Audit - 2004/2005
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
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FINANCIAL STATEMENTS
December 31, 2005 and 2004
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BARTLETT, SETTLE & EDGERLE
A PROFESSIONAL ASSOCIATION
Certified Public Accountants
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
FINANCIAL STATEMENTS
For the Years Ended December 31, 2005 and 2004
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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2-4
5
6
7
8 - 11
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BAl{fLETT SETTLE & EffiE~LE
A PROFESSIONAL ASSOCIATION
CERTIFIED PUBLIC ACCOUNTANTS
To the Governing Board
Saline County-City Building Authority
Salina, Kansas
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We have audited the accompanying financial statements of the business-type activities of the Saline
County-City Building Authority, Salina, Kansas, as of December 31, 2005 and 2004, and for the years
then ended which comprises the Building Authority's basic financial statements as shown in the table of
contents. These financial statements are the responsibility of the Saline County-City Building Authority's
management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the Kansas Municipal Audit Guide. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall fmancial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit, the financial statements referred to above present fairly, in all material
respects, the net assets of the Saline County-City Building Authority as of December 31, 2005 and 2004
and the revenues, expenses, changes in net assets and cash flows thereof for the years then ended in
conformity with accounting principles generally accepted in the United States of America.
The management's discussion and analysis is not a required part of the basic financial statements but is
supplementary information required by accounting principles generally accepted in the United States of
America. We have applied certain limited procedures which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express on opinion on it.
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~,So~+-~
A Professional Association
Hutchinson, Kansas
March 1, 2006
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129 WEST SECO'lD, Sun A . PO. Box 2889 . Hl'TCHINSON, KS 67504-2889
PHONE: 620.662.3358 . TOll-FREE: 888.414.0123 . FAX: 620.662.3350 . E'.1AIL: bse@cpabse.com
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MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the Saline County-City Building Authority (the "Authority"), we offer readers of our
financial statements this narrative overview and analysis of the financial activities of the Authority for the
fiscal year ended December 31, 2005.
Financial IDghlights
. The assets of the Authority exceeded its liabilities at the close of the most recent fiscal year by
$2,912,015 (net assets). Of this amount, $907,301 (unrestricted net assets) may be used to meet
the Authority's ongoing obligations to customers and creditors.
. The Authority's total net assets increased by $149,281.
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Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the Authority's basic financial
statements. Since the Authority is engaged only in business-type activities, its basic 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 fmancial statements 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 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 Authority is improving or
deteriorating.
The statement of revenues, expenses and changes in fund net assets presents information showing
how the Authority'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 the 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., earned but unused vacation
leave).
The basic enterprise fund financial statements can be found on pages 5 through 7 of this report.
Notes to financial statements - The notes provide additional information that is essential to a full
understanding of the data provided in the fmancial statements. The notes to the fmancial
statements can be found on pages 8 through 11 of this report.
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Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's fmancial position.
In the case of the Authority, assets exceeded liabilities by $2,912,015 at the close of the most recent fiscal
year.
The largest portion of the Authority's net assets (67%) reflects its investment in capital assets, less any
related debt used to acquire those assets that is still outstanding. The Authority uses these capital assets to
provide facilities, equipment, and services to its tenants; consequently, these assets are not available for
future spending. Although the Authority'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.
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Financial Analysis (Continued)
Net Assets
2005 2004 2003
Current and other assets $ 965,718 $ 934,335 $ 742,879
Capital assets 2.048.583 1.987.741 2.033.860
Total assets $3.014.301 $2.922.076 $2.776.739
Long-term liabilities outstanding $ $ 43,869 $ 85,711
Other liabilities 102.286 115.473 98.885
Total liabilities $ 102.286 $ 159.342 $ 184.596
Net assets:
Invested in capital assets, net of related debt $2,004,714 $1,902,029 $1,908,238
Unrestricted 907.301 860.705 683.905
. Total net assets $2.912.015 $2.762.734 $2.592.143
At the end of the current fiscal year, the Authority is able to report positive balances in both categories of
net assets. The same situation held true for the prior fiscal year.
