2010 Comprehensive Annual Financial Report by City of Suffolk, Virginia

Comprehensi ve AnnualFi nanci alReport f ort hef i s c al y earendedJ une30,2010

C i t y o f S u f f o l k V i r g i n i a

City of Suffolk, Virginia Official Directory June 30, 2010

City Council Linda T. Johnson, Mayor

Leroy Bennett, Councilman

Curtis R. Milteer, Sr., Vice Mayor

Charles F. Brown, Councilman

Robert C. Barclay IV, Councilman

Jeffrey L. Gardy, Councilman

Joseph H. Barlow, Councilman

Charles D. Parr, Sr., Councilman Constitutional Officers

Raleigh H. Isaacs, Sheriff

Ronald H. Williams, City Treasurer

C. Phillips “Phil” Ferguson, Commonwealth’s Attorney

W. Randolph Carter, Jr, Clerk of

Thomas A. Hazelwood, Commissioner of the Revenue

the Circuit Court

City Administration Selena Cuffee-Glenn, City Manager

Sherry Hunt, Chief of Staff

Patrick Roberts, Deputy City Manager

Sid Daughtrey, City Assessor

C. Edward Roettger, Jr., City Attorney

Erika S. Dawley, City Clerk

Kevin Hughes, Economic Development

Anne Seward, Budget

Gerry Jones, Capital Programs and Buildings

Dale M. Walker, Finance

Captain James T. Judkins, Emergency Management

Mark R. Outlaw, Fire and Rescue

Dr. Lisa McCoy, Health

Ronnie Charles, Human Resources

Elliott A. Drew, Library

Thomas E. Bennett, Police

Debbie George, Media and Community Relations

Lakita Frazier, Parks and Recreation

D. Scott Mills, Planning and Community Development

Albert S. Moor, II Public Utilities

Eric T. Nielsen, Public Works

Leonard Horton, Social Services

iii

City of Suffolk, Virginia Official Directory June 30, 2010

Suffolk Public Schools – School Board Lorraine B. Skeeter, Chairwoman

Diane B. Foster, Board Member

William L. Whitley, Vice Chairman

Thelma V. Hinton, Board Member

Phyllis C. Byrum, Board Member

Enoch C. Copeland, Board Member

Michael J. Debranski, Ed. D., Board Member

Cynthia B. Chavis, Clerk

Suffolk Public Schools – Administration Milton R. Liverman, Ed.D., School Superintendent (retired June 30, 2010) Deran R. Whitney, Ed.D, Interim School Superintendent – July 1, 2010 thru December 31, 2010 Michael K. Brinkley, Executive Director of Finance

Judges Circuit Court Westbrook J. Parker, Chief Judge Rodham T. Delk, Jr, Judge

Carl Edward Eason, Jr. Judge

General District Court James A. Moore, Chief Judge William R. Savage, III, Presiding Judge Juvenile and Domestic Relations Court Alfreda Talton-Harris, Chief Judge

Robert S. Brewbaker, Jr. Judge

DaleM.Walker Di r ect orofFi nance Ci t yofSuf f ol k,Vi r gi ni a

CITY OF SUFFOLK, VIRGINIA Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2010 TABLE OF CONTENTS

Page

INTRODUCTORY SECTION i

Title Page Official Directory

iii-iv

Table of Contents

v-viii

Letter of Transmittal

ix-xvi

Organizational Chart

xvii

Certificate of Achievement for Excellence in Financial Reporting

preface of back cover

FINANCIAL SECTION 1-2

Independent Auditors’ Report

3-14

Management’s Discussion and Analysis BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Exhibit 1

Statement of Net Assets

Exhibit 2

Statement of Activities

19 20-21

Fund Financial Statements: Exhibit 3

Balance Sheet–Governmental Funds

Exhibit 4

Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Assets

Exhibit 5

Statement of Revenues, Expenditures and Changes in Fund Balances– Governmental Funds

Exhibit 6

Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities

Exhibit 7

Statement of Net Assets—Proprietary Funds

Exhibit 8

Statement of Revenues, Expenses and Changes in Net Assets— Proprietary Funds

Exhibit 9

Statement of Cash Flows—Proprietary Funds

Exhibit 10

Statement of Net Assets—Fiduciary Funds

Exhibit 11

Statement of Changes in Fiduciary Net Assets - OPEB Trust Fund

33 35-81

Notes to Financial Statements

CITY OF SUFFOLK, VIRGINIA Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2010 TABLE OF CONTENTS (CONTINUED)

Page

FINANCIAL SECTION (CONTINUED) REQUIRED SUPPLEMENTARY INFORMATION: Exhibit 12

Schedule of Revenues, Expenditures and Changes in Fund Balances— Budget and Actual—General Fund

Exhibit 13

Schedule of Funding Progress for the Virginia Retirement System and OPEB

85-88 89

OTHER SUPPLEMENTARY INFORMATION: Combining and Individual Fund Statements and Schedules 93

Exhibit 14

Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Debt Service Fund

Exhibit 15

Schedule of Current Capital Projects—Capital Projects Fund

Exhibit 16

Schedule of Current Capital Projects—Utility Fund

Exhibit 17

Combining Balance Sheet—Nonmajor Governmental Funds

102-103

Exhibit 18

Combining Statement of Revenues, Expenditures, and Changes in Fund Balances—Nonmajor Governmental Funds

104-105

Exhibit 19

Schedule of Revenues, Expenditures and Changes in Fund Balances—Budget and Actual—Nonmajor Governmental Funds

106-107

Exhibit 20

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets—Nonmajor Proprietary Funds

111

Exhibit 21

Combining Statement of Net Assets—Internal Service Funds

115

Exhibit 22

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets—Internal Service Funds

116

Exhibit 23

Combining Statement of Cash Flows—Internal Service Funds

117

Exhibit 24

Combining Statement of Fiduciary Net Assets—Agency Funds

121

Exhibit 25

Combining Statement of Changes in Assets and Liabilities—Agency Funds

122

Exhibit 26

Combining Balance Sheet—Governmental Funds—Discretely Presented Component Unit School Board

124

97-98 99-100

CITY OF SUFFOLK, VIRGINIA Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2010 TABLE OF CONTENTS (CONTINUED)

Page

FINANCIAL SECTION (CONTINUED) OTHER SUPPLEMENTARY INFORMATION: (CONTINUED) Combining and Individual Fund Statements and Schedules: (Continued) Exhibit 27

Combining Statement of Revenues, Expenditures and Changes in Fund Balances—Governmental Funds—Discretely Presented Component Unit School Board

125-

Exhibit 28

Budgetary Reconciliation Schedule—Governmental Funds—Discretely Presented Component Unit School Board

126-127

Exhibit 29

Schedule of Revenues, Expenditures and Changes in Fund Balances— Governmental Funds—Budget and Actual—Discretely Presented Component Unit School Board

128-129

Exhibit 30

Statement of Net Assets—Fiduciary Funds—Discretely Presented Component Unit School Board

130

Exhibit 31

Statement of Changes in Fiduciary Net Assets - OPEB Trust Fund— Discretely Presented Component Unit School Board

131

Exhibit 32

Statement of Changes in Assets and Liabilities—Agency Funds—Discretely Presented Component Unit School Board

132

STATISTICAL SECTION: Statistical Tables 135

Table 1

Net Assets by Component

Table 2

Changes in Net Assets

136-137

Table 3

Fund Balances, Governmental Funds

138-139

Table 4

Changes in Fund Balances, Governmental Funds

140-141

Table 5

Tax Revenues by Source, Governmental Funds

142-143

Table 6

Assessed and Estimated Actual Value of Taxable Property

144-145

Table 7

Property Tax Rates (Per Hundred)

147

Table 8

Principal Property Taxpayers

148

Table 9

Property Tax Levies and Collections

149

vii

CITY OF SUFFOLK, VIRGINIA Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2010 TABLE OF CONTENTS (CONTINUED)

Page

STATISTICAL SECTION: (CONTINUED) Statistical Tables: (Continued) Table 11

Ratios of Net General Bonded Debt Outstanding

152

Table 12

Direct Governmental Activities Debt

153

Table 13

Legal Debt Margin

Table 14

Utility Fund Bond Coverage

157

Table 15

Demographic and Economic Statistics

158

Table 16

Principal Employers

159

Table 17

Full-Time Equivalent City Government Employees by Function/Program

160-161

Table 18

Operating Indicators by Function/Program

162-163

Table 19

Capital Asset Statistics by Function/Program

164

Table 20

Property Value, Construction and Bank Deposits

165

Table 21

Principal Commercial/Industrial Water and Sewer Consumers

166

154-155

COMPLIANCE SECTION: Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

167-168

Report on Compliance with Requirements that Could Have a Direct and Material Effect to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133

169-170

Schedule of Expenditures of Federal Awards

171-173

Notes to Schedule of Expenditures of Federal Awards

174

Schedule of Findings and Questioned Costs

175

Summary Schedule of Prior Audit Findings

176

viii

CITY OF SUFFOLK P.O. BOX 1858, SUFFOLK, VIRGINIA 23439-1858 PHONE: (757) 514-4012

CITY MANAGER

December 15, 2010

The Honorable Council City of Suffolk, Virginia

Dear Council Members:

The Comprehensive Annual Financial Report (CAFR) for the period of July 1, 2009 through June 30, 2010 is hereby submitted. The code of the Commonwealth of Virginia and the City of Suffolk Charter requires an annual financial audit. Responsibility for accuracy of the presented data as well as the completeness and fairness of the CAFR presentation, including the disclosures, rests with the City. Included are the results of operations and cash flows of its proprietary funds as measured by the financial activity of its various funds. The CAFR includes all disclosures necessary to enable the reader to gain the maximum understanding of the City’s financial affairs. Consideration is given to the adequacy of internal accounting controls when developing and implementing the City’s accounting system. The City is responsible for establishing and maintaining internal controls designed to ensure that the assets of the City are protected from loss, theft or misuse. The City also ensures that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with accounting principles generally accepted in the United States. Internal control is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that first, the cost of a control should not exceed the benefits likely to be derived and secondly, the valuation of costs and benefits requires estimates and judgments by management. We assert to the best of our knowledge this CAFR is complete and reliable in all material aspects. According to Section 8.08 of the City Charter and Section 15.2-2511of the 1950 Code of Virginia, as amended, an annual audit by an independent auditor of the City finances is required. The City of Suffolk’s financial statements have been audited by Robinson, Farmer, Cox Associates, CPA’s. An independent audit is designed to provide reasonable assurance that financial statements are free of material misstatements and as of June 30, 2010 the CAFR reflects this position. The independent audit involved examining on a statistactical test

basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. As presented in the financial section, the independent auditor concluded, based on their audit, that there

was a reasonable basis for issuing an unqualified opinion on the City of Suffolk’s financial statements for the fiscal year ended June 30, 2010. In addition, they felt the financial statements were presented fairly and in conformance with accounting principles generally accepted in the United States. The audit included and was part of a broader federally mandated “Single Audit” designed to meet the special needs of federal grants. The standards governing single audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the City’s internal control and compliance with legal requirements, with special emphasis on those involving the administration of federal awards. The analysis by the auditors is included in the CAFR under the tab Single Audit Section. Management, according to the Generally Accepted Accounting Principles (GAAP), is required to provide a narrative, introduction, overview, and analysis to accompany the basic financial statements with a Management’s Discussion and Analysis (MD&A). The letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A is within the financial section tab following the independent auditor’s opinion. Profile of the Government The present City of Suffolk was formed January 1, 1974, from the consolidation of the City of Suffolk and the City of Nansemond (formerly Nansemond County). The City is Virginia’s largest city in land areas and one of the top ten in land area in the nation. The City is situated in the western portion of Hampton Roads, Virginia’s coastal plain area, and is bounded by the James River to the north, the Cities of Chesapeake and Portsmouth to the east, the State of North Carolina to the south, and the Counties of Southampton and Isle of Wight to the west. The City of Suffolk is one of seven major cities that form the NorfolkVirginia Beach-Newport News metropolitan area with 1.6 million people. It is also known as the Hampton Roads area. The City’s government is organized under the Council-Manager form of government. The governing body, City Council, is composed of seven members and a Mayor who develop policies for the administration of the City. The Mayor and Council are elected by borough in a city-wide election every other year with terms of office being four years. The City Council appoints a City Manager to act as administrative head of the City. The City Manager serves at the pleasure of City Council and carries out the City Council’s policies, directs business procedures. The City Manager also appoints and removes the directors of all departments and all employees of those departments under his/her control. The School Board is elected by borough. Under Virginia law all operations of the School Board are completely independent of City Council and the City Administration. City Council is required to make an annual appropriation to the School Board based upon an approved budget, but has no authority to direct how such appropriation is expended. The City of Suffolk provides a full range of municipal services authorized by statue or charter. This includes education, public safety, highways and streets, parks and recreation, sanitation, health and social services, public improvements, planning and zoning, public utilities, storm water management and general administrative services.

The funds and entities related to the City of Suffolk included in the City’s CAFR are controlled by or dependent on the City. Determination of “controlled by or dependent on” is based on criteria developed by the Governmental Accounting Standards Board. The criteria deal with existence as an organized entity, governmental character, and substantial autonomy. Based on these criteria, the various funds of the City shown in the Table of Contents are included in this report. Since the School System is fiscally dependent on the City, the financial statements of the Suffolk City School System are included as a component unit of the City in accordance with Governmental Accounting Standards Board Statement No. 14. The Economic Development Authority has also been included as a component unit of the City due to the fiscal relationship which exists for the Northgate Commerce Park, Suffolk Industrial Park, the Hilton Garden Inn Hotel and Suffolk Conference Center, and the Health and Human Services building as well as other initiatives designed to foster economic activity in the City, in accordance with Governmental Accounting Standards Board Statement No. 14. Excluded as a component unit are the Suffolk Redevelopment and Housing Authority, the Western Tidewater Regional Jail Authority, and the Western Tidewater Water Authority which are not controlled by or dependent on the City. The City maintains budgetary controls, the objective of which is to ensure compliance with the legal provisions embodied in the annual appropriated budget approved by City Council. Budgetary control is maintained at the expenditure level of each department using an encumbrance accounting system. Open encumbrances are reported as reservations of fund balance at June 30, 2010. A description of the procedures utilized to establish budgetary data is presented in the Notes to Required Supplementary Information of this report. Economic Activity The City of Suffolk has experienced a strong increase in population and is expected to go through a higher growth rate in the next 20 years than it experienced during the previous two decades, according to the Hampton Roads Planning District Commission. As seen by the chart below by 2034 the population is anticipated to double. Population grew by 58% between 1990 and 2008 and is projected to grow an additional 246% by 2034. 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

Suffolk Population Growth and Projections

1980 199 0 2000 2003 2008 2010 2020 2030 2034

Source: Hampton Roads Planning District Commission and the Virginia Employment Commission

Suffolk is one of the fastest growing cities and is home to some of the fastest growing companies. With easy access to regional highways, international and general aviation airports, and the Port of Virginia, Suffolk has become a prime location for business development. Add in the commitment of strong city leadership and you’ll understand why more than $1 billion in new capital investment, for major new and expanding commercial projects, have taken place

in the community since 2000. As a result, more than 8,400 new jobs have been created. Suffolk is sending the message that we are open for business, for businesses large and small. Suffolk’s economic viability remains strong due to its well diversified and growing industry base. Concentrated areas for growth in the City include: Warehousing and Distribution, Food Processing, Manufacturing, Hospitality, Retail, Medical Services and Modeling and Simulation. These sectors experienced growth and expansions in calendar year 2009. As a whole in 2009, new and expanding businesses invested more than $112 million in the city, announcing more than 510 new jobs. Suffolk’s proximity to a skilled workforce and affordable land costs has been an attraction for manufacturing firms searching for new operation locations. During calendar year 2009 we saw this development continue when Cobham Composite Products expanded their operations to Suffolk. A manufacturer of composite parts for the aerospace and defense industry, Cobham leased 72,500 square-feet and will create over 200 new jobs over a five year period. Suffolk’s proximity to the Port of Virginia continues to attract companies in the distribution industry. Houff Logistics started operating from their new 28,000 square-foot facility near Northgate Commerce Park in 2009. They specialize in dry truckload freight distribution along the Mid-Atlantic Region. Northgate 10 was constructed to provide additional space for distribution companies. Northgate 10, a new dock level warehouse was completed providing over 51,000 square-feet of space for future distribution firms. Long-time Suffolk companies, Pepsi, Sysco Foods of Hampton Roads and Supreme Foods all saw expansions in calendar year 2009. Suffolk is now home expanded in Suffolk, company consolidated part of this project. Accelerator welcomed

to more Modeling and Simulation companies. Northrop Grumman moving into a new three-story 27,400 square-foot building. The employees from three other existing offices throughout the region, as Suffolk's Virginia Modeling, Analysis and Simulation Center (VMASC) two new companies to Suffolk, Alelo and Command Post Technologies.

Suffolk also experienced an expansion in the Medical sector giving citizens more variety for quality healthcare. Riverfront Family Medicine and Specialty Care, North Suffolk Family Medicine, and Children's Hospital of the King's Daughters opened practices in Suffolk in 2009. The Obici Healthcare Foundation broke ground on a new 7,000 square-foot facility. The seeds of the Foundation were planted by Amedeo Obici, founder of Planters Peanuts and Louise Obici Hospital. The foundation was established to oversee the funds Amedeo Obici left after his death for healthcare well being in Suffolk and the surrounding area. Calendar year 2009 major new and expanding businesses were as follows: Business Highlights

2009

New Business

Sector

Investment

Cobham Composite Products

Manufacturing

$9,000,000

Northgate 10

Distribution

$5,000,000

Rt. 17 Office Park

Flex

$4,500,000

xii

East Point Plaza

Redevelopment

$4,100,000

AAA Service Center

Retail

$2,500,000

Hampton Roads Sanitation District

Service

$36,000,000

SYSCO Foods of Hampton Roads

Distribution

$16,000,000

Northrop Grumman

Office

$5,000,000

BASF

Manufacturing

$3,000,000

Pepsi Bottling Group

Distribution

$3,000,000

Expanding Business

Capital investments and additional new jobs are an economic boom for Suffolk from January through August 2010. New capital investments from major announcements amounted to $112,067,000 plus 510 new jobs. This compiled with the following reflects over a ten year period that $1.2 billion dollars has been invested in this community generating 7,762 new jobs. City of Suffolk â&#x20AC;&#x201C; Economic Activity Calendar Year

Capital Investments from Announcements

New Jobs

2001

$132,395,000

893

2002

$111,150,000

812

2003

$120,710,000

998

2004

$78,347,000

685

2005

$121,500,000

655

2006

$99,551,000

1,141

2007

$165,167,000

1,194

2008

$163,479,000

440

2009

$101,700,000

434

2010

$112,067,000

510

Total

$1,206,066,000

7,762

xiii

Suffolk’s industry sectors have had a tremendous amount of growth from new and expanding businesses. Revitalization projects have also continued to flourish in our Downtown for office, business and retail developments. Monument Construction, Stallings & Bischoff and other private developers have contributed to this growth. East Point Plaza and West Washington Lofts transformed six dilapidated structures into highly desirable retail locations in Downtown. From small business opportunities to multi-million dollar expansions, companies have discovered Suffolk’s affordable land, convenient location, and enthusiastic city support. By managing our residential and commercial development, we continue to offer families and businesses plenty of room to live, work and play. Long-term Financial Planning City Council and City Management continue their visionary process in their commitment to planning for the future of the City of Suffolk. Through a series of retreats and work sessions, City Council has established priorities as the guiding principles to move the city into the twenty-first century and to develop partnerships to further the City’s objectives. Financial planning is further extended with the aid of financial advisors for bond issues and rate consultants for utility rate analysis. In planning for the specific initiatives under these priorities, the City’s adopted ten-year Capital Improvement Plan which represents a planned schedule of the City’s needed expenditures for physical improvements over the next decade. The Capital Improvements Plan which covers the ten-year period from fiscal year 2011 through fiscal year 2020 includes water and sewer projects totaling approximately $794.9 million. Public Utilities Fund is estimated at $284.4 million, the General Fund $504.9 million and the remainder is the Storm Water Fund. Financial policies are vital in maintaining consistency and focus. One of the financial policies continually reviewed the fund balance levels. The ratio of unassigned General Fund balance as a percentage of budgeted Governmental Funds Expenditures and capital projects fund expenditure plus budgeted plus expenditures in the School Operating and Food Service Funds indicates the ability of the City to cope with unexpected financial challenges or emergencies. The larger the Unassigned General Fund balance, the greater the City’s ability to cope with these potential financial emergencies and fluctuations in revenue cycles. The City has established a target rate of 12% at the close of each fiscal year. At June 30, 2010 the target rate exceeded the target. Once the Unassigned General Fund balance target is achieved by the City, it is intended to be maintained for the upcoming fiscal year from prior year surpluses and budgeted additions as available before any other needs are addressed. In the event the target percentage falls below 12% due to an emergency or due to severe economic circumstances, the City will develop a plan to restore the Unassigned Fund Balance over a three year period. Financial policies were developed for the Utility Fund which provided for a written documentation of many of the sound business practices. Categories developed include financial independence, target percentage for unrestricted cash and long term investments, debt service coverage ratios, plus asset replacement and system extension.

xiv

In addition, a new policy for post-issuance compliance for tax forward obligations was instituted. This was for adherence to the IRS tax codes as it relates to Build America Bonds. Awards and Recognition Comprehensive Annual Financial Report The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Suffolk, Virginia for its comprehensive annual financial report for the fiscal year ended June 30, 2009, representing the twenty-sixth consecutive year that the City has received this award. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. Annual Budget The Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to the City of Suffolk, Virginia for its annual budget for the fiscal year beginning July 1, 2009. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. This is the second consecutive year for this recognition as it is valid for a one year period. America’s 100 Best Small Cities to Live for 2010 Suffolk has been named as one of America’s 100 best Small Cities to Live for 2010 by CNN Money Magazine. The magazine compared statistics from 746 U.S. cities with a population of 50,000 to 300,000 to make its rankings. Suffolk placed 91st and was one of only four Virginia cities to make the list. It was also the first time Suffolk had been received this esteemed recognition. Some of the factors considered in the selection included job and housing markets, quality of education, crime rate and overall quality of life including leisure and cultural activities. Learning of the prestigious designation, Mayor Linda Johnson stated, “We were thrilled to learn of Suffolk’s selection by CNN Money Magazine as one of the Top 100 Small Cities in America. We are well aware of Suffolk’s unique and diverse offerings, from its historic downtown and rich farmland to its high-tech corridor and beautiful recreational offerings. It is wonderful that others are learning what we already know: whether it’s to work, live or play…It’s a good time to be in Suffolk.” Acknowledgments During the year, the staff of the Finance department rendered professional and knowledgeable services to the City. We are most appreciative of these efforts and take this opportunity to recognize these outstanding public servants. They maintain the accounting records of the City on a current and timely basis and deserve special consideration.

The City Councilâ&#x20AC;&#x2122;s oversight of the financial affairs of the City has resulted in this strong financial report and Council is commended for the policies and practices which have made it so.

xvi

xvii

Chief Information Officer

Commissioner of Revenue

Director of Parks & Recreation

Tourism Development Manager

Director of Economic Development

Assessor

City Council

Chief of Police

City Manager

Fleet Management

Director of Public Works

Director of Planning & Community Development

Director of Public Utilities

Fire Chief

Treasurer

Deputy City Manager

Director of Capital Programs & Buildings

Risk Management

Director of Human Resources

City Attorney

Clerk of the Circuit Court

Voters

Health Department

Director of Social Services

Director of Media and Community Relations

Planning Commission

School Board

ORGANIZATIONAL CHART

City Of Suffolk, VA

Chief of Staff

Library Director

Budget & Strategic Planning Officer

Other Authorities, Boards and Commissions

Commonwealthâ&#x20AC;&#x2122;s Attorney

Purchasing

Director of Finance

City Clerk

Sheriff

This page intentionally left blank

ROBINSON, FARMER, COX ASSOCIATES A PROFESSIONAL LIMITED LIABILITY COMPANY

CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditors' Report To the Honorable Members of the City Council City of Suffolk Suffolk, Virginia We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Suffolk, Virginia, as of and for the year ended June 30, 2010, which collectively comprise the Cityâ&#x20AC;&#x2122;s basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the City of Suffolk, Virginiaâ&#x20AC;&#x2122;s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Suffolk, Virginia, as of June 30, 2010 and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As reflected in the balance sheet of the governmental funds and in the notes to the financial statements, the City has early implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, effective for periods beginning after June 15, 2010. In accordance with Government Auditing Standards, we have also issued our report dated November 8, 2010, on our consideration of the City of Suffolk, Virginiaâ&#x20AC;&#x2122;s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

The Managementâ&#x20AC;&#x2122;s Discussion and Analysis and required supplementary information as listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Suffolk, Virginia's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, supporting schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the City of Suffolk, Virginia. The combining and individual nonmajor fund financial statements and schedules, supporting schedules and the schedule of expenditures of federal awards as listed in the table of contents have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

Charlottesville, Virginia November 8, 2010

MANAGEMENT’S DISCUSSION AND ANALYSIS This section of the City of Suffolk’s (the “City”) comprehensive annual financial report presents a discussion and analysis of the City’s financial performance during the fiscal year ended June 30, 2010. Please read this in conjunction with the transmittal letter in the front of this report and the City’s basic financial statements following this section. FINANCIAL HIGHLIGHTS 

At the close of the fiscal year, the assets of the City exceeded its liabilities by $363 million (total net assets – government-wide), an $2.5 million increase from fiscal year 2009.

Assets vs. Liabilities

Total assets

Total liabilities

436.5

244.5



The General Fund, on a current financial resource basis, reported revenues in excess of expenditures and other financing sources and uses by $3.0 million.



At the end of the fiscal year, the unassigned fund balance for the General Fund was $42.3 million, an increase of $4.9 million from the prior fiscal year.



Debt transactions for 2010 were as follows: -In April 2010, the City issued $34.1 million in General Obligation Bonds. Of the $34.1 million, $30.6 million was refunding older bonds and $3.5 was new money to support the capital budget for public safety. This bond issue has an effective interest rate of 3.38%. -In September 2009, the City issued a $495,000 capital lease for the purchase of a time and attendance system. -In June 2010, the City issued $31.9 million in water and sewer bonds. Of the $31.9 million, $27.0 million was new money to support the water and sewer capital projects and $4.9 was refunding older bonds. This bond issue has a variable interest rate.

OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) Government-wide financial statements, 2) Fund financial statements, and 3) Notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements The government-wide financial statements are designed to provide the readers with a broad overview of the City’s finances in a manner similar to a private-sector business. Government-wide financial reporting consists of two statements: the Statement of Net Assets and the Statement of Activities. The statement of net assets presents information on all City 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 City is improving or deteriorating. The statement of activities presents information identifying how 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 related cash flows. Thus, some items of revenues and expenses are reported in this statement that will result in cash flows in future fiscal periods. In the Statement of Net Assets and the Statement of Activities, the City is divided into the following categories: 

Governmental activities – Most of the City’s basic services are reported here including general government, public safety, public works, education, health and welfare, parks and recreation and economic and community development.



Business-type activities – The City’s water and sewer services are reported here as well as the City’s golf course activity and Stormwater Utilities. These services are supported by charges for services based on use.



Component Units – The City includes two separate legal entities in its report – the Suffolk School Board and the Economic Development Authority of the City of Suffolk. While legally separate, the City is financially accountable and provides operating and capital funding to these component units.

Fund Financial Statements Fund financial statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance. Traditional users of government financial statements will find the fund financial statement presentation more familiar. The focus is now on the City’s most significant funds. The fund financial statements are divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the governmentwide financial statements, governmental fund financial statements focus on current sources and uses of 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 financing requirements.

OVERVIEW OF THE FINANCIAL STATEMENTS: (CONTINUED) 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 financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General, Capital Projects and Debt Service funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. Proprietary Funds – The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer operations and the activities of the Stormwater Utility Fund. Internal Service funds are an accounting mechanism used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its fleet management, information technology and insurance programs. Fiduciary Funds – The fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s programs. The accounting used for fiduciary funds is similar to that of the proprietary funds. Notes to the Financial Statements – The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found following the Basic Financial Statements section of this report. Required Supplementary Information – In addition to the basic financial statements and notes, this report also presents budgetary comparison schedules, a schedule of funding progress and employer contributions and notes to the required supplementary information. Other Supplementary Information – This report also presents combining and individual fund statements and schedules.

GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of Net Assets The following table reflects the condensed statement of net assets:

Statement of Net Assets (in Millions) Governmental Activities 2010 Current and other assets

Capital and other non-current assets Total assets Current and other liabilities

Long-term liabilities Total liabilities

113.2

323.3 $

Business-Type Activities

2009

436.5

13.3

231.2

120.6 $

2010 46.6

321.1

348.4

441.7 $

395.0

11.7

14.5 $ 236.2

211.9

Total

2009 47.8

2010 $

331.0

159.8

2009 $

671.7

378.8

7.4

197.2

168.4 652.1

831.5

25.0

443.1

820.5 21.9 433.4

244.5

250.7 $

223.6

204.6

468.1

455.3

115.7

129.6 $

163.6

171.3

279.3

300.9

Net assets: Invested in capital assets, net of related debt Restricted net assets Unrestricted net assets

0.4

1.5

75.9

61.0

6.3

2.9

1.9

0.4

82.2

63.9

Total net assets

192.0

191.0 $

171.4

174.2

363.4

365.2

Total liabilities and net assets

436.5

441.7 $

395.0

378.8

831.5

820.5

As noted earlier, net assets may serve over time as a useful indicator of a governmentâ&#x20AC;&#x2122;s financial position. In the case of the City of Suffolk, assets exceeded liabilities by $192 million at June 30, 2010. The largest portion of the Cityâ&#x20AC;&#x2122;s net assets, 77% and 82% in 2010 and 2009, respectively, represents its investment in capital assets (e.g., land, buildings and improvements, machinery and equipment), net of accumulated depreciation and less any related debt used to acquire or construct those assets that are still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. The majority of the remaining balance of net assets, 23% and 18% in 2010 and 2009, respectively, represents unrestricted net assets, which may be used to meet the Cityâ&#x20AC;&#x2122;s ongoing obligations. Unrestricted net assets increased both in governmental and business-type activities in FY 10 by $14.9 million and $4.8 million respectively.

GOVERNMENT-WIDE FINANCIAL ANALYSIS: (CONTINUED) Statement of Activities The following table indicates the changes in net assets for governmental and business-type activities:

Changes in Net Assets (in Millions) Governmental Activities 2010 2009 Revenues: Program Revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Real estate and property taxes Other taxes Grants and contributions, not restricted Unrestricted investment earnings Miscellaneous Total Revenues

7.0 $ 34.3 1.9

6.5 32.3 1.6

Business-Type Activities 2010 2009

32.9 $ 1.5

30.0 0.6 3.8

Total 2010

39.9 $ 34.3 3.4

2009

36.5 32.9 5.4

98.8 33.0 13.9 1.1 1.7 191.7

99.4 33.0 14.4 1.8 1.8 190.8

0.5 0.2 35.1

0.6 0.3 35.3

98.8 33.0 13.9 1.6 1.9 226.8

99.4 33.0 14.4 2.4 2.1 226.1

Expenses: General government Judicial Public safety Public works Health and welfare Education Parks, recreation, cultural Community development Interest on long-term debt Utility Golf course Stormwater Utility Total expenses

9.4 7.4 42.4 34.7 13.6 53.7 8.3 9.3 9.2 188.0

8.5 7.2 36.3 32.5 12.1 77.7 8.3 7.8 9.9 200.3

33.5 3.0 36.5

29.1 1.7 2.9 33.7

9.4 7.4 42.4 34.7 13.6 53.7 8.3 9.3 9.2 33.5 3.0 224.5

8.5 7.2 36.3 32.5 12.1 77.7 8.3 7.8 9.9 29.1 1.7 2.9 234.0

Excess of revenues over expenses Transfers Change in net assets Net assets - beginning of year (as restated) Net assets - ending

3.7 2.2 5.9 186.0 191.9 $

2.3 2.3 361.0 363.3 $

(9.5) (1.0) (10.5) 373.0 362.5

(9.5) (9.5) 199.4 189.9 $

(1.4) (2.2) (3.6) 175.0 171.4 $

(1.0) (1.0) 173.6 172.6 $

GOVERNMENT-WIDE FINANCIAL ANALYSIS: (CONTINUED) Governmental Activities Real estate and personal property tax revenue, the City’s largest revenue source, totaled $98.8 million and $99.4 million in FY 2010 and 2009 respectively. The chart below indicates the growth in the General Property Taxes revenue over the past ten years. The city wide Real Property tax rate has been relatively consistent while increasing property construction has assisted the growth.

General Property Tax Revenue 120

100

Millions

0 FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

Source: Comprehensive Annual Financial Reports 2000‐2010

The City’s assessed value of real property decrease by 1% for the current fiscal year. The City is committed to ensuring the highest level of safety for its citizens and has expended $42.4 million towards public safety efforts, representing 22.6% and 18.1% of total governmental activities expenses for 2010 and 2009 respectively. Education continues to be one of the City’s highest priorities and commitments representing 28.6% and 38.8% in 2010 and 2009 respectively of total governmental activity expenses. The decrease FY10 is due to the transfer of assets to the School Board in 2009, specifically the completion of the Hillpoint Elementary school. Public Works increased $2.2 million over FY09. This is due to the continued growth of the City’s fleet and its services and services. Community Development increased $1.5 over FY09. This is due to the payments made to the Economic Development Authority under the Economic Development Investment Program. During 2010, transfers into the General Fund were $2.2 million from proprietary funds. The General fund finished strong this year with positives changes in fund balances.

GOVERNMENT-WIDE FINANCIAL ANALYSIS: (CONTINUED)

Revenues by SourceGovernmental Activities

Business & Occupational Tax Motor Vehicle, Recordation Communication & Utility 4% & Tobacco Tax Tax 3% 5% Local Sales and Use Tax Meal & Other Local Tax 5% 5% Unrestricted Revenues from Use of Money & Property 1% Grants and Contributions 9%

Miscellaneous 1%

General Property Tax 67%

Business-type Activities The business-type activities are made up of Public Utilities and Stormwater Utilities. In 2010, the Golf Course was consolidated into the General Fund due to outsourcing of operations. Charges for services, including water and sewer fees, and Stormwater Utility fees represent 91.8% and 86.4% of total revenues for business-type activities for 2010 and 2009 respectively. Utility revenues increased from $24.8 million in 2009 to $29 million in 2010. Capital contributions total $1.5 million in 2010 compared to $3.8 million in 2009. These contributions represented 11.1% of total revenues for business type activities for 2010. Stormwater expenses decreased from $4.4 million in 2009 to $3 million in 2010. This is dues to a slight reduction in contractual services. Depreciation and amortization for the Utility fund was $7.8 million in 2010.

FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $83.4 million. Approximately 46.7% of this amount is available for spending at the government’s discretion (unassigned fund balance). The remainder of fund balance is committed or restricted to indicate that is not available for new spending because it has already been committed. General Fund. The general fund is the chief operating fund of the City. At the end of the current fiscal year, the general fund balance was $52.5 million of which $42.3 million represents unassigned fund balance of the general fund. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balances represents 30% of the total fund expenditures, while total fund balance represents 38% of that same amount. The unassigned fund balance of the General Fund is 16.8%, which is calculated as the net of governmental funds minus the School contribution, capital projects, and transfer out. Also added to this calculation is the School operating and the School Food Service fund expenses. This percentage is a key financial policy for the city of which needs to be greater than 10%. Unassigned Fund Balance vs. Expenditures (%) 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2001

2002

2003

2004

2005

2006

Unassigned Fund Balance vs. Expenditures

2007

2008

2009

City Policy

2010

FINANCIAL ANALYSIS OF THE CITY’S FUNDS: (CONTINUED) General Fund: (Continued) The net increase to fund balance for the general fund for 2010 was $2.7 million. This increase was a result of the continued streamlining of operations throughout the organization by freezing staff positions and holding costs to a minimum. Debt service fund. The debt service fund has a fund balance of $1.0 million. Of this amount $.4 million is restricted for payment to a debt service reserve fund in a future fiscal year as required by the HUD Section 108 loan leaving $.6 million. The General Fund transfers monies to meet debt service requirements. Capital projects fund. The capital projects fund accounts for all construction projects of general public improvements, excluding capital projects related to business-type activities, which are accounted for elsewhere. At the end of the current fiscal year, the fund balance was $19.8 million, of this $13 million was committed for contracts in process, and the balance of $6.8 million was assigned for subsequent years’ projects. During FY10 the City issued general obligation bonds of $3.4 million to finance new public safety equipment and expended $20.7 million on various projects. The City’s top five construction projects consisted of the following in FY10: -

$4.9 million $3.1 million $1.2 million $1.0 million $0.8 million

in continued construction of the Kings Fork Safety Center. in continued transportation improvement on Nanesmond Parkway/Shoulders Hill. in continued transportation improvements throughout the City. in continued transportation improvements on Route 17. in continued transportation improvements to the Downtown Connector

At year end the City has $152 million in projects authorized and has expended and committed $114.3 million on these projects, reference details on Exhibit 15. Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The net assets of the proprietary funds at the end of the current fiscal year totaled $171.4 million. Enterprise funds. The City’s enterprise funds account for its water and sewer operations and stormwater utility efforts. Unrestricted net assets of the enterprise funds were $6.2 million at the end of the current fiscal year. Internal service funds. The internal service funds are used to account for entity-wide fleet management, information technology and insurance programs. The total net assets at the end of the current fiscal year were $21.9 million. Each of the internal service funds finished strong this year with positive changes in net assets. Trust funds. The City funded $3.3 million in other post employment benefits in the OPEB Trust Fund. The City participates in the Virginia Pooled OPEB Trust Fund. In fiscal year 2010, the City fully funded its annual contribution to the fund as calculated by the actuaries and now has $7.9 million in the OPEB Trust Fund.

Virginia Pooled OPEB Trust Fund Asset Allocation as of June 30, 2010

Cash Goldman Sach FS Prime Obligations 0.2%

Fixed Income Vanguard Total Bond Index Fund 32.4%

Large Cap Core Vanguard Inst'l Index Fund 35%

Fixed Income Vanguard Total Bond Index Fund 27%

Global REIT Ell Global Property Fund 3%

International Equity Artio Global Investors II 12%

Small Cap Core C.S. McKee 10%

GENERAL FUND BUDGETARY HIGHLIGHTS The City’s annual budget, which is prepared on an operating basis, includes estimated revenues and annual appropriations. Differences between the original budget and the final amended budget resulted in a $6.2 million increase in appropriations. Listed below are explanations for significant budgetary variances between the final amended budget and actual results: 

Revenue from Personal Property was under the budget projections by $0.9 million. This was due to personal property collections still trying to rebound from the economic downturn.



Revenue from the Use of Money category was under the budget projections by $0.3 million. This was due in large part to a lower returns and interest rates on investments.



Categorical Aid revenues were under the budget by $0.3 million. This is due the reductions in funding received from the State for Constitutional Officers.



The Golf Course fund and its assets were transferred into the City’s General fund Budget during the fiscal year.



Economic development expenditures were under budget by $1.5 million. The majority of this figure is made up of funds for economic development incentives that carry forward from prior years to further this development program on an as needed basis.

CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. The Cityâ&#x20AC;&#x2122;s investment in capital assets for its governmental and business-type activities as of June 30, 2010, totaled $666.2 million, net of accumulated depreciation. This investment in capital assets includes land, buildings, improvements other than buildings, infrastructure, machinery and equipment and construction in progress. Capital Assets (net of depreciation) (in Millions) Governmental Activities

Land Construction in progress Buildings Improvements other than buildings Machinery and equipment Allocation of School Board assets

Total

2010 24.5 $ 42.7 39.5 116.0 20.3 80.3

2009 22.0 27.5 41.9 120.3 20.3 89.0

323.3 $

321.0

Business-type Activities

2010 3.3 $ 61.5 36.9 190.9 50.3 -

2009 4.6 $ 94.0 13.7 189.5 29.0 -

2010 27.8 $ 104.2 76.4 306.9 70.6 80.3

2009 26.6 121.5 55.6 309.8 49.3 89.0

342.9 $

330.8 $

666.2 $

651.8

Capital Assets

Machinery and equipment 11%

Allocation of School Board assets 12%

Land 4%

Construction in progress 16%

Buildings 11%

Improvement s other than buildings 46%

Additional information on the Cityâ&#x20AC;&#x2122;s capital assets can be found in Note 7.

Total

CAPITAL ASSETS AND DEBT ADMINISTRATION: (CONTINUED) Long-term debt. At the end of the current fiscal year, the City had total outstanding debt of $421.6 million. Capital leases, claims payable, compensated absences and premiums and other credits are not included in these figures.

Outstanding Debt

Bonds Payable

Governmental Activities Business-type Activities 2010 2009 2010 2009 $ 201.7 $ 206.8 $ 211.4 $ 193.1

Loans and Notes Payable Total

8.5 $

210.2 $

9.4

216.2

211.4 $

Total $

193.1

2010 413.1

8.5 $

421.6

2009 399.9 9.4

409.3

The Commonwealth of Virginia limits the amount of debt outstanding to 10% of the locality’s assessed value of real property. The City Charter further limits this calculation to 7% of the City’s assessed value of real property. The City Finance Committee has further restricted the debt ratio to 4% to reflect its conservative use of borrowed monies. The City’s outstanding debt is significantly below both limitations representing the City’s conservative debt borrowing policy. The City maintains bond ratings on general obligation debt of “Aa3”, “AA” and “AA-“ from Moody’s, S&P and Fitch respectively. Additional information on the City’s long-term debt can be found in Notes 8. ECONOMIC FACTORS 

The City’s economic development initiatives created over 510 new jobs and over $112 million dollars in new capital investment in the City.



For the fiscal year 2010 the City maintained its tax rate of $.91 per $100.



Suffolk was named as one of America’s 100 best small cities to live by CNN/Money Magazine.

REQUESTS FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. Questions concerning this report or requests for additional information should be directed to the City’s Department of Finance, 441 Market Street, Suffolk, Virginia, 23439.

BASIC FINANCIAL STATEMENTS

This page intentionally left blank

BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Exhibit 1

Statement of Net Assets At June 30, 2010 Primary Government BusinessGovernmental Type Activities Activities ASSETS Cash and cash equivalents Restricted cash Receivables - net Due from other governments Due from component units Inventories Prepaid items Deferred charges Capital assets not depreciated Capital assets being depreciated, net Total Assets LIABILITIES Accounts payable Payables from restricted assets Accrued liabilities Accrued payroll Accrued interest Due to primary government Deposits and amounts held for others Unearned revenue Long-term liabilities: Due within one year Due in more than one year Total Liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Debt service requirements Unrestricted assets

Totals

Component Units Economic School Development Board Authority

73,465,481 $ 23,926,719 6,235,249 2,851,769 568,224 393,316 227,447 5,535,290 67,358,547 255,955,463

3,310,067 $ 38,409,576 4,859,527 62,130 1,425 5,318,989 64,874,558 278,122,047

76,775,548 $ 19,922,120 $ 62,336,295 11,094,776 177,549 2,851,769 4,571,487 568,224 455,446 391,829 228,872 60,000 10,854,279 132,233,105 5,938,618 534,077,510 61,538,166

1,382,869 2,086,126 118,659 12,612,537 784,162 27,996,542

436,517,505 $

394,958,319 $

831,475,824 $ 92,599,769 $

44,980,895

3,948,484 $ 1,243,087 4,642,083 3,532,609

3,688,704 $ 3,181,733 32,827 74,556

7,637,188 $ 2,526,904 $ 1,243,087 465,130 12,047,313 7,823,816 328,969 32,827 44,221 3,607,165 -

14,724 128,004 239,255 10,000 -

18,104,990 213,127,805

4,754,028 211,888,609

22,859,018 425,016,414

244,599,058 $

223,620,457 $

468,219,515 $ 17,328,268 $

20,554,314

115,706,222 $

163,631,305 $

279,337,527 $ 67,476,784 $

14,993,990

392,169 75,820,056

1,525,006 6,181,551

1,917,175 82,001,607

217,785 1,697,946

7,794,717

691,240 19,471,091

2,086,126 7,346,465

Total Net Assets

191,918,447 $

171,337,862 $

363,256,309 $ 75,271,501 $

24,426,581

Total Liabilities and Net Assets

436,517,505 $

394,958,319 $

831,475,824 $ 92,599,769 $

44,980,895

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

CITY OF SUFFOLK, VIRGINIA Statement of Activities Year Ended June 30, 2010 Program Revenues

Functions/Programs PRIMARY GOVERNMENT: Governmental activities: General government administration Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural Community development Interest on long-term debt

Expenses

Charges for Services

Operating Grants and Contributions

Capital Grants and Contributions

9,422,635 $ 7,393,681 42,448,178 34,682,047 13,569,286 53,624,924 8,309,722 9,329,455 9,293,250

6,299 $ 736,610 2,931,733 2,367,267 25,280 670,162 248,816 -

122,185 $ 1,766,209 2,705,501 18,095,389 9,511,711 294,402 1,808,426 -

1,802,779 109,151 -

188,073,178 $

6,986,167 $

34,303,823 $

1,911,930

33,481,090 $ 3,001,245

29,044,958 $ 3,861,010

1,504,233 -

Total business-type activities

36,482,335 $

32,905,968 $

1,504,233

Total primary government

224,555,513 $

39,892,135 $

34,303,823 $

3,416,163

152,194,298 $

2,916,492 $

97,830,203 $

2,778,021 $

262,004 $

913,331 $

45,000

154,972,319 $

3,178,496 $

98,743,534 $

45,000

Total governmental activities Business-type activities: Utility Stormwater

COMPONENT UNITS: School Board Economic Development Authority Total component units

General revenues: General property taxes Local sales and use taxes Utility taxes Communication taxes Business and occupational taxes Motor vehicle license taxes Recordation taxes Tobacco taxes Meals taxes Other local taxes Unrestricted revenues from use of money and property Grants and contributions not restricted to specific programs Miscellaneous City of Suffolk contribution to School Board Transfers Total general revenues and transfers Change in net assets Net assets - beginning, as restated Net assets - ending The accompanying notes to financial statements are an integral part of this statement.

Exhibit 2

Net (Expense) Revenue and Changes in Net Assets

Governmental Activities

Primary Government Business Type Activities

Component Units Economic School Development Board Authority

Total

(9,294,151) $ (4,890,862) (36,810,944) (12,416,612) (4,032,295) (53,624,924) (7,345,158) (7,163,062) (9,293,250)

(144,871,256) $

(2,931,899) $ 859,765

(2,072,134) $

(144,871,256) $

(2,072,134) $

(146,943,390) $

(51,447,603) $

$ $

98,831,895 7,355,338 4,238,079 3,614,856 5,985,479 1,711,012 1,009,592 1,382,361 5,643,405 1,976,730 1,136,704 13,938,495 1,674,116 2,294,321 150,792,383 5,921,126 185,997,321 191,918,447

98,831,895 7,355,338 4,238,079 3,614,856 5,985,479 1,711,012 1,009,592 1,382,361 5,643,405 1,976,730 1,692,518 13,938,495 1,905,121 149,284,881 2,341,490 360,914,819 363,256,309

$ $ $

555,814 231,005 (2,294,321) (1,507,502) (3,579,636) 174,917,498 171,337,862

$ $ $

(1,557,686)

(51,447,603) $

(1,557,686)

59,762 659,771 52,979,674 53,699,207 2,251,604 73,019,897 75,271,501

$ $ $

1,319,856 1,319,856 (237,830) 24,664,411 24,426,581

This page intentionally left blank

BASIC FINANCIAL STATEMENTS Fund Financial Statements

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Exhibit 3

Balance Sheet - Governmental Funds At June 30, 2010 Capital Projects

General

Nonmajor Governmental Funds

Debt Service

Total Governmental Funds

ASSETS Cash and cash equivalents: Unrestricted Restricted Receivables (Net of allowance for uncollectibles): Taxes receivable Accounts receivable Due from other governmental units Due from other funds Due from component units Inventories Prepaid items Total assets

46,410,332 $ 891,878

5,646,586 $ 15,737,222

3,713,836 2,362,269 1,738,941 1,851,244 568,224 121,627 10,794

9,034 349,955 -

601,360 $ 392,169

7,410,522 $ 6,381,002

60,068,800 23,402,271

76,022 44,470 762,873 413

3,789,858 2,415,773 2,851,769 1,851,244 568,224 121,627 11,207

57,669,145 $

21,742,797 $

993,529 $

14,675,302 $

95,080,773

1,019,996 $ 717,069 2,476,649 921,389

1,320,967 $ 526,018 41,234 -

501 $ -

1,187,775 $ 763,204 29,236 2,611,220

3,529,239 1,243,087 763,204 2,547,119 3,532,609

5,135,103 $

1,888,219 $

501 $

4,591,435 $

11,615,258

132,421

392,169

585,475 -

12,986,435 -

4,398,679 286,150

585,475 12,986,435 4,398,679 286,150

2,986,050 6,529,103 -

6,868,143 -

600,859 -

5,468,839

2,986,050 13,397,246 600,859 5,468,839

42,300,994

LIABILITIES Accounts payable Payables from restricted assets Due to other funds Deferred revenue Unearned revenue Total liabilities FUND BALANCES Nonspendable: Inventories and prepaids Restricted: Debt service Committed: General Capital projects Road projects Other governmental funds Assigned: General Capital projects Debt service Special revenue Unassigned: General (deficit) Total fund balances Total liabilities and fund balances

$ $

52,534,043 $ 57,669,145 $

19,854,578 $ 21,742,797 $

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

993,028 $ 993,529 $

(69,801) 10,083,867 $ 14,675,302 $

42,231,193 83,465,516 95,080,773

CITY OF SUFFOLK, VIRGINIA

Exhibit 4

Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Assets At June 30, 2010 Primary Government Total fund balances - governmental funds

83,465,516

Amounts reported for governmental activities in the statement of net assets (Exhibit 1) are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in the funds.

304,339,105

Deferred revenue represents amounts that were not available to fund current expenditures and therefore are not reported as revenue in the governmental funds.

2,547,119

Other assets used in governmental activities are not financial resources and therefore not reported in the governmental funds: Net financing costs

5,535,290

Internal service funds are used by management to change the costs of certain activities such as information technology, fleet management, and insurance to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets.

21,961,259

Interest on long-term debt is not accrued in the governmental funds, but rather is recognized as an expenditure when due.

(4,602,487)

Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the governmental funds. $ General obligation bonds Literary fund loans Section 108 loan Unamortized premium and other credits on bonds Compensated absences Total long-term liabilities Net assets of governmental activities

(201,749,125) (5,250,000) (3,266,000) (6,737,894) (4,324,337) (221,327,356) $

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

191,918,447

CITY OF SUFFOLK, VIRGINIA

Exhibit 5

Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended June 30, 2010 Governmental Funds Capital Projects

General Revenues: Real estate and personal property taxes Other local taxes Permits, privilege fees and regulatory licenses Fines and forfeitures Revenue from use of money and property Charges for services Miscellaneous Intergovernmental: Contribution from Component Unit - School Bd. Revenue from the Commonwealth Revenue from the Federal Government Total revenues Expenditures: Current: General government administration Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural Community development Nondepartmental Capital outlay Debt service: Principal Interest and other fiscal charges Bond issuance cost Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Issuance of refunding bonds Issuance of debt Premiums on debt Payment to refunded bond escrow agent Transfers in Transfers (out) Total other financing sources (uses) Net changes in fund balances

21,242,461 5,453,868 $

164,444,070 $

- $ 412 88,469 406,969 1,504,961

- $ 9,359 -

1,395,755 $ 386,538 43,991 1,004,001 336,865 18,603,369 2,942,620

Total Governmental Funds 98,299,291 32,916,852 1,394,842 852,307 1,136,704 4,739,019 1,674,116 40,252,799 9,901,449

2,000,811 $

9,359 $

24,713,139 $

191,167,379

8,113,416 $ - $ 6,760,145 36,481,173 8,199,773 12,322,636 44,724,978 6,802,265 7,417,037 8,264,861 20,789,098

- $ -

- $ 52,383 1,321,428 18,584,928 395,887 776 169,922 1,366,202 -

8,113,416 6,812,528 37,802,601 26,784,701 12,718,523 44,725,754 6,972,187 8,783,239 8,264,861 20,789,098

14,315,646 9,755,820 339,170

139,086,284 $ 20,789,098 $ 24,410,636 $

21,891,526 $

206,177,544

25,357,785 $ (18,788,287) $ (24,401,277) $

2,821,613 $

(15,010,166)

- $ 2,244,596 (24,863,347)

19,501 $ 30,585,499 $ 3,550,000 2,102,918 (32,350,000) 4,486,751 24,376,182 -

- $ 115,035 (2,153,139)

30,605,000 3,550,000 2,102,918 (32,350,000) 31,222,564 (27,016,486)

(22,618,751) $

8,056,252 $ 24,714,599 $

(2,038,104) $

8,113,996

Fund balances at beginning of year, as restated Fund balances at end of year

96,903,536 $ 32,916,852 1,008,304 852,307 1,082,942 3,735,018 1,248,782

Nonmajor Governmental Funds

Debt Service

2,739,034 $ (10,732,035) $ 49,795,009

30,586,613

52,534,043 $ 19,854,578 $

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

313,322 $ 679,706 993,028 $

783,509 $ 9,300,358 10,083,867 $

(6,896,170) 90,361,686 83,465,516

CITY OF SUFFOLK, VIRGINIA

Exhibit 6

Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2010 Primary Government Governmental Funds Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds

(6,896,170)

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which the capital outlays exceeded depreciation in the current period. The following details support this adjustment: Capital outlay Dispositions of capital assets Depreciation expense Transfer of joint tenancy assets from Primary Government to the Component Unit

18,694,339 (200,360) (8,425,746) (8,756,513)

1,311,720

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Details of this item consist of: Deferred taxes

532,604

The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items the treatment of long-term debt and related items. A summary of items supporting this adjustment is as follows: Debt issued or incurred: General obligation bonds Premium on general obligation debt Deferred amount on refunding 2010 bonds Principal repayments on debt: Principal retired on general obligation debt Principal retired on literary fund loans Principal retired on Section 108 loan Principal retired on notes payable

(34,155,000) (2,102,918) 2,929,170 43,142,646 500,000 193,000 240,000

10,746,898

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore are not reported as expenditures in governmental funds. The following is a summary of items supporting this adjustment: $

Change in accrued interest payable Change in compensated absences Change in other post employment benefits Amortization of premiums on bonds payable Amortization of deferred charges

282,418 (337,317) 209,817 453,930 (273,777)

335,071

Internal service funds are used by management to charge the costs of certain activities such as information technology, fleet management, and insurance to individual funds. The net revenue of certain internal service funds is reported with governmental activities. Change in net assets of governmental activities

(108,997) $

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

5,921,126

CITY OF SUFFOLK, VIRGINIA

Exhibit 7

Statement of Net Assets - Proprietary Funds At June 30, 2010

Business-type Activities - Enterprise Funds Major Fund Nonmajor Utility Fund Funds Totals ASSETS Current Assets: Cash and cash equivalents Restricted cash Receivables (net of allowance for uncollectible) Inventories Prepaid items Total Current Assets

Governmental Activities Internal Service Funds

849,076 $ 38,409,576 4,736,538 62,130 5

2,460,991 $ 122,989 1,420

3,310,067 $ 38,409,576 4,859,527 62,130 1,425

13,396,681 524,448 29,618 271,689 216,240

44,057,325 $

2,585,400 $

46,642,725 $

14,438,676

5,318,989 $

- $

5,318,989 $

- $ - $ - $

3,340,405 $ 61,534,153 46,353,951 243,467,482 72,604,858 (84,304,244) 342,996,605 $ 348,315,594 $

298,000 504,043 1,221,050 35,157 43,839,429 (26,922,776) 18,974,903 18,974,903

Noncurrent Assets: Deferred charges Capital assets: Land Construction in progress Buildings Improvements other than buildings Machinery and equipment Less: Accumulated depreciation Total Capital Assets (net) Total Noncurrent Assets

$ $

3,340,405 $ 61,534,153 46,353,951 243,467,482 72,604,858 (84,304,244) 342,996,605 $ 348,315,594 $

Total Assets

392,372,919 $

2,585,400 $

394,958,319 $

33,413,579

3,628,407 $ 12,733 32,827 3,181,733 204,410 4,535,206 11,595,316 $

60,297 $ 1,679 74,556 136,532 $

3,688,704 $ 14,412 74,556 32,827 3,181,733 204,410 4,535,206 11,731,848 $

419,245 7,208 39,596 1,380,913 1,088,040 2,549,608 5,484,610

350,403 $ 4,654,001

60,780 $ -

411,183 $ 4,654,001

164,779 1,958,218 -

LIABILITIES Current Liabilities: Vouchers and accounts payable Current portion of compensated absences Unearned revenue Deposits payable Accrued interest Claims payable - current portion Due to other funds Current portion of bond premiums and other credits Bonds, notes payable and capital lease obligations-current Total Current Liabilities Noncurrent Liabilities: Noncurrent portion of compensated absences Claims payable - net of current Bond premiums and other credits, net Bonds, notes payable and capital lease obligations net of current Total Noncurrent Liabilities Total Liabilities

$ $

206,823,425

3,844,713

$ $

211,827,829 $ 223,423,145 $

60,780 $ 197,312 $

211,888,609 $ 223,620,457 $

5,967,710 11,452,320

163,631,305 $ 1,525,006 3,793,463

- $ 2,388,088

163,631,305 $ 1,525,006 6,181,551

12,580,582 9,380,677

Total Net Assets

168,949,774 $

2,388,088 $

171,337,862 $

21,961,259

Total Liabilities and Net Assets

392,372,919 $

2,585,400 $

394,958,319 $

33,413,579

NET ASSETS Invested in capital assets, net of related debt Restricted Unrestricted assets

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

CITY OF SUFFOLK, VIRGINIA

Exhibit 8

Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds Year Ended June 30, 2010

Business-type Activities - Enterprise Funds Major Fund Utility Fund

Nonmajor Funds

Totals

Governmental Activities Internal Service Funds

Operating revenues: Charges for services Other operating revenues

28,923,105 $ 121,853

3,861,010 $ -

32,784,115 $ 121,853

28,395,879 55

Total operating revenues

29,044,958 $

3,861,010 $

32,905,968 $

28,395,934

6,815,314 $ 1,239,062 1,144,363 869,047 944,365 3,415,399 7,845,602 357,005 926,218

1,739,716 $ 110,213 481,409 669,907

8,555,030 $ 1,349,275 1,625,772 869,047 944,365 3,415,399 7,845,602 357,005 1,596,125

2,238,002 10,672,564 105,384 1,394,428 4,829,523 73,236 1,626,893 3,014,322 3,570,516 496,543 267,727

Total operating expenses

23,556,375 $

3,001,245 $

26,557,620 $

28,289,138

Net income from operations

5,488,583 $

859,765 $

6,348,348 $

106,796

534,455 $ (7,911,881) (2,012,834) 231,005

21,359 $ -

555,814 $ (7,911,881) (2,012,834) 231,005

73,158 (281,753) (149,979) -

Total nonoperating revenues (expenses)

(9,159,255) $

21,359 $

(9,137,896) $

(358,574)

Net income before contributions and transfers

(3,670,672) $

881,124 $

(2,789,548) $

(251,778)

1,504,233 (920,363) (3,086,802) $

(1,373,958) (492,834) $

1,504,233 (2,294,321) (3,579,636) $

2,054,538 (1,911,757) (108,997)

Operating expenses: Personnel services Self-insured claims Purchased services Contractual services Supplies Utilities Insurance and bonds OPEB Bulk-water purchases Depreciation and amortization Leased property Other charges

Nonoperating revenues (expenses): Interest income Interest and other fiscal (expenses) Gain (loss) on disposal of capital assets Other nonoperating (expenses) Other nonoperating revenues

Capital contributions Transfers (out) Changes in net assets Net assets, beginning of year, as restated Net assets, end of year

172,036,576

2,880,922

174,917,498

22,070,256

168,949,774 $

2,388,088 $

171,337,862 $

21,961,259

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

CITY OF SUFFOLK, VIRGINIA

Exhibit 9

Statement of Cash Flows - Proprietary Funds Year Ended June 30, 2010

Business-type Activities - Enterprise Funds Major Fund Nonmajor Utility Fund Funds Totals Cash flows from operating activities: Receipts from customers and users Payments to employees (including fringe benefits) Payments for operating activities

Governmental Activities Internal Service Funds

28,490,336 $ (6,814,673) (10,633,673)

3,868,773 $ (1,722,298) (1,231,057)

32,359,109 $ (8,536,971) (11,864,730)

28,596,354 (2,245,558) (20,921,340)

11,041,990 $

915,418 $

11,957,408 $

5,429,456

(920,363) $

(1,373,958) $

(2,294,321) $

(1,911,757)

(920,363) $

(1,373,958) $

(2,294,321) $

(1,911,757)

(24,517,384) $ 32,424,906 (8,839,786) (7,344,087) -

- $ -

(24,517,384) $ 32,424,906 (8,839,786) (7,344,087) -

(4,139,483) 2,054,538 (2,790,889) (305,338) 398,785

Net cash provided by (used in) capital and related financing activities $

(8,276,351) $

- $

(8,276,351) $

(4,782,387)

Net cash provided by operating activities Cash flows from non-capital financing activities: Transfer (out) Net cash provided by (used in) non-capital financing activities Cash flows from capital and related financing activities: Acquisition and construction of capital assets Proceeds from debt issued Capital contributions Principal paid on debt Interest paid on debt Proceeds from capital lease obligations

Cash flows from investing activities: Interest earned

534,455 $

21,359 $

555,814 $

Net increase (decrease) in cash and cash equivalents

2,379,731 $

(437,181) $

1,942,550 $

Cash and cash equivalents at beginning of year

73,158 (1,191,530)

36,878,921

2,898,172

39,777,093

15,112,659

Cash and cash equivalents at end of year

39,258,652 $

2,460,991 $

41,719,643 $

13,921,129

Reconciliation of operating income to net cash provided by (used in) operating activities: Cash flows from operations: Income from operations

5,488,583 $

859,765 $

6,348,348 $

106,796

Adjustment to reconcile net income to net cash provided by operations: Depreciation and amortization

7,845,602

Changes in operating accounts: (Increase) decrease in: Accounts receivable Inventories Prepaids Non-operating revenues Increase (decrease) in: Accounts payable Deferred revenue Claims payable Compensated absences Non-operating (expenses) Net cash provided by operating activities

7,845,602

3,570,516

(785,627) 41,542 231,005

35,259 (1,420) -

(750,368) 41,542 (1,420) 231,005

233,078 641 (2,012,834)

31,892 (27,496) 17,418 -

264,970 (27,496) 18,059 (2,012,834)

(53,877) 1,538,889 (7,555) -

11,041,990 $

915,418 $

11,957,408 $

5,429,456

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

200,420 74,267 -

CITY OF SUFFOLK, VIRGINIA

Exhibit 10

Statement of Net Assets Fiduciary Funds Year Ended June 30, 2010 OPEB Trust Fund Assets Cash and cash equivalents

Agency Funds

7,901,030

28,543

7,901,030

28,543

7,901,030 $

Total net assets

7,901,030 $

Total liabilities and net assets

7,901,030

Total assets

Liabilities Amounts held for others Total liabilities Net assets Held in trust for OPEB benefits

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

28,543

CITY OF SUFFOLK, VIRGINIA

Exhibit 11

Statement of Changes in Fiduciary Net Assets OPEB Trust Fund Year Ended June 30, 2010

Additions: Employer contributions Gain (loss) on investments

3,014,322 524,471

3,538,793

Deductions: Administrative fees

6,320

Total deductions

6,320

Change in net assets

3,532,473

Total additions

Net assets - beginning of year

4,368,557

Net assets - end of year

7,901,030

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

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The financial statements of the City of Suffolk, Virginia have been prepared in conformity with accounting principles generally accepted in the United States of America as specified by the Governmental Accounting Standards Board (GASB) and the specifications promulgated by the Auditor of Public Accounts (APA) of the Commonwealth of Virginia. The more significant of the government's accounting policies are described below. A. Entity and Services The City of Suffolk, Virginia (City) was formed on January 1, 1974, by the merger of the former Cities of Suffolk and Nansemond. The City of Nansemond was previously formed by the merger of the County of Nansemond and the Towns of Whaleyville and Holland. The City is a political subdivision of the Commonwealth of Virginia operating under the council-manager form of government. The elected seven-member City Council, vested with legislative powers, appoints the City Manager who is the executive and administrative head of the City’s government. The City provides a full range of services to include the following: public safety (police and fire), education, community development (planning and zoning), water treatment and distribution, sewage collection, refuse collection, maintenance of highways, streets and infrastructure, stormwater management, recreational activities including a golf course, cultural events, social services, and library among other services. B. Financial Reporting Entity The City’s Basic Financial Statements include all funds, agencies, boards, commissions, authorities and other governmental organizations for which the City has financial accountability. Financial accountability includes the appointment of a voting majority of the organization’s governing body and the ability of the Primary Government to impose its will on the organization or if there is a financial benefit/burden relationship. Also, an organization that is fiscally dependent on the Primary Government should be included in its reporting entity. These financial statements include the City of Suffolk, Virginia (the Primary Government) and its Component Units. The Component Units discussed below are included in the City’s reporting entity because of the significance of the operational or financial relationship with the City. Blended Component Units - Blended component units, although legally separate entities are, in substance, part of the government’s operations and so data from these units are combined with data of the primary government. The City has no blended component units. Discretely Presented Component Units - Discretely presented component units are reported separate from the primary government to emphasize that they are legally separate from the City. The following organizations have been included in the reporting entity as a discretely presented component unit: City of Suffolk Public Schools The City of Suffolk Public Schools (School Board) is responsible for elementary and secondary education within the City. The Schools are fiscally dependent upon the City because the City Council approves the annual budget of the Schools, levies the necessary taxes to finance the Schools’ operations and approves the borrowing of money. 35

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) B. Financial Reporting Entity: (Continued) City of Suffolk Public Schools: (Continued) The School Board has one discretely presented component unit, the Pruden Center for Industry and Technology (The Center). The Center is a vocational and technical center used by both the Suffolk City Schools and the Isle of Wight County Schools to provide classes to high school students and adults in various occupational trades. The Center is dependent upon the Suffolk School Board for a majority of its funding. The Center is shown as a discretely presented component unit as it is legally separate from the School Board. Separate audited financial statements may be obtained from the Pruden Center by contacting the Pruden Center for Industry and Technology, 4169 Pruden Blvd., Suffolk, Virginia 23434. The School Board does not issue separate financial statements. The following funds are included in the School Board: School Operating Fund – accounts for revenues and expenditures relating to the operation of the City of Suffolk Public Schools. Revenues are derived from the City’s General Fund and from state and federal funds. School Food Service Fund – accounts for revenues and expenditures relating to the operation of school cafeterias. Revenues are derived from state and federal funds and cafeteria sales. School Grants Fund – accounts for revenues and expenditures relating to grants received by the school system from federal and state governments. OPEB Trust Fund – accounts for activities of the School Board's other post-employment benefits (OPEB). This fund accumulates resources for health insurance for retired employees. Combined School Activity Funds – accounts for additions and deductions of the various activity funds of each of the Suffolk public schools. Revenues are derived from school fundraisers, athletic and state event receipts and School Board allocations. The Pruden Center for Industry and Technology Component Unit – Accounts for revenues and expenditures relating to operation of The Pruden Center for Industry and Technology operated jointly by Suffolk Public Schools and Isle of Wight County Public Schools. Revenues are derived primarily from local appropriations. Economic Development Authority The Economic Development Authority of the City of Suffolk (EDA) was established under the Industrial Development and Revenue Bond Act – Code of Virginia. A separate board appointed by the City Council governs the EDA. The EDA is authorized to acquire, own, lease and dispose of properties and to conduct related activities to promote industry and develop trade by inducing manufacturing, industrial, governmental and commercial enterprises to locate or to remain in the City. The City makes significant contributions to the EDA relating to the property the EDA develops and markets. Separate audited financial statements may be obtained from the EDA by contacting the Executive Director, City of Suffolk Economic Development Authority, 127 E. Washington Street, Suite 200, Suffolk, Virginia 23434.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1â&#x2C6;&#x2019;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) B. Financial Reporting Entity: (Continued) Other related organizations not included in the financial statements: Western Tidewater Water Authority The Western Tidewater Water Authority (Water Authority) was created March 18, 1998, by the City Council of the City of Suffolk, Virginia and the Board of Supervisors of the County of Isle of Wight, Virginia pursuant to the Virginia Water and Sewer Authorities Act, Chapter 51, Title 15.2, Code of Virginia. The Water Authority was formed for the purpose of acquiring, financing, constructing, leasing, operating and maintaining facilities for the production, impoundment, treatment and transmission of potable and non-potable water. Those facilities may include, but not be limited to, sources of water supply, water intakes, reservoirs, filtration and purification plants, pumping stations, transmission lines, storage facilities and all other facilities deemed appropriate for fulfilling the purpose of the Water Authority together with all appurtenant equipment and appliances necessary or suitable therefore, and all properties, rights, easements or franchises relating thereto and deemed necessary, convenient or appropriate by the Water Authority for its operation. The City is not obligated to pay the principal or interest on notes or any other liabilities of the Authority and has no financial interest in the Authority. Separate financial statements are available from the Western Tidewater Water Authority and can be obtained by contacting the Treasurer at P.O. Box 80, Isle of Wight, Virginia 23397. Western Tidewater Regional Jail Authority The Western Tidewater Regional Jail Authority (Jail Authority) was created as a political subdivision of the Commonwealth of Virginia jointly through an agreement dated November 1, 1989, among the Cities of Suffolk (59.3%) and Franklin (6.8%), and the County of Isle of Wight (33.9%) (the member jurisdictions) under the Jail Authorities Act, Code of the Commonwealth of Virginia. The Jail Authority has the responsibility to finance the acquisition, construction, equipping and maintenance of a regional jail facility to operate for the benefit of the member jurisdictions. Notes issued by the Jail Authority are limited obligations payable solely from revenues received from the member jurisdictions. The City is not obligated to pay the principal or interest on the notes or any other liabilities of the Authority and has no financial interest in the Authority beyond its initial contribution to the Authority. Separate financial statements are available from the Western Tidewater Regional Jail Authority and can be obtained by contacting the Superintendent at 2402 Godwin Blvd., Suffolk, Virginia 23434. Suffolk Redevelopment and Housing Authority The Suffolk Redevelopment and Housing Authority administers public housing and redevelopment activities in the City. It applies, receives and invests its own funds and formulates and approves its own budget.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) B. Financial Reporting Entity: (Continued) Other related organizations not included in the financial statements: (Continued) Suffolk Redevelopment and Housing Authority: (Continued) City Council is responsible for appointing members of the Board of the Suffolk Redevelopment and Housing Authority, but the City’s accountability does not extend beyond making such appointments. Suffolk Redevelopment and Housing Authority does not have a significant operational or financial relationship with the City. Separate financial statements are available from the Suffolk Redevelopment and Housing Authority and can be obtained by contacting the Executive Director at 530 E. Pinner Street, Suffolk, Virginia 23434. C. Government-wide and Fund Accounting Financial Statements The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements. The focus is on either the City as a whole or major individual funds (within the fund financial statements). The government-wide financial statements categorize primary activities as either governmental or business-type. In the government-wide Statement of Net Assets, both the governmental and business-type activities columns are (a) presented on a consolidated basis by column, and (b) are reflected on a full accrual, economic resource basis, which incorporates long-term assets and receivables as well as long-term debt and obligations. Each presentation provides valuable information that can be analyzed and compared (between years and between governments) to enhance the usefulness of the information. The City generally first uses restricted assets for expenses incurred for which both restricted and unrestricted assets are available. The City may defer the use of restricted assets based on a review of the specific transaction. The government-wide Statement of Activities is reported using the economic resources measurement focus and the accrual basis of accounting which reflects both the gross and net cost per functional category (public safety, public works, health and welfare, etc.), which are otherwise being supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, fines, permits and charges, etc.) The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, which include fees and charges paid by the recipients of goods or services offered by the programs, operating and capital grants, and contributions. The program revenues must be directly associated with the function (public safety, public works, health and welfare, etc.) or a business-type activity. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function, and 2) grants and contributions that are restricted to meeting the operation or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. The City does not allocate indirect expenses. The operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Generally the effect of interfund activity has been eliminated from the City’s government-wide financial statements for internal service funds. Exceptions to our general rule are payments-in-lieu of taxes where the amounts are equivalent to interfund services provided and other charges between the government’s proprietary funds and various other functions of government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 38

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1â&#x2C6;&#x2019;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) C. Government-wide and Fund Accounting Financial Statements: (Continued) Private-sector standards of accounting and financial reporting issued prior to December 1, 1989 generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. The governmental funds major fund statements in the fund financial statements are presented on a current financial resource measurement focus and modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statementsâ&#x20AC;&#x2122; governmental column, a reconciliation is presented which briefly explains the adjustments necessary to reconcile funds based on financial statements with the governmental column of the government-wide presentation. The Cityâ&#x20AC;&#x2122;s fiduciary funds are presented in the fund financial statements by type. Since by definition these assets are being held for the benefit of a third party and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. The focus of the basic financial statements is on the City as a whole and the fund financial statements, including the major individual funds of the governmental and business-type categories, as well as the fiduciary funds, (by category) and the component units. Each presentation provides valuable information that can be analyzed and compared (between years and between governments) to enhance the usefulness of the information. In the fund financial statements, financial transactions and accounts of the City are organized on the basis of funds. The operation of each fund is considered to be an independent fiscal and separate accounting entity, with a self-balancing set of accounts recording cash and/or other financial resources together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The focus of governmental and proprietary fund financial statements is on major funds. Fund statements present the financial information of each major fund in a separate column. Nonmajor funds are aggregated and displayed in a single column. The main operating fund, the general fund, is always reported as a major fund. Other individual governmental and enterprise funds are reported in separate columns as major funds based on these criteria: a. Total assets, liabilities, revenues, or expenditures/expenses of the fund are at least 10% of the corresponding total for all funds of that category or type (that is, total governmental or total enterprise funds), and b. Total assets, liabilities, revenues, or expenditures/expenses of the fund are at least 5% of the corresponding total for all governmental and enterprise funds combined. In addition to funds that meet the major fund criteria, any other governmental or enterprise fund that management believes is particularly important to financial statement users may be reported as a major fund. 39

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) C. Government-wide and Fund Accounting Financial Statements: (Continued) Governmental Funds Governmental Funds are those through which most governmental functions typically are financed. The City presents the following major governmental funds: General Fund - The General Fund is primary operating fund of the City which accounts for all financial resources accounted for in another fund. Revenues are derived primarily from property and other local taxes, state and federal distributions, licenses, permits, charges for services, and interest income. A significant part of the General Fund’s revenues is transferred to other funds and component units, principally to finance the operations of the City of Suffolk Public Schools. Capital Projects Fund - The Capital Projects Fund is used to account for financial resources that are restricted, committed, or assigned to expenditures for capital outlays, except for those financed by proprietary funds or for assets held in trust for individuals, private organizations, or other governments. Debt Service Fund - The Debt Service Fund is used to account for financial resources that are restricted, committed, or assigned to expenditure for principal and interest related costs as well as the financial resources being accumulated for future debt service. The City presents the following nonmajor governmental funds: Special Revenue Funds The Special Revenue Funds account for proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Suffolk Taxing District Fund – accounts for revenues and expenditures related to services provided in the Suffolk Taxing District. Most revenues are derived from a specific percentage of the annual real estate tax assessments in the Suffolk Taxing District. Downtown Business Overlay District – accounts for revenues and expenditures related to services provided in the Downtown Business Overlay District. Most revenues are derived from a specific percentage of the annual real estate tax assessments in the Downtown Business Overlay District. Road Maintenance Fund – accounts for revenue and expenditures related to maintaining roads city wide. Revenues will be derived from the state and sale of service to other funds. Consolidated Grants Fund – accounts for revenues and expenditures involving governmental grant programs. Law Library Fund – accounts for the maintenance of a law library. Revenue is derived from court fees.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) C. Government-wide and Fund Accounting Financial Statements: (Continued) Special Revenue Funds: (Continued) Route 17 Taxing District Fund – accounts for revenues and expenditures related to services provided in the Route 17 Taxing District. Most revenues are derived from a specific percentage of the annual real estate tax assessments in the Route 17 Taxing District. Mosquito Taxing District Fund – accounts for revenues and expenditures related to mosquito spraying services provided in the Mosquito Taxing District. Most revenues are derived from a specific percentage of the annual real estate tax assessments in the Mosquito Taxing District. Cemetery Fund – accounts for monies received from the sale of burial sites, lots and mausoleum sites, the revenue from which is to be applied to the perpetual care of the City’s cemeteries. Proprietary Funds Proprietary Funds are used to account for activities that are similar to those often found in the private sector. All assets, liabilities, equities, revenues, expenses, and transfers relating to the primary government’s business activities are accounted for through proprietary funds. The measurement focus is on the determination of net income, financial position, and cash flows. Proprietary funds distinguish operating revenues and expenses from nonoperating revenues and expenses. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the proprietary funds are charges for services. Operating expenses include cost of sales and services, personnel, contractual services, and depreciation. The City has chosen not to implement private sector guidance issued after November 30, 1989 in reporting activities of the proprietary funds. Enterprise Funds The Enterprise Funds account for operations that are financed in a manner similar to private business enterprises, where the intent is that costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The City presents the following major enterprise fund: Utility Fund – accounts for the provision of water and sewer services to City residents. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operation, maintenance, billing, collections, financing and related debt service and capital assets of the water and sewage systems. The City presents the following nonmajor enterprise fund: Stormwater Utility Fund - accounts for the maintenance and improvements to the City's stormwater infrastructure.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) C. Government-wide and Fund Accounting Financial Statements: (Continued) The City presents the following other fund types: Internal Service Funds The Internal Service Funds account for the financing of goods or services provided by one department to other departments or agencies of the City on a cost-reimbursement basis. The Internal Service Funds are included in governmental activities for government-wide reporting purposes. The excess revenue or expenses of the funds are allocated to the appropriate functional activity. Information Technology Fund – accounts for the City's technology infrastructure and allocates costs to the various departments or agencies using the service. Fleet Management Fund – accounts for, on a cost-reimbursement basis, the financing of vehicles and the related maintenance, repairs and fuel costs of the City and allocates operating costs to the various departments or agencies using the equipment. Risk Management Fund – accounts for the funding and payment of auto, personal liability, general liability, health insurance, and workers’ compensation claims against the City exclusive of the School Board employees. Charges to other funds are based on estimated claims for the year. Fiduciary Funds Fiduciary Funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. Fiduciary funds are not included in the government-wide financial statements. OPEB Trust Fund – accounts for activities of the City's other post-employment benefits (OPEB). This fund accumulates resources for health insurance for retired employees. Agency Funds Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of the results of operations. In addition to the Funds listed below, the Suffolk Public School Combined School Activity Funds are also agency funds. Special Welfare Fund – accounts for receipt of welfare checks and foster children support checks from the state and payments made on behalf of individuals. Commonwealth of Virginia Fund – accounts for monies collected by the City on behalf of the Commonwealth of Virginia.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) D. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using the current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet in the funds statements. Long-term assets and long-term liabilities are included in the government-wide statements. Operating statements of the governmental funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. The government-wide statements of net assets and statements of activities, and proprietary funds, are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these activities are either included on the statement of net assets or on the statement of fiduciary net assets. Proprietary fund-type operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets. The fund financial statements of the Governmental Funds (for the primary government and component units) are maintained and reported on the modified accrual basis of accounting using the current financial resources measurement focus. Under this method of accounting, revenues are recognized in the period in which they become measurable and available. With respect to real and personal property tax revenue and other local taxes, the term “available” is limited to collection within forty-five days of the fiscal year-end. Levies made prior to the fiscal year-end but which are not available are deferred. Interest income is recorded as earned. Federal and State reimbursement-type grants are recorded as revenue when related eligible expenditures are incurred. Expenditures, other than accrued interest on long-term debt, are recorded when the fund liability is incurred. E. Stewardship, Compliance and Accountability The provisions of the Code of Virginia shall control the preparation, consideration, adoption and execution of the budget of the City. The City Charter requires the budget to be balanced with planned expenditures equal to revenue estimates. The City will prepare and annually update a long range (5 year) financial forecast model utilizing trend indicators and projections of annual operating revenues, expenditures, capital improvements and related debt service and operating costs as well as fund balance levels. The City Manager through the Budget and Finance Department will exercise appropriate fiscal management as necessary as necessary to live within the limits of the adopted budget. 1. Budgeting Information The City utilizes the following procedures in establishing the budgetary data reflected in the basic financial statements: −

At least 60 days prior to June 30, the City Manager submits to City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them.

−

The budget is formulated from estimates of revenues and expected expenditures from each department. The School Board is treated as a single expenditure line item.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) E. Stewardship, Compliance and Accountability: (Continued) 1. Budgeting Information: (Continued) −

The City Manager submits the proposed budget to City Council, and recommends an appropriation ordinance and an ordinance levying the tax rates for the ensuing year.

−

City Council then holds public hearings on the proposed budget. Notice of such public hearing must appear in a local newspaper not less than seven days prior to the hearing.

−

The budget must be approved by a majority vote of City Council and legally adopted before July 1. If City Council does not adopt the proposed budget before July 1, the budget as submitted is automatically adopted.

−

Additional appropriations may be made by City Council only if there is an unencumbered fund balance or additional funding becomes available. Supplemental budget appropriations were approved during the fiscal year ended June 30, 2010 for the following funds: General Fund, Consolidated Grants, Road Maintenance, Law Library, Capital Projects, Utility Fund, Stormwater Utility Fund, Information Technology Fund, and Fleet Management Fund.

Formal budgetary integration is employed as a management control device. Annual operating budgets are adopted by ordinance passed by City Council for the General Fund, the Debt Service Fund, the Utility Fund, Stormwater Utility Fund, the Internal Service Funds and the following Special Revenue Funds: Route 17 Tax District, Downtown Business Overlay District, Road Maintenance and Law Library. Annual operating budgets are also adopted for the School Operating, School Food Service and School Grants funds. Budgets for proprietary fund types are prepared on the accrual basis of accounting. The General, Special Revenue and Debt Service Funds' budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Beginning fund balances for budgetary basis presentation purposes are adjusted for the carry-forward or prior year encumbrances. According to City Code, unexpended and unencumbered appropriations lapse at June 30 of each year. Appropriations that are encumbered at June 30 are carried forward into the following year's appropriations to allow for liquidation of the encumbrances. Individual grants and projects included in the Consolidated Grants Fund and Capital Projects Fund, are budgeted separate from the operating budget. These appropriations do not parallel the City's fiscal year and the accounting, encumbering and controlling of the funds are based upon the length of each individual grant or project, which may be more than one year.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1â&#x2C6;&#x2019;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) E. Stewardship, Compliance and Accountability: (Continued) 2. Excess Expenditures of Appropriations Expenditures exceeded appropriations for the year ended June 30, 2010 as follows:

Activity / Element Treasurer Other general government Juvenile and Domestic Relations Court Service Unit Lease rent of building

Expenditure $

Appropriations

Excess

1,274,131 $ 15,909

1,265,014 $ -

9,117 15,909

813,265 501,817

705,976 501,215

107,289 602

3. Fund Deficit There were no funds with deficit balances at June 30, 2010. F. Deposits and Investments For purposes of reporting cash flows for proprietary-type funds, cash and cash equivalents include cash on hand, money market funds, certificates of deposit and investments with maturities of three months or less. State statutes authorize the City government and the School Board to invest in obligations of the U.S. Treasury, commercial paper, corporate bonds, repurchase agreements, the Local Government Investment Pool and State Non-Arbitrage Pool. Investments for the government, as well as for its component units, are reported at fair value. No investments are valued at cost. The Local Government Investment Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares. Interest income on investments is allocated to the appropriate funds based upon the average monthly cash balance of each fund. Interest income is accrued as earned. Restricted Cash and Payables from Restricted Cash - Restricted cash in the various funds consists of developer bonds and various other deposits and unspent bond proceeds as disclosed in Note 3. Payables from restricted assets in the fleet management fund will be paid from these capital lease proceeds.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) G. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to" or "due from" other funds” (i.e. the current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Allowances for Uncollectible Accounts The City calculates its allowances for uncollectibles on property taxes and utility service charges using historical collection data. The receivables shown on the Statement of Net Assets are presented net of the following allowances for doubtful accounts as of June 30, 2010:

Fund General Fund – Taxes receivable Nonmajor Funds – Taxes receivable Utility Fund – Accounts receivable Nonmajor Proprietary Funds – Fees receivable Total

2,117,066 41,115 138,208 66,516

2,362,905

Property Taxes - Property taxes are levied as of January 1 for personal property and as of July 1 for real estate, based on the assessed value of real and personal property as of the date. The City's legal right to collect property taxes attaches each year when the rates are approved and the taxes are assessed. Real estate taxes are collectible twice a year, on June 5 and December 5. Personal property taxes are due on December 5. Amounts not collected within 45 days after year-end are reflected as deferred revenue.

Real Property Levy date Due date and collection date Lien date for delinquent taxes

July 1 June 5 and December 5 3 years from due date

Personal Property January 1 December 5 Various

H. Inventories and Prepaid Items Inventories of materials and supplies in the governmental and proprietary fund types are recorded at cost. The cost of inventory is recorded as an expenditure at the time individual inventory items are consumed (consumption method) on a first-in, first-out basis. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 46

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) I. Capital Assets Capital outlays are recorded as expenditures of the governmental funds and as assets in the governmentwide financial statements to the extent the City’s capitalization threshold is met. Property, plant, equipment and infrastructure capital outlays of the Primary Government as well as the component units are recorded as capital assets and depreciated over their estimated useful lives on a straight-line basis on both the fund’s basis and the government-wide basis. Interest expense is capitalized on proprietary fund type assets. The amount of interest expense capitalized is calculated by offsetting interest expense incurred from the date of the borrowing until completion of the project against interest income earned on invested proceeds over the same period. Interest capitalized during 2010 totaled $2,287,976. The City’s capitalization policy threshold is $5,000. All capital assets are valued at historical cost or estimated historical cost if actual cost was not available. Donated assets are valued at their estimated fair market value on the date donated. Assets acquired under capital leases are capitalized at the net present value of all lease payments, and related amortization expense is included with depreciation expense. The estimated useful lives of capital assets are as follows:

Years Buildings Improvements other than buildings Machinery and equipment Infrastructure

40 15-75 3-50 25-50

Maintenance, repairs, and minor equipment are charged to operations when incurred. Expenditures that materially change capacities or extend useful lives are capitalized. Upon sale or retirement of land, buildings, and equipment, the cost and related accumulated depreciation, if applicable, are eliminated from the respective accounts and any resulting gain or loss is included in the results of operations. Capital assets having historical significance and being maintained by the City are not expected to decrease in value and, therefore, are not being depreciated. J. Deferred/Unearned Revenue Deferred revenue in the governmental fund types consists of revenues that are measurable but not available for use during the current period. Property taxes receivable at June 30 but not collected within 45 days after that date are reported as deferred revenue in the financial statements. Unearned revenues consist of amounts prepaid and not yet earned.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) K. Compensated Absences City employees are granted vacation and sick pay in varying amounts based on years of service. Employees may accumulate, subject to certain limitations, unused vacation and sick pay earned and, upon retirement, termination, or death, may be compensated for certain amounts at specified rates. The cost of accumulated vacation and sick pay expected to be paid from future expendable resources is accounted for as a liability in the government-wide statements and proprietary fund statements. All vacation pay is accrued when incurred in the government-wide and proprietary financial statements. For governmental fund types, the amount of accumulated unpaid vacation leave which is payable from available resources is recorded as a liability of the respective fund only if they have matured, for example, as a result of employee retirement or resignation. For City proprietary funds, the cost of vacation and sick leave is recorded as a liability when earned. L. Long-term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. M. Fund Balance Financial Policies The City’s Finance Committee has been established by Council to implement and establish various financial policies. The Committee meets on a monthly basis to manage and review cash financial activities to insure compliance the established policies. Members of the Committee include those individuals stipulated by ordinance adopted by City Council. It is the City’s policy to fund current expenditures with current revenues and the City’s mission is to strive to maintain a diversified and stable revenue stream to protect the government from problematic fluctuations in any single revenue source and provide stability to ongoing services. The City’s unassigned General Fund balance will be maintained to provide the City with sufficient working capital and a margin of safety to address local and regional emergencies without borrowing. The City has elected to early implement GASB 54 for the current year for its governmental funds. Fund balances are reported according to the following categories: Nonspendable fund balance – Includes amounts that cannot be spent because they are either not in spendable form, or, for legal or contractual reasons, must be kept intact. This classification includes inventories, prepaid amounts, assets held for sale, and long-term receivables

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) M. Fund Balance: (Continued) Restricted fund balance – Restricted funds are either externally imposed (such as debt covenants, grantor, contributors or other governments) or are imposed by law (constitutionally or enabling legislation). Committed fund balance – The City’s Committed Funds require formal action of the City Council either by resolution or ordinance that identifies the specific circumstances under which there resources may be expended. Assigned fund balance – Amounts that are constrained by the City’s expressed intent to use resources for specific purposes but do not meet the criteria to be classified as restricted or committed. Intent can be stipulated by the governing body, anther body (such as the Finance Committee), or by an official to whom that authority has been given. With the exception of the General Fund, this is the residual fund balance of the classification for all governmental funds with positive balances. Unassigned fund balance – This is the residual classification of the General Fund. Only the General Fund can report a positive “unassigned fund balance”. Other governmental funds might report a negative balance in this classification. Unassigned general fund balance - The ratio of Unassigned General Fund balance as a percentage of Budgeted Governmental Funds Expenditures (net of the General Fund Contribution to Schools, transfer to other Governmental Funds, and Capital Projects Fund Expenditures) plus budgeted expenditures in the School Operating and Food Service Funds indicates the ability of the City to cope with unexpected financial problems or emergencies. The larger the Unassigned General Fund balance, the greater the City’s ability to cope with financial emergencies and fluctuations in revenue cycles. The City has established a target rate of 12% at the close of each fiscal year as computed on the upcoming budget year. Once the Unassigned General Fund Balance target is achieved by the City, it is intended to be maintained for the upcoming fiscal year from prior year surpluses and budgeted additions as available before any other needs are addressed. In the event Unassigned Fund Balance is required to be drawn below the 12% target rate due to an emergency (such as a natural disaster) or due to severe economic circumstances, the City will develop a plan to restore the Unassigned Fund Balance over the ensuing two to three years. The General Fund has the following amounts committed and assigned at June 30, 2010:

Function

Commited

General government administration Judicial administration Public safety Public works Health and welfare Parks, recreation, and cultural Community development Total 49

Assigned

39,359 $ 47,480 112,965 98,076 242,133 22,466 22,996

119,901 903,127 14,688 207,495 17,939 1,722,900

585,475 $

2,986,050

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1â&#x2C6;&#x2019;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) N. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net assets invested in capital assets, net of related debt excludes unspent debt proceeds. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The City first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. O. Retirement Plan Retirement plan contributions are actuarially determined and consist of current service costs and amortization of prior service costs over a 30-year period. The City's policy is to fund pension cost as it accrues. P. Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenditures/expenses and disclosure of contingent assets and liabilities for the reported periods. Actual results could differ from those estimates and assumptions. Q. Component Unit-School Board Capital Asset and Debt Presentation By law, the School Board does not have taxing authority and, therefore, it cannot incur debt through general obligation bonds to fund the acquisition, construction or improvement of its capital assets. That responsibility lies with the City who issues the debt on behalf of the School Board. However, the Code of Virginia requires the School Board to hold title to the capital assets (buildings and equipment) due to their responsibility for maintaining the assets. In the Statement of Net Assets, this scenario presents a dilemma for the City. Debt issued on behalf of the School Board is reported as a liability of the primary government, thereby reducing the net assets of the City. The corresponding capital assets are reported as assets of the Component Unit-School Board (title holder), thereby increasing its net assets. The Virginia General Assembly amended the Code of Virginia to allow a tenancy in common with the School Board whenever the locality incurs a financial obligation which is payable over more than one fiscal year for any school property. The tenancy in common terminates when the associated debt has been paid in full. For financial reporting purposes, the legislation permits the locality to report the portion of the school property related to any outstanding financial obligation, thus eliminating a potential deficit from financing capital assets with debt.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 1−SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) R. Comparative Data/reclassifications Certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year’s presentation. S. Credit Risk The assessed value of real estate and personal property for the City’s ten largest taxpayers comprises 3.86% and 6.00% of the City’s real estate and personal property tax base, respectively. Concentration of credit risk with respect to receivables is limited due to the large number of citizens comprising the City’s taxpayer base. NOTE 2−DEPOSITS AND INVESTMENTS: The City maintains a cash and investment pool for all funds except the Economic Development Authority. The cash and investments of the Economic Development Authority’s funds are held separately from other City funds and the Treasurer of the City of Suffolk is not accountable for these funds. Each fund’s portion of the pool is reported in the balance sheet as cash and cash equivalents and/or restricted assets. Deposits All cash of the City and Component Unit School Board is maintained in accounts collateralized in accordance with the Virginia Security for Public Deposits Act, Section 2.2-4400 et. seq. of the Code of Virginia or covered by federal depository insurance. The City Treasurer’s policy for deposits and investments applies to both the City and the School Board. The policy refers to relevant state statutes identifying allowable types of investments, which are deemed to be high quality. The state statutes specify the following minimum levels of credit ratings: A-1 or P-1 for commercial paper and certificates of deposit, AA or Aa for corporate notes, and AAA for asset-backed securities. The Treasurer’s policy emphasizes the use of securities of high credit quality and marketability, and follows state statute, but does not specify minimum credit ratings. Credit Risk of Debt Securities Credit risk is the risk an investor is subject to as a result of the credit quality of investments in debt securities. The City’s rated debt investments as of June 30, 2010 were rated by Standard & Poor’s and the ratings are presented below using Standard & Poor’s rating scale.

Locality's Rated Debt Investments' Values Fair Quality Ratings AAA AAAm

Rated Debt Investments SNAP Repurchase Agreements - Underlying: U.S. Agency Securities Total 51

- $

56,935,436

18,220,638 18,220,638 $

56,935,436

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 2â&#x2C6;&#x2019;DEPOSITS AND INVESTMENTS: (CONTINUED) Interest Rate Risk The City Treasurer's policy states that the investment portfolio shall be designed to attain a market rate of return, taking into account investment risk constraints and liquidity needs. The portfolio shall be structured so that securities mature concurrent with estimated cash needs and remain sufficiently liquid to meet anticipated operating requirements. Investments of current operating funds shall have maturities of no longer than 24 months.

Fair Value

Investment Type Repurchase Agreements

Less Than 1 Year

18,220,638 $

Interest rate risk does not apply to the State Non-Arbritrage Pool. External Investment Pool The State Non-Arbitrage Pool (SNAP) is an open-end management investment company registered with the Securities and Exchange Commission (SEC). The fair value of the positions in the SNAP is the same as the value of the pool shares. NOTE 3â&#x2C6;&#x2019;RESTRICTED CASH: The City has restricted cash as of June 30, 2010 as follows:

General Unspent debt proceeds $ Proffers Debt service Cemetery Bridge repair Escrow/bond/customer deposits Other external purposes $ Total restricted cash

Capital Projects

Debt Service

Nonmajor Governmental Funds

Businesstype Activities

Internal Service Funds

Total Primary Government

53,900 $ 15,211,204 $ - $ - $ 36,851,743 $ 524,448 $ 526,018 - 392,169 1,525,006 986,450 2,669,183 -

52,641,295 526,018 1,917,175 986,450 2,669,183

812,302 2,544,541 32,827 25,676 180,828 891,878 $ 15,737,222 $ 392,169 $ 6,381,002 $ 38,409,576 $ 524,448 $

3,389,670 206,504 62,336,295

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 4â&#x2C6;&#x2019;RECEIVABLES: Taxes receivables and accounts receivable in the proprietary funds at June 30, 2010 are as follows:

Taxes Receivable Primary Government: General Nonmajor Governmental Funds Business-type Activities Internal Service Funds Total Component UnitSchool Board

Accounts Receivable

Subtotal

LessAllowance for Uncollectible Accounts

Receivables Net

5,830,902 $

- $

5,830,902 $

(2,117,066) $

3,713,836

117,137 5,948,039 $

5,064,251 29,618 5,093,869 $

117,137 5,064,251 29,618 11,041,908 $

(41,115) (204,724) (2,362,905) $

76,022 4,859,527 29,618 8,679,003

- $

173,604 $

- $

173,604

NOTE 5â&#x2C6;&#x2019;DUE FROM OTHER GOVERNMENTS: Due from other governments in the fund statements at June 30, 2010 are as follows:

Primary Government

General Commonwealth of Virginia State sales tax Shared expenses Social services reimbursement Various grants Total due from the Commonwealth of Virginia Federal Government HUD grants Social services reimbursement Various grants Total due from the Federal government Total due from other governments

Capital Projects

Nonmajor Governmental Funds

Total

621,718 $ 231,073 460,952 38,787

- $ 179,267

- $ 46,989

621,718 231,073 460,952 265,043

1,352,530 $

179,267 $

46,989 $

1,578,786

- $ 386,411 -

- $ 170,688

195,968 $ 519,916

195,968 386,411 690,604

386,411 $

170,688 $

715,884 $

1,272,983

1,738,941 $

349,955 $

762,873 $

2,851,769

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 5−DUE FROM OTHER GOVERNMENTS: (CONTINUED)

Component Unit School Board School Operating Fund Commonwealth of Virginia State sales tax Various grants Total due from the Commonwealth of Virginia Federal Government School food reimubursement Title I Title VI-B Various grants Total due from the Federal government Total due from other governments

School Food Service Fund

School Grants Fund

Total

1,043,781 $ 14,877

- $ -

- $ 69,639

1,043,781 84,516

1,058,658 $

- $

69,639 $

1,128,297

- $ 296,285

237,350 $ -

- $ 1,380,065 792,519 736,971

237,350 1,380,065 792,519 1,033,256

296,285 $

237,350 $

2,909,555 $

3,443,190

1,354,943 $

237,350 $

2,979,194 $

4,571,487

NOTE 6−INTERFUND TRANSACTIONS: Interfund Receivables and Payables Individual fund interfund receivable and payable balances at June 30, 2010 are as follows:

Due To General Fund Nonmajor Governmental Funds: Grants Fund Internal Service Funds: Fleet Management Fund Totals

Due From

1,851,244 $ -

1,851,244 $

763,204 1,088,040 1,851,244

Purpose Due to General Fund $763,204 - Nonmajor Governmental Funds: reimbursed in subsequent fiscal year.

Advances for receivables from other governments to be

$1,088,040 - Nonmajor Enterprise Fund: Cash advances at June 30, 2010. 54

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 6â&#x2C6;&#x2019;INTERFUND TRANSACTIONS: (CONTINUED) Transactions between primary government and component units Receivable and payable balances between the primary government and component units at June 30, 2010, are as follows:

Due To Primary Government Component Units: School Board Industrial Development Authority Totals

Due From

568,224 $

328,969 239,255 568,224

The City transferred $44,223,161 to Suffolk School Board as part of its annual operating budget appropriation for support of schools. Interfund Transfers

Transfers to General Fund Transfers from: General Fund Utility Nonmajor: Governmental Enterprise Internal Service Total

Capital Projects

Debt Service

Nonmajor Governmental

Total

- $ 920,363

1,514,461 $ -

23,906,655 $ -

115,035 $ -

25,536,151 920,363

670,807 373,958 279,468 2,244,596 $

340,000 1,000,000 1,632,290 4,486,751 $

1,142,331 25,048,986 $

115,035 $

2,153,138 1,373,958 1,911,758 31,895,368

Purpose Transfers are used to (1) move revenues from that statute or budget requires to collect them to the funds that statute or budget requires to expend them and (2) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds is accordance with budgeting authorization.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 7â&#x2C6;&#x2019;CAPITAL ASSETS: The following is a summary of governmental capital asset activity for the fiscal year ended June 30, 2010: Restated Balance July 1, 2009 Capital assets not being depreciated Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated Buildings Improvements other than buildings Machinery and equipment Total capital assets being depreciated Less accumulated depreciation Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation Total capital assets being depreciated net School Board Joint Tenancy Assets Total capital assets governmental activities

Increases

Balance June 30, 2010

Decreases

23,407,954 $ 27,567,957

1,173,965 $ 18,544,056

45,000 $ 3,384,811

24,536,919 42,727,202

50,975,911 $

19,718,021 $

3,429,811 $

67,264,121

55,346,926 $ 149,044,624 52,788,785

96,457 $ 1,989,495 4,551,348

991,037 $ 159,980 2,563,650

54,452,346 150,874,139 54,776,483

$ 257,180,335 $

6,637,300 $

3,714,667 $

260,102,968

14,549,856 $ 28,443,680 32,586,810 75,580,346 $

1,395,493 $ 6,447,514 4,153,252 11,996,259 $

991,037 $ 4,620 2,263,945 3,259,602 $

14,954,312 34,886,574 34,476,117 84,317,003

$ 181,599,989 $

(5,358,959) $

455,065 $

175,785,965

89,020,437 $

- $

8,756,513 $

80,263,924

$ 321,596,337 $

14,359,062 $

12,641,389 $

323,314,010

Reconciliation of primary government net assets invested in capital assets, net of related debt: Net capital assets $ Long-term debt applicable to capital assets: $ 201,749,125 General obligation debt Literary fund loans 5,250,000 Section 108 loan 3,266,000 Capital lease obligations 6,394,321 Bond premiums and other credits 6,737,894 Less - debt proceeds received but not expended on capital assets (15,789,552) Net long-term debt as adjusted $ 207,607,788 Net assets invested in capital assets, less related debt

323,314,010

(207,607,788) 115,706,222

Note - Beginning balances were restated for Golf Course Fund capital assets in the amount of $3,664,263, accumulated depreciation of $1,311,258 and improvements of $1,924,282 reference Note 17. 56

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 7â&#x2C6;&#x2019;CAPITAL ASSETS: (CONTINUED) The following is a summary of Utility Fund capital asset activity for the year ended June 30, 2010: Restated Balance July 1, 2009

Increases

3,208,702 $ 94,957,734 *

131,703 $ 21,839,068

- $ 55,262,649

3,340,405 61,534,153

98,166,436 $

21,970,771 $

55,262,649 $

64,874,558

22,112,282 $ 235,261,146 49,137,291

24,241,669 $ 8,206,336 23,475,567

- $ 8,000

46,353,951 243,467,482 72,604,858

306,510,719 $

55,923,572 $

8,000 $

362,426,291

8,543,505 $ 47,808,323 20,114,814 76,466,642 $

943,951 $ 4,710,972 2,190,679 7,845,602 $

- $ 8,000 8,000 $

9,487,456 52,519,295 22,297,493 84,304,244

230,044,077 $

48,077,970 $

- $

278,122,047

328,210,513 $

70,048,741 $

55,262,649 $

342,996,605

Reconciliation of primary government net assets invested in capital assets, net of related debt: Net capital assets $

342,996,605

Capital assets not being depreciated Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated Buildings Improvements other than buildings Machinery and equipment Total capital assets being depreciated Less accumulated depreciation Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation Total capital assets being depreciated net Total capital assets Utility Fund

Long-term debt applicable to capital assets see Note 8 Less - debt proceeds received but not expended on capital assets Net long-term debt as adjusted

Balance June 30, 2010

Decreases

$ $

216,217,043 (36,851,743) 179,365,300

Net assets invested in capital assets, less related debt

(179,365,300) $

* Includes adjustment of $911,588 to construction in progress reference Note 17 . 57

163,631,305

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 7â&#x2C6;&#x2019;CAPITAL ASSETS: (CONTINUED) The following is a summary of Component Unit-School Board capital asset activity for the year ended June 30, 2010: Balance July 1, 2009 Capital assets not being depreciated Land Capital assets being depreciated Buildings Improvements Machinery and equipment Total capital assets being depreciated Less accumulated depreciation Buildings Improvements Machinery and equipment Total accumulated depreciation Total capital assets being depreciated net City Joint Tenancy Assets Total

