HomeMy WebLinkAbout2012CAFRCITY OF SEWARD
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Fiscal Year
Ended December 31, 2012
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
of the
CITY OF SEWARD, ALASKA
For the Fiscal Year Ended
December 31, 2012
David Seaward
MAYOR
Jim Hunt
CITY MANAGER
Prepared by the Finance Department
Kristin M. Erchinger, CGFM, MPA
FINANCE DIRECTOR
INTRODUCTORY
SECTION
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents
I
Exhibit Page
PART I - INTRODUCTORY SECTION
Table of Contents I -VI
Letter of Transmittal VII -XIII
Certificate of Achievement for Excellence in Financial Reporting XIV
List of Principal Officials XV
Seward Citizens — Organizational Chart XVI
PART II - FINANCIAL SECTION
Independent Auditor's Report 1 -4
Management's Discussion and Analysis 5 -16
Basic Financial Statements
Government -wide Financial Statements:
Statement of Net Position A -1 18
Statement of Activities A -2 19
Fund Financial Statements:
Governmental Funds:
Balance Sheet B -1 20
Reconciliation of Governmental Funds Balance
Sheet to Statement of Net Position B -2 21
Statement of Revenues, Expenditures and Change in
Fund Balances B -3 22
Reconciliation of the Changes in Fund Balances of
Governmental Funds to Statement of Activities B -4 23
Statement of Revenues, Expenditures and Change in Fund
Balance - Budget and Actual - General Fund B -5 24
Proprietary Funds:
Statement of Net Position C -1 25
Statement of Revenues, Expenses and Change in
Net Position C -2 26
Statement of Cash Flows C -3 27 -28
Statement of Fiduciary Net Position D -1 29
Notes to Basic Financial Statements 31 -58
I
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents, continued
Internal Service Funds
Combining Statement of Net Position
Exhibit Page
PART II - FINANCIAL SECTION, continued
Supplementary Information
G -2 67
Nonmajor Governmental Funds:
G -3 68
Combining Balance Sheet E -1 60
Combining Statement of Revenues, Expenditures and
H -1 70 -71
Change in Fund Balances E -2 61
Nonmajor Enterprise Funds:
H -2 72 -79
Combining Statement of Net Position F -1 62
Combining Statement of Revenues, Expenses and
I -1 81
Change in Net Position F -2 63
Combining Statement of Cash Flows F -3 64 -65
Internal Service Funds
Combining Statement of Net Position G -1 66
Combining Statement of Revenues, Expenses and
Change in Net Position G -2 67
Combining Statement of Cash Flows G -3 68
General Fund:
Balance Sheet H -1 70 -71
Schedule of Revenues, Expenditures and
Change in Fund Balance — Budget and Actual H -2 72 -79
Nonmajor Special Revenue Funds:
Combining Balance Sheet I -1 81
Combining Statement of Revenues, Expenditures and
Change in Fund Balances (Deficit) I -2 82
Nonmajor Capital Project Funds:
Combining Balance Sheet J -1 84
Combining Statement of Revenues, Expenditures and
Change in Fund Balances (Deficits) J -2 85
II
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents, continued
Water
Statement of Net Position K -7 95
Statement of Revenues, Expenses and Change in Net Position K -8 96
Statement of Cash Flows K -9 97
Schedule of Composition of Net Position K -10 98
Wastewater
Statement of Net Position K -11 99
Statement of Revenues, Expenses and Change in Net Position K -12 100
Statement of Cash Flows K -13 101
Schedule of Composition of Net Position K -14 102
Harbor
Statement of Net Position
Exhibit Page
PART II - FINANCIAL SECTION, continued
K -16 104
Supplementary Information, continued
K -17 105
Enterprise Funds:
K -18 106
Electric:
K -19 107
Statement of Net Position K -1 88 -89
Statement of Revenues, Expenses and Change in Net Position K -2 90
Statement of Cash Flows K -3 91
Schedule of Operating Expenses K -4 92
Schedule of Composition of Net Position K -5 93
Schedule of Electric Capital Projects K -6 94
Water
Statement of Net Position K -7 95
Statement of Revenues, Expenses and Change in Net Position K -8 96
Statement of Cash Flows K -9 97
Schedule of Composition of Net Position K -10 98
Wastewater
Statement of Net Position K -11 99
Statement of Revenues, Expenses and Change in Net Position K -12 100
Statement of Cash Flows K -13 101
Schedule of Composition of Net Position K -14 102
Harbor
Statement of Net Position K -15 103
Statement of Revenues, Expenses and Change in Net Position K -16 104
Statement of Cash Flows K -17 105
Schedule of Composition of Net Position K -18 106
Schedule of Harbor Capital Projects K -19 107
Seward Marine Industrial Center
Statement of Net Position K -20 108
Statement of Revenues, Expenses and Change in Net Position K -21 109
Statement of Cash Flows K -22 110
Schedule of Composition of Net Position K -23 111
III
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents, continued
Capital Assets
Schedule of Governmental Capital Assets N -1 128
Schedule of Changes in Governmental Capital Assets N -2 129
Schedule of Governmental Capital Assets by Function and Activity N -3 130
Schedule of Changes in Governmental Capital Assets by Function
and Activity N -4 131
Schedule of Expenditures of Federal Awards 0-1 132 -133
Schedule of State Financial Assistance P -1 134
Note to the Schedules of Expenditures of Federal Awards and
State Financial Assistance 135
IV
Exhibit Page
PART II - FINANCIAL SECTION, continued
Supplementary Information, continued
Enterprise Funds, continued:
Parking:
Statement of Net Position K -24 112
Statement of Revenues, Expenses and Change in Net Position K -25 113
Statement of Cash Flows K -26 114
Schedule of Composition of Net Position K -27 115
Providence Seward Medical & Care Center:
Statement of Net Position K -28 116
Statement of Revenues, Expenses and Change in Net Position K -29 117
Statement of Cash Flows K -30 118
Internal Service Funds:
Motor Pool:
Statement of Net Position L -1 120
Statement of Revenues, Expenses and Change in Net Position L -2 121
Statement of Cash Flows L -3 122
Schedule of Composition of Net Position L -4 123
Compensated Annual Leave:
Statement of Net Position L -5 124
Statement of Revenues, Expenses and Change in Net Position L -6 125
Statement of Cash Flows L -7 126
Teen Council Agency Fund -
Statement of Changes in Assets and Liabilities M -1 127
Capital Assets
Schedule of Governmental Capital Assets N -1 128
Schedule of Changes in Governmental Capital Assets N -2 129
Schedule of Governmental Capital Assets by Function and Activity N -3 130
Schedule of Changes in Governmental Capital Assets by Function
and Activity N -4 131
Schedule of Expenditures of Federal Awards 0-1 132 -133
Schedule of State Financial Assistance P -1 134
Note to the Schedules of Expenditures of Federal Awards and
State Financial Assistance 135
IV
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents, continued
Page
PART III — STATISTICAL SECTION
Table 1 Net Assets /Position by Component 138
Table 2 Changes in Net Assets/Net Position 139 -140
Table 3 Fund Balances of Governmental Funds 141
Table 4 Changes in Fund Balances of Governmental Funds 142
Table 5 General Fund Revenues by Source 143
Table 6 General Fund Tan Revenues by Source 144
Table 7 Property Tax Rates 145
Table 8 Property Tax Levies and Collections 146
Table 9 Assessed and Estimated Actual Value of Taxable Property 147
Table 10 Principal Property Taxpayers 148
Table 11 Principal Taxable Sales by Line of Business 149
Table 12 Ratios of Outstanding Debt by Type 150
Table 13 Ratio of Net General Obligation Bonded Debt to Assessed Value
and Net General Obligation Bonded Debt per Capita 151
Table 14 Computation of Direct and Overlapping Bonded Debt 152
Table 15 Legal Debt Margin 153
Table 16 Ratio of Annual Debt Service Expenditures for General
Obligation Debt to Total General Fund Expenditures 154
Table 17 Revenue Bond Coverage — Electric Enterprise Fund 155
Table 18 Revenue Bond Coverage — Harbor Enterprise Fund 156
Table 19 Demographic and Economic Statistics 157
Table 20 Principal Employers 158
Table 21 Full -Time Equivalent Employees by Fund 159
Table 22 Operating Indicators by Function 160
Table 23 Capital Asset Statistics By Function 161
Table 24 Property Value, Construction, and Bank Deposits 162
Table 25 Miscellaneous Statistics 163
V
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents, continued
Page
PART IV - SINGLE AUDIT SECTION
Independent Auditor's Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards 165 -166
Independent Auditor's Report on Compliance For Each Major
Federal Program and Report on Internal Control Over Compliance
as Required by OMB Circular A -133 167 -168
Independent Auditor's Report on Compliance For Each Major
State Program and Report on Internal Control Over Compliance
as Required by the State of Alaska Audit Guide and Compliance
Supplement for State Single Audits 169 -170
Schedule of Findings and Questioned Costs
Summary Schedule of Prior Audit Findings
Corrective Action Plan
VI
171 -172
173
174
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4ASKP
June 12, 2013
Honorable Members of the Seward City Council
Citizens of the city of Seward:
The City of Seward (City) Comprehensive Annual Financial Report (CAFR) for the year ended December
31, 2012 is hereby submitted in accordance with Alaska Statutes 29.35.120 and the Seward City Code. This
report satisfies the requirement that the City issues an annual report on its financial position and activities, and
that the report is audited by an independent firm of certified public accountants.
The CAFR is presented in three sections; Introduction, Financial, and Statistical, as follows:
The Introduction Section is unaudited and includes this letter of transmittal, a Certificate of Achievement for
Excellence in Financial Reporting for the City of Seward's 2011 CAFR, an organization chart, and a list of
principal officials.
The Financial Section includes the auditor's report, Management's Discussion and Analysis (MD &A), the
financial statements; which include government -wide financial statements and fund financial statements with
comparative budgetary information, notes to the financial statements, required supplementary information, and
combining and individual statements and schedules, as applicable, arranged according to fund type.
The Statistical Section is unaudited and includes a broad range of information including historical trends over
a ten -year period, demographic information, and other non - financial information.
Management is responsible to ensure the accuracy, completeness, and fairness of the presentation of this
information, including all disclosures. To provide a reasonable basis for making these representations,
management has established a comprehensive framework of internal controls which is designed to protect the
government's assets from loss, theft, or misuse, and to provide sufficiently reliable information upon which to
prepare the City's financial statements in accordance with GAAP. Because the cost of internal controls should
not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to
provide reasonable rather than absolute assurance that the financial statements will be free from material
misstatement. As management, we assert that, to the best of our knowledge, this financial report is complete
and reliable in all material respects.
The City's financial statements have been audited by Mikunda, Cottrell & Co., Inc., an independent auditing
firm of certified public accountants. The goal of the independent audit is to provide reasonable assurance that
the financial statements of the City 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 the significant estimates made by management; and evaluating the
overall presentation of the financial statements. The independent auditor concluded, based on the audit, that
there was a reasonable basis for rendering an unqualified opinion that the City's financial statements for the
fiscal year ended December 31, 2012, are fairly presented in conformity with GAAP. The independent
auditor's report is presented in the financial section of this report.
As a recipient of federal grant funds, the City is required to undergo an audit in accordance with the provisions
of the U.S. Office of Management and Budget's (OMB) Circular A -133, Audits of States, Local
Governments, and Non - Profit Organizations and associated Compliance Supplement. A schedule of
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expenditures of federal awards, the independent auditor's report on internal controls and compliance with
applicable laws and regulations, and a schedule of findings and questions costs (if any) are prepared as part of
the audit in accordance with OMB Circular A -133.
As a recipient of state grant funds, the City is also required to undergo an audit in accordance with the
provisions of Alaska State Regulation 2 AAC 45.010 and Audit Guide and Compliance Supplement for State
Single Audits. A state financial assistance schedule, the independent auditor's reports on internal controls and
compliance with applicable laws and regulations, and a schedule of findings and questioned costs (if any) are
prepared as part of the audit in accordance with the State of Alaska Audit Guide and Compliance Supplement
for State Single Audits.
The independent audit of the financial statements of the City was part of a broader, federally mandated "Single
Audit" designed to meet the special needs of federal and state granting agencies. The standards governing
Single Audit engagements require the auditor to report not only on the fair presentation of the financial
statements, but also on internal controls and compliance with certain legal requirements, with special emphasis
on internal controls and legal requirements involving the administration of federal and state awards. These
findings are presented in the Single Audit Section of this report.
Generally accepted accounting principles require management to provide a narrative introduction, overview,
and analysis to accompany the basic financial statements, in the form of a Management's Discussion and
Analysis. This letter of transmittal is designed to complement the MD &A and should be read in conjunction
with it. The City's MD &A can be found immediately following the report of the independent auditors.
Profile of the City of Seward
The City was incorporated on June 1, 1912, and became a first class City under Alaska Statute's home rule
provisions (AS 29.04.010) upon adoption of the City Charter by a referendum vote on January 5, 1960. The
community is located on the eastern side of the Kenai Peninsula in Southcentral Alaska, 125 highway miles
south of Anchorage. Year -round access is available by road, rail, water and two small- aircraft runways. The
City has an area of 22 square miles and a population of 2,733. The form of government established by the
Charter is the Council- Manager plan. The Council exercises legislative power and determines all matters of
policy for the City. The Council is composed of a Mayor and six council members who are elected at -large on
a non - partisan basis. Council members and the Mayor each serve a term of two years.
The City Manager is the administrative head of the City government, is appointed by the Council, and is
responsible to the Council for the proper handling of all City affairs. The City Clerk is also appointed by the
Council. The Clerk's primary responsibilities involve the safekeeping of public records and the administration
of City elections. The City Attorney is appointed by the Council. All other officers and employees of the City
are appointed by the City Manager. Appointments to the following positions are made by the City Manager
with approval of the Council: Manager of Electric Utility; Chief of Police; Finance Director; and Fire Chief.
The City is empowered to levy a property tax on both real and personal property located with its boundaries.
The property tax is an ad valorem tax. Funding for the General Fund, by order of significance, is provided by
sales tax, payments in lieu of tax assessed to enterprise funds of the City, intergovernmental revenues,
property tax, recreation and camping fees, hotel/motel tax, land rents and leases, and other revenues. The City
provides the following services to its citizens: police, motor vehicle testing and licensing, jail, animal control,
building inspection, fire, public works, community development, library, parks and recreation, electric, water,
wastewater, port and harbor, library, healthcare services, road maintenance, and general administrative
services. The City is financially responsible for a hospital and long -term care facility which began to be
reported as an enterprise fund within the City's financial statements beginning in 2011, and which were
previously reported as a discreetly presented component unit and two distinct debt service funds.
VIII
Budgetary Control
The City's budget serves as the foundation for financial planning and control. The City Council adopts a
biennial budget which represents a two -year period of time. Adjustments to the budget are made periodically
throughout the year, as authorized by the City Council, and in the off - budget year, a review is conducted and
modifications are recommended to the City Council. All departments submit budget requests to the City
Manager on or before September 1 every odd - numbered year. The City Manager utilizes these requests to
formulate a proposed budget and submits the proposed budget to the City Council at the first regular meeting
in October. The Council holds public hearings on the proposed budget and generally adopts the budget at the
last meeting in November. The City Manager is authorized to make transfers between departments and line
items within a Fund for amounts up to $50,000. Council action is required for transfers between funds, for all
single -item purchases exceeding $50,000 (and all purchases of new motor vehicles regardless of cost), and for
all new appropriations. Budget -to- actual comparisons are provided in this report for the General Fund.
Factors Affecting Financial Condition
Economy
Seward's economy is recovering from a downturn that began during the worldwide economic recession of
2009. Prior to that time, Seward's economy experienced slow, steady economic growth of approximately 6%
per year over the previous ten years, as evidenced by growth in tax revenues fueled largely by tourism. In
2009, in conjunction with the economic downturn, visitor numbers to Seward declined, resulting in a
significant drop in room occupancy, charter and tour boat passengers, campers, and taxable sales. The
reduction in visitors had an adverse impact on local businesses; especially those involved in the visitor- related
industry, and between 2008 and 2009, sales tax revenues declined 13.3 %, hotel/motel tax declined 21.2 %, and
passenger fees declined 23.4 %. In the past three years, sales tax revenues have risen above pre- recession
levels, increasing 16.9% between 2009 and 2012. Hotel/motel tax has reached its highest -ever levels, rising
33% in the past three years. Passenger levels are up a modest 9.5% since 2009, but are still 20% lower than
they were in the highest year of 2007, when there were 197,600 passengers embarking on local tour boats and
fishing charters. The number of passengers in 2012 was 157,458. Sales tax revenues increased by a modest
42,320 or 1.02% in 2012, while taxable sales in Seward showed the strongest growth in taxable sales in the
Kenai Peninsula Borough, of 4.52 %. The difference between taxable sales and sales tax revenue is a matter of
timing and adjustments. In 2011, Seward also had the strongest growth in taxable sales in the Borough, at
6.84 %. This reflects improvement in the local economy. However, the fluctuating costs of gasoline may
continue to put pressure on visitor numbers to Alaska. Overall, real estate values in Alaska have been stable,
with Seward seeing an overall increase in property values, resulting in a rise in property tax revenues of 1.3%
from 2011 to 2012.
The City's top ten property taxpayers have become more diverse over the past few years, but still lean toward
an over - dependence on tourism- related businesses and the visitor industry. The top -ten taxpayers group
represents various industries including retail sales, seafood processing, petroleum products, hotel/motel,
communications, marine, and tourism, and accounts for approximately 23% of all taxable property in the
community. With the bulk of these entities being visitor- related, the City is vulnerable to changes that affect
the tourism industry, since sales tax and property tax are two of the community's top revenue sources, and
combined, account for nearly 50% of all General Fund revenue. Seward's top ten sales tax lines of business
show that the bulk of sales taxes are generated from retail trade, followed by water guides, food service,
accommodations, public administration, wholesale trade, and others.
The State no longer provides data regarding the size of employers, in accord with changes to State statute.
Therefore, the City does not have precise data regarding the size of its largest employers. Seward's largest
employers however, continue to reflect significant government presence, with more than half of the top ten
employers being government or non -profit entities, including the state -owned prison and vocational technical
center, the City, the Borough school district, and three non - profits. Providence Seward Medical and Care
Center (the hospital and long -term -care facility) and Alaska Sealife Center are City -owned facilities run on the
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City's behalf by non - profit organizations, and they round out the list of top employers. The largest private
sector employers include Safeway, CIRI Alaska tourism, the Breeze Inn, and Ray's Waterfront.
Long Term financial planning
In the off - budget year, the City focuses attention on longer -term financial planning. In 2012, the focus was on
improving the Capital Improvement Plan by more accurately identifying the costs of replacing critical -risk,
high -risk, and moderate risk deteriorating capital infrastructure in the enterprise funds. This follows the 2011
rate reviews of the City's Harbor, Electric, Water and Wastewater enterprise funds. The result of this process
was a more refined five -year plan for each enterprise fund, which listed the critical risk (likely to fail in the
next five years), high risk (likely to fail within the next 5 -10 years), and moderate risk (continuously increasing
cost to operate and maintain) infrastructure needs, and potential funding strategies to meet those needs. To
address the replacement of infrastructure, enterprise funds have raised rates in each of the past two years.
Combined with automatic tariff increases based on rises in the consumer price index, the City is making
important progress in the area of enterprise fund financial improvement.
The focus on long -term financial planning has assisted the City in the short -term, by addressing budget
policies which were not being met, such as increasing General Fund reserves, adequate depreciation funding in
the enterprise funds, allotting one -time revenues for capital infrastructure needs, etc. In 2012, the General
Fund's reserve levels have increased to more than 4 months, reversing a trend of declining reserves, three of
the enterprise funds have contributed increasing levels of funding to capital infrastructure replacement, and
one -time revenues for project management fees were allotted to capital acquisitions.
The next phase of long -term financial planning proposes will focus on strengthening the City's financial
condition by addressing areas of structural weakness in the City's financial health which have been influenced
by the lagging economy, rising healthcare costs, significant rise in costs of fuel and utilities, ailing enterprise
operations and infrastructure, and changes in healthcare reimbursement models. This phase will improve on
the financial forecast completed in 2010, which highlighted the importance of planning to meet pending
challenges to the City's financial condition in order to provide sufficient time for course correction.
Financial Condition
The City has struggled for a number of years to bring its General Fund undesignated fund balance to a level
that meets its own policy of between three and six months' reserves available in the undesignated fund balance
account. As a result of implementing GASB Statement No. 54, Fund Balance Reporting and Governmental
Fund Type Definitions, this policy will now focus on unassigned fund balance to meet this goal, as the term
undesignated fund balance is no longer utilized.
The City's unassigned fund balance rose in 2012 by $1,316,454, to $4,827,055, representing 4.6 months'
reserves, up from 3.2 months' at the end of 2011. This is the highest level of General Fund reserves in at least
two decades. The increase in reserves is largely due to $2.0 million in one -time EXXON Valdez oil spill
settlement payments in 2009 and 2010, as well as a transfer of the remaining SGH PERS liability out of the
General Fund to the PSMCC Enterprise Fund in 2012, of $1,312,335. This brings the City's reserve levels in
the General Fund to within the mid -range of three to six months' expenditures and transfers -out (the policy
band is between $3.1 million and $6.2 million based on 2012 Actuals) and provides some flexibility to the City
in terms of meeting unexpected needs and emergencies. There is significant unmet need however, for capital
repairs and replacement to address local roads and sidewalks, erosion issues, parks and recreation warehouse,
replacement of the City Shop, as well as cost sharing required to repay the Army Corps of Engineers loan for
dredging, and to match grants to expand the Seward Marine Industrial Center to encourage economic
expansion. In addition, the City's reserve levels are needed to mitigate potential health system financial
shortfalls, migration of the local clinic to a federally qualified Community Health Center, Alaska Sealife
Center funding uncertainty, enterprise fund critical needs, unforeseen emergencies and natural disasters and
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other similar risks. Any of these risks can have a significant adverse impact on the City's financial condition,
enhancing the need for a healthy level of unassigned reserves.
In recent years, municipal governments in Alaska experienced a significant decline in State financial
assistance. In the past five years however, the State legislature has provided revenue sharing funds and
assistance in the form of funding a portion of retirement system liabilities. This has mitigated the need to
reduce services or increase property taxes to cover the shortfall. The general strength of Seward's retail sales
has enabled the City to absorb State funding reductions, but revenue sharing remains the City's only identified
source of funding governmental infrastructure and capital needs. The City's continued dependence on state
and federal funding for major repairs and replacement of infrastructure assets is not sustainable in the long-
term. In addition, any change in the State's current policy of funding retirement system rates above 22% could
have a materially adverse financial impact on the City. For example, if the City had been required to pay the
full actuarially required contribution rate of 33.49% to the pension plan, instead of only 22 %, the additional
cost to the City in 2012 would have been $625,512. This is the additional amount that the State of Alaska
paid to the defined benefits pension plan on the City's behalf in 2012, for all of the City's funds, and is the
equivalent of a 0.6% increase in the City's sales tax rate, or an approximately 2.0 mill property tax increase.
The City's enterprise funds recently underwent a thorough assessment of capital infrastructure condition and
classified and prioritized the most critical, high -risk, and moderate -risk repair and replacement needs. Rates
were increased in most enterprise funds to begin addressing infrastructure. However, taxpayer rate fatigue,
combined with years of failing to pass along cost increases to ratepayers, now places the enterprise funds in a
position of having costly critical repair needs, with insufficient resources to meet those needs. With reductions
in state and federal grant opportunities, it will be more and more difficult for enterprise funds to mitigate risks
to their financial condition. Recent rate increases will help enterprise funds from falling further behind, but are
still expected to fall short of the level necessary to finance replacement of existing deteriorated assets and
infrastructure. In the future, it is hoped that smaller incremental rate increases will cause less "rate shock" to
ratepayers, as enterprise fund tariffs have been modified to raise rates annually based on the Anchorage
consumer price index.
Major Projects
The City has a number of major capital projects in the works. The following represents the largest of the
projects: 1) the City recently completed construction of a $10 million replacement library /museum building,
which has been paid for with a combination of State grant funds, foundation and private fundraising, and
3.48 million in local general obligation bonds; 2) the electric generator replacement project is being
completed in phases. Two aging electric generators were replaced into the newly constructed generator
building, and a new warehouse will be constructed in the coming year. These improvements will update and
automate the electric generators, resulting in more reliable electric generation capability when the community
is cut off from purchased power; 3) two separate grants from the State of Alaska have provided $20 million in
funding to begin a major economic development and expansion project at the Seward Marine Industrial Center
SMIC) to construct a new breakwater and eventually install new docks and floats capable of mooring
commercial fishing and transportation vessels. The initial expansion efforts are aimed at home- porting the
Coastal Villages Region Fund fishing fleet in Alaska, and encouraging expansion of transportation and
shipping opportunities through Seward's port; 4) the relocation of the Coast Guard building is complete and
will free up prime real estate space in the boat harbor; 5) upland improvements associated with construction of
the new security float in the northeast harbor area continue, and the parking lots will be improved in the near
future; 6) the fish ditch at Scheffler Creek has been upgraded to enhance habitat for salmon and to improve
visitor amenities in the area; 7) new mooring dolphins at the Seward Marine Center are installed and will serve
the new arctic research vessel Sikuliaq, which is soon to be homeported in Seward; 8) the hospital is taking
advantage of capital funds from the City to install a new CT scanner and to replace sidewalks adjacent to the
clinic to facilitate improved drainage and heating of the sidewalks; 9) additional automated paid parking
stations have been added to the harbor parking lots creating staffing efficiencies equivalent to at least a one
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FTE reduction in the parking enterprise fund. The success of paid parking stations has resulted in the parks
and recreation department considering expansion of a modified system for use in the City's campgrounds, and
a new station will be installed at the sewer dump station in the campgrounds in the coming summer; 10) the
Seward Community Health Center (CHC) board has applied for funding as a federally qualified health center
which would improve access and affordability of healthcare in Seward, and if funding is achieved, the City -
owned clinic operations would migrate from operation by Providence Seward Medical & Care Center, to the
Seward CHC board in the coming year; 11) construction of a new 500- gallon water storage tank is pending, as
is refurbishment on two existing tanks; and 12) work is progressing on a new vessel washdown and
wastewater recycling facility at the Seward Marine Industrial Center.
Cash Management Policies and Practices
The investment and collateralization of City funds is governed by Section 5.15 of the Seward City Code. The
ordinance clearly identifies safety as the primary concern in the selection and management of the City's
investments. The Seward City Code authorizes investment in obligations of the U.S. Treasury, its agencies
and instrumentalities, repurchase agreements, fully collateralized certificates of deposit, high rated commercial
paper, bankers' acceptances, and the Alaska Municipal League Investment Pool. The City combines all cash
into a Central Treasury, facilitating the investment of combined funds to maximize investment earnings.
Earnings on these investments are allocated monthly to participating funds based on ending cash balances.
The City Code places limitations on maturity of investments and investment guidelines are contained in an
investment policy established by the finance director and approved by the city manager.
Risk Management
The City is a member of the Alaska Municipal League Joint Insurance Association (JIA), a government
insurance pool established by the Alaska Municipal League. The JIA provides the City's insurance coverage
for property, general liability, public officials and employees' liability, law enforcement professional liability,
and workers' compensation. The City also maintains special marine insurance coverage and boiler and
machinery insurance coverage with other insurance companies. This specialized insurance is placed through
JIA. The JIA provides loss control services and conducts periodic inspections to ensure safe operations. The
City maintains a safety committee charged with reviewing and recommending safety policies and procedures
for all departments. The City Council designates a portion of the General Fund reserves to meet potential
insurance- related losses, and to support higher deductibles to minimize insurance premiums.
Pension and Other Post - employment Benefits
The City provides pension benefits for all eligible employees through the State of Alaska Public Employees
Retirement System (PERS). This system consists of four defined benefit (DB) Tiers, and one defined
contribution (DC) Tier. The City has no obligations in connection with employee benefits offered through
these plans beyond its annual required payments to the plans. The City has always paid its annual required
contribution rates on time. The City anticipates near -term annual contribution rates to be capped at 22% of
covered payroll for both the DB and DC Plans, based on State statutes requiring the State of Alaska to cover
costs in excess of 22 %. The transition from a single- agent, multiple - employer plan, to a cost - sharing plan as
of July 1, 2008, provides a single rate for all participating PERS employers, eliminating the previous
methodology of assessing each employer its own rate. The City of Seward now shares in the pooled liability of
the PERS plan. The legislature's cap on local government contribution rates brings stability to Seward's
retirement rates, mitigating the need for significant annual rate increases, although it is important to note that a
future State legislature can eliminate the State subsidy above 22 %. In 1998, the General Fund contributed
194,666 toward funding retirement contributions. In 2012, that contribution was $1,746,910, of which
472,217 was paid by the State of Alaska, and $1,274,693 was paid by the City. This reflects a 797% overall
increase, or an average annual increase of 57 %. The State's contribution on behalf of the City in 2012
represented 27% of the City's 2012 PERS actuarially required contribution.
XII
Financial Reporting Award
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 Seward for its comprehensive annual
financial report (CAFR) for the year ended December 31, 2011. This is the 18th consecutive year that the
City of Seward has received this prestigious award. In order to be awarded a Certificate of Achievement, a
government must publish an easily readable and efficiently organized comprehensive annual financial report.
This report must satisfy both generally accepted accounting principles and applicable legal requirements. A
Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive
annual financial report continues to meet the Certificate of Achievement Program's requirements and we are
submitting it to the GFOA to determine its eligibility for another certificate.
Acknowledgments
Preparation of the CAFR could not have been accomplished without the dedicated service of the entire staff of
the finance department. We would like to express our appreciation to all members of the finance department
who assisted and contributed to the preparation of this report. Credit is also due to the Mayor and the
members of the Seward City Council for their interest and support in planning and conducting the operations
of the City of Seward in a responsible and progressive manner.
e4HunLrk-fy'
s . ted
mes Manager
XIII
Kristin Erchinger, Finance irector
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Seward
Alaska
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2011
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
5tA
s *$;
too
eu M
VXW
CWM y - President
au
Executive Director
XIV
David Seaward
Jean Bardarson
Robert Valdatta
Marianna Keil
Vanta Shafer
Ristine Casagranda
Christy Terry
James Hunt
Kristin Erchinger
John Foutz
W.C. Casey
Mack Funk
Tom Clemons
David Squires
Karin Sturdy
Patty Linville
CITY OF SEWARD
LIST OF PRINCIPAL OFFICIALS
COUNCIL MEMBERS
Mayor
Vice Mayor
Council Member
Council Member
Council Member
Council Member
Council Member
ADMINISTRATION
City Manager
Finance Director
Manager of Electric Utility
Public Works Director
Harbormaster
Chief of Police
Fire Chief
Parks & Recreation Director
Library Director
CITY CLERK
Johanna Kinney City Clerk
ATTORNEY
Cheryl Brooking City Attorney, Wohlforth, Brecht,
Cartledge & Brooking
Term Expires
2013
2014
2013
2014
2013
2014
2013
The City of Seward is a home -rule city with a council - manager form of
government. Legislative powers of the City of Seward are vested in a council
consisting of a mayor and six council members. The mayor and each council
member are elected from the city at large. The term of office is two years.
The appointed officers of the city include the city manager, city clerk, and the
city attorney. The city council generally meets on the second and fourth
Mondays of each month in the City Council Chambers located in the City Hall
Building at 410 Adams Street in Seward, Alaska.
KUT
CITY OF SEWARD
Organizational Chart
Citizens of Seward
Mayor & Council
Boards &
Commissions City Clerk City Manager
Planning & Zoning
Port & Commerce
Historic Preservation
Parks & Recreation I I Community I I I Library & Museum
Development
Public Works I I Harbor & SMIC I I Electric Utility
Water Utility
Wastewater Utility
Roads and Streets
City Shop
XVI
Fire, Building
Inspection
City Attorney
Finance
Public Safety
Police, Jail, Animal
Control
FINANCIAL
SECTION
Mikunda, 4da Cottrell & Co.,,...
Certified Public Accountants & Consultants
Independent Auditor's Report
Honorable Mayor and City Council
City of Seward, Alaska
Report on the Financial Statements
An nlv andently Owned Member
MCGLADRiyALLIANCE = McGladrey
We have audited the accompanying financial statements of the governmental activities, the business -type
activities, each major fund, and the aggregate remaining fund information of City of Seward, Alaska, as
of and for the year ended December 31, 2012, and the related notes to the financial statements, which
collectively comprise the City's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not
audit the operating account of the Providence Seward Medical and Care Center ( PSMCC) which
represents 6 %, 0 %, and 100% respectively, of the assets, net position, and revenues of the PSMCC
Enterprise Fund, and 1 %, 0 %, and 49% respectively, of the assets, net position, and revenues of the
business -type activities. Those financial statement components were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the
operating account of the Providence Seward Medical and Care Center is based solely on the report of the
other auditors. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement. The financial statements of the operating account of
the PSMCC were not audited in accordance with Government Auditing Standards.
1
3601 "C" Street, Suite 600 * Anchorage, Alaska 99503 * (907) 278 -8878 * Fax (907) 278 -5779 * www.mcc- cpa.com
Honorable Mayor and City Council
City of Seward, Alaska
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Opinions
In our opinion, based on our audit and the report of other auditors, the financial statements referred to
above present fairly, in all material respects, the respective financial position of the governmental
activities, the business -type activities, each major fund, and the aggregate remaining fund information
of City of Seward, Alaska as of December 31, 2012, and the respective changes in financial position
and, where applicable, cash flows thereof and the respective budgetary comparison for the General
Fund for the year then ended in accordance with accounting principles generally accepted in the United
States of America.
