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2003 � . � � � .�,;'�°� � � � � �� � , �i � �,' "� , u . iC��, � _ � i � �� , ' ,._ , ,�. , _ � '.. ' �", ' � I � ,u,ll. �� '' I�i��, - � , � ��� a �a c� �. � �" ,� Com e her�s iv e .�lnnuaC inanc iaC � .� .� � ���� ort �� � p . �_ �� � � �sc��� ear� un e o Zo a .� .l 3 � 3 , � � � � � � � .M _ _ . ��� .. . , . . . �w _ i� �^^ d � � _ ' ^.� �. iw�� � � � , + '%'�ry,.� — ...�►�` . . ,, i��. '� '6� �i �y rh� II���* ���,� ��,�. .�_�� ./ � -,f �� ,�y� � . n_ - '.' i..'�,+� � , .�.,y;. . � "'�^' . ".^, .� ' 11 � 1'«:. V�, II ' s_, .ar �f. "^: � + , �"II I., u- '�..� i. . � r- �q"k. ' e r ' a J . r �i�� � � r 1 w y � , . ����� a�' `.'1� �I��' I ..�'�• :. ^�:� .i��, ' y '. ,., . .� .�., ' .x r m � . . : � _ �._ " I�.��, ',� • . I � _. .r:: , r.._. . i � _..�pp - ._ ... �� � ��. - �. .. .. .. .. � ... � �v�w. a o�r�rr�aine. �i : :, , ,� r�► grry � � - , �upq,iii � . � � � �_� � � I � :.J ' ;._.ui—— _ _, — _ . _ _ _..._ � _ �..._ ��._ — - �..�" _._. ��...� _ _ _—, ii Introductory Section CITY OF BANGOR, MAINE � Comprehensive Annual Financial Report Table of Contents � For the fiscal year ended 7une 30, 2003 � INTRODUCTORY SECTION Pa4e Letter of Transmittal I - 1 GFOA Certificate of Achievement I - 7 Organizational Chart I - 8 Listing of Principal Executive Officers I - 9 � � FINANCIAL SECTION ' ` Report of Independent Auditors • - II - 1 Management's Discussion and Analysis , II - 2 . < < Basic Financial Statements: � � Exhibit � � ' � ' � � . ��, - Government-wide Finaricial Statements: ' ' r Statement of Net Assets 1 II - 14 ' i Statement of Activities ,,` � , . � ' �2 II - 15 + Fund Financial Statements:, ' ' ,' Balance Sheet- Governmental Funds 3 II - 16 ' Statement of Revenues, Expenditures and Changes in , ' Fund Balances= Governmenta) Funds � _'���4 II - 17 ` Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds • . to the Statement of Activities 5 II - 18 � Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund 6 II - 19 Statement of Net Assets— Proprietary Funds 7 II - 20 � Statement of Revenues, Expenses, and Changes in Net Assets— Proprietary Funds , 8 II - 22 Statement of Cash Flows— Proprietary Funds 9 II - 23 Statement of Fiduciary Net Assets— Fiduciary Funds 10 II - 25 Notes to the Financial Statements II - 26 � ? , CITY OF BANGOR, MAINE Tabie of Contents, Continued , � Schedule Pa4e ; � Combining and Individual Fund Statements and Schedules: Balance Sheet— General Fund A— 1 II - 49 Schedule of Revenues, Expenditures and Changes in Undesignated Fund Balance — Budget and Actual — Budgetary , Basis—General Fund A— 2 II - 50 Combining Balance Sheet— Nonmajor Governmental Funds B — 1 II - 54 Combining Statement of Revenues, Expenditures, and �, Changes in Fund Balances— Nonmajor Governmental Funds B — 2 II - 55 - Combining Balance Sheet— Nonmajor Special Revenue Funds B — 3 II - 56 , Combining Statement of Revenues, Expenditures, and Changes in Fund Balances— Nonmajor Special Revenue Funds B — 4 II - 57 1 Combining Balance Sheet— Nonmajor Permanent Funds B — 5 II - 58 � Combining Statement of Revenues, Expenditures, and , Changes in Fund Balances— Nonmajor Permanent Funds B — 6 II - 59 Schedules of Revenues, Expenditures and Encumbrances — Budget � and Actual Budgetary Basis: - Sewer Utility Enterprise Fund C — 1 II - 60 , Airport Enterprise Fund C — 2 II - 61 r Park Woods Enterprise Fund C — 3 II - 62 Parking Enterprise Fund C — 4 II - 63 _ Bass Park Enterprise Fund C — 5 II - 64 Municipal Golf Course Enterprise Fund C— 6 II - 65 ` Economic Development Enterprise Fund C — 7 II - 66 Capital Assets Used in the Operation of Governmental Funds: Schedule by Source D — 1 II - 67 Schedule by Function and Activity D — 2 II - 68 Schedule of Changes by Function and Activity D — 3 II - 69 ' Other Information: Assessed Valuation, Commitment and Collections E — 1 II - 70 Undesignated Fund Balance Sufficiency Calculation E — 2 II - 71 i � 1 � CITIf OF BANGOR, MAINE Table of Contents, Continued � ; STATISTICAL SECTION Table Paae Government-wide information: Government-wide Expenses by Function 1 III - 1 Government-wide Revenues 2 III _ 2 Fund information: . General Governmental Expenditures by Function - Budgetary Basis 3 III - 3 , General Governmental Revenues by Source - Budgetary Basis 4 III - 4 General Governmental Expenditures/Other Uses and Revenues/Other " Sources- Budgetary Basis . i 5 III - 5 . Property Tax Levies and Collections 6 III - 6 , Assessed and Estimated Market Value of Properly ; 7 III - 7 Property Tax Rate- Direct and Overlapping Governments . 8 III - 8 Principal Taxpayers , � r. 9 III - 9 ' Computation of Legal Debt Margin - � 10 III -10 Ratio of Net General Obligation Debt to Assessed Value and ' ` , , , Net Genera) Obligation Debt Per Capita � 11 III -il � Ratio of Annual Debt Service Expenditures for General • ' �.'+ Obligation Debt to Total General Fund Expenditures , 12 III -12 Computation of Direct and Overlapping Debt ��-` 13 III -13 ? Demographic Statistics � 14 III -14 Taxable Retail Sales ' �15 III -15 Residential and Commercial Building Permits and Bank Deposits J` 16 III -16 Miscellaneous Statistics 17 III -17 � � � , . , , � � . . , , , , . , ti � i , � ' J ' ' ' , - . r 7 . I. � r � � 1 { � � � I l • � / � ' • + ,1 � 1 ' 1 . 1 f � ` • , \ . � ' � . / � � � � CITY OF BANGOR, MAINE ` � . . ,, � .. � �� . . ,�` � � � � ', � . � , � . � . , Compreti,ensive Annual Financial Report � � . , . ; , + � . _ � , . ' For the Fiscal Year Ended June 30, 2003 � � : � , , , , , , . � � . . , . � r - � i � � . r , � � , ,�. + ' ' , , ' j � /. ' I � Prepared by: Debbie Cyr, Finance Director � David tittle, Tax Collector/Deputy Treasurer �Gty of ^ � �� 207/945-4400 �� fax 207/945-4446 aine debbie.cyrC bgrme.org www.bgrme.org FINANCE DEPARTMENT Deborah A. Cyr, Finance Director i December 31, 2003 To the Honorable Chairman, Members of the Bangor City Council, and Citizens of Bangor In accordance with the requirements of both our City Charter and state statutes, the comprehensive annual financial report of the Ciry of Bangor for the fiscal year ended June 30, 2003 is hereby submitted. This is the first year that the City's Finance Department has prepared this report using the new reporting � requirements prescribed by Governmental Accounting Standards Board (GASB) Statement No. 34. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City of Bangor. To the best of our knowledge and belief, the enclosed , data is accurate in all material respects and is reported in a manner that presents fairly the financial position and results of operations of the City of Bangor on a government wide and fund basis. � The City is responsible for establishing and maintaining an internal control framework designed to ensure that the assets of the City are protected from loss, theft, and misuse, and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the costs of control should not exceed the benefits likely to be derived, and that the valuation of costs and benefits requires estimates and judgments by management. The City's financial statements have been audited by Runyon, Kersteen, Ouellette. The goal of the independent audit is to provide reasonable assurance that the financial statements are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor's unqualified opinion is presented as the first component of the financial section of this report. 73 Harlow Street • Bangor, Maine 04401 The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984, and the U.S. Office of Management _ and Budget's Circular A-133, Audits of States, Local Government and Non-Profit + Organizations. Information related to this single audit, including a schedule of federal financial assistance, findings, questioned costs, recommendations and the independent auditor's reports on the internal control structure and compliance , with applicable laws and regulations, are included in a separately issued single audit report. GASB requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of � Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The , _ City's MD&A can be found immediately following the independent auditor's report. ' , Profile of the Government The Ciry of Bangor is situated in eastern Maine, is the Penobscot County seat, - and is the third most populous of Maine's 22 cities. The City occupies approximately 35 square miles on the western shore of the Penobscot River. Bangor was first settled in 1656, incorporated as a town on February 25, 1791 and as a city on February 12, 1834. Bangor has become a major trade, distribution, service, and commercial center for the central, eastern, and northern portions of the State. The City operates under a Charter adopted in 1931 that provides for a Council- Manager form of government. The City Council is composed of nine members who are elected at large for three-year staggered terms. The Charter grants to the Council all powers to enact, amend, or repeal rules, ordinances, and resolutions relating to the City's property, affairs, and government; to preserve the public peace, health, and safety; to establish personnel policies; to give effect to any vote of the City; and to authorize the issuance of debt. The Council adopts an annual budget and provides for an annual audit. The City Manager is the chief administrative officer of the City and is appointed by the Council, as are the Assessor, Solicitor, and Clerk. The current City Manager has been in his _ position since 1988. The City's schools are governed by a seven-member School Committee. Its members are elected at large to staggered three-year terms. By Charter, the School Committee has all the powers and performs all the duties related to the , care and management of the public schools of the City. The Committee annually furnishes to the City Council an estimate of sums required for school purposes for the ensuing municipal year. The City Council makes a single gross i I - 2 appropriation for this purpose with the expenditure of this appropriation under the direction and control of the School Committee. The School Committee employs the Superintendent of Schools as its chief operating officer. The current Superintendent has been in his position since )uly 2000. The City provides a full range of municipal services that includes police and fire, highways and sanitation, health and welfare, parks and recreation, education, public transportation, planning, business and economic development, code enforcement and general administrative services. Bangor International Airport, sanitary sewer services, the Bass Park Complex, parking, golf course, economic development, and a transitional housing complex are accounted for in the City's Enterprise Funds. � The City's budgeting process is structured around its fiscal year, which begins on ' ]uly 1st and ends on the following �une 30th. The City annually adopts budgets for its general fund and seven enterprise funds. The City Charter requires that the City Manager submit a recommended budget to the Council by the second Monday in April. The budget, which must be in balance, contains estimates of all - non-tax revenues and receipts expected to be received during the next fiscal year, the expenditures necessary to support City operations, debt service requirements, and the tax levy required to achieve balance between revenues , � and expenditures. The Council may modify recommended expenditures and the recommended tax levy. If the Council fails to adopt a budget by July ist, the City Manager's proposed budget automatically becomes that fiscal year's budget. In either case, an appropriate property tax levy is established and filed with the City Assessor who then sets the necessary property tax rate. Special Revenue Funds do not have legally adopted budgets, but have program budgets. Budgetary controls are maintained on other governmental funds through formal authorizations by the City Council and through grant agreements. All budgets are legally adopted by the City Council through the passage of an appropriation resolve. Factors Affecting Financial Condition Local economy. The City is the economic, educational, recreational, distribution, and health care center for the central, eastern, and northern Maine regions. Bangor also serves as northern New England's economic link to the , Canadian Maritimes and Eastern Quebec. The City is a major center for the communication, banking, commercial, industrial, and governmental sectors of the State. Bangor has a stable and varied economic base. Major employers include a diversified mix of health care, educational, professional, retail, manufacturing, � and governmental entities. For the fourth year running, Bangor's 2002 I - 3 unemployment rate of 3.0% remained virtually unchanged and continues to be below both state and national rates. Bangor is the second largest retail market in Maine after Portland. The Bangor Mall, Airport Mall, Broadway commercial center, Union Street commercial corridor, and the Bangor Center Development District have long established ; Bangor as the regional hub of the eight-county eastern Maine retail market. Bangor's retail sector serves an extensive geographic area ranging from eastern Maine to the Canadian Maritimes with a population exceeding 3.1 million. With less than three percent of the State's population, Bangor's share of the State's retail sales has remained in excess of 7% since 1988 and stood at over 9% in , 2002. Over the same period, Bangor's share of County sales has grown significantly, to just over 70%. Further evidence of continuing sustained growth is the change in the City's �. assessed value of real and personal property, which has increased on average 3% per annum for the last ten years. Tax base growth coupled with the City's � focus on controlling budgetary growth has translated to the City's tax rate increasing on average .7% during that same ten-year period. � The City is committed to preserving its viable economic base while creating new opportunities for future economic growth. To achieve these objectives, the City - is proactive in supporting economic activity through planned capital improvements, innovative financing, and aggressive marketing. . Long-term fnancial planning. The City prepares a five-year capital plan, which is updated at least biannually as part of the overall budget process. The plan identifies all anticipated capital investments as well as potential funding , sources. Recently the City acquired the necessary property to construct a new police station. The current station was built in 1940 and has significant structural issues. It is anticipated that the project will cost approximately $7 million and will break ground in early 2004. Through the relocation of the station, two additional goals will be achieved: improved visibility and the provision of additional space adjacent to the Maine Court System and County offices to allow for their future expansion. � Progress continues in the redevelopment of almost a mile of prime Penobscot River frontage extending from the City's downtown area to the Bass Park Complex. Infrastructure development has begun in earnest, for which the City has been successful in obtaining partial funding from both State and Federal agencies. Current plans call for some $180 million in development including: a headquarters hotel and high-technology conference center, new class A office I - 4 space, restaurant and retail space, residential apartments and condominiums, and other private sector projects. In November, a statewide referendum was approved that authored installation of slot machines, also known as video fottery terminals (VLTs), at harness racing facilities in Maine. Prior to the statewide vote, the City entered into a development agreement with Capital Seven LLC to redevelop Bangor Raceway � � and surrounding Bass Park property. The proposal calls for the installation of VLTS, along with hotel and convention center space. Under the agreement with Capital Seven, the City will receive a percentage of gross slot revenue as well as land lease payments and properly taxes on new development. This may provide the necessary funding to construct a new arena in downtown Bangor. Cash management and investments. Cash temporarily idle during the year was invested in a number of vehicles, the most frequent being Treasury bills, Federal Home Loan Notes, U.S. Treasury Obligations and money market funds. The average yield on these investments was 2.25%, a decrease of 26% from last year. This decrease in investment income during the year was directly attributable to the decrease in the average daily rate of return earned on investments. Investment income includes appreciation in the fair value of investments. Increases in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always possible to realize such amounts. Risk management. Overall risk management responsibility falls to the Finance Department, which identifies and takes reasonable steps to manage the risks inherent in the normal conduct of City business. The City regularly purchases commercially available insurance for a variety of identified risks. These include commercial general liability, auto, property damage, crime and dishonesty, and various other policies, each with limits and deductibles deemed prudent and reasonable given the nature of the risks, the cost of coverage, and the City's ability to fund various types and levels of losses. The City self-insures its workers' compensation program and also purchases excess insurance to limit its financial risk to a maximum of $500,000 per occurrence. An annual independent actuarial valuation is performed to ensure the adequacy of the City's reserves and that the program is funded to at least an 80% confidence level. Pension benefits. The City of Bangor provides retirement benefits for its employees through a number of vehicles, including a defined contribution plan, � defined benefit pension plan and social security. I - 5 The City provides pension benefits for certain employees through a 401(a) . defined contribution plan administered by ICMA/RC. In addition, certain full-time employees are covered through both a 401 (a) and 457 Deferred Compensation Plan (DCP) also administered by ICMA/RC. In a DCP, benefits depend solely on amounts contributed to the plan plus investment earnings. Those employees with a hire date prior to April 1, 2001 were given the option of participating in the DCP or remaining in the Maine State Retirement System's (MSRS) plan. The MSRS is a cost-sharing, multiple-employer defined pension � plan. As a participant in the plan, the City is required to make contributions at an actuarially determined rate. � Additional information on the City's pension arrangements can be found in Notes, , Other Information, Note D. Awards and Acknowledgements. The Government Finance Officers , Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Bangor for its comprehensive annual financial report for the fiscal year ended June 30, 2002. This was the si�h consecutive year that the City has achieved this prestigious ' award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual . financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe . that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this document would not have been possible without the hard work of all of the City's employees. Each one contributes on a daily basis, simply by carrying out the responsibilities of their positions. Our sincerest thanks are once again extended to our Citizens and the Bangor City Council for their continued support for our efforts to further develop the Ciry's financial management and reporting capabilities. We hope that we have once again met their expectations. Respectfully submitted, . � Debbie Cy,r Finance Director I - 6 CITY OF BANGOR ORGANIZATIONAL CHART(9-00) CITIZENS OF BANGOR CITIZEN CITY CITIZEN COMMISSIONS COUNCiI BOARDS CITY ASSESSING C�TM CLERK SOLICITOR MANAGER ANIMAI. ELECTIONS CONTROL COMMUNITY AND INTERGOVERNMENTA� LICENSES AFFAIRS , INFRASTRUCTURE AND GOVERNMENT BUSINESS AND ECONOMIC FINANCE OEVELOPMENT SUPPORT OPERATIONS DEVELOPMENT CODE WASTEWATER PARKS AND COMMUNIN& BANGOR BA�p�yK � AUDITING TREASURY ENFORCEMENT P�NING ENGINEERING TREATMENT POLICE FIRE RECREATION ECONOMIC DEV. INTERNATIONAL AIRPORT PArtKS COMMUNIN ECONOMIC SEWER FIRE DMINISTRATION ftECREATION CIVICCEME UDITORIUM RISK INFORMATION HARBOR PUBLIC WORKS oETECnvE anrROL FIGHTING Ai nANC DEVEIOPMEN7 OEVEIOPMEM MANAGEMENT SERVICES MAINTENANCE � FiaE Go�F STA7E ADMINISTRATO SERVICES PREVENTION FAIR BUREAU • DOWNTOWN PARKING PURCHASING PROGRAMS MANAGEMENT HEALTH AND ADMINISTRATIVE WELFARE SERVICES , .i GREUEF� SERVICES RESOURCES EIATI�ON � � DENTAL GRAM FLEET THE . LLINIC PROGRAM$ MAIM NA BUS GENritPL SERVICES Certi�icate of Achievement f or Excellence � in Financial ' Reporting Presented to � City of Bangor, Maine For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2002 A Certificate of Achievement for Excellence in Financial Reporting is presented Uy the Government Finance Officers Association of the United States and Canada to government units and public employee reHrement systems whose comprehensive aru�ual financial reports(CAFRs) achieve the highest standards in government accounting and financial reporting. �ce oFF,c �. ��� ornii�V`ss `i�����iiCl�ss+" A� i W UNIlE051ATE5`y AND t N b COFPpa�AjION '^ Presiaent � ,,�o�\��\s �HI(�40 ''�����������ii/�/ Executive Director City of �angor, Maine Elected Officials and Principal Administrative Officers At 7une 30, 2003 Citv Council Nichi S. Farnham, Mayor Anne E. Allen Michael R. Crowley Frank]. Farrington Richard D. Greene David S. Nealley Gerry G.'M. Palmer John M. Rohman Daniel ). Tremble City Staff Edward A. Barrett, City Manager Benjamin F. Birch, City Assessor Gail E. Campbell, City Clerk Norman Heitmann, City Solicitor Deborah A. Cyr, Finance Director School Committee Martha G. Newman, Chair Susan A. Carlisle James F. Cox George F. Eaton. Phyllis M. Shubert, Vice Chair Christine Szal Ellen Tobin School Staff Robert Ervin, Superintendent of Schools Alan F. Kochis, Director of Business Services I - 9 Financial Section � � ��� � . 