Changes in Net Assets
2005 2004 2003
Operating revenues:
Charges for facilities, equipment and services $ 823.423 $ 817.793 $ 831.393
Nonoperating revenues:
Investment income 22,920 5,070 2,384
Other nonoperating revenue 5.706 8.271 3.862
Total nonoperating revenues 28.626 13.341 6.246
Total revenues 852.049 831.134 837.639
Operating expense:
Personnel expense 318,855 306,104 340,727
Depreciation 131,530 127,761 122,900
Operation and maintenance 206,089 184,520 231,262
Other operating 44.170 38.208 35.050
Total operating expense 700.644 656.593 729.939
Nonoperating expense:
. Interest and fiscal charges 2.124 3.950 3.295
Total expense 702.768 660.543 733.234
Income (loss) 149,281 170,591 104,405
Net assets - January 1 2.762.734 2.592.143 2.487.738
Net assets - December 31 $2.912.015 $2.762.734 $2.592.143
The Authority's net assets increased by $149,281 during the current fiscal year. Operating revenues
increased by $5,630, or 0.69%, and operating expenses decreased by $44,051, or 6.71%. Key elements of
these changes are as follows:
. Salary expenses and related costs increased by approximately $12,751.
. Operation and maintenance expenses increased by approximately $21,569.
. Other operating expenses increased by $5,962.
. Depreciation of fixed assets increased by $3,769.
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Capital Asset and Debt Administration
Capital assets - The Authority's investment in capital assets as of December 31, 2005, amounts to
$2,048,583 (net of accumulated depreciation). This investment in capital assets includes, land and land
improvements, building, motor vehicles, furniture and ftxtures, and maintenance equipment. The net
increase in the Authority's investment in capital assets for the current ftscal year was $60,842. This
increase is a net ftgure resulting from capital assets additions of $192,542, less retirement of assets of
$170, and depreciation of $131 ,530. Additional information related to capital assets is located in Note 6
ofthe Notes to Financial Statements.
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Land and land improvements
Building
Offtce furniture, ftxtures and telephone system
Maintenance equipment
Total
Major capital asset events during the current ftscal year included:
Roof replacements
Ceiling tile replacements
Parking lot improvements
Equipment additions
Window replacements
Capital Assets
(net of depreciation)
2005
$ 313,732
1,579,023
129,894
25.934
$2.048.583
2004
$ 309,749
1,460,665
161,619
55.708
$1.987.741
$ 160834
11,445
10,454
7,034
2,775
Long-Term Debt - At the end of the current ftscal year, the Authority had an outstanding principal
balance of $43,869 on a telephone system lease purchase agreement versus $85,712 last year, a decrease
of 49%. The key factor in this decrease was principal payment on outstanding obligations.
Requests for Information
This ftnancial report is designed to provide a general overview of the Authority's fmances for all those
with an interest in the Authority's fmances. Questions concerning any of the information provided in this
report or requests for additional fmancial information should be addressed to the Saline County-City
Building Authority, 300 West Ash Street, Salina, KS 67401.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
STATEMENTS OF NET ASSETS
December 31, 2005 and 2004
2005 2004
ASSETS
Current Assets
Cash and cash equivalents $ 965,718 $ 926,635
Receivables (net) 7,700
Total current assets 965,718 934,335
. Noncurrent Assets
Capital assets (net of depreciation) 2,048,583 1,987,741
TOTAL ASSETS $ 3,014,301 $ 2,922,076
LIABILITIES
Current Liabilities
Accounts payable $ 22,573 $ 38,330
Accrued interest payable 2,124 4,150
Accrued vacation and sick leave payable 33,720 31,150
Capital lease payable 43,869 41,843
Total current liabilities 102,286 115,473
Lon2-term liabilities:
Capital lease payable 43,869
Total Liabilities 102,286 159,342
NET ASSETS
Invested in capital assets net of related debt 2,004,714 1,902,029
Unrestricted 907,301 860,705
. Total Net Assets 2,912,015 2,762,734
TOTAL LIABILITIES AND NET ASSETS $ 3,014,301 $ 2,922,076
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The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
STATEMENTS OF REVENUES, EXPENSES,
AND CHANGES IN NET ASSETS
For the Years Ended December 31, 2005 and 2004
2005 2004
OPERATING REVENUES
Charges for facilities, services and equipment
Saline County $ 503,158 $ 499,668
City of Salina 312,565 310,425
I. Salina Public Library 7,700 7,700
Total operating revenues 823,423 817,793
OPERATING EXPENSES
Personnel costs 318,855 306,104
Maintenance and repairs 82,410 63,097
Supplies and small tools 17,767 19,580
Depreciation 131,530 127,761
Insurance 32,072 30,162
Utilities 105,912 101,843
Contracted services 7,520 5,056
Miscellaneous expenses 4,578 2,990
Total operating expenses 700,644 656,593
Net Operating Income 122,779 161,200
NONOPERATING REVENUE AND EXPENSE
Interest income 22,920 5,070
Interest expense (2,124) (3,950)
Vending income (net) 3,382 3,169
Miscellaneous revenue 2,324 5,102
. Total nonoperating revenue and expense 26,502 9,391
Change in Net Assets 149,281 170,591
Net Assets at Beginning of Year 2,762,734 2,592,143
Net Assets at End of Year $ 2,912,015 $ 2,762,734
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The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2005 and 2004
