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Home My WebLink About2007 CAFR Part 2 COUNTY OF HAWAII Statement of Net Assets June 30,2007 Primary Government Governmental Business-type Component Activities Activities Total Unit Assets Current assets: Cash and cash equivalents(notes 3 and 14) $136,604,924 $ 282,333 $136,887,257 $ 3,806,266 Restricted cash and cash equivalents(note 3) 80,569 32,634 113,203 - Investments(notes 3 and 14) 128,713,405 700,000 129,413,405 47,091,515 Receivables,net(note 4) 26,142,765 60,240 26,203,005 5,577,145 Receivable from improvement district (notes 4 and 10) 85,802 - 85,802 - Internal balances(note 5) 2,700 (2,700) - - Inventories 2,243,984 - 2,243,984 1,201,276 Prepaid expenses - 1,369 1,369 248,691 Other 2,261,638 - 2,261,638 - Total current assets 296,135,787 1,073,876 297,209,663 57,924,893 Investments(note 3) 25,000,000 - 25,000,000 - Restricted cash and cash equivalents(note 3) - 198,585 198,585 - Restricted investments(note 14) - - - 16,207,996 Loans receivable,excluding current portion - - - 384,544 Receivable from improvement district,excluding current portion(notes 4 and 10) 3,719,135 - 3,719,135 - Deferred charges - - - 6,917,791 Capital assets(notes 6, 8 and 14): Utility plant in service,net - - - 154,841,401 Infrastructure assets,net 157,241,475 - 157,241,475 - Ground and site improvements,net - 86,352 86,352 - Buildings and improvements,net 219,677,063 452,804 220,129,867 - Equipment,net 36,237,623 13,230 36,250,853 - Construction work in progress 109,766,441 - 109,766,441 42,489,082 Land 22,999,168 753,877 23,753,045 815,962 Total capital assets,net 545,921,770 1,306,263 547,228,033 198,146,445 Total noncurrent assets 574,640,905 1,504,848 576,145,753 221,656,776 Total assets 870,776,692 2,578,724 873,355,416 279,581,669 (Continued) -24- COUNTY OF HAWAII Statement of Net Assets June 30,2007 (Concluded) Primary Government Governmental Business-type Component Activities Activities Total Unit Liabilities Current liabilities: Accounts payable and accrued liabilities $ 8,210,114 $ 449,015 $ 8,659,129 $ 3,568,169 Unearned revenue(note 7) 11,137,422 2,858 11,140,280 - Interest due on long-term debt 5,270,995 - 5,270,995 395,883 Bonds and loans payable,current portion net (notes 10 and 14) 14,990,831 24,994 15,015,825 2,200,000 Compensated absences,current portion(note 10) 6,606,708 - 6,606,708 1,516,141 Claims and judgments,current portion (notes 10, 12 and 14) 3,282,252 - 3,282,252 45,187 Capital leases,current portion(notes 8 and 10) 1,418,078 - 1,418,078 - Landfill costs payable,current portion (notes 9 and 10) 183,103 - 183,103 - Customers'deposits for service connections - - - 748,395 Other 3,818,702 - 3,818,702 - Total current liabilities 54,918,205 476,867 55,395,072 8,473,775 Noncurrent liabilities: Bonds and loans payable,net (notes 10 and 14) 286,968,694 970,860 287,939,554 40,108,135 Compensated absences(note 10) 19,141,450 - 19,141,450 1,029,545 Claims and judgments(notes 10, 12 and 14) 15,026,040 - 15,026,040 156,813 Capital leases(notes 8 and 10) 2,667,657 - 2,667,657 - Landfill costs payable(notes 9 and 10) 21,057,897 - 21,057,897 - Customers'deposits payable from restricted assets - - - 16,207,996 Total noncurrent liabilities 344,861,738 970,860 345,832,598 57,502,489 Total liabilities 399,779,943 1,447,727 401,227,670 65,976,264 Net Assets Invested in capital assets,net of related debt 394,789,635 310,409 395,100,044 179,984,628 Restricted for: Capital projects 36,095,871 - 36,095,871 - Debt service(note 10) 18,761,152 183,832 18,944,984 - Unrestricted 21,350,091 636,756 21,986,847 33,620,777 Total net assets $470,996,749 $ 1,130,997 $472,127,746 $213,605,405 See accompanying notes to the basic financial statements. -25 - COUNTY OF HAWAII Statement of Activities For the Fiscal Year Ended June 30,2007 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government $ 46,349,904 $ 4,460,016 $ 3,167,784 $ 4,050,900 Public safety 118,010,316 5,798,126 17,083,062 213,626 Highways and streets 28,185,968 9,354,639 409,198 3,020,115 Health,education and welfare 23,203,874 799,075 15,500,768 - Culture and recreation 26,948,501 1,634,008 620,032 521,345 Sanitation 42,682,281 18,486,502 1,287,294 - Interest on long-term debt 10,303,332 - - - Total governmental activities 295,684,176 40,532,366 38,068,138 7,805,986 Business-type activities: Health,education and welfare 698,329 345,802 134,211 - Total primary government $ 296,382,505 $ 40,878,168 $ 38,202,349 $ 7,805,986 Component unit: Water(note 14) $ 40,468,835 $ 38,524,965 $ - $ 5,730,506 General revenues: Taxes: Property taxes,levied for general purposes Public service company taxes Franchise taxes Fuel taxes Grants and contributions not restricted to specific programs Investment earnings Miscellaneous Total general revenues Change in net assets See accompanying notes to the basic financial statements. -26- Net(Expense)Revenue and Changes in Net Assets Primary Government Governmental Business-type Component Activities Activities Total Unit $ (34,671,204) $ - $(34,671,204) $ - (94,915,502) - (94,915,502) - (15,402,016) - (15,402,016) - (6,904,031) - (6,904,031) - (24,173,116) - (24,173,116) - (22,908,485) - (22,908,485) - (10,303,332) - (10,303,332) - (209,277,686) - (209,277,686) - (218,316) (218,316) - (209,277,686) (218,316) (209,496,002) - - - - 3,786,636 183,611,050 - 183,611,050 - 7,396,084 - 7,396,084 - 8,520,133 - 8,520,133 - 8,471,453 - 8,471,453 - 18,999,596 - 18,999,596 - 9,727,911 35,551 9,763,462 2,251,239 3,063,413 - 3,063,413 101,518 239,789,640 35,551 239,825,191 2,352,757 30,511,954 (182,765) 30,329,189 6,139,393 440,484,795 1,313,762 441,798,557 207,466,012 $470,996,749 5 1,130,997 $472,127,746 $213,605,405 -27- COUNTY OF HAWAII Governmental Funds Balance Sheet June 30,2007 Other Total Capital Governmental Governmental General Projects Funds Funds Assets Cash and cash equivalents(note 3) $ 29,133,610 $ 70,682,984 $36,788,330 $136,604,924 Investments(note 3) 15,689,391 118,794,414 19,229,600 153,713,405 Receivables,net(note 