Audit - 2005/2006
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SALINE COUNTY-CITY BUILDING AUTHORI Y
Salina, Kansas
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FINANCIAL STATEMENTS
December 31, 2006 and 2005
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BARTLETT, SETTLE & EDGERLE
A PROFESSIONAL ASSOCIATION
Certified Public Accountants
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SALINE COUNTY-CITY BUILDING AUTHORI~ Y
Salina, Kansas
FINANCIAL STATEMENTS
For the Years Ended December 31,2006 and 200
Table of Contents
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Independent Auditor's Report
Management's Discussion and Analysis
Statements of Net Assets
Statements of Revenues, Expenses, and Changes in Net Assets
Statements of Cash Flows
Notes to Financial Statements
Pa2e
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6
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BARJLEII SEIILE & EffiER.! E
A PROFESSIONAL ASSOCIATION
GERTIFIED PUBLIC ACCOUNTANTS
To the Governing Board
Saline County-City Building Authority
Salina, Kansas
We have audited the accompanying fmancial statements of the business- e activities of the Saline
County-City Building Authority, Salina, Kansas, as of December 31,2006 nd 2005, and for the years
then ended which comprises the Building Authority's basic fmancial stateme ts as shown in the table of
contents. These financial statements are the responsibility ofthe Saline Coun -City Building Authority's
management. Our responsibility is to express an opinion on these financial sta ements based on our audit.
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We conducted our audit in accordance with auditing standards generally acce ted in the United States of
America and the Kansas Municipal Audit Guide. Those standards require th t we plan and perform the
audit to obtain reasonable assurance about whether the financial state ents are free of material
misstatement. An audit includes examining, on a test basis, evidence s pporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our op' ion.
fu our opinion, based on our audit, the financial statements referred to above resent fairly, in all material
respects, the net assets of the Saline County-City Building Authority as of D cember 31, 2006 and 2005
and the revenues, expenses, changes in net assets and cash flows thereof r the years then ended in
conformity with accounting principles generally accepted in the United States f America.
The management's discussion and analysis is not a required part of the basi financial statements but is
supplementary information required by accounting principles generally acce ted in the United States of
America. We have applied certain limited procedures which consisted rincipally of inquiries of
management regarding the methods of measurement and presentation of t e required supplementary
information. However, we did not audit the information and express no opini n on it.
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:B~J~~~
A Professional Association
Hutchinson, Kansas
May 17,2007
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129 WEST SECOND, SUITE A . P.O. Box 2889 . HUTCHINSON, KS 675 4-2889
PHONE: 620.662.3358 . TOLL-FREE: 888.414.0123 . FAX: 620.662.3350 . EM IL: bse@cpabse.com
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MANAGEMENT'S DISCUSSION AND ANAL YS S
As management of the Saline County-City Building Authority (the "Authority'), we offer readers of our
[mancial statements this narrative overview and analysis of the financial activi ies of the Authority for the
fiscal year ended December 31, 2006.
Financial Highlights
. The assets of the Authority exceeded its liabilities at the close of the ost recent fiscal year by
$2,971,212 (net assets). Of this amount, $1,057,047 (unrestricted net ssets) may be used to meet
the Authority's ongoing obligations to customers and creditors.
. The Authority's total net assets increased by $59,197.
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Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the Auth rity's basic financial
statements. Since the Authority is engaged only in business-type activities, its asic financial statements
are comprised of only two components: 1) enterprise fund financial statements and 2) notes to financial
statements.
Enterprise fund financial statements - The enterprise fund [mancial tatements are designed to
provide readers with a broad overview of the Authority's finances, in a manner similar to a
private-sector business.
The statement of net assets presents information on the Authority's ass ts and liabilities, with the
difference between the two reported as net assets. Over time, increase or decreases in net assets
may serve as a useful indicator of whether the [mancial position of the Authority is improving or
deteriorating.
The statement of revenues, expenses and changes in net assets present information showing how
the Authority's net assets changed during the most recent fiscal year. 11 changes in net assets are
reported as soon as the underlying event giving rise to the change occ s, regardless of the timing
of the cash flows. Thus, revenues and expenses are reported in this st ement for some items that
will only result in cash flows in future fiscal periods (e.g., earned but used vacation leave).
Notes to rmancial statements - The notes provide additional informa . on that is essential to a full
understanding of the data provided in the financial statements.
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Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a gove ent's financial position.
In the case of the Authority, assets exceeded liabilities by $2,971,212 at the cl se of the most recent fiscal
year.
