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Home My WebLink AboutDOWNTOWN DEVELOPMENT AUTHORITY FINANCIAL STATEMENTS DECEMBER 31, 2006 I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUSTA FINANCIAL STATEMENTS DECEMBER 31, 2006 I I I I I I I I I I I I I I I I I I I TABLE OF CONTENTS Page INDEPENDENT AUDITORS' REPORT .......................................................................... 1 FINANCIAL STATEMENTS: Statement of Net Assets ... ..... ....... ............. ...... ........... ..... .............. ..... ...... .... ....................... 2 Statement of Activities . ........ .... ... ..... .... ...... ........... ..... .... ...... ... ...... ........... ....... .......... .......... 3 Balance Sheet - Governmental Fund .................................................................................. 4 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Fund .......................................................................... 5 NOTES TO FINANCIAL STATEMENTS ..................................................................... 6-10 SUPPLEMENTAL INFORMA nON: Independent Auditors' Report on Supplemental Information ............................................ 11 Supplemental Schedule of Expenses by Activity ............................................................... 12 I I I I I I I I I I I I I I I I I I I --- ~IIII: SEROTTA INDEPENDENT AUDITORS' REPORT MADDOCKS EVANS & CO., CPA'S The Authority Members Downtown Development Authority of the City of Augusta Augusta, Georgia A Professional Corporation We have audited the accompanying financial statements of the Downtown Development Authority of the City of Augusta, a component unit of the City of Augusta, Georgia, as of and for the year ended December 31, 2006, as listed in the table of contents. These financial statements are the responsibility of the Downtown Development Authority of the City of Augusta's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we 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. We believe that our audit provides a reasonable basis for our opinion. The Downtown Development Authority of the City of Augusta has not presented management discussion and analysis and the budgetary comparison statement required by the Governmental Accounting Standards Board that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the basic financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Downtown Development Authority of the City of Augusta as of December 31, 2006, and the respective change in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. ~ ((Joddn~ 5JJ.ro ~ Go. SEROTT A MADDOCKS EVANS & CO. Augusta, Georgia June 27, 2007 701 Greene Street, Suite 200 I Augusta, GA 30901-2322 Telephone (706) 722-5337 Telefax (706) 724-FAXX (3299) I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUSTA STATEMENT OF NET ASSETS DECEMBER 31, 2006 ASSETS Cash Noncurrent assets: Notes receivable Capital assets, net Deferred charges Total Assets $ 403,014 170,000 3,820,964 80,678 $ 4,474,656 LIABn..ITIES Accounts payable Due to other city funds Noncurrent liabilities: Due within one year: Revenue bonds Due in more than one year: Revenue bonds Total Liabilities $ 73,624 38,644 575,000 1,800,000 2,487,268 NET ASSETS Invested in capital assets net of related debt Unrestricted Total Liabilities and Net Assets 1,445,964 541,424 1,987,388 $ 4,474,656 SEE NOTES TO FINANCIAL STATEMENTS - 2- I I I I I I I I I I I I I I I I I I I ~ o Z ----<t:lZl ~::r:~ ZU~ ~Q?2 o..Z<t: ~<t:~ '-'~~ ~::JZ ~Z'7: Z~H > ~ <t: ~ lZl ::J tJ ::J <t: ~ o :>< ~ U \0 ~ 0 ::r:lZl~ ~~........ ~~M O~~ :><~~ ~Uo:l ~<t:~ O~~ ::r:0~ ~~Q ::JZQ <t:~~ ~~Q Z~Z ~~~ ~<t:~ o..~....... OlZl........ .....:l ~ ~ :>< > ~ Q Z ~ o ~ z ~ o Q lZl QZ .....:lz9 <t:<t:~ ~lZl::J o..~E9 <t:z~ u<t:~ ~Z 00 lZl U ~ ::J lZl ZOQZ g:~z9 ~~~~ ~;;2~E9 <t:~z~ ~o..;;2~ oOoz o 0 ~ U 0.. ---- NON O.q-\O OO~~o;. r- r- 0'1 00 \0 ...... .q- '-'.q- ~ 0'1 ' 0'1 \0 \0 o 0 M M .q- .q- r- r- ~ ~ 0'0 0'1 0'1 r- r- ..,; ..,; V) V) ...... ...... ~ ~ tJ ~ lZl ~ Q Z ti .q- .q- M M \O~ ~ r- r- M M ~ ~ lZl ~ lZl Z ~ 0.. >< ~ ......0...... O'I.q-M \0 00 V) \C5'~"'; .q-\O...... .q- V) ~ ~ ell <!) ..... ..... ..... ;> ..... ..... lZl u ~ ..... ro <t: 5..... 