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Home My WebLink AboutCompiled 08 CAFRAtISURN WASHINGTON 2008 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2008 x CITY OF AUBURN WASHINGTON COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year January 1, 2008 through December 31, 2008 AUBURN WASHINGTON Prepared by Finance Department Shelley Coleman, Finance Director CITY OF AUBURN * MORE THAN YOU IMAGINED CITY OF AUBURN: 2008 CAFR TABLE OF CONTENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2008 TABLE OF CONTENTS 1. INTRODUCTORY SECTION Page Title Page Table of Contents i City Officials .....................................................................................................................................1 Organizational Chart (City and Council Committees) ......................................................................2 Letter of Transmittal .........................................................................................................................3 Certificate of Achievement ..............................................................................................................11 II. FINANCIAL SECTION Auditor's Report .........13 Management's Discussion and Analysis .........15 Basic Financial Statements Government-wide Financial Statements: Statement of Net Assets .........35 Statement of Activities .........36 Fund Financial Statements: Balance Sheet - Governmental Funds .........39 Statement of Revenues, Expenses and Changes in Fund Balance - Governmental Funds .........40 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Government Funds to the Statement of Activities .........41 Statement of Net Assets - Proprietary Funds .........44 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds .........45 Statement of Cash Flows - Proprietary Funds .........46 Statement of Fiduciary Net Assets - Fiduciary Funds .........49 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds .........50 Notes to the Financial Statements .........51 Required Supplemental Information: Schedule of Revenues, Expenses and Changes in Fund Balance - Budget and Actual: General Fund .........91 Arterial Street Fund .........92 Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet - Nonmajor Government Funds .........94 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Government Funds .........95 Combining Balance Sheet - Nonmajor Special Revenue Funds .........98 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Special Revenue Funds ........100 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual: Local Street Special Revenue Fund ........102 Hotel/Motel Tax Special Revenue Fund ........103 CITY OF AUBURN: 2008 CAFR TABLE OF CONTENTS Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual: (continued) Page Drug Forfeiture Special Revenue Fund ..104 Local Law Enforcement Grant Special Revenue Fund ..105 Housing & Community Development Special Revenue Fund ..106 Recreation Trails Special Revenue Fund ..107 Business Improvement Area Special Revenue Fund ..108 Cumulative Reserve Special Revenue Fund ..109 Mitigation Special Revenue Fund ..110 Combining Balance Sheet - Debt Service Funds ..112 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - Nonmajor Debt Service Funds ..113 Balance Sheet - Capital Project Fund ..115 Statement of Revenues, Expenditures, and Changes in Fund Balances - Capital Project Fund ..116 Balance Sheet - Permanent Fund ..118 Statement of Revenues, Expenditures and Changes in Fund Balance - Permanent Fund ..119 Combining Statement of Net Assets - Nonmajor Enterprise Funds ..121 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - Nonmajor Enterprise Funds ..122 Combining Statement of Cash Flows - Nonmajor Enterprise Funds ..123 Combining Statements of Net Assets - Internal Service Funds ..126 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - Internal Service Funds ..127 Combining Statement of Cash Flows - Internal Service Funds ..128 Statement of Changes in Assets and Liabilities - Agency Fund ..131 III. STATISTICAL SECTION Schedule Net Assets by Component ..........1 ..134 Changes in Net Assets ..........2 ..135 Fund Balances, Government Funds ..........3 ..136 Changes in Fund Balances, Government Funds ..........4 ..137 Tax Revenues by Source, Government Funds ..........5 ..138 Assessed Value by Type ..........6 ..139 Property Tax Data ..........7 ..140 Property Tax Levies and Collections ..........8 ..142 Principal Taxpayers - Property Taxes ..........9 ..143 Retail Tax Collections by Sector ........10 ..144 Ratios of Outstanding Debt by Type ........11 ..145 Computation of Legal Debt Margin ........12 ..146 Legal Debt Margin Ratios ........13 ..146 Computation of Net Direct and Estimated Overlapping Debt ........14 ..147 Ratio of Net General Bonded Debt to Assessed Value ........15 ..148 Pledged Revenue Bond Coverages ........16 ..149 Population, Income and Housing Trends ........17 ..150 Major Employers ........18 ..151 Staffing Levels by Department ........19 ..152 Operating Indicators by Department ........20 ..153 Capital Asset Indicators by Department ........21 ..154 ii CITY COUNCIL r Nancy Backus Lynn Norman Bill Peloza CITY OFFICIALS MAYOR Pete Lewis rl~, Virginia Haugen Sue Singer Rich Wagner DEPARTMENT HEADS Finance Director Shelley Coleman City Attorney Dan Heid Director of Human Resources & Risk Management Brenda Heineman Information Services Lorrie Rempher Parks Director Daryl Faber Planning Director Cindy Baker Police Chief Jim Kelly Public Works Director Dennis Dowdy 1 CITY OF AUBURN: 2008 CAFR ORGANIZATION JUDGE Patrick Burns ADMINISTRATIVE SERVICES CITIZENS MAYOR Pete Lewis PUBLIC SERVICES PARKS & PLANNING RECREATION Daryl Faber Cindy Baker HUMAN FINANCE RESOURCES ShelleyColeman [Brenda Heineman PUBLIC SAFETY POLICE Jim Kelly CITYCOUNCIL PUBLIC WORKS Dennis Dowdy INFORMATION SERVICES Lorrie Rem pher COUNCIL COMMITTEES FINANCE COMMITTEE Nancy Backus, Chairperson Sue Singer Bill Peloza PLANNING & COMMUNITY DEVELOPMENT Lynn Norman, Chairperson Nancy Backus Rich Wagner MUNICIPAL SERVICES Gene Cerino, Chairperson Bill Peloza Lynn Norman PUBLIC WORKS Rich Wagner, Chairperson Gene Cerino Virginia Haugen LEGAL Dan Heid 2 CIITTYTOF _ AV BURN WASHINGTON June 30, 2009 Peter B. Lewis, Mayor 25 West Main Street * Auburn WA 98001-4998 * www.d.auburnmo,us * 253-93] -3000 Honorable Peter Lewis, Mayor Members of the Auburn City Council Citizens of the City of Auburn 25 W Main Street Auburn, WA 98001 We are pleased to present the City's Comprehensive Annual Financial Report for the year ended December 31, 2008. We publish this financial statement in conformity with generally accepted accounting principles (GAAP). It has been audited in accordance with generally accepted auditing standards by the Washington State Auditor's Office. Therefore, we issue and transmit to you the City of Auburn's Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2008. This transmittal letter provides an overview of the report and the financial condition of the City. It also provides insight into the history of the City and the economic conditions affecting it, and describes the systems and controls employed by the Finance department. The Comprehensive Annual Financial Report has several significant uses. First, it provides a general overview of the City's finances to the general public and taxpayers. Second, it is referenced by bond buyers and rating agencies to evaluate the City's fiscal stability and creditworthiness. Finally, the CAFR is a series of financial statements that have been audited by the State Auditor's Office and provides assurances that assets are safeguarded and funds are expended as they were legally appropriated in the biennial budget. INTRODUCTION A. MANAGEMENT REPRESENTATION The Auburn Finance Department prepared the report and accepts complete responsibility for the accuracy, completeness, and fairness of presentation of the information included. The data is believed to be accurate in all material respects, and it is believed that all significant information necessary for an understanding of the affairs and financial condition of the City has been disclosed. The report has been prepared in conformance with generally accepted accounting principals and in conformance with financial reporting standards issued by the Governmental Accounting Standards Board (GASB). City management has developed and evaluated a comprehensive internal control structure that is designed to protect the City's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with generally accepted accounting principles. Because the cost of internal controls should not outweigh the benefits, the City's internal control structure is designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we attest that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects. AUBURN * MORE THAN YOU IMAGINED CITY OF AUBURN: 2008 CAFR LETTER OF TRANSMITTAL As a recipient of federal, state and county financial assistance the City is required to undergo an annual single audit in conformity with U.S. Office of Management and Budget Circular A-133, Audits of State and Local Governments. The audit is conducted by the State Auditor's Office in conjunction with the City's annual independent audit. The results of the City's annual single audit for the fiscal year ended December 31, 2008 provided no instances of material weakness in the internal control structure or significant violations of applicable laws. 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. Auburn's MD&A can be found immediately following the independent auditor's report. B. ORGANIZATION OF THE REPORT The report is divided into three sections: the Introductory Section, the Financial Section, and the Statistical Section. The Introductory Section contains the table of contents, a list of the City's principal officials, an organizational chart, this letter of transmittal, and the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers' Association of the United States and Canada for the 2007 CAFR. The Financial Section contains the Washington State Auditor's Report, completed by the Washington State Auditor, Management's Discussion and Analysis, Government-Wide Financial Statements, the Fund Financial Statements, Notes to the Financial Statements and Other Required Combining and Supplemental Information. The Statistical Section, which is unaudited, contains a range of statistical tables and charts that present various financial, economic, social, and demographic data about the City. This information depicts various trends that have affected the fiscal condition of the City over the last ten years. The data presented in this section complies with the requirements of GASB Statement No. 44, Economic Condition Reporting: The Statistical Section. C. REPORTING ENTITY The City of Auburn was incorporated in 1891 and currently operates as a non-charter Code City under the laws of the State of Washington. Code City status in Washington provides "home rule" authority to cities. Auburn has a Mayor/Council form of government, and the Mayor is elected and is the full-time Chief Administrator. The seven-member City Council is elected at large, rather than by district. Members of the City Council are responsible for establishing the general direction and policies for the City and for providing the resources necessary to carry out those policies. As the City's chief administrator, the Mayor is responsible for carrying out the policy and direction set by the City Council. This includes the enforcement of laws and ordinances, the execution of contracts and agreements, and maintenance of peace and order in the city. The City is located primarily in southern King County (county seat, Seattle) and a small northeastern portion of Pierce County. These are the two most populous counties in the State of Washington, comprising over 40% of the population. The City is strategically located in relation to the labor and consumer markets of the two largest cities in the area: Seattle in King County and Tacoma in Pierce County. Auburn currently serves approximately 67,000 people within its incorporated limits. The City provides a wide range of services, both beneficial and necessary, to its residents as well as to the adjacent area. These services include police protection; parks and recreational facilities that include a senior center, golf course and museum; land use management and development regulation; infrastructure construction and maintenance; water, sanitary sewage collection, storm drainage, and solid waste services; a general aviation airport; and a municipal CITY OF AUBURN: 2008 CAFR LETTER OF TRANSMITTAL cemetery. The City also has a municipal court and jail facilities that provide services to other governmental agencies through interlocal agreements. II. ECONOMIC CONDITION A. SUMMARY OF LOCAL ECONOMY Auburn began as a small rural community based on agriculture and the railroad, which maintained a significant switching and repair facility. The City has grown significantly since World War II, both as a residential community and as a commercial and industrial area. Auburn has become a significant area for automobile sales and has also developed a significant manufacturing and distribution base with the largest employer being The Boeing Co., which employs over 5,000 people in its Auburn facility. Boeing is a worldwide supplier of aircraft and related products. The City's assessed valuation in 2008, for 2009 property tax collection, was $8,719,721,892. Auburn has enjoyed steady residential and industrial growth over the years as development has moved outward from the major cities. The City currently has a growing array of manufacturing facilities, as well as distribution, wholesaling, and retailing operations. Auburn Regional Medical Center, located in Auburn, serves the local geographic area and is a major trauma center of the northwest. The medical center is expanding to include an oncology center and also has a parking garage currently under construction. Auburn also has a significant retailing base, and in addition to maintaining its downtown core businesses, has attracted significant retailers who have constructed major new facilities in Auburn in recent years. The SuperMall of the Great Northwest has increased the retail base as the area surrounding the SuperMall continues to develop as well as the 277th Street business corridor. In addition, in the past 10 years Auburn has seen the development of a new YMCA, a new Justice Center, downtown revitalization, Emerald Downs, Muckleshoot Casino, Auburn Performing Arts Center, White River Museum, White River Amphitheater, Washington National Golf Course, the commuter rail station, the new Safeway distribution center, and the newly finished Auburn Golf Course Clubhouse.. Auburn has also been a center for automobile sales for a number of years, drawing customers from a wide area. Since 1999 the City's total assessed property valuation has more than doubled from $3.0 billion to over $6.5 billion. The sales tax receipts went from $12.4 million to $17.5 million in the same time period. Sales taxes dropped from their high in 2007 of $17.5 million to $15.4 million in 2008 from the impact of the Streamlined Sales Tax (SST) laws enacted by the State of Washington that were effective July 1, 2008. The SST eliminates approximately $200,000 a month of sales tax revenue to the City. The State of Washington has a mitigation plan for cities that are severely impacted by the SST and the City of Auburn received one mitigation payment in 2008, however, there is no certainty that the mitigation payments will continue. The City has suffered in the recession and has not been insulated from the same effects being felt at the State and National levels. The economic climate suddenly changed mid year 2008 and has steadily declined through the first quarter 2009. Sales Tax revenue which constitutes approximately forty percent of the General Fund budget appears to have leveled off and `reset'. Construction permits and Real Estate Excise Tax revenue is expected to be less than half of past years receipts. The City has reduced staff and corresponding budgets to align the budgets and live within its means. There is a more positive note regarding City projects that are in the early development and planning stages including the creation of the Auburn Environmental Park and a recently constructed bird viewing tower in the park. The City has also acquired property in the downtown CITY OF AUBURN: 2008 CAFR LETTER OF TRANSMITTAL area and entered into development contracts with a clear goal to revitalize the downtown area. Recently the State Legislature identified the Auburn downtown redevelopment area as a demonstration area and the City is the planned recipient of an annual revenue stream from the State that will provide $3.3 million of infrastructure improvements in the downtown. This revitalization trend is positive for the aging downtown core and is designed to integrate the existing downtown with the planned development area(s). Other projects currently underway include The Auburn Regional Medical Center campus expansion. The campus is located in the downtown area of the city and the expansion includes an oncology center and a 300 stall parking garage which is a public private partnership with the City where the City will own 149 of the stalls. The project completion is scheduled for fall 2009. Also under construction is a new professional office building which will provide medical/professional office space, relocation of the Key Bank, and over 50,000 square feet of new space for the City Hall. This project is adjacent to the Medical Center project and City Hall. Other factors continue to strengthen the local economy over the past several years. Emerald Downs a major thoroughbred horseracing facility in Auburn, was constructed to replace Longacres - the area's former racing facility located in Renton, Washington. The addition of the Thoroughbred Breeders Association headquarters was completed in 1998. Emerald Downs also provides facilities for meetings, banquets and seminars. A major gambling facility is located on the Muckleshoot Indian Reservation in Auburn. In 1999, 2004 and again in 2006, the facility was expanded for additional gambling which includes a non-smoking facility, entertainment, and the addition of a 24-hour family restaurant. The casino recently completed construction of a five- story parking garage to accommodate casino growth and increased numbers of patrons. The Tribe is in the planning stages at this time for further expansion of the facility in the near future. The Tribe also opened the White River Amphitheater, a 25,000 seat outdoor facility in 2003. The total impact of these facilities on the City has been an increased demand for public safety, and a large transportation impact, as the main arterial accessing these sites goes directly through the City. The Boeing Company's layoffs and divesture over the past several years in the Puget Sound area has had an effect on the regional and local economy. Boeing has reduced approximately 57% of its jobs in Auburn. The Boeing downsizing operation has led to new economic growth in Auburn as available property and the adjacent land open up to development opportunities for other businesses. These new businesses are relocating to Auburn by using property vacated by the Boeing Company. In the long term, the City will benefit from the economic diversity. Despite economic cycles, the City has continually focused on enhancing the quality of life in the community. In recent years, through strategically placed bond issues, special levies, successes in grant procurements, and conservative operations, parks have been expanded, streets improved, commercial and residential sidewalks have been upgraded, and buildings have been advantageously renovated to house a new senior center and parks department. In 1997, the voters elected to annex to the King County Library System. The System completed construction of a new library in the City early in 2000. In 2001, the City renovated the former library building into a new Senior Center at the Les Gove Park campus. In 2003, the City was successful in negotiating the purchase of the former YMCA building located on this campus. The building was recently demolished and site prepared in anticipation of the future construction of a Community and Activity Center. The campus currently hosts the Library, White River Valley Museum, Parks and Recreation department and Senior Center. The City's budgeting process is based on financial policies directed at conserving fiscal resources while supporting programmatic strategies. Budget recommendations reflect a long- range analysis of fiscal trends. These policies and practices have not only averted serious funding problems in the past, particularly in the current and recent recession years of 2001 and 2002, but have maintained the General fund on a firm financial basis. CITY OF AUBURN: 2008 CAFR LETTER OF TRANSMITTAL The City is maintaining a stable financial condition by reducing expenditure budgets to match the current revenue streams. All funds contain adequate balances, and the City's debt is manageable. The General and Cumulative Reserve funds contain satisfactory balances, a significant Insurance fund has been set aside for contingencies, and the Equipment Rental fund is adequate for vehicle replacement. The Proprietary and Fiduciary funds are generally in satisfactory condition and have adequate balances for their purposes. The Water fund has been under some economic pressure due to an aggressive capital program to meet federal and state requirements. Rates were increased during 2007, 2008 and 2009. The City completed a comprehensive plan update in 2008 for all utilities and will complete an associated cost-of- service study for the utilities in 2009. B. FUTURE ECONOMIC OUTLOOK Auburn is in a continuous process of both short-term and long-term financial planning. Short- term financial planning is inherent in the development of the City's biennial budget. Concurrent with the biennial budget is the review of the City's long-term capital needs. Funding sources are assessed with the development of the six-year capital facility plan. The capital facility plan is a component of the Comprehensive Master Plan, which outlines how the City should look and function in twenty years and creates a vision that can be realistically implemented. An integral part of this vision is determining how to allocate the City's financial resources to achieve the desired goals. The City has several long-term planning and capital projects underway. Several projects include the reconstruction of aged utility infrastructure, reconstruction of local neighborhood streets and the Intelligent Traffic System (ITS). The ITS project will allow the City to program and monitor intersections from a central location for highly traveled corridors like Auburn Way. Also underway is a master plan for the Les Gove Park Campus which will house a community center in the future. The Pierce County area of the City continues to grow through the development of new single and multifamily housing in Lakeland Hills. Madera town homes and Pinnacle single-family homes are some of the newest developments with more in the planning stages. Growth is predicted to continue, but not at the rate experienced in the late 1990's. The challenge is to control costs that grow at a faster rate than revenue. Areas of concern are health care costs and public safety costs related to incarceration and labor contracts. Continuing to fund these sectors will draw valuable resources from other areas such as infrastructure replacement and capital programs. As Auburn moves forward, economic conditions will be continually monitored and adjustments to city spending and services made to maintain the City's financial health. Long-term plans will be focused on ensuring the City continues to be an economically strong and viable city. III. FINANCIAL INFORMATION A. CASH MANAGEMENT The City invests in U.S. Treasury and Agency Issues, Prime Bankers Acceptances, Time Deposits, and Repurchase Agreements. Investment policies and procedures, established by the Mayor and adopted by the City Council, require the City to establish a trustee to take delivery of all investment transactions at time of payment. The City has contracted with the Bank of New York to provide delivery versus payment trustee services on all government agency investments. The State of Washington maintains an investment pool to provide economies of scale in investing to smaller- and medium-sized cities in the State. The City uses this service for all funds not invested in longer-term securities. The pool operates under the same legal restrictions CITY OF AUBURN: 2008 CAFR LETTER OF TRANSMITTAL that apply to all municipalities in the State and, consequently, uses the same instruments as listed above. The State also takes delivery of all investment transactions. The City has adopted a comprehensive investment policy statement to guide City investment practices. These policies are closely patterned after the recommendations in Investing Public Funds published by the Government Finance Officer's Association (GFOA). Investments are restricted to less than three years in order to maintain liquidity on all investments in all funds, yet enable the City to take advantage of the yield curve. Fiduciary funds, which involve long-term reserves and require minimal liquidity, are invested for longer time periods. The City undertakes repurchase agreements only with financial institutions that offer the City full protection in the event of default, by providing the delivery of the underlying security to the City. B. RISK MANAGEMENT Types and Level of Risk Assumed The City participates in the Washington Cities' Insurance Authority (an insurance pool of over 100 cities). The City actively pursues risk reduction in the operation of its programs. The City purchases, with employee participation, most of its health insurance for its employees through commercial policies administered by the Association of Washington Cities. Employees represented by the Teamsters Union have insurance through the Teamsters organization. The City participates in the Washington State Workers' Compensation program. In order to keep its long-term options open and to provide for any uninsured losses that might occur, the City has elected to build an insurance reserve (the Insurance fund). The Insurance fund supplements various insurance coverages maintained by the City. This fund is also used to self-insure some limited exposures, the most significant of which is accidental loss to City-owned vehicles. 2. Risk Control Policies The Washington Cities' Insurance Authority not only provides a sharing of risk by pooling of losses, it also provides an extensive array of professional services in risk management. The pool monitors the City's management practices and damage claims. The City follows the guidelines provided by the pool in an effort to minimize risk exposure in the day-to-day operations of the City's programs. The City also maintains an extensive employee safety program managed by the Human Resources department. IV. OTHER RELEVANT INFORMATION A. INDEPENDENT AUDIT State law requires an annual audit of all City books of accounts and financial records by the Office of the State Auditor, which is headed by an independently elected State official, the State Auditor. The Auditor has broad legal authority to inquire into all financial and legal compliance matters and such audits are considered equal to audits by certified public accounting firms. The 2008 financial audit of the City is complete and was conducted in conformance with Generally Accepted Auditing Standards. The financial statements of all City funds have been included in this audit. The City has been given an unqualified opinion for 2008. Please see the Auditor's CITY OF AUBURN: 2008 CAFR LETTER OF TRANSMITTAL Report. The State Auditor's Office also audits the City's administration of its federal grants under the single audit concept. B. AWARDS The Government Finance Officer's Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Auburn for its Comprehensive Annual Financial Report for the fiscal year ended December 31, 2007. This was the twenty first consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The City has also received the Government Finance Officer's Association Distinguished Budget Presentation award for seventeen years. The City was one of just twenty-two cities in the state to receive both the Certificate of Achievement for Excellence in Financial Reporting and the Distinguished Budget Presentation award for 2007. C. ACKNOWLEDGMENTS Preparation of this report could not have been accomplished without the professional, efficient, and dedicated staff of the Finance department and various other City employees who assisted in its production. Further appreciation is extended to the Mayor and City Council for their encouragement, interest, and support in conducting the financial affairs of the City in a sound and progressive manner. The assistance of the auditors from the Washington State Auditor's Office is also greatly appreciated. Respectfully submitted, Shelley R. Coleman Finance Director CITY OF * MORE THAN YOU IMAGINED Opp 10 CITY OF AUBURN: 2008 CAFR CERTIFICATE OF ACHIEVEMENT Certificate of Achievement for Excellence in Financial Reporting Presented to City of Auburn Washington FeT its C.oTnprehensive Anneal Financial Report 1'crr the Fiscal Year Ended DmeTn t r 31 r 2007 A C eKtificate ofAeb evernent for Lxcellence in Financial Reporting is presented by the Govenunent Finance Officers Agm)ciatiori of the United States and Canada to government units and public employee retirement systems whose- co7npr~-Mensive annual financial reports (C:.ti FRs) ac:hicve the highest standards in eoverrrnient accoturting and financial reporting. a OF - T T H" President nwau ~ + Mews SS Exccutivc Director 11 CITY OF -4. .RN 4 1~w t f w 12 4Y ~V11 5809 Washington State Auditor Brian Sonntag INDEPENDENT AUDITOR'S REPORT June 30, 2009 Mayor and City Council City of Auburn Auburn, Washington We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Auburn, King County, Washington, as of and for the year ended December 31, 2008, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In.our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Auburn, King County, Washington, as of December 31, 2008, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 10, during the year ended December 31, 2008, the City implemented the Governmental Accounting Standards Board's Statement 45. In accordance with Government Auditing Standards, we will also issue our report dated June 26•, 2009, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant 13 Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • TDD Relay (800) 833-6388 FAX (360) 753-0646 • http://www.sao.wa.gov agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. 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 and should be considered in assessing the results of our audit. The management's discussion and analysis on pages 15 through 34 and budgetary comparison information on pages 91 through are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying information listed as combining and individual fund financial statements and schedules on pages 94 through 131 is presented for purposes of additional analysis and is not a required part of the basic financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional analysis and is not a required part of the basic financial statements of the City. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it. Sincerely, BRIAN SONNTAG, CGFM STATE AUDITOR 14 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS MANAGEMENT'S DISCUSSION AND ANALYSIS The City of Auburn's (the "City") discussion and analysis is designed to: • Assist the reader in focusing on significant financial issues • Provide an overview of the City's financial activity • Identify changes in the City's financial position (its ability to meet future years' challenges) • Identify any material deviations from the approved budget • Identify individual fund issues or concerns Management's Discussion and Analysis is designed to focus on the current year's activities, resulting changes and currently known facts. Therefore, it should be read in conjunction with the Transmittal Letter and the City's financial statements. Financial Highlights Total government-wide net assets, the amount by which total assets exceed total liabilities, equal $539.9 million. A total of $448.2 million, or 83% of total net assets, is invested in capital assets, net of debt related to the capital assets, and includes assets such as utility systems, streets, buildings, land, vehicles and equipment. An additional $2.1 million of net assets is restricted for purposes of endowment and debt service. Of the remaining $89.6 million of net assets, $27.8 million is legally restricted, reserved by City policy for specific purposes, or is restricted for use by the City's utilities and $61.8 million is unrestricted. • The net increase in government-wide net assets during 2008 was $103.6 million. Of this amount, $105.0 million was directly related to the increase in City-owned capital assets and infrastructure. • On a government-wide basis, governmental net assets increased by $94.6 million during 2008. Of this amount $90 million is attributable to the infrastructure assets received as a result of the annexation of the Lea Hill and West Hill areas. • Business-type net assets increased by $9.0 million during 2008. While the business-type activities had a net loss of $922,000 net assets increased due to $10.7 million of utility capital contributions. Of this amount, $9.4 million is related to utility infrastructure contributed to the City by developers, and $1.3 million is related to new customer connections. • Governmental fund balances at year-end totaled $42.2 million. Of this amount, $40.7 million, or 96%, is unreserved and available to fund ongoing activities. However, the majority of the unreserved fund balance relates to special revenue funds and, as such, is legally restricted for specific purposes. Included in unreserved fund balance is $5.9 million in the cumulative reserve fund that is intended to provide resources in the event of significant downturns in certain City funds or provide for capital needs as designated by the City Council. Compared to 2007, total governmental fund balances increased by $3.0 million. This increase is primarily a result of the recognized gain of $2.7 million from the sale of two city properties in 2008. • The general fund's unreserved fund balance decreased $1.4 million from 2007. This decrease resulted from transfers out of the general fund of $1.3 million to the capital projects fund and $697,000 to the equipment rental fund for the purchase of equipment and vehicles needed as a result of the annexations in 2008. The transfers out were only partially offset by net revenue of $2.2 million in 2008. 