4) 7,631,259 878,665 3,022,627 11,532,551 Due from other governmental funds(note 5) 421,359 265,242 383,115 1,069,716 Due from other nongovernmental funds(note 5) - - 2,700 2,700 Receivables from other governments(note 4) 6,373,988 7,516,935 719,291 14,610,214 Restricted cash with escrow(note 3) 80,569 - - 80,569 Inventories 2,243,984 - - 2,243,984 Other 612,879 - 1,648,759 2,261,638 Total assets $ 62,187,039 $ 198,138.240 $61,794,422 $322,119,701 Liabilities and Fund Balances Liabilities: Accounts payable $ 2,604,045 $ 3,155,443 $ 2,450,626 $ 8,210,114 Due to other governmental funds(note 5) 262,419 285,779 521,518 1,069,716 Deferred revenue(note 7) 11,332,238 7,407,157 3,051,914 21,791,309 Other 3,377,986 - 440,716 3,818,702 Total liabilities 17,576,688 10,848,379 6,464,774 34,889,841 Fund balances: Reserved for: Encumbrances 12,518,470 47,693,607 11,693,752 71,905,829 Inventories 2,243,984 - - 2,243,984 Taxicab investigations 63,388 - - 63,388 Liquor control 833,841 - - 833,841 Unexpended allotments - 43,912,039 - 43,912,039 Debt service(note 10) - - 18,761,152 18,761,152 Unreserved,reported in: General fund 28,950,668 - - 28,950,668 Special revenue funds - - 24,874,744 24,874,744 Capital projects funds - 95,684,215 - 95,684,215 Total fund balances 44,610,351 187,289,861 55,329,648 287,229,860 Total liabilities and fund balances $ 62,187,039 $ 198,138,240 $61,794,422 $322,119,701 See accompanying notes to the basic financial statements. -28- COUNTY OF HAWAII Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30,2007 Total fund balances-governmental funds $287,229,860 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. These assets consist of. Land 22,999,168 Infrastructure assets,net 157,241,475 Buildings and improvements,net 219,677,063 Equipment,net 36,237,623 Construction work in progress 109,766,441 Total capital assets 545,921,770 Some of the County's revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures and therefore are deferred(unearned)in the funds.(note 7) 10,653,887 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Those liabilities consist of Bonds and loans payable,net of receivable from improvement district (298,154,588) Accrued interest on bonds (5,270,995) Capital leases (4,085,735) Compensated absences (25,748,158) Claims and judgments (18,308,292) Landfill closure/postclosure costs (21,241,000) Total long-term liabilities (372,808,768) Net assets of governmental activities $470,996,749 See accompanying notes to the basic financial statements. -29 - COUNTY OF HAWAII Governmental Funds Statement of Revenues,Expenditures,and Changes in Fund Balances For the Fiscal Year Ended June 30,2007 Other Total Capital Governmental Governmental General Projects Funds Funds Revenues Property tax $181,445,952 $ - $ - $181,445,952 Public service company tax 7,396,084 - - 7,396,084 Fuel tax - - 8,471,453 8,471,453 Public utility franchise tax - - 8,520,133 8,520,133 Licenses and permits 7,218,217 - 9,050,770 16,268,987 Intergovernmental 45,997,340 2,705,683 14,896,173 63,599,196 Charges for services 4,474,017 - 17,211,003 21,685,020 Investment earnings 10,111,061 - 179,413 10,290,474 Miscellaneous 1,951,555 1,736,618 1,384,722 5,072,895 Total revenues 258,594,226 4,442,301 59,713,667 322,750,194 Expenditures Current: General government 37,651,563 - - 37,651,563 Public safety 88,325,293 - 4,916,044 93,241,337 Highways and streets 3,012,228 - 11,020,819 14,033,047 Sanitation 1,029,073 - 30,787,535 31,816,608 Health,education and welfare 6,232,515 - 15,237,486 21,470,001 Culture and recreation 16,271,995 - 845,649 17,117,644 Pension and retirement contributions(note 13) 18,593,349 - 3,202,556 21,795,905 Employees'health insurance 15,543,842 - 1,397,266 16,941,108 Miscellaneous 4,096,314 - 1,011,680 5,107,994 Debt service: Principal 360,668 - 15,715,681 16,076,349 Interest 38,286 - 9,856,196 9,894,482 Capital outlay 4,247,771 48,037,148 - 52,284,919 Total expenditures 195,402,897 48,037,148 93,990,912 337,430,957 Excess(deficiency)of revenues over expenditures 63,191,329 (43,594,847) (34,277,245) (14,680,763) (Continued) - 30- COUNTY OF HAWAII Governmental Funds Statement of Revenues,Expenditures,and Changes in Fund Balances For the Fiscal Year Ended June 30,2007 (Concluded) Other Total Capital Governmental Governmental General Projects Funds Funds Other Financing Sources(Uses),including transfers Sale of assets $ 5,000 $ - $ - $ 5,000 Increase in capital leases(note 10) - - 2,402,731 2,402,731 State Revolving Fund loans(note 10) - 6,254,922 - 6,254,922 Sale of bonds(note 10) - 85,000,000 - 85,000,000 Premium on bonds(note 10) 1,309,803 1,789,402 - 3,099,205 Refunding bonds(note 10) 31,607,388 - - 31,607,388 Refunding bonds issuance costs(note 10) (218,518) - - (218,518) Payment to refunded bond escrow agent(note 10) (32,698,673) - - (32,698,673) Transfers in(note 5) - 15,386,503 43,752,217 59,138,720 Transfers out(note 5) (52,997,033) - (6,141,687) (59,138,720) Total other financing sources(uses) (52,992,033) 108,430,827 40,013,261 95,452,055 Net change in fund balances 10,199,296 64,835,980 5,736,016 80,771,292 Fund balance at beginning of year 34,965,207 122,453,881 49,593,632 207,012,720 Decrease in reserve for inventories (554,152) - - (554,152) Fund balance at end of year $ 44,610,351 $187,289,861 $55,329,648 $287,229,860 See accompanying notes to the basic financial statements. - 31 - COUNTY OF HAWAII Reconciliation of the Change in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2007 Net change in fund balances-total governmental funds $ 80,771,292 Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities,the cost of capital assets is allocated over their estimated useful lives as depreciation expense. In the current period,these amounts are: Capital outlay and dedicated property 49,723,184 Depreciation expense and loss on disposals (20,402,006) Excess of capital outlay over depreciation expense 29,321,178 Borrowings provide current financial resources to governmental funds; however,issuing debt increases