Emphasis of Matter
As discussed in Note 1 to the financial statements, in 2012, City of Seward adopted the provisions of
Governmental Accounting Standards Board (GASB) Statement number 63, Financial Reporting of
Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position; and the provisions of
GASB Statement number 65, Items Previously Reported as Assets and Liabilities. These provisions
have been retrospectively applied to all periods presented in these financial statements. Our opinion is
not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis on pages 5 -16 be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
2
Honorable Mayor and City Council
City of Seward, Alaska
Supplementary and Other Information
Our audit for the year ended December 31, 2012 was conducted for the purpose of forming opinions on
the financial statements that collectively comprise City of Seward's basic financial statements. The
accompanying Schedule of Expenditures of Federal Awards, the Schedule of State Financial Assistance,
the combining and individual fund financial statements and schedules, and the introductory and
statistical sections are presented for purposes of additional analysis and are not a required part of the
basic financial statements. The Schedule of Expenditures of Federal Awards and the Schedule of State
Financial Assistance are required by OMB Circular A -133 and the State of Alaska Audit Guide and
Compliance Supplement for State Single Audits, respectively.
The accompanying Schedule of Expenditures of Federal Awards, the Schedule of State Financial
Assistance, and the combining and individual fund financial statements and schedules are the
responsibility of management and were derived from and relate directly to the underlying accounting
and other records used to prepare the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the basic financial statements for the year ended
December 31, 2012 and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America. In our opinion, the
accompanying supplementary information is fairly stated, in all material respects, in relation to the basic
financial statements as a whole for the year ended December 31, 2012.
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 do not express an opinion or provide any
assurance on them.
We also have previously audited, in accordance with auditing standards generally accepted in the United
States of America, the City of Seward's basic financial statements for the year ended December 31, 2011
which are not presented with the accompanying financial statements. In our report dated June 7, 2012,
we expressed unqualified opinions on the respective financial statements of the governmental activities,
business -type activities, each major fund, and the aggregate remaining fund information. That audit was
conducted for the purpose of forming opinions on the financial statements that collectively comprise the
City of Seward's financial statements as a whole. The individual fund financial statements and
schedules related to the December 31, 2011 financial statements are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such information is the
responsibility of management and was derived from and relates directly to the underlying accounting
and other records used to prepare the December 31, 2011 financial statements. The information has
been subjected to the auditing procedures applied in the audit of those financial statements and certain
additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare those financial statements or to those financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the 2011 individual fund financial statements and
schedules are fairly stated in all material respects in relation to the basic financial statements for the year
ended December 31, 2011.
3
Honorable Mayor and City Council
City of Seward, Alaska
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 12,
2013 on our consideration of City of Seward's internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering City of Seward's internal
control over financial reporting and compliance.
Anchorage, Alaska
June 12, 2013
El
CITY OF SEWARD
Management's Discussion and Analysis
December 31, 2012
As management for the City of Seward, we hereby offer readers of the City's Comprehensive Annual
Financial Report this narrative overview and analysis of the financial activities of the City of Seward for
the fiscal year ended December 31, 2012. In addition to this discussion and analysis, readers are
encouraged to read our letter of transmittal found on pages VII -XIII of this report, which provides
additional summary information.
FINANCIAL HIGHLIGHTS
The assets of the City of Seward exceed liabilities by $152,091,921 at December 31, 2012. Of
this amount, $127,302,346 represents net investment in capital assets, $5,176,194 is restricted
for capital purposes and the remainder of $19,613,381 represents unrestricted net position.
Unrestricted net position does not necessarily reflect a surplus of resources, as a portion of net
position is designated for capital grants, capital replacement, or for other purposes as determined
by the City Council.
Excluding business -type activities, the assets of the primary government exceeded liabilities by
70,088,200. Of this amount, $8,669,442 in unrestricted net position is legally unreserved and
available to meet the government's ongoing financial obligations, although the Council has
earmarked a portion of these funds for specific purposes.
The City's total net position increased by $1,366,573. Governmental activities increased by
4,450,710 and business -type activities decreased by ($3,084,177). The decrease in business -
type activity net position is substantially due to the City's healthcare facilities.
The City's governmental funds reported combined ending fund balances of $8,316,435,
representing a decrease of ($1,715,148) compared to the prior year. While $7,832,458 of the
fund balance is legally available for spending, only $4,814,175 has not already been earmarked
for specific purposes (unassigned fund balance). This reflects an increase in available
unassigned fund balance of $1,316,454 resulting primarily from the transfer of the outstanding
balance on the hospital PERS liability ($1,312,334) and debt service collateral loan ($1,973,360)
from the General Fund to the Providence Seward Medical and Care Center Enterprise Fund.
The total debt of governmental activities decreased by ($162,258) or (3.8 %) due to capital lease
payments for a fire truck and two loaders. The total debt of business -type activities decreased
by ($2,886,434) or (6.5 %) as a result of routine bond and loan payments, and due to the
retirement in the prior year of bonds on the North SMIC dock, 2000 harbor bonds, and a DEC
water loan.
OVERVIEW OF THE FINANCIAL STATEMENTS
This Management Discussion and Analysis serves to introduce readers to the City of Seward's basic
financial statements, which includes the government -wide financial statements, the individual fund
statements, and notes to the financial statements. In addition to the basic financial statements, this
report also contains other required supplementary information. The basic financial statements include
two types of statements reflecting different views of the City's financial activities:
1. Government -wide financial statements summarize the City's overall financial condition and
contain both short -term and long -term information. This information is intended to present a
broader view of the City as a whole in a manner similar to private- sector business.
2. Fund financial statements focus on specific areas of City operations and provide more detail
than the government -wide statements.
5
Government -wide Financial Statements
The government -wide financial statements are intended to provide a comprehensive look at all financial
activities of the City and are presented on the accrual basis of accounting, in a manner similar to a
business enterprise.
The Statement of Net Position presents information on all of the City's assets less liabilities, resulting
in net position. The purpose of this statement is to present the overall financial position of the City.
Over time, increases or decreases in net position may demonstrate whether the City's financial position
is improving or deteriorating. There are other non - financial factors, such as the condition of public
facilities, the timely investment in roads and infrastructure, and the level of maintenance funding that
should be considered in evaluating the City's overall financial condition.
The Statement of Activities demonstrates how the City's net position changed as a result of the current
year's activities. This statement is prepared on the accrual basis of accounting which is comparable to
private- sector businesses. Revenues and expenses are reported when the underlying event giving rise to
the change occurs, regardless of the timing of the related cash flows. Therefore, revenues and expenses
are reported in this statement for some items that will result in cash flows in future fiscal periods.
Both of the government -wide financial statements distinguish functions of the City of Seward that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a significant portion of their costs through user fees and
charges (business -type activities). The governmental activities of the City of Seward include general
government, public safety, public works, parks and recreation, library, and the Alaska Sealife Center.
The business -type activities of the City include hospital and long -term care facility, harbor, marine
industrial center, electric, water, wastewater, and parking. The government -wide financial statements
can be found on pages 18 -19 of this report.
Fund Financial Statements
A fund is a grouping of related accounts used to maintain control over resources that have been
segregated for specific activities or purposes. The City of Seward, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with legal requirements. The
funds of the City of Seward are divided into three categories: governmental funds, proprietary funds,
and fiduciary funds, each of which is further described below.
Governmental Funds
Governmental Funds are used to account for essentially the same functions reported as governmental
activities in the government -wide financial statements. However, unlike the government -wide financial
statements which provide a broad overview and include short -term and long -term information, the
governmental funds' financial statements focus on near -term inflows and outflows of spendable
resources, as well as on balances of spendable resources available at the end of the fiscal year. Such
information is useful in evaluating a government's near -term financing requirements.
However, because the focus of governmental funds is narrower than that of the government -wide
financial statements, it is useful to compare the information presented for governmental funds, with
similar information presented for governmental activities in the government -wide financial statements.
Such a comparison enables the reader to better understand the long -term impact of a government's near -
term financing decisions. The Governmental Funds Balance Sheet and the Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to
facilitate the comparison between governmental funds and governmental activities.
C9
The City of Seward maintains sixteen (16) individual governmental funds. As Major Funds,
information for the General Fund and the Library/Museum Capital Project Fund are presented as distinct
columns in the Governmental Funds Balance Sheet and in the Governmental Fund Statement of
Revenues, Expenditures, and Changes in Fund Balances, with the other fourteen governmental funds
aggregated and shown in the Non -major Funds column on these same two statements. Individual fund
information for the non -major governmental funds is provided in the form of combining statements
elsewhere in this report.
The City of Seward adopts an annual budget for the General Fund. A budgetary comparison statement
can be found on page 24 to demonstrate compliance with the annual budget, and a list of budgetary
highlights can be found later in this document. The basic governmental fund financial statements can be
found on pages 20 -24 of this report.
Proprietary Funds
The City of Seward maintains two types of proprietary funds; enterprise funds and internal service
funds. Enterprise funds are used to report the same functions identified as business -type activities in the
government -wide financial statements. The City uses enterprise funds to account for the hospital and
long -term care facility (Providence Seward Medical and Care Center), harbor, Seward Marine Industrial
Center, electric utility, water utility, wastewater utility, and parking operations. Information for each of
these funds is presented in the individual fund statements found on pages 87 -118 of this report.
Internal service funds are used to accumulate and allocate costs internally among the various functions
of the City. The City of Seward utilizes two internal service funds to account for its motor pool
equipment replacement program and compensated annual leave resources. The equipment replacement
program benefits both the governmental and business -type functions. As a result, its activities have
been allocated among both the governmental and business -type activities in the government -wide
financial statements. Accrued leave that is earned in the governmental funds is accounted for in the
Compensated Annual Leave Internal Service Fund. Individual fund data for the internal service funds
can be found on pages 119 -126 of this report.
Fiduciary Funds
Fiduciary funds account for resources held by the City in a trustee capacity, for the benefit of parties
outside of the government. Fiduciary funds are not reflected in the government -wide financial
statements because the resources of those funds are not available to support programs of the City. The
accounting used for fiduciary funds is similar to that of governmental funds. The City utilizes a single
fiduciary fund, the Teen Council Agency Fund, and data for that fund can be found on page 127 of this
report.
Notes to the Basic Financial Statements
The notes provide additional information essential to a complete understanding of the data provided in
the government -wide and fund financial statements. The notes can be found on pages 31 -58 of this
report.
Other Information
In addition to the basic financial statements and accompanying notes, this report presents certain
required supplementary information on the public employee's retirement system on pages 52 -55 of this
report.
VA
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Statement of Net Position
Over time, net position may serve as a useful indicator of a government's financial position. At
December 31, 2012, the City's assets exceeded liabilities by $152,091,921. A significant portion of the
City's net position (84 %) reflects its investment in capital assets, less any outstanding debt used to
acquire those assets. Capital assets are not liquid and are not available for future spending. Since the
investment in 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 liquidate these liabilities.
The following table provides a summary of the City's net position:
Table 1
Statement of Net Position
As of December 31, 2012 and 2011
Governmental Business -Type
Activities Activities Total
2012 2011* 2012 2011* 2012 2011*
Current and other assets $ 11,019,886 12,510,182
Capital assets 65,301,763 59,182,285
Total assets and
deferred outflows 76.321.649 71.692.467
Long -term liabilities
outstanding
Other liabilities
Total liabilities
4,413,129 4,487,329
1,820,320 1.567.688
6,233,449 6,055,017
Net position:
Net investment in capital
assets, 61,392,678 56,122,348
Restricted 26,080 3,730,137
Unrestricted 8,669,442 5.784.965
Total net position $ 70 088 200 65 637 450
As restated
23,912,830 24,641,268 34,932,716 37,151,450
107,676,470 113,394,866 172,978,233 172,577,151
131.589.300 138.036.134 207.910.949 209.728.601
42,265,550 44,959,459 46,678,679 49,446,788
7.320.029 7.383.436 9.140.349 8.951.124
49,585,579 52,342,895 55,819,028 58,397,912
65,909,668 68,656,643
5,150,114 1,387,821
10,943,939 15.648.775
82 003 721 85 693 239
127,302,346 124,778,991
5,176,194 5,117,958
19.613.381 21.433.740
152 091 921 151 330 689
At the end of 2012, the City of Seward is able to report positive balances in all three categories of net
position, for the government as a whole, as well as for its separate governmental and business -type
activities.
Statement of Activities
The City's total revenues and expenses for governmental and business -type activities are reflected in the
following table.
Table 2
Change in Net Position
For the Years Ended December 31, 2012 and 2011
Governmental Business -Type
Activities Activities
2012
Revenues:
Program revenues:
Charges for services $ 1,649,326
Operating grants /
contributions 1,037,711
Capital grants /
contributions 3,442,599
General revenues:
Total
2011* 2012 2011* 2012 2011*
1,602,805 35,910,422 32,731,576 37,559,748 34,334,381
1,128,278 154,295 401,734 1,408,535 1,530,012
3,573,497 1,732,343 2,291,919 5,174,942 5,865,416
Sales taxes 4,189,330 4,147,010
Property taxes 1,025,266 999,737
Payments in lieu of tax 76,160 78,574
Other 1,750,767 1,772,827
Total revenues 13,171,119 13,302,728
Expenses:
General government
Public safety
Public works
Parks and Rec / Library
Unallocated interest
Alaska Sealife Center
Electric
Water
Wastewater
Harbor
SMIC
PSMCC
Parking
Total expenses
1,981,876 2,031,590
3,360,091 3,140,921
2,410,794 1,988,748
1,766,647 1,862,005
206,778 173,993
965,206 51,939
10,691,392 9,249,196
4,189,330 4,147,010
1,025,266 999,737
76,160 78,574
552,441 1,614,564 2,303,208 3,387,391
38,566,030 37,039,793 51,737,189 50.342.521
1,981,876
3,360,091
2,410,794
1,766,647
206,778
965,206
9,935,695 10,493,512 9,935,695
1,246,997 1,230,833 1,246,997
1,013,492 1,044,654 1,013,492
4,243,734 3,676,190 4,243,734
928,458 1,081,862 1,144,987
21,856,797 20,416,615 21,856,797
237,522 205,407 237,522
39,679,224 38,149,073 50,370,616
2,031,590
3,140,921
1,988,748
1,862,005
173,993
51,939
10,493,512
1,230,833
1,044,654
3,676,190
1,081,862
20,416,615
205,407
47,398,269
Increase (decrease) in net
assets before transfers 2,479,727 4,053,532 (1,113,194) (1,109,280) 1,366,573 2,944,252
Transfers 1,970,983 (1.290 998) (1,970,983) 1,290,998 - -
Change in net position 4,450,710 2,762,534 (3,084,177) 181,718 1,366,573 2,944,252
Beginning net position 65,637,450 62,874,916 85,087,898* 85,511,521 150,725,348 148,386,437
Ending net position $ 70 088 200 65.637.450 82.003 721 85.693.239 152 091 921 151,330,689
As restated
X
Governmental Activities
Governmental and business -type activities both increased the City of Seward's net position.
Governmental activities increased net position by $4,450,710. The following items are of particular
note:
Overall revenues for governmental activities were down by ($131,609), or approximately (1 %)
compared with the prior year.
Overall expenditures were up by $1,442,196 or 15.6 %. The primary areas of increase included
the Alaska Sealife Center (up $913,267 or 1,758 %) related to infrastructure; public works (up
422,046 or 21.2 %); and public safety (up $219,170 or 7.0 %).
Capital and operating grants brought in $3.4 million -- approximately $130,000 lower than the
prior year -- with more than $3.1 million attributed to the construction of a new library /museum.
Governmental funds experienced net transfers -in of $1,970,983 in 2012 versus net transfers -out
of ($1,290,998) in 2011. Much of the difference in the current year is attributed to the transfer
of outstanding hospital- related debt for the SGH PERS liability and a debt service collateral loan
out of the General Fund to the newly established Providence Seward Medical and Care Center
Enterprise Fund.
The City does not generate sufficient tax revenues to cover depreciation on general government
assets. To replace capital assets in the future, the City will need to rely on external financing
sources such as grants, or incurring debt to finance construction.
The following graph reflects the revenues and expenses associated with each of the general
government's primary programs:
Business -Type Activities
Business -type activities decreased the net position of the City by ($3,084,177), including adjustments
for Motor Pool Internal Service Fund activities. As is the case with governmental activities, a
substantial portion (80 %) of the $82.0 million in net position is invested in capital assets. The decrease
in net position is comprised of the following:
Net position decreased in the Water Enterprise Fund by ($181,957), in the Wastewater
Enterprise Fund by ($136,478), in the Seward Marine Industrial Center Fund by ($263,025), and
in the Providence Seward Medical and Care Center Enterprise Fund by ($3,488,958). Net
position increased in the Electric Enterprise Fund by $503,363, in the Harbor Enterprise Fund by
438,723, and in the Parking Enterprise Fund by $33,740.
Allocations of the Motor Pool Internal Service Fund to the business -type activities increased net
position by $10,415.
1111
The Electric Enterprise Fund experienced earnings from operations of $1,659,214, an increase of
1,456,611 from the prior year. Operating revenues were higher by $914,987 or 8.9% and
operating costs were down by ($541,624) or (5.4 %). The improved operating performance was
due in large part to a 10% increase in all electric utility rates, aimed at reversing the negative
trend in financial performance of the Utility. Power costs declined ($383,819) or (6.8 %) owing
to a reduction in fuel costs. The utility reduced contributions to the Motor Pool Internal Service
Fund by $165,000, and scaled back purchase of operating supplies by $234,574, in an effort to
restore cash necessary to address critical infrastructure needs.
The Electric Enterprise Fund (excluding associated capital projects) experienced an increase in
cash during the year of $1,256,943, from a prior cash balance of $639,624 to a balance of
1,896,567. Including related capital projects, the ending electric utility- related cash balance is
3,634,856 with $1,738,289 of those funds restricted by bond covenants and grant agreements.
The restoration of cash in the enterprise fund is the result of targeted efforts to scale back
spending and raise rates to address significant critical -risk and high -risk infrastructure needs of
the Fund. It also results in no contribution to the depreciation reserve fund for the future
replacement of capital assets, which is not consistent with the City's budget policy of setting
aside 100% of annual depreciation costs for replacement of capital assets. To address these
concerns, rate increases were approved as follows: 5% in 2011, 10% in 2012 and 5% in 2013.
The net decrease in Seward Marine Industrial Center (SMIC) net position of ($263,025) results
from an operating loss of ($513,721), which includes depreciation expense of $601,831. The
cash balance in the SMIC fund is $144,503, and will be used to offset future cash infusion
requirements from the General Fund.
The net decrease in Water Enterprise Fund net position of ($181,957) is due to the following:
The State of Alaska DEC required the City to reimburse $94,507 of grant funding the City was
paid in a prior year, resulting from an audit which found that the DEC overpaid a number of
cities for water- related grants. The City had not initially anticipated receiving the grant funds,
so the refund of the monies was not a financial hardship to the Utility. The cost of utilities
increased by $41,699 over the prior year, and transfers -out to other funds increased by $45,794.
The water utility ends the year with $957,479 in cash (excluding water- related capital projects)
representing a decline of ($893,264) from 2011, reflecting a loan payment in excess of $724,000
for the Third Avenue water main upgrade. The one -time payment was equivalent to what the
City would have paid over the past four years, had loan payments not been delayed pending the
outcome of a dispute over contaminated soils with the State of Alaska DOT.
The net increase in Harbor Enterprise Fund net position of $438,723 is substantially due to net
capital grant contributions of $624,735, and $343,265 in State of Alaska Commercial Passenger
Vessel Tax proceeds. The enterprise fund experienced a loss from operations of ($82,499), and
is not able to fund replacement of existing assets due to the need to spend cash on servicing debt
704,553 in 2012). In 2010, the Harbor took an important step in identifying a specific revenue
source (raw fish tax proceeds being contributed from the General Fund, and a newly created
capital renewal and replacement fee) to contribute to the Major Maintenance and Repair Fund
for replacement of existing infrastructure and assets. The purpose of this fund is to repair and
replace existing infrastructure, and the balance in this account at year -end is $901,249, which
will be completely depleted for the upcoming replacement of D- Float. The Harbor Enterprise
Fund (excluding capital projects) ended the year with a cash balance of $2,149,227, with an
additional $2,383,536 restricted by bond and capital project covenants. Including Capital
Project Funds, the harbor ended the year with a net increase in unrestricted cash of $187,015 due
to capital grant contributions and commercial passenger vessel tax receipts.
The net decrease in net position of the Providence Seward Medical and Care Center Enterprise
Fund of ($3,488,958) is due to a loss from operations of ($1,784,215) and interest payments on
debt of ($1,348,255). Most of the loss comes from a reduction in cost reimbursements from the
State of Alaska, which Providence Health and Services, as operator of the City's hospital and
long -term care facility, has appealed with the State. The issue has recently been settled and the
City expects to see a total of $6.1 million in settlement proceeds paid to the facility over the next
11
two years. The financial stability of PSMCC will depend in large part, on the census of the
long -term care facility in the future, as census is the most important driver of patient service
revenue of the facility. These revenues are also pledged to repay the $27 million in revenue
bonds issued to construct the Seward Mountain Haven long -term care facility.
Other non -major enterprise funds experienced the following: 1) increase in Parking Enterprise
Fund net position of $33,740 and an increase in cash of $55,546 with parking revenues higher
than the prior year by $25,338. The acquisition of automated pay stations drove personnel cost
savings of approximately $17,000; and 2) a net decrease in Wastewater Enterprise Fund net
position of ($136,478) and increase in cash of $25,735 to $605,982 (for the wastewater utility
only, excluding related capital projects).
FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
Governmental Funds
The City of Seward's governmental funds focus on near -term inflows, outflows, and balances of
spendable resources. As such, you will not find long -term capital assets or long -term debt displayed
on the governmental funds' individual fund financial statements. This focus on near -term inflows
and outflows assesses whether the City is generating sufficient revenues in the current year to pay
for current -year obligations. However, it does not indicate whether there are sufficient funds
available to cover long -term operations. The level of unassigned fund balance is an important
indicator of the amount of net resources available for spending at the end of the year.
At the end of the year, the City of Seward's governmental funds reported combined ending fund
balances of $8,316,435. Of this amount: $457,897 is nonspendable (inventory, prepaid items);
26,080 is restricted by bond covenants requiring its use for construction of the library /museum;
2,126,418 has been committed by the City Council for working capital, hospital line of credit, and
insurance reserves; $891,865 has been assigned by the administration for payment of grant- related
projects; and $4,814,175 is unassigned, and legally available for spending. These new
classifications of fund balance promulgated in GASB Statement No. 54, reflect efforts to create a
hierarchy of fund balance to enable the reader of the financial statements to understand the extent to
which fund balance reserves are available for spending. The hierarchy reports, in order, the least
spendable to the most spendable fund balance; first are resources which are not available for
spending (nonspendable), then resources which are restricted by legislation or external agencies
restricted), next resources which the City Council has committed to spend for a specific purpose by
way of enabling legislation, and then resources which have been assigned for a specific use but
don't meet the definition of restricted or committed, and finally, the unassigned fund balance which
remains available for spending.
Fund balances in the governmental funds decreased by ($1,715,148), representing a net increase in
the General Fund of $1,376,945, a net decrease in the Library/Museum Capital Project of
3,704,057), and a combined net increase in other governmental funds of $611,964.
The overall net increase in fund balance is due to the following:
General Fund
General Fund revenues were $265,917 higher than expenditures, and after subtracting net transfers
of $1,111,028, fund balance increased by $1,376,945. General Fund revenues came in $22,910
0.22 %) lower than in 2011, and expenditures came in $326,808 or 3.32% higher.
12
The General Fund's fund balance must be able to meet unforeseen needs and emergencies, as well
as future spending needs. The City's fund balance policy is to maintain unassigned fund balance
equal to between three and six months' expenditures and routine transfers -out to other funds. The
General Fund unassigned fund balance at the end of 2012 is $4,827,055, equal to approximately 4.6
months' reserves, up from 3.2 months' at the end of 2011 due, primarily, to the transfer of hospital
PERS liability and debt service collateral loan from the General Fund to the Providence Seward
Medical and Care Center Enterprise Fund. In the City's case, an adequate level of fund balance is
between $3.1 million and $6.2 million (based on 2012 actuals), which results in the General Fund
currently being in the mid -range of the desired level of unassigned fund balance. There is a marked
improvement in this metric of financial stability over the past few years.
Special Revenue Funds
Special revenue fund projects experienced a net increase in fund balance of $115,495 to $138,101,
with all but the Fish Ditch Restoration project maintaining a positive fund balance, and with the
largest project being the Cruise Ship Transportation project with a fund balance of $112,832.
Major Capital Project Funds
The Library/Museum Fund experienced a net decrease in fund balance of ($3,704,057) as bond
proceeds were spent on construction of the new library /museum building.
Non -Major Capital Project Funds
All other capital projects combined experienced a net increase in fund balance of $496,469 to
740,884. The Capital Acquisition Fund ($742,857) and Kawabe Park project ($8,524) have
positive fund balances, while the Flood Mitigation Fund (- $10,019) and Fire Department Equipment
Fund ( -$478) have deficits which are pending reimbursement of capital grants from state and federal
agencies.
Proprietary Funds
The City of Seward maintains two types of proprietary funds; enterprise funds and internal service
funds. The City's seven enterprise funds (hospital, harbor, electric, water, wastewater, parking, and
marine industrial center) report the same functions presented as business -type activities in the
government -wide financial statements, but the individual fund statements are presented in more detail.
Enterprise funds reported total net position of $82.0 million, with $65.9 million invested in capital assets
net of related debt, leaving unrestricted net position of approximately $10.9 million, and restricted net
position of $5.1 million. Of the unrestricted net position, $6.45 million is in restricted cash (bond
reserve funds, bond proceeds, etc.) not available for appropriation, and current liabilities total $9.9
million. More specific factors influencing the net position of the enterprise funds are addressed above in
the discussion of the City's business -type activities.
The City maintains two internal service funds; the motor pool and the compensated annual leave fund.
The Motor Pool Internal Service Fund accumulates cash for the replacement of the City's vehicles and
heavy equipment fleet. Departments contribute to the motor pool to purchase vehicles and annually pay
into the motor pool to forward -fund replacement of vehicles. This funding mechanism spreads the costs
of the vehicles over the life of the vehicle in each program's annual budget, rather than to incur costs as
one -time expenses in the year of the vehicle /equipment purchase. The balance of unrestricted cash in
the motor pool at year -end is $1,089,780, reflecting an increase of $203,000. The Motor Pool maintains
an outstanding loan due from the Providence Seward Medical and Care Center ( PSMCC) Enterprise
Fund in the amount of $960,362 related to the payoff of prior hospital PERS liabilities. This loan was
carried on the books of the General Fund until 2012 when it was transferred to the books of the PSMCC
Fund. The Compensated Annual Leave Fund accumulates cash reserves to pay annual leave cash -outs
for governmental funds. The balance of cash in this fund at the end of 2012 is $454,604.
13
General Fund Budgetary Highlights
There were a number of modifications to the budget during the year, as described below:
Overall, projected revenues were upward adjusted $723,538 related primarily to State
payments on behalf of the City for PERS ($472,217) and raw fish tax ($199,689),
increased project management fees ($25,000), and various general government grants
26,632).
Expenditures were increased by $872,500, as follows: $472,217 related to the State
payments on behalf of the City for public employee's retirement system costs; $16,500
to restore credit card fees absorbed by the City; $6,145 in added audit costs; $6,732 in
grant- funded travel for historic preservation commission training; $6,830 in increased
personnel costs in the City Clerk's department; $51,000 for salmon enhancement in
Resurrection Bay; $55,001 for increases in utility and heating fuel costs; $20,000 in
personnel costs to extend the retirement date for fire chief, $13,273 in grant- funded
supplies for the fire department; additional costs related to snow removal, including
57,000 in overtime, $27,000 in operating supplies, $15,000 in fuel and $39,000 in
operating supplies; $15,835 in grant- related library costs for a town hall meeting,
archival packing material, a non - fiction grant, and an online library aide; $67,500 for
building stabilization at the parks and recreation warehouse; and the remaining $3,467
miscellaneous grant- related costs for training.
Transfers to other funds increased by a total of $585,239 due to the acquisition of new
financial accounting software ($214,766), sharing of project management fees with the
Capital Acquisition Fund ($25,000), raw fish tax to the Harbor ($144,689), a new sound
system for the city council chambers ($50,000), a loan repayment to the electric fund
110,784), and erosion control funds for the SMIC seawall ($40,000).
Transfers from other funds increased by $1,312,335 for transfer of the remaining SGH
PERS liability from the General Fund to the PSMCC Enterprise Fund; by $17,807 to
close out the Hoben Park Capital Project Fund; and by $7,293 to close out the Pavilion
Capital Project Fund.
On a budgetary basis, General Fund revenues came in $148,345 or 1.4% higher than budget primarily
due to an increase in the State jail contract of $101,923 and tax revenues exceeding budget by $72,500
or 1.3 %. Investment earnings came in lower than budget by $32,310 due to the sustained low interest
rate environment. General Fund expenditures were under budget by $552,315. Most of this variance
was due to budgeting $336,686 for debt service payments on the new library /museum, which did not
come due in 2012. Retirement costs came in under budget by $123,591 based on timing differences
between the City and the State's fiscal year. The remaining budget variance of expenditures of $92,038
was entirely due to salary savings related to vacancy factor.
General Fund Actual Highlights
General Fund revenues exceeded expenditures by $265,917, and after transfers between funds were
accounted for, there was a net increase in fund balance of $1,376,945, which was due to the transfer of
liabilities for SGH PERS and debt service loan collateral from the General Fund to the PSMCC
Enterprise Fund.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of December 31, 2012, the City had $127,302,346 invested in capital assets net of accumulated
depreciation, representing an overall increase of $4,523,355 from the previous year.
14
Land and improvements
Buildings
Improvements other
than buildings
Machinery and equipment
Construction in progress
Total net capital assets
As restated
Table 3
City of Seward Capital Assets
in thousands, net of depreciation)
Governmental Business -Type
Business -Type
Activities Activities Total
Activities
2012 2011* 2012 2011* 2012 2011*
5,432 5,432 17,484 17,484 22,916 22,916
37,020 38,019 26,553 29,941 63,573 67,960
1,676 1,910 56,736 53,276 58,412 55,186
4,340 5,107 6,149 6,874 10,489 11,981
16,834 8,714 754 5,820 17,588 14,534
65 302 59 182 107 676 113 395 172 978 172 577
Additional information regarding the City of Seward's capital assets can be found in Footnote 4 on
pages 41-43.
Long -term Debt
As of December 31, 2012, the City had total debt outstanding of $45,710,243. Of this amount, $4.19
million represents outstanding general obligation bonds backed by the full faith and credit of the City.
General obligation bonds outstanding include the hospital and library /museum bonds. An additional
38.5 million represents: revenue bonds backed by operating revenues from the harbor enterprise fund
6.45 million), electric enterprise fund ($6.4 million), and long -term care facility ($25.6 million). The
remaining debt represents an outstanding capital equipment lease on fire /rescue vehicles, loaders, water
and wastewater loans, and compensated absences.
Table 4
City of Seward Outstanding Debt
in thousands)
As restated
Further detail regarding the City's long -term outstanding debt can be found on pages 45 -50.
Economic Factors and Next Year's Budget and Rates
The City is entering the second year of its Biennial Budget for the period January 1, 2012 through
December 31, 2013. The budget has been adjusted mid -cycle to meet changing economic and
operational conditions. In the past few years, economic activity has increased slowly, resulting in higher
tax revenue projections. The General Fund's primary source of revenue, sales tax, is budgeted to
15
Governmental Business -Type
Activities Activities Total
2012 2011* 2012 2011* 2012 2011*
General obligation bonds 3,480 3,480 710 1,550 4,190 5,030
Revenue bonds 38,475 39,930 38,475 39,930
Capital leases 229 420 229 420
Loans 2,155 2,775 2,155 2,775
Compensated absences 455 426 206 177 661 603
Total outstanding debt 4 .164 4 326 41 546 44 432 45 710 48 758
As restated
Further detail regarding the City's long -term outstanding debt can be found on pages 45 -50.
Economic Factors and Next Year's Budget and Rates
The City is entering the second year of its Biennial Budget for the period January 1, 2012 through
December 31, 2013. The budget has been adjusted mid -cycle to meet changing economic and
operational conditions. In the past few years, economic activity has increased slowly, resulting in higher
tax revenue projections. The General Fund's primary source of revenue, sales tax, is budgeted to
15
increase by 0.45% or approximately $18,736 over 2012 actuals, necessitating an increase in local
taxable sales of $468,000 to hit the target. The recent increase in economic activity makes it very likely
the City will exceed this target. Bed tax revenues were budgeted to increase by 2.9% over 2012 budget
to $350,000, based on a slowly recovering bed tax trend. However, 2012 hotel activity rebounded better
than expected and revenues ended the year at $380,210, so 2013 targets should be met.
On the General Fund cost side, construction of the new library /museum is complete, resulting in cost
increases associated with new debt service ($244,400), janitorial services ($50,611) and utilities and
heating fuel. The operating costs associated with the old library building and the old museum space
have not yet been factored into the budget, but as these facilities will house City programs and staff,
funding for these needs must be addressed. Adjustments to the 2013 Budget were made mid -cycle to
reflect a rise in utility and heating fuel costs. These rising costs are also impacting small business
owners and residents who express concern that prolonged increases in fuel and utility prices may have
an impact on their ability to afford to live or do business in Seward. Raw fish taxes are anticipated to
increase, positively impacting the harbor's funding for critical and high -risk capital needs. The General
Fund budget is balanced without utilization of reserves, and for the first time in many years, reserve
levels are at more than 4 months, with a policy band requirement of 3 -6 months.
