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City of South Lyon, MichiganFinancial Reportwith Supplemental InformationJune 30, 2010City of South Lyon Financial Report June 30, 2010 Mayor Tedd Wallace City Council Erin Kopkowski, Mayor Pro Tem Glen Kivell Michael Kramer Ron Morelli Charles Dick Selden Harvey Wedell City Administration City Manager David M. Murphy Clerk/Treasurer Julie C. Zemke Police Chief Lloyd Collins Fire Chief Craig Kask Water and Wastewater Treatment Superintendent Robert Martin Department of Public Works Superintendent Steve Renwick Building/Zoning Inspector Joe Veltri Bokepr Lori Mosier City of South Lyon, MichiganContentsReport Letter 1-2Management's Discussion and Analysis 3-7Basic Financial StatementsGovernment-wide Financial Statements:Statement of Net Assets 8Statement of Activities 9-10Fund Financial Statements:Governmental Funds:Balance Sheet 11Reconciliation of the Balance Sheet to the Statement of Net Assets 12Statement of Revenue, Expenditures, and Changes in Fund Balances 13Reconciliation of the Statement of Revenue, Expenditures,and Changes in Fund Balances of Governmental Fundsto the Statement of Activities 14Proprietary Funds - Enterprise Fund - Water and Sewer Funds:Statement of Net Assets 15Statement of Revenue, Expenses, and Changes in Net Assets 16Statement of Cash Flows 17-18Fiduciary Fund - Statement of Fiduciary Assets and Liabilities - Tax Collection 19Notes to ...
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City of South Lyon, Michigan
Financial Report
City of South Lyon Financial Report June 30, 2010
Mayor Tedd Wallace
City Council
Erin Kopkowski, Mayor Pro Tem
Glen Kivell
Michael Kramer
Ron Morelli
Charles Dick Selden
Harvey Wedell
City Administration
City Manager City Clerk/Treasurer Police Chief Fire Chief Water and Wastewater Treatment Superintendent Department of Public Works Superintendent Building/Zoning Inspector Bookkeeper
David M. Murphy Julie C. Zemke Lloyd Collins Craig Kaska
Robert Martin Steve Renwick Joe Veltri Lori Mosier
City of South Lyon, Michigan
Report Letter
Management's Discussion and Analysis
Basic Financial Statements
Government-wide Financial Statements: Statement of Net Assets Statement of Activities
Fund Financial Statements: Governmental Funds: Balance Sheet
Reconciliation of the Balance Sheet to the Statement of Net Assets Statement of Revenue, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances of Governmental Funds
Proprietary Funds - Enterprise Fund - Water and Sewer Funds: Statement of Net Assets Statement of Revenue, Expenses, and Changes in Net Assets Statement of Cash Flows
Fiduciary Fund - Statement of Fiduciary Assets and Liabilities - Tax Collection
Notes to Financial Statements
Required Supplemental Information
Budgetary Comparison Schedule - General Fund
Budgetary Comparison Schedule - Major Special Revenue Funds
Other Supplemental Information
Nonmajor Governmental Funds: Combining Balance Sheet Combining Statement of Revenue, Expenditures, and Changes in Fund Balances
Schedule of Expenditures - General Fund
Schedule of Expenditures by Activity - Major and Local Road Funds
Schedule of Operating Expenses - Enterprise Fund - Water and Sewer Fund
Statistical Information
Schedule of Taxes Levied, Collected, and Returned Delinquent - 2009 Tax Roll
Continuing Disclosure Undertaking
Contents
1-2
3-7
8 9-10
11 12 13
14
15 16 17-18
19
20-39
40
41
42
44-45
46-47
48-49
50
51-52
53
54
55-58
Independent Auditor's Report
To the Members of the City Council City of South Lyon, Michigan
We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of South Lyon, Michigan as of and for the year ended , which collectively comprise the Cit ’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City o South Lyon, Michigan’s management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining
fund information of the City of South Lyon, Michigan as of 30, 2010 and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The management's discussion and analysis and the budgetary comparison schedules, as identified in the table of contents, are not a required part of the basic financial statements but are supplemental information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management, regarding the methods of measurement and presentation of the required supplemental information. However, we did not audit the information and express no opinion on it.
1
To the Members of the City Council City of South Lyon, Michigan
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of South Lyon, Michigan’s basic financial statements. The accompanying other supplemental information and statistical section, as identified in the table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. The other supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The statistical section has not been subjected to auditing procedures applied in the audit of the basic financial statements and accordingly, we ex
2
City of South Lyon, Michigan
Managements Discussion and Analysis
Our discussion and analysis of the City of South Lyon, Michigans (the City) financial performance provides an overview of the City of South Lyons financial activities for the fiscal year ended June 30, 2010. Please read it in conjunction with the Citys financial statements.
