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HomeMy WebLinkAbout2014 TBD Annual Report 345 6th Street Suite 600, Bremerton, WA 98337 Telephone: 360-473-5296 Fax: 360-473-5200 Cathy.Johnson@ci.bremerton.wa.us ______________________________________________________________Cathy Johnson, District Treasurer April 29, 2015 To the Members of the Bremerton Transportation Benefit District Board and the Citizens of the City of Bremerton: The Department of Financial Services is pleased to provide you with the Annual Financial Report of the Bremerton Transportation Benefit District (TBD) for the fiscal year ended December 31, 2014. State statute and financial best practices require the TBD issue annually a report on its financial position and activity. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with city management based upon a comprehensive framework of internal controls that have been established to provide assurances that the financial statements are free of any material misstatements. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner that presents fairly the financial position and results of operations of the TBD. Generally Accepted Accounting Principles (GAAP) in the United States of America requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The TBD’s MD&A can be found in the Financial Section of this report. Profile of the Government The Bremerton Transportation Benefit TBD was established on February 4, 2009, and operates under the laws of the State of Washington applicable to a Transportation Benefit District. The TBD is governed by the seven member City of Bremerton Council, acting as the Board. Effective January 1, 2014, the number of Council members was reduced to seven with initial terms of two and four years. The Board members are part-time elected officials who exercise the legislative powers of the TBD and determine matters of policy. Per the Charter of the TBD, the Board is comprised of two officers, the Board President and the Vice President. In addition, the City’s Financial Services Director shall act as Treasurer of the TBD pursuant to RCW 36.73.020(4) The TBD is coextensive with the boundaries of the City of Bremerton which is located in Kitsap County and lies east of the Olympic Mountains directly across Puget Sound from Seattle. As the largest city in the County, Bremerton had a 2014 population of 37,850 and serves as the urban center for the Bremerton-Silverdale Metropolitan Statistical Area (MSA). For over a century, Bremerton has been home to Puget Sound Naval Shipyard which continues to service U.S. Naval vessels and its personnel. The TBD adopts an annual (calendar year) budget and the Board is required to adopt the final budget by prior to the close of the fiscal year. This annual budget serves as the foundation for the TBD’s financial planning and control. Periodic amendments to the adopted budget are approved by the Board. Major Initiatives The TBD operates as an independent taxing District and was created to primarily benefit the City of Bremerton. On February 15, 2012 the TBD entered into an inter-local agreement with the City of Bremerton to preserve, maintain, construct and reconstruct City streets and other related public infrastructure either by contract or through the use of City forces. The TBD enacted a $20 per vehicle license fee to fund appropriate projects. In 2014 the TBD collected $444,012 in fees. The Board approved a final operating budget of $992,950 to maintain selected roadways in the City of Bremerton. The TBD used $746,326 of the proposed budget. Acknowledgments We would like to express our appreciation to all those who assisted and contributed to the preparation of this report. Respectfully submitted, Dino Davis Cathy Johnson Board President Treasurer Bremerton Transportation Benefit District Management Discussions and Analysis Year Ended December 31, 2014 This section of Bremerton Transportation Benefit District’s (referred to as “District” throughout this report) Annual Financial Report presents management’s overview and analysis of the District’s financial performance for the fiscal year ended December 31, 2014. This section should be read in conjunction with the financial statements and notes to the financial statements that follow this section. The Bremerton Transportation Benefit District was established on February 4, 2009 by the Bremerton City Council. The District operates within the boundaries of the City of Bremerton, and revenue generated by the District through an imposed $20 vehicle license supports local transportation improvement projects. The MD&A presents comparative financial information. Discussion of the Basic Financial Statements This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements. The basic financial statements are comprised of the following components: 1.Government-wide Financial Statements 2.Fund Financial Statements 3.Notes to the Financial Statements Government-wide Financial Statements Government-wide financial statements are designed to provide the readers with a broad overview of the District’s finances in a manner similar to a private-sector business. The statement of net position presents information on all of the District’s assets and liabilities, with the difference between the two reported as net position. This statement serves the purpose similar to that of a balance sheet of a private-sector business. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. However, this is just one indicator of financial health of the District. Other indicators include the level of change in local governmental support for transportation improvements that the District revenue provides, as well as the general economic conditions within the City of Bremerton. The statement of activities presents information showing how the District’s net position changed for the year ended December 31, 2014. It separates program revenue generated by its functions and programs. All changes in net position are reported as soon as the underlying event occurs, regardless of the timing of related cash flows. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District uses a single fund accounting system to ensure and demonstrate compliance with finance-related requirements and to provide management with information for controlling spending activities. The Governmental Funds Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance present a single column of financial data for the General Fund. Governmental funds are used to account for essentially the same functions as governmental activities in the government-wide financial statements. However, unlike government-wide statements’ use of accrual accounting, governmental fund financial statements focus on the near term inflows and outflows of spendable resources available at the end of the fiscal year. This information is useful in evaluating a government’s near-term financial requirements in comparison to near-term resources available. Notes to Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements in this report. Condensed Financial Data The following tables present condensed financial information related to the District’s Net Position for the year ended December 31, 2014. Statement of Net Position Governmental Activities:20132014 Total Assets568,010$ 313,750$ Total Liabilities60 47,455 Total Net Position567,950 266,295 Statement of Activities Governmental Activities:20132014 Revenues Vehicle Fees Tax431,866 444,012 Investment Interest486 659 Total Revenues432,352 444,671 Expenses Transportation53,629 746,326 Total Expenses53,629 746,326 Change in Net Postion378,723 (301,655) Net Position Beginning189,227 567,950 Net Position Ending567,950$ 266,295$ Overall Analysis of Financial Position & Result of Operations The District’s net position as of December 31, 2013 and 2014 was $567,950 and $266,295 respectively. This amount is restricted in full by RCW 36.73 for transportation improvements. The District’s most significant asset is cash, as the District does not maintain ownership of any capital assets. While the District has only been in operation less than three years, a positive net position in 2014 reflects the District’s ability to meet current and future obligations in the course of its activities. Over time, once the District has been in operation for multiple years, changes in net position may be used to analyze financial operations. In addition, since the TBD is used as a mechanism for financing street restoration, costs are controlled by the budget adoption and not adversely affected by changes in the financial environment. Fund Analysis The Bremerton Transportation Benefit District uses fund accounting to ensure and demonstrate compliance with finance related legal documents. The District has only one governmental type fund, the general fund. The District’s revenue is entirely generated from the collection of vehicle registration fees, recorded as taxes. The General Fund expenditures exceeded General Fund revenues by $301,655 thus decreasing ending fund balance by the same amount with an ending balance of $266,295 Average monthly revenue from these fees was $37,000. Actual collections exceeded anticipated 2014 revenue by $19,012. The entire fund balance is restricted for transportation improvements by RCW 36.73. Budget Variances in the General Fund Final BudgetActualVariance Budgetary Fund Balance, January 1 567,950 567,950 - Resources (inflows):425,000 444,671 19,671 Charges to appropriations (outflows): 905,000 746,326 (158,674) Budgetary Fund Balance December 3187,950$ 266,295$ 178,345$ Bremerton Transportation Benefit District Statement of Net Position December 31, 2014 2014 Governmental Activities Assets Current assets: Cash & Cash Equivalents279,456$ Receivables 34,294 Total assets 313,750 - Deferred outflows of resources Liabilities Accounts payable and other current liabilities47,4 55 Total liabilities 47,455 - Deferred inflows of resources Net Position Restricted for: Transportation Improvements266,295 $ 266,295 Total Net Position See accompanying notes