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received for facility and equipment use $ 831,123 $ 810,093
Cash paid to suppliers (266,449) (209,588)
Cash paid to employees (316,285) (302,456)
Net cash provided by operating activities 248,389 298,049
. CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Purchase of capital assets (192,110) (78,147)
Principal paid on capital debt (41,843) (39,910)
Interest paid on capital debt (4,150) (6,082)
Proceeds from sale of assets 200
Other receipts 5,677 4,776
Net cash used for capital and related financing activities (232,226) (119,363)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 22,920 5,070
Net cash provided by investing activities 22,920 5,070
Net increase (decrease) in cash and cash equivalents 39,083 183,756
Cash and cash equivalents at beginning of year 926,635 742,879
Cash and cash equivalents at end of year $ 965,718 $ 926,635
RECONCILIATION OF OPERATING INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
. Operating income $ 122,779 $ 161,200
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 131,530 127,761
Changes in assets and liabilities:
Receivables 7,700 (7,700)
Accounts payable (16,190) 13,140
Accrued expenses 2,570 3,648
Net cash provided by operating activities $ 248,389 $ 298,049
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The accompanying notes are an integral part of these financial statements.
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Note 1 -
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31,2005 and 2004
Orl!anization and Summarv of Sil!Dificant Accountinl! Policies
A. Reporting Entity - The Saline County-City Building Authority (the "Authority") 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 organized by three participating
municipalities for the purpose of acquiring facilities to house and accommodate the offices of Saline County,
the City of Salina, and the county and city courts, and such other offices as may be expedient, and to equip,
operate, and maintain the facility so acquired.
The governing board of the Authority is composed of seven members, six of whom are appointed from the
governing boards of the participating municipalities, and one of who is selected at large by the six appointed
members. The makeup of the appointed members is three from Saline County, two from the City of Salina,
and one from the District Court.
B. Measurement Focus and Basis of Accounting - The Authority consists 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 measurement focus. The enterprise fund
is used to account for operations that are fmanced and operated in a manner similar to private business
enterprises. The intent of the Board is that the cost of providing services on a continuing basis be
recovered through user fees and rents.
The Authority's fmancial statements are prepared using the accrual basis of accounting. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows.
As permitted by generally accepted accounting principles, the Authority has elected not to apply
Financial Accounting Standards Board pronouncements issued after November 30, 1989.
The Authority distinguishes operating revenues and expenses from nonoperating 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 Authority. The principal operating
revenues of the Authority are rents and assessments charged to the entities occupying the Authority's
facilities and for the use of equipment owned by the Authority. Operating expenses include those costs
necessary for upkeep and maintenance and related administrative expenses 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 equivalents are consider to consist of cash
on hand, demand deposits, and all highly liquid investments (including restricted assets) with maturities of
three months or less when purchased.
D. Capital Assets - Additions to property and equipment are recorded at cost. 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 disposition is credited or charged to
operations.
Assets are depreciated using the straight-line method over the estimated useful lives of the assets as
follows:
Years
Buildings and Improvements 5-50
Equipment 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 recorded in these financial
statements.
F. Taxes - The Building Authority is exempt from payment offederal and state income, property and certain
other taxes.
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2005 and 2004
Note 1 -
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Note 2 -
Note 3 -
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Ore:anization and Summary of Sie:nificant Accountine: Policies - continued
G. Budget Law Compliance - The Saline County-City Building Authority does not have tax levying powers
and is not required to publish a budget. A budget is adopted annually by the Governing Board for the
purpose of determining appropriations required from participating municipalities to cover net operating and
maintenance costs of the building. These appropriations are borne 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 estimates and assumptions that affect
certain reported amounts of assets, liabilities, revenues, and expenses. Accordingly, actual results could
differ from those estimates.
I. Compensated Absences - The Authority compensates employees for the following types of absences at
their current rate of pay.