1`��'���' . . �Gersteev� �-�- D'(ile�le�e Certified Public Accountants and Business Consultants . Independent Auditor's Report . City Council . . City of Bangor,Maine � We have audited the accompanying basic financial statements of the City of Bangor,Maine, as of and for : . the year ended June 30,2003,as listed in the Table of Contents. These basic financial statements are the � responsibility of the City of Bangor,Maine's management. Our responsibility is to express an opinion on - � these basic 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 sfandards applicable to financial audits contained in GovernmentAuditing Standdrds � � issued by the Comptroller General of the United States. Those standards require that we plan and perfornn .. the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining,on a test basis,evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles � used.and significant estimates made by management,as we11 as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion,the basic financial statements referred to in the first paragraph present fairly, in all material respects,the financial position of the City of Bangor,Maine as of June 30,2003,and the results of its operations and the cash flows of its business type activities for the year then ended in conformity with accounting principles generally accepted in the United States of America. � As discussed in the notes to the basic financial statements,the City adopted the provisions of � Governmental Accounting Standards.Board.Statements No. 34, 36,37,and 38 as well as GASB Interpretation 6 as of and for the year ended June 30,2003. This resulted in changes in the City's method. . . -of accounting for certain transactions and a change in the format and content of the basicfinancial statements. The Management's Discussion and Analysis,as listed in the Table of Contents,is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting . � Standards Board. We have applied certain limited procedures,which consisted principally of inquiries of management regarding the methods of ineasurement and presentation of the supplementary information. However,we did not audit the information and express no opinion on it. The combining and individual fund schedules listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and,in our opinion, is fairly presented, in a�l material respects, in relation to the basic financial statements taken as a whole. We did not audit the information in fhe introductory and statistical sections of this report and therefore express no opinion on them. City Council Page 2 In accordance with Government Auditing Standards;we have also issued a report dated October.29,2003 on our consideration of the City of Bangor,Maine's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. � October 29,2003 South Portland,Maine MANAGEMENT'S DISCUSSION AND ANALYSIS Management of the City of Bangor offers readers of the financial statements this narrative overview and analysis of the financial activities of the City of Bangor for the fiscal year ended June 30, 2003. This is the City's initial year of implementation of Statement No. 34 of the Governmental Accounting Standards Board, therefore comparative information from the government-wide statements is not available. The City is presenting comparative data that is based on key information presented in the fund financial statements for the general fund budgetary basis of accounting. In future years a comparative analysis of government-wide data will be presented. We encourage � readers to consider the information presented here in conjunction with additional information that is furnished in our letter of transmittal, which can be found on pages I-1 to I-6 of this report. Financial Highlights • The assets of the City of Bangor exceeded its liabilities at the close of the most recent fiscal year by $189.1 million (net assets). • As of the close of the current fiscal year, the City of Bangor's governmental funds reported combined ending fund balances of $24.6 million, a decrease of $1.6 million � in comparison with the prior year. The decrease in fund balance is due to the expenditure of bond proceeds issued in the prior year. Approximately 67% of the total amount, or $16.7 million is available for spending at the City's discretion (unreserved fund balance). • The City of Bangor has a fund balance policy. The City strives to maintain a general fund ureserved/undesignated fund balance of 5% - 10% of current expenditures less debt service. At the end of the current fiscal year, unreserved undesignated fund balance for the general fund was $8.9 million, or 12.27% of the general fund expenditure base. The annual calculation is included within the financial statements as Schedule E-2. • The total liabilities of the City's governmental and enterprise funds increased by $200 thousand (2.1%) and $3.2 million (6.2%), respectively. The increase in enterprise fund liabilities was to due increased accounts payable associated with an extensive runway repaving project and the issuance of $4.6 million of general obligation bonds. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Bangor's basic financial statements. The City of Bangor's basic financial statements consist of three components: government-wide financial statements, fund financial statements, and 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 present the financial picture of the City from the point of view of economic resources measurement and using the accrual basis of accounting, which is similar to II - 2 what privaCe-sector companies' use. These statements present governmental activities and business type activities separately. The statement of net assets includes all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. � The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets 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 and earned but unused vacation leaves). These statements are divided into two categories: governmental activities and business- type activities. • Governmental activities — Most of the City's basic services are included here, such as the general government, public safety, public works, health and welfare, education, and parks and recreation. These activities are principally supported by taxes and intergovernmental revenues. , • Business-type activities — Currently, the City operates the following business type activities: Bangor International Airport, Sewer, the Bass Park Complex, Parking, Golf Course, Economic Development and the Park Woods Complex. The government-wide financial statements can be found on pages II-14 to II-15 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 City of Bangor, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary 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 are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate a comparison between governmental funds and governmental activities. The City of Bangor maintains nine individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund II - 3 balances for the general fund, community development block grant, and capital projects fund, all of which are considered to be major funds. Data from the other six governmental funds are combined into a single aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements (Schedule B) elsewhere in this report. The City of Bangor adopts an annual budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget(Schedule A-2). • Proprietary funds are used to account for essentially the same functions reported as business-type activities in the government-wide financial statements. Enterprise funds are the only type of proprietary funds maintained by the City. The proprietary , fund statements provide the same type of information as the government-wide statements, only in more detail. The City maintains seven individual proprietary funds, all of which are considered to be major. The City of Bangor adopts annual budgets for all its proprietary funds. Budgetary comparison statements have been provided for each proprietary fund to demonstrate compliance with budget (Schedule C1 —C7). • Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary fvnds is much like that used for proprietary funds. Its statement of net assets is included elsewhere in this report as Exhibit 10. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages II-26 through II-48 of this report. II -4 Government-wide Financial Analysis The following is a condensed version of the Statement of Net Assets. Since this is the first year of GASB 34 implementation, no comparative data is available. In future years, comparative information will be provided. � Governmental Business-type Activities Activities Current &other assets 35,937,649 33,375,484 Capital assets, net 55,837,902 189,735,099 Total assets 91,775,551 223,110,583 Long-term debt outstanding 62,268,172 48,615,099 Other liabilities 9,873,193 5,052,682 Totalliabilities 72,141,365 53,667,781 Net assets: Invested in": Capital assets, net of related debt 33,261,947 147,970,359 � Restricted 507,743 - Unrestricted (14,135,504� 21,472,443 Total net assets 19,634,186 169,442,802 By far the largest portion of the City's net assets (96% or $181.2 million) reflects its investment in capital assets (ie. land, buildings, machinery and equipment), less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens, consequently, these assets are not available for � future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to satisfy these liabilities. Restricted net assets are those resources that are subject to external restrictions on how they may be used. While the remaining balance of unrestricted net assets is $7.3 million, the governmental activity portion shows a deficit of $14.1 million, which is primarily due to $28.3 million of outstanding pension obligation bonds. Although the City made all required contributions to the Maine State Retirement System's (MSRS) Participating Local District plan, an unfunded pension liability existed at the time MSRS created the Consolidated plan. Until fiscal year 2002, this liability was being paid to the MSRS over twenty eight years at a rate of 8%. In fiscal year 2002, the City issued bonds to pay off the MSRS resulting in savings of$8.2 million over the life of the debt. II - 5 Changes in Net Assets The following is a condensed version of the Statement of Activities. Governmental Business-type Activities Activities Revenues Program Revenues Charges for services 15,169,744 19,325,452 Operating grants &contributions 21,566,478 _ Capital grants &contributions 3,814,705 11 274 222 General Revenues � � Property and other taxes 42,128,366 _ Grants and contributions not restricted to specific programs 4,059,770 - Other 1,532,793 1,097,155 Total Revenues 88,271,856 31,696,829 Expenses General government 6,060;687 - Public safety 11,114,804 - Health, welfare and recreation 3,340,989 - Public buildings and services 7,050,085 - Other agencies 1,610,132 , - Education 40,828,756 - Unclassified 1,844,069 - Restricted grants 6,551,455 - County tax 1,712,263 - Interest on de6t 740,077 - Capital maintenance expenses 2,024,489 - Sewer Utility - 5,744,275 Airport - 14,489,128 Park Woods - 449,873 Parking - 1,370,737 Bass Park - 1,944,718 Municipal Golf Course - 575,408 Economic Development - 271,047 Total Expenses 82,877,806 24,845,186 Excess before special items and transfers 5,394,050 6,851,643 Transfers (798,618) 798,618 Increase in net assets 4,595,432 7,650,261 II -6 Governmental Activities The cost of all governmental activities was $82.9 million. However, as shown on the Statement of Activities, the amount that the City's property taxpayers financed was $37.6, million or 45.5%, because $15.2 million was paid by those who directly benefit from the programs or by other governments and organizations that subsidized certain programs with operating grants and contributions in the amount of $21.6 million, and capital grants and contributions accounted for $3.8 million. The City also received $10.1 million in other general revenues such as State Revenue Sharing, motor vehicle and boat excise taxes, homestead exemption, and interest earnings. Expenses and Program Revenues-Governmental Activities 45 ; � ` � 35 � � � 30 ; I � 25 � I �E 20 ' � � 15 ' I 10 ; � 5 ' ❑D�er�es 0 - � � • I o Revenues �c�`�'����,�c c��m.�c����c'd�a+��`c� ��,���\cA ���PA��aJc`�������� t & c�� �a�� � �� ~c�� c� \`�''y�� �a�o QJ� ��, 'm �� Q� C� II -7 Revenues by Source- Governmental Activities 5� 5% ao�o O Charges for Servioes 19°ib OOperating Grants& Contributions :;. o Capital Grants&Contributions ❑Property Taxes • �o�o B Other General 42 ❑Unrestricted Grants& I 4% Contributions �Other Unrestricted Business-type Activities Business-type activities increased the City's net assets by $7.7 million. The majority of this increase is attributable to the receipt of $10.4 million in capital grants for the reconstruction of the Airport Fund's runway. Expenses and Program Revenues- Business-type Activities , 20 18 � 16 � � 14 I � 12 � 10 O Expenses � g O Revenues `� 6 I 4 � 2 0 — � � y �i � t� �c �w� Pc�' �d�' ��° �yyQ� ��,��,�oQc� � � � � ��� c° �� II -8 Revenues by Source - Business-type Activities 3% 2% O Charges for Services ,,,�, O Capital Grants and i��`' Contributions O Unrestricted Investment 35% Eamings O Transfers Financial Analysis of the Government's Funds Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the City's net resources available for spending at the end of the fiscal year. At fiscal year end, the City of Bangor's governmental funds reported combined ending fund balances of $24.6 million, relatively unchanged in comparison to the prior year's balance of $26.2 million. Approximately 67% of this total ($16.7 million) constitutes unreserved fund balance which is available for spending at the City's discretion. The remainder of fund balance is reserved, indicating that it is not available for new spending because it has already been committed for various purposes including: liquidating contracts and purchase orders of prior periods ($5.8 million), as a reserve for potential non-repayment of interfund balances ($1.4 million), or for a variety of other restricted purposes ($.7 million). � The general fund is the chief operating fund of the City of Bangor. At the end of the fiscal year, the unreserved fund balance of the general fund was $14.6 million ($5.7 � million of which has been designated by management for subsequent years' � expenditures), and the general fund's total fund balance was $17.3 million, which is relatively unchanged from fiscal year 2002's balance of$17.6 million. � Proprietary funds. The City of Bangor's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. ' II - 9 The unrestricted net assets of the seven enterprise funds totaled $169.4 million, including a net asset deficit of$1.2 million in the Bass Park Fund. During the current year, the Municipal Golf Course, Economic Development and Bass Park enterprise operations individually experienced an increase in net assets ranging from $31 thousand to $267 thousand, while the increase in net assets for Sewer Utility and Airport operations were $1.3 million and $6.2 million respectively. Both the Parking and Park Woods enterprise operations experienced a decrease in net assets of $110.2 thousand and $164.5 thousand respectively. General Fund Budgetary Highlights Differences between the original budget and the final amended budget can be briefly summarized as follows: $1.5 million was appropriated from the City's unreserved undesignated fund balance to provide funding for a variety ofi improvements accounted for in the capital projects fund, and $3:6 million in general obligation bond proceeds were used to refund a previous issue Capital Asset and Debt Administration Capital assets. As of June 30, 2003, the City of Bangor's ir�vestment in capital assets for its governmental and business-type activities amounts to $245.6 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, machinery and equipment, roads, runways and sewer lines. The total increase in the City's investment in capital assets for the current fiscal year was 5.9% (a 10.3% increase for governmental activities and a .5% increase for business-type activities). Major capital asset events during the current fiscal year included the following; • Completion of a $4.5 million expansion of Bangor High School • Investment of$1.4 million in infrastructure on the City's waterfront • Improvements to local roads in the amount of $1.6 million through state and local funding sources • Purchase of 6 new BAT Community Connector buses to support the City operated regional transportation system in the amount of $1.7 million in federal, state and local funds • A private donation of$1.4 million to construct a new outdoor aquatic center • An additional $3.0 million in general obligation bonds issued to continue the City's aggressive combined sewer overtlow program • State, federal, local, and defense department funding to finance $10.0 million toward the reconstruction of runways at Bangor International Airport. II - 10 Capital Assets (net of depreciation) Governmental Business-type Activities Activities Land and improvements 5,362,966 3,682,809 Buildings and improvements 26,475,633 18,948,198 Machinery and equipment 2,994,903 2,500,664 Vehicles 4,852,573 _ Infrastructure 3,905,950 37,974,460 Parking structures - 5,307,083 Aircraft operational assets - 105,329,961 Construction in process 12,245,877 15,991,924 Tota I 55,837,902 189,735,099 Debt Administration At fiscal year end, the City had a total outstanding bonded debt of $105.5 million, an increase of $4.0 million during the year. The main factor in this increase was the Sewer Utility Fund's continued commitment to a Combined Sewer OverFlow program ($3.0 million) and the Economic Development Fund's purchase of a building ($1.3 million). Bonded Debt Outstanding (in millions) �47.90 � O Govemmental Activities $57.70 O Business-type Activi�es During the year, the City refinanced some of its existing debt to take advantage of favorable interest rates. The City issued general obligation bonds to refinance previously outstanding limited revenue and general obligation bonds, resulting in a decrease in future debt service payments of$1.2 million. II - 11 The City maintained a "AA" rating from Standard & Poor's and a "Aa3" rating from Moody's for general obligation