15 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS • Total City debt payments during the year, net of compensated absences, were $2.6 million. Total outstanding debt, including bonds and loans, totaled $25.9 million at December 31St This ending debt balance is a decrease of $1.9 million from 2007 and is the result of scheduled debt repayments and removal of the compensated absence liability for firefighters and EMS that was partially offset by additional Public Works Trust Fund loans. See note 12 for further information on debt activity during the year and note 16 for information related to incorporation of what was the City's fire department into a new regional fire protection district. Other City Highlights: • The City worked with other regional governments on future regional water supplies, climate change, water demand, source exchange and small systems management. • The expanded use of Photosafe Red Light Photo Enforcement and Speed Enforcement within the City to enhance the public safety of our pedestrian and vehicular traffic. Expansion included one new intersection and two school zones. • Police reduced crime through community programs educating citizens on reducing crimes. • Continued implementation of the neighborhood traffic calming program using revenues from the Photo Safe Red Light Enforcement program. • Improvement in animal control. • The completion of the second Gateway project at M Street and Auburn Way South. • The initiation of the Auburn Junction Downtown Plan. • The provision of support to the Save Our Streets program for local street projects. • The completion of West Main Street, Bike Trail and Streetscape improvements incorporating public art. • The completion of the annexation of Lea Hill and West Hill areas and commencement of the update of our Comprehensive Plans for Arterial Streets, Storm Drainage, Water and Sewer. Total population increase from the annexations was approximately 15,500. • The City undertook implementation of Economic Development Strategies. • The City provided greater opportunity to citizens in need of human service agency services to use those services in a more coordinated manner. • Construction of a bird viewing tower in Auburn Environmental Park. • Renovated, redeveloped the use of, and began programming at the Auburn Avenue Theater. 16 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Overview of the Financial Statements The City's basic financial statements are presented in three parts: 1) Government-wide financial statements 2) Fund financial statements 3) Notes to the financial statements Other supplementary information, in addition to the basic financial statements, is also contained in this report. This section of the management's discussion and analysis is intended to introduce and explain the basic financial statements. Government-wide Financial Statements The government-wide financial statements are designed to be corporate-like in that all governmental and business-type activities are consolidated into columns which add to a total for the City. The focus of the Statement of Net Assets is designed to be similar to bottom-line results for the City and its governmental and business-type activities. This statement combines and consolidates governmental funds' current financial resources (short-term spendable resources) with capital assets and long-term obligations. Over time, increases or decreases in net assets may be one indicator of improvement or deterioration in the City's overall financial health. The Statement of Activities is focused on both the gross and net cost of various functions, including both governmental and business-type activities, which are supported by the City's general tax and other revenues. This is intended to summarize and simplify the user's analysis of cost of various governmental services and/or subsidy to various business-type activities. The revenue generated by the specific functions (charges for services, grants, and contributions) is compared to the expenses for those functions to show how much each function either supports itself or relies on taxes and other general funding sources for support. All activity on this statement is reported on the accrual basis of accounting, requiring that revenues are reported when they are earned and expenses are reported when they are incurred, regardless of when cash is received or disbursed. Governmental activities of the City include general government (executive, finance, legal, human resources, and court), security (police), physical environment, economic environment, transportation, health and human services, and culture and recreation. The City's business-type activities include water, sanitary sewer, storm water and solid waste utilities, as well as the operations of a golf course, airport, cemetery and commercial retail space. Governmental activities are primarily supported by taxes, charges for services, and grants while business-type activities are self- supporting through user fees and charges. Fund Financial Statements The Fund Financial Statements are the traditional reporting format for governments. A fund is a fiscal and accounting entity with a self-balancing set of accounts used to account for specific activities or meet certain objectives. While the government-wide statements present the City's finances based on the type of activity (general government vs. business type), the Fund Financial Statements are presented by fund type, such as the general fund, special revenue funds and proprietary funds, with the focus on major funds. Governmental Funds are used to account for essentially the same functions that are reported as governmental activities in the government-wide financial statements. The government major fund presentation is used, utilizing the "sources and uses of liquid resources" basis. This is the manner in which the budget is typically developed. The basis of accounting is different between the governmental fund statements and the government-wide financial statements. The governmental fund statements focus on the near-term revenues/financial resources and expenditures while the 17 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS government-wide financial statements include both near-term and long-term revenues/financial resources and expenditures. The information in the governmental fund statements can be used to evaluate the City's near-term financing requirements and immediate fiscal health. Comparing the governmental fund statements with the government-wide statements can help the reader better understand the long-term impact of the City's current-year financing decisions. Because the basis of accounting is different between the governmental fund statements and the government-wide financial statements, reconciliations are provided. The reconciliation between the governmental fund Balance Sheets and the government-wide Statement of Net Assets is found on the bottom of the governmental funds' Balance Sheet, while the reconciliation between the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balance and the government-wide Statement of Activities is found directly following the governmental funds' Statement of Revenues, Expenses, and Changes in Fund Balance. The City maintains seventeen individual governmental funds. Of these, three are considered major (the general fund, the arterial street fund, and the capital improvement projects fund) and are presented separately in the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balances. The remaining governmental funds are combined into a single column labeled "Other Governmental Funds". Individual fund data for each of the other governmental funds can be found in the combining statements later in this report. The City maintains budgetary control over its operating funds through the adoption of a biennial budget. Budgets are adopted at the fund level according to state law. Budgetary comparison statements are presented for the general and arterial street funds as required supplemental information. Other budgetary comparison schedules are included following the other government funds' combining statements in this report. Proprietary funds are used by governments to account for their business-type activities and use the same basis of accounting as utilized in private industry. Business-type activities provide specific goods or services to a group of customers that are paid for by fees charged to those customers. There is a direct relationship between the fees paid and the services rendered. The City has two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to account for goods and services provided to citizens, while internal service funds are used to account for goods and services provided internally to various City departments. Enterprise funds report the same functions presented as business-type activities in the government- wide statements, but in greater detail. The City's enterprise fund statements provide information on the City's four utilities (water, sanitary sewer, storm water, and solid waste) as well as the City- owned airport, cemetery, and golf course and the City-leased retail space. Internal service funds are an essential accounting tool used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its fleet of vehicles, the City-wide provision of computer hardware and software services, and its insurance premiums. Internal service funds benefit both governmental and business-type activities, and are allocated accordingly in the government-wide statement of activities. Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments or other funds. Fiduciary funds are not included in the government-wide financial statements because their assets are not available to support the City's activities. The City has two fiduciary funds: a pension fund and an agency fund, and are accounted for on the accrual basis. As agency funds are custodial in nature, they do not include revenues and expenses. 18 CITY OF AUBURN: 2008 CAM MANAGEMENT'S DISCUSSION AND ANALYSIS 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. The notes to the financial statements can be found at the end of the Basic Financial Statements section. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the budget vs. actual reports of the City's general fund and major special revenue funds. The budget vs. actual required supplementary information can be found in the tab labeled "Required Supplemental Information" and the pension benefit and other postemployment benefit required supplementary information is found in note 10. The combining statements referred to earlier in connection with nonmajor governmental funds, nonmajor enterprise funds, and internal service funds are presented in the section titled "Fund Financial Statements and Schedules". Government-wide Financial Analysis The statement of net assets can serve as a useful indicator of the City's financial position. The City of Auburn's net assets (assets in excess of liabilities) at December 31, 2008 totaled $539.9 million. Following is a condensed version of the government-wide statement of net assets with a comparison to 2007: CityofAubum Net Assets Governmental Activities Business-ty pe Activities Total As of 12J31/08 As of 12J31/07 As of 12J31/08 As of 12/31/07 As of 12/31/08 As of 12/31/07 Current and other assets $ 61,772,384 $ 58,618,809 $ 44,721,537 $ 46,338,621 $ 106,493,921 $ 104,957,430 Capital assets, net of accunulateddepreciation 310,061,603 217,146,886 159,692,228 151,684,341 469,753,831 368,831,227 Total assets 371,833,987 275,785,695 204,413,765 198,022,962 576,247,752 473,788,657 Long-term Iiabilities 8,354,361 7,461,126 20,348,476 22,422,501 28,702,837 29,883,627 Other liabilities 4,994,178 4,400,206 2,645,390 3,202,642 7,639,568 7,602,848 Total liabilities 13,348,539 11,861,332 22,993,866 25,625,143 36,342405 37,486,475 Net assets Invested in capital assets, net of related debt 303,564,348 212,611,232 144,626,496 130,515,163 448,190,844 343,126,395 Restricted 28,965,599 24,519,024 933,914 1,227,395 29,899,513 25,746,419 Unrestricted 25,955,501 26,774,107 35,859,489 40,655,261 61,814,990 67,429,368 Total net assets $ 353,485,448 $ 263,904,363 $ 181,419,899 $ 172397,819 $ 539,905,347 $ 436,302,182 The largest component of the City's net assets, $448.2 million, or 83%, is its investment in capital assets, less debt related to the acquisition or construction of those assets. These capital assets, such as streets, parks, trails, and vehicles and equipment related to police and public works, are used to provide services to the citizens. As a result, these assets are not for sale, and are therefore not available to fund current and future City obligations. The City elected the GASB 34 reporting option to include all general infrastructure of the City acquired or substantially renovated since 1980. The largest component of unrestricted net assets, $35.9 million, represents the unrestricted net assets of the City's business-type activities and may only be spent on activities related to one of the four City utilities (water, sanitary sewer, storm water and solid waste) or to the City-owned ventures (airport, golf course, cemetery, and commercial retail property). Examples of utility activities include 19 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS maintenance of water/sewer mains, pump and lift stations, storm drain flushing, water meter reading, and garbage collection. Activities related to the other City-owned ventures include maintenance of hangars and runways at the airport, and grooming and landscaping at the golf course and cemetery. Restricted governmental fund net assets are $28.9 million and are restricted for purposes such as capital project construction, debt service, mitigation, and endowment. The remaining net assets of the City may be used for functions such as public safety employee salaries and supplies, park and road maintenance, and other general governmental services. Changes in Net Assets The change in net assets represents the increase or decrease in City net assets resulting from its various activities. Following is a condensed version of the City's changes in net assets. The table shows the revenues, expenses and related changes in net assets for both governmental-type and business-type activities: City of Auburn's Changes in Net Assets Governmental Activities Business-ty pe Activities Total 2008 2007 2008 2007 2008 2007 Revenues: Program revenues Charges for services $ 9,077,556 $ 10,049,930 $ 39,883,386 $ 38,784,127 $ 48,960,942 $ 48,834,057 Operating grants and contributions 2,567,788 2,923,968 55,024 43,263 2,622,812 2,967,231 Capital grants and contributions 94,905,563 9,213,115 10,670,660 12,479,500 105,576,223 21,692,615 General revenues Property taxes 10,804,825 16,164,073 - - 10,804,825 16,164,073 Sales taxes 17, 620, 661 18, 958, 484 17, 620, 661 18, 958, 484 Interfund utility taxes 2,507,213 2,095,901 2,507,213 2,095,901 Admission &utility taxes 8,075,355 6,073,429 8,075,355 6,073,429 Excise taxes 3,477,517 3,862,692 3,477,517 3,862,692 Cthertaxes 2,949,430 2,005,836 2,949,430 2,005,836 Investment earnings 1,589,837 2,993,174 1,242,363 2,098,417 2,832,200 5,091,591 Miscellaneous revenue 2,751,495 (406,847) 330,472 427,522 3,081,967 20,675 Total revenues 156,327,240 73,933,755 52,181,905 53,832,829 208,509,145 127,766,584 Expenses: General government 8,000,715 7,196,492 8,000,715 7,196,492 Publicsafety 28,217,844 33,396,630 28,217,844 33,396,630 Transportation 12, 974, 861 8,077,154 12, 974, 861 8,077,154 Physical environment 3,096,696 3,269,334 3,096,696 3,269,334 Culture and recreation 6,271,924 6,539,281 6,271,924 6,539,281 Economic environment 2,608,980 2,400,031 2,608,980 2,400,031 Health and human services 776,224 416,456 776,224 416,456 Interest on long-term debt 226,651 163,916 226,651 163,916 Water - - 8,565,231 7,873,191 8,565,231 7,873,191 Sanitary sewer 14, 479, 299 13, 974, 607 14, 479, 299 13, 974, 607 Storm drainage 5,226,823 4,224,881 5,226,823 4,224,881 Solid waste 10,781,426 10,368,901 10,781,426 10,368,901 Golf course 1,958,703 1,576,126 1,958,703 1,576,126 Other business-type activities 1,720,603 1,735,118 1,720,603 1,735,118 Total expenses 62,173,895 61,459,294 42,732,085 39,752,824 104,905,980 101,212,118 Increase in net assets before transfers 94,153,345 12,474,461 9,449,820 14,080,005 103,603,165 26,554,466 Transfers 427,740 (371,660) (427,740) 371,660 - - Change in net assets 94,581,085 12,102,801 9,022,080 14,451,665 103,603,165 26,554,466 Net assets-beginning of period 263,904,363 251,801,562 172,397,819 157,946,154 436,302,182 409,747,716 Net assets-end of period $ 358,485,448 $ 263,904,363 $ 181,419,899 $ 172,397,819 $ 539,905,347 $ 436,302,182 20 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Governmental activities contributed $94.2 million to the total increase in City net assets of which $90 million is attributable to the infrastructure assets received as a result of the annexation of the Lea Hill West Hill areas. Revenues to fund capital assets are recorded as program or general revenues in the statement of activities. However, asset purchases are not recorded as expenses in the year purchased and construction costs are not recorded as expenses in the year incurred. Instead, the costs are recorded as long-term assets and are depreciated over their useful life. This amount equaled $11.9 million, which was offset by an overall increase in the cost and variety of governmental services provided. General tax revenues decreased in the current fiscal year by 7.6%, compared to an increase of 6.4% in the prior fiscal year: • Property tax revenue fell $5.4 million, or 33.2%. This decrease is a result of a combination of lower property valuations, a rise in foreclosures and a reduction in the City's levy rate due to the creation of the Valley Regional Fire Authority. • Sales tax collections fell $1.3 million, or 7.1% as a result of the economic downturn and the Streamlined Sales Tax legislation enacted in Washington State. • Utility and admission tax revenue rose by $2.0 million or 33.0%. The increase is primarily attributable to the annexing Lea Hill and West Hill areas. • Real Estate Excise Tax (REET) revenue decreased by $385,175, or 9.97%. The decline in excise taxes reflects the decline in real estate activity both in number of transactions and in the average value per transaction. • Investment revenue fell by $1.4 million, or 46.9%. These declines reflect the tumultuous conditions in the market. • Miscellaneous revenue increased $3.2 million which was primarily from the gain on sale of two city owned properties in 2008. Governmental activities expenses in the primary government as a whole rose slightly from $61.5 million to $62.2 million in 2008 an increase of 1.2%. An increase in transportation expense of $4.9 million or 60.6% and general government expense of $804,000 or 11.2% were offset by a decline in public safety expense of $5.2 million or 15.5% as a result of the transfer of the City's fire protection services to the newly created Valley Regional Fire Authority. The first chart on the following page summarizes the government activity revenue by source, while the second chart reflects the specific programs' revenues and related expenses for the various activities of the City. Gaps between specific programs' revenues and their related expenditures are funded through general tax revenues. 21 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Revenues by Source -Government Activities Utility & admissioi 5% Interfund utility to 2% Sales taxes 11% Property ta: 7% grants & ibutions Operating grants & contributions 60% Program Expenses and Revenues - Governmental Activities $100,000,000 $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 ZZN' a ❑ Program revenues ■ Expenses Business-type net assets increased by $9.0 million. Key components of this increase include: • $10.7 million of the increase relates to utility capital contributions. Of this amount, $9.4 million is related to utility infrastructure contributed to the City by developers, and $1.3 million is related to new customer connections. 22 Charges for services Other revenue 6% CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS • Income (loss) before capital contributions and transfers amounted to: o Water fund: $ (461,949) o Sanitary sewer fund: (152,683) o Storm fund: 306,838 o Solid waste fund: (363,862) o Golf course: (234,377) o Non-major funds: (16,746) $ (922,779) • Net transfers-out totaled $427,740. Below is a chart that shows the relative net asset balances for each business-type fund: Business-type Net Assets - By Fund Golf course 3% Solid wa 2% Storm drainage 22% Water 32% The majority of net assets in the City's enterprise funds relate to capital asset infrastructure, such as water and sewer mains, the airport runway, and the golf course land. As such, most of the net assets are not available to support the ongoing expenses of the funds. Following are two charts that contrast the total net assets to the spendable portion of net assets for each enterprise fund: 23 Sanitary sewer 35% CITY OF AUBURN: 2008 CAM MANAGEMENT'S DISCUSSION AND ANALYSIS Comparison of Total Net Assets to Spendable Net Assets Utility Funds $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,OOC OW1111 Ulaulaye Solid waste The first chart following depicts the revenues and expenses for business-type funds, while the second shows the various sources of business-type revenue: Comparison of Total Net Assets to Spendable Net Assets Other Enterprise Funds $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,OOC $1,000,00( VUII I:VUIJC Commercial retail 24 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Business-type Activity Revenues and Expenses Before Capital Contributions and Transfers $15,000,000 $13,500,000 $12,000,000 $10,500,000 $9,000,000 $7,500,000 $6,000,000 $4,500,000 $3,000,000 $1,500,000 $0 ❑ Revenues ■ Expenses Business-type Activity Revenues - By Source Investment earnings 2% Capital contributions 20% Business-type ll miscellaneous income j Charges for services 77% 25 Water Sanitary Storm Solid waste Golf course Minor sewer drainage business-type activities CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Financial Analysis of Governmental Funds The purpose of the City's governmental funds is to report on near-term revenues/financial resources and expenditures. This information helps determine the City's financial requirements in the near future. Specifically, fund balance is a good indicator of the City's financial resources. As of December 31, 2008, the City's governmental funds had combined fund balances of $42,176,454, an increase of $3,043,726 or 7.78%. This increase is related to: • General fund ($1,391,629) • Arterial street fund $710,275 • Capital improvement projects fund $3,019,851 • Other governmental funds $705,229 Of the government funds' total fund balances, $40,668,889 is unreserved. Of this unreserved total, $12,990,032 is earmarked for capital projects and $14,463,370 is in special revenue funds and is earmarked for specific purposes. Of the $1,507,565 of fund balances that are reserved, $1,336,000 is reserved for endowment. The general fund is the primary operating fund of the City. All receipts and payments of ordinary City operations are processed through it unless they are required to be accounted for in another fund. At the end of 2008, the general fund had a fund balance of $13,071,091, all of which is unreserved. Other funds that had significant fund balances include: • $12,705,203 in the capital improvement projects fund; used for various governmental capital asset projects. • $5,866,566 in the cumulative reserve fund; used for revenue stabilization or capital projects. • $5,468,420 in the mitigation fund; used to collect fees from new development to mitigate the cost of new roads and other infrastructure. • $1,336,000 in the cemetery endowed care fund; used for maintenance of the cemetery. 26 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The following chart shows the relative fund balances for governmental funds: Governmental Funds - Fund Balances All other government 4:..-,4- i e Mitigation fu 13% Cumulative reserve fund 14% 3eneral fund 30% Arterial street fund 4% The decrease in the general fund balance of $1.4 million is primarily attributable to a decrease of $5.4 million in property taxes that resulted from a combination of a reduced levy rate as a result the creation of the Valley Regional Fire Authority, a decline in property valuations and a significant decline in the housing market in 2008. In addition, sales tax revenues declined $1.3 million or 7.1% reflecting the negative impact of the Streamlined Sales Tax legislation enacted in the State of Washington as well as the impacts of the economic downturn over the fiscal year. These decreases in revenue were partially offset by an increase in intergovernmental revenues of $2.3 million; the majority of which is attributable to $1.3 million received from the King County annexation agreement and $596,000 received from the State for streamlined sales tax mitigation. General fund expenditures decreased by $5.3 million or 9.8% from 2007. The decrease reflects the reduction in the cost of security of persons and property as a result of the transfer of fire protection services to the Valley Regional Fire Authority (VRFA) in 2007 as described in note 16. In 2007, $10.5 million of tax revenue was paid to the VRFA and was reflected in the general fund as an operating expenditure for security of persons and property. There was no corresponding tax revenue paid in 2008 as the VRFA now receives these taxes directly from the State of Washington. Also, contributing to the decrease in the general fund balance were transfers out of the general fund of $3.3 million to the capital projects fund and $697,000 to the equipment rental fund for the purchase of equipment and vehicles needed as a result of the annexations in 2008. 27 Capital improvement fund 30% CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS The general fund revenue decrease of $3.5 million came from the following sources: 2008 General Fund Revenue Increases / (Decreases) - By Source $3,000,000 1 Intergovernmental $2,336,700 $2,000,000 Utility & admission taxes $1,414,394 $1,000,000 Interfund utility taxes Fines & forfeitures $228,724 $129,382 $0 Charges for services Miscellaneous ($110,087) ($1,000,000) ($266,763) Licenses & permits Sales taxes ($496,228) ($2,000,000) ($1,337,823) ($3,000,000) ($4,000,000) ($5,000,000) I~ Property taxes ($6,000,000) ($5,408,017) The increase of $3.0 million in the capital improvement projects fund is largely due to $2.7 million gain from the sale of two city owned properties in 2008. Other significant changes in fund balances include: • The mitigation fund increased by $348,375 as revenues exceeded expenditures and net transfers. • The local streets fund increased by $225,952 due to transfers in from the capital improvement projects and mitigation funds. Financial Analysis of Proprietary Funds The City's proprietary funds provide the same type of information as found in the government-wide financial statements, but in greater detail. Factors affecting the finances of the City's proprietary funds have already been addressed in the discussion of the City's business-type activities. 28 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS General Fund Budgetary Highlights The City budgets biannually by adopting a budget at the end of the preceding fiscal year, and then making adjustments as necessary via budget amendments throughout the next two years. Major budget revisions included: • Decreasing property tax revenue by $5.6 million to adjust for both a reduction in the levy rate after the formation of the Valley Regional Fire Authority for fire protection services and an increase in the King County road levy. • Decreasing Building Permits by $500,000 as construction declines due to the economic downturn. • Increasing tax revenue from natural gas utility taxes by $312,000, motor vehicle fuel taxes by $443,300, electric utility taxes by $788,300 and telephone utility taxes by $820,700 due to the annexations in 2008. • Increase King County annexation contribution by $625,000 due to the annexations. • Increase the sales tax credit revenue by $733,000 for a 4 month credit. • Increasing traffic photo enforcement revenue by $900,000 for the implementation of this program in 2008. • Decreasing fire protection services expenditures by $11.1 million after the formation of the Valley Regional Fire Authority for fire protection services. • Increasing intergovernmental professional services by $515,000 for additional jail costs due to the annexation. • Increasing police salaries and benefits by $695,700 for 10 Patrol Officers and 1 Traffic Officer due to the annexation. • Increasing jail costs by $515,000 due to the annexation. • Increasing police professional services for Redflex traffic lights, adding three school zones, and one traffic light. • Increasing police salaries by $646,900 for 10 Police Officers due to the savings achieved from the formation of the Valley Regional Fire Authority. • Increasing transfers out to the Capital Improvement Projects Fund by $2.0 million for property purchases for the downtown revitalization. Reasons for the significant variances in the general fund between the final budget and actual results include: • Intergovernmental revenues exceeded the budgeted amount by $1.3 million because the City received the King County annexation agreement payment of $1.3 million and the streamlined sales tax mitigation payment of $596,000 from the State of Washington which were not included in the 2008 budget. • Security of persons and property expenditures were below budget by $3.3 million as fire protection services for the City were transferred to the Valley Regional Fire Authority. Economic Environment expenditures were $1.1 million less than budgeted reflecting salary savings of $700,000 and the carry forward of $700,000 of budget for the code update project. Capital Asset and Debt Administration Capital Assets The City's investment in capital assets for both its governmental and business-type activities as of December 31, 2008 totaled $469.8 million (net of accumulated depreciation), an increase of $101.0 29 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS million from 2007. This investment in capital assets includes land, buildings, improvements, machinery and equipment, construction in progress, utility transmission/distribution systems, roads, bridges, and other infrastructure. Major capital asset changes during the year include: • Annexation of Lea Hill and West Hill areas effective January 1, 2008 resulted in an increase in governmental infrastructure of $88.9 million net of depreciation. • Developer contributions resulted in an increase of $9.4 million in utility infrastructure assets and $2.5 million in governmental infrastructure assets. • $3.4 million was spent by proprietary funds on construction projects during the year. Some of the larger ones include: o $2.3 million on Local Street Pavement Preservation o $1.2 million on Arterial Pavement Preservation o $0.9 million on Fenster property o $0.7 million on Auburn Community Center A summary of the City's net assets follows: Summary of Capital Assets (net of depreciation) Governmental Activities Business-ty pe Activities Total As of 12/31/08 As of 12/31/07 As of 12/31/08 As of 12/31/07 As of 12/31/07 As of 12/31/07 Land $ 105,137,747 $ 48,969,057 $ 14,464,998 $ 14,158,803 $ 119,602,745 $ 63,127,860 Building 15,569,974 16,789,533 8,454,977 8,666,798 24,024,951 25,456,331 Joint venture 3,276,716 2,885,788 - - 3,276,716 2,885,788 Site improvements 4,957,637 4,077,270 132,648,835 121,837,398 137,606,472 125,914,668 Equipment 6,613,918 6,109,008 1,188,638 1,042,068 7,802,556 7,151,076 Intangibles 616,633 649,137 - - 616,633 649,137 Infrastructure 168,394,251 134,140,672 - - 168,394,251 134,140,672 Construction in progress 5,494,727 3,526,421 2,934,771 5,979,274 8,429,498 9,505,695 $ 310,061,603 $ 217,146,886 $ 159,692,219 $ 151,684,341 $ 469,753,822 $ 368,831,227 More detailed information on capital assets is provided in note 7 Long-term Debt At the end of the current fiscal year, the City had total bonded debt outstanding of $13,584,827. Of this amount, $10,053,000 is general obligation bonds, $3,495,000 is revenue bonds for the water and storm utilities, and $36,827 is special assessment debt with government commitment. The City currently maintains a rating of Al with Moody's for its general obligation debt. The following schedule summarizes the City's bonded debt: Summary of bonded debt Governmental Business-type Activities Activities Total General obligation bonds $ 3,868,000 $ 3,275,000 $ 7,143,000 Special assessment bonds - - 0 Revenue bonds - 1,030,000 1,030,000 $ 3,868,000 $ 4,305,000 $ 8,173,000 30 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Below is a summary of additional, non-bonded long-term debt of the City: Other Long-term Debt Public Works Trust Fund loans $ 2,321,053 Employee leave benefits - $ 2,321,053 Washington State law limits the amount of general obligation debt a governmental entity may issue to 7.5% of its total assessed value. Of the 7.5% limit, 2.5% is for general purposes, 2.5% is for open spaces/parks, and 2.5% is for utilities. Non-voted (limited tax) general obligation indebtedness is limited to 1.5% of assessed valuation. The combination of unlimited tax and limited tax general obligation debt for all purposes cannot exceed 7.5% of assessed valuation. Following is a summary of the City's legal debt limitations and capacity: Summary of legal debt limits and capacity With a Vote General Open spaces/parks Utilities Totals Without a Vote General Totals Auburn Legal Limitation Capacity - $ 217,993,047 $ 207,263,695 217,993,047 217,993,047 217,993,047 217,993,047 $ 653,979,142 $ 643,249,790 $ 130,795,828 $ 120,066,476 130,795, 828 -120,066,476 Additional information can be found in note 11 and in the statistical section of this report. Economic Factors The outlook for 2009 and beyond is guarded. The economy in the county and the City has experienced the same deep, lingering recession as that of the nation. The largest impact on the City is the decline in sales tax and development revenues. Many existing businesses have reduced their forces and unemployment in Auburn ranges between 9% for blue collar workers and close to 12% for middle management. However in spite of the recession there is development occurring in the City: • Auburn Regional Medical Center is currently under construction with an 11,000-square foot cancer treatment center adjacent to the hospital, along with a public/private mix 300-stall parking garage. • A new three story building that will house a floor of City offices (City Hall Annex) is under construction on an adjacent block to City Hall. The building will feature Key Bank as its anchor, along with medical/professional offices and a restaurant. • Downtown redevelopment is planned on several blocks (4+) near the Transit Station. A developer has been selected and the project value is estimated to be $240 million. The State has identified the Auburn project as a demonstration project during the recent legislative session. The City will receive up to $250,000 a year that will support approximately $3.35 million in infrastructure improvements in this area. • Plans are moving forward to develop a large retail/office project in the City's north end that had been a drive-in movie complex. Up to 65 acres may be involved. Significant new retail sales tax revenues would be generated from this project. 