 15,634 EXItlBIT C-2 Health Workers' Iasurance Compensation Reserve Reserve Total $ 3,744,399 $ 124,330 $ 5,727,900 354 3,688 3,744,399 124,684 5,731,588 4,488,510 305,521 258,817 24,912 1,527,874 17,191 10,021 5,149,435 290,141 9,06~ 4,747,327 330,433 7,003,730 (1,002,928) (205,749) (1,272,142) 18,366 22,935 41,301 121 18,366 22,935 41,422 (984,562) (182,814) (1,230,720) 427,076 553,639 (1,240) (557,486) (182,814) (678,32t) 666,462 699,492 1,384,473 108,976 $ 516,678 $ 706,152 76 CITY OF DUBUQUE, IOWA COM~INhNG STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR TI4~ YEAR ENDED JUNE 30, 2003 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 ACTIVII ItzS Transfers from other funds Transfers to other ftmds Payment of intc~fimd balances NET,CASH PROVII)ED BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of property and equ/pmem CASH FLOWS FROM INVESTING ACTIVITIES Interest received General Garage Stores/ Service Service Printh~g 981,804 $ 854,071 (6,754) (366,326) (972,232) (549,300) 3,334 $ 23,296 (27,951) 2,818 (58,221) (4,655) 1,817 124,746 (1,240) (1,491) (63,529) 326 59,977 121 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING 3,t44 1,877 (4,655) 15,934 $ 3,144 $ 1,877 $ 11,279 EXI~iR1T C-3 Health Iztsurance Reserve Compensation Reserve Total $ 3,920,196 $ (4,597,884) 124,330 $ 5,903,697 (375,056) (5,373,971) (1,521,532) 354 3,688 (677,688) (250,372) (988,118) 427,076 553,639 (1,240) (65,020) 427,076 487,379 12I 22,990 26,398 49,388 (227,622) (223,974) (451,230) 1,090,618 1,017,649 2,124,201 $ 862,996 $ 793,675 $ 1,672,971 (continued) 77 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2003 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) General Garage Stores/ Service Service Printing $ (1,409) $ (62,698) $ 642 Adjustments to reconcile operating income (loss) to net cash provided (used) by opemthag activities Depreciation Change in assets and liabilities Decrease in receivables Decrease (increase) in inventories Increase (decrease) in accounts payable Increase in accrued liabilities Total Adjustments 9,068 2,534 (388) (9,240) (4,909) 4,227 2,115 4,227 4,477 (5,297) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 2,81~8 $ (58,221~) $ (4,655) EXI-IlllIT C-3 (continued) Health Workers' Insurance Compensation Reserve Reserve Total $ (1,002,928) $ (205,749) $ (1,272,142) 9,068 175,797 175,797 2,146 149,443 (44,623) 90,671 6,342 325,240 (44,623) 284,024 $ (677,688) $ (250,372) $ (988,118) 78 STATISTICAL SECTION (Unaudited) CITY OF DUBUQUE, IOWA GOVERNMENT-WIDE EXPENSES BY FUNCTION JUNE 30, 2003 (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Health and Commtmity Fiscal Public Public Social Culture and and Economic Gcmeral Year Safety Works Services Recreation Development Government 2003 (1)$ 15,817 $ 14,454 $ 816 $ 7,367 $ 9,432 $ 4,212 (I) Fiscal year 2003 was the £~rst year of reporting the City's operation on a govero_ment-wide basis. Table I Interest on Sewage Long-Term Disposal Debt Works 2~33erica ' S Water Parking River Refuse Transit Utility Facilities Project Collection System Total $ 1,605$ 4,656$ 4,146$ 1,445$ 415 $ 2,141$ 2,055$ 68,560 79 CITY OF DUBUQUE, IOWA GOVERNMENT-WIDE REVENUES JUNE 30, 2003 (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Operating Capital Unrestricted Fiscal Charges for Grants and Grants and Investmeut Year Services Contributions Contributions Taxes Gaming Earnings 2003 (I) $ 19,894 $ 14,558 $ 15,386 $ 26,010 $ 9,540 $ 2,071 (1) Fiscal year 2003 was the fa:st year of reporting the City's operation on a government-wide basis. Table 2 Loss on Sale of Capital Assets Other Total $ (318) $ 1,228 $ 88,369 80 CITY OF DUBUQUE, IOWA GENERAL GOVERaNMENTAL EXPENDITURES BY FUNCTION (1) LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 3 Home and Fiscal Community Hmman Community Policy and Debt Year Protection Development Environment Administration Service 1994 $ 11,068$ 4,407 $ 11,092$ 5,456 $ 4,276 1995 11,747 5,207 9,785 2,927 3,764 1996 12,202 5,508 10,060 3,252 3,750 1997 12,082 5,856 11,050 3,891 3,492 1998 12,827 6,200 10,380 4,386 2,898 1999 13,343 6,599 15,136 3,981 2,747 2000 13,907 7,493 14,983 4,938 2,312 2001 15,064 8,653 I6,410 5,442 2,882 2002 16,386 8,520 14,361 4,986 2,637 Total 36,299 33,430 34,772 36,371 36,691 41,806 43,633 48,451 46,890 Commuaity Health and and Economic General Fiscal Public Public Social Culture and DeveI- Govern- Debt Year Safety Works Services Recreation opment ment Service Total 2003(2)$15,279 $11,860 $ 749 $ 7,514 $ 9,011 $ 3,813 $ 3,678 $ 51,904 (1) Includes general, special revenue, and debt service funds. (2) The State of Iowa required cities to change from programs to functions during 2003. 