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Comprehensive Annual Financial Report (CAFR) FY Ended 6 30 11Masterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager Dubuque bierd All- America City 1 2007 SUBJECT: Submission of Fiscal Year Ended June 30, 2011 Comprehensive Annual Financial Report (CAFR), Auditor's Communication with Those Charged with Governance and City Response DATE: January 25, 2012 Finance Director Ken TeKippe is transmitting the Fiscal Year 2011 Comprehensive Financial Report (CAFR), Auditor's Communication with Those Charged with Governance Letter, along with the City Finance staff's response. The City's independent auditor issued an unqualified opinion on the financial statements. Michael C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Kenneth J. TeKippe, Finance Director THE CITY OF Dui Masterpiece on the Mississippi Dubuque band All- America City 'I I' 2007 TO Michael C Van Milligen, City Manager FROM Kenneth J TeKippe, Finance Director DATE January 25, 2012 SUBJECT Submission of Fiscal Year Ended June 30, 2011 Comprehensive Annual Financial Report (CAFR), Auditor's Communication with Those Charged with Governance and City Response INTRODUCTION The purpose of this memorandum is to submit the Fiscal Year 2011 CAFR audited by Eide Badly, LLP, Auditor's Communication with Those Charged with Governance Letter along with the City Finance staff's response The City's independent auditor issued an unqualified opinion on the financial statements BACKGROUND Iowa state code requires an annual audit by independent certified public accountants or the State Auditor In addition to meeting the requirements set forth in state statues, the audit also was designed to meet the requirements of an annual single audit in conformity with the U S Office of Management and Budget Circular A -133, Audits of States, Local Governments and Non - Profit Organizations This Comprehensive Annual Financial Report is in conformance with the standards set by OMB Circular A -133 This federal regulation mandates audit standards for federal programs The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting Separate financial statements are required for Dubuque Metropolitan Area Solid Waste Agency and Dubuque Initiatwes and Subsidiaries and have been received The financial information for these entities is included in the City of Dubuque CAFR AUDITOR'S COMMUNICATION with THOSE CHARGED with GOVERNANCE Included is a separate letter from Eide Badly, LLP The letter contains audit information required by auditing standards to be communicated to the Mayor and City Council ACTION TO BE TAKEN It is recommended that the City Council receives and files the Fiscal Year 2011 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 Prepared by KJT /eml Enclosures Fiscal Year 2011 CAFR Auditor's Communication with Those Charged with Governance Letter City Response EideBailly CPAs & BUSINESS ADVISORS January 19, 2012 To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the financial statements of the governmental activities, the busmess -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaimng fund mformation of the City of Dubuque, Iowa, for the year ended June 30, 2011 We did not audit the financial statements of Dubuque Imtiatives and Subsidiaries (a discretely presented component unit) Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opuuon, insofar as it relates to the amounts mcluded for Dubuque Imtiatives and Subsidiaries, is based on the report of the other auditors Professional standards require that we provide you with mformation about our responsibilities under generally accepted auditing standards, Government Auditing Standards and OMB Circular A -133, as well as certain information related to the planned scope and timing of our audit We have communicated such mformation m our letter to you dated May 4, 2011 Professional standards also require that we communicate to you the following mformation related to our audit SlaIIlicaIIt Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropnate accounting policies The sigmficant accounting policies used by the City are descnbed m Note 1 to the financial statements As descnbed in Note 1 to the financial statements, the City changed accounting policies related to fund balance by adopting Statement of Governmental Accountmg Standards (GASB Statement) No 54, Fund Balance Reporting and Governmental Fund Type Definitions, m 2011 No other new accounting policies were adopted and the application of existing policies was not changed during 2011 We noted no transactions entered into by the City during the year for which there is a lack of authontative guidance or consensus All sigmficant transactions have been recogmzed in the financial statements m the proper penod Accounting estimates are an mtegral part of the financial statements prepared by management and are based on management's knowledge and expenence 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 sigmficantly from those expected The most sensitive estimates affecting the City's financial statements were Management's estimate of the cost of contributed mfrastructure from developers is based on estimated unit cost on City funded projects We evaluated the key factors and assumptions used to develop the contnbuted infrastructure costs in deternumng that they are reasonable m relation to the financial statements taken as a whole www eidebailly corn 1 3999 Pennsylvania Ave , Ste 100 I Dubuque, IA 52002 -2273 I T 563 556 1790 I F 563 557 7842 I EOE To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Page 2 Management's estimate of incurred but not reported health insurance and workers' compensation liabilities are based on third - party administrator's calculations and estimates. We evaluated the key factors and assumptions used to develop incurred by not reported liabilities in determining that they are reasonable in relation to the financial statements taken as a whole. Management's estimate of other postemployment benefits liability is based on a calculation of actuarially determined contributions for health insurance benefits. We evaluated the key factors and assumptions used to develop other postemployment benefits liability in determining that it is reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. The following material misstatements detected as a result of audit procedures were corrected by management: Sewage Disposal Works and Water Utility To record advance from Water Utility to the Sewage Disposal Works for the purchase of equipment. To reduce construction in progress for mercury spill expenses (extraordinary item) General, Street Construction, and Sales Tax Construction To reduce receivable balances for local option sales tax and utility franchise fees receivables inadvertently recorded twice To adjust deferred revenue for September receipts Disagreements with Management $ 2.832.595 2,105,741 1.514.739 1.730.432 For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated January 19, 2012. To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Page 3 Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings of Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship, and our responses were not a condition to our retention. Other Information in Documents Containing Audited Financial Statements With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. This information is intended solely for the use of the Mayor, City Council, and management of the City of Dubuque, Iowa, and is not intended to be and should not be used by anyone other than these specified parties. Sincerely, EIDE BAILLY LLP -,k-,, 2 , rs 3 Masterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Kenneth J. TeKippe, Finance Director Dubuque bitil All-America City 'I'll®, 2007 SUBJECT: Responses to Auditor's Communication with Those Charged with Governance Letter - Fiscal Year Ended June 30, 2011 DATE: January 25, 2012 INTRODUCTION Responses to the January 19, 2012 Auditor's Communication with Those Charged with Governance letter issued by Eide Bailly LLP subsequent to completion of the Fiscal Year 2011 audit of the City are hereby submitted. The letter is required by SAS 114 and was formally referred to as the management letter. BACKGROUND A separate section in the Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2011 details specific findings. Pages 153 -157 of the report provide this information and city responses. In addition to the comments in the report, the Auditor's Communication with Those Charged with Governance letter dated January 19, 2012 was issued which includes more general comments relative to the audit. DISCUSSION Most of the information in the Auditor's Communication with Those Charged with Governance does not warrant a response. However, the Finance Department would like to provide responses to the Auditor's Communication with Those Charged with Governance for the following: Auditor comment Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. The following material misstatements detected as a result of audit procedures were corrected by management: To record advance from Water Utility to the Sewage Disposal Works for the purchase of equipment ($2,832,595) City of Dubuque Response: Since sanitary sewer is funding 50% of the debt for the water meter change out project it was deemed appropriate to transfer 50% of the cost. To reduce construction in progress for mercury spill expenses (extraordinary item) ($2,105,741) City of Dubuque Response: Auditors determined that expenses related to the mercury spill be reflected as an extraordinary expense item as opposed to being considered part of the project cost. Any future reimbursement for the spill will be reflected as an extraordinary item. To reduce receivable balances for local option sales tax and utility franchise fees receivables inadvertently recorded twice ($1,514,739) City of Dubuque Response: Finance staff will implement a control sheet for receivables to avoid recording twice in the future. To adjust deferred revenue for September receipts ($1,730,432) City of Dubuque Response: The receivables for items collected more than 60 days after fiscal year earned needs to be reflected as deferred revenue on the Governmental Funds statement according to GASB requirements and finance staff will implement controls to assure correct classification in the future. KJ T/e ml COMPREHENSIVE ANNUAL FINANCIAL REPORT THE CITY OF Masterpiece on the Mississippi Iowa s, Entrance 4' FISCAL YEAR ENDED JUNE 30 2011 CENTRAL AVENUE PARKING RAMP -84- FIRE HEADQUARTERS EXPANSION About the Cover: Dubuque's new Central Avenue Parking Ramp was completed in summer 2011. The $9.4 million facility was financed through a $1 5 million Economic Development Administration grant and $7.9 million in general obligation bond sales. The ramp contains 477 parking spaces on seven levels and was built to support and encourage continued development in downtown Dubuque. It features a "smart" lighting system which monitors each level and only activates lighting when motion sensors detect movement, a bicycle storage area, and parking spaces with electrical outlets to charge hybrid and electric vehicles. The landscaped areas around the parking ramp also function as rain gardens. In conjunction with the ramp construction project, three vehicle bays were added to Dubuque's Fire Department Headquarters, located next to the ramp. The cost of this expansion project was $737,000, which was financed through general obligation bond sales. Photo. by: Erich Moeller Page Layout by: Kelli Buchenau Comprehensive Annual Financial Report June 30, 2011 City of Dubuque, Iowa Prepared by: Department of Finance introductory Section June 30, 2011 City of Dubuque, Iowa CITY OF DUBUQUE, IOWA Table of Contents Exhibit Page INTRODUCTORY SECTION Table of Contents 1 -2 Letter of Transmittal 3 -12 City Organizational Chart 13 Officials 14 Certificate of Achievement for Excellence in Financial Reporting 15 FINANCIAL SECTION Independent Auditor's Report 16 -17 Management's Discussion and Analysis 18 -27 Basic Financial Statements Government -wide Financial Statements Statement of Net Assets 1 28 -29 Statement of Activities 2 30 -31 Fund Financial Statements Balance Sheet — Governmental Funds 3 32 -33 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 3 -1 34 Statement of Revenues, Expenditures, and Changes in Fund Balances — Goveitunental Funds 4 35 -36 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 4 -1 37 -38 Statement of Net Assets — Proprietary Funds 5 39 -42 Statement of Revenues, Expenses, and Changes in Fund Net Assets — Proprietary Funds 6 43 -44 Statement of Cash Flows — Proprietary Funds 7 45 -48 Statement of Fiduciary Assets and Liabilities — Agency Funds 8 49 Notes to Financial Statements 50 -86 Required Supplementary Information Schedule of Receipts, Expenditures, and Changes in Balances — Budget and Actual (Budgetary Basis) — Governmental Funds and Enterprise Funds 87 Note to Required Supplementary Information — Budgetary Reporting 88 Schedule of Funding Progress for the Retiree Benefit Plan 89 Combining Fund Statements Combining Balance Sheet — Nonmajor Governmental Funds A -1 90 -93 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds A -2 . 94 -97 Combining Statement of Net Assets — Nonmajor Enterprise Funds B -1 98 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets — Nonmajor Enterprise Funds B -2 99 Combining Statement of Cash Flows — Nonmajor Enterprise Funds B -3 100 -101 Combining Statement of Net Assets — Internal Service Funds C -1 102 -103 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets (Deficit) — Internal Service Funds C -2 104 -105 Combining Statement of Cash Flows — Internal Service Funds C -3 106 -107 Combining Statement of Changes in Assets and Liabilities — Agency Funds D -1 108 1 CITY OF DUBUQUE, IOWA Table of Contents Table Page STATISTICAL SECTION (Unaudited) Statistical Section Contents 109 Financial Trends Net Assets by Component 1 110 -111 Changes in Net Assets 2 112 -115 Fund Balances of Governmental Funds 3 116 -117 Changes in Fund Balances of Governmental Funds 4 118 -119 Revenue Capacity Taxable and Assessed Value of Property 5 120 Property Tax Rates — Direct and Overlapping Governments 6 121 Principal Property Taxpayers 7 122 Property Tax Levies and Collections 8 123 Debt Capacity Ratios of Outstanding Debt by Type 9 124 -125 Ratios of General Bonded Debt Outstanding 10 126 Direct and Overlapping Governmental Activities Debt 11 127 Legal Debt Margin Information 12 128 -129 Revenue Debt Coverage 13 130 Water and Sewer Receipt History 14 131 Water Meters by Rate Class 15 132 Largest Water and Sewer Customers 16 133 Demographic and Economic Information Demographic and Economic Statistics 17 134 Principal Employers 18 135 Operating Information Full -Time Equivalent City Government Employees by Function/Department 19 136 -137 Operating Indicators by Function/Program 20 138 -139 Capital Asset Statistics by Function 21 140 -141 COMPLIANCE SECTION Report on Internal Control over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor's Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A -133 Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards 142 -143 144 -145 146 -151 152 Schedule of Findings and Questioned Costs 153 -157 2 Masterpiece on the Mississippi January 19, 2012 Dubuque bfrd All- America City l®► 2007 Honorable Mayor, City Council Members, and Citizens of the City of Dubuque Finance Department 50 West 13th Street Dubuque, Iowa 52001 -4805 Office (563) 589 -4133 Fax (563) 690 -6689 TTY (563) 690 -6678 finance ©cityofdubuque.org www.cityofdubuque.org The Comprehensive Annual Financial Report (CAFR) of the City of Dubuque, Iowa, for the fiscal year ended June 30, 2011, is hereby submitted as required by various state and federal regulations. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects, and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and activities of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial operations have been included. State code requires an annual audit by independent certified public accountants or the State Auditor. The accounting firm of Eide Bailly LLP conducted the audit for fiscal year 2011. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of an annual single audit in conformity with the U.S. Office of Management and Budget Circular A -133, Audits of States, Local 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 financial reporting and compliance with requirements applicable to laws, regulations, contracts, and grants, are included in the Compliance Section of this report. The independent auditors' report is included in the Financial Section of this report. This report includes all funds of the City of Dubuque, as well as its component units. Component units are legally separate entities for which the City of Dubuque is financially accountable. The City provides a full range of services including police and fire protection; sanitation services; the construction and maintenance of roads, streets, and infrastructure; inspection and licensing functions; maintenance of grounds and buildings; municipal airport; library; recreational activities and cultural events. In addition to general government activities, the municipality owns and operates enterprises for a water system, water pollution control facility, storm water system, parking facilities, refuse collection, and public transportation. 3 Service People Integrity Responsibility Innovation Teamwork This report includes the Dubuque Metropolitan Area Solid Waste Agency (DMASWA) and Dubuque Initiatives and Subsidiaries as discretely presented component units. A discretely presented component unit is reported in a separate column in the government -wide financial statements to emphasize that it is legally separate from the City of Dubuque and to differentiate its financial position and results of operations from those of the City. The City of Dubuque appoints a voting majority to the DMASWA governing board and operates the landfill. Dubuque Initiatives is organized to render service to the City Council of the City of Dubuque, Iowa on matters of community interest, and in the event of dissolution, any assets or property of the organization are transferred to the City. In 2009, the City of Dubuque guaranteed debt issued by Dubuque Initiatives and Subsidiaries. Generally Accepted Accounting Principles (GAAP) require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD &A). This letter of transmittal is designed to complement the MD &A and should be read in conjunction with it. The City of Dubuque's MD &A can be found immediately following the independent auditor's report. PROFILE OF THE CITY The City of Dubuque is located on the Mississippi River in northeast Iowa, adjacent to the states of Illinois and Wisconsin. Julien Dubuque began mining lead in the area now known as Dubuque in 1788. Dubuque is the oldest city in Iowa and has a unique combination of the old and new, ranging from cable cars, Victorian architecture, and a Civil War era shot tower, to an enclosed shopping mall, two casinos, one with a pari - mutuel dog track and the Smithsonian- affiliated National Mississippi River Museum and Aquarium. The City of Dubuque currently has a land area of 29.94 square miles, and a census 2010 population of 57,637. 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. Dubuque has a stable and diversified economic base and is the major tri -state retail center. Dubuque ended the fiscal year with an unemployment rate of approximately 5.8 %, lower than the 6% state unemployment rate and 9.1% national rate. A new IBM Technology Service Delivery Center added 1,300 IT jobs in downtown Dubuque over the last two years. 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 mayor is elected to a four -year term. The council is elected on a non - partisan basis. Council members are elected to four -year staggered terms with three council members elected every two years. Four of the council members are elected within their respective wards; the mayor and the two remaining council members are elected at large. The governing council is responsible for, among other things, setting policy, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, City Attorney, and City Clerk. The City Manager is responsible for overseeing the day -to -day operations of the government, making recommendations to the City Council on the budget and other matters, appointing the heads of the government's departments, and hiring employees. 4 ECONOMIC CONDITION Development at the Port of Dubuque continues with construction starting September 2011 on the $9 million new world corporate headquarters of Flexsteel Industries. This project joins the already completed developments in the Port of Dubuque including the McGraw -Hill Higher Education office building, the LEED- certified remodeling of the former Adams facility by Durrant; renovation of the City - owned Dubuque Star Brewery by a private developer for office, restaurant, and retail use, a new City parking ramp, the expansion of the National Mississippi River Museum and the $86 million Diamond Jo Casino entertainment center. In 1997, the City acquired five farms (approximately 900 acres) with approximately 550 acres becoming Dubuque Industrial Center West (DICW.) In 2009 -2010, the North Siegert farm was developed into a 100 -acre expansion of the DICW. Over 233 acres have been sold and 24 businesses have located in the DICW, which include 21 local business expansions and 3 new industries. The City has seen unprecedented growth, selling over 125 acres in less than three years. IWI Auto Parts is nearing completion of its 69,240 square -foot warehouse in the expanded area. Two local expansions have already begun construction in the newly opened industrial area. Additionally, nearly 200 new jobs were created at Hormel and 100 new jobs at Medline, both in DICW, during the 2010 — 2011 time frame. The City has hired a consulting firm to begin the design phase of the next expansion of the DICW. The Dubuque Technology Park on the south side of the City is a 130 -acre park designed to accommodate growing office businesses. Eight businesses have located in the park. Sedgwick CMS has expanded their current leased facility and has created 106 new jobs in 2010 -11. Robust downtown development has occurred in the last five years with over $100 million spent each year in building construction, renovation, and public improvement. Today there are over 9,000 people working in downtown Dubuque. In January 2009, IBM announced that would be utilizing the former Roshek Building as the office for 1,300 new technology service delivery center jobs. The building was purchased by Dubuque Initiatives and underwent a $43 million renovation. IBM has taken possession of the top five floors (5 -9) and achieved their employment goal of 1,300 by mid -2011. Two restaurants and a spa have become first -floor tenants. Another downtown fixture and sign of vitality is our Carnegie -Stout Public Library, which received a $6.2 million renovation, completed in September 2010. The City Council approved a Revitalization Strategy for Dubuque's Historic Millwork District in August 2007. The strategy defines six primary goals to be achieved in rehabilitating the area. The revitalization is expected to amount to $200 million in investment from private and public sectors over the next ten years. A master plan for the redevelopment of the district was approved by the Council in February 2009. Planning has been completed for the infrastructure and parking needs anticipated by the redevelopment of these large brick structures for mixed -use purposes. Dubuque was awarded a $5.6 million USDOT TIGER grant in early 2010 to fund a Complete Streets project within the Historic Millwork District. This project was initiated in March 2011 and will be completed in spring 2012. Additionally, the Caradco Building, a $28 million private renovation project in the Millwork District, received two awards of $3 million and $5.9 million in CDBG funds to develop workforce housing. This project is expected to be completed in 5 2012.The IBM project has created a high demand for rental housing, as many of these new employees are recent college graduates and IBM transfers. In addition to the Historic Millwork District revitalization, the City is actively working with developers to expedite additional downtown housing rehabilitation projects in order to fill the critical housing need created by IBM. A 24 -unit apartment project has been completed at 40 -42 Main Street. Another 18 -plus unit renovation has begun next door. The completion of Cathedral Square added 24 units to the market in October 2010. The upper three stories of the former Bricktown building have been renovated into 24 residential units that became available in early 2011. There are several other scattered upper story redevelopments that are or will soon be available for market rate residential rental. West end construction includes Horizon Development opening their 43 -unit affordable senior apartments in the fall 2011; Kluck Construction has finished the first of two 24 -unit market rate apartment buildings; and GTW Pennsylvania, Inc. has finished their second 36 -unit market rate two- bedroom apartments near the Dubuque Industrial Center West. Westside Place Townhomes are beginning construction of a 58 -unit townhouse development. Portzen Construction has finished 35 townhouse units along Wyngate Drive off Pennsylvania Avenue near the Kennedy Mall. 3- Diamond Development completed construction of a 60 -unit senior apartment building near Sylvan Drive. Construction and selling of lots continues for four residential subdivisions. Pebble Cove #1 and #2, located near the Northwest Arterial will provide 46 new building lots for single and two - family homes. Construction of homes is currently underway. English Ridge subdivision, located east of the intersection of U.S. 20, created 45 single - family lots in the first phase and an additional 21 building lots in phase II. Northfork Trails is beginning construction of their second two -unit townhome located in their first phase. Northfork Trails provides 17 building lots for two- family homes and will incorporate sustainable land management and building construction practices on an infill site. Westbrook Subdivision on the City's far west side has completed its first phase of 39 lots and has begun second phase with 43 building lots. Liberty Subdivision has begun development of 15 new building lots on the City's north end. - Retail construction includes a new Texas Roadhouse Restaurant, Tantra Asian Bistro and Fareway Grocery Store, on the City's west side. Construction is underway for a Hy -Vee Convenience Store and Gas on Highway 20. Health care providers have projects in various stages of planning and construction that include $5.8 million renovation to Mercy Medical Center to relocate ICU /CVU departments; Bethany Home $3.5 million dementia unit addition; Area Residential Care $2.8 million remodel and expansion; and M &M Schultz , Properties LLC completed construction of their new dental office building. Thirty acres on the 51/61 corridor are available for additional retail development. Steady progress continues on the University of Dubuque's $30 million Performing Arts and Campus Center scheduled to be completed in 2013. The 80,000 square foot, architecturally dramatic center, located at the corner of Grace, Bennett, and McCormick Streets on the University campus, will be comprised of a main performance hall seating close to 1,000, faculty offices, student music practice rooms, a black box theater, a student cafe seating 150, a college store, together with enhanced space for student life as well as facilities to support fine and performing arts. 6 The Dubuque Ice and Recreation Center (DICE) group and four partner organizations completed an $8 million, 3,000 -seat Mystique Community Ice Center on Schmitt Island for the Dubuque Fighting Saints, (youth United States Hockey League Tier 1), and community ice events. The Fighting Saints ended their first season by winning the Clark Cup. The ice arena offers year round hockey and ice skating opportunities. Over 250 youth participated in the Learn to Skate program, and over 1,000 hours of public skating time was made available in this first year. The City continues to receive awards and recognition from .a variety of sources including: • A UC- Berkley study ranked Dubuque 5th out of 361 cities nationwide in a 2011 study of resiliency capacity that evaluates a community's economic capacity to bounce back from adversity, strength of demographics, and community connectivity (August 2011) • Dubuque was ranked 7th in the nation in Forbes' annual "Best Small Places" (August 2011) • Moody's /Economy.com ranked Dubuque 9th among 392 largest U.S. cities for "Employment Growth" based on 2010 -2012 (July 2011) • Dubuque was awarded the 2010 Award for Outstanding Leadership & Innovation as part of the Governor's Iowa Environmental Excellence Awards (July 2011) • Dubuque was #1 in Iowa for Private Sector Job Growth in 2010 according to data from Iowa Workforce Development. 