long-term liabilities in the statement of net assets. In the current period,proceeds were received from: General obligation bonds,net of refunding (85,185,214) Premium on bond issuance (1,789,402) Deferred amount on refunding of bonds 1,534,757 SRF loan obligations (6,254,922) Capital lease obligations (2,402,731) Total debt proceeds (94,097,512) Repayment of long-term debt is reported as an expenditure in governmental funds,but the repayment reduces long-term liabilities in the statement of net assets. In the current year,these amounts consist of: Bond principal retirement,net of refunding 12,473,327 SRF loan repayment 2,421,513 Capital lease payments 1,181,510 Total long-term debt repayment 16,076,350 Because some revenues will not be collected for several months after the County's fiscal year end,they are not considered"available"revenues and are"deferred" in the governmental funds. Unearned revenues decreased by this amount this year. 1,980,870 (Continued) -32- COUNTY OF HAWAII Reconciliation of the Change in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30,2007 (Concluded) Some items reported in the statement of activities do not involve current financial resources and therefore are not reported as expenditures in governmental funds. These activities are: Decrease in inventory $ (554,152) Increase in compensated absences (1,681,778) Decrease in claims and judgments 3,032,101 Increase in landfill c losure/postclo sure care costs (2,578,000) Amortization of premium from bond issuance 226,272 Amortization of deferred amount on refunding of bonds (206,138) Net increase in accrued interest (1,778,529) Net additional expenditures (3,540,224) Change in net assets of governmental activities S 30,511,954 See accompanying notes to the basic financial statements. -33 - COUNTY OF HAWAII General Fund Statement of Revenues,Expenditures and Changes in Fund Balance- Budget and Actual(Budgetary Basis) For the Fiscal Year Ended June 30,2007 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Taxes and assessments: Real property taxes $ 183,695,000 $ 183,695,000 $ 181,445,952 $ (2,249,048) Public service company taxes 7,300,000 7,300,000 7,396,084 96,084 Total taxes and assessments 190,995,000 190,995,000 188,842,036 (2,152,964) Licenses and permits: Nonbusiness licenses and permits 3,983,805 3,983,805 4,288,651 304,846 Business licenses 1,489,199 1,489,199 1,341,681 (147,518) Street use 1,599,000 1,599,000 1,587,885 (11,115) Total licenses and permits 7,072,004 7,072,004 7,218,217 146,213 Intergovernmental: Federal: Programs for the aged 2,180,304 2,457,064 1,957,614 (499,450) Community development block grants - 2,438,491 2,438,491 - HOME program grant - 995,756 995,756 Law enforcement 1,951,836 2,432,583 1,833,302 (599,281) Other 2,822,895 3,892,611 2,974,268 (918,343) Total federal 6,955,035 12,216,505 10,199,431 (2,017,074) State: State General Fund-Act 185, SLH 1990 19,198,000 19,198,000 18,690,646 (507,354) Emergency medical services 11,820,968 11,820,968 10,721,402 (1,099,566) Other 4,217,946 7,783,741 7,168,761 (614,980) Child support enforcement 1,082,357 1,082,357 1,003,067 (79,290) Total State 36,319,271 39,885,066 37,583,876 (2,301,190) Total intergovernmental revenue 43,274,306 52,101,571 47,783,307 (4,318,264) Charges for current services: General government 3,497,132 3,614,324 3,449,864 (164,460) Culture and recreation 883,050 883,050 878,990 (4,060) Highways and streets 218,114 218,114 255,351 37,237 Public safety 152,878 152,878 (110,188) (263,066) Total charges for current services 4,751,174 4,868,366 4,474,017 (394,349) Fines and forfeitures 1,484,900 1,484,900 809,516 (675,384) Rents 119,140 119,140 76,264 (42,876) (Continued) -34- COUNTY OF HAWAII General Fund Statement of Revenues,Expenditures and Changes in Fund Balance- Budget and Actual(Budgetary Basis) For the Fiscal Year Ended June 30,2007 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues(continued): Interest and penalties $ 4,000,000 $ 4,000,000 $ 9,782,198 $ 5,782,198 Miscellaneous 3,435,505 3,848,282 3,738,523 (109,759) Total revenues 255,132,029 264,489,263 262,724,078 (1,765,185) Expenditures: Current: General government: Finance 8,075,389 8,186,676 6,751,591 1,435,085 General government building 4,845,491 5,120,775 4,477,515 643,260 Legislative 6,038,927 4,588,723 3,911,956 676,767 Automotive equipment 3,949,032 3,649,032 3,288,405 360,627 Law 3,406,664 3,406,664 3,176,532 230,132 Research and development 2,848,412 3,339,102 3,152,104 186,998 Planning and zoning 3,287,240 3,467,740 3,136,037 331,703 Mayor's office 1,644,171 3,265,171 3,032,251 232,920 Engineering 2,938,280 2,896,493 2,637,791 258,702 Data systems 1,151,984 2,660,984 2,547,131 113,853 Personnel services 1,782,345 1,788,137 1,600,119 188,018 Public works administration 1,566,125 1,597,125 1,441,417 155,708 Elections 973,865 989,865 891,453 98,412 Total general government 42,507,925 44,956,487 40,044,302 4,912,185 Public safety: Police department 47,035,790 47,832,946 45,270,831 2,562,115 Fire department 29,866,570 30,281,307 30,182,018 99,289 Prosecuting attorney 8,052,651 8,303,747 7,013,386 1,290,361 Protective inspection 2,284,283 2,324,951 2,057,099 267,852 Liquor control 1,444,856 1,769,681 1,568,805 200,876 Flood control 335,031 635,031 590,237 44,794 Civil defense agency 2,597,789 4,113,871 2,790,554 1,323,317 Animal control 1,099,357 1,186,357 1,186,357 - Total public safety 92,716,327 96,447,891 90,659,287 5,788,604 Highways and streets: Mass transit 4,613,306 4,613,306 4,389,737 223,569 (Continued) -35 - COUNTY OF HAWAII General Fund Statement of Revenues,Expenditures and Changes in Fund Balance- Budget and Actual(Budgetary Basis) For the Fiscal Year Ended June 30,2007 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Expenditures(continued): Current(continued): Sanitation: Environmental management $ 1,239,535 $ 1,356,727 $ 1,054,147 $ 302,580 Health,education and welfare: Elderly activities 3,248,040 3,411,040 3,011,258 399,782 Office of Aging 2,540,856 2,549,616 2,169,446 