CITY OF CENTER ECONOMIC DEVELOPMENT CORPORATION Center, Texas

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CITY OF CENTER ECONOMIC DEVELOPMENT CORPORATION Center, Texas

Transcript Of CITY OF CENTER ECONOMIC DEVELOPMENT CORPORATION Center, Texas

CITY OF CENTER ECONOMIC DEVELOPMENT CORPORATION
Center, Texas
FINANCIAL STATEMENTS
September 30, 2019

C O N T E N T S
Independent Auditors' Report................................................................................................................. 3 Management's Discussion and Analysis................................................................................................. 5 Governmental Fund Balance Sheet / Statement of Net Position ............................................................ 8 Statement of Governmental Fund Revenues, Expenditures
and Changes in Fund Balance / Statement of Activities ...................................................................... 9 Notes to the Financial Statements........................................................................................................ 10 Required Supplementary Information:
Budgetary Comparison Schedule - General Fund .......................................................................... 14 Supplementary Information:
Project Schedule............................................................................................................................. 16

INDEPENDENT AUDITORS' REPORT
Honorable Mayor and City Council City of Center Center, Texas
We have audited the accompanying financial statements of the City of Center Economic Development Corporation (a nonprofit organization), a component unit of the City of Center, Texas, as of and for the year ended September 30, 2019 and the related notes to the financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and general fund of the City of Center Economic Development Corporation, a component unit of the City of Center, Texas as of September 30, 2019, and the respective changes in financial position and changes in fund balance thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
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Emphasis of Matter
As discussed in Note 1, the financial statements present only the City of Center Economic Development Corporation Fund and do not purport to, and do not present fairly the financial position of the City of Center, Texas as of September 30, 2019, the changes in its financial position, or where applicable, its cash flows for the year ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on pages 5-7 and 14 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Center Economic Development Corporation's basic financial statements. The project schedule on page 16 is presented for purposes of additional analysis and are not a required part of the basic financial statements.
The project schedule is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with the auditing standards generally accepted in the United States of America. In our opinion, the project schedule is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

Lufkin, Texas February 27, 2020

____________________________________ CERTIFIED PUBLIC ACCOUNTANTS

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Management's Discussion and Analysis

As management of the City of Center, Texas, we offer readers of the City of Center Economic Development Corporation's financial statements this narrative overview and analysis of the financial activities of the City of Center Economic Development Corporation "EDC" for the fiscal year ended September 30, 2019. Please read it in conjunction with the financial statements and accompanying notes.

Overview of the Financial Statements

The annual financial report consists of two parts: Management's Discussion and Analysis (this section) and the basic financial statements. City of Center EDC is a self-supporting entity and uses a governmental fund to report operations.

The governmental fund statements tell how general services were financed in the short term as well as what remains for future spending.

The government-wide financial statements provide both long-term and short-term information about the EDC's overall financial status. The government-wide statements are presented in a manner similar to a private business, such as real estate development, investment banking, commercial lending, construction management and private consulting. The statement of net position includes all the EDC's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid.

Financial Highlights



The net position of the EDC exceeded its liabilities at the close of the most recent fiscal year by

$2,317,362.



As of the close of this fiscal year, the EDC reports an ending net position of $2,317,362, this is

an increase of $356,565 from the prior year. The increase is the result of current year revenues

exceeding expenditures.

The following table provides a summary of the EDC's net position:

Cash Investments Due from State Notes receivable Accrued interest receivable Capital assets
TOTAL ASSETS

2019

2018

CHANGE

$

3 192 $

1 807 $

1 385

1 593 605

1 196 287

397 318

32 015

31 840

175

395 750

436 139

(40 389)

4 788

5 194

(406)

289 530

289 530

-

2 318 880

1 960 797

358 083

Accounts payable TOTAL LIABILITIES

1 518 1 518

-

1 518

-

1 518

Net Position: Net investment in capital assets Unrestricted TOTAL NET POSITION

289 530

289 530

2 027 832

1 671 267

$ 2 317 362 $ 1 960 797 $

356 565 356 565

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The following table provides a summary of the EDC's changes in net position:

Revenues: Sales tax Interest TIF loan interest
TOTAL REVENUES

2019

2018

CHANGE

$ 434 229 $ 400 734 $

34 816

18 876

7 440

8 034

476 485

427 644

33 495 15 940
(594)
48 841

Expenses: Administration Contractual Sundry Incentives Other Supplies
TOTAL EXPENSES

55 000 49 357 13 621
1 942
119 920

55 000 32 484
8 372 27 081
318 -
123 255

16 873
5 249 (27 081)
(318) 1 942
(3 335)

CHANGE IN NET POSITION

356 565

304 389

52 176

Beginning net position Prior period adjustment
ENDING NET POSITION

1 960 797

1 704 916

-

(48 508)

$ 2 317 362 $ 1 960 797 $

255 881 48 508
356 565

Government-Wide Financial Analysis:

Net Position. The net position of the EDC is $2,317,362 which is an increase of $356,565 from the prior year. In 2011, the EDC was the lending entity on a loan agreement for financing improvements within the City's Tax Increment Reinvestment Zone #1, reflected in note receivable with a current balance of $240,750. In 2014, the note was refinanced to extend the terms and reduce the annual payment amount.

Fund Financial Analysis:

Fund Balance. The fund balance of the EDC at the close of the fiscal year is $2,027,832. This is an $356,565 increase from last year's fund balance of $1,671,267. The current fund balance includes $240,750 as the balance due to the EDC on the Tax Increment Financing District loan and is not liquid. Cash and investments totaling $1,596,797 comprise the majority of the fund balance and are completely liquid. No portion of the fund balance is currently assigned or committed for future expenditures so that the entire amount is classified as unrestricted.

