2009 comprehensive annual financial report

City of Suffolk, Virginia

City Council

Constitutional Officers

Judges

Suffolk Public Schools - School Board

Suffolk Public Schools - Administration

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City of Suffolk, Virginia

City Administration

City ManagerDeputy City Manager

Chief of StaffCity AssessorCity Attorney

City ClerkBudget

Capital Programs and BuildingsEconomic Development

Emergency ManagementFinance

Fire & RescueHealth

Human ResourcesLibrary

Media and Community RelationsParks and Recreation

Planning and Community DevelopmentPolice

Public UtilitiesPublic Works

Social Services

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CITY OF SUFFOLK, VIRGINIA

Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2009

TABLE OF CONTENTS

PageINTRODUCTORY SECTION

Title Page i

Official Directory iii-iv

Table of Contents v-viii

Letter of Transmittal ix-xv

Organizational Chart xvii

Certificate of Achievement for Excellence in Financial Reporting preface of back cover

FINANCIAL SECTION

Independent Auditors’ Report 1-2

Management’s Discussion and Analysis 3-10

BASIC FINANCIAL STATEMENTS

Government-wide Financial Statements:

Exhibit 1 Statement of Net Assets 19

Exhibit 2 Statement of Activities 20-21

Fund Financial Statements:

Exhibit 3 Balance Sheet–Governmental Funds 24

Exhibit 4 Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Assets 25

Exhibit 5 Statement of Revenues, Expenditures and Changes in Fund Balances–Governmental Funds 26

Exhibit 6 Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 27

Exhibit 7 Statement of Net Assets—Proprietary Funds 28

Exhibit 8 Statement of Revenues, Expenses and Changes in Net Assets—Proprietary Funds 29

Exhibit 9 Statement of Cash Flows—Proprietary Funds 30

Exhibit 10 Statement of Net Assets—Fiduciary Funds 31

Exhibit 11 Statement of Changes in Fiduciary Net Assets - OPEB Trust Fund 32

Notes to Financial Statements 33-76

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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 79-82

Exhibit 13 Schedule of Funding Progress for the Virginia Retirement System and OPEB 83

OTHER SUPPLEMENTARY INFORMATION:

Combining and Individual Fund Statements and Schedules

Exhibit 14 Schedule of Revenues, Expenditures and Changes in Fund Balance – 87Budget and Actual – Debt Service Fund

Exhibit 15 Schedule of Current Capital Projects—Capital Projects Fund 91-92

Exhibit 16 Schedule of Current Capital Projects—Utility Fund 93-94

Exhibit 17 Combining Balance Sheet—Nonmajor Governmental Funds 96-97

Exhibit 18 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances—Nonmajor Governmental Funds 98-99

Exhibit 19 Schedule of Revenues, Expenditures and Changes in Fund Balances—Budgetand Actual—Nonmajor Governmental Funds 100-102

Exhibit 20 Combining Statement of Net Assets—Nonmajor Proprietary Funds 105

Exhibit 21 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets—Nonmajor Proprietary Funds 106

Exhibit 22 Combining Statement of Cash Flows—Nonmajor Proprietary Funds 107

Exhibit 23 Combining Statement of Net Assets—Internal Service Funds 111

Exhibit 24 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets—Internal Service Funds 112

Exhibit 25 Combining Statement of Cash Flows—Internal Service Funds 113

Exhibit 26 Combining Statement of Fiduciary Net Assets—Agency Funds 117

Exhibit 27 Combining Statement of Changes in Assets and Liabilities—Agency Funds 118

Exhibit 28 Combining Balance Sheet—Governmental Funds—Discretely Presented Component Unit School Board 120

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Page

FINANCIAL SECTION (CONTINUED)

OTHER SUPPLEMENTARY INFORMATION: (CONTINUED)

Combining and Individual Fund Statements and Schedules: (Continued)

Exhibit 29 Combining Statement of Revenues, Expenditures and Changes in Fund Balances—Governmental Funds—Discretely Presented Component UnitSchool Board 121

Exhibit 30 Budgetary Reconciliation Schedule—Governmental Funds—DiscretelyPresented Component Unit School Board 122-123

Exhibit 31 Schedule of Revenues, Expenditures and Changes in Fund Balances—Governmental Funds—Budget and Actual—Discretely Presented Component 124-125Unit School Board

Exhibit 32 Statement of Net Assets—Fiduciary Funds 126

Exhibit 33 Statement of Changes in Fiduciary Net Assets - OPEB Trust Fund 127

Exhibit 34 Statement of Changes in Assets and Liabilities—Agency Funds—DiscretelyPresented Component Unit School Board 128

STATISTICAL SECTION:

Statistical Tables

Table 1 Net Assets by Component 131

Table 2 Changes in Net Assets 132-133

Table 3 Fund Balances, Governmental Funds 134-135

Table 4 Changes in Fund Balances, Governmental Funds 136-137

Table 5 Tax Revenues by Source, Governmental Funds 138-139

Table 6 Assessed and Estimated Actual Value of Taxable Property 140-141

Table 7 Property Tax Rates (Per Hundred) 143

Table 8 Principal Property Taxpayers 144

Table 9 Property Tax Levies and Collections 145

Table 10 Ratios of Outstanding Debt by Type 146-147

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Page

STATISTICAL SECTION: (CONTINUED)

Statistical Tables: (Continued)

Table 11 Ratios of Net General Bonded Debt Outstanding 148

Table 12 Direct Governmental Activities Debt 149

Table 13 Legal Debt Margin 150-151

Table 14 Utility Fund Bond Coverage 153

Table 15 Demographic and Economic Statistics 154

Table 16 Principal Employers 155

Table 17 Full-Time Equivalent City Government Employees by Function/Program 156-157

Table 18 Operating Indicators by Function/Program 158-159

Table 19 Capital Asset Statistics by Function/Program 160

Table 20 Property Value, Construction and Bank Deposits 161

Table 21 Principal Commercial/Industrial Water and Sewer Consumers 162

COMPLIANCE SECTION:

Report on Internal Control Over Financial Reporting and on Compliance and OtherMatters Based on an Audit of Financial Statements Performed in Accordancewith Government Auditing Standards 163-164

Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 165-166

Schedule of Expenditures of Federal Awards 167-169

Notes to Schedule of Expenditures of Federal Awards 170

Schedule of Findings and Questioned Costs 171

Summary Schedule of Prior Audit Findings 172

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xvii

ROBINSON, FARMER, COX ASSOCIATESA 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, 2009, which collectively comprise the City’s basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the City of Suffolk, Virginia’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, 2009, 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.