380,170 Education 65,000 65,000 60,499 4,501 Social programs 900,000 900,000 898,000 2,000 Cemeteries 313,618 333,718 299,964 33,754 Physical examination 102,942 102,942 102,942 - Total health,education and welfare 7,170,456 7,362,316 6,542,109 820,207 Culture and recreation: Community music 412,520 412,520 240,009 172,511 Organized recreation: Maintenance 6,719,212 7,012,012 6,524,990 487,022 Recreation 2,373,077 2,544,027 2,378,518 165,509 Aquatics 3,904,805 3,777,305 3,382,848 394,457 Hoolulu Park complex 898,416 899,416 874,278 25,138 Administration 1,997,694 2,271,994 2,010,944 261,050 Children's zoo 581,340 611,940 591,940 20,000 Summer/Intersession 478,365 478,365 304,238 174,127 Culture and arts 149,148 179,818 160,821 18,997 Elderly activities administration 673,833 734,813 637,063 97,750 Total culture and recreation 18,188,410 18,922,210 17,105,649 1,816,561 Pension and retirement contributions 18,969,686 18,969,686 18,382,958 586,728 Health fund 20,654,000 20,479,000 15,543,842 4,935,158 Miscellaneous 4,076,000 4,131,709 3,123,042 1,008,667 Total current 210,135,645 217,239,332 196,845,073 20,394,259 (Continued) -36- COUNTY OF HAWAII General Fund Statement of Revenues,Expenditures and Changes in Fund Balance- Budget and Actual(Budgetary Basis) For the Fiscal Year Ended June 30,2007 (Concluded) Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Expenditures(continued): Capital Outlay: Community Development Block grants(HUD) $ - $ 2,648,538 $ 2,648,538 $ - HOME Program - 1,045,618 1,045,618 - Other - 346,500 346,500 - Total capital outlay - 4,040,656 4,040,656 - Total expenditures 210,135,645 221,279,988 200,885,729 20,394,259 Excess of revenues over expenditures 44,996,384 43,209,275 61,838,349 18,629,074 Other financing uses: Transfers out: Capital Projects Fund (2,000,000) (9,244,816) (9,244,816) - Housing Fund (1,228,399) (1,295,399) (1,295,399) - Solid Waste Fund (14,483,706) (14,656,244) (14,656,244) - Golf Course Fund (256,480) (342,531) (342,531) - Highway Fund (700,000) (812,000) (812,000) - Self Insurance Fund (1,000,000) (1,000,000) (1,000,000) - Disaster/Bmergency Fund (1,000,000) (1,000,000) (1,000,000) - Public Access,Open Space,and Natural Resources Preservation Fund (1,000,000) (2,600,000) (2,519,479) 80,521 Budget Stabilization Fund (1,000,000) (1,000,000) (1,000,000) - Debt Service Fund (29,622,809) (29,622,809) (29,313,792) 309,017 Total transfers out (52,291,394) (61,573,799) (61,184,261) 389,538 Total other financing uses (52,291,394) (61,573,799) (61,184,261) 389,538 Excess(deficiency)of revenues and other sources over expenditures and other uses (7,295,010) (18,364,524) 654,088 19,018,612 Fund balance at beginning of year 34,965,207 34,965,207 34,965,207 - Fund balance at end of year $ 27,670,197 $ 16,600,683 $ 35,61-9,295 $ 19,018,612 See accompanying notes to the basic financial statements. -37- COUNTY OF HAWAII Proprietary Funds Statement of Net Assets June 30,2007 Business-type Activities- Enterprise Funds Kulaimano Ouli Ekahi Elderly Affordable Housing Housing Project Project Total Assets Current assets: Cash and cash equivalents(note 3) $ 112,276 $ 169,907 $ 282,183 Restricted cash and cash equivalents(note 3) 10,625 22,009 32,634 Investments(note 3) 700,000 - 700,000 Imprest fund(note 3) 50 100 150 Receivables(note 4) 8,280 51,960 60,240 Prepaid expenses 1,369 - 1,369 Total current assets 832,600 243,976 1,076,576 Noncurrent assets: Restricted cash and cash equivalents(note 3) 183,832 14,753 198,585 Capital assets(note 6): Land and site improvements 511,000 503,877 1,014,877 Buildings and equipment 1,230,504 - 1,230,504 Less accumulated depreciation (939,118 - (939,118) Total capital assets 802,386 503,877 1,306,263 Total noncurrent assets 986,218 518,630 1,504,848 Total assets 1,818,818 762,606 2,581,424 Liabilities Current liabilities: Accounts payable 53,947 356,124 410,071 Internal balances(note 5) 2,700 - 2,700 Due to developer - 7,729 7,729 Security deposits payable from restricted assets 10,625 20,590 31,215 Deferred revenue(note 7) 1,345 1,513 2,858 Notes payable,current portion(note 10) 24,994 - 24,994 Total current liabilities 93,611 385,956 479,567 Noncurrent liabilities: Notes payable(note 10) 970,860 - 970,860 Total liabilities 1,064,471 385,956 1,450,427 Net Assets Invested in capital assets,net of related debt (193,468) 503,877 310,409 Restricted for debt service 183,832 - 183,832 Unrestricted 763,983 (127,227) 636,756 Total net assets $ 754,347 $ 376,650 $ 1,130,997 See accompanying notes to the basic financial statements. - 38- COUNTY OF HAWAII Proprietary Funds Statement of Revenues,Expenses,and Changes in Fund Net Assets For the Fiscal Year Ended June 30,2007 Business-type Activities- Enterprise Funds Kulaimano Ouli Ekahi Elderly Affordable Housing Housing Project Project Total Operating revenues: Rental receipts from tenants $ 106,772 $ 233,455 $ 340,227 Rental subsidy from federal government-HUD 134,211 - 134,211 Laundry receipts 2,435 - 2,435 Miscellaneous - 3,140 3,140 Total operating revenues 243,418 236,595 480,013 Operating expenses: Utilities 36,770 28,857 65,627 General and administration 96,832 108,013 204,845 Maintenance and repairs 143,092 65,088 208,180 Lease expense - 115,254 115,254 Depreciation(note 6) 33,666 - 33,666 Total operating expenses 310,360 317,212 627,572 Operating loss (66,942) (80,617) (147,559) Nonoperating revenues(expenses): Investment income 35,464 87 35,551 Interest expense (70,380) - (70,380) Loss on disposal of assets (377) - (377) Total nonoperating revenue(expenses) (35,293) 87 (35,206) Change in net assets (102,235) (80,530) (182,765) Net assets,beginning of year 856,582 457,180 1,313,762 Net assets,end of year $ 754,347 $ 376,650 $ 1,130,997 See accompanying notes to the basic financial statements. -39 - COUNTY OF HAWAII Proprietary Funds Statement of Cash Flows For the Fiscal Year Ended June 30,2007 Business-type Activities- Enterprise Funds Kulaimano Ouli Ekahi Elderly Affordable Housing Housing Project Project Total Cash Flows from Operating