CCDA Report - FY Ending June 30, 2016 CityCenter Development Agency
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CCDA Tigard, Oregon's Urban Renewal Agency
Annual Financial Report I For the fiscal year ended June 30, 2016
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TIGARD CITY CENTER DEVELOPMENT AGENCY
(A Component Unit of the City of Tigard, Oregon)
ANNUAL FINANCIAL REPORT
For the fiscal year ended June 30, 2016
Prepared by:
City of Tigard — Financial and Information Services Department
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• City Center Development Agency
• Table of Contents
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Introductory Section:
List of Officials
Financial Section:
Independent Auditor's Report 2
Management's Discussion and Analysis 5
• Basic Financial Statements:
• Government-Wide Financial Statements
Statement of Net Position 10
Statement of Activities 11
• Fund Financial Statements—Governmental Funds
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• Balance Sheet 12
Statement of Revenues and Expenditures 13
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Notes to the Basic Financial Statements 14
Required Supplementary Information:
• Schedule of Revenues and Expenditures—Budget and Actual:
• Urban Renewal Agency Capital Projects Fund 21
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• Other Supplementary Information:
• Schedule of Revenues and Expenditures—Budget and Actual:
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• Urban Renewal Agency Debt Service Fund 22
• Audit Comments and Disclosure Requirements:
• Independent Auditor's Report Required by Oregon State Regulations 23
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Tigard City Center Development Agency
Fiscal Year 2015-2016
CITY CENTER DEVELOPMENT AGENCY BUDGET COMMITTEE •
Don Fisher Mayor John L. Cook •
Melody Graeber Councilor John Goodhouse •
Julie Plotz Councilor Marland Henderson •
Bill Bigcraft Councilor Jason Snider .
Clifford Rone Councilor Marc Woodard
Zoe Monahan,Alternate •
CITY CENTER DEVELOPMENT AGENCY BOARD •
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John L. Cook,Chair •
John Goodhouse Jason Snider •
Marc Woodard Marland Henderson •
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EXECUTIVE DIRECTOR •
Marty Wine •
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COMMUNITY DEVELOPMENT DIRECTOR •
Kenny Asher •
REDEVELOPMENT PROJECT MANAGER for DOWNTOWN •
Sean Farrelly •
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FINANCE and INFORMATION SERVICES DIRECTOR •
Toby LaFrance •
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CITY CENTER DEVELOPMENT AGENCY •
City of Tigard 113125 Hall Blvd.I Tigard,OR 972231503-639-4171 •
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+rr INDEPENDENT AUDITOR'S REPORT
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MOSS ADAMS I l I'
REPORT OF INDEPENDENT AUDITORS
Board Members
Tigard City Center Development Agency(A component unit of the City of Tigard,Oregon)
Tigard,Oregon
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major
fund of the Tigard City Center Development Agency(the Agency),a component unit of the City of Tigard,
Oregon, as of and for the year ended June 30, 2016, and the related notes to the financial statements,
which collectively comprise the Agency's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit.We conducted
our audit in accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of
the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities and each major fund of the Agency as of June
30, 2016, and the respective changes in financial position for the year then ended in accordance with
• accounting principles generally accepted in the United States of America.
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• Praxity:
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• GLOBAL ALLIANCE OF
INDEPENDENT FIRMS
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MOSS ADAMS LLP
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management's 0
discussion and analysis on pages 5 through 9 and the budgetary schedules for the Capital Projects Fund
on page 21,be presented to supplement the basic financial statements. Such information,although not a
part of the basic financial statements,is required by the Governmental Accounting Standards Board who 0
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational,economic,or historical context.
We have applied certain limited procedures to the management's discussion and analysis in accordance a
with auditing standards generally accepted in the United States of America,which consisted of inquiries
of management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements.We do not express an opinion
or provide any assurance on this information because the limited procedures do not provide us with 0
sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The budgetary schedules for the Capital
Projects Fund described above are the responsibility of management and were derived from and related
directly to the underlying accounting and other records used to prepare the basic financial statements. 0
The budgetary schedules for the Capital Projects Fund have been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records 0
used to prepare the basic financial statements or to the basic financial statements themselves,and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the budgetary schedules for the Capital Projects Fund are fairly stated, in all
material respects,in relation to the basic financial statements as a whole.
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Supplementary Information
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Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Agency's basic financial statements. The budgetary schedules on page 22 are
presented for purposes of additional analysis and are not a required part of the basic financial 0
statements.
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This supplementary information is the responsibility of management and was derived from and relates IP
directly to the underlying accounting and other records used to prepare the basic financial statements.
This information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information A
directly to the underlying accounting and other records used to prepare the basic financial statements
or to the financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the budgetary schedules
are fairly stated,in all material respects,in relation to the basic financial statements as a whole.
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MOSS ADAMS LLP
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Agency's basic financial statements. The introductory section is presented for
purposes of additional analysis and is not a required part of the basic financial statements.
The introductory section has not been subjected to the auditing procedures applied in the audit of the
basic financial statements and,accordingly,we do not express an opinion or provide any assurance on it.
Report on Other Legal and Regulatory Requirements
In accordance with the Minimum Standards of Audits of Oregon Municipal Corporations,we have issued
our report dated December 20, 2016 on our consideration of the Agency's compliance with certain
provisions of laws and regulations, including the provisions of Oregon Revised Statutes as specified in
Oregon Administrative Rules. The purpose of that report is to describe the scope of our testing of
compliance and the results of that testing and not to provide an opinion on compliance.
p.Aa(.'441,4151
For Moss Adams LLP
Portland,Oregon
December 20,2016
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• Management's Discussion and Analysis
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• As part of this Annual Financial Report,the Tigard City Center Development Agency (agency),a component
• unit of the City of Tigard,Oregon,offers readers this narrative overview and analysis of the financial activities
® of the agency for the fiscal year ended June 30,2016. It focuses on significant financial issues,major financial
activities, and resulting changes in financial position, as well as economic factors affecting the agency. This
C Management's Discussion and Analysis (MD&A)is based on currently known facts,decisions,and conditions
that existed as of the date of the report.
