URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON

URBAN RENEWAL AGENCY OF THE
CITY OF SALEM, OREGON
(A Component Unit of the
City of Salem, Oregon)
ANNUAL FINANCIAL REPORT
Year Ended June 30,2005
TABLE OF CONTENTS
Page
AGENCY OFFICIALS
1
INDEPENDENT AUDITOR'S REPORT
2
MANAGEMENT'S DISCUSSION AND ANALYSIS
6
BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements
Statement of Net Assets
Statement of Activities and Changes in Net Assets
Fund Financial Statements
Balance Sheet - Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
Notes to Basic Financial Statements
SUPPLEMENTARY IIVFORMATION
Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Governmental Funds
Debt Service Fund
Combining Balance Sheet
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
Pringle Creek
Riverfront/Downtown
Fairview Industrial Area
North Gateway
West Salem
Capital Projects Fund
Combining Balance Sheet
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
General
Pringle Creek
Riverfront/Downtown
Fairview Industrial Area
North Gateway
West Salem
Schedule of Expenditures by Project - Budget and Actual
AUDIT COMMENTS AND GOVERNMENT AUDITING STANDARDS SECTION
Auditor's Comments and Disclosures Required by State Regulations
AGENCY OFFICIALS
Term Expires
Janet Taylor
2006
Frank Walker
2008
Jim Randall
2006
Brad Nanke
2008
TJ Sullivan
2006
Rick Stucky
2008
Bruce Rogers
2006
Brent DeHart
2008
Dan Clem
2006
INDEPENDENT A UDITOR'S REPORT
Agency Officials
Urban Renewal Agency of the City of Salem
Salem, Oregon
We have audited the accompanying financial statements of the governmental activities and each major fund of
the Urban Renewal Agency of the City of Salem, Oregon (the Agency) (a Component Unit of the City of
Salem, Oregon) as of and for the year ended June 30, 2005, which collectively comprise the Agency's basic
financial statements, as listed in the table of contents. These financial statements are the responsibility of the
Agency'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 basic financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities and each major fund of the Urban Renewal Agency of the
City of Salem, Oregon as of June 30, 2005 and the respective changes in financial position for the year then
ended in conformity with accounting principles generally accepted in the United States of America.
The Management's Discussion and Analysis is not a required part of the basic financial statements, but is
supplementary information required by accounting principles generally accepted in the United States of
America. We have applied certain limited procedures which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the required supplementary information. However,
we did not audit the information and express no opinion on it.
Our audit was made for the purpose of forming an opinion on the financial statements that collectively
comprise the Urban Renewal Agency of the City of Salem's basic financial statements. The supplementary
information is presented for purposes of additional analysis and is not a required part of the basic financial
statements. The other supplementary 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.
Charles A. Swank, A Shareholder
October 10,2005
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MANAGEMENT'S DISCUSSION AND
ANALYSIS
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Fiscal Year Ended June 30,2005
This discussion and analysis of the City of Salem's Urban Renewal Agency's (Agency) financial
performance provides an overview of the Agency's financial activities for the fiscal year ended
June 30, 2005. Please read it in conjunction with the basic financial statements and the
accompanying notes to those financial statements.
THE FINANCIAL STATEMENTS
The financial statements presented herein include all of the activities of the Agency using the
integrated approach as prescribed by Governmental Accounting Standards Board (GASB)
Statement No. 34 Basic Financial Statements-and Management's Discussion and Analysis-for
State & Local Governments. The government-wide financial statements present the financial
picture of the Agency from the economic resources measurement focus using the accrual basis of
accounting. These statements include all assets of the Agency (including infrastructure) as well
as all liabilities (including long-term debt). Additionally, certain eliminations have occurred as
prescribed by Statement No. 34 in regards to payables and receivables. The fund financial
statements for governmental activities are prepared using the current financial resources
measurement focus and the modified accrual basis of accounting. Reconciliation of the h n d
financial statements to the government-wide financial statements is provided to explain the
differences created by the integrated approach.
Throughout this document, prior year data has been presented for comparative purposes.
IWPORTING ON THE AGENCY AS A WHOLE
The Statement of Net Assets and the Statement of Activities and Changes in Net Assets
report financial information about the Agency as a whole and about its activities. These
statements include all assets and liabilities of the Agency using the accl4cal basis of accounting,
which is similar to the accounting used by most private-sector companies. All of the current
year's revenues earned, and expenses incurred are recorded regardless of when cash is received
or paid.
These two statements report the Agency's net assets and the changes in them. Net assets are the
difference between assets and liabilities, which is one way to measure the Agency's financial
health, or Jinancial position. Over time, increases or decreases in the Agency's net assets are
one indicator of whether its Jinancial health is improving or deteriorating. Other factors to
consider are changes in the City's property tax base as well as the assessed values in the urban
renewal areas. In the Statement of Net Assets and the Statement of Activities and Changes in
Net Assets, all Agency activities are defined as governmental activities, which include capital
projects and applicable debt service associated with the five urban renewal project areas.
REPORTING ON THE AGENCY'S MOST SIGNIFICANT FUNDS
Fund Financial Statements
A fimd is a grouping of related accounts that are used to maintain control over resources that
have been segregated for specific activities or objects. The Agency uses fund accounting to
ensure and demonstrate compliance with finance-related legal requirements. The two funds
utilized by the Agency are both defined as major funds.
The Agency's services are reported in governmental funds, which focus on how money flows
into and out of those funds and the balances left at year-end that are available for spending.
These fimds are reported using an accounting method called modzfied accrual accounting, which
measures cash and all other financial assets that can readily be converted to cash. The
governmental fund statements provide a detailed short-term view of the Agency's general
government operations and the basic services it provides. Governmental fund information helps
determine whether there are more or fewer financial resources that can be spent in the near future
to finance the Agency's programs. The reconciliation of differences between the governmental
fimd financial statements and the government-wide financial statements is explained in a section
.
following the governmental fund financial statements.
i
FINANCIAL ACTIVITIES OF THE AGENCY AS A WHOLE
Government-wide Financial Statements
Statement of Net Assets
The following table reflects the condensed Statement of Net Assets compared to prior year.
Table 1
Statement of Net Assets
as of June 30,
(in millions)
2004
Assets:
Cash and investments
Other assets
Capital assets
Total assets
Liabilities:
Other liabilities
Long-term debt outstanding
Total liabilities
Net assets:
Investment in capital assets,
net of debt
Restricted
Debt Service
Capital Projects
Total net assets
$
2005
54.2 $ 37.1
3.4
4.5
60.5
72.4
118.1
114.0
3.9
58.4
62.3
2.0
50.2
52.2
2.0
39.5
8.8
45.0
$ 55.8 $
11.7
10.6
61.8
For more detailed information, see the Statement of Net Assets (page 20).
The Agency's net assets from governmental activities increased 10.8% from $55.8 million to
$61.8 million. T h s increase is the change in net assets reflected in the Statement of Activities
and Changes in Net Assets, shown in Table 2, and explained below:
Cash and investments decreased $17.1 million primarily due to payment of expenditures
of the Riverfiont/Downtown urban renewal area for construction of the Conference
Center, loans for urban rehabilitation in the Riverfiont/Downtown area and continued
construction in the North Gateway urban renewal area.
Capital assets increased $1 1.9 million, primarily as a result of the continued construction
of the Riverfront/Downtown7s Conference Center and North Gateway construction
activity.
Long-term debt outstanding decreased $8.2 million, primarily as a result of a $7.2 million
prior period adjustment (see note below). The agency also issued $2.2 million in tax
increment bonds, and retired $3.2 million in both tax increment and urban renewal bonds.