Activities Receipts from tenants $ 106,996 $ 230,239 $ 337,235 Receipts from federal government-HUD 134,211 - 134,211 Payments to suppliers for goods and services (227,702) (303,363) 531,065 Net cash provided by(used in)operating activities 13,505 (73,124) (59,619) Cash Flows from Capital and Related Financing Activities Principal paid on notes payable (23,532) - (23,532) Interest paid on notes payable (70,380) - (70,380) Purchase of capital assets (3,386) - (3,386) Net cash used in capital and related financing activities (97,298) - 97,298 Cash Flows from Investing Activities Purchase of investments (1,400,000) - (1,400,000) Proceeds from maturities of investments 1,400,000 - 1,400,000 Interest on investments 35,464 80 35,544 Net cash provided by investing activities 35,464 80 35,544 Net decrease in cash and cash equivalents (48,329) (73,044) (121,373) Cash and cash equivalents at beginning of year 355,112 279,813 634,925 Cash and cash equivalents at end of year $ 306,783 $ 206,769 $ 513,552 Reconciliation of Operating Loss to Net Cash Provided by(Used in)Operating Activities Operating loss $ (66,942) $ (80,617) $ (147,559) Adjustments to reconcile operating loss to net cash provided by(used in)operating activities: Depreciation expense 33,666 - 33,666 Change in assets and liabilities: Receivables (1,813) (8,429) (10,242) Prepaid expenses (13 8) - (138) Accounts and other payables 49,382 15,746 65,128 Unearned income (650) 176 (474) Net cash provided by(used in)operating activities $ 13,505 $ (73,124) $ (59;619 Supplemental disclosure of cash flow information-Interest paid $ 70,380 $ - $ 70,380 See accompanying notes to the basic financial statements. -40- COUNTY OF HAWAII Fiduciary Funds Statement of Fiduciary Net Assets June 30,2007 Private- Purpose Agency Trusts Funds Assets Cash and cash equivalents(note 3) $ 1,861,787 $ 4,315,864 Investments(note 3) 2,883,581 1,447,009 Receivables: Due from other agency funds - 2,245 Other receivables 6,980 63,839 Total receivables 6,980 66,084 Restricted cash and cash equivalents(note 3) - 637,000 Total assets 4,752,348 $ 6,465,957 Liabilities Due to other agency funds - 2,245 Accrued liabilities - 2,994,401 Advances payable - 191,900 Assets held for benefit of improvement districts - 3,277,411 Total liabilities - $ 6,465,957 Net Assets Held in trust for other parties 4,752,348 Total net assets $ 4,752,348 See accompanying notes to the basic financial statements. -41 - COUNTY OF HAWAII Fiduciary Funds Statement of Changes in Fiduciary Net Assets For the Fiscal Year Ended June 30,2007 Private- Purpose Trusts Additions Contributions: Puna Geothermal Venture $ 50,000 Investment earnings: Net increase in fair value of investments 137,148 Dividends 46,442 Interest 175,595 Total additions 409,185 Deductions Appraisal fees 11,726 Total deductions 11,726 Change in net assets 397,459 Net assets,beginning of year 4,354,889 Net assets,end of year $ 4,752,348 See accompanying notes to the basic financial statements. -42- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2007 The accounting policies of the County of Hawai'i(the County)conform to U.S.generally accepted accounting principles(GAAP)as applicable to local governmental units. The following notes to the basic financial statements are an integral part of the County's Comprehensive Annual Financial Report. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Financial Reporting Entity The County has implemented Governmental Accounting Standards Board Statement No.14, The Financial Reporting Entity(GASB Statement No. 14). All organizations, activities or functions that meet the criteria in GASB Statement No. 14 for inclusion in the reporting entity are included from the County's basic financial statements. Primary Government The County operates under the Mayor-Council form of government under a charter that became effective on January 2, 1969,and was amended in 1979, 1982, 1990 and 2000. The County's operations are organized by the following functions: general government;public safety;highways and streets;sanitation;health,education and welfare; culture and recreation;pension and retirement contributions;health fund;miscellaneous; capital outlay;and debt service. The State of Hawaii(the State)assumes full responsibility for several major functions usually performed by local governments,including education, welfare,health and judicial functions. There are no separate city,county or township governments nor any school districts,special districts,authorities or public corporations with overlapping authority. GASB Statement No. 14 defines component units as legally separate organizations for which the elected officials of the primary government are financially accountable. "Financial accountability" is the level of accountability that exists if a primary government appoints a voting majority of an organization's governing board and is either able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to,or impose specific financial burdens on,the primary government. A primary government has the ability to impose its will on an organization if it can significantly influence the programs,projects,activities or level of services performed or provided by the organization. An organization has a financial benefit or burden relationship with the primary government if any one of three conditions exist: (1)The primary government is legally entitled to or can otherwise access the organization's resources;(2)The primary government is legally obligated or has otherwise assumed the obligation to finance the deficits of,or provide financial support to,the organization;or(3)The primary government is obligated in some manner for the debt of the organization. As required by GAAP as set forth in GASB Statement No. 14,these basic financial statements present the County of Hawaii(the primary government)and its component unit, -43 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2007 the Department of Water Supply. This component unit is included in the County's reporting