Financial Highlights
® • The agency sold three contiguous properties to a private developer as part of a Disposition and
• Development agreement for$1,650,000 resulting in a gain on the sale of$1,525,128.
• The assets of the agency exceeded its liabilities at the close of the most recent fiscal year by$1,627,942.
• Of this amount, $377,632 is restricted for the repayment of debt, $1,109,961 is for net investment in
• capital assets and the remaining$140,349 is unrestricted and may be used to meet the agency's ongoing
obligations to citizens and creditors.
• • The agency's net position (assets less liabilities) increased $217,948 over the course of the year,
primarily due to property tax revenue exceeding expenses.
• In the fund financial statements, there were total expenditures of$2,504,227 for fiscal year 2015-16.
• The expenditures in the Capital Projects Fund($2,285,039)were for payment of$1,650,000 to the city
• for SDC fees related to a property sale agreement and downtown beautification projects, including
• downtown gateways and landscape development. The payments in the Debt Service Fund($219,188)
were for principal and interest payments on a commercial bank loan and to the City of Tigard.
O • Also in the fund financial statements,the agency recognized$504,852 in revenue from property taxes,
miscellaneous revenue and interest earnings.
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 include three components:
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1. Government-wide financial statements,
2. Fund financial statements,and
• 3. Notes to the financial statements.
Government-wide financial statements
• Government-wide financial statements are designed to provide readers with a broad overview of the agency's
• finances,in a manner that is similar to a private-sector business.
• The Statement of Net Position presents information on all of the agency's assets and liabilities, with the
• difference between the two reported as net position. Over time, increases or decreases in net position may
• serve as a useful indicator of whether the financial position of the agency is improving or deteriorating.
S The Statement of Activities presents information on how the agency's net position changed during the most
• recent fiscal year. All changes in net position are reported as soon as the underlying event occurs,regardless
of the timing of related cash flows. Thus,revenues and expenses are reported in the statement for some items
• that will result in cash flows in a future period such as earned,but uncollected,property taxes.
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The government-wide financial statements indicate that the functions of the agency are principally supported
by property taxes and are considered governmental activities. The agency does not have business-type activities
in which costs are covered through user fees or charges.
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 functions. The agency uses fund accounting to ensure and demonstrate .
compliance with finance-related legal requirements. All of the funds of the agency are considered governmental
funds. •
Governmental funds are used to account for agency functions that are supported primarily by taxes and •
intergovernmental revenues. These are essentially the same functions that are reported as governmental •
activities in the government-wide financial statements. Unlike government-wide financial statements,
governmental fund financial statements focus on the acquisition and use of spendable resources, as well as
balances of available spendable resources at the end of the fiscal year. Such information may be useful in .
evaluating the agency's near-term requirements. .
The agency maintains two separate governmental funds consisting of the Urban Renewal Debt Service Fund .
and the Urban Renewal Capital Projects Fund. The Capital Projects Fund functions as the agency's general
operations fund. Information for each fund is presented separately in the governmental funds balance sheet •
and in the governmental funds statement of revenues and expenditures.
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Notes to the basic Financial Statements
The notes provide additional information that is essential for a full 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.
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Government-wide Financial Analysis •
As noted earlier,net position may serve over time as a useful indicator of the agency's financial position. In •
the case of the agency, assets exceeded liabilities by$1,627,942 in fiscal year 2016 compared to a net position
of$1,409,994 in fiscal year 2015. •
The revenues for fiscal year 2016 increased primarily due to the agency selling property to a private developer, •
resulting in a gain on the sale of$1,525,128. As a condition of the sale,the agency was required to pay a portion •
of the developer permit fees in the amount of$1,650,000. These developer fees account for the significant •
increase in the Community Development line item. This accounts for the majority of the change in net position
for fiscal year 2016 as compared to fiscal year 2015. •
A significant portion of the agency's net position (68%) reflects its investment in capital assets, consisting •
mostly of infrastructure and land. The agency uses these capital assets in the redevelopment of the designated
Urban Renewal downtown area and, as such, are not available for future spending. In fiscal year 2016 the •
capital assets increased due to the agency purchasing two property lots for future redevelopment. $377,632 or
23%is restricted for the payment of debt incurred by the agency and the remaining net position of$140,349 •
or 9%is unrestricted. •
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• Tigard City Center Development Agency
• Statement of Net Position
June 30,
• 2016 2015
• ASSETS:
Cash and cash equivalents $ 152,970 $ 949,001
• Receivables 16,784 14,838
• Restricted cash and cash equivalents 360,848 -
Land and construction in progress 1,491,579 862,962
• Other capital assets,net of accumulated depreciation 1,546,060 1,788,839
• Total assets 3,568,241 3,615,640
• LIABILITIES:
Accounts payable and other accrued liabilities 11,221 98,468
Q Deposits 1,400 -
Due within one year:
0 Bank loan payable 130,000 130,000
II Due within more than one year:
Advances from City 757,678 807,178
• Bank loan payable 1,040,000 1,170,000
• Total liabilities 1,940,299 2,205,646
NET POSITION:
• Net investment in capital assets 1,109,961 999,117
• Restricted for debt service 377,632 410,877
Unrestricted 140,349 -
• Total net position $ 1,627,942 $ 1,409,994
® Tigard City Center Development Agency
Change in Net Position
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® For the Year Ended June 30,
REVENUES: 2016 2015
O Program revenues:
Q Rental income and charges for services $ 130,516 $ 149,872
General revenues:
G Property taxes 371,933 350,138
• Interest earnings 4,310 1,663
Miscellaneous 78 78,262
• Special item:
• Gain on sale of capital assets 1,525,128
Total revenues * 2,031,965 579,935
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EXPENSES:
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Community development 1,774,329 193,745
• Interest on long-term debt 39,688 21,534
• Total expenses 1,814;017 215,279
• Change in net position 217,948 364,656
Net position-beginning 1,409,994 1,045,338
• Net position-ending $ 1,627,942 $ 1,409,994
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Capital Assets and Debt Administration 4110
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Capital Assets .