Increases

Decreases

Balance June 30, 2010

5,938,618 $

- $

5,938,618

184,178,431 $ 16,396,876 32,207,150

45,284 $ 44,509 3,337,262

- $ 844,078

184,223,715 16,441,385 34,700,334

232,782,457 $

3,427,055 $

844,078 $

235,365,434

59,943,503 $ 7,401,487 19,147,594 86,492,584 $

4,854,586 $ 621,312 2,428,955 7,904,853 $

- $ 834,093 834,093 $

64,798,089 8,022,799 20,742,456 93,563,344

146,289,873 $

(4,477,798) $

9,985 $

141,802,090

(89,020,437) $

8,756,513 $

- $

63,208,054 $

4,278,715 $

9,985 $

(80,263,924) 67,476,784

The following is a summary of depreciation expense charged to various functions/funds for the year ending June 30, 2010:

Governmental Activites: General Government Judicial Administration Public Safety Public Works Public Health Parks, Recreation, and Culture Total Governmental Activities

392,852 70,037 1,858,461 8,686,386 12,388 976,135

11,996,259 *

* Includes depreciation of $3,370,705 for the Fleet Maintenance Fund and $199,811 for Information Technology Fund. Proprietary Funds: Utility Fund Component Unit School Board 58

7,837,602

7,904,853

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 8â&#x2C6;&#x2019;LONG-TERM OBLIGATIONS: The following is a summary of the changes in long-term obligation transactions of the governmental funds for the year ended June 30, 2010:

Restated Balance July 1, 2009 Governmental Funds: General obligation debt Literary fund loans Notes payable Section 108 loan Capital lease obligations Add bond premiums and other credits Net debt

Claims payable OPEB Compensated absences Total

Reductions

Due Within One Year

210,736,771 $ 5,750,000 240,000 3,459,000 8,786,426

34,155,000 $ 398,784

43,142,646 $ 500,000 240,000 193,000 2,790,889

201,749,125 $ 12,878,169 5,250,000 500,000 3,266,000 193,000 6,394,321 2,549,608

5,088,906 234,061,103 $

2,102,918 36,656,702 $

453,930 47,320,465 $

6,737,894 331,020 223,397,340 $ 16,451,797

1,800,242 209,817 4,166,564 $

Additions

Balance June 30, 2010

240,237,726 $

10,826,864 1,137,498 48,621,064 $

9,287,975 209,817 807,738 57,625,995 $

3,339,131 4,496,324

1,380,913 272,280

231,232,795 $ 18,104,990

Note - Beginning balances were restated for Golf Course Fund debt in the amount of $3,974,784 and deferred credits in the amount of $1,244, reference Note 17.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 8â&#x2C6;&#x2019;LONG-TERM OBLIGATIONS: (CONTINUED) The following is a summary of long-term obligations outstanding at June 30, 2010: Description Bonds Payable: Virginia Public School Authority Virginia Public School Authority General Obligations Bonds: Public Improvement Series 2001 2001 Refunding Bonds Public Improvement Series 2002 Public Improvement Series 2003 2003 Refunding Bonds Public Improvement Series 2004 Public Improvement Series 2005 2005 Refunding Bonds 2007 Public Improvement and Refunding Bonds 2007B Public Improvement Bonds 2008 Public Improvement Bonds 2010A Public Improvement and Refunding Bonds

Issue Date

Final Maturity

Interest Rate

08/30/90 07/31/91

07/15/10 07/15/12

6.40 - 7.10 $ 4.85 - 6.60

06/07/01 06/07/01 07/18/02 07/01/03 07/16/03 07/28/04 11/17/05 11/17/05

06/30/21 06/30/15 06/30/23 08/01/23 08/01/16 06/30/25 12/01/25 12/01/19

4.00 - 5.00 4.00 - 5.00 3.00 - 5.00 2.50 - 6.00 2.50 - 6.00 2.50 - 6.00 4.00 - 5.00 4.00 - 5.00

21,135,000 5,430,883 18,195,000 17,515,000 18,129,532 18,160,000 11,710,000 9,978,267

3,285,000 2,396,801 3,085,000 12,630,000 4,850,369 13,585,000 9,360,000 8,557,074

04/11/07 12/01/07 10/28/08

02/01/35 12/01/27 02/01/29

4.00 - 4.50 4.00 - 5.00 4.00 - 5.00

88,081,239 24,475,000 16,600,000

77,562,126 22,025,000 9,960,000

04/29/10

08/01/32

3.38

34,155,000

Total general obligation bonds Literary Fund Loans: Literary Fund Loan Literary Fund Loan

12/01/99 04/01/01

12/01/19 04/01/21

3.00 3.00

Total literary fund loans Other Notes: Section 108 Loan Payable

09/14/06

08/01/26

4.96 - 5.77

Authorized and Issued

Outstanding June 30, 2010

3,685,000 $ 451,546

240,000 57,755

201,749,125

5,000,000 $ 5,000,000

2,500,000 2,750,000

5,250,000

3,845,000 $

3,266,000

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 8â&#x2C6;&#x2019;LONG-TERM OBLIGATIONS: (CONTINUED) Summary of long-term obligations outstanding at June 30, 2010: (Continued) Outstanding June 30, 2010 Capital Lease Obligations: $4,662,530 issued April 26, 2006 for the purchase of roadway maintenance equipment to include 20 dump trucks, 9 mowing tractors, 1 rubber tire loader,1 asphalt patch truck, backhoes, 18 pickups, a ditch master and miscellaneous other equipment; payable in quarterly installments of $258,070 through July 2011; interest at 3.69% $

1,255,393

$245,968 issued September 13, 2006 for the purchase of 2 freightliner trash trucks; payable in quarterly installments of $258,070 through September 2011; interest at 4.11%

66,284

$2,083,504 issued February 28, 2007 for the purchase of a various roadway maintenace equipment; payable in quarterly installments of $115,371 through February, 2012; interest at 3.97%

776,467

$495,043 issued September 24, 2010 for the purchase of a time and attendance system; payable in monthly installments of $13,751 through November 2012

398,784

$5,412,300 issued November 10, 2008 for the purchase of 28 public safety vehicles; payable in quarterly installments of $299,170 through November 2013; interest at 3.90%

3,897,393

Total capital lease obligations

6,394,321

Add premiums and other credits

6,737,894

Claims payable

3,339,131

Compensated absences

4,496,324

Total governmental long-term obligations

231,232,795

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 8â&#x2C6;&#x2019;LONG-TERM OBLIGATIONS: (CONTINUED) Amortization Requirements for Governmental Funds The following is a summary of long-term obligation amortization requirements for governmental funds at June 30, 2010: Year Ending June 30,

General Obligation Bonds Principal Interest

12,878,169 $ 13,827,876 13,964,858 14,212,945 13,212,952 13,409,433 12,975,428 13,117,475 11,057,488 10,662,501 9,860,000 8,895,000 9,075,000 8,300,000 7,550,000 6,775,000 6,370,000 6,545,000 2,155,000 1,355,000 1,110,000 1,150,000 1,215,000 1,015,000 1,060,000

8,497,772 $ 8,302,867 7,748,472 7,104,538 6,495,059 5,888,295 5,298,267 4,632,084 4,009,410 3,512,725 3,083,021 2,664,593 2,241,698 1,858,500 1,522,043 1,212,774 923,688 633,825 368,944 295,875 242,950 193,838 142,350 93,375 47,700

Literary Fund Loans Principal Interest

500,000 $ 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 250,000 -

157,500 $ 142,500 127,500 112,500 97,500 82,500 67,500 52,500 37,500 22,500 7,500 -

Section 108 Loan Payable Principal Interest

193,000 $ 193,000 193,000 193,000 193,000 193,000 193,000 193,000 193,000 193,000 193,000 193,000 193,000 193,000 193,000 193,000 178,000 -

Capital Lease Obligations Principal Interest

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

170,065 $ 2,714,620 $ 195,508 160,406 1,875,618 103,925 150,707 1,214,381 51,058 140,979 589,702 8,639 131,214 121,410 111,567 101,521 91,215 80,764 70,187 59,495 48,697 37,812 26,849 15,809 5,135 -

Total

$ 201,749,125 $ 77,014,663 $ 5,250,000 $ 907,500 $ 3,266,000 $ 1,523,832 $ 6,394,321 $ 359,130

The Internal Services Fund capital lease obligations are collateralized by equipment with a book value of $6,918,522 for 2010, which is net of accumulated depreciation of $5,825,900 for 2010 at June 30, 2010.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 8â&#x2C6;&#x2019;LONG-TERM OBLIGATIONS: (CONTINUED) Other General Fund revenues are used to pay all long-term general obligation debt, capital leases, and compensated absences. The General Fund has a contingent liability for repayment of the general obligation bonds outstanding in the Enterprise Fund, from which repayment is anticipated, should the Enterprise Fund be unable to do so. Debt service requirements for general obligation bonds and other long-term obligations are met by the General Fund. The City retains the liability for the portion of general obligation bonds issued to fund capital projects of the School Board. General obligation bonds are direct obligations and pledge the full faith and credit of the City. The following is a summary of the changes in long-term obligation transactions of the proprietary funds for the year ended June 30, 2010: Balance July 1, 2009 Utility Fund: Bonds payable Add bond premiums other credits Net bonds payable Compensated absences

Additions

Reductions

Balance June 30, 2010

Amount Due Within One Year

188,253,417 $

31,945,000 $

8,839,786 $ 211,358,631 $

4,535,206

4,558,920 192,812,337 $ 362,493

479,906 32,424,906 $ 99,445

180,415 4,858,411 9,020,201 $ 216,217,042 $ 98,804 363,134

204,410 4,739,616 12,733

193,174,830 $

32,524,351 $

9,119,005 $ 216,580,176 $

4,752,349

Stormwater Utility Fund: Compensated absences

45,042 $

38,485 $

Total Proprietary Funds

193,219,872 $

32,562,836 $

Total Utility Fund

21,068 $

62,459 $

1,679

9,140,073 $ 216,642,635 $

4,754,028

Description Public Utility Fund: Bonds payable: General Obligation and Revenue Bonds: Water and Sewer Revenue Bonds Series 2000 2001 Refunding Bonds Water and Sewer Bonds Series 2001 2003 Refunding Bonds Water and Sewer Revenue Bonds Series 2003 2003C VRA Refunding Bonds Water and Sewer Revenue Bonds Series 2004B Water and Sewer Revenue Bonds Series 2005B 2005 Refunding Bonds 2006B VRA Refunding Bonds Water and Sewer Revenue Bonds Series 2006C 2007 Public Improvement and Refunding Bond 2007 Series Water and Sewer Revenue Bond - VRA 2008 Series Water and Sewer Revenue Bond - VRA 2009 Series Water and Sewer Revenue Bond - VRA 2009 Series (Taxable-Build America Bonds) 2010 VRA Refunding Bonds (VPFP)

Issue Date

Final Maturity

03/29/00 06/07/01 12/14/01 07/16/03

04/01/30 06/30/15 04/01/31 08/01/16

4.20 4.00 3.85 2.50 -

12/04/03 08/07/03

10/01/33 10/01/16

2.10 - 5.10 2.00 - 5.00

11,725,000 3,295,000

10,450,000 1,810,000

11/17/04

10/01/26

2.00 - 6.00

11,695,000

10,230,000

12/07/05 11/17/05 08/09/06

10/01/35 12/01/19 04/01/30

4.77 - 5.10 4.00 - 5.00 4.10 - 4.87

14,050,000 $ 26,733 12,750,000

13,045,000 22,926 12,235,000

11/29/06

10/01/36

4.26 - 4.91

36,460,000

35,215,000

04/11/07

02/01/35

4.00 - 4.50

163,761

97,874

12/13/07

10/01/37

3.40 - 5.10

39,795,000

39,075,000

12/10/08

10/01/38

2.29 - 5.54

45,300,000

06/17/09

10/01/25

1.13 - 4.86

10,200,000

10,125,000

11/10/09 06/16/10

02/01/40 04/01/31

3.87 4.52

27,000,000 4,945,000

Total long-term debt

Interest Rate %

Authorized and Issued

Outstanding June 30, 2010

5.90 $ 14,435,000 $ 5.00 1,344,117 5.10 18,340,000 6.00 3,250,469

Bond premiums and other credits

345,000 593,200 869,631

211,358,631 4,858,411

Net bonds payable

Compensated absenses

216,217,042 363,134

Total Public Utility Fund

216,580,176

62,459

216,642,635

Stormwater Utility Fund: Compensated absences Total Proprietary Funds 64

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 8â&#x2C6;&#x2019;LONG-TERM OBLIGATIONS: (CONTINUED) Other: (Continued) The following is a summary of long-term obligation amortization requirements for proprietary funds at June 30, 2010: Major Fund Utility Fund Principal Interest

Year Ending June 30, 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

4,535,206 $ 4,691,504 5,485,142 5,717,055 5,742,048 5,925,567 6,039,572 5,972,525 6,222,513 6,512,499 6,785,000 7,115,000 7,430,000 7,770,000 8,140,000 8,515,000 8,915,000 8,485,000 8,880,000 9,310,000 8,815,000 8,110,000 8,510,000 8,935,000 8,610,000 9,040,000 8,600,000 6,645,000 4,370,000 1,535,000

10,601,209 10,093,642 9,899,199 9,688,681 9,462,990 9,212,376 8,947,174 8,682,160 8,402,789 8,108,945 7,799,560 7,469,664 7,120,921 6,753,329 6,363,307 5,945,606 5,504,538 5,062,804 4,619,577 4,154,092 3,665,617 3,225,248 2,792,747 2,338,952 1,882,134 1,422,490 961,709 559,498 262,245 95,170

Totals

211,358,631 $

171,098,373

The City also leases various equipment and facilities through operating leases which are subject to appropriation annually. Rent expense for governmental and business-type activities was $2,095,859 and $1,073,490, respectively. 65

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 8â&#x2C6;&#x2019;LONG-TERM OBLIGATIONS: (CONTINUED) School Board Long-Term Liabilities Following is a summary of changes in noncurrent liabilities of the School Board and its component unit for the year ended June 30, 2010:

Balance July 1, 2009 Compensated absences: School Board $

2,052,220 $

Additions

435,086 $

Reductions

Balance June 30, 2010

571,575 $

1,915,731 $

Current Portion

217,785

General Obligation Debt Limit The Commonwealth of Virginia imposes a legal limit of 10% of the assessed valuation of taxable real property on the amount of general obligation borrowing which may be outstanding by the City. The City of Suffolk has independently set a lower debt limit of 4% of the assessed valuation. As of June 30, 2010 the City's aggregated general obligation indebtedness is approximately $422 million less that the City's limit and $695 million less that the Commonwealth's limit as summarized in statistical table number 13. The City was in compliance with all significant financial covenants contained in the various bond indentures at June 30, 2010. The City does not have overlapping debt at June 30, 2010. In prior years, the City defeased certain general obligation and other bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the Cityâ&#x20AC;&#x2122;s financial statements. At June 30, 2010, $18,140,000 of bonds outstanding are considered defeased. On June 16, 2010 the City issued $4,945,000 in VRA Water and Sewer Bonds in the Virginia Pooled Financing Program to advance refund $5,205,000 Water and Sewer Bonds Series 2001 on October 1, 2026 through April 1, 2031. This refunding reduced debt service payments by $667,664. A premium was received in the amount of $479,906 and issuance costs totaled $109,499 reflecting a net loss on refunding of $110,407. On April 27, 2010 the City issued $34,155,000 Series 2010 New Money ($3,450,000) and Refunding Bonds ($30,705,000) with an effective interest rate of 3.3%. The refunded bonds are summarized as follows: Refund Refund Refund Refund Refund Refund Refund

1999 Public Improvement Bonds 2000 Public Improvement Bonds 2001 GO Refunding Bonds 2002 Public Improvement Bonds 1994 Public Improvement and Refunding Bonds 2007 Public Improvement and Refunding Bonds 2002 Public Improvement Bonds

Total

1,080,000 945,000 2,170,000 12,420,000 955,000 6,380,000 5,810,000

29,760,000

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 8â&#x2C6;&#x2019;LONG-TERM OBLIGATIONS: (CONTINUED) General Obligation Debt Limit: (Continued) The 2010 bonds will be repaid in various installments beginning August 1, 2011 to August 1, 2033. As a result the above bonds are considered to be defeased in substance and the liability for those bonds has been removed from these financial statements. The City received premiums in the total amount of $2,102,918 as part of this bond issue. The re-acquision price exceeded the carrying amount of the old debt by $1,130,179. These advance refundings were undertaken to reduce the total debt service payments over the next 20 years by $1,237,249 and resulted in an economic gain (difference between the present value of the old and new debt service payments ) of $982,272. Arbitrage Rebate Management has calculated its estimated arbitrage rebate liability relating to the City's various bond issues in accordance with Internal Revenue Service regulations. Internal Revenue Service regulations require the City to remit the rebate to the United States Treasury once every five years. At June 30, 2010, the City did not have an estimated rebate liability. Bonds Authorized and Unissued Bonded debt authorized by City Council in previous years but unissued as of June 30, 2010, totals $57,380,739. NOTE 9â&#x2C6;&#x2019;DEFINED BENEFIT PENSION PLAN: A. Plan Description Name of Plan: Virginia Retirement System (VRS) Identification of Plan: Agent and Cost-Sharing Multiple-Employer Defined Benefit Pension Plan Administering Entity: Virginia Retirement System (System) All full-time, salaried permanent employees of participating employers must participate in the VRS. Benefits vest after five years of service. Employees are eligible for an unreduced retirement benefit at age 65 with 5 years of service (age 60 for participating law enforcement officers, firefighters, and sheriffs) or at age 50 with at least 30 years of service if elected by the employer (age 50 with at least 25 years for participating local law enforcement officers, firefighters, and sheriffs) payable monthly for life in an amount equal to 1.7 percent of their average final compensation (AFC) for each year of credited service (1.85% to sheriffs and if the employer elects, to other employees in hazardous duty positions receiving enhanced benefits). Benefits are actuarially reduced for retirees who retire prior to becoming eligible for full retirement benefits. In addition, retirees qualify for annual cost-of-living adjustment (COLA) beginning in their second year of retirement. The COLA is limited to 5% per year. AFC is defined as the highest consecutive 36 months of reported compensation. Participating local law enforcement officers, firefighters, and sheriffs may receive a monthly benefit supplement if they retire prior to age 65. The VRS also provides death and disability benefits. Title 51.1 of the Code of Virginia (1950), as amended, assigns the authority to establish and amend benefit provisions to the General Assembly of Virginia.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 9−DEFINED BENEFIT PENSION PLAN: (CONTINUED) A. Plan Description: (Continued) The System issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for VRS. A copy of that report may be downloaded from their website at http://www.varetire.org/Pdf/publications/2009-Annual-Report.pdf or obtained by writing to the System's Chief Financial Officer at P.O. Box 2500, Richmond, VA 23218-2500. B. Funding Policy Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5% of their annual salary to the VRS. This 5% member contribution may be assumed by the employer. In addition, the City and School Board are required to contribute the remaining amounts necessary to fund participation in the VRS using the actuarial basis specified by the Code of Virginia and approved by the VRS Board of Trustees. The City's and School's non-professional employees contribution rates for the fiscal year ended 2010 were 9.22% and 7.08% of annual covered payroll, respectively. The School Board’s contributions for professional employees were $8,229,751, $10,175,482, and $6,170,650 to the teacher cost-sharing pool for the fiscal years ended June 30, 2010, 2009 and 2008, respectively and these contributions represented 8.81%, 8.81% and 8.30%, respectively, of current covered payroll. C. Annual Pension Cost For fiscal year 2010, the City’s annual pension cost of $4,817,023 was equal to the City’s required and actual contributions. For fiscal year 2010, the City School Board’s annual pension cost for the Board’s non-professional employees was $871,508 which was equal to the Board’s required and actual contributions.

Trend information for the City and School Board Annual Pension Cost (APC) (1)

Fiscal Year Ending City: June 30, 2010 June 30, 2009 June 30, 2008 School Board: Non-professional: June 30, 2010 June 30, 2009 June 30, 2008

Percentage of APC Contributed

Net Pension Obligation

4,817,023 4,730,739 4,404,885

100% 100% 100%

871,508 837,098 821,274

100% 100% 100%

(1) Employer portion only

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 9−DEFINED BENEFIT PENSION PLAN: (CONTINUED) C. Annual Pension Cost: (Continued) The required contribution was determined as part of the June 30, 2009 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at June 30, 2009 included (a) 7.50% investment rate of return (net of administrative expenses), (b) projected salary increases ranging from 3.75% to 5.60% per year for general government employees and 3.50% to 4.75% for employees eligible for enhanced benefits available to law enforcement officers, firefighters, and sheriffs, and (c) a cost of living adjustment of 2.50% per year. Both the investment rate of return and the projected salary increases include an inflation component of 2.50%. The actuarial value of the City’s and the City School Board’s assets is equal to the modified market value of assets. This method uses techniques that smooth the effects of short-term volatility in the market value of assets over a five-year period. The City’s, School Board's unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2007 was 20 years. D. Funded Status and Funding Progress As of June 30, 2009, the most recent actuarial valuation date, the City’s plan was 81.20% funded. The actuarial accrued liability for benefits was $181,382,891, and the actuarial value of assets was $147,279,719, resulting in an unfunded actuarial accrued liability (UAAL) of $34,103,172. The covered payroll (annual payroll of active employees covered by the plan) was $52,462,203 and ratio of the UAAL to the covered payroll was 65.1%. As of June 30, 2009 the most recent actuarial valuation date, the City School Board’s plan was 91.20% funded. The actuarial accrued liability for benefits was $17,857,433, and the actuarial value of assets was $16,285,337, resulting in an unfunded actuarial accrued liability (UAAL) of $1,572,096. The covered payroll (annual payroll of active employees covered by the plan) was $7,212,065 and ratio of UAAL to the covered payroll was 21.80%. The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. NOTE 10−DEFERRED/UNEARNED REVENUE: The balance in deferred revenue on the fund statements and unearned revenues on the government-wide statements at year-end is comprised of the following elements:

Deferred Revenue Unearned developer deposits and other amounts (General) Unearned developer deposits (Nonmajor Governmental) Unearned grant receipts (Governmental) Taxes receivable, net (Governmental) Taxes receivable, net (Nonmajor Governmental) Unearned revenue, (Nonmajor Proprietary) Total

$ 69

Unearned Revenue

- $ 41,234 2,476,649 29,236 -

921,389 2,544,541 66,679 -

2,547,119 $

3,607,165

74,556

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 11â&#x2C6;&#x2019;CONTINGENT LIABILITIES AND COMMITMENTS: Litigation At year end there are two lawsuits against the School Board involving negligence in connection with mold contamination of a school building which collectively total $9M. The suits allege the School Board had untrained school personnel performing mold sample collection and remediation by application of bleach and other biocides which caused undue harm to two individuals. These cases were filed in state court but have been removed to federal court and the court has not ruled at this time. These lawsuits are not covered by any policy of insurance and it is not known whether or not damages, if any, will be awarded. Other claims and lawsuits are pending against the City and School Board. In the opinion of the City and School Board attorneys, resolution of these cases will not involve a significant liability to the City or the School Board. Federally Assisted Grant Programs The City participates in a number of federally assisted grant programs. Although the City has been audited in accordance with the provisions of OMB Circular A-133, these programs remain subject to financial and compliance audits by the grantors or their representatives. Such audits could lead to requests for reimbursements to the grantor agency for expenditures disallowed under terms of the grant. Based on prior experience, City management believes such disallowances, if any, will not be significant. Construction Commitments The City has authorized expenditures for capital additions and construction of various governmental and utility capital projects. At June 30, 2010, projects expected to be completed at various dates through 2010 had a total unexpended balance of $12,986,435 (governmental) and $11,857,580 (utility). Contingency The City currently has been notified by a taxpayer that is may be requesting the manufacturing exemption for the Business Professional Occupancy License taxes for the years 2007 to 2009 which total $1,066,513. At the date of this report this evaluation is on-going.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 11â&#x2C6;&#x2019;CONTINGENT LIABILITIES AND COMMITMENTS: (CONTINUED) Self-Insurance The City is self-insured for a portion of its health insurance risks up to $125,000 per occurrence. An external insurance policy provides coverage over the specified amount up to $1,000,000 per individual for life. Claims payable reported in the Risk Management Fund at June 30, 2010 consists of all current self-insured claims payable amounting to $3,339,131. The current portion is $1,380,913 and $1,491,141 for 2010 and 2009, respectively. Claims payable for health insurance are based on current enrollment and benefits and historical experience. Claims payable for workmanâ&#x20AC;&#x2122;s compensation and other contingent liabilities are based on insurance coverage and specific claims which have been presented. Following is a summary of changes in claims payable for the fiscal years ended June 30, 2010 and 2009: Current Year Claims and Changes in Estimates

Claims Payable July 1, 2009 Workman's Compensation and other Health Insurance Totals

1,038,741 $ 761,501

2,315,147 $ 8,511,717

(907,089) $ (8,380,886)

2,446,799 892,332

1,800,242 $

10,826,864 $

(9,287,975) $

3,339,131

Current Year Claims and Changes in Estimates

Claims Payable July 1, 2008 Workman's Compensation and other Health Insurance Totals

Claims Payments

Claims Payable June 30, 2010

Claims Payments

Claims Payable June 30, 2009

1,164,369 $ 860,603

802,921 $ 6,626,906

(928,549) $ (6,726,008)

1,038,741 761,501

2,024,972 $

7,429,827 $

(7,654,557) $

1,800,242

Third-party administrators acting on behalf of the City pay all self-insured claims. There have been no claims settled that exceeded insurance coverage in any of the past three years.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 11−CONTINGENT LIABILITIES AND COMMITMENTS: (CONTINUED) Worker’s Compensation Self-Insurance Coverage – School Board The School Board maintains a self-insurance plan for workers’ compensation benefits. Charges are made to the School Operating, Grants and Food Service Funds as approved by City Council in the annual operating budgets. Any excess charges are reflected as a reserved fund balance for workers’ compensation claims in the School Operating Fund. Claims are paid by a third-party administrator acting on behalf of the School Board under terms of a contractual agreement. Administrative fees are included within the provisions of that agreement. The plan pays all claims up to $600,000 and $500,000 for each covered accident, for the years ended June 30, 2010 and 2009, respectively. Any claims exceeding $600,000 for each covered accident are paid by specific stoploss insurance provided by a third-party insurance company. As of June 30, 2010, the workers’ compensation benefit obligation consisted of $309,178 in reported unpaid claims and estimated incurred but not reported claims. Changes in the balance of claims liabilities during the years ended June 30, 2010 and 2009, are as follows:

Claims Payable July 1, 2009 Workers' compensation

465,510 $

Claims Payable July 1, 2008 Workers' compensation

Current Year Claims and Changes in Estimates 300,479 $ Current Year Claims and Changes in Estimates

338,917 $

784,399 $

Claims Payments (456,811) $

Claims Payments (657,806) $

Claims Payable June 30, 2010 309,178

Claims Payable June 30, 2009 465,510

At June 30, 2010, School Operating Fund cash of $627,484 was held for purposes of funding the School’s future claims liabilities. As a result, $627,484 of the School Operating Fund balance is reserved for payment of future claims liabilities. Health Insurance Self-insurance Coverage – School Board Claims are paid by a third-party administrator acting on behalf of the School Board under terms of a contractual agreement. The plan pays all claims up to $125,000 for each participant. Any claims exceeding $125,000 for each participant are paid by specific stop-loss insurance provided by a third-party insurance company. As of June 30, 2010, School Operating Fund cash of $380,122 was held for purposes of funding the School’s future claims liabilities. As a result, $380,122 of the School Operating Fund balance is reserved for payment of future claims liabilities.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 12−LANDFILL POST CLOSURE CARE COSTS: State and Federal laws and regulations require that the City of Suffolk perform certain maintenance and monitoring functions subsequent to closure of the City’s landfill site. The City ceased accepting solid waste at the landfill in 1984 and completed initial closure measures in 1995. The City’s ten-year post closure period began in 1995 and has been extended. The estimated post closure cost is $581,200. This cost estimate includes site maintenance, water quality testing, and applicable methane gas monitoring measures, leachate collection and disposal. The total current cost of landfill closure and post closure care is an estimate and subject to changes resulting from inflation, deflation, technology, or changes in applicable laws or regulations. The City has expended $326,041 through fiscal year 2010. It is estimated that the remaining $255,159 will be recognized as post closure care expenses between June 30, 2010, and the date post closure care requirements expire. NOTE 13−SURETY BONDS: Surety Bonds of the City of Suffolk are as follows: Ronald H. Williams, Treasurer

Thomas A. Hazelwood, Commissioner of the Revenue

Raleigh H. Isaacs, Sheriff

W. Randolph Carter, Jr., Clerk of Circuit Court

C. Phillips Ferguson, Commonwealth's Attorney

Constitutional Officer's Self-Insurance Plan Commonwealth of Virginia Faithful Performance of Duty Bond Plan

1,000,000 500,000

Constitutional Officer's Self-Insurance Plan Commonwealth of Virginia Faithful Performance of Duty Bond Plan

1,000,000

Constitutional Officer's Self-Insurance Plan Commonwealth of Virginia Faithful Performance of Duty Bond Plan

1,000,000

Constitutional Officer's Self-Insurance Plan Commonwealth of Virginia Faithful Performance of Duty Bond Plan

1,000,000

Constitutional Officer's Self-Insurance Plan

1,000,000

NOTE 14−SUBSEQUENT EVENTS: There are no subsequent events at June 30, 2010.

3,000

30,000

485,000

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 15−TRUST FOR OTHER POST-EMPLOYMENT BENEFITS: The City of Suffolk has established a irrevocable trust pursuant to Section 15.2-1544 of the Code of Virginia, as amended for the purpose of accumulated and investing assets to fund Other Post-Employment Benefits (OPEB) and to participate in the Virginia Pooled OPEB Trust Fund and has established a Local Finance Board to become a Participating Employer in the Trust Fund. The Trust Fund provides administrative, custodial and investment services to the Participating Employers in the Trust Fund. For the fiscal year ending June 30, 2010 the City contributed $3,014,322 and the School Board contributed $1,411,000 to the Trust Fund. Expenses allocated to the Trust Fund during the fiscal year ended June 30, 2010 totaled $6,320 for the City and $3,825 for the School Board. The Trust Fund issues a separate report, which can be obtained by requesting a copy from the plan administrator, Virginia Municipal League (“VML”) at P.O. Box 12164, Richmond, Virginia 23241. NOTE 16−OTHER POST-EMPLOYMENT BENEFITS PROGRAM: City: A. Plan Description The City Post-Retirement Medical Plan (CPRMP) is a single-employer defined benefit healthcare plan which offers health insurance for retired employees. Retired employees, who were enrolled in the City group health insurance plan for the 24 month prior to retirement date, who were employed by City with at least 20 years of service and who retire under the VRS plan are eligible to elect post-retirement coverage in the CPRMP. Retirees pay 100 % of spousal premiums. Coverage ceases when retirees reach the age of 65. Surviving spouses are not allowed access to the plan. The plan is administered by the City and the City has no separate financial report. B. Funding Policy The City establishes employer contribution rates for plan participants as part of the budgetary process each year. The City determines how the plan will be funded each year whether it will partially fund or fully fund the plan. For participating retirees the City pays $195 per month towards the monthly premium and the retiree contributes remaining funds towards the monthly premium. C. Annual OPEB Cost and Net OPEB Obligation In accordance with GASB Statement No. 45, an actuarial study was performed calculating the postemployment healthcare costs as of June 30, 2010. The actuarial valuation estimated the Unfunded Actuarial Accrued Liability (“UAAL”) at $19,264,318 and an Annual Required Contribution (“ARC”) of $3,014,322. The annual cost of other post employment benefits (OPEB) under GASB 45 is the Annual Required Contribution (ARC). The City paid $661,766 towards the estimated pay as you go cost for OPEB benefits in fiscal year 2010, and in addition contributed $3,014,322 to a Trust Fund to fully fund the ARC. The City elected to pre-fund OPEB liabilities. The City is contributing the annual required contribution of the employer (ARC) an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The thirty year amortization period is open.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 16−OTHER POST-EMPLOYMENT BENEFITS PROGRAM: C. Annual OPEB Cost and Net OPEB Obligation: (Continued) For 2010, the City’s cash payment of $3,372,436 was more than the annual pension costs. The City’s annual OPEB cost, the contributions made, and the decrease in net OPEB obligation as well as the net OPEB obligation for 2010 are as follows: Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) Contributions made Increase (decrease) in net OPEB obligation Net OPEB obligation - beginning of year Net OPEB obligation - end of year

$ $ $

3,014,322 (24,913) 28,126 3,017,535 (3,372,436) (354,901) (332,175) (687,076)

Information reflecting annual pension cost, amounts contributed as well as the percentage contributed for the past three fiscal years is as follows:

Annual OPEB Cost

Fiscal Year Ended June 30, 2010 June 30, 2009 June 30, 2008

Percentage of Annual OPEB Cost Contributed

3,017,535 2,321,226 2,323,275

111.88% $ 123.33% 93%

Net OPEB Obligation (687,076) (332,175) 211,866

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 16â&#x2C6;&#x2019;OTHER POST-EMPLOYMENT BENEFITS PROGRAM: (CONTINUED) City: (Continued) C. Annual OPEB Cost and Net OPEB Obligation: (Continued) Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Cost Method The projected unit credit (PUC) cost method was used for this valuation. The objective of this method is to fund each participantâ&#x20AC;&#x2122;s benefits under the plan as they would accrue. Under this method the total value of the benefit to which each participant is expected to become entitled is broken down into units, each associated with a year of past or future credited service. D. Summary of Actuarial Assumptions Interest Assumptions Funding Assumptions Interest rate assumed Payroll growth

7.50% *

* Since none of the benefits are salary related, there is no salary increase assumption.