31 CITY OF AUBURN: 2008 CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS • A new Super Wal-Mart is about to begin its 2 year construction cycle adjacent to the Super Mall that will also provide the City with new jobs and new tax revenues. The City has and is adjusting the current expenditure budget in order to live within its means. The recession is anticipated to end late 2009 or early 2010. However, the return of revenue levels will be sometime further off in the future. The City views this economic event as a `reset' of revenue to a lower base and expectations are that it may be several years before they return to prior levels. Requests for Information This financial report is designed to provide a general overview of the City of Auburn's finances for readers with an interest in the City's finances. Questions concerning this report, or requests for additional information, may be addressed to the Finance Director, City of Auburn, 25 West Main Street, Auburn WA 98001-4998. 32 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS The City presents two government-wide financial statements. The Statement of Net Assets provides information all on city assets and liabilities, with the difference between the two reported as net assets. The Statement of Activities is focused on both the gross and net cost of various functions, including both governmental and business-type activities, which are supported by the City's general tax and other revenues. 33 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS A CITY OF I M. t 34 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON STATEMENT OF NET ASSETS DECEMBER 31, 2008 CASH AND CASH EQUIVALENTS (Note 3) $ 48,844,885 $ 29,156,008 $ 78,000,893 CASH WITH OUTSIDE AGENCIES - - - INVESTMENTS (Note 3) 4,038,330 6,169,076 10,207,406 RECEIVABLES: TAXES 342,949 - 342,949 CUSTOMER ACCOUNTS 190,789 4,303,421 4,494,210 OTHER RECEIVABLES 2,630,829 92,769 2,723,598 SPECIAL ASSESSMENTS 646,408 - 646,408 DUE FROM OTHER GOVERNMENTAL UNITS (Note 6) 3,177,376 55,024 3,232,400 INTERNAL BALANCES 193,124 - 193,124 MATERIALS AND SUPPLIES INVENTORY 143,945 269,039 412,984 LONG-TERM CONTRACTS AND NOTES 4,723 1,115,752 1,120,475 DEFERRED CHARGES 1,559,026 - 1,559,026 RESTRICTED ASSETS: TEMPORARILY RESTRICTED: CASH AND CASH EQUIVALENTS (Note 3) - 3,560,448 3,560,448 DEPRECIABLE CAPITAL ASSETS (NET OF ACCUMULATED DEPRECIATION): (Note 7) 199,493,336 142,292,458 341,785,794 NON-DEPRECIABLE CAPITAL ASSETS 110,568,267 17,399,770 127,968,037 TOTALASSETS 371,833,987 204,413,765 576,247,752 LIABILITIES: ACCOUNTS PAYABLE 4,736,405 2,124,956 6,861,361 INTERFUND PAYABLE - - - INTERNAL BALANCES 193,124 193,124 DUE TO OTHER GOVERNMENTAL UNITS - - - OTHER LIABILITIES PAYABLE 257,773 52,216 309,989 PAYABLE FROM RESTRICTED ASSETS: ACCRUED INTEREST - 195,837 195,837 DEPOSITS 79,257 79,257 MATURED BONDS PAYABLE - - - UNEARNED REVENUE 1,074,801 901,051 1,975,852 DEFERRED CREDITS - - - BONDS AND OTHER DEBT PAYABLE: DUE WITHIN ONE YEAR (Note 12) 1,791,228 1,904,985 3,696,213 DUE IN MORE THAN ONE YEAR (Note 12) 4,658,301 17,542,440 22,200,741 SPEC ASSESSMENT DEBT WITH GOV'T COMMITMENT (Note 12) 36,827 - 36,827 NET OPEB OBLIGATION 793,204 793,204 TOTAL LIABILITIES 13,348,539 22,993,866 36,342,405 NET ASSETS: INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT 303,564,348 144,626,496 448,190,844 RESTRICTED NET ASSETS: CAPITAL PROJECTS 13,012,383 - 13,012,383 SPECIAL REVENUE FUND PROJECTS 14,463,370 - 14,463,370 DEBT SERVICE 141,096 648,190 789,286 NON EXPENDABLE PERPETUAL CARE 1,348,750 - 1,348,750 CONSTRUCTION - 285,724 285,724 UNRESTRICTED NET ASSETS 25,955,501 35,859,489 61,814,990 TOTAL NET ASSETS $ 358,485,448 $ 181,419,899 $ 539,905,347 The notes to the financial statements are an integral part of this statement. 35 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2008 Page 1 of 2 XPENSES CHARGES FOR SERVICES PROGRAM REVENUES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS FUNCTIONS / PROGRAMS: PRIMARY GOVERNMENT GOVERNMENTAL ACTIVITIES: GENERAL GOVERNMENT $ 8,000,715 $ 2,316,125 $ 330,125 $ 90,047,644 PUBLIC SAFETY 28,217,844 2,674,777 1,488,163 - TRANSPORTATION 12,974,861 1,272,751 - 3,601,553 PHYSICAL ENVIRONMENT 3,096,696 257,780 289,701 115,496 CULTURE AND RECREATION 6,271,924 917,544 83,332 1,140,910 ECONOMIC ENVIRONMENT 2,608,980 1,638,579 - (40) HEALTH AND HUMAN SERVICES 776,224 - 376,467 - INTEREST ON LONG-TERM DEBT 226,651 62,173,895 - 9,077,556 - 2,567,788 - 94,905,563 BUSINESS-TYPE ACTIVITIES: WATER 8,565,231 7,664,443 2,653,883 SANITARY SEWER 14,479,299 13,602,387 7,095,833 STORM DRAINAGE 5,226,823 5,160,386 - 920,944 SOLID WASTE 10,781,426 10,294,411 55,024 - GOLF COURSE 1,958,703 1,701,487 - NONMAJOR BUSINESS-TYPE ACTIVITIES 1,720,603 1,460,272 - - 42,732,085 39,883,386 55,024 10,670,660 TOTAL PRIMARY GOVERNMENT i $ 104,905,980 $ 48,960,942 $ 2,622,812 $ 105,576,223 GENERALREVENUES: TAXES: PROPERTY RETAIL SALES AND USE INTERFUND UTILITY UTILITY EXCISE OTHER INVESTMENT EARNINGS MISCELLANEOUS GAIN ON SALE OF CAPITAL ASSETS CONTRIBUTIONS TO ENDOWMENT FUNDS TRANSFERS (Note 5) TOTAL GENERAL REVENUES NET ASSETS - BEGINNING The notes to the financial statements are an integral part of this statement. 36 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS Page 2 of 2 NET (EXPENSE) REVENUE AND CHANGES IN NET ASSETS GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITY TOTAL $ 84, 693,179 $ $ 84, 693,179 (24, 054, 904) (24, 054, 904) (8,100, 557) (8,100, 557) (2, 433, 719) (2, 433, 719) (4,130,138) (4,130,138) (970, 441) (970, 441) (399, 757) (399, 757) (226, 651) (226, 651) 44, 377, 012 44, 377, 012 1,753,095 1,753,095 6,218,921 6,218,921 854,507 854,507 (431,991) (431,991) (257,216) (257,216) (260,331) (260,331) 7,876,985 7,876,985 $ 44,377,012 $ 7,876,985 $ 52,253,997 $ 10,804,825 $ $ 10,804,825 17, 620, 661 17, 620, 661 2,507,213 2,507,213 8,075,355 8,075,355 3,477,517 3,477,517 2,949,430 2,949,430 1,589,837 1,242,363 2,832,200 - 329,872 329,872 2,699,062 600 2,699,662 52,433 - 52,433 427,740 (427,740) - 50, 204, 073 1,145, 095 51, 349,168 263, 904, 363 172, 397, 819 436, 302,182 $ 358, 485, 448 $ 181, 419, 899 $ 539, 905, 347 37 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS MAJOR GOVERNMENTAL FUNDS General Fund The general fund accounts for all of the City's financial resources except those required by statute or generally accepted accounting principles to be accounted for in another fund. As is the case with most municipalities, the general fund is the largest and most important accounting entity of the City. As noted in the statements that follow, the general fund receives the bulk of its revenues from local taxes, followed by State shared revenues, service charges, and other income. The general fund is accounted for on a modified accrual basis. Annual budgets are adopted with appropriations lapsing at year-end. Arterial Street Fund This fund is supported by the State's one-half cent gas tax and is used for major street construction. Capital Improvement Projects Fund This fund accounts for major capital acquisitions, and streets and parks construction projects. 38 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CASH AND CASH EQUIVALENTS INVESTMENTS RECEIVABLES: TAXES CUSTOMER ACCOUNTS OTHER RECEIVABLES SPECIAL ASSESSMENTS INTERFUND RECEIVABLE (Note 5) LONG-TERM NOTES AND CONTRACTS DUE FROM OTHER GOVERNMENTAL UNITS DEFERRED CHARGES LIABILITIES AND FUND BALANCES: CURRENT PAYABLES CUSTOMER DEPOSITS OTHER LIABILITIES PAYABLE DEFERRED REVENUE FUND BALANCES: RESERVED FOR DEBT SERVICE ENDOWMENT UNRESERVED,REPORTEDIN: GENERALFUND SPECIAL REVENUE FUNDS CAPITAL PROJECT FUNDS PERMANENTFUND TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES $ 8,839,983 $ 1,960,615 $ 11,706,497 $ 14,418,573 $ 36,925,668 1,999,580 - 1,024,375 1,014,375 4,038,330 342,949 - - - 342,949 111,630 432 56,532 1,995 170,589 2,587,064 - 25,825 - 2,612,889 - - - 646,408 646,408 - - 96,875 - 96,875 - - 585,126 - 585,126 2,481,381 283,027 - 412,968 3,177,376 - - - 4,320 4,320 $ 16,362,587 $ 2,244,074 $ 13,495,230 $ 16,498,639 $ 48,600,530 $ 2,724,414 $ 263,944 $ 179,076 $ 1,003,808 $ 4,171,242 227,062 - - - 227,062 242 - - - 242 339,778 428,393 610,951 646,408 2,025,530 3,291,496 692,337 790,027 1,650,216 6,424,076 - - - 171,565 171,565 - - - 1,336,000 1,336,000 13,071,091 - - - 13,071,091 - 1,551,737 - 12,911,633 14,463,370 - - 12,705,203 284,829 12,990,032 - - - 144,396 144,396 13,071,091 1,551,737 12,705,203 14,848,423 42,176,454 $ 16,362,587 $ 2,244,074 $ 13,495,230 $ 16,498,639 $ 48,600,530 Total governmental fund balances as reported on this statement $ 42,176,454 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore not reported in the funds. 304,363,380 Other long-term assets are not available to pay for current-period expenditures and therefore are deferred in the funds. Prepaid expenses 1,530,966 Interest receivable on investments 48,488 Unearned revenue beyond the city's 30-day measurable and available period 339,778 Deferred charges for bond issue costs 1,023 1,920,255 Internal service funds are used by management to charge the cost of certain activities, such as insurance and fleet maintenance, to individual funds. The assets and liabilities of these internal service funds are included in governmental 17,209,359 activities in the statement of net assets. Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Bonds and loans payable (4,335,983) Interest payable (30,469) Net pension obligation 23,740 Net other postemployment obligations (793,204) Compensated absences payable (1,401,286) Capital lease payable (646,798) (7,184, 000) 58,485,448 The notes to the financial statements are an integral part of this statement. 39 CITY OF AUBURN, WASHINGTON BALANCE SHEET GOVERNMENTALFUNDS DECEMBER 31. 2008 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31. 2008 OTHER TOTAL GENERAL ARTERIAL CAPITAL GOVERNMENTAL GOVERNMENTAL FUND STREET IMPROVEMENT FUNDS FUNDS REVENUES: TAXES: PROPERTY $ 9,757,999 $ $ $ 2,282,125 $ 12,040,124 RETAIL SALES & USE 17,620,661 - 17,620,661 I NTERFUN D UTILITY 2,324,625 182,588 2,507,213 UTILITY 7,487,823 587,532 - 8,075,355 EXCISE 1,160,700 - 2,230,280 86,537 3,477,517 OTHER - - 60,660 60,660 LICENSES AND PERMITS 1,110,722 - - - 1,110,722 INTERGOVERNMENTAL 5,788,294 1,062,911 4,875 1,513,808 8,369,888 CHARGES FOR SERVICES 2,397,025 - - 1,387,519 3,784,544 FINES AND FORFEITURES 2,059,771 - 2,059,771 SPECIAL ASSESSMENTS - - - 57,402 57,402 INVESTMENT EARNINGS 521,647 27,254 364,576 449,898 1,363,375 MISCELLANEOUS 849,839 - 154,595 291,915 1,296,349 TOTALREVENUES 51,079,106 1,860,285 2,754,326 6,129,864 61,823,581 EXPENDITURES: CURRENT: GENERAL GOVERNMENT 7,010,742 - - - 7,010,742 SECURITY OF PERSONS AND PROPERTY 26,157,394 89,155 485,826 26,732,375 PHYSICAL ENVIRONMENT 3,490,636 - - - 3,490,636 TRANSPORTATION 2,784,963 3,757,294 2,368,710 8,910,967 ECONOMIC ENVIRONMENT 2,018,159 - 512,668 2,530,827 HEALTH AND HUMAN SERVICES 776,224 - 776,224 CULTURE AND RECREATION 6,296,743 - - 6,296,743 DEBT SERVICE: PRINCIPAL 201,482 35,578 219,595 456,655 INTERESTANDOTHER COSTS 116,760 534 - 147,703 264,997 CAPITAL OUTLAY - - 2,494,212 2,284,122 4,778,334 TOTAL EXPENDITURES * 48,853,103 3,793,406 2,583,367 6,018,624 61,248,500 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 2,226,003 (1,933,121) 170,959 111,240 575,081 OTHER FINANCING SOURCES (USES): SALES OF CAPITAL ASSETS - - 2,698,677 - 2,698,677 PROCEEDS OF LONG-TERM DEBT - 360,000 - 360,000 PROCEEDS FROM CAPITAL LEASE 17,728 - - - 17,728 TRANSFERS IN (Note 5) 643,132 2,283,396 2,644,800 1,814,754 7,386,082 TRANSFERS OUT (Note 5) (4,278,492) (2,494,585) (1,220,765) (7,993,842) TOTAL OTHER FINANCING SOURCES AND USES (3,617,632) 2,643,396 2,848,892 593,989 2,468,645 NET CHANGE IN FUND BALANCES (1,391,629) 710,275 3,019,851 705,229 3,043,726 FUNDBALANCES- BEGINNING 14,462,720 841,462 9,685,352 14,143,194 39,132,728 FUNDBALANCES - ENDING $ 13,071,091 $ 1,551,737 $ 12,705,203 $ 14,848,423 $ 42,176,454 The notes to the financial statements are an integral part of this statement. 40 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENT FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31. 2008 Net change in fund balances per the Statement of Revenues, Expenditures and Changes in Fund Balance $ 3,043,726 Amount reported as change in net assets in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay ($10,296,604) exceeded depreciation ($9,375,543) in the current period. 938,789 Gain on sale of capital assets - Debt proceeds are reported as financing sources in governmental fund and thus contribute to the change in fund balances. In the government-wide statements, however, issuing debt increases long-term liabilities in the statement of net assets and does not affect the statement of activities. (377,728) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds: Deferred revenue (1,254,723) Donation of property - Amortization of bond premium 3,138 Investment interest receivable (33,263) (1,284,848) Developer contributions and annexation of infrastructure assets are reported as revenue in the statement of activities, but do not provide current financial resources and are not reported as fund revenue. 91,416,052 Repayment of the principal of long-term debt consumes the current financial resources of governmental funds but has no effect on the net assets. 432,060 Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet maintenance, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. 1,543,726 Some expenses 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. Amortization of debt issue costs (3,240) Amortization of prepaid expenses (109,355) Change in accrued interest payable 2,259 Change in net pension obligation (25,213) Change in net other postemployment benefits (793,204) Change in compensated absences payable (201,939) (1,130,692) The notes to the financial statements are an integral part of this statement. 41 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS A CITY OF I M. t 42 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS MAJOR PROPRIETARY FUNDS ENTERPRISE FUNDS The City's enterprise funds are used to account for operations that are financed and operated in a manner similar to private business operations. The goods and services these funds provide to the general public are primarily financed by service charges. Enterprise funds are self-supporting and use the accrual method of accounting. Auburn has five major enterprise funds. The Water Fund This fund accounts for all maintenance, construction, and debt service requirements associated with the water system. The Sanitary Sewer Fund This fund accounts for maintenance, construction, and debt requirements for Auburn's sanitary sewer system. The Storm Drainage Fund This fund accounts for the maintenance, construction and debt service requirements of Auburn's storm drainage system. The Solid Waste Fund Garbage collection services for the City are accounted for in this fund, supported almost entirely by garbage collection fees. Expenses include payment to the City's garbage contractor and other service charges. The Golf Course Fund Accounts for services, maintenance, and operations associated with the Auburn Municipal Golf Course. 43 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON STATEMENT OF NET ASSETS PROPRIETARY FUNDS DECEMBER 31. 2008 ATER SANITARY SEWER STORM DRAINAGE SOLID WASTE GOLF COURSE NON-MAJOR PROPRIETARY FUNDS TOTAL PROPRIETARY FUNDS GOVERNMENTAL ACTIVITIES INTERNAL SERVICE FUNDS ASSETS: CURRENT ASSETS: CASH AND CASH EQUIVALENTS $ 6,695,075 $ 11,337,351 $ 6,328,751 $ 2,359,384 $ 221,139 $ 2,214,308 $ 29,156,008 $ 11,919,217 INVESTMENTS 3,112,826 2,003,750 1,052,500 - - - 6,169,076 - RESTRICTED CASH: BONDS PAYMENTS 1,009,122 - 442,329 - 26,726 - 1,478,177 - CUSTOMER DEPOSITS 33,745 18,471 - - - 79,258 131,474 - OTHER 468,199 738,017 479,991 264,590 - 1,950,797 - CUSTOMER ACCOUNTS 768,978 1,636,060 720,823 1,173,651 - 3,909 4,303,421 20,200 OTHER RECEIVABLES 51,179 37,069 4,521 - - - 92,769 - DUE FROM OTHER GOVERNMENTAL UNITS - - - 55,024 - - 55,024 - INVENTORIES TOTAL CURRENT ASSETS 242,852 12,381,976 8,968 15,779,686 8,764 9,037,679 3,588,059 512,455 8,455 2,305,930 269,039 43,605,785 143,945 12,083,362 NONCURRENT ASSETS: LONG-TERM CONTRACTS AND NOTES - 1,073,400 - - - 42,352 1,115,752 - CAPITAL ASSETS: LAND 897,971 1,654,958 5,686,254 - 2,229,636 3,996,179 14,464,998 - BUILDINGS AND EQUIPMENT 3,113,583 1,131,744 201,255 496,618 6,570,141 5,237,606 16,750,947 13,069,916 IMPROVEMENTS OTHER THAN BUILDINGS 81,599,892 65,113,774 38,271,397 - 3,023,053 6,628,275 194,636,391 46,591 CONSTRUCTION IN PROGRESS 920,761 846,620 808,357 - - 359,034 2,934,772 64,206 LESS: ACCUMULATED DEPRECIATION (32,146,881) (15,200,016) (12,887,006) (277,337) (2,082,876) (6,500,764) (69,094,880) (7,482,490) TOTAL CAPITALASSETS(NET OF A/D) 54,385,326 53,547,080 32,080,257 219,281 9,739,954 9,720,330 159,692,228 5,698,223 TOTAL NONCURRENT ASSETS 54,385,326 54,620,480 32,080,257 219,281 9,739,954 9,762,682 160,807,980 5,698,223 TOTAL ASSETS LIABILITIES: 66,767,302 70,400,166 41,117,936 3,807,340 10,252,409 12,068,612 204,413,765 17,781,585 CURRENT LIABILITIES: CURRENT PAYABLES 477,679 424,743 218,480 892,898 48,294 62,862 2,124,956 565,163 CUSTOMER DEPOSITS 33,745 18,471 - - - - 52,216 - INTERFUND PAYABLES - - - - 96,875 - 96,875 - EMPLOYEE LEAVE BENEFITS-CURRENT 123,306 69,282 92,777 15,907 50,012 13,701 364,985 91,969 REVENUE BONDS PAYABLE-CURRENT 896,500 - 398,500 - - - 1,295,000 - GENERAL OBLIGATION BONDS PAYABLE-CURRENT - - - - 180,000 65,000 245,000 - ACCRUED INTEREST 138,825 13,183 43,829 - - - 195,837 - DEPOSITS 79,257 79,257 TOTAL CURRENT LIABILITIES 1,670,055 525,679 753,586 908,805 375,181 220,820 4,454,126 657,132 NONCURRENT LIABILITIES: DEFERRED REVENUE 42,200 162,203 597,204 - 57,092 42,352 901,051 - EMPLOYEE LEAVE BENEFITS 15,208 8,545 11,443 1,962 6,168 1,690 45,016 11,343 LOANS PAYABLE 5,323,768 4,046,557 - - - - 9,370,325 - REVENUE BONDS PAYABLE 1,655,846 - 581,326 - - - 2,237,172 - GENERAL OBLIGATION BONDS PAYABLE 4,133,266 1,756,661 5,889,927 TOTAL OTHER NONCURRENT LIABILITIES 7,037,022 4,217,305 1,189,973 1,962 4,196,526 1,800,703 18,443,491 11,343 TOTAL LIABILITIES NET ASSETS: 8,707,077 4,742,984 1,943,559 910,767 4,571,707 2,021,523 22,897,617 668,475 INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT 46,509,213 53,547,080 31,100,432 - 5,426,689 8,043,082 144,626,496 4,095,046 RESTRICTED FOR DEBT SERVICE 468,199 - 179,991 - - - 648,190 - CONSTRUCTION - 21,398 - - 264,326 - 285,724 - UNRESTRICTED 11,082,813 12,088,704 7,893,954 21896,573 (10,313) 2,004,007 35,955,738 13,018,064 TOTAL NET ASSETS $ 58,060,225 $ 65,657,182 $ 39,174,377 $ 2,896,573 $ 5,680,702 $ 10,047,089 $ 181,516,148 $ 17,113,110 Adjustment to reflect the consolidation ofinternal service funds related to enterprise funds (96,249) Net assets of business-type activities $ 181,419,899 The notes to the financial statements are an integral part of this statement. 44 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31. 2008 ATER SANITARY SEWER STORM DRAINAGE SOLID WASTE GOLF COURSE NONMAJOR ENTERPRISE FUNDS TOTAL PROPRIETARY FUNDS GOVERNMENTAL ACTIVITIES INTERNAL SERVICE FUNDS OPERATING REVENUES: CHARGES FOR SERVICES $ 7,664,443 $ 13,601,390 $ 5,159,389 $ 10,294,411 $ 1,635,232 $ 1,455,318 $ 39,810,183 $ 7,135,162 INTEREST - - - - - 2,363 2,363 - OTHER OPERATING REVENUE TOTAL OPERATING REVENUES 7,664,443 997 13,602,387 997 5,160,386 10,294,411 66,255 1,701,487 2,591 1,460,272 70,840 39,883,386 181,776 7,316,938 OPERATING EXPENSES: OPERATIONS & MAINTENANCE 3,266,201 10,071,648 1,551,406 8,894,606 1,264,494 617,014 25,665,369 5,312,504 ADMINISTRATION 2,192,538 1,774,962 1,979,083 712,645 67,581 572,323 7,299,132 936,657 DEPRECIATION/AMORTIZATION 2,098,916 1,282,599 1,241,980 20,534 337,451 425,426 5,406,906 1,363,084 OTHER OPERATING EXPENSES 867,789 1,029,045 417,130 1,153,641 64,724 10,099 3,542,428 TOTAL OPERATING EXPENSES 8,425,444 14,158,254 5,189,599 10,781,426 1,734,250 1,624,862 41,913,835 7,612,245 OPERATING INCOME (LOSS) (761,001) (555,867) (29,213) (487,015) (32,763) (164,590) (2,030,449) (295,307) NON-OPERATING REVENUE (EXPENSE): INTEREST REVENUE 383,491 426,168 295,975 65,278 20,614 50,837 1,242,363 291,706 OTHER NON-OPERATING REVENUES 55,348 - 77,300 57,875 2,225 192,148 384,896 9,182 GAIN ON SALE OF CAPITAL ASSETS - - - - - 600 600 385 INTEREST EXPENSE (137,855) (20,807) (37,224) - (224,453) (95,741) (516,080) - OTHER NON-OPERATING EXPENSES (1,932) (2,177) (4,109) TOTAL NON-OPERATING REVENUE (EXPENSE) INCOME (LOSS) BEFORE CONTRIBUTIONS & TRANSFERS 299,052 403,184 (461,949) (152,683) 336,051 123,153 (201,614) 147,844 1,107,670 301,273 306,838 (363,862) (234,377) (16,746) (922,779) 5,966 CAPITAL CONTRIBUTIONS 2,653,883 7,095,833 920,944 - - - 10,670,660 260,198 TRANSFERS IN (Note 5) - - - - 56,092 115,000 171,092 994,500 TRANSFERS OUT (Note 5) (50,000) (50,000) (159,100) (339,732) (598,832) (15,000) CHANGE IN NET ASSETS 2 141 934 6 893 150 1 068 682 (363 862) (178 285) (241 478) 9 320 141 1 245 664 TOTAL NET ASSETS BEGINNING OF YEAR , , 55,918,291 , , 58,764,032 , , , , , 38,105,695 3,260,435 5,858,987 10,288,567 , , 172,196,007 , , 15,867,445 TOTAL NET ASSETS END OF YEAR $ 58,060,225 $ 65,657,182 $ 39,174,377 $ 2,896,573 $ 5,680,702 $ 10,047,089 $ 181,516,148 $ 17,113,109 Change in net assets from this statement 9,320,141 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (298,061) Change in net assets of business-type activities $ 9,022,080 The notes to the financial statements are an integral part of th is statement. 45 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: INTERFUND LOAN PAYABLE - - - - (37,500) - (37,500) - OPERATING GRANT RECEIVED - - - (11,761) - - (11,761) - TRANSFERS IN - - - - 56,092 115,000 171,092 994,500 TRANSFERS OUT NET CASH PROVIDED (USED) BY NOW CAPITAL FINANCING ACTIVITIES (50,000) (50 000) (50,000) (50 000) (159,100) (159 100) (11 761) 18 592 (339,732) (224 732) (598,832) (477 001) (15,000) 979 500 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTI , VITIES: , , , , , , , PROCEEDS FROM SALE OF EQUIPMENT 2,844 - - - - 600 3,444 62,770 PURCHASE OF CAPITAL ASSETS (1,058,931) (1,427,191) (793,200) - (202,189) (523,411) (4,004,922) (1,789,109) CONTRIBUTED CAPITAL 691,401 371,044 248,347 - - - 1,310,792 64,584 CAPITAL GRANTS - - 76,000 - - - 76,000 - PROCEEDS FROM OTHER GOVERNMENTS - 90,000 - 55,024 - 190,881 335,905 - PROCEEDS FROM INSURANCE SETTLEMENT 619 - 1,300 2,851 - - 4,770 8,560 PREMIUM & BOND ISSUANCE COSTS 11,841 - 5,118 - 4,666 9,772 31,397 - PRINCIPAL PAYMENT ON DEBT (1,290,668) (236,792) (379,900) - (175,000) (60,000) (2,142,360) - INTEREST PAYMENT ON DEBT (208,337) (20,118) (67,739) - (229,215) (96,236) (621,645) - OTHER CASH RECEIVED (PAID) - - - - - 1,267 1,267 - NET CASH PROVIDED (USED) FOR CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES: PROCEEDS FROM SALE OF INVESTMENTS 4,003,125 4,038,131 3,485,344 1,001,290 - - 12,527,890 1,001,250 PURCHASE OF INVESTMENTS (3,075,000) (2,036,213) (1,000,000) (950) - - (6,112,163) - INTEREST RECEIVED NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 327,925 1,256,050 413,788 2,415,706 306,323 2,791,667 85,139 1,085,479 20,614 20,614 50,837 50,837 1,204,626 7,620,353 285,912 1,287,162 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 770,655 1,126,752 2,761,757 745,732 (325,459) (389,493) 4,689,944 1,687,285 CASH AND CASH EQUIVALENTS-BEGINNING OF YEAR CASH AND CASH EQUIVALENTS-END OF YEAR 7,435,486 $ 8,206,141 $ 10,967,087 12,093,839 $ 4,489,314 7,251,071 $ 1,613,651 2,359,383 $ 837,914 512,455 $ 2,683,057 2,293,564 $ 28,026,509 32,716,453 $ 10,231,932 11,919,217 CASH AT END OF YEAR CONSISTS OF CASH AND CASH EQUIVALENTS $ 6,695,075 $ 11,337,351 $ 6,328,751 $ 2,359,383 $ 221,139 $ 2,214,308 $ 29,156,007 $ 11,919,217 RESTRICTED CASH-BOND PAYMENTS 1,477,321 738,017 922,320 - 26,726 - 3,164,384 - RESTRICTED CASH-CUSTOMER DEPOSITS 33,745 18,471 264,590 79,256 396,062 TOTAL CASH $ 8,206,141 $ 12,093,839 $ 7,251,071 $ 2,359,383 $ 512,455 $ 2,293,564 $ 32,716,453 $ 11,919,217 The notes to the financial statements are an integral part of this statement. 46 CASH FLOWS FROM OPERATING ACTIVITIES: CASH RECEIVED FROM USERS $ 7,635,074 $ 13,586,852 $ 4,929,187 $ 10,337,998 $ 1,701,487 $ 1,459,572 $ 39,650,170 $ 7,353,739 CASH PAID TO SUPPLIERS (2,499,652) (10,698,658) (1,402,454) (9,098,466) (678,804) (602,201) (24,980,235) (2,718,078) CASH PAID FOR TAXES (867,789) (1,029,044) (417,130) (1,153,641) (64,724) (10,099) (3,542,427) (33,125) CASH PAID FOR INVENTORY (19,812) (4,638) (1,167) - - 513 (25,103) (1,024,191) CASH PAID TO EMPLOYEES (2,831,986) (1,855,054) (2,072,104) (471,752) (736,617) (586,256) (8,553,769) (2,504,526) OTHER CASH RECEIVED (PAID) (15,356) 2,932 15,731 3,307 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 1,415,835 (15,898) 1,039,264 (385,861) 237,073 261,529 2,551,942 1,073,818 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008 Page 2 a f.2 GOVERNMENT NON-MAJOR ACTIVITIES W ATER SANITARY SEWER STORM DRAINAGE SOLID WASTE GOLF COURSE ENTERPRISE FUND TOTAL INTERNAL SERVICE FUNDS RECONCILIATION OF NET OPERATING INCOME TO NEW CASH PROVIDED BY OPERATING ACTIVITIES OPERATING INCOME LOSS 761 001 555 867 29 213 487 015 32 763 164 590 2 030 448 295 307 ( ) $ ADJUSTMENTS TO RECONCILE OPERATING INCOME TO NET CASH ( , ) $ ( , ) $ ( , ) $ ( , ) $ ( , ) $ ( , ) $ ( , , ) $ ( , ) PROVIDED (USED) BY OPERATING ACTIVITIES: DEPRECIATION 2,098,916 1,282,599 1,241,980 20,534 337,452 425,425 5,406,906 1,363,084 ASSET (INCREASES) DECREASES ACCOUNTS RECEIVABLE (19,449) (15,535) (231,199) 43,587 - - (222,595) 36,801 INVENTORY (19,812) (4,638) (1,167) - - 513 (25,103) (8,671) LIABILITY (INCREASES) DECREASES ACCOUNTS & VOUCHERS PAYABLE 126,629 (741,725) (21,340) 32,238 (92,776) 5,692 (691,283) (52,134) DEPOSITS PAYABLE (9,920) (15,356) - - - 1,891 (23,385) - WAGES & BENEFITS PAYABLE (24,386) 23,507 49,955 1,490 281 (1,791) 49,056 20,319 COMPENSATED ABSENCES PAYABLE 24,858 11,117 30,248 3,305 9,148 (5,611) 73,065 9,727 DEFERRED REVENUE TOTAL ADJUSTMENTS 2,176,837 539,969 1,068,477 101,154 15,731 269,836 426,119 4,582,391 1,369,126 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES CAPITAL ASSETS ACQUIRED BY CONTRIBUTED CAPITAL $ 2,014,367 $ 6,724,789 $ 672,597 $ INCREASE (DECREASE) IN FAIR VALUE OF INVESTMENT 37,826 4,750 30,500 The notes to the financial statements are an integral part of this statement. $ - $ - $ 9,411,753 $ 131,030 73,076 - 47 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS FIDUCIARY FUNDS Fiduciary funds are used to account for assets held by the City of Auburn as a trustee or agent for various individuals, private organizations, and other governmental units. The Fire Relief and Pension Fund is accounted for on an accrual basis. The agency fund is custodial in nature, therefore, no annual budget is adopted. TRUSTFUNDS The Fire Relief and Pension Fund This fund accounts for the payment of administrative costs and benefits for retired firefighters (and beneficiaries) who were employed prior to March 1, 1970. Primary revenue sources are general property tax allocations, fire insurance premium tax, and investment interest, in accordance with actuarial recommendations. AGENCYFUNDS The Agency Fund This fund accounts for the funds over which the City is strictly a short-term custo- dian. 48 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS DECEMBER 31, 2008 FIRE RELIEF PENSION AGENCY TRUST FUND FUND ASSETS: CASH AND CASH EQUIVALENTS INVESTMENTS RECEIVABLES: CUSTOMER ACCOUNTS INTEREST DUE FROM OTHER GOVERNMENTAL UNITS LIABILITIES: CURRENT PAYABLES NET ASSETS: HELD IN TRUST FOR PENSION BENEFITS AND OTHER PURPOSES $ 1,807,664 $ 1,566,226 1,134,354 - - 5,321 3,437 - - 2,613 $ 2,945,455 $ 1,574,160 $ 4,688 $ 1,574,160 4,688 1,574,160 The notes to the financial statements are an integral part of this statement. 49 CITY OF AUBURN: 2008 CAFR BASIC FINANCIAL STATEMENTS CITY OF AUBURN, WASHINGTON STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2008 FIRE RELIEF PENSION TRUST FUND ADDITIONS: FIRE INSURANCE PREMIUMS-TRANSFERRED FROM GENERAL FUND $ 56,000 INVESTMENT EARNINGS 115,948 TOTAL ADDITIONS 171,948 DEDUCTIONS: BENEFIT PAYMENTS 86,317 PROFESSIONAL SERVICES - ADMINISTRATIVE EXPENSES 43,833 S NET ASSETS - BEGINNING 2,898,968 NET ASSETS - ENDING $ 2,940,766 The notes to the financial statements are an integral part of this statement. 50 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS City of Auburn NOTES TO THE FINANCIAL STATEMENTS December 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ......52 A. REPORTING ENTITY ......52 B. BASIC FINANCIAL STATEMENTS .....52 C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND BASIS OF PRESENTATION 53 D. BUDGET AND BUDGETARY ACCOUNTING 56 E. ASSETS, LIABILITIES, AND FUND EQUITY ......57 1. DEPOSITS AND INVESTMENTS 57 2. RECEIVABLES ......57 3. INTERFUND RECEIVABLES AND PAYABLES 58 4. AMOUNTS DUE FROM OTHER GOVERNMENTAL UNITS 58 5. INVENTORIES ......58 6. RESTRICTED ASSETS 58 7. INTERFUND TRANSACTIONS 58 8. CAPITAL ASSETS 58 9. DEFERRED CREDITS/CHARGES 59 10. COMPENSATED ABSENCES 59 11. DEFERRED REVENUES 60 12. RESERVATIONS AND DESIGNATIONS OF FUND EQUITY ......60 F. REVENUES, EXPENDITURES AND EXPENSES 60 G. ESTIMATES ......61 NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY 61 NOTE 3 - DEPOSITS AND INVESTMENTS 61 NOTE 4 - PROPERTY TAXES 63 NOTE 5 - INTERFUND ACTIVITY 65 NOTE 6 - DUE FROM OTHER GOVERNMENTAL UNITS 67 NOTE 7 - CAPITAL ASSETS AND DEPRECIATION 68 NOTE 8 - CAPITAL LEASE OBLIGATION 69 NOTE 9 - RECORDED VACATION, SICK LEAVE, AND POSTEMPLOYMENT BENEFITS 70 NOTE 10 - PENSION PLANS AND OTHER POSTEMPLOYMENT BENEFITS 70 NOTE 11 - ASSOCIATION OF WASHINGTON CITIES EMPLOYEE BENEFIT TRUST 81 NOTE 12 - LONG-TERM DEBT 81 NOTE 13 - CONSTRUCTION COMMITMENTS 84 NOTE 14 - CEMETERY ENDOWED CARE FUND 84 NOTE 15 - JOINT VENTURE / RELATED PARTY 85 NOTE 16 - JOINTLY GOVERNED ORGANIZATION / RELATED PARTY 87 NOTE 17 - CONTINGENCIES AND LITIGATION 87 NOTE 18 - RISK MANAGEMENT & INSURANCE 87 NOTE 19 - SUBSEQUENT EVENT 89 51 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Auburn, King County, Washington, was incorporated in 1891. It operates under the laws of the State of Washington applicable to a Non-Charter Code City under a Mayor/Council form of government. A full-time mayor and seven part-time council members administer Auburn, all elected at-large to four-year terms. The City provides a range of municipal services authorized by state law, including water services, sanitary sewer collection, solid waste collection, storm drainage, a general aviation airport, a municipal cemetery and a municipal golf course. The accounting and reporting policies of the City of Auburn, which conform to Generally Accepted Accounting Principles (GAAP) for governments, are regulated by the Washington State Auditor's Office. The City's significant accounting policies are described in the following notes. A. REPORTING ENTITY In accordance with the criteria set forth in Statement No. 14 of the Governmental Accounting Standards Board (GASB) the City's Comprehensive Annual Financial Report (CAFR) includes all funds controlled by the City. Joint Venture - Based on the criteria of Governmental Accounting Standards Board (GASB) Statement No. 14 as modified by GASB Statement No. 34, the Valley Communications Center is included in the accompanying government-wide statement of net assets as a joint venture. (Please refer to Notes 7 and 15). Jointly Governed Organization - The cities of Auburn, Algona and Pacific formed the Valley Regional Fire Authority (VRFA) effective January 1, 2007. The VRFA is a separate municipal corporation of the State of Washington, organized as a regional fire protection service authority under RCW 52.26. The VRFA is not financially accountable to the member cities, none of the participating cities has an ongoing financial interest in the VRFA, and the VRFA is not financially dependent upon any member city. The VRFA imposes its own property tax levy and fire benefit charge. The City of Auburn is fiscal agent for the VRFA, and as such activity for the VRFA is accounted for in the City's agency fund. The government-wide financial statements consist of the government-wide statement of net assets and the government-wide statement of activities. B. BASIC FINANCIAL STATEMENTS The City's basic financial statements consist of government-wide financial statements and fund financial statements. The government-wide financial statements, which include the statement of net assets and the statement of activities, summarize the entire operation of the City. The fund financial statements, which include balance sheets, statements of revenues, expenditures and changes in fund balances, budget and actual statements, and statements of cash flows, provide a more detailed level of reporting. The government-wide financial statements report information on all of the non-fiduciary activities of the City. For the most part, the effect of interfund activity has been eliminated from these statements. Because governmental activities are normally supported by taxes and intergovernmental revenue, while business-type activities are generally supported through user fees and charges, governmental activities are reported separately from business-type activities on all government-wide financial statements. 