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Comprehensive Annual Financial Report (CAFR) FY Ended June 30, 2013Masterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager Dubuque band AI- America City 1 2007 • 2012 • 2013 SUBJECT: Submission of Fiscal Year Ended June 30, 2013 Comprehensive Annual Financial Report (CAFR), Auditor's Communication with Those Charged with Governance and City Responses to Findings DATE: January 27, 2014 Finance Director Ken TeKippe is transmitting the Fiscal Year 2013 Comprehensive Financial Report (CAFR), Auditor's Communication with Those Charged with Governance Letter, along with the City Finance staff's responses to auditor's findings. The City's independent auditor issued an unqualified opinion on the financial statements. bt/A4.42 k'-',., Mic ael C. Van Milligen MCVM:sv 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 trati M- America City �1111! 2007 • 2012 • 2013 TO: Michael C. Van Milligen, City Manager FROM: Kenneth J. TeKippe, Finance Director DATE: January 22, 2014 SUBJ ECT: Submission of Fiscal Year Ended June 30, 2013 Comprehensive Annual Financial Report (CAFR) and Auditor's Communication with Those Charged with Governance and City Responses to Findings INTRODUCTION The purpose of this memorandum is to submit the Fiscal Year 2013 CAFR audited by Eide Bailly, LLP, Auditor's Communication with Those Charged with Governance Letter along with the City Finance staffs responses to auditor's findings. 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 CircularA -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 Initiatives 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 Bailly, 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 2013 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. Dave Cahill, audit partner in charge from Eide Bailly CPA's, will be attending the City Council meeting and be available for any questions of clarifications. Finance staff will also be attending the meeting. Prepared by: KT /eml Enclosures: Fiscal Year 2013 CAFR Auditor's Communication with Those Charged with Governance Letter Responses to Auditor's Findings PORT OF DUBUQUE MARINA Dubuque THE CITY OF DUBUQUE CAFR COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2013 About the Cover: Nestled in the Ice Harbor of Dubuque, the Port of Dubuque Marina allows transient boaters to securely dock their boats within walking distance of restaurants and entertainment. The marina project was completed in June of 2013, and was made possible by $3,037,802 in Federal Grant funds with a matching contribution of $1,088,950 in City funding. This transient marina consists of 70 slips that can accommodate boats up to 90 feet in length and includes water and electrical connections, a fuel dock, sanitary pump -out equipment, as well as shower and laundry facilities. Included in the project, a 3,000 square foot marina ship store and shower facility provides boaters with first class amenities to enhance their stay. The store is open daily from May through October with access to beverages and food. More information about the marina and store hours can be viewed online at www.portofdubuquemarina.com or by calling the Port of Dubuque Marina at 563- 582 -5524. Photo by: Erich Moeller Cover Design by: Kelli Buchenau Copy provided by: Dan Kroger Comprehensive Annual Financial Report June 30, 2013 City of Dubuque, Iowa Prepared by: Department of Finance 3 4 Introductory Section June 30, 2013 City of Dubuque, Iowa 6 CITY OF DUBUQUE, IOWA Table of Contents Exhibit Page INTRODUCTORY SECTION Table of Contents 7 -8 Letter of Transmittal 9 -18 City Organizational Chart 19 Officials 20 Certificate of Achievement for Excellence in Financial Reporting 21 FINANCIAL SECTION Independent Auditor's Report 25 -27 Management's Discussion and Analysis 28 -37 Basic Financial Statements Government -wide Financial Statements Statement of Net Position 1 40 -41 Statement of Activities 2 42 Fund Financial Statements Balance Sheet — Governmental Funds 3 43 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 3 -1 44 Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds 4 45 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 4 -1 46 Statement of Net Position — Proprietary Funds 5 48 -51 Statement of Revenues, Expenses, and Changes in Fund Net Position — Proprietary Funds 6 52 -53 Statement of Cash Flows — Proprietary Funds 7 54 -57 Statement of Fiduciary Assets and Liabilities — Agency Funds 8 58 Notes to Financial Statements 59 -94 Required Supplementary Information Schedule of Receipts, Expenditures, and Changes in Balances — Budget and Actual (Budgetary Basis) — Governmental Funds and Enterprise Funds 96 Note to Required Supplementary Information — Budgetary Reporting 97 Schedule of Funding Progress for the Retiree Benefit Plan 98 Combining Fund Statements Combining Balance Sheet — Nonmajor Governmental Funds A -1 102 -104 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances — Nonmajor Governmental Funds A -2 106 -108 Combining Statement of Net Position — Nonmajor Enterprise Funds B -1 110 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position — Nonmajor Enterprise Funds B -2 111 Combining Statement of Cash Flows — Nonmajor Enterprise Funds B -3 112 -113 Combining Statement of Net Position — Internal Service Funds C -1 116 -117 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position (Deficit) — Internal Service Funds C -2 118 -119 Combining Statement of Cash Flows — Internal Service Funds C -3 120 -121 Combining Statement of Changes in Assets and Liabilities — Agency Funds D -1 123 CITY OF DUBUQUE, IOWA Table of Contents Table Page STATISTICAL SECTION (Unaudited) Statistical Section Contents 127 Financial Trends Net Position by Component 1 128 -129 Changes in Net Position 2 130 -133 Fund Balances of Governmental Funds 3 134 -135 Changes in Fund Balances of Governmental Funds 4 136 -137 Revenue Capacity Taxable and Assessed Value of Property 5 138 Property Tax Rates — Direct and Overlapping Governments 6 139 Principal Property Taxpayers 7 140 Property Tax Levies and Collections 8 141 Debt Capacity Ratios of Outstanding Debt by Type 9 142 -143 Ratios of General Bonded Debt Outstanding 10 144 Direct and Overlapping Governmental Activities Debt 11 145 Legal Debt Margin Information 12 146 -147 Revenue Debt Coverage 13 148 Water and Sewer Receipt History 14 149 Water Meters by Rate Class 15 150 Largest Water and Sewer Customers 16 151 Demographic and Economic Information Demographic and Economic Statistics 17 152 Principal Employers 18 153 Operating Information Full -Time Equivalent City Government Employees by Function/Department 19 154 -155 Operating Indicators by Function/Program 20 156 -157 Capital Asset Statistics by Function 21 158 -159 COMPLIANCE SECTION Independent Auditor's 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 163 -164 Independent Auditor's Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by OMB Circular A -133 165 -166 Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs 167 -171 172 173 -176 Summary Schedule of Prior Federal Audit Findings 177 8 THE CITY OF Dubuque Masterpiece on the Mississippi January 15, 2014 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, 2013, 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 2013. 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, sanitary sewer system, storm water system, parking facilities, refuse collection, salt sales, and public transportation. 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 9 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) requires 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 31.8 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. As of October 2013, the City unemployment rate was 3.7% and County rate was 3.6 %, well below the 4.6% state and 7.3% national unemployment rates. 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. ECONOMIC CONDITION According to the Federal Housing Finance Agency (FHFA) Changes in the Metropolitan Area House Price Indexes, Five Year average through third quarter 2013, Dubuque's home value increased 9.71 %. Nationwide the increase is only 0.15 %. According to the US Department of Commerce Bureau of Economic Analysis Dubuque has the fastest growing economy in Iowa and one of the top 30 growing economies in the United States. Dubuque was #1 in Iowa for Private Sector Job Growth in Iowa in 2010, 2011 and 2012. Dubuque was also ranked #4 among overall metros with the largest average annual increases in wages and salaries in the 2012's "America's Best Places for a Raise." 10 A 2011 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. Dubuque has a diverse employer base including manufacturing, software, health services, insurance, education and government. The top 10 employers in the area employ less than 20% of the total workforce. This insulates the City from the negative impact on a downturn in any one area of the economy. The City's continual development in its industrial parks, has attracted new industries, but just as importantly retained existing businesses. Dubuque Industrial Center West (DICW) In 1997, the City acquired five farms creating approximately 550 saleable acres in Dubuque Industrial Center West. Over 251 acres have been sold and 24 businesses have located in the DICW, which include 21 local business expansions and 3 new industries. The City completed the last of these five farms and held a ribbon cutting November 2013. The City works with the Greater Dubuque Development Corporation to evaluate sites for future industrial areas. IWI added 30,350 square feet of additional warehouse space in 2013. The Dubuque Technology Park Located on the south side of the City is a 100 -acre park designed to accommodate growing office businesses. Eight businesses have located in the park. Over $100 million has been spent in the downtown area. More than 9,000 people work in the downtown area. Thirteen hundred IBM employees work on five renovated floors of the nine story Roshek Building. Heartland Financial relocated existing staff to the third floor of the building in October 2012, and committed to create 50 new jobs in 2013. In the City's Millwork District, The Schmid Innovation Center, a $28 million private renovation project received two awards of $3 million and $5.9 million in CDBG funds to develop workforce housing. The 72 -unit residential project was completed in September 2012. Nonprofits have moved into the basement space. Several commercial tenants occupy the first floor with a food co -op scheduled for opening spring of 2014. Renovation of 76 residential units in the Novelty Iron Works building has begun. In response to a critical need for affordable housing for seniors and disabled individuals, The Rose of Dubuque assisted living facility opened its doors for occupancy in October 2012. This 70 -unit complex is the first affordable, income qualified facility in Dubuque to also be licensed to offer assisted living services on -site. The Rose of Dubuque has partnered with the City of Dubuque Housing and Community Development Department and enrolled seventeen apartments in the Dubuque project -based voucher program. Commercial development continues with construction of a new 114,000 square foot Blain's Farm & Fleet retail store beginning shortly. New stores recently opened or currently under construction include Dairy Queen, Kwik Stop, Dunkin Donuts, T.J. Maxx, Dubuque Mattress and O'Reilly Auto Parts. On June 1, 2013 the City dedicated and opened the $4 million Port of Dubuque Marina, located in the Ice Harbor. Funding of $3 million was received from Iowa Department of Natural Resources through the U.S. Fish and Wildlife Service Boating Infrastructure (Tier 2) Grant program. Recent community investment in education includes the University of Dubuque's $30 million Performing Arts and Campus Center, completed in 2013. The University has begun construction of a new student residence hall scheduled for completion by fall of 2014 and a new intramural /practice facility. Clarke 11 University completed a $13 million 46,000 square -foot, three story science center. Loras College continues progress on its $4 million Parkway. Phase I completed in 2012. Phase II and III involve moving the College's existing physical plant and constructing a visitor center on the site. Phase IV is to create a retail, dining and lounge site. The dining venue could be a national chain. The completed parkway will include a Veterans' Memorial, fountain, benches and three outdoor performing spaces that will be available to the community for festivals and other events. Completion of the entire parkway is expected in the next couple years. In the spring of 2013, Dubuque Community School district completed the $10 million renovation of Dubuque Senior High School's Dalzell Field. Hempstead High School's $33 million project which consists of a new auditorium, additional gymnasium and two remodeled wings of the existing building is currently underway. The Kennedy elementary school is undergoing a $7 million renovation. UnityPoint Health Finley Hospital has a $42 million renovation starting in early 2014. This 40,000 square foot addition will house the Finley Heart and Vascular Center, and new Emergency and Surgery departments. The new facility will be built on the west side of the current hospital structure facing Grandview Avenue. The City's recent awards and recognition from a variety of sources including: • Dubuque was named a 2013 All- America City by the National Civic League for a community initiative to improve grade -level reading. Dubuque was named in 2007 and 2012 • Dubuque was ranked 14th in the nation in Forbes' annual "Best Small Places" (August 2013) • Forbes placed Dubuque 50th of 179 small cities for the Cost of Doing Business (August 2013) • Site Selection magazine's annual "Top Metropolitan Areas" places Dubuque at 5th in the U.S. in 2013 for metro areas with under 200,000 people • Farmers Insurance listed Dubuque as the 10"' Most secure Small City in the U.S. (2013) • Milken Institute ranked Dubuque as the 10"' Best - Performing Small Metro (2013) • Kiplinger's Personal Finance named Dubuque as One of 10 Great Places to Live (2013) • Area Development magazine's 2012 Leading Locations report ranked Dubuque in five categories: # 16 among the Top 100 Overall Cities, #3 among the Top 20 Midwest Cities, #7 among the Top 50 Small Cities, #6 among the Top 25 Small Cities in Economic Strength Factors, and #8 among the Top 25 Small Cities in "Recession Busting" Factors • The America's Promise Alliance named Dubuque one of its 100 Best places for Young People in 2012, 2011,20110,2008 and 2007 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. Fall 2012 saw construction beginning on the Dubuque Regional Airport New Airline Passenger Terminal Facility and the Aircraft Parking Apron, while continuing the effort to meet current and forecasted passenger demand for Dubuque and the surrounding communities. This project element is scheduled to be completed in 2014. The Dubuque Regional Airport received its 22nd consecutive year of perfect compliance with Federal Aviation Regulation (FAR) Part 139. FAR Part 139 governs safety standards for airfield operations and airfield maintenance at airports served by commercial airlines. 12 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 moving forward. It is expected that approximately 84% of the project costs will be funded by Airport Improvement Program grants issued through the Federal Aviation Administration. Other funds through the state and locally generated passenger facility charges continue to be banked for this project. The City continues to implement components of the Drainage Basin Master Plan adopted in 2001 and amended in 2013. Improvements in the North Fork Catfish Creek Drainage Basin have been addressed with expanded detention along the Northwest Arterial and conveyance improvements along the North Fork Catfish Creek between the Northwest Arterial and Pennsylvania Avenue. The City continues to implement the various phases of the Bee Branch Watershed Flood Mitigation Project to address flooding in the Bee Branch Drainage Basin. The Drainage Basin Master Plan engineering firm's analysis predicted that over 1,155 homes and businesses in the Bee Branch Watershed are at risk of flood damage during heavy rains. Flooding was witnessed firsthand in Dubuque six times since 1999. A subsequent study in 2009 by the Federal Emergency Management Agency (FEMA) identified a flood prone area in the Bee Branch Watershed impacting 1,373 properties. Of the seven Presidential Disaster Declarations issued between 1999 and 2011, six have hit the Bee Branch Watershed particularly hard with estimated damages totaling $69.8 million, or about $5.8 million annually. Construction of the new Carter Road Detention Basin and expansion of the W. 32nd Street Detention Basin is complete. With federal funding from the U.S. Department of Transportation through the Transportation Investment Generating Economic Recovery (TIGER) grant, the City's first pervious pavement street was constructed in the area known as the Historic Millwork District. The City has also started reconstructing alleys with pervious pavement systems, completing eight of the 240 planned in the watershed. Of all the improvements associated with the twelve -phase Bee Branch Watershed Flood Mitigation Project, only the pervious pavement systems appreciably reduce the volume of floodwaters. Construction of the improvements associated with the Lower Bee Branch Creek Restoration began in 2010 and is scheduled to be complete in 2014. As outlined in the Drainage Basin Master Plan and the Bee Branch Creek Alignment Study, the Lower Bee Branch Creek Restoration includes the construction of the 2,500 foot long creek and flood plain area from Kerper Boulevard west and north to the railroad tracks just south of Garfield Avenue, replacing the underground Bee Branch storm sewer. In addition to "day- lighting" and restoring the Bee Branch Creek, this phase included the restoration of the floodplain, dredging of the 16th Street Detention Basin, relocation of utilities, and reworking the street system through the area to accommodate the new flood mitigation facility and the redevelopment of adjacent private property. Creek "day - lighting" required the construction of two bridges, maintenance access to the creek, hike /bike trail, safety and security measures, vegetation, recreational components and overlook areas for better monitoring of the creek. The acquisition of property is required to make room for the "day- lighted" creek and floodplain. Additional phases currently under design include: • Flood Mitigation Gate Replacement, which involves the replacement of the flood mitigation gates, repair of the concrete gate structure and concrete wing walls, installation of check valves on the pump discharges, and installation of new air release valves at the Mississippi River floodwall's Bee Branch pumping station. • Upper Bee Branch Creek Restoration which involves the removal of a buried storm sewer and replacing it with a 2,300 foot long creek and flood plain area from where the Lower Bee Branch Creek Restoration terminates just south of Garfield Avenue north to 24th Street. In addition to the restoration/day - lighting of the creek and floodplain, this phase includes the construction of vehicular and pedestrian bridges, bike/hike trails (that includes replacement of what has to be 13 removed to restore the creek), multiuse maintenance access, utility relocations, vegetation, overlooks, safety and security measures, parking, and education and recreational components. The acquisition of property is required to make room for the "day- lighted" creek and floodplain. The Upper Bee Branch Creek Restoration Project includes the construction of large diameter culverts under the Canadian Pacific (CP) Railroad yard and Garfield Avenue. It also includes property acquisitions (both partial and full), roadway reconfigurations, construction of bridge crossings and an outfall at 24th Street where the existing Bee Branch storm sewer will remain. • 22nd Street Storm Sewer Improvements which involves the construction of a large diameter storm sewer from 22nd Street west across Central Avenue. • Flood Mitigation Maintenance Facility designed to maintain the mile long creek and floodplain areas and ensure they function as designed, when necessary, a Flood Mitigation Maintenance Facility is planned near 16th and Elm Streets in the vicinity of the Lower Bee Branch Creek Restoration. In addition to providing work space for City employees assigned to maintaining the Bee Branch Creek Restoration the facility provides public restrooms which will double as a storm shelter. Parking will also be provided. • North End Storm Sewer Improvements upgrading the storm sewers within the heart of the at risk properties on 25th, 26th, 27th, 28th, 29th, and 30th Streets between White and Elm Streets. • Water Plant Flood Protection to equip the plant with a permanent concrete floodwall along the existing alignment of the property fence line, with the ability to deploy temporary measures at the access point openings. • 17th Street Storm Sewers involving the construction of a large diameter storm sewer from Elm Street to W. Locust Street and Dorgan Place to safely convey more stormwater from the W. Locust Street sub - watershed to the restored Lower Bee Branch Creek. The entire $179 million ($201 million with financing costs) Bee Branch Watershed Flood Mitigation Project is scheduled to be complete over the course of 20 years with the most significant improvements completed in the next six years. The project is being funded through a variety of local, state and federal funding sources as outlined below: Project Funding Sources U.S. DOT TIGER Grant I -Jobs II Grant 1 RECAT Grant U.S. DOT National Scenic Byways Grant State Recreational Trail Grant U.S. Economic Development Administration Dubuque Metropolitan Area Transportation Study U.S. EPA Clean Water SRF Federal Financial Assistance General Obligation Bonds Private Donations Stormwater Utility Fees Sales of Assets and Land State of Iowa Sales Tax Increment 14 Beginning in 2006, the Dubuque City Council identified becoming a more sustainable city as one of its top priorities. They identified the vision that, "Dubuque is a viable, livable and equitable community. We embrace economic prosperity, social /cultural vibrancy, and environmental integrity in order to create a more sustainable legacy for generations to come." 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 the 50% by 2030 Community Climate Action & Resiliency Plan, and a variety of neighborhood - based initiatives. 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 integrates community engagement and education, more energy - efficient ways of operating municipal services, decreased carbon emissions, new job creation, increased financial savings, and a higher quality of life for the entire community. Smarter Sustainable Dubuque provides 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, discards, and health and wellness. 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 and travel habits. A grand opening ceremony was held in October 2013 for the $64 million renovation of the Water and Resource Recovery Center (W &RRC). Construction of the new W &RRC facilities required 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. Final completion of the project is scheduled for February 2014. An additional cogeneration project to generate heat and electricity will be completed by January 2014. The projects are funded by state revolving loan funds repaid with sanitary sewer user fees. The City of Dubuque's Transit Division is working on designing a $12 million intermodal facility and a $4.2 million renovation to the former public works building for use as a bus maintenance center. Part of the project will be funded with an $8 million grant from the U.S. Federal Transit Administration. The intermodal facility will be located in the Millwork District and include a 292 space three level ramp, connecting walkway to bus transfer areas, local transit driveway, intra -city and inter -city buses and taxicabs. The projects are scheduled for completion in 2015. The City's Lead Paint and Healthy Homes Programs, administered through the Housing and Health Departments, are partnering with the Community Foundation of Greater Dubuque in Green and Healthy Homes Initiative. Dubuque's GHHI Program was selected as one of the 16 sites nationally to participate in this initiative, sponsored by the Coalition to End Childhood Lead Poisoning. The goal of the initiative is both to reduce health hazards in home living environments and to transform lives though lifting families out of the cycle of poverty and socio- cultural impoverishment. This is achieved through a multi - department and agency service delivery system, providing hazard mitigation, assessment and referral 15 services in a household - centric approach that eliminates duplication and focuses resources cost - efficiently. 