State of Utah Comprehensive Annual Financial Report€¦ · The City of . South Salt Lake . State of Utah . Comprehensive Annual Financial Report . For Fiscal Year Ended . June 30,

The City of

South Salt Lake State of Utah

Comprehensive Annual Financial Report

For Fiscal Year Ended

June 30, 2010

220 East Morris Ave Suite 200 SSL, UT 84115 (801)483-6000

CITY OF SOUTH SALT LAKE

STATE OF UTAH

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2010

Prepared By:

South Salt Lake Department of Finance

TABLE OF CONTENTS Page INTRODUCTORY SECTION Finance Officer’s transmittal letter and report on financial statements i GFOA Certificate of Achievement v Table of principal officials of the City of South Salt Lake vi Organization chart vii FINANCIAL SECTION Independent Auditors’ Report 1-2 Management’s Discussion and Analysis 5-12 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 15 Statement of Activities 16 Fund Financial Statements: Balance Sheet - Governmental Funds 17 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 18 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 19 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 20 Statement of Net Assets - Proprietary Funds 21 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 22 Statement of Cash Flows - Proprietary Funds 23-24 Notes to Financial Statements 27-48 Required Supplementary Information: Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: General Fund 51 Redevelopment Agency 52 Other Supplementary Information: Combining Fund Statements: Combining Balance Sheet - Nonmajor Governmental Funds 55 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds 56 Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: Sales Tax Debt Service Fund 57 Leased Equipment Tax Debt Service Fund 58 Capital Projects Fund 59 STATISTICAL SECTION Net Assets by Component 64 Changes in Net Assets 65-66 Governmental Activities Tax Revenues by Source 67

TABLE OF CONTENTS (CONTINUED) Page Fund Balances of Governmental Funds 68 Changes in Fund Balances of Governmental Funds 69-70 General Governmental Tax Revenues by Source 71 Sales Tax Revenue Allocation by Fund 72 Direct and Overlapping Sales Tax Rates 73 Principal Sales Taxpayers 74 Ratios of Outstanding Debt by Type 75 Ratios of General Bonded Debt Outstanding 76 Direct and Overlapping Governmental Activities Debt 77 Legal Debt Margin Information 78 Pledged-Revenue Coverage 79 Demographic and Economic Statistics 80-81 Full-time Equivalent Employees by Function 82 Operating Indicators by Function 83-84 Capital Asset Statistics by Function 85 SINGLE AUDIT SECTION Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 89-90 Independent Auditors’ Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 91-92 Summary Schedule of Findings and Questioned Costs 93-95 Schedule of Expenditures of Federal Awards 96-97 Independent Auditors’ Report on State of Utah Legal Compliance 98-99

INTRODUCTORY

SECTION

City of South Salt Lake

FINANCIAL

SECTION


MANAGEMENT’S DISCUSSION AND ANALYSIS

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MANAGEMENT’S DISCUSSION AND ANALYSIS

YEAR ENDING JUNE 30, 2010

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As management of the City of South Salt Lake, we offer readers of the City of South Salt Lake’s financial statements this narrative overview and analysis of the financial activities of the City of South Salt Lake for the fiscal year ended June 30, 2010. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. All amounts, unless otherwise indicated, are expressed in whole dollars. A comparison to prior year information is also included.

Financial Highlights • The assets of the City of South Salt Lake exceeded its liabilities at the close of the most recent fiscal

year by $83,309,655 (net assets). Of this amount, $30,466,670 (unrestricted net assets) may be used to meet the city’s ongoing obligations to citizens and creditors.

• As of the close of the current fiscal year, the City of South Salt Lake governmental funds reported combined ending fund balances of $19,376,110. Approximately 74 percent of this total amount, $14,379,903, is available for spending at the City’s discretion (unreserved fund balance).

• The City received approximately $1,636,000 in federal grants during the fiscal year. Most of these grants will fund after school programs, which will extend another one to two years into the future, and the acquisition of public safety equipment.

• The City’s ambulance service began operations in August 2009. The service lost approximately $339,000 in its first year of operation. The City expects losses to decrease in subsequent years.

• The City entered into a loan agreement in order to finance the acquisition of 16 improved single family building lots. The City sold four of these lots to a non-profit housing agency in order to make the homes available to income-qualified families and intends to sell the remaining lots to the agency.

• The City entered into a three-year equipment lease to finance a new fire engine. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of South Salt Lake’s basic financial statements. The City of South Salt Lake’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of South Salt Lake’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City of South Salt Lake’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of South Salt Lake is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).


MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)

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Both of the government-wide financial statements distinguish functions of the City of South Salt Lake that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of South Salt Lake include general government, public buildings, public safety, highways and public improvements, parks and recreation, and redevelopment. The business-type activities of the City of South Salt Lake include water and sewer utilities, ambulance services, and housing. The government-wide financial statements include one component unit, the Redevelopment Agency of South Salt Lake. Financial information for the Redevelopment Agency is blended with the primary government. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of South Salt Lake, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of South Salt Lake can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of South Salt Lake maintains five individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the capital projects fund, and the redevelopment agency, all of which are considered to be major funds. The sales tax debt service fund and lease equipment debt service fund are combined into a single, aggregated presentation. Individual fund data for both of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of South Salt Lake adopts annual appropriated budgets for its general fund and redevelopment agency. Budgetary comparison schedules have been provided for the general fund and redevelopment agency to demonstrate compliance with these budgets. Proprietary funds. The City of South Salt Lake maintains proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of South Salt Lake uses enterprise funds to account for its Water and Sewer Utilities, Ambulance Services, and Housing Fund. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses an internal



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service fund to account for its Insurance Reserve Fund. Because this service predominantly benefits governmental rather than business-type functions, it has been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water Utility, Sewer Utility, Ambulance Services, and Housing Funds, all of which are considered to be major funds of the City of South Salt Lake. Notes to the financial statements. The notes provide additional financial information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City of South Salt Lake, assets exceeded liabilities by $83,309,655 at the close of the most recent fiscal year. By far the largest portion of the City of South Salt Lake’s net assets (61.2 percent) reflects its investment in capital assets (e.g., land, buildings, machinery & equipment, and infrastructure); less any related debt used to acquire those assets that is still outstanding. The City of South Salt Lake uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of South Salt Lake’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

Net Assets Governmental Business-type

Activities Activities Total2010 2009 2010 2009 2010 2009

Current and other assets 27,428,711$ 27,160,837$ 9,272,358$ 10,002,254$ 36,701,069$ 37,163,091$ Capital assets 43,883,169 41,099,140 13,156,052 13,400,114 57,039,221 54,499,254

Total assets 71,311,880 68,259,977 22,428,410 23,402,368 93,740,290 91,662,345

Other liabilities 3,878,826 3,713,463 788,631 1,281,068 4,667,457 4,994,531 Long-term liabilities outstanding 2,863,494 2,766,020 2,899,684 2,894,689 5,763,178 5,660,709

Total liabilities 6,742,320 6,479,483 3,688,315 4,175,757 10,430,635 10,655,240

Net assets:Invested in capital assets, net

of related debt 40,521,910 37,994,140 10,450,052 10,492,614 50,971,962 48,486,754 Restricted 1,063,821 1,210,191 807,202 723,478 1,871,023 1,933,669 Unrestricted 22,983,829 22,576,163 7,482,841 8,010,519 30,466,670 30,586,682

Total net assets 64,569,560$ 61,780,494$ 18,740,095$ 19,226,611$ 83,309,655$ 81,007,105$

An additional portion of the City of South Salt Lake’s net assets (2.2 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets (36.6 percent) may be used to meet the City’s ongoing obligations to citizens and creditors.



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At the end of the current fiscal year, the City of South Salt Lake is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. There was an increase of $2,302,550 in total net assets compared to the prior year. This increase is comprised of an increase of $2,789,066 in governmental activities and a decrease of $(486,516) in business-type activities.

Changes in Net Assets Governmental Business-type


Revenues:Program revenues:

Charges for services 3,439,765$ 3,144,711$ 3,917,510$ 3,407,530$ 7,357,275$ 6,552,241$ Operating grants and

contributions 2,609,173 1,105,567 75,217 224,953 2,684,390 1,330,520 Capital grants and

contributions 232,136 36,000 - - 232,136 36,000 General revenues:

Property taxes 5,681,093 5,927,156 - - 5,681,093 5,927,156 Sales taxes 10,753,452 10,417,014 - - 10,753,452 10,417,014 Other taxes 3,034,463 3,168,593 - - 3,034,463 3,168,593 Other 1,178,368 498,044 12,745 21,984 1,191,113 520,028

Total revenues 26,928,450 24,297,085 4,005,472 3,654,467 30,933,922 27,951,552

Expenses:General government 4,537,553 3,919,755 - - 4,537,553 3,919,755 Public safety 13,102,659 12,626,820 - - 13,102,659 12,626,820 Highways and public

improvements 4,233,024 4,057,002 - - 4,233,024 4,057,002 Parks and recreation 1,770,956 1,201,007 - - 1,770,956 1,201,007 Redevelopment 312,389 259,235 - - 312,389 259,235 Interest on long-term debt 182,803 168,604 - - 182,803 168,604 Water utility - - 1,815,512 1,828,358 1,815,512 1,828,358 Sewer utility - - 1,339,683 1,608,735 1,339,683 1,608,735 Recycle waste - - - 12,030 - 12,030 Housing - - 178,285 264,295 178,285 264,295 Ambulance services - - 1,158,508 16,297 1,158,508 16,297

Total expenses 24,139,384 22,232,423 4,491,988 3,729,715 28,631,372 25,962,138

Increase in net assets beforetransfers 2,789,066 2,064,662 (486,516) (75,248) 2,302,550 1,989,414

Transfers - 31,788 - (31,788) - -

Increase (decrease) in net assets 2,789,066 2,096,450 (486,516) (107,036) 2,302,550 1,989,414

Net assets - beginning 61,780,494 59,684,044 19,226,611 19,333,647 81,007,105 79,017,691

Net assets - ending 64,569,560$ 61,780,494$ 18,740,095$ 19,226,611$ 83,309,655$ 81,007,105$



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Governmental activities. Governmental activities increased the City of South Salt Lake’s net assets by $2,789,066, thereby accounting for 100 percent of the total growth in the net assets of the City of South Salt Lake. The increase in governmental activities is primarily explained by the following:

• The City completed the sale of Workman Park and the old Fire Station #42 to the Utah Transit Authority. The City acquired the old Woodrow Wilson Elementary School and the open space associated with the school site using the proceeds from the sale of the above property and fund balance.

• The City entered into a three-year equipment lease in order to purchase a new fire engine. Due to the current economic situation, the City obtained the financing with a very favorable interest rate.

• The City acquired 16 improved housing lots by incurring a $500,000 note payable. • Class C road projects increased by approximately $530,000 when compared to the prior year.

By far the largest factor contributing to the growth in net assets is the sale of the Workman Park property and grants and other revenues used to acquire capital assets. Business-type activities. Business-type activities decreased the City of South Salt Lake’s net assets by $(486,516). The decrease is due to water and sewer fee revenue being less than expected due to economic conditions. The reduced revenue was anticipated midway through the budget year, and the City took steps to reduce expenses. Cost cutting measures mitigated the impact and made the loss in revenue manageable. Financial Analysis of the Government’s Funds As noted earlier, the City of South Salt Lake uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of the City of South Salt Lake’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of South Salt Lake’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of South Salt Lake’s governmental funds reported combined ending fund balances of $19,376,110, an increase of $265,337 in comparison with the prior year. Approximately 74 percent of this total amount, $14,379,903, constitutes unreserved fund balance, which is available for spending at the government’s discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed 1) to liquidate interfund notes receivable ($2,059,609), 2) to pay debt service ($1,063,821), and 3) to liquidate property acquired for redevelopment ($1,872,777). The general fund is the main operating fund of the City of South Salt Lake. At the end of the current fiscal year, unreserved and total fund balance of the general fund was $3,553,139. As a measure of the general fund’s liquidity, it may be useful to compare total fund balance to total fund expenditures. This results in fund balance being 17 percent of expenditures. Total fund balance is approximately 16 percent of subsequent year budgeted fund revenues. The amount of fund balance allowed in the general fund is limited by Utah State law to 18 percent of subsequent year budgeted revenues. The general fund balance increased by $136,002 during the current fiscal year. The capital projects fund balance decreased by $217,595. The capital projects fund unreserved fund balance is $10,702,897. Elected officials will determine the future uses of the fund balance. Other governmental funds have a total fund balance of $3,060,465, most of which is reserved for various uses.



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Proprietary funds. The City of South Salt Lake’s proprietary funds provide the same type of information found in the government-wide financial statements, but in greater detail. Unrestricted net assets of the water utility fund were $313,463. The sewer utility fund had unrestricted net assets of $6,847,609, of which approximately $5,313,000 is related to unamortized equity investment in Central Valley Water Reclamation Facility. The unrestricted net assets of the housing fund were $1,259,531. The unrestricted net assets of the ambulance services fund were $(947,877). Operating losses were approximately $339,000 in the first year of operation. The City expects operating losses to decrease until the service reaches a break-even point in approximately two years. Other factors concerning the finances of these four funds have already been addressed in the discussion of the City of South Salt Lake’s business-type activities. General Fund Budgetary Highlights There was an increase in appropriations of approximately $1,124,000 from the original budget to the final amended budget. One reason for the increase was the net effect of increasing the budget due to grant revenue awarded after the original budget was finalized. Also, slight budget increases in salaries, benefits, and consulting accounts were requested by the new mayor and approved by the city council. During the year, general fund revenues (excluding appropriations from fund balance) were $1,045,041 less than budgeted. Actual amounts of tax revenue were less than budgeted because the City allocated less to the general fund due to expenditures being under budget. General fund expenditures were $1,261,043 less than budgeted. The reduction in expenditures was the result of each department responding to the administration’s request to decrease spending in order to respond to decreasing revenues. In addition, grant expenses did not accelerate as much as expected, which reduced the amount of grant revenue that was realized. Capital Asset and Debt Administration Capital assets. The City of South Salt Lake’s investment in capital assets for its governmental and business-type activities as of June 30, 2010, amounts to $57,039,221 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery and equipment, and infrastructure. The City of South Salt Lake’s investment in capital assets for the current fiscal year increased by approximately 7 percent for governmental activities and decreased by approximately 2 percent for business-type activities. Major capital asset events during the current fiscal year included the following:

• Acquisition of the old Wilson School property. • On-going replacement of police vehicles and acquisition of new law enforcement equipment. • Acquisition of a new fire engine and other fire department equipment. • Completion of additional Class C road projects.



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Capital Assets

Net of Depreciation Governmental Business-type


Land 4,973,983$ 4,331,342$ 762,820$ 762,820$ 5,736,803$ 5,094,162$ Buildings 17,325,592 16,228,661 1,753,282 1,778,538 19,078,874 18,007,199 Improvements 2,151,774 1,995,307 9,457,499 9,696,272 11,609,273 11,691,579 Machinery and equipment 5,146,799 4,637,913 1,182,451 1,162,484 6,329,250 5,800,397 Infrastructure 14,249,461 13,905,917 - - 14,249,461 13,905,917 Construction in progress 35,560 - - - 35,560 -

TOTAL 43,883,169$ 41,099,140$ 13,156,052$ 13,400,114$ 57,039,221$ 54,499,254$

Additional information on the City of South Salt Lake’s capital assets can be found in Note 4. Long-term debt. At the end of the current fiscal year, the City of South Salt Lake had total debt of $6,463,735. The debt represents bonds secured solely by specified revenue sources. The City of South Salt Lake’s debt increased by $258,767 during the current fiscal year. The net effect of the incurrence of new debt (equipment capital lease, note payable, and an increase in the Central Valley revenue bonds) and scheduled debt retirement payments account for the increase. The City of South Salt Lake has no outstanding general obligation debt.

