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CITY OF BANGOR,.MAINE ,Y, �1 l ,, � , , ,- , � ,,�;� , � - ,:: , 1 CSomprehensive�Annual Financial�Report _ ' � ti ' �,�:` j+ f f �1 .- � �1�' , - -�, ;�����I+ ' For the Fisca�Year Ended=]une�30, 2007 ; `' '��� J,Y , �, -a�� � � --_....__�.,. , � f , . , � Prepared by: y Debbie Cyr, Finance Director David Little, Tax Collector/Deputy Treasurer � � . i CITY OF BANGOR, MAINE ' Comprehensive Annual Financial Report � � Table of Contents , � For.the Fiscal Year Ended June 30, 2007 - INTRODUCTORY SECTION Pa4e ,�. . Letter of Transmittal I - 1 , , f r , GFOA Certifcate of Achievement I - 7 _ Organizational Chart I - 8 Elected Officials and Principal Administrative Officers I - 9 FINANCIAt SECTION �r�--~--- � � _ - Report of Independent Auditors II - 1 Management's Discussion andiAnalysis;='�� r.: , : � � II - 2 ., Basic Financial Statements: - ;-' � `�,, , ,,Exhibit � � - f � ` I, ,: - �, � ' , ., I l � � Government-wide Financial Statements: ' .. � � �; r_; , Statement of NetJAssets `. �� _ ;� < < �y ; 1 II - 15 A � Statement of Actiyities � '�, ^� - ' '-' ^ 2 II - 16 � i -" .J ,' �� ': E . . . . � [. ; f — !J� , .�s � � ���ti.,� � "� � � . Fund Financial Statements: j` .--��� _ �:a,' � �`�; -� '�- `�' Balance Sheet -�Governmental Funds �`_�-��='—! .! 3 II - 17 , � Statement of Revenues;,Expenditures and��Changes in����� Fund Balances,Governmental Funds `��<< �oM � f� 4 II - 18 � � Reconci lia tion o f t he S ta temen t o f Revenu�;1 Expe�di tures ' , and Changes in Fund Balances of,�Governmental Funds _-�_.��. , to the Statement of`Activities 5 II - 19 Statement of Revenues,Expenditures and Changes in � ,�� Fund Balance - Budget and�Actual - General Fund 6 II - 20 Statement of Net Assets- Proprietary-Funds--�"`�r 7 II - 21 i ` Statement of Revenues, Expenses and Changes in . Net Assets- Proprietary Funds 8 II - 23 - Statement of Cash Flows- Proprietary Funds 9 II - 24 �-� Statement of Fiduciary Net Assets- Fiduciary Funds 10 II - 26 � � _ ' Notes to the financial Statements II - 27 0 r� 6 -, ., . . . . . . . . . .. . . ... . �. . . ... . . . .. . � _ CITY OF BANGOR, MAINE � Table of Contents, Continued � Schedule Paae ,l Combining and Individual Fund Statements and Schedules: � Balance Sheet—General Fund A— 1 II - 51 ' Schedule of Revenues, fxpenditures and Changes in � Undesignated Fund Balance — Budget and Actual — Budgetary ' Basis— General Fund A—2 II - 52 � : Combining Balance Sheet— Nonmajor Governmental Funds B— 1 II - 56 Combining Statement of Revenues, Expenditures and _ ' Changes in Fund Balances — Nonmajor Governmental Funds B— 2 II - 57 Combining .Balance Sheet— Nonmajor Special Revenue-Funds B — 3 II - 58 ' ' Combining Statement of Revenues„Expenditures and Changes in Fund Balances — Nonmajor Special_Revenue Funds� B —4 II - 59 „ Combining Balance Sheet— Nonmajor Permanent Funds�_; � B.— 5 II - 60 ' Combining 5tatement of Revenues, Expenditures and ��;, � Changes in Fund Balances — Nonmajor Per,manent Funds �•. � B= 6 II - 61 ` , � Schedules of Revenues, Ex�enditures and Encumbrances =,Budget �`� �� - ' and Actual Budgetary Basis: ,� "� , -` ' �'l �. Sewer Utility Enterprise;;Fund �: .`_ ti ,, ` ,'�'; C— 1 II - 62 �', ' Airport Enterprise Fund � ' �� _ �' _5` � � ' G— 2 II - 63 : Park Woods Enterprise Fund � ` �� ' , ��, � C—3 II - 64 . Parking Enterprise Fu�d t, n" -- ,�. � `, �~ --;� �`;`�/ C-4 II - 65 �� Bass Park Enterprise Fund �, . ��;� �� -� �`-�r-� � _ 5 II - 66 � � Municipal Golf Course E�terprise Fund _.__ �__^ �y � C 6 II - 67 � � _ r��-.� Economic Development Enterprise-Fund � ' ,C —7 II— 68 t� �� � G ' Fiduciary Funds: � .�n��.� � � . Statement of Change in Assets and Liabilities'—Agency Fund D— 1 II— 69 _ � - � Capital Assets.Used in the Operation of`Go�rnmental Funds: Schedule of Changes by Function and Activity----��J E - 1 II = 70 j � Other Information: � Assessed Valuation, Commitment and Collections F — 1 II - 71 ; Undesignated Fund Balance Sufficiency Calculation F — 2 II - 72 I 1 1 � F , , � , - CITI( OF BANGOR, MAINE � � Table of Contents, Continued . STATISTICAL SECTION ' ' � Table Paae , =, Financial Trends - � , Net Assets by Component 1 III — 1 ' Changes in Net Assets 2 III — 2 Governmental Activities Tax Revenues by Source 3 II3 — 5 ' ' Fund Balances of Governmental Funds 4 III — 6 � - Changes in Funds Balances of Governmental Funds 5 III — 7 � Revenue Capacity: • Assessed Value and Estimated Actual Value of Taxable Property 6 - III— 8 � Properly Tax Rate — Direct and Overlapping-Governments 7 III:— 9 Frincipal Property Taxpayers � . 8 III — 10 Property Tax Levies and Collections, = 9 III — li ,_ - - �� , � Debt Capacity: ��"� , . - Ratios of Outstanding Debt by Type� r� ' -.�; �` ��� 10 III —12 Ratio of Net General Obli gation,Debt to Assessed Value-and '. „ ; � ' Net Obligation Debt Per Capita , � �� `� ` �'� •� ', 11 III— 13 � � Computation of Direct and Oyerlapping Debt �� �; _ : '� 12 III— 14 Legal Debt Margin Infocmation , �. _ _, �� t '' `13 III — 15 �_ � _� ., .i � _ ;:y � , I ' . , � t J � �-. , r , :' �_ ,.� �' ;' i Demographic and Economic Information,� �:-� '��- � a� � ? � Demographic and Economic Stat�stics;� =�f` r� ,t��:�l ,'14 III — 16 Principal Employers � �; `', �" .' , � �`_,_��`� � 15_ III — 17 , � �'�- _ •-� ��'��� � �� ,^1 `,``,`i' , � Operating Information: �.-�� � � Full-time Equivalent City Government Emplo�ees.-.�bylFun�n , . 16 III _ 18 Operatmg ,Indicators by Function .�,c� . 17 III 19 ;,,�. Capital Asset Statistics by Function� , ��'�� 18 III- 20 , + ' � � I . ' � 1. , 4 . � h � � j __ _ _ � _ _ _ - - � i � � � INTRODUCTORY SECTION ,� . � ,: , , ; - � , � City of B�� O� 207/992-4260 fax 207/945-4446 Maine debbie.cyr@bangormaine.gov www.bangormaine.gov FINANCE DEPARTMENT Deborah A. Cyr, Finance Director December 21, 2007 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 City of Bangor for the fiscal year ended June 30, 2007 is hereby submitted. 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 Citys 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 I - 1 � � ,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 expenditures of federal awards, 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 (MD8cA). 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 City 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 l 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 - 2 . . , ` .• < '. .� + k s�� � . �,5; 4�e,n��� i, .. , i . .,,ti . . .. � . .{' t� . � ' ' • � � . , _ � . ,.'ry� � .. 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 July 2000. The City provides a full range of municipal services including 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 � July ist and ends on the following June 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 ne� 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 � Ciry Manager's proposed budget automatically becomes that fiscal year's budget. � In either case, an appropriate properry tax levy is established and filed with the City Assessor who then sets the necessary property tax rate. - The annual budget serves as the foundation for the City's financial planning and ' control and is prepared by fund, function, and department. The City Manager may transfer resources within a department; however, transfers - between � departments require Council action. 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 I - 3 communication, banking, commercial, industrial, healthcare, 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. Bangor's 2006 unemployment rate of 4.4% � continues to be below both country and state rates of 4.9%, 4.6%, respectively. 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 (downtown) 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 9% since 1999. Over the same period, Bangor's share of County sales has grown significantly to approximately 71%. ' Further evidence of continuing sustained growth is the change in the City's � assessed value of real and personal property, which averaged 2.47% from 1991 , to 2000 and 6.07% per year over the last 6 years. Tax base growth, the City's focus on controlling budgetary growth, and ramped up state funding for ' education has resulted in a 16.9% reduction in the City's tax rate from 1998 to , 2007. ; The City is committed to preserving its viable economic base while creating new opportunities for future econornic growth. To achieve these objectives, the City is proactive in supporting economic activity through planned capital � improvements, innovative financing, and aggressive marketing. Long-term financial planning and major initiatives. Unreserved, undesignated fund balance in the general fund as of June 30, 2007 was 10.63% of expenditures, net of debt service. By Charter, the City is required to maintain - - a balance between 5% and 10%, and the Council has determined that a reasonable target is 7.5%. The City prepares a five-year capital plan that 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. , 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. A majority of the required infrastructure has been installed, for which . the City has been successful in obtaining partial funding from both State and I - 4 Federal agencies. Current plans call for some $180 million in development including: a headquarters hotel and high-technology conference center, new � � class A office space, restaurant and retail space, residential apartments and condominiums, and other private sector projects. The City has entered into a development agreement with Bangor Historic Track, a wholly owned subsidiary of Penn National Gaming, to redevelop Bangor Raceway and a portion of the surrounding Bass Park property. Penn National Gaming opened a temporary gaming facility containing 475 slot machines in November 2005 and anticipates opening its permanent facility, including a hotel, in the summer of 2008. Under this agreement, the City receives a percentage of gross slot revenue as well as land lease payments and property taxes on new development. In October 2005, the City established a special revenue fund to account for all such payments. In addition, the Council Order establishing this fund specifies that its primary use will be to construct a new arena in Bangor to replace the Bangor Auditorium which opened in Bass Park in 1954. Over the years, the City has invested significant resources and effort in improving our local environment and protecting our natural resources. In recent years, the City has performed environmental remediation work on the waterfront, a former gas works site, and a former laundry/dry cleaning establishment, and has undertaken significant sewer system improvements and a � project to direct all de-icing fluid used at Bangor International Airport directly to � the treatment plant. In the coming year, the City will complete its fifteen year _. commitment to addressing its combined sewer overflows. Expanded attention " will be given to storm water management and its efFects on various water bodies � within our corporate limits. ' In conjunction with surrounding communities and various interested parties, the City will be participating in a regional open space plan. The plan will use "greenprinting" and geographical information systems to identify appropriate areas within our region for public and private open space. In addition, the City continues to work with all interested parties to implement . the comprehensive approach adopted to address land use issues related to the � Penjajawoc Marsh area adjacent to the Bangor Mall. In order to achieve significant long term energy savings as well as to provide , environmental, occupant comfort, and indoor air quality improvements, the City has undertaken an energy audit of all its facilities. The results from this effort are expected in the coming year. The City will then undertake capital , improvements recommended by the audit in order to reduce energy use and related costs. It is anticipated that the savings realized by the improvements will be applied toward the annual payments required to finance these improvements. � I - 5 } In addition to improving its current facilities, the City has adopted a policy that will require all new construction and major renoyations to City owned or funded � buildings to meet Leadership in Energy and Environmental Design (LEED) ; certification. - 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, 2006. This was the tenth 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 for consideration 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 City's financial management and reporting capabilities. We hope that we have once again met their expectations. ; � Respectfully submitted � Debbie Cyr Finance Director � � � I - 6 i . � . . � Certlficate of . , � . . � . . . Achlevement �. . . for Excellence . , , . . � . ln Flnancial � Re ortin - � p g . . Presented to City of Bangor : . : , - . • Maine . i ' . . For its Comprehensive�Annual � Financial Report. , ; , for the Fiscal Year Ended June 30, 2006 � . ,- . � A Certificate of Achievement for Excellence in Financial � Repocting is presented by the Government Finance Officers .. � " . Association of the United States and Canada to � ' govemment units and public employee retirement ' ; � � systems whose comprehensive arinual financial . reporfs(CAFRs)achieve the higliest � , � standards in government accounting � � . � ° ', .and financial reporting. : . � ��oN�ETMfFkE : . - . . � � �SfATFi_w � . ' . ' . � � � � , � � � . _ � �ffi ��� � . _ President . . 9��$F.RI,� . unt►co . . r '• �� �'3 G�����' ' � ' Executive Director ' � i /. . CITY OF BANGOR ORGANIZATIONAL CHART Revised (11-07) • • CITIZEN CITY CITIZEN COMMISSIONS COUNCIL BOARDS CITY ASSESSING CITY CITY so�iciTOR _ _ MANAGER CLERK RECORDS ELECTIONS VOTER REGISTRATION FINANCE � INFRASTRUCTURE AND � GOVERNMENT '' COMMUNITY & BANGOR BASS OPERATIONS I ECONOMIC DEV. INTERNATIONAL DEVELOPMENT SUPPORT ' __ _ AIRPORT __; COMMUNITY CIVIC AUDITING ' CODE ,POLICE I FIRE i HEALTH i DEVELOPMENT CENTER 'ENFORCEMENT AND DETECTIVE FIRE WELFARE I� ECONOMIC AUDITORIUM FIGHTING TREASURY, PLANNING' GENERAL DEVELOPMENT STATE - PATROL FIRE RELIEF FAIR RISK & - PREVENTION DOWNTOWN !ENGINEERING PROGRAMS ENVIRONMENTAL —_ ADMINISTRATION BU�EAU NURSING MANAGEMENT SERVICES pARKING SERVICES ADMINISTRATION MANAGEMENT INFORMATION �PUBLIC WORKS DENTAL SERVICES ANIMAL ADMINISTRATIVE CONTROL , SERVICES ' PURCHASING HARBOR HUMAN GRANT PROGRAMS PARKS AND RESOURCES WASTEWATER RECREATION PARK TREATMENT J RELAB ONS WOODS PARKS SEWER MAINTENANCE BAT MAINTENANCE RECREATION COMMUNITY CONNECTOR GOLF FLEET COURSE MAINTENANCE CENTRAL SERVICES City of Bangor, Maine Elected Officials and Principal Administrative Officers � 7une 30, 2007 � Citv Council Richard D. Greene, Mayor Anne E. Allen Patricia A. Blanchette Peter R. D'Errico Frank J. Farrington Geoffrey M. Gratwick Susan M. Hawes Gerry G.M. Palmer Richard I. Stone Citv Staff Edward A. Barrett, City Manager � � Benjamin F. Birch, City Assessor Patti Dubois, City Clerk Norman Heitmann, City Solictor School Committee � Martha G. Newman, Chair � Susan A. Carlisle James Cox Phyllis S. Guerette Phyllis M. Shubert, Vice Chair � Christine Szal Ellen Tobin School Staff Robert Ervin, Superintendent of Schools , I - 9 � � 1 - FINANCIAL SECTION � , . _,; , ; .�- � �Li 11.1�101�i. �,� � `�Ge�steen. �-� , Or�etlette Certified Public Accountants and Business Consultants Independent Auditor's Report , City Council City of Bangor,Maine We have audited the accompanying financial statements of the governmental activities,business-type ' activities,each major fund,and the aggregate remaining fund information of the City of Bangor;Maine as of and for the year ended June 30,2007,which collectively comprise the City's basic financial statements. as listed in the table of contents. These financial statements are the responsibility of the City of Bangor, Maine's management. Our responsibility is to express opinions on these financial statements based on ' our audit. ' We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards � issued by the Comptroiler General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of.material misstatement. A.n audit includes examining,on a test basis, evidence supporting the amounts and , --, disclosures in the financial statements. An audit also includes assessing the accounting principles used . and significant estimates made by management,as well as evaluating the overal]fnancial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion,the financial statements referred to above present fairly, in all material respects,the ' respective financial position of the govemmental activities,business-type activities,each major fund, and _ the aggregate remaining fund information of the City of Bangor,Maine,as of June 30,2007,and ° respective changes in financial position and cash flows,where applicable,thereof and the budgetar}j '_ comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accoidance with Governnzent Auditing Stmzdards,we have also issued our report dated December 21, 2007,on our consideration of the City of Bangor,Maine's internal control over financial reporting and - l� our tests of its compliance with certain provisions of laws,regulations,contracts and grant agreements � and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal conhol over financial reporting or on compliance. That report is an integral�part of an audit . performed in accordance with Government Auditing Staizdards and should be considered in assessing the - results of our audit. 