CITY OF DETROIT FOR FISCAL YEAR ENDED JUNE 30, 2005 Roger Short, CPA Kwame M. Kilpatrick Interim Finance Director/ Mayor Chief Financial Officer An Overview of the new Campus Martius Park Photo courtesy of the City of Detroit - Communications and Creative Services Department. City of Detroit, Michigan Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2005 Kwame M. Kilpatrick Mayor Prepared by the Finance Department Roger Short, CPA Interim Finance Director / Chief Financial Officer FOUNDED 1701 INCORPORATED 1806 AREA (Square Miles) 137.9 POPULATION 951,270 TABLE OF CONTENTS Page I. INTRODUCTORY SECTION LETTER OF TRANSMITTAL....................................................................................................................................... I-1 GFOA CERTIFICATE OF ACHIEVEMENT ............................................................................................................... I-10 AUDITOR GENERAL'S LETTER ................................................................................................................................ I-11 LIST OF CITY OF DETROIT PRINCIPAL OFFICIALS............................................................................................. I-12 CITY OF DETROIT ORGANIZATION CHART ......................................................................................................... I-14 II. FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT ..................................................................................................................... 3 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (UNAUDITED) ..................................................... 5 BASIC FINANCIAL STATEMENTS: A. GOVERNMENT-WIDE FINANCIAL STATEMENTS: Statement of Net Assets................................................................................................................................ 28 Statement of Activities.................................................................................................................................. 30 B. FUND FINANCIAL STATEMENTS: Governmental Funds Financial Statements: Balance Sheet................................................................................................................................... 32 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets.......................................................................................................... 34 Statement of Revenues, Expenditures, and Changes in Fund Balances...................................................................................................... 35 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities............................................................................................ 36 Proprietary Funds Financial Statements: Statement of Net Assets .............................................................................................................. 38 Statement of Revenues, Expenses, and Changes in Fund Net Assets........................................ 42 Statement of Cash Flows............................................................................................................. 44 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Assets .................................................................................................. 48 Statement of Changes in Fiduciary Net Assets ............................................................................... 49 Component Units Financial Statements: Statement of Net Assets .............................................................................................................. 50 Statement of Activities................................................................................................................ 52 C. NOTES TO BASIC FINANCIAL STATEMENTS: I. Summary of Significant Accounting Policies ................................................................................. 58 A. Reporting Entity...................................................................................................................... 58 B. Joint Venture........................................................................................................................... 61 C. Basis of Presentation............................................................................................................... 61 D. Basis of Accounting................................................................................................................ 63 E. Budgetary Data ....................................................................................................................... 63 F. Assets, Liabilities and Fund Equity........................................................................................ 64 II. Stewardship, Compliance, and Accountability................................................................................. 68 A. Compliance with Finance Related Legal and Contractual Provisions................................... 68 B. Excess of Expenditures Over Appropriations in Individual Funds ....................................... 68 C. Deficit Fund Equity ................................................................................................................ 69 III. Detailed Notes on all Funds............................................................................................................. 69 A. Assets ........................................................................................................................................ 69 B. Liabilities.................................................................................................................................... 85 IV. Subsequent Events ........................................................................................................................... 109 BUDGET TO ACTUAL COMPARISON-GENERAL FUND: Statement of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual-General Fund ........................................................................................... 112 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD& A: Pension Schedules (Unaudited) Schedules of Employer Contributions............................................................................................................... 117 Schedules of Funding Progress.......................................................................................................................... 117 i TABLE OF CONTENTS Page COMBINING NONMAJOR FUNDS FINANCIAL STATEMENTS: Non-Major Governmental Funds: Combining Balance Sheet.................................................................................................................................. 122 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances........................................................................................................................ 123 Special Revenue Funds: Combining Balance Sheet......................................................................................................................... 124 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances........................................................................................................ 126 Capital Projects Funds: Combining Balance Sheet........................................................................................................................... 128 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances........................................................................................................ 129 Permanent Funds: Combining Balance Sheet......................................................................................................................... 130 Statement of Revenues, Expenditures, and Changes in Fund Balances.................................................................................................................................. 131 Agency Funds: Combining Statement of Net Assets and Liabilities ........................................................................................ 132 Combining Statement of Changes in Assets and Liabilities Agency Funds............................................... 133 III. STATISTICAL SECTION (Unaudited): Table General Governmental Revenues — by Source — Last Ten Fiscal Years................................................................ 1 136 General Governmental Expenditures — by Function — Last Ten Fiscal Years....................................................... 2 136 Property Tax Levies and Collections — Last Ten Fiscal Years ................................................................................ 3 138 Adjusted Tax Levies and Tax Collections by Levies — Last Ten Fiscal Years........................................................ 4 138 Assessed and Estimated Actual Value of Taxable Property — Last Ten Fiscal Years.................................................................................................................... 5 140 Property Tax Rates and Levies — All Overlapping Governments-Last Ten Fiscal Years........................................................................................................................... 6 141 Special Assessments Additions and Deductions — Last Ten Fiscal Years............................................................... 7 142 Ratio of Net