Long-Term Debt Governmental Business-type


Sales tax revenue bonds 2,575,000$ 3,105,000$ -$ -$ 2,575,000$ 3,105,000$ Water/sewer revenue bonds - - 2,706,000 2,907,500 2,706,000 2,907,500 Central Valley revenue bonds - - 396,476 192,468 396,476 192,468 Capital leases payable 386,259 - - - 386,259 - Notes payable 400,000 - - - 400,000 -

TOTAL 3,361,259$ 3,105,000$ 3,102,476$ 3,099,968$ 6,463,735$ 6,204,968$

Additional information on the City of South Salt Lake’s long-term debt can be found in Note 6. Economic Factors and Next Year’s Budgets and Rates The City of South Salt Lake continues to rely on sales tax as the main source of revenue in the general fund. National and local trends indicate economic activity, which includes taxable sales, will stop decreasing and even increase slightly in the coming fiscal year. Recently the state legislature changed sales tax distribution which has impacted the City’s sales tax collections. However, the state has essentially protected the city until 2016 by guaranteeing the amount of sales tax revenue distributed to the city. Property tax collections were slightly higher when compared to the previous year primarily due to new construction being placed on the tax rolls. The City continues to maintain sufficient fund balances which can be used to respond effectively to the economic pressure that all local governments are facing. The City of South Salt Lake uses a conservative approach to budgeting. Generally the City attempts to be very conservative when estimating revenue. This approach results in some flexibility when actual revenues do not meet expectations. The City increased its general fund budget approximately $1,124,000 (5.2%) during the 2009-2010 fiscal year through the amendment process. Most of the increase was due to the receipt of federal grants during the year. In addition, the City completed additional Class C road projects which were funded by allocating additional Class C reserve.



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The City continues to be conservative in its expenditure of funds. Equipment is generally purchase on a “pay-as-we-go” basis. Several positions in various city departments will remain vacant until revenue increases. The city council and administration will continue to evaluate all budget requests and allocate resources appropriately based on need and economic conditions. Fiscal year 2010-11 will be a year of significant change for the City of South Salt Lake. A new mayor took office in January 2010, and the 2010-2011 budget represents the mayor’s vision in many areas. A new Urban Livability Department was created by combining Animal Control, Code Enforcement, and the Fire Marshall functions. The department is responsible for the enforcement of city codes as they apply to nuisance properties. In September 2010 the City terminated its contract to provide animal control services to Holladay City. One employee was reassigned to the Code Enforcement Division within the Urban Livability department. The City is also investing in economic development projects that will benefit the City in the long run. State law allowed the City to impose an additional 0.2% to the current 1% sales tax local option until 2016. During that time the City will use the additional revenue from the 0.2% increase to finance land purchases in the Market Station and other redevelopment projects. The land will subsequently be resold to developers with the intention of accelerating development in the project areas. The City does not expect any increases in the sales tax revenue in 2010-11 and must rely on small increases in other revenue in order to fund additional expenditures. The City did not budget any increases in wages and only funded new positions in the recently organized Urban Livability Department. Also, the City increased the monthly solid waste fee by $2.00/month, continuing the plan to make solid waste collection be self supporting within the next one to three years. Sales taxes, as well as some other revenues, are distributed based on population formulas. The results of the 2010 census could have a positive impact on the city. Major increases in the General Fund budget are mainly due to new grant revenue, and corresponding expenditures, which will be received from the state and federal government. Elected officials will closely monitor budget information and react accordingly. In late 2008 the City Council approved the creation of a City-provided emergency ambulance transport service. The program began operations in August 2009. The City purchased vehicles and equipment in fiscal year 2009. An operating loss of approximately $339,000 was recorded in fiscal year 2010 mainly due to the fact that the service only operated for ten months. In addition, it took several months to “ramp up” the billing and collection process. The expectation is that the ambulance service will be revenue neutral within 18 months. To finance start up equipment costs, and to cover the initial operating loss, the City’s capital improvement fund issued an interfund loan to the ambulance fund in the amount of approximately $1,172,000. Payments on the interfund loan will be made as funds are available from the ambulance service. The City is continuing the process of updating its long-term financial plan. A new mayor and administration took office in January 2010. Current financial plans and policies were presented to, and reviewed by, the new administration. Five to eight year revenue, expense, service level, and other information will be estimated in order to create a sound plan. Council members, administrative staff, and department leaders will work together to ensure all stakeholders are represented in this undertaking. Requests for Information This financial report is designed to provide a general overview of the City of South Salt Lake’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Finance Director, 220 E Morris Avenue, Suite 200, South Salt Lake, UT 84115.

BASIC FINANCIAL STATEMENTS



STATEMENT OF NET ASSETS

JUNE 30, 2010

The notes to the financial statements are an integral part of this statement. 15

Governmental Business-typeActivities Activities Total

ASSETS:Cash and cash equivalents 16,057,257$ 2,596,268$ 18,653,525$ Taxes receivable 6,262,673 - 6,262,673 Accounts receivable - net - 819,278 819,278 Miscellaneous receivables 10,921 - 10,921 Internal balances 1,161,885 (1,161,885) - Due from other governmental units 362,933 427,546 790,479 Property acquired for redevelopment 1,179,480 - 1,179,480 Property held for sale 693,297 - 693,297 Deferred charges - 38,917 38,917 Loans receivable - 432,350 432,350 Investment in joint venture - 5,312,682 5,312,682 Restricted cash and cash equivalents 1,700,265 807,202 2,507,467 Capital assets not being depreciated:

Land 4,973,983 762,820 5,736,803 Construction in progress 35,560 - 35,560

Capital assets net of accumulated depreciation:Buildings 17,325,592 1,753,282 19,078,874 Improvements 2,151,774 9,457,499 11,609,273 Machinery and equipment 5,146,799 1,182,451 6,329,250 Infrastructure 14,249,461 - 14,249,461

TOTAL ASSETS 71,311,880 22,428,410 93,740,290

LIABILITIES:Accounts payable and accrued liabilities 1,796,024 462,987 2,259,011 Customer deposits payable 53,013 47,402 100,415 Accrued interest payable 49,589 23,616 73,205 Unearned revenues 961,151 - 961,151 Noncurrent liabilities:

Due within one year 1,019,049 254,626 1,273,675 Due in more than one year 2,863,494 2,899,684 5,763,178

TOTAL LIABILITIES 6,742,320 3,688,315 10,430,635

NET ASSETS:Invested in capital assets, net of related debt 40,521,910 10,450,052 50,971,962 Restricted for:

Debt service 1,063,821 807,202 1,871,023 Unrestricted 22,983,829 7,482,841 30,466,670

TOTAL NET ASSETS 64,569,560$ 18,740,095$ 83,309,655$


STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2010


Net (Expense) Revenue

Program Revenue and Changes in Net AssetsOperating Capital

Charges for Grants and Grants and Governmental Business-typeFunctions/Programs Expenses Services Contributions Contributions Activities Activities Total

Primary government:Governmental activities:

General government 4,537,553$ 1,703,033$ 232,853$ -$ (2,601,667)$ -$ (2,601,667)$ Public safety 13,102,659 1,674,406 592,257 232,136 (10,603,860) - (10,603,860) Highways and public improvements 4,233,024 - 983,318 - (3,249,706) - (3,249,706) Parks and recreation 1,770,956 62,326 800,745 - (907,885) - (907,885) Redevelopment 312,389 - - - (312,389) - (312,389) Interest on long-term debt 182,803 - - - (182,803) - (182,803)

TOTAL GOVERNMENTAL ACTIVITIES 24,139,384 3,439,765 2,609,173 232,136 (17,858,310) - (17,858,310)

Business-type activities:Water utility 1,815,512 1,768,132 - - - (47,380) (47,380) Sewer utility 1,339,683 1,237,720 - - - (101,963) (101,963) Housing 178,285 91,876 75,217 - - (11,192) (11,192) Ambulance services 1,158,508 819,782 - - - (338,726) (338,726)

TOTAL BUSINESS-TYPE ACTIVITIES 4,491,988 3,917,510 75,217 - - (499,261) (499,261)

TOTAL PRIMARY GOVERNMENT 28,631,372$ 7,357,275$ 2,684,390$ 232,136$ (17,858,310) (499,261) (18,357,571)

General revenues:Property taxes 5,681,093 - 5,681,093 Sales taxes 10,753,452 - 10,753,452 Energy sales and use tax 3,009,395 - 3,009,395 Transient room taxes 25,068 - 25,068 Unrestricted investment earnings 145,309 12,745 158,054 Gain on sale of capital assets 1,033,059 - 1,033,059

TOTAL GENERAL REVENUES 20,647,376 12,745 20,660,121

CHANGE IN NET ASSETS 2,789,066 (486,516) 2,302,550

NET ASSETS - BEGINNING 61,780,494 19,226,611 81,007,105

NET ASSETS - ENDING 64,569,560$ 18,740,095$ 83,309,655$


BALANCE SHEET – GOVERNMENTAL FUNDS

JUNE 30, 2010


Capital Other TotalGeneral Projects Redevelopment Governmental Governmental

Fund Fund Agency Funds FundsASSETS:

Cash and cash equivalents 3,001,263$ 10,960,022$ 984,764$ 440,681$ 15,386,730$ Receivables (net):

Taxes 6,262,673 - - - 6,262,673 Miscellaneous 10,921 - - - 10,921

Interfund note receivable - 2,059,609 - - 2,059,609 Due from other governmental units 362,933 - - - 362,933 Property acquired for redevelopment - - 1,872,777 - 1,872,777 Cash and cash equivalents - restricted 976,795 - 100,330 623,140 1,700,265

TOTAL ASSETS 10,614,585$ 13,019,631$ 2,957,871$ 1,063,821$ 27,655,908$

LIABILITIES AND FUND BALANCES:Liabilities:

Accounts payable 613,282$ 257,125$ 72,339$ -$ 942,746$ Salaries/payroll payables 849,529 - 700 - 850,229 Deposits 52,434 - 579 - 53,013 Interfund notes payable - - 887,609 - 887,609 Deferred revenue 5,546,201 - - - 5,546,201

TOTAL LIABILITIES 7,061,446 257,125 961,227 - 8,279,798

Fund Balances:Reserved for:

Debt service - - - 1,063,821 1,063,821 Interfund note - 2,059,609 - - 2,059,609 Property acquired for redevelopment - - 1,872,777 - 1,872,777

Unreserved, designated for, reported in:Craft House - 189,149 - - 189,149

Unreserved, reported in:General fund 3,553,139 - - - 3,553,139 Special revenue funds - - 123,867 - 123,867 Capital projects funds - 10,513,748 - - 10,513,748

TOTAL FUND BALANCES 3,553,139 12,762,506 1,996,644 1,063,821 19,376,110

TOTAL LIABILITIES ANDFUND BALANCES 10,614,585$ 13,019,631$ 2,957,871$ 1,063,821$ 27,655,908$


RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS

JUNE 30, 2010


Total fund balance - governmental funds 19,376,110$

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. 43,883,169

Other assets are not available to pay for current period expenditures and, therefore, are deferred in the funds. 4,585,050

Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. (3,932,132)

Internal service funds are used by management to charge the costs of insurance to individual funds. The assets and liabilities of internal service funds are included in governmental activities in the statement of net assets. 657,363

Net assets of governmental activities 64,569,560$


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS



Capital Other TotalGeneral Projects Redevelopment Governmental Governmental

Fund Fund Agency Funds FundsREVENUES:

Property taxes 4,927,756$ -$ 740,723$ -$ 5,668,479$ Sales taxes 7,921,260 2,319,426 - 512,766 10,753,452 Other taxes 3,034,463 - - - 3,034,463 Licenses and permits 906,325 - - - 906,325 Intergovernmental 2,152,773 592,515 - - 2,745,288 Charges for services 324,809 50 - - 324,859 Fines 1,546,418 - - - 1,546,418 Investment earnings 50,149 86,996 330 4,544 142,019 Miscellaneous 657,708 99,535 941 - 758,184

TOTAL REVENUES 21,521,661 3,098,522 741,994 517,310 25,879,487

EXPENDITURES:Current:

General government 3,735,357 - 215,548 - 3,950,905 Public safety 12,000,077 - - - 12,000,077 Highways and public improvements 3,224,976 - 68,184 - 3,293,160 Parks and recreation 1,643,270 - - - 1,643,270 Redevelopment - - 244,205 - 244,205

Debt service:Principal - - 100,000 726,241 826,241 Interest and fiscal charges - - 40,776 139,957 180,733

Capital outlay:General government - 243,791 - - 243,791 Public safety - 1,585,113 - - 1,585,113 Highways and public improvements 781,979 470,095 - - 1,252,074 Parks and recreation - 2,789,115 - - 2,789,115

TOTAL EXPENDITURES 21,385,659 5,088,114 668,713 866,198 28,008,684

EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURES 136,002 (1,989,592) 73,281 (348,888) (2,129,197)

OTHER FINANCING SOURCES (USES):Transfers - (202,518) - 202,518 - Notes payable issued - - 500,000 - 500,000 Capital leases - 582,500 - - 582,500 Sale of capital assets - 1,392,015 - - 1,392,015 Loss on sale of property held for sale - - (79,981) - (79,981)

TOTAL OTHER FINANCINGSOURCES - 1,771,997 420,019 202,518 2,394,534

NET CHANGE IN FUND BALANCES 136,002 (217,595) 493,300 (146,370) 265,337

FUND BALANCES - BEGINNING 3,417,137 12,980,101 1,503,344 1,210,191 19,110,773

FUND BALANCES - ENDING 3,553,139$ 12,762,506$ 1,996,644$ 1,063,821$ 19,376,110$


RECONCIILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF

GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES



Net change in fund balances - total governmental funds 265,337$

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. 3,063,004

The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to decrease net assets. (278,975)

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 12,614

The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long-term debt and related items. (256,259)

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (30,165)

Internal service funds are used by management to charge the costs of insurance to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. 13,510

Change in net assets of governmental activities 2,789,066$


STATEMENT OF NET ASSETS

PROPRIETARY FUNDS

JUNE 30, 2010


Business-type Activities - Enterprise FundsGovernmental

Activities -Water Sewer Ambulance InternalUtility Utility Services Housing ServiceFund Fund Fund Fund Total Fund

ASSETS:Current assets:

Cash and cash equivalents 404,612$ 1,814,516$ 114$ 377,026$ 2,596,268$ 670,527$ Accounts receivable, net 195,702 235,670 359,833 28,073 819,278 - Due from other governmental units - - - 427,546 427,546 -

TOTAL CURRENT ASSETS 600,314 2,050,186 359,947 832,645 3,843,092 670,527 Noncurrent assets:

Restricted cash and cash equivalents 776,452 30,750 - - 807,202 - Loans receivable - - - 432,350 432,350 - Capital assets:

Land 302,093 2,316 - 458,411 762,820 - Buildings 1,281,911 908,218 - 339,184 2,529,313 - Improvements 11,022,412 4,628,667 - - 15,651,079 - Machinery and equipment 1,840,612 283,340 683,935 - 2,807,887 -

Less: accumulated depreciation (6,306,892) (2,095,420) (90,981) (101,754) (8,595,047) - Investment in joint venture - 10,420,420 - - 10,420,420 -

Less: accumulated amortization - (5,107,738) - - (5,107,738) - Deferred charges 38,917 - - - 38,917 -

TOTAL NONCURRENT ASSETS 8,955,505 9,070,553 592,954 1,128,191 19,747,203 - TOTAL ASSETS 9,555,819 11,120,739 952,901 1,960,836 23,590,295 670,527

LIABILITIES:Current liabilities:

