Loading...
HomeMy WebLinkAboutItem 4: Resolution on Receipt of the FY09 Annual Financial ReportEURA UGENE RBAN ENEWAL GENCY AIS GENDA TEM UMMARY Action: Resolution 1054 Acknowledging Receipt of the Annual Financial Report of the Urban Renewal Agency of the City of Eugene, Oregon, for the Fiscal Year Ended June 30, 2009 Meeting Date: January 11, 2010 Agenda Item Number: 4 Department: Central Services Staff Contact: Fionan Cronin www.eugene-or.gov Contact Telephone Number: 682-5394 ISSUE STATEMENT This is a resolution acknowledging receipt of the Annual Financial Report (Report) of the Urban Renewal Agency (Agency) of the City of Eugene for the fiscal year ended June 30, 2009. This resolution demonstrates compliance with ORS 297.465(2), which requires that a copy of the Agency’s financial report, containing a signed expression of opinion, be furnished to each member of the governing body. BACKGROUND Under Oregon Municipal Audit Law, the Agency is required each fiscal year, to contract with an authorized accounting firm for the audit of its accounts and fiscal affairs (ORS 297.425). The regional firm of Isler CPA (auditors) has completed the audit of the Agency’s annual financial report for the fiscal year ended June 30, 2009, and issued an unqualified opinion on the basic financial statements. The auditors conduct the audit of the Agency’s basic financial statements in accordance with generally accepted auditing standards and the Minimum Standards for Audits of Oregon Municipal Corporations. Management is responsible for the information contained in, and the preparation of, the Agency’s financial statements. To effectively fulfill this responsibility and to contain the cost of auditor services, City staff devotes significant effort to the closing of accounting records, the preparation of schedules and audit work papers, and the production of the Annual Financial Report. This also results in staff expertise being developed on specific financial and service issues that can then be used to assist departments and other pertinent parties. The key pages of the report, which you may wish to review, are page 3 and pages 43-44, where the two auditors' reports are found. In the first report, the auditors have issued a "clean opinion" on the Agency’s basic financial statements, indicating that the Agency has prepared these statements in conformity with generally accepted accounting principles (GAAP). GAAP for state and local governments is promulgated by the Governmental Accounting Standards Board (GASB) to ensure consistency in accounting and comparability in financial reporting among Z:\CMO\2010 Council Agendas\M100111\S1001114.doc state and local governments. A clean opinion is a fundamental financial goal for every government, as it represents the highest level of opinion a government can receive from its independent auditors. A clean opinion is an important indicator of sound financial management and creditworthiness to the citizens, other governmental jurisdictions (state and federal), credit rating agencies, investment bankers, bond holders, and other private sector entities. In the second report, the auditors address the Agency’s compliance with applicable provisions of Oregon Revised Statutes including, requirements related to debt, deposit of public funds, preparation and adoption of the budget, accounting records and related internal control structure, etc. The auditors noted that nothing came to their attention that caused them to believe that the Agency was not in compliance with state regulations. RELATED POLICY ISSUES Policy B.1 of the City’s Financial Management Goals and Policies states that “The City will maintain an accounting and financial reporting system that allows reporting in conformance with Generally Accepted Accounting Principles and Oregon Local Budget Law and will issue a Comprehensive Annual Financial Report each fiscal year.” This action signifies formal completion of this process for the fiscal year ended June 30, 2009, and demonstrates the Agency’s compliance with the policy. AGENCY OPTIONS None. AGENCY DIRECTOR’S RECOMMENDATION The Agency Director recommends adoption of the resolution. SUGGESTED MOTION Move to adopt Resolution 1054 acknowledging receipt of the Annual Financial Report for the Urban Renewal Agency of the City of Eugene for the fiscal year ended June 30, 2009. ATTACHMENTS A.Resolution B.Copy of 2009 Report FOR MORE INFORMATION Staff Contact: Fionan Cronin Telephone: 682-5394 Staff E-Mail: finn.j.cronin@ci.eugene.or.us Z:\CMO\2010 Council Agendas\M100111\S1001114.doc ATTACHMENT A RESOLUTION NO. A RESOLUTION ACKNOWLEDGING THE RECEIPT OF THE ANNUAL FINANCIAL REPORT OF THE URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, FOR THE FISCAL YEAR ENDED JUNE 30, 2009 The Urban Renewal Agency of the City of Eugene finds that: The firm of Isler CPA has completed the audit of the financial statements of the Urban Renewal Agency of the City of Eugene for the fiscal year ended June 30, 2009, as required by ORS 297.425 and, pursuant to ORS 297.465, reported to the Board on its findings. NOW, THEREFORE, BE IT RESOLVED by the Urban Renewal Agency of the City of Eugene, as follows: Section 1. That the Board hereby acknowledges that it has received the "Annual Financial Report of the Urban Renewal Agency, a Component Unit of the City of Eugene, for the fiscal year ended June 30, 2009." The foregoing resolution adopted the 11th day of January, 2010. Director URBAN RENEWAL AGENCY A Component Unit of the City of Eugene, Oregon Annual Financial Report Fiscal Year Ended June 30, 2009 URBAN RENEWAL AGENCY A Component Unit of the City of Eugene, Oregon Annual Financial Report Fiscal Year Ended June 30, 2009 (With Independent Auditors’ Report Thereon) Report Prepared by the City of Eugene Finance Division URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Annual Financial Report Year Ended June 30, 2009 Table of Contents Exhibit/ Page(s) Schedule Principal Officials 1 Independent Auditors’ Report 3 Management’s Discussion and Analysis 5 - 9 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 1 13 Statement of Activities 2 14 Fund Financial Statements: Balance Sheet - Governmental Funds 3 15 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 4 16 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 5 17 19 - 27 Notes to Basic Financial Statements Required Supplementary Information: Schedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: General Fund A – 1 31 Riverfront Special Revenue Fund A – 2 32 Other Supplementary Information: Schedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Debt Service Fund B – 1 35 Capital Projects Fund B – 2 36 Riverfront Capital Projects Fund B – 3 37 Schedule of Property Tax Transactions B – 4 38 i URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Annual Financial Report Table of Contents, continued Exhibit/ Schedule Page(s) Audit Comments and Disclosures: Independent