NOTES TO FINANCIAL STATEMENTS

NOTE 7. CAPITAL ASSETS

Capital asset activity for the fiscal year ended July 31, 2020, is as follows:

Primary Government

NOTE 7. CAPITAL ASSETS (CONTINUED) Primary Government (Continued)

Depreciation expense was charged to functions/programs of the City as follows:

NOTE 8. LONG-TERM DEBT

Revenue bonds. During the year ended July 31, 2020, the City of Fayetteville Public Facilities Authority issued the following Series 2019 Bonds: (i) $21,695,000 City Hall and Park Projects

Revenue Bonds, Series 2019 (the “Series 2019 New Money Bonds”), (ii) $5,395,000 Water and Sewage Refunding Project Revenue Bonds, Series 2019 (the “Series 2019 Refunding Bonds”), and (iii) $7,890,000 Water and Sewer Refunding Project Taxable Revenue Bonds, Series 2019 (the “Taxable Series 2019 Refunding Bonds”).

NOTE 8. LONG-TERM DEBT (CONTINUED)

Governmental activities (Continued)

Revenue bonds (Continued). The Series 2019 New Money Bonds in the amount of $21,695,000 were used to finance the cost of the acquisition, construction, upgrading, and equipping of various public facilities including City Hall, acquisition, construction, renovation, upgrading, and equipping of recreational facilities, and property acquisition/demolition, and infrastructure improvements located within the City

The Downtown Development Authority issued revenue bonds during the year ended July 31, 2012 in the am ount of $1,885,000 The purpose of the bonds is to advance refund the remaining series 2001 bonds issued during the year ended July 31, 2002. The principal and interest on the bonds is payable from and secured by certain payments made to the Downtown Development Authority by the City pursuant to a contract between the Downtown Development Authority and the City until maturity or the bonds are redeemed. To fulfill its obligations under the contract, the City has agreed that it will, to the extent necessary, levy an annual tax on all taxable property located within the boundaries of the City, at such rate or rates, limited to 3 mills, as may be necessary to make the payments to the Downtown Development Authority for its services as called for by the contract. For the fiscal year ended July 31, 2020, the levied tax by the City totaled $4,282,657 and the total debt service related to the revenue bonds totaled $250,002. Amounts pledged equal total debt service for each applicable year. Revenue bonds outstanding at July 31, 2020, are as follows:

NOTE 8. LONG-TERM DEBT (CONTINUED)

Governmental activities (Continued)

Revenue bonds (Continued). Revenue bond debt service requirements to maturity are as follows:

Notes payable. The Downtown Development Authority has incurred debt to a financial institution to be used on specifically identified Main Street projects. In connection with this debt, a contract has been entered into between the Downtown Development Authority and the City whereby the City is to levy an annual tax on all taxable property located within the boundaries of the City in order to produce revenues sufficient to pay the debt service on the Downtown Development Authority debt. In the event that payments of this tax by the City to the Downtown Development Authority each year are not sufficient to pay the debt service payment on the debt, the City will be liable for any difference. For the fiscal year ended July 31, 2020, the levied tax by the City totaled $4,282,657 and the total debt service related to the revenue bonds totaled $48,787. Amounts pledged equal total debt service for each applicable year. The note is as follows at July 31, 2020:

During the fiscal year ended July 31, 2018, the City entered into an Installment Sales Agreement debt in the amount of $2,895,000. The proceeds from the debt agreement were used to purchase land for capital outlay projects. The note is as follows at July 31, 2020:

NOTE 8. LONG-TERM DEBT (CONTINUED)

Governmental activities (Continued)

Notes payable (Continued). The annual requirements to pay the notes outstanding are as follows:

Certificates of participation. During the year ended July 31, 2005, the City entered into leasepurchase agreements with the Georgia Municipal Association for the construction of a new law enforcement center issuing certificates of participation in the amount of $4,575,000. The City refinanced the previously issued certificates of participation during the year ended July 31, 2013.