debt. State statutes limit the amount of general obligation debt a governmental entity may issue to 15% of its total State assessed valuation. The current debt limit for the City is $241.4 million, an amount, which is significantly in excess of the existing general obligation debt. Additional information on the City's long-term debt can be found in Note I on pages II- 39 to II-42 of this report. Economic Factors and Ne�ct Year's Budget and Rates • The unemployment rate for the City of Bangor for calendar year 2002 is 3.12%, which is virtually unchanged from the. rate of 3.01% a year ago. This compares favorably to the State's rate of 3.5%. • The City's share of retail sales remains in excess of 9% of total statewide sales and 70% of county sales, while Bangor represents less than 3% of the state's population. • The increased supply of new residential lots that began in 2002 continues in the current fiscal year. Developers continue to construct new housing without a need for the City to significantly improve infrastructure to accommodate this growth. City of Bangor officials considered many factors when adopting the 2004 fiscal year budget. The primary objective was to keep the increase in the properly tax to a minimum, given economic conditions and the on-going fiscal problems of the state. Since existing property valuation is adjusted annually to current market conditions, the Council focused on minimizing the individual property tax bill. While the mill rate decreased for fiscal year 2004, the average increase in existing property valuation increased 5%. Given that the value of existing property increased by 5% for fiscal year 2004, the City's mill rate was decreased to partially off-set this impact. Past events and current projections indicate that the state will continue to face significant shortfalls in its budget. Given the general consensus that the tax burden in Maine is too high, it is likely that strong efforts will be undertaken to reduce state spending. This may result in reductions to state aid programs to municipalities in such areas as education and revenue sharing. Management continues to track other areas of revenue and expense concerns as well. On the revenue side, our focus is on the continued low and flat rates of return on investments and the ability of automobile excise tax collections to keep pace with its recent trend of 4.5% average annual increases. As for expenses, insurance costs have proven the most volatile. After several years of double-digit increases in both employee health and commercial insurance coverage, estimates for fiscal year 2004 are promising. The City will actually see a small decrease in employee health insurance rates and a less than 10% increase in commercial insurance rates. Management continues to be mindful that insurance rates could easily return to their recent history of large annual increases. II - 12 User rates for both governmental and business-type activities are reviewed on an annual basis, to ensure that fee structures are sufficient in relation to market conditions and the cost to provide such services. Many fees are adjusted annually for inflation, and no significant increases in user rates are foreseen at this time. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Ciry of Bangor's finances. Questions concerning any of this information should be addressed to the Finance Director, City of Bangor, 73 Harlow Street, Bangor, ME 04401. II - 13 6/�SIC FI NAiVCIAL STATE M E NTS � - , , . � � - - . , , , , r . " , � : ; . � . � � . � , , . , . � � � .i ' , • , , � , , , : I ' � ' 'i ' . � , r + � , , _ � � . . . -, , 4 V � I -r , l • , � Exhibit 1 CITY OF BANGOR,MAINE Statement of Net Assets June 30,2003 Governmental Business-type Activities Activities Total ASSETS Cash and cash equivalents $ 1;438,372 $ 888,064 $ 2,326,436 Investments 20,120,544 19,635,390 39,755,934 Receivables: Accounts(net of allowance of$274,838) 1,005,069 3,744,106 4,749,175 Intergovernmental 2,065,568 3,232,394 5,297,962 Taxes and liens receivable -prior years 765,008 - 765,008 Taxes receivable-current year 984,450 - 984,450 Deferred special assessments 30,130 89,358 119,488 Due from water district - 114,952 114,952 Loans (net of allowance of$130,131) 5,358,445 3,396,037 8,754,482 Internal balances 1,SZ3,355 (1,573,355) - Inventories 547,061 78,504 625,565 Prepaid items 6,887 74,244 81,131 Other assets 2,042,761 3,695,790 5,738,551 Capital assets,net 55,837,902 189,735,099 245,573,001 Total assets 91,775,552 223,110,583 314,886,134 LIABILITIES Accounts payable and other cunent liabilities 2,571,918 4,699,296 7,271,214 Accrued payroll 3,205,789 274,677 3,480,466 Deferred revenues 4,095,487 78,709 4,174,196 Noncurrent liabilities Due within one year 2,969,161 3,685,517 6,654,678 Due in more than one year 59,299,011 44,929,582 104,228,593 Totalliabilities 72,141,366 53,667,781 125,809,147 NET ASSETS Invested in capital assets,net of related debt 33,261,947 147,970,359 181,232,306 Restricted for: Nonexpendable trust principal 507,743 - 507,743 Unrestricted (14,135,504) 21,472,443 7,336,939 Total net assets $ 19,634,186 $ 169,442,802 $ 189,076,988 See accompanying notes to financial statements. II- 14 _._ � _ r __ � � - � t __. . Ex6ibit 2 CITY OF BANGOR,MAINE St�[emeut of Activities For the Year Ended June 30.2003 Net(expense)revenue and changes ProQram Revenues in uet assets Operating Capital Primary Government Charges for grants and graots aod Goverumental Business-type Functions/programc Expenses services coo[ributions contributions activities acttvides Total Primary govemment: Govemmental activities: Generalgovemment $ 6,060,687 $ 869,520 $ - $ - S (5,191,16� $ - $ (S,191,16'n Publicsafery � 1I,II4,804 1,446,942 342,246 - (9,325,616) - (9,325,61� Health,welfaze and recrtation 3,340,989 647,709 I,089,698 - Q,603,582) - (1,603,582) � � Public buildings and services 7,050,085 3,043,886 5,688 - (4,000,511) - (4,000,51 l) Otheragencies 1,61Q132 - 33,737 - (1,576,395) - (1,576,395) Educatian 40,828,756 3,742,385 18,691,059 - (18,395,312) - (18,395,312) Unclassified 2,044,069 26,830 - - (2,017,239) - (2,017,239) Restricted grants 6,551,455 5,392,472 1,404,050 - 245,067 - 245,067 .. . - County[a�c 1,712,263 - - - (1,712.263) - (1,712,263) • � . Inurest on deb[ 740,077 - - - (740,07� - (740,07� Capital maintenance expenses 1 824 489 3,814,705 1,99Q216 1,990,2I6 Total govemmental activities 82 877 806 15 I69 744 21 566 478 3,814,705 (42,326,879) (42,326,879) . Business-rype activities: � . Sewer U[ility 5,744,275 6,569,790 - 492,046 - 1,317,561 1,317,561 AiryoR 14,489,128 9,291,513 - 10,432,176 - 5,234,561 5,234,561 �� PazkWoods 449,873 283,052 - - - (I66,821) (166,821) Pazking 1,370,737 807,645 - - - (563,092) (563,092) Bass Pazk 1,944,718 1,362,054 - 350,000 - (232,664) (232,664) Municipal Golf Course 575,408 623,233 - - - 47,825 47,825 EconomicDevelonment 271047 388165 - 117,118 _ 117,118 Total business-type activities 24 845 186 19 325 452 11 274,222 5,754,488 5,754,488 : Total primary government S 107,722,992 $ 34,495,196 $ 21,566,478 $ 15,088,927 (42,326,879) 5,754,488 (36,572,391) General revenues: Properry taxes,levicd for genera(puryoses 37,624,392 - 37,624,392 Payment in lieu of ta�ces 113,573 - 113,575 Excise taxes 4,09I,505 - 4,091,505 Registration fees 65,020 - 65,020 Franchisefees 233,874 - 233,874 Grants and contributions not restricted to specific progams: Homestead exemption 893,050 - 893,050 Other State aid 30,979 - 30,979' State Revenue Sharing 3,135,741 - 3,135.741 Unrestricted investrnent eamings 377,113 1,097,155 1,474,268 Indirect cos[charges 557,165 - 557,165 Miscellaneous revenues 598,515 - 598,515 Transfers (798,618) 798,618 Total¢eneralrevenues and transfers 46,922,311 1,895,773 48,8t8,084 Change in netassets 4,595,432 7,650,261 12,245,693 Net assets-be�++nning 15,038,754 161,792,541 176,831,295 Net assets-eoding S 19,634,186 $ 169,442,802 S 189,076,988 See accompanytng notes to financia!statements. lI-15 , . Exhibit 3 CITY OF BANGOR,MAINE - Balance Sheet Governmental Funds . ; June 30,2003 Community Capitai Other Total � Development Projects Governmental Governmental � General Block Grant Fund Funds Funds '' ;ASSETS 1lssets: Cash $ 839,858 $ 120,596 $ 25,018 $ 452,900 $ 1,438,372 Investments 15,325,950 - 2,311,675 2,482,919 20,120,544 ' Receivables: Ta�ces 1,749,458 - - - 1,749,458 Accounts(net of allowance of$274,838) 912,955 - 92,114 - 1,005,069 Interfundloans 1,573,355 - - 192,025 1,765,380 Intergovemmental 1,491,741 29,897 246,461 297,469 2,065,568 I.oan(netofallowanceof$130,131) 1,300,000 3,026,441 - 1,032,004 5,358,445 Deferred special assessments - - 30,130 - 30,130 � Inventory,atcost 547,061 - - - 547,061 Investment of bond proceeds - - 2,042,761 - 2,042,761 Prepaid items 6 887 - - - 6,887 _ � Totai assets $ 23,747,265 $ 3,176,934 $ 4,748,159 $ 4,457,3]7 $ 36,129,675 LIABILITIES AND EQUITY _ Liabiliries: ' Accountspayable $ 1,151,931 $ 47,088 $ 649,361 $ 92,788 $ 1,941,168 Accrued wages and benefiu payable 3,205,789 - - - 3,205,789 Workers'compensation 607,890 - - - 607,890 Interfund loans payable - - - 192,025 192,025 � Deferred revenues 1,513,698 3,026,441 - 1,004,747 5,544,886 4 Due to rehabilitation recipients - 48,819 - - 48,819 1- Interfund advance - - - - ' Totalliabilities 6,479,308 3,122,348 649,361 1,289,560 11,540,577 1 Fund balances: Reserved for: � Encumbrances 1,252,948 - 4,587,642 898 5,841,488 Prepaid itetns 6,887 - - - 6,887 Interfundloans 1,432,689 - - - 1,432,689 _ �� - - - 132,960 132,960 Nonexpendable trust principal - - - 507,743 507,743 ' Unreserved: Designated 5,682,749 - - - 5,682,749 Undesignated,reported in: General fund 8,892,684 - - - 8,892,684 Special revenue funds - 54,586 - 2,025,598 2,080,184 Capital pmjects funds - - (488,844) - (488,844) � - Peananent funds - - - 500,558 500,558 Total equity(deficit) 17 267 957 54,586 4,098,798 3,167,757 24,589,098 Total liabilities and equity $ 23,747,265 $ 3,176,934 $ 4,748,159 $ 4,457,317 Amounts reported for govemmental activities in the statement of net assets are different because: Capital assets used in govemmental activities are not financial resources and,therefore,are not reported in the funds. 55,837,902 Other long-term assets are not available to pay for current-period expenditure and,therefore, { are deferred in the funds. 1,449,399 Long-term liabiliries,including bonds payable,are not due and payable in the wrrent period ` and,therefore,are not reported in the funds (62,242,213) Net assets of govemmental fimds $ 19,634,186 See accompanying notes to financial statements. II-16 - - Exhibit 4 � CITY OF BANGOR,MAINE Statement of Revenues,Expenditures and Changes in Fand Balances Governmental Funds For t6e year ended Jane 30,2003 Community Capital Ot6er Total � Development Projects Goveromental .Goveromental Geaeral Block Grant Fund Funds Funds -' � r ' Revenues: � Taxes $ 41,948,596 $ - $ - $ 1,404,050 $ 43,352,646 Intergovemmental 24,252,060 681,424 2,268,068 3,426,375 30,627,927 Licenses and permits 409,842 - - - 409,842 Chazgesforservices 9,734,546 - - 417,091 10,151,637 Program income - 461,607 - 121,962 583,569 Revenue from use ofmoney and property 1,142,089 9,493 80,416 188,584 1,420,582 _ , Other 9,707 2,538 1,516,875 83,398 1,612,518 Total revenues 77,496,840 1,155 062 3 865,359 5,641,460 88,158,721 Expenditures: Current: , General govemment 4,223,670 - - - 4,223,670 �� Public safery 11,018,419� - - - 11,018,419 Health,welfare and recreation 3,230,938 - - - 3,230,938 Public buildings and services 7,876,895 - - - 7,876,895 � Other agencies 3,386,873 - - - 3,386,873 Education 44,690,381 - - - 44,690,381 Unclassified 2,223,533 - - - 2,223,533 Restricted grants - 937,642 - 5,614,571 6,552,213 Capital outlay 143,593 - 8,651,058 - 8,794,651 Debt service 1,611,606 - - - 1,611,606 � Total expenditures 78,405,908 937,642 8,651,058 5,614,571 93,609,179 Excess(deficiency)ofrevenues over(under)expenditures (909,068) 217,420 (4,785,699) 26,889 (5,450,458) Other financing sources(uses): General obligation debt 3,805,397 - 592,114 - 4,397,511 Sale of assets 232,259 - - - 232,259 Transfers to other funds (3,561,855) (11,867) (12,249) (77,889) (3,663,860) Transfers from other funds 83,958 - 2,770,326_ 1Q958 2,865,242 Total other financing sources(uses) 559,759 (11,86�) 3,350,191 (66,931) 3,831,152 Excess(deficiency)of revenues and other financing sources over(under)expenditures and other financing uses (349,309) 205,553 (1,435,508) (40,042) (],619,306) Fund balances(deficit),beginning of year(Restated Note F) 17,617,266 (150,967) 5,534,306 3,207,799 26,208,404 Fund balances,end of year $ 17,267,957 $ 54,586 $ 4,098,798 $ 3,167,757 $ 24,589,098 See accompanying notes to financia/statements. � II-17 � Eghibit 5 CITY OF BANGOR,MAINE Reconciliation of the Statement of Revenues,Expenditures, and Changes in Fund Balances of Governmental Funds � to the Statement of Activities r, For the year ended June 30,2003 � Net change in fund balances-total governmental funds (from Exhibit 4) $ (1,619,306) ; � Amounts reported for governmental activities in the statement of ' activities(Exhibit 2)are different because: " � Governmental funds report capital outlays as expenditures. � However,in the statement of activities,the cost of those assets � is allocated over their estimated useful lives as depreciation expense. t This is the amount by which capital outlays exceeded depreciation expense in the current period. 5,204,945 � • � Revenues in the statement of activities that do not provide cunent financial resources are not reported as revenues in � the funds (119,123) Bond proceeds and certain capital leases provide current financial resources to governmental funds,but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds,but the , repayment reduces long-term liabilities in the statement of net assets. 'This is the amount by which proceeds exceeded repayments. 1,025,163 Some expenses reported in the statement of activities do not require -�� the use of current financial resources and,therefore, are not reported as expenditures in governmental funds. 103,753 � Change in net assets of governmental activities(see Exhibit 2) $ 4,595,432 � See accompanying notes to financial statements. �% ( II- 18 � � Exhibit 6 CITY OF BANGOR,MAINE Statement of Revenues,Eapenditures and Changes in Fund Balance Budget and Actual General Fund For the year ended June 30,2003 Variance with �� Final Budget Budgeted amounts Positive ' Original Final Actual (Negative) Revenues: � � Taxes $ 41,316,597 $41,418,077 $41,948,596 $ 530,519 Intergovernmental 19,360,703 19,390,565 20,508,789 1,118,224 � Licenses and permits 369,750 369,750 409;842 40,092 Charges for services ' municipal 5,753,332 5,753,332 5,833,588 80,256 „ school 4,287,779 4,287,779 3,742,385 (545,394) Fines,forfeits and penalties 20,400 20,400 9,707 (10,693) Revenue from use of money and property municipal 764,995 765,471 758,609 (6,862) �' school - 7,965 7,965 - Total revenues 71,873,556 72,013,339 73,219,481 1,206,142 •- Expenditures: � Current: General govemment 4,045,693 4,129,873 3,992,860 137,013 Public safety 11,290,138 11,290,138 11,104,269 185,869 Health,welfaze and recrearion 2,884,280 2,905,985 3,172,189 (266,204) , ) Public buildings and services 7,970,5]3 7,970,513 7,919,573 50,940 Other agencies 3,314,608 3,323,108 3,311,873 11,235 Education 38,766,338 44,112,796 41,455,729 2,657,067 Debt service 1,306,975 1,614,009 1,611,606 2,403 Unclassified 2,023,230 2,214,730 2,211,125 3,605 Totalexpenditures 71,601,775 77,561,152 74,779,224 2,781,928 Excess(deficiency)ofrevenues over expenditures 271,781 (5,547,813) (1,559,743) 3,988 070 Other financing sources(uses): � Appropriaton from designated fund balance 1,188,182 1,188,182 431,636 (756,546) Appropriation from undesignated fund balance - 1,564,180 - (1,564,180) General obligarion bond proceeds - 3,805,397 3,805,397 - � Sale of assets 500 500 18,207 17,707 Transfers to other funds (525,000) (2,055,000) (2,055,000) - Transfers from other funds 48,000 48,000 48,000 - �'� Operating transfers (983,463) (983,463) (983 463) - � Total other financing sources(uses) (271,781) 3,567,796 1,264,777 (2 303 019) -, Excess(deficiency)of revenues and other financing sources over(under)expegditures and other fmancing uses $ . - $ (1,980,017) (294,966) $ 1,685,051 � Undesignated fund balance,beginning of year 9,291,767 Change in balances carried (104,117) ` Undesignated fund balance,end of year $ 8,892,684 See accompanying notes to financial statements. II-19 Exhibit 7 CITY OF BANGOR,MAINE ' Statement of Net Assets Proprietary Funds June 30,2003 . Business-type Activities-Enterprise�nds Sewer Bass Mnnicipal Economic �•. Uh7ity Airport pa� Parking Park Golf Development Totab . Fond Fund Woods Fund Fond Coarse Fund Cnrreotyear � ASSETS Current assets Cash $ 84,179 S �05,055 $ 1,918 $ 8,768 $ 73,277 S 13,095 E 1.772 E 888,064 e Investrnents 2,645,406 3,681,593 - 337,085 - 684,162 - 7,348,246 ! � Accountsreceivable 1,642,112 2,250,791 - 3,713 99,738 - - 3,996,354 � Less allowance for uncollectibie accounts (22,601) (202,537) - - (27,110) - (252,1A8) Netaccountsreceivable I,619,511 2,048,254 - 3,7i3 72,628 - - 3,744,106 Due from other govemments 47,040 3,185,354 - - - - - 3,232,394 Due from wata district ll4,952 - - - - - - I 14,952 Inventories,at cosl - 66,450 - - 12,054 - - 78,504 Prepaid itetns 4,971 24,818 - - 44,455 - 74,244 Totalcurrentassets 4,516,059 9,711,524 1,918 349,566 202,414 697,257 1,772 15,480,510 Property L.and and improvements 683,865 - 295,025 - 828,921 1,431,040 1,143,984 4,382,835 `l Buildings and improvements 27,486,624 - 1,933,061 - 5,587,727 238,408 3,600,785 38,846,605 I Machinery and equipment 4,771,534 - 22,952 - 144.428 246,478 - 5,185,392 - InfrasWcture 44,887,061 - - - - - - 44.887,061 .. Aircrafl operational astets - 194,747,7I3 - - - - - 194,747,713 I Parking struclures - - � - 9,968,268 - - - 9,968,268 Construction in process 4,330,827 11,661,097 - - - - - 15,991,924 82,159,911 206,408,810 2,251,038 9,968,268 6,561,076 1,915,926 4,744,769 314,009,798 �, L.ess accumulated depreciation (23,741,562) (89,417,752) (74I,454) (4,661,185) (4,581,845) (883,401) (247,500) (124,274,699) NetpropeRy,plantandequipment 58,418,349 116,991,058 1,509,584 5,309,083 1,979,231 1,032,525 4,497,269 189,735,099 ( � Other assets ]nvestrnents - 12,287,144 - - ' ' ' 12.287,144 Loans receivable 619,200 2,642,281 - - - - 134,556 3,396,037 Deferted special assessnents � 89,358 - - - - - - 89,358 Investrnentofbond proceeds � 1,642,024 - - 236,940 14,188 - - 1,893,152 Due&om bond trustee 1,598,049 - - - - - - 1,598,049 " . Deposits - - 15,000 - - - - 15,000 Operating rights(net of accumulated amortizadonof$I,276,437) - 23,563 - - - - - 23,563 _ Bond issuance cosls(net of accumulated � amortization of$249,036) 166,026 - - - 166,026 � Total assets 67,049,065 141,655,570 1,526,502 5,893,589 2,I95,833 1,729,782 4,633,597 224,683,938 See accompanying notes to fznancial statements. l"_ I Continued on next page n-zo � r Exhibit 7(con't) CITY OF BANGOR,MAINE � Statement of Net Assets , Proprietary F�nds June 30,2003 ' . Business-type Activities-Enterprise Ftind's Sewer Bass Municipal Economic r., UNlity Airport Park Parldng Park Golf Development Totals Fund �nd Woods Ftind Fund Course Fund Current year ' LIABILITTES ' Curtent liabili[ies Accounts payable 594,343 3,463,632 16,235 11,726 19,802 6,579 24,192 4,136,509 i , Accrued wages and benefits payable 24,409 195,506 3,127 6,543 26,647 18,445 - 274,677 Accruedinterest 329,366 56,628 - 82,566 17,657 - 26,450 512,667 � Workers'compensation 15,101 81,074 - 3,231 5,555 - - 104,961 Defemd revenue - - - 54,234 24,475 - - 78,709 Interfund loans - - 26,000 - 1,399,355 - 148,000 1,573,355 � Generalobligation debtpayable 2,512,637 333,178 - 433,215 126,t37 445 237,659 3,643,2I1 � Deferred amount on refunding (33,793) - - (28,922) - - - (62,715) Other liabilities - 48,109 - - 2,011 - - 50,120 Total curtent liabilities 3,442,063 4,178,127 45,362 562,593 1,621,639 25,469 436,301 10,311,554 ' Long-tenn liabilifies Workers'compensation 74,899 94,825 - 6,769 4,445 - - 180,938 Generalobligationdebtpayable 28,534,113 7,035,181 - 5,316,158 1,778,587 94,158 1,452,593 44,210,790 � Deferred amount on refunding (106,839) - - Q00,202) - - - (207,04I) � Accrued compensared absences 45,440 