81 CITY OF DUBUQUE, IOWA GENERAL GOVERNMENTAL REVENUES BY SOURCE (1) LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 4 Special Assess- Licenses Inter- Charges Fines Invest- Fiscal merits and Govern- for end ment Year Taxes (2) Permits mental Services Forfeits Earnings 1994 $20,295 $ $ 673$ t0,417 $ 3,526 $ 388 $1,438 1995 20,889 921 9,457 4,494 341 2,155 1996 2t,620 717 9,253 5,491 350 1,686 1997 24,772 507 11,454 6,637 358 1,596 1998 24,848 507 10,351 7,106 37I 1,989 t999 25,629 580 10,375 7,843 337 1,948 2000 25,562 613 12,140 7,882 341 1,813 2001 26,800 576 13,769 8,127 369 2,720 2002 26,303 703 14,124 8,847 410 1,980 2003 22,263 561 754 14,398 5,134 466 1,465 Contri- butions (2) 385 Fiscal Year Gain/ne (3) Miscelleneous Total t994 $ $ 736 $ 37,473 1995 1,130 39,387 1996 765 39,882 1997 1,487 46,811 1998 1,619 46,791 1999 1,926 48,638 2000 950 49,301 2001 1,988 54,349 2002 1,526 53,893 2003 9,405 1,107 55,938 (1) Includes general, special revenue, and debt service fimds. (2) Special assessments end contribution revenues were included in miscelleneous revenue in years prior to 2003. (3) Gaming revenue was included in taxes and charges for services prior to 2003. 82 CITY OF DUBUQUE, IOWA GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE (1) LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 4A Money and State Credits Mobile Replacement Fiscal Property Replacement Homes Personal Prop. Year Tax (2) Tax Tax Exemption 1994 $ 14,168 $ 38 $ 33 $ 493 1995 14,300 39 33 493 1996 14,928 40 32 472 1997 18,454 15 33 492 1998 18,562 42 37 494 1999 19,890 44 33 492 2000 20,519 45 32 492 2001 21,615 45 31 490 2002 21,020 45 31 459 2003 17,528 46 29 443 (1) Includes general, special revenue, and debt service funds. (2) Includes gaming revenues in years prior to 2003. Hotel Sales Motel Tax Tax Total 4,796 $ 767 $ 20,295 5,182 842 20,889 5,318 830 21,620 5,373 784 25,151 4,856 857 24,848 4,206 964 25,629 3,489 985 25,562 3,624 995 26,800 3,797 951 26,303 3,246 970 22,263 83 CITY OF DUBUQUE, IOWA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Percent of Delinquent Fiscal Total Tax Current Tax Current Taxes Tax Total Tax Year Levy (l) Collections Collected Collections Collections 1994 $ 14,851 $ 14,101 94.9% $ 161 $ 14,262 1995 14,997 14,635 97.6 116 14,751 1996 15,182 14,832 97.7 ti8 14,950 1997 t5,299 15,025 98.2 132 t5,157 1998 15,538 15,426 99.3 172 15,598 1999 16,587 16,528 99.6 121 16,649 2000 16,497 16,380 99.3 115 16,495 2001 17,163 16,662 97.1 120 16,782 2002 17,147 16,941 98.8 127 17,068 2003 15,328 15,215 99.3 216 15,432 (1) Includes tax increment levy. (2) Includes taxes collected in June by the County but not received by the City until July. Ratio of Total Tax Collections to Total Tax Levy 96.0% 98.4 98.5 99.1 100.4 I00.4 99.9 97.8 99.5 I00.1 Table 5 Ratio of Outstanding Delinquent Delhaquent Taxes to Total Taxes Tax Levy 956 6.4% 245 1.6 232 1.5 274 1.8 138 0.9 129 0.8 138 0.8 150 0.9 238 1.4 130 0.8 84 CITY OF DUBUQUE, IOWA ASSESSED AND ESTIMATED ACTUAL VALUE OF PROPERTY LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAtmrrED) Table 6 Real Property Exemptions Total Fiscal Assessed Estimated Real Assessed Estimated Year Value Actual Value Property Value Actual Value 1994 $ 997,573 $ 1,229,395 $ 10,681 $ 986,892 $ 1,229,395 1995 1,127,153 1,450,026 10,642 1,116,511 1,450,026 1996 1,151,187 1,487,208 10,467 1,140,720 1,487,208 1997 1,237,246 1,750,830 10,405 1,226,841 1,750,830 1998 1,259,649 I}776,342 10,218 1,249,431 1,776,342 1999 1,354,421 1,987,466 10,319 1,344,102 1,987,466 2000 1,389,352 1,990,428 10,018 1,379,334 1,990,428 2001 1,377,518 2,014,897 10,194 1,367,324 2,014,897 2002 1,429,025 2,047,186 10,097 1,418,928 2,047,186 2003 1,540,206 2,3t7,926 10,141 1,530,066 2,307,785 Ratio of Total Assessed Value to Total Estimated Actual Value 80.27% 77.00 76.70 70.07 70.34 67.62 69.30 67.86 69.31 66.31 85 CITY OF DUBUQUE, IOWA PROPERTY TAX RATES DIRECT AND OVERLAPPhNG GOVERNMENTS LAST TEN FISCAL YEARS TAX RATES PER $1,000 ASSESSED VALUE (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 7 Board