NOTES TO FINANCIAL STATEMENTS

NOTE 14. FUND EQUITY

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– The following fund balance is nonspendable because it is allocated to:

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– The following fund balances are restricted for:

NOTE 14. FUND EQUITY (CONTINUED) A. Fund Balances: (Continued)

 Assigned – The following fund balance is assigned to: General Fund

Three-month operating reserve, as provided for in adopted City policy$3,092,983

NOTE 15. COMMITMENTS AND CONTINGENCIES Litigation

The City is involved in several pending lawsuits. Liability, if any, which might result from these proceedings, would not, in the opinion of management and legal counsel, have a material adverse effect on the financial position of the City.

Grant Contingencies

The City has received federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to the disallowance of certain expenditures previously reimbursed by those agencies. Based upon prior experience, management of the City believes such disallowances, if any, will not be significant.

Contractual Commitments

In addition to the liabilities enumerated in the balance sheet at July 31, 2016, the City has contractual commitments on uncompleted construction contracts of approximately $2,864,298.

NOTE 16. HOTEL/MOTEL LODGING TAX

The City has levied a 5% lodging tax. The Official Code of Georgia Annotated 48-13-50 requires that all lodging taxes levied of 5% or more be expended or obligated contractually for the promotion of tourism, conventions, or trade shows. For the fiscal year ended July 31, 2016, the City collected $259,805 of hotel/motel taxes, and transferred 100% of the lodging tax received during the year ended July 31, 2016 to the Downtown Development Authority Fund, where it was used for the promotion of tourism.