1,800 net new jobs were created in 2010, 18% of the state. total. (February 2011) • Connected World magazine named Dubuque one of the "Seven Most - Connected Locals" in the United States (December 2010) • Fast Company named Dubuque one of the 10 "Smartest Cities on the Planet" (December 2010) • Dubuque placed 3rd and was named a Gold Community at the 2010 International Awards for Livable Communities (LivCOM) (November 2010) • Forbes named Dubuque the "Best Small City to Raise a Family" for 2010 (October 2010) • Forbes ranked Dubuque 1st in the national among mid -sized cities for projected job growth (April2010) • According to Thomson Rueters, Dubuque had the 2nd lowest healthcare spending among 382 metropolitan areas for residents with employer- sponsored health plans in 2009. • Dubuque received the International Economic Development Council's 2010 "Excellence in Economic Development Award" in the category of Public/Private Partnership for communities with populations of 25 thousand to 200 thousand for the historic redevelopment of the Roshek Building • The Iowa League of Cities named Dubuque its 2010 All -Star Community for the Sustainable Dubuque initiative; • Dubuque was ranked 15th in the nation in Forbes magazine's annual "Best Small Places for Business and Careers" (September 2010); • Named "One of America's 100 Best Communities for Young People" by America's Promise Alliance for Youth for 2010, 2008, and 2007; • Named one of America's 2009 "Crown Communities" by American City & County magazine; • 2009 Best Business Retention & Expansion Program Award; • 2009 RelocateAmerica.com Top 100 Places to Live; 7 • 2009 Economic Development Administration's "Excellence in Economic Development Award for Excellence in Historic Preservation -led Strategies" for the IBM/Roshek Building Project; MAJOR INITIATIVES For the Year. The City of Dubuque staff, following the adopted priorities of the Mayor and City Council, has been involved in a variety of projects throughout the year. These projects reflect the City's commitment to continue to provide high quality services to the citizens of Dubuque within the budget guidelines set by the Mayor and City Council. The Dubuque Regional Airport continues the design phase in an effort to meet current and forecasted passenger demand for Dubuque and the surrounding communities. Working with the Federal Aviation Administration (FAA), airport staff has completed the preliminary terminal design and an engineer's report. Phase H began fall 2011. At the request of FAA, the various design phases associated with the development of the new Passenger Terminal Facility (site work & building - related) that were programmed throughout the project have been moved forward. It is expected that nearly 90% of the project costs will be funded by Airport Improvement Program grants issued through the Federal Aviation Administration. The program for these grants has been allowed to languish in Congress for over four years. The House has passed several funding bills. The City awaits action by Senate and subsequent Presidential approval for a multi -year funding program. Other funds through the state and locally generated passenger facility charges continue to be banked for this project. Additionally, the Dubuque Regional Airport was awarded a $164,000 IDOT Air Service Enhancement Grant to assist with start up costs of the 4th American Airlines flight through Chicago O'Hare that began in April 2011. The City continues to implement components of the $60 million Drainage Basin Master Plan. The Northwest Arterial Detention Basin Project, the North Fork Catfish Creek Improvements Project, the Carter Road Detention Basin Project and the W. 32nd Street Detention Basin Project are complete. And in the fall of 2011, construction of the first phase of the $52 million Bee Branch Creek Restoration and Gateway Project was completed. The Bee Branch Creek Restoration project, which will protect more than 1,100 properties currently at risk of flood damage during heavy rains, involves the construction of a 4,500 -foot long open waterway from the 16th Street Detention Basin to Comiskey Park. The project required the deconstruction of 65 residential and 10 commercial structures. Construction of the first phase, completed in the fall of 2011, involved the excavation and handling of approximately 265,000 cubic yards of soil. It also included the dredging of the 16th Street Detention Basin, the construction of two bridges, the reconstruction of the Couler Valley sanitary sewer interceptor, and water main improvements along 14th Street and along 16th Street. Construction of the next phase of the project is scheduled to begin in early 2012. The entire $52 million Bee Branch Creek Restoration Project is scheduled to be complete in the spring of 2013. In the fall of 2010, the City was awarded a $3.96 million I -JOBS grant from the State of Iowa for the project. In March of 2011 the City was awarded a $2,250,000 Vision Iowa RECAT grant and a forgivable loan in the 8 amount of $4 4 million through the State Revolving Loan Fund Program administered by the Iowa Department of Natural Resources. In the fall of 2011, the Federal Highway Administration awarded a $1 million grant for the project. And finally, a $100,000 grant was awarded through the State Recreational Trail grant program. The City was also able to raise $120,000 for the project as part of the America's River III fundraising campaign. The remainder of the project will be funded using general obligation bonds and state revolving loan funds to be repaid with revenue generated through the City's monthly storm water utility fee. The project serves as a storm water facility and also a regional park and recreation attraction for citizens and visitors. Beginning in 2006, the Dubuque City Council identified becoming a more sustainable city as one of its top priorities. Since then, many initiatives have been underway to make Dubuque a more sustainable community. The City continues to implement projects that will help it achieve the Council's goal. These include adoption of the Unified Development Code, establishment of a City Green Team, holding the annual Growing Sustainable Communities Conference, completion of a Green House Gas Inventory for City operations and facilities and a variety of neighborhood- based green initiatives. The Iowa League of Cities named Dubuque as an All -Star Community in the Sustainability category in both 2010 and 2011. Smarter Sustainable Dubuque is a unique public /private partnership between the City of Dubuque and IBM Research, the division of IBM responsible for its "Smarter Planet" campaign. The project was initiated in September 2009 when the City of Dubuque and IBM announced their intentions to make Dubuque one of the first "smarter" sustainable cities in the U.S. Plans include the development of new smarter technologies and implementation strategies to create a replicable, international model of sustainability for communities of 200,000 and under, where over 40 percent of the U.S. population resides. The model will integrate community engagement and education, more energy - efficient ways of operating municipal services and buildings, decreased carbon emissions, new job creation, increased financial savings, and a higher quality of life for the entire community. Smarter Sustainable Dubuque will provide Dubuque residents the information and tools they need to make smarter choices about resource consumption. The initiative is engaging Dubuque residents and businesses who, through advanced technology, will be able to voluntarily better manage their use of resources in the areas of water, electricity, travel, and natural gas. Individual wellness is also being considered as a component. Pilot studies involving more than 1,200 volunteer households were recently completed or are still underway to provide participants with personalized data on their water and electricity usage as well as travel habits. A groundbreaking ceremony was held in October 2010 for a major renovation of the City's water pollution control plant (WPCP), renamed the Water and Resources Recovery Center (W &RRC). Construction of the new W &RRC facilities requires four major components: four anaerobic digesters (each approximately 70 feet in diameter and 30 feet tall) and a central control building; conversion from chlorine disinfection to ultra violet light; modification of existing structures for flow equalization; and overall upgrades and repairs. A small structure will also be constructed off -site to temporarily store bio- solids before they are transported to an off -site storage facility and ultimately applied to agricultural land. The project is estimated to cost $64 million and is expected to be completed by December 2013. The project is being funded by state revolving loan funds repaid with sanitary sewer user fees. 9 The City of Dubuque's Parking Division opened the new 477 - space, seven -level ramp at 10th Street and Central Avenue in the summer of 2011. The project also includes the addition of three truck bays to the adjacent Fire Department headquarters. The ramp which appears on the CAFR cover this year and was funded with a $1.5 million grant from the U.S. Department of Commerce Economic Development Administration and the sale of urban renewal general obligation bonds to be repaid with tax increment financing receipts. 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: • Economic Prosperity • Environmental Integrity • Social/Cultural Vibrancy • Planned and Managed Growth • Partnering for a Better Dubuque • Improved Connectivity: Transportation and Telecommunications FINANCIAL INFORMATION Internal Controls. City management is responsible for establishing and maintaining internal controls to ensure that the assets of the government are protected from loss, theft, or misuse, and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Single Audit. As a recipient of federal and state financial assistance, the City of Dubuque's government is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws, regulations, contracts, and grants related to those programs. These internal controls are subject to periodic evaluation by management. As 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, 2011, provided no instances of material weaknesses in internal control over compliance, or significant violations of 10 applicable laws, regulations, contracts, and grants. Additional information is provided in the Schedule of Findings and Questioned Costs. Budgeting Controls. In addition, the government maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. All funds are included in the annual budget process. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established by state programs. The government also maintains an encumbrance accounting system as one technique for accomplishing budgetary control. Encumbered amounts lapse at year -end, however, encumbrances generally are re- appropriated as part of the following year's budget. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. Cash Management Cash temporarily idle during the year was invested in demand deposits, certificates of deposit, federal agency obligations, and authorized mutual funds. The City (including DMASWA) received cash basis investment earnings of $757,409 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. Risk Management. The City of Dubuque is a member of a statewide risk pool for local governments, the Iowa Communities Assurance Pool (ICAP). The coverage for general and auto liability, as well as public official and police professional liability are acquired through this pool. Worker's compensation coverage up to $500,000 for each accident is provided through self - insurance. The accumulated reserve provision for such claims reflected a $953,653 deficit as of June 30, 2011. Provision for a large number of claims were accrued at fiscal year end with funds to cover payment available in next fiscal year. The City has also established a self- insurance plan for medical, prescription drug, and short-term disability. The accumulated reserve provision for such claims equaled $996,972 as of June 30, 2011. All self - insured health plans are certified as actuarially sound and certificates of compliance have been filed with the State of Iowa. Bond Rating. The rating for the City's outstanding general obligation bonded debt was upgraded by Moody's Investors Service to Aal from a previous rating of Aa2 in August 2010. This upgrade was due in part to Moody's Investors Service recalibrating municipal ratings to a global scale. Series 2010 A, B and C bond ratings continued at Aal which reflects the City's role as dominant regional service and retail provider in northeast Iowa; satisfactory reserves enhanced by revenue raising flexibility; and a manageable debt position given the support of non -levy revenue sources that offset annual debt service payments. AWARDS AND ACKNOWLEDGEMENTS Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Dubuque, Iowa, for its Comprehensive Annual Financial Report for the fiscal year ended 11 June 30, 2010. This was the 23":1 consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement program requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. GFOA also awarded a Certificate of Recognition for Budget Preparation to the City of Dubuque, Iowa, for its annual budget for the fiscal year ended June 30, 2011. In addition, we received the award for the fiscal year ending June 30, 2012. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. This was the 66 consecutive year that the City has achieved this prestigious award. This award is valid for a period of one year. The City of Dubuque submitted its investment policy to the Association of Public Treasurers of the United States and Canada for review and recertification during fiscal year ended June 30, 2009. The City was awarded the Certification of Excellence in July The investment policy is normally reviewed every five years. Acknowledgments. The preparation of this report could not be accomplished without the efficient and dedicated services of the entire Finance Department staff. We also thank the Mayor and City Council for their interest and support in planning and conducting the financial operations of the City of Dubuque in a responsible and progressive manner. We also thank the independent certified public accountants, Eide Bailly LLP, whose competent assistance and technical expertise have enabled the production of this report. Sincerely, Michael C. Van Milligen Kenneth J. TeKippe, CPA City Manager Finance Director 12 CITY OF DUBUQUE ORGANIZATIONAL CHART City Attorney Library Assistant City Manager (2) CITY COUNCIL City Clerk Personnel Manager Training and Workforce Development Coordinator — Budget Director Assistant Budget Director CITY MANAGER Airport Public Information Officer i Cable TV Geographic Communications Information Assistant Systems Neighborhood Development Sustainable Community Coordinator Building Services Department Economic Emergency Development Communications Department Parking System Transit Division Leisure Services Public Works Department Department Civic Center Park Recreation 4/22/09 Finance Department Planning Services Department Fire Department Emergency Management Police Department Health Services Department Engineering Department 1 1 I Housing & Community Development Department Water Department Human Rights Department Information Services Department Water Pollution Control Department CITY OF DUBUQUE, IOWA OFFICIALS JUNE 30, 2011 CITY COUNCIL Roy D. Buol Richard W. Jones David T. Resnick Kevin J. Lynch Karla A. Braig Joyce E. Connors Dirk N. Voetberg COUNCIL APPOINTED OFFICIALS Michael C. Van Milligen Barry A. Lindahl Crenna M. Brumwell -Sahm James A. O'Brien Jeanne F. Schneider DEPARTMENT MANAGERS Robert A. Grierson Therese H. Goodmann Cynthia M. Steinhauser Jenny M. Larson Richard R. Russell David J. Heiar Kenneth J. TeKippe E. Daniel Brown Mary Rose Corrigan David W. Harris, Jr. Kelly R. Larson Randall K. Peck Christine A. Kohlmann Marie L. Ware Susan A. Henricks Donald J. Vogt Laura B. Carstens Mark M. Dalsing Gus N. Psihoyos. Robert M. Green Jonathan R. Brown Mayor Council Member — At Large Council Member — At Large Council Member —15` Ward Council Member — 2nd Ward Council Member — 3 Ward Council Member — 4th Ward City Manager City Attorney Assistant City Attorney Assistant City Attorney City Clerk Airport Manager Assistant City Manager Assistant City Manager Budget Director Building Services Manager Economic Development Director Finance Director Fire Chief Health Services Manager Housing and Community Development Manager Human Rights Director Personnel Manager Information Services Manager Leisure Services Manager Library Director Public Works Director Planning Services Manager Police Chief Public Works Director Water Department Manager Water Pollution Control Plant Manager 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, 2010 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. k /11F DIE U:ttIED STATES N CANAOA CORP(' RATIOft �3y e. 04A#141Y) President Executive Director 15 Financial Section June 30, 2011 City of Dubuque, Iowa E deBailly CPAs & BUSINESS ADVISORS Independent Auditor's Report To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Dubuque, Iowa, as of and for the year ended June 30, 2011, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the management of the City of Dubuque, Iowa. Our responsibility is to express opinions on these fmancial statements based on our audit. We did not audit the financial statements of Dubuque Initiatives and Subsidiaries (a discretely presented component unit), which represents 80 percent, 61 percent, and 74 percent, respectively of the assets, net assets, and revenues of the aggregate discretely presented component units. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for Dubuque Initiatives and Subsidiaries, is based on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The financial statements of Dubuque Initiatives and Subsidiaries, a discretely presented component unit, were not audited in accordance Government Auditing Standards. 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 and the report of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the report of other auditors, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Dubuque, Iowa, as of June 30, 2011, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1 to the financial statements, the City adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, in 2011. www.eidebailly.com 3999 Pennsylvania Ave., Ste. 100 I Dubuque, IA 52002 -2273 I T 563.556.1790 I F 563.557.7842 I EOE In accordance with Government Auditing Standards, we have also issued our report dated January 19, 2012, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over fmancial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, and the schedule of funding progress for the retiree benefit plan, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of fmancial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. The introductory section, combining nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget. Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations, and is also not a required part of the financial statements. The combining nonmajor fund financial statements and the 'schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the fmancial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Dubuque, Iowa January 19, 2012 17 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 This section of the City of Dubuque's annual financial report presents our discussion and analysis of the City's financial performance during the fiscal year that ended on June 30, 2011. Please read it in conjunction with the transmittal letter at the front of this report and the City's financial statements found in the next section of this report. FINANCIAL HIGHLIGHTS • The assets of the City of Dubuque exceeded its liabilities at the close of the fiscal year by $486,787,134 (net assets). This was an increase of $26,237,328 over net assets at June 30, 2010, primarily due to additions in buildings and infrastructure. • Unrestricted net assets for governmental activities are negative $4,891,381 due to "tit- debt for the Port of Dubuque parking facility residing in governmental activities. • The revenues of the general fund exceeded expenditures by $2,089,962. • The ending general fund balance was $15,912,427. • Within the City's business -type activities, revenues exceeded expenses and transfers by $1,908,955. • For the year, the revenues of the City's governmental activities exceeded expenses and transfers by $24,328,373. • The City's debt increased by $37,857,517 due to issuance of new debt exceeding principal payments. OVERVIEW OF THE FINANCIAL STATEMENTS The City's basic financial statements consist of government -wide financial statements, fund financial statements, and notes to the financial statements. This discussion and analysis is intended to serve as an introduction to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to private - sector business. The paragraphs below provide a brief description of the government -wide financial statements. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. To assess the overall health of the City, you need to consider additional non - financial factors such as changes in the City's property tax base and the condition of the City's infrastructure. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods such as uncollected taxes and earned but unused vacation leave. 18 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 The government -wide financial statements include not only the City itself (known as the primary government), but also two other legally separate entities (known as component units), the Dubuque Metropolitan Area Solid Waste Agency (DMASWA) and Dubuque Initiatives (DI) and Subsidiaries, for which the City of Dubuque is considered financially accountable. Financial information for DMASWA and DI are reported separately from the financial information presented for the primary government, The Dubuque Metropolitan Area Solid Waste Agency and Dubuque Initiatives and Subsidiaries issue separate financial statements. Dubuque Initiatives and Subsidiaries' financial statements are prepared on a calendar year basis while the Dubuque Metropolitan Area Solid Waste Agency's financial statements are prepared on the same fiscal year basis as the City of Dubuque. The government -wide financial statements are divided into two categories: Governmental activities This category consists of services provided by the City that are principally supported by taxes and intergovernmental revenues. Basic City services such as police, fire, public works, planning, parks, library, and general administration are governmental activities. Business -type activities. These activities are supported primarily by user fees. The services provided by the City in this category include water, sewer, storm water, refuse, salt, parking, transit and the America's River Project. Fund Financial Statements A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with legal requirements for financial transactions and reporting. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government - wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financial requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental 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. 19 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 The City maintains five individual major governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, employee benefits fund, street construction fund, community development fund, and general construction fund, all of which are considered to be major funds. Data from all other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. The City legally adopts an annual budget by function. A budgetary comparison schedule has been provided. Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses enterprises funds to account for its sewer, water, storm water, and refuse utilities, transit service, parking facilities, salt, 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 engineering services, garage services, stores /printing, health insurance, and workers' compensation. The City's internal service funds predominately benefit the governmental activities and have been included in the governmental activities in the government -wide financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City has two fiduciary funds, an agency fund reporting resources held for the Dubuque Racing Association for improvements at the greyhound racing facility and an agency fund used for reporting resources from Mediacom for purchasing equipment relevant to public, educational, and governmental (PEG) access broadcasting. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Required supplementary information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the budget and actual results of the City and the funding progress for the retiree benefit plan. Other information. The combining statements referred to earlier in connection with non -major governmental funds, non -major enterprise funds, and internal service funds, as well as an individual agency fund statement, are presented immediately following the required supplementary information. 20 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 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 $486,787,134 at the close of the most recent fiscal year. The largest part of the City's net assets (95 %) reflects its investment in capital assets such as land, buildings, infrastructure, machinery, and equipment less any related debt used to acquire those assets that are still outstanding. These capital assets are used to provide services to the citizens and are not available for future spending. Current and other assets Capital assets Total assets CITY OF DUBUQUE'S NET ASSETS Governmental Activities Business -type Activities Total 2011 2010 2011 2010 2011 2010 S 81,209,017 $ 73,454,790 $ 23,201,501 $ 24,755,782 $ 104,410,518 $ 98,210,572 357,667,559 33 5,569,658 194,460,412 148,392,552 552,127,971 483,962,210 438,876,576 409,024,448 217,661,913 173,148,334 656,538,489 582,172,782 Longterm liabilities 62,478,404 57,954,405 68,252,575 34,465,063 130,730,979 92,419,468 Other liabilities 28,135,109 27,135,353 10,885,267 2,068,155 39,020,376 29,203,508 Total liabilities 90,613,513 85,089,758 79,137,842 36,533,218 169,751,355 121,622,976 Net assets: Invested in capital assets, net of related debt 329,416,245 309,126,684 135,026,753 124,805,513 464,442,998 433,932,197 Restricted 23,738,199 26,064,318 893,519 129,642 24,631,718 26,193,960 Unrestricted (4,891,381) (11,256,312) 2,603,799 11,679,96! (2,287,582) 423,649 Total net assets $ 348,263,063 $ 323,934,690 $ 138,524,071 3 136,615,116 $ 486,787,134 $ 460,549,806 21 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 A portion of the City's net assets (5.1 %) represents resources that are subject to external restrictions on how they may be used. At the close of fiscal year 2011 the City has negative total unrestricted net assets. For fiscal year 2011, the City is able to report positive balances in total net assets, both for the government as a whole and business -type activity. The deficit balance reported is in the governmental activities unrestricted category. This is due to TIF debt for the Port of Dubuque parking facility residing in governmental activities, The City also has unfunded OPEB liability and accrued employee absences that would not have corresponding offsetting assets. Governmental activities. The Governmental activities increased in the net assets by $24,328,373 in 2011. Taxes are the largest source of governmental revenues with property taxes of $28,249,114 in 2011. Other governmental revenues included gaming of $13,327,223, local option sales taxes of $7,929,761 and $12,549,651 of charges for services. Governmental expenses during 2011 totaled $79,960,067. The largest programs were public safety of $23,759,068, public works of $18,978,423, community and economic development of $12,890,841 and culture and recreation of $10,911,733. Business -type activities. Business -type activities increased net assets by $1,908,955 in fiscal year 2011 compared to the 2010 increase of $3,050,548. 22 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 CITY OF DUBUQUE'S CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS Governmental Activities Business -type Activities Total 2011 2010 2011 2010 2011 2010 Revenues: Progam revenues Charges for services $ 12,549,651 5 11,000,413 5 22,075,091 $ 19,075,850 5 34,624,742 $ 30,076,263 Operating grants and contributions 14,204,627 20,830,113 2,773,933 1,652,277 16,978,560 22,482,390 Capital pants and contributions 23,482,866 10,748,522 6536,527 3,800,582 30,019,393 14,549,104 General revenues Property taxes 28,249,114 24,876,073 - 28,249,114 24,876,073 Local option sales tax 7,929,761 8,112,471 7,929,761 8,112,471 Hotel/motel tax 1,826,809 1,678,806 1,826,809 1,678,806 Malty franchise fees 2,438,858 1,591,712 2,488,858 1,591,712 Gaming 13,327,223 8,209,761 13,327,223 8,209,761 Unrestricted investment earnings 668,363 1,339,709 184,581 294,562 852,944 1,634,271 Gain on sale of capital assets 149,937 19,337 23,699 169,274 23,699 Other 622,494 880,930 622,494 880,930 Total revenues 105,499,703 89,268,510 31,589,469 24,846,970 [37,089,172 114,115,480 Expenses: Public safety 23,759,068 22,067,988 - 23,759,068 22,067,988 Public works 18,978,423 22,121,629 - 18,978,423 22,121,629 Health and social services 1,072,347 852,099 - 1,072,347 852,099 Culture and recreation 10,911,733 11,446,084 10,911,733 11,446,084 Community and economic development [2,890,841 15,422,099 12,890,841 15,422,099 General government 9,052,704 7,963,016 - 9,052,704 7,963,016 Interest on long -term debt 3,294,951 3,101,897 - - 3,294,951 3,101,897 Sewage disposal works 7,899,011 6,631,326 7,899,011 6,631,326 Water utility - 6,523,993 6,093,827 6,523,993 6,093,827 Stormwater utility 2,811,321 2,213,144 2,811,321 2,213,144 Parking facilities 4,775,834 4,003,776 4,775,834 4,003,776 America's River Project 180,086 423,158 180,086 423,158 Refuse collection 2,828,891 2,703,887 2,828,891 2,703,887 Transit system - 2,947,958 2,832,066 2,947,958 2,832,066 Salt 671,647 671,647 Total expenses 79,960,067 82,974,812 28,638,741 24,901,184 108,598,808 107,875,996 Increase (decrease) in net assets before extraordinary item and transfers 25,539,636 6,293,693 2,950,728 (54,214) 28,490,364 6,239,484 Extraordinary item - (2,253,036) - (2,253,036) Transfers (1,211,263) (3,104,762) 1,211,263 3,104,762 - Increase (decrease) in net assets 24,328,373 3,188,936 1,908,955 3,050,548 26,237,328 6,239,484 Net assets, beginning 323,934,690 320,745,754 136,615,1 16 133,564,568 460,549,806 454,310,372 Net assets, ending 5348,263,063 $ 323,934,690 5138,524,071 $ 136,615,116 $486,787,134 5460,549,806 23 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 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 $49,069,411 at June 30, 2011. $11,119,524 is in non spendable for inventory, receivables, and prepaid items. $69,412 is non spendable endowment corpus. $18,010,570 is restricted for debt service and bond ordinance, road use tax funds, capital improvements, community development programs, employee benefits, endowments and various grants. Council ordinance has committed $5,203,472 for capital improvements. $8,904,490 is assigned for capital improvements and equipment. This leaves $5,761,943 for unassigned fund balances in the government funds. The general fund's fund balance reserve goal is 10% of budgeted annual expenditures. The fund balance of the General Fund increased by $2,089,962 to $15,912,427 due to an increase in gaming revenue. The fund balance of special revenue fund Employee Benefits increased by $8,920 to $45,067. The fund balance of special revenue fund Community Development decreased by $359,427 to $12,094,910 due to timing issues relative to grant revenue and related expenditures. The fund balance of the capital projects fund Street Construction increased by $777,798 to $3,472,138 due to transfers from other funds and the timing of budgeted capital expenditures. The fund balance of the capital projects fund General Construction increased by $4,690,044 to $8,778,753 due to transfers from other funds and the timing of budgeted capital expenditures. 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, 2011, totaled $138,524,071 of which $2,603,799 is unrestricted. The net assets of the internal service funds decreased by $958,003 for a fund balance of $179,800, due to increased employee health insurance claims and workers compensation claims. The unrestricted net assets of the internal service funds are $140,777 (78.3 %). 