Accounts payable 217,709 104,776 58,983 5,464 386,932 3,049 Salaries payable 23,125 10,680 42,250 - 76,055 - Compensated absences 5,903 1,403 21,718 - 29,024 - Accrued interest payable 23,616 - - - 23,616 - Revenue bonds payable - current 143,000 82,602 - - 225,602 -

TOTAL CURRENT LIABILITIES 413,353 199,461 122,951 5,464 741,229 3,049 Noncurrent liabilities:

Customer deposits payable 47,402 - - - 47,402 - Compensated absences 8,013 1,924 12,873 - 22,810 - Interfund note payable - - 1,172,000 - 1,172,000 - Revenue bonds payable 1,825,000 1,051,874 - - 2,876,874 -

TOTAL NONCURRENTLIABILITIES 1,880,415 1,053,798 1,184,873 - 4,119,086 -

TOTAL LIABILITIES 2,293,768 1,253,259 1,307,824 5,464 4,860,315 3,049

NET ASSETS:Invested in capital assets, net of related debt 6,172,136 2,989,121 592,954 695,841 10,450,052 - Restricted for debt service 776,452 30,750 - - 807,202 - Unrestricted 313,463 6,847,609 (947,877) 1,259,531 7,472,726 667,478

TOTAL NET ASSETS 7,262,051$ 9,867,480$ (354,923)$ 1,955,372$ 18,729,980 667,478$

ADJUSTMENT TO REFLECT THE CONSOLIDATION OF INTERNAL SERVICE FUNDACTIVITIES RELATED TO ENTERPRISE FUNDS 10,115

NET ASSETS OF BUSINESS-TYPE ACTIVITIES 18,740,095$


STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDS



Business-type Activities - Enterprise Funds

GovernmentalActivities -

Water Sewer Ambulance InternalUtility Utility Services Housing ServiceFund Fund Fund Fund Total Fund

OPERATING REVENUES:Water sales 1,609,431$ -$ -$ -$ 1,609,431$ -$ Sewer service charges - 1,156,608 - - 1,156,608 - Ambulance fees, net - - 819,782 - 819,782 - Connection fees 3,000 - - - 3,000 - Other services 155,701 81,112 - 91,876 328,689 409,500

TOTAL OPERATING REVENUES 1,768,132 1,237,720 819,782 91,876 3,917,510 409,500

OPERATING EXPENSES:Employee salaries 428,406 159,991 707,998 - 1,296,395 - Employee benefits 203,712 75,926 203,349 - 482,987 - Professional services 27,659 20,172 6,178 - 54,009 - Supplies 32,174 24,883 56,285 - 113,342 - Utilities 148,010 15,347 2,672 - 166,029 - Equipment supplies and maintenance 60,080 22,257 47,811 - 130,148 - Repairs and maintenance 46,012 51,124 - 66,537 163,673 - Depreciation 422,682 116,883 90,981 16,959 647,505 - Amortization of investment in sewer

treatment facility - 197,757 - - 197,757 - Central Valley sewer treatment costs - 618,154 - - 618,154 - Water purchases 364,355 - - - 364,355 - Sundry expense 13,840 2,198 37,858 18,867 72,763 - Insurance 15,000 14,000 - - 29,000 398,501 Furniture and equipment 5,073 9,414 5,376 - 19,863 -

TOTAL OPERATING EXPENSES 1,767,003 1,328,106 1,158,508 102,363 4,355,980 398,501

OPERATING INCOME (LOSS) 1,129 (90,386) (338,726) (10,487) (438,470) 10,999

NONOPERATING REVENUES (EXPENSES):Interest revenue 8,519 3,298 - 928 12,745 3,290 Interest expense and fiscal charges (48,912) (11,953) - - (60,865) - Federal grant revenue - - - 75,217 75,217 - Housing program expenses - - - (75,922) (75,922) -

TOTAL NONOPERATINGREVENUES (EXPENSES) (40,393) (8,655) - 223 (48,825) 3,290

CHANGE IN NET ASSETS (39,264) (99,041) (338,726) (10,264) (487,295) 14,289

TOTAL NET ASSETS - BEGINNING 7,301,315 9,966,521 (16,197) 1,965,636 653,189

TOTAL NET ASSETS - ENDING 7,262,051$ 9,867,480$ (354,923)$ 1,955,372$ 667,478$

ADJUSTMENT TO REFLECT THE CONSOLIDATION OF INTERNAL SERVICE FUNDACTIVITIES RELATED TO ENTERPRISE FUNDS 779

CHANGES IN NET ASSETS OF BUSINESS-TYPE ACTIVITIES (486,516)$


STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS



Business-type Activities - Enterprise Funds

GovernmentalActivities -

Water Sewer Ambulance InternalUtility Utility Services Housing ServiceFund Fund Fund Fund Total Fund

CASH FLOWS FROM OPERATING ACTIVITIES:Receipts from customers 1,747,231$ 1,216,794$ 459,949$ 46,299$ 3,470,273$ 409,500$ Payments to suppliers (703,011) (839,176) (97,197) (122,588) (1,761,972) (395,502) Payments to employees (627,999) (235,145) (834,506) - (1,697,650) -

NET CASH PROVIDED BY (USEDIN) OPERATING ACTIVITIES 416,221 142,473 (471,754) (76,289) 10,651 13,998

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES:

Net grants and contributions received (used) - - - (72,992) (72,992) -

NET CASH (USED IN) NONCAPITALFINANCING ACTIVITIES - - - (72,992) (72,992) -

CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:

Proceeds from capital assets - 224,507 - - 224,507 - Proceeds from interfund note payable - - 1,172,000 - 1,172,000 - Acquisition and construction of capital assets (141,572) (144,882) (700,132) - (986,586) - Proceeds from sale of property held for sale - - - 382,059 382,059 - Principal paid on interfund note payable - - - (265,000) (265,000) - Principal paid on capital debt (140,000) (81,999) - - (221,999) - Interest paid on capital debt (50,592) (11,953) - - (62,545) -

NET CASH PROVIDED BY (USEDIN) CAPITAL AND RELATEDFINANCING ACTIVITIES (332,164) (14,327) 471,868 117,059 242,436 -

CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of additional investment in joint

venture - (288,954) - - (288,954) - Issuance of loans receivable - - - (3,320) (3,320) - Payments on loans receivable - - - 35,343 35,343 - Interest received 8,519 3,298 - 928 12,745 3,290

NET CASH PROVIDED BY (USEDIN) INVESTING ACTIVITIES 8,519 (285,656) - 32,951 (244,186) 3,290

NET INCREASE (DECREASE) IN CASHAND CASH EQUIVALENTS 92,576 (157,510) 114 729 (64,091) 17,288

CASH AND CASH EQUIVALENTS - BEGINNING 1,088,488 2,002,776 - 376,297 3,467,561 653,239

CASH AND CASH EQUIVALENTS - ENDING 1,181,064$ 1,845,266$ 114$ 377,026$ 3,403,470$ 670,527$


STATEMENT OF CASH FLOWS (CONTINUED)

PROPRIETARY FUNDS



Business-type Activities - Enterprise FundsGovernmental

Activities -Water Sewer Ambulance InternalUtility Utility Services Housing ServiceFund Fund Fund Fund Total Fund

RECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED BY(USED IN) OPERATING ACTIVITIES:

Operating income (loss) 1,129$ (90,386)$ (338,726)$ (10,487)$ (438,470)$ 10,999$ Adjustments to reconcile operating income

(loss) to net cash provided by (used in)operating activities:

Depreciation expense 422,682 116,883 90,981 16,959 647,505 - Amortization of investment in joint

venture - 197,757 - - 197,757 - Changes in operating assets and

liabilities:(Increase) decrease in:

Accounts receivable - - - (14,231) (14,231) - Due from other governments (22,362) (20,926) (359,833) (31,346) (434,467) -

Increase (decrease) in:Accounts payable and accrued

liabilities 13,311 (60,855) 135,824 (37,184) 51,096 2,999 Customer deposits 1,461 - - - 1,461 -

TOTAL ADJUSTMENTS 415,092 232,859 (133,028) (65,802) 449,121 2,999

NET CASH PROVIDED BY (USED IN)OPERATING ACTIVITIES 416,221$ 142,473$ (471,754)$ (76,289)$ 10,651$ 13,998$

NOTES TO FINANCIAL STATEMENTS



NOTES TO FINANCIAL STATEMENTS


27

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The City of South Salt Lake is a municipal corporation governed by an elected mayor and a seven member council. As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government’s operations and so data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize they are legally separate from the government. The City of South Salt Lake has no discretely presented component units and is itself not a component unit of any other entity. Each blended component unit has a June 30 year end. Blended Component Units The Redevelopment Agency was created by the City during fiscal year 1982. The Agency uses tax increment financing to support redevelopment projects within the City. The Agency is governed by the City’s Mayor and City Council. Because the Agency’s governing body is the same as the City’s the financial data is included in the reporting entity using the blended method. The Municipal Building Authority was created by the City during fiscal year 1996. The Authority used the proceeds of tax exempt bonds to acquire capital assets for the City. The bonds are secured by a lease agreement with the City and will be retired through lease payments from the City. The Municipal Building Authority is accounted for in a debt service fund. The Authority is governed by the City Council. Because the Authority’s governing body is substantially the same as the City’s the financial data is included in the reporting entity using the blended method. Complete financial statements for each of the individual component units may be obtained at the City’s administrative offices.

City of South Salt Lake 220 East Morris Avenue Salt Lake City, UT 84115

Joint Ventures

During 1978, the City entered into a joint venture with six other entities with an inter-local agreement to create the Central Valley Water Reclamation Facility (Central Valley), which provides waste water treatment for all seven sanitation entities. The Central Valley facility went on line on February 23, 1988. The original cost of the project was $131,168,137, of which 59% or $78,031,036 was paid by the participating entities. The City’s portion of the cost was 5.6% or $4,498,316. During 1994, the City increased its equity in Central Valley by $558,828. During 2004, the City increased its equity in Central Valley by $993,821. During 2005, the City decreased its equity in Central Valley by $278,529. The City’s interest in the original facility, new expansion, facility enhancements, digesters, and secondaries was 6.120%, 2.5074%, 5.0980%, 1.378% and 2.5857%, respectively, at June 30, 2010. The seven member entities contribute amounts to Central Valley on an annual basis to fund capital enhancements based on their ownership percentage and capital expansion based on the growth in their plant usage.


NOTES TO FINANCIAL STATEMENTS (CONTINUED)

28

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity (continued) During the current year the City contributed $95,115 for capital enhancements. The net amount of equity interest in Central Valley Water Reclamation Facility at June 30, 2010 is $5,312,682 and is recorded in the Sewer Utility Fund. Costs associated with the joint venture for the year ended June 30, 2010 were $815,911, which includes $197,757 amortization of the City’s investment in Central Valley. Amounts reported on the financial statements as investments in Central Valley reflect both the amounts paid by the City and the City’s pro rata share of capital grants made by the federal government. The City’s pro rata share of capital grants made by the federal government, net of amortization at June 30, 2010, is $1,817,041. The Central Valley operating and maintenance costs are paid by the seven member entities based on their usage of the treatment plant. All costs are passed through to the member entities. The City’s portion of Central Valley’s operating costs and the related percentage of plant usage for the last three years are as follows: Year Operating Costs Percentage of Plant 2010 $618,154 4.24% 2009 $730,408 4.62% 2008 $786,144 6.26% A copy of the Central Valley Water Reclamation Facility audited financial statements may be obtained by writing to the Central Valley Water Reclamation Facility at 800 West Central Valley Road, Salt Lake City, UT 84119-3379.

B. Government-Wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovenmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. 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 applications that 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. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.



29

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. Measurement focus, basis of accounting, and financial statement presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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 government considers revenues to be available if they are collected within 60 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. Property taxes, energy sales and use taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The government reports the following major governmental funds:

The general fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The capital projects fund accounts for the resources required for major capital improvements of the City. The redevelopment agency accounts for revenues derived from specific taxes which are designated to finance particular functions of the City.

The government reports the following major proprietary funds:

The water utility fund accounts for the activities of the water distribution system of the City. The sewer utility fund accounts for the activities of the joint venture (described in Note 1.A.), the sewage pumping stations, and the collection system. The ambulance services fund accounts for the activities of the ambulance and paramedic services of the City. The housing fund accounts for the resources used to provide housing assistance to qualifying persons within the City.



30


C. Measurement focus, basis of accounting, and financial statement presentation (continued)

Additionally, the government reports the following fund types:

Internal service funds account for insurance provided to other departments or agencies of the government on a cost reimbursement basis.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private-sector guidance. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the government’s water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Water Utility enterprise fund, of the Sewer Utility enterprise fund, and of the City’s internal service fund are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed.

D. Reconciliation of Government-wide and Fund Financial Statements

Governmental funds use the current financial resources measurement focus and the modified accrual basis of accounting, while the government-wide financial statements use the economic resources measurement focus and the accrual basis of accounting. As a result, there are important differences between the assets, liabilities, revenues and expense/expenditures reported on the fund financial statements and the government-wide financial statements. For example, many long-term assets and liabilities are excluded from the fund balance sheet but are included in the entity-wide financial statements. As a result there must be a reconciliation between the two statements to explain the differences. A reconciliation is included as part of the fund financial statements.



31


E. Budgetary Procedures and Budgetary Accounting

Budgetary procedures for the City have been established by the Uniform Fiscal Procedures Act adopted by the State of Utah, which requires the legal adoption of a budget for all funds. Furthermore, in accordance with state law, all appropriations, except capital projects fund appropriations, lapse at the end of the budget year; accordingly, no encumbrances are recorded. The basis of accounting applied to each fund budget is the same basis as the related fund’s financial statements. The following are the legal procedures followed by the City: 1) On or before the first regularly scheduled meeting of the City Council in May, the City’s Mayor,

authorized under state statute to be appointed budget officer, submits a proposed operating budget for governmental fund types for which budgetary control is required by Utah State statute (i.e., General Fund, Capital Projects Funds, Debt Service Funds, and Special Revenue Funds), and an operating and capital budget for all proprietary fund types for the subsequent fiscal year. The budget documents include the proposed budget amounts requested by the department heads, along with the proposed budget amounts requested by the Mayor.

2) A public hearing is held to receive input on all aspects of the proposed budget. The hearing is

preceded by a notice in the local newspaper. The notice is given at least seven days before the hearing and includes the time, date, and place of the hearing. All budget documents are required to be available for public inspection ten days prior to the public hearing.

3) On or before June 22, a final balanced budget must be adopted for the subsequent fiscal year

beginning July 1. 4) The legal budgetary control is maintained at the departmental level. The Mayor, however, acting

as budget officer, has the budget authority to transfer budget appropriations between individual line items within any department of any budgetary fund.

5) The City Council, by resolution, has the authority to transfer budget appropriations between the

individual departments of any budgetary fund. 6) A public hearing, as required in (2) above, must be held to increase the total appropriations of any one governmental fund type; however, after the original public hearing, operating and capital budgets of proprietary fund types may be increased by resolution without an additional hearing. 7) Monthly interim financial reports are prepared by the Finance Director and presented to the City

Council. These reports contain a budgetary statement showing a comparison of budget to actual for all budgetary funds of the City. Special budgetary reports, using an operating and capital expenditure concept, are prepared for proprietary funds.

The budgets presented for the General Fund, Capital Projects Funds and Redevelopment Agency

are designated as revised budgets. Throughout the year, the City Council approves all expenditures and makes amendments to the City’s budget. Near year end, the City Council makes final amendments to the budget.

The budget passed for the Capital Projects Funds is an annual budget, based on estimates of annual expenditures. This budget is not based on project length for long-term capital projects.



32


E. Budgetary Procedures and Budgetary Accounting (continued)

No budget is presented in these financial statements for the Proprietary Funds. State law allows the City Council to amend the Proprietary Funds budgets without public hearing or public notice. Additional budgetary appropriations were necessary during the year ended June 30, 2010 for the Water Utility and Sewer Utility Funds.