Auditors’ Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Oregon Auditing Standards 43 - 44 ii URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Eugene City Hall 777 Pearl Street Eugene, Oregon 97401 Principal officials as of June 30, 2009 NameTerm Expires Mayor: Kitty Piercy January 2013 Board Members: George Brown January 2013 Betty Taylor January 2013 Alan Zelenka January 2011 George Poling January 2011 Mike Clark January 2011 Jennifer Solomon January 2011 Andrea Ortiz January 2013 Chris Pryor January 2013 Administrator: Jon R. Ruiz (this page intentionally left blank) INDEPENDENT AUDITORS’ REPORT To the Honorable Mayor, Members of the Urban Renewal Agency Board and Administrator of the Urban Renewal Agency of the City of Eugene, Oregon We have audited the accompanying financial statements of the governmental activities and each major fund of the Urban Renewal Agency of the City of Eugene, Oregon (“Agency”) (a component unit of the City of Eugene, Oregon) as of and for the year ended June 30, 2009, which collectively comprise the Agency’s basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the Agency’s management. Our responsibility is to express an opinion 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Agency as of June 30, 2009, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. The management's discussion and analysis and budgetary comparison information on pages 5 through 9 and 31 through 32 are not a required part of the basic financial statements but are supplementary information required by accounting principals generally accepted in the United States of America. We have applied certain limited procedures to management’s discussion and analysis on pages 5 through 9, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. The schedules of revenues, expenditures, and changes in fund balance – budget and actual, on pages 31 and 32 have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in relation to the basic financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency’s basic financial statements. The other supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. That information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. ISLER CPA By: Paul Nielson, CPA, a member of the firm Eugene, Oregon November 30, 2009 (this page intentionally left blank) Management’s Discussion and Analysis The management of the Urban Renewal Agency (Agency), a component unit of the City of Eugene, Oregon presents this narrative overview and analysis to facilitate both a short and a long-term analysis of the financial activities of the Agency for the fiscal year ended June 30, 2009. This Management’s Discussion and Analysis (MD&A) is based on currently known facts, decisions, and conditions that existed as of the date of the independent auditors’ report. Financial Highlights The net assets of the Agency (assets less liabilities) at June 30, 2009 were $20,475,095. Of this amount, $15,216,991 is unrestricted. The Agency purchased two downtown district properties and then sold those properties to Beam Development in exchange for a note. Subsequently, the Agency assigned the note to the City’s Community Development Fund. At June 30, 2009, the Agency’s governmental funds reported combined ending fund balances of $13,529,649. Of that amount, $11,123,488 is unreserved and available for spending at the Agency’s discretion. The General Fund’s unreserved fund balance is $2,115,560 at the end of the current fiscal year. General Fund expenditures for the current fiscal year were $881,469. Overview of the Financial Statements The following discussion and analysis is intended to serve as an introduction to the Agency’s basic financial statements. The Agency’s basic financial statements are comprised of three components: 1. Government-wide financial statements 2. Fund financial statements 3. Notes to the basic financial statements . Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the Agency’s finances, in a manner similar to a private-sector business. The Statement of Net Assets presents information on all of the Agency’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 Agency is improving or deteriorating. The Statement of Activities presents information showing how the Agency’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 related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. Examples of such items include earned, but uncollected, property taxes. The Agency focuses on planning and development activities within the boundaries of the two urban renewal districts in the City of Eugene. Both government-wide financial statements provide information on these activities, which is supported mainly by property taxes. The government-wide financial statements can be found on Exhibits 1 and 2 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Agency uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Agency are governmental funds. Governmental funds. Governmental funds are used to account for activities where emphasis is placed on available financial resources, rather than upon net income determination. Therefore, unlike the government-wide financial statements, governmental fund financial statements focus on the acquisition and use of current spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financial decisions. Both the governmental funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. These reconciliations can be found on Exhibits 3 and 5 of this report. The Agency maintains two taxing districts within the urban renewal boundary: the Downtown District and the Riverfront District. The Agency maintains five individual governmental funds to account for these two districts: a general fund, a debt service fund, and a capital projects fund for the Downtown District; and a special revenue fund and a capital projects fund for the Riverfront District. Information for each fund is presented separately in the governmental funds Balance Sheet and in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. The basic governmental fund financial statements can be found on Exhibits 3 and 4 of this report. . The notes provide additional information that is essential to a full Notes to the basic financial statements understanding of the data provided in the government-wide and fund financial statements. They are an integral part of the financial statements and should be read in conjunction with them. Required supplementary information. The Agency adopts an annual appropriated budget for all its funds. To demonstrate compliance with the budget, budgetary comparison statements have been provided for the General Fund and the Riverfront Special Revenue Fund as required supplementary information. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the Agency, assets exceeded liabilities by $20,475,095 at the close of the most recent fiscal year. A portion of the Agency’s net assets (25.7%) reflects its investment in capital assets (land, construction in progress, buildings and building improvements, improvements other than buildings, and infrastructure). The Agency uses these capital assets to plan and develop designated properties within the urban renewal boundary. Consequently, these assets are not available for future spending. The remaining balance of net assets ($15,216,991) is unrestricted, and may be used to meet the government’s ongoing obligations within the urban renewal boundary. Urban Renewal Agency’s Net Assets 20092008 Current and other assets $15,221,986 14,260,771 Capital assets 5,258,104 6,658,188 Total assets 20,480,090 20,918,959 Other Liabilities 4,995 101,013 Total liabilities 4,995 101,013 Net assets: Invested in capital assets 5,258,104 6,658,188 Unrestricted15,216,99114,159,758 Total net assets $20,475,095 20,817,946 Urban Renewal Agency’s Change in Net Assets 20092008 Revenues Program revenues: Fines, fees, and charges for services $768,807 292,438 Capital grants and contributions 428,190 1,196,114 General revenues: Taxes 2,517,489 4,460,882 Investment earnings 397,213 608,146 Total revenues 4,111,699 6,557,580 Expenses: Urban renewal; redevelopment 4,014,550 4,345,963 Transfers out 440,000 0 Total expenses 4,454,550 4,345,963 Increase (decrease) in net assets (342,851)2,211,617 Net assets, July 1 20,817,946 18,606,329 Net assets, June 30 $20,475,095 20,817,946 The Agency’s net assets decreased by $0.3 million compared to a $2.2 million increase in the prior year. Urban Renewal Agency Revenues by Source Taxes - 61.2% Capital grants and contributions - 10.4% Fines, fees, and charges for services - 18.7% Investment earnings - 9.7% Fund-based Financial Analysis As previously discussed, the Agency uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. The focus of the Agency’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Agency’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the Agency’s governmental funds reported combined ending fund balances of $13,529,649. Approximately 82% of this total amount ($11,123,488) constitutes unreserved fund balance, which is available for spending at the Agency’s discretion. The remainder of fund balance ($2,406,161) is reserved to indicate that it is not available for new spending because it has already been committed for assets held for resale. The General Fund is the chief operating fund of the Agency. At the end of the current fiscal year, the total fund balance was $2,654,489, of which $2,115,560 is unreserved. As a measure of the General Fund’s liquidity, it may be useful to compare total fund balance to total fund expenditures. Unreserved fund balance is 2.4 times larger than total General Fund expenditures. General Fund Budgetary Highlights The difference between the original budget and the final amended budget was an increase of $331,021. This increase was funded by unspent resources from the prior year and current year resources. Capital Assets . The Agency’s investment in capital assets for its governmental activities as of June 30, 2009 Capital assets amounted to $5,258,104 (net of accumulated depreciation). This investment in capital assets includes land, construction in progress, buildings and building improvements, improvements other than buildings, and infrastructure. Urban Renewal Agency’s Capital Assets Net of Accumulated Depreciation 20092008 Land $ 2,215,4591,908,026 Construction in progress 53,189 1,857,468 Improvements other than buildings 1,612,044 1,773,850 Infrastructure1,377,4121,118,844 $ 5,258,1046,658,188 Additional information on the Agency’s capital assets can be found in note (4)(C) of this report. Next Year’s Budgets and Rates For FY10, the following factors were taken into account when developing the urban renewal budgets: Property taxes are predicted to decrease slightly in the downtown district in FY10 due to the soft economy. Property taxes in the Riverfront District are budgeted to increase slightly due to a higher tax rate applied for the division of tax calculation. The property tax collection rate for both districts is estimated to be 94% in FY10. The FY09 actual was approximately 98% for both current and delinquent taxes. The Downtown District will continue to implement redevelopment of two properties in FY10. The budget includes a construction loan to Beam Development for renovating the Centre Court building. There are no new projects planned in the Riverfront District for FY10. Requests for Information This financial report is designed to provide a general overview of the Agency’s finances for all those with an interest in the Agency. Questions concerning any of the information provided in this report, or requests for additional financial information, should be addressed to: Fionan Cronin, CPA Financial Reporting Manager City of Eugene th Avenue, Suite 400 100 West 10 Eugene, Oregon 97401 BASIC FINANCIAL STATEMENTS (this page intentionally left blank) Exhibit 1 Urban Renewal Agency of the City of Eugene, Oregon Statement of Net Assets June 30, 2009 (amounts in dollars) Assets Equity in pooled cash and investments11,101,406 Receivables (net of allowance)1,693,091 Due from other governments21,329 Other assets2,406,160 Capital assets: Land and construction in progress2,268,648 Other capital assets (net of accumulated depreciation)2,989,456 Total assets20,480,090 Liabilities Accounts payable and other liabilities4,995 Total liabilities4,995 Net assets Invested in capital assets5,258,104 Unrestricted15,216,991 Total net assets20,475,095 The accompanying notes are an integral part of the financial statements. Exhibit 2 Urban Renewal Agency of the City of Eugene, Oregon Statement of Activities For the fiscal year ended June 30, 2009 (amounts in dollars) NetExpense and Changes Program Revenuesin Net Assets Fees, Fines, andOperatingCapital Charges forGrants andGrants and Expenses ServicesContributionsContributionsTotal Functions/Programs Governmental activities: Urban renewal redevelopment4,014,550 768,8070428,190(2,817,553) Total governmental activities4,014,550 768,8070428,190(2,817,553) General revenues: Property taxes 2,517,489 Unrestricted investment earnings 397,213 Transfers (440,000) Total general revenues 2,474,702 Change in net assets (342,851) Net assets, July 1, 2008 20,817,946 Net assets, July 1, 2009 20,475,095 The accompanying notes are an integral part of the financial statements. pyggp Exhibit 3 Urban Renewal Agency of the City of Eugene, Oregon Balance Sheet Governmental Funds June 30, 2009 (amounts in dollars) RiverfrontRiverfrontTotal DebtCapitalSpecialCapitalGovernmental General ServiceProjectsRevenueProjectsFunds Assets Equity in pooled cash and investments2,114,806 5,772,769134,9732,907,575171,28311,101,406 Receivables: Interest5,749 48,35709,378063,484 Taxes0 174,122040,4030214,525 Loans and notes1,441,170 00001,441,170 Due from other governments0 17,23904,090021,329 Assets held for resale538,929 0001,867,2322,406,161 Total assets4,100,654 6,012,487134,9732,961,4462,038,51515,248,075 