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HomeMy WebLinkAbout2020 CDACHUBBUCK The urban renewal agency for the City of Chubbuck, Idaho CHUBBUCK DEVELOPMENT AUTHORITY A COMPONENT UNIT OF THE CITY OF CHUBBUCK, IDAHO AUDITED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2020 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2019 CHUBBUCK DEVELOPMENT AUTHORITY TABLE OF CONTENTS Page Title Page 1 Table of Contents 2 AUDITOR'S REPORTS 3-5 MANAGEMENT'S DISCUSSION AND ANALYSIS 6--9 FINANCIAL STATEMENTS Government Wide Statements of net position 10 Statements of activities 11 Governmental Funds Balance sheets 12 Statements of revenues, expenditures, and changes in fund balances 13 NOTES TO FINANCIAL STATEMENTS 14-19 REQUIRED SUPPLEMENTARY INFORMATION 20 Schedule of revenues and expenditures - budget to actual - General Fund 21 Schedule of revenues and expenditures - budget to actual - Chubbuck Urban District Fund 22 Schedule of revenues and expenditures - budget to actual - Pine Rfdge Urban District Fund 23 Notes to the statement of revenues and expenditures - budget to actual 24 REPORTS REQUIRED BY GENERALLY ACCEPTED GOVERNMENT AUDITING STANDARDS Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 25-26 7 Deaton & Company, Chartered Certified Public Accountants 215 North 9th, Suite A �sy Pocatello, Idaho 83201-5278 (208),Z32-5825 Members of Idaho Society o[Cerlified Puhlic Accountanis Members of American Institute or Certified Public Accounta«ts INDEPENDENT AUDITOR'S REPORT To the Board of Commissioners Chubbuck Development Authority Chubbuck, Idaho Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and each major fund of the Chubbuck Development Authority, a component unit of the City of Chubbuck, Idaho, as of and for the year ended September 30, 2020, and the related notes to the financial statements, which collectively comprise the Authority's basic financial statements as fisted in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund information of the Chubbuck Development Authority, as of September 30, 2020, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management discussion and analysis and budgetary comparison information on pages 6 - 9 and 20 - 22, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information We have also previously audited, in accordance with auditing standards generally accepted in the United States of America, the Authority's basic financial statements for the year ended September 30, 2019, which are shown as summarized comparative totals and not as fully disclosed comparative financials with the accompanying financial statements and we expressed unmodified opinions on the respective financial statements of the governmental activities, and the aggregate remaining fund information. That audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Chubbuck Development Authority's basic financial statements as a whole. The summarized comparative information is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 6, 2021, on our consideration of the Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Chubbuck Development Authority's internal control over financial reporting and compliance. Chubbuck, Idaho January 6, 2021 Chubbuck Development Authority Management's Discussion and Analysis For the Year Ended September 30, 2020 As management of the Chubbuck Development Authority, we offer readers of the Chubbuck Development Authority's Financial statements this narrative overview and analysis of the financial activities for the fiscal year ended September 30, 2020. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our financial statements and notes to the financial statements. Financial Highlights • The assets and deferred outflows of the Chuhbuck Development Authority exceed its liabilities and deferred inflows at the close of the most recent fiscal year by $3,968,875 (net position). • The Authority's net position increased from 2019 to 2020 by $1,843,358. • At the end of the current fiscal year, fund balances for the Authority were $2,710,722 or 59 percent of total fund expenditures. • During the current fiscal year, the Authority's liabilities decreased by $411,425. • The decrease was primarily due to the payment on long-term note and reduction of accounts payable. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Authority's basic financial statements. The Authority's basic financial statements are comprised of three components: 1) governmental -wide financial statements, 2) Urban Renewal District financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the Chubbuck Development Authority's finances, in a manner similar to a private -sector business. The Statement of Net Position presents information on all of the Chubbuck Development Authority's assets, deferred outflows and liabilities with deferred inflows, with the difference between each reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Authority's is improving or deteriorating. The Statement of Activities presents information showing how the Chubbuck Development Authority's net position changed during the fiscal year. All changes in the assets are reported when the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in the future fiscal periods (e.g. uncollected taxes). The government -wide financial statements distinguish functions of the Chubbuck Development Authority that are principally supported by taxes. The governmental activities of the Chubbuck Development Authority consist of infrastructural renewal, development, and administration. Fund Financial Statements, A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated from specific activities or objectives. The Chubbuck Development Authority, like other Development Authorities, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. The funds of the Development Authority can be divided into three categories: General funds, Chubbuck Urban Renewal District funds, and Pine Midge Mall Urban Renewal District Funds. The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. The Chubbuck Development Authority adopts an annual appropriated budget for its funds. General Funds. General funds are used to account for daily administration and general activities of the Authority. Chubbuck Urban Renewal District Fund and Pine Ridge Mall Urban Renewal District Fund. The Chubbuck Development Authority maintains two different types of proprietary funds. These funds are used to maintain control over resources for each district. The funds help ensure that the resources are used as legally required. 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. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Authority's budgeted expense and revenues versus actual expenses and revenues. Government -wide Financial Analysis. Net position may serve, over time, as a useful indicator of the Authority's financial position. In the case of the Authority, assets exceeded liabilities by $3,968,875 as of September 30, 2020. This was an increase from 2019 by 87%. Below is a summary of the Chubbuck Development Authority's Net Position statement. Chubbuck Development Authority's Net Position ASSETS current assets Noncurrent assets LIABILITIES Current liabilities Noncurrent liabilities NET POSITION Restricted for districts Unrestricted Governmental Activities 2020 2019 2,808,716 1,738,986 1,622,524 1,260,321 4,431,240 2,999,307 241,132 516,940 221,233 356.850 462,365 873,790 2,416,951 1,270,859 1,551,924 854,658 3 3,968,875 $2,125,517 Governmental activities. Governmental activities increased net position by $1,843,358. Below is summary of the Cbubbuck Development Authority's Changes in Net Position. Chubbuck Development Authority's Changes in Net Position NET (EXPENSES)lREVENUE (882,853) (1,770,409) GENERALREVENUE Property taxes Governmental Activities 2,786,429 2020 2019 EXPENSES Gain on sale of asset - General government 6,348 165 Chubbuck Urban Renewal District 899,258 1,587,996 Pine Ridge Mall Urban Renewal District 47,247 214,804 952,853 1,802.966 REVENUES Charges for services 70,000 32.556 70,000 32,556 NET (EXPENSES)lREVENUE (882,853) (1,770,409) GENERALREVENUE Property taxes 2,707,024 2,786,429 Interest 18,912 16,133 Gain on sale of asset - 1,001 Other 275 430 2,726,211 2,803,993 CHANGE IN NET POSITION 1,843,358 1,033,584 BEGINNING NET POSITION 2,125,517 898,954 PRIOR PERIOD ADJUSTMENT 192,979 ENDING NET POSITION $ 3,968,875 $ 2,125,517 Financial Analysis of the Government's Funds As noted earlier, the Authority uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds. The focus of the Chubbuck Development Authority's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Chubbuck Development Authority's financing requirements. In particular, unrestricted fund balance may serve as a useful measure of the government's net resources available for spending at the end of the fiscal year. General Fund Budgetary Highlights. The general fund did not have a budget appropriated for the fiscal