Dubuque of Education Fiscal Dubuque School and Area 1 Year City District Independents Voc. Tech Dubuque County Ratio of Dubuque City Total to Total 1994 $12.60588 $13.92886 $ .50303 $ .47495 $ 7.61714 $35.12986 35.88% t995 11.78206 13.60398 .53777 .49222 6.95885 33.37488 35.30 1996 11.78215 13.70668 .74972 .49360 6.13169 32.86384 35.85 1997 11.38153 12.39251 .70548 .50348 5.87236 30.85536 36.89 1998 11.40112 12.03974 .52563 .49951 5.54113 30.00713 37.99 1999 tl.07340 11.98226 .50368 .48592 5.52169 29.56695 37.45 2000 11.15945 11.53111 .66882 .55128 5.54016 29.45082 37.89 200I 11.93556 13.50444 .54806 .57072 5.73669 32.29547 36.96 2002 11.85631 13.73882 .55492 .57507 5.60064 32.32576 36.68 2003 11.99116 13.84768 .61686 .57791 5.59515 32.62876 36.75 Source: Dubuque County Auditor's Office. 86 CITY OF DUBUQUE, IOWA PRINCIPAL TAXPAYERS PAYABLE FISCAL YEAR 2003 (AMOIYNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 8 Taxpayer Type of Business Kennedy Mai1 Shopping Center $ 23,588 .98% Medical Associates Realty Health Services 21,080 .88 Otto A LLC Manufacturing 17,512 .73 Nordstrom, Inc. Warehouse Distributor 14,889 .62 Plaza 20, Inc. Shopping Plaza 10,041 .42 U.S. West Communications Telecommunications 9,422 .39 Wal-Mart Retail Sales 9,137 .38 Minglewood LLm/ted Partnership Pension Services 8,944 .37 American Trust and Savings Bank Bank 8,640 .36 McGraw Hill Publ/shing 7,702 .32 Totals $ 130.955 5.45% 2001 Percentage of Assessed Total Assessed Valuation Valuation Source: Dubuque County Auditor's Office. Alliant Energy Power Company and Peoples Natural Gas Company are not on the above schedule. Effective 2001 utility companies pay excise tax on revenue to the state rather than property taxes. 87 CITY OF DUBUQUE, IOWA SPECIAL ASSESSMENT BILLINGS AND COLLECTIONS LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 9 Fiscal Special Assessment Special Assessment Year BillLngs Collected (1) 1994 $ 44 $ 339 1995 51 6O9 1996 33 147 1997 41 378 1998 73 179 1999 67 644 2000 67 203 2001 82 698 2002 87 657 2003 89 558 (1) Includes prepayments. 88 CITY OF DUBUQUE, IOWA COMPUTATION OF LEGAL DEBT MARGIN JUNE 30, 2003 (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 10 Actual Valuations $~2~317.92~6 Legal debt marg/n: Debt limitation - 5% of actual valuations Debt applicable to limitation: Total bonded debt Less: Revenue bonds Total debt applicable to 1kmitation Legal debt margin 31,811 (1,540) $ 115,896 30,271 85.625 89 CITY OF DUBUQUE, IOWA RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE AND NET GENERAL OBLIGATION BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS (UNAUDITED) Table 11 Ratio of Net Bonded Net Net Debt to Bonded Fiscal Population Assessed Bonded Assessed Debt Per Year (1) * Value (2) * Debt (3) * Value Capita 1994 58 $ 986,892 $ 17,125 1.74% $ 295 1995 58 1,116,5II I4,775 1.32 255 1996 59 1,140,720 t4,200 1.24 241 1997 59 1,226,841 11,755 0.96 199 1998 59 1,249,431 10,795 0.86 183 1999 56 1,344,102 8,545 0.64 153 2000 56 1,379,334 10,511 0.76 188 2001 58 1,367,324 9,005 0.66 155 2002 58 1,418,928 20,945 1.48 361 2003 58 1,530,066 19,865 1.30 343 * Amounts expressed in thousands. (1) U.S. Census Bureau. (2) From Table 6. (3) From Table 13. Amount does not include revenue bonds. 9O CITY OF DUBUQUE, IOWA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 12 Total Fiscal Debt Year Principal Interest (1) Service Total General Governmental Expenditures (2) 1994 $ 2,315 $ 908 $ 3,223 1995 2,350 915 3,265 1996 2,435 757 3,192 I997 2,445 740 3,185 t998 2,150 551 2,701 1999 2,060 438 2,498 2000 1,655 320 1,975 2001 1,974 219 2,193 2002 1,346 132 1,478 2003 1,729 882 2,611 36,299 33,430 34,772 36,371 36,691 41,806 43,633 48,451 46,890 51,904 (t) Excludes bond issuance and other costs. (2) Includes general, special revenue, and debt service funds. Ratio of Debt Service to General Governmental Expenditures 8.88% 9.77 9.18 8.76 7.36 5.98 4.53 4.53 3.15 5.03 91 CITY OF DUBUQUE, IOWA COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT GENERAL OBLIGATION BONDS JUNE 30, 2003 (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 13 Jurisdiction Net General Percentage Obligation Applicable Amount Bonded Debt to Applicable Outstanding Government to Government Direct: City of Dubuque $ 19,865 (1) 100.00% $ 19,865 $ 19.865 $ 19.865 Total (1) Excluding general obligation bonds reported in the enterprise funds. 