I-1 - Preliminary Official Statement - UR Loan Agreement

BASIS OF ACCOUNTING The City maintains its financial records on the basis of cash receipts and disbursements and the financial statements of the City are prepared on that basis. The cash basis of accounting does not give effect to accounts receivable, accounts payable and accrued items. Accordingly, the financial statements do not present financial position and results of operations of the funds in accordance with U.S. generally accepted accounting principles. Therefore, when reviewing the financial information and discussion within this annual report, readers should keep in mind the limitations resulting from the use of the cash basis of accounting. REPORTING THE CITY’S FINANCIAL ACTIVITIES Government-wide Financial Statement One of the most important questions asked about the City’s finances is, “Is the City as a whole better off or worse off as a result of the year’s activities?” The Cash Basis Statement of Activities and Net Position reports information which helps answer this question. The Cash Basis Statement of Activities and Net Position presents the City’s net position. Over time, increases or decreases in the City’s net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Cash Basis Statement of Activities and Net Position is divided into two kinds of activities: • Governmental Activities include public safety, public works, health and social services, culture and recreation, community and economic development, general government, debt service and capital projects. Property tax and state and federal grants finance most of these activities. • Business Type Activities include the waterworks, the City sewer system and recycling operations. These activities are financed primarily by user charges. Fund Financial Statements The City has two kinds of funds: 1) Governmental funds account for most of the City’s basic services. These focus on how money flows into and out of those funds and the balances at year-end that are available for spending. The governmental funds include: 1) the General Fund, 2) the Special Revenue Funds, such as Road Use Tax and Urban Renewal Tax Increment, 3) the Debt Service Fund, and 4) the Capital Projects Fund. The governmental fund financial statements provide a detailed view of the City’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 City’s programs. The required financial statement for governmental funds is a Statement of Cash Receipts, Disbursements and Changes in Cash Balances. 2) Proprietary funds account for the City’s Enterprise Funds. Enterprise Funds are used to report business type activities. The City maintains three Enterprise Funds to provide separate information for the Water, Sewer and Recycling Funds. The Water and Sewer Funds are considered to be major funds of the City. The required financial statement for proprietary funds is a Statement of Cash Receipts, Disbursements and Changes in Cash Balances. 9