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2006 Annual Financial ReportCITY OF BANGER FINANCIAL STATEMENTS SEPTEMBER 30, 2006 TABLE OF CONTENTS INDEPENDENT AUDITOR'S REPORT CITY OFFICIALS PAGE # 1 REQUIRED SUPPLEMENTARY INFORMATION: Management's Discussion and Analysis 3-10 NOT INCLUDED IN DRAFT COPIES BASIC FINANCIAL STATEMENTS: Government -wide Financial Statements: Statement of Net Assets 11 Statement of Activities 12 Fund Financial Statements: Balance Sheet - Governmental Funds 13 Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds 14 Statement of Net Assets - Proprietary Fund 15 Statement of Revenues, Expenditures and Changes in Fund Net Assets - Proprietary Fund 16 Statement of Cash Flows - Proprietary Fund 17 Notes to Financial Statements 18-33 REQUIRED SUPPLEMENTARY INFORMATION: Budgetary Comparison Schedule -General Fund 34 Budgetary Comparison Schedule -Special Revenue Fund 35 Schedule of Pension Plan Funding Progress 36 OTHER SUPPLEMENTARY INFORMATION: Comparative Schedule of Revenues, Expenditures and Changes in Fund Balance -General Fund 37 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance - Special Revenue Fund 38 Comparative Schedule of Revenues, Expenses, and Changes in Net Assets - Proprietary Fund 39 Combining Schedule of Revenues & Expenses - Proprietary Fund 40 Schedules of Future Debt Service Requirements: General Long -Term Debt 41 Proprietary Fund 42 Schedule of Property Taxes 43 Schedule of Restricted Cash Accounts 44 Home Grant Receipts & Expenditures 45 REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED UPON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAL AUDITING STANDARDS MANAGEMENT LETTER William C. Spore, P.C. Certified Public Accountants Independent Auditor's Report To the City Council City of Sanger, Texas I have audited the accompanying financial statements of the governmental activities, business -type activities and major funds of the City of Sanger, Texas as of September 30, 2006, and for the year then ended, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of City's management, My responsibility is to express an opinion on these general purpose financial statements based upon my audit. I conducted my 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 I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business -type activities and major funds of the City of Sanger, Texas at September 30, 2006 and the changes in financial position and cash flows, where applicable, of those activities for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, I have also issued my report dated February 19, 2001 on my consideration of the City of Sanger's internal control over financial reporting and my tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of the audit. The management's discussion and analysis, the budgetary comparison schedule for the general and special revenue funds and the pension plan funding progress are not a required part of the basic financial statements, but are supplementary information required by GASB. I have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, I did not audit the information and express no opinion on it. My audit was conducted for the purpose of forming an opinion on the City's basic financial statements. The other supplementary information schedules described in the accompanying table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of the City of Sanger, Texas. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in my opinion is fairly presented in all material respects in relation to the basic financial statements taken as a whole. Wi//iom Co Spot- P.C. February 19, 2007 3950 Highway 360, Suite 102 # Grapevine, TX 76051 # 817/421-6619 CITY OF SANGER CITY OFFICIALS September 30, 2006 ELECTED OFFICIALS MAYOR COUNCILMEMBERS APPOINTED OFFICIALS CITY MANAGER CITY SECRETARY/ASSISTANT CITY MANAGER MUNICIPAL COURT JUDGE CITY ATTORNEY Joe Higgs Glenn Ervin Andy Garza Mike Walker Jack Smith Rosalie Chavez Danny Spindle &Ken Hartless Nichols, Jackson, Dillard, Hager &Smith SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 2 CITY OF SANGER MANAGEMENT'S DISCUSSION AND ANALYSIS USING THIS ANNUAL REPORT As management of the City of Sanger, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2006. The information provided here should be used in conjunction with the basic financial statements. This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: (1) government -wide financial statements, (2) fund financial statements and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Reporting the City as aWhole-Government-wide Financial Statements The Statement of Net Assets and the Statement of Activities The government -wide financial statements are designed to provide readers with a broad overview of the City's finances in a manner similar to a private -sector business. The Statement of Net Assets (page 10) presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets, Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating, The Statement of Activities (page 11) presents information showing how the City's net assets changed during the fiscal year. All changes in net assets are reported when the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused compensated absences). Capital grant funds are reported as revenues in the Statement of Activities. The City provides two types of activities -Governmental type activities and Business type activities: • Governmental type activities - Most.of the City's basic services are reported here, including police, municipal court, animal control, fire, library, community center, engineering, enforcement/inspection, parks, public works, sanitation, senior center, swimming pool and general administration. Property taxes, sales taxes, franchise fees, permit revenues and municipal court fines finance most of these activities. 3 • Business Type Activities - The City charges a fee to customers to help cover all or most of the cost of certain services it provides. The City's electric, water and sewer system is reported here. Reporting the City's Most Significant Funds Fund Financial Statements The Fund financial statements begin on page 13 and provide detailed information about the most significant funds -not the City as a whole, Some funds are required to be established by State law and by bond covenants. However, the City Council may establish other funds to help it control and manage money for particular purposes. The City's kinds of funds - governmental and proprietary - use different accounting approaches. • Governmental funds -Most of the City's basic services are reported in governmental funds, which focus on how money flows into and out of the funds and the balances left at the end of the year that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can be readily converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in a reconciliation at the bottom of the fund financial statements. • Proprietary funds -When the City charges customers for the services it provides, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact the City's water and sewer fund are the same as the business -type activities we report in the government -wide statements but we provide more detail and additional information, such as cash flows, for proprietary funds. 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 begin on page 18, GOVERNMENT -WIDE FINANCIAL ANALYSIS The City's net assets are as follows: 0 Current &Other Assets Capital Assets Total Assets Long -Term Debt Other Liabilities Total Liabilities Invested in Capital Net of Debt Restricted Unrestricted Total Net Assets GOVERNMENT -WIDE NET ASSETS TOTAL PRIMARY GOVERNMENTALACTIVITIES BUSINESS -TYPE ACTIVITIES GOVERNMENT 2006 2005 2006 2005 2006 2005 $ 4,440,150 $ 1,416,146 $ 7,058,631 $ 2,981,082 $ 11,498,781 $ 4,397,228 61384,052 51420,706 12,292,217 11,509,573 1816761269 16,930,279 10,824,202 61836,852 191350,848 14,490,655 30,175,050 21,327,507 610529792 313651025 71403,929 31995,606 13,456,721 71360,631 938,968 730,744 11568,615 11401,814 21507,583 21132,558 61991,760 4,095,769 81972,544 51397,420 15,964,304 91493,189 3,353,623 2,257,550 7,935,593 7,182,077 11,289,216 9,439,627 803,286 6631067 454,121 507,779 11257,407 11170,846 (324,467) (179,534) 1,9881590 11403,379 11664,123 11223,845 $ 31832,442 $ 21741,083 $ 10,378,304 $ 91093,235 $ 14,210,746 $ 11,834,318 At September 30, 2006 the City's assets exceeded its liabilities by $14,210,746, an increase of $2,376,428 from the prior year. The largest portion of the City's net assets is its investment in capital assets, (land, building, equipment and infrastructure.) During the fiscal year the City added $2,937,813 of capital assets including additions to its infrastructure assets as well as the purchases of two ambulances and a fire truck. The City uses these capital assets to provide services to the City's citizens, consequently these assets are not available for future spending. Analysis of City's Operations A summary of the City's operations for the year ended September 30, 2006, with comparative totals for the year ended September 30, 2005 is as follows: REVENUES Program Revenues: Charges for Services Operating Grants Capital Grants & Donations General Revenues: Property Taxes Sales & Beverage Taxes Franchise Taxes Hotel/Motel Taxes Interest Income Transfers TOTAL REVENUES PROGRAM EXPENSES General Government Home Grant Public Safety Streets & Sanitation Culture & Recreation Interest Expense Water & Sewer TOTALEXPENSES CHANGE IN NET ASSETS CHANGES IN NET ASSETS TOTAL PRIMARY GOVERNMENTAL ACTIVITIES BUSINESS -TYPE ACTIVITIES GOVERNMENT 2006 2005 2006 2005 2006 2005 $ 845,025 $ 784,836 $ 9,679,861 $ 8,250,418 $ 10,524,886 $ 9,035,254 542,116 136, 709 -- -- 542,116 136, 709 890,762 17,273 354,742 0 1,245,504 17,273 1,822,709 11732,907 928,550 848,987 3711676 304,033 14,340 11,514 78,750 56,475 (45,911) 54,889 5,4481017 31947,623 481,793 386,948 1,510,214 11185,711 601,713 1901279 4,356,658 367,655 0 1,306,619 1,0041804 581,453 1951591 3,456,122 (212,059) 106,762 45,911 9,975,217 8,690,148 8,690,148 (174,616) 53,937 (54,889) 81074,850 7,457,613 7,457,613 118229709 928,550 159,617 14,340 1851512 0 15,423,234 481,793 386,948 1,510,214 1,1851711 6011713 1901279 8,6901148 13,046,806 11732,907 848,987 129,417 11,514 1101412 0 12,022,473 367,655 0 1,306,619 1,004,804 581,453 195,591 7,457,613 10,913,735 $ 1,091,359 $ 491,501 $ 11285,069 $ 617,237 $ 2,3761428 $ 1,108,738 E Total revenues increased from $12,022,473 to $15,423,234, a 28% increase. During 2006 the City had significant increases in operating grants received (a $405,407 increase) and capital grants/developer contributions received (a $1,228,231 increase) which account for $1,633,638 of the $3,400,761 increase in total revenues. During the fiscal year the proprietary fund charges for services increased $1,429,443 while proprietary fund expenses increased $1,232,535, FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS Governmental Funds The focus of the City's governmental fund is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements, in particular, unreserved fund balance may serve a measure of a government's net resources available for spending at the end of the fiscal year. The City's governmental funds include the general fund and the special revenue fund. The special revenue fund is used to account for the activities of the City's two blended component units; the Sanger Texas Industrial Development Corporation (4A) and the Sanger Texas Development Corporation (413) along with the Hotel/Motel tax funds received by the City. The 4A and 4B funds are controlled by the City Council of the City of Sanger and their revenues are restricted for economic development as described in