52 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS The statement of activities demonstrates the degree to which the direct expenses of various functions and activities of the City are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a function or activity, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. Taxes and other items that are not properly included among function or activity revenues are instead reported as general revenues. The City does not allocate indirect expenses to functions in the statement of activities. Separate financial statements are included for government funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported in separate columns in the fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND BASIS OF PRESENTATION The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenue, and expenditures or expenses, as appropriate. The City resources are allocated to, and accounted for in, individual funds according to the purpose for which they are spent and how they are controlled. The basis of accounting refers to the timing of when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary and pension trust fund financial statements. Interfund services provided and used are not eliminated in the process of consolidation. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. The modified accrual basis of accounting is followed in all governmental and permanent funds of the City. Under the modified accrual basis of accounting, revenues are recognized when measurable and available. Revenues are generally considered available if they are collected within the current period or soon enough thereafter (30 days) to pay current liabilities. For derived tax revenues, such as sales tax and utility business and occupation taxes, revenues are recognized in the period when the underlying exchange has occurred. For imposed non-exchange taxes, such as property taxes, revenues are recognized when the use of resources is permitted, or when resources are available. Grant revenue is recognized in the period in which the expenditure occurs and the eligibility requirements have been met. Non-exchange transactions, such as contributions, are recognized when the donation eligibility requirements have been satisfied. Those specific major revenue sources accrued are: Property Taxes - King County and Pierce County collect property taxes and remit to the City daily or monthly. December collections by each County, remitted in January, are recognized as revenues in current year even though received in the subsequent year since they are considered to be measurable and available. Property taxes remaining uncollected at year-end are reported as "deferred revenue", since they are not considered to be available. 53 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS Sales Tax Revenues - The State of Washington collects all sales taxes. Auburn's portion is remitted to the City by the State monthly. The sales tax received in January is recognized as revenue in current year even though received in the subsequent year because of when the underlying transaction occurred and the resources are considered to be measurable and available. Grant Revenues - On cost reimbursement, grant revenue is recognized when the expenditure is incurred. Under the modified accrual basis, expenditures are recorded when the fund liability is incurred, except for the un-matured interest and principal on general long-term debt, which is recognized when due, and for compensated absences which are recorded as expenditures when liquidated from expendable available fund resources. Purchases of capital assets from governmental funds are reported as expenditures during the year incurred and the asset is capitalized and reported on the government-wide statement of net assets. Long-term liabilities, including compensated absences not currently due and payable, are also reported on the government-wide statement of net assets. The accrual basis of accounting is followed in all proprietary, agency, and pension trust funds. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when incurred. The three broad fund categories and nine fund types presented in this report are described below: 1. GOVERNMENTAL FUND TYPES All governmental funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and current liabilities generally are included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources". Governmental fund operating statements focus on measuring cash flows rather than net income; they present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. a. General fund - This fund is used to account for all financial resources and transactions of the City not accounted for in another fund, as required. The general fund is always considered a major fund. b. Special Revenue funds - These funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. One special revenue fund is considered major: the arterial street fund. This fund is supported by the State of Washington's one-half cent gas tax and is used for major street construction. c. Debt Service funds - These funds account for the accumulation of resources for, and the payment of, general long-term and special assessment debt principal, interest, and related costs. These funds also include the LID guarantee fund which provides financial security for outstanding LID bonds. d. Capital Projects funds - These funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds. One capital project fund is considered major: the capital improvement projects fund. This fund 54 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS accounts for major capital acquisitions, and street and parks construction projects. e. Permanent funds - These funds are used to account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes of supporting a specific City program. 2. PROPRIETARY FUND TYPES Financial statements for proprietary funds use the economic resources measurement focus and the accrual basis of accounting. This means that all assets and all liabilities (whether current or non-current) associated with their activity are included on their balance sheets. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when incurred. The proprietary fund measurement focus is applied in the determination of financial position, net income, and cash flow. Proprietary funds distinguish operating revenues and expenses from non-operating 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 revenue of the City's utility funds, other enterprise funds, and internal service funds are charges to customers for sales and services, vehicle and computer replacement, and insurance. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, taxes, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses, or as capital contributions. Pursuant to Statement No. 20 of the Governmental Accounting Standards Board (GASB), Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the City has chosen to apply all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: FASB Statements and Interpretations, APB Opinion, and ARBs. Enterprise funds - These funds are used to account for services to the general public where all or most of the costs, including depreciation, are to be financed or recovered from users of such services. Five enterprise funds are considered major funds. Utilities provided to residents are accounted for in the water fund, sanitary sewer fund, storm drainage fund and the solid waste fund. The golf course fund is used to account for business operations at the City's municipal golf course. b. Internal Service funds - These funds are used to account for the financing of goods and services provided to other funds, departments, or governments on a cost reimbursement basis. 3. FIDUCIARY FUND TYPES Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments, and/or other funds. These include a Fire Relief and Pension Trust Fund and Agency Fund. Each fiduciary fund is classified for accounting measurement purposes as either a governmental fund or a proprietary fund. 55 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS The Fire Relief and Pension Trust Fund is accounted for on the accrual basis in essentially the same manner as proprietary funds since capital management is critical. Based on actuarial recommendations, there are no employee or employer contributions to the Fire Relief and Pension Plan. Pension benefits are recognized when due; plan administration costs are also recognized when incurred in this fund. The Agency Fund is custodial in nature (assets equal liabilities) and does not involve a measurement of results of operations. D. BUDGET AND BUDGETARY ACCOUNTING The City of Auburn budgets in accordance with the Revised Code of Washington (RCW) 35A.33 for the general and special revenue funds. For governmental funds, there are no substantial differences between the budgetary basis and generally accepted accounting principles. Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include budgetary comparisons for biannually budgeted governmental funds only. Budgets established for proprietary and trust funds are "management budgets", and are not legally required to be reported and, as such, are not reported in the CAFR. The biennial budget is proposed by the Mayor and adopted by the City Council with legal budgetary control at the fund level; i.e., expenditures and other financing sources may not exceed budgeted appropriations at the fund level. The Mayor may authorize transfers within funds; however, the City Council must approve by ordinance any amendments that increase the total for the fund. Any unexpended appropriation balances lapse at the end of the fiscal year. The City prepares the biennial budget on the modified accrual basis, which conforms to Generally Accepted Accounting Principles (GAAP). The CAFR includes budgetary comparisons for those governmental funds with legally adopted budgets. Budget amounts include the adopted current year budget appropriations and any revisions made during the year. State law establishes the budget process and the time limits under which a budget must be developed. The City follows the procedures outlined below to establish its biennial budget: 1. Sixty days prior to each odd numbered fiscal year, the Mayor submits to the City Council a preliminary budget for the biennium commencing the following January 1St. The operating budget includes proposed expenditures and funding sources. 2. Public hearings are conducted at the Auburn City Council Meetings to obtain taxpayer comments. 3. Prior to December 31St, the budget is legally enacted through passage of an ordinance. 4. The final operating budget as adopted is published and distributed after adoption. Copies of the budget are made available to the public. Amounts shown in the accompanying financial statements represent the original budgeted amounts and all supplemental appropriations. 56 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS ORIGINAL AND SUPPLEMENTAL APPROPRIATIONS Original Final Budget Revisions Budget Governmental funds General fund $ 44,827,000 $ 14,805,982 $ 59,632,982 Total governmental funds 44,827,000 14,805,982 59,632,982 Special revenue funds: Local street 1,200,000 1,395,000 2,595,000 Arterial street 3,638,400 4,142,700 7,781,100 Hotel/motel tax 75,000 47,000 122,000 Drug forfeiture fund 181,200 79,400 260,600 Local Law Enforcement Block Grant 29,000 - 29,000 Housing and Community Development 409,800 - 409,800 Business Improvement Area 53,500 20,000 73,500 Mitigation fees 909,000 771,200 1,680,200 Total special revenue funds 6,495,900 7,491,500 13,987,400 Total budgeted funds $ 51,322,900 $ 22,297,482 $ 73,620,382 E. ASSETS, LIABILITIES, AND FUND EQUITY 1. DEPOSITS AND INVESTMENTS It is the City's policy to invest all temporary cash surplus. At December 31, 2008, the Local Government Investment Pool (LGIP) was holding $77,340,548 in short-term investments. This amount is classified on the balance sheet as cash and cash equivalents. The interest on these investments is prorated to the various funds based upon ownership of investments. For purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on deposit with financial institutions in both demand and time deposit accounts, and amounts invested in the Local Government Investment Pool, administered by the State Treasurer's Office. The City, by state law, is authorized to purchase certificates of deposit issued by Washington State depositories that participate in the state investment pool, U.S. Treasury and Agency securities, banker's acceptances, and repurchase agreements. The City purchases repurchase agreements only from institutions that use authorized securities for collateral. The City of Auburn also has signed a "master repurchase agreement" with its primary bank, Key Bank. For purposes of the statement of cash flows, all proprietary fund types and similar trust funds consider all highly liquid investments (including restricted assets) with maturity of three months or less when purchased to be cash equivalents. Investments are recorded at fair investments amortized over the Statement No. 31. value. Adjustments are made to cost for period to maturity in accordance with GASB 2. RECEIVABLES Taxes receivable consist of property taxes (see Note 4). Accrued interest receivable consists of amounts earned on notes and contracts at the end of the year. 57 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS Customer accounts receivable consist of amounts owed by private individuals or organizations for goods and services provided. Uncollectible amounts are considered immaterial and the direct write-off method is used. Special assessments are levied against certain property owners and become liens against the property benefited by the improvement. Special assessments receivable consist of current assessments, which are due within one year, delinquent assessments remaining unpaid after the due date, and deferred, uncollected assessments, which have been levied, but are not due within one year. Other receivables include utility taxes due from private organizations and customer accounts receivable, which consist of amounts owed from private individuals or organizations for goods and services, including amounts owed for which billings have not been prepared. Notes and contracts receivable consist of amounts owed on open accounts from private individuals or organizations for goods and services rendered. 3. INTERFUND RECEIVABLES AND PAYABLES These accounts include all interfund receivables and payables. A separate schedule of interfund activity is furnished in Note 5. 4. AMOUNTS DUE FROM OTHER GOVERNMENTAL UNITS This account includes amounts due from other governments for grants, entitlements and charges for services. A schedule by fund of amounts due from other governmental units is presented in Note 6. 5. INVENTORIES Inventories in the enterprise and internal service funds are valued at cost using the weighted average costing method. Governmental fund types recognize the cost of inventory items as expenditures when purchased. In governmental funds, materials and supplies remaining at year-end are immaterial and not included in inventory. 6. RESTRICTED ASSETS There are three types of restricted assets: customer deposits, proceeds of revenue bonds issued by City utilities that are restricted by applicable bond ordinances to pay bond and construction costs, and funds contributed by the Muckleshoot Indian Tribe that have been restricted for use in certain construction projects. 7. INTERFUND TRANSACTIONS During the course of normal operations, the City has numerous transactions between City funds. Interfund services provided and used, such as buying goods and services, are recorded as revenues and expenditures. Internal service fund billings are recorded as revenues in the equipment rental fund and as expenditures in the paying fund. Transfers between funds are included as "other financing sources or uses". 8. CAPITAL ASSETS Capital assets are recorded at historical cost when known or at estimated historical cost when actual costs are not known. Infrastructure, such as roads, bridges and water mains, is reported in the applicable government or business-type activities 58 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS columns in the government-wide statement of net assets. All infrastructure costs have been calculated and are reported. Government-donated capital assets are stated at their market value on the date donated. Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets of enterprise and internal service funds are recorded at cost. The capital assets of the airport are carried at cost and include those acquired with capital contributed by the Federal Government. Capital improvements financed by special assessments that provide capital assets to a government's proprietary funds are capitalized on the fund's balance sheet and are offset by equity. Capital assets of all funds are depreciated, and are calculated on the straight-line method using estimated lives as follows: Capitalization Depreciation Estimated Asset Threshold Method Useful Life Building $5,000 Straight-line 20 - 50 years Improvement $5,000 Straight-line 10 - 50 years Equipment $5,000 Straight-line 3 - 20 years Infrastructure $5,000 Straight-line 25 - 50 years At the inception of capital leases at the government fund reporting level, the net present value of future minimum lease payments allocable to the capital asset is reflected as expenditures and an "other financing source" of an equal amount. 9. DEFERRED CREDITS/CHARGES Deferred charges and credits include the premium, discount and issuance costs of revenue bonds that are amortized over the life of the bond issue. Deferred credits and charges also include undistributed court receipts. 10. COMPENSATED ABSENCES City employees accrue vacation leave at a variable rate based on years of service. In general, employees are allowed to accumulate vacation leave up to what would be earned in two years. Unaffiliated employees accrue sick leave at the rate of eight hours per month up to 960 hours. Sick leave accumulations over 960 hours at year-end are paid at 25%. Sick leave is not paid upon termination except in some instances upon separation in good standing, where employees hired before 12/31/1984 can be reimbursed at their current rate for unused sick leave up to a maximum of 960 hours, at a rate based on years of service. The City's union contracts have varied sick leave accruals and payout options. In general, non-exempt employees can accrue up to 80 hours of compensatory time. The City reports compensated absences as liabilities in the government-wide statement of net assets and in proprietary funds. Vacation, compensatory time, and sick leave are calculated separately for each employee using the rules described above. 59 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS Governmental funds recognize expenditures for vacation, sick, and compensatory time when paid. Proprietary and pension trust funds recognize the expense and accrue a liability for vacation and sick leave pay as the leave is earned. All compensated absence liabilities include salary-related payments, where applicable. 11. DEFERRED REVENUES This account reflects the amounts of taxes and other long-term receivables for which the revenue recognition criteria have not been met. It also reflects prepayments on accounts and grants received in advance. 12. RESERVATIONS AND DESIGNATIONS OF FUND EQUITY In governmental funds, reserves are used to indicate a portion of fund balance that is not appropriable for expenditure or is legally segregated, and designations are used to indicate tentative managerial plans for financial resource utilization in a future period. In proprietary funds, net assets are generally reserved in connection with restricted assets or for legal segregation. These reserves are identified on the balance sheet of each fund type. F. REVENUES, EXPENDITURES AND EXPENSES Under the modified accrual basis of accounting: Charges for services, interest on investments, and rents generally are considered measurable and available when earned in governmental funds. Taxes and federal or state entitlements or shared revenues that have been collected but not remitted by an intermediary collection agency to the City are considered measurable and available. Special assessments are considered measurable and available when they become due. Grants are considered measurable and available to the extent that expenditures have been made. Other intergovernmental revenues are considered measurable and available when earned. Interfund revenues for goods and services are considered measurable and available when earned. Proceeds from sale or loss of capital assets are recognized as other financing sources. Revenues from taxpayer-assessed taxes (i.e., sales tax), net of estimated refunds, are recognized when measurable and available to finance expenditures of the current period. All other revenues are either not measurable or considered not available until collected. Expenditures are generally recognized when incurred, except for principal and interest on general long-term debt, which are reported as expenditures when paid, 60 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS and compensated absences, which are reported as expenditures when liquidated from expendable available financial resources. Under the accrual basis of accounting: Revenues are recognized when earned and expenses are recognized when incurred. Contributions of capital in proprietary fund financial statements arise from internal and external contributions of capital assets or from grants or outside contributions of resources restricted to capital acquisition and construction. Transfers between government and business-type activities on the government-wide statement of activities are reported as general revenues. Transfers between funds reported in the governmental activities column are eliminated, as are transfers between funds reported in the business-type activities column. G. ESTIMATES The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY There have been no material violations of finance-related legal or contractual provisions, and there have been no expenditures exceeding legal appropriations in any of the funds of the City of Auburn. NOTE 3 - DEPOSITS AND INVESTMENTS At December 31, 2008, the carrying amount of the City's cash demand deposits with Key Bank totaled $8,656,392 while the bank balance was $8,454,758. In addition, there was $10,000 in the Drug Forfeiture Fund to be used for enforcement purposes, and $6,325 in various petty cash and cashier change funds. The Federal Deposit Insurance Corporation (FDIC) insures the City's deposits up to $100,000 and the Washington Public Deposit Protection Commission (WPDPC) insures amounts over $100,000. The WPDPC is a multiple financial institution collateral arrangement, which provides for additional assessments against members of the pool on a pro rata basis. As required by State law, all investments of the City's funds are obligations of the U.S. Government, or deposits with Washington State banks. Pension and permanent funds are not subject to these limitations. All temporary investments are stated at cost. Other investments are shown on the balance sheet at fair value. Investments that were not at par value (cost) as of December 31, 2008 are reported at fair value. The fair value of the position in the state investment pool is the same as the value of shares held by the City in the pool. During 2008, the net decrease in the fair value of investments being held for more than one year is $144,694 at year-end. 61 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS As of December 31, 2008, the City had the following investments and maturities: SCHEDULE OF INVESTMENTS BY MATURITIES AS OF DECEMBER 31, 2008 Investment maturities Fair Less than 1 to 2 2 to 3 Greater than Investment Type Value 1 year years years 3 years State investment pool $ 77,340,548 $ 77,340,548 $ $ $ - US Treasuries 93,729 - 93,729 US Agencies 11,248,031 10,195,531 1,052,500 - $ 88,682,308 $ 87,536,079 $ 1,052,500 $ - $ 93,729 Reconciliation to government wide statement of net assets: Total investments above $ 88,682,308 Plus: cash in checking and petty cash 7,594,684 Less: cash investments in fiduciary funds (4,508,244) Total cash and investments, government- wide statement of net assets $ 91,768,748 Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits the maximum maturity of an investment to not greater than three years, unless an investment is matched to an anticipated future cash flow. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law and the City's investment policy limits the instruments in which the City may invest. These include: 1. United States bonds. 2. United States certificates of indebtedness. 3. Bonds or warrants of the State of Washington. 4. General obligation or utility revenue bonds or warrants of its own or of any other city or town in the State. 5. Its own bonds or warrants of a local improvement district which are within the protection of the local improvement guaranty fund. 6. Savings or time accounts in designated public depositories. 7. Certificates, notes or bonds of United States agencies, or corporations wholly owned by the United States. 8. Repurchase agreements. 9. Banker's acceptances. 10. Federal Home Loan Bank notes and bonds, Federal Land Bank bonds, Federal National Mortgage Association notes, debentures and guaranteed certificates of participation, or obligations of any other government sponsored corporation whose obligations are or may be eligible as collateral for advances to member banks as determined by the Board of Governors of the Federal Reserve System or any portion thereof in investment deposits as defined in RCW 39.8.010 secured by collateral in accordance with RCW 39.58. 11. Interim financing warrants of local improvement districts. 12. State Local Government Investment Pool. 62 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS As of December 31, 2008, the City had investments in a limited number of investment instruments as follows: • Federal Home Loan Bank bonds • Federal National Mortgage Association bonds • Federal Home Loan Mortgage Corporation bonds • U.S. Treasuries • State Local Government Investment Pool With the exception of the State Local Government Investment Pool, which is not rated, all of the investments above carried a rating of AAA by Standard & Poor's rating service at December 31, 2008. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City diversifies its investments by security type and institution. The investment policy states: "With the exception of US Treasury securities and the State Investment Pool, no more than 20% of the City's total investment portfolio will be invested in a single security type or with a single financial institution". Other information Effective 2002, the City has established arrangements with Bank of New York for safekeeping of all investments. Below is a schedule of investments by fund type: SCHEDULE OF INVESTMENTS BY FUND CATEGORY AND INVESTMENT TYPE AS OF DECEMBER 31, 2008 State Investment U. S. Pool Securities Total General Fund $ $ 1,999,580 $ 1,999,580 Capital Project Funds 1,024,375 1,024,375 Permanent Funds 1,014,375 1,014,375 Enterprise Funds 6,169,076 6,169,076 Fiduciary Funds 1,134,354 1,134,354 Treasurer's Residual Funds 77,340,548 - 77,340,548 Total $ 77,340,548 $ 11,341,760 $ 88,682,308 NOTE 4 - PROPERTY TAXES Property taxes received during tax year 2008 were $10,827,132, including collection of prior year delinquent assessments. Property taxes assessed for collection in tax year 2008 were based on a regular tax levy of $1.48 per $1,000 on a total 2007 assessed value of $6,526,294,998. For levy year 2008, to be received in 2009, the City's regular tax levy is $1.48 per $1,000 on a 2008 assessed valuation of $8,719,721,892, as of December 31, 2008, for a total regular levy of 63 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS $12,964,308. State law provides that debt cannot be incurred in excess of the following percentages of the taxable property of the City. 1.50% of assessed value without a vote of the people 2.50% of assessed value with a vote of the people The City has additional authority to incur the following debt as a percentage of total valuation. 2.50% of assessed value with a vote of the people, indebtedness is for utilities 2.50% of assessed value with a vote of the people, indebtedness is for parks, or open space development At December 31, 2008, the debt limits for the City were as follows: With a Vote For Parks or Without General For Open Space Item a Vote Purposes Utilities Development Total 1.50% 1.00% 2.50% 2.50% Capacity Legal Limit $ 130,795,828 $ 87,197,219 $ 217,993,047 $ 217,993,047 $ 653,979,142 Outstanding indebtedness (13,854,520) - - - (13,854,520) Assets available 3,125,168 - - - 3,125,168 Margin available $ 120,066,476 $ 87,197,219 $ 217,993,047 $ 217,993,047 $ 643,249,789 The County Treasurer acts as an agent to collect property taxes levied in the county for all taxing authorities. Taxes are levied annually on January 1 on property values listed as of the prior August 31. The County assesses property at 100% of fair value. A revaluation of all property is required at least once every four years and a physical inspection is required at least once every six years. Property taxes levied by the County Assessor and collected by the County Treasurer become a lien on the first day of the levy year and may be paid in two installments if the total amount exceeds $10. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12% and are subject to additional penalties if not paid as scheduled. At year-end, property taxes are recorded as a receivable with the portion not expected to be collected within 30 days offset by deferred revenue. In the statement of activities, this deferred revenue is referred to as "Unearned Revenue". During the year, property tax revenues are recognized when cash is received. The Washington State Constitution limits the total regular property taxes to 1% of assessed valuation or $10 per $1,000 of value. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or below the 1 % limit. Washington State law in RCW 84.55.010 limits the annual growth of regular property taxes to the lesser of 1 % or the rate of inflation. With a vote of the majority of the voters within a taxing district, the 1% levy limitation can be "lifted" and additional taxes may be levied. The City may voluntarily levy taxes below the legal limit. Special levies approved by the voters are not subject to the above limitations. 64 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS Property taxes are recorded as receivable and offset by a deferred revenue account when levied. Since state law allows for the sale of property for failure to pay taxes, no estimate of uncollectible taxes is made. NOTE 5 - INTERFUND ACTIVITY The next two tables summarize interfund activity during 2008. The first table details transfers while the second lists loan activity. Transfers are legally authorized transfers of resources from a fund receiving revenue to the fund through which resources are to be expended. 65 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS Funds Transfers Transfer Out Transfer In Governmental funds: General fund $ 4,278,492 $ 643,132 Special revenue funds: City street fund Local street fund - 375,000 Arterial street fund 2,283,396 Local Law Enforce Block Grants 2,600 Recreational trails - 5,100 Cumulative reserve 256,843 - Mitigation fees 794,122 - Total special revenue funds 1,050,965 2,666,096 Debt service funds: 1998 library GO - 307,200 LID guarantee 54,800 - Total debt service funds 54,800 307,200 Capital projects funds: Park construction - 1,124,854 Capital improvement projects 2,494,585 2,644,800 Total capital projects funds 2,494,585 3,769,654 Proprietary funds: Water 50,000 - Sew er 50,000 Storm drainage 159,100 - Cemetery - 115,000 Golf course - 56,092 Commercial retail 339,732 - Total proprietary funds 598,832 171,092 Internal service funds: Information services 8,000 273,900 Equipment rental 7,000 720,600 Total internal service funds 15,000 994,500 Fiduciary funds: Fire pension & relief fund - 56,000 Permanent funds: Cemetery endow ed care 115,000 - Total All transfers are considered routine Loans between funds are classified as interfund loans receivable and payable or advances to and from other funds on the balance sheet, depending on the time period for which the loan was made. Interfund loans do not affect total fund equity. 