The UAAL is being amortized as a level percentage of projected payroll on an open basis. Health care cost trends, which is the trend rates of increased claims representing the rate of increase of employer claims payments. Medical annual rate increases for pre-medicare members are as follows: Fiscal Year Ended 2010 2011 2012 2013 2014

Fiscal Year Ended

Percentage 9.50% 9.00% 8.50% 8.00% 7.50%

2015 2016 2017 2018 2019 76

Percentage 7.00% 6.50% 6.00% 5.50% 5.00%

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 16â&#x2C6;&#x2019;OTHER POST-EMPLOYMENT BENEFITS PROGRAM: (CONTINUED) City: (Continued) D. Summary of Actuarial Assumptions: (Continued) Interest Assumptions Annual Per Capita Costs for fiscal year ended June 30, 2010 are as follows: Retirees eligible for medicare are enrolled in medicare supplemental plan F with a drug card. The City provides $19,522 per month towards the premium ($2,343 per year) Age 50 55 62

Amount $

Age

7,495 8,479 10,079

64 65

Amount $

10,590 2,343

Aging Assumption

Age

Medical Annual Increase

55 60 64

2.50% 2.50% 0.5%

Retiree Contribution increase assumption: Retiree medical contributions are assumed to increase at the same rate as incurred claims. Assume constant costs sharing between employer and employees. School Board: A. Plan Description The School Board Post-Retirement Medical Plan is a single-employer defined benefit healthcare plan which offers health insurance for retired employees. Retired employees, who were enrolled in Suffolk Public Schools group health insurance plan for the 24 month prior to retirement date, who were employed by Suffolk Public Schools with at least 10 years of service and who retire under the VRS plan are eligible to elect post-retirement coverage in the plan. Retirees pay 100 % of spousal premiums. Coverage ceases when retirees reach the age of 65. Surviving spouses are not allowed access to the plan. The plan is administered by the School Board and has no separate financial report.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 16−OTHER POST-EMPLOYMENT BENEFITS PROGRAM: (CONTINUED) School Board: (Continued) A. Plan Description: (Continued) The School Board participates in the Virginia Pooled OPEB Trust Fund (“Trust Fund”), an irrevocable trust established for the purpose of accumulating assets to fund postemployment benefits other than pensions. The Trust Fund issues a separate report, which can be obtained by requesting a copy from the plan administrator, Virginia Municipal League (“VML”) at P.O. Box 12164, Richmond, Virginia 23241. B. Funding Policy The School Board establishes benefit levels, employee contributions and employer contribution rates for plan participants as part of the budgetary process each year. The School Board determines how the plan will be funded each year whether it will partially fund the plan or fully fund the plan. For participating retirees the School Board pays $203 per month towards the monthly premium and the retiree contributes remaining funds towards the monthly premium. C. Annual OPEB Cost and Net OPEB Obligation In accordance with GASB Statement No. 45, an actuarial study was performed calculating the postemployment healthcare costs as of June 30, 2010. The actuarial valuation estimated the Unfunded Actuarial Accrued Liability (“UAAL”) at $12,806,424 and an Annual Required Contribution (“ARC”) of $2,214,000. The annual cost of other post employment benefits (OPEB) under GASB 45 is called the annual required contribution or ARC. The School Board paid $945,000 towards the estimated pay as you go cost for OPEB benefits in fiscal year 2010, and in addition contributed $1,269,000 to a Trust Fund to fully fund the ARC. The School Board elected to pre-fund OPEB liabilities. The School Board is required to contribute the annual required contribution of the employer (ARC) an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The thirty year amortization period is open. Annual OPEB Cost For 2010, the School Board’s expected cash payment of $2,214,000 is equal to the ARC. The School Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2010 are as follows:

Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) Contributions made Increase (decrease) in net OPEB obligation Net OPEB obligation - beginning of year Net OPEB obligation - end of year

$ $ $

2,214,000 2,214,000 (2,214,000) -

Annual OPEB Cost

Fiscal Year Ended June 30, 2010 June 30, 2009 June 30, 2008

Percentage of Annual OPEB Cost Contributed

2,214,000 2,214,000 2,213,791

100.00% $ 100.00% 100.00%

Net OPEB Obligation -

Funded Status and Funding Progress The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revisions as actual results are compared with past expectations and new estimates are made about the future. As of June 30, 2010 the School Boardâ&#x20AC;&#x2122;s plan was 25.21% funded. The actuarial accrued liability for benefits was $17,122,042, and the actuarial value of assets was $4,315,618, resulting in an unfunded actuarial accrued liability UAAL of $12,806,424. The covered payroll (annual payroll of active employees covered by the plan) was $59,353,222, and the ratio of UAAL to the covered payroll was 21.58%. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

CITY OF SUFFOLK, VIRGINIA Notes to Financial Statements As of June 30, 2010 (Continued) NOTE 16â&#x2C6;&#x2019;OTHER POST-EMPLOYMENT BENEFITS PROGRAM: (CONTINUED) School Board: (Continued) C. Annual OPEB Cost and Net OPEB Obligation: (Continued) Cost Method The projected unit credit (PUC) cost method was used for this valuation. The objective of this method is to fund each participantâ&#x20AC;&#x2122;s benefits under the plan as they would accrue. Under this method the total value of the benefit to which each participant is expected to become entitled is broken down into units, each associated with a year of past or future credited service. Interest Assumptions Funding Assumptions Discount rate Payroll growth

7.50% *

* Since none of the benefits are salary related, there is no salary increase assumption.

Fiscal Year Ended

Percentage

2010 2011 2012 2013 2014

8.29% 8.09% 7.89% 7.69% 7.50%

Percentage

2015 2016 2017 2018 2019

7.32% 7.13% 6.96% 6.79% 6.59%

Annual Per Capita Costs for fiscal year ended June 30, 2010 are as follows:

Age 50 55 62

Amount $

Age

6,719 7,602

64 65

Amount $

9,494 n/a

Age 55 60 65

2.50% 2.50% 2.50%

General Fund Net assets, as previously reported

51,210,069 $

Adjustment for reclassification of the Golf Course Fund from Proprietary Fund to General Fund Golf Course capital assets Golf Course deferred charges Golf Course bonds payable Golf Course interest payable Golf Course deferred credits Adjustment for accumulated depreciation amounts Adjustment for improvements other than buildings Adjustment for construction in progress Adjustment for Capacity Payment to Western Tidewater Water Authority Net assets, as restated

Governmental Activities

(1,415,060) -

190,972,718 $

(1,415,060) 3,664,263 64,160 (3,974,784) (77,192) (1,244) (1,311,258)

49,795,009 $ 81

(1,924,282) 185,997,321 $

Proprietary Funds 174,244,827

1,415,060 (3,664,263) (64,160) 3,974,784 77,192 1,244 (1,978,774) 911,588 174,917,498

This page intentionally left blank

REQUIRED SUPPLEMENTARY INFORMATION Note to Required Supplementary Information: Presented budgets were prepared in accordance with accounting principles generally accepted in the United States of America.

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Exhibit 12 Page 1 of 4

Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund Year Ended June 30, 2010 Variance From Final Budget Positive (Negative)

Original Budget

Final Budget

Actual

78,987,614 $ 13,460,230 1,962,000 1,000,000 -

79,323,059 $ 12,555,164 2,239,936 68,095 1,573,541 838,088 305,653

335,445 (905,066) 277,936 68,095 1,573,541 (161,912) 305,653

95,409,844 $

96,903,536 $

1,493,692

7,154,000 $ 4,176,000 3,800,000 5,800,000 1,650,000 290,000 967,500 1,400,000 736,920 5,600,000 78,000 399,000

7,355,338 $ 4,238,079 3,614,856 5,985,479 1,711,012 641,735 1,009,592 1,382,361 957,654 5,643,405 377,341

201,338 62,079 (185,144) 185,479 61,012 351,735 42,092 (17,639) 220,734 43,405 (78,000) (21,659)

32,051,420 $

32,916,852 $

865,432

36,000 $ 827,210

34,914 $ 973,390

863,210 $

1,008,304 $

145,094

Fines and forfeitures

816,000 $

852,307 $

36,307

Revenue from use of money and property: Revenue from use of money Revenue from use of property

590,000 $ 358,090

281,872 $ 801,070

(308,128) 442,980

948,090 $

1,082,942 $

134,852

356,387 $ 32,500 70,000 479,325 10,000 43,000 2,082,000 839,000

356,387 $ 32,500 70,000 479,325 10,000 43,000 1,532,000 839,000

214,674 $ 29,323 64,997 656,900 13,262 30,729 2,024,637 700,496

(141,713) (3,177) (5,003) 177,575 3,262 (12,271) 492,637 (138,504)

3,912,212 $

3,362,212 $

3,735,018 $

372,806

Fund, Function, Activity, Element Revenues: General property taxes: Real estate Personal property Public service corporations Mobile homes Machinery and tools Penalties Interest Total general property taxes Other local taxes: Sales and use Utility tax Communication taxes Business and occupational licenses Motor vehicle license Bank stock Recordation Tobacco Lodging Meals Public facility taxes Admission Total other local taxes Permits, fees and licenses: Animal license Permits and other licenses Total permits, fees, and licenses

Total use of money and property Charges for services: Excess fees - Circuit Court Clerk Police and traffic control Charges for other protection Charges for parks and recreation Charges for library Charges for planning and community development Charges for other services Airport sales Total charges for services

(1,086) 146,180

CITY OF SUFFOLK, VIRGINIA

Exhibit 12 Page 2 of 4

Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund Year Ended June 30, 2010

Original Budget

Fund, Function, Activity, Element Revenues: (Continued) Miscellaneous revenue: Miscellaneous Total revenue from local sources Revenue from the Commonwealth: Noncategorical aid: Tax on Deeds Railroad rolling stock tax House Bill 599 Funds PPTRA Mobile home titling tax Vehicle rental tax Total noncategorical aid Categorical aid: Commonwealth's Attorney Commissioner of Revenue Treasurer Sheriff Circuit Court Clerk Registrar Total categorical aid Other categorical aid: Public assistance and welfare administration Budget reduction to C/VA Other categorical aid Total other categorical aid Total categorical aid Total revenue from the Commonwealth Revenue from the Federal Government: Categorical aid: Public assistance and welfare administration Emergency Services Parks, recreation and cultural Property seizure Other federal grants Total revenue from the federal government Total revenues

Final Budget

Variance From Final Budget Positive (Negative)

Actual

836,000 $

841,000 $

1,248,782 $

407,782

134,836,776 $

134,291,776 $

137,747,741 $

3,455,965

582,000 $ 100,000 3,163,582 10,169,729 65,000 179,000

683,930 $ 1,277 2,899,462 10,169,730 41,251 142,845

101,930 (98,723) (264,120) 1 (23,749) (36,155)

14,259,311 $

13,938,495 $

(320,816)

973,000 $ 187,000 252,000 942,000 473,000 62,000

973,000 $ 187,000 252,000 942,000 603,308 62,000

872,159 $ 166,101 219,408 759,028 551,871 54,120

(100,841) (20,899) (32,592) (182,972) (51,437) (7,880)

2,889,000 $

3,019,308 $

2,622,687 $

(396,621)

$ $ $

3,825,933 697,034 4,522,967 7,411,967 21,671,278

$ $ $

3,825,933 1,025,817 4,851,750 7,871,058 22,130,369

$ $ $

3,854,518 (327,444) 1,154,205 4,681,279 7,303,966 21,242,461

$ $ $

28,585 (327,444) 128,388 (170,471) (567,092) (887,908)

(149,568) 32 (10,148) 32,874 82,210 (44,600)

5,274,656 $ 11,000 35,642 210,289 5,531,587 $

5,274,656 $ 11,000 35,642 177,170 5,498,468 $

5,125,088 $ 11,032 25,494 32,874 259,380 5,453,868 $

162,039,641 $

161,920,613 $

164,444,070 $

2,523,457

CITY OF SUFFOLK, VIRGINIA

Exhibit 12 Page 3 of 4

Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund Year Ended June 30, 2010

Original Budget

Fund, Function, Activity, Element Expenditures: General government administration: Legislative: City Council General and financial administration: City Manager Budget and strategic planning City Attorney Human resources Commissioner of the Revenue City Assessor City Treasurer Finance Purchasing Other general government Board of elections: Registrar Total general government administration Judicial administration: Courts: Circuit Court District Court Magistrate Juvenile and Domestic Relations Court Juvenile and Domestic Relations Court Service Unit Circuit Court Clerk Sheriff Commonwealth's Attorney Total judicial administration Public safety: Police Communications Fire Western Tidewater Regional Jail Animal shelter and management Neighborhood development services Emergency services Total public safety Public works: Administration Refuse collection Maintenance building and grounds Aviation facilities Total public works Health and welfare: Social services Total health and welfare

324,143 $

Final Budget

338,109 $

Actual

320,293 $

Variance From Final Budget Positive (Negative)

17,816

793,755 416,130 885,120 982,096 845,304 1,025,296 1,243,996 1,032,688 337,847 -

822,159 407,387 901,843 1,095,539 849,963 1,252,238 1,265,014 1,117,249 272,616 -

822,156 394,304 875,216 870,883 834,535 1,041,487 1,274,131 1,112,775 272,311 15,909

3 13,083 26,627 224,656 15,428 210,751 (9,117) 4,474 305 (15,909)

284,485 8,170,860 $

310,830 8,632,947 $

279,416 8,113,416 $

31,414 519,531

156,196 $ 79,049 19,654 22,519 872,435 1,078,787 1,894,564 2,603,429 6,726,633 $

156,196 $ 79,049 19,654 22,519 705,976 1,288,808 1,878,060 2,720,741 6,871,003 $

155,232 $ 48,889 17,099 20,968 813,265 1,239,440 1,863,206 2,602,047 6,760,145 $

964 30,160 2,555 1,551 (107,289) 49,368 14,854 118,694 110,858

14,604,215 $ 1,476,746 16,561,510 306,042 551,517 2,014,249 17,483 35,531,762 $

15,596,952 $ 1,511,428 17,504,894 713,021 558,473 2,072,142 17,912 37,974,822 $

15,119,641 $ 1,412,878 16,684,318 713,021 528,205 2,008,583 14,527 36,481,173 $

477,311 98,550 820,576 30,268 63,559 3,385 1,493,649

3,558,885 $ 3,771,566 443,596 1,009,777 8,783,824 $

3,738,033 $ 3,932,135 446,692 1,033,280 9,150,140 $

3,386,464 $ 3,477,094 435,836 900,379 8,199,773 $

351,569 455,041 10,856 132,901 950,367

$ $

13,394,984 $ 13,394,984 $

13,762,247 $ 13,762,247 $

12,322,636 $ 12,322,636 $

1,439,611 1,439,611

$ $

CITY OF SUFFOLK, VIRGINIA

Exhibit 12 Page 4 of 4

Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund Year Ended June 30, 2010

Fund, Function, Activity, Element Expenditures: (Continued) Education: Contribution to Component Unit School Board Lease rent of building Total education Parks, recreation and cultural: Parks and recreation Golf course Public libraries Total parks, recreation and cultural

$ $

Variance From Final Budget Positive (Negative)

Original Budget

Final Budget

Actual

44,552,130 $ 501,215 45,053,345 $

44,223,161 $ 501,817 44,724,978 $

328,969 (602) 328,367

4,378,950 $ 2,125,279 6,504,229 $

4,449,485 $ 2,223,985 6,673,470 $

4,233,387 $ 380,787 2,188,091 6,802,265 $

216,098 (380,787) 35,894 (128,795)

1,132,890 $ 618,593 3,411,274 510,757 469,670 2,823,400 68,008 9,034,592 $

1,077,846 $ 604,463 1,912,545 488,946 450,449 2,822,153 60,635 7,417,037 $

55,044 14,130 1,498,729 21,811 19,221 1,247 7,373 1,617,555

Community development: Planning Geographic information system Economic development Communications Tourism Local and regional organizations Cooperative extension services Total community development

1,221,004 $ 555,237 1,041,155 501,080 440,103 2,864,935 78,008 6,701,522 $

Nondepartmental: Fringe benefits and insurance Total nondepartmental

$ $

8,578,914 $ 8,578,914 $

8,534,210 $ 8,534,210 $

8,264,861 $ 8,264,861 $

269,349 269,349

Total expenditures

139,446,073 $

145,686,776 $

139,086,284 $

6,600,492

22,593,568 $

16,233,837 $

25,357,785 $

9,123,948

2,235,289 $ (24,863,347) (22,628,058) $

2,244,596 $ (24,863,347) (22,618,751) $

9,307 9,307

(6,394,221) $

2,739,034 $

9,133,255

Excess (deficiency) of revenues over expenditures

Other financing sources (uses): Transfers in Transfers (out) Total other financing (uses)

2,235,289 $ (24,828,857) (22,593,568) $

Net changes in fund balance

- $

Fund balance at beginning of year, as restated Fund balance at end of year

- $

6,394,221 - $

49,795,009

43,400,788

52,534,043 $

52,534,043

CITY OF SUFFOLK, VIRGINIA

Exhibit 13

Schedule of Funding Progress for the Virginia Retirement System and Other Post Employment Benefits Last Three Fiscal Years

Virginia Retirement System

Valuation Date (1)

Actuarial Value of Assets (AVA) (2)

Actuarial Accrued Liability (AAL) (3)

Unfunded (Excess Funded) Actuarial Accrued Liability (4)

147,279,719 $ 142,580,456 127,487,501

181,382,891 $ 168,516,668 151,283,005

Funded Ratio (2) / (3) (5)

Annual Covered Payroll (6)

UAAL as % of Payroll (4) / (6) (7)

City: 6/30/2009 6/30/2008 6/30/2007

34,103,172 25,936,212 23,795,504

81.20% $ 84.61% 84.27%

52,462,203 50,262,100 47,940,645

65.01% 51.60% 49.64%

91.20% $ 93.50% 89.54%

7,212,065 6,776,948 6,831,960

21.80% 15.89% 23.50%

Discretely Presented Component Unit School Board - Non-Professional: 6/30/2009 6/30/2008 6/30/2007

16,285,337 $ 15,498,806 13,749,278

17,857,433 $ 16,575,497 15,354,981

1,572,096 1,076,691 1,605,703

Other Post Employment Benefits Actuarial Value of Assets (AVA) (2)

Valuation Date (1)

Actuarial Accrued Liability (AAL) (3)

Unfunded (Excess Funded) Actuarial Accrued Liability (4)

Funded Ratio (5)

Annual Covered Payroll (6)

UAAL as % of Payroll (7)

City: FY 10 FY 09 FY 08

July 1, 2010 July 1, 2007 July 1, 2007

8,076,990 $ 4,368,558 2,398,246 *

27,341,308 $ 24,529,651 24,529,651

19,264,318 20,161,093 22,131,405

29.54% $ 17.81% 9.78%

58,766,577 57,292,676 55,476,526 **

32.78% 35.19% 39.89%

4,315,618 $ 17,122,042 $ 12,806,424 25.21% $ 2,756,021 14,499,271 11,743,250 19.01% 1,445,000 14,499,271 13,054,271 9.97% * These amounts reflect contributions to the OPEB trust fund by the City and School Board Amounts provided by the City and School Board

59,353,222 59,163,327 55,305,573 **

21.58% 19.85% 23.60%

School Board: FY 10 FY 09 FY 08 * **

July 1, 2010 July 1, 2007 July 1, 2007

This page intentionally left blank

OTHER SUPPLEMENTARY INFORMATION Debt Service Fund The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs.

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Exhibit 14

Schedule of Revenues, Expenditures and Changes in Fund Balance -- Budget and Actual Debt Service Fund Year Ended June 30, 2010

Original Budget Revenues: Revenue from use of money and property: Revenue from use of money

Final Budget

Actual

Variance From Final Budget Positive (Negative)

- $

9,359 $

9,359

- $

9,359 $

9,359

14,315,647 $ 9,855,542 -

14,315,646 $ 9,755,820 339,170

1 99,722 (339,170)

24,171,189 $

24,410,636 $

(239,447)

(24,171,189) $

(24,401,277) $

(230,088)

24,171,189 $ -

24,376,182 $ 30,585,499 2,102,918 (32,350,000)

204,993 30,585,499 2,102,918 (32,350,000)

Total other financing sources (uses)

24,171,189 $

24,714,599 $

543,410

Net changes in fund balance

- $

313,322 $

313,322

679,706

- $

993,028 $

993,028

Total revenues Expenditures: Debt service: Principal Interest and other fiscal charges Bond issuance costs Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Issuance of refunding bonds Premiums on debt Payment to refunded bond escrow agent

Fund balance at beginning of the year Fund balance at end of the year

This page intentionally left blank

OTHER SUPPLEMENTARY INFORMATION Capital Projects Fund The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary fund types).

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Exhibit 15 Page 1 of 2

Capital Projects Fund Schedule of Current Capital Projects Year Ended June 30, 2010

Project Name

Airport Development Airport Drainage Study Airport Maintenance Storage Building Airport Security Improvements Airport Water/Sewer Lines Ambulance Purchase Animal Shelter Kennel Floor ARRA Citywide Repaving Project Barnes Rd. - Widening and Paving Benton Road Improvements Boston Community Street Boston Community Improvement Burbage Grant Sidewalk Project Chuckatuck Village Plan Citywide Emergency Home Repair Commerce Street Parking Lot Downtown Connector Road Improvements Driver Fire Station Additions Driver Village Plan East Suffolk Administration Center Stabilization East Suffolk Community Center Playground East Suffolk Complex East Washington St Plan East Washington Street/Hall Place Neighborhood East Washington Streetscape Eclipse/Crittenden Plan Emergency Signal - Holland/O'Kelly Energy Efficiency ARRA Funding EPA Phase II Stormwater Fairground Revitalization Plan Finney Avenue Extension Fire Engine Geographic Information System Great Dismal Swamp Interpretive Center Greenways, Blueways, & Trails Hampton Roads Technology Park Hangar Taxiway Construction/Site Preparation HVAC Equipment Upgrade - Various Schools Hazardous Materials Management Health & Human Services Building Hillpoint Elementary School Holland and Kenyon Rd Inter Improve Holland Athletic Fields Holland Village Plan Hollywood 2nd Street Egress Hollywood 2nd Street Egress & Pierce Park HSIP Proactive Safety Project Huntersville Community Plan Huntersville Improvements James River Water Shed/Sandler Pond Kensington Blvd Sidewalk Kidzone Kings Fork Safety Center Kings Fork Safety Center Engine

Authorization (1) $

787,932 1,801,200 120,000 367,192 276,914 878,339 525,000 1,991,235 539,518 1,255,224 250,000 200,000 36,224 681,385 8,822 55,200 3,896,220 390,000 297,058 615,281 50,000 9,109,478 404,492 969,331 11,890,972 915,788 170,000 741,100 258,917 1,000,000 2,002,240 1,544,137 4,025,172 30,000 1,419,886 25,001 1,085,221 133,700 370,079 14,691 20,045,268 1,250,000 160,000 474,458 146,686 113,314 424,607 145,055 100,000 36,250 80,000 41,334 7,628,791 500,000

Cumulative Totals Expenditures (2) $

300,000 $ 1,137,504 196,844 276,914 717,582 121,028 798 539,518 986,004 60,386 36,224 332,872 5,000 13,966 2,429,896 74,227 125,138 560,781 50,000 6,925,104 391,913 945,895 9,547,450 3,548 166,876 473,321 18,277 528,437 1,985,935 1,553,876 3,950,566 553,343 1,083,992 41,236 299,671 41,200 20,045,194 828 152,100 458,103 28,433 29,349 144,774 67,564 25,654 15,413 6,739,568 489,561

Committed (3) - $ 231,438 22,622 158,339 2,348 13,456 18,828 1,386,804 18,200 127,767 78,822 2,194,146 4,492 1,451,217 84,527 146,761 71,380 130,072 61,903 5,200 7,900 3,560 66,500 12,815 37,800 939,744 -

Construction in Progress at June 30, 2010 (1) 924,465 219,466 276,914 211,150 93,107 798 986,004 60,386 107,258 5,000 13,966 1,698,896 74,227 26,487 168,300 391,913 16,564 5,968,394 3,548 166,876 461 18,277 528,437 4,924 3,534,466 549,778 828 49,695 28,433 29,349 133,573 67,564 25,654 5,428 6,547,212 24,031

CITY OF SUFFOLK, VIRGINIA

Exhibit 15 Page 2 of 2

Capital Projects Fund Schedule of Current Capital Projects Year Ended June 30, 2010 (Continued)

Project Name

Kings Highway Bridge Construction Land Easement Acquisition Runway 4/22 Main Street Pedestrian Improvement Main Street to Commerce Street Connection Maintenance Facility Building Mullican Drive Rural Addition Roadway Municipal Blvd. Safety Improvements Municipal Building Stabilization Master Municipal Center Renovation Municipal Channel Upgrade Nansemond Parkway Civic League Nansemond Parkway Recreation Facility Nansemond Parkway/Shoulders Hill Road Nansemond River High School Sewer Pump Station Neighborhood Plans (Olde Towne) New Whaleyville/Holland Elementary North Main Street Fifth Lane Project Northgate Industrial Park Obici House Stabilization Old Courthouse Renovation/Jail Demolition Old East Washington Street Improvements Old Human Resource Bldg. Renovation Orlando Community Improvement Parks Capital Maintenance Pedestrian Crossing Godwin & Kensin Phoenix Bank Pierce Park Pierce Park II Street Improvements Police Administration Building Program Administration Property Acquisition - Obici Hospital Public Buildings Capital Maintenance Raleigh Avenue Recreation Buildings Capital Maintenance Riddick's Folly Structural Repair Road Maintenance Off- Holland Rd. Road Maintenance Off- Salt Storage Facility Rt. 17 Improvements (Special Taxing District) Runway 4-22 Safety Area Expansion Saratoga Saratoga Phase II Neighborhood Rehabilitation Spring Street Park Acquisition Storm Drainage Improvements Street Landscape Suffolk Industrial Park Transportation Improvements-Rt. 17 (Townpoint Rd.) VA Dept of Aviation Fuel Upgrade Va Dept of Aviation Maint Storage Bldg Village Plans Wellons Street Parking Lot Whaleyville Fire Station Emergency Signal Whaleyville Village Plan Totals

Authorization (1) $

Cumulative Totals Expenditures (2)

1,000,000 $ 571,591 612,238 517,508 2,124,098 153,377 31,561 170,000 626,154 1,017,438 50,000 53,000 17,791,926 250,000 215,505 1,502,701 4,609 435,138 364,020 1,414,818 267,151 400,000 120,000 2,758,754 60,000 1,432,287 79,824 180,000 9,337,058 90,004 2,001,779 3,095,530 124,170 1,007,008 183,000 160,000 495,000 1,211,167 6,242,674 200,000 865,511 1,296,085 351,156 2,832,863 5,026,243 34,136 38,001 300,083 80,000 150,000 473,799 152,077,676

Committed (3)

- $ 385,493 27,525 508,302 1,021,866 84,031 31,561 319 597,620 445,364 3,910,055 157,196 210,884 60,000 486,139 214,581 1,049,194 243,162 412,325 2,616,439 3,550 485,137 79,824 130,326 5,912,948 82,256 1,554,077 2,827,246 102,543 955,079 157,041 159,222 491,308 1,058,150 516,814 197,267 820,162 20,000 1,286,906 353,466 2,846,087 3,539,579 34,135 32,885 88,442 73,081 8,519 366,677 101,316,641

Construction in Progress at June 30, 2010 (1)

- $ 30,915 5,081 17,507 52,993 386 2,385 35,833 599,657 10,185 2,850 271,390 23,989 17,802 19,637 58,009 32,716 3,412,030 241,021 14,129 3,000 591,756 2,769 214,031 3,277 21,561 24,886 12,986,435

209,340 122,401 508,302 126,764 78,169 319 134,273 3,135,526 167,381 42,194 60,000 10,138 214,581 1,573,863 23,271 412,325 1,133,470 3,550 410,382 130,326 618,093 82,256 1,329,510 2,140,147 102,543 107,623 157,041 92,167 491,308 1,034,367 245,452 197,267 292,214 26,351 3,539,579 88,442 73,081 8,519 166,904 42,251,265

CITY OF SUFFOLK, VIRIGINIA

Exhibit 16 Page 1 of 2

Utility Fund Schedule of Current Capital Projects Year Ended June 30, 2010

Cumulative Totals Project Name

Rt 58 Water Tank & Pump Station Water Facilities Manual Crittenden Well Trans Main Pipeline Water Storage Tank Dam Rehabilitation Pembroke Water Main Replacement Mullican Dr Water Main Ext Norfolk Bulk Water Pepsi Water Main Ext Water System Emergency Response Plan Water Layer GIS Benton Road Water Holland Emergency Wells Operations & Maintenance Facility Holland Consent Wells Nansemond Gardens/Wilroy Acres Water Water Treatment Plant Phase II RT 460 Tank & Pipeline Misc Development Project Easements (Water) Finney Avenue Project Fairgrounds Portsmouth Main Relocation Fairgrounds Water Upgrades Water Treatment Plant Phase III Meadow Country Road Water Extension Water Source Development Water Distribution & Transmission System Expansion Water Distribution System Upgrades Operations & Maintenance Facility FY01 Everets Road Water Main Replacement Western Branch Raw Water Main Sleepy Hole Golf Course Water Main RT 460 Water Transmission Main Extension Lonestar Lakes Entrance Water Meter Location GPS Bennett's Creek Office Park Water Water Meter Upgrades Fire Hydrant Upgrades Water Valve Replacement Lead Service Line Replacement Maple Hills/Forest Glen Water Crittenden/Eclipse Water Whaleyville Water Source Community Well Sites Abandonment Whaleyville Water Distribution System Sewer Pumping Station Access Driveway Fairgrounds Sewer Upgrades Sewage PS Upgrades (10, 11, 12, 13, 43)

Authorization (1) $

4,884,102 $ 97,500 4,400,308 162,100 1,063,208 113,316 232,443 2,942,200 34,387 220,169 1,084,447 271,081 1,821,672 200,000 1,873,984 967,229 53,246,220 46,300 24,783 136,582 1,108,431 689,943 1,762,900 579,919 2,579,568 10,832,456 11,821,139 7,947,800 56,000 113,500 135,474 46,300 10,475 150,000 16,493 291,565 125,775 2,919 1,075 705,380 1,551,252 833,988 3,074,877 4,917,875 446,960 332,817 146,225

Expenditures (2) 3,833,500 $ 86,577 4,400,308 108,898 947,763 113,316 102,269 1,856,025 34,387 220,169 768,965 271,081 1,765,420 194,263 1,136,225 942,731 51,809,784 19,911 24,783 154,299 612,461 504,068 1,193,540 624,779 1,308,349 30,800 78,248 16,247 291,425 125,775 2,919 1,075 671,169 1,464,143 821,128 3,074,877 4,818,118 433,868 282,832 146,225

Committed (3) 1,198,380 $ 10,812 53,201 13,945 132,346 266,507 16,652 737,759 23,293 1,218,776 26,390 517,904 149,065 569,360 25,200 35,253 119,227 29,160 12,860 79,737 15,272 32,089 -

Construction in Progress at June 30, 2010 (1) 2,395,742 114,263 4,414,327 117,610 1,059,359 132,349 1,997,881 1,017,096 1,911,454 308,588 1,676,258 79,630 4,517,426 23,357 629,700 541,577 1,351,700 125,323 100,020 121,790 1,358,654 37,382 88,141 33,940 6,047 1,368 19,590 2,154 675,197 1,607,862 821,128 5,319,424 445,699 296,595 -

CITY OF SUFFOLK, VIRIGINIA

Exhibit 16 Page 2 of 2

Utility Fund Schedule of Current Capital Projects Year Ended June 30, 2010

Cumulative Totals Project Name

Sanitary Sewer Evaluation Study Force Main Upgrades Sanitary Sewer Facilities Manual Operations Center (Sewer) South Main St Sewer Rehab Elephant's Fork Pump Station & FM Upgrades Emergency Generators Sewer Infrastructure Annual Services Contract Miscellaneous Pump Station Upgrades Sleepy Hole Golf Course Wastewater City Works Pearl Street Rehab PS 124 - Nansemond Pkwy Fire Station 10 - PS & FM Benton Road Sewer Pump Station # 63 Upgrades Mullican Dr Sewer Extension Pump Station # 106 Rehabilitation Pump Station # 30 Replacement Misc Development Project Easements (Sewer) PS # 64 and Sewer System Replacement Prentis House Sewer Relocation Bennett's Creek Office Park Sewer Neighborhood Sewer Projects Sewer System Upgrades Non-Residential Sewer Extension Cedar Point Sanitary Sewer Maple Hills/Forest Glenn Sewer Constant's Wharf Wastewater Pump Station Nansemond Gardens/Wilroy Acres Sewer Sewer Pump Station #14 Upgrades Eastover Sanitary Sewer Extension Crittenden/Eclipse Sewer Lake Speight Neighborhood Sewer Extension Respass Beach/Holly Acres Sewer Holland Sewage Treatment Study Constance Rd Sanitary Sewer Rehab Water & Sewer Facility Generator Connect Master Sanitary Sewer Plan Update Turlington Park Sewer Extension Totals

Authorization (1)

Expenditures (2)

Committed (3)

26,105,552 $ 427,834 215,090 350,000 36,958 470,865 212,731 168,566 1,268,669 167,660 451,025 68,816 5,916 78,050 1,373,480 177,839 177,037 121,070 135,083 25,806 153,713 1,775 120,764 10,260,921 7,868,805 6,407,470 4,641,763 2,167,952 1,464,403 14,758 285,379 30,606 3,395,731 156,919 1,606,594 159,518 996,516 518,387 1,070,943 275,267

19,934,911 $ 427,834 197,613 32,523 301,933 212,731 107,725 1,094,627 104,384 280,848 44,597 5,916 78,050 1,373,480 58,316 176,487 38,845 28,999 18,806 11,966 4,816,784 2,134,042 1,229,711 14,758 285,379 15,528 3,040,975 59,682 1,606,594 159,518 903,896 489,065 965,352 180,112

5,117,815 $ 17,377 4,435 121,651 60,841 73,981 63,276 160,603 24,219 103,948 8,769 82,225 106,084 141,747 240,800 15,078 23,148 35,138 12,767 9,225 105,591 45,676

197,739,367 $

125,724,709 $

11,857,580 $

(1) Included in cumulative expenditure totals (2) Inception of project through 6/30/10 (3) Open POs at 6/30/10

100

Construction in Progress at June 30, 2010 (1) 17,175,630 193,555 333,620 212,731 119,026 548,544 124,602 313,787 5,916 79,357 199,368 53,287 45,391 31,088 232 5,778 1,742 99,660 834,706 2,247,456 264,614 550 22,644 3,124,133 111,818 45,657 851,933 558,790 399,400 180,509 61,536,163

OTHER SUPPLEMENTARY INFORMATION Nonmajor Governmental Funds

101

CITY OF SUFFOLK, VIRGINIA Combining Balance Sheet Nonmajor Governmental Funds At June 30, 2010 Special Revenue Funds Downtown Business Overlay Road District Maintenance

Suffolk Taxing District Assets Cash and cash equivalents Restricted cash Receivables (Net of allowances for uncollectibles): Taxes receivable Accounts receivable Prepaid items Due from other governments Total assets

Liabilities Vouchers and Accounts payable Due to other funds Unearned revenue Deferred revenue Total liabilities Fund Balances Fund balances: Committed: Bridge repair Other road projects Grants Rt. 17 taxing district Assigned: Special revenue Unassigned: Unreserved (deficit) Total fund balances Total liabilities and fund balances

317,126 $ -

54,180 $ 11,530 -

Consolidated Grants

4,846,738 $ 5,213,724

204,013 180,828

40,512 413 -

331 762,873

317,126 $

65,710 $

10,101,387 $

1,148,045

- $ -

- $ 5,784

1,081,828 $ 2,544,541 -

102,571 763,204 66,679 -

- $

5,784 $

3,626,369 $

932,454

- $ -

2,669,183 $ 1,729,496 -

285,392 -

317,126

59,926

2,076,339

317,126 $

59,926 $

6,475,018 $

317,126 $

65,710 $

10,101,387 $

102

(69,801) 215,591 1,148,045

Exhibit 17

Route 17 Taxing District

Law Library

187,236 $ -

992,719 $ -

Mosquito Taxing District

Total Non-Major Governmental Funds

Cemetery

808,510 $ -

- $ 986,450 -

7,410,522 6,381,002

3,627 -

64,492 -

76,022 44,470 413 762,873

190,863 $

1,057,211 $

808,510 $

986,450 $

14,675,302

3,376 $ -

- $ 23,452

- $ -

1,187,775 763,204 2,611,220 29,236

3,376 $

23,452 $

- $

4,591,435

- $ -

- $ 758

- $ -

2,669,183 1,729,496 285,392 758

187,487

1,033,001

808,510

986,450

5,468,839

187,487 $

1,033,759 $

808,510 $

986,450 $

(69,801) 10,083,867

190,863 $

1,057,211 $

808,510 $

986,450 $

14,675,302

103

CITY OF SUFFOLK, VIRGINIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2010 Special Revenue Funds Downtown Business Overlay Road District Maintenance