92 CITY OF DUBUQUE, IOWA REVENUE BOND COVERAGE PARKING BONDS LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 14 Net Revenue Gross Operating Available Fiscal Revenues Expenses For Debt Debt Service Requ/rements Year (1) (2) Service Principal Interest Total Coverage (3) 1994 $ 1,090 $ 543 $ 547 $ 90 $ 212 $ 302 1.81 1995 1,108 592 516 95 205 300 1.72 1996 1,152 631 521 105 198 303 1.72 1997 1,175 551 624 110 191 301 2.07 1998 1,268 570 698 150 195 345 2.02 1999 1,303 584 719 I55 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 1,484 847 636 190 71 261 2.44 (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 ord/nance requires 1.3 minimum coverage. 93 CITY OF DUBUQUE, IOWA PROPERTY VALUE, CONSTRUCTION PERMITS, AaND BANK DEPOSITS LAST TEN FISCAL YEARS (UNAUDITED) Table 15 Fiscal Year Property Value* Bank Deposits (2) Number of Calendar Total Other (3~ Residential Total (1) Permits Value* Year Deposits* Construction Permits 1994 $ 381,324 $ 848,071 $ 1,229,395 1,862 $ 56,928 1993 $ 852,000 1995 441,399 1,008,627 1,450,026 6,918 * 65,599 1994 883,000 1996 456,075 1,031,133 1,487,208 4,190 75,569 1995 902,659 1997 519,104 1,231,726 1,750,830 2,039 34,950 1996 901,724 I998 521,327 1,255,015 1,776,342 1,572 35,647 1997 701,402® I999 589,760 1,397,706 1,987,466 1,500 58,309 1998 782,248 2000 586,318 1,404,110 1,990,428 1,502 78,500 1999 842,165 2001 593,085 1,421,812 2,014,897 1,448 72,073 2000 934,240 2002 610,673 1,436,513 2,047,186 1,338 115,398 2001 1,019,491 2003 738,823 1,579,103 2,317,926 1,363 88,769 2002 1,078,409 * Amounts expressed in thousands. (I) Estimated acttml value from Table 6. (2) Source: Federal Deposit Insurance Corporation. (3) Commercial, Industrial, and Utilities. · Hail and wind storm in August 1994, caused extensive roof and siding damage throughout the City, greatly increasing permit activity. ® In 1998, two major banks in the City were consolidated into larger bank corporations; deposits were recorded only at source of charter. 94 CITY OF DUBUQUE, IOWA DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) Table 16 Fiscal Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Data Sources: (1) (2) (3) (4) (5) (4) (2) (3) Public (1) Per Capita Median School Population Income Age Em:ollment 57,538 $ 19,110 34 57,538 20,113 34 59,084 21,755 34 59,084 22,096 34 59,084 23,293 34 56,467 24,499 34 56,467 25,645 34 57,686 19,616 34 57,686 19,616 37 57,686 * 37 Bureau of Census; 2000 Census. U.S. Department of Commerce, Bureau of Econondc Analysis. Bureau of Census; 2000 Census. Dubuque Community School District Iowa Department of Employment Services. Unavailable at report date. I0,022 I0,133 I0,065 9,985 9,857 9,735 9,697 9,680 9,906 10,122 (5) Unemployment Rate 4.3% 3.8 4.8 4.7 3.1 3.1 2.7 3.4 3.6 3.7 95 CITY OF DUBUQUE, IOWA SCHEDULE OF INSUI~4NCE IN FORCE JUNE 30, 2003 LIABILITY INSURANCE Iowa Communities Assurance Pool Iowa Commurfities Assurance Pool Expiration Policy Number Date 17041901414000003 7/1/03 17035901414000003 7/1/03 Details of Coveraze Municipal General Liability Includes EMT's and Ambulance Service Municipal Auto Liability Includes Transit Liability Iowa Communities Assurance Pool 17015901414000003 7/1/03 Comprehensive & Collision Iowa Communities Assurance Pool 17039901414000003 7/I/03 Public Official Liability Iowa Communities Assurance Pool 11)040891414000003 7/1/03 Police Professional Zurich Insurance Co. GPL3783561 ~02 4/15/04 Environment Liability Lead Pollution ACE USA AAPN 00036572 7/1/03 Airport Liability Northland Casualty Co. AY070043 7/1/03 Public Officials Liability St. Paul Fire & Marine Insurance Company Mount Vernon Fire Insurance Co. Mount Vernon Fire Insurance Co. EM06649597 8/1/03 CL2236323A 8/1/03 CL2231997B 4/16/04 Professional Liabihty- Nurses Dram Shop Liability- Five Flags Dram Shop Liability- BunkerHill Table 17 Annual Liabiliw Limits Premium $ 5,000,000 Each Occurrence $ 404,978* 100,000 Aggregate Per Year 10,000 Deductible Per Occurrence 5,000,000 Each Accident I00,000 Aggregate 10,000 Deductible Per Accident Per Scheduled Motor Vehicles 5,000,000 Each Claim 100,000 Aggregate 10,000 Deductible Per Claim 5,000,000 Per Person/Agg. 100,000 Aggregate 10,000 Deductible Per Claim 1,000,000 Each Occurrence 1,000,000 Aggregate 5,000 Deductible 7,575 20,000,000 Aggregate Limit 2,500 Deductible 15,000 Deductible Aggregate 48,295 5,000,000 Each Occurrence/Aggregate 