its by-laws. The Hotel/Motel tax funds are collected by the local motel are used by the City to promote tourism. At September 30, 2006 the special revenue fund had a restricted fund balance of $755,138, The fund balance of the general fund increased by $3,021,846 primarily due the issuance of 2006 Combination Tax and Revenue Certificates of Obligation in September 2006. The general fund received net bond proceeds of $3,143,615 in September 2006 which are included in general fund revenues in fiscal year 2006. None of the bond proceeds were expended in September 2006 which created an excess of revenues over expenditures for the fiscal year. The bond proceeds will be included in capital outlay each fiscal year as the funds are expended. General Fund revenues, compared to the prior year, is as follows: Property Taxes Sales &Beverage Taxes Franchise Taxes Intergovernmental Charges for Services Fines Licenses & Permits Donations Interest income GENERAL FUND REVENUE COMPARISON 2006 2005 CHANGE %CHANGE $ 1,834,716 $ 1,718,635 $ 116,081 6.75% 462,362 426,327 36,035 8.45% 371,676 304,033 67,643 22.25% 751,957 148,015 603,942 408003% 564,710 512,525 52,185 10.18%° 139,878 124,012 151866 12.79% 140,437 148,299 (71862) -5.30% 41296 51967 (11671)-28.00% 49,991 38,061 11,930 31.34% $ 41320,023 $ 31425,874 $ 894,149 26.10% During 2006 the City received grants totaling $592,792, which are included in the intergovernmental revenues. There were minimal grant revenues in 2005. These grant proceeds are as follows: GRANT PROCEEDS HOME GRANT FIRE DEPARTMENT GRANTS PARKS GRANT HISTORIC CHURCH RENOVATION 2006 2005 $ 3411200 $ 0 182,404 91310 39,188 0 30,000 0 $ 592,792 $ 91310 General fund expenditures totaled $5,708,000 in 2006, which is an increase of $1,570,290 from 2005. Included in general fund expenditures are Home Grant expenditures of $386,948 (there were no similar expenditures in 2005) and capital outlay expenditures of $1,648,258, which is an increase of $741,863 over 2005 capital outlay expenditures. Proprietary funds The City's proprietary fund statements (electric, water and sewer fund) provide the same type of information found in the government -wide financial statements, but in more detail. Current year revenues compared to the prior year revenues are as follows: WATER, SEWER &ELECTRIC REVENUE COMPARISON Water User Charges Sewer User Charges 2006 2005 CHANGE $ 916791861 $ 81250,418 $ 11429,443 The revenue increases were expected due to rate increases and the increasing cost of purchased electricity from the City's power provider which is "passed on" to the City's customers. Tap fee revenues are down due to a decrease in the number of new home starts in the City when compared to the prior year. 7 Proprietary fund expense, compared to the prior year, are as follows: WATER, SEWER & ELECTRIC EXPENSE COMPARISON Personnel Services Purchased Water/Electricity Supplies & Contract Services Repair & Maintenance Utilities Depreciation Franchise Fees 2006 1,319,368 5,1701814 3931235 360,152 118,155 793,384 212,059 ................................. $ 8,667,167 2005 CHANGE %CHANGE 1,180,164 1391204 11.80% 4,218,948 951,866 22.56% 6181335 74,900 12.11 % 321,272 381880 12.10% 851882 321273 37.58% 791,667 11717 0.22% 174,616 37,443 21.44% 7,390,884 1,276,283 The cost of purchased electricity, which the City resells to its customers, increased from $4,165,621 in 2005 to $5,133,115 in 2006, The electric department pays a six percent franchise fee to the general fund and as the electric revenues increase, the. franchise fee expense increases. General Fund Budgetary Highlights The original budget for the general fund was amended by the City Council in March 2007, The amendments increased budgeted revenues by $4,955,675 and budgeted expenditures by $1,812,275, The amendments were made to more accurately reflect expenditures that were incurred during the fiscal year and paid from an increase in revenues over budgeted revenues, and to reflect grant revenues, notes payable proceeds, transfers from the special revenues funds and bond proceeds received during the year that were not included in the original budgeted revenues. The original budget included a excess of budgeted revenues over budgeted expenditures of $25)611. The amended budget included the 2006 bond proceeds that were received in September 2006 that will be expended in future years. The amended budget indicates excess budgeted revenues over budgeted expenditures of $3,169,011, which includes $3,143,400 of 2006 bond proceeds that will be expended in future years, CAPITAL ASSETS The City's investment in capital assets as of September 30, 2006 amounts to $18,676,269 (net of depreciation). The investment in capital assets includes land, buildings, equipment and infrastructure. Infrastructure includes streets, water and sewer systems. The City's capital assets are as follows: Land Construction in Process Infrastructure Buildings & Equipment TOTAL CAPITAL ASSETS AT YEAR-END (net of accumulated depreciation) GOVERNMENTAL 376,840 $ 0 3,939,372 21067,840 $ 376,840 $ 0 3,548,999 11494,866 312,164 332,162 10,759,552 8881339 $ 312,164 45,691 10,301,892 8491826 TOTALS $ 689,004 332, 14,698,924 21956,179 162 689 45,691 13,850,891 21344,692 $ 6,3841052 $ 51420,705 $ 12,292,217 $ 11,509,573 $ 1 81676,269 $ 16,930,278 Major capital improvements made during the fiscal were as follows: GENERAL FUND Fire Truck Ambulances Street Chipper Truck Sidewalk Improvements Bridge & Street Improvements Quail Run Phase II Streets Fall Meadows Ph. III Streets Building for Street Dept, Parks Improvements Historic Church Improvements 17Z�7�71�ir_1T/111t•I�; Electric Department Bucket Truck Utility Metering System Water System Improvements Sewer System Improvements Electric System Improvements 234,975 86,056 51,450 561983 90,216 3811223 2951402 65,276 2441928 60,898 .................................. $ 1,567,407 .................................. .................................. 87,703 5921695 21,436 4311238 81,663 ............................... $ 1,214,735 ............................... Additional information on the City's capital assets can be found in Note 3. DEBT ADMINISTRATION In addition to issuing the 2006 Certificates of Obligations, the City added long-term debts for the purchase of vehicles, afire truck, electric department bucket truck and for utility metering system upgrades. Outstanding long-term debts are as follows: Certificates of Obligation Revenue Bonds Notes Payable Capital Leases Yarbrough Settlement Pay TOTAL OUTSTANDING DEBT AT YEAR-END GOVERNMENTAL ACTIVITIES BUSINESS -TYPE ACTIVITIES 2006 2005 2006 2005 $ 518951000 0 447591 204,068 155,256 , TOTALS 2006 2005 $ 21895,000 $ 0 $ 02,895,000 0 7,070,000 4,120,0 $ 6,701,915 $ 31842,337 $ 81055,638 $ 41455,113 $ 14,757,553 $ 81297,450 Additional information on the City's long-term debts can be found in Note 4. Do ECONOMIC FACTORS AND NEXT YEAR'S BUDGET Budgeted general fund revenues for fiscal year 2007 are $4,427,329, which is an increase of $218,803 from budgeted revenues for fiscal year 2006. The 2006 budgeted revenues includes transfers from the proprietary fund of $599,611. Proprietary fund 2007 budgeted revenues are $8,940,389, which is an increase of $1,646,275 over 2006 budgeted revenues. Budgeted water and sewer tap fees for 2007 are $780,000 while actual tap fees revenues for 2006 were $559,200, The City historically has used tap fees for improvements to the water and sewer infrastructure systems. This financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the City of Sanger. If you have questions about this report or need any additional information, contact the City Secretary at: 201 Bolivar Street, Sanger, TX. 76266 or at 940458-7930. CITY OF SANGER GOVERNMENT -WIDE STATEMENT OF NET ASSETS September 30, 2006 ASSETS CURRENT ASSETS Cash Accounts Receivable (net) Inventory TOTAL CURRENT ASSETS NONCURRENT ASSETS Restricted Cash Bond Issue Costs (net) & Capitalized Interest Capital Assets: Land Construction in Process Infrastructure Buildings & Equipment Less - Accumulated Depreciation Total Capital Assets, Net of Accum. Depr. TOTAL NONCURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Accounts Payable & Accrued Expenses Deferred Revenues & Customer Deposits Interfund Payables Compensated Absences Revenue & Cert. of Obligation Bonds Payable Notes Payable Capital Leases Payable Yarbrough Settlement Payable TOTAL CURRENT LIABILITIES NONCURRENT LIABILITIES Revenue & Cert. of Obligation Bonds Payable Notes Payable Capital Leases Payable Yarbrough Settlement Payable TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS Invested in Capital Assets, net of Related Debt Restricted For: Debt Service Hotel/Motel and Economic Development Unrestricted TOTAL NET ASSETS GOVERNMENTAL ACTIVITIES $ 68,782 239,827 0 308,609 4,031,550 99,991 376,840 0 51948,624 31438,865 (31380,277) 61384,052 10,515,593 10,824,202 206,587 12,063 (7,370) 78,565 422,500 1361378 46,948 43,297 938,968 5,472,500 311,213 157,120 111,959 6,052,792 6,991,760 3,353,623 48,148 755,138 (324,467) $ 31832,442 BUSINESS TYPE ACTIVITIES $ 120,737 11011,871 325,131 1,457,739 5,357,702 2431190 312,164 332,162 171635,461 2,105,223 (81092,793) 121292,217 171893,109 19,350,848 638,873 220,020 7,370 50,643 472,500 53,008 126,201 0 1,568,615 6,597,500 56,364 7501065 0 71403,929 81972,544 7,935,593 454,121 0 1,988,590 $ 101378,304 TOTAL $ 189,519 11251,698 325,131 1,766,348 9,389,252 3431181 689,004 332,162 23,584,085 5,544,088 (11,473,070) 18,676,269 28,408,702 30;175,050 845,460 232,083 0 129,208 895;000 189,386 173,149 43,297 2,507,583 121070,000 367,577 907,185 111,959 13,456,721 151964,304 11,289,216 502,269 7551138 11664,123 $ 14,210,746 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 11 n Al W_ W F- �U Z a W LL O Z IjZ W OW oa F- U) O 000 (D rn t rn LO O O O t, O N O 00 00 00 0 LO '[t a (O 00 r� LO O O LO r- �' r- N N d' J O � IQ (O d� N qtt M h. 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W � � � c � c o (!1 Z Z° C ate) u w O W (N 3 a ui ) � > Z U) Q U O o _ a)a �- U)o F- z c Ea)_ F-U �+- O O C7 a) o +� O a 00 F- tL m ELM U) U FM wa) U) m u �Xa)c'�F-o J~ m N O c � 06 u z�- woC�o°)� C9a.WLL_ �cF- W Q CITY OF SANGER BALANCE SHEET GOVERNMENTALFUNDS ASSETS Cash Receivables: Sales & Beverage Taxes Franchise Taxes Denton County -Fire Runs Interest Vendor Refunds Due from Other Funds Property Taxes TOTAL ASSETS LIABILITIES Accounts Payable Accrued Expenses Deferred Revenues TOTAL LIABILITIES FUND BALANCES Reserved For: Capital Outlay Debt Service Parks Hotel/Motel Fund Economic Development Designated For: Capital Outlay Library Parks Unreserved, Reported In: General Fund us TOTAL LIABILITIES &FUND BALANCES September 30, 2006 GENERAL FUND $ 3,382,944 $ TOTAL SPECIAL GOVERNMENTAL REVENUE FUNDS 717,388 $ 41100,332 37,750 37,750 75,500 27,371 0 27,371 251031 0 251031 15,387 0 15,387 11778 10 11778 71370 0 71370 94,760 0 94,760 31592,391 755,138 43347,529 145,169 0 145,169 81151 0 81151 94,760 0 94,760 2481080 0 248,080 3,143,615 0 3,143,615 48,148 0 48,148 91400 0 91400 91831 91831 7451307 745,307 7,447 0 7,447 12,926 12,926 1,329 11329 121,446 0 121,446 31344,311 755,138 410993449 $ 31592,391 $ 755,138 $ 4,347,529 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 13 CITY OF SANGER RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET ASSETS September 30, 2006 Fund Balance Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the Fund Balance Sheet Property Taxes receivable are not available to pay for current period expenditures and therefore are deferred in the fund balance sheet Long term liabilities and not due and payable in the current period and therefore are not reported in the Fund Balance Sheet NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 4,099,449 6,384,052 94,760 (6,745,819) $ 3,832,442 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page -13 CITY OF SANGER STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS REVENUES Property Taxes Sales & Beverage Taxes Franchise Taxes Hotel/Motel Tax Intergovernmental Charges for Services Fines Licenses & Permits Donations Interest Income TOTAL REVENUES EXPENDITURES General Government Home Grant Public Safety Streets & Sanitation Culture & Recreation Capital Outlay Debt Service: Principal Interest Bond Issue Costs TOTAL EXPENDITURES EXCESS REVENUES OVER (UNDER) EXPENDITURES For the Year Ended September 30, 2006 TOTAL GENERAL SPECIAL GOVERNMENTAL FUND REVENUE FUNDS $ 1,834,716 $ 0 $ 1,834,716 4621362 4663188 928,550 371,676 0 371,676 0 14,340 14,340 751,957 0 751,957 564,710 0 564,710 1391878 0 139,878 140,437 0 140,437 41296 0 41296 491991 35,152 85,143 41320,023 515,680 41835,703 OTHER FINANCING SOURCES (USES) Proceeds of Notes Payable/Capital Leases Proceeds of 2006 Bonds Transfer to/from Special Revenue Funds Transfer to Proprietary Fund for Sewer Transfer from Proprietary Fund Developer Contributions Bond Discount TOTAL OTHER FINANCING SOURCES (USES) EXCESS REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE -BEGINNING FUND BALANCE -ENDING 420,755 37,352 458,107 3861948 0 3861948 1,381,986 0 11381,986 718,030 0 718,030 517,597 0 517,597 1,6481258 0 11648,258 403,763 164,052 66,611 5,708,000 (1,387,977) 178,337 3,250,000 1901546 0 154,089 676,625 (39,774) 4,409,823 3,021,846 � 322,465 $ 31344,311 ` $ 164,996 568,759 17,498 181,550 0 66,611 2191846 51927,846 295,834 (1,092,143) 0 1781337 0 31250,000 (190,546) 0 (200,000) (200,000) 0 154,089 0 676,625 0 (39,774) (390,546) 41019,277 (94,712) 849,850 2,927,134 1,172,315 $ 4,099,449 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 14 CITY OF SANGER RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO STATEMENT OF ACTIVITIES For the Year Ended September 30, 2006 Net Change in Fund Balance -Governmental Funds $ 2,927,134 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlay as expenditures. However in the statement of activities the cost of these assets is allocated over the estimated useful lives as depreciation expense: Capital assets recorded in the current period 1,648,258 Depreciation expense on capital assets (684,911) Note Payable and Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. (31428,337) Repayment on debt principle is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 568,759 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds: Deferred Revenues -Properly Taxes (12,007) Some expenses in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds: Accrued Interest Expense Compensated absences (18,800) Interest paid related to unused bond proceeds and capital improvement projects are expenditures in the governmental funds but are capitalized and added to the cost of the capital assets being constructed in the Statement of Activities (61393) Debt issue costs are expenditures in the governmental funds, are capitalized and amortized in the Statement of Activities 106,385 CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 11091,359 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 14 CITY OF SANGER STATEMENT OF NET ASSETS PROPRIETARY FUND September 30, 2006 CURRENT ASSETS Cash Accounts Receivable (net) Interest Receivable Inventory TOTAL CURRENT ASSETS NONCURRENT ASSETS Restricted Cash Debt Issue Costs & Discount(net) Capitalized Interest Capital Assets: Land Construction in Process Distribution & Collection Systems Buildings & Equipment Less - Accumulated Depreciation Total Capital Assets, Net of Accum. Depr. TOTAL NONCURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Accounts Payable Accrued Expenses Customer Deposits Due to Other Funds Compensated Absences Revenue Bonds Payable Notes Payable Capital Leases Payable TOTAL CURRENT LIABILITIES NONCURRENT LIABILITIES Revenue Bonds Payable Notes Payable Capital Leases Payable TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES Invested in Capital Assets, net of Related Debt Restricted for Debt Service Unrestricted TOTAL NET ASSETS ASSETS $ 120,737 9781349 33,522 325,131 1.457.739 5,357,702 224,835 18,355 312,164 332,162 17,635,461 2,1051223 (8,092,793) 12,292,217 17.893.109 19.350.848 LIABILITIES 521,276 117,597 2201020 7,370 50,643 4721500 53,008 1261201 1.568.615 6,597,500 56,364 750,065 7,403,929 8,972,544 NET ASSETS 5 7,935,593 454,121 1,988,90 $ 10,378,304 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 15 CITY OF SANGER STATEMENT OF REVENUES, EXPENSES & CHANGES IN FUND NET ASSETS PROPRIETARY FUND For the Year Ended September 30, 2006 WATER, SEWER & ELECTRIC OPERATING REVENUES Charges for Services $ 9,057,728 Connection Fees 33,090 Miscellaneous 29,843 TOTAL OPERATING REVENUES 9,120,661 OPERATING EXPENSES Personnel Services 1,319,369 Purchased Water/Electricity 51170,814 Supplies & Contract Services 693,235 Repair & Maintenance 360,152 Utilities 118,155 Franchise Fees 212,059 Depreciation 793,384 TOTAL OPERATING EXPENSES 8,667,168 OPERATING INCOME 453,493 NONOPERATING REVENUES (EXPENSES) Interest Income 106,762 Tap Fees 559,200 Interest Expense (235,039) Developer Contributions 354,742 Transfers from 4A Fund 2001000 Transfers Out to General Fund (154,089) TOTAL NONOPERATING REVENUES (EXPENSES) 831,576 CHANGE IN NET ASSETS 11285,069 NET ASSETS -BEGINNING 91093,235 NET ASSETS -ENDING $ 10,378,304 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 16 CITY OF SANGER COMBINED STATEMENT OF CASH FLOWS - PROPRIETARY FUND For the Year Ended September 30, 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received from Customers $ 91068,834 Cash Payments to Suppliers for Goods and Services (61606,480) Cash Payments for Employees Services (11303,597) NET CASH PROVIDED BY OPERATING ACTIVITIES 11158,757 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Cash Transferred to Other Funds (156,680) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of Capital Assets (11625,844) Additions to Long -Term Debt 41145,276 Principal Paid on Bonds and Notes (544,751) Debt Issue Costs Paid (114,378) Interest Paid on Bonds and Notes (254,625) Tap Fees Collected 559,200 Transfers from 4B Fund 2000000 Capital Contributed - Grants & Developers 354,742 NET CASH USED FOR CAPITAL AND RELATED FINANCING ACTIVITIES 21719,620 CASH FLOWS FROM INVESTING ACTIVITIES: Interest on Investments 112,056 NET INCREASE (DECREASE) IN CASH 31833,753 CASH - BEGINNING OF YEAR 11644,686 CASH - END OF YEAR $ 51478,439 CASH PER BALANCE SHEET: Current Assets - Cash $ 120,737 Noncurrent Assets - Restricted Cash 51357,702 TOTAL CASH PER BALANCE SHEET $ 51478,439 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating Income $ 453,493 Adjustment to Reconcile Operating Income to Net Cash Provided by Operating Activities: Depreciation 793,384 (Increase) Decrease in Receivables (723530) (Increase) Decrease in Inventory/Prepaid Expense (36,772) Increase (Decrease) in Accounts Payable 660 Increase (Decrease) in Accrued Expenses (181) Increase (Decrease) in Customer Deposits 20,703 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 11158,757 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 17 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 3u, 2uuu NOTE l: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The City of Sanger operates under aCouncil-Mayor form of government, following the laws of a Home Rule Charter City as defined by the State of Texas. The City provides the following services: ambulance, animal control, community center, fire, library, enforcement/inspection, municipal court, parks, police, public works, sanitation, senior center, swimming pool and general administrative services, In addition the City owns and operates the City's electric, water and sewer systems. The City's financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). Governments are also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 (when applicable) that do not conflict with or contradict GASB pronouncements. The more significant accounting policies established in GAAP and used by the City are discussed below: A. REPORTING ENTITY As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Sanger (the primary government) and its component units. The following component units are included in the City's reporting entity because of its operational and financial relationship with the City. Blended Component Unit - (4A); The Sanger Texas Industrial Development Corporation (S.T.I.D.C.) is governed by a board of five directors, all of whom are appointed by the City Council of the City of Sanger and any of whom can be removed from office by the City Council at its' will. The SJ.I.D.C. was incorporated in the state of Texas as a non-profit industrial development corporation under Section 4A of the Development Corporation Act of 1979. The purpose of the S.T.I.D.C. is to promote economic development within the City of Sanger. Separate financial statements of the component unit can be obtained from the City's administrative offices. Blended Component Unit - (413); The Sanger Texas Development Corporation (S.T.D.C.) is governed by a board of seven directors, all of whom are appointed by the City Council of the City of Sanger and any of whom can be removed from office by the City Council at its' will, The S.T.D.C. was incorporated in the state of Texas as a non-profit industrial development corporation under Section 4B of the Development Corporation Act of 1979. The purpose of the S.T.D.C. is to promote economic and community development within the City of Sanger. Separate financial statements of the component unit can be obtained from the City's administrative offices. CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 200G B. BASIC FINANCIAL STATEMENTS -GOVERNMENT -WIDE STATEMENTS: The City's basic financial statements include both government -wide (reporting the City as a whole) and fund financial statements (reporting the City's major funds). Both the government -wide and fund financial statements categorize primary activities as either governmental or business type. The City's ambulance, animal control, community center, fire, library, enforcement/inspection, municipal court, parks, police, public works, sanitation, senior center, swimming pool and general administrative services departments and the hotel/motel, 4A and 4B special revenue funds are classified as governmental activities. The City's electric, water and sewer services are classified as business -type activities. In the government -wide Statement of Net Assets governmental activities are presented on a consolidated basis and are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The City's net assets are reported in three parts- invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. The City first utilizes restricted resources to finance qualifying activities. The government -wide Statement of Activities reports both the gross and net costs of each of the City's Functions (general government, public safety, public works, culture and recreation). The functions are also supported by general government revenues (property, sales and franchise taxes). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. Program revenues must be directly associated with the function (police, inspection). Operating grants include operating -specific and discretionary grants while capital grants reflect capital specific grants. Developer contributions for public works infrastructure are included in capital grants. The net costs (by function) are normally covered by general revenue (property, sales, franchise taxes). The City does not allocate indirect costs. This government -wide focus is more on the sustainability of the City as an entity and the change in the City's net assets resulting from the current year's activities. C: BASIC FINANCIAL STATEMENTS -FUND FINANCIAL STATEMENTS: The financial transactions of the City are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures/expenses. The various funds are reported by generic classification within the financial statements. The following fund types are used by the City. Page - 19 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2006 1. Governmental Funds: The focus of the governmental funds' measurement (in the fund statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The following is a description of the governmental funds of the City: General Fund -The General Fund is the general operating fund of the City. It is used to account for all financial resources not accounted for in other funds. Special Revenue - The Special Revenue Fund is used to account for the proceeds of the Sanger Texas Industrial Development Corporation and the Sanger Economic Development Corporation sales tax revenues and the Hotel/Motel tax revenues. The fund balance is reserved to signify amounts that are restricted to be used for economic development and promotion within the City. 2. Proprietary Funds: The focus of proprietary funds' measurement is upon determination of operating income, changes in net assets, financial position, and cash flows. The generally accepted accounting principles applicable are those similar to business in the private sector. The following is a description of the proprietary funds of the City: Electric, Water and Sewer -The Electric, Water and Sewer Fund is used to account for the operation of the City's electric, water and sewer systems for which a fee is charged to external customers for goods and services and the activity is (a) financed with debt secured by a pledge of the net revenues and (b) has the requirement that the cost of providing services, including capital costs, be recovered by user fees and charges. The City does not have any fiduciary funds. D: BASIS OF ACCOUNTING: Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It related primarily to the timing of the measurements made regardless of the measurement focus applied. 1. Accrual: Both governmental activities and business type activities in the government -wide financial statements and the proprietary fund statements are presented on the accrual basis of accounting, Revenues are recognized when earned and expensed are recognized when incurred. Page - 20 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2006 2. Modified Accrual: The governmental fund financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; Le, both measurable and available, "Measurable" means knowing or being able to reasonably estimate the amount. "Available" means collectible within the current period or within 60 days after year end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principle and interest on general obligation long-term debt, if any, is recognized when due. 3. Revenue Recognition: The City considers property, sales and franchise taxes as available if collected within 60 days after year end. All other governmental revenues are recognized when received. 4. Restricted Resources: When an expense is incurred for purposes for which both restricted and unrestricted resources are available the City first applies restricted resources. E. FINANCIAL STATEMENT AMOUNTS: 1. Cash and Cash Equivalents: The City has defined cash and cash equivalents to include cash on hand and demand deposits, 2. Capital Assets: Capital assets purchased or acquired with an original cost of $1,000 or more are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, or improvements and other capital outlays that significantly extend the useful lives of an assets are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation is provided on the straight-line basis over the following estimated useful lives: Buildings 5 - 50 years Equipment 3 - 20 years Electric, Water & Sewer Systems 10 - 50 years Infrastructure - Streets 10 - 20 years GASB No. 34 requires the City to report and depreciate new infrastructure assets effective with the with the fiscal year beginning October 1, 2003 and the City has elected to implement the retroactive infrastructure provisions at the same time. These infrastructure assets are likely to be the largest asset class of the City. Page - 21 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2006 3. Revenues: Substantially all governmental fund revenues are accrued. Property taxes are billed and collected within the same period in which the taxes are levied. Subsidies, grants and developer contributions to proprietary funds, which finance either capital or current operations, are reported as nonoperating revenues based upon GASB. No.33, 4. Expenditures: Expenditures are recognized when the related fund liability is incurred. 5. Compensated Absences: The City accrues accumulated unpaid vacation time when earned by the employee, The noncurrent portion (the amount estimated to be used in subsequent years) is maintained separately and represents a reconciling item between the fund and government -wide presentations. 6. Interfund Activity: Interfund activity is reported as either loans or transfers. Loans are reported as interfund receivables and payable as appropriate and are subject to elimination upon consolidation. Transfers between governmental or proprietary funds are netted as part of the reconcilement to the government -wide financial statements. 7. Equity Classifications: Government Equity is classified as net assets and displayed in three components: a: Invested in capital assets, net of related debt - Consists of capital assets net of accumulated depreciation and reduced by outstanding balances of any bonds, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Any outstanding debt is reduced by any unspent debt proceeds at the end of the fiscal year before the reduction discussed above. b, Restricted net assets - Consists of net assets with constraints placed on the use either (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted net assets - All other net assets that do not meet the criteria of "restricted" or "invested in capital assets, net of related debt." Page - 22 CITY OF SANGER SEPTEMBER 305 2006 Fund Statements Governmental fund equity is classified as fund balance. Fund balance is further classified as reserved and unreserved, with reserved further split between designated and undesignated, Proprietary fund equity is classified the same as in the government -wide statements. 8. Bad Debts: Allowance for uncollectable accounts receivable in the Proprietary Fund at September 30, 2006 is $68,451. The allowance for delinquent property taxes is not provided as it is considered to be immaterial. 9. Operating Revenues &Expenses: The City's Proprietary fund distinguish between operating and non operating revenues and expenses. Operating revenues and expenses of the City's water, sewer and electric fund consist of charges for services, connection fees and the costs of providing those services, including depreciation and excluding interest cost. All other revenues and expenses are reported as nonoperating. 10. Capitalized Interest: For proprietary fund reporting the City' capitalizes construction period interest costs when incurred. Capitalized interest for the fiscal year totaled $18,355, For government -wide reporting, the general fund capitalizes construction period interest costs when incurred. Interest earned on invested 2006 bond proceeds exceeded interest accrued on the bonds during the fiscal year, This excess of $6,393 has been capitalized and will reduce future capitalized interest costs. NOTE 2: CASH: At September 30, 2006 the City's cash accounts totaled $9,578,772 of which $9,266,860 was held in checking and certificate of deposit accounts at a two local financial institutions. The balances at the local banks were covered by federal depository insurance (risk category 1), and by collateral held by the pledging Bank's agent in the name of the City (risk category 2). The bank balances are as follows: Checking, Savings and CD's $ 9,131,897 Collateral: FDIC Coverage $ 100,000 Securities Pledged $11,005,943 Page - 23 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 3u, 2006 The accounts at Sanger an are adequately collateralized. The securities pledged by Sanger Bank are as follows: SECURITY PAR FMV FHLMC $ 878,000 $ 874,982 U S TREASURY NOTE 400,000 397,750 FNMA 11000,000 992,187 FHLMC 11000,000 992,631 FHLB 200,000 195,812 FHLB 250,000 246,016 DOUGLAS COUNTY HOSP 150,000 146,213 FHLB 200,000 193,437 FHLB 2001000 197,688 FHLB 250,000 249,141 FHLB 2001000 193,375 FHLMC 200,000 195,704 FHLMC 100,000 100,156 FFCB 250,000 241,641 FHLB 400,000 393,000 FHLMC 2501000 243,160 CARTHAGE WTR/SWR 175,000 189,812 FHLB 500,000 4991062 FHLMC 225,000 2261304 FFCB 250,000 2391219 FHLMC 250,000 2421687 FHLMC 400,000 3831003 FNMA 5001000 480,938 FHLB 250,000 245,234 FHLMC 250,000 243,129 FHLB 200,000 193,750 FNMA 200,000 194,625 FHLB 200,000 1961562 FFCB 500,000 488,281 FHLMC 2501000 248,372 GALVESTON CNTY MUD 345,000 348,833 DENTON CO WTR 125,000 124,400 KRUM CALL 135,000 1461406 FHLMC 250,000 2481997 GNMA 13,704 14,061 FHLB 200,000 199,375 11,146,704 $ 11,005,943 Page - 24 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS Held at GNB Financial: Checking, Savings and CD's Collateral: FDIC Coverage Securities Pledged Uncollateralized Balances SEPTEMBER 30, 2u06 $133,462 $100,000 33 462 The City also has unspent capital lease proceeds which are held in escrow at Wells Fargo Bank. The funds are invested by Wells Fargo in general obligation of the United States or in obligation fully insured by the United States. The funds are drawn down by the City as amounts come due to vendors related to the metering system capital improvement project. At September 30, 2006 there was $311,812 held in escrow at Wells Fargo Bank, all of which was fully collateralized. Cash and cash equivalents on the balance sheet consist of the following: Petty Cash $ 100 Checking, Savings and CD's 995780672 $ 9,578 772 NOTE 3: CAPITAL ASSETS: Capital asset activity for the fiscal year ended September 30, 2006 is as follows: CAPITAL ASSETS GOVERNMENTAL ACTIVITIES BEGINNING BALANCE ADDITIONS RETIREMENTS ENDING BALANCE Land &Easements $ 376,840 $ 0 $ 0 on 376,840 Infrastructure 5,124,801 823,823 0 5,948,624 Buildings & Improvements 9431081 1281074 0 1,071,155 Office Equipment 141,047 14,139 0 155,186 Equipment 1,530,302 682,222 0 21212,524 TOTAL AT HISTORICAL COST 81116,071 11648,258 0 91764,329 LESS ACCUMULATED DEPRECIATION Land & Easements 0 0 0 0 Infrastructure 11575,802 433,450 0 21009,252 Buildings & Improvements 266,656 39,436 0 306,092 Office Equipment 97,387 191593 0 1161980 Equipment 755,521 192,432 0 947,953 TOTAL ACCUMULATED DEPRECIATION 21695,366 684,911 0 31380,277 TOTAL CAPITAL ASSETS, NET $ 5,4201705 $ 963,347 $ 0 $ 61384,052 Page - 25 CITY OF SANGER CAPITAL ASSETS PROPRIETARY FUND NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER Jug 2006 BEGINNING ENDING BALANCE ADDITIONS RETIREMENTS BALANCE Land $ 312,164 $ 0 $ 0 $ 312,164 Construction in Process 45,691 286,471 0 332,162 Buildings 3951832 0 0 3951832 Equipment 11512,396 196,995 0 11709,391 Water System 51245,481 201,217 0 51446,698 Sewer System 615591058 622,999 0 71182,057 Electric System 41738,362 2681344 0 51006,706 TOTAL AT HISTORICAL COST 1818081984 11576,026 0 201385,010 ACCUMULATED DEPRECIATION Land 0 0 0 0 Buildings 84,103 14,757 0 98,860 Equipment 974,298 143,726 0 111180024 Water System 11829,043 153,366 0 11982,409 Sewer System 11697,967 2161810 0 11914,777 Electric System 21713,998 