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HomeMy WebLinkAbout2013 CAFR PFD Annual Financial StatementsPASCO PUBLIC FACILITIES DISTRICT Pasco, Washington ANNUAL FINANICAL STATEMENTS For the fiscal year ended December 31, 2013 Prepared by: Finance Division Dunyele Mason, CPA — Financial Services Manager Administrative and Community Services Department Richard G. Terway— Director TABLE OF CONTENTS Directory of Board of Directors .......... ..............................1 ]Management's Discussion and Analysis . ..............................2 Basic Financial Statements Government -wide Financial Statements Statement of Net Position ................. ..............................6 Statement of Activities .................... ..............................8 Fund Financial Statements Balance Sheet — Governmental Fund .. ..............................9 Statement of Revenues, Expenditures and Changes in Fund Balance — Governmental Fund . ........ .............................10 Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Fund Budget To Actual ................11 Notes to the Financial Statements .............. .............................12 Pasco Public Facilities District 2013 Basic Financial Statements Directory of Board Directors As of December 31, 2013 APPOINTER DIRECTORS TERM EXPIRES PRESIDENT Mark Morrissette 7/14/2016 VICE PRESIDENT Leonard Dietrich 7/14/2014 SECRETARY/TREASURER Vacant DIRECTORS Spencer Jilek 7/14/2017 John Merk 7/14/2015 Craig Maloney 7/14/2014 Pasco Public Facilities District 2013 Basic Financial Statements Management's Discussion and Analysis This management discussion and analysis of the Pasco Public Facilities District's financial performance provides an overview of the financial activities for the year ended December 31, 2013. Please read it in conjunction with the accompanying basic financial statements and the notes to the financial statements. Financial Highlights The assets of the Pasco Public Facilities District's exceeded its liabilities at December 31, 2013 by $47,524. The Pasco Public Facilities District program expenses exceeded its program revenues by $363,059. General revenues, however, were $367,265 and net assets thereby increased by $4,206 on the full accrual basis. The Pasco Public Facilities District total revenues exceeded its total expenses and thereby increased its ending fund balance by $4,206 on the modified accrual basis. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the Pasco Public Facilities District's basic financial statements. Those financial statements comprise three components: I) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required 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 Pasco Public Facilities District's finances in a manner similar to a private- sector business. The Statement of Net Position presents information on all of the assets and liabilities with the difference between the two 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 Pasco Public Facilities District is improving or deteriorating. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as 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 future fiscal periods (e.g. uncollected taxes). The government -wide financial statements include a single function (classified as culture and recreation) which is primarily supported by taxes and intergovernmental revenues (Governmental Activities). The PPFD currently does not have any business -type activities. The governmental activity of the Pasco Public Facilities District was to provide support to the Kennewick Convention Center. In addition, the Pasco Public Facilities District conducted some project concept planning and evaluation work through consultant contracts. Pasco Public Facilities District 2013 Basic Financial Statements The government -wide financial statements can be found on pages 8 -9 of this report Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Pasco Public Facilities District like other governments uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide statements. By doing so, readers may better understand the long -term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statements of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Pasco Public Facilities District maintains just one governmental fund; the general fund. Information is presented in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances. The general fund is a major fund as defined by the Governmental Accounting Standards Board. The Pasco Public Facilities District adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found starting on page 10 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the fund statements. The notes to the financial statements can be found starting on page 13. Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. hi the case of the Pasco Public Facilities District, assets exceeded liabilities by $47,524 at the close of the most recent fiscal year. All of the Pasco Public Facilities District's net position represents working capital (current assets minus current liabilities) as it does not have any investments in long term capital assets or long tern debt obligations. At the end of the current and prior fiscal years, the PPFD was able to report positive net position. The government`s net position increased by $4,206 during the current fiscal year. This increase represents the degree to which ongoing revenues have exceeded ongoing expenses. Payables t_` Pasco Public Facilities District 2013 Basic Financial Statements represent the amount of sales taxes payable to the Kennewick Public Facility District (KPFD), per interlocal agreement. Current assets Current liabilities Total net positron Pasco Public Facility District Net Position Govennnental Activitics Total Primary Govetnme 2013 2012 $107,651 $ 101,541 60,127 58,223 2013 2012 $ 107,651 $101,541 60,127 58,223 $ 47,524 $ 43,318 $ 47,524 $ 43,318 Statement of Activities The following condensed table of changes in net assets compares the revenues and expenses for the current year to those of the prior year. Pasco Public Facility District Changes in Net Position The largest form of revenue is from Sales Tax ($367,162 in 2013 and $341,280 in 2012). The largest expense is the payment to the KPFD for all of the sales taxes received. The other expenses are mostly administrative in nature, and continued one -time costs relating to market analysis and feasibility studies for a potential regional aquatics center. 9 2013 2012 2013 2012 Program revenues $ 20,000 $ 20,000 $ 20,000 $ 20,000 General revenues 367,265 341,394 367,265 341,394 Total revenues 387,265 361,394 387,265 361,394 Program expenses 383,059 380,105 383,059 380,105 Changes in net position 4,206 (18,711) 4,206 (18,711) The largest form of revenue is from Sales Tax ($367,162 in 2013 and $341,280 in 2012). The largest expense is the payment to the KPFD for all of the sales taxes received. The other expenses are mostly administrative in nature, and continued one -time costs relating to market analysis and feasibility studies for a potential regional aquatics center. 9 Pasco Public Facilities District 2013 Basic Financial Statements Financial Analysis of the Government's Funds. As noted earlier, the Pasco Public Facilities District uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds The focus of the Pasco Public Facilities District's governmental funds is to provide information on near -term inflows, outflows and balances of spendable resources. Such information is useful in assessing the Pasco Public Facilities District financing requirements. In particular, unrestricted fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the Pasco Public Facilities District's only governmental fund is its general fund. The general fund is the chief operating fund of the Pasco Public Facilities District and reported an ending fund balance of $47,524; an increase of $4,206 in comparison with prior year. All of fund balance constitutes unassigned fund balance which is available for spending at the government's discretion. As a measure of the general fund's liquidity, it may be useful to compare unrestricted, unassigned fund balance to total expenditures. This represents 12% of total expenditures. Overall revenues increased by 7% ($25,871) and total expenditures increased by 1% ($2,954). General fund revenues were affected by the continued strength in sales activity as the increase was due to increases in sales tax revenues. The increase in expenditures was also due to increased sales tax revenue as it was all passed through to the Kennewick Public Facility District per interlocal agreement. Normally revenues and expenditures would be expected to increase by the same amount, however, in the prior year there were one -time expenditures related to supporting the Regional Public Facility District and which were not repeated in the current year. General Fund Budgetary Highlights There was no change in appropriations between the original and final amended budget. Actual expenditures were 106% of both the original and revised budget; actual revenues were 112% of the original and revised budget. This was due to increased sales tax revenue and the related KPFD expense of all sales tax received. Economic Factors and Next Year's Budget 2014's budget was developed using the expectations that 2014 activity would be similar to 2013's actual revenues and expenditures. Special studies expenditures related to the potential Tri Cities Aquatic Facility were reduced. Requests for Information This financial report is designed to provide a general overview of the Pasco Public Facilities District's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Financial Services Manager, PO Box 293, Pasco, WA 99301. Pasco Public Facilities District 2013 Basic Financial Statements Pasco Public Facilities District 2013 Basic Financial Statements PASCO PUBLIC FACILITIES DISTRICT STATEMENT OF NET POSITION As of December 31, 2013 Governmental Total Primary Activities Government ASSETS Cash $ 78,439 $ 78,439 Sales taxes receivable 29,212 29,212 Total assets 107,651 107,651 LIABILITIES Accounts Payable 60,127 60,127 Total Liabilities 60,127 60,127 NET POSITION Unrestricted 47,524 47,524 Total net position $ 47,524 $ 47,524 The notes to the financial staetments are an integral part ofthis statement. 