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HomeMy WebLinkAbout2019 CDAThe 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, 2019 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2018 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 2� Schedule of revenues and expenditures -budget to actual -General Fund 21 Schedule of revenues and expenditures -budget to actual - Chubbuck and Pine Ridge Mall Urban District Fund 22 Notes to the statement of revenues and expenditures -budget to actual 23 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 24-25 E Deaton & Company, Chartered Certified Public Accountants 215 North 91h, Suite A Pocatello, Idaho 83201-5278 (208)232-5825 Members of Idaho Society of Certified Public Accountants Members of American Institute of Certified Public Accountants 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, 2019, and the related notes to the financial statements, which collectively comprise the Authority's basic financial statements as listed in the table of contents. INanagement'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, 2019, 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 301 2018, 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 291 2020) 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,ldaho January 29, 2020 ,.. ,f Discussion and Analysis or the Year Ended September 30, 2019 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, 2019. 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 Chubbuck Development Authority exceed its liabilities and deferred inflows at the close of the most recent fiscal year by $2,125,517 (net position). • The Authority's net position increased from 2018 to 2019 by $1,033,584. • At the end of the current fiscal year, fund balances for the Authority was $1,500,504 or 52 percent of total fund expenditures. • During the current fiscal year, the Authority's liabilities increased by $271,792. The increase was primarily due to the long-term note issued to purchase land. 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 Ridge 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 use indicator of the Authority's financial position. In the case of the Authority, assets exceeded liabilities by $2,125,517 as of September 30, 2019. This was an increase from 2018 by 136%. Below is a summary of the Chubbuck Development Authority's Net Position statement. Cha �b'VbucCc [C1etire[Iioipnuarru}t Ae_gtGYac:Dc'6t9,r's Net Posut assets �TM9oncurrent assets �:�urrent fiabil'ities �*3oncu:rrent iiabiiitic�, fWET PC::�.o u uu.���6 E� n restri cted 7 u�rrn �otirrrr��rrvu�P"uir�A ,,�.��owrurii�s 2019 2018 €� rent $ 1 ,387986 1 ,260,3.21 2,999,307 516,940 356,850 87 3,790 1 x-500 Q52 0179,98 17 998 $ 5,51 � $ 898,954 Governmental activities. Governmental activities increased net position by $1,033,584. Below is summary of the Chubbuck Development Authority's Changes in Net Position. Chubbuck Development Authority's Changes In Net Position Governmental Activities 2019 20'18 EXPENSES General government 165 1381215 Chubbuck Urban Renewal District 1,5871990 4,255,082 Pine Ridge Flail Urban Renewal District 214,804 1751023 118021905 415081320 REVENUES Charges for services 321556 1381215 32.556 138,215 NET(EXPENSES)IREVENUE {1,77CJ,409) �4,430,1C15) Prope►ty taxes 2,780,429 2,775,022 Interest 16,133 20,670 Cain on sale of asset 11001 - C7ther 430 11230 21803,993 237971522 CHANGE IN NET POSITION 1,03 3,584 (116323583) EEGINNING NET POSITION 8983954 215311537 PRIOR PERIOD ADJUSTMENT 1921979 - ENDING NET POSITION Financial Analysis of the Government's Funds $ 231251517 $ 8983954 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 $415 in the general fund. S Chubbuck and Pine Ridge Mall Urban Renewal District Funds. The district funds did not budget sufficient expenditures in the amount of $877,700 for various accounts. The revenues in excess of budget by $275,360 and expenditures below budget in the amount of $1,079,692 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 $2,611,932 and paid reimbursement of $40,833. The Pine Ridge Mall Urban Renewal District (Pine Ridge District) received property tax revenue allocation of $174,889 and paid reimbursement of $214,804. The Pine Ridge District's $39,915 deficit was funded from the $53,507 tax revenue residual of the year 2018. The Authority's largest expenditure was $1,067,342 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. �7 CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF NET POSITION SEPTEMBER 30, 2019 WITH COMPARATIVE TOTAL AT SEPTEMBER 30, 2018 Governmental Activities 2019 2018 ASSETS Current assets Cash and cash equivalents $ 11708,247 Property tax receivable 307739 1,738,986 Noncurrent assets Non -depreciable capital assets 112601321 1.260,321 2,999,307 LIABILITIES Current liabilities Accounts payable 2161940 Current portion of long-term debt 300,000 516.940 Noncurrent liabilities Note payable 3561850 356,850 873,790 Restricted for districts 1,270,859 Unrestricted $ 854,658 $ 1,475,094 25, 858 1.500,952 1,500,952 601, 998 6017998 6013998 649,020 $ 249, 934 The accompanying notes are an integral part of these financial statements 10 CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2019 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2018 