177,361 8,036 2,839 17,504 6,703 - 257,883 � Other long-term liabili[ies 280,534 - 193,061 13,417 - - - 487,012 -• Total long-tertn liabilities 28,828,147 7,307,367 201,097 5,238,981 1,800,536 ]00,861 1,452,593 44,929,582 ' Totalliabilities 32,270,210 t1,485,494 246,459 5,801,574 3,422,175 126,330 1,888,894 55,241,I36 , 1 NET ASSETS 1 Inves[ed in capital assets,net of related debt 28,411,487 ll3,491,058 1,509,584 169,076 549,612 1,032,525 2,807,017 147,970,359 � Unrestricted 6,367,368 16,679,018 (229,541) (77,061) (1,775,954) 570,927 (62,314) 21,472,443 Total net assets $ 34,'778,855 S 130,170,076 $ 1,280,043 $ 92,015 $ (1,226,342) $ 1,603,452 $ 2,744,703 $ 169,442,802 See accompanying notes to f nancial statements. + . � � , � � , �` =� Continued from previous page � Q_Z� Exhibit 8 CITY OF BANGOR,MAINE � Statement otRevenues,Eapenses and Changes in Net Assets Proprietary Funds For the fiscal year ended June 30,2003 Business-type Activities-Enterprise Funds Sewer Bsss MuniMpal Ern�romic Utility Airport Park Parldng Park Golf Developmevl Totab ' � Fmid Fund Woods Ftimd Fmd Conrse Fm�d C�ment year _ � Operating revenues Cha�ges for services $ 6,569,790 $ 9,253,620 $ 283,052 $ 807,645 S 1,362,054 S 623,233 $ 388,165 $ 19,287,559 Opuating expensw / ; Operating expenses othtt than depreciationar�darnortirrtion 2,889,295 ' 8,198,731 360,750 586,353 1,662,607 471,027 155,726 14,324,489 . Lkpreciationandamortization 1,550,300 5,740,556 89,123 470,452 196,473 98,605 77,381 8,222890 � Total operating ezpensa 4,439,595 13,939,287 449,873 1,056,805 1,859,080 569,632 233,107 22 547,379 Operatingincome(loss) 2,13q195 (4,685,66'� (166,821) (249,I60) (497,026) 53601 155058 (3259820) � � I Nonoperating revrnue(ezpenses) Interest income 92,009 I,046,317 28 4,193 1,790 14,308 ]0,655 1,169,300 Unrealized loss on invatmrnts - (72,14� - - - - - (72,14� � Interest expense (1�04,680) (549,841) - (313,932 , ) (85,638) (5,776) " (37,940) (2,297,807) Gfants/contributions received for capital assets 492,046 10,432,176 - - 350,000 - - 11,274,222 . Miscellanmus income(expense) - 37,893 - - - 37,893 � - ToWnonoperatingrovenue(expenses) (720,625) 10,694,400 28 (309,739) 266,152 8,532 (27,285) ]0,111,463 f Net income(loss)befo�c operating hansfers 1,409,570 6,208,733 (166;793) (558,899) (23Q874) � 62,133 127,773 6 851 643 Transfersrootherfunds (100,000) (19,345) - (36,422) - (31,345) - (187,112) �' Transfcrs from other funds - - 2,267 485,077 498,386 985,730 �� Changeinnetazscts 1,309,570 6,189,388 (164,526) (llQ244) 267,512 30,788 127,773 7,650,261 � 4 Net Assets,July 1,(Ratated Note k� 33,469,285 123,980,688 1,444,569 202,259 (1,493,854) 1,572,664 2 616 930 161,792,541 Net Assets,Jwe 30 S 34,778,855 S 130,190,076 S 1,280,043 S 92,015 S (1,226,342) S 1,603,452 S 2,744,703 S 169,442,802 � See accompanying notes to financial statements. \ f � , � r r n-zz � ' Exhibit 9 CITY OF BANGOR,MAINE Statement of Cash Flows-Proprietary Funds - For the f scal year ended June 30,2003 ,_ Business-type Activities-Enterprise Funds � Sewer Bass MuMcipal Ernnomie Utflity Alrport Park Parklog Park Golf Development � Fund Fund Woods Fund Fund Course Fund Total � ' Cazh Oows Gom operating actvities , Cach raeived Gom customers S 6,816,486 $ 9,248,323 S 283,052 S 50�,205 S t,281,185 S 623,233 5 388,165 S 19,441,649 " Cazh paid to suppliers Cor goods ar�d services (1,853,604) (3,475,200) (284,585) (415,028) (974,492 ) (232.02� (146,624) (7,387,559) Cashpaidtoemployeesfmsrnices (964,911) (4,404,079) (65,009) (168,538) (710,528) (242,601) (6,555,86 � Na cazh provided by(used in)operating , � activies 3,997.971 1,369,094 (66,542) 217,639 (403,835) 148,406 241,541 5,504,224 Cash Oows from nmrcapital finarrcing utivitia Nterfimdtoa�(repayments) �. - (600,OW) 26,000 - 118,500 - 148,000 (307,500) I Transfers in - - Z167 - - - - 2.267 � Transfersout (100,000) (19,345) - (36,422) - (31,345) - (187,ll2) Operating Na'¢fer raeived - - 485.077 498,386 . . 983,463 -� Nel cash provided by(uced in)nmicapital - fmancingacfivitia (100,000) (619,345) 28,26� 448,655 616,866 (31,345) 148,000 491,118 Cash flows Gom capital and relateA fvuncing activities Praeeds Gom general obligation bonds 5,262,142 3,500.000 - 266,000 812,699 - 1,300,000 I1,140,841 "_ Acquisiuonandconstructionofcapitalassets '(3,213.778) (8,884.82t) - (297,249) (300,470) - (I.850,359) (14,546,67'n Principal paid on grneral and�imi�ed revenue . _ obligationbonds (4,584,59� (4,215,453) - (391.773) (588,164) (256 ) (65534)� (9,845,77� Interest paid on grneral and limiled revenue _ obligationbonds (1,272,735) (578,589) ' (304,919) (87,203) (5,�76 ) (25,08� (2,274,309) I i Proceeds from salt of equipmen� - 221,254 - • - - ' 221,254 � Granl monia received for capilal azsets 835,059 8,477,177 - - - - - 9,312,236 Inveslmrnto(bond proceeds (1,484,168) 539,380 87,695 �g57,p9;� � Net cash provided by(used in)capital and related , 1 (nancing activilies (4,458,077) (941,052) - (640,24� (163,138) (6,032) (640,960) (6,849 525) Cash flows 6om investing aclivities Net sales(purchazes)of inveshnents 103,206 (281,909) 968 (221,665) 7,050 (199,553) 12,124 (579,779) Interal on mvcstmenis 95,076 974,169 28 4,535 1,790 14,308 10,656 I,I00,562 , Loanrepaymenls 391.800 197,140 4,172 593112 Net cazh provided by(used in)mvesting activities 590,082 889,400 996 (217,130) 8,840 (185,245) 26,952 1,113,895 � Ne�increase(decrease)in cash 29,976 698,047 (37,279) (191,082) 58,753 (74,216) ' (224,487) 259,712 Cash,July I 54,203 7,008 39,197 199,850 14,524 8�,317 226,259 628,352 I � Cash,June 30 S 84,179 S 705,055 S 1y18 $ 8,768 S 73,277 S 13,095 $ 1,772 g 886,064 Schedule of noncazh investing,capiW and Snancing activities: ., , During ihe year.the Airport Fwid had an unrealized loss on imestrnrnts in 1he amounl of 572.145. See accompanying notes to financial statements. t 1 i - Cantinued on next page ' D-23 Exhibit 9(con't) CTI'Y OF BANGOR,MAINE . Statement of Cash Flows-Proprietary Funds , For the fiscai year ended June 3Q 2003 Busioess-type Activities-Enterprise Funds Sewer Baas Municipal Economic � . Utflity Alrport Park Parking Park Golf Development N'und Fund Woods Fund Rund Course Fund Total . Reconciliation ofopaatmg income(lass)wrnl - � cash provided bY(�m)oP��B activities _ Opera[ingimomeQoss) � $ �2,130,195 5 (4,685,66� $ (166,821) $ (249,160) 5 (497,026) 5 53,601 $ 155,058 E (3;259,820) � Adjustrnents ro recrnicile operating income(loss) � to nel czsh provided by(used'm)opemting . azUvitia � 1 - Depredationandarnrntir�tion I,550,300 5,740,556 69,123 470,452 196,473 98,605 77,38i 8,222,890 `� Provision frn uncollabble accamts - 91,804 - - - - - 91,604 � Changes in assets and liablitics: i . ([ncrease)a«reasoinaccowrtsreceivante (27,1a9) (5,29� - (sza) (2a�zo]) - - (s7,���) (Incresse)decreaze in due from water districl 273,885 - - - - - - 273.885 � (Increase)decrcau m inventories - 1,386 - - (2,816) - - (1,430) (Inaeace)decrease m prepaid items (1.092) 9.108 - - (2Q245) - - (12,229) , Increase(decrease)in accounts payable 64,514 154,027 9,450 1,083 (4,442) (10,664) 9,102 223,050 L�crease(decreaze)m dtferted revenue - . - (5,916) (56,668) - - (62,584) . Increase(decrease)m otha curtent liabilities 7,358 63,127 1,706 1,704 5,090 6,684 85,869 Toul adjustmrnls 1,867,776 6,054,711 100,279 466,799 93,191 94,805 86 483 8 764 044 � Net cash provided by(used in)operating attivltles $ 3,997,971 $ 1,369,044 $ (66,542) $ 217,6J9 S (403,83� 5 148,406 $ 241,541 $ 5,504,224 �- f See accompanying no(es Io financiaf smtemenu. � Y 1 I / i I I, i Continued Gompreviou�page � �-24 ^ E�ibit 10 CITY OF BANGOR,MAINE Statement of Fiduciary Net Assets ' Fiduciary Funds � June 30,2003 , Agency Fund , ASSETS , , Cash $ 71,060 ' Total assets $ 71,060 � _ LIABILITIES Liabilities: Amounts held for others $ 71,060 Total liabilities $ 71,060 See accompanying notes to financial statements. � , � � II-25 � This page left intentionally blank , . � � � � . ; . ,- , _, ` � INDEX OF NOTES TO FINANCIAL STATEMENTS Summary of SigniFcant Accounting Policies Note Pa4e A Reporting Entity II— 26 B Govemment-wide and Fund Financial Statements II — 26 , C Meas�rement Focus, Basis of Accounting and Basis of Presentation II — 26 D Assets, Liabilities and Equity II — 29 , Stewardship, Compliance and Accountability � ' A Budgetary Information - � ' ,"� II— 31 - B Reconciliation of Budgetary Basis Statements � II — 32 C Excess of Expenditures Over Appropriations , II — 33 D Deficit Fund Equity - � . � II — 33 ; , � � � Detailed Notes on All Funds � ` _ �� { A Deposits and Investments � �� ,' II — 34 B Properly Tax `� ; , � , ' � � ; II — 35 ' � C Capital Assets � � � . } � � ' II�— 35 D Interfund Transactions �• � � " � , II — 37 E Due From Other Governments+ � , � ` II — 37 F Leases ' II — 38 G Other Assets - �� II — 39 H Deferred Revenue � � ' II — 39 I Long-Term Debt � ' ,Ii — 39 5 = . ] Fund Balances , • , II= 43 _ ' . , � , � Other Information . � , ' A Risk Management �` ` ' ' II — 44 ._ B Tax Increment Financing Districts � II — 45 C Contingent Liabilities ' { ;- " II— 46 D Retirement � � II—46 E Landfill Closure and Postclosure Care Costs , II — 48 F Restatement of Beginning Fund Equity , II — 48 G Subsequent Events II — 48 CITY OF BANGOR, MAINE Notes to Basic Financial Statements 7une 30, 2003 � SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1 A. Reporting Entity The City of Bangor was incorporated under the laws of the State of Maine in 1834 and operates under a council/manager form of government. In evaluating how to define the reporting entity, for financial reporting purposes, management has considered all potential component units. The criteria used to determine which entities, agencies, commissions, boards and authorities are part of the City's � operations include how the budget is adopted, whether debt is secured by general obligation of the City, the City's duty to cover any deficits that may occur, and supervision over the accounting , functions. Based upon all pertinent facts derived from the analysis of the above criteria, it was , determined that no additional entities should be included as part of theses financial statements. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Governmental ` activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for , support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The City has elected not to allocate indirect costs among the programs, functions and segments. 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 of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary ' funds, even though the latter are excluded from the government-wide financial statements. Major �- individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation The government-wide financial statements are reported using the economic resources measurement - focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. 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. , II-26 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 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 government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. F�cpenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as certain compensated absences and claims and , judgments, are recorded only when the payment is due. Those revenues susceptible to accrual are property taxes, interest, and charges for services. Other , receipts and taxes become measurable and available when cash is received by the City and are , recognized as revenue at that time. -- Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. , The City reports the following major governmental funds: The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. , The Community Development Block Grant Fund accounts for federal grants obtained and expended under the Housing and Community Development Act of 1974, as amended, for the development of viable urban communities. � The Capital Projects Fund accounts for the acquisition of fixed assets or construction of major capital projects not being finance by proprietary or fiduciary funds. The City reports the following major proprietary funds: The Sewer Utility fund accounts for the costs of construction and operation of the sewage treatment plant, the City sewer system, and sewer operation activities, and is self-supported through sewer user fees. � The Airport Fund accounts for the operation of Bangor International Airport. The principal � sources of revenues are landing fees and the sale of aviation fuel. Other revenue sources include lease payments for the use of terminal space and non-aviation industrial buildings. II-27 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED � The Park Woods Fund accounts for the rental of 60 units of surplus housing received from the � federal government pursuant to the McKinney Homeless Assistance Act. The principal source of � revenue is rental income. The Parking Fund accounts for the operation of the City-owned parking lots and the Pickering � Square garage. Revenue sources include monthly lease payments for parking spaces, hourly/daily parking fees and fines and waiver fees for parking violations. Certain of these facilities are operated under a private management contract. - The Bass Park Fund accounts for the operation of the Bangor auditorium, Bangor Civic Center, � and Bangor State Fair. Principal sources of revenue are admissions, concession sales and rentals. The facility is named aPter the Bass family, which bequeathed the property to the City for recreational purposes. ' The Municipal Golf Course Fund accounts for the operation of a 27 hole municipal golf course. Principal revenue sources are season memberships and daily greens fees. The Economic Development Fund accounts for the operation and development of properties , acquired by the City. Its purpose is to promote economic growth within the City. the principal source of revenue is rental income. Additionally, the City reports the following fund type: Fiduciary funds account for assets held by the City in a trustee capacity or as an agent on behalf of others. The City's fiduciary funds include the following fund type: - � Agency funds are custodial in nature and do not present results of operations or have a measurement focus. Agency funds are accounted for using the modified accrual basis of accounting. The funds are used to account for assets that the City holds for others in an agency capacity. � Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the '' extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to the same limitation. The Ciry has elected not to follow subsequent private-sector guidance. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City's public services function and , - various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. II-28 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued ; SUMMARY OF SIGNIFICANT.ACCOUNTING POLICIES, CONTINUED Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. l''he principal operating revenues of the City's proprietary fund is charges to customers for sales and services; operating expenses include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, �hen unrestricted resources as they are needed. D. Assets, Liabilities and Equity i. Deposits and Investments � Cash includes amounts in demand deposits as well as short-term investments with a maturity date , within three months of the date acquired by the City. State statutes authorize the City to invest in obligations of the U. S. Treasury, commercial paper, � corporate bonds and repurchase agreements. City policy prohibits the investment in so-called '�derivative instruments". Investments are reported at fair value. Income earned from the investment of pooled cash is allocated ' to various funds based upon the average cash balance allocated to the fund. 2. Interfund Receivables and Payables . Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either'�interfund loans" (i.e. current portion of interfund loans) or "advances to/from other funds" (i.e. the non-current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as"internal balances". Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. 3. Inventories and Prepaid Items Inventories consist of expendable supplies held for consumption and are valued at cost. Under the consumption method, the costs of inventory items are recognized as expenditures/expenses when II-29 CITY OF BANGOR, MAINE Notes to Financial Staten�ents, Continued SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED , used. The consumption method does not require a reserve for inventory and the City has chosen not to have such a reserve. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 4. Capital Assets ' Capital assets, which include property, plant, equipment, and infrastructure assets (e.g:, roads, bridges, sidewalks,.and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $10,000 for machinery/equipment/vehicles, $25,000 for land/buildings and improvements and $100,000 for infrastructure and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or � constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal repairs and maintenance that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest � incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Property, plant, and equipment of the primary government is depreciated using the straight line method over the assets' estimated useful lives ranging from 3 to 100 years. For all capital assets; buildings, vehicles, equipment, sewer related assets the City elects to use the Depreciation Approach as defined by Statement No. 34 for reporting. The City conducted an inventory of all other capital assets for fiscal year 2003. " This process determined the original cost, which is defined as the actual cost to acquire new property � in accordance with market prices at the time of first construction/acquisition. Original costs were -� developed in one of three ways: 1) historical records; 2) standard unit costs appropriate for the construction/acquisition date; or 3) present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the current date. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date on a straight line, unrecovered cost method was computed using industry accepted life expectancies for each capital asset. The book value was then computed by deducting the accumulated depreciation from the original cost. 5. Compensated Absences , Accumulated vacation or compensatory time or vested sick leave of governmental funds that is expected to be liquidated with expendable available resources is reported as an expenditure in the - fund financial statements. All accumulated leave, including that which is not expected to be liquidated with expendable available financial resources, is reported in the government-wide financial statements. - II-30 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued , SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Accumulated leave of Enterprise Funds is recorded as an expense and liability of the respective fund as the benefits accrue to employees. No liability is recorded for non-accumulating rights to receive sick pay benefits. 6. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs if material to basic financial statements, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charged and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 7. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific � purpose. Designated fund balances represent tentative plans for future use of financial resources. � 8. Allowance for Uncollectible Accounts and Loans . Allowances for uncollectible accounts are maintained for all types of receivables which historically experience uncollectible accounts. Allowances for uncollectible loans are established when the City determines its ability to collect the outstanding loan balance has been impaired. 9. Use of Estimates _ Preparation of the City's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent items at the date of the financial statements and the reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ from those estimates. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Budgets are prepared on a modified accrual basis of accounting, with the exception of depreciation within the enterprise funds. Budgets for the General Fund and enterprise funds are formally adopted - each year through the passage of an appropriation resolve. Budgets for special revenue and capital II-31 CITIf OF BANGOR, MAINE Notes to Financial Statements, Continued STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY, CONTINUED , projects funds have adopted project-length budgets. Unencumbered appropriations lapse at fiscal year end. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting is employed in governmental funds. Encumbrances (i.e., purchase orders, contracts, and other commitments) outstanding at year end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments have not be honored in the current year. Fo"r budgetary purposes, encumbrances are treated as expenditures within both governmental and proprietary fund types. On or before the second Monday in April, the City Manager submits to the City Council a proposed operating budget for the ensuing fiscal year. The Council holds public meetings and a final budget must be prepared and adopted no later than June 30th. Should the Council fail to adopt an operating budget on or before June 30th, by Charter, the budget proposed by the City Manager becomes effective. The budget is adopted at the department level through the passage of appropriation resolves. The City Manager may make transfers of appropriations within a department. Transfers between departments or additional appropriations require the approval of the City Council. The City Council made several supplementary budgetary appropriations throughout the year, only two of which were material. The City Council appropriated $1,530,000 from the City's undesignated fund balance to be transferred to the Capital Projects Fund for various improvements and it appropriated $3,643,600 in general obligation bond proceeds for the purpose of a current refunding (refer to Note I. Long-Term Debt, of the Detailed Notes for a full description of the transaction). B. Reconciliation of Budgetary Basis Statements The following schedule reconciles the General Fund amounts on the Statement of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual—Budgetary Basis to the amounts on the Statement of Revenues, Expenditures, and Changes in Fund Balances, Governmental Funds: Deficiency of revenues over expenditures and L _ other financing sources and uses(Budget) $(324,728) Activity in designated fund balance (357,138) 2003 encumbrances 1,238,548 2002 encumbrances lapsed (9,245) 2002 encumbrances paid (896,746) Excess of revenues and other financing sources over expenditures and other uses(GAAP) � (349.3091 The following schedule reconciles the amounts on the enterprise funds' Schedules of Revenues, Expenditures and Encumbrances—Budget and Actual—Budgetary Basis to the amount on the Combined Statement of Revenues, Expenses, and Changes in Retained Earnings/Fund Balances: ' II-32 ' CITY OF BANGOR, MAINE Notes to Financial Statements, Continued , , ;. __._ .. _. .. __. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY,CONTINUED Excess(deficiency)of revenues over expenditures and encumbrances: Sewer $ (1,126,236) Airport (484,983) Park Woods (56,873) Parking (443,238) Bass Park (100,055) , Municipal Golf Course 33,086 Economic Development (455�374� �2.633,673) Nonoperating revenues classification (2,092,440) Investments at market value (72,145) Capital outlay 913,321 Capital projects (144,224) Cash basis to accrual basis adjustments (580,704) Contributed capital depreciation (4,367,077) Principat payments 3,243,271 2003 encumbrances 200,063 2002 encumbrances (176,369) Nonoperating expenses classification 2,450,157 Operating loss $��25�$ ) C. Excess of Expend�tures Over Appropriations The following General Fund departments were over-expended by the indicated dollar amounts; Council $354, City Clerk $3,647, Assessing $442, Legal $8,433, Fire $4,983, Health and Welfare $281,919, Pension and Other Fringes $9,614 and Tax Increment Financing Payments $3,281. These over- expenditures were funded by receipt of revenues in excess of appropriation and under-expenditures within other General Fund departments. �' The Park Woods Fund was over-expended on a departmental basis by $55,186. The majority of the deficit was caused by higher than anticipated utility billings and increased repairs to the units. The Parking Fund was over-expended on a departmental basis by $182,495. These over-expenditures were funded in part by receipt of revenues in excess of appropriations and the remainder is attributable to depreciation expense being under budgeted. The Economic Development Fund was over-expended on a departmental basis by $59,135. This deficit is eliminated on a GAAP basis. D. Deficit Fund Equity The Bass Park Enterprise Fund has a deficit fund equity of$1,226,342 as of June 30, 2003. The City Council has begun to take steps to address this ongoing problem, and has determined that the facility � will either be closed or replaced in the near future under a financial and management structure that more clearly reflects its economic benefit and more equitably distributes it business risk. II-33 CITIf OF BANGOR, MAINE Notes to Financial Statements, Continued DETAILED NOTES ON ALL FUNDS � A. Deposits and Investments At year=end, the City's carrying amount of deposits was $2,391,057 and the bank balance was � $3,045,142. Of the bank balance, $2,334,658 was covered by federal depository and Travelers insurance or by collateral held by the City in its name, the remaining $710,484 was uninsured. Statutes authorize the City to invest in obligations of the U.S. Treasury, agencies and instrumentalities, repurchase agreements, corporate securities, financial institution stocks, and other stock investments. Investments are categorized as follows to give an indication of the level of risk assumed by the City at year end: (1) insured or registered or for which securities are held by the City or its agent in the City's name, � (2) uninsured and unregistered for which the securities are held by the bank's trust department or agent in the City's name, (3) uninsured and unregistered for which the securities are held by the bank's trust department or agent but not in the City's name. At year end, the City's investments consisted of the following: Carrying Category Valu 1 2 3 U.S.Government and agencies $ 29,592,326 - $ 29,592,326 - State of Maine(agency bonds) 10,124 - 10,124 - Commercial paper 996,000 - 996 000 - 30,598,450 - 30,598,450 - Certificate of deposit 50,000 Mutual Funds(1) 13,043,242 - - - Total investments 43.691.692 - $ 30.598.450 - 1 (1) Mutual funds and the certificate of deposit are not classified in any of the three above categories because they are not evidenced by securities that exist in physical or book entry form nor are they included as deposits. Due to_higher cash flows at certain times during the year, the City's investment in U.S. Government and agency obligations, repurchase agreements and mutual funds fluctuates significantly. r A reconciliation of cash and investments as shown on the combined balance sheet for the Ciry follows: Cash and Cash Equivalents $ 2,397,496 Investments 39,755,934 Investment of bond proceeds(other assets) 3,935,913 46,089,343 Less: Pending items (6,594) 46.082_749 � Carrying amount of deposits 2,391,057 Carrying amount of investments 43,691,692 Carrying amount of investments 46.082.749 II-34 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued - DETAILED NOTES ON ALL FUNDS, CONTINUED B. Property Tax Property taxes for the current year were levied July 9, 2002, on the assessed value listed as of the � prior Aprii 1 for ail real and personal property located in the City. Assessed values are periodically established by the City's Assessor at 100% of assumed market value. Taxes were due in two installments: September 16, 2002 and March 17, 2003. Interest was charged at 8.75% on all taxes unpaid as of the due date. � Property taxes levied during the year were recorded as receivables at the time the levy was made. The receivables collected during the year and in the first sixty days following the end of the fiscal year have been recorded as revenues. The remaining receivables have been recorded as deferred revenues. Tax liens are placed on real property within twelve months following the tax commitment date if taxes are delinquent. The City has the authority to foreclose on property eighteen months after the filing of the lien if the tax liens and associated costs remain unpaid. " C. Capital Assets Capital asset activity for the year ended June 30, 2003 was as follows: Balance Balance June 30, ]une 30, 2002 Increases Decreases 2003 Governmental activities: Capital assets, not being depreciated: ' Land $ 5,040,548 - - 5,040,548 Construction in progress 8�733 347 6,814,697 3,302,167 12�245,� Total capital assets, not being depreciated 13�773,895 6,814,697 3 302,167 17,Z86�425 Capital assets, being depreciated: , Land improvements 1,437,811 - - 1,437,811 Buildings and improvements 40,769,869 218,731 - 40,988,600 Machinery and equipment 5,058,501 805,590 - 5,864,091 Vehicles 6,999,689 2,513,335 - 9,513,024 Infrastructure 11,061,273 155,740 - 11,217,013 Total capital assets being depreciated 65,327,143 3,693,396 - 69,020,539 Less accumulated depreciation for: Land improvements (1,071,439) (43,954) - (1,115,393) Buildings and improvements (13,708,971) (803,996) - (14,512,967) Machinery and equipment (2,489,741) (379,447) - (2,869,188) Vehicles (4,109,650) (550,801) - (4,660,451) Infrastructure (7 088�280) (222,783) - (7,311,063) , Total accumulated depreciation (28,468,081) (2,000,981) - (30,469,062) Total capital assets being de�reciated, net 36,859,062 1,692,415 - 38,551,477 �50.632.957 8.507.112 3.302.167 55.837.9A II-35 CITY OF BANGOR, MAINE , Notes to Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED Balance Balance June 30, June 30, 2002 Increases Decreases 2003 Business-type activities: - Capital assets,not being depreciated: Land $ 1,929,749 350,000 - 2,279,749 Construction in progress 7,717,444 12.901.279 4,626.799 15.991,924 Total capital assets,not being depreciated 9,647,193 13,251,279 4,626,799 18,271,673 Business-type activities: ' Capital assets,being depreciated: ' Land improvements 1,802,616 300,470 - 2,103,086 Buildings and improvements 36,996,246 1,850,359 - 38,846,605 Machinery and equipment 5,061,759 123,633 - 5,185,392 Infrastructure 40,205,852 4,681,209 - 44,887,061 Airport operational assets 193,863,377 1,078,310 193,974 194,747,713 Parking structures 9,742,189 226,079 - 9,968,268 Total capital assets being depreciated 287,672,039 8,260,060 193,974 295,738,125 Less accumulated depreciation for: . Land improvements (613,611) (86,415) - (700,026) Buildings and improvements (18,654,413) (1,243,994) - (19,898,407) Machinery and equipment (2,449,789) (234,939) - (2,684,728) Infrastructure (6,487,136) (425,465) - (6,912,601) Aircraft operational assets (83,574,223) (5,848,836) 5,307 (89,417,752) Parking structures (4,190,734) (470,451) - (4j661�1851 Total accumulated depreciation (115,969,906) (8,310,100) 5,307 (124,274,699) Total capital assets being depreciated,net 171,702 133 (50r040) 188,667 171,463,426 ' es canital assets.net �181.349.326 13.201.239 4.815.466 189.735.099 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: � General govemment $ 568,343 Pubiic safety 240,907 Health,welfare and recreation 154,992 Public building and services 298,473 EdUcatiOn 738,266 deoreciation exoense—aovernmental activities �2.000.98 Business-type activities: Sewer Utility Fund $1,529 683 Airport Fund 5,848,835 Park Woods 89,123 Parking Fund 470,452 Bass Park Fund 196,022 Municipal Golf Course -" 98,605 Economic Development Fund 77,380 otal de�reciation exoense—business activities 58.31A.10 � II-36 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED Construction commitments The government has active construction projects as of )une 30, 2003. The projects include reconstruction of runways, construction of additional infrastructure on the waterfront, continuation of the combined sewer overtlow program, construction of an outdoor aquatic center and the engineering associated with a new police station. D. Interfund Transactions Individual fund interfund receivable and payable balance at June 30, 2003 were as follows: Receivable Payable General Fund $ 1,573,355 $ - Other HUD Funds 192,025 - . Grant Fund - 192,025 Park Woods Fund - 26,000 Bass Park Fund - 1,399,355 Economic Development _ - 148,000 .76 .380 � 1.76 . 8 Individual fund transfers to and from other funds for the fiscal year ended June 30, 2003 were as follows: Transfers to Transfer from - General Fund $3,561,855 $ 83,958 Special Revenue Funds 28,189 10,899 ` Capital Projecks Fund 12,249 2,770,326 Expendable Trust Funds 10,267 59 Proprietary Funds 187,112 985,730 Permanent Funds 51,300 - $3.850_ 7 � 3 R5(1 977 E. Due From Other Governments Due from other governments is comprised of the following amounts at June 30, 2003: Federal State of Government Maine Other Total General Fund $ 23,438 $ 1,104,690 $ 363,613 $ 1,491,741 Special Revenue Funds 317,808 9,558 - 327,366 Capital Projects Fund - 246,461 - 246,461 Proprietary Funds 3,063,810 168,584 - 3,232,394 Of the General Fund's $1,104,690 due from State of Maine, $329,016 represents school grant and State agency billings, $317,988 is due from the Department of Transportation and $213,742 represents general assistance claims. Amounts due from other communities for tuition reimbursement to Bangor accounts for $337,531 of the Due from Other in the General Fund. II-37 CITY OF BANGOR, MAINE _ Notes to Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED F. Leases Operating Leases The Airport and Economic Development Proprietary Funds are the lessors of various buildings and land parcels under operating leases expiring in various years through 2039 and 2034, respectively. Minimum future rentals to be received on noncancelable leases as of June 30, 2003 are: Fiscal year ending Economic June 30, Airport Development 2004 $ 1,539,674 $ 375,325 2005 1,363,082 324,756 2006 1,091,688 321,726 2007 860,466 321,726 2008 738,825 206,061 Subsequent to 2008 6,978,856 2,367,095 12.572.591 $ 3.916.689 Minimum future rentals do not include contingent rentals, which may be received as stipulated in the lease contracts. The Airport received $1,823,412 in contingent rentals in fiscal year 2003. Capital Leases The General Fund has entered into lease agreements as lessee for financing the acquisition of copiers. � These tease agreements qualify as capital leases for accounting purposes and, therefore, have been � recorded at the present value of their future minimum leases payments as of the inception date. The following is a schedule of future minimum lease payments under the capital leases, together with the net present value of the minimum lease payments as of June 30, 2003. Fiscal year ending June 30, General Fund 2004 $ 144,411 2005 74,948 2006 71,457 2007 71.457 Minimum lease payments 362,273 Less: interest 36,114 Present value of minimum , lease payments 326"l59 � II-38 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued - DETAILED NOTES ON ALL FUNDS, CONTINUED G. Other Assets Other assets are comprised of the following: Capital Proprietary Projects Fund Fund Investment of bond proceeds $ 2,042,761 $ 1,893,152 • Due from bond trustees - 1,598,049 Deposits - 15,000 Operating rights (net of amortization) - 23,563 Bond issuance costs (net of amortization) - 166.026 Total 2.042.761 $ 3.695.790 H. Deferred Revenue � General Fund deferred revenue consists of $1,449,399 in deferred taxes and $64,299 of advance deposits. Special Revenue Funds deferred revenue of $4,031,188 represents future revenue equal to loans made pursuant to the Community Development, Urban Development Action Grants and Economic Incentive Revolving Loan Fund. Under the terms of these grants, loans made are recognized as an expenditure in the Special Revenue Fund when they occur. Further, in accordance with regulations governing such funds, the repayments of such loans are considered program income as received and are available to the recipient for additional use within the program. Proprietary Funds deferred revenue of$78,709 represents advance deposits. I. Long-Term Debt General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital additions. General obligation bonds have been issued for both governmental and business-type activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenues. In addition, general obligation bonds have been issued to refund general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of - the government. These bonds generally are issued as 20-year serial bonds. The original amount of general obligation bonds issued in prior years was $127,936,400. The following is a summary of general obligation bond and note transactions of the City for the fiscal year ended June 30, 2003: Bonds and notes payable at June 30, 2002 $ 101,522,483 Add: principal additions 15,272,352 Less: principal repayments 11,271,751 Bonds and notes payable at]une 30, 2003 $ 105.523.084 II-39 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED Bonds and notes payable at June 30, 2003 are comprised of the foilowing: Fscal year Interest Govemmental activibes Business-rype Total of maturitv rate Ciiv School activities June 30.2003 Long-term debt: Public improvements-1988 2008 7.37%-8.60% $ - $ - $ 500,000$ 500,000 Treatment Plant 2011 7.00%-7.10% - - 9,500,000 9,500,000 Combined sewer overFlow 2014 2.46% - - 1,025,200 1,025,200 Combined sewer overflow 2014 2.45% - - 1,092,300 1,092,300 Refunding bonds 2011 2.35%-5.20% 238,215 2,065,000 5,136,785 7,440,000 Public improvements-1996 2016 5.05%-5.85% 540,000 - - 540,000 Combined sewer overflow 2017 3.52% - - 2,212,864 2,212,864 Tax increment financing note* 2016 6.00%-6.90% 805,000 - - 805,000 Public improvements—1996 2017 5.35%-6.50% 1,170,000 - - 1,170,000 Combined sewer overflow 2018 3.03% - - 1,933,206 1,933,206 Pubiic improvements—1997 2018 4.875%-5.3% 2,737,370 2,900,000 1,397,630 7,035,000 Tax increment finanang note* 2018 6.19% 250,000 - - 250,000 Public improvement—1999 2019 4.20% 1,400,500 40,000 1,209,500 2,650,000 Maine Business Enter Park 2018 5.00% - - 216,426 216,426 Waterfront note* 2004 6.00% - - 173,827 173,827 Pubiic improvements—2000 2020 5.25%-5.90% 1,331,623 - 1,413,377 2,745,000 Public improvements—2001 2021 4.25%-5.00% 1,288,000 250,000 3,787,000 5,325,000 State Revolving Renovation—School 2011 0.00% - 454,880 - 454,880 Public improvements note* 2012 6.25% 681,394 - - 681,394 Public improvements—2002 2022 3.50%-4.75% 4,575,000 4,275,000 1,725,000 10,575,000 Pension obligation bonds 2026 3.06%-6.45% 26,592,308 1,686,587 5,656,105 33,935,000 Refunding bonds 2024 3.06%-3.47% 705,082 3,430,077 6,274,841 10,410,000 Combined sewer overFlow 2023 1.94% - - 3,000,000 3,000,000 State Revolving Renovation—School 2008 0.00% - 62,352 - 62,352 Pubtic improvements note* 2012 2.50%-4.00% - - 300,000 300,000 Tax increment financing note* 2015 2.50%-4.00% 190,635 - - 190,635 Briggs Building note 2023 6.50% - - 1.300.000 1,300,000 Total bonds and notes payable 4 .S05.t 7 .163.8 6 47.854.067 10 .5 '�.08 *Six series of general obligation notes aggregating$2,400,856 are held by the City's Airport Fund at fixed,taxable market rates of interest. These notes are structured with a put feature,which, upon certain precedent conditions,allows the Airport to present them for redemption to the City's General Fund. It is management's intention,should a put occur,to fund it by passing the note along to its Sewer Fund,where it will be converted to a three to five year fixed note with levei debt service,albeit without a put option. Annual debt service requirements to maturity for general obligation bonds and notes payable are as follows: Fiscal year , ending Governmental Activities Business-Type Activities June 30, Princi al Interest Principal Interest , 2004 $ 2,232,944 $ 3,091,994 $ 3,643,271 $ 1,949,734 2005 2,277,646 2,983,920 3,475,916 1,795,537 2006 2,358,271 2,894,989 3,508,725 1,662,363 2007 2,457,080 2,799,453 3,553,399 1,524,524 2008 2,562,307 2,696,540 3,592,573 1,389,237 2009-2013 13,004,300 11,743,339 16,418,945 4,914,549 2014-2018 12,195,904 8,550,404 7,063,891 2,692,569 , 2019-2023 11,901,340 5,051,496 4,846,570 1,263,842 2024-2026 8,679.231 1,151,915 1,750,771 233,140 Total 57.669,023� 40.964.050� 47.854.061 � 17.425.495 � II-40 CIiY OF BANGOR, MAINE Notes to Financial Statements, Continued , DETAILED NOTES ON ALL FUNDS, CONTINUED The City is subject to the laws of the State of Maine, which limits the amount of long-term debt to 15% of the state's assessed valuation of the City. At June 30, 2003, the statutory limit for the City was $241,387,500. The City's outstanding long-term debt of$105,523,084 at)une 30, 2003 was within the statutory limit. Revenue Bonds Revenue bonds are where income derived from the acquired or constructed asset is pledged to pay � debt service. Bangor International Airport (Airport Fund) had $4,205,000 of limited obligation revenue bonds outstanding at ]une 30, 2002, the proceeds of which were used to finance expansion of the terminal. Due to the favorable interest rate environment, these bonds were refunded on a current basis with general obligation bonds. Said refunding results in annual interest rate savings of between 2.50% to 4.20%. The following is a summary of limited obligation revenue bond transaction of the City for the fiscal year ended June 30, 2003: Limited obligation revenue bonds at June 30, 2002 $ 4,205,000 Less: principal repayments 4,205,000 Limited obligation revenue bonds at June 30, 2003 � Advance and Current Refunding In prior years, the City defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At June 30, 2003, $2,234,900 and $4,970,100 of the governmental and business-type activities, respectively, are considered defeased. Within the Proprietary Funds the advance refunding transaction gave rise to a deferred amount on refunding. The deferred amount on refunding will be amortized over the remaining life of the old bonds. In the current year, the City issued $9,910,000 of general obligation bonds and liquidated a debt service requirement fund of$540,117 for a current refunding of $6,250,000 in general and $3,930,000 in limited revenue obligation bonds. The refunding was undertaken to reduce total future debt service payments by $1,181,098, which is net of the dissolution of a debt service requirements fund, over the next 10 years. II-41 CITY OF BANGOR, MAINE Notes to Pinancial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED � Overlapping Debt In addition to the bonds and notes payable, the City is contingently responsible for a proportionate share of the following overlapping debt as of June 30, 2003: Percentage � Debt Applicable City's Share ' Unit Outstanding to the City of Debt General obligation bonds $105,523,084 100.00% $105,523,084 Penobscot County 288,660 23.07% 66�594 105.811.744 $105.589,678 This results in a ratio of City and overlapping debt to April 1, 2002 assessed valuation of 6.24%. Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2003, was as follows: Balance Balance Due within ]une 30, 2002 Additions Reductions June 30, 2003 one year Governmental activities: General obligation debt $ 59,135,992 4,397,511 5,864,480 57,669,023 2,232,944 Obligations under capital leases 150,353 308,774 132,968 326,159 128,327 Accrued compensated absences 1,670,971 1,080,797 992,206 1,759,562 - Long-term obligation for self insurance 2,664,438 183,386 334,396 2,513 428 607,890 Governmental activities lona-term liabilities �63.621.754 5.970.468 7.324,050 62.268.172 2.969.161 Business type activities: General obligation debt 46,591,491 11,140,841 9,878,271 47,854,061 3,643,271 Accrued compensated absences . 239,755 293,359 275,231 257,883 - Long-term obligation for self insurance 267,437 77,642 59,180 285,899 104,961 Deferred amount on refunding (340,553) - (70,797) (269,756) (62,715) Other 483 604 3 408 487 012 Business type activities � lona-term liabilities � 47.241.734 11.515,250 10.141.885 48.615.099 3.685.517 II-42 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED 7. Fund Balances Permanent Funds As of June 30, 2003, the fund balances by purpose were as foliows: Restricted Unrestricted • Nonexpendable Permanent Trust Principal Funds Cemetery $ 358,566 $ 78,304 Parks 14,538 155,052 City Missionary 16,511 49,425 Education 44,138 53,807 Aid for Aged Women 43,067 60,732 Other Purposes 30,923 103,238 Total nonmajor permanent funds $ 507.743 $ 500.558 Dedicated Revenue Funds- Special Revenue Funds ' As of June 30, 2003, the fund balances by purpose were as follows: Dental Clinic $ 107,351 Preservation of Records 123 Adopt a Park 73,744 Park Woods Children 786 City Forest 86,970 BFD Imaging 7�26g Park Woods Complex ' 780,946 USS Maine Monument 12,630 Kenduskeag Stream Trail 348 Skate Park � 5,766 Tricentennial 551 Total expendable trusts 1.076.48 II-43 CITY OF BANGOR, MAINE Notes to.Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED Designated Fund Balance Designated fund balance of the General Fund at June 30, 2UO3 consists of amounts, which the City intends to use for the following purposes: School department— regular $ 1,552,756 adult education 44,134 , reading assessment 24,956 special revenue 258,254 school lunch 71,152 trust and agency 132,882 Total balances carried 2.084f 134 Accrued summer teacher payroll (2,277,757) Pooled equipment 1,002,609 Bus equipment 4,608 Fire equipment 2,107 Improvement 555,480 Self insurance 1,905,538 Cameron stadium 116,691 Landfill closure 83,587 Cascade park maintenance 42,480 Demolition 1,245 PEG capital support 45,263 Pickering Square development district 90,753 MSRS Consolidated Plan 551,500 Parks &Rec Improvement (30,979) Bangor Nursing & Rehabilitation Center— line of credit 292,575 Amounts due from Bangor Nursing & Rehabilitation Center 217,811 Pension obligation bond savings 581,361 Arbitrage rebate 213,742 Credit reserve 200,001 5.682,749 OTHER INFORMATION A. Risk Management The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees, and natural disasters for which the City either carries commercial insurance or is self—insured. The City currently reporfis all of its risk management activities in the General and Proprietary Funds. Claims expenditure, liabilities and reserves are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported. II-44 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued OTHER INFORMATION, CONTINUED The City purchases coverage under a number of commercially available insurance policies such as; commercial general liability, auto, property damage and crime and dishonesty, each with limits and deductibles deemed prudent given the risks, cost of coverage and the City's ability to fund certain types of losses. For those claims covered by commercial insurance, the amount of settlements has not exceeded the coverage for the years ended June 30, 2003, 2002 and 2001. The City is self-insured for its workers' compensation liability. Reserves are actuarially determined each year to assure funding adequacy. In addition, the City purchases excess workers'compensation insurance to limit its financial risk. , At June 30, 2003, the amount of self-insurance liabilities was $2,799,327. This liability is the City's best estimate based on available information. Changes in the reported liabilities since July 1, 2001 resulted from the following: Workers' All other self- Compensation insured risks Total Unpaid claims as of July 1, 2001 $ 3,073,144 $ 35,796 $ 3,108,940 Incurred claims 195,957 - 195,957 � Payments (388,813) (19,584) (408,397) Changes in estimates and other adjustments 34�612 763 35,375 Unpaid claims as of)uly 1, 2002 2,914,900 16,975 2,931,875 Incurred claims 154,363 - 154,363 Payments (333,745) (651) (334,396) Changes in estimates and other adjustments 36,386 11,099 47,485 Unpaid claims as of June 30, 2003 2.771.904 $ 27.423 $ 2.799.327 B. Tax Increment Financing Districts The City has established tax increment financing districts, all of which dedicate a portion of the incremental increase in real estate and/or personal property tax revenues over staggered twenty year periods for the following purposes: B.I.A. Municipal Devefopment District No. 1 — Partially financed $27.5 million dollars of capital expenditures at manufacturing facilities leased by General Electric Company. Main Street Municipal Development District — Assisted Penobscot Development Limited Liability Company in financing the extraordinary costs of acquisition and environmental remediation of the former Gasworks site on Main Street, ultimately to provide land area necessary for the construction of a 54,000 square foot supermarket in a Community Development project area. Pickering Square Municipal Development District — Assisted Realty Resources Chartered in a major redevelopment project converted the former Freese's department store building into affordable housing units. II-45 CITY OF BANGOR, MAINE Notes to Financial Statements, Continued OTHER INFORMATIOPI, CONTINUED C. Contingent Liabilities In February 1998, the City was served Notification of Potential Liability by the Federa) Environmental Protection Agency (EPA) in connection with that agency's efForts to clean up a disposal site. The City is among approximately 500 potentially responsible parties. Selection of the final remedy is expected in January 2004, although the design and implementation phases will probably continue for several years. At this point it is not possible to estimate the cost of designing and implementing the final remedy. In 2002, the City filed suit against a potentially responsible parly to force cleanup of contamination of the Penobscot River bottom due to the inability to reach settlement. The matter is now pending in the U.S. District Court. The City is a party to various other lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's counsel that resolution of these matters will not have a material adverse efFect on the financial condition of the City. D. Retirement The Ciry of Bangor provides retirement pensions for its employees through a number of vehicles, including a defined contribution plan, defined benefit pension plan and social security. Defined Contribution Plan Description of the Plan - The City provides pension benefits for certain employees through a 401(a) defined contribution plan administered by ICMA/RC. In addition certain full-time employees are covered through both a 401 (a) and 457 Deferred Compensation Plans (DCP) also administered by ICMA/RC. In a DCP, benefits depend solely on amounts contributed to the plan plus investment earnings. Covered employees are eligible to participate and are fully vested from the date of employment. Fundi� Policx — Plan members not covered by employment contracts are required to contribute 6.5% of their annual covered salary and the City is required to contribute either 8% or 10% depending upon the employee's classification. For fiscal year 2003 covered payroll was $6,108,047 and City contributions were $523,950. For those plan members that have employment contracts, the City contributes at various rates from 8% - 15% of annual earnings. The covered payroll and City contributions for those employees with employment contracts approximated $502,518 and $55,411 respectively, in fiscal year 2003. Defined Benefit Pension Plan Description of the Plan—The City contributes to the Maine State Retirement System Consolidated Plan, a cost sharing multiple-employer retirement system established by the Maine State legislature. The Maine State Retirement System provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The authority to establish and amend benefit provisions rests with the state legislature. The Maine State Retirement System issues a II-46 - CTTY OF BANGOR, MAINE Notes to Financial Statements, Continued OTHER INFORMATION, CONTINUED publicly available financial report that includes financial statements and required supplementary information for the Consolidated Plan. That report may be obtained by writing to Maine State Retirement, 46 State House Station, Augusta, Maine 04333-0046 or by calling 1-800-451-9800. FundincLPolicy— Plan members are required to contribute 6.5% of their annual covered salary and the City is required to contribute an actuarially determined rate. The current rate ranges from 2.80% to 6.50% of annual covered payroll. The contribution rates of plan members and the Ciry are established and may be amended by the Maine State Retirement System Board of Trustees. The City's contributions to the Maine State Retirement System Consolidated Plan for the years ended June 30, 2003, 2002 and 2001 were $663,217, $693,220 and $846,415, respectively, equal to the required contributions for each year. , Teachers Group Description of the Plan - All school teache�s, plus other qualified educators, participate in the Maine State Retirement System's teacher group. The teacher's group is a cost-sharing plan with a special funding situation, established by the Maine State legislature. The Maine State Retirement System provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The authority to establish and amend benefit provisions rests with the state legislature. The Maine State Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for the Teacher's Group. That report may be obtained by writing to Maine State Retirement System, 46 State House Station, Augusta, Maine 04333-0046 or by calling 1-800-451-9800. Funding Policv — Plan members are required to contribute 7.65% of their compensation to the retirement system. The same statute requires the State of Maine Department of Education; to contribute the employer contribution, which amounts to $3,743,270 (19.17%) for the fiscal year 2003. This amount has been reported as an intergovernmental revenue and education expenditure in the GAAP basis financial statements. There is no contribution required by the school department except for federally funded teachers, for which they contributed 18.93% of their compensation. This cost is charged to the applicable grant. ' Deferred Compensation Plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue (IRC) Section 457. The plan permits participating employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Social Security The City does not have a section 218 agreement to provide full social security coverage to its employees. The City does provide full social security coverage to part-time, seasonal and temporary employees under the Omnibus Budget Reconciliation Act of 1990, and Internal Revenue Service regulations, which became efFective )uly 1, 1991. II-47 CITIf OF BANGOR, MAINE Notes to Financial Statements, Continued OTHER INFORMATION, CONTINUED E. Landfill Closure and Postclosure Care Costs Closure of the City's Kittredge Road landfill was completed during the fiscal year ended June 30, 2000. Potential postclosure costs have been deemed immaterial, and therefore no liability for these amounts has been accrued. All necessary postclosure costs will be funded from the annual operating budget. � F. Restatement of Beginning Fund Equity During fiscal year 2003, the City revised its fixed asset capitalization policy. The change increased the threshold for capitalization by asset type, which results in a reduction of the net property, plant and equipment value. The restatement results in a decrease to beginning net assets by the following amounts, Sewer Utility - $31,586, Airport - $503,117, Park Woods - $1,013, Parking - $1,077, Bass Park - $114,432, and Municipal Golf Course - $136,791. Also during fiscal year 2003, the City reallocated $266,000 of general obligation bond proceeds from the Capital Projects Fund to the Parking Fund. Therefore, the beginning net assets of the Capital Projects Fund has been restated by $266,000. G. Subsequent Events The City Charter requires maintaining the City's undesignated/unreserved fund balance at between 5% and 10% of the previous year's expenditures, net of debt service. As policy, the City has targeted 7.5% as a reasonable balance. At June 30, 2003, this balance exceeded the City policy of 7.5% by $3,457,281. Further City policy prescribes uses for these excess funds, and the Council has been presented with a series of options for the surplus funds. Thus far, Council has appropriated funds from the undesignated/unreserved fund balance for the following purposes; $1,250,000 of additional funds to fund further environmental assessment of the Penobscot river as well as legal costs, $800,000 for the local match of a $1.2 million dollar grant for work on the waterfront, $227,247 towards the construction of a baseball stadium, $175,000 towards the replacement of the city-wide phone system, $150,000 for in-kind costs associated with the National Folk Festival, $125,000 to increase the City's self-insurance reserve, and $179,170 for smaller capital acquisitions. II-48 GENERAL FUND The General Fund is used to account for resources traditionally associated witli the government, which are not'�required legally or by sound financiai management, to be accounted for in another fund. . fb .. '. ' ' . .. �4 . �� . . .. . � .. . . - Schedule A-1 CITY OF BANGOR,MAINE Balance Sheet - General Fund June 30,2003 ASSETS Cash $ 839,858 Inveshnents 15,325,950 Receivables: Taxes , 1,749,458 Accounts (net of allowance of$274,838) 912,955 Interfund loans 1,573,355 Intergovernmental 1,491,741 Loans 1,300,000 Inventory,at cost 547,061 Prepaid items 6,887 Total assets $ 23,747,265 LIABILITIES AND FUND EQUITY Liabilities Accounts payable $ 1,151,931 Accrued wages and benefits payable 3,205,789 Workers'compensation 607,890 Deferred revenue 1,513,698 Total liabilities 6,479,308 Fund equity Reserved for: Encumbrances 1,252,948 Prepaid items 6,887 Interfund loans 1,432,689 Unreserved: Designated , 5,682,749 Undesignated 8,892,684 Total fund equity 17,267,957 Total liabilities and fund equity $ 23,747,265 II-49 ` Schedule A-2 � C`ITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Changes in Undesignated Fund Balance-Budget and Actual-Budgetary Basis General Fnnd For the fiscal year ended June 30,2003 Balances Variance Carried 7/1/02 Budget Actual Surplus Carried Revenues ' Taxes Real and personal property $ - $ 38,709,127 $ 38,833,254 $ 124,127 $ - Change in deferred property tax - - 119,123 119,I 23 - Tax increment financing district - (1,404,050) (1,404,050) - - Payment in lieu of t�es - 135,000 113,575 (21,425) - Excise - 3,728,000 4,091,505 363,505 - Interest on delinquent taxes - 250,000 195,189 (54,811) - Total taxes - 41,418,077 41,948,596 530,519 - Intergovernmental State revenue sharing - - 3,210,000 3,135,741 (74,259) - School subsidy - 10,750,664 l 1,192,437 - 441,773 Other- municipal - 1,964,446 2,395,497 431,051 - school - 3,465,455 3,785,114 - 319,659 Total intergovemmental - 19,390,565 20,508,789 356,792 761,432 Otherrevenue Licenses and permits - 369,750 409,842 40,092 - Charges for service- municipal - � 5,753,332 5,833,588 80,256 - school - 4,287,779 3,742,385 - (545,394) Fines,forfeits and penalties - 20,400 9,707 (10,693) - Revenue from use of.money and property- municipal - 765,471 758,609 (6,862) - school - 7,965 7,965 - - Total other - 11,204,697 10,762,096 102,793 (545,394) Total revenues - 72,013,339 73,219,481 990,104 216,038 II-50 Schedule A-2(con't). CITY OF BANGOR,MAINE Schedule of Revenues,Ezpenditures and Changes in Undesignated Fund Balance-Budget and Actual-Budgetary Basis General Fund For the fiscal year ended June 30,2003 Balances Variance Carried 7/1/02 Budget Actual Surplus Carried Expenditures General government Council - 34,641 34,995 (354) - Executive - 671,939 654,182 17,757 - Human resources - 87,106 77,483 9,623 - City Clerk - 350,057 353,704 (3,647) - Assessing - 316,112 316,554 (442) - Legal - 246,985 255,418 (8,433) - Finance - ],245,001 1,168,266 76,735 - Insurance - 144,180 115,879 28,301 - Planning,econ dev,code enforcement 50,000 983,852 1,016,379 17,473 - Total general government 50,000 4,079,873 3,992,860 137,013 - Public safety Police - 5,607,871 5,417,019 190,852 - Fire - 5,682,267 5,687,250 (4,983) - Total public safety - 11,290,138 11,104,269 185,869 - Health,welfare and recreation Health and welfare - 1,808,557 2,090,476 (281,919) - Parks and recreation 21,605 1,075,823 1,081,713 15,715 - Total health,welfare and recreation 21,605 2,884,380 3,172,189 (266,204) - Public buildings and services - 7,970,513 7,919,573 50,940 - II-51 ,. Schedule A-2 (con't) CITY OF BANGOR,MAINE Schedule of Revenues,Egpenditures and Changes in Undesignated Fund Balance-Budget and Actual-Bndgetary Basis General Fund For the fiscal year ended June 30,2003 Balances Variance Camed , 7/1/02 Budget Actual Surplus Carried Expenditures,continued Other agencies Countytax - 1,712,263 1,712,263 - - Private school services - 160,807 152,166 8,641 - Downtown Development District - 39,372 39,372 - - Public library - 1,252,986 1,252,986 - - Other agencies - 157,680 155,086 2,594 - Total other agencies - 3,323,108 3,311,873 11,235 - Education Regular 1,462,834 36,611,941 35,894,185 - 2,180,590 Adult education 78,154 623,329 599,997 - 101,486 Schoollunch 103,187 1,150,044 1,077,067 - 176,164 Reading assessment 18,516 45,000 9,959 - 53,557 Special revenue 151,089 1,989,716 2,136,214 - 4,591 Trust and agency 94,632 1,784,354 1,738,307 - 140,679 Total education 1,908,412 42,204,384 41,455,729 - 2,657,067 Other appropriations Pensions and other fringe benefits - 1,635,108 1,644,722 (9,614) - Debt service - 1,614,009 1,611,606 2,403 - Tax increment financing payments - 563,122 566,403 (3,281) - Contingency - 16,500 - 16,500 - Total other appropriations - 3,828,739 3,822,731 6,008 - Total expenditures 1,980,017 75,581,135 74,779,224 ]24,861 2,657,067 Excess(deficiency)of revenues over expenditures (1,980,017) (3,567,796) (1,559,743) 1,114,965 2,873,105 II-52 Schedule A-2 (con't) _ CITY OF BANGOR,MAIlVE Schedule of Revenues,Expenditures and Changes in Undesignated Fund Balance-Budget and Actual-Budgetary Basis General Fund For the fiscal year ended June 30,2003 Balances Variance Carried 7/1/02 Budget Actual Surplus Carried Other financing sources(uses) , Appropriaton from designated fund balance - 1,188,]82 431,636 32,425 (788,971) Appropriaton to designated fund balance - - - - - Appropriation from undesignated fund balance - 1,564,]80 - (1,564,180) - General obligarion bond proceeds - 3,805,397 3,805,397 - . - Sale of assets - 500 18,207 17,707 - Transfers to other funds - (2,055,000) (2,055,000) - - Transfers from other funds - 48,000 48,000 - - Operating transfers - (983,463) (983,463) - - Total other financing sources(uses) - 3,567,796 1,264,777 (1,514,048) (788,971) Excess(deficiency)of revenues over expenditures and other financing sources and uses $ (1,980,017) $ - $ (294,966) (399,083) $ 2,084,134 Undesignated fund balance,July 1 9,291,767 Appropriation from designated fund balance - Undesignated fund balance,June 30 $ 8,892,684 II-53 NONMA.