7 Pasco Public Facilities District 2013 Basic Financial Statements F=dDml Program Prkary Govern mem: Governmental Activkis: Cultural & Commindy Ac6mm Total Governmental Activities Total l'rarary Govertmem PASCO PUBLIC FACILITIES DISTRICT STATEML -NT OF ACTMTIES For the Year Ended December 31, 2013 Charges for Operating Capiial Governmental Total Prnory Expenses Services Grants Grams Activities Gove`mrw'nt S 383,059 S S 20,000 S S (363,059) S(363,059) 383,059 20,000 (363,059) (363,059) S 383,059 S S 20,000 $ The notes to the financial staetmems are an integral part ofths statement. I General revems: Sales tax Investment ncmne Total general revenues Change in net poskiin Net position - beginning Net position- ending 367,161 367,161 104 104 367,265 367,265 4,206 4,206 43,318 43,318 47,524 47,524 Pasco Public Facilities District 2013 Basic Financial Statements PASCO PUBLIC FACILITIES DISTRICT BALANCESHEET As ofDecember 31, 2013 ASSETS Cash Sales taxes receivable Total assets LIABILITIES Accounts Payable Total Liabilties FUND BALANCES Unassigned Total fund balance 01 78,439 29,212 107,651 60,127 60,127 47,524 $ 47,524 Pasco Public Facilities District 2013 Basic Financial Statements PASCO PUBLIC FACILITIES DISTRICT STATEMENT OF REVENUES, EXPENDITURES & CHANGES IN FUND BALANCE Year to Date Ending December 31, 2013 Annual 2013 2013 Budget Actual Sales Tax $ 325,000 $ 367,161 City of Pasco Grant 20,000 20,000 Interest Income 95 104 Total Revenues $ 345,095 $ 387,265 EXPENDITURES Advertising/Publications $ 1,000 $ 137 Legal Services 1,000 337 Kennewick PFD 325,000 367,161 Professional Services 20,000 820 Insurance 2,800 2,604 Admostrative Services 12,000 12,000 Total Expenditures 361,800 383,059 Net change in fund balance (16,705) 4,206 Fund balance - beginning 68,338 43,318 Fund balance - ending $ 51,633 $ 47,524 The notes to the financial staetments are an integral part of this staternent. 10 Pasco Public Facilities District 2013 Basic Financial Statements PASCO PUBLIC FACILITIES DISTRICT STATEMENT OF REVENUES, EXPENDITURES & CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - GENERAL FUND Year to Date Ending December 31, 2013 EXPENDITURES AdvertisiopTublicatbns Original Final $ 137 $ (863) Legal Services Budget Budget Actual Variance REVENUES 325,000 325,000 367,161 42,161 Saks Tax $ 325,000 $ 325,000 $ 367,161 $ 42,161 City of Pasco Grant 20,000 201000 20,000 - Interest Income 95 95 104 9 Total Revenues $ 345,095 $ 345,095 $ 387,265 $ 42,170 EXPENDITURES AdvertisiopTublicatbns $ 1,000 $ 1,000 $ 137 $ (863) Legal Services 1,000 1,000 337 (663) Kennewick PFD 325,000 325,000 367,161 42,161 Professional Services 20,000 20,000 820 (19,180) Insurance 2,800 2,800 2,604 (196) Administrative Services 12,000 12,000 12,000 0 TotalExpenditttres 361,800 361,800 383,059 21,259 Net change in fund balance (16,705) (16,705) 4,206 20,911 Fund balance - begmnmg 68,338 68,338 43,318 (25,020) Fund balance - ending $ 51,633 $ 51,633 $ 47,524 The notes to the financial staetments are an integral part of this statement. Pasco Public Facilities District 2013 Basic Financial Statements NOTES TO THE FINANCIAL STATEMENTS NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Pasco Public Facilities District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard - setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies. A. Reporting Entity The Pasco Public Facilities District (PPFD or "District ") was created by the City Council of the Pasco Public Facilities District by passage of Ordinance No. 3558 on July 15, 2002, to participate in acquisition, construction, operation, and/or financing of a regional center (as defined in RCW 35.57) in the Tri-Cities area. State law, as defined in the Revised Code of Waslvngton (RCW) Chapter 35.57 (the City PFD Act), authorizes the City Council, as the legislative authority of the City, to create a public facilities district coextensive with the boundaries of the City for the purposes, among others, of acquiring, constructing, operating, and financing one or more "Regional Centers" through cooperative and joint ventures with one or more qualifying public facilities districts. A Regional Center is defined in the City PFD Act as "...convention, conference, or special events center, or any combination of facilities, and related parking facilities, serving a regional population constructed, improved or rehabilitated after July 25, 1999 at a cost of at least $10,000,000 including debt service." State law also states a public facilities district created before July 31, 2002 that commences construction or improvement of a Regional Center before January 1, 2004 may impose, solely for Regional Center Purposes, a 0.033% sales and use tax. The Sales Tax operates to shift a share of the State's sales and use tax revenues to the public facilities district at no additional cost to taxpayers. The Board of Directors is comprised of 5 members; two members appointed by the City Council and 3 members appointed by the City Council based on recommendations from local organizations. The Board then elects a President, a Vice President, and a Secretary/Treasurer. The initial appointment of the Board called for one - one year term, one - two year term, one - three year term and two - four year terms. Thereafter, appointments are for four year terns. 