24 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 The sewerage disposal works had a decrease in net assets of $3,241,576 for total net assets of $39,483,810 at June 30, 2011 primarily due to increase in liabilities for the construction of the new water pollution control plant, and the sewer funds share of the debt service cost for the water meter replacement project. The fund also experienced an extraordinary loss of $2,253,036 due to mercury cleanup activities. The water utility had a decrease in net assets of $134,982 primarily due to a decrease in inventory in 2011 for total net assets of $24,188,379. The storm water utility had an increase in net assets of $4,283,833 mainly due to increase in construction projects and acquisition of land for the Bee Branch Project. The parking facilities had a decrease in net assets of $801,025 due to the spend down of bond proceeds for the Central Avenue parking ramp. The America's River Project had a decrease in net assets of $155,897 primarily due to restoration work on the Shot Tower Restoration project that was not capitalized. BUDGETARY HIGHLIGHTS There were three amendments to the City's 2010 -2011 cash basis budget. The first amendment was passed July 2010 reflecting changes in staff for the City's library staff. The second amendment was passed in September 2010 to reflect operating and capital budget carryovers (continuing appropriation authority) from 2010 and amended the FY 2011 budget for operating and capital City Council actions since the beginning of the fiscal year. The third budget amendment was passed in April 2011 to reflect City Council actions since the second budget amendment and amendments to add additional appropriation authority due to increased revenues. The final budget for total cash basis receipts increased by $53,722,407. The increase was primarily attributable to revenue associated with capital projects and operating carryovers which mainly include grants to intergovernmental funds. The final budget for total expenditures increased $119,855,128 from the original budget. The increase was primarily attributable to purchase order encumbrances carryover, capital projects and operating carryovers from the prior year and expenditures associated with new grants received. Actual cash basis revenues were $55,669,239 less than the final amended budget, and cash basis expenditures were $122,352,677 less than the final amended budget due primarily to projected capital projects not completed by fiscal year end. 25 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital assets. The City's investment in capital assets for its governmental and business -type activities as of June 30, 2011, amounts to $552,127,971 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements other than buildings, machinery and equipment, infrastructure, and construction in progress. Additional information on the City's assets can be found in the note 6 to the financial statements in this report. CAPITAL ASSETS (net of accumulated depreciation) Governmental Activities Business -type Activities Total 2011 2010 2011 2010 2011 2010 Land $ 65,444,288 $ 58,772,516 $ 17,028,167 $ 13,487,195 $ 82,472,455 $ 72,259,711 Buildings 125,774,456 113,435,724 85,942,961 85,822,990 211,717,417 199,258,714 Improvements other than buildings 16,648,148 15,535,320 70,117,869 68,523,151 86,766,017 84,058,471 Machinery and equipment 35,616,512 32,454,175 64,510,585 56,277,467 100,127,097 88,731,642 Infrastructure 197,987,110 192,517,528 197,987,110 192,517,528 Construction in progress 18,874,510 17,586,988 42,610,599 6,509,164 61,485,109 24,096,152 Accumulated depreciation (102,677,465) (94,732,593) (85,749,769) (82,227,415) (188,427,234) (176,960,008) $ 357,667,559 $ 335,569,658 $194,460,412 $148,392,552 $ 552,127,971 $ 483,962,210 Major expenditures during 2010 -2011 were for the construction work on the Water and Resource Recovery Center plant, Bee Branch storm water projects, construction of new parking ramp, water meter replacement project, Millwork District projects, and Southwest Arterial. Long -term debt, At year end the City had $125,262,439 of debt outstanding. This is an increase of $37,857,517 from June 30, 2010. New debt issued during the current year included general obligation bonds for $9,970,000 for costs of improvements and extensions to the municipal sanitary sewer and storm water drainage systems; equipping the sanitation and road departments; improving the City airport grounds and facilities; the acquisition of land and other costs associated with the Bee Branch storm water project; rehabilitation and improvement of city parks; construction; reconstruction and repair of sidewalks; improvement and installation of street lighting fixtures; connections and facilities; street improvements, including installation of fiber optic conduit; to current refund $690,000 of outstanding General Obligation Bonds, Series 2002B, and the costs of aiding in planning, undertaking and carrying out urban renewal activities for the Greater Downtown Urban Renewal Area. The City's bond rating for these issues was Aal. $5,700,000 Water Revenue Bonds were issued to pay costs of constructing and equipping improvements and extensions to the municipal water system. The City's bond rating for this revenue bond issues was Aa2. 26 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2011 The City also received disbursements from the State Revolving Fund construction loan program of $24,316,437, of which $389,000 is planning and design loan for the Upper Bee Branch storm water project. $4,658,085 is construction loan funds for storm water projects, $13,680,921 is construction loan for sanitary sewer, and $5,588,430 construction loan fund for the City's water meter replacement project. The City also received a $360,700 TIF loan from Premier Bank for conversion of warehouse property at 44 Main St. into residential apartments, and $2,850,000 loan from US Bank for the construction of two bridges which are part of the Lower Bee Branch storm water project. The City continues to operate well under the State debt capacity limitations. The State limits the amount of general obligation debt outstanding to 5% of the assessed value of all taxable property in the community. Thus our debt capacity is $174,333,061. With $92,443,077 of debt applicable against the capacity, we are utilizing 53.03% of this limit. Additional information on the City's long -term debt can be found in note 7 of this report. ECONOMIC FACTORS The City's unemployment rate ended the fiscal year at 5.8 %, a 0.9% decrease from the prior year, and lower than both the State of Iowa's 6% rate and 9.1% national rate. The assessed valuation of taxable property, net of exemptions, increased by 6.7% to $2,159,622,000. In fiscal year 2011, the minimum monthly refuse rate increased $0.74 to $11.09, sewer rates increased 1 1 %, water rates increased 3.9 %, and the storm water monthly fee increased $1.25 to $5.25 per single family unit (SFU). Requests for information. This financial report is designed to provide a general overview of the City's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 50 West 13th Street, Dubuque, Iowa 52001-4864, 27 Basic Financial Statements June 30, 2011 City of Dubuque, Iowa CITY OF DUBUQUE, IOWA STATEMENT OF NET ASSETS JUNE 30, 2011 Primary Government Component Units Dubuque Dubuque Metropolitan Initiatives Governmental Business -type Area Solid and Activities Activities Total Waste Agency Subsidiaries ASSETS CURRENT ASSETS Cash and pooled cash investments $ 34,508,750 $ 13,314,647 $ 47,823,397 $ 6,339,019 $ 2,788,705 Receivables Property tax Delinquent 421,936 421,936 Succeeding year 21,277,242 21,277,242 Accounts and other 2,267,186 2,260,687 4,527,873 284,961 9,203 Special assessments 560,485 - 560,485 - Accrued interest 166,883 28,088 194,971 10,780 46,336 Notes 528,909 528,909 - 33,I46 Intergovernmental 7,792,525 5,765,750 13,558,275 Internal balances 217,159 (217,159) - Inventories 961,475 447,636 1,409,111 530,251 Prepaid items 152,192 708,333 860,525 27,151 - Restricted cash - - - 285,852 Total Current Assets 68,854,742 22,307,982 91,162,724 6,661,911 3,693,493 NONCURRENT ASSETS Temporarily restricted cash and pooled cash investments 2,269,547 893,519 3,163,066 4,I70,367 1,026,840 Permanently restricted cash and pooled cash investments 69,412 69,412 Notes receivable 10,015,316 10,015,316 13,981,135 Capital assets Land 65,444,288 17,028,I67 82,472,455 1,586,092 131,983 Buildings 125,774,456 85,942,961 211,717,417 65,922 43,298,369 Improvements other than buildings 16,648,148 70,117,869 86,766,017 6,364,906 32,816 Machinery and equipment 35,616,512 64,510,585 100,127,097 3,801,218 Infrastructure 197,987,110 197,987,110 - Construction in progress 18,874,510 42,610,599 61,485,109 - Accumulated depreciation (102,677,465) (85,749,769) (188,427,234) (7,378,648) (1,399,702) Total Noncurrent Assets 370,021,834 195,353,931 565,375,765 8,609,857 57,071,441 Total Assets 438,876,576 217,661,913 656,538,489 15,271,768 60,764,934 28 EXHIBIT 1 LUABI11TIFS CURRENT LIABILITIES Accounts payable Accrued payroll Loans payable Notes payable General obligation bonds payable Revenue bonds payable Tax increment fmancingbonds payable Accrued compensated absences Accrued interest payable Intergovernmental p ay able Unearned revenue Succeedingyearproperty tax Other Total Current Liabilities NONCURRENT LIABILITIES Loans payable Notes payable General obligation bonds payable Revenue bonds p ay able Landfill closure and postclosure care Tax increment financing bonds payable Net OPEB liability Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for/by: Bond ordinance/development agreement Debt service Employee benefits Community development Iowa Finance Authority trust Capital projects Franchise agreement Endowments, expendable Endowments, nonexpendable Other State statute Minority interest Unrestricted Total Net Assets See notes to financial statements. Primary Government Governmental Business -type Activities Activities $ 4,758,217 1,484,041 47,143 183,690 2,270,259 778,939 2,746,993 249,461 58,958 21,277,242 307,190 $ 10,353,530 324,483 970,874 1,220,859 1,439,741 255,000 386,070 207,434 34,1 62,133 15,157,991 235,714 1,281,235 1,747,659 31,944,550 30,290,789 23,814,911 6,522,793 22,258,283 - 1,918,935 416,362 56,451,380 63,979,851 90,613,513 79,137,842 329,416,245 135,026,753 2,198,962 893,519 115,608 45,067 - 13,603,530 410,980 6,678,409 320,356 52,322 69,412 243,553 260,294 1,434,071 (4,891,381) 2,603,799 (2,287,582) 4,883,424 16,787,679 Total Component Units Dubuque Metropolitan Area Solid Waste Agency Dubuque Initiatives and Subsidiaries $ 15,111,747 $ 149,458 $ 1,318,008 1,808,524 37,700 - 1,018,017 450,000 1,404,549 11,225,935 3,710,000 255,000 778,939 - 3,133,063 124,573 - 456,895 - 145,781 58,958 62,886 21,277,242 307,190 49,320,124 1,516,949 33,692,209 54,105,700 6,522,793 22,258,283 2,335,297 120,431,231 169,751,355 464,442,998 3,092,481 115,608 45,067 13,603,530 410,980 6,678,409 320,356 52,322 69,412 243,553 374,617 13,139,724 - 30,512,102 3,839,008 - 40,865 3,879,873 30,512,102 4,254,490 43,651,826 4,439,489 325,429 $ 348,263,063 $ 138,524,071 $ 486,787,134 $ 11,017,278 $ 17,113,108 29 CITY OF DUBUQUE, IOWA STATEMENT OF ACTIVITIES FOR YEAR ENDED JUNE 30, 2011 Functions /Programs Primary government Governmental activities Public safety Public works Health and social services Culture and recreation Community and economic development General govenunent Interest on long-term debt Total governmental activities Business -type activities Sewage disposal works Water utility Stonnwater utility Parking facilities America's River Project Refuse collection Transit system Salt Total business -type activities Total primary government Component units Dubuque Metropolitan Area Solid Waste Agency Dubuque Initiatives and Subsidiaries Total component units See notes to financial statements. Expenses Charges for Services Program Revenues Operating Grants and Contributions Capital Grants and Contributions $ 23,759,068 $ 2,579,573 $ 732,549 5 18,978,423 5,331,667 5,586,000 12,417,024 1,072,347 111,532 46,199 - 10,911,733 2,108,177 298,180 9,279,098 12,890,841 553,031 7,478,448 947,744 9,052,704 1,865,671 35,653 839,000 3,294,951 - 27,598 - 79,960,067 12,549,651 14,204,627 23,482,866 7,899,011 6,643,974 6,605 31,712 6,523,993 5,638,277 1,810 702,545 2,811,321 2,993,539 86,112 4,219,750 4,775,834 2,750,610 238,794 1,568,333 180,086 - - 2,828,891 3,082,197 - 14,187 2,947,958 193,236 2,440,612 671,647 773,258 - 28,638,741 22,075,091 2,773,933 6,536,527 $ 108,598,808 $ 34,624,742 $ 16,978,560 $ 30,019,393 $ 3,587,054 $ 3,416,513 $ 29,962 5 34,375 5,423,772 8,619,347 35,000 $ 9,010,826 5 12,035,860 5 64,962 $ 34,375 General revenues Property taxes Local option sales tax Hotel/motel tax Utility franchise fees Gaming Unrestricted investment earnings Gain on disposal of capital assets Other Extraordinary item, mercury cleanup Transfers Total general revenues, extraordinary item and transfers Change in net assets Net assets, beginning of year Net assets, ending of year 30 EXHIBIT 2 Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business -type Activities Activities Total Component Units Dubuque Dubuque Metropolitan Initiatives Area Solid and Waste Agency Subsidiaries $ (20,446,946) $ - $ (20,446,946) $ $ 4,356,268 4,356,268 (914,616) - (914,616) 773,722 773,722 (3,911,618) (3,911,618) (6,312,380) (6,312,380) (3,267,353) (3,267,353) (29,722,923) (29,722,923) (29,722,923) (1,216,720) (1,216,720) (181,36I) (181,361) 4,488,080 4,488,080 (218,097) (218,097) (180,086) (180,086) 267,493 267,493 (314,110) (314,110) 101,611 101,611 2,746,810 2,746,810 2,746,810 (26,976,113) (106,204) - 3,230,575 (106,204) 3,230,575 28,249,114 28,249,114 7,929,761 7,929,761 1,826,809 1,826,809 2,488,858 2,488,858 13,327,223 13,327,223 668,363 184,581 852,944 45,469 1,150,009 149,937 19,337 169,274 622,494 622,494 - (2,253,036) (2,253,036) (1,211,263) 1,211,263 - 54,051,296 (837,855) 53,213,441 45,469 1,150,009 24,328,373 1,908,955 26,237,328 (60,735) 4,380,584 323,934,690 136,615,116 460,549,806 11,078,013 12,732,524 $ 348,263,063 $ 138,524,071 $ 486,787,134 $ 11,017,278 $ 17,113,108 CITY OF DUBUQUE, IOWA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2011 Special Revenue Capita[ Projects Other Employee Community Street General Govemmental General Benefits Development Construction Construction Funds Total ASSETS Cash and pooled cash investments $ 14,435,875 $ - $ 1,880,154 $ 3,616,674 $ 7,668,610 $ 5,733,109 $ 33,334,422 Receivables Property tax Delinquent 363,499 47,299 11,138 421,936 Succeeding year 17,196,824 3,561,388 519,030 21,277,242 Accounts and other 1,914,957 169,395 2,084,352 Special assessments - 560,485 560,485 Accrued interest 62,881 34,966 11,373 1,107 53,089 163,416 Notes 220,276 10,097,359 226,000 590 10,544,225 Intergovernmental 1,811,894 119,805 2,670,625 1,538,559 1,651,642 7,792,525 Due from other funds 107,173 - 107,173 Inventories 448,528 442,097 890,625 Advances to other funds 109,986 - - 109,986 Prepaid items 89,841 13,756 103,597 Restricted cash and pooled cash investments 2,338,959 2,338,959 Total Assets $ 36,761,734 $ 3,608,687 $ 12,146,040 $ 6,298,672 5 9,434,276 $ 11,479,534 $ 79,728,943 32 EXHIBIT 3 General Special Revenue Capital Projects Other Employee Community Street General Governmental Benefits Development Construction Construction Funds Total LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 1,286,139 8 - $ 19,760 $ 782,243 $ 520,621 $ 868,878 $ 3,477,641 Accrued payroll 1,274,783 30,193 120,344 1,425,320 Intergovernmental payable - - 58,958 58,958 Deferred revenue Succeeding year property lax 17,196,824 3,561,388 - 519,030 21277,242 Other I,091,561 2,232 1,177 2,044,291 134,902 1,146,208 4,420,371 Total Liabilities 20,849,307 3,563,620 51,130 2,826,534 655,523 2,713,418 30,659,532 FUND BALANCES Nonspendable Endowment corpus - 69,412 69,412 Inventory 448,528 - 442,097 890,625 Long -term notes receivable 220,276 9,584,338 210,617 85 10,015,316 Prepaid items 89,841 13,756 103,597 Advances to other funds 109,986 - 109,986 Restricted Endowments 52,322 52,322 Library 205,513 205,513 Debt service - 115,608 115,608 Band ordinance 2,198,962 2,198,962 Capital improvements 8,568,136 2,050,150 10,618,286 Franchise agreement 320,356 320,356 Special assessments 29,920 29,920 Claims 8,120 8,120 Iowa Finance Authority Mist 410,980 410,980 Community programs 2,496,816 1,508,620 4,005,436 Employee benefits 45,067 - 45,067 Committed, capital improvements 3,472,138 1,731,334 5,203,472 Assigned DRA gaming and distribution 7,287,001 - 7,287,001 Equipment and capital 1,617,489 1,617,489 Unassigned 6,139,306 (377,363) 5,761,943 Total Fund Balances 15,9I2,427 45,067 12,094,910 3,472,138 8,778,753 8,766,116 49,069,411 Total Liabilities and Fund Balances $ 36,761,734 $ 3,608,687 8 12,146,040 $ 6,298,672 $ 9,434,276 $ 11.479,534 $ 79,728,943 See notes to financial statements 33 CITY OF DUBUQUE, IOWA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2011 EXHIBIT 3 -1 Total fund balances - governmental funds $ 49,069,411 Amounts reported for the governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Cost of capital assets $ 460,243,286 Accumulated depreciation (102,614,750) Some of the City's revenues will be collected after year -end but are not available soon enough to pay for the current period's expenditures and therefore are deferred in the funds. Those revenues consist of Property tax 24,284 Special assessments 530,950 Other 3,557,947 Internal service funds are used by the City's management to charge the costs of equipment maintenance and self - insurance programs to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. 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 (32,561,048) Tax increment financing bonds (23,037,222) Notes payable (1,931,349) Loans payable (282,857) Accrued interest (249,461) Compensated absences (2,746,993) Net OPEB liability (1,918,935) 357,628,536 4,113,181 179,800 (62,727,865) Net assets of governmental activities $ 348,263,063 See notes to financial statements. 34 CITY OF DUBUQUE, IOWA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2011 Special Revenue Capital Projects Other Employee Community Street General Governmental General . Benefits Development Construction Construction Funds Total REVENUES Taxes $ 25,351,801 $ 2,219,744 $ - $ 2,378,928 $ $ 10,478,421 $ 40,428,894 Special assessments - 232,535 232,535 Licenses and permits 1,170,922 - - - - 1,170,922 Intergovernmental 4,735,212 2,040,300 4,373,413 3,038,761 11,983,396 26,171,082 Charges for services 8,504,818 - 15,903 - 202,365 8,723,086 Fines and forfeits 454,117 - 454,117 Investment earnings 340,945 110,209 41,233 38,594 123,606 654,587 Contributions 1,087,893 - 1,340 208,388 1,297,621 Gaming 13,327,223 - - - - 13,327,223 Miscellaneous 1,025,687 79,829 207,363 18 762,365 2,075,262 Total Revenues 55,998,618 2,219,744 2,230,338 7,018,180 3,077,373 23,991,076 94,535,329 EXPENDITURES Current Public safety 23,859,171 - - 91,215 23,950,386 Public works 7,227,363 31,878 - 7,170,174 14,429,415 Health and social services 954,538 85,576 - 1,040,114 Culture and recreation 10,994,552 143,006 142,393 11,279,951 Community and economic development 2,578,196 2,828,715 6,954,265 12,361,176 General government 6,976,292 220 - - 710,417 7,686,929 Debt service Principal 31,003 - 2,789,368 2,820,371 Interest and fiscal charges 17,371 - 3,303,786 3,321,157 Capital projects - 6,968,265 4,258,065 3,876,563 15,102,893 Total Expenditures 52,638,486 220 3,089,175 6,968,265 4,258,065 25,038,181 91,992,392 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 3,360,132 2,219,524 (858,837) 49,915 (1,180,692) (1,047,105) 2,542,937 35 EXHIBIT 4 Special Revenue Capital Projects Other Employee Community Street General Governmental General Benefits Development Construction Construction Funds Total OTHER FINANCING SOURCES (USES) Issuance of debt $ - $ - $ - $ - $ - $ 6,996,722 $ 6,996,722 Discount on bonds - (39,547) (39,547) Premium on bonds - 1,642 1,642 Issuance of refunding bonds - 705,000 705,000 Refunded bonds redeemed - - (690,000) (690,000) Transfers in 3,217,160 499,410 998,820 6,684,895 4,450,238 15,850,523 Transfers out (4,612,843) (2,210,604) - (298,593) (1,441,799) (10,398,053) (18,961,892) Insurance recovery - 27,656 - 600,826 628,482 Sale of capital assets 125,513 - 627,640 - 753,153 Total Other Financing Sources (Uses) (1,270,170) (2,210,604) 499,410 727,883 5,870,736 1,626,828 5,244,083 NET CHANGE IN FUND BALANCES 2,089,962 8,920 (359,427) 777,798 4,690,044 579,723 7,787,020 FUND BALANCES, BEGINNING 13,822,465 36,147 12,454,337 2,694,340 4,088,709 8,186,393 41,282,391 FUND BALANCES, ENDING $ 15,912,427 $ 45,067 $ 12,094,910 $ 3,472,138 $ 8,778,753 $ 8,766,116 $ 49,069,411 See notes to financial statements. 36 CITY OF DUBUQUE, IOWA RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMEMT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2011 Net change in fund balances - total governmental funds $ 7,787,020 Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities, the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense. In the current period, these amounts are: Capital assets expended in governmental funds $ 19,627,892 Transfers of capital assets from enterprise funds 1,225,374 Transfers of capital assets to enterprise funds (268) Contributions from developers and federal government 10,272,129 Depreciation expense (8,413,751) In the statement of activities, only the gain or loss on the sale of capital assets is reported, whereas in the governmental funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets d iffers from the change in fund balances by the book value of the asset being disposed. Because some revenues will not be collected for several months after the City's fiscal year ends, they are not considered "available" revenues and are deferred in the governmental funds. Deferred revenues increased by these amounts this year: Property tax (7,012) Special assessments (16,930) Other (76,008) 37 22,711,376 (603,216) (99,950) EXHIBIT 4 -1 Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long -term liabilities in the statement of net assets. Repayment of debt principal is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net assets and does not affect the statement of activities. Also, governmental funds report the effect of issuance discounts and premiums when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Issuance of debt $ (7,701,722) Discounts and premiums on bonds issued 37,905 Debt repayments 3,510,371 (4,153,446) Some items reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. These items consist of: Decrease in accrued interest 15,145 Amortization of bond discount/premium 11,061 Increase in compensated absences (29,360) Increase in net OPEB liability (352,254) Total additional expenses (355,408) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of the internal service funds is reported with governmental activities. (958,003) Change in net assets of governmental activities $24,328,373 See notes to financial statements. 38 CITY OF DUBUQUE, IOWA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2011 Business -type Activities - Sewage Disposal Water Stormwater Parking Works Utility Utility Facilities ASSETS CURRENT ASSETS Cash and pooled cash investments $ 4,479,975 $ 3,557,570 $ 1,961,275 $ 1,816,540 Receivables Accounts 833,362 680,008 328,407 85,241 Accrued interest 12,922 7,538 2,901 - Intergovernmental 1,195,656 2,464,533 344,656 Inventories 419,391 Prepaid items 708,333 Total Current Assets 6,521,915 5,372,840 4,757,116 2,246,437 NONCURRENT ASSETS Restricted cash and pooled cash investments 687,959 205,560 Advances to other funds 2,832,595 - Capital assets Land 167,855 59,898 15,332,849 1,431,565 Buildings 31,598,780 8,242,543 - 44,214,074 Improvements other than buildings 36,179,987 761,957 30,779,278 2,396,647 Machinery and equipment 13,582,390 42,434,220 925,265 1,427,005 Construction in progress 22,629,667 113,695 11,603,098 8,181,467 Accumulated depreciation (40,717,927) (21,099,776) (9,134,964) (9,556,458) Net Capital Assets 63,440,752 30,512,537 49,505,526 48,094,300 Total Noncurrent Assets 63,440,752 34,033,091 49,505,526 48,299,860 Total Assets 69,962,667 39,405,931 54,262,642 50,546,297 39 EXHIBIT 5 Enterprise Funds Governmental America's Other Activities - River Enterprise Internal Project Funds Total Service Funds $ 24,194 $ 1,475,093 $ 13,314,647 $ 1,174,328 333,669 2,260,687 182,834 119 4,608 28,088 3,467 1,760,905 5,765,750 - 28,245 447,636 70,850 708,333 48,595 24,313 3,602,520 22,525,141 1,480,074 893,519 2,832,595 36,000 17,028,167 1,887,564 85,942,961 70,117,869 - 6,141,705 64,510,585 101,738 82,672 42,610,599 - (5,240,644) (85,749,769) (62,715) 2,907,297 194,460,412 39,023 2,907,297 198,186,526 39,023 24,313 6,509,817 220,711,667 1,519,097 40 (Continued) CITY OF DUBUQUE, IOWA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2011 LIABILITIES CURRENT LIABILITIES Accounts payable Accrued payroll Loans payable - current General obligation bonds payable Revenue bonds payable Capital loan notes payable Accrued compensated absences Accrued interest payable Due to other funds Total Current Liabilities NONCURRENT LIABILITIES Advances from other funds Loans payable General obligation bonds payable Revenue bonds payable Capital loan notes payable Net OPEB liability Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted by bond ordinance /development agreement Unrestricted Total Net Assets See notes to financial statements. Business -type Activities - Sewage Disposal Works Water Utility Stormwater Utility Parking Facilities $ 7,397,102 $ 373,259 $ 1,359,239 $ 1,189,124 74,464 86,663 11,459 27,908 950,000 20,874 150,520 170,000 561,434 555,000 255,000 - - 661,413 240,973 318,473 99,306 121,440 5,218 24,649 54,003 40,959 62,048 50,244 8,436,808 1,288,294 3,267,871 1,867,799 2,832,595 109,986 950,000 331,235 1,479,197 949,426 10,729,200 10,5 89,865 6,522,793 - 17,619,229 6,231,218 8,094,103 111,028 115,835 22,214 38,861 22,042,049 13,929,258 19,795,517 10,959,961 30,478,857 15,217,552 23,063,388 12,827,760 46,201,746 17,924,714 28,808,373 39,187,485 687,959 - 205,560 (6,717,936) 5,575,706 2,390,881 (1,674,508) $ 39,483,810 $ 24,188,379 $ 31,199,254 $ 37,718,537 41 EXHIBIT 5 (continued) Enterprise Funds Governmental America's Other Activities - River Enterprise Internal Project Funds Total Service Funds $ 985 $ 33,821 $ 10,353,530 $ 1,280,576 123,989 324,483 58,721 - 970,874 2,787 1,439,741 255,000 1,220,859 - 135,457 386,070 180 207,434 - 107,173 107,173 985 403,407 15,265,164 1,339,297 2,942,581 1,281,235 67,223 23,814,911 - 6,522,793 31,944,550 128,424 416,362 195,647 66,922,432 985 599,054 82,187,596 1,339,297 2,904,435 135,026,753 39,023 893,519 23,328 3,006,328 2,603,799 140,777 $ 23,328 $ 5,910,763 $ 138,524,071 $ 179,800 42 CITY OF DUBUQUE, IOWA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2011 Business -type Activities - Sewage Disposal Water Stormwater Parking Works Utility Utility Facilities OPERATING REVENUES Charges for sales and services $ 6,589,308 $ 5,609,848 $ 2,974,799 $ 2,484,978 Other 54,666 28,429 18,740 265,632 Total Operating Revenues 6,643,974 5,638,277 2,993,539 2,750,610 OPERATING EXPENSES Employee expense 2,445,054 2,560,422 402,598 786,174 Utilities 693,127 614,513 2,893 201,564 Repairs and maintenance 280,422 155,183 I2,912 158,853 Supplies and services 2,501,095 1,924,572 1,242,357 2,142,752 Insurance 108,435 60,806 I8,850 46,886 Depreciation 1,343,385 863,151 421,709 898,473 Total Operating Expenses 7,371,518 6,178,647 2,101,319 4,234,702 OPERATING INCOME (LOSS) (727,544) (540,370) 892,220 (1,484,092) NONOPERATING REVENUES (EXPENSES) Intergovernmental 527,195 3,806,299 1,583,960 Investment earnings 55,074 42,132 29,470 37,570 Contributions 6,605 1,810 67,874 92,439 Interest expense (527,493) (345,346) (710,002) (541,132) Gain (loss) on disposal of assets 11,656 3,744 3,813 - Net Nonoperating Revenues (Expenses) (454,158) 229,535 3,197,454 1,172,837 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS, EXTRAORDINARY ITEMS AND TRANSFERS (1,181,702) (310,835) 4,089,674 (31I,255) CAPITAL CONTRIBUTIONS 31,712 175,350 431,689 130,728 EXTRAORDINARY ITEM, MERCURY CLEANUP (2,253,036) - - TRANSFERS IN 194,905 79,763 231,030 167,383 TRANSFERS OUT (33,455) (79,260) (468,560) (787,881) CHANGE IN NET ASSETS (3,241,576) (134,982) 4,283,833 (801,025) NET ASSETS, BEGINNING 42,725,386 24,323,361 26,915,421 38,519,562 NET ASSETS, ENDING $ 39,483,810 $ 24,188,379 $ 31,199,254 $ 37,718,537 See notes to financial statements. 43 EXHIBIT 6 Enterprise Funds Governmental America's Other Activities - River Enterprise Internal Project Funds Total Service Funds $ - $ 4,029,987 $ 21,688,920 $ 9,896,375 18,704 386,171 22,207 4,048,691 22,075,091 9,918,582 8,756 3,163,634 9,366,638 9,237,227 70,902 1,582,999 23,637 - 569,807 1,177,177 24,001 171,330 2,198,550 10,180,656 2,240,486 64,154 299,131 29,751 375,410 3,902,128 10,259 180,086 6,442,457 26,508,729 11,565,361 (180,086) (2,393,766) (4,433,638) (1,646,779) 2,454,799 8,372,253 349 19,986 184,581 13,776 168,728 (1,804) (2,125,777) (4,111) 15,102 349 2,468,870 6,614,887 13,776 (179,737) 75,104 2,181,249 (1,633,003) 769,479 (2,253,036) - 28,098 1,883,498 2,584,677 675,000 (4,258) (1,373,414) - (155,897) 1,958,602 1,908,955 (958,003) 179,225 3,952,161 136,615,116 1,137,803 $ 23,328 $ 5,910,763 $ 138,524,071 $ 179,800 44 CITY OF DUBUQUE, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2011 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 BY (USED FOR) OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Proceeds from interfund balances Payment of interfund balances Intergovernmental grant proceeds Payments for extraordinary item Proceeds from issuance of debt NET CASH PROVIDED BY (USED FOR) NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets Acquisition and construction of capital assets Proceeds from issuance of debt Payment of debt Interest paid Contributions Intergovernmental grant proceeds NET CASH PROVIDED BY (USED FOR) CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Interest received NET CASH PROVIDED BY INVESTMENT ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING Business -type Activities - Sewage Disposal Works Water Utility Stormwater Utility Parking Facilities $ 6,623,945 $ 5,697,776 $ 2,961,239 $ 2,484,424 3,387,711 (3,283,465) (119,447) (2,416,957) (2,515,247) (394,253) 54,666 28,429 18,740 7,649,365 194,637 2,832,595 (2,253,036) 2,105,741 2,879,937 11,655 (22,188,453) 13,115,580 (143,000) (474,615) 6,605 (1,674,984) (776,763) 265,632 (72,507) 2,466,279 298,309 79,763 231,030 167,383 (143,782) - (2,883,326) (2,803,563) 87,248 167,383 3,744 3,813 (4,330,886) (14,019,905) (8,643,733) 11,211,670 9,643,068 (193,239) (1,525,000) (619,869) (280,457) (676,620) (511,244) 1,810 67,874 92,439 527,195 1,341,766 1,239,304 (9,672,228) 6,939,837 (5,165,004) (8,443,103) 51,521 51,521 35,589 34,774 41,044 35,589 34,774 41,044 908,595 4,099,356 (2,576,703) (7,936,367) 3,571,380 146,173 4,537,978 9,958,467 $ 4,479,975 $ 4,245,529 $ 1,961,275 $ 2,022,100 45 Enterprise Funds America's River Project Other Enterprise Funds $ - $ (190,443) (8,756) (199,199) 28,098 (4,258) (65,297) Governmental Activities - Internal Total Service Funds 4,036,085 $ 21,803,469 $ (2,913,242) (4,793,870) (3,135,289) (9,247,265) 18,704 386,171 (1,993,742) 9,719,684 (2,508,036) (9,226,502) 22,207 8,148,505 (1,992,647) 1,883,498 2,584,409 (148,040) 107,173 2,874,471 (6,465) (2,889,791) 1,688,597 1,688,597 (2,253,036) 2,105,741 (41,457) 3,672,803 3,962,351 264,620 264,620 230 230 24,I94 24,017 (I,270,765) 69,946 (1,740) (1 ,178,542) 17,943 17,943 518,462 43,229 (50,453,742) 34,040,264 (2,481,108) (1,944,676) 168,728 3,372,885 (17,254,420) 181,101 181,101 675,000 (1,489) 673,511 16,314 16,314 (4,962,463) (1,302,822) 956,631 19,170,629 2,477,150 $ 24,194 $ 1,475,093 $ 14,208,166 $ 1,174,328 (Continued) 46 CITY OF DUBUQUE, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2011 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss) Business -type Activities - Sewage Disposal Water Stormwater Parking Works Utility Utility Facilities $ (727,544) $ (540,370) $ 892,220 $ (1,484,092) Adjustments to reconcile operating income (Ioss) to net cash provided by (used for) operating activities Depreciation 1,343,385 863,151 421,709 898,473 Change in assets and liabilities (Increase) decrease in receivables 34,637 87,928 (13,560) (554) Decrease in inventories and prepaid items - (191,409) - Increase (decrease) in accounts payable 6,970,790 (336,982) 1,157,565 875,071 Increase in accrued Liabilities 9,877 24,121 3,891 2,123 Increase in net OPEB liability 18,220 21,054 4,454 7,288 Total Adjustments 8,376,909 467,863 1,574,059 1,782,401 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 7,649,365 $ (72,507) $ 2,466,279 $ 298,309 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Contribution of capital assets from outside sources $ 31,712 $ 175,350 $ 431,689 $ 130,728 Contributions of capital assets to Governmental Activities $ 33,455 $ 79,260 $ 324,778 S 787,881 Contributions of capital assets from Governmental Activities $ 268 $ $ - $ See notes to financial statements. ..