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: • Planned and Managed Growth • Partnering for a Better Dubuque • Improved Connectivity: Transportation and Communications • Economic Prosperity • Social /Cultural Vibrancy • EnvironmentaFEcological Integrity 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, 2013, provided no instances of material weaknesses in internal control over compliance, or significant violations of 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, except for fiduciary fund types which include pension trust funds, private purpose trust funds and agency 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 16 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 fmancial section of this report, the City continues to meet its responsibility for sound fmancial 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 $774,846 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 $871,673 deficit as of June 30, 2013. A 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 $619,859 as of June 30, 2013. All self - insured health plans are certified as actuarially sound and certificates of compliance have been filed with the State of Iowa. Bond Rating. Moody's Investor Service reaffirmed the City's Aal rate on the Series 2012 A, B, C, D, E, F G, H and I 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. The City's revenue bonds are rated Aa3. Moody's provides credit ratings and research covering debt instruments and securities. The purpose of Moody's ratings is to provide investors with a simple system to gauge future relative creditworthiness of securities. The firm uses nine rating classifications to designate least credit risk to greatest credit risk: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, and C. Moody's appends numerical modifiers 1, 2, and 3 to each rating classification. AWARDS AND ACKNOWLEDGEMENTS Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Dubuque, Iowa, for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2012. This was the 25th 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 fmancial 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, 2014. In order to receive this award, a 17 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 8th 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 2009. 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 City Manager Kenneth J. TeKippe, CPA Finance Director 18 ! 1 Planning Services Department 1 Health Services Department 1 Hou ing & Community Development l J l ! 1 Information Services Deoartm ent l 1 CITY OF DUBUQUE ORGANIZATIONAL CHART Library Citizens City Attorney City Council City Clerk 1 Assistant City Manager (2) Personnel Manager Sustainable Community Coordinator Budget Directo Assistant B dget Directo City Manager Airport Public Information Officer Cable TV Geographi Informatio Systems Neighborhood Development Specialist Arts Coordinator Building Services Department ! 1 Economic Development Department Parking Division Transit Division Eme gency Communications Department Finance Department 1 ! 1 Fire Depa tment I 1 Ambulance Services Emergency 1 Human Rights Department I 1 l Training & Workforce Development 1 Human Relations Coordinator Leisure Services Department l Civic enter Recreation Park Grand River Center M ticultural Family Center Public Works Department • Police Department ! Engineering Department Water Department l Water & Resource Recovery Center 19 CITY OF DUBUQUE, IOWA OFFICIALS JUNE 30, 2013 CITY COUNCIL Roy D. Buol Ric W. Jones David T. Resnick Kevin J. Lynch Karla A. Braig Joyce E. Connors Lynn V. Sutton COUNCIL APPOINTED OFFICIALS Michael C. Van Milligen Barry A. Lindahl Crenna M. Brumwell -Sahm Maureen A. Quann Kevin S. Firnstahl DEPARTMENT MANAGERS Robert A. Grierson Therese H. Goodmann Cynthia M. Steinhauser Jenny M. Larson Richard R. Russell Phillip J. Wagner Kenneth J. TeKippe E. Daniel Brown Mary Rose Corrigan Alvin L. Nash 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 — 1st Ward Council Member — 2nd Ward Council Member — 3rd 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 Acting 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 & Resource Recovery Manager 20 Government Finance Officers Association 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, 2012 Executive Director /CEO 21 22 Financial Section June 30, 2013 City of Dubuque, Iowa 23 24 EideBailly CPAs Cu BUSINESS ADVISORS Independent Auditor's Report To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Report on the Financial Statements 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, 2013, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Dubuque Initiatives and Subsidiaries, which represent 79 percent, 71 percent, and 57 percent of the assets, net position, 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 financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements of Dubuque Initiatives and Subsidiaries, a discretely presented component unit, were not audited in accordance with Government Auditing Standards. www.eidebailly.com 3999 Pennsylvania Ave., Ste. 100 1 Dubuque, IA 52002 -2273 1 T 563.556.1790 1 F 563.557.7842 1 EOE 25 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Dubuque, Iowa, as of June 30, 2013, and the respective changes in financial position and, where, applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and the other required supplementary information 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 financial 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 inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquires, 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Dubuque, Iowa's financial statements. 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 Organization, and is also not a required part of the financial statements. 26 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 basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated January 15, 2014, on our consideration of the City of Dubuque, Iowa's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. e-,e,-,, 2 , rs Dubuque, Iowa January 15, 2014 27 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 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, 2013. 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 net position of the City of Dubuque remained constant at $501,045,202 compared to net position of $501,055,013 for fiscal year 2012. • Governmental program revenues decreased $15,354,360 due to lower grant revenue in fiscal year 2013 over fiscal year 2012 along with a program expenses decrease of $2,416,463 from fiscal year 2012. • The City's business type activities program revenues decreased $1,581,318 due to decreased grant revenues along with program expenses decrease of $62,189 from fiscal year 2012. 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 position presents information on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the 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 position changed during the most recent fiscal year. All changes in net position 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/sick leave. 28 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 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. 29 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 The City maintains three individual major governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, tax increment financing 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. 30 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 GOVERNMENT -WIDE FINANCIAL ANALYSIS Net position. As noted earlier, net position may serve as a useful indicator of a government's financial position when observed over time. The analysis that follows focuses on the change in net position for the governmental and business -type activities. The largest part of the City's net position (95.9 %) reflects its investment in capital assets such as land, buildings, infrastructure, machinery, and equipment less any related debt used to acquire those assets that are still outstanding. These capital assets are used to provide services to the citizens and are not available for future spending. CITY OF DUBUQUE'S NET POSITION Governmental Activities Business -type Activities Total 2013 2012 2013 2012 2013 2012 Cunent and other assets $ 101,483,710 $ 103,424,724 $ 24,942,169 $ 27,940,257 $ 126,425,879 $ 131,364,981 Capital assets 379,827,336 373,651,594 244 ,959,531 227,670,280 624,786,867 601,321,874 Total assets 481,311,046 477,076,318 269 ,901,700 255,610,537 751,212,746 732,686,855 Long -tens liabilities 89,354,696 86,116,692 113,695,550 100,869,706 203,050,246 186 ,986,398 Other liabilities 34,780,389 33,765,745 12,336 ,909 10,879,699 47,117,298 44,645,444 Total liabilities 124,135,085 119,882,437 126,032,459 111,749,405 250,167,544 231,631,842 Net Position: Net investment in capital assets 342,046,442 347,890,769 138,498,777 132,237,734 480,545,219 480,128,503 Restricted 23,491,207 26,180,100 6,011,848 957,802 29,503,055 27,137 ,902 Unrestricted (8,361,688) (16,876 ,988) (641,384) 10,665,596 (9,003,072) (6,211,392) Total net position $ 357,175 ,961 $ 357,193,881 $ 143,869,241 $ 143,861,132 $ 501,045,202 $ 501,055,013 Net position of the governmental activities decreased from FY12 by $17,920. Grants and contributions decreased $14,787,547 from FY12 as several large projects were completed in the prior year, including Bee Branch bridges and projects in the Millwork District. Charges for services also decreased $566,813. The largest decrease is in special assessments revenue. Property taxes increased $1,851,940 or 6% of FY12. Local option sales tax and hotel motel taxes combined increased 3% or $354,718. Net position for the business -type activities increased $8,109 over FY12. Grants and contributions decreased $3,397,701 as large projects were completed in prior year. Charges for services increased 7.5% or $1,816,383 over FY12 due to rate increases of 15% on both water and sanitary sewer utilities and a 9% increase in refuse fees. 31 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 A portion of the City's net position (6.7 %) represents resources that are subject to external restrictions on how they may be used. At the close of fiscal year 2013 the City has negative total unrestricted net position. The government - wide negative unrestricted results from the TIF (governmental activities) debt being used to finance capital assets of the business -type activities. Business -type activities negative unrestricted, results from storm water capital projects completed in fiscal year 2012 of which $1,395,000 were covered under the State Revolving Loan fund proceeds received in fiscal year 2014 and sewer fund utilizing debt to cover the extraordinary expenses related to the mercury spill cleanup. Fiscal year 2013, the City is able to report positive balances in total net position, for both the government as a whole and business -type activity. Governmental activities. Taxes are the largest source of governmental revenues with property taxes of $32,668,554 in 2013. Other governmental revenues included gaming of $8,452,298, local option sales taxes of $8,764,787 and $12,272,039 of charges for services. Governmental operating expenses during 2013 totaled $91,951,008. The largest programs were public safety of $28,292,481, public works of $21,607,536, community and economic development of $17,388,720 and culture and recreation of $13,647,178 Business -type activities. Business -type activities increased net position by $8,109 in fiscal year 2013 compared to the fiscal year 2012 increase of $5,337,061. The increase in fiscal year 2012 was primarily due to new Central Street parking ramp and new equipment purchases in both transit and water utility. 32 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 CITY OF DUBUQUE CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Govemmental Activities Business -type Activities Total 2013 2012 2013 2012 2013 2012 Revenues: Program revenues Charges for services $ 12,722,039 $ 13,288,852 $ 25,972,597 $ 24,156,214 $ 38,694,636 $ 37,445,066 Operating grants and contributions 13,995,316 23,013,997 2,264,695 1,579,493 16,260,011 24,593,490 Capital grants and contributions 10,791 ,945 16,560,811 1,240,583 5,323,486 12,032,528 21,884,297 General revenues Property taxes 32,668,554 30,816,614 - - 32,668,554 30,816,614 Local option sales tax 8,764,787 8,459,888 - - 8,764,787 8,459,888 Hotel /motel tax 1 ,953,763 1 ,903 ,944 - - 1 ,953,763 1 ,903 ,944 Utility franchise fees 2,568,347 2,272,481 - - 2,568,347 2,272,481 Gaming 8,452,298 8,785,453 - - 8,452,298 8,785,453 Unrestricted investment eamings 201,153 1 ,529,149 65,351 206,672 266,504 1,735,821 Gain on sale of capital assets 907,122 1,417,048 384,697 84,178 1,291,819 1,501,226 Total revenues 93,025,324 108,048,237 29 ,927,923 31,350,043 122 ,953,247 139,398,280 Expenses: Public safety 28,292,481 26,326,367 - - 28,292,481 26,326,367 Public works 21,607,536 22 ,917,747 - - 21,607,536 22 ,917,747 Health and social services 716,970 913 ,954 - - 716 ,970 913 ,954 Culture and recreation 13,647,178 12,749 ,558 - - 13,647,178 12,749,558 Community and economic development 17,388,720 22,030 ,950 - - 17,388,720 22,030 ,950 General government 6,248,483 6,133 ,983 - - 6,248,483 6,133 ,983 Interest on long -temp debt 4,049,640 3,294 ,912 - - 4,049,640 3,294 ,912 Sewage disposal works - - 9,375,748 9,718,669 9,375,748 9,718,669 Water utility - - 6,817,772 7,410,710 6,817,772 7,410,710 Stonnwater utility - - 3,347,304 2,750,767 3,347,304 2,750,767 Parking facilities - - 3,586,405 3,152,055 3,586,405 3,152,055 America's River Project - - 22,770 22,787 22,770 22,787 Refuse collection - - 3,468,859 3,173,075 3,468,859 3,173,075 Transit system - - 3,492,095 3,629,750 3,492,095 3,629,750 Salt - - 346,066 661,395 346,066 661,395 Total expenses 91 ,951,088 94,367,471 30,457,019 30,519,208 122,408,027 124,886,679 Increase (decrease) in net position before extraordinary item and transfers 1,074,316 13,680,766 (529,096) 830,835 545,220 14,511,601 Extraordinary item - - (555,031) (243,722) (555,031) (243,722) Transfers (1,092,236) (4,749 ,948) 1,092,236 4,749 ,948 - - Increase (decrease) in net position (17,920) 8 ,930,818 8,109 5,337,061 (9,811) 14,267,879 Net position, beginning 357,193,881 348,263,063 143,861,132 138,524,071 501,055,013 486,787,134 Net position, ending $ 357,175 ,961 $ 357,193,881 $ 143,869,241 $ 143,861,132 $ 501,045,202 $ 501,055,013 33 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 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 $69,544,627 at June 30, 2013. $15,669,386 is in non - spendable for inventory, advances to other funds, receivables, and prepaid items. $69,412 is non - spendable endowment corpus. $30,738,046 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 $10,872,172 for capital improvements. $3,434,440 is assigned for capital improvements and equipment. This leaves $8,806,171 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 decreased by $1,647,289 to $18,886,889 due to public safety expenses increases related to MFPRSI and health insurance expenses and Community and Economic Development expenses for the design work at the Dubuque Industrial Center West (DICW). The fund balance of special revenue fund Tax Increment Financing increased by $66,682 to $4,466,316 due to an in increase in property tax revenue and a decrease in expenditures. The fund balance of the capital projects fund General Construction increased by $913,305 to $18,225,839. Due to fewer capital projects expenses in fiscal year 2013 than anticipated. 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 position of the enterprise funds at June 30, 2013, totaled $143,869,241 of which ($641,384) is unrestricted. The net position of the internal service funds decreased by $1,009,623 to ($210,820) due to health insurance claims being larger than anticipated. The unrestricted net position of the internal service funds are ($272,258). 34 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 The Sewer Fund had a decrease of $865,573 for total net position of $37,682,628 at June 30, 2013 primarily due to increase in liabilities for the construction of the Water Resource Recovery Center (WRRC). The fund also experienced an extraordinary loss of $555,031 due to final mercury cleanup activities at the WRRC. The Water Utility had an increase in net position of $487,662 for total net position of $24,742,054, primarily due to new equipment. The Storm Water Utility had an increase in net position of $748,315 primarily due to an increase in improvements other than buildings. Ending net position is $31,038,354. The Parking Facilities had a decrease in net position of $300,847, primarily due to an increase in operating expenses. Ending net position is $38,136,599. Other Enterprise Funds net position decreased by $61,448 for an ending balance of $12,269,606. This was primarily due to an increase in operating expense for Refuse. America's River Project was also moved from a major fund to a nonmajor fund. BUDGETARY HIGHLIGHTS There were two amendments to the City's 2012 -2013 cash basis budget. The first amendment was passed in September 2012 to reflect operating and capital budget carryovers (continuing appropriation authority) from 2012 and amended the FY 2013 budget for operating and capital City Council actions since the beginning of the fiscal year. The second budget amendment was passed in May 2013 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 $48,407,573. 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 $104,718,891 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 $75,551,146 less than the final amended budget, and cash basis expenditures were $168,581,055 less than the final amended budget due primarily to projected capital projects not completed by fiscal year end. 35 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 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, 2013, amounts to $624,786,867 (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. Land Buildings Improvements other than buildings Machinery and equipment Infastrncture Constrnction in progress Accumulated depreciation CAPITAL ASSETS (net of accumulated depreciation) Governmental Activities Business -type Activities Total 2013 2012 2013 2012 17,728,352 $ 17,226,067 $ 82,924,670 $ 81,945,755 133,810,040 94,924,124 259 ,983,418 220,892 ,986 91,529, 793 72,619,054 113,630,172 89,304 ,911 90,018,972 68,654 ,938 128,198T46 105,796;356 - - 213,219,583 210,567,846 2,250,248 63,139,045 36,048 ,982 92,517,639 (90$77,874) (88,892,948) (209,218,204) (199,703,619) 244 ,959,531 $ 227,670,280 $ 624,786,867 $ 601,321,874 2013 2012 $ 65,196,318 $ 64, 719,688 $ 126,173;378 125 ,968,862 22,100;379 16,685,857 38,179,274 37,141,418 213,219,583 210,567,846 33, 798,734 29;378,594 (118,840,330) (110,810,671) $ 379,827;336 $ 373,651,594 $ Major expenditures during 2012 -2013 were for the construction work on the Water and Resource Recovery Center plant, Bee Branch storm water projects, Millwork District projects, and Southwest Arterial. Long -term debt At year end the City had $202,218,341 of debt outstanding. This is an increase of $16,450,694 from June 30, 2012. New debt issued during the current year included general obligation bonds of $15,295,000. Series 2012E proceeds will be used to pay for the cost of Library repairs and improvements, costs associated with grading and road constructions, development of new parks, rehabilitation and improvement of existing City parks and public safety software replacement. Series 2012H will be used to pay the urban renewal projects for the Greater Downtown Urban Renewal District and the Technology Park South District including those costs associated with construction of a rail platform for the intermodal transportation center, Multicultural Family Center repairs and improvements including renovation of the second floor, construction of an Americans with Disability Act (ADA) compliant restroom at 5th and Bluff Streets, utilities extension and construction of a trail in Technology Park South. Proceeds of series 2012F will be used for projects in the Greater Downtown Urban Renewal District including funding development incentives in the Washington Neighborhood Subarea, assistance to property owners in the Greater Downtown Urban Renewal District to make structural changes that make the property more accessible and streetscape improvements for historic districts, and acquisition and installation of equipment, and repairs and improvements for the Mystique Community Ice Center. Series 2012G provided funding to pay costs of refunding and refinancing of General Obligation Bonds Series 2002C. Series 2012I proceeds provided funds to pay costs of refunding and refinancing of certain City indebtedness including General Obligation Bonds 2005 series C, 2006 series B and C, and 2007 series B. Existing debt was refinanced at more favorable rates and to remove bond restrictions on parking debt. 36 CITY OF DUBUQUE, IOWA MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2013 The City also received disbursements from the State Revolving Fund construction loan program of $14,036,422 to fund the sanitary sewer projects. The City made a lease buyout of $1 million for Bowling and Beyond riverfront properties. The City will pay $50,000 annually over twenty years, beginning in fiscal year 2013. The City continues to operate 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 $181,667,654. With $143,302,946 of debt applicable against the capacity, we are utilizing 78.9% 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 3.7 %, a 1.5% decrease from the prior year, and lower than both the State of Iowa's 4.6% rate and 7.3% national rate. The assessed valuation of taxable property, net of exemptions, increased by 4.2% to $2,337,129,000. In fiscal year 2013, the minimum monthly refuse rate increased $.97 to $11.69, sewer rates increased 15 %, water rates increased 15 %, and the storm water monthly fee increased 6.7% to $5.60 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. 