There are no proposed changes to tax rates in 2013 with the mill rate remaining at 3.12 mills, the City
sales tax rate remaining at 4 %, and the hotel /motel bed tax rate remaining at 4 %. The harbor tariff
includes a 2.6% rate increase in 2013, equal to the consumer price index for Anchorage averaged over
the five previous full years. The Harbor capital renewal and replacement fee and a portion of raw fish
tax proceeds will contribute $238,250 toward replacement of aging harbor infrastructure. The electric
tariff rates will increase by 5% in 2013 to address significant critical and high -risk capital infrastructure
needs, including continued upgrades to the electric generator project and the completion of right -of -way
clearing. The Electric Fund will contribute $600,280 toward replacement of aging infrastructure, a
considerable improvement over recent years in which little funding was available for capital needs. The
water tariff will increase rates 6% in 2013 and the department will construct a new water storage tank
with grant funds, to mitigate summer water storage capacity concerns. The Water Fund will contribute
198,883 toward replacement of aging infrastructure. The wastewater tariff will increase rates 6% in
2013 and those rate increases are necessary solely to keep the Fund from falling behind financially.
These rate levels do not address critical or high -risk wastewater capital infrastructure needs. In the
future, enterprise fund tariffs are expected to provide annual incremental rate increases equal at least to
the CPI, enabling them to keep pace with the increased cost of goods and services, preventing further
erosion of financial stability of those Funds.
Requests for Information
The City of Seward's financial statements and the accompanying information are designed to present
users (citizens, taxpayers, elected officials, customers, investors, and creditors) with a general overview
of the City's finances, and to demonstrate accountability to taxpayers and ratepayers. Questions
concerning information in this report, or requests for additional information, can be addressed to the
City of Seward, Attn: Finance Director, P.O. Box 167, Seward, Alaska 99664.
f[7
BASIC FINANCIAL STATEMENTS — OVERVIEW
These financial statements provide a summary overview of the financial position and results of
operations of all funds of the City, aggregated at the government -wide and the major fund level. The
following statements are included in this section:
Statement of Net Position
Statement of Activities
Governmental Funds - Balance Sheet
Reconciliation of Governmental Funds Balance Sheet to Statement of Net Position
Governmental Funds - Statement of Revenues, Expenditures and Change in Fund
Balances
Reconciliation of the Changes in Fund Balances of Governmental Funds to Statement of
Activities
General Fund - Statement of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual
Proprietary Funds - Statement of Net Position
Proprietary Funds - Statement of Revenues, Expenses and Change in Net Position
Proprietary Funds - Statement of Cash Flows
Statement of Fiduciary Net Position
Notes to Basic Financial Statements
17
Exhibit A -1
CITY OF SEWARD
Statement of Net Position
December 31. 2012
Primary Government
Governmental Business -type
Assets Activities Activities Total
Cash and investments 8,533,674 10,433,228 18,966,902
Receivables, net of allowance for doubtful accounts:
Taxes 532,067 532,067
Accounts 80,277 4,201,165 4,281,442
Assessments, due within one year 13,252 13,252
Grants, shared revenues, and loans 1,789,135 443,207 2,232,342
Accrued interest 66,952 66,952
Other 16,135 527,163 543,298
Prepaid items 456,417 456,417
Inventories 9,375 985,909 995,284
Restricted cash and investments 6,450,672 6,450,672
Other assets 246,000 246,000
Assessments, due after one year 25,877 25,877
Internal balances 513,586) 513,586
Capital assets not being depreciated 22,266,187 18,238,032 40,504,219
Capital assets being depreciated, net of depreciation 43,035,576 89,438,438 132,474,014
Total assets 76,272,209 131,516,529 207,788,738
Deferred Outflows
Unamortized deferred loss on refunding 49,440 72,771 122,211
Total assets and deferred outflows 76,321,649 131,589,300 207,910,949
Liabilities
Accounts payable 1,140,591 874,892 2,015,483
Payable to Providence Health and Services - Washington 3,418,000 3,418,000
Due to contractual agencies 192,000 192,000
Accrued payroll and related liabilities 122,636 1,090,530 1,213,166
Accrued interest 55,737 463,010 518,747
Other accrued liabilities 196,331 196,331
Funds held in trust 61,139 61,139
Customer deposits 251,849 251,849
Unearned revenue 243,886 1,029,748 1,273,634
Noncurrent liabilities:
Due within one year:
Annual leave 115,547 46,300 161,847
Notes payable 186,477 186,477
Bonds payable 2,240,000 2,240,000
Capital lease obligations 198,178 198,178
Due in more than one year:
Annual leave 339,057 159,677 498,734
Notes payable 1,968,687 1,968,687
Bonds payable, including bond premium 3,729,027 37,444,409 41,173,436
Capital lease obligations 31,320 31,320
Other liabilities 220,000 220,000
Total liabilities 6,233,449 49,585,579 55,819,028
Net Position
Net investment in capital assets 61,392,678 65,909,668 127,302,346
Restricted for capital projects, bond retirement, & commercial passenger vessel tax 26,080 5,150,114 5,176,194
Unrestricted 8,669,442 10,943,939 19,613,381
Total net position 70,088,200 82,003,721 152,091,921
Total liabilities and net position 76,321,649 131,589,300 207,910,949
See accompanying notes to basic financial statements.
18
Functions:
Exhibit A -2
CITY OF SEWARD
Statement of Activities
Year Ended December 31, 2012
Net (Expense) Revenue and
Program Revenues Changes in Net Position
Fees,
Fines & Operating Capital Business-
Charges for Grants & Grants & Governmental type
Expenses Services Contributions Contributions Activities Activities Total
uovemmentat activities:
212,189Generalgovernment $ 1,981,876
Public safety 3,360,091
Public works 2,410,794
Parks and recreation 1,320,447
Library 446,200
Sea Life Center 965,206
Unallocated interest 206,778
Total governmental
8,848
184,410 212,189 1,585,277) 1,585,277)
809,645 274,845 (2,275,601) 2,275,601)
36,721 574,360 1,799,713) 1,799,713)
609,342 242,314 468,791) 468,791)
9,208 8,848 3,167,754 2,739,610 2,739,610
965,206) 965,206)
206,778) 206,778)
activities 10,691,392 1,649,326 1,037,711 3,442,599 (4,561,756) 4,561,756)
Business -type activities:
4,189,330
1,025,266 1,025,266
380,210 380,210
76,160
Electric 9,935,695 11,224,511 37,451 141,677 1,467,944 1,467,944
Water 1,246,997 1,150,109 21,984 20,070 54,834) 54,834)
Wastewater 1,013,492 929,514 20,810 63,168) 63,168)
Harbor 4,243,734 3,169,744 73,050 1,324,067 323,127 323,127
SMIC 928,458 414,737 216,529 297,192) 297,192)
PSMCC 21,856,797 18,728,364 1,000 30,000 3,097,433) 3,097,433)
Parking 237,522 293,443 55,921 55,921
Total business -type
activities 39,462,695 35,910,422 154,295 1,732,343 1,665,635) 1,665,635)
Total primary
government $ 50,154,087 37,559,748 1,192,006 5,174,942 (4,561,756) (1,665,635) (6,227,391)
General revenues:
Taxes:
Sales taxes
Property taxes
Other taxes
Payment in lieu of taxes
Grants and entitlements not
restricted to a specific purpose
Investment income
Transfers
Total general revenues and transfers
Change in net position
Beginning net position, as restated
Ending net position
See accompanying notes to basic financial statements.
19
4,189,330 4,189,330
1,025,266 1,025,266
380,210 380,210
76,160 76,160
1,250,895 343,265 1,594,160
119,662 209,176 328,838
1,970,983 (1,970,983) -
9,012,506 (1,418,542) 7,593,964
4,450,750 (3,084,177) 1,366,573
65,637,450 85,087,898 150,725,348
70,088,200 82,003,721 152,091,921
CITY OF SEWARD
Governmental Funds
Balance Sheet
December 31, 2012
Assets
Cash and investments
Receivables, net of allowance for doubtful accounts:
Taxes
Accounts
Grants and shared revenues
Other receivables
Accrued interest
Prepaid items
Inventory
Due from other funds
Total assets
Liabilities
Accounts payable
Accrued payroll and related liabilities
Accrued liabilities
Funds held in trust
Due to other funds
Unearned revenue
Total liabilities
Deferred Inflows
Deferred property taxes
Total liabilities and deferred inflows
Fund Balances
Nonspendable:
Inventory
Prepaid items
Restricted for library and museum
Committed:
Working capital
Insurance
Hospital line of credit
Assigned:
Parks and recreation
General government
Public works
Library
Capital projects
Unassigned (deficit)
Total fund balances
Total liabilities, deferred inflows, and fund balances
See accompanying notes to basic financial statements.
20
Exhibit B -1
Major Funds
2,520
115,495 115,495
Library/
11,031
11,438 11,438
Museum
751,381
Total
4,814,175
Capital Nonmajor Governmental
General Project Funds Funds
6,070,681 918,609 6,989,290
532,067 532,067
80,277 80,277
239,938 572,002 977,195 1,789,135
13,635 2,500 16,135
10,900 10,900
448,522 448,522
9,375 9,375
896,995 896,995
8,288,755 585,637 1,898,304 10,772,696
376,417 317,822 211,260 905,499
122,636 122,636
196,331 196,331
61,139 61,139
107,334 789,661 896,995
91,087 134,401 18,398 243,886
847,610 559,557 1,019,319 2,426,486
29,775 - - 29,775
877,385 559,557 1,019,319 2,456,261
9,375 - - 9,375
448,522 - - 448,522
26,080 - 26,080
1,500,000 - - 1,500,000
126,418 - - 126,418
500,000 - - 500,000
2,520 2,520
115,495 115,495
11,031 11,031
11,438 11,438
751,381 751,381
4,827,055 1( 2,880) 4,814,175
7,411,370 26,080 878,985 8,316,435
8,288,755 585,637 1,898,304 10,772,696
CITY OF SEWARD
Reconciliation of Governmental Funds Balance Sheet
to Statement of Net Position
December 31, 2012
Total fund balances for governmental funds
Total net position reported for governmental activities in the
Statement of Net Position is different because:
Capital assets used in governmental activities are not
financial resources and therefore are not reported
in the funds. These assets, net of accumulated Internal
depreciation consist of: Governmental Service
Land $ 5,432,289
Construction in progress 16,428,130 405,768
Buildings 58,381,690
Improvements other than buildings 16,167,267
Machinery and equipment 8,336,747 5,388,091
Accumulated depreciation 42,055,147) 3,183,072)
Total capital assets $ 62,690,976 2,610,787
Other long -term assets are not available to pay for current
period expenditures and therefore are deferred in the funds.
An internal service fund is used by the City to charge the cost
of vehicles and heavy equipment to individual funds. The
net position of the internal service fund attributable to
governmental activities is included in the governmental
column on the Statement of Net Position.
Net position related to governmental activities
Less amount reported with capital assets
Plus amount reported with long -term liabilities
Long -term liabilities, including bonds payable, the related
accrued interest and accrued leave are not due and
payable in the current period and are therefore not
reported as fund liabilities. These liabilities consist of:
General obligation bonds payable
Accrued interest on bonds
Capital leases payable
Accrued leave
Unamortized bond premium
Total long term liabilities
In connection with long -term liabilities, deferred outflows
of resources represent the consumption of the
government's net position that is applicable to a future
reporting period. This consists of an unamortized loss
on refunding.
Total net position of governmental activities
See accompanying notes to basic financial statements.
21
2,783,734
2,610,787)
686,706
Internal
Governmental Service
3,480,000) -
53,133) (2,604)
229,498)
454,604)
Exhibit B -2
8,316,435
65,301,763
29,775
859,653
249,027) -
3,782,160) (686,706) (4,468,866)
49,440
70,088,200
CITY OF SEWARD
Governmental Funds
Statement of Revenues, Expenditures and Change in Fund Balances
Year Ended December 31, 2012
Other financing sources (uses):
Transfers in
Major Funds
885,056 4,263,668
Transfers out 2,267,584) -
Library/
2,292,685)
Total
1,111,028 - 859,955
Museum
Net change in fund balances
Govern-
611,964 1,715,148)
Capital Nonmajor mental
10,031,583
General Project Funds Funds
Revenues:
Taxes 5,661,136 5,661,136
Licenses and permits 159,114 159,114
Intergovernmental 1,953,472 2,538,506 1,257,416 5,749,394
Charges for services 2,540,717 2,540,717
Fines and bails 8,386 8,386
Investment income 56,690 62 56,752
Other 51,824 629,248 19,098 700,170
Total revenues 10,431,339 3,167,816 1,276,514 14,875,669
Expenditures:
Current:
General government 2,651,720 291,751 2,943,471
Public safety 3,260,308 3,260,308
Public works 1,765,636 574,360 2,339,996
Parks and recreation 1,259,052 242,314 1,501,366
Library 419,211 350 419,561
Debt service:
Retirement benefits 656,294 656,294
Interest and other costs 153,201 153,201
Capital outlay:
General government 140,885 140,885
Public safety 274,845 274,845
Library 6,871,873 6,871,873
Total expenditures 10,165,422 6,871,873 1,524,505 18,561,800
Excess of revenues over
under) expenditures 265,917 3,704,057) 247,991) 3,686,131)
Other financing sources (uses):
Transfers in 3,378,612 - 885,056 4,263,668
Transfers out 2,267,584) - 25,101 ) 2,292,685)
Net other financing sources (uses) 1,111,028 - 859,955 1,970,983
Net change in fund balances 1,376,945 (3,704,057) 611,964 1,715,148)
Beginning fund balances 6,034,425 3,730,137 267,021 10,031,583
Ending fund balances 7,411,370 26,080 878,985 8,316,435
See accompanying notes to basic financial statements.
22
CITY OF SEWARD
Reconciliation of the Changes in Fund Balances of Governmental Funds
to Statement of Activities
Year Ended December 31, 2012
Net change in fund balances - total governmental funds
The change in net position reported for governmental activities in the
Statement of Activities is different because:
Governmental funds report capital outlays as expenditures. However
on the Statement of Activities, depreciation expense is recognized to
allocate the cost of these items over their estimated useful lives.
This is the amount by which capital outlays of $8,207,752 exceeded
depreciation and loss on asset disposals of $2,129,522.
Revenues in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the funds. This
is the increase in other long -term assets.
Issuance of long -term debt provides current financial resources to
governmental funds, while the repayment of the principal of the
long -term debt consumes financial resources in governmental funds.
In addition, interest on long -term debt is not recognized under the
modified accrual basis of accounting until due, rather than as it accrues.
This adjustment combines the net change in these balances:
Amortization of bond premium $ 10,827
Amortization of deferred loss on refunding (49,445)
Increase in accrued interest on bonds (4,132)
An internal service fund is used by management to charge the cost of
vehicles and heavy equipment to individual funds. A portion of the
net revenue of these activities is reported with governmental activities.
Change in net position of governmental activities
See accompanying notes to basic financial statements.
23
Exhibit B -4
1,715,148)
6,078,230
9,830
42,750)
120,588
4,450,750
Exhibit B -5
CITY OF SEWARD
General Fund
Statement of Revenues, Expenditures
and Change in Fund Balance - Budget and Actual
Year Ended December 31, 2012
See accompanying notes to basic financial statements.
24
Variance
Original Final Positive
Budge Budge Actual Negative)
Revenues:
Taxes 5,588,636 5,588,636 5,661,136 72,500
Licenses and permits 161,075 161,075 159,114 1,961)
Intergovernmental 1,127,652 1,836,190 1,953,472 117,282
Charges for services 2,555,093 2,552,843 2,540,717 12,126)
Fines and bails 11,000 11,000 8,386 2,614)
Investment income 89,000 89,000 56,690 32,310)
Other 27,000 44,250 51,824 7,574
Total revenues 9,559,456 10,282,994 10,431,339 148,345
Expenditures:
Current:
General government 2,633,572 2,787,578 2,651,720 135,858
Public safety 3,162,831 3,294,585 3,260,308 34,277
Public works 1,441,174 1,633,998 1,765,636 131,638)
Parks and recreation 1,168,427 1,289,300 1,259,052 30,248
Library 411,983 442,503 419,211 23,292
Debt service:
Principal payments 258,308 258,308 258,308
Retirement benefits 537,362 779,885 656,294 123,591
Interest and other costs 231,580 231,580 153,201 78,379
Total expenditures 9,845,237 10,717,737 10,165,422 552,315
Excess of revenues over
under) expenditures 285,781) 434,743) 265,917 700,660
Other financing sources (uses):
Transfers in 1,956,300 3,299,720 3,378,612 78,892
Transfers out 1,670,519) 2,255,759) 2,267,584) 11,825)
Net other financing sources (uses) 285,781 1,043,961 1,111,028 67,067
Net change in fund balance 609,218 1,376,945 767,727
Beginning fund balance 6,034,425
Ending fund balance 7,411,370
See accompanying notes to basic financial statements.
24
Exhibit C -1
CITY OF SEWARD
Proprietary Funds
Statement of Net Position
December 31, 2012
Enterprise Funds
Total Internal
Major Funds Nonmajor Enterprise Service
Assets Electric Harbor SMIC PSMCC Funds Funds Funds
Current assets:
Cash and investments 1,896,567 3,769,029 144,503 2,435,687 2,187,442 10,433,228 1,544,384
Receivables:
Accounts 1,088,920 221,033 53,691 3,456,000 168,724 4,988,368
Accrued interest 56,052
Assessments 1,897 4,286 7,069 13,252
Interfund loans 17,650 17,650 71,745
Grants and loans 401,087 34,035 8,085 443,207
Other receivables 112,450 386,000 28,713 527,163
Less allowance for doubtful accounts 49,001) 29,016) 696,000) 13,186) 787,203)
Prepaid expenses 7,895
Inventory 930,547 55,362 985,909
Total current assets 3,999,030 4,366,419 232,229 5,581,687 2,442,209 16,621,574 1,680,076
Noncurrent assets:
Restricted cash and investments 1,738,289 2,383,536 1,973,360 355,487 6,450,672
Assessments receivable, net of current portion 8,844 6,430 10,603 25,877
Other assets 246,000 246,000
hrterfund loans, net of current portion 334,323 1,973,360 2,307,683 991,041
Property, plant and equipment:
Total capital assets not being depreciated 230,951 5,213,240 12,238,350 555,491 18,238,032 405,768
Total capital assets being depreciated 56,724,356 30,789,006 41,132,868 37,617,408 21,554,829 187,818,467 5,388,091
Less accumulated depreciation 33,656,561) 12,345,984) 28,184,008) 11,879,713) 12,313,763) 98,380,029) 3,183,072
Total noncurrent assets 25,380,202 26,046,228 25,187,210 27,957,055 12,136,007 116,706,702 3,601,828
Total assets 29,379,232 30,412,647 25,419,439 33,538,742 14,578,216 133,328,276 5,281,904
Deferred Outflows
Unamortized deferred loss on refunding 14,713 58,058 72,771
Total assets and deferred outflows 29,393,945 30,470,705 25,419,439 33,538,742 14,578,216 133,401,047 5,281,904
Liabilities
Current liabilities:
Accounts payable 410,361 152,438 17,021 184,000 111,072 874,892 235,092
Payable to Providence Health and Services - Washington 3,418,000 3,418,000
Due to contractual agencies 192,000 192,000
Accrued payroll and related liabilities 31,724 17,910 159 1,031,000 9,737 1,090,530
Accrued interest 26,332 29,366 383,465 23,847 463,010 2,604
Current portion:
Accrued annual leave 21,972 15,138 9,190 46,300 115,547
Bonds payable 360,000 420,000 1,460,000 2,240,000
Notes payable 186,477 186,477
Capital lease obligations 198,178
Interfund loans 23,588 65,807 89,395
Customer deposits 191,128 60,721 251,849
Unearned revenue 22,926 934,501 40,321 32,000 1,029,748
Total current liabilities 1,064,443 1,653,662 57,501 6,766,272 340,323 9,882,201 551,421
Noncurrent liabilities, net of current portion:
Accrued annual leave 71,167 47,040 41,470 159,677 339,057
Bonds payable 6,025,000 6,060,000 24,860,000 36,945,000
Unamortized bond premium 50,151 95,970 353,288 499,409
Notes payable 1,968,687 1,968,687
Other liabilities 220,000 220,000
Capital lease obligations 31,320
Interfund loans 78,837 3,219,887 3,298,724
Total noncurrent liabilities 6,146,318 6,281,847 28,653,175 2,010,157 43,091,497 370,377
Total liabilities 7,210,761 7,935,509 57,501 35,419,447 2,350,480 52,973,698 921,798
Net Position
Net investment in capital assets 16,878,308 17,138,350 25,187,210 935,593) 7,641,393 65,909,668 2,381,289
Restricted for bond retirement 677,911 709,910 1,973,360 3,361,181
Restricted for commercial passenger vessel tax 1,788,933 1,788,933
Unrestricted (deficit) 4,626,965 2,898,003 174,728 2,918,472) 4,586,343 9,367,567 1,978,817
Total net position 22,183,184 22,535,196 25,361,938 1,880,705) 12,227,736 80,427,349 4,360,106
Total liabilities and net position 29,393,945 30,470,705 25,419,439 33,538,742 14,578,216 5,281,904
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 1,576,372
Net position of business -type activities 82,003,721
See accompanying notes to basic financial statements.
25
Exhibit C -2
CITY OF SEWARD
Proprietary Funds
Statement of Revenues, Expenses and Change in Net Positions
Year Ended December 31. 2012
Operating expenses
Salaries and benefits
Enterprise Funds
1,005,103 74,278 11,959,000 662,824 14,957,794 364,902
Total Internal
838,311
Major Funds Nonmajor Enterprise Service
Electric Harbor SMIC PSMCC Funds Funds Funds
Operating revenues:
419,977 2,435,175
Depreciation
Charges for services 11,224,511 3,169,744 414,737 18,728,364 2,373,066 35,910,422
Vehicle rental and interfund
425,597
Total operating expenses 9,565,297 3,252,243
charges 873,901
Total operating revenues 11,224,511 3,169,744 414,737 18,728,364 2,373,066 35,910,422 873,901
Operating expenses
Salaries and benefits 1,256,589 1,005,103 74,278 11,959,000 662,824 14,957,794 364,902
Services and supplies 5,731,666 838,311 155,760 3,806,000 846,039 11,377,776
Administration 855,843 327,766 96,589 735,000 419,977 2,435,175
Depreciation 1,721,199 1,081,063 601,831 4,012,579 536,320 7,952,992 425,597
Total operating expenses 9,565,297 3,252,243 928,458 20,512,579 2,465,160 36,723,737 790,499
Earnings (loss) from operations 1,659,214 82,499) 513,721) 1,784,215) 92,094) 813,315) 83,402
Nonoperating revenues (expenses)
Intergovernmental - PERS on- behalf 37,451 73,050 42,794 153,295
Fleet relocation grant
Fleet relocation study
Investment income 119,536 59,211 944 8,435 21,050 209,176 62,910
Interest expense 319,192) 299,765) 1,348,255) 35,660) 2,002,872) 16,831;
Commercial passenger vessel tax 343,265 343,265
Gain on disposal of capital assets 4,037 4,037 1,522
Grant revenue 1,000 1,000
Other expenses 51,206) 51,206)
Dredging 699,332) 699,332)
Net nonoperating revenues (expenses) 213,411) 523,571) 944 1,334,783) 28,184 2,042,637) 47,601
Earnings (loss) before contributions
and transfers 1,445,803 606,070) 512,777) 3,118,998) 63,910) 2,855,952) 131,003
Capital contributions 141,677 1,324,067 216,529 30,000 20,070 1,732,343
Transfers in 150,834 320,000 123,187 1,053,063 1,647,084
Transfers out 1,234,951) 599,274) 89,964) 1,453,023) 240,855) 3,618,067)
Change in net position 503,363 438,723 263,025) 3,488,958) 284,695) 3,094,592) 131,003
Beginning net position, as restated 21,679,821 22,096,473 25,624,963 1,608,253 12,512,431 4,229,103
Ending net position $ 22,183,184 22,535,196 25,361,938 1,880,705) 12,227,736 4,360,106
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds 10,415
Change in net position of business -type activities 3,084,177)
See accompanying notes to basic financial statements.
26
Cash flows from operating activities:
Receipts from customers and users
Payments to suppliers
Payments to employees
Payments for interfund services used
Receipts from interfund charges
Net cash flows from operating
activities
Cash flows from noncapital financing activities:
Transfers in
Transfers out
Net cash flows from noncapital
financing activities
Cash flows from capital and related
financing activities:
Principal payments on long -term debt
Interest payments on long -term debt
Issuance of interfund loans
Acquisition of property, plant and
equipment
Proceeds from sale of capital assets
Capital contributions received
Interfund loan payments
Commercial passenger vessel tax receipts
Decrease in due to other funds
Transfers in
Net cash flows from capital and
related financing activities
Cash flows from investing activities:
Investment income received
Interfund loan receipts
Net cash flows from investing
activities
Net increase (decrease) in cash
and investments
Beginning cash and investments
Ending cash and investments
Reconciliation of cash and investments
to statement of net assets:
Current assets
Restricted assets
345,000) (400,000)
323,987) (304,553)
288,967) (1,616,685) (216,528)
142,106 1,760,085 182,494
22,357) -
1,411,435 -
20,949)
40,050
1,565,000) (620,175) (2,930,175)
1,308,736) (166,297) (2,103,573)
3,348,219 3,348,219
43,687) (64,692) (2,230,559)
31,000 21,295 2,136,980
62,525) - (84,882)
1,411,435
169,000) (189,949)
40,050
191,219)
19,204)
231,753)
1,522
775,798) 827,925 54,983) 230,271 829,869)
Exhibit C -3
440,654)
CITY OF SEWARD
Proprietary Funds
59,211 944 8,435 21,050
Statement of Cash Flows
66,542
16,769
Year Ended December 31, 2012
16,769 68,113
Enterprise Funds
136,305 59,211 944 8,435
Total Internal
134,655
Major Funds Nonmajor Enterprise Service
Electric Harbor SMIC PSMCC Funds Funds Funds
11,028,065 3,045,369 585,070 18,976,364 2,364,358 35,999,226
1,443,617
5,914,948) 1,902,296) (249,043) 4,021,680) 773,458) 12,861,425)
144,503
1,208,988) 929,233) (74,119) 11,828,000) 608,631) 14,648,971) 335,941)
855,843) 327,766) (96,589) 419,977) 1,700,175)
2,435,687 2,187,442 10,433,228 1,544,384
873,901
2,383,536 1,973,360 355,487 6,450,672
3,048,286 113,926) 165,319 3,126,684 562,292 6,788,655 537,960
16,883,900 1,544,384
110,784 320,000 123,187 1,053,063 1,607,034
1,234,951) 599,274) (89,964) 1,453,023) 240,855) 3,618,067)
1,124,167) 279,274) 33,223 399,960) 240,855) 2,011,033)
345,000) (400,000)
323,987) (304,553)
288,967) (1,616,685) (216,528)
142,106 1,760,085 182,494
22,357) -
1,411,435 -
20,949)
40,050
1,565,000) (620,175) (2,930,175)
1,308,736) (166,297) (2,103,573)
3,348,219 3,348,219
43,687) (64,692) (2,230,559)
31,000 21,295 2,136,980
62,525) - (84,882)
1,411,435
169,000) (189,949)
40,050
191,219)
19,204)
231,753)
1,522
775,798) 827,925 54,983) 230,271 829,869) 602,454) 440,654)
119,536 59,211 944 8,435 21,050 209,176 66,542
16,769 16,769 68,113
136,305 59,211 944 8,435 21,050 225,945 134,655
1,284,626 493,936 144,503 2,965,430 487,382) 4,401,113 231,961
2,350,230 5,658,629 1,443,617 3,030,311 12,482,787 1,312,423
3,634,856 6,152,565 144,503 4,409,047 2,542,929 16,883,900 1,544,384
1,896,567 3,769,029 144,503 2,435,687 2,187,442 10,433,228 1,544,384
1,738,289 2,383,536 1,973,360 355,487 6,450,672
3,634,856 6,152,565 144,503 4,409,047 2,542,929 16,883,900 1,544,384
See accompanying notes to basic financial statements.
27
Reconciliation of earnings (loss) from
operations to net cash provided (used)
by operating activities:
Earnings (loss) from operations
Adjustments to reconcile earnings (loss)
from operations to net cash flows from
operating activities:
Depreciation
Amortization of deferred loss
Other nonoperating expenses
Noncash expense - PERS on- behalf
Increase (decrease) in allowance for
doubtful accounts
Increase) decrease in assets:
Receivables
Inventory
Other assets
Increase (decrease) in liabilities:
Accounts payable
Other payables
Accrued payroll and related liabilities
Accrued annual leave
Customer deposits
Unearned revenue
Net cash flows from
operating activities
Noncash capital and related financing activities -
purchase of equipment included in
accounts payable
Exhibit C -3, continued
CITY OF SEWARD
Proprietary Funds
Statement of Cash Flows, continued
235,092)
See accompanying notes to basic financial statements.
28
Enterprise Funds
Total Internal
Major Funds Nomnajor Enterprise Service
Electric Harbor SMIC PSMCC Funds Funds Funds
1,659,214 82,499) 513,721) 1,784,215) 92,094) 813,315) 83,402
1,721,199 1,081,063 601,831 4,012,579 536,320 7,952,992 425,597
51,206) 699,332) 750,538)
37,451 73,050 42,794 153,295
7,373 9,916 566,000) 6,122 542,589)
205,376) 80,975) 173,076 804,000 14,830) 675,895
66,533) 3,722 62,811)
213,680) 213,680)
65,543) 364,653) 93,283) 42,000) 68,859 496,620)
775,000 775,000
845) 3,947) 159 131,000 420 126,787
10,995 6,767 10,979 28,741 28,961
27,357 5,691 33,048
25,800) 59,007) 2,743) 10,000 77,550)
3,048,286 113,926) 165,319 3,126,684 562,292 6,788,655 537,960
235,092)
See accompanying notes to basic financial statements.
28
CITY OF SEWARD
Fiduciary Fund
Statement of Fiduciary Net Position
December 31, 2012
A cePtc
Cash and investments
Other assets
Total assets
Liabilities
Accounts payable
Due to Teen Council
Total liabilities
See accompanying notes to basic financial statements.
29
P
Exhibit D -1
Teen
Council
Agency
Fund
54,719
150
54,869
1,418
53,451
54,869
This page left blank intentionally)
30
CITY OF SEWARD
Notes to Basic Financial Statements
December 31, 2012
1) Summary of Significant Accounting Policies
Reporting Entity_
The City of Seward, Alaska (the City) was incorporated June 1, 1912 as a home -rule city and
operates under a Council- Manager form of government. The City provides the full range of
municipal services as provided for by Alaska Statute. This includes police and fire protection,
electric, water and wastewater services, library, parks and recreation, public improvements,
planning and zoning, port and harbor, hospital and long -term care, and general administrative
services.
The accompanying financial statements present the City of Seward. In 2011 the City adopted the
provisions of GASB Statement number 61, The Financial Reporting Entity: Ombnibus. In
connection therewith, the City reviewed its legal and contractual arrangements with the Providence
Seward Medical Center which was previously reported as a discreet component unit, and
determined that, for financial reporting purposes in accordance with generally accepted accounting
principles, this activity is appropriately recorded as an enterprise fund of the City.
The PSMCC facilities (hospital and long -term care facilities) are owned by the City of Seward.
The facilities are managed by Providence Health & Services — Washington, a nonprofit
corporation (the Corporation), under a management and operating agreement. Under the operating
agreement, the Corporation is responsible for day to day management of the PSMCC in exchange
for a management fee. All financial risks and rewards from the operations of the PSMCC accrue
to the City. The City is responsible for debt obligations, including payment of revenue bonds
through revenues generated at the PSMCC. The City pays for all capital costs of the healthcare
facilities and is legally obligated to finance potential deficits.
Government -Wide and Fund Financial Statements
The accounting policies of the City conform to accounting principles generally accepted in the
United States of America as applicable to governments. The following is a summary of the more
significant policies:
The government -wide financial statements (i.e., the statement of net position and the statement of
activities) report information on all of the nonfiduciary activities of the primary government. In
general, the effect of interfund activity has been removed from these statements to minimize the
double - counting of internal activities. Governmental activities, which normally are supported by
taxes and intergovernmental revenues, are reported separately from business -type activities, which
rely primarily on fees and charges to external parties.
31
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Summary of Significant Accounting Policies, continued
Government -Wide and Fund Financial Statements, continued
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. Program revenues include 1) fees, fines and
charges to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or segment.
Taxes, investment income and other items not properly included among program revenues are
reported instead 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.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government -wide and proprietary fund financial statements are reported using the economic
resources measurement focus and the accrual basis of accounting. Revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing of the
related cash flows. Property taxes are recognized as revenues in the year for which they are levied.
Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed
by the provider have been met. The Fiduciary Fund also uses the accrual basis of accounting.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the City considers all revenues, except reimbursement grants, to
be available if they are collected within 60 days after year end. Reimbursement grants are
considered available if they are collected within one year 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 expenditures related to compensated absences are
recorded only to the extent they have matured.
Property taxes, sales taxes, charges for services, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as revenues of
the current fiscal period. Only the portion of special assessments receivable due within the current
fiscal period is considered to be susceptible to accrual as revenue in the current period. Most other
revenue items are considered to be measurable and available only when received by the
government.
32
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Summary of Significant Accounting Policies, continued
Measurement Focus, Basis of Accounting, and Financial Statement Presentation, continued
The City reports the following major funds based on the required quantitative criteria:
Major Governmental Funds:
The General Fund is the government's primary operating fund. It accounts for all financial
resources of the general government, except those required to be reported in another fund.
The Library /Museum Capital Project Fund accounts for all activities related to the design and
construction of the new library and museum.
Major Proprietary Funds:
The Electric Enterprise Fund accounts for all activities related to the operation of the City's electric
utility.
The Harbor Enterprise Fund accounts for the marine- related activities of the City's harbor.