As of June 30,2016 the agency had invested$3,037,638 in capital assets as reflected in the following table:
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Governmental Activities
2016 2015 •
Land $ 985,504 $ 380,918
Construction in progress 506,075 482,044
Infrastructure 1,594,255 1,810,021 •
Amumulated depredation (48,196) (21,182)
Total $ 3,037,638 $ 2,651,801 •
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On November 12,2015 the agency sold three contiguous properties,previously transferred to the agency from •
the city in fiscal year 2015,to a private developer as part of a Disposition and Development Agreement(DDA)
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for future residential and commercial development. The amount of the sale was equal to the appraised value
of the property in the amount of$1,650,000. As a condition of the DDA,the agency agreed to use the entire •
proceeds of the sale to pay the city for a portion of the system development charges (SDC) and permit costs •
that the project would incur.
On November 24,2015 the agency acquired two property lots(Main Street Saxony properties)in the downtown
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area from the city. Per the Purchase and Sale Agreement between the city and the agency, the purchase price
for these properties was$515,000 (representing the original purchase price for the property paid by the city)or
the amount established by an independent MAI appraisal,whichever is greater,with$1.00 due at closing and
the balance due on June 30,2017.The purchase and sale agreement includes covenants that bind the agency to
repaying the city(Park Bond fund)the original purchase amount,or market value,whichever is greater,for the •
portion of the property not used for public space by January 30, 2017 as these properties were originally .
purchased by the city using Park Bond funds. In addition, the city has the right to repurchase the properties
any time prior to the agency paying the full amount of the purchase price. •
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The agency completed two projects in the Strolling Street landscaping program, designed to encourage
beautification in the downtown area for future investment opportunities. Other projects included the Main •
Street gateways and public artwork as well as façade improvements to businesses in the downtown area. •
Additional information on the agency's capital assets can be found on page 18 of this report.
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Debt
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Under the Intergovernmental Agreement(IGA)between the agency and the City of Tigard,loans from the city •
to the agency are repaid in ten equal payments on the principal starting ten years after the loan;however,interest .
payments start in the second year after the loan. In fiscal year 2015-16,the agency did not receive any additional
loans from the city. The Debt Service Fund elected to make an early repayment of$49,500 of principal during •
the year.
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In fiscal year 2015 the agency borrowed$1,300,000 from a financial institution to purchase property located in •
the downtown area. Payments of principal and interest are due in March and September annually until the final
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payment in September of 2019. Additional information on the agency's debt can be found on pages 18-19 of
this report. •
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• Budgetary Highlights
• The Tigard City Center Development Agency budget consists of two funds: The Capital Projects Fund,which
functions as the agency's general operations fund, and the Debt Service Fund. The Capital Projects Fund
• activity is supported by loans from the City of Tigard and a bank loan. The city loans will be repaid with interest
once the agency begins generating enough tax increment revenue. The focus of the fiscal year 2015-16 budget
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was the purchase of property in downtown for future development, facade improvements to businesses to
• make them more attractive to consumers,property improvement for development,landscape architecture and
real estate consulting. These projects are on-going and have been carried over into the fiscal year 2016-17
budget.
• Two budget adjustments were necessary during the fiscal year,one to request$15,000 of appropriations carry
• forward for contract and internal expenses related to property relocation and a second to authorize the sale of
properties totaling $1,650,000 to a private developer, which was used toward the payment of system
development charges and permit fees for downtown redevelopment projects.
The agency received additional rental income of$46,516 over budgeted amounts for fiscal year 2015-16 from
tenants leasing the newly acquired Saxony property. The Saxony tenants will be relocating when the process
for redevelopment begins,including environmental studies and planning for building demolition.
The budget for fiscal year 2016-17 includes continuation of the facade improvements and strolling street
• programs,payment to the city for the Main Street property(Saxony)purchase,cleanup and site demolition for
the Saxony properties,paid for with an Environmental Protection Agency grant and redevelopment planning
for the transit center. In addition,various marketing and real estate development opportunities will be pursued.
Economic Factors
The Tigard City Center Development Agency is an urban renewal agency approved by voters in 2006. The
primary funding source for the agency is property tax increment financing, which generally means that the
property taxes resulting from growth in property value within the Urban Renewal area can be used to finance
• improvement projects and programs. In order to facilitate the redevelopment of the Urban Renewal area,the
agency adopted a City Center Urban Renewal Plan that allows the agency to incur a maximum amount of
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indebtedness (amount of tax increment financing for projects and programs) of$22,000,000 for a duration of
• 20 years. No new debt will be incurred after the fiscal year 2025-26 as part of this plan. As of the fiscal year
2015-16, the agency had $18.7 million in maximum indebtedness remaining. The agency's ability to borrow
• additional funds will remain constrained for several more years as tax increment revenue is based on property
• tax increases over time and growth was fairly slow at the time the agency was created. Despite the slow growth,
the agency has been able to leverage state, county and local funds to make major improvements to streets,
• bicycle and pedestrian paths in the district. The agency will continue to seek additional funding from outside
• sources for redevelopment opportunities.
