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City of South Lyon, MichiganFinancial Reportwith Supplemental InformationJune 30, 2010City of South Lyon Financial Report June 30, 2010 Mayor Tedd Wallace City Council Erin Kopkowski, Mayor Pro Tem Glen Kivell Michael Kramer Ron Morelli Charles Dick Selden Harvey Wedell City Administration City Manager David M. Murphy Clerk/Treasurer Julie C. Zemke Police Chief Lloyd Collins Fire Chief Craig Kask Water and Wastewater Treatment Superintendent Robert Martin Department of Public Works Superintendent Steve Renwick Building/Zoning Inspector Joe Veltri Bokepr Lori Mosier City of South Lyon, MichiganContentsReport Letter 1-2Management's Discussion and Analysis 3-7Basic Financial StatementsGovernment-wide Financial Statements:Statement of Net Assets 8Statement of Activities 9-10Fund Financial Statements:Governmental Funds:Balance Sheet 11Reconciliation of the Balance Sheet to the Statement of Net Assets 12Statement of Revenue, Expenditures, and Changes in Fund Balances 13Reconciliation of the Statement of Revenue, Expenditures,and Changes in Fund Balances of Governmental Fundsto the Statement of Activities 14Proprietary Funds - Enterprise Fund - Water and Sewer Funds:Statement of Net Assets 15Statement of Revenue, Expenses, and Changes in Net Assets 16Statement of Cash Flows 17-18Fiduciary Fund - Statement of Fiduciary Assets and Liabilities - Tax Collection 19Notes to ...

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City of South Lyon, Michigan

Financial Report





City of South Lyon Financial Report June 30, 2010

Mayor Tedd Wallace 



City Council

Erin Kopkowski, Mayor Pro Tem

Glen Kivell

Michael Kramer

Ron Morelli

Charles Dick Selden

Harvey Wedell





City Administration



City Manager City Clerk/Treasurer Police Chief Fire Chief Water and Wastewater Treatment Superintendent Department of Public Works Superintendent Building/Zoning Inspector Bookkeeper 



David M. Murphy Julie C. Zemke Lloyd Collins Craig Kaska

Robert Martin Steve Renwick Joe Veltri Lori Mosier

City of South Lyon, Michigan

Report Letter

Management's Discussion and Analysis

Basic Financial Statements

Government-wide Financial Statements: Statement of Net Assets Statement of Activities

Fund Financial Statements: Governmental Funds: Balance Sheet

Reconciliation of the Balance Sheet to the Statement of Net Assets Statement of Revenue, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances of Governmental Funds

Proprietary Funds - Enterprise Fund - Water and Sewer Funds: Statement of Net Assets Statement of Revenue, Expenses, and Changes in Net Assets Statement of Cash Flows

Fiduciary Fund - Statement of Fiduciary Assets and Liabilities - Tax Collection

Notes to Financial Statements

Required Supplemental Information

Budgetary Comparison Schedule - General Fund

Budgetary Comparison Schedule - Major Special Revenue Funds

Other Supplemental Information

Nonmajor Governmental Funds: Combining Balance Sheet Combining Statement of Revenue, Expenditures, and Changes in Fund Balances

Schedule of Expenditures - General Fund

Schedule of Expenditures by Activity - Major and Local Road Funds

Schedule of Operating Expenses - Enterprise Fund - Water and Sewer Fund

Statistical Information

Schedule of Taxes Levied, Collected, and Returned Delinquent - 2009 Tax Roll

Continuing Disclosure Undertaking

Contents

1-2

3-7

8 9-10

11 12 13

15 16 17-18

20-39

44-45

46-47

48-49

51-52

55-58

Independent Auditor's Report

To the Members of the City Council City of South Lyon, Michigan

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of South Lyon, Michigan as of and for the year ended , which collectively comprise the Cit ’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City o South Lyon, Michigan’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. 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 aggregate discretely presented component unit, each major fund, and the aggregate remaining

fund information of the City of South Lyon, Michigan as of 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.

The management's discussion and analysis and the budgetary comparison schedules, as identified in the table of contents, are not a required part of the basic financial statements but are supplemental information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management, regarding the methods of measurement and presentation of the required supplemental information. However, we did not audit the information and express no opinion on it.