year. However, the actual revenues exceeded expenses by $64,126 in the general fund. M Chubbuck and Pine Ridge Mall Urban Renewal District Funds. The district funds did not budget sufficient expenditures in the amount of $50,019 for various accounts. The expenditures below budget in the amount of $1,205,694 were used to pay the insufficient budget expenditures. Current Known Facts and Conditions During the year, the Chubbuck Urban Renewal District (Chubbuck District) received property tax revenue allocation of $2,499,248 and paid reimbursement(s) of $37,530. The Pine Ridge Mall Urban Renewal District (Pine Ridge District) received property tax revenue allocation of $222,260 and paid reimbursement(s) of $0. On October 15, 2020, the Authority approved the issuance of a bond in the amount of $1,940,000 to reimburse the developer of the Pine Ridge Mall for eligible costs. On October 15, 2020, the Authority approved the issuance of a bond in the amount of $1,940,000 at a discount of $50,000. The bond carries an interest rate at 6.750% and a maturity date of November 1, 2037. The bond is being used to provide monies to reimburse the developer of the Pine Ridge Mall for eligible costs and thereby provide more capital for further development in the Pine Ridge Mall Project Area. The Pine Ridge Mall Project is within the Pine Ridge Tax Increment Financing District (TIF) District. The bond will be payable from and secured by the revenues generated from the TIF District tax increments. The Authority's largest expenditure was $362,203 in capital outlay. The capital outlay was the purchased land properties within the Chubbuck District. Request for information The financial report is designed to provide citizens of the City of Chubbuck and creditors with a general overview of the Authority's finances and to show the Authority's accountability for the money it receives. If you have question about this report or need any additional financial information, contact the Authority at 5160 Yellowstone Ave, Chubbuck, ID 83202, telephone (208)237-2400. J I Hi r-mr-N ! o Vr IVC I E'V.7[ [ EVIY SEPTEMBER 30, 2020 WITH COMPARATIVE TOTAL AT SEPTEMBER 30, 2019 Governmental Activities 2020 2019 ASSETS Current assets Cash and cash equivalents $ 2,721,042 $ 1,708,247 Accounts receivable 70,000 - Reimbursement receivable 1,222 - Property tax receivable 16,452 30,739 2.808.716 1,738,986 Noncurrent assets Non -depreciable capital assets 1,622,524 1,260,321 1,622, 524 1,260, 321 4,431,240 2,999,307 LIABILITIES Current liabilities Accounts payable 88,403 216,940 Disbursements in excess of cash 2,729 - Current portion of long-term debt 150,000 300,000 241,132 516,940 Noncurrent liabilities Note payable 221,233 356,850 221,233 356,850 462,365 873,790 NET POSITION Restricted for districts 2,416,951 1,270,859 Unrestricted 1,551,924 854,658 $ 3,968,875 $ 2,125,517 The accompanying notes are an integral part of these financial statements 10 CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2020 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2019 EXPENSES General government Chubbuck Urban Renewal District Pine Ridge Mall Urban Renewal District REVENUES Charges for services NET(EXPENSES)/REVENUE GENERAL REVENUE Property taxes Interest Gain on sale of asset Other CHANGE IN NET POSITION BEGINNING NET POSITION PRIOR PERIOD ADJUSTMENT ENDING NET POSITION Governmental Activities 2020 2019 6,348 165 899,258 1,587,996 47,247 214,804 952,853 1,802,965 70,000 32,556 70.000 32,556 (882,853) (1,770,409) 2,707,024 18,912 275 2,726,211 1,843,358 2,125,517 2,786,429 16,133 1,001 430 2,803,993 1,033,584 898,954 192,979 $ 3,968,875 $ 2,125,517 The accompanying notes are an integral part of these financial statements 11 GOVERNMENTAL FUNDS SEPTEMBER 30, 2020 WITH COMPARATIVE TOTAL AT SEPTEMBER 30, 2019 ASSETS Cash and cash equivalents Accounts receivable Reimbursement receivable Property tax receivable LIABILITIES Nonmajor Chubbuck Pine Ridge Mall 66,903 $ General Urban Renewal Urban Renewal $ 216,940 Fund District Fund District Fund 2020 2019 - 2,729 - $ - $ 2,505,491 $ 215,551 $ 2,721,042 $ 1,708,247 70,000 - - 70,000 - 1,222 - 1,222 - - 16,452 - 16,452 30,739 $ 70,000 $ 2,523,165 $ 215,551 $ 2,808,716 $ 1,738,986 Accounts payable $ 1,500 $ 66,903 $ 20,000 $ 88,403 $ 216,940 Excess cash disbursements 2,729 - - 2,729 - Deferred tax revenues - 6,862 - 6,862 21,542 4,229 73,765 20,000 97,994 238,482 FUND BALANCES Restricted - 2,221,400 195,551 $ 2,416,951 $ 1,270,859 