Prior period adjustments account for a $1.4 million increase in net assets. An adjustment
was made of $7.2 million to remove the Section 108 loan from the Riverfront/Downtown
urban renewal area debt. This loan is due to be paid from Community Renewal Funds
and is not debt of the Urban Renewal Agency. Also, a $5.7 million adjustment was made
to remove assets from the statements that had already been transferred to the City of
Salem in previous years. This included $4.9 million for land and parking structures and
$0.8 million for sky-bridges.
Statement of Activities and Changes in Net Assets
The following table reflects the condensed Statement of Activities and Changes in Net Assets
compared to prior year.
Table 2
Statement of Activities and Changes in Net Assets as of June 30,
(in millions)
Total Primary Government
2004
2005
Revenues
Charge for services
Grants and contributions
Taxes
Interest
Other
Total revenues
Expenses
Programs
Increase in net assets before special
items and transfers
Transfers
Increase in net assets
3.3
(2.0)
4.8
(0.2)
1.3
4.6
Beginning net assets
Prior period adjustment
Ending net assets
For more detailed information, see the Statement of Activities and Changes in Net Assets (page
2 1).
The Agency's changes to net assets fkom governmental activities increased 253.8% from $1.3
million to $4.6 million. This increase in the changes in net assets primarily reflected:
Charges for services - These are revenues that arise from charges to customers,
applicants, or others who purchase, use, or directly benefit from the goods, services, or
privileges provided, or are otherwise directly affected by the services. In 2004-05
revenues primarily consist of loan collections and are accrued at net of new loans and
payments received. Charges for services increased $0.9 million or 128.6%.
Grants and contributions - These are revenues arising from mandatory and voluntary
nonexchange transactions with other governments, organizations, or individuals that are
restricted for use in a particular program. Revenues primarily consist of federal and state
grants and capital project shared costs. Total revenues remained the same in 2004-05 as
the prior fiscal year. The agency received an EPA grant for cleanup of a property in the
North Gateway area. Funding towards improvements to the Railroad Bridge over the
Willamette River was received from the Oregon Department of Transportation, Union
Pacific Railroad and the City of Salem Cultural and Tourism Fund. A grant was received
from the Oregon State Marine Board for Riverfront Park dock improvements.
Taxes - These are revenues that consist of property taxes, which have decreased $1.4
million. The decline is primarily the result of property tax revaluation of the Qwest,
Norpac and Surnco properties.
Transfers - These are attributable to a transfer to the City of Salem Conference Center
GainILoss Reserve Fund of $0.2 million to partially fund future working capital shortfalls
and capital projects for the Conference Center.
Program Expenses - These are direct expenses that are specifically associated with a
service, program, or department and, thus, are clearly identifiable to a particular function.
The following table reflects the changes in program expenses:
Table 3
Governmental Activities - Program Expenses
as of June 30,2005
(in millions)
FY 2004-05
Programs
Urban Renewal
Interest on long-term debt
Total expenses
Amount
3.2
2.9
$
6.1
$
Compared to FY 2003-04
Percent of
Increase / (Decrease)
Total
Amount
Percent
52.5%
$
(0.6)
-15.8%
47.5%
(0.5)
-14.7%
100.0% $
(1.1)
The decreased program expenses of $1.1 million, primarily reflect:
Urban renewal program costs for project management, loan programs, and Tool Box
grants in the five urban renewal project areas. The decreased program costs in 2004-05
primarily reflect decreased activity associated with the RiverfrontDowntown and North
Gateway urban renewal areas as prior year projects were near completion.
Interest on long-term debt consists of the Agency's tax allocation debt interest. The
decrease in interest expense is primarily due to the decrease in long-term debt for the
Section 108 loan that was deemed an obligation of the Community Renewal Fund of the
City of Salem, and not a debt of the Agency.
Fund Financial Statements
The following table reflects a summary of ending fimd balances for governmental funds
compared to prior year.
Table 4
Governmental Funds - Fund Balances
as of June 30,2005
(in millions)
Major Funds
Amount
Capital projects
$
24.1
11.7
Debt service
Total fimd balances $ 35.8
Percent of
Increase 1 (Decrease)
Total
Amount
Percent
$ (18.7)
-43.7%
67.3%
32.7%
3.1
36.0%
100.0% $ (15.6)
At June 30, 2005, the Agency's governmental funds reported combined fund balances of $35.8
million, which is a decrease of $15.6 million or 30.4% compared with last year. The decrease is
a result of continued activities in the RiverfrontDowntown urban renewal area due to
construction of the Convention Center as it nears completion and a decrease over prior year in
bond and loan proceeds received.
Capital Projects Fund
The Capital Projects fund accounts for construction improvement projects within the five urban
renewal areas. Financing is provided by bond issuance and interest income. Principal
expenditures are made for infrastructure improvements, assorted studies, and capital projects.
The Capital Projects fund's revenues (exclusive of debt proceeds, sales of assets, and transfers)
decreased 11. l % from $1.8 million to $1.6 million. This decrease in revenues primarily reflects
the combination of a decrease in fees, licenses and permits of $0.3 million and a decrease in loan
payments received of $0.2 million offset by donations received of $0.3 million.
The Capital Projects fund's expenditures decreased 33.3% from $34.5 million to $23.0 million.
This decrease in expenditures primarily reflects a decrease in construction costs for the
Conference Center in the Riverfiont/Downtown urban renewal area and the Portland Road
improvements in the North Gateway urban renewal area as these projects drew close to
completion.
The Capital Projects fund's other financing sources (uses) decreased 92.0% from $35.0 million
to $2.8 million. This decrease is primarily a result of a decrease in urban renewal bond issuance
from prior year in the Riverfront/Downtown urban renewal area.
As of June 30, 2005, there was a $24.1 million Capital Projects fund balance, which is reserved
for urban renewal projects.
Debt Service Fund
The Debt Service fund accounts for the accumulation of resources and the payment of urban
renewal bond principal and interest. The principal source of revenue is property taxes.
The Debt Service fund's revenues decreased. 14.1% from $8.5 million to $7.3 million, due
primarily to decreased property taxes of $1.3 million. The property tax decline is primarily the
result of property tax revaluation of the Qwest, Norpac and Sumco properties.
The Debt Service fund's expenditures decreased 50.0% from $8.4 million to $4.2 million. This
decrease primarily reflects the decrease in short-term debt that was issued, and later retired
during the fiscal year.
The Debt Service fund's other financing sources (uses) decreased 100% from $2.8 million to
$0.0 million. This decrease primarily reflects the decrease in reserve required for sale of urban
renewal bonds in the Riverfront/Downtown urban renewal area that were issued in 2003-04.
As of June 30,2005, there was an $1 1.7 million Debt Service fund balance, which is reserved for
debt service.
Budgetary Highlights
For the year ended June 30, 2005, there were no significant variations between the original
budget and the final amended budget.
.
Capital Assets
As of June 30, 2005 the Agency had invested $72.5 million in capital assets as reflected in the
following table, which represents a net increase of $17.7 million or 32.3% from the 2003-04
fiscal year.
Table 5
Capital Assets At Year Ending June 30,
(Net of Depreciation)
(in millions)
Land
Work in progress
Total
$
-
$
$
54.8
54.8
$
5.2
67.3
72.5
For more detailed information see Notes to the Financial Statements (page 34).