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 accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted ' principally of inquiries of management regarding the methods of ineasurement and presentation of the ' reyuired supplementary information. However,we did not audit the information and express no opinion on it. City Council � � Page 2 � , Our audit was conducted for the purpose of forming opinions on the financial statements that collectively - comprise the City of Bangor,Maine's basic financial statements. The introductory section,combining and individual nonmajor fund financial statements and schedules,and statistical section 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,are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections.have not been subjected to the auditing procedures applied in the audit of the basic financial statements and,accordingly,we express no opinion on them. � O December 21,2007 South Portland,Maine , t MANAGEMENT'S DISCUSSION AND ANALYSIS Management of the City of Bangor offers this narrative overview and analysis of the financial activities of the City of Bangor for the fiscal year ended June 30, 2007. In addition to comparative information from the government-wide statements, comparative , data is presented on key information from the fund financial statements. We encourage readers to consider the information presented here in conjunction with additional information that is furnished in our letter of transmittal, whic� 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 $203.5 million (net assets). • As of the close of the current fiscal year, the City of Bangor's governmental funds reported combined ending fund balances were relatively unchanged from the prior year at $20.6 million. Approximately 79% of the total amount, or $16.2 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 unreserved/undesignated fund balance of 5% to 10% of current expenditures less debt service. At the end of the current fiscal year, unreserved undesignated fund balance for the general fund was $8.3 million, or 10.63% of the general fund expenditure base. The annual calculation is included within the financial statements , as Schedule F-2. • The total liabilities of the City's governmental and enterprise funds decreased by ' $700 thousand (5.4%) and $800 thousand (1.5%), respectively. The change in governmental fund liabilities is due to a decrease in accounts payable within the City's Capital Project Fund. These payables can vary drastically from year to year depending upon the projects being undertaken. The decrease in enterprise fund liabilities is due to principal repayments exceeding new debt issued by $1.9 million, an increase of $600 thousand in accounts payable due to the timing of invoices ' received in the prior year, an increase in interfund borrowings related to cash flow in � the amount of $200 thousand and a $200 thousand increase in compensated absences. � 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. These 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 that used by private-sector companies. 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 employee 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 Utility, 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-15 to II-16 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 that 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 ten 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 balances for the general fund, community development block grant, racino fund, and II - 3 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 non-major 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 I be major. , The City of Bangor adopts annual budgets for all of 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 funds is much like that used for proprietary funds. Its' statement of r�et assets is included 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-27 through II-50 of this report. , . II - 4 Government-wide Financial Analysis The following is a condensed version of the Statement of Net Assets. (Certain amounts within 2006 have been reclassed to conform with 2007 presentation.) Governmental Business-type Activities Activities � Total 2007 2006* 2007 2006* 2007 2006* Current&other assets 32,045,317 32,384,087 28,732,848 27,683,760 60,778,165 60,067,847 Capital assets; net 73,854,037 71,620,583 191,640,571 192,561,963 265.494,608 264,182,546 Totalassets 105,899,354 104,004,670 220,373,419 220,245,723 326,272,773 324,250,393 Long-term debtoutstanding 63,925,828 64,772,239 45,258,758 46,788,985 109,184,586 111,561,224 ,_ Other liabilities 10.565,974 11,051,573 2,992,321 2,389.888 13.558,295 13,441,461 Total liabilities 74,491,802 75,823,812 48,251,079 49,178,873 122,742,881 125,002,685 Net assets: � Invested in: ' Capital assets, net of related debt 48,257,039 48,707,054 154,897,152 154,068,754 203,154,191 202,775,808 � Restricted 1,025,700 1,002,525 - - 1,025,700 1,002,525 Unrestricted �17,875,187��21.528,721) 17,225,188 16,998,096 (649,999� (4,530,625� Total net assets 31,407,552 28,180,858 172,122,340 171,066,850 203,529,892 199,247,708 By far the largest portion of the City's net assets (99% or $203.2 million) reflects its investment in capital assets (i.e. 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 approximately a $600 thousand deficit, the governmental activity portion shows a deficit of $17.9 million. This is primarily due to $27.3 million in outstanding pension obligation bonds. With the exception of total unrestricted net assets, the City is able to report positive balances in the remaining two categories of net assets for the government as a whole. Business-type activities net assets continue to remain positive in all categories. Governmental-type net assets increased by $3.2 million and business-type net assets , increased by $1.0 million during the year. Within the governmental-type funds, the increases are related to actual revenues outpacing estimates, specifically in the area of property and excise taxes, state revenue sharing, interest earnings, and racino fund revenues. The business-type net asset increase was due to an increase on investment returns coupled with increased capital grants and contributions. II - 5 � Changes in Net Assets The following is a condensed version of the Statement of Activities. , (*Certain amounts within 2006 have been reclassed to conform with 2007 presentation) Governmental Business-type Activities Activities Total 2007 2006* 2007 2006 2007 2006 Revenues Program Revenues Charges for services 16,487,735 15,607,246 24,696,844 21,989,212 41,184,579 37;596,458 Operating grants&contributions 30,534,706 29,577,430 - - 30,534,706 29,577,430 Capital grants&contributions 2,604,652 3,788,485 4,316,902 2,581,874 6,921,554 6,370,359 General Revenues Property and othertaxes 46,812,955 45,855,053 - - 46,812,955 45,855,053 Grants and contributions not Restricted to specific programs 4,968,217 4,773,082 - - 4,968,217 4,773,082 Other 1,444,529 731,967 1,392,375 635,454 2,836,904 1,367,421 TotalRevenues 102,852,794 100,333,263 30,406,121 25,206,540 133,258,915125,539,803 1 Expenses General government 7,052,860 6,947,106 - - 7,052,860 6,947,106 Public safety 13,756,962 12,890,750 - - 13,756,962 12,890,750 Health, welfare and recreation 7,348,875 7,301,546 - - 7,348,875 7,301,546 Public buildings and services 8,659,473 8,256,266 - - 8,659,473 8,256,266 Other agencies 3,787,970 3,610,935 - - 3,787,970 3,610,935 Education 46,106,647 45,522,795 - - 46,106,647 45,522,795 Unclassified 397,851 805,218 - - 397,851 805,218 Arena Developrrtient 417,030 141,807 - - 417,030 141,807 Community development 1,865,026 2,419,594 - - 1,865,026 2,419,594 Streets/sidewalks 2,884,655 2,911,131 - - 2,884,655 2,911,131 WaterFront 399,015 990,961 - - 399,015 990,961 Public transportation 1,841,516 1,798,968 - - 1,841,516 1,798,968 Interest on debt 3,135,278 3,098,248 - - 3,135,278 3,098,248 Tax increment financing _ 1,101,078 1,092,770 - - 1,101,078 1,092,770 Sewer Utility - - 6,353,825 5,818,127 6,353,825 5,818,127 Airport - - 18,645,140 16,947,056 18,645,140 16,947,056 Park Woods - - 498,678 540,207 498,678 540,207 Parking - - 1,390,863 1,322,138 1,390,863 1,322,138 Bass Park - - 1,984,042 1,918,111 1,984,042 1,918,111 Municipal Golf Course - - 657,809 647,499 657,809 647,499 Economic Development - - 692,138 484,264 692,138 484,264 Total Expenses 98 754 236 97 788 095 30 222 495 27 677 402 128 976 731125 465 497 Excess(deficiency) before transfers 4,098,558 2,545,168 183,626 (2,470,862) 4,282,184 74,306 Transfers (871,864) (861,290) 871,864 861,290 - - Change in net assets 3,226,694 1,683,878 1,055,490 (1,609,572) 4,282,184 74,306 II - 6 Governmental Activities The cost of all governmental activities was $98.8 million. As shown on the Statement of Activities, the total amount financed by the Ciry's property taxpayers was $41.7 million, or 40.5%. Those who directly benefit from an activity provided $16.5 million in payments. Other governments and organizations subsidized certain activities with operating grants and contributions in the amount of $30.5 million. Capital grants and contributions accounted for $2.6 million. The City also received $11.5 million in other general revenues such as State Revenue Sharing, motor vehicle and boat excise taxes, homestead exemptions, and interest earnings. . Expenses and Program Revenues- Governmental Activities � - 50 45 40 � 35 � 30 0 25 �� 20 � 15 v 10 p Expenses � , I I I ' ' S i Revenues � ' ` 0 cc�c�'��`���'`�occ���`a'`o°y,���aa¢��,�Q`��y��°�'``'�c����, �,�J�\` ���`�`P���Jc`a P�� �,�a,��cy�L�° t�oc �� Q�`c°' ��Or C,°� `� c'�e C�c °� �`� ,° ~ � �� QJ QJ,����. �� Total governmental activities expenses increased $1 million over the prior year. No additional programs were sponsored by the City in the current year, nor were any eliminated. Increased costs are directly related to personnel and utilities. These increased costs were offset by reductions in program expenses associated with the Community Development Block Grant as well as a reduction in spending on the waterfront, which was based on available grant funding. Governmental functions experienced a 2% employee cost of living wage adjustment, which is the primary factor in the increase. There were minimal to no increases in historically volatile expense areas such as health insurance premiums and utility costs (fuel oil, vehicle fuel, � electricity). � II - 7 Revenues by Source- Gbvernmer�tal Activities o lo�o ❑Charges for Services e Operating Grants& Corrtributions � ❑Capital GPar�ts&Contributions - ❑Property Taxes i - . . ._. .—. qpo o� p% ■Other General I ❑Unrestricted Grarrts& 3 0 ��ributions �Other Unrestricted . Total governmental activities revenues increased 2.5%. The largest single source of revenue continues to be the property tax, which remained stable at approximately 40% of total revenues for both 2006 and 2007. Revenue resulting from services provided increases in two specific areas, interest earnings and a full year of racino operation. The largest area of revenue growth is within the properly and other taxes category. Tax � revenues increased nearly $1 million in 2007 due to new value, as defined by LD 1, which translates into $49.7 million of new development/improvements within the City during the prior fiscal year. Business-type Activities Total expenses of business-type activities increased 9.2%, or $2.5 million, over the prior year. Within the Sewer Fund, there were a significant number of equipment upgrades that were expensed in the amount of $450,000. The Airport continues to see increased , numbers of international flights requiring services. Most of these flights are directly related to military troop movements. The additional costs associated with servicing this market are recovered through additional revenue from charges for�service. In addition, all business-type activity employees also received a 2% cost of living wage adjustment. Expenses and Program Revenues- Business-type Activities zo 18 16 14 � � 12 �Expenses 0 = 10 A Revenues .� c g � v 6 - 4 2 0 J`'�� `�L� �y �c0 Qa� oJt�,� ,�Q ���c P � Qa �y� o C, Q� � Qa C� ��,o II - 8 Revenues by Source - Business-type Activities Transfers Unrestricted Capital Grants and 3°�O Investment Earnings Contributions 4% 14% ■Charges for Services Charges ices 79% ■Capital Grants and Contributions ❑Tra nsfers ❑Unrestricted Investment Earnings Total business-type activities revenue increased by $5.2 million. This increase is partially attributable to an increase in capital grants and in investment earnings and their market value. The source of funding for Airport capital projects is cyclical in nature. In one year, the majoriry may be provided by grants while the following year's may be primarily supported through local sources such as passenger faciliry charges collected by the Airport. The remaining increase was generated through charges for services. During the year, the Sewer Fund increased user rates by 5%, the first rate increase in ten years. In addition, the Airport continues to experience increased revenues from increased international flights, specifically those tied to military troop movements to and from the Middle East. Financial Analysis of the Government's Funds Governmental funds. The focus of the City's governmental funds reporting is to provide information on near-term inflows, outflows, and balances of expendable resources. Such information is useful in assessing the Ciry's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the 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 $20.5 million, which is virtually unchanged from the prior year balance of $20.3 million. Approximately 79% of this total ($16.2 million) constitutes unreserved fund balance that is available for spending at the City's discretion. The remainder is reserved, indicating that it is not available for new spending because it has already been committed for various purposes including liquidating prior period contracts and purchase orders ($2.2 million), reserving for potential non-repayment of interfund balances ($1.4 million), or set aside for a variety of other restricted purposes ($700 thousand). II - 9 The general fund is the chief operating fund of the City and is comprised of two major functions, education and municipal services. At the end of the fiscal year, the total unreserved fund balance of the general fund was $11.4 miPlion ($3.2 million of which has been designated by management for subsequent years' expenditures). The general fund's total fund balance was $13.8 million, an increase from the prior year's balance of � $13.0 million. The entire increase occurred within the municipal services undesignated fund balance. The reasons for the increase were relatively low increases in operating expenditures coupled with increased revenue collections in� the area of taxes, State Revenue sharing, and increased interest earnings. Over the last few years, the City has consistently exceeded its 7.5% undesignated fund balance target. In order to bring our undesignated fund balance into line with the Council's established policy, the City appropriated $550 thousand from this balance during fiscal year 2008 to fund further environmental assessment of the Penobscot River and associated legal costs. Proprietary funds. Information on the City of Bangor's proprietary funds is similar to that found in the government-wide financial statements, but in more detail. The unrestricted net assets of the seven enterprise funds increased $1.0 million to a total of $172.1 million, including net asset deficits of $1.5 miVlion in the Bass Park Fund and $200 thousand in the Parking Fund. With the exception of the Economic Development Fund, the net assets of all other enterprise funds were relatively unchanged. During 2007, the Economic Development Fund sold significantly more assets than normal. This fund accounts for vacant land and other property acquired by the City to support our efforts to attract new and expand existing businesses within our community. General Fund Budgetary Highlights Differences between the originally adopted budget and the final amended budget were minimal. The City's commitment to budgetary integrity continues, with actual revenues exceeding budgeted amounts by 1.8% or $1.5 million while municipal expenditures were under budget by 3.7% or $3.2 million. The majority of under expenditures, at $2.9 million, occurred in education. By statute, education balances must be segregated from municipal balances. Capital Asset and Debt Administration Capital assets. As of June 30, 2007, the City of Bangor's investment in capital assets for its governmental and business-type activities amounted to $265.5 million (net of accumulated depreciation), an increase of $1.3 million over the prior year. This investment 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 minimal in total but varied vastly by activity. Governmental activities investment in capital assets increased 3.1% based largely on the final financing of the new Police Station, while business-type activities net capital assets decreased by $900,000, as depreciation expenses of$9.6 million outpaced capital investments. II - 10 Major capital asset events during the current fiscal year included the following; • Investing more than $1.0 million in partially state funded street and highway improvements � • Additional costs to construct a new police station in the amount of$3.4 million • investments in emergency response technologies, vehicles, and equipment in the - amount of$1.1 • Continuing the City's aggressive combined sewer overflow control program in the amount of$2.0 million � Investing $3.0 million in operational assets at Bangor International Airport, including the upgrading and improving access points, remote custom clearance areas, and cargo hold aprons, as well as acquisition of an upgraded security system. , Capital Assets (net of depreciation) Governmental Business-type Activities Activities Land and improvements 9�378�882 4,600,012 Buildings and improvements 31,775,004 16,360,439 Machinery and equipment 3,411,580 1,932,343 � Vehicles 5,748,596 _ Infrastructure 11,107,900 45,286,237 Parking structures ' 3,393,559 Aircraft operational assets - 115,353,720 Construction in process 12,432,075 4,714,261 Tota I 73,854,037 191,640,571 Additional information on the City's capital assets can be found in Note C, Detailed Notes on all funds, of this report. Debt Administration � At fiscal year end, the City had a total outstanding bonded debt of $104.1 million, a decrease of $2.7 million during the year. This decrease includes a one time early repayment of $1.2 million made through issuing new debt in June 2006 in order to call outstanding 1995 and 1996 bonds with payments scheduled for September 2006. II - 11 Bonded Debt Outstanding (in millions) $43.8 . OGovernmental Activities ■Business-type Activities $60.3 The City's general obligation debt maintained a "AA-" rating from Standard & Poor's and a "Aa3" rating from Moody's. 