• In fiscal year 2016-17 staff will pursue feasibility and market analysis for downtown as well as finding a
developer for public and private sites near the Tigard Transit Center and Main Street.Redevelopment planning
• for the Saxony site will be a major focus as commercial and creative office mixed-use development is planned
• for the site.
• 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 government's finances. Questions concerning any of the information provided in this report or
• requests for additional financial information should be addressed to the Finance and Information Services
Director,City of Tigard, 13125 SW Hall Blvd.,Tigard,Oregon 97223.
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Basic Financial Statements
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Tigard City Center Development Agency
Statement of Net Position
June 30,2016
Governmental
Activities
ASSETS:
Cash and cash equivalents $ 152,970
Property taxes receivable 16,784
® Restricted cash and cash equivalents 360,848
• Land and construction in progress 1,491,579
• Other capital assets,net of accumulated depreciation 1,546,060
Total assets 3,568,241
LIABILITIES:
Accounts payable and other accrued liabilities 11,221
Deposits 1,400
• Due within one year:
® Bank loan payable 130,000
• Due within more than one year:
Advances from City 757,678
Bank loan payable 1,040,000
Total liabilities 1,940,299
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NET POSITION:
• Net investment in capital assets 1,109,961
• Restricted for debt service 377,632
Unrestricted 140,349
• Total net position $ 1,627,942
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a The accompanying notes are an integral part of the basic financial statements.
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Tigard City Center Development Agency
Statement of Activities I
Year Ended June 30,2016
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Net
(Expense)/Revenue
Program and Change in Net
Revenues Position a
Rental Income and Total
Charges for Governmental
Functions/Programs Expenses Services Activities
Governmental activities:
Community development $ 1,774,329 $ 130,516 $ (1,643,813)
Interest on long-term debt 39,688 - (39,688) 111
Total governmental activities $ 1,814,017 $ 130,516 (1,683,501) a
General revenues: .
Property taxes 371,933
Interest earnings 4,310
Miscellaneous 78 0
Special item:
Gain on sale of capital assets 1,525,128
Total revenues 1,901,449
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Change in net position 217,948
Net position-beginning 1,409,994 •
Net position-ending $ 1,627,942 •
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The accompanying notes are an integral part of the basic financial statements.
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Tigard City Center Development Agency
• Balance Sheet-Governmental Funds and
0 Reconciliation to the Statement of Net Position
June 30,2016
O Total
• Capital Debt Governmental
® Projects Service Funds
ASSETS:
C Cash and cash equivalents
152,970 $ - $ 152,970
O Property taxes receivable - 16,784 16,784
• Restricted cash and cash equivalents - 360,848 360,848
Total assets $ 152,970 $ 377,632 $ 530,602
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LIABILITIES:
0 Accounts payable and accrued liabilities $ 11,221 $ - $ 11,221
Deposits 1,400 - 1,400
O Total liabilities 12,621 - 12,621
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40...,110DEFERREDINFLOWS OF RESOURCES:
,., Unavailable revenues-property taxes - 15,425 15,425
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*sr FUND BALANCES:
A✓ Restricted for debt service - 362,207 362,207
AV
Q Restricted for capital projects 140,349 - 140,349
Total fund balances 140,349 362,207 502,556
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• Total liabilities,deferred inflows
II of resources and fund balances $ 152,970 $ 377,632
• Capital assets used in governmental activities are not financial resources and are
• not reported in the funds. 3,037,639
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w Long-term assets are not available to pay for current period expenditures and,
therefore are unearned in the funds-property taxes earned but not available 15,425
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• Long-term liabilities-not reported in the funds:
9 Loan from City of Tigard,not due and payable in the current period (757,678)
• Loan from financial institution,not due and payable in the current period (1,170,000)
• Net Position of Governmental Activities $ 1,627,942
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• The accompanying notes are an integral part of the basic financial statements.
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Tigard City Center Development Agency 4
Statement of Revenues and Expenditures-Governmental Funds and ,
Reconciliation to the Statement of Activities
Year Ended June 30,2016
Total 4
Capital Debt Governmental '
Projects Service Funds ,
REVENUES:
Taxes $ - $ 369,948 $ 369,948 ,
Rental revenues 130,516 - 130,516 '
Interest earnings - 4,310 4,310
Miscellaneous 78 - 78 ,
Total revenues 130,594 374,258 504,852 ,
EXPENDITURES: ,
Community development 1,650,000 - 1,650,000 ,
Capital projects 635,039 - 635,039
Debt service ,
Principal - 179,500 179,500 ,
Interest - 39,688 39,688 ,
Total expenditures 2,285,039 219,188 2,504,227
Change in fund balance before ,
other financing sources(uses) (2,154,445) 155,070 (1,999,375) 4
Other financing sources(uses):
Proceeds from sale of capital asset 1,650,000 - 1,650,000 ,
Transfers in 190,300 - 190,300 ,
Transfers out - (190,300) (190,300)
Total other financing sources(uses) 1,840,300 (190,300) 1,650,000 4
Change in fund balance (314,145) (35,230) (349,375) I
Fund balance-beginning 454,494 397,437 851,931
Fund balance-ending $ 140,349 $ 362,207 $ 502,556
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Net change in fund balances-total governmental funds $ (349,375) .
Governmental funds report capital outlays as expenditures while govermental activities .
report depreciation expense to allocate thoses expenditures over the life of the assets. .
Expenditures for capitalized assets 537,724
Depreciation reported in the government-wide statements (27,014) III
Proceeds on sale of asset in the fund financial statements (1,650,000)
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Gain on disposal of capital assets 1,525,128
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Property taxes that do not provide current financial resources 1,985
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Principal payments expensed on the fund financial statements 179,500
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Change in Net Position of Governmental Activities $ 217,948 •
The accompanying notes are an integral part of the basic financial statements. •
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• City Center Development Agency
• Notes to the Basic Financial Statements
• 1. Summary of Significant Accounting Policies:
• The financial statements of the Tigard City Center Development Agency (agency) have been prepared in
• accordance with accounting principles generally accepted in the United States of America (GAAP) as applied
• to government units. GAAP statements include all relevant Governmental Accounting Standards Board
(GASB)pronouncements.
