I-1 - Preliminary Official Statement - UR Loan Agreement

The City reports the following major proprietary funds: The Enterprise, Water Fund accounts for the operation and maintenance of the City’s water system. The Enterprise, Sewer Fund accounts for the operation and maintenance of the City’s wastewater treatment and sanitary sewer system. C. Measurement Focus and 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. Under the terms of grant agreements, the City funds certain programs by a combination of specific cost-reimbursement grants, categorical block grants and general receipts. Thus, when program disbursements are paid, there are both restricted and unrestricted cash basis net position available to finance the program. It is the City’s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants and then by general receipts. When a disbursement in governmental funds can be paid using either restricted or unrestricted resources, the City’s policy is generally to first apply the disbursement toward restricted fund balance and then to less-restrictive classifications – committed, assigned and then unassigned fund balances. Proprietary funds distinguish operating receipts and disbursements from non- operating items. Operating receipts and disbursements generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. All receipts and disbursements not meeting this definition are reported as non-operating receipts and disbursements. D. Governmental Cash Basis Fund Balances In the governmental fund financial statements, cash basis fund balances are classified as follows: Restricted – Amounts restricted to specific purposes when constraints placed on the use of the resources are either externally imposed by creditors, grantors or state or federal laws or are imposed by law through constitutional provisions or enabling legislation. Unassigned – All amounts not included in the preceding classifications. 24