The largest portion of the Authority's net assets (64%) reflects its investment i capital assets, less any
related debt used to acquire those assets that is still outstanding. The Authori uses these capital assets to
provide facilities, equipment, and services to its tenants; consequently, these a sets are not available for
future spending. Although the Authority's investment in its capital assets is re orted net of related debt, it
should be noted that the resources needed to repay this debt must be provided om other sources, since
the capital assets themselves cannot be used to liquidate these liabilities.
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Financial Analysis (Continued)
Net ssets
2006 2! ill. 2004
Current and other assets $1,115,182 $ 9 )5,718 $ 934,335
Capital assets 1.914.165 20 8583 1.987.741
Total assets $3.029.347 $30 4301 $2.922.076
Long-term liabilities outstanding $ - $ - $ 43,869
Other liabilities 58.135 1 )2 286 115A7:i
Tota11iabi1ities $ 58.135 $ 1 )2 286 $ 159.342
Net assets:
Invested in capital assets, net of related debt $1,914,165 $2,0 )4,714 $1,902,029
. Unrestricted 1.057 .047 9)7 301 860.70~
Total net assets $2.971.212 $29 2015 $2.762.734
At the end of the current fiscal year, the Authority is able to report positive bah nces in both categories of
net assets. The same situation held true for the prior fiscal year.
Chamres it Net Assets
2006 2! ill. 2004
Operating revenues:
Charges for facilities, equipment and services $ 772.983 $ 8 )3 423 $ 817.793
Nonoperating revenues:
Investment income 42,099 )2,920 5,070
Other nonoperating revenue 1 1.007 5706 8.271
Total nonoperating revenues 53.106 ')8626 13.341
Total revenues 826.089 8,2 049 831.134
Operating expense:
Personnel expense 335,494 318,855 306,104
Depreciation 137,667 l:s 1,530 127,761
Operation and maintenance 249,090 2 )6,089 184,520
Other operating 44.641 ~4 170 38.208
Total operating expense 766,892 7 [)0,644 656,593
Nonoperating expense:
. Interest and fiscal charges - 2124 3.950
Total expense 766.892 7 )2 768 660543
Income (loss) 59,197 U9,281 170,591
Net assets - January 1 2.912.015 27 ,>2 734 2592.141
Net assets - December 31 $2.971.212 $291 2015 $2.762.734
The Authority's net assets increased by $59,197 during the current fiscal year. Operating revenues
decreased by $50,440, or 6.13%, and operating expenses increased by $66,248 or 9.45%. Key elements
of these changes are as follows:
. Salary expenses and related costs increased by approximately $16,639
. Operation and maintenance expenses increased by approximately $43, 01.
. Other operating expenses increased by $471.
. Depreciation of fixed assets increased by $6,137.
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Capital Assets and Debt Administration
Capital Assets - The Authority's investment in capital assets as of December 3 ,2006, amounts to
$1,914,165 (net of accumulated depreciation). This investment in capital asset includes, land and land
improvements, building, motor vehicles, furniture and ftxtures, and maintenanc equipment. The net
decrease in the Authority's investment in capital assets for the current fiscal yea was $134,418. This
decrease is a net ftgure resulting from capital asset additions of$3,460, less reti ement of assets of$211,
and depreciation of $137,667. Additional information related to capital assets i located in Note 6 of the
Notes to Financial Statements.
('anital Assets
(ne of denreciation)
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Land and land improvements
Building
Office furniture, ftxtures and telephone system
Maintenance equipment
Total
2006
$ 306,7; 7
1,491,4)2
95,0 )0
20 976
$1 914 1 '15
2005
$ 313,732
1,579,023
129,894
25.934
$2.048.583
Major capital asset events during the current ftscal year included:
Write-off obsolete or unserviceable equipment having a cost of $27,280,
less accumulated depreciation of $27,069
Long-Term Debt - At the end ofthe current fiscal year, the Authority had no cutstanding long-term debt.
Requests for Information
This financial report is designed to provide a general overview of the Authority's finances for all those
with an interest in the Authority's finances. Questions concerning any of the in ormation provided in this
report or requests for additional ftnancial information should be addressed to tbe Saline County-City
Building Authority, 300 West Ash Street, Salina, KS 67401.