In accordance with Government Auditing Standards, we have also issued our report dated November 2, 2009, on our consideration of the City of Suffolk, Virginia’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.

1

The Management’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, 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, 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 2, 2009

2

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, 2009. 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 $365.2 million (total net assets – government-wide), an $7.8 million decrease from fiscal year 2008 due to a reduction of capital assets.

250.7

441.7

Assets vs. Liabilities

Total assets Total liabilities

The General Fund, on a current financial resource basis, reported revenues in excess of expenditures and other financing sources and uses by $3.1 million.

At the end of the fiscal year, the undesignated fund balance for the General Fund was $37.4 million, an increase of $4.0 million from the prior fiscal year.

Debt transactions for 2009 were as follows:

- In October 2008, the City issued $16.6 million in General Obligation Bonds. This bond issue has an effective interest rate of 4.98%. This bond is for support of the fiscal year 2008 capital budget which contained projects in the area such as economic development, public safety, public works, and economic development.

-In November 2008, the City executed a $5.4 capital lease with Suntrust Capital for public safety vehicles.

-In December 2008, the City issued $45.3 million in VRA water and sewer revenue bonds series 2008.

-In June 2009, the City issued $10.2 million in VRA Refunding bonds to refund part of the 2001 VRA issue.

3

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 government-wide 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.

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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 three 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, the City’s golf course activity 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.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS

Statement of Net Assets

The following table reflects the condensed statement of net assets:

2009 2008 2009 2008 2009 2008Current and other assets $ 120.6 $ 109.2 $ 47.8 $ 29.1 $ 168.4 $ 138.3Capital assets 321.1 337.9 331.0 308.9 652.1 646.8

Total assets $ 441.7 $ 447.1 $ 378.8 $ 338.0 $ 820.5 $ 785.1

Current and other liabilities $ 14.5 $ 16.7 $ 7.4 $ 10.1 $ 21.9 $ 26.8 Long-term liabilities 236.2 231.1 197.2 154.3 433.4 385.4

Total liabilities 250.7 247.8 204.6 164.4 455.3 412.2

Net assets:Invested in capital assets, net of related debt 129.6 140.8 171.3 172.1 300.9 312.9Restricted net assets 0.4 1.3 - - 0.4 1.3 Unrestricted net assets 61.0 57.2 2.9 1.5 63.9 58.7

Total net assets 191.0 199.3 174.2 173.6 365.2 372.9

Total liabilities and net assets $ 441.7 $ 447.1 $ 378.8 $ 338.0 $ 820.5 $ 785.1

Governmental Activities Business-Type Activities Total

Statement of Net Assets(in Millions)

As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City of Suffolk, assets exceeded liabilities by $365.2 million at June 30, 2009. The largest portion of the City’s net assets, 82% and 84% in 2009 and 2008, 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, 18% and 16% in 2009 and 2008, respectively, represents unrestricted net assets, which may be used to meet the City’s ongoing obligations. Unrestricted net assets increased both in governmental and business-type activities in FY 09 by $3.8 million and $1.4 million respectively.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS: (CONTINUED)

Statement of Activities

The following table indicates the changes in net assets for governmental and business-type activities:

2009 2008 2009 2008 2009 2008Revenues:Program Revenues:

Charges for services $ 6.5 $ 6.4 $ 30.0 $ 29.0 $ 36.5 $ 35.4Operating grants and contributions 32.3 30.8 0.6 0.9 32.9 31.7Capital grants and contributions 1.6 1.2 3.8 2.6 5.4 3.8

General revenues:Real estate and property taxes 99.4 98.4 - - 99.4 98.4Other taxes 33.0 33.1 - - 33.0 33.1Grants and contributions, not restricted 14.4 14.4 - - 14.4 14.4Unrestricted investment earnings 1.8 3.8 0.6 1.6 2.4 5.4Miscellaneous 1.8 1.4 0.3 - 2.1 1.4

Total Revenues 190.8 189.5 35.3 34.1 226.1 223.6

Expenses:General government 8.5 9.6 - - 8.5 9.6Judicial 7.2 7.2 - - 7.2 7.2Public safety 36.3 36.3 - - 36.3 36.3Public works 32.5 29.8 - - 32.5 29.8Health and welfare 12.1 12.7 - - 12.1 12.7Education 77.7 42.1 - - 77.7 42.1Parks, recreation, cultural 8.3 8.5 - - 8.3 8.5Community development 7.8 6.3 - - 7.8 6.3Interest on long-term debt 9.9 11.1 - - 9.9 11.1Utility - - 29.1 29.1 29.1 29.1Golf course - - 1.7 1.8 1.7 1.8Stormwater Utility - - 2.9 2.5 2.9 2.5

Total expenses 200.3 163.6 33.7 33.4 234.0 197.0

Excess of revenues over expenses (9.5) 25.9 1.6 0.7 (7.9) 26.6Transfers 1.0 0.6 (1.0) (0.6) - -Change in net assets (8.5) 26.5 0.6 0.1 (7.9) 26.6Net assets - beginning of year 199.4 172.9 173.6 173.5 373.0 346.4Net assets - ending $ 190.9 $ 199.4 $ 174.2 $ 173.6 $ 365.1 $ 373.0

(in Millions)Changes in Net Assets

Governmental Activities Business-Type Activities Total

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Governmental Activities

Real estate and personal property tax revenue, the City’s largest revenue source, totaled $99.4 million and $98.4 million in FY 2009 and 2008 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.

0

20

40

60

80

100

120

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

Millions

General Property Tax Revenue

Source: Comprehensive Annual Financial Reports 2000 2009

The City’s assessed value of real property increased by 1% for the current fiscal year.

The City is committed to ensuring the highest level of safety for its citizens and has expended $36.3 million towards public safety efforts, representing 18.1% and 22.2% of total governmental activities expenses for 2009 and 2008 respectively.

Education continues to be one of the City’s highest priorities and commitments representing 38.8% and 25.7% in 2009 and 2008 respectively of total governmental activity expenses. The increase in FY09 is due to the transfer of assets to the School Board, specifically the completion of the Hillpoint Elementary school. In addition, state and federal support for the schools budget provided an additional $7.0 million over the prior year.

Public Works increased $2.7 million over FY08. This is due to the department acquiring the fleet department and services.

Community Development increased $1.5 over FY08. This is due to the payments made to the Economic Development Authority under the Economic Development Investment Program.

The Change in Net Assets and Excess Revenues are reflective of the transfer of Hillpoint Elementary school to Suffolk Public Schools.

8


General Property Tax66%

Local Sales and Use Tax5%

Communication & Utility Tax5%

Business & Occupational Tax4%

Motor Vehicle, Recordation & Tobacco Tax

3%Meal & Other Local Tax

5%

Unrestricted Revenues from Use of Money & Property

1%

Grants and Contributions10%

Miscellaneous1%

Revenues by Source-Governmental Activities

Business-type Activities

The business-type activities are made up of Public Utilities, Golf Course and Stormwater Utilities.

Charges for services, including water and sewer fees, golf fees and Stormwater Utility fees represent 86.4% and 87.1% of total revenues for business-type activities for 2009 and 2008 respectively.

During 2009, Public Utilities received $3.8 million in capital asset contributions from developer projects that came on line and were accepted into the City system. These contributions represented 11.1% of total revenues for business-type activities for 2009.

0

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10,000,000

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25,000,000

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Utility Golf Course Stormwater

Expenses and Program RevenueBusiness Type Activities

June 30, 2009

Revenues

Expenses

9

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, unreserved 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 $91.8 million. Approximately 40.7% of this amount is available for spending at the government’s discretion (unreserved fund balance). The remainder of fund balance is reserved or designated 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 $51.2 million of which $37.3 million represents undesignated fund balance of the general fund. As a measure of the general fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balances represents 27% of the total fund expenditures, while total fund balance represents 37% of that same amount. The unreserved fund balance of the General Fund is 15.08%, 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%.

0

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40,000,000

50,000,000

60,000,000

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

General FundFund Balance

Total Fund Balance

Unreserved fund balance

10

FINANCIAL ANALYSIS OF THE CITY’S FUNDS: (CONTINUED)

General Fund: (Continued)

The net increase to fund balance for the general fund for 2009 was $3.1 million. This increase was a result of streamlining operations throughout the organization by freezing staff positions, holding costs to a minimum, and revenues were received as projected.

Debt service fund. The debt service fund has a fund balance of $.7 million. Of this amount $.3 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 $.4 million. During the current fiscal year, the fund balance decreased slightly ($.2 million). The General Fund continues to transfer 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 $30.5 million, of this $11.2 million was encumbered for contracts in process, and the balance of $19.3 million was designated for subsequent years’ expenditures. During FY09 the City issued general obligation bonds of $16.6 million to finance various projects and expended $20.6 million on various projects. The City’s top five construction projects consisted of the following in FY09:

- $3.2 million in continued construction of Hillpoint elementary school. Construction was completed in September 2008.

- $3.6 million in continued construction of a new police administrative building. Construction was completed in May 2009.

- $2.9 million in continued construction of the East Suffolk Complex. Construction was completed in March 2009.

- $1.1 million in continued transportation improvements on Route 17. - $1.4 million in construction of the Kings Fork Safety Center.

At year end the City has $151 million in projects authorized and has expended and committed $104.6 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 $174.2 million.

Enterprise funds. The City’s enterprise funds account for its water and sewer operations as well as the City’s golf course and stormwater utility efforts. Unrestricted net assets of the enterprise funds were $2.9 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 $22.0 million. Each of the internal service funds finished strong this year with positive changes in net assets.

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FINANCIAL ANALYSIS OF THE CITY’S FUNDS: (CONTINUED)

Trust funds. The City funded $2.3 million in other post employment benefits in the OPEB Trust Fund. The City participates in the Virginia Pooled OPEB Trust Fund. In fiscal year 2009, the City fully funded its annual contribution to the fund as calculated by the actuaries.

Cash Goldman Sach FS Prime Obligations 13%

Large Cap Core Vanguard Inst'l Index

Fund 35%

Small Cap Core C.S. McKee

10%

International Equity Artio Global Investors

II12%

Global REIT Ell Global Property Fund

3%

Fixed Income Vanguard Total Bond Index Fund

27%

Virginia Pooled OPEB Trust FundAsset Allocation as of June 30, 2009

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 $6.0 million increase in appropriations.

Listed below are explanations for significant budgetary variances between the final amended budget and actual results:

Revenue from the Use of Money category was under the budget projects by $1.7 million. This was due in large part to a lower returns and interest rates on investments.

Miscellaneous revenues were under the budget by $2.1 million. This is due the second anticipated installment of the Obici property sale. The project never materialized and the budget was never amended.

Non-departmental expenditures were under budget by $2.6 million. This is due in large part to the $2.3 million contribution to the Other Post-Employment Benefits Fund (OPEB).

Economic development expenditures were under budget by $2.2 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.

12

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets. The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2009, totaled to $651.8 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.

2009 2008 2009 2008 2009 2008Land $ 22.0 $ 22.0 $ 4.6 $ 4.6 $ 26.6 $ 26.6Construction in progress 27.5 41.2 94.0 77.5 121.5 118.7Buildings 41.9 30.6 13.7 13.7 55.6 44.3Improvements other than buildings 120.3 126.7 189.5 183.4 309.8 310.1Machinery and equipment 20.3 19.1 29.0 29.6 49.3 48.7Allocation of School Board assets 89.0 98.3 - - 89.0 98.3

Total $ 321.0 $ 337.9 $ 330.8 $ 308.8 $ 651.8 $ 646.7

Governmental Activities Business-type Activities Total

Capital Assets(net of depreciation)

(in Millions)

Capital Assets

Land4%

Constructionin progress

18%

Buildings9%

Improvementsother than buildings

47%

Machinery andequipment

8%

Allocation ofSchool Board

assets14%

Additional information on the City’s capital assets can be found in Note 7.

13

CAPITAL ASSETS AND DEBT ADMINISTRATION: (CONTINUED)

Long-term debt. At the end of the current fiscal year, the City had total outstanding debt of $409.3 million. Capital leases, claims payable, compensated absences and premiums and other credits are not included in these figures.

2009 2008 2009 2008 2009 2008Bonds Payable $ 206.8 $ 202.9 $ 193.1 $ 150.0 $ 399.9 $ 352.9

Loans and Notes Payable 9.4 10.4 - - 9.4 10.4

Total $ 216.2 $ 213.3 $ 193.1 $ 150.0 $ 409.3 $ 363.3

Governmental Activities Business-type Activities Total

Outstanding Debt

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.

Subsequent to the end of the current fiscal year, the City issued $16.6 million in general obligation debt in support of general government activities.

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 and 14.

ECONOMIC FACTORS

The City’s economic development initiatives created over 440 new jobs and over $163 million dollars in new capital investment in the City.

The City’s assessed value of real property increased by 7.4% for fiscal year 2009.

For the fiscal year 2009 the City lowered its tax rate of $.91 per $100.

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, 23434.

14


15


Government-Wide Financial Statements

17

CITY OF SUFFOLK, VIRGINIA Exhibit 1

Statement of Net AssetsAt June 30, 2009

Primary GovernmentBusiness- Economic

Governmental Type School DevelopmentActivities Activities Totals Board Authority

ASSETS Cash and cash equivalents $ 68,522,582 $ 13,282,059 $ 81,804,641 $ 21,766,170 $ 1,007,306 Restricted cash 37,157,079 26,549,785 63,706,864 - 3,633,700 Receivables - net 6,434,928 4,165,316 10,600,244 167,751 783,337 Due from other governments 3,162,059 - 3,162,059 3,225,014 - Internal balances 1,516,232 (1,516,232) - - - Due from component units 309,334 - 309,334 - - Inventories 420,656 103,672 524,328 567,198 10,526,445 Prepaid items 226,782 5 226,787 40,000 - Deferred charges 2,879,898 5,232,969 8,112,867 - - Capital assets not depreciated 49,585,120 98,645,639 148,230,759 5,938,618 17,381,131 Capital assets being depreciated, net 271,582,494 232,317,549 503,900,043 57,269,436 13,600,999

Total Assets $ 441,797,163 $ 378,780,762 $ 820,577,925 $ 88,974,187 $ 46,932,918

LIABILITIES Accounts payable $ 5,190,067 $ 4,844,620 $ 10,034,687 $ 2,214,379 $ 205,210 Payables from restricted assets 475,057 - 475,057 - - Accrued liabilities - - - 635,870 - Accrued payroll - - - 10,943,990 - Accrued interest 4,948,086 2,360,536 7,308,622 - 269,557 Due to primary government - - - 70,079 239,255 Deposits and amounts held for others - 32,827 32,827 37,752 20,000 Unearned revenue 3,949,537 102,052 4,051,589 - - Long-term liabilities: Due within one year 19,025,211 3,952,588 22,977,799 67,858 15,240 Due in more than one year 217,236,487 193,243,312 410,479,799 1,984,362 21,519,245

Total Liabilities $ 250,824,445 $ 204,535,935 $ 455,360,380 $ 15,954,290 $ 22,268,507

NET ASSETSInvested in capital assets, net of related debt $ 129,638,603 $ 171,309,403 $ 300,948,006 $ 63,208,054 $ 17,159,331Restricted for: Debt service requirements 392,169 - 392,169 - 1,150,567Unrestricted assets 60,941,946 2,935,424 63,877,370 9,811,843 6,354,513

Total Net Assets $ 190,972,718 $ 174,244,827 $ 365,217,545 $ 73,019,897 $ 24,664,411

Total Liabilities and Net Assets $ 441,797,163 $ 378,780,762 $ 820,577,925 $ 88,974,187 $ 46,932,918

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

Component Units

19


Statement of ActivitiesYear Ended June 30, 2009

Charges Operating Capitalfor Grants and Grants and

Functions/Programs Expenses Services Contributions Contributions

PRIMARY GOVERNMENT:Governmental activities: General government administration $ 8,493,992 $ - $ 170,905 $ - Judicial administration 7,159,993 753,969 1,829,318 - Public safety 36,372,402 2,587,982 2,136,678 70,500 Public works 32,530,396 2,195,198 18,491,121 587,602 Health and welfare 12,187,513 7,388 8,848,554 - Education 77,678,641 - - - Parks, recreation, and cultural 8,301,660 628,393 305,120 - Community development 7,742,440 302,134 575,172 966,594 Interest on long-term debt 9,896,678 - - -

Total governmental activities $ 200,363,715 $ 6,475,064 $ 32,356,868 $ 1,624,696

Business-type activities: Utility $ 29,133,054 $ 24,813,989 $ 542,287 $ 3,785,842 Golf Course 1,689,229 1,095,315 - - Stormwater 2,924,270 4,056,979 - -

Total business-type activities $ 33,746,553 $ 29,966,283 $ 542,287 $ 3,785,842

Total primary government $ 234,110,268 $ 36,441,347 $ 32,899,155 $ 5,410,538

COMPONENT UNITS: School Board $ 154,189,071 $ 2,703,327 $ 101,106,496 $ -

Economic Development Authority $ 3,648,219 $ 927,428 $ 1,595,618 $ 238,499

Total component units $ 157,837,290 $ 3,630,755 $ 102,702,114 $ 238,499

General revenues:General property taxesLocal sales and use taxesUtility taxesCommunication taxesBusiness and occupational taxesMotor vehicle license taxesRecordation taxesTobacco taxesMeals taxesOther local taxesUnrestricted revenues from use of money and propertyGrants and contributions not restricted to specific programsMiscellaneousCity of Suffolk contribution

TransfersTotal general revenues and transfers

Change in net assetsNet assets - beginningNet assets - ending


Program Revenues

20

Exhibit 2

Business EconomicGovernmental Type School Development

Activities Activities Total Board Authority

$ (8,323,087) $ - $ (8,323,087) $ - $ -(4,576,706) - (4,576,706) - -

(31,577,242) - (31,577,242) - -(11,256,475) - (11,256,475) - -(3,331,571) - (3,331,571) - -

(77,678,641) - (77,678,641) - -(7,368,147) - (7,368,147) - -(5,898,540) - (5,898,540) - -(9,896,678) - (9,896,678) - -

$ (159,907,085) $ - $ (159,907,085) $ - $ -

$ - $ 9,064 $ 9,064 $ - $ -- (593,914) (593,914) - -- 1,132,709 1,132,709 - -

$ - $ 547,859 $ 547,859 $ - $ -

$ (159,907,085) $ 547,859 $ (159,359,226) $ - $ -

$ - $ - $ - $ (50,379,248) $ -

$ - $ - $ - $ - $ (886,674)

$ - $ - $ - $ (50,379,248) $ (886,674)

$ 99,470,144 $ - $ 99,470,144 $ - $ -7,323,289 - 7,323,289 - -4,279,814 - 4,279,814 - -3,733,667 - 3,733,667 - -6,261,676 - 6,261,676 - -1,713,998 - 1,713,998 - -1,186,018 - 1,186,018 - -1,408,348 - 1,408,348 - -5,683,139 - 5,683,139 - -1,500,655 - 1,500,655 - -1,845,378 640,041 2,485,419 80,509 226,046

14,405,688 - 14,405,688 - -1,784,155 309,937 2,094,092 699,704 -

- - - 76,332,859 -908,201 (908,201) - - -

$ 151,504,170 $ 41,777 $ 151,545,947 $ 77,113,071 $ 226,046$ (8,402,917) $ 589,636 $ (7,813,281) $ 26,733,824 $ (660,628)

199,375,635 173,655,191 373,030,826 46,286,073 25,325,039$ 190,972,718 $ 174,244,827 $ 365,217,545 $ 73,019,897 $ 24,664,411

Component Units

Net (Expense) Revenue and Changes in Net Assets

Primary Government

21


Fund Financial Statements

23


Balance Sheet - Governmental FundsAt June 30, 2009

Nonmajor TotalCapital Debt Governmental Governmental

General Projects Service Funds Funds ASSETS

Cash and cash equivalents: Unrestricted $ 43,162,729 $ 6,432,455 $ 288,040 $ 9,140,334 $ 59,023,558 Restricted 1,688,920 25,795,791 392,169 3,666,564 31,543,444 Receivables (Net of allowance for

uncollectibles): Taxes receivable 3,341,199 - - 23,038 3,364,237 Accounts receivable 2,810,276 1,490 - 28,888 2,840,654

Due from other governmental units 2,044,763 882,657 - 234,639 3,162,059 Due from other funds 2,807,611 - - - 2,807,611 Due from component units 309,334 - - - 309,334 Inventories 74,699 - - - 74,699 Prepaid items 10,542 - - - 10,542

Total assets $ 56,250,073 $ 33,112,393 $ 680,209 $ 13,093,463 $ 103,136,138

LIABILITIES

Accounts payable $ 1,367,378 $ 2,458,530 $ 503 $ 890,533 $ 4,716,944 Payables from restricted assets 475,057 - - - 475,057 Due to other funds - - - 203,339 203,339 Deferred revenue 1,934,170 67,250 - 13,095 2,014,515 Unearned revenue 1,263,399 - - 2,686,138 3,949,537

Total liabilities $ 5,040,004 $ 2,525,780 $ 503 $ 3,793,105 $ 11,359,392

FUND BALANCES

Reserved for: Encumbrances $ 595,328 $ 11,233,485 $ - $ 1,068,241 $ 12,897,054 Inventories 74,699 - - - 74,699 Grant compliance - - - 17,211 17,211Unreserved: Designated: Capital projects 9,494,050 19,353,128 - - 28,847,178 General - various items 3,658,345 - - - 3,658,345 Special revenue - - - 2,869,259 2,869,259 Debt service - - 392,169 - 392,169 Undesignated: Special revenue - - - 5,345,647 5,345,647 Debt service - - 287,537 - 287,537 Unreserved 37,387,647 - - - 37,387,647

Total fund balances $ 51,210,069 $ 30,586,613 $ 679,706 $ 9,300,358 $ 91,776,746 Total liabilities and fund balances $ 56,250,073 $ 33,112,393 $ 680,209 $ 13,093,463 $ 103,136,138


24


Reconciliation of the Balance Sheet of the Governmental Fundsto the Statement of Net AssetsAt June 30, 2009

PrimaryGovernment

Total fund balances - governmental funds $ 91,776,746

302,611,699

2,014,515

Net financing costs 2,879,898

22,070,256

(4,884,905)

General obligation bonds $ (206,761,987)Literary fund loans (5,750,000) Notes payable (240,000) Section 108 loan (3,459,000) Unamortized premium and other credits on bonds (5,087,662) Other post employment benefits (209,817) Compensated absences (3,987,025) Total long-term liabilities (225,495,491)

Net assets of governmental activities $ 190,972,718


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

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

Long-term liabilities, including bonds payable, are not due and payable in the currentperiod and therefore are not reported as liabilities in the governmental funds.

Amounts reported for governmental activities in the statement of net assets (Exhibit 1) aredifferent because:

Capital assets used in governmental activities are not current financial resources andtherefore are not reported in the funds.

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

Other assets used in governmental activities are not financial resources and therefore notreported in the governmental funds:

25


Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds Year Ended June 30, 2009

Governmental FundsNonmajor Total

Capital Debt Governmental GovernmentalGeneral Projects Service Funds Funds

Revenues: Real estate and personal property taxes $ 97,759,991 $ - $ - $ 1,284,706 $ 99,044,697 Other local taxes 33,090,604 - - - 33,090,604 Permits, privilege fees and regulatory licenses 1,120,958 - - 61,344 1,182,302 Fines and forfeitures 521,771 - - - 521,771 Revenue from use of money and property 1,738,559 10,496 6,981 89,342 1,845,378 Charges for services 3,430,265 4,110 - 1,336,616 4,770,991 Miscellaneous 1,626,657 5,000 - 152,498 1,784,155 Intergovernmental:

Contribution from Component Unit - School Bd. - 795,360 - - 795,360 Revenue from the Commonwealth 22,528,564 274,700 - 18,037,320 40,840,584 Revenue from the Federal Government 5,130,580 1,349,996 - 1,066,092 7,546,668

Total revenues $ 166,947,949 $ 2,439,662 $ 6,981 $ 22,027,918 $ 191,422,510

Expenditures: Current: General government administration $ 8,075,932 $ - $ - $ - $ 8,075,932 Judicial administration 6,634,589 - - 181,012 6,815,601 Public safety 34,164,299 - - 512,057 34,676,356 Public works 8,293,366 - - 17,910,977 26,204,343 Health and welfare 11,582,608 - - 15,302 11,597,910 Education 48,472,908 - - - 48,472,908 Parks, recreation, and cultural 6,546,669 - - 133,834 6,680,503 Community development 7,172,430 - - 859,904 8,032,334 Nondepartmental 8,753,753 - - - 8,753,753 Capital outlay - 20,582,782 - - 20,582,782 Debt service: Principal - - 13,667,737 - 13,667,737 Interest and other fiscal charges - - 9,645,646 - 9,645,646 Bond issuance cost - - 288,914 - 288,914

Total expenditures $ 139,696,554 $ 20,582,782 $ 23,602,297 $ 19,613,086 $ 203,494,719

Excess (deficiency) of revenues over expenditures $ 27,251,395 $ (18,143,120) $ (23,595,316) $ 2,414,832 $ (12,072,209)

Other financing sources (uses): Issuance of debt $ - $ 16,600,000 $ - $ - $ 16,600,000 Transfers in 2,155,922 4,071,100 23,413,314 840,864 30,481,200 Transfers (out) (26,286,919) (382,288) - (2,637,633) (29,306,840)

Total other financing sources (uses) $ (24,130,997) $ 20,288,812 $ 23,413,314 $ (1,796,769) $ 17,774,360

Net changes in fund balances $ 3,120,398 $ 2,145,692 $ (182,002) $ 618,063 $ 5,702,151

Fund balances at beginning of year 48,089,671 28,440,921 861,708 8,682,295 86,074,595

Fund balances at end of year $ 51,210,069 $ 30,586,613 $ 679,706 $ 9,300,358 $ 91,776,746


26


Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2009

PrimaryGovernment

GovernmentalFunds

Amounts reported for governmental activities in the statement of activities are differentbecause:

Net changes in fund balances - total governmental funds $ 5,702,151

Governmental funds report capital outlays as expenditures. However, in the statement ofactivities the cost of those assets is allocated over their estimated useful lives and reportedas depreciation expense. This is the amount by which the capital outlays exceededdepreciation in the current period. The following details support this adjustment:

Capital outlay $ (547,043) Depreciation expense (7,941,670) Transfer of joint tenancy assets from Primary Government to the Component Unit (9,369,727) (17,858,440)

Revenues in the statement of activities that do not provide current financial resources arenot reported as revenues in the funds. Details of this item consist of:Deferred taxes 425,447

The issuance of long-term debt (e.g. bonds, leases) provides current financial resources togovernmental funds, while the repayment of the principal of long-term debt consumes thecurrent financial resources of governmental funds. Neither transaction, however, has anyeffect 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. Asummary of items supporting this adjustment is as follows: Debt issued or incurred:

General obligation bonds $ (16,600,000) Principal repayments on debt: Principal retired on general obligation debt 12,734,737 Principal retired on literary fund loans 500,000 Principal retired on Section 108 loan 193,000 Principal retired on notes payable 240,000 (2,932,263)

Some expenses reported in the statement of activities do not require the use of currentfinancial 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 $ (79,581) Change in compensated absenses (188,564) Change in other post employment benefits 2,049 Amortization of premiums on bonds payable 247,746 Amortization of deferred charges (130,283) (148,633)

6,408,821

Change in net assets of governmental activities $ (8,402,917)


Internal service funds are used by management to charge the costs of certain activities such asinformation technology, fleet management, and insurance to individual funds. The netrevenue of certain internal service funds is reported with governmental activities.