entity because of its financial relationship with the County. Discretely Presented Component Unit The component unit column in the basic financial statements includes the financial data of the Department of Water Supply(the Department),a legally independent agency of the County that is accounted for as an enterprise fund. It is reported in a separate column to emphasize that it is legally separate from the County. The members of the Water Commission,the governing body of the Department,are appointed by the Mayor of the County and confirmed by the County Council. The Department is granted corporate powers by state statute and the County Charter. Although the County does not have the authority to approve or modify the Department's operational and capital budgets,the County has issued bonds on the Department's behalf that are general obligations of the County. Because the County is obligated to repay these bonds in the event of default by the Department,the County is financially accountable for the debts of the Department. See Note 14 for component unit disclosures for the Department. Complete financial statements of the Department can be obtained from the Department of Water Supply,345 Kekuanaoa Street, Suite 20,Hilo,Hawaii 96720. Basic Financial Statements The basic financial statements include both government-wide(based on the County as a whole)and fund financial statements.Both the government-wide and fund financial statements(within the basic financial statements)categorize primary activities as either governmental or business-type. In the government-wide statement of net assets,both the governmental and business-type activities columns(a)are presented on a consolidated basis by column,(b)and are reflected,on a full accrual,economic resource basis,which incorporates long-term assets and receivables as well as long-term debt and obligations. The government-wide statement of activities reflects both the gross and net costs per functional category(general government,public safety,highways and streets,etc.)which are otherwise being supported by general government revenues(property taxes,certain intergovernmental revenues,etc.). The statement of activities reduces gross expenses (including depreciation)by related program revenues,operating and capital grants. The program revenues must be directly associated with the function(general government,public safety,highways and streets,etc.)or a business-type activity. The operating grants include operating-specific and discretionary(either operating or capital)grants while the capital grants column reflects capital-specific grants. The net cost(by function or business-type activity)is normally covered by general revenues. The government-wide focus is more on the sustainability of the County as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. -44- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2007 The fund financial statements' emphasis is on the major funds in either the governmental or business-type categories. Nonmajor funds(by category)are summarized into a single column. The governmental funds in the fund financial statements are presented on a current financial resource and modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. This presentation is deemed most appropriate to(a)demonstrate legal and covenant compliance,(b)demonstrate the source and use of liquid resources,and(c) demonstrate how the County's actual experience conforms to the budget fiscal plan. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements'governmental column,a reconciliation is presented on the page following each statement,which briefly explains the adjustments necessary to transform the fund based financial statements into the governmental column of the government-wide presentation. The County's fiduciary funds are presented in the fund financial statements by type(private purpose and agency). Since by definition these assets are being held for the benefit of a third party(private parties,state government,etc.)and cannot by used to address activities or obligations of the government,these funds are not incorporated into the government-wide statements. 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 all of the nonfiduciary activities of the primary government and its component unit. The effect of interfund activity has been removed from these statements. Governmental activities,which normally are supported by taxes and intergovernmental 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(a)charges to customers or applicants who purchase,use,or directly benefit from goods,services,or privileges provided by a given function or segment and(b)grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds,proprietary funds,and fiduciary funds,even though the latter are excluded from the government-wide financial -45 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2007 statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Activities in funds—The financial transactions of the County are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities,reserves,fund equity,revenues and expenditures/expenses. The various funds are reported by generic classification within the financial statements. GASB Statement No. 34,Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments,sets forth minimum criteria(percentage of the assets,liabilities,revenues or expenditures/expenses of either fund category or the governmental and enterprise combined)for the determination of major funds. The nonmajor funds are combined in a column in the fund financial statements and detailed in the combining section. The County reports the following major governmental funds: General Fund—The general fund is the general operating fund of the County. It is used to account for all activities of the general government, except those required to be accounted for in other funds. Capital Projects Fund—Used to account for the costs of constructing County capital improvements financed with general obligation bond proceeds,federal and state