The Agency's change in capital assets is reflected in the following table:
Table 6
Change in Capital Assets
(in millions)
Beginning balance
Prior period adjustment
Increases
$
60.5
(5.7)
17.7
Ending balance
$
72.5
The prior period adjustment of $5.7 million reflects the removal from these financial statements
certain assets previously transferred to the City of Salem including $4.9 million for land and
parking structures and $0.8 million for sky-bridges.
The $17.7 million increase reflects the change in construction in progress associated with projects in
the urban renewal project areas. Construction in progress represents multi-year construction projects.
Debt Outstanding
As of June 30, 2005 the Agency had $50.2 million in debt (bonds, notes, etc.) outstanding
compared to the $51.3 million last year, a 2.1% net decrease (considering new borrowing and
debt retirement). This decrease primarily reflects the retirement of $2.0 million in Urban
renewal Series 2003 bonds in the North Gateway area.
Table 7
Outstanding Debt At Year Ended June 30,
(in millions)
Totals
2004
2005
Governmental:
Tax increment
Notes
$
50.0
1.3
$
49.0
1.2
Total
$
51.3
$
50.2
For more detailed information see the Notes to the Financial Statements (page 36).
ECONOMIC FACTOR
The Urban Renewal Agency continues to be an important partner in economic development
within the City of Salem, providing necessary infrastructure improvements to support continued
growth and quality of service to those within the Agency's boundaries. As property values
within the boundaries of the Agency increase, so do the property taxes derived from the
corresponding increases in tax increment. That tax increment is then used to pay debt service on
bonds issued to fund projects and improvements.
Ray and Joan Kroc Corps Community Center - The Salvation Army has selected Salem as one
of eight sites in the western United States to move forward in the development phase for a Ray &
Joan Kroc Corps Community Center. The estimated $29.0 million facility would be located on
10.65 acres in the North Gateway Urban Renewal Area. Land adjacent to the site will be
developed by the Salem Urban Renewal Agency as a community wetlands park.
Mill Creek Industrial Park - On April 25,2005, the City Council approved an ordinance to adopt
the urban renewal plan for the Mill Creek Industrial Park.
SUMCO USA Plant Closure - SUMCO USA had planned to close their Salem plants by the end
of 2004. As of June 30, 2005, SUMCO still represented the Urban Renewal Agency's largest
property taxpayer in the Urban Renewal Agency's North Gateway Project Area. The Agency
contracted with Tashrnan Johnson LLC (consultant), to better assess the impact to tax increment
revenues. The analysis identified a significant impact to North Gateway Project Area cash flow
and on the ability to meet the existing debt service schedule associated with the Tax Increment
Revenue Bonds issued in May 2003. The debt service repayment issue was alleviated through
staff working closely with the North Gateway Redevelopment Advisory Board, the consultant,
and bondholders to:
Develop a conservative model for the 2003 bond sale that anticipated SUMCO's north
plant closing,
Revise the Budget and the Ten Year Spending Plan - capital expenditures were
significantly reduced through reprioritizing, reducing, andlor deferring scheduled capital
projects to better match cash flows,
Exercise the Bond Purchasing Agreement provision that allows repayment of up to $2.0
million of principal in any fiscal year (partial defeasance of debt in the amount of $2.0
million in June 2004, and again in December 2004),' and
Negotiate with the bondholders on revisions to the bond covenants.
Staff will continue to closely monitor cash flows to assure continued compliance with bond
covenants.
Statewide initiative Measure # 50 approved by voters on May 20, 1997 has adversely impacted
the property values in the boundary areas. This measure rolled back assessed values to 1995-96
levels and effectively limited increased property tax revenues the City could anticipate in future
years to a maximum of 3 percent, with permitted allowances for increasing valuations based on
new construction.
'
Starting in fiscal year 2002-03, the portion of the tax increment revenue which had been
allocated to the school levy must now be allocated to the general government levy, and is
included in the calculation to determine whether the total general government levy exceeds the
$10/$1,000 of real market value limitation on taxes under Article XI, Section 1l b of the Oregon
Constitution. In the event that total general government levy, including the urban renewal tax
increment, exceeds the $10/$1,000 limit, the Department of Revenue has established
administrative rules to evenly reduce all taxes imposed upon the property so as to meet the
limitation (OAR 150-310.090 and .110). This is referred to as "compression." The effects of
compression are also determined by the taxes collected by other overlapping governments
levying taxes on the property.
In fiscal year 2004-05, urban renewal taxes were collected through a combination of methods.
Under the tax increment, or "division of taxes," method, the amount of tax increment collected is
based on the increase in value of the property located in an urban renewal area over the "frozen
base" value established at the time the urban renewal district was formed. The tax increment
collected from within a district can only be spent on urban renewal activity within that district.
In addition, certain urban renewal districts collect additional taxes through a citywide special
levy, which is identified as such on tax bills. These taxes must likewise be spent only on urban
renewal activity in the district for which the taxes are collected. The Agency's districts entitled
to receive the special levy have a special levy rate of $0.2744/$1,000 of real market value for
fiscal year 2004-05. For fiscal year 2005-06, the rate per $1,000 of real market value will be:
Urban Renewal Area
Riverfront/Downtown
North Gateway
Fairview
West Salem
Division of Taxes Rate
Special Levy Rate
$0.3 159
0.1871
0.0481
0.0000
$0.1909
0.0937
none
none
FINANCIAL CONTACT
The Agency's financial statements are designed to present users (citizens, taxpayers, customers,
investors, and creditors) with a general overview of the Agency's finances and to demonstrate
the Agency's accountability. If you have questions about the report or need additional financial
information, please contact the City's Finance Director at 555 Liberty Street SE, Salem, Oregon
97301.
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BASIC FINANCIAL STATEMENTS
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URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
STATEMENT OF NET ASSETS
June 30,2005
Assets
Current assets
Cash and investments
Accounts receivable, net
Intergovernmental receivable
Inventories and prepayments
Total current assets
Noncurrent assets
Capital assets:
Land and construction in progress
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Long-term debt - due within one year
Total current liabilities
Non-current liabilities
Long-term debt
Total liabilities
Net assets
Investment in capital assets, net of related debt
Restricted
Debt service
Capital projects
Total net assets
The accompanying notes are an integral part ofthe financial statements.
20
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
For the fiscal year ended June 30,2005
Program Revenues
Capital
Charges
Grants1
For Services
Contributions
Expenses
Functionslprograms
Governmental activities
Urban renewal
Interest on long-term debt
$
3,238,455
2,905,799
Net (Expense)
Revenues and
Changes in
Net Assets
$
1,586,668
-
$
459,651
Totals
$
-
(1,192,136)
(2,905,799)
Total governmental activities
General revenues
Property taxes, levied for debt service
Investment earnings
Gain (loss) on sale of assets
Miscellaneous
Transfers
8,680,2 10
Total general revenues and transfers
Change in net assets
4,582,275
Net assets, July 1,2004
55,763,667
Prior period adjustment
Net assets, June 30,2005
$
The accompanying notes are an integral part of the financial statements.
61,825,436
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30,2005
Debt
Service
Assets
Cash and investments
Accounts receivable, net
Intergovernmental receivable
Inventories and prepayments
$
Capital
Projects
11,578,177
536,550
$ 25,488,037
Totals
$
37,066,214
4,228,292
277,692
$
1,790,354
3,964,237
3,691,742
277,692
Total assets
Liabilities and fund balance
Liabilities
Accounts payable and accrued liabilities
Deferred revenues
$
Total liabilities
Fund balance
Reserved for debt service
Unreserved, reported in capital projects fund
4 10,022
1,790,354
3,554,2 15
4 10,022
5,344,569
5,754,591
-
24,113,027
11,704,705
24,113,027
12,114,727
$ 29,457,596
$
11,704,705
Total fund balance
Total liabilities and fund balance
$
Amounts reported for governmental activities in the statement
of net assets are different because:
Capital assets used in governmental activities are not current
financial resources and, therefore, are not reported in the
funds (net of accumulated depreciation)
Other long-term assets are not available to pay for currentperiod expenditures and, therefore, are deferred in the funds:
Notes receivable earned, but unavailable
Property taxes earned, but unavailable
Long-term liabilities, including bonds payable, are not due
and payable in the current period and, therefore are
not reported in the funds (includes accrued interest)
Total net assets
The accompanying notes are an integral part of the$nancial statements.