The Seward Marine Industrial Center (SMIQ Enterprise Fund accounts for marine - related
services on the east side of Resurrection Bay.
The Providence Seward Medical & Care Center Enterprise Fund accounts for the local hospital
and long -term care facilities.
The City also reports two Internal Service Funds which account for the activities relating to the City's
motor pool activities and accrued leave of the governmental funds. The Motor Pool Internal Service
Fund reports revenues charged to the other funds based on rental fees and capital lease payments
designed to cover the cost of the lease payments and to fund depreciation. The Compensated Annual
Leave Internal Service Fund accounts for the accrual and payment of compensated absences of the
governmental activities.
In addition, the City maintains and reports on a single fiduciary fund. This fund records cash held in a
fiduciary capacity on behalf of the local teen council.
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.
33
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Summary of Significant Accounting Policies, continued
Measurement Focus, Basis of Accounting, and Financial Statement Presentation, continued
As a general rule the effect of interfund activity has been eliminated from the government -wide
financial statements. Exceptions to this general rule are allocated administration fees and charges
between the enterprise funds and the various other funds and departments. Elimination of these
charges would distort the direct costs and program revenues reported for the various functions
concerned.
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. In addition, general revenues include all taxes,
investment income, and State of Alaska entitlement revenues.
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. Operating
expenses for the proprietary funds include the costs 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.
Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g. roads 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 $2,500 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. In the
case of the initial capitalization of infrastructure assets, the City chose to include all such items,
regardless of their acquisition date.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend the useful life of the asset are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business -type activities is
included as part of the capitalized value of the assets constructed.
Property, plant, and equipment of the City is depreciated using the straight -line method over the
following estimated useful lives:
Buildings and improvements 20 -40 years
Infrastructure 50 years
System infrastructure 20 -50 years
Machinery and equipment 3 -8 years
34
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Summary of Significant Accounting Policies, continued
Central Treasury
A central treasury is used to account for the City's cash and investments to maximize
investment income. Investments are stated at fair value. Investment income is allocated among
the funds based on their respective cash balances.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the proprietary funds consider all cash and
investments to be cash and cash equivalents. The central treasury, which holds cash and
investments, is used essentially as a cash management pool by each fund.
Prepaid Items
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. Cost is recorded as an
expenditure or expense as the prepayment is applied (consumption method).
Inventory
Inventories are valued at cost in governmental funds and at the lower of cost or market in the
proprietary funds. Cost is determined by the first -in, first -out method. The cost is recorded as an
expenditure or expense at the time individual inventory items are consumed (consumption
method).
Grants and Other Intergovernmental Revenues
In applying the measurable and available concepts to grants and intergovernmental revenues, the
legal and contractual requirements of the numerous individual programs are used as guidance.
There are, however, essentially two types of these revenues. In one, monies must be expended on
the specific purpose or project before any amounts are considered "earned "; therefore, revenues are
recognized based upon expenditures recorded. In the other, monies are virtually unrestricted as to
purpose of expenditure and are usually revocable only for failure to comply with prescribed
compliance requirements. These resources are reflected as revenues at the time of receipt or earlier
if the measurable and available criteria are met.
Proper!. Taxes
Property taxes are liens on the assessed value of taxable property as of January 1. Pursuant to
Alaska Statutes, the City establishes the mill rate and tax levy on or before June 15. The City is
located within the Kenai Peninsula Borough, which acts as the City's agent in the billing and
collection of property taxes. Tax bills for one -half of the taxes are mailed prior to July 1 and are
payable on August 15; tax bills for the second -half of the taxes are mailed by October 1 and are
payable on November 15. City property tax revenues are recognized in the fiscal year in which
they are collectible and available (collected within sixty days after year -end) to finance
expenditures of the fiscal year.
At December 31, the delinquent real and personal property taxes not currently available are
reflected as deferred revenues of the General Fund.
35
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Summary of Significant Accounting Policies, continued
Receivables and Pqyables
Activity between funds that are representative of lendingiborrowing arrangements outstanding at
the end of the year are referred to as either "due to / from other funds" (i.e., the current portion of
interfund loans) or "advances to / from other funds" (i.e., the noncurrent portion of interfund
loans). All other outstanding balances between funds are reported as "due to / from other funds."
Any residual balances outstanding between the governmental activities and business -type activities
are reported in the government -wide financial statements as "internal balances."
Accrued Annual Leave
The City allows employees to accumulate earned but unused vacation and sick leave benefits. All
accrued leave is accrued when incurred in the government -wide, proprietary fund, and
governmental fund financial statements. Accrued leave that is earned in the governmental funds is
accounted for in the Compensated Annual Leave Internal Service Fund.
Long -Term Debt
In the government -wide and the proprietary 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 position. Bond premiums and discounts,
are deferred and amortized over the life of the bonds using the straight -line method.
Fund Balances
In the fund financial statements, governmental funds report aggregate amounts for five
classifications of fund balances based on the constraints imposed on the use of these resources.
The nonspendable fund balance classification includes amounts that cannot be spent because
they are either (a) not in spendable form— prepaid items or inventories; or (b) legally or
contractually required to be maintained intact.
The spendable portion of the fund balances comprises the remaining four classifications:
restricted, committed, assigned, and unassigned.
Restricted fund balance – This classification reflects the constraints imposed on resources either
a) externally by creditors, grantors, contributors, or laws or regulations of other governments;
or (b) imposed by law through constitutional provisions or enabling legislation.
Committed fund balance – These amounts can only be used for specific purposes pursuant to
constraints imposed by formal resolutions of the City Council —the government's highest level
of decision making authority. Those committed amounts cannot be used for any other purpose
unless the City Council removes the specified use, also through resolution. This classification
also includes contractual obligations to the extent that existing resources in the fund have been
specifically committed for use in satisfying those contractual requirements.
36
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Summary of Significant Accounting Policies, continued
Fund Balances, continued
Assigned fund balance – This classification reflects the amounts constrained by the City's
intent" to be used for specific purposes, but are neither restricted nor committed. City
Resolution 2009 -131 delegates authority to assign fund balance to the City Manager and the
Finance Director. Assigned fund balances, by default, include all remaining amounts (except
negative balances) that are reported in governmental funds, other than the General Fund, that
are not classified as nonspendable and are neither restricted nor committed.
Unassigned fund balance – This fund balance is the residual classification for the General Fund.
It is also used to report negative fund balances in other governmental funds.
When both restricted and unrestricted resources are available for use, it is the City's policy to
use externally restricted resources first, then unrestricted resources committed, assigned, and
unassigned—in order as needed.
Encumbrances
Encumbrance accounting, under which purchase orders, contracts and other commitments for
expenditures are recorded in order to reserve that portion of the applicable appropriation, is
employed as an extension of formal budgetary integration in the General Fund during the year.
However, it is the City's policy to stop issuing purchase orders in early December. As a result,
there are no outstanding encumbrances at December 31, 2012. Outstanding purchase orders, if
any, at December 31, are cancelled and new ones are issued in the subsequent year.
Unearned Grant Revenue
Amounts received from grantor agencies, which are restricted as to use and have not been
expended for the intended use, are shown as unearned revenue.
Change in Accounting Principle
The City has adopted newly issued GASB pronouncements 63 and 65, resulting in a change in
presentation of the government -wide and fund level financial statements. The new
pronouncements require reporting two new categories of accounts. Certain items previously
reported as assets are now categorized as deferred outflows. A deferred outflow represents the
consumption of the government's net assets or fund balance that is applicable to a future reporting
period. Other items previously categorized as liabilities are now categorized as deferred inflows.
A deferred inflow represents the acquisition of net assets or fund balance that is applicable to a
future reporting period. For example, revenues that have been earned but are not yet available in
the governmental funds are now reported as deferred inflows. In the government -wide financial
statements, the residual net of all of the accounts is now called net position. As discussed further
in Note 9, these statements have been retrospectively applied resulting in a restatement of opening
net position.
Pension Plans
With the exception of certain Electric Fund employees, substantially all other employees of the
City participate in the Public Employees' Retirement System (PERS) administered by the State of
Alaska.
37
CITY OF SEWARD
Notes to Basic Financial Statements, continued
2) Stewardship, Compliance and Accountability
Budgetary Accounting
An operating budget is adopted each fiscal year for the General Fund on the same modified accrual
basis used to reflect actual revenues and expenditures. Appropriations for this fund lapse at year-
end to the extent that they have not been expended. Budgetary control is exercised at the
department level. The City Manager is authorized to transfer budget amounts between
departments within a fund or between line items within departments, but City Council approval is
required to transfer budget amounts between funds.
Allocation of Sales Tax Revenues
When the City transferred the operations of the Hospital to Providence Seward Medical and Care
Center on July 1, 1996, the City agreed to allocate 1% of the sales tax for the benefit of the
Hospital. During construction, the allocated sales tax was used to offset losses and transition costs.
Subsequent to completion of the construction, the allocated sales tax has been used to fund the debt
service on the Hospital general obligation bonds. Upon maturity of hospital bonds, sales tax
revenues will be used to fund healthcare capital and operating costs, and debt service on long -term
care facility bonds, if necessary. All sales tax revenue is recorded in the General Fund. The
allocated portion is then transferred to the PSMCC Enterprise debt service.
3) Cash and Investments
The City of Seward maintains a central treasury that is available for use by all funds. Each
fund's portion of the central treasury is displayed on the balance sheet as "cash and
investments" or in the case of "negative cash," is included in "due to other funds."
At year -end, $3,299,821 of the City's bank deposits were uninsured and uncollateralized.
Investments
City statutes authorize the City to invest in obligations of the U.S. Treasury and U.S. agencies,
bankers' acceptances, repurchase agreements, commercial paper issued by corporations or
businesses and having the highest rating of a nationally- recognized rating service and maturing
within nine months, certificates of deposit insured by federal depository insurance or secured by
eligible collateral held by a third party in the City's name, and investments through the Alaska
Municipal League Investment Pool ( AMLIP). The City's investment policy does not specify a
maximum investment maturity, but the City generally invests funds for less than three years
from the date of purchase. The City has complied with its investment policy throughout the
year. The City's investments are recorded at fair value.
The AMLIP is an external investment pool which is rated AAAm for credit risk purposes.
Alaska Statute 37.23 establishes regulatory oversight of the pool. The law sets forth numerous
requirements regarding authorized investments and reporting. On a monthly basis the
investments in the pool are reviewed for fair value by an independent pricing service. The
values of investments in the AML pool are approximately equal to fair value.
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Cash and Investments, continued
Reconciliation of Deposit and Investment Balances
The following is a reconciliation of the City's deposit and investment balances to the financial
statements as of December 31, 2012:
Government -
Wide
Statement
of Net Position
Cash and investments $ 18,966,902
Restricted cash and investments 6,450,672
25,417,574
Restricted Cash and Investments
Fiduciary Fund
Statement of
Fiduciary
Net Position Totals
54,719 19,021,621
6,450,672
54 719 25,472,293
The City maintains bond redemption and reserve accounts as required by bond covenants. The
balances at December 31, 2012 are as follows:
PSMCC Fund
Electric Fund
Harbor Fund
1,973,360
677,911
709,910
3.361,181
The City also includes in restricted cash and investments amounts that have been designated for
capital projects. The total amount of restricted cash and investments that has been designated
for capital projects follows:
Harbor Fund 1,673,626
Electric Fund 1,060,378
Water Fund 243,372
Wastewater Fund 112.115
3.089.491
Custodial Risk
The fair value of the City's investments at year -end is shown below. GASB Statement 3, as
amended by GASB Statement 40, establishes categories as an indication of the level of
custodial risk involved in the investments. All of the City's remaining investments are in the
category of least risk and include investments that are insured or registered in the City's name,
or securities that are held by the City or its agent in the City's name. All of the United States
treasury bills, treasury notes, and United States agency securities are held in custodial accounts
in the U.S. Bank and Bank of New York Trust Departments and are recorded in the City's
name, in accordance with safekeeping agreements. U.S. Bank and Bank of New York are not
counter parties to security transactions.
39
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Cash and Investments, continued
Interest Rate Risk
The fair value of the City's fixed - income investments fluctuate in response to changes in market
interest rates. Increases in prevailing interest rates generally translate into decreases in fair
value of those investments. Fair values of interest rate - sensitive instruments may be affected by
the creditworthiness of the issuer, prepayment options, relative values of alternative
investments, the liquidity of the instrument, and other general market conditions. The City
manages interest rate risk by allocating specific percentages of the portfolio over specified time
periods, and generally holds investments for less than five years, which minimizes the
sensitivity of fair value to changes in market interest rates. The City has no formal policy
relating to a specific deposit or interest rate risk.
Investment types and their maturities at December 31, 2012 are as follows:
Option Risk
Option risk is the risk that an investment's counterparty may exercise a right embedded in the
investment — an embedded option. The City invests in securities issued by U.S. government
agencies that contain call provisions. The exercise of the call option by the counterparty occurs
during times of declining interest rates; therefore the City is exposed to the risk of having to
reinvest at a lower interest rate. In the table above, securities are categorized according to the
final maturity, regardless of call option dates. If call options were exercised at the next possible
call date, many of the callable securities would mature in less than one year.
O
Investment Maturities in Years)
Fair Less than 1 to 5 Over
Investment Value 1years 5 years
Certificates of deposit 7,381,493 2,283,274 5,098,219
U.S. government agencies 3,841,826 2,972,336 869,490
U.S. treasury SLGS 247,300 247,300
Repurchase agreements 4,757,244 4,757,244
Total subject to interest rate risk 16,227,863 10,012,854 5.967,709 247,300
Pooled investments 8,088,609
Money market account 592,292
Total investments 24,908,764
Bank deposits 563,529
Total cash and investments 25.472.293
Option Risk
Option risk is the risk that an investment's counterparty may exercise a right embedded in the
investment — an embedded option. The City invests in securities issued by U.S. government
agencies that contain call provisions. The exercise of the call option by the counterparty occurs
during times of declining interest rates; therefore the City is exposed to the risk of having to
reinvest at a lower interest rate. In the table above, securities are categorized according to the
final maturity, regardless of call option dates. If call options were exercised at the next possible
call date, many of the callable securities would mature in less than one year.
O
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Cash and Investments, continued
Concentration Risk
The City's investment policy places no limit on the amount that can be invested in any one
issuer. More than 2% of the total portfolio is invested in securities issued by federal agencies
and currently 36% is held with the Federal Home Loan Bank.
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. The investments in U.S. government agencies include Federal Home
Loan Bank and U.S. Treasuries. All of the U.S. government agencies investments are rated AAA
by Standard and Poors.
The City's investment policy specifies the types of investments that can be purchased, in order
to limit credit risk. The City may invest in obligations of the United States government, its
agencies and instrumentalities; insured or collateralized certificates of deposit; savings
accounts; collateralized repurchase agreements; commercial paper maturing within nine months
issued by corporations having the highest rating of a national rating agency; bankers'
acceptances; and the State investment pool. Credit risk is mitigated by limiting the eligible
investment options.
4) Capital Assets
Capital asset activity for the year ended December 31, 2012 was as follows:
Balance Additions Deletions Balance
January 1, and Reclass- and Reclass- December 31,
41
2012 ifications ifications 2012
Governmental activities
Capital assets not being depreciated*
Land and land improvements $ 5,432,289 5,432,289
Construction in progress 8,714,138 8,136,691 16,931 16,833,898
Total assets not being depreciated 14,146,427 8,136,691 16,931 22,266,187
Capital assets being depreciated:
Buildings 57,991,642 390,048 58,381,690
Improvements other than buildings 16,119,523 47,744 16,167,267
Machinery and equipment 13,668,063 117,045 60,270 13,724,838
Total assets being depreciated 87,779,228 554,837 60,270 88,273,795
41
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Capital Assets, continued
Governmental activities, continued
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Machinery and equipment
Total accumulated depreciation
Total capital assets being
depreciated, net
Governmental activity
capital assets, net
Balance Additions Deletions Balance
January 1, and Reclass- and Reclass- December 31,
2012 ifications ifications 2012
ifications
19,972,793 1,388,950 21,361,743
14,209,926 281,477 14,491,403
8,560,651 884,242 59,820 9,385,073
42,743,370 2,554,669 59,820 45,238,219
17,483,769
Construction in progress
45,035,858 1,999,832) 450 43,035,576
59,182,285 6.136,859 17,381 65,301,763
The ending balances include $405,768, $5,388,091, and $3,183,072 of construction in
progress, equipment cost, and accumulated depreciation, respectively, related to the Motor Pool
Internal Service Fund.
Capital assets being depreciated.-
Buildings
Balance Additions Deletions Balance
Improvements other than buildings
January 1, and Reclass- and Reclass- December 31,
Machinery and equipment
2012 ifications ifications 2012
Business -type activities
180,860,414 8,319,808 1,361,755 187,818,467
Capital assets not being depreciated*
Land and land improvements 17,483,769 17,483,769
Construction in progress 5,820,226 1,821,971 6,887,934 754,263
Total assets not being depreciated 23,303,995 1,821,971 6,887,934 18,238,032
Capital assets being depreciated.-
Buildings 39,005,181 30,289 1,013,983 38,021,487
Improvements other than buildings 125,247,574 7,774,910 4,617 133,017,867
Machinery and equipment 16,607,659 514,609 343,155 16,779,113
Total assets being depreciated 180,860,414 8,319,808 1,361,755 187,818,467
Less accumulated depreciation for
Buildings 9,064,475 2,403,628 11,468,103
Improvements other than buildings 71,971,103 4,314,997 3,809 76,282,291
Machinery and equipment 9,733,964 1,234,367 338,696 10,629,635
Total accumulated depreciation 90,769,542 7,952,992 342,505 98,380,029
Total capital assets being
depreciated, net 90,090,872 366,816 1,019,250 89,438,438
Business -type capital assets, net $ 113.394.867 2.188.787 7.907.184 107.676.470
42
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Capital Assets, continued
Depreciation expense was charged to the functions as follows:
Depreciation
Depreciation Internal
Internal
Excluding Service
Electric
Internal Fund Total
Wastewater
Service Fund Allocation Depreciation
Governmental activities
601,831
Parking 23,968
General government 193,892 113,460 307,352
Public safety 170,801 99,271 270,072
Public works 100,908 190,761 291,669
Parks and recreation 72,660 22,105 94,765
Library 23,830 23,830
Sea Life Center 1,566,981 1,566,981
Total governmental activities 2.129,072 425,597 2.554,669
Depreciation
5) Interfund Receivables, Pavables, and Transfers
A schedule of interfund balances and transfers as of and for the year ended December 31, 2012,
follows. Interfund balances typically result from short -term operating or capital advances.
Transfers typically result from capital matching, operating subsidies, and payment in lieu of
taxes.
Due from other funds:
Due to the General Fund from:
Nonmajor governmental funds $ 789,661
Library/Museum Capital Project Fund 107,334
Total due from other funds $ 896,995
43
Excluding
Internal
Service Fund
Business -type activities
Electric 1,721,199
Water 221,179
Wastewater 291,173
Harbor 1,081,063
SMIC 601,831
Parking 23,968
PSMCC 4,012,579
Total business -type activities 7.952,992
5) Interfund Receivables, Pavables, and Transfers
A schedule of interfund balances and transfers as of and for the year ended December 31, 2012,
follows. Interfund balances typically result from short -term operating or capital advances.
Transfers typically result from capital matching, operating subsidies, and payment in lieu of
taxes.
Due from other funds:
Due to the General Fund from:
Nonmajor governmental funds $ 789,661
Library/Museum Capital Project Fund 107,334
Total due from other funds $ 896,995
43
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Interfund Receivables, Payables, and Transfers, continued
Transfers:
From General Fund to
SMIC Enterprise Fund 121,282
Harbor Enterprise Fund 320,000
Electric Enterprise Fund 110,784
PSMCC Enterprise Fund 1,053,063
Nonmajor governmental funds 662,455
Total transfers from General Fund 2,267,584
From Harbor Enterprise Fund to
Nonmajor governmental funds 222,601
General Fund 374,768
SMIC Enterprise Fund 1,905
Total transfers from Harbor Enterprise Fund 599,274
From Electric Enterprise Fund to General Fund 1,234,951
From nonmaj or governmental funds to General Fund 25,101
From Water Enterprise Fund to General Fund 97,489
From Water Enterprise Fund to Electric Enterprise Fund 40,050
From Wastewater Enterprise Fund to General Fund 79,841
From SMIC Enterprise Fund to General Fund 89,964
From Parking Enterprise Fund to General Fund 23,475
From PSMCC Enterprise Fund to General Fund 1,453,023
Total transfers to other funds $ 5.910,752
The City has three outstanding interfund loans. In 2006, the Motor Pool Fund and the Electric
Fund issued interfund loans in the total amount of $1,708,125 to the PSMCC Enterprise Fund
for the purpose of paying the Seward General Hospital PERS unfunded liability. Repayment is
scheduled over twenty years bearing interest at 5.25 %. Also in 2006, the Motor Pool Fund
loaned $220,258 to the Harbor Enterprise fund for the purpose of purchasing a 50 -ton Boat Lift.
The loan is for ten years and bears interest at 5.5% per year. In 2009, the Water Fund loaned
1,973,260 to the General Fund to be used as a debt service collateral account. Because the cash is
restricted for debt service and is held in a bank account for that purpose, all interest earnings on the
account accrues to the Water Fund and interest is not charged to the General Fund. In addition,
there is no scheduled payback for the funds until they are released from debt service requirements.
In 2012, the outstanding balance on the Seward General Hospital PERS liability ($1,312,334) and
the debt service collateral loan ($1,973,360) were transferred and assigned to the PSMCC
Enterprise Fund from the General Fund.
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Interfund Receivables, Pavables, and Transfers, continued
Amounts outstanding at December 31, 2012 was as follows:
Payable from the PSMCC Enterprise Fund to:
Motor Pool Internal Service Fund 960,361
Electric Enterprise Fund 351,973
Water Enterprise Fund 1,973,360
Total payable from the PSMCC Enterprise Fund 3,285,694
Payable from the Harbor Enterprise Fund to
Motor Pool Internal Service Fund 102,425
Total interfund loans payable $ 3 388 119
6) Long -Term Debt
The following is a summary of long -term debt transactions of the City for the year ended December 31,
2012:
Balance Balance Due
January 1, December 31, Within
2012 Additions Retired 2012 One Year
Governmental activities
General obligation bonds:
3,480,000 2011 General Obligation
bonds, due in annual installments of
85,000 to $240,000, plus interest
at 4.0% to 5.0% through September 1,
2036 $ 3,480,000 - - 3,480,000 -
Capital leases:
Fire truck capital lease obligation, due
in annual installments of $110,177,
including interest at 3.295% through
May 13, 2013 209,892 - 103,230 106,662 106,662
Loaders capital lease obligation, due
in monthly installments of $7,895,
including interest at 3.97% through
April 21, 2014 210,825 - 87,989 122,836 91,516
Accrued annual leave 425,643 370,937 341,976 454,604 115,547
Total governmental activities
long -term liabilities $ 4 326 360 370 937 533 195 4,164,102 313 725
Plus unamortized bond premium 249,027
4 413 129
45
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Long -Term Debt, continued
Liquidation of the accrued annual leave is made by the Compensated Annual Leave Internal
Service Fund. All other debt service payments above are made by the General Fund or Motor Pool
Internal Service Fund directly or by transfers from the General Fund to the Debt Service Fund.
Balance Balance Due
January 1, December 31, Within
2012 Additions Retired 2012 One Year
Business -type activities
General obligation bonds:
5,150,000 2004 refunding hospital
bonds, due in final annual installment
of $710,000, plus interest at 3.5%
through April 1, 2013 $ 1,550,000
Revenue bonds:
6,000,000 2008 Electric revenue
bonds, due in annual installments of
115,000 to $375,000, plus interest at
4.0% to 6.0% through June 1, 2038 5,715,000
840,000 710,000 710,000
110,000 5,605,000 115,000
27,000,000 2008 Series One long
term care facility bonds, due in
annual installments of $750,000 to
1,875,000, plus interest at 4.0% to
5.1% through April 1, 2033 26,320,000 - 710,000 25,610,000 750,000
4,500,000 2006 harbor revenue
bonds, due in annual installments of
190,000 to $330,000, plus interest at
4.0% to 5.0% through June 1, 2026 3,740,000 - 180,000 3,560,000 190,000
1,965,000 2007 refunding harbor revenue
bonds, due in annual installments of
165,000 to $235,000, plus interest at
4.0% to 5.0% through June 1, 2021 1,935,000 - 155,000 1,780,000 165,000
2,290,000 2005 refunding electric revenue
bonds, due in annual installments of
245,000 to $275,000, plus interest at
4.0% to 5.0% through June 1, 2015 1,015,000 - 235,000 780,000 245,000
1,500,000 2005 harbor revenue bonds,
due in annual installments of $65,000
to $110,000, plus interest at 4.0% to
5.0% through June 1, 2025 1,205,000 - 65,000 1,140,000 65,000
e
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Long -Term Debt, continued
Balance
January 1,
Business -type activities, continued 2012
Notes payable:
26,231 sewer note payable to State of
Alaska Department of Environmental
Conservation, due in annual installments
of $1,333, plus interest at 1.5%
through July 15, 2014 $
Balance Due
December 31, Within
Additions Retired 2012 One Year
3,998 - 1,333 2,665 1,333
901,851 sewer note payable to State of
Alaska Department of Environmental
Conservation, due in annual installments
of $60,584, including interest at 1.5%
through November 5, 2013 118,492 58,800 59,692 59,692
2,652,849 water note payable to State of
Alaska Department of Environmental
Conservation, due in annual installments
of $156,844, including interest at 1.5%
through October 1, 2029 2,652,849 - 560,042 2,092,807 125,452
Accrued annual leave 177,236 163,609 134,868 205,977 46,300
Total business -type activities
long -term liabilities $ 44 432 575 163 609 3 050 043 41,546,141 2 472 777
Plus unamortized bond premium 499,409
42 045 550
Annual debt service requirements to maturity on the bonds, notes and capital leases follow:
General Obligation Bonds
Year Ending Governmental Activities
December 31, Principal Interest Total
2013 159,400 159,400
2014 85,000 159,400 244,400
2015 90,000 155,150 245,150
2016 95,000 151,500 246,500
2017 100,000 146,800 246,800
2018 -2022 575,000 657,300 1,232,300
2023 -2027 725,000 509,350 1,234,350
2028 -2032 910,000 324,500 1,234,500
2033 -2036 900,000 97,750 997,750
Business -type Activities
Principal Interest Total
710,000 12,425 722,425
3 480 000 2,361,150 5 841 150 710,000 12 425 722 425
47
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Long -Term Debt, continued
Revenue Bonds
Year Ending
December 31,
2013
2014
2015
2016
2017
2018 -2022
2023 -2027
2028 -2032
2033 -2037
2038
Notes Payable
Year Ending
December 31,
2013
2014
2015
2016
2017
2018 -2022
2023 -2027
Capital Leases
Year Ending
December 31,
2013
2014
Business -type Activities
Principal Interest Total
1,530,000 1,791,364 3,321,364
1,610,000 1,715,438 3,325,438
1,685,000 1,638,207 3,323,207
1,475,000 1,562,482 3,037,482
1,550,000 1,495,709 3,045,709
8,515,000 6,425,842 14,940,842
8,905,000 4,437,120 13,342,120
9,350,000 2,237,487 11,587,487
3,480,000 365,308 3,845,308
375,000 9,844 384,844
38,475,000 21,678,801 60,153,801
Business -type Activities
Principal Interest Total
186,477 32,327 218,804
128,666 29,530 158,196
129,244 27,600 156,844
131,182 25,662 156,844
133,150 23,694 156,844
696,315 87,905 784,220
750,130 34,091 784,221
2.155,164 260,809 2.415,973
Governmental Activities
Principal Interest Total
198,178 6,738 204,916
31,320 252 31,572
229,498 6 990 236,488
CITY OF SEWARD
Notes to Basic Financial Statements, continued
7) Revenue Bond Requirements
Certain covenants of the revenue bonds require establishment of bond redemption and reserve
accounts. The balances are reflected as restricted cash and investments at December 31, 2012
as follows:
Long -term care facility bond reserves $1,973,360
Electric bond reserves 677,911
Harbor bond reserves 709,910
The Electric and Harbor revenue bonds also require that rates be maintained at a level that will
produce net revenues after certain adjustments, equal to 1.3 and 1.2, respectively, times the
amount required each year to pay the principal and interest. The City met these revenue
requirements for both bonds in 2012. The bond coverage calculations are as follows:
Electric Revenue Bonds
Total revenues, excluding grants $ 11,344,047
Total operating expenses, excluding depreciation (7,844,098)
Available for debt service $ 3,499,949
Debt service payments
Principal $ 345,000
Interest (319,192)
Total debt service payments $ 664,192
Debt coverage 5.27
Harbor Revenue Bonds
Total revenues, excluding grants $ 3,228,955
Total operating expenses excluding depreciation (2,171,180)
Available for debt service $ 1.057.775
Debt service payments
Principal $ 400,000
Interest (299,765)
Total debt service payments $ 699,765
Debt coverage 1.51
CITY OF SEWARD
Notes to Basic Financial Statements, continued
8) Capitalized Leases
The City has entered into lease agreements as lessee for financing the acquisition of fire
equipment and public works loaders. These lease agreements qualify as capital leases for
accounting purposes (title transfers at the end of the lease term) and therefore, have been
recorded at the present value of the future minimum lease payments. The following is a
summary of the assets acquired with the capital leases that have an outstanding balance as of
December 31, 2012:
Internal
Service
Fund
Machinery and equipment
Less accumulated depreciation
Carrying value
944,415
248,083)
696,332
The following is a schedule of future minimum lease payments under the capital leases and the
present value of the net minimum lease payments at December 31, 2012:
Internal
Year Ending Service
December 31, Fund
2013 $ 204,915
2014 31,572
Total minimum lease payments 236,487
Less interest portion 6 989)
Present value of future minimum
lease payments 229,498
Less current portion (198,178)
Long -term portion $ 31.320
9) Change in Accounting Principles — Adoption of GASB Pronouncements - Restatement
The City has adopted newly issued GASB pronouncement numbers 63 and 65, resulting in a
change in presentation for the government -wide financial statements. The new pronouncements
require, among other things, that debt issuance costs be recognized as an expense in the year
incurred, rather than capitalizing and amortizing these costs over the life of the debt.
Retroactive restatement of net position is required in the year of adoption.
50
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Change in Accounting Principles — Adoption of GASB Pronouncements - Restatement,
continued
The beginning net position in the Electric, Harbor, and PSMCC Enterprise Funds and the
Business -type Activities have been restated as follows:
2012 beginning net position,
as previously presented
Restatement; write off
unamortized debt issue costs
2012 beginning net position,
as restated
Electric Harbor PSMCC Business -
Enterprise Enterprise Enterprise type
Fund Fund Fund Activities
21,771,360 22,175,687 2,042,841 85,693,239
91,539) (79,214) 434 588) (605,341)
21,679,821 22,096,473 1.608,253 85,087,898
10) Fund Balances
Fund balances, reported for the major funds and the nonmajor funds in the aggregate on the
governmental funds balance sheet are subject to the following constraints:
Nonspendable:
Inventory
Prepaid items
Total nonspendable
Restricted for library
and museum
Committed:
Working capital
Insurance
Hospital line of credit
Total committed
Library/Museum
General Capital Project Nonmajor
Fund Fund Funds Totals
9,375 - - 9,375
448,522 - - 448,522
457,897 - - 457,897
26,080 - 26,080
1,500,000 - - 1,500,000
126,418 - - 126,418
500,000 - - 500,000
2,126,418 - - 2,126,418
51
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Fund Balances, continued
Assigned:
Park and recreation
General government
Public works
Library
Capital projects
Total assigned
Unassigned (deficit)
Total fund balances
11) Defined Benefit Pension Plan
Library/Museum
General Capital Project
Fund Fund
Nonmaj or
Funds Totals
S - - 2,520
115,495
11,031
11,438
751,381
891,865
2,520
115,495
11,031
11,438
751,381
891,865
4,827,055 12,880) 4,814,175
7.411,370 26,080 878,895 8.316,435
The City participates in the Public Employees' Retirement System (PERS). PERS is a cost -
sharing multiple employer plan which covers eligible State and local government employees,
other than teachers. The Plan was established and is administered by the State of Alaska
Department of Administration to provide pension, postemployment healthcare, death, and
disability benefits. Benefit and contribution provisions are established by State law and may be
amended only by the State Legislature.
The Plan is included in a comprehensive annual financial report that includes financial
statements and other required supplemental information. The report is available at the following
address:
Department of Administration
Division of Retirement and Benefits
P.O. Box 110203
Juneau, Alaska 99811 -0203
Conversion to Cost Sharing
In April 2008, the Alaska Legislature passed legislation which converted the existing Public
Employees Retirement System (PERS) from an agent - multiple employer plan to a cost -
sharing plan with an effective date of July 1, 2008. Under the cost - sharing arrangement, the
State of Alaska Division of Retirement and Benefits no longer tracks individual employer
assets and liabilities. Rather, all plan costs and past service liabilities are shared among all
participating employers.
52
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Defined Benefit Pension Plan, continued
Conversion to Cost Sharing, continued
That same year, the State of Alaska passed additional legislation which statutorily capped the
employer contribution, established a state funded "on- behalf' contribution, and required that
employer contributions be calculated against all PERS eligible wages, including wages attributable
to the defined contribution plan described later in these footnotes.
Employee Contribution Rates
Regular employees are required to contribute 6.75% of their annual covered salary (2.97% for
pension and 3.78% for healthcare). Police and firefighters are required to contribute 7.5% of
their annual covered salary (3.29% for pension and 4.21% for healthcare).
Employer and Other Contribution Rates
There are three contribution rates associated with the pension and healthcare contributions and
related liabilities:
Contractual Rate: This is the required funding rate for participating employers. The contractual
rate is statutorily capped at a uniform 22% of eligible wages, subject to a wage floor, and other
termination events. This 22% rate includes all PERS participating wages, including those wages
attributable to employees in the defined contribution plan.