To the Members of the City Council City of South Lyon, Michigan

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of South Lyon, Michigan’s basic financial statements. The accompanying other supplemental information and statistical section, as identified in the table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. The other supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The statistical section has not been subjected to auditing procedures applied in the audit of the basic financial statements and accordingly, we ex

City of South Lyon, Michigan

Managements Discussion and Analysis

Our discussion and analysis of the City of South Lyon, Michigans (the City) financial performance provides an overview of the City of South Lyons financial activities for the fiscal year ended June 30, 2010. Please read it in conjunction with the Citys financial statements.

Financial Highlights

As discussed in further detail in this managements discussion and analysis, the following represents the most significant financial highlights for the year ended June 30, 2010:

•

Revenues exceeded expenditures in the General Fund, thus increasing fund balance by approximately $140,000. This exceeded expectations as the final amended budget expected a decrease of approximately $229,000.

Total net assets related to the Citys governmental activities decreased by approximately $654,000.

Using this Annual Report

This annual report consists of a series of financial statements. The statement of net assets and the statement of activities provide information about the activities of the City as a whole and present a longer-term view of the Citys finances. This longer-term view uses the accrual basis of accounting so that it can measure the cost of providing services during the current year, and whether the taxpayers have funded the full cost of providing government services.

The fund financial statements present a short-term view; they tell us how the taxpayers resources were spent during the year, as well as how much is available for future spending. Fund financial statements also report the Citys operations in more detail than the government-wide financial statements by providing information about the Citys most significant funds.

Invested in capital assets -

Restricted

Unrestricted

22,863 23,033 16,585 16,264 39,448 39,297 2,056 1,912 6,386 7,142 8,442 9,054

Liabilities

Long-term liabilities

Net of related debt

Net Assets

The Citys combined net assets decreased by approximately 2 percent from a year ago -

decreasing from $56,437,308 to $55,255,945. Net assets of both the governmental activities

and business-type activities decreased during the year. This is an indication that the taxpayers

and users of City services fell slightly short in paying for the full cost of providing those services

5,621 6,250 1,745 1,837 7,366 8,087

$ 30,540 $ 31,195 $ 24,716 $ 25,243 $ 55,256 $ 56,438 

Total net assets



of unrestricted net

did not change significantly for the governmental activities. The current level

presentation.

in the current year. This measurement is one of the goals of full accrual financial statement

assets related to governmental activities is $5,620,915.

Unrestricted net assets, the part of net assets that can be used to finance day-to-day operations,

The following table shows, in a condensed format, the net assets as of June 30, 2010 and 2009

(in thousands):

usiness-type

Governmental

010

Activities



City of South Lyon, Michigan

Managements Discussion and Analysis (Continued)

The City of South Lyon as a Whole



75,655

40,161

41,424

73,365

57,377

38,029

32,141

62,567

200

Total

2009

Activities

2010

2009

2010

19,217

18,109

16,181

15,445

16,801

17,202

15,073

15,088

$ 2,132

$ 9,283

$ 10,798

$ 18,278

33,204

34,231

$ 8,666 24,538

$ 8,995 25,236

Total assets

Current assets

1,728

2,114

Total liabilities

Current liabilities

Assets

Noncurrent assets

1,108

357

2,416

907

1,308

550

2,664

3,036

2010

2009

$ 25,243

2009

$ 56,438

$ 56,969

Total

$ 25,742

$ 24,716

$ 31,195

$ 55,256 $ 56,438 

$ 25,243

2010 2009 $ 31,195 $ 31,227

2010

$ 30,540 

)

4,017 4,054 11,046 11,120

7,029

7,066

1,329 

(655)

(32)

(527) (499) (1,182) (531

Total revenue

1,329

-

-

2,851

1,388

-

3,027

-

157

137

4,017 4,054

4,054

4,017

-

-

166 621

175

208

-

208 175

137 157

-

2,162

2,162 1,874

-

166 

621

-

3,490

10,589

6,374

7,034

2,851

1,388

1,874

3,027



The following table shows the changes of the net assets during the years ended June 30, 2010

and 2009 (in thousands):

Managements Discussion and Analysis (Continued)

City of South Lyon, Michigan



Business-type

Net Assets- Beginning of year

Revenue

Activities



Activities

Governmental

distribution and sewage treatment to residents from our water supply and

The Citys business-type activities consist of the Water and Sewer Fund. We provide water

Expenses decreased approximately $45,000.

treatment facility.

closely monitoring expenses, seeking to reduce them when possible.