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS
For thejscal year ended June 30, 2005
Debt
Service
Capital
Proiects
Revenues
Property taxes
Interest on investments
Intergovernmental
Loan payments received
Rents
Other
Total revenues
Expenditures
Material and services
Capital outlay
Debt service
Principal retirement
Interest and fiscal charges
Total expenditures
Revenues over (under) expenditures
Other financing sources (uses)
Transfers in
Sale of capital assets
Proceeds of long-term capital related debt
Transfers out
Total other financing sources (uses)
Net change in fund balance
Fund balances, beginning of year
Fund balances, end of year
The accompanying notes are an integral part of the$nancial statements.
Totals
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
For the fiscal year ended June 30,2005
Net change in fund balances-total governmental funds (decrease in fund balance)
Amounts reported for governmental activities in the Statement
of Activities and Changes in Net Assets are different because:
Capital assets used in government activities are not current financial resources and, therefore
are not reported in the funds. This is the amount of capital outlay and expenditures in the
funds which are included in government-wide capital assets.
Revenues in the government-wide Statement of Activities and Changes in Net Assets that
do not provide current financial resources are not reported as revenues in the funds.
Bond proceeds provide current financial resources to governmental funds, but issuing debt
increases long-term liabilities in the government-wide Statement of Net Assets.
Repayment of bond principal is an expenditure in governmental funds, but the repayment
reduces long-term liabilities in the government-wide Statement of Net Assets.
Accrued interest expense on long-term debt is reported in the government-wide Statement
of Activities and Changes in Net Assets, but they do not require the use of current
financial resources and are not reported as expenditures in governmental funds.
Change in net assets
Prior period adjustments:
Prior period adjustment due to misstatement of capital assets for the GASB 34 conversion.
Prior period adjustment to remove a long-term debt that was recorded in a previous year, as
a liability of the Agency, but was a liability of another City of Salem department.
Total prior period adjustments
Change in net assets and prior period adjustment of governmental activities.
The accompanying notes are an integral part of the financial statements.
24
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NOTES TO BASIC FINANCIAL STATEMENTS
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URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED .TUNE 30,2005
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Urban Renewal Agency (Agency) of the City of Salem, Oregon (City) have
been prepared in conformity with generally accepted accounting principles (GAAP) as applied to
governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting
body for establishing governmental accounting and financial reporting standards.
The more significant of the Agency's accounting policies are described below.
The Financial Reporting Entity
'
The Urban Renewal Agency of the City of Salem is a municipal corporation created by Oregon statute and
activated by the Salem City Council (Council). The Council elected to have the Urban Renewal Agency
exercise its powers and engage in urban renewal activity within the boundaries of the City. The Council has
been designated as the governing body of the Agency, and acts in that capacity. The Agency develops urban
renewal plans which the Council approves. Pursuant to ORS 457.210(3), the City has been delegated
responsibility for fiscal matters of the Agency related to the planning and construction of urban projects. The
tax increment collections resulting from the division of taxes under ORS 457.420 are used to retire any
indebtedness incurred to finance urban renewal projects.
Urban Renewal Areas
Tax allocation bonds for urban renewal plan areas are authorized by state law to 1) ". . .eliminate and prevent
the development or spread of urban blight and deterioration; and 2) encourage needed urban conservation and
rehabilitation and provide for redevelopment of blighted or deteriorated areas."
Projects are financed in urban renewal plan areas as follows:
The Agency prepares an urban renewal plan which must be approved by the Council.
The County Assessor "freezes" the assessed value of property within the urban renewal area. This is
referred to as the "frozen" value.
Any increase in assessed value above the frozen value is called the "incremental value." The tax revenue
generated by the tax rate times the incremental value is used to pay the principal and interest on any
indebtedness incurred by the Urban Renewal Agency to finance the urban renewal project.
State law does not limit the amount of tax allocation bonds a city may issue. However, the Salem City Charter
limits the amount of bonds that can be issued without voter approval to $5 million. The Agency is not subject
to the Charter Limitation when it is the debt issuer.
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2005
Government-wide and Fund Financial Statements
The government-wide financial statements report information on all activities of the Agency. As a general
rule, the effect of interfund activity has been eliminated from the government-wide financial statements.
The Statement of Activities and Changes in Net Assets demonstrates the degree to which the expenses of a
given function are offset by program revenues. Program revenues include (1) fines, fees, and charges to
customers who purchase, use or directly benefit from goods, services, or privileges provided by a given
function or program and (2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function or program. Grants and contributions not restricted are reported as
general revenues rather than program revenues. Taxes and other items not properly included among program
revenues are also reported as general revenues.
Fund financial statements are provided for all governmental funds.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Measurement focus refers to what is being measured by a fund. Basis of accounting refers to when revenues
and expenditures are recognized in the accounts and reported in the financial statements.
The government-wide financial statements are accounted for using an economic resources measurement focus
and the accrual basis of accounting. Assets and liabilities are included in the Statement of Net Assets and the
Statement of Activities and Changes in Net Assets presents increases and decreases in those net assets.
Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the
timing of related cash flows.
The governmental fund financial statements are accounted for using a current financial resources measurement
focus and the modified accrual basis of accounting. Only current assets and current liabilities are included in
the Balance Sheet, and the Statement of Revenues, Expenditures, and Changes in Fund Balances present
increases and decreases in those net current assets. Revenues are recorded when susceptible to accrual (both
measurable and available). "Measurable" means that the amount of the transaction can be determined.
"Available" is defined as being collectible within the current period or soon enough thereafter (60 days) to be
used to liquidate liabilities of the current period. Expenditures, other than interest on long-term obligations,
are recorded when the fund liability is incurred.
The Agency's government-wide financial statements are based on all applicable GASB pronouncements as
well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements
conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements
and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins
(ARBS) of the Committee on Accounting Procedures. The Agency has elected not to apply FASB guidance
issued subsequent to November 30, 1989 to the government-wide financial statements unless specifically
adopted by GASB.
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2005
Governmental Funds
Governmental funds finance all of the functions of the Agency. The following are the Agency's major fund
types.
Debt Service Fund
The Debt Service Fund is used to account for the accumulation of tax increment resources for payment of
principal and interest.
Capital Proiects Fund
The Capital Projects Fund accounts for construction improvement projects in the Urban Renewal areas.
Financing is provided by bond sales, ad valorem taxes on property and interest income.
Cash and Investments
The City maintains a common cash and investment pool for all City funds including funds of the Urban
Renewal Agency. Interest earned by the Agency on the pooled cash and investments is allocated based on
each fund's average cash and investments balance as a proportion of the City's total pooled cash and
investments.
Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments
with original maturities of three months or less from the date of acquisition.
It is the City's policy to report at amortized cost all short-term, highly liquid money market investments
(including corporate bonds, commercial paper, bankers' acceptances, municipal bonds, US Treasury and
agency obligations) and participating interest-earning investment contracts with a remaining maturity of one
year or less at time of purchase. Investments with a remaining maturity at time of purchase of more than one
year are valued at fair value in accordance with GASB Statement No. 3 1.