F. Cash and Cash Equivalents

The City’s 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. For purposes of the statement of cash flows, the Water Utility, Sewer Utility, Ambulance Services, and Housing Funds consider all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents.

G. Interfund Transactions

During the course of operations, numerous transactions occur between individual funds for goods provided, services rendered and for short-term interfund loans or transfers. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Loans are reported as receivables and payables and are classified as “due from other funds” or “due to other funds” on the balance sheet of the governmental fund financial statements. Interfund receivables and payables between funds within governmental activities are eliminated in the Statement of Net Assets. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation between the governmental fund statements and the government-wide columnar presentation.

H. Restricted Cash and Cash Equivalents

Certain resources set aside for bond repayment, are classified as restricted cash and cash equivalents on the balance sheet because their use is limited by applicable bond covenants. Other cash and cash equivalents accounts are restricted by state law or collateral requirements.

I. Accounts Receivable

Accounts receivable in the ambulance services fund is shown net of an allowance for uncollectibles of $309,408 as of June 30, 2010. Management determines the allowance for uncollectibles by using historical experience applied to the receivable balance.

J. Capital Assets

In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition.



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J. Capital Assets (continued)

Capital assets in the government-wide financial statements and in the fund financial statements for proprietary funds are reported in the statement of net assets. Capital assets include property, plant, equipment and infrastructure assets, e.g., roads, sidewalks, and similar items. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such 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.

Prior to July 1, 2002, governmental funds’ infrastructure assets were not capitalized. These assets (back to June 30, 1994) have been valued at historical cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets business-type activities is included as part of the capitalized value of the assets constructed. No interest was capitalized during the current fiscal year. Property, plant and equipment of the primary government, is depreciated using the straight line method over the following estimated useful lives: Assets Years

Outfall Lines 60 Sewage Collection 60 Water Storage Towers 50 Water Distribution Mains 50 Pump houses 25 to 40 Pumping Stations 33 Wells and reservoirs 10 to 25 Meters & Hydrants 10 Buildings 15 Office Equipment 5 to 10 Machinery and Equipment 5 to 20 Vehicles 7 Infrastructure 10 to 50

K. Fund Equity

In the fund financial statements, government funds report designations of fund balance for amounts that are not available for appropriation and reservations of fund balance for amounts that are legally restricted by outside parties for use for a specific purpose.

L. Compensated Absences

All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignation and retirements. Sick pay amounts are charged as wages when used.



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L. Compensated Absences (continued)

Employees can carry-over up to twenty-one days of unused vacation each year. The vacation year ends on March 31. Employees may carry-over up to twelve days of unused sick leave each year with the remaining time converted to cash at 10-50% of the hourly rate. When employees terminate, they are paid for accumulated vacation and one-half their normal rate for accumulated sick leave, if certain criteria are met.

M. Bond Discounts/Issuance Costs

In the government-wide and proprietary fund financial statements, costs of issuing bonds are capitalized and amortized on a straight-line basis over the life of the bonds. During the fiscal year ended June 30, 2010 the amortization expense related to deferred bond financing costs was zero.

N. Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the City to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.

O. Taxes and Other Significant Revenue

Property and Other Taxes Property tax is assessed, levied, and collected by the county governments in the state of Utah. The City Council is authorized by state statute (10-6-133) to levy up to a tax rate of .007 of the market value against all real and personal property located within its boundaries. Property taxes become a lien on January 1 and are levied on the first Monday of August. Taxes are due and payable on November 1 and delinquent after November 30 of each year. Taxes on an individual piece of property may be delinquent up to five years before the property is sold for delinquent taxes. Under state statute, the County Treasurer, acting as a tax collector, must settle and disburse all current tax collections to all taxing units by the end of March following the taxing year. Delinquent taxes are collected throughout the year and disbursed to the taxing units on a routine basis. Property tax revenues are recognized when they become available. Available includes those property taxes collected from the taxpayers by the County Treasurer by June 30 of each year. Amounts that are measurable but not available are recorded as deferred revenue. An accrual was made for property taxes receivable and an offsetting deferred revenue in the amount of $4,585,050 at June 30, 2010. Property taxes become an enforceable lien on January 1 but are not due until November 30. Transient room tax and the municipal telecommunications tax are collected by the State Tax Commission and remitted to the City monthly. Energy sales and use taxes are collected and remitted to the City by the electric and natural gas companies monthly, and the cable television company semiannually.



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O. Taxes and Other Significant Revenue (continued)

Sales Taxes In accordance with the Local Sales and Use Tax Act (title 59, Chapter 12, Part 2, Utah Code Annotated 1953, as amended), the City presently levies a local sales and use tax of 1.00% on all taxable sales of goods and services. The local sales and use tax is collected by the Utah State Tax Commission and distributed monthly to the City of South Salt Lake and all other counties and municipalities in Utah. The distributions are based on a formula, which since 1983 has provided that; 1) 50% of each dollar of sales tax collections will be distributed on the basis of the local government’s pro-rata share of the state population and, 2) 50% of each dollar of sales tax collections will be distributed on the basis on the point of sale.

P. Recently Issued Accounting Standards

During February 2009, the Governmental Accounting Standards Board issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (“GASB 54”). As part of GASB 54, current governmental fund balance classifications (including reserved, unreserved, and designated) will be replaced with the following fund balance categories: nonspendable, restricted, committed, assigned, and unassigned. In addition, the provisions of GASB 54 clarify the definitions of the general fund, special revenue fund type, capital projects fund type, debt service fund type, and permanent fund type. The City is required to implement GASB 54 for the year ended June 30, 2011. Management is currently evaluating the impact this pronouncement will have on its financial statements.

2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net assets

The governmental fund balance sheet includes a reconciliation between fund balance - total governmental funds and net assets - governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains that “long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds”. The details of this $3,932,132 difference are as follows:

Bonds payable 2,575,000$ Capital leases payable 386,259 Notes payable 400,000 Accrued interest payable 49,589 Compensated absences 521,284

Net adjustment to reduce fund balance - totalgovernmental funds to arrive at net assets -governmental activities 3,932,132$



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2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) B. Explanation of certain differences between the governmental fund statement of revenues,

expenditures, and changes in fund balances and the government-wide statement of activities

The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net change in fund balances - total governmental funds and change in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this $3,063,004 difference are as follows:

Capital outlay 4,866,553$ Depreciation expense (1,803,549)

Net adjustment to increase net changes in fundbalances - total governmental funds to arriveat changes in net assets of governmental activities 3,063,004$

Another element of that reconciliation states that “The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets.” The details of this $256,259 difference are as follows:

Debt issued:Capital lease 582,500$ Note payable 500,000

Principal repayments (826,241)

Net adjustment to decrease net changes in fundbalances - total governmental funds to arriveat changes in net assets of governmental activities 256,259$

Another element of that reconciliation states that “Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.” The details of this $30,165 difference are as follows:

Compensated absences 28,095$ Accrued interest 2,070

Net adjustment to decrease net changes in fundbalances - total governmental funds to arriveat changes in net assets of governmental activities 30,165$



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3. DEPOSITS AND INVESTMENTS

The State of Utah Money Management Council has the responsibility to advise the State Treasurer about investment policies, promote measures and rules that will assist in strengthening the banking and credit structure of the state and review the rules adopted under the authority of the State of Utah Money Management Act that relate to the deposit and investment of public funds.

The City follows the requirements of the Utah Money Management Act (Utah Code, Section 51, Chapter 7) in handling its depository and investment transactions. The Act requires the depositing of City funds in a qualified depository. The Act defines a qualified depository as any financial institution whose deposits are insured by an agency of the Federal Government and which has been certified by the State Commissioner of Financial Institutions as meeting the requirements of the Act and adhering to the rules of the Utah Money Management Council.

a. Deposits

Bank BookBalances Balances

Cash on hand -$ 2,250$ Cash on deposit 1,112,473 682,276

TOTAL 1,112,473$ 684,526$

Custodial Credit Risk: Custodial credit risk is the risk that, in the event of a bank failure, the City’s deposits may not be returned to it. The City does not have a formal deposit policy for custodial credit risk. As of June 30, 2010, $762,143 of the City’s bank balances of $1,112,473 was uninsured and uncollateralized.

b. Investments

The Money Management Act defines the types of securities authorized as appropriate investments for the City and the conditions for making investment transactions. Investment transactions may be conducted only through qualified depositories, certified dealers, or directly with issuers of the investment securities. Statutes authorize the City to invest in negotiable or nonnegotiable deposits of qualified depositories and permitted negotiable depositories; repurchase and reverse repurchase agreements; commercial paper that is classified as “first tier” by two nationally recognized statistical rating organizations, one of which must be Moody’s Investors Services or Standard & Poor’s; bankers’ acceptances; obligations of the United States Treasury, including bills, notes, and bonds; bonds, notes, and other evidence of indebtedness of political subdivisions of the State; fixed rate corporate obligations and variable rate securities rated “A” or higher, or the equivalent of “a” or higher, by two nationally recognized statistical rating organizations; shares or certificates in a money market mutual fund as defined in the Act; and the State of Utah Public Treasurer’s Investment Fund. The Utah State Treasurer’s Office operates the Public Treasurer’s Investment Fund (PTIF). The PTIF is available for investment of funds administered by any Utah public treasurer. The PTIF is not registered with the SEC as an investment company. The PTIF is authorized and regulated by the Money Management Act, Section 51-7, Utah Code Annotated, 1953, as amended. The Act established the Money Management Council, which oversees the activities of the State



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3. DEPOSITS AND INVESTMENTS (CONTINUED)

Treasurer and the PTIF and details the types of authorized investments. Deposits in the PTIF are not insured or otherwise guaranteed by the State of Utah, and participants share proportionally in any realized gains or losses on investments. The PTIF operates and reports to participants on an amortized cost basis. The income, gains, and losses-net of administration fees, of the PTIF are allocated based upon the participant’s average daily balance. The fair value of the PTIF investment pool is approximately equal to the value of the pool shares. As of June 30, 2010, the City had the following investments and maturities:

Investment Maturities (in Years)Fair Less More

Investment Type Value Than 1 1-5 6-10 Than 10

State of Utah Public Treasurer'sInvestment Fund 20,476,466$ 20,476,466$ -$ -$ -$

Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The City’s policy for managing its exposure to fair value loss arising from increasing interest rates is to comply with the State’s Money Management Act. Section 51-7-11 of the Act requires that the remaining term to maturity of investments may not exceed the period of availability of the funds to be invested. Except for funds of Institutions of Higher Education acquired by gifts, grants, or the corpus of funds functioning as endowments, the Act further limits the remaining term to maturity on all investments in commercial paper, bankers’ acceptances, fixed rate negotiable deposits, and fixed rate corporate obligations to 270-365 days or less. In addition, variable rate negotiable deposits and variable rate securities may not have a remaining term to final maturity exceeding two years.

Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City’s policy for reducing its exposure to credit risk is to comply with the State’s Money Management Act as previously discussed. As of June 30, 2010, the City’s investments in the State of Utah Public Treasurer’s Investment Fund were unrated. Concentration of Credit Risk: Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The City’s policy for reducing the risk of loss is to comply with the Rules of the Money Management Council. Rule 17 of the Money Management Council limits investments in a single issuer of commercial paper and corporate obligations to 5%-10% depending upon total dollar amount held in the portfolio. Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City does not have a formal policy for custodial credit risk.



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4. CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2010, was as follows:

Beginning EndingBalance Increases Decreases Balance

GOVERNMENTAL ACTIVITIES:Capital assets not being depreciated:

Land 4,331,342$ 838,098$ (195,457)$ 4,973,983$ Construction in progress - 35,560 - 35,560

Total capital assets not being depreciated 4,331,342 873,658 (195,457) 5,009,543

Capital assets being depreciated:Buildings 20,921,737 1,652,508 (65,705) 22,508,540 Improvements other than buildings 2,613,093 220,476 - 2,833,569 Machinery and equipment 9,676,452 1,320,531 (486,524) 10,510,459 Infrastructure 17,959,771 799,380 - 18,759,151

Total capital assets being depreciated 51,171,053 3,992,895 (552,229) 54,611,719

Less accumulated depreciation for:Buildings (4,693,076) (548,624) 58,752 (5,182,948) Improvements other than buildings (617,786) (64,009) - (681,795) Machinery and equipment (5,038,539) (735,080) 409,959 (5,363,660) Infrastructure (4,053,854) (455,836) - (4,509,690)

Total accumulated depreciation (14,403,255) (1,803,549) 468,711 (15,738,093)

Total capital assets being depreciated, net 36,767,798 2,189,346 (83,518) 38,873,626

GOVERNMENTAL ACTIVITIESCAPITAL ASSETS, NET 41,099,140$ 3,063,004$ (278,975)$ 43,883,169$

BUSINESS-TYPE ACTIVITIES:Capital assets not being depreciated:

Land 762,820$ -$ -$ 762,820$ Total capital assets not being depreciated 762,820 - - 762,820

Capital assets being depreciated:Buildings 2,486,606 42,707 - 2,529,313 Improvements other than buildings 15,536,960 114,119 - 15,651,079 Machinery and equipment 2,561,270 246,617 - 2,807,887

Total capital assets being depreciated 20,584,836 403,443 - 20,988,279



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4. CAPITAL ASSETS (CONTINUED)

Beginning EndingBalance Increases Decreases Balance

Less accumulated depreciation for:Buildings (708,068)$ (67,963)$ -$ (776,031)$ Improvements other than buildings (5,840,688) (352,892) - (6,193,580) Machinery and equipment (1,398,786) (226,650) - (1,625,436)

Total accumulated depreciation (7,947,542) (647,505) - (8,595,047)

Total capital assets being depreciated, net 12,637,294 (244,062) - 12,393,232

BUSINESS-TYPE ACTIVITIESCAPITAL ASSETS, NET 13,400,114$ (244,062)$ -$ 13,156,052$

Depreciation expense was charged to functions/programs of the primary government as follows:

GOVERNMENTAL ACTIVITIES:General government 390,245$ Public safety 707,934 Highways and public improvements 630,885 Parks and recreation 74,485

TOTAL DEPRECIATION EXPENSE - GOVERNMENTAL ACTIVITIES 1,803,549

BUSINESS-TYPE ACTIVITIES:Water 422,682 Sewer 116,883 Ambulance services 90,981 Housing 16,959

TOTAL DEPRECIATION EXPENSE - BUSINESS-TYPE ACTIVITIES 647,505

TOTAL DEPRECIATION EXPENSE 2,451,054$

5. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS

The composition of interfund balances as of June 30, 2010, is as follows: Receivable Fund Payable Fund Amount Capital projects Ambulance services fund $ 1,172,000 Redevelopment agency 887,609 TOTAL $ 2,059,609



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5. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (CONTINUED)

The interfund payable balance in the Redevelopment Agency reflects the amount due to the capital projects fund for loans made in 1992, 1993, and 1994. The original 1992 loan, which comprises the majority of the total loan amount, was made to finance major housing rehabilitation projects in the Park Creek and Southbrook areas of the City. Debt service on the loan is made with tax increment proceeds received annually by the Redevelopment Agency. The interfund payable balance in the Ambulance Services Fund reflects the amount due to the capital projects fund for a loan made in 2010. The loan was made to fund the start up costs of the new fund. Debt service on the loan will be made with available funds at the conclusion of any fiscal year after payment of all operating and capital costs of the ambulance system. Transfer Out: Transfer In: Amount Capital projects Leased equipment debt service fund $ 202,518 Transfers are used to move revenues from the fund with collection authorization to the debt service fund as debt service principal and interest payments become due.