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SALINE COUNTY -CITY BUILDING AUTHORI'l Y
Salina, Kansas
STATEMENTS OF NET ASSETS
December 31,2006 and 2005
~Q!!Q 2005
ASSETS
Current Assets
Cash and cash equivalents $ 1 115,182 $ 965,718
Noncurrent Assets
. Capital assets (net of depreciation) 1 914,165 2,048,583
TOTAL ASSETS $ 3029,347 $ 3,014,301
LIABILITIES
Current Liabilities
Accounts payable $ 26,638 $ 22,573
Accrued interest payable - 2,124
Accrued vacation and sick leave payable 31,497 33,720
Capital lease payable - 43,869
Total current liabilities 58,135 102,286
Lonl!- Term Liabilities
Capita11ease payable - ..
TOTAL LIABILITIES 58,135 102,286
NET ASSETS
Invested in capital assets net of related debt 1914,165 2,004,714
Unrestricted 1 057,047 907,301
Total Net Assets 2 971,212 2,912,015
. TOTAL LIABILITIES AND NET ASSETS $ 3 029,347 $ 3,014,301
. The accompanying notes are an integral part of these financia statements.
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SALINE COUNTY-CITY BUILDING AUTHORIl
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Salina, Kansas
STATEMENTS OF REVENUES, EXPENSES,
AND CHANGES IN NET ASSETS
For the Years Ended December 31, 2006 and 200 5
2006 200Sl
OPERATING REVENUES
Charges for facilities, services and equipment
Saline County 474,594 $ 503,158
City of Salina 290,329 312,565
. Salina Public Library 8,060 7,700
Total operating revenues 772,983 823,423
OPERATING EXPENSES
Personnel costs 335,494 318,855
Maintenance and repairs 92,200 82,410
Supplies and small tools 21,448 17,767
Depreciation 137,667 131,530
Insurance 35,246 32,072
Utilities 135,442 105,912
Contracted services 6,048 7,520
Miscellaneous expenses 3,347 4,578
Total operating expenses 766,892 700,644
Net Operating Income 6,091 122,779
NONOPERATING REVENUE AND EXPENSE
Interest income 42,099 22,920
Interest expense - (2,124)
Vending income (net) 3,270 3,382
Miscellaneous revenue 7,737 2,324
. Total nonoperating revenue and expense 53,106 26,502
Change in Net Assets 59,197 149,281
Net Assets at Beginning of Year 2,912,015 2,762,734
Net Assets at End of Year 2,971,212 $ 2,912,015
. The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY-CITY BUILDING AUTHORI'l Y
Salina, Kansas
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,2006 and 200 .
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received for facility and equipment use $ 772,983 $ 831,123
Cash paid to suppliers (289,466) (266,449)
Cash paid to employees (337,706) (316,285)
Net cash provided by operating activities 145,811 248,389
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CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Purchase of capital assets (3,460) (192,110)
Principal paid on capital debt (43,869) (41,843)
mterest paid on capital debt (2,124) (4,150)
Proceeds from sale of assets - 200
Other receipts 11,007 5,677
Net cash used for capital and related financing activities (38,446) (232,226)
CASH FLOWS FROM INVESTING ACTIVITIES:
mterest received 42,099 22,920
Net cash provided by investing activities 42,099 22,920
Net increase (decrease) in cash and cash equivalents 149,464 39,083
Cash and cash equivalents at beginning of year 965,718 926,635
Cash and cash equivalents at end of year $ 1,115,182 $ 965,718
RECONCILIATION OF OPERATING INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
. Operating income $ 6,091 $ 122,779
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 137,667 131,530
Loss on disposal of assets 211 -
Changes in assets and liabilities:
Receivables - 7,700
Accounts payable 4,055 (16,190)
Accrued expenses (2,213) 2,570
Net cash provided by operating activities $ 145,811 $ 248,389
. The accompanying notes are an integral part of these financial s tatements.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
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Note 1 - Or{!anization and Snmmary of Si{!nificant Accountin{! Policies
A. Reporting Entity - The Saline County-City Building Authority (the" uthority") was formed March
22, 1965, under the Interlocal Cooperation Act of Kansas (KSA 12-2901 to 12-2907). The organizing
agreement was restated January 16, 1996. The Authority is a joint venture 0 ganized by three participating
municipalities for the purpose of acquiring facilities to house and accommoda e the offices of Saline County,
the City of Salina, and the county and city courts, and such other offices as y be expedient, and to equip,
operate, and maintain the facility so acquired.
The governing board of the Authority is composed of seven members, six 0 whom are appointed from the
governing boards of the participating municipalities, and one of who is select d at large by the six appointed
members. The makeup of the appointed members is three from Saline Coun , two from the City of Salina,
and one from the District Court.