66 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS Interfund Loans Balance Balance Due From Due To 1/1/2008 New Loans Repayments 12/31/2008 Golf course fund Capital projects fund $ 134,375 $ 83,000 $ 120,500 $ 96,875 Park construction fund General fund 150,000 150,000 - Comm Dev BIk Grant General fund 59,000 - 59,000 Local Law BIk Grant General fund 20,000 20,000 Total interfund loans $ 363,375 $ 83,000 $ 349,500 $ 96,875 All interfund loans are considered short-term cash loans. NOTE 6 - DUE FROM OTHER GOVERNMENTAL UNITS As of December 31, 2008, the City had receivables due from other governmental units as follows: General fund: WAState Treasurer-Sales taxes $ 1,108,457 WAAuto Theft Prevention Authority- Auto theft prevention grant 22,455 WAState Administrative Office ofthe Courts 9,039 King County- Road tax 1,130,867 King County-4 Culture -Arts sustained support grant 17,000 King County- Real estate excise taxes 167,448 Pierce County- Real estate excise taxes 15,490 King County Sheriffs Registered Sex Offender grant 10,625 Total general fund 2,481,381 Arterial street fund: WA Dept. of Transportation -Arterial street improvements 283,027 Drug Forfeiture Fund: Tacoma Narcotics Enforcement Team grant 13,993 Local law enforcement block grant: U.S. Dept. of Justice -Justice assistance grant 26,235 Housing & community development: U.S. Dept. of Housing - Community development block grant 29,163 Municipal park construction: WA Recreation and Conservation Office - Park imp. grants 343,577 Solid waste fund: King County- Local hazardous waste management grant 16,206 King County-Waste reduction and recycling grant 38,818 Total solid waste fund 55,024 Agency disbursement fund: Bail Trust 362 City of Algona - Court administration 2,251 Total agency disbursement fund Total 2,613 $ 3 235 013 Reconciliation to government-wide statement of net assets: , , Total above due from other governmental units $ 3,235,013 Amount due to fiduciaryfund Total due from other governmental units, government-wide statement of net assets (2,613) $ 3,232,400 67 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 7 - CAPITAL ASSETS AND DEPRECIATION Capital asset activity for the year ended December 31, 2008 is as follows: Schedule of Capital Asset Activity Balance 1/1/08 Increases Decreases/ Adjustments Balance 12/31/08 Governmental activities: Capital assets, not being depreciated: Land $ 48,969,057 $ 56,547,239 $ (378,549) $ 105,137,747 Construction in progress 3,526,421 5,430,522 (3,462,216) 5,494,727 Total capital assets, not being depreciated 52,495,478 61,977,761 (3,840,765) 110,632,474 Capital assets, being depreciated: Buildings 24,204,348 271,757 (846,785) 23,629,320 Improvements other than buildings 12,322,974 1,260,579 - 13,583,553 Machinery and equipment 14,948,288 2,141,720 (350,088) 16,739,920 Joint venture 3,849,690 390,928 - 4,240,618 Intangibles 695,504 17,728 (1) 713,231 Infrastructure 191,186,630 43,492,419 - 234,679,049 Total capital assets being depreciated 247,207,434 47,575,131 (1,196,874) 293,585,691 Less: accumulated depreciation for: Buildings (7,414,815) (7,818) (636,713) (8,059,346) Improvements other than buildings (8,245,704) (2,544) (377,668) (8,625,916) Machinery and equipment (8,839,280) (1,352,722) 66,000 (10,126,002) Joint venture (963,902) - (963,902) Intangibles (46,367) (50,231) (96,598) Infrastructure (57,045,958) (9,238,840) (66,284,798) Total accumulated depreciation (82,556,026) (1,363,084) (10,237,452) (94,156,562) Total capital assets, being depreciated, net 164,651,408 46,212,047 (11,434,326) 199,429,129 Business-type activities: Capital assets, not being depreciated Land $ 14,158,803 $ 306,195 $ - $ 14,464,998 Construction in progress 5,979,274 3,394,959 (6,439,462) 2,934,771 Total capital assets, not being depreciated 20,138,077 3,701,154 (6,439,462) 17,399,769 Capital assets, being depreciated: Buildings 12,784,732 159,350 12,944,082 Improvements other than buildings 178,919,442 15,716,951 194,636,393 Machinery and equipment 3,546,173 277,296 (16,606) 3,806,863 Total capital assets being depreciated 195,250,347 16,153,597 (16,606) 211,387,338 Less: accumulated depreciation for: Buildings (4,117,934) (371,171) (4,489,105) Improvements other than buildings (57,082,044) (4,905,514) - (61,987,558) Machinery and equipment (2,504,105) (130,222) 16,102 (2,618,225) Total accumulated depreciation (63,704,083) (5,406,907) 16,102 (69,094,888) Total capital assets, being depreciated, net 131,546,264 10,746,690 (504) 142,292,450 68 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS Depreciation/amortization expense was charged to functions/programs of the City as follows: Governmental activities: General government $ 243,097 Public safety 413,877 Transportation 9,046,907 Physical environment 63,629 Culture and recreation 728,035 Capital assets held by the City's internal service funds are charged to the various functions based on their usage of the assets 1,362,558 Total depreciation/amortization expense - governmental activities 3 $ 11,858,103 Business-type activities: Water $ 2,098,916 Sanitary sewer 1,282,599 Storm water 1,241,980 Solid waste 20,534 Golf course 337,451 Airport 224,961 Cemetery 79,957 Commercial retail Total depreciation expense - business-type activities 120,508 $ 5,406,906 NOTE 8 - CAPITAL LEASE OBLIGATION During 2007 the City entered into a capital lease agreement for the Auburn Avenue Theater facility for a 15 year term. The intent is for the City's Parks, Arts and Recreation department to offer performances to the public, as well as make the facility available for short-term rentals. SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS Lease Payable 2009 $ 71,524 2010 71,524 2011 71,524 2012 71,524 2013-2017 357,621 2018-2021 286,097 Total minimum lease payments 929,815 Less: Amounts representing interest Present value of future minimum lease payment (267,405) s $ 662,410 As of December 31, 2008, the value of capital assets acquired under the capital lease is $616,633. Monthly lease payments of $5,960 are payable through the end of the lease period on December 1, 2021. Interest on the lease was imputed at five percent plus an annual inflation adjustment based on the U.S. CPI-W index. 69 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 9 - RECORDED VACATION, SICK LEAVE, AND POSTEMPLOYMENT BENEFITS In accordance with GASB Statement No. 16, the City accrues vacation and sick leave pay. The accrual is shown on the government-wide statement of net assets for both governmental and proprietary funds. The accrual is also seen in the separate proprietary fund balance sheets, but is excluded from the separate governmental fund balance sheets since it is not currently due and payable at year-end (please refer to Note 11). In addition to pension benefits described in Note 10, the City provides postemployment benefits, in accordance with state statutes, to all LEOFF 1 retirees. Currently, 65 retirees meet the eligibility requirements. The City provides long-term care, medical insurance, and reimburses all validated claims for medical, dental and hospitalization costs incurred by retirees. Expenditures for postretirement health care benefits are recognized as retirees report claims. During the year, expenditures of $919,019 were recognized for postemployment health care. This represents a decrease of $101,274 from the previous year. NOTE 10 - PENSION PLANS AND OTHER POSTEMPLOYM ENT BENEFITS Substantially all City full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing multiple-employer public employee defined benefit and defined contribution retirement plans. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98504-8380. The following disclosures are made pursuant to GASB Statement 27, Accounting for Pensions by State and Local Government Employers. Public Employees' Retirement System (PERS) Plans 1, 2, and 3 Plan Description PERS is a cost-sharing multiple-employer retirement system comprised of three separate plans for membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan with a defined contribution component. Membership in the system includes: elected officials; state employees; employees of the Supreme, Appeals, and Superior courts (other than judges currently in a judicial retirement system); employees of legislative committees; community and technical colleges, college and university employees not participating in national higher education retirement programs; judges of district and municipal courts; and employees of local governments. PERS participants who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or after October 1, 1977 and by either, February 28, 2002 for state and higher education employees, or August 31, 2002 for local government employees, are Plan 2 members unless they exercise an option to transfer their membership to Plan 3. PERS participants joining the system on or after March 1, 2002 for state and higher education employees, or September 1, 2002 for local government employees have the irrevocable option of choosing membership in either PERS Plan 2 or PERS Plan 3. The option must be exercised within 90 days of employment. An employee is reported in Plan 2 until a choice is made. Employees who fail to choose within 90 days default to PERS Plan 3. Notwithstanding, PERS Plan 2 and Plan 3 members may opt out of plan membership if terminally ill, with less than five years to live. 70 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS PERS defined benefit retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PERS retirement benefit provisions are established in state statute and may be amended only by the State Legislature. Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for retirement at any age after 30 years of service, or at the age of 60 with five years of service, or at the age of 55 with 25 years of service. The annual benefit is two percent of the average final compensation per year of service, capped at 60 percent. The average final compensation is based on the greatest compensation during any 24 eligible consecutive compensation months. Plan 1 members who retire from inactive status prior to the age of 65 may receive actuarially reduced benefits. The benefit is actuarially reduced to reflect the choice of a survivor option. A cost-of living allowance (COLA) is granted at age 66 based upon years of service times the COLA amount, increased by three percent annually. Plan 1 members may also elect to receive an additional COLA amount that provides an automatic annual adjustment based on the Consumer Price Index. To offset the cost of this annual adjustment, the benefit is reduced. PERS Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members may retire at the age of 65 with five years of service with an allowance of two percent of the AFC per year of service. (The AFC is based on the greatest compensation during any eligible consecutive 60-month period. Plan 2 members who retire prior to the age of 65 receive reduced benefits. If retirement is at age 55 or older with at least 30 years of service, a three percent per year reduction applies; otherwise an actuarial reduction will apply. The benefit is also actuarially reduced to reflect the choice of a survivor option. There is no cap on years of service credit; and a cost-of-living allowance is granted (based on the Consumer Price Index), capped at three percent annually. PERS Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component, and member contributions finance a defined contribution component. The defined benefit portion provides a benefit calculated at one percent of the average final compensation per year of service. The average final compensation is based on the greatest compensation during any eligible consecutive 60-month period. Effective June 7, 2006, Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service, if twelve months of that service are earned after age 44; or after five service credit years earned in PERS Plan 2 prior to June 1, 2003. Plan 3 members are immediately vested in the defined contribution portion of their plan. Vested Plan 3 members are eligible to retire with full benefits at age 65, or at age 55 with 10 years of service. Plan 3 members who retire prior to the age of 65 receive reduced benefits. If retirement is at age 55 or older with at least 30 years of service, a three percent per year reduction applies; otherwise an actuarial reduction will apply. The benefit is also actuarially reduced to reflect the choice of a survivor option. There is no cap on years of service credit, and Plan 3 provides the same cost-of-living allowance as Plan 2. The defined contribution portion can be distributed in accordance with an option selected by the member, either as a lump sum or pursuant to other options authorized by the Employee Retirement Benefits Board. Judicial Benefit Multiplier Beginning January 1, 2007 through December 31, 2007, judicial members of PERS were given the choice to participate in the Judicial Benefit Multiplier Program (JBM). Justices and judges in PERS Plan 1 and 2 were able to make a one-time irrevocable election to pay increased contributions that would fund a retirement benefit with a 3.5 percent multiplier. The benefit would be capped at 75 percent of average financial compensation. Judges in PERS Plan 3 could elect a 1.6 percent of pay per year of service benefit, capped at 37.5 percent of average compensation. Members who choose to participate in JBM would: accrue service credit at the higher multiplier beginning with the date of their election, be subject to the benefit cap of 75% of average financial 71 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS compensation, pay higher contributions, stop contributing to the Judicial Retirement Account (JRA), and be given the option to increase the multiplier on past judicial service. Members who did not choose to participate would: continue to accrue service credit at the regular multiplier; continue to participate in JRA, if applicable; never be a participant in the JBM Program; and continue to pay contributions at the regular PERS rate. Newly elected or appointed justices and judges who chose to become PERS members on or after January 1, 2007, or who had not previously opted into PERS membership, were required to participate in the JBM Program. Members required into the JBM program would: return to prior PERS Plan if membership had previously been established; be mandated into Plan 2 and not have a Plan 3 transfer choice, if a new PERS member; accrue the higher multiplier for all judicial service; not contribute to JRA; and not have the option to increase the multiplier for past judicial service. There are 1,190 participating employers in PERS. Membership in PERS consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2007: Retirees and Beneficiaries Receiving Benefits 71,244 Terminated Plan Members Entitled to but not yet Receiving Benefits 26,583 Active Plan Members Vested 105,447 Active Plan Members Non-vested 52,575 Total 255,849 Funding Policy Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates, Plan 2 employer and employee contribution rates, and Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are established by statute at 6 percent for state agencies and local government unit employees, and at 7.5 percent for state government elected officials. The employer and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. All employers are required to contribute at the level established by the Legislature. Under PERS Plan 3, employer contributions finance the defined benefit portion of the plan, and member contributions finance the defined contribution portion. The Employee Retirement Benefits Board sets Plan 3 employee contribution rates. Six rate options are available ranging from 5 to 15 percent; two of the options are graduated rates dependent on the employee's age. As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier of employer and employee rates was developed to fund, along with investment earnings, the increased retirement benefits of those justices and judges that participate in the program. The methods used to determine the contribution requirements are established under state statute in accordance with chapters 41.40 and 41.45 RCW. The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2008, were as follows: Members not participating in JBM: PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer' 8.31 8.31 8.31 Employee 6.00°k"" 5.45°k"" The employer rates include the employer administrative expense fee currently set at 0.16%. 72 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS The employer rate for state elected officials is 12.39% for Plan 1 and 8.31% for Plan 2 and Plan 3. Plan 3 defined benefit portion only. The employee rate for state elected officials is 7.50% for Plan 1 and 5.45% for Plan 2. Variable from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member. Members participating in JBM: Employer' 8.31% 8.31% 8.31 Employee 12.26% 13.63% 7.50%*** * The employer rates include the employer administrative expense fee currently set at 0.16%. Plan 3 defined benefit portion only. Minimum rate. Both City and the employees made the required contributions. The City's required contributions for the years ended December 31 were as follows: 2008 $54,719 $1,173,956 $238,108 2007 $49,744 $765,172 $144,898 2006 $37,733 $386,786 $65,820 The increase in contributions each year is primarily due to an increase in the employer contribution rate. The employer contribution rate for the City was 3.69% in 2006, 6.13% in 2007, and 8.31 % in 2008. Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2 Plan Description LEOFF is a cost-sharing multiple-employer retirement system comprised of two separate defined benefit plans. LEOFF participants who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or after October 1, 1977 are Plan 2 members. Membership in the system includes all full-time, fully compensated, local law enforcement officers and firefighters and, as of July 24, 2005, those emergency medical technicians who were given the option and chose LEOFF Plan 2 membership. LEOFF membership is comprised primarily of non-state employees, with Department of Fish and Wildlife enforcement officers, who were first included prospectively effective July 27, 2003, being an exception. Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established by Initiative 790 to provide governance of LEOFF Plan 2. The Board's duties include adopting contribution rates and recommending policy changes to the Legislature for the LEOFF Plan 2 retirement plan. LEOFF defined benefit retirement benefits are financed from a combination of investment earnings, employer and employee contributions, and a special funding situation in which the state pays through state legislative appropriations. LEOFF retirement benefit provisions are established in state statute and may be amended by the State Legislature. 73 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS LEOFF Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for retirement with five years of service at the age of 50. The benefit per year of service calculated as a percent of final average salary (FAS) is as follows: Term of Service Percent of Final Average Salary 20 or more years 2.0% 10 but less than 20 years 1.5% 5 but less than 10 years 1.0% The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last ten years of service. A Cost-of-living allowance is granted (based on the Consumer Price Index). LEOFF Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members may retire at the age of 50 with 20 years of service, or at the age of 53 with five years of service, with an allowance of two percent of the FAS per year of service. The FAS is based on the highest consecutive 60 months. Plan 2 members who retire prior to the age of 53 receive reduced benefits. Benefits are actuarially reduced for each year that the benefit commences prior to age 53 and to reflect the choice of a survivor option. If the member has at least 20 years of service and is age 50, the reduction is three percent for each year prior to age 53. There is no cap on years of service credit; and a cost-of-living allowance is granted (based on the Consumer Price Index), capped at three percent annually. There are 374 participating employers in LEOFF. Membership in LEOFF consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2007: Retirees and Beneficiaries Receiving Benefits 9,085 Terminated Plan Members Entitled to but not yet Receiving Benefits 633 Active Plan Members Vested 12,904 Active Plan Members Non-vested 3,708 Total 26,330 Funding Policy Starting on July 1, 2000, Plan 1 employers and employees contribute zero percent as long as the plan remains fully funded. Employer and employee contribution rates are developed by the Office of the State Actuary to fully fund the plan. LEOFF Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. All employers are required to contribute at the level required by state law. The Legislature, by means of a special funding arrangement, appropriated money from the state General Fund to supplement the current service liability and fund the prior service costs of LEOFF Plan 2 in accordance with the requirements of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. However, this special funding situation is not mandated by the state constitution and this funding requirement could be returned to the employers by a change of statute. The required contribution rates expressed as a percentage of current-year covered payroll, as of December 31, 2008, were as follows: LEOFF Plan 1 LEOFF Plan 2 Employer" 0.16% 5.46%"" Employee 0.00% 8.83% 74 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS * The employer rates include the employer administrative expense fee currently set at 0.16%. The employer rate for ports and universities is 8.99%. Both the City of Auburn and the employees made the required contributions. The City's required contributions for the years ended December 31 were: 2008 $221 $459,489 2007 $216 $382,356 2006 $1,049 $585,329 Public Safety Employees' Retirement System (PSERS) Plan 2 Plan Description PSERS is a cost-sharing multiple-employer retirement system comprised of a single defined benefit plan, PSERS Plan 2. PSERS was created by the 2004 Legislature and became effective July 1, 2006. PSERS Plan 2 membership includes full-time employees of a covered employer on or before July 1, 2006, who met at least one of the PSERS eligibility criteria, and elected membership during the election period of July 1, 2006 to September 30, 2006; and those full-time employees, hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. A covered employer is one that participates in PSERS. Covered employers include: State of Washington agencies: Department of Corrections, Department of Natural Resources, Parks and Recreation Commission, Gambling Commission, Washington State Patrol, and Liquor Control Board; Washington state counties; and Washington state cities except for Seattle, Tacoma and Spokane. To be eligible for PSERS, an employee must work on a full-time basis and: • have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce the criminal laws of Washington, and carry a firearm as part of the job: OR • have primary responsibility to ensure the custody and security of incarcerated or probationary individuals; OR • function as a limited authority Washington peace officer, as defined in RCW 10.93.020; OR • have primary responsibility to supervise eligible members who meet the above criteria. PSERS defined benefit retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PSERS retirement benefit provisions are established in state statute and may be amended only by the State Legislature. Plan 2 members are vested after the completion of five years of eligible service. PSERS Plan 2 members may retire at the age of 65 with five years of service, or at the age of 60 with at least 10 years of PSERS service credit, with an allowance of two percent of the average final compensation (AFC) per year of service. The AFC is the monthly average of the member's 60 consecutive highest-paid service credit months, excluding any severance pay such as lump-sum payments for deferred sick leave, vacation or annual leave. Plan 2 members who retire prior to the age of 60 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 75 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS 60 applies. There is no cap on years of service credit; and a cost-of-living allowance is granted (based on the Consumer Price Index), capped at three percent annually. There are 71 participating employers in PSERS. Membership in PSERS consisted of the following as of the latest actuarial valuation date for the plan of June 30, 2007: Retirees and Beneficiaries Receiving Benefits - Terminated Plan Members Entitled to but not yet Receiving Benefits - Active Plan Members Vested - Active Plan Members Non-vested 2,755 Total 2,755 Funding Policy Each biennium, the state Pension Funding Council adopts PSERS Plan 2 employer and employee contribution rates. The employer and employee contribution rates for Plan 2 are developed by the Office of the State Actuary to fully fund Plan 2. All employers are required to contribute at the level established by the Legislature. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.37 and 41.45 RCW. The required contribution rates expressed as a percentage of current-year covered payroll, as of December 31, 2008, were as follows: PSERS Plan 2 Employer* 9.43% Employee 6.57% *The employer rate includes and employer administrative expense fee of 0.16%. Both the City and the employees made the required contributions. The City's required contributions for the years ended December 31 were as follows: PSERS Plan 2 2008 $ 57,147 2007 $ 48,549 2006 $ 7,225 City of Auburn Fire Relief and Pension Plan The City is the administrator of the Firemen's Pension Plan (Plan), which is a closed, single- employer defined benefit pension plan that was established in conformance with RCW Chapters 41.16 and 41.18. This plan provided retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Membership is limited to firefighters employed prior to March 1, 1970 when the LEOFF retirement system was established. The City's obligation under the Firemen's Pension Plan consists of paying all benefits, including payments to beneficiaries and healthcare, for firefighters who retired prior to March 1, 1970, and excess pension and healthcare benefits of LEOFF for covered firefighters who retired after March 76 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS 1, 1970. Benefits and refunds of the defined benefit pension plan are recognized when due and payable in accordance with the Plan. The Plan does not issue a separate financial report. Under state law, the Firemen's Pension Plan is provided an allocation of 25% of all monies received by the state from taxes on fire insurance premiums, interest earnings, member contributions made prior to the inception of LEOFF, and City contributions required to meet projected future pension obligations. The actuary determined as of January 1, 2007 that no future City contributions would be required beyond future revenues from state fire insurance taxes and interest earnings. On-behalf payments of fringe benefits and salaries for the City's employees were recognized as revenues and expenditures/expenses during the period. Administrative costs, such as City staff time and actuarial valuation costs are funded from interest earnings or City contributions. Membership of the Firemen's Pension Plan consisted of 14 eligible, of which 12 are receiving benefits. GASB STATEMENTS No. 26 and No. 27 SCHEDULE OF FUNDING PROGRESS (rounded to thousands) Unfunded Actuarial Actuarial UAAL as a Actuarial Accrued Accrued Percentage Actuarial Value Liabilities- Liabilities Funded Covered of Covered Valuation Date of Assets Entry Age (UAAL) Ratio Payroll Payroll January 1, 1999 $2,096 $2,157 January 1, 2001 $3,632 $2,332 January 1, 2003 $3,514 $2,428 January 1, 2005 $3,160 $2,172 January 1, 2007 $2,868 $2,802 This plan primarily covers inactive participants. $60 97.17% $119 51% ($1,300) 155.75% $58 -2241% ($1,086) 144.73% $61 -1780% ($988) 145.00% $64 -1544% ($66) 102.00% $0 N/A There are no current member contribu tions. Prior to adoption of GASB Statement No. 25 in 1997, the Annual Required Contribution (ARC) was not determined pursuant to the parameters required by the statement. Therefore, no liability prior to 1997 has been shown. 77 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS GASB STATEMENT No. 25 GASB STATEMENT No. 27 SCHEDULE OF EMPLOYER CONTRIBUTIONS THREE YEAR TREND INFORMATION Fiscal Actual Annual Required Percentage Annual Percentage Net Year Employer Contribution of ARC Pension Cost of APC Pension Ending Contributions (ARC) Contributed (APC) Contributed Obligation December 31, 1999 $52,738 $5,381 980% December 31, 2000 $31,721 $5,381 590% $5,520 574.66% ($48,808) December 31, 2001 $37,281 $0 N/A $341 10932.84% ($85,748) December 31, 2002 $40,869 $0 N/A $684 5975.00% ($125,933) December 31, 2003 $45,664 $0 N/A $1,137 4016.18% ($170,460) December 31, 2004 ($137,783) ($91,881) N/A ($90,143) N/A ($122,820) December 31, 2005 ($144,746) ($78,690) N/A ($76,827) N/A ($54,901) December 31, 2006 ($149,327) ($78,690) N/A ($77,774) N/A $16,652 December 31, 2007 $17,920 ($5,048) N/A ($5,420) N/A ($48,953) December 31, 2008 $12,167 ($5,048) N/A ($4,885) N/A ($23,740) GASB STATEMENT No. 27 Annual Development of Pension Cost Fiscal ARC at Amort. Annual Total Year End of Interest on ARC Factor Pension Cost Employer Change in NPO Ending Year (1) NPO (2) Adjustment (APC) Contributions NPO Balance (3) 12/31/1999 $5,381 $1,742 $1,874 13.28% $5,249 $52,738 ($47,489) ($22,667) 12/31/2000 $5,381 ($1,582) ($1,721) 13.14% $5,520 $31,721 ($26,201) ($48,808) 12/31/2001 $0 ($3,417) ($3,758) 12.99% $341 $37,281 ($36,940) ($85,748) 12/31/2002 $0 ($6,002) ($6,686) 12.83% $684 $40,869 ($40,185) ($125,933) 12/31/2003 $0 ($8,815) ($9,952) 12.65% $1,137 $45,664 ($44,527) ($170,460) 12/31/2004 ($91,881) ($11,932) ($13,670) 12.47% ($90,143) ($137,783) $47,640 ($122,820) 12/31/2005 ($78,690) ($7,369) ($9,232) 13.30% ($76,827) ($144,746) $67,919 ($54,901) 12/31/2006 ($78,690) ($3,294) ($4,210) 13.04% ($77,774) ($149,327) $71,553 $16,652 12/31/2007 ($5,048) $833 $1,205 13.82% ($5,420) $17,920 ($23,340) ($6,688) 12/31/2008 ($5,048) ($334) ($497) 13.46% ($4,885) $12,167 ($17,052) ($23,740) (1) A change in consulting actuaries resulted in a recommended change in the actuarial methods and assumptions. (2) 8.00% interest rate was used for years prior to January 1, 1999: 7.00% thereafter. (3) The Net Pension Obligation (NPO) balance is reflected as part of Deferred Credits on the Government-wide Statement of Net Assets Based on 30-year level-dollar closed amortization as of January 1, 1999. The information presented in the preceding required schedules was determined as part of the actuarial valuations at the date indicated. 78 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS Actuarial Assumptions Postemployment Benefits (OPEB) Other Than Pensions for LEOFF 1 Plan Description In addition to the pension benefits described above the City is required to pay post employment benefits in accordance with Revised Code of Washington (RCW) Chapter 41.16, all medical, hospital, and nursing care as long as a disability exists are covered for any active firefighter hired prior to March 1, 1970. For any retired firefighter hired prior to March 1, 1970, medical, hospital, and nursing care are covered at the discretion of the Retirement Board. Members retired prior to 1961 for reasons other than duty disability are not eligible for medical benefits during retirement. In 1970, LEOFF was established by the Legislature under RCW Chapter 41.26. LEOFF members who joined the system by September 30, 1977 are Plan 1 members. For Plan 1 members, the necessary hospital, medical, and nursing care expenses not payable by workers' compensation, Social Security, etc, are covered. Funding Policy The funding policy is based upon the pay-as-you-go financing requirements. LEOFF 1 RETIREE MEDICAL BENEFITS GASB STATEMENTS No. 43 and No. 45 SCHEDULE OF FUNDING PROGRESS (rounded to thousands) Actuarial Unfunded Actuarial UAAL as a Actuarial Value Accrued Accrued Liabilities Funded Covered Percentage of Valuation Date of Assets Liabilities (UAAL) Ratio Payroll Covered Payroll January 1, 2008 $0 $20,738 $20,738 0.00° N/A N/A % Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost is calculated based upon the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities over a period of 21 years as of January 1, 2008. The table below shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan and changes in the City's net OPEB for LEOFF. 79 CITY OF AUBURN: 2008 CAM NOTES TO THE FINANCIAL STATEMENTS Fiscal Year Ending 12/31/2008 Annual required contribution (ARC) 1. Annual Normal Costs at beginning of year $ 90,257 2. Amortization of UAAL at beginning of year 1,540,432 3. Interest to end of year 81,534 4. ARC at end of year $ 1,712,223 5. Interest on Net OPEB Obligation $ 6. Adjustment to ARC - 7. Annual OPEB Cost $ 1,712,223 8. Employer Contributions 919,019 9. Change in Net OPEB Obligation 793,204 10. Net OPEB Obligation at beginning of year - 11. Net OPEB Obligation at end of year $ 793,204 The City's annual OPEB cost, the percentage of OPEB costs contributed to the plan, and the net OPEB obligation for 2008 were as follows: Contributions as a Annual Percentage of Net OPEB Fiscal Year Ending OPEB Cost Annual OPEB Cost Obligation December 31, 2008 $ 1,712,223 54% $ 793,204 Funded Status and Funding Progress As of January 1, 2008, the most recent actuarial valuation date, the plan was 0% funded. The accrued liability for benefits was $20.7 million, and the actuarial value of assets was $0, resulting in a UAAL of $20.7 million. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations. 80 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS In the January 1, 2008 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions used included a 5.0% discount rate, which is based upon the long- term investment yield on the investments that are expected to be used to finance the payment of benefits. The UAAL is being amortized on a closed basis at the assumed discount rate. The remaining amortization period at January 1, 2008 was 21 years. NOTE 11 - ASSOCIATION OF WASHINGTON CITIES EMPLOYEE BENEFIT TRUST ("Trust") Trust Description The City is a Participating Employer in the Association of Washington Cities Employee Benefit Trust ("Trust"), a cost-sharing multiple-employer welfare benefit plan administered by the Association of Washington Cities. The Trust provides medical benefits to certain eligible retired employees of Participating Employers and their eligible family members. Under Article VII of the Trust document, the Trustees have the authority and power to amend the amount and the nature of the medical and other benefits provided by the Trust. The Trust issues a publicly available financial report that includes financial statements and requires supplementary information for Trust. That report, along with a copy of the Trust document, may be obtained by writing to Trust at 1076 Franklin Street SE, Olympia, WA 98501-1346 or by calling 1-800-562-8981. Funding Policy The Trust provides that contribution requirements of Participating Employers and of participating employees, retirees and other beneficiaries, if any, are established and may be amended by the Board of Trustees of the Trust. Retirees of the City receiving medical benefits from the Trust contribute $644.35 per month for non-Medicare enrolled retiree-only coverage, $1,288.70 for non- Medicare enrolled retiree and spouse coverage, $987.25 for Medicare enrolled retiree and non- Medicare enrolled spouse (or non-Medicare enrolled retiree and Medicare-enrolled spouse) and $685.80 for Medicare-enrolled retiree and spouse coverage. Participating Employers are contractually required to contribute at a rate assessed each year by Trust, currently 12.2 percent of annual covered payroll. The City's contributions to the Trust for the year ended December 31, 2008, was $4.2 million, which equaled the required contributions of that year. NOTE 12 - LONG-TERM DEBT General Obligation Bonds are direct obligations of the City for which its full faith and credit are pledged. Debt service for voter-approved issues, of which the City has none, would be funded by special property tax levies. Debt service for City Council authorized bonds, also called councilmanic bonds, is funded from regular property taxes or general revenues, and is generally paid from debt service funds but can be paid from other designated funds. General Obligation Bonds outstanding at year-end are as follows: • 1998 Limited Tax General Obligation bonds were issued for construction of a library to be owned and operated by the King County Rural Library District. These 20-year bonds mature in 2018 and are paid from the Debt Service fund. • 1999 Limited Tax General Obligation bonds were issued for construction of hangars at the Auburn Municipal Airport. These 20-year bonds mature in 2019 and are paid from the Airport fund. 81 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS • Valley Communication Center Development Authority issued General Obligation bonds in 2000 for a new dispatch facility. The City is contracted to pay 20% of the debt service of these 15-year bonds that mature in 2015. This debt is paid from the General fund. • 2005 Limited Tax General Obligation refunding bonds were issued to partially advance refund the 1999 Limited Tax Obligation bonds. • 2006 Limited Tax General Obligation bonds were issued to fund improvements at the Auburn Golf Course including a pro shop, clubhouse and related facilities, as well as construction of a columbarium at the Mountain View Cemetery. • 2006 Limited Tax General Obligation (taxable) bonds were issued to construct and equip restaurant, banquet and related facilities for a restaurant facility to be located at the Auburn Golf Course clubhouse. Revenue Bonds are payable from water and storm drainage utility revenues generated by those enterprise funds. Special Assessment Bonds are not a direct responsibility of the City, but are funded from the collection of special assessment payments. Debt service principal and interest costs are paid from the individual LID funds. The City is obligated for special assessment debt to the extent that it is required to establish an LID Guarantee fund for the purpose of guaranteeing the payment of local improvement bonds in the event there are insufficient funds in the individual LID fund. State of Washington Public Works Trust Fund Loans are a direct responsibility of the City. Auburn currently has seven outstanding loans with a remaining total balance of $9,801,401. Six of the loans are being repaid from water and sewer fund revenues over a 20-year period that begins upon each project completion. The other loan is being repaid from arterial street fund revenues over a 4-year period that began in 2007 upon project completion. The following schedules summarize the long-term debt transactions of the City for the year ended December 31, 2008. The first table summarizes all debt transactions for Auburn, while the second provides detailed information on all long-term debt. Additional schedules reflect total annual debt service requirements to maturity and the reconciliation of debt by fund type. CHANGES IN LONG-TERM DEBT SUMMARY General Special Employee Leave Obligation Utility Assessment Benefit Deferred Charges Total Long-term debt payable 12/31/07 $ 11,313,553 $ 14,879,419 $ 36,827 $ 1,629,872 $ (24,632) $ 27,835,039 Added 377,728 - - 1,780,848 - 2,158,576 Retired (631,482) (1,942,938) - (1,496,122) 10,707 (4,059,835) Long-term debt payable 12/31/08 $ 11,059,799 $ 12,936,481 $ 36,827 $ 1,914,598 $ (13,925) $ 25,933,780 82 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS DEBT SERVICE REQUIREMENT TO MATURITY 2009 625,000 469,878 36,247 31,517 2,002,938 218,483 - 2,558 1,704,389 4,368,573 722,435 2010 669,000 439,857 38,101 29,662 982,938 151,371 - 2,558 21,021 1,711,060 623,448 2011 718,000 408,540 40,050 27,713 982,360 135,789 - 2,558 21,021 1,761,431 574,599 2012 752,000 374,718 42,099 25,664 997,360 119,685 36,827 2,558 21,021 1,849,307 522,624 2013 795,000 339,292 44,253 23,510 1,002,360 102,981 - - 21,021 1,862,634 465,782 2014 831,000 300,712 46,517 21,246 1,017,360 86,076 - - 21,021 1,915,898 408,034 2015 873,000 259,514 48,897 18,866 1,032,360 66,135 - - 21,021 1,975,278 344,515 2016 685,000 215,340 51,399 16,364 1,047,360 45,668 - - 21,021 1,804,780 277,372 2017 725,000 183,730 54,029 13,735 692,360 24,676 - - 21,021 1,492,409 222,141 2018 755,000 151,665 56,793 10,971 692,360 20,172 - - 21,021 1,525,173 182,808 2019 495,000 118,125 59,698 8,065 692,360 15,668 - - 21,021 1,268,079 141,858 2020 320,000 95,850 62,753 5,011 509,991 11,164 - - - 892,744 112,024 2021 330,000 81,450 65,963 1,800 509,991 8,483 - - - 905,955 91,733 2022 345,000 66,600 - - 282,906 5,802 - - - 627,906 72,402 2023 360,000 51,075 - - 256,791 4,257 - - - 616,791 55,332 2024 380,000 34,875 - - 256,791 2,973 - - - 636,791 37,848 2025 395,000 17,775 - - 148,947 1,689 - - - 543,947 19,464 2026 - - - - 148,947 945 - - - 148,947 945 2027 - - - - 20,000 200 - - - 20,000 200 2028 TOTALS $ 10,053,000 $ 3,608,993 $ 646,799 $ 234,124 20,000 $ 13,296,481 $ 100 1,022,317 7 36,827 $ 10,231 $ 1,914,598 20,000 $ 25,947,705 $ 100 4,875,665 CHANGES IN LONG-TERM DEBT Interest Maturity Original Principal Balance Balance Due Within Issue Name Rates Date Amount Installments 12/31/07 Additions Reductions 12/31/08 One Year Governmental debt: General obligation bonds: Limited G.O. Library 3.75-5.00% 12/1/2018 $ 4,000,000 $110,000-$290,000 $ 2,635,000 $ - $ (195,000) $ 2,440,000 $ 205,000 Valley Communication G.O. 4.30-5.75% 12/1/2015 2,551,600 $96,600-$233,000 1,595,000 - (167,000) 1,428,000 175,000 Capital lease Employee leave benefit Compensated absences - 1,292,934 1,399,489 (1,187,826) 1,504,598 1,339,404 Public Works Trust Fund loans: PWTF 2006(a) 0.50% 7/1/2010 142,313 106,735 - (35,578) 71,157 35,578 PWTF 2008 0.50% 7/1/2028 1,800,000 - 360,000 360,000 Total Public Works Trust Fund loans 1,942,313 106,735 360,000 (35,578) 431,157 35,578 Business-type debt: General obligation bonds GObond 1999 5.00-5.10% 11/1/2009 $ 1,655,000 $45,000-$65,000 $ 125,000 $ - $ (60,000) $ 65,000 $ 65,000 GO refunding bond 2005 4.00-5.00% 12/1/2019 1,375,000 $10,000-$190,000 1,345,000 - - 1,345,000 - GO bond 2006 4.25-5.00% 12/1/2025 3,275,000 $5,000 - $395,000 3,275,000 - - 3,275,000 - GO bond 2006 taxable 5.40-5.52% 12/1/2015 1,885,000 $45,000-$245,000 1,675,000 (175,000) 1,500,000 180,000 Total GO bonds 8,190,000 6,420,000 - (235,000) 6,185,000 245,000 Revenue bonds' Utility sys. revenue 1999(2) 5.00-5.10% 11/1/2009 8,345,000 $670,000-$1,030,000 2,010,000 - (980,000) 1,030,000 1,030,000 Utility sys. refunding bonds 2005 (2) Total revenue bonds 3.004.75% 11/1/2016 2,765,000 11,110,000 $45,000-$355,000 2,720,000 4,730,000 (255,000) - (1,235,000) 2,465,000 3,495,000 265,000 1,295,000 Employee leave benefit: Compensated absences 336,938 381 ,359 (308,296) 410,000 364,985 Public Works Trust Fund loans: PWTF 1999 1.00% 7/1/2019 3,465,000 $182,368 2,188,421 - (182,368) 2,006,053 182,368 PWTF 2001 0.50% 7/1/2021 4,290,405 $227,086 3,179,198 - (227,086) 2,952,112 227,086 PWTF 2002 1.00% 7/1/2022 641,250 $26,114 391,717 - (26,115) 365,602 26,114 PWTF 2004 0.50% 7/1/2024 2,049,036 $107,844 1,833,348 - (107,844) 1,725,504 107,844 PWTF 2006(b) Total Public Works Trust Fund loans 0.50% 7/1/2026 2,450,000 12,895,691 $128,947 2,450,000 10,042,684 (128,947) - (672,360) 2,321,053 9,370,324 128,947 672,359 (1) Imputed interest rate of 5.00%. (2) Subject to federal arbitrage rules. 83 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS LONG-TERM DEBT RECONCILIATION Enterprise Governmental Funds Funds 12/31/08 Liabilities payable from restricted assets Revenue bonds $ 648,190 $ - $ 648,190 Long-term bonds payable: General obligation bonds 6,185,000 3,868,000 10,053,000 Capital lease - 646,799 646,799 Revenue bonds 2,846,810 - 2,846,810 Special assessments with - 36,827 36,827 government commitment Public Works Trust Fund loans 9,370,324 431,157 9,801,481 Employee leave benefits 410,000 1,504,598 1,914,598 Deferred charges (12,902) (1,024) (13,925) Total long-term debt $ 19,447,423 $ 6,486,357 $ 25,933,780 Revenue Bond Debt Service Coverage The required debt service coverage for the 1999 utility revenue bonds and the 2005 utility revenue refunding bonds is 1.25. Debt service coverage for 2008 was 2.03. Please refer to Schedule 16 in the statistical section. The restricted rate stabilization fund for the utility revenue bonds was established to minimize the effect on rates of revenue fluctuations between years. By transferring cash into this stabilization fund, adjusted net revenue available for debt service, as defined, would be decreased by the amount of the transfer. Conversely, transfers out of the account would increase adjusted net revenue available for debt service. NOTE 13 - CONSTRUCTION COMMITMENTS At December 31, 2008 the City had the following contractual obligations on construction projects: SCHEDULE OF OUTSTANDING CONSTRUCTION OBLIGATIONS AS OF DECEMBER 31, 2008 Amount Outstanding Traffic projects Street projects Utilities projects Total commitments $ 166,601 156,813 362,882 $ 686,296 NOTE 14 - CEMETERY ENDOWED CARE FUND The City maintains one permanent fund known as the cemetery endowed care fund. Paid into this fund are 15% of all proceeds received from the sale of each grave, niche or crypt. This fund is irreducible in principal and no part of the income of this fund shall ever be used for purposes other than those specified upon the creation of the fund. 84 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS RCW 68.44.020 restricts the use of endowment net appreciation to endowment care "stipulated in the instrument by which the fund was established". For the City, the instrument that established the fund is Auburn City Code section 3.04.080, and section 3.040.120 governs the use of the fund. ACC 3.04.120 restricts net interest or income from investments to the care of the lots and in the improvement or embellishment of the cemetery or the erection or preservation of any buildings or structures, fences or walks, or for the repair, preservation, erection or renewal of any tomb, monument, grave, stone, fence, railing or other erection in or around the cemetery. The funds may also be used for planting and cultivating trees, shrubs, flowers or plants in or around the cemetery. All expenditures of income from the fund must first be authorized by the City Council. For 2008, of the $105,046 net appreciation on investments, $38,238 was available for expenditure, and the rest was related to an unrealized gain on a long-term investment that matures in 2009. Amounts that are available for expenditure are reflected as unrestricted net assets. NOTE 15 - JOINT VENTURE / RELATED PARTY The "Valley Communications Center" was established August 20, 1976, when an Interlocal Agreement was entered into by four participating municipal corporations: Renton, Kent, Auburn and Tukwila. The provisions and terms of the "Interlocal Cooperation Act", pursuant to RCW 39.34, sanction the agreement. The initial duration of the agreement was five years and thereafter is automatically extended for consecutive two-year periods, unless terminated by one or more of the participating cities. Any such termination must be in writing and served upon the other cities on or before July 1 in any one year and such termination shall then become effective on the last day of such year. On August 4, 1999 the Administration Board of Valley Communications Center voted to include the City of Federal Way as a full participating member city as of January 1, 2000. The five participating municipal corporations that include the cities of Renton, Kent, Auburn, Tukwila, and Federal Way on April 17, 2000 entered into a new interlocal Agreement, pursuant to RCW 39.34, et seq. This agreement reaffirmed Valley Communications Center as a governmental administration agency pursuant to RCW 39.34.030 (3) (b). The purpose of the joint operation, hereafter referred to as Valley Com, is to provide improved consolidated emergency communications (dispatch) services for police, fire and medical aid to the five participating cities and to the several subscribing agencies, which include King County Fire Districts #2, #20, #40, #43, #44, #47, Black Diamond Fire Department, Vashon Island Fire Department, City of Pacific Police and Fire Departments, City of Algona Police Department, City of Black Diamond Police Department, City of Des Moines Police Department, SeaTac Fire Department, North Highline Fire Department, and King County EMS Units. In 1988, King County Fire District #1 was annexed to the City of Tukwila. A separate agreement between Valley Com and the subscribing agencies has been executed, which set forth condition of services and rates charged. The participating cities provide the majority of revenues to Valley Com. The method of allocating revenue source was changed in 1990 to a basis of prior year's calls with actual first and second quarter and estimated third and fourth quarter calls. The allocation of prorated financial participation among the five participating cities is the percentage of estimated dispatched calls attributed to each jurisdiction compared to the total actual and estimated dispatched calls, for the period for January 1, through December 31. The percentages are applied to the current approved budget, less revenue from subscribing agencies and all other sources. 85 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS The 2008 cost distribution for the five participating cities is as follows: Dispatchable Percent of Calls Total * Renton 67,075 18.03% Kent 101,281 27.23% Auburn 79,591 21.40% Tukwila 38,934 10.47% Federal Way 85,075 22.87% Total 371,956 100.00% Distribution of current year net income is based on these budgeted percentages. Valley Com is served by an Administration Board composed of the Mayors or designated representatives from the five participating cities of Renton, Kent, Auburn, Tukwila and Federal Way. The Administration Board is responsible for the following functions: 1) Budget review and recommendation to the legislative bodies of the participating cities, and budget adoption after each legislative body has approved the required financial participation for the ensuing year; 2) Approval of appointment and/or discharge of the Director; 3) Approval of personnel policy and final decisions on all major policy changes; 4) Review and approval of all contracts. In addition, an Operations Board provides direction and consists of two members of each participating City's public safety departments, including the heads of such departments or their designees. The Operations Board performs the following functions: 1) Oversees the operation of Valley Com, advises and makes recommendations to the Administration Board; 2) Makes recommendations on Director selection; 3) Presents proposed policies and budget to the Administration Board; 4) Approves disbursement of funds by the Director. The Director presents a proposed budget to the Operations Board on or before August 15 of each year. Said budget is then presented to the Administration Board by September 1 of each year. The Administration Board can make changes to the proposed Valley Com budget as it finds necessary, but final approval falls to the legislative body of each participating city in accordance with the provisions of the Interlocal Agreement. In August 1993, Valley Com entered into an Interlocal Cooperation Agreement, pursuant to Chapter 39.34 RCW, with the sub-regions of King County, Seattle and Eastside Public Safety Communications Agency (EPSCA). This agreement governs the development, acquisition and installation of the 800 MHz emergency radio communications system (system) funded by the $57 million King County levy. This agreement provides that upon voluntary termination of any sub-region participation in the system, it surrenders its radio frequencies, relinquishes its equipment and transfers any unexpended levy proceeds and association equipment replacement reserves to another sub- region or consortium of sub-regions. The share of equity belonging to the five participating cities is as follows: 86 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS Item Renton Kent Auburn Tukwila Federal Way Total Equity Dec. 31, 2007 $ 4,144,201 $ 5,857,547 $ 3,849,684 $2,428,951 $ 2,271,890 $ 18,552,273 Current year change 315,033 522,452 390,928 144,391 424,182 1,796,986 Equity Dec 31, 2008 $ 4,459,234 $ 6,379,999 $ 4,240,612 $ 2,573,342 $ 2,696,072 $ 20,349,259 of equity 21.91% 31.35% 20.84% 12.65% 13.25% of 2008 distribution 17.53% 29.07% 21.75% 8.04% 23.61% Liabilities are the responsibility of the five participating cities in direct proportion to their equity position. Complete audited financial statements for Valley Communications Center can be obtained from Valley Communications Center, 27519 108th Ave SE, Kent, WA 98030, or telephone 253-372- 1300. NOTE 16 - JOINTLY GOVERNED ORGANIZATION / RELATED PARTY Residents of the cities of Auburn, Algona and Pacific approved in the November 7, 2006 general election the creation of a regional fire authority pursuant to RCW 52.26. The new regional fire protection service authority, called the Valley Regional Fire Authority (VRFA), provides first responder fire and emergency medical services to residents of Auburn, Algona and Pacific. The VRFA is a new municipal corporation, with its own Governing Board, and is legally separate from the three cities it serves. The Governing Board of the VRFA consists of the Mayors of the three cities within the VRFA service area, as well as two Councilmembers from each city. Membership on the Governing Board is made by appointment from the city council of the respective member cities. Effective January 1, 2007, all personnel, assets, equipment and contractual obligations of the former Auburn Fire Department were transferred to the VRFA. Similar transfers were made by the cities of Algona and Pacific. In accordance with the interlocal agreement at time of formation, each member city retained its obligation for LEOFF 1 firefighter and Fire Relief and Pension Plan obligations. During 2008 Auburn paid $50,738 for the employer's share of active LEOFF 1 firefighter medical premiums and benefit payments. Premium and benefit payments for retired LEOFF 1 firefighters for 2008 were $132,347. Medical premiums and benefit payments made under the Fire Relief and Pension Plan for 2008 were $159,818. NOTE 17 - CONTINGENCIES AND LITIGATION As of December 31, 2008, a number of claims were pending against the City for damages and legal actions. While the outcome of these actions is uncertain, no losses are clearly anticipated at this time due to these pending claims. In the event of a liability finding against the City, it is anticipated that any potential adverse judgment against the City also would be subject to coverage under the City's comprehensive liability insurance, including public officials' errors and omission insurance and general liability insurance. NOTE 18 - RISK MANAGEMENT & INSURANCE Risk Management The City is exposed to various risks of loss such as: theft and damage and destruction of assets, errors and omissions, injuries or property damage to others, employees' health, and natural 87 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS disasters. To insure against risks of loss the City of Auburn is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self- insuring, and / or jointly contracting for risk management services. WCIA has a total of 129 Members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials' errors or omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self insured layer, and $16 million per occurrence in the re-insured excess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate sublimits in the excess layers. The Board of Directors determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery are purchased on a group basis. Various deductibles apply by type of coverage. Property insurance and auto physical damage are self-funded from the members' deductible to $500,000, for all perils other than flood and earthquake, and insured above that amount by the purchase of reinsurance. In-house services include risk management consultation, loss control field services, claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. These revenues directly offset portions of the membership's annual assessment. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. No settlement has exceeded insurance coverage over the past three years. Workers' Compensation Title 51 RCW requires the City to ensure payment of benefits for job-related injuries and diseases through the Workers' Compensation fund or through self-insurance. The City participates in the State of Washington's Workers' Compensation program. Premiums are based on individual employer's reported payroll hours and insurance rates based on each employer's risk classification and past experience. The premium is paid by employer and employee contributions. 88 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS NOTE 19 - SUBSEQUENT EVENTS SCORE On January 20, 2009, the City Council of the City of Auburn authorized the execution of an interlocal agreement relating to the South Correctional Entity Facility (SCORE) and the formation of the South Correctional Entity Facility Public Development Authority. The agreement allows for the construction of a 680 bed misdemeanant facility jointly with seven other south King County Cities; Burien, Des Moines, Federal Way, Renton, SeaTac, and Tukwila . The City of Auburn will own approximately 29 percent of the beds in the facility and will be responsible for the same percentage of debt service and operations and maintenance of the facility. The Public Development Authority is authorized to issue debt in the aggregate principal amount of not to exceed $100,000,000 to finance the acquisition, construction, equipping and improvement of the facility on behalf of the member cities. Reduction in Force The 2009 budgeted revenue for the City's General Fund is under pressure, specifically sales tax and development revenues. The City has done one budget amendment and is scheduled to do another which will reduce 2009 sales tax revenue by 18 percent and development revenues by 25 percent. To offset this revenue decrease, the City has frozen 14 vacant positions and reduced work force via lay off by another 22 positions. This is in addition to 22 positions that were frozen in 2008. Other budget elements were also reduced to balance the General Fund budgeted expenses to the revised revenue levels. 89 CITY OF AUBURN: 2008 CAFR NOTES TO THE FINANCIAL STATEMENTS CITY OF ..RN t D ppp _-.a 90 CITY OF AUBURN: 2008 CAFR REQUIRED SUPPLEMENTAL INFORMATION CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERALFUND FOR THE YEAR ENDED DECEMBER 31, 2008 ORIGINAL BUDGET (GAAP BASIS) FINAL BUDGET (GAAP BASIS) ACTUAL RESULTS VARIANCE WITH FINAL BUDGET POSITIVE (NEGATIVE) REVENUES: TAXES: PROPERTY $ 15,200,000 $ 9,616,900 $ 9,757,999 $ 141,099 RETAIL SALES & USE 17,680,000 18,514,700 17,620,661 (894,039) INTERFUND UTILITY 1,906,200 2,000,400 2,324,625 324,225 UTILITY 5,525,100 7,656,800 7,487,823 (168,977) EXCISE 1,006,500 996,500 1,160,700 164,200 LICENSES AND PERMITS 1,795,000 1,295,000 1,110,722 (184,278) INTERGOVERNMENTAL 2,976,500 4,460,600 5,788,294 1,327,694 CHARGES FOR SERVICES 1,757,500 1,979,500 2,397,025 417,525 FINES AND FORFEITURES 771,000 1,671,000 2,059,771 388,771 INVESTMENT EARNINGS 300,000 300,000 521,647 221,647 MISCELLANEOUS TOTAL REVENUES 351,100 49,268,900 523,800 49,015,200 849,839 51,079,106 326,039 2,063,906 EXPENDITURES: CURRENT: GENERAL GOVERNMENT 8,130,400 8,679,875 7,010,742 1,669,133 SECURITY OF PERSONS AND PROPERTY 22,221,500 28,753,625 26,157,394 2,596,231 PHYSICAL ENVIRONMENT 2,716,300 3,653,050 3,490,636 162,414 TRANSPORTATION 2,208,900 2,931,100 2,784,963 146,137 ECONOMIC ENVIRONMENT 2,003,200 3,109,800 2,018,159 1,091,641 HEALTH AND HUMAN SERVICES 605,200 885,600 776,224 109,376 CULTURE AND RECREATION 5,384,800 6,720,300 6,296,743 423,557 DEBT SERVICE 250,500 250,500 318,242 (67,742) TOTAL EXPENDITURES 43,520,800 54,983,850 48,853,103 6,130,747 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): PROCEEDS FROM CAPITAL LEASE - - 17,728 17,728 TRANSFERS IN (Note 5) 17,000 643,132 643,132 - TRANSFERS OUT (Note 5) (1,306,200) (4,649,132) (4,278,492) 370,640 NET CHANGE IN FUND BALANCES 4,458,900 (9,974,650) (1,391,629) 8,583,021 FUND BALANCES - BEGINNING 10,288,125 14,462,720 14,462,720 - FUND BALANCES - ENDING $ 14,747,025 $ 4,488,070 $ 13,071,091 $ 8,583,021 91 CITY OF AUBURN: 2008 CAFR REQUIRED SUPPLEMENTAL INFORMATION CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ARTERIAL STREET FUND FOR THE YEAR ENDED DECEMBER 31, 2008 VARIANCE WITH ORIGINAL FINAL FINAL BUDGET BUDGET BUDGET ACTUAL POSITIVE (GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE) REVENUES: TAXES: UTILITY $ $ 554,500 $ 182,588 $ (371,912) BUSINESS - 587,532 587,532 INTERGOVERNMENTAL 1,646,000 4,165,300 1,062,911 (3,102,389) INVESTMENT EARNINGS TOTAL REVENUES 25,000 1,671,000 25,000 4,744,800 27,254 1,860,285 2,254 (2,884,515) EXPENDITURES: CURRENT: TRANSPORTATION DEBT SERVICE CAPITAL LEASES CAPITAL OUTLAY TOTAL EXPENDITURES ■ EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES - 553,800 3,757,294 (3,203,494) 48,300 48,300 - 48,300 - - 35,578 (35,578) 3,590,100 7,179,000 534 7,178,466 3,638,400 7,781,100 3,793,406 3,987,694 OTHER FINANCING SOURCES (USES): PROCEEDS OF LONG-TERM DEBT - 80,000 360,000 280,000 TRANSFERS IN (Note 5) 1,956,300 3,015,300 2,283,396 (731,904) TOTAL OTHER FINANCING SOURCES AND U SES 1,956,300 3,095,300 2,643,396 (451,904) NET CHANGE IN FUND BALANCES (11,100) 59,000 710,275 651,275 FUND BALANCES - BEGINNING 518,647 841,462 841,462 - FUND BALANCES - ENDING $ 507,547 $ 900,462 $ 1,551,737 $ 651,275 92 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON-MAJOR GOVERNMENTAL FUNDS THE CITY HAS FOUR TYPES OF NON-MAJOR GOVERNMENTAL FUNDS: Special Revenue Funds Special revenue funds account for the proceeds of specific revenue sources and are segregated into individual funds to ensure that expenditures are made exclusively for qualified purposes. Special revenue funds are accounted for on a modified accrual basis. Annual budgets are adopted with appropriations lapsing at year-end. Debt Service Funds Debt service funds account for payments of principal and interest on general obligation and special assessment long-term debt. Capital Project Funds Capital project funds account for the City of Auburn's financial resources used for the acquisition or construction of major non-proprietary capital facilities. Permanent Funds Permanent funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support City programs that are for the benefit of the City or its citizens. 