to the financial statements Bremerton Transportation Benefit District Statement of Activities For the year ended December 31, 2014 2014 Governmental Activities Governmental Activites Expenses Transportation746,326$ Total Program Expenses746,326 Program Revenues Charges for Services- Total Program Revenues- General Revenues Taxes444,012 Interest 659 Total General Revenues444,671 Change in Net Position(301,655) Net Position Beginning567,950 Net Position Ending 266,295$ See accompanying notes to the financial statements Bremerton Transportation Benefit District Balance Sheet December 31, 2014 2014 ASSETS Cash and equivalents$ 279,456 Receivables, net 34,294 Total assets 313,750 Deferred outflows of resources - Total assets and deferred outflows of resources313, 750 LIABILITIES, DEFERRED INFLOW of RESOURCES and FUND BALANCES Liabilities: Accounts/contracts payable 47,455 Total liabilities 47,455 Deferred inflows of resources - Fund balances: Restricted 266,295 Total fund balances 266,295 Total liabilities, deferred inflows of resources and fund balances313,750$ See accompanying notes to the financial statement Bremerton Transportation Benefit District Statement of Revenues, Expenditures and Change in Fund Balance For the year ended December 31, 2014 2014 Revenues Taxes444,012$ Investment Earnings659 Total Revenues444,671 Expenditures Transportation746,326 Total Expenditures746,326 Excess of Revenues over Expenditures(301,655) (301,655) Net Change in Fund Balance Fund Balance - Beginning567,950 Fund Balance - Ending266,295$ See accompanying notes to the financial statements Bremerton Transportation Benefit District General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget to Actual For the Year Ended December 31, 2014 Variance with OriginalFinalFinal Budget BudgetBudgetActualPositive 201420142014(Negative) REVENUES Taxes350,000$ 425,000$ 444,012$ 19,012$ Other Revenue 659659 Total revenues350,000 425,000 444,671 19,671 EXPENDITURES Supplies and Services500,000 655,000 496,326 (158,674) Transfers- 250,000 250,000 - Total expenditures500,000 905,000 746,326 (158,674) - Excess (deficiency) of revenues over expenditures(150,000) (480,000) (301,655) 178,345 Fund balances-beginning205,983 567,950 567,950 - Fund balances-ending55,983$ 87,950$ 266,295$ 178,345$ See accompanying notes to the financial statements Bremerton Transportation Benefit District Notes to Financial Statements Year Ended December 31, 2014 1. Summary of significant accounting policies The financial statements of the City of Bremerton have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. A. Reporting Entity On February 4, 2009 the City authorized and approved the creation of a Transportation Benefit District (TBD) coextensive with the boundaries of the City in order to exercise the powers available under RCW 36.73. This blended component unit is governed by a board composed of the seven members of the Bremerton City Council, who serve in an ex-officio and independent capacity, with the City Director of Finance acting as District Treasurer. City employees perform all operational and administrative functions of the District. The primary purpose of the District is the acquisition, construction, improvement, provision and/or funding of the maintenance of City streets and related infrastructure. The TBD is an independent taxing district and was established primarily to benefit the City of Bremerton satisfying GASB Statement No. 14’s criteria for the recognition of the TBD as a blended component unit of the City. Beginning fiscal year 2012, the TBD has enacted a $20 per vehicle license fee to fund appropriate projects. In 2014, the TBD received total collections from vehicle license fees of $444,012. B. Government-wide and fund financial statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government. 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. Our policy is to not allocate indirect costs to a specific function. Program revenues are those items that are applicable to customers who purchase, use, or directly benefit from goods, services, or privileges provided by a given function. Grants and contributions that are restricted to meeting the operational or capital requirement of a particular function are also included. Taxes and other items not properly included among program revenues are reported instead as general revenues. The District reports a single governmental fund (the general fund) and therefore no interfund activity or additional separate fund statements are presented. C. Measurement focus, basis of accounting, and financial statement presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. 