�OR GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally , restricted to expenditures for particular purposes. Other HUD Funds —This is used to account for 1) federal grants obtained and expended under the Housing and Community�Development Act of 1974, as amended, for the redevelopment of the downtown commercial core of the City and 2) low interest loans to businesses within the�City of Bangor for establishment, expansion or redevelopment purposes. � � , � . Grant Fund - Accounts for federal and state grants that are legally restricted to expenditures allowable by the grantor agency. Dedicated Revenue Funds - Accounts for amownts raised or donated to benefit various governmental programs such as; the. Dental Clinic, local-parks, City forest and Park Woods complex.` ``', . , _� s ?{ . _ _ , , Other Funds—Accounts for funds he1d to be used in future periods such as tax financing district repayments and other community funds for capital expenses relating to the operation of the area transportation system \' � Permanent Fund Permanent funds are used to report resources that are legally restricted to the e�ent that only earnings, not principal, may be used for purposes that support the reporting governmenYs programs. . Schedule B-1 _ CITY O�BANGOR - �Combining Balance Sheet Nonmajor Governmental Funds June 30,2003 Nonmajor Special Nonmajor TotalOther Revenue Permanent Governmental Funds Funds Funds ASSETS Cash $ 452,900 $ - $ 452,900 Investments 1,368,915 1,114,004 2,482,919 Receivables: Loans(net of allowance of$130,131) 1,004,747 27,257 1,032,004 Interfund loans 192,025 - 192,025 Intergovernmental 297,469 - 297,469 Total assets $ 3,316,056 $ 1,141,261 $ 4,457,317 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 92,788 $ - $ 92,788 Defened revenue 1,004,747 - 1,004,747 Interfund loans 192,025 - 192,025 Total liabilities 1,289,560 - 1,289,560 Fund balances(deficit): Reserved for: Encumbrance 898 - 898 Loans - 132,960 132,960 Principal - 507,743 507,743 Unreserved,undesignated 2,025,598 500,558 2,526,156 Total fund balance(deficit) 2,026,496 1,141,261 3,167,757 Total liabilities and fund balances $ 3,316,056 $ 1,141,261 $ 4,457,317 II-54 ` Schedule B-2 ., ' CITY OF BANGOR,MAINE Combining Statement of Revenues,Ezpenditures and Changes in Fund Balances Nonmajor Governmental Funds For the year ended June 30,2003 Nonmajor Special Nonmajor TotalOther Revenue Permanent Governmental Funds ' Funds Funds Revenues: � Taxes , $ 1,404,050 $ - $ 1,404,050 Intergovernmental 3,426,375 - 3,426,375 Charges for services 417,091 - 417,091 Program income 121,962 - 121,962 Revenue from use of money and properly 188,584 - 188,584 Other revenue 65,436 1,450 66,886 Interest revenue - 16,512 16,512 Total revenues 5,623,498 17,962 5,641,460 Expenditures: Cunent: Personnel 407,912 - � 407,912 Equipment 38,741 - 38,741 Payments to beneficiaries 1,724,823 - 1,724,823 Other 2,361,279 - 2,361,279 Bus operations 1,076,229 - 1,076,229 Program expenditures - 5,587 5,587 Total expenditures 5,608,984 5,587 5,614,571 Excess (deficiency) of revenues over(under)expenditures 14,514 12,375 26,889 Other financing sources (uses): General obligation debt - - - Reallocation of general obligation debt - - - Transfer to other funds (26,589) (51,300) (77,889) Transfer from other funds 10,958 - 10,958 Total other financing sources (uses) (15,631) (51,300) (66,931) Excess (deficiency) of revenues and other financing sources over(under) � expenditures and other financing uses (1,117) (38,925) (40,042) Fund balances,beginning of year 2,027,613 1,180,186 3,207,799 � Fund balances,end of year $ 2,026,496 $ 1,141,261 $ 3,167,757 II-55 . Schedule B-3 CITY OF BANGOR,MAINE Combining Balance Sheet Nonmajor Special Revenue Fnnds June 30,2003 Dedicated O't6er Grant Revenue Totals AUD Funds Fund Funds Other 2003 ASSETS Cash $ 149,I35 $ 2 $ - $ 303,763 $ 452,900 Investments - - 1,076,484 292,431 1,368,915 Receivables: Loans(net of allowance of$130,131) 1,004,747 - - - 1,004,747 Interfund loans 192,025 - - - 192,025 Intergovernmental - 297,469 - - 297,469 Tota]assets $ 1,345,907 $ 297,471 $ 1,076,484 $ 596,194 $ 3,316,056 LIABII.,ITIES AND FUND EQUITY Liabilities Accountspayable $ - $ 87,637 $ - $ 5,151 $ 92,788 Deferred revenue 1,004,747 - � - - 1,004,747 Interfund loans payable - 192,025 - - 192,025 Totalliabilities 1,004,747 279,662 - 5,151 1,289,560 Fund equity Reserved for: Encumbrances - 898 - - 898 Unreserved: Undesignated 341,160 16,911 1,076,484 591,043 2,025,598 Total fund equity 341,160 17,809 1,076,484 591;043 2,026,496 Total liabilities and fund equity $ 1,345,907 $ 297,471 $ 1,076,484 $ 596,194 .$ .3,316,056 II-56 Schedule B-0. CITY OF BANGOR,MAINE Combining Statement of Revenues,Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds . For the fiscal year ended June 30,2003 Dedicated Other Grant Revenue Totals HUD Funds Fund Funds Other 2003 Revenues Taxes $ - $ - $ - $, 1,404,050 $ 1,404,050 Intergovernmental - 3,426,375 - - 3,426,375 Charges for services - 417,091 - - 417,091 Programincome 121,962 - - - ]21,962 Revenue from use of money and property - - 115,838 72,746 188,584 Contributions - - 29,362 34,261 63,623 Other 1,813 - - - 1,813 Total revenues 123,775 3,843,466 145,200 I,S11,057 5,623,498 Expenditures Personnel - 407,912 - - 407,912 Equipment - 34,741 - 4,000 38,741 Payments to beneficiaries - - 10,822 1,714,001 1,724,823 Other 10,698 2,328,481 - 22,100 2,361,279 Bus operations - 1,076,229 - - 1,076,229 Total expenditures 10,698 3,847,363 10,822 1,740,101 5,60$,984 Excess(deficiency)of revenues over expenditures 113,077 (3,897) 134,378 (229,044) 14,514 Other financing sources(uses) Transfers to other funds - - (10,267) (16,322) (26,589) Transfers from other funds - 3,322 59 7,577 10,958 Total other financing sources(uses) - 3,322 (]0,208) (8,745) (15,631) Excess(deficiency)of revenues over expenditures and other financing sources and uses 113,077 (575) 124,170 (237,789) (1,117) Fund balances(deficit),July 1 228,083 18,384 952,314 828,832 2,027,613 Fund balances,June 30 $ 341,160 $ 17,809 $ 1,076,484 $ 591,043 $ 2,026,496 II-57 'Schedule B-5 CITY OF BANGOR Combining Balance Sheet � Nonmajor Permanent Funds June 30,2003 Revolving Other Loan Funds Funds Totals . ASSETS Investments $ 1,008,301 $ 105,703 $ 1,114,004 Loans receivable - 27,257 27,257 Total assets $ 1,008,301 $ 132,960 $ 1,141,261 LIABILIT'IES AND FUND BALANCES Liabilities: Totalliabilities $ - $ - $ - Fund balances: � Loans - 132,960 132,960 Principal 507,743 - 507,743 Unexpended income 500,558 - 500,558 Total fund balances 1,008,301 132,960 1,141,261 Total liabilities and and fund balances $ 1,008,301 $ 132,960 $ 1,141,261 � II-58 Schedule B-6 CITY OF BANGOR Combining Statement of Revenues,Egpenditures and Changes in Fund Balances Nonmajor Permanent Funds For the year ended June 30,2003 � Revolving Other Loan Funds Funds Totals Revenues: Investment income $ 12,896 $ 3,616 $ 16,512 Lot sales 1,450 - 1,450 Total revenues 14,346 3,616 17,962 Expenditures: Current: Loss on sale of investments - 765 765 Payments to beneficiaries 709 3,000 3,709 Other miscellaneous - 1,113 1,113 Total expenditures 709 4,878 5,587 Other financing sources(uses): Transfer to other funds (51,300) - (51,300) Total financing sources(uses) (51,300) - (51,300) Excess(deficiency)of revenues and other financing sources over(under)expendihues and other financing uses (37,663) (1,262) (38,925) Fund balances,beginning of year 1,045,964 134,222 1,180,186 Fund balances,end of year $ 1,008,301 $ 132,960 $ 1,141,261 II-59 , This page left intentionally blank , . - . ENTERPRISE FUNDS Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent of the government is to have the costs of providing goods or services to.the general public financed or recovered primarily through user charges. The government has decided that periodic determination of net income is appropriate for accountability purposes. r,` . . Sewer Utility Fund — This�fund aceounts for the costs of construction and operation of the Sewage Treatment Plant, the City sewer system, and sewer operation activities, and is self—supported tiFirough sewer user fees.. r ,� Airport Fund .-This,fund accounts for the operation of Bangor International Airport. The principal sources of.revenu�s are landing fees and the sale of aviation fuel. Other revenue sources include lease payments for the use of terminal space and non-aviation industrial buildings.' ' :," , t. : f .�. � - , � : �'� Park Woods — This fund'accounts for�the rental of 60 units of surplus housing received from the federal governmenttpursuant to the McKinney Homeless Assistance Act. The principal source of revenue is rental income. �- ; , - � , Parking Fund —This fund accounts for the operation of the City-owned parking lots and the Pickering Square garage. Revenue sources include monthly lease payments for parking spaces, hourly/�laily parking fees, and fines and waiver fees for parking violations. Certain of these facilities are;operated under a private management contract. � __ Bass Park Fund —This fund accounts for the operation ofthe Bangor�auditorium, Bangor Civic Center, and B�ngor State. Fair. Principal sources of revenue are admissions, concession sales, and rentals. The fund is named after the Bass family, which bequeathed the property to the City for recreational purposes. � . , Municipal Golf Course —This fund accounts for..the operation of a 27 hole municipal golf course. Principal revenue sources are season memberships and daily green fees. Economic Development Fund —This fund accounts for the operation and development of properties acquired by the City. Its purpose is to promote economic growth within the . City. The principal source of revenue is rental income. Schedule C-1 CITY OF BANGOR,MAINE Schednle of Revenues,Expenditures and Encumbrances Budget and Actual-Budgetary Basis Sewer Utility Fund-Enterprise Fund For the f scal year ended June 30,2003 Budget Actual Variance � Revenues Charges for services $ 6,362,150 $ 6,465,623 $ 103,473 Operating transfer - - - Interest and other revenue 505,000 457,966 (47,034) Total revenues 6,867,150 6,923,589 56,439 Expenditures and encumbrances Salaries 853,553 861,122 (7,569) Fringe benefits 204,598 111,147 93,451 Supplies and materials 737,214 717,139 20,075 Contractual services 517,985 564,367 (46,382) Interfund charges 514,560 483,603 30,957 Miscellaneous 25,550 10,620 14,930 Debt service 3,731,990 3,715,949 16,041 Depreciation 1,237,711 1,312,691 (74,980) Outlay 281,700 273,187 8,513 Credits - - - Total expenditures and encumbrances 8,104,861 8,049,825 55,036 Excess(deficiency)of revenues over expenditures and encumbrances $ (1,237,711) $ (1,126,236) $ 111,475 II-60 Schedule G2 CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Encumbrances Budget and Actual-Budgetary Basis - - Airport Fund-Enterprise Fund For the fiscal year ended June 30,2003 Budget Actual Variance Revenues Charges for services $ 8,226,800 $ 9,261,626 $ 1,034,826 Operating transfer - - - Interest and other revenue 1,220,476 1,314,343 93,867 Total revenues 9,447,276 10,575,969 1,128,693 Expenditures and encumbrances ' Salaries 3,839,908 3,747,984 91,924 -- Fringe benefits 749,177 719,774 29,403 Supplies and materials 1,274,500 1,408,584 (134,084) Contractual services 1,718,772 1,700,661 18,111 Interfund charges 436,589 363,838 72,751 Miscellaneous 143,124 151,801 (8,677) Debt service 777,580 864,042 (86,462) Depreciation 1,943,565 1,793,165 150,400 ' Outlay 277,388 318,633 (41,245) -�. Credits (5,400) (7,530) 2,130 Total expenditures and encumbrances 11,155,203 11,060,952 94,251 ` Excess(deficiency)of revenues over expenditures ' and encumbrances $ (1,707,927) $ (484,983) $ 1,222,944 , I � II-61 Schedule C-3 CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Encumbrances Budget and Actual-Budgetary Basis Park Woods-Enterprise Fund � For the fiscal year ended June 30,2003 _. Budget Actual Variance Revenues Charges for services $ 276,766 $ 283,052 $ 6,286 Operating transfer 2,267 , 2,267 - Interest and other revenue - 28 28 Total revenues 279,033 285,347 6,314 � - Expenditures and encumbrances , Salaries 56,158 57,390 (1,232) � Fringe benefits 10,385 9,325 1,060 -- Supplies and materials 78,750 108,626 (29,876) Contractual services 130,490 154,450 (23,960) Interfund charges 3,250 ' 4,707 (1,457) Miscellaneous - - - Debt service - - - Depreciation 8,001 7,722 279 Outlay - - - � Credits - - - -v� Total expenditures and encumbrances 287,034 342,220 (55,186) Excess(deficiency)of revenues over expenditures and encumbrances $ (8,001) $ (56,873) $ (48,872) ' , II-62 � - Schedule C-4 � ` CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Encumbrances ' Budget and Actual-Budgetary Basis � - Parking Fund-Enterprise Fund For the fiscal year ended Jnne 30,2003 Budget Actual Variance Revenues Charges for services $ 750,200 $ 801,729 $ 51,529 Operating transfer 485,077 485,077 - , � Interest and other revenue 5,000 4,193 (807) Total revenues 1,240,277 1,290,999 50,722 Expenditures and encumbrances � Salaries 136,143 141,864 (5,721) , Fringe benefits 24,783 28,378 (3,595) Supplies and materials 7,075 5,658 1,417 Contractual services 240,650 274,335 (33,685) Interfund charges 82,700 85,738 (3,038) Miscellaneous _ _ _ Debt service 699,692 696,693 2,999 Depreciation 311,465 463,202 (151,737) Outlay 49,234 38,369 10,865 Credits _ _ _ Total expenditures and encumbrances 1,551,742 1,734,237 (182,495) Excess (deficiency)of revenues over expenditures and encumbrances $ (311,465) $ (443,238) $ (131,773) ` II-63 Schedule G5 CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Encumbrances Bndget and Actual-Budgetary Basis Bass Park Fund-Enterprise Fund ' For the fiscal year ended June 30,2003 Budget Actual Variance Revenues Charges for services $ 1,324,400 $ 1,362,053 $ 37,653 Operating transfer 498,386 498,386 - Interest and other revenue - 1,561 1,561 Total revenues 1,822,786 1,862,000 39,214 Expenditures and encumbrances Salaries 640,296 602,799 37,497 ' Fringe benefits 121,227 112,891 8,336 � Supplies and materials 224,975 260,415 (35,440) Contractual services 502,550 495,666 6,884 Interfund charges 107,925 148,452 (40,527) Miscellaneous 65,000 60,967 4,033 Debt service 177,563 175,367 2,196 Depreciation 152,299 123,180 29,119 � Outlay 4,250 3,318 932 , Credits (21,000) (21,000) - Total expenditures and encumbrances 1,975,085 1,962,055 13,030 = Excess(deficiency)of revenues over expenditures and encumbrances $ (152,299) $ (100,055) $ 52,244 � . � II-64 Schedule C-6 CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Encumbrances Budget and Actual-Budgetary Basis � Municipal Golf Course-Enterprise Fund For the fiscal year ended June 30,2003 Budget Actual Variance Revenues Charges for services $ 689,000 $ 623,234 $ (65,766) Operating transfer - - - Interest and other revenue 20,000 14,308 (5,692) � Total revenues ' 709,000 637,542 (71,458) Expenditures and encumbrances Salaries 213,292 212,856 436 Fringe benefits 35,255 34,644 611 Supplies and materials 55,012 53,105 1,907 Contractual services 65,446 65,910 (464) Interfund charges 251,963 81,382 170,581 Miscellaneous - - - Debt service 6,032 6,032 - Depreciation 114,158 98,050 16,108 � Outlay 82,000 52,477 29,523 Credits - - - Total expenditures and encumbrances 823,158 604,456 218,702 Excess (deficiency) of revenues over expenditures and encumbrances $ (114,158) $ 33,086 $ 147,244 � i II-65 Schedule C-7 CITY OF BANGOR,MAINE Schedule of Revenues,Ezpenditares and Encumbrances Budget and Actaal-Budgetary Basis Economic Development Fund-Enterprise Fund � For the�scal year ended June 30,2003 Budget Actual Variance Revenues Charges for services $ 236,242 $ 388,164 $ 151,922 Operating transfer - - - Interest and otherrevenue 547,111 10,656 (536,455) Total revenues 783,353 398,820 (384,533) � Expenditures and encumbrances , � Salaries - - - Fringe benefits - - - Supplies and materials 12,695 8,103 4,592 Contractual services 37,175 40,169 (2,994) , Interfund charges 3,757 3,338 419 Miscellaneous 70,120 51,686 18,434 Debt service 90,620 90,620 - Depreciation 11,706 57,488 (45,782) Outlay 568,986 602,790 (33,804) Credits - - - Total expenditures and encumbrances 795,059 854,194 (59,135) Excess (deficiency)of revenues over expenditures and encumbrances $ (11,706) $ (455,374) $ (443,668) i II-66 , - CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS , . i� , ; , . ', � , , , , . . , , ; . ; . , � � , . , �r . . , , �, � + , � � , ; + � 1 i � ! .. +` . . < ' .. 