264,725 0 21978,723 TOTAL ACCUMULATED DEPRECIATION 71299,409 793,384 0 81092,793 TOTAL CAPITAL ASSETS, NET $ 11,509,575 $ 782,642 $ 0 $ 12,292,217 DEPRECIATION EXPENSE WAS CHARGED TO GOVERNMENTAL ACTIVITIES AS FOLLOWS: Administration $ 13,742 Economic Development 705 Police 50,196 Municipal Court 577 Animal Control 71725 Fire 52,338 Enforcement/Inspection 11208 Parks & Recreation 52,941 Engineering 11158 Streets 4661394 Swimming Pool 11,688 Vehicle Maintenance 71918 Sullivan & Community Centers 31908 Library 14,413 TOTAL DEPRECIATION EXPENSE $ 684,911 DEPRECIATION EXPENSE WAS CHARGED TO BUSINESS -TYPE ACTIVITIES AS FOLLOWS: Water 199,733 Sewer 263,666 Electric 3290985 $ 7931384 Page - 26 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 3u, 2uuG NOTE 4: LONG-TERM DEBT: The following is a summary of the City's Long -Term Debt. General Long Term Debt; Bond Obligations: Certificates of Obligation, Series 1994 -Original amount of $1,900,000; principal paid annually starting September 1, 1995; Interest paid semi-annually on March 1, and September 1, at rates ranging from 5.60 to 7.50%. The Bonds were issued for street improvements and library building construction and are to be repaid from property tax revenues and are further secured by a pledge of Proprietary Fund Net Revenues, Texas Tax and Revenue Certificates of Obligation, Series 2002 -Original amount of $2,360,000; principal paid annually starting September 1, 2003; Interest paid semi-annually on March 1, and September 1, at rates ranging from 4.20 to 5.70%. The Bonds were issued for the purpose of constructing and improving City streets and are to be repaid from property tax revenues and are additionally secured by a pledge of Proprietary Fund Net Revenues, Combination Tax and Revenue Certificate of Obligation, Series 2006 -Original amount of $3,250,000; principal paid annually starting September 1, 2007; Interest paid semi-annually on March 1 and September 1, at rates ranging from 4.00 to 4.10%. The Bonds were issued for the purpose of making improvements to the City's streets and are to be repaid from property tax revenues and are additionally secured by a pledge of the Proprietary fund net revenues. The Bond Obligations require that certain cash reserve accounts be maintained. At September 30, 2006 the City had established and maintained the proper reserve accounts. Notes payable: Note Payable -Sanger Bank - Original amount of $150,000, the note requires one hundred twenty monthly installments of $1,615, with the final installment due January 2012, The note bears interest at 6.25% and has sixty four installments remaining at September 30, 2006. The note proceeds were used to purchase and remodel a building to be used by the police department, which also serves as collateral for the note. Note Payable -Sanger Bank - Original amount of $120,000, the note requires sixty monthly installments of $2,234, with the final installment due December 2008. The note bears interest at 4.25% and has twenty seven installments remaining at September 30, 2006. The note proceeds were used to purchase a fire truck, which also serves as collateral for the note, Page - 27 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2006' Note Payable - Sanger Bank - Original amount of $39,295, the note requires thirty six monthly installments of $1,165, with the final installment due February 2008. The note bears interest at 4.25% and has seventeen installments remaining at September 30, 2006. The note proceeds were used to purchase two vehicles which also serve as collateral for the note. Note Payable -Sanger Bank - Original amount of $177,715, the note requires thirty six monthly installments of $525, with the final installment due February 2008.. The note bears interest at 4.25% and has seventeen installments remaining at September 30, 2006. The note proceeds were used to purchase a vehicle which also serves as collateral for the note. Note Payable - GNB Financial Bank - Original amount of $850,000, the note requires one hundred eighty monthly installments of $7,499, with the final installment due March 2011. The note bears interest at 2.80 percent under prime rate and has forty installments remaining at September 30, 2006. The note proceeds were used to purchase land for a development project between the Sanger Texas Industrial Development Corporation and Walmart Stores East, Inc. The loan will be repaid from the 4A sales tax proceeds to be collected by the Sanger Texas Industrial Development Corporation. As funds are available additional principal have been made on the note. Capital Leases: Capital Lease -Capital City Leasing - Original balance of $65,986. The lease requires a down payment plus four annual rental payments of $14,436 with one annual payments remaining at September 30, 2006. The City has a purchase option during the term of the lease to purchase the equipment at a designated purchase option price. The City intends to exercise this option at the end of the lease term. The proceeds of the lease were used to purchase parks equipment which also serves as security for the lease. Capital Lease -Diversified Lending, Inc. - Original balance of $18,860, The lease requires a down payment plus fifty eight monthly rental payments of $368 with thirty six payments remaining at September 30, 2006. The City has a purchase option during the term of the lease to purchase the equipment at a designated purchase option price. The City intends to exercise this option at the end of the lease term. The proceeds of the lease were used to purchase upgraded accounting software which also serves as security for the lease. Capital Lease -Texas Capital Bank - Original balance of $51,362, The lease requires five annual rental payments of $11,909 starting in October 2006. The City has a purchase option during the term of the lease to purchase the equipment at a designated purchase option price. The City intends to exercise this option at the end of the lease term. The proceeds of the lease were used to purchase street equipment which also serves as security for the lease. Capital Lease -Vision Bank - Original balance of $126,975. The lease requires six annual rental payments of $25,008 starting in December 2006. The City has a purchase option during the term of the lease to purchase the equipment at a designated purchase option price. The City intends to exercise this CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 3u, 2006 option at the end of the lease term. The proceeds of the lease were used to purchase afire truck which also serves as security for the lease. Lawsuit Judgment Payable: In July 2002 the City was issued the order of final judgment in the lawsuit Richard Yarbrough vs. the City of Sanger. The lawsuit related to the termination of Richard Yarbrough, a former police officer with the City. The City was ordered to pay Mr. Yarbrough a total of $320,120 in annual installments beginning on October 1, 2002 with the final installment due April 1, 2009. Proprietary Fund: Bond Obligations: Texas Utility System Revenue Bonds, Series 1996 - Original amount of $1,0600,000, principal paid annually on May 15; Interest paid semi-annually on May 15 and November 15, at rates ranging from 4.2% to 4.75%. The bonds were issued to provide funds for improving and extending the City's Sewer System. The Bonds are to be repaid from and are secured by the Proprietary Fund Net Revenues. Texas Utility System Refunding Revenue Bonds, Series 1999 - Original amount of $1,735,000, principal paid annually on May 15; Interest paid semi-annually on May 15 and November 15, at rates ranging from 4.25% to 4.40%. The bonds were issued to provide funds sufficient to advance refund maturities 2000 through 2011 of the City's outstanding Series 1991 Bonds. The Bonds are to be repaid from and are secured by the Proprietary Fund Net Revenues. Utility System Revenue Bonds, Series 2002 -Original amount of $2,540,000, principal paid annually on May 15; Interest paid semi-annually on May 15 and November 15, at rates ranging from 4.5% to 6.0%. The bonds were issued to provide funds for improving and enlarging the City's wastewater treatment plant and replacing various water and sewer lines. The Bonds are to be repaid from and are secured by. the Proprietary Fund Net Revenues. Combination Tax and Revenue Certificate of Obligation, Series 2006 -Original amount of $3,250,000; principal paid annually starting September 1, 2007; Interest paid semi-annually on March 1 and September 1, at rates ranging from 4.00 to 4.10%, The Bonds were issued for the purpose of making improvements to the City's water, sewer and electrical systems and are to be repaid from property tax revenues and are additionally secured by a pledge of the Proprietary fund net revenues. It is the City's intention to repay the bonds from Proprietary fund net revenues. The Bond Obligations require that certain cash reserve accounts be maintained. At September 30, 2006 the City had established and maintained the proper reserve accounts. CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2006 Notes Payable: Note Payable -Sanger an -Original amount of $60,401, the note requires sixty monthly installments of $1,120, with the final installment due March 2010. The note bears interest at 4,25% and has forty two installments remaining at September 30, 2006. The note proceeds were used to purchase a backhoe, which also serves as collateral for the note. Note Payable -Sanger Bank - Original amount of $120,253, the note requires thirty six monthly installments of $3,598, with the final installment due April 2008, The note bears interest at 4.25% and has nineteen installments remaining at September 30, 2006. The note proceeds were used to purchase a digger truck, which also serves as collateral for the note. Capital Leases: Capital Lease -Diversified Lending, Inc. - Original balance of $18,860. The lease requires a down payment plus fifty eight monthly rental payments of $368 with thirty six payments remaining at September 30, 2006, The City has a purchase option during the term of the lease to purchase the equipment at a designated purchase option price. The City intends to exercise this option at the end of the lease term. The proceeds of the lease were used to purchase upgraded accounting software which also serves as security for the lease. Capital Lease - ALTEC - Original balance of $86,500. The lease requires thirty six monthly rental payments of $2,701 with twenty one payments remaining at September 30, 2006, The City has a purchase option during the term of the lease to purchase the equipment at a designated purchase option price. The City intends to exercise this option at the end of the lease term. The proceeds of the lease were used to purchase a Hydraulic Derrick Truck used by the electric department. The vehicle is security for the lease. Capital Lease -Wells Fargo Bank - Original balance of $807,573, The lease requires ten annual rental payments of $104,455 starting in November 2006 with nine payments remaining at September 30, 2006, The City has a purchase option during the term of the lease to purchase the equipment at a designated purchase option price. The City intends to exercise this option at the end of the lease term. The proceeds of the lease were used to purchase utility metering equipment and software which also serve as collateral for the lease. Capital Lease -Vision Bank - Original balance of $87,703. The lease requires thirty six monthly rental payments of $2,644 starting in March 2006 with twenty eight payments remaining at September 30, 2006. The City has a purchase option during the term of the lease to purchase the equipment at a designated purchase option price. The City intends to exercise