• The Agency
• The Tigard City Center Development Agency was approved on May 16, 2006 with plans to commence
• operations during fiscal year 2009 under the provisions of Oregon Revised Statutes, Chapter 457 (ORS 457),
to provide improvements in the downtown area so that it will be economically healthy while maintaining its
• "uniquely Tigard"character.
• The Tigard City Center Development Agency is a legally separate entity, which is governed by a board
comprised of the City Council,as stipulated in the bylaws. The Council has the ability to impose its will on the
• agency as determined on the basis of budget adoption, taxing authority, and funding. The purpose of the
agency is to undertake urban renewal projects and activities pursuant to the city's downtown redevelopment
plan. The financial results of the agency are reported herein as a debt service fund and a capital projects fund.
The agency boundaries include primarily the city's central business district, general commercial district and
professional commercial district. The agency is a blended component unit of the City of Tigard and its financial
• activities are included in the basic financial statements of the city,which can be viewed on the city's website at
http://www.tigard-or.gov.
Basic Financial Statements
The agency's financial operations are presented at both the government-wide and fund financial levels. All
• activities of the agency are categorized as governmental activities.
• Government-wide financial statements
• The Statement of Net Position and the Statement of Activities display information about the agency as a whole.
• These statements include all the financial activities of the agency.
• The Statement of Activities presents a comparison between direct expenses and program revenues for each
• function of the agency's governmental activities. Direct expenses are clearly identifiable with a specific function.
• All costs are supported by general revenues which include property taxes and interest earnings.
• Fund financial statements
• These statements display information at the individual fund level. Each fund is considered to be a separate
• accounting entity. Funds are classified and summarized as governmental,proprietary and fiduciary. Currently
• the agency has only governmental fund types.
i Basis of Presentation
• The financial transactions of the agency are recorded in individual funds. Each fund is accounted for by
• providing a separate set of self-balancing accounts that comprises its assets, deferred outflows of resources,
liabilities,deferred inflows of resources,fund balance,revenues and expenditures.
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1. Summary of Significant Accounting Policies Continued: a
Basis of Presentation,con't. •
GASB Statement No. 34 sets forth criteria (percentage of the assets,deferred outflows of resources,liabilities, .
deferred inflows of resources,revenues or expenditures/expenses or either fund category or the governmental .
and enterprise combined) for the determination of major funds. For purposes of presentation, each of the
agency's funds is presented as a major fund. .
The Urban Renewal Debt Service Fund accounts for the accumulation of resources and payments for long- I
term borrowings related to the Tigard City Center Development Agency. .
The Urban Renewal Capital Projects Fund accounts for the acquisition and development of capital assets related 41
to the Tigard City Center Development Agency and serves as the agency's general operations fund.
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Measurement Focus and Basis of Accounting411
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Measurement focus is a term used to describe which transactions are recorded within the various financial
statements. Basis of accounting refers to when transactions are recorded,regardless of the measurement focus.
The government-wide financial statements are reported using the economic resources measurement focus and •
the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a •
liability is incurred,regardless of the timing of related cash flows. Grants and similar items are recognized as .
revenue as soon as all eligibility requirements imposed by the provider have been met.
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The governmental fund financial statements are reported using the current financial resources measurement .
focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered to be available when they are collectible within the current •
period or soon enough thereafter to pay liabilities of the current period. For this purpose,the agency considers .
revenues to be available if they are collectible within 60 days of the end of the current fiscal period. The agency
considers property taxes subject to accrual. Expenditures generally are recorded when a liability is incurred,as 410
under accrual accounting. However,payment on long-term borrowing is recorded only when payment is due. •
Since the governmental fund statements are presented on a different measurement focus and basis of •
accounting than the government-wide statements,reconciliation is necessary to explain the adjustments needed •
to transform the fund-based financial statements into the government-wide presentation. These reconciliations
are presented with the governmental fund statements. .
Cash and Investments •
The city maintains a common cash and cash equivalents pool for all city funds,including funds of the agency. •
Interest is earned and allocated monthly on pooled cash and cash equivalents based on each fund's cash 41
balances as a proportion of the city's total pooled cash and equivalents. The agency considers cash and
equivalents to include the pooled cash, 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. •
The agency reports certain cash and equivalents as restricted because their use is limited by parties external to •
the agency. Restrictions may be imposed by creditors,other governments,laws and/or enabling legislation. •
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• City Center Development Agency
• Notes to the Basic Financial Statements
• 1. Summary of Significant Accounting Policies Continued:
Receivables and Payables
® Property taxes are levied and become a lien on July 1. Collection dates are November 15, February 15, and
• May 15 following the lien date. Discounts are allowed if the amount due is received by November 15 or
• February 15. Taxes unpaid and outstanding on May 16 are considered delinquent.
• The majority of the agency's receivables are property taxes,which are deemed to be substantially collectible.
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• Capital Assets
• Capital assets,which include property,plant,equipment and infrastructure assets (e.g. roads,pathways, street
• lights,etc.) are reported in the government-wide financial statements.
Capital assets are charged to expenditures as purchased or constructed in the governmental fund statements,
and capitalized in the government-wide financial statements. Capital assets are recorded at historical cost or
estimated historical cost. Upon disposal of an asset, cost and accumulated depreciation (if applicable) is
removed from the accounts and,if appropriate,a gain or loss on the disposal is recognized.