27


Statement of Net Assets - Proprietary FundsAt June 30, 2009

GovernmentalActivities -

Major Fund Nonmajor InternalUtility Fund Funds Totals Service Funds

ASSETSCurrent Assets: Cash and cash equivalents $ 10,383,887 $ 2,898,172 $ 13,282,059 $ 9,499,024 Restricted cash 26,495,034 54,751 26,549,785 5,613,635 Receivables (net of allowance for uncollectible) 3,950,911 214,405 4,165,316 230,038 Inventories 103,672 - 103,672 345,957 Prepaid items 5 - 5 216,240

Total Current Assets $ 40,933,509 $ 3,167,328 $ 44,100,837 $ 15,904,894

Noncurrent Assets: Deferred charges $ 5,168,809 $ 64,160 $ 5,232,969 $ - Capital assets: Land $ 3,208,702 $ 1,390,791 $ 4,599,493 $ 298,000 Construction in progress 94,046,146 - 94,046,146 - Buildings 22,112,282 213,826 22,326,108 1,221,050 Improvements other than buildings 235,261,146 2,917,815 238,178,961 35,157 Machinery and equipment 49,137,291 42,982 49,180,273 42,617,913 Less: Accumulated depreciation (76,466,642) (901,151) (77,367,793) (25,616,205) Total Capital Assets (net) $ 327,298,925 $ 3,664,263 $ 330,963,188 $ 18,555,915 Total Noncurrent Assets $ 332,467,734 $ 3,728,423 $ 336,196,157 $ 18,555,915

Total Assets $ 373,401,243 $ 6,895,751 $ 380,296,994 $ 34,460,809

LIABILITIESCurrent Liabilities: Vouchers and accounts payable $ 4,806,479 $ 38,141 $ 4,844,620 $ 473,123 Current portion of compensated absences 13,309 955 14,264 9,701 Unearned revenue - 102,052 102,052 - Deposits payable 32,827 - 32,827 - Accrued interest 2,283,344 77,192 2,360,536 63,181 Claims payable - current portion - - - 1,491,141 Due to other funds - 1,516,232 1,516,232 1,088,040 Current portion of bond premiums and other credits 206,845 - 206,845 - Bonds, notes payable and capital lease obligations-current 3,634,787 96,692 3,731,479 2,790,888 Total Current Liabilities $ 10,977,591 $ 1,831,264 $ 12,808,855 $ 5,916,074

Noncurrent Liabilities: Noncurrent portion of compensated absences $ 349,184 $ 44,086 $ 393,270 $ 169,842 Claims payable - net of current - - - 309,101 Bond premiums and other credits, net 4,352,075 1,243 4,353,318 - Bonds, notes payable and capital lease obligations -

net of current 184,618,631 3,878,093 188,496,724 5,995,536

Total Noncurrent Liabilities $ 189,319,890 $ 3,923,422 $ 193,243,312 $ 6,474,479Total Liabilities $ 200,297,481 $ 5,754,686 $ 206,052,167 $ 12,390,553

NET ASSETSInvested in capital assets, net of related debt $ 171,621,168 $ (311,765) $ 171,309,403 $ 9,769,491Unrestricted assets 1,482,594 1,452,830 2,935,424 12,300,765

Total Net Assets $ 173,103,762 $ 1,141,065 $ 174,244,827 $ 22,070,256

Total Liabilities and Net Assets $ 373,401,243 $ 6,895,751 $ 380,296,994 $ 34,460,809


Business-type Activities - Enterprise Funds

28


Statement of Revenues, Expenses and Changes in Net Assets - Proprietary FundsYear Ended June 30, 2009



Operating revenues: Charges for services $ 24,684,686 $ 5,152,294 $ 29,836,980 $ 28,377,333 Other operating revenues 129,303 - 129,303 25,111

Total operating revenues $ 24,813,989 $ 5,152,294 $ 29,966,283 $ 28,402,444

Operating expenses: Personnel services $ 6,711,804 $ 1,699,899 $ 8,411,703 $ 2,224,652 Self-insured claims - - - 8,114,803 Purchased services 1,031,870 1,422,383 2,454,253 187,630 Contractual services 1,134,454 490,738 1,625,192 1,236,702 Supplies 843,688 4,498 848,186 3,929,541 Utilities 1,237,923 - 1,237,923 84,415 Insurance and bonds - - - 1,320,294 OPEB - - - 2,323,275 Bulk-water purchases 4,106,712 - 4,106,712 - Depreciation and amortization 6,191,069 156,275 6,347,344 3,768,388 Leased property 249,291 21,300 270,591 449,654 Other charges 1,285,698 633,407 1,919,105 124,188

Total operating expenses $ 22,792,509 $ 4,428,500 $ 27,221,009 $ 23,763,542

Net income from operations $ 2,021,480 $ 723,794 $ 2,745,274 $ 4,638,902

Nonoperating revenues (expenses): Interest income $ 616,672 $ 23,369 $ 640,041 $ 68,687 Interest and other fiscal (expenses) (5,772,191) (184,999) (5,957,190) (331,212) Gain on disposal of capital assets 2,048 - 2,048 (111,099) Isle of Wight contribution for WTWA 542,287 - 542,287 - Other nonoperating (expenses) (568,354) - (568,354) - Other nonoperating revenues 307,889 - 307,889 -

Total nonoperating revenues (expenses) $ (4,871,649) $ (161,630) $ (5,033,279) $ (373,624)

Net income before contributions and transfers $ (2,850,169) $ 562,164 $ (2,288,005) $ 4,265,278

Capital contributions 3,785,842 - 3,785,842 2,409,702 Transfers in - 324,485 324,485 - Transfers (out) (876,536) (356,150) (1,232,686) (266,159)Changes in net assets $ 59,137 $ 530,499 $ 589,636 $ 6,408,821

Net assets, beginning of year 173,044,625 610,566 173,655,191 15,661,435

Net assets, end of year $ 173,103,762 $ 1,141,065 $ 174,244,827 $ 22,070,256



29


Statement of Cash Flows - Proprietary FundsYear Ended June 30, 2009



Cash flows from operating activities: Receipts from customers and users $ 25,785,510 $ 5,158,660 $ 30,944,170 $ 28,178,805 Payments to employees (including fringe benefits) (6,679,150) (1,701,794) (8,380,944) (2,206,182) Payments for operating activities (10,478,457) (2,564,822) (13,043,279) (17,842,734)