Suffolk Taxing District Revenues: Real estate taxes Permits, privilege fees and regulatory licenses Revenue from use of money and property Charges for services Miscellaneous Intergovernmental: Revenue from the Commonwealth Revenue from the Federal Government

Total revenues

329 $ 1,476 -

199,026 $ 638 -

- $ 386,538 25,452 901,864 241,304

Consolidated Grants

38,503 95,526

18,053,108 -

550,261 2,942,620

1,805 $

199,664 $

19,608,266 $

3,626,910

- $ -

- $ 180,245 -

- $ 18,123,433 -

7,364 1,063,366 281,250 395,887 776 169,922 1,366,202

Total expenditures

- $

180,245 $

18,123,433 $

3,284,767

Excess (deficiency) of revenues over expenditures

1,805 $

19,419 $

1,484,833 $

342,143

- $ -

- $ (1,001,500)

115,035 (372,667)

- $

(1,001,500) $

(257,632)

1,805 $

19,419 $

483,333 $

Expenditures Current: Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural Community development

Other financing sources (uses): Transfers in Transfers (out) Total other financing sources (uses) Net changes in fund balances Fund balances at beginning of year Fund balances at end of year

84,511

315,321

40,507

5,991,685

131,080

317,126 $

59,926 $

6,475,018 $

215,591

104

Exhibit 18

Route 17 Taxing District

Law Library

- $ 853 45,234 35 -

Mosquito Taxing District

1,194,533 $ 2,493 -

1,867 $ 3,772 -

Cemetery

- $ 9,307 18,400 -

Total Nonmajor Governmental Funds

1,395,755 386,538 43,991 1,004,001 336,865 18,603,369 2,942,620

46,122 $

1,197,026 $

5,639 $

27,707 $

24,713,139

45,019 $ -

- $ 258,062 -

- $ -

52,383 1,321,428 18,584,928 395,887 776 169,922 1,366,202

45,019 $

258,062 $

- $

21,891,526

1,103 $

938,964 $

5,639 $

27,707 $

2,821,613

- $ -

- $ (769,665)

- $ -

- $ (9,307)

115,035 (2,153,139)

- $

(769,665) $

- $

(9,307) $

(2,038,104)

1,103 $

169,299 $

5,639 $

18,400 $

186,384 $

187,487 $

864,460 1,033,759 $

802,871

968,050

808,510 $

986,450 $

783,509 9,300,358 10,083,867

105

CITY OF SUFFOLK, VIRGINIA Schedule of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds - Budget and Actual Year Ended June 30, 2010 Special Revenue Funds

Law Library

Original Budget Revenues: $ Real estate taxes Permits, privilege fees and regulatory licenses Fines and forfeitures Revenue from use of money and property Charges for services Miscellaneous Intergovernmental: Revenue from the Commonwealth Revenue from the Federal Government Total revenues Expenditures Current: Judicial administration Public safety Public works Health and welfare Parks, recreation, and cultural Community development Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers (out) Total other financing sources (uses) Net changes in fund balances

Actual

Original Budget

Final Budget

Actual

- $

- $ 195,000 $ 195,000 $ 199,026 $

57,000 1,000

853 45,234 35 -

853 (11,766) (965) -

Variance From Final Budget Positive (Negative)

4,026

638 -

58,000 $

46,122 $

(11,878) $ 195,000 $ 195,000 $ 199,664 $

4,664

79,873 $ -

80,876 $ -

45,019 $ -

- $ - $ - $ 35,857 $ 195,000 195,000 180,245 -

14,755 -

79,873 $

80,876 $

45,019 $

35,857 $ 195,000 $ 195,000 $ 180,245 $

14,755

$ (21,873) $ (22,876) $

1,103 $

23,979 $

- $

19,419 $

19,419

21,873 $ -

22,876 $ -

- $ -

(22,876) $ -

- $ -

21,873 $

22,876 $

- $

(22,876) $

- $

1,103 $

- $

19,419 $

19,419

186,384

40,507

- $

- $ 187,487 $

187,487 $

- $

59,926 $

59,926

Fund balances at beginning of year Fund balances at end of year

Final Budget

Downtown Business Overlay District Variance From Final Budget Positive (Negative)

186,384

106

Exhibit 19

Road Maintenance

Original Budget

Final Budget

- $

Route 17 Taxing District Variance From Final Budget Positive (Negative)

Actual

- $

Original Budget

- $

126,250 -

386,538 -

900,000 15,000 18,103,680 -

900,000 772,208 20,330,680 -

25,452 901,864 241,304 18,053,108 -

25,452 1,864 (530,904) (2,277,572) -

260,288 -

1,535,000 $

Variance From Final Budget Positive (Negative)

Final Budget

Actual

1,535,000 $

1,194,533 $

(340,467)

2,493 -

19,144,930 $

22,129,138 $

19,608,266 $

(2,520,872) $

1,535,000 $

1,197,026 $

- $ 18,143,430 -

- $ 21,127,638 -

- $ 18,123,433 -

- $ 3,004,205 -

- $ -

- $ 258,820 -

- $ 258,062 -

758 -

18,143,430 $

21,127,638 $

18,123,433 $

3,004,205 $

- $

258,820 $

258,062 $

758

1,001,500 $

1,484,833 $

483,333 $

1,535,000 $

1,276,180 $

938,964 $

(337,216)

- $ (340,000)

- $ (1,001,500)

- $ (1,535,000)

188,820 $ (1,465,000)

- $ (769,665)

(188,820) 695,335

(340,000) $

(1,001,500) $

(1,535,000) $

(1,276,180) $

(769,665) $

506,515

661,500 $

483,333 $

(518,167) $

- $

169,299 $

169,299

864,460

(661,500) $

- $

(661,500) - $

5,991,685

6,653,185

6,475,018 $

6,135,018 $

- $

107

1,033,759 $

(337,974)

864,460 1,033,759

This page intentionally left blank

OTHER SUPPLEMENTARY INFORMATION Nonmajor Proprietary Funds

109

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Exhibit 20

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Proprietary Funds Year Ended June 30, 2010 Business-type Activities - Enterprise Funds Golf Course Stormwater Fund Fund Totals Operating revenues: Charges for services

- $

3,861,010 $

3,861,010

Total operating revenues

- $

3,861,010 $

3,861,010

- $ -

1,739,716 $ 110,213 481,409 669,907

1,739,716 110,213 481,409 669,907

Total operating expenses

- $

3,001,245 $

3,001,245

Net income from operations

- $

859,765 $

859,765

Nonoperating revenues: Interest income

- $

21,359 $

21,359

Total nonoperating revenues

- $

21,359 $

21,359

Net income before contributions and transfers

- $

881,124 $

881,124

Operating expenses: Personnel services Purchased services Contractual services Supplies Depreciation and amortization Leased property Other charges

Transfers (out) Change in net assets

Net assets, beginning of year, as restated Net assets, end of year

111

- $

(1,373,958) (492,834) $

(1,373,958) (492,834)

2,880,922

- $

2,388,088 $

2,388,088

This page intentionally left blank

OTHER SUPPLEMENTARY INFORMATION Internal Service Funds

113

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Exhibit 21

Combining Statement of Net Assets - Internal Service Funds At June 30, 2010 Information Technology Fund ASSETS Current Assets: Cash and cash equivalents Restricted cash Receivables (net of allowance for uncollectibles): Accounts receivable Inventories Prepaids Total Current Assets Capital assets: Land Buildings and improvements Improvements other than buildings Machinery and equipment Construction in progress Less: Accumulated depreciation Total Capital Assets (net) Total Assets LIABILITIES Current Liabilities: Accounts payable Claims payable - current portion Accrued interest Due to other funds Current portion of compensated absences Current portion of capital leases Total Current Liabilities Noncurrent Liabilities: Noncurrent portion of compensated absences Claims payable - net of current Noncurrent portion of capital leases Total Noncurrent liabilities Total Liabilities NET ASSETS Invested in capital assets, net of related debt Unrestricted assets (deficit) Total Net Assets Total Liabilities and Net Assets

Fleet Management Fund

1,239,947 $ -

Risk Management Fund

2,376,292 $ 524,448

9,780,442 $ -

5,660 271,689 -

23,958 216,240

Totals

13,396,681 524,448 29,618 271,689 216,240

1,239,947 $

3,178,089 $

10,020,640 $

- $ 2,707,259 504,043 (2,120,341) 1,090,961 $

298,000 $ 1,221,050 35,157 41,132,170 (24,802,435) 17,883,942 $

- $ - $

2,330,908 $

21,062,031 $

10,020,640 $

33,413,579

24,063 $ 3,184 27,247 $

220,831 $ 39,596 1,088,040 2,837 2,549,608 3,900,912 $

174,351 $ 1,380,913 1,187 1,556,451 $

419,245 1,380,913 39,596 1,088,040 7,208 2,549,608 5,484,610

79,772 $ 398,785

79,124 $ 3,445,928

5,883 $ 1,958,218 -

164,779 1,958,218 3,844,713

478,557 $

3,525,052 $

1,964,101 $

5,967,710

505,804 $

7,425,964 $

3,520,552 $

11,452,320

692,176 $ 1,132,928

11,888,406 $ 1,747,661

- $ 6,500,088

12,580,582 9,380,677

1,825,104 $

13,636,067 $

6,500,088 $

21,961,259

2,330,908 $

21,062,031 $

10,020,640 $

33,413,579

115

14,438,676

298,000 1,221,050 35,157 43,839,429 504,043 (26,922,776) 18,974,903

CITY OF SUFFOLK, VIRGINIA

Exhibit 22

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds Year Ended June 30, 2010

Information Technology Fund

Fleet Management Fund

Risk Management Fund

Totals

Operating revenues: Charges for services Other operating revenues

2,692,806 $ 55

10,642,898 $ -

15,060,175 $ -

28,395,879 55

Total operating revenues

2,692,861 $

10,642,898 $

15,060,175 $

28,395,934

946,243 $ 29,909 579,151 104,133 34,001 199,811 16,937 248,559

1,153,121 $ 19,144 805,706 4,718,791 37,577 3,370,705 479,606 3,857

138,638 $ 10,672,564 56,331 9,571 6,599 1,658 1,626,893 3,014,322 15,311

2,238,002 10,672,564 105,384 1,394,428 4,829,523 73,236 1,626,893 3,014,322 3,570,516 496,543 267,727

Total operating expenses

2,158,744 $

10,588,507 $

15,541,887 $

28,289,138

Net income (loss) from operations

534,117 $

54,391 $

(481,712) $

106,796

4,526 $ -

24,813 $ (281,753) (149,979)

43,819 $ -

73,158 (281,753) (149,979)

Total nonoperating revenues (expenses)

4,526 $

(406,919) $

43,819 $

(358,574)

Net income (loss) before contributions and transfers

538,643 $

(352,528) $

(437,893) $

(251,778)

Operating expenses: Personnel services Insurance claims and expenses Purchased services Contractual services Supplies Utilities Insurance and bonds OPEB Depreciation Building and equipment rental Other charges

Nonoperating revenues (expenses): Interest income Interest expense Gain (loss) on disposal of capital assets

Capital contributions Transfers (out) Changes in net assets

Net assets, beginning of year Net assets, end of year

(87,980)

2,054,538 (147,366)

(1,676,411)

450,663 $

1,554,644 $

(2,114,304) $

2,054,538 (1,911,757) (108,997)

1,374,441

12,081,423

8,614,392

22,070,256

1,825,104 $

13,636,067 $

6,500,088 $

21,961,259

116

CITY OF SUFFOLK, VIRGINIA

Exhibit 23

Combining Statement of Cash Flows - Internal Service Funds Year Ended June 30, 2010 Information Technology Fund Cash flows from operating activities: Receipts from customers and users Payments to employees (including fringe benefits) Payments for operating activities

Fleet Management Fund

Risk Management Fund

Totals

2,692,861 $ (956,231) (1,088,208)

10,784,167 $ (1,150,186) (6,030,166)

15,119,326 $ (139,141) (13,802,966)

648,422 $

3,603,815 $

1,177,219 $

5,429,456

(87,980) $

(147,366) $

(1,676,411) $

(1,911,757)

(87,980) $

(147,366) $

(1,676,411) $

(1,911,757)

(616,065) $ 398,785 -

(3,523,418) $ (2,790,889) 2,054,538 (305,338)

- $ -

(4,139,483) (2,790,889) 2,054,538 398,785 (305,338)

(217,280) $

(4,565,107) $

- $

(4,782,387)

Cash flows from investing activities: Interest earned

4,526 $

24,813 $

43,819 $

Net increase (decrease) in cash and cash equivalents

347,688 $

(1,083,845) $

(455,373) $

Net cash provided by operating activities Cash flows from non-capital financing activities: Transfers (out) Net cash provided by (used in) non-capital financing activities Cash flows from capital and related financing activities: Acquisition of capital assets Principal paid on capital lease obligations Capital contributions Issuance of long-term debt Interest paid on debt Net cash (used in) capital and related financing activities

Cash and cash equivalents at beginning of year

892,259

3,984,585

10,235,815

28,596,354 (2,245,558) (20,921,340)

73,158 (1,191,530) 15,112,659

Cash and cash equivalents at end of year

1,239,947 $

2,900,740 $

9,780,442 $

13,921,129

Reconciliation of operating income to net cash provided by (used in) operating activities: Cash flows from operations: Income (loss) from operations

534,117 $

54,391 $

(481,712) $

106,796

Adjustment to reconcile net income (loss) to net cash provided by operations: Depreciation and amortization Changes in operating accounts: (Increase) decrease in: Accounts receivable and due from other governments Inventories Increase (decrease) in: Accounts payable Compensated absences Claims payable Net cash provided by operating activities

199,811

3,370,705

3,570,516

47,315

141,269 26,952

59,151 -

200,420 74,267

(122,833) (9,988) $

117

648,422 $

7,562 2,936 3,603,815 $

61,394 (503) 1,538,889

(53,877) (7,555) 1,538,889

1,177,219 $

5,429,456

This page intentionally left blank

OTHER SUPPLEMENTARY INFORMATION Agency Funds

119

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Exhibit 24

Combining Statement of Fiduciary Net Assets Agency Funds At June 30, 2010 Special Welfare Fund Assets Cash and cash equivalents Total assets

Liabilities Amounts held for others Total liabilities

121

Commonwealth of Virginia Fund

Totals

26,010 $

2,533 $

28,543

26,010 $

2,533 $

28,543

26,010 $

2,533 $

28,543

26,010 $

2,533 $

28,543

CITY OF SUFFOLK, VIRGINIA

Exhibit 25

Combining Statement of Changes in Assets and Liabilities Agency Funds Year Ended June 30, 2010 Balance Beginning of Year

Additions

Deletions

Balance End of Year

Special Welfare Fund: Assets: Cash and cash equivalents

26,458 $

77,908 $

78,356 $

26,010

Liabilities: Amounts held for others

26,458 $

77,908 $

78,356 $

26,010

3,368 $

142,366 $

143,201 $

2,533

Liabilities: Amounts held for others

3,368 $

142,366 $

143,201 $

2,533

Totals -- All agency funds Assets: Cash and cash equivalents Total assets

$ $

29,826 $ 29,826 $

220,274 $ 220,274 $

221,557 $ 221,557 $

28,543 28,543

Liabilities: Amounts held for others

29,826 $

220,274 $

221,557 $

28,543

29,826 $

220,274 $

221,557 $

28,543

Commonwealth of Virginia Fund: Assets: Cash and cash equivalents

Total liabilities

122

OTHER SUPPLEMENTARY INFORMATION Discretely Presented Component Unit School Board

123

CITY OF SUFFOLK, VIRGINIA

Exhibit 26

Combining Balance Sheet - Governmental Funds - Discretely Presented Component Unit School Board At June 30, 2010

School Food Service Fund

School Operating Fund ASSETS Cash and investments: Unrestricted Receivables (net of allowance for uncollectibles): Accounts receivable Due from other funds Due from other governments Inventories Prepaids Total assets

17,695,182 $

128,375 1,513,649 1,354,943 129,770 60,000

Subtotal Excluding Component Unit

School Grants Fund

2,072,886 $

45,229 237,350 262,059 -

- $

2,979,194 -

19,768,068 $

173,604 1,513,649 4,571,487 391,829 60,000

Component Unit The Pruden Center for Industry & Technology

Total School Board

154,052 $

19,922,120

3,945 -

177,549 1,513,649 4,571,487 391,829 60,000

20,881,919 $

2,617,524 $

2,979,194 $

26,478,637 $

157,997 $

26,636,634

2,165,343 $ 311,078 10,852,005 44,221 328,969 -

174,573 $ 235,224 -

183,043 $ 960,084 1,513,649

2,522,959 $ 311,078 12,047,313 44,221 328,969 1,513,649

- $ 154,052 3,945 -

2,522,959 465,130 12,047,313 44,221 328,969 3,945 1,513,649

13,701,616 $

409,797 $

2,656,776 $

16,768,189 $

157,997 $

16,926,186

189,770

262,059

451,829

322,418

627,484 380,122

5,982,927

1,945,668

7,928,595

7,180,303 $

2,207,727 $

322,418 $

9,710,448 $

- $

9,710,448

Total liabilities and fund balances $

20,881,919 $

2,617,524 $

2,979,194 $

26,478,637 $

157,997 $

26,636,634

9,710,448

LIABILITIES Accounts payable Accrued liabilities Accrued payroll Amounts held for others Due to primary government Due to other governments Due to other funds Total liabilities FUND BALANCES Nonspendable: Inventories and prepaids Restricted: Grant Compliance Committed: Workers compensation claims Health insurance claims Assigned: Special revenue Total fund balances

Reconciliation of Fund Balances to Net Assets Fund balances Capital assets used in governmental activities are not current financial resources and therefore not reported in the governmental funds Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds Total net assets

67,476,784 (1,915,731) $

124

75,271,501

CITY OF SUFFOLK, VIRGINIA

Exhibit 27

Combining Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds - Discretely Presented Component Unit School Board Year Ended June 30, 2010

School Operating Fund Revenues: Revenue from use of money and property $ Charges for services Miscellaneous Intergovernmental: City contribution to School Board Revenue from the Commonwealth Revenue from the Federal Government School Board contribution to Pruden Center Isle of Wight contribution to Pruden Center Total revenues Expenditures: Current: Education Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers (out) Total other financing sources (uses)

Net changes in fund balances

59,034 $ 728 $ 181,551 2,614,143 627,592 32,179 44,223,161 75,462,073 4,285,640 -

115,950 3,702,614 -

Subtotal Excluding Component Unit

School Grants Fund

- $ 588,542 11,205,056 -

59,762 $ 2,795,694 659,771 44,223,161 76,166,565 19,193,310 -

Total School Board

- $ 120,798 26,000 1,643,648 800,680

59,762 2,916,492 659,771 44,223,161 76,192,565 19,193,310 1,643,648 800,680

$ 124,839,051 $ 6,465,614 $ 11,793,598 $ 143,098,263 $

2,591,126 $ 145,689,389

$ 127,198,937 $ 6,139,451 $ 11,913,490 $ 145,251,878 $

2,591,126 $ 147,843,004

$ 127,198,937 $ 6,139,451 $ 11,913,490 $ 145,251,878 $

2,591,126 $ 147,843,004

(2,359,886) $

326,163 $

(119,892) $

(2,153,615) $

- $

(2,153,615)

- $ (127,737)

- $ -

127,737 $ -

127,737 $ (127,737)

- $ -

127,737 (127,737)

(127,737) $

- $

127,737 $

- $

(2,487,623) $

326,163 $

7,845 $

(2,153,615) $

- $

(2,153,615)

11,864,063

Fund balances at beginning of year Fund balances at end of year

School Food Service Fund

Component Unit The Pruden Center for Industry & Technology

9,667,926 $

1,881,564

7,180,303 $ 2,207,727 $

Reconciliation of Changes in Fund Balances to Changes in Net Assets: Net changes in fund balances Change in capital assets Changes in compensated absences Changes in net assets

125

314,573 322,418 $

9,710,448 $

- $

9,710,448

(2,153,615) 4,268,730 136,489 2,251,604

CITY OF SUFFOLK, VIRGINIA Budgetary Reconciliation Schedule Governmental Funds - Discretely Presented Component Unit School Board Year Ended June 30, 2010 School Operating Fund Total Exhibit 29 Total revenues Total other financing sources Total revenues and other financing sources Total expenditures Total other financing (uses) Total expenditures and other financing (uses) Net changes in fund balances

126

Total Exhibit 27

Encumbrances

124,839,051 -

124,839,051 $ -

124,839,051 $

124,839,051

133,241,864 $ 127,737

(6,042,927) $ -

127,198,937 127,737

133,369,601 $

(6,042,927) $

127,326,674

(8,530,550) $

6,042,927 $

(2,487,623)

Exhibit 28

School Food Service Fund Total Exhibit 29

School Grants Fund Total Exhibit 27

Encumbrances

Total Exhibit 29

Total Exhibit 27

Encumbrances

6,465,614 $ -

11,793,598 $ 127,737

6,465,614 $

11,921,335 $

11,921,335

6,140,224 $ -

(773) $ -

6,139,451 $ -

11,981,725 $ -

(68,235) $ -

11,913,490 -

6,140,224 $

(773) $

6,139,451 $

11,981,725 $

(68,235) $

11,913,490

325,390 $

773 $

326,163 $

(60,390) $

68,235 $

7,845

127

11,793,598 127,737

CITY OF SUFFOLK, VIRGINIA Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Governmental Funds - Discretely Presented Component Unit School Board Year Ended June 30, 2010

School Operating Fund

Original Budget Revenues: Revenue from use of money and property Charges for services Miscellaneous Intergovernmental: Contribution from the City of Suffolk Revenue from the Commonwealth Revenue from the Federal Government Total revenues

Final Budget

80,000 $ 100,000 760,000 44,552,130 80,262,870 1,052,000

80,000 $ 100,000 760,000 44,552,130 77,183,796 4,131,074

Actual Budgetary Basis 59,034 $ 181,551 627,592 44,223,161 75,462,073 4,285,640

Variance From Final Budget Positive (Negative) (20,966) 81,551 (132,408) (328,969) (1,721,723) 154,566

126,807,000 $

124,839,051 $

(1,967,949)

126,622,000 $ -

135,133,335 $ -

133,241,864 $ -

1,891,471 -

126,622,000 $

135,133,335 $

133,241,864 $

1,891,471

126,622,000 $

135,133,335 $

133,241,864 $

1,891,471

Excess (deficiency) of revenues over expenditures

185,000 $

(8,326,335) $

(8,402,813) $

Other financing sources (uses): Transfers in Transfers (out)

- $ (185,000)

- $ (130,400)

- $ (127,737)

2,663

Total other financing sources (uses)

(185,000) $

(130,400) $

(127,737) $

2,663

Net changes in fund balances

- $

(8,456,735) $

(8,530,550) $

Expenditures: Education Food services Grant expenditures Total education Total expenditures

128

(76,478)

(73,815)

Exhibit 29

School Food Service Fund

Actual Budgetary Basis

School Grants Fund Variance From Final Budget Positive (Negative)

Actual Budgetary Basis

Original Budget

Final Budget

5,000 $ 2,707,000 30,000

728 $ 2,614,143 32,179

(4,272) $ (92,857) 2,179

107,000 3,483,000

115,950 3,702,614

8,950 219,614

648,273 15,899,990

588,542 11,205,056

(59,731) (4,694,934)

6,332,000 $

6,465,614 $

133,614 $

16,548,263 $

11,793,598 $

(4,754,665)

- $ 6,732,000 -

- $ 6,140,224 -

- $ 591,776 -

- $ 16,676,000

- $ 11,981,725

4,694,275

6,732,000 $

6,140,224 $

591,776 $

16,676,000 $

11,981,725 $

4,694,275

6,732,000 $

6,140,224 $

591,776 $

16,676,000 $

11,981,725 $

4,694,275

(400,000) $

325,390 $

725,390 $

(127,737) $

(188,127) $

- $ -

127,737 $ -

- $

127,737 $

(400,000) $

325,390 $

725,390 $

- $

(60,390) $

Original Budget

Variance From Final Budget Positive (Negative)

129

Final Budget - $ -

- $ -

(60,390)

CITY OF SUFFOLK, VIRGINIA

Exhibit 30

Statement of Net Assets Fiduciary Funds - Discretely Presented Component Unit School Board At June 30, 2010 School Activity Funds

OPEB Trust Fund Assets Cash and cash equivalents

4,206,690

1,120,379

4,206,690

1,120,379

4,206,690 $

Total net assets

4,206,690 $

Total liabilities and net assets

4,206,690

Total assets

Liabilities Amounts held for others Total liabilities Net assets Held in trust for OPEB benefits

130

1,120,379

CITY OF SUFFOLK, VIRGINIA

Exhibit 31

Statement of Changes in Fiduciary Net Assets OPEB Trust Fund - Discretely Presented Component Unit School Board At June 30, 2010

School Board Additions: Employer Contributions Gain (loss) on investments Total additions

Deductions: Administrative fees Total liabilities Change in net assets

1,411,000 300,090

1,711,090

3,825

1,707,265

Net assets - beginning of year

2,499,425

Net assets - end of year

131

4,206,690

CITY OF SUFFOLK, VIRGINIA

Exhibit 32

Statement of Changes in Assets and Liabilities - Agency Funds Discretely Presented Component Unit School Board Year Ended June 30, 2010 Balance Beginning of Year

Additions

Balance End of Year

Deletions

School Activity Funds: Cash Liabilities: Amounts held for students

946,625

2,628,523

2,454,769

1,120,379

946,625

2,628,523

2,454,769

1,120,379

132

STATISTICAL SECTION This part of the City of Suffolk's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the City's overall financial health. Contents

Table Number

Financial Trends These tables contain trend information to help the reader understand how the City's financial performance and well-being have changed over time.

1 to 5

Revenue Capacity These tables contain information to help the reader assess the factors affecting the City's ability to generate its property taxes.

6 to 10

Debt Capacity These tables contain information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue debt in the future.

11 to 15

Demographic and Economic Information These tables offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments.

16 to 17

Operating Information These tables contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs.

18 to 22

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in fiscal year 2002; schedules presenting government-wide information include information beginning in that year.

133

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Table 1

NET ASSETS BY COMPONENT LAST NINE FISCAL YEARS 2002

2003

2004

2005

2006

2007

2008

2009

2010

Governmental Activities Invested in capital assets, net of related debt

14,455,117 $

17,854,254 $

41,339,232 $

22,018,105 $

50,694,555 $ 128,097,710 $ 140,789,631 $

129,638,603 $ 115,706,222

Restricted: Capital Projects

11,273,870

Debt Service

(245,575)

Other Purposes

1,189,783

1,439,773

524,725

28,290,778

29,082,266

55,488,698 $

55,542,153 $

27,866,304 $

38,652,097 $

21,854,006

17,214,206

Special Programs Unrestricted Total Governmental Activities Net Assets

8,845,303 (1,679,443)

12,565,077

2,862,010

5,222,554

2,250,498

944,650

3,703,280

9,733,131

392,169 -

44,337,037

392,169 959,304 57,234,531

392,169

22,631,799

12,468,387

60,941,946

75,820,056

65,887,938 $

48,456,564 $

72,088,776 $ 172,826,916 $ 199,375,635 $

190,972,718 $ 191,918,447

56,290,404 $

69,299,223 $ 170,862,396 $ 173,084,623 $ 172,165,375 $

171,309,403 $ 163,631,305

Business-Type Activities Invested in capital assets, net of related debt Restricted: Capital Projects Debt Service Other Purposes Unrestricted Total Business-Type Activities Net Assets

1,689,149 -

634,206

6,869,399

7,032,281

7,773,220

1,776,739

39,426 3,058,548

445,172

1,489,816

2,935,424

1,525,006 6,181,551

56,589,709 $

62,898,584 $

66,386,979 $

71,075,962 $ 173,960,370 $ 173,529,795 $ 173,655,191 $

174,244,827 $ 171,337,862

42,321,421 $

56,506,351 $

97,629,636 $

91,317,328 $ 221,556,951 $ 301,182,333 $ 312,955,006 $

300,948,006 $ 279,337,527

33,127,876

26,059,509

14,254,226

Primary Government Invested in capital assets, net of related debt Restricted: Capital Projects Debt Service Other Purposes Special Programs Unrestricted Total Primary Government Net Assets $

(245,575)

(1,679,443)

1,189,783

1,439,773

524,725

35,160,177

36,114,547

2,862,010

2,884,704

944,650

24,408,538

392,169

959,304

15,526,935

392,169

3,742,706

17,506,351

112,078,407 $ 118,440,737 $ 132,274,917 $

5,222,554

44,782,209

58,724,347

119,532,526 $ 246,049,146 $ 346,356,711 $ 373,030,826 $ (1)

(2)

(3)

Information prior to 2002 is not available due to implementation of GASB Statement No. 34 in 2002. (1) This includes a $3,274,701 restatement in the Governmental Activities Net Assets. (2) This includes a $105,473,045 restatement in the Business-Type Activities Net Assets. (3) This includes a $12,376,267 restatement in the Governmental Activities Net Assets and $446,251 restatement in the Business-Type Activities Net Assets.

135

392,169

1,917,175

63,877,370

82,001,607

365,217,545 $ 363,256,309

CITY OF SUFFOLK, VIRGINIA

Table 2 Page 1 of 2

CHANGES IN NET ASSETS LAST NINE FISCAL YEARS 2002 Expenses Governmental Activities: General Government Judicial Public Safety Public Works Health and Welfare Education Parks, Recreation and Cultural Community Development Other Public Services Interest on Long-Term Debt Bond Costs Non-Departmental Total Governmental Activities Expenses

2003

5,952,937 $ 5,617,639 $ 4,771,088 4,457,170 22,521,545 21,195,772 7,950,702 7,665,951 14,043,726 12,527,607 26,882,975 32,979,130 4,515,517 4,130,338 4,193,781 9,677,963 2,868,171 2,375,419 6,510,669 6,549,846 94,231 27,383 3,201,419 4,292,818 $ 103,506,761 $ 111,497,036 $

2004

2005

2006

2007

2008

2009

2010

8,019,005 $ 1,900,766 $ 6,916,053 $ 8,379,163 $ 9,575,332 $ 8,493,992 $ 9,422,635 4,428,005 4,936,491 5,535,063 6,807,141 7,157,778 7,159,993 7,393,681 24,623,891 26,646,128 33,410,471 33,914,535 36,275,476 36,372,402 42,448,954 13,763,814 4,657,083 5,275,996 28,828,221 29,772,711 32,530,396 34,682,047 13,014,409 13,810,781 13,252,584 10,843,875 12,718,036 12,187,513 13,569,286 26,253,784 56,260,122 38,779,835 51,958,540 42,109,639 77,678,641 53,624,148 4,043,316 15,364,543 8,707,837 8,783,502 8,524,477 8,301,660 8,309,722 6,556,252 10,058,214 11,807,444 27,229,557 6,296,351 7,742,440 9,329,455 3,662,585 2,949,560 3,669,173 7,359,854 7,266,452 7,099,604 6,989,398 11,090,479 9,896,678 9,293,250 13,390 27,970 22,272 7,587,424 5,481,997 119,325,729 $ 149,360,107 $ 134,476,332 $ 183,733,932 $ 163,520,279 $ 200,363,715 $ 188,073,178

Business-Type Activities: Utilities Golf course Stormwater management Total Business-Type Activities Expenses

$ 12,672,901 $ 13,045,332 $ 15,593,938 $ 17,317 1,181,521 1,148,610 $ 12,690,218 $ 14,226,853 $ 16,742,548 $

Total Primary Government Expenses

$ 116,196,979 $ 125,723,889 $ 136,068,277 $ 168,967,368 $ 159,706,739 $ 217,797,671 $ 197,039,664 $ 234,110,268 $ 224,555,513

Program Revenues Governmental activities: Charges for Services: General Government and Administration $ Judicial Administration Public Safety Public Works Health and Welfare Parks, Recreation and Cultural Community Development Other Public Service Total Charges for Services $

103,970 $ 566,751 1,380,455 769,700 430,920 59,509 547,591 3,858,896 $

2,114,804 $ 493,282 184,587 1,380,740 288,075 11,357 575,318 5,048,163 $

2,243,348 $ 588,401 198,638 1,386,084 316,658 33,296 602,404 5,368,829 $

Operating Grants and Contributions: General Government and Administration $ 383,924 $ 370,679 $ 1,195,139 $ Judicial Administration 2,477,980 2,463,581 2,131,555 Public Safety 889,563 475,511 1,971,088 Public Works 706,517 754,217 6,357,646 Health and Welfare 10,513,767 10,960,814 11,295,734 Education 150,897 83,991 131,645 Parks, Recreation and Cultural 513,362 268,232 305,659 Community Development 163,529 572,857 780,466 Other Public Services 98,691 41,039 11,494 Total Operating Grants and Contributions $ 15,898,230 $ 15,990,921 $ 24,180,426 $

23,296,106 $ 30,173,237 $ 1,934,301 1,979,380 1,911,122 25,230,407 $ 34,063,739 $

29,133,054 $ 1,689,229 2,924,270 33,746,553 $

33,481,090 3,001,245 36,482,335

- $ 788,324 2,361,369 1,531,857 15,201 476,376 1,215,821 6,388,948 $

- $ 753,969 2,587,982 2,195,198 7,388 628,393 302,134 6,475,064 $

6,299 736,610 2,931,733 2,367,267 25,280 670,162 248,816 6,986,167

443,125 $ 2,267,307 745,611 292,492 11,788,079 369,363 996,938 72,711 16,975,626 $

294,285 $ 473,712 $ 2,141,741 1,802,021 1,159,591 2,325,968 676,331 16,350,686 10,199,959 8,172,786 749,244 285,761 550,749 756,429 28,630 15,800,530 $ 30,167,363 $

531,013 $ 1,846,680 2,293,795 17,088,074 8,398,910 297,489 302,122 30,758,083 $

170,905 $ 1,829,318 2,136,678 18,491,121 8,848,554 305,120 575,172 32,356,868 $

122,185 1,766,209 2,705,501 18,095,389 9,511,711 294,402 1,808,426 34,303,823

- $ 1,151,499 1,035,898 41,378 26,935 1,172,283 3,427,993 $

- $ 1,763,201 1,290,471 27,652 86,672 170,280 18,701 3,356,977 $

- $ - $ 1,979,527 105,190,141 8,383 1,394,061 227,199 2,043 628,900 1,127,019 4,229,687 $ 106,327,586 $