Capital assets are defined for the agency as assets with an initial, individual cost of$5,000 or more, and an
estimated useful life of greater than one year. Additions or improvements and other capital outlays that
• significantly extend the useful life of an asset,or that significantly increase the capacity of an asset are capitalized.
Donated capital assets are recorded at their estimated fair value at the time of donation. Other costs for repairs
and maintenance are expensed as incurred.
S Depreciation on exhaustible assets is calculated on the straight-line basis over the following estimated useful
lives:
110 Asset Years
Buildings and improvements 25-40
• Improvements other than buildings 10-20
Infrastructure 20-40
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Deferred Inflows of Resources
® In addition to liabilities,the governmental fund balance sheet reports a separate section for deferred inflows of
• resources. Deferred inflows of resources represent unavailable revenue that will be recognized in a future
period. The agency reports delinquent property tax revenue in this section under the modified accrual basis of
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accounting. These revenues are deferred and recognized as an inflow of resources in the period that the
• revenues become available.
Net Position and Fund Balance
Net position is reported on the Statement of Net Position. Within net position, the net investment in capital
• assets represents total capital assets less accumulated depreciation. Of the total net position,the majority is net
41 investment in capital assets and the remaining amount is restricted for debt service.
• In the fund financial statements, the fund balance for governmental funds is reported in classifications that
• comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on
the specific purposes for which amounts in those funds can be spent.
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Notes to the Basic Financial Statements ,
1. Summary of Significant Accounting Policies Continued: 41
Fund balance is reported as restricted when the constraints placed on the use of resources are either: (a)
externally imposed by creditors (such as through debt covenants),grantors,contributors or laws or regulations 41
of other governments;or(b)imposed by law through constitutional provisions or enabling legislation. .
Use of Estimates ,
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In preparing the agency's financial statements,management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities,the disclosure of contingent assets and liabilities at the date 0
of the financial statements, and the reported amounts of revenues and expenses/expenditures during the
reporting period. Actual results could differ from those estimates.
2. Stewardship, Compliance, and Accountability:
Budgets41
The agency's budget is prepared in accordance with Oregon local budget law. All annual appropriations lapse 41
at fiscal year-end. During the month of February each year, the agency submits requests for appropriations i
to the executive director so that a budget may be prepared. In June,the proposed budget is presented to the
agency's board of directors for approval. The board holds public hearings and a final budget must be prepared 41
and adopted no later than June 30.
The adopted budget is,prepared by fund and function. The legal level of budgetary control, (i.e., the level at 41
which expenditures may not legally exceed appropriations)is the fund and function level.
Deficit Fund Balance 41
The Urban Renewal Agency Capital Project Fund reported a deficit fund balance of$617,329 on a GAAP •
basis as of June 30,2016. This deficit is due to internal loans from the General Fund and the Sewer Fund that 411/
have been spent on activities in the downtown urban renewal district. The loans are repaid over time with •
future revenues from tax increment collections.
3. Cash and Investments: •
The agency's cash and investments reported on the Statement of Net Position and Balance Sheet represent
the agency's share of the city's cash and investment pool. The agency's participation in the cash and investment
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pool is involuntary. Interest earnings from this pool are allocated to the agency on a monthly basis based on i
the cash and investment balance of the agency to the total investments in the pool. At June 30, 2016 the
agency's share of the city's cash and investment pool,including restricted and unrestricted,totaled$513,818. •
Of this amount$360,848 is restricted by the requirements of the agency's property tax levy. It is not practical
to determine the investment risk, collateral risk or insurance coverage for the agency's share of its pooled •
investments. Investments for the city as well as its component unit are reported at fair value. •
Information about the pooled investments is included in the city's annual financial report and may be obtained •
by contacting the city's Finance Department at 13125 SW Hall Blvd.,Tigard, OR 97223 or found on line at:
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http://www.tigard-or.gov/city hall/finance and information services.php
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• City Center Development Agency
• Notes to the Basic Financial Statements
• 4. Receivables and Payables:
• Property taxes are levied and become a lien on July 1. Collection dates are November 15, February 15, and
• May 15 following the lien date. Discounts are allowed if the amount due is received by November 15 or
.+. February 15. Taxes unpaid and outstanding on May 16 are considered delinquent.
5. Capital Assets:
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• Capital assets include a property purchase for redevelopment projects on Main Street,the completion of two
projects for the Strolling Street landscaping program,Main Street gateway improvements and public artwork.
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0 Balance Balance
0 June 30,2015 Additions Deletions Transfers June 30,2016
C Land $ 380,918 $ - $ (124,872) $ 729,458 $ 985,504
® Construction in Progress 482,044 537,724 - (513,692) 506,076
Infrastructure 1,810,021 -
(215,766) 1,594,255
C Total cost 2,672,983 537,724 (124,872) - 3,085,835
® Depreciation
C Infrastructure (21,182) (27,014) - - (48,196)
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Capital assets,net $ 2,651,801 $ 510,710 $ (124,872) $ - $ 3,037,639
6. Leased Property
• In connection with acquiring property and a building in the downtown area during fiscal year 2016,the agency
• assumed a lease agreement as the lessor that extends through July 31,2018. The lease has the option of two
additional extensions of three years each. The property and building are recorded at$1,360,929 less the related
. accumulated depreciation of$15,787 for a net book value of$1,345,142. Minimum future rental income under
• the lease agreement is as follows:
• Year ending June 30
• 2017 $ 86,400
• 2018 86,400
2019 7,200
• Total minimum payments $ 180,000
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• 7. Long-term Borrowing:
• The agency and the city entered into an intergovernmental agreement (IGA) that states the city will loan the
• agency resources as needed to cover project costs related to the Tigard City Center Urban Renewal Plan.