Operating Activities. This year's operating activities increased the EDC's net operating income by $314,309. Key elements of this increase are as follows:

Revenues from sales taxes increased by $33,495 (8.4%) from the prior year.

Expenses of the EDC decreased $3,335 from the prior year.

Debt and Capital Assets:

Capital Assets. The EDC currently had capital assets consisting of:

Land

2019

2018

$ 289 530 $ 289 530

TOTAL CAPITAL ASSETS

$ 289 530 $ 289 530

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Program Commitments. The EDC currently has workforce training program commitments to Tyson Foods.

Long-Term Debt. The EDC currently has $-0- in outstanding debt.

Economic Factors and Next Year's Budgets and Rates



The unemployment rate as of August 2019 for Shelby County, according to Texas Workforce

Commission statistics is 4.3%. The corresponding unemployment rates for August 2019 according to the Texas Workforce Commission is 3.6% for the State of Texas and 4.1% for the

Deep East Texas Region.



The ¼% sales tax receipts remitted to the 4(A) Economic Development Corporation for the

current fiscal year totaled $434,229. This amount is an increase of $33,495 (8.4%) from the

previous year.



Economic trends in the area lag behind state and nation trends due to transferred oil and gas

industry activity. However, the City has met some success in retaining and recruiting major

employers.

All of these factors were considered in preparing the EDC's budget for the 2020 fiscal year.

Requests for Information

This financial report is designed to provide a general overview of the City of Center EDC for all those with an interest in the EDC's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Center Economic Development Corporation, P. O. Box 1744, 617 Tenaha Street, Center, Texas, 75935-1744.

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CITY OF CENTER ECONOMIC DEVELOPMENT CORPORATION GOVERNMENTAL FUND BALANCE SHEET/
STATEMENT OF NET POSITION September 30, 2019

ASSETS Current Assets:
Cash Investments Due from State Notes receivable Accrued interest receivable
TOTAL CURRENT ASSETS
Capital Assets: Land TOTAL CAPITAL ASSETS
TOTAL ASSETS
TOTAL ASSETS AND DEFERRED OUTFLOWS
LIABILITIES Accounts payable
TOTAL LIABILITIES
FUND BALANCE/NET POSITION Fund Balance:
Unassigned TOTAL FUND BALANCE
TOTAL LIABILITIES AND FUND BALANCE
NET POSITION Investment in capital assets Unrestricted
TOTAL NET POSITION

GENERAL FUND

ADJUSTMENTS

STATEMENT OF NET
POSITION

$

3 192 $

1 593 605

32 015

395 750

4 788

2 029 350

-

$

3 192

-

1 593 605

-

32 015

-

395 750

-

4 788

-

2 029 350

-
2 029 350

289 530 289 530
289 530

289 530 289 530
2 318 880

$ 2 029 350

289 530

2 318 880

$

1 518

1 518

-

1 518

-

1 518

2 027 832 2 027 832
$ 2 029 350

(2 027 832) (2 027 832)
289 530 2 027 832 $ 2 317 362

-
289 530 2 027 832 $ 2 317 362

The accompanying notes to the financial statements are an integral part of this statement. 8

CITY OF CENTER ECONOMIC DEVELOPMENT CORPORATION STATEMENT OF GOVERNMENTAL FUND REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE / STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2019

Revenues: Sales tax TOTAL REVENUES
Expenditures: Administration Contractual Sundry Supplies TOTAL EXPENDITURES
NET OPERATING INCOME
Other Financing Sources (Uses): Interest income TIF loan interest TOTAL OTHER FINANCING SOURCES (USES)
CHANGE IN NET
Fund Balance/Net Position:
Beginning of year
END OF YEAR

GENERAL FUND
$ 434 229 434 229

ADJUSTMENTS

$

-

-

STATEMENT OF
ACTIVITIES
$ 434 229 434 229

55 000 49 357 13 621
1 942 119 920
314 309

-

55 000

-

49 357

-

13 621

-

1 942

-

119 920

-

314 309

34 816 7 440
42 256
356 565

-

34 816

-

7 440

-

42 256

-

356 565

1 671 267 $ 2 027 832 $

289 530 289 530

1 960 797 $ 2 317 362

The accompanying notes to the financial statements are an integral part of this statement. 9

CITY OF CENTER ECONOMIC DEVELOPMENT CORPORATION
NOTES TO THE FINANCIAL STATEMENTS September 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the City of Center Economic Development Corporation "the Corporation" conform to accounting principles generally accepted in the United States of America as applicable to governmental units.

A.

Reporting Entity

The Corporation was organized in 1995 and is a component unit of the City of Center "(City)". The Corporation is a 4A nonprofit industrial development corporation specifically governed by the Development Corporation Act. The purpose of the Corporation is to promote, assist, and enhance economic development.

B.

Measurement Focus, Basis of Accounting and Financial Statement Presentation

The Corporation uses only governmental funds to report their operations and are engaged in a single program. For this reason, the Corporation has combined their fund financial statements and their government-wide financial statements by providing a columnar (line-by-line) reconciliation on the face of the financial statements.

Government-wide financial statements are reported using the economic resources measurement focus and 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.

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, revenues are considered 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 are recorded only when payment is due.

The following governmental fund is reported:

The general fund is the primary operating fund. It accounts for all financial resources.

NOTE 2 - DEPOSITS AND INVESTMENTS

The Corporation is authorized to invest in securities that are listed in Texas House Bill 2459, Public Funds Investment Act of 1995.

The Corporation's deposits were fully insured or collateralized as required at September 30, 2019. At year end, the carrying amount of deposits in the Corporation's operating account was $3,192 and the respective bank balance totaled $3,264.

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