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Combining Balance Sheet

NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020

B. Commitments and Contingencies

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1) Litigation

The City is involved in pending litigation . The City anticipates no potential claims resulting from these cases which would materially affect the financial statements of the City .

2) Federal Grants

Federal grants are subject to audit which could result in disallowed costs, the amount which is undeterminable at December 31, 2020 . If any costs are disallowed in the future, the City expects them to be insignificant .

3) Tax Abatements

The City enters into sales tax abatement agreements with local businesses for the purpose of attracting or retaining businesses within the City . Abatements are granted to businesses located within or promising to relocate to the City upon City Council approval .

For the fiscal year ended December, 31, 2020, the City abated sales taxes totaling $1,180,842 under this program, including the following tax abatement agreements:

• A 50% sales tax abatement to a restaurant to improve and occupy an empty restaurant location . The abatement amounted to $13,357 . • A 50% sales tax abatement to a retail store for construction including infrastructure and improvements of a retail store . The abatement amounted to $32,520 . • A 75% sales tax abatement to a retail store to improve and occupy an empty store front . The abatement amounted to $15,543 . • A $76,486 annual sales tax abatement to a grocery store for retention and continued use of store front .

The abatement amounted to $76,486 . • A 50% sales tax abatement to a grocery store for construction including infrastructure and improvements of a grocery store . The abatement amounted to $962,756 . • A 100% admission tax abatement after the first $100,000 is retained by the City annually and a 100% use tax abatement on the building permit to reconstruct and modernize a public amenity . The abatement amounted to $80,180 .

4) AURA Commitments

Developer Agreements The Authority, under the Urban Renewal Law of the State of Colorado, has entered into various Disposition and Development Agreements (DDAs) with certain developers, the terms of which are scoped into the requirements of Governmental Accounting Standards Board Statement No . 77, Tax Abatements . These agreements generally stipulate that the Authority will sell property held for resale, typically at a discount, and provide certain types of property and sales tax rebates (in excess of a set “base” amount and up to a set maximum dollar threshold and/or maturity date), lodging tax rebates, public improvement fee (PIF) rebates and/or PIF in lieu of sales taxes in exchange for a commitment from the developer to purchase, develop and otherwise rehabilitate the related property within a specified period of time .

As of December 31, 2020, the Authority has entered into nine DDAs expiring from 2025 to 2035 . During the year ended December 31, 2020, the Authority rebated property tax of $17,146,523, PIF of $991,426 and lodging tax of $49,182 .

NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020

C. Conduit Debt Obligation

From time to time, the City has issued Industrial/Mortgage Revenue Bonds, Mortgage Credit Certificates and Private Activity Bonds . Industrial Bonds are issued to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities . Mortgage Bonds are issued to provide financial assistance to low and moderate income persons and families in the purchase of a home . The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans . Upon repayment of the bonds, ownership of such property transfers to the person/family served by the bond issuance . Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds . Accordingly the bonds are not reported as liabilities in the accompanying financial statements .

As of December 31, 2020, there were 3 Industrial Revenue Bonds, 1,141 single and multi-family Mortgage Bonds, 247 Mortgage Credit Certificates and 3 Private Activity Bond and one Charter School Revenue Bond . The unpaid balance on the Industrial Revenue Bonds is $21 .5 million and on the multi-family Mortgage Bonds is $21 million . The unpaid balance on the Mortgage Credit Certificates is $36 .4 million, and on the Private Activity Bonds is $56 .6 million . The balance on the Charter School Revenue Bond is $6 .1 million .

D. Retirement Commitments

The City has adopted one pension plan and three defined contribution plans (Plans) covering all employees, except those hired on a temporary basis .

Although it has not expressed any intention to do so, the City has the right under the Plans to discontinue its contribution or to terminate the Plans .

Should the Plans terminate at some future time; their net position will be used to provide participants’ benefits . Upon such termination, the assets of the Plans are to be allocated for the benefit of each participant and the beneficiary in a manner approved by the Internal Revenue Service .

1) Defined Benefit Police Pension Plan

Governmental Accounting Standards Board Statement No . 67 Financial Reporting for Pension Plans - an amendment of GASB Statement No. 25 (GASB 67) establishes the requirements for governmental pension plan financial statement reporting, including pension plan financial statements included as a pension trust fund of a government . Accordingly, GASB 67 applies to the City’s reporting of statement of fiduciary net position, statement of changes in fiduciary net position, certain notes to the financial statements and certain required supplementary information (RSI) .

Governmental Accounting Standards Board (GASB) Statement 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27 sets forth the pension reporting requirements for the City in the statement of net position, statement of activities, certain notes to the financial statements and certain RSI . For purposes of measuring net pension liability, deferred outflows of resources and deferred inflows of resources related to the pension, pension expense, and information about the fiduciary net position of the Defined Benefit Police Pension (Plan) have been determined on the same basis as they are reported by the Plan . Benefit payments are recognized when due and payable . As no stand-alone financial report is issued, all required disclosures for both GASB 67 and GASB 68 are contained in this note .

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