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Parking Facilities Financial Report 6 30 03I I ! I I I I I I I i I I ! I CITY OF DUBUQUE, IOWA PARKING FACII JITIES FINANCIAL STATEMENTS JUNE 30, 2003 i 1 1 I I I I I i i CITY OF DUBUQUE, IOWA PARKING FACILITIES Table of Contents OFFICIALS INDEPENDENT AUDITOR'S REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL STATEMENTS Statement of Net Assets Statement of Revenues, Expenses, and Changes in Net Assets Statement of Cash Flows Notes to Financial Statements SUPPLEMENTARY INFORMATION Combining Statement of Net Assets Combining Statement o£Revenues, Expenses, and Changes in Net Assets Bond Ordinance Requirements Schedule of Insurance Coverage Schedule of Statistical Dam REPORT ON BOND ORDINANCE COMPLIANCE REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FIN~NCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS SCI-IEDULE OF FINDINGS Page 1 2-3 4-7 8 9 10-11 12-19 20 21 22 23-24 25 26 27-28 29 I [ I I I I I I [ I I I I [ [ [ [ I I CI~ OF DUBUQUE, IOWA PARKING FACILITIES OffICIALS Name Termnce M. Duggan Roy D. Buol Patricia A. Cline Ann E. Michalski John H. Markham Daniel E. Nicholson Joyce E. Connors Michael C. Van Milligen Barry A. L'mdahl Jeanne F. Schneider Kenneth J. TeKippe Timothy M. Horsfield Title Mayor Council Member Council Member Council Member Council Member Council Member Council Member City Manager Corporation Counsel City Clerk Finance Director/Treasurer Parking Division Manager Term Expires December 2005 December 2003 December 2003 Deceanber 2003 December 2005 December 2005 December 2005 Appointed by Council Appointed by Council Appointed by Council Appointed by City Manager Appointed by City Manager EideBailly = Consultants · Certified Public Accountants INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council: Ii I Ii I I ! We have audited the accompanying financial smtemems of the Parking Facilities of the City of Dubuque, Iowa, as of and for the year coded June 30, 2003, as listed in the table of ccentcots. These financial statemcots are the responsibility of the City's managemcot. Our responsibility is to express an opunon on these financial statemcots 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 comained in Govemment Auditing Standards, issued by the Comptroller Gcoeral of the United States. Those standards and provisions require that we plan and perform the audit to obtain reasonable assurance about whether the financial statemcots are free of material misstatement. An audit includes examining, on a test basra, evidence supporting the amounts and disclosures m 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 statemcot presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1, the financial statements refca'red to above present only the Parking Facilities of the City of Dubuque, Iowa, and are not intended to prescot fairly the financial position of the City of Dubuque and the results of its operations and the cash flows of its proprietary fund types in conformity with accounting principles gcoemlly accepted in the United States of America. In our opinion, the financial statemcots referred m above present fairly, in all material respects, the financial position of the Parking Facilities of the City of Dubuque, Iowa, at June 30, 2003, and the results of its operations and cash flows for the year then coded in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards. we have also issued our report dated September 12, 2003, on our consideration of the Parking Facilities' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, cuntmots, and grants. That report is an mmgral 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 audk. The managemcot's discussion and analysis, listed in the table of contcots is not a required part of the financial statemcots but is supplementary information required by accounting principles gcoeraliy accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and prescotation of the required supplementary information. However. we did not audit the information and express no opimon on it. 3999 Permsylvania Ave. · Suite I00 · ~e. 1oma52002.2639 · $63.$56.1790 · Fax563.557.7842 Or, es in Arizona. Iowa. M/nnesota. Montana Nordl Dal. u-a.a o~nd ~h Da~va · F4ual Opportuniey Employer 2 Our audit was conducted for the purpose of forming an opinion on the financial statements of the Parking Facilities of the City of Dubuque. The supplementary information section is presented for purposes of additional analysis and is not a required pan of the financial statements. T~e combining financial statements have been subjected to the auditing procedures applied in the audit of the combined financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. The bond ordinance requirements, schedule of insurance coverage, and schedule of statistical data have not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on then~ DubuqUe, Iowa September 12, 2003 i I I I I I I I I 3 CITY OF DUBUQUE PARKING FACILITIES MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JIJNE 30, 2003 This section of the City of Dubuque Parking Facilities financial report l~resents our discusmon and analysis of the financial performance during the fiscal year that ended on June 30, 2003. Please read it in conjunction with the City of Dubuque Parking Facilities financial statements found in this report. FINANCIAL HIGHLIGHTS · The assets of the Parking Facilities exceeded its liabilities at the close of the fiscal year by $13,023,931 (net assets). This was an increase of $6,610,980 over net assets at June 30, 2002. Unrestricted net assets at June 30, 2009 in the amount of $509,255 may be used to meet the Parking Facilities ongoing 0~bligations. · Total operating and construction fund revenues exceeded expenses by $6,610,980. · Within the Parking Facilities operating fund, revenues and transfers exceeded expenses by $7,277,467. · Within the Parking Facilities construction fund, expenses exceeded revenues and transfers by $666,487. OVERVIEW OF THE FINANCIAL STATEMENTS The Parking Facilities financial statements consist of a statement of net assets, statement of revenues, expenses, and changes in net assets and a statement of cash flows. This discussion and analysis are intended to serve as an introduction to the financial statements. This report also contains other supplementary information in addition to the financial statements themselves. The statement of net assets presents information on all of the Parking Facilities assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position is improving or deteriorating. The statement of activities presents information showing how the Parking Facilities net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The statement of cash flows reports cash receipts, cash payments and net changes in cash and cash equivalents resulting from four defined types of activities. It provides answers to such questions as where did cash come from, what c, zzh was used for and what was the change in cash and cash equivalents during the reporting year. 4 FINANCIAL ANALYSIS I I I Net assets. As noted earlier, net assets may serve as a useful indicator of a facilities financial position when observed over time. In the case of the Parking Facility, assets exceeded liabilities by $13,023,931 at the close of the most recent fiscal year. ? The largest part of the Parking Facilities assets (93.0%) reflects it's investment in capital assets such as land, build'mgs, mactfinery, 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. PARKING FACILITIES NET ASSETS I I I I I I I I Current and Other Assets Capital Assets Total Assets Long-term Liabilities Other Liabilities Total Liabilities 2003 2002 Total Total $ 1,208,046 $ 1,363,163 16,023,958 9,470,302 17,232,004 10,833,465 3,777,959 4,058,917 430,114 361,597 4,208,073 4,420,514 Net Assets: Invested in Capital Assets, Net of Related Debt 11,960,999 5,136,385 Restricted 553,677 553,225 Unrestricted 509,255 723,341 TotalNetAssets $13,023,931 $ 6,412,951 The increase in capital assets and investment in capital assets reflects the addition of the new parking ramp. The decrease in long-term liabilities reflects principal paid during the past year. I I I I Certain proceeds of revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. At the close of fiscal year 2003, the Parking Facility is able to report total operating income of $217,146 and an increase in net assets of $6,610,980. I I I I I I I I I I I I I I I I I I I PARKING FACILITIES CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS 2003 2002 Total Total $ 1,427,146 $ 1,401,694 1,210,000 1,099,117 217,146 302,577 (179,055) (197,187) Operating Revenues Operating Expenses Operating Income (Loss) Nonoperating Revenues (Expenses) Income (Loss) Before Capital Contributions and Transfers Capital Contributions Transfers from City of Dubuque Transfers to City of Dubuque Change in Net Assets Net Assets, Beginmng Net Assets, Ending 38,091 105,390 75,300 6,716,575 (218,986) (984,911) 6,610,980 (879,521) 6,412,951 7,292,472 $13,023,931 $ 6,412,951 CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. The Parking Facilities investment in capital assets for its operating and construction fund as of June 30, 2003, mounts to $16,023,958 (net of accumulated depreciation). This investment in capital assets includes land, buildings, machinery and equipment. Additional information on the Parking Facilities assets can be found in Note 4 to the financial statements in this report. CAPITAL ASSETS (net of accumulated depreciation) Land Buildings Improvements and other buildings Machinery and equipment Construction in progress Accumulated depreciation 2003 2002 Total Total 1,296,209 $ 1,237,209 18,956,368 11,618,957 246,961 246,961 598,197 575,732 86,300 573,861 (5,160,077) (4,782,418) $ 16,023,958 $ 9,470,302 6 I I I I i I : The financial statements reflect a transfer in during fiscal year 2003 for the completion of a new parking ramp. Funding for the ramp was provided by a general obligation bond issue with repayment through tax increment financing. The general obligation bond debt for the new ramp is not reflected in these financial statements. Long-term debt. At year end the Parking Facility had $4,062,959 ofdeb~t outstanding. This is a decrease of $270,958 from June 30, 2002. Additional information on the Park/rig Facilities long-term debt can be found in Note 5 to the financial statements in this report. ECONOMIC FACTORS Revenue was fairly consistent since there were no significant rate changes. Revenue from new parking ramp revenue was offset by loss in revenue from street surface lots. Requests for infomation. This financial report is designed to provide a general overview of the Parking Facility's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Dubuque, Finance Director, 50 West 13th Street, Dubuque, Iowa 52001-4864. CITY OF DUBUQUE, IOWA PARKING FACILITIES STATEMENT OF NET ASSETS JUNE 30, 2003 ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Accounts Accrued interest Total Current Assets RESTRICTED ASSETS Cash and pooled cash investments CAPITAL ASSETS Land Buildings Improvements other than buildings Machinery and equipment Construction in progress Accumulated depreciation Net Capital Assets Total Ass~s 638,925 8,390 7,054 654,369 553,677 1,296,209 18,956,368 246,961 598,197 86,300 (5,160,077) 16,023,958 17,232,004 ! ! I ! ! ! ! Il ! ! ! ! ! ! CLrRRENT LIABILITIES Accounts payable Accrued payroll General obligation bonds payable - current Revenue bonds payable - current Accrued compensated absences Accrued interest payable Total Ctm-ent Liabilities NONCURRENT LIABILITIES General obligation bonds payable (net of discount of $23,375) Revenue bonds payable (net of $18,666 deferred amount on refunding) Total Noncurrent Liab'tlities Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted by bond ordinance Unrestricted Total Net Assets See notes to financial statements. $ 75,889 8,191 95,000 190,000 36,807 24,227 430,114 2,446,625 1,331,334 3,777,959 4,208,073 11,960,999 553,677 509255 $13,023,931 ! I I I I I CITY OF DUBUQUE, IOWA PARKING FACILITIES STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2003 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses $ 1,425,991 1,155 1,427,146 549,283 80,906 32,803 163,097 21,408 362,503 1,210,000 217,146 OPERATING INCOME NONOPERATING REVENUES (EXPENSES) Investment earnings Interest expense Total Nonopemting Revenues (Expenses) INCOME BEFORE CAPITAL CONTR~UTIONS AND TRANSFERS 56,379 (235,434) I179,055) 38,091 I I I I ! ! CAPITAL CONTRIBUTIONS TRANSFERS FROM THE CITY OF DUBUQUE TRANSFERS TO TH~ CITY OF DUBUQUE CHANGE IN NET ASSETS NET ASSETS, BEGINNING NET ASSETS, ENDING See notes to financial statements. 75,300 6,716,575 (218,986) 6,610,980 6~412~951 13,023,931 I I I 'i ! ! ! ! ! ! ! ': CITY OF DUBUQUE, IOWA PARKING FACILITIES STATEMENT OF CASH FLOWS FOR TH~ FISCAL YEAR ENDED JUNE 30, 2003 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from ensmmers Cash payments to suppliers for goods and services Cash payments to ~aployees for services Other operating receipts NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVI'I1ES Transfers to other funds CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVI I'II~S Acquisition and construction of property and equipment Payment of debt Interest paid NET CASH USED BY CAPITAL AND RELATED FINANCING ACTI¥ ffll~S CASH FLOWS FROM INVESTING ACTIVi'I'II~S Interest received NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING 1,424,066 (241,368) (545,930) 1,155 637.923 (218,986) (124,284) (270,958) (237,116) (632,358) 56,895 (156,526) 1,349,128 $ 1,192,602 (continued) 10 ! I I ! ! I I I i I I ! ! ! ! ! ! CITY OF DUBUQUE, IOWA PARKING FACILITIES STATEMENT OF CASH FLOWS (continued) FOR TH ~: FISCAL YEAR ENDED JUNE 30, 2003 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDF~) BY OPERATING ACTIVITIES Operating income Adjustments to reconcile operating income to net cash provided by operating activities Depreciation Change in assets and liabilities Increase ha receivables Increase in accounts payable Increase in accrued liabilities Total Adjustments NET CASH PROVIDED BY OPERATING ACTMTIES NONCASH CAPITAL AND RELATED FINANCING ACTIV[I1ES Contributions of capital assets fi.om other funds and outside sources $ 217,146 362.503 (1,925) 56,846 3,353 420,777 $ 637,923 $ 6,791,875 See notes to financial statements. 11 I CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 I I I I I I I I I i I I I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The financial statements include only those funds o£the Parking Facilities and are not intended to presen~ all funds of the City of Dubuque, Iowa. Basis of Accounting The Parking Facilities~ accounting records are maintained on the cash basis. However. for ~ancial reporting purposes, the accounting records have been adjusted to the accrual method, recognizing revenue when earaed and expenses when liabi~ties are incurred. Budgets and Budgetary Accounting In accordance with the Code of Iowa, the City Council annually adopts a budget on the cash basis of accounting with an adjusm~ent for accrued payroll £ollowing required public notice and hearing for ali fxmds. The annual budgei may be amended during the year utilizing similar statutorily prescribed procedures. Formal and legal budgetary cuntml is based upon uine major classes of expenditures known as fimctions, not by fund. These nine functions are public safety, public works, health and social services, culture and recreation, community and econon~c development, general government, debt service, capital projects, and business-type activities. Deposits and Investments The Parking Facilities~ cash and cash equivalents are considered to be cash on hand, demand deposits, and shon-ter~ investments with original maturities of three months or less from the date of acquisition. Restricted Assets Certain proceeds of revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is 1/mired by applicable bond Capital Assets Capital assets include property, plant, and equipment. Capital assets are defined by the government as assets with an initial, individual cost of more than $20,000 for building assets and $5,000 for the remaining assets, and an estimated useful life of more than a year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of thc asset or materially extend asset lives are not ca~pitalized. (continued on next page) 12 CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 Major outlays for capital assets and improvements are capitalized as projects _.are consmmted. Interest incurred during the construction phase of capital assets is not included as part of the capitalized value of the assets constructed. Capital assets are depreciated using the straight4ine method over the following estimated useful lives: Assets Years Buildings 40 to 125 Improvc~ments other than buildings 15 to 50 Machinery and equipment 2 to 30 Compensated Absences The Parking Facilities allow employees to accumulate earned but unused vacation and sick pay benefits. Such benefits are accrued when earned and are reported as liabilities. Equity Reservations of net assets represent amounts restricted by applicable bond covenants. NOTE 2 - DEPOSITS AND INVESTMENTS The Parking Facilities' deposits at June 30, 2003, were entirely covered by federal depository insurance or by the State Sink/rig Fund in accordance with Chapter 12C of the Code of Iowa. Ttds chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. ~t~ae Parking Facilities are authorized by statute to invest public funds in obligations of the Tlnited States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured depository institutions approved by the City Council; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; certain registered open-end management investment companies; certain joint investment trusts; and warrants or improvement certificates of a drainage district. Investments are stated at fair value. The Parking Facilities' investments are pooled with other investments of the City. It is, therefore, not possible to list the types of investments held by the Parking Facilities at June 30, 2003, nor is il possible to categorize the investments to give an indication of the level of risk assumed by the Parking Facilities at year-end. (continued on next page) 13 t ! I I ! 1 i ! i I I I ! I I ! ! ! ! CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 NOTE 3 - TRANSFERS Transfers for the year ended June 30, 2003, consisted of the following: Transfers to Parking Facilities from: America's River Project $ 6.716.575 Transfers from Parking Facilities to: America's River Project Health Insurance Reserve $ 214,814 4,172 Transfers from the America's River Project represents the transfer of the completed capital assets. Transfers to the America's River Project were made according to grant requirements and represent the financing of capital assets. Transfers to the Health Insurance Reserve were made to insure the reserve had an adequate balance at year-end. NOTE 4 - CAPITAl, ASSETS Capital asset activity for the year ended June 30, 2003, was as follows: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Beg/nning Ending Balance Increases Decreases Balance 1,237,209 $ 59,000 $ $ 1,296,209 573,861 114,284 (601,845) 86,300 1,811,070 173,284 1'601,845) ' 1,382,509 Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total capital assets, being depreciated 11,618,957 7,337,411 18,956,368 246,961 246,961 575~732 22,465 598A97 12,441,650 7,359,876 19,801,526 Less accumulated depreciation for: Buildings Improvements other than buildings Mackinery and equipment Total accumulated depreciation (4,450,286) (314,578) (4,764,864) (72,730) (10,861) (83,591) (259,402) (52,220) (311,622) [4,782,418) (377,659) (5,160,077) Total capital assets, being depreciated, net 7,659,232 6,982,217 14,641,449 Total capital assets, net $ 9.470.30~ L~73.~ $ (601.845~ $ 16.023.958 (continued on next page) 14 CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 NOTE 5 - LONG-TERM DEBT General Obligation Bonds. The City issued general obligation bonds to provide financing for the acquisition and construction of parking facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds were issued as serial bonds with varying mounts of principal maturing annually and with interest payable semi-annually. General obligation bonds outstanding at June 30, 2003, are as follows: Date of Maturity Interest OrigLna]ly Outstanding Purpose Issue Dates Rates Issued End of Year Corporate purpose 06/01/00 06/01/02--06/01/20 5.80-5.88% $ 2.750.000 $ 2.565.000 Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Ending June 30 Principal Interest 2004 $ 95,000 $ 148,939 2005 100,000 143,429 2006 105,000 137,629 2007 115,000 131,539 2008 120,000 124,869 2009-2013 695,000 513,274 2014-2018 900,000 289,394 2019-2020 435,000 38,618 Total Revenue Bonds. The City issued parking revenue bonds to provide financing for the acquisition and construction of parking facilities. These bonds were issued as serial bonds with varying mounts of principal maturing annually and with interest payable semi-annually. Parking revenue bonds outstanding at June 30, 2003, are as follows: Aarount Date of Maturity Interest Originally Oul~tanding Purpose Issue Dates Rates Issued Parking fiacilities 03/01/98 05/01/98-05/01/10 4.30--4.75% $ 2.51~ ~ (continued on next page) CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 Revenue bond debt serwee requirements to maturity are as follows: Fiscal Year Endinff 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 The resolution providing for the issuance of the revenue bonds includes the following provisions: A sum equal to one-tenth (1/10) of the principal of all bonds maturing on May 1 next succeeding, plus a sum equal to one-fifth (1/5) of the interest coming due on the next succeeding interest payment date on all of the then outstanding