B. Measurement Focus and Basis of Accounting - The Authority consis solely of an enterprise fund.
Enterprise funds are classified as proprietary funds by the Governmental Accounting Standards Board
(GASB) and are accounted for using a total economic resource measureme t focus. The enterprise fund
is used to account for operations that are financed and operated in a ma er similar to private business
enterprises. The intent of the Board is that the cost of providing servi es on a continuing basis be
recovered through user fees and rents.
The Authority's financial statements are prepared using the accrual basis of accounting. Revenues are
recorded when earned and expenses are recorded when a liability is incurr d, regardless of the timing of
related cash flows.
As permitted by generally accepted accounting principles, the Autho ty has elected not to apply
Financial Accounting Standards Board pronouncements issued after Nove er 30, 1989.
The Authority distinguishes operating revenues and expenses from no operating items. Operating
revenues and expenses generally result from the providing of services and the related upkeep and
maintenance of building, grounds and equipment owned by the Autho ty. The principal operating
revenues of the Authority are rents and assessments charged to the enti es occupying the Authority's
facilities and for the use of equipment owned by the Authority. Operatin expenses include those costs
necessary for upkeep and maintenance and related administrative expens s and depreciation on capital
assets. All revenues and expenses not meeting this defmition are reported as nonoperating revenues and
expenses.
C. Cash and Cash Equivalents - The Authority's cash and cash equivalent are consider to consist of cash
on hand, demand deposits, and all highly liquid investments (including res cted assets) with maturities of
three months or less when purchased.
D. Capital Assets - Additions to property and equipment are recorded at ost. Maintenance and repairs
are expensed as incurred. When properties are disposed of, the related cost and accumulated depreciation
are removed from the respective accounts and any gain or loss on dispos' tion is credited or charged to
operations.
Assets are depreciated using the straight-line method over the estimated useful lives of the assets as
follows:
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Years
Buildings and Improvements
Equipment
5-50
5-25
E. Inventory - The Building Authority maintains no significant inventory of office and maintenance
supplies. These items are expensed as purchased and no inventory is recor ed in these fmancial
statements.
F. Taxes - The Building Authority is exempt from payment of federal and sta e income, property and certain
other taxes.
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO F1NANCIAL STATEMENTS - continued
December 31, 2006 and 2005
Note 1 - On!anization and Summary of Sil!nificant Accountinl! Policies - continu d
G. Budget Law Compliance - The Saline County-City Builcling Autho 'ty does not have tax levying
powers and is not required to publish a budget. A budget is adopted annua y by the Governing Board for
the purpose of determining appropriations required from participating muni ipalities to cover net operating
and maintenance costs of the building. These appropriations are bome by the participating municipalities.
H. Estimates - The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make es' tes and assumptions that affect
certain reported amounts of assets, liabilities, revenues, and expenses. A cordingly, actual results could
differ from those estimates.
I. Compensated Absences - The Authority compensates employees for th following types of absences at
. their current rate of pay.
A. VACATION - Full-time employees earn from 12 to 21 days of vaca on pay per year based on the
number of years of continuous service. Vacation pay may accumul te to a maximum of 24 days
depending upon the employees' number of years of continuous service. pon tennination, an employee
is entitled to a lump sum payment for all accumulated vacation earned.
B. SICK LEA VE - Full-time employees earn one day of sick leave for each onth of full-time service to be
used for illness or death in the family. Accumulation is unlimited. Upo termination due to retirement,
an employee is entitled to a lump sum payment for one-half of all acc ulated sick leave not to exceed
90 days. Upon termination for any other reason except dismissal for c use, an employee with at least
five continuous years of service is entitled to a lump sum payment for ne-half of all accumulated sick
leave, not to exceed 30 days.
C. PERSONAL LEA VE - One day of persona11eave is granted to each full-' e employee annually. There
is no accumulation of personal leave beyond the year it is allowed.
J. Net Assets - Net assets are the difference between assets and liabilitie. Net assets invested in capital
assets represents capital assets, less accumulated depreciation less any utstancling debt related to the
acquisition, construction or improvement of those assets.
Note 2 - Stewardship. Compliance. and Accountability
Cash-Basis Law (KSA 10-1113) - The Authority was in compliance with this law at all times during the
year.
Depository Security (KSA 9-1402) - The Authority's funds were adequatel secured at all times during the
year.
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Note 3 - Deposits and Investments
As of December 31,2006 and 2005, the Authority had cash and cash equi alents as listed below:
Deposits in fmancia1 banking institutions $1 115 290 $966.426
The Authority did not have any activity in investment-type assets.
The Authority's policies relating to deposits and investments are govern d by various Kansas Statutes
(KSA). Those statutes specify the type of deposits and investments as well as the securing of those
deposits and investments.