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 $332.1 million, an amount which is significantly in excess of 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 Next Year's Budget and Rates • The unemployment rate for the City of Bangor for calendar year 2006 was 4.4% and continued to compare favorably to the State's rate of 4.6%. � • While Bangor represents less than 3% of the state's population, the City's share of retail sales remains in excess of 9% of total statewide sales and 71% of Penobscot County sales. • The increase in residential construction that began in 2002 has continued, albeit at a slower pace, and still without a need for the City to significantly improve infrastructure to accommodate this growth. • Bangor has experienced a slowing in the rate of appreciation of existing homes during this calendar year. We project that existing home values will appreciate in the 5% to 7% range in the coming year compared to the 10% to 15% range in recent years. Bangor remains the only municipaliry in Maine that has met the requirements of state law that allow for the operation of slot machines at commercial harness racing tracks. In November 2005, Penn National Gaming opened a "racino" at an interim location in the City. Construction of the permanent gaming facility began in the spring of 2007, and it is projected to open in the summer of 2008. This facility will include a 1,500 car parking garage, a 152 room seven story hotel, and approximately 110,000 square feet for gaming. The project is estimated to cost $131 million. The Council has adopted a policy directing all rents and state taxes received from the operation of the slot facility to a separate special revenue fund, the Racino Fund. The primary purpose of this fund is to provide the necessary resources to construct a new arena to replace the Bangor Auditorium which opened in Bass Park in 1954. - II - 12 Beginning with fiscal year 2006, the City became subject to a state statutory system (known as LD 1) that is designed to limit the increase in that portion of the tax levy that supports municipal functions. Generally, the growth of the tax levy is limited to an increase equal to the ten year average percentage change in real statewide personal incomes plus taxes from property value resulting from new construction, major renovations to existing properties, or the subdivision of property. In addition, any "net new state funding," defined as the percentage increase in certain state support programs to municipalities that are in excess of the LD 1 limit, must be deducted from the allowable tax levy increase. LD 1 also increased the State's share of local education costs through the "Essential Programs and Services" model, a mechanism designed to allocate state funding to local school units and to control local school expenditures. The implementation of LD 1 complemented a number of the City's long-standing objectives including controlling the rate of increase in properry taxes and achieving proportionately greater State funding for the Bangor School Department. For Fiscal Year 2007 and as required by LD 1, the City Council voted to increase the City's property tax levy limit to recognize a "net new state funding" increase in Local Road Assistance. The City earmarks these state provided funds for its annual road paving capital program and not for day to day operations. Prior to July 1, 2006, the State legislature amended LD 1 to eliminate local road assistance from the "net new state funding" limitation; however, that amendment did not become effective until after July 1, the date by which the City must adopt a budget for the year. The Council's vote to increase the tax levy limit insured that the City complied, both technically and in spirit, with the requirements of LD 1. For Fiscal Year 2008, the City was within the ' statutory tax levy limit as established by LD 1. LD 1 also implemented the Essential Programs and Services Model for educational funding. This model sets forth a comprehensive methodology for computing the cost of providing essential educational programs to Maine's children. It also establishes a schedule designed to increase the State's share of total Essential Programs and Services costs to 55% over a four year period. Due to this change, the City received approximately $2 million more in State School Aid for the fiscal year ending ]une 30, 2007. While the State's model recognizes what it considers to be essential programs and their appropriate funding level, the Bangor School Department has identified a number of programs that are either under-funded or not funded by this model. As a result, both the School Committee and the City Council voted to increase the educational spending limits imposed by LD 1 in order to appropriately fund such services and programs for both Fiscal Year 2007 and 2008. In June 2007 as part of the overall state budget, the legislature passed what is referred to as '�School Administrative Reorganization" (SAR), legislation. The legislative intent is to ensure that schools are organized in units of sufficient size to provide equitable educational opportunities, rigorous academic programs, uniformity in delivering programs, greater equity in tax rates, more efficient and effective use of limited resources, preservation of school choice, and maximized opportunity to deliver educational services in an efficient manner. II - 13 The act requires that all school districts submit a Notice of Intent to the Department of Education that identifies the district's plan to either engage in planning/negotiating with other districts to create a regional school unit or �o submit an alternative plan to achieve efficiencies. The Bangor School Department has filed an alternative plan that seeks to maintain the system's current status as a municipal'department under the arrangements set forth in the Charter of the City of Bangor. As such, it would not be combined with any other districts into a larger educational entity. As of this writing, the Department of Education has not rendered a final decision on this alternative plan. Further, amendments to the School Reorganization legislation are expected to be presented to the Legislature in January of 2008. Given these circumstances, the impact of this effort on the School Department and the City of Bangor remains unknown at this time. Management continues to track other areas of revenue and expenditure concern. On the revenue side, we are focusing on the flat yield curve we are experiencing on City investments, the ability of the automobile excise tax to keep pace with recent 4.5% average annual increases, and uncertainty regarding State provided revenues due to projected State budget shortfalls. As to expenses, health insurance costs have proven volatile. While the City achieved a rate hold for fiscal year 2007, we were faced with a 49.09%, or $725,000, increase for fiscal year 2008 based upon actual benefit utilization by our employee group. Given the gap between available resources and this increase in health costs, the City took the unprecedented action of using $295,000 in one-time revenues to bridge this gap, with the understanding that costs would have to be reduced going forward. Over the five month period beginning in July 2007, the City initiated a collaborative effort including all union and non-union employee groups, management, and retirees, to address health insurance costs. This resulted in a recommendation to change health insurance providers effective January 1, 2008, a recommendation subsequently approved by all twenty-one stakeholder groups (10 non- union, 10 union, and 1 retiree group) and the City Council. By changing carriers, the City and those covered_by the program will share in first-year savings of approximately $650,000. This reduced premium should eliminate the need to use one-time revenues to cover costs in the City's Fiscal Year 2009 budget. In response to escalating energy costs, the City is in the midst of a comprehensive four-part energy audit. The results of the first part, which includes the majority of the City's General Fund buildings, were presented in December 2007 and recommends that the City undertake $1.2 million in improvements that will generate over $150,000 in annual savings, an amount suffici�ent to cover annual financing costs. Implementation of these improvements will reduce energy'consumption in these facilities by 14% annually. User fees for governmental and business-type activities are reviewed on an annual basis to ensure that fee structures are su.fficient to cover service costs. Many fees are adjusted annually for inflation. A 5% increase in sewer fees will be implemented effective January 1, 2008, only the second sewer fee increase since March 1996. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City 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 - 14 1 This page left intentionally blank � . , BASIC FINANCIAL STATEMENTS . ___ . , ; �� �� ; � , .� , � 4 � I� '����;,� _ l _ -� , �', �i'�i\ •., . . .. fllL ' j' . Q�l"y�r ' -�'��, . f ! I .�� I: '_� ! �V� I �i1���C�:� _'}.� `., / \ `'1F___>(J � 7 �� i Exhibit 1 CITY OF BANGOR,MAINE Statement of Net Assets June 30,2007 Governmental Business-type Activities Activities Total � ASSETS -� Cash and cash equivalents $ 739,070 $ 700,686 $ 1,439,756 Investments 13,464,102 19,426,695 32,890,797 Receivables: Accounts (net of allowance of $264,892 and$174,626,respectively) 893,375 5,161,221 6,054,596 Intergovernmental 2,779,753 1,230,932 4,010,685 Taxes and liens receivable-prior years 799,637 - 799,637 Taxes receivable-current year 901,426 - 901,426 Deferred special assessments 30,130 88,700 118,830 Due from water district - 225,654 225,654 Loans 7,851,276 2,150,328 10,001,604 Internal balances 2;096,755 (2;096,755) - Inventories 697,389 104,725 802,114 Prepaid items 31,693 43,968 75,661 Other assets 1,760,711 1,696,694 3,457,405 Non-depreciable capital assets 17,472,623 8,245,072 25,717,695 Depreciable capital assets,net 56,381,414 183,395,499 239,776;913 , Total assets 105,899,354 220,373,419 326,272,773 LIABILITIES Accounts payable.and other cunent liabilities 2,161,923 2,618,550 4,780,473 Accrued wages and benefits payable 3,979,634 292,371 4,272,005 Unearned revenues 4,424,120 81,400 4,505,520 Noncurrent liabilities Due within one year 5,114,422 4,770,113 9,884,535 Due in more than one year 58,811,703 40,488,645 99,300,348 Totalliabilities 74,491,802 48,251,079 122,742,881 NET ASSETS Invested in capital assets,net ofrelated debt , 48,257,039 . 154,897,152 203,154,191 � Restricted for: Nonexpendable h-ust principal 1,025,700 - 1,025,700 Unrestricted (17,875,187) 17,225,188 (649,999) Total net assets $ 31,407,552 $ 172,122,340 $ 203,529,892 See accompanying notes to financial statements. II- 15 Exhibit 2 CITY OF BANGOR,MAINE Statement ot AcHvities . For the Fiscal Year Ended June 30,2007 Net(expense)revenue and changes Program Revenues in net assets Operating Capital Primary Government Charges for grants and grants and Governmental Business-type Functions/programs Ezpenses services contributions contributions activities ac6viHes Total Primary government - Govertunental activities: General govemment $ 7,052,860 S 2,334,040 $ 723 $ - $ (4,718,097) $ - $ (4,718,097) Public safety 13;756,962 2,182,680 169,478 I,035,581 (10,369,223) - (10,369,223) Health,welfare and recreation 7,348,875 681,583 4,633,044 68,862 Q,965,386) - (1,965,386) - Public buildings and services 8,659,473 3,871,412 34,168 - (4,753,893) - (4,753,893) Other agencies 3,787,970 - - - (3,787,970) - (3,787,970) Education 46,106,647 4,408,431 23,548,930 - (18,149,286) - (18,I49,2S� Undassified 397,85I 61,128 200 - (336,523) - (336,523) Arena Development 417,030 1,630,360 - - 1,213,330 - 1,213,330 Communirydevelopmen[ 1,865,026 658,141 942,545 - (264,340) - (264,340) � Streets/Sidewalks 2,884,655 - 61,440 1,383,548 (1,439,667) - (1,439,667) Waterfront 399,015 - - 110,380 (288,635) - (288,635) Public traasportation 1,841,516 659,960 1,144,178 6,281 (31,097) - (31,097) Taxincrementfmancing 1,101,078 - - - (1,101,078) - (I,lOL,078) Interest on debt 3,I35,278 (3,135,278) (3,135,278) Total govemmental activities 98,754,236 16,487,735 30,534,706 2,604,652 (49,127,I43) (49,127,143) - Business-type activities: Sewer Utility 6,353,825 6,662,482 - - - 308,657 308,657 Airport 18,645,140 13,555,003 - 4,104,095 - (986,042) (986,042) Park Woods 498,678 297,036 - - - (201,642) (201,642) Parking 1,390,863 983,519 - - - (407,344) (407,344) Bass Pazk ],984,042 1,436,959 - - - (547,083) (547,083) � � Municipal Golf Coucse 657,809 635,420 - - (22,389) (22,389) Economic Development 692,138 I,126,425 212,807 647,094 647,094 Total business-type activities 30,222,495 24,696,844 4,316,902 (1,208,749) (1,208,749) Totalprimary government $ 128,976,731 $ 41,184,579 $ 3Q534,706 $ 6,921,554 (49,127,143) (1,208,749) (50,335,892) Generalrevenues: Property ta�ces,levied for general putposes 41,702,775 - 41,702,775 Payment in lieu of taxes 145,000 - 145,000 Excise taxes 4.668,614 - 4,668,614 Franchise ta�ces 296,566 - 296.566 Grants and cona-ibutions not restricted to specific progranLs: Homestead exemptiou 659,413 - 659,4I3 Other State aid 23,080 - 23,080 State Revenue Shazing 4,285,724 - 4,285,724 Unrestrictedinveshnenteamings 1,183,796 1,392,375 2,576,17t Miscellaneous revenues . 260,733 - 260,733 � Transfers (871,864) 871,864 Total general revenues and transfers 52,353,837 2,264,239 54,618,076 Change in net assets 3,226,694 1.055,490 4,282,184 Net asseu,beginning of year 28,(80,858 171,066,850 199,247,708 Net assets,end of year $ 31,407,552 $ 172,122,340 $ 203,529,892 . See nccompunying notes to jnancia!statements. ' II-16 Exhibit 3 ' CITY OF BANGOR,MAINE Balance Sheet Governmental Funds June 30,2007 , Community Capitai Other Total Development Racino Projects Governmental Governmental General Block Grant Fund Fund Funds Funds ASSETS Assets Cash and cash equivalents $ 340,279 $ 15,830 $ - $ 292,725 $ 90,236 $ 739,070 Investments 11,474,968 - 1,317,329 301,524 370,281 13,464,102 Receivables: Taxes 1,701,062 - - - - 1,701,062 Accounu(net of allowance of$264,892) 840,131 - 6,882 46,362 - 893,375 Interfund 2,274,205 70,447 264,212 - - 2,608,864 Intergovernmental 1,694,700 123,010 107,060 641,519 213,464 2,779,753 Loans 1,133,246 3,932,041 - - . 2,785,989 7,851,276 Deferred specia]assessments - - - 30,130 - 30,130 Inventory,at cost 697,389 - - - - 697,389 Inveshnent ofunexpended bond proceeds - - - 1,760,71 I - 1,760,711 Prepaid items 31,693 - - - - 31,693 Total assets $ 20,187,673 $ 4,141,328 $ 1,695,483 $ 3,0�2,971 $ 3,459,970 $ 32,557,425 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 942,577 $ 70,950 $ - $ 340,977 $ 29,893 $ 1,384,397 Accrued wages and benefits payable 3,979,634 - - - - 3,979,634 lnterfundloanspayable - - - - 512,109 512;109 Deferredrevenues 1,461,316 3,932,OR1 - - 457,663 5,851,020 D'ue to rehabilitation recipients - 249,653 - - - 249,653 Tota]liabilities 6,383,527 4,252,644 - 340,977 999,665 11,976,813 Fund balances Reserved for: Encumbrances - 901,650 355,036 - 996,763 - 2,253,449 Prepaid items 31,693 - - - - 31,693 Advances to other funds 1,432,689 - - - - 1,432,689 Nonexpendab]e tiust principa] - - - - 663,821 663,82] Unreserved: Designated(NoteJ) 3,178,854 - - - - 3,178,854 Undesignated,reported in: General fund 8,259,260 - - - - 8,259,260 Special revenue funds - (466,352) 1,695,483 - 1,434,605 2,663,736 Capital projects funds - - - 1,735,231 - ],735,231 Permanent funds , - - - - 361,879 361,879 Total fund balances(deficits) 13,804,146 (l 11,316) 1,695,483 2,731,994 2,460,305 20,580,612 Total liabilities and fund balances $ 20,187,673 $ 4,141,328 $ 1,695,483 $ 3,072,971 $ 3,459,970 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activiries are not financial resources and,therefore,are not reported in the funds. 73,854,037 Deferred taxes are not available to pay for current-period expenditure and,therefore, are deferred in the funds. 1,426,900 Long-term liabilities,including bonds payable$60,321,264,accrued interest$527,872,compensated absences$1,953,091 and self insurance liability$1,651,770 are not due and payable in the current period and,therefore,are not reported in the funds (64,453,997) Net assets of governmental funds $ 31,407,552 See accompanying notes to f nancinl statements. ll-17 Exhibit 4 CITY OF BANGOR,MAINE Statement otRevenues,Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30,2007 Community Capital Other Total Development Racino Projects Governmental Governmental General Block Grant Fund Fund Funds Funds Revenues Taxes $ 45,691,270 $ - $ - $ 168,105 $ 955,151 $ 46,814,526 Intergovemmenpl 30,180,807 942,545 - 2,419,586 4,231,984 37,774,922 Licenses and pennits 982,879 - - - - 982,879 Charges for services 11,847,554 - - - 751,222 12,598,776 Program income - G34,563 - - 23,424 657,987 Revenue from use of money and property 1,658,367 3,087 1,630,360 117,344 212,830 3,621,988 Other 10 337 154 216,066 52 704 279 261 Total revenues 90,371,214 1,58Q349 1,630,360 2,921,101 6,227,315 IO2,730,339 Expendimres Current: Generalgovemment 4,736,885 - - - - 4,736,885 Publicsafety ]3,476,656 - - - - 13,476,656 HealAi,welfare and recreation 4,086,513 - - - - 4,086,513 Public build'u�gs and services 9,363,365 - - - - 9,363,365 Odieragencies 4,011,711 - - - - 4,011,711 Educarion 46,872,497 - - - - 46,872,497 Unclassified 13Qt87 - 417,030 - - 547,217 Restricted grants - 1,731,208 - - 6,158,727 7,889,935 Capitaloutlay 277,845 - - 8,822,512 - 9,100,357 Debt scrvice 4 144 273 1 265 000 5 409,273 Total expe�idimres 87,099,932 1,731,208 417,030 10,087,512 6,158,727 ]05,494,409 Excess(deficiency)ofrevenues over(under)expendiNres 3,271,282 Q50,859) 1,213,330 (7,166,411) 68,588 (2,764,070) Other fmancing sourees(uses) Genere�obligation debt - - - 3,555,000 - 3,555,000 Sale of asse[s 320,034 - - - - 320,034 Transfers to other funds (2,921,038) (30,016) (24,500) (42,324) (282,369) (3,300,247) Transfers from otlier funds ll 6 610 2,299 830 11,943 2 428,383 Total other financing sources(uses) (2,484,394) (3Q016) (24,500) 5,812,506 (270,426) 3,003,170 Changesin fund balances 786,888 (]80,875) 1,188,830 (1,353,905) (201,838) 239,100 Fuud balances,beginnnig ofyear 13,017,258 69,559 506,653 4,085,899 2,662,143 20,341,512 Fund balances(defici[),end of year $ 13,504,146 $ p 11,316) $ 1,695,483 $ 2,731,994 $ 2,460,305 $ 20,580,612 See nccompnnying notes m finnncinl stntements. 11-18 Exhibit 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 For the Fiscal Year Ended June 30,2007 Net change in fund balances-tota]governmental funds(from E�chibit 4) $ 239,100 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. This is the amount by which capital outlays of$5,335,997 exceeded depreciation expense of$3,012,242 and disposals of$90,301 in the current period. 2,233,454 Bond proceeds provide current financial resources to governmental funds,but issuing debt increases long-term]iabilities 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 repayments of$4,237,099 exceeded proceeds of$3,555,000. 682,099 Some items reported in the statement of activities do not require the use of current financial resources and,therefore,are not reported as in governmental fund statements. The differences are as follows: increase in compensated absences($14,633),deferred taxes($107,277), decrease in accrued interest$15,303 and self insurance liability$178,648. 72,041 Change in net assets of governmental activities(see Exhibit 2) $ 3,226,694 See accompanying notes to�nancial statements. 