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 2019 2018 165 138,215 1,587,996 4,255,082 214,804 175,023 1,802,965 41568,320 32,556 138,215 32.556 1389215 (1,770,409) (4,430,105) 2,786,429 2,775,622 161133 201670 1,001 - 430 1,230 2.803.993 21797,522 1,033,584 (1,632,583) 898,954 2,531,537 192,979 - $ 2,125, 517 $ 898,954 The accompanying notes are an integral part of these financial statements 11 CHUBBUCK DEVELOPMENT AUTHORITY BALANCE SHEETS GOVERNMENTAL FUNDS SEPTEMBER 30, 2019 WITH COMPARATIVE TOTAL AT SEPTEMBER 30, 2018 Nonmajor Chubbuck Pine Ridge Mall General Urban Renewal Urban Renewal Fund District Fund District Fund ASSETS Cash and cash equivalents $ 1,645 $ 17686,453 $ 201149 Property tax receivable - 301739 - 2019 $ 1,708,247 30,739 2018 $ 1,4751094 25.858 $ 1,645 $ 1,717,192 $ 20,149 $ 1,738,986 $ 1,500,952 LIABILITIES Accounts payable $ - $ 2161940 $ - $ 216,940 $ 601,998 Deferred tax revenues - 211542 - 211542 21,934 - 2381482 - 238,482 6231932 FUND BALANCES Restricted - 112500710 201149 $ 11270,859 $ 649,020 Committed - 2287000 - 2281000 228,000 Unassigned 11645 - - 11645 - 11645 114787710 201149 115001504 8771020 $ 1,645 $ 1,717,192 $ 20,149 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 $0. 1,260,321 - Certain receivables are not current resources and are report ed as deferred revenues in the governmental funds 21,542 21,934 Long-term liabilities are not due and payable in the current period and therefore, are not reported in the governmental funds: Note payable (656,850) - Net Position of Governmental Activities $ 21125,517 $ 898,954 The accompanying notes are an integral part of these financial statements 12 CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2019 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2018 REVENUES Property taxes Interest revenue Other revenue Service and contract revenue EXPENDITURES Administration Projects Grants Professional services Other expenses Capital outlays EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Proceeds from sale of assets Proceeds from debt Discount on loan NET CHANGE IN FUND BALANCE BEGINNING FUND BALANCE Nonmajor Chubbuck Pine Ridge Mall General Urban Renewal Urban Renewal Fund District Fund District Fund 2019 2018 $ $ 21611,932 $ 174,889 $ 21786,821 $ 21781,210 - 14,927 11056 15,983 20,670 580 - - 580 11230 32,556 - 321556 138,215 580 21659,415 175,945 21835,940 21941,325 40,833 214,804 255,637 2761430 - 1,295,288 - 11295,288 410603650 228,000 - 228,000 228,000 21,289 21,289 31240 165 21586 - 21751 - 11067,342 - 11067,342 - 165 21655,338 214,804 21870,307 415687320 415 4,077 (38,859) (34,367) (1,626,995) 700,000 - 700,000 - (43,150) - (43,150) - 657,851 - 657,851 - 415 661,928 (38,859) 623,484 (11626,995) 1,230 816,782 59,008 877,020 2,504,015 ENDING FUND BALANCE $ 1,645 $ 11478,710 $ 20,149 $ 11 500,504 $ 877,020 Net change in fund balances -total governmental funds $ 623,484 $(11626,995) 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 taxes receivable are treated as revenues in the statement of activities. Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the costs of those assets is depreciated over their estimated useful lives: Capital asset purchases Long-term notes provide current financial resources to the governmental funds, but issuing debt increases long term liabilities in the Statement of Net Position. The discount on the long-term debt is an other financial resource in the government fund but decreases the net liability in the Statement of Net Position: Long term debt proceeds Long term debt discount Change in Net Position of Governmental Activities (392) (5,588) 1,067,342 - (700,000) - 43,150 - $ 1,0331584 $(11 The accompanying notes are an integral part of these financial statements 13 632,583) CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO FINANCIAL STATEMENTS 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 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. 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 CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accounting Policies (Continued) 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. Asa general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. D. Assets, liabilities, and net position or fund 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 CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accountinq 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 authority 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 wide statement 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 21,542 Capital assets are made u C3 p of the folllowing non-decpreciable assets: Lnd During the year, the Authority purchased land using anon -interest barring note of $700,000. The implied interest rate of 3.25% created a discount of the loan in the amount of $43,150. Long-term Note Payable Long-term Note Discount NOTE 3 -Stewardship, Compliance and Accountability A. Budgetary information $ $ 1,260,321 $ 700,000 (43,150) $ 656, 850 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 new budget is submitted to the board at its meeting in October as part of the cash report presented by the Treasurer. When the cash report is approved by the board the budget is approved as well. Budgets may be amended by the same procedure used to adopt the budget. 