this option at the end of the lease term. The proceeds of the lease were used to purchase a bucket truck for the electric department which also serves as security for the lease. Tong -term debt activity for the fiscal year is as follows: Page - 30 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS GOVERNMENTAL ACTIVITIES BOND OBLIGATIONS Series 1994 Certificates of Obligation Series 2002 Certificates of Obligation Series 20Q6 Certificates of Obligation NOTES PAYABLE Sanger Bank Sanger Bank Sanger Bank Sanger Bank Sanger Bank Sanger Bank Guaranty National Bank - 4A Fund TOTAL NOTES PAYABLE CAPITAL LEASES Capital City Lease Diversified Texas Capital Bank Vision Bank TOTAL CAPITAL LEASES LAWSUIT JUDGEMENT PAYABLE Yarbrough Payable TOTAL GOVERNMENTAL ACTIVITIES BUSINESS -TYPE ACTIVITIES REVENUE BOND OBLIGATIONS Series 1996 Series 1999 Series 2002 Series 2006 TOTAL REVENUE BONDS NOTES PAYABLE Sanger Bank Sanger Bank Sanger Bank TOTAL NOTES PAYABLE CAPITAL LEASES Diversified Lenders, Inc. Altec Well Fargo Bank Vision Bank TOTAL CAPITAL LEASES SEPTEMBER 30, 2006 CURRENT - BEGINNING ADDITIONS PAYMENTS ENDING PORTION $ 730,000 21165,000 0 $ 21895,000 104,265 10,263 27,402 81,210 32,063 141442 437,620 $ 707,265 $ 26,958 15,410 0 0 $ 42,368 $ 0 0 31250,000 $ 31250,000 $ 0 0 51,362 1261975 $ 178,337 $ 165,000 851000 0 $ 250,000 14,532 10,263 27, 402 23, 817 12, 868 5,796 164,996 $ 259,674 $ 13,170 3,467 0 0 $ 16,637 $ 565,000 210801000 31250, 000 $ 5,895,000 89,733 0 0 57, 393 19,195 8, 646 272,624 $ 447,591 $ 13,788 11,943 51,362 126,975 $ 204,068 $ 175,000 85,000 162,500 $ 422,500 15,018 0 0 24,846 13,425 6,048 77,041 $ 136,378 $ 13,788 3,712 10,024 19,424 $ 46,948 $ 197,704 $ 0 $ 42,448 $ 155,256 $ 43,297 $ 3,842,337 $ 3,428,337 $ 720,000 1,105,000 21295,000 0 $ 41120,000 $ 78,862 54,963 IU%I I9 $ 238,604 $ 15,411 81,098 0 0 $ 61509 $ 0 0 0 31250,000 $ 31250,000 $ 0 0 807,573 87,703 $ 895,276 568,759 $ $ 50,000 165, 000 85,000 0 $ 300,000 $ 78,862 11,326 39,044 $ 1290232 $ 3,467 28,674 65,094 181284 $ 115,519 6,701,915 $ $ 670,000 940,000 212101000 312501000 $ 71070,000 $ 0 43,637 65,735 $ 1091372 $ 11,944 52,424 742,479 69,419 $ 876,266 649,123 $ $ 50,000 170,000 90,000 162,500 $ 472,500 $ 0 11,813 41,195 $ 53,008 $ 3,712 26,464 67,338 28,687 $ 126,201 TOTAL BUSINESS -TYPE ACTIVITIES $ 41455,113 $ 4,145,276 $ 544,751 $ 810551638 $ 651,709 Page-31 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS Future debt maturities are as follows: NOTE 5: Year 2007 2008 2009 2010 2011 2012-2016 2017-2021 2022 Total PROPERTY TAX: SEPTEMBER Jug 2006 Governmental Type Activities Business -Type Activities $ 649,123 6551931 658,901 3831234 347,340 11714, 886 21107, 500 1851000 ................................ $ 6,701,915 $ 294,929 267,360 235,953 204,983 1891821 736,699 3321182 9,250 ............................... $ 21271,177 $ 651,709 665,277 626, 814 627,090 651,847 21475,401 21162, 500 1951000 ................................ $ 8,055,638 $ 367,465 3381063 308,458 2791990 251,100 891,033 3581002 10,530 ................................. $ 2,8041641 Property tax is levied each October 1 on the assessed (appraised) value as of the prior January 1 for all real and personal property located in the City. Taxes are due October 1, the levy date, and are delinquent after the following January 31. At the fund level property taxes are recorded as receivables and deferred revenues at the time the taxes are assessed. Revenues are then recognized as the taxes are collected. NOTE 6: RETIREMENT PLAN: The City provides pension benefits for all of its full-time employees through anon -traditional, joint contributory, defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple -employer public retirement system. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City -financed monetary credits, with interest, Members can retire at ages sixty and above with ten or more years of service or with twenty five years of service regardless of age. A member is vested after ten years, The contribution rate for the employees is 5% of gross earning and the City provides a monthly contribution of 5,72% of gross earnings. This rate consists of the normal cost contribution and the prior service contribution rate. The normal cost contribution rate finances the currently accruing monetary credits and the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the remainder of the plan's twenty five year amortization period. The City's contributions for the fiscal year totaled $125,135. Page - 32 CITY OF SANGER NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 3u, 2uu6 The schedule of Actuarial Liabilities and Funding Progress for the year ended September 30, 2006 is as Follows: Actuarial valuation date Actuarial Cost Method Amortization method Asset valuation method Actuarial valuation of assets Actuarial Accrued Liability Percentage funded Unfunded actuarial accrued liability (UAAL) Annual covered payroll UAAL as percentage of covered payroll Net pension obligation -beginning Annual required contributions Contributions made Net pension obligation - ending 12/31/2005 Unit Cost Level Percent of Payroll Amortized Cost $2,272>635 91.5% $ 194,140 $1,993,666 9.7% $2078495 $ 0 $ 125,135 $ 125 135) $ 0 The prior two fiscal years were 100% funded, the net pension obligation was zero and the annual contributions were $104,353 and $86,672. The City of Sanger is one of 811 municipalities having the benefit plan administered by TMRS. Each of the 811 Municipalities have an annual, individual actuarial valuation performed. All assumptions for the 12-31-05 valuations are contained in the 2004 TMRS Comprehensive Annual Financial Report, a copy of which may be obtained by writing to P.O, Box 149153, Austin, Texas 78714-9153. Page - 33 REQUIRED SUPPLEMENTARY INFORMATION CITY OF SANGER BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended September 30, 2006 Beginning Budgetary Fund Balance RESOURCES: TAXES: Property Taxes Sales & Beverage Taxes Franchise Taxes TOTAL TAXES INTERGOVERNMENTAL: Library County Funding Fire County Funding Grant Revenues TOTAL INTERGOVERNMENTAL CHARGES FOR SERVICES: Variances & Plats Swimming Pool Sanitation Collection Library Fees Other Fees Misc. Income TOTAL CHARGES FOR SERVICES FINES: Police Fines LICENSES &PERMITS: Permits &Inspections DONATION REVENUES: Beautification Board Parks TOTAL DONATION REVENUES INVESTMENT INCOME OTHER SOURCES: Proceeds of Notes Payable/Capital Lease Proceeds of 2006 Bonds Transfers from 4A Fund Transfers from 4B Fund Transfer form Hotel/Motel Fund Transfers from Proprietary Fund Developer Contributions TOTAL OTHER SOURCES TOTAL RESOURCES AVAILABLE 1,815,000 4461000 2751650 21536,650 FINAL BUDGET $ 0 1,834,700 4621000 371,725 21668,425 17,000 17,000 2581990 1691990 0 592,792 275,990 779,782 401000 401000 11,000 11,000 470,400 495,000 41000 41000 10,700 10,700 251000 251000 561,100 585,700 150,500 150,500 168,400 0 0 0 168,400 0 0 0 ACTUAL AMOUNTS $ 0 1,834,716 462,362 371,676 21668,754 17,748 141,417 592,792 751,957 14,706 4,972 495,417 9,024 4,975 35,616 3:3WiC VARIANCE WITH FINAL BUDGET FAVORABLE (UNFAVORABLE) $ 0 16 362 (49) 329 748 (28,573) 0 (27,825) (25,294) (6,028) 417 5,024 (5,725) 10,616 (20,990) 139,878 (10,622) 140,437 4,296 0 4,296 (27 ,963) 4,296 0 4,296 261000 261000 49,991 23,991 0 178,337 0 3,250,000 0 1501299 0 18,715 0 21,532 4891886 4891886 0 6761625 489,886 41785,394 4,208,526 178,337 3,250,000 18,715 1501299 21,532 1541089 6761625 4,449,597 9,164,201 8,769,620 0 0 (131,584) 131,584 0 (335,797) 0 (335,797) (394,581) SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 34 CITY OF SANGER BUDGETARY COMPARISON SCHEDULE - GENERAL FUND CHARGES TO APPROPRIATIONS: ADMINISTRATION: Personnel Services Insurance Professional Fees Supplies & Contract Service Home Grant Repair & Maintenance Utilities & Telephone Vehicle Capital Outlay Debt Service TOTAL ADMINISTRATION POLICE: Personnel Services Professional Fees Repair & Maintenance Supplies & Contract Service Utilities & Telephone Vehicle Capital Outlay Debt Service TOTAL POLICE MUNICIPAL COURT: Personnel Services Professional Fees Repairs & Maintenance Supplies & Contract Service Utilities & Telephone Capital Outlay TOTAL MUNICIPAL COURT ANIMAL CONTROL: Personnel Services Supplies & Contract Service Utilities & Telephone Vehicle TOTAL ANIMAL CONTROL ECONOMIC DEVELOPMENT Personnel Services Repairs & Maintenance Supplies & Contract Service Utilities & Telephone Capital Outlay TOTAL ECONOMIC DEVELOPMENT For the Year Ended September 30, 2006 ORIGINAL BUDGET 83,863 39,900 7,000 57,853 0 5,000 8,300 550 32,099 42,448 277.013 598,172 500 9,000 57,290 13,445 26,000 3,000 22,377 729,784 77,762 9,000 1,415 26,050 2)300 1,700 118,227 42,955 7,150 3,000 2,000 55,105 6,993 500 11,600 11200 3,500 23,793 FINAL BUDGET 83,863 39,900 7,000 57,853 387,000 5,000 8,300 550 1,599 42,448 6330513 648,172 500 7,200 34,090 13,445 42,000 0 22,377 767,784 77,762 9,000 1,415 26,050 2,300 1,700 118,227 42,955 7,150 3,000 2,000 55,105 44,423 500 11,600 1,200 3,500 61,223 ACTUAL AMOUNTS $1,112 39,575 7,226 65,169 386,948 3,820 5,614 378 1,647 53,180 644,669 650,554 0 6,212 33,140 12,752 42,996 0 20,593 766,247 81,433 8,750 3,614 22,818 960 0 117.575 35,163 8,145 1,720 2,347 47,375 46,099 341 8,630 1,108 2,764 58,942 VARIANCE WITH FINAL BUDGET FAVORABLE (UNFAVORABLE) 2,751 325 (226) (71316) 52 1,180 2,686 172 (48) (10,732) (11,156) (2,382) 500 988 950 693 (996) 0 1,784 1,537 (3,671) 250 (21199) 3,232 1,340 1,700 652 7,792 (995) 1,280 (347) 7,730 (1,676) 159 2,970 92 736 2,281 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 34 CITY OF SANGER BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended September 30, 2006 FIRE: Personnel Services Ambulance Service Repair & Maintenance Supplies & Contract Service Utilities & Telephone Vehicle Debt Service Capital Outlay TOTAL FIRE ENFORCEMENTIINSPECTION Personnel Services Repair & Maintenance Supplies & Contract Service Utilities & Telephone Vehicle Debt Service Capital Outlay TOTAL ENFORCEMENT/INSPECTION ENGINEERING Personnel Services Repair & Maintenance Supplies & Contract Service Utilities & Telephone Capital Outlay TOTAL ENGINEERING PARKS & RECREATION: Personnel Services Repair & Maintenance Supplies & Contract Service Utilities & Telephone Vehicle Capital Outlay Debt Service TOTAL PARKS & RECREATION STREETS: Personnel Services Repair & Maintenance Solid Waste Collection Supplies & Contract Service Utilities & Telephone Vehicle Capital Outlay Debt Service Bond Issue Costs TOTAL STREETS ORIGINAL FINAL ACTUAL BUDGET BUDGET AMOUNTS VARIANCE WITH FINAL BUDGET FAVORABLE (UNFAVORABLE) 122,770 122,770 118,834 3,936 213,570 124,570 951555 29,015 15,000 15,000 71851 71149 106,346 106,346 781044 28,302 11,300 11,300 51898 51402 12,000 12,000 27,424 (15,424) 155,255 101,134 54,844 46,290 8500 372,000 371,429 571 644,741 865,120 759,879 105,241 50,454 50,454 32,934 17,520 31000 31000 11543 1,457 84,100 104,100 101,035 31065 21000 21000 21148 (148) 41200 41200 116 41084 20,000 0 0 0 11750 11750 0 11750 1651504 1651504 1373776 27,728 69,419 19,419 18,293 1,126 250 250 109 141 81143 85,350 84,069 11281 550 550 382 168 0 0 0 0 781362 1051569 102,853 21716 313,427 313,427 327,039 (13,612) 25,500 25,500 16,171 91329 27,300 27,300 19,416 71884 21600 21600 11538 11062 161000 16,000 12,143 31857 351000 222,772 248,928 (26,156) 0 4191827 607,599 625,235 (17,636) 100,154 100,154 531572 461582 57,000 57,000 61,330 (4,330) 3661300 4151900 447,452 (31,552) 51,500 51,500 40,668 101832 44,000 44,000 42,108 11892 201000 201000 29,021 (91021) 1551200 9481000 948,070 (70) 5191688 454,875 4011526 53,349 0 66,600 661611 (11) 11313,842 2,158,029 2,0901358 67,671 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 