11- 19 J Exhibit 6 CITY OF BANGOR,MAINE Statement of Revenues,Expenditures and Changes in Fund Balance Budget and Actual General Fund For the Fiscal Year Ended June 30,2007 Variance with : � Final Budget Budgeted amounts Positive Original Final Actual (Negative) - , Revenues Taxes $ 45,201,035 $ 45,201,035 $ 45,691,270 $ 490,235 Intergovernmental 25,028,600 25,078,600 26,007,914 929,314 Licenses and permits 494,700 494,700 687,879 193,179 Charges for services municipal 7,377,284 7,377,284 7,155,467 (221,817) schoo.l 4,631,11] 4,631,111 4,408,431 (222,680) Fines,forfeits and penalties 27,200 27,200 ]0,337 (16,863) Revenue from use of money and property municipal 701,801 701,801 1,085,272 383,471 Total revenues 83,461,731 83,511,731 85,046,570 1,534,839 Expenditures Current: Genera]government 4,270,984 4,289,595 4,217,113 72,482 Public safety 13,496,820 13,593,820 13,589,502 4,318 Health,welfare and recreation 4,041,700 4,093,900 4,087,050 6,850 Public buildings and services 9,495,735 9,495,735 9,346,906 148,829 Other agencies 4,011,452 4,015,252 3,992,561 22,691 Education 43,975,505 45,995,842 43,119,601 2,876,241 Debt service 4,132,663 4,132,663 4,144,273 (11,610) Unclassified 238,146 220,546 149,337 71,209 Total expenditures 83,663,005 85,837,353 82,646,343 3,191,010 Excess(deficiency)of revenues over/under expenditures (201,274) (2,325,622) 2,400,227 4,725,849 Other financing sources(uses) . Appropriaton from designated fund balance 1,434,475 1,434,475 627,061 (807,414) Appropriation from undesignated fund balance 1,000,000 1,000,000 - (1,000,000) Sale of assets 2,000 7,900 267,090 259,190 Transfers to other funds (1,554,000) (1,563,100) (1,563,100) - Transfers from other fiands 65,404 65,404 62,634 (2,770) � Operating transfers (746,605) (746,605) (746,605) - Total other financing sources(uses) 201,274 198,074 (1,352,920) (1,550,994) Net change in fund balance $ - $ (2,127,548) 1,047,307 $ 3,174,855 Undesignated fund balance,beginning of year 7,398,406 Change in balances carried (186,453) Undesignated fund balance,end of year $ 8,259,260 See accompanying notes to�nancial statements. II-20 Exhibit 7 CITY OF BANGOR,MAINE Statement of Net Assets Proprietary Funds June 30,2007 Business-type Activities-Enterprise Funds � Sewer Bass Municipat Economic Utility Airport Park Parking Park Golf Deveiopment Totals . Fund Fund Woods Fund Fund Course . Fund Currentyear ASSETS Current assets Cash and cash equivalents $ 73,569 $ 92,287 $ 3,783 $ 215,372 $ 16,153 $ 299,408 $ 114 $ 700,686 Investments ' S53,860 � 6,870,347 - - 189,666 - 64I,075 • 6,254,948 Accountsreceivable 1,693,200 3,119,686 - 5,586 117,373 - 400,000 5,335,847 � Less allowance for uncollectible accounts (22,601) (124,915) - � - (27,110) - - (]74,626). Netaccountsreceivable 1,670,599 2,994,7�1 - 5,588 90,263 - 400,000 5,161,221 . Due from other governments - � 1,230,932 � - - - - - 1,230,932 Due from water district 225,654 - - � - - - - 225,654 Inventories,atcost - 90,776 - - 13,949 - - 104,725 Prepaid items 35,260 (21,222) - - 29,930 - - 43,968 7'otal current assets 2,558,942 11,257,891 3,783 410,626 150,295 940,483 400,114 15,722,134 Noncunent assets � Capital Assets: � � Land and improvemenis 683,865� - 295,025 • � 828,921 1,431,040 2,395,046 5,633,897 Buildingsandimprovements 27,539,270 - 1,933,06] - 5,587,727 238,408 5,872,273 41,1"70,739 Machineryandeqaipment 5,181,272 - 22,952 - 144,428 322,461 - 5,67I,113 InfrastrucNre 54.147.784 � - - - - - - - 54.147.784 Aircraft operational assets - 230,625,633 - - - - - 230,625,633 Parking structures • �- - 9,968,268 - - - 9,968,268 Construction in process 916,255 2,549,746 - - - 655,252 593,008 4,714,261 88,466,446 233,175,379 2,251,038 9,968,268 6,561,076 2,647,161 � 8,86Q327 351,931,695 Less accumulated depreciation (30,234,061) (115,271,913) (1,097,948)' (6,574,708) (5,058,003) (1,279,891) (774,600) (160,29�,124) NetcapitalasseLs 58,234,385 117,903,466 1,153,090 3,393,560 1,503,073 1,367,270 8,085,727 191,640,571 Inveriments - 11,171,747 - - - - - 11,171,747 Loansreceivable - 2,036,583 - - - - I13,745 2,150,328 Deferted special assessments 88,700 . - - - - - - 88,700 ]nveshnentoFunexpendedbondproceeds 1,511,316 - - 82,364 - - - 1,593,680 Deposits - - 20,000 - - - - 20,000 Bond issuance costs(net of accumulated � amoAizationof$332,048) 83,,014 - - - - - - 83,014 . Totalnoncurtentassets 59,917,415 ]31,I11,796 1,173,090 3,475,924 1,503,073 1,367,270 8,I99,472 206,748,040 Total assets 62,476,357 142,369,689 1,176,873 3,886,550 1,653,368 2,307,753 8,599,586 222,470,174 See accompanying notes to financial statements. ' Continued on next page ' 11-21 Exhibit 7(con't) CITY OF BANGOR,MAINE Statement of Net Assets Proprietary Funds June 30,2007 Business-type Activities-Enterprise Funds Sewer Bass Municipal Economic Utility Airport Park Parking Park Golf Developmen[ Totals Fund Fund Woods Fund Fund . Course Fund Currentyear LIABILI77ES . � Curtent liabilities Accountspayable 450,077 1,578,558 19,957 92,301 34,214 27,842 36,730 2,239,679 Accrued wages and benefits payable 47,025 193,963 3,062 6,786 22,937 18,595 - 292,371 Accrued interest 209,632 61,391 - 37,267 16,946 $218 32,251 365,705 Workers'compensation 37,088 122,151 - 3,735 6,700 - - 169,674 Uneamed revenue - - - 30,568 50,832 - - 81,400 Accruedcompensa[edabsences 105,122 341,888 32,122 7,781 46,482 9,198 - 542,593 lnterfuud loans - - 28,000 - 1,647,255 - 421,500 2,096,755 Generalobliga6on debtpayable 2,785,294 515,906 - 444,175 134,034 31,711 176,287 4,087,407 Deferted amounton refunding (15.250) - - (14,311) - - - (29,561) Otherliabilities - 11,16G 2,000 - - - - 13,166 Totalcurrentliabilities 3,618,988 2,825,023 85,141 608,302 ],959,400 95,567 666,768 9,859,189 Long-temi Iiabilities Workers'compensation 12,912 277,849 - 6,265 3,300 - - 300,326 Generalobligation debtpayable 22,542,986 7,512,122 - 3,560,705 I,265,343 629,281 4,2I2,109 39,722,546 Defened amount on refunding (17,940) - - (20,969) - - - (38,909) Other bng-temi liabilities 294,894 - 193,061 16,727 - - - 504,682 Totallong-tenn liabilities 22,832,852 7,789,9'7] 193,061 3,562,728 I,268,643 629,281 4,212,109 40,488,645 Totalliabilities 26,451,840 10,6I4,994 278,202 4,171,030 3,228,043 724,848 4,878,877 50,347,834 NET ASSETS Invested in capital assets,net ofrelated debt 35,423,617 113,618,466 1,153,090 (356,575) 563,407 797,816 3,697,33I 154,897,152 Unrestricted 60Q900 18,I36,227 (254,419) 72,095 (2,138,082) 785,089 23,378 17,225,188 Total net assets $ 36,024,517 $ 131,754,693 $ 898,671 $ (284,480) $ (1,574,675) $ 1,582,905 $ 3,720,709 $ 172,122,340 See accompanying notes to financial statements. / . Continued from previous page ❑-22 Exhibit 8 CITY OF BANGOR,MAINE Statement of Revenues,Expenses and Changes in Net Assets Proprietary Funds For the Fiscal Year Ended June 30,2007 Business-type Activities-Enterprise Funds Sewer Basa Munic�pal Economic Utllity Afrporl Perk Parking Park Golf Development Tolais Fund Fund WoodS Fund Fund Course Fund Currentyear Operating revenues Charges for services 5 6,659,906 $ 13,549,966 �5 297,036 $ 983,519 E 1,436,959 $ 635,420 $ 424,416 $ 23,987,222 Operating cxpenses '. � Operating czpenses othtt[han - deprcciation and amortizafion 3,821,547 I1,224,026 409,555 713,267 1,842,699 531,038 2i4,921 18,797,053 Depttciation and amonization 1,676,489 7,016,220 89,123 478,381 74,051 99,662 203,713 9,637,639 Totaloperatingexpanses 5,498,036 18,240,246 498,678 1,191,648 1,916,750 630,700 4i8,634 28,434,692 Opera[ingincome(loss) � 1,161,870 (4,690,260) (201,642) (208,129) (479,791) 4,720 (34,218) (4,447,470) � Nonoperating rcvenuc(czprnses) ' Inhrestincome � 51,327 1,2I9,675 1,327 17,357 746 67,175 34,768 1,392,375 Inlercstexprnsc - (855,789) (404,894) - (199,2I5) (67,292) (27,109) (233,504) (I,787,803) Miscellaneous income(expense) � 2,576 5,037 702,009 709,622 , Totalnonoperatingrevenue(expenscs) (BOI,866) 819,816 1,327 (161,858) (66,546)' 40,066 503,273 314,194 Netinwmc(loss)before grants/con[ribufions and transfers 359,984 (3,870,462) (200,315) (389,987) (546,337) 44,766 469,055 � (4,133,276) � Grants/contnbu[ions nccivcd for capitnl assets - 4,104,095 - - - - 212,807 4,316,902 Transferstootherfunds . (100,000) - - - � (1,202) (22,393) - (123,595) � . Transters from otha funds 35,000 133,154 319,349 507,956 995,459 Changeinnetassets 294,984 233,633 (67,161) (70,638) (39,583) 22,393 681,662 1,055,490 Nctazscis,beginningofywr 35,729,533 131,521,060 965,832 (213,842) (1,535,692) 1,560,512 3,038,847 171,066,850 � Net assets,end of year $ 36,024,517 $ 131,754,693 S 898,671 S (284,480) $ (1,574,675) S 1,582,905 $ 3,720,709 $ 172,122,340 See accompanying notes to finnncial stntements. II-23 Exhibit 9 CITY OF BANGOR,MAINE Statement of Cash Flows-Proprietary Funds For the Fiscal Year Ended June 30,2007 Business-type Activities-Enterprise Funds Sewer Bass Municipal Economic Utiliry Alryort Park Parking Pnrk Golf Development Fund Fund � Woals Fund Fund Course Fund Total Cesh Oows Gom operating acdvities Cash reteivcd from customcrs $ 6,340,342 $ 16,032,841 b 297,036 $ 975,203 S 1,490,995 $ 635,420 E � 24,416 $ 25,796,253 Cash paid tosupplicrs forgoods und services (2,307,485) (5,394,247) (308,236) (448,610) (I,039,224) (223,832) (234,400) (9,956,034) Cash pnid�o employces forservices (1,212,324) (5,372,639) (80,601) (197,486) (794,351) (288,988) (7,946,389) Net cnsh providcd by(used in)operzting activitiu 2,820,533 5,265,955 (91,601) 329,I07 (342,580) 122,600 (209,964) 7,893,830 Cesh Flows(rom noncapital finnncing activides . IntcrPond loans(rrynymrnts) - - (39,000) - 46,500 - 154,000 161,500 Transfersin � 35,000 - 133,154 319,349 �507,956 - - 995,459 Trensfersout (100,000) (1,202) (22,393) (123,595) Net cesh provided by(used in)nonwpital financingactivities (65,000) 94,154 319,349 553,254 (22,393) 154,000 1,033,364 Cash Flows from anpital and rcleted financing ac[ivifies Proceeds from grneml obligation bonds 2,000,000 - - - - _ - . 2,000,000 � Acquisition and construc6on oicepital esseLt (651,637) (6,717,491) - - - (629,185) (496,017) (8,494,330) Principelpaid on grncrul obligation bonds (2,691,692) (495,337) - (45I,888) (131,003) (31.655) (169,701) (3,9'71,276) Interest paid on geneml obligation bonds (850,267) (408,21 I) - Q84,218) (69,036) (23,444) (233,504) (1,768,680) ' Procccds from sale of property - 5,037 - - � - - 702,009 � 707,046 Grant moniu rcceived for wpitsl assets - �858,595 - - - - 212,807 1,071,402 lnvcstmcN o(unexpended bond procceds (1,511,316) 16,441 594,343 (900,532) Nct cash provided by(used in)capi[al and ttlated . financingactivitics (3,704,912) (6,757,407) (619,665) (200,039) (89,941) 15,594 (II,356,370) ' Cash ftows(rom invwting nctivities Nct snlcs(purchases)o(investments 943,444 285,752 - 164,053 • 2I2,407 - 1,605,656 Inrcrutonimestmrnts 57.346 1,219,673 1,328 18,715 746 67,175 34,"768 1,399,751 Loan rcpayments 54,843 5,719 60,562 Net wsh provided by(used in)invesHng ectivities 1,000,790 1,560,266 1,328 � �82,768 746 279,582 4Q487 3,065,969 Net increate(decreazc)in cash 51,411 68,816 3,66I 211,559 I 1,38I 289,848 97 , 636,793 Cash,beginning o(year 22,158 23,471 ]02 3,813 4,772 9,560 17 63,893 � Cash,end of ycar $ 73$69 $ 92,287 $ 3,783 $ 2I5,372 $ 16,753 $ 299,408 $ ]14 $ 90Q686 Schedule of noncesh investing,capifel and financing acrivities: � - During Ihe ycar,the Ai'port Fund hed an unrcalized loss on imeshnrnts in Ihe amounl of$I 15,803. See nccompanying notes to financinl stntements. Continued on nex�page ll-24 Exhibit 9(con't) CITY OF BANGOR,MAINE Statement of Cash Flows-Proprietary Funds For the Fiscal Year Ended June 30,2007 Business-type Activities-Enterprise Funds Sewer � Bass Municipal Economfc UNlity Afrport Park Parking Park Colf Development � Fund Fund Woods Fund Fund Course Fund Total Rttonciliation of operating income(loss)to net ca5h provided by(uscd in)opera[ing activi�ies � Operntingincome(toss) $ I,161,870 $ (4,690,280) 5 (201,642) $ (208,129) S (479,791) $ 4,720 $ (34,2I8) S (4,447,470) Adjushnonts to rcwncilc opere[ing incomc(loss) ro net cash providcd by(uscd in)opereting � . activiries � � Deprcciation and amortization 1,676,489 7,016,220 69,123 478,361 74,051 99,662 203,713 9,637,639 Provision for uncoilectible accounts - (26,370) - - - - - -(26,370) Chenges in esscts and liabilities: (Increase)dccmasein accountsrcceivablc (283,301) 2,612,876 - (2,400) 75,240 - (40Q000) 2,002,415 Qncrcase)decreaze in due from water district (36;263) - - - - - - (36,263) (]nawse)decreese in inventories - 19,324 • - 2,t36 - - 2I,460 (Inereate)decreasein prepaiditems 1,902 49,708 (5,000) - 7,417 - � - 54,027 Incrcace(decreazyin�accountspayable 283,948 56,641 .5,724 65,332 (18,225) 15,238 20,521 429,179 Incrcase(dccrwsc)in uncamcd revenue - - - (5,916) (21,204) - - (27,120) Incroue(decmase)in othcr current liabilities 15,868 227,836 19,994 �,839 17,796 2,980 286,333 � Total adjustmcnls � ],658,663 9,956,235 109,84I 537,236 137,21 I I 17,880 (I75,766) 12,341,300 Net cash provided by(used in)operaling ac8vitles $ 2,820,533 $ 5,265,955 E (91,801) $ 329,107 $ (3d2,580) $ 122,600 $ (209,984) $ 7,893,830 See nccompnnying noles ta finnncial stntements. Continued(rom prcvious pngc II-25 Exhibit 10 CITY OF BANGOR,MAINE Statement of Fiduciary Net Assets Fiduciary Funds , June 30,2007 � Agency Fund ASSETS Cash and cash equivalents $ 133,524 Total assets $ 133,524 LIABILITIES Liabilities: Amounts held for others $ 133,524 Totalliabilities $ 133,524 See accompanying notes to financial statements. II - 26 This page left intentionally blank INDEX OF NOTES TO THE FINANCIAL STATEMENTS ' Summary of Significant Accounting Policies Note Paae A Reporting Entity II— 27 B Government=wide and Fund Financial Statements II — 27 C Measurement Focus, Basis of Accounting and Basis of Presentation II — 28 D Assets, Liabilities and Equity II —30 � Stewardship, Compliance and Accountability A Budgetary Information II — 32 B Reconciliation 'of Budgetary Basis Statements II — 33 C Excess of Expenditures Over Appropriations�� Ii — 34 D Deficit Fund Equity � : � , , II — 34 E Restricted Assets - - II — 34 _ : � . � Detailed Notes on All*Funds �� , ,�:� ,, , '\ A Deposits and Investments � '� �\ II — 35 B Properly Tax � !' ,1� �'� ' ' ,'� II — 36 - � . �, . ; , , C Capital Assets �,� . :fi; , �II —36 D Interfund Transaetions�;' � � � � � -_ �-. t � ��� 'II —38 E Due From Other Governments �" , 1 �� `f: .�-� ;� � \ II —39 F L e a s e s , ,.� � '� o;�� y �?�,, ; I I — 3 9 G Other Assets �1 � -��'�� � _ � ,� �� 1'���1 �II —40 H Deferred/Unearned Revenue �, `���� � i II —40 I Cong-Term Debt �' �'' �- ---- --��",`��� / II =40 J Fund Balances ��"�� � ' ~;�!, � � II —44 K Net Assets .4��,v �� � II —46 � . `�c�.r�' �� : - -Other Information. ' , � A Risk Management � II —46 B Tax Increment Financing Districts II —47 C Contingent Liabilities , II —48 D Retirement II =48 E Landfill Closure and Postclosure�Care Costs II — 50 � F Subsequent Events II —S0 , � CITY OF BANGOR, MAINE Notes to the Financial Statements �une 30, 2007 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 these financial statements. The City of Bangor is a member of the Joint Venture of the Equity Charter Municipalities of Municipal Review Committee, Inc (Joint Venture). The Joint Venture is an organization that resulted from a contractual arrangement between certain member municipalities, Penobscot Energy Recovery Company (PERC) and Bangor Hydro Electric Company. It was formed to pool resources of the Equity Charter Municipalities for the long-term goal of handling the disposal of their present and projected volumes of non-hazardous municipal solid waste. As of December 31, 2006 (most recent data available) the City of Bangor's share of the Joint Venture's net assets was $5,832,211. Compete financial statements may be obtained from Municipal Review Gommittee, 40 Harlow Street, Bangor, ME 04401. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) 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 restr'icted 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. II -27 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 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. Properry taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed . by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon .enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the ' current fiscal period. Expenditures 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 Communiry Development Act of 1974, as amended, for the development of viable urban communities. The Racino Fund accounts for the percentage of slot revenues received by the City from the operation of the Racino. Said funds will be used to replace the Bangor Auditorium. The Capital Projects Fund accounts for the acquisition of capital assets or construction of major capital projects not being financed 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. II -28 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 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. 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 Ciyic Center, and Bangor State Fair. Principal sources of revenue are admissions, concession sales and rentals. The � facility is named after 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 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 City 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-29 CIIY OF BANGOR, MAINE Notes to the 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: The principal operating revenues of the City's proprietary fund are 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, then unrestricted resources as they are needed. D. Assets, Liabilities and Equity 1. 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. Ciry 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 - 30 CITY OF BANGOR, MAINE Notes to the Financial Statements,.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, sewer mains 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. Properry, plant, and equipment of the primary government is depreciated using the straight line method over the assets' estimated useful lives. The range of useful lives used to compute depreciation are as follows: � Buildings 25 — 50 years Equipment 5 — 20 years Infrastructure 10 — 50 years Aircraft Operational 5 —40 years Parking Structures 10 — 20 years � 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 respective fund financial statements only if the liability has matured, for example, as a result of , employee resignations and retirements. 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. 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. II- 31 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED 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 materiaf 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 � charges 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 projects funds have adopted project-length budgets. Unencumbered appropriations lapse at fiscal year end. II - 32 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY, CONTINUED 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. For 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, none were material. 