Receivables and Deferred Revenues
Property taxes receivable for the governmental fund types, which have been collected within sixty days
subsequent to year end, are considered measurable and available and are recognized as revenues. All other
property tax receivables are offset by deferred property tax revenues and, accordingly, have not been recorded
as revenue. Real and personal property taxes are levied upon all taxable property within the City and become
liens against the property as of July 1 of each year and are payable in three installments which are due on
November 15, February 15, and May 15. Discounts are allowed if the amount due is received by November
15. Taxes unpaid and outstanding on May 16 are considered delinquent. In the government-wide financial
statements taxes are recognized as revenue when levied.
Notes receivable are recorded as receivables when loaned, offset by deferred revenue and accordingly, not
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED .TUNE 30,2005
recorded as revenue in the funds until payments are received. In the government-wide statements the revenue
is recognized in the current period.
Capital Assets
Capital assets, which include land and land improvements and construction in progress, are reported in the
government-wide financial statements. Capital assets are recorded at historical cost or estimated historical
cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date
of donation. In the governmental fund statements, capital assets are charged to expenditures as purchased.
Capital assets are defined by the Agency as assets with an initial, individual cost of more than $10,000 and an
estimated useful life in excess of two years. Additions or improvements and other capital outlays that
significantly extend the useful life of an asset, or significantly increase the capacity of an asset are capitalized.
Other costs incurred for repairs and maintenance are expensed.
Construction-in-progressrepresents amounts expended to date on uncompleted construction projects.
It is the Agency's practice to transfer capital assets to the City when projects are completed.
Long-Term Debt
Long-term debt is reported in the Statement of Net Assets as noncurrent liabilities. The governmental fund
financial statements do not report long-term debt because they do not require the use of current financial
resources.
Net Assets
In the government-wide financial statements, governmental funds report restriction of fund balance for
amounts that are not available for appropriation. These include capital assets net of related debt and other net
assets where a third party (statutory, bond covenant, or granting agency) placed limitation on their use.
Budget and Budgetary Accounting
A budget is prepared for each fund in accordance with the modified accrual basis of accounting for all funds.
Appropriations are made by expenditure type for all funds. Expenditures may not legally exceed
appropriations. Appropriations lapse at the end of each fiscal year. Budget amounts include original
approved amounts and all subsequent appropriation transfers approved by the Urban Renewal Agency Board.
The budget for the funds includes capital outlay expenditures in each program for capital outlays applicable to
that program.
After budget approval, the Urban Renewal Agency Board may approve supplemental appropriations if an
occurrence, condition, or need exists which had not been ascertained at the time the budget was adopted.
Management may not amend the budget. A supplemental budget requires hearings before the public,
publications in newspapers and approval by the Urban Renewal Agency Board. The Agency approved a
$50,000 supplemental budget appropriation in August 2004 for materials and services.
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2005
CASH AND INVESTNIENTS
The Agency's cash and investments are comprised of the following at June 30,2005:
Carrying
Value
Deposits with City of Salem
Cash held by County Treasurer
Local Government Investment Pool
$
34,992,817
5 1,320
2,022,077
Fair
Value
$
34,992,817
5 1,320
2,O 18,033
The City's investment policies are governed by state statute. State statutes authorize the City to invest primarily
in general obligations of the U.S. Government and its agencies, certain bonded obligations of Oregon
municipalities, bank repurchase agreements, bankers' acceptances, certain commercial paper and the state
treasurer's investment pool, among others.
The State Treasurer of the State of Oregon maintains the Oregon Short-Term Fund, of which the Local
Government Investment Pool is part. Participation by local governments is voluntary. The State of Oregon
investment policies are governed by statute and the Oregon Investment Council. In accordance with Oregon
Statutes, the investment funds are invested as a prudent investor would do, exercising reasonable care, skill and
caution. The Oregon Short-Term Fund is the LGIP for local governments and was established by the State
Treasurer. It was created to meet the financial and administrative responsibilities of federal arbitrage
regulations. The investments are regulated by the Oregon Short-Term Fund Board and approved by the Oregon
Investment Council (ORS 294.805 to 294.895). At June 30, 2005, the fair value of the position in the Oregon
State Treasurer's Short-Term Investment Pool was equal to 99.8% of the value of the pool shares. The
investment in the Oregon Short-Term Fund is not subject to risk evaluation. Separate financial statements for
the Oregon Short-Term Fund are available from the Oregon State Treasurer.
RECEIVABLES
The Agency's receivables at June 30, 2005 are as follows:
Debt
Service
Accounts Receivable
Property Taxes
Interest
Notes
$
536,5 10
40
Capital
Projects
Totals
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2005
PROPERTY TAXES
Balances
July 1,
2004
Current
Prior
$
65 1,787
2004-05
Lev
$
Adjustments
7,490,035 $
-
Collections
(119,686) $ 7,033,855 $
(293,727)
158,044
Balances
June 30,
2005
336,494
200,016
Ensuing Year's Levies
The Pringle Creek plan area will not levy for 2005-06.
The Riverfiont/Downtown and North Gateway plan areas will levy 100 percent of the amount of their
authority under option one of ORS 457.435(2)(a) as selected by the Agency for the retirement of long-term
obligations principal and interest due during 2005-06.
Fairview Industrial area will levy $460,000 during 2005-06 under option three of ORS 457.435(2)(a) as
selected by the Agency for the retirement of long-term obligations principal and interest.
West Salem area will levy 100% of the amount of their authority under option three "Windows" plans
(standard rate) of ORS 457.435(2)(a) as selected by the Agency for the retirement of long-term obligations
principal and interest due during 2005-06.
NOTES RECEIVABLE
Riverfront/Downtown
Payments are receivable in monthly or annual installments, interest rates range
from 7.0% to 10.0%, and all notes are secured by the underlying renewal project
improvements.
IVorth Gateway
Payments are receivable in monthly installments with an interest rate of 3%.
The note is secured by the underlying renewal project improvement.
$
2,906,911
647,304
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2005
CAPITAL ASSETS
Governmental activities
Land and land improvements
Construction in progress
Governmental activities
capital assets, net
Beginning
Balance
Increases
Ending
Balance
Decreases
$
-
$
5,155,067
$
-
$
5,155,067
$
54,774,144
$
17,684,879
$
-
$
72,459,023
The Agency previously reported depreciable assets, net of depreciation, which had been transferred to the
Community Development Department of the City of Salem. The Downtown Parking fund received the Parking
structures of $4,948,789 and the General fund received the sky bridges of $771,717. This is part of the prior
period adjustment of $1,479,494 reported on the Statement of Activities and Changes in Net Assets for the fiscal
year ended June 30,2005.
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URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2005
LONG-TERM OBLIGATIONS
Transactions for the year ended June 30,2005 are as follows:
Balances
July 1,
2004
Notes
Fairview Industrial Area Phase 11note payable dated October 15, 1997,
at 5.01%.
$
1,296,588
New
Obligations
$
-
Maturedl
Retired
$
66,242 $
Balances
June 30,
2005
1,230,346
Tax increment bonds
Pringle Creek
Riverfiont/Downtown
North Gateway
West Salem
Fairview
Urban Renewal Bonds
North Gateway, Series 2003 Bond payable
dated March 12,2003, at 5.40%.
22,695,000
2,000,000
20,695,000
Riverfiont/Downtown, Series 2003A
Bond payable dated July 29,2003, at 5.35%.