37 38 Basic Financial Statements June 30, 2013 City of Dubuque, Iowa 39 CITY OF DUBUQUE, IOWA STATEMENT OF NET POSITION JUNE 30, 2013 Primary Government Component Units Dubuque Metropolitan Dubuque Governmental Business -type Area Solid Initiatives and Activities Activities Total Waste Agency Subsidiaries ASSETS CURRENT ASSETS Cash and pooled cash investments $ 47,174,760 $ 9,861,393 $ 57,036,153 $ 2,331,582 $ 2,051,076 Receivables Property tax Delinquent 202,248 - 202,248 - - Succeeding year 23,952,456 - 23,952,456 - - Accounts and other 1,536,804 2,767,993 4,304,797 276,587 179,588 Special assessments 1,087,855 - 1,087,855 - - Accrued interest 129,661 21,294 150,955 2,812 34,584 Notes 520,391 - 520,391 - 36,322 Intergovernmental 6,272,773 1,205,297 7,478,070 2,517 - Intemal balances 1,527,837 (1,527,837) - - - Inventories 1,019,852 690,683 1,710,535 - 530,251 Prepaid items 300,821 148,041 448,862 1,086 126,139 Restricted cash - - - - 262,007 Total Current Assets 83,725,458 13,166,864 96,892,322 2,614,584 3,219,967 NONCURRENT ASSETS Temporarily restricted cash and investments 2,581,220 11,775,305 14,356,525 4,582,216 983,898 Permanently restricted cash and investments 69,412 - 69,412 - - Notes receivable 15,107,620 - 15,107,620 - 11,021,144 Capital assets Land 65,196,318 17,728,352 82,924,670 2,776,217 131,983 Buildings 126,173,378 133,810,040 259,983,418 65,922 44,509,904 Improvements other than buildings 22,100,379 91,529,793 113,630,172 9,940,887 32,816 Machinery and equipment 38,179,274 90,018,972 128,198,246 3,563,483 - Infrastructure 213,2 19,583 - 213,219,583 - - Construction in progress 33,798,734 2,250,248 36,048,982 - - Accumulated depreciation (118,840,330) (90,377,874) (209,218,204) (8,127,349) (3,602,251) Total Noncurrent Assets 397,585,588 256,734,836 654,320,424 12,801,376 53,077,494 Total Assets 481,3 1 1,046 269,901,700 751,212,746 15,415,960 56,297,461 40 EXHIBIT 1 LIABILITIES CURRENT LIABILITIES Accounts payable Accmed payroll Loans payable Notes payable General obligation bonds payable Revenue bonds payable Tax increment financing bonds payable Accmed compensated absences Accmed interest payable Intergovernmental payable Unearned revenue Succeeding year property tax Other Total Current Liabilities NONCURRENT LIABILITIES Loans payable Notes payable General obligation bonds payable Revenue bonds payable Landfill closure and post closure care Tax increment financing bonds payable Accmed Compensated Absences Net OPEB Liability Total Noncurrent Liabilities Total Liabilities NET POSITION Net investment in capital assets 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 Position See notes to financial statements. Primary Government Component Units Governmental Business -type Activities Activities Dubuque Metropolitan Area Solid Total Waste Agency Dubuque Initiatives and Subsidiaries $ 5,337,605 251,418 97,143 205,867 3,939,938 372,973 291,711 320,664 6,912 $ 7,093,311 113,202 23,041 2,343,660 2,185,062 270,000 42,428 266,205 $ 12,430,916 364,620 120,184 2,549,527 6,125,000 270,000 372,973 334,139 586,869 6,912 23,952,456 - 23,952,456 3,702 3,702 34,780,389 12,336,909 47,117,298 $ 195,915 $ 374,048 13,439 2,215 57,453 647,242 52,990 269,022 1,074,280 5,541,428 286,263 5,827,691 1,030,036 73,071,771 74,101,807 52,577,227 32,736,069 85,313,296 - 5,990,299 5,990,299 21,547,564 21,547,564 5,932,117 1,033,208 6,965,325 2,726,324 577,940 3,304,264 89,354,696 113,695,550 203,050,246 28,590,180 3,834,636 335,034 - 59,719 - 4,229,389 28,590,180 124,135,085 126,032,459 250,167,544 4,498,411 29,664,460 342,046,442 138,498,777 480,545,219 8,219,160 11,835,030 2,140,740 6,011,848 8,152,588 125,576 - 125,576 31,984 31,984 10,974,937 10,974,937 70,403 - 70,403 8,497,363 - 8,497,363 270,146 - 270,146 73,775 - 73,775 69,412 - 69,412 1,236,871 - 1,236,871 (641,384) (9,003,072) (8,361,688) $ 357,175,961 330,306 537,555 1,830,528 14,797,971 $ 143,869,241 $ 501,045,202 $ 10,917,549 $ 26,633,001 41 CITY OF DUBUQUE, IOWA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013 EXHIBIT 2 Functions/Programs Primary government Govemmental Activities: Public safety Public works Health and social services Culture and recreation Community and economic development General government Interest on long -tens debt Total govemmental activities Business -type activities Sewage disposal works Water utility Stonnwater utility Parking facilities Americans River Project Refuse collection Transit system Salt Total business -type activities Total primary govemment Component units DMASWA Dubuque Initiatives and Subsidiaries Total Component Units See notes to financial statements Expenses Program Revenues Net (Expense) Revenue and Changes in Net Position Charges for Services Primary government Operating Capital Grants Grants and and Total Program Govemmental Business -type Contributions Contributions Revenues Activities Activities Component Units Dubuque Metropolitan Dubuque Area Solid Initiatives and Total Waste Agency Subsidiaries $ 28,292,481 $ 2,495,737 $ 902,988 $ 40,733 $ 3,439,458 $(24,853,023) $ 21,607,536 4,472,479 8,222,530 6,025,642 18,720,651 (2,886,885) 716,970 122,156 32,064 154,220 (562,750) 13,647,178 2,488,844 442,164 435,645 3,366,653 (10,280,525) 14,388,720 1,112,713 4,369,814 4,119,554 9,602,081 (7,786,639) 6,248,483 2,030,110 25,756 144,948 2,200,814 (4,047,669) 4,049,640 25,423 25,423 (4,024,217) 91,951,008 12,722,039 13,995,316 10,791,945 37,509,300 (54,441,708) $(24,853,023) $ (2,886,885) (562,750) (10,280,525) (7,786,639) (4,047,669) (4,024,217) (54,441,708) 9,375,748 6,817,772 3,347,304 3,586,405 22,770 3,468,859 3,492,095 346,066 30,457,019 $ 122,408,027 8,924,785 7,946 332,861 9,265,592 6,922,582 4,625 424,976 7,352,183 3,192,256 22,000 348,405 3,562,661 2,883,865 71,399 132,671 3,087,935 3,346,795 - 1,670 3,348,465 307,314 2,158,725 2,466,039 395,000 - 395,000 25,972,597 2,264,695 1,240,583 29,477,875 $ 38,694,636 $ 16,260,011 $ 12,032,528 $ 66,987,175 (110,156) (110,156) 534,411 534,411 215,357 215,357 (498,470) (498,470) (22,770) (22,770) (120,394) (120,394) (1,026,056) (1,026,056) 48,934 48,934 (979,144) (979,144) (54,441,708) (979,144) (55,420,852) 3,922,334 3,542,816 4,396,888 3,665,272 79,088 3,621,904 666,022 4,331,294 $ 8,319,222 $ 7,208,088 $ $ 745,110 $ 7,953,198 General revenues Property taxes Local option sales tax Hotel motel tax Utility franchise fees Gaming Unrestricted investment eamings Gain on disposal of capital assets Extraordinary item mercury clean up Transfers Total General Revenues and Transfers Change in Net Position Net position, beginning ofyear, as restated Net position, ending ofyear (300,430) (65,594) (300,430) (65,594) 32,668,554 - 32,668,554 - - 8,764,787 - 8,764,787 - - 1,953,763 - 1,953,763 - - 2,568,347 - 2,568,347 - - 8,452,298 - 8,452,298 - - 201,153 65,351 266,504 19,564 574,018 907,212 384,697 1,219,819 - - (555,031) (555,031) (1,092,236) 1,092,236 - 54,423,788 987,253 55,411,041 19,564 574,018 (17,920) 8,109 (9,811) (280,866) 508,424 357,193,881 143,861,132 501,055,013 11,198,415 26,124,577 $ 357,175,961 $ 143,869,241 $ 501,045,202 $ 10,917,549 $ 26,633,001 42 CITY OF DUBUQUE, IOWA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2013 EXHIBIT 3 Special Revenue Capital Projects Tax Other Increment General Governmental General Financing Construction Funds Total ASSETS Cash and pooled cash investments $ 9,602,497 $ 2,249,662 $ 18,406,098 $ 15,637,399 $ 45,895,656 Receivables Property tax Delinquent 161,151 - - 41,097 202,248 Succeeding year 18,419,001 - - 5,533,455 23,952,456 Accounts and other 1,268,983 - - 168,821 1,437,804 Special assessments - - - 1,087,855 1,087,855 Accrued interest 39,058 38,914 717 48,378 127,067 Notes 6,095,785 37,000 187,156 9,308,070 15,628,011 Intergovernmental 1,535,278 - 66,084 4,671,411 6,272,773 Due from other funds 1,570,621 - 1,570,621 Inventories 281,531 - - 637,198 918,729 Prepaid items 268,962 - - 31,859 300,821 Restricted cash and pooled cash investments - 2,140,740 509,892 2,650,632 Total Assets $ 39,242,867 $ 4,466,316 $ 18,660,055 $ 37,675,435 $ 100,044,673 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 985,548 $ $ 368,132 $ 2,303,748 $ 3,657,428 Accrued payroll 179,785 - - 40,237 220,022 Intergovernmental payable - - 6,912 6,912 Due to other funds - 279 279 Deferred revenue Succeeding year property tax 18,419,001 - - 5,533,455 23,952,456 Other 771,644 - 66,084 1,825,221 2,662,949 Total Liabilities 20,355,978 - 434,216 9,709,852 30,500,046 FUND BALANCES Nonspendable Endowment corpus - - - 69,412 69,412 Inventory 281,531 - - 637,198 918,729 Long -tertn notes receivable 6,095,785 - 187,156 8,166,895 14,449,836 Prepaid items 268,962 - - 31,859 300,821 Restricted Endowments - - - 73,775 73,775 Library - - - 1,219,622 1,219,622 Debt service - - - 125,576 125,576 Bond ordinance - 2,140,740 - - 2,140,740 Capital improvements - 2,325,576 18,038,683 3,627,109 23,991,368 Franchise agreement - - - 270,146 270,146 Special assessments - - - 15,267 15,267 Claims - - - 1,982 1,982 Iowa Finance Authority Trust - - - 70,403 70,403 Community programs - - - 2,797,183 2,797,183 Employee benefits - - - 31,984 31,984 Committed, capital improvements - - - 10,827,172 10,827,172 Assigned DRA gaming and distribution 3,434,440 3,434,440 Unassigned 8,806,171 8,806,171 Total Fund Balances 18,886,889 4,466,316 18,225,839 27,965,583 69,544,627 Total Liabilities and Fund Balances $ 39,242,867 $ 4,466,316 $ 18,660,055 $ 37,675,435 $ 100,044,673 See notes to financial statements. 43 CITY OF DUBUQUE, IOWA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2013 EXHIBIT 3 -1 Total fund balances - governmental funds $ 69,544,627 Amounts reported for the governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Cost of capital assets Accumulated depreciation $ 498,561,145 (118,795,246) 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 33,698 Special assessments 1,072,588 Other 1,552,961 Intemal 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 intemal service funds are included in governmental activities in the statement of net position. Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Those liabilities consist of: General obligation bonds Tax increment financing bonds Notes payable Loans payable Accrued interest Compensated absences Net OPEB liability (56,517,165) (21,920,537) (1,235,903) (5,638,571) (320,664) (6,223,828) (2,726,324) 379,765, 899 2,659,247 (210,820) (94,582,992) Net position of governmental activities $ 357,175,961 See notes to financial statements. 44 CITY OF DUBUQUE, IOWA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2013 EXHIBIT 4 General Special Revenue Capital Projects Tax Other Increment General Governmental Financing Construction Funds Total REVENUES Taxes $ 26,608,392 $ 9,831,858 $ - $ 9,000,723 $ 45,440,973 Special assessments - - 175,486 175,486 Licenses and pertnits 1,271,771 - - 1,271,771 Intergovernmental 2,785,616 26,602 - 23,768,613 26,580,831 Charges for services 8,590,278 - - 361,901 8,952,179 Fines and forfeits 484,128 - - - 484,128 Investment eamings 222,983 (230,254) 48,698 138,589 180,016 Contributions 357,988 12,166 370,154 Gaming 8,452,298 - - - 8,452,298 Miscellaneous 559,309 7 4,337 752,262 1,315,915 Total Revenues 49,332,763 9,628,213 53,035 34,209,740 93,223,751 EXPENDITURES Current Public safety 26,497,378 - - 9,336 26,506,714 Public works 7,087,746 - - 6,328,362 13,416,108 Health and social services 556,426 - - 124,040 680,466 Culture and recreation 11,005,077 - - 212,942 11,218,019 Community and economic development 4,246,289 4,400,907 - 10,031,300 18,678,496 General government 4,466,825 - - 568,283 5,035,108 Debt service Principal 40,000 283,820 - 2,858,420 3,182,240 Interest and fiscal charges 141,588 206,664 - 3,642,863 3,991,115 Capital projects - - 3,760,803 12,875,895 16,636,698 Total Expenditures 54,041,329 4,891,391 3,760,803 36,651,441 99,344,964 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (4,708,566) 4,736,822 (3,707,768) (2,441,701) (6,121 213) OTHER FINANCING SOURCES (USES) Issuance of debt 565,000 1,152,671 3,218,329 1,641,268 6,577,268 Issuance of refunding debt 1,743,427 3,205,721 4,949,148 Payment to refunded bond escrow agent (1,743,427) (3,205,721) - - (4,949,148) Transfers in 5,479,809 500,000 157,817 9,158,004 15,295,630 Transfers out (3,220,098) (6,322,811) (799,299) (6,638,995) (16,981,203) Insurance recovery 3,060 - - 46,149 49,209 Sale of capital assets 233,506 2,044,226 161,105 2,438,837 Total Other Financing Sources (Uses) 3,061,277 (4,670,140) 4,621,073 4,367,531 7,379,741 NET CHANGE IN FUND BALANCES (1,647,289) 66,682 913,305 1,925,830 1,258,528 FUND BALANCES, BEGINNING FUND BALANCES, ENDING See notes to financial statements. 20,534,178 4,399,634 17,312,534 26,039,753 68,286,099 $ 18,886,889 $ 4,466,316 $ 18,225,839 $ 27,965,583 $ 69,544,627 45 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, 2013 EXHIBIT 4 -1 Net change in fund balances - total governmental funds $ 1,258,528 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 $ 15,652,377 Transfers of capital assets from enterprise funds 600,033 Transfers of capital assets to enterprise funds (2,562) Contributions from developers and federal government 430,850 Depreciation expense (8,995,981) 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 position differs 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 (decreased) by these amounts this year: Property tax 7,304 Special assessments 525,222 Other (2,139,271) Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long -term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but it reduces long -term liabilities in the statement of net position 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 $ (11,526,416) Debt repayments 3,182,240 Payment to refunded bond escrow 4,949,148 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 Increase in accrued interest 9,151 Amortization of bond discount/premium (67,676) Increase in compensated absences (857,784) Increase in net OPEB liability (494,506) Total additional expenses 7,684,717 (1,538,954) (1,606,745) (3,395,028) (1,410,815) Internal service funds are used by management to charge the costs of certain activities to individual funds. The change in net position of the internal service funds is reported with governmental activities. (1,009,623) Change in net position of governmental activities $ (17,920) See notes to financial statements. 46 ouji ' 1 0 r7-17777 -L.i ! rn i (r777777, El Limo sl Id r i /1 _ ;;;;,„,,,o/ iiiiE71 r�-ii " rM1111a1111111111110s]I _.i11 1 CITY OF DUBUQUE, IOWA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2013 ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Accounts Accrued interest Intergovemmental Inventories Prepaid items Total Current Assets NONCURRENT ASSETS Restricted cash and pooled cash investments Capital assets Land Buildings Improvements to other than buildings Machinery and equipment Constmction in progress Accumulated depreciation Net Capital Assets Total Noncurrent Assets Total Assets Business -type Activities- Enterprise Funds Sewage Disposal Works Water Utility Stormwater Utility $ 5,624,338 $ 2,423,431 $ 1,050,400 821,573 11,405 6,310 114,682 148,166 690,683 141,668 335,454 21,804 6,800,825 4,231,831 357,258 2,971,742 167,855 70,471,058 38,147,147 34,919,059 593,128 (43,481,980) 100,816,267 103,788,009 $ 110,588,834 3,887,502 59,898 8,403,073 761,957 44,915,125 598,601 (21,881,559) 32,857,095 36,744,597 $ 40,976,428 15,835,134 49,979,810 1,016,891 51,889 (10,010,402) 56,873,322 56,873,322 $ 57,230,580 48 EXHIBIT 5 Business -type Activities - Enterprise Funds Parking Facilities Other Enterprise Funds Total Governmental Activities - Internal Service Funds $ 809,379 $ 1,004,245 $ 9,861,393 141,397 419,169 2,767,993 2,226 1,353 21,294 - 920,645 1,205,297 - - 690,683 6,373 - 148,041 959,375 2,345,412 14,694,701 $ 1,279,104 99,000 2,594 101,123 1,481,821 746,215 4,169,846 1,629,465 36,000 52,872,887 2,063,022 2,396,647 244,232 1,944,827 7,223,070 - 1,006,630 (11,580,660) (3,423,273) 47,263,166 7,149,681 48, 009,381 11,319,5 27 11,775,305 17,728,352 133,810,040 91,529,793 90,018,972 2,250,248 (90,377,874) 244,959,531 256,734,836 $ 48,968,756 $ 13,664,939 $ 271,429,537 106,521 (45,084) 61,437 61,437 $ 1,543,258 (Continued) 49 CITY OF DUBUQUE, IOWA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2013 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 Loans payable General obligation bonds payable Revenue bonds payable Capital loan notes payable Accrued compensated absences Net OPEB Liability Total Noncurrent Liabilities Total Liabilities NET POSITION Net investment in capital assets Restricted by bond ordinance /development agreement Unrestricted Total Net Position See notes to financial statements. Business -type Activities- Enterprise Funds Sewage Disposal Works Water Utility Stormwater Utility $ 4,314,506 21,590 308,136 1,916,172 31,450 113,280 6,705,134 $ 982,879 28,620 357,975 270,000 161,500 4,962 37,555 1,843,491 $ 1,070,706 3,873 800,329 265,988 608 69,630 1,501,332 3,712,466 4,551,603 61,188,249 310,251 150,969 4,419,046 5,990,299 3,512,140 306,360 163,038 14,066,168 8,371,382 9,103 33,107 66,201,072 14,390,883 22,479,760 72,906,206 16,234,374 26,192,226 38,453,492 320,859 (1,091,723) $ 37,682,628 20,804,562 1,229,076 2,708,416 $ 24,742,054 35,100,906 (4,062,552) $ 31,038,354 50 EXHIBIT 5 (continued) Business -type Activities - Enterprise Funds Parking Other Enterprise Facilities Funds Total Governmental Activities - Internal Service Funds $ 20,661 $ 704,559 $ 7,093,311 $ 1,680,177 9,024 50,095 113,202 31,396 23,041 - 23,041 714,210 4,412 2,185,062 - - 270,000 - - 2,343,660 3,193 2,215 42,428 45,475 265 266,205 - 26,505 1,527,837 42,505 815,604 788,051 13,864,746 1,754,078 286,263 - 286,263 9,604,614 94,638 32,736,069 - - 5,990,299 - - 73,071,771 70,476 337,018 1,033,208 55,200 175,626 577,940 10,016,553 607,282 113,695,550 10,832,157 1,395,333 127,560,296 1,754,078 37,089,186 7,050,631 138,498,777 61,438 292,067 4,169,846 6,011,848 - 755,346 1,049,129 (641,384) (272,258) $ 38,136,599 $ 12,269,606 $ 143,869,241 $ (210,820) 51 CITY OF DUBUQUE, IOWA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2013 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Intergovernmental Investment earnings Contributions Interest expense Gain on disposal of assets Net Nonoperating Revenues (Expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS, EXTRAORDINARY ITEMS AND TRANSFERS CAPITAL CONTRIBUTIONS EXTRAORDINARY ITEM, MERCURY CLEANUP TRANSFERS IN TRANSFERS OUT CHANGE IN NET POSITION NET POSITION, BEGINNING NET POSITION, ENDING See notes to financial statements. Business -type Activities- Enterprise Funds Sewage Disposal Works Water Utility Stormwater Utility $ 8,743,467 181,318 8,924,785 $ 6,919,955 2,627 6,922,582 $ 3,170,948 21,308 3,192,256 3,333,236 586,077 470,462 1,607,598 115,872 1,367,579 2,421,990 631,368 172,342 2,093,134 71,698 912,924 869,399 4,044 52,431 1,082,281 10,511 449,091 7,480,824 6,303,456 2,467,757 1,443,961 619,126 724,499 31,056 25,979 7,946 (1,894,924) 7,131 2,714 21,384 4,625 (514,316) 19,254 63,039 2,114 22,000 (879,547) 336,358 (1,822 812) (466,339) (456,036) (378,851) 301,805 (555,031) 180,120 (413,616) (865,573) 38,548,201 $ 37,682,628 152,787 422,262 72,959 (160,346) 487,662 24,254,392 $ 24,742,054 268,463 285,366 275,741 (81,255) 748,315 30,290,039 $ 31,038,354 52 EXHIBIT 6 Business -type Activities- Enterprise Funds Other Parking Enteiprise Facilities Funds Total Govemmental Activities - Intemal Service Funds $ 2,648,854 $ 3,916,251 $ 25,399,475 $ 12,709,189 235,011 132,858 573,122 37,530 2,883,865 4,049,109 25,972,597 12,746,719 925,995 3,866,030 11,416,650 2,897,264 260,795 77,127 1,559,411 26,711 214,770 544,942 1,454,947 40,928 607,404 2,091,621 7,482,038 10,670,092 55,366 63,907 317,354 134,941 1,051,439 682,919 4,463,952 10,738 3,115,769 7,326,546 26,694,352 13,780,674 (231,904) (3,277,437) (721,755) (1,033,955) 132,671 2,126,309 2,355,789 - 15,874 65,351 21,137 71,399 34,086 140,056 - (470,636) (3,244) (3,762,667) - - 24,514 387,257 7,329 (266,566) 2,197,539 (814,214) 28,466 (498,470) (1,079,898) (1,535,969) (1,005,489) - - 1,009,433 - - (555,031) 197,623 1,393,045 2,119,488 - (374, 595) (1,029,812) (4,134) (300,847) (61,448) 8,109 (1,009,623) 38,437,446 12,331,054 143,861,132 798,803 $ 38,136,599 $ 12,269,606 $ 143,869,241 $ (210,820) 53 CITY OF DUBUQUE, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2013 Business -type Activities- Sewage Disposal Water Stonnwater Parking Works Utility Utility Facilities CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 9,934,117 $ 6,867,489 $ 3,175,482 $ 2,661,764 Cash payments to suppliers for goods and services (2,961,600) (2,093,843) (1,286,616) (1,135,944) Cash payments to employees for services (3,259,011) (2,376,098) (862,527) (900,216) Other operating receipts 181,318 2,627 21,308 235,011 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 3,894,824 2,400,175 1,047,647 860,615 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 180,120 Transfers to other funds (20,152) Proceeds from interfund balances Payment of interfund balances Intergovernmental grant proceeds - Payments for extraordinary item (555,031) NET CASH PROVIDED BY (USED FOR) NONCAPITAL FINANCING ACTIVITIES (395,063) 70,397 (56,465) 13,932 275,741 (35,032) 1,501,332 197,623 1,742,041 197,623 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets 7,131 19,254 336,358 - Acquisitionandconstructionofcapitalassets (14,577,314) (2,104,277) (2,666,088) (449,102) Proceeds from issuance of debt 14,691,663 1,643,150 134,342 2,335,852 Payment of debt (363,155) (1,617,114) (1,010,655) (2,822,400) Interest paid (1,908,135) (520,659) (880,518) (474,026) Contributions 7,946 4,625 22,000 71,399 Intergovernmental grant proceeds 41,235 132,671 NET CASH PROVIDED BY (USED FOR) CAPITAL AND RELATED FINANCING ACTIVITIES (2,141,864) (2,575,021) (4,023,326) (1,205,606) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 26,535 22,159 5,583 2,013 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING 1,384,432 (138,755) (1,228,055) (145,355) 7,211,648 6,449,688 1,228,055 1,700,949 $ 8,596,080 $ 6,310,933 $ - $ 1,555,594 54 EXHIBIT 7 Enterprise Funds Other Enterprise Funds Total Governmental Activities - Internal Service Funds $ 3,835,963 $ 26,474,815 $ 12,628,598 (2,129,540) (9,607,543) (10,762,445) (3,781,564) (11,179,416) (2,897,478) 132,858 573,122 37,530 (1,942,283) 6,260,978 (993,795) 1,393,045 2,116,926 - (374,595) (429,779) (4,134) - 1,501,332 36,078 (115,903) (172,368) 1,876,051 1,876,051 (555,031) 2,778,598 4,337,131 31,944 20,944 383,687 7,329 (1,540,890) (21,337,671) (40,717) 18,805,007 (4,385) (5,817,709) - (3,286) (3,786,624) - 34,086 140,056 - 173,906 - (1,493,531) (11,439,348) (33,388) 17,086 73,376 20,047 (640,130) (767,863) (975,192) 5,814,221 22,404,561 2,254,296 $ 5,174,091 $ 21,636,698 $ 1,279,104 (Continued) 55 CITY OF DUBUQUE, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2013 Business -type Activities - Sewage Disposal Water Stonnwater Parking Works Utility Utility Facilities RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss) $ 1,443,961 $ 619,126 $ 724,499 $ (231,904) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities Depreciation 1,367,579 912,924 449,091 1,051,439 Change in assets and liabilities (Increase) decrease in receivables 1,190,650 (52,466) 4,534 12,910 Decrease in inventories and prepaid items 131,375 - (6,373) Increase (decrease) in accounts payable (181,591) 743,324 (137,349) 8,764 Increase in accrued liabilities 49,667 16,869 174 15,733 Increase in net OPEB liability 24,558 29,023 6,698 10,046 Total Adjustments 2,450,863 1,781,049 323,148 1,092,519 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES $ 3,894,824 $ 2,400,175 $ 1,047,647 $ 860,615 Contribution of capital assets from outside sources $ 301,805 $ 419,700 $ 285,366 $ Contributions of capital assets to Governmental Activities $ 393,464 $ 160,346 $ 46,223 $ Contributions of capital assets from Governmental Activities $ - $ 2,562 $ - $ See notes to financial statements. 56 EXHIBIT 7 (Continued) Enterprise Funds Other Enterprise Funds $ (3,277,437) $ Total Governmental Activities - Intemal Service Funds 721,755 $ (1,033,955) 682,919 4,463,952 10,738 (80,288) 1,075,340 (80,592) 125,002 (23,154) 648,057 1,081,205 133,382 55,443 137,886 (214) 29,023 99,348 - 1,335,154 6,982,733 40,160 $ (1,942,283) $ 6,260,978 $ (993,795) $ $ 1,006,871 $ $ $ 600,033 $ $ $ 2,562 $ 57 CITY OF DUBUQUE, IOWA STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUNDS JUNE 30, 2013 EXHIBIT 8 Agency Funds ASSETS Cash and pooled cash investments $ 840,395 Accounts receivable 52,053 Accrued interest 950 Total Assets $ 893,398 LIABILITIES Accounts Payable Due to other agency Total Liabilities See notes to financial statements. 178 $ 893,220 $ 893,398 58 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 The notes to financial statements contain a summary of significant accounting policies and other notes considered necessary for an understanding of the fmancial 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 Post Closure Care 14. Leases Where City is Lessor 15. Subsequent Events 16. Prospective Accounting Pronouncements 17. Prior Period Adjustment - Dubuque Initiatives 59 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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 fmancial 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, 2013, $621,504 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(e)(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 13th 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 60 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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 position 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 fmancial 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. 