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: Excess of revenues over expenditures and other financing sources and uses(Budget) $ 1,047,307 Activity in designated fund balance (442,238) 2007 encumbrances 887,250 ' 2006 encumbrances lapsed (21,162) 2006 encumbrances paid (684,269) Excess of revenues and other financing sources over expenditures and other uses(GAAP) � $ 786.888 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 Net Assets: . II- 33 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY, CONTINUED Excess(deficiency)of revenues over expenditures and encumbrances: Sewer $ (2,132,738) Ai rport (4,549,302) Park Woods (146,078) Parking (466,134) Bass Park (168,094) Municipal Golf Course (46,802) Economic Development (396,936� �7,906,084) Nonoperating revenues classification (1,311,720). Investments at market value (369,640) Capital outlay 218,521 Capital projects (540,341) Cash basis to accrual basis adjustments (364,763) Principal payments �, 3,971,276 2007 encumbrances , 39,609 2006 encumbrances (49,544) Nonoperating expenses classification 1,865,216 Operating loss $ 4.447.470) C. Excess of Expenditures Over Appropriations _ The following General Fund departments were over-expended by the indicated dollar amounts; City Clerk $2.,518, Assessing $1,969, Parks and recreation $19,148, Fire $36,708, Downtown ,development , district $1,840 and Debt service $11,590. These over-expenditures were funded by receipt of revenues in excess of appropriation and under-expenditures within other General Fund departments. The Airport Fund was over-expended on a departmental basis by $697,916, the majority of which is attributable to underestimated depreciation expense. The Parking Fund was over-expended on a departmental basis by $46,176. This over-expenditure was funded by receipt ofi revenues in excess of appropriations. The Park Woods and Bass Park Funds were over-expended on a departmental basis by $24,716 and $111,946 respectively, but were reasonable based upon the expected deficiencies within eachfund. D. Deficit Fund Equity The Bass Park Enterprise Fund has a deficit fund equity of $1,574,675. The City Council has determined that the facility will either be closed or replaced in the near future. With continued review of parking usage and fees it is anticipated that the Parking Fund deficit of $284,480 will at the least stabilize over the coming years. It is anticipated that program income in subsequent years will fund the $111,316 deficit in the Community Development Block Grant Fund. E. Restricted Assets Donations received by the City whose use in limited are placed in the appropriate �pecial Revenue fund, depending upon whether or not the principal can be expended. All changes in market value are added to the earnings, which is allowable by State Statute. As these amounts are invested in a note receivable, there was no change in market value for fiscal year 2007. II - 34 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued DETAILED NOTES ON ALL FUNDS A. Deposits and Investments - The City maintains a cash pool that is available for use by all funds. In addition, cash and investments are separately held by several of the funds. Custodial Credit Risk - Deposits Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned. The City does not have a policy with respect to custodial credit risk for deposit accounts. , The City does maintain insurance coverage to protect up to $3;500,000 of deposits in addition to the $100,000 provided by the Federal Deposit Insurance Corporation (FDIC). As of June 30, 2007, $194,918 of the City's bank balance of $3,380,205 was exposed to custodial credit risk because it was uninsured and uncollateralized. At June 30, 2007, the City had the following investments a d maturies: Maturity(years) Investment types Fair Value Not Applicable <1 1-5 6-10 Mutual Funds $20,407,103 $ 20,407,103 $ - $ - $ - US Treasuries 13,451,146 - 2,465,346 10,006,187 979,613 Common stock 825,624 825,624 - .. . . - -. Certificate of Deposit 50,000 50.000 - - - Totals 34.733.873 21.282.727 2.465.346 $10.006.187 $ 979:613 Interest Rate Risk The City's Investment Policy requires that, to the extent possible, the City will attempt to match � investments with anticipated cash requirements. Unless matched to a specific cash flow, the City is not allowed to directly invest in securities maturing more than three years from the date of purchase. Credit Risk Maine statutes authorize the City to invest in obligations of the U.S. Treasury and U.S agencies, repurchase agreements and certain corporate stocks and bonds. As of June 30, 2007, the City's investment in equities were rated by Standard and Poor's as follows: , Investment type Ratin4 Fair Value Mutual Funds Not Rated $ 20,407,103 US Treasuries AAA 13,451,146 Common stock Not Rated 825,624 Certificate of Deposit Not Rated 50,000 Custodial Credit Risk - Investments For investments, custodial credit risk is the risk that, in the event of failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities fhat are in the possession of the outside party. As of June 30, 2007, the City had no investrnents that were subject to custodial risk. The City's investment policy states that all security transactions, including collateral for repurchase agreements, entered into by the City shall be conducted on a '�delivery vs. payment"basis. Securities will be held by a third parry custodian, or Trust Department, designated by the Treasurer and evidenced by safekeeping receipts. II- 35 � CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED Concentration of Credit Risk The City's Investment Policy states that tlie City will diversify its investments by security type and institution. No more than 40% of the City's total investment portfolio will be invested in any . combination of commercial paper and time certificates of deposit. B. Property Tax _ Property taxes for the current year were levied July 7, 2006, on the assessed value listed as of the prior April 1 for all r.eal and personal property located in the City. Assessed values are periodically r established by the City's Assessor at 100% of assumed market value. Taxes were due in two installments: September 15, 2006 and MarcM 15, 2007. Interest was charged at 11.00% 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 properly 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, 2007 was as follows: � Balance Balance ]une 30, June 30, 2006 Increases Decreases 2007 Governmental activities: Capital assets, not being depreciated: Land • $ 5,040,548 - - 5,040,548 Construction in oroqress 13,011,431 6,066,548 6,645,904 12,432,075 Total capital assets, not beinq depreciated 18,051,979 6,066,548 6,645,904 17,472,623 , Capital assets, being depreciated: Land improvements 5,997,377 - - 5,997,377 Buildings and improvements 49,674,556 317,892 - 49,992,448 Machinery and equipment 8,276,144 60,417 - 8,336,561 Vehicles 11,347,385 998,436 312,921 12,032,900 Infrastructure 15 113 084 4 538 608 - 19 651 692 Total capital assets being depreciated 90,408,546 5,915,353 312,921 96,010,978 Less accumulated depreciation for: Land improvements (1,394,734) (264,309) - (1,659,043) Buildings and improvements (17,251,591) (965,853) - (18,217,444) Machinery and equipment (4,325,563) (599,418) - (4,924,981) Vehicles (5,707,577) (799,347) (222,620) (6,284,304) Infrastructure (8,160,477L_(383,315) - j8,543,792� Total accumulated depreciation (36,839,942) (3,012,242) (222,620) (39,629,564) Total capital assets beinq depreciated, net 53,568,604 2.903,111 90,301 56,381,414. activities canital assets,net $71.620.583 8,969.659 6,736,205 73,854.037 II - 36 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED Balance . Balance June 30, June 30, 2006 Increases Decreases 2007. Business-type activities: Capital assets, not being depreciated: Land $ 3,627,802 - 96,991 3,530,811 Construction in progress 5,508,135 8,368,648 9,162,522 4.714,261 Total caoital assets, not bein4 deqreciated 9,135,937 8,368,648 9,259,513 8,245,072 Business-type activities: � , Capital assets, being depreciated: Land improvements 2,103,086 - - 2,103,086 - Buildings and improvements 41,170,739 - - 41,170,739 Machinery and equipment 5,622,773 48,340 - 5,671,113 Infrastructure 50,245,044 3,902,740 - 54,147,784 Airport operational assets 224,990,353 5,635,280 - 230,625,633 Parking structures 9.968,268 - - 9,968,268 Total capital assets being depreciated 334,100,263 9,586,360 - 343,686,623 Less accumulated depreciation for: • Land improvements (947,470) (86,415) - (1,033,885) Buildings and improvements (23,555,338) (1,254,962) - (24,810,300) Machinery and equipment (3,479,825) (258,945) - (3,738,770) Infrastructure (8,339,583) (521,964) - (8,861,547) , Airport operational assets (108,255,693) (7,016,220) - (115,271,913) Parkinclstructures (6,096,328) (478,381) - (6,574,709� Total accumulated depreciation (150,674,237) (9,616,887) - (160,291,124) Total caqital assets beinq depreciated, net 183,426,026 (30,527) - 183,395,499 assets, net $192,561.963 8.338.121 9.259.513 191.640.57 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 1,053,567. Public safety 397,999 Health,welfare and recreation 174,016 Public building and services 518,732 � Education 867 928 —aovernmental activities �3,012.24 Business-type activities: � Sewer Utility Fund $1,655,73,7 Airport Fund 7,016,220 Park Woods 89,123 Parking Fund 478,381 Bass Park Fund 74,051 ' Municipal Golf Course 99,662 Economic Development Fund 203,713 Total denreciation exoense—business-tvue activities �9,616.887 II - 37 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued , DETAILED NOTES ON ALL FUNDS, CONTINUED Construction commitments The government has active construction projects as of June 30, 2007. The projects include reconstruction of runways, construction of additional infrastructure on the waterfront, and continuation of the combined sewer overflow program. D. Interfund Transactions Individual fund interfund receivable and payable transactions are described in the Summary of Significant Accounting Policies Note D. 2. As of June 30, 2007 the bal�ances were as follows: � Receivabte Payable , General Fund $2,274,205 $ - Racino Fund 264,212 - Communiry Development Block Grant 70,447 - Other Governmental.Funds - 512,109 Park Woods Fund - 28,000 Bass Park Fund - 1,647,255 Economic Development - 421,500 2.608.864 $ 2.608.864 '� Individual fund transfers to and from other funds for the fiscal year ended June 30, 2007 are comprised primarily of transfers from fund balances to fund capital projects and to provide operating subsidies to certain proprietary funds. Transfers to Transfer from General Fund $2,921,038 $ 116,610 Community Development Block Grant 30,016 - Racino Fund 24,500 - Special Revenue Funds 249,369 11,943 Capital Projects Fund 42,324 2,299,830 Proprietary Funds 123,595 995,459 Permanent Funds 33,000 - _�3,423,842 $ 3,423,842 II - 38 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED , E. Due From Other Governments Due from other governments is comprised of the following amounts at June 30, 2007: , Federal State of � Government Maine Other Total General Fund $ - $ 1,377,161 $ 317,539 $ 1,694,700 . Special Revenue Funds 335,634 400 440 , 336,474 Racino Fund - 107,060 - 107,060 Capital Projects Fund 50,385 591,134 - 641,519 Proprietary Funds 1,187,524 43,408 - 1,230,932 � Of the General Fund's $1,377,161 due from State.of Maine, $496,590 represents school grant and State agency billings, $666,637 is due from the Department of Transportation and $151,602 represents general assistance claims. Amounts due from other communities for tuition reimbursement to Bangor accounts for $256,975 of the Due from Other in the General Fund. ` 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, 2007 are: Fiscal year ending Economic June 30, Airport Development . 2008 $ 2,337,702 $ 213,772 2009 1,414,776 219,289 2010 1,125,695 224,591 2011 881,329 224,591 2012 818,875 224,591 Subsequent to 2012 4,722,072 1,562,684 $ 11,300.449 $ 2.669.518 Minimum future rentals do not include contingent rentals, which may be received as stipulated in the lease contracts. The Airport received $1,525,756 in contingent rentals in fiscal year 2007. The carrying amounts of the leased assets are as follows: Economic Airport Development Land $ 565,901 $ 2,395,046 Buildings 30,040,160 5,872,273 , Less accumulated depreciation (1,277,662�_(774,600) � _ Total 29,328,399 � 7,492,719 II- 39 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued , DETAILED NOTES ON ALL FUNDS, CONTINUED G. Other Assets Other assets are comprised of the following: Capital Proprietary Proiects Fund Fund Investment of bond proceeds $ 1,760,711 $ 1,593,680 _ Deposits - 20,000 Bond issuance costs (net of amortization) - 83,014 Total 1,760,711 $ 1,696,694 H. -� Deferred/Unearned Revenue General Fund deferred revenue consists of $1,426,900 in deferred taxes and $34,416 of advance deposits. Community Development Block Grant and Other Governmental Funds deferred revenue of $3,932,041 and $457,663, respectively, 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 w.hen 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 unearned revenue of $81,400 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 and extinguish an existing retirement liability. 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 is $145,950,900. The following is a summary of general obligation bond and note transactions of the City for the fiscal year ended June 30, 2007: Bonds and notes payable at)une 30, 2006 $ 106,784,592 Add: principal additions 5,555,000 , Less: principal repayments 8,208,375 Bonds and notes payable at June 30, 2007 104.131.217 II-40 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED Bonds and notes payable at June 30, 2007 are comprised of the following: Fiscal year Interest Governmental activities Business-type Total of maturity rate City School activities )une 30,2007 Long-term debt: Public improvements- 1988 2008 7.37%-8.60% $ - $ - $ 100,000$ 100,000 � Treatment Plant 2011 7.00%-7.10% - - 5,700,000 5,700,000 Combined sewer overFlow 2014 2.46% - - 652,400 652,400 ' Combined sewer overflow 2014 2.45% - - 695,100 695,100 Combined sewer overFlow 2017 3.52% - - 1,666,907 1,666,907 Tax increment financing note* 2016 6.00%-6.90% 650,000 - - 650,000 Combined sewer overFlow 2018 3.03% - - 1,481,127 1,481,127 " Public improvements—1997 2018 4.875%-5.3% 2,184,600 2,320,000 1,115,400 5,620,000 Tax increment financing note* 2018 6.19% 208,000 - - 208,000 ' Public improvement—1999 2019 3.8%-4.6% 982,200 - 907,800 1,890,000 Maine Business Enter Park 2018 5.00% - - 173,196 173,196 Public improvements—2000 2020 5.25%-5.90% 1,035,116 - 1,154,884 2,190,000 Public improvements—2001 2021 4.25%-5.00% 934,000 136,000 3,185,000 4,255,000 State Revolving Renovation—School 2011 0.00% - 227,440 - 227,440 Public improvements note* 2012 6.25% . 594,986 - - 594,986 Public improvements—2002 2022 3.50%-4.75% 3,438,000 3,375,000 1,402,000 8,215,000 Pension obligation bonds 2026 3.06%-6.45% 25,695,208 1,631,938 5,472,854 32,800,000 Refunding bonds 2024 3.06%-3.47% 543,807 2,068,812 3,872,381 6,485,000 Combined sewer overFlow 2023 1.94% - - 2,462,321 2,462,321 State Revolving Renovation—School 2008 0.00% - 12,471 - 12,471 Public improvements note* 2012 2.50%-4.00% - - 170,342 170,342 Tax increment financing note* 2015 2.50%-4.00% 128,292 - - 128,292 Briggs Building note 2023 6.50% - - 1,133,246 1,133,246 Refunding/public improvements-2004 2023 2.50%-4.80% 3,271,250 838,600 2,310,150 6,420,000 � Combined sewer overflow 2024 1.41% - - 2,928,435 2,428,435 Public improvements-2005 2024 3.50%-4.30% 2,340,000 - 900,000 3,240,000 Airport building sprinklers 2024 3.25%-5.00% - - 2,075,000 2,075,000 Chancellor's property note 2025 5.00% - - 2,181,954 2,181,954 Public improvements/refunding 2025 4.00%-4.20% 4,150,546 - 569,454 4,720,000 Combined sewer overflow 2027 1.64% - - 2,000,000 2,000,000 Public improvements—2007 2027 4.00% 3,555,000 - - 3.555,000 Total bonds and notes payable 49.711.005 �10.610.261 �43.809.951 �iO4.131.217 * Five series of.general obligation notes aggregating$1,751,620 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 managemenYs 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 level 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 2008 $ 3,323,243 $ 3,104,106 $ 4,087,407 $ 1,672,257 2009 3,410,336 2,996,255 4,015,143 1,529,659 2010 3,338,237 2,856,197 4;015,795 1,386,725 2011 3,171,863 2,720,186 3,767,436 1,249,030 2012 3,628,863 2,582,828 3,512,435 1,114,340 2013-2017 15,741,400 10,512,798 11,327,745 4,100,383 2018-2022 14,835,352 6,420,929 8,298,156 2,177,520 2023-2027 12,871,970 2,009,895 4,785,836 550,520 � _ Total $60,321,264 � 33.203.194$ 43,809.953 $ 13.780.434 II-41 CITY OF BANGOR, MAINE Notes to the 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, 2007, the statutory limit for the City was $332,092,500. The City's outstanding long-term debt of$104,131,217 at June 30, 2007 was within the statutory limit. Advance and Current Refunding In prior years, the City defeased certain general obligation bonds which reduced total future debt � service payments in governmental and business-type funds by $408,000 and $302,000, respectively. This transaction placed the proceeds of the new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. The trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At June 30, 2007, $975,900 and $2,352,100 of the govecnmental 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 is being amortized over the remaining life of the original bonds. Authorized and Unissued On September 26, 2005, the City Council authorized the issuance of up to $6,868,831 in general obligations bonds for various purposes. As of June 30, 2007, $1,500,000 remains authorized and unissued for the construction, demolition, engineering and furnishing of Fire Station 6. On March 27, 2006, the City Council authorized the issuance of up to $455,000 in general obligation bonds for the purpose of renovating and rehabilitating property located at 103 Texas Avenue. As of )une 30, 2007, $255,000 remains authorized and unissued. The City expects to issue the debt within the next fiscal year. II -42 CITY OF BANGOR, MAINE Notes to the Financial 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, 2007: Percentage , Debt Applicable City's Share ' Unit Outstandinq to the City of Debt General obligation bonds $104,131,217 100.00% $104,131,217 Penobscot County - 0.00% - United Technology Center - 0.00% - 104.131.217 $104.131,217 This results in a ratio of City and overlapping debt to April 1, 2006 assessed valuation of 4.68%: Changes in Long-term Liabilities Long-term liability activity for the year ended 3une 30, 2007, was as follows: Balance Balance Due within June 30, 2006 Additions Reductions ]une 30, 2007 one year Governmental activities: General obligation debt $61,003,363 3,555,000 4,237,099 60,321,264 3,323,243 Accrued compensated absences* 1,938,458 1,430,196 1,415,563 1,953,041 1,183,289 Long-term obligation for self insurance 1,830,418 501,623 680,271 1,651,770 607,890 Governmental activities ona-term liabilities �64.772.239 5.486,819 6.332.933 63.926.iZ5 5.114,422 � Business type activities: General obligation debt 45,781,229 2,000,000 3,971,276 43,809,953 4,087,407 Accrued compensated absences 328,337 517,129 302,873 542,593 542,593 Long-term obligation for self insurance 285,899 224,101 40,000 470,000 169,674 Deferred amount on refunding (106,361) - (37,891) (68,470) (29,561) Other 499.881 4,801. - 504,682 - Business type activities � lona-term liabilities � 46.788,985 2,746,031 4,276,258 45.258,758 4,770,113 * -The liquidation of compensated absences is fully covered within the General Fund II -43 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued , DETAILED NOTES ON ALL FUNDS, CONTINUED � ). Fund Balances Permanent Funds , As of June 30, 2007, the fund balances by purpose were as follows: Restricted Unrestricted Nonexpendable Permanent Trust Principal Funds Cemetery $ 371,424 $ 20,773 Pa rks 14,538 42,126 City Missionary 16,511 54,851 Education 44,138 60,910 Aid for Aged Women 43,067 69,275 . Other Purposes 30,867 113,944 Total nonmajor permanent funds 520,545 $ 361.879 Dedicated Revenue Funds - Special Revenue Funds As of June 30, 2007, the fund balances by purpose were as follows: Dental Clinic $ 65,178 Preservation of Records 133 Adopt a Park 95,925 Park Woods Children 145 City Forest 188,422 � BFD Imaging 6,144 Park Woods Complex 197,113 USS Maine Monument 13,669 Flower 993 Impact Fees 76,449 Kenduskeag Stream Trail 4 Skate Park 901 Tricentennial 960 Total dedicated revenue funds 646 036 II-44 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED, Designated Fund Balance Designated fund balance of the General Fund at June 30, 2007 consists of amounts, which the City intends to use for the following purposes: Departmental balances carried forward $ 22,950 School department— regular 1,733,967� adult education 187,617 reading assessment 21,183 special revenue 151,895 school lunch 54,180 trust and agency 142,209 Total balances carried 2,314,001 Accrued summer teacher payroll (2,708,870) Pooled equipment 42,635 Bus equipment 69,068 Fire equipment 93,870 Improvement 382,057 Self insurance 1,651,770 Cameron stadium 333,430 Landfill closure 10,047 Cascade park maintenance 45,468 � Demolition . 