ARM Board Adopted Rate: This is the rate formally adopted by the Alaska Retirement
Management (ARM) Board. This rate is actuarially determined to calculate annual funding
requirements of the Plan, without regard to the statutory rate cap. There are no constraints or
restrictions on the actuarial cost method or other assumptions used in this valuation, other than
those established and agreed to by the ARM Board.
Current legislation provides that the State of Alaska will contribute the difference between the
ARM Board adopted rate and the contractual (statutory) rate. These additional contributions are
recognized by each employer as an on- behalf payment and are reflected within the financial
statements.
GASB 43 Rate: This is the rate used to determine the long -term pension and healthcare liability
for plan accounting purposes in accordance with generally accepted accounting principles as
established by GASB. Certain actuarial methods and assumptions for this rate calculation are
mandated by GASB. For FY13, the rate uses an 8.00% pension discount rate and a 6.88%
healthcare discount rate. Additionally, the GASB 43 rate disregards all future Medicare Part D
payments.
The GASB 43 rate differs significantly from the ARM board adopted rate as a direct result of
differences in the actuarial valuation methodology and assumptions.
53
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Defined Benefit Pension Plan, continued
Employer and Other Contribution Rates, continued
Contribution rates for the six months ended June 30, 2012 were determined as part of the June
30, 2009 actuarial valuation. Rates for the six months ended December 31, 2012 (State fiscal
year 2013) were determined in the June 30, 2010 valuation.
State FYI 3
July to December
Pension 9.67% 15.75% 24.95%
Postemployment healthcare 12.33% 20.09% 39.93%
Total contribution rate 22.00% 35.84% 64.88%
Annual Pension and Postemployment Healthcare Cost
The City is required to contribute 22% of covered payroll, subject to a wage floor. In addition,
the State of Alaska contributed approximately 11.49% and 13.84% of covered payroll to the
Plan for each six month period noted above, respectively. In accordance with the provisions of
GASB Statement Number 24, the City has recorded the State on- behalf payment in the amount
of $625,512 as revenue and expense /expenditures in these financial statements. However,
because the City is not statutorily obligated for these payments, this amount is excluded from
pension and OPEB cost as described here.
Employer ARM Board
Total
Contractual Adopted GASB 43
State FY 12 Rate Rate Rate
January to June
Pension OPEB Cost
Pension 9.92% 15.10% 23.10%
Postemployment healthcare 12.08% 18.39% 32.74%
Total contribution rate 22.00% 33.49% 55.84%
State FYI 3
July to December
Pension 9.67% 15.75% 24.95%
Postemployment healthcare 12.33% 20.09% 39.93%
Total contribution rate 22.00% 35.84% 64.88%
Annual Pension and Postemployment Healthcare Cost
The City is required to contribute 22% of covered payroll, subject to a wage floor. In addition,
the State of Alaska contributed approximately 11.49% and 13.84% of covered payroll to the
Plan for each six month period noted above, respectively. In accordance with the provisions of
GASB Statement Number 24, the City has recorded the State on- behalf payment in the amount
of $625,512 as revenue and expense /expenditures in these financial statements. However,
because the City is not statutorily obligated for these payments, this amount is excluded from
pension and OPEB cost as described here.
54
Total
Year Annual Annual Benefit City of
Ended Pension OPEB Cost Contri- TBC
December 31 Cost Cost TBC) butions Contributed
2012 405,911 517,664 923,575 923,575 100%
2011 338,913 610,905 949,818 949,818 100%
2010 336,569 588,328 924,897 924,897 100%
54
CITY OF SEWARD
Notes to Basic Financial Statements, continued
12) Defined Contribution Pension Plan
Employees hired after July 1, 2006 participate in PERS Tier IV, a defined contribution plan. The
Plan is administered by the State of Alaska, Department of Administration, and benefit and
contribution provisions are established by State law and may be amended only by the State
Legislature. The Alaska Retirement Management Board may also amend contribution
requirements. Included in the Plan are individual pension accounts, retiree medical insurance plan
and a separate Health Reimbursement Arrangement account that will help retired members pay
medical premiums and other eligible medical expenses not covered by the medical plan.
Employee Contribution Rates
Employees are required to contribute 8.0% of their annual covered salary. This amount goes
directly to the individual account.
Employer Contribution Rates
The City is required to contribute the following amounts based on covered salary:
Others Police /Fire
Julv to December
Individual account
Tier IV Tier IV
January to June
0.48 0.48
Individual account 5.00% 5.00%
Retiree medical plan 0.51 0.51
Occupational death and disability benefits 0.20 0.97
5.71 % 6.48%
Julv to December
Individual account 5.00% 5.00%
Retiree medical plan 0.48 0.48
Occupational death and disability benefits 0.14 0.99
5.62% 6.47%
In addition, the employer must contribute to the Health Reimbursement Arrangement. AS
39.30.370 establishes this contribution amount as "three percent of the average annual employee
compensation of all employees of all employers in the plan ". As of July 1, 2012, for actual
remittance, this amount is calculated as a flat rate for each full time or part -time employee per pay
period and approximates $1,848 per year for each full -time employee, and $1.18 per hour for part -
time employees.
Employees are immediately vested in their own contributions and vest 25% per year in employer
contributions. The City and employee contributions to PERS including the HRA contribution for
the year ended December 31, 2012 were $134,724 and $113,648, respectively.
55
CITY OF SEWARD
Notes to Basic Financial Statements, continued
13) International Brotherhood of Electrical Workers
Certain Electric Fund employees are members of the International Brotherhood of Electrical
Workers, which maintains its own defined contribution pension plan. There are two separate
negotiated contracts for temporary and permanent employees. The City's contribution rate for
temporary employees is $10.77 per compensable hour per the terms of a negotiated agreement
expiring December 31, 2012. The City's contribution rate for permanent employees is $800 per
employee per month per the terms of a negotiated agreement expiring June 30, 2013. The total
City contribution for the year ended December 31, 2012 was $70,686. Employees are not
required to contribute.
14) Deferred Compensation Plan
The City offers its employees a voluntary deferred compensation plan created in accordance
with Internal Revenue Code Section 457. The Plan, available to all employees, permits them 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. The provisions of
the Plan require that all assets and income of the Plan be held in trust for the exclusive benefit
of participants and their beneficiaries.
15) Risk Management
The City faces a considerable number of risks of loss, including (a) damage to and loss of
property and contents, (b) employee torts, (c) professional liability; i.e., errors and omissions,
d) environmental damage, (e) workers' compensation; i.e., employee injuries, and (f) medical
insurance costs of employees.
The City is a member of the Alaska Municipal League Joint Insurance Association (JIA), a
governmental insurance pool established by the Alaska Municipal League. The JIA provides
the City coverage for property, including building and contents, automobiles, mobile
equipment, data processing equipment and boiler and machinery; casualty, including general
liability, public officials and employees liability, law enforcement professional liability, auto
liability and employee benefit liability; workers' compensation, including employers liability;
and commercial blanket bond. The City maintains supplemental marine insurance and
firefighters group accident coverage with insurance companies placed through JIA. The City
has no coverage for potential losses from environmental damages.
The JIA is a public entity risk pool organized to share risks among its members. The
Association's bylaws provide for the assessment of supplemental contributions from members
in the event that losses and expenses for any coverage year exceed the annual contributions and
income earned on such contributions for the year. Such supplemental contributions shall be
based upon each member's deposit contribution in comparison to the aggregate deposit
contributions of all members. The Association made no supplemental assessments during the
year ended December 31, 2012.
56
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Risk Management, continued
The HA provides loss control services and conducts periodic inspections to ensure safe
operations. The City has utilized an established safety committee to review and recommend
safety policies and procedures for all departments. The City Council designates a portion of the
General Fund balance to meet potential losses not covered by insurance and insurance
deductibles.
The City also participates in the Alaska Public Utilities Insurance Trust, which provides
insurance coverage for employee health benefits. The Plan is a public entity risk pool in which
risks are shared among the members. Stop loss insurance limits participants' liability for
individual and aggregate claims.
There was no significant reduction in the City's major categories of risk insurance coverage
from the prior year, and the amount of settlements for the past three fiscal years did not
materially exceed the City's insurance coverage.
16) Commitments and Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by
grantor agencies, principally the state and federal government. Any disallowed claims,
including any amount already collected, could become a liability of the applicable funds.
The City of Seward is the owner of the Alaska Sealife Center ( "Center"), which is operated on
the City's behalf by the Seward Association for the Advancement of Marine Science
SAAMS "). The City is obligated to abide by provisions of the Cooperative Agreement
Agreement ") between the City and the State of Alaska Department of Fish and Game, which
served as a significant funding source for the construction of the Center. The City has passed
most of its obligations for operating the Center on to SAAMS through a management and
operating agreement ( "Operating Agreement "), but the City ultimately remains responsible to
ensure that provisions of the Agreement with the State are met. The Operating Agreement
requires, in part, that SAAMS maintain sufficient termination fund reserves to enable the City
to operate the facility for up to one full year in the event SAAMS is unable to meet its
obligations under the Operating Agreement. The estimated costs of operating the Center for a
full year are not easily measured based on imprecise definitions of the requirements, but could
approach $3 million per year. The Operating Agreement does not require SAAMS to maintain
that level of reserves, and to the extent their termination fund reserve levels are inadequate, the
City would be expected to cover any shortfall. The City does not currently have adequate
reserves in its General Fund to cover this potential shortfall.
Various other claims and lawsuits against the city are pending, but are either covered by
insurance or are the type which are normal and reasonable in view of the City's operations. City
management believes the total amount of the liability, if any, which may arise from such claims
and lawsuits beyond that which is covered by insurance would not have a material effect on the
City's financial condition or its ability to carry on its activities as now conducted.
57
CITY OF SEWARD
Notes to Basic Financial Statements, continued
17) Fund Deficits
The following funds had a deficit in fund balance at December 31, 2012. The deficits will be
eliminated in the future with transfers from other funds.
Flood Mitigation Capital Project Fund $ 10,019
Fire Department Equipment Capital Project Fund 478
Fish Ditch Restoration Special Revenue Fund 2,383
18) Subsequent Events
Subsequent to year end the City was awarded a $10 million State of Alaska legislative grant for
expansion of the Seward Marine Industrial Center. Also following year end, the City entered
into a settlement agreement with State of Alaska to resolve a rate claim for outstanding
Medicaid billings. Under the terms of the agreement, the State will pay the City $6.1 million to
settle claims for a four year period running from 2010 -2013.
19) New Accounting Pronouncements
The Governmental Accounting Standards Board has passed several new accounting standards
with upcoming implementation dates as follows:
GASB 66 Technical Corrections 2012 — Effective for year end December 31, 2013 —
This statement contains certain technical corrections to prior GASB statements on the
topics of Risk Financing, Operating Leases, Loan Purchases, and Servicing Fees.
GASB 67 Financial Reporting for Pension Plans 2013 — Effective for year end
December 31, 2014 — This statement contains certain technical corrections to prior GASB
statements on the topic of improving financial reporting by state and local governmental
pension plans.
GASB 68 Accounting and Financial Reporting for Pensions 2013 — Effective for year
end December 31, 2015 — This statement contains certain technical corrections to prior
GASB statements on the topics of Net Pension Liability and Pension Expense.
GASB 69 Government Combination and Disposals of Government Operations 2013 —
Effective for year end December 31, 2014 — This statement contains certain disclosures to
be made about government combinations and disposals of government operations to
enable financial statement users to evaluate the nature and effects of these transactions.
SUPPLEMENTARY INFORMATION
59
Exhibit E -1
CITY OF SEWARD
Nonmaj or Governmental Funds
Combining Balance Sheet
December 31, 2012
Special Capital
Assets Revenue Projects Total
Cash and investments $ 167,228 751,381 918,609
Grants receivable 972,366 4,829 977,195
Other receivables 2,500 - 2,500
Total assets $ 1,142,094 756,210 1,898,304
Liabilities
Accounts payable 211,260 211,260
Unearned revenue 18,398 18,398
Due to other funds 774,335 15,326 789,661
Total liabilities 1,003,993 15,326 1,019,319
Fund Balances
Assigned:
Parks and recreation
General government
Public works
Library
Capital projects
Unassigned (deficits)
Total fund balances
Total liabilities and fund balances
E
2,520 2,520
115,495 115,495
11,031 11,031
11,438 11,438
751,381 751,381
2,383 10,497 12,880
138,101 740,884 878,985
1,142,094 756,210 1,898,304
CITY OF SEWARD
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances
Year Ended December 31, 2012
Revenues:
Intergovernmental
Local grants
Total revenues
Expenditures:
Current:
General government
Public works
Parks and recreation
Library
Capital outlay:
General government
Public safety
Total expenditures
Excess of revenues over (under)
expenditures
Other financing sources (uses):
Transfers in
Transfers out
Net other financing sources (uses)
Net change in fund balances
Beginning fund balances
Ending fund balances
61
Exhibit E -2
Special Capital
Revenue Projects Total
982,571 274,845 1,257,416
19,098 - 19,098
1,001,669 274,845 1,276,514
291,751 - 291,751
574,360 - 574,360
242,314 - 242,314
350 - 350
140,885 140,885
274,845 274,845
1,108,775 415,730 1,524,505
107,106) (140,885) (247,991)
222,601 662,455 885,056
25,101 25,101
222,601 637,354 859,955
115,495 496,469 611,964
22,606 244,415 267,021
138,101 740,884 878,985
CITY OF SEWARD
Nonmajor Enterprise Funds
Combining Statement of Net Position
December 31, 2012
Assets
Current assets:
Cash and investments
Receivables:
Accounts
Assessments
Grants and loans
Other
Less allowance for doubtful accounts
Inventory
Total current assets
Noncurrent assets:
Restricted cash and investments
Assessments receivable, net of current portion
Interfund loan
Property, plant and equipment, net of
accumulated depreciation
Total noncurrent assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Accrued payroll and related liabilities
Accrued interest
Current portion:
Accrued annual leave
Notes payable
Total current liabilities
Noncurrent liabilities, net of current portion:
Accrued annual leave
Notes payable
Total noncurrent liabilities
Total liabilities
Net Position
Net investment in capital assets
Unrestricted
Total net position
Total liabilities and net position
Water Wastewater Parking
1,117,071 605,982 464,389
Total
2,187,442
78,003 90,721 168,724
7,069 7,069
8,085 8,085
5,635 23,078 28,713
9,104) 4,082) 13,186)
55,362 55,362
1,262,121 715,699 464,389 2,442,209
24,011
243,372 112,115 355,487
10,603 10,603
1,973,360 1,973,360
4,911,919 4,759,141 125,497 9,796,557
7,139,254 4,871,256 125,497 12,136,007
4,696,784 125,497
8,401,375 5,586,955 589,886 14,578,216
100,461 3,611 7,000 111,072
5,016 4,552 169 9,737
23,652 195 23,847
4,584 4,606 9,190
125,452 61,025 186,477
259,165 73,989 7,169 340,323
17,459 24,011 41,470
1,967,355 1,332 1,968,687
1,984,814 25,343 2,010,157
2,243,979 99,332 7,169 2,350,480
2,819,112 4,696,784 125,497 7,641,393
3,338,284 790,839 457,220 4,586,343
6,157,396 5,487,623 582,717 12,227,736
8,401,375 5,586,955 589,886 14,578,216
62
Exhibit F -2
CITY OF SEWARD
Nonmajor Enterprise Funds
Combining Statement of Revenues, Expenses and Change in Net Position
Year Ended December 31, 2012
Water Wastewater Parking Total
Operating revenues - charges for services $ 1,150,109 929,514 293,443 2,373,066
Operating expenses:
Salaries and benefits
Services and supplies
Administration
Depreciation
Total operating expenses
Earnings (loss) from operations
Nonoperating revenues (expenses):
Intergovernmental - PERS on- behalf
Investment income
Interest expense
Net nonoperating revenues (expenses)
Earnings (loss) before transfers
Capital contributions
Transfers out
Change in net position
Beginning net position
295,574 277,664 89,586 662,824
453,545 297,337 95,157 846,039
243,326 146,101 30,550 419,977
221,179 291,173 23,968 536,320
1,213,624 1,012,275 239,261 2,465,160
63,515) (82,761) 54,182 (92,094)
21,984 20,810 - 42,794
10,951 7,066 3,033 21,050
33,908) (1,752) - 35,660
973) 26,124 3,033 28,184
64,488) (56,637) 57,215 (63,910)
20,070 - - 20,070
137,539 (79,841) (23,475) 240,855
181,957) (136,478) 33,740 (284,695)
6,339,353 5,624,101 548,977 12,512,431
Ending net position $ 6,157,396 5,487,623 582,717 12,227,736
63
CITY OF SEWARD
Nonmajor Enterprise Funds
Combining Statement of Cash Flows
Year Ended December 31, 2012
Cash flows from operating activities:
Receipts from customers and users
Payments to suppliers
Payments to employees
Payments for interfund services used
Net cash flows from operating activities
Cash flows from noncapital financing activities -
transfers out
Exhibit F -3
Water Wastewater Parking Total
1,157,177 913,738 293,443 2,364,358
358,685) (317,285) (97,488) (773,458)
270,075) (249,139) (89,417) (608,631)
243,326 146,101 30,550 419,977
285,091 201,213 75,988 562,292
Cash flows from capital and related financing activities:
Principal payments on long -term debt
Interest payments on long -term debt
Acquisition of property, plant and equipment
Capital contributions received
Net cash flows from capital and
related financing activities
Cash flows from investing activities -
investment income received
Net increase in cash and investments
Beginning cash and investments
Ending cash and investments
Reconciliation of cash and investments
to statement of net assets:
Current assets
Restricted assets
137,539 79,841 (23,475) (240,855)
560,042) (60,133) 620,175)
164,449) (1,848) 166,297)
23,970) (40,722) 64,692)
21,295 - 21,295
727,166) (102,703) - 829,869
10,951 7,066 3,033 21,050
568,663) 25,735 55,546 (487,382)
1,929,106 692,362 408,843 3,030,311
1,360,443 718,097 464,389 2,542,929
1,117,071 605,982 464,389 2,187,442
243,372 112,115 - 355,487
1,360,443 718,097 464,389 2,542,929
M
CITY OF SEWARD
Nonmajor Enterprise Funds
Statement of Cash Flows, continued
Reconciliation of earnings (loss) from operations to net cash
provided (used) by operating activities:
Earnings (loss) from operations $
Adjustments to reconcile earnings (loss) from operations
to net cash flows from operating activities:
Depreciation
Noncash expense - PERS on- behalf
Increase in allowance for doubtful accounts
Increase) in assets:
Accounts receivable
Other receivable
Inventory
Increase (decrease) in liabilities:
Exhibit F -3, continued
Water Wastewater Parking Total
63,515) (82,761) 54,182 (92,094)
221,179 291,173 23,968 536,320
21,984 20,810 - 42,794
5,524 598 - 6,122
1,544 (13,296) - (11,752)
3,078) - (3,078)
3,722 - - 3,722
Accounts payable 91,138 19,948) 2,331) 68,859
Accrued payroll and related liabilities 397 146) 169 420
Accrued annual leave 3,118 7,861 10,979
Net cash flows from operating activities 285,091 201,213 75,988 562,292
65
CITY OF SEWARD
Internal Service Funds
Combining Statement of Net Position
December 31, 2012
Compensated
Motor Annual
Assets Pool Leave Total
Current assets:
Cash and investments 1,089,780 454,604 1,544,384
Receivables:
Property, plant and equipment:
Accrued interest 56,052 56,052
Interfund loans 71,745 71,745
Prepaid expenses 7,895 7,895
Total current assets 1,225,472 454,604 1,680,076
Noncurrent assets:
Interfund loans, net of current portion 991,041 991,041
Property, plant and equipment:
Equipment and vehicles 5,388,091 5,388,091
Less accumulated depreciation 3,183,072) 3,183,072)
Net property, plant and equipment in service 2,205,019 2,205,019
Construction in progress 405,768 405,768
Total noncurrent assets 3,601,828 3,601,828
Total assets 4,827,300 454,604 5,281,904
Liabilities
Current liabilities:
Accounts payable 235,092 235,092
Accrued interest 2,604 2,604
Current portion:
Accrued annual leave 115,547 115,547
Capital lease obligations 198,178 198,178
Total current liabilities 435,874 115,547 551,421
Noncurrent liabilities, net of current portion:
Accrued annual leave 339,057 339,057
Capital lease obligations 31,320 31,320
Total liabilities 467,194 454,604 921,798
Net Position
Net investment in capital assets 2,381,289 2,381,289
Unrestricted 1,978,817 1,978,817
Total net position 4,360,106 4,360,106
Total liabilities and net position 4,827,300 454,604 5,281,904
wo
CITY OF SEWARD
Internal Service Funds
Combining Statement of Revenues, Expenses and Change in Net Position
Year Ended December 31, 2012
Operating revenues -
vehicle rental and interfund charges
Operating expenses:
Salaries and benefits
Depreciation
Total operating expenses
Earnings from operations
Nonoperating revenues (expenses):
Gain on disposal of capital assets
Investment income
Interest expense
Net nonoperating revenues (expenses)
Change in net position
Beginning net position
Ending net position
N
Exhibit G -2
Compensated
Motor Annual
Pool Leave Total
508,999 364,902 873,901
364,902 364,902
425,597 - 425,597
425,597 364,902 790,499
83,402 - 83,402
1,522 1,522
62,910 62,910
16,831 16,831
46,079 46,079
129,481 129,481
4,229,103 4,229,103
4,358,584 - 4,358,584
CITY OF SEWARD
Internal Service Funds
Combining Statement of Cash Flows
Year Ended December 31, 2012
Cash flows from operating activities:
Receipts from vehicle rentals, and interfund charges
Payments to employees
Net cash flows from operating activities
Cash flows from capital and related financing activities:
Principal payments on long -term debt
Interest payments on long -term debt
Acquisition of equipment and vehicles
Proceeds from sale of capital assets
Net cash flows from capital and
related financing activities
Cash flows from investing activities:
Interfund loan receipts
Investment income received
Net cash flows from investing activities
Net increase in cash and investments
Beginning cash and investments
Ending cash and investments
Reconciliation of earnings from operations to net cash
provided (used) by operating activities:
Earnings from operations
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation
Increase in liabilities - accrued annual leave
Net cash flows from operating activities
Noncash capital and related financing activities - purchase of
equipment included in accounts payable
Exhibit G -3
Compensated
Motor Annual
Pool Leave Total
508,999 364,902 873,901
335,941) 335,941)
508,999 28,961 537,960
191,219) 191,219)
19,204) 19,204)
231,753) 231,753)
1,522 1,522
440,654 ) 440,654
68,113 68,113
66,542 66,542
134,655 134,655
203,000 28,961 231,961
886,780 425,643 1,312,423
1,089,780 454,604 1,544,384
83,402 - 83,402
425,597 - 425,597
28,961 28,961
508,999 28,961 537,960
235,092 ) (235,092
GENERAL FUND
The General Fund is established to account for the revenues and expenditures necessary to carry
out basic governmental activities of the City such as fire and police protection, public works,
recreation, planning, administrative services, etc. Appropriations are made from the General
Fund annually.
Revenue is recorded by source, i.e., taxes, charges for services, intergovernmental. Expenditures
are recorded first by function then by activity and object of expenditures.
CITY OF SEWARD
General Fund
Balance Sheet
December 31, 2012
With Comparative Amounts for 2011)
2012
Assets
Exhibit H -1
2011
Cash and investments 6,070,681 6,729,580
Receivables:
Taxes:
Personal property 22,536 12,450
Less allowance for doubtful accounts 883) 425)
Net personal property 21,653 12,025
Motor vehicle 7,006 5,863
Hotel /motel room 17,831 12,377
Real property 15,982 20,532
Sales 469,595 553,492
Net taxes 532,067 604,289
Accounts 80,277 68,614
Grants and shared revenues 239,938 26,160
Accrued interest 10,900 15,571
Total receivables 863,182 714,634
Prepaid items 448,522 386,526
Inventory 9,375 10,880
Due from other funds 896,995 709,598
Restricted cash and investments - bond reserve 1,973,360
Total assets 8,288,755 10,524,578
70
Exhibit H -1, continued
CITY OF SEWARD
General Fund
Balance Sheet, continued
2012 2011
T ]_L717 ]__
Accounts payable 376,417 503,203
Accrued payroll and related liabilities 122,636 111,798
Accrued liabilities 196,331 169,865
Funds held in trust 61,139 54,659
Unearned revenue 91,087 210,284
Accrued interest 72,180
Interfund loans payable 3,348,219
Total liabilities 847,610 4,470,208
Deferred Inflows
Deferred property taxes 29,775 19,945
Total liabilities and deferred inflows 877,385 4,490,153
Fund Balance
Nonspendable:
Inventory 9,375 10,880
Prepaid items 448,522 386,526
Committed:
Working capital 1,500,000 1,500,000
Insurance 126,418 126,418
Hospital line of credit 500,000 500,000
Unassigned 4,827,055 3,510,601
Total fund balance 7,411,370 6,034,425
Total liabilities, deferred inflows, and fund balance 8,288,755 10,524,578
71
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and
Change in Fund Balance - Budget and Actual
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Revenues:
Taxes:
Sales
Property
Hotel /motel room
Payments in lieu of taxes
Penalty and interest
Total taxes
Licenses and permits:
Building permits
Taxi permits
Department of Motor Vehicles commissions
Animal control licenses
Business licenses
Miscellaneous
Total licenses and permits
Intergovernmental:
Jail contract
Dispatch contracts
Raw fish tax
Shared fisheries and landing tax
Liquor tax
Library grants
Revenue sharing
PERS relief
Other grants
Total intergovernmental
72
5,588,636 5,661,136 72,500 5,563,249
40,000
2012
8,866
2011
1,000 740
Variance
1,285
95,000 85,378
Positive
89,143
Budge Actual Negative) Actual
20,000
4,164,946 4,189,330 24,384 4,147,010
1,007,290 1,013,580 6,290 1,001,020
340,000 380,210 40,210 334,824
75,000 76,160 1,160 78,574
1,400 1,856 456 1,821
72
5,588,636 5,661,136 72,500 5,563,249
40,000 48,866 8,866 48,571
1,000 740 260) 1,285
95,000 85,378 9,622) 89,143
775 480 295) 312
20,000 21,720 1,720 16,500
4,300 1,930 2,370 4,285
161,075 159,114 1,961 160,096
465,472 567,395 101,923 491,341
98,180 99,140 960 98,660
519,689 519,689 599,451
13,889 13,889 5,310
16,000 17,100 1,100 20,950
22,602 8,498 14,104) 18,040
228,000 228,000 306,509
472,217 472,217 414,535
14,030 27,544 13,514 33,050
1,836,190 1,953,472 117,282 1,987,846
Exhibit H -2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
Other
Sale of land, equipment and gravel 9,250
2012
10,962
2011
Refuse contract 15,200 13,674
Variance
23,038
Other 19,800 17,938
Positive
20,117
Total other
Budget Actual Negative) Actual
Revenues, continued:
Total revenues 10,282,994 10,431,339 148,345
Charges for services:
Expenditures:
Administrative 1,751,443 1,776,800 25,357 1,864,606
Rents and leases 132,200 133,425 1,225 139,681
Copying charges 14,000 9,107 4,893) 8,927
Work orders 2,200 2,835 635 1,838
Recreation 628,000 609,342 18,658) 620,943
Library 25,000 9,208 15,792) 9,953
Total charges for services 2,552,843 2,540,717 12,126) 2,645,948
2,960 840
Fines and bails 11,000 8,386 2,614) 12,177
8,156
Legislative representation 157,000
Investment income 89,000 56,690 32,310) 25,744
Other
Sale of land, equipment and gravel 9,250 20,212 10,962 16,034
Refuse contract 15,200 13,674 1,526) 23,038
Other 19,800 17,938 1,862) 20,117
Total other 44,250 51,824 7,574 59,189
Total revenues 10,282,994 10,431,339 148,345 10,454,249
Expenditures:
General government:
Mayor and council:
Salaries 36,307 48,160 11,853) 49,517
Employee benefits 14,496 20,750 6,254) 19,119
Audit 72,145 81,114 8,969) 66,705
Legal 125,000 89,317 35,683 97,175
Purchased services 3,800 2,960 840 5,147
Supplies and maintenance 12,500 12,273 227 8,156
Legislative representation 157,000 161,980 4,980) 164,593
General and administrative 75,332 63,533 11,799 151,756
Total mayor and council 496,580 480,087 16,493 562,168
73
Exhibit H -2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
Expenditures, continued:
General government, continued:
City manager:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Total city manager
City clerk:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Total city clerk
Management information systems:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Total management information
systems
Finance:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Capital outlay
Total finance
Budget
228,342
121,625
10,500
10,500
35,500
406,467
74
136,265
95,491
18,500
18,550
268,806
137,133
77,032
8,900
32,000
13,000
268,065
371,318
236,404
25,300
52,500
15,600
701,122
2012 2011
Variance
Positive
Actual (Negative) Actual
203,773 24,569 227,729
128,400 6,775) 129,306
7,857 2,643 27,486
4,832 5,668 18,725
49,318 13,818) 50,941
394,180 12,287 454,187
130,207 6,058 117,636
99,108 3,617) 88,748
7,944 10,556 7,395
769 769)
16,649 1,901 15,565
254,677 14,129 229,344
126,174 10,959 122,774
80,851 3,819) 76,137
2,744 6,156 2,284
40,538 8,538) 35,974
4,814 8,186 12,378
255,121 12,944 249,547
364,538
247,114
9,255
39,634
22,526
7,799
6,780
10,710)
16,045
12,866
6,926)
7,799)
10,256
357,602
218,819
11,775
60,945
18,482
667,623
Exhibit H -2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
Expenditures, continued:
General government, continued:
Community development:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Capital outlay
Total community development
General services:
Purchased services
Supplies and maintenance
General and administrative
Total general services
Contributions to organizations:
Senior Citizens
Museum
Chamber of Commerce
Boys and Girls Club
Other
Total contributions to organizations
Total general government
Public safety:
Police:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
2012 2011
Variance
Positive
Budget Actual (Negative) Actual
135,193 113,694 21,499 92,791
79,768 76,781 2,987 54,461
47,584 19,588 27,996 69,697
9,698 5,376 4,322 8,072
7,500 12,559 5,059) 8,493
4,493
279,743 227,998 51,745 238,007
14,997 16,972 1,975) 7,838
19,900 25,994 6,094) 26,980
41,700 33,627 8,073 111,900
76,597 76,593 4 146,718
50,000 50,000 50,000
5,000
164,198 164,198 151,000
25,000 25,000
51,000 33,000 18,000 3,000
290,198 272,198 18,000 209,000
75
2,787,578 2,651,720 135,858 2,756,594
976,741 918,536 58,205 946,913
648,323 666,411 18,088) 626,061
97,544 119,995 22,451) 60,327
55,000 51,657 3,343 71,422
Exhibit H -2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
Jail
Salaries
2012
267,619
2011
262,020
Employee benefits
Variance
202,124 2,022 191,091
Positive
51,721 47,601
Budget Actual Negative) Actual
Expenditures, continued:
8,892 3,108 8,859
Public safety, continued:
103,765 100,838 2,927
Police, continued:
Total jail 652,809 627,074
General and administrative 59,780 48,701 11,079 49,622
Capital outlay 26,160
Total police 1,837,388 1,805,300 32,088 1,780,505
Jail
Salaries 281,177 267,619 13,558 262,020
Employee benefits 204,146 202,124 2,022 191,091
Purchased services 51,721 47,601 4,120 42,316
Supplies and maintenance 12,000 8,892 3,108 8,859
General and administrative 103,765 100,838 2,927 104,199
Total jail 652,809 627,074 25,735 608,485
Animal control:
Purchased services 62,560 64,142 1,582) 73,248
Supplies and maintenance 2,500 2,500 283
Total animal control 65,060 64,142 918 73,531
Fire:
Salaries 197,818 171,215 26,603 163,110
Employee benefits 118,383 125,752 7,369) 114,825
Purchased services 156,900 226,140 69,240) 214,848
Supplies and maintenance 38,550 30,706 7,844 44,010
General and administrative 16,200 13,745 2,455 13,123
Total fire 527,851 567,558 39,707) 549,916
Volunteer training
Employee benefits 6,700 6,700 5,000
Purchased services 7,400 2,272 5,128 3,891
Supplies and maintenance 30,273 29,139 1,134 28,264
General and administrative 27,000 28,803 1,803) 21,306
Total volunteer training 71,373 60,214 11,159 58,461
76
Exhibit H -2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
Expenditures, continued:
Public safety, continued:
Emergency preparedness:
Purchased services
Supplies and maintenance
General and administrative
Total emergency preparedness
Building inspector:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Total building inspector
Total public safety
Public works:
Roads and streets:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Total roads and streets
Buffet
1,000
1,950
3,500
6,450
77
67,009
43,414
11,531
5,500
6,200
133,654
3,294,585
255,094
138,852
285,646
284,480
9,435
973,507
2012 2011
Variance
Positive
Actual (Negative) Actual
3,048 2,048) 1,540
1,661 289 862
755 2,745 848
5,464 986 3,250
63,953 3,056 61,041
44,218 804) 39,624
9,175 2,356 3,415
8,144 2,644) 2,561
5,066 1,134 7,060
130,556 3,098 113,701
3,260,308 34,277 3,187,849
267,421
168,868
353,051
263,252
13,414
1,066,006
12,327)
30,016)
67,405)
21,228
3,979)
92,499)
217,104
137,377
258,247
186,608
2,206
801,542
Exhibit H -2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
Expenditures, continued:
Public works, continued:
City shop:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Total city shop
Municipal building:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Capital outlay
Total municipal building
Total public works
Parks and recreation:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Capital outlay
Total parks and recreation
Library:
Salaries
Employee benefits
Purchased services
Supplies and maintenance
General and administrative
Total library
2012 2011
Variance
Positive
Budget Actual (Negative) Actual
136,326 146,739 10,413) 147,151
90,787 108,234 17,447) 113,309
71,088 73,077 1,989) 64,280
54,945 42,608 12,337 39,163
12,825 8,056 4,769 11,667
365,971 378,714 12,743) 375,570
81,903 78,169 3,734 76,630
69,661 69,687 26) 64,330
117,931 134,785 16,854) 102,782
24,265 31,178 6,913) 21,174
760 662 98 1,744
6,435 6,435)
294,520 320,916 26,396) 266,660
1,633,998 1,765,636 (131,638) 1,443,772
564,416 542,071 22,345 579,836
293,760 301,793 8,033) 286,239
243,744 244,995 1,251) 217,275
91,375 82,821 8,554 106,444
28,505 19,872 8,633 39,320
67,500 67,500 12,381
1,289,300 1,259,052 30,248 1,241,495
194,337
130,503
41,808
43,000
32,855
442,503
184,663
131,468
43,451
32,509
27,120
419,211
9,674
965)
1,643)
10,491
5,735
23,292
170,130
126,498
40,224
37,111
27,639
401,602
Exhibit H -2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
Expenditures, continued:
Debt service:
Principal payments
Retirement benefits
Interest and other costs
Total debt service
Total expenditures
Excess of revenues over (under) expenditure:
Other financing sources (uses):
Transfers in
Transfers out
Net other financing sources (uses)
Net change in fund balance
2012
Budget Actual
2011
Variance
Positive
Negative) Actual
258,308 258,308 100,477
779,885 656,294 123,591 631,278
231,580 153,201 78,379 75,547
1,269,773 809,495 460,278 807,302
10,717,737 10,165,422 552,315 9,838,614
434,743) 265,917 700,660 615,635
3,299,720 3,378,612 78,892 1,938,448
2,255,759) 2,267,584) 11,825) 3,270,288)
1,043,961 1,111,028 67,067 1,331,840)
609,218 1,376,945 767,727 716,205)
Beginning fund balance 6,034,425 6,750,630
Ending fund balance $ 7,411,370 6,034,425
79
SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for expenditures associated with dedicated or restricted
revenue sources.