- $ 138,253 1,088,018 1,226,271 $

70,500 $ 587,602 966,594 1,624,696 $

1,802,779 109,151 1,911,930

Total Governmental Activities Program Revenues$ 23,931,392 $ 22,410,317 $ 32,656,582 $

25,701,432 $

25,895,954 $ 141,794,623 $

38,373,302 $

40,456,628 $

43,201,920

- $ 1,538,340 1,538,360 28,687 1,068,879 4,174,266 $

- $ 926,906 78,000 1,030,585 2,035,491 $

136

2,507,468 $ 687,317 249,612 1,254,981 325,748 27,930 812,681 5,865,737 $

29,147,386 $ 1,780,625 2,591,374 33,519,385 $

- $ 939,300 1,313,880 1,746,854 15,015 335,642 948,983 5,299,674 $

Capital Grants and Contributions: Public Safety Public Works Health and Welfare Education Parks, Recreation and Cultural Community Development Other Public Services Nondepartmental Total Capital Grants and Contributions

931,888 $ 1,475,505 994,414 457,370 25,102 499,626 4,383,905 $

17,773,204 $ 1,834,057 19,607,261 $

CITY OF SUFFOLK, VIRGINIA

Table 2 Page 2 of 2

CHANGES IN NET ASSETS LAST EIGHT FISCAL YEARS 2002 Program Revenues: (Continued) Business-Type Activities: Charges for Services: Utility Non-major Total Charges for Services

2003

2004

2005

$ 18,359,157 $ 16,616,219 $ 16,920,731 $ 686,307 438,735 $ 18,359,157 $ 17,302,526 $ 17,359,466 $

19,566,580 $ 1,430,093 20,996,673 $

2006

2007

2008

20,419,822 $ 22,096,514 $ 1,510,288 4,412,172 21,930,110 $ 26,508,686 $

2009

2010

23,803,453 $ 5,220,655 29,024,108 $

24,813,989 $ 5,152,294 29,966,283 $

29,044,958 3,861,010 32,905,968

Operating Grants and Contributions: Utility Total Operating Grants and Contributions

$ $

- $ - $

400,724 $ 400,724 $

240,093 $ 240,093 $

11,163 $ 11,163 $

814,500 $ 814,500 $

864,141 $ 864,141 $

542,287 $ 542,287 $

Capital Grants and Contributions: Utility Total Capital Grants and Contributions

$ $

- $ - $

3,935,770 $ 3,935,770 $

2,233,515 $ 2,233,515 $

3,284,662 $ 3,284,662 $

383,412 $ 383,412 $

6,043,266 $ 6,043,266 $

2,658,020 $ 2,658,020 $

3,785,842 $ 3,785,842 $

1,504,233 1,504,233

Total Business-Type Activities Program Revenues $ 18,359,157 $ 21,238,296 $ 19,993,705 $

24,521,428 $

22,324,685 $ 33,366,452 $

32,546,269 $

34,294,412 $

34,410,201

Total Primary Government Program Revenues

$ 42,290,549 $ 43,648,613 $ 52,650,287 $

50,222,860 $

48,220,639 $ 175,161,075 $

70,919,571 $

74,751,040 $

77,612,121

Net (Expense)/Revenue Governmental Activities Business-Type Activities

$ (79,575,369) $ (89,086,719) $ (86,669,147) $ (123,658,675) $ (108,580,378) $ (41,939,309) $ (125,146,977) $ (159,907,087) $ (144,871,256) 5,668,939 7,011,443 3,251,157 4,914,167 (2,905,722) (697,287) (973,116) 547,859 (2,072,134)

Total Primary Government Net Expense

$ (73,906,430) $ (82,075,276) $ (83,417,990) $ (118,744,508) $ (111,486,100) $ (42,636,596) $ (126,120,093) $ (159,359,228) $ (146,943,390)

General Revenues and Other Changes in Net Assets Governmental Activities: Taxes Grants and Contributions Not Restricted to Specific Programs Revenue from use of money and property Gain on Disposal of Capital Assets Transfers/Miscellaneous Total Governmental Activities Business-Type Activities: Reimbursements from Other Agencies Grants and Contributions Not Restricted to Specific Programs Investment Earnings Gain on Disposal of Capital Assets Transfers/Miscellaneous Total Business-Type Activities

$ 75,735,139 $ 82,192,711 $ 91,734,955 $ 102,418,853 $ 106,905,524 $ 120,034,998 $ 131,543,030 $ 132,560,748 $ 131,748,747 2,947,490 2,954,054 3,041,024 3,239,271 14,174,921 14,535,729 14,427,389 14,405,688 13,938,495 1,686,545 2,476,306 2,100,281 2,060,740 2,445,754 3,871,010 3,794,438 1,845,378 1,136,704 (30,742) 180,500 1,104,708 1,517,103 169,414 1,783,138 2,659,201 4,235,712 1,930,839 2,692,356 3,968,437 $ 81,473,882 $ 89,140,174 $ 97,014,932 $ 109,502,002 $ 126,365,900 $ 142,677,449 $ 151,695,696 $ 151,504,170 $ 150,792,383

518,131 $

113,312 $

- $

23,000 $

- $

84,706 235,370 (41,608) 796,599 $

129,655 28,464 (973,999) (702,568) $

197,469 39,758 237,227 $

237,146 (485,330) (225,184) $

476,611 (158,526) 318,085 $

1,042,633 (329,670) 712,963 $

1,633,718 (535,206) 1,098,512 $

640,041 (598,264) 41,777 $

555,814 (2,063,316) (1,507,502)

Total Primary Government

$ 82,270,481 $ 88,437,606 $ 97,252,159 $ 109,276,818 $ 126,683,985 $ 143,390,412 $ 152,794,208 $ 151,545,947 $ 149,284,881

Change in Net Assets Governmental Activities Business-Type Activities

1,898,513 $ 6,465,538

53,455 $ 10,345,785 $ (14,156,673) $ 6,308,875 3,488,384 4,688,983

17,785,522 $ 100,738,140 $ (2,587,637) 15,676

26,548,719 $ 125,396

(8,402,917) $ 589,636

5,921,126 (3,579,636)

Total Primary Government

8,364,051 $

6,362,330 $ 13,834,169 $

15,197,885 $ 100,753,816 $

26,674,115 $

(7,813,281) $

2,341,490

(9,467,690) $

(1)

Information prior to 2002 is not available due to implementation of GASB Statement No. 34 in 2002. (1) In Fiscal Year 2007 the City adjusted grouping categories based on new fund additions, changes in operational structure and GFOA comments.

137

CITY OF SUFFOLK, VIRGINIA FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS 2001 General Fund Reserved Unreserved Non-Spendable Committed Assigned General Capital Projects Unassigned Total General Fund

All Other Governmental Funds Reserved Unreserved, reported in: Capital Projects Funds Debt Service Funds Permanent Special Revenue Funds Restricted Committed, reported in: Capital Projects Funds Nonmajor Governmental Funds Other Governmental Funds Assigned, reported in: Capital Projects Funds Special Revenue Funds Debt Service Funds Unassigned Total all other Governmental Funds

Component Unit (School Board) Reserved Unreserved Nonspendable Restricted Committed Assigned

2002

2003

2004

2005

4,078,996 $ 32,399,193 -

3,740,533 $ 32,785,732 -

2,872,994 $ 34,169,781 -

2,656,053 $ 28,902,323 -

3,235,758 25,079,595 -

36,478,189 $

36,526,265 $

37,042,775 $

31,558,376 $

28,315,353

4,467,017 $

8,189,533 $

1,948,525 $

4,117,671 $

4,768,672

19,519,255 927,608 -

3,564,030 (245,575) 2,137,286 -

7,378,260 (1,679,443) 1,850,914 -

8,082,082 (2,360,804) 2,224,696 -

8,307,664 (1,572,163) 2,272,683 -

24,913,880 $

13,645,274 $

9,498,256 $

12,063,645 $

13,776,856

4,236,109 $ 601,041 4,837,150 $

4,477,136 $ 798,427 5,275,563 $

6,353,892 $ 773,035 7,126,927 $

8,191,095 $ 220,970 8,412,065 $

6,611,928 844,356 7,456,284

(1)

With the implementation of GASB Statement No. 34 in Fiscal Year 2002, the fund balance of the nonexpendable trust fund was reclassified to that of a special revenue fund. (1) This includes a $937,447 restatement in the General Fund. (2) This includes a $4,703,180 restatement in the Capital Projects Fund. With the implementation of GASB Statement No. 54 in Fiscal Year 2010, the fund balance terminology was changed.

138

Table 3

2006

2007

2008

2009

2,008,158 $ 28,146,402 -

594,170 $ 33,217,808 -

810,492 $ 47,279,178 -

670,027 $ 50,540,042 -

132,421 585,475

30,154,560 $

33,811,978 $

48,089,670 $

51,210,069 $

2,986,050 6,529,103 42,300,994 52,534,043

5,890,801 $

2,419,652 $

8,189,612 $

12,318,937 $

(7,242,148) (757,116) 977,277 (174,585) -

28,003,480 734,340 1,026,077 4,171,904 -

21,339,005 861,708 959,304 6,635,295 -

2010

19,353,128 679,706 8,214,906 -

392,169 12,986,435 4,398,679 286,150

(1,305,771) $

36,355,453 $

37,984,924 $

40,566,677 $

6,868,143 5,468,839 600,859 (69,801) 30,931,473

5,378,752 $ 1,011,181 6,389,933 $

8,174,301 $ 783,382 8,957,683 $

8,065,992 $ 1,370,368 9,436,360 $

10,459,827 $ 1,404,236 11,864,063 $

451,829 322,418 1,007,606 7,928,595 9,710,448

(2)

139

CITY OF SUFFOLK, VIRGINIA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS 2001 Revenues General Property Taxes Other Local Taxes Licenses, Permits and Fees Fines and Forfeitures Use of Money and Property Intergovernmental Charges for Services Sale of Commodities and Property Miscellaneous Total Revenues Expenditures General Government Judicial Public Safety Public Works Health and Welfare Education Parks, Recreation and Cultural Community Development Other Public Services Non-Departmental Capital Outlay Debt Service Other Interest Principal

(1)

2002

2003

2004

47,924,487 18,567,350 1,236,861 414,419 4,681,210 76,770,071 1,438,789 1,472,687 865,580

53,892,139 21,843,000 1,405,319 349,377 2,420,813 79,370,828 1,784,194 1,580,723 2,062,003

57,961,870 23,503,407 1,452,509 553,375 3,185,964 113,176,486 2,076,100 1,888,096 640,633

66,231,547 25,361,853 1,459,690 655,114 2,164,113 127,923,434 2,781,664 2,011,073 908,522

153,371,454

164,708,396

204,438,440

229,497,010

4,583,998 3,670,902 16,443,143 6,412,480 12,168,833 78,070,900 2,943,721 2,362,377 1,452,488 5,798,002 27,567,545

5,089,739 4,147,075 19,529,292 6,418,212 12,257,769 84,091,273 3,750,968 3,666,922 2,439,054 2,796,469 18,144,092

5,481,723 4,420,572 20,911,023 6,839,111 12,495,701 92,760,306 3,885,476 3,643,667 2,380,779 3,755,336 25,488,540

5,903,203 4,402,709 23,876,250 7,008,118 13,001,895 131,062,322 3,810,234 6,506,643 2,725,172 10,749,106 24,763,361

191,961 5,878,200 11,299,424

94,231 6,365,540 7,819,576

133,327 6,650,152 8,598,182

150,408 7,208,931 10,081,717

Total Expenditures

178,843,974

176,610,212

197,443,895

251,250,069

Excess of Revenues Over (Under) Expenditures

(25,472,520)

(11,901,816)

6,994,545

(21,753,059)

5,402,123 26,203,584 32,212,726 (5,402,123) (31,344,201)

(25,184,762) 33,920,389 (8,521,719)

18,124,270 (27,434,956) 5,980,095 (5,443,097)

19,770,997 18,183,028 12,522,466 (19,770,997) 1,722,690 (12,308,996)

Total Other Financing Sources (Uses)

27,072,109

(8,773,688)

20,119,188

Net Change in Fund Balance

1,599,589

(1,779,143)

(1,633,871)

Other Financing Sources (Uses) Proceeds of Refunding Bonds Proceeds of Bonds Issued Premiums on Debt Transfers to Component Units Transfers In Payment to Refunded Bonds Escrow Agent Proceeds from Sale of Asset Transfers Out

Debt Service as a percentage of non-capital expenditures

213,908 (11,687,908)

11.36%

8.95%

8.87%

7.63%

Note A: Includes General, Capital Projects, Special Revenue, Debt Service, School Operating, School Food Service and the School Grants Fund. School Funds are reported in the component unit section of the financial statements, but are included here since they are a part of the general goverment function. Note B: With the implementation of GASB Statement No. 34 in Fiscal Year 2002, the fund balance of the nonexpendable trust fund was reclassified to that of a special revenue fund. Note C: In Fiscal Year 2007 the City adjusted grouping categories based on new fund additions, changes in operational structure and GFOA comments. (1) Includes $12,202,627 from the first semi-annual real estate tax collection. (2) Education includes the City's payments to the School Board, as listed below, which were reported as transfers in prior years. 2004 – $30,386,932

2005 – $34,230,484

2006 – $38,779,835

2007 – $41,553,626

(3) Includes $2,437,088 of funding for the IDA's Secondary Debt Service Reserve Fund to support the $18.3 million Economic Development Revenue Bonds relating to the Hilton Garden Inn and Suffolk Conference Center.

140

Table 4

2005

2006

2007

2008

2009

2010

74,827,500 27,514,690 1,581,725 661,623 2,139,060 134,887,182 2,957,076 2,174,387 896,602

76,472,589 $ 30,512,149 1,811,848 695,620 2,542,192 155,028,233 (8) 3,166,463 2,371,587 2,678,000 (7)

88,450,925 31,261,557 1,532,729 552,063 3,966,250 180,010,723 5,811,425 4,315,695

98,037,522 33,104,223 1,375,508 475,350 3,794,438 47,805,781 4,538,081 1,368,871

99,044,697 33,090,604 1,182,302 521,771 1,845,378 49,182,612 4,770,991 1,784,155

98,299,291 32,916,852 1,394,842 852,307 1,136,704 50,154,248 4,739,019 1,674,116

247,639,845

275,278,681

315,901,367

190,499,774

191,422,510

191,167,379

6,433,652 $ 4,915,653 26,239,576 8,767,265 13,786,005 148,483,536 (2) 4,299,784 4,485,621 2,949,560 4,995,690 29,674,725

6,648,753 $ 5,183,428 30,227,291 11,172,271 (8) 12,581,669 161,903,529 (2) 4,839,971 4,541,559 (5) 3,561,018 5,530,537 38,086,252

8,177,101 6,602,250 31,896,254 22,157,962 10,493,819 171,941,517 6,042,500 26,784,795 7,012,669 18,741,520

8,172,799 6,770,319 33,563,830 24,379,984 11,040,820 45,999,422 5,984,292 6,192,145 7,622,634 28,574,620

8,075,932 6,815,601 34,676,356 26,204,343 11,597,910 48,472,908 6,680,503 8,032,334 8,753,753 20,582,782

8,113,416 6,812,528 37,802,601 26,784,701 12,718,523 44,725,754 6,972,187 8,783,239 8,264,861 20,789,098

(2) (3) (4)

131,124 6,829,437 9,949,599

209,398 7,385,176 12,991,845

1,005,084 6,689,872 15,044,611

190,205 8,531,876 13,361,741

271,941,227

304,862,697

332,589,954

(24,301,382)

(29,584,016)

(16,688,587)

21,160,000 168,989 7,910,293 (7,423,493)

9,978,267 $ 14,406,949 918,255 6,114,990 (10,365,390) (5,778,826) (6)

28,440,000 63,486,239 3,131,272 6,699,896 (29,703,423) (9,204,842)

21,815,789

15,274,245

62,849,142

(2,485,593)

(14,309,771)

46,160,555

6.93%

7.64%

200,384,687

288,914 9,645,646 13,667,737 $

203,494,719

206,177,544

(9,884,913)

(12,072,209)

(15,010,165)

24,475,000 501,623

16,600,000 30,481,200 (29,306,840)

30,605,000 3,550,000 2,102,918 31,222,564 (32,350,000) (27,016,486)

25,792,077

17,774,360

8,113,996

15,907,164

5,702,151

(6,896,169)

27,223,057 (26,407,603)

6.93%

339,170 9,755,820 14,315,646

12.74%

12.75%

12.98%

(4) Nondepartmental includes expenditures for Hurricane Isabel. (5) Includes $18,451,749 contribution to the IDA from the refunding of the Economic Development Revenue Bonds relating to the Hilton Garden Inn and Suffolk Conference Center. (6) Includes approximately $3,000,000 in transfers to the internal service funds to eliminate fund deficits and establish a reserve for future claims in the Risk Management Fund. (7) Includes $1,500,000 from the first installment payment on the sale of the Obici property (8) Includes revenues and expenditures for the Road Maintenance fund which had a full year of maintenance for fiscal year 2007

141

CITY OF SUFFOLK, VIRGINIA TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS

2001 General Property Tax Other Local Taxes: Sales and Use Utility Tax Communication Taxes Business and Occupational License Franchise Motor Vehicle License Bank Stock Recordation Tobacco Lodging Meals Admission Emergency Phone Services Public Facility Tax Rebate Total

2002

2003

2004

2005

47,924,487 $

53,892,139 $

57,961,870 $

66,231,547 $

74,827,500

4,321,930 5,225,478 2,990,623 311,472 1,119,357 242,790 384,620 934,559 173,076 2,075,966 127,041 660,438 66,491,837 $

5,033,151 6,619,362 3,460,903 197,742 1,196,784 204,459 507,616 898,407 201,284 2,530,282 293,405 699,605 75,735,139 $

5,293,294 7,062,298 3,618,973 481,015 1,248,266 166,264 644,418 971,777 224,742 2,704,256 351,413 736,691 81,465,277 $

5,787,336 6,439,771 3,901,699 216,994 1,330,191 242,789 855,860 1,693,781 227,152 3,291,137 386,899 988,243 91,593,399 $

6,393,278 6,160,225 4,528,220 233,565 1,350,308 283,547 2,001,254 1,538,959 302,463 3,323,238 369,995 1,029,638 102,342,190

(1) Effective January 1, 2007 the Commonwealth of Virginia moved to a Communication Tax collected by the State and remitted to the locality versus the local taxes previously charged by the jurisdiction.

142

Table 5

2006

2007

2008

2009

76,472,589 $

88,450,925 $

98,037,522 $

99,044,697 $

7,043,982 6,420,430 5,177,235 251,447 1,359,928 362,571 2,632,855 1,403,764 235,137 3,886,919 356,211 1,033,810 347,860 106,984,738 $

7,177,386 5,348,947 1,723,627 5,674,968 138,635 1,532,277 350,564 2,122,575 1,378,724 226,867 4,306,494 382,592 502,503 395,398 119,712,482 $

7,579,882 4,190,304 3,682,126 5,806,810 1,650,732 288,973 1,563,745 1,415,123 832,049 5,632,980 354,950 106,549 131,141,745 $

7,323,289 4,279,814 3,733,667 6,261,676 1,713,998 306,405 1,186,018 1,408,348 778,559 5,683,139 376,024 39,667 132,135,301 $

143

2010 98,299,291 7,355,338 4,238,079 3,614,856 (1) 5,985,479 1,711,012 641,735 1,009,592 1,382,361 957,654 5,643,405 377,341 - (1) 131,216,143

Change 2001-2010 105% 70% -19% 0% 100% -100% 53% 164% 162% 48% 453% 172% 0% -100% 0%

CITY OF SUFFOLK, VIRGINIA ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS

Fiscal Year 2001 $ 2002 2003 2004 2005 2006 2007 2008 2009 2010

Citizens Property (1)

Real Property Assessed Value Public Service (2) Total

2,973,951,700 $ 3,197,461,000 3,532,824,000 4,044,414,400 4,700,248,600 5,767,166,200 7,615,318,305 8,471,944,000 9,095,186,800 9,055,790,400

15,638,034 $ 17,455,240 17,669,080 18,332,444 16,416,461 18,411,941 16,841,670 20,753,336 23,662,692 26,606,668

2,989,589,734 $ 3,214,916,240 3,550,493,080 4,062,746,844 4,716,665,061 5,785,578,141 7,632,159,975 8,492,697,336 9,118,849,492 9,082,397,068

Estimated Actual Value

City Wide

3,178,132,234 3,402,129,340 3,750,119,580 4,280,219,144 4,983,988,261 6,215,420,841 8,207,595,470 9,466,652,720 9,723,630,800 9,705,046,100

1.03 $ 1.08 1.08 1.08 1.08 1.06 0.94 0.94 0.91 0.91

Citizens Property (3) 450,578,178 $ 487,554,205 529,426,302 608,825,985 624,278,865 699,151,891 760,041,770 766,350,990 804,367,320 721,104,740

Personal Property Assessed Value Public Service (2) Total 146,698,674 $ 172,908,792 167,961,412 166,161,886 153,824,486 175,007,613 154,722,996 207,604,394 217,629,411 245,272,079

597,276,852 $ 660,462,997 697,387,714 774,987,871 778,103,351 874,159,504 914,764,766 973,955,384 1,021,996,731 966,376,819

(1) Real property is assessed at 100% of estimated actual value except land use property which approximates 30%. Source: City Assessor's Office (2) Determined by the State Corporation Commission of Virginia. (3) Vehicles are assessed at 100% of average loan value: recreation vehicles are assessed at 100% of lowest NADA value; and machinery and tools are assessed at 20% of original cost for the first five years and 10% thereafter. Source: City Commissioner of the Revenue's Office.

144

Estimated Actual Value 613,576,705 679,675,085 715,774,193 793,450,303 795,194,961 893,604,794 931,956,210 650,872,800 609,262,900 630,103,100

Table 6

Total Personal Property (3) 4.25 $ 4.25 4.25 4.25 4.25 4.25 4.25 4.25 4.25 4.25

Assessed Value

Estimated Actual Value

3,586,866,586 $ 3,875,379,237 4,247,880,794 4,837,734,715 5,494,768,412 6,659,737,645 8,546,924,741 9,466,652,720 9,723,630,800 9,055,790,400

3,791,708,939 4,081,804,425 4,465,893,773 5,073,669,447 5,779,183,222 7,109,025,635 9,139,551,680 10,117,525,520 10,332,893,700 9,685,893,500

Ratio of Total Assessed to Total Estimated Actual Value 94.60% 94.94% 95.12% 95.35% 95.08% 93.68% 93.52% 93.57% 94.10% 93.49%

145

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Table 7

DIRECT PROPERTY TAX RATES (PER HUNDRED) (1) LAST TEN FISCAL YEARS

Real Property (2) Suffolk Taxing District

Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1.19 $ 1.24 1.24 1.24 1.24 1.22 0.98 -

City Wide

Route 17 Taxing District

1.03 $ 1.08 1.08 1.08 1.08 1.06 0.94 0.94 0.91 0.91

0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26

Mosquito Control District $

0.035 $ 0.035 0.035 0.035 0.035 0.035 0.035 -

Downtown Business Overlay District 0.125 0.125 0.125 0.125

Personal Property (3) $

Machinery and Tools (4)

4.25 $ 4.25 4.25 4.25 4.25 4.25 4.25 4.25 4.25 4.25

3.15 $ 3.15 3.15 3.15 3.15 3.15 3.15 3.15 3.15 3.15

(1) The City is not a component of any overlapping governments; therefore, it does not share any overlapping tax rates nor debt. (2) Real property is assessed at 100% of estimated actual value, except land use property which approximates 30%. (3) Vehicles are assessed at 100% of average loan value. (4) Assessed at 20% of original cost during the first five years of life; 10% thereafter. (5) The district tax rates include the City-wide rate. Additionally, districts overlap some properties, resulting in those properties being taxed at the City rate plus the additional rate for each applicable district. Therefore, only the City-wide rate is used with the personal property rate to calculate the Minimum Total Direct Rate. (6) In Fiscal Year 2008, the Suffolk Taxing District and Mosquito Control District supplemental taxes were not assessed because the City instituted a city-wide mosquito control program and incorporated the fees associated with those services into the storm water utility fee.

147

Minimum Total Direct Rate (5) 5.28 5.33 5.33 5.33 5.33 5.31 5.19 5.19 5.16 5.16

CITY OF SUFFOLK, VIRGINIA

Table 8

PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND NINE YEARS AGO Real Property

Taxpayer 116 Lakeview Parkway LLC LMC Properties CVN Distribution Target Corporation Sysco Food Services of Hampton Roads Lakeview Development Group LLC Planters/Kraft Foods Bon Secours Hampton Rds Health Sys The Pergola Group Lake Prince Center, Inc. Harborview Partners Ciba Specialty Chemical City of Norfolk Sustainable Forest City of Portsmouth City of Norfolk Walmart Dominion Land Inc.

2010 Percentage of Total City Taxable Taxable Assessed Assessed Value Value (1)

Type of Business Joint Military Training Facility Joint Military Training Facility Distribution Warehouse Distribution Warehouse Food Services Joint Military Training Facility Peanut Products Health Systems Apartment Complex Retirement Community Real Estate Developers Chemical Plant Municipal Water System Wood Products Municipal Water System Municipal Water System Retail Merchandise Real Estate Developers

2001 Percentage of Total City Taxable Taxable Assessed Assessed Value Value (1)

67,963,300 43,666,300 43,843,300 39,245,000 30,377,400 22,969,900 25,685,400 21,969,300 26,818,900 26,714,100 -

0.75% $ 34,456,900 0.48% 0.48% 29,554,600 0.43% 0.34% 24,296,000 0.25% 0.28% 17,628,200 0.24% 11,578,900 0.30% 725,400 0.29% 187,000 22,487,600 22,901,200 18,120,500 12,612,900 23,306,900 10,251,000 11,425,400

1.16% 0.99% 0.82% 0.59% 0.39% 0.02% 0.01% 0.76% 0.84% 0.61% 0.42% 0.78% 0.34% 0.38%

$ 349,252,900

3.86% $ 205,075,600

6.96%

(1) Total assessed valuation of real estate for fiscal year 2009-2010 - $9,055,790,400

Source: City of Suffolk Assessor's Office

2000-2001 -$2,973,951,700 does not include public service corporations

Personal Property

Taxpayer Ciba Specialty Chemicals Sara Lee International QVC of Suffolk Inc Unilever Bestfoods/Lipton Tea Lockheed Martin Corporation Planters/Kraft Foods Target Corporation Massimo Zanetti Beverage USA Sysco Food Services of Hampton Roads Charter Communications Penn Engineering & Manufacturing Thomas J. Lipton Co. CVN Distribution Co Sonoco Products Company Lakeview Medical Center, Inc. Vixtex Packaging, Inc.

2010 Percentage of Total City Taxable Taxable Assessed Assessed Value Value (2)

Type of Business Chemical Plant Beverage Company Distribution Warehouse Beverage Company Technology Company Peanut Products Distribution Warehouse Beverage Company Food Services Cable Products Self Clenching Fasteners Beverage Company Distribution Warehouse Fuel Services Medical Products Packaging Warehouse

$ (2) Total assessed valuation of personal property for fiscal year 2009-2010 - $966,376,819 2000-2001 - $450,578,178 Does not include Public Service Corporations

148

9,432,130 8,794,980 6,373,480 7,991,250 5,021,290 6,525,940 3,640,010 4,457,350 3,231,410 2,535,190 58,003,030

2001 Percentage of Total City Taxable Taxable Assessed Assessed Value Value (2)

0.98% $ 7,830,900 0.91% 5,844,040 0.66% 0.83% 0.52% 0.68% 5,811,110 0.38% 0.46% 0.33% 0.26% 896,790 1,922,240 4,870,540 2,989,230 1,078,260 1,005,200 1,495,720 6.00% $ 33,744,030

1.74% 1.30% 1.29% 0.20% 0.43% 1.08% 0.66% 0.24% 0.22% 0.33% 8.14%

Source: City of Suffolk, Commissioner of Revenue's office

CITY OF SUFFOLK, VIRGINIA

Table 9

PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Tax Collections Delinquent

Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total Tax Levy (1)

Current Tax Collections

47,995,899 $ 53,553,363 58,175,390 66,303,851 74,108,747 87,028,625 98,604,779 107,353,414 112,502,640 109,732,744

46,948,148 52,796,334 57,393,884 65,447,182 73,148,580 85,921,671 97,146,638 105,361,772 110,007,171 107,359,137

Percent of Levy Collected 97.82% $ 98.59% 98.66% 98.71% 98.70% 98.73% 98.52% 98.14% 97.78% 97.84%

Amount 1,025,905 727,714 646,620 710,189 747,395 918,601 1,096,719 1,369,006 1,886,960 -

Total

As Percent of Outstanding Delinquent Taxes 4696.08% $ 2482.39% 2058.64% 484.84% 351.27% 487.70% 303.45% 122.45% 121.44% 0.00%

Outstanding Delinquent Taxes

As Percent of Current Levy

Amount (2) 47,974,053 53,524,048 58,040,504 66,157,371 73,895,975 86,840,272 98,243,357 106,730,778 111,894,131 107,359,137

99.95% $ 99.95% 99.77% 99.78% 99.71% 99.78% 99.63% 99.42% 99.46% 97.84%

At End of Fiscal Year (2) 21,846 29,315 31,410 146,480 212,772 188,353 361,422 1,118,001 1,553,816 2,373,607

Note A: Delinquent real property taxes not collected within three years, a lien is recorded on the property of the collection thereof. Collecitons in subsequent years represent delinquent accounts collected during the course of that fiscal year for all prior fiscal years. (1) Beginning in the year ended June 30, 2000, the total tax levy includes the Commonwealth's reimbursement.

Data furnished by City Treasurer

(2) Adjusted for collections through August 15.

Property Tax Levies and Collections 120,000,000

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

0 2001

2002

2003

2004 Total Tax Levy

2005

2006

Current Tax Collections

149

2007

2008

2009

2010

As Percent of Current Levy 0.05% 0.05% 0.05% 0.22% 0.29% 0.22% 0.37% 1.04% 1.38% 2.16%

As Percent of Applicable Levies 1.32% 1.20% 1.18% 1.08% 1.02% 0.91% 0.90% 0.97% 1.14%

CITY OF SUFFOLK, VIRGINIA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS

Governmental Activities General Obligation Bonds

Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Note A:

118,492,672 $ 111,374,910 121,679,066 130,576,861 139,505,817 140,962,269 188,919,526 202,079,985 210,171,583 201,451,369

VPSA Bonds 2,372,276 $ 2,170,462 1,963,124 1,745,204 1,526,650 1,297,419 1,062,465 816,739 565,188 297,756

Bond Anticipation Notes

Literary Fund Loan 9,750,000 $ 9,250,000 8,750,000 8,250,000 7,750,000 7,250,000 6,750,000 6,250,000 5,750,000 5,250,000

Section 108 Loan Payable $

$ 3,845,000 3,652,000 3,459,000 3,266,000

Notes Payable 1,415,000 $ 1,415,000 1,415,000 3,000,000 4,196,949 1,588,475 480,000 240,000 -

Personal Income and population data is shown on the Demographic and Economic Statistics, Table 16

*Data not available **

150

Internal Service Fund Capital Leases 2,285,189 1,951,375 1,738,928 2,686,055 3,168,162 8,370,710 8,767,219 6,354,783 8,786,426 6,394,321

Table 10

Business-Type Activities

Revenue Bonds** $

27,395,000 $ 45,270,000 44,460,000 55,345,000 54,600,000 67,410,000 103,200,000 141,385,000 184,380,000 207,965,000

General Obligation Bonds 10,590,470 $ 9,542,706 12,267,021 11,658,139 11,354,183 10,362,731 9,385,474 8,615,016 3,873,417 3,393,631

Notes Payable 13,684 $ 2,200,000 2,200,000 3,334,000 -

Total Primary Government 172,314,291 183,174,453 194,473,139 213,595,259 220,904,812 239,850,078 323,518,159 369,633,523 417,225,614 428,018,077

151

Percentage of Personal Income 9.74% 9.82% 9.67% 9.78% * * * * * *

Per Capita 2,675 2,711 2,774 2,938 2,926 3,111 4,068 4,491 5,094 5,156

CITY OF SUFFOLK, VIRGINIA

Table 11

RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS General Bonded Debt Outstanding

Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

General Obligation Bonds

VPSA Bonds

Literary Fund Loan

Notes Payable

Section 108 Loan Payable

Total

$ 118,492,672 $ 2,372,276 $ 9,750,000 $ 1,415,000 $ $ 111,374,910 2,170,462 9,250,000 1,415,000 121,679,066 1,963,124 8,750,000 1,415,000 130,576,861 1,745,204 8,250,000 139,505,817 1,526,650 7,750,000 3,000,000 140,962,269 1,297,419 7,250,000 4,196,949 188,919,526 1,062,465 6,750,000 1,588,475 3,845,000 202,079,985 816,739 6,250,000 480,000 3,652,000 206,196,799 565,188 5,750,000 240,000 3,459,000 201,451,369 297,756 5,250,000 3,266,000

Debt Service Monies Available

Net General Debt

132,029,948 $ 2,017,096 $ 130,012,852 124,210,372 6,680 124,203,692 133,807,190 133,807,190 140,572,065 140,572,065 151,782,467 151,782,467 153,706,637 153,706,637 202,165,466 734,340 201,431,126 213,278,724 861,708 212,417,016 216,210,987 679,706 215,531,281 210,265,125 1,665,833 208,599,292

Note A: Population data is shown on the Demographic and Economic Statistics, Table 16 Estimated Actual Value is shown on the Assessed Value and Estimated Actual Value Statistics, Table 6 Note B: Estimated Actual Value used includes all taxable property (real estate, personal property and public service corporation property). Note C: Includes bonds and notes payable only - no capital lease obligations of the internal service funds.