Committed - 228,000 - 228,000 228,000 Unassigned 65,771 - - 65,771 1,645 65,771 2,449,400 195,551 2,710,722 1,500,504 $ 70,000 $ 2,523,165 $ 215,551 Amounts reported for governmental activities in the statements of net position are different because: Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds, net of accumulated depreciation of K Certain receivables are not current resources and are reported as deferred revenues in the governmental funds 1,622, 524 1,260, 321 6,862 21,542 Long-term liabilities are not due and payable in the current period and therefore, are not reported in the governmental funds: Note payable (371,233) (656,850) Net Position of Governmental Activities $ 3,968,875 $ 2,125,517 The accompanying notes are an integral part of these financial statements 12 CHUbbuUm L)E V E-rm",1 , r, - '.. STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 74,135 GOVERNMENTALFUNDS Administration _ 597,394 26,955 FOR THE YEAR ENDED SEPTEMBER 30, 2020 1,295,288 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2019 228,000 Nonmajor Grants _ _ 3,998 Chubbuck Pine Ridge Mail 21,289 General Urban Renewal Urban Renewal 7,988 Fund District Fund District Fund 2020 2019 REVENUES $ 195 $ 2,499,249 $ 222,260 $ 2,721,704 $ 2,786,82 Property taxes 4 18,519 389 18,912 15,983 Interest revenue 275 - 275 580 Other revenue 70,000 701000 - 32,556 Service and contract revenue 70,474 2,517,768 222,649 2,810,891 2,835,940 EXPENDITURES 52,343 20,292 1,500 74,135 255,637 Administration _ 597,394 26,955 624,349 1,295,288 Projects 228,000 - 228,000 228,000 Grants _ _ 3,998 3,998 21,289 Professional services 850 7,138 - 7,988 2,751 Other expenses _ 300,000 - 300,000 Debt services _ 362,203 - 362,203 1,067,342 Capital outlays 6,348 1,547,078 47,247 1,600,673 2,870,307 EXCESS OF REVENUES OVER 64,126 970,690 175,402 1,210,218 (34,367) (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) _ 1'G01 Proceeds from sale of assets - _ 700,000 Proceeds from debt _ (43,150) Discount on loan _ - 657,851 NET CHANGE IN FUND BALANCE 64,126 970,690 175,402 1,210,218 623,484 BEGINNING FUND BALANCE 1,645 1,478,710 20,149 1,500,504 877,020 ENDING FUND BALANCE $65,771 $ 2,449,400 $ 195,551 $2,710,722 $ 1,500,504 in fund balances -total governmental funds $ 1,210,218 $ 623,484 Net change Amounts reported for governmental activities in the statements of activities are different because: Governmental funds only report taxes received within sixty days as current fund revenues. All {14,680) (392 ) taxes receivable are treated as revenues in the statement of activities. Governmental funds report capitai outlays as expenditures. However, in the Statement of Activities, the costs of those assets is depreciated over their estimated useful lives. 362,203 1,067,342 Capital asset purchases Governmental funds report principal repayment on debt as an expenditure and debt issuance as an other financing source. Long-term notes provide current financial resources to the increases long term liabilities in the Statement of Net governmental funds, but issuing debt is financial resource in the government Position. The discount on the long-term debt an other fund but decreases the net liability in the Statement of Net Position: 285,617 - Principal repayment on debt _ (656,850) Long term debt proceeds $ 1,843,358 $ 1,033,584 Change in Net Position of Governmental Activities The accompanying notes are an integral part of these financial statements 13 NOTE 1 - Summary of Significant Accounting Policies A. Reporting entity The Idaho Urban Renewal Law of 1965 authorized the Mayor, with advice and consent of the City Council, to appoint a board of commissioners for an urban renewal agency to function within the municipality of Chubbuck, provided that the Council has first passed a resolution finding that one or more such areas are necessary, and that there is a need for an urban renewal agency to function in the City. Chubbuck's urban renewal agency, Chubbuck Development Authority {CDA), was found necessary by resolution in 1992 and the board members were appointed thereafter. Unlike other advisory boards to the City Council, state law declares this agency to be "an independent public body corporate and politic" and gives it a wide range of authority to effectuate urban renewal. Under generally accepted accounting principles, as adopted by the Governmental Accounting Standards Board, the CDA is included in the Annual Financial Statements of the City of Chubbuck as a