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City Center Development Agency l
Notes to the Basic Financial Statements ,
7. Long-term Borrowing, Continued:
The terms of the IGA state that the agency agrees to repay the principal and accrued interest on all loan
amounts solely from Tax Increment Revenues. The interest rate calculated for the loans is based on the same
average rate as that earned on other funds invested by the city at the time of the loan,which currently ranges ,
from 0.500/0 to 0.54%. Interest-only payments are scheduled to be paid to the city prior to July 1,2017. During ,
the fiscal year ending June 30,2025 the agency will begin making principal payments to the city on outstanding
loans. Payments are to be made as tax increment revenue or other funding sources are available. In no case
shall the repayment timeline exceed the life of the agency. Under the terms of the IGA,the city may forgive
or reduce the interest and/or principal due from the agency. The agency may also repay the debt early. In
fiscal year 2016 the agency elected to repay$49,500 of outstanding principal on the loans. In fiscal year 2016 ,
the agency did not enter into any new loans from the city.
In fiscal year 2015 the city received a$1,300,000 loan from a financial institution borrowed at 3.00%to finance
a property purchase within the City Center Urban Renewal Area. At the time of the bank loan, the city and
the agency entered into an Intergovernmental Agreement to Make Financing Payments(IGA). This agreement
states the agency will make the payments on the bank loan to the financial institution from the tax increment
revenues. The IGA constitutes indebtedness of the agency in the amount of the financing or$1,300,000. As
of June 30,2016,the bank loan principal outstanding was$1,170,000.
Future principal and interest payments on the bank loan and the city loans are as follows: ,
Borrowing Transactions Interest
Outstanding Outstanding Due in
Outstanding Loans June 30,2015 Additions Paid June 30,2016 Paid one year
Loans from City of Tigard
•for urban renewal projects:
Loan#5 June 30,2013 $ 137,647 $ - $ (35,152) $ 102,495 $ 688 $ - •
Loan#5 June 30,2013 54,531 - (14,348) 40,183 273 - •
Loan#6 June 30,2014 361,000 - - 361,000 1,949
Loan#7 June 30,2015 254,000 - - 254,000 - - •
Bank loan payable 1,300,000 - (130,000) 1,170,000 36,778 130,000 •
Total $ 2,107,178 $ - $ (179,500) $ 1,927,678 $ 39,688 $ 130,000
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• City Center Development Agency
• Notes to the Basic Financial Statements
O 7. Long-term Borrowing, Continued:
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• Fiscal Year
Ending Loans from the City Bank Loan Totals
O June 30 Principal Interest Principal Interest Principal Interest
• 2017 $ - $ 3,933 $ 130,000 $ 32,842 $ 130,000 $ 36,775
4111 2018 - 3,933 130,000 28,980 130,000 32,913
2019 3,933 130,000 25,118 130,000 29,051
• 2020 - 3,933 780,000 11,681 780,000 15,614
• 2021 - 3,933 - 3,933
2022-2026 63,201 19,594 - - 63,201 19,594
2027-2031 375,604 14,134 - - 375,604 14,134
• 2032-2036 318,873 4,357 - - 318,873 4,357
• $ 757,678 $ 57,750 $ 1,170,000 $ 98,621 $ 1,927,678 $ 156,371
8. Related Party Transactions
• In fiscal year 2016 the agency entered into a Development and Disposition Agreement with the city and a
developer related to property owned by the agency. Under the terms of this agreement,the agency agreed
• to pay the city a portion of the developer's system development charges equal to the appraised value of the
• property sold by the agency to the developer. The property was sold for $1,650,000 to the developer in
September of 2015. In December of 2015,the agency paid to the city$1,650,000 in system development
4111 charges which were recognized as revenues in the city's respective system development funds and as a
• community development program expense in the agency's capital project fund, Urban Renewal Capital
Projects Fund.
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• 9. Risk Management:
• As a component unit of the city,the agency is exposed to various risks of loss related to torts;theft of,damage
• to and destruction of assets;errors and omissions;and natural disasters for which the city carries commercial
insurance. The city has established risk management programs for liability insurance coverage. The agency is
covered under policies and programs insuring the city. There were no insurance claims attributable to the
agency as of June 30,2016.
10. Subsequent Events:
Upon purchase of the Saxony properties in fiscal year 2015,the agency entered into a consent judgment with
3 • the State of Oregon Department of Environmental Quality (DEQ) to perform certain pollution remediation
• activities only if the city chooses to begin on-site construction. As of year-end the agency did not have an
obligation to perform any pollution remediation with respect to these properties as redevelopment activities
9 are dependent,in part,on obtaining a federal grant to assist with cleanup and demolition of the properties.
• On August 31,2016 the agency was awarded a$400,000 federal grant from the U.S.Environmental Protection
• Agency for the cleanup of the Saxony properties as a Brownfields site in downtown Tigard. The project will
• clean up contamination on the two tax lots that comprise Main Street/Fanno Creek (Saxony) properties to
prepare for future redevelopment. Brownfields are defined as real property, the expansion,development or
• reuse of which may be complicated by the presence or potential presence of a hazardous substance,pollutant
, • or contaminant.