7,815 i0,000 Deductible 1,000,000 Each Person 175 3,000,000 Total Limit 3,000,000 Each Common Cause/Aggregate 6,834 3,000,000 Each Common Cause/Aggregate 4,515 (continued) * Includes the premiums for all poticies of the Iowa Communities Assurance Pool. 96 CITY OF DUBUQUE, IOWA SCE[EDULE OF INSURANCE IN FORCE JUNE 30, 2003 Insurer PROPERTY INSURANCE Cincinnati Insurance Co. Policy Number Expiration Date CAP769 5890 Details of Coverage 7/1/03 Comprehensive Business Policy CRIME INSURANCE Allied Insurance Travelers Insurance Co. BD7900575274 103338754 7/1/03 7/1/03 Public Official Bond Public Official Bond BOILER INSURANCE Cincinnati Insurance Co. BUILDERS RISK St. Pad Insurance Co. BEP 264 96 23 7/1/03 Boiler & Machinery CF06301129 6/1/04 Grand River Center Cincinnati Insurance Co. CAP5496966 3/1/04 New Water Tower Table 17 (continued) Liability Limits Annual Prem/um 122,087,052 I0,000 20,000 20,000,000 996,670 1,695,000 3,652,197 317,347 252,560 Building & Contents Deductible Per Occurrence Aggregate Per Year Earthquake Business Interruption EDP Equipment Mobile Equipment Camera Equipment Paintings 140,221 I00,000 90O,0O0 900,000 900,000 900,000 All Employees City Manager Finance Director Assistant Finance Director Administrative Service Manager 3,100 1,284 2,500,000 Per Accident 5,000 Deductible 56,876 24,000,000 Per Project 10,000 Deductible 1,033,000 Per Project 10,000 Deductible Two year policy 50,422 2,930 97 CITY OF DUBUQUE, IOWA MISCELLANEOUS STATISTICS JUNE 30, 2003 (UNAUDITED) Table 18 Date of Incorporation Form of Government Population - 2000 Cemmas Number of employees: Full Time Part Time/Seasonal Area in square miles City of Dubuque facilities and serv/ces: M/les of streets Number of street lights Number of traffic signals Culture and Recreation: Parks Park acreage Golf comes Swimming Pools Civic Center F/re Protection: Number of stations Number of fire personnel and officers Police Protection: Number of stations Number of police personnel and officers Sewerage System: Miles of sanitary sewers Miles of storm sewers Number of treatment plants Number of service connections Daily average treatment in gallons Maximum daily capacity of treatment plant in gallons Water System: Miles of water mains Number of service connections Number of fire hydrants Daily average consumption in gallons Max/mm daily capacity of plant in gallons Public Transit System Facilities and services not included in the reporting entity: Education: Number of elementary schools Number of secondary schools Number of colleges Number of un/versities Number of theological seminaries Hospitals: Number of hospitals Number of licensed patient beds 1837 Counc/l/Manager - Ward 57,686 5O8 282 28.3 273.2 1,500 109 42 850 I 2 1 6 90 1 98.25 167 150.5 1 20,800 8,000,000 15,000,000 304.87 21,032 2,713 8,000,000 18,000,000 Vehicles- 28 18 7 4 i 2 2 584 98 COMPLIANCE SECTION EideBailly= Consultants · Certified Public Accountants REPORT ON COMPLIANCE AND ON hNTERNAL CON'IROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT AUDITING S T~DARDS To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the financial statements of the City of Dubuque, Iowa, as of and for the year ended June 30, 2003, and have issued our report thereon dated December 16, 2003. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; Chapter 11 of the Code of Iowa; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the City's financial statements are flee of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, non-compliance with which could have a d/rect and material effect on the determination of financial statement mounts. However, provid/ng 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 that are required to be reported under Government Auditing Standards. However, we noted a certain immaterial instance of non-compliance that is described in Part III of the accompanying Schedule of Findings and Questioned Costs. Comments involving statutory and other legal matters about the City's operations for the year ended June 30, 2003, are based exclusively on knowledge obtained fi:om procedures performed during our audit of the financial statements of the City. 