Certificates of participation outstanding at July 31, 2020, are as follows:

Annual debt service requirements on the certificates of participation are as follows:

NOTE 8. LONG-TERM DEBT (CONTINUED)

Governmental activities (Continued)

Capital leases. During the year ended July 31, 2016, the City entered into a lease-purchase agreement with the Georgia Municipal Association for the purchase of a vehicle in the amount of $768,055 for the public safety department. The lease agreements qualify as capital leases for accounting purposes (title transfers at the end of the lease term) and have been recorded at the present value of the future minimum lease payments as of the date of their inception. The vehicle leases are being serviced by Building Fund payments with annual interest rates of 2.54%. During the year ended July 31, 2017, the City entered into a lease-purchase agreement with the Georgia Municipal Association for the purchase of a vehicle in the amount of $580,700 for the public safety department. The lease agreements qualify as capital leases for accounting purposes (title transfers at the end of the lease term) and have been recorded at the present value of the future minimum lease payments as of the date of their inception. The vehicle leases are being serviced by Building Fund payments with annual interest rates of 2.06%. During the year ended July 31, 2018, the City entered into three lease-purchase agreements with SunTrust for the purchase of vehicles, equipment and land in the amount of $650,000, $1,200,000, and $515,000. The lease agreements qualify as capital leases for accounting purposes (title transfers at the end of the lease term) and have been recorded at the present value of the future minimum lease payments as of the date of their inception. These leases are being serviced by Building Fund and SPLOST 2017 Fund payments with annual interest rates of 2.42%, 2.12%, and 1.94%, respectively. During the year ended July 31, 2019, the City entered into one lease-purchase agreement with SunTrust for the purchase of vehicles and equipment in the amount of $500,000. The lease agreement qualifies as a capital lease for accounting purposes (title transfers at the end of the lease term) and has been recorded at the present value of the future minimum lease payments as of the date of inception. This lease is being serviced by the SPLOST 2017 Fund payments with an annual interest rate 3.10%. During the year ended July 31, 2020, the City entered into a lease-purchase agreement with BCI for the purchase of equipment in the amount of $940,000. The lease agreement qualifies as capital leases for accounting purposes (title transfers at the end of the lease term) and has been recorded at the present value of the future minimum lease payments as of the date of their inception. The lease is being serviced by the Building Fund and SPLOST 2017 Fund payments with an annual interest rate of 2.14%.

The City reported accumulated depreciation and depreciation expense in the respective amounts of $1,467,259 and $512,107 on the above leased assets as of July 31, 2020

NOTE 8. LONG-TERM DEBT (CONTINUED)

Governmental activities (Continued)

Capital leases (Continued). The following is a schedule of future minimum lease payments under the capital leases and the present value of the net minimum lease payments at July 31, 2020:

Business-type activities

Revenue bonds. The “Series 2019 Refunding Bonds” in the amount of $5,395,000 were used to:

(a) refund a portion of the Water and Sewage Revenue Bonds, Series 2010 Bonds, (b) refund a portion of the Water and Sewer Revenue Bonds, Series 2013A, and (c) pay the issuance cost of the Series 2019 Refunding Bonds. The “Taxable Series 2019 Refunding Bonds” in the amount of $7,890,000 were used to: (a) refund a portion of the Water and Sewer Refunding Bonds, Series 2010, and (b) pay the issuance costs of the Taxable Series 2019 Refunding Bonds.

NOTE 8. LONG-TERM DEBT (CONTINUED)

Business-type activities (Continued)

Revenue bonds (Continued). The issuance of the Series 2019 Refunding Bonds and the Taxable Series 2019 Refunding Bonds were used to refund the Series 2010 and Series 2013A Bonds. The difference between the cash flows required to service the old debt and the cash flow to service the new debt and complete the refunding totaled $3,435,629. The economic gain resulting from the refunding was $1,204,390.

Debt service requirements to maturity on the revenue bonds are as follows:

NOTE 8. LONG-TERM DEBT (CONTINUED)

Business-type activities (Continued)

Notes payable. The City has also incurred debt to the Georgia Environmental Facilities Authority for construction of various water and sewer system projects. This note is a construction line of credit agreement with a rate of 2.03% for $961,221.

The City has also incurred debt to the Georgia Environmental Facilities Authority for construction of various water and sewer system projects. This note is a construction line of credit agreement with a rate of 2.62% for $19,474,000, of which $8,648,251 had been drawn as of July 31, 2020 A debt service requirements to maturity schedule is not presented for the construction line of credit as this note payable is in the draw down phase as of July 31, 2020, and repayment will be determined when the construction is complete and all draws have been made.

Notes payable outstanding July 31, 2020, are as follows:

Notes Payable The annual requirements to pay the notes outstanding are as follows: