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COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Fiscal Year
Ended December 31, 2008
City of Seward
Report to-the City Council
June 22, 2009
Mikunda,
9 ' Cottrell&Co.,Inc.
Certified Public Attoumuns&Consultants
Mikunda,
Cottrell&Ca,Inc.
Certified Public Accountants&Consultants
Mikunda, Cottrell&Co.
3601 C Street,Suite 600
Anchorage,AK 99503
Phone(907)278-8878
Fax(907)278-5779
June 22,2009
Honorable Mayor and City Council
City of Seward
Seward,Alaska
Honorable Mayor and City Council:
We are pleased to present this report related to our audit of the financial statements of City of Seward for the year
ended December 31, 2008. This report summarizes certain matters required by professional standards to be
communicated to you in your oversight responsibility for City of Seward's financial reporting process.
This report is intended solely for the information and use of the City Council and management and is not intended to
be and should not be used by anyone other than these specified parties. It will be our pleasure to respond to any
questions you have regarding this report. We appreciate the opportunity to continue to be of service to City of
Seward.
fin cow 6.
Mikunda, Cottrell, &Co.
Page 1
Contents
Required Communications
Summary of Accounting Estimates
Exhibit A— Certain Written Communications Between Management and Our Firm
Representation Letter
Page 2
Required Communications
Statement on Auditing Standards No. 114 requires the auditor to communicate certain matters to keep those charged
with governance adequately informed about matters related to the financial statement audit that are, in our
professional judgment,significant and relevant to the responsibilities of those charged with governance in overseeing
the financial reporting process. The following summarizes these communications.
Area Comments
Auditor's Responsibility Under Professional Our responsibility under auditing standards generally
Standards accepted in the United States of America has been
described to you in our arrangement letter dated January
29, 2009.
Accounting Practices Adoption of, or Change in,Accounting Policies
Management has the ultimate responsibility for the
appropriateness of the accounting policies used by the City.
The City did not adopt any significant new accounting
policies nor have there been any changes in existing
significant accounting policies during the current period.
Significant or Unusual Transactions
We did not identify any significant or unusual transactions or
significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or
consensus.
Alternative Treatments Discussed with Management
We did not discuss with management any alternative
treatments within generally accepted accounting principles
for accounting policies and practices related to material
items during the current audit period.
Page 3
Area Comments
Management's Judgments and Accounting Summary information about the process used by
Estimates management in formulating particularly sensitive accounting
estimates and about our conclusions regarding the
reasonableness of those estimates is in the attached
Summary of Accounting Estimates".
Financial Statement Disclosures To our knowledge, all necessary disclosures have been
included in the footnotes to the financial statements.
Audit Adjustments There were 3 significant audit adjustments made to the
original trial balances presented to us to begin our audit.
The significant audit adjustments were to adjust the PERS
on behalf payment from the State of Alaska to the correct
amount, adjust for the capital contributions from Providence
Seward Medical Center for the LTC facility, and adjust
beginning equity and accounts payable for a disputed
liability.
Uncorrected Misstatements There are no uncorrected misstatements to our knowledge.
Disagreements with Management We encountered no disagreements with management over
the application of significant accounting principles, the basis
for management's judgments on any significant matters, the
scope of the audit,or significant disclosures to be included in
the financial statements.
Consultations with Other Accountants We are not aware of any consultations management had
with other accountants about accounting or auditing matters.
Significant Issues Discussed with No significant issues arising from the audit were discussed
Management or were the subject of correspondence with management.
Difficulties Encountered in Performing the We did not encounter any difficulties in dealing with
Audit management during the audit.
Significant Deficiencies and Material We did not identify any significant deficiencies or material
Weaknesses weaknesses during the audit.
Certain Written Communications Between Copies of certain written communications between our firm
Management and Our Firm and the management of the City are attached as Exhibit A.
Page 4
City of Seward
Summary of Accounting Estimates
Year Ended December 31, 2008
Accounting estimates are an integral part of the preparation of financial statements and are based upon
management's current judgment. The process used by management encompasses their knowledge and experience
about past and current events and certain assumptions about future events. You may wish to monitor throughout the
year the process used to compute and record these accounting estimates. The following describes the significant.
accounting estimates reflected in the City's December 31,2008 financial statements:
Area Accounting Policy Estimation Process Comments
Bad debt expense and To estimate the amount of Based on historical We agree with
allowance for doubtful uncollectible accounts records and actual review management's estimate.
accounts receivable at year end. of individual accounts at
year end.
Depreciable lives of To depreciate the cost of Based on management's We concur with
capital assets capital assets over their estimates using their management's policy.
estimated useful lives. knowledge of the specific
assets, usage, etc.
Page 5
Exhibit A - Certain Written Communications Between Management
and Our Firm
Page 6
CITY OF SEWARD agimittkp. UTILITIES &FINANCE
P.O. BOX 167
Main Office(907)224-4050
y Police(907)224-3338
SEWARD, ALASKA 99664-0167 A 4 Harbor(907)224-3138
QcnsK° Fire(907)224-3445
a' ` ' Ty City Clerk(907)224-4046
Wm"Engineering(907)224-4049
Utilities(907)224-4050
mss$ Fax(907)224-4038
June 15, 2009
Mikunda, Cottrell &Co.
3601 "C" Street, Suite 600
Anchorage,AK 99503
In connection with your audit of the basic financial statements of City of Seward, Alaska as of
and for the year ended December 31, 2008, we confirm that we are responsible for the fair
presentation in the financial statements of financial position, changes in financial position, and
cash flows in conformity with accounting principles generally accepted in the United States of
America.
We confirm to the best of our knowledge and belief the following representations made to you
during your audit.
1. The financial statements referred to above are fairly presented in conformity with
accounting principles generally accepted in the United States of America.
2. We have identified for you all organizations that are a part of this reporting entity or with
which we have a relationship, as these organizations are defined in Section.2100 of the
Govenmental Accounting Standards Board's Codification of Governmental Accounting
and Financial Reporting Standards that are component units.
3. We have identified for you all of our funds, governmental functions, and identifiable
business-type activities.
4. We have properly classified all funds and activities.
5. We have properly determined and reported the major governmental and enterprise funds
based on the required quantitative criteria.
6. We are responsible for compliance with laws and regulations applicable to City of
Seward, including adopting, approving, and amending budgets.
Mikunda, Cottrell &Co.
Anchorage,AK 99503
Page Two
7. We have identified and disclosed to you all laws and regulations that have a direct and
material effect on the determination of financial statement amounts including legal and
contractual provisions for reporting specific activities in separate funds.
8. We have identified in the schedules of expenditures of Federal awards and State financial
assistance all such assistance received, both directly and as a subrecipient, in the form of
grants, contracts, loans, loan guarantees, property, cooperative agreements, interest
subsidies, insurance, or direct appropriations by City of Seward,Alaska.
9. We have:
a. Identified to you all applicable generic compliance requirements.
b. Identified to you all applicable agency program requirements.
c. Complied with reporting requirements in connection with the expenditure of Federal
and State awards identified in the schedules of expenditures of Federal awards and.
State financial assistance.
d. Determined amounts claimed or used to comply with matching requirements of
Federal and State awards identified in the schedules of expenditures of Federal
awards and State financial assistance in accordance with guidance provided by OMB
Circular A-87, "Cost Principles for State and Local Governments," and the OMB's
Uniform Administrative Requirements for "Grants and Cooperative Agreements to
State and Local Governments."
e. With respect to monitoring subrecipients:
1) Identified Federal and State awards made by informing each subrecipient of
CFDA title and number where applicable, award name and number, award year, if
the award is R&D, and name of Federal agency. If some of this information was
not available, we provided the best information available to describe the Federal
or State award.
2) Advised subrecipients of requirements imposed on them by Federal and State
laws, regulations, and the provisions of contracts or grant agreements as well as
any supplemental requirements imposed by City of Seward.
Mikunda, Cottrell &Co.
Anchorage, AK 99503
Page Three
3) Monitored the activities of subrecipients as necessary to ensure that Federal and
State awards are used for authorized purposes in compliance with laws,
regulations, and the provisions of contracts or grant agreements and that
performance goals are achieved.
4) Ensured that subrecipients expending$500,000 or more in Federal or State awards
during their fiscal year have met Single Audit and OMB Circular No. A-133
requirements for that fiscal year.
f. Identified and disclosed to you all amounts that have been questioned, and all known
instances of noncompliance with statutory, regulatory and contractual requirements
that could have a material effect on a major Federal or State financial assistance
program.
10. Information presented in Federal and State financial reports and claims for advances and
reimbursements is supported by the books and records from which the basic financial
statements have been prepared.
11. We have made available to you:
a. All financial records and related data of all funds and activities, including those of all
special funds,programs, departments,projects, activities, etc.,in existence at any time
during the period covered by your audit.
b. All minutes of the meetings of the governing board and committees of board members
or summaries of actions of recent meetings for which minutes have not yet been
prepared.
c. All communications from grantors, lenders, other funding sources or regulatory
agencies concerning noncompliance with:
1) Statutory,regulatory or contractual provisions or requirements.
2) Financial reporting practices that could have a material effect on the financial
statements.
12. We have no knowledge of fraud or suspected fraud affecting the entity involving:
a. Management or employees who have significant roles in the internal control.
b. Others where the fraud could have a material effect on the financial statements.
13. We acknowledge our responsibility for the design and implementation of programs and
controls to provide reasonable assurance that fraud is prevented and detected.
Mikunda, Cottrell&Co.
Anchorage,AK 99503
Page Four
14. We have no knowledge of any allegations of fraud or suspected fraud affecting City of
Seward received in communications from employees, former employees, analysts,
regulators, short sellers, or others.
15. We are not aware of any significant deficiencies, including material weaknesses, in the
design or operation of internal controls that could adversely affect the entity's ability to
record,process, summarize, and report financial data.
16. There have been no communications from regulatory agencies concerning noncompliance
with, or deficiencies in, financial reporting practices.
17. We know of no violations of state or Federal statutory or regulatory provisions, grant or
other contractual provisions,or of provisions of local ordinances.
18. We have no plans or intentions that may materially affect the carrying value or
classification of assets and liabilities.
19. The following have been properly recorded and/or disclosed in the financial statements:
a. Related party transactions,including those with the component units for which City of
Seward is accountable as defined in Section 2100 of the Governmental Accounting
Standards Board's Codification of Governmental Accounting and Financial Reporting
Standards, and inter-fund transactions, including inter-fund accounts and advances
receivable,and payable, sale and purchase transactions, inter-fund transfers, long-term
loans, leasing arrangements and guarantees, all of which have been recorded in
accordance with the economic substance of the transaction and appropriately
classified and reported.
b. Guarantees,whether written or oral,under which the City is contingently liable.
c. Arrangements with financial institutions involving compensating balances or other
arrangements involving restrictions on cash balances.
d. Line of credit or similar arrangements.
e. Agreements to repurchase assets previously sold.
f. Security agreements in effect under the Uniform Commercial Code.
g. Any other liens or encumbrances on assets or revenues or any assets or revenues
which were pledged as collateral for any liability or which were subordinated in any.
way.
h. The fair value of investments.
i. Amounts of contractual obligations for construction and purchase of real property or
equipment not included in the liabilities or encumbrances recorded on the books.
Mikunda, Cottrell &Co.
Anchorage,AK 99503
Page Five
j. Any liabilities which are subordinated in any way to any other actual or possible
liabilities.
k. Debt issue repurchase options or agreements, or sinking fund debt repurchase
ordinance requirements.
1. Debt issue provisions.
m. All leases and material amounts of rental obligations under long-term leases.
n. All significant estimates and material concentrations known to management which are
required to be disclosed in accordance with the AICPA's Statement of Position 94-6,
Disclosure of Certain Significant Risks and Uncertainties. Significant estimates are
estimates at the balance sheet date which could change materially within the next
year. Concentrations refer to volumes of business, revenues, available sources of
supply, or markets for which events could occur which would significantly disrupt
normal finances within the next year.
o. Authorized but unissued bonds and/or notes.
p. Risk financing activities.
q. Deposits and investment securities category of custodial credit risk.
20. We are responsible for making the accounting estimates included in the financial
statements. Those estimates reflect our judgment based on our knowledge and experience
about past and current events and our assumptions about conditions we expect to exist
and courses of action we expect to take. In that regard, adequate provisions have been
made.
a. To reduce receivables to their estimated net collectable amounts.
b. To reduce obsolete, damaged, or excess inventories to their estimated net realizable
values.
c. To reduce investments, intangibles, and other assets which have permanently declined
in value to their realizable values.
d. For risk retention, including uninsured losses or loss retentions (deductibles)
attributable to events occurring through December 31, 2008- and/or for expected
retroactive insurance premium adjustments applicable to periods through December
31,2008.
e. For pension obligations, post-retirement benefits other than pensions and deferred
compensation agreements attributable to employee services rendered through
December 31,2008.
Mikunda, Cottrell&Co.
Anchorage,AK 99503
Page Six
f. For any material loss to be sustained in the fulfillment of, or from the inability to
fulfill, any service commitments.
g. For any material loss to be sustained as a result of purchase commitments.
h. For environmental clean up obligations.
21. There are no:
a. Material transactions that have not been properly recorded in the accounting records
underlying the financial statements.
b. Violations or possible violations of laws or regulations whose effects should be
considered for disclosure in the financial statements or as a basis for recording a loss
contingency. In that regard, we specifically represent that we have not been
designated as, or alleged to be, a "potentially responsible party" by the Federal
Environmental Protection Agency or any equivalent state agencies in connection with
any environmental contamination.
c. Other material liabilities or gain or loss contingencies that are required to be accrued
or disclosed by Statement of Financial Accounting Standards No. 5 and/or GASB
Statement No. 10.
22.Unless disclosed to you, there have been no complaints filed with or concerning our
compliance with the provisions of:
a. Davis-Bacon Act relative to payment of prevailing wage rates.
b. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970
relative to acquisition of real property and the relocation of occupants of acquired
property.
23. There are no unasserted claims or assessments that our lawyer has advised us are
probable of assertion and must be disclosed in accordance with Statement of Financial
Accounting Standards No. 5 and/or GASB Statement No. 10.
24. We have satisfactory title to all owned assets.
25. We have complied with all aspects of contractual agreements that would have a material
effect on the financial statements in the event of noncompliance.
26.Net asset components (invested in capital assets, net of related debt; restricted; and
unrestricted) and fund balance reserves and designations are properly classified and, if
applicable, approved.
Mikunda, Cottrell &Co.
Anchorage, AK 99503
Page Seven
27. Expenses have been appropriately classified in or allocated to functions and programs in
the statement of activities, and allocations have been made on a reasonable basis.
28. Revenues are appropriately classified in the statement of activities within program
revenues and general revenues.
29. Capital assets, including infrastructure assets, are properly capitalized, reported, and
depreciated.
30. Required supplementary information is properly measured and presented.
31. We are responsible for and have reviewed and approved the proposed adjustments to the
trial balances identified during the audit which have been provided to us, and will post all
adjustments accordingly. We have reviewed, approved, and are responsible for
overseeing the preparation and completion of the basic financial statements and related
notes. We have reviewed, approved, and are responsible for the depreciation schedules.
We have provided the method, rate, and salvage value for the preparation of the
schedules.
32. We are not aware of any internal control weaknesses or significant deficiencies that
should be reported. We are responsible for establishing and maintaining effective internal
control over financial reporting.
No events or transactions have occurred subsequent to the balance sheet date that would require
adjustment to, or disclosure in, the financial statements.
During the course of your audit, you may have accumulated records containing data which
should be reflected in our books and records. All such data have been so reflected. Accordingly,
copies of such records in your possession are no longer needed by us.
Name Pe: e Name %YiLts- cam'-iGAi?
City Manager Finance Director
COMPREHENSIVE
ANNUAL FINANCIAL- REPORT
of the
CITY OF SEWARD, ALASKA
For the Fiscal Year Ended
December 31, 2008
Clark Corbridge
MAYOR
Phillip Oates
CITY MANAGER
Prepared by the Finance Department
Kristin M. Erchinger, CGFM, MPA
FINANCE DIRECTOR
x .._.+.c g "3 w,; r-.., ,-.•r-..,..,. ••- • =_..:,=_exax s ---: t •'-' t ;,k c.°,3 s,s a a`s x.
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents
Exhibit Page
PART I-INTRODUCTORY SECTION
Table of Contents I-VI
Letter of Transmittal VII-XI
Certificate of Achievement for Excellence in Financial Reporting XII
List of Principal Officials XIII
Seward Citizens—Organizational Chart XIV
PART II-FINANCIAL SECTION
Independent Auditor's Report 1-2
Management's Discussion and Analysis 3-14
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Assets A-1 16
Statement of Activities A-2 17
Fund Financial Statements:
Governmental Funds:
Balance Sheet B-1 18
Reconciliation of Governmental Funds Balance
Sheet to Statement of Net Assets B-2 19
Statement of Revenues,Expenditures and Change in
Fund Balances B-3 20
Reconciliation of the Changes in Fund Balances of
Governmental Funds to Statement of Activities B-4 21
Statement of Revenues, Expenditures and Change in Fund
Balance-Budget and Actual - General Fund B-5 22
Proprietary Funds:
Statement of Net Assets C-1 23
Statement of Revenues, Expenses and Change in
Net Assets C-2 24
Statement of Cash Flows C-3 25-26
Statement of Fiduciary Net Assets D-1 27
Notes to Basic Financial Statements 29-55
I
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents, continued
Exhibit Page
Y
PART II-FINANCIAL SECTION, continued
Supplementary Information
Nonmajor Governmental Funds:
Combining Balance Sheet E-1 58
Combining Statement of Revenues,Expenditures and
Ch a ng e in Fund Balances(Deficit) E-2 59
Nonmajor Enterprise Funds:
Combining Statement of Net Assets F-1 60
Combining Statement of Revenues,Expenses and
Change in Net Assets F-2 61
Combining Statement of Cash Flows F-3 62-63
Internal Service Funds:
Combining Statement of Net Assets G-1 64
Combining Statement of Revenues, Expenses and
Change in Net Assets G-2 65
Combining Statement of Cash Flows G-3 66
General Fund:
Balance Sheet H-1 68 69
Schedule of Revenues, Expenditures and
Change in Fund Balance—Budget and Actual H-2 70-77
Special Revenue Funds:
Combining Balance Sheet I-1 . 80
Combining Statement of Revenues,Expenditures and
Change in Fund Balances(Deficit) I-2 81
Debt Service Fund:
Balance Sheet J-1 82
Statement of Revenues, Expenditures and
and Change in Fund Balance J-2 83
Capital Project Funds:
Combining Balance Sheet K-1 86
Combining Statement of Revenues,Expenditures and
Change in Fund Balances(Deficit) K-2 87g
II
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents, continued
Exhibit Page
PART II-FINANCIAL SECTION, continued
Supplementary Information,continued
Enterprise Funds:
Electric:
Statement of Net Assets L-1 90-91
Statement of Revenues,Expenses and Change in Net Assets L-2 92
Statement of Cash Flows L-3 93
Schedule of Operating Expenses L-4 94
Schedule of Composition of Net Assets L-5 95
Schedule of Electric Capital Projects L-6 96
Water:
Statement of Net Assets L-7 97
Statement of Revenues,Expenses and Change in Net Assets L-8 98
Statement of Cash Flows L-9 99
Schedule of Composition of Net Assets L-10 100
Combining Schedule of Water Capital Projects L-11 101
Wastewater:
Statement of Net Assets L-12 102
Statement of Revenues,Expenses and Change in Net Assets L-13 103
Statement of Cash Flows L-14 104
Schedule of Composition of Net Assets L-15 105
Harbor:
Statement of Net Assets L-16 106
Statement of Revenues,Expenses and Change in Net Assets L-17 107
Statement of Cash Flows L-18 108
Schedule of Composition of Net Assets L-19 109
Combining Schedule of Harbor Capital Projects L-20 110
Seward Marine Industrial Center:
Statement of Net Assets L-21 111
Statement of Revenues, Expenses and Change in Net Assets L-22 112
Statement of Cash Flows L-23 113
Schedule of Composition of Net Assets L-24 114
III
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents, continued
Exhibit Page
PART II-FINANCIAL SECTION, continued
Supplementary Information,continued
Enterprise Funds, continued:
Parking:
Statement of Net Assets L-25 115
Statement of Revenues,Expenses and Change in Net Assets L-26 116
Statement of Cash Flows L-27 117
Schedule of Composition of Net Assets L-28 118
Internal Service Funds:
Motor Pool:
Statement of Net Assets M-1 120
Statement of Revenues,Expenses and Change in Net Assets M-2 121 i
Statement of Cash Flows M-3 122
Schedule of Composition of Net Assets M-4 123
Compensated Annual Leave:
Statement of Net Assets M-5 124
Statement of Revenues,Expenses and Change in Net Assets M-6 125
Statement of Cash Flows M-7 126
Teen Council Agency Fund-
Schedule of Changes in Assets and Liabilities N-1 127
Capital Assets:
Schedule of Capital Assets 0-1 128
Schedule of Changes in Capital Assets 0-2 129
Schedule of Capital Assets by Function and Activity 0-3 130
Schedule of Changes in Capital Assets by Function and Activity 0-4 131
Schedule of Expenditures of Federal Awards P-1 132
Schedule of State Financial Assistance Q-1 133
Note to the Schedules of Expenditures of Federal Awards and
State Financial Assistance 134
IV
CITY OF SEWARD
Comprehensive Annual Financial Report
Table of Contents, continued
Page
PART III.—STATISTICAL SECTION
Table 1 Net Assets by Component 136
Table 2 Changes in Net Assets 137-138
Table 3 Fund Balances of Governmental Funds 139
Table 4 Changes in Fund Balances of Governmental Funds 140
Table 5 General Fund Revenues by Source 141
Table 6 General Fund Tax Revenues by Source 142
Table 7 Property Tax Rates 143
Table 8 Property Tax Levies and Collections 144
Table 9 Assessed and Estimated Actual Value of Taxable Property 145
Table 10 Principal Property Taxpayers 146
Table 11 Principal Taxable Sales by Line of Business 147
Table 12 Ratios of Outstanding Debt by Type 148
Table 13 Ratio of Net General Obligation Bonded Debt to Assessed Value
and Net General Obligation Bonded Debt per Capita 149
Table 14 Computation of Direct and Overlapping Bonded Debt 150
Table 15 Legal Debt Margin 151
Table 16 Ratio of Annual Debt Service Expenditures for General
Obligation Debt to Total General Fund Expenditures 152
Table 17 Revenue Bond Coverage—Electric Enterprise Fund 153
Table 18 Revenue Bond Coverage—Harbor Enterprise Fund 154
Table 19 Demographic and Economic Statistics 155
Table 20 Seward Area Principal Employers 156
Table 21 Full-Time Equivalent Employees by Fund 157
Table 22 Operating Indicators by Function 158
Table 23 Capital Asset Statistics By Function 159
Table 24 Property Value, Construction, and Bank Deposits 160
Table 25 Miscellaneous Statistics 161
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 163-164
Independent Auditor's Report on Compliance with Requirements
Applicable to Each Major Program and on Internal Control Over
Compliance in Accordance with OMB Circular A-133 165-166
V
CITY OF SEWARD
J
Comprehensive Annual Financial Report
Table of Contents, continued
Page
PART IV- SINGLE AUDIT SECTION,continued
Independent Auditor's Report on Compliance with Requirements
Applicable to Each Major Program and on Internal Control Over
Compliance in Accordance with State ofAlaska Audit
Guide and Compliance Supplement for State Single Audits 167-168
Schedule of Findings and Questioned Costs 169-170
Summary Schedule of Prior Audit Findings 171
Corrective Action Plan 172
VI
r 4 skis.
June 15 2009
To the Citizens of the City of Seward:
It is with great pleasure that we present the City of Seward Comprehensive Annual Financial Report
for the fiscal year ended December 31, 2008. This report satisfies state statutes and local ordinances
which require that the City of Seward issue an annual report on its financial position and activity, and
that the report be audited by an independent firm of certified public accountants. Responsibility for the
accuracy of the data and the completeness and fairness of the presentation, including all disclosures,
rests with management. We believe the data as presented are accurate in all material respects. It is
presented in a manner designed to fairly set forth the financial position and results of operations of the
City as measured by the financial activity of the various funds. The financial statements were prepared
in conformance with generally accepted accounting principles. All disclosures necessary to enable the
reader to gain an understanding of the City's financial activities have been included.
The City's financial statements have been audited by Mikunda, Cottrell & Company, an independent
auditing firm of certified public accountants. The goal of an independent audit is to provide reasonable
assurance that the fmancial 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, 2008, are fairly
presented in conformity with GAAP. The independent auditor's report is presented in the financial
section of this report.
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 fmancial 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.
GAAP requires that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statements. Such narrative is presented in the form of a Management's
Discussion and Analysis (MD&A), which should be read in conjunction with this letter of transmittal.
The City's MD&A can be found immediately after 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 (ASS 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 2,661. 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.
VII
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
Budgetary Control
The City's annual budget serves as the foundation for financial planning and control. All departments
submit budget requests to the City Manager on or about September 15. 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 for all
new appropriations. Budget-to-actual comparisons are provided in this report for the General Fund.
Factors Affecting Financial Condition
Economy
The City's economy has experienced slow, steady growth in the past ten years as evidenced by an
average annual growth in tax revenues of approximately 6.0%. After adjusting for inflation, sales tax
revenues continue to grow slightly, based on an increase in taxable sales. The current economic
climate is hampered by economic uncertainty resulting from the recent worldwide economic crisis.
While Alaska has fared far better than most states due to fewer mortgage foreclosures and more stable
property values, the strong reliance on tourism is likely to be impacted by fewer people traveling to
Seward from outside of Alaska. In addition, a rise in fuel prices such as was seen in the prior year,
and/or an increase in the unemployment rate, could have a substantial adverse impact on local citizens.
On a positive note, Seward expects to see more Alaskan visitors elect to remain in Alaska for family
vacations,which could partly offset the loss in non-Alaskan visitors. Property tax revenues have begun
to increase after a decade of leveling off--on an inflation-adjusted basis -- due to a Kenai Peninsula
Borough full-scale property assessment in 2008. Bed tax revenues have increased an average of 6.04%
annually over the past ten years, with one-half of collected bed tax revenues being reinvested into
promoting marketing and economic development. Growth may see some slowdown as the full impact
of the economic recession impacts the local visitor industry.
The City's top ten property taxpayers have become more diverse in the past few years, helping to offset
Seward's dependence on tourism-related businesses and the visitor industry. This group represents
various industries including retail sales, real estate, seafood processing, petroleum products,
hotel/motel, communications, and tourism. Seward's top ten sales tax lines of business show that 45%
of sales taxes are generated from retail trade, followed by 33.1% from accommodations and food
service, and public administration at 6.4%. Seward's largest employers continue to reflect significant
government presence, including the state-owned prison and vocational technical center, federal forest
and park service agencies, the City, and the Borough school district. The hospital, long-term-care
facility, and Alaska Sealife Center, are City-owned facilities run on the City's behalf by non-profit
organizations, and they round out the list of top employers. The largest private sector employers
VIII
include Icicle Seafoods, Safeway, and CIRI Alaska tourism. Seward continues to invest in
infrastructure to encourage economic development (harbor and parking improvements; new long-term
care facility, waterfront park improvements, street and sidewalk upgrades), and in addition to local
government investment, is seeing plans for facility upgrades and expansion by AVTEC, the park
service,University of Alaska, and the Alaska Railroad.
Financial Condition
Over the past ten years, municipal governments in Alaska have been adversely impacted by a
significant reduction in State funding. However, in the past two years, the State legislature has
provided revenue sharing funds, energy assistance, and assistance in funding retirement system
liabilities. This has mitigated the need to reduce services or increase property taxes to cover the
shortfall. Seward's increased retail sales have enabled the City to absorb a portion of the State funding
reductions. The City of Seward has only increased its property mill rate by 0.12 mills over the past two
decades (equal to $24 on a home valued at $200,000). Approximately 65% of property located within
Seward is owned by non-taxable government or non-profit entities, giving Seward a very low tax base
on which to generate property tax.
The rise in oil prices last year had a positive impact on State revenues and by extension, on the level of
State funding to the City. The City received State capital funds to construct a new levee/road to
mitigate future flooding, to construct I&T Docks, to purchase backup electrical generators to ensure
continuity of electrical service during inclement weather, and to construct a waterfront pavilion. More
recent declines in oil prices are expected to result in less State funding to local governments in the near
future. The City is now challenged to rebuild its inadequate General Fund reserves and to address the
growing list of deferred maintenance needs. General Fund undesignated fund balance is currently
equal to approximately 1.3 months' expenditures and transfers-out, with Council guidance requiring
between three and six months' reserves. The time has come to focus on developing a long-range
financial plan to ensure that the future impact of today's decisions are taken into consideration before
committing to additional projects or new services that will increase costs to future taxpayers.
Major Projects
The City has recently completed upgrades to the harbor floats and docks, adding capacity, improving
upland restrooms, oil collection facilities and utilities, and improving boat lift services. A new security
dock is planned for the northeast harbor area, and the initial purchase of dock components has begun.
A $27 million long-term care facility is being constructed and is expected to open in September, 2009:
Plans to expand the prison by 144 beds at an approximate cost of$22.7 million have been put on hold
by the State of Alaska. The City has begun a project to replace two aging electric generators with a
new building to house the generators and their controls, and has nearly completed the upgrades of
wastewater Lift Station No. 3, which will automate the City's primary lift station controls and provide
improved operational safety. The first phase of construction of the North Forest Acres-levee/road
project is complete, with primary construction activities anticipated in the Fall. When complete, this
project will protect Seward's residential and industrial areas from flooding. A new waterfront pavilion
will be constructed in the summer of 2009,providing a sheltered picnic area along Ballaine Boulevard.
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
IX
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.
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 fund balance 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 legislative action
agreeing to State coverage of costs exceeding 22%. The recent transition from a single-agent, multiple-
employer plan, to a pooled retirement plan, will provide a single rate for all participating PERS
employers, eliminating the previous methodology of assessing each employer its own rate. Under the
previous scenario, the City of Seward's unfunded pension liability was in excess of $6.5 million.
Under the new plan structure, the City will not have its own unfunded pension liability per se, tS' but willPt3'p
share in the pooled liability of the PERS plan. This legislature's cap on local government contribution
rates will bring stability to Seward's retirement rates, mitigating the recent trend of significant annual
rate increases, although it is important to note that a future State legislature can eliminate the State
subsidy above 22%. Ten years ago, the General Fund contributed $194,666 toward funding retirement
contributions, and in 2009, that contribution is expected to be $802,977, reflecting a 312%increase, or
an average annual increase of nearly 35%.
Financial Reporting Award
The Government Finance Officer's 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 fiscal year ended December 31, 2007. This is
the fourteenth 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.
X
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 also should
be given to the Mayor and the members of Council for their interest and support in planning and
conducting the operations of the City of Seward in a responsible and progressive manner.
Respectfully submitted,
Phillip Odes, City Manager Kristin Erchinger, Finance irector
XI
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 31,2007
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.
Itio4,4404
4`
CE Ofp
Id1WSfATES
n
atm
0
President
Cr 4e°4171.
Executive Director
XII
CITY OF SEWARD
LIST OF PRINCIPAL OFFICIALS
COUNCIL MEMBERS
Term Expires
Clark Corbridge Mayor 2009
Willard Dunham Council Member 2010
Jean Bardarson Council Member 2010
Tom Smith Council Member 2009
Bob Valdatta Council Member 2009
Betsy Kellar Council Member 2009
Marianna Keil Council Member 2010
ADMINISTRATION
Phillip Oates City Manager
Kirsten Vesel Assistant City Manager
Kristin Erchinger Finance Director
John Foutz Manager of Electric Utility
W.C. Casey Public Works Director
Kari Anderson Harbormaster
Tom Clemons Chief of Police
David Squires Fire Chief
Karin Sturdy Parks &Recreation Director
Patty Linville Library Director
Christy Terry Community Development Director
ji
CITY CLERK
Jean Lewis City Clerk
ATTORNEY
Cheryl Brooking City Attorney, Wohlforth, Johnson,Brecht,
Cartledge &Brooking
r 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
located at 410 Adams Street in Seward, Alaska.
XIII
CITY OF SE /AR
1
D
Organizational Chart
Citizens
Mayor&
Council
1
Boards & City Manager City Clerk City 7
Commissions Attorney
Planning &
Zoning
Port &
Commerce Electric Public 1
Historic Utility Works
Preservation
I
i
Police Finance ngineering & Library
Building Inspection
I 7
Harbor Community Parks&
Development Recreation
XIV
iMiikunRSM McGladrey Network
An Independently Owned Member
Cottrell & Co., Inc. Offices in Anchorage&Kenai
Certified Public Accountants&Consultants
J
i l
Independent Auditor's Report
Honorable Mayor and City Council
City of Seward,Alaska
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 the City of Seward, Alaska,
as of and for the year ended December 31, 2008 which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of the City's
management. Our responsibility is to express opinions on these financial statements based on our audit.
We did not audit the financial statements of Providence Seward Medical Center, a component unit of the
City of Seward. Those financial statements were audited by other auditors whose report thereon has been
furnished to us, and our opinion, insofar as it relates to the amounts included for Providence Seward
Medical Center,is based 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 of
material misstatement. The financial statements of Providence Seward Medical Center were not audited
in accordance with Government Auditing Standards. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinions.
In our opinion,based on our audit and the report of the 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, the aggregate discretely presented component unit, each major
fund, and the aggregate remaining fund information of the City of Seward, Alaska as of December 31,
2008, and the respective changes in financial position and cash flows, where applicable, thereof and the
respective budgetary comparison for the General Fund for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
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
In accordance with Government Auditing Standards, we have also issued our report dated June 15, 2009
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 and should be considered in assessing the results of our
audit.
The Management's Discussion and Analysis is not a requiredgiured part of the basic financial statements but is
supplementaryppary mformahon required by the Governmental Accounting Standards Board. We have applied
certain limited procedures,which consisted principally of inquiries of management regarding the methods
of measurement and presentation of the required supplementary information. However, we did not audit
the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City of Seward's basic financial statements. The accoinpanying Schedule of Expenditures
of Federal Awards, Schedule of State Financial Assistance, and the combining and individual fund
financial statements and schedules 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 is
required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Nonprofit Organizations and the Schedule of State Financial Assistance is required by
the State of Alaska Office of Management and Budget, State of Alaska Audit Guide and Compliance
Supplement for State Single Audits. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
The introductory section and statistical tables have not been audited by us and accordingly,we express no
opinion on them.
Anchorage, Alaska
June 15,2009
2
1
CITY OF SEWARD
Management's Discussion and Analysis
December 31, 2008
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, 2008. In addition to this discussion and analysis, readers are
encouraged to read our letter of transmittal found on pages VII-IX of this report, which provides
additional summary information.
FINANCIAL HIGHLIGHTS
The assets of the City of Seward exceed liabilities by $146,259,166 at December 31, 2008. Of
this amount, $124,770,360 represents investment in capital assets net of debt, $699,601 is
restricted for capital purposes, and the remainder of $20,789,205 represents unrestricted net
assets. Unrestricted net assets does not necessarily reflect a surplus of resources, as a portion of
net assets 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 at
the December 31, 2008 by $64,009,659. Of this amount, $5,993,256 in unrestricted net assets
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 assets increased by $3,165,735. Governmental activities increased by
967,759 and business-type activities increased by $2,197,976.
The City's governmental funds reported combined ending fund balances of $17,903,591,
representing an increase of$13,289,630 compared to the prior year. While $16,146,741 of the
fund balance is legally available for spending (unreserved fund balance), only $1,289,619 has
not already been earmarked for specific purposes. This reflects a significant decrease in
available undesignated fund balance in the past few years.
The total debt of the governmental activities increased by-$25,758,131 or 453%, due to the
issuance of$27 million in long-term care facility bonds in 2008. The total debt of business-
type activities increased by $5,832,657 or 42.7%, reflecting the issuance of $6 million in
electric revenue bonds in 2008.
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.
3
2.Fund financial statements focus on specific areas of City operations and provide more detail
than the government-wide statements. These statements are only slightly changed from the
historical financial reporting model used by the City.
Government-wide Financial Statements
The government-wide financial statements are intended to provide a comprehensive look at all
financial activities of the City. Prior to implementation of the new government financial reporting
model, government financial statements separately summarized business-like activities and non-
businesslike activities, but did not aggregate those into a total government-wide perspective. The
government-wide financial statements are now presented on the accrual basis of accounting, in a
manner similar to a business enterprise.
The Statement of Net Assets presents information on all of the City's assets less liabilities, resulting in
net assets. The purpose of this statement is to present the overall financial position of the City. Over
time, increases or decreases in net assets 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 assets 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, hospital and long-term care, and
the Alaska Sealife Center. The business-type activities of the City include harbor, marine industrial
center, electric, water, wastewater, and parking. The government-wide financial statements can be
found on pages 16-17 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.
4
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. Both 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.
The City of Seward maintains eighteen individual governmental funds. Information for the General
Fund and Long-Term Care Facility Capital Project 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 sixteen 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 22 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 18-22 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 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 90-118 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 its 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 120-126 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 29-55 of this
report.
5
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 48-52 of
this report.
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Statement of Net Assets
Over time, net assets may serve as a useful indicator of a government's financial position. At
December 31, 2008, the City's assets exceeded liabilities by $146,259,166. A significant portion of
the City's net assets (85%) reflects its investment in capital assets, less any outstanding debt used to
acquire those assets. Capital assets are not liquid and are not available for future spending. Since the
investment in capital assets is reported net of related debt,it should be noted that the resources needed
to repay this debt must be provided from other sources, since the capital assets themselves cannot be
used to liquidate these liabilities.
The following table provides a summary of the City's net assets:
Table 1
Statement of Net Assets
As of December 31,2008 and 2007
Governmental Business-Type
Activities Activities Total
2008 2007 2008 2007 2008 2007
Current and other assets$ 24,831,581 6,888,741 24,459,263 17,849,126 49,290,844 24,737,867
Capital assets 76,033,031 62,566,577 80,242,353 78,808,308.156,275,384 141,374,885 .
Total assets 100,864,612 69,455,318104,701,616 96,657,434 205,566,228 166.112,752
Long-term liabilities
outstanding 31,584,331 5,383,367 19,633,137 13,776,605 51,217,468 19,159,972
Other liabilities 5,270,622 1,030,051 2,818,972 2,829,298 8,089,594 3,859,349
Total liabilities 36,854.953 6,413,418 22,452,109 16,605.903 59,307,062 23,019.321
Net assets:
Invested in capital assets,
net of related debt 58,016,403 58,016,403 66,753,957 65,440,427 124,770,360 123,456,830
Restricted 699,601 16,223 699,601 16,223
Unrestricted 5,993,256 5,025,497 14,795,949 14,594,881 20,789,205 19,620,378
Total net assets $ 64.009.659 63.041.900 82,249,507 80,051,531 146,259,166 143.093,431
At the end of 2008, the City of Seward is able to report positive balances in all three categories of net
assets, both for the government as a whole, as well as for its separate governmental and business-type
activities.
6
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 Assets
For the Years Ended December 31,2008 and 2007
Governmental Business-Type
Activities Activities Total
2008 2007 2008 2007 2008 2007
Revenues:
Program revenues:
Charges for services $ 1,622,899 1,818,204 13,686,348 13,449,177 15,309,247 15,267,381
Operating grants/
contributions 84,144 680,176 159,595 65,247 243,739 745,423
Capital grants/
contributions 999,171 1,459,744 2,769,005 2,578,739 3,768,176 4,038,483
General revenues:
Sales taxes 4,137,758 4,068,600 4,137,758 4,068,600
Property taxes 943,832 862,258 943,832 862,258
Payments in lieu of tax 80,126 76,609 80,126 76,609
Other 2,834,403 1,196,603 1,493,407 651,763 4,327,810 1,848,366
Total revenues 10,702,333 10,162,194 18,108,355 16,744,926 28,810,688 26,907,120
Expenses:
General government 2,501,443 1,161,765 2,501,443 1,161,765
Public safety 2,934,607 2,980,785 2,934,607 2,980,785
Public works 1,310,474 2,650,977 1,310,474 2,650,977
Parks,recreation, and
library 1,634,519 1,366,057 1,634,519 1,366,057
Hospital and unallocated
interest 529,703 842,215 529,703 842,215
Alaska Sealife Center 1,736,147 1,672,365 1,736,147 1,672,365
Electric 8,626,745 8,029,054 8,626,745 8,029,054
Water 1,194,311 859,799 1,194,311 859,799
Wastewater 901,759 747,484 901,759 747,484
Harbor 3,006,069 2,457,216 3,006,069 2,457,216
Seward Marine Industrial
Center 1,149,453 1,076,730 1,149,453 1,076,730
Parking 119,723 129,623 119,723 129,623
Total expenses 10,646,893 10,674,164 14,998,060 13,299,906 25,644,953 23,974,070
Increase(decrease) in net
assets before transfers 55,440 (511,970) 3,110,295 3,445,020 3,165,735 2,933,050
Transfers 912,319 989,801 (912,319) (989,801)
Increase in net
assets 967,759 477,831 2,197,976 2,455,219 3,165,735 2,933,050
Beginning net assets 63,041,900 62,564,069 80,051,531 77,596,312 143,093,431 140,160,381
Ending net assets 64,009,659 63,041,900 82,249 507 80,051,531 146,259,166 143,093,431
7
Governmental Activities
Governmental activities increased the City of Seward's net assets by $967,759, accounting for 30.6%
of the total growth in net assets. The following items are of particular note:
Net assets would have experienced a decrease of $449,477 were it not for transfers in from
other funds of$912,319, plus a one-time special item write-off of net pension obligations of
504,917.
Capital and operating grants declined from the prior year by more than $1 million, due to prior
year Sea Life Center grants.
Sales tax revenues increased by $69,158 or 1.7% from the prior year, despite the expected
decline in economic activity resulting from higher fuel prices and the nationwide recession.
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 fmancing
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:
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Gen'l Public Public Parks& Library Hospital Sealife Debt
Govt Safety Works Rec Center interest
0 Revenues l Expenses
Business-Type Activities
Business-type activities increased the net assets of the City by $2,197,976, including adustments for
Motor Pool Internal Service Fund activities. As is the case with governmental
activitiesj
a substantial
portion (81%) of the net assets is invested in capital assets. The increase in net assets is comprised of
the following:
Net assets increased in the water utility ($12,592) and harbor enterprise ($2,384,149), and
decreased in the electric utility (-$9,835) and Seward Marine Industrial Center (-$539,716).
The non-major enterprise funds (including parking and wastewater) had a combined increase in
net assets of$232,345.
Allocations of the Motor Pool Internal Service Fund to the business-type activities added
118,441 to net assets.
l_l
8
The electric utility experienced a decrease in earnings from operations of$336,493 primarily
due to higher distribution and administrative costs.
The decrease in electric utility net assets of ($9,835) comes, in part, from the transfer of
714,082 to other funds, primarily reflecting payments-in-lieu-of-tax to the General Fund. The
positive earnings from operations totaled $97,297, indicating that the electric fund rates were
sufficient to cover depreciation, prior to transfers to other funds. After payments for debt
service, capital purchases, and the issuance of$6 million in revenue bonds, the electric utility
ended the year with positive cash flow of $6,018,215, since the bond proceeds were not yet
spent to purchase replacement generators. In addition, no cash was invested in the depreciation
reserve fund for the future replacement of capital assets.
The net increase in water utility net assets of$12,592 results from a combination of a loss from
operations of ($13,241), investment earnings of $113,713, other non-operating items totaling
102,524), and net transfers and special items of$14,644. Cash balances in the water utility
decreased $1,907,337 primarily due to a loan to the General Fund of$1,973,360 to fund a bond
reserve for the long-term care facility, leaving total cash of$1,427,477.
The net increase in harbor enterprise net assets of $2,384,149 is due primarily to capital
contributions from grants for the T-Dock and Bulkhead construction project, totaling $2
million. The earnings before contributions and transfers of $608,172 include cruise ship
passenger tax proceeds in the amount of $713,178. Excluding these funds --which are
earmarked for use on cruise ship-related projects -- the harbor would be able to fund much of
its depreciation if it did not have any long-term debt or contributions to other funds. In 2008
however, long-term debt principal and interest payments totaled $710,376 and net transfers
between funds totaled $319,595, leaving no cash to contribute to the depreciation reserve fund
for the future replacement of capital assets. The harbor ended the year with a net decrease in
cash of$482,042 due to draw-down of funds for construction activities. Total cash stands at
3,449,521, with only $1,523,686 unrestricted, and the remainder restricted for bond reserves
and capital projects.
The net decrease in Seward Marine Industrial Center net assets of$539,716 is due entirely to
depreciation costs ($642,635). With a loss from operations of$838,347, this Fund is unable to
fund any of its depreciation. When considering debt payments of$59,826, this fund requires
subsidies from other funds to cover all of its debt costs, as well as a portion of its operating
costs. In 2008,the General Fund transferred $348,655 to this Fund to cover the deficit.
The non-major funds experienced the following: increase in parking enterprise net assets of
107,582 and an increase in cash of$105,149; and a net increase in wastewater enterprise net
assets of$124,763 and a decrease in cash of($161,029).
ANALYSIS OF THE CITY'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 unreserved fund balance is an
important indicator of the amount of net resources available for spending at the end of the year.
9
At the end of the year, the City of Seward's governmental funds reported combined ending fund
balances of $17,903,591. Of this amount, $1,756,850 has been legally reserved (reserved fund
balance) for inventory, prepaid expenses and notes receivable ($693,590) and to meet debt service
requirements ($1,063,260). An additional $14,472,815 has been designated as follows:
12,346,397 for capital projects; $500,000 for hospital cash flow to cover anticipated short-term
operating losses; $1,500,000 working capital to pay routine payables and payroll; and $126,418 for
insurance reserves. This leaves an undesignated fund balance of$1,289,619 in the General Fund
and $384,307 in the non-major funds. However, the General Fund's fund balance must be able to
meet unforeseen needs and emergencies, as well as future spending needs. Industry standards
suggest maintaining undesignated fund balance reserves equal to between three and six months'
expenditures and routine transfers-out to other funds, and in the City of Seward's case, there is 1.3
month's reserves available. In the City's case, an adequate level of fund balance is between $2.9
million and $5.9 million, requiring approximately $1.7 million to achieve the three month level of
undesignated fund balance.
Fund balances in the governmental funds increased by $13,289,630, representing a net increase in
the General Fund of$90,797, a net increase of$12,727,281 in the Long-Term Care Project, and a
net increase of$471,552 in the remaining non-major governmental funds. This overall net increase
in fund balance is due to the following:
General Fund revenues.were $618,733 higher than expenditures, and after net transfers of
527,936), fund balance increased by $90,797. Although General Fund revenues came in
183,670 (1.8%) higher than budget, and expenditures came in $505,438 (4.8%) lower than
budget, the net transfers-out of($527,936) increased fund balance by only 2.2%. This level
of fund balance limits the ability of the General Fund to meet unforeseen needs,
emergencies, required grant matches, deficits in other funds, capital infrastructure repairs,
Sealife Center reserve shortfalls, and anticipated short-term hospital losses.
Special revenue fund projects experienced a net increase in fund balance of$374,677 due to
grant-related cost recoveries for the year.
The debt service fund experienced a net increase in fund balance of$117,782. This fund
receives income from a one percent sales tax dedicated to healthcare-related expenditures,
and investment income. In 2008, sales tax and investment income exceeded debt principal
and interest and other payments by $117,782, resulting in an ending fund balance of
1,063,260. The reserves in this fund exceed the City's goal of meeting or exceeding the
single highest year debt service payments ($878,500) on the outstanding bonds.
Capital projects experienced a net increase in fund balance of more than $12.6 million, with
most of that due to unspent Long-Term Care Facility bond proceeds.
Proprietary Funds
The City of Seward maintains two types of proprietary funds; enterprise funds and internal service
funds. The City's six enterprise funds (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 assets of $80.9 million, with $66.7 million invested in capital assets net of
related debt, leaving unrestricted net assets of approximately $13.4 million, and restricted assets of
699,601. Of the unrestricted net assets, $9.9 million is in restricted cash (bond reserve funds, bond
proceeds, etc.) and not available for appropriation, and current liabilities total $3.7 million. More
specific factors influencing the net assets of the enterprise funds are addressed above in the discussion
of the City's business-type activities.
10
A
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 motor pool
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
cash in the motor pool at year-end is $1,095,688. The Motor Pool maintains an outstanding loan due
from the. General Fund in the amount of approximately $1.3 million related to the payoff of prior
hospital PERS liabilities. 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 2008 is
376,605.
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 $858,040 during the year. This
primarily reflects State revenue sharing of $233,135, the State's assumption of PERS
costs exceeding 22% of covered payroll (totaling $202,755), State energy assistance of
36,181, and a one-time PERS rebate of$378,969.
Expenditures were increased by $975,587, as follows: $500,000 to cover hospital
operating short-falls; $175,510 to record on-behalf retirement system payments;
153,000 to cover higher than anticipated fuel and utility costs; $24,000 in contributions
to the Boys & Girl's Club; $11,000 in higher audit fees resulting from new auditing
standards; $32,200 for plow/sander repairs; $43,653 in public safety grant costs;
27,200 for parts to repair a snowblower; and $9,024 for library grants.
Transfers to other funds were increased by a total of $609,357 during the year,
reflecting the following: $100,000 for prison expansion; $192,000 as a loan to the long-
term care facility to construct road infrastructure; $65,781 for oil spill containment costs
at SMIC; $4,282 in matching funds for historic preservation; $224,113 in costs to
migrate to a voice-over-internet-protocol telephone and internet system; and $23,181 to
close out prior-year flood-related project costs.
General Fund revenues were $618,733 more than expenditures, and after transfers between funds were
accounted for, there was a net increase in fund balance of$90,797. In 2008, General Fund revenues
came in $183,670 (1.7%) higher than budgeted due entirely to higher administrative fees. Sales tax
revenues came in 0.2% or $9,851 higher than projected, increasing 1.7% ($69,158) over 2007.
Hotel/motel taxes fell short of projections by$176,704 due to the failure to enact an increase in bed tax
which was budgeted but not implemented. Recreation revenues came in under budget by $108,567
due to higher fuel costs and lower visitor numbers to the campgrounds, although revenues were higher
than 2007 by 7.8% or$45,105.
General Fund expenditures came in under budget by $505,438. The largest savings came from failure
to spend funds set aside for dredging Japp Creek ($250,000), lower debt payments ($53,000), delayed
building repairs to the fire hall ($25,000) and personnel cost savings ($242,000) due to delayed hirings
and personnel vacancy factor. When compared to 2007, expenditures increased approximately $1.2
million, with $500,000 due to hospital operating losses, $347,637 in higher retirement costs, $42,678
in higher workers' compensation insurance costs, $11,650 in higher audit costs, $71,882 in higher
maintenance and repair costs, $148,109 higher contracted services costs, $48,998 higher gas and
heating fuel costs, and $41,917 in higher building costs.
11
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of December 31, 2008, the City had $156,275,384 invested in capital assets net of accumulated
depreciation, representing an overall increase of$14,900,499 from the previous year.
Table 3
City of Seward Capital Assets
in thousands, net of depreciation)
Governmental Business-Type
Activities Activities Total
2008 2007 2008 2007 2008 2007
Land and improvements 5,399 5,399 17,484 17,484 22,883 22,883
Buildings 45,824 47,336 800 886 46,624 48,222
Improvements other
than buildings 2,505 2,272 54,594 52,740 57,099 55,012
Machinery and equipment 3,531 4,153 4,578 4,884 8,109 9,037
Construction in progress 18,774 3,407 2,786 2,814 21,560 6,221
Total net capital assets $ 76,033 62,567 80.242 78,808, 156,275 141,375
Additional information regarding the City of Seward's capital assets can be found in Footnote 4 on
pages 38-40.
Long-term Debt
As of December 31, 2008, the City had total debt outstanding of $50,942,077. Of this amount,
4,184,999 represents outstanding general obligation bonds backed by the full faith and credit of the
City. General obligation bonds outstanding include the hospital, streets and sidewalks, community
center building, and the North SMIC dock. An additional $42.6 million represents revenue bonds
backed by operating revenues from the harbor enterprise fund ($7.97 million), electric enterprise fund
7.68 million), and long-term care facility ($27 million). The remaining debt represents an
outstanding capital equipment lease on fire department air packs, water and wastewater loans, and
compensated absences.
Table 4
City of Seward Outstanding Debt
in thousands)
Governmental Business-Type
Activities Activities Total
2008 2007 2008 2007 2008 2007
General obligation bonds 4,015 4,738 169 222 4,184 4,960
Revenue bonds 27,000 15,645 10,175 42,645 10,175
Capital leases 46 109 46 109
Loans 3,545 3,008 3,545 3008
Compensated absences 377 833 145 266 522 1,099
Total outstanding debt 31.438 5.680 19.504 13.671 50.942 19.351
Further detail regarding the City's long-term outstanding debt can be found on pages 41-46.
12
1
Economic Factors and Next Year's Budget and Rates
The City's 2009 budget was prepared in a period of stressed economic conditions not seen in decades.
On a national level, the economy is experiencing recessionary pressures caused by the impact of the
sub-prime mortgage market crisis on households, banks, and credit institutions. This has led to
significant adverse economic spin-offs, bank failures, corporate bankruptcies, and rising
unemployment. To address these difficult times, the 2009 budget anticipated no new fees or taxes, no
change in current tax and fee levels, and assumed that revenues in 2009 will remain consistent with
prior-year levels. At this time revenues are likely to come in even lower than projected only a few
short months ago, due to the broad impact of the economic slowdown. The administration has
developed contingency plans to address the likely reduction in revenues, to include options such as
delayed capital spending, delayed hiring, and reduced contributions to the Motor Pool Internal Service
Fund. A prolonged economic slowdown will require a plan to reduce service levels, given the absence
of a revenue stabilization fund, and the insufficient levels of General Fund reserves to absorb
significant revenue reductions.
Sales tax revenues account for 43% of all General Fund revenues, making the City susceptible to the
volatility of taxable sales. The economic slowdown is expected to reduce the number of cruise ship
visitors to Seward by as much as 30%, but that may be offset in part, by Alaskans choosing to stay
close to home for summer vacation. Seward sees a significant portion of campground visitors arriving
from nearby Alaskan communities, and those visitors are likely to spend money in Seward for
accommodations, food, and recreation.
In addition, the City expanded the Small Boat Harbor in 2007 by more than 100 slips, and given the
central role that the harbor plays in serving as Seward's economic `engine', that is expected to
encourage continued economic growth. The federal stimulus projects -- as well as other major capital
projects already in the works (long-term care facility construction, AVTEC culinary arts facility,
levee/road construction) —are expected to inject tens of millions of dollars into the local economy over
the next two years, benefiting the local construction industry and those who depend on that industry for
employment and economic spin-off effects.
The City will face a number of challenges in the coming years. The rising costs of healthcare, a
growing list of deferred maintenance projects, inadequate reserves, short-term hospital losses, demand
for increased public infrastructure (library/museum, new City shop, pavilions) and economic
uncertainty will continue to challenge the City's available resources. The City's roads and sidewalks
are in need of significant repair, and grant funding is anticipated to cover some of those near-term
costs. On a positive note, some of Seward's more recent challenges are reaching resolution. The
City's unfunded PERS liability (in excess of$6.5 million) was eliminated when the State transitioned
from a single-agent, multiple-employer retirement plan to a pooled plan. Seward will now share the
same PERS retirement rate as other members of the pool, and for the time being, the State legislature
has agreed to cover costs in excess of the current 22% rate, providing at least short-term rate
predictability. The State has also provided near-term funding for the State revenue sharing program,
which has had a positive impact on the City's ability to fund at least some level of capital budget, as
these one-time revenues have been earmarked for capital-related expenditures rather than operating
costs.
13
Perhaps the biggest challenge facing the City's General Fund is the inadequate level of undesignated
fund balance of approximately $1.28 million, equal to only 1.3 months' worth of annual operating
expenditures and transfers to other funds. Given Seward's history of unforeseen events (such as floods
and avalanches), as well as the anticipated short-term hospital losses of up to $1 million over the next
year, as well as the uncertain financial future of the Alaska Sealife Center, it is important to maintain
and rebuild our reserves. In addition, for more than a decade, the City has failed to identify a reliable
funding source for capital repair and replacement, relying instead on unbudgeted supplemental
appropriations or one-time revenues to fund capital needs. To maintain our financial health and
resiliency, the City must develop and implement a plan to rebuild General Fund reserves to meet
unforeseen needs and emergencies. In addition, a consistent revenue stream should be identified to
fund ongoing capital repairs and maintenance. Too many capital repairs are being deferred without
adequate plans to address the growing list of deferred maintenance items. And finally, there is a need
to curb unanticipated draws from the General Fund's fund balance.
These factors were considered in preparing the City,'s budget for 2009, and a long-term financial plan
is needed to develop viable solutions to these problems.
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.
14
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 Assets
Statement of Activities
Governmental Funds -Balance Sheet
Reconciliation of Governmental Funds Balance Sheet to Statement of Net Assets
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 Assets
Proprietary Funds- Statement of Revenues,Expenses and Change in Net Assets
Proprietary Funds- Statement of Cash Flows
Statement of Fiduciary Net Assets
Notes to Basic Financial Statements
15
Exhibit A-1
CITY OF SEWARD
Statement of Net Assets
December 31,2008
Component
Unit
Providence
Primary Government Seward
Governmental Business-type Medical
Assets Activities Activities Total Center
1
1
Cash and investments 7,999,799 6,827,282 14,827,081 78,000
Receivables,net of allowance i
for doubtful accounts:
Taxes 532,148 532,148
Accounts 78,817 1,137,537 1,216,354 2,024,000
Assessments,due within one year 15,357 15,357
Grants and shared revenues 195,523 870,398 1,065,921
Accrued interest 330,648 67,798 398,446
Note receivable-PSMC 192,000 437,600 629,600
Other 364,673 364,673 446,000
Prepaid items 508,796 14,137 522,933 14,000
Inventories 9,875 957,698 967,573
Restricted cash and investments 18,047,524 9,925,851 27,973,375 612,000
Unamortized bond issuance costs 458,466 233,431 691,897
Assessments,due after one year 85,486 85,486
Internal balances 3,522,015) 3,522,015
Capital assets not being depreciated 24,173,209 20,269,755 44,442,964
Capital assets being depreciated 51,859,822 59,972,598 111,832,420 75,000
Total assets 100,864,612 104,701,616 205,566,228 3,249,000
Liabilities 1-
Accounts payable 4,513,984 1,444,981 5,958,965 523,000
Accrued payroll and related liabilities 118,998 49,603 168,601 638,000
Accrued interest 436,443 150,593 587,036
Other accrued liabilities 128,633 935 129,568 1,861,000
Funds held in trust 23,305 23,305
Customer deposits 215,987 215,987 1 I
Unearned revenue 49,259 956,873 1,006,132
Noncurrent liabilities:
Due within one year:
Accrued leave 99,274 39,809 139,083
Notes payable 184,689 184,689
Bonds payable 769,906 700,094 1,470,000
Capital lease obligations 17,790 17,790 20,000
Due in more than one year:
Accrued leave 277,331 104,930 382,261
Notes payable 3,360,268 3,360,268
Bonds payable,net of bond premium and deferred loss 30,392,043 15,243,347 45,635,390
Capital lease obligations 27,987 27,987 60,000
Other liabilities 612,000
Total liabilities 36,854,953 22,452,109 59,307,062 3,714,000
Net Assets
Restricted for capital projects 699,601 699,601
Invested in capital assets,net of related debt 58,016,403 66,753,957 124,770,360
Unrestricted(deficit) 5,993,256 14,795,949 20,789,205 (465,000)
Total net assets 64,009,659 82,249,507 146,259,166 (465,000)
Total liabilities and net assets 100,864,612 104,701,616 205,566,228 3,249,000
See accompanying notes to basic financial statements.
16
1 1
Exhibit A-2
CITY OF SEWARD
Statement of Activities
Year Ended December 31,2008
Net(Expense)Revenue and
Program Revenues Changes in Net Assets
Component
Primary Government Unit
Fees, Providence
Fines& Operating Capital Business- Seward
Charges for Grants& Grants& Governmental type Medical
Functions: - Expenses Services Contributions Contributions Activities Activities Total Center
Governmental activities:
General government 2,501,443 196,240 39,152 2,266,051) 2,266,051)
Public safety 2,934,607 669,988 7,191 344,905 (1,912,523)1,912,523)
Public works 1,310,474 116,833 11,565 1,182,076) 1,182,076)
Parks and recreation 1,236,411 627,038 2,477 24,666 (582,230) 582,230)
Library 398,108 12,800 23,759 361,549) 361,549)
Hospital 412,797 629,600 216,803 216,803
Sea Life Center 1,736,147 1,736,147) 1,736,147)
Unallocated interest 116,906 116,906) 116,906)
Total governmental activities 10,646,893 1,622,899 84,144 999,171 (7,940,679) 7,940,679)
Business-type activities:
Electric 8,626,745 8,565,180 16,731 442,423 397,589 397,589
Water 1,194,311 998,541 83,184 83,000 29,586) (29,586)
Wastewater 901,759 801,095 11,980 239,600 150,916 150,916
Harbor 3,006,069 2,776,676 44,797 2,003,982 1,819,386 1,819,386
SMIC 1,149,453 304,517 2,892 842,044) (842,044)
Parking 119,723 240,339 11 120,627 120,627
Total business-type activities 14,998,060 13,686,348 159,595 2,769,005 1,616,888 1,616,888
Total primary government $ 25,644.953 15,309,247 243,739 3,768,176 (7,940,679) 1,616,888
Component Unit-Providence
Seward Medical Center 12,969,000 12,053,000 916,000)
General revenues:
Taxes:
Sales taxes 4,137,758 4,137,758
Property taxes 943,832 943,832
Other taxes 362,004 362,004
Paymentinlieuoftaxes 80,126 80,126
Grants and entitlements not
restricted to a specific purpose 1,354,871 713,178 2,068,049
Investment income 612,611 640,277 1,252,888
Other 1,000
Contributions from primary government 500,000
Transfers 912,319 (912,319)
Special item-write-off NPO/OPEB 504,917 139,952 644,869
Total general revenues and transfers 8,908,438 581,088 9,489,526 501,000
Changes in net assets 967,759 2,197,976 3,165,735 (415,000)
Net assets at beginning of year 63,041,900 80,051,531 143,093,431 (50,000)
Net assets(deficit)at end of year 64,009,659 82,249,507 146,259,166 (465,000)
See accompanying notes to basic financial statements.
17
Exhibit B-1
CITY OF SEWARD
Governmental Funds
Balance Sheet
December 31,2008
Major Funds
LTC Facility Total
Capital Nonmajor Governmental
Assets General Project Funds Funds
Cash and investments 4,852,912 1,674,594 6,527,506
Receivables,net of allowance for doubtful accounts:
Taxes 532,148 532,148
Accounts 78,817 78,817
Grants and shared revenues 690 194,833 195,523
Accrued interest 206,499 54,636 261,135
Note receivable-PSMC 192,000 192,000
Prepaid items 491,715 9,185 500,900
Inventory 9,875 9,875
Due from other funds 126,716 126,716
Restricted cash and investments 1,973,360 16,074,164 18,047,524
Total assets 8,464,732 16,137,985 1,869,427 26,472,144
Liabilities and Fund Balances
Liabilities:
Accounts payable 427,252 4,000,721 86,011 4,513,984
Accrued payroll and related liabilities 118,998 118,998 111
Accrued liabilities 128,633 128,633
Accrued interest 81,078 81,078
Funds held in trust 23,305 23,305
Due to other funds 126,716 126,716
Deferred revenue 58,145 58,145
Interfund loans payable 3,517,694 3,517,694
Total liabilities 4,355,105 4,000,721 212,727 8,568,553
Fund balances:
Reserved:
Inventory and prepaids 501,590 501,590
Note receivable-PSMC 192,000 192,000
Debt service 1,063,260 1,063,260
Unreserved:
Designated:
Working capital 1,500,000 1,500,000
Insurance 126,418 126,418
Hospital line of credit 500,000 500,000
Capital Project Funds-capital improvements 12,137,264 209,133 12,346,397
Undesignated,reported in:
General Fund 1,289,619 1,289,619
Special Revenue Funds 409,326 409,326
Capital Project Funds(deficit)25,019) 25,019)
Total fund balances 4,109,627 12,137,264 1,656,700 17,903,591
Total liabilities and fund balances 8,464,732 16,137,985 1,869,427 26,472,144
See accompanying notes to basic financial statements.
18
Exhibit B-2
CITY OF SEWARD
Reconciliation of Governmental Funds Balance Sheet
to Statement of Net Assets
December 31,2008
Total fund balances for governmental funds 17,903,591
Total net assets reported for governmental activities in the
Statement of Net Assets 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 depreciation consist of:
Land 5,398,928
Buildings 63,463,657
Improvements other than buildings 15,915,243
Machinery and equipment 8,286,754
Construction in progress 18,774,281
Accumulated depreciation 36,967,272)
Total capital assets 74,871,591
Other long-term assets are not available to pay for current period
expenditures and therefore are deferred in the funds. 8,886
Governmental funds report the effect of bond issuance costs,premiums
and deferred losses when debt is first issued,whereas these amounts
are deferred and amortized in the Statement of Net Assets. 458,466
An internal service fund is used by the City to charge the cost
of vehicles and heavy equipment to individual funds. The
net assets of the internal service fund attributable to
governmental activities is included in the governmental
column on the Statement of Net Assets. 2,330,216
An internal service fund is used by the City to hold cash for
the future payment of accrued leave. 376,605
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 31,015,781)
Accrued interest on bonds 355,365)
Capital leases payable 45,777)
Accrued leave 376,605)
Unamortized bond premium 393,388)
Unamortized deferred loss on refunding 247,220
Total long term liabilities 31,939,696)
Total net assets of governmental activities 64,009,659
See accompanying notes to basic financial statements.
19
Exhibit B-3
CITY OF SEWARD
Governmental Funds
Statement of Revenues, Expenditures and Change in Fund Balances
Year Ended December 31, 2008
Major Funds
LTC Facility Total
Capital Nonmajor Governmental
General Project Funds Funds
Revenues:
Taxes 5,535,081 5,535,081
Licenses and permits 129,956 129,956 i
Intergovernmental 1,935,174 419,864 2,355,038
Charges for services 2,610,515 2,610,515
Fines and bails 18,209 18,209
Investment income 226,854 350,617 35,140 612,611
Miscellaneous 141,602 629,600 771,202
Total revenues 10,597,391 980,217 455,004 12,032,612
Expenditures:
Current:
General government 3,160,758 208,720 3,369,478
Public safety 2,988,528 344,905 3,333,433
Public works 1,645,483 17,212 1,662,695
Parks and recreation 1,153,248 45,550 1,198,798
Library 367,413 1,283 368,696
Hospital and long-term care 14,547,952 42,249 14,590,201
Debt service:
Principal payments 98,999 640,000 738,999
Retirement benefits 470,573 470,573
Interest and other costs 93,656 1,111,062 123,788 1,328,506
Total expenditures 9,978,658 15,659,014 1,423,707 27,061,379
Excess of revenues over
under) expenditures 618,733 (14,678,797) (968,703) (15,028,767)
Other financing sources (uses):
Proceeds from debt issuance 27,406,078 27,406,078
Transfers in 1,395,678 1,781,110 3,176,788
Transfers out 1,923,614) 340,855) (2,264,469)
Net other financing sources (uses)527,936) 27,406,078 1,440,255 28,318,397
Net change in fund balances 90,797 12,727,281 471,552 13,289,630
Beginning fund balances (deficit)4,018,830 590,017) 1,185,148 4,613,961
Ending fund balances 4,109,627 12,137,264 1,656,700 17,903,591
See accompanying notes to basic financial statements.
20
Exhibit B-4
CITY OF SEWARD
Reconciliation of the Changes in Fund Balances of Governmental Funds
to Statement of Activities
Year Ended December 31, 2008
Net change in fund balances -total governmental funds 13,289,630
The change in net assets 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$15,801,573 exceeded depreciation of$2,340,279. 13,461,294
Revenues in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the funds. This
is the decrease in other long-term assets. 10,125)
Governmental funds report the effect of bond issuance costs,premiums
and deferred losses when debt is first issued,whereas these amounts
are deferred and amortized in the Statement of Activities. 458,466
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:
General obligation bonds issued 26,278,126)
Amortization of deferred loss on refunding 49,445)
Bond premium 393,388)
Net pension/OPEB obligation decrease 504,917 •
Capital lease payments 17,126
Accrued interest on bonds increase 321,174)
Total long term liabilities 26,520,090)
An internal service fund is used by management to charge the cost of
vehicles and heavy equipment to individual funds. A portion of the
of these governmentalrevenueeactivitiesattributabletoovernmental activitiesns
is included in the governmental column on the Statement of Activities. 288,584
Change in net assets of governmental activities 967,759
See accompanying notes to basic financial statements.
21
Exhibit B-5
CITY OF SEWARD
General Fund
Statement of Revenues, Expenditures
and Change in Fund Balance-Budget and Actual
Year Ended December 31, 2008
Variance
Original Final Positive
Budget Budget Actual (Negative)
Revenues:
Taxes 5,632,153 5,632,153 5,535,081 97,072)
Licenses and permits 190,950 190,950 129,956 60,994)
Intergovernmental 918,027 1,778,067 1,935,174 157,107
Charges for services 2,463,401 2,443,401 2,610,515 167,114
Fines and bails 20,000 20,000 18,209 1,791)
Investment income 252,000 252,000 226,854 25,146)
Miscellaneous 79,150 97,150 141,602 44,452
Total revenues 9,555,681 10,413,721 10,597,391 183,670
Expenditures:
Current:
General government 2,809,766 3,386,766 3,160,758 226,008
Public safety 3,027,965 3,137,589 2,988,528 149,061
Public works 1,468,659 1,681,059 1,645,483 35,576
Parks and recreation 1,166,711 1,191,711 1,153,248 38,463
Library 377,147 396,700 367,413 29,287
Debt service:
Principal payments 149,951 149,951 98,999 50,952
Retirement benefits 411,979 443,989 470,573 26,584)
Interest and other costs 96,331 96,331 93,656 2,675
Total expenditures 9,508,509 10,484,096 9,978,658 505,438
Excess of revenues over
under) expenditures 47,172 70,375) 618,733 689,108
Other financing sources (uses):
Transfers in 1,890,806 1,903,576 1,395,678 (507,898)
Transfers out 1,514,851) (2,124,208) (1,923,614) 200,594
Net other financing sources (uses) 375,955 (220,632) (527,936) (307,304)
Net change in fund balance 423,127 (291,007) 90,797 381,804
Beginning fund balance 4,018,830
Ending fund balance 4,109,627
See accompanying notes to basic financial statements.
22
Exhibit C-1
CITY OF SEWARD
Proprietary Funds
Statement of Net Assets
December 31,2008
Enterprise Funds
Total Internal
Major Funds Nonmajor Enterprise Service
Assets Electric Water Harbor SMIC Funds Funds Funds
Current assets:
1 Cash and investments 3,103,126 1,287,123 1,523,686 126,457 786,890 6,827,282 1,472,293
Receivables:
Accounts 884,132 66,665 151,217 31,988 74,250 1,208,252
Accrued interest 67,798 67,798 69,513
Assessments 4,435 6,814 4,108 15,357
Interfund loans 14,383 14,383 58,284
Grants and loans 50,610 720,955 98,833 870,398
Other 18,925 345,748 364,673
Less allowance for doubtful accounts 39,786) (3,000) (24,588)3,341) (70,715)
Prepaid expenses 9,950 4,187 14,137 7,896
Inventory 892,979 64,719 957,698
Total current assets 5,006,552 2,143,276 2,099,004 158,445 861,986 10,269,263 1,607,986
Noncurrent assets:
Restricted cash and investments 7,652,102 140,354 1,925,835 207,560 9,925,851
Assessments receivable,net of current portion 23,031 38,880 23,575 85,486
Deferred charges-unamortized debt issuance costs 136,431 97,000 233,431
Notes receivable-PSMC 115,000 83,000 239,600 437,600
Interfund loans,net of current portion 399,813 1,973,360 2,373,173 1,256.957
Property,plant and equipment:
Total capital assets not being depreciated 1,124,437 384,275 6,531,331 12,021,821 207,891 20,269,755
Total capital assets being depreciated 45,480,279 8,341,312 25,653,856 41,129,628 12,193,304 132,798,379 3,175,274
Less accumulated depreciation 27,777,458) (3,456,222) (9,052,731) (25,715,490) (6,823,880) (72,825,781) (2.013,834)
Total noncurrent assets 27.153,635 7,504.959 25,178,866 27,435,959 6.024.475 93,297,894 2,418,397
Total assets 32,160,187 9,648,235 27,277,870 27,594,404 6,886,461 103,567,157 4,026.383
Liabilities and Net Assets
Current liabilities:
Accounts payable 690,322 606.676 93,982 45,262 8,739 1,444,981
Accrued payroll and related liabilities 19,095 4,901 19,293 1,083 5,231 49,603
Accrued interest 31,124 74,415 43,907 448 699 150,593
Current portion:
Accrued annual leave 15,843 5,834 14,606 3,526 39,809 99,274
Bonds payable 305,000 340,000 55.094 700,094
Notes payable 127.118 57,571 184,689
Interfund loans payable 19,040 19,040
Customer deposits 215.987 215,987
Deferred revenue 89,232 848,015 19,626 956,873
Other accrued liabilities 935 935
Total current liabilities 1,366,603 818,944 1.379.778 121,513 75,766 3,762,604 99,274
Noncurrent liabilities,net of current portion:
Accrued annual leave 46,532 11,846 30,131 16,421 104,930 277,331
Bonds payable 7,375,000 7,625,000 114,124 15,114,124
Unamortized bond premium 83,613 129,471 213,084
Notes payable 3,120,077 240,191 3,360,268
Unamortized deferred loss on refunding 83,861)83,861)
Interfund loans payable 166,063 166,063
Total noncurrent liabilities 7,505,145 3,131,923 7,866,804 114,124 256,612 18,874,608 277,331
Total liabilities 8,871,748 3,950,867 9,246,582 235,637 332,378 22.637,212 376,605
Net assets:
Restricted for capital projects 699,601 699,601
Invested in capital assets,net of related debt 17.063,645 2.022,172 15.121,846 27,266,741 5,279,553 66,753,957 1,161,440
Unrestricted(deficit) 6.224,794 3,675,196 2.209,841 92,026 1,274,530 13,476,387 2.488,338
Total net assets 23,288.439 5,697,368 18.031,288 27.358,767 6,554,083 80,929,945 3,649,778
Total liabilities and net assets 32,160.187 9.648,235 27.277,870 27.594,404 6.886.461 4,026,383
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds 1,319,562
Net assets of business-type activities 82,249,507
See accompanying notes to basic financial statements.
23
Exhibit C-2
CITY OF SEWARD
Proprietary Funds
Statement of Revenues,Expenses and Change in Net Assets
Year Ended December 31,2008
Enterprise Funds
Total Internal
Major Funds Nonmajor Enterprise Service
Electric Water Harbor SMIC Funds Funds Funds
Operating revenues:
Charges for services 8,565,180 998,541 2,776,676 304,517 1,041,434 13,686,348
Vehicle rental and interfund charges 842,003
Total operating revenues 8,565,180 998,541 2,776,676 304,517 1,041,434 13,686,348 842,003
Operating expenses:
Salaries and benefits 154,687 257,891 839,212 97,237 325,160 1,674,187 329,810
Services and supplies 4,731,560 324,015 629,392 203,084 282,181 6,170,232 4,110
Administration 2,189,721 205,567 185,940 199,908 140,644 2,921,780
Depreciation 1,391,915 224,309 1,012,180 642,635 281,953 3,552,992 212,694
Total operating expenses 8,467,883 1,011,782 2,666,724 1,142,864 1,029,938 14,319,191 546,614
Earnings(loss)from operations 97,297 (13,241) 109,952 (838,347)11,496 (632,843) 295,389
Nonoperating revenues(expenses):
Intergovernmental 16,731 83,184 44,797 2,892 11,991 159,595
Investment income 355,550 113,713 120,152 7,773 43,089 640,277 111,821
Interest expense 200,488) (74,415) (379,907) (6,589) 5,054) (666,453) 205)
Commercial passenger vessel tax 713,178 713,178
Gain on disposition of capital assets 20
Other expenses 19,564) (111,293) 130,857)
Net nonoperating revenues(expenses)152,229 11,189 498,220 4,076 50,026 715,740 111,636
Earnings(loss)before contributions,
transfers and special item 249,526 (2,052) 608,172 (834,271)61,522 82,897 407,025
Capital contributions 442,423 83,000 2,003,982 239,600 2,769,005
Transfers in 348,655 348,655
Transfers out 714,082) (84,883) (319,595) (54,100) (88,314) (1,260,974)
Special item-write-off NPO/OPEB 12,298 16,527 91,590 19,537 139,952
Change in net assets 9,835) 12,592 2,384,149 (539,716) 232,345 2,079,535 407,025
Beginning net assets 23,298,274 5,684,776 15,647,139 27,898,483 6,321,738 3,242,753
Ending net assets 23,288,439 5,697,368 18,031,288 27,358,767 6,554,083 3,649,778
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds 118,441
Change in net assets of business-type activities 2,197,976
See accompanying notes to basic financial statements.
24
Exhibit C-3
CITY OF SEWARD
Proprietary Funds
Statement of Cash Flows
Year Ended December 31,2008
Enterprise Funds
Total Internal
Major Funds Nonmajor Enterprise Service
Electric Water Harbor SMIC Funds Funds Funds
Cash flows from operating activities:
Receipts from customers and users 8,702,877 1,006,145 2,847,560 303,694 1,038,267 13,898,543
Payments to suppliers 5,067,435) (484,965) (620,377) (169,884) (290,876) (6,633,537) (12,006)
Payments to employees 994,171) (238,002) (804,071) (94,541) (310,581) (2,441,366) (281,481)
Payments for interfund services used 745,152) (205,567) (185,940) (199,908) (140,644) (1,477,211)
Receipts from interfund charges 842,003
Net cash flows from operating activities 1,896,119 77,611 1,237,172 (160,639) 296,166 3,346,429 548,516
Cash flows from noncapital financing activities:
Transfers in 348,655 348,655
Transfers out 714,082) (84,883) (319,595) (54,100) (88,314) (1,260,974)
Noncapital intergovernmental revenues 70,243 70,243
Interfund loan to General Fund 1,973,360) 1,973,360)
Net cash flows from noncapital
financing activities 714,082) (1,988,000) (319,595) 294,555 (88,314) (2,815,436)
Cash flows from capital and related financing activities:
Issuance of long term debt 6,034,165 6,034,165
Bond issuance costs 105,622) 105,622)
paymentsPrincipalaY bmentsonlong-term debt 205,000) 325,000) (53,127) (56,740) (639,867) (46,281)P
Interest payments on long-term debt 159,320) 385,376) (6,699) (5,316) (556,711) (1,591)
Acquisition of property,plant and equipment (1,339,408) (117,494) (3,750,907) (5,111) (244,765) (5,457,685) (217,854)
Capital contributions received 287,482 6,833 2,592,130 2,886,445
Proceeds from sale of capital assets 20
Interfund loan payments 18,048) - 18,048)
Commercial passenger vessel tax receipts 367,430 367,430
Net cash flows from capital and
related financing activities 4,512,297 (110,661) (1,519,771) (64,937) (306,821) 2,510,107 (265,706)
Cash flows from investing activities:
Investment income received 310,215 113,713 120,152 7,773 43,089 594,942 114,771
Interfund loan receipts 13,666 13,666 55,336
Net cash flows from investing activities 323,881 _ 113,713 120,152 7,773 43,089 608,608 - 170,107
Net increase(decrease)in cash
and investments 6,018,215 (1,907,337) (482,042) 76,752 (55,880) 3,649,708 452,917
Beginning cash and investments 4,737,013 3,334,814 3,931,563 49,705 1,050,330 13,103,425 1,019,376
Ending cash and investments 10,755,228 1,427,477 3,449,521 126,457 994,450 16,753,133 1,472,293
Reconciliation of cash and investments
to statement of net assets:
Current assets 3,103,126 1,287,123 1,523,686 126,457 786,890 6,827,282 1,472,293
Restricted assets 7,652,102 140,354 1,925,835 207,560 9,925,851
10,755,228 1,427,477 3,449,521 126,457 994,450 16,753,133 1,472,293
See accompanying notes to basic financial statements.
25
Exhibit C-3.continued
CITY OF SEWARD
Proprietary Funds
Statement of Cash Flows,continued
I-
Enterprise Funds
Total Internal
Major Funds Nonmajor Enterprise Service
Electric Water Harbor SMIC Funds Funds Funds
Reconciliation of earnings(loss)from
operations to net cash provided(used)
by operating activities:
Earnings(loss)from operations 97,297 (13,241) 109,952 (838,347) 11,496 (632,843) 295,389
Adjustments to reconcile earnings(loss)
from operations to net cash flows from
operating activities:
Depreciation 1,391,915 224,309 1,012,180 642,635 281,953 3,552,992 212,694
Amortization of debt issuance costs 8,425 5,929 14,354
Other nonoperating expenses 19,564) (111,293) 130,857)
Noncash expense-PERS relief 16,731 12,361 44,797 2,892 11,991 88,772
Increase(decrease)in allowance for
doubtful accounts 4,351 358) 1,709 6 5,708
Increase)decrease in assets:
Receivables 84,819 7,962 19,576 923)148) 111,286
Prepaids 4,187) (4,187) (7,896)
Inventory 503) (18,413) 18,916)
Increase(decrease)in liabilities:
Accounts payable 260,659 (31,244) 3,086 33,200 (4,508) 261,193
Accrued payroll and related liabilities 2,481 1,652 (19,936) (196)1,595 (14,404)
Accrued annual leave 981 5,876 10,280 993 18,130 48,329
Customer deposits 9,105 3,025) 6,080
Deferred revenue 39,422 49,599 100 89,121
Net cash flows from
operating activities 1,896,119 77,611 1,237,172 (160,639) 296,166 3,346,429 548,516
i '
r
f
See accompanying notes to basic financial statements.
26 j
Exhibit D-1
CITY OF SEWARD
Fiduciary Funds
Statement of Fiduciary Net Assets
December 31, 2008
Teen
Council
Agency
Fund
Assets
Cash and investments 34,945
Prepaid expenses and other 150
Total assets 35,095
Liabilities
Accounts payable 1,285
Due to others 33,810
Total liabilities 35,095
See accompanying notes to basic financial statements.
27
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28
CITY OF SEWARD
Notes to Basic Financial Statements
December 31, 2008
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, and general administrative services.
The accompanying financial statements present the City of Seward (the primary government) and its
component unit,Providence Seward Medical Center, an entity for which the City is considered to be
financially accountable. The discretely presented component unit is presented in a separate column
in the government-wide financial statements to emphasize that it is legally separate from the City.
The City has evaluated the criteria used to determine the proper classification of a separate legal
entity as a component unit. While the City does not appoint the Board of the medical center, the
City can impose its will by terminating the management agreement with 90 days' written notice.
The City demonstrates financial benefit by ownership of the facility and its assets, and the entity has
operated for decades under City ownership. The City demonstrates financial burden by paying all
debt payments associated with the component unit, reflecting general obligation bonds which
obligate the full faith and credit of the City. The City pays for all capital costs of the facility and is
legally obligated to finance potential deficits of the component unit. Due to the strong fiscal
dependence and corresponding financial benefit and/or burden, it would be potentially misleading to
exclude the component unit from the City's books.
Providence Seward Medical Center (the Medical Center) is owned by the City of Seward and is
managed by Providence Health & Services - Washington (a Washington nonprofit corporation) (the
Corporation). The Corporation operates a number of healthcare institutions in Washington, Alaska,
Montana, Oregon, and California.
Effective May 1, 2003, the Corporation and the City signed a management and operations
agreement (the Agreement) whereby all financial risks and rewards from the operations of the
Medical Center accrue to the City and the Corporation is the manager of the Medical Center.
Effective with the signing of the Agreement, the City entered into a contract to lease the Wesley
Care Center located adjacent to the Medical Center,which is now operated by the Medical Center.
Complete financial statements of Providence Seward Medical Center can be obtained from the
address below:
Providence Seward Medical Center
P.O. Box 365
Seward, AK 99664
29
CITY OF SEWARD
Notes to Basic Financial Statements,continued
Summary of Significant Accounting Policies,continued
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 assets and the statement of
activities) report information on all of the nonfiduciary activities of the primary government and its
component unit. 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.
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 Agency 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.
30
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
Property taxes, sales taxes, licenses, 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.
The City reports the following major funds—
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 Long-term Care Facility Capital Project Fund accounts for all activities related to the
construction and operation of the City's Long-term Care Facility.
Major Proprietary Funds:
The Electric Enterprise Fund accounts for all activities related to the operation of the City's
electric utility.
The Water Enterprise Fund accounts for all activities related to the City's water system.
The Harbor Enterprise Fund accounts for the marine-related activities of the City's harbor.
The Seward Marine Industrial Center (SMIC) Enterprise Fund accounts for marine-related
services on the east side of Resurrection Bay.
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.
31
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
32
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.
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.
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.
Property 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 taxes not currently available are reflected as
deferred revenues of the General Fund.
33
it
CITY OF SEWARD
Notes to Basic Financial Statements,continued
Summar of Si! ificant Accountin! Policies continued
Receivables and Payables
Activity between funds that are representative of lending/borrowing 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 assets. Bond premiums and discounts, as
well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line
method.
r
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, 2008. Outstanding purchase orders, if any, at
December 31, are cancelled,and new ones are issued in the subsequent year.
Deferred 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 deferred revenue.
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.
34
CITY OF SEWARD
Notes to Basic Financial Statements, continued
2) Stewardship,ComplianceComliance 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 Alaska Medical 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. All sales tax revenue is recorded in the
General Fund. The allocated portion is then transferred to the Debt Service Fund.
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 included in"due to/from other funds."
At year-end, all of the City's bank deposits were either insured or collateralized with securities
held by the City's agent in the City's name.
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. 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 not SEC registered and is not rated 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.
35
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, 2008:
Pooled Cash
and Investments Other Totals
Petty cash 2,602 2,602
Bank deposits 818,670) 892,705 74,035
Investments 40,140,850 2,617,914 42,758,764
39,322,180 3,513,221 42,835,401
Government-Fiduciary Fund
Wide Statement of
Statement Assets and
of Net Assets Liabilities Totals
Cash and investments 14,827,081 34,945 14,862,026
Restricted cash and investments 27,973,375 27,973,375
42,800,456 34,945 42,835,401
Restricted Cash and Investments
The City maintains bond redemption and reserve accounts as required by bond covenants. The
balances at December 31, 2008 are as follows:
General Fund (long-term care facility) 1,973,360
Electric Fund 677,911
Harbor Fund 859,348
3,510,619
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:
LTC Facility Capital Project Fund 16,074,164
Electric Fund 6,974,19.1
Water Fund 140,354
Wastewater Fund 207,560
Harbor Fund 1,066,487
24,462,756
36
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Cash and Investments, continued
Restricted Cash and Investments, continued
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. The AMLIP is uncategorized. 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.
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, 2008 are as follows:
Investment Maturities (in Years)
Fair Less than 1 to 5 Over
Investment Value 1 year years 5 years
U.S. government agencies $ 20,740,262 14,132,426 6,359,318 248,518
Repurchase agreements 1,964,885 1,964,885
Total subject to
interest rate risk 22,705,147 16,097,311 6,359,318 248,518
Certificates of deposit 8,288,308
Pooled investments 11,270,559
Money market account 494,750
Total investments 42,758,764
37
CITY OF SEWARD
Notes to Basic Financial Statements,continued
Cash and Investments,continued
I
Restricted Cash and Investments, continued
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 US 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.
Concentration Risk
The City's investment policy places no limit on the amount that can be invested in any one
issuer. More than 5% of the total portfolio is invested in securities issued by federal agencies, as
follows: the Federal Home Loan Bank (27%), Federal Home Loan Mortgage Corporation (10%),
and Federal National Mortgage Association (6%). All of the U.S. Agency securities in the
portfolio at year-end are rated as Aaa by Moody's Investors Service and AAA by Standard and
Poor's.
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 National Mortgage Association, Federal Home Loan Bank, Federal Home Loan
Mortgage Corporation, Federal Farm Credit 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, 2008 was as follows:
Balance Additions Deletions Balance
January 1, and and December 31,
2008 Reclassifications Reclassifications 2008
Governmental activities
Capital assets not being depreciated:
Land and land improvements 5,398,928 5,398,928
Construction in progress 3.406,983 15,823,692 456.394 18.774,281
Total assets not being depreciated 8.805,911 15,823,692 456,394 24,173,209
38
CITY OF SEWARD
Notes to Basic Financial Statements,continued
Capital Assets, continued
Balance Additions Deletions Balance
January 1, and and December 31,
2008 Reclassifications Reclassifications 2008
Governmental activities,continued
Capital assets being depreciated:
Buildings 63,422,243 41,414 63,463,657
Improvements other than buildings 15,357,686 557,557 15,915,243
Machinery and equipment 11,440,290 420,482 398,744 11,462,028*
Total assets being depreciated 90,220,219 1,019,453 398,744 90,840,928
Less accumulated depreciation for:
Buildings 16,086,536 1,553,365 17,639,901
Improvements other than buildings 13,085,934 324,161 13,410,095
Machinery and equipment 7,287,083 766,497 122,470 7,931,110*
Total accumulated depreciation 36,459,553 2,644,023 122,470 38,981,106
Total capital assets being depreciated,net 53,760,666 (1,624,570)276,274 51,859,822
Governmental activity capital assets,net $62,566,577 14,199,122 732,668 76,033,031
The ending balances include$3,175,274 and$2,013,834 of equipment cost and accumulated depreciation,respectively,
related to the Motor Pool Internal Service Fund.
Balance Additions Deletions Balance
1 January 1, and and December 31,
2008 Reclassifications Reclassifications 2008
Business-type activities
Capital assets not being depreciated:
Land and land improvements 17,483,769 17,483,769
Construction in progress 2,813,635 4,172,351 4,200,000 2,785,986
Total assets not being depreciated 20,297,404 4,172,351 4,200,000 20,269,755
Capital assets being depreciated:
Buildings 4,874,895 5,165 4,880,060
Improvements other than buildings 111,705,391 5,000,472 116,705,863
Machinery and equipment 11,129,759 116,419 33,722 11,212,456
Total assets being depreciated 127,710,045 5.122,056 33.722 132,798,379
Less accumulated depreciation for:
Buildings 3,989,143 90,631 4,079,774
Improvements other than buildings 58,964,521 3,146,668 62,111,189
Machinery and equipment 6245,477 398,193 8,852 6,634,818
Total accumulated depreciation 69,199,141 3,635,492 8,852 72,825,781
Total capital assets being depreciated,net 58,510,904 1,486,564 24,870 59,972,598
Business-type capital assets,net 78,808,308 5,658,915 4,224,870 80,242,353
39
CITY OF SEWARD
Notes to Basic Financial Statements,continued
Capital Assets,continued
Depreciation expense was charged to the functions as follows:
Depreciation Internal
Excluding Service
Internal Fund Total
Service Fund Allocation Depreciation
Governmental activities
General government 153,903 69,166 223,069
Public safety 123,057 31,443 154,500
Public works 99,001 96,191 195,192
Parks and recreation 64,632 15,894 80,526
Library 32,395 32,395
Hospital and long-term care 242,112 242,112
Sea Life Center 1,716,229 1,716,229
Total governmental activities 2,431,329 212,694 2,644,023
Business-type activities
Electric 1,391,915 1,391,915
Water 224,309 224,309
Wastewater 275,745 275,745
Harbor 1,094,680 1,094,680
SMIC 642,635 642,635
Parking 6,208 6,208
Total business-type activities 3,635,492 3,635,492
Total depreciation expense 6,066,821 212,694 6,279,515
5) Interfund Receivables,Payables,and Transfers
A schedule of interfund balances and transfers for the year ended December 31, 2008, follows:
Due from other funds-
Due to the General Fund from nonmajor governmental
funds to cover operating and capital costs 126,716
Transfers:
From General Fund to:
SMIC Enterprise Fund for operating costs 348,655
Nonmajor governmental funds for debt service costs 1,023,383
Nonmajor governmental funds for operating costs 251,576
Nonmajor governmental funds for capital costs 300,000
Total transfers from General Fund 1,923,614
li
40
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Interfund Receivables,Payables, and Transfers, continued
Transfers, continued:
From nonmajor governmental funds to:
General Fund for operating costs 134,704
Nonmajor governmental funds for capital costs 206,151
Total transfers from nonmajor governmental funds 340,855
From Electric Enterprise Fund to General Fund
for payment in lieu of taxes and other costs 714,082
From Water Enterprise Fund to General Fund
for payment in lieu of taxes and other costs 84,883
From Wastewater Enterprise Fund to General Fund
for payment in lieu of taxes and other costs 69,087
From Harbor Enterprise Fund to General Fund
for payment in lieu of taxes and other costs 319,595
From SMIC Enterprise Fund to General Fund
for payment in lieu of taxes and costs 54,100
From Parking Revenue Enterprise Fund to
General Fund for payment in lieu of taxes 19,227
Total transfers to other funds 3,525,443
6) Long-Term Debt
Bond Issuance
In 2008 the City issued$27,000,000 in 2008 Series 1 Long Term Care Facility Revenue Bonds with
interest rates of 4.0% to 5.1%. The bonds were issued at a premium of$406,078 and after paying
issuance and other costs of$477,569 and withholding of bond reserve requirements of$1,933,360,
the net proceeds were$24,955,149.
In 2008, the City also issued $6,000,000 in Electric Revenue Bonds with interest rates of 4.0% to
6.0%. The bonds were issued at a premium of$34,165 and after paying issuance and other costs of
105,521 and withholding of bond reserve requirements of $396,036, the net proceeds were
5,548,027.
Loans Payable
In 2007, the City entered into a loan agreement with the State of Alaska Department of
Environmental Conservation to assist with the costs of the
3rd
Avenue water main. The City
drew down $2,652,849 in 2007 and an additional $594,346 in 2008. Repayment begins January
1, 2009 with interest at 1.5%.
41
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Long-Term Debt,continued
Loans Payable, continued
The following is a summary of long-term debt transactions of the City for the year ended December
31,-2008:
Balance Balance Due
January 1, December 31, Within
2008 Add itions Retired 2008 One Year
Governmental activities
Revenue bonds-
27,000,000 2008 Series One long
term care facility bonds,due in
annual installments of$680,000 to
1,875,000 plus interest at 4.0%to
5.1%through April 1,2033 (first
principal payment due in 2011) 27,000,000 27,000,000
General obligation bonds:
5,150,000 2004 refunding hospital
bonds,due in annual installments of
685,000 to$840,000 plus interest
at 2.75%to 3.5%through April 1,2013 4,395,000 640,000 3,755,000 685,000
1,086,018 2003 refunding streets and
sidewalks bonds,due in semiannual
installments of$70,487 to$78,319
plus interest at 2.0%to 3.5%through
December 1,2011 295,000 70,487 224,513 73,098
175,438 2003 refunding senior center
bonds,due in semiannual installments of
11,387 to$12,652 plus interest at 2.0%
to 3.5%through December 1,2011 47,655 11,387 36,268 11,808
Fire equipment capital lease obligation
due in semiannual installments
of$9,690,including interest at
3.81%through May 1,2011 62,903 17,126 45,777 17,790
Loader/grader capital lease obligation
due in semi-annual installments
of$32,086 including interest at
5.16%through July 25,2008. 46,281 46,281
L
42
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Long-Term Debt,continued
Governmental activities,continued
Balance Balance Due
January 1, December 31, Within
2008 Additions Retired 2008 One Year
Accrued annual leave 328,276 329,810 281,481 376,605 99,274
Net pension/OPEB obligation 504,917 504,917
Total governmental activities
long-term liabilities 5,680.032 27,329,810 1,571,679 31,438,163 886,970
Less unamortized deferred loss on refunding 247,220)
Plus unamortized bond premium 393,388
31,584,331
The debt service payments for the loader/grader capital lease are made by the Motor Pool Internal
Service Fund. 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
directly or by transfers from the General Fund to the Debt Service Fund.
Balance Balance Due
January 1, December 31, Within
2008 Additions Retired 2008 O_ne Year
Business-type activities
General obligation bonds: $818,544
2003 refunding SMIC bonds,due
in semiannual installments of$53,127
to$59,030,plus interest at 2.0%to
3.5%through December 1,2011 222,345 53,127 169,218 55,094
Revenue bonds:
6,000,000 2008 Electric revenue bonds,
due in annual installments of$90,000 to
375,000,plus interest at 4.0%to 6.0%
through June 1,2038 6,000,000 6,000,000 90,000
4,500,000 2006 harbor revenue bonds,
due in annual installments of$150,000 to
330,000,plus interest at 4.0%to 6.0%
through June 1,2026 4,365,000 145,000 4,220,000 150,000
3,000,000 2000 harbor revenue bonds,
due in annual installments of$120,000
to$140,000 plus interest at 5.25%to
5.5%through October 1,2011 520,000 120,000 400,000 125,000
43
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Long-Term Debt, continued
Balance Balance Due
January 1, December 31, Within
2008 Additions Retired 2008 One Year
Business-type activities,continued
Revenue bonds,continued:
1,965,000 2007 refunding harbor
revenue bonds,due in annual installments
of$5,000 to$235,000,plus interest
at 4.0%to 5.0%through June 1,2021 1,960,000 5,000 1,955,000 5,000
2,290,000 2005 refunding electric
revenue bonds,due in annual installments
of$215,000 to$275,000,plus interest
at 3.5%to 5.0%through June 1,2015 1,885,000 205,000 1,680,000 215,000
1,500,000 2005 harbor revenue bonds,
due in annual installments of$60,000 to
110,000 plus interest at 3.5%to 5.0%
through June 1,2025 1,445,000 55,000 1,390,000 60,000
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 9,325 1,333 7,992 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 345,177 55,407 289,770 56,238
3,247,195 water note payable to State of
Alaska Department of Environmental
Conservation,due in annual installments
of$208,298,including interest at 1.5%
through January 31,2028 2,652,849 594,346 3,247,195 127,118
Accrued annual leave 126,609 133,168 115,038 144,739 39,809
Net pension/OPEB obligation 139,952 139,952
Total business-type activities
long-term liabilities 13,671,257 6327,514 894,857 19,503,914 924,592
Less unamortized deferred loss on refunding 83,861)
Plus unamortized bond premium 213,084
19,633,137
44
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Long-Term Debt,continued
Annual debt service requirements to maturity on the bonds,notes and capital leases follow:
General Obligation Bonds
Year Ending Governmental Activities Business-type Activities
December 31, Principal Interest Total Principal Interest Total
2009 769,906 115,447 885,353 55,094 5,372 60,466
2010 819,906 92,456 912,362 55,094 3,719 58,813
2011 875,969 67,109 943,078 59,030 2,066 61,096
2012 840,000 38,500 878,500
2013 710,000 12,425 722,425
4,015,781 325,937 4,341,718 169.218 11,157 180,375
Revenue Bonds and Notes
Year Ending Governmental Activities Business-type Activities
December 31, Principal Interest Total Principal Interest Total
2009 1,292,663 1,292,663 645,000 723,565 1,368,565
2010 1,292,663 1,292,663 675,000 691,578 1,366,578
2011 680,000 1,275,662 1,955,662 715,000 657,766 1,372,766
2012 710,000 1,240,913 1,950,913 745,000 621,676 1,366,676
2013 750,000 1,204,413 1,954,413 780,000 596,952 1,376,952
2014-2018 4,330,000 5,425,688 9,755,688 3,600,000 2,415,741 6,015,741
2019-2023 5,345,000 4,396,693 9,741,693 3,295,000 1,656,932 4,951,932
2024-2028 6,670,000 3,020,175 9,690,175 2,190,000 991,444 3,181,444
2029-2033 8,515,000 1,127,733 9,642,733 1,310,000 622,035 1,932,035
2034-2038 1,690,000 230,998 1,920,998
27,000,000 20.276.603 47,276,603 15,645,000 9,208,687 24,853,687
45
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Long-Term Debt, continued
Revenue Bonds and Notes, continued
Business-type Activities
Year Ending Notes Payable
December 31, Principal Interest Total
2009 184,689 85,646 270,335
2010 188,711 81,605 270,316
2011 192,825 77,472 270,297
2012 197,033 73,243 270,276
2013 201,352 68,918 270,270
2014-2018 757,308 285,531 1,042,839
2019-2023 855,321 186,169 1,041,490
2024-2028 967,718 73,774 1,041,492
3,544,957 932,358 4,477,315
Capital Leases
Year Ending Governmental Activities
December 31, Principal - Interest Total
2009 17,790 1,589 19,379
2010 18,480 899 19,379
2011 9,507 183 9,690
45,777 2,671 48,448
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, 2008 as
follows:
Harbor bond reserves 859,348
Electric bond reserves 677,911
The Harbor revenue bonds also require that rates be maintained at a level that will produce net
revenues after certain adjustments, equal to 1.2 times the amount required each year to pay the
principal and interest. The bond coverage calculation is as follows:
46
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Revenue Bond Requirements, continued
Total revenues, excluding grants 2,896,828
Total operating expenses excluding depreciation
and payment in lieu of taxes 1,506,685
Available for debt service 1,390.143
Debt service payments:
Principal 325,000
Interest 374,203
Total debt service payments 699,203
Debt coverage 1.99
The Electric revenue bonds require that rates be maintained at a level that will produce net
revenues after certain adjustments, equal to 1.3 times the amount required each year to pay the
principal and interest. The bond coverage calculation is as follows:
Total revenues, excluding grants 8,920,730
Total operating expenses, excluding depreciation
and payment in lieu of taxes 6,396,886
Available for debt service 2,523,844
Debt service payments:
Principal 205,000
Interest 175,825
Total debt service payments 380,825
Debt coverage 6.63
8) Capitalized Lease
The City has entered into a lease agreement as lessee for financing the acquisition of fire
equipment. This lease agreement qualifies as a capital lease for accounting purposes (title
transfers at the end of the lease term) and, therefore, has been recorded at the present value of the
future minimum lease payments. The following is a summary of the assets acquired with the
capital lease that have an outstanding balance as of December 31, 2008:
General
Fund
Machinery and equipment 117,800
Less accumulated depreciation 67,315)
Carrying value 50,485
47
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Capitalized Leases, continued
The following is a schedule of future minimum lease payments under the capital lease and the
present value of the net minimum lease payments at December 31, 2008:
Year Ending General
December 31,Fund
2009 19,379
2010 19,379
2011 9,690
Total minimum lease payments 48,448
Less interest portion 2,671)
Present value of future minimum
lease payments 45,777
Less current portion 17,790)
Long-term portion 27,987
9) Defined Benefit Pension Plan
The City participates in the Public Employees' Retirement System (PERS). PERS was originally
established as an agent multiple employer plan, but was converted by legislation to a cost-sharing
plan, effective July 1, 2008. Under the cost-sharing arrangement, the State of Alaska Division of
Retirement and Benefits will no longer track individual employer assets and liabilities. Rather,
all plan costs and past service liabilities will be shared among all participating employers.
The Plan covers eligible State and local government employees and was established and is
administered by the State of Alaska. It provides 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
48
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Defined Benefit Pension Plan,continued
Funding Policy
Regular employees are required to contribute 6.75% of their annual covered salary (2.09% for
pension and 4.66% for healthcare). Police and firefighters are required to contribute 7.5% of
their annual covered salary (2.35% for pension and 5.15 for healthcare). The funding policy
provides for periodic employer contributions based on actuarially determined rates that,
expressed as a percentage of annual covered payroll, are sufficient to accumulate sufficient assets
to pay both pension and postemployment healthcare benefits when due.
Under the newly adopted cost sharing arrangement, the employer contribution rate is statutorily
capped at 22%. State legislation currently provides that the State of Alaska will contribute any
amount over 22% such that the total contribution equals the Alaska Retirement Management
Board adopted rate. This rate will be consistent with the actuarially determined rate.
The City's contribution rates for 2008 are as follows:
January to June July to December
Agent Multi- Cost-Sharing
Employer Plan Plan
Employer Actuarial Employer Actuarial
Rate Rate Rate Rate
Pension 6.05% 7.26% 6.82% 10.91%
Postemployment healthcare 15.95%19.15% 15.18% 24.31%
Total contribution rate 22.00% 26.41% 22.00% 35.22%
The employer contribution rate for the fiscal year ended June 30, 2008 was established in the
June 30, 2005 actuarial valuation using the projected unit credit actuarial funding method.
Effective with the June 30, 2006 valuation, which established the fiscal year end June 30, 2009
rates, the Entry Age Actuarial Cost Method has been employed. Under both methods, the rates
were determined as a level percentage of payroll. Unfunded accrued liabilities and future.
gains/losses are amortized over a fixed 25 year period as a level percentage of pay.
The projection of future benefits for an ongoing plan involves estimates of the value of reported
amounts and assumptions about the probability of occurrence of events far into the future.
Examples include assumptions about future employment, mortality, and the healthcare cost trend.
Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future.
49
CITY OF SEWARD
Notes to Basic Financial Statements,continued
Defined Benefit Pension Plan,continued
Funding Policy, continued
Projections of benefits are based on the substantive plan (the plan as understood by the employer
and plan members) and include the types of benefits in force at the valuation date and the pattern
of sharing benefit costs between the City and the plan members at that point. Actuarial
calculations reflect a long-term perspective and employ methods and assumptions that are
designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial values ofY
assets.
Projected benefits for financial reporting purposes do not incorporate any potential effects of
legal or contractual funding limitations.
The significant actuarial information and. assumptions used in the most recent valuation of the
plan follow:
Valuation Date June 30, 2007
Actuarial Cost Method Entry age normal, level percentage of pay
for pension; level dollar for healthcare
Amortization Method Level dollar, closed
Equivalent Single Amortization Period 21 years
Asset Valuation Method 5-year smoothed market
Investment rate of return 8.25% for pension;4.5%for healthcare
Projected salary increases Peace officer/firefighter: Merit: 2.5%per year for first 6
years of employment, 0.5% thereafter;Productivity: 0.5%
per year; Others: Merit: 5.5%per year grading down to
1.5% after 5 years; for more than 6 years of service, 1.0%
grading down to 0%.Productivity: 0.5%per year
Inflation 3.5%
The State of Alaska Public Employees' Retirement System retiree healthcare benefits are
partially funded. The PERS plan uses the percentage of ARC methodology in the development
of the investment rate of return.
Annual Pension and Postemployment Healthcare Cost—through June 30, 2008
Through June 30, 2008, the State of Alaska adopted contribution rates for each employer at an
amount no less than 14.48% and no more than 22%. The Legislature then approved State funding
in the form of an on-behalf payment for those amounts between the established employer rate and
the actuarially determined rate. This on-behalf payment was transferred to the Alaska Division of
Retirement and Benefits at July 1, but was allocated to the individual employer accounts on a
prorata basis with each payroll reporting period. In accordance with GASB Statement Number
24, the City has recorded $96,325 in these financial statements as PERS relief and related PERS
expenditures/expenses. In addition, because the City is legally obligated for these amounts under
the plan, the on-behalf payment is included in employer contributions for the purpose of
calculating the ending net pension obligation and other post-employment benefit (OPEB)
obligation as noted below.
50
CITY OF SEWARD
Notes to Basic Financial Statements,continued
Defined Benefit Pension Plan,continued
Annual Pension and Postemployment Healthcare Cost-through June 30, 2008, continued
Because of the conversion to cost-sharing, the net pension obligation and net OPEB obligation
will not be paid. As a result, these amounts have been written off as of July 1, 2008.
Through June 30, 2008, the City's annual pension and OPEB costs were as follows:
Pension OPEB Total
Annual required contribution 137,099 361,444 498,543
Interest on net pension/OPEB obligation 14,631 38,571 53,202
Adjustment to annual required contribution 11,040) (29,085) (40,125)
Annual pension cost 140,690 370,930 511,620
Contributions made 140,690) (370,930) (511,620)
Increase in net pension/OPEB obligation
Net pension/OPEB obligation, beginning of year 397,254 247,615 644,869
Net pension/OPEB July 1 write off, special item $ 397,254 247,615 644,869
Trend information for PERS (prior to conversion to cost sharing) follows:
Annual Percentage Net
Period Pension Actual of APC Pension
Ending Cost (APC) Contributions Contributed Obligation
Pension 12/31/06 $ 544,397 493,060 91% 323,952
12/31/07 435,067 361,765 83% 397,254
7/1/08 140,690 140,690 100%
Period OPEB Actual of OPEB OPEB
Ending Cost Contributions Contributed Obligation
Postemployment
healthcare 12/31/06 $ 374,253 341,877 91% 195,715
12/31/07 566,738 514,838 91% 247,615
7/1/08 370,930 370,930 100%
Annual Pension and Postemployment Healthcare Cost-July 1 -December 31
Effective July 1, 2008, the Plan has been converted to a cost-sharing arrangement. The
v wagestatutorilyestablishedrateis22% of covered payroll, subject to a ag floor. In addition, the
State contributed approximately 13.22% of covered payroll to the Plan. In accordance with the
provisions of GASB Statement Number 24, the City has recorded the State contribution in the
amount of $278,688 as a PERS on-behalf payment. However, because the City is not legally
responsible for the payments, these amounts are excluded from pension and OPEB cost as
described here.
51
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Defined Benefit Pension Plan, continued
Annual Pension and Postemployment Healthcare Cost—July 1 —December 31, continued
Six Total
Months Annual Annual Benefit City of
End Pension OPEB Cost Contri- TBC
December 31 Cost Cost TBC) butions Contributed
2008 126,016 $ 280,488 $ 406,504 $ 406,504 100%
Funding Status and Funding Progress of the Cost-Sharing Plan
As of June 30, 2007, the pension plan is 77.8% funded and the post-employment health plan is
28.5% funded. The following schedule of funding progress presents multiyear trend information
about whether the actuarial value of plan assets is increasing or decreasing over time relative to
the actuarial accrued liabilities for benefits.
Actuarial Actuarial Unfunded
Value of Accrued Unfunded Covered Liability as
Actuarial Assets Liability Liability Payroll Percentage
Valuation in in in Funded in of Covered
Date thousands) thousands) thousands) Ratio thousands) Payroll
June 30, 2007:
Pension 6,739,004 $ 8,662,324 $ 1,923,320 77.8% $ 1,605,819 119.8%
Postemployment
healthcare 3,161,956 11,108,553 7,946,597 28.5% 1,605,819 494.9%
June 30, 2006:
Pension 6,331,065 8,094,043 1,762,978 78.2% 1,590,693 110.8%
Postemployment
healthcare 2,709,843 11,455,015 8,745,172 23.7% 1,590,693 549.8%
10) Tier IV Defined Contribution Pension Plan
The State of Alaska Legislature approved Senate Bill 141 to create the Public Employees'
Retirement System (PERS) Tier IV for employees hired after July 1, 2006 or for employees
converting from the PERS Tier I, II or III defined benefit plans. The Plan is administered by the
State of Alaska, Department of Administration Commissioner, 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. Employees are required to
contribute 8.0% of their annual covered salary and the City is required to make the following
contributions:
52
CITY OF SEWARD
Notes to Basic Financial Statements, continued
Tier IV Defined Contribution Pension Plan, continued
PERS
Tier IV
Individual account 5.00%
Health reimbursement arrangement(HRA) * 3.00
Retiree medical plan 1.75
Occupational death and disability benefits 30
10.05 %
Health Reimbursement Arrangement — AS 39.30.370 requires that the employer contribute "an
amount equal to three percent of the employer's average annual employee compensation." For
actual remittance, this amount is calculated as a flat rate for each full time or part-time employee
per pay period.
Under the newly adopted cost-sharing arrangement for the PERS defined benefit plan (Tiers I —
III), the state statute employer contribution rate of 22%, includes Tier IV employees. In addition
to the 10.05% above, the City contributed 11.95% on Tier IV employee payroll. This amount
was applied to the obligation of the PERS defined benefit plan.
The City and employee contributions to PERS including the HRA contribution for the year ended
December 31, 2008 were $97,268 and $35,343, respectively.
11) 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 $10.40 per compensable hour per the terms of a negotiated agreement
expiring December 31, 2008. The City's contribution rate for permanent employees is $800 per
employee per month per the terms of a negotiated agreement expiring June 30, 2010. The total
City contribution for the year ended December 31, 2008 was $89,252. Employees are not
required to contribute.
12) Deferred Compensation Plan
The City offers its employees a 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.
53
CITY OF SEWARD
Notes to Basic Financial Statements, continued
13) 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, 2008.
The JIA 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.
54
CITY OF SEWARD
Notes to Basic Financial Statements, continued
14) Health Care Operating Agreements
The City has entered into an operating agreement with Providence Health and Services. Under
the terms of the agreement the City will pay Providence Health and Services an annual
management fee in exchange for Providence's overall management of the Providence Seward
Medical Center and the Wesley Rehabilitation and Care Center.
15) 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.
In 2006 the City was named as a defendant in a lawsuit alleging discharge of pollutants into
Resurrection Bay in violation of the federal Clean Water Act. In March 2008, the court issued an
Order of Summary Judgment finding that the City must obtain a permit for storm water
discharges. The City is not obligated to pay civil penalties, and both parties to the suit are to bear
their own legal fees and costs. Following this order, the plaintiff filed an appeal with the Ninth
Circuit Court of Appeals requesting attorney fees and costs of approximately$100,000. Briefing
on the appeal is completed and the parties await further notice from the Ninth Circuit Court of
Appeals.
I 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 Depaitment 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.
55
CITY OF SEWARD
Notes to Basic Financial Statements, continued
16) Fund Deficits
The Flood Mitigation Capital Projects Fund had a deficit in fund balance of$25,019 at December
31, 2008. This fund incurred costs related to the 2006 flood disaster. The deficit will be
eliminated in the future with transfers from other funds.
56
r-,
SUPPLEMENTARY INFORMATION
57
Exhibit E-1
CITY OF SEWARD
Nonmajor Governmental Funds
Combining Balance Sheet
December 31, 2008
Special Debt Capital
Assets Revenue Service Projects Total
Cash and investments 402,201 1,063,260 209,133 1,674,594
Grants receivable 70,976 123,857 194,833
Total assets 473,177 1,063,260 332,990 1,869,427
Liabilities and Fund Balances
Liabilities:
Accounts payable 40,157 45,854 86,011
Due to other funds 23,694 103,022 126,716
Total liabilities 63,851 148,876 212,727
Fund balances:
Reserved for debt service 1,063,260 1,063,260
Unreserved:
Designated for capital improvements 209,133 209,133
Undesignated(deficit) 409,326 25,019) 384,307
Total fund balances 409,326 1,063,260 184,114 1,656,700
Total liabilities and fund balances 473,177 1,063,260 332,990 1,869,427
58
Exhibit E-2
CITY OF SEWARD
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances (Deficit)
Year Ended December 31, 2008
Special Debt Capital
Revenue Service Projects Total
Revenues:
Intergovernmental 50,293 369,571 419,864
Investment income 35,140 35,140
Total revenues 50,293 35,140 369,571 455,004
Expenditures:
General government 48,720 160,000 208,720
Public safety 344,905 344,905
Public works 11,565 5,647 17,212
Parks and recreation 2,477 43,073 45,550
Library 1,283 1,283
Principal payments 640,000 640,000
Interest and other costs 123,788 123,788
Other services and charges 42,249 42,249
Total expenditures 64,045 806,037 553,625 1,423,707
Excess of revenues over(under)
expenditures 13,752) (770,897) (184,054) (968,703)
Other financing sources (uses):
Transfers in 457,727 1,023,383 300,000 1,781,110
Transfers out 134,704) (206,151) (340,855)
Net other financing sources (uses) 457,727 888,679 93,849 1,440,255
Net change in fund balances 443,975 117,782 90,205)471,552
Beginning fund balances (deficit) 34,649)945,478 274,319 1,185,148
Ending fund balances 409,326 1,063,260 184,114 1,656,700
59
Ex h ibit F-1
CITY OF SEWARD
Nonmajor Enterprise Funds
Combining Statement of Net Assets
December 31, 2008
Assets Wastewater Parking Total
Current assets:
Cash and investments 356,104 430,786 786,890
Prepaid expenses 4,187 4,187
Receivables:
Accounts 74,250 74,250
Less allowance for doubtful accounts 3,341) 3,341)
Total current assets 427,013 434,973 861,986
Noncurrent assets:
Restricted cash and investments 207,560 207,560
Note receivable -PSMC 239,600 239,600
Capital assets, net of accumulated depreciation 5,525,278 52,037 5,577,315
Total noncurrent assets 5,972,438 52,037 6,024,475
Total assets 6,399,451 487,010 6,886,461
Liabilities and Net Assets
Current liabilities:
Accounts payable 8,160 579 8,739
Accrued payroll and related liabilities 5,231 5,231
Accrued interest 699 699
Current portion:
Accrued annual leave 3,526 3,526
Notes payable 57,571 57,571
Total current liabilities 75,187 579 75,766
Noncurrent liabilities, net of current portion:
Accrued annual leave 16,421 16,421
Notes payable 240,191 240,191
Total noncurrent liabilities 256,612 256,612 j
Total liabilities 331,799 579 332,378
Net assets:
Invested in capital assets, net of related debt 5,227,516 52,037 5,279,553
Unrestricted 840,136 434,394 1,274,530
Total net assets 6,067,652 486,431 6,554,083
Total liabilities and net assets 6,399,451 487,010 6,886,461
60
Exhibit F-2
CITY OF SEWARD
Nonmaj or Enterprise Funds
Combining Statement of Revenues, Expenses and Change in Net Assets
Year Ended December 31, 2008
Wastewater Parking Total
Operating revenues - charges for services 801,095 240,339 1,041,434
Operating expenses:
Salaries and benefits 236,490 88,670 325,160
Services and supplies 260,798 21,383 282,181
Administration 126,851 13,793 140,644
Depreciation 275,745 6,208 281,953
Total operating expenses 899,884 130,054 1,029,938
Earnings (loss) from operations 98,789)110,285 11,496
Nonoperating revenues (expenses):
Intergovernmental 11,980 11 11,991
Investment income 26,576 16,513 43,089
Interest expense 5,054) 5,054)
Net nonoperating revenues (expenses) 33,502 16,524 50,026
Earnings (loss)before contributions, transfers
and special item 65,287) 126,809 61,522
Capital contributions 239,600 239,600
Transfers out 69,087)19,227)88,314)
Special item - write-off NPO/OPEB 19,537 19,537
Change in net assets 124,763 107,582 232,345
Beginning net assets 5,942,889 378,849 6,321,738
Ending net assets 6,067,652 486,431 6,554,083
61
Exhibit F-3
CITY OF SEWARD
Nonmajor Enterprise Funds
Combining Statement of Cash Flows
Year Ended December 31, 2008
Wastewater Parking Total
Cash flows from operating activities:
Receipts from customers and users 797,928 240,339 1,038,267
Payments to suppliers 260,852)30,024) (290,876)
Payments to employees 221,922)88,659) (310,581)
Payments for interfund services used 126,851)13,793) (140,644)
Net cash flows from operating activities 188,303 107,863 296,166
Cash flows from noncapital financing activities -
transfers out 69,087)19,227) 88,314)
Cash flows from c ap ital and related financing activities:
Principal payments on long-term debt 56,740) 56,740)
Interest payments on long-term debt 5,316) 5,316)
Acquisition of property,plant and equipment 244,765) 244,765)
Net cash flows from capital and
related financing activities 306,821) 306,821)
Cash flows from investing activities -
investment income received 26,576 16,513 43,089
3
Net increase (decrease) in cash and investments 161,029)105,149 55,880)
Beginning cash and investments 724,693 325,637 1,050,330
Ending cash and investments 563,664 430,786 994,450
Reconciliation of cash and investments
to statement of net assets:
Current assets 356,104 430,786 786,890
Restricted assets 207,560 207,560
563,664 430,786 994,450
62
Exhibit F-3, continued
CITY OF SEWARD
Nonmajor Enterprise Funds
Statement of Cash Flows, continued
Wastewater Parking Total
Reconciliation of earnings (loss) from operations to net cash
provided (used)by operating activities:
Earnings (loss) from operations 98,789) 110,285 11,496
Adjustments to reconcile earnings (loss) from operations
to net cash flows from operating activities:
Depreciation 275,745 6,208 281,953
Noncash expense - PERS relief 11,980 11 11,991
Increase in allowance for doubtful accounts 6 6
Increase in assets:
Accounts receivable 148) 148)
Prepaid expenses 4,187)4,187)
Increase (decrease) in liabilities:
Accounts payable 54) 4,454)4,508)
Accrued payroll and related liabilities 1,595 1,595
Accrued annual leave 993 993
Customer deposits 3,025) 3,025)
Net cash flows from operating activities 188,303 107,863 296,166
63
Exhibit G-1
CITY OF SEWARD
Internal Service Funds
Combining Statement of Net Assets
December 31, 2008
r
Compensated
Motor Annual
Assets Pool Leave Total
Current assets:
Cash and investments 1,095,688 376,605 1,472,293
Receivables:
Accrued interest 69,513 69,513
Interfund loans 58,284 58,284
Prepaid expenses 7,896 7,896
Total current assets 1,231,381 376,605 1,607,986
Noncurrent assets:
Interfund loans, net of current portion 1,256,957 1,256,957
Capital assets, net of accumulated depreciation 1,161,440 1,161,440
Total noncurrent assets 2,418,397 2,418,397
Total assets 3,649,778 376,605 4,026,383
Liabilities and Net Assets
Current liabilities - current portion of accrued annual leave 99,274 99,274
Noncurrent liabilities, net of current portion -
Accrued annual leave 277,331 277,331
Total liabilities 376,605 376,605
Net assets:
Invested in capital assets, net of related debt 1,161,440 1,161,440
Unrestricted 2,488,338 2,488,338
Total net assets 3,649,778 3,649,778
Total liabilities and net assets 3,649,778 376,605 4,026,383
64
Exhibit G-2
CITY OF SEWARD
Internal Service Funds
Combining Statement of Revenues, Expenses and Change in Net Assets
Year Ended December 31, 2008
Compensated
Motor Annual
Pool Leave Total
Operating revenues -
vehicle rental and interfund charges 512,193 329,810 842,003
Operating expenses:
Salaries and benefits 329,810 329,810
Supplies 4,110 4,110
Depreciation 212,694 212,694
Total operating expenses 216,804 329,810 546,614
Earnings from operations 295,389 295,389
Nonoperating revenues (expenses):
Gain on disposition of capital assets 20 20
Investment income 111,821 111,821
Interest expense 205) 205)
Net nonoperating revenues (expenses) 111,636 111,636..
Change in net assets 407,025 407,025
Beginning net assets 3,242,753 3,242,753
Ending net assets 3,649,778 3,649,778
65
Exhibit G-3
CITY OF SEWARD
Internal Service Funds
Combining Statement of Cash Flows
Year Ended December 31, 2008
Compensated
Motor Annual
Pool Leave To tal
Cash flows from operating activities:
r
Receipts from interfund charges 512,193 329,810 842,003
Payments to suppliers 12,006) 12,006)
Payments to employees 281,481) (281,481)
Net cash flows from operating activities 500,187 48,329 548,516
Cash flows from capital and related financing activities:
Principal payments on long-term debt 46,281) 46,281)
Interest payments on long-term debt 1,591) 1,591)
Acquisition of equipment and vehicles 217,854) 217,854)
Proceeds from sale of capital assets 20 20
Net cash flows from capital and
related financing activities 265,706) 265,706)
Cash flows from investing activities:
Interfund loan receipts 55,336 55,336
Investment income received 114,771 114,771
Net cash flows from investing activities 170,107 170,107
Net increase in cash and investments 404,588 48,329 452,917
Beginning cash and investments 691,100 328,276 1,019,376
Ending cash and investments 1,095,688 376,605 1,472,293
Reconciliation of earnings from operations to net cash
provided (used)by operating activities:
Earnings from operations 295,389 295,389
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 212,694 212,694
Increase in assets -prepaid expenses 7,896) 7,896)
Increase in liabilities - accrued annual leave 48,329 48,329
Net cash flows from operating activities - 500,187 48,329 548,516
I
66
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, etc.
Expenditures are recorded first by function then by activity and object of expenditures.
67
I
Exhibit H-1
CITY OF SEWARD
General Fund
Balance Sheet
December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Assets
Cash and investments 4,852,912 4,722,889
Receivables:
Taxes:
Personal property 4,171 17,956
Less allowance for doubtful accounts 133) 790)
Net personal property 4,038 17,166
Motor vehicle
0 4,198 5,656
Hotel/motel room 10,878 16,599
Real property 21,652 19,890
Sales 491,382 447,155
Net taxes 532,148 506,466
Accounts 80,818 80,914
Less allowance for doubtful accounts 2,001) (2,040)
Net accounts 78,817 78,874
Grants and shared revenues 690 71
Accrued interest 206,499 148,482
Note receivable -PSMC 192,000
Total receivables 1,010,154 733,893
Prepaid items 491,715 443,260
Inventory 9,875 15,600
Due from other funds 126,716 420,701
Restricted cash and investments -bond reserve 1,973,360
Total assets 8,464,732 6,336,343
68
Exhibit H-1, continued
CITY OF SEWARD
General Fund
Balance Sheet, continued
2008 2007
it
Liabilities and Fund Balance
Liabilities:
Accounts payable 427,252 405,525
Accrued payroll and related liabilities 118,998 81,532
Accrued liabilities 128,633 96,782
Funds held in trust 23,305 9,140
Deferred revenue 58,145 45,494
Accrued interest 81,078 83,753
Interfund loans payable 3,517,694 1,595,287
Total liabilities 4,355,105 2,317,513
Fund balance:
Reserved:
Inventory and prepaids 501,590 458,860
Note receivable- PSMC 192,000
Unreserved:
Designated:
Working capital 1,500,000 1,500,000
Insurance 126,418 126,418
Hospital line of credit 500,000 500,000
Undesignated 1,289,619 1,433,552
Total fund balance 4,109,627 4,018,830
Total liabilities and fund balance 8,464,732 6,336,343
69
Exhibit H-2
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and
Change in Fund Balance -Budget and Actual
Year Ended December 31, 2008 j
With Comparative Amounts for 2007)
2008 2007
Variance
Positive
Budget Actual (Negative) Actual
Revenues:
Taxes:
Sales 4,127,907 4,137,758 9,851 4,068,600
Property • 933,538 953,957 20,419 873,513
Hotel/motel room 538,708 362,004 (176,704) 343,162
Payments in lieu of taxes 30,000 80,126 50,126 76,609
Penalty and interest 2,000 1,236 764) 1,381
Total taxes 5,632,153 5,535,081 (97,072) 5,363,265
Licenses and permits: A
Building permits 70,000 35,777 (34,223) 31,206
Taxi permits 1,200 1,400 200 1,060
Department of Motor Vehicles commissions 93,000 68,765 (24,235)90,727
Animal control licenses 750 785 35 620
Business licenses 21,000 18,960 2,040)15,945
Miscellaneous 5,000 4,269 731) 5,096
Total licenses and permits 190,950 129,956 (60,994) 144,654
Intergovernmental:
Jail contract 429,000 449,472 20,472 449,472
I
Dispatch contracts 98,500 96,980 1,520) 100,240
Raw fish tax 372,527 403,746 31,219 316,704
Shared fisheries and landing tax 4,533
Liquor tax 20,000 16,600 3,400)19,150
Library grants 3,500 23,608 20,108 13,702
Fire department grants 7,191 7,191 360
Energy assistance 36,181 36,181 198,412
Revenue sharing 233,135 233,135
PERS relief 202,755 286,240 83,485 84,539
PERS rebate 378,969 378,969
Other grants 3,500 3,052 448) 2,146
Total intergovernmental 1,778,067 1,935,174 157,107 1,189,258
I
70 1
I
Exhibit H-2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
2008 2007
Variance
Positive
Budget Actual (Negative) Actual
Revenues, continued:
Charges for services:
Administrative 1,568,803 1,825,071 256,268 1,656,773
Rents and leases 84,793 130,430 45,637 71,420
Copying charges 26,000 15,176 10,824) 18,385
Work orders 20,000 20,000) 39,520
Recreation 735,605 627,038 (108,567) 581,933
L ibrary 8,200 12,800 4,600 7,736
Total charges for services 2,443,401 2,610,515 167,114 2,375,767
Fines and bails 20,000 18,209 1,791) 17,611
Investment income 252,000 226,854 25,146) 285,066
Miscellaneous:
Sale of land, equipment and gravel 11,750 54,259 42,509 6,528
Refuse contract 65,000 62,574 2,426) 65,708
Other 20,400 24,769 4,369 25,209
Total miscellaneous 97,150 141,602 44,452 97,445
Total revenues 10,413,721 10,597,391 183,670 9,473,066
Expenditures:
General government:
Mayor and council:
Salaries 60,689 40,589 20,100 43,505
Employee benefits 25,034 19,056 5,978 18,750
Audit 57,000 57,000 45,350
Legal 135,000 132,918 2,082 183,100
Purchased services 4,600 3,410 1,190 3,259
Supplies and maintenance 22,500 11,571 10,929 14,236
Legislative representation 140,000 128,647 11,353 129,174
General and administrative 100,150 105,942 5,792) 72,611
Capital outlay 2,733
Total mayor and council 544,973 499,133 45,840 512,718
71
Exhibit H-2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
2008 2007
Variance
Positive
Budget Actual Negative) Actual
Expenditures, continued:
General government, continued:
City manager:
Salaries 209,425 208,557 868 210,825
Employee benefits 101,732 107,898 6,166) - 80,741
Purchased services 28,072 26,751 1,321 42,985
Supplies and maintenance 11,980 12,494 514) 8,838
General and administrative 52,817 51,011 1,806 38,906
Total city manager 404,026 406,711 2,685) 382,295
City clerk:
Salaries 128,207 119,912 8,295 116,480
Employee benefits 77,732 81,469 3,737) 67,905
Purchased services 11,250 11,146 104 8,221
Supplies and maintenance 386 386)
General and administrative 17,550 14,413 3,137 7,763
Total city clerk 234,739 227,326 7,413 200,369
Management information systems:
Salaries 102,982 109,555 6,573) 103,711
Employee benefits 57,824 60,355 2,531) 51,340
Purchased services 11,200 9,194. 2,006 10,709
Supplies and maintenance 24,000 32,399 8,399)43,499
General and administrative 12,900 10,214 2,686 7,271
Capital outlay 5,849
Total management information
systems 208,906 221,717 12,811) 222,379
Finance:
Salaries 349,889 322,415 27,474 332,387
Employee benefits 194,283 197,208 2,925) 184,179
Purchased services 23,500 26,805 3,305) 24,279
Supplies and maintenance 48,640 61,469 12,829)41,506
General and administrative 22,835 17,536 5,299. 20,719
Capital outlay 6,750 8,853 2,103) 5,995
Total finance 645,897 634,286 11,611 609,065
72
Exhibit H-2. continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
2008 2007
Variance
Positive
Budget Actual Negative) Actual
Expenditures, continued:
General government, continued:
Community development:
Salaries 178,282 143,219 35,063 80,883
Employee benefits 81,496 74,172 7,324 44,632
Purchased services 47,242 88,932 41,690)25,484
Supplies and maintenance 7,520 8,495 975) 3,198
General and administrative 6,600 7,361 761) 4,089
Capital outlay 2,649 2,649)
Total community development 321,140 324,828 3,688) 158,286
General services:
Salaries 2,603 2,603)
Employee benefits 223 223)
Purchased services 46,600 69,605 23,005) 16,569
Supplies and maintenance 13,100 46,676 33,576) 13,663
General and administrative 279,300 54,315 224,985 78,224
Capital outlay 15,000 15,000 9,498
Total general services 354,000 173,422 _ 180,578 117,954
Contributions to organizations:
Senior Citizens 12,000 12,000 10,000
Museum 4,800 4,800 4,000
Chamber of Commerce 155,285 155,285 142,000
Providence Seward Medical Center 500,000 500,000
Nordic Ski Club 1,000 1,000
Other 250 250) 10,000
Total contributions to organizations 673,085 673,335 250) 166,000
Total general government 3,386,766 3,160,758 226,008 2,369,066
Public safety:
Police:
Salaries 907,244 818,420 88,824 779,651
Employee benefits 468,337 483,883 15,546) 427,419
Purchased services 105,200 113,681 8,481) 113,029
Supplies and maintenance 56,000 57,605 1,605) 50,334
73
i
Exhibit H-2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
2008 2007
Variance
Positive
Budget Actual (Negative) Actual
Expenditures, continued:
Public safety, continued:
Police, continued:
General and administrative 66,480 62,228 4,252 53,214
Capital outlay 5,000 19,106 14,106) 6,533
Total police 1,608,261 1,554,923 53,338 1,430,180
Jail:
Salaries 247,014 223,439 23,575 209,270
Employee benefits 152,776 155,933 3,157) 127,322
Purchased services 29,000 54,176 25,176) 27,849
Supplies and maintenance 13,500 9,841 3,659 8,923
General and administrative 97,800 90,196 7,604 96,931
Capital outlay 2,725
Total jail 540,090 533,585 6,505 473,020
Animal control:
Purchased services 71,280 77,339 6,059) 76,586
Supplies and maintenance 9,400 342 9,058 • 1,164
Total animal control 80,680 77,681 2,999 77,750
Fire:
Salaries 161,434 152,360 9,074 145,676
Employee benefits 94,888 103,798 8,910) 84,186
Purchased services 181,040 171,273 9,767 170,865
Supplies and maintenance 46,960 42,455 4,505 51,140
General and administrative 23,100 17,332 5,768 13,139
Capital outlay 88,770 64,179 24,591 1,376
Total fire 596,192 551,397 44,795 466,382
Volunteer training:
Employee benefits 6,140 6,709 569)
Purchased services 5,000 4,513 487 7,514
Supplies and maintenance 29,338 19,033 10,305 5,861
General and administrative 29,125 22,575 6,550 23,190
Capital outlay 8,805
Total volunteer training 69,603 52,830 16,773 45,370
74
Exhibit H-2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
2008 2007
Variance
Positive
Budget Actual (Negative) Actual
Expenditures, continued:
Public safety, continued:
Emergency preparedness:
Purchased services 250 814 564) 426
Supplies and maintenance 4,800 857 3,943 1,600
General and administrative 4,500 3,120 1,380 5,168
Capital outlay 3,335 3,335 1,000
Total emergency preparedness 12,885 4,791 8,094 8,194
Engineer and utility manager:
Salaries 20,608 33,149 12,541) 77,438
Employee benefits 15,619 18,865 3,246) 41,230
Purchased services 49,100 29,303 19,797 52,053
Supplies and maintenance 1,743 1,743) 3,096
General and administrative 800 2,870 2,070) 8,127
Total engineer and utility manager 86,127 85,930 197 181,944
Building inspector:
Salaries 70,550 63,267 7,283 55,970
Employee benefits 39,901 38,219 1,682 29,645
Purchased services 18,100 18,288 188) 13,821
Supplies and maintenance 7,000 4,761 2,239 1,213
General and administrative 8,200 2,856 5,344 3,590
Total building inspector 143,751 127,391 16,360 104,239
Total public safety 3,137,589 2,988,528 149,061 2,787,079
Public works:
Roads and streets:
Salaries 305,485 265,212 40,273 234,778
Employee benefits 147,571 149,715 2,144) 118,179
Purchased services 377,000 393,479 16,479) 327,705
Supplies and maintenance 263,900 273,566 9,666) 197,975
General and administrative 15,900 7,544 8,356 4,208
Total roads and streets 1,109,856 1,089,516 20,340 882,845
75
Exhibit H-2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
2008 2007
Variance
Positive
Budget Actual Negative) Actual
Expenditures, continued:
Public works, continued:
City shop:
Salaries 73,198 83,553 10,355) 154,052
Employee benefits 50,199 60,008 9,809) 92,804
Purchased services 66,250 80,367 14,117) 73,983
Supplies and maintenance 48,500 56,738 8,238)49,713
General and administrative 14,000 10,052 3,948 14,186
Capital outlay 10,000 5,279 4,721 8,575
Total city shop 262,147 295,997 33,850) 393,313
Municipal building:
Salaries 79,897 70,701 9,196 70,421
Employee benefits 55,959 60,539 4,580) 51,202
1
Purchased services 109,900 91,421 18,479 94,019
Supplies and maintenance 36,200 36,609 409)32,156
General and administrative 2,100 700 1,400 838
Capital outlay 25,000 25,000 16,291
Total municipal building 309,056 259,970 49,086 264,927
Total public works 1,681,059 1,645,483 35,576 1,541,085
Parks and recreation:
Salaries 555,386 528,665 26,721 490,635
Employee benefits 250,920 259,981 9,061) 223,496
Purchased services 244,100 231,178 12,922 213,774
Supplies and maintenance 103,530 106,858 3,328) 88,211
General and administrative 32,775 26,566 6,209 52,877
Capital outlay 5,000 5,000
Total parks and recreation 1,191,711 1,153,248 38,463 1,068,993 J
Library:
Salaries 171,489 155,707 15,782 144,149
Employee benefits 104,559 105,344 785) 88,748
Purchased services 43,999 41,302 2,697 38,925
Supplies and maintenance 53,553 38,178 15,375 44,541
General and administrative 23,100 23,899 799)22,859
Capital outlay 2,983 2,983)
Total library 396,700 367,413 29,287 339,222
76
Exhibit H-2, continued
CITY OF SEWARD
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
2008 2007
Variance
Positive
Budget Actual (Negative) Actual
Expenditures, continued:
Debt service:
Principal payments 149,951 98,999 50,952 249,977
Retirement benefits 443,989 470,573 26,584) 293,114
Interest and other costs 96,331 93,656 2,675 123,507
Total debt service 690,271 663,228 27,043 666,598
Total expenditures 10,484,096 9,978,658 505,438 8,772,043
Excess of revenues over
under) expenditures 70,375) 618,733 689,108 701,023
Other financing sources (uses):
Transfers in 1,903,576 1,395,678 (507,898) 1,441,438
Transfers out 2,124,208) (1,923,614) 200,594 (2,158,285)
Net other financing sources (uses)220,632) (527,936) (307,304) (716,847)
Net change in fund balance 291,007) 90,797 381,804 15,824)
Beginning fund balance 4,018,830 4,034,654
Ending fund balance 4,109,627 4,018,830
77
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78
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.
Computer Network— The City of Seward is converting its telephone and internet service
for all departments—to include the hospital and long-term care facilities which are owned
by the City — to Voice-over-Internet-Protocol in order to achieve communication cost
efficiencies. The project cost includes purchasing all VOIP equipment, including
telephones, cables, software, servers and other peripherals, as well as installation and
service costs.
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.
Natural Disasters — To account for the costs associated with the October 2006 flood
disaster.
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.
79
Exhibit I-1
CITY OF SEWARD
Special Revenue Funds
Combining Balance Sheet
December 31, 2008
Parks and Public
Recreation General Government Works Library
Two Historical
Lakes Computer Records Natural
Assets Park Network Preservation Disasters . Library Total
Cash and investments 2,520 396,681 3,000 402,201
Grants receivable 36,100 34,725 151 70,976
Total assets 2,520 396,681 36,100 34,725 3,151 473,177
Liabilities and Fund Balances
Liabilities:
Accounts payable 4,057 36,100 40,157
Due to other funds 23,694 23,694
Total liabilities 4,057 36,100 23,694 63,851
Fund balances - unreserved
and undesignated 2,520 392,624 11,031 3,151 409,326
Total liabilities and
fund balances 2,520 396,681 36,100 34,725 3,151 473,177
80
I
Exhibit I-2
CITY OF SEWARD
Special Revenue Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances (Deficits)
1 Year Ended December 31,2008
Parks and Public
Recreation General Government Works Library
Two Historical
Litter Lakes Computer Records Natural
Control Park Network Preservation Disasters Library Total
Revenues:
Federal grants 8,674 151 8,825
State grants 2,477 - 36,100 2,891 41,468
Total revenues 2,477 - 36,100 11,565 151 50,293
Expenditures:
Salaries and employee benefits 2,427 - 941 3,368
Contracted services 50 - 36,100 9,549 1,018 46,717
Supplies 12,620 265 12,885
Other services and charges 1,075 1,075
Total expenditures 2,477 - 12,620 36,100 11,565 1,283 64,045
Excess of revenues over
under) expenditures 12,620) 1,132) (13,752)
Other financing sources -
transfers in 405,244 48,200 4,283 457,727
Change in fund balances - 392,624 48,200 3,151 443,975
Beginning fund balances (deficits) - 2,520 37,169) - 34,649)
Ending fund balances 2,520 392,624 11,031 3,151 409,326
81
Exhibit J-1
CITY OF SEWARD
Debt Service Fund
Balance Sheet
December 31, 2008
With Comparative Amounts for 2007)
Assets 2008 2007
Cash and investments 1,063,260 945,478
Fund Balance
Fund balance- reserved for debt service 1,063,260 945,478
I
82
Exhibit J-2
CITY OF SEWARD
Debt Service Fund
Statement of Revenues, Expenditures
and Change in Fund Balance
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Revenues - investment income 35,140 22,649
Expenditures:
Principal payments 640,000 605,000
Interest and other costs 123,788 137,037
Other services and charges 42,249
Total expenditures 806,037 742,037
Excess of revenues over(under) expenditures 770,897) 719,388)
Other financing sources (uses):
Transfers in 1,023,383 1,003,079
Transfers out 134,704)
Net other financing sources (uses) 888,679 1,003,079
Net change in fund balance 117,782 283,691
Beginning fund balance 945,478 661,787
Ending fund balance 1,063,260 945,478
83
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84
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.
Flood Mitigation— To account for the costs of engineering and construction of a levee at
Japanese Creek,to mitigate flooding at Resurrection River.
Fire Department Equipment - To account for the costs of purchasing a fire department
breathing air compressor to refill fire air packs.
Police Equipment—To account for the grant activity related to purchasing police radios.
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.
City Hall Facilities and Equipment — To account for the costs of replacing aging lighting
ballasts and fixtures throughout the City Hall building, as well as replacing some areas of
worn carpet.
Streets and Sidewalks - To account for the costs of repairs to existing streets and
sidewalks.
85
Exhibit K-1
CITY OF SEWARD
Nonmajor Capital Project Funds
Combining Balance Sheet
December 31, 2008
Parks and Public
Recreation Public Safety General Government Works
Water Streets
Hoben Front Flood Police 4th and Capital and
Assets Park Pavilion Mitigation Equipment Adams Acquisition Sidewalks Total
Cash and investments 18,450 9,929 8,524 160,994 11,236 209,133
Grants receivable 84,025 39,832 123,857
Total assets 18,450 9,929 84,025 39,832 8,524 160,994 11,236 332,990
0
rn
Liabilities and Fund Balances
Liabilities:
Accounts payable 45,854 45,854
Due to other funds 63,190 39,832 103,022
Total liabilities 109,044 39,832 148,876
Fund balances -unreserved:
Designated for capital improvements 18,450 9,929 8,524 160,994 11,236 209,133
Deficit 25,019) 25,019)
Total fund balances (deficit)18,450 9,929 25,019) 8,524 160,994 11,236 184,114
Total liabilities and fund balances $ 18,450 9,929 84,025 39,832 8,524 160,994 11,236 332,990
1
Exhibit K-2
CITY OF SEWARD
Nonmajor Capital Project Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances (Deficit)
Year Ended December 31, 2008
Parks and Public
Recreation Public Safety General Government Works
City Hall
Water Fire Facilities Streets
Hoben Front Flood Department Police 4th and Capital and and
Park Pavilion Mitigation Equipment Equipment Adams Acquisition Equipment Sidewalks Total
Revenues - intergovernmental 24,666 -171,276 9,000 164,629 - 369,571
Expenditures:
Contracted services 164,356 9,000 160,000 333,356
Supplies 5,134 5,134
Land,buildings and equipment 36,805 - 164,629 - 201,434
Other services and charges 6,268 - 6,920 513 13,701
Total expenditures 43,073 -171,276 9,000 164,629 - 160,000 5,647 553,625
Excess of revenues over
under) expenditures 18,407) - 160,000) 5,647) (184,054)
Other financing sources (uses):
Transfers in 300,000 300,000
Transfers out 25,019) 181,132)206,151)
Net other financing sources (uses) - 25,019) 300,000 (181,132)93,849
Net change in fund balances 18,407) -25,019) 140,000 (181,132) (5,647) (90,205)
Beginning fund balances 36,857 9,929 8,524 20,994 181,132 16,883 274,319
Ending fund balances (deficit) 18,450 9,929 (25,019) 8,524 160,994 11,236 184,114
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88
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.
89
Exhibit L-1
CITY OF SEWARD
Electric Enterprise Fund
Statement of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
Assets 2008 2007
Current assets:
Cash and investments 3,103,126 2,424,833
Receivables:
Accounts 884,132 787,447
Assessments 4,435 5,534
Grants 50,610
Accrued interest 67,798 22,463
Interfund loan 14,383 13,666
Other 18,925 200,429
Less allowance for doubtful accounts 39,786) 35,435)
Net receivables 1,000,497 994,104
Prepaid expenses 9,950 9,950
Inventory 892,979 892,476
Total current assets 5,006,552 4,321,363
Restricted cash and investments:
Bond retirement 677,911 281,875
Capital projects 6,974,191. 2,030,305
Total restricted cash and investments 7,652,102 2,312,180
Assessments receivable, net of current portion 23,031 32,601
Note receivable-PSMC 115,000
Interfund loan,net of current portion 399,813 414,196
Property,plant and equipment:
Land and land rights 230,951 230,951
Buildings 281,474 281,474
Improvements other than buildings 37,831,391 37,368,527
Equipment 7,367,414 7,398,078
Total property,plant and equipment in service 45,711,230 45,279,030
Less accumulated depreciation 27,777,458) (26,394,395)
Net property,plant and equipment in service 17,933,772 18,884,635
Construction in progress 893,486 20,000
Total property,plant and equipment 18,827,258 18,904,635
Deferred charges-unamortized debt issuance costs 136,431 39,234
Total assets 32,160,187 26,024,209
90
Exhibit L-1, continued
CITY OF SEWARD
Electric Enterprise Fund
Statement of Net Assets, continued
Liabilities and Net Assets
2008 2007
Liabilities:
Current liabilities:
Accounts payable 690,322 429,663
Accrued payroll and related liabilities 19,095 16,614
Accrued interest 31,124 6,460
Current portion:
Bonds payable 305,000 205,000
Accrued annual leave 15,843 15,275
Customer deposits 215,987 206,882
Deferred revenue 89,232 49,810
Total current liabilities 1,366,603 929,704
Noncurrent liabilities, net of current portion:
Accrued annual leave 46,532 46,119
Bonds payable 7,375,000 1,680,000
Unamortized bond premium 83,613 57,814
Net pension/OPEB obligation 12,298
Total noncurrent liabilities 7,505,145 1,796,231
Total liabilities 8,871,748 2,725,935
Net assets:
Invested in capital assets, net of related debt 17,063,645 16,961,821
Unrestricted 6,224,794 6,336,453
Total net assets 23,288,439 23,298,274
Total liabilities and net assets 32,160,187 26,024,209
91
Exhibit L-2
CITY OF SEWARD
Electric Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Assets
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Operating revenues:
Residential 2,670,579 2,562,743
Small general service 1,365,748 1,364,789
Large general service 3,305,699 3,388,377
Industrial 800,877 642,252
Harbor power 196,318 159,679
Street and yard lights 66,060 63,124
Miscellaneous 159,899 247,142
Total operating revenues 8,565,180 8,428,106
Operating expenses:
Power 4,567,749 4,584,472
Distribution 318,498 3,629
Administration and general 2,189,721 2,063,354
Depreciation 1,391,915 1,342,861
Total operating expenses 8,467,883 7,994,316
Earnings from operations 97,297 433,790
Nonoperating revenues (expenses):
Intergovernmental 16,731 24,228
Investment income 355,550 281,001
Interest expense 200,488)80,369)
Other expenses 19,564) 647)
Net nonoperating revenues (expenses) 152,229 224,213
Earnings before contributions, transfers and special item 249,526 658,003
Capital contributions 442,423 391,835
Transfers out 714,082) (1,015,717)
Special item -write-off NPO/OPEB 12,298
Change in net assets 9,835) 34,121
Beginning net assets 23,298,274 23,264,153
Ending net assets 23,288,439 23,298,274
Of the total depreciation expense of$1,391,915 above, $837,189 was attributable to capital assets that were
funded with capital contributions.)
92
Exhibit L-3
CITY OF SEWARD
Electric Enterprise Fund
Statement of Cash Flows
Year Ended December 31,2008
With Comparative Amounts for 2007)
2008 2007
Cash flows from operating activities:
Receipts from customers and users 8,702,877 8,281,479
Payments to suppliers 5,067,435) (5,573,915)
Payments to employees 994,171) (824,396)
Payments for interfund services used 745,152) (671,422)
Net cash flows from operating activities 1,896,119 1,211,746
Cash flows from noncapital financing activities:
Transfers out 714,082) (1,015,717)
Noncapital intergovernmental revenues 21,220
Net cash flows from noncapital financing activities 714,082) (994,49.7)
Cash flows from capital and related financing activities:
Issuance of long-term debt 6,034,165
Bond issuance costs 105,622)
Principal payments on long-term debt 205,000) (195,000)
Interest payments on long-term debt 159,320) (88,165)
Acquisition of property,plant and equipment 1,339,408) (729,811)
Capital contributions received 287,482 507,535
Net cash flows from capital and related financing activities 4,512,297 (505,441)
Cash flows from investing activities:
Investment income received 310,215 281,001
Interfund loan receipts 13,666 30,264
Net cash flows from investing activities 323,881 311,265
Net increase in cash and investments 6,018,215 23,073
Beginning cash and investments 4,737,013 4,713,940
Ending cash and investments 10,755,228 4,737,013
Reconciliation of cash and investments to statement of net assets:
Current assets 3,103,126 2,424,833
Restricted assets 7,652,102 2,312,180
10,755,228 4,737,013
Reconciliation of earnings from operations to net cash
provided(used)by operating activities:
Earnings from operations 97,297 433,790
Adjustments to reconcile earnings from operations to net
cash flows from operating activities:
Depreciation 1,391,915 1,342,861
Amortization of debt issuance costs 8,425 4,904
Other nonoperating expenses 19,564)647)
Noncash expense-PERS relief 16,731 3,008
Increase(decrease)in allowance for doubtful accounts 4,351 18)
Increase(decrease)in assets:
Receivables 84,819 (143,120)
Prepaid expenses 9,950)
Inventory 503) (382,935)
Increase(decrease)in liabilities:
r Accounts payable 260,659 (49,147)
Accrued payroll and related liabilities 2,481 (13,829)
Accrued annual leave 981 25,105
Customer deposits 9,105 9,483
Deferred revenue 39,422 (12,972)
Net pension/OPEB obligation 5,213
Net cash flows from operating activities 1,896,119 1,211,746
93
Exhibit L-4
CITY OF SEWARD
Electric Enterprise Fund
Schedule of Operating Expenses
Year Ended December 31, 2008
With Comparative Amounts for 2007)
200.8 2007
Power:
Salaries and employee benefits 11,075 50,628
Purchased services 88,309 88,368
Power for resale 4,414,335 4,400,947
Supplies, maintenance and other 54,030 44,529
Total power 4,567,749 4,584,472
Distribution:
r 311 776 316 465Salariesandemployeebenefits316,465
credits -work orders 168,164) (250,927)
Purchased services 43,544 56,085
Supplies and maintenance 272,382 90,928
Supply credits -work orders 143,010) (210,300)
Administration and general 1,970 1,378
Total distribution 318,498 3,629
Administration and general:
Salaries and employee benefits 859,677 727,727
Purchased services 283,885 363,903
Supplies and maintenance 91,359 120,310
Administrative fee 745,152 671,422
Other 209,648 179,992
Total administration and general 2,189,721 2,063,354
Depreciation 1,391,915 1,342,861
Total operating expenses 8,467,883 7,994,316
94
Exhibit L-5
CITY OF SEWARD
Electric Enterprise Fund
Schedule of Composition of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Grants and other external contributions 26,114,744 25,436,767
Related accumulated amortization 14,472,795) (13,635,603)
City-generated equity 11,655,238 11,497,110
Total net assets 23,297,187 23,298,274
95
Exhibit L-6
CITY OF SEWARD
Electric Enterprise Fund
Schedule of Electric Capital Projects
Year Ended December 31, 2008
Transmission
Line
Funding sources - Electric Fund 245,198
Capital outlay:
Contracted services 237,753
Other services and charges 7,445
Total capital outlay 245,198
96
Exhibit L-7
CITY OF SEWARD
Water Enterprise Fund
Statement of Net Assets
December 31,2008
With Comparative Amounts for 2007)
Assets 2008 2007
Current assets:
Cash and investments 1,287,123 3,152,291
Receivables:
Accounts 66,665 74,627
Assessments 6,814 6,578
Grants and loans 720,955 127,729
Less allowance for doubtful accounts 3,000)3,358)
Net receivables 791,434 205,576
Inventory 64,719 46,306
Total current assets 2,143,276 3,404,173
Restricted cash and investments-capital projects 140,354 182,523
Assessments receivable,net of current portion 38,880 45,949
Note receivable-PSMC 83,000
Interfund loan 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 5,822,987 5,739,987
Equipment 1,230,472 1,230,473
Total property,plant and equipment in service 8,343,819 8,260,820
Less accumulated depreciation 3,456,222) (3,231,913)
Net property,plant and equipment in service 4,887,597 5,028,907
Construction in progress 381,768 43,331
Total property,plant and equipment 5,269,365 5,072,238
Total assets 9,648,235 8,704,883
Liabilities and Net Assets
Liabilities:
Current liabilities:
Accounts payable 606,676 335,678
Accrued payroll and related liabilities 4,901 3,249
Accrued interest 74,415
Current portion:
Accrued annual leave 5,834 3,874
Notes payable 127,118 _ 114,071
Total current liabilities 818,944 456,872
Noncurrent liabilities,net of current portion:
Accrued annual leave 11,846 7,930
Notes payable 3,120,077 2,538,778
Net pension/OPEB obligation 16,527
Total noncurrent liabilities 3,131,923 2,563,235
Total liabilities 3,950,867 3,020,107
Net assets:
Invested in capital assets,net of related debt 2,022,172 2,419,389
Unrestricted 3,675,196 3,265,387
Total net assets 5,697,368 5,684,776
Total liabilities and net assets 9,648,235 8,704,883
97
Exhibit L-8
CITY OF SEWARD
Water Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Assets
Year Ended December 31,2008
With Comparative Amounts for 2007)
2008 2007
Operating revenues:
Residential 358,347 363,780
Small general service 104,193 97,527
Large general service 159,245 189,101
Industrial 145,287 126,297
Seward Marine Industrial Center 64,015 78,383
Ship water sales 106,616 80,548
Miscellaneous 60,838 60,997
Total operating revenues 998,541 996,633
Operating expenses:
Salaries and benefits 257,891 256,240
Purchased services 203,931 215,055
Supplies and maintenance 102,182 78,864
Administration and general 205,567 184,426
Other 17,902 25,025
Depreciation 224,309 98,547
Total operating expenses 1,011,782 858,157
Earnings (loss) from operations 13,241) 138,476
Nonoperating revenues (expenses):
Intergovernmental 83,184 28,965
Compliance study and design 111,293)
Investment income 113,713 159,048
Interest expense 74,415)
Net nonoperating revenues (expenses)11,189 188,013
Earnings (loss)before contributions, transfers and special item 2,052) 326,489
Capital contributions 83,000 11,879
Transfers out 84,883) (248,910)
Special item-write-off NPO/OPEB 16,527
Change in net assets 12,592 89,458
Beginning net assets 5,684,776 5,595,318
Ending net assets 5,697,368 5,684,776
Of the total depreciation expense of$224,309 above, $32,033 was attributable to capital assets that were
funded with capital contributions.)
98
Exhibit L-9
CITY OF SEWARD
Water Enterprise Fund
Statement of Cash Flows
Year Ended December 31,2008
With Comparative Amounts for 2007)
2008 2007
Cash flows from operating activities:
Receipts from customers and users 1,006,145 1,010,443
Payments to suppliers 484,965) (311,233)
Payments to employees 238,002) (258,261)
Payments for interfund services used 205,567) (184,426)
Net cash flows from operating activities 77,611 256,523
Cash flows from noncapital financing activities:
Transfers out 84,883) (248,910)
Noncapital intergovernmental revenues received 70,243 25,805
Interfund loan to General Fund 1,973.360)
Net cash flows from noncapital financing activities 1,988,000) (223,105)
Cash flows from capital and related financing activities:
Acquisition of property,plant and equipment 117,494) (1,853,553)
Issuance of long term debt 2,555,094
Capital contributions received 6,833 73 '
Net cash flows from capital and related financing activities 110,661)701,614
Cash flows from investing activities-investment income received 113,713 159,048
Net increase(decrease)in cash and investments 1,907,337)894,080
Beginning cash and investments 3,334,814 2,440,734
Ending cash and investments 1,427,477 3,334,814
Reconciliation of cash and investments to statement of net assets:
Current assets 1,287,123 3,152,291
Restricted assets 140,354 182,523
1,427,477 3,334,814
Reconciliation of earnings(loss)from operations to net cash
provided(used)by operating activities:
Earnings(loss)from operations 13,241)138,476
r Adjustments to reconcile earnings(loss)from operations
to net cash flows from operating activities:
Depreciation 224,309 98,547
Noncash expense-PERS relief 12,361 3,160
Nonoperating expenses-compliance study 111,293)
Increase(decrease)in allowance for doubtful accounts 358) 689)
Increase)decrease in assets:
Receivables 7,962 14,499
Inventory 18,413) 2,454)
Increase(decrease)in liabilities:
Accounts payable 31,244) 10,165
Accrued payroll and related liabilities 1,652 5,347)
Accrued annual leave 5,876 3,662)
Net pension/OPEB obligation 3,828
Net cash flows from operating activities 77,611 256,523
99
Exhibit L-10
CITY OF SEWARD
Water Enterprise Fund
Schedule of Composition of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Grants and other external contributions 2,457,610 2,374,610
Related accumulated amortization 1,766,117) (1,734,084)
Contributions from other funds 498,756 498,756
City-generated equity 4,507,119 4,545,494
Total net assets 5,697,368 5,684,776
100
Exhibit L-11
CITY OF SEWARD
Water Enterprise Fund
Combining Schedule of Water Capital Projects
Year Ended December 31, 2008
Water 3rd
Source Avenue
Study Water Line Totals
Funding sources:
State grants 70,823 70,823
Water Fund 40,470 338,437 378,907
Total funding sources 111,293 338,437 449,730
Capital outlay:
Contracted services 109,293 338,437 447,730
Supplies 2,000 2,000
Total capital outlay 111,293 338,437 449,730
101
Exhibit L-12
CITY OF SEWARD
Wastewater Enterprise Fund
Statement of Net Assets
December 31,2008
With Comparative Amounts for 2007)
Assets 2008 2007
Current assets:
Cash and investments 356,104 517,133
Receivables:
Accounts 74,250 74,102
Less allowance for doubtful accounts 3,341) 3,335)
Net receivables 70,909 70,767
Total current assets 427,013 587,900
Restricted cash and investments-capital projects 207,560 207,560
Note receivable-PSMC 239,600
Property,plant and equipment:
Land and land rights 111,011 111,011
Buildings 2,418,399 2,413,234
Improvements other than buildings 8,952,968 8,713,368
Equipment 292,907 292,907
Total property,plant and equipment in service 11,775,285 11,530,520
Less accumulated depreciation 6,346,887) (6,071,142)
Net property,plant and equipment in service 5,428,398 5,459,378
Construction in progress 96,880 96,880
Total property,plant and equipment 5,525,278 5,556,258
Total assets 6,399,451 6,351,718
Liabilities and Net Assets
Liabilities:
Current liabilities:
Accounts payable 8,160 8,214
Accrued payroll and related liabilities 5,231 3,636
Accrued interest 699 961
Current portion:
Accrued annual leave 3,526 3,078
Notes payable 57,571 56,740
Customer deposits 3,025
Total current liabilities 75,187 75,654
Noncurrent liabilities,net of current portion:
Accrued annual leave 16,421 15,876
Notes payable 240,191 297,762
Net pension/OPEB obligation 19,537
Total noncurrent liabilities 256,612 333,175
Total liabilities •331,799 408,829
Net assets:
Invested in capital assets,net of related debt 5,227,516 5,201,756
Unrestricted 840,136 741,133
Total net assets 6,067,652 . 5,942,889
Total liabilities and net assets 6,399,451 6,351,718
102
1"-1
Exhibit L-13
CITY OF SEWARD
Wastewater Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Assets
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Operating revenues:
Residential 442,273 428,134
Small general service 110,287 103,266
Large general service 179,035 189,321
Seward Marine Industrial Center 49,878 55,351
Miscellaneous 19,622 24,096
Total operating revenues 801,095 800,168
Operating expenses:
Salaries and benefits 236,490 172,599
Purchased services 137,171 112,865
Supplies and maintenance 102,461 57,205
Administration and general 126,851 111,497
Other 21,166 10,333
Depreciation 275,745 279,214
Total operating expenses 899,884 743,713
Earnings (loss) from operations 98,789)56,455
Nonoperating revenues (expenses):
Intergovernmental 11,980 2,181
Investment income 26,576 34,347
Interest expense 5,054)6,156)
Net nonoperating revenues (expenses) 33,502 30,372
Earnings (loss) before contributions, transfers and special item 65,287)86,827
Capital contributions 239,600 27,688
Transfers out 69,087) (185,987)
Special item-write-off NPO/OPEB 19,537
Change in net assets 124,763 71,472)
Beginning net assets 5,942,889 6,014,361
Ending net assets 6,067,652 5,942,889
Of the total depreciation expense of$275,746 above, $215,800 was attributable to capital assets that were
funded with capital contributions.)
103
1
Exhibit L-14
CITY OF SEWARD
Wastewater Enterprise Fund
Statement of Cash Flows
Year Ended December 31,2008
With Comparative Amounts for 2007)
2008 2007
Cash flows from operating activities:
Receipts from customers and users 797,928 804,878
Payments to suppliers 260,852) (177,755)
Payments to employees 221,922) (170,081)
Payments for interfund services used 126,851) (111,497)
Net cash flows from operating activities 188,303 345,545
Cash flows fromnoncapital financing activities-transfers out 69,087) (185,987)
Cash flows from capital and related financing activities:
Principal payments on long-term debt 56,740)55,927)
Interest payments on long-term debt 5,316) 6,156)
Acquisition of property,plant and equipment 244,765)60,577)
Capital contributions received 30,717
Net cash flows from capital and related financing activities 306,821)91,943)
Cash flows from investing activities-investment income received 26,576 34,347
Net increase(decrease)in cash and investments 161,029) 101,962
Beginning cash and investments 724,693 622,731
Ending cash and investments 563,664 724,693
Reconciliation of cash and investments to statement of net assets:
Current assets 356,104 517,133
Restricted assets 207,560 207,560
563,664 724,693
Reconciliation of earnings(loss)from operations to net cash provided
used)by operating activities:
Earnings(loss)from operations 98,789) 56,455
Adjustments to reconcile earnings(loss)from operations
to net cash flows from operating activities:
Depreciation 275,745 279,214
Noncash expense-PERS relief 11,980 2,181
Increase(decrease)in allowance for doubtful accounts 6 1,265)
Increase)decrease in assets-receivables 148) 2,950
Increase(decrease)in liabilities:
Accounts payable 54) 2,648
Accrued payroll and related liabilities 1,595 3,126)
Accrued annual leave 993 316)
Customer deposits 3,025) 3,025
Net pension/OPEB obligation 3,779
Net cash flows from operating activities 188,303 345,545
104
Exhibit L-15
CITY OF SEWARD
Wastewater Enterprise Fund
Schedule of Composition of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Grants and other external contributions 10,155,599 9,915,999
Related accumulated amortization 6,148,889) (5,933,089)
Contributions from other funds 161,550 161,550
City-generated equity 1,899,392 1,798,429
Total net assets 6,067,652 5,942,889
105
Exhibit L-16
CITY OF SEWARD
Harbor Enterprise Fund
Statement of Net Assets
December 31,2008
With Comparative Amounts for 2007)
Assets 2008 2007
Current assets:
Cash and investments 1,523,686 1,387,484
Receivables:
Accounts 151,217 170,793
Grants 98,833 682,695
Commercial passenger vessel tax 345,748
Assessments 4,108 4,108
Less allowance for doubtful accounts 24,588) (22,879)
Net receivables 575,318 834,717
Total current assets 2,099,004 2,222,201
Restricted cash and investments:
Bond retirement 859,348 363,378
Capital projects 1,066,487 2,180,701
Total restricted cash and investments 1,925,835 2,544,079
Assessments receivable,net of current portion 23,575 27,861
Property,plant and equipment:
Land and land rights 5,117,479 5,117,479
Buildings 615,287 615,287
Improvements other than buildings 23,641,185 19,431,290
Equipment 1,397,384 1,284,020
Total property,plant and equipment in service 30,771,335 26,448,076
Less accumulated depreciation 9,052,731) (7,958,051)
Net property,plant and equipment in service 21,718,604 18,490,025
Construction in progress 1,413,852 2,653,424
Total property,plant and equipment 23,132,456 21,143,449
Deferred charges-unamortized debt issuance costs 97,000 102,929
Total assets 27,277,870 26,040,519
Liabilities and Net Assets
Liabilities:
Current liabilities:
Accounts payable 93,982 840,616
Accrued payroll and related liabilities 19,293 39,229
Accrued interest 43,907 47,452
Current portion:
Bonds payable 340,000 325,000
Interfund loan 19,040 18,048
Accrued annual leave 14,606 12,449
Deferred revenue 848,015 798,416
Other accrued liabilities 935 935
Total current liabilities 1,379,778 2,082,145
Noncurrent liabilities,net of current portion:
Accrued annual leave 30,131 22,008
Bonds payable 7,625,000 7,965,000
Interfund loan 166,063 185,103
Unamortized bond premium 129,471 137,846
Unamortized deferred loss on refunding 83,861) (90,312)
Netpension/OPEB obligation 91,590
Total noncurrent liabilities 7,866,804 8,311,235
Total liabilities 9,246,582 10.393,380 .
Net assets:
Restricted for capital projects 699,601 16,223
Invested in capital assets,net of related debt 15,121,846 12,805,915
Unrestricted 2,209,841 2.825,001
Total net assets 18,031,288 15,647,139
Total liabilities and net assets 27,277,870 26,040,519
106
Exhibit L-17
CITY OF SEWARD
Harbor Enterprise Fund
Statement of Revenues,Expenses
and Change in Net Assets
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Operating revenues:
Moorage 1,353,666 1,301,142
Wharfage 51,729 67,714
Boat lift fees 83,909 89,650
Power sales 232,243 201,048
Rentals and leases 290,796 289,824
Passenger transit fees 657,248 707,824
Miscellaneous 107,085 94,714
Total operating revenues 2,776,676 2,751,916
Operating expenses:
Salaries and benefits 839,212 759,556
Purchased services 319,136 271,047
Power for resale 147,197 153,327
Supplies and maintenance 163,059 119,469
Administration and general 185,940 169,443
Depreciation 1,012,180 620,741
Total operating expenses 2,666,724 2,093,583
Earnings from operations 109,952 658,333
Nonoperating revenues (expenses):
Intergovernmental 44,797 9,410
Investment income 120,152 153,097
Commercial passenger vessel tax 713,178
Interest expense 379,907) (390,715)
Net nonoperating revenues (expenses) 498,220 (228,208)
Earnings before contributions, transfers and special item 608,172 430,125
Capital contributions 2,003,982 2,147,337
Transfers in 464,387
Transfers out 319,595) (300,908)
Special item-write-off NPO/OPEB 91,590
Change in net assets 2,384,149 2,740,941
f
Beginning net assets 15,647,139 12,906,198
Ending net assets 18,031,288 15,647,139
Of the total depreciation expense of$1,012,180 above, $546,514 was attributable to capital assets that were
funded with capital contributions.)
107
Exhibit L-18
CITY OF SEWARD
Harbor Enterprise Fund
Statement of Cash Flows
Year Ended December 31,2008
With Comparative Amounts for 2007)
2008 2007
Cash flows from operating activities:
Receipts from customers and users 2,847,560 2,901,266
Payments to suppliers 620,377) (533,634)
Payments to employees 804,071) (732,802)
Payments for interfund services used 185,940) (169,443)
Net cash flows from operating activities 1,237,172 1,465,387
Cash flows from noncapital financing activities-transfers out 319,595) (300,908)
Cash flows from capital and related financing activities:
Advance refunding escrow deposit 1,996,095)
Issuance of long-term debt,net of expenses 2,000,423
Principal payments on long-term debt 325,000) (310,000)
Interest payments on long-term debt 385,376) (387,677)
Acquisition of property,plant and equipment 3,750,907) (3,851,083)
Capital contributions received 2,592,130 1,545,199
Capital transfers from other funds 464,387
Interfund loan payment 18,048) (17,107)
Commercial passenger vessel tax receipts 367,430
Net cash flows from capital and related financing activities 1,519,771) (2,551,953)
Cash flows from investing activities-investment income received 120 152 153 097g
Net decrease in cash and investments 482,042) (1,234,377)
Beginning cash and investments 3,931,563 5,165,940 r
Ending cash and investments 3,449,521 3,931,563
Reconciliation of cash and investments to statement of net assets:
Current assets 1,523,686 1,387,484
Restricted assets 1,925,835 2,544,079
3,449,521 3,931,563
Reconciliation of earnings from operations to net cash
provided(used)by operating activities:
Earnings from operations 109,952 658,333
Adjustments to reconcile earnings from operations to net cash
flows from operating activities:
Depreciation 1,012,180 620,741
Amortization of debt issuance costs 5,929 5,929
Noncash expense-PERS relief 44,797 9,410
Increase in allowance for doubtful accounts 1,709 1,395
Increase)decrease in assets-receivables 19,576 (28,001)
Increase(decrease)in liabilities:
Accounts payable 3,086 4,300
Accrued payroll and related liabilities 19,936) 26,787
Accrued annual leave 10,280 (24,344)
Other accrued liabilities 20)
Deferred revenue 49,599 175,956
Net pension/OPEB obligation 14,901
Net cash flows from operating activities 1,237,172 1,465,387
108
Exhibit L-19
CITY OF SEWARD
Harbor Enterprise Fund
Schedule of Composition of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Grants and other external contributions 19,053,675 17,049,692
Related accumulated amortization 5,302,213) (4,755,698)
Contributions from other funds 4,060,270 4,060,270
City-generated equity (deficit) 219,556 707,125)
Total net assets 18,031,288 15,647,139
109
Exhibit L-20
CITY OF SEWARD
Harbor Enterprise Fund
Combining Schedule of Harbor Capital Projects
Year Ended December 31, 2008
SBH
Harbor Repairs and
Expansion Renovations Totals
Funding sources:
State grants 1,943,886 1,943,886
Federal grants 60,096 60,096
Harbor Fund 17,909 938,545 956,454
Total funding sources 78,005 2,882,431 2,960,436
Capital outlay:
Contracted services 78,005 2,618,880 2,696,885
Other services and charges 263,551 _ 263,551
Total capital outlay 78,005 2,882,431 2,960,436
ri
110
Exhibit L-21
CITY OF SEWARD
Seward Marine Industrial Center Enterprise Fund
Statement of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
Assets 2008 2007
Current assets:
Cash and cash equivalents 126,457 49,705
Accounts receivable 31,988 31,065
Total current assets 158,445 80,770
Property, plant and equipment:
Land and land rights 12,021,821 12,021,821
Buildings 277,047 277,047
Improvements other than buildings 26,798,104 26,792,993
Equipment 908,789 908,789
Docks and floats 13,145,688 13,145,688
Total property, plant and equipment in service 53,151,449 53,146,338
Less accumulated depreciation 25,715,490) (25,072,855)
Net property, plant and equipment in service 27,435,959 28,073,483
Total assets 27,594,404 28,154,253
Liabilities and Net Assets
Liabilities:
Current liabilities:
Accounts payable 45,262 12,062
Accrued payroll and related liabilities 1,083 1,279
Accrued interest 448 558
Current portion of bonds payable 55,094 53,127
Deferred revenue 19,626 19,526
Total current liabilities 121,513 86,552
Noncurrent liabilities, net of current portion -
bonds payable 114,124 169,218
Total liabilities 235,637 255,770
Net assets:
Invested in capital assets, net of related debt 27,266,741 27,851,138
Unrestricted 92,026 47,345
Total net assets 27,358,767 27,898,483
Total liabilities and net assets 27,594,404 28,154,253
111
Exhibit L-22
CITY OF SEWARD
Seward Marine Industrial Center Enteiprise Fund
Statement of Revenues, Expenses
and Change in Net Assets
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Operating revenues:
Moorage 704 2,367
Wharfage 2,590 565
Boat lift fees 118,350 116,682
Storage 81,059 84,720
Rentals and leases 72,573 70,866
Power sales 24,779 15,021
Miscellaneous 4,462
Total operating revenues 304,517 290,221
Operating expenses:
Salaries and benefits 97,237 77,761
Purchased services 116,516 61,089
Supplies and maintenance 39,352 50,139
Administration and general 199,908 197,147
Depreciation 642,635 642,691
Miscellaneous 47,216
Total operating expenses 1,142,864 1,028,827
Loss from operations 838,347) (738,606)
Nonoperating revenues (expenses):
Intergovernmental 2,892 463
Investment income 7,773 8,026
Interest expense 6,589)47,903)
Net nonoperating revenues (expenses) 4,076 39,414)
Loss before transfers 834,271) (778,020)
Transfers in 348,655 364,734
Transfers out 54,100)52,829)
Change in net assets 539,716) (466,115)
Beginning net assets 27,898,483 28,364,598
Ending net assets 27,358,767 27,898,483
Of the total depreciation expense of$642,635 above, $523,543 was attributable to capital assets that were
funded with capital contributions.)
112
Exhibit L-23
CITY OF SEWARD
Seward Marine Industrial Center Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Cash flows from operating activities:
Receipts from customers and users 303,694 292,507
Payments to suppliers 169,884) (122,456)
Payments to employees 94,541) (81,890)
Payments for interfund services used 199,908) (197,147)
Net cash flows from operating activities 160,639) (108,986)
Cash flows from noncapital financing activities:
Transfers in 348,655 364,734
Transfers out 54,100) (52,829)
Net cash flows from noncapital financing activities 294,555 311,905
Cash flows from capital and related financing activities:
Principal payments on long-term debt 53,127) (151,509)
Interest payments on long-term debt 6,699) (9,731)
Acquisition of property,plant and equipment 5,111)
Net cash flows from capital and related financing activities 64,937) (161,240)
Cash flows from investing activities- investment income received 7,773 8,026
Net increase in cash and investments 76,752 49,705
Beginning cash and investments 49,705
Ending cash and investments 126,457 49,705
Reconciliation of loss from operations to net cash provided(used)
by operating activities:
Loss from operations 838,347) (738,606)
Adjustments to reconcile loss from operations to net cash
flows from operating activities:
Depreciation 642,635 642,691
Noncash expense-PERS relief 2,892 463
Amortization of debt issuance costs 2,410
Increase) decrease in assets- accounts receivable 923) 686
Increase (decrease) in liabilities:
Accounts payable 33,200 7,682
Accrued payroll and related liabilities 196) (4,592)
Deferred revenue 100 1,600
Due to other funds 21,320)
Net cash flows from operating activities 160,639) (108,986)
113
Exhibit L-24
CITY OF SEWARD
Seward Marine Industrial Center Enterprise Fund
Schedule of Composition of Net Assets
December 31, 2008 r `
E
With Comparative Amounts for 2007)
2008 2007
Grants and other external contributions 35,725,414 35,725,414
Related accumulated amortization 23,239,842) (22,716,299)
Contributions from other funds 16,567,145 16,218,490
City-generated deficit 1,693,950) (1,329,122)
Total net assets 27,358,767 27,898,483
114
Exhibit L-25
CITY OF SEWARD
Parking Enterprise Fund
Statement of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
Assets 2008 2007
Current assets:
Cash and investments 430,786 325,637
Prepaid expenses 4,187
Total current assets 434,973 325,637
Property, plant and equipment:
Improvements other than buildings 513,540 513,540
Equipment 15,490 15,490
Total property, plant and equipment in service 529,030 529,030
Less accumulated depreciation 476,993) (470,785)
Net property, plant and equipment in service 52,037 58,245
Total assets 487,010 383,882
Liabilities and Net Assets
Current liabilities - accounts payable 579 5,033
Net assets:
Invested in capital assets, net of related debt 52,037 58,245
Unrestricted 434,394 320,604
Total net assets 486,431 378,849
Total liabilities and net assets 487,010 383,882
115
Exhibit L-26
CITY OF SEWARD
Parking Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Assets
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Operating revenues -parking fees 240,339 182,133
Operating expenses:
Salaries and employee benefits 88,670 98,838
Supplies and maintenance 8,383 10,554
Rents and leases 13,000 13,000
Administration and general 13,793 19,481
Depreciation 6,208 6,310
Total operating expenses 130,054 148,183
Earnings from operations 110,285 33,950
Nonoperating revenues:
Investment income 16,513 16,244
Intergovernmental 11
Total nonoperating revenues 16,524 16,244
Earnings before transfers 126,809 50,194
Transfers out 19,227) (14,571)
Change in net assets 107,582 35,623
Beginning net assets 378,849 343,226
Ending net assets 486,431 378,849
116
Exhibit L-27
CITY OF SEWARD
Parking Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Cash flows from operating activities:
Receipts from customers and users 240,339 182,133
Payments to suppliers 30,024) (18,545)
Payments to employees 88,659) (98,838)
Payments for interfund services used 13,793) (19,481)
Net cash flows from operating activities 107,863 _ 45,269
Cash flows from noncapital financing activities -
transfers out 19,227) (14,571)
Cash flows from investing activities - investment income received 16,513 16,244
Net increase in cash and investments 105,149 46,942
Beginning cash and investments 325,637 278,695
Ending cash and investments 430,786 325,637
Reconciliation of earnings from operations to net cash
provided(used) by operating activities:
Earnings from operations 110,285 33,950
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 6,208 6,310
Noncash expense-PERS relief 11
Increase in assets -prepaid expenses 4,187)
Increase(decrease) in liabilities - accounts payable 4,454) 5,009
Net cash flows from operating activities 107,863 45,269
117
Exhibit L-28
CITY OF SEWARD
Parking Enterprise Fund
Schedule of Composition of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Grants and other external contributions 425,891 425,891 i
Related accumulated amortization 425,891) (425,891)
Contributions from other funds 7,650 7,650
City-generated equity 478,781 371,199
Total net assets 486,431 378,849
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 expense 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
Exhibit M-1
CITY OF SEWARD
Motor Pool Internal Service Fund
Statement of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
Assets 2008 2007
Current assets:
Cash and investments 1,095,688 691,100
Receivables:
Accrued interest 69,513 72,463
Interfund loans 58,284 55,335
Prepaid expenses 7,896
Total current assets 1,231,381 818,898
Interfund loans, net of current portion 1,256,957 1,315,242
Property, plant and equipment:
Equipment and vehicles 3,175,274 2,988,840
Less accumulated depreciation 2,013,834) (1,832,560)
Total property, plant and equipment 1,161,440 1,156,280
Total assets 3,649,778 3,290,420
Liabilities and Net Assets
Liabilities:
Current liabilities:
Accrued interest 1,386
Current portion of capital lease obligation 46,281
Total current liabilities 47,667
Net assets:
Invested in capital assets, net of related debt 1,161,440 1,109,999
Unrestricted 2,488,338 2,132,754
Total net assets 3,649,778 3,242,753
Total liabilities and net assets 3,649,778 3,290,420
120
Exhibit M-2
CITY OF SEWARD
Motor Pool Internal Service Fund
Statement.of Revenues, Expenses
and Change in Net Assets
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Operating revenues -vehicle rental 512,193 492,820
Operating expenses:
Depreciation 212,694 225,971
Supplies and maintenance 4,110
Total operating expenses 216,804 225,971
Earnings from operations 295,389 266,849
Nonoperating revenues (expenses):
Gain on disposition of capital assets 20 2,300
Investment income 111,821 101,468
Interest expense 205)4,055)
Net nonoperating revenues (expenses) 111,636 99,713
Change in net assets 407,025 366,562
Beginning net assets 3,242,753 2,876,191
Ending net assets 3,649,778 3,242,753
Of the total depreciation expense of$212,694 above, $0 was attributable to capital assets that were
funded with capital contributions.)