3 ~~a..oc:: ..... 0. <!) <!) tJ .~ 0 "0 a o.~ ~ ~ c:: ~..... ..... l-< ~~~2~ lZl ro u c:: 01) Z ~ .s ~ ~ o S 0 ell ..... ..... <!) 0 ~ 0 g ~ ~ u ~ u ..... Z ;>~.s tic3 .q-\ONOO \0 N \000 MMOM rrlrrl"';~ N\OOO .q- "l O'I~ ...... ...... ~ ell Ea ..... <!) <!) >. ~4-; roOEa Q) gp <!) .. <!) c:: ..... >. ell a c:: c:: 4-; go..... .8 0 c:: u <!) 01)"0 <!) c:: 01) <!) c:: ;> ..... c:: ..0 <!) <!) ..... ro 1 1 ~~e22 ca Q.) Cl) Q.) l-< d ~ ~ ~ ~ ro ro <!) ..... ..... ,.., <!) <!) v ZZ lZl ~ z ~ ~ ~ ~ <t: ~ lZl .....:l ~ U, ZM <t: I ~ ~ o ~ lZl ~ ~ o Z ~ ~ lZl I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUSTA BALANCE SHEET GOVERNMENTAL FUND DECEMBER 31, 2006 ASSETS Cash Notes receivable Total Assets $ 403,014 170,000 $ 573,014 LIABn..ITIES Accounts payable Due to other funds Total Liabilities $ 73,624 38,644 112,268 FUND BALANCE Unreserved Total Liabilities and Fund Balance 460,746 460,746 $ 573,014 GOVERNMENTAL FUND BALANCE $ 460,746 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 funds. Deferred charges from bond issuance costs are expensed in the current period rather than amortized over the life of the bonds. Long-term liabilities are not due and payable in the current period and therefore are not reported in the fund. Bonds payable 3,820,964 80,678 (2,375,000) NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 1,987,388 SEE NOTES TO FINANCIAL STATEMENTS - 4 - I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUSTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUND YEAR ENDED DECEMBER 31, 2006 REVENUES Operating grants and contributions Capital grants and contributions Fundraising income, net Interest income Total Revenues $ 154,790 742,069 37,634 3,364 937,857 EXPENDITURES Current: General government Bond payments: Principal Interest Total Expenditures Excess of Revenues Over Expenditures 260,423 550,000 67,840 878,263 59,594 401,152 $ 460,746 FUND BALANCE - BEGINNING OF YEAR FUND BALANCE - END OF YEAR SEE NOTES TO FINANCIAL STATEMENTS - 5 - I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUSTA NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Downtown Development Authority of the City of Augusta, Georgia (the Authority), a component unit of the City of Augusta, Georgia, conform to generally accepted accounting principles (GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for established governmental accounting and financial reporting principles. For the year ended December 31, 2003, the Authority adopted the provisions of GASB 33 and 34. These financial statements present only the Authority and are not intended to present fairly the financial position and results of operations of the City of Augusta in conformity with accounting principles generally accepted in the United States of America. The Authority serves to promote, pursue and implement economic development in downtown Augusta, Georgia. The following is a summary of significant policies: A. Discretely Presented Component Unit The Authority is a discretely presented component unit of the City of Augusta, Georgia. A discretely presented component unit is a legally separate organization for which the elected officials of the primary government are financially accountable. B. Measurement Focus. Basis of Accounting and Financial Statement Presentation Government-Wide and Fund Financial Statements - The Authority's government-wide financial statements include a Statement of Net Assets and a Statement of Activities. These statements present summaries of Governmental Activities for the Authority. Governmental activities normally are supported by taxes and intergovernmental revenues. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The government-wide financial statements are presented on an economic resources measurement focus and the accrual basis of accounting. Accordingly, all of the Authority's assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. -6- I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUSTA NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Authority considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. C. Budgets and Budgetary Accounting Budgets are adopted by the City of Augusta, Georgia for the Authority on a total revenues and total expenditures basis. All budgets are prepared on a basis consistent with accounting principles generally accepted in the United States of America. D. Capital Assets All purchased fixed assets are valued at cost where historical records are available and at an estimated historical cost where no historical records exist. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable. Assets are depreciated using the straight-line method. Depreciation expense is reflected as an operating expense in the government-wide statement of activities. Estimated useful lives for asset types are as follows: Buildings Furniture and fixtures 40 years 5 - 7 years E. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. - 7 - I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUSTA NOTES TO FINANCIAL STATEMENTS NOTE 2 - DEPOSITS AND INVESTMENTS Credit Risk The Authority's policy is in accordance with Section 36-83-04 of the State of Georgia Code of Laws which allows for deposits and investments as follows: a) Obligations of Georgia or of other states; b) Obligations issued by the United States government; c) Obligations fully insured or guaranteed by the United States government or a United States government agency; d) Obligations of any corporation of the United States government; e) Prime bankers' acceptances; f) The local government investment pool established by Code Section 36-83-8; g) Repurchase agreements; h) Obligations of other political subdivisions of Georgia; and i) Deposit accounts with eligible depository institutions. Concentration and Custodial Credit Risk - Deposits Custodial credit risk for deposits is the risk that, in the event of a bank failure, the Authority's deposits may not be returned to it. The Authority does not have a deposit policy for custodial credit risk. At December 31, 2006, the carrying amount of the Authority's deposits was approximately $284,000 and the bank balance was approximately $80,000 at one financial institution. The Authority has deposits with an additional financial institution with a carrying amount of approximately $119,000 and the bank balance was approximately $119,000, limiting its federal depository insurance to $100,000 with the remaining balance uncollateralized. NOTE 3 - NOTES RECEIVABLE The Authority received approval from the Augusta-Richmond County Commission to use $490,000 in SPLOST funds to purchase the Houghton School and the Widow's Home located on Greene Street in downtown Augusta, Georgia. The properties were then purchased by Augusta Capital, LLC to be held for future development. The Authority sold the properties to Augusta Capital, LLC for $490,000 and provided financing of $370,000 on the purchase by obtaining two notes receivable on the properties from Augusta Capital, LLC. The Authority obtained a note receivable dated May 11, 2005 for $200,000 on the Houghton School with no interest for the first two years and repayment of all principal outstanding on May 10, 2007. The Authority received payment in full on this note receivable in December of 2006. The Authority obtained a note receivable dated May 11, 2005 for $170,000 on the Widow's Home with no interest for the first two years and repayment of all principal outstanding on May 10, 2007. The remaining note is secured by the respective Greene Street, Augusta properties and the personal guaranty of a principal at Augusta Capital, LLC. - 8 - I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUST A NOTES TO FINANCIAL STATEMENTS NOTE 4 - CAPITAL ASSETS Capital asset activity for the year ended December 31, 2006 was as follows: BALANCE BALANCE 12/31/05 ADDITIONS DISPOSALS 12/31/06 Capital assets: Port Royal parking deck $ 2,600,000 $ $ $ 2,600,000 Riverfront parking deck 3,816,000 3,816,000 Clock 41,393 41,393 Furniture and equipment 3,578 4,342 7,920 Total capital assets 6,460,971 4,342 6,465,313 Less accumulated depreciation for: Port Royal parking deck (1,040,000) (65,000) (1,105,000) Riverfront parking deck (1,431,000) (95,400) (1,526,400) Clock (7,432) (4,139) (11,571) Furniture and equipment (130) (1,248) (1,378) Total accumulated depreciation (2,478,562) (165,787) (2,644,349) Capital assets, net 3,982,409 (161,445) 3,820,964 Related debt (2,925,000) 550,000 (2,375,000) Capital assets, net of related debt $ 1,057,409 $ (161,445) $ 550,000 $ 1,445,964 Depreciation expense for the year ended December 31,2006 was $165,787. NOTE 5 - LONG-TERM DEBT Long-term debt activity for the year ended December 31, 2006 was as follows: Debt Outstanding at December 31, 2005 Principal Payments Debt Outstanding at December 31, 2006 General Long-term Debt Development Authority Bonds, Series 2003 $ 2,925,000 (550,000) $ 2,375,000 - 9 - I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUSTA NOTES TO FINANCIAL STATEMENTS NOTE 5 - LONG-TERM DEBT (continued) In May of 2003, the Downtown Development Authority of the City of Augusta issued $4,035,000 Development Authority Revenue Bonds, Series 2003. The proceeds of these bonds were used to redeem two previous issuances of revenue bonds, Development Authority Parking Revenue Bonds, Series 1989 and 1991. The original bond issuances were used to fund the construction of two parking decks in downtown Augusta, Georgia. The Series 2003 Bonds are limited, special obligations of the Authority and are secured from payments received under an intergovernmental lease between the City of Augusta and the Authority for use of the two parking decks. Interest on the Series 2003 Development Authority Bonds is paid semi-annually. The interest rate is 2.56%. Principal is due on January 1 of each year as follows: Year 2007 2008 2009 2010 Principal Payments $ 575,000 585,000 600,000 615,000 $2,375,000 NOTE 6 - OPERATING AGREEMENT The Authority had an operating agreement with Main Street Augusta, Inc. ("Main Street") to share certain revenues and expenses during a portion of 2006, prior to the dissolution of Main Street Augusta, Inc. in August 2006. The Authority allocated a portion of their city funding to Main Street each year. For the year ended 2006, the amount of city funding allocated to Main Street was $8,500. - 10- I I I I I I I I I I I I I I I I I I I --- ~IIII: SEROTTA MADDOCKS INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION EVANS & CO., CPA'S A Professional Corporation The Authority Members Downtown Development Authority of the City of Augusta Augusta, Georgia Our report on our audit of the basic financial statements of Downtown Development Authority of the City of Augusta for December 31, 2006 appears on page 1. That audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Supplemental Schedule of Expenses by Activity is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. ~ ((J0dd0~ 5JJ.ro ~ Go. SEROTT A MADDOCKS EVANS & CO. Augusta, Georgia June 27, 2007 701 Greene Street, Suite 200 I Augusta, GA 30901-2322 Telephone (706) 722-5337 Telefax (706) 724-FAXX (3299) - 11 - I I I I I I I I I I I I I I I I I I I DOWNTOWN DEVELOPMENT AUTHORITY OF THE CITY OF AUGUSTA SUPPLEMENTAL SCHEDULE OF EXPENSES BY ACTIVITY YEAR ENDED DECEMBER 31, 2006 GOVERNMENTAL ACTIVITIES: Economic Development: Bank service charges $ 622 Salaries 73,363 Training 1,504 Memberships 1,125 Office supplies 3,206 Postage 458 Marketing study 165 Professional fees 25,033 Rent 9,600 Sponsorship 400 Telephone 5,800 Casual labor 31,385 Depreciation 165,787 Amortization 24,824 Insurance 6,417 Copier 1,796 Travel 2,329 Advertising and marketing 1,353 Operating expenses 4,031 Parking study 515 Main Street allotment 8,500 DeLaigle House/Sidewalk Project 46,730 Profile reports 4,750 Saturday Market allotment 27,000 Total Economic Development 446,691 Interest on bond debt 67,840 Total Governmental Activities $ 514,531 - 12 -