� 47 EXHIBIT 7 (Continued) Enterprise Funds Governmental America's Other Activities - River Enterprise Internal Project Funds Total Service Funds $ (180,086) $ (2,393,766) $ (4,433,638) $ (1,646,779) 375,410 3,902,128 10,259 6,098 I14,549 (176,691) (1,751) (193,160) (66,981) (19,1I3) (8,078) 8,639,253 (123,180) 6,481 46,493 10,725 21,864 72,880 (19,113) 400,024 12,582,143 (345,868) $ (199,199) $ (1,993,742) $ 8,148,505 $ (1,992,647) $ $ - $ 769,479 $ $ - $ $ 1,225,374 $ - $ - $ 268 $ 48 CITY OF DUBUQUE, IOWA STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUNDS JUNE 30, 2011 EXHIBIT 8 Agency Funds ASSETS Cash and pooled cash investments $ 1,247,843 Accounts receivable 53,197 Accrued interest 3,498 Total Assets $ 1,304,538 LIABILITIES Accounts payable $ 11,174 Due to other agency 1,293,364 Total Liabilities $ 1,304,538 See notes to financial statements. CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 The notes to financial statements contain a summary of significant accounting policies and other notes considered necessary for an understanding of the financial statements of the City and are an integral part of this report. The index to the notes is as follows: 1. Summary of Significant Accounting Policies 2. Deficit Fund Equity 3. Cash on Hand, Deposits, and Investments 4. Notes Receivable 5. Interfund Balances and Transfers 6. Capital Assets 7. Long -Term Debt 8. Risk Management 9. Commitments and Contingent Liabilities 10. Extraordinary Item 11. Other Postemployment Benefits (OPEB) 12. Employee Retirement Systems 13. Landfill Closure and Postclosure Care 14. Leases Where City is Lessor 15. Subsequent Events 16. New Governmental Accounting Standards Board (GASB) Standards 50 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING 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 units, entities for which the City is considered to be financially accountable. The City has no blended component units. The discretely presented component units are reported in separate columns in the government -wide financial statements to emphasize that they are legally separate from the City. Discretely Presented Component Units The Dubuque Metropolitan Area Solid Waste Agency was created under the provisions of Chapter 28E of the Code of Iowa by the City of Dubuque and Dubuque County. The purpose of the Agency 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 and has a June 30 year end. During the year ended June 30, 2011, $546,060 of the Dubuque Metropolitan Area Solid Waste Agency's charges for services were related to services provided to the City of Dubuque. Dubuque Initiatives and Subsidiaries is a non - profit corporation organized under the laws of Iowa and Section 501(c)(3) of the Internal Revenue Code. The Organization was created to render service to the City Council of the City of Dubuque, Iowa, on matters of community interest. The Organization's articles require that its board members include two city council members, the mayor, and the city manager of the City of Dubuque, Iowa; and in the event of dissolution, any assets or property of the Organization be transferred to the City of Dubuque, Iowa. During the fiscal year 2009, the City of Dubuque, Iowa guaranteed debt issued by Dubuque Initiatives and Subsidiaries for the rehabilitation of the Roshek Building. The Organization is presented as a proprietary fund type and has a December 31 year end. Complete financial statements for the Component Units may be obtained from the City of Dubuque's Finance Department for the Dubuque Metropolitan Area Solid Waste Agency and Economic Development Office for Dubuque Initiatives and Subsidiaries. City of Dubuque 50 West 13`h Street Dubuque, Iowa 52001 Jointly Governed Organizations The City participates in several jointly governed organizations that provide goods or services to the citizenry of the City but do not meet the criteria of a joint venture since there is no ongoing financial interest or responsibility by the participating governments. City officials are members of the following boards and commissions: City of Dubuque Conference Board Dubuque County E -911 Committee Dubuque Drug Task Force (continued on next page) 51 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Government-wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for services. Likewise, the primary government is reported separately from the legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants, contributions, and interest restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and a fiduciary fund, even though the latter is excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period (year -end). Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, interest, special assessments, and grants are susceptible to accrual. Sales taxes are considered measurable and available at the time the underlying transaction occurs, provided they are collected by the City within 60 days after year -end. All other revenue items are considered to be measurable and available only when cash is received by the City. (continued on next page) 52 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 Ernployee Benefits Fund is used to account for pension and related employee benefit costs for those employees paid wages from the General Fund. The Community Development Fund is used to account for the use of Community Development Block Grant funds as received from federal and state governmental agencies. The Street Construction Fund is used to account for the resources and costs related to street capital improvements. The General Construction Fund is used to account for the resources and costs related to nonassignable capital improvements. The City reports the following major proprietary funds: The Sewage Disposal Works Fund is used to account for the operations of the City's sewage disposal works and services. The Water Utility Fund is used to account for the operations of the City's water facilities and services. The Stormwater Utility Fund is used to account for the operations of the City's sormwater services. The Parking Facilities Fund is used to account for the operations of the City -owned parking ramps and other parking facilities. The America's River Project is used to account for the construction of all projects covered by the Vision Iowa Grant, including all matching funds. Additionally, the City reports the internal service fund type. Internal service funds are used to account for general, garage, stores /printing, health insurance, and worker's compensation insurance services provided by one department to other departments of the City on a cost - reimbursement basis. Fiduciary funds account for assets held by the City in a trustee or agency capacity for the benefit of others and cannot be used to support City activities. Fiduciary funds, other than agency funds, use the economic resources measurement focus and the full accrual basis of accounting. Agency funds use the full accrual basis of accounting but do not have a measurement focus and therefore report only assets and liabilities. The City reports Agency Funds to account for assets held by the City as an agent under the cable franchise agreement and for the Dubuque Racing Association. (continued on next page) 53 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Private - sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private - sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private - sector guidance. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the City's water and sewer function and various other functions of the City. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds and of the City's internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. Assets, Liabilities, and Equity Deposits and Investments The City's cash, pooled cash investments, and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Investments are stated at fair value or amortized cost. Amortized cost is used only for money market investments that have a remaining maturity at time of purchase of one year or less. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at year -end 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." (continued on net page) 54 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Advances between funds, as reported in the fund financial statements, are offset by a nonspendable fund balance account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Property tax receivable is recognized in the funds on the levy or lien date, which is the date that the tax asking is certified by the City to the County Board of Supervisors. Current year delinquent property tax receivable represents taxes collected by the County but not remitted to the City at June 30, 2011, and unpaid taxes. The succeeding year property tax receivable represents taxes certified by the City to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. By statute, the City is required to certify its budget to the County Auditor by March 15 of each year for the subsequent fiscal year. However, by statute, the tax asking and budget certification for the following fiscal year becomes effective on the first day of that year. Although the succeeding year property tax receivable has been recorded, the related revenue is deferred in both the government -wide and fund financial statements and will not be recognized as revenue until the year for which it is levied. Property taxes are levied as of July 1 on property values assessed as of January 1 of the previous year. The tax levy is divided into two billings. The billings are due September 1 and March 1 O September 30 and March 31, the bill becomes delinquent, and penalties and interest may be assessed by the City. Inventories and Prepaid Items Inventories included in the governmental funds are valued at cost using the first -in first -out (FIFO) method. The costs of governmental fund inventories are recorded as expenditures when consumed rather than when purchased. Inventories of materials and supplies in the enterprise funds are deterrained by actual count and priced on the FIFO method. Inventories included in internal service funds are stated at the lower of cost (FIFO method) or market and consist of consumable supplies. The cost of these supplies is recorded as an expense at the time they are removed from inventory for use. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. The costs of governmental fund prepaids are recorded as expenditures when consumed rather than when purchased. Restricted Assets Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet/statement of net assets because their use is limited by applicable bond covenants. The "revenue bond operating" account is used to report resources set aside to subsidize potential deficiencies from the enterprise fund's operation that could adversely affect debt service payments. The "revenue bond sinking" account is used to segregate resources accumulated for debt service payments over the next twelve months. The "revenue bond reserve" account is used to report resources set aside to make up potential future deficiencies in the revenue bond sinking account. (continued on next page)- 55 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Certain assets of the special revenue funds and capital project funds are classified as restricted assets because their use is limited by debt agreements, the City's cable television franchise agreement and Iowa Finance Authority housing program 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, intangibles, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide statement of net assets and in the proprietary funds statement of net assets. Capital assets are defined by the government as assets with an initial, individual cost of more than $100,000 for infrastructure and intangible assets, $20,000 for building assets, and $10,000 for the remaining assets, and an estimated useful life of more than a year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs o£ normal maintenance and repair not adding to the value of the asset or materially extending asset lives are not capitalized. All of the City's infrastructure has been recorded, including infrastructure acquired prior to June 30, 1980. Major outlays for capital assets and improvements are capitalized as projects are constructed. There was no interest incurred during the construction phase of capital assets of business -type activities to capitalize with the value of the assets constructed in the current year. Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight -line method over the following estimated useful lives: Assets Years Buildings 40 to 125 Improvements other than buildings 15 to 50 Machinery and equipment 2 to 30 Infrastructure and intangibles 15 to 75 Compensated Absences The City allows employees to accumulate a limited amount of earned but unused vacation and sick pay benefits. Vacation pay is payable to employees upon retirement or termination. Sick pay is payable only upon retirement, in which event employees are paid for 25% of all eligible hours (50% in the case of police and fire employees). All vacation pay and applicable sick pay benefits are accrued when incurred in the government -wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. (continued on next page) 56 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Long -Term Obligations In the government -wide financial statements and proprietary fund types in the fund fmancial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, bond issuance costs, and deferred amounts on refunding are deferred and amortized over the life of the bonds using the straight -line method. Bonds payable are reported net of the applicable bond premium or discount and deferred amount on refundings. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources, Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Net Assets /Fund Balance The Dubuque Metropolitan Area Solid Waste Agency's restricted net assets represent outside third -party restrictions and amounts restricted for minority interest of the Agency. The Agency is restricted to using certain amounts for purposes specified by state statute. The net assets restricted for minority interest is calculated at'22.7% of unrestricted net assets, based on the 1976 revenue bond resolution authorizing the issuance of revenue bonds for the construction of the landfill. In the government -wide and proprietary fund financial statements, net assets is displayed in three components as follows: • Invested in capital assets, net of related debt -This consists of capital assets, net of accumulated depreciation, less the outstanding balances of any bonds, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Net assets invested in capital assets, net of related debt excludes unspent debt proceeds. Unspent debt proceeds was $4,592,591 for the governmental activities and $5,910,563 for business -type activities. • Restricted -This consists of net assets that are legally restricted by outside parties or by law through constitutional provisions or enabling legislation. Net assets restricted through enabling legislation as of June 30, 2011 consists of $115,608 for debt service and $45,607 for employee benefits. All other restrictions are by outside parties through grants, debt agreements or donors. • Unrestricted -This consists of net assets that do not meet the definition of restricted or invested in capital assets, net of related debt. (continued on next page) 57 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 1-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Beginning with fiscal year 2011, the City implemented GASB Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions." This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government's fund balances more transparent. In the governmental fund fmancial statements, fund balances are classified as follows: • Nonspendable: Nonspendable fund balances cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. • Restricted: Restricted fund balances are restricted to specific purposes when constraints placed on the use of the resources are either externally imposed by creditors, grantor or state or federal laws or imposed by law through constitutional provisions or enabling legislation. • Committed: Committed fund balances can be used only for specific purposes determined pursuant to constraints formally imposed by the City Council through resolution approved prior to year -end. • Assigned: Assigned fund balances contain self - imposed constraints of the government to be used for a particular purpose. Intent can be expressed by the City Council or by an official or body to which the City Council delegates the authority. The City Council has delegated the authority to the City Manager, Budget Director, and Finance Director. • Unassigned: Unassigned fund balances are amounts not included in the other spendable classifications. When an expenditure is incurred for purposes for which amounts in the committed, assigned, or unassigned fund balance classifications could be used, the City first considers the committed to be spent and then the assigned and unassigned, respectively. The budget guideline of the City of Dubuque maintains a General Fund working balance or operating reserve of 10% of the total General Fund operating budget requirements, or approximately $4,017,317 for fiscal year 2011. An operating reserve or working balance must be carried into a fiscal year to pay operating costs until tax money, or other anticipated revenue is received. The State of Iowa recommends a reasonable amount for a working balance as (a) anticipated revenues for the first three months of the fiscal year, less anticipated expenditures or (b) 5% of the total General Fund operating budget, excluding fringes and tort liability expenses. The City's rating agency, Moody's Investor Service, recommends a reserve balance of at least 10% for "A" rated cities. This is based on the fact that a large portion of the revenue sources are beyond the City's control and therefore uncertain. An additional one -time $1 million reserve implemented in fiscal year 2010 was carried forward into fiscal year 2011. Another $500,000 was added to the reserve for fiscal year 2011 due to the health insurance claims exceeding expectations in fiscal year 2010. If these funds were not needed, they would have been available in fiscal year 2012 for a capital project or economic development initiative. $1,117,475 of the additional funds was used in fiscal year 2011 and the remaining $382,525 was carried over into fiscal year 2012. (continued on next page) 58 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Budgets and Budgetary Accounting The budgetary comparison and related disclosures are reported as Required Supplementary Information. During the year ended June 30, 2011, disbursements exceeded the amounts budgeted in the community and economic development function. Other Significant Accounting Policies Other significant accounting policies are set forth in the financial statements and the notes thereto. NOTE 2 — DEFICIT FUND EQUITY The following funds have deficit net asset amounts as of June 30, 2011: Internal Service General Service $ Workers' Compensation Reserve $ 20,116 953,653 The General Service deficit will be addressed during next fiscal year's reallocation of expenses. The Worker's Compensation Reserve deficit is a result of a number of projected settlements at fiscal year -end that will be paid during next fiscal year with additional funding to cover. NOTE 3 — CASH ON HAND, DEPOSITS, AND INVESTMENTS Cash on Hand. Cash on hand represents authorized change funds and petty cash funds used for current operating purposes. The carrying amount at year -end was $10,346 for the City and $450 for the Dubuque Metropolitan Area Solid Waste Agency. Deposits. At year -end, the City's carrying amount of deposits was $23,110,980, and the bank balance was $24,921,323. The City's deposits in banks at June 30, 2011, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. The carrying amount of deposits for the Dubuque Metropolitan Area Solid Waste Agency was $10,508,936, and the bank balance was $10,787,012. The Agency's deposits in banks at June 30, 2011, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. (continued on next page) 59 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 3 — CASH ON HAND, DEPOSITS, AND INVESTMENTS (continued) Investments. As of June 30, 2011, the City had the following investments and maturities. (The City assumes callable bonds will not be called): Investment Maturities (In Years) Investment Type Less Than 1 1 to 5 6 to 10 More than 10 Total Money Market Funds - U.S. Treasury $ 3,781,517 $ 99,750 $ - $ - $ 3,881,267 U.S. Treasury Securities 1,646,602 7,693,247 - 2,170,747 11,510,596 Federal Agency Obligations - 5,764,815 773,019 7,176,602 13,714,436 Corporate Stock 76,093 - - - 76,093 $ 5,504,212 $ 13,557,812 $ 773,019 $ 9,347,349 $ 29,182,392 The City and the Dubuque Metropolitan Solid Waste Agency are authorized by statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured depository institutions approved by the City Council or Board of Trustees and the Treasurer of the State of Iowa; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; certain registered open -end management investment companies; certain joint investment trusts; and warrants or improvement certificates of a drainage district. Corporate stock was donated in 1957 to the City to establish the Ella Lyons Peony Trail Permanent Trust Fund. Interest Rate Risk The City's investment policy limits the investment of operating funds (funds expected to be expended in the current budget year or within 15 months of receipt) to instruments that mature within 397 days. Funds not identified as operating funds may be invested in instruments with maturities longer than 397 days, but the maturities shall be consistent with the needs and use of the City. Credit Risk. The City's investment policy limits investments in commercial paper and other corporate debt to the top two highest classifications. The City did not invest in any commercial paper or other corporate debt during the year. The City's investments in Money Market Funds and US Agencies were rated AAA. Concentration of Credit Risk The City's investment policy does not allow for a prime bankers' acceptance or commercial paper and other corporate debt balances to be greater than ten percent of its total deposits and investments. The policy also limits the amount that can be invested in a single issue to five percent of its total deposits and investments. The City held no such investments during the year. Custodial Credit Risk - Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City's deposits are entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. Custodial Credit Risk --- Investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City had no custodial risk with regards to investments, since all investments were held by the City or its agent in the City's name. ( continued on next page) 60 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 3 — CASH ON HAND, DEPOSITS, AND INVESTMENTS (continued) Due to legal and budgetary reasons, the General Fund is assigned a portion of the investments earnings associated with other funds. These funds are the employee benefits, community development, tort liability, road use tax, cable TV, general construction, transit system, general service, garage service, and stores /printing funds. The Dubuque Metropolitan Area Solid Waste Agency had no investments at June 30, 2011. A reconciliation of cash and investments as shown on the government -wide statement of net primary government and statement of fiduciary assets and liabilities follows: Cash on hand Carrying amount of deposits Carrying amount of investments Total Government -wide Cash and pooled cash investments Cash and pooled cash investments — temporarily restricted Cash and pooled cash investments — permanently restricted Fiduciary Cash and pooled cash investments Total assets for the $ 10,346 23,110,980 29,182,392 $ 52,303,718 $ 47,823,397 3,163,066 69,412 1,247,843 $ 52,303,718 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 Total Cash and pooled cash investments Cash and pooled cash investments — temporarily restricted Total 450 10508,936 10,509,386 6,339,019 4,170,367 10,509,386 Dubuque Initiatives and Subsidiaries. At December 31, 2010, Dubuque Initiatives and Subsidiaries had the following cash and investments: Deposits Repurchase agreement Beneficial interest in assets held by others Total $ 2,955,695 118,862 1.026,840 $ 4,101,397 A reconciliation of cash and investments as shown on the government -wide statement of net assets for Dubuque Initiatives and Subsidiaries follows: Cash and pooled cash investments Cash and pooled cash investments- restricted Cash and pooled cash investments — temporarily restricted Total (continued on next page) 61 $ 2,788,705 285,852 1,026.840 $ 4,101,397 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 4 — NOTES RECEIVABLE At December 30, 2010, Dubuque Initiatives and Subsidiaries had the following notes receivable: Lower Main Development, 4.00 %, unsecured, matures August 2018 112,987 City of Dubuque, 5.00 %, unsecured, matures July 2023 362,167 Roshek Building Investment Fund, LLC, 4.74 %, collateralized by a pledge agreement, matures June 2039 6,500,000 Roshek Building Investment Fund, LLC, 4.74 %, collateralized by a pledge agreement, matures June 2039 1,744,743 Roshek Building Investment Fund, LLC, 4.74%, collateralized by a pledge agreement, matures June 2039 5,294,384 Total notes receivable 14,014,281 Less: current maturities (33,146) Noncurrent portion $ 13,981,135 NOTE 5 — INTERFUND BALANCES AND TRANSFERS Interfund balances at June 30, 2011, include amounts due to /from other funds and advances due to /from other funds. Interfund balances are as follows: Due From Due To Other Funds Other Funds Governmental activities: Major Fund, General $ 107,173 $ Business -type activities: Nonmajor, Transit $ 107,173 107,173 $ 107,173 Advances To Other Funds Advances From Other Funds Governmental activities: Major Fund, General $ 109,986 $ Business -type activities: Major Funds: Sewage Disposal Works 2,832,595 Water U tility 2,832,595 109,986 $ 2,942,581 $ 2,942,581 (continued on the next page) 62 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 5 — INTERFUND BALANCES AND TRANSFERS (continued) Interfund transfers for the year ended June 30, 2011, consisted of the following: Transfers From Americas Employee Street General Nonmajor Stormwater River Transfer to General Benefits Construction Construction Governmental Utility Project General Community development Street construction 157,840 General construction 49,499 Nonmajor governmental 1,705,256 Sewage disposal works Water utility - Stormwater utility 230,434 Parking facilities Americas River project 28,098 Nonmajor enterprise 1,766,716 Internal service funds 675,000 2,210,604 100,000 902,298 499,410 117,525 723,455 6,635,396 298,593 1.066,274 1,3 80,1 15 125,500 25,355 79,763 596 32,500 134,883 43,782 16,782 100,000 4,258 Total 3,217, 160 499,4I0 998,820 6,684,895 4,450,238 194,637 79,763 231,030 167,383 28,098 1,883,498 675.000 8 4,612,843 $ 2,210,604 $ 298,593 $ 1,441,799 $ 1.0,398,053 $ I43,782 $ 4,258 $ 19,109,932 Transfer of capital assets to governmental activities 1,225,374 Transfer of capital assets to business -type activities (268) Total $ 20,335,038 In the fund financial statements, total transfers out of $20,335,038 are greater than total transfers in of $19,109,932 because of the treatment of transfers of capital assets to the governmental activities capital assets. During the year, capital assets related to Sewer, Water, Stormwater, and Parking with a book value of $33,455, $79,260, $324,778, and $787,881, respectively, were transferred to governmental activities capital assets. Net capital assets of $268 were transferred from governmental activities capital assets to sanitary sewer. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of financial resources. However, the Sewage Disposal Works, Water Utility, Stormwater Utility, and Parking major enterprise funds did report transfers out for the capital resources given. Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, (3) use unrestricted revenues collected in the general fiend to finance various programs accounted for in other funds in accordance with budgetary authorizations, and (4) fund capital projects. (continued on next page) 63 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 6 — CAPITAL ASSETS Capital asset activity for the year ended June 30, 2011, was as follows: Primary Government: Governmental activities; Beginning Transfers Transfers Ending Balance In Out Reclassification Increases Decreases Balance Capital assets, not being depreciated: Land $ 58,772,516 $ - $ - 5 - S 7,250,345 5 (578,573) $ 65,444,288 Construction in progress 17,586,988 - 19,437,887 (18,150,365) 18,874,510 Total Capital assets, not being depreciated 76,359,504 - 26,688,232 (18,728,938) 84,318,798 Capital assets, being depreciated: - Buildings 113,435,724 787,881 11,550,851 125,774,456 Improvements other than buildings 15,535,320 - 1,112,828 16,648,148 Machinery and equipment 32,454,175 312,000 (16,064) 3,354,386 (487,985) 35,616,512 Infrastructure 192,517,528 125,493 - - 5,344,089 - 197,987,110 Total capital assets, being depreciated 353,942,747 1,225,374 (16,064) - 21,362,154 (487,985) 376,026,226 Less accumulated depreciation for: Buildings (25,651,430) - - (2,117,901) - (27,769,331) Improvements other than buildings (6,038,212) (1,449) (508,660) - (6,548,321) Machinery and equipment (15,884,217) 15,796 1,538,614 (1,090,326) 463,342 (14,956,791) Infrastructure (47,158,734) - (1,537,165) (4,707,123) - (53,403,022) Total accumulated depreciation (94,732,593) 15,796 - (8,424,010) 463,342 (102,677,465) Total capital assets, being depreciated, net 259,210,154 1,225,374 (268) 12,938,144 (24,643) 273,348,761 Governmental activities capital assets, net 5335,569,658 5 1,225,374 $ (continued on next page) (268) 5 - 539,626,376 $ (18,753,581) S 357,667,559 64 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 6 — CAPITAL ASSETS (continued) Business -type activities: Beginning Transfers Transfers Ending Balance In Out Increases Decreases Balance Capital assets, not being depreciated: Land $ 13,487,195 8 - $ - $ 3,590,972 $ - 8 17,028,167 Construction inprogress 6,509,164 - (1,225,374) 50,356,780 (13,029,971) 42,610,599 Total Capital assets, not being depreciated 19,996,359 (1,225,374) 53,897,752 (13,029,971) 59,638,766 Capital assets, being depreciated: Buildings 85,822,990 119,971 85,942,961 Improvements other than buildings 68,523,151 1,594,718 - 70,117,869 Machinery and equipment 56,277,467 16,064 8,640,751 (423,697) 64,510,585 Total capital assets, being depreciated 210,623,608 16,064 10,355,440 (423,697) 220,571,415 Less accumulated depreciation for: Buildings (40,193,372) (1,272,641) (41,466,013) Improvements other than buildings (19,251,530) (1,259,032) - (20,510,562) Machinery and equipment (22,782,513) (15,796) (I,370,455) 395,570 (23,773,194) Total accumulated depreciation (82,227,415) (15,796) (3,902,128) 395,570 (85,749,769) Total capital assets, being depreciated, net 128,396,193 268 6,453,312 (28,127) 134,821,646 Business -type activities capital assets, net 8 148,392,552 $ 268 8 (1,225,374) $ 60,351,064 S (13,058,098) 194,460,412 (continued on next page) 65 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 34, 2011 NOTE 6 — CAPITAL ASSETS (continued) Depreciation expense was charged to functions /programs for the primary government as follows: Governmental activities: Public safety $ 666,941 Public works 4,871,906 Health and social services Culture and recreation 1,546,977 Community and economic development 41,081 General government 1,286,846 Capital assets held by the government's internal service funds are charged to various functions based on their usage of their assets 10,259 Total depreciation expense - governmental activities $ 8,424,010 Business -type activities: Sewage disposal works $ 1,343,385 Water utility 863,151 Stormwater utility 421,709 Parking facilities 898,473 Refuse collection 65,640 Transit system 309,770 Total depreciation expense - business -type activities $ 3,902,128 (continued on next page) 66 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 6 — CAPITAL ASSETS (continued) Component Unit: Beginning Transfers Transfers Ending Balance In Out Increases Decreases Balance Capital assets, not being depreciated: Land $ 1,586,092 $ - $ - $ - $ - $ 1,586,092 Construction in progress 190,878 - 403,419 (594,297) Total capital assets, not being depreciated 1,776,970 403,419 (594,297) 1,586,092 Capital assets, being depreciated: Buildings 65,922 Improvements other than buildings 6,364,906 Machinery and equipment 2,820,938 Total capital assets, being depreciated 9,251,766 65,922 6,364,906 980,280 - 3,801,218 980,280 - 10,232,046 Less accumulated depreciation for. Buildings (47,225) Improvements other than buildings (5,336 899) Machinery and equipment (1,325,355) Total accumulated. depreciation (6,709,479) (719) (47,944) (295,022) - (5,631,921) (373,428) (1,698,783) (669,169) (7,378,648) Total capital assets, being depreciated, net 2,542,287 2,853,398 Dubuque Metropolitan Area Solid Waste capital assets, net $ 4,319,257 • 714,530 $ (594,297) 4,439,490 Depreciation expense of $669,169 was charged to the Dubuque Metropolitan Area Solid Waste Agency. (continued on next page) 67 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 7 — 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 $47,805,000. During Fiscal Year 2011, the City issued $705,000 to current refund one outstanding issuance. The refunding was undertaken to reduce total future debt service payments. The transaction resulted in an economic gain of $82,762 and a reduction of $70,465 in future debt service payment. During Fiscal Year 2011, the City issued $9,265,000 of general obligation bonds for capital improvements. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds generally are issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi - annually. General obligation bonds outstanding at June 30, 2011, are as follows: Purpose Amount Amount Date of Interest Originally Outstanding Issue Maturity Dates Rates Issued End of Year Corporate purpose and refunding Series 2002C 12/03/02 6/01103- 06/01/17 3.65 -4.30% $ 3,105,000 $ 1,120,000 Corporate purpose Series 2003 10/15/03 6/01/04- 06/01/23 3.40 -4.75 2,110,000 1,420,000 Corporate purpose Series 2005 04/18/05 6/01/06- 06/01/24 3.40 -5.00 9,015,000 6,510,000 Corporate purpose Series 2006A 04/03/06 6/01/07 - 06101/25 3.80-4.20 2,900,000 2,360,000 Corporate purpose Series 2006B 04/03/06 6/01/07- 06/01/21 3.70 -4.20 910,000 670,000 Refunding Series 2006C 04/03/06 6/01/10 - 06/01/20 3.70 -4.10 3,525,000 3,190,000 Corporate purpose and refunding Series 2007B 12/01/07 6/01/10 - 06/01/17 3.75 2,965,000 2,310,000 Corporate purpose Series 2007A 12/01/07 6/01/09 - 06/01/17 3.45 -3.65 1,055,000 740,000 Corporate purpose Series 2008A 11/04/08 6/01/09- 06/01/28 3.75 -4.80 3,885,000 3,500,000 Corporate purpose Series 2008B 11/04/08 6101/09- 06/01/23 3,75-4.25 .3,290,000 2,795,000 Corporate purpose (taxable) Series 2008C '11/04/08 6/01/09 - 06/01/18 5.25 -5.50 2,465,000 2,145,000 Corporate purpose (taxable) Series 2009A 11 /10/09 6/01/11- 06/01/29 1.90 -5.60 2,935,000 2,815,000 Corporate purpose (taxable) Series 2009B 11/10/09 6/01/11- 06/01/29 I.50 -5.50 11,175,000 14,725,000 Refunding Series 2009C 11/10/09 6/01/10- 06/01121 2.004.00 8,885,000 7,560,000 Corporate purpose and refunding Series 2010A 08/30/10 6/01/11- 06/01/30 2.00 -3.00 4,470,000 4,415,000 Corporate purpose Series 2010B 08/30/10 6/01/12- 06/01/30 1.00 -4.15 2,675,000 2,675,000 Corporate purpose Series 2010C 08/30/10 6/01/12- 06/01/30 2.00 -3.00 2,825,000 2,825,000 $ 68,190,000 $ 57,775,000 (continued on next page) 68 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 7 — LONG - TERM DEBT (continued) Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year June 30 2012 2013 2014 2015 2016 2017 -2021 2022 -2026 2027 -2030 Total Governmental Activities Principal Interest Business -type Activities Principal Interest $ 2,270,259 2,316,768 2,591,768 2,688,277 2,789,786 14,098,542 3,542,854 1,972,768 $ 32,271,022 $ 1,307,536 1,235,247 1,156,285 1,061,555 958,182 3,041,157 1,059,676 301,260 $ 10,120,898 $ 1,439,741 1,483,232 1,523,232 1,576,723 1,625,214 7,236,458 6,522,146 4,097,232 $ 25,503,978 $ 1,039,038 994,241 946,164 892,638 835,893 3,261,236 1,737,667 350,914 $ 10,057,791 Tax Increment Financing Bonds. The City issues tax increment financing bonds to provide funds for urban renewal projects. The City pledges property tax revenues from the tax increment financing districts to pay debt service. These bonds are generally issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi - annually. The original amount of tax increment financing bonds issued in prior years was $26,333,538. Tax increment financing bonds outstanding at June 30, 2011, are as follows: Date of Interest Purpose Issue Maturity Dates Rates Amount Originally Issued Amount Outstanding End of Year Eagle Window & Door 02/15/00 12/31/02- 06/30/12 Vessel Systems 12/31/03 12/30/05- 06/30/15 Diamond Jo Parking Ramp 10/16/07 06 /01 /11- 06/01/37 (continued on next page) 9.1 % $ 3,168,538 $ 8.0 140,000 7.5 23,025,000 69 458,575 $ 69,317 22,740,000 Current Portion 458,575 15,364 305,000 $ 26,333,538 $ 23,267,892 $ 778,939 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 7 — LONG-TERM DEBT (continued) Annual debt service requirements to maturity for tax increment financing bonds are as follows: Fiscal Year Governmental Activities June 30 Principal Interest 2012 $ 778,939 $ 1,742,354 2013 346,617 1,686,616 2014 372,973 1,660,510 2015 399,363 1,632,418 2016 410,000 1,602,750 2017 -2021 2,565,000 7,503,375 2022 -2026 3,675,000 6,386,250 2027 -2031 5,280,000 4,785,375 2032 -2036 7,570,000 2,486,250 2037 1,870,000 140,250 Total $ 23,267,892 $ 29,626,148 Revenue Bonds. The City also issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service. These bonds are generally issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi - annually. Revenue bonds outstanding at June 30, 2011, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Water Utility Series 2008D 11/04/08 06/01/10 - 06/01/23 3.00 -5.00 $ 1,195,000 $ 1,055,000 Water Utility Series 2010D 09/21/10 06/01/12 - 06/01/30 2.00 -4.00 5,700,000 5,700,000 $ 6,895,000 $ 6,755,000 Revenue bond debt service requirements to maturity are as follows: Fiscal Year Business -type Activities June 30 Principal Interest 2012 $ 255,000 $ 237,608 2013 260,000 231,458 2014 270,000 224,945 2015 275,000 218,045 2016 285,000 210,825 2017 -2021 1,585,000 909,830 2022 -2026 1,940,000 601,173 2027 -2030 1,885,000 192,800 Total $ 6,755,000 $ 2,826,684 (continued on next page) 70 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 7 - LONG -TERM DEBT (continued) Notes Payable. Notes payable have been issued to provide funds for economic development and for the purchase of capital assets. Notes payable at June 30, 2011, are as follows: Purpose Date of Amount Interest Originally Issued Issue Maturity Dates Rates Adams Company Lower Main Development Theisen Supply 40 M ain LLC 44 Main LLC 02/13/04 06/30/04 11/22/06 08/06/09 10/26/10 06/01/05- 06101 /15 12/31/06- 06/30/16 12/31/08- 06/30/18 06/01/11-06/01/37 12/31/12-06/30/27 4.07 % 8.00 8.25 6.50 6.00 $ 500,000 182,000 810,323 690,529 317,347 Amount Outstanding Current End of Year Portion $ 181,818 108,109 633,546 690,529 317,347 $ 45,455 18,409 69,116 50,710 $ 2,500,199 $ 1,931,349 $ 183,690 Annual debt service requirements to maturity for notes payable are as follows: Fiscal Year June 30 2012 2013 2014 2015 2016 2017 -2021 2022 -2026 2027 Total (continued on next page) Governmental Activities Principal Interest 183,690 $ 208,702 221,043 234,540 203,240 728,129 138,596 13,409 1,931,349 $ 130,927 117,145 102,954 88,533 73,213 170,687 34,322 1,520 719,301 71 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 7 — LONG -TERM DEBT (continued) Capital Loan Notes. Revenue capital loan notes have been issued for the planning and construction of sewer, stormwater, and water capital projects through the State of Iowa State Revolving Loan Funds. The City has pledged income derived from the acquired or constructed assets to pay debt service. During 2011, the City received $603,955 in forgivable capital loan notes not reflected in the following amounts. Amount Date Final Interest Amount Outstanding Current Puipose Authorized Maturity Date Rates Authorized End of Year Portion Upper Bee Branch Sewer 12/28/06 06/01/30 3.25 % $ 1,657,821 $ . 617,822 $ 22,353 Clean Water 01/14/09 06/0128 3.25 1,847,000 I,628,000 73,000 Drinking Water 10/18/07 06/01/28 3.25 1,037,000 807,000 36,000 North Catfish Creek Stormwater 01/13/09 06/01/30 3.25 998,000 740,024 26,775 North Catfish Creek Sewer 01/13/09 06101/30 3.25 1,141,000 655,371 22,353 Water Moser Replacement 02/12/10 06/01/30 3.25 8,676,000 5,665,190 206,332 Upper Bee Branch Sewer 10/27/10 06/01/41 3.25 7,850,000 5,426,731 196,345 Water Pollution Control Plant 08/18/10 06/01/39 3.25 64,885,000 17,625,271 637,701 8 88,091,821 8 33,165,409 8 1,220,859 Annual debt service requirements to maturity for capital loan notes are as follows: Fiscal Year Business -type Activities June 30 Principal Interest 2012 $ 1,220,859 $ 1,068,915 2013 1,260,287 1,028,943 2014 1,302,910 987,621 2015 1,345,765 945,023 2016 1,388,893 900,962 2017 -2021 7,660,944 3,791,925 2022 -2026 8,998,776 2,456,078 2027 -2031 9,986,975 898,854 Total $ 33,165,409 $ 12,078,321 At June 30, 2011, the City of Dubuque had $58,221,914 of capital loan note funds available. These funds are available to the City by filing a disbursement request with the State of Iowa. The City expects to use the remaining available funds in fiscal year 2012. (continued on next page) 72 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 7 - LONG-TERM DEBT (continued) Loans Payable. Loans payable have been issued to fund several City projects. Amount Amount Date of Interest Originally Outstanding Current Purpose Issue Maturity Dates Rates Issued End of Year Portion Parking Lot Purchase 07/08/08 01/01/09-07/01/23 5.00 % $ 400,000 $ 352,109 8 20,874 Building Purchase Agreement 02/01 /10 02/01/10-02/01/16 - 330,000 282,857 47,143 Lower Bee Branch Bridge Loan 34 09/20/10 06/01/11 1.49 950,000 - Lower Bee Branch Bridge Loan 59 09/20 /10 06/01/12 1.49 950,000 950,000 950,000 Lower Bee Branch Bridge Loan 75 09/20 /10 06 /01/13 149 950,000 950,000 $ 3,580,000 $ 2,534,966 $ 1,018,017 Annual debt service requirements to maturity for loans payable are as follows: Fiscal Year Governmental Activities Business -type Activities June 30 Principal Interest Principal Interest 2012 $ 47, 143 $ $ 970,874 $ 45,658 2013 47,143 971,931 30,446 2014 47,143 23,041 15,181 2015 47,143 24,208 14,014 2016 47,143 25,433 12,789 2017 -2021 47,142 147,835 43,275 2022 -2024 88,787 6,768 Total $ 282,857 $ $ 2,252,109 $ 168,131 (continued on next page) 73 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS NNE 30,2011 NOTE 7 — LONG-TERM DEBT (continued) Changes in Long -term Liabilities. Long -term liability activity for the year ended June 30, 2011, was as follows: Balance Beginning Balance End Due Within of Year Additions Reductions of Year One Year Governmental activities: General obligation bonds $ 27,540,000 $ 7,341,022 $ (2,610,000) 5 32,271,022 $ 2,270,259 Unaccreted premium 525,283 1,642 (27,740) 499,185 Unamortized discounts (123,312) (39,547) 2,396 (160,463) Deferred amount on refunding (54,107) 5,411 (48,696) Total general obligation bonds 27,887,864 7,303,117 (2,629,933) 32,561,048 2,270,259 Tax increment financing bonds 24,042,040 (774,148) 23,267,892 778,939 Unamortized discounts (239,542) 8,872 (230,670) - Total tax increment financing bonds 23,802,498 (765,276) 23,037,222 778,939 Notes payable 1,696,872 360,700 (126,223) 1,931,349 183,690 Loans payable 282,857 - 282,857 47,143 Comp ens ated absences 2,717,633 2,746,993 (2,717,633) 2,746,993 2,746,993 Net OPEB liability 1,566,681 352,254 1,918,935 Total governmental activities $ 57,954,405 $ 10,763,064 $ (6,239,065) $ 62,478,404 $ 6,027,024 Business -ty pe activities: General obligation bonds Unamortized discounts Deferred amount on refunding Total general obligation bonds Revenue bonds Unaccreted premium Unamortized discounts Total revenue bonds Capital loan notes Loans payable Compensated absences Net OPEB liability Total business -type activities (continued on next page) $ 24,225,000 $ 2,628,978 $ (1,350,000) $ 25,503,978 5 1,439,741 (178,002) 8,889 (169,113) (89,196) 8,983 (80,213) 23,957,802 2,628,978 {1,332,128) 25,254,652 1,439,741 1,125,000 5,700,000 (70,000) 6,755,000 255,000 32,114 - 32,114 (9,570) 249 (9,321) 1,115,430 5,732,114 (69,751) 6,777,793 255,000 8,289,621 25,043,787 (167,999) 33,165,409 1,220,859 371,978 2,850,000 (969,869) 2,252,109 970,874 386,750 386,250 (386,750) 386,250 386,250 343,482 72,880 416,362 5 34,465,063 $ 36,714,009 5 (2,926,497) $ 68,252,575 $ 4,272,724 74 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS ,TUNE 30, 2011 NOTE 7 — LONG -TERM DEBT (continued) For the governmental activities, compensated absences are generally liquidated by the General Fund, Community Development Fund, and Section VIII Housing Fund. Dubuque Initiatives and Subsidiaries. At December 31, 2011, Dubuque Initiatives and Subsidiaries had the following notes and loan payable: Note payable to Dubuque Bank & Trust (Loan A), with the following interest rate provisions: fixed interest rate of 5.85% during the "Fixed Interest Rate Period "; during the "Initial Loan A Variable Interest Rate Period ", an interest rate equal to the greater of the "Loan A Index Rate" plus 2.75% and 5.00 %; during the "Second Loan A Variable Interest Rate Period ", an interest rate equal to the "Loan A Index Rate" plus 2.75 %. Monthly interest only payments are due with final principal and interest due at maturity on June 15, 2029.* Note payable to Dubuque Bank & Trust (Loan B), with the following interest rate provisions: fixed interest rate of 5.85% during the "Fixed Interest Rate Period ", during the "Variable Interest Period: an interest rate equal to the "Loan A Index Rate" plus 2.75 %. Monthly interest only payments due until March 2010, principal and interest payments of $54,167 begin on April 1, 2010. This note matures on June 15, 2019.* Note payable to Dubuque Bank & Trust (Loan D), interest rate equal to the greater of Prime Rate plus 0.50% or 3.99 %. Monthly interest only payments are due with. final principal and interest due at maturity on October 31, 2011.* Note payable to ICD VIII, LLC (QLICI QA1 Loan), fixed interest rate of 4.74 %. Monthly interest only payments are due with final principal and interest due at maturity on June 1, 2039. ** Note payable to USBCDE Sub -CDE XXXV, LLC (QLICI QA2 Loan), fixed interest rate of 4.47 %. Monthly interest only payments are due with fmal principal and interest due at maturity on June 1, 2039. ** Note payable to ICD VIII, LLC (QLICI QB 1 Loan), fixed interest rate of 1.80 %. Monthly interest only payments are due with final principal and interest due at maturity on June 1, 2039. ** Note payable to USBCDE Sub -CDE XXXV, LLC (QLICI QB2 Loan), fixed interest rate of 1.80 %. Monthly interest only payments are due with final principal and interest due at maturity on June 1, 2039. ** Less: Current maturities Noncurrent liability (continued on next page) 75 $ 5,294,384 6,092,598 10,651,055 5,897,192 5,897,192 3,902,808 4,002,808 41,738,037 (11,225,935) $ 30,512,102 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 7 — LONG -TERM DEBT (continued) The following is a schedule by years of the principal maturities of long -term debt obligations for the years ending June 30: 2011 $ 11,225,935 2012 609,190 2013 647,242 2014 686,692 2015 728,547 Thereafter 27,840,431 $ 41,738,037 * - Notes A, B, and D payable to Dubuque Bank & Trust are collateralized by a security agreement dated June 22, 2009, a collateral assignment of tax credit purchase agreement dated June 22, 2009, and a collateral assignment of fund loan documents dated June 22, 2009. ** - These notes payable to various entities are collateralized by, among other things, a certain Open -End Mortgage, Assignment of Leases and Rents, Security Agreement, and Fixture Filing of even date herewith executed by Borrower, as Mortgagor, to Administrative Agent, in its capacity as the Administrative Agent for the Lenders and for the benefit of the Lenders, as Mortgagee, encumbering the Property. Forgivable loan. On February 19, 2009, the City of Dubuque was awarded a grant from the Iowa Department of Economic Development in the amount of $450,000. The City of Dubuque awarded the grant to Dubuque Initiatives & Subsidiaries to assist the Organization in starting the Roshek Building project. The grant is a "forgivable loan ". The funds will be released on a reimbursement basis, upon the City of Dubuque submitting paperwork to Iowa Department of Economic Development documenting $450,000 in building related costs. If the Iowa Department of Economic Development considers the project to meet the reimbursement requirements, the loan will become forgivable on July 1, 2011. The balance of the forgivable loan at December 31, 2010, was $450,000. (continued on next page) 76 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 8 — RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance purchased from independent third parties and participates in a local government risk pool. The City assumes liability for any deductibles and claims in excess of coverage limitations. 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 $90,000, and an aggregate stop -loss of $7,889,065 for 2011. Coverage from a private insurance company is maintained for losses in excess of the stop -loss amount. All claims handling procedures are performed by a third -party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. The City has established a Workers' Compensation Reserve Fund for insuring benefits provided to City employees which is included in the Internal Service Fund Type. Workers' compensation benefits were self - insured up to a specific stop -loss amount of $500,000, and an aggregate -stop loss consistent with statutory limits for 2011. Coverage from a private insurance company is maintained for losses in excess of the stop -loss amount. All claims handling procedures are performed by a third -party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. The City purchases private insurance to include sworn Police Officers and Fire Fighters medical claims under a self- insured retention of $600,000 for each accident. All funds of the City participate in both programs and make payments to the Health Insurance Reserve Fund and the Workers' Compensation Reserve Fund based on actuarial estimates of the amounts needed to pay prior- and current -year claims. The claims liability of $80,135 in the Health Insurance Reserve Fund and $987,017 in the Workers' Compensation Reserve Fund is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the toss can be reasonably estimated. (continued on next page) 77 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 8 — RISK MANAGEMENT (continued) Changes in reported liabilities, all of which are expected to be paid within one year fiscal years ended June 30, 2011 and 2010, are summarized as follows: Liabilities at June 30, 2009 Claims and changes in estimates during fiscal year 2010 Claim payments Liabilities at June 30, 2010 Claims and changes in estimates during fiscal year 2011 Claim payments Liabilities at June 30, 2011 Health Insurance Reserve Fund of year end, for the Workers' Compensation Reserve Fund 814,119 5,599,969 (5,934,318) 479,770 6,457,672 (6,674,473) 262,969 $ 622,009 998,771 (713,170) 907,610 1,042,820 987,017 The City is a member in the Iowa Communities Assurance Pool (Pool), as allowed by Chapter 670.7 of the Code of Iowa. The Pool is a local government risk- sharing pool whose 645 members include various governmental entities throughout the State of Iowa. The Pool was formed in August 1986 for the purpose of managing and funding third -party liability claims against its members. The Pool provides coverage and protection in the following categories: general liability, automobile liability, automobile physical damage, public officials liability, police professional liability, property, inland marine, and boiler /machinery. The City acquires automobile physical damage coverage through the Pool. All other property, inland marine, and boiler /machinery insurance is acquired through commercial insurance. There have been no reductions in insurance coverage from prior years. Each member's annual casualty contributions to the Pool fund current operations and provide capital. Annual operating contributions are those amounts necessary to fund, on a cash basis, the Pool's general and administrative expenses, claims, claims expenses, and reinsurance expenses due and payable in the current year, plus all or any portion of any deficiency in capital. Capital contributions are made during the first six years of membership and are maintained not to exceed 300 percent of the total current members' basis rates or to comply with the requirements of any applicable regulatory authority having jurisdiction over the Pool. The Pool also provides property coverage. Members who elect such coverage make annual operating contributions which are necessary to fund, on a cash basis, the Pool's general and administrative expenses and reinsurance premiums, all of which are due and payable in the current year, plus all or any portion of any deficiency in capital. Any year -end operating surplus is transferred to capital. Deficiencies in operations are offset by transfers from capital and, if insufficient, by the subsequent year's member contributions. The City has property insurance coverage in addition to the Pool. (continued on next page) 78 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 8 -- RISK MANAGEMENT (continued) 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, 2011, were $570,843. The Pool uses reinsurance and excess risk- sharing agreements to reduce its exposure to large losses. The Pool retains general, automobile, police professional, and public officials liability risks up to $350,000 per claim. The next $2,650,000 in claims are covered with another pool (APEEP). Claims exceeding $3,000,000 are reinsured. Property and automobile physical damage risks are retained by the Pool up to $150,000 each occurrence, each location, with excess coverage reinsured on an individual- member basis. The Pool's Iowa Risk Management Agreement with its members provides that in the event a casualty claim or series of claims exceeds the amount of risk - sharing protection provided by the member's risk - sharing certificate, or in the event that a series of casualty claims exhausts total members' equity plus any reinsurance and any excess risk - sharing recoveries, then payment of such claims shall be the obligation of the respective individual member. As of June 30, 2011, settled claims have not exceeded the risk pool or reinsurance company coverage since the Pool's inception. Members agree to continue membership in the Pool for a period of not less than one full year. After such period, a member who has given 60 days' prior written notice may withdraw from the Pool. Upon withdrawal, payments for all claims and claims expenses become the sole responsibility of the withdrawing member, regardless of whether a claim was incurred or reported prior to the member's withdrawal. Members withdrawing within the first six years of membership may receive a partial refund of their capital contributions. If a member withdraws after the sixth year, the member is refunded 100 percent of its capital contributions. However, the refund is reduced by an amount equal to the annual operating contribution which the withdrawing member would have made for the one -year period following withdrawal and Cumulative Reserve Fund distribution. NOTE 9 — COMMITMENTS AND CONTINGENT LIABILITIES Grants The City has received financial assistance from numerous federal and state agencies in the form of grants and entitlements. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, liabilities resulting from disallowed claims, if any, will not have a material effect on the City's financial position as of June 30, 2011. Litigation The City's corporate counsel reported that as of June 30, 2011, 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. In October 2010, during the initial stages of the City's Water Resource and Recovery Center's Renovation Project, a small amount of mercury was spilled from the bearing on a trickling filter while the (continued on next page) 79 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 9 — COMMITMENTS AND CONTINGENT LIABILITIES (continued) bearing was being removed to abate the mercury. The spill required cleaning the trickling filter and its contents by a process approved by the EPA and the IDNR. Miron Construction is seeking $3 million from the City. The City is seeking to recover $1.7 million of those costs. Liability for the costs of the spill is set to go to arbitration in early 2012. Tschiggfrie Excavating Co. has a claim for extra construction costs for the recently completed Lower Bee Branch Sanitary Sewer Project. The claim is for $2.3 million and is set to go to arbitration in early 2012. Construction Contracts The City has recognized as a liability only that portion of construction contracts representing construction completed through June 30, 2011. The City has additional commitments for signed construction contracts of $61,461,000 as of June 30, 2011. These commitments will be funded by federal and state grants, cash reserves, and bond proceeds. Debt Guarantee The City has guaranteed debt issued by Dubuque Initiatives and Subsidiaries related to the rehabilitation of the Roshek Building. The guarantee is limited to $25,000,000. Dubuque Initiatives & Subsidiaries During 2010, Roshek Building QALICB, LLC had significant renovations started on the Roshek Building, which resulted in various construction contract commitments as of December 31, 2010. The total amount of outstanding commitments at December 31, 2010 was $1,925,702. Roshek Building, Inc. also anticipates receipt of State of Iowa Certified Historic Rehabilitation Tax Credits in the excess of $10,000,000 and Federal Certified Historic Rehabilitation Tax Credits in excess of $11,000,000. The funds will be used to retire debt. The State credits are subject to a completion of the rehabilitation project by December 31, 2010. Both Federal and State credits are also subject to successful approval of the project by the State of Iowa and National Park Service. NOTE 10 — EXTRAORDINARY ITEM As discussed in Note 9 above, the City incurred costs for a mercury spill of $2,253,036 in the Sewer Fund. The mercury spill is reported as an extraordinary item since the event was both unusual in nature and infrequent in occurrence. NOTE 11— OTHER POSTEMPLOYMENT BENEFITS (OPEB) The City implemented GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits other Than Pensions prospectively during the year ended June 30, 2009. Plan Description - The City operates a single- employer retiree benefit plan which provides postemployment benefits for eligible participants enrolled in the City- sponsored plans, which includes the employees of the Dubuque Metropolitan Area Solid Waste Agency (a component unit). The Plan does not issue a stand -alone fmancial report. The benefits are provided in the form of an implicit rate subsidy where pre -65 retirees receive health insurance coverage by paying a combined retiree /active rate for the self - insured medical and prescription drug plan. (continued on next page) 80 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 11— OTHER POSTEMPLOYMENT BENEFITS (OPEB) (continued) An explicit rate subsidy where the City pays the full cost of a $1,000 policy in the fully- insured life insurance plan. To be eligible for the health insurance coverage, retirees must be at least 55 years old, have completed 4 years of service, and be vested with either the Iowa Public Employee's Retirement System (IPERS) or the Municipal Fire and Police Retirement System of Iowa (MFPRSI). In addition to the health eligibility coverage requirements, one must have belonged to a bargaining group to be eligible for life insurance benefits. There are approximately 523 active and 35 retired members in the plan. Funding Policy - The contribution requirements of plan members are established and may be amended by the City. The City currently finances the retiree benefit plan on a pay -as- you -go basis. Annual OPEB Cost and Net OPEB Obligation - The City's annual OPEB cost is calculated based on the annual required contribution (ARC) of the City, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost for the year ended June 30, 2011, the amount actually contributed to the plan, and changes in the City's net OPEB obligation: Annual required contribution $ 570,443 Interest on net OPEB obligation 97,187 Adjustment to annual required contribution (86,094) Annual OPEB cost 581,536 Contributions made, net of retiree contributions (149,114) Increase in net OPEB obligation 432,422 Net OPEB obligation, beginning of year 1,943,740 Net OPEB obligation, end of year $ 2,376,162 For calculation of the net OPEB obligation, the actuary has set the transition day as July 1, 2008. The end of year net OPEB obligation was calculated by the actuary as the cumulative difference between the actuarially determined funding requirements and the actual contributions for the year ended June 30, 2011. For the year ended June 30, 2011, the City paid $450,962 for retiree claims. Plan members eligible for benefits contributed $301,848 or 100% of the premium costs. The net resulted in City contributions of $149,114. (continued on next page) 81 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 11— OTHER POSTEIVIPLOYMENT BENEFITS (OPEB) (continued) The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation as of June 30, 2011 are summarized as follows: Percentage of Net Annual Annual OPEB OPEB Year Ended OPEB Cost Cost Contributed Obligation June 30, 2011 $ 581,536 25.6 % $ 2,376,162 June 30, 2010 945,000 (8.3) 1,943,740 June 30, 2009 945,000 2.6 920,157 Funded Status and Funding Progress - As of July 1, 2010, the most recent actuarial valuation date for the period July 1, 2010 through June 30, 2011, the actuarial accrued liability was $5,481,802, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability (UAAL) of $5,481,802. The covered payroll (annual payroll of active employees covered by the plan) was approximately $29,790,517 and the ratio of the UAAL to covered payroll was 18.40 %. As of June 30, 2011, there were no trust fund assets. Actuarial Methods and Assumptions - Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumption about future employment, mortality, and the health care cost trend. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as Required Supplementary Information in the section following the Notes to Financial Statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the plan as understood by the employer and the plan members and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term perspective of the calculations. As of the July 1, 2010 actuarial valuation date, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 5% discount rate based on the City's funding policy. The projected annual medical trend rate (inflation rate) is 10 %. The ultimate medical trend rate is 5 %. The medical trend rate is reduced 1.0% each year until reaching the 5% ultimate trend rate. Mortality rates are from the RP2000 Group Annuity Mortality Tables, applied on a gender - specific basis. Annual retirement and termination probabilities were developed consistent with the City's experience and the IPERS and MFPRSI retirement patterns. Annual turnover rates were based on Scale T -2 of the actuary's pension handbook. Projected claim costs of the medical plan are $8,440 per year for retirees. The salary increase rate was assumed to be 3% per year. The UAAL is being amortized as a level percentage of pay on an open basis over 30 years. (continued on next page) 82 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 12 — EMPLOYEE RETIREMENT SYSTEMS MFPRSI The City contributes to the Municipal Fire and Police Retirement System. of Iowa (PIan), which is a cost - sharing, multiple - employer defined benefit pension plan administered by a Board of Trustees. The Plan provides retirement, disability, and death benefits which are established by state statute to plan members and beneficiaries. The Plan issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to Municipal Fire and Police Retirement System of Iowa, 7155 Lake Drive, Suite 201, West Des Moines, Iowa, 50266. Plan members are required to contribute 9.40% of earnable compensation and the City is required to contribute 19.90% of eamable compensation. Contribution requirements are established by state statute. The City's contributions to the Plan for the years ended June 30, 2011, 2010, and 2009, were $2,404,474, $1,966,345, and $2,077,554, respectively, which met the required minimum contribution for each year. IPERS The City contributes 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. IPERS provides retirement and death benefits which are established by state statute to plan members and beneficiaries. IPERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to IPERS, P.O. Box 9117, Des Moines, Iowa, 50306 -9117. Plan members are required to contribute 4.50% of their annual covered salary, and the City is required to contribute 6.95% of annual covered payroll. Contribution requirements are established by state statute. The City's contributions to IPERS for the years ended June 30, 2011, 2010, and 2009, were $1,614,811, $1,456,384, and $1,314,106, respectively, equal to the required contributions for each year. NOTE 13 — LANDFILL CLOSURE AND POSTCLOSURE CARE State and federal laws and regulations require the Dubuque Metropolitan Area Solid Waste Agency to place a final cover on each cell of its landfill site when filled and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that each cell stops accepting waste, the Agency reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each statement of net assets date. The $3,839,008 reported as landfill closure and postclosure care liability at June 30, 2011, represents the cumulative amount reported to date based on the use of 100% of the estimated capacity of cells 1, 2, 3, and 4, the use of 90% of the estimated capacity of cells 5, 6, 7, and 8.. The Agency will recognize the remaining estimated cost of closure and postclosure care of $243,892 as the remaining capacity is filled. (continued on next page) 83 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 13 — LANDFILL CLOSURE AND POSTCLOSURE CARE (continued) These amounts are based on what it would cost to perform all closure and postclosure care in 2011. The Agency expects to close cells 5, 6, 7, and 8 in 2013. The Agency is making plans to construct a second generation of cells to extend the life of the landfill to 2061. Actual cost may be higher due to inflation, changes in technology, or changes in regulations. The Agency has begun to accumulate resources to fund these costs in accordance with state and federal financial assurance requirements. At June 30, 2011, funds have been restricted for closure and postclosure costs in the amount of $3,910,073. NOTE 14 -- LEASES WIIERE CITY IS LESSOR The City of Dubuque leases riverfront property, airport property (hangars and terminal space), farm land, parking areas, space for antennas on top of water towers, and concession areas under operating leases. The most significant lease is the lease of the greyhound racing and gambling facility and related parking area to the Dubuque Racing Association (DRA). The City's cost of the leased DRA assets total $14,144,771. The carrying amount of the assets at June 30, 2011 is $7,153,888, with $142,423 of depreciation expense during the year ended June 30, 2011. The DRA lease amount is based on the association's gross gambling receipts. During the year ended June 30, 2011, the DRA lease generated $6,311,350 in lease revenue. NOTE 15 — SUBSEQUENT EVENTS On July 18, 2011, the City authorized $4,500,000 to Caradco LLLP The funds are provided by the Iowa Finance Authority (IFA) via a loan to the City of Dubuque. The loan funds are being used for the creation of apartments in the Millwork District. The interest rate for the City on the loan is 3% for 20 years with the first ten years interest only; second ten years principal and interest, 20 year amortization. The City has drawn $3,500,000 of funds through November 2011 from IFA and forwarded to Caradco LLLP. On August 1, 2011, the City authorized $6,330,000 General Obligation Bonds, Series 2011A. The bonds are being issued to provide improvements to water, sewer, stormwater, streets, parking and solid waste, as well as the stipulated civil penalty and supplemental environmental project required under the Consent Decree with federal and state authorities concerning the Water Pollution Control Plant and sanitary sewer system. Although the City sold General Obligation Bonds to support the projects, repayment of the debt will be from fees and other available revenue sources. The interest rate on the bonds range from 2% to 4 %, with a maturity date of June 1, 2031. On August 1, 2011, the City authorized $1,590,000 Taxable General Obligation Urban Renewal Bonds, Series 201113. The bonds will provide funds to pay costs of grading and road construction on the South Siegert Farm area of Dubuque Industrial Center West; emergency repairs to the Port of Dubuque Parking Ramp and related litigation expenses; rehabilitation and renovation and reconstruction of the former 18th street Fire engine House #1, including the provision of construction financing to the private developer undertaking the rehabilitation of the same. Repayment of the debt will be from tax increment revenues of the Dubuque Industrial Center West and the Greater Downtown Urban Renewal Area along with fees and other available revenue sources. The interest rate on the bonds range from 2.25% to 4.35 %, with a maturity date of June 1, 2026. (continued on next page) 84 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 NOTE 15 — SUBSEQUENT EVENTS (continued) In February, 2012, the City plans to authorize not to exceed $5,000,000 of General Obligation Urban Renewal Bonds. The proceeds will fund urban renewal project activities under the authority of Chapter 403 of the Code of Iowa and the Amended and Restated Urban Renewal Flan for Greater Downtown Urban Renewal Area, including those costs associated with the construction of an intermodal transportation center and the acquisition of real property for public and private redevelopment. Since the bonds are not yet authorized, the actual interest rate and maturity date are not determined. The funds to repay the bonds will be generated from tax increment revenues of the Greater Downtown Urban Renewal Area. In February, 2012, the City plans to authorize not to exceed $9,000,000 of General Obligation Bonds. The proceeds will be used to pay costs of street improvements related to East 7 "' and Commercial Street reconstruction and related improvements, two -way traffic conversion from 9 "'to 11"' Streets, Historic Millwork District "complete streets" improvements and the refunding and refinancing of the General Obligation Capital Loan Notes, Series 2010F, dated September 20, 2010. Since the bonds are not yet authorized, the actual interest rate and maturity date are undetermined. The funds to repay the bonds will be generated from tax increment revenues of the Greater Downtown Urban Renewal Area. On July 18, 2011, the Dubuque Metropolitan Area Solid Waste Agency acquired 120 acres of adjoining farm land that will be utilized for future landfill expansion. The cost of the property as $1,190,125. The City incurred significant expenses at the construction site of the new Water and Resource Recovery Center project due to wind and water damage from July 2011 events. The damage could approximate $2,250,000 with builder's risk insurance to reimburse the City the bulk of the cost of repairs. In addition, the City incurred approximately $800,000 of other damages to city property at various locations throughout the City (lift stations, retaining walls, bridges, roads etc.) It is anticipated that FEMA will reimburse the City 75 %, the State will reimburse the City 10 %, and the City will pick up the remaining 15 %. NOTE 16 — NEW GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) STANDARDS GASB has issued several statements not yet implemented by the City that will affect the City's financial statements, as follows: GASB Statement No. 57, OPEB Measurements by Agent Employers and Agent Multiple- Employer Plans, an amendment of GASB Statement No. 43 and No. 45. This Statement was issued January 2010 and will be effective for the City beginning with its year ending June 30, 2012. This Statement addresses issues related to measurement of OPEB obligations by certain employers participating in agent multiple - employer OPEB plans. (continued on next page) 85 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS .TUNE 30, 2011 NOTE 16 — NEW GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASH) STANDARDS (continued) GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements, issued November 2010, will be effective for the City with its year ending June 30, 2013. This Statement is intended to improve financial reporting by addressing issues related to service concession arrangements, which are a type of public - private or public- public partnerships. GASB Statement No 61, The Financial Reporting Entity: Omnibus an amendment of GASB Statements No. 14 and No. 34, issued November 2010 will be effective for the City beginning with its year ending June 30, 2013. This Statement is intended to improve financial reporting for governmental financial reporting entities by improving guidance for including, presenting and disclosing information about component units and equity interest transactions of a financial reporting entity. GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre November 30, 1989 FASB and AICPA Pronouncements, issued January 2011, will be effective for the City beginning with its year ending June 30, 2013. This statement is intended to enhance the usefulness of the Codification of Governmental Accounting and Financial Reporting Standards by incorporating guidance that previously could only be found in certain FASB and AICPA pronouncements. GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, issued July 2011, will be effective for the City beginning with its year ending June 30, 2013. This Statement is intended to improve financial reporting by providing citizens and other users of state and local government financial reports with information about how past transactions will continue to impact a government's financial statement in the future. GASB Statement No. 64, Derivative Instruments: Application of Hedge Accounting Termination Provisions, issued in June 2011, will be effective for the City beginning with its year ending June 30, 2013. The objective of this Statement is to clarify whether an effective hedging relationship continues after the replacement of a swap counterparty or a swap counterparty's credit support provider. This Statement sets forth criteria that establish when the effective hedging relationship continues and hedge accounting should continue to be applied. The City's management has not yet determined the effect these statements will have on the City's financial statements. 86 Required Supplementary Information June 30, 2011 City of Dubuque, Iowa CITY OF DUBUQUE, IOWA SCHEDULE OF RECEIPTS, DISBURSEMENTS AND CHANGES IN BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS) GOVERNMENTAL AND ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2011 RECEIPTS Property tax Tax imminent financing Other City tax Licenses and permits Use of money and property Intergovernmental Charges for fees and service Special assessments M iscellaneous Total Receipts EXPENDITURES Public safety Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital projects Business -type activities Total Expenditures Actual Budgeted Amounts Original Final Final to Actual Variance $ 19, 104,736 $ 19, 177,697 $ 19,177,697 $ 8,358,387 9,080,612 9,080,612 10,967,592 14,628,325 14,628,325 4,220,761 1,187,750 1,187,750 16,459,821 17,204,673 17,450,449 30,538,233 41,810,047 89,087,080 23,254,259 29,434,587 30,276,892 288,156 229,000 2,765,269 24,544,559 6,930,645 9,751,669 137,736,504 139,683,336 193,405,743 (72,961) (722,225) (3,660,733) 3,033,011 (990,628) (58,548,847) (7,022,633) (2,477,113) 14,792,890 (55,669,239) 23,318,989 23,226,178 23,903,288 584,299 11,391,328 11,236,376 13,087,242 1,695,914 885,582 864,254 962,372 76,790 9,696,979 9,212,448 9,699,402 2,423 11,312,854 11,678,675 12,249,796 936,942 7,061,642 6,912,832 7,190,142 128,500 6,288,173 6,445,719 5,722,717 (565,456) 25,536,097 36,937,109 94,490,211 68,954,114 69,559,157 61,034,759 120,098,308 50,539,151 165,050,801 167,548,350 287,403,478 122,352,677 EXCESS (DEFICIENCY) OF RECEIPTS OVER (UNDER) EXPENDITURES (27,314,297) OTHER FINANCING SOURCES, NET 27,848,374 EXCESS (DEFICIENCY) OF RECEIPTS AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES BALANCE, BEGINNING OF YEAR BALANCE, ENDING OF YEAR (27,865,014) (93,997,735) 66,683,438 28,845,081 67,294,895 (39,446,521) 534,077 980,067 (26,702,840) 27,236,917 47,298,087 47,298,087 47,298,087 $ 47,832,164 $ 48,278,154 $ 20,595,247 $ 27,236,917 See Note to Required Supplementary Information. 87 CITY OF DUBUQUE, IOWA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION — BUDGETARY REPORTING FOR THE YEAR ENDED JUNE 30, 2011 The budgetary comparison is presented as Required Supplementary Information in accordance with Governmental Accounting Standards Board Statement No. 41 for governments with significant budgetary perspective differences resulting from not being able to present budgetary comparisons for the General Fund and each major Special Revenue Fund. The Code of Iowa requires the adoption of an annual budget by the City Council on or before March 15 of each year which becomes effective July 1 and constitutes the appropriation for each function specified therein until amended. The legal level of control (the level on which expenditures may not legally exceed appropriations) is the function level for the City as a whole, rather than at the fund or fund type level. The internal service fund or agency fund activity is not included in the adopted budget. The City's budget is prepared on the cash basis of accounting with an adjustment for accrued payroll following required public notice and hearings. After the initial annual budget is adopted, it may be amended for specified purposes. Budget amendments must be prepared and adopted in the same manner as the original budget. Management is not authorized to amend the budget or to make budgetary transfers between functions without the approval of the City Council. Management may make budgeting transfers between funds as long as the transfers are within the same function. The City has adopted a policy relative to budgetary control and amendment which provides for control at the line -item level and review of the current year's budget at the time the next year's budget is prepared. This usually results in amending the appropriations of all functions to adjust to current conditions. Supplemental appropriations are only provided when unanticipated revenues or budget surpluses become available. Appropriations as adopted lapse at the end of the fiscal year. The budget for the fiscal year ended June 30, 2011 was amended three times during the year to allow the City to increase function expenditures by $119,855,128, primarily for the carry - forward of unfinished capital improvement projects and expenditure of additional grants for capital improvements. During the year ended June 30, 2011, disbursements in the debt services function exceeded the amount budgeted, due to refunding a refunding bond principal payment that was not included in the budget amendment. The following is a reconciliation of the budgetary basis to the modified accrual basis of accounting: Receip ts/Revenue Exp end it ureslExp enses Deficiency of Receip ts/Revenue Under Expenditures/Expenses Other Financing Sources Net Balance, Beginning Balance, Ending Governmental Enterprise Modified Funds Funds Budgetary Accrual Accrual/Accrual Basis Adjustments $ 137,736,504 165,050,801 Modified Accrual Basis Accrual Basis Basis Total $ (12,385,420) $ 125,351,084 $ 94,535,329 $ 30,815,755 $ 125,351,084 (44,423,903) 120,626,898 91,992,392 28,634,506 120,626,898 (27,314,297) 32,038,483 4,724,186 27,848,374 (22,876,585) 4,971,789 534,077 9,161,898 9,695,975 47,298,087 130,599,420 177,897,507 $ 47,832,164 $ 139,761,318 $ 187,593,482 88 2,542,937 2,181,249 4,724,186 5,244,083 (272,294) 4,971,789 7,787,020 41,282,391 $ 49,069,411 1,908,955 9,695,975 136,615,116 177,897,507 $ 138,524,071 $ 187,593,482 CITY OF DUBUQUE, IOWA SCHEDULE OF FUNDING PROGRESS FOR THE RETIREE BENEFIT PLAN FOR THE YEAR ENDED JUNE 30, 2011 Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Year Actuarial Value of Liability AAL Funded Covered of Covered Ended Valuation Assets (AAL) (UAAL) Ratio Payroll Payroll June 30 Date (a) (b) (b -a) (a/b) (c) (b -a/c) 2009 7/1/2008 $ - $ 9,117,000 $ 9,117,000 0.0% $ 30,012,086 30.4% 2010 7/1/2008 - 9,117,000 9,117,000 0.0% 31,430,000 29.0% 2011 7/1/2010 5,481,802 5,481,802 0.0% 29,790,517 18.4% 89 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Road Use Tax Fund — This fund is used to account for state revenues allocated to the City for maintenance and improvement of City streets. Section VIII Housing Fund — This fund Ls used to account for the operations of federal Section VIII existing, voucher, and moderate rehabilitation projects. Tort Liability Fund — This fund is used to collect a special property tax levy which is then transferred to the General Fund. The General Fund accounts for the administration and payment of damage claims against the City. Special Assessments Fund — This fund is used to account for the financing of public improvements that are deemed to benefit primarily the properties against which special assessments are levied and to accumulate monies for the payment of principal and interest on the outstanding long -term debt service. Tax Increment Financing Fund — This fund is used to account for the receipt of property taxes, for the payment of projects within the tax increment financing district, and for the payment of remaining principal and interest costs on the tax increment financing districts' long -term debt service. Cable TV Fund — This fund is used to account for the monies and related costs as set forth in the cable franchise agreement between the City of Dubuque and the cable franchisee. Library Expendable Gifts Trust — This fund is used to account for contributions given to the library to be spent for specific purposes. IFA Housing Trust — This fund is used to account for funds received under the Iowa Finance Authority State Housing Trust Fund Program. DEBT SERVICE FUND The debt service fund is used to account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the government is obligated in some manner for the payment. NONMAJOR GOVERNMENTAL FUNDS CAPITAL PROJECTS FUNDS Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. Airport Construction Fund — This fund is used to account for the resources and costs related to airport capital improvements. Sales Tax Construction Fund — This fund is used to account for the resources and costs related to capital improvements financed through the local option sales tax. PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting City's programs. Ella Lyons Peony Trail Trust Fund — This fund is used for dividends and maintenance cost related to the City Peony Trail, per trust agreement. Library Gifts Trust Fund — This fund is used to account for testamentary gifts to the City library. CITY OF DUBUQUE, IOWA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2011 Road Section VIII Tort Use Tax Housing Liability ASSETS Cash and pooled cash investments $ 141,984 S 1,193,884 $ Receivables Property tax Delinquent 8,649 Succeeding year - 396,890 Accounts and other 17,405 Special assessments - Accrued interest 3,643 Not 590 Intergovernmental 447,893 5,475 Inventory 442,097 - Restricted cash and pooled cash investments 18,396 Total Assets $ 1,031,974 $ 1,239,393 $ 405,539 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 131,363 $ 23,468 $ Accrued payroll 75,706 25,625 - intergovemmental payable - 58,958 Deferred revenue Succeeding year property tax 396,890 Other - 529 Total Liabilities 207,069 108,051 397,419 FUND BALANCES Nonspendable: Endowment corpus Inventory Long -term notes receivable Restricted: Endowments Library Debt service Bond ordinance Capital improvements Franchise agreement Special assessments Claims Iowa Finance Authority trust Community programs Committed, capital improvements Unassigned Total Fund Balances 442,097 382,808 85 1,508,620 (377,363) 824,905 1,131,342 8,120 8,120 Total Liabilities and Fund Balances $ 1,031,974 $ 1,239,393 $ 405,539 EXHIBIT A -1 Special Revenue Funds Tax Library 1FA Special Increment Expendable Housing Debt Assessments Financing Cable TV Gifts Trust Trust Service $ 385 5 479,937 $ 192,657 S 207,325 5 410,980 $ 112,849 2,489 122,140 - 151,990 - 560,485 . 39,193 626 690 370 2,198,962 560,870 5 2,718,092 $ 345,273 $ 208,015 $ 410,980 5 237,848 $ - 5 52,943 $ 5,904 $ 2,502 $ - 5 19,013 - 122,140 530,950 100 530,950 52,943 24,917 2,502 - 122,240 29,920 2,198,962 466,187 320,356 205,513 115,608 410,980 29,920 2,665,149 320,356 205,513 410,980 115,608 $ 560,870 $ 2,718,092 $ 345,273 $ 208,015 $ 410,980 S 237,848 (Continued) 91 CITY OF DUBUQUE, IOWA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2011 Capital Projects Funds Airport Sates Tax Construction Construction ASSETS Cash and pooled cash investments $ I,156,219 $ 1,836,889 Receivables Property tax Delinquent Succeeding year Accounts and other Special assessments Accmed interest 3,063 5,371 Notes Intergovernmental 365,203 833,071 Inventory - Restricted cash and pooled cash investments Total Assets $ 1,524,485 $ 2,675,331 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 274,685 $ 378,013 Accrued payroll Intergovernmental payable Deferred revenue Succeeding year property tax - Other 48,645 565,984 Total Liabilities 323,330 943,997 FUND BALANCES Nonspendabie: Endowment corpus Inventory Long-term notes receivable Restricted: Endowments Library Debt service Bond ordinance Capital improvements Franchise agreement Special assessments Claims Iowa Finance Authority trust Community programs Committed, capital improvements Unassigned Total Fund Balances 1,201,155 1,731,334 1,201,155 1,731,334 Total Liabilities and Fund Balances S 1,524,485 $ 2,675,331 EXHIBJT A -1 (Continued) Permanent Funds Total Ella Lyons Library Nanm1 }or Peony Trail Gifts Governmental Trust Trust Funds $ - 5 - 5 5,733,109 11,138 5I9,030 169,395 560,485 110 23 53,089 590 1,651,642 - - 442,097 109,556 12,045 2,338,954 109,666 5 12,068 5 11,479,534 5 - $ - $ 868,878 120,344 58,958 519,030 1,146,208 2,713,418 57,412 12,000 69,412 442,097 85 52,254 68 52,322 205,513 115,608 2,198,962 2,050,150 320,356 29,920 8,120 410,980 1,508,620 1,731,334 (377,363) 109,666 12,068 8,766,116 109,666 5 12,068 5 11,479,534 93 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2011 Road Section VIII Tort Use Tax Housing Liability REVENUES Taxes $ - $ - $ 404,112 Special assessments Intergovernmental 5,38I ,901 4,995,633 Charges for services - Investment earnings 2,689 13,140 Contributions Miscellaneous 83,089 15,207 Total Revenues 5,467,679 5,023,980 404,112 EXPENDITURES Governmental activities Current Public safety Public works Culture and recreation Community and economic development General government Debt service: Principal Interest and fiscal charges Capital projects Total Expenditures 7,170,174 38,540 91,215 4,167,589 7,208,714 4,258,804 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (1,741,035) 765,176 404,112 OTHER FINANCING SOURCES (USES) Issuance of debt - Discount on bonds Premium on bonds Issuance of refunding bonds Refunded bonds redeemed - - Transfers in 1,924,859 65,520 Transfers out (630,338) - (405,169) Insurance recovery Total Other Financing Sources (Uses) 1,294,521 65,520 (405,169) NET CHANGE IN FUND BALANCES (446,514) 830,696 (1,057) FUND BALANCES, BEGINNING 1,271,419 300,646 9,177 FUND BALANCES, ENDING $ 824,905 $ 1,131,342 $ 8,120 94 EXHIBIT A -2 Special Revenue Tax Library IFA Special Incrernent Expendable Housing Debt Assessments Financing Cable TV Gifts Trust Trust Service $ - $ 8,358,387 $ - $ - $ - $ 129,970 232,535 - - - - 314,500 27,598 44,255 2,059 2,771 537 - 208,388 18,155 29,024 616,865 - 294,945 8,387,411 618,924 211,159 314,500 158,105 2,733,156 671,877 132,890 - 53,520 1,015,503 1,773,865 2,740,596 563,190 6,489,255 671,877 132,890 53,520 2,337,055 294,945 1,898,156 (52,953) 78,269 260,980 (2,178,950) 5,860,700 1,136,022 (38,911) (636) 1,642 705,000 (690,000) 100,000 1,520,658 (307,243) (8,082,093) (79,502) (453,816) (307,243) (2,160,304) • (79,502) 2,218,870 (12,298) (262,148) (52,953) (1,233) 260,980 39,920 42,218 2,927,297 373,309 206,746 150,000 75,688 $ 29,920 $ 2,665,149 $ 320,356 $ 205,513 $ 410,980 $ 115,608 (Continued) 95 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2011 Capital Projects Airport Sales Tax Construction Construction REVENUES Taxes $ • $ 1,585,952 Special assessments Intergovernmental 1,263,764 Charges for services 202,365 - Investment earnings 13,227 21,516 Contributions Miscellaneous 25 Total Revenues 1,479,356 1,607,493 EXPENDITURES Governmental activities Current Public safety Public works Culture and recreation Community and economic development General government Debt service Principal Interest and fiscal charges Capital projects 2,052,238 1,824,325 Total Expenditures 2,052,238 1,824,325 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (572,882) (216,832) OTHER FINANCING SOURCES (USES) Issuance of debt Discount on bonds Premium on bonds Issuance of refunding bonds Refunded bonds redeemed Transfers in 324,485 509,576 Transfers out (23,946) (415,946) Insurance recovery 600,826 Total Other Financing Sources (Uses) 901,365 93,630 NET CHANGE IN FUND BALANCES 328,483 (123,202) FUND BALANCES, BEGINNING 872,672 1,854,536 FUND BALANCES, ENDING $ 1,201,155 $ 1,731,334 96 EXHIBIT A -2 (Continued) Permanent Funds Total Ella Lyons Library Nonmajor Peony Trail Gifts Governmental Trust Trust Funds $ - $ $ 10,478,421 232,535 11,983,396 202,365 23,316 96 123,606 208,388 762,365 23,316 96 23,991,076 - 91,215 7,170,174 2,132 7,371 142,393 6,954,265 710,417 2,789,368 3,303,786 3,876,563 2,132 7,371 25,038,181 21,184 (7,275) (1,047,105) 6,996,722 (39,547) 1,642 705,000 (690,000) 5,140 4,450,238 (10,398,053) 600,826 5,140 1,626,828 21,184 (2,135) 579,723 88,482 14,203 8,186,393 5 I09,666 $ 12,068 $ 8,766,116 97 NONMAJOR ENTERPRISE FIJI\ DS Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises -- where the intent of the City Council is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the City Council has decided that periodic determination of net income is appropriate for accountability purposes. Refuse Collection Fund — This fund is used to account for the operations of the City's refuse collection services. Transit System Fund — This fund is used to account for the operations of the City's bus and other transit services. Salt Fund — This fund is used to account for the operations of the City's salt distribution. CITY OF DUBUQUE, IOWA EXHIBIT B -1 COMBINING STATEMENT. OF NET ASSETS NONMAJOR ENTERPRISE FUNDS JUNE 30, 2011 Refuse Transit Collection System ASSETS Salt Total Other Enterprise Funds CURRENT ASSETS Cash and pooled cash investments S 1,371,578 $ 100 S 103,415 $ 1,475,093 Receivables Accounts 332,895 774 - 333,669 Accmed interest 4,270 - 338 4,608 Intergovernmental - 1,760,905 - 1,760,905 Inventories - 28,245 - 28,245 Prepaid items Total Current Assets 1,708,743 1,790,024 103,753 3,602,520 NONCURRENT ASSETS Capital assets Land 36,000 36,000 Buildings 1,887,564 1,887,564 Machinery and equipment 1,655,327 4,486,378 6,141,705 Construction in progress 82,672 82,672 Accumulated depreciation (1,345,449) (3,895,195) (5,240,644) Net Capital Assets 309,878 2,597,419 2,907,297 Total Noncurrent Assets 309,878 2,597,419 2,907,297 Total Assets 2,018,621 4,387,443 103,753 6,509,817 LIABILITIES CURRENT LIABILITIES Accounts payable 9,677 24,144 33,821 Accnrcd payroll 57,418 66,571 123,989 General obligation bonds payable - current 2,787 - - 2,787 Accrued compensated absences 127,138 8,319 135,457 Accrued interest payable 180 - 180 Due to other funds 107,173 107,173 Total Current Liabilities 197,200 206,207 403,407 NONCURRENT LIABILITIES General obligation bonds payable (net of premium of $63) 67,223 - - 67,223 Net OPEB liability • 99,076 29,348 128,424 Total Noncurrent Liabilities 166,299. 