3,245,000
160,000
3,085,000
Riverfront/Downtown, Series 2003B
Bond payable dated July 29,2003, at 6.25%.
23,840,000
900,000
22,940,000
The Agency had previously reported a HUD Section 108 note for $7,200,000 as a liability of the
Riverfront/Downtown urban renewal area. However, the liability belongs to the Community Renewal fund of
the City of Salem. This as part of the prior period adjustment of $1,479,494 reported on the Statement of
Activities and Changes in Net Assets for the fiscal year ended June 30,2005.
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2005
Future maturities of long-term obligations are as follows:
Year
Total
Pringle Creek
Principal
Interest
RiverfrontiDowntown
Principal
Interest
Fairview
Principal
Interest
$ 473,036
Continued
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED .TUNE 30,2005
Future maturities of long-term obligations are as follows (continued):
West Salem
Princi~al
Interest
North Gateway
Principal
Interest
$ 20,695,000
$
9,532,080
$
400
$
Totals
Princi~al
-
$ 50,164,106
Interest
$ 22,852,549
Concluded
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30,2005
COMMITMENTS AND CONTINGENCIES
Risk Management
The Agency is provided coverage under the City of Salem partially self-insured program. Excess insurance
policies are purchased which include property damage and liability. No insurance claims have been settled in
the prior three years that have exceeded policy coverage.
From time to time, the Agency is a defendant in various litigation proceedings. Management believes any
losses arising fiom these actions will not materially affect the Agency's financial position.
Litigation
The Agency is the defendant in a legal action currently pending. Although the outcome cannot be determined, it
is the opinion of management that settlement of this matter will not have a material effect on the financial
position and results of operations of the Agency.
Construction Commitments
Phase I1 of the January 2004 contract with Axis Curb for construction of the Front Street Traffic Calming will
widen the south bound off-ramp fiom the Center Street Bridge to two lanes from the Court Street Intersection to
the bridge (approximately). It also includes completing streetscape improvements on the east side of Front
Street from State Street to Chemeketa Street. In addition, landscaping will be completed in all areas where the
curb line was relocated during Phase 1 of the project. The project funding is split with $1,000,000 in 2005-06
and $750,000 in 2006-07.
Work has begun on the Salem Industrial Drive improvements in the North Gateway Area. A contract has been
awarded to W & H Pacific in the amount of $3 17,000 for design and engineering work. The total project budget
is $5 million with completion anticipated in the fall of 2007.
SUBSEQUENT EVENTS
On April 25,2005, the Salem City Council approved an ordinance to adopt the urban renewal plan for the Mill
Creek Industrial Park. The plan was effective July 24,2005. A contract of $14 1,143 was awarded to OTAK on
October 12,2005 to work on designing the wetland plans.
SUPPLEMENTARY INFORMATION
URBAN RENEWAL AGENCY O F THE CITY O F SALEM, OREGON
(A Component Unit of the City of Salem)
SCHEDULE O F REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - GOVERNMENTAL FUNDS
For the fiscal year ended June 30, 2005
Debt Service Fund
Original/
Final
Budget
Actual
variance'
Revenues
Propety Taxes
Interest on investments
Intergovernmental
Loan payments received
Rents
Other
Total revenues
6,647,640
Expenditures
Current
Materials and services
Capital outlay
Debt service
7,299,149
(65 1,509)
54,2 10
54,2 10
8,073,780
4,22 1,701
3,852,079
(1,480,350)
3,077,448
(4,557,798)
Total expenditures
Revenues over (under) expenditures
Other financing sources (uses)
Transfers in
Sale of capital assets
Debt issuance
Transfers out
Total other financing sources (uses)
3,000
Excess (deficiency) of revenues over (under)
expenditures and other financing sources (uses)
Fund balance, beginning of year
Fund balance, end of year
$
3,000
(1,477,350)
3,080,448
(4,557,798)
8,919,590
8,624,257
295,333
7,442,240
$
11,704,705
1 ( ) indicates revenueslexpenditures in excess of budget
41
$
(4,262,465)
Continued
1
Original/
Final
Budget
$
Actual
-
$
24,113,027
variance'
$
(24,113,027)
Concluded
1 ( ) indicates revenues/expenditures in excess of budget
42
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URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
COMBINING BALANCE SHEET- DEBT SERVICE FUND
June 30,2005
Assets
Cash and investments
Receivables
$
785
598
Faiwiew
Industrial
Area
Riverfront1
Downtown
Pringle
Creek
$
5,357,426
266,338
$
1,383,912
29,861
North
Gateway
$
4,835,775
239,305
West
Salem
$
279
448
Totals
$
11,578,177
536,550
Total assets
Liabilities and fund balance
Liabilities
Deferred revenue
Fund balance
Reserved for debt service
Total liabilities and
fund balance
785
$
1,383
5,420,643
$
5,623,764
1,390,962
$
1,413,773
4,892,004
$
5,075,080
31 1
$
727
11,704,705
$
12,114,727
URBAN RENEWAL AGENCY OF THE CITY O F SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
DEBT SERVICE FUND
For theJiscal year ended June 30,2005
Pringle
Creek
Revenues
Property taxes
Interest on investments
Other
Total revenues
Expenditures
Debt service
Revenues over (under) expenditures
Other financing sources (uses)
Operating transfers in
Excess (deficiency) of revenues over (under)
expenditures and other financing sources (uses)
Fund balance, beginning of year
Fund balance, end of year
Riverfront1
Downtown
Fairview
Industrial
Area
North
Gateway
-
West
Salem
Totals
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - PRINGLE CREEK (DEBT SERVICE FUND)
For thefiscal year ended June 30, 2005
Budgeted Amounts
Original
Final
Actual Amounts
(Budgetary
Revenues
Property taxes
Interest on investments
Total revenues
Expenditures
Debt service
PrincipaI
Interest
Total expenditures
Excess (deficiency) of revenues over
expenditures
Other financing sources (uses)
Operating transfers in
Excess (deficiency) of revenues over
expenditures and other sources (uses)
Fund balance, beginning of year
Fund balance, end of year
1 ( ) indicates revenues/expendituresin excess of budget
46
variance1
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - RIVERFRONT/DOWNTOWN (DEBT SERVICE FUND)
For the fiscal year ended June 30, 2005
Budgeted Amounts
Final
Original
Revenues
Property taxes
Interest on investments
Other
Total revenues
Expenditures
Intra City - Intra departmental billings
Debt service
Principal
Interest
Total expenditures
Excess (deficiency) of revenues over
expenditures
Fund balance, beginning of year
Fund balance, end of year
1 ( ) indicates revenues/expenditures in excess of budget
47
Actual Amounts
variance1
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - FAIRVIEW INDUSTRIAL AREA (DEBT SERVICE FUND)
For the fiscal year ended June 30, 2005
Budgeted Amounts
Original
Final
Revenues
Property taxes
Interest on investments
Other
Total revenues
Expenditures
Debt service
Principal
Interest
Total expenditures
Excess (deficiency) of revenues over
expenditures
Fund balance, beginning of year
Fund balance, end of year
1 ( ) indicates revenueslexpenditures in excess of budget
48
Actual Amounts
variance'
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - NORTH GATEWAY (DEBT SERVICE FUND)
For fiscal year ended June 30, 2005
Budgeted Amounts
Original
Final
Revenues
Property taxes
Interest on investments
Other
Total revenues
Expenditures
Debt service
Principal
Interest
Total expenditures
Excess (deficiency) of revenues over
expenditures
Fund balance, beginning of year
Fund balance, end of year
1 ( ) indicates revenueslexpendituresin excess of budget