Litter Control (ALPAR) — To account for the cost of a City— administered litter control
program. The program employs local youth and is financed by grants from the non-
profit Alaskans for Litter Prevention and Recycling and the Kenai Peninsula Borough.
Two Lakes Park — To account for acquisition of land, survey and development of the
park area, including site preparation, picnic tables, and other improvements.
Miscellaneous Pass - Through Grants — To account for grants that are passed through to
other agencies.
Historical Records Preservation — To account for the costs of preserving the City's
historical records. Funding is provided by a State grant and the City.
Cruise Ship Transportation Grant — To account for a transportation grant to assist cruise
ship passengers.
Natural Disasters — To account for the costs associated with flooding and other natural
events.
Fish Ditch Restoration — The purpose of this fund is to account for grant proceeds
used to restore a failed fish passage /drainage system. The project will involve the
removal and disposal of failed culverts, and the design and construction of an open
drainage fish ditch passage. The new passage will consist of excavation and placing
of rip -rap for bank stabilization, landscaping of upland vehicle turnarounds, and
signage.
Library — This Fund includes the Alaska Statehood grant project, which celebrates
Seward as the Home of Alaska's Flag. A Statehood symposium hosts historic
presentations on the Alaskan Statehood experience, a one -act play centers on Alaska's
flag, and the Seward Mural Society designs and completes a mural interpreting Alaska's
flag and its unique history. In addition, this Fund contains a grant to provide public
access to Seward's historical photographic records for properties on the Seward Register
of Historic Places, and other historic sites. A website is designed to provide easy public
access to this information.
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CAPITAL PROJECT FUNDS
Capital Project Funds are established to account for the resources expended to acquire or construct assets
of a relatively permanent nature.
Hoben Park — To account for improvements to Hoben Park, located adjacent to the
Alaska SeaLife Center, including removal and replacement of fencing, monuments and
trees, and installation of a sidewalk.
Water Front Pavilion — To account for the design and construction costs of a new water
front pavilion.
Fire Department Equipment - To account for the costs of purchasing a fire department
breathing air compressor to refill fire air packs.
Flood Mitigation — To account for all activities related to the construction of the Japanese
Creek levee project.
Fourth and Adams — To account for the costs of building a town square park to include a
public restroom facility, bus pullout, covered waiting area, and green space, servicing to
revitalize the downtown area.
Capital Acquisition — To account for purchase of equipment not financed by the Motor
Pool Fund and capital improvements and projects of at least $20,000.
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9
This page left blank intentionally)
ENTERPRISE FUNDS
Enterprise Funds are established to account for the financing of self - supporting activities of
governmental units, which render services to the general public on a user - charge basis. Enterprise Funds
are maintained on the accrual basis of accounting.
Electric — To account for the provision of electrical service to the residents of the City
and other areas within the electric service area.
Water — To account for the provision of water services to the residents of the City.
Wastewater — To account for the provision of sewer services to the residents of the City.
Harbor — To account for the provision of harbor and marine services to the public within
the Small Boat Harbor basin.
Seward Marine Industrial Center (SMIC) — To account for the provision of marine -
related services to the public on the east side of Resurrection Bay.
Parking — To account for the provision of public parking services.
Providence Seward Medical and Care Center (PSMCC) — To account for the provision of
services provided by the hospital and long -term care facilities.
Exhibit K -1
CITY OF SEWARD
Electric Enterprise Fund
Statement of Net Position
December 31, 2012
With Comparative Amounts for 2011)
2011
Assets 2012 Restated
Current assets:
Cash and investments $ 1,896,567 639,624
Receivables:
Accounts 1,088,920 925,064
Assessments 1,897 1,720
Interfund loan 17,650 16,769
Other 112,450 70,930
Less allowance for doubtful accounts 49,001) 41,628)
Net receivables 1,171,916 972,855
Inventory 930,547 864,014
Total current assets 3,999,030 2,476,493
Restricted cash and investments:
23,298,746 24,730,978
Bond retirement 677,911 677,911
Capital projects 1,060,378 1,032,695
Total restricted cash and investments 1,738,289 1,710,606
Assessments receivable, net of current portion 8,844 9,450
Interfund loan, net of current portion 334,323 351,973
Property, plant and equipment:
Land and land rights 230,951 230,951
Buildings 9,456,075 9,425,786
Improvements other than buildings 39,847,679 38,938,470
Equipment 7,420,602 7,403,999
Total property, plant and equipment in service 56,955,307 55,999,206
Less accumulated depreciation 33,656,561) 31,937,234)
Net property, plant and equipment in service 23,298,746 24,061,972
Construction in progress 669,006
Total property, plant and equipment 23,298,746 24,730,978
Total assets 29,379,232 29,279,500
Deferred Outflows
Unamortized deferred loss on refunding 14,713 19,617
Total assets and deferred outflows S 29,393,945 29,299,117
88
CITY OF SEWARD
Electric Enterprise Fund
Statement of Net Position, continued
T iahilitiPa
Current liabilities:
Accounts payable
Accrued payroll and related liabilities
Accrued interest
Current portion:
Accrued annual leave
Bonds payable
Customer deposits
Unearned revenue
Total current liabilities
Noncurrent liabilities, net of current portion:
Accrued annual leave
Bonds payable
Unamortized bond premium
Total noncurrent liabilities
Total liabilities
I TPf pna;t;nn
Net investment in capital assets
Restricted for bond retirement
Unrestricted
Total net position
Total liabilities and net position
FOR
Exhibit K -1, continued
2011
2012 Restated
410,361 475,904
31,724 32,569
26,332 27,666
21,972 17,576
360,000 345,000
191,128 163,771
22,926 48,726
1,064,443 1,111,212
71,167 64,568
6,025,000 6,385,000
50,151 58,516
6,146,318 6,508,084
7,210,761 7,619,296
16,878,308 17,962,079
677,911 677,911
4,626,965 3,039,831
22,183,184 21,679,821
29,393,945 29,299,117
Exhibit K -2
CITY OF SEWARD
Electric Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Operating expenses:
Power 5,267,436
2011
Distribution
2012 Restated
Operating revenues:
2,454,668 2,625,100
Residential 3,344,416 3,122,897
Small general service 1,868,892 1,723,846
Large general service 4,581,176 3,797,012
Industrial 948,750 1,280,676
Harbor power 288,839 240,015
Street and yard lights 68,648 68,437
Miscellaneous 123,790 76,641
Total operating revenues 11,224,511 10,309,524
Operating expenses:
Power 5,267,436 5,651,255
Distribution 121,994 344,174
Administration and general 2,454,668 2,625,100
Depreciation 1,721,199 1,486,392
Total operating expenses 9,565,297 10,106,921
Earnings from operations 1,659,214 202,603
Nonoperating revenues (expenses):
Intergovernmental - PERS on- behalf 37,451 27,850
Investment income 119,536 101,384
Interest expense 319,192) 334,618)
Other expenses 51,206) 40,321)
Net nonoperating revenues (expenses) 213,411) 245,705)
Earnings (loss) before contributions and transfers 1,445,803 43,102)
Capital contributions 141,677 116,551
Transfers in 150,834 392,846
Transfers out 1,234,951) 1,172,831)
Change in net position
Beginning net position, as restated
Ending net position
503,363 (706,536)
21,679,821 22,386,357
22,183,184 21,679,821
Of the total depreciation expense of $1,721,199 above, $937,286 was attributable to capital assets that were
funded with capital contributions.)
90
Exhibit K -3
CITY OF SEWARD
Electric Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Cash flows from investing activities
Investment income received 119,536
2011
Interfund loan receipts
2012 Restated)
Cash flows from operating activities:
136,305 117,317
Receipts from customers and users 11,028,065 10,393,414
Payments to suppliers 5,914,948) 6,001,217)
Payments to employees 1,208,988) 1,178,557)
Payments for interfund services used 855,843) 847,691)
Net cash flows from operating activities 3,048,286 2,365,949
Cash flows from noncapital financing activities:
1,738,289 1,710,606
Transfers in 110,784
Transfers out 1,234,951) 1,172,831)
Net cash flows from noncapital financing activities 1,124,167) 1,172,831)
Cash flows from capital and related financing activities:
1,659,214 202,603
Principal payments on long -term debt 345,000) 330,000)
Interest payments on long -term debt 323,987) 339,299)
Acquisition of property, plant and equipment 288,967) 280,202)
Capital contributions received 142,106 117,360
Increase (decrease) in due to other funds 233,894)
Transfers in 40,050 392,846
Net cash flows from capital and related financing activities 775,798) 673,189)
Cash flows from investing activities
Investment income received 119,536 101,384
Interfund loan receipts 16,769 15,933
Net cash flows from investing activities 136,305 117,317
Net increase in cash and investments 1,284,626 637,246
Beginning cash and investments 2,350,230 1,712,984
Ending cash and investments 3,634,856 2,350,230
Reconciliation of cash and investments to statement of net position:
Current assets 1,896,567 639,624
Restricted assets 1,738,289 1,710,606
3,634,856 2,350,230
Reconciliation of earnings from operations to net cash
provided (used) by operating activities:
Earnings from operations 1,659,214 202,603
Adjustments to reconcile earnings from operations to net
cash flows from operating activities:
Depreciation 1,721,199 1,486,392
Other nonoperating expenses 51,206) 40,321)
Noncash expense - PERS on- behalf 37,451 27,850
Increase in allowance for doubtful accounts 7,373 2,448
Increase) decrease in assets:
Receivables 205,376) 40,876
Inventory 66,533) 175,331
Increase (decrease) in liabilities:
Accounts payable 65,543) 442,505
Accrued payroll and related liabilities 845) 2,186)
Accrued annual leave 10,995 10,115)
Customer deposits 27,357 3,303)
Unearned revenue 25,800) 43,869
Net cash flows from operating activities 3,048,286 2,365,949
91
CITY OF SEWARD
Electric Enterprise Fund
Schedule of Operating Expenses
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Power:
Salaries and employee benefits
Purchased services
Power for resale
Supplies, maintenance and other
Total power
Distribution:
Salaries and employee benefits
Salary credits - work orders
Purchased services
Supplies and maintenance
Supply credits - work orders
Administration and general
Total distribution
Administration and general:
Salaries and employee benefits
Purchased services
Supplies and maintenance
Administrative fee
Other
Total administration and general
Depreciation
Total operating expenses
92
Exhibit K -4
2012 2011
162,356 37,153
121,518 115,557
4,946,497 5,418,616
37,065 79,929
5,267,436 5,651,255
231,844 300,881
176,230) 132,565)
176,164 104,563
12,829 138,165
123,319) 67,270)
706 400
121,994 344,174
1,038,619
161,289
229,780
855,137
169,843
2,454,668
988,637
339,175
287,451
847,291
162,546
2,625,100
1,721,199 1,486,392
9,565,297 10,106,921
CITY OF SEWARD
Electric Enterprise Fund
Schedule of Composition of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Grants and other external contributions
Related accumulated amortization
City- generated equity
Total net position
93
Exhibit K -5
2012 2011
28,300,062 28,158,385
18,009,821) (17,072,535)
11,892,943 10,593,971
22,183,184 21,679,821
CITY OF SEWARD
Electric Enterprise Fund
Schedule of Electric Capital Projects
Year Ended December 31, 2012
Funding source - Electric Fund customers
Capital outlay - contracted services
Exhihit K -6
Customer
Projects
141,677
141,677
Exhibit K -7
CITY OF SEWARD
Water Enterprise Fund
Statement of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Assets 2012 2011
Current assets:
1,967,355 2,069,011
Cash and investments 1,117,071 1,845,042
Receivables:
2,243,979 2,839,909
Accounts 78,003 79,547
Assessments 7,069 7,069
Grants and loans 8,085 2,241
Other 5,635 5,635
Less allowance for doubtful accounts 9,104) 3,580)
Net receivables 89,688 90,912
Inventory 55,362 59,084
Total current assets 1,262,121 1,995,038
Restricted cash and investments - capital projects 243,372 84,064
Assessments receivable, net of current portion 10,603 17,672
Interfund loan 1,973,360 1,973,360
Property, plant and equipment:
Land and land rights 2,507 2,507
Buildings 1,287,853 1,287,853
Improvements other than buildings 6,203,911 6,164,576
Equipment 1,281,116 1,277,216
Total property, plant and equipment in service 8,775,387 8,732,152
Less accumulated depreciation 4,305,441) 4,084,262)
Net property, plant and equipment in service 4,469,946 4,647,890
Construction in progress 441,973 461,238
Total property, plant and equipment 4,911,919 5,109,128
Total assets 8,401,375 9,179,262
Liabilities
Current liabilities:
Accounts payable 100,461 9,323
Accrued payroll and related liabilities 5,016 4,619
Accrued interest 23,652 154,193
Current portion:
Accrued annual leave 4,584 4,584
Notes payable 125,452 583,838
Total current liabilities 259,165 756,557
Noncurrent liabilities, net of current portion
Accrued annual leave 17,459 14,341
Notes payable 1,967,355 2,069,011
Total noncurrent liabilities 1,984,814 2,083,352
Total liabilities 2,243,979 2,839,909
Net Position
Net investment in capital assets 2,819,112 2,456,279
Unrestricted 3,338,284 3,883,074
Total net position 6,157,396 6,339,353
Total liabilities and net position 8,401,375 9,179,262
95
Exhibit K -8
CITY OF SEWARD
Water Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Operating expenses:
Salaries and benefits
2012 2011
Operating revenues:
289,504 350,494
Residential 408,768 393,713
Small general service 116,573 110,659
Large general service 197,564 187,964
Industrial 230,872 190,721
Seward Marine Industrial Center 54,210 57,209
Ship water sales 65,243 62,427
Miscellaneous 76,879 67,039
Total operating revenues 1,150,109 1,069,732
Operating expenses:
Salaries and benefits 295,574 289,490
Purchased services 289,504 350,494
Supplies and maintenance 53,594 84,050
Administration and general 243,326 233,744
Other 110,447 20,305
Depreciation 221,179 208,527
Total operating expenses 1,213,624 1,186,610
Loss from operations 63,515) 116,878)
Nonoperating revenues (expenses):
Intergovernmental - PERS on- behalf 21,984 17,612
Investment income 10,951 25,888
Interest expense (33,908) 44,040
Net nonoperating revenues (expenses) (973) 540
Loss before contributions and transfers (64,488) (117,418)
Capital contributions 20,070 137,085
Transfers out (137,539) 91,745
Change in net position (181,957) (72,078)
Beginning net position 6,339,353 6,411,431
Ending net position $ 6,157,396 6,339,353
Of the total depreciation expense of $221,179 above, $28,997 was attributable to capital assets that were
funded with capital contributions.)
Cash flows from capital and related financing activities:
Principal payments on long -term debt 560,042)
Exhibit K -9
CITY OF SEWARD
164,449) 4,247)
Water Enterprise Fund
23,970) 9,092)
Statement of Cash Flows
21,295 528,297
Year Ended December 31, 2012
727,166) 476,336
With Comparative Amounts for 2011)
10,951 25,888
Net increase (decrease) in cash and investments
2012 2011
Cash flows from operating activities:
1,929,106 1,394,386
Receipts from customers and users 1,157,177 1,070,679
Payments to suppliers 358,685) 440,018)
Payments to employees 270,075) 272,676)
Payments for interfund services used 243,326) 233,744)
Net cash flows from operating activities 285,091 124,241
Cash flows from noncapital financing activities - transfers out 137,539) 91,745)
Cash flows from capital and related financing activities:
Principal payments on long -term debt 560,042) 38,622)
Interest payments on long -term debt 164,449) 4,247)
Acquisition of property, plant and equipment 23,970) 9,092)
Capital contributions received 21,295 528,297
Net cash flows from capital and related financing activities 727,166) 476,336
Cash flows from investing activities - investment income received 10,951 25,888
Net increase (decrease) in cash and investments 568,663) 534,720
Beginning cash and investments 1,929,106 1,394,386
Ending cash and investments 1,360,443 1,929,106
Reconciliation of cash and investments to statement of net assets:
Current assets 1,117,071 1,845,042
Restricted assets 243,372 84,064
1,360,443 1,929,106
Reconciliation of loss from operations to net cash
provided (used) by operating activities:
Loss from operations 63,515) 116,878)
Adjustments to reconcile loss from operations
to net cash flows from operating activities:
Depreciation 221,179 208,527
Noncash expense - PERS on- behalf 21,984 17,612
Increase (decrease) in allowance for doubtful accounts 5,524 46)
Increase) decrease in assets:
Accounts receivable 1,544 993
Inventory 3,722 10,738
Increase (decrease) in liabilities:
Accounts payable 91,138 4,093
Accrued payroll and related liabilities 397 3,317)
Accrued annual leave 3,118 2,519
Net cash flows from operating activities 285,091 124,241
97
CITY OF SEWARD
Water Enterprise Fund
Schedule of Composition of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Grants and other external contributions
Related accumulated amortization
Contributions from other funds
City- generated equity
Total net position
2012
3,556,708
1,887,004)
498,756
Exhibit K -10
2011
3,536,638
1,858,007)
498,756
3,988,936 4,161,966
6,157,396 6,339,353
Exhibit K -11
CITY OF SEWARD
Wastewater Enterprise Fund
Statement of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Assets 2012 2011
Current assets:
Cash and investments $ 605,982 580,247
Receivables
Accounts 90,721 77,425
Other 23,078 20,000
Less allowance for doubtful accounts 4,082) 3,484)
Net receivables 109,717 93,941
Total current assets 715,699 674,188
Restricted cash and investments - capital projects 112,115 112,115
Property, plant and equipment
Land and land rights 111,011 111,011
Buildings 2,418,398 2,418,398
Improvements other than buildings 8,952,968 8,952,968
Equipment 757,237 716,515
Total property, plant and equipment in service 12,239,614 12,198,892
Less accumulated depreciation 7,480,473) 7,189,300)
Net property, plant and equipment in service 4,759,141 5,009,592
Total assets 5,586,955 5,795,895
Liabilities
Current liabilities:
Accounts payable 3,611 23,559
Accrued payroll and related liabilities 4,552 4,698
Accrued interest 195 291
Current portion:
Accrued annual leave 4,606 4,555
Notes payable 61,025 60,143
Total current liabilities 73,989 93,246
Noncurrent liabilities, net of current portion
Accrued annual leave 24,011 16,201
Notes payable 1,332 62,347
Total noncurrent liabilities 25,343 78,548
Total liabilities 99,332 171.794
Net Position
Net investment in capital assets 4,696,784 4,887,102
Unrestricted 790,839 736,999
Total net position 5,487,623 5,624,101
Total liabilities and net position $ 5,586,955 5,795,895
99
Rvh;h;r u_1
CITY OF SEWARD
Wastewater Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Operating expenses:
Salaries and benefits
2012 2011
Operating revenues:
235,974 258,402
Residential 515,836 488,208
Small general service 156,450 128,725
Large general service 222,200 209,729
Seward Marine Industrial Center 29,120 32,513
Miscellaneous 5,908 5,565
Total operating revenues 929,514 864,740
Operating expenses:
Salaries and benefits 277,664 278,509
Purchased services 235,974 258,402
Supplies and maintenance 48,936 40,125
Administration and general 146,101 144,120
Other 12,427 15,813
Depreciation 291,173 296,693
Total operating expenses 1,012,275 1,033,662
Loss from operations 82,761) 168,922)
Nonoperating revenues (expenses):
Intergovernmental - PERS on- behalf 20,810 17,285
Investment income 7,066 7,541
Interest expense 1,752 10,809
Net nonoperating revenues (expenses) 26,124 14,017
Loss before contributions and transfers 56,637) 154,905)
Capital contributions 250,200
Transfers out 79,841 75,380
Change in net position 136,478) 19,915
Beginning net position 5,624,101 5,604,186
Ending net position 5,487,623 5,624,101
Of the total depreciation expense of $291,173 above, $222,329 was attributable to capital assets that
were funded with capital contributions.)
100
Exhibit K -13
CITY OF SEWARD
Wastewater Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Cash flows from capital and related financing activities:
Principal payments on long -term debt (60,133) (116,355)
Interest payments on long -term debt (1,848) (14,450)
Capital contributions received - 250,200
Acquisition of property, plant and equipment (40,722) 21,935
Net cash flows from capital and related financing activities (102,703) 97,460
Cash flows from investing activities - investment income received 7,066 7,541
Net increase in cash and investments 25,735 184,241
Beginning cash and investments 692,362 508,121
Ending cash and investments $ 718,097 692,362
Reconciliation of cash and investments to statement of net assets:
Current assets
2012 2011
Cash flows from operating activities:
112,115 112,115
Receipts from customers and users 913,738 861,498
Payments to suppliers 317,285) 299,687)
Payments to employees 249,139) 263,071)
Payments for interfimd services used 146,101) 144,120
Net cash flows from operating activities 201,213 154,620
to net cash flows from operating activities:
Cash flows from noncapital financing activities - transfers out 79,841) 75,380
Cash flows from capital and related financing activities:
Principal payments on long -term debt (60,133) (116,355)
Interest payments on long -term debt (1,848) (14,450)
Capital contributions received - 250,200
Acquisition of property, plant and equipment (40,722) 21,935
Net cash flows from capital and related financing activities (102,703) 97,460
Cash flows from investing activities - investment income received 7,066 7,541
Net increase in cash and investments 25,735 184,241
Beginning cash and investments 692,362 508,121
Ending cash and investments $ 718,097 692,362
Reconciliation of cash and investments to statement of net assets:
Current assets 605,982 580,247
Restricted assets 112,115 112,115
718,097 692,362
Reconciliation of loss from operations to net cash provided
used) by operating activities:
Loss from operations 82,761) 168,922)
Adjustments to reconcile loss from operations
to net cash flows from operating activities:
Depreciation 291,173 296,693
Noncash expense - PERS on- behalf 20,810 17,285
Increase in allowance for doubtful accounts 598 153
Increase) decrease in assets:
Accounts receivable 13,296) 3,395)
Other receivable 3,078)
Increase (decrease) in liabilities:
Accounts payable 19,948) 14,653
Accrued payroll and related liabilities 146) 3,138)
Accrued annual leave 7,861 1,291
Net cash flows from operating activities 201,213 154,620
101
CITY OF SEWARD
Wastewater Enterprise Fund
Schedule of Composition of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Grants and other external contributions
Related accumulated amortization
Contributions from other funds
City- generated equity
Total net position
102
2012
10,405,799
7,037,640)
Exhibit K -14
2011
10,405,799
6,815,311)
161,550 161,550
1,957,914 1,872,063
5,487,623 5,624,101
Total liabilities and net position $ 30,470,705 30,880,726
103
Exhibit K -15
CITY OF SEWARD
Harbor Enterprise Fund
Statement of Net Position
December 31, 2012
With Comparative Amounts for 2011)
2011
Assets 2012 Restated)
Current assets:
Cash and investments 3,769,029 3,582,014
Receivables:
Accounts 221,033 140,058
Grants 57,822 489,554
Commercial passenger vessel tax 343,265 1,411,435
Assessments 4,286 4,286
Less allowance for doubtful accounts 29,016) 19,100)
Net receivables 597,390 2,026,233
Total current assets 4,366,419 5,608,247
Restricted cash and investments:
Bond retirement 709,910 709,910
Capital projects 1,673,626 1,366,705
Total restricted cash and investments 2,383,536 2,076,615
Assessments receivable, net of current portion 6,430 10,716
Property, plant and equipment:
Land and land rights 5,117,479 5,117,479
Buildings 610,169 610,169
Improvements other than buildings 28,596,393 22,416,800
Equipment 1,582,444 1,551,131
Total property, plant and equipment in service 35,906,485 29,695,579
Less accumulated depreciation 12,345,984) 11,264,921)
Net property, plant and equipment in service 23,560,501 18,430,658
Construction in progress 95,761 4,689,982
Total property, plant and equipment 23,656,262 23,120,640
Total assets 30,412,647 30,816,218
Deferred Outflows
Unamortized deferred loss on refunding 58,058 64,508
Total assets and deferred outflows 30,470,705 30,880,726
Liabilities
Current liabilities:
Accounts payable 152,438 517,091
Accrued payroll and related liabilities 17,910 21,857
Accrued interest 29,366 32,229
Current portion:
Accrued annual leave 15,138 14,491
Bonds payable 420,000 400,000
Interfund loan 23,588 22,358
Unearned revenue 934,501 993,508
Customer deposits 60,721 55,030
Total current liabilities 1,653,662 2,056,564
Noncurrent liabilities, net of current portion:
Accrued annual leave 47,040 40,920
Bonds payable 6,060,000 6,480,000
Interfund loan 78,837 102,424
Unamortized bond premium 95,970 104,345
Total noncurrent liabilities 6,281,847 6,727,689
Total liabilities 7,935,509 8,784,253
Net Position
Net investment in capital assets 17,138,350 16,200,803
Restricted for bond retirement 709,910 709,910
Restricted for commercial passenger vessel tax 1,788,933 2,373,605
Unrestricted 2,898,003 2,812,155
Total net position 22,535,196 22,096,473
Total liabilities and net position $ 30,470,705 30,880,726
103
Exhibit K -16
CITY OF SEWARD
Harbor Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Operating expenses:
Salaries and benefits 1,005,103
2011
Purchased services
2012 Restated
Operating revenues:
243,731 192,946
Moorage 1,572,263 1,455,315
Wharfage 43,783 36,508
Boat lift fees 90,711 98,418
Power sales 461,123 356,062
Rentals and leases 356,210 353,848
Passenger transit fees 551,103 557,421
Miscellaneous 94,551 110,449
Total operating revenues 3,169,744 2,968,021
Operating expenses:
Salaries and benefits 1,005,103 920,929
Purchased services 533,108 439,259
Power for resale 243,731 192,946
Supplies and maintenance 61,472 76,396
Administration and general 327,766 326,230
Depreciation 1,081,063 1,086,311
Total operating expenses 3,252,243 3,127,214
Loss from operations 82,499) 74,050)
Nonoperating revenues (expenses):
Intergovernmental - PERS on- behalf 73,050 59,532
Dredging and breakwater grant 95,145
Investment income 59,211 48,982
Commercial passenger vessel tax 343,265 1,411,435
Interest expense 299,765) 320,623)
Dredging 699,332) 305,059)
Net nonoperating revenues (expenses) 523,571) 989,412
Earnings (loss) before contributions and transfers 606,070) 915,362
Capital contributions 1,324,067 1,788,083
Transfers in 320,000 995,210
Transfers out 599,274) 391,849)
Change in net position 438,723 3,306,806
Beginning net position, as restated 22,096,473 18,789,667
Ending net position 22,535,196 22,096,473
Of the total depreciation expense of $1,081,063 above, $622,174 was attributable to capital assets that were funded
with capital contributions.)
104
Cash flows from noncapital financing activities
Transfers in 320,000 599,451
Transfers out (599,274) (391,849)
Nonoperating intergovernmental revenues received - 95,145
Net cash flows from noncapital financing activities (279,274) 302,747
Cash flows from capital and related financing activities
Principal payments on long -term debt 400,000) 385,000)
Exhibit K -17
304,553)
CITY OF SEWARD
Acquisition of property, plant and equipment 1,616,685) 1,831,003)
Harbor Enterprise Fund
1,760,085 2,768,897
Interfund loan payment
Statement of Cash Flows
21,194)
Commercial passenger vessel tax receipts 1,411,435
Year Ended December 31, 2012
Transfers in 395,759
With Comparative Amounts for 2011)
827,925 975,267
Cash flows from investing activities - investment income received 59,211 48,982
2011
493,936 1,095,755
2012 Restated
Cash flows from operating activities:
Ending cash and investments 6,152,565 5,658,629
Receipts from customers and users 3,045,369 3,026,492
Payments to suppliers
3,582,014
1,902,296) 2,074,216)
Payments to employees 929,233) 857,287)
Payments for interfund services used 327,766) 326,230)
Net cash flows from operating activities 113,926) 2( 31,241)
Cash flows from noncapital financing activities
Transfers in 320,000 599,451
Transfers out (599,274) (391,849)
Nonoperating intergovernmental revenues received - 95,145
Net cash flows from noncapital financing activities (279,274) 302,747
Cash flows from capital and related financing activities
Principal payments on long -term debt 400,000) 385,000)
Interest payments on long -term debt 304,553) 326,486)
Acquisition of property, plant and equipment 1,616,685) 1,831,003)
Capital contributions received 1,760,085 2,768,897
Interfund loan payment 22,357) 21,194)
Commercial passenger vessel tax receipts 1,411,435 374,294
Transfers in 395,759
Net cash flows from capital and related financing activities 827,925 975,267
Cash flows from investing activities - investment income received 59,211 48,982
Net increase in cash and investments 493,936 1,095,755
Beginning cash and investments 5,658,629 4,562,874
Ending cash and investments 6,152,565 5,658,629
Reconciliation of cash and investments to statement of net assets:
Current assets 3,769,029 3,582,014
Restricted assets 2,383,536 2,076,615
6,152,565 5,658,629
Reconciliation of loss from operations to net cash
provided (used) by operating activities:
Loss from operations 82,499) 74,050)
Adjustments to reconcile loss from operations to net cash
flows from operating activities:
Depreciation 1,081,063 1,086,311
Noncash expense - PERS on- behalf 73,050 59,532
Nonoperating expenses 699,332) 305,059)
Decrease in allowance for doubtful accounts 9,916
Increase) decrease in assets - receivables 80,975) 7,449
Increase (decrease) in liabilities:
Accounts payable 364,653) 1,060,556)
Accrued payroll and related liabilities 3,947) 1,668)
Accrued annual leave 6,767 5,778
Customer deposits 5,691 4,230
Unearned revenue 59,007) 46,792
Net cash flows from operating activities 113,926) 231,241)
105
CITY OF SEWARD
Harbor Enterprise Fund
Schedule of Composition of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Grants and other external contributions
Related accumulated amortization
Contributions from other funds
City- generated equity
Total net position
106
Exhibit K -18
2011
2012 Restated
23,345,548 22,021,481
7,833,432) (7,211,258)
5,677,742 5,357,742
1,345,338 1,928,508
22,535,196 22,096,473
Funding sources:
State grants
Federal grants
Harbor Fund
Total funding sources
n__i_.L., r" in
CITY OF SEWARD
Harbor Enterprise Fund
Schedule of Harbor Capital Projects
Year Ended December 31, 2012
Cruise Ship Seward SBH
Boardwalk Harbor Marine Repairs and
Extension Expansion Center Dock Renovations
16,729 229,715 1,029,736 9,578
38,310
278,034 -
16,729 229,715 1,307,770 47,888
Capital outlay - contracted services $ 16,729 229,715 1,307,770 47,888
107
Exhibit K -20
CITY OF SEWARD
Seward Marine Industrial Center Enterprise Fund
Statement of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Assets 2012 2011
Current assets
Cash 144,503
Account receivable 53,691 226,767
Grant receivable 34,035
Total current assets 232,229 226,767
Property, plant and equipment:
Land and land rights 12,021,821 12,021,821
Buildings 280,287 280,287
Improvements other than buildings 26,798,104 26,798,104
Equipment 908,789 908,789
Docks and floats 13,145,688 13,145,688
Total property, plant and equipment in service 53,154,689 53,154,689
Less accumulated depreciation 28,184,008) 27,582,176)
Net property, plant and equipment in service 24,970,681 25,572,513
Construction in progress 216,529
Total property, plant and equipment 25,187,210 25,572)513
Total assets 25,419,439 25,799,280
Liabilities
Current liabilities:
Accounts payable 17,021 110,304
Due to other funds 20,949
Accrued payroll and related liabilities 159
Unearned revenue 40,321 43,064
Total current liabilities 57,501 174,317
Net Position
Net investment in capital assets 25,187,210 25,572,513
Unrestricted 174,728 52,450
Total net position 25,361,938 25,624,963
Total liabilities and net position 25,419,439 25,799,280
1 .!