61 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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 Tax Increment Financing Fund is used to account for the receipt of property taxes, for the payment of projects within the tax increment fmancing district, and for the payment of remaining principal and interest costs on the tax increment financing districts' long -term debt service. The General Construction Fund is used to account for the resources and costs related to nonassignable capital improvements. The City reports the following major proprietary funds: The Sewage Disposal Works Fund is used to account for the operations of the City's sewage disposal works and services. The Water Utility Fund is used to account for the operations of the City's water facilities and services. The Stormwater Utility Fund is used to account for the operations of the City's stormwater sery ices. The Parking Facilities Fund is used to account for the operations of the City -owned parking ramps and other parking facilities. 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. 62 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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." 63 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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, 2013, 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. On 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 determined 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 statement of net position 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. 64 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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 agreement, the City's cable television franchise agreement, or 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 position and in the proprietary funds statement of net position. 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 one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repair 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 with twenty years or more of service are paid 100% of their accrued sick leave balance over a five year period. 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. 65 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Long -Term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. 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 refunding's. In the fund fmancial 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 Position/Fund Balance The Dubuque Metropolitan Area Solid Waste Agency's restricted net position represents 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 position restricted for minority interest is calculated at 22.7% of unrestricted net position, 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 position is displayed in three components as follows: • Net investment in capital assets - 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 investment in capital assets excludes unspent debt proceeds. Unspent debt proceeds were $19,874,843 for the governmental activities and $7,494,908 for business -type activities. • Restricted - This consists of net position that is legally restricted by outside parties or by law through constitutional provisions or enabling legislation. Net position restricted through enabling legislation as of June 30, 2013 consists of $125,576 for debt service and $31,984 for employee benefits. All other restrictions are by outside parties through grants, debt agreements or donors. • Unrestricted - This consists of net position that does not meet the definition of restricted or net investment in capital assets. 66 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 by resolution 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 $4,363,273 for fiscal year 2013. 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. Budgets and Budgetary Accounting The budgetary comparison and related disclosures are reported as Required Supplementary Information. Other Significant Accounting Policies Other significant accounting policies are set forth in the financial statements and the notes thereto. 67 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 2 — DEFICIT FUND EQUITY The following funds have deficit net position amounts as of June 30, 2013: Internal Service General Service $ 26,395 Workers' Compensation Reserve $ 871,673 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 $14,221 for the City and $800 for the Dubuque Metropolitan Area Solid Waste Agency. Deposits. At year -end, the City's carrying amount of deposits was $42,171,018, and the bank balance was $44,658,501 The City's deposits in banks at June 30, 2013, 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 $6,912,998, and the bank balance was $7,051,727. The Agency's deposits in banks at June 30, 2013, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. 68 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 — CASH ON HAND, DEPOSITS, AND INVESTMENTS (continued) Investments. As of June 30, 2013, the City had the following investments and maturities. (The City assumes callable bonds will not be called): Investment Maturities (In Years) More than Investment Type Less Than 1 1 to 5 6 to 10 10 Total Money Market Funds - U.S. Treasury $ 1,099,522 $ 1,222,483 $ 244,199 $ - $ 2,566,204 U.S. Treasury Securities 387,520 8,962,655 - 2,503,157 11,853,332 Federal Agency Obligations 1,762,940 7,416,581 2,426,174 4,001,521 15,607,216 Corporate Stock 90,494 - - - 90,494 $ 3,340,476 $ 17,601,719 $ 2,670,373 $ 6,504,678 $ 30,117,246 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. 69 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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, 2013. A reconciliation of cash and investments as shown on the government -wide statement of net position for the primary government and statement of fiduciary assets and liabilities follows: Cash on hand $ 14,221 Carrying amount of deposits 42,171,018 Carrying amount of investments 30,117,246 Total $ 72,302,485 Government -wide Cash and pooled cash investments $ 57,036,153 Cash and pooled cash investments - temporarily restricted 14,356,525 Cash and pooled cash investments - permanently restricted 69,412 Fiduciary Cash and pooled cash investments 840,395 Total $ 72,302,485 A reconciliation of cash and investments as shown on the government -wide statement of net position for the Dubuque Metropolitan Solid Waste Agency follows: Cash on hand $ 800 Carrying amount of deposits 6,912,998 Total $ 6,913,798 Cash and pooled cash investments $ 2,331,582 Cash and pooled cash investments - temporarily restricted 4,582,216 Total $ 6,913,798 A reconciliation of cash and investments as shown on the government -wide statement of net position for the Dubuque Initiatives and Subsidiaries (December 31, 2012) follows: Deposits $ 940,798 Repurchase agreement 1,372,285 Beneficial interest in assets held by others 983,898 Total $ 3,296,981 Cash and pooled cash investments $ 2,051,076 Cash and pooled cash investments- restricted 262,007 Cash and pooled cash investments - temporarily restricted 983,898 Total $ 3,296,981 70 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 — NOTES RECEIVABLE At December 30, 2012, Dubuque Initiatives and Subsidiaries had the following notes receivable: Lower Main Development, 4.00 %, unsecured, matures August 2018 $ 86,906 City of Dubuque, 5.00 %, unsecured, matures July 2023 309,303 Roshek Building Investment Fund, LLC, 4.74 %, collateralized by a pledge agreement, matures June 2039 5,366,873 Roshek Building Investment Fund, LLC, 4.74 %, collateralized by a pledge agreement, matures June 2039 5,294,384 Total notes receivable 11,057,466 Less: current maturities (36,322) Noncurrent portion 11 021,144 NOTE 5 — INTERFUND BALANCES AND TRANSFERS Interfund balances at June 30, 2013, include amounts due to /from other funds and advances due to /from other funds. Interfund balances are as follows: Due From Other Funds Due To Other Funds Governmental activities: General Fund $ 1,570,621 $ Nonmajor 279 Internal Service 42,505 Business -type activities: Stormwater Utility 1,501,332 Nonmajor 26,505 $ 1,570,621 $ 1,570,621 These balances result from a time lag between the date that 1) the internal service funds goods and services are provided or reimbursement occurs, 2) transactions are recorded in the accounting system and 3) payments between funds are made. 71 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 5 — INTERFUND BALANCES AND TRANSFERS (continued) Interfund transfers for the year ended June 30, 2013, consisted of the following: Transfer to General $ Taxlncrenent Financing General construction Transfers From Tax Sanitary Increment General Nonmjor Sewer General Fine cing Construction Govemmental Utility 622,698 $ 243,000 $ 4,609,977 $ - $ - 500,000 - - Nonmajor governmental 1,609,163 5,502,490 Sewage disposal works - Water utility - - Stomwateutility 274,189 - Parking facilities - 197,623 Nonmajor enterprise 1,336,746 - $ 3,220,098 $ 6,322,811 $ Transfer of capi Transfer of capi Total 56,299 Interval Parking Nonmajor Service Ramps Enterprise Fund 157,817 - - 1,671,756 - - 180,120 - - 17,775 20,152 35,032 1,552 - - 374.595 $ 4,134 799,299 $ 6,638,997 $ 20,152 $ 35,032 $ 374,595 $ 4,13 sets to govemmental act v ities sets to business-type activities Total $ 5,479,809 500,000 157,817 9,158,004 180,120 72,959 275,741 197,623 1,393,045 $ 17,415,118 600,033 2,562 $ 18,017,713 In the fund financial statements, total transfers out of $18,017,713 are greater than total transfers in of $17,415,118 because of the treatment of transfers of capital assets to the governmental activities capital assets. During the year, capital assets related to Sewer, Water and Stormwater with a book value of $393,464, $160,346, and $46,233, respectively, were transferred to governmental activities capital assets. Net capital assets of $2,562 were transferred from governmental activities capital assets to water. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of fmancial resources. However, the Sewage Disposal Works, Water, and Stormwater 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 fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, and (4) fund capital projects. 72 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 6 — CAPITAL ASSETS Capital asset activity for the year ended June 30, 2013, was as follows: Primary Government: Governmental activities: Capital assets, not being depreciated: Land Construction in progress Total Capital assets, not being depreciated Beginning Transfers Transfers Ending Balance In Out Increases Decreases Balance $ 64,719,688 $ 29,378,594 1,985,350 $ (1,508,720) $ 14,380,739 (9,960,599) 65,196,318 33,798,734 94,098,282 16,366,089 (11,469,319) 98 ,995,052 Capital assets, being depreciated: Buildings 125 ,968,862 - - 204,516 - 126,173,378 Improvements other than buildings 16,685,857 - - 5,414,522 - 22,100,379 Machinery and equipment 37,141,418 14,300 (15,368) 2,033,412 (994,488) 38,179,274 Infrastructure 210,567,846 585,733 - 2,066,004 - 213,219,583 Total capital assets, being depreciated 390,363 ,983 600,033 (15,368) 9,718,454 (994,488) 399,672,614 Less accumulated depreciation for: Buildings (29,906,409) - - (2,190,650) - (32,097,059) Improvements other than buildings (7,092,726) - - (557,699) - (7,650,425) Machinery and equipment (16,952,522) - 12,806 (2,701,301) 964,254 (18,676,763) Infrastructure (56,859,014) - - (3,557,069) - (60,416,083) Total accumulated depreciation (110,810,671) - 12,806 (9,006,719) 964,254 (118,840,330) Total capital assets, being depreciated, net Governmental activities capital assets, net 279,553,312 600,033 (2,562) 711,735 (30,234) 280,832,284 $ 373,651,594 $ 600,033 $ (2,562) $ 17,077,824 $ (11,499,553) $ 379,827,336 73 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 6 — CAPITAL ASSETS (continued) Business -type activities: Capital assets, not being depreciated: Land Construction in progress Total Capital assets, not being depreciated Beginning Transfers Transfers Ending Balance In Out Increases Decreases Balance 17,226,067 $ 63,139,045 - S (585,733) 502,285 $ 21,209,681 - S 17,728,352 (81,512,745) 2,250,248 80,365,112 (585,733) 21,711,966 (81,512,745) 19 ,978,600 Capital assets, being depreciated: Buildings 94 ,924,124 Improvements other than buildings 72,619,054 Machinery and equipment 68,654 ,938 Total capital assets, being depreciated 236,198,116 38,885 ,916 - 133,810,040 18 ,910,739 - 91,529,793 15,368 (14,300) 24,357,361 (2,994,394) 90,018 ,973 15,368 (14,300) 82,154,016 (2,994,394) 315,358,806 Less accumulated depreciation for: Buildings (42,722,425) - - (1,217,237) - (43,939,662) Improvements other than buildings (21,773,728) - - (1,292,625) - (23,066,353) Machinery and equipment (24,396,795) (12,806) - (1,954,090) 2 ,991,832 (23,371,859) Total accumulated depreciation (88,892,948) (12,806) - (4,463,952) 2 ,991,832 (90,377,874) Total capital assets, being depreciated, net Business -type activities capital assets, net 147,305,168 2,562 (14,300) 77,690,064 (2,562) 224 ,980 ,932 $ 227,670,280 $ 2,562 $ (600,033) $ 99,402,030 $ (81,515,307) $ 244 ,959,532 74 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 6 — CAPITAL ASSETS (continued) Depreciation expense was charged to functions /programs for the primary government as follows: Governmental activities: Public safety $ 713,656 Public works 5,276,792 Health and social services 6,685 Culture and recreation 2,088,178 Community and economic development 54,944 General government 855,726 Capital assets held by the government's internal service funds are charged to various functions based on their usage of their assets 10,738 Total depreciation expense - governmental activities $ 9,006,719 Business -type activities: Sewage disposal works $ 1,367,579 Water utility 912,924 Stormwater utility 449,091 Parking facilities 1,051,439 Refuse collection 171,141 Salt 4,762 Transit system 507,016 Total depreciation expense - business -type activities $ 4,463,952 75 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 6 — CAPITAL ASSETS (continued) Component Unit: Capital assets, not being depreciated: Land Construction in progress Total Capital assets, not being depreciated Beginning Transfers Transfers Ending Balance In Out Increases Decreases Balance 2,776,217 $ - $ - $ 2,776,217 299,300 - - 3,049,103 (3,348,403) - 3,075,517 - - 3,049,103 (3,348,403) 2,776,217 Capital assets, being depreciated: Buildings 65,922 - - - - 65,922 Improvements other than buildings 6,364 ,906 - - 3,575 ,981 - 9 ,940,887 Machinery and equipment 3 ,909,302 - - 123 ,904 (469,723) 3,563,483 Total capital assets, being depreciated 10,340,130 - - 3,699,885 (469,723) 13,570,292 Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net 148,663) - - (719) - 149,382) (5,847,2351 (2,089,920) (246,712) 1363,823) 469,723 (6,093,947) (1,984,020) (7,985,818) (611,254) 469,723 (8,127,349) 2,354,312 - - 3,088,631 - 5,442 ,943 Dubuque Metropolitan Area Solid Waste, capital assets $ 5,429,829 $ 6,137,734 $ (3,348,403) $ 8,219,160 Depreciation expense of $611,254 was charged to the Dubuque Metropolitan Area Solid Waste Agency. 76 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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 $88,000,000. During Fiscal Year 2013, the City issued $7,285,000 to advance refund four outstanding issuances. The City advance refunded the 2005 series C, 2006 series B and C, and 2007 series B to reduce debt service payments over 9 years by $475,640 and to obtain an economic gain (difference between the present value of the debt service payments on the old and new debt) of $337,953. During Fiscal Year 2013, the City issued $8,010,000 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, 2013, are as follows: Purpose Corporate purpose Series 2003 Corporate purpose Series 2005 Corporate purpose Series 2006A Corporate purpose Series 2007A Corporate purpose Series 2008A Corporate purpose Series 2008B Corporate purpose (taxable) Series 2008C Corporate purpose (taxable) Series 2009A Corporate purpose (taxable) Series 2009B Refunding Series 2009C Corporate purpose and refunding Series 2010A Corporate purpose Series 2010B Corporate purpose Series 2010C Corporate purpose Series 2011A Corporate purpose (taxable) Series 2011B Corporate purpose Series 2012A Corporate purpose and refund Series 2012B Corporate purpose (taxable) Series 2012C Corporate purpose Series 2012D Corporate purpose Series 2012E Corporate purpose (taxable) Series 2012F Corporate purpose and refund Series 2012G Corporate purpose Series 2012H Corporate purpose (taxable) and refund Series 2012I Date of Issue 10/15/2003 04/18/2005 04/03/2006 12/01/2007 11/04/2008 11/04/2008 11/04/2008 11/10/2009 11/10/2009 11/10/2009 08/30/2010 08/30/2010 08/30/2010 09/01/2011 09/01/2011 03/15/2012 03/15/2012 06/28/2012 06/28/2012 12/12/2012 12/10/2012 11/28/2012 12/10/2012 12/04/2013 Maturity Dates 06/01/04- 06/01/23 06/01/06- 06/01/24 06/01/07- 06/01/25 06/01/09- 06/01/17 Amount Amount Interest Originally Outstanding Rates Issued End of Year 3.40 -4.75 % $ 2,110,000 $ 1,230,000 3.40 -5.00 9,015,000 4,500,000 3.80 -4.20 2,900,000 2,105,000 3.45 -3.65 1,055,000 510,000 06/01/09- 06/01/28 3.75 -4.80 3,885,000 3,200,000 06/01/09- 06/01/23 3.75 -4.25 3,290,000 2,420,000 06/01/09- 06/01/18 5.25 -5.50 2,465,000 1,895,000 06/01/11- 06/01/29 1.90 -5.60 2,935,000 2,560,000 06/01/11- 06/01/29 1.50 -5.50 11,175,000 9,805,000 06/01/10- 06/01/21 2.00 -4.00 8,885,000 6,185,000 06/01/11-06/01/30 06/01/12- 06/01/30 06/01/12- 06/01/30 06/01/12- 06/01/31 2.00 -3.00 4,470,000 3,995,000 1.00 -4.15 2,675,000 2,495,000 2.00 -3.00 2,825,000 2,595,000 2.00 -4.00 6,330,000 6,070,000 06/01/13- 06/01/26 2.25 -4.35 1,590,000 1,490,000 06/01/14- 06/01/31 2.00 -3.00 4,380,000 4,380,000 06/01/13- 06/01/31 2.00 -3.13 7,495,000 7,420,000 06/01/14- 06/01/32 2.00 -3.90 6,965,000 6,965,000 06/01/14- 06/01/32 2.00 -3.46 7,175,000 7,175,000 06/01/14- 06/01/32 2.00 -3.00 3,640,000 3,640,000 06/01/14-06/01/22 1.00 -2.20 1,035,000 1,035,000 06/01/14- 06/01/17 1.00 -1.25 950,000 765,000 06/01/15- 06/01/32 2.00 -3.00 2,385,000 2,385,000 06/01/13- 06/01/21 0.30 -2.20 7,285,000 6,285,000 $ 106,915,000 $ 91,105,000 77 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 7 — LONG-TERM DEBT (continued) Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year June 30 2014 2015 2016 2017 2018 2019 -2023 2024 -2028 2029 -2032 Total Governmental Activities Interest $ 1,743,996 1,645,038 1,535,602 1,414,114 1,274,461 4,391,207 2,240,679 475,264 $ 14,720,361 Principal $ 3,939,938 4,329,469 4,395,968 4,566,928 4,717,280 17,170,155 10,541,352 6,460,932 $ 56,122,022 Business -type Activities Interest $ 1,262,022 1,207,286 1,149,870 1,084,171 1,013,154 3,977,825 1,995,354 288,952 $ 11,978,634 Principal $ 2,185,062 2,240,531 2,294,032 2,363,072 2,082,720 10,369,956 9,643,648 3,803,957 $ 34,982,978 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. Tax increment fmancing bonds outstanding at June 30, 2013, are as follows: Amount Amount Date of Interest Originally Outstanding Current Purpose Issue Maturity Dates Rates Issued End of Year Portion Vessel Systems 12/31/03 12/30/05- 06/30/15 8.0% $ 140,000 $ 37,335 $ 17,973 Diamond Jo Parking Ramp 10/16/07 06/01/11 - 06/01/37 7.5 23,025,000 22,105,000 355,000 $ 23,165,000 $ 22,142,335 $ 372,973 78 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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 2014 $ 372,973 $ 1,660,510 2015 399,364 1,632,418 2016 410,000 1,602,750 2017 440,000 1,572,000 2018 475,000 1,539,000 2019 -2023 2,965,000 7,106,000 2024 -2028 4,245,000 5,834,375 2029 -2033 6,100,000 3,963,750 2034 -2037 6,734,998 1,308,375 Total $ 22,142,335 $ 26,219,177 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, 2013, 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 $ 910,000 Water Utility Series 2010D 09/21/10 06/01/12- 06/01/30 2.00 -4.00 5,700,000 5,330,000 $ 6,895,000 $ $ 6,240,000 79 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 7 - LONG-TERM DEBT (continued) Revenue bond debt service requirements to maturity are as follows: Fiscal Year June 30 2014 2015 2016 2017 2018 2019 -2023 2024 -2028 2029 -2030 Total Business -type Activities Principal Interest $ 270,000 275,000 285,000 295,000 305,000 1,710,000 2,115,000 985,000 $ 6,240,000 $ 224,945 218,045 210,825 202,260 193,228 796,915 451,800 59,600 $ 2,357,618 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, 2013, are as follows: Purpose Adams Company Lower Main Development Theisen Supply 40 Main LLC Date of Issue 02/13/04 06/30/04 11/22/06 08/06/09 Maturity Dates 06/01/05-06/01/15 12/31/06-06/30/16 12/31/08-06/30/18 06/01/11-06/01/37 Interest Rates 4.07% 8.00 8.25 6.50 Amount Originally Issued $ 500,000 182,000 810,323 690,529 $ 2,182,852 Annual debt service requirements to maturity for notes payable are as follows: Fiscal Year June 30 2014 2015 2016 2017 2018 2019 -2021 Total Governmental Activities Principal $ 205,867 218,427 186,189 173,666 195,881 255,872 $ 1,235,903 Interest $ 83,547 70,062 55,690 41,743 28,381 30,346 $ 309,768 Amount Outstanding End of Year $ 90,909 69,788 489,495 585,711 $ 1,235,903 Current Portion $ 45,455 21,536 81,245 57,632 $ 205,867 80 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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. Annual debt service requirements to maturity for capital loan notes are as follows: Purpose Upper Bee Branch Sewer Clean Water Drinking Water North Catfish Creek Stormwater North Catfish Creek Sewer Water Meter Replacement Stormwater Water Meter Replacement Sewer Upper Bee Branch Sewer Water Pollution Control Plant Date Authorized 12/28/06 01/14/09 1 0/18/07 01/13/10 01/13/10 02/12/10 02/12/10 10/27/10 08/18/10 Final Maturity Date 06 /01 /30 06/01/28 06/01/28 06 /01 /30 06/01/30 06 /01 /30 06/01/30 06/01/41 06/01/39 Interest Rates 3.25% $ 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25 Amount Authorized 1,657,821 1,847,000 1,037,000 998,000 1,141,000 4,338,000 4,338,000 7,850,000 74,285,000 97,491,821 Annual debt service requirements to maturity for capital loan notes are as follows: Fiscal Year June 30 2014 2015 2016 2017 2018 2019 -2023 2024 -2028 2029 -2033 2034 -2038 2039 -2041 Total Business -type Activities Principal Interest $ 2,343,660 2,399,100 2,454,417 2,511,632 2,569,765 13,782,401 15,474,848 15,043,385 14,946,406 3,888,557 $ 75,414,171 $ 1,697,136 1,642,721 1,586,941 1,529,809 1,471,271 6,426,534 4,760,954 2,903,826 1,317,589 95,529 $ 23,432,309 Amount Outstanding Current End of Year Portion $ 617,821 $ 25,735 1,480,000 78,000 734,000 39,000 710,000 32,000 810,000 36,000 2,939,000 122,500 2,939,000 122,500 5,828,929 130,253 59,355,421 1,757,672 $ 75,414,171 $ 2,343,660 At June 30, 2013, the City of Dubuque had $17,997,578 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 majroity of the remaining available funds in fiscal year 2014. 