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 prior year statutory comment bas been resolved. Internal Control Over Financial Reporting 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 opidion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively Iow level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management of the City of Dubuque, Iowa, in a separate letter dated December 16, 2003. There were no prior year reportable conditions to be resolved. 99 3999 Permsflvania Ave. · Suir~ II30 · Dubuque, Iowa 52002-2639 · 563.556.1790 · Fax 563.55L7842 OJ}~es in Ar/zon~ Iowa, Minnesota, Montana, North Dakota and Soutt~ Dakota · Equal Opportunity Employer 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. 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, 2003 100 EideBailly=, Consultants · Certified Public Accountants REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND h'CI~RNAL 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 ~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, 2003. 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. Comphance with the requirements of laws, regulations, contracts, and grants 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; Chapter 11 of the Code of Iowa; 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 prov/sions 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 pro=oran occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those mqnirements 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, 2003. However, the results of our audifmg procedures disclosed an instance of noncompliance with those requirements that are required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item II-A-03. 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 grants applicable to federal programs. Irt planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and matmSal effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the internal control over comphance in accordance with OMB Circular A-133. 3999 Pennsyl,~arda Ave. · Suite 100" Dubu~e, Iowa 52002-2639 · 563.556.1790 · Fc, x 563.557.7842 Ojrflces in Arizona, Io~a, Minnesota, Montana, Nor:h Dakota and South Dakota · Equal Opportani~ Employer 101 Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that m/ght be mater/al weaknesses. A mater/al weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that non-compliance with applicable requirements of laws, regulations, contracts, and grants that would be material in relation to a major federal program be/rig audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. 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. 2qfis report is not intended to be and should not be used by anyone other than these specified parties. Dubuque, Iowa December 16, 2003 102 CITY OF DUBUQUE, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS ]FOR THE FISCAL YEAR ENDED JUNE 30, 2003 Grantor/Pro~ram CFDA Agency or Number Pass-Throu~h Number Direct: Department of Homing and Urban Development: Community Development Block Grants/ Entitlement Grants 14.218 B-XX-MC-19-0004 Commun/ty Development Block Grants/ Special Purpose Grants/Technical Assistance Program 14.227 SPG-IA-05SPG23 Community Development Block Grants/ Economic Development Initiative 14.246 B-SP-IA-0178 Fair Housing Assistance Program - State and Local 14.401 FF207K027006 Lower Income Housing Assistance Program - Section 8 Moderate Rehabilitation Lower Income Housing Assistance Program - Section 8 Moderate Rehabilitation Lower Income Housing Assistance Program - Section 8 Moderate, Rehabilitation Lower Income Housing Assistance Program- Section 8 Moderate Rehabilitation 14.856 14.856 14.856 14.856 KC-9004MR~002 KC~9004MR-001 KC-9004MR-005 KC-9004MR-007 KC-9004V IALAG0066-97 I999BUBX990 2001SHWX0414 2000SHWX0668 Section 8 Housing Choice Vouchers Lead-Based Paint Hazard Control in Privat ely-Ovnaed Housing Departraent of Justice: Bulletproof Vest Partnership Program Public Safety Partnership and Commlmity Policing Grants Public Safety Partnership and Community Policing Grants 14.871 14.900 16.607 16.710 16.710 Program Expenditures $ 1.792.515 34,500 77,066 82,456 17,266 25,438 260,021 3,770 306,495 4;313.625 930,176 11.623 40,113 30.673 70.786 (continued) 103 CITY OF DUBUQUE, IOWA SC]ffEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR 'l'H v; FISCAL YEAR ENDED JUNE 30, 2003 Grantor/Pro,ram Direct: (continued) Department of Transportation: Airport Improvement Program Airport Improvement Program Airport Improvement Program Airport Improvement Program Airport Improvement Program Airport Improvement Program