CITY OF SEWARD
Seward Marine Industrial Center Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Operating expenses:
Salaries and benefits
2012 2011
Operating revenues:
104,352 87,788
Moorage 2,589 3,916
Wharfage 13,347 6,176
Boat lift fees 102,873 127,254
Storage 121,943 112,797
Rentals and leases 136,586 133,782
Power sales 31,957 26,115
Miscellaneous 5,442 3,414
Total operating revenues 414,737 413,454
Operating expenses:
Salaries and benefits 74,278 73,568
Purchased services 104,352 87,788
Supplies and maintenance 51,408 45,892
Administration and general 96,589 88,630
Depreciation 601,831 601,831
Miscellaneous 1,870
Total operating expenses 928,458 899,579
484,611)
Loss from operations 513,721) 486,125)
Nonoperating revenues (expenses):
Intergovernmental - PERS on- behalf 3,307
Fleet relocation grant 180,389
Fleet relocation study 180,389)
Investment income 944 101
Interest expense 1,894)
Net nonoperating revenues (expenses) 944 1,514
Loss before contributions and transfers 512,777) 484,611)
Capital contributions 216,529
Transfers in 123,187 124,640
Transfers out 89,964) 90,325)
Change in net position 263,025) 450,296)
Beginning net position 25,624,963 26,075,259
Ending net position 25,361,938 25,624,963
Of the total depreciation expense of $601,831 above, $482,529 was attributable to capital assets that were funded
with capital contributions.)
109
F.xhihit K -??
CITY OF SEWARD
Seward Marine Industrial Center Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Cash flows from capital and related financing activities:
Principal payments on long -term debt - (59,030)
Interest payments on long -term debt - (2,066)
Decrease in due to other funds (20,949) (6,192)
Acquisition of property, plant, and equipment (216,528) -
Capital contributions received 182,494 -
Net cash flows from capital and related financing activities 54,983 67,288
Cash flows from investing activities - investment income received 944 101
Net increase in cash and investments 144,503 -
Beginning cash and investments - -
Ending cash and investments $ 144,503 -
Reconciliation of loss from operations to net cash provided (used)
by operating activities:
Loss from operations
2012 2011
Cash flows from operating activities:
Receipts from customers and users 585,070 234,372
Payments to suppliers 249,043) 40,777)
Payments to employees 74,119) 72,093)
Payments for interfund services used 96,589 88,630
Net cash flows from operating activities 165,319 32,872
Accounts payable
Cash flows from noncapital financing activities:
94,773
Accrued payroll and related liabilities
Transfers in 123,187 124,640
Transfers out 89,964 90,325)
Net cash flows from noncapital financing activities 33,223 34,315
Cash flows from capital and related financing activities:
Principal payments on long -term debt - (59,030)
Interest payments on long -term debt - (2,066)
Decrease in due to other funds (20,949) (6,192)
Acquisition of property, plant, and equipment (216,528) -
Capital contributions received 182,494 -
Net cash flows from capital and related financing activities 54,983 67,288
Cash flows from investing activities - investment income received 944 101
Net increase in cash and investments 144,503 -
Beginning cash and investments - -
Ending cash and investments $ 144,503 -
Reconciliation of loss from operations to net cash provided (used)
by operating activities:
Loss from operations 513,721) 486,125)
Adjustments to reconcile loss from operations to net cash
flows from operating activities:
Depreciation 601,831 601,831
Noncash expense - PERS on- behalf 3,307
Increase) decrease in assets - accounts receivable 173,076 182,146)
Increase (decrease) in liabilities:
Accounts payable 93,283) 94,773
Accrued payroll and related liabilities 159 1,832)
Unearned revenue 2,743 3,064
Net cash flows from operating activities 165,319 32,872
110
CITY OF SEWARD
Seward Marine Industrial Center Enterprise Fund
Schedule of Composition of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Grants and other external contributions
Related accumulated amortization
Contributions from other funds
City- generated deficit
Total net position
111
Exhibit K -23
2012 2011
35,725,414 35,725,414
25,231,475) (24,748,946)
17,023,864 16,902,582
2,155,865) (2,254,087)
25,361,938 25,624,963
Exhibit K -24
CITY OF SEWARD
Parking Enterprise Fund
Statement of Net Position
December 31, 2012
With Comparative Amounts for 2011)
2012 2011
Assets
Current assets - cash and investments $ 464,389 408,843
Property, plant and equipment
Improvements other than buildings 513,540 513,540
Equipment 139,806 139,806
Total property, plant and equipment in service 653,346 653,346
Less accumulated depreciation (527,849) 503,881
Net property, plant and equipment in service 125,497 149,465
Total assets $ 589,886 558,308
Liabilities
Current liabilities:
Accounts payable 7,000 9,331
Accrued payroll and related liabilities 169 -
Total current liabilities 7,169 9,331
Net Position
Net investment in capital assets 125,497 149,465
Unrestricted 457,220 399,512
Total net position 582,717 548,977
Total liabilities and net position $ 589,886 558,308
112
Exhibit K -25
CITY OF SEWARD
Parking Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2012
With Comparative Amounts for 2011)
2012 2011
Operating revenues - parking fees $ 293,443 268,105
Operating expenses:
Salaries and employee benefits 89,586 106,824
Supplies and maintenance 15,586 17,952
Purchased services 66,571 10,669
Rents and leases 13,000 13,000
Administration and general 30,550 39,612
Depreciation 23,968 16,756
Total operating expenses 239,261 204,813
Earnings from operations 54,182 63,292
Nonoperating revenues:
Intergovernmental - PERS on- behalf 614
Investment income 3,033 3,532
Total nonoperating revenues 3,033 4,146
Earnings before transfers 57,215 67,438
Transfers out 23,475) 21,448
Change in net position 33,740 45,990
Beginning net position 548,977 502,987
Ending net position 582,717 548,977
113
Exhibit K -26
CITY OF SEWARD
Parking Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Cash flows from capital and related financing activities -
acquisition of property, plant and equipment - 50,477
Cash flows from investing activities - investment income received 3,033 3,532
Net increase in cash and investments 55,546 21,505
Beginning cash and investments 408,843 387,338
Ending cash and investments $ 464,389 408,843
Reconciliation of earnings from operations to net cash
provided (used) by operating activities:
Earnings from operations
2012 2011
Cash flows from operating activities:
Receipts from customers and users 293,443 268,105
Payments to suppliers 97,488) 32,385)
Payments to employees 89,417) 106,210)
Payments for interfund services used 30,550 39,612
Net cash flows from operating activities 75,988 89,898
Accrued payroll and related liabilities
Cash flows from noncapital financing activities -
Net cash flows from operating activities
transfers out 23,475 ) 21,448
Cash flows from capital and related financing activities -
acquisition of property, plant and equipment - 50,477
Cash flows from investing activities - investment income received 3,033 3,532
Net increase in cash and investments 55,546 21,505
Beginning cash and investments 408,843 387,338
Ending cash and investments $ 464,389 408,843
Reconciliation of earnings from operations to net cash
provided (used) by operating activities:
Earnings from operations 54,182 63,292
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 23,968 16,756
Noncash expense - PERS on- behalf 614
Increase (decrease) in liabilities:
Accounts payable 2,331) 9,236
Accrued payroll and related liabilities 169
Net cash flows from operating activities 75,988 89,898
114
CITY OF SEWARD
Parking Enterprise Fund
Schedule of Composition of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Grants and other external contributions
Related accumulated amortization
Contributions from other funds
City- generated equity
Total net position
115
Exhibit K -27
2012 2011
425,893 425,893
425,893) 425,893)
7,650 7,650
575,067 541,327
582,717 548,977
Exhibit K -28
CITY OF SEWARD
Providence Seward Medical & Care Center Enterprise Fund
Statement of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Noncurrent liabilities, net of current portion
Bonds payable 24,860,000 26,320,000
Interfund loan payable 3,219,887 -
Other 220,000 44,000
Unamortized bond premium 353,288 369,531
Total noncurrent liabilities 28,653,175 26,733,531
Total liabilities 35,419,447 32,954,234
Net Position
Net investment in capital assets (935,593) 1,448,019
Restricted for bond retirement 1,973,360 -
Unrestricted (deficit) (2,918,472) 160,234
Total net position (1,880,705) 1,608,253
Total liabilities and net position $ 33,538,742 34,562,487
116
2011
Assets 2012 Restated)
Current assets:
Cash and investments 2,435,687 1,434,633
Receivables:
Accounts 3,456,000 3,739,000
Other 386,000 907,000
Less allowance for doubtful accounts 696,000) 1,262,000)
Net receivables 3,146,000 3,384,000
Total current assets 5,581,687 4,818,633
Restricted cash and investments - capital projects
Bond retirement 1,973,360
Capital projects 8,984
Total restricted cash and investments 1,973,360 8,984
Other assets 246,000 32,320
Property, plant and equipment:
Buildings 23,968,704 24,982,687
Improvements other than buildings 8,959,585 8,317,429
Equipment 4,689,119 4,610,203
Total property, plant and equipment in service 37,617,408 37,910,319
Less accumulated depreciation 11,879,713) 8,207,769)
Net property, plant and equipment in service 25,737,695 29,702,550
Total assets 33,538,742 34,562,487
Liabilities
Current liabilities:
Accounts payable 184,000 226,000
Accrued payroll and related liabilities 1,031,000 900,000
Accrued interest payable 383,465 327,703
Current portion:
Capital leases 15,000
Bonds payable 1,460,000 1,550,000
Interfund loan payable 65,807
Unearned revenue 32,000 22,000
Payable to Providence Health and Services - Washington 3,418,000 2,819,000
Due to contractual agencies 192,000 361,000
6,766,272 6,220,703
Noncurrent liabilities, net of current portion
Bonds payable 24,860,000 26,320,000
Interfund loan payable 3,219,887 -
Other 220,000 44,000
Unamortized bond premium 353,288 369,531
Total noncurrent liabilities 28,653,175 26,733,531
Total liabilities 35,419,447 32,954,234
Net Position
Net investment in capital assets (935,593) 1,448,019
Restricted for bond retirement 1,973,360 -
Unrestricted (deficit) (2,918,472) 160,234
Total net position (1,880,705) 1,608,253
Total liabilities and net position $ 33,538,742 34,562,487
116
Exhibit K -29
CITY OF SEWARD
Providence Seward Medical & Care Center Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2012
With Comparative Amounts for 2011)
2011
2012 Restated
Operating revenues:
Net patient service revenues $ 18,106,000 16,192,000
Miscellaneous 622,364 646,000
Total operating revenues 18,728,364 16,838,000
Operating expenses:
Salaries and benefits 11,959,000 11,820,000
Purchased services 2,762,000 2,762,000
Supplies and maintenance 1,044,000 1,049,114
Administration and general 735,000 999,000
Depreciation 4,012,579 2,398,169
Total operating expenses 20,512,579 19,028,283
Loss from operations
Nonoperating revenues (expenses):
Investment income
Interest expense
Nonoperating grant
Gain (loss) on disposal of capital assets
Net nonoperating revenues (expenses)
Loss before contributions and transfers
1,784,215) (2,190,283)
8,435
1,348,255)
1,000
4,037
1,334,783)
15,701
1,346,962)
22,267)
1,353,528)
3,118,998) (3,543,811)
Capital contributions 30,000 -
Transfers in 1,053,063 1,756,584
Transfers out (1,453,023) (134,704)
Change in net position
Beginning net position, as restated
Ending net position
117
3,488,958) (1,921,931)
1,608,253 3,530,184
1,880,705) 1,608,253
Exhibit K -30
CITY OF SEWARD
Providence Seward Medical & Care Center Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2012
With Comparative Amounts for 2011)
118
2011
2012 Restated
Cash flows from operating activities:
Receipts from customers and users 18,976,364 15,380,253
Payments to suppliers 4,021,680) 3,206,114)
Payments to employees 11,828,000) 11,754,000)
Net cash flows from operating activities 3,126,684 420,139
Cash flows from noncapital financing activities:
Transfers in 1,053,063 1,756,584
Transfers out 1,453,023) 134,704)
Net cash flows from noncapital financing activities 399,960) 1,621,880
Cash flows from capital and related financing activities:
Principal payments on long -term debt 1,565,000) 1,488,000)
Acquisition of property, plant, and equipment 43,687)
Issuance of interfund loans 3,348,219
Principal payments on interfund loans 62,525)
Capital contributions received 31,000
Interest payments on long -term debt 1,308,736) 1,377,588)
Decrease in due to other funds 169,000) 59,000)
Net cash flows from capital and related financing activities 230,271 2,924,588)
Cash flows from investing activities - investment income received 8,435 15,701
Net increase (decrease) in cash and investments 2,965,430 866,868)
Beginning cash and investments 1,443,617 2,310,485
Ending cash and investments 4,409,047 1,443,617
Reconciliation of cash and investments to statement of net assets:
Current assets 2,435,687 1,434,633
Restricted assets 1,973,360 8,984
4,409,047 1,443,617
Reconciliation of loss from operations to net cash
provided (used) by operating activities:
Loss from operations 1,784,215) 2,190,283)
Adjustments to reconcile loss from operations to net cash
flows from operating activities:
Depreciation 4,012,579 2,398,169
Increase (decrease) in allowance for doubtful accounts 566,000) 64,000
Increase) decrease in assets:
Accounts receivable 804,000 1,513,747)
Other assets 213,680)
Increase (decrease) in liabilities:
Accounts payable 42,000) 3,000
Other payables 775,000 1,601,000
Accrued payroll and related liabilities 131,000 66,000
Unearned revenue 10,000 8,000)
Net cash flows from operating activities 3,126,684 420,139
118
INTERNAL SERVICE FUNDS
Motor Pool — The Motor Pool Internal Service Fund accounts for payments from
departments for the use of vehicles, in order to accumulate cash to forward -fund
replacement of vehicles. This funding mechanism spreads the cost of the vehicles over
the expected life of the vehicle in each program's annual budget, rather than to show the
cost of vehicles as a one -time expenditure to each fund in the year of purchase.
Compensated Annual Leave — The Compensated Annual Leave Fund was created in
2005 for the purpose of accumulating cash reserves to pay annual leave cash -outs for
governmental funds.
119
CITY OF SEWARD
Motor Pool Internal Service Fund
Statement of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Assets
Current assets:
Cash and investments
Receivables:
Accrued interest
Interfund loans
Prepaid expenses
Total current assets
Interfund loans, net of current portion
Property, plant and equipment:
Equipment and vehicles
Less accumulated depreciation
Net property, plant and equipment in service
Construction in progress
Total property, plant and equipment
Total assets
Liabilities:
Current liabilities:
Accounts payable
Accrued interest
Current portion of capital lease obligations
Total current liabilities
Noncurrent liabilities, net of current portion -
capital lease obligations
Total liabilities
Net investment in capital assets
Unrestricted
Total net position
Total liabilities and net position
120
Exhibit L -1
2012 2011
1,089,780 886,780
56,052 59,684
71,745 68,113
7,895 7,895
1,225,472 1,022,472
991,041 1,062,786
5,388,091 5,359,335
3,183,072) 2,789,796)
2,205,019 2,569,539
405,768 -
2,610,787 2,569,539
4,827,300 4,654,797
235,092 -
2,604 4,977
198,178 191,219
435,874 196,196
31,320 229,498
467,194 425,694
2,381,289 2,148,822
1,978,817 2,080,281
4,360,106 4,229,103
4,827,300 4,654,797
CITY OF SEWARD
Motor Pool Internal Service Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Operating revenues - vehicle rental
Operating expenses:
Depreciation
Supplies and maintenance
Total operating expenses
Earnings (loss) from operations
Nonoperating revenues (expenses):
Gain on disposal of capital assets
Investment income
Interest expense
Net nonoperating revenues (expenses)
Change in net position
Beginning net position
Ending net position
2012
Exhibit L -2
2011
508,999 459,682
425,597 460,842
7,584
425,597 468,426
83,402 (8,744)
1,522 5,832
62,910 65,504
16,831 18,088
47,601 53,248
131,003 44,504
4,229,103 4,184,599
4,360,106 4,229,103
Of the total depreciation expense of $425,597 above, $0 was attributable to capital assets that were
funded with capital contributions.)
121
CITY OF SEWARD
Motor Pool Internal Service Fund
Statement of Cash Flows
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Cash flows from operating activities:
Receipts from vehicle rentals and other charges
Payments to suppliers
Net cash flows from operating activities
Cash flows from capital and related financing activities:
Principal payments on long -term debt
Interest payments on long -term debt
Acquisition of equipment and vehicles
Proceeds from sale of capital assets
Net cash flows from capital and
related financing activities
Cash flows from investing activities:
Interfund loan receipts
Investment income received
Net cash flows from investing activities
Net increase in cash and investments
Beginning cash and investments
Ending cash and investments
Reconciliation of earnings (loss) from operations to net cash
provided (used) by operating activities:
Earnings (loss) from operations
Adjustments to reconcile earnings (loss) from operations
to net cash flows from operating activities:
Depreciation
Increase in assets - prepaid expenses
Net cash flows from operating activities
Noncash capital and related financing activities - purchase of
equipment included in accounts payable
122
Exhibit L -3
2012 2011
508,999 459,682
15,479
508,999 444,203
191,219)
19,204)
231,753)
1,522
440,654)
184,507)
20,411)
167,280)
5,832
366,366)
68,113 64,666
66,542 68,952
134,655 133,618
203,000 211,455
886,780 675,325
1,089,780 886,780
83,402 (8,744)
425,597 460,842
7,895
508,999 444,203
235,092)
CITY OF SEWARD
Motor Pool Internal Service Fund
Schedule of Composition of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Grants and other external contributions
Related accumulated amortization
Contributions from other funds
City- generated equity
Total net position
123
Exhibit L -4
2012 2011
97,289 97,289
97,289) 97,289)
832,324 832,324
3,527,782 3,396,779
4,360,106 4,229,103
CITY OF SEWARD
Compensated Annual Leave Internal Service Fund
Statement of Net Position
December 31, 2012
With Comparative Amounts for 2011)
Assets
Current assets - cash and investments
Liabilities
Current liabilities - accrued annual leave
Long -term accrued annual leave
Total liabilities
Net Position
Unrestricted
Total liabilities and net position
124
2012
Exhibit L -5
2011
454,604 425,643
115,547 112,489
339,057 313,154
454,604 425,643
454,604 425,643
CITY OF SEWARD
Compensated Annual Leave Internal Service Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Operating revenues - interfund charges
Operating expenses - salaries and benefits
Change in net position
Beginning net position
Ending net position
125
Exhibit L -6
2012 2011
364,902 380,846
364,902 380,846
CITY OF SEWARD
Compensated Annual Leave Internal Service Fund
Statement of Cash Flows
Year Ended December 31, 2012
With Comparative Amounts for 2011)
Cash flows from operating activities:
Receipts from interfund charges
Payments to employees
Net cash flows from operating activities
Beginning cash and investments
Ending cash and investments
Reconciliation of earnings from operations to net cash
provided by operating activities:
Earnings from operations
Adjustments to reconcile earnings from operations
to net cash flows from operating activities - increase
decrease) in accrued annual leave
Net cash flows from operating activities
126
Exhibit L -7
2012 2011
364,902 380,846
335,941 412,391
28,961 31,545)
425,643 457,188
454,604 425,643
28,961 31,545
28,961 (31,545
Cash and investments
Other assets
Total assets
CITY OF SEWARD
Teen Council Agency Fund
Statement of Changes in Assets and Liabilities
Year Ended December 31, 2012
Liabilities
Accounts payable
Due to Teen Council
Exhibit M -1
Balance at Balance at
January 1, December 31,
2012 Additions Deletions 2012
47,351 30,691 23,323 54,719
150 - - 150
47,501 30,691 23,323 54,869
2,561 - 1,143 1,418
44,940 30,691 22,180 53,451
Total liabilities $ 47,501 30,691 23,323 54,869
127
CITY OF SEWARD
Schedule of Governmental Capital Assets
December 31, 2012
With Comparative Amounts for 2011)
Capital assets:
Land and land improvements
Buildings
Improvements other than buildings
Equipment
Construction in progress
Total capital assets
128
Exhibit N -1
2012 2011
5,432,289 5,432,289
58,381,690 57,991,642
16,167,267 16,119,523
8,336,747 8,308,728
16,428,130 8,714,138
104,746,123 96,566,320
Exhibit N -2
CITY OF SEWARD
Schedule of Changes in Governmental Capital Assets
Year Ended December 31, 2012
96,566,320 8,224,684 44,881 104,746,123
129
Balance at Balance at
January 1, December 31,
2012 Additions Deletions 2012
Land and land improvements 5,432,289 5,432,289
Buildings 57,991,642 390,048 - 58,381,690
Improvements other than buildings 16,119,523 47,744 - 16,167,267
Equipment 8,308,728 55,969 27,950 8,336,747
Construction in progress 8,714,138 7,730,923 16,931 16,428,130
96,566,320 8,224,684 44,881 104,746,123
129
CITY OF SEWARD
Schedule of Governmental Capital Assets by
December 31, 2012
Land and
Land
Improve -
Function and Activity ments Buildings
General government:
City Council/Mayor
City manager
City clerk
Finance
Community development
Municipal building
Alaska SeaLife Center
General services
Community and Senior Center
Non - departmental
Total general government
Function and Activity
Improve-
ments
Other than
Buildings Equipment
Exhibit N -3
Total
44,554 44,554
491,198 491,198
37,988 37,988
97,115 97,115
5,232 7,142 12,374
2,450,550 16,291 54,169 2,521,010
49,160,493 3,193,270 4,445,742 56,799,505
1,479,080 8,005,937 53,025 9,538,042
1,473,935 1,473,935
5,432,289 68,868 5,501,157
5,432,289 54,638,158 11,215,498 5,230,933 76,516,878
Public safety:
Police
Jail
Animal control
Fire
Building inspection
Seward Volunteer Ambulance Corp
Total public safety
Public works:
Streets
Engineering
City shop
Total public works
1,682,105 1,682,105
9,408 9,408
156,720 156,720
1,075,742 46,746 885,405 2,007,893
2,600 2,600
12,210 12,210
1,232,462 46,746 2,591,728 3,870,936
254,567 3,324,312 256,374 3,835,253
3,621 3,621
785,766 65,466 851,232
1,040,333 3,324,312 325,461 4,690,106
Parks and recreation - 744,071 1,567,911 125,956 2,437,938
Library - 726,666 12,800 62,669 802,135
Total capital assets
allocated to functions $ 5,432,289 58,381,690 16,167,267 8,336,747 88,317,993
Construction in progress
Total capital assets
19101
16,428,130
104,746,123
Exhibit N -4
CITY OF SEWARD
Schedule of Changes in Governmental Capital Assets by Function and Activity
Year Ended December 31, 2012
Capital Capital
Assets at Assets at
January 1, December 31,
Function and Activitv 2012 Additions Deletions 2012
General government:
City Council/Mayor 44,554 44,554
City manager 491,198 491,198
City clerk 37,988 37,988
Finance 65,386 31,729 97,115
Community development 12,374 12,374
Municipal building 2,478,189 42,821 2,521,010
Alaska Sealife Center 56,546,092 281,363 27,950 56,799,505
General services 9,538,042 9,538,042
Community and Senior Center 1,473,935 1,473,935
Non - departmental 5,501,157 5,501,157
Total general government 76,188,915 355,913 27,950 76,516,878
Public safety
Police 1,682,105 - 1,682,105
Jail 9,408 - 9,408
Animal control 156,720 - 156,720
Fire 1,960,386 47,507 2,007,893
Building inspection 2,600 - 2,600
Seward Volunteer Ambulance Corp 6,300 5,910 12,210
Total public safety 3,817,519 53,417 3,870,936
Public works
Streets 3,835,253 - - 3,835,253
Engineering 3,621 - - 3,621
City shop 851,232 - - 851,232
Total public works 4,690,106 - - 4,690,106
Parks and recreation 2,353,507 84,431 - 2,437,938
Library 802,135 - - 802,135
Construction in progress 8,714,138 7,730,923 16,931 16,428,130
96,566,320 8,224,684 44,881 104,746,123
131
Exhibit 0-1
CITY OF SEWARD
Schedule of Expenditures of Federal Awards
Year Ended December 31, 2012
Catalog of
Federal January 1, Federal December 31,
Domestic Total 2012 Share of 2012
Assistance Grant Grant Receivable Expen- Federal Receivable
Grant Title Number Number Award Deferred ditures Receipts Deferred
Department of Agriculture
Passed through State of Alaska Department
of Natural Resources -
2012 Volunteer Fire Assistance Grant 10.664 2012VFA 12,066 12,066 12,066
Department of Commerce
Passed through State of Alaska Department
of Education & Early Development:
Alaska OWL Project FY13 IT Aide Award 11.557 02- 42- B10560 2,380 1,778 2,380 602)
Alaska OWL Project FY13 IT Aide Award 11.557 02- 42- B10560 2,380 2,380 2,380)
OWL Travel Grant (ARRA) 11.557 53412 261 261 261
Total Department Commerce 2,039 5,021 2,982)
Department of Justice
Passed through State of Alaska Department
of Health and Social Services - Title V -
Delinquency Prevention Grants 16.548 609 -12 -066 45,000 9,000 9,000
National Endowment for the Humanities
Community Library Construction 45.130 CH- 50802 -12 500,000 332,104 200,000 132,104
Passed through Alaska Humanities Forum -
Phase IL The 3- Country Jujiro Wade
Global Archiving Project 45.129 G11 -0029 5,000 (450) 450 - -
Total National Endowment for the Humanities (450) 332,554 200,000 132,104
Institute of Museum and Library Services
Passed through State of Alaska Department
of Education and Early Development -
Continuing Education Program 45.310 CED -12- 770 -174 1,500 - 1,500 1,500
Department of Energy
Passed through Alaska Energy Authority -
Energy Efficiency and Conservation (ARRA) 81.128 7510052 115,800 46,724 36,387 83,111 -
Denali Commission
D Float Replacement Seward Small Boat Harbor 90.100 01411 -01 80,000 - 38,310 - 38,310
Department of Health & Human Services
Affordable Care Act - Health Center Planning 93.527 4PO4CS22764 -01 -01 80,000 - 80,000 - 80,000
132
CITY OF SEWARD
Schedule of Expenditures of Federal Awards, continued
Catalog of
Federal
Domestic
Assistance Grant
January 1, Federal
Total 2012 Share of
Grant Receivable Expen-
Exhibit 0-1, continued
December 31,
2012
Federal Receivable
Grant Title Number Number Award Deferred ditures Receipts Deferred
Department of Homeland Security
Assistance to Firefighters - Operation and Safety 97.044 EMW- 2010 -FO -08207 $ 19,157 11,519 4,697 16,216
Passed through State of Alaska Department
of Military and Veterans Affairs:
September 2012 Flood (FEMA) 97.039 FEMA- 4094 -DR -AK 301,468 301,468 301,468
November 2011 Windstorm (FEMA) 97.039 FEMA- 4054 -DR -AK 50,491 50,491 31,474 19,017
Dairy Hill Drainage Upgrade (FEMA) 97.039 1865.0003 262,487 45,628 45,628
Total CFDA 97.039 397,587 31,474 366,113
State Homeland Security Program 97.067 2009 -SS -T9 -0007 30,000 26,160 26,160
Total Department of Homeland Security 37,679 402,284 73,850 366,113
Total Federal Financial Assistance
133
83,953 914,140 384,548 613,545
CITY OF SEWARD
Schedule of State Financial Assistance
Year Ended December 31, 2012
January 1, State
Total 2012 Share of
Grant Grant Receivable Expendi-
Grant Title Number Award Deferred Adiustments tures
Department of Commerce, Community
47,524
and Economic Development
312,844Road/Levee Construction 09 -DC -527
Fish Ditch Restoration 09 -DC -261
Security and Fire Protection for
Commercial Passenger Vessels 11 -DC -640
Mooring Dolphins and Dock Improvements
462,252
at Seward Marine Center 11 -DC -350
Community Library 11 -DC -374
Alutiiq Pride Shellfish Hatchery 12 -DC -593
Construction of New Water Storage Tank 12 -RR -030
CDQ Fishing Fleet Relocation Study 12- DC-427
Cruise Ship Boardwalk Extension Grant 12 -DM -236
D Float Replacement Seward Small Boat Harbor 1411
State Revenue Sharing N/A
Shared Fishery Taxes N/A
Total Department of Commerce, Community
14,226
and Economic Development
400,000
Department of Military and Veteran Affairs
142,985
Dairy Hill Drainage Upgrade 1865.0003
December 09 Storm Surge AK -10 -230
November 2011 Windstorm FEMA- 4054 -DR -AK
September 2012 Flood FEMA- 4094 -DR -AK
Total Department of Military and Veteran Affairs
9,578
Department of Revenue
9,578
Fish Taxes N/A
Liquor Licenses N/A
Commercial Passenger Vessel Tax 2009 N/A
Commercial Passenger Vessel Tax 2010 (Note 2) N/A
Commercial Passenger Vessel Tax 2011 (Note 2) N/A
Passed through Kenai Peninsula Borough
2,168,665
Commercial Passenger Vessel Tax 2011 (Note 2) N/A
Total Department of Revenue
Department of Natural Resources
Jesse Lee Home Rehabilitation Project, Phase H PT- 2007 -1
Department of Administration
PERS Relief N/A
Department of Corrections
279
Community Jails Program 2011 N/A
Department of Environmental Conservation
Vessel Wash -Down and Wastewater
10,491
Recycling Facility 76913
Department of Education and Early Development
100,489
FY13 Grant -In -Aid FYI3GIA
Public Library Assistance PLA -13- 770 -67
Total Department of Education and Early Development
81,895
Alaska Energy Authority
Sea Life Center Heat Pump Project 703 001 7 - 40601 1
Total State Financial Assistance
Major program
519,689
Exhibit P -1
December 31,
2012
State Receivable
Receipts Deferred
1,750,000 47,524 270,148 312,844 4,828
61,250 1,143 1,143
2,000,000 242,473 229,715 462,252 9,936
1,500,000 247,082 1,029,736 1,276,818
4,700,000 1,364,672 2,206,402 3,506,175 64,899
250,000 109,284 140,716 250,000
1,992,000 2,241 20,070 14,226 8,085
400,000 180,389 142,985 323,374
25,000 25,000) 16,729 8,271)
20,000 9,578 9,578
228,000 228,000 228,000
13,889 13,889 13,889
2,168,665 4,309,111 6,160,721 317,055
87,496 15,209 15,209
441,181 52,727 279 71,404 18,398)
16,830 16,830 10,491 6,339
100,489 100,489 100,489
52,727 132,807 81,895 103,639
519,689 519,689 519,689
17,100 17,100 17,100
771,065 587,877) 587,877
374,293 374,293) 356,309 17,984)
324,865 324,865 324,865)
1,086,570 - 1,086,570 (1,086,570)
962,170) 1,480,975 1,948,224 1,4( 29,419)
1,000,000 112,108 (45,395) 176,532 66,713 176,532
134
625,512 - 625,512 625,512
9,785 (1,857)
89,725
1,857
73,544 39,507 34,037
1,998 1,998 1,998
6,500 6,500 6,500
8,498 8,498
286,580 25,031 19,536 44,567
1,394,504 45,395) 6,828,372 8,975,637 (798,156)
CITY OF SEWARD
Notes to the Schedules of Expenditures of Federal Awards
and State Financial Assistance
Year Ended December 31, 2012
1) Basis of Presentation
The accompanying Schedules of Expenditures of Federal Awards and State Financial Assistance
include the grant activity of City of Seward and are presented on the modified accrual basis of
accounting. The information in the schedules is presented in accordance with the requirements of
OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations and the
State ofAlaska Audit Guide and Compliance Supplement for State Single Audits.
2) Commercial Passenger Vessel Tax
Amounts shown as cash receipts on the commercial passenger vessel taxes have been receipted
into revenue in Harbor Fund trial balance on an accrual basis. Any unspent portion of these funds,
shown on the state schedule as "deferred" is reported as restricted net position in the fund financial
statements. At December 31, 2012, the unspent receipted portion of the funding is $1,429,419. In
addition, $343,365 has been accrued to revenue though not yet received or reported on the state
schedule. In the fund financial statements total restricted net assets is reported as $1,788,933.
3) Current Year Adjustments
The City received an audit in 2012 of the Jesse Lee Home Rehabilitation Project, Phase II from the
State of Alaska Department of Natural Resources. At December 31, 2011, the expenditures
incurred were reported to the State for reimbursement and recorded as a receivable at year end.
The overall total error identified during the audit was $45,395 of expenditures that were deemed
disallowed by the State. Due to these disallowed costs, the beginning receivable was adjusted to
reflect this amount that would not be reimbursed by the State granting agency.
135
This page left blank intentionally)
136
STATISTICAL
SECTION
CITY OF SEWARD
Statistical Section
This part of the City of Seward'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 City's overall financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how the City's
financial performance and well -being have changed over time.
Table 1 Net Assets /Position by Component 138
Table 2 Changes in Net Assets/Net Position 139 -140
Table 3 Fund Balances of Governmental Funds 141
Table 4 Changes in Fund Balances of Governmental Funds 142
Table 5 General Fund Revenues by Source 143
Table 6 General Fund Tax Revenues by Source 144
Revenue Capacity
These schedules contain information to help the reader assess the City's most significant
local revenue sources, sales and property tax.