Liabilities and Fund Balances Liabilities Accounts payable4,99500004,995 Deferred revenue1,441,170222,479049,78201,713,431 Total liabilities1,446,165222,479049,78201,718,426 Fund balances Reserved for assets held for resale538,9290001,867,2322,406,161 Unreserved2,115,5605,790,008134,9732,911,664171,28311,123,488 Total fund balances2,654,4895,790,008134,9732,911,6642,038,51513,529,649 Total liabilities and fund balances4,100,6546,012,487134,9732,961,4462,038,515 Reconciliation to the Statement of Net Assets: The Statement of Net Assets reports receivables at their net realizable value. However, receivables not available to pay for current-period expenditures are deferred in governmental funds.1,687,342 Capital assets are not financial resources in governmental funds, but are reported in the Statement of Net Assets at their net depreciable value.5,258,104 Total net assets20,475,095 The accompanying notes are an integral part of the financial statements. Exhibit 4 Urban Renewal Agency of the City of Eugene, Oregon Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the fiscal year ended June 30, 2009 (amounts in dollars) RiverfrontRiverfrontTotal DebtCapitalSpecialCapitalGovernmental GeneralServiceProjectsRevenueProjectsFunds Revenues Taxes01,870,7290668,66502,539,394 Intergovernmental479,23202,716,698003,195,930 Rental income00023,190023,190 Charges for services11,234000011,234 Repayment of revolving loans29,442000029,442 Miscellaneous, primarily interest110,069194,2832,652262,2904,734574,028 Total revenues629,9772,065,0122,719,350954,1454,7346,373,218 Expenditures Current - departmental: Administration881,46900177,90901,059,378 Capital outlay002,741,161053,1892,794,350 Intergovernmental02,372,4780002,372,478 Total expenditures881,4692,372,4782,741,161177,90953,1896,226,206 Excess (deficiency) of revenues over expenditures(251,492)(307,466)(21,811)776,236(48,455)147,012 Other financing sources (uses) Transfers in297,0410000297,041 Transfers out0(297,041)000(297,041) Total other financing sources (uses)297,041(297,041)0000 Net change in fund balances45,549(604,507)(21,811)776,236(48,455)147,012 Fund balances, July 1, 20082,608,9406,394,515156,7842,135,4282,086,97013,382,637 Fund balances, June 30, 20092,654,4895,790,008134,9732,911,6642,038,51513,529,649 The accompanying notes are an integral part of the financial statements. Exhibit 5 Urban Renewal Agency of the City of Eugene, Oregon Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the fiscal year ended June 30, 2009 (amounts in dollars) Net change in fund balances - total governmental funds147,012 Amounts reported for governmental activities in the Statement of Activities are different because: Donations of capital assets are reported as capital contributions in the Statement of Activities, but do not appear in the governmental funds because they are not financial resources. In addition, the Statement of Activities reports gains and losses arising from the disposal of existing capital assets, while governmental funds do not.(3,618,060) Capital outlays are reported as expenditures in governmental funds. However, the Statement of Activities allocates the cost of capital outlays over their estimated useful lives as depreciation expense.2,217,975 Governmental funds defer revenues that do not provide current financial resources. However, the Statement of Activities recognizes such revenues at their net realizable value when earned, regardless of when received.910,222 Change in net assets of governmental activities.(342,851) The accompanying notes are an integral part of the financial statements. (this page intentionally left blank) URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Notes to Basic Financial Statements June 30, 2009 (1)Summary of Significant Accounting Policies The financial statements of the Urban Renewal Agency (Agency) of the City of Eugene, Oregon (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard- setting body for establishing governmental accounting and financial reporting standards. The more significant of the Agency's accounting policies are described below. (A)The Financial Reporting Entity The Agency's governing body is identical to the Eugene City Council, and because the services of the Agency are exclusively for the benefit of the City, the Agency has been determined under standards established by Governmental Accounting Standards Board Statement No. 14 to be a component unit of the City. As a result, the funds of the Agency are blended with those of the City by including them in the appropriate statements and schedules of the City's Comprehensive Annual Financial Report, copies of which can be obtained from the Financial Services Division of the City. (B)Organization and Operation The Urban Renewal Agency of the City of Eugene was established on July 10, 1967 as a separate political body charged with the responsibility to implement the Central Eugene Project and Urban Renewal Plan. On May 24, 1982, the powers granted to the Agency under Oregon Revised Statutes Chapter 457 were transferred to the City Council of Eugene. The accounts of the Agency are organized on the basis of funds. Fund accounting is designed to demonstrate legal compliance and aid financial management by segregating government functions and activities. The operations of each fund are accounted for by providing a separate set of self-balancing accounts, which comprise its assets, liabilities, fund balances, revenues, and expenditures. (C)Government-wide and Fund Financial Statements The government-wide financial statements (Exhibits 1 and 2) report information on all activities of the Agency. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. The Statement of Activities (Exhibit 2) demonstrates the degree to which the expenses of a given function are offset by program revenues. Program revenues include 1) fines, fees, and charges to customers who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or program and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or program. Grants and contributions not restricted are reported as general revenues rather than program revenues. Taxes and other items not properly included among program revenues are also reported as general revenues. Fund financial statements (Exhibits 3 and 4) are provided for all governmental funds. continued URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Notes to Basic Financial Statements (1)Summary of Significant Accounting Policies, continued (D)Measurement Focus, Basis of Accounting, and Financial Statement Presentation Measurement focus refers to what is measured by a fund. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. The government-wide financial statements are accounted for using an economic resources measurement focus, whereby all assets and liabilities are reported in the Statement of Net Assets. The increases and decreases in those net assets are reported in the Statement of Activities. The accrual basis of accounting is used whereby revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The governmental fund financial statements are accounted for using a current financial resources measurement focus. The Balance Sheet generally reports only current assets and current liabilities; and the Statement of Revenues, Expenditures, and Changes in Fund Balances presents increases and decreases in those net current assets. These funds use the modified accrual basis of accounting whereby revenues are recorded when susceptible to accrual (both measurable and available). "Measurable" means that the amount of the transaction can be determined. "Available" is defined as being collectible within the current period or soon enough thereafter (60 days) to be used to liquidate liabilities of the current period.Expenditures, other than interest on long-term obligations, are recorded when the fund liability is incurred. Real and personal property taxes were levied as of July 1 for the fiscal year on values assessed as of January 1. Property taxes are an enforceable lien on both real and personal property as of July 1 and are due and payable in three installments on November 15, February 15, and May 15. All property taxes are billed and collected by Lane County and remitted to the Agency. In the governmental fund financial statements, property taxes are reflected as revenues in the fiscal period for which they were levied, provided they are due, or past due and receivable within the current period, and collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period (60 days). Otherwise, they are reported as deferred revenues. In the government-wide financial statements, property tax revenues are fully recognized at the time of levy. Property taxes which are held at year-end by the collecting agency, Lane County, and are remitted to the City within the 60-day period are reported as "Due from other governments." Repayment of revolving loans and miscellaneous revenues (except investment earnings) are recorded as revenues when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned since they are measurable and available. Rental income is typically received in advance and is deferred when appropriate. Governmental Funds Governmental funds finance all of the functions of the Agency. The measurement focus is upon determination of changes in current financial resources, rather than upon net income determination. The following are the Agency's Downtown District governmental funds: General Fund The General Fund is the general operating fund of the Agency. It is used to account for all financial resources except those required to be accounted for in another fund. Principal sources of revenue are rental income, interest on investments, principal and interest payments on outstanding loans, and transfers from the Debt Service Fund. Primary expenditures of the General Fund are made for downtown development and administration costs. continued URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Notes to Basic Financial Statements (1)Summary of Significant Accounting Policies, continued (D)Measurement Focus, Basis of Accounting, and Financial Statement Presentation, continued Governmental Funds, continued Debt Service Fund The Debt Service Fund is used to account for the accumulation of tax increment resources and the payment of intergovernmental expenditures to the City for principal and interest on the Library Certificates of Participation. Capital Projects Fund The Capital Projects Fund is used to account for the financial resources to be used for the acquisition or construction of major capital facilities within the Downtown District. The following are the Agency's Riverfront District governmental funds: Riverfront Special Revenue Fund The Riverfront Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for the Riverfront District. Riverfront Capital Projects Fund The Riverfront Capital Projects Fund is used to account for the financial resources to be used for the acquisition or construction of major capital facilities within the Riverfront District. When both restricted and unrestricted resources are available for use, it is the Agency’s practice to use restricted resources first, then unrestricted resources as they are needed. (E)Equity in Pooled Cash and Investments The Agency invests cash through the City into various investment programs. Policies adopted by the Investment Advisory Board and the Eugene City Council authorize the City to invest in obligations of the U.S. Treasury and its agencies, time certificates of deposit, bankers’ acceptances, municipal bonds, corporate bonds, commercial paper, repurchase agreements, reverse repurchase agreements, and the Oregon Local Government Investment Pool (LGIP). It is the City’s policy to report at amortized cost all short-term, highly-liquid money market investments (including corporate bonds, commercial paper, bankers’ acceptances, municipal bonds, and U.S. Treasury and agency obligations) and participating interest-earning investment contracts with a remaining maturity at time of purchase of one year or less. Such investments are stated at cost, increased by accretion of discounts and reduced by amortization of premiums, both computed by the straight-line method. Callable investments purchased at a discount are amortized to the maturity date, and callable investments purchased at a premium are amortized to the first call date. Investments with a remaining maturity at time of purchase of more than one year are valued at fair value. The City maintains a common cash and investments pool for all City funds, including funds of the Agency. Interest earned on the pooled cash and investments is allocated quarterly based on each fund’s average cash and investments balance as a proportion of the City’s total pooled cash and investments. The City considers “cash” to include the pooled cash and investments, since the pool has the general characteristics of a demand deposit account, in that any participating fund may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty. continued URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Notes to Basic Financial Statements (1)Summary of Significant Accounting Policies, continued (F)Receivables All receivables are shown net of an allowance for uncollectibles in the Statement of Net Assets. (G)Capital Assets Capital assets include land, construction in progress, buildings, improvements, and infrastructure having initial useful lives extending beyond a single reporting period and a cost of more than $5,000. Infrastructure assets in the Agency include streets and street improvements. Except for infrastructure placed in service prior to July 1, 1980, all capital assets have been capitalized in the government-wide financial statements. In accordance with the current financial resources measurement focus, capital assets are not capitalized in the governmental fund financial statements. All purchased capital assets are valued at historical cost. Historical cost is measured by the cash or cash equivalent price of obtaining an asset, including ancillary charges necessary to place the asset into its intended location and condition for use. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Amounts expended for maintenance and repairs are charged to expenditures in the appropriate funds as incurred and are not capitalized. Capital assets are depreciated unless they are inexhaustible in nature (e.g., land). Depreciation is an accounting process used to allocate the cost of capital assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the capital asset. Depreciation is not intended to represent an estimate in the decline of fair market value, nor are capital assets net of accumulated depreciation intended to represent an estimate of the current condition of the assets, or the maintenance requirements needed to maintain the assets at their current level of condition. Depreciation is computed over the estimated useful lives of the capital assets. All estimates of useful lives are based on actual experience by City departments with identical or similar capital assets. Infrastructure assets are depreciated using a composite depreciation method. All other categories of assets are depreciated on the straight-line basis of accounting. The estimated useful lives of the various categories of assets are as follows: Estimated useful life Category Buildings 40 years Improvements other than buildings 20 years Infrastructure 25 years Upon disposal of capital assets, cost and accumulated depreciation are removed from the accounts and, if appropriate, a gain or loss on the disposal is recognized. In accordance with the composite depreciation method, no gain or loss is recorded upon disposal, but rather, cost is removed from the capital asset account and charged to the accumulated depreciation account. Capital assets are reported net of accumulated depreciation in the Statement of Net Assets, and depreciation expense is reported in the Statement of Activities in the urban renewal redevelopment function. (H)Fund Balances In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for specific purposes. continued URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Notes to Basic Financial Statements (1)Summary of Significant Accounting Policies, continued (I)Indirect Expenses The Agency’s Statement of Revenues, Expenditures, and Changes in Fund Balances include reimbursement to the City’s Central Services department for general services provided to the Agency by the City’s General Fund. The charge for general service costs is based on an approved overhead rate applied to direct costs. The indirect cost reimbursement has been included in program expenses in the Statement of Activities. (2)Reconciliation of Government-wide and Fund Financial Statements (A)Explanation of Certain Differences Between the Government-wide Statement of Net Assets and the Governmental Fund Balance Sheet The Balance Sheet for governmental funds (Exhibit 3) includes a reconciliation between total fund balances and total net assets in the Statement of Net Assets (Exhibit 1). The following are selected elements of that reconciliation: Capital assets are not financial resources in governmental funds, but are reported in the Statement of Net Assets at their net depreciable value. The details of this $5,258,104 difference are as follows: Capital assets (net of accumulated depreciation) reported in the Statement of Net Assets: Land and construction in progress $2,268,648 Other capital assets (net of accumulated depreciation) 2,989,456 Net adjustment $5,258,104 The Statement of Net Assets reports receivables at their net realizable value. However, receivables not available to pay for current-period expenditures are deferred in governmental funds. The details of this $1,687,342 difference are as follows: Receivables: Interest $57,734 Taxes 214,526 Loans and notes 1,441,170 Subtotal 1,713,430 Allowance for uncollectibles (26,088) Net adjustment $1,687,342 continued URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Notes to Basic Financial Statements (2) Reconciliation of Government-wide and Fund Financial Statements, continued (B) Explanation of Certain Differences Between the Government-wide Statement of Activities and the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances The Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities is provided at Exhibit 5. The following are selected elements of that reconciliation: Donations of capital assets are reported as capital contributions in the Statement of Activities, but do not appear in the governmental funds because they are not financial resources. In addition, the Statement of Activities reports gains and losses arising from the disposal of existing capital assets, while governmental funds do not. The difference of $3,618,060 is due to sale of capital assets. Capital outlays are reported as expenditures in governmental funds. However, the Statement of Activities allocates the cost of capital outlays over their estimated useful lives as depreciation expense. The details of this $2,217,975 difference are as follows: Capital outlay $2,478,466 Depreciation expense (260,491) Net adjustment$2,217,975 Governmental funds defer revenues that do not provide current financial resources. However, the Statement of Activities recognizes such revenue at their net realizable value when earned, regardless of when collected. The details of this $910,222 difference are as follows: Change in deferred revenue from the following sources: Property taxes receivable $(20,843) Notes receivable 942,299 Subtotal 921,456 Change in the allowance for doubtful receivables (11,234) Net adjustment $910,222 (3) Stewardship, Compliance, and Accountability (A) Budgetary Information The City of Eugene submits to the City Council of Eugene (acting as the Urban Renewal Agency Board under provisions of Oregon Revised Statute 457.460) a proposed operating and capital budget a sufficient length of time in advance to allow adoption of the budget prior to July 1. Prior to July 1, the Agency legally adopts its annual budget for all funds through passage of a resolution. The resolution authorizes fund appropriations as current annual departmental requirements, debt service, capital outlay, interfund transfers, interfund loans, intergovernmental, and miscellaneous fiscal transactions. Expenditures cannot legally exceed appropriations at these control levels. Appropriations which have not been spent at year-end lapse, although an amending resolution passed in the subsequent year specifically provides for the reappropriation of prior-year lapsed encumbrances. continued URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Notes to Basic Financial Statements (3) Stewardship, Compliance, and Accountability, continued (A) Budgetary Information, continued Unexpected additional resources, or