34 CITY OF SANGER BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended September 30, 2006 SWIMMING POOL: Personnel Services Repair & Maintenance Supplies & Contract Service Utilities & Telephone Capital Outlay TOTAL SWIMMING POOL VEHICLE MAINTENANCE: Personnel Services Repair & Maintenance Supplies & Contract Service Utilities & Telephone Vehicle Capital Outlay TOTAL VEHICLE MAINTENANCE SULLIVAN &COMMUNITY CENTERS Repair & Maintenance Supplies & Contract Service Utilities & Telephone Capital Outlay TOTAL SULLIVAN & COMMUNITY CTRS LIBRARY: Personnel Services Repair & Maintenance Supplies & Contract Service Utilities & Telephone Capital Outlay Debt Service TOTAL LIBRARY OTHER USES: Bond Issue Discount TOTAL CHARGES TO APPROPRIATIONS ENDING BUDGETARY FUND BALANCE ORIGINAL BUDGET FINAL BUDGET ACTUAL AMOUNTS VARIANCE WITH FINAL BUDGET FAVORABLE (UNFAVORABLE) 25,914 25,914 22,144 3,770 28,100 281100 71599 201501 15,210 15,210 91965 51245 41400 41400 41171 229 15,000 15,000 0 151000 88,624 88,624 43,879 44,745 43,951 2,300 11,600 3,750 2,500 2,350 66,451 10,100 11,450 4,700 3,400 29,650 43,951 2,300 11,600 3,750 2,500 2,350 66,451 10,100 11,450 4,700 64,200 90,450 44,420 3,025 4,470 3,870 3,045 5,886 64,716 3,511 10,191 2,524 62,253 78,479 (469) (725) 7,130 (120) (545) (31536) 1,735 6,589 1,259 2,176 1,947 11,971 98,728 98,728 100,838 (2,110) 5,800 5,800 3,912 1,888 10,150 10,150 11,929 (11779) 9,700 9,700 81385 11315 91945 9,945 71281 21664 37,669 37,669 37,672 (3) 171,992 171,992 1701017 11975 0 40,000 39,774 226 41182,915 51995,190 51747,774 247,416 $ 25,611 $ 31169,011 $ 31021,846 $ (147,165) SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 34 CITY OF SANGER BUDGETARY COMPARISON SCHEDULE - SPECIAL REVENUE FUNDS For the Year Ended September 30, 2006 �!_131Ji•I 7 Beginning Budgetary Fund Balance RESOURCES: Sales Taxes Investment Income TOTAL RESOURCES AVAILABLE CHARGES TO APPROPRIATIONS: ADMINISTRATION Supplies & Contract Services Professional Fees Debt Service Transfer to General Fund for Econ. Devel. Transfer to Enterprise Fund for Sewer TOTAL CHARGES TO APPROPRIATIONS ENDING BUDGETARY FUND BALANCE nning Budgetary Fund Balance RESOURCES: Sales Taxes Investment Income TOTAL RESOURCES AVAILABLE CHARGES TO APPROPRIATIONS: ADMINISTRATION Supplies & Contract Services Transfer to General Fund for Econ. Devel. Transfer to General Fund for Parks TOTAL CHARGES TO APPROPRIATIONS ENDING BUDGETARY FUND BALANCE Beginning Budgetary Fund Balance RESOURCES: Alcoholic Beverage Taxes Investment Income TOTAL RESOURCES AVAILABLE CHARGES TO APPROPRIATIONS: ADMINISTRATION Promotion Transfer to General Fund TOTAL CHARGES TO APPROPRIATIONS ENDING BUDGETARY FUND BALANCE FINAL BUDGET 220,000 0 220,000 ACTUAL AMOUNTS 233,094 3,948 237,042 1,223 0 1821494 18,715 2007000 402,432 $ 351200 $ $ (165,390) $ 0 $ 0 $ 0 $ 220,000 2331094 0 31,085 220,000 264,179 21450 30,700 27,300 18,715 152,050 131,584 181,800 180,999 $ 38,200 $ 83,180 $ 0 $ 0 $ 0 $ 0 ORIGINAL BUDGET $ 0 $ 220,000 0 220,000 2,450 1,000 154,050 27,300 0 184,800 220,000 0 220.000 2,450 27,300 1521050 181,800 $ 38,200 8.000 0 0 2,450 1,000 154,050 27,300 0 184,800 35,200 14,340 14,340 0 119 14,340 14,459 6,340 51429 0 21,532 61340 26,961 81000 $ (12150Q $ VARIANCE WITH FINAL BUDGET FAVORABLE (UNFAVORABLE) 0 13,094 3,948 17,042 1,227 1,000 (28,444) 8,585 (200,000) (217,632) (200,590) 0 13,094 31)085 44,179 f (28,250) 8,585 20,466 801 44,980 911 (21,532) (20,621) (20,502) SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 35 CITY OF SANGER SCHEDULE OF PENSION PLAN FUNDING PROGRESS For the Year Ended September 30, 2006 DEFINED BENEFIT RETIREMENT PLAN Actuarial Valuation Date 12-31-05 12-31-04 12-31-03 Actuarial Value of Assets $ 21078,495 $ 11805,541 $ 11710,290 Actuarial Accrued Liabilities (AAL) 21272,635 11966,474 11851,297 Unfunded (Overfunded) AAL (UAAL) 194,140 1601933 141,007 Funded Ratio 91.5% 9108% 9294% Covered Payroll 1,993,666 1,792,164 11711,143 UAAL as a Percentage of Covered Payroll 9.7% 940% 8.2% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 36 OTHER SUPPLEMENTARY INFORMATION CITY OF SANGER COMPARATIVE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GENERAL FUND For the Year Ended September 30, 2006 & 2005 2006 2005 REVENUES Property Taxes $ 11834,716 $ 11718,635 Sales & Beverage Taxes 462,362 426,327 Franchise Taxes 371,676 304,033 Intergovernmental 751,957 148,015 Charges for Services 564,710 5121525 Fines 139,878 124,012 Licenses & Permits 140,437 148,299 Donations 41296 51967 Interest Income 491991 381061 TOTAL REVENUES 42320,023 31425,874 EXPENDITURES General Government 420,755 325,528 Home Grant Expenditures 386,948 0 Public Safety 11381,986 11188,066 Streets & Sanitation 7181030 625573 Culture & Recreation 517,597 517,382 Capital Outlay 11648,258 906,395 Debt Service: Principal 403,763 392,825 Interest 164,052 181,941 Bond Issue Costs 66,611 0 TOTAL EXPENDITURES 51708,000 4,137,710 EXCESS REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Proceeds of Notes Payable/Capital Leases Proceeds of 2006 Bonds Transfer from Special Revenue Funds Transfer from Proprietary Fund Developer Contributions Bond Discount TOTAL OTHER FINANCING SOURCES (USES) EXCESS REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE -BEGINNING FUND BALANCE -ENDING (1,387,977) (711,836) 178,337 75,869 , 3,250,000 0 190,546 42,436 154,089 54,889 676,625 0 (39,774) 0 41409,823 173,194 3,021,846 (538,642) 322,465 861,107 $ 3,344,311 $ 322,465 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 37 CITY OF SANGER COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - SPECIAL REVENUE FUNDS For the Year Ended September 30, 2006 With a Comparative Total for the Year Ended September 30, 2005 REVENUES Sales Taxes Hotel/Motel Tax Interest Income TOTAL REVENUES EXPENDITURES Promotion Supplies & Contract Services Professional Fees Debt Service TOTAL EXPENDITURES EXCESS REVENUES OVER (UNDER) EXPENDITURES 0 OTHER FINANCING SOURCES (USES) Transfer to General Fund Transfer to Proprietary Fund TOTAL OTHER FINANCING SOURCES (USES) EXCESS REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE -BEGINNING FUND BALANCE -ENDING HOTEL/ MOTEL 0 14,340 119 14,459 5,429 0 0 0 5,429 9,030 (21,532) 0 4A 4B TOTAL TOTAL FUND FUND 2006 2005 $ 233,094 $ 233,094 $ 466,188 $ 422,660 0 0 14,340 11,514 31948 31,085 35,152 18,414 237,042 264,179 5151680 452,588 0 0 51429 81252 11223 30,700 31,923 21640 0 0 0 10,149 182,494 0 182,494 89,993 183,717 30,700 2191846 111,034 53,325 233,479 2951834 341,554 (18,715) (150,299) (190,546) 0 (200,000) 0 (200,000) (42,436) (21,532) (218,715) (150,299) (390,546) (42,436) (12,502) 22,333 (165,390) 83,180 (94,712) 299,118 319,227 508,290 849,850 550,732 $ 9,831 $ 153,837 $ 591,470 $ 755,138 $ 849,850 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 38 CITY OF SANGER COMPARATIVE SCHEDULE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - PROPRIETARY FUND For the Year Ended September 30, 2006 & 2005 2006 OPERATING REVENUES 2005 Charges for Services $ 9,057,728 $ 7,493,933 Connection Fees 33,090 29,317 Miscellaneous 291843 16,068 TOTAL OPERATING REVENUES 91120,661 71539,318 OPERATING EXPENSES Personnel Services Purchased Water/Electricity Supplies & Contract Services Repair & Maintenance Utilities Franchise Fees Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME NONOPERATING REVENUES (EXPENSES) Interest Income Tap Fees Grants &_Developer Contributions Interest Expense Transfers In from 4A Fund Transfers Out to General Fund 1,319,369 5,170,814 693,235 360,152 118,155 212,059 793,384 1,180,164 4,2181948 618,335 3 ? 11272 85,882 174,616 791,667 8,667,168 7,390,884 453,493 106,762 559,200 3541742 (2351039) 2001000 (1541089) 148,434 53,937 711,100 0 (2411345) 0 (54,889) TOTAL NONOPERATING REVENUES (EXPENSES) 831,576 468, 803 CHANGE IN NET ASSETS NET ASSETS -BEGINNING NET ASSETS -ENDING 11285,069 9,093,235 617,237 8,475,998 $ 1013781304 $ 91093,235 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS Page - 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O U Q W W CITY OF SANGER DEBT SERVICE REQUIREMENTS - GENERAL LONG-TERM DEBT September 30, 2006 Series 1994 Certificates of Obligation Year Ending TOTAL September 30, PRINCIPAL INTEREST REQUIREMENTS 2007 $ 1751000 $ 331900 $ 208,900 2008 1901000 23,400 213,400 2009 200,000 12,000 212,000 $ 5651000 $ 69,300 $ 634,300 Series 2002 Certificates of Obligation Year Ending TOTAL September 30, PRINCIPAL INTEREST REQUIREMENTS 2007 $ 85,000 $ 1001625 $ 185,625 2008 901000 95,780 185,780 2009 95,000 90,650 185,650 2010 1001000 85,235 185,235 2011 1051000 801385 185,385 2012 1101000 751975 1851975 2013 120,000 71,245 191,245 2014 1251000 651965 1901965 2015 1301000 601340 190,340 2016 135,000 54,490 189,490 2017 145,000 48,280 193,280 2018 150,000 41,465 191,465 2019 160,000 34,340 194,340 2020 1701000 26500 1961500 2021 1751000 181000 1931000 2022 185,000 91250 194,250 $ 2,080,000 $ 958,525 $ 31038,525 Series 2006 Tax & Revenue Bonds Year Ending TOTAL September 30, PRINCIPAL INTEREST REQUIREMENTS 2007 $ 162,500 $ 131,497 $ 293,997 2008 167,500 126,474 293,974 2009 175,000 119,774 294,774 2010 182,500 112,774 295,274 2011 1901000 105,474 295,474 2012 197,500 97,873 295,373 2013 2051000 89,974 294,974 2014 212,500 81,774 294,274 2015 2201000 73,273 293,273 2016 230,000 64,474 294,474 2017 242,500 52,974 295,474 2018 2501000 43,273 2931273 2019 260,000 33,149 293,149 2020 272,500 22,619 295,119 2021 2821500 11,582 294,082 $ 312501000 $ 11166,958 $ 41416,958 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 41 CITY OF SANGER DEBT SERVICE REQUIREMENTS - GENERAL LONG-TERM DEBT NOTE PAYABLE - SANGER BANK Year Ending September 30, 2007 2008 2009 2010 2011 2012 PRINCIPAL $ 15,018 15,825 16,676 17,573 18,518 6,123 $ 89,733 NOTE PAYABLE -SANGER BANK Year Ending September 30, 2007 2008 2009 PRINCIPAL $ 24,846 25,924 6,623 $ 57,393 NOTE PAYABLE -SANGER BANK Year Ending September 30, 2007 2008 PRINCIPAL $ 13,425 5,770 $ 19,195 NOTE PAYABLE -SANGER BANK Year Ending September 30, 2007 2008 PRINCIPAL $ 6,048 2,597 $ 8,645 September 30, 2006 INTEREST $ 4,368 3,560 2,709 1,812 867 70 TOTAL REQUIREMENTS $ 19,386 19,385 19,385 19,385 19,385 6,193 $ 13,386 $ 103,119 INTEREST $ 1,959 882 47 $ 2,888 INTEREST $ 557 61 $ 618 INTEREST $ 250 28 $ 278 NOTE PAYABLE -GUARANTY NATIONAL BANK - 4A FUND Year Ending September 30, 2007 2008 2009 2010 PRINCIPAL $ 77,041 81,347 85,892 28,344 $ 272,624 INTEREST $ 12,952 8,647 4,101 313 0 TOTAL REQUIREMENTS $ 26,805 26,806 6,670 $ 60,281 TOTAL REQUIREMENTS $ 13,982 5,831 $ 19,813 TOTAL REQUIREMENTS $ 6,298 2,625 $ 8,923 TOTAL REQUIREMENTS $ 89,993 89,994 89,993 28,657 26,013 $ 298,637 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 41 CITY OF SANGER DEBT SERVICE REQUIREMENTS - GENERAL LONG-TERM DEBT September 30, 2006 Capital Lease - CAPITAL CITY LEASING Year Ending TOTAL September 30, PRINCIPAL INTEREST REQUIREMENTS 2007 $ 13,788 $ 648 $ 14,436 $ 13,788 $ 648 $ 14,436 Capital Lease - DIVERSIFIED LENDERS, INC. Year Ending TOTAL September 30, PRINCIPAL INTEREST REQUIREMENTS 2007 $ 31712 $ 704 $ 41416 2008 31975 441 41416 2009 41257 160 41417 $ 11,944 $ 11305 $ 13,249 Capital Lease - Texas Capital Bank Year Ending TOTAL September 30, PRINCIPAL INTEREST REQUIREMENTS 2007 $ 100024 $ 11885 $ 11,909 2008 9,460 21449 11,909 2009 101021 11889 11,910 2010 101614 11295 11,909 2011 11,243 666 11,909 $ 51,362 $ 81184 $ 59,546 Capital Lease - Vision Bank Year Ending TOTAL September 30, PRINCIPAL INTEREST REQUIREMENTS 2007 $ 19,424 $ 5584 $ 25,008 2008 191370 51638 251008 2009 20,385 4,623 25,008 2010 21,454 31554 25,008 2011 22,579 21429 251008 2012 23,763 11246 251009 $ 126,975 $ 23,074 $ 150,049 Lawsuit Judgment Payable - Yarbrough Year Ending TOTAL September 