1,421 PEG capital support 124,002 � Pickering Square development district 90,513 Parks & Rec Improvement (221,313) Amounts due from Bangor Nursing & Rehabilitation Center 217,811 � Benefit reserve 295,000 Pension obligation bond savings 193,761 Arbitrage rebate 244,183 3.178.854 II -45 � CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued DETAILED NOTES ON ALL FUNDS, CONTINUED � K. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the , outstanding balance of bonds and capital leases payable and adding back any unspent proceeds. Net assets are reported as restricted when there are limitation imposed on their use either through the enabling legislations adopted by the City of through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The City's net assets invested in capital assets, net of related debt was calculated as follows at June 30, 2007: Governmental Business-Tvpe Capital assets $113,483,601 $351,931,695 Accumulated depreciation (39,629,564) (160,291,124) Bonds payable (27,357,709) (38,337,099), Unspent bond proceeds 1,760,711 1,593,680 Totaf invested in capital assets net of related debt . 48.257,039 $154.897,152 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 reports 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. 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, 2007, 2006 and 2005. II-46 CITY OF BANGOR, MAINE � Notes to the Financial Statements, Continued OTHER INFbRMATION, CONTINUED 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, 2007, the amount of self-insurance liabilities was $2,121,470. This liability is the City's best estimate.based on available information. Changes in the reported liabilities since July 1, 2005 resulted from the following: Workers' All other self- Compensation insured risks Total Unpaid claims as of)uly 1, 2005 $ 2,071,602 $ 207,753 $ 2,279,355 Incurred claims 109,458 - 109,818 Payments (595,737) (2,554) (599,291) Changes in estimates and other adjustments _ 317,630 9,165 326J95 Unpaid claims as of)uly 1, 2006 1,901,953 214,364 2,116,317 Incurred claims 925,097 - 925,097 Payments (643,815) (4,800) (648,615) Changes in estimates and other adjustments (282,915) 11,586 (271,329� Unpaid claims as of June 30, 2007 $ 1,900.320 $ 221.150 $ 2.121.470 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 Development 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 that converted the former Freese's department store building into affordable housing units. Downtown Municipal Development District — To partially finance in excess of $70 million dollars of infrastructure improvements within the boundries of the district. II-47 CITY OF BANGOR, MAINE ' Notes to the Financial Statements, Continued , OTHER INFORMATION, CONTINUED ' C. Contingent Liabilities In February 1998, the City was served Notification of Potential Liability by the Federal 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. At this time, the group is in the process of implementing the remedy for the off-site area and continue to negotiate with the EPA for the final remedy of the on-site area. The EPA is expected to file the final Consent Decree prior to June 30, 2008. Based upon the recent passage of LD 1929, there should be no further costs to the City. LD 1929 established a program to fund clean up costs at this site for certain parties, including municipalities. In 2002, the City filed suit against Citizens Communication Company (Citizens), a potentially responsible party to force cleanup of contamination of the Penobscot River bottom due to the inability to reach settlement. In September of 2005, the U.S. District Court issued an Order finding that the City is responsible for 40% of the remediation costs. In July 2007, the City reached a settlement agreement with Citizens, whereby the City received $7.625 million to be held in escrow and applied to the cost of remediation. At this time, the cost of the remediation, which couGd range from $6 - $14 million, is unknown. The City is a parly 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 City 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 employ�es are eligible to participate and are fully vested from the date of employment. Funding 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 2007 covered payroll was $9,383,637 and City contributions were $798,319. 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 $530;759 and $58,575 respectively, in fiscal year 2007. II -48 CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued � OTHER INFORMATION, CONTINUED 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 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. Funding Policy — 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 City 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, 2007, 2006, and 2005 were $701,159, $701,017, and $692,119 respectively, equal to the required contributions for each year. Teachers Group Description of the Plan - All school teachers, 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 Policy — 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 $4,172,893 (19.14%) for the fiscal year 2007. - 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 19.14% of their compensation. This cost is charged to the applicable grant. Deferred Compensation Plan The City offers its employees a deferred compensation p�an 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. II-49 � CITY OF BANGOR, MAINE Notes to the Financial Statements, Continued OTHER INFORMATION, CONTINUED 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 July 1, 1991. . E. Land�ll 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. Subsequent Events On August 27, 2007, the City Council authorized the issuance of $770,122 in general obligation bonds for the purpose of funding the City's annual fleet replacement and the local share of State of Maine road projects and $2,000,000 in general obligation bonds to finance the continuation of the City's combined sewer overFlow program. On November 26, 2007, the City Council authorized the issuance of $600,000 in general obligations bonds for the purpose of renovating and improving property located at 103 Texas avenue. The City Charter requires maintaining the City's undesignated/unreserved fund balance at between 5% and 1.0% 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, 2007, this balance exceeded the City policy of 7.5% by $2,�522,799. 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 in the amount of $550,000 to fund further environmental assessment of the Penobscot river as well as legal costs. II - 50 This page left intentionally blank � . _ . ... ' . . . . . . . . . .. . .. . ... ... . . . i�.' . . , . . . . . i, . � . . . . . � . . � . . . . . . . - . . . . . . . I : ' . . . . - . . . _ . . . . . . i I . . . j ' . . . . . ' . . . ' .. . . . .. . ' .. � . . i � . . .. . . . . _ � . . . . . . . . ' . . . . ( . . - . . . . . . . . .. f. . . . . . . . � . , . . . ' ' . . . . I ' . . . . ' , . . . - ! .'. . . . � , I . .. . . ' . . ' _ . - . . . ' ' . . ' � ' GENERAL FUND ; The General Fund is used to account for resources traditionally associated with the � . � government, which are not required legally or by sound financial management, to be - accounted for in another fund. l ; � � -r ----� -.� _ �: � � ::, . �z _� ; -'_ , , ; '�,, _ ',�\; ` . ; �1�� ,� _� . -.`� � �\ ':�:' . i -'j ' �- 1' - , � Y ' : �� � ; �Jl r,, � ;�`, y y, � �_ . c,�'� ; ' � ��- _ � �,) ' � . . . - i . '� _ J . . _ . . i f�' ti \�. �� l' r' ' i !f � � �, ,S �� _ .-t�.r'- j� �. � . � •.,�, .�r^� v ,��-_�,��� y��' ����'�` �� ;� �-�� ..�. .��� i ' � { 4�-�°_�..-.�� i ` � •_••_ . �'°--+-�- .��.._ - 4� ,� � ��J- { ? ` . . ' '. .��1 ,,. . �, . � . . . . . . � V � . . :�4'�G�. ,�. � . . . . . . . . . � . . � ' . �,��� __ _ � � . � . . . �, . .. . . � . � � . . ' . ... .� . . . . � . ' . _ . . . . i . ' _ � , � . .. .. - . - . . . . . . . ' . . . . � . � . . . i �' �. . . . ' . � . . ' . . . . ' . . . . . . � � . . j . . . . . . . , . . . I . . . . . . . . . . . . �. i . . ' . . . . � . . - . . ' .. . . . . . . . . . .. . .. . . . . �. . . . . . .. . . ... ... . . . . . . .. . . . . . . . . . . . . . . . . _ . . . ' . � . ' _ - . . . - . . � , ' . P. ' . � ' . � . , . . � . . . I` . . . . . . . . . . . . . . . . � i Schedule A-1 I CITY OF BANGOR,MAINE ` � Balance Sheet General Fund June 30,2007 ; �. ASSETS Cash and cash equivalents $ 340,279 � Investments 11,474,968 Receivables: Taxes 1,701,062 � Accounfs (net of allowance of$264,892) , 840,131 Interfund loans 2,274,205 � Intergovernmental 1,694,700 Loans 1,133,246 ' Inventory,at cost 697,389 � Prepaid items 31,693 Total assets " $ 20,187,673 I � LIABILITIES AND FUND BALANCE � Liabilities � Accounts payable $ 942,577 � Accrued wages and benefits payable 3,979,634 � Deferred revenue 1,461,316 , Total liabilities 6,383,527 � Fund balance ` Reserved for: � Encumbrances 901,650 Prepaid items 31,693 , Advances to other funds 1,432,689 � Unreserved: � Designated(Note J) 3,178,854 � Undesignated 8,259,260 i Total fund Ualance 13,804,146 Total liabilities and fund balance $ 20,187,673 i . � . 1 . � I I II - 51 ; Schedule A-2 CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Changes in Undesignated Fund Balance-Budget and Actual-Budgetary Basis General Fund For the Fiscal Year Ended June 30,2007 � Balances Variance Carried 7/1/2006 Budget Actual Surplus Carried Revenues Taxes Real and personal property $ - $ 41,735,519 $ 41,702,774 $ (32,745) $ - Change in deferred property tax - - 107,277 ]07,277 - Tax increment financing district - (1,315,984) (1,123,256) 192,728 ' - Payment in lieu of taxes - 145,000 145,000 - - Excise - 4,426,500 4,668,615 242,I1S - Interest on delinquent taxes - 210,000 190,860 (19,140) - Totaltaxes - 45,201,035 45,691,270 490,235 - Intergovemmental State revenue sharing - 3,900,000 4,285,724 385,724 - School subsidy - 15,581,046 15,557,961 - (23,085) Other- municipal - 2,247,467 2,346,153 98,686 - � school - 3,350,087 3,818;076 - 467,989 Total intergovernmental - 25,078,600 26,007,914 484,410 444,904 • Other revenue Licenses and permits - 494,700 687,879 193,179 - Charges for service- municipal - 7,377,284 7,155,467 (221,817) - school - 4,631,111 4,408,431 - (222,680) Fines,forfeits and penalties - 27,200 10,337 (16,863) - Revenue from use of money and property- municipal - 701,801 1,085,272 383,471 - Total other - 13,232,096 ]3,347,386 337,970 (222,680) Totalrevenues - 83,511,731 85,046,570 1,312,615 222,224 II- 52 Schedule A-2 (con't) CITY OF BANGOR,MAINE � Schedule of Revenues,Expenditures and Changes in Undesignated Fund Balance-Budget and Actual-Budgetary Basis General Fund For the Fiscal Year Ended June 30,2007 Balances Variance Carried 7/l/2006 Budget Actual Surplus Carried Expenditures General govemment Council - 44,193 33,530 10,663 - Executive - 626,189 621,370 4,819 - Human resources 6,411 ]01,420 100,018 7,813 - City clerk - 328,401 330,919 (2,51 S) - Assessing - 361,439 363,408 (1,969) - Legal - 251,235 248,688 2,547 - Finance - 1,413,632 1,408,893 4,739 - Insurance - 150,259 134,086 16,173 - � Planning,econ dev,code enforcement - 1,006,416 976,201 30,215 - Tota]general government 6,4]1 4,283,184 4,217,113 72,482 - Public safety Po]ice - 6,631,637 6,590,611 41,026 - Fire 97,000 6,865,183 6,998,891 (36,708) - i Total public safety 97,000 13,496,820 13,589,502 4,318 - Health,welfare and recreation Health and welfare - 2,7'83,253 2,757,255 25,998 - Parks and recreation - 1,310,647 1,329,795 (19,148) - Total health,welfare and recreation - 4,093,900 4,087,050 6,850 - Public buildings and services - 9,495,735 9,346,906 148,829 - II -53 Schedule A-2 (con't) CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Changes in Undesignated Fund Balance-Budget and Actual-Budgetary Basis General Fund For the Fiscal Year Ended June 30, 2007 Balances Variance Carried 7/1/2006 Budget Actual Surplus Carried Expenditures,continued Other agencies County tax - 2,240,744 2,240,744 - - Downtown Development District - 46,920 48,760 (1,840) - Public library - 1,434,135 1,434,135 - - Other agencies 3,800 289,653 268,922 1,581 22,950 Total other agencies 3,800 4,0]1,452 3,992,561 (259) 22,950 Education Regu]ar 1,492,012 38,060,918 37,329,980 - 2,222,950 Adult education 118,703 627,153 546,507 - 199,349 Schoollunch 44,741 1,171,021 1,170,300 - 45,462 Reading assessment 21,184 ]0,000 - - 31,184 Special revenue 139,107 2,469,789 2,462,207 - 146,689 Trust and agency 204,590 1,636,624 1,610,607 - 230,60? Total education 2,020,337 43,975,505 43,119,601 - 2,876,241 � Other appropriations Pensions and other fringe benefits - 1,884,081 1,824,757 59,324 - Debt service - 2,043,190 2,054,780 (l 1,590) - . Tax increment financing payments - 425,938 414,073 11,865 - Totai other appropriations - 4,353,209 4,293,610 59,599 - Total expenditures 2,127,548 83,709,805 82,646,343 291,819 2,899,191 Excess(deficiency)of revenues over/underexpenditures (2,127,548) (198,074) 2,400,227 1,604,434 3,121,415 II- 54 Schedule A-2(con't) CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Changes in Undesignated Fund Balance-Budget and Actual-Budgetary Basis General Fund For the Fiscal Year Ended June 30,2007 � Balances Variance Carried � 7/1/2006 Budget Actual Surplus Carried Other financing sources(uses) Appropriaton from designated fund balance - 1,434,475 627,061 - (807,414) Appropriation from undesignated fund balance - 1,000,000 - (1,000,000) - Sale of assets - 7,900 267,090 259,190 - Transfers to other funds - (1,563,100) (1,563,100) - - Transfers from other funds - 65,404 62,634 (2,770) - Operating transfers - (746,605) (746,605) - - Total other financing sources(uses) - 198,074 (1,352,920) (743,580) (807,414) Net change in fund balance $ (2,127,548) $ - $ . 1,047,307 860,854 $ 2,314,001 Undesignated fund balance,beginning of year 7,398,406 Undesignated fund balance,end of year $ 8,259,260 II - 55 I_ ; - 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.eommercial 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 an`d state�,grants`that are`�.legally restricted to expend'itures allowable by the grantor agency , � '� ;,,_,�., /I � .I r�� .�� �. � �. . . ' . `�_ . . ' ��L •� 1 �. . � j r�.' � ,� -:.. � �l��:� 1 . Dedicated Revenue Funds - Accounts-for-amounts_raised or donated to benefit various governmental pro`grams such as, the�Dental Glinic;,local parks, City`�forest �and Park Woods complex. .;� j ,, .� � ,� � „J,, Other Funds —Accounts � �J ~ �� � , � I I � �� 'tifor funds held to'be used in future per ods such�as tax financing , � �� �.`t, �,1��: ,-- � district repayments and other community funds for.`capitalrexpenditures relating to the operation of the area transportation�'system , �, ( � � ;-� y, ��.,�.�ti s �'i�/ _ ��t . :r---�-.,--�\1 � �. � . Perma�nent�Fund j ��—�-.! , Permanent funds are usedto report resources that are legally restricted to the extent that only earnings, not principal�may be used for purposes that support the reporting governmenYs programs. , • . ; , � ; � s�neau�e B-i - CITY OF BANGOR,MAINE y Combining Balance Sheet � Nonmajor Governmental Funds June 30,2007 � � ` Nonmajor -� � Special Nonmajor TotalOther Revenue Permanent Governmental ' Funds Funds Funds ` ASSETS � Cash and cash equivalents $ 90,236 $ - $ 90,236 - Investments 254,262 116,019 370,281 � Receivables: � Loans 1,876,308 909,681 2,785,989 - Intergovemmental 213,464 - 213,464 Total assets $ 2,434,270 $ 1,025,700 $ 3,459,970 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 29,893 $ - $ 29,893 Deferred revenue 457,663 - 457,663 Interfund loans - 512,109 - 512,109 - � Total liabilities 999,665 - 999,665 . ; : Fund balances Reserved,principal - 663,821 663,821 Unreserved, undesignated 1,434,605 361,879 1,796,484 Total fund balances 1,434,605 1,025,700 2,460,305 Total liabilities and fund balances $ 2,434,270 $ 1,025,700 $ 3,459,970 � � II - 56 ' Schedule B-2 CITY OF BANGOR,MAINE Combining Statement of Revenues,Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended June 30,2007 + Nonmajor Special Nonmajor TotalOther Revenue Permanent Governmental Funds Funds Funds Revenues . Taxes $ 955,151 $ - $ 955,151 Intergovernmental 4,231,984 - 4,231,984 Charges for services 751,222 - 751,222 Program income 23,424 - 23,424 Revenue from use of money and property I55,550 - 155,550 Other revenue 50,304 . 