49
Actual Amounts
variance'
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - WEST SALEM (DEBT SERVICE FUND)
For thejscal year ended June 30, 2005
Budgeted Amounts
Original
Final
Revenues
Property taxes
Expenditures
Debt service
Principal
Interest
Total expenditures
Excess (deficiency) of revenues over
expenditures
Fund balance, beginning of year
Fund balance, end of year
1 ( ) indicates revenueslexpenditures in excess of budget
50
Actual Amounts
(Budgetary Basis)
variance1
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
COMBINING BALANCE SHEET - CAPITAL PROJECTS FUND
June 30,2005
Pringle
Creek
General
Riverfront1
Downtown
Assets
Cash and investments
Accounts receivable, net
Intergovernmental receivable
Prepaid Expense
Total assets
Liabilities and fund balance
Liabilities
Accounts payable
Deferred revenue
Total liabilities
13,319
4,120,310
Fund balance
Total liabilities and fund balance
$
2,511
$
1,275,169
$
14,628,377
Continued
Fairview
Industrial
Area
$
4,489,012
North
Gatewav
$
9,057,701
West
Salem
$
4,826
Total
$
29,457,596
Concluded
URBAN RENEWAL AGENCY O F THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE CAPITAL PROJECTS FUND
For the fiscalyear ended June 30, 2005
General
Pringle
Creek
Riverfront1
Downtown
Revenues
Interest on Investments
Intergovernmental
Loan payments received
Rents
Other
Total revenues
Expenditures
Materials and services
Capital outlay
Debt service
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers in
Sale of capital assets
Debt issuance
Transfers out
Total other financing sources (uses)
Excess (deficiency) of revenues over
expenditures and other financing sources (uses)
Fund balance, beginning of year
Fund balance, end of year
Continued
Faiwiew
Industrial
Area
$
4,476,658
North
Gateway
$
7,863,834
West
Salem
$
107
Total
$
24,113,027
Concluded
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE O F REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - GENERAL (CAPITAL PROJECTS FUND)
For thefiscal year ended June 30, 2005
Budgeted Amounts
Original
-
Actual Amounts
Final
(Budgetary Basis)
variance1
Revenues
Interest on investments
Intergovernmental
Total revenues
Expenditures
Materials and services
Excess (deficiency) of revenues over expenditures
(2,390)
(2,390)
(27,390)
(27,390)
(2,390)
Other financing sources (uses)
Transfers out
Excess (deficiency ) of revenues over
expenditures and other financing sources (uses)
(2,390)
(25,000)
Fund balance, beginning of year
Fund balance, end of year
$
-
$
-
$
1 ( ) indicates revenues/expenditures in excess of budget
2,511
$
(2,511)
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - PRINGLE CREEK (CAPITAL PROJECTS FUND)
For theJiscal year ended June 30,2005
Budgeted Amounts
Original
Final
Actual Amounts
(Budgetary Basis)
variance1
Revenues
Interest on investments
Loan payments received
Rents
Total revenues
Expenditures
Materials and services
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Proceeds of long-term capital related debt
Transfers out
(1,786,760)
(1,786,760)
(694,625)
(1,092,135)
(3,000)
20
(3,000)
(20)
(3,000)
(1,789,760)
(1,789,760)
(697,605)
(1,092,155)
1,789,760
1,789,760
Total other financing sources (uses)
Excess (deficiency) of revenues over
expenditures and other sources (uses)
Fund balance, beginning of year
Fund balance, end of year
1 ( ) indicates revenues/expendituresin excess of budget
1,959,455
(169,695)
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - RIVERFRONTiDOWNTOWN (CAPITAL PROJECTS FUND)
For thefiscal year ended June 30, 2005
Budgeted Amounts
Original
Final
Actual Amounts
variance'
Revenues
Interest on investments
Intergovernmental
Loan payments received
Rents
Other
Total revenues
1,026,290
1,026,290
1,050,526
(24,236)
(26,499,240)
(26,349,240)
(15,023,108)
(1 1,326,132)
1,434,290
(325,000)
1,434,290
(475,000)
1,410,890
(475,000)
(25,389,950)
(25,389,950)
(14,087,218)
(1 1,302,732)
25,389,950
25,389,950
24,3 17,593
1,072,357
Expenditures
Materials and services
Excess (deficiency) of revenues over
expenditures
Other financing sources (uses)
Proceeds of long-term capital related debt
Transfers out
23,400
Total other financing sources (uses)
Excess (deficiency) of revenues over
expenditures and other financing sources (uses)
Fund balance, beginning of year
Fund balance, end of year
$
-
10,230,375
$
Reconciliation to generally accepted accounting principles:
Adjustment for loan to Parking Leasehold fund, City of Salem
Fund Balance - end of year
$
1 ( ) indicates revenueslexpenditures in excess of budget
57
10,508,067
$
(10,230,375)
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE O F REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - FAIRVIEW INDUSTRIAL AREA (CAPITAL PROJECTS FUND)
For the fiscal year ended June 30, 2005
Budgeted Amounts
Original
Final
Actual Amounts
(Budgetary Basis)
variance1
Revenues
Interest on investments
Expenditures
Materials and services
Capital outlay
Total Expenditures
(6,552,8 10)
(6,552,8 10)
(427,340)
(6,125,470)
Other financing sources (uses)
Sale of assets
Proceeds of long-term capital related debt
600,000
2,894,500
600,000
2,894,500
768,25 1
802,450
(168,25 1)
2,092,050
Total Other Financing Sources (Uses)
3,494,500
3,494,500
1,570,701
1,923,799
(3,058,310)
(3,058,310)
1,143,361
(4,201,671)
3,058,310
3,058,310
3,333,297
(274,987)
Excess (deficiency) of revenues over expenditures
Excess (deficiency) of revenues over
expenditures and other financing sources (uses)
Fund balance, beginning of year
Fund balance, end of year
1 ( ) indicates revenueslexpenditures in excess of budget
58
URBAN RENEWAL AGENCY O F THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - NORTH GATEWAY (CAPITAL PROJECTS FUND)
For the fiscal year ended June 30, 2005
Budgeted Amounts
Original
Final
Actual Amounts
(Budgetary Basis)
variance1
Revenues
Interest on investments
Intergovernmental
Loan payments received
Other
Total revenues
208,790
208,790
429,769
(220,979)
(14,358,240)
(14,358,240)
(5,217,716)
(9,140,524)
14,358,240
14,358,240
13,081,550
1,276,690
Expenditures
Materials and services
Debt service
Principal
Total expenditures
Excess (deficiency) of revenues over expenditures
Fund balance, beginning of year
Fund balance, end of year
-
$
$
-
1 ( ) indicates revenueslexpenditures in excess of budget
59
$
7,863,834
$
(7,863,834)
URBAN RENEWAL AGENCY O F THE CITY O F SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE O F REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - WEST SALEM (CAPITAL PROJECTS FUND)
For the fiscal year ended June 30, 2005
Budgeted Amounts
Original
Final
Actual Amounts
(Budgetary Basis)
variance1
2,725
Revenues
Interest on investments
Expenditures
Materials and services
Excess (deficiency) of revenues over expenditures
(64,140)
(64,140)
(66,865)
Other financing sources (uses)
Transfers in
Proceeds of long-term capital related debt
25,000
25,000
25,000
400
(400)
Total other financing sources (uses)
25,000
25,000
25,400
(400)
(39,140)
(39,140)
(41,465)
2,325
39,140
39,140
41,572
(2,432)
Excess (deficiency) of revenues over expenditures
and other financing sources (uses)
Fund balance, beginning of year
Fund balance, end of year
1 ( ) indicates revenues/expendituresin excess of budget
60
URBAN RENEWAL AGENCY O F THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE O F EXPENDITURES BY PROJECT BUDGET AND ACTUAL
For thefiscal year ended June 30, 2005
-
Budget
General
259006
259008
Transfer to West Salem
Gen URA Plan Srec/Mill Creek
Unspecified Improvements
Total General
Pringle Creek
259101
259123
259126
259127
259128
259129
259130
259131
259136
259137
259138
259139
Project CoordinationISupport
Security Improvements
Millrace Stabilization