appropriations may be added to the budget through the use of a supplemental budget. A supplemental budget requires hearings before the public, publications in newspapers, and approval by the Agency. Original and supplemental budgets may be modified by the use of appropriation transfers between the levels of control. Such transfers require approval by passing an Agency resolution authorizing the transfer. All budget amendments are subject to the limitations put forth in the Oregon Revised Statutes Chapters 294.305 through 294.565 (Oregon Budget Law). The net effect of amending resolutions passed during the fiscal year was an appropriation increase of $331,021. (4) Detailed Notes on All Funds (A)Equity in Pooled Cash and Investments The City maintains a common cash and investments pool that is available for use by all funds, including the Agency. The Agency’s portion of this pool is displayed in the Statement of Net Assets and the Balance Sheet as "Equity in pooled cash and investments.” Cash and investments are comprised of the following at June 30, 2009: Deposits with banks $1,230,193 Investments 9,871,213 $11,101,406 Detailed information for the Agency’s pooled cash and investments can be found in the City of Eugene’s FY09 Comprehensive Annual Financial Report (Notes to Basic Financial Statements). (B) Deferred Revenue Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period, and for resources that have been received but not yet earned. At June 30, 2009, the deferred revenue reported in the Balance Sheet for governmental funds consist of the following: Total Property taxes receivable: Debt Service $174,122 Riverfront Special Revenue 40,403 Notes receivable: General 1,441,170 Other: Debt Service 48,357 Riverfront Special Revenue 9,379 Total deferred revenue $ 1,713,431 continued URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Notes to Basic Financial Statements (4)Detailed Notes on All Funds, continued (C)Capital Assets Capital assets activity for the year ended June 30, 2009 was as follows: BeginningEnding IncreasesDecreasesbalance balance Governmental activities: Capital assets, not being depreciated Land$1,908,026307,43302,215,459 Construction in progress1,857,46853,189(1,857,468)53,189 Total capital assets, not being depreciated3,765,494360,622(1,857,468)2,268,648 Capital assets, being depreciated Buildings03,618,060(3,618,060)0 Improvements other than buildings3,683,563003,683,563 Infrastructure2,288,466357,25202,645,718 Total capital assets being depreciated5,972,0293,975,312(3,618,060)6,329,281 Less accumulated depreciation for: Improvements other than buildings(1,909,713)(161,806)0(2,071,519) Infrastructure(1,169,622)(98,684)0(1,268,306) Total accumulated depreciation(3,079,335)(260,490)0(3,339,825) Total capital assets, being depreciated, net2,892,6943,714,822(3,618,060)2,989,456 Governmental activities capital assets, net$6,658,1884,075,444(5,475,528)5,258,104 (5)Other Information (A) Risk Management The Agency is a participant in the City’s Risk and Benefits Internal Service Fund which accounts for and finances its risks of loss. The Risk and Benefits Fund has a self-insured liability program which covers personal injury, public official errors and omissions, automobile, and employer’s liability, with a maximum self-insured retention of $500,000 per occurrence. In addition, the Risk and Benefits Fund has a self- insured workers’ compensation program which covers employees’ work related illnesses and injuries, including employer’s liability, with a maximum self-insured retention of $500,000 per occurrence. The Agency, as a participant in the Risk and Benefits Fund, retains a portion of the risk of loss for general liability. Coverage for workers’ compensation, general liability, and employees’ medical claims in excess of the self-insurance retention limit is purchased from commercial insurers. The Risk and Benefits Fund also purchases all risk property insurance coverage from a commercial insurer. The property insurance policy has a basic $25,000 deductible, however, earthquake and flood insurance coverage were subject to $250,000 deductible per occurrence. During the previous three fiscal years, there were no general liability claims that exceeded the insurance coverage levels. continued URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON Notes to Basic Financial Statements (5) Other Information, continued (B) Commitments Pursuant to an intergovernmental agreement between the City and the Agency, the Agency’s tax increment revenues are to be used to provide funding resources to the City to cover debt service associated with the certificates of participation (COPs) issued by the City to finance the construction of a library. If the Agency’s revenues exceed the debt service requirements, such excess may be disbursed to the City to pay other obligations incurred for the library project. During the fiscal year, $2,372,478 in payments were made to the City to cover debt service. The payments are reported as intergovernmental expenditures in the Agency’s Debt Service Fund. Annual debt service requirements to maturity for the City’s Library COPs are as follows: PrincipalInterest Year ending June 30 2010 2,350,000 58,750 Total $2,350,00058,750 (C) Outstanding Encumbrances Encumbrances outstanding at June 30, 2009 which the Agency intends to honor are $4,195 in the Riverfront Capital Projects Fund. (this page intentionally left blank) REQUIRED SUPPLEMENTARY INFORMATION (this page intentionally left blank) A-1 Urban Renewal Agency of the City of Eugene, Oregon General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the fiscal year ended June 30, 2009 (amounts in dollars) BudgetActual BudgetGAAP OriginalFinalbasisAdjustmentbasis Revenues Intergovernmental6,700,0007,308,190479,2320479,232 Charges for services2,0002,00011,234011,234 Repayment of revolving loans00029,44229,442 Miscellaneous79,000579,000103,6776,392110,069 Total revenues6,781,0007,889,190594,14335,834629,977 Expenditures Administration532,000972,000302,494578,975881,469 Loans granted8,809,7839,761,000578,975(578,975)0 Total expenditures9,341,78310,733,000881,4690881,469 Excess (deficiency) of revenues over expenditures(2,560,783)(2,843,810)(287,326)35,834(251,492) Other financing sources (uses) Principal payments received55,00055,00029,442(29,442)0 Transfers in332,000772,000297,0410297,041 Total other financing sources (uses)387,000827,000326,483(29,442)297,041 Net change in fund balance(2,173,783)(2,016,810)39,1576,39245,549 Fund balance, July 1, 20082,223,7832,066,8102,066,810542,1302,608,940 Fund balance, June 30, 200950,00050,0002,105,967548,5222,654,489 A-2 Urban Renewal Agency of the City of Eugene, Oregon Riverfront Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the fiscal year ended June 30, 2009 (amounts in dollars) BudgetActual BudgetGAAP OriginalFinalbasisAdjustmentbasis Revenues Taxes615,000615,000668,6650668,665 Rental income25,00025,00023,190023,190 