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• Tigard City Center Development Agency
Urban Renewal Agency Capital Projects Fund
• Schedule of Revenues and Expenditures-Budget and Actual
For the fiscal year ended June 30,2016
• Variance with
• Budgeted Amounts Actual Final Budget
Original Final Amounts Over(Under)
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REVENUES:
• Rental revenues /$ 84,000 $ 84,000 $ 130,516 $ 46,516
CMiscellaneous revenues - - 78/ 78
c Total revenues 84,000 84,000 130,594 46,594
C EXPENDITURES:
C Capital projects* 705,000 2,370,000 2,285,039 / 84,961
Q Change in fund balance
® before other financing sources (621,000) (2,286,000) (2,154,445) 131,555
o OTHER FINANCING SOURCES:
• Proceeds from sale of capital assets - 1,650,000 1,650,000 / -
• Transfers in 175,300 190,300 190,300 / _
Total other financing sources 175,300 1,840,300 1,840,300
• Change in fund balance (445,700) (445,700) (314,145) 131,555
• Fund balance-Beginning of the year 445,700 445,700 454,494 / 8,794
• Fund balance-End of the year $ - $ - $ 140,349 - $ 140,349
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Urban Renewal Agency Debt Service Fund
• Schedule of Revenues and Expenditures-Budget and Actual
For the fiscal year ended June 30,2016
•
Variance with
Budgeted Amounts Actual Final Budget
Original Final Amounts Over (Under)
REVENUES:
Property taxes $ 397,792 $ 397,792 $ 369,948/$ (27,844)
Interest earnings 1,000 1,000 4,310 ' 3,310
Total revenues 398,792 398,792 374,258 (24,534)
EXPENDITURES:
war Debt service:*
Principal 179,500 179,500 179,500 / -
Interest 39,698 39,698 39,688 / (10)
®
Reserve for future expenditure 174,991 174,991 (174,991)
• Total expenditures 394,189 394,189 219,188 (175,001)
Change in fund balance before
® other financing uses 4,603 4,603 155,070 150,467
• OTHER FINANCING USES
Transfers out (175,300) (190,300) (190,300) " -
• Change in fund balance (170,697) (185,697) (35,230) 150,467
Fund balance-Beginning of the year 170,697 185,697 397,437 / 211,740
Fund balance-End of the year $ $ $ 362,207 7$ 362,207
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INDEPENDENT AUDITOR'S REPORT REQUIRED BY OREGON STATE REGULATIONS
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^•` WWW.MOSSADAMS.COM
M o SS ADAM S
REPORT OF INDEPENDENT AUDITORS ON COMPLIANCE AND ON INTERNAL CONTROL
OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH OREGON MINIMUM AUDIT STANDARDS
Board Members
Tigard City Center Development Agency(A component unit of the City of Tigard,Oregon)
Tigard,Oregon
We have audited the basic financial statements of the Tigard City Center Development Agency, a component
unit of the City of Tigard, Oregon (the Agency) as of and for the year ended June 30, 2016 and have issued
our report thereon dated December 20, 2016. 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
from material misstatement.
Compliance
As part of obtaining reasonable assurance about whether the Agency's basic financial statements are free from
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 162-010-0000 to 162-010-0330,as set forth below,noncompliance with which could have a direct
and material effect on the determination of financial statement amounts:
Instances of Non-
OAR Section Compliance Identified?
162-010-0000 Preface None Noted
162-010-0010 Definitions None Noted
162-010-0020 Introduction None Noted
162-010-0030 General Requirements None Noted
162-010-0050 Financial Statements None Noted
162-010-0115 Required Supplementary Information(RSI) None Noted
162-010-0120 Other Supplementary Information None Noted
Schedule of Revenues,Expenditures/Expenses,and Changes None Noted
162-010-0130 in Fund Balances,/Net Assets, Budget and Actual(Each Fund)
162-010-0150 Schedule of Property Tax Transactions or Acreage Assessments None Noted
162-010-0160 Schedule of Bonded or Long-Term Debt Transactions None Noted
Schedule of Future Requirements for Retirement of Bonded or None Noted
162-010-0170 Long-Term Debt
162-010-0190 Other Financial or Statistical Information None Noted
162-010-0200 Required Disclosures and Independent Auditors Comments None Noted
162-010-0230 Accounting Records and Internal Control None Noted
162-010-0240 Public Fund Deposits None Noted
162-010-0250 Indebtedness None Noted
162-010-0260 Budget None Noted
162-010-0270 Insurance and Fidelity Bonds None Noted
162-010-0280 Programs Funded from Outside Sources None Noted
162-010-0295 Highway Funds None Noted
162-010-0300 Investments None Noted
162-010-0310 Public Contracts and Purchasing None Noted
162-010-0320 Other Comments and Disclosures None Noted
Praxiity•:
23MEMBERGLOBAL •'
INDEPENDENTNF;PMS
WWW.MOSSADAMS.COM fib
MOSS-ADAMS LLP 4
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However, providing an opinion on compliance with those provisions was not an objective of our audit and, 4
accordingly, we do not express such an opinion. The results of our test disclosed no instances of
noncompliance that are required to be reported under Minimum Standards for Audits of Oregon Municipal
Corporations,prescribed by the Secretary of State.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Agency's internal control over financial reporting
(internal control)to determine the audit procedures that are appropriate in the circumstances 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 the Agency's internal control. •
A deficiency in internal control 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 and correct .
misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in
internal control such that there is a reasonable possibility that a material misstatement of the entity's financial .
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, •
yet important enough to merit attention by those charged with governance. •
Our consideration of internal control over financial reporting was for the limited purpose described in the first
•
paragraph of this section and was not designed to identify all deficiencies in internal control that might be
deficiencies,significant deficiencies or material weaknesses. Given these limitations,during our audit we did •
not identify any deficiencies in internal control over financial reporting that we consider to be material
weaknesses.However,material weaknesses may exist that have not been identified. •
We noted certain additional matters that we reported to the City of Tigard and the Agency in a separately •
issued letter to management. •
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Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and •
the results of that testing,and do not provide an opinion on the effectiveness of the entity's internal control or 5
on compliance. This report is an integral part of an audit performed in accordance with Minimum Standards
for Audits of Oregon Municipal Corporations,prescribed by the Secretary of State,in considering the entity's 4111
internal control and compliance.Accordingly,this communication is not suitable for any other purpose. •
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POW (.7 4e/i/t4
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For Moss Adams LLP w
Portland,Oregon
December 20,2016
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•
24
I