Financial Highlights
As discussed in further detail in this managements discussion and analysis, the following represents the most significant financial highlights for the year ended June 30, 2010:
•
•
Revenues exceeded expenditures in the General Fund, thus increasing fund balance by approximately $140,000. This exceeded expectations as the final amended budget expected a decrease of approximately $229,000.
Total net assets related to the Citys governmental activities decreased by approximately $654,000.
Using this Annual Report
This annual report consists of a series of financial statements. The statement of net assets and the statement of activities provide information about the activities of the City as a whole and present a longer-term view of the Citys finances. This longer-term view uses the accrual basis of accounting so that it can measure the cost of providing services during the current year, and whether the taxpayers have funded the full cost of providing government services.
The fund financial statements present a short-term view; they tell us how the taxpayers resources were spent during the year, as well as how much is available for future spending. Fund financial statements also report the Citys operations in more detail than the government-wide financial statements by providing information about the Citys most significant funds.
3
Invested in capital assets -
Restricted
Unrestricted
22,863 23,033 16,585 16,264 39,448 39,297 2,056 1,912 6,386 7,142 8,442 9,054
Liabilities
Long-term liabilities
Net of related debt
Net Assets
The Citys combined net assets decreased by approximately 2 percent from a year ago -
decreasing from $56,437,308 to $55,255,945. Net assets of both the governmental activities
and business-type activities decreased during the year. This is an indication that the taxpayers
and users of City services fell slightly short in paying for the full cost of providing those services
5,621 6,250 1,745 1,837 7,366 8,087
$ 30,540 $ 31,195 $ 24,716 $ 25,243 $ 55,256 $ 56,438
Total net assets
of unrestricted net
did not change significantly for the governmental activities. The current level
presentation.
in the current year. This measurement is one of the goals of full accrual financial statement
assets related to governmental activities is $5,620,915.
Unrestricted net assets, the part of net assets that can be used to finance day-to-day operations,
The following table shows, in a condensed format, the net assets as of June 30, 2010 and 2009
(in thousands):
usiness-type
2
Governmental
B
010
Activities
4
City of South Lyon, Michigan
Managements Discussion and Analysis (Continued)
The City of South Lyon as a Whole
75,655
40,161
41,424
73,365
57,377
38,029
32,141
62,567
200
9
Total
2009
Activities
2010
2009
2010
19,217
18,109
16,181
15,445
16,801
17,202
15,073
15,088
$ 2,132
$ 9,283
$ 10,798
$ 18,278
33,204
34,231
$ 8,666 24,538
$ 8,995 25,236
Total assets
Current assets
1,728
2,114
Total liabilities
Current liabilities
Assets
Noncurrent assets
1,108
357
2,416
907
1,308
550
2,664
3,036
2010
2009
$ 25,243
2009
$ 56,438
$ 56,969
Total
$ 25,742
$ 24,716
$ 31,195
$ 55,256 $ 56,438
$ 25,243
2010 2009 $ 31,195 $ 31,227
2010
$ 30,540
)
4,017 4,054 11,046 11,120
7,029
7,066
1,329
(655)
(32)
(527) (499) (1,182) (531
Total revenue
1,329
-
-
-
2,851
1,388
-
3,027
-
157
137
4,017 4,054
4,054
4,017
-
-
166 621
175
208
-
-
208 175
137 157
-
-
2,162
2,162 1,874
-
166
621
-
-
3,490
10,589
6,374
7,034
2,851
1,388
1,874
3,027
5
The following table shows the changes of the net assets during the years ended June 30, 2010
and 2009 (in thousands):
Managements Discussion and Analysis (Continued)
City of South Lyon, Michigan
Business-type
Net Assets- Beginning of year
Revenue
Activities
Activities
Governmental
distribution and sewage treatment to residents from our water supply and
The Citys business-type activities consist of the Water and Sewer Fund. We provide water
Expenses decreased approximately $45,000.
treatment facility.
closely monitoring expenses, seeking to reduce them when possible.