93 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING BALANCE SHEET NON-MAJOR GOVERNMENT FUNDS DECEMBER 31, 2008 NONMAJOR NONMAJOR NONMAJOR NONMAJOR NONMAJOR SPECIAL REVENUE DEBT SERVICE CAPITAL PROJ PERMANENT GOVERNMENTAL FUNDS FUNDS FUNDS FUNDS FUNDS ASSETS: CASH AND CASH EQUIVALENTS $ 13,040,662 $ 171,565 $ 740,325 $ 466,021 $ 14,418,573 INVESTMENTS - - - 1,014,375 1,014,375 RECEIVABLES: CUSTOMER ACCOUNTS 1,995 - - - 1,995 SPECIAL ASSESSMENTS - 646,408 - - 646,408 DUE FROM OTHER GOVERNMENTAL UNITS 69,391 - 343,577 - 412,968 DEFERRED CHARGES 4,320 4,320 TOTAL ASSETS $ 13,116,368 $ 817,973 $ 1,083,902 $ 1,480,396 $ 16,498,639 LIABILITIES AND FUND BALANCES: CURRENT PAYABLES $ 204,735 $ - $ 799,073 $ - $ 1,003,808 DEFERRED REVENUE 646,408 646,408 TOTAL LIABILITIES 204,735 646,408 799,073 - 1,650,216 94 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENT FUNDS FOR THE YEAR ENDED DECEMBER 31, 2008 TOTAL NONMAJOR SPECIAL REVENUE TOTAL NONMAJOR DEBT SERVICE TOTAL NONMAJOR CAPITAL PROJECTS TOTAL NONMAJOR PERMANENT TOTAL NONMAJOR GOVERNMENTAL REVENUES: TAXES: PROPERTY $ 2,200,000 $ $ 82,125 $ $ 2,282,125 EXCISE 86,537 - 86,537 OTHER 60,660 - 60,660 INTERGOVERNMENTAL 433,370 1,080,438 1,513,808 CHARGES FOR SERVICES 1,268,048 67,038 52,433 1,387,519 SPECIAL ASSESSMENTS - 57,402 - - 57,402 INVESTMENT EARNINGS 348,373 47,395 1,517 52,613 449,898 MISCELLANEOUS TOTAL REVENUES 266,915 4,663,903 - 104,797 25,000 1,256,118 - 105,046 291,915 6,129,864 EXPENDITURES CURRENT: SECURITY OF PERSONS & PROPERTY 485,826 485,826 TRANSPORTATION 2,368,710 2,368,710 ECONOMIC ENVIRONMENT 512,668 - 512,668 DEBT SERVICE PRINCIPAL - 219,595 219,595 INTEREST 147,703 - 147,703 CAPITAL OUTLAY - - 2,284,122 2,284,122 TOTAL EXPENDITURES 3,367,204 367,298 2,284,122 - 6,018,624 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 1,296,699 (262,501) (1,028,004) 105,0 46 111,240 OTHER FINANCING SOURCES (USES): TRANSFERS IN (Note 5) 382,700 307,200 1,124,854 1,814,754 TRANSFERS OUT (Note 5) (1,050,965) (54,800) - (115,000) (1,220,765) TOTAL OTHER FINANCING SOURCES (USES) (668,265) 252,400 1,124,854 (115,000) 593,989 NET CHANGE IN FUND BALANCES 628,434 (10,101) 96,850 (9,954) 705,229 FUND BALANCES - BEGINNING 12, 283,199 181,666 187,979 1,490,350 14,143,194 FUNDBALANCES - ENDING 12,911,633 $ 171,565 $ 284,829 $ 1,480,396 $ 14,848,423 95 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF po 96 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special revenue funds account for the proceeds of specific revenue sources and are segregated into individual funds to ensure that expenditures are made exclusively for qualified purposes. Special revenue funds are accounted for on a modified accrual basis. Annual budgets are adopted with appropriations lapsing at year-end. The City has ten non-major special revenue funds. The Local Street Fund - This fund was created when Auburn voters approved the Save Our Streets lid lift in 2004 and is used to account for all revenues and expenditures related to this initiative. Hotel/Motel Tax Fund - This fund was created to account for the hotel/motel taxes levied to support City tourist promotion. Drug Forfeiture Fund - Money seized and forfeited from drug activity is deposited in this fund to be used exclusively for drug investigation and enforcement. Local Law Enforcement Block Grant - Accounts for police overtime relating to community oriented policing. The Housing and Community Development Fund - Accounts for projects associated with the Community Development Block Grant program. The Recreational Trails Fund - Created for the purpose of trail development. This is a tax-supported fund. The Business Improvement Area Fund - Accounts for special assessments on downtown merchants for ongoing services and for improvements made to the downtown area. The Cumulative Reserve Fund - Created for the purpose of revenue stabilization for future operations. Mitigation Fees - Accounts for the receipt of contracted mitigation fees for streets and fire service. Special Parks and Recreation Accounts for funds that are donated to the City for specific parks and recreation uses. 97 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING BALANCE SHEET NON-MAJOR SPECIAL REVENUE FUNDS DECEMBER 31, 2008 Page 1 of 2 HOTEL/ LOCAL LOCAL MOTEL DRUG LAW STREEETS TAX FORFEITURE ENFORCEMENT ASSETS: CASH AND CASH EQUIVALENTS $ 701,145 $ 97,730 $ 688,956 $ 2,684 RECEIVABLES: CUSTOMER ACCOUNTS 1,995 - - - DUE FROM OTHER GOVERNMENTAL UNITS - - 13,993 26,235 DEFERRED CHARGES - 4,320 - - TOTALASSETS $ 703,140 $ 102,050 $ 702,949 $ 28,919 LIABILITIES AND FUND BALANCES: CURRENT PAYABLES $ 35,747 $ 14 $ 29,059 $ - TOTAL LIABILITIES 35,747 14 29,059 FUND BALANCES: UNRESERVED DESIGNATED FOR MITIGATION - - - - UNDESIGNATED 667,393 102,036 673,890 28,919 TOTAL FUND BALANCES 667,393 102,036 673,890 28,919 TOTAL LIABILITIES AND FUND BALANCES $ 703,140 $ 102,050 $ 702,949 $ 28,919 98 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES Page 2 of 2 TOTAL HOUSING BUSINESS NONMAJOR COMMUNITY RECREATION IMPROVEMENT CUMULATIVE MITIGATION SPECIAL REVENUE DEVELOPMENT TRAILS AREA RESERVE FEES FUNDS $ 34,287 $ 37,661 $ 59,878 $ 5,866,566 $ 5,551,755 $ 13,040,662 - 1,995 29,163 69,391 - - - - - 4,320 $ 63,450 $ 37,661 $ 59,878 $ 5,866,566 $ 5,551,755 $ 13,116,368 $ 32,208 $ $ 24,372 $ $ 83,335 $ 204,735 32,208 24,372 , 83,335 204,735 31,242 37,661 35,506 5,866,566 31,242 37,661 35,506 5,866,566 5,468,420 5,468,420 - 7,443,213 5,468,420 12,911,633 $ 63,450 $ 37,661 $ 59,878 $ 5,866,566 $ 5,551,755 $ 13,116,368 99 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2008 Page 1 of 2 HOTEL/ LOCAL LAW LOCAL MOTEL DRUG ENFORCEMENT STREETS TAX FORFEITURE GRANT REVENUES: TAXES: PROPERTY $ 2,200,000 $ - $ $ EXCISE - 86,537 OTHER - - INTERGOVERNMENTAL - 30,708 26,235 CHARGES FOR SERVICES - 9,500 - - INVESTMENT EARNINGS 19,662 2,395 15,599 377 MISCELLANEOUS - - 265,948 - TOTAL REVENUES 2,219,662 98,432 312,255 26,612 EXPENDITURES: CURRENT: SECURITY OF PERSONS & PROPERTY - 209,072 12,554 TRANSPORTATION 2,368,710 - - ECONOMIC ENVIRONMENT - 83,790 - TOTAL EXPENDITURES 2,368,710 83,790 209,072 12,554 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (149,048) 14,642 103,183 14,058 OTHER FINANCING SOURCES (USES): TRANSFERS IN (Note 5) 375,000 2,600 TRANSFERS OUT (Note 5) - - TOTAL OTHER FINANCING SOURCES (USES) 375,000 - 2,600 NET CHANGE IN FUND BALANCES 225,952 14,642 103,183 16,658 FUND BALANCES - BEGINNING 441,441 87,394 570,707 12,261 FUND BALANCES - ENDING $ 667,393 $ 102,036 $ 673,890 $ 28,919 100 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES Page 2 of 2 TOTAL HOUSING BUSINESS NONMAJOR COMMUNITY RECREATION IMPROVEMENT CUMULATIVE MITIGATION SPECIAL REVENUE DEVELOPMENT TRAILS AREA RESERVE FEES FUNDS $ $ $ $ $ $ 2,200,000 86,537 60,660 60,660 376,427 - 433,370 - - 1,258,548 1,268,048 1,750 160,441 148,149 348,373 967 - - - 266,915 264,200 485,826 - - - 2,368,710 355,416 73,462 - 512,668 355,416 73,462 264,200 3,367,204 5,100 382,700 - (256,843) (794,122) (1,050,965) - 5,100 (256,843) (794,122) (668,265) 21,011 6,067 (11,052) (96,402) 348,375 628,434 10,231 31,594 46,558 5,962,968 5,120,045 12,283,199 $ 31,242 $ 37,661 $ 35,506 $ 5,866,566 $ 5,468,420 $ 12,911,633 101 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LOCAL STREETS SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2008 VARIANCE WITH ORIGINAL FINAL FINAL BUDGET BUDGET BUDGET ACTUAL POSITIVE (GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE) REVENUES: TAXES: PROPERTY INVESTMENT EARNINGS MISCELLANEOUS EXPENDITURES CURRENT: $ 810,000 $ 2,200,000 $ 2,200,000 $ - 20,000 20,000 19,662 (338) 830,000 2,220,000 2,219,662 (338) TRANSPORTATION 1,200,000 2,595,000 2,368,710 226,290 TOTAL EXPENDITURES 1 200 000 2 595 000 2 368 710 226 290 , , , , , , , EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (370,000) (375,000) (149,048) 225,952 OTHER FINANCING SOURCES (USES): TRANSFERS IN (Note 5) 375,000 375,000 375,000 - TOTAL OTHER FINANCING SOURCES (USES) 375,000 375,000 375,000 - NET CHANGE IN FUND BALANCES 5,000 - 225,952 225,952 FUND BALANCES - BEGINNING 41,520 441,441 441,441 - 102 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HOTEL/MOTEL TAX SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2008 VARIANCE WITH ORIGINAL FINAL FINAL BUDGET BUDGET BUDGET ACTUAL POSITIVE (GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE) REVENUES: TAXES: EXCISE INVESTMENT EARNINGS TOTALREVENUES $ 62,000 $ 76,000 $ 86,537 $ 10,537 1,000 1,800 2,395 595 63,000 77,800 98,432 20,632 EXPENDITURES: CURRENT: ECONOMIC ENVIRONMENT 75,000 122,000 83,790 38,210 TOTAL EXPENDITURES 75,000 122,000 83,790 38,210 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (12,000) (44,200) 14,642 58,842 NET CHANGE IN FUND BALANCES (12,000) (44,200) 14,642 58,842 FUND BALANCES - BEGINNING 31,717 87,394 87,394 - FUND BALANCES - ENDING $ 19,717 $ 43,194 $ 102,036 $ 58,842 103 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DRUG FORFEITURE SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2008 VARIANCE WITH ORIGINAL FINAL FINAL BUDGET BUDGET BUDGET ACTUAL POSITIVE (GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE) REVENUES: INTERGOVERNMENTAL INVESTMENT EARNINGS MISCELLANEOUS $ - $ 15,000 $ 30,708 $ 15,708 15,000 15,000 15,599 599 200,000 200,000 265,948 65,948 215,000 230,000 312,255 82,255 EXPENDITURES: CURRENT: SECURITY OF PERSONS & PROPERTY 181,200 260,600 209,072 51,528 TOTAL EXPENDITURES 181,200 260,600 209,072 51,528 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 33,800 (30,600) 103,183 133,783 NET CHANGE IN FUND BALANCES 33,800 (30,600) 103,183 133,783 FUND BALANCES - BEGINNING 497,745 570,707 570,707 - FUND BALANCES - ENDING $ 531,545 $ 540,107 $ 673,890 $ 133,783 104 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LOCAL LAW ENFORCEMENT GRANT SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2008 VARIANCE WITH ORIGINAL FINAL FINAL BUDGET BUDGET BUDGET ACTUAL POSITIVE (GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE) REVENUES: INTERGOVERNMENTAL INVESTMENT EARNINGS TOTALREVENUES $ 26,300 $ 26,300 $ 26,235 $ (65) 100 100 377 277 EXPENDITURES: CURRENT: SECURITY OF PERSONS & PROPERTY 29,000 29,000 12,554 16,446 TOTAL EXPENDITURES 29,000 29,000 12,554 16,446 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (2,600) (2,600) 14,058 16,658 OTHER FINANCING SOURCES (USES): TRANSFERS IN (Note 5) 2,600 2,600 2,600 TRANSFERS OUT (Note 5) - - - TOTAL OTHER FINANCING SOURCES (USES) 2,600 2,600 2,600 NET CHANGE IN FUND BALANCES - - 16,658 16,658 FUND BALANCES - BEGINNING 6,295 12,261 12,261 - FUND BALANCES - ENDING $ 6,295 $ 12,261 $ 28,919 $ 16,658 105 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HOUSING & COMMUNITY DEVELOPMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31. 2008 ORIGINAL FINAL BUDGET BUDGET (GAAP BASIS) (GAAP BASIS) VARIANCE WITH FINAL BUDGET ACTUAL POSITIVE RESULTS (NEGATIVE) REVENUES: INTERGOVERNMENTAL $ 409,800 $ 409,800 $ 376,427 $ (33,373) TOTAL REVENUES 409,800 409,800 376,427 (33,373) EXPENDITURES: CURRENT: ECONOMIC ENVIRONMENT 409,800 409,800 355,416 54,384 HEALTH & HUMAN SERVICES - - - - TOTAL EXPENDITURES 409,800 409,800 355,416 54,384 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES - 21,011 21,011 NET CHANGE IN FUND BALANCES 21,011 21,011 FUND BALANCES - BEGINNING 10,231 10,231 - FUND BALANCES - ENDING $ $ 10,231 $ 31,242 $ 21,011 106 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL RECREATION TRAILS SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2008 VARIANCE WITH ORIGINAL FINAL FINAL BUDGET BUDGET BUDGET ACTUAL POSITIVE (GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE) REVENUES: INVESTMENT EARNINGS MISCELLANEOUS EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): TRANSFERS IN (Note 5) TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES - BEGINNING $ 800 $ 800 $ - $ (800) - - 967 967 30,624 31,594 31,594 - $ 36,524 $ 37,494 $ 37,661 $ 167 107 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL BUSINESS IMPROVEMENT AREA SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2008 ORIGINAL FINAL BUDGET BUDGET (GAAP BASIS) (GAAP BASIS) VARIANCE WITH FINAL BUDGET ACTUAL POSITIVE RESULTS (NEGATIVE) REVENUES: TAXES: OTHER $ 53,000 $ 53,000 $ 60,660 $ 7,660 INVESTMENT EARNINGS 500 500 1,750 1,250 TOTAL REVENUES 53,500 53,500 62,410 8,910 EXPENDITURES: CURRENT: ECONOMIC ENVIRONMENT 53,500 73,500 73,462 38 TOTAL EXPENDITURES 53,500 73,500 73,462 38 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES - (20,000) (11,052) 8,948 NET CHANGE IN FUND BALANCES (20,000) (11,052) 8,948 FUND BALANCES - BEGINNING 101 46,558 46,558 - FUND BALANCES - ENDING $ 101 $ 26,558 $ 35,506 $ 8,948 108 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL CUMULATIVE RESERVE SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2008 VARIANCE WITH ORIGINAL FINAL FINAL BUDGET BUDGET BUDGET ACTUAL POSITIVE (GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE) REVENUES: TAXES: INVESTMENT EARNINGS EXCESS (DEFICIENCY) OF REVENUES OTHER FINANCING SOURCES (USES): TRANSFERS IN (Note 5) TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES - BEGINNING $ 200,000 $ 200,000 $ 160,441 $ (39,559) 200,000 200,000 160,441 (39,559) 44,800 (44,800) (991,400) (256,843) 734,557 200,000 (791,400) (96,402) 694,998 4,595,983 5,962,968 5,962,968 - $ 4,795,983 $ 5,171,568 $ 5,866,566 $ 694,998 109 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL MITIGATION SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 2008 VARIANCE WITH ORIGINAL FINAL FINAL BUDGET BUDGET BUDGET ACTUAL POSITIVE (GAAP BASIS) (GAAP BASIS) RESULTS (NEGATIVE) REVENUES: CHARGES FOR SERVICES INVESTMENT EARNINGS EXPENDITURES: CURRENT: SECURITY OF PERSONS & PROPERTY $ 470,000 $ 1,020,000 $ 1,258,548 $ 238,548 50,000 50,000 148,149 98,149 520,000 1,070,000 1,406,697 336,697 264,200 264,200 264,200 264,200 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 520,000 805,800 1,142,497 336,697 OTHER FINANCING SOURCES (USES): TRANSFERS OUT (Note 5) (909,000) (1,416,000) (794,122) 621,878 TOTAL OTHER FINANCING SOURCES (USES) (909,000) (1,416,000) (794,122) 621,878 NET CHANGE IN FUND BALANCES (389,000) (610,200) 348,375 958,575 FUND BALANCES - BEGINNING 2,911,295 5,120,045 5,120,045 - FUND BALANCES - ENDING $ 2,522,295 $ 4,509,845 $ 5,468,420 $ 958,575 110 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON-MAJOR GOVERNMENTAL FUNDS Debt Service Funds Debt service funds account for payments of principal and interest on general obligation and special assessment long-term debt. The City of Auburn has one outstanding general obligation issue, and three special assessment funds. The 1998 General Obligation Library Bonds - Accounts for debt service on a Council-approved bond issue to finance, in conjunction with King County, the construction of a new library in the City. The L.I.D. Guarantee Fund - This fund provides financial security for out- standing L. 1. D. bonds and special assessment debt. Special Assessment Debt Fund - Accounts for the special assessment collections and debt service payments for all local improvement districts located within the City. 111 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING BALANCE SHEET DEBT SERVICE FUNDS DECEMBER 31, 2008 TOTAL 1998 GO NONMAJOR LIBRARY LID SPECIAL DEBT SERVICE BOND DEBT GUARANTEE ASSESSMENTS FUNDS ASSETS: CASH AND CASH EQUIVALENTS $ 41,603 $ 62,230 $ 67,732 $ 171,565 RECEIVABLES: SPECIAL ASSESSMENTS - - 646,408 646,408 TOTAL ASSETS $ 41,603 $ 62,230 $ 714,140 $ 817,973 112 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE NONMAJOR DEBT SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2008 TOTAL 1998 G.O. NONMAJOR LIBRARY L I D SPECIAL DEBT SERVICE BOND DEBT GUARANTEE ASSESSMENTS FUNDS REVENUES: TAXES: SPECIAL ASSESSMENTS $ - $ - $ 57,402 $ 57,402 INVESTMENT EARNINGS 5,783 2,007 39,605 47,395 TOTAL REVENUES 5,783 2,007 97,007 104,797 EXPENDITURES: DEBT SERVICE PRINCIPAL 195,000 - 24,595 219,595 INTEREST 112,190 35,513 147,703 TOTAL EXPENDITURES 307,190 - 60,108 367,298 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (301,407) 2,007 36,899 (262,501) OTHER FINANCING SOURCES (USES): TRANSFERS IN (Note 5) 307,200 - - 307,200 TRANSFERS OUT (Note 5) - (54,800) (54,800) TOTAL OTHER FINANCING SOURCES (USES) 307,200 (54,800) - 252,400 NET CHANGE IN FUND BALANCES 5,793 (52,793) 36,899 (10,101) FUND BALANCES - BEGINNING 35,810 115,023 30,833 181,666 FUND BALANCES - ENDING $ 41,603 $ 62,230 $ 67,732 $ 171,565 113 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON-MAJOR GOVERNMENTAL FUNDS Capital Project Funds Capital projects funds account for the City of Auburn's financial resources used for the acquisition or construction of major non-proprietary capital facilities. Auburn has one non-major capital project fund. The Municipal Park Construction Fund - Accounts for park related construction activity and includes funding from a portion of field rental income and adult athletic team fees. 114 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON BALANCE SHEET CAPITAL PROJECT FUND DECEMBER 31, 2008 MUNICIPAL PARK CONSTRUCTION ASSETS: CASH AND CASH EQUIVALENTS $ 740,325 DUE FROM OTHER GOVERNMENTAL UNITS 343,577 TOTAL ASSETS $ 1,083,902 LIABILITIES AND FUND BALANCES: CURRENT PAYABLES $ 799,073 TOTAL LIABILITIES 799,073 FUND BALANCES: UNRESERVED UNDESIGNATED 284,829 115 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES CAPITAL PROJECT FUND FOR THE YEAR ENDED DECEMBER 31. 2008 MUNICIPAL PARK CONSTRUCTION REVENUES: TAXES: PROPERTY $ 82,125 INTERGOVERNMENTAL 1,080,438 CHARGES FOR SERVICES 67,038 INVESTMENT EARNINGS 1,517 MISCELLANEOUS 25,000 TOTAL REVENUES 1,256,118 EXPENDITURES: CAPITAL OUTLAY 2,284,122 TOTAL EXPENDITURES 2,284,122 EXCESS (DEFICIENCY)OF REVENUES OVER (UNDER) EXPENDITURES (1,028,004) OTHER FINANCING SOURCES (USES): TRANSFERS IN (Note 5) 1,124,854 TOTAL OTHER FINANCING SOURCES (USES) 1,124,854 NET CHANGE IN FUND BALANCES 96,850 FUND BALANCES - BEGINNING 187,979 FUND BALANCES - ENDING $ 284,829 116 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON-MAJOR GOVERNMENTAL FUNDS Permanent Funds Permanent funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support City programs that are for the benefit of the City or its citizens. Auburn has one permanent fund. The Cemetery Endowed Care Fund - Accounts non-expendable investments held by the City's trustee. The interest income from investments is available for use by the cemetery fund for capital enhancement and maintenance. 117 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON BALANCE SHEET PERMANENTFUND DECEMBER 31, 2008 CEMETERY ENDOWED CARE ASSETS: CASH AND CASH EQUIVALENTS NON-EXPENDABLE TRUST $ 466,021 INVESTMENTS 1,014,375 FUND BALANCES: RESERVED FOR: ENDOWMENT $ 1,336,000 UNRESERVED UNDESIGNATED 144,396 TOTAL FUND BALANCES 1,480,396 . TOTAL LIABILITIES AND FUND BALANCES $ 1,480,396 118 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE PERMANENT FUND FOR THE YEAR ENDED DECEMBER 31, 2008 CEMETERY ENDOWED CARE REVENUES: INCREASE TO ENDOWMENT FROM LOT SALES 52,433 INVESTMENT EARNINGS 52,613 TOTAL REVENUES 105,046 OTHER FINANCING SOURCES (USES): TRANSFERS OUT (Note 5) TOTAL OTHER FINANCING SOURCES (USES) (115,000) (115,000) NET CHANGE IN FUND BALANCE (9,954) FUND BALANCE- BEGINNING 1,490,350 FUNDBALANCE- ENDING $ 1,480,396 119 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON-MAJOR PROPRIETARY FUNDS Enterprise Funds The City's enterprise funds are used to account for operations that are financed and operated in a manner similar to private business operations. The goods and services these funds provide to the general public are primarily financed by service charges. Enterprise funds are self-supporting and use the accrual method of accounting. Auburn has three non-major enterprise funds. The Airport Fund - Provides accounting of the activities of the Auburn Municipal Airport. Sources of income for the fund are leases, rentals, fuel charges, investment interest, and grant funding as available. The Cemetery Fund - Accounts for Mountain View Cemetery's operations. The Commercial Retail Fund - Accounts for revenues and expenses related to City-owned or leased property that is rented to commercial tenants. 120 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF NET ASSETS NON-MAJOR ENTERPRISE FUNDS DECEMBER 31, 2008 TOTAL NONMAJOR COMMERCIAL PROPRIETARY AIRPORT CEMETERY RETAIL FUNDS ASSETS: CURRENT ASSETS: CASH AND CASH EQUIVALENTS RESTRICTED CASH: CUSTOMER DEPOSITS CUSTOMER ACCOUNTS INVENTORIES TOTAL CURRENT ASSETS NONCURRENT ASSETS: LONG-TERM CONTRACTS AND NOTES CAPITAL ASSETS: LAN D BUILDINGS AND EQUIPMENT IMPROVEMENTS OTHER THAN BUILDINGS CONSTRUCTION IN PROGRESS LESS: ACCUMULATED DEPRECIATION TOTAL CAPITAL ASSETS (NET OF A/D) LIABILITIES: CURRENT LIABILITIES: CURRENT PAYABLES EMPLOYEE LEAVE BENEFITS-CURRENT GENERAL OBLIGATION BONDS PAYABLE-CURRENT DEPOSITS NONCURRENT LIABILITIES: DEFERRED REVENUE EMPLOYEE LEAVE BENEFITS GENERAL OBLIGATION BONDS PAYABLE 1,076,357 $ 487,674 $ 650,277 $ 2,214,308 79,258 - - 79,258 3,909 - - 3,909 - 8,455 - 8,455 1,159,524 496,129 650,277 2,305,930 42,352 - 42,352 3,653,343 342,836 - 3,996,179 2,476,174 1,024,034 1,737,398 5,237,606 5,189,952 1,082,094 356,229 6,628,275 354,505 4,529 - 359,034 (4,172,448) (1,100,591) (1,227,725) (6,500,764) 7,501,526 1,352,902 865,902 9,720,330 3,101 59,761 - 62,862 2,206 11,495 - 13,701 65,000 - - 65,000 79,257 - - 79,257 149,564 71,256 - 220,820 - 42,352 - 42,352 272 1,418 - 1,690 1,257,794 498,867 - 1,756,661 1,258,066 542,637 - 1,800,703 NET ASSETS: INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT 6,178,732 739,169 1,125,181 8,043,082 UNRESTRICTED 1,074,688 538,321 390,998 2,004,007 TOTAL NET ASSETS $ 7,253,420 $ 1,277,490 $ 1,516,179 $ 10,047,089 121 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2008 IRPORT EMETERY TOTAL NONMAJOR COMMERCIAL ENTERPRISE RETAIL FUNDS OPERATING REVENUES: CHARGES FOR SERVICES $ 660,062 $ 795,256 $ $ 1,455,318 INTEREST - 2,363 2,363 OTHER OPERATING REVENUE TOTAL OPERATING REVENUES - 660,062 - 797,619 2,591 2,591 2,591 1,460,272 OPERATING EXPENSES: OPERATIONS & MAINTENANCE 1,504 615,510 - 617,014 ADMINISTRATION 365,839 206,484 - 572,323 DEPRECIATION/AMORTIZATION 224,961 79,957 120,508 425,426 OTHER OPERATING EXPENSES 143 9,956 - 10,099 TOTAL OPERATING EXPENSES 592.447 911.907 120.508 1.624.862 NON-OPERATING REVENUE (EXPENSE) INTEREST REVENUE 28,735 15,840 6,262 50,837 OTHER NON-OPERATING REVENUES 190,881 1,267 - 192,148 GAIN (LOSS) ON SALE OF CAPITAL ASSETS 600 - 600 INTEREST EXPENSE (73,962) (21,779) - (95,741) TOTAL NON-OPERATING REVENUE (EXPENSE) INCOME (LOSS) BEFORE CONTRIBUTIONS & TRANSFERS 146,254 213 869 (4,672) (118 960) 6,262 (111 655) 147,844 (16 746) TRANSFERS IN (Note 5) , - , 115,000 , , 115,000 TRANSFERS OUT (Note 5) - - (339,732) (339,732) CHANGE IN NET ASSETS 213,869 (3,960) (451,387) (241,478) TOTAL NET ASSETS BEGINNING OF YEAR 7,039,551 1,281,450 1,967,566 10,288,567 TOTAL NET ASSETS END OF YEAR $ 7,253,420 $ 11277,490 $ 11516,179 $ 10,047,089 122 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31. 2008 Pagel of 2 TOTAL NONMAJOR COMMERCIAL ENTERPRISE CASH FLOWS FROM OPERATING ACTIVITIES: CASH RECEIVED FROM USERS $ 661,953 $ 797,619 $ - $ 1,459,572 CASH PAID TO SUPPLIERS (351,419) (246,062) (4,720) (602,201) CASH PAID FOR TAXES (143) (9,956) (10,099) CASH PAID FOR INVENTORY - 513 513 CASH PAID TO EMPLOYEES (22,447) (563,809) (586,256) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 287,944 (21,695) (4,720) 261,529 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: TRANSFERS FROM OTHER FUNDS - 115,000 115,000 OPERATING TRANSFERS OUT - (339,732) (339,732) NET CASH PROVIDED (USED) BY NON- CAPITAL FINANCING ACTIVITIES - 115,000 (339,732) (224,732) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: PROCEEDS FROM SALE OF EQUIPMENT 600 - 600 PURCHASE OF CAPITAL ASSETS (212,764) (310,647) (523,411) PROCEEDS FROM OTHER GOVERNMENTS 190,881 190,881 PREMIUM & BOND ISSUANCE COSTS 9,772 9,772 PRINCIPAL PAYMENT ON DEBT (60,000) (60,000) INTEREST PAYMENT ON DEBT (73,963) (22,273) (96,236) OTHER CASH RECEIVED (PAID) 1,267 1,267 NET CASH PROVIDED (USED) FOR CAPITAL AND RELATED FINANCING ACTIVITIES (145,474) (331,653) (477,127) CASH FLOW FROM INVESTING ACTIVITIES: INTEREST RECEIVED 28,735 15,840 6,262 50,837 NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 28,735 15,840 6,262 50,837 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 171,205 (222,508) (338,190) (389,493) CASH AND CASH EQUIVALENTS-BEGINNING OF YEAR 984,408 710,181 988,467 2,683,057 CASH AND CASH EQUIVALENTS-END OF YEAR $ 1,155,613 $ 487,674 $ 650,277 $ 2,293,564 CASH AT END OF YEAR CONSISTS OF: CASH AND CASH EQUIVALENTS $ 1,076,357 $ 487,674 $ 650,277 $ 2,214,308 RESTRICTED CASH-CUSTOMER DEPOSITS 79,256 - - 79,256 TOTAL CASH i $ 1,155,613 $ 487,674 $ 650,277 $ 2,293,564 123 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008 ADJUSTMENTS TO RECONCILE OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: DEPRECIATION INVENTORY Page 2 of 2 TOTAL NONMAJOR COMMERCIAL ENTERPRISE 224,961 79,957 120,508 425,425 - 513 - 513 LIABILITY (INCREASES) DECREASES ACCOUNTS & VOUCHERS PAYABLE (6,627) 19,629 (7,311) 5,692 DEPOSITS PAYABLE 1,891 - 1,891 WAGES & BENEFITS PAYABLE 163 (1,954) (1,791) COMPENSATED ABSENCES PAYABLE (59) (5,552) - (5,611) TOTAL ADJUSTMENTS 220,329 92,593 113,197 426,119 NET CASH PROVIDED (USED) BY OPERATING ACTIVITI ES $ 287,944 $ (21,695) $ (4,720) $ 261,529 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES CAPITAL ASSETS ACQUIRED BY CONTRIBUTED CAPITAL $ $ $ $ INCREASE (DECREASE) IN FAIR VALUE OF INVESTMENT TOTAL NON CASH INVESTING, CAPITAL AND FINANCING ACTIVITIES $ $ $ $ 124 RECONCILIATION OF NET OPERATING INCOME TO NEW CASH PROVIDED BY OPERATING ACTIVITIES CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES NON-MAJOR PROPRIETARY FUNDS Internal Service Funds The City of Auburn's internal service funds are used to account for the financing of goods and services provided by one department of operation to other departments on a cost reimbursement basis. Internal service funds are self-supporting and use the accrual method of accounting. Auburn has three internal service funds. The Insurance Fund - Provides a source of funds to pay unemployment claims and property and casualty claims which fall below deductible levels. The Information Services Fund - Accounts for the costs of purchasing and maintaining the City's various computer and telecommunications systems. The Equipment Rental Fund - Accounts for the costs of purchasing, maintaining, and operating Auburn's fleet of vehicles and related equipment. 125 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENTS OF NET ASSETS INTERNAL SERVICE FUNDS DECEMBER 31, 2008 INFORMATION INSURANCE SERVICES EQUIPMENT RENTAL TOTAL ASSETS: CURRENT ASSETS: CASH AND CASH EQUIVALENTS $ 2,481,572 $ 3,345,884 $ 6,091,761 $ 11,919,217 CUSTOMER ACCOUNTS - 13,000 7,200 20,200 INVENTORIES TOTAL CU RRE NT ASS ETS - - 2,481,572 3,358,884 143,945 6,242,906 143,945 12,083,362 NONCURRENT ASSETS: CAPITAL ASSETS: BUILDINGS AND EQUIPMENT 3,159,905 9,910,011 13,069,916 IMPROVEMENTS OTHER THAN BUILDINGS - 46,591 46,591 CONSTRUCTION IN PROGRESS 64,206 - 64,206 LESS: ACCUMULATED DEPRECIATION TOTAL CAPITALASSETS(NETOFA/D) (2,018,397) (5,464,093) (7,482,490) 1,205,714 4,492,509 5,698,223 LIABILITIES: CURRENT LIABILITIES: CURRENT PAYABLES 426,399 138,764 565,163 EMPLOYEE LEAVE BENEFITS-CURRENT 66,593 25,376 91,969 TOTAL CURRENT LIABILITIES 492,992 164,140 657,132 NONCURRENT LIABILITIES: EMPLOYEE LEAVE BENEFITS 8,213 3,130 11,343 TOTAL NONCURRENT LIABILITIES 8,213 3,130 11,343 NET ASSETS: INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT UNRESTRICTED TOTAL NET ASSETS - 64,584 4,030,462 4,095,046 2,481,572 3,998,809 6,537,683 13,018,064 $ 2,481,572 $ 4,063,393 $ 10,568,145 $ 17,113,110 126 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2008 INFORMATION EQUIPMENT INSURANCE SERVICES RENTAL TOTAL OPERATING REVENUES: CHARGES FOR SERVICES OTHER OPERATING REVENUE OPERATING EXPENSES: OPERATIONS & MAINTENANCE ADMINISTRATION DEPRECIATION/AMORTIZATION TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON-OPERATING REVENUE (EXPENSE): INTEREST REVENUE OTHER NON-OPERATING REVENUES GAIN (LOSS) ON SALE OF CAPITAL ASSETS TOTAL NON-OPERATING REVENUE (EXPENSE) INCOME (LOSS) BEFORE CONTRIBUTIONS CAPITAL CONTRIBUTIONS TRANSFERS IN (Note 5) TRANSFERS OUT (Note 5) CHANGE IN NET ASSETS TOTAL NET ASSETS BEGINNING OF YEAR TOTAL NET ASSETS END OF YEAR $ $ 3,983,304 $ 3,151,858 $ 7,135,162 181,776 181,776 4,165,080 3,151,858 7,316,938 3,798,513 1,513,991 5,312,504 289,148 - 647,509 936,657 - 477,010 886,074 1,363,084 289,148 4,275,523 3,047,574 7,612,245 (289,148) (110,443) 104,284 (295,307) 55,202 81,283 155,221 291,706 - - 9,182 9,182 - - 385 385 55,202 81,283 164,788 301,273 (233,946) (29,160) 269,072 5,966 64,584 195,614 260,198 273,900 720,600 994,500 (8,000) (7,000) (15,000) (233,946) 301,324 1,178,286 1,245,664 2,715,518 3,762,068 9,389,859 15,867,445 $ 2,481,572 $ 4,063,392 $ 10,568,145 $ 17,113,109 127 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31. 2008 Page 1 of 2 IN SURANCE INFORMATION SERVICES EQUIPMENT RENTAL TOTAL CASH FLOWS FROM OPERATING ACTIVITIES: CASH RECEIVED FROM USERS $ - $ 4,201,881 $ 3,151,858 $ 7,353,739 CASH PAID TO SUPPLIERS (256,003) (1,900,927) (561,148) (2,718,078) CASH PAID FOR TAXES (33,145) 20 (33,125) CASH PAID FOR INVENTORY (1,024,191) (1,024,191) CASH PAID TO EMPLOYEES (1,878,242) (626,284) (2,504,526) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (289,148) 422,712 940,255 1,073,819 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: TRANSFERS IN 273,900 720,600 994,500 TRANSFERS OUT NET CASH PROVIDED (USED) BY NOW CAPITAL FINANCING ACTIVITIES (8,000) 265,900 (7,000) 713,600 (15,000) 979,500 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: PROCEEDS FROM SALE OF EQUIPMENT 62,770 62,770 PURCHASE OF CAPITAL ASSETS (546,064) (1,243,045) (1,789,109) CONTRIBUTED CAPITAL 64,584 - 64,584 PROCEEDS FROM INSURANCE SETTLEMENT - 8,560 8,560 NET CASH PROVIDED (USED) FOR CAPITAL AND RELATED FINANCING ACTIVITIES (481,480) (1,171,715) (1,653,195) CASH FLOW FROM INVESTING ACTIVITIES: PROCEEDS FROM SALE OF INVESTMENTS INTEREST RECEIVED - - 1,001,250 1,001,250 55,202 81,283 149,427 285,912 55,202 81,283 1,150,677 1,287,162 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS-BEGINNING OF YEAR CASH AT END OF YEAR CONSISTS OF: CASH AND CASH EQUIVALENTS TOTAL CASH (233,946) 288,415 1,632,816 1,687,285 2,715,518 3,057,469 4,458,945 10,231,932 $ 2,481,572 $ 3,345,884 $ 6,091,761 $ 11,919,217 $ 2,481,572 $ 3,345,884 $ 6,091,761 $ 11,919,217 128 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008 Page 2 of 2 INFORMATION EQUIPMENT INSURANCE SERVICES RENTAL TOTAL RECONCILIATION OF NET OPERATING INCOME TO NEW CASH PROVIDED BY OPERATING ACTIVITIES ADJUSTMENTS TO RECONCILE OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: DEPRECIATION ASSET (INCREASES) DECREASES : ACCOUNTS RECEIVABLE INVENTORY 477,010 886,074 1,363,084 36,801 - 36,801 - (8,671) (8,671) LIABILITY (INCREASES) DECREASES : ACCOUNTS & VOUCHERS PAYABLE 4,427 (56,561) (52,134) WAGES & BENEFITS PAYABLE 9,613 10,706 20,319 COMPENSATED ABSENCES PAYABLE 5,304 4,423 9,727 TOTAL ADJUSTMENTS 533,155 835,971 1,369,126 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (289,148) $ 422,712 $ 940,255 $ 1,073,819 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES CAPITAL ASSETS ACQUIRED BY CONTRIBUTED CAPITAL $ - $ (64,584) $ 195,614 $ 131,030 129 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES AGENCYFUNDS The agency fund accounts for monies over which the City is strictly a short- term custodian. Agency funds typically involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments. 130 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF AUBURN, WASHINGTON STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCYFUND FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008 1/1/2008 ADDITIONS DEDUCTIONS 12/31/2008 ASSETS: CASH AND CASH EQUIVALENTS $ 2,203,513 $ 3,874,859 $ 4,512,146 $ 1,566,226 OTHER CURRENT ASSETS 3,984 181,136 179,799 5,321 DUE FROM OTHER GOVERNMENTAL UNITS 394,508 2,613 394,508 2,613 TOTAL ASSETS $ 2,602,005 $ 4,058,608 $ 5,086,453 $ 1,574,160 LIABILITIES: DUE TO OTHER GOVERNMENTAL UNITS $ 2,602,005 $ 6,002,417 $ 7,030,262 $ 1,574,160 TOTAL LIABILITIES $ 2,602,005 $ 6,002,417 $ 7,030,262 $ 1,574,160 131 CITY OF AUBURN: 2008 CAFR FUND FINANCIAL STATEMENTS AND SCHEDULES CITY OF i ..RN 132 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION City of Auburn STATISTICAL SECTION December 31, 2008 Financial Trends Information Financial trends schedules are intended to provide users with information to assist them in understanding and assessing how the City's financial position has changed over time. Schedule 1 Net assets by component 134 Schedule 2 Changes in net assets 135 Schedule 3 Fund balances, governmental funds 136 Schedule 4 Changes in fund balances, governmental funds 137 Schedule 5 Tax revenues by source, governmental funds 138 Revenue Capacity Information The objective of providing revenue capacity information is to help users understand and assess the factors affecting the City's ability to generate its most significant local source revenues. Schedule 6 Assessed value by type 139 Schedule 7 Property tax data 140 Schedule 8 Property tax levies and collections 142 Schedule 9 Principal taxpayers-property taxes 143 Schedule 10 Retail tax collections by sector 144 Debt Capacity Information Debt capacity information is intended to assist users to understand and assess the City's current levels of outstanding debt and ability to issue additional debt in the future. Schedule 11 Ratios of outstanding debt by type 145 Schedule 12 Computation of legal debt margin 146 Schedule 13 Legal debt margin ratios 146 Schedule 14 Computation of net direct and estimated overlapping debt 147 Schedule 15 Ratio of net general bonded debt to assessed value 148 Schedule 16 Pledged revenue bond coverages 149 Demographic and Economic Information These schedules offer demographic and economic information to assist users in understanding certain aspects of the environment within which the City operates and to provide information that facilitates comparisons of financial statement information over time and across governmental units. Schedule 17 Population, income and housing trends 150 Schedule 18 Major employers 151 Operating Information These schedules contain service and infrastructure data to help users understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Schedule 19 Staffing levels by department 152 Schedule 20 Operating indicators by department 153 Schedule 21 Capital indicators by department 135 133 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION Governmental activities: Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net assets Business-type activities: Invested in capital assets, net of related debt Restricted Unrestricted Primary government: Invested in capital assets, net of related debt Restricted Unrestricted CITY OF AUBURN, WASHINGTON SCHEDULE1 NET ASSETS BY COMPONENTS LAST SIX FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) $ 167,057,262 $ 171,921,373 $ 194,121,232 $ 200,814,063 $ 212,611,232 $ 303,564,348 23,384,709 25,615,116 23,442,309 26,839,342 24,519,024 28,965,599 29,547,005 28,490,736 24,095,336 24,148,157 26,774,107 25,955,501 $ 219,988,976 $ 226,027,225 $ 241,658,877 $ 251,801,562 $ 263,904,363 $ 358,485,448 $ 104,513,351 $ 106,783,634 $ 115,137,273 $ 125,265,152 $ 130,515,163 $ 144,626,496 1,919,515 1,969,809 2,238,611 6,987,485 1,227,395 933,914 29,489,320 31,849,110 32,513,576 25,693,517 40,655,261 35,859,489 7 135,922,186 $ 140,602,553 $ 149,889,460 $ 157,946,154 $ 172,397,819 $ 181,419,899 $ 271,570,613 $ 278,705,007 $ 309,258,505 $ 326,079,215 $ 343,126,395 $ 448,190,844 25,304,224 27,584,925 25,680,920 33,826,827 25,746,419 29,899,513 59,036,325 60,339,846 56,608,912 49,841,674 67,429,368 61,814,990 7 355,911,162 $ 366,629,778 $ 391,548,337 $ 409,747,716 $ 436,302,182 $ 539,905,347 (1) Information available for 2003-2008 only due to new accounting and reporting standards beginning in 2003 with GASB Statement No. 34. 