Business-type Activities

Governmental Activities

The Citys total governmental expenses decreased by approximately $37,000. The City has been

Net Assets- End of year



-

2,368

3,114

2,444

-

193

868

3,114

526

411

998

523

-

485

128

5,515

212

811

710

4,922

110

-

3,555

9,864

(35)

-

(56)

-

Community and economic

Public works

Cultural and recreation

development

Water and sewer

Interest on long-term debt

Change in Net Assets

Total program expenses

General revenue:

Property taxes

Interest

State-shared revenue

General government

Transfers and other revenue

Public safety

Program Expenses

4,054

292

670

523

Charges for services

Program revenue:

Operating grants and contributions

Capital grants and contributions

116

811

4,517

283

526

746

710

City of South Lyon, Michigan

Managements Discussion and Analysis (Continued)

The City of South Lyons Funds

Our analysis of the Citys major funds begins on page 11, following the government-wide financial statements. The fund financial statements provide detailed information about the most significant funds, not the City as a whole. The South Lyon City Council creates funds to help manage money for specific purposes, as well as to show accountability for certain activities, such as major and local road maintenance and debt service. The Citys major funds for 2010 include the General Fund, the Capital Improvements Fund, and the Water and Sewer Fund.

The General Fund pays for most of the Citys governmental services. The most significant is the police department, which incurred expenses of approximately $2,215,000 in 2010. Other government services accounted for in the General Fund include general government, the department of public works, the fire department, and recreation.

General Fund Budgetary Highlights

Over the course of the year, the City amended the budget to account for changes made necessary due to unanticipated events or situations requiring less expenditures for operational and capital expenditures.

There were no significant unfavorable budget variances within the General Fund. Overall, the total expenditures were approximately $457,000 under budget; however, revenues and other financing sources offset a portion of this as those were under budget by $78,000.

Capital Asset and Debt Administration

At the end of 2009, the City had approximately $56,180,000 invested in a broad range of capital assets, including buildings, police and fire equipment, and water and sewer lines. In addition, the City has invested significantly in roads within the City.

Economic Factors and Next Years Budgets and Rates

The Citys budget for next year takes into consideration many factors anticipated to impact the budget. Among them are another potential decrease in state-shared revenues, a reduction in property taxes due to the devaluation of the taxable value (in both the housing and commercial markets), a decline in water and sewer sales due to the poor economy, and foreclosures and the loss of businesses. However, despite all of these factors, given our healthy fund balance, we do not anticipate any reductions in service levels based on potential revenue reductions. Over the years, the City has had the flexibility to adjust various ad valorem tax rates as necessary and as determined by Headlee, Truth in Taxation, and Proposal A. The state-wide Tax Reform Acts limit growth in taxable value to inflation or 5 percent, whichever is less. Inflation rates in recent years have only been in the range of 2.3 percent to 4.4 percent.

Due to the troubled economy of Southeastern Michigan, the taxable value of the City has actually decreased 9.1 percent for 2010-2011.



City of South Lyon, Michigan

Managements Discussion and Analysis (Continued)

Contacting the Citys Management

This financial report is intended to provide our citizens, taxpayers, customers, and investors with a general overview of the Citys finances and to show the Citys accountability for the money it receives. If you have questions about this report or need additional information, we welcome you to contact the city managers office.







120,061

693 ---

693

Primary Government

Total net assets

197,791 435,383

147,317 31,494,841

40,160,259

81,948 -

3,355,121 52,824,741

73,363,831

184,745 89,620

16,584,779

22,862,927

329,295 443,677

39,447,706

30,540,116

904,443 57,295 361,586 732,950 --5,620,915

904,443 57,295 361,586 732,950 5,102,664 1,283,795 7,365,506

----5,102,664 1,283,795 1,744,591

55,255,945

24,715,829

Statement of Net Assets

119,368

------119,368

The Notes to Financial Statements are an Integral Part of this Statement.

City of South Lyon, Michigan

329,295 1,288,677

-274,979

State revolving fund loan Unrestricted

Net Assets Invested in capital assets - Net of related debt Restricted for: Road improvements Law enforcement Debt service Cemetery

Total liabilities

Net OPEB obligation (Note 12) Long-term debt (Note 7)

Noncurrent liabilities: Due within one year: Compensated absences Current portion of long-term debt Due in more than one year:

Due to other governmental units Refundable deposits, bonds, etc.

Liabilities

Total assets

Cash and cash equivalents (Note 3) Receivables (Note 4) Internal balances Prepaid expenses and other assets Restricted assets (Note 1) Capital assets (Note 5): Not being depreciated Depreciable - Net

1,406,905 777,270 (69,650) 17,117 6,386,459

9,415,000 1,298,708 -83,802 6,386,459

$ 119,711 --350 -

Total

Business-type Activities