grants, and general and special revenue fund revenues. The capital projects fund is used to account for financial resources to be used for the acquisition or construction of major general government capital facilities and infrastructure(other than those financed by proprietary funds and trust funds)when separate project centers are needed to control costs. The County reports the following major proprietary funds: Kulaimano Elderly Housing Project—Used to account for the operation of a rental housing project for low-income senior citizens located north of Hilo. Ouli Ekahi Affordable Housing Project—Used to account for the operation of a 33-unit single-family affordable rental housing project located in Waimea. The County reports the following fiduciary funds: Private-Purpose Trust Funds—Used to account for funds received from geothermal developers to mitigate the effects of geothermal energy development. Also used to account for investment income on funds received from import businesses at the port of Hilo and the related expenditures to promote health and safety on the Island of Hawaii. -46- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2007 Agency Funds—Used to account for assets held by the County for other governmental units and individuals. The agency funds are custodial in nature and do not involve measurement of results of operations. The County has the following agency funds: • State Weight Tax Fund • Improvement District No. 17 Fund • Improvement District No. 18 Fund • Improvement District Revolving Fund • Performance and Refundable Deposits Fund • Payroll Clearance Fund • Flexible Spending Account • Lapsed Warrants Fund • Non-Profit License Plates Fund • Organ and Tissue Education Fund Basis of Accounting Basis of accounting refers to the period in which revenues and expenditures(or expenses)are recognized in the accounts and reported in the basic financial statements. Basis of accounting relates to the timing of the measurements made,regardless of the measurement focus applied. The government-wide financial statements and the proprietary,fiduciary and component unit fund financial statements are presented on an accrual basis of accounting. The governmental funds in the fund financial statements are presented on a modified accrual basis. Accrual Basis-Revenues are recognized when earned and expenses are recognized when the related obligation is incurred. Modified Accrual Basis-Revenues are recorded when susceptible to accrual(that is,both measurable and available). "Measurable"means the amounts are determinable. "Available" means the amounts are collectible within the current period or soon enough thereafter(within 60 days)to be used to pay liabilities of the current period. Licenses and permits,charges for current services,fines and forfeitures,penalties and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. State Revolving Fund loan proceeds are considered available when collected. In applying the susceptible to accrual concept to intergovernmental revenues,the legal and contractual requirements of the numerous individual programs are used as guidance. There -47 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2007 are essentially two types of these revenues. In one,monies must be expended on the specific purpose or project before any amounts will be paid to the County;therefore,revenues are recognized based upon the expenditures recorded. Most construction grants and many operating grants fall into this category. In the other,monies are virtually unrestricted as to purpose of expenditure and are usually revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenues at the time of receipt or earlier if the susceptible to accrual criteria are met. The County reports unearned revenue in its fund financial statements(see Note 7). Unearned revenues arise when potential revenue does not meet both the"measurable"and "available" criteria for recognition in the current period. In subsequent periods,when both revenue recognition criteria are met,the liability for unearned revenue is removed from the combined balance sheet and revenue is recognized. Expenditures are recognized under the modified accrual basis of accounting in the accounting period in which the fund liability is incurred. Exceptions to this general rule include: (a)accumulated compensated absences and claims and judgments which are recognized as expenditures when paid;(b)liabilities related to municipal solid waste landfill closure and postclosure care costs;and(c)principal and interest on general long-term debt which are recognized as expenditures when due. In accordance with GASB Statement No.20,Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the County applies all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 1989,unless those pronouncements conflict with or contradict GASB pronouncements;Financial Accounting Standards Board statements and interpretations,Accounting Principles Board opinions,and Accounting Research Bulletins of the Committee on Accounting Procedures. Encumbrances The general,special revenue,and capital projects funds follow encumbrance accounting under which purchase orders,contracts and other commitments are recorded as a reserve of fund balance and provide authority for the carryover of appropriations to the subsequent year in order to complete these transactions. Encumbrances outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year. Unexpended Allotments Allotment accounting is employed in the general and capital projects funds to reserve appropriations to complete capital projects that were funded during a given fiscal period. -48 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2007 Unexpended allotments represent reserves of capital projects appropriations that are available to complete such projects in future fiscal periods. Cash and Investments Cash and cash equivalents include cash on hand,amounts in demand deposits and short-term investments with a maturity date of three months or less from the date acquired by