Miscellaneous52,00052,000254,1178,173262,290 Total revenues692,000692,000945,9728,173954,145 Expenditures Administration342,000342,000177,9090177,909 Total expenditures342,000342,000177,9090177,909 Excess (deficiency) of revenues over expenditures350,000350,000768,0638,173776,236 Total other financing sources (uses)00000 Net change in fund balance350,000350,000768,0638,173776,236 Fund balance, July 1, 20081,992,7822,131,1872,131,1874,2412,135,428 Fund balance, June 30, 20092,342,7822,481,1872,899,25012,4142,911,664 OTHER SUPPLEMENTARY INFORMATION (this page intentionally left blank) B-1 Urban Renewal Agency of the City of Eugene, Oregon Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the fiscal year ended June 30, 2009 (amounts in dollars) Actual BudgetGAAP BudgetbasisAdjustmentbasis Revenues Taxes1,925,0001,870,72901,870,729 Miscellaneous219,000181,07513,208194,283 Total revenues2,144,0002,051,80413,2082,065,012 Expenditures Intergovernmental2,437,5002,372,47802,372,478 Total expenditures2,437,5002,372,47802,372,478 Excess (deficiency) of revenues over expenditures(293,500)(320,674)13,208(307,466) Other financing sources (uses) Transfers out(772,000)(297,041)0(297,041) Total other financing sources (uses)(772,000)(297,041)0(297,041) Net change in fund balance(1,065,500)(617,715)13,208(604,507) Fund balance, July 1, 20086,379,5066,379,50615,0096,394,515 Fund balance, June 30, 20095,314,0065,761,79128,2175,790,008 B-2 Urban Renewal Agency of the City of Eugene, Oregon Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the fiscal year ended June 30, 2009 (amounts in dollars) Actual BudgetGAAP BudgetbasisAdjustmentbasis Revenues Intergovernmental2,782,7402,716,69802,716,698 Miscellaneous16,0002,2723802,652 Total revenues2,798,7402,718,9703802,719,350 Expenditures Capital outlay2,879,3142,741,16102,741,161 Total expenditures2,879,3142,741,16102,741,161 Excess (deficiency) of revenues over expenditures(80,574)(22,191)380(21,811) Total other financing sources (uses)0000 Net change in fund balance(80,574)(22,191)380(21,811) Fund balance, July 1, 2008156,784156,7840156,784 Fund balance, June 30, 200976,210134,593380134,973 B-3 Urban Renewal Agency of the City of Eugene, Oregon Riverfront Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the fiscal year ended June 30, 2009 (amounts in dollars) Actual BudgetGAAP BudgetbasisAdjustmentbasis Revenues Miscellaneous6,0004,4143204,734 Total revenues6,0004,4143204,734 Expenditures Capital outlay210,91853,189053,189 Total expenditures210,91853,189053,189 Excess (deficiency) of revenues over expenditures(204,918)(48,775)320(48,455) Total other financing sources (uses)0000 Net change in fund balance(204,918)(48,775)320(48,455) Fund balance, July 1, 2008219,322219,3221,867,6482,086,970 Fund balance, June 30, 200914,404170,5471,867,9682,038,515 B-4 Urban Renewal Agency of the City of Eugene, Oregon Schedule of Property Tax Transactions For the fiscal year ended June 30, 2009 (amounts in dollars) Uncollected Adjustments, Uncollected balancesCurrentinterest, and balances Fiscal yearJuly 1, 2008year's levydiscountsCollectionsJune 30, 2009 1965-0230,20106,430(1,061)35,570 20035,1990160(993)4,366 20044,9630(98)(1,265)3,600 20059,9680(148)(4,813)5,007 200622,64002,159(16,466)8,333 200745,7230403(22,070)24,056 2008124,6350(8,534)(58,464)57,637 200902,582,431(73,321)(2,433,154)75,956 Totals243,3292,582,431(72,949)(2,538,286)214,525 Summary by fund type Special Revenue Fund(668,401)40,403 Debt Service Fund(1,869,885)174,122 Totals(2,538,286)214,525 AUDIT COMMENTS (this page intentionally left blank) AUDIT COMMENTS (Comments and Disclosures Required by State Regulators) _________ Oregon Administrative Rules 162-010-050 through 162-010-320, of the Minimum Standards for Audits of Oregon Municipal Corporations, prescribed by the Secretary of State in cooperation with the Oregon State Board of Accountancy, enumerate the financial statements, schedules, comments, and disclosures required in audit reports. The required financial statements and schedules are set forth in preceding sections of this report. Required comments and disclosures related to the audit of such statements and schedules are set forth following. (this page intentionally left blank) INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH OREGON AUDITING STANDARDS To the Honorable Mayor, Members of the Urban Renewal Agency Board and the Administrator City of Eugene, Oregon We have audited the basic financial statements of the Urban Renewal Agency (Agency) of the City of Eugene, Oregon as of and for the year ended June 30, 2009 and have issued our report thereon dated November 30, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the provisions of the Minimum Standards for Audits of Oregon Municipal Corporations, prescribed by the Secretary of State. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Agency’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Agency’s internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Agency’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Agency’s financial statements that is more than inconsequential will not be prevented or detected by the Agency’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Agency’s internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance As part of obtaining reasonable assurance about whether the Agency’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, grants, including provisions of Oregon Revised Statutes as specified in Oregon administrative Rules OAR 162-10-000 to 162-10-330, as set forth below, noncompliance with which could have a direct and material effect on the determination of financial statement amounts: The accounting records and related internal control structure. The amount and adequacy of collateral pledged by depositories to secure the deposit of public funds, The requirements relating to debt. The requirements relating to preparation, adoption and execution of the annual budgets for fiscal years 2009 and 2010. The requirements relating to insurance and fidelity bond coverage. The appropriate laws, rules and regulations pertaining to programs funded wholly or partially by other governmental agencies. The statutory requirements pertaining to investment of public funds. The requirements pertaining to awarding of public contracts of public improvements. The results of our tests indicate that with respect to the items tested the Agency complied, in all material respects, with the provisions referred to above. This report is intended solely for the information of the Honorable Mayor, member of the Urban Renewal Agency Board, the Administrator and management of the Urban Renewal Agency of the City of Eugene, Oregon and the Secretary of State, Audits Division, of the State of Oregon and is not intended to be and should not be used by anyone other than these specified parties. ISLER CPA By: Paul Nielson, CPA, a member of the firm Eugene, Oregon November 30, 2009