121
Exhibit M-3
CITY OF SEWARD
Motor Pool Internal Service Fund
Statement of Cash Flows
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Cash flows from operating activities:
Receipts from interfund charges 512,193 492,820
Payments to suppliers 12,006)
Net cash flows from operating activities 500,187 492,820
Cash flows from capital and related financing activities:
Principal payments on long-term debt 46,281)59,473)
Interest payments on long-term debt 1,591) 4,699)
Acquisition of equipment and vehicles 217,854)
Proceeds from sale of capital assets 20 2,300
Net cash flows from capital and
related financing activities 265,706)61,872)
Cash flows from investing activities:
Interfund loan receipts 55,336 99,681
Investment income received 114,771 57,121
Net cash flows from investing activities 170,107 156,802
Net increase in cash and investments 404,588 587,750
Beginning cash and investments 691,100 103 350
Ending cash and investments 1,095,688 691,100
Reconciliation of earnings from operations to net cash
provided by operating activities:fl
Earnings from operations 295,389 266,849
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 212,694 225,971
Increase in assets -prepaid expenses 7,896)
Net cash flows from operating activities 500,187 492,820
122
Exhibit M-4
CTI`Y OF SEWARD
Motor Pool Internal Service Fund
Schedule of Composition of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Grants and other external contributions 97,289 97,289
Related accumulated amortization 97,289) (97,289)
Contributions from other funds 832,324 832,324
City-generated equity 2,817,454 2,410,429
Total net assets 3,649,778 3,242,753
123
Exhibit M-5
CITY OF SEWARD
Compensated Annual Leave Internal Service Fund
Statement of Net Assets
December 31, 2008
With Comparative Amounts for 2007)
Assets 2008 2007
Current assets - cash and investments 376,605 328,276
Liabilities and Net Assets
Liabilities:
Current liabilities - accrued annual leave 99,274 86,235
Long-term accrued annual leave 277,331 242,041
Total liabilities 376,605 328,276
Net assets
Total liabilities and net assets 376,605 328,276
124
Exhibit M-6
CITY OF SEWARD
Compensated Annual Leave Internal Service Fund
Statement of Revenues, Expenses
and Change in Net Assets
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Operating revenues - interfund charges 329,810 309,579
Operating expenses - salaries and benefits 329,810 309,579
Change in net assets
Beginning net assets
Ending net assets
125
Exhibit M-7
CITY OF SEWARD
Compensated Annual Leave Internal Service Fund
Statements of Cash Flows
Year Ended December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Cash flows from operating activities:
Receipts from interfund charges 329,810 309,579
Payments to employees 281,481) (330,271)
Net cash flows from operating activities 48,329 20,692)
Beginning cash and investments 328,276 348,968
Ending cash and investments 376,605 328,276
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 48,329 20,692)
Net cash flows from operating activities 48,329 20,692)
126 i`
Exhibit N-1
CITY OF SEWARD
Teen Council Agency Fund
Schedule of Changes in Assets and Liabilities
Year Ended December 31, 2008
Balance at Balance at
January 1, December 31,
2008 Additions Deletions 2008
Assets
Cash and investments 27,412 29,619 22,086 34,945
Prepaid expenses and other 150 150
Total assets 27,412 29,769 22,086 35,095
Liabilities
Accounts payable 1,627 342 1,285
Due to Teen Council 25,785 29,769 21,744 33,810
Total liabilities 27,412 29,769 22,086 35,095
127
Exhibit 0-1
CITY OF SEWARD
Schedule of Capital Assets
December 31, 2008
With Comparative Amounts for 2007)
2008 2007
Capital assets:
Land and land improvements 5,398,928 5,398,928
Buildings 63,463,657 63,422,243
Improvements other than buildings 15,915,243 15,357,686
Equipment 8,286,754 8,451,450
Construction in progress 18,774,281 3,406,983
Total capital assets 111,838,863 96,037,290
i-
128
Exhibit 0-2
CITY OF SEWARD
Schedule of Changes in Capital Assets
Year Ended December 31, 2008
Balance at Balance at
January 1, December 31,
2008 Additions Deletions 2008
Land and land improvements 5,398,928 5,398,928
Buildings 63,422,243 41,414 63,463,657
Improvements other than buildings 15,357,686 557,557 15,915,243
Equipment 8,451,450 202,628 367,324 8,286,754
Construction in progress 3,406,983 15,823,692 456,394 18,774,281
96,037,290 16,625,291 823,718 111,838,863
129
Exhibit 0-3
CITY OF SEWARD
Schedule of Capital Assets by Function and Activity
December 31, 2008
Land and Improve-
Land ments
Improve-Other than
Function and Activity ments Buildings Buildings Equipment Total
General government:
City Council/Mayor 54,323 54,323
City manager 56,583 56,583 1
City clerk 48,132 48,132
Finance 76,084 76,084
Community development 8,509 8,509 I
Municipal building 2,382,489 16,291 54,169 2,452,949
Alaska SeaLife Center 47,204,801 2,979,808 4,026,096 54,210,705
General services 1,479,080 8,005,937 53,025 9,538,042
Community and Senior Center 1,473,936 1,473,936
Non-departmental 5,398,928 68,868 5,467,796
Total general government 5,398,928 52,609,174 11 002,036 4,376,921 73,387,059
Public safety:
Police 1,233,219 1,233,219
Jail 22,006 22,006
Animal control 156,720 156,720
Fire 1,028,236 46,746 912,391 1,987,373
Building inspection 2,600 2,600
Seward Volunteer Ambulance Corp 6,300 6,300
Total public safety 1,184,956 46,746 2,176,516 3,408,218
Public works:
Streets 116,945 3,324,312 451,196 3,892,453
Engineering 3,621 3,621
City shop 771,823 58,924 830,747
Total public works 888,768 3,324,312 513,741 4,726,821
Hospital 7,757,029 54,375 1,034,959 8,846,363
Parks and recreation 297,064 1,474,974 100,890 1,872,928
Library 726,666 12,800 83,727 823,193
Total capital assets
allocated to functions $ 5,398,928 63,463,657 15,915,243 8,286,754 93,064,582
I '
Construction in progress 18,774,281
Total capital assets 111,838,863
130
Exhibit 0-4
CITY OF SEWARD
Schedule of Changes in Capital Assets by Function and Activity
Year Ended December 31, 2008
Capital Capital
Assets at Assets at
January 1, December 31,
Function and Activity 2008 Additions Deletions 2008
General government:
City Council/Mayor 54,323 54,323
City manager 56,583 56,583
City clerk 48,132 48,132
Finance 67,231 8,853 76,084
Community development 5,860 2,649 8,509
Municipal building 2,452,949 2,452,949
Alaska Sealife Center 54,230,623 242,156 262,074 54,210,705
General services 9,538,042 9,538,042
Community and Senior Center 1,473,936 1,473,936
Non-departmental 5,467,796 5,467,796
Total general government 73,395,475 253,658 262,074 73,387,059
Public safety:
Police 1,214,113 19,106 1,233,219
1 Jail 22,006 22,006
Animal control 156,720 156,720
Fire 1,940,944 64,179 17,750 1,987,373
Building inspection 2,600 2,600
Seward Volunteer Ambulance Corp 6,300 6,300
Total public safety 3,342,683 83,285 17,750 3,408,218
Public works:
Streets 3,979,953 87,500 3,892,453
Engineering 3,621 3,621
City shop 825,468 5,279 830,747
Total public works 4,809,042 5,279 87,500 4,726,821
Hospital 8,846,363 8,846,363
Parks and recreation 1,416,534 456,394 1,872,928
Library 820,210 2,983 823,193
Construction in progress 3,406,983 15,823,692 456,394 18,774,281
96,037,290 16,625,291 823,718 111,838,863
131
I ,
Exhibit P-1
CITY OF SEWARD
Schedule of Expenditures of Federal Awards f
Year Ended December 31,2008
Catalog of
Federal January 1, Federal December31,
Domestic Total 2008 Share of 2008
Assistance Grant Grant Receivable Expen- Federal Receivable
Grant Title Number Number Award (Deferred) ditures Receipts (Deferred)
Department of Agriculture
NRCS Flood Mitigation/Engineering 10.904 68-0150-9-024 $ 500,000 17,492 31,535 38,666 10,361
Passed through State of Alaska Department
of Natural Resources-Volunteer Firefigher
Assistance Grant 10.664 39927 5,212 5,212 5,212
Total Department of Agriculture 17,492 36,74.7 43,878 10,3.61
Department of Interior
Passed through State of Alaska Department
of Natural Resources:
Public Access to Seward Historical
Site Inventory 15.904 08492 4,173 151 - 151
Hoben Park Restoration 15.904 07482 24,666 24,666 24,666 4
Total Department of Interior 24,817 24,666 151 1
National Endowment for the Humanities
Passed through State of Alaska Department
of Education and Early Development 45.310 CED-08-770-163 1,000 1,000 1,000
Department of Transportation
Passed through State of Alaska Department
of Transportation and Public Facilities:
Impaired Driving Enforcement 20.600 154AL 08-00-01-x 1,289 1,289 1,098 191
Seatbelt&DUI Enforcement 20.600 402PT08-04-03-x 2,227 2,032 1,533 499
Total Department of Transportation 3,321 2,631 690
Environmental Protection Agency
Passed through State of Alaska Department
of Environmental Conservation:
3rd Avenue Water Main Loan(83%federal) 66.468 769031 2,888,400 81,137 493,307 -574,444
Engineering of Water Tank and Line Extension 66.606 76911 297,400 123 - 123
Total Environmental Protection Agency 81,260 493,307 -574,567
Denali Commission
Seward East Harbor Reconstruction 90.100 01006 1,000,000 19,507 60,096 - 79,603
Department of Homeland Security
Passed through State of Alaska Department
of Military and Veterans Affairs:
Hazard Mitigation Plan 97.039 HMPG-1445.0003 11,250 53 6,697 6,750
Oct.06 Southern Alaska Storm Disaster/Flood 97.036 DR-1669-AK 361,628 36,455 8,674 19,085 26,044
Communications Equipment(33 Radios) 97.073 07SHSP-GR34054 108,600 108,600 108,600
Communications Equipment(10 Radios) 97.074 07LETPP-GR34238 95,840 56,029 16,197 39,832
Passed through State of Alaska Department of
Commerce,Community,and Economic Development-
Federal Emergency Management Agency 97.023 N/A 175 175 175
Total Department of Homeland Security 36,508 180,175 150,807 65,876
Department of Justice
Bullet Proof Vest Program 16.607 N/A 1,237 1,237 1,237
Total Federal Financial Assistance 154,767 800,700 224,219 731,248
132
Exhibit Q-1
CITY OF SEWARD
r Schedule of State Financial Assistance
Year Ended December 31,2008
January 1, State December 31,
Total 2008 Share of 2008
Grant Grant Receivable Expendi- State Receivable
Grant Title Number Award (Deferred) tures Receipts (Deferred)
Department of Commerce,Community and Economic Development
T-Dock&Bulkhead 06-DC-160 $ 2,000,000 663,188 943,887 1,607,075
T-Dock&Bulkhead Phase II 07-DC-262 1,000,000 1,000,000 1,000,000
Levee Construction 08-DC-411 1,000,000 125,364 64,765 60,599
Road/Levee Construction 09-DC-527 1,750,000 14,377 1,313 13,064
PERS Rebate N/A 378,969 378,969 378,969
Total Department of Commerce,Community
and Econcomic Development 663,188 2,462,597 3,052,122 73,663
Department of Military and Veteran Affairs
2006 South Central Storm Disaster FEMA-AK-DR1669 143,037 12,151 2,892 6,362 8,681
Hazard Mitigation Plan HMPG-1445.0003 3,750 18 2,232 2,250
Total Department of Military and Veteran Affairs 12,169 5,124 8,612 8,681
Department of Education&Early Development
Library Grant PLA-09-770-66 6,350 6,350 6,350
Department of Environmental Conservation
Drinking Water Compliance Study&
Preliminary Design 76912 99,800 26,872 70,823 70,243 27,452
Engineering of Water Tank and
Line Extension 76911 99,200 41 41
Water Tank 76910 94,600 9,460 9,460
Water Distribution System 76909 24,800 1,240 1,240
Total Department of Environmental Conservation 37,613 70,823 70,243 38,193
Department of Revenue
Fish Taxes N/A 403,745 403,746 403,746
Municipal Energy Assistance N/A 36,181 36,181 36,181
Liquor Licenses N/A 16,600 16,600 16,600
State Revenue Sharing N/A 233,135 233,135 233,135
Commercial Passenger Vessel Tax N/A 713,178 29,800 367,430 (337,630) (2)
Total Department of Revenue 719,462 1,057,092 (337,630)
Department of Administration
PERS Relief N/A 375,013 375,013 375,013
Department of Natural Resources
Jesse Lee Home Stabilization and Repair N/A 1,000,000 36,100 36,100
Alaska Energy Authority
Purchase of Backup Generators 2195315 2,000,000 163,298 112,688 50,610
Total State Financial Assistance 712,970 3,838,767 4,682,120 (130,383)
Major program
133
i I
CITY OF SEWARD
Notes to the Schedules of Expenditures of Federal Awards
and State Financial Assistance
Year Ended December 31,2008
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
The City received $367,430 during 2008 of commercial passenger vessel taxes from the State of
Alaska. Of the amount received, $29,800 was spent during 2008, leaving$337,630 being shown as
deferred revenue on the Schedule of State Financial Assistance. However, the financial statements
for the Harbor Enterprise Fund show the entire amount received, plus an additional amount of
345,748 that was accrued as commercial passenger vessel tax revenue. The excess recognized as
revenue over the expenditures is included in net assets of the Harbor Enterprise Fund.
134
I -
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.
PageContentsPa
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 by Component 136
Table 2 Changes in Net Assets 137-138
Table 3 Fund Balances of Governmental Funds 139
Table 4 Changes in Fund Balances of Governmental Funds 140
Table 5 General Fund Revenues by Source 141
Table 6 General Fund Tax Revenues by Source 142
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 143
Table 8 Property Tax Levies and Collections 144
Table 9 Assessed and Estimated Actual Value of Taxable Property 145
Table 10 Principal Property Taxpayers 146
Table 11 Principal Taxable Sales by Line of Business 147
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 148
Table 13 Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General
Obligation Bonded Debt per Capita 149
Table 14 Computation of Direct and Overlapping Bonded Debt 150
Table 15 Legal Debt Margin 151
Table 16 Ratio of Annual Debt Service Expenditures for General Obligation Debt to Total
General Fund Expenditures 152
Table 17 Revenue Bond Coverage-Electric Enterprise Fund 153
Table 18 Revenue Bond Coverage-Harbor Enterprise Fund 154
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 155
Table 20 Seward Area Principal Employers 156
Table 21 Full-Time Equivalent Employees by Fund 157
Table 22 Operating Indicators by Function 158
Table 23 Capital Asset Statistics by Function 159
Table 24 Property Value, Construction, and Bank Deposits 160
Table 25 Miscellaneous Statistics 161
135
Table 1
CITY OF SEWARD
Net Assets by Component
Last Six Fiscal Years
accrual basis of accounting)
amounts expressed in thousands)
2003 2004 2005 2006 2007 2008
Governmental Activities:
Invested in capital assets,
net of related debt 57,398 55,726 56,495 56,663 58,016 58,016
Restricted
Unrestricted 5,009 6,636 5,946 5,901 5,025 5,993
Total governmental activities
net amounts 62,407 62,362 62,441 62,564 63,041 64,009
Business-type Activities:
Invested in capital assets,
net of related debt 67,048 66,690 66,155 64,760 65,440 66,754
Restricted 16 700
Unrestricted 10,354 9,727 12,089 12,837 14,595 14,796
Total business-type activities
net assets 77,402 76,417 78,244 77,597 80,051 82,250
Primary government:
Invested in capital assets,
net of related debt 124,446 122,416 122,650 121,423 123,456 124,770
Restricted 16 700
Unrestricted 15,363 16,363 18,035 18,738 19,620 20,789
Total primary government
net assets 139,809 138,779 140,685 140,161 143,092 146,259
Note: GASB 34 conversion took place in 2003. Prior year net asset information is not available.
136
4.
Table 2
CITY OF SEWARD
Changes in Net Assets
Last Six Fiscal Years
accrual basis of accounting)
2003 2004 2005 2006 2007 2008
Expenses
Governmental activities:
General government 1,355,573 1,731,427 1,770,306 2,158,969 1,161,765 2,501,443
Public safety 2,286,556 2,299,873 2,383,911 2,440,488 2,980,785 2,934,607
Public works 1,145,730 1,265,153 1,383,178 1,704,296 2,650,977 1,310,474
Parks and recreation 996,112 1,046,681 1,099,556 1,075,945 981,222 1,236,411
Library 316,679 358,364 367,077 378,487 384,835 398,108
Hospital 247,052 440,997 • 468,703 924,795 535,226 412,797
Sealife Center 1,839,836 1,804,367 1,028,302 1,578,315 1,672,365 1,736,147
Unallocated interest 466,382 371,982 432,438 347,367 306,989 . 116,906
Total governmental activities expenses 8,653,920 9,318,844 8,933,471 10,608,662 10,674,164 10,646,893
Business-type activities:
Electric 5,926,703 6,419,925 6,863,724 9,195,187 8,029,054 8,626,745
Water 1,346,099 687,542 760,363 813,245 859,799 1,194,311
Wastewater 706,332 705,508 693,096 747,484 901,759
Harbor 2,441,498 2,282,991 2,402,810 2,648,290 2,457,216 3,006;069
Seward Marine Industrial Center 1,541,608 1,591,311 1,521,930 1,278,774 1,076,730 1,149,453
Parking 75,983 95,209 112,013 117,150 129,623 119,723
Total Business-type activities 11,331,891 11,783,310 12,366,348 14,745,742 13,299,906 14,998,060
Total primary government expenses $ 19,985,811 21,102,154 21,299,819 25,354,404 23,974,070 25,644,953
Program Revenues
Governmental activities:
Charges for services:
General government 468,421 276,173 61,798 106,589 400,074 196,240
Public safety 683,916 737,338 687,763 761,316 706,575 669,988
Public works 149,464 116,742 219,843 239,984 111,756 116,833
Parks and recreation 471,396 548,283 565,168 529,289 592,063 627,038
Library 8,144 8,218 8,601 8,677 7,736 12,800
Operating grants and contribution 182,090 112,945 157,809 148,785 680,176 84,144
Capital grants and contributions 146,170 1,053,026 880,372 2,124,245 1,459,744 999,171
Total governmental activities
program revenues: 2,109,601 2,852,725 2,581,354 3,918,885 3,958,124 2,706,214
Business-type activities:
Electric 6,539,213 6,943,720 7,381,178 7,979,436 8,428,106 8,565,180
Water 1,445.553 769,970 1,019,832 1,008,765 996,633 998,541
1 Wastewater 702,770 791,988 811,546 800,168 801,095
Harbor 1,795,350 1,818,674 1,943,424 2,499,065 2,751,916 2,776,676
Seward Marine Industrial Center 330,249 318,009 324,828 286,640 290,221 304,517
Parking 114,008 167,101 177,098 175,792 182,133 240,339
Operating grants and contributions 1,260,476 65,247 159,595
Capital grants and contributions 429,796 722,130 3,149,335 928,554 2,578,739 2,769,005
Total business-type activities
program revenues: 10,654,169 11,442,374 14,787,683 14,950,274 16,093,163 16,614,948
Total primary government
program revenues 12,763,770 14,295,099 17,369,037 18,869,159 20,051.287 19.321,162
Net(expenses)/revenue:
Governmental activities 6,544,319) (6,466,119) (6,352,117) (6,689,777) (6,716,040) (7,940,679)
Business-type activities 677,722) (340,936) 2,421,335 204,532 2,793,257 1,616,888
Total primary government net expense S (7,222,041) (6.807.055) (3,930,782) (6,485.245) (3,922,783) (6.323,791)
Note: GASB 34 conversion took place in 2003. Prior year net asset information is not available.
137
Table 2.continued
CITY OF SEWARD
Changes in Net Assets
Last Six Fiscal Years
accrual basis of accounting)
continued
I I
2003 2004 2005 2006 2007 2008
General Revenues and Other
Changes in Net Assets
Governmental activities:
Taxes:
Sales taxes 2,894,455 3,123,314 3,411,283 3,518,435 4,068,600 4,137,758
Property taxes 670,297 973,948 802,539 864,906 862,258 943,832
Other taxes 77,135 89,473 381,270 388,284 419,771 442,130
Grants and entitlements 462,249 324,452 339,074 388,766 538,799 1,354,871
Investment earnings 151,035 170,179 218,102 436,241 314,642 612,611
Other 4,754,704 882,501 287,018)
Transfers 816,854 857,313 1,279,903 1,502,583 989,801 912,319
Special item-write-off NPO/OPEB 504,917
Total governmental activities 9.826,729 6,421,180 6,432,171 6,812,197 7,193,871 8,908,438
Business-type activities:
Investment earnings 139,432 116,165 323,821 650,078 651,763 640,277 1
Grants and entitlements 713,178
Other 71,125 22,555 362,218 139,952
Transfers 816,854) (857,313) (1,279,903) (1,502,583) (989,801) (912,319)
Total business-type activities 606,297) (718,593) (593,864) (852,505) (338,038)581,088
Total primary government 9,220,432 5,702,587 5,838,307 5,959,692 6,855,833 9,489,526
Changes in Net Assets
Governmental activities 3,282,410 44,939) 80,054 122,420 477,831 967,759
Business-type activities 1,284,019) (1,059,529) 1,827,471 647,973) 2,455,219 2,197,976
Total primary government 1,998,391 (1,104,468) 1,907,525 525,553) 2,933,050 3,165,735
Beginning net assets 137,884,486 139,882,877 138,778,409 140,685,934 140,160,381 143,093,431
Ending net assets 139,882,877 138,778,409 140,685,934 140,160,381 143,093,431 146,259,166
Change in net assets 1,998,391 (1,104,468) 1,907,525 525,553) 2,933,050 3,165,735
Note: GASB 34 conversion took place in 2003. Prior year net asset information is not available.
1
L_
I
138
Table 3
CITY OF SRWARD
Fund Balances of Governmental Funds
Last Ten Fiscal Years
modified accrual basis of accounting)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
General Fund
Reserved 6,280 35,869 85,786 83,480 369,415 552,316 491,535 388,409 458,860 693,590
Unreserved:
Designated 1,835,778 2,098,242 2,126,984 2,161,585 2 104,417 2,019,418 2 569 418 2,569,418 2 126,418 2,126,418
Undesignated 1,735,415 2,563,352 2,772,989 3,007,335 2,967,799 3,169,462 2,819,780 1,076,827 1,433,552 1,289,619
Total General Fund 3,577,473 4,697,463 4,985,759 5,252,400 5,441,631 5,741,196 5,880,733 4,034,654 4,018,830 4,109,627
All Other Governmental Funds
Reserved-debt service 336,095 564,909 685,422 789,298 811,246 554,190 688,006 661,787 945,478 1,063,260
Unreserved,reported in:
Special revenue funds 29,320 47,346 41,404 171,775 139,682 116,732 22,148 (510,560) (34,649)409,326
Capital projects funds 925,085 642,131 434,275 494,392 543,967 596,587 _ 483,827 1,635,625 (315,698) 12,321,378
Total all other Governmental
Funds 1,290,500 1,254,386 1,161,101 1,455,465 1,494,895 1,267,509 1,193,981 1,786,852 595,131 13,793,964
w
Total all Governmental Funds $ 4,867,973 5,951,849 6,146,860 6,707,865 6,936,526 7,008,705 7,074,714 5,821,506 4,613,961 17,903,591
Percentage Change-General
Fund(Undesignated only) 39.1% 47.7% 8.2% 8.5% 1.3% 6.8% 11.0%61.8% 33.1% 10.0%
Percentage Change-General Fund 22.0% 31.3% 6.1% 5.3% 3.6% 5.5% 2.4% 31.4% 0.4% 2.3%
Percentage Change-Other
Governmental 19.0% 2.8% 7.4% 25.4% 2.7% 15.2% 5.8% 493% 66.7%2217.8%
Percentage Change-All
Governmental Funds 7.6% 22.3% 3.3% 9.1% 3.4% 1.0% 0.9%17.7%20.7% 288.0%
Table 4
CITY OF SEWARD
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
Modified Accrual Basis of Accounting)
1999 2000 2001 2002 2003 2.004 2005 2006 2007 2008
Revenues
Taxes 3,584,389 3,953,139 3,913,556 4,045,976 3,637,867 4,201,664 4,581,860 4,756,073 5,363,265 5,535,081
Licenses and permits 144,003 139,871 134,396 169,979 286,837 254,613 164,628 278,515 144,654 129,956
Intergovernmental 1,344,510 1,667,366 2,040,493 1,276,577 1,239,445 1,935,598 1,891,500 3,057,175 2,072,811 2,355,038
Charges for services 1,475,581 2,179,832 2,161,177 1,783,271 1,828,901 1,824,270 1,883,636 2,078,065 2,375,767 2,610,515
Investment earnings 271,856 484,089 486,317 184,140 151,035 170,179 218,102 436,241 314,642 612,611
Other revenues 501,688 611,450 355,726 840,732 284,505 152,332 170,791 256,427 125,186 789,411
Total Revenues 7,322,027 9,035,747 9,091,665 8,300,675 7,428,590 8,538,656 8,910,517 10,862,496 10,396,325 12,032,612
Expenditures:
General government 1,569,272 1,601,677 1,743,428 1,972,672 1,914,692 2,050,449 2,736,435 2,737,586 2,956,706 3,369,478
Public safety 1,975,242 2,463,209 2,178,338 2,171,513 2,408,441 2,987,078 2,878,864 2,792,296 3,011,920 3,333,433
Public works 863,536 981,027 1,152,948 1,324,885 1,377,601 1,401,447 1,425,348 1,962,053 2,678,493 1,662,695
Parks and recreation 603,241 715,409 801,596 903,707 1,006,621 998,232 1,068,880 1,074,141 1,084,002 1,198,798
Library 234,882 251,865 258,832 268,384 283,721 305,758 313,348 332,577 339,222 368,696
I-Iospital and long-term care 43,729 6,614 96,935 320,119 66,058 1,615,516 1,114,693 14,590,201
Non-allocated capital outlay 970,108 1,176,757 1,163,511 462,532
Debt service:
o Principal 281,475 354,123 390,005 432,653 527,612 955,591 800,928 892,836 854,977 738,999
Retirement benefits 164,143 1,805,475 293,114 470,573
Interest and other costs 510,792 486,874 467,974 448,676 498,415 386,182 _ 397,610 402,274 260,544 1,328,506
Total expenditures 7,052,277 8,037,555 8,156,632 7,985,022 8,114,038 9,404,856 9,851,614 13,614,754 12,593,671 27,061,379
Excess of revenues over
under)expenditures 269,750 998,192 935,033 315,653 (685,448) (866,200) (941,097) (2,752,258) (2,197,346) (15,028,767)
Other financing sources(uses)
Transfers in 1,233,844 1,490,259 1,500,749 1,629,793 1,836,606 2,258,432 3,126,673 3,731,769 3,631,316 3,176,788
Transfers out 1,160,839) (1,523,516) (2,240,771) (1,384,441) (1,039,752) (1,401,119) (2,119,567) (2,232,719) (2,641,515) (2,264,469)
Net bond proceeds 95,937 81,066 27,406,078
Total other financing sources(uses) 73,005 33,257) (740,022) 245,352 892,791 938,379 1,007,106 1,499,050 989,801 28,318,397
Net change in fund balance 342,755 964,935 • 195,011 561,005 207,343 72,179 66,009 (1,253,208) (1,207,545) 13,289,630
Beginning fund balances 4,525,218 4,986,914 5,951,849 6,146,860 6,729,183 6,936,526 7,008,705 7,074,714 5,821,506 4,613,961
Ending fund balances 4,867,973 - 5,951,849 6,146,860 6,707,865 6,936,526 7,008,705 7,074,714 5,821,506 4,613,961 17,903,591
Net change in fund balances $ 342,755 964,935 195,011 561,005 207,343 72,179 66,009 (1,253,208) (1,207,545) 13,289,630
Debt service as a percentage of
noncapital expenditures 15.10%13.99%13.98%13.27% 14.68%17.33%16.18% 34.84% 14.89% 22.54%
Total non-capital expenditures $ 5,246,173 6,013,187 6,135,142 6,641,161 6,991,076 7,742,964 8,422,875 8,898,653 9,458,715 11,259,806
Table 5
CITY OF SEWARD
General Fund Revenues by Source
Last Ten Fiscal Periods *
Licenses Inter Charges Fines
Fiscal and Govern- for and
Year Taxes (a) Permits mental Services Bails Interest Other Total
1999 $ 3,584,389 $ 144,003 $ 1,021,209 $ 1,475,581 $ 17,347 $ 214,140 $ 218,597 $ 6,675,266
1999 2,255,326 73,715 438,185 925,721 10,748 104,719 41,956 3,850,370
2000 3,953,139 139,871 984,231 2,179,832 14,786 438,005 247,461 7,957,325
2001 3,913,556 134,396 1,120,299 2,161,177 16,378 447,888 290,694 8,084,388
2002 4,045,976 169,979 976,268 1,739,071 12,279 160,000 771,073 7,874,646
2003 3,637,867 286,837 973,170 1,828,901 20,152 135,686 243,304 7,125,917
2004 4,201,664 254,613 829,535 1,824,270 22,857 160,536 104,685 7,398,160
2005 4,581,860 164,628 984,920 1,883,636 23,206 194,247 143,649 7,976,146
2006 4,756,073 200,015 1,066,093 2,078,065 16,073 392,379 175,079 8,683,777
2007 5,363,265 144,654 1,189,258 2,375,767 17,611 285,066 97,445 9,473,066
2008 5,535,081 129,956 1,935,174 2,610,515 18,209 226,854 141,602 10,597,391
Effective July 1, 1999, the City of Seward changed from a fiscal year ending June 30, to a calendar year ending December 31.
This schedule includes ten full fiscal years plus the six-month transition period.
Represents the six-month period from July 1, 1999 through December 31, 1999.
a) Beginning 2003, GASB Statement No. 34 requires inter-fund payments-in-lieu-of-tax to be classifed as transfers rather than revenue
Table 6
CITY OF SEWARD
General Fund Tax Revenues by Source
Last Ten Fiscal Periods *
Payments-
in- Hotel/
Fiscal Property Sales Lieu-of- Motel
Year Tax Tax (1) Tax (2) Tax (3) Other(4) Total
1999 $ 523,993 $ 2,029,485 $ 864,106 $ 163,330 $3,475 $ 3,584,389
1999 515,544 1,197,288 419,108 122,248 1,138 2,255,326
2000 694,332 2,197,561 844,583 212,619 4,044 3,953,139
2001 663,747 2,165,586 872,749 209,458 2,016 3,913,556
2002 712,175 2,250,081 862,954 217,482 3,284 4,045,976
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
Effective July 1, 1999, the City of Seward changed from a fiscal year ending June 30, to a calendar
year ending December 31. This schedule includes ten full fiscal years plus the six-month transition
period.
A Represents the six-month period from July 1, 1999 through December 31, 1999.
1) Effective July 1, 2003, sales tax rate increased from 3% to 4%. 1/4 of all sales tax revenue is
transferred out of the General Fund to the Debt Service Fund to pay healthcare debt and capital costs.
2) Beginning 2003, GASB Statement No. 34 requires inter-fund payments-in-lieu-of-tax to be
classifed as transfers rather than revenues. From 2003 forward, PILT reflects external payments only.
3) The hotel/motel tax rate is 4%.
4) Represents tax-related penalties and interest.
142
Table 7
CITY OF SEWARD
Property Tax Rates
Direct and Overlapping Governments
Last Ten Fiscal Years
Per$1,000 of Assessed Value)
Flood
Year City Borough (1) KPCC (2)Service (3) Total
1999 3.12 8.00 0.10 0.00 11.22
2000 3.12 7.50 0.10 0.00 10.72
2001 3.12 7.00 0.10 0.00 10.22
2002 3.12 6.50 0.10 0.00 9.72
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
1) Includes Kenai Peninsula Borough only.
2) Kenai Peninsula Community College.
3) Seward/Bear Creek Flood Service Area created effective 2004.