Percentage of Net General Debt to Estimated Actual Value 2.15%

2010 2009

2.09%

2008

2.10% 2.20%

2007

2.16%

2006

2.76%

2005

2.91%

2004

3.15%

2003

3.20%

2002

3.62%

2001

152

Percentage of Net General Debt to Estimated Actual Value 3.62% 3.20% 3.15% 2.91% 2.76% 2.16% 2.20% 2.10% 2.09% 2.15%

Per Capita $ 2,018 1,838 1,909 1,934 2,010 1,994 2,613 2,581 2,631 2,513

CITY OF SUFFOLK, VIRGINIA

Table 12

DIRECT GOVERNMENTAL ACTIVITIES DEBT

Outstanding Balance FY 2010

Debt Issue 1990 VPSA Bond 1991 VPSA Bond 1999 Literary Fund Loan 2001 Literary Fund Loan 2001 General Obligation Bond 2001 Refunding Bond 2002 General Obligation Bond 2003 General Obligation Bond 2003 Refunding Bond 2004 General Obligation Bond 2005 General Obligation Bond 2005 Refunding Bond 2007 Refunding and new funds Section 108 Loan Payable 2007 General Obligation Bond 2008 General Obligation Bond 2010 Refunding and new funds Subtotal General Government Activities

Public Safety Vehicles Lease Refuse Trucks Capital Lease Refuse Trucks Capital Lease Roadway Maintenance Capital Lease Time and Attendence System Subtotal General Govermental Activities Internal Svc Funds

3,897,393 1,255,393 66,284 776,467 398,784 6,394,321

Total Direct Governmental Activities Debt

216,659,446

153

240,000 57,755 2,500,000 2,750,000 3,285,000 2,396,801 3,085,000 12,630,000 4,850,369 13,585,000 9,360,000 8,557,074 77,562,126 3,266,000 22,025,000 9,960,000 34,155,000 210,265,125

CITY OF SUFFOLK, VIRGINIA LEGAL DEBT MARGIN LAST TEN FISCAL YEARS

Legal Debt Margin Calculation for Fiscal Year 2010 City's Legal Debt Margin Assessed value (as of July 1, 2009) - taxable real property, including public service corporations

Legal debt limits: 7% of assessed value (authorized limit imposed by City Charter)

9,082,397,068 $

Commonwealth's Legal Debt Margin

9,082,397,068

635,767,795

10% of assessed value(authorized by the Commonwealth for all cities) Deduct amount of debt applicable to debt limit: Gross general debt (includes bonds and note payable)

908,239,707

213,658,756

422,109,039 $

694,580,951

2001

2002

2003

2004

209,271,281 $

225,044,137 $

248,534,516 $

284,392,279

142,634,102

135,953,078

151,476,712

155,564,204

Totals

City's Legal Debt Margin

Debt Limit

Total Net Debt applicable to Limit Legal Debt Margin

66,637,179 $

Total Net Debt Applicable to Limit as a percentage of debt limit

89,091,059 $

68.16%

97,057,804 $

60.41%

128,828,075

60.95%

54.70%

Commonwealth's Legal Debt Margin

Debt Limit

Total Net Debt applicable to Limit Legal Debt Margin Total Net Debt Applicable to Limit as a percentage of debt limit Note A:

2001

2002

2003

2004

298,958,973 $

321,491,624 $

355,049,308 $

406,274,684

142,634,102

135,953,078

151,476,712

155,564,204

156,324,871 $

185,538,546 $

203,572,596 $

250,710,480

47.71%

42.29%

42.66%

During a refunding in Fiscal Year 2004 it was determined that the 1993 VRA Bonds were general obligation bonds purchased by the VRA and should be included in this calcuation. Prior fiscal years have been restated in order to accommodate this determination.

154

38.29%

Table 13

Legal Debt Margin

80.00% 70.00% 60.00% 50.00%

City's Legal Debt Margin

40.00%

Commonwealth's Legal Debt Margin

30.00% 20.00% 10.00% 0.00% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2005

2006

2007

2008

330,166,554 $

404,990,470 $

534,251,198 $

594,488,418 $

638,319,464 $

635,767,795

163,136,650

164,069,368

211,550,939

221,893,739

224,059,188

213,658,756

167,029,904 $

240,921,102 $

322,700,259 $

372,594,679 $

414,260,276 $

422,109,039

49.41%

40.51%

39.60%

2009

37.33%

2010

35.10%

33.61%

2005

2006

2007

2008

2009

471,666,506 $

578,557,814 $

763,215,997 $

849,269,734 $

911,884,949 $

908,239,707

163,136,650

164,069,368

211,550,939

221,893,739

224,059,188

213,658,756

308,529,856 $

414,488,446 $

551,665,058 $

627,375,995 $

687,825,761 $

694,580,951

34.59%

28.36%

27.72%

155

26.13%

2010

24.57%

23.52%

This page intentionally left blank

CITY OF SUFFOLK, VIRGINIA

Table 14

UTILITY FUND BOND COVERAGE LAST TEN FISCAL YEARS

Gross Revenue (2)

Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Direct Operating Expenses (1)

15,803,804 $ 19,197,558 20,755,301 19,338,363 23,096,899 21,275,903 29,991,524 28,893,476 29,758,790 29,579,413

9,906,753 $ 9,084,449 9,226,636 10,421,464 12,559,188 13,840,075 14,859,732 14,820,616 16,601,440 15,710,773

Net Revenue Available For Debt Service

Principal

5,897,051 $ 10,113,109 11,528,665 8,916,899 10,537,711 7,435,828 15,131,792 14,072,860 13,157,350 13,868,640

1,332,052 $ 1,526,448 3,550,685 3,458,541 4,717,955 1,789,209 2,498,818 2,290,458 2,961,599 3,559,790

Debt Service Requirements Interest Total 1,336,877 $ 1,155,637 2,352,608 1,643,242 2,436,878 4,109,964 5,389,293 4,217,220 5,772,191 6,723,321

2,668,929 2,682,085 5,903,293 5,101,783 7,154,833 5,899,173 7,888,111 6,507,678 8,733,790 10,283,111

(1) Exclusive of depreciation, amortization, interest expense, debt issuance costs and loss on disposal of capital assets. (2) Includes operating revenues, miscellaneous revenues and interest income in the Utility Fund. Includes only Public Utility revenue debt that falls under the debt covenant requirements of the master indenture. The chart below is the Virginia Revenue Authority (VRA) coverage based on the debt that falls under the covenant of the master indenture. VRA Bonds represent 74% of the total debt service.

Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Coverage 2.21 3.77 1.95 1.75 1.47 1.26 1.92 2.16 1.51 1.35

Total Utility Bonds Financial Policy Goal NA NA NA NA NA NA NA NA 1.30 1.30

Above or Below Policy NA NA NA NA NA NA NA NA 0.21 0.05

VRA Coverage 2.50 4.17 2.04 1.81 1.62 1.47 2.16 2.38 1.61 1.40

157

VRA VRA Policy Goals 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.15

Above or Below Policy 1.35 3.02 0.89 0.66 0.47 0.32 1.01 1.23 0.46 0.25

Coverage 2.21 3.77 1.95 1.75 1.47 1.26 1.92 2.16 1.51 1.35

CITY OF SUFFOLK, VIRGINIA

Table 15

DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS

Fiscal Year

Personal Income (2) Population (1)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

64,415 67,568 70,100 72,700 75,500 77,100 79,524 82,302 81,907 83,006

In Thousands

Per Capita Income (2)*

Average Daily Membership (3)

1,768,615 1,865,282 2,005,863 2,164,876 2,339,067 2,574,717 2,737,833 2,908,023 not available not available

26,630 26,924 27,536 28,592 30,033 32,126 33,751 36,157 not available not available

11,608 12,003 12,476 12,966 13,297 13,452 13,490 13,513 13,568 13,801

City of Suffolk

Unemployment Rate State of Virginia

United States

3.1% 4.3% 4.3% 4.1% 3.9% 3.4% 3.2% 4.2% 7.3% 7.5%

3.2% 4.2% 4.0% 3.7% 3.5% 3.0% 3.0% 4.0% 7.3% 6.5%

4.8% 5.8% 6.0% 5.5% 5.1% 4.6% 4.6% 5.8% 9.7% 9.2%

Sources: (1) 2000 - U.. Census Bureau: 2001-2009 - City of Suffolk Planning Department (2) Bureau of Economic Analysis based on calendar year (3) City of Suffolk Public Schools based on March 31st collection data for State of Virginia (4) Virginia Employment Commission - Area Unemployment Statistics

Comparative Unemployment Rates 2001‐2010

City of Suffolk State of Virginia

United States 4

0 2001 2002 2003 2004 2005 2006 2007 2008 200 9 2010 1 2 3 4 5 6 7 8

Fiscal Year

158

CITY OF SUFFOLK, VIRGINIA

Table 16

PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO

Employer

U.S. Joint Forces Command/Joint Warfighting Center Sentara/Obici Memorial Hospital QVC Distribution Wal-Mart Stores BASF Sysco Food Services of Hampton Roads Unilever Bestfoods/Lipton Tea Planters/Kraft Foods Target Corporation Towne Bank Bon Secours Health System Lakeview Medical Center Massimo Zanetti Beverage USA Birdsong Peanuts Amadas Industries Sara Lee International

Type of Business

Computer Modeling and Simulation (Civilian) Health Care Home Shopping Distribution Retail Chemical Manufacturer Food Service Distribution Beverage Manufacture and Distribution Peanut Products Warehouse Distribution Retail Banking Health Care Health Care Beverage Company Peanut Products Agricultural Equipment Manufacturer Beverage Company

Total number of employees city-wide (daytime population) for fiscal year

Employer U.S. Joint Forces Command/Joint Warfighting Center Sentara/Obici Memorial Hospital QVC Distribution Wal-Mart Stores Hampton Roads BASF Unilever Bestfoods/Lipton Tea Planters/Kraft Foods Lakeview Medical Center Amadas Industries Birdsong Peanuts Sara Lee International

2010 Percentage of Total City Employees Employment

2,220 1,200 900 840 400 350 350 340 300 281 269 232 227 150 100 85 8,244 38,422

Type of Business Computer Modeling and Simulation (Civilian) Health Care Home Shopping Distribution Retail Chemical Manufacturer Beverage Manufacture and Distribution Peanut Products Health Care Agricultural Equipment Manufacturer Peanut Products Beverage Company

Total number of employees city-wide (daytime population) for fiscal year

2001 Percentage of Total City Employees Employment 800 725 500 275 250 275 190 100 175 250 3,540 30,171

The Suffolk Public Schools (1,780 employees) and the City of Suffolk (1,202 employees) have not been included to give a clearer reflection of community activity. Source: Economic Development Department and Virginia Employement Commission

159

5.26% 2.84% 2.13% 1.99% 0.95% 0.83% 0.83% 0.81% 0.71% 0.67% 0.64% 0.55% 0.54% 0.36% 0.24% 0.20% 19.53%

2.89% 2.62% 1.81% 0.99% 0.90% 0.99% 0.69% 0.36% 0.63% 0.90% 12.80%

CITY OF SUFFOLK, VIRGINIA

Table 17 Page 1 of 2

FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST EIGHT FISCAL YEARS

Function/Program General Fund: General Government: City Council City Manager Asst City Manager Operations Asst City Manager Development Management Services Budget and Strategic Planning City Attorney Human Resources Commissioner of Revenue City Assessor Treasurer Finance - Administration and Accounting Finance - Purchasing Registrar Total Judicial: Circuit Court Circuit Court - Clerk's Office Sheriff Commonwealth Attorney Total Public Safety: Police Administration and Officers Emergency Communications Animal Shelter and Management Fire Fire and Rescue Fire Prevention Neighborhood Development Total Public Works: Public Works Administration Traffic Engineering and Maintenance (1) Engineering (2) Refuse Collection (3) Maintenance Building and Grounds Mosquito Control Capital Program Management Aviation Facilities Total

2003

2004

2005

8 2 2 4 8

8 2 2 4 9

9 2 2 4 7

2006

2007

2008

9 5 1 4 6

9 5

2010

6 6 10 13 13 9 3 2 86

7 6 10 13 13 9 3 2 88

7 7 10 13 13 11 4 2 91

7 7 11 13 13 12 4 2 93

9 8 12 13 16 11 5 2 101

9 8 12 13 16 11 5 2 98

10 6 4 9 8 12 14 15 10 4 2 94

2 13 21 17 53

2 13 22 18 55

2 14 25 22 63

2 14 25 29 70

2 13 25 29 69

2 14 24 28 68

167 22 9

175 22 9

186 22 9

196 22 9

206 26 9

194 26 8

204 22 7

174 3 25 400

183 3 27 419

187 3 27 434

190 3 27 447

197 3 27 468

216 5 26 475

213 24 470

7 24 8 11 22 1 2 3

7 27 9 12 22 2 3 3

7 30 11 12 25 2 3 3

7 34 12 14 25 2 3 3

7 46 27 2 3 3

6 46 27 3 3

5 40 15 6 3

100

160

9 2 2 4 7

2009

2 6 -

10 6 4 8 8 11 15 15 12 4 2 95

3 41 4 20 3 71

CITY OF SUFFOLK, VIRGINIA

Table 17 Page 2 of 2

FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST SEVEN FISCAL YEARS

Function/Program

2003

2004

2005

General Fund: Health and Welfare: Social Services Comprehensive Services Act Total

103 1 104

101 1 102

102 1 103

Parks, Recreation and Cultural: Parks and Recreation Administration Support Services Parks, Gateway and Facility Maintenance Recreation Library Total

5 17 13 15 50

8 17 11 17 53

Community Development: Planning Geographic Information Systems Economic Development Tourism Communications Total

14 6 2 22

Total General Fund Special Revenue Fund: Transit Road Maintenance (1) Road Maintenance Traffic Engineering Total Special Revenue Fund

2007

2008

101 1 102

102 1 103

101 1 102

100 1 101

5 5 18 9 17 54

5 5 20 9 23 62

4 4 22 12 35 77

4 4 22 12 34 76

4 4 20 14 31 73

4 4 19 16 31 74

15 7 2 24

16 7 3 4 30

16 7 3 5 31

18 7 3 5 33

16 3 8 3 5 35

14 5 5 3 5 32

12 5 4 3 5 29

793

824

858

890

933

935

914

908

94 23 122

86 22 108

91 23 114

2006

93 20 118

2009

2010

Enterprise Fund: Public Utilities Administration Customer Service Line Maintenance Maintenance Water Production Engineering Stormwater Utility Stormwater Utility (2) Mosquito Control (2) Total Enterprise Fund

4 7 29 19 19 11

4 7 29 17 23 11

6 17 26 17 24 11

6 17 26 20 28 12

6 18 26 20 28 16

8 18 26 20 29 18

6 18 24 19 28 15

9 18 27 20 29 17

101

109

28 142

28 7 154

26 6 142

27 7 154

Internal Service Funds: Fleet Management Information Technology Risk Management Total Risk Management

17 10 27

18 10 28

19 11 2 32

19 12 2 33

25 12 2 39

26 13 2 41

23 13 2 38

21 12 1 34

914

948

996

1,037

1,232

1,252

1,202

Total

(4) 1. Road maintenance fund was increased in 2007 due to VA Dept. of Transportation turning over the highway system within the City to Suffolk. 2. New program adopted by City Council in 2007 and staffing realignment. 3. Change in methodology of calculating full time employees in this department. 4. 2009 and 2010 actual data furnished by Human Resources. 2003-2008 provided by Budget Office.

161

1,210 (4)

CITY OF SUFFOLK, VIRGINIA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS

Function/Program General Government: Building permits issued Value of permits issued (millions)

2001

Number of registered voters Taxable retail sales (millions) Taxable retail sales per capita Parks, Recreation and Cultural: Library volumes in collection (,000) Circulation (,000) Enterprise Fund: Public Utilities Customers - Water Customers - Sewer Average daily consumption (mgd) Treatment Capacity daily (mgd) Pump Stations

2002

1,980 182.0

2003

1,296 184.9

2004

1,974 228.8

1,975 195.4

39,268

41,253

41,966

44,341

419.9 6,518

453.3 6,710

488.8 6,973

539.3 7,418

160.0 -

160.2 -

157.8 -

160.1 -

19,171

20,351

20,566

19,885

4.56 7.45 86

5.43 7.45 90

5.38 7.45 98

5.21 7.45 104

Sources: Various City Departments ** Data is not availabe as this is shown on a calendar year basis

162

Table 18

2005

2006

1,776 268.5

2007

1,886 288.5

2008

1,416 272.8

2009

1,294 179.4

2010

488 134.0

949 108.2

45,922

47,569

48,170

50,843

530.7 7,029

599.4 8,153

645.2 8,114

652.8 7,931

175.0 -

175.7 -

218.1 -

222.7 -

228.4 401

221.4

21,515

22,533

5.55 7.45 112

6.49 11.20 113

23,435 19,795 6.70 11.20 125

24,370 20,319 7.68 11.20 129

24,576 20,708 6.89 11.20 131

24,663 20,911 6.79 17.45 134

163

55,578

not available not available

55,008 not available not available

CITY OF SUFFOLK, VIRGINIA

Table 19

CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS

Function/Program Public Safety: Police Stations Fire Stations Public Works: (1) State maintained road miles City maintained road miles Streetlights Bridges Traffic Signals Education: Elementary Schools Middle Schools High Schools Alternative Schools Number of Teachers, Principals, and Assistants Average Daily Membership Capacity of Schools Enterprise Fund: Public Utilities Miles of Water Main Miles of Sanitary Sewers Miles of Storm Sewers Parks, Recreation and Cultural: Parks and Recreation Number of major parks and recreation facilties (2) Acreage of major parks and recreation facilties Library Number of libraries Number of branch libraries Number of bookmobiles

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

5 7

4 7

4 8

5 8

1,302 74 5,423 3 23

1,302 74 5,768 3 23

1,302 76 5,968 3 23

1,308 76 6,467 3 23

1,308 76 6,710 3 23

1,308 76 6,940 3 23

17 1,420 6,980 144 86

18 1,500 7,000 144 89

18 1,531 7,139 154 91

18 1,581 7,648 154 91

12 3 2 1

12 4 2 1

12 4 3 1

13 4 3 1

14 4 3 1

1,180 11,608 11,450

1,212 12,003 11,450

1,246 12,476 11,450

1,295 12,966 11,450

1,347 13,297 13,250

1,380 13,452 13,250

1,393 13,490 14,050

1,405 13,512 14,050

1,448 13,568 14,632

1,425 13,801 14,577

247 177 6

254 182 6

256 184 6

261 188 6

271 198 6

400 293 6

415 308 142

420 309 495

420 313 505

422 315 505

1,334

1,405

1,821

1,825

1,827

1 3 1

1 2 1

Sources: Various City Departments 1. 2008 Virginia Department of Transportation turned over the highway system within the City to the City of Suffolk, except for Interstate I-664 and Route 164 2. 2009 sold the American Leagion Building

164

CITY OF SUFFOLK, VIRGINIA

Table 20

PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS LAST TEN FISCAL YEARS Commercial Construction (1) Fiscal Number Year of Permits Value

Residential Construction (1) Number of Permits Value

65,079,091

Bank Deposits (2) (in thousands)

Real Property Value (3) Residential

Commercial

Agricultural

Nontaxable

Total

2001

169 $

1,811 $ 116,922,016

416,000 $ 2,209,050,400 $

586,899,400 $ 366,544,400 $

571,385,800 $

3,733,880,000

2002 2003 2004

212 175 184

63,388,257 108,959,711 57,183,116

2,024 1,799 1,791

133,069,941 119,230,994 138,229,794

427,000 450,000 481,000

2,391,608,700 2,626,448,600 3,086,553,300

631,472,700 723,716,810 792,445,200

361,592,700 382,285,100 382,888,200

631,546,300 688,124,300 714,195,300

4,016,220,400 4,420,574,810 4,976,082,000

2005 2006

191 196

86,239,759 59,858,597

1,585 1,690

182,767,959 228,671,215

504,000 598,000

3,633,548,700 4,537,277,500

876,319,900 1,013,362,100

457,703,200 646,369,300

751,744,400 809,532,500

5,719,316,200 7,006,541,400

2007 2008 2009

218 193 151

140,285,316 73,914,062 79,953,808

1,198 1,101 337

132,475,248 105,455,002 54,363,185

642,000 * *

6,060,448,500 6,850,010,900 7,114,848,900

1,362,319,600 1,444,643,500 1,779,310,900

767,985,700 845,756,000 829,471,000

914,701,000 978,058,800 1,000,191,500

9,105,454,800 10,118,469,200 10,723,822,300

2010

168

40,876,496

781

67,393,951

7,021,145,800

1,655,756,200

378,888,400

1,021,152,900

10,076,943,300

(1) City Zoning Administration and Enforcement (2) Federal Home Loan Bank of Atlanta and Federal Deposit Insurance Corporation (3) City Assessor's Office, estimated actual value * N/A

Single Family

Multi‐Family

100

$43,667,311

2010 New Residential Construction $14,666,785

150

200

Permits Issued

165

250

300

CITY OF SUFFOLK, VIRGINIA

Table 21

PRINCIPAL COMMERCIAL/INDUSTRIAL WATER AND SEWER CONSUMERS YEAR ENDED JUNE 30, 2010

Water Consumers Western Tidewater Water Authority Sara Lee Coffee & Tea BASF Corporaton Western Tidewater Regional Jail Sentara/Obici Hospital Suffolk Public Schools Unilever Bestfoods Planters Peanut Co. Wanchese Fish Company Harbour Breeze Apartments

Type of Business Regional Water Supply Beverage Company Chemical Plant Jail-Regional Facility Hospital School System Beverage Company Peanut Products Seafood Processing Real Property Management

Annual Consumption in Gallons (Hundred Cubic Feet) 158,229 89,392 58,555 40,780 35,865 35,311 22,754 21,905 19,341 15,985 498,117

% of Total Annual Consumption* 6.01% 3.40% 2.22% 1.55% 1.36% 1.34% 0.86% 0.83% 0.73% 0.61% 18.92%

*Total annual consumption for fiscal year 2009-2010 was 2,632,512

Sewer Consumers Sara Lee Coffee and Tea BASF Corporation Western Tidewater Regional Jail Sentara/Obici Hospital Suffolk Public School Unileaver Best Foods Wanchese Fish Company Harbour Breeze Apartments 30 West Pershing LLC Estates of Scottfield

Type of Business Beverage Company Chemical Plant Jail-Regional Facility Hospital Education Beverage Company Seafood Processing Real Property Management Real Property Management Real Property Management

**Total annual consumption for fiscal year 2009-2010 was 2,139,958

166

Annual Consumption in Gallons (Hundred Cubic Feet) 68,171 58,555 40,780 35,865 35,311 22,754 19,341 15,985 13,019 10,193 251,803

% of Total Annual Consumption** 3.19% 2.74% 1.91% 1.68% 1.65% 1.06% 0.90% 0.75% 0.61% 0.48% 11.77%

ROBINSON, FARMER, COX ASSOCIATES A PROFESSIONAL LIMITED LIABILITY COMPANY

CERTIFIED PUBLIC ACCOUNTANTS

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Honorable Members of the City Council City of Suffolk Suffolk, Virginia We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Suffolk, Virginia as of and for the year ended June 30, 2010, which collectively comprise the City of Suffolk, Virginiaâ&#x20AC;&#x2122;s basic financial statements and have issued our report thereon dated November 8, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Suffolk, Virginia's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Cityâ&#x20AC;&#x2122;s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Suffolk, Virginia's internal control over financial reporting. 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 a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Countyâ&#x20AC;&#x2122;s financial statements will not be prevented, or detected and corrected on a timely basis. 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.

167

Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Suffolk, Virginia's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the City Council, management, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

Charlottesville, Virginia November 8, 2010

168

ROBINSON, FARMER, COX ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS

A PROFESSIONAL LIMITED LIABILITY COMPANY

Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 To the Honorable Members of the City Council City of Suffolk Suffolk, Virginia Compliance We have audited the City of Suffolk, Virginiaâ&#x20AC;&#x2122;s compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010. The City of Suffolk, Virginia's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City of Suffolk, Virginia's management. Our responsibility is to express an opinion on the City of Suffolk, Virginia's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City of Suffolk, Virginia's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of City of Suffolk, Virginia's compliance with those requirements. In our opinion, the City of Suffolk, Virginia complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010. Internal Control Over Compliance The management of the City of Suffolk, Virginia is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City of Suffolk, Virginia's internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Cityâ&#x20AC;&#x2122;s internal control over compliance.

169

Internal Control Over Compliance: (Continued) A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the City Council, management, and others within the entity, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

Charlottesville, Virginia November 8, 2010

170

CITY OF SUFFOLK, VIRGINIA

Page 1 of 3

Schedule of Expenditures of Federal Awards - Primary Government and Discretely Presented Component Unit Year Ended June 30, 2010

Federal Grantor/State Pass - Through Grantor/ Program Title

Federal CFDA Number

Pass-Through Agency Identifying Number

10.559

N/A

10.561 10.561

0010110 0010110

Federal Expenditures

PRIMARY GOVERNMENT: DEPARTMENT OF AGRICULTURE: Direct payments: Summer Food Service Program for Children Pass through payments: Department of Social Services: State Administrative Matching Grants - Supplemental Nutrition Assistance Program ARRA State Administrative Matching Grants - Supplemental Nutrition Assistance Program Total Department of Agriculture

1,265,697 22,370 $

DEPARTMENT OF LABOR: Direct payments: WIA Pilots, Demonstrations, and Research Projects

17.261

17901-60580

Pass through payments: Operation Incorporated of Hampton Roads: Workforce Investment Act - Youth Activities ARRA Workforce Investment Act - Youth Activities

17.259 17.259

N/A N/A

Total Department of Labor DEPARTMENT OF TRANSPORTATION: Direct payments: Airport Improvement Program Highway Planning and Construction

20.106 20.205

AIP 3-51-0050 N/A

Total Department of Transportation

85,744

1,373,811

158,664

232,525 4,698 $

395,887

922,489 284,817

1,207,306

DEPARTMENT OF ENERGY: Direct payments: ARRA Energy Efficiency and Conservation Block Grant Program

81.128

N/A

473,321

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT: Direct payments: Home Investment Partnerships Program

14.239

N/A

343,476

14.218 14.253 14.228 14.257

N/A 53505-49380 45805-49050

Pass through payments: Department of Housing and Community Development: Community Development Block Grants/Entitlement Grants ARRA Community Development Block Grants/Entitlement Grants Community Development Block Grants - Neighborhood Stabilization Program ARRA Homelessness Prevention and Rapid Re-Housing Program Total Department of Housing and Urban Development DEPARTMENT OF HEALTH AND HUMAN SERVICES: Pass - through payments: Department of Social Services: Promoting Safe and Stable Families Temporary Assistance for Needy Families Refugee and Entrant Assistance-State Administered Programs Low-Income Home Energy Assistance

93.556 93.558 93.566 93.568

171

0950110 0400111 0500111 0600411

476,277 79,406 352,077 294,882 $

1,546,118

52,330 1,036,549 3,410 50,830

CITY OF SUFFOLK, VIRGINIA

Page 2 of 3

Schedule of Expenditures of Federal Awards - Primary Government and Discretely Presented Component Unit Year Ended June 30, 2010 (Continued)

Federal Grantor/State Pass - Through Grantor/ Program Title PRIMARY GOVERNMENT: (Continued) DEPARTMENT OF HEALTH AND HUMAN SERVICES: (Continued) Pass - through payments: (Continued) Department of Social Services: (Continued) Child Care and Development Block Grant Child Care Mandatory and Matching Funds of the Child Care and Development Fund ARRA Child Care and Development Block Grant Chafee Education and Training Vouchers Program Adoption Incentive Payments Child Welfare Services Foster Care-Title IV-E Foster Care-Title IV-E - ARRA Adoption Assistance Adoption Assistance - ARRA Social Services Block Grant Chafee Foster Care Independence Program Children's Health Insurance Program Medical Assistance Program

Federal CFDA Number

Pass-Through Agency Identifying Number

93.575 93.596 93.713 93.599 93.603 93.645 93.658 93.658 93.659 93.659 93.667 93.674 93.767 93.778

0770110 0760111 0770110 9160110 1130108 0900110 1100111 1100111 1120111 1120111 1000111 9150110 0540111 1200111

Total Department of Health and Human Services DEPARTMENT OF INTERIOR: Pass - through payments: Department of Historic Resources: Dismal Swamp Historic Preservation Fund Grants-In-Aid Save America's Treasures

15.000 15.904 15.929

N/A 50205-66022 B-06-SP-VA-1052

Total Department of Interior DEPARTMENT OF JUSTICE: Direct payments: Bulletproof Vest Partnership Program Pass through payments: Department of Criminal Justice Services: Crime Victim Assistance Edward Byrne Memorial Formula Grant Program State Criminal Alien Assistance Program Gang Resistance Education and Training Edward Byrne Memorial Justice Assistance Grant Program Public Safety Partnership and Community Policing Grants Violence Against Women Formula Grants ARRA Edward Byrne Memorial Justice Assistance Grant Program ARRA Edward Byrne Memorial Competitive Grant Program

16.607

N/A

16.575 16.579 16.606 16.737 16.738 16.710 16.588 16.803 16.808

39001-46000 39001-61011 N/A 2008-JV-FX-0038 39001-41000 2008-CK-WX-0837 39001-46500 2009-SU-B9-0033 2009-SB-B9-1925

Total Department of Justice DEPARTMENT OF HOMELAND SECURITY: Pass through payments: Department of Criminal Justice: Hazard Mitigation Grant ARRA Port Security Grant Program Department of Emergency Services: State Homeland Security Program Buffer Zone Protection Program Total Department of Homeland Security Total Primary Government

172

97.039 97.056

77501-52749 77501-52858

97.073 97.078

77501-52708 77501-52766

Federal Expenditures

322,287 277,920 123,700 2,959 1,042 3,319 562,584 25,671 123,882 11,154 437,044 14,558 56,441 731,342

3,837,022

25,494 10,000 75,524

111,018

7,068

164,420 40,456 5,932 51,251 69,175 35,046 45,887 49,076 87,214 $

555,525

11,032 309,716 57,150 23,545

401,443

9,901,451

CITY OF SUFFOLK, VIRGINIA

Page 3 of 3

Schedule of Expenditures of Federal Awards - Primary Government and Discretely Presented Component Unit Year Ended June 30, 2010 (Continued)

Federal Grantor/State Pass - Through Grantor/ Program Title

Federal CFDA Number

Pass-Through Agency Identifying Number

10.555

N/A

10.553 10.555 10.559 10.559 10.579 10.582

17901-40591 17901-40623 N/A N/A 17901-40592 17901-40599

Federal Expenditures

COMPONENT UNIT-SCHOOL BOARD: DEPARTMENT OF AGRICULTURE: Pass through payments: Department of Agriculture and Consumer Services: Food Distribution Department of Education: National School Breakfast Program National School Lunch Program Summer Food Service Program for Children - Commodities Summer Food Service Program for Children ARRA Child Nutrition Discretionary Grants Limited Availability Fresh Fruit and Vegetable Program Total Department of Agriculture

258,065 881,771 2,466,698 2,347 39,228 20,989 54,504

3,723,602

DEPARTMENT OF HEALTH AND HUMAN SERVICES: Direct payments: Medical Assistance Program

93.778

N/A

69,358

DEPARTMENT OF DEFENSE: Direct payments: JROTC Instruction

12.000

N/A

159,533

84.041

N/A

493,808

84.002 84.010 84.389 84.027 84.391

17901-42801 17901-42901 17901-42913 17901-43071 17901-61245

114,529 2,904,105 947,639 2,898,470 1,133,416

84.048

17901-61095

366,339

84.173 84.392 84.186 84.287 84.318 84.386 84.357 84.367 84.377 84.387 84.394

17901-62521 17901-61247 17901-60511 17901-60565 17901-61600 17901-60897 17901-60655 17901-61480 17901-43040 17901-18102 17901-62532

51,161 6,596 43,256 12,233 39,982 60,520 33,248 609,818 93,844 34,588 5,397,263

DEPARTMENT OF EDUCATION: Direct payments: Impact Aid Pass through payments: Department of Education: Adult Education - Basic Grants to States Title I Grants to Local Educational Agencies ARRA Title I Grants to Local Educational Agencies Special Education Grants to States ARRA Special Education Grants to States Vocational Education: Career and Technical Education - Basic grants to states Special Projects: Special Education - Preschool Grants ARRA Special Education - Preschool Grants Safe and Drug-Free Schools and Communities-State Grants 21st Century Community Learning Centers Education Technology State Grants ARRA Education Technology State Grants Reading First State Grants Improving Teacher Quality State Grants School Improvement Grants ARRA Education for Homeless Children and Youth ARRA State Fiscal Stabilization Funds, Education State Grants Total Department of Education Total Component Unit School Board Total Expenditures of Federal Awards See accompanying notes to schedule of expenditures of federal awards.

173

15,240,815

19,193,308

29,094,759

CITY OF SUFFOLK, VIRGINIA Notes to Schedule of Expenditures of Federal Awards For The Year Ended June 30, 2010

Note 1 - General The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of the City of Suffolk, Virginia under programs of the federal government for the year ended June 30, 2010 . The information in this Schedule is presented in accordance with the reporting requirements of OMB Circular A-133, Audits of States, Local Governments, and NonProfit Organizations . Because the Schedule presents only a selected portion of operations of the City of Suffolk, Virginia, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the City of Suffolk, Virginia. Note 2 - Basis of Accounting Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments , wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. Note 3 - Subrecipients Of the federal expenditures presented in the schedule, the City of Suffolk, Virginia provided federal awards to subrecipients as follows: Amount Provided to Subrecipients

CFDA Number

Program Name HOME Investment Partnership Program Community Development Block Grant

14.239 14.228

275,378 90,017

Note 4 - Food Donation Nonmonetary assistance is reported in the schedule at the fair market value of the commodities received and disbursed. At June 30, 2010, the City of Suffolk, Virginia had food commodities totaling $258,065 in inventory.

Note 5 - Relationship to Financial Statements Federal expenditures, revenues and capital contributions are reported in the City's basic financial statements as follows:

Intergovernmental federal revenues per the basic financial statements: Primary government: Governmental funds - exhibit 5 School Board - exhibit 27 Total federal expenditures per the Schedule of Expenditures of Federal Awards

174

9,901,449 19,193,310

29,094,759

CITY OF SUFFOLK, VIRGINIA Schedule of Findings and Questioned Costs Year Ended June 30, 2010 Section I - Summary of Auditor's Results Financial Statements Unqualified

Type of auditor's report issued: Internal control over financial reporting: Material weakness(es) identified?

No None reported

Significant deficiency(ies) identified

Noncompliance material to financial statements noted? Federal Awards Internal control over major programs: Material weakness(es) identified?

No None reported

Significant deficiency(ies) identified Type of auditor's report issued on compliance for major programs:

Unqualified

Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section .510 (a)?

Identification of major programs: CFDA # 10.553 10.561 20.106 84.010 84.027 84.394 93.575 93.658

/ 10.555 / 10.559

/ 84.389 / 84.173 / 84.391 / 84.392 / 93.596 / 93.713

Name of Federal Program or Cluster Child Nutrition Cluster SNAP Cluster Airport Improvement Grant Title I Cluster Special Education Cluster (IDEA) State Fiscal Stabilization Funds (SFSF) ARRA, Education State Grants Child Care & Development Block Grant Cluster Foster Care - Title IV-E

Dollar threshold used to distinguish between Type A and Type B programs:

$872,843 Yes

Auditee qualified as low-risk auditee? Section II - Financial Statement Findings There are no financial statement findings to report. Section III - Federal Award Findings and Questioned Costs There are no federal award findings and questioned costs to report.

175

CITY OF SUFFOLK, VIRGINIA Summary Schedule of Prior Audit Findings Year Ended June 30, 2010

None reportable

176

Certificate of Achievement for Excellence in Financial Reporting Presented to

City of Suffolk Virginia For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2009 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual fmancial reports (CAFRs) achieve the highest standards in government accounting and fmancial reporting.

President

Executive Director

I t ’ s ag o o dt i met ob ei nS u f f o l k DepartmentofFi nance

441Mar ketSt r eet•Suf f ol k,VA23434 7575147500•Fi nanceEmai l . ci t y . suf f ol k. va. us www. Suf f ol k. va. us