the County. Investments consist of time certificates of deposit at financial institutions and bank repurchase agreements with original maturities exceeding three months. Included are participating interest-earning investment contracts(repurchase agreements)that have remaining maturities at the time of purchase of one year or less,as well as nonparticipating interest-earning investment contracts(time certificates of deposit and repurchase agreements): Both categories of investments are stated at amortized cost(see Note 3). Investments also consist of equity securities in the fiduciary fund financial statements. These investments are stated at fair value. Real Property Taxes The County's real property taxes are on levied July 1 each year on assessed valuation as of January 1. The taxes become a lien on the property assessed as of the levy date. Taxes are due and payable in two equal annual installments on August 20 and February 20. Accordingly,real property taxes receivable as of June 30 are delinquent. Each delinquent installment bears interest at I%per month and penalties of up to 10%of the amount due. Assessments are based on 100%of estimated fair market values. Inventories Inventories consist of materials and supplies and are reported as expenditures at the time of purchase(purchase method). Police and fire department inventories are stated using the first in,first out(FIFO)method. Other inventories are stated at average cost. Liquor Control Section 281 of the Hawaii Revised Statutes requires that liquor license revenues collected be used only for costs and expenses directly relating to operational and administrative costs actually incurred by the liquor commission collecting such fees. The unexpended fees at June 30,2007 of$833,841 are reflected as a reserve of general fund balance. -49- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2007 Capital Assets Capital assets,which include property,plant,equipment,and infrastructure assets(e.g.,roads, bridges,curbs and gutters,streets and sidewalks,drainage systems, lighting systems,and similar items),are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial,individual cost of more than$1,000 and an estimated useful life in excess of one year. 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. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset 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 of business-type activities is included as part of the capitalized value of the assets constructed. Capital assets of the primary government are depreciated using the straight-line method over the following estimated useful lives of the assets: Assets Years Infrastructure 20 to 100 years Buildings and improvements 50 to 100 years Equipment 5 to 40 years Depreciation is recorded in one enterprise fund,the Kulaimano Elderly Housing Project. It is computed using the straight-line method over the following estimated useful lives of the assets: Buildings 50 years Furnishings and equipment 5 to 10 years Ground and site improvements 20 to 50 years Long-term Obligations The County reports long-term debt of governmental funds at face value on the government- wide statement of net assets. Certain other governmental fund obligations not expected to be financed with current available resources are also reported on the government-wide statement of net assets. Long-term debt and other obligations financed by the proprietary funds are reported as liabilities in those funds. -50- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2007 Compensated Absences Employees earn vacation credit at the rate of one and three-quarter working days for each month of service. Up to ninety days of vacation leave credits can be accumulated per employee. In addition,employees who work overtime can elect to take compensatory time off instead of overtime pay. The time off is earned at the rate of one-and-a-half hours for each hour of overtime worked. There is no statutory limit to the amount of compensatory time off an employee can accumulate. Both compensatory time off and vacation credits are converted to pay upon termination of employment. A liability for these amounts is reported in the Governmental Funds only if they have matured,for example,as a result of employee resignations and retirements. All vacation and compensatory time off pay is accrued in the government-wide statement of net assets along with the estimated liability for social security and Medicare taxes and employers'retirement contributions on those amounts. In prior years,the following funds have been used to liquidate this liability for compensated absences: General Fund,Highway Fund,Sewer Fund, Solid Waste Fund,Vehicle Disposal Fund,Golf Course Fund and the Housing Agency. Sick leave accumulates without limit. Sick leave can betaken only in the event of illness and is not convertible to pay upon termination of employment;therefore there is no related liability. However,a County employee who retires or leaves government service in good standing with 60 days or more of unused sick leave is entitled to additional service credit in the Employees' Retirement System of the State of Hawai`i. Accumulated sick leave at June 30,2007 totaled$57,063,000 for the primary government. Leases Leases transferring substantially all of the risks and benefits of ownership are recorded as capital leases; other leases are operating leases(see Note 8). Capital leases are recorded as capital asset additions at their estimated fair market value at the inception of the lease and the related present value of the future minimum lease obligations is recorded as long-term debt. Operating lease expenditures and expenses are recognized when the lease obligation is paid. Retirement Plan Contributions The County's contribution to the Employees'Retirement System of the State of Hawaii includes the normal cost plus the level annual payment required to amortize the unfunded actuarial accrued liability.The County's policy is to fund its required contribution annually (see Note 13). -51 -