134 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE2 CHANGES IN NET ASSETS LAST SIX FISCAL YEARS t') (ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 2007 2008 Expenses Governmental activities: General government $ 5,968,367 $ 4,235,953 $ 5,284,440 $ 6,462,578 $ 7,196,492 $ 8,000,715 Public safety 23,045,701 26,076,348 28,048,087 29,804,864 33,396,630 28,217,844 Transportation 3,071,195 8,239,795 7,956,286 7,619,268 8,077,154 12,974,861 Physical environment 1,845,059 2,415,047 2,209,652 2,418,543 3,269,334 3,096,696 Culture and recreation 5,108,683 4,949,050 5,324,543 5,729,431 6,539,281 6,271,924 Economic environment 1,379,552 2,866,473 1,919,780 1,848,988 2,400,031 2,608,980 Health and human services 639,678 597,423 602,726 763,156 416,456 776,224 Interest on long-term debt 322,653 362,051 188,945 203,180 163,916 226,651 Total governmental activities expenses 41,380,888 49,742,140 51,534,459 54,850,008 61,459,294 62,173,895 Business-type activities: Water 6,868,291 6,913,709 6,962,997 7,647,935 7,873,191 8,565,231 Sewer 9,949,763 11,207,786 12,044,330 11,878,252 13,974,607 14,479,299 Storm drainage 2,955,179 3,169,350 3,354,899 3,852,335 4,224,881 5,226,823 Solid waste 8,553,801 8,645,372 9,121,727 9,936,222 10,368,901 10,781,426 Golf course 874,809 973,110 1,032,733 1,020,070 1,576,126 1,958,703 Non-major business-type activities 1,730,969 1,624,365 1,593,944 1,618,285 1,735,118 1,720,603 Total business-type activities expenses 30,932,812 32,533,692 34,110,630 35,953,099 39,752,824 42,732,085 Total primary government expenses $ 72,313,700 $ 82,275,832 $ 85,645,089 $ 90,803,107 $ 101,212,118 $ 104,905,980 Program revenues Governmental activities: Charges for services General Government $ 359,398 $ 561,013 $ 663,309 $ 820,585 $ 1,126,258 $ 2,316,125 Public Safety 1,354,900 1,767,687 2,109,284 2,514,867 3,100,973 2,674,777 Transportation 570,100 447,036 1,052,110 631,340 1,930,504 1,272,751 Physical Environment 237,772 365,681 244,766 436,503 576,539 257,780 Culture and Recreation 597,300 654,417 726,753 881,318 1,245,122 917,544 Economic Environment 2,088,948 3,097,230 3,169,262 2,590,763 2,070,534 1,638,579 Total charges for services 5,208,418 6,893,064 7,965,484 7,875,376 10,049,930 9,077,556 Operating grants and contributions 1,959,919 2,178,951 2,445,913 2,714,324 2,923,968 2,567,788 Capital grants and contributions 12,336,814 5,192,593 11,162,241 5,174,350 9,213,115 94,905,563 Total governmental activities program revenues 19,505,151 14,264,608 21,573,638 15,764,050 22,187,013 106,550,907 Business-type activities: Charges for services 31,233,491 31,747,066 32,658,440 36,226,324 38,784,127 39,883,386 Operating grants and contributions 33,384 33,384 54,999 47,961 43,263 55,024 Capital grants and contributions 6,985,742 4,351,278 7,857,856 3,988,202 12,479,500 10,670,660 Total business-type activities program revenues 38,252,617 36,131,728 40,571,295 40,262,487 51,306,890 50,609,070 Total primary government program revenues 57,757,768 50,396,336 62,144,933 56,026,537 73,493,903 157,159,977 Net (expense)/revenue Governmental activities (21,875,737) (35,477,532) (29,960,821) (39,085,958) (39,272,281) 44,377,012 Business-type activities Total primary government net expense 7,319,805 $ (14,555,932) $ 3,598,036 (31,879,496) $ 6,460,665 (23,500,156) $ 4,309,388 (34,776,570) $ 11,554,066 (27,718,215) $ 7,876,985 52,253,997 General revenues and other changes in net assets Governmental activities: Taxes: Property taxes $ 12,440,724 $ 12,598,954 $ 13,464,390 $ 15,186,456 $ 16,164,073 $ 10,804,825 Retail sales and use tax 13,970,383 15,429,527 16,333,169 17,784,374 18,958,484 17,620,661 Interfund utility taxes 1,696,389 1,714,102 1,792,136 1,983,652 2,095,901 2,507,213 Utility taxes 4,225,725 5,012,010 5,349,713 5,893,041 6,073,429 8,075,355 Excise taxes 3,401,498 3,384,515 4,633,037 4,568,549 3,862,692 3,477,517 Othertaxes 1,699,275 1,678,485 1,796,224 1,859,428 2,005,836 2,949,430 Investment earnings 769,239 708,259 1,465,102 2,454,694 2,993,174 1,589,837 Miscellaneous 96,168 192,469 564,416 69,037 (406,847) 2,751,495 Transfers (1,225,054) 627,000 194,286 (570,588) (371,660) 427,740 Total governmental activities 37,074,347 41,345,321 45,592,473 49,228,643 51,375,082 50,204,073 Business-type activities: Investment earnings 306,862 421,803 895,870 1,574,444 2,098,417 1,242,363 Miscellaneous 545,087 1,287,528 2,124,658 1,602,274 427,522 330,472 Transfers 1,225,054 (627,000) (194,286) 570,588 371,660 (427,740) Total business-type activities: Total primary government 2,077,003 $ 39,151,350 $ 1,082,331 42,427,652 $ 2,826,242 48,418,715 $ 3,747,306 52,975,949 $ 2,897,599 54,272,681 $ 1,145,095 51,349,168 Change in net assets Governmental activities $ 15,198,610 $ 5,867,789 $ 15,631,652 $ 10,142,685 $ 12,102,801 $ 94,581,085 Business-type activities 9,396,808 4,680,367 9,286,907 8,056,694 14,451,665 9,022,080 Total primary government $ 24,595,418 $ 10,548,156 $ 24,918,559 $ 18,199,379 $ 26,554,466 $ 103,603,165 (1) Information available for 2003-2008 only due to new accounting and reporting standards beginning in 2003 with GASB Statement No. 34. 135 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE3 FUND BALANCES, GOVERNMENTAL FUNDS LAST SIX FISCAL YEARS (1) (MODIFIED ACCRUAL BASIS OF ACCOUNTING) General Fund Unreserved $ 18,496,495 $ 20,702,250 $ 15,938,825 $ 14,448,328 $ 14,462,720 $ 13,071,091 Total general fund $ 18,496,495 $ 20,702,250 $ 15,938,825 $ 14,448,328 $ 14,462,720 $ 13,071,091 All other governmental funds Reserved $ 1,133,206 $ 1,270,769 $ 1,375,591 $ 1,376,798 $ 1,501,033 $ 1,507,565 Unreserved, reported in: Special revenue funds 9,776,846 10,612,069 8,967,039 10,738,431 13,124,661 14,463,370 Capital projects funds 13,930,030 13,852,020 13,111,273 14,727,423 9,873,331 12,990,032 Permanent funds 233,800 222,020 232,832 188,524 170,983 144,396 Total all other governmental funds $ 25,073,882 $ 25,956,878 $ 23,686,735 $ 27,031,176 $ 24,670,008 $ 29,105,363 (1) Information available for 2003-2008 only due to new accounting and reporting standards beginning 2003 with GASB Statement No. 34. 136 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE4 CHANGES IN FUND BALANCES, GOVERNMENT FUNDS LAST SIIX FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 2007 2008 Revenues Taxes $ 35,734,592 $ 38,258,799 $ 41,467,853 $ 44,867,161 $ 46,721,651 $ 43,781,530 Licenses and permits 1,255,582 2,248,576 2,227,963 1,683,320 1,606,950 1,110,722 Intergovernmental 6,756,672 4,697,501 6,826,222 6,831,240 5,766,484 8,369,888 Charges for services 2,924,962 3,393,178 3,939,610 3,659,773 5,017,224 3,784,544 Fines and forfeits 836,244 845,721 777,241 1,054,201 2,155,120 2,059,771 Special assessments 177,588 127,976 153,627 75,574 52,291 57,402 Investment earnings 300,213 336,442 1,175,258 1,477,368 2,456,291 1,363,375 Miscellaneous 1,102,089 2,452,468 1,247,252 1,865,079 877,473 1,296,349 Total revenues 49,087,942 52,360,661 57,815,026 61,513,716 64,653,484 61,823,581 Expenditures General government 5,737,882 5,472,630 5,308,663 6,062,037 6,834,084 7,719,205 Public safety 22,658,127 25,870,873 27,169,657 29,148,278 33,568,753 26,023,912 Transportation 4,327,863 5,152,344 10,337,587 9,403,147 7,385,929 8,910,967 Physical environment 1,911,616 2,304,248 2,191,796 2,435,201 3,352,466 3,490,636 Economic environment 1,316,782 2,796,902 1,877,675 1,928,978 2,142,282 2,530,827 Health and human services 639,678 597,423 602,726 763,156 416,456 776,224 Culture and recreation 4,453,173 4,806,217 4,815,643 5,016,554 6,571,275 6,296,743 Capital outlay (2) 3,357,827 12,100,966 507,484 3,822,895 7,346,316 4,778,334 Debt service: Principal 1,162,465 1,018,355 10,582,246 420,631 435,093 456,655 Interest/other 333,439 248,005 315,960 247,551 203,266 264,997 Total expenditures 45,898,852 60,367,963 63,709,437 59,248,428 68,255,920 61,248,500 Excess of revenues over (under) expenditures 3,189,090 (8,007,302) (5,894,411) 2,265,288 (3,602,436) 575,081 Other financing sources (uses) Transfers in 5,458,804 3,946,424 9,753,294 8,873,200 6,103,144 7,386,082 Transfers out (6,561,204) (3,319,424) (11,703,804) (9,554,816) (5,542,988) (7,993,842) Capital leases - 10,350,000 - - 695,504 17,728 Issuance of long-term debt - - - 142,313 - 360,000 Sales of capital assets 26,930 119,053 811,353 127,959 2,698,677 Total other financing sources (uses) Net change in fund balances (1,075,470) $ 2,113,620 11,096,053 $ 3,088,751 $ (1,139,157) (7,033,568) $ (411,344) 1,853,944 $ 1,255,660 (2,346,776) $ 2,468,645 3,043,726 Debt service as a percentage of noncapital expenditures 3.52% 2.62% 17.24% 1.21% 1.05% 1.28% (1) Information available for 2003-2008 only due to new accounting and reporting standards beginning 2003 with GASB Statement No. 34. (2) Capital outlay of $4,778,334 for 2008 is for Gov ernmental Funds only. Proprietary Funds captial out lay was $5,518,270 for total capital outlay of $10,296,604 as reported on the R econciliation of the Statemen t of Revenues, Expenditures, and Changes in Fund Balances of Governm ental Funds to the Statememt of Activities. 137 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE5 TAX REVENUES BY SOURCE, GOVERNMENT FUNDS LAST TEN FISCAL YEARS Fiscal Year Property Sales & Use Interfund Utility Utility Excise Other Total 1999 $ 9,224,087 $ 12,388,117 $ 913,629 $ 3,694,650 $ 603,461 $ 83,858 $ 26,907,802 2000 10,209,181 13,376,907 972,327 4,704,155 850,570 78,265 30,191,405 2001 11,016,263 13,467,184 1,016,366 6,143,060 1,172,417 44,660 32,859,950 2002 11,673,939 13,568,518 1,078,845 4,193,983 829,537 52,839 31,397,661 2003 12,396,502 13,970,383 1,696,389 4,225,725 3,401,498 44,095 35,734,592 2004 12,680,361 15,429,527 1,714,102 5,012,010 3,384,515 38,284 38,258,799 2005 13,319,740 16,333,169 1,792,136 5,349,713 4,633,037 40,058 41,467,853 2006 14,582,829 17,784,374 1,983,652 5,893,041 4,568,549 54,716 44,867,161 2007 15,666,016 18,958,484 2,095,901 6,073,429 3,862,692 65,129 46,721,651 2008 12,040,124 17,620,661 2,507,213 8,075,355 3,477,517 60,660 43,781,530 Change 1999-2008 30.5% 42.2% 174.4% 118.6% 476.3% -27.7% 62.7% Fiscal years 1999-2002 include tax revenues collected in the general and special revenue funds. Fiscal years 2003-2008 include all governmental funds. FIGURE 5: TAX REVENUES BY SOURCE 1998 - 2008 $50,000 $45,000 $40,000 $35,000 ■ Excise & other v^, ❑ Utility $30,000 ❑lnterfund utility u) $25,000 $20,000 a ■Sales&use $15,000 ❑ Property $10,000 $5,000 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 138 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE6 ASSESSED VALUE BY TYPE LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) State Total Total Fiscal Property Personal Land and Assessed Direct Year and Other Property Building Value Rate 1999 $ 84,456 $ 719,317 $ 2,200,628 $ 3,004,401 $ 3.04 2000 82,105 746,579 2,345,551 3,174,235 3.00 2001 104,117 751,709 2,510,519 3,366,345 2.99 2002 115,189 800,159 3,104,524 4,019,872 2.93 2003 140,531 787,022 3,344,271 4,271,824 2.93 2004 150,458 742,255 3,599,466 4,492,179 2.87 2005 137,611 704,061 3,834,629 4,676,301 2.88 2006 116,895 623,298 4,359,276 5,099,469 2.87 2007 101,419 607,875 5,055,734 5,765,028 2.73 2008 112,101 640,004 5,804,585 6,556,690 1.48 Source: King County Dept of Assessments & Pierce County Assessor-Treasurer FIGURE 6: ASSESSED VALUE BY TYPE 1999 - 2008 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 ❑State property $2,000,000 ❑ Personal property $1,000,000 ■Land and building $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 139 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE7 PROPERTY TAX DATA LAST TEN FISCAL YEARS Page 1 of 2 Item 1999 2000 2001 2002 Assessed and estimated actual values Estimated and actual value (in thousands) $ 3,004,401 $ 3,174,235 $ 3,366,345 $ 4,019,872 Assessed value (in thousands) $ 3,004,401 $ 3,174,235 $ 3,366,345 $ 4,019,872 Ratio of assessed to actual 100% 100% 100% 100% Property tax rates (1) Direct regular and special General fund Debt service funds Subtotal Overlapping regular and special (1) $ 3.04212 $ 3.00157 $ 2.98932 $ 2.93353 $ 3.04212 $ 3.00157 $ 2.98932 $ 2.93353 5.47999 $ 5.47810 1.55218 1.44949 3.14502 2.98946 0.19029 0.18956 0.24624 0.25000 0.55737 0.52581 Auburn School District $ 5.86647 $ 5.80795 $ King County 1.77385 1.68951 State of Washington 3.35872 3.30278 Port of Seattle 0.23898 0.21585 Emergency Medical Services 0.29000 0.27299 King County Library District 0.59120 0.58651 Valley Regional Fire Authority - - King County Flood Zone King County Ferry District - - Subtotal 12.1 1922 1 1 .87559 Total direct and overlapping $ 15.16134 $ 14.87716 $ Sources: (1) King County and Pierce County Deparments of Assessments; real and personal property has been assessed at 100% of the estimated actual value. (2) The decrease in property tax levy to $1.48 is due to the incorporation of the new Valley Regional Fire Authority effective 1/1/07. The VRFA will assess its own property tax levy in 2008, partially offsetting what was previously levied by the City. FIGURE 7A: TEN YEARS CITY PROPERTY TAX RATES 1999 - 2008 $3.50 0 'N $3.00 m a $2.50 Q 0 °o $2.00 0 a $1.50 $1.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 11.17109 10.88242 140 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION Page 2 of 2 2003 2004 2005 2006 2007 2008(2) $ 4,271,824 $ 4,492,179 $ 4,676,301 $ 5,099,469 $ 5,765,028 $ 6,556,690 $ 4,271,824 $ 4,492,179 $ 4,676,301 $ 5,099,469 $ 5,765,028 $ 6,556,690 100% 100% 100% 100% 100% 100% $ 2.92857 $ 2.87319 $ 2.88000 $ 2.86520 $ 2.73076 $ 1.48385 $ 2.92857 $ 2.87319 $ 2.88000 $ 2.86520 $ 2.73076 $ 1.48385 $ 5.35720 $ 5.34914 $ 5.37195 $ 5.37383 $ 4.94903 $ 4.40970 1.34948 1.43146 1.38229 1.32869 1.28956 1.20770 2.89680 2.75678 2.68951 2.49787 2.32535 2.13233 0.25895 0.25402 0.25321 0.23330 0.23158 0.22359 0.24143 0.23717 0.23182 0.21982 0.20621 0.30000 0.54568 0.53653 0.53255 0.53424 0.50027 0.45336 - - - - - 1.00000 0.10000 - - - - - 0.05500 10.64954 10.56510 10.46133 10.18775 9.50200 9.88168 $ 13.57811 $ 13.43829 $ 13.34133 $ 13.05295 $ 12.23276 $ 11.36553 $14.00 $12.00 N $10.00 U) U) $8.00 o o a $6.00 a~ $4.00 $2.00 $0.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 ■ King County Ferry District ■ King County Flood Zone ❑ Valley Regional Fire Authority ■ King County Library District ❑ Emergency Medical Services ■ PortofSeattle ❑ State of Washington ❑ King County ■ Auburn School District 141 FIGURE 713: PROPERTY TAX RATES Last Ten Fiscal Years CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE8 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Total Tax Collected Within the Collections Fiscal Levy for Fiscal Year of the Levy in Subsequent Total Collections to Date Current Year Year Fiscal Year Amount % of Levy Years Amount % of Levy Levy Balance King County: 1999 $ 9,653,173 $ 9,312,513 96.5% $ 340,660 $ 9,653,173 100.000% $ 2000 10,105,107 10,022,441 99.2% 82,666 10,105,107 100.000% 2001 11,134,267 10,814,089 97.1% 319,335 11,133,424 99.992% 843 2002 11,530,359 11,261,600 97.7% 256,026 11,517,626 99.890% 12,733 2003 12,082,591 11,765,654 97.4% 311,485 12,077,139 99.955% 5,452 2004 12,212,321 12,031,253 98.5% 174,705 12,205,958 99.948% 6,363 2005 12,639,642 12,393,241 98.1% 236,853 12,630,094 99.924% 9,548 2006 13,399,943 13,164,248 98.2% 208,684 13,372,932 99.798% 27,011 2007 13,846,324 13,605,301 98.3% 167,168 13,772,469 99.467% 73,855 2008 9,554,019 9,406,398 98.5% - 9,406,398 98.455% 147,621 $ 283,426 Pierce County: 1999 $ - $ $ $ - $ - 0.000% $ - 2000 60,601 59,086 97.5% 1,515 60,601 100.000% 2001 114,323 105,707 92.5% 8,616 114,323 100.000% 2002 267,001 258,385 96.8% 8,616 267,001 100.000% 2003 435,886 423,834 97.2% 12,052 435,886 100.000% 2004 579,828 566,356 97.7% 13,472 579,828 100.000% 2005 783,135 769,223 98.2% 13,912 783,135 100.000% - 2006 1,242,039 1,220,642 98.3% 19,454 1,240,096 99.844% 1,943 2007 1,852,229 1,816,706 98.1% 27,546 1,844,252 99.569% 7,977 2008 1,227,268 1,177,665 96.0% - 1,177,665 95.958% 49,603 $ 59,523 Total current levy balance $ 342,950 Source: King County Finance and Business Operations Division Pierce County Budget and Finance Department FIGURE 8: TEN YEARS COLLECTION OF LEVIED PROPERTY TAXES Last Ten Fiscal Years 0 Collection percentage 100.0% within the fiscal 99.0% year of the levy 98.0% (Total collection 970% percentage 96.0% 95.0 94.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 142 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE9a PRINCIPAL TAXPAYERS-PROPERTY TAXES CURRENT YEAR AND NINE YEARS AGO 2008 1999 axpayer Assessed Value ank Percentage of Total City Taxable Assessed Value Assessed Value ank Percentage of Total City Taxable Assessed Value Boeing Company $ 457,846,367 1 6.98% $ 742,858,235 1 24.73% Glimcher Realty Trust (Supermall) 124,696,902 2 1.90% 135,999,497 2 4.53% Safeway 121,011,972 3 1.85% - EPropertyTax Inc. 74,665,100 4 1.14% - Puget Sound Energy 58,958,636 5 0.90% 26,670,286 4 0.89% Muckleshoot Indian Tribe 57,234,500 6 0.87% - Investco Realty Advisors 53,946,000 7 0.82% - Universal Health 47,220,355 8 0.72% 26,638,455 5 0.89% Qwest Corporation 24,144,890 9 0.37% 19,830,156 8 0.66% Roundup Co. (Fred Meyer) 19,217,762 10 0.29% 12,449,446 10 0.41% La Terra Limited Partnership - 44,380,100 3 1.48% Quadrant Corporation - 25,024,000 6 0.83% Fritz Companies - 21,764,700 7 0.72% West Valley 29 Partners - 12,480,126 9 0.42% Source: King County and Pierce County Departments of Assessments Total assessed value for 2008 is $6,556,690,000 Total assessed value for 1999 is $3,004,401,000 FIGURE 9a-1: TOP TAXPAYER ASSESSED VALUE AS A PERCENTAGE OF TOTAL ASSESSED VALUE Current Year and Nine Years Ago 40% 30% 20% 10% 0% 1999 2008 FIGURE 9a-2: TOP 10 TAXPAYERS ASSESSED VALUE AS A PERCENTAGE OF TOTAL ASSESSED VALUE Current Year and Nine Years Ago 40% 30% 20% 10% 0% 1999 2008 CITY OFAUBURN, WASHINGTON SCHEDULE9b PRINCIPAL TAXPAYERS-SALES TAXES CURRENT YEAR AND NINE YEARS AGO 2008 1999 Percentage Percentage Sales of Total City Sales of Total City Tax Sales Taxes Tax Sales Taxes Received Sector (1) Rank Received Received Sector (1) Rank Received $ 401,376 Automotive 1 2.6% 388,323 Distribution 2 2.5% NOT AVAILABLE 340,904 Automotive 3 2.2% 332,807 General retail 4 2.1% 296,036 General retail 5 1.9% 281,174 General retail 6 1.8% 269,511 Automotive 7 1.7% 253,829 Manufacturing 8 1.6% 236,397 General retail 9 1.5% 207.144 General retail 10 1.3% Source: Washington State Department of Revenue (1) It is illegal to disclose specific taxpayer sales tax information, so the above information is being provided without identification 143 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE10 RETAIL TAX COLLECTIONS BY SECTOR LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 RETAIL TRADE SECTOR Automotive/gas $ 2,429 $ 2,755 $ 2,607 $ 2,827 $ 2,862 $ 2,893 $ 3,326 $ 3,428 $ 3,643 $ 3,255 Furniture 300 336 306 276 318 438 218 263 268 241 Electronics & appliances - - - - - - 451 288 262 242 Building materials 201 202 314 371 412 479 488 594 615 521 Food stores 532 542 538 526 401 395 358 346 378 360 Health & personal care - - - - - - 120 130 143 152 Apparel 609 600 624 646 649 765 836 874 899 873 General merchandise 420 373 468 646 909 990 970 941 974 872 Food/Drink 502 542 566 560 596 651 - - - - Misc retail trade 886 1,205 1,228 1,017 864 905 724 939 1,334 1,234 $ 5,879 $ 6,555 $ 6,651 $ 6,869 $ 7,011 $ 7,515 $ 7,491 $ 7,803 $ 8,516 $ 7,750 SERVICE SECTOR Information $ - $ - $ - $ - $ - $ - $ 506 $ 507 $ 531 $ 489 Finance & insurance - - - - - - 86 84 85 85 Real estate, rental, leasaing - - - - - - 294 311 330 394 Professional, scientific, technical - - - - - - 119 116 162 146 Administrative, supply & remediation Services - - - - - - 197 195 301 261 Educational - - - - - - 81 81 87 91 Healthcare & social services - - - - - - 45 33 88 98 Arts & entertainment - - - - - - 104 126 172 171 Accomodation & food service - - - - - - 764 833 870 915 Other services 477 492 502 457 $ - $ - $ - $ - $ - $ - $ 2,673 $ 2,779 $ 3,128 $ 3,107 OTHER SECTORS: Services * $ 1,206 $ 1,248 $ 1,162 $ 1,154 $ 1,182 $ 1,152 $ - $ - $ - $ - Construction 1,238 1,374 1,472 1,448 1,514 2,402 2,008 2,453 2,240 1,647 Manufacturing 357 288 368 607 882 793 414 486 625 643 Transportation 401 433 459 426 400 401 31 26 22 76 Wholesaling 2,245 2,166 2,184 1,676 1,674 1,795 2,313 2,571 2,943 2,306 Banking 101 70 89 110 98 127 - - - - Other business 75 94 102 126 121 108 73 72 143 72 Subtotal - other sectors $ 5,623 $ 5,673 $ 5,836 $ 5,547 $ 5,871 $ 6,779 $ 4,839 $ 5,607 $ 5,973 $ 4,744 GRAND TOTAL $ 11 502 $ 12 228 $ 12 487 $ 12 416 $ 12 882 $ 14 294 $ 15 003 $ 16 189 $ 17 617 $ 15 601 OVERLAPPING SALES TAX RATES , , , , , , , , , , Basic sales tax rates City of Auburn 0.8415% 0.8415% 0.8415% 0.8415% 0.8415% 0.8415% 0.8415% 0.8415% 0.8415% 0.8415% Washington State 6.5000% 6.5000% 6.5000% 6.5000% 6.5000% 6.5000% 6.5000% 6.5000% 6.5000% 6.5000% King County 0.1585% 0.1585% 0.1585% 0.1585% 0.1585% 0.1585% 0.1585% 0.1585% 0.2585% 0.3585% Regional Transit Authority 0.4000% 0.4000% 0.4000% 0.4000% 0.4000% 0.4000% 0.4000% 0.4000% 0.4000% 0.4000% Metro 0.6000% 0.6000% 0.8000% 0.8000% 0.8000% 0.8000% 0.8000% 0.8000% 0.8000% 0.8000% Criminal Justice 0.1000% 0.1000% 0.1000% 0.1000% 0.1000% 0.1000% 0.1000% 0.1000% 0.1000% 0.1000% Soecial sales tax rates Restaurants-for stadium funding 0.5000% 0.5000% 0.5000% 0.5000% 0.5000% 0.5000% 0.5000% 0.5000% 0.5000% 0.5000% Motor vehicles-for multimodal transportation - - - - 0.3000% 0.3000% 0.3000% 0.3000% 0.3000% 0.3000% (1) Starting in March of 2005, the State of Washington switched from classifying retail sales using the Standard Industrial Classification (SIC) code to the North American Industry Classification System (NAICS). As a result, specific trend comparisons of 2005 results to prior year may not be meaningful. 144 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE11 RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Govrnmental Activities Business-type Activities General Special Public Works Total Percentage Fiscal Obligation Assessment Capital Revenue Trust Fund Primary of Personal Per Year Bonds Bonds Leases Bonds Loans Government Income (1) Capita 1999 $ 5,545,000 $ 541,077 $ - $ 12,825,000 $ - $ 18,911,077 2.94% $ 485 2000 7,956,600 1,013,904 - 11,990,000 - 20,960,504 3.05% 498.53 2001 7,700,000 738,904 - 11,110,000 7,367,157 26,916,061 3.85% 611.94 2002 7,402,000 548,904 1,367,108 10,190,000 7,826,039 27,334,051 3.84% 611.71 2003 7,088,000 347,904 689,643 9,230,000 7,428,695 24,784,242 3.27% 546.45 2004 6,754,000 228,354 10,322,787 8,220,000 7,066,042 32,591,183 4.16% 706.43 2005 6,478,000 132,354 - 7,020,000 8,679,509 22,309,863 2.68% 469.98 2006 11,210,000 36,827 - 5,905,000 9,853,410 27,005,237 3.04% 551.63 2007 10,650,000 36,827 663,553 4,730,000 10,149,419 26,229,799 2.77% 519.71 2008 10,053,000 36,827 646,799 3,495,000 9,730,324 23,961,950 1.82% 357.61 Source: City of Auburn, Finance Department (1) Personal income data provided by Hebert Research for 2000, 2004 and 2005 only, other years are city estimates FIGURE 11: PER CAPITA DEBT Last Ten Fiscal Years $1,000 $750 $500 $250 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 145 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE12 COMPUTATION OF LEGAL DEBT MARGIN AS OF DECEMBER 31, 2008 General Capacity Special Purpose Capacity Parks and Utility Total Councilmanic Excess Levy Open Spaces Purpose Capacity December 31, 2008 - Total Assessed Value: $8,719,721,892 2.5% of assessed value $ - $ 217,993,047 $ 217,993,047 $ 217,993,047 $ 653,979,142 1.5% of assessed value 130,795,828 (130,795,828) - - - Statutory debt limit 130,795,828 87,197,219 217,993,047 217,993,047 653,979,142 Debt outstanding 10,770,955 - - - 10,770,955 Less redemption fund assets: Available to pay principal 3,125,168 3,125,168 Plus liabilities: Payables 1,610,708 1,610,708 Vacation/sick leave 1,472,857 1,472,857 Net debt outstanding 10,729,352 - - - 10,729,352 Remaining debt capacity $ 120,066,476 $ 87,197,219 $ 217,993,047 $ 217,993,047 $ 643,249,790 CITY OF AUBURN, WASHINGTON SCHEDULE13 LEGAL DEBT MARGIN RATIOS LAST TEN FISCAL YEARS (EXPRESSED IN THOUSANDS) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Debt Limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit $ 238,068 $ 252,476 $ 252,476 $ 294,669 $ 336,913 $ 350,782 $ 350,782 $ 432,377 $ 489,472 $ 653,979 468 4,866 (4,871) (1,610) 3,576 17,055 17,055 11,352 10,757 10,771 0.20% 1.93% -1.93% -0.55% 1.06% 4.86% 4.86% 2.63% 2.20% 1.65% 146 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE 14 COMPUTATION OF NET DIRECT AND ESTIMATED OVERLAPPING DEBT AS OF DECEMBER 31, 2008 Net Debt Percent Bonded Amount Outstanding Applicable (3) Applicable Net direct debt: Net direct debt - City of Auburn Estimated net overlapping debt: (2) King County Port of Seattle School District No. 210 School District No. 408 School District No. 415 Rural Library District Pierce County Total estimated net overlapping debt $ 10,053,000 $ 1,040,881,000 1.68% $ 17,486,801 378,065,000 1.68% 6,351,492 178,635,000 0.09% 160,772 108,255,000 63.56% 68,806,878 225,895,000 1.48% 3,343,246 66,359,355 2.75% 1,824,882 125,756,218 0.93% 1,169,533 99,143,603 Sources: (1) City of Auburn finance department; includes both bonded and non bonded general long-term debt (2) Overlapping governments (3) King County Assessors office, except for Pierce Co. 147 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE15 RATIOS OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND GROSS BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS Ratio of Net Debt Net Bonded Gross Assessed Gross Service Bonded Debt to Bonded Fiscal Value (1) Bonded Amount (3) Debt Assessed Debt per Year Population (Thousands) Debt (2) Available (Thousands) Value Capita 1999 38,980 $ 3,201,769 $ 3,890,000 $ 47,274 $ 3,843 0.12% $ 100 2000 42,045 3,392,920 7,956,600 1,807,092 6,150 0.18% 189 2001 43,985 3,752,065 7,700,000 1,923,800 5,776 0.15% 175 2002 44,685 3,928,917 8,769,108 1,843,957 6,925 0.18% 196 2003 45,546 4,492,179 7,088,000 66,779 7,021 0.16% 156 2004 46,135 4,677,093 6,754,000 159,042 6,595 0.14% 146 2005 47,470 5,099,469 6,478,000 218,498 6,260 0.12% 136 2006 48,955 5,765,028 11,210,000 144,449 11,066 0.19% 229 2007 50,470 5,765,028 10,650,000 181,666 10,468 0.18% 211 2008 67,005 6,556,690 10,053,000 171,565 9,881 0.15% 150 Notes: (1) From Figure 6 (2) Amount does not include special assessment and revenue bond debt. (3) Fund balances from debt service funds. FIGURE 15: BONDED DEBT RATIOS Last Ten Fiscal Years 0.0100 $250 0 0090 . 0 0080 $200 . 0 0070 . " 0 0060 -A $150 m . 0 0050 L a . 0 0040 $100 . 0 0 0030 . 0.0020 $50 0 0010 . 0 $ 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year f Debt/AV A Debt/Pop 148 CITY OF AUBURN: 2008 CAM STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE 16 PLEDGED REVENUE BOND COVERAGES LAST TEN FISCAL YEARS Direct(2) Debt Service Requirements Gross (1) Operating Net Revenue Times Year Revenue Expense Available Principal Interest Total Coverage 1999 $ 15,760,351 $ 11,848,912 $ 3,911,439 $ 835,000 $ 650,945 $ 1,485,945 2.63 2000 17,749,951 11,961,126 5,788,825 880,000 614,245 1,494,245 3.87 2001 18,638,847 12,866,310 5,772,537 1,102,368 579,260 1,681,628 3.43 2002 19,928,128 13,917,916 6,010,212 1,142,368 707,581 1,849,949 3.25 2003 21,243,060 15,611,753 5,631,307 1,407,343 603,357 2,010,700 2.80 2004 21,958,359 16,834,837 5,123,522 1,633,533 539,754 2,173,287 2.36 2005 24,562,487 18,078,747 6,483,740 1,800,568 417,834 2,218,402 2.92 2006 27,087,351 19,615,315 7,472,036 1,718,412 333,016 2,051,428 3.64 2007 27,492,779 21,237,294 6,255,485 1,914,523 281,065 2,195,588 2.85 2008 27,665,498 23,149,802 4,515,696 1,942,938 279,765 2,222,703 2.03 Source: City of Auburn, Finance Department (1) Includes water, sewer & storm drainage operating, interest and other revenues. (2) Includes water, sewer & storm drainage operating expenses less depreciation. FIGURE 16: UTILITY BOND COVERAGES Last Ten Fiscal Years $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YEAR Net revenue available f Debt service requirements 149 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE17 POPULATION, INCOME AND HOUSING TRENDS LAST TEN FISCAL YEARS School enrollment (1) 13,063 13,079 13,222 13,504 13,461 13,838 13,760 14,367 14,559 14,716 Rate of unemployment (2) 3.8% 4.0% 5.1% 6.1% 6.2% 5.1% 4.6% 4.1% 3.7% 4.2% Population(') 38,980 43,047 43,985 45,010 45,355 46,135 47,470 48,955 50,470 67,005 Personal income (thousands ofdollars) $794,529 $913,500 $974,196 $1,040,462 $1,094,254 $1,161,714 $1,247,566 $1,342,818 $1,444,871 $2,024,087 Per capita personal income $20,383 $21,221 $22,148 $23,116 $24,126 $25,181 $26,281 $27,430 $28,628 $30,208 Housing units (5) One unit 7,377 8,125 8,247 8,671 8,745 8,990 9,105 9,402 9,625 14,186 Two or more 7,217 7,520 7,667 7,452 7,790 8,078 8,655 8,943 9,623 10,375 Mobile home or special 2,204 2,212 2,302 2,144 2,474 2,421 2,346 2,407 2,382 2,761 Total housing units 16,798 17,857 18,216 18,267 19,009 19,489 20,106 20,752 21,630 27,322 Sources: (1) Auburn School District No. 408 (2) WA State Employment Security Department - average King County rate (3) WA State Office of Financial Management (4) ESRI report data, 2000 and 2008 only, other years are City estimates (5) Office of Financial Management 80,000-- 70 000 FIGURE 17: POPULATION AND HOUSING TRENDS Last Ten Fiscal Years , 60 000- , 50,000 40 000 , 30 000- , 20 000 , 10 000 1 0- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 ( Population 6 Total housing units 150 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE18 MAJOR EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2008 1999 Percentage Percentage of Total City of Total City Employer Product/service Employees Rank Employment Employees Rank Employment The Boeing Company Aerospace 5,000 1 20.1% 9,689 1 50.5% Muckleshoot Tribal Enterprises Gaming 2,200 2 8.8% 900 3 4.7% Auburn School District Education 1,800 3 7.2% 1,453 2 7.6% Super Mall Retail 1,700 4 6.8% Green River Community College Education 1,067 5 4.3% 650 4 3.4% Safeway GrocertyRetail/Distribution 900 6 3.6% Auburn Regional Medical Center Hospital 805 7 3.2% 575 6 3.0% Emerald Downs Racetrack Horse racing 678 8 2.7% 600 5 - Social Security Administration Gov't/ public offices 600 9 2.4% 536 7 2.8% Zones, Inc. Technology reseller 500 10 2.0% Federal Aviation Administration Federal government 500 10 2.0% 500 8 2.6% General Services Administration Federal government 500 10 2.0% 325 10 1.7% City of Auburn City government 385 9 2.0% TOTALS 16 250 65 3% 15 613 78 3% Sources: WA Employment Security Department , . , . City of Auburn Economic Development Department FIGURE 18A: AUBURN EMPLOYMENT BASE PERCENTAGE OF TOP EMPLOYER COMPARED TO ALL EMPLOYERS Last Ten Fiscal Years 100% 80% 60% ■ Top employer 40% ❑ All employers 20% 0% 1999 2008 FIGURE 1813: AUBURN EMPLOYMENT BASE PERCENTAGE OF TOP 10 EMPLOYERS COMPARED TO ALL EMPLOYERS Last Ten Fiscal Years 100% 80% ■Top 10 employers 60% DAII employers 40% 20% 0% , 1999 2008 151 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE 19 STAFFING LEVELS BY DEPARTMENT LAST TEN FISCAL YEARS Department 1999 2000 2001 2002 2003 2004 2005 2006 2007 200 Mayor 3 3 3 3 4 4 8 10 11 12 Human resources 6 6 6 7 7 7 7 15 17 18 Finance 25 25 26 27 28 28 21 23 24 25 Municipal court 9 10 11 12 12 13 14 15 17 21 Legal 11 13 13 13 13 13 13 13 14 16 Planning 12 12 12 13 31 31 32 25 29 34 Police 107 110 112 114 115 115 117 118 121 152 Fire (1) 76 78 78 81 81 81 82 82 - - Public works 58 62 62 62 48 49 48 48 54 63 Parks & recreation 34 34 34 35 37 37 36 36 38 40 Street 13 13 13 13 13 13 11 11 15 14 Water 13 14 14 14 16 16 16 16 19 20 Sewer 6 7 7 7 7 6 8 8 11 11 Storm utility 7 7 7 7 7 7 9 9 12 16 Solid waste 6 6 6 6 2 2 2 2 2 2 Airport 4 3 3 3 3 3 - - - - Cemetery 7 7 7 7 7 7 6 6 7 7 Golf course 6 6 6 6 6 6 6 6 9 9 Equipment rental 8 8 8 8 10 10 10 9 9 10 Information services - - - - - - 10 11 15 18 Source: City of Auburn Finance Department (1) No data is presented for Fire employees for 2007 and thereafter due to incorporation of Fire department into a separate legal entity effective 1/1/07. FIGURE 19: STAFFING LEVELS BY TYPE OF SERVICE Last Ten Fiscal Years 160 140 ■ 1999 120 ❑ 2000 a~ ❑ 2001 o 100 ■ 2002 p t ❑ 2003 w o 80 ■ 2004 ❑ 2005 60 ■ 2006 z ■ 2007 40 ❑ 2008 20 ~~cP 5 c Qo ~y Q~0 ~ ~ ~ ~C s~° 4t~ a ~y P ~\`o Qm Q° 152 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE 20 OPERATING INDICATORS BY DEPARTMENT LAST TEN FISCAL YEARS Planning Commercial permits Commercial construction value ($1,000's) Residential permits Residential construction value ($1,000's) Police Crimes: Arson Assault Burglary DUI Homicide Narcotics Rape Robbery Theft Theft- motor vehicle Traffic: Non-criminal Parking Fire rsr Type of response: Building Non-building Alarm systems Service Other First Aid Parks and Recreation Athletic teams Recreation activities Golf course rounds Senior center visits (2) Cultural activities Museum audience served (3)(4) Cemetery burials 432 471 431 434 337 217 240 $93,971 $75,011 $74,924 $56,257 $50,269 $77,121 $71,047 361 583 422 421 583 766 604 $22,961 $65,077 $65,326 $55,108 $89,415 $155,551 $112,125 28 31 35 46 45 43 33 125 139 143 169 145 135 168 581 541 686 578 596 861 623 198 150 204 170 189 240 218 2 - 3 2 1 1 426 628 606 499 506 399 472 19 28 19 33 32 24 13 82 65 69 68 69 91 85 2,412 2,273 2,300 2,243 2,082 2,344 2,509 672 594 692 875 816 802 869 7,599 7,690 9,072 9,643 9,946 7,962 6,850 1,555 1,802 1,803 2,188 1,821 1,827 2,140 81 92 103 101 114 107 94 184 275 236 260 305 249 198 515 496 562 511 486 497 474 390 352 387 370 465 493 493 537 673 747 819 917 940 870 4,510 4,815 4,902 5,177 5,155 5,562 5,679 512 455 464 467 523 507 445 1,301 1,551 1,483 1,527 1,708 1,896 2,086 55,672 56,527 53,864 53,967 41,753 45,336 47,501 29,778 31,949 29,572 32,121 31,418 32,103 35,308 118 117 56 88 55 56 56 9,000 11,000 11,000 8,994 9,417 10,274 9,340 291 300 301 277 272 271 277 248 214 95 $63,658 $63,658 $22,887 485 293 165 $61,872 $61,872 $27,048 36 30 24 158 143 154 686 590 630 158 145 194 1 - 493 368 439 24 12 14 122 92 102 2,216 1,962 2,343 642 672 639 4,978 6,865 6,794 3,965 4,802 3,740 98 - - 238 524 618 979 5,616 459 479 416 2,069 2,719 2,056 43,454 50,500 54,993 35,381 34,427 36,805 58 84 84 9,400 12,090 11,921 277 245 289 Sources: Various city departments (1) 2003 - Portion of golf course closed for two months (2) 2001 - Senior center had reduced programs and 16 additional closure dates to facilitate move to new facility (3) 2002 - Museum actual service has increased, decline in count due to change in calculation method (4) 1998 & 2001 - Museum closed for renovations for several months (5) 2007 - Effective 1/1/2007 Valley Regional Fire Authority formed replacing the Fire Departments of Auburn, Pacific and Algona. 153 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION CITY OF AUBURN, WASHINGTON SCHEDULE 21 CAPITAL ASSET INDICATORS BY DEPARTMENT LAST TEN FISCAL YEARS General City Total area (square miles) 21.0 21.0 22.6 22.7 22.8 22.8 23.3 23.4 23.4 30.0 Public Works Miles of streets 155 155 160 166 180 180 180 180 186 272 Number of streetlights 2,690 2,790 2,790 2,934 2,934 3,355 3,410 3,575 3,602 5,074 Number of traffic signals n/a n/a n/a n/a n/a 66 72 72 72 83 Utilities Number of services 11,330 11,546 11,645 12,014 12,077 12,144 12,833 12,633 12,954 13,050 Miles of water mains 221 220 243 247 252 254 278 279 287 283 Miles of sanitary sewers 156 156 166 149 176 177 177 177 182 205 Miles of storm sewers n/a n/a n/a n/a n/a 185 190 195 197 197 Number of fire hydrants n/a n/a n/a n/a n/a 2,270 2,285 2,300 2,369 2,969 Public Safety Number of fire stations 3 3 3 3 3 3 3 3 - - Number of police stations 2 2 3 3 2 2 2 2 2 2 Parks and Recreation Total park acreage 429 478 547 533 535 592 596 596 596 598 Number of softball/baseball fields n/a n/a n/a n/a n/a 19 19 19 19 19 Number of soccer/football fields n/a n/a n/a n/a n/a 3 3 3 3 3 Number of playgrounds n/a n/a n/a n/a n/a 25 29 30 30 32 Sources: Various city departments (1) Effective 1/1/2007 Valley Regional Fire Authority formed replacing th e Fire Depart ments of Aub urn, Pacific an d Algona. 154 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION Prepared by: Shelley Coleman Finance Director Maggie Coleman Assistant Finance Director Lanny Petitjean Senior Accountant Teri Ashton Accountant Teresa Mattson Utility & Accounting Services Manager Karen Jester Financial Planning Manager Michelle Surdez Senior Accountant Consuelo Rogel Financial Analyst Kristen Hollis Finance Secretary 155 CITY OF AUBURN: 2008 CAFR STATISTICAL SECTION I1~V ~.ITY OF IL Y 156