bonds, shall be set aside into a restricted sinking account fi:om the net revenue of the Operating Fund until the full amount of such installments is on hand. b. A restricted reserve account shall maintain the lesser of 1) the maximum amount of principal and interest coming due in any fiscal year;, or 2) ten percent of the proceeds of the sale of the bonds. $5,000 shall be set apart and paid into a restricted depreciation account from the balance of the net off-street parking revenues and net on-street parking revenues remmumg after fa:si making the required payments into the sinking account and the reserve account on the first day of each month of each year up to a maximum of $250,000. NOTE 6 - PENSION AND RErlREMENT BENEFITS The Parking Facilities of the City of Dubuque, Iowa, contribute to the Iowa Public Employees Retirement System (IPERS) which is a cost-sharing multiple-employer defined benefit pension plan administered by the State of Iowa. 1PERS provides retirement and death benefits which are established by state statute to plan members and beneficiaries. IPERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to IPERS, P.O. Box 9117, Des Moines, Iowa, 50306-9117. Plan members are required m contribute 3.70% of their annual covered salary, and the Parking Facilities are required to contribute 5.75% of annual covered payroll. Contribution requirements are established by state statute. The Parking Facilities' contributions to IPER3 for the year~ ended June 30, 2003, 2002, and 2001, were $22,974, $19,449, and $19,063, respeetiv~y, ~lual to the required contributions for each year. (continued onnextpage) 16 CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 i 1 i i i ! ! ! ! NOTE 7 - LEGAL COMPLIANCE WITit BUDGET The City of Dubuque, Iowa, adopts a budget annually as required by Iowa law. The budget, wh/ch is prepared on the cash basis of accounting with an adjustment for accrued payroll, includes those funds of the Parking Facilities~ Following is a schedule comparing the Parking Facilities' budget and actual disbursements using the cash basis Of accounting with an adjustment for accrued payroll for the year ended June 30, 2003: Variance - Function Budget Actual Positive Business-type activities $ 2.378.833 ~ $ 518.537 As required by Iowa law, the City prepares its budget based upon nine major classes of expenditures knovoa as functions, not by individual fund. Therefore, the City must amend the budget only if the entire City's function amounts will be exceeded. For the year ended June 30, 2003, the City's actual disbursements were less than budgeted amounts for all functions, so the City has complied with legal budget requirements. NOTE 8 - RISK MANAGEMENT The City ~s exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the government tames commercial insurance and participates in a local government risk pool. The City of Dubuque has established a Health Insurance Reserve Fund for insuring benefits provided to City employees and covered dependents which is included in the Internal Set'vice Fund Type. Health benefits wjere self-insured up to an individual stop loss mount of $80,000 and an aggregat% stop loss of approximately $5,520,000 for 2003. Coverage fi:om 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 cla'nns administrator. Incurred but not reported claims have been accrued as a liability based upon the claims arlministmtor's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The est'nnated liability does not include any allocated or unallocated claims adjustment expense. The City of Dubuque has established a Workers' Compensation Reserve Fund for insuring benefits provided to City employees which is included in the Internal Service Fund Type. Workers' compensation benefits were self-insured up to a specific stop loss mount of $400,000, and an aggregate stop loss consistent with statutory limits for 2003. Coverage fi:om a private insurance company is maintained for losses in excess of the stop loss amount. All claims handling procedures are performed by a third-patty claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled cia/ms have not exceeded comme~ial coverage in any of the last three fiscal yea.rs. The estimated liability does not include any allocated or unallocat~ claims adjustment expense. (continued on next page) 17 ! ! i II II II q ill CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 All funds of the City participate in both programs and make payments to the Health Insurance Reserve Fund and the Workers' Compensation Reserve Fund based on actuarial estimates of the mounts needed to pay prior- and current-year claims. The City is a member in the Iowa Communities Assurance Pool, as allowed by Chapter 670.7 of the Code of Iowa. The Iowa Communities Assurance Pool (Pool) is a local government risk-sharing pool with over 475 members from various governmental entities throughout the State of Iowa. The Pool was formed in Augus! 