81 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 7 - LONG-TERM DEBT (continued) Loans Payable. Loans payable have been issued to fund several City projects. Purpose Parking Lot Purchase Building Purchase Agreement Iowa Finance Authority Bowling & Beyond Inc. Date of Issue 07/08/08 02/01/10 08/26/11 07/25/12 Annual debt service requ Fiscal Year June 30 Principal 2014 $ 97,143 2015 97,143 2016 97,143 2017 97,142 2018 50,000 2019 -2023 857,237 2024 -2028 1,234,977 2029 -2032 3,107,786 Total $ 5,638,571 Maturity Dates 01/01/09 - 07/01/23 02/01/10 - 02/01/16 06/01/20 - 06/01/30 12/04/12 - 12/04/32 Amount Amount Interest Originally Outstanding Rates Issued End of Year 5.0 % $ 400,000 $ 309,304 0.0 330,000 188,571 3.0 4,500,000 4,500,000 0.0 1,000,000 950,000 $ 6,230,000 $ 5,947,875 Current Portion $ 23,041 47,143 50,000 $ 120,184 ements to maturity for loans payable Governmental Activities Interest $ 135,000 135,000 135,000 135,000 135,000 648,218 520,343 164,758 $ 2,008,319 Business -type Principal $ 23,041 24,208 25,433 26,721 28,074 163,182 18,645 are as follows: Activities Interest $ 15,181 14,014 12,790 11,501 10,148 27,929 466 $ 309,304 $ 92,029 82 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 7 — LONG-TERM DEBT (continued) Changes in Long -term Liabilities. Long-term liability activity for the year ended June 30, 2013, was as follows: Governmental activities: General obligation bonds Unaccreted premium Unamortized discounts Deferred amount on refunding Total general obligation bonds Tax increment financing bonds Unamortized discounts Total tax increment financing bonds Notes payable Loans payable Compensated absences Net OPEB liability Total governmental activities Business -type activities: General obligation bonds Unaccreted premium 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 Balance Beginning of Year $ 52,751,472 597,126 (217,501) (43,286) 53,087,811 22,488,953 (230,670) 22,258,283 1,767,664 4,735,714 5,366,044 2,231,818 $ 89,447,334 Additions $ 10,526,416 ■ ■ ■ 10,526,416 ■ ■ ■ ■ 1,000,000 3,360,411 494,506 $ 15,381,333 $ 35,248,528 110,960 (180,128) (71,357) 35,108,003 6,500,000 30,509 (9,321) 6,521,188 61,957,749 331,235 939,840 478,592 Reductions $ (7,155,866) (40,789) 56,307 43,286 (7,097,062) (346,618) 8,872 (337,746) (531,761) (97,143) (2,502,627) Balance End Due Within of Year One Year $ 56,122,022 $ 3,939,938 556,337 - (161,194) - 56,517,165 3,939,938 22,142,335 372,973 (221,798) - 21,920,537 372,973 1,235,903 205,867 5,638,571 97,143 6,223,828 291,711 2,726,324 - $ (10,566,339) $ 94,262,328 $ 4,907,632 $ 4,768,584 $ (5,034,134) - (5,557) - 12,879 - 71,357 4,768,584 (4,955,455) - (260,000) (1,606) 717 - (260,889) 14,036,422 (580,000) (21,931) 646,840 (511,044) 99,348 $ 34,982,978 $ 2,185,062 105,403 (167,249) - 34,921,132 6,240,000 28,903 (8,604) 6,260,299 75,414,171 309,304 1,075,636 577,940 2,185,062 270,000 ■ ■ 270,000 2,343,660 23,041 42,428 ■ Total business- type activities $ 105,336,607 $ 19,551,194 $ (6,329,319) $ 118,558,482 $ 4,864,191 83 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 7 — LONG-TERM DEBT (continued) For the governmental activities, compensated absences and net OPEB liability are generally liquidated by the General Fund, Community Development Fund, and Section VIII Housing Fund. Dubuque Initiatives and Subsidiaries. At December 31, 2012, 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.* $ 5,294,384 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 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 QB1 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 fmal principal and interest due at maturity on June 1, 2039. ** Less: Current maturities Noncurrent liability 4,243,038 5,897,192 5,897,192 3,902,808 4,002,808 29,237,422 (647,242) 28590.180 84 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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: 2013 $ 647,242 2014 686,692 2015 728,547 2016 772,491 2017 820,038 Thereafter 25 582 812 S 29,237 422 * - 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. On July 1, 2011, the Iowa Department of Economic Development determined the project met the reimbursement requirements, therefore the loan was forgiven. The balance of the forgivable loan was recorded as grant income at December 31, 2011. 85 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 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 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 $110,000, and an aggregate stop -loss of $9,534,066 for 2013. 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 2013. 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 participates in both programs and makes 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 $551,428 in the Health Insurance Reserve Fund and $1,081,084 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 fmancial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in reported liabilities, all of which are expected to be paid within one year of year end, for the fiscal years ended June 30, 2013 and 2012, are summarized as follows: Liabilities at June 30, 2011 Claims and changes in estimates during fiscal year 2012 Claim payments Liabilities at June 30, 2012 Claims and changes in estimates during fiscal year 2013 Claim payments Liabilities at June 30, 2013 Health Insurance Reserve Fund $ 262,969 7,747,206 (7,623,275) 386,900 8,675,722 (8,511,194) $ 551,428 Workers' Compensation Reserve Fund $ 987,017 1,092,653 (942,502) 1,137,168 592,684 (648,768) $ 1,081,084 86 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 8 — RISK MANAGEMENT (continued) 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 678 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. 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, 2013, were $508,529. 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. Excess coverage is provided for claims exceeding $350,000 under various reinsurance agreements. Property and automobile physical damage risks are retained by the Pool up to $250,000 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, 2013, settled claims have not exceeded the risk pool or reinsurance company coverage since the Pool's inception. 87 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 8 — RISK MANAGEMENT (continued) Members agree to continue membership in the Pool through the Iowa Risk Management Agreement 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 distributions. 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, 2013. Litigation The City's corporate counsel reported that as of June 30, 2013, 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 fmancial position of the City. The City has authority to levy additional taxes (outside the regular limit) to cover uninsured judgments against the City. Construction Contracts The City has recognized as a liability only that portion of construction contracts representing construction completed through June 30, 2013. The City has additional commitments for signed construction contracts of $23,971,202 as of June 30, 2013. These commitments will be funded by federal and state grants, cash reserves, and bond proceeds. 88 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 9 — COMMITMENTS AND CONTINGENT LIABILITIES (continued) 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 Roshek Building, Inc. also anticipates receipt of State of Iowa Certified Historic Rehabilitation Tax Credit ('State credits') in 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 were subject to a completion of the rehabilitation project by December 31, 2010. Both Federal and State credits were subject to successful approval of the project by the State of Iowa and National Park Service, such approval has been received. The Organization received $660,000 and $10,000,000 of State of Iowa Certified Historic Rehabilitation Tax Credits for the years ended December 31, 2012 and 2011, respectively. Commitments On July 1, 2013, the Dubuque Metropolitan Area Solid Waste Agency (DMASWA) acquired 10.1 acres of adjoining farmland that will be utilized for future landfill expansion. The cost of the property was $176,449. NOTE 10 — EXTRAORDINARY ITEM In 2013, the Sewer Disposal Works Fund incurred $555,031 of expenses related to mercury spill. Prior expenses reported for this spill include $243,722 in FY '12 and $2,253,036 in FY '11. The mercury spill is reported as an extraordinary item since the event was both unusual in nature and infrequent in occurrence. 89 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 11— OTHER POST EMPLOYMENT 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 include the employees of the Dubuque Metropolitan Area Solid Waste Agency (a component unit). The Plan does not issue a stand -alone financial 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. 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 537 active and 28 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, 2013, the amount actually contributed to the plan, and changes in the City's net OPEB obligation: Annual required contribution $ 574,674 Interest on net OPEB obligation 137,948 Adjustment to annual required contribution (130,750) Annual OPEB cost 581,872 Contributions made, net of retiree contributions 23,145 Increase in net OPEB obligation 605,017 Net OPEB obligation, beginning of year 2,758,965 Net OPEB obligation, end of year $ 3,363,982 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, 2013. For the year ended June 30, 2013, the City paid $395,803 for retiree claims. Plan members eligible for benefits contributed $418,948 or 100% of the premium costs. The net resulted in employee premium contributions in excess of claims by $23,145. 90 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 11— OTHER POST EMPLOYMENT 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, 2013 are summarized as follows: Percentage of Net Annual Annual OPEB OPEB Year Ended OPEB Cost Cost Contributed Obligation June 30, 2013 $ 581,872 (3.98)% $ 3,363,982 June 30, 2012 584,004 34.45% 2,758,966 June 30, 2011 581,536 25.60% 2,376,162 Funded Status and Funding Progress - As of July 1, 2012, the most recent actuarial valuation date for the period July 1, 2012 through June 30, 2013, the actuarial accrued liability was $5,720,577, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability (UAAL) of $5,720,577. The covered payroll (annual payroll of active employees covered by the plan) was approximately $31,830,608 and the ratio of the UAAL to covered payroll was 18 %. As of June 30, 2013, 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, 2012 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 8 %. The ultimate medical trend rate is 5 %. The medical trend rate is reduced 1.0% each year until reaching the 5% ultimate trend rate. The underlying inflation rate is 3 %. 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 $10,380 per year for retirees. The salary increase rate was assumed to be 2.5% per year. The UAAL is being amortized as a level percentage of pay on an open basis over 30 years. 91 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 12 — EMPLOYEE RETIREMENT SYSTEMS MFPRSI The City contributes to the Municipal Fire and Police Retirement System of Iowa (Plan), which is a cost - sharing, multiple - employer defined benefit pension plan administered by a Board of Trustees. The Plan provides retirement, disability, and death benefits which are established by state statute to plan members and beneficiaries. The Plan issues a publicly available fmancial 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. For FY '13, plan members are required to contribute 9.40% of earnable compensation and the City is required to contribute 26.12% of earnable compensation. Contribution requirements are established by state statute. The City's contributions to the Plan for the years ended June 30, 2013, 2012, and 2011, were $3,309,975, $3,177,159 and $2,404,474, 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 fmancial 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. For FY '13, plan members are required to contribute 5.78% of their annual covered salary, and the City is required to contribute 8.67% of annual covered payroll. Contribution requirements are established by state statute. The City's contributions to IPERS for the years ended June 30, 2013, 2012, and 2011, were $2,078,735, $1,964,764 and $1,614,811, respectively, equal to the required contributions for each year. NOTE 13 — LANDFILL CLOSURE AND POST CLOSURE CARE State and federal laws and regulations require the 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 post closure 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 post closure care costs as an operating expense in each period based on landfill capacity used as of each statement of net position date. The $3,834,636 reported as landfill closure and post closure care liability at June 30, 2013, 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 99% of the estimated capacity of cells 5, 6, 7, and 8, and the use of 16% of cell 9. The Agency will recognize the remaining estimated cost of closure and post closure care of $1,281,364 as the remaining capacity is filled. These amounts are based on what it would cost to perform all closure and post closure care in 2013. The Agency expects to close cells 5, 6, 7, and 8 in 2014. The Agency is making plans to construct a second generation of cells to extend the life of the landfill to 2050. Actual cost may be higher due to inflation, changes in technology, or changes in regulations. 92 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 13 — LANDFILL CLOSURE AND POST CLOSURE CARE The Agency has begun to accumulate resources to fund these costs in accordance with state and federal financial assurance requirements. At June 30, 2013, funds have been restricted for closure and post closure costs in the amount of $4,251,910. NOTE 14 — LEASES WHERE CITY IS LESSOR The City of Dubuque leases riverfront property, airport property (hangars and terminal space), farm land, parking areas, space for antennas on top of water towers, and concession areas under operating leases. The most significant lease is the lease of the greyhound racing and gambling facility and related parking area to the Dubuque Racing Association (DRA). The City's cost of the leased DRA assets total $10,144,771. The carrying amount of the assets at June 30, 2013 is $6,869,047, with $142,423 of depreciation expense during the year ended June 30, 2013. The DRA lease amount is based on the association's gross gambling receipts. During the year ended June 30, 2013, the DRA lease generated $5,942,125 in lease revenue. NOTE 15— SUBSEQUENT EVENTS There are no subsequent events to report. NOTE 16 — PROSPECTIVE ACCOUNTING PRONOUNCEMENTS The Governmental Accounting Standards Board (GASB) has issued six statements not yet implemented by the City. The statements which might impact the City are as follows: Statement No. 65, Items Previously Reported as Assets and Liabilities, issued March 2012, will be effective for the fiscal year ending June 30, 2014. The objective of this Statement is to establish accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. Statement No. 66, Technical Corrections — 2012 — an amendment of GASB Statements No. 10 and No. 62, issued March 2012, will be effective for the fiscal year ending June 30, 2014. The objective of this Statement is to improve accounting and financial reporting for a governmental fmancial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre- November 30, 1989 FASB and AICPA Pronouncements. Statement No. 67, Financial Reporting for Pension Plans — an amendment of GASB Statement No. 25, issued June 2012, will be effective for the fiscal year ending June 30, 2014. The objective of this Statement is to establish accounting and financial reporting requirements related to pensions for governments whose employees are provided with pensions through pension plans that are covered by the scope of this Statement, as well as for nonemployer governments that have a legal obligation to contribute to those plans. Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27, issued June 2012, will be effective for the fiscal year ending June 30, 2015. The objective of this Statement is to improve information provided by state and local governmental employers about financial support for pensions that is provided by other entities. 93 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 16 — PROSPECTIVE ACCOUNTING PRONOUNCEMENTS (continued) Statement No. 69, Government combinations and Disposals of Government Operations, issued January 2013, will be effective for the fiscal year ending June 30, 2015. The objective of this statement is to improve financial reporting by addressing accounting and financial reporting for government combinations and disposals of government operations. The term government combinations is used in the Statement to refer to a variety of arrangements including mergers and acquisitions. Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, issued April 2013, will be effective for the fiscal year ending June 30, 2014. The objective of this Statement is to improve the recognition, measurement, and disclosure guidance for state and local governments that have extended or received financial guarantees that are nonexchange transactions. The City's management has not yet determined the effect these statements will have on the City's financial statements. NOTE 17 — PRIOR PERIOD ADJUSTMENT During 2012, an error was discovered in Dubuque Initiatives, Inc. pertaining to restricted cash and tax credit proceeds. The restricted cash held in the US Bank Reserve account was also included as an asset of Roshek Building Investment Fund, LLC. As a result of conversations with US Bank, the cash should remain an asset of Roshek Building Investment Fund, LLC. Dubuque Initiatives, Inc. will receive the net benefit upon exercising their PUT option in 2016. This resulted in a restatement of the net position of Dubuque Initiatives, Inc. The restatement decreased restricted cash and unrestricted net position as previously reported at December 31, 2011 by $991,608. 94 Required Supplementary Information June 30, 2013 City of Dubuque, Iowa 95 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, 2013 RECEIPTS Property tax Tax increment financing Other City tax Licenses and permits Use of money and property Intergovernmental Charges for fees and service Special assessments Miscellaneous Total Receipts EXPENDITURES Public safety Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital projects Business -type activities Total Expenditures Actual Budgeted Amounts Original Final Final to Actual Variance $ 21,924,102 $ 9,831,859 12,076,380 4,273,831 12,243,445 28,271,752 26,041,541 433,100 9,922,180 125,018,190 22,007,300 10,289,639 14,922,012 1,339,574 12,365,425 50,224,931 34,178,789 74,273 6,759,820 152,161,763 $ 22,007,300 $ (83,198) 10,289,639 (457,780) 14,922,012 (2,845,632) 1,384,456 2,889,375 12,442,198 (198,753) 92,742,406 (64,470,654) 34,211,789 (8,170,248) 1,843,814 (1,410,714) 10,725,722 (803,542) 200,569,336 (75,551,146) 25,292,704 25,339,063 25,935,722 643,018 11,762,952 12,049,060 12,447,988 685,036 967,291 1,030,919 1,175,550 208,259 10,352,765 10,546,195 10,709,118 356,353 11,408, 822 12,781,522 13,136,558 1,727,736 6,974,291 7,317,526 7,586,919 612,628 6,685,697 6,994,075 6,994,075 308,378 28,157,402 44,312,974 106,011,789 77,854,387 48,995,946 94,088,699 135,181,206 86,185,260 150,597,870 214,460,033 319,178,925 168,581,055 EXCESS (DEFICIENCY) OF RECEIPTS OVER (UNDER) EXPENDITURES (25,579,680) OTHER FINANCING SOURCES, NET 24,817,813 EXCESS DEFICIENCY OF RECEIPTS AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES BALANCE, BEGINNING OF YEAR BALANCE, ENDING OF YEAR (62,298,270) (118,609,589) 60,239,239 93,029,909 72,490,241 (47,672,428) (761,867) 70,211,104 $ 69,449,237 (2,059,031) (46,119,348) 22,279,858 65,389,863 45,357,481 $ 20,220,827 $ 19,270,515 $ 45,357,481 See Notes to Required Supplementary Information. 96 CITY OF DUBUQUE, IOWA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION — BUDGETARY REPORTING FOR THE YEAR ENDED JUNE 30, 2013 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, 2013 was amended two times during the year to allow the City to increase function expenditures by $104,718,892, primarily for the carry- forward of unfinished capital improvement projects and expenditure of additional grants for capital improvements. The following is a reconciliation of the budgetary basis to the modified accrual basis of accounting: Receipts/Revenue Expenditures/Expenses Deficiency of Receipts/Revenue Under Expenditures/Expenses Other Financing Sources Net Balance, Beginning Balance, Ending Budgetary Accrual Basis Adjustments $ 125,018,190 $ (2,873,389) 150,597,870 (20,795,887) Governmental Modified Funds Accrual /Accrual Modified Basis Accrual Basis $ 122,144,801 $ 93,223,751 129,801 ,983 99,344 ,964 Enterprise Funds Accrual Basis $ 28,921,050 30,457,019 Total $ 122,144,801 129,801 ,983 (25,579,680) 17 ,922 498 24,817,813 (15,893 ,994) (761,867) 2,028,504 70,211,104 141 ,936,127 $ 69,449,337 $ 143,694,631 (7,657,182) 8 ,923,819 1,266,637 212,147,231 $ 213,413,868 (6,121,213) 7,379,741 1,258,528 68,286,099 $ 69,544,627 (1,535,969) 1,544,078 8,109 143,861,132 $ 143,869,241 (7,657,182) 8 ,923,819 1,266,637 212,147,231 $ 213,413,868 97 CITY OF DUBUQUE, IOWA SCHEDULE OF FUNDING PROGRESS FOR THE RETIREE BENEFIT PLAN FOR THE YEAR ENDED JUNE 30, 2013 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) 2011 07/01/10 - 5,481,802 5,481,802 0.00% 29,790,517 18.40% 2012 07/01/10 - 5,481,802 5,481,802 0.00% 31,183,497 17.60 % 2013 07/01/12 - 5,720,577 5,720,577 0.00% 31,830,608 18.00 % 98 99 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Road Use Tax Fund — This fund is used to account for state revenues allocated to the City for maintenance and improvement of City streets. Section VIII Housing Fund — This fund is used to account for the operations of federal Section VIII existing, voucher, and moderate rehabilitation projects. Employees Benefits Fund — This fund is used to account for pension and related employee benefit costs for those employees paid wages from the General Fund. 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. 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. Community Development Fund — This fund is used to account for the use of Community Development Block Grant funds as received from federal and statement governmental agencies. 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. 100 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 fmanced through the local option sales tax. Street Construction Fund — This fund is used to account for the resources and costs related to street capital improvements. 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. 