Table 7 Property Tax Rates 145
Table 8 Property Tax Levies and Collections 146
Table 9 Assessed and Estimated Actual Value of Taxable Property 147
Table 10 Principal Property Taxpayers 148
Table 11 Principal Taxable Sales by Line of Business 149
Debt Capacity
These schedules present information to help the reader assess the affordability of the City's
current level of outstanding debt and the City's ability to issue additional debt
Table 12 Ratios of Outstanding Debt by Type 150
Table 13 Ratio of Net General Obligation Bonded Debt to Assessed Value and Net
Table 19 Demographic and Economic Statistics
General Obligation Bonded Debt per Capita 151
Table 14 Computation of Direct and Overlapping Bonded Debt 152
Table 15 Legal Debt Margin 153
Table 16 Ratio of Annual Debt Service Expenditures for General Obligation Debt to
162
Table 25 Miscellaneous Statistics
Total General Fund Expenditures 154
Table 17 Revenue Bond Coverage - Electric Enterprise Fund 155
Table 18 Revenue Bond Coverage - Harbor Enterprise Fund 156
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand
the environment within which the City's financial activities take place.
Table 19 Demographic and Economic Statistics 157
Table 20 Prinipal Employers 158
Table 21 Full -Time Equivalent Employees by Fund 159
Table 22 Operating Indicators by Function 160
Table 23 Capital Asset Statistics by Function 161
Table 24 Property Value, Construction, and Bank Deposits 162
Table 25 Miscellaneous Statistics 163
137
Table 1
MY OF SEWARD
Net Assets/Position by Component
Last Ten Fiscal Years
accrual basis of accounting)
amounts expressed in thousands)
138
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Governmental Activities:
Invested in capital assets,
net ofrelated debt S 57,398 55,726 56,495 56.663 58,016 58,016 56,208 56,122 56,122 61,393
Restricted 3,730 26
Unrestricted 5,009 6,636 5,946 5.901 5,025 5,993 8,619 9,983 5,785 8,669
Total governmental activities
net amounts S 62,407 62,362 62,441 62,564 63,041 64,009 64,827 66,105 65,637 70,088
Business -type Activities:
Invested in capital assets,
net of related debt 67,048 66,690 66,155 64,760 65,440 66,754 64,112 67,773 68,657 65,910
Restricted 16 700 2,111 3,465 1,388 5,150
Unrestricted 10,354 9,727 12,089 12,837 14,595 14,796 14,777 10,290 15,649 10,944
Total business -type activities
net assets 77,402 76,417 78,244 77,597 80,051 82,250 81,000 81,528 85,694 82,004
Primary government:
Invested in capital assets,
net of related debt 124,446 122,416 122,650 121,423 123,456 124,770 120,320 123,895 124,779 127,302
Restricted 16 700 2,111 3,465 5,118 5,176
Unrestricted 15,363 16,363 18,035 18,738 19,620 20,789 23,396 20,273 21,434 19,613
Total primary government
net assets /net position 139,809 138,779 140,685 140,161 143,092 146,259 145,827 147,633 151,331 152,091
138
Table 2
CITY OF SEWARD
Changes in Net Assets/Position
Last Ten Fiscal Years
accrual basis of accounting)
See Statement of Activities; page 19 (Exhibit A -2) of CAFR
139
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Expenses
Governmental activities:
General government 1,355,573 1,731,427 1,770,306 2,158,969 1,161,765 2,501,443 1,451,682 800,716 2,031,590 1,981,876
Public safety 2,286,556 2,299,873 2,383,911 2,440,488 2,980,785 2,934,607 3,029,935 3,168,421 3,140,921 3,360,091
Public works 1,145,730 1,265,153 1,383,178 1,704,296 2,650,977 1,310,474 1,456,468 1,991,925 1,988,748 2,410,794
Parks and recreation 996,112 1,046,681 1,099,556 1,075,945 981,222 1,236,411 1,247,366 1,462,365 1,395,705 1,320,447
Library 316,679 358,364 367,077 378,487 384,835 398,108 478,385 437,082 466,300 446,200
Healthcare facilities 247,052 440,997 468,703 924,795 535,226 412,797 3,910,190 2,804,000
SealifeCenter 1,839,836 1,804,367 1,028,302 1,578,315 1,672,365 1,736,147 1,294,636 731,528 51,939 965,206
Unallocated interest 466,382 371,982 432,438 347,367 306,989 116,906 236,982 1,505,248 173,993 206,778
Total governmental activities expenses 8,653,920 9,318,844 8,933,471 10,608,662 10,674,164 10,646,893 13,105,644 12,901,285 9,249,196 10,691,392
Business -type activities:
Electric 5,926,703 6,419,925 6,863,724 9,195,187 8,029,054 8,626,745 10,363,820 8,569,240 10,493,512 9,935,695
Water 1,346,099 687,542 760,363 813,245 859,799 1,194,311 1,066,860 1,093,419 1,230,833 1,246,997
Wastewater 706,332 705,508 693,096 747,484 901,759 916,909 1,078,318 1,044,654 1,013,492
Harbor 2,441,498 2,282,991 2,402,810 2,648,290 2,457,216 3,006,069 3,934,866 5,947,066 3,676,190 4,243,734
Seward Marine Industrial Center 1,541,608 1,591,311 1,521,930 1,278,774 1,076,730 1,149,453 990,466 926,290 1,081,862 928,458
PSMCC 20,416,615 21,856,797
Parking 75,983 95,209 112,013 117,150 129,623 119,723 118,309 157,229 205,407 237,522
Total business -type activities expenses 11,331,891 11,783,310 12,366,348 14,745,742 13,299,906 14,998,060 17,391,230 17,771,562 38,149,073 39,462,695
Total primary government expenses 19985.811 21.102J54 21.299.819 25,354.404 23,974,070 25.644953 30.496.874 30.672.847 47.398.269 50,154,087
Program Revenues
Governmental activities:
Charges for services:
General government 468,421 276,173 61,798 106,589 400,074 196,240 223,545 201,335 190,795 184,410
Public safety 683,916 737,338 687,763 761,316 706,575 669,988 744,939 682,906 740,204 809,645
Public works 149,464 116,742 219,843 239,984 111,756 116,833 84,849 168,196 40,910 36,721
Parks and recreation 471,396 548,283 565,168 529,289 592,063 627,038 622,067 608,361 620,943 609,342
Library 8,144 8,218 8,601 8,677 7,736 12,800 14,799 13,794 9,953 9,208
Healthcare facilities 2,569,886
Opemting grants and contributions 182,090 112,945 157,809 148,785 680,176 84,144 542,354 620,310 1,128,278 1,037,711
Capital grants and contributions 146,170 1,053,026 880,372 2,124,245 1,459,744 999,171 2,860,172 1,709,977 3,573,497 3,442,599
Total governmental activities
program revenues 2,109,601 2,852,725 2,581,354 3,918,885 3,958,124 2,706,214 5,092,725 6,574,765 6,304,580 6,129,636
Business -type activities:
Electric 6,539,213 6,943,720 7,381,178 7,979,436 8,428,106 8,565,180 9,060,636 8,842,150 10,309,524 11,224,511
Water 1,445,553 769,970 1,019,832 1,008,765 996,633 998,541 972,713 1,034,888 1,069,732 1,150,109
Wastewater 702,770 791,988 811,546 800,168 801,095 796,454 851,416 864,740 929,514
Harbor 1,795,350 1,818,674 1,943,424 2,499,065 2,751,916 2,776,676 2,596,924 2,803,828 2,968,021 3,169,744
Seward Marine Industrial Center 330,249 318,009 324,828 286,640 290,221 304,517 263,775 296,139 413,454 414,737
PSMCC 16,838,000 18,728,364
Parking 114,008 167,101 177,098 175,792 182,133 240,339 162,120 192,046 268,105 293,443
Operating grants and contributions 1,260,476 65,247 159,595 445,228 2,674,610 401,734 154,295
Capital grants and contributions 429,796 722,130 3,149,335 928,554 2,578,739 2,769,005 2,354,601 1,988,430 2,291,919 1,732,343
Total business -type activities
program revenues 10,654,169 11,442,374 14,787,683 14,950,274 16,093,163 16,614,948 16,652,451 18,683,507 35,425,229 37,797,060
Total primary government
program revenues 12,763.770 14,295,099 17.369.037 18.869.159 20.051,287 19.321.162 21,745,176 25258.272 41,729,809 43926.696
Net (expenses) /revenue:
Governmental activities 6,544,319) 6,466,119) 6,352,117) 6,689,777) 6,716,040) 7,940,679) 8,012,919) 6,326,520) 2,944,616) 4,561,756)
Business -type activities 677,722) 340,936) 2,421,335 204,532 2,793,257 1,616,888 738,779) 911,945 2,723,844) 1,665,635)
Total primary government net expense 7,222,041) 6,807,055) 3,930,782) 6,485,245) 3,922,783) 6,323,791) 8,751,698) 5,414,575) 5,668,460) 6,227,391)
PSMCC (healthcare facilities) is anew enterprise fund in 2011 previously reported as governmental fund and discreetly presented component unit.
See Statement of Activities; page 19 (Exhibit A -2) of CAFR
139
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Table 6
CITY OF SEWARD
General Fund Tax Revenues by Source
Last Ten Fiscal Years
1) Effective July 1, 2003, sales tax rate increased from 3% to 4 %. Sales tax remains at 4% and
1/4 of all sales tax revenue is transferred out of the General Fund to the PSMCC Enterprise Fund
to pay healthcare- related debt, capital and operating costs.
2) The hotel /motel tax rate is 4 %.
3) Represents tax - related penalties and interest.
144
Payments -
Fiscal Property Sales Tax in- Lieu -of- Hotel /Motel
Year Tax 1) Tax Tax (2) Other (3) Total
2003 670,297 $ 2,671,613 77,586 215,145 3,226 $ 3,637,867
2004 745,901 3,123,314 89,926 239,660 2,863 4,201,664
2005 787,503 3,411,283 96,614 284,656 1,804 4,581,860
2006 847,875 3,518,435 77,714 310,570 1,479 4,756,073
2007 873,513 4,068,600 76,609 343,162 1,381 5,363,265
2008 953,957 4,137,758 80,126 362,004 1,236 5,535,081
2009 975,687 3,585,304 84,922 285,313 1,329 4,932,555
2010 954,687 3,742,751 75,317 328,396 1,003 5,102,154
2011 1,001,020 4,147,010 78,574 334,824 1,821 5,563,249
2012 1,013,580 4,189,330 76,160 380,210 1,856 5,661,136
1) Effective July 1, 2003, sales tax rate increased from 3% to 4 %. Sales tax remains at 4% and
1/4 of all sales tax revenue is transferred out of the General Fund to the PSMCC Enterprise Fund
to pay healthcare- related debt, capital and operating costs.
2) The hotel /motel tax rate is 4 %.
3) Represents tax - related penalties and interest.
144
Table 7
CITY OF SEWARD
Property Tax Rates
Direct and Overlapping Governments
Last Ten Fiscal Years
Per $1,000 of Assessed Value)
Fiscal Borough KPCC Flood
Year City 1) 2) Service (3) Total
2003 3.12 6.50 0.10 0.00 9.72
2004 3.12 6.50 0.10 0.50 10.22
2005 3.12 6.50 0.10 0.50 10.22
2006 3.12 6.50 0.10 0.50 10.22
2007 3.12 5.50 0.00 0.50 9.12
2008 3.12 4.50 0.00 0.50 8.12
2009 3.12 4.50 0.00 0.50 8.12
2010 3.12 4.50 0.00 0.50 8.12
2011 3.12 4.50 0.00 0.50 8.12
2012 3.12 4.50 0.00 0.50 8.12
1) Includes Kenai Peninsula Borough only.
2) Kenai Peninsula Community College.
3) Seward /Bear Creek Flood Service Area created effective 2004.
Source: "Alaska Taxable, 2012"
145
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Table 11
CITY OF SEWARD
Principal Taxable Sales by Line of Business
December 31, 2012
Percent of
FY12 Taxable Total Taxable
Type of Business Sales (1) Sales (2)
Retail Trade
Guiding Water
Restaurant /Bar
Hotel/Motel /Bed & Breakfast
Public Administration
Wholesale Trade
Information
Services
Rental Residential Property
Rental Commercial Property
Other
43,453,043 40.1%
17,564,634 16.2%
11,786,383 10.9%
11,722,639 10.8%
7,366,331 6.8%
6,271,717 5.8%
2,805,412 2.6%
1,719,997 1.6%
1,377,791 1.3%
998,086 0.9%
3,346,757 3.1%
108,412,790 100%
1) Taxable sales for 2012 are $108,412,790. Source: Kenai Peninsula Borough EDD.
2) Total sales tax collected in 2012 is $4,217,144. Source: Kenai Peninsula Borough Finance
Department confirmation letter.
Note: Information regarding the ten principal revenue payers and the amount collected from each,
is not available. The Kenai Peninsula Borough collects sales tax on behalf of the City of Seward as
required by State law. The Borough does not disclose sales tax data by individual business, even to
the cities within the Borough.
149
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CITY OF SEWARD
Ratio of Net General Obligation Bonded Debt to Assessed Value and
Net General Obligation Bonded Debt per Capita
Last Ten Fiscal Years
Amounts expressed in thousands.
1) Alaska Department of Commerce, Community & Economic Development
2) From Table 9 (expressed in thousands)
3) Amount does not include revenue bonds
Source: Kenai Peninsula Borough and State of Alaska, "Alaska Taxable 2012"
151
Ratio of
Debt Net
Payable Bonded Net
Gross from N et Debt to Bonded
Fiscal Population Assessed Bonded Enterprise Bonded Assessed Debt per
Year 1) Value (2)# Debt (3)# Revenues # Debt # Value Capita
2003 2,794 $ 216,698 8,610 1,387 $ 7,223 3.33% $ 2,585
2004 2,745 223,202 7,735 665 7,070 3.17% 2,576
2005 2,540 247,173 6,870 521 6,349 2.57% 2,500
2006 2,606 263,529 5,950 374 5,576 2.12% 2,140
2007 2,627 278,153 4,960 222 4,738 1.70% 1,804
2008 2,661 292,802 4,185 169 4,016 1.37% 1,509
2009 2,609 301,784 3,360 114 3,246 1.08% 1,244
2010 2,693 311,277 2,485 59 2,426 0.78% 901
2011 2,733 304,945 5,030 1,550 3,480 1.14% 1,273
2012 2,754 314,828 4,190 4,190 1.33% 1,521
Amounts expressed in thousands.
1) Alaska Department of Commerce, Community & Economic Development
2) From Table 9 (expressed in thousands)
3) Amount does not include revenue bonds
Source: Kenai Peninsula Borough and State of Alaska, "Alaska Taxable 2012"
151
CITY OF SEWARD
Computation of Direct and Overlapping Bonded Debt
December 31, 2012
Jurisdiction
Direct:
City of Seward
Overlapping:
Kenai Peninsula Borough (KPB)
Net General
Obligation Percentage
Bonded Debt Applicable
Outstanding to Seward
3,709,498 (1) 100%
29,969,000 (2) 6.5%
33,678,498
Table 14
Amount
Applicable to
City of Seward
3,709,498
3) 1,961,771
5,671,269
1) Excluding general obligation bonds reported in the Enterprise Funds. Includes governmental activities'
general obligation bonds, revenue bonds, and capital leases.
2) Source: KPB finance dept. Total $31,944,000 less Central Emergency Services unrelated to Seward.
3) Based on ratio of City of Seward assessed value (real and personal property = $369,320,053)
to total assessed value of the Kenai Peninsula Borough ($5,641,918,435)
Source: "2012 Alaska Taxable" p. 40, State of Alaska, and KPB main and supplemental tax rolls.
Note: Excludes State assessed values which are exempt from taxation at City and Borough level.
152
Table 15
CITY OF SEWARD
Legal Debt Margin
December 31, 2012
No debt limit mandated by law.
11.7%3
Table 16
CITY OF SEWARD
Ratio of Annual Debt Service Expenditures
for General Obligation Debt (1)
to Total General Fund Expenditures
Last Ten Fiscal Years
1) General obligation debt reported in the Enterprise Funds, with government commitment, have been
excluded. Beginning in 2005, retirement system payments attributed to past service costs are
reflected as debt service payments in the General Fund. In 2006, excludes a one -time payoff of
Seward General Hospital PERS costs in the amount of $1,708,126, to be consistent with
reclassification of hospital- related items into enterprise fund in 2011.
2) Total General Expenditures includes General Fund only beginning in 2011. Prior years included
Hospital Debt Service Fund and Seward Mountain Haven Debt Service Fund which combined
to become the Providence Seward Medical & Care Center enterprise fund in 2011.
154
Retirement
Past- Ratio of Debt
Service Total General Service to
Fiscal Cost Total Debt Expenditures General
Year Principal Interest Payments Service (1) 2) Expenditures
2003 527,612 $ 498,415 1,026,027 7,726,624 13.28%
2004 955,591 386,182 1,341,773 8,124,329 16.52%
2005 800,927 380,662 164,143 1,345,732 9,042,117 14.88%
2006 892,837 305,202 97,349 1,295,388 10,988,362 11.79%
2007 854,977 260,544 293,114 1,408,635 9,514,080 14.81%
2008 738,999 217,444 470,573 1,427,016 10,784,695 13.23%
2009 787,695 195,299 596,907 1,579,901 11,162,373 14.15%
2010 838,386 168,653 529,778 1,536,817 10,404,004 14.77%
2011 100,477 75,547 631,278 807,302 9,838,614 8.21%
2012 153,201 656,294 809,495 10,165,422 7.96%
1) General obligation debt reported in the Enterprise Funds, with government commitment, have been
excluded. Beginning in 2005, retirement system payments attributed to past service costs are
reflected as debt service payments in the General Fund. In 2006, excludes a one -time payoff of
Seward General Hospital PERS costs in the amount of $1,708,126, to be consistent with
reclassification of hospital- related items into enterprise fund in 2011.
2) Total General Expenditures includes General Fund only beginning in 2011. Prior years included
Hospital Debt Service Fund and Seward Mountain Haven Debt Service Fund which combined
to become the Providence Seward Medical & Care Center enterprise fund in 2011.
154
9'..1.1.. 1'7
CITY OF SEWARD
Revenue Bond Coverage
Electric Enterprise Fund
Last Ten Fiscal Years
1) Total revenues, including interest, exclusive of grants.
2) Total operating expenses exclusive of depreciation and payments in lieu of taxes.
3) Includes principal and interest of revenue bonds only.
4) Revenue bond agreements require Net Revenue Available for Debt Service be at least 1.30 times the
amount of the total annual debt service requirement.
155
Debt Service Requirements (3)
Gross Net Revenue
Fiscal Revenues Operating Available for Coverage
Year 1) Expenses (2) Debt Service Principal Interest Total 4)
2003 $ 6,715,607 4,417,052 2,298,555 145,000 $ 144,536 $ 289,536 7.94
2004 7,003,400 5,065,958 1,937,442 155,000 137,184 292,184 6.63
2005 7,542,541 5,539,190 2,003,351 165,000 129,181 294,181 6.81
2006 8,246,477 7,855,990 390,487 210,000 87,500 297,500 1.31
2007 8,709,107 6,651,455 2,057,652 195,000 80,938 275,938 7.46
2008 8,920,730 6,396,886 2,523,844 205,000 175,825 380,825 6.63
2009 9,173,257 8,589,154 584,103 305,000 367,023 672,023 0.87
2010 8,903,337 6,854,897 2,048,440 315,000 353,586 668,586 3.06
2011 10,410,908 8,620,529 1,790,379 330,000 339,298 669,298 2.68
2012 11,344,047 7,844,098 3,499,949 345,000 319,192 664,192 5.27
1) Total revenues, including interest, exclusive of grants.
2) Total operating expenses exclusive of depreciation and payments in lieu of taxes.
3) Includes principal and interest of revenue bonds only.
4) Revenue bond agreements require Net Revenue Available for Debt Service be at least 1.30 times the
amount of the total annual debt service requirement.
155
Table 18
CITY OF SEWARD
Revenue Bond Coverage
Harbor Enterprise Fund
Last Ten Fiscal Years
1) Total revenues, including interest, exclusive of grants.
2) Total operating expenses exclusive of depreciation and payments in lieu of taxes.
3) Includes principal and interest of revenue bonds only.
4) Revenue bond agreements require Net Revenue Available for Debt Service be at least 1.20 times the
amount of the total annual debt service requirement.
Operating Expenses were restated in 2012 for FY2011.
Note: 2000 Harbor Enterprise Fund revenue bonds refunded in 2007. Bonds issued in 2005 in amount of
1.5 million for float construction and in 2006 in the amount of $4.5 million for expansion of the
south harbor.
156
Debt Service Requirements (3)
Net
Revenue
Gross Operating Available
Fiscal Revenues Expenses for Debt Coverage
Year 1) 2) Service Principal Interest Total 4)
2003 $ 1,837,517 $ 1,192,187 645,330 $ 90,000 153,568 $ 243,568 2.65
2004 1,864,318 1,149,701 714,617 95,000 148,618 243,618 2.93
2005 2,002,229 1,310,211 692,018 105,000 150,542 255,542 2.71
2006 2,752,802 1,388,971 1,363,831 110,000 293,848 403,848 3.38
2007 2,905,013 1,472,842 1,432,171 310,000 376,504 686,504 2.09
2008 2,896,828 1,506,685 1,390,143 325,000 374,203 699,203 1.99
2009 2,632,937 1,903,985 728,952 340,000 356,540 696,540 1.05
2010 2,850,942 1,784,887 1,066,055 360,000 337,990 697,990 1.53
2011 3,017,003 2,040,903 976,100 385,000 318,459 703,459 1.39
2012 3,228,955 2,171,180 1,057,775 400,000 299,765 699,765 1.51
1) Total revenues, including interest, exclusive of grants.
2) Total operating expenses exclusive of depreciation and payments in lieu of taxes.
3) Includes principal and interest of revenue bonds only.
4) Revenue bond agreements require Net Revenue Available for Debt Service be at least 1.20 times the
amount of the total annual debt service requirement.
Operating Expenses were restated in 2012 for FY2011.
Note: 2000 Harbor Enterprise Fund revenue bonds refunded in 2007. Bonds issued in 2005 in amount of
1.5 million for float construction and in 2006 in the amount of $4.5 million for expansion of the
south harbor.
156
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CITY OF SEWARD
Principal Employers - Current and Ten Years Ago
Name
2011
Rank
Table 20
2004
Rank
State of Alaska (excludes University of Alaska) 1 1
City of Seward 2 4
Providence Seward Medical & Care Center 3
Kenai Peninsula Borough School District 4 6
Safeway, Inc. 5 9
Alaska SeaLife Center 6 2
Ciri Alaska Tourism Corp 7 5
Seaview Community Services 8
Breeze Inn Motel 9
Rays Waterfront Bar & Grill 10
Icicle Seafoods 7
United States Government 3
Ocean Beauty 8
Seward Ships Drydock 10
Source: Alaska Department of Labor and Workforce Development, Research and Analysis
Data for 2003 not available; 2004 data is nearest available data.
Beginning in 2012, the State of Alaska by statute, is no longer allowed to provide data
relative to the number of employees working for an employer. Nor can it rank employers
according to size. The City will seek alternate means to obtain relevant data but none is
available at this time.
158
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Table 24
CITY OF SEWARD
Property Value, Construction, and Bank Deposits
Last Ten Fiscal Years
1) "Estimated Actual Value" from Table 9.
Source: Construction Data - City of Seward Engineering Department
Bank Deposit Data - Local Banks (First National Bank Alaska and Wells Fargo)
162
Commercial Construction Residential Construction
Total Real Number Number
Fiscal Property of Value of of Value of Bank
Year Value (1) Permits Permits Permits Permits Deposits
2003 $ 175,842,600 34 $ 6,611,765 25 $ 1,453,898 $ 47,679,000
2004 191,098,900 29 15,080,750 28 2,645,400 54,006,361
2005 198,141,000 21 888,820 33 1,974,323 56,467,873
2006 220,649,800 36 24,332,857 22 1,204,392 59,374,764
2007 226,885,700 20 22,555,446 17 589,254 59,042,303
2008 229,373,700 14 903,500 16 1,928,879 60,821,068
2009 244,392,800 31 18,694,201 24 966,926 54,337,541
2010 242,037,200 36 4,376,321 15 941,261 57,426,000
2011 242,523,700 36 10,468,128 27 873,920 76,678,691
2012 253,609,300 36 6,254,641 18 717,400 82,765,489
1) "Estimated Actual Value" from Table 9.
Source: Construction Data - City of Seward Engineering Department
Bank Deposit Data - Local Banks (First National Bank Alaska and Wells Fargo)
162
Table 25
CITY OF SEWARD
Miscellaneous Statistics
December 31, 2012
Date of Incorporation June 1, 1912
Class Home Rule City
Form of Government Council / Manager
Area, Square Miles 22
Miscellaneous Operational Statistics:
25.00
Library - number of volumes 31,478
Fire Department - Number of volunteers 26
Sewer System - Maximum daily capacity (gallons) 1,300,000
Water System - Maximum daily capacity (gallons) 8,856,000
Electric System:
180
Miles of distribution lines 70
Miles of transmission lines 42
Harbor - Number of permanent slips 673
City Employees:
47
Regular Employees - Full -time equivalent 92.70
Temporary Employees - Full -time equivalent 11.70
Demographics:
6
School Enrollment, City of Seward (3) 593
Unemployment Rate - Borough -Wide (1) 8.4%
Population (2) 2,754
Average annual earnings (4) 40,297
Qualified Voters 1,868
Facilities and Services not included in the reporting entity:
Education:
Elementary School
Number of students enrolled 324
Number of teachers 25.00
Middle School
Number of students enrolled 89
Number of teachers 7.00
High School
Number of students enrolled 180
Number of teachers 11.50
Alaska. Vocational Technical Center
Number of students served annually 1,185
Number of teachers 47
Healthcare Facilities - a component unit of the reporting entity:
Providence Seward Medical & Care Center
Number of patient beds (6) combination of primary care & swing beds 6
Number of long -term care beds 40
Number of employees:
Exempt 16
Non - Exempt 117
1) Kenai Peninsula Borough
2) State of Alaska, Department of Commerce, Community & Economic Development
3) Kenai Peninsula Borough School District
4) Kenai Peninsula Borough information extrapolated by Seward's population
163
This page left blank intentionally)
164
SINGLE AUDIT
SECTION
Mikunda, 4da Cottrell & Co.,,...
Certified Public Accountants & Consultants
An nlv andently Owned Member
MCGLADRiyALLIANCE = McGladrey
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government
Auditia Standards
Honorable Mayor and City Council
City of Seward, Alaska
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business -type activities, each major fund, and the aggregate remaining fund information of
City of Seward, Alaska, as of and for the year ended December 31, 2012, and the related notes to the
financial statements, which collectively comprise City of Seward's basic financial statements and have
issued our report thereon dated June 12, 2013. Our report includes a reference to other auditors who
audited the operating account of the Providence Seward Medical and Care Center, as described in our
report on City of Seward's financial statements. The operating account of Providence Seward Medical
and Care Center was not audited in accordance with Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of Seward's
internal control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of City of Seward's
internal control. Accordingly, we do not express an opinion on the effectiveness of City of Seward's
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or
combination of deficiencies, in internal control, such that there is a reasonable possibility that a
material misstatement of the entity's financial statements will not be prevented, or detected and
corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough to
merit attention by those charged with governance.
165
3601 "C" Street, Suite 600 * Anchorage, Alaska 99503 * (907) 278 -8878 * Fax (907) 278 -5779 * www.mcc- cpa.com
Honorable Mayor and City Council
City of Seward, Alaska
Our consideration of internal control was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify
any deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Seward's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion
on compliance with those provisions was not an objective of our audit, and accordingly, we do not
express such an opinion. The results of our tests disclosed no instances of noncompliance or other
matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
entity's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the entity's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Anchorage, Alaska
June 12, 2013
166
Dv Pd.n
MCGLADiEYALLIANC E _ McGladreyMikunca, 4da Cottrell & Co.,,...
Certified Public Accountants & Consultants
Independent Auditor's Report on Compliance For Each Major Federal Program and Report on Internal
Control Over Compliance as Required by OMB Circular A -133
Honorable Mayor and City Council
City of Seward, Alaska
Report on Compliance for Each Major Federal Program
We have audited City of Seward's compliance with the types of compliance requirements described
in the OMB Circular A -133 Compliance Supplement that could have a direct and material effect on
each of City of Seward's major federal programs for the year ended December 31, 2012. City of
Seward's major federal programs are identified in the summary of auditor's results section of the
accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and
grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of City of Seward's major federal
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-
133, Audits of States, Local Governments, and Non - Profit Organizations. Those standards and OMB
Circular A -133 require that we plan and perform the audit to obtain reasonable assurance about
whether noncompliance with the types of compliance requirements referred to above that could have
a direct and material effect on a major federal program occurred. An audit includes examining, on a
test basis, evidence about City of Seward's compliance with those requirements and performing such
other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. However, our audit does not provide a legal determination of City of Seward's
compliance.
Opinion on Each Major Federal Program
In our opinion, City of Seward complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs for the year ended December 31, 2012.
167
3601 "C" Street, Suite 600 * Anchorage, Alaska 99503 * (907) 278 -8878 * Fax (907) 278 -5779 * www.mcc- cpa.com
Honorable Mayor and City Council
City of Seward, Alaska
Report on Internal Control Over Compliance
Management of City of Seward is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above. In planning
and performing our audit of compliance, we considered City of Seward's internal control over
compliance with the types of requirements that could have a direct and material effect on each major
federal program to determine the auditing procedures that are appropriate in the circumstances for the
purpose of expressing an opinion on compliance for each major federal program and to test and
report on internal control over compliance in accordance with OMB Circular A -133, but not for the
purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of City of Seward's internal control
over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.
A significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a federal
program that is less severe than a material weakness in internal control over compliance, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses, as
defined above. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
with OMB Circular A -133. Accordingly, this report is not suitable for any other purpose.
Anchorage, Alaska
June 12, 2013
I •:
Mikunda,
Cottrell & Co.,,...
Certified Public Accountants & Consultants
An nlv andently Owned Member
MCGLADRiyALLIANCE = McGladrey
Independent Auditor's Report on Compliance For Each Major State Program and Report on Internal
Control Over Compliance as Required by the State of Alaska Audit Guide and Compliance Supplement
for State Single Audits
Honorable Mayor and City Council
City of Seward, Alaska
Report on Compliance for Each Major State Program
We have audited City of Seward's compliance with the types of compliance requirements described in
the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that could have a
direct and material effect on each of City of Seward's major state programs for the year ended
December 31, 2012. City of Seward's major state programs are identified in the accompanying
Schedule of State Financial Assistance.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and
grants applicable to its state programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of City of Seward's major state
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and the State of Alaska
Audit Guide and Compliance Supplement for State Single Audits. Those standards and the State of
Alaska Audit Guide and Compliance Supplement for State Single Audits require that we plan and
perform the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a major
state program occurred. An audit includes examining, on a test basis, evidence about City of Seward's
compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
state program. However, our audit does not provide a legal determination of City of Seward's
compliance.
Opinion on Each Major State Program
In our opinion, City of Seward complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major state
programs for the year ended December 31, 2012.
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3601 "C" Street, Suite 600 * Anchorage, Alaska 99503 * (907) 278 -8878 * Fax (907) 278 -5779 * www.mcc- cpa.com
Honorable Mayor and City Council
City of Seward, Alaska
Report on Internal Control Over Compliance
Management of City of Seward is responsible for establishing and maintaining effective internal control
over compliance with the type of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered City of Seward's internal control over compliance
with the types of requirements that could have a direct and material effect on a major state program to
determine our auditing procedures that are appropriate in the circumstances for the purpose of
expressing an opinion on compliance for each major state program, and to test and report on internal
control over compliance in accordance with the State of Alaska Audit Guide and Compliance
Supplement for State Single Audits, but not for the purpose of expressing an opinion on the effectiveness
of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of
City of Seward's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a state program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a state program will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a state
program that is less severe than a material weakness in internal control over compliance, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Accordingly, this
report is not suitable for any other purpose.
Anchorage, Alaska
June 12, 2013
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CITY OF SEWARD
Schedule of Findings and Questioned Costs
Year Ended December 31, 2012
I. Summary of Auditor's Results
Financial Statements
Type of auditor's report issued
Internal control over financial reporting:
Material weakness(es) identified?
Significant deficiency(ies) identified?
Noncompliance material to financial
statements noted?
Federal Financial Assistance
Internal control over major programs:
Material weakness(es) identified?
Significant deficiency(ies) identified?
Type of auditor's report issued on compliance
for major programs?
Any audit findings disclosed that are required to
be reported in accordance with section 510(a) of
Circular A -133?
Identification of major programs:
Agency
National Endowment for the Humanities
Department of Homeland Security
Dollar threshold used to distinguish between
Type A and Type B programs:
Auditee qualified as low -risk auditee?
State Financial Assistance
Internal control over major programs:
Material weakness(es) identified?
Significant deficiency(ies) identified?
Unqualified
yes X no
yes X none reported
yes X no
yes X no
yes X none reported
Unqualified
yes X no
CFDA
Number Name of Federal Program or Cluster
45.130 Community Library Construction
97.039 FEMA Cluster
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300,000
X yes no
yes X no
yes X none reported
CITY OF SEWARD
Schedule of Findings and Questioned Costs, continued
Summary of Auditor's Results, continued
State Financial Assistance, continued
Type of auditor's report issued on compliance
for major programs? Unqualified
Dollar threshold used to distinguish a state
major program?
II. Financial Statement Findings
None noted.
100,000
IILFederal Award Findings and Questioned Costs
None noted.
IV. State Award Findings and Questioned Costs
None noted.
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CITY OF SEWARD
Summary Schedule of Prior Audit Findings
Year Ended December 31, 2012
Federal
There were no prior year audit findings.
State of Alaska
There were no prior year audit findings.
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CITY OF SEWARD
Corrective Action Plan
Year Ended December 31, 2012
There are no current year findings; therefore no corrective action plan is required.
174