1986 for the purpose of managing and funding third-party liability claims against its members. The Pool provides coverage and protection in the following categories: general liability, automobile liability, automobile physical damage, pubhc officials liability, police professional liability, property, inland marine, and boiler/machinery. There have been no reductions in insurance coverage from prior years. Each members' annual casualty contributions to the Pool fund current operations and a reserve fund. Annual operating contributions are those mounts necessary to fund, on a cash basis, the Pool's g*mm~l and administrative expenses, claims, cla'uns expenses and reinsurance expenses due and payable in th~ current year, plus all or any portion of any deficiency in capital. During the first sm years of membership, a portion of the member's contribution is allocated to a Cumulative Reserve Fund. Thereafter, no further annual contribution shall be made to the Cumulative Reserve Fund unless the Board shall require further annual contributions for the puipose of maintaining the Cumulative Reserve Fund at a level equal to 300 percent of the total current Basis Rates of all Members, or to comply with the requirements of any applicable regulatory authority having jurisdiction over the Pool. The Pool also provides property coverage. Members who elect such coverage make annual operating contributions which are necessary to fund, on a cash basis, the Pool's general and administrative expenses and reinsuran~ 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 mmsferred to capital. Deficiencies in operations are offset by transfers from capital and, if insufficient, by the subsequent y,ear's member contdbutions. 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 m $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 reqmring specific coverage from $2.000,000 m $15,000,000, such excess coverage ~s 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 claims exceeds the amount of risk-sharing protection provided by the member's risk-sharing certificate, or in the event that a series of casualty claims exhausts total members' equity plus any reinsurance and any excess risk-sharing recoveries, then payment of such claims shall be the obligation of the respective individual member. 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 remsuranee company coverage since the Pool's inception. (continued on next page) 18 i I I I I I I I I i i I i i I i i i i CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 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 witl~draw is within a 60 day period of the anniversary date, the member forfeits all rights to their interest in the vested Cumulative Reserve Fund. Upon withdrawal, payments for all claims and claims expenses become the sole responsibility of the withdrawing member, regardless of whether a claim was recurred or reported prior to the member's withdrawal. Members withdrawing within the fa-st s'm years of membership may receive a partial refund of their reserve contributions. If a member withdraws after the sixth year, the member is refunded 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. 19 CITY OF DUBUQUE; IOWA PARKING FACILITIES COMBINING STATEMENT OF NET ASSETS JUNE 30, 2003 ASSETS Operating Construction Fund Fund Total CURRENT ASSETS Cash and pooled cash investments Receivables Accrued interest Total Current Assets RESTRICTED ASSETS Cash and pooled cash investments CAPITAL ASSETS Land Buildings Improvements other than buildings Machinery and equipment Construction in progress Accumulated depreciation Net Capital Assets 84,930 $ 553,995 $ 638,925 8,390 8,390 7,054 7,054 100,374 553,995 654,369 553,677 553,677 1,296,209 1,296,209 18,956,368 18,956,368 246,961 246,961 598~197 598,197 86,300 86,300 (5,160,077) (5,160,077) 15,937,658 86,300 16,023,958 Total Assets 1'6;;591,709 640,295 17,232,004 LIABILITIES Operating Construction Fund Fund Total CURRENT LIABILITIES Accounts payable Accrued payroll General obligation bonds payable - current Revenue bonds payable - current Accrued compensated absences Accrued interest payable Total Current Liabilities $ 6,600 $ 69,289 $ 75,889 8,191 8,191 95,000 95,000 190,000 190,000 36,807 36,807 24,227 ~ 24,227 360,825 69,289 430,114 NONCURRENT LIABILITIES General obligation bonds payable (net of discount of $23,375) Revenue bonds payable (net of $18,666 deferred amount on refunding) Total Noncnrrent Liabilities 2,446,625 2,446,625 1,331,334 1,331,334 3,777,959 3,777,959 4,138,784 69,289 4,208,073 Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted by bond ordinance Unrestricted 11,960,999 11,960,999 553,677 553,677 (61,751) 571,006 509,255 Total Net Assets $12,452,925 $ 571,006 $13,023,931 20 I I CITY OF DUBUQUE, IOWA PARKING FACILITIES COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS FOR TH E FISCAL YEAR ENDED JUNE 30, 2003 OPERATING RE'vENUES Charges for sales and services Other Total Operating Revenues Operating Construction Fund Fund Total $ 1,425,991 $ $ 1,425,991 1,155 1,155 1,427,146 1,427,146 OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Depreciation Total Operating Expenses 549.283 549,283 80,906 80,906 32,803 32,803 72,236 90,861 163,097 21,408 21,408 362,503 362~503 1,119,139 90.861 1,210~000 I I I I ! I I I I OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Invesmaenr earnings Interest expense Total Nonoperating Revenues (Expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS TRANSFERS FROM (TO) OTHER FUNDS TRANSFERS FROM THE CITY OF DUBUQUE TRANSFERS TO TH~ CITY OF DUBUQUE CHANGE IN NET ASSETS NET ASSETS, BEGINNING NET ASSETS, ENDING 308,007 (90,861) 217.146 35,345 21,034 56,379 (235,434) (235,434) (200,089) 21,034 (179,055) 107,918 (69,827) 38,091 75,300 75,300 381,846 (381,846) 6,716,575 6,716,575 ~ (214,814) (218,986) 7,277,467 (666,487) 6,610.980 5,175,458 1,237,493 6,4t2,951 $ 12,452,925 $ 571.006 $ 13,023,931 21 I I I I ! ! ! CITY OF DUBUQUE, IOWA PARKING FACILITIES BOND ORDINANCE REQUIREMENTS JUNE 30, 