29,348 - 195,647 Total Liabilities 363,499 235,555 599,054 NET ASSETS Invested in capital assets, net of related debt 307,016 2,597,419 - 2,904,435 Unrestricted 1,348,106 1,554,469 103,753 3,006,328 Total Net Assets _ S 1,655,122 S 4,151,888 S 103,753 S 5,910,763 CITY OF DUBUQUE, IOWA EXHIBIT B -2 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2011 Total Other Refuse Transit Enterprise Collection System Salt Funds OPERATING REVENUES Charges for sales and services $ 3,079,243 $ 177,486 $ 773,258 $ 4,029,987 Other 2,954 15,750 - 18,704 Total Operating Revenues 3,082,197 193,236 773,258 4,048,691 OPERATING EXPENSES Employee expense 1,812,723 1,350,911 3,163,634 Utilities 15,692 55,210 70,902 Repairs and maintenance 239,597 330,210 - 569,807 Supplies and services 666,842 860,061 671,647 2,198,550 Insurance 26,593 37,561 - 64,154 Depreciation 65,640 309,770 375,410 Total Operating Expenses 2,827,087 2,943,723 671,647 6,442,457 OPERATING INCOME (LOSS) 255,110 (2,750,487) 101,611 (2,393,766) NONOPERATING REVENUES Intergovernmental 14,187 2,440,612 2,454,799 Investment earnings 17,844 2,142 14,986 Interest expense (1,804) (1,804) Gain (loss) on disposal of assets 124 (4,235) - (4,111) Net Nonoperating Revenues 30,351 2,436,377 2,142 2,468,870. INCOME (LOSS) BEFORE TRANSFERS 285,461 (314,110) 103,753 75,104 TRANSFERS IN 1,883,498 1,883,498 TRANSFERS OUT - - - CHANGE IN NET ASSETS 285,461 1,569,388 103,753 1,958,602 NET ASSETS, BEGINNING 1,369,661 2,582,500 3,952,161 NEC ASSETS, ENDING $ 1,655,122 $ 4,151,888 $ I03,753 $ 5,910,763' 99 COMBINING CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS YEAR ENDED JUNE 30, 2011 EXHIBIT B -3 Total Other Refuse Transit _ Enterprise Collection System Salt Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 3,084,062 $ 178,765 $ 773,258 $ 4,036,085 Cash payments to suppliers for goods and services (948,749) (1,292,846) (671,647) (2,913,242) Cash payments to employees for services (1,801,138) (1,334,151) (3,135,289) Other operating receipts 2,954 15,750 18,704 NET CASHPROVIDED BY (USED FOR) OPERATING ACTIVITIES 337,129 (2,432,482) 101,611 (1,993,742) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES 1,883,498 Transfers from other funds , 1,883,498 Transfers to other funds 107,173 - Proceeds from interfund balances - 107,173 Payment of interfund balances (6,465) (6,465) Intergovernmental grant proceeds 14,187 1,674,410 1,688,597 NET CASH PROVIDED BY (USED FOR) NONCAPITAL FINANCING ACTIVITIES 14,187 3,658,616 3,672,803 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES 24,017 Proceeds from sale of capital assets 124 23,893 Acquisition and construction of capital assets (20,838) (1,249,927) (1,270,765) Proceeds from issuance of debt 69,946 69,946 Interest paid (1,740) (1,740) NET CASH PROVIDED BY (USED FOR) CAPITAL AND RELATED FINANCING ACTIVITIES 47,492 (1,226,034) (1,178,542) CASHFLOWS FROM INVESTING ACTIVITIES Interest received NET CASH PROVIDED BY INVESTING AC I'1VITIES 16,139 16,139 1,804 17,943 1,804 17,943 NET INCREASE IN CASH AND CASH EQUIVALENTS 414,947 100 103,415 518,462 CASH AND CASH EQUIVALENTS, BEGINNING 956,631 - 956,631 CASH AND CASH EQUIVALENTS, ENDING $ 1,371,578 $ 100 $ 103,415 $ 1,475,093 (Continued) CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS EDIT B -3 NONMAJOR ENTERPRISE FUNDS (continued) YEAR ENDED JUNE 30, 2011 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss) Business -type Activities - Enterprise Funds Total Other Refuse Transit Enterprise Collection System Salt _ Funds 255,110 $ (2,750,487) $ 101,611 $ (2,393,766) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities Depreciation 65,640 309,770 375,410 Change in assets and liabilities _ Decrease in receivables 4,819 1,279 6,098 ( Increase) in inventories and prepaid items (1,751) (1,751) (Decrease) in accounts payable (25) (8,053) (8,078) (Decrease) in accrued liabilities (4,611) 11,092 6,481 Increase in net OPEBliability 16,196 5,668 21,864 Total Adjustments 82,019 318,005 400,024 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Amortization of bond discount $ 337,129 $ (2,432,482) $ 101,611 $ (1,993,742) $ 64 $ - $ - $ 64 101 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 engineering, street, and general services supplied to other departments. Garage Service Fund - This fund is used to account for maintenance and repair services for the City's automotive equipment. Stores/Printing Fund - This fund is used to account for printing, supplies, and other services provided to other departments. Health Insurance Reserve Fund - This fund is used to account for health insurance costs. Workers' Compensation Reserve Fund - This fund is used to account for workers' compensation costs. CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS JUNE 30, 2011 General Garage Stores/ Service Service Printing ASSETS CURRENT ASSETS Cash and pooled cash investments $ 2,501 $ 113,405 $ 13 Receivables Accounts Accrued interest Inventories 64,398 6,452 Prepaid items - Total Current Assets 2,501 177,803 6,465 NONCURRENT ASSETS Capital assets Machinery and equipment 101,738 Accumulated depreciation (62,715) Net Capital Assets 39,023 Total Noncurrent Assets 39,023 Total Assets LIABILITIES 2,501 216,826 6,465 CURRENT LIABILITIES Accounts payable 30,589 1 Accrued payroll 22,617 36,104 Total Liabilities 22,617 66,693 1 NET ASSETS Invested in capital assets, net of related debt 39,023 - Unrestricted (20,1169 111,110 6,464• - Total Net Assets (Deficit) $ (20,116) $ 150,133 $ 6,464 Exhibit C -1 Health Workers' Insurance Compensation Reserve Reserve Total $ 1,025,154 $ 33,255 $ 1,174,328 182,834 182,834 3,358 109 3,467 70,850 48,595 48,595 1,259,941 33,364 1,480,074 101,738 (62,715) 39,023 39,023 1,259,941 33,364 1,519,097 262,969 987,017 1,280,576 58,721 262,969 987,017 1,339,297 39,023 996,972 (953,653) 140,777 996,972 8 (953,653) $ 179,800 103 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS (DEFICIT) INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2011 General Garage Stores/ Service Service Printing OPERATING REVENUES Charges for sales and services $ 1,712,648 $ 1,898,858 $ 45,464 Other - 22,207 - Total Operating Revenues 1,712,648 1,921,065 45,464 OPERATING EXPENSES Employee expense 1,695,221 867,533 Utilities 23,637 Repairs and maintenance 24,001 Supplies and services 5,878 1,116,740 47,480 Insurance 13,106 16,645 Depreciation - 10,259 Total Operating Expenses 1,714,205 2,058,815 47,480 OPERATING INCOME (LOSS) NONOPERATING REVENUES Investment earnings Total Nonoperating Revenues INCOME (LOSS) BEFORE TRANSFERS TRANSFERS. IN TRANSFERS OUT (1,557) (137,750) (2,016) (1,557) (137,750) (2,016) CHANGE IN NET ASSETS (1,557) (137,750) (2,016) NET ASSETS (DEFICIT), BEGINNING (18,559) 287,883 8,480 NET ASSETS (DEFICIT), ENDING $ (20,116) $ 150,133 $ 6,464 EXHIBIT C -2 Health Workers' Insurance Compensation Reserve Reserve Total $ 5,578,726 $ 660,679 $ 9,896,375 22,207 5,578,726 660,679 9,918,582 6,674,473 9,237,227 - 23,637 24,001 106,975 963,413 2,240,486 29,751 10,259 6,781,448 963,413 11,565,361 (1,202,722) (302,734) (1,646,779) 10,912 2,864 13,776 10,912 2,864 13,776 (1,191,810) (299,870) (1,633,003) 475,000 200,000 675,000 (716,810) (99,870) (958,003) 1,713,782 (853,783) 1,137,803 $ 996,972 $ (953,653) $ 179,800 105 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2011 General Garage Stores/ Service Service Printing CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,712,648 $ 1,903,418 $ 45,464 Cash payments to suppliers for gouds and services (18,984) (1,183,552) (49,I23) Cash payments to employees for services (1,689,674) (862,355) Other operating receipts 22,207 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 3,990 (120,282) (3,659) CASH FLOWS FROM NONCAP1TAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Payment of interfund balances NET CASH PROVIDED BY (USED FOR) NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Interest received NET CASH PROVIDED BY INVESTMENT ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQIJIVALINTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING (1,484) (1,489) 2,501 (120,282) (3,659) 233,687 3,672 $ 2,501 $ 113,405 $ 13 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating (loss) $ (1,557) $ (137,750) $ (2,016) Adjustments to reconcile operating (loss) to net cash provided by (used for) operating activities Depreciation - 10,259 Change in assets and liabilities Decrease in receivables 4,560 (Increase) in inventories and prepaid items - (16,742) (1,644) Increase (decrease) in accounts payable - 14,213 1 (Decrease) in accrued liabilities 5,547 5,I78 Total Adjustments 5,547 17,468 (1,643) NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 106 $ 3,990 $ (120,282) $ (3,659) EXHIBIT C -3 Health Workers' Insurance Compensation Reserve Reserve Total $ 5,397,475 5 660,679 $ 9,719,684 (372,371) (884,006) (2,508,036) (6,674,473) (9,226,502) 22,207 (I,649,369y (223,327) (1,992,647) 475,000 200,000 675,000 (1,489) 475,000 200,000 673,511 13,415 2,899 16,314 13,415 2,899 16,314 (1,160,954) (20,428) (I,302,822) 2,186,108 53,683 2,477,150 $ 1,025,154 8 33,255 $ 1,174,328 $ (1,202,722) $ (302,734) $ (1,646,779) 10,259 (181,251) (176,691) (48,595) - (66,981) (216,801) 79,407 (123,180) - - 10,725 (446,647) 79,407 (345,868) $ (1,649,369) $ (223,327) $ (1,992,647) 107 AGENCY FUNDS The agency fund is used to report resources held by the City in a purely custodial capacity. Cable Equipment Fund — This fund is used to account for resources received under the cable franchise agreement to support public, educational, and governmental access and Internet use grants. Dog Track Depredation Fund — This fund is used to account for the resources held for improvements at the greyhound racing facility. CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED JUNE 30, 2011 EDIT D -1 Balance Balance Beginning End of Year Additions Deductions of Year CABLE EQUIPMENT FUND ASSETS Cash and pooled cash investments $ 163,759 $ 216,707 $ 201,251 $ 179,215 Accounts receivable 5,700 53,197 5,700 53,197 Total Assets $ 169,459 $ 269,904 $ 206,951 $ 232,412 LIABILITIES Accounts payable $ 14,988 $ 11,174 $ 14,988 $ 11,174 Due to other agency 154,471 66,767 - 221,238 Total Liabilities $ 169,459 $ 77,941 $ 14,988 $ 232,412 DOG TRACK DEPRECIATION FUND ASSETS Cash and pooled cash investments $ 936,016 $ 133,599 $ 987 $ 1,068,628 Accrued interest 2,510 3,498 2,510 3,498 Total Assets $ 938,526 $ 137,097 $ 3,497 $ 1,072,126 LIABILITIES Due to other agency $ 938,526 $ 137,097 $ 3,497 $ 1,072,126 TOTAL AGENCY FUNDS ASSETS Cash and pooled cash investments $ 1,099,775 $ 350,306 $ 202,238 $ 1,247,843 Accounts receivable 5,700 53,197 5,700 53,197 Accrued interest 2,510 3,498 2,510 3,498 Total Assets $ 1,107,985 $ 407,001 $ 210,448 $ 1,304,538 LIABILITIES Accounts payable $ 14,988 $ 11,174 $ 14,988 $ 1I,174 Due to other agency 1,092,997 203,864 3,497 1,293,364 Total Liabilities $ 1,107,985 $ 215,038 $ 18,485 $ 1,304,538 Statistical Section (Unaudited) June 30, 2011 City of Dubuque, Iowa CITY OF DUBUQUE, IOWA STATISTICAL SECTION This statistical section of the City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well -being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 110 120 124 134 136 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2003; schedules presenting government -wide information include information beginning in that year. 109 CITY OF DUBUQUE, IOWA NET ASSET BY COMPONENT LAST NINE FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal Year 2003 2004 2005 2006 Governmental activities Invested in capital assets, net of related debt $ 212,767,403 $ 231,863,231 $ 249,881,646 $ 267,762,059 Restricted 29,306,124 31,931,803 24,180,874 21,693,357 Unrestricted 11,528,644 11,322,661 11,236,870 15,132,486 Total governmental activities net assets $ 253,602, 171 $ 275,117,695 $ 285,299,390 $ 304,587,902 Business -type activities Invested in capital assets, net of related debt $ 98,706,116 $ 92,301,043 $ 93,036,089 $ 88,802,536 Restricted 553,677 554,005 554,205 554,294 Unrestricted 6,308,801 10,502,939 12,854,730 13,258,072 Total business -type activities net assets $ 105,568,594 $ 103,357,987 $ 106,445,024 $ 102,614,902 Primary government Invested in capital assets, net of related debt $ 311,473,519 $ 324,164,274 $ 342,917,735 $ 356,564,595 Restricted 29,859,801 32,485,808 24,735,079 22,247,651 Unrestricted 17,837,445 21,825,600 24,091,600 28,390,558 Total primary government net assets $ 359,170,765 $ 378,475,682 $ 391,744,4 14 $ 407,202,804 110 TABLE I 2007 2008 2009 2010 2011 $ 288,978,975 $ 296,143,451 S 298,855,346 $ 309,126,684 $ 329,416,245 23,900,328 31,970,724 27,171,123 26,064,318 23,738,199 21,921,57I 18,987,841 (5,280,715) (11,256,312) (4,891,381) $ 334,800,874 $ 347,102,016 $ 320345,754 $ 323,934,690 $ 348,263,063 $ 91,483,532 $ 95,104,575 $ 120,473,286 $ 124,805,513 $ 135,026,753 554,318 554,505 770,157 129,642 893,519 11,214,900 11,312,806 12,321,125 11,679,961 2,603,799 $ 103,252,750 5 106,971,886 $ 133,564,568 $ 136,615,116 $ 138,524,071 $ 380,462,507 $ 391,248,026 $ 419,328,632 $ 433,932,197 $ 464,442,998 24,454,646 32,525,229 27,941,280 26,193,960 24,631,718 33,136,471 30,300,647 7,040,4I0 423,649 (2,287,582) $ 438,053,624 $ 454,073,902 $ 454,310,322 $ 460,549,806 $ 486,787,134 111 CITY OF DUBUQUE, IOWA CHANGES IN NET ASSETS LAST NINE FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal Year 2003 2004 2005 2006 Expenses Governmental activities: Public safety S 15,817,052 $ 16,605,481 $ 18,636,877 $ 18,892,980 Public works 14,453,558 12,847,410 17,088,983 16,390,322 Health and social services 815,524 1,290,619 654,469 678,748 Culture and recreation 7,367,147 7,849,114 8,474,183 9,627,505 Community and economic development 9,431,702 12,662,552 9,680,046 8,541,167 General government 4,211,922 3,773,136 4,048,475 3,868,687 Interest on long -terra debt 1,605,326 1,248,498 1,298,367 1,460,730 Total governmental activities expenses 53,702,231 56,276,810 59,881,400 59,460,139 Business -type activities: Sewage disposal works 4,655,696 5,282,016 4,656,172 5,298,353 Water utility 4,I45,983 4,368,738 4,232,489 4,700,483 Stormwater utility 1,184,968 1,114,811 1,I53,628 Parking facilities 1,445,434 1,655,429 1,604,071 1,629,427 America's River Project 414,830 1,064,701 515,570 82,617 Refine collection 2,140,807 2,238,254 2,202,800 2,463,795 Transit system 2,055,248 2,257,078 2,326,908 2,555,080 Salt - - - Total business -type activities expenses 14,857,998 18,051,184 16,652,821 17,883,383 Total primary government expenses $ 68,560,229 5 74,327,994 5 76,534,221 S 77,343,522 Program Revenues Governmental activities: Charges for services Public safety $ 1,586,255 S 1,785,787 S 1,900,938 5 1,809,481 Public works 3,367,720 3,392,650 3,371,073 3,370,291 Culture and recreation 2,145,435 2,282,983 2,143,246 2,218,315 Other activities 764,732 873,457 945,712 895,920 Operating grants and contributions 13,677,503 12,197,307 14,603,106 12,902,410 Capital grants and contributions 3,447,052 5,153,258 6,919,296 6,881,573 Total governmental activities program revenues 24,988,697 25,685,442 29,883,371 28,077,990 Business -type activities: Charges for services Sewage disposal works 4,300,156 4,719,491 4,552,587 5,077,491 Water utility 3,975,598 4,307,238 4,224,074 4,669,340 Stormwater utility - 754,101 684,570 928,850 Parking facilities 1,427,146 1,643,490 1,889,937 1,886,642 America's River Project 147,695 881,089 26,061 51,313 Refuse collection 1,981,105 2,157,285 2,283,677 2,397,525 Transit system 201,367 319,216 389,106 341,743 Salt - Operating grants and contributions 880,822 825,538 651,967 920,762 Capital grants and contributions 11,938,797 11,007,676 3,030,378 2,769,657 Total business -type activities program revenues 24,852,686 26,615,124 17,732,357 19,043,383 Total primary goverment program revenues $ 49,841,383 5 52,300,566 $ 47,615,728 $ 47,121,373 TABLE 2 2007 2008 2009 2010 2011 S 20,326,724 $ 16,966,210 $ 22,038,265 $ 22,067,988 S 23,759,068 16,505,560 18,847,068 19,079,688 22,121,629 18,978,423 759,367 800,566 849,237 852,099 1,072,347 9,837,299 10,857,409 12,640,716 11,446,084 10,911,733 11,965,805 11,961,584 12,693,140 15,422,099 12,890,841 4,940,154 5,804,003 6,423,908 7,963,016 9,052,704 1,400,748 2,577,417 3,164,126 3,101,897 3,294,951 65,735,657 67,814,257 76,889,080 82,974,812 79,960,067 5,814,076 6,141,524 6,326,708 6,631,326 7,899,011 4,780,063 4,814,692 6,100,49I 6,093,827 6,523,993 1,198,675 1,706,735 2,138,198 2,213,144 2,811,321 1,611,447 2,173,110 2,147,405 4,003,776 4,775,834 434,667 126,699 _ 61,927 423,158 180,086 2,496,018 2,724,050 2,788,665 2,703,887 2,828,891 2,760,459 2,703,983 2,625,145 2,832,066 2,947,958 671,647 19,095,405 20,390,793 22,188,539 24,901,184 28,638,741 $ 84,831,062 $ 88,205,050 $ 99,077,619 $ 107,875,996 S 108,598,808 $ 1,857,324 $ 2,088,723 $ 2,020,625 $ 2,348,064 $ 2,579,573 4,839,781 4,061,883 4,456,364 4,046,583 5,331,667 2,251,562. 2,109,57I 2,279,688 2,192,886 2,108,177 I,074,550 1,382,889 1,557,597 2,412,880 2,530,234 11,641,904 11,709,123 12,599,967 20,830,113 14,204,627 23,741,282 8,032,602 4,811,729 10,748,522 23,482,866 45,406,403 29,384,791 27,725,970 42,579,048 50,237,144 5,259,432 5,484,079 5,904,535 5,893,730 6,643,974 4,743,896 4,875,530 5,320,642 5,326,202 5,638,277 1,227,243 1,766,334 2,291,249 2,282,625 2,993,539 1,977,757 2,141,607 2,224,185 2,399,843 2,750,610 3,099 2,140 7,000 2,642,251 2,710,583 2,872,649 2,893,017 3,082,197 237,088 195,817 196,260 273,433 193,236 773,258 1,167,344 1,209,636 1,095,946 1,652,277 2,773,933 1,670,874 2,830,263 3,613,321 3,800,582 6,536,527 18,928,984 21,215,989 23,518,787 24,528,709 31,385,551 S 64,335,387 $ 50,600,780 $ 51,244,757 $ 67,107,757 $ 81,622,695 (Continued) 113 CTI'Y OF DUBUQUE, IOWA CHANGES IN NET ASSETS LAST NINE FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal Year 2003 2004 2005 2006 Net (Expense)/Revenue Governmental activities $ (28,713,534) $ (30,591,368) $ (29,998,029) $ (31,382,149) Business -type activities 9,994,688 8,563,940 1,079,536 1,160,000 Total primary government net expense 5 (18,718,846) S (22,027,428) $ (28,918,493) ,222, l49) General Revenues and Other Changes In Net Assets Governmental activities: General Revenues Property taxes $ 18,041,049 $ 18,588,367 $ 19,767,492 $ 19,716,620 Local option sales tax 6,492203 7,105,183 6,963,124 7,336,124 Hotel/motel tax 970,232 1,314,114 1,383,660 1,862,439 Utility franchise fees 862,275 1,310,064 1,521,201 Gaming 9,539,598 11,631,022 11,694,105 14,034,847 Unrestricted investment earnings 1,749,301 497,361 1,190,337 1,081,141 Gain on sale of capital assets (149,650) 175,231 170,642 77,627 Other 1,228,232 638,681 560,789 572,602 Transfers (7,720,462) 10,956246 (1,684,581) 5,033,974 Total governmental activities 30,150,503 51,768,480 41,355,632 51,236,575 Business -type activities: General Revenues Property taxes 506,054 - Unrestricted investment earnings 321,447 181,674 322,884 , 339,599 Gain on sale of capital assets (168,001) 25 36 703 Extraordinary item - - Transfers 7,720,462 (10,956,246) 1,684,581 (5,033,974) Total business -type activities 8,379,962 (10,774,547) 2,007,501 (4,693,672) Total primary government $ 38,530,465 $ 40,993,933 $ 43,363,133 $ 46,542,903 Change In Net Assets Governmental activities Business -type activities Total primary government 5 1,436,969 $ 21,177,112 $ 11,357,603 $ 19,854,426 18,374,650 (2,210,607) 3,087,037 (3,533,672) 5 19,811,619 $ 18,966,505 $ 14,444,640 $ 16,320,754 TABLE 2 (Continued) 2007 2008 2009 2010 2011 $ (20,329,254) $ (38,429,466) $ (49,163,110) $ (40,395,764) $ (29,722,923) (166,421) 825,196 1,330,248 (372,475) 2,746,810 $ (20,495,675) $ (37,604,270) $ (47,832,862) $ (40,768,239) S (26,976,113) $ 21,656,908 $ 22,744,563 $ 23,716,819 $ 24,876,073 $ 28,249,114 7,817,403 8,020,889 7,649,853 8,112,471 7,929,761 1,569,743 1,622,455 1,611,954 1,678,806 1,826,809 1,492,920 1,516,123 1,486,292 1,591,712 2,488,858 15,556,551 15,346,468 9,627,391 8,209,761 13,327,223 I,870,903 2,741,499 2,215,413 1,339,709 668,363 92,525 407,503 149,937 586,931 898,241 918,605 880,930 622,494 (7,633) (2,252,155) (24,826,982) (3,104,762) (1,211,263) 50,543,226 50,730,608 22,806,848 43,584,700 54,051,296 796,636 630,049 433,148 294,562 184,581 - 11,736 2,304 23,699 19,337 _ - - (2,253,036) 7,633 2,252,155 24,826,982 3,104,762 1,211,263 804,269 2,893,940 25,262,434 3,423,023 (837,855) $ 51,347,495 S 53,624,548 S 48,069,282 $ 47,007,723 S 53,213,441 $ 30,213,972 S 12,301,142 $ (26,356,262) S 3,188,936 $ 24,328,373 637,848 3,719,136 26,592,682 3,050,548 1,908,955 $ 30,851,820 S 16,020,278 S 236,420 $ 6,239,484 $ 26,237,328 115 CITY OF DUBUQUE, IOWA FUND BALANCES, GOVERNMENTAL FUNDS LAST NINE FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal Year 2003 2004 2005 2006 General Fund Reserved $ 4,573,723 $ 3,233,335 $ 3,169,453 $ 1,477,141 Unreserved 12,218,787 13,685,063 13,706,134 16,050,997 Nonspendable * * * * Assigned * * * * Unassigned * * * * Total general fund $ 16,792,510 $ 16,918,398 16,875,587 $ 17.528,138 All Other Governmental Funds Reserved $ 14,525,251 $ 14,231,390 $ 13,607,759 $ 15,564,016 Unreserved, reported in: - - Special revenue funds 11,886,631 9,720,412 5,777,233 7,277,471 Debt service fund (68,569) . (56,320) Capital projects funds 5,846,016 7,353,593 11,191,461 (981,248) Permanent funds 70,091 71,373 73,628 83,367 Nonspendable * * * * Restricted * * * * Committed * * * * Unassigned * * * * Total all other governmental funds 132,32:2M. 31,308,199 $ 30,593,761 $ 21,943,606 * Classification changed in 2011 due to adoption of GASB 54, 116 TABLE 3 2007 2008 2009 2010 2011 $ 4,455,303 $ 1,699,825 $ 4,864,701 $ 5,199,760 * 17,827,631 17,982,016 14,206,181 8,622,705 * * * * $ 868,631 * * * * 8,904,490 * * * * 6,139,306 $ 22,282,934 $ 19,681,841 $ 19,070,882 $ 13,822,465 $ 15,912,427 $ 13,942,519 $ 31,887,038 $ 19,634,305 $ 24,404,656 * 7,586,898 7,431,931 5,981,390 4,011,022 * * 4,195,354 7,875,448 5,659,214 (989,025) * 115,825 33,958 35,550 33,273 * * * * * $ 10,320,305 * * * * 18,010,570 * * * * 5,203,472 * * * * (377,363) $ 25,840,596, $ 47,228,375 $ 31,310,459 $$ 27.926 $ 33,156,984 117 CITY OF DUBUQUE, IOWA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST NINE FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal Year 2003 2004 2005 2006 Revenues Taxes S 25,508,936 S 27,861,273 $ 29,430,135 $ 30,043,167 Special assessments 561,406 717,305 197,195 322,214 Licenses and permits 753,990 1,063,081 1,078,722 965,712 Intergovernmental 17,249,290 17,057,994 I 8,370,358 15,021,722 Charges for services 5,325,031 5,666,307 5,91 8,542 6,620,243 Fines and forfeits 465,787 241,572 267,536 204,201 Investment earnings 1,750,519 502,932 1,197,691 1,096,445 Contributions 447,960 345,415 306,809 246,908 Gaming 9,539,598 11,631,022 11,694,105 14,034,847 Miscellaneous 1,312,348 1,139,057 1,573,305 1,106,991 Total revenues 62,914,865 66,225,958 70,034,398 69,662,450 Expenditures Current Public safety 15,278,654 16,764,510 18,652,246 , 19,535,369 Public works 11,860,004 10,723,527 21,301,239 11,605,567 Health and social services 749,435 721,906 662,231 715,598 Culture and recreation 7,515,522 7,470,264 8,I80,832 9,998,462 Community and economic development 9,010,868 11,924,011 9,825,470 9,981,645 General government 3,835,609 4,227,335 4,022,785 4,090,866 Debt service Principal 2,004,986 2,117,773 1,769,960 1,325,970 Interest 1,668,019 1,304,802 1,240,427 1,493,504 Capital projects 9,930,311 6,865,119 8,226,840 14,528,340 Total expenditures 61,858,408 62,119,247 73,882,030 73,275,321 Excess (deficiency) ofrevenues over (under) expenditures 1,056,457 4,106,711 (3,847,632) (3,612,871) Other Financing Sources (Uses) Issuance of bonds 13,682 Discount on bonds (58,487) Premiums on bonds - Issuance of refunding bonds 150,000 795,000 7,277,665 1,515,750 Payment to refunded bonds escrow agent (150,000) (1,494;371) Transfers in 5,367,986 8,662,300 12,981,655 7,334,605 Transfers out (21,073,805) (15,060,669) (16,105,184) (11,904,890) Insurance recovery Sale of capital assets 117,239 264,344 170,642 150,491 Total other financing sources (uses) (15,588,580) (5,339,025) 4,266,291 (4,384,733) Net change in fund balances $ (14.532.123} $ (1.2323141 S 41 8.659 $ (7.997.604) Debt service as a percentage ofnoncapital expenditures 118 7.37% 6.32% 5.46% 4.99% TABLE 4 2007 2008 2009 2010 2011 $ 32,526,525 S 33,898,692 $ 34,454,146 $ 36,252,156 $ 40,428,894 586,459 177,585 250,372 318,178 232,535 1,052,896 1,153,429 1,088,386 1,115,472 1,170,922 16,744,703 14,256,523 15,796,822 27,310,624 26,171,082 7,351,191 7,833,151 8,029,189 8,063,284 8,723,086 158,360 188,603 199,839 224,601 454,117 1,913,420 2,731,953 2,206,382 1,348,615 • 654,587 1,168,463 6,134,002 1,369,759 2,333,995 1,297,621 15,556,551 15,346,468 9,627,39€ 8,209,761 13,327,223 1,149,546 1,269,376 1,600,679 2,111,834 2,075,262 78,208,114 82,989,782 74,622,965 87,288,520 94,535,329 20,743,196 21,542,661 21,335,192 21,979,729 23,950,386 12,506,378 16,331,107 14,261,551 19,251,625 14,429,415 783,209 797,644 815,873 813,609 1,040,114 10,244,244 10,277,787 12,227,506 14,909,517 11,279,951 11,695,902 11,847,512 11,953,279 14,654,816 12,361,176 4,441,043 6,310,939 5,836,839 6,368,308 7,686,929 1,663,339 1,762,375 2,169,678 2,651,765 2,820,371 1,412,012 2,406,431 3,095,166 3,145,735 3,321,157 8,227,257 15,351,848 24,274,120 14,831,118 I5,102,893 71,716,580 86,628,304 95,969,204 98,606,222 91,992,392 6,491,534 (3,638,522) 743,591 23,083,696 (266,158) 2,965,000 (2,875,000) I0,394,726 14,801,589 (11,789,548) (18,185,109) (21,346,239) (11,317,702) 5,905,000 4,722,176 (48,516) (31,990) 554,796 8,885,000 (9,405,000) 7,451,152 7,993,297 (9,084,228) (10,562,137) 2,811,483 2,901,190 593,956 2,160,252 22,425,208 4,817,364 $ 8.651.786 ; 1L786.686 i (I6.528 8751 5.01% 6.55% 62,610 2,218,752 2,542,937 6,996,722 (39,547) 1,642 705,000 (690,000) 15,850,523 (18,961,892) 628,482 753,153 5,244,083 7.787.020 7.68% 7.74% 8.49% 119 CITY OF DUBUQUE, IOWA TAXABLE AND ASSESSED VALUE OF PROPERTY LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) TABLE 5 Ratio of Total Taxable Real Property Exemptions Total Value to Total Taxable Assessed Real Taxable Assessed Assessed Total Direct Levy Year Fiscal Year Value Value Property Value Value Value Tax Rate 2000 2002 $ 1,429,025 $ 2,050,019 $ 10,097 $ 1,418,928 $ 2,050,019 69.22 % $ 10.76080 2001 2003 1,540,206 2,317,926 10,141 1,530,065 2,317,926 66.01 10.21200 2002 2004 1,572,776 2,350,317 9,694 1,563,082 2,350,317 66.51 10.27303 2003 2005 1,666,033 2,575,400 9,599 1,656,434 2,575,400 64.32 10.07200 2004 2006 1,710,334 2,679,078 9,862 1,700,472 2,679,078 63.47 9.69910 2005 2007 1,780,354 2,804,568 9,122 1,771,232 2,804,568 63.16 9.98030 2006 2008 1,823,304 2,870,178 8,939 1,814,365 2,870,178 63.21 10.31690 2007 2009 1,949,071 3,171,681 9,298 1,939,773 3,171,681 61.16 9.96904 2008 2010 2,033,135 3,239,112 9,246 2,023,889 3,239,112 62.48 9.85777 2009 2011 2,159,622 3,349,823 8,885 2,150,737 3,349,823 64.20 10.02741 120 CITY OF DUBUQUE, IOWA PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TAX RATES PER $1,000 ASSESSED VALUE TABLE 6 Board of Education Dubuque and Ratio of Dubuque School Independent Area 1 Voc. Dubuque Dubuque Levy Year Fiscal Year City District s Tech County Total City to Total 2000 2002 $ 10.76080 $ 13.50444 $ 0.54806 $ 0.57072 $ 5.73669 $ 31.12071 34.58 % 2001 2003 10.21200 13.73882 0.55492 0.57507 5.60064 30.68145 33.28 2002 2004 10.27303 13.84768 0.61686 0.57791 5.59515 30.91063 33.23 2003 2005 10.07200 14.27491 0.57269 0.59804 6.08923 31.60687 31.87 2004 2006 9.69910 15.09695 0.60226 0.60517 6.08416 32.08764 30.23 2005 2007 9.98033 15.92538 0.60802 0.61127 6.17924 33.30424 29.97 2006 2008 10.31690 16.40925 0.63160 0.61270 6.42691 34.39736 29.99 2007 2009 9,96904 16.89000 0.95250 0.55713 6.41459 34.78326 28.66 2008 2010 9.85777 16.87918 0.57970 0.99471 6.40435 34.71571 28.40 2009 2011 10.02742 16.88349 0.55740 1.03532 6.50193 35.00556 28.65 Separate components of the Dubuque City Rate is as follows: Public Employee Levy Year Fiscal Year General Transit Insurance Benefits Debt Service Total 2000 2002 $ 8.10000 $ 0.26680 $ 0.15287 $ 1.53298 $ 0.70815 $ 10.76080 2001 2003 8.10000 0.31269 0.14642 1.24862 0.40427 10.21200 2002 2004 8.10000 0.32633 0.17342 1.51270 0.16058 10.27303 2003 2005 8.10000 0.37993 0.20994 1.25424 0.12789 10.07200 2004 2006 8.10000 0.42561 0.22000 0.95349 - 9.69910 2005 2007 8.10000 0.53643 0.21308 1.13082 9.98033 2006 2008 8.10000 0.60729 0.21760 1.39201 10.31690 2007 2009 8.10000 0.66727 0.08685 1.11492 - 9.96904 2008 2010 8.10000 0.60000 0.21492 0.90583 0.03702 9.85777 2009 2011 8.10000 0.54469 0.20531 1.12441 0.05300 10.02741 Source: Dubuque County Auditor's Office. 121 CITY OF DUBUQUE, IOWA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO (IN THOUSANDS OF DOLLARS) TABLE 7 2011 2002 Percentage of Percentage of Taxable Total City Taxable Total City Assessed Taxable Assessed Assessed Taxable Assessed Imam% Value Rank Value Value Rank Value Peninsula Gaming Company $ 56,784 1 1.70 % Kennedy Mall 31,133 2 .93 $ 19,990 1 0.98% Medical Associates Realty LP 19,157 3 .57 17,886 2 .87 Otto A LLC 17,500 4 .52 Nordstrom, Inc. 16,884 5 .50 15,532 3 .76 The McGraw Hill Companies Inc. 14,440 6 .43 7,730 7 .38 Platinum Holdings LLC 11,179 7 .33 Minglewood Limited Partnership 9,948 8 .30 Asbury Dubuque LLC 9,925 9 .30 Lexington Dubuque LLC 9,844 10 .29 Plaza 20 Inc. 8,733 4 .43 U.S. West Communications 8,575 5 .42 Georgia - Pacific Corp. /Color -Box, LLC 7,744 6 .38 American Trust & Savings Bank 7,379 8 .36 A.Y. McDonald Manufacturing Co. 6,904 9 .34 Plastic Center, Inc. 6,278 10 • .31 $ 196,794 5.87% $ 106,751 5.23 Effective 2001, utility companies (Alliant Energy/Interstate Power and Aquila Natural Gas) pay excise tax on revenue to the state rather than property taxes. Source: Dubuque County Auditor's Office. 122 CITY OF DUBUQUE, IOWA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS ) TABLE 8 Percent of Delinquent Total Tax Ratio of Total Tax Outstanding Ratio of Fiscal Tax Total Tax Current Tax Current Taxes Tax Collections Collections to Delinquent Delinquent Taxes Year Year Levy (1) Collections Collected Collections (2) Total Tax Levy Taxes to Total Tax Levy 2002 2001 $ 15,725 $ 15,511 98.6 % $ 127 $ 17,068 99.5 % $ 238 1.5 % 2003 2002 15,810 15,703 99.3 216 15,431 100.7 130 0.8 2004 2003 16,208 15,937 98.3 11 15,948 98.4 207 1.3 2005 2004 16,408 16,383 99.8 20 16,403 100.0 196 1.2 2006 2005 16,229 16,146 99.5 2 16,148 99.5 182 1.1 2007 2006 17,216 17,193 99.9 4 17,197 99.9 174 1.0 2008 2007 18,211 18,160 99.7 3 18,163 99.7 215 1.2 2009 2008 18,992 18,670 98.3 5 18,675 98.3 262 1.4 2010 2009 19,124 19,117 99.9 (10) 19,107 99.9 202 1.1 2011 2010 19,906 19,793 99.4 13 19,806 99.5 276 1.4 (1) Excludes tax increment levy. (2) Includes taxes collected in June by the Countybut not received by the City until July. 123 CITY OF DUBUQUE RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Govememental Activities General Tax Increment Tax Increment Obligation Financing Financing Notes Other Loans Fiscal Year Bonds Bonds Payable Payable 2002 $ 20,945,000 $ 5,873,155 $ $ 2003 19,865,000 4,943,199 2004 19,010,000 3,820,394 655,000 2005 24,960,000 3,450,820 622,211 2006 24,165,750 3,040,304 590,439 2007 22,990,000 2,594,831 1,279,885 2008 21,860,000 25,136,402 1,279,636 - 2009 26,080,000 24,611,976 1,169,684 150,000 2010 27,540,000 24,689,216 1,049,696 282,857 2011 32,271,022 23,267,892 1,931,348 282,857 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Population and personal income data can be found in Table 17. * Personal Income unavailable at report date. TABLE 9 Business -Type Activities General Percentage of Per Obligation Capital Loan Revenue Other Loans Total Primary Personal Capital Bonds Notes Bonds Payable Government Income([) (1) $ 3,105,000 $ $ 1,720,000 $ - $ 31,643,155 1.307% 549 5,140,000 1,540,000 - 31,488,199 1.264% 546 6,660,000 1,350,000 31,495,394 1.168% 546 8,090,000 1,150,000 38,273,03I 1.363% 663 [ 1,619,250 940,000 40,355,743 1.353% 700 11,090,000 720,000 38,674,716 I.258% 670 11,570,000 611,977 490,000 60,948,015 1.901% 1,057 14,655,000 3,914,076 1,445,000 390,890 72,416,626 2.241% 1,255 24,225,000 8,289,621 1,125,000 371,978 87,573,368 2.638% 1,518 25,503,978 33,195,408 6,755,000 2,252,109 125,459,614 * 2,177 CITY OF DUBUQUE RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS DOLLARS IN THOUSANDS EXCEPT PEE. CAPITA TABLE 10 General Percentage of Percentage of Obligation Taxable Value Taxable Value of Assessed Value Assessed Value Per Fiscal Year Bonds (1) of Property Property of Property of Property Capita 2002 S 24,050 S 1,418528 L69% S 2.050,019 1.17% 417 2003 25,005 1,530.057 1.63% 2,317,926 1.08% 433 2004 25,670 1,563,082 1.64% 2,350,317 1.09% 445 2005 33,050 1,656,434 2.00% 2,575,400 1.28% 573 2006 35,785 1,700,472 2.10% 2,679,078 1.34% 620 2007 34,080 1,771,232 1.92% 2,804,568 1.22% 591 2008 33,430 1,814,365 1.84% 2,870,178 1.16% 580 2009 40,735 1,939,773 2.10% 1174681 1,28% 706 2010 51,765 2,023,899 2.56% 3,239,112 1.60% 897 2011 57,775 2,159.622 2.68% 3,349.823 1.72% 1,002 CITY OF DUBUQUE, IOWA DIRECT AND OVERLAPPING DEBT AS OF JUNE 30, 2011 TABLE 11 Net General Tax Tax Obligation Increment Increment Percentage Amount Bonded Debt Financing Financing Capital Loans Applicable Applicable to Jurisdiction Outstanding Bonds Notes Notes Payable to City Government (I) Direct, City of Dubuque, Iowa S 32,271,022 S 23,267,892 S 1,931,349 S • S 282,857 100.00% S 57,753,120 Overlapping: Dubuque County 50,001 0.06% 30 Dubuque Community School District 19,650,000 100.00% 19,650,000 Northeast Iowa Community College 30,855,000 720,000 0.02% 6,315 Total Overlapping 30,855,000 20,370,000 50,001 19,656,345 Total S 63,126,022 S 23,267,892 S 1,931,349 524,370,000 S 332,858 S 77,409,465 Source: Dubuque County Auditor, Dubuque Community School District and Northeast Iowa Community College (I) Excludes general obligation bonds reported in enterprise funds. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesss of Dubuque. This process recognizes that, when considering the city's ability to issue and repay long -term debt, the entire debt burden borne by the residents and businesss should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. CITY OF DUBUQUE, IOWA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) 2002 2003 2004 2005 Debit limit S 102,359 S 115,896 S 117,516 S 133,149 Total net debt applicable to limit 30,250 30,271 30,185 37,177 Legal debit margin S 72,109 $ 85,625 S 87,331 S 95,972 Total net debt applicable to the debt limit as a percentage of debt limit 29.55% 26.12% 25,69% 27.92% Legal Debt Margin Calculation for Fiscal Year 2011 Estimated actual value Debt limit • 5% of total actual valuation Debt applicable to limit: (Including GO Debt, TIF Debt, and Lease Obligations Paid from General Fund) Legal debt margin 128 TABLE 12 2006 2007 2008 2009 2010 2011 S 138,789 $ 145,401 S 148,824 S 163,621 $ 167,247 S 174,333 39,443 38,060 60,485 76,182 101,152 92,443 S 99,346 S 107,341 $ 88,339 S 87,439 S 66,095 $ 81,890 28.42% 26.18% 40,64% 46,56% 60,48% 53.03% S 3,486,661,216 S 174,333,061 92,443,077 S 81,889,984 129 CITY OF DUBUQUE, IOWA REVENUE BOND COVERAGE LAST TEN FISCAL YEARS ( IN THOUSANDS OF DOLLARS) TABLE 13 Net Revenue Available Next Fiscal Year's Fiscal Gross Operating For Debt Debt Service Requirements Year Revenues (1) Expenses (2) Service Principal Interest Total Coverage (3) WATER UTILITY 2008 S 4,933 S 3,959 $ 974 $ 39 $ 27 $ 66 14.76 2009 5,391 5,196 195 104 99 203 0.96 2010 5,353 5,153 200 108 79 187 1.07 2011 5,638 5,316 322 496 446 942 0.34 STORMWATER UTILITY Net Revenue Available Next Fiscal Year's Fiscal Gross Operating For Debt Debt Service Requirements Year Revenues (I) Expenses (2) Service Principal Interest Total Coverage (3) 2009 2,402 1,309 1,093 75 58 133 8.22 2010 2,357 1,320 1,037 132 110 242 4.29 2011 2,788 1,680 1,108 296 252 548 2.02 SEWAGE DISPOSAL WORKS Net Revenue Available Next Fiscal Year's Fiscal Gross Operating For Debt Debt Service Requirements Year Revenues (1) Expenses (2) Service Principal Interest Total Coverage (3) 2009 6,084 5,093 991 7 7 141.57 2010 5,995 5,331 664 144 128 272 2.44 2011 6,699 6,028 671 661 589 1,250 0.54 PARKING BONDS Net Revenue Available Next Fiscal Year's Fiscal Gross Operating For Debt Debt Service Requirements Year Revenues (1) Expenses (2) Service Principal Interest Total Coverage (3) 2002 1,452 737 715 180 79 259 2.76 2003 1,484 847 637 190 71 261 2.44 2004 1,659 971 688 200 63 263 2.62 2005 1,934 960 974 210 54 264 3.69 2006 1,933 977 956 220 44 264 3.62 2007 2,113 1,014 1,099 230 34 264 4.16 2008 2,224 1,495 729 240 23 263 2.77 2009 2,270 1,412 858 250 12 262 3.27 Parking revenue bonds matured in 2010. (1) Total operating 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. 