2,400 52,704 Interest revenue - 57,280 57,280 Total revenues 6,167,635 59,680 6,227,315 Expenditures � Current: Personnel 547,431 - 547;431 Equipment 23,801 - 23,801 Payments to beneficiaries 1,192,183 - 1,192,183 Other � 2,596,554 - 2,596,554 Bus operations 1,795,253 - 1,795,253 � Program expenditures - 3,505 3,505 Total expenditures 6,155,222 3,505 6,158,727 Excess (deficiency)of revenues over(under)expenditures 12,413 56,175 68,588 Other financing sources (uses) Transfer to other funds (249,369) (33,000) (282,369) Transfer from other funds 11,943 - 11,943 Total other financing sources (uses) (237,426) (33,000) (270,426) Net change in fund balances (225,013) 23,175 (201,838) Fund balances,beginning of year 1,659,618 1,002,525 2,662,143 Fund balances, end of year $ 1,434,605 $ 1,025,700 $ 2,460,305 II - 57 � Schedule B-3 CITY OF BANGOR,MAINE Combining Balance Sheet Nonmajor Special Revenue Funds June 30,2007 , Dedicated Other Grant Revenue Totals HUD Funds Fund Funds Other 2007 ASSETS Cash and cash equivalents $ 90,229 $ 7 $ - $ - 90,236 Investments - - - 254,262 254,262 Receivables: Loans 457,663 - 64G,036 772,609 1,876,308 Intergovemmental - 212,624 - 840 213,464 Total assets $ 547,892 $ 212,631 $ 646,036 $ 1,027,711 $ 2,434,270 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ - $ 2,967 $ - $ 26,926 $ 29,893 Deferred revenue 457,663 - - - 457,663 Interfund loans payable - 177,450 - 334,659 512,109 Totalliabilities 457,663 180,417 - 361,585 999,665 Fund balances Unreserved,undesignated 90,229 32,214 646,036 666,126 1,434,605 Total fund balances 90,229 32,214 646,036 666,126 1,434,605 i Total liabilities and fund balances $ 547,892 $ 212,631 $ 646,036 $ 1,027,711 $ 2,434,270 II-58 Schedule B-4 CITY OF BANGOR,MAINE Combining Statement of Revenues,Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds For the Fiscal Year Ended June 30,2007 Dedicated Other Grant Revenue Totals HUD Funds Fund Funds Other 2007 Revenues Taxes $ - $ - $ - $ 955,151 $ 955,151 Intergovernmental - 4,231,984 - - 4,231,984 Charges for services - 674,773 76,449 - 751,222 Program income 23,424 - - - 23,424 Revenue from use of money and properiy 3,041 - 33,087 119,422 155,550 Contributions - - 41,718 8,586 SQ304 Total revenues 26,465 4,906,757 151,254 1,083,159 6,167,635 Expenditures � Personnel - 547,431 - - 547,431 Equipment - 23,801 - - 23,801 Payments to beneficiaries 200,000 - 4,007 988,176 ],192,183 Other 7,773 2,568,532 - 20,249 2,596,554 Bus operations - 1,795,253 - - 1,795,253 Total expenditures 207,773 4,935,017 4,007 1,008,425 6,155,222 Excess(deficiency)of revenues over(under)expenditures (181,308) (28,260) 147,247 74,734 12,413 Other financing sources(uses) Transfers to other funds - - (201,088) (48,281) (249,369) Transfers from other funds - - 292 ]1,651 11,943 Total other financing sources(uses) - - (200,796) (36,630) (237,426) Net change in fund balances (181,308) (28,260) (53,549) 38,104 (225,013) Fund balances,beginning ofyear 271,537 60,474 699,585 628,022 1,659,618 Fund balances,end of year $ 90,229 $ 32,214 $ 646,036 $ 666,126 $ 1,434,605 II-59 • ' Schedule B-5 CITY OF BANGOR,MAINE � Combining Balance Sheet Nonmajor Permanent Funds June 30,2007 Revolving Other Loan Funds Funds Totals ASSETS Investments $ - $ 116,019 $ 116,019 Loans receivable 882,424 27,257 909,681 Total assets $ 882,424 $ 143,276 $ 1,025,700 LIABILITIES AND FUND BAL•ANCES Liabilities $ - $ - $ - Totalliabilities $ - $ - $ - Fund balances � Principal 520,545 143,276 663,821 Unexpended income 361,879 - 361,879 Total fund balances 882,424 143,276 1,025,700 Total liabilities and and fund balances $ 882,424 $ 143,276 $ 1,025,700 II -60 Schedule B-6 CITY OF BANGOR,MAINE Combinirig Statement of Revenues,Expenditures and Changes in Fund Balances Nonmajor Permanent Funds For the Fiscal Year Ended June 30,2007 Revolving Other Loan Funds Funds Totals Revenues � � Investment income $ 44,708 $ 12,572 $ 57,280 Lot sales 2,400 - 2,400 Total revenues 47,108 12,572 59,680 Expenditures Cunent: . Payments to beneficiaries 55 2,400 2,455 Other miscellaneous - 1,050 1,050 Total expenditures 55 3,450 3,505 Exces's(deficiency)of revenues � over(under)expenditures 47,053 9,122 56,175 Other financing uses Transfer to other funds (33,000) - (33,000) Total other financing uses (33,000) - (33,000) Net change in fund balances 14,053 9,122 23,175 Fund balances,beginning of year 868,371 134,154 1,002,525 Fund balances, end of year $ 882,424 $ 143,276 $ 1,025,700 II -61 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 appr.opriate for accountability purposes. Sewer Utiliry Fund — This fund accounts for the�costs of construction and operation of . the Sewage Treatment Plant, t�City sewer system and sewer operation activ.ities, and is self—supported through sewer user fees. _� - Airport Fund —This 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.j , .` � � . 1 - '-, i ` i Park Woods — This'-fund accounts for-tfie rental of 60 units of surpfus housing received from the federaf�government pursuant to the McKmney Homeless A'ssi'stance Act. The � principal source of revenue is rental'income. `�, '��., �" � I � ���_ ..`'��--� � �;�` i �, � �' G-- -�"'`,�� -', � �;,a1 ParKing Fund -This fund accounts�fo r the operation of�the City=owned�parking lots and the Pickering Square garage. Revenue sources `includeirrionthly lease payments for � � _. �--_._� �;���s�,r•�., 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. .��� r.� � � Bass Park Fund —This fund;accounts+f�th�ration of the Bangor auditorium, Bangor. Civic Center, ,and Bangor.State Fair. Principal sources.ofirevenue are admissions; concession sales, and renta'Is.� The fund is name�after the Bass family, which bequeathed the property to the City�for_r_ecreational-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 witfiin the Gity. The principal source of revenue is rental income. Schedule Gl - CITY OF BANGOR,MAINE � . Schedule of Revenues,Expenditures and Encumbrances - Budget and Actual-Budgetary Basis Sewer Utility Fund-Enterprise Fund • �'. For the Fiscal Year Ended June 30,2007 ' Variance Positive ' Budget Actual (Negative) - Revenues Charges for services $ 6,555,900 $ 6,613,511 . $ 57,611 - Interest and other revenue 1,009,382 49,748 (959,634) Total revenues 7,565,282 6,663,259 (902,023) Expenditures and encumbrances . � � Salaries 980,120 1,094,715 (114,595) Fringe benefits . 247,514 227,034 20,480 Supplies and materials 1,085,201 992,259 92,942 Contractual services 652,425 625,785 26,640 � Interfund charges 516,199 503,187 13,012 � Miscellaneous 17,350 16,796 554 Debt service 3,749,359 3,576,477 172,882 Depreciation 1,633,722 1,676,489 (42,767) - Outlay 74,000 83,255 (9,255) Total expenditures and encumbrances 8,955,890 8,795,997 159,893 Excess(deficiency)of revenues over/under expenditures and encumbrances $ (1,390,608) $ (2,132,738) $ (742,130) II-62 Schedule C-2 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 30,2007 Variance Positive Budget Actual (Negative) Revenues Charges for services $ 13,082,827 $ 13,549,966 $ 467,139 Interest and other revenue 778,763 876,974 98,211 Total revenues 13,861,590 14,426,940 565,350 Expenditures and encumbrances Salaries � 4,429,515 4,418,867 10,648 Fringe benefits 953,874 958,928 (5,054) Supplies and materials 2,560,000 2,293,110 266,890 Contractual services 2,046,775 1,828,791 217,984 Interfund charges 616,355 531,807 84,548 Miscellaneous 149,500 387,813 (238,313) Debt service • 903,547 903,548 (1) Depreciation 6,390,000 7,016,220 (626,220) Outlay 242,760 637,158 (394,398) Credits (14,000) - (14,000) Total expenditures and encumbrances 18,278,326 18,976,242 (697,916) Excess(deficiency)of revenues over/under expenditures and encumbrances $ (4,416,736) $ (4,549,302) $ (132,566) II-63 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 30,2007 Variance Positive Budget Actual (Negative) � Revenues Charges for services $ 330,602 $ 297,036 $ (33,566) Operating transfer 8,291 8,291 - Interest and other revenue - 1,327 1,327 Total revenues 338,893 306,654 (32,239) Expenditures and encumbrances Salaries 68,302 67,803 ' 499 Fringe benefits 12,421 12,847 (426) Supplies and materials 119,750 140,256 (20,506) Contractual services 132,550 137,332 (4,782) Interfund charges 5,620 4,862 758 Miscellaneous - 116 (116) Depreciation 89,123 89,123 - Outlay 250 393 (143) Total expenditures and encumbrances 428,016 452,732 (24,716) Excess(deficiency)of revenues over/under expenditures and encumbrances $ (89,123) $ (146,078) $ (56,955) II -64 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 June 30,2007 Variance , Positive Budget Actual (Negative) Revenues Charges for services $ 931,500 $ 977,603 $ 46,103 Operating transfer 319,349 319,349 - Interest and other revenue - 12,321 12,321 Total revenues 1,250,849 1,309,273 58,424 Expenditures and encurnbrances Salaries 161,181 161,919 (738) - Fringe benefits 36,938 35,581 1,357 Supplies and materials 6,450 9,816 (3,366) Contractual services 318,876 348,670 (29,794) Interfund charges 91,300 104,935 (13,635) Debt service 636,105 636,105 - Depreciation 478,381 478,381 - Outlay - - - Total expenditures and encumbrances 1,729,231 1,775,407 (46,176) Excess(deficiency) of revenues over/under expenditures and encumbrances $ (478,382) $ (466,134) $ 12,248 II -65 Schedule GS CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Encumbrances . Budget and Actual-Budgetary Basis Bass Park Fund-Enterprise Fund For the Fiscal Year Ended June 30,2007 Variance Positive Budget Actual Adjust Actual (Negative) Revenues Charges for services $ 1,408,450 $ 1,436,959 $ 1,436,959 $ 28,509 Operating transfer 483,456 483,456� 483,456 - Interest and other revenue - 747 747 747 Total revenues 1,891,906 1,921,162 1,921,162 29,256 Expenditures and encumbrances • Salaries 651,132 661,201 Vac (17,584) 643,617 7,515 Fringe benefits 134,059 150,947 150,947 (16,888) Supplies and materials 326,550 381,237 381,237 (54,687) Contractual services 404,700 445,006 enc - 445,006 (40,306) Interfund charges 128,425 154,720 154,720 (26,295) Miscellaneous 57,000 49,639 49,639 7,361 Debt service 200,039 67,292 Prin/Ac 132,747 200,039 - Depreciation 88,436 74,051 74,051 14,385 Credits (10,000) (10,000) (10,000) - Total expenditures and encumbrances 1,980,341 1,974,093 2,089,256 (108,915) Excess(deficiency)of revenues over/under expenditures and encumbrances $ (88,435) $ (52,931) $ (168,094) $ (79,659) ll-66 Schedule C-6 CITY OF BANGOR,MAINE Schedale of Revenues,Expenditures and Encumbrances Sudget and Actual-Budgetary Basis Municipal Golf Course-Enterprise Fund For the Fiscal Year Ended June 30,2007 Variance Positive Budget Actual (Negative) Revenues Charges for services $ 640,000 $ 635,420 $ (4,580) Interest and other revenue 14,000 41,374 27,374 Total revenues 654,000 676,794 22,794 Expenditures and encumbrarices Salaries 255,119 258,932 (3,813) Fringe benefits 49,393 33,041 16,352 Supplies and materials 69,840 78;727 (8,887) Contractual services 68,910 54,395 14,515 Interfund charges 81,888 84,852 (2,964) Debt service 66,350 55,099 11,251 Depreciation 98,151 99,662 (1,511) � Outlay � 62,500 58,888 3,612 Total expenditures and encumbrances 752,151 723,596 28,555 Excess (deficiency)of revenues over/under expenditures and encumbrances $ (98,151) $ (46,802) $ 51,349 II-67 Schedule C-7 CITY OF BANGOR,MAINE Schedule of Revenues,Expenditures and Encumbrances Budget and Actual-Budgetary Basis � Economic Development Fund-Enterprise Fund For the Fiscal Year Ended June 30,2007 Variance Positive Budget Actual (Negative) Revenues Charges for services $ 558,929 $ 424,416 $ (134,513) Interest and other revenue 14,777 40,487 25,710 Total revenues 573,706 464,903 (108,803) Expenditures and encumbrances Supplies and materials 32,886 43,189 (10,303) Contractual services 132,690 209,116 (76,426) Interfund charges - 78 (78) Miscellaneous 2,488 2,538 (50) Debt service 403,206 403,205 1 Depreciation 110,895 203,713 (92,818) � Outlay 450,345 - 450,345 Total expenditures and encumbrances 1,132,510 861,839 270,671 Excess (deficiency)of revenues over/under expenditures and encumbrances $ (558,804) $ (396,936) $ 161,868 II-68 FIDUCIARY FUNDS Fiduciary Funds are used to report assets held in a trustee or.agency capacity for others. Agency Funds — Agency Funds are used to account for situations where the City's role is purely custodial, such as the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments. . � _ __ -- ��` � _ ;' ' `� ` ;' .�- ,. �`.� � ' , � ,- , , f �i ,, _ ; :`:�� , , � " / .� �� - ,�, ,�� ; � � � . f _ � � � ' ,.,,, �,.-� - .. r.-� y .;� ; i , a� � � ' � ", � � � , ' ���� _... :;�, ��-pr ,y �.r .. . � �, 1,_ Y _ c� ���:+»,`�� . - . .� _ � ' F..J � �� . _I��/`y�•..:� /�SP � . ' . . � C�'l�M1�� . ' ' _ ��^'r�-v�� . . . . . � . . . . - . � i Schedule D-1 CITY OF BANGOR,MAINE Statement of Change in Assets and Liabilities Agency Fund � For the Fiscal Year Ended June 30,2007 � � Balance Balance July 1,2006 Additions Deletions June 30,2007 ASSETS American Folk Festival funds $ 22,227 811,702 821,920 12,009 Bangor Area Stormwater Group 5,734 89,589 69,341 25,982 School Activity Funds 87,799 298,327 290,593 95,533 � Total assets $ 115,760 1,199,618 1,181,854 133,524 LIABILITIES Funds held for American Folk Festival $ 22,22'7 811,702 821,920 12,009 Funds held for Bangor Area Stormwater Group 5,734 89,589 69,341 25,982 Funds held for School Activity Funds 87,799 298,327 290,593 95,533 Total liabilities $ 115,760 1,199,618 1,181,854 133,524 II-69 � CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS � �. - - - -- _ . � � , � ;� , � �� ; � � � � . ; . � .,.�,�_ � ��- ; : ► r-� . _ _ ;. , , . �,,;:; ._ _.� __ _ ''� `� 1 --�-�----,, ' r,+� ;` � �,` � �"_ ;C-; , �o�v �i�� � � �_, __ . Schedule E-1 CITY OF BANGOR,IVIAINE Capital Assets Used in the Operation of Governmental Funds (net of accumulated depreciation) Schedule of Changes by Function and Activity For the Fiscal Year Ended June 30,2007 - Balance Balance Function and Activity 2006 Additions Deletions 2007 General government Animal control $ 3,669 $ - $ 1,469. $ 2,200 BAT community connector 1,052,894 237,944 176,890 1,113,948 Central service 32,691 - 3,846 28,845 City clerk 42,408 28,389 36,988 33,809 City hall 514,286 195,066 210,498 498,854 Community and economic development 4,716,717 107,582 209,489 4,614,810 Engineering 52,049 - 2,829 49,220 Information services 544,305 15,533 134,869 424,969 Legal 6,050 . - 2,420 3,630 Motor pool 3,904,433 544,685 597,223 3,851,895 Other-unclassified 699,371 - 74,525 624,846 Total general government 11,568,873 1,129,199 1,451,046 11,247,026 Public safety Fire 2,656,237 978,784 433,010 3,202,011 Police 7,612,046 3,793,545 167,984 11,237,607 Total public safety 10,268,283 4,772,329 600,994 . 14,439,618 Health,welfare and recreation , Health and welfare - - - - Parks and recreation 2,836,930 106,645 192,907 2,750;668 Total health,welfare and recreation 2,836,930 106,645 192,907 2,750,668 Public building and services Public works 19,017,057 5,695,883 6,635,572 18,077,368 Total public buildings and services 19,017,057 � 5,695,883 6,635,572 18,077,368 Educarion 27,929,440 277,845 867,928 27,339,357 Total governmental fund capital assets $ 71,620,583 $11,981,901 $ 9,748,447 $73,854,037 II-70 OTHER INFORMATION __ �.� � � ,- � �, : � , .._ � ' `. r-=`'�'�"�;;,, . � `, �, ,� . _ ; -=. ;. ,1 �' .____._ _� ,;: � , �, ` ; � ��;..-,�-y , r. � ti�� � �, \ . � � � � '�_ � � i Schedule F-1 - � CITY OF BANGOR,MAINE i � Assessed Valuation,Commitment and Collections For the Fiscal Year Ended June 30,2007 y VALUATION ��' Land and buildings $ 1,896,440,700 _ I � , Land and buildings-Homestead exemption 67,904,400 . Personal property 259,703,500 � � � f Total valuation $ 2,224,048,600 � COMMITMENT � Real estate and personal property(excludes Homestead exemption) $ 2,156,144,200 ;' Tax rate � 0.01940 � Total commitment , 41,829,197 ' ADD Supplemental taxes committed 161,788 41,990,985 1 ' LESS I Collections 2007 40;819,923 Abatements 269,636 � 2007 taxes receivable at June 30,2007 $ 901,426 � i { i � , , , ; I , -� � II-71 , Schedule F-2 CITY OF BANGOR,MAINE Undesignated Fund Balance Sufficiency Calculation For the Fiscal Year Ended June 30,2007 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, 2007 undesignated fund balance. General Fund expenditures/uses( Schedule A-2) General government $ 4,217,113 Public safety 13,589,502 Health,welfare and recreation 4,087,050 Public buildings and services 9,346,906 Other agencies 3,992,561 Education 43,119,601 Other appropriations 4;293,610 Other uses, gross* 2,309,705 Gross expenditures and uses 84,956,048 General Fund debt service 7,276,628 Net expenditures and uses $77,679,420 Indicated undesignated fund balance @ 7.5% $ 5,825,957 Actual undesignated fund balance (Schedule A-2) $ 8,259,260 Actua] undesignated fund balance as a percentage of net expenditures and uses . 10.63% Over(under) funded status $ 2,433,304 * excludes amounts appropriated from undesignated fund balance II-72 This page left intentionally blank STATISTICAL SECTION This part of the City of Bangor's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the government's overall financial health. Page Financial Trends III - 1 The schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity III - 8 These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity III - 12 � These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the ability to issue additional debt in the future. Demographic and Economic Information III - 16 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information III - 18 These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it . performs. Table•1 CITY OF BANGOR,MAINE Net Assets by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2003* 2004* 2005* 2006* 2007 Govemmental activities: Invested in capital assets,net of related debt $ 35,304,708 $ 41,565,642 $ 46,993,577 $ 48,707,054 $ 48,257,039 Restricted 507,743 510,433 513,851 1,002,525 1,025,700 Unrestricted (16,178,265) (20,154,733) (21,010,448) (21,528,721) (17,875,187) Total governmental activiries net assets 19,634,186 21,921,342 26,496,980 28,180,858 31,407,552 Business-type activities: lnvested in capital assets,net of related debt 149,863,511 148,218,655 150,970,961 154,068,754 154,897,152 Restricted - - - - - Unrestricted 19,579,291 21,096,167 21,705,461 16,998,096 17,225,188 Total business-type activities net assets 169,442,802 169,314,822 172,676,422 171,066,850 172,122,340 Primary governmenh Invested in capital assets,net of related debt 185,168,219 189,784,297 197,964,538 202,775,808 203,154,191 Restricted 507,743 510,433 513,85] 1,002,525 1,025,700 Unrestricted 3,401,026 941,434 695,013 (4,530,625) (649,999)' Tota]primary govemment net assets $ 189,076,988 $ 191,236,164 $ 199,173,402 $ 199,247,708 $203,529,892 . Only five years have been presented because 2003 was the year GASB Statement No.34 was implemented. *-Certain amounts have been reclassified to conform with 2007 presentation. III-1 Table 2 CITY OF BANGOR,MAINE Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 2007 Expenses Governmental activities: General government $ 6,060,687 $ 6,487,572 $ 6,435,386 $ 6,947,106 $ 7,052,860 Public safety 11,114,804 12,066,567 12,478,326 12,890,750 13,756,962 Health,welfare and recreation 3,340,989 3,606,827 4,000,249 7,301,546 7,348,875 Public building and services 7,050,085 7,360,360 7,609,989 8,256,266 8,659,473 Other agencies 3,322,395 3,273,003 3,514,658 3,610,935 3,787,970 Education 40,828,756 40,279,055 42,659,395 45,522,795 46,106,647 Unclassified 2,044,069 389,598 65,639 947,025 397,851 Restricted grants* 6,551,455 6,857,039 7,326,307 - - Arena Development - - - - 417,030 Community development* - - - 2,419,594 1,865,026 Streets/Sidewalks* - - - 2,911,131 2,884,655 Waterfront* - - - 990,961 399,015 � Public transportation* - - - 1,798,968 1,841,516 Tax increment financing* - - - 1,092,770 1,101,078 Interest on debt 740,077 3,083,447 3,166,250 3,098,248 3,135,278 Capital maintenance expenses* 1,824,489 2,666,118 1,674,034 - - Total governinental activities expenses 82,877,806 86,069,586 88,930,233 97,788,095 98,754,236 Business-type activities: Sewer Utility 5,744,275 5,751,710 5,859,588 5,818,127 6,353,825 Airport 14,489,128 15,060,963 16,368,681 I 6,947,056 18,645,140 Park Woods 449,873 531,986 598,854 540,207 498,678 , Parking 1,370,737 1,431,983 1,425,508 1,322,138 1,390,863 Bass Park 1,944,718 1,935,653 1,889,215 1,918,111 1,984,042 Municipal Golf Course 575,408 626,739 592,323 647,499 657,809 Economic Development 271,047 338,795 397,881 484,264 692,138 Total business-type activities expenses 24,845,186 25,677,829 27,132,050 27,677,402 30,222,495 Total primary government expenses $ 107,722,992 $ 111,747,415 $ 116,062,283 $ 125,465,497 $ 128,976,731 Only five years have been presented because 2003 was the