2003 Following is a summary of the bond ordinance requirements of the parking revenue refunding bond issue dated March 1, 1998. A sum equal to one-tenth (1/10) of the principal of all bonds mattmng on May 1 next succeeding, plus a sum equal m one-fifth (1/5) of the interest coming due on the next succeeding interest payment date on all of the thee outstanding bonds, shall be set aside into a restricted sinking account fi:om the net revenue of the Operating Fund until the full amouut of such installments is on hand. 2. A restricted reserve account shall maintain the lesser of 1) the maximum amount of principal and interest coming due in any fiscal year; or 2) ten perceet of the proceeds of the sale of the bonds. $5,000 shall be set apart and paid into a restricted depreciation account fi:om the balance of the net off-street parking revenues and net on-street parking revenues remaining aider first making the required payments into the sinking account and the reserve account on the first day of each month of each year up to a maximum of $250,000. The City will cause an audit of such books and accounts of the Parking Facilities to be made by a certified public accountant not in the regular employ of the City showing the receipts and disbursements for each account of the Parking Facilities. The audit report required shall include, but not be limited to, the following: a. An evaluation of the manner in which the City has complied with the covenants of this resolution, including particularly the rote covenants included herein; b. A statement of net reveeues and current expenses; c. Analyses of each fund and account created, including deposits, withdrawals, and beginning and ending balances; d. A statement of net assets; e. The rates in effect at the end of the fiscal year, and the number of customers of the Parking Facilities; A schedule of insurance policies and fidelity bonds in force at the end of the fiscal year, showing with respect to each policy and bond the nature of the risks covered, the limits of liability, the name of the insurer, and the expiration date; g. An evaluation of the issuer's system of internal financial controls and the sufficiency of fidelity bond and insurance coverage in force: h. The names and titles of the principal officers of the City; and i. A general statement covering any events or circumstances which might affect the financial status of the Parking Facilities. 22 i ! I ! ! I I I t 1 I I I I I I ! ! CITY OF DUBUQUE, IOWA PARKING FACILITIES SCHEDULE OF INSURANCE COVERAGE FOR 'i'H ~; FISCAL YEAR ENDED JUNE 30, 2003 At June 30, 2003, the property of the Parking Facilities was insured through ~ blanket fnce and extended coverage policy with the Cincinnati Insurance Company in the mount of $19,259,872. This policy expired July t, 2003. The Parking Facilities were also insured against general, vehicle, and personal liability through the Iowa Communities Assurance Pool. These policies expired July I, 2003. Also in force at June 30, 2003, was a self-funded workers' compensation plan and an employers' liability policy which expired July 1, 2003. Listed below is a detailed schedule of the policies in effect at June 30, 2003: FIRE AND EXTENDED COVERAGE VALUES Building and Description Structure Contents Total Concrete Parking Ramp 601-795 Iowa Street $ 3,864,791 $ 10,369 $ 3,875,160 ConcreteParkingRamp 801-899 Locust 4,487,997 43,184 4,531,181 Concrete Parking Ramp 501-599 Iowa Street 5,549,531 5,549,531 Concrete Parking Ramp 100 West Fourth Street 5,304,000 5,304,000 19.206._319 $ 53.553 $ 19.259.872 BUSINESS INCOME on earnings - $297,900 at 601-795 Iowa Street- 80% co-insurance. on earnings - $221,500 at 801-899 Locust Street - 80% co-insurance. on earnings - $297,270 at 501-599 Iowa Street- 80% co-insurance. on earnings - $180,000 at 100 West Fourth Street - 80% co-insurance. (continued on next page) 23 I I I I I I I t I I ! ! ! CITY OF DUBUQUE, IOWA PARKING FACILITIES SCI:rEDULE OF INSURANCE COVERAGE (continued) FOR TItE FISCAL YEAR ENDED JUNE 30, 2003 Each Occurrence BREAKDOWN COVERAGE - EQUIPMENT $ 2,500,000 GENERAL LIABILITY INSURANCE BODILY INJURY- PROPERTY DAMAGE - PRODUCTS ICAP Each Occurrence $ 5,000,000 VEHICLES ICAP Each Occurrence $ 5,000,000 EXCESS WORKERS' COMPENSATION & EMPLOYERS' LIABILITY Each Accident Each Disease Limit Employers' Liability $ 400,000 Retention $ 400,000 Retention Workers' Compensation- Statutory $ 1,000,000 FIDELITY BOND COVERAGE Each employee $ 100,000 City Manager, Administrative Services Manager, Finance Director, and Assistant Finance Director - $900,000 additional. The above immrance policies have been renewed through July 1, 2004. 24 I I I i I I 1 ! ! I I II i i CITY OF DUBUQUE, IOWA PARKING FACILITIES SCHEDULE OF STATISTICAL DATA FOR THE FISCAL YEAR ENDED JUNE 30, 2003 Number of Customers: (Estimated) Locust Ramp: Cash customers Monthly customers Iowa Ramp: Cash customers Monthly customers 4th Street Ramp: Cash customers Monthly customers 5t~ Street Ramp: Cash customers Monthly customers 30,129 156,000 43,639 227,000 5,400 85.000 N/A 240,000 Rates in Effect per Month: Locust Ramp: Reserved stalls (Bay) Reserved stalls (Undercover) Roof stalls (South Side) Roof stalls (Center) 49 44 38 32 Iowa Ramp: Non-assigned stalls N/A Reserved stalls 44 Top of ramp stalls 32 4t~ Street Ramp: Non-assigned stalls 35 5 th Street Ramp: Non-assigned stalls 38 Other: Residential Street Meters 37.50/qtr Lot 1 25 Lot 2 25 Lot 10 35 Lot 12 25 Notes: 4t~ street ramp opened on June 1. 