101 CITY OF DUBUQUE, IOWA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2013 Special Revenue Funds Road Use Section VIII Employee Tort Tax Housing Benefits Liability ASSETS Cash and pooled cash investments $ 542,799 $ 41,766 $ - $ Receivables Property tax Delinquent - - 37,901 2,609 Succeeding year - - 5,060,627 353,628 Accounts and other - 20,099 - - Special assessments - - Accrued interest - 607 Notes - 106 Intergovernmental 542,264 4,700 Inventories 637,198 - Prepaid items 12,000 - Restricted cash and pooled cash investments - 366,812 Total Assets $ 1,734,261 $ 434,090 $ 5,098,528 $ 356,237 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 91,146 $ 38,614 $ - $ Accrued payroll 31,618 2,467 - - Intergovernmental payable - 6,912 - - Deferred revenue Due to other funds - - 279 - Succeeding year property tax - - 5,060,627 353,628 Other 2,855 12,572 5,638 627 Total Liabilities 125,619 60,565 5,066,544 354,255 FUND BALANCES Nonspendable: Endowment corpus - Inventory 637,198 Long -term notes receivable - Prepaid items 12,000 Restricted: Endowments - Library - Debt service - Capital improvements 959,444 Franchise agreement - Special assessments Claims Iowa Finance Authority Trust Community programs Employee benefits Committed, capital improvements Total Fund Balances ■ 373,525 ■ 31,984 1,982 1,608,642 373,525 31,984 1,982 Total Liabilities and Fund Balances $ 1,734,261 $ 434,090 $ 5,098,528 $ 356,237 102 EXHIBIT A -1 Special Revenue Funds Capital Projects Funds Library IFA Special Expendable Housing Community Airport Sales Tax Assessments Cable TV Gifts Trust Trust Development Debt Service Construction Construction $ - $ 128,480 $ 1,217,732 $ 70,403 $ 1,956,305 $ 124,930 $ 2,870,824 $ 4,324,776 587 - - - - - - 119,200 - - 148,722 - - - - - 1,087,855 - - - - - - - 258 2,470 - 31,979 254 1,352 5,704 - - - - 8,650,446 - - 657,518 - - - - 238,676 - 1,536,978 266,923 - - - - 19,859 - - $ 1,087,855 $ 277,460 $ 1,220,202 $ 70,403 $ 10,897,265 $ 244,971 $ 4,409,154 $ 5,254,921 $ - $ 6,692 $ 580 $ - $ 72,883 $ - $ 1,517,701 $ 121,078 622 - - 5,530 - - - - - 119,200 - 1,072,588 - - - 208,440 195 223,788 1,072,588 7,314 580 - 286,853 119,395 1,741,489 121,078 270,146 15,267 8,166,895 19,859 1,219,622 - - - 125,576 70,403 2,423,658 2,667,665 - - - - - - - 5,133,843 15,267 270,146 1,219,622 70,403 10,610,412 125,576 2,667,665 5,133,843 $ 1,087,855 $ 277,460 $ 1,220,202 $ 70,403 $ 10,897,265 $ 244,971 $ 4,409,154 $ 5,254,921 (Continued) 103 CITY OF DUBUQUE, IOWA COMBINING BALANCE SHEET EXHIBIT A -1 NONMAJOR GOVERNMENTAL FUNDS (Continued) JUNE 30, 2013 Capital Permanent Funds Projects Funds Total Ella Lyons Library Nonmajor Street Peony Trail Gifts Governmental Construction Trust Tmst Funds ASSETS Cash and pooled cash investments $ 4,359,384 $ - $ - $ 15,637,399 Receivables Property tax Delinquent - - - 41,097 Succeeding year - - - 5,533,455 Accounts and other - - - 168,821 Special assessments - - - 1,087,855 Accmed interest 5,647 82 25 48,378 Notes - - - 9,308,070 Intergovernmental 2,081,870 - - 4,671,411 Inventories - - - 637,198 Prepaid items - - - 31,859 Restricted cash and pooled cash investments - 130,810 12,270 509,892 Total Assets $ 6,446,901 $ 130,892 $ 12,295 $ 37,675,435 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 455,054 $ - $ - $ 2,303,748 Accmed payroll - - - 40,237 Intergovernmental payable - - - 6,912 Deferred revenue Due to other funds - - - 279 Succeeding year property tax - - - 5,533,455 Other 298,518 - - 1,825,221 Total Liabilities FUND BALANCES Nonspendable: Endowment corpus Inventory Long -term notes receivable Prepaid items Restricted: Endowments Library Debt service Capital improvements Franchise agreement Special assessments Claims Iowa Finance Authority Tmst Community programs Employee benefits Committed, capital improvements Total Fund Balances 753,572 - - 9,709,852 57,412 12,000 73,480 5,693,329 69,412 637,198 8,166,895 31,859 295 73,775 - 1,219,622 125,576 - 3,627,109 270,146 15,267 1,982 70,403 - 2,797,183 31,984 - 10,827,172 5,693,329 130,892 12,295 27,965,583 Total Liabilities and Fund Balances $ 6,446,901 $ 130,892 $ 12,295 $ 37,675,435 104 0 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Special Revenue Funds Road Use Section VIII Employee Tort Tax Housing Benefits Liability REVENUES Taxes $ - $ - $ 4,255,620 $ 293,037 Special assessments - - Intergovernmental 5,657,931 3,562,876 - - Charges for services - - Investment earnings 270 - - - Contributions - - - - Miscellaneous 66,656 24,597 - Total Revenues 5,724,857 3,587,473 4,255,620 293,037 EXPENDITURES Governmental activities Current Public safety - - - Public works 6,294,368 - - Health and social services - - - Culture and recreation - - - Community and economic development - 4,469,913 General government 29,178 - 280 Debt service Principal - - - Interest and fiscal charges - - - Capital projects - Total Expenditures 6,323,546 4,469,913 280 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Issuance of debt Transfers in Transfers out Insurance recovery Sale of capital assets Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING FUND BALANCES, ENDING (598,689) (882,440) 4,255,340 293,037 722,840 (50,442) (820) (4,256,440) (294,552) (50,442) 722,020 (4,256,440) (294,552) (649,131) (160,420) (1,100) (1,515) 2,257,773 533,945 33,084 3,497 $ 1,608,642 $ 373,525 $ 31,984 $ 1,982 106 EXHIBIT A -2 Special Revenue Funds Capital Projects Funds Library IFA Special Expendable Housing Community Airport Sales Tax Assessments Cable TV Gifts Trust Trust Development Debt Service Construction Construction $ - $ 175,486 30,469 13,363 219,318 149,622 488 453,259 603,369 $ - $ - $ - $ 69,673 $ - $ 1,752,958 - - 3,806,323 25,423 5,632,290 1,272,671 - - 7,292 - 190,284 - 2,890 - 74,941 (14,185) 11,873 11,646 - - - - 9,965 2,201 63,257 - 121,929 - 2,156 973 66,147 - 4,010,485 80,911 5,846,568 3,040,449 9,336 31,290 75,219 538,419 579,045 75,219 33,994 92,750 137,104 180,489 5,380,898 406 - - 2,858,420 - - - 3,642,640 - 223 - - - 6,430,690 2,490,358 180,489 5,645,152 6,501,060 6,430,690 2,490,581 219,318 24,324 (9,072) (180,489) (1,634,667) (6,420,149) (584,122) 549,868 - - - - - - - 361,080 - - - - 69,837 6,377,584 327,889 1,538,419 (449,269) (573) - - - - (57,607) (158,418) - - - 75,764 - - (449,269) (573) - - 145,601 6,377,584 270,282 1,741,081 (229,951) 23,751 (9,072) (180,489) (1,489,066) (42,565) (313,840) 2,290,949 245,218 246,395 1,228,694 250,892 12,099,478 168,141 2,981,505 2,842,894 $ 15,267 $ 270,146 $ 1,219,622 $ 70,403 $ 10,610,412 $ 125,576 $ 2,667,665 $ 5,133,843 (Continued) 107 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES EXHIBIT A -2 NONMAJOR GOVERNMENTAL FUNDS (Continued) FOR THE YEAR ENDED JUNE 30, 2013 Capital Permanent Funds Projects Funds Total Ella Lyons Library Nonmajor Street Peony Trail Gifts Governmental Construction Trust Trust Funds REVENUES Taxes $ 2,629,435 $ - $ - $ 9,000,723 Special assessments - - - 175,486 Intergovernmental 3,811,099 - - 23,768,613 Charges for services 14,703 - - 361,901 Investment earnings 12,453 7,712 32 138,589 Contributions - - 12,166 Miscellaneous 6,054 18 752,262 Total Revenues 6,473,744 7,730 32 34,209,740 EXPENDITURES Governmental activities Current Public safety - Public works - Health and social services - Culture and recreation - Community and economic development - General government - Debt service Principal - Interest and fiscal charges - Capital projects 3,954,847 Total Expenditures 3,954,847 619 619 9,336 6,328,362 124,040 212,942 10,031,300 568,283 2,858,420 3,642,863 12,875,895 36,651,441 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 2,518,897 7,111 32 (2,441,701) OTHER FINANCING SOURCES (USES) Issuance of debt 1,280,188 - - 1,641,268 Transfers in 121,435 - - 9,158,004 Transfers out (1,370,874) - - (6,638,995) Insurance recovery 46,149 - - 46,149 Sale of capital assets 85,341 - - 161,105 Total Other Financing Sources (Uses) 162,239 - - 4,367,531 NET CHANGE IN FUND BALANCES 2,681,136 7,111 32 1,925,830 FUND BALANCES, BEGINNING 3,012,193 123,781 12,263 26,039,753 FUND BALANCES, ENDING $ 5,693,329 $ 130,892 $ 12,295 $ 27,965,583 108 NONMAJOR ENTERPRISE FUNDS Enterprise funds are used to account for operations that are fmanced 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. America's River Project — This fund is used to account for all projects covered by the Vision Iowa Grant, including all matching funds. 109 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS JUNE 30, 2013 EXHIBIT B -1 ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Accounts Accrued interest Intergovernmental Total Other Refuse Transit America's Enterprise Collection System Salt River Project Funds $ 635,594 $ 337,190 $ - $ 31,461 $ 1,004,245 308,323 1,289 1,670 2,203 108,643 918,975 419,169 64 1,353 920,645 Total Current Assets 946,876 1,258,368 108,643 31,525 2,345,412 NONCURRENT ASSETS Restricted cash and pooled cash investments - 4,169,846 - - 4,169,846 Capital assets Land - 36,000 - - 36,000 Buildings - 1,887,564 175,458 - 2,063,022 Improvements to other than buildings 244,232 - - 244,232 Machinery and equipment 2,159,038 5,027,690 36,342 - 7,223,070 Construction in progress 1,006,630 - - 1,006,630 Accumulated depreciation (634,947) (2,781,343) (6,983) - (3,423,273) Net Capital Assets 1,524,091 5,420,773 204,817 - 7,149,681 Total Noncurrent Assets 1,524,091 9,590,619 204,817 - 11,319,527 Total Assets 2,470,967 10,848,987 313,460 31,525 13,664,939 LIABILITIES CURRENT LIABILITIES Accounts payable 234,490 Accrued payroll 22,015 General obligation bonds payable 4,412 Accrued compensated absences 2,215 Accrued interest payble 265 Due to other funds Total Current Liabilities NONCURRENT LIABILITIES General obligation bonds payable (net of premium of $460) Accrued Compensated Absences Net OPEB Liability Total Noncurrent Liabilities 343,761 126,056 252 704,559 28,080 - 50,095 4,412 2,215 265 26,505 26,505 263,397 371,841 152,561 252 788,051 94,638 333,177 135,385 3,841 40,241 94,638 337,018 175,626 563,200 44,082 607,282 Total Liabilities 826,597 415,923 152,561 252 1,395,333 NET POSITION Net investment in capital assets 1,425,041 5,420,773 204,817 - 7,050,631 Restricted by bond ordinance /development agreement 4,169,846 - 4,169,846 Unrestricted 219,329 842,445 (43,918) 31,273 1,049,129 Total Net Position $ 1,644,370 $ 10,433,064 $ 160,899 $ 31,273 $ 12,269,606 110 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2013 EXHIBIT B -2 Refuse Collection Transit System America's Salt River Project Total Other Enterprise Funds OPERATING REVENUES Charges for sales and sery ices $ 3,346,307 $ Other 488 Total Operating Revenues 3,346,795 OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES Intergovernmental Investment earnings Contributions Interest expense Gain (loss) on disposal of assets Net Nonoperating Revenues INCOME (LOSS) BEFORE TRANSFERS TRANSFERS IN TRANSFERS OUT 176,043 $ 393,901 $ 131,271 1,099 307,314 395,000 $ 3,916,251 132,858 4,049,109 2,245,343 1,618,715 1,972 17,746 57,062 2,319 302,499 233,933 8,510 706,089 1,034,259 328,503 22,797 41,110 - 171,141 507,016 4,762 3,465,615 3,492,095 346,066 22,770 22,770 3,866,030 77,127 544,942 2,091,621 63,907 682,919 7,326,546 (118,820) (3,184,781) 48,934 (22,770) (3,277,437) 1,670 2,069 (3,244) 2,124,639 13,748 34,086 23,870 495 2,196,343 (118,325) (988,438) CHANGE IN NET POSITION (118,325) NET POSITION, BEGINNING 1,762,695 NET POSITION, ENDING $ 1,644,370 1,362,347 (374,595) (686) 10,433,750 $ 10,433,064 644 644 - 2,126,309 57 15,874 - 34,086 (3,244) - 24,514 57 2,197,539 49,578 49,578 111,321 $ 160,899 (22,713) (1,079,898) 30,698 1,393,045 - (374,595) 7,985 (61,448) 23,288 12,331,054 $ 31,273 $ 12,269,606 111 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS YEAR ENDED JUNE 30, 2013 Refuse Transit Collection System Salt America's Total Other River Enterprise Proiect Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 3,319,911 $ 174,534 $ 341,518 $ - $ 3,835,963 Cash payments to suppliers for goods and services (822,807) (1,058,149) (225,386) (23,198) (2,129,540) Cash payments to employees for services (2,171,030) (1,608,562) (1,972) - (3,781,564) Other operating receipts 488 131,271 1,099 - 132,858 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 326,562 (2,360,906) 115,259 (23,198) (1,942,283) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Payment of interfund balances Intergovernmental grant proceeds NET CASH PROVIDED BY (USED FOR) NONCAPITAL FINANCING ACTIVITIES 1,362,347 - (374,595) (115,903) 1,876,051 2,863,803 (115,903) 30,698 1,393,045 (374,595) (115,903) 1,876,051 30,698 2,778,598 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets 20,300 644 - 20,944 Acquisition and construction of capital assets (926,743) (614,147) - (1,540,890) Contributions - 34,086 - 34,086 Principal Paid (4,385) - - (4,385) Interest paid (3,286) - - (3,286) NET CASH PROVIDED BY (USED FOR) CAPITAL AND RELATED FINANCING ACTIVITIES (934,414) (559,761) 644 - (1,493,531) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 3,343 13,748 - (5) 17,086 NET INCREASE IN CASH AND CASH EQUIVALENTS (604,509) (43,116) - 7,495 (640,130) CASH AND CASH EQUIVALENTS, BEGINNING 1,240,103 4,550,152 - 23,966 5,814,221 CASH AND CASH EQUIVALENTS, ENDING $ 635,594 $ 4,507,036 $ $ 31,461 $ 5,174,091 (Continued) 112 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS YEAR ENDED JUNE 30, 2013 EXHIBIT B -3 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss) Business -type Activities - Enterprise Funds Refuse Transit Collection System Salt America's Total Other River Enterprise Proiect Funds $ (118,820) $ (3,184,781) $ 48,934 $ (22,770) $ (3,277,437) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities Depreciation 171,141 507,016 4,762 - 682,919 Change in assets and liabilities Decrease in receivables (26,396) (1,509) (52,383) - (80,288) (Decrease) in accounts payable 226,324 308,215 113,946 (428) 648,057 (Decrease) in accrued liabilities 51,988 3,455 - 55,443 Increase in net OPEB liability 22,325 6,698 - 29,023 Total Adjustments 445,382 823,875 66,325 (428) 1,335,154 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 326,562 $ (2,360,906) $ 115,259 $ (23,198) $ (1,942,283) 113 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. 114 1 a 1 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2013 General Garage Stores/ Service Service Printing ASSETS CURRENT ASSETS Cash and pooled cash investments $ - $ - $ - Receivables Accounts - - - Accrued interest - Inventories - 91,891 9,232 Total Current Assets - 91,891 9,232 NONCURRENT ASSETS Capital assets Machinery and equipment Accumulated depreciation Net Capital Assets Total Noncurrent Assets Total Assets LIABILITIES 106,521 (45,084) 61,437 61,437 153,328 9,232 CURRENT LIABILITIES Accounts payable 394 47,271 - Accrued payroll 17,697 13,699 Due to other funds 8,304 28,071 6,130 Total Current Liabilities 26,395 89,041 6,130 Total Liabilities 26,395 89,041 6,130 NET POSITION Net investment in capital assets 61,438 Unrestricted (26,395) 2,849 3,102 Total Net Position (Deficit) $ (26,395) $ 64,287 $ 3,102 116 EXHIBIT C -1 Health Workers' Insurance Compensation Reserve Reserve Total $ 1,070,117 $ 208,987 $ 1,279,104 99,000 - 99,000 2,170 424 2,594 - - 101,123 1,171,287 209,411 1,481,821 106,521 (45,084) 61,437 61,437 1,171,287 209,411 1,543,258 551,428 1,081,084 1,680,177 31,396 42,505 551,428 1,081,084 1,754,078 551,428 1,081,084 1,754,078 - - 61,438 619,859 (871,673) (272,258) $ 619,859 $ (871,673) $ (210,820) 117 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION (DEFICITS) INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2013 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues General Garage Stores/ Service Service Printing $ 2,005,188 $ 2,414,244 $ 18,770 36,385 2,005,188 2,450,629 18,770 OPERATING EXPENSES Employee expense 1,994,698 902,566 - Utilities 26,711 - Repairs and maintenance 40,928 Supplies and services 5,116 1,485,720 19,294 Insurance 10,877 21,138 Depreciation 10,738 Total Operating Expenses 2,010,691 2,487,801 19,294 OPERATING INCOME (LOSS) (5,503) (37,172) (524) NONOPERATING REVENUES (EXPENSES) Investment earnings - - Gain (loss) on disposal of assets - 7,329 - INCOME (LOSS) BEFORE TRANSFERS (5,503) (29,843) (524) TRANSFERS OUT (4,134) CHANGE IN NET POSITION (5,503) (33,977) (524) NET POSITION (DEFICIT), BEGINNING (20,892) 98,264 3,626 NET POSITION (DEFICIT), ENDING $ (26,395) $ 64,287 $ 3,102 118 EXHIBIT C -2 Health Workers' Insurance Compensation Reserve Reserve Total $ 7,397,769 $ 873,218 $ 12,709,189 - 1,145 37,530 7,397,769 874,363 12,746,719 2,897,264 26,711 40,928 8,511,194 648,768 10,670,092 33,421 69,505 134,941 - - 10,738 8,544,615 718,273 13,780,674 (1,146,846) 156,090 (1,033,955) 16,172 4,965 21,137 - - 7,329 (1,130,674) 161,055 (1,005,489) - - (4,134) (1,130,674) 161,055 (1,009,623) 1,750,533 (1,032,728) 798,803 $ 619,859 $ (871,673) $ (210,820) 119 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2013 General Garage Stores/ Service Service Printing CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 2,005,189 $ 2,414,244 $ 18,770 Cash payments to suppliers for goods and services (15,599) (1,571,938) (20,464) Cash payments to employees for services (1,995,903) (901,575) Other operating receipts 36,385 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (6,313) (22,884) (1,694) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to other funds Proceeds from interfund balances NET CASH PROVIDED BY (USED FOR) NONCAPITAL FINANCING ACTIVITIES (4,134) 6,313 28,071 6,313 1,694 23,937 1,694 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets - 7,329 Acquisition and construction of capital assets - (40,717) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES - (33,388) CASH FLOWS FROM INVESTING ACTIVITIES Interest received NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING $ (32,335) 32,335 $ - $ RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss) $ (5,503) $ (37,172) $ (524) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities Depreciation - 10,738 Change in assets and liabilities (Increase) Decrease in receivables - - (Increase) Decrease in inventories and prepaid items (21,985) Increase (decrease) in accounts payable 394 24,544 (Decrease) in accrued liabilities (1,204) 991 Total Adjustments (810) 14,288 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ (6,313) $ (22,884) $ (1,694) 120 EXHIBIT C -3 Health Workers' Insurance Compensation Reserve Reserve Total $ 7,317,177 $ 873,218 $ 12,628,598 (8,380,087) (774,358) (10,762,445) - - (2,897,478) - 1,145 37,530 (1,062,910) 100,005 (993,795) 15,287 (1,047,623) (4,134) 36,078 31,944 7,329 (40,717) (33,388) 4,760 20,047 104,765 (975,192) 2,117,740 104,221 2,254,296 $ 1,070,117 $ 208,986 $ 1,279,104 $ (1,146,846) $ 156,090 $ (1,033,955) - - 10,738 (80,592) - (80,592) - - (23,154) 164,528 (56,085) 133,382 - (214) 83,936 (56,085) 40,160 $ (1,062,910) $ 100,005 $ (993,795) 121 AGENCY FUNDS The agency fund is used to report resources held by the City in a purely custodial capacity. Cable Equipment Fund — This fund is used to account for resources received under the cable franchise agreement to support public, educational, and governmental access and internet use grants. Dog Track Depreciation Fund — This fund is used to account for the resources held for improvements at the greyhound racing facility. 122 CITY OF DUBUQUE, IOWA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED JUNE 30, 2013 EXHIBIT D -1 Balance Balance Beginning End of Year Additions Deductions of Year CABLE EQUIPMENT FUND ASSETS Cash and pooled cash investments $ 265,986 $ 214,167 $ 108,230 $ 371,923 Accounts receivable 55,229 - 3,176 52,053 Total Assets $ 321,215 $ 214, 167 $ 111,406 $ 423,976 LIABILITIES Accounts payable $ - $ 178 $ - $ 178 Due to other agency 321,215 102,583 - 423,798 Total Liabilities $ 321,215 $ 102,761 $ - $ 423,976 DOG TRACK DEPRECIATION FUND ASSETS Cash and pooled cash investments $ 1,207,219 $ 131,291 $ 870,038 $ 468,472 Accrued interest 2,747 950 2,747 950 Total Assets $ 1,209,966 $ 132,241 $ 872,785 $ 469,422 LIABILITIES Due to other agency $ 1,209,966 $ - $ 740,544 $ 469,422 TOTAL AGENCY FUNDS ASSETS Cash and pooled cash investments $ 1,473,205 $ 345,458 $ 978,268 $ 840,395 Accounts receivable 55,229 - 3,176 52,053 Accrued interest 2,747 950 2,747 950 Total Assets $ 1,531,181 $ 346,408 $ 984,191 $ 893,398 LIABILITIES Accounts payable $ - $ 178 $ - $ 178 Due to other agency 1,531,181 102,583 740,544 893,220 Total Liabilities $ 1,531,181 $ 102,761 $ 740,544 $ 893,398 123 124 Statistical Section (Unaudited) June 30, 2013 City of Dubuque, Iowa 125 126 CITY OF DUBUQUE, IOWA STATISTICAL SECTION This statistical section of the City's comprehensive annual fmancial 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 fmancial 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. 128 138 142 152 154 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 127 CITY OF DUBUQUE, IOWA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal - 2004 2005 2006 2007 2008 Governmental activities Net Investment in capital assets $ 231,863,231 $ 249,881,646 $ 267,762,059 $ 288,978,975 $ 296,143,451 Restricted 31,931,803 24,180,874 21,693,357 23,900,328 31,970,724 Unrestricted 11,322,661 11,236,870 15,132,486 21,921,571 18,987,841 Total governmental activities net position $ 275,117,695 $ 285,299,390 $ 304,587,902 $ 334,800,874 $ 347,102,016 Business -type activities Net Investment in capital assets $ 92,301,043 $ 93,036,089 $ 88,802,536 $ 91,483,532 $ 95,104,575 Restricted 554,005 554,205 554,294 554,318 554,505 Unrestricted 10,502,939 12,854,730 13,258,072 11,214,900 11,312,806 Total business- type activities net position $ 103,357,987 $ 106,445,024 $ 102,614,902 $ 103,252,750 $ 106,971,886 Primary government Net Investment in capital assets $ 324,164,274 $ 342,917,735 $ 356,564,595 $ 380,462,507 $ 391,248,026 Restricted 32,485,808 24,735,079 22,247,651 24,454,646 32,525,229 Unrestricted 21,825,600 24,091,600 28,390,558 33,136,471 30,300,647 Total primary government net position $ 378,475,682 $ 391,744,414 $ 407,202,804 $ 438,053,624 $ 454,073,902 128 TABLE 1 Year 2009 2010 2011 2012 2013 $ 298,855,346 $ 309,126,684 $ 329,416,245 $ 347,890,769 $ 342,046,442 27,171,123 26,064,318 23,738,199 26,180,100 23,491,207 (5,280,715) (11,256,312) (4,891,381) (16,876,988) (8,361,688) $ 320,745,754 $ 323,934,690 $ 348,263,063 $ 357,193,881 $ 357,175,961 $ 120,473,286 $ 124,805,513 $ 135,026,753 $ 132,237,734 $ 138,498,777 770,157 129,642 893,519 957,802 6,011,848 12,321,125 11,679,961 2,603,799 10,665,596 (641,384) $ 133,564,568 $ 136,615,116 $ 138,524,071 $ 143,861,132 $ 143,869,241 $ 419,328,632 $ 433,932,197 $ 464,442,998 $ 480,128,503 $ 480,545,219 27,941,280 26,193,960 24,631,718 27,137,902 29,503,055 7,040,410 423,649 (2,287,582) (6,211,392) (9,003,072) $ 454,310,322 $ 460,549,806 $ 486,787,134 $ 501,055,013 $ 501,045,202 129 CITY OF DUBUQUE, IOWA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal - 2004 2005 2006 2007 2008 Expenses Governmental activities: Public safety $ 16,605,481 $ 18,636,877 $ 18,892,980 $ 20,326,724 $ 16,966,210 Public works 12,847,410 17,088,983 16,390,322 16,505,560 18,847,068 Health and social services 1,290,619 654,469 678,748 759,367 800,566 Culture and recreation 7,849,114 8,474,183 9,627,505 9,837,299 10,857,409 Community and economic development 12,662,552 9,680,046 8,541,167 11,965,805 11,961,584 General government 3,773,136 4048,475 3,868,687 4,940,154 5,804,003 Interest on long -tenn debt 1,248,498 1,298,367 1,460,730 1,400,748 2,577,417 Total governmental activities expenses 56,276,810 59,881,400 59,460,139 65,735,657 67,814,257 Business -type activities: Sewage disposal works 5,282,016 4,656,172 5,298,353 5,814,076 6,141,524 Water utility 4,368,738 4,232,489 4,700,483 4,780,063 4,814,692 Stonnwater utility 1,184,968 1,114,811 1,153,628 1,198,675 1,706,735 Parking facilities 1,655,429 1,604,071 1,629,427 1,611,447 2,173,110 America's River Project 1,064,701 515,570 82,617 434,667 126,699 Refuse collection 2,238,254 2,202,800 2,463,795 2,496,018 2,724,050 Transit system 2,257,078 2,326,908 2,555,080 2,760,459 2,703,983 Salt - - - - - Total business-type activities expenses 18,051,184 16,652,821 17,883,383 19,095,405 20,390,793 Total primary government expenses $ 74,327,994 $ 76,534,221 $ 77,343,522 $ 84,831,062 $ 88,205,050 Program Revenues Governmental activities: Charges for services Public safety 1,785,787 1,900,938 1,809,481 1,857,324 2,088,723 Public works 3,392,650 3,371,073 3,370,291 4,839,781 4,061,883 Culture and recreation 2,282,983 2,143,246 2,218,315 2,251,562 2,109,571 Other activities 873,457 945,712 895,920 1,074,550 1,382,889 Operating grants and contributions 12,197,307 14,603,106 12,902,410 11,641,904 11,709,123 Capital grants and contributions 5,153,258 6,919,296 6,881,573 23,741,282 8,032,602 Total governmental activities program revenues 25,685,442 29,883,371 28,077,990 45,406,403 29,384,791 Business -type activities: Charges for services Sewage disposal works 4,719,491 4,552,587 5,077,491 5,259,432 5,484,079 Water utility 4,307,238 4,224,074 4,669,340 4,743,896 4,875,530 Stonnwater utility 754,101 684,570 928,850 1,227,243 1,766,334 Parking facilities 1,643,490 1,889,937 1,886,642 1,977,757 2,141,607 America's River Project 881,089 26,061 51,373 3,099 2,140 Refuse collection 2,157,285 2,283,677 2,397,525 2,642,251 2,710,583 Transit system 319,216 389,106 341,743 237,088 195,817 Salt - - - Operating grants and contributions 825,538 651,967 920,762 1,167,344 1,209,636 Capital grants and contributions 11,007,676 3,030,378 2,769,657 1,670,874 2,830,263 Total business- type activities program revenues 26,615,124 17,732,357 19,043,383 18,928,984 21,215,989 Total primary government program revenues $ 52,300,566 $ 47,615,728 $ 47,121,373 $ 64,335,387 $ 50,600,780 130 TABLE 2 Year 2009 2010 2011 2012 2013 $ 22,038,265 $ 22,067,988 $ 23,759,068 $ 26,326,367 $ 28,292,481 19,079,688 22,121,629 18,978,423 22,917,747 21,607,536 849,237 852,099 1,072,347 913,954 716,970 12,640,716 11,446,084 10,911,733 12,749,558 13,647,178 12,693,140 15,422,099 12,890,841 22,030,950 17,388,720 6,423,908 7,963,016 9,052,704 6,133,983 6,248,483 3,164,126 3,101,897 3,294,951 3,294,912 4,049,640 76,889,080 82,974,812 79,960,067 94,367,471 91,951,008 6,326,708 6,631,326 7,899,011 9,718,669 9,375,748 6,100,491 6,093,827 6,523,993 7,410,710 6,817,772 2,138,198 2,213,144 2,811,321 2,750,767 3,347,304 2,147,405 4,003,776 4,775,834 3,152,055 3,586,405 61,927 423,158 180,086 22,787 22,770 2,788,665 2,703,887 2,828,891 3,173,075 3,468,859 2,625,145 2,832,066 2,947,958 3,629,750 3,492,095 - - 671,647 661,395 346,066 22,188,539 24,901,184 28,638,741 30,519,208 30,457,019 $ 99,077,619 $ 107,875,996 $ 108,598,808 $ 124,886,649 $ 122,408,027 2,020,625 2,348,064 2,579,573 2,915,562 2,495,737 4,456,364 4,046,583 5,331,667 5,178,439 4,472,479 2,279,688 2,192,886 2,108,177 2,321,553 2,488,844 1,557,597 2,412,880 2,530,234 2,873,298 3,264,979 12,599,967 20,830,113 14,204,627 23,013,997 13,995,316 4,811,729 10,748,522 23,482,866 16,560,811 10,791,945 27,725,970 42,579,048 50,237,144 52,863,660 37,509,300 5,904,535 5,893,730 6,643,974 7,827,281 8,924,785 5,320,642 5,326,202 5,638,277 6,037,073 6,922,582 2,291,249 2,282,625 2,993,539 3,180,134 3,192,256 2,224,185 2,399,843 2,750,610 2,908,989 2,883,865 7,000 - - 2,872,649 2,893,017 3,082,197 3,257,960 3,346,795 196,260 273,433 193,236 278,835 307,314 773,258 665,942 395,000 1,095,946 1,652,277 2,773,933 1,579,493 2,264,695 3,613,321 3,800,582 6,536,527 5,323,486 1,240,583 23,518,787 24,528,709 31,385,551 31,059,193 29,477,875 $ 51,244,757 $ 67,107,757 $ 81,622,695 $ 83,922,853 $ 66,987,175 (Continued) 131 CITY OF DUBUQUE, IOWA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Net (Expense)/Revenue Governmental activities Business -type activities Total primary government net expense Fiscal - 2004 2005 2006 2007 2008 $ (30,591,368) $ (29,998,029) $ (31,382,149) $ (20,329,254) $ (38,429,466) 8,563,940 1,079,536 1,160,000 (166,421) 825,196 $ (22,027,428) $ (28,918,493) $ (30,222,149) $ (20,495,675) $ (37,604,270) General Revenues and Other Changes in Net Position Governmental activities: General Revenues Property taxes 18,588,367 19,767,492 19,716,620 21,656,908 22,744,563 Local option sales tax 7,105,183 6,963,124 7,336,124 7,817,403 8,020,889 HoteVmotel tax 1,314,114 1,383,660 1,862,439 1,569,743 1,622,455 Utility franchise fees 862,275 1,310,064 1,521,201 1,492,920 1,516,123 Gaming 11,631,022 11,694,105 14,034,847 15,556,551 15,346,468 Unrestricted investment earnings 497,361 1,190,337 1,081,141 1,870,403 2,741,499 Gain on sale of capital assets 175,231 170,642 77,627 - 92,525 Other 638,681 560,789 572,602 586,931 898,241 Transfers 10,956,246 (1,684,581) 5,033,974 (7,633) (2,252,155) Total governmental activities 51,768,480 41,355,632 51,236,575 50,543,226 50,730,608 Business -type activities: General Revenues Unrestricted investment earnings 181,674 322,884 339,599 796,636 630,049 Gain on sale of capital assets 25 36 703 - 11,736 Extraordinary item - - - - - Transfers (10,956,246) 1,684,581 (5,033,974) 7,633 2,252,155 Total business -type activities (10,774,547) 2,007,501 (4,693,672) 804,269 2,893,940 Total primary government $ 40,993,933 $ 43,363,133 $ 46,542,903 $ 51,347,495 $ 53,624,548 Change in Net Position Governmental activities Business -type activities $ 21,177,112 $ 11,357,603 $ 19,854,426 $ 30,213,972 $ 12,301,142 (2,210,607) 3,087,037 (3,533,672) 637,848 3,719,136 Total primary government $ 18,966,505 $ 14,444,640 $ 16,320,754 $ 30,851,820 $ 16,020,278 132 TABLE 2 (Continued) Year 2009 2010 2011 2012 2013 $ (49,163,110) $ (40,395,764) $ (29,722,923) $ (41,503,811) $ (54,441,708) 1,330,248 (372,475) 2,746,810 539,985 (979,144) $ (47,832,862) $ (40,768,239) $ (26,976,113) $ (40,963,826) $ (55,420,852) 23,716,819 24,876,073 28,249,114 30,816,614 32,668,554 7,649,853 8,112,471 7,929,761 8,459,888 8,764,787 1,611,954 1,678,806 1,826,809 1,903,944 1,953,763 1,486,292 1,591,712 2,488,858 2,272,481 2,568,347 9,627,391 8,209,761 13,327,223 8,785,453 8,452,298 2,215,413 1,339,709 668,363 1,529,149 201,153 407,503 149,937 1,417,048 907,122 918,605 880,930 622,494 - (24,826,982) (3,104,762) (1,211,263) (4,749,948) (1,092,236) 22,806,848 43,584,700 54,051,296 50,434,629 54,423,788 433,148 294,562 184,581 206,672 65,351 2,304 23,699 19,337 84,178 384,697 (2,253,036) (243,722) (555,031) 24,826,982 3,104,762 1,211,263 4,749,948 1,092,236 25,262,434 3,423,023 (837,855) 4,797,076 987,253 $ 48,069,282 $ 47,007,723 $ 53,213,441 $ 55,231,705 $ 55,411,041 $ (26,356,262) $ 3,188,936 $ 24,328,373 $ 8,930,818 $ (17,920) 26,592,682 3,050,548 1,908,955 5,337,061 8,109 $ 236,420 $ 6,239,484 $ 26,237,328 $ 14,267,879 $ (9,811) 133 CITY OF DUBUQUE, IOWA FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) General Fund Reserved Unreserved Nonspendable Assigned Unassigned Total general fund All Other Governmental Funds Reserved Unreserved, reported in: Special revenue fiords Debt service fiord Capital projects fiords Permanent fiords Nonspendable Restricted Committed Unassigned Total all other governmental fiords 2004 2005 2006 2007 $ 3,233,335 13,685,063 $ 3,169,453 13,706,134 $ 1,477,141 16,050,997 $ 4,455,303 17,827,631 Fiscal - 2008 $ 1,699,825 17,982,016 $ 16,918,398 $ 16,875,587 $ 17,528,138 $ 22,282,934 $ 19,681,841 $ 14,231,390 9,720,412 (68,569) 7,353,593 71,373 $ 13,607,759 5,777,233 (56,320) 11,191,461 73,628 $ 15,564,016 7,277,471 (981,248) 83,367 $ 13,942,519 7,586,898 4,195,354 115,825 $ 31,887,038 7,431,931 7,875,448 33,958 $ 31,308,199 $ 30,593,761 $ 21,943,606 $ 25,840,596 $ 47,228,375 *Classification changed in 2011 due to adoption of GASB 54. 134 TABLE 3 Year 2009 2010 2011 2012 2013 $ 4,864,701 $ 5,199,760 $ 14,206,181 8,622,705 * * * $ 19,070,882 $ 868,631 8,904,490 6,139,306 13,822,465 $ 15,912,427 $ * $ * * 6,646,278 3,434,440 8,806,171 $ 18,886,889 5,613,359 5,549,803 9,371,016 20,534,178 $ 19,634,305 5,981,390 5,659,214 35,550 * * * * $ 24,404,656 $ 4,011,022 (989,025) 33,273 10,320,305 18,010,570 5,203,472 (377,363) * $ * * * * * * 10,975,468 31,362,126 5,843,671 (429,344) 9,092,520 30,738,046 10,827,172 ■ $ 31,310,459 $ 27,459,926 $ 33,156,984 $ 47,751,921 $ 50,657,738 135 CITY OF DUBUQUE, IOWA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Revenues Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Contributions Gaming Miscellaneous Total revenues Expenditures Current Public safety Public works Health and social services Culture and recreation Community and economic development General government Debt service Principal Interest Capital projects Total expenditures Excess (deficiency) of revenues over (under) expenditures Other Financing Sources (Uses) Issuance of bonds Discount on bonds Premiums on bonds Issuance of refunding bonds Payment to refunded bonds escrow agent Transfers in Transfers out Insurance recovery Sale of capital assets Total other financing sources (uses) Net change in fund balances Debt service as a percentage of noncapital expenditures Fiscal - 2004 2005 2006 2007 2008 $ 27,861,273 $ 29,430,135 $ 30,043,167 $ 32,526,525 $ 33,898,692 717,305 197,195 322,214 586,459 177,585 1,063,081 1,078,722 965,712 1,052,896 1,153,429 17,057,994 18,370,358 15,021,722 16,744,703 14,256,523 5,666,307 5,918,542 6,620,243 7,351,191 7,833,151 241,572 267,536 204,201 158,360 188,603 502,932 1,197,691 1,096,445 1,913,420 2,731,953 345,415 306,809 246,908 1,168,463 6,134,002 11,631,022 11,694,105 14,034,847 15,556,551 15,346,468 1,139,057 1,573,305 1,106,991 1,149,546 1,269,376 66,225,958 70,034,398 69,662,450 78,208,114 82,989,782 16,764,510 18,652,246 19,535,369 10,723,527 21,301,239 11,605,567 721,906 662,231 715,598 7,470,264 8,180,832 9,998,462 11,924,011 9,825,470 9,981,645 4,227,335 4,022,785 4,090,866 2,117,773 1,769,960 1,325,970 1,304,802 1,240,427 1,493,504 6,865,119 8,226,840 14,528,340 62,119,247 73,882,030 73,275,321 20,743,196 12,506,378 783,209 10,244,244 11,695,902 4,441,043 1,663,339 1,412,012 8,227,257 71,716,580 21,542,661 16,331,107 797,644 10,277,787 11,847,512 6,310,939 1,762,375 2,406,431 15,351,848 86,628,304 4,106,711 (3,847,632) (3,612,871) 6,491,534 (3,638,522) 795,000 8,662,300 (15,060,669) 264,344 (5,339,025) $ (1,232,314) (58,487) 7,277,665 12,981,655 (16,105,184) 170,642 4,266,291 $ 418,659 13,682 1,515,750 (1,494,371) 7,334,605 (11,904890) 150,491 (4,384,733) $ (7,997,604) 743,591 23,083,696 (266,158) 10,394,726 (11,789,548) 2,811,483 2,160,252 $ 8,651,786 2,965,000 (2,875,000) 14,801,589 (18,185,109) 2,901,190 22,425,208 $ 18,786,686 6.32% 5.46% 4.99% 5.01% 6.55 % 136 TABLE 4 Year 2009 2010 2011 2012 2013 $ 34,454,146 $ 36,252,156 $ 40,428,894 $ 43,443,669 $ 45,440,973 250,372 318,178 232,535 596,138 175,486 1,088,386 1,115,472 1,170,922 1,570,022 1,271,771 15,796,822 27,310,624 26,171,082 37,574,783 26,580,831 8,029,189 8,063,284 8,723,086 9,296,329 8,952,179 199,839 224,601 454,117 525,389 484,128 2,206,382 1,348,615 654,587 1,511,437 180,016 1,369,759 2,333,995 1,297,621 1,578,376 370,154 9,627,391 8,209,761 13,327,223 8,785,453 8,452,298 1,600,679 2,111,834 2,075,262 1,319,558 1,315,915 74,622,965 87,288,520 94,535,329 106,201,154 93,223,751 21,335,192 14,261,551 815,873 12,227,506 11,953,279 5,836,839 2,169,678 3,095,166 24,274,120 95,969,204 21,979,729 19,251,625 813,609 14,909,517 14,654,816 6,368,308 2,651,765 3,145,735 14,831,118 98,606,222 (21,346,239) (11,317 702) 5,905,000 (48,516) 7,451,152 (9,084,228) 593,956 4,817,364 $ (16,528,875) 4,722,176 (31,990) 554,796 8,885,000 (9,405,000) 7,993,297 (10,562,137) 62,610 2,218,752 $ (9,098,950) 23,950,386 14,429,415 1,040,114 11,279,951 12,361,176 7,686,929 2,820,371 3,321,157 15,102,893 91,992,392 24,476,772 12,385,929 828,837 10,873,474 22,237,140 6,335,947 3,224,680 3,220,546 23,459,891 107,043,216 26,506,714 13,416,108 680,466 11,218,019 18,678,496 5,035,108 3,182,240 3,991,115 16,636,698 99,344,964 2,542,937 (842,062) (6,121,213) 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 27,215,363 (71,689) 123,990 8,773,387 (18,336,603) 132,425 2,221,877 20,058,750 $ 19,216,688 6,577,268 4,949,148 (4,949,148) 15,295,630 (16,981,203) 49,209 2,438,837 7,379,741 $ 1,258,528 7.68% 7.74% 8.49% 7.65% 8.57% 137 CITY OF DUBUQUE, IOWA TAXABLE AND ASSESSED VALUE OF PROPERTY LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) TABLE 5 Real Property Levy Fiscal Taxable Year Year Value 2002 2004 $ 1,572,776 2003 2005 1,666,033 2004 2006 1,710,334 2005 2007 1,780,354 2006 2008 1,823,304 2007 2009 1,949,071 2008 2010 2,033,135 2009 2011 2,159,622 2010 2012 2,243,474 2011 2013 2,337,129 Assessed Value $ 2,350,317 $ 2,575,400 2,679,078 2,804,568 2,870,178 3,171,681 3,239,112 3,349,823 3,406,186 3,476,638 Exemptions Real Property 9,694 9,599 9,862 9,122 8,939 9,298 9,246 8,885 8,875 8,872 Total Taxable Value to Total Total Taxable Assessed Assessed Total Direct Value Value Value Tax Rate $ 1,563,082 $ 2,350,317 66.51% $ 10.27303 1,656,434 2,575,400 64.32 10.07200 1,700,472 2,679,078 63.47 9.69910 1,771,232 2,804,568 63.16 9.98030 1,814,365 2,870,178 63.21 10.31685 1,939,773 3,171,681 61.16 9.96904 2,023,889 3,239,112 62.48 9.85777 2,150,737 3,349,823 64.20 10.02742 2,234,599 3,406,186 65.60 10.45111 2,328,257 3,476,638 66.97 10.78478 138 CITY OF DUBUQUE, IOWA PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TAX RATES PER $1,000 ASSESSED VALUE TABLE 6 Dubuque Board of Ratio of Levy Fiscal Dubuque School Education and Area 1 Dubuque Dubuque Year Year City District Independents Voc. Tech County Total City to Total 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 2010 2012 10.45111 16.87685 0.67766 1.07379 6.49167 35.57108 29.38 2011 2013 10.78477 15.40388 0.71653 0.98407 6.43124 34.32049 31.42 Separate components of the Dubuque City Rate is as follows Levy Fiscal Public Employee Debt Year Year General Transit Insurance Benefits Service Total 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 2010 2012 8.10000 0.35273 0.19508 1.75052 0.05278 10.45111 2011 2013 8.10000 0.49516 0.13965 2.02267 0.02729 10.78477 Source: Dubuque County Auditor's Office. 139 CITY OF DUBUQUE, IOWA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO (IN THOUSANDS OF DOLLARS) TABLE 7 2013 2004 Percentage of Percentage of Taxable Total City Taxable Total City Assessed Taxable Assessed Taxable Taxpayer Value Rank Assessed Value Value Rank Assessed Value Peninsula Gaming Company $ 56,784 1 1.63% $ % ITC Midwest LLC 37,147 2 1.07 Kennedy Mall Inc. 26,940 3 0.77 23,608 1 1.00 Progressive Processing LLC (Hormel) 21,397 4 0.62 Medical Associates Realty LLC 18,815 5 0.54 20,952 2 0.89 CenturyLlNK 18,745 6 0.54 Nordstrom Inc 17,221 7 0.50 16,060 4 0.68 McGraw -Hill Education LLC 14,729 8 0.42 7,700 10 0.33 Otto A. LLC 14,100 9 0.41 17,532 3 0.75 Platinum Holdings LLC 11,588 10 0.33 Minglewood Limited Partnership 8,944 7 0.38 Plaza 20 Inc. 10,034 6 0.43 U.S. West Communications 10,393 5 0.44 Wa1 -Mart 7,744 9 0.33 American Trust & Savings Bank 8,663 8 0.37 $ 237,466 6.83% $ 131,630 5.60% Source: Dubuque County Auditor's Office 140 CITY OF DUBUQUE, IOWA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS ) TABLE 8 Percent of Total Tax Ratio of Total Tax Current Current Delinquent Total Tax Collections Outstanding Delinquent Fiscal Levy Levy Tax Taxes Tax Collections to Total Delinquent Taxes to Total Year Year (1) Collections Collected Collections (2) Tax Levy Taxes Tax Levy 2004 2003 16,208 15,937 98.3% 11 15,948 98.4% 207 1.28% 2005 2004 16,408 16,383 99.8 20 16,403 100.0 196 1.19 2006 2005 16,229 16,146 99.5 2 16,148 99.5 182 1.12 2007 2006 17,216 17,193 99.9 4 17,197 99.9 174 1.01 2008 2007 18,211 18,160 99.7 3 18,163 99.7 215 1.18 2009 2008 18,992 18,670 98.3 5 18,675 98.3 262 1.38 2010 2009 19,124 19,117 99.9 (10) 19,107 99.9 202 1.06 2011 2010 19,906 19,793 99.4 13 19,806 99.5 276 1.39 2012 2011 21,313 21,339 100.1 1 21,341 100.1 185 0.87 2013 2012 22,789 22,749 100 7 22,755 100.0 182 0.80 (1) Excludes tax increment levy. (2) Includes taxes collected in June by the County but not received by the City until July. 141 CITY OF DUBUQUE RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governemental Activities Tax General Tax Increment Increment Fiscal Obligation Financing Financing Other Loans Year Bonds Bonds Notes Payable 2004 $ 19,010,000 $ 3,820,394 $ 655,000 $ 2005 24,902,241 3,450,820 622,211 2006 24,036,627 3,040,304 590,439 2007 22,870,646 2,594,831 1,279,885 - 2008 21,752,907 24,879,116 1,279,885 - 2009 25,941,693 24,363,262 1,169,684 150,000 2010 27,887,864 24,449,674 1,049,696 282,857 2011 32,561,048 23,037,222 1,931,348 282,857 2012 53,087,811 22,258,283 1,767,664 4,735,714 2013 56,517,165 21,920,537 1,235,903 5,638,571 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. 142 TABLE 9 Business -Type Activities General Capital Other Total Percentage of Obligation Loan Revenue Loans Primary Personal Per Bonds Notes Bonds Payable Government Income (1) Capita (1) $ 6,622,750 $ 1,350,000 $ $ 31,458,144 1.85% $ 545 8,037,594 1,150,000 38,162,866 2.16 662 11,428,712 940,000 - 40,036,082 2.15 694 10,895,593 720,000 - 38,360,955 2.00 665 11,384,371 611,977 490,000 - 60,398,256 3.03 1,047 14,448,770 3,914,076 1,434,713 390,890 71,813,088 3.59 1,245 23,957,802 8,289,621 1,115,430 371,978 87,404,922 4.25 1,515 25,254,652 33,195,408 6,777,793 2,252,109 125,292,437 5.37 2,174 35,108,003 61,957,749 6,521,188 331,235 185,767,647 7.65 3,223 34,921,131 75,415,431 6,260,299 309,304 202,218,341 * 3,508 143 CITY OF DUBUQUE RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS DOLLARS IN THOUSANDS EXCEPT PER CAPITA TABLE 10 Percentage of Percentage of General Taxable Taxable Assessed Assessed Fisal Obligation Value of Value of Value of Value of Per Year Bonds Property Property Property Property Capita 2004 $ 25,633 $ 1,563,082 1.64% $ 2,350,317 1.09% $ 444 2005 32,940 1,656,434 1.99 % 2,575,400 1.28 % 571 2006 35,456 1,700,472 2.09 % 2,679,078 1.32 % 615 2007 33,766 1,771,232 1.91 % 2,804,568 1.20 % 585 2008 33,137 1,814,365 1.83% 2,870,178 1.15% 574 2009 40,390 1,939,773 2.08 % 3,171,681 1.27 % 700 2010 51,846 2,023,899 2.56% 3,239,112 1.60% 899 2011 57,816 2,159,622 2.68% 3,349,823 1.73% 1,003 2012 88,196 2,243,474 3.93 % 3,406,186 2.59 % 1,530 2013 91,438 2,337,129 3.91 % 3,476,638 2.63 % 1,586 144 CITY OF DUBUQUE, IOWA DIRECT AND OVERLAPPING DEBT AS OF JUNE 30, 2013 TABLE 11 Net General Obligation Bonded Tax Tax Amount Debt Increment Increment Percentage Applicable Outstanding Financing Financing Capital Loans Applicable To Jurisdiction (1) Bonds Notes Notes Payable to City Government Direct, City of Dubuque, Iowa $ 56,517,165 $ 21,920,537 $ 1,235,903 $ - $ 5,638,571 100.00 % $ 85,312,176 Overlapping: Dubuque County Dubuque Community School District Northeast Iowa Community College Total Overlapping Total 3,850,000 57,595,000 281,791 57,595,000 3,850,000 0.06 % 169 100.00 % 3,850,000 0.02 % 11,519 281,791 3,861,688 $ 113,717,022 $ 22,142,335 $ 1,235,903 $ 3,850,000 $ 5,920,362 $ 89,173,864 Source: Dubuque County Auditor, Dubuque Community School District and Northeast Iowa Community College (1) Excludes debt 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 businesses of Dubuque. This process recognizes that, when considering the city's ability to issue and repay long -tenn debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 145 CITY OF DUBUQUE, IOWA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) 2004 2005 2006 2007 Debit limit $ 117,516 $ 133,149 $ 138,789 $ 145,401 Total net debt applicable to limit 30,185 37,177 39,443 38,060 Legal debit margin $ 87,331 $ 95,972 $ 99,346 $ 107,341 Total net debt applicable to the debt limit as a percentage of debt limit 25.69 ° 27.92% 28.42 % 26.18% 146 TABLE 12 2008 2009 2010 2011 2012 2013 $ 148,824 $ 163,621 $ 167,247 $ 174,333 $ 177,668 $ 181,668 60,485 76,182 101,152 92,443 142,316 143,303 $ 88,339 $ 87,439 $ 66,095 $ 81,890 $ 35,352 $ 38,365 40.64% 46.56 % 60.48% 53.03% 80.10% 78.88% Legal Debt Margin Calculation for Fiscal Year 2013 Estimated actual value $ 3,633,353,076 Debt limit - 5% of total actual valuation $ 181,667,654 Debt applicable to limit: (Including GO Debt, TIF Debt, and Lease Obligations Paid from General Fund) $ 143,302,946 Legal debt margin $ 38,364,708 147 CITY OF DUBUQUE, IOWA REVENUE DEBT COVERAGE LAST TEN FISCAL YEARS ( IN THOUSANDS OF DOLLARS) TABLE 13 Net Revenue Gross Operating Available Next Fiscal Year's Fiscal Revenues Expenses For Debt Debt Service Requirements Year (1) (2) Service Principal Interest Total Coverage (3) WATER UTILITY 2008 $ 4,933 $ 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 2012 6,087 5,895 192 535 455 990 0.19 2013 6,944 5,391 1,553 432 344 776 2.00 STORMWATER UTILITY Net Revenue Gross Operating Available Next Fiscal Year's Fiscal Revenues Expenses For Debt Debt Service Requirements Year (1) (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 3,023 1,679 1,344 231 243 474 2.84 2012 3,211 1,497 1,714 462 268 730 2.35 2013 3,194 2,019 1,175 266 279 545 2.16 SEWAGE DISPOSAL WORKS Net Revenue Gross Operating Available Next Fiscal Year's Fiscal Revenues Expenses For Debt Debt Service Requirements Year (1) (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 6,029 670 34 1,129 1,163 0.58 2012 7,892 7,018 874 1,719 1,443 3,162 0.28 2013 8,951 6,113 2,838 1,916 1,298 3,214 0.88 PARKING BONDS Net Revenue Gross Operating Available Next Fiscal Year's Fiscal Revenues Expenses For Debt Debt Service Requirements Year (1) (2) Service Principal Interest Total Coverage (3) 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. 148 CITY OF DUBUQUE, IOWA WATER AND SEWER RECEIPT HISTORY LAST TEN FISCAL YEARS TABLE 14 Fiscal Year Water Receipts Sewer Receipts 2004 $ 4,350,338 $ 4,466,035 2005 4,340,789 4,478,205 2006 4,798,408 4,920,376 2007 4,856,353 5,276,454 2008 5,020,001 5,481,074 2009 5,358,419 5,821,251 2010 5,503,277 5,851,401 2011 5,871,246 6,672,890 2012 6,297,547 7,825,037 2013 7,077,986 8,688,996 Source: Cash basis receipt ledgers. Note: Revenue includes penalties, investment earnings and sales tax collected and remitted to the State of Iowa. 149 CITY OF DUBUQUE, IOWA WATER METERS BY RATE CLASS LAST EIGHT 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 2010 20,204 1,887 71 48 22,210 2011 20,338 1,904 79 51 22,372 2012 20,532 1,902 79 52 22,565 2013 20,753 1,921 80 53 22,807 *Prior two years information not available. 150 CITY OF DUBUQUE, IOWA LARGEST WATER AND SEWER CUTOMERS FISCAL YEAR 2013 TABLE 16 Percentage of Percentage of Water Total Water Sewer Total Sewer Customer Receipts Rank Receipts Receipts Rank Receipts Rousselot $ 271,312 1 3.83 % $ 556,882 1 6.41 % Hormel 144,510 2 2.04 301,695 2 3.47 Alliant Energy 75,606 3 1.07 Loras College 68,366 4 0.97 92,386 6 1.06 Prairie Farms Dairy 60,605 5 0.86 152,794 4 1.76 Water & Resource Recovery Center 57,905 6 0.82 Mercy Medical Center 56,448 7 0.80 98,388 5 1.13 University of Dubuque 55,620 8 0.79 69,032 9 0.79 Dubuque Community Schools 54,154 9 0.77 73,156 8 0.84 Premier Linen & Dry Cleaning 40,492 10 0.57 83,437 7 0.96 Inland Protein Corporation 159,949 3 1.84 Clarke University 54,302 10 0.62 Total Revenue $ 7,077,986 $ 8,688,996 151 CITY OF DUBUQUE, IOWA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS TABLE 17 Per Capita Public Personal Median School Unemployment Personal Income Age Enrollment Rate Year Population Income (1) (2) (3) (4) 2004 57,686 $ 1,704,563,614 $ 29,549 37 10,428 4.4% 2005 57,686 1,768,075,900 30,650 37 10,547 4.5 2006 57,686 1,862,680,940 32,290 37 10,733 3.5 2007 57,686 1,920,366,940 33,290 37 10,727 7.0 2008 57,686 1,994,262,706 34,571 38 10,614 3.8 2009 57,686 2,002,973,292 34,722 37 10,697 6.2 2010 57,686 2,055,640,610 35,635 37 10,517 4.0 2011 57,637 2,332,569,390 40,470 37 10,467 5.8 2012 57,637 2,428,016,262 42,126 37 10,513 5.2 2013 57,637 * * 39 * 5.3 Data Sources: (1) U.S. Department of Commerce, Bureau of Economic Analysis. (2) Greater Dubuque Development Corporation. (3) Dubuque Community School District. (4) Iowa Department of Employment Services as of June 30. * Unavailable at report date. 152 CITY OF DUBUQUE, IOWA PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO TABLE 18 2013 2006* Percentage of Percentage of # of Total City # of Total City Employer Employees Rank Employment Employees Rank Employment John Deere (2) 2,400 1 4.44 % 1,900 1 3.54% Dubuque Community Schools 1,946 2 3.60 1,410 2 2.62 IBM 1,300 3 2.40 Medical Associates 1,046 4 1.93 998 5 1.86 Mercy Medical Center 1,000 5 1.85 1,324 3 2.46 Finley Hospital 859 6 1.59 920 7 1.71 City of Dubuque 691 7 1.28 716 10 1.33 Diamond Jo 600 8 1.11 Eagle Window & Door 550 9 1.02 950 6 1.77 Prudential Retirement 528 10 0.98 Flexsteel 750 9 1.40 Heartland Financial USA, Inc. 760 8 1.41 McCoy Group 1,200 4 2.23 10,920 20.18% 10,928 20.34% Source: Greater Dubuque Development Corp. (1) Based on the percentage of total employment for Dubuque area from the U.S. Department of Labor, Bureau of Labor Statistics. (2) Located just outside City limits. *2004 and 2005 information unavailable. 153 CITY OF DUBUQUE, IOWA FULL -TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/DEPARTMENT LAST TEN FISCAL YEARS 2004 2005 2006 2007 Pulic Safety Emergency Communications 10.00 10.00 11.00 11.00 Fire 90.00 90.00 90.00 90.00 Police 97.00 97.00 99.00 100.00 Building Services 7.00 7.00 7.00 7.00 Public Works Public Works 87.30 88.55 87.00 87.00 Engineering 24.00 24.00 25.00 25.00 Health & Social Services Health Services 5.00 5.00 5.00 5.00 Human Rights 2.00 2.00 3.00 3.00 Cultural and Recreation Civic Center 9.15 9.15 1.15 0.15 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 7.93 Community & Economic Development Community / Economic Dev 3.00 3.00 3.00 3.00 Housing Services 20.00 21.00 21.00 20.25 Planning Services 7.00 7.00 8.00 8.00 General Government Airport 13.00 13.00 13.00 13.23 Cable TV 2.00 2.00 2.00 2.00 City Clerk's Office 3.00 3.00 3.00 3.00 City Manager's Office 10.00 10.00 11.00 11.00 Finance 15.00 14.00 14.00 14.00 Legal 2.00 2.00 2.62 3.00 Information Services 6.00 6.00 6.00 6.00 Business Type Water 23.00 23.00 23.00 23.00 *Water & Resource Recovery Center 18.00 18.00 18.00 18.00 Parking 10.50 10.50 8.00 8.00 Transit 7.00 7.00 8.55 8.00 Total 519.80 521.05 518.17 516.48 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. *Department renamed in 2011. Formerly known as the Water Pollution Control Plant. 