year GASB Statement No.34 was implemented. *-Amounts previsou]y reported as restricted grants and capital maintenance expenses have been classified into new functions beginning in 2006. III-2 Table 2(con't) CITY OF BANGOR,MAINE Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 2007 Program Revenues Governmental activities: Charges for services General government $ 934,540 $ 1,103,382 $ ],447,058 $ 1,672,854 $ 2,334,040 Public safety 1,446,942 1,923,804 1,908,000 2,47],220 2,182,680 Health,welfare and recreation 647,709 624,778 674,364 756,207 681,583 Public buildings and services 3,043,886 3,537,702 3,766,334 4,076,981 3,871,412 Education 3,742,385 3,857,798 4,549,286 4,561,352 4,408,431 Unclassified 26,830 19,719 20,036 859,682 61,128 Restricted grants 5,392,472 1,368,366 1,079,690 - - Arena Development - - - � - 1,630,360 Community development - - - 672,459 658,141 Public transportation - - - 536,491 659,960 Operating grants and contributions 21,566,478 24,743,028 25,986,614 29,577,430 30,534,706 Capital grants and contributions 3,814,705 2,098,577 4,117,072 3,788,485 2,604,652 Total governmental activities program revenues 40,615,947 39,277,154 43,548,454 48,973,161 49,627,093 Business-type activities: Charges for services Sewer Utility 6,569,790 6,281,870 5,970,615 6,206,605 6,662,482 Airport 9,291,513 11,398,518 11,527,061 12,074,504 ]3,555,003 Park Woods 283,052 279,588 310,389 287,452 297,036 Parking 807,645 892,820 943,990 963,697 983,519 Bass Park 1,362,054 1,253,421 1,238,707 1,460,931 1,436,959 Municipal Golf Course 623,233 595,852 586,956 604,365 635,420 Economic Developmer�t 388,165 316,062 433,694 391,658 1,126,425 Capital grants and contributions 11,274,222 3,376,637 7,749,367 2,581,874 4,316,902 Total business-type activities program revenues 30,599,674 24,394,768 28,760,779 24,571,086 29,013,746 Total primary government program revenues $ 71,215,621 $ 63,671,922 $ 72,309,233 $ 73,544,247 $78,640,839 Only five years have been presented because 2003 was the year GASB Statement No.34 was implemented. III-3 Table 2(con't) CITY OF BANGOR,MAINE Changes in Net Assets Last Ten Fiscal Years (uccrual basis of accounting) Fiscal Year 2003 2004 2005 2006 2007 Net(expense)/revenue Govemmental activities $ (42,261,859) $ (46,�92,432) $ (45,381,779) $ (48,814,934) $(49,127,143) Business-type activities 5,754,488 (1,283,06]) ],628,729 (3,106,316) (1,208,749) Total primary govemment expense (36,507,371) (48,0'75,493) (43,753,050) (51,921,250) (50,335,892) General revenues and other changes in net assets Govemmental activities: Property taxes 37,624,392 39,936,976 40,302,810 40,666,758 41,702,775 Payment in lieu of taxes ]]3,575 135,000 186,500 160,457 145,000 Excise taxes 4,091,505 4,306,055 4,358,409 4,752,852 4,668,614 Franchise taxes 233,874 225,224 265,598 274,986 296,566 Unrestricted grants and conuibutions 4,059,770 4,512,720 4,487,93] 4,773,082 4,968,2i7 Unrestricted investment eamings 377,113 296,857 519,225 699,417 1,183,796 Indirect cost charges 557,165 483,439 472,056 - - Miscellaneous 598,515 131,733 8,353 32,550 260,733 Transfers (798,618) (948,416) (837,806) (861,290) (871,864) Total governmental activities 46,857,291 49,079,588 49,763,076 50,498,812 52,353,837 Business-type activiries: Unreshicted investment earnings 1,097,155 206,665 895,064 635,454 1,392,375 Transfers 798,618 948,416 837,806 8G1,290 871,864 ' Total business-rype activiries 1,895,773 1,155,081 1,732,870 1,496,744 2,264,239 Total primary government 48,753,064 50,234,669 51,495,946 51,995,556 54,618,076 Change in net assets Governmental activities 4,595,432 2,287,156 4,381,297 1,683,878 . 3,226,694 Business-type activities 7,650,261 (127,980) 3,361,599 (1,609,572) 1,055,490 Totalprimarygovemment $ 12,245,693 $ 2,159,176 $ 7,742,896 $ 74,306 $ 4,282,184 Only five years have been presented because 2003 was the year GASB Statement No.34 was implemented. IIl-4 ' Table 3 CITY OF BANGOR,MAINE . Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 2007 Tax Revenues Property taxes $ 37,624,392 $ 39,936,976 $ 40,302,810 $ 40,666,758 $ 41,702,775 Excise taxes 4,091,505 4,306,055 4,358,409 4,752,852 4,668,614 Franchise taxes 233,874 225,224 265,598 274,986 296,566 Total tax revenues $ 41,949,771 $ 44,468,255 $ 44,926,817 $ 45,694,596 $ 46,667,955 Only five years have been presented because 2003 was the year GASB Statement No.34 was implemented. \ IIl-5 Table 4 CITY OF BANGOR,MAINE Fund Balances of Goveromental Funds Last Ten Fiscal Yeacs (modifed accrual basis of accounting) • Fiscal Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 General Fund: Reserved $ 2,428,610 $ 3,388,936 $ 2,907,605 $ 2,314,524 $ 2,204,855 $ 2,692,524 $ 2,571,692 $ 2,571,692 $ 2,188,819 $ 2,366,032 Unreserved 6,603,821 7,777,318 10,868,363 13,022,113 15,412,411 14,575,433 11,184,543 11,184,543 10,828,439 11,438,]14 Total general fund $ 9,032,431 $ 11,166,254 $ 13,775,968 $ 15,336,637 $ 17,617,266 $ 17,267,957 $ 13,756,235 $ 13,756,235 $ 13,017,258 $13;804,146 All ot6er governmental funds: Reserved $ 1,086,210 $ 967,921 $ 969,162 $ 1,143,�38 $ 1,836,653 $ 5,229,243 $ 2,599,271 $ 2,599,271 $ 3,832,469 $ 2,015,620 Unreserved,reported in Special revenue funds � 9,276 (259,601) (315,560) (346,598) 1,029,775 2,080,184 1,997,434 1,997,434 2,215,929 2,663,736 � Capital projects funds 1,524,200 968,763 1,173,695 538,858 4,622,212 (488,844) 4,211,800 4,211,800 925,634 1,735,231 Permanent funds 465,780 555,634 864,739 812,694 539,666 500,558 424,802 424,802 350,222 361,879 Total all other govemmental funds �$, 3,085,466 $ 2,232,717 $ 2,692,036 $ 2,148,692 $ 8,028,306 $ 7,321,141 $ 9,233,307 $ 9,233,307 $ 7,324,254 $ 6,776,466 . III-6 Table 5 CITY OF BANGOR,MAINE � Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 2007 • Revenues: Taxes: Property taxes $ 39,261,141 $ 39,774,952 $ 40,586,129 $ 41,101,785 $ 42,145,912 Excise taxes 4,091,505 4,306,055 4,358,409 4,752,852 4,668,614 Total tax reyenues 43,352,646 44,081,007 44,944,538 45,854,637 46,814,526 Intergovernmental 30,627,927 31,617,135 34,484,238 37,714,682 37,774,922 Licenses and permits 409,842 374,499 655,745 538,534 982,879 Charges for services 10,151,637 1],035,587 12,160,573 12,927,989 12,598,776 Prograrn income 583,569 463,066 409,153 663,269 657,987 Revenue from money and property 1,420,582 1,162,796 1,255,959 2,349,812 3,621,988 Other 1,612,518 142,3ll 168,452 526,360 279,261 Tota]revenues 88,158,721 88,876,401 94,078,658 100,575,283 102,730,339 Expenditures: General govemment 4,223,670 4,619,401 4,732,331 4,642,935 4,736,885 Public safety 11,O18,419 12,001,813 12,352,418 12,852,119 13,476,656 Health,welfare and recreation 3,230,938 3,480,885 3,865,578 4,084,948 4,086,513 Public buildings and services 7,876,895 8,180,067 8,301,848 8,991,673 9,363,365 Other agencies 3,157,861 3,273,003 3,514,658 3,610,935 3,783,720 Education 39,428,576 40,341,426 42,228,691 44,817,879 45,224,974 Unclassified 327,812 389,598 65,639 263,702 597,262 Restricted grants 6,510,909 6,822,298 7,282,380 8,248,872 7,787,297 Capita]ouUay 8,794,651 10,675,201 8,681,772 11,762,832 9,1Q0,357 Debt service Principal 5,730,088 2,232,944 4,110,250 2,748,866 4,237,096 Interest 3,299,332 3,080,468 3,120,028 3,098,248 3,095,434 Other charges 10,028 5,570 37,467 5,070 4,850 Total expenditures 93,609,179 95,102,674 98,293,060 ]05,128,079 ]05,494,409 Deficiency of revenues under expenditures (5,450,458) (6,226,273) (4,214,402) (4,552,796) (2,764,070) Other financing sources/(uses) General obliation debt 4,397,511 5,443,400 2,650,000 4,333,000 3,555,000 Sale of asseu 232,259 131,773 106,895 120,479 320,034 Transfers to other funds (3,663,860) (5,369,448) (3,]31,050) (3,099,137) (3,300,247) Transfers from other funds 2,8G5,242 4,421,032 2,293,244 2,237,847 2,428,383 Total other financing sources 3,831,152 4,626,757 1,919,089 3,592,189 3,003,170 Net change in fund balances $ (1,619,306) $ (1,599,516) $ (2,295,313) $ (960,607) $ 239,100 Debt service as a percentage of noncapital expenditures 11.17% 6.30% 8.27% 6.08% 7.74% Only£ve years have been presented because 2003 was the year GASB Statement No.34 was implemented. III-7 Table 6 CITY OF BANGOR,MAINE Assessed Value and Estimated Actual Value of Taxable Property* Last Ten Fiscal Years Real Properly Total Taxable Total Fiscal Estimated Estimated Personal Assessed Direct Year Residential Commercial Property' Value Tax Rate 1998 735,200,500 475,214,200 176,756,000 1,387,170,700 22.49 1999 746,472,500 473,478,000 188,488,200 1,408,438,700 22.88 2000 782,055,600 485,097,500 208,423,500 1,475,576,600 22.79 2001 815,027,500 499,936,900 222,823,400 1,537,787,800 ' 22.54 2002 841,857,900 504,871,000 241,682,200 � 1,588,411,100 22.78 2003 896,351,100 516,447,000 278,430,400 1,691,228,500 22.52 2004 922,374,500 549,399,100 268,555,600 1,740,329,200 22.27 2005 990,170,000 618,388,000 259,687,300 1,868,245,300 20.97 2006 1,091,628,800 713,822,300 254,225,800 2,059,676,900 19.31 2007 1,178,745,758 785,599,342 259,703,500 2,224,048,600 18.33 * It is Ciry policy to assess at 100%of estimated actual va]ue. � Personal Property consists of machinery and equipment III-8 Table 7 CITY OF BANGOR,MAINE Property Tax Rate-Direct and Overlapping Governments Last Ten Fiscal Years General General Fiscal City Fund Debt Penobscot Total Tax/ Year Government Service Education County (Mill)Rate 1998 9.64 1.28 11.57 0.86 23.35 1999 9.67 1.10 12.11 a.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 9.81 0.73 12.24 0:97 23.75 � 2003 9.51 0.74. 12.27 1.08 23.60 2004 9.26 0.79 12.22 1.08 23.35 2005 8.20 1.18 11.59 1.08 22.05 2006 7.97 1.14 � 10.20 1.09 20.40 2007 7.79 1.18 9.36 1.07 i 9.40 III-9 Table 8 . CITY OF BANGOR,MAINE Principal Property Taxpayers June 30,2007 2007 1998 Assessed %of Total Assessed %of Total Taxpayer Business Value Rank Tax Base Value Rank Tax Base General Electric Manufacturer $ 92,999,700 1 4.18% $ 62,345,200 1 4.49% BANMAK Associates Shopping mall 53,870,800 2 2.42% 39,721,500 2 2.86% Paradign Development LLC Utility 30,822,300 3 1.39% 23,698,600 3 1.71% Eastern Maine Healthcare Medical institution 17,772,600 4 0.80% - - Bangor Savings Bank ' Financial institution 1'7,344,400 5 0.78% - - Inland Western Parkade Shopping mall 15,297,400 6 0.69% - - QV Realty Trust Real estate interests 13,348,500 7 0.60% - - May Deparhnent Stores Retailer 12,166,000 8 0.55% - - Cabrel Company Real estate interests 11,814,700 9 0.53% 9,292,300 7 0.67% Airport Mall Associates Shopping mall 11,534,900 10 0.52% l 1,474,700 6 0.83% Wal Mart Stores Retailer - - 15,450,500 4 ].11% Webber Oil Company Fuel distributor - - 11,862,700 5 0.86% Fleet Bank of Maine Commercial bank - - 7,737,300 8 0.56% Judson Grant Holdings Real estate interests - - 6,913,000 9 0.50°/a Stillwater Realty Trust Real estate interests - - 6,524,500 10 0.47% Totals $276,971,300 12.45% $ 195,020,300 14.06% III- 10 Table 9 CITY OF BANGOR,MAINE Property Tax Levies and Collections Last Ten Fiscal Years ' %of Outstanding Ratio of "/�of Delinquent Total Total Tax Current Year Current Year Fiscal Gross Tax Abate- Net Tax Current Net Levy Tax Tax Collection Delinquent Delinquencies Year Levy ments Levy Collections Collected Collections Collections to Net Levy Taxes to Net Lery 1998 32;600,063 364,524 32,235,539 3Q805,625 95.56% 1,543,779 32,349,404 ]00.35% 1,429,914 4.44"/0 1999 32,611,689 145,123 32,4G6,566 31,084,751 95J4% 1,503,187 32,587,938 100.37% 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% 1,014,446 3.00% 2001 • 35,283,733 258,412 35,025,32] 33,930,930 96.88°/ 1,565,244 35,496,174 10134°/a 7,094,391 3.12% 2002 36,893,245 208,211 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% t,506,817 39,291,873 . ]0135°/a 984,450 2.54°/ 2004 39,866,850 172,868 39,693,982 38,589,047 97.22% 1,154,693 39,743,740 100.13% 1,104,935 2J8% 2005 40,474,184 1G0,117 40,314,0G7 39,206,172 97.25% 1,310,311 40,516,483 100.50% 1,107,895 2.75% 2006 41,099,990 632,397 40,467,593 39,716,755 98.14% 1,327,356 41,044,111 101.42% 750,838 1.86% 2007 41,990,985 269,63G 41,721,349 4'0,819,923 97.84% 1,271,969 42,091,892 100.89°/a 901,426 2.16% III- 1] Table 10 CITY OF BANGOR,MAINE � Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-Type Activities General Generat Total Fiscal Obligation Capital Obligation Revenue Primary Per Year Bonds Leases Bonds Bonds Government Capita* 1998 $ 22,188,559 287,274 39,206,893 5,160,000 66,842,726 2,146.94 1999 $ 21,254,395 352,735 41,636,421 4,940,000 68,183,551 2,214.97 2000 $ 21,909,832 293,503 38,018,202 4,710,000 64;931,537 2,073.76 2001 $ 22,806,350 223,910 37,931,078 4,465,000 65,426,338 2,078.81 2002 $ 59,135,992 150,353 42,386,491 4,205,000 105,877,836 3,351.09 2003 $ 57,669,023 326,159 47,854,061 - 105,849,243 3,355.93 2004 $ 60,879,479 3,491 47,994,390 - 108,877,360 3,450.95 2005 $ 59,419,229 - 46,774,080 - 106,193,309 3,361.08 2006 $ 61,003,363 - 45,781,229 - 106,784,592 3,436.46 2007 $ 60,321,264, - 43,809,953 - 104,131,217 3,358.20 * Source:Maine Department of Human Services,Maine State Plannng Office and City of Bangor (1998 through 2000)and U.S.Census Bureau(2001 through 2007). III- 1 Z 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 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 2004 31,550 1,740,329,200 69,638,974 4.00% 2,207.26 2005 31,595 1,868,245,300 65,988,998 3.53% 2,088.59 2006 31,074 2,059,676,900 66,990,510 3.25% 2,155.84 2007 31,008 2,224,048,600 65,725,523 2.96% 2,119.63 * Source:Maine Department of Human Services,Maine State Planning Office and City of Bangor (1998 through 2000)and U.S.Census Bureau(2001 through 2007). ** Net Bonded General Obligation Debt Consists of all non-self supporting genera]obligation debt,and excludes all Sewer Utility debt of$25,328,279,Airport debt of$8,028,028,Golf Course debt of$660,992 and Economic Development debt of$4,388,395. IlI- 13 Table 12 CITY OF BANGOR,MAINE Computation of Direct and Overlapping Debt June 30, 2007 Percentage Amount Total Debt Applicable Applicable Outstanding to Bangor to Bangor Direct Debt City of Bangor Gerieral Obligation.Bonds $ 104,131,217 100.00% $ 104,131,217 Overlapping Debt Penobscot County - 0.00% - United Technology Center - 0.00% - Total Debt $ 104,131,217 $ 104,131,217 1 III - 14 Table 13 CITY OF BANGOR,MAINE Legal Debt Margin Information Last Ten Fiscal Years Total Net Debt Legal Percentage of Fiscal Debt Applicable to Debt Net Debt to Year Limit Limit Margin Debt Limit 1998 $ 208,852;500 61,395,452 147,457,048 29.40% 1999 $ 212,692,500 62,890,816 149,801,684 29.57% 2000 $ 215,017,500 59,928,034 155,089,466 27.87% 2001 $ 225,630,000 64,737,428 160,892,572 28.69% 2002 $ 240,937,500 101,522,483 139,415,017 42.14% � 2003 $ 241,387,500 105,523,084 135,864,416 43.72%' 2004 $ 261,240,000 108,873,869 152,366,131 41.68% 2005 $ 279,202,500 106,193,307 173,009,193 38.03% 2006 $ 309,495,000 106,784,592 202,710,408 34.50% 2007 $ 332,092,500 104,131,217 227,961,283 31.36% Legal Debt Margin Calculation for Fiscal Year 2007 Total State Valuation $2,213,950,000 Debt Limitation: 15 % of State Valuation 332,092,500 Debt Applicable to Debt Limitation: General Obligation Bonds: Municipal 68,192,676 School 10,610,261 Sewer 25,328,280 Total debt applicable to limit 104,131,217 Legal Debt margin $ 227,961,283 III - 15 Table 14 CITY OF BANGOR,MAINE Demographic and Economic Statistics Last Ten Fiscal Years Median Public Unemploy- Fiscal Household Median School ment Year Population * Income* Age* Enrollment** Rate*** 1998 31,134 Data not Data not 4,377 3.60% available available 1999 30,783 Data not Data not 4,410 2.99% available available 2000 31,311 � Data not Data not 4,281 2.85% available available 2001 31,473 Data not Data not 4,316 3.01% available available 2002 31,5.95 29,740 36.1 4,205 3.12% 2003 31,541 29,740 36.1 4,019 3.40% 2004 31,550 29,740 36.1 4,006 4.30% 2005 31,595 29,740 36.1 3,989 4.50% 2006 31,074 29,740 36.1 3,962 4.40% 2007 31,008 29,740 36.1 3,913 4.40% * Source: U.S. Census ** Source: Bangor Scliool Department *** Source: Bureau of Labor Statistics III - 16 � Table 15 CITY OF BANGOR,MAINE , Principal Employers June 30, 2007 2007 1998 Employees Employer Location Employees Employer Location 1000-4000 Eastern Maine Medical Center Bangor 1000-4000 Eastern Maine Medical Center Bangor Bangor Mall Bangor Bangor Mall Bangor University of Maine Orono University of Maine Orono City of Bangor Bangor City of Bangor Bangor Hannaford Supermarkets Throughout 500-999 Fort James Paper Corp Old Town 500-999 Bangor Savings Bank Bangor St. Joseph Hospital Bangor General Electric Corp Bangor Community Health/Counseling Bangor Microdyne Orono Shop& Save Supermarkets Throughout Acadia Hospital Bangor 250-499 Webber Energy Co Bangor St. Joseph Hospital Bangor Eastern Fine Paper Brewer III - 17 Table 16 CITY OF BANGOR,MAINE Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years Full-time Equivalent Employees as of June 30th 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Function General government 87 86 90 92 93 91 90 87 88 94 Public safety Police 79 81 79 85 86 89 86 87 89 90 . Fire 94 98 98 97 95 95 97 96 . 97 94 Health, welfare and recreation 76 71 78 33 34 33 31 31 32 39 Public building and services 69 66 62 63 66 68 67 64 68 71 � Education 571 568 580 583 574 574 561 571 573 562 Sewer Utility 24 24 24 23 23 23 23 23 23 23 Airport 75 73 75 76 82 72 73 75 76 81 Park Woods 3 3 3 3 3 3 3 3 3 3 . Parking 3 3 1 1 2 2 2 2 � 2 2 Bass Park 9 9 10 10 9 9 8 9 9 9 Municipal Golf Course 3 3 3 3 3 3 3 3 3 9 Economic Development 2 2 2 2 3 2 3 3 3 3 Totals 1,095 1,087 1,105 1,071 1,073 1,064 1,047 1,054 1,066 1,080 III- 18 Table 17 CITY OF BANGOR,MAINE Operating Indicators by Function - Last Ten Calendar Years Calendar Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Function Code enforcement Building permits Unavailable 565 509 494 471 474 522 514 537 550 Certificates of occupancy Unavailable 476 388 354 295 358 342 341 432 446 Sign permits Unavailable 126 120 129 85 96 98 ]07 115 116 ' Police � Callsforservice Unavailable Unavailable Unavailable Unavailable Unavailable 22,213 24,407 23,945 27,052 28,157 Fire " Calls for service iJnavailable Unavailable Unavailable Unavailable Unavailable 7,528 7,470 7,805 7,492 7,992 Sewer Treated flow(billions of gallons) 2.65 2.95 3.02 3.04 2.63 3.14 3.42 2.75 4.23 3.62 Biosolids(cubic yards) 8,594 9,184 8,519 8,272 8,683 8,308 9,379 9,280 9,348 9,775 III-19 Table 18 CITY OF BANGOR,MAINE ' Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year i 2003 2004 2005 . 2006 2007 ' Function Public safety Police: Stations . 1 1 1 ] 1 Vehicles 42 56 57 51 52 Fire: Stations 3 3 3 3 3 Vehicles 25 20 20 24 27 Public works Streets(miles) 422 422 422 422 422 Sidewalks(miles) 99.6 99.6 99.6 99.6 99.6 Parks and recreation Parks 29 29 29 29 29 Parks acreage 950 950 950 950 950 Public swimming pools 1 2 2 2 2 Public golf courses 1.5 1.5 1.5 ].5 l.5 Indoor ice arena l 1 1 1 1 Semi-pro baseball stadium 1 1 I 1 1 Sewer Treahnent plants 1 1 1 ] 1 Pump stations 5 5 5 5 5 Miles of sanitary sewers 103 103 103 ]03 103 Miles of combined sewers 44 44 44 44 44 Only five years have been presented because 2003 was the year GASB Statement No. 34 was implemented. III-20