COMPREHENSIVE ANNUAL FINANCIAL REPORT City of Nampa
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COMPREHENSIVE ANNUAL FINANCIAL REPORT City of Nampa, Idaho for Fiscal Year Ended September 30, 2014 COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF NAMPA, IDAHO Fiscal Year Ended September 30, 2014 Submitted by: Department of Finance, City of Nampa 411 3 rd Street South Nampa, Idaho 83651 (208) 468-5737 CITY OF NAMPA, IDAHO Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal 1 Certificate of Achievement for Excellence in Financial Reporting 5 City of Nampa Organizational Charts 6 Chart of Elected Officials and Appointed Citizen Commissions 7 Mayoral Appointments 8 INDEPENDENT AUDITOR’S REPORT 9 MANAGEMENT’S DISCUSSION AND ANALYSIS 12 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Statement of Net Position 21 Statement of Activities 23 Fund Financial Statements Balance Sheet – Governmental Funds 25 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 26 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 27 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 28 Statement of Net Position – Proprietary Funds 29 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds 31 Statement of Cash Flows – Proprietary Funds 33 Statement of Fiduciary Net Position – Fiduciary Funds 37 Statement of Changes in Fiduciary Net Position – Fiduciary Funds 38 Notes to the Financial Statements 39 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund 64 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Nampa Development Corporation Special Revenue Fund 65 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Streets Special Revenue Fund 66 Notes to Required Supplementary Information 67 OTHER FINANCIAL INFORMATION Combining Statements and Individual Fund Schedules Combining Balance Sheet – Nonmajor Governmental Funds 69 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds 71 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Nonmajor Governmental Funds Airport Special Revenue Fund 73 Cemetery Special Revenue Fund 74 Civic Center Special Revenue Fund 75 Electric Franchise Fee Downtown Development Special Revenue Fund 76 Golf Course Special Revenue Fund 77 Grants and Contracts Special Revenue Fund 78 Idaho Center Special Revenue Fund 79 Library Special Revenue Fund 80 Parks and Recreation Special Revenue Fund 81 Recreation Center Special Revenue Fund 82 911 Fee Special Revenue Fund 83 Development Impact Fee Capital Projects Fund 84 Capital Projects Fund 85 GO Bond Debt Service Fund 86 Combining Statement of Net Position – Internal Service Funds 88 Combining Statement of Revenues, Expenses, and Changes in Net Position – Internal Service Funds 89 Combining Statement of Cash Flows – Internal Service Funds 90 STATISTICAL SECTION (UNAUDITED) Net Position by Component 92 Changes in Net Position 94 Fund Balances, Governmental Funds 98 Changes in Fund Balances, Governmental Funds 100 Assessed Value and Actual Value of Taxable Property 104 Property Tax Rates, Direct and Overlapping Governments 106 Principal Property Taxpayers 107 Property Tax Levies and Collections 108 Ratios of Outstanding Debt by Type 110 Ratios of General Bonded Debt Outstanding 112 Direct and Overlapping Government Activities Debt 113 Legal Debt Margin Information 114 Pledged Revenue Coverage 116 Demographic and Economic Statistics 118 Principal Employers 119 Number of City Government Employees by Function/Program 121 Operating Indicators by Function/Program 122 Capital Asset Statistics by Function/Program 126 SINGLE AUDIT SECTION Schedule of Expenditures of Federal Awards 127 Notes to Schedule of Expenditures of Federal Awards 130 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 131 Independent Auditor’s Report on Compliance for Each Major Program; Report on Internal Control over Compliance Required by OMB Circular A-133 133 Summary Schedule of Prior Year Findings 135 Schedule of Findings and Questioned Costs 136 The City has developed an accounting system that is continually evaluated to assure the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute assurance in two areas: 1) safeguarding assets against loss from unauthorized use or disposition and 2) reliability of financial records and convenient access for preparing financial statements and maintaining accountability. The concept of reasonable assurance adopted by the City of Nampa recognizes that a) the evaluation of cost and benefit requires estimates and judgments by management and b) that the cost of the control should not exceed the benefits likely to be derived. Every effort is made to evaluate all internal controls against these criteria. It is our belief that the City’s internal accounting controls adequately safeguard the City’s assets and also provides reasonable assurance of properly recorded financial transactions. Cost centers are monitored within the City budget by both revenue and expenditure categories. In addition, while individual department and division heads are responsible for their budgets, the total budget is monitored by the Finance Department with quarterly updates to the City Council. Council also receives monthly cash reports compared with fund balances to be informed regarding overall cash flow and specific needs within each fund. This allows the fiduciary body to monitor the effectiveness of the City’s fund balance policy. BUDGET PROCESS The City of Nampa is a municipal corporation governed by an elected mayor and six-member council. As required by Idaho Code Section 50-1002, the City Council shall, prior to passing the annual appropriation ordinance, prepare a budget estimating the revenues and expenditures for the ensuing fiscal year. After proper publication, a public hearing is held for any interested person to appear and show cause why such proposed budget should or should not be adopted. City Council may amend the budget during the fiscal year by following the same procedure as used in adopting the original appropriation ordinance. However, in order to amend the budget to a greater amount than originally adopted, additional revenue must accrue to the City equal to the proposed expenditures. ECONOMIC CONDITIONS A sustained economic recovery is showing a positive trend in Nampa. The unemployment rate continues to decline and is at 5.2%. More businesses have expanded or established themselves during FY 2014. And additional commitments of other businesses and restaurants have already been made through the permitting process. Our greatest success this past year for attraction of new businesses was the recruitment of Go Go Squeez operated by Materne. This project represents an $85 million investment in Nampa and will create 230 new jobs. The levy rate decreased by 14% in the City as a result of increased assessed values, a welcome relief to those marketing our area to businesses. New construction of homes is increasing and the average home sale price rose by 10.6% to $149,800. New subdivisions are being developed, as established ones with empty lots are being filled in with homes. Wages continue to be low in our area, which attracts businesses but creates challenges to home ownership and stable families. The City has worked to develop partnerships among education, businesses and 2 government to identify and train the skills needed to provide livable wages for the workforce within our community. LONG-TERM FINANCIAL PLANNING With a decreasing levy rate and a growing economy, the City expects to prioritize deferred capital maintenance, primarily via cash for non-enterprise investments and via a combination of cash and debt financing for large capital infrastructure for enterprises. Care will be taken to encourage established businesses and attract new ones with attention to moderating the levy rate. It is imperative to remain an attractive place for families to live, work and play so that commuting becomes less of a challenge to families and businesses. It is also important to recognize that core government services must be maintained and therefore will also require investment. Funding in the short term must be divided among these core services and the most critical capital needs. RELEVANT FINANCIAL POLICIES As a result of the City of Nampa’s aggressive refusal to use reserves for operations coupled with tight management of department budgets, the General Fund ended FY 2014 by adding to reserves for the third consecutive year. The City currently complies with its own fund balance policy of maintaining 25% of annual expenditures in reserve for cash flow and emergent purposes. Increasing the property tax budgets brings concern over the levy rate, and will be monitored with the increasing assessed values to avoid a negative impact for the economy and job creation. MAJOR INITIATIVES Economic growth is crucial to sustainable service delivery, therefore, Council and directors seek creative methods to partner with community stakeholders and businesses to promote economic activity. Because jobs are the number one priority, economic incentives