6. LONG-TERM DEBT

Revenue Bonds The government issues bonds where the government pledges income derived from the acquired or constructed assets to pay debt service. The original amount of revenue bonds issued in prior years was $6,210,000 for governmental activities and $4,230,000 for business-type activities. In addition, during the year ended June 30, 2005, Central Valley Water Reclamation Facility issued taxable sewer revenue bonds totaling $35,000,000. As of June 30, 2010, Central Valley had drawn down the entire $35,000,000 from the bond proceeds. Revenue bonds outstanding at year end are as follows:

InterestPurpose Rates Amount

Water system improvements - Water Utility Fund 2.40% 1,968,000$ Columbus School and city hall sales tax revenue and

refunding bonds - Debt Service Fund 4.00 - 4.85% 2,575,000 Wastewater treatment - Sewer Utility Fund 0.00% 738,000 Central Valley expansion - Sewer Utility Fund 3.00% 396,476

TOTAL 5,677,476$



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6. LONG-TERM DEBT (CONTINUED)

Revenue bond debt service requirements to maturity are as follows:

Governmental Activities Business-type ActivitiesPrincipal Interest Principal Interest

2011 400,000$ 110,965$ 225,602$ 59,129$ 2012 260,000 96,380 230,305 55,064 2013 275,000 84,407 233,446 50,882 2014 285,000 71,665 238,571 46,624 2015 300,000 58,060 242,712 42,236

2016-2020 1,055,000 61,395 1,282,534 141,613 2021-2025 - - 649,306 28,405

TOTAL 2,575,000$ 482,872$ 3,102,476$ 423,953$

Notes Payable The City borrowed $500,000 under a note payable to a financial institution for the year ended June 30, 2010. Notes payable outstanding at year end are as follows:

InterestPurpose Rates Amount

Affordable housing development - Redevelopment Agency LIBOR + 3.25% 400,000$

Notes payable debt service requirements to maturity are as follows:

Governmental ActivitiesPrincipal Interest

2011 100,000$ 14,588$ 2012 100,000 10,698 2013 100,000 6,808 2014 100,000 2,918

TOTAL 400,000$ 35,012$



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6. LONG-TERM DEBT (CONTINUED)

Changes in Long-Term Liabilities Long-term liability activity for the year ended June 30, 2010, was as follows:

DueBeginning Ending WithinBalance Additions Reductions Balance One Year

GOVERNMENTAL ACTIVITIES:Bonds payable:

2001 sales tax revenue andrefunding bonds 3,105,000$ -$ (530,000)$ 2,575,000$ 400,000$

Capital leases - 582,500 (196,241) 386,259 190,066 Notes payable - 500,000 (100,000) 400,000 100,000 Compensated absences 493,189 522,624 (494,529) 521,284 328,983

GOVERNMENTAL ACTIVITIESLONG-TERM LIABILITIES 3,598,189$ 1,605,124$ (1,320,770)$ 3,882,543$ 1,019,049$

BUSINESS-TYPE ACTIVITIES:Bonds payable:

2001 taxable water revenuebonds 2,108,000$ -$ (140,000)$ 1,968,000$ 143,000$

2002 taxable sewer revenuebonds 799,500 - (61,500) 738,000 61,500

Central Valley taxable sewerrevenue bonds 192,468 224,407 (20,399) 396,476 21,102

TOTAL BONDS PAYABLE 3,099,968 224,407 (221,899) 3,102,476 225,602

Compensated absences 16,572 72,733 (37,471) 51,834 29,024

BUSINESS-TYPE ACTIVITIESLONG-TERM LIABILITIES 3,116,540$ 297,140$ (259,370)$ 3,154,310$ 254,626$

Compensated absences in the governmental activities are generally liquidated by the General Fund. 7. CAPITAL LEASES

The City has entered into a lease agreement as lessee for financing the acquisition of fire equipment. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of its future minimum lease payments as of the inception date.



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7. CAPITAL LEASES (CONTINUED)

The asset acquired through the capital lease is as follows:

Asset:Machinery and equipment 582,500$ Less: accumulated depreciation (12,288)

TOTAL 570,212$

The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2010 were as follows:

Year Ending June 30,2011 202,518$ 2012 202,518 Total minimum lease payments 405,036 Less: amount representing interest (18,777) Present value of minimum lease payments 386,259$

8. CONDUIT DEBT OBLIGATIONS

From time to time, the City has issued Industrial Development Revenue Bonds to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities and equipment. The bonds are secured by the property financed and are payable solely from payments received on the underlying loans. Neither the City, nor the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2010, there were three series of Industrial Development Revenue Bonds outstanding, with an outstanding principal balance of $5,373,638.

9. PENSION SYSTEMS

The City contributes to the Local Governmental Contributory Retirement System and Local Governmental Noncontributory Retirement System, Public Safety Retirement System for employers with Social Security coverage, Firefighters Retirement System that are for employers with Social Security coverage cost-sharing multiple employer defined benefit pension plans administered by the Utah Retirement Systems (Systems). Utah Retirement Systems provide refunds, retirement benefits, annual cost of living adjustments, and death benefits to plan members and beneficiaries in accordance with retirement statutes. The Systems are established and governed by the respective sections of Chapter 49 of the Utah Code Annotated 1953 as amended. The Utah State Retirement Office Act in Chapter 49 provides for the administration of the Utah Retirement Systems and Plans under the direction of the Utah State Retirement Board (Board) whose members are appointed by the Governor. The Systems issue a publicly available financial report that includes financial statements and required supplementary information for the Local Governmental Contributory Retirement System, Local Governmental Noncontributory Retirement System,



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9. PENSION SYSTEMS (CONTINUED)

and Public Safety Noncontributory Retirement System for employers with Social Security coverage, and Firefighters Retirement System, which are for employers with Social Security coverage. A copy of the report may be obtained by writing to the Utah Retirement Systems, 540 East 200 South, Salt Lake City, Utah 84102 or by calling (800) 365-8772. In the Local Governmental Noncontributory Retirement System, the City is required to contribute 11.66% of their annual covered salary. In the Public Safety Noncontributory Retirement System for employers with Social Security coverage, the City is required to contribute 25.90% of their annual covered salary. The City ceased participation in the Public Safety Contributory System at June 30, 1995. In the Firefighters Retirement System for employers with Social Security coverage plan members are required to contribute 13.49% of their annual covered salary (all or part may be paid by the employer for the employee) and the City is required to contribute 0.00% of their annual covered salary. The contribution rates are the actuarially determined rates. The contribution requirements of the Systems are authorized by statute and specified by the Board.

The City’s contributions to the Noncontributory Retirement System for June 30, 2010, 2009, and 2008 were $461,801, $450,409, and $447,607, respectively; covered salaries for the same period were $3,960,569, $3,876,148, and $3,852,037, respectively. The Public Safety Noncontributory Retirement System contributions for June 30, 2010, 2009, and 2008 were $795,534, $726,589, and $670,374, respectively; covered salaries for the same period were $3,071,561, $3,056,661, and $2,964,941, respectively. The Firefighters Retirement System contributions for June 30, 2010, 2009, and 2008 were $354,471, $302,488, and $286,406, respectively; covered salaries for the same period were $2,627,656, $2,302,038, and $2,244,550, respectively. The City’s contributions were equal to the required contributions for each year. Employees of the City may also participate in a 401(k) Defined Contribution Plan. The City’s contributions to the Plan for June 30, 2010, 2009, and 2008 were $336,966, $324,324, and $329,874, respectively. Employee contributions to the 401(k) plan for June 30, 2010, 2009, and 2008, were $173,930, $233,835, and $263,737, respectively. Full-time employees of the City are eligible to participate in the retirement systems based on their position. Benefits fully vest on reaching four years of service in each of the systems.

10. DEFERRED COMPENSATION 457 PLAN

The Utah Retirement Systems have adopted Governmental Accounting Standards Board Statement 32 (GASB No. 32), Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. This resulted in reporting the 457 Plans as a “Trust Fund” rather than as an “Agency Fund”. Currently all of the assets and income of the 457 Plan are held in trust by the Utah Retirement Systems for the exclusive benefit of the participants or their beneficiaries rather than as assets of the City and are no longer reported as such.



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11. RISK MANAGEMENT

The City of South Salt Lake, as a provider of municipal services, is exposed to a number of risks. Among these are; police enforcement liability, auto liability, road maintenance exposure, public official’s errors and omissions, and property losses. The City has determined that the inherent risk of providing services necessitates implementing risk management policies and purchasing commercial liability insurance. This combination has resulted in fewer claims against the City and sufficient protection when claims occur.

There has not been any reduction in insurance coverage in the past year for any insurance category. The amounts of settlements for any of the past three years have not exceeded coverage amounts. The City of South Salt Lake contracts with commercial insurance coverage for general liability, auto liability, law enforcement liability and public official’s errors and omissions type risks. The City maintains an Insurance Reserve Fund to fund deductibles and small equipment losses. As a result, the City does not have any outstanding insurance liabilities from year to year. However, the City does have annual expenses, which change. For the year ended June 30, 2010, the Insurance Reserve Fund paid $398,501 in expenses. Current expenses include insurance deductible for insurance coverage and claims on uninsured property such as police and other City vehicles and small trucks, legal fees and insurance premiums.

12. REDEVELOPMENT AGENCY

In accordance with Utah Code Section 17C-1-605(2), the City’s Redevelopment Agency is required to disclose the following information for fiscal year 2010: A. The tax increment collected by the Agency for each project area is as follows:

Project Area 2010Burton Place 68,895$ Edison Street 29,998 Park Creek 61,689 Southbrook 65,648 South State Street 57,083 Madison School 92,004 Post Office Place 110,870 Third West 231,225 Metro - Center 23,311

TOTAL 740,723$

B. There were no amounts of tax increment paid to any taxing agency during the year.



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12. REDEVELOPMENT AGENCY (CONTINUED)

C. The outstanding principal amount of bonds issued or other loans incurred to finance the costs associated with project areas is as follows:

Project Area 2010

Note payable - affordable housing 400,000$ Interfund notes payable 887,609

1,287,609$

D. The actual amount expended for:

Project Area 2010Administrative costs of the Agency 215,548$ Principal on note payable 100,000 Interest on note and interfund note 40,776 Furniture and fixtures expenditures 27,720 Housing program expenditures 40,464 Loss on sale of property held for sale 79,981

Tax increment distributions under contracts:Madison School 31,889 Third West 212,316

748,694$

13. CONTINGENT LIABILITIES

Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amounts, if any, of expenditures, which may be disallowed by the grantor, cannot be determined at this time although the government expects such amounts, if any, to be immaterial. The City is a defendant in various lawsuits. Although the outcome of most of these lawsuits is not presently determinable, it is the opinion of the City’s counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City.

14. COMMITMENTS

Central Valley Water Reclamation Facility - the City has committed with six other entities to fund future capital projects of the Central Valley Water Reclamation Facility.



48

14. COMMITMENTS (CONTINUED)

During the year ended June 30, 2010, the City entered into a contract for sidewalk construction and improvements. As of June 30, 2010, there was approximately $151,000 remaining on the contract.

15. SUBSEQUENT EVENTS

Subsequent to June 30, 2010, the City issued $1,680,000 Sales Tax Revenue Refunding Bonds, Series 2010. The bonds were issued to advance refund most of the remaining balance on the Sales Tax Revenue and Refunding Bonds, Series 2001. The bonds bear interest at 1.50% to 2.00% and require semi-annual interest payments beginning in March 2011 and annual principal payments beginning in September 2011. The bonds mature in September 2015. Also subsequent to June 30, 2010, the City entered into a lease-purchase agreement with a financial institution to fund the purchase of a street sweeper, sewer vacuum truck, and a vehicle. The principal amount is $502,500 with imputed interest of approximately 3.79%. Lease payments are due in annual installments, beginning in January 2011 through January 2015. Also subsequent to June 30, 2010, the City entered into a contract for a road construction project. The total amount of the contract is approximately $105,000. Also subsequent to June 30, 2010, the City Council adopted a city or town option sales and use tax (0.2%), which will take effect on January 1, 2011.

REQUIRED SUPPLEMENTARY INFORMATION



GENERAL FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL


51

Variance withBudgeted Amounts Final Budget-

Actual PositiveOriginal Final Amounts (Negative)

REVENUES:Property taxes 5,027,436$ 5,027,436$ 4,927,756$ (99,680)$ Sales taxes 8,965,692 8,918,192 7,921,260 (996,932) Other taxes 2,825,000 2,825,000 3,034,463 209,463 Licenses and permits 890,000 890,000 906,325 16,325 Intergovernmental 1,414,700 2,412,200 2,152,773 (259,427) Charges for services 235,000 265,874 324,809 58,935 Fines and forfeitures 1,463,000 1,463,000 1,546,418 83,418 Investment earnings 115,000 115,000 50,149 (64,851) Miscellaneous revenues 507,000 650,000 657,708 7,708

TOTAL REVENUES 21,442,828 22,566,702 21,521,661 (1,045,041)


General government:Administration 1,386,300 1,461,300 1,394,989 66,311 City council 351,700 309,200 292,041 17,159 Municipal court 787,500 787,500 724,763 62,737 City attorney 542,600 660,600 635,710 24,890 City hall building 372,000 394,000 347,669 46,331 Civic center 323,280 360,280 340,185 20,095

Public safety:Police protection 6,918,000 7,041,000 6,903,390 137,610 Dispatching 429,000 429,000 425,322 3,678 Community services 554,300 554,300 516,815 37,485 Fire protection 4,404,000 4,286,000 4,154,550 131,450

Highways and public improvements:Streets and highways 2,480,800 2,470,800 2,040,796 430,004 Waste collection and disposal 295,600 320,600 307,874 12,726 Building and planning services 859,700 779,700 684,682 95,018 Engineering 192,248 192,248 191,624 624

Parks and recreation:Parks 303,850 303,850 279,359 24,491 Community events 182,100 182,100 176,625 5,475 Recreation 839,850 1,414,224 1,187,286 226,938

Capital outlay:Highways and public improvements:

Streets and highways 300,000 700,000 781,979 (81,979) TOTAL EXPENDITURES 21,522,828 22,646,702 21,385,659 1,261,043

EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURES (80,000) (80,000) 136,002 216,002

OTHER FINANCING SOURCES (USES):Transfers in (out) 25,000 25,000 - (25,000)

TOTAL OTHER FINANCING SOURCES (USES) 25,000 25,000 - (25,000)

NET CHANGE IN FUND BALANCES (55,000) (55,000) 136,002 191,002 FUND BALANCES - BEGINNING 3,417,137 3,417,137 3,417,137 - FUND BALANCES - ENDING 3,362,137$ 3,362,137$ 3,553,139$ 191,002$


REDEVELOPMENT AGENCY



52

Budgeted AmountsVariance withFinal Budget-


REVENUES:Property taxes 900,000$ 900,000$ 740,723$ (159,277)$ Investment earnings 16,000 16,000 330 (15,670) Miscellaneous revenues - - 941 941

TOTAL REVENUES 916,000 916,000 741,994 (174,006)


General government: 175,000 175,000 215,548 (40,548) Highways and public improvements 430,000 430,000 68,184 361,816 Redevelopment 268,000 268,000 244,205 23,795

Debt Service:Principal on note payable 240,000 100,000 100,000 - Interest and fiscal charges 20,000 50,500 40,776 9,724

TOTAL EXPENDITURES 1,133,000 1,023,500 668,713 354,787

EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURES (217,000) (107,500) 73,281 180,781

OTHER FINANCING SOURCES (USES):Transfers in (out) - - - - Notes payable issued - 500,000 500,000 - Sale of capital assets - 117,000 - (117,000) Loss on sale of property held for sale - - (79,981) (79,981)

TOTAL OTHER FINANCINGSOURCES (USES) - 617,000 420,019 (196,981)