16 CHUBBUCK DEVELOPMENT AUTHORITY 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 Outstanding checks The Authority has no investments. Bank $ 117081247 Book $ 117081247 $ 1,708,247 $ 1,708,247 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 a variety of 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 FDIC and are insured up to $250,000. The Authority's concentration credit risk was $1,458,247. 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 $ 1,303,471 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 CHUBBUCK DEVELOPMENT AUTHORITY 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 D. Long-term Debt Receivables 30,739 Deferred Tax 21,542 $ 30,739 $ 21,542 In 20191 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 remaininq balance shall be due in full. Current portion Face Value Discount 3001000 141383 Noncurrent portion Book Value $ $ $ 285,617 4001000 281767 371,233 $ 700,000 $ 43,150 $ 656,850 Beginning Ending Blance Additions Long-term note payable $ - $ 700,000 Long-term debt discount - (43,150) $ - $ 656,850 C1 NOTE 5 -Other Information A. Contingent liabilities Reductions Balance $ 700,000 (43,150) $ 656,850 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 less. 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 29, 2020, the date the financial statements were available to be issued. D. Tax abatement During the year the Authority was not subject to any tax abatements. NOTE 6 -Correction of an Error and Prior Period Adjustments Adjustments Governmental activities: During the year, the CDA became aware of assets that were expensed in the prior year but were not capitalized in accordance with the CDA's capitalization policy. The capitalization of the assets increased the statement of net position and statement of activities withing the governmental activities by $192,979. 19 ��c=�l����C� ��J�pl���li��9�Q��1 �V��9����vli ���i �OoV�� 20 CHUBBUCK DEVELOPMENT AUTHORITY SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL GENERALFUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 REVENUES Interest revenue Other revenue E?(PENDITURES Administration NET CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE Original Budget Amounts Amended Budget Amounts 21 Actual Amounts Variance 150 150 $ 430 $ 430 580 580 165 (165) 165 (165) 415 $ 415 1,230 $ 1,645 J 0 Q Z D LL ® U Z 0' i"W®® ® J N Q O M O co FMM Z W W LLIW F Z W Z I— Q I===W — m CL ® W QLU O a JW LU > W Z W aW W ®_ LLJ 5 W 0� } Co W W COZZy D LU W 0 Q' U W ® Y W U J :3 M 0 Co W Z) X: 3: U U cn CD LL n c Q (D '2 C V) 0 M (O ami (� C a) 0)C -0 w O Q E N O CD LL n c Q (D '2 C V) 0 M (O ami Q) C a) 0)C -0 w � C LL L N O U Q m Q O C Ln N qq N N LO O CD LL n c Q (D '2 C V) 0 r M (O ami Q) C O 0)C -0 w N LO O N Lo r Q m Q r M (O O N 00 LO M w rn LO co N Lo r r O r r co r N N qq N N LO O N r CO M O N co LO M M O Lo co M LC) (Ni Ln 00 r M CO I� O O co N N O N O M ' CD Lo M O dam' r O O r d L!j o O O O M N LO r O O LO d N N r r O r r M LO O N qq M N LO O N M 00 M L!j o O O O r 0 LO N M r O N N N r r O r M Ln I� O M N qq LO O LO O LO M 00 M W d' M M d' O M LO O co H �} N V LnvOo(O(O�fCo O O O r� M N O ti 1. 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Lfj I� O Ln Ln Ln r O N (D LO O LO N� LO r L() L() LLQ N M r� N co LO r L) N N M 0 0 O O O O 0 0 0 C) O v O O O O 0 0 O O O O 00 O 00 OO O O O O O Ln O O O O r� O N N O O O 1� 00 N O O ui Ln r� O Ln LS7 r 00 N d r 1O N M � N LLO O t� N N M cQ W Z) c O 0 U) c O U) O W Ln ) a) E a) Q Z cA U)i c a) co W U Q o o� �W cn a) JY W N N � N O LL W Ln o C) <L o Lo U O N N S C: (n H— U) O *' (n a) Z3 C9 O c � N L cG 0- a) 0 C C 0 C N O co U U a) U LU LQ aci 0 6 Q Q a- � Q > U cn o > c o> o Q j>. O CO c C ® Z E E + E O Q O O o (nO 4)� ® C O Z Q (n S Cn U d CL d 70 -6 Z o( Z E• o Z LU a) a) W X LU O O W w ® m a. N N NOTE � -EXPENSES IN EXCESS OF BUDGET GENERAL FUND The Authority did not budget sufficient expenditure for administration expenses. CHUBBUCK AND PINE RIDGE MALL URBAN RENEWAL DISTRICT FUND The Authority did not budget sufficient expenditure fihe following expenses. Administration and other expenses Siphon Road Reconstruction Industry / Southside Way Streets Stuart Additions Streets Pine Ridge Mall TIF reimbursement Property Acquisitions and Capital Outlay REVENUE IN EXCESS OF BUDGET GENERAL FUND Excess revenues funded the excess expenditures in administration expenses. CHUBBUCK AND PINE RIDGE MALL URBAN RENEWAL DISTRICT FUND Revenues in excess of budget and decreased expenditures in Hawthorne Road and Country Acres Streets were used to pay under -budgeted expenditures. NOTE 2 -LEGAL ADOPTION OF BUDGET The authority is not legally required to adopt a budget, however, management provides an internal budget for control purposes. 23 Deaton & Company, Chartered Certified Public Accountants 215 North 911, Suite A Pocatello, Idaho 83201-5278 (208)232-5825 Members of Idaho Society of Certified Public Accountants Members of American Institute of Certified Public Accountaws 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, 2019, 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 29, 2020. 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,ldaho January 29, 2020