154 TABLE 19 Full -Time Equivalent as of June 30 2008 2009 2010 2011 2012 2013 11.00 13.00 13.00 13.00 13.00 13.00 90.00 90.00 90.00 90.00 90.00 90.00 101.00 108.67 110.84 113.34 114.25 115.00 7.00 8.00 8.00 9.00 9.00 9.00 87.00 88.00 87.42 87.42 87.42 86.17 25.00 26.00 26.00 27.00 27.00 29.00 4.00 4.00 4.00 4.00 4.00 4.00 3.00 3.00 3.00 3.00 4.00 5.00 0.15 0.15 0.15 0.15 0.15 0.15 18.00 18.00 18.00 18.00 18.00 19.00 21.92 21.92 22.51 22.50 23.50 23.50 7.93 7.93 8.43 8.93 9.93 9.93 3.00 3.00 3.00 3.00 3.00 3.00 18.00 22.00 22.00 22.25 23.00 25.80 8.00 8.00 8.00 8.00 8.00 8.00 12.00 12.00 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 11.00 13.50 15.00 15.00 14.00 15.00 14.00 14.00 14.00 14.00 14.00 14.00 3.00 4.00 4.66 5.00 5.00 5.00 7.00 7.00 7.00 7.00 7.00 7.50 23.00 23.00 24.00 25.00 25.00 25.00 18.00 18.00 18.00 18.00 18.00 18.00 7.00 7.50 9.00 9.00 9.00 9.00 7.00 7.00 6.00 7.00 6.00 6.00 512.00 532.67 539.01 546.59 549.25 557.05 155 CITY OF DUBUQUE, IOWA OPERATING INDICATORS BY FUNCTION /PROGRAM LAST TEN FISCAL YEARS Public Safety Police Physical arrests Traffic violations Parking violations Fiscal Year 2004 2005 2006 2007 4,550 4,795 4,790 5,078 2,427 2,171 8,398 6,842 49,985 51,004 46,575 42,530 Fire Number of calls answered 4,181 4,300 4,176 4,454 Inspections conducted 408 1,135 409 360 Sewer Sewage system Daily average treatment in gallons Maximum daily capacity of treatment plant in gallons Water systems Daily average consumption in gallons Maximum daily capacity of plant in gallons Refuse (Municipal Collection) Tonnage Sources: Various City Departments. Statistics updated for fiscal year 2006, 2007 & 2008. 8,000,000 8,500,000 8,500,000 8,000,000 15, 000,000 13, 500,000 13, 500,000 13, 500,000 8,000,000 7,720,000 8,057,000 7,950,000 18, 000,000 18, 000,000 18, 000,000 18, 000,000 10,330 10,428 10,573 1 0,807 156 TABLE 20 2008 2009 2010 2011 2012 2013 5,090 6,325 6,365 6,350 6,319 6,106 6,881 8,801 8,901 12,289 11,836 12,089 40,741 36,457 37,056 35,799 34,910 35,516 4,699 4,480 4,557 4,844 5,307 4,792 624 443 1,035 555 589 512 10,310,000 7,981,000 9,068,000 8,132,000 7,817,000 10,987,000 13,500,000 21,131,000 21,131,000 23,240,000 23,240,000 23,240,000 7,812,000 7,845,000 7,684,000 7,636,000 7,226,000 6,953,000 17, 000,000 18, 000,000 18, 000,000 18, 000,000 18, 000,000 18,000,000 11,798 10, 7 74 10,615 10,660 11,180 10,535 157 CITY OF DUBUQUE, IOWA CAPITAL ASSETS BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year 2004 2005 2006 2007 Public safety Police Stations 1 1 1 1 Patrol units 18 19 19 19 Fire Stations 6 6 6 6 Aerial trucks 3 3 3 3 Public works Streets Miles (1) 290 290 295 307 Street lights (1) 1,591 1,631 1,755 1,802 Health and social sery ices Hospital 2 2 2 2 Number of patient beds 560 421 421 405 Cultural and recreation Library 1 1 1 1 Golf 1 1 1 1 Parks 42 44 44 47 Acreage 850 855 845 898 Recreation Civic center 1 1 1 1 Swimming pools 2 2 2 2 Softball fields 7 7 7 8 Baseball fields 1 1 1 1 Tennis courts 20 20 19 19 Sewer Sewage system Miles of sanitary sewer (1) * * 263 286 Miles of storm sewers (1) * * 116 120 Number of treatment plants 1 1 1 1 Number of service connectors 21,000 21,000 21,443 21,568 Water systems Miles of water mains 310 312 313 315 Number of service connectors 21,206 21,016 21,257 21,210 Number of city owned fire hydrants 2,736 2,770 2,780 2,798 Sources: Various City Departments. (1) City GIS System *Information not available 158 TABLE 21 2008 2009 2010 2011 2012 2013 1 1 1 1 1 1 19 19 22 22 22 22 6 6 6 6 6 6 3 3 3 3 3 3 317 320 321 325 328 329 1,855 1,877 1,916 1,931 2,081 2,084 2 2 2 2 2 2 405 405 389 389 389 389 1 1 1 1 1 1 1 1 1 1 1 1 47 47 48 48 51 51 898 898 901 901 1,001 1,001 1 1 1 1 1 1 2 2 2 2 2 2 7 7 7 7 7 7 1 1 1 1 1 1 20 20 20 20 20 20 290 295 300 300 304 304 122 143 144 150 155 141 1 1 1 1 1 1 21,633 21,347 21,599 21,702 22,393 22,428 316 317 318 319 319.75 321.02 21,243 21,347 21,986 22,092 22,161 22,536 2,812 2,831 2,843 2,854 2,863 2,879 159 160 Compliance Section June 30, 2013 City of Dubuque, Iowa 161 162 EideBailly CPAs Cu BUSINESS ADVISORS Independent Auditor's 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, 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 the governmental activities, the business -type activities, the 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, 2013, and the related notes to the financial statements, which collectively comprise City's basic financial statements, and have issued our report thereon dated January 15, 2014. The financial statements of Dubuque Initiatives and Subsidiaries, a discretely presented component unit which was audited by other auditors, 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 of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances 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. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. 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 material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified a certain deficiency in internal control 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 I F 563.557.7842 I EOE 163 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 entity'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 2013 -A to be a material weakness. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from 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. Comments involving statutory and other legal matters about the City's operations for the year ended June 30, 2013 are based exclusively on knowledge obtained from procedures performed during our audit of the financial statements of the City and are reported in Part IV of the accompanying schedule of findings and questioned costs. Since our audit was based on tests and samples, not all transactions that might have had an impact on the comments were necessarily audited. The comments involving statutory and other legal matters are not intended to constitute legal interpretations of those statutes. City's Response to Findings The City's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. The City's responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. -,k-,, 2 , rs Dubuque, Iowa January 15, 2014 164 EideBailly CPAs Cu BUSINESS ADVISORS Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance Required by OMB Circular A -133 To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Report on Compliance for Each Major Federal Program We have audited the City of Dubuque, Iowa's (City) compliance 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, 2013. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance grants applicable to its federal programs. th the requirements of laws, regulations, contracts and Auditor's Responsibility Our responsibility is to express an opinion on the compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. 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 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 on compliance for each major federal program. However, our audit does not provide a legal determination of the City's compliance. Opinion on Each Major Federal Program 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, 2013. 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 165 Report on Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program 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 compliance requirement will not be prevented, or detected and corrected, on a timely basis. 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. 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 that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A -133. Accordingly, this report is not suitable for any other purpose. e-,e,-,, 2 , rs Dubuque, Iowa January 15, 2014 166 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2013 Grantor /Program U.S. Department of Housing and Urban Development. Direct program: Community Development Block Grants/Entitlement Grants Community Development Block Grants/Entitlement Grants Federal Pass - Through CFDA Entity Identifying Federal Number Number Expenditures 14.218 14.218 $ 1,136,303 267,789 1,404,092 Pass - through program from: Iowa Department of Economic Development: Community Development Block Grants/ State's Program and Non - Entitlement Grants in Hawaii 14.228 08 -DRH -212 2,128,695 Community Development Block Grants/ State's Program and Non - Entitlement Grants in Hawaii 14.228 08 -NSP -019 247,561 2,376,256 Direct program: Shelter Plus Care 14.238 62,301 Lower Income Housing Assistance Program - Section 8 Moderate Rehabilitation 14.856 72,326 Section 8 Housing Choice Vouchers 14.871 2,922,206 Section 8 Housing Choice Vouchers 14.871 461,452 Section 8 Housing Choice Vouchers 14.871 120,870 3,504,528 Lead -Based Paint Hazard Control in Privately -Owned Housing 14.900 999,994 Healthy Homes Production Grant Program 14.913 447,042 Total U.S. Department of Housing and Urban Development 8,866,539 167 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2013 Grantor /Program U.S. Department of the Interior Pass - through program from: Iowa Department of Natural Resources: Sportfishing and Boating Safety Act U.S. Department of Justice: Direct program: Violence Against Women Formula Grants Federal Pass - Through CFDA Entity Identifying Federal Number Number Expenditures 15.622 CRD825MKONRA110303 $ 180,081 16.588 2,697 JAG Program Cluster: Direct program: Edward Byrne Memorial Justice Assistance Grant Program 16.738 16,148 Edward Byrne Memorial Justice Assistance Grant Program 16.738 15,789 Edward Byrne Memorial Justice Assistance Grant Program 16.738 24,907 56,844 Pass - through program from: Iowa Department of Justice: ARRA - Recovery Act - Edward Byrne Memorial Justice Assistance Grant (JAG) Program/Grants to States and Territories 16.803 10JAG /ARRA -41940 42,538 Total JAG Program Cluster 99,382 Total U.S. Department of Justice 102,079 U.S. Department of Transportation: Direct program: Airport Improvement Program 20.106 2,801,243 Airport Improvement Program 20.106 1,257,352 Airport Improvement Program 20.106 814,163 Airport Improvement Program 20.106 339,597 Airport Improvement Program 20.106 29,877 Airport Improvement Program 20.106 29,416 Airport Improvement Program 20.106 14,387 5,286,035 168 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2013 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 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 Federal Transit - Formula Grants Pass - through program from: Iowa Department of Transportation: Federal Transit - Formula Grants Federal Transit - Formula Grants Total Federal Transit Cluster Federal CFDA Number Pass - Through Entity Identifying Number 20.205 HDP- 2100 - (655) -71 -31 20.205 STP -U- 2100(643)- -70 -31 20.205 BROS- 2100(659)- -8J -31 20.205 STP -A -PA- 27(4)86 -31 20.205 SRTS -U- 2100(663)- -8U -31 20.205 STP -E- 2100(623)- -70 -31 20.205 ESL - 2100 - (646) -75 -31 20.205 STP -U- 2100(634)- -70 -31 20.205 STP -A- 061 - 8(128) -22 -31 20.205 UYC -11 -001 20.205 HDP- 2100 - (661) -71 -31 20.500 20.507 20.507 IA -95- X003 - 210 -10 20.507 IA -95- X003 - 210 -12 Federal Services Programs Cluster: Pass - through program from: Iowa Department of Transportation: Capital Assistance Program for Elderly Persons and Persons with Disabilities 20.513 New Freedom Program 20.521 New Freedom Program 20.521 Total Federal Se Cluster ces Programs IA -16- X002 - 210 -13 IA -57- 009 - 210 -13 IA -57- X009 - 210 -12 Federal Expenditures $ 691,715 524,979 164,846 81,471 54,189 26,508 24,407 14,714 12,750 5,018 772 1,601,369 411,240 945,516 63,535 168,346 1,177,397 1,588,637 31,180 87,539 19,281 106,820 138,000 169 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2013 Grantor /Program Federal Pass - Through CFDA Entity Identifying Federal Number Number Expenditures U.S. Department of Transportation: (continued) Direct program: Clean Fuels 20.519 $ 47,282 State and Community Highway Safety 20.600 7,658 State and Community Highway Safety 20.600 5,926 13,584 Total U.S. Department of Transportation 8,674,907 National Endowment for the Arts Direct Program: Promotion of the Arts - Grants to Organizations and Individuals 100,000 Environmental Protection Agency: Direct program: Climate Showcase Communities Grant Program 66.041 137,253 Pass - through program from: Iowa Finance Authority: Capitalization Grants for Clean Water State Revolving Funds 66.458 CS- 192427 -01 11,246,025 ARRA - Capitalization Grants for Clean Water State Revolving Funds 66.458 CS- 192421 -01 729,000 11,975,025 Total Environmental Protection Agency 12,112,278 U.S. Department of Energy: Direct program: ARRA - Energy Efficiency and Conservation Block Grant Program 81.128 5,303 170 City of Dubuque Schedule of Expenditures of Federal Awards Year Ended June 30, 2013 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 Iowa Department of Public Health: Environmental Public Health and Emergency Response Iowa Department of Human Sery ices Substance Abuse and Mental Health Services Total U.S. Department of Health and Human Services Federal Pass - Through CFDA Entity Identifying Federal Number Number Expenditures 93.069 93.069 93.070 93.243 5882BT31 $ 2,271 5883BT31 1,991 4,262 5883LP03 550 5883CP12 2,560 7,372 Corporation for National and Community Service: Pass - through program from: Iowa Commission on Volunteers: AmeriCorps 94.006 12-AC-13 158,485 AmeriCorps 94.006 11 -AC-13 41,736 200,221 Iowa Economic Development Volunteer Generation Fund 94.021 12- VGF -N6 4,301 Total Corporation for National and Community Service 204,522 U.S. Department of Homeland Security: Pass - through program from: Iowa Department of Homeland Security: Disaster Grants - Public Assistance 97.036 FEMA DR- 4018 -IA 71,377 Hazard Mitigation Grant 97.039 HMPG -DR- 1930 -31 -01 201,179 Direct program: Assistance to Firefighters Grant 97.044 11,523 Assistance to Firefighters Grant 97.044 28,960 40,483 Total U.S. Department of Homeland Security 313,039 Total $ 30,566,120 171 City of Dubuque Notes to the Schedule of Expenditures of Federal Awards Year Ended June 30, 2013 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 modified 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. The City received federal awards both directly from federal agencies and indirectly through pass - through entities. Federal financial assistance provided to a subrecipient is treated as an expenditure when it is paid to the subrecipient. Governmental fund types account for the City's federal grant activity. Therefore, expenditures in the schedule of expenditures of federal awards are recognized on the modified accrual basis — when they become a demand on current available financial resources. The City's summary of significant accounting policies is presented in Note 1 in the City's 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 Federal Amount CFDA Provided to Number Subrecipients 14.218 $ 59,145 172 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2013 Part I: Summary of the Independent Auditor's Results: Financial Statements Type of auditor's report issued Internal control over financial reporting: Material weaknesses identified Significant deficiencies identified not considered to be material weaknesses Noncompl ance material to financ Federal Awards al statements noted? Internal control over major programs: Material weaknesses identified Significant deficiencies identified not considered to be material weaknesses Type of auditor's report issued on compliance for major programs: Unmodified Yes None reported No No None reported Unmodified Any audit findings disclosed that are required to be reported in accordance with OMB Circular A -133 §.510(a): No Identification of major programs: Name of Federal Program Community Development Block Grants /Entitlement Grants CFDA Number 14.218 Lead -Based Paint Hazard Control in Privately -Owned Housing 14.900 Highway Planning and Construction 20.205 ARRA - Capitalization Grants for Clean Water State Revolving Funds 66.458 Dollar threshold used to distinguish between type A and type B programs: $916,984 Auditee qualified as low -risk auditee? No 173 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2013 Part II: Findings Related to the Financial Statements: MATERIAL WEAKNESS 2013 -A Material Audit Adjustment 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. Condition — During the course of our engagement, we proposed a material audit adjustment to net position balances that were not 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. Cause — There is a limited number of office employees with varying levels of experience with the reporting requirements. In addition, management's review of the balances was not performed before giving the balances to the auditors. Effect — The effect of this condition was financial data not in accordance with generally accepted accounting principles. Recommendation — We recommend that finance staff continue to receive relevant training and that management review all documentation for use in preparing the financial statements timely. 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. Staffing will be reviewed in future budgets. Part III: Findings and Questioned Costs for Federal Awards: There were no findings and questioned costs to report. 174 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2013 Part IV: Other Findings Related to Required Statutory Reporting: 2013 -IA -A Certified Budget — Functional disbursements during the year ended June 30, 2013, did not exceed the amount budgeted. 2013 -IA -B 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. 2013 -IA -C Travel Expense — No expenditures of City money for travel expenses of spouses of City officials or employees were noted. 2013 -IA -D Business Transactions — Business transactions between the City and City officials or employees are detailed as follows: Name, Title, and Business Connection Joleen Murphy, employee, spouse is owner of Murphy Construction Group Anne Link, employee, spouse is owner of Link Hydraulic & Supply Ric Jones, council member, owner of RJ Productions John Hefel, employee, spouse is owner of A Frame of Mind Framing & Gallery Andrew Fuerste - Henry, employee, brother is Philip Henry Transaction Description Amount Construction $ 201,919 Parts and supplies 18,845 Services 1,850 Services 1,004 Services 50 In accordance with Chapter 362.5(3)(j) of the Code of Iowa, the transactions with A Frame of Mind Framing & Gallery and Phillip Henry 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) (d) of the Code of Iowa. The transactions with Link Hydraulic & Supply and RJ Productions may represent a conflict of interest. Recommendation — We recommend the City review the transactions with Link Hydraulic & Supply and RJ Productions with legal counsel. Response —The transactions with Link Hydraulic and Supply and RJ Productions are being reviewed with legal counsel. 175 City of Dubuque Schedule of Findings and Questioned Costs Year Ended June 30, 2013 Part IV: Other Findings Related to Required Statutory Reporting: (continued) 2013 -IA -E 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. 2013 -IA -F Council Minutes — No transactions were found that we believe should have been approved in the Council minutes but were not. 2013 -IA -G 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. 2013 -IA -H Urban Renewal Annual Report — The urban renewal annual report was properly approved and certified to the Iowa Department of Management on or before December 1. 2013 -IA -I Revenue Notes — No instances of non - compliance with the sewer, water, or stormwater utility revenue note provisions were noted. 2013 -IA -J Tax Increment Financing — Chapter 403.19 of the Code of Iowa provides a municipality shall certify indebtedness to the County Auditor While performing our audit procedures, we noted several amounts certified in the fall of 2012 that were based on incorrect calculations. Recommendation — The City has certified the needed corrections in the fall 2013. To minimize the likelihood of future errors, the City should implement additional controls over the management of its approximately $150,000,000 in TIF indebtedness. Such controls should include increasing supporting documentation for the amounts certified and formalizing a review and approval procedure. Response — The City identified and corrected the misreported debt amounts on City TIF Form 3 of the County TIF Certification Form that was filed on December 2, 2013. The TIF form is prepared from source documentation including general ledger reports, TIF development agreements and TIF debt amortization schedules; however this error occurred due to formula issues in the internal spreadsheet used to consolidate the source documentation. Due to time constraints from the State TIF report also being due on December 1, 2012, this error was not caught prior to filing. The internal spreadsheet has been corrected and the City will continue to prepare the TIF report from the source documentation used in the past. 2013 -IA -K 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. 2013 -IA -L 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. 176 City of Dubuque Summary Schedule of Prior Federal Audit Findings Year Ended June 30, 2013 There were no prior year federal findings. 177 EideBailly CPAs & BUSINESS ADVISORS January 15, 2014 To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Dubuque, Iowa, for the year ended June 30, 2013. We did not audit the financial statements of Dubuque Initiatives 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 opinion, insofar as it relates to the amounts included for Dubuque Initiatives and Subsidiaries, is based solely on the reports of the other auditors. Professional standards require that we provide you with information 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 information in our letter to you dated May 30, 2013. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Dubuque, Iowa, are described in Note 1 to the financial statements. No significant new accounting policies were adopted, and the application of existing policies was not changed during the year ended June 30, 2013. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City's financial statements were: 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. www.eidebailly.corn 3999 Pennsylvania Ave., Ste. 100 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 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 clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. The following material misstatement, detected as a result of audit procedures, was corrected by management: Sewage Disposal Works To increase net assets invested in capital assets, net of related debt, and decrease unrestricted net assets for noncapital debt inadvertently included in the net assets invested in capital asset calculation Disagreements with Management 2,347,720 For purposes of this letter, a disagreement with management is 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 15, 2014. 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. To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Page 3 Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship, and our responses were not a condition to our retention. Other Matters 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 Dubuque, Iowa Masterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Kenneth J. TeKippe, Finance Director SUBJECT: Responses to Auditor's Findings DATE: January 22, 2014 INTRODUCTION The Auditor's Communication with Those Charged with Governance letter was issued by Eide Bailly LLP on January 15, 2014 and is hereby submitted. The letter is required by AU 260 and was formally referred to as the management letter. BACKGROUND A separate section in the Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2013 details specific findings. Pages 173 -177 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 15, 2014 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. 2013 -A Material Audit Adjustment (Page 174 in CAFR) The SRF debt associated with the mercury spill cleanup at the Water Resource and Recovery Center was originally included in the net investment in capital assets calculation and should not have been. 2013 -IA -D — Related Parties Transactions (Page 175 in CAFR) During preparation for City audit, staff identified two vendors whose owners were related to City employees. It is not always apparent to departments when City employees are related to business owners. The City continues to review procedures to be more proactive in identifying potential related party transactions. 2013 -IA -J Tax Increment Financing (Page 176 in CAFR) Tax Increment Financing (TIF) certification of debt to the County contained an incorrect calculation in the Fall of 2012. The information was corrected with the County TIF Certification Form filed in December 2013. KT /eml