discretely presented component unit. B. Government -wide and fund financial statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the government. For the most part, the effect of interfund activity has been removed from these statements. The fund financial statements provide information about the Authority's funds. The emphasis of fund financial statements is on major funds, each displayed in a separate column. The Authority reports the following major funds: The General Fund is the Authority's primary operating fund. It accounts for all financial resources, except those accounted for in another fund. The Chubbuck Tax Increment Financing (TIF) District Fund (Chubbuck District), a special revenue fund, accounts for the Authority's operations within the revenue allocation area of that district. The Chubbuck District was established in 1992 and has a termination date in the year 2022. The Pine Ridge Tax Increment Financing District (TIF) District Fund (Pine Ridge District), a special revenue fund, accounts for the Authority's operations within the revenue allocation area of that district. The Pine Ridge District was established in 2016 and has a termination date in the year 2036, except for revenues which may be received in 2037. The revenue generated in the districts' fund are restricted to be used for the district and within the TIF district boundaries. C. Measurement focus, basis of accounting, and financial statement presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied, Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the authority considers revenues to be available if they are collected within 60 days of the end of the current fiscal year. 14 CHUSBUCK DEVELUPMLN I AU I HUMI I I NOTES TO FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accounting Policies iContinued C. Measurement focus, basis of accounting, and financial statement presentation (continued) Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the authority. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. D. Assets, liabilities, and net position or funs[ balance 1. Deposits and investments Unrestricted cash balances from all funds are combined and invested in investments authorized under Idaho State Code. Earnings from these investments are credited to the funds based on the monthly balance of cash in each fund. Cash includes cash on hand, deposits and other investments which are immediately convertible to cash or have a maturity of less than 90 days. CDA is authorized under State Code to invest in obligations of the U.S. Treasury, U.S. Government backed institutions, commercial paper, and repurchase agreements. CDA's policy is to restrict investment to highly liquid money market accounts_ 2. Receivables and payables Property taxes receivable are recorded when certified by the State Tax Commission in October of each year. Taxes not received within sixty days of year-end are deferred. The taxing authorities within each tax increment financing district levy property taxes by the third Monday of September on a market value basis. These taxes are billed to the taxpayers in November and are due December 20. Real property taxes not paid constitute a lien on the property when entered on the real property assessment roll as delinquent on the first day of January of the succeeding year. Property taxes are assessed and collected for the Authority by Bannock County. 3. Restricted assets It is the Authorities policy to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. When unrestricted resources are spent, the order of spending is committed (if applicable), assigned (if applicable) and unassigned. 4. Capital Assets The Authority has purchased land properties within the Chubbuck TIF District as capital assets. The land is to be developed by the authority, sold to a third party for further development, or donated. It is the policy of the Authority to capitalize assets that are expected to last longer than one year and cost exceeds $5,000. 5. Compensated Absences The Authority has no liability for compensated absences. 