NET CHANGE IN FUND BALANCES (217,000) 509,500 493,300 (16,200)

FUND BALANCES - BEGINNING 1,503,344 1,503,344 1,503,344 -

FUND BALANCES - ENDING 1,286,344$ 2,012,844$ 1,996,644$ (16,200)$

OTHER SUPPLEMENTARY INFORMATION



COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS

JUNE 30, 2010

55

Leased TotalSales Tax Equipment Nonmajor

Debt Service Debt Service GovernmentalFund Fund Funds

ASSETS:Cash and cash equivalents 440,681$ -$ 440,681$ Cash and cash equivalents - restricted 623,140 - 623,140

TOTAL ASSETS 1,063,821$ -$ 1,063,821$

LIABILITIES AND FUND BALANCESLiabilities -$ -$ -$

TOTAL LIABILITIES - - -

Fund balances:Reserved for debt service 1,063,821 - 1,063,821

TOTAL FUND BALANCES 1,063,821 - 1,063,821

TOTAL LIABILITIES ANDFUND BALANCES 1,063,821$ -$ 1,063,821$


COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS


56

Leased TotalSales Tax Equipment Nonmajor

Debt Service Debt Service GovernmentalFund Fund Funds

REVENUES:Sales taxes 512,766$ -$ 512,766$ Investment earnings 4,544 - 4,544

TOTAL REVENUES 517,310 - 517,310

EXPENDITURES:Debt service:

Principal retirement 530,000 196,241 726,241 Interest and fiscal charges 133,680 6,277 139,957

TOTAL EXPENDITURES 663,680 202,518 866,198

(DEFICIENCY) OF REVENUES(UNDER) EXPENDITURES (146,370) (202,518) (348,888)

OTHER FINANCING SOURCES (USES):Transfers in (out) - 202,518 202,518

TOTAL OTHER FINANCINGSOURCES (USES) - 202,518 202,518

NET CHANGES IN FUND BALANCES (146,370) - (146,370)

FUND BALANCES - BEGINNING 1,210,191 - 1,210,191

FUND BALANCES - ENDING 1,063,821$ -$ 1,063,821$


SALES TAX DEBT SERVICE FUND



57



REVENUES:Sales taxes 512,766$ 512,766$ 512,766$ -$ Investment earnings 10,000 10,000 4,544 (5,456)

TOTAL REVENUES 522,766 522,766 517,310 (5,456)

EXPENDITURES:Debt Service:

Principal retirement 530,000 530,000 530,000 - Interest and fiscal charges 134,161 134,161 133,680 481

TOTAL EXPENDITURES 664,161 664,161 663,680 481

(DEFICIENCY) OF REVENUES(UNDER) EXPENDITURES (141,395) (141,395) (146,370) (4,975)

OTHER FINANCING SOURCES (USES):Transfers in (out) 141,395 141,395 - (141,395)

TOTAL OTHER FINANCINGSOURCES (USES) 141,395 141,395 - (141,395)

NET CHANGE IN FUND BALANCES - - (146,370) (146,370)


FUND BALANCES - ENDING 1,210,191$ 1,210,191$ 1,063,821$ (146,370)$


LEASED EQUIPMENT DEBT SERVICE FUND



58



REVENUES:Investment earnings -$ -$ -$ -$

TOTAL REVENUES - - - -

EXPENDITURES:Debt Service:

Principal retirement 200,000 200,000 196,241 3,759 Interest and fiscal charges 4,300 4,300 6,277 (1,977)

TOTAL EXPENDITURES 204,300 204,300 202,518 1,782

(DEFICIENCY) OF REVENUES(UNDER) EXPENDITURES (204,300) (204,300) (202,518) 1,782

OTHER FINANCING SOURCES (USES):Transfers in (out) 204,300 204,300 202,518 (1,782)

TOTAL OTHER FINANCINGSOURCES (USES) 204,300 204,300 202,518 (1,782)

NET CHANGE IN FUND BALANCES - - - -

FUND BALANCES - BEGINNING - - - -

FUND BALANCES - ENDING -$ -$ -$ -$


CAPITAL PROJECTS FUND



59



REVENUES:Sales taxes 1,221,542$ 1,221,542$ 2,319,426$ 1,097,884$ Intergovernmental 695,226 1,197,062 592,515 (604,547) Charges for services - - 50 50 Investment earnings 150,000 150,000 86,996 (63,004) Miscellaneous revenues - 96,760 99,535 2,775

TOTAL REVENUES 2,066,768 2,665,364 3,098,522 433,158

EXPENDITURES:Capital outlay:

General government 130,000 249,500 243,791 5,709 Public safety 757,113 1,719,574 1,585,113 134,461 Highways and public improvements 1,234,000 1,446,275 470,095 976,180 Parks and recreation 100,000 2,805,360 2,789,115 16,245

TOTAL EXPENDITURES 2,221,113 6,220,709 5,088,114 1,132,595

(DEFICIENCY) OF REVENUES(UNDER) EXPENDITURES (154,345) (3,555,345) (1,989,592) 1,565,753

OTHER FINANCING SOURCES (USES):Transfers in (out) (1,828,637) (1,828,637) (202,518) 1,626,119 Capital leases - 585,000 582,500 (2,500) Sale of capital assets 50,000 1,269,400 1,392,015 122,615

TOTAL OTHER FINANCINGSOURCES (USES) (1,778,637) 25,763 1,771,997 1,746,234

NET CHANGE IN FUND BALANCES (1,932,982) (3,529,582) (217,595) 3,311,987


FUND BALANCES - ENDING 11,047,119$ 9,450,519$ 12,762,506$ 3,311,987$


STATISTICAL

SECTION



63

STATISTICAL SECTION

Contents Page

Financial Trends 64These schedules contain trend information to help the reader understand howthe government's financial performance and well-being have changed over time.

Revenue Capacity 72These schedules contain information to help the reader assess one of the government'srevenue sources, sales taxes.

Debt Capacity 75These schedules present information to help the reader assess the affordability of thegovernment's current levels of outstanding debt and the government's ability to issueadditional debt in the future.

Demographic and Economic Information 80These schedules offer demographic and economic indicators to help the readerunderstand the environment within which the government's financial activities takeplace.

Operating Information 82These schedules contain service and infrastructure data to help the reader understandhow the information in the government's financial report relates to the services thegovernment provides and the activities it performs.

This part of the City of South Salt Lake's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health.

64

2003 2004 2005 2006 2007 2008 2009 2010

Governmental activities Invested in capital assets, net of related debt 26,656$ 28,918$ 31,061$ 31,776$ 32,065$ 36,418$ 37,994$ 40,522$ Restricted 5,823 4,995 1,166 1,209 1,220 1,221 1,210 1,064 Unrestricted 5,830 6,608 14,460 20,580 24,948 22,045 22,576 22,984 Total governmental activities net assets 38,309$ 40,521$ 46,687$ 53,565$ 58,233$ 59,684$ 61,780$ 64,570$

Business-type activities Invested in capital assets, net of related debt 7,790$ 8,054$ 7,878$ 8,314$ 8,403$ 9,122$ 10,493$ 10,450$ Restricted - - 673 765 861 864 723 807 Unrestricted 8,812 8,660 8,472 8,298 8,379 9,348 8,011 7,483 Total business-type activities net assets 16,602$ 16,714$ 17,023$ 17,377$ 17,643$ 19,334$ 19,227$ 18,740$

Primary government Invested in capital assets, net of related debt 34,446$ 36,972$ 38,939$ 40,090$ 40,468$ 45,540$ 48,487$ 50,972$ Restricted 5,823 4,995 1,839 1,974 2,081 2,085 1,933 1,871 Unrestricted 14,642 15,268 22,932 28,878 33,327 31,393 30,587 30,467 Total primary government net assets 54,911$ 57,235$ 63,710$ 70,942$ 75,876$ 79,018$ 81,007$ 83,310$

Source: South Salt Lake Finance Department

Note: GASB 34 was not implemented until June 30, 2003

Fiscal Year

City of South Salt LakeNet Assets by ComponentLast Eight Fiscal Years

(accrual basis of accounting)(amounts expressed in thousands)

65

Expenses 2003 2004 2005 2006 2007 2008 2009 2010Governmental activities: General government 3,395$ 3,397$ 3,215$ 3,476$ 3,919$ 4,217$ 3,920$ 4,538$ Public safety 9,709 9,582 9,699 10,072 11,717 12,970 12,627 13,103 Highways and public improvements 3,205 3,287 3,003 3,087 3,691 3,994 4,057 4,233 Parks and recreation 673 671 669 845 1,022 1,052 1,201 1,771 Redevelopment 548 335 380 373 428 445 259 312 Interest on long-term debt 416 289 257 237 215 196 168 183 Total governmental activities expenses 17,946 17,561 17,223 18,090 20,992 22,874 22,232 24,140 Business-type activities: Water utility 1,710 1,650 1,676 1,736 1,793 1,809 1,829 1,815 Sewer utility 1,490 1,209 1,301 1,482 1,440 1,567 1,609 1,340 Recycled waste * n/a n/a n/a 12 18 24 12 n/a Housing 220 249 309 233 211 272 264 178 Ambulance services ** n/a n/a n/a n/a n/a n/a 16 1,159 Total business-type activities expenses 3,420 3,108 3,286 3,463 3,462 3,672 3,730 4,492 Total primary government expenses 21,366$ 20,669$ 20,509$ 21,553$ 24,454$ 26,546$ 25,962$ 28,632$

Program RevenuesGovernmental activities: Charges for services: General government 1,229$ 1,216$ 1,136$ 1,295$ 1,320$ 1,606$ 1,510$ 1,704$ Public Safety 1,651 1,570 1,916 1,716 1,848 1,787 1,592 1,674 Highways and public improvements 518 - - - - - - - Parks and recreation 21 22 27 29 27 25 43 62 Other activities - - - - - - - - Operating grants and contributions 1,006 1,956 1,852 608 931 1,124 1,105 2,609 Capital grants and contributions - - 189 168 91 764 36 232 Total governmental activities program revenues 4,425 4,764 5,120 3,816 4,217 5,306 4,286 6,281 Business-type activities: Charges for services: Water utility 1,548 1,735 1,720 1,801 1,888 1,925 1,862 1,768 Sewer utility 1,243 1,295 1,386 1,344 1,402 1,428 1,415 1,238 Recycled waste * n/a n/a n/a 26 11 24 12 n/a Housing - 1 56 98 99 104 119 92 Ambulance services ** n/a n/a n/a n/a n/a n/a - 821 Operating grants and contributions 209 152 501 292 213 335 225 75 Capital grants and contributions - - - 211 - - - - Total business-type activities program revenues 3,000 3,183 3,663 3,772 3,613 3,816 3,633 3,994 Total primary government program revenues 7,425$ 7,947$ 8,783$ 7,588$ 7,830$ 9,122$ 7,919$ 10,275$

Fiscal Year

City of South Salt LakeChanges in Net Assets

Last Eight Fiscal Years(accrual basis of accounting)

(amounts expressed in thousands)

66

2003 2004 2005 2006 2007 2008 2009 2010Net (expense)/revenueGovernmental activities (13,521)$ (12,797)$ (12,103)$ (14,274)$ (16,775)$ (17,568)$ (17,946)$ (17,859)$ Business-type activities (420) 75 377 309 151 144 (97) (498) Total primary government net expense (13,941)$ (12,722)$ (11,726)$ (13,965)$ (16,624)$ (17,424)$ (18,043)$ (18,357)$

General Revenues and Other Changes inNet AssetsGovernmental activities: Taxes Property taxes 2,850$ 2,889$ 2,887$ 5,367$ 6,306$ 5,800$ 5,927$ 5,681$ Sales taxes 9,808 9,882 10,904 12,076 11,166 10,601 10,417 10,754 Energy sales and use tax 1,798 2,002 2,719 3,056 2,916 3,077 3,136 3,009 Transient room tax 24 24 25 26 33 39 32 25 Unrestricted investment earnings 259 199 295 627 972 1,002 427 146 Miscellaneous 10 - - - - - - - Gain (loss) on sale of capital assets (106) 13 - - 50 - 71 1,033 Transfers - - - - - (1,500) 32 - Total governmental activities 14,643 15,009 16,830 21,152 21,443 19,019 20,042 20,648 Business-type activities: Unrestricted investment earnings 38 37 84 45 114 47 22 12 Transfers - - - - - 1,500 (32) - Total business-type activities 38 37 84 45 114 1,547 (10) 12 Total primary government 14,681$ 15,046$ 16,914$ 21,197$ 21,557$ 20,566$ 20,032$ 20,660$

Change in Net AssetsGovernmental activities 1,122$ 2,212$ 4,727$ 6,878$ 4,668$ 1,451$ 2,096$ 2,789$ Business-type activities (382) 112 461 354 265 1,691 (107) (486) Total primary government 740$ 2,324$ 5,188$ 7,232$ 4,933$ 3,142$ 1,989$ 2,303$



* n/a - Not applicable, Recycled Waste program began July 1, 2005 and ended June 30, 2009** n/a - Not applicable, Ambulance Services program began May 1, 2009

Changes in Net AssetsLast Eight Fiscal Years

(accrual basis of accounting)(amounts expressed in thousands)

(continued)

Fiscal Year


67

City of South Salt LakeGovernmental Activities Tax Revenues by Source

Last Eight Fiscal Years(accrual basis of accounting)


Energy TransientFiscal Property Sales Sales and Use RoomYear Tax Tax Tax Tax Total

2003 2,850$ 9,808$ 1,798$ 24$ 14,480$ 2004 2,889 9,882 2,002 24 14,797 2005 2,887 10,904 2,719 25 16,535 2006 5,367 12,076 3,056 26 20,525 2007 6,306 11,166 2,916 33 20,421 2008 5,800 10,601 3,077 39 19,517 2009 5,927 10,417 3,136 32 19,512 2010 5,681 10,753 3,009 25 19,468



68

City of South Salt LakeFund Balances of Governmental Funds

Last Ten Fiscal Years(modified accrual basis of accounting)


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010General Fund Reserved -$ -$ 194$ -$ -$ -$ -$ -$ -$ -$ Unreserved 2,597 2,503 2,507 2,966 2,557 3,376 3,458 3,428 3,417 3,553 Total general fund 2,597$ 2,503$ 2,701$ 2,966$ 2,557$ 3,376$ 3,458$ 3,428$ 3,417$ 3,553$

All other governmental funds Reserved 3,787$ 4,058$ 4,736$ 4,303$ 4,114$ 3,957$ 3,996$ 3,763$ 3,542$ 4,996$ Unreserved, reported in: Special revenue funds (1,988) (1,457) (1,559) (1,403) (1,093) (804) (479) (229) 324 124 Capital projects funds 3,650 6,012 5,683 5,662 8,062 10,819 14,661 11,777 11,828 10,703 Total all other governmental funds 5,449$ 8,613$ 8,860$ 8,562$ 11,083$ 13,972$ 18,178$ 15,311$ 15,694$ 15,823$


69

City of South Salt LakeChanges in Fund Balances of Governmental Funds

Last Ten Fiscal Years (modified accrual basis of accounting)


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010RevenuesTaxes 16,387$ 16,160$ 14,480$ 14,797$ 16,535$ 18,040$ 20,319$ 19,518$ 19,366$ 19,456$ Licenses and permits 748 847 780 734 711 870 807 956 864 906 Intergovernmental 629 1,259 1,621 2,051 2,104 858 1,100 1,956 1,125 2,745 Charges for services 364 341 290 217 284 271 360 367 329 325 Fines and forfeitures 1,832 1,675 1,411 1,385 1,711 1,518 1,582 1,534 1,342 1,546 Investment earnings 456 316 250 193 285 609 949 980 416 142 Miscellaneous 57 53 333 377 310 299 368 493 627 759 Total Revenues 20,473 20,651 19,165 19,754 21,940 22,465 25,485 25,804 24,069 25,879