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 non - fiduciary activities of the primary government. As there is just one fund, the general fund, there is no interfund activity in these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely 12 Pasco Public Facilities District 2013 Basic Financial Statements to a significant extent on fees and charges for support. The PPFD had no business -type activities in the current or prior year. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. PPFD policy is to not allocate indirect costs to a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements for a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. 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. 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 City considers revenues to be available if they are collected within 31 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. The PPFD reports the general fund as a major governmental fund. The general fund is the PPFD's primary operating fund. It accounts for all governmental financial resources. Amounts reported as program revenues include 1) charges to customers, 2) operating grants and contributions, and 3) capital grants and contributions. General revenues include all taxes. The PPFD does not have a flow of funds policy and therefore utilizes the default provided by GASB 54 which assumes restricted assets are used before unrestricted assets. D. Assets, liabilities and equities Deposits and investments The government's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-tern investments with original maturities of three months or less from the date of acquisition and include amount invested in the State of Washington's Local Government Investment pool. This is done via City of Pasco's City Treasurer. The investments are held in the City of Pasco's name and are recorded in the City accounts as held on behalf of the PPFD. 13 Pasco Public Facilities District 2013 Basic Financial Statements Receivables and payables Receivables consist of sales taxes receivable. Payables result from an interlocal agreement with the Kennewick Public Facility District (KPFD) that all sales tax received will be passed through to the KPFD. Fund balance and fund flow policies Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The government itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). The committed fund balance classification includes amounts that can be used only for specific purposes determined by formal action of the government's highest level of decision - making authority. The city council is the highest level of decision making authority for the government that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Amounts in the assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as committed. The council may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year's appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. The City has not adopted a specific flow of funds policy relating to the use of restricted and unrestricted resources when both are available. Therefore the statements are prepared using the default option provided in GASB 54 which provides that when both restricted and unrestricted resources are available, restricted resources are used first. In the fund financial statements, governmental funds report restrictions of fund balance as follows: Nonspendable fund balance - includes amounts that are not in spendable form such as inventory or are required to be maintained intact such as the principal of a permanent fund. Restricted fund balance - includes amounts that can be spent only for the specific purpose stipulated by external resource providers such as for grant providers, bondholders, higher levels of government, or through enabling legislation. Committed fund balance — includes amounts that can be used only for the specific purposes determined by a formal action of the city council. Commitments may be changed or lifted only by the City Council taking the same formal action that imposed the constraint originally. 