15 NOTES TO FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accounting Policies Continued D. Assets, liabilities, and net position or fund balance (continued) 6. Fund Balance In the fund financial statements, governmental funds report the following classifications of fund balance: Nonspendable items- This category includes a portion of net resources that cannot be spent because of their form or because they must be maintained intact. This includes inventories and prepaid items. Restricted items- This category includes resources where limitations are imposed by external entities, such as grantors and creditors, or to comply with laws and regulations of governments. Committed items -This category includes amounts that can only be used for the specific purposes determined by a formal action of the Authority's highest level of decision-making for the Authority. Commitments may be changed or lifted only by the Board taking the same formal action that imposed the constraint originally. Assigned items -Assigned items represent the Authority's intent to use certain resources for specific purposes. The Board may establish the intended use of these funds for a designated purpose. Unassigned items- Represents the remainder of the Authority's equity in governmental fund -type balances in excess of the aforementioned classifications. NOTE 2 - Reconciliation of Government -wide and Fund Financial Statements A. Explanation of certain differences between the governmental fund balance sheet and the government -wide statement of net position. The governmental fund balance sheet includes the reconciliation between fund balance - total governmental funds and net position - governmental activities as reported in the government -wide statement of net position. One element of the reconciliation explains that "Certain receivables are not current resources and are reported as deferred revenues in the governmental funds". The detail of this difference is as follows: Deferred Property Taxes $ 6,862 Capital assets are made up of the following non -depreciable assets: Land $ 1,622,524 During the year, the Authority purchased land using a non-interest barring note of $700,000. The implied interest rate of 3.25% was calculated to be $43,150. Long-term Note Payable $ 400,000 Long-term Note Discount (28,767) $ 371,233 NOTE 3 - Stewardship Compliance and Accountability A. Budgetary information Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for the general and special revenue funds. All annual appropriations lapse at fiscal year end. The Board of the Chubbuck Development Authority does not and is not required to hold public meeting in conjunction with adoption of its annual budget. The City Council approved the 2020 budget and previous fiscal years. The Authority will approve future budgets. The new budget is submitted to the board at fts meeting in October as part of the cash report presented by the Treasurer This is when the budget is approved. Budgets may be amended by the same procedure used to adopt the budget. 16 CHUBBUGK UtVkLUrElnr_ry i IAU I nvrcl I I NOTES TO FINANCIAL STATEMENTS NOTE 4 - Detailed Notes on All Funds A. Deposits and investments Cash and cash equivalents at yearend consist of the following: Deposits Cash in bank Disbursements in excess of cash Post void checks Outstanding checks The Authority has no investments. Bank Book $ 2,718,313 $ 2,721,042 - (2,729) (2,971) (2,971) - $ 2,715,342 $ 2,715,342 Deposits - Custodial Credit Risk for deposits is the risk that, in the event of bank (financial institute) failure, the government's deposits may not be returned to it. Deposits and Investment transactions are subject to risks. Interest Rate Risk is the risk that changes in interest rates will adversely affect the value of an investment. This risk in null since the Authority has no investments. Credit Risk is the risk that an issuer or a counter party to an investment will not fulfill its obligations. Concentration of Credit Risk is the risk of loss attributed to the magnitude of an investment in a single issuer. Because the Authority has all trust deposits held within one trust department and invested in the same fund a concentration risk exists. Deposits are held in an institution covered by collateralized accounts or federal depository insurance up to $250,000. The Authority's concentration credit risk was $0. B. Changes in Capital Assets A summary of capital assets at year end is as follows: Beginning Ending Balance Additions Deletions Balance Non -depreciable assets Land $ 1,303,471 $ 362,203 $ 14,383 $ 1,651,291 $ 1,303,471 $ 362,203 $ 14,383 $ 1,651,291 C. Receivables 1. Property Taxes Property tax revenues are recognized and accrued when billed by Bannock County. CDA's property taxes, levied by the third Monday of September on a market value basis, are billed to the taxpayers in November. Half of the real, personal and mobile home property taxes are due on December 20 and the remainder is due the following June 20. Other property taxes are due December 20. Real property taxes not paid constitute a lien on the property when entered on the real property assessment roll as delinquent on the first day of January of the succeeding year. Property taxes are assessed and collected for CDA by Bannock County. 