ExpendituresGeneral government 2,753 2,780 2,794 2,719 2,748 2,962 3,273 3,763 3,513 3,951 Public safety 8,740 9,017 8,916 8,860 9,036 9,465 10,868 11,839 11,828 12,000 Highways and public improvements 2,550 2,657 2,621 2,611 2,455 2,663 2,910 3,174 3,286 3,293 Parks and recreation 508 468 624 638 682 765 935 963 1,113 1,643 Redevelopment 455 435 889 618 431 427 534 445 259 244 Capital outlay 3,912 6,160 2,718 3,399 3,322 1,776 2,032 6,321 3,136 5,871 Debt service: Principal 277 2,348 629 658 544 469 506 527 510 826 Interest and fiscal charges 155 215 324 296 266 244 222 203 176 181 Total expenditures 19,350 24,080 19,515 19,799 19,484 18,771 21,280 27,235 23,821 28,009

Excess (deficiency) of revenues over (under) expenditures 1,123$ (3,429)$ (350)$ (45)$ 2,456$ 3,694$ 4,205$ (1,431)$ 248$ (2,130)$

70

City of South Salt LakeChanges in Fund Balances of Governmental Funds

Last Ten Fiscal Years (modified accrual basis of accounting)

(amounts expressed in thousands)(continued)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Other financing sources (uses)Transfers in 422$ 3,047$ 244$ 244$ 102$ 198$ -$ 14$ 32$ -$ Transfers out (422) (3,047) (244) (244) (102) (198) - (1,514) - - Proceeds from loans/bonds - 6,245 174 - - - - - - 500 Capital leases - 277 - - - - - - - 583 Sale of capital assets 214 73 220 13 57 14 82 34 92 1,312 Total other financing sources (uses) 214 6,595 394 13 57 14 82 (1,466) 124 2,395

Net change in fund balances 1,337$ 3,166$ 44$ (32)$ 2,513$ 3,708$ 4,287$ (2,897)$ 372$ 265$

Debt service as a percentage of non-capital expenditures 2.8% 14.3% 5.7% 5.8% 5.0% 4.2% 3.8% 3.5% 3.3% 4.5%


71

City of South Salt LakeGeneral Governmental Tax Revenues by Source

Last Ten Fiscal Years(modified accrual basis of accounting)


Energy TransientFiscal Property Sales Sales and Use RoomYear Tax Tax Tax Tax Total

2001 2,712$ 11,849$ 1,804$ 22$ 16,387$ 2002 3,670 10,555 1,908 27 16,160 2003 2,850 9,808 1,798 24 14,480 2004 2,889 9,882 2,002 24 14,797 2005 2,887 10,904 2,719 25 16,535 2006 2,882 12,076 3,056 26 18,040 2007 6,204 11,166 2,916 33 20,319 2008 5,800 10,601 3,077 39 19,517 2009 5,781 10,417 3,136 32 19,366 2010 5,668 10,753 3,009 25 19,455


72

City of South Salt LakeSales Tax Revenue Allocation by Fund

Last Ten Fiscal Years(in thousands of dollars)

Capital Sales Tax General Improvements Debt Service

Year Fund Fund Fund Total

2001 7,824$ 4,025$ -$ 11,849$ 2002 7,837 1,723 673 10,233 2003 7,799 1,364 645 9,808 2004 7,975 639 1,268 9,882 2005 6,769 3,493 642 10,904 2006 7,884 3,527 665 12,076 2007 5,928 4,597 641 11,166 2008 7,269 2,696 636 10,601 2009 7,503 2,274 640 10,417 2010 7,921 2,319 513 10,753

Source: South Salt Lake Finance Department Utah State Tax Commission

Prior to fiscal year 2007 the City of South Salt Lake received 75% of the 1% local option with the remaining 25% allocated to other cities and towns based on their percentage of statewide population. In 2007 state law changed the method of distribution resulting in the City of South Salt Lake receiving 50% of the 1% local option and being allocated an additional amount based on the City's share of the State's population.

73

City of South Salt LakeDirect and Overlapping Sales Tax Rates

Last Ten Fiscal Years

City of South Fiscal Salt Lake Salt Lake State of County Wide Botanical Total SalesYear Local Option (a) County Option Utah Mass Transit Cultural, Zoo Tax Rate

2001 1.00% 0.25% 4.75% 0.50% 0.10% 6.60%

2002 1.00% 0.25% 4.75% 0.50% 0.10% 6.60%

2003 1.00% 0.25% 4.75% 0.50% 0.10% 6.60%

2004 1.00% 0.25% 4.75% 0.50% 0.10% 6.60%

2005 1.00% 0.25% 4.75% 0.50% 0.10% 6.60%

2006 1.00% 0.25% 4.75% 0.50% 0.10% 6.60%

2007 (b) 1.00% 0.50% 4.75% 0.50% 0.10% 6.85%

2008 1.00% 0.50% 4.75% 0.50% 0.10% 6.85%

2009 1.00% 0.50% 4.75% 0.50% 0.10% 6.85%

2010 1.00% 0.50% 4.75% 0.50% 0.10% 6.85%

Source: Utah State Tax Commission

(a) The State of Utah limits the amount of the local option to 1%.

(b) Prior to fiscal year 2007 the City of South Salt Lake received 75% of the 1% local option with the remaining25% allocated to other cities and towns based on the their percentage of statewide population. In fiscal year 2007state law changed the method of distribution resulting in the City of South Salt Lake receiving 50% of the 1% localoption and being allocated an additional amount based on the City's share of the State's population.

74

City of South Salt LakePrincipal Sales Taxpayers

June 30, 2010

Taxpayer Rank Type of Sales

RC Willey Home Furnishings 1 Retail Sales

Best Buy 2 Consumer Electronics

Mark Miller Subaru 3 Auto Sales

Hinckley Dodge 4 Auto Sales

Roofers Supply 5 Construction Supplies

WW Grainger 6 Industrial Sales

Rocky Mountain Power 7 Public Utility

Valcom Computers 8 Computer Equipment

Contractors HVAC 9 Construction Supplies

Salt Lake Valley GMC 10 Auto Sales

Source: Utah State Tax Commission

75

City of South Salt LakeRatios of Outstanding Debt by Type

Last Eight Fiscal Years(amounts expressed in thousands, except per capita amounts)

Governmental Activities Business-Type ActivitiesGeneral Sales Tax Capital Special Water Sewer Total Percentage of

Fiscal Obligation Revenue Lease Assessment Notes Revenue Revenue Housing Primary Household PerYear Bonds Bonds Obligations Bonds Payable Bonds Bonds Loans Government Income Capita

2003 -$ 5,825$ 326$ 169$ -$ 2,881$ 1,168$ -$ 10,369$ 4.97% 471$

2004 - 5,425 98 139 - 2,760 1,107 800 10,329 4.95% 470

2005 - 5,010 - 107 - 2,636 1,127 540 9,420 4.52% 428

2006 - 4,575 - 73 - 2,509 1,162 380 8,699 4.17% 378

2007 - 4,105 - 37 - 2,379 1,095 220 7,836 3.76% 341

2008 - 3,615 - - - 2,245 1,022 60 6,942 3.33% 302

2009 - 3,105 - - - 2,108 992 - 6,205 2.98% 270

2010 - 2,575 386 - 400 1,968 1,134 - 6,463 3.10% 281

Source: South Salt Lake Finance Department United States Bureau of Census Note: GASB Statement 34 was not implemented until June 30, 2003

76

City of South Salt LakeRatios of General Bonded Debt Outstanding


General Less: Amounts Percentage of Obligation Available in Debt Estimated Actual

Fiscal Year Bonds Service Fund Total Taxable Value Per Capita

2010 n/a n/a n/a n/a n/a

Note: The City of South Salt Lake has not issued General Obligation Debt in the past ten years.

77

City of South Salt LakeDirect and Overlapping Governmental Activities Debt

As of December 31, 2009(amounts expressed in thousands)

Governmental City's PortionSouth Salt Lake's Estimated Unit's General of General

2009 Taxable Portion of Percentage Obligation ObligationGovernmental Unit Value Taxable Value Applicable (a) Debt Debt

State of Utah 203,723,489$ 1,809,754$ 0.89% 2,299,300$ 20,426$ Central Utah Water Conservancy District 116,814,769 1,950,329 1.67% 148,920 2,486 Salt Lake County 73,734,383 1,950,329 2.65% 259,800 6,872 Granite School District(b) - - 0.00% - -

Total 2,708,020 29,784 Less: State of Utah(c) (2,299,300) (20,426) Total Direct and Overlapping Debt 408,720$ 9,358$

(a) Based on 2009 taxable assessed property values.(b) In 2009, Granite School District did not have any outstanding general obligation debt.(c) The State of Utah does not levy property tax for payment of general obligation debt.

Sources:Utah State AuditorSalt Lake County Auditor

78

City of South Salt LakeLegal Debt Margin Information

Last Ten Years(amounts expressed in thousands)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Debt Limit 53,519$ 51,432$ 53,315$ 51,955$ 51,933$ 52,731$ 60,542$ 77,318$ 78,013$ 72,390$

Total Net Debt Applicable to Limit (a) - - - - - - - - - -

Legal Debt Margin 53,519$ 51,432$ 53,315$ 51,955$ 51,933$ 52,731$ 60,542$ 77,318$ 78,013$ 72,390$

Total Debt Applicable tothe Limit as a percentageof Debt Limit (b) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Legal Debt Margin Calculation for 2009

Taxable Value All Property 1,809,754$

Debt Limit (4% of reasonable fair cash value) (c) 72,390 Debt applicable to limit: General Obligation Bonds -

Legal Debt Margin 72,390$

(a) The city has not issued General Obligation Bonds in the past ten years.(b) Not Applicable(c) The Utah State Constitution (Article 14, section 4) limits debt limit at 4% of taxable property.

Source: Salt Lake County Auditor

79

City of South Salt LakePledged-Revenue Coverage

Last Ten Fiscal Years(amounts expressed in thousands)

Water Revenue BondsLess: Net

Water Operating Available Debt ServiceFiscal Year Charges Expenses Revenue Principal Interest Coverage

2002 1,769$ 1,188$ 581$ -$ 20$ 29.05 2003 1,566 1,155 411 119 44 2.52 2004 1,763 1,232 531 121 62 2.90 2005 1,754 1,195 559 124 65 2.96 2006 1,820 1,239 581 127 63 3.06 2007 1,931 1,300 631 130 60 3.32 2008 1,941 1,300 641 134 57 3.36 2009 1,873 1,286 587 137 54 3.07 2010 1,776 1,319 457 140 49 2.42

State Sewer Loan/Central Valley Taxable BondsLess: Net

Sewer Operating Available Debt ServiceFiscal Year Charges Expenses Revenue Principal Interest Coverage

2003 1,252$ 811$ 441$ 62$ -$ 7.11 2004 1,296 736 560 62 - 9.03 2005 1,432 867 565 62 - 9.11 2006 1,360 930 430 73 8 5.31 2007 1,459 1,006 453 73 8 5.59 2008 1,448 1,110 338 73 7 4.23 2009 1,425 1,112 313 74 7 3.86 2010 1,242 990 252 82 12 2.68

In 2005, the City agreed to participate with Central Valley Water Reclamation Facility to issuebonds for a facility expansion project.

Public Safety Sales Tax Revenue BondsSales Tax Netand Other Less: Available Debt Service

Fiscal Year Revenue Expenses Revenue Principal Interest Coverage2002 170$ 2$ 168$ 168$ -$ 1.00 2003 654 2 652 385 260 1.01 2004 654 3 651 400 244 1.01 2005 657 2 655 415 228 1.02 2006 692 3 689 435 211 1.07 2007 676 3 673 470 193 1.02 2008 667 3 664 490 173 1.00 2009 655 3 652 510 153 0.98 2010 517 3 514 530 131 0.78

Special Improvement District Revenue BondsNet

SID Less: Available Debt ServiceFiscal Year Revenue Expenses Revenue Principal Interest Coverage

2001 40$ -$ 40$ 26$ 14$ 1.00 2002 40 - 40 27 12 1.03 2003 42 - 42 29 12 1.02 2004 40 - 40 30 9 1.03 2005 44 - 44 32 8 1.10 2006 42 - 42 34 6 1.05 2007 46 - 46 36 4 1.15 2008 39 - 39 37 2 1.00

2009 (a) - - - - - - 2010 (a) - - - - - -


(a) Special improvement district revenue bonds were retired during fiscal year 2008.

80

City of South Salt LakeDemographic and Economic Statistics

Year 1990 1994 2000(a) 2009 Est. 2010 Est. 2020 Est.Population 10,129 10,693 22,038 23,107 23,801 26,445

Pacific

Population African Native Islander/ HispanicBreakdown Female Male White American American Asian or Other

2007 45.0% 55.0% 62.1% 1.9% 1.0% 6.0% 29.0%

2006-2008 Number of households - 8,799

2006-2008 Average household size - 2.66

2006-2008 Median household income - $35,264

2006-2008 Percentage of residents over age 16 employed - 64.8%

2006-2008 Percentage of South Salt Lake households living below the poverty level - 13.2%

2006-2008 Share of Salt Lake County Residents that live in South Sale Lake - 2.3%

2006-2008 Share of Utah residents that live in South Salt Lake - .09%

2008 estimated ratio of police officers per South Salt Lake resident - 1:373

(a) In 1998 the City annexed approximately two square miles and 9,000 residents.