Business-type Activities
Governmental Activities
The Citys total governmental expenses decreased by approximately $37,000. The City has been
Net Assets- End of year
-
41
2,368
3,114
2,444
-
193
868
3,114
526
411
998
523
-
485
128
5,515
96
212
811
710
4,922
110
-
56
35
3,555
9,864
(35)
-
(56)
-
Community and economic
Public works
Cultural and recreation
development
Water and sewer
Interest on long-term debt
Change in Net Assets
Total program expenses
General revenue:
Property taxes
Interest
State-shared revenue
General government
Transfers and other revenue
Public safety
Program Expenses
4,054
292
670
523
Charges for services
Program revenue:
Operating grants and contributions
Capital grants and contributions
116
811
4,517
283
526
746
69
710
City of South Lyon, Michigan
Managements Discussion and Analysis (Continued)
The City of South Lyons Funds
Our analysis of the Citys major funds begins on page 11, following the government-wide financial statements. The fund financial statements provide detailed information about the most significant funds, not the City as a whole. The South Lyon City Council creates funds to help manage money for specific purposes, as well as to show accountability for certain activities, such as major and local road maintenance and debt service. The Citys major funds for 2010 include the General Fund, the Capital Improvements Fund, and the Water and Sewer Fund.
The General Fund pays for most of the Citys governmental services. The most significant is the police department, which incurred expenses of approximately $2,215,000 in 2010. Other government services accounted for in the General Fund include general government, the department of public works, the fire department, and recreation.
General Fund Budgetary Highlights
Over the course of the year, the City amended the budget to account for changes made necessary due to unanticipated events or situations requiring less expenditures for operational and capital expenditures.
There were no significant unfavorable budget variances within the General Fund. Overall, the total expenditures were approximately $457,000 under budget; however, revenues and other financing sources offset a portion of this as those were under budget by $78,000.
Capital Asset and Debt Administration
At the end of 2009, the City had approximately $56,180,000 invested in a broad range of capital assets, including buildings, police and fire equipment, and water and sewer lines. In addition, the City has invested significantly in roads within the City.
Economic Factors and Next Years Budgets and Rates
The Citys budget for next year takes into consideration many factors anticipated to impact the budget. Among them are another potential decrease in state-shared revenues, a reduction in property taxes due to the devaluation of the taxable value (in both the housing and commercial markets), a decline in water and sewer sales due to the poor economy, and foreclosures and the loss of businesses. However, despite all of these factors, given our healthy fund balance, we do not anticipate any reductions in service levels based on potential revenue reductions. Over the years, the City has had the flexibility to adjust various ad valorem tax rates as necessary and as determined by Headlee, Truth in Taxation, and Proposal A. The state-wide Tax Reform Acts limit growth in taxable value to inflation or 5 percent, whichever is less. Inflation rates in recent years have only been in the range of 2.3 percent to 4.4 percent.
Due to the troubled economy of Southeastern Michigan, the taxable value of the City has actually decreased 9.1 percent for 2010-2011.
6
City of South Lyon, Michigan
Managements Discussion and Analysis (Continued)
Contacting the Citys Management
This financial report is intended to provide our citizens, taxpayers, customers, and investors with a general overview of the Citys finances and to show the Citys accountability for the money it receives. If you have questions about this report or need additional information, we welcome you to contact the city managers office.
7
120,061
693 ---
--
--
693
Primary Government
Total net assets
8
197,791 435,383
147,317 31,494,841
40,160,259
81,948 -
3,355,121 52,824,741
73,363,831
184,745 89,620
--
16,584,779
22,862,927
329,295 443,677
39,447,706
30,540,116
$
$
904,443 57,295 361,586 732,950 --5,620,915
904,443 57,295 361,586 732,950 5,102,664 1,283,795 7,365,506
----5,102,664 1,283,795 1,744,591
55,255,945
$
24,715,829
$
Statement of Net Assets
119,368
------119,368
-
The Notes to Financial Statements are an Integral Part of this Statement.
City of South Lyon, Michigan
329,295 1,288,677
-274,979
State revolving fund loan Unrestricted
Net Assets Invested in capital assets - Net of related debt Restricted for: Road improvements Law enforcement Debt service Cemetery
Total liabilities
Net OPEB obligation (Note 12) Long-term debt (Note 7)
Noncurrent liabilities: Due within one year: Compensated absences Current portion of long-term debt Due in more than one year:
Due to other governmental units Refundable deposits, bonds, etc.
Liabilities
Total assets
Cash and cash equivalents (Note 3) Receivables (Note 4) Internal balances Prepaid expenses and other assets Restricted assets (Note 1) Capital assets (Note 5): Not being depreciated Depreciable - Net
1,406,905 777,270 (69,650) 17,117 6,386,459
$
9,415,000 1,298,708 -83,802 6,386,459
$ 119,711 --350 -
Total
Business-type Activities
Downtown Development Authority
$
Governmental Activities
8,008,095 521,438 69,650 66,685 -
$
33,203,572
3,207,804 21,329,900
15,444,430
18,107,886
30,124 14,212,379
138,896 15,443,479
2,663,456
-845,000
108,772 1,231,100
102,797 89,620 197,791 160,404