30, PRINCIPAL INTEREST REQUIREMENTS 2007 $ 43,297 $ 0 $ 431297 2008 44,163 0 44,163 2009 45,047 0 45,047 2010 22,749 0 22,749 $ 155,256 $ 0 $ 155,256 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 41 CITY OF SANGER DEBT SERVICE REQUIREMENTS - GENERAL LONG-TERM DEBT TOTALS Year Ending September 30, 2007 $ 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 PRINCIPAL 649,123 6551931 658,901 3831234 347,340 21694,529 337,386 3251000 337,500 3501000 3651000 11714,886 387,500 400,000 420,000 442,500 457,500 2,107,500 1851000 1851000 September 30, 2006 INTEREST $ 294,929 267,360 235,953 204,983 189,821 11193,046 175,164 161,219 147,739 133,613 1181964 7361699 101,254 84,738 67,489 49,119 29,582 332,182 9,250 9,250 TOTAL REQUIREMENTS $ 9441052 923,291 894,854 588,217 537,161 31887,575 512,550 486,219 4851239 483,613 483,964 2,451,585 488,754 484,738 4873489 491,619 487,082 21439,682 194,250 194,2501 $ 6,701,915 $ 2,271,177 $ 8,973,092 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 41 CITY OF SANGER DEBT SERVICE REQUIREMENTS - ENTERPRISE FUND Series 1996 Revenue Bonds Year Ending September 30, PRINCIPAL 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ 50,000 55,000 60,000 60,000 65,000 70,000 70,000 75,000 80,000 85,000 $ 670,000 Series 1999 Revenue Refunding Bonds Year Ending September 30, PRINCIPAL 2007 $ 170,000 2008 1801000 2009 1901000 2010 1951000 2011 2051000 $ 940,000 Series 2002 Revenue Bonds Year tnding September 30, 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 PRINCIPAL $ 90,000 95,000 100,000 105,000 110,000 120,000 1251000 130,000 140,000 145,000 155,000 1601000 170,000 180,000 190,000 195,000 $ 21210,000 September 30, 2006 INTEREST $ 30,790 28,690 26,297 23,628 20,898 17,908 14,652 11,363 7,837 4,037 $ 186,100 INTEREST $ 40,962 33,653 25,913 17,600 9,020 $ 127,148 INTEREST $ 116,500 111,100 105,400 99,400 93,100 88,150 82,510 76,510 70,140 63,140 55,745 47,840 39,520 30,510 20,790 10,530 $ 11110,885 TOTAL REQUIREMENTS $ 80,790 83,690 86,297 83,628 85,898 87,908 84,652 86,363 87,837 89,037 $ 856,100 TOTAL REQUIREMENTS $ 210,962 213,653 215,913 212,600 214,020 $ 11067,148 TOTAL REQUIREMENTS $ 206,500 206,100 205,400 204,400 203,100 208,150 207,510 206,510 210,140 208,140 210,745 207,840 209,520 210,510 210,790 205,530 $ 31320,885 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE-42 CITY OF SANGER DEBT SERVICE REQUIREMENTS - ENTERPRISE FUND September 30, 2006 Series 2006 Tax & Revenue Bonds Year Ending TOTAL September 30, PRINCIPAL INTEREST REQUIREMENTS 2007 $ 162,500 $ 131,497 $ 293,997 2008 167,500 126,474 2931974 2009 175,000 119,774 294,774 2010 182,500 112,774 295,274 2011 1901000 105,474 295,474 2012 197,500 97,873 295,373 2013 2051000 891974 294,974 2014 212,500 81,774 294,274 2015 2201000 73,273 293,273 2016 230,000 64,474 294,474 2017 242,500 521974 295,474 2018 2501000 43,273 2931273 2019 2601000 33,149 293,149 2020 272,500 221619 295,119 2021 282,500 113582 294,082 $ 31250,000 $ 11166,958 $ 41416,958 NOTE PAYABLE -BANGER BANK Year Ending September 30, 2007 2008 2009 2010 PRINCIPAL $ 11,813 12,325 12,859 6,640 $ 43,637 NOTE PAYABLE -BANGER BANK Year Ending September 30, 2007 2008 PRINCIPAL $ 41,195 24,540 $ 65,735 Capital Lease -DIVERSIFIED LENDERS, INC. Year Ending September 30, 2007 2008 2009 PRINCIPAL $ 3,712 3,975 4,257 $ 11,944 INTEREST $ 1,626 1,114 580 83 $ 3,403 INTEREST $ 1,979 335 $ 2,314 INTEREST $ 704 441 160 $ 1,305 TOTAL EMENTS REQUIR $ 13,439 13,439 13,439 6,723 $ 47,040 TOTAL 43174 REQUIREMENTS $ , 24,875 $ 68,049 4,416 REQUIREMENTS $ 4,416 4,417 $ 13,249 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 42 CITY OF SANGER DEBT SERVICE REQUIREMENTS - ENTERPRISE FUND September 30, 2006 Capital Lease -ALTEC Year Ending September 30, PRINCIPAL INTEREST 2007 $ 26,464 $ 31247 2008 25,960 11050 $ 52,424 4,297 ital Lease -Wells Fargo Bank Year Ending September 30, PRINCIPAL INTEREST 2007 $ 67,338 $ 37,117 2008 70,704 33,750 2009 74,239 30,216 2010 77,950 261505 2011 81,847 22,608 2012 85,939 181516 2013 90,235 14,220 2014 94,745 91709 2015 991482 41973 $ 742,479 $ 197,614 ital Lease -Vision Bank � Year Ending September 30, PRINCIPAL INTEREST 2007 $ 28,687 0 3,043 2008 301273 11456 2009 10,459 118 $ 691419 $ 41617 TOTAL REQUIREMENTS $ 29,711 27,010 $ 56,721 TOTAL REQUIREMENTS $ 104,455 104,454 104,455 104,455 104,455 104,455 104,455 104,454 104,455 $ 940,093 TOTAL REQUIREMENTS $ 31,730 31,729 10,577 $ 74,036 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 42 CITY OF SANGER DEBT SERVICE REQUIREMENTS - ENTERPRISE FUND TOTALS Year Ending September 30, PRINCIPAL 2007 $ 6511709 2008 665,277 2009 626,814 2010 627,090 2011 651,847 31222,737 2012 473,439 2013 4901235 2014 512,245 2015 539,482 2016 4601000 21475,401 2017 397,500 2018 410,000 2019 430,000 2020 452,500 2021 472,500 21162,500 2022 195,000 195,000 $ 8,0551638 September 30, 2006 TOTAL INTEREST REQUIREMENTS $ 367,465 $ 1,019,174 3381063 1,003,340 308,458 935272 279,990 907,080 251,100 902,947 11545,076 [ 41767,813 222,447 695,886 201,356 691,591 179,356 691,601 156,223 695,705 131,651 591,651 891,033 31366,434 108,719 506,219 91,113 501,113 72,669 502,669 53,129 5051629 32,372 504,872 3581002 21520,502 101530 2051530 10,530 205,530 21804,641 $ 10,860,279 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 42 CITY OF SANGER ANALYSIS OF TAXES RECEIVABLE For the Year Ended September 30, 2006 2006 2005 ADJUSTED TAX ROLL $ 11785,686 $ 11718,611 $ Less: Collections and Adjustments 11752,921 11674,032 CURRENT YEAR TAXES RECEIVABLE - END OF YEAR PRIOR YEAR TAXES RECEIVABLE - END OF YEAR TOTAL TAXES RECEIVABLE - END OF YEAR Assessed Value Tax Rate per $100 Percent of Current Taxes Collected to Billed 32,765 44,579 2004 2003 1,4491712 $ 11296,134 1,4111753 11257,647 37,959 61,995 62,188 54,536 38,487 59,278 $ 94,760 $ 106,767 $ 92,495 $ 97,765 $ 312,822,804 $ 290;0111961 $ 256,310,962 $ 224,729,064 $ 04570830 $ 06592600 $ 00565470 $ 0*565470 98.17% 97.41 % 97.38% 97.03% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 43 CITY OF SANGER GOVERNMENTAL AND PROPRIETARY FUNDS SCHEDULE OF RESTRICTED CASH September 30, 2006 GENERALFUND Equipment Replacement Funds Insurance Fund Beautification Board Funds Library Savings Contingency Fund Park Department Fund Unspent 2006 Bond Funds Certificate of Obligation Reserve and I & S Funds TOTAL GENERAL FUND SPECIAL REVENUE FUND Hotel/Motel Economic Development -Section 4A Economic Development -Section 4B $ 32,214 (5,051) 9,400 12,926 71,581 1,329 31143,615 48,148 $ 31314,162 $ 9,831 134,963 572,594 TOTAL SPECIAL REVENUE FUND $ 717,388 ENTERPRISE FUND Revenue Bond I & S Funds $ 93,629 Revenue Bond Reserve Funds 344,280 Revenue Bond Emergency Fund 16,212 Customer Utility Deposits 228,342 Unspent 2006 Bond Funds 31144,012 Unspent Capital Lease Funds 311,812 Water &Sewer Improvement Funds 11215,933 One Plus Program &Safety &Incentive Funds 31482 TOTAL ENTERPRISE FUND $ 5,357,702 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS PAGE - 44 ti N O O O U) LL � LL W a� z}�. o FM U Z Z a O0 W � O u w0�scn On.CDa aWZw LLOw O=m LU LL U U O Z Z aZc� NCO W a� pap w W W ClsommmollCL UU)(U U W OFM w w z O o � O N O M M V ONE � p � OQ ONW = CL o. c) in f- o m U L = 4 r = I— O W ZLM O N m U } LM t E VIA0) L ,F, o Q, tL d U) o N N O O O S O N Lo 000 LLo rt Lo 000 Lo O M (� (O M IK (O M (O 0 (\f Ln h �-0 �Lf) M�-M �� OML�O 000 000 O Lf) Lo d' Lo 0 d) (,C) ONN Oft (OMO ON ON N(fl00 d'Lf)N �� Ln Lf) d Ort'd' 000 00LN N 1O G O N M M � �• 00o co Or"" ce) M M M O O O O O O 0 0 0 O O O N N N OLN f� I M M M I�� V7 0 0 0�0 N N O N M I M M c c o O U U Fm N81111111 +J + LOU w N ate' a)+N' U M o o LOU 1010111 c U c U H p J o ff;? °it:�+� U fa- ca a �:cin amain W O X D U •c U m U •C ro 0 0 LL J W w W Q J W D Q w W O U) LOU D fn LOU a LOU � � 0 W U) z w w a O LOU w WILLIAM C. SPORE, P.C. Certified Public Accountants 3950 Hwy 360, Grapevine, TX 76051 817421-6619 REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED UPON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAL A UDITING STANDARDS To the City Council City of Sanger, Texas I have audited the financial statements of the governmental activities, the business -type activities and major funds of the City of Sanger, Texas as of and for the year ended September 30, 2006, which collectively comprise the City's basic financial statements and have issued my report thereon dated February 19, 2007. I conducted my 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, Compliance As part of obtaining reasonable assurance about whether City of Sanger's financial statements are free of material misstatement, I performed tests of its compliance with certain provision of laws, regulations, contracts and grants, 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 my audit and, accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards, Internal Control Over Financial Repo ing In planning and performing my audit, I considered City of Sanger's internal control over financial reporting in order to determine my auditing procedures for the purpose of expressing my opinion on the financial statements and not to provide assurance on the internal control over financial reporting. My consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. I noted no matters involving the internal control over financial reporting and its operation that I consider to be material weaknesses. This report is intended for the information and use of management, Honorable Mayor and City Council of the City of Sanger, Texas, and is not intended to be and should not be used by anyone other than these specified parties. Wi//iom C. Spore, P.C. February 19, 2007 WILLIAM C. SPORE, P.C. Certified Public Accountants 3950 Hwy 360, Ste 102, Grapevine, Texas 76059 To the City Council City of Sanger, Texas In planning and performing my audit of the financial statements of the governmental activities, the business -type activities and major funds of the City of Sanger, Texas, for the year ended September 30, 2006, I considered its internal control structure in order to determine my auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control. In accordance with Government Auditing Standards, I have issued my report dated February 19, 2007 on my consideration of the City of Sanger's internal control over financial reporting. However, during my audit I became aware of matters that are opportunities for strengthening internal controls and operating efficiency. These matters are as follows: (1) Additional supervisory review needs to be added to the utility billing process. Past due accounts should be reviewed on a monthly basis by someone other than the utility billing clerk. Credit memos should be used for all account adjustments and all credit memos should be formally approved by someone outside of the daily utility billing process, (2) The electric department inventory system is currently only used to provide a year end value for the audited financial statements. If the system was maintained on a perpetual basis it could be a useful management tool to determine inventory levels, reorder points, etc. To fully utilize the software, systems should be developed to provided the inventory clerk with accurate information to allow the system to function reliably. Reports should be generated monthly and reviewed for accuracy in order to insure the system is being maintained properly. Cycle counts of the inventory should be periodically done to insure the accuracy of the inventory, with significant discrepancies reported to the City Manager. I have already discussed these comments and suggestion with the City Manager and City Secretary, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations. Sincerely, �ViCCiam C. Spore, � G February 19, 2007