Mirror Pond Water Supply
Northbank Trail at Five Oaks
Streetscape Reconstruction
Millrace Walkway Lighting
Property Acquisition
Salmon Run
Security Upgrade-Library
Transfer Debt Fund
Conference Center Overflow Parking
Unspecified Improvements
Total Pringle Creek
Riverfronffdowntown
25921 7
Streetcar Feasibility
259229
Railroad Bridge Conversion
259230
Project CoordinationISupport
259235
Misc Receipts
259249
Housing Opportunity Fund
259250
North Downtown Property Acquisition
259252
Downtown Streetscape
Transfer Funds Conference Center Reserve
259253
259260
Net Bond Proceeds
Faqade Improvement Program
259261
Various
Conference Center Construction
Various
Riverfront Park Construction
Various
Toolbox Grants 2004
Various
Toolbox Loans/Commercial Loans 2004
259274
Front Street Traffic Control
259294
Riverfront - Loan to leasehold
259295
Riverfront-Conference Center- I08 Loan Payments
259398
Legal fees Assoc/Boli /Issues
Unspecified Improvements
Total Riverfront/Downtown
Actual
Variance
URBAN RENEWAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
SCHEDULE OF EXPENDITURES BY PROJECT - BUDGET AND ACTUAL
For the fiscal year ended June 30, 2005
Budget
Fairview Industrial Area
259301
Project CoordinationISupport
259305
Phase 111 Wetland Mitigation
Marketing~EnterpriseZone Management
259307
259308
EngineeringIDesign Airport South Industrial
259309
Construction Airport South Industrial
259320
Fairview-Strong Rd Improvements
259321
Bond lssuance Expense
Purchase of Land
Reserved Unspecified Improvements
Total Fairview Industrial
North Gateway
259401
Project Coordination/Support
259404
Enterprise Management
259407
Northgate Extension
259409
Blossom Drive Street Improvement
259426
Portland Road Underground/ROW/Streetscape
259427
Property Acquisition
259428
Rehabilitation Loan Program
259450
Cadle Property Cleanup
259454
Demolition and Site Preparation
259455
Goodwill Site Demolition and Preparation
259456
Prepayment of Bond Principal
Unspecified Improvements
Total North Gateway
West Salem
25915 1
2591 52
259154
Project Coordination
Bond Issuance Expense
TGM Grant Administration
Unspecified Improvements
Total West Salem
Total all projects
Actual
Variance
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AUDIT COMMENTS AND DISCLOSURES
REQUIRED BY STATE REGULA TIONS
Oregon Administrative Rules 165-30-100 through 164-30-295 of the Minimum Standards for Audits of Oregon
Municipal Corporations, prescribed by the Secretary of State in cooperation with the Oregon State Board of
Accountancy, enumerate the financial statements, schedules, comments and disclosures required. Required
comments and disclosures related to our audit of such statements and schedules are set forth on the following pages.
URBAN RENE WAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
A UDIT COMMENTS AND DISCLOSURES REQUIRED BY STATE REG ULATIONS
YEAR ENDED JUNE 30,2005
Oregon Administrative Rules 162-10-050 through 162-10-320 incorporated in the Minimum Standards for Audits
of Oregon Municipal Corporations, prescribed by the Secretary of State in cooperation with the Oregon State Board
of Accountancy, enumerate the financial statements, schedules, comments and disclosures required in audit reports.
The required statements and schedules are set forth in the preceding sections of this report. Required comments
and disclosures related to our audit of such statements and schedules are set forth as follows:
Significant Accounting Policies
The significant accounting policies followed in preparing the Agency's financial statements are summarized in
the notes to the basic financial statements.
Organization and Fund Structure
The organization and fund structure of the Agency is documented on the title page and in the notes to the basic
financial statements.
Accounting and Internal Control Structure
We have audited the basic financial statements of the Urban Renewal Agency of the City of Salem as of and for
the year ended June 30, 2005, and have issued our report thereon dated October 10, 2005. As part of our audit,
we made a study and evaluation of accounting systems and controls as required by auditing standards generally
accepted in the United States of America. The purpose of our study and evaluation was to determine the nature,
timing and extent of the auditing procedures necessary for expressing an opinion on the Agency's basic financial
statements. Our study and evaluation was more limited than would be necessary to express an opinion on the
system of internal accounting control of the Agency taken as a whole. However, our study and evaluation
disclosed no condition that we believe to be a material weakness.
Indebtedness
The general obligation bonded debt of the Agency is in compliance with the limitation imposed by legal statutes.
We noted no defaults in principal, interest, sinking fund, or redemption provisions with respect to any of the
Agency's liabilities, and no breach of the bond agreements, at June 30,2005.
Adequacy of Collateral Securing Depository Balances
ORS 295 provides that each depository, throughout the period of its possession of public fund deposits, shall
maintain on deposit with its custodians, at its own expense, securities having a value not less than 25% of the
certificates of participation issued by the pool manager for funds in excess of those insured by the Federal Deposit
Insurance Corporation. Our review of the adequacy of collateral securing depository balances indicated that
collateral was sufficient during the year ended June 30,2005.
Budget Compliance
The Agency has complied with Local Budget Law (ORS 294) and ORS 264.300 in the preparation and adoption
of its budget and tax levy for fiscal years ending June 30,2005 and 2006.
URBAN RENE WAL AGENCY OF THE CITY OF SALEM, OREGON
(A Component Unit of the City of Salem, Oregon)
A UDITOR 'S COMMENTS AND DISCLOSURES (Continued)
YEAR ENDED JUNE 30,2005
Investments
Our review of deposit and investment balances and the investment policies of the Agency appear to be in
compliance with ORS 295, as it pertains to the investment of public funds during the year ended June 30,2005.
Public Contracts and Purchasing
The Agency appears to have complied in all material respects with ORS 279 pertaining to purchasing and the
awarding of public contracts.
Insurance and Fidelity Bonds
We have reviewed the Agency's insurance and fidelity bond coverage at June 30,2005. We ascertained that such
policies appeared to be in force and comply with legal requirements relating to insurance and fidelity bond
coverage. We are not competent by training to comment on the adequacy of the insurance policies.
Programs Funded from Outside Sources
We have reviewed the Agency's compliance with appropriate laws, rules, and regulations pertaining to programs
funded wholly or partially by other governmental agencies. The Agency is in compliance with the guidelines in
all material respects.
Financial Reporting Requirements
We have reviewed financial reports and other data relating to programs funded wholly or partially by other
governmental agencies. This data, filed with other governmental agencies, is in agreement with and supported by
the accounting records.
Schedule of Accountability of Independently Elected Of3cials
There are no elected Agency officials who collect or receive funds on behalf of the Agency.
This report is intended for the information and use of the Urban Renewal Agency of the City of Salem and the
Secretary of State Audits Division, and is not intended to be and should not be used by anyone other than these
specified parties.
GROVE, MUELLER & SWANK, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
October 10, 2005