Interest rate risk - In accordance with Kansas Statute 12-1675, the Au ority manages its exposure to
interest rate fluctuations by limiting all time investments to maturities ofle s than two years.
Credit risk - State law limits the amount of credit risk by restricting gov ents to specific investment
types as listed in KSA 12-1675. The Authority's policy is to place idle ds in certificates of deposit,
United States obligations, and the Kansas Municipal Investment Pool ( IP). The KMIP was rated
AAAflS1+ by Standard & Poor's as of March 15, 2004. The KMIP 's permitted to invest in fully
collateralized certificates of deposit, certain obligations of the United S tes, certain repurchase/reverse
repurchase agreements, and other types of investments.
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SALINE COUNTY-CITY BIDLDlNG AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2006 and 2005
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Note 3 - Deposits and Investments - continued
Custodial credit risk - The custodial credit risk for deposits is the risk that, in the event of the failure of a
depository fmancial institution, a government will not be able to recover eposits or will not be able to
recover collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty t a transaction, a government
will not be able to recover the value of investment or collateral securities at are in the possession of an
outside party. Kansas Statutes 9-1402 and 9-1405 require that gove ents obtain security for all
deposits. The Authority manages its custodial credit risk by requiring the ancial institutions to grant a
security interest in securities held by third-party custodial banks. Mo' es in the Kansas Municipal
Investment Pool are not required to have pledged securities.
Concentration of credit risk - This is the risk of loss attributed to the gnitude of a government's
investment in a single issuer. The Authority manages this risk by placing ds with financial institutions
only after contacting all eligible institutions in the taxing area and mo . es in the Kansas Municipal
Investment Pool are diverse according to the policies of the investment pool
Note 4 -
Defined Benefit Pension Plan
The non-school municipality participates in the Kansas Public Employees etirement System (KPERS), a
cost-sharing multiple-employer defined benefit pension plan as provided by SA 74-4901, et seq. KPERS
provides retirement benefits, life insurance, disability income benefits, an death benefits. Kansas law
establishes and amends benefit provisions. KPERS issues publicly avail ble financial statements and
required supplementary information. That report may be obtained by ring to KPERS (400 SW 8th
Avenue, Suite 200, Topeka, KS 66603-3925) or by calling 1-800-228-0366.
KSA 74-4919 establishes the KPERS member-employee contribution rate t 4% of covered salary. The
employer collects and remits member-employee contributions according to e provisions of section 414(h)
of the Internal Revenue Code. State law provides that the employer contributi n rate be determined annually
based on the results of an annual actuarial valuation. KPERS is funded on actuarial reserve basis. State
law sets a limitation on annual increases in the contribution rates for KP RS employers. The average
employer rate established by statute for calendar year 2006 is 4.71 %. The no -school municipality employer
contributions to KPERS for the years ending December 31,2006,2005, and 2 04 were $10,516, $8,876, and
$7,743, respectively, equal to the statutory required contributions for each yea.
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Note 5 - Lon!!:-TermDebt
The following summarizes the lease obligations included in the long-term debt
Debt Issue
Date
Issued
Maturity
Date
Original
Amount
Interest
Rate
Telephone Lease Purchase Agreement 2/7/01 2/7/06 $200.000 4.84%
The lease purchase agreements were entered into for the purpose of financ' g a contract for the telephone
system
Annual debt service requirements to maturity for the equipment lease purchase agreement follow:
Year
Principal
Due
Interest
Due
$2.124
Total
Due
$45.993
2006
$43.869
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SALINE COUNTY -CITY BUU,DING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2006 and 2005
Note 6 - Capital Assets
The following summarizes the changes in capital assets for the year ended De ember 31, 2006:
Beginning Ending
Balance Additions Dispositions Balance
Land $ 223,873 $ $ $ 223,873
Parking Lot 128,580 128,580
Building and Improvements 3,263,308 3,263,308
Equipment 475.484 3.460 (27,280) 451.664
Total 4,091,245 3,460 (27,280) 4,067,425
. Accumulated Depreciation (2,042,662) (137,667) 27,069 (2.153.260)
Net Investment in Capital Assets $2,048.583 $(134.207) $ (211) $ 1.914,165
Note 7 - Risk Manal!ement
The Authority is exposed to various levels of loss related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. Th Authority carries commercial
insurance to limit its exposure.
There has been no significant reduction in the Authority's insurance covera e from the previous year. In
addition, there have not been settlements in excess of the Authority's coverag in any of the prior three years.
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