Source: "Alaska Taxable, 2008"
L_l
143
Table 8
CITY OF SEWARD
Property Tax Levies and Collections
Last Ten Fiscal Periods *
Ratio of
Total Tax Delinquent
Total Current Percent Delinquent Total Collections Outstanding Taxes as
Fiscal Tax Tax of Levy Tax Tax as % of Delinquent % of Total
Year Levy Collections Collected Collections Collections Levy Taxes Levy
1999 $ 505,323 $ 488,883 96.7% $ 32,515 $ 521,398 103.2% $ 40,930 8.1%
1999 523,453 484,305 92.5%4,627 488,931 93.4%70,490 13.5%
2000 606,781 571,261 94.1% 41,770 613,031 101.0% 64,241 10.6%
2001 625,110 592,042 94.7% 32,951 624,993 100.0% 64,358 10.3%
2002 646,424 618,447 95.7% 32,036 650,483 100.6% 60,299 9.3%
2003 634,287 618,356 97.5% 26,536 644,892 101.7% 49,694 7.8%p
2004 666,848 650,763 97.6% 18,302 669,065 100.3% 47,477 7.1%
2005 733,298 717,697 97.9% 15,604 733,301 100.0% 47,474 6.5%
2006 835,829 801,964 95.9% 21,818 823,782 98.6%59,522 7.1%
2007 851,190 820,934 96.4% 17,948 838,883 98.6%37,846 4.4%
2008 784,672 874,259 111.4% 54,571 928,830 118.4% 25,826 3.3%
Effective July 1, 1999, the City of Seward changed from a fiscal year ending June 30, to a calendar year ending December 31.
This schedule includes ten full fiscal years plus the six-month transition period.
Represents the six-month period from July 1, 1999 through December 31, 1999.
Source: Kenai Peninsula Borough
Table 9
CITY OF SEWARD
Assessed and Estimated Actual Value of Taxable Property
Last Ten Fiscal Periods*
Ratio of
Assesed
Real Property Personal Property Total Property Tax Rates Value to
Estimated Estimated Estimated Direct Overlapping Combined Total Est.
Fiscal Assessed Actual Assessed Actual Assessed Actual City of (Kenai Tax Actual
Year Value Value Value • Value Value Value Seward) Borough)Rate Value
1999 $ 106,918,000 $ 114,049,300 $ 52,852,159 $ 70,534,400 $ 159,770,159 $ 184,583,700 3.12 8.00 11.12 86.56%
1999 113,464,200 124,730,000 58,163,405 72,987,600 171,627,605 197,717,600 3.12 8.00 11.12 86.80%
2000 154,991,200 167,589,200 55,354,065 71,952,600 210,345,265 239,541,800 3.12 7.50 10.62 87.81%
2001 152,839,700 172,127,800 57,901,379 77,274,400 210,741,079 249,402,200 3.12 7.00 10.12 84.50%
2002 157,214,800 175,990,700 57,383,564 77,702,100 214,598,364 253,692,800 3.12 6.50 9.62 84.59%
2003 159,864,700 175,842,600 56,833,535 69,146,300 216,698,235 244,988,900 3.12 6.50 9.62 88.45%
2004 163,163,200 191,098,900 60,038,915 79,244,100 223,202,115 270,343,000 3.12 6.50 9.62 82.56%
2005 178,133,000 198,141,000 69,039,838 87,242,600 247,172,838 285,383,600 3.12 6.50 9.62 86.61%
ui
2006 189,325,100 220,649,800 74,203,884 93,273,700 263,528,984 313,923,500 3.12 6.50 9.62 83.95%
2007 203,132,200 226,885,700 75,020,329 102,404,800 278,152,529 329,290,500 3.12 6.50 9.62 84.47%
2008 210,858,500 229,373,700 81,943,985 108,717,600 292,802,485 338,091,300 3.12 5.50 8.62 86.60%
Effective July 1, 1999,the City of Seward changed from a fiscal year ending June 30,to a calendar year ending December 31.
This schedule includes ten full fiscal years plus the six-month transition period.
Represents the six-month period from July 1, 1999 through December 31, 1999.
Source: "Alaska Taxable 2008",State of Alaska,and Kenai Peninsula Borough Certified Tax Roll.
Table 10
CITY OF SEWARD
Principal Property Taxpayers
Compared with 10 Years Ago
December 31, 2008
Percentage of Percentage of
2008 Total Taxable 1998 Total Taxable
Assessed Assessed Assessed Assessed
Taxpayer (2) Type of Business Value(1) Rank Value Value (1) Rank Value
Crowley Marine Services, Inc 11,287,524 1 4.2%
Seward Fisheries Seafood processing 9,849,150 2 3.6% 6,709,963 1 4.3%
Can Gottstein Grocery 7,573,721 3 2.8%
Breeze Inn Motel Hotel/Retail/Restaurant/Saloon 5,692,900 4 2.1%
GCI Communications 4,582,268 5 2.1%
Shoreside Petroleum Petroleum Products 4,258,350 6 1.7%
Kishan Group Hotel/Retail 3,228,100 7 1.6%
Telalaska Communications 3,018,199 8 1.2% 1,729,701 9 1.1%
O1 . Pacific Park Real Estate/Housing 2,930,700 9 1.1%
Polar Equipment, Inc Seafood processing 2,761,337 10 1.0%
Suneel Alaska Corporation Coal Export 5,804,399 2 3.7%
Kenai Fjord Tours, Inc. Boat Tours 3,969,375 3 2.6%
New Seward Hotel/Saloon Hotel/Saloon 2,750,027 4 1.8%
Breeze Inn Motel Hotel/Retail 2,342,737 5 1.5%
Anderson Tug &Barge Tug &Barge Service 2,312,306 6 1.5%
Harbor Gateway Enterprises Gas Station/Retail 2,306,307 7 1.5%
Harbor Enterprises, Inc. Petroleum Products 1,795,230 8 1.2%
Afognak Logging General Construction 1,668,190 10 1.1%
Total 55,182,249 20.4% 31,388,235 20.2%
1) Includes real and personal property
2) Source: Kenai Peninsula Borough assessing records. Above assessed values are a best effort to identify ten largest property taxpayers, although
values reflect aggregation of multiple tax accounts. It is possible that some tax accounts may have different names,making it difficult to identify as
being owned by the same entity. Therefore some valuations may have been inadvertently omitted above.
li
Table 11
CITY OF SEWARD
Principal Taxable Sales by Line of Business
December 31, 2008
Percent
of Total
FY08 Taxable Taxable
Type of Business Sales (1) Sales (2)
Retail Trade 47,295,682 45.0%
Accommodations, Food Service 34,735,735 33.1%
Public Administration 6,727,02'1 6.4%
Wholesale Trade 5,767,956 5.5%
Services 5,363,162 5.1%
Rental Residential Property 2,648,265 2.5%
Manufacturing 1,007,740 1.0%
Professional 644,427 0.6%
Construction Contracting 615,140 0.6%
Transportation and Warehousing 192,933 0.2%
Other 5,708 0.0%
105,003,769 100%
1) Taxable sales for 2008 are $105,003,769. Source: Kenai Peninsula Borough EDD.
2) Total sales tax collected in 2008 is $4,094,578. Source: Kenai Peninsula Borough Finance
Department confirmation letter.
147
Table 12
CITY OF SEWARD
Ratios of Outstanding Debt by Type(1)
Last Ten Fiscal Years
Debt as a% of Debt per
Governmental Activities Business-Type Activities Personal Income(3) Capita(4) Debt as a%
Total Total of Estimated
Total Primary Primary Actual TaxableFiscalG.O.Revenue Capital G.O. Revenue Capital Primary Govern- Govern- Govern- Govern- Value of
Year Bonds(2) Bonds(6) Leases Bonds(2) Bonds(6) Leases Loans Government mental ment mental ment Property(5)
1999 $ 9,185,640 $ 4,724,360 $ 3,100,000 $ 846,628 $ 793,490 $ 18,650,118 12.3% 25.0% $ 3,052 $ 6,196 10.10%
2000 8,513,277 3,421,723 6,000,000 588,869 713,841 19,237,710 10.8% 24.4% 3,008 6,798 8.03%
2001 8,123,272 2,651,728 5,870,000 804,650 667,723 18,117,373 10.3% 23.0% 2,944 6,567 7.26%
2002 7,690,620 1,989,380 5,640,000 627,827 619,244 16,567,071 9.7% 20.8% 2,793 6,016 6.53%
2003 7,223,262 267,027 1,386,738 5,405,000 185,000 569,587 15,036,614 9.3% 18.6% 2,681 5,382 6.14%
2004 7,069,933 326,522 665,068 5,155,000 95,000 518,722 13,830,245 9.5% 17.8%2,695 5,038 5.12%
2005 6,348,571 257,533 521,429 6,410,000 465,543 14,003,076 8.7% 18.5%2,601 5,513 4.91%
2006 5,576,146 185,143 373,854 10,590,000 410,429 17,135,572 6.9% 20.5%2,211 6,575 5.46%
2007 4,737,655 109,184 222,345 10,175,000 3,007,351 18,251,535 5.4% 20.5% 1,845 6,948 5.54%
2008 4,015,782 27,000,000 45,777 169,218 15,645,000 3,544,957 50,420,734 4.3% 53.5% 1,526 18,948 14.91%
V
00
1) Excludes other than debt instruments(i.e.compensated absences,net pension obligation,inter-fund loans)
2) G.O.Bonds represent general obligation bonds pledging the full faith and credit of the City.
3) Personal income is estimated by using Kenai Peninsula Borough income to calculate per capita income.(See http://www.bea.gov/bea/regional/refs)
4) Population data can be found on Table 13.
5) Estimated Actual Taxable Value data can be found on Table 9.
6) Health facilities bonds to be repaid from fees and charges.
Note:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
Source: City of Seward
i
Table 13
r-
CITY OF SEWARD
i
Ratio of Net General Obligation Bonded Debt to Assessed Value and
Net General Obligation Bonded Debt per Capita
Last Ten Fiscal Periods *
Ratio of
Debt Net
Gross Payable Bonded Net
Assessed Bonded From Net Debt to Bonded
Fiscal Population Value Debt Enterprise Bonded Assessed Debt per
Year 1) 2) # 3) # Revenues # Debt#Value Capita
1999 3010 159,770 $ 13,910 $4,724 $ 9,186 5.75% $ 3,052
1999 3010 171,628 13,025 4,157 8,867 5.17% 2,946
2000 2830 210,345 11,935 3,421 8,513 4.05% 3,008
2001 2759 210,741 10,775 2,651 8,123 3.85% 2,944
2002 2754 214,598 9,680 1,989 7,690 3.58% 2,792
2003 2794 216,698 8,610 1,387 7,223 3.33% 2,585
2004 2745 223,202 7,735 665 7,070 3.17% 2,576
2005 2540 247,173 6,870 521 6,349 2.57% 2,500
2006 2606 263,529 5,950 374 5,576 2.12% 2,140
2007 2627 278,153 4,960 222 4,738 1.70% 1,804
2008 2661 292,802 4,185 169 4,016 1.37% 1,509
Effective July 1, 1999, the City of Seward changed from a fiscal year ending June 30, to a calendar year
ending December 31. This schedule includes ten full fiscal years plus the six-month transition period.
A Represents the six-month period from July 1, 1999 through December 31, 1999.
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 2008"
149
Table 14
CITY OF SEWARD
Computation of Direct and Overlapping Bonded Debt
December 31, 2008
Net General Amount
Obligation Percentage Applicable
Bonded Debt Applicable to City of
Jurisdiction Outstanding to Seward Seward
Direct:
City of Seward 4 015 782 (1) 100tyO 0 4,015,782
Overlapping:
Kenai Peninsula Borough 22,304,000 (2) 5.7% (3; 1,271,328
26,319,782 5,287,110
1) Excluding general obligation bonds reported in the Enterprise Funds.
2) Source: Kenai Peninsula Borough finance department.
3) Based on ratio of City of Seward assessed value (real and personal property=$301,604,075)
to total assessed value of the Kenai Peninsula Borough ($5,322,738,518)
Source: "2008 Alaska Taxable" p. 49, State of Alaska, and KPB main and supplemental tax rolls.
r -,
150
Table 15
CITY OF SEWARD
Legal Debt Margin
December 31, 2008
i
No debt limit mandated by law.
I 4
I fI
i 7
151
Table 16
CITY OF SEWARD
Ratio of Annual Debt Service Expenditures
for General Obligation Debt (1)
to Total General Fund Expenditures
Last Ten Fiscal Periods *
Retirement
Past- Total Ratio of
Service Total General Debt Service
Fiscal Cost Debt Expenditures to General
Year Principal Interest Payments Service (I) 2) Expenditures
1999 $ 281,475 $ 510,792 $ 792,267 $ 5,938,514 13.34%
1999 318,240 251,818 570,058 3,458,351 16.48%
2000 507,340 333,657 840,997 6,342,573 13.26%
2001 390,005 467,974 857,979 6,779,450 12.66%
2002 496,723 384,606 881,329 7,391,687 11.92%
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 1,805,475 3,003,514 10,988,362 27.33%
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%
Effective July 1, 1999, the City of Seward changed from a fiscal year ending June 30, to a calendar
year ending December 31. This schedule includes ten full fiscal years plus the six-month transition
period.
A Represents the six-month period from July 1, 1999 through December 31, 1999.
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, includes a one-time payoff of
Seward General Hospital PERS costs in the amount of$1,708,126.
2) Total General Expenditures includes General Fund and Debt Service Fund.
152
Table 17
CITY OF SEWARD
Revenue Bond Coverage
Electric Enterprise Fund
Last Ten Fiscal Years
Net
Revenue
Gross Operating Available
Fiscal Revenues Expenses for Debt Debt Service Requirements (3)Coverage
Year 1)2) Service Principal Interest Total 4)
1999 $ 6,720,313 $ 3,644,529 $ 3,075,784 $ 75,000 $ 180,760 $ 255,760 12.03
2000 6,704,860 4,171,110 2,533,750 100,000 171,573 271,573 9.33
2001 6,937,500 4,479,770 2,457,730 130,000 163,120 293,120 8.38
2002 6,903,078 4,636,527 2,266,551 140,000 153,198 293,198 7.73
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
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. Excludes general obligation bonds reported in
Electric Enterprise Fund.
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.
153
Table 18
CITY OF SEWARD
Revenue Bond Coverage
Harbor Enterprise Fund
Last Eight Fiscal Years (*)
Net
Revenue
Gross Operating Available
Fiscal Revenues Expenses for Debt Debt Service Requirements (3)Coverage
Year 1)2) Service Principal Interest Total 4)
2001 $ 1,811,896 $ 1,132,855 $ 679,041 $ 132,098 $ 132,098 5.14
2002 1,752,202 1,214,763 537,439 90,000 158,518 248,518 2.16
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
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.
2000 Harbor Enterprise Fund revenue bonds refunded in 2007. Bonds were issued in 2005 in the amount of
1.5 million for float construction and in 2006 in the amount of$4.5 million for expansion of the south harbor.
ii
154
Table 19
CITY OF SEWARD
Demographic and Economic Statistics
Last Ten Fiscal Years
City of Seward For the Kenai Peninsula Borough (A)
Per Capita
Fiscal School Personal Personal Median Population School Unemployment
Year Population Enrollment Income Income (2) Age 1) Enrollment Rate(3)
1999 3,010 818 ; 74,584,790 $ 24,779 35:4 48,952 10,179
2000 2,830 836 78,863,610 27,867 36.1 49,691 9,896 8.00%
2001 2,759 796 79,754,413 28,907 36.3 50,005 9,963 7.90%
2002 2,754 761 82,823,796 30,074 36.3 50,621 9,799 9.40%
2003 2,794 695 80,917,034 28,961 36.7 51,398 9,661 10.00%
2004 2,745 685 77,916,825 28,385 38.1 51,398 9,467 9.50%
2005 2,540 632 75,709,780 29,807 36.3 50,980 9,534 8.70%
tm
u, 2006 2,606 580 83,399,818 32,003 36.3 51,224 9,382 8.10%
2007 2,627 577 89,131,483 33,929 39.7 51,350 9,135 7.70%
2008 2,661 577 ' 94,239,315 35,415 39.2 53,017 9,135 *8.20%
A) Data for the City of Seward is not available, but should be comparable to this data which is for the Kenai Peninsula Borough
1) "Alaska Taxable" as of July 1 of each fiscal year
2) Data for 1997-2002 not available for Seward so utilizes Kenai Peninsula Borough data for 1997-2002,which should be comparable.
3) Data is provided by the State of Alaska Department of Labor: http://www.labor.state.ak.us/research/emp_ue/kblfhtm
Data unavailable at this time, prior year information is used
The Bureau of Labor Statistics, changed their method of calculating unemployment rates; comparable data not available prior to 2001.
Table 20
CITY OF SEWARD
Seward Area Principal Employers
Rank * Employer Employment *
2007 2006 2007 2006
1 1 State of Alaska- Excludes University 338 339
2 9 Ocean Beauty 141 89
3 2 Alaska Sealife Center 133 143
4 5 Icicle Seafoods 118 103
5 4 Providence 114 112
6 8 CIRI Alaska Tourism 100 94
7 3 City of Seward 98 112
8 7 Kenai Peninsula Borough School District 88 96
9 6 Safeway 84 85
10 Shoreside Petroleum 65 51
10 Federal government 41 58 1
Source: I-
2007 - State of Alaska, Department of Labor. Data no longer compiled by Kenai Peninsula
Borough. Reflects Monthly Average Employment Annualized.
2006 -Kenai Peninsula Borough. Reflects Annual Average Employment.
Note: Total City employment figures were not available prior to publication.
156
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157
Table 22
CITY OF SEWARD
Operating Indicators by Function
Last Ten Fiscal Years
Year
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Function
Public Safety
Police Services:
Physical arrests 399 364 483 403 467 379 458 305 257 332
Traffic violations 376 1,542 1,186 431 1,059 808 1,406 1,010 1,187 327
Parking violations 125 161 146 139 227 196 56 59 40 102
Fire and Emergency Services:
Number of calls answered 120 183 216 188 169 153 181 179 198 299 (a)
Harbor
Registered vessels 3,244 3,857 4,000 3,874 4,064 4,344 4,344 3,100 1,630 3,347
Number on waiting list for slips 367 323 327 352 385 447 471 477 362 287
Number of boat lifts 563 565 613 418 383 414 382 423 417 425
VI General cargo tonnage 17,780 5,803 1,831 3,117 149 317 35,318 573 582 606
00 Fish product tonnage 1,542 21,758 13,502 18,995 23,405 16,787 21,300 12,972 21,873 16,299
Petroleum(gallons)3,258,244 2,921,054 2,610,537 2,782,117 2,614,014 2,362,865 2,569,060 2,691,297 2,957,732 2,780,723
Water and Wastewater Systems:
Water service connections 864 857 876 856 884 858 917 921 933 928
Daily average consumption(gallons) 1,300,000 1,565,000 1,300,000
Sewer service connections 837 832 856 838 854 826 887 890 901 898
Daily average treatment(gallons) 870,000 715,000 504,745
Electric System:
Number of service connections 2,218 2,333 2,458 2,471 2,459 2,543 2,831 2,901 3,089 3,112
Total kilowatt hour sales 55,252,317 55,496,119 54,940,719 53,800,825 54,664,399 55,682,929 54,786,754 55,412,943 56,228,590 56,360,698
a) Beginning June 2008,began providing aid response for medical calls.
Source: City of Seward departments
1 1
Table 23
CITY OF SEWARD
Capital Asset Statistics By Function
Last Ten Fiscal Years
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Lane miles of street 43.14 43.14 43.64 43.64 44.14 44.14 44.14 52.00 52.00 52.00
Number of street lights 198 198 233 235 235 235 235 258 258 265
Public Safety:
Number of fire stations 2 2 2 2 2 2 2 2 2 2
Fire rating (ISO) 4/9 4/9 4/9 4/9 4/9 4/9 4/9 4/9 4/9 4/9
Number of fire hydrants 185 185 185 197 197 197 197 217 221 220
Number of police stations 1 1 1 1 1 1 1 1 1 1
Number of Facilities:
Parks and playgrounds 11 11 17 18 18 19 19 19 19 20
Libraries 1 1 1 1 1 1 1 1 1 1
Sewer treatment plants 2 2 2 2 2 2 2 2 2 2
Electric distribution line (miles) 55 55 55 55 55 63 63 65 65 65
Electric substations 3 3 3 3 3 3 3 3 3 3
Source: City of Seward departments
d
Table 24
CITY OF SEWARD
Property Value, Construction, and Bank Deposits
Last Ten Fiscal Periods *
Commercial Construction Residential Construction_
Total Real Number
Fiscal Property Number of Value of of Value of Bank
Year Value (1) Permits Permits Permits Permits Deposits
1999 $ 114,049,300 22 $ 5,937,950 25 $ 1,271,900 $ 47,116,749
1999 124,730,000 24 1,407,699 12 719,300 42,661,000
2000 167,589,200 23 1,982,065 36 1,469,000 45,217,355
2001 172,127,800 27 1,922,767 21 794,214 46,527,000
2002 175,990,700 31 4,888,627 31 883,708 42,577,128
2003 175,842,600 34 6,611,765 25 1,453,898 47,679,000 A
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 4_
Effective July 1, 1999, the City of Seward changed from a fiscal year ending June 30, to a
calendar year ending December 31. This schedule includes ten full fiscal years plus the
six-month transition period.
A Represents the six-month period from July 1, 1999 through December 31, 1999. i-
1) Estimated actual value from Table 9.
Source: Construction Data- City of Seward Engineering Department
Bank Deposit Data-Local Banks (First National Bank of Anchorage and Wells Fargo)
i
I '
160 1 H
Table 25
CITY OF SEWARD
Miscellaneous Statistics
December 31,2008
Date of Incorporation June 1, 1912
Class Home Rule City
Form of Government Council/Manager
Area,Square Miles 22
Miscellaneous Operational Statistics:
Library-number of volumes 32,585
Fire Department-Number of volunteers 32
Sewer System-Maximum daily capacity(gallons) 1,300,000
Water System-Maximum daily capacity(gallons) 8,856,000
Electric System:
Miles of distribution lines 65
Miles of transmission lines 42
Harbor-Number of permanent slips 669
City Employees:
Regular Employees-Full-time equivalent 97.72
Temporary Employees-Full-time equivalent 10.85
Demographics:
School Enrollment,City of Seward(3) 528
Unemployment Rate-Borough-Wide(1) 9.5%
Population(2) 2,661
Average annual earnings(4) 35,415
Qualified Voters 1,953
Facilities and Services not included in the reporting entity:
Education:
Elementary School
Number of students enrolled 266
Number of teachers 36.13
Middle School
Number of students enrolled 80
Number of teachers 11.77
High School
Number of students enrolled 182
Number of teachers 25.23
Alaska Vocational Technical Center
Number of students served annually 1,457
Number of teachers 38
Hospital:
Providence Seward Medical&Care Center
Number of patient beds(4 primary care;2 swing beds) 6
Number of long-term care beds 36
Number of employees:
Exempt 6
Non-Exempt 99
l) 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
161
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1v11kunda
RSM McGladrey Network
An Independently Owned Member
Cottrell Co.,& Inc.Offices in Anchorage&Kenai
Certified Public Accountants&Consultants
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
Honorable Mayor and City Council
City of Seward,Alaska
We have audited the financial statements of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of the City of Seward, Alaska as of
and for the year ended December 31, 2008, which collectively comprise City of Seward's basic
fmancial statements and have issued our report thereon dated June 15, 2009. Our report was modified
to include a reference to 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.
Other auditors audited the financial statements of Providence Seward Medical Center, as described in
our report on City of Seward's financial statements. The financial statements of Providence Seward
Medical Center were not audited in accordance with Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial reporting
as a basis for designing our auditing procedures for the purpose of expressing our opinion on the
financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's
internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the City's internal control over financial reporting.
A control deficiency 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
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the entity's ability to initiate, authorize, record, process, or
report financial data reliably in accordance with generally accepted accounting principles such that
there is more than a remote likelihood that a misstatement of the entity's financial statements that is
more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the fmancial statements will not be
prevented or detected by the entity's internal control.
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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
Our consideration of the internal control over financial reporting was for the limited purpose described
in the first paragraph of this section and would not necessarily identify all deficiencies in the internal
control that might be significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over financial reporting that we consider to be material weaknesses, as
defied above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City'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.
This report is intended solely for the information and use of the City of Seward's management,
Honorable Mayor and City Council, others within the entity, federal and state awarding agencies and,
if applicable, pass-through entities, and is not intended to be and should not be used by anyone other
than these specified parties.
Anchorage,Alaska
June 15,2009
164
A/ail T RSM McGladrey Network1 ,M k An independently Owned Member
I 41111 ill I Co-ttrell SiI Offices in Anchorage&Kenai
Certified Public Accountants&Consultants
Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Program and
on Internal Control Over Compliance in Accordance with OMB Circular A-133
Honorable Mayor and City Council
City of Seward,Alaska
Compliance
We have audited the compliance of City of Seward with the types of compliance requirements
described in the OMB Circular A-133 Compliance Supplement that are applicable to each of its major
federal programs for the year ended December 31, 2008. 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. Compliance with the requirements of laws, regulations, contracts, and grants
applicable to each of its major federal programs is the responsibility of City of Seward's management.
Our responsibility is to express an opinion on City of Seward's compliance based on our audit.
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. Our audit does not provide a legal determination on the City of
Seward's compliance with those requirements.
In our opinion, the City of Seward complied, in all material respects, with the requirements referred to
above that are applicable to each of its major federal programs for the year ended December 31, 2008.
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
Internal Control Over Compliance
The management of City of Seward is responsible for establishing and maintaining effective internal
control over compliance with the requirements of laws, regulations, contracts, and grants applicable to
federal programs. In planning and performing our audit, we considered City of Seward's internal
control over compliance with the requirements that could have a direct and material effect on a major
federal program in order to determine our auditing procedures for the purpose of expressing our
opinion on compliance, 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 control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a
federal program on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the entity's ability to administer a federal program such that
there is more than a remote likelihood that noncompliance with a type of compliance requirement of a
federal program that is more than inconsequential will not be prevented or detected by the entity's
internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that material noncompliance with a type of compliance requirement
of a federal program will not be prevented or detected by the entity's internal control.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and would not necessarily identify all deficiencies in internal control that
might be significant deficiencies or material weaknesses. We did not identify any deficiencies in
internal control over compliance that we consider to be material weaknesses, as defined above.
r
This report is intended solely for the information and use of City of Seward's management, Honorable.
Mayor and City Council, and federal awarding agencies and pass-through entities, and is not intended to
be and should not be used by anyone other than these specified parties.
6.
Anchorage,Alaska
June 15, 2009
I !
166
Mlkl lld,RSM McGladrey Network
An Independently Owned Member
Cottrell & (I1 o. Inc.Co.,Offices in Anchorage&Kenai
Certified Public Accountants&Consultants
Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Program and
on- Internal Control Over Compliance in Accordance with the State of Alaska Audit Guide and -
Compliance Supplement for State Single Audits
Honorable Mayor and City Council
City of Seward, Alaska
Compliance
We have audited the compliance of City of Seward with the types of compliance requirements described
in the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that are applicable
to each of its major state programs for the year ended December 31, 2008. City of Seward's major state
programs are identified in the accompanying Schedule of State Financial Assistance. Compliance with
the requirements of laws, regulations, contracts, and grants applicable to each of its major state programs
is the responsibility of City of Seward's management. Our responsibility is to express an opinion on City
of Seward's compliance based on our audit.
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. Our audit does not provide a legal determination of City
of Seward's compliance with those requirements.
In our opinion, City of Seward complied, in all material respects, with the requirements referred to above
that are applicable to each of its major state programs for the year ended December 31,2008.
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
Internal Control Over Compliance
The management of City of Seward is responsible for establishing and maintaining effective internal
control over compliance with the requirements of laws, regulations, contracts, and grants applicable to
state programs. In planning and performing our audit, we considered City of Seward's internal control
over compliance with the requirements that could have a direct and material effect on a major state
program in order to determine our auditing procedures for the purpose of expressing our opinion on
compliance, 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 control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a
state program on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the entity's ability to administer a state program such that
there is more than a remote likelihood that noncompliance with a type of compliance requirement of a
state program that is more than inconsequential will not be prevented or detected by the entity's
internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that material noncompliance with a type of compliance requirement
of a state program will not be prevented or detected by the entity's internal control.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and would not necessarily identify all deficiencies in internal control that
might be significant deficiencies or material weaknesses. We did not identify any deficiencies in
internal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of City of Seward's management, Honorable
Mayor and City Council, and the State of Alaska and is not intended to be and should not be used by
anyone other than these specified parties.
Anchorage,Alaska
June 15,2009
168
f CITY OF SEWARD
Schedule of Findings and Questioned Costs
Year Ended December 31, 2008
I. Summary of Auditor's Results
Financial Statements
Type of auditor's report issued Unqualified
Internal control over financial reporting:
Material weakness(es) identified? yes X no
Significant deficiency(ies) identified that are
not considered to be material weakness(es)? yes X none reported
Noncompliance material to financial
statements noted? yes X no
Federal Financial Assistance
Internal control over major programs:
Material weakness(es) identified? yes X no
Significant deficiency(ies) identified that are
not considered to be material weakness(es)? yes X none reported
Type of auditor's report issued on compliance
for major programs? Unqualified
Any audit findings disclosed that are required to
be reported in accordance with section 510(a) of
Circular A-133? yes X no
Identification of major programs:
CFDA
Agency Number Name of Federal Program or Cluster
Environmental Protection Agency 66.468 Drinking Water Loan—3rd
Avenue
Water Main
Dollar threshold used to distinguish between
Type A and Type B programs: 300,000
Auditee qualified as low-risk auditee? X yes no
State Financial Assistance
Internal control over major programs:
Material weakness(es) identified? yes X no
Significant deficiency(ies) identified that are
not considered to be material weakness(es)? yes X none reported
Type of auditor's report issued on compliance
for major programs? Unqualified
169
CITY OF SEWARD
Schedule of Findings and Questioned Costs, continued
Summary of Auditor's Results, continued
State Financial Assistance, continued
Dollar threshold used to distinguish a state
major program? 75,000
II. Financial Statement Findings
None noted.
III.Federal Award Findings and Questioned Costs
None noted.
IV.State Award Findings and Questioned Costs
None noted.
170
CITY OF SEWARD
Summary Schedule of Prior Audit Findings
Year Ended December 31, 2008
Federal
There were no prior year audit findings.
State of Alaska
There were no prior year audit findings.
171
CITY OF SEWARD
Corrective Action Plan
Year Ended December 31, 2008
There are no current year findings; therefore no corrective action plan is required.
172