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 revenues to be available if they are collected within 30 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. The District reports the following major governmental fund: The general fund is the District’s operating fund. It accounts for all financial resources of the District. D. Budgetary Information 1. Scope of Budget Annual appropriated budgets are adopted for the District’s general fund on the modified accrual basis of accounting. Expenditures may not exceed appropriations Appropriations lapse at year-end 2. Amending the Budget Any revisions to the District’s approved budget must be approved by the Board of Directors through ordinance. Additionally, pursuant to RCW 36.73.160, the Board has developed a Material Change Policy to address Board and potential public involvement should significant changes to budgeted costs and/or scope occur. The financial statements contain the original and final budget information. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all supplemental appropriations authorized for the fiscal year. The budget was amended two times during the year. E. Assets, Liabilities and Net Assets 1. Cash and Cash Equivalents It is the District as well as the City’s policy to invest all temporary cash surpluses. At December 31, 2014, the District was holding $279,456 in cash and cash equivalents, of that amount, $279,301 was held in short-term residual investments of surplus cash. The interest on these investments is distributed back into the fund. 2. Receivables Taxes receivable consists of fees earned by the City but not yet received from the State. 3. Fund Balance Classification The District, in accordance with Governmental Accounting Standards Board Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions, classifies governmental fund balances as Non-Spendable, Restricted, Committed, Assigned or Unassigned. For the year ended December 31, 2014, the entire fund balance of $266,295 in the District’s General Fund is classified as restricted. It is only available for transportation improvement projects as prescribed by RCW 36.73. NOTE 2- Stewardship, Compliance and Accountability There have been no material violations of finance-related legal or contractual provisions NOTE 3- Cash and Equivalents A. Cash and Equivalents The City's deposits are entirely covered by federal depository insurance (FDIC) or by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC). The City invests excess funds in the Washington State Investment Pool. Due to the short term nature of the investments in the Pool, the funds are reported as cash and equivalents. NOTE 4- Risk Management The District retains no rights to any real or personal property, maintains no employees, and its Board of Directors and Treasurer are also officers/employees of the City of Bremerton. The City’s insurance policies cover claims against the District. NOTE 5- Contingencies and Litigations The District’s financial statements include all material liabilities. There are no material contingent liabilities to record. NOTE 6- Restricted Component of Net Position The government-wide statement of net position reports $266,295 of restricted component of net position which is restricted by enabling legislation. Bremerton Transportation Benefit District 2014 Completed Work per Approved TBD Workplan Category BudgetedCompleted Crack Seal Roads 94,09375,000 Hot Applied Street Markings 50,00050,000 Slurry Seal Pilot Program 194,282174,500 Grind & Patch 153,627355,500 Lower Wheaton Way 250,000250,000 Not to exceed$ 742,003905,000$ AFFIDAVIT OF PUBLICATION Account#342133 AD#605420 STATE OF WASHINGTON COUNTY OF KITSAP I,Teresa Hull, being first duly sworn on oath, deposes and says: That she is now, and at all times embraced in the publication herein mentioned was the principal clerk of the printers and publishers of KITSAP SUN; that said newspaper has been approved as a legal newspaper by order of the Superior Court of the County of Kitsap, in which County it is published and is now and has been for more than six months prior to the date of the publi- cation hereinafter referred to, published in the English language continually as a daily newspaper in Bremerton, Kitsap County, Washington, a weekly newspaper in Kitsap County, Washington and is now and during all of said time,was printed in an office maintained in the aforesaid place of publication of said newspaper; that the following is a true text of an advertisement as it was published in regular issues (and not in supplement form) of said newspaper on the following date, to wit:And on July 16, 2015 such newspaper was regularly distributed to its subscribers during all of said period. The full amount of the fee charged for the foregoing publication is the sum of$39.52. This amount has not been paid in full. Notary Public State of Washington TISHA SULLIVAN (Signature of Principal Clerk) My Appointment Expires Aug 4, 2p1g Subscribed and sworn to before me this day of July 16, 2015. �-f�G�.�.ik�.�P'v-v�-r---� PUBLIC NOTICE NOTICE IS HEREBY GIVEN by the Board of the Bremerton Transportation District that the DistricYs Annual Report for the year 2014 is avail- able to the public on-line at www.bremertonwa.gov under "Transportation Ben- efit DistricY' or in the City of Bremerton City Clerk's Office, 345 6th Street, Suite 600,Bremerton,Washington. JULY 16,2015 AD#605420 .