CFDA Agency or Number Pass-Tttrou~h Number 20.106 3-I9-0028-26 20.106 3-19-0028-30 20.106 3-19-0028-31 20.106 3-19-0028-29 20.106 3-19-0028-25 20.106 3-19-0028-27 Federal Transit - Capital Investment Grants Federal Transit - Formula Grants Environmental Protection Agency: Brownfield Assessment and Cleanup Cooperative Agreements Federal Emergency Management Agency: Assistance to Firefighters Grant Total Direct Indirect: Department of Justice: Governor's Office of Drug Control Policy and Dubuque County, Iowa: Byme Formula Grant Program 20.500 IA-03-0097-00 20.507 IA-90-X262 66.818 BP98719701 83.554 16.579 02A-0218 Violence Against Women Formula Grants 16.588 01V-0205 Violence Against Women Formula Grants 16.588 02V-0234 Department of Transportation: Iowa Department of Transportation: Federal Transit- Capital Investment Grants 20.500 Federal Transit- Capital Investment Grants 20.500 Federal Transit- Capital Investment Grants 20.500 Federal Transit- Capital Investment Grants 20.500 EMW-2002-FG-01657 03-0094-210-22 03-0095-210-02 03-0085-210-00 03-0093-210-01 Job Access - Reverse Commute 20.516 37-X006-210-01 Program Expenditures $ 118,309 290,142 924,437 6,306 59,305 42,782 1.441,281 90,976 556,885 647,861 10,545 31,640 9,750,569 3,123 2,320 1,992 4,312 6,455 7,820 5,025 39,751 59,051 12,398 (continued) 104 CITY OF DUBUQUE, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR It:LE FISCAL YEAR ENDED JUNE 30, 2003 Grantor/Prom:am CFDA Agency or Program Number Pass-Through Number Expenditures Indirect: (continued) Department of Transportati0n: (continued) Governor's Traffic Safety Bureau: State and Community Highway Safety State and Community Highway Safety State and Community Highway Safety 20.600 PAP 03-02, TASK 05 $ 20,413 20.600 PAP 02-02, TASK 05 10,445 20.600 PAP 02-164, TASK 32 15,135 45,993 Alcohol Traffic Safety and Drank Driving Prevention Incentive Grants 20.601 PAP 03-410 TASK 12 7,681 Federal Emergency Management Agency: Iowa Department of Public Defense: Public Assistance Grants Hazard Mitigation Grant Hazard Mitigation Grant 83.544 FEMA-DR-1420-IA 55,592 83.548 1420-0002 196,525 83.548 HMGP 0996-0185 38 Department of Health and Human Services: Iowa Department of Public Health: Childhood Lead Poisoning Prevention Projects - State and Local Ch/ldhood Lead Poisoning Prevention and Surveillance of Blood Levels in Children Total indirect 93.197 5883LP06 Total 196,563 20,409 405.122 $ I0.155.69~1 See notes to the Schedule of Expenditures of Federal Awards. 105 CITY OF DUBUQUE, IOWA NOTES TO TH I~; SCltEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE~ FISCAL YEAR ENDED JUNE 30, 2003 NOTE 1 - BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards includes the federal grant acti,Aty of the City of Dubuque, Iowa, and is presented in conformity with the modified accrual basis of accounting. The information on this schedule is presented in accordance with the requirements of O5/113 Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some mounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic f'mancial statements. NOTE 2 - SUBRECIPIENTS Of the federal expenditures presented in the schedule, the City of Dubuque, Iowa, provided federal awards to subrecipients as follows: Federal Amount Provided Pro,am Title CFDA Number to Subrecipients Community Development Block Grants/ Entitlement Grants 14.218 $ 207,287 106 CITY OF DUBUQUE, IOWA SCH2EDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2003 Part I: Summary of the Independent Auditor's Results: (a) An unqualified opinion was issued on the £mancial statemeats. (b) No reportable conditions in internal control over financial reporting were identified. (c) The audit did not disclose any non-compliance which is material to the financial statements. (d) No reportable conditions in internal control over major programs were identified. (e) An unqualified opinion was issued on compliance with requirements applicable to each major program. (f) The audit disclosed an audit finding which is required to be reported in accordance with Office of Management and Budget Circular A-133, Section .510(a). (g) Major programs were as follows: · CFDA Number 14.218 - Community Developmant Block Grants/Entitlement Grants · CFDA Number 20.106 - Airport Improvement Program · CFDA Number 20.500 - Federal Transit - Capital Investment Grants · CFDA Number 20.507 - Federal Transit - Formula Grants (h) The dollar threshold used to distinguish between Type A and Type B programs was $304,671. (i) The City of Dubuque, Iowa, qualified as a low-risk auditee. Part H: Findings and Questioned Costs for Federal Awards: INSTANCE OF NON-COMPLIANCE CFDA Number 14.218: Community Development Block Grants/Entitlement Grants Grant Number: B-XX-MC-19-0004 Department of Housing and Urban Development II-A-03 Construction Contract Compliance - The City provided one of its subrecipients with CDBG funds to assist them with the construction of an apartment building. Since federal funds were used to fund part of this project, the City was required to comply with Section 36 of Government Document Number 10 (A-102 Common Rule). Section 36 of A-102 Common Rule states that contracts should contain required federal language to comply with federal laws and regulations. In reviewing the constmction contract and bid spec/fications, the required federal language was not included. Recommendation - We recommend that in the furore, the required federal language be included in the contracts and bid specifications where federal funding is involved. In addition, City staff will need to develop procedures to ensure famre compliance. 107 CITY OF DUBUQUE, IOWA SCH lq;OLrLE OF FINDINGS AND QUESTIONED COSTS FOR TH Iq; FISCAL YEAR ENDED JUNE 30, 2003 Part 1I: Findings and Questioned Costs for Federal Awards:(continued) Response - The required federal contract language has been provided to all CDBG subrecipients responsible for construction projects. Subrecipient monitoring procedures have been changed to include review of bid documents and contracts to ensure compliance with this requirement. Conclusion - Response accepted. Part Ill: Other Findings Related to Statutory Reportinm III-A-03 Official Depositories - A resolution naming official depositories has been approved by the City Council. The maximum deposit mounts stated in the resolution were not exceeded during the year ended June 30, 2003. III-B-03 Certified Budget - Function disbursements during the year ended June 30, 2003, did not exceed the amounts budgeted. ffi-C-03 Questionable Expenditures - We noted no expenditures which fail to meet the reqmrements of public purpose as de£med in an Attorney General's op/nion dated April 25, 1979. III-D-03 Travel Expense - No expenditures of city money for travel expenses of spouses of City officials or employees were noted. III-E-03 Business Transactions - Business transactions between the City and City officials or employees are detailed as follows: Name, Title, and Transaction Business Connection Description Amount John Zeuner, employee, owner of building Building rent $ 3,540 Jan Anderson, employee, spouse is owner of Anderson Design & Consulting, Inc. Architect services $ 7,391 In accordance with Chapter 362.5(t0) of the Code of Iowa, the transactions with John Zenner do not appear to represent a conflict of interest since the transactions were entered into through competitive bidding. The remaining transactions were not entered into through competitive bidding and may represent conflicts of interest. Recommendation - The City should consult legal counsel to detenrdne the disposition of this matter. Response - Finance management will ren~nd City department managers of Chapter 362.5(I0) of the Code of Iowa requirements, stating that business transactions totaling $1,500 or more in a fiscal year between the City and City officials or employees be competitively bid. Conclusion - Response accepted. 108 CITY OF DUBUQUE, IOWA SCIJLEDULE OF FINDINGS AND QUESTIONED COSTS FOR TH tq; FISCAL YEAR ENDED JUNE 30, 2003 Part HI: Other Findings Related to Statutory Reporting: (continued) III-F-03 Bond Coverage - Surety bond coverage of City officials and employees is in accordance with statutory provisions. The mount of coverage should be reviewed annually to insure that the coverage is adequate for current operations. m-G-03 Council Minutes - No transactions were found that we believe should have been approved in the Council minutes but were not. III~H-03 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. m-i-03 Revenue Bonds - No instances of non-compliance with the provisions of the City's revenue bond resolutions were noted. llI-J-03 Solid Waste Fees Retain_age - 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.3 t 0(2) of the Code of Iowa. 109