2002. Holiday Inn parking ended when 4th street ramp opened. N/A = Not Applicable 25 ! ! EideBailly = Consultants · Certified Public Accountants REPORT ON BOND ORDINANCE COMPLIANCE i I I I I I I I I I ! ! To the Honorable Mayor and Members of the City Council: We have audited the financial statements of the Parking Facilities of the City of Dubuque, Iowa, as of June 30, 2003, and for the year then ended, and have issued our report thereon dated September 12, 2003. These financial statements are the responsibility of the City's management. ~Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; 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. Those standards and provismns require that we plan and pm-form the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In the course of our audit, nothing came to our attention that caused us to believe there had been a lack of compliance with the accounting or reporting requirements of the bond ordinance governing the parking revenue refimding bond issue dated Mamh I, 1998. Dubuque, Iowa September 12, 2003 Iowa 52002.2639 · 563.556.1790 ° Fax 563.557.7842 Nor~h Dakota and South Dakota ° Equal Opportunity Em¢loyer 26 I I I I I ! il !1 ! !1 IN IN EideBailly= Consultants · Cemfied Public Accountants REPORT ON COMPLIANCE AND ON INTERNAL CONTI~OL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT .4 UDITING STANDARDS To the Honorable Mayor and Members of the City Council: We have audited the financial statements of the Parking Facilities of the City of Dubuque, Iowa, as of and for the year ended June 30, 2003, and have issued our report thereon dated September 12, 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 pan of obtaining reasonable assurance about whether the Parking Facilities' financial statements are free of material misstatement, we performed tests of its compliance with certain prowsions of laws, regulations, contracts, and grants, non-compliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opimon 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. Comments involving statutory and other legal matters about the Parking Facilities' operations for the year ended June 30, 2003, are based exclusively on knowledge obtained from procedures performed during our audit of the financial statements of the Parking Facilities and are reported in Part I of the accompanying Schedule of Findings. Since our audit was based on tests and samples, sot 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. There were no prior year statutory comments and recommendations. 3999 Pennsylvania A~e. · Suim 100 · Dulasgu~, bowa $2002.2639 · 563.556.1790 · Fax563.557.7842 Offices in Arizona, Iowa, Minnesota, Montana, No~h ~ ~ &mt, h Dakota · Equal Opporcaniry Employer 27 I I I I I I ! Internal Control Over Fimmcial Reporting In planning and performing our audit, we considered the Parking Facilities' internal control over financial reporting in order m determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not m 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 cuntml 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 low level the risk that misstatements in mounts 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. There were no prior year reportable conditions. This report, a public record by law, ~s intended solely for the information and use of the officials, employees, and citizens of the City of Dubuque and other parties to whom the City of Dubuque may report. This report is not intended to be and should not be used by anyone other than these specified parties. We would like to acknowledge the many courtesies and assistance extended to ns by personnel of the City of Dubuque during the course of our audit. Should you hav~ any questions concerning any of the above matters, we shall be pleased to discuss them with you at your convenience. Dubuque, Iowa September 12, 2003 28 ! ! ! ! I CITY OF DUBUQUE, IOWA PARKING FACILITIES SCHEDULE OF FINDINGS FOR ~I'HE FISCAL YEAR ENDED JUNE 30, 2003 Part I: Other Findino_~ Related to Statutory Reporting: I-A-03 Official Depositories - A resolution naming official depositories has been approved by thc City. The maximum deposit amounts stated in the resolution were not exceeded during the year ended June 30, 2003. I-B-03 Certified Budget - Disbursements during the year ended June 30, 2003, did not exceed the amounts budgeted. I-C-03 I-D-03 Questionable Expenditures - No expenditures that fail to meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979, were noted. Travel Expense - No expenditures of Parking Facilities' money for travel expenses of spouses of Parking Facilities' officials or employees were noted. I=E-03 Business Transactions - No business transactions between the Parking Facilities and its officials or employees were noted. I-F-03 Bond Coverage - Surety bond coverage of Parking Facilities' officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to insure that the coverage is adequate for current operations. I-G-03 Council Minutes - No transactions were found that we believe should have been approved in the Council minutes but were not. I-H-03 Revenue Bonds - The provisions of the Parking Facilities' Revenue Refunding Bond resolution have been met for the year ended June 30, 2003. 1-1-03 Deposits and Investments - No instances of nonqzompliance with the deposit find investment provisions of Chapters 12B and 12C of the Code of Iowa and the City's investment policy were noted. 29