17 CHUBBUC:K UtVtLurivicry i mu 111v 1 NOTES TO FINANCIAL_ STATEMENTS NOTE 4 - Detailed Notes on All Funds Continued C. Receivables (continued) 2. Property Tax Receivable and Deferred Property Taxes At yearend, property tax receivable and deferred tax revenues consisted of the following: General fund Chubbuck Urban Renewal District Fund Pine Ridge Mall Urban Renewal District Fund Receivables Deferred Tax 16,452 6,862 16.452 6,862 D. Long-term Debt In 2019, CDA has issued a note to provide funds for purchase of land in the Chubbuck District. The note shall provide $700,000 towards the purchase price and be paid in annual installments of not less than $150,000. The note is non- interest bearing but has an implied rate of 3.25%. The final payment is due December 31, 2022 when the entire remaining balance shall be due in full. Current portion Noncurrent portion Long-term note payable Long-term debt implied interest NOTE 5 - Other Information A, Contingent liabilities Face Value Discount Book Value $ 150,000 $ 14,383 $ 135,617 250,000 14,384 235,616 $ 400,000 28 767 $ 371,233 Beginning Ending Balance Additions Reductions Balance $ 700,000 $ - $ (300,000) $ 400,000 43,150 - 14,383 28,767 $ 656,850 $ - $ (285,E317) 371,233 The majority of the revenue collected by CDA is derived from tax increment financing. Tax increment financing is a method of segregating a portion of the property taxes paid on properties within an urban renewal district to fund improvements for which the district was formed. This is accomplished by freezing the market value of property within the district A contingent liability exists when the market value increase in the district is not large enough to fund any debt incurred by the district to finance the improvements within the district. The Pine Ridge Mall Urban Renewal District agreed to pay the developer the property tax revenue collected by the District until its expiration or the maximum of 11.7 million, which ever is earlier. 18 CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO FINANCIAL STATEMENTS NOTE 5 - Other Information Continued B. Committed Funds The Chubbuck Development Authority has committed to pay for the portion of the !Northwest Sewer Interceptor project lying inside the Chubbuck Urban Renewal District boundary. That portion has been calculated at $2,287,000. This total is to be paid in an annual payment of $228,000 to Chubbuck Impact Area Waste Water Collection Authority, which began in FY 2013. C. Subsequent events Subsequent events were evaluated up to January 6, 2021, the date the financial statements were available to be issued. On October 15, 2020, the Authority approved the issuance of a bond in the amount of $1,940,000 at a discount of $50,000. The bond carries an interest rate at 6.750% and a maturity date of November 1, 2037. The bond is being used to provide monies to reimburse the developer of the Pine Ridge Mall for eligible costs and thereby provide more capital for further development in the Pine Ridge Mall Project Area. The Pine Ridge Mall Project is within the Pine Ridge Tax Increment Financing District (TIF) District. The bond will be payable from and secured by the revenues generated from the TIF District tax increments. D. Tax abatement During the year the Authority was not subject to any tax abatements. 19 REQUIRED SUPPLEMENTARY INFORMATION 20 CHUBBUCK DEVELOPMENT AUTHORITY SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL GENERALFUND FOR THE YEAR ENDED SEPTEMBER 30, 2020 REVENUES Property taxes Interest revenue Other revenue Service and contract revenue EXPENDITURES Administration Professional services Other expenses NET CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE Original Amended Budget Budget Actual Amounts Amounts Amounts Variance $ - $ _ $ 195 $ 195 _ - 4 4 - - 275 275 - - 70,000 70,000 - - 70,474 70,474 - - 1,500 (1,500) - - 3,998 (3,998) - - 850 (850) - - 6,348 (6,348) 64,126 $ 54,126 21 1,645 $ 65,771 SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL CHUBBUCK URBAN RENEWAL DISTRICT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2020 Original Amended 340,000 372,803 Budget Budget Actual Amounts Amounts Amounts Variance REVENUES 228,000 - Allstate Property taxes $ 2,5001000 $ 2,500,000 $ 2,499,249 $ (751) interest revenue - - 18,519 18,519 2,500,000 2,500,000 21517,768 17,768 EXPENDITURES Administration and other expenses 340,000 340,000 372,803 (32,803) Projects and grants NWSI grant 228,000 228,000 228,000 - Allstate 350,000 350,000 327,215 22,785 Stuart Park 90,000 90,000 - 90,000 Siphon Road Reconstruction 934,500 934,500 91,603 842,897 Hawthorne Road- James to Siphon 75,000 75,000 76,924 (1,924) Briscoe Road Reconstruction 15,000 15,000 12,886 2,114 Country Acres Streets 2,500 2,500 2,490 10 Patriot Square TIF reimbursement 40,000 40,000 37,530 2,470 Downtown Property Maintenance 15,000 15,000 10,066 4,934 Downtown Infrastructure Maintenance 5,000 5,000 2,663 2,337 Capital Outlay 375,000 375,000 362,203 12,797 URA Plans 30,000 30,000 22,695 7,305 2,500,000 2,500,000 1,547,078 952,922 NET CHANGE IN FUND BALANCE $ - $ - 970,690 $ 970,690 BEGINNING FUND BALANCE 1,478,710 ENDING FUND BALANCE $ 2,449,400 CHUBBUCK DEVELOPMENT AUTHORITY SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL PINE RIDGE MALL URBAN RENEWAL DISTRICT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2020 REVENUES Property taxes Interest revenue EXPENDITURES Administration Pine Ridge Mall Pine Ridge Mall Bonding NET CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE Original Amended Budget Budget Actual Amounts Amounts Amounts $ 250,000 $ 250,000 $ 222,260 - - 389 250,000 250,000 222,649 Variance $ (27,740) 5,000 5,000 20,292 (15,292) 215,000 215,000 - 215,000 30,000 30,000 26,955 3,045 250,000 250,000 47,247 202,753 $ - $ - 175,402 $ 175,402 23 20,149 $ 195,551 CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO REQUIRED SUPPLEMENTAL INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 2020 NOTE 1 - EXPENSES IN EXCESS OF BUDGET GENERALFUND The Authority did not budget sufficient expenditure for the following expenses. Administration and other expenses Professional services CHUBBUCK URBAN RENEWAL DISTRICT FUND The Authority did not budget sufficient expenditure for the following expenses. Administration and other expenses Hawthorne Road- James to Siphon PINE RIDGE MALL URBAN RENEWAL DISTRICT FUND The Authority did not budget sufficient expenditure for the following expenses. Administration REVENUE IN EXCESS OF BUDGET GENERALFUND Excess revenues funded the excess expenditures in administration expenses, other expenses, and professional services. CHUBBUCK URBAN RENEWAL DISTRICT FUND The under -budgeted expenditures were paid using revenues in excess of budget and unspent revenues from other expenses. PINE RIDGE MALL URBAN RENEWAL DISTRICT FUND The under -budgeted expenditures were paid using unspent revenues from other expenses. NOTE 2 - LEGAL ADOPTION OF BUDGET The Authority is required by State law to adopt annual budgets on all governmental funds that cover a period from October 1, through September 30. The City Council approved the Fiscal Year End 2020, but the Authority will approve future budgets. 24 Deaton & Company, Chartered Certified Public Accountants 215 North 9th, Suite A Pocatello, Idaho 83201-5278 (208)232-5825 Members or Idaho Society of Certified PubHe Accountants Members ofAmerican Institute of Cerlified Public Accoumants ■ t . � ■ u � ■t ■;tr tea■■ m lblikk. —1 -owl IL I� A■ Al ■ I L ■r INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Commissioners Chubbuck Development Authority Chubbuck, Idaho We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standardsd issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund, and the aggregate remaining fund information of Chubbuck Development Authority, as of and for the years ended September 30, 2020, and the related notes to the financial statements, which collectively comprise Chubbuck Development Authority's basic financial statements, and have issued our report thereon dated January B, 2021. Internal Control Over Financial Reporting In planning and performing our audit, we considered Chubbuck Development Authority's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Chubbuck Development Authority's internal control. Accordingly, we do not express an opinion on the effectiveness of the Chubbuck Development Authority's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether Chubbuck Development Authority's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Chubbuck, Idaho January 6, 2021