130 CITY OF DUBUQUE, IOWA WATER AND SEWER RECEIPT HISTORY LAST TEN FISCAL YEARS TABLE 14 Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Cash basis receipt ledgers. 131 Water Receipts 4,233,908 4,154,899 4,350,338 4,340,789 4,798,408 4,856,353 5,020,001 5,358,419 5,503,277 5,871,246 Sewer Receipts 4,319,655 4,252,098 4,466,035 4,478,205 4,920,376 5,276,454 5,481,074 5,821,251 5,851,401 6,672,890 CITY OF DUBUQUE, IOWA WATER METERS BY RATE CLASS LAST SIX FISCAL YEARS* TABLE 15 Fiscal Year Residential Commercial Industrial Government Total 2006 19,813 1,820 73 35 21,741 2007 19,914 1,839 74 38 21,865 2008 19,970 1,878 70 45 21,963 2009 20,058 1,895 72 48 22,073 20I0 20,204 1,887 71 48 22,210 2011 20,338 1,904 79 51 22,372 *Prior four years information not available. 132 CITY OF DUBUQUE, IOWA LARGEST WATER AND SEWER CUTOMERS FISCAL YEAR 2011 TABLE 16 Customer Rousselot Hormel Prairie Farms Dairy Mercy Medical Center Loras College Water & Resource Recovery Center University of Dubuque Dubuque Community Schools Inland Protein Corportation Premier Linen & Dry Cleaning Finley Hospital Percentage of Water Total Water Receipts Rank Receipts $ 221,614 1 3.77 % 83,071 2 1.41 57,563 3 0.98 56,217 4 0.96 53,820 5 0.92 48,290 6 0.82 46,502 7 0.79 43,363 8 0.74 33,921 9 0.58 32,787 10 0.56 Sewer Receipts Rank $ 388,203 1 158,659 2 127,945 4 92,488 5 65,993 6 46,965 9 51,376 8 135,577 3 62,252 7 45,503 10 Total Receipts $ 5,871,246 $ 6,672,890 133 Percentage of Total Sewer Receipts 5.82 2.38 1.92 1.39 0.99 0.70 0.77 2.03 0.93 0.49 CITY OF DUBUQUE, IOWA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS TABLE 17 Sources: Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Population 57,686 57,686 57,686 57,686 57,686 57,686 57,686 57,686 57,686 57,637 Personal Income $ 2,421,441,000 2,491,982,000 2,695,504,000 2,807,625,000 2,983,000,000 3,074,666,000 3,206,000,000 3,231,613,000 3,316,659,000 * Per Capita Personal Median Age Income (1) (2) $ 26,760 37 27,631 37 29,549 37 30,650 37 32,290 37 33,290 37 34,571 38 34,571 37 35,635 37 37 (I) U.S. Department of Commerce, Bureau of Economic Analysis, (2) Bureau of Census: 2000 Census (3) Dubuque Community School District. (4) Iowa Department of Employment Services as of June 30.. * Unavailable at report date. 134 Public School Enrollment (3) 9,906 10,122 10,428 10,547 10,733 10,727 10,614 10,697 10,517 10,467 Unemployment Rate (4) 3.9 % 4.0 4.4 4.5 3.5 3.7 3.8 6.2 6.4 5.8 CITY OF DUBUQUE, IOWA PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO TABLE 18 Employer John Deere (2) Dubuque Community Schools Mercy Medical Center IBM (3) Medical Associates Finley Hospital City of Dubuque Holy Family Catholic Schools Eagle Window & Door Prudential Retirement Dubuque Racing Association CIGNA Retirement Diamond Jo McCoy Group (4) 2011 # of Employees Rank 2,065 1 1,946 2 1,324 3 1,300 4 999 5 920 6 686 7 575 8 550 9 550 9 413 10 11,328 Source: Greater Dubuque Development Corp. Percentage of Total City Employment (I) 3.80% 3.58 2.44 . 2.39 1.84 1.69 1.26 1.06 1.01 1.01 .76 2002 Percentage of -Total City Employment # of Employees Rank (1) 1,800 I 3.35 % 1,410 2 2.85 1,340 3 2.49 760 6 1,41 700 7 1.30 1,007 5 1.87 519 10 .97 625 8 620 9 1,200 4 9,981 (1) Based on the percentage of total employment for Dubuque area from the U.S, Department of Labor, Bureau of Labor Statistics. (2) Located just outside City Limits. (3) Anticipated employment. Actual number not available at this time. (4) McCoy Group in 2002 includes all employees not just City of Dubuque. 135 1.16 1.15 2.23 CITY OF DUBUQUE, IOWA FULL -TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/DEPARTMENT LAST TEN FISCAL YEARS 2002 2003 2004 2005 Pulic Safety Emergency Communications 10.00 10.00 10.00 10.00 Fire 90.00 90.00 90.00 90.00 Police 96.00 97.00 97.00 97.00 Building Services 7.00 7.00 7.00 7.00 Public Works Public Works 83.00 86.02 87.30 88.55 Engineering 24.00 24.00 24.00 24.00 Health & Social Services Health Services 5.00 5.00 5.00 5.00 Human Rights 2.00 2.00 2.00 2.00 Cultural and Recreation Civic Center 9.15 9.15 9.15 9.15 Library 18,00 18.00 18.00 18.00 Park 21.92 21.92 21.92 21.92 Recreation 8.93 8.93 8.93 8.93 Community & Economic Development Community! Economic Dev 5.00 3.00 3.00 3.00 Housing Services 20.00 20.25 20.00 21.00 Planning Services 7.00 7.00 7.00 7.00 General Government Airport 13.00 14.00 13.00 13.00 Cable TV 3.00 2.00 200 2.00 City Clerk's Office 3.00 3.00 3.00 3.00 City Manager's Office 9.00 1 1.00 10.00 10.00 Finance 16.00 16.00 15.00 14.00 Legal 2.00 2.00 2.00 2.00 information Services 6.00 6.00 6.00 6.00 Business Type Water 23.00 23.00 23.00 23.00 Water Pollution Control 18.00 18.00 18.00 18.00 Parking 11.00 11.50 10.50 10.50 Transit 7.50 8.00 7.00 7.00 Total 518.50 523.77 519.80 521.05 Source: City Budget Records Departments with employees who are allocated to more than one function are reflected in the area with largest number of employees. 136 TABLE 19 Full -Time Equivalent Employees as of June 30 2006 2007 2008 2009 2010 2011 11,00 11.00 11.00 13.00 13.00 13.00 90.00 90.00 90.00 90.00 90.00 90.00 99.00 100.00 101.00 108,67 110.84 113.34 7.00 7.00 7.00 8.00 8.00 9.00 87.00 87.00 87.00 88.00 87,42 87.42 25.00 25.00 25.00 26.00 26.00 27.00 5.00 5.00 4.00 4.00 4.00 4.00 3.00 3.00 3.00 3.00 3.00 3.00 1.15 0.15 0.15 0.15 0.15 0.I5 18.00 18.00 18.00 18.00 18.00 18.00 21,92 21.92 21.92 21.92 2251 22.50 8.93 7.93 7.93 7.93 8.43 8.93 3.00 3.00 3.00 ' 3.00 3.00 3.00 21.00 20.25 18.00 22.00 22.00 22.25 8.00 8.00 8.00 8.00 8.00 8.00 13.00 13.23 12.00 12.00 12.00 12.00 2.00 2.00 2.00 2.00 2.00 2.00 3.00 3.00 3.00 3.00 3.00 3.00 1 1.00 11.00. 11.00 13.50 15.00 15.00 14.00 14.00 14,00 14.00 14.00 14.00 2.62 3.00 3.00 4.00 4.66 5.00 6.00 6.00 7,00 . 7.00 7.00 7.00 23.00 23.00 23.00 23.00 24.00 25.00 18.00 18.00 18.00 18.00 18.00 18.00 8.00 8.00 7.00 7.50 9.00 9.00 8.55 8.00 7.00 7.00 6.00 7,00 518.17 516.48 512.00 532.67 534.01 546.59 137 CITY OF DUBUQUE, IOWA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year 2002 ' 2003 2004 2005 Public Safety Police Physical arrests' 4,000 4,550 4,795 Traffic violations 2,462 2,126 2,427 2,171 Parking violations3 51,162 49,985 51,004 Fire Number of calls answered 4,774 3,974 4,181 4,300 Inspections conducted 841 524 408 1,135 Sewer Sewage system Daily average treatment in gallons 9,000,000 8,000,000 8,000,000 8,500,000 Maximum daily capacity of treatment plant in gallons 15,000,000 15,000,000 15,000,000 13,500,000 Water systems Daily average consumption in gallons 8,000,000 8,000,000 8,000,000 7,720,000 Maximum daily capacity of plant in gallons 18,000,000 18,000,000 18,000,000 18,000,000 Refuse (Municipal Collection) Tonnage 13,594 10,435 10,330 10,428 Sources: Various City Departments. 1 Statistics not available for fiscal year 2002. 2 Statistics begin in fiscal year 2002. 3 Statistics begin in fiscal year 2003. 138 TABLE 20 Fiscal Year 2006 2007 2008 2009 2010 2011 4,790 5,078 5,090 6,325 6,365 6,350 2,111 1,986 6,881 8,801 8,901 12,289 46,575 42,530 40,74I 36,457 37,056 35,799 4,176 4,454 4,699 4,480 4,557 4,844 409 360 624 443 1,035 555 8,500,000 8,000,000 10,310,000 7,981,000 9,068,000 8,132,000 13,500,000 13,500,000 13,500,000 21,131,000 21,131,000 23,240,000 8,057,000 7,950,000 7,812,000 7,845,000 7,684,000 7,636,000 18,000,000 18,000,000 17,000,000 18,000,000 18,000,000 18,000,000 10,573 10,807 11,798 10,774 10,615 10,660 139 CITY OF DUBUQUE, IOWA CAPITAL ASSETS BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year 2002 2003 2004 2005 Public safety Police Stations 1 1 . 1 I Patrol units 18 18 18 19 Fire Stations 6 6 6 6 Aerial trucks 3 3 3 3 Public works Streets Miles (1) * 273 290 290 Street lights (1) 1,195 1,500 1,591 1,631 Health and social services Hospital 2 2 2 2 Number of patient beds 478 584 560 421 Cultural and recreation Library 1 1 1 I Golf 1 1 1 1 Parks 39 42 42 44 Acreage 834 850 850 855 Recreation Civic center 1 1 1 1 Swimming pools 2 2 2 2 Softball fields 7 7 7 7 Baseball fields 1 I 1 1 Tennis courts 20 20 20 20 Sewer Sewage system Miles of sanitary sewer (1) * * * * Miles of storm sewers (1) * * * * Number of treatment plants 1 1 1 1 Number of service connectors 20,200 20,800 21,000 21,000 Water systems Miles of water mains 305 305 310 312 Number of service connectors 20,550 21,032 21,206 21,016 Number of city owned fire hydrants 2,712 2,713 2,736 2,770 Sources: Various City Departments. ( 1) City GIS System. * Information not available. 140 TABLE 21 Fiscal Year 2006 2007 2008 2009 2010 2011 1 1 1 1 1 1 19 19 19 19 22 22 6 6 6 6 6 3 3 3 3 3 295 307 317 320 321 325 1,755 1,802 1,855 1,877 1,916 1,931 2 2 2 2 2 2 421 405 405 405 389 389 1 1 1 1 1 1 1 1 1 1 1 1 44 47 47 47 48 48 845 898 898 898 901 901 1 1 1 1 1 1 2 2 2 2 2 2 7 8 7 7 7 7 1 1 1 1 1 1 19 19 20 20 20 20 263 286 290 295 300 300 116 120 122 143 144 150 1 1 1 1 1 1 2I,443 21,568 21,633 21,347 21,599 21,702 313 315 316 317 318 319 21,257 21,210 21,243 21,347 21,986 22,092 2,780 2,798 2,812 2,831 2,843 2,854 141 Compliance Section June 30, 2011 City of Dubuque, Iowa Ei eBai11 St..1 IiN85$ A DVISORS Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Dubuque, Iowa, as of and for the year ended June 30, 2011, which collectively comprise the City's basic financial statements and have issued our report thereon dated January 19, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. The financial statements of Dubuque Initiatives and Subsidiaries, a discretely presented component unit, were not audited in accordance with Government Auditing Standards, and accordingly, this report does not extend to those financial statements. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies, or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified a certain deficiency in internal control over financial reporting that we consider to be a material weakness. www.eidebailly.com 3999 Pennsylvania Ave., Ste. 100 I Dubuque, IA 52002 -2273 I T 563.556.1790 j F 563.557.7842 I EOE A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in Part II of the accompanying Schedule of Findings and Questioned Costs as item II -A -11 to be a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The . results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, we noted certain immaterial instances of noncompliance or other matters that are described in Part IV 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, 2011, are based exclusively on knowledge obtained from 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 City's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. We did not audit the City's response, and accordingly, we express no opinion on it. This report is intended solely for the information and use of the management, City Council, others within the entity, and federal awarding agencies and pass - through entities and is not intended to be and should not be used by anyone other than these specified parties. Dubuque, Iowa January 19, 2012 143 EideBailly CPAs &ISUSINES ADVISORS Independent Auditor's Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A -133 To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Compliance We have audited the compliance of the City of Dubuque, Iowa, with the types of compliance requirements described in the OMB Circular A -133 Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2011. The City's major federal programs are identified in the summary of the independent auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and 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; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A -133, Audits of States, Local Governments, and Non- Profit Organizations. Those standards and OMB Circular A -133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City of Dubuque, Iowa, complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. www.eidehailly.com 3999 Pennsylvania Ave., Ste. 100 I Dubuque, IA 52002 -2273 I T 563.556.1790 F 563.557.7842 I EOE Internal Control Over Compliance Management of the City of Dubuque, Iowa, is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the 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, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, we identified a certain deficiency in internal control over compliance that we consider to be a significant deficiency as described in the accompanying schedule of findings and questioned cost as item III -A -11. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. The City's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the City's response and, accordingly, we express no opinion on the response. This report is intended solely for the information and use of management, City Council, others within the entity, federal awarding agencies, and pass - through entities and is not intended to be and should not be used by anyone other than these specified parties. /y G Dubuque, Iowa January 19, 2012 145 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2011 Grantor/Program Federal Pass - Through CFDA Entity Identifying Federal Number Number Expenditures U.S. Department of Commerce: Direct program: Investments for Public Works and Economic $ 1,437,604 Development Facilities 11.300 U.S. Department of Housing and Urban Development: CDBG — Entitlement Grants Cluster: Direct program: Community Development Block 461,885 Grants/Entitlement Grants 14.218 Community Development Block 975,359 Grants/Entitlement Grants 14.218 1,437,244 ARRA - Community Development Block Grant ARRA Entitlement Grants 92,681 (CDBG -R) (Recovery Act Funded) 14.253 Total CDBG — Entitlement Grants 1,529,925 Cluster Direct program: Community Development Block Grants/ State's Program and Non- Entitlement 138,712 Grants in Hawaii 14.228 Pass - through program from: Iowa Department of Economic Development: Community Development Block Grants/ State's Program and Non - Entitlement 08 DRH 212 1,177 Grants in Hawaii 14.228 139,889 Direct program: 77,349 Shelter Plus Care 14.238 ARRA - Homelessness Prevention and Rapid 188,919 Re- Housing Program 14.257 Fair Housing Assistance Program - State and 29,950 Local 14.401 Lower Income Housing Assistance Program - 76,716 Section 8 Moderate Rehabilitation 14.856 76,4,376,7716 Section 8 Housing Choice Vouchers 14.871 519,938 9,928 51 Section 8 Housing Choice Vouchers 14.871 1 Section 8 Housing Choice Vouchers 14.871 2,720 Section 8 Housing Choice Vouchers 14.871 595 9 Section 8 Housing Choice Vouchers 14.871 5 4,899,598 146 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2011 Grantor/Program Federal Pass- Through CFDA Entity Identifying Federal Number Number Expenditures U.S. Department of Housing and Urban Development: (continued) Direct program: (continued) Lead -Based Paint Hazard Control in Privately -Owned Housing 14.900 $ 746,682 Lead -Based Paint Hazard Control in Privately -Owned Housing 14.900 45,606 792,288 Healthy Homes Production Grant Program 14.913 13,167 Total U.S. Department of Housing and Urban Development 7,747,791 U.S. Department of the Interior Pass - through program from: Iowa Department of Natural Resources: Sportfishing and Boating Safety Act 15.622 CRD825MKONRA110303 565,984 Direct program: Historic Preservation Fund Grants -In -Aid 15.904 25,000 Total U.S. Department of the Interior 590,984 U.S. Department of Justice: Direct program: Violence Against Women Formula Grants 16.588 1,826 Bulletproof Vest Partnership Program 16.607 1,086 Bulletproof Vest Partnership Program 16.607 976 2,062 Pass- through program from: Dubuque County, Iowa Sheriff: Public Safety Partnership and Community Policing Grants 16.710 09- HOTSPOTS 2,293 Helping Services of Northeast Iowa, Inc.: Enforcing Underage Drinking Laws Program 16.727 JJYD- FY10 -01 3,800 Enforcing Underage Drinking Laws Program 16.727 01- DJ08 -F09 788 4,588 147 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2011 Grantor/Program Federal Pass- Through CFDA Entity Identifying Federal Number Number Expenditures U.S. Department of Justice: (continued) JAG Program Cluster: Direct program: Edward Byrne Memorial Justice Assistance Grant Program 16.738 $ 21,555 Edward Byrne Memorial Justice Assistance Grant Program 16.738 10,890 Edward Byrne Memorial Justice Assistance Grant Program 16.738 10,077 Edward Byrne Memorial Justice Assistance Grant Program 16.738 9,662 52,184 Pass - through program from: Iowa Department of Justice: ARRA - Recovery Act - Edward Byrne Memorial Justice Assistance Grant (JAG) Program/Grants to States and Territories Direct program: ARRA - Recovery Act - Edward Byrne Memorial Justice Assistance Grant (JAG) Program/Grants to Units of Local Government Total JAG Program Cluster 16.803 09JAG -15910 53,582 16.804 3,050 108.816 Total U.S. Department of Justice 119,585 U.S. Department of Transportation: Direct program: Airport Improvement Program 20.106 633,519 Airport Improvement Program 20.106 382,772 Airport Improvement Program 20.106 352,912 Airport Improvement Program 20.106 186,544 Airport Improvement Program 20.106 135,367 Airport Improvement Program 20.106 33,183 Airport Improvement Program 20.106 20,091 Airport Improvement Program 20.106 18,256 Airport Improvement Program 20.106 6,536 1,769,180 148 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2011 • Grantor/Program U.S. Department of Transportation: (continued) Pass - through program from: Iowa Department of Transportation: Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Highway Planning and Construction Federal Transit Cluster: Direct program: Federal Transit - Capital Investment Grants Pass - through program from: Iowa Department of Transportation: Federal Transit - Capital Investment Grants Direct program: Federal Transit - Formula Grants ARRA - Federal Transit - Formula Grants Pass - through program from: Iowa Department of Transportation: ARRA - Federal Transit - Formula Grants Federal Transit - Formula Grants Total Federal Transit Cluster Federal CFDA Number 20.205 20.205 20.205 20.205 20.205 20.205 20.205 20.500 20.500 20.507 20.507 20.507 20.507 Federal Services Programs Cluster: Direct program: Capital Assistance Program for Elderly Persons and Persons with Disabilities 20.513 Pass - through program from: Iowa Department of T ransportation: Capital Assistance Program for Elderly Persons and Persons with Disabilities 20.513 Job Access - Reverse Commute Total Federal Services Programs Cluster 20.516 Pass - Through Entity Identifying Number STP -U- 2100(634)- -70 -31 HDP- 2100- (661) -71 -31 TSF -32- 1(28)- -92 -31 STP -A -32- 1(29)- -86 -31 HDP -2100- (655) -71 -31 IA -10 -02 -2100 ESL -2100- (646) -7S -31 IA -04 -0113 IA -96 -0001 IA -95 -X003 IA -16 -X001 IA -37 -X017 Federal Expenditures 1,764,703 534,733 500,000 448,086 182,821 142,309 64,505 3,637,157 526,160 346,761 872,921 781,774 43,723 339,482 93,250 1,258,229 2,131,150 27,129 32,596 59,725 20,057 79,782 149 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2011 Grantor/Program U.S. Department of Transportation: (continued) Direct program: State and Community Highway Safety State and Community Highway Safety Federal CFDA Number 20.600 20.600 ARRA - Surface Transportation - Discretionary Grants for Capital Investment 20.932 Total U.S. Department of Transportation Environmental Protection Agency: Pass- through program from: Iowa Finance Authority: ARRA - Capitalization Grants for Clean Water State Revolving Funds ARRA - Capitalization Grants for Clean Water State Revolving Funds ARRA - Capitalization Grants for Clean Water State Revolving Funds Capitalization Grants for Clean Water State Revolving Funds ARRA - Capitalization Grants for Drinking Water State Revolving Funds ARRA - Capitalization Grants for Drinking Water State Revolving Funds ARRA - Capitalization Grants for Drinking Water State Revolving Funds ARRA - Capitalization Grants for Drinking Water State Revolving Funds Total Environmental Protection Agency U.S. Department of Energy: Direct program: ARRA - Energy Efficiency and Conservation Block Grant Program ARRA - Energy Efficiency and Conservation Block Grant Program Total U.S. Department of Energy 66.458 66.458 66.458 66.458 66.468 66.468 66.468 66.468 81.128 81.128 Pass - Through Entity Identifying Number CS- 192421 -01 CS- 192421 -01 CS- 192421 -01 CS- 192427 -01 FS -31 -10 -DWSRF -023 FS -31 -10 -DWSRF -023 FS -31 -10 -DWSRF -023 FS -31 -10 -DWSRF -023 Federal Expenditures $ 37,968 5,653 43,621 2,946,377 10,607,267 148,104 549,896 729,000 2,950,840 4,377,840 2,923,240 76,760 527,194 472,806 4,000,000 8,377,840 500,000 307,616 807,616 150 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2011 Grantor/Program U.S. Department of Health and Human Services: Pass- through program from: Dubuque County, Iowa Health Department: Public Health Emergency Preparedness Public Health Emergency Preparedness Federal Pass- Through CFDA Entity Identifying Federal Number Number Expenditures 93.069 93.069 5881BT31 $ 6,376 5880BT31 2,063 Total U.S. Department of Health and Human Services 8,439 Corporation for National and Community Service: Pass - through program from: Iowa Commission on Volunteers: AmeriCorps 94.006 10 -AC -13 137,508 AmeriCorps 94.006 10 -AF -21 44,700 AmeriCorps 94.006 09 -AC -13 39,150 AmeriCorps 94.006 09 -CR -13 5,614 Total Corporation for National and Community Service 226,972 U.S. Department of Homeland Security: Pass - through program from: Iowa Department of Homeland Security: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Direct program: Assistance to Firefighters Grant Total U.S. Department of Homeland Security 97.036 FEMA DR- 1930 -DR -IA 97.044 253,141 64,000 317,141 Total $ 30,241,239 151 City of Dubuque Notes to the Schedule of Expenditures of Federal Awards Year Ended June 30, 2011 Note 1 - Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of Dubuque, Iowa, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. Note 2 - Subrecipients Of the federal expenditures presented in the schedule, the City of Dubuque, Iowa, provided federal awards to subrecipients as follows: Program Title Community Development Block Grants/Entitlement Grants ARRA - Homelessness Prevention and Rapid Re- Housing Program Federal Amount CFDA Provided to Number Subrecipients 14.218 $ 132,182 14.257 $ 188,919 152 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2011 Part I: Summary of the Independent Auditor's Results: Financial Statements Type of auditor's report issued Unqualified Internal control over financial reporting: Material weakness identified Yes Significant deficiency None reported Noncompliance material to financial statements noted No Federal Awards Internal control over major programs: Material weakness identified No Significant deficiency Yes Type of auditor's report issued on compliance for major programs Unqualified Any audit fmdings disclosed that are required to be reported in accordance with Circular A -133, Section .510(a) Yes Identification of major programs: CFDA Number Name of Federal Program or Cluster 11.300 Investments for Public Works and Economic Development Facilities 14.257 ARRA,— Homelessness Prevention and Rapid Re- Housing Program 14.871 Section 8 Housing Choice Vouchers Federal Transit Cluster 20.500 Federal Transit - Capital Investment Grants 20.507 ARRA — Federal Transit - Formula Grants 20.932 ARRA — Surface Transportation - Discretionary Grants for Capital Investment 66.458 ARRA — Capitalization Grants for Clean Water State Revolving Funds 66.468 ARRA — Capitalization Grants for Drinking Water State Revolving Funds 81.128 ARRA — Energy Efficiency and Conservation Block Grant Program Dollar threshold used to distinguish between Type A and Type B programs Auditee qualified as low -risk auditee $907,237 No 153 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2011 Part II: Findings Related to the Financial Statements: MATERIAL WEAKNESS II-A-11 Material Audit Adjustments Criteria — A properly designed system of internal control over financial reporting allows entities to initiate, authorize, record, process, and report financial data reliably in accordance with generally accepted accounting principles and the requirements of OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Condition — During the course of our engagement, we proposed material audit adjustments to the fmancial statements and Schedule of Expenditures of Federal Awards that would not have been identified as a result of the City's existing internal controls and, therefore, could have resulted in a material misstatement of the City's financial statements and Schedule of Expenditures of Federal Awards. Cause — There is a limited number of office employees with varying levels of experience with the reporting requirements. Effect — The effect of this condition was financial data not in accordance with generally accepted accounting principles or the requirements of OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Recommendation — We recommend that finance staff continue to receive relevant training and that management review all documentation completed by staff for use in preparing the financial statements and Schedule of Expenditures of Federal Awards. Response — The Finance Department will continue to receive relevant training, and management will review all documentation completed by staff for use in preparing the financial statements and Schedule of Expenditures of Federal Awards. Conclusion — Response accepted. Part III: Findings and Questioned Costs for Federal Awards: SIGNIFICANT DEFICIENCY /QUESTIONED COST: CFDA Number 20.500: Federal Transit Capital Investment Grants Pass - Through Agency Number: IA -04 -0113 U.S. Department of Transportation Passed through the Iowa Department of Transportation III -A -11 Allowable Cost /Cost Principles Criteria — Allowable costs, under OMB Circular A -87, Attachment A, paragraph C.1(h), must not be included as a cost of any other Federal award. 154 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2011 Part III: Findings and Questioned Costs for Federal Awards: (continued) Condition — The Capital Investment Assistance Project Grant and the State of Good Repairs Grant both allowed for the purchase of the same type of buses. However, reimbursement, was requested for one of the buses under both grants. Questioned Cost — $62,250 Cause — The Capital Investments Assistance Project Grant and the State of Good Repairs Grant were managed by different Transit Department individuals. Also, the expenses of both grants were not separately identifiable by grant within the City's general ledger. Effect — The City requested reimbursement for expenditures under both grants. Recommendation — The City should exercise due care in processing all requests for grant reimbursements to verify that the claims being submitted were requested for only one grant. The City should consider setting up separate account codes for each type of grant. Response — The Transit Department will monitor and coordinate grant drawdowns more closely in the future since more than one individual prepares draws. Conclusion — Response accepted. Part IV: Other Findings Related to Required Statutory Reporting: 1V -A -11 Certified Budget — Disbursements during the year ended June 30, 2011, exceeded the amount budgeted in the debt service function. Chapter 384.20 of the Code of Iowa states, in part, "Public monies may not be expended or encumbered except under an annual or continuing appropriation." Recommendation — The budget should have been amended in accordance with Chapter 384.18 of the Code of Iowa before disbursements were allowed to exceed the budget. Response — The City will amend the budget for refunded debt issuances in the future, if applicable. Conclusion — Response accepted. IV -B -11 Questionable Expenditures — No expenditures that may not meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979, were noted. IV -C -11 Travel Expense — No expenditures of City money for travel expenses of spouses of City officials or employees were noted. City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2011 Part IV: Other Findings Related to Required Statutory Reporting: (continued) IV -D -11 Business Transactions — Business transactions between the City and City officials or employees are detailed as follows: IV -E -11 Name, Title, and Business Connection Deb Stephenson, employee, spouse is owner of GMS, Inc. Joleen Murphy, employee, spouse is owner of Murphy Construction Group Ric Jones, council member, owner of RJ Productions David Resnick, council member Molly Menster, employee, spouse is Tina Sio Melissa McGinnis, employee, spouse is owner of Quality Brick Transaction Description Amount Contracted Golf Pro $ 66,900 Construction, per bid 21,557 Services 600 Services 400 Services 250 Construction 243 In accordance with Chapter 362.5(3)0) of the Code of Iowa, the transactions with RJ Productions, David Resnick, Tina Sio, and Quality Brick do not appear to represent conflicts of interest since total transactions with each individual were less than $1,500 during the fiscal year. The transaction with Murphy Construction Group does not appear to be a conflict of interest since it was entered into through competitive bidding in accordance with Chapter 362.5(3)(e) of the Code of Iowa. The transaction with GMS, Inc. may represent a conflict of interest. Recommendation — We recommend the City review the transaction with GMS, Inc. with legal counsel. Response — The City plans to competitively bid the golf pro contract next year or hire the golf pro as a City employee. Conclusion — Response accepted. Bond Coverage — Surety bond coverage of City officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to ensure the coverage is adequate for current operations. IV -F -11 Council Minutes — No transactions were found that we believe should have been approved in the Council minutes but were not. 156 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2011 Part IV: Other Findings Related to Required Statutory Reporting: (continued) IV -G -11 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. IV -H -11 Revenue Bonds — No instances of non- compliance with the provisions of the City's Sewage Disposal Works, Stormwater Utility, or Parking Facilities revenue debt resolutions were noted. IV -I -11 IV -J -11 The City has created the reserve and sinking funds required by water revenue bond debt covenants. The reserve and sinking funds are appropriately funded at June 30, 2011. In addition, the Water Utility revenue debt covenants include a requirement for the utility to produce net revenues of at least 125% of the current year debt service requirement of the Series 2008 water utility revenue bonds, and all other revenue bonds or notes ranking on a parity with the 2008 water utility revenue bonds. In January of 2011, the City entered into a subordinate agreement with the Iowa Finance Authority (lender for the water revenue capital loan notes) which retroactively subordinates the water revenue capital loan notes in relation to the Series. This agreement allows the City to exclude the water revenue loan notes in the 125% computation until December 31, 2015. By excluding the water revenue capital loan notes, the City meets the 125% requirement for fiscal year 2011. Solid Waste Tonnage Fees Retained — No instances of non - compliance with the solid waste fees used or retained in accordance with provisions of Chapter 455B.310 of the Code of Iowa by the Dubuque Metropolitan Area Solid Waste Agency, a component unit of the City, were noted. Financial Assurance — The Dubuque Metropolitan Area Solid Waste Agency, a component unit of the City, has demonstrated financial assurance for closure and postclosure care costs by establishing a local government dedicated fund as provided in 567- 113.14(6) of the Iowa Administrative Code. 157