A. VACATION - Full-time employees earn from 12 to 21 days of vacation pay per year based on the
nwnber of years of continupus service. Vacation pay may accumulate to a maxinnun of 24 days
depending upon the employees' nwnber of years of continuous service. Upon 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 month of full-time service to be
used for illness or death in the family. Accumulation is unlimited. Upon termination due to retirement,
an employee is entitled to a lump sum payment for one-half of all accumulated sick leave not to exceed
90 days. Upon termination for any other reason except dismissal for cause, an employee with at least
five continuous years of service is entitled to a lump sum payment for one-half of all accumulated sick
leave, not to exceed 30 days.
C. PERSONAL LEA VE - One day of personal leave is granted to each full-time 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 liabilities. Net assets invested in capital
assets represents capital assets, less accumulated depreciation less any outstanding debt related to the
acquisition, construction or improvement of those assets.
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 adequately secured at all times during the
year.
Deposits and Investments
As of December 31, 2005 and 2004, the Authority had cash and cash equivalents as listed below:
Deposits in fmancial banking institutions $966.426 $935.054
The Authority did not have any activity in investment-type assets.
The Authority's policies relating to deposits and investments are governed 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 Authority manages its exposure to
interest rate fluctuations by limiting all time investments to maturities ofless than two years.
Credit risk - State law limits the amount of credit risk by restricting governments to specific investment
types as listed in KSA 12-1675. The Authority's policy is to place idle funds in certificates of deposit,
United States obligations, and the Kansas Municipal Investment Pool (KMIP). The KMIP was rated
AAAflS1+ by Standard & Poor's as of March 15, 2004. The KMIP is permitted to invest in fully
collateralized certificates of deposit, certain obligations of the United States, certain repurchase/reverse
repurchase agreements, and other types of investments. Maturity information released by the KMIP at
September 30, 2005 showed that the investment pool consisted of investment with a maturity date of 365
days or less.
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2005 and 2004
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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 financial institution, a government will not be able to recover deposits 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 to a transaction, a government
will not be able to recover the value of investment or collateral securities that are in the possession of an
outside party. Kansas Statutes 9-1402 and 9-1405 require that governments obtain security for all
deposits. The Authority manages its custodial credit risk by requiring the fInancial institutions to grant a
security interest in securities held by third-party custodial banks. Monies 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 magnitude of a government's
investment in a single issuer. The Authority manages this risk by placing funds with fmancial institutions
only after contacting all eligible institutions in the taxing area and monies 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 Retirement System (KPERS), a
cost-sharing nmltiple-employer defmed benefIt pension plan as provided by KSA 74-4901, et seq. KPERS
provides retirement benefIts, life insurance, disability income benefIts, and death benefIts. Kansas law
establishes and amends benefIt provisions. KPERS issues publicly available fInancial statements and
required supplementary information. That report may be obtained by writing 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 at 4% of covered salary. The
employer collects and remits member-employee contributions according to the provisions of section 414(h)
of the Internal Revenue Code. State law provides that the employer contnbution rate be determined annually
based on the results of an annual actuarial valuation. KPERS is funded on an actuarial reserve basis. State
law sets a limitation on annual increases in the contnbution rates for KPERS employers. The employer rate
established by statute for calendar year 2005 is 2.93%. The non-school municipality employer contnbutions
to KPERS for the years ending December 31,2005 and 2004 were $8,876 and $7,743, respectively, equal to
the statutory required contributions for each year.
Note 5 - Lonl!- Term Debt
The following summarizes the lease obligations included in the long-term debt:
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Debt Issue
Date
Issued
Maturitv
Date
0ri1rina1
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 fInancing a contract for the telephone
system
Annual debt service requirements to maturity for the equipment lease purchase agreement follow:
Year
2006
Principal
Due
Interest
Due
Total
Due
$~
$Ul4
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2005 and 2004
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Note 6 - Capital Assets
The following sunnnarizes the changes in capital assets for the year ended December 31, 2005:
Belrinninl!: Ending
Balance Additions Dispositions Balance
$ 223,873
128,580
3,263,308
475.484
4,091,245
(2.042.662)
$ 2.048.583
Land $ 223,873 $ $
Parking Lot 118,126 10,454
Building and Improvements 3,088,254 175,054
Equipment 475.674 7.034 (7.224)
Total 3,905,927 192,542 (7,224)
. Accumulated Depreciation 0.918.186) (131.530) 7.054
Net Investment in Capital Assets $ 1.987.741 $ 61.012 $~
Note 7 - Risk Manae: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.
There bas been no significant reduction in the Authority's insurance coverage from the previous year. In
addition, there have been not settlements in excess of the Authority's coverage in any of the prior three years.
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