1'`I I , ' � ' 1 ' ; � + / - `Schedule D-1 : CITY OF BANGO�t . , Capital Assets Used in the Operation of Governmental Funds Schedule by Source June 30,2003 Governmental funds capital assets: � Land $ 3,886,978 School Land 1,475,988 - , Buildings 4,566,636 School buildings 21,908,997 Vehicles 4,852,573 Machinery and equipment 2,700,689 ` School equipment 294,214 Infrastructure 3,905,950 , Construction in progress 12,245,877 Total governmental fund capital assets $ 55,837,902 Investments in govemmental funds assets by source: General Fund $ 55,837,902 Total governmental fund capital assets $ 55,837,902 II-67 Schedule D-2 CITY OF BANGOR Capital Assets Used in the Operation of Governmental Funds ' Schedule by Function and Activity June 30,2D03 Construction Function and Activity Land Buildings Vehicles Equipment Infrastructure in Process Total General govemment: Animal control $ - - 8,076 - - - 8,076 BAT community connector - - 1,600,783 - - 29,646 1,630,429 Central service - - - 2,490 - - 2,490 Ciryhall - 208,164 - 34,968 - 105,994 349,126 Communiry and economic development 3,564,560 159,560 - - - - 3,724,120 Information services - - - 117,055 - 216,654 333,709 ` ��1 - - - 13,310 - - 13,310 Motor pool - 47,257 2,243,501 201,292 - 594,760 3,086,810 Other-unclassified - - - 934,772 - 19,448 954,220 Total general government 3 564 560 414 981 3 852 360 1 303 887 966 502 10 102 290 Public safety - Fire - 1,027,437 781,034 177,597 - 155,215 2,141,283 Police 24,650 693,396 89,918 246,463 - 213,526 1,267,953 Total public safe 24 650 1 720 833 870 952 424 060 - 368 741 3 409 236 Heaith,welfare and recreation Health and welfare - - - - - 2,336 2,336 Parks and recrearion 297,768 1,643,619 8,360 653,994 - 678,820 3,282,561 Total health,welfare and recreation 297,768 1,643 619 8 360 653,994 - 681 156 3 284 897 Public building and services � Public works - 787,203 120,901 318,748 3,905,950 5,493,913 10,626,715 Total public buildings and services - 787 203 120 901 318 748 3 905 950 5 493 913 10 626 715 Education 1,475,988 21,908,997 - 294,214 - 4,735,565 28 414,764 Total governmental fund capital assets $ 5,362,966 26,475,633 4,852,5'I3 2,994,903 3,905,950 12,245,877 55,837,902 • � II-68 _ Schedule D-3 CITY OF BANGOR Capital Assets Used in the Operation of Governmental Funds Schedule of Changes by Function and Activity For the year ended June 30,2003 Balance Balance Function and Activity 2002 Additions Deletions 2003 ' General government Animal control $ 9,545 - 1,469 8,076 BAT community connector 242,166 3,068,895 1,680,632 1,630,429 " Central service 4,150 - 1,660 2,490 City hall 358,227 1,625 10,726 349,126 Community and economic development 3,727,410 - 3,290 3,724,120 Information services 330,987 47,071 44,349 333,709 Legal 15,730 - 2,420 13,310 � Motor pool 2,603,657 1,742,162 1,259,009 3,086,810 Other-unclassified 1,012,305 107,227 165,312 954,220 Total general government 8,304,177 4,966,980 3,168,867 10,102,290 Public safety Fire 2,043,490 271,297 173,504 2,141,283 Police 1,143,107 192,249 67,403 1,267,953 Total public safety 3,186,597 463,546 240,907 3,409,236 Health,welfare and recreation Health and welfare 2,336 - - 2,336 Parks and recreation 2,931,322 809,763 458,524 3,282,561 Total health,welfare and recreation 2,933,658 809,763 458,524 3,284,897 Public building and services Public works 7,403,015 3,920,285 696,585 10,626,715 Total public buildings and services 7,403,015 3,920,285 696,585 10,626,715 Education 28,805,510 347,519 738,265 28,414,764 Total governmental fund capital assets $ 50,632,957 10,508,093 5,303,148 55,837,902 II-69 � OTHER INFORMATION . , /, r . � .. . �'/ � . r + ,` . �: ' , � . �� � .._ . . �. � i . � J, '� r ' \, � � • �`r � • : i� �' ,, r \ - ' • , � � / . •� ,' � , , � � � ' � � �' i �� :: / � ! 1 .•��� ; � . + ,1. . i• + , , ; ''��I�, i r � � � /' � i • � , � � , ` � � , � r � I Jr �, �� , - '� � � . . 1' , '', • � -� � � r , � '� 1 �' `, `1 . ` � . . � ' � • � , � ' " . ' t _ ; ` • • �- ` . , , - . � , � - � �� - � _, .� . . ; - . , i . r _. , ��. i - •i . �/ r- •.r Schedule E-1 CITY OF BANGOR,MAINE , Assessed Valuation, Commitment and CollecNons For the fiscal year ended June 30,2003 VALUATION Land and buildings $ 1,374,984,100 ' Land and buildings -Homestead exemption 37,814,000 Personal property 278,430,400 ` Total valuation $ 1,691,228,500 COMNIITMENT Real estate and personal property(excludes Homestead exemption) $ 1,653,414,500 Tax rate 0.02360 Total commitment 39,020,582 ADD Supplemental taxes committed 60,601 39,081,183 LESS Collections 2003 37,785,056 Abatements 311,677 2003 taxes receivable at June 30, 2003 $ 984,450 II-70 Schedule E-2 CITY OF BANGOR,MAINE Undesignated Fund Balance Sufficiency Calculation For the fiscal year ended June.30,2003 It is the policy of the City to maintain an undesignated fund balance approximately 7.5%of operating expenditures. The following table sets forth the calculation as to the sufficiency of � the June 30,2003 undesignated fund balance. General Fund expenditures/uses(Schedule A-2) General government $ 3,992,860 Public safety 11,104,269 ' Health, welfare and recreation 3,172,189 Public buildings and services 7,919,573 Other agencies 3,311,873 Education 41,455,729 Other appropriations 3,822,731 Other uses, gross 3,038,463 Gross expenditures and uses 77,817,687 General Fund debt service 5,345,651 Net expenditures and uses $72,472,036 Indicated undesignated fund balance @ 7.5% $ 5,435,403 Actual undesignated fund balance(Schedule A-2) $ 8,892,684 Actual undesignated fund balance as a percentage of net expenditures and uses 12.27°/o Over(under)funded status $ 3,457,281 II-71 This page left intentionally blank , � Statistical Section E p _ Ta61e 1 CITY OF BANGOR,MAINE ' . � Govemment-wide Expenses by Function � Last Ten FSscal Years , Health Public Interest on Capital �scal General Public welfare and buildings Other Restricted County long-term maintenance year government safety recreation and services agencies Education Unclassified grants tax debt expenses � Total` � 2003 $ 6,060,687 11,114,804 3,340,989 7,050,085 1,610,132 40,828,756 2,044,069 6,551,455 1,712,263 740,077 1,824,489 82,877,806 Only one year has been presented because 2003 was the year GASB Statement No.34 was implemented. III- 1 Table 2 CITY OF BANGOR,MAINE Government-wide Revenues Last Ten Fiscal Years � Program Revenues General Revenues Operating Capital Grants and Charges Grants Grants Contributions not Unrestricted Fiscal for and and Restricted to Investment year Services Contributions Contributions Taxes Specific Programs Earnings Miscellaneous Total 2003 $ 15,169,744 21,566,478 3,814,705 42,128,366 4,059,770 377,113 357,062 87,473,238 . Only one year has been presented because 2003 was the year GASB Statement No. 34 was implemented. III-2 , Table 3 CITY OF BANGOR,MAINE General Fund Expenditures by Function--Budgetary Basis* Last Ten Fiscal Years Fiscal General Public Health& Parl�& Public Debt Other Year Government Safety Welfare Recrea8on Servicea Edacation Service Other•" Agencies;•` Total ]994 3,275,299 9,126,524 4,016,937 894,339 5,659,277 26,871,968 1,454,132 200,436 1,715,417 53,214,329 1995 3,243,405 9,233,995 2,455,303 970,084 6,720,880 27,999,220 1,641,046 150,474 1,999,580 54,413,987 1996 3,340,732 8,990,888 1,683,177 888,139 7,049,049 28,258,718 1,403,761 45,595 2,046,064 53,706,123 1997 3,378,392 9,723,034 1,805,734 887,122 6,842,469 28,934,989 1,364,213 75,238 2,196,959 55,208,150 1998 3,454,345 10,362,360 1,757,148 923,430 7,648,048 30,190,919 1,335,405 389,805 2,231,591 58,293,051 1999 3,371,246 10,326,120 1,705,099 945,953 7,321,657 31,926,707 1,34U,136 131,815 2,391,962 59,460,695 2000 3,481,542 9,527,935 1,652,971 971,887 7,073,693 33,181,363 1,214,661 1,545,415 2,500,460 61,149,927 2001 3,737,126 10,252,977 1,736,958 979,569 7,108,393 34,277,778 1,197,825 1,828,634 3,533,309 64,652,569 2002 3,818,335 ]0,802,401 1,822,104 1,053,472 7,359,810 37,860,069 866,860 28,670,847 2,953,707 95,207,605 2003 3,992,860 11,104,269 2,090,476 1,081,713 7,919,573 41,455,729 1,611,606 2,211,125 3,311,873 74,779,224 ' Amounts appear in Schedule A-2. ** "Other"includes recreation district tax,contingency,TIF related payments,pensions and other fringes. - In F1'02,pensions and other fi-inges includes a$26,942,265 payment to Maine State Retirement. *"" "Other Agencies"includes Penobscot County taxes and support to,among other the Bangor Public Library, local private schools and the Bangor Conventions and Visitors Bureau. III-3 Table 4 CITY OF BANGOR,MAINE General Fund Revenues by Source—Budgetary Basis* Last Ten Fiscal Years Inter- Licenses Charges Fioes Use of Fiscal Real Personal Total Tax govern- & tor &For- Money& Year Property Property Excise Revenues mental Permita Services feitures Property Total 1994 26,392,128 2,483,933 2,922,952 31,799,013 17,291,808 276,167 5,203,023 11,699 530,633 55,112,343 1995 27,011,014 3,138,803 2,763,619 32,913,436 14,513,524 268,352 6,936,668 54,132 911,491 55,597,603 1996 27,34Q204 3,545,267 2,754,819 33,64Q290 13,803,107 324,639 6,940,083 26,569 1,066,083 55,800,771 1997 27,036,650 3,748,446 2,926,858 33,711,954 14,322,698 372,003 7,138,210 42,350 924,742 56,511,957 1998 27,750,306 4,224,568 3,095,072 35,069,946 16,233,583 433,449 7,529,144 28,193 546,229 59,840,544 1999 27,484,400 4,487,695 3,266,421 35,238,716 17,733,946 499,483 7,879,418 24,813 600,085 61,976,461 2000 28,498,443 4,945,754 3,592,979 37,037,176 18,936,166 393,354 8,147,181 19,178 933,427 65,466,482 2001 29,474,793 5,280,324 3,749,219 38,504,336 19,114,860 392,778 8,914,248 15,106 1,187,296 68,128,624 2002 30,767,352 5,796,498 3,935,924 40,499,774 ]9,580,491 298,665 9,755,012 28,009 980,442 71,142,393 2003 31,2�7,657 6,579,434 4,091,505 41,948,596 20,479,027 409,842 9,575,973 9,707 766,574 73,189,719 • Amounts appear in Schedule A-2. _ III-4 Table 5 CITY OF BANGOR,MAINE , General Fund Expenditures/Other Uses and Revenues/Other Sources-Budgetary Basis* Last Ten Fiscal Years Other Uses Ot6er Sources Excess(Deficiency) Appropr- Total Appropr- OperaNng Total ot Revenues/Ot6er iations to Operating General Fund iadoos Gom Traosfere Total General Fund Sonrces Over Fiscal Fuod Transfere Total Expenditures Fund In&Other Other Revenues Expenditures/ Year Balance Out&Other Other Uses &Ot6er Uses Balance Sources Sources &Other Sourcea Other Uses 1994 - 787,897 787,897 54,002,226 26,328 108,179 134,507 55,246,850 1,244,624 1995 - 865,462 865,462 55,279,449 260,000 28,770 288,770 55,886,373 606,924 1996 - 1,871,914 1,871,914 55,578,037 689,909 76,249 766,158 56,566,929 988,892 1997 - 2,360,375 2,360,375 57,568,525 1,249,123 377,448 1,626,571 58,138,528 570,003 1998 - 1,528,803 1,528,803 59,821,854 333,731 357,459 691,190 60,531,734 709,880 1999 - 1,640,914 1,640,914 61,101,609 362,286 77,903 440,189 62,416,650 1,315,041 2000 240,000 1,803,724 2,043,724 63,193,651 21,550 71,682 93,232 65,559,714 2,366,063 2001 285,000 2,022,267 2,307,267 66,959,836 29,047 65,537 94,584 68,223,208 1,263,372 2002 26,500 2,749,818 2,776,318 97,983,923 82,147 28,454,275 28,536,422 99,678,815 1,694,892 2003 - 3,038,463 3,038,463 77,817,687 431,636 3,871,604 4,303,240 77,492,959 (324,728) * Amounts appear in Schedule A-2. III-5 Table 6 CITY OF BANGOR,MAINE Property Taz Levies and Collections - Last Ten Fiscal Years %ot Outstanding Ratioof %of Delinquent Total Total Tax Current Year Current Year Fiscal Gross Tas Abate- Net Tax Current Net I.evy Taz Taa Collection Delinquent Delinquencies Year Levy ments Levy Collections Collected Co1lecHons Collectlons to Net Levy Taxes to Net Levy 1994 28,549,008 380,322 28,168,686 26,499,976 94.08% 2,024,862 28,524,838 101.26% 1,668,710 5.92% 1995 30,305,921 323,102 29,982,819 28,250,549 94.22% 1,680,210 29,930,759 99.83% 1,732,270 5.78% 1996 31,084,237 341,860 30,742,377 29,297,048 9530% 1,469,986 30,767,034 ]00.08% ],445,329 4.70% I997 31,437,259 395,775 31,041,484 29,481,717 94.98% 1,570,081 31,051,798 100.03% 1,560,037 5.03% 1998 32,600,063 364,524 32,235,539 30,805,625 95.56% 1,543,779 32,349,404 100.35% 1,429,914 4.44% 1999 32,611,689 145,123 32,466,566 31,084,751 95.74% 1,503>187 32,587,938 10037% 1,381,815 4.26% 2000 34,069,975 246,152 33,823,823 32,809,377 97.00% 719,683 33,529,060 99.13°/a 1,014,446 3.00% 2001 35,283,733 258,412 35,025,321 33,930,930 96.88% 1,565,244 35,496,174 10134% 1,094,391 3.12% 2002 36,893,245 208,21] 36,685,034 35,633,029 97.13% 1,655,407 37,288,436 101.64% 1,052,005 2.87% 2003 39,081,183 311,677 38,769,506 37,785,056 97.46% 1,506,817 39,291,873 ]0135% 984,450 2.54°/a III-6 'rable 7 CITY OF BANGOR,MAINE Assessed and Estimated Market Value of Property* Last Ten Fiscal Years � Fiscal Real Personal year Property Property Total % Change 1994 1,183,296,900 109,541,200 1,292,838,100 2.12% 1995 1,193,466,200 112,324,800 1,305,791,000 1.00% 1996 ' 1,201,371,900 139,604,900 1,340,976,800 2.69% 1997 1,206,956,900 156,506,600 1,363,463,500 1.68% 1998 1,210,414,700 176,756,000 1,3 87,170,700 1.74% 1999 1,219,950,500 188,488,200 1,408,438,700 1.53% 2000 1,267,153,100 208,423,500 1,475,576,600 4.77% 2001 1,314,964,400 222,823,400 1,537,787,800 4.22% 2002 1,346,728,900 241,682,200 1,588,411,100 3.29% 2003 1,412,798,100 278,430,400 1,691,228,500 6.47% * It is City policy to assess at 100%of estimated market value. III-7 -w.. - Table 8 _ CITY OF BANGOR,MAINE _ Property Tax Rate-Direct and Overlapping Governments Last Ten Fiscal Years General General Fiscal City Fnnd Debt Penobscot Total Tax/ Year Government Service Education County (Mill)Rate � 1994 9.60 1.13 10.41 0.86 22.00 1995 9.72 1.26 11.21 0.86 23.05 1996 9.72 1.06 11.51 0.86 23.15 1997 9.61 1.08 11.33 0.88 22.90 1998 9.64 1.28 11.57 0.86 23.35 1999 9.67 1.1 12.11 0.92 23.80 2000 9.73 0.97 12.09 0.91 23.70 2001 9.64 1.01 11.89 0.91 23.45 2002 9.69 0.85 12.24 0.97 23.75 2003 9.38 0.87 12.27 1.08 23.60 III-8 .� Table 9 CITY OF BANGOR,MAINE Principal Taxpayers June 30,2003 Assessed °/a of Total Cumulative Taxpayer Business Value Tax Base % BANMAKAssociates Shoppingmall $ 49,148,600 2.91% 2.91% General Electric* Steam turbine manufacturer 42,504,850 2.51% 5.42% Bangor Hydro-Electric Utility 28,451,200 1.68% 7.10% . Bangor Savings Bank Financial institution 16,789,900 0.99% 8.09% Eastern Maine Healthcare Medical institution 16,013,600 0.95% 9.04% QV Realty Trust Real estate interests 12,409,300 0.73% 9.77% May Department Stores Retailer 10,783,200 0.64% 10.41% Cabrel Company Real estate interests 10,703,400 0.63% 11.05% Airport Mall Associates Shopping mall 10,244,600 0.61% 11.65% Sams Real Estate Trust Retailer 9,698,700 0.57% 12.22% Totals $206,747,350 x Net of$59,493,650 of tax increment financing assets. I III-9 Table 10 CITY OF BANGOR,MAINE Computation of Legal Debt Margin June 30,2003 Total State Valuation $ 1,609,250,000 Debt Limitation: , 15%of State Valuation $ 241,387,500 Debt Applicable to Debt Limitation: Bonded General Obli ation Debt Le al Maximum As a Percent of —� Dollar State � Purpose Percentage Amount Amount Maximum Valuation Municipal 7.50% $ 120,693,750 $ 59,312,434 49.14% 3.69% School 10.00% 160,925,000 15,163,900 9.42% 0.94% Sewer 7.50% 120,693,750 31,046,750 25.72% 1.93% Total Bonded Debt Applicable to Debt Limit: $ 105,523,084 43.72% 6.56% Margin for Additional Borrowing: $ 135,864,416 III- 10 . . Table 11 CITY OF BANGOR,MAINE Ratio of Net General Obligation Debt to Assessed Value and Net General Obligation Debt Per Capita Last Ten Fiscal Years Ratio of Net Bonded Debt Fiscal Assessed Net Bonded To Assessed Per Year Population* Value GO Debt** Value Capita 1994 32,437 1,292,838,100 27,033,359 2.09% 833.41 1995 32,570 1,305,791,000 24,198,270 1.85% 742.96 1996 31,849 1,340,976,800 24,937,760 1.86% 783.00 1997 31,479 1,363,463,500 25,763,268 1.89% 818.43 1998 31,134 1,387,170,700 28,261,855 2.04% 907.75 � 1999 30,783 1,408,438,700 27,205,258 1.93% 883.78 2000 31,311 1,475,576,600 27,713,328 1.88% 885.10 2001 31,473 1,537,787,800 30,434,229 1.98% 966.99 2002 31,595 1,588,411,100 66,818,681 4.21% 2,114.85 2003 31,541 1,691,228,500 65,323,120 3.86% 2,071.05 * Source:Maine Department of Human Services(1991 through 1994),Maine Department of Human Services,Maine State Planning Of�ice and City of Bangor(1995 through 2000)and U.S.Census Bureau(2001 through 2003). ** Net Bonded General Obligation Debt Consists of all non-self supporting general obligation debt,and excludes all Sewer Utility debt of$31,046,750,Airport debt of$7,368,359,Golf Course debt of$94,603 and Economic Development debt of$1,690,252. III-11 Table 12 CITY OF BANGOR,MAINE Ratio of Annual Debt Service Ezpenditures for General Obligation Debt to Total General Fund Ezpenditures Last Ten Fiscal Years Ratio of Debt Debt Service Ex enditures Total Service To Fiscal General Fund General Fund Year Principal Interest Total Expenditures* Ezpenditures 1994 2,209,846 1,235,184 3,445,030 53,214,329 6.47% 1995 2,358,643 1,085,414 3,444,057 54,413,987 6.33% 1996 2,180,072 948,868 3,128,940 53,706,123 5.83% 1997 2,039,162 852,963 2,892,125 55,208,150 5.24% 1998 2,032,188 1,051,394 3,083,582 58,293,051 5.29% 1999 2,012,109 973,276 2,985,385 59,460,695 5.02% � 2000 2,038,664 1,059,773 3,098,437 , 61,149,927 5.07% 2001 2,389,399 1,097,765 3,487,164 64,652,569 5.39% 2002 1,707,483 1,686,455 3,393,938 67,566,552 ** 5.02% 2003 2,053,480 3,292,171 5,345,651 74,779,224 7.15% * Budget basis,Schedule A-2 ** 2002 General Fund Expenditures have been reduce by the one time payment to the MSRS totaling$27,641,053 III-12 Table 13 CITY OF BANGOR,MAINE Computation of Direct and Overlapping Debt June 30,2003 Percentage Amount Total Debt Applicable Applicable Outstanding to Bangor to Bangor Direct Debt , City of Bangor General Obligation Bonds $ 105,523,084 100.00% $ 105,523,084 Overlapping Debt Penobscot County 288,660 23.07% 66,594 Total Debt $ 105,811,744 $ 105,589,678 III-13 Table 14 CITY OF BANGOR,MAINE Demographic Statistics Last Ten Calendar Years Median Public Unemploy- Fiscal Household Median School ment Year Population * Income* Age* Enrollment** Rate*** 1994 32,437 Data not Data not 4,227 7.96% available available 1995 32,570 Data not Data not 4,303 7.47% available available ' 1996 31,849 Data not Data not 4,257 5.72% available available 1997 31,479 Data not Data not 4,394 4.52% available available 1998 31,134 Data not Data not 4,408 4.80% available available 1999 30,783 Data not Data not 4,377 3.60% available available 2000 31,311 Data not Data not 4,410 2.99% available available 2001 31,473 29,740 36.1 4,281 2.85% 2002 31,595 29,740 36.1 4,316 3.01% 2003 31,541 29,740 36.1 4,205 3.12% * Source: U.S. Census ** Source: Bangor School Department *** Source: Bureau of Labor Statistics III-14 Table 15 CITY OF BANGOR,MAINE Taxable Retail Sales(000's) Last Ten Calendar Years Taxable Retail Sales in: Bangor as Percent of Galendar City of Penobscot State of Year Bangor County Maine County State 1993 712,294 1,217,741 9,815,702 58.49% 7.26% ' 1994 725,513 1,241,600 10,162,703 58.43% 7.14% 1995 731,195 1,269,502 10,414,283 57.60% 7.02% 1996 784,965 1,333,801 10,915,108 58.85% 7.19% 1997 1,020,875 1,473,461 11,323,937 69.28% 9.02% 1998 1,087,277 1,573,243 12,311,991 69.11% 8.83% 1999 1,215,497 1,738,263 13,453,367 69.93% 9.03% 2000 1,300,292 1,849,715 13,939,682 70.30% 9.33% 2001 1,296,936 1,847,194 14,169,119 70.21% 9.15% 2002 1,364,873 1,930,534 14,619,785 70.70% 9.34% Source:Maine State Pianning Office and Maine Bureau ofTaxation � III-15 v Table 16 CITY OF BANGOR,MAINE Residential and Commercial Building Permits and Bank Deposits (Doliar Amounts in Thousands) Last Ten Calendar Years Property Value Building Permits Residential Non-Residential Totals Calendar Estimated Estimated � , Bank Year Commercial Residential Total Units Value Units Value Units Value Deposits* 1993 607,633.9 685,204.2 1,292,838.1 371 5,718.7 253 10,968.4 624 16,687.1 717,982.0 1994 613,721.8 692,069.2 1,305,791.0 289 4,019.7 274 21,068.0 563 25,087.7 705,589.0 . 1995 630,259.1 710,717.7 1,340,976.8 279 3,203.0 198 17,392.7 477 20,595.7 749,352.0 1996 640,827.8 722,635.7 1,363,463.5 283 4,013.8 192 18,773.8 475 22,787.6 762,181.0 � 1997 651,970.2 735,200.5 1,387,170.7 303 2,966.9 222 29,368.5 525 32,335.4 792,341.8 1998 661,966.2 746,472.5 1,408,438.7 284 3,149.7 223 37,984.6 507 41,1343 808,188.7 1999 693,521.0 782,055.6 1,475,576.6 269 7,252.0 220 24,772.6 489 32,024.6 799,166.0 2000 722,760.3 815,027.5 1,537,787.8 296 9,637.9 191 18,888.9 487 28,526.8 780,101.0 2001 746,553.2 841,857.9 1,588,411.1 248 4,291.7 198 21,175.2 446 25,466.9 827,173.0 2002 794,877.4 896,351.1 1,691,228.5 277 5,076.1 199 25,313.9 476 30,390.0 DatallotAvailable * Source:Maine Bureau of Banking III-16 Table 1.7 CITY OF BANGOR,MAINE Miscellaneous Statistics June 30,2003 City Employees Public Education Full time 486 Number of schools 10 Part Time 368 Number of teachers ` 369 Number of students 4,205 Police Protection Fire Protection Number of officers 76 Number of firefighters 93 Number of civilian employees 16 � Number of civilian employees 4 Number of stations 1 Number of starions 3 Number of vehicles 42 Number of vehicles 25 Number of calls for service 22,213 Number of calls for service 7,528 Number of training facilities 1 Insurance Service Organization fire 2 Parks and Recreation Sewers Number of parks 29 Miles of sanitary sewers 103 Number of play areas 11 Miles of combined sewers 44 Acres of park land 950 Miles of interceptor sewers 9 Indoor ice arena 1 Treatment plant 1 Semi-pro baseball stadium 1 Pump stations 5 Public golf courses 1.5 Combined sewer overflow locations 12 Public swimming pools 1 Storage tanks 3 Football stadium 1 Recreation center 1 Public Library Number of branches 1 Number of volumes 468,000 Registered borrowers 42,345 Annual circulation 445,927 III-17 This page left intentionally blank