14 Pasco Public Facilities District 2013 Basic Financial Statements Assigned fund balance — includes amounts intended to be used by the government for specific purposes. Intent can be expressed by the governing body or by an official designated by the governing body to which the governing body designates authority. Unassigned fund balance - includes amounts that are available for any purpose. NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Scope of Budgetary Accounting. Annual appropriated budgets are adopted for the PPFD on the modified accrual basis of accounting. Annual appropriated budgets are adopted at the major expenditure category level. Appropriations lapse at year -end. Budgetary accounts are integrated in fund ledgers for all budgeted funds. Amending the Budget. When the Board determines it is in the best interest of the PPFD to increase or decrease the appropriation for a particular item, it may do so with a motion approved by an affirmative vote of at least three Board members. The financial statements contain the original and final budget information. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by any authorized amendments. Budget Compliance. The PPFD expenses exceeded the budget appropriation by $21,259. The primary source of revenue is sales tax, which is volatile in nature. By contract the total amount of sales tax received is an expense and was passed through to the Kennewick Public Facility District even though it exceeded the amount estimated and budgeted. NOTE 3 — DETAILED NOTES ON ALL FUNDS A. Deposits and investments As of December 31, 2013 the government had the following: Weighted Average Fair Value Maturities (Years) Local Government Investment Pool Total Invested Cash Equivalents $78,439 N/A Portfolio weighted average maturity N/A biterest rate risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The PPFD does not have an investment policy, but manages its exposure to declines in fair value by limiting investing only in the State of Washington's Local Government Investment Pool (LGIP). Credit risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The PPFD does not have an investment policy, but manages its exposure to credit risk by limiting investing only in the State of Washington's Local Government Investment Pool. 15 Pasco Public Facilities District 2013 Basic Financial Statements Concentration of credit risk-. Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The PPFD does not have an investment policy, but manages its exposure to concentration of credit risk by limiting investing only in the State of Washington's Local Government Investment Pool. The LGIP invests in a variety of governmentally issued securities. Custodial credit risk — deposits. This is the risk that in the event of a bank failure, the governments' deposits may not be returned. The PPFD does not have a deposit policy, but manages its exposure to custodial risk by investing 100% of its fund in the State of Washington's Local Government Investment Pool and therefore does not maintain any deposits in a bank. Custodial credit risk — investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will be able to recover the value of its investments or other collateral securities that are in the possession of an outside party. The PPFD does not have a custodial credit risk policy, but manages its exposure by investing 100% of its fund in the State of Washington's Local Government Investment Pool, B. Receivables and payables Taxes receivable. The PPFD received sales tax distributions from the State of Washington in 2014 from sales that occurred in 2013. The State receives the sales tax, and then distributes the appropriate portion of the tax the following month to the local governmental entities. As receivables are recognized when earned, the sales taxes from underlying sales transactions are recognized as receivables. Per the inter -local agreement, 100% of the sales tax received is owed to Kennewick Public Facility District (KPFD). Sales taxes are received on the last day of the month, creating a payable which is then paid to KPFD during the next month. NOTE 4 - OTHER INFORMATION A. Risk Management The Pasco Public Facilities District owns no property and does not hire any employees. Therefore, the PPFD does not carry any insurance other than maintaining coverage for officials' errors and omissions. In 2013, there were no policy coverage changes, claims, nor settlements. B. Related organization City of Pasco. Pursuant to RCW 35.57 (the "City PFD Act ") the Pasco Public Facilities District was formed and created by City of Pasco Ordinance No. 3558 on July 15, 2002, coextensive with the boundaries of the City of Pasco, with the powers and authority set forth in the City PFD Act. All corporate powers of the PPFD are exercised by or under the authority of the PPFD Board; and the business, property and affairs of the PPFD are managed under the direction of the 16 Pasco Public Facilities District 2013 Basic Financial Statements PPFD Board, except as may be otherwise provided in the Charter. The PPFD operates independently from the City of Pasco. The PPFD contracts with the City of Pasco to administer its accounting operations, manage its cash and provide organizational administrative support. Sales tax proceeds are received by the City for the benefit of the PPFD. The City Treasurer disburses funds on behalf of the PPFD and invests any surplus amounts commingled with City investments. Separate accounts are maintained within the City to designate and hold separately amounts on behalf of the PPFD. 17