Sources: Wasatch Front Regional Council Utah State Governor's Office of Planning and Budget U.S. Bureau of Census South Salt Lake Chamber of Commerce

Ten Year Demographic Information is Not AvailablePersonal Income Information is Not Available

81

City of South Salt LakeDemographic and Economic Statistics

Top Ten EmployersJune 30, 2010

Type of Number ofEmployer Business Employees

Marriott Ownership Resorts Property Lessors 500-999

Utah Transit Authority Public Transportation 500-999

Salt Lake County - Sheriff's Office Public Safety Office 500-999

Seaboard Foods Food Manufacturing 250-499

RC Willey Retail Home Furnishings 250-499

Westech Engineering Inc. Machinery Manufacturing 250-499

Granite School District Public Education Office 250-499

Pacific Flyway Wholesale Sporting/Recreational 250-499

American Building Maintenance Janitorial Services 250-499

Marriott Rewards Data Processing/Hosting 250-499

Sources: South Salt Lake Chamber of Commerce University of Utah, Bureau of Economic and Business Research

82

City of South Salt LakeFull-time Equivalent Employees by Function


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Function

General Government:Administration (a) 29 28 28 27 26 26 27 27 27 27.5 Court 13 12 10 10 10 10 9 9 9 8

Public Safety:Police 79 74 71 71 69 74 74 74 74 73 Fire (b) 43 43 40 40 40 41 41 41 41 50 Animal Control (c) 2 2 2 2 2 - - - - - Community Services - - - - - 5 6 7 7 8

Highways and Public Improvements:

Streets & Highways 23 22 20 18 17 19 18 19 19 20 Engineering 5 3 2 2 2 1 1 1 1 1 Building & Planning 11 11 9 8 8 7 8 7 7 7

Parks and Recreation:Parks 4 4 5 5 5 4 3 3 3 3 Recreation 1 1 3 3 3 4 7 7 9 15

Water 8 8 8 8 8 8 7 7 7 7 Sewer 3 3 2 2 2 2 3 3 3 3

Total 221 211 200 196 192 201 204 205 207 222.5

(a) Includes Administration, City Council, City Attorney(b) In 2009, the City began providing ambulance service and hired 9 paramedics(c) Animal Control combined with Code Enforcement in 2006 to create new Community Services Department

Source: South Salt Lake Human Resources

83

City of South Salt LakeOperating Indicators by Function


Fiscal Year2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Function

PoliceTotal Calls 12,112 29,873 33,720 39,188 46,261 42,231 44,368 43,832 41,365 43,902

Violent Crimes 1,131 797 853 1,035 819 1,001 1,107 968 1,056 1,006 Property Crimes 2,884 4,139 3,939 4,508 3,949 4,351 3,785 4,046 3,157 3,207 Traffic Citations 1,843 11,421 15,923 16,414 14,397 9,334 10,059 8,525 7,400 7,209

Fire Total Calls 3,502 3,823 3,626 3,806 4,034 4,600 3,981 4,467 4,587 4,451

Number of Fires 188 140 88 111 189 223 179 47 50 62 Medical Calls 2,479 2,567 2,653 2,871 2,913 3,206 2,682 3,276 3,387 3,469

Avg Response Time 4.0 minutes 3.9 minutes 4.4 minutes 5.1 minutes 4.6 minutes 3.3 minutes 3.6 minutes 5.1 minutes 5.0 minutes 5.6 minutes

Justice CourtTotal Cases Filed 13,192 14,116 12,184 11,378 10,663 8,117 9,044 9,092 8,522 9,390

Comm Service Hours Levied 18,553 18,773 10,614 9,273 7,919 10,088 7,161 5,609 9,975 22,080

Building & ZoningBuilding Permits 382 500 471 499 475 431 433 465 329 357

Business Licenses 2,112 1,993 1,959 1,984 1,957 1,792 2,388 2,369 3,078 3,108 Construction Value 26,079,818$ 16,387,560$ 21,263,788$ 11,628,509$ 26,782,372$ 21,838,253$ 26,460,150$ 32,763,924$ 31,072,220$ 53,811,539$

AdministrationA/P Checks 8,264 6,296 5,900 5,753 6,874 6,059 5,682 5,654 5,613 6,353

Payroll Checks 6,509 6,685 6,966 6,510 6,466 6,329 6,533 6,518 6,931 7,700 Utility Billings 40,876 40,813 40,784 41,311 41,508 41,704 42,441 41,304 42,313 42,302

84

City of South Salt LakeOperating Indicators by Function

Last Ten Fiscal Years(continued)

Fiscal Year2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Function

City AttorneyTraffic Cases Prosecuted n/a n/a n/a 1,079 2,450 1,930 2,310 715 707 707

(a)Criminal Cases Prosecuted n/a n/a n/a 693 1,191 1,107 1,115 1,159 1,638 1,353

Public WorksRoad Improvements 292,968 sq ft 944,034 sq ft 430,547 sq ft 873,029 sq ft 536,501 sq ft 39,750 sq ft 39,750 sq ft 1,747,631 sq ft 2,014,292 sq ft 3,647,945 sq ft

Concrete Improvements 6,227 sq ft 4,942 sq ft 8,725 sq ft 14,315 sq ft 2,500 sq ft 1,973 sq ft 1,900 sq ft 2,227 sq ft 3,513 sq ft 5,155 sq ftSolid Waste Removed n/a n/a 2,127 tons 1,096 tons 867 tons 879 tons 900 tons 886 tons 701 tons 711 tons

WaterGallons Produced 1,159 million 792 million 748 million 629 million 657 million 758 million 828 million 690 million 635 million 661 million

Gallons Purchased 330 million 378 million 221 million 345 million 339 million 230 million 209 million 287 million 448 million 297 millionWater Connections 3,289 3,281 3,278 3,286 3,295 3,334 3,344 3,335 3,331 3,323

SewerLines Inspected 17,988 ft n/a 2,390 ft 1,500 ft 5,000 ft 20,174 ft 2,386 ft 9,600 ft 55,880 ft 48,580 ft

Lines Cleaned n/a n/a 8,940 ft 600 ft 1,400 ft 74,191 ft 2,274 ft 7,600 ft 57,656 ft 48,580 ftTotal Connections 2,686 2,584 2,591 2,605 2,611 2,612 2,593 2,598 2,600 2,582

Parks and RecreationRec. Participants n/a n/a 1,832 2,465 1,750 2,060 2,491 2,348 3,850 4,250

Number of Programs n/a n/a 8 10 10 12 12 12 18 22

(a) In fiscal year 2008, the prosecutor began resolving cases during the arraignment process, resulting in fewer cases being formally prosecuted.


n/a - information not available

85

City of South Salt LakeCapital Asset Statistics by Function


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Function

Public SafetyPolice:

Police Stations 1 1 1 1 1 1 1 1 1 1 Officer Vehicles 64 64 59 59 59 59 60 60 60 62

Animal Shelter 1 1 1 1 1 1 1 1 1 1 Fire:

Fire Stations 3 3 3 3 3 3 3 3 3 3 Fire Apparatus 5 6 6 6 7 6 6 6 6 6

(Medium and Heavy)

Highways and Public Improvements

Streets & Highways:Road Miles 75 75 75 75 75 75 75 75 75 75

Storm Drain Miles 48 48 48 48 50 50 50 50 50 50

Water:Water Line Miles 45 46 46 46 46 46 46 46 46 46

Fire Hydrants 536 536 540 540 540 540 542 540 541 541

Sewer:Sewer Line Miles 34 34 34 35 35 35 35 35 35 35

Maximum Flow Capacity 3.83 3.83 3.83 3.83 3.93 3.93 3.93 3.93 3.93 3.93 Monthly Actual Flow n/a n/a n/a 2.54 3.08 3.40 3.10 2.96 2.88 2.91

Central Valley Facility(millions gallons/day)

Parks and RecreationPark Acreage 8 8 8 8 8 8 8 8 8 10 Sports Fields - - - 1 1 1 1 1 1 1

n/a - Information not available



SINGLE AUDIT

SECTION City of South Salt Lake

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SUMMARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS


93

A. SUMMARY OF AUDIT RESULTS

1. The auditors’ report expresses an unqualified opinion on the financial statements of the City of South Salt Lake.

2. Three significant deficiencies disclosed during the audit of the financial statements were reported in the

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS. Two of these significant deficiencies were determined to be material weaknesses in internal control.

3. No instances of noncompliance material to the financial statements of the City of South Salt Lake were

disclosed during the audit.

4. One material weakness relating to the audit of the major federal award programs was reported in the INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133.

5. The auditors’ report on compliance for the major federal award programs for the City of South Salt

Lake expresses an unqualified opinion for all major programs except for the Twenty-First Century Community Learning Centers, which was qualified.

6. Audit findings that are required to be reported in accordance with Section 510(a) of OMB Circular A-

133 are reported in Part C of this Schedule.

7. The programs tested as major programs include:

Community Development Block Grants/Entitlement Grants, CFDA number 14.218 ARRA – Edward Byrne Memorial Justice Assistance Grant Program/Grants to Units of Local

Government, CFDA number 16.804 ARRA – COPS Hiring Recovery Program, CFDA number 16.710 Twenty-First Century Community Learning Centers, CFDA number 84.287c

8. The threshold for distinguishing Types A and B programs was $300,000.

9. The City of South Salt Lake did not qualify as a low-risk auditee.

B. FINDINGS – FINANCIAL STATEMENTS AUDIT

MATERIAL WEAKNESSES 10-1. Federal Grant Deferred Revenue

We noted during our audit that an advance received on a federal grant was recognized as grant revenue as of June 30, 2010. Federal grant revenue should be recognized as the corresponding


SUMMARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)


94

B. FINDINGS – FINANCIAL STATEMENTS AUDIT (CONTINUED)

MATERIAL WEAKNESSES (CONTINUED) 10-1. Federal Grant Deferred Revenue (Continued)

expenditures are incurred. Reimbursement for payroll expenditures of a future period was received during the year ended June 30, 2010. As a result, the City’s financial statements had an immaterial misstatement of deferred revenue (understated) and revenue (overstated). We recommend that the City strengthen existing policies over the timing of recognizing grant reimbursements as revenue.

Management’s Response

The City agrees with the above recommendation and will improve its methods of tracking and recording grant revenue to ensure proper reporting in the future.

10-2. Capital Asset Additions

We noted the following during our audit: Capital expenditures for park improvements were recorded in the housing fund and

capitalized as general capital assets in the government-wide governmental activities. Certain expenditures of capitalizable items in the governmental funds were not recorded as

capital assets in the government-wide financial statements. Generally accepted accounting principles and the City’s capital asset policies require that capital asset additions be properly identified, classified, and recorded in the proper period. There was inadequate review and approval of capital expenditures and capital asset additions lists. As a result, the City’s financial statements had material and immaterial misstatements of capital asset and related capital expenditure balances. We recommend that the City strengthen existing policies and procedures over identifying, classifying, and recording capital assets, including independent review of capital assets records and reconciliation of these records to the general ledger.


The City agrees with the above recommendation and will ensure that capital asset additions will be better scrutinized in the future.

SIGNIFICANT DEFIENCY

10-3. Prepaid Medical Insurance

We noted during our audit that prepaid medical insurance had a credit (negative) balance. Prepaid assets should generally have a debit (positive) balance. COBRA health benefit payments received from former employees were credited to the prepaid medical insurance account, but the corresponding payments of health insurance premiums made by the City were recorded as benefits expenditures. As a result, the City’s financial statements had an immaterial misstatement of prepaid assets (understated) and benefits expenditures (overstated). We recommend that the City strengthen existing policies over


SUMMARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)


95

B. FINDINGS – FINANCIAL STATEMENTS AUDIT (CONTINUED)

SIGNIFICANT DEFIENCY (CONTINUED)

10-3. Prepaid Medical Insurance (Continued)

reconciling balance sheet accounts to identify misstatements or unusual transactions included in individual balance sheet accounts.

Management’s Response The City agrees with the above recommendation and will improve all balance sheet review in the future.

C. FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT

DEPARTMENT OF EDUCATION Pass-Through Program from the State of Utah Office of Education Twenty-First Century Community Learning Centers – CFDA No. 84.287c MATERIAL WEAKNESS 10-4. Unallowable Costs – Salaries and Benefits

We noted during our audit that certain salaries and benefits expenditures submitted for reimbursement exceeded actual expenditures. Under the terms of the grant and approved budgets, as specified in the award letters for AF15020 and AF15256, the City can only submit allowable costs actually incurred, including salaries and benefits, for reimbursement. Amounts received in reimbursement exceeded the allowable salaries and benefits costs incurred for the reporting period. This resulted in likely questioned costs of approximately $21,600 (which includes known questioned costs of approximately $14,400). All questioned costs relate to salaries and benefits; no questioned costs were identified related to other expenditures. We noted several errors in the spreadsheets used to calculate reimbursement amounts, and there was inadequate review and approval of grant-reimbursable salaries and benefits expenditures. We recommend that the City implement a detailed review (by someone other than the preparer) of salaries and benefits spreadsheets (including reconciling payroll records to the spreadsheet summary) prior to preparation of the quarterly reimbursement request reports. Also, we recommend that the City conduct a detailed review of all transactions included in the reimbursement request prior to submission.


The City agrees with the above recommendation and will improve its methods of recording and reporting grant expenditures.

NONCOMPLIANCE WITH REQUIREMENTS OF FEDERAL AWARDS See item 10-4 above.


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


96

Federal Grantor Federal Agency orPass-through Grantor CFDA Pass-through Federal

Number Number Expenditures

U.S. Department of Housingand Urban Development

Passed Through Salt Lake County:Community Development Block Grants/

Entitlement Grants 14.218 Various 207,210$

U.S. Department of Justice

Passed Through Utah Commission onCriminal and Juvenile Justice:Juvenile Justice and Delinquency

Prevention Allocation to States 16.540 Various 41,458 Crime Victim Assistance (Note B) 16.575 Various 56,320 ARRA-Violence Against Women Formula Grant (Note C) 16.588 Various 34,882 ARRA-Edward Byrne Memorial Justice Assistance

Grant Program/Grants to States and Territories 16.803 9AR72 23,454

Passed Through Salt Lake City:ARRA-Edward Byrne Memorial Justice Assistance

Grant Program/Grants to Units of Local Government 16.804 2009-SB-B9-1411 217,967

Part E - Developing, Testing and DemonstratingPromising New Programs 16.541 2009JLFX0263 131,502

Bulletproof Vest Partnership Program 16.607 10,418 ARRA-COPS Hiring Recovery Program 16.710 2009RKWX0841 111,512 Gang Resistance Education and Training (Note D) 16.737 Various 24,244

U.S. Department of Education

Passed Through Utah State Office of Education:Twenty-First Century Community

Learning Centers 84.287c Various 412,031

U.S. Department of Health and Human Services

Passed Through Utah Department ofWorkforce Services:Temporary Assistance to Needy Families 93.558 Various 94,000

Passed Through Salt Lake County:Social Services Block Grant (Note E) 93.667 BJ9120 33,893

U.S. Department of Homeland Security

Passed Through Utah Department ofPublic Safety:Assistance to Firefighters Grant 97.044 EMW-2008-FP-00460 82,790 State Homeland Security Program (SHSP) 97.073 8,638 Law Enforcement Terrorism Prevention Program 97.074 16,487 Buffer Zone Protection Program (BZPP) 97.078 BZP8 129,220

TOTAL 1,636,026$

Program Title


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED)


97

NOTE A – SIGNIFICANT ACCOUNTING POLICIES The accompanying schedule of federal awards is presented using the same basis of accounting as that used in reporting the expenditures in the City’s financial statements. The basis of accounting for each fund is described in footnote 1.C. of the City’s financial statements. NOTE B – CRIME VICTIM ASSISTANCE In accordance with the grant agreement, the City of South Salt Lake has expended matching contributions totaling $11,598 during the year ended June 30, 2010. NOTE C – VIOLENCE AGAINST WOMEN FORMULA GRANT In accordance with the grant agreement, the City of South Salt Lake has expended matching contributions totaling $11,873 during the year ended June 30, 2010. NOTE D – GANG RESISTANCE EDUCATION AND TRAINING In accordance with the grant agreement, the City of South Salt Lake has expended matching contributions totaling $10,705 during the year ended June 30, 2010. NOTE E – SOCIAL SERVICES BLOCK GRANT In accordance with the grant agreement, the City of South Salt Lake has expended matching contributions totaling $14,577 during the year ended June 30, 2010.

City of South Salt Lake June 30, 2010 Corrective Action Plan Department of Education Pass – Through Program from the Utah State Office of Education Twenty-First Century Community Learning Centers CFDA #84.287c

Finding #10-4

Auditors discovered a material weakness regarding the reporting and subsequent reimbursement submissions. Certain salaries and benefits were overstated due to spreadsheet “copy and paste” errors.

Corrective Action Plan

The City has reassigned certain job responsibilities as it pertains to recording grant expenses. In particular, one employee has been assigned to calculate, compile, and report the grant expenditure information. Another employee has been assigned to review all compiled expenditure information prior to submission to the Utah State Office of Education who is the pass-through agency. In addition to the above measures, a consulting auditor will review all expenditure information on a quarterly basis to ensure accuracy. The employees will receive adequate training from the city’s finance office and the consulting auditor. The Utah State Office of Education, who acts as the pass-through entity, has been notified of the single audit findings and has offered assistance to ensure correct reporting. The city believes that the measures above will eliminate reporting errors in the future. In order to correct the error which occurred in the most recently completed fiscal year the city intends to request reimbursement for future period expenses in an amount less than the actual incurred expenses. The city will engage this policy until the overstated expenses are netted to zero. This will occur in the January 2011 – March 2011 period. The anticipated completion date of the corrective action plan is expected to be January 31, 2011. Troy Bennett, Director of Parks & Recreation, will be the contact person responsible for the corrective action plan.

Documents

State of Utah Comprehensive Annual Financial Report€¦ · The City of . South Salt Lake . State of Utah . Comprehensive Annual Financial Report . For Fiscal Year Ended . June 30,