Net cash provided by operating activities $ 8,627,903 $ 892,044 $ 9,519,947 $ 8,129,889

Cash flows from non-capital financing activities: Transfers in $ - $ (356,150) $ (356,150) $ - Transfer (out) (876,536) 526,378 (350,158) (266,159)

Net cash provided by (used in) non-capital financing activities $ (876,536) $ 170,228 $ (706,308) $ (266,159)

Cash flows from capital and related financing activities: Acquisition and construction of capital assets $ (31,593,571) $ - $ (31,593,571) $ (4,989,971) Isle of Wight contribution for WTWA 542,287 - 542,287 - Proceeds from debt issued 56,254,088 - 56,254,088 - Capital contributions 3,785,842 - 3,785,842 2,409,702 Principal paid on debt (13,176,599) (95,216) (13,271,815) (2,980,657) Interest paid on debt (6,893,720) (183,570) (7,077,290) (320,447) Proceeds from capital lease obligations - - - 5,412,300 Proceeds from sale of capital assets 2,048 - 2,048 1,200

Net cash provided by (used in) capital and related financing activities $ 8,920,375 $ (278,786) $ 8,641,589 $ (467,873)

Cash flows from investing activities: Interest earned $ 616,672 $ 23,369 $ 640,041 $ 68,687

Net increase (decrease) in cash and cash equivalents $ 17,288,414 $ 806,855 $ 18,095,269 $ 7,464,544

Cash and cash equivalents at beginning of year 19,590,507 2,146,068 21,736,575 7,648,115

Cash and cash equivalents at end of year $ 36,878,921 $ 2,952,923 $ 39,831,844 $ 15,112,659

Reconciliation of operating income to net cash providedby (used in) operating activities:

Cash flows from operations: Income from operations $ 2,021,480 $ 723,794 $ 2,745,274 $ 4,638,902

Adjustment to reconcile net income to net cash provided by operations:

Depreciation and amortization 6,191,069 156,275 6,347,344 3,768,388

Changes in operating accounts: (Increase) decrease in: Accounts receivable 663,847 (30,745) 633,102 (223,639) Inventories 15,208 - 15,208 10,641 Prepaids 1,204 - 1,204 151,204 Non-operating revenues 307,889 - 307,889 - Increase (decrease) in: Accounts payable (36,879) 7,504 (29,375) (9,348) Deferred revenue (215) 37,111 36,896 - Claims payable - - - (224,730) Compensated absences 32,654 (1,895) 30,759 18,471 Non-operating (expenses) (568,354) - (568,354) -

Net cash provided by operating activities $ 8,627,903 $ 892,044 $ 9,519,947 $ 8,129,889



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Statement of Net AssetsFiduciary FundsAt June 30, 2009

OPEBTrust Agency Fund Funds

AssetsCash and cash equivalents $ 4,368,557 $ 29,826

Total assets $ 4,368,557 $ 29,826

LiabilitiesAmounts held for others $ - $ 29,826

Total liabilities $ - $ 29,826

Net assets Held in trust for OPEB benefits $ 4,368,557 $ -

Total net assets $ 4,368,557 $ -

Total liabilities and net assets $ 4,368,557 $ 29,826


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Statement of Changes in Fiduciary Net AssetsOPEB Trust FundAt June 30, 2009

Additions: Employer contributions $ 2,323,275 Gain (loss) on investments (349,375)

Total additions $ 1,973,900

Deductions: Administrative fees $ 5,343

Total deductions $ 5,343

Change in net assets $ 1,968,557

Net assets - beginning of year, as restated 2,400,000

Net assets - end of year $ 4,368,557


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Notes to Financial Statements As of June 30, 2009

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.

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Notes to Financial Statements As of June 30, 2009 (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.

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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.

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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 cots and program revenues reported for the various functions concerned.

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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 statements’ 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 City’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.

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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 the primary operating fund of the City. This fund is used to account for all financial transactions and resources except those required to be 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 to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary fund types).

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.

The City presents the following nonmajor governmental funds:

Special Revenue Funds

The Special Revenue Funds account for revenue derived from specific sources (other than major capital projects) that are restricted by legal and regulatory provisions to finance specific activities.

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.

Transit System Fund – accounts for the operation of a transit system in the City of Suffolk. A portion of the revenue is derived from charges for services. The majority of the revenues are derived from General Fund appropriations and grants.

Law Library Fund – accounts for the maintenance of a law library. Revenue is derived from court fees.

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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.

Law Enforcement Block Grant – accounts for revenues and expenditures related to the Law Enforcement Block Grant. Revenues are derived from a federal grant.

Wireless E-911 Fund – accounts for revenues and expenditures related to developing and implementing the technology for wireless E-911. Surcharges are paid into a Commonwealth of Virginia wireless 911 fund and then distributed to counties and cities that operate public safety answering points and to service providers to defray capital assets and operating expenses incurred in providing service to wireless E-911 calls.

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.

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Enterprise Funds: (Continued)

The City presents the following nonmajor enterprise funds:

Golf Course Fund – accounts for the development and maintenance of the Municipal Golf Course activities.

Stormwater Utility Fund - accounts for the maintenance and improvements to the City's stormwater infrastructure.

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 Fund – accounts for monies collected by the City on behalf of the Commonwealth of Virginia.

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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

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.

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.

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E. Stewardship, Compliance and Accountability: (Continued)

1. Budgeting Information: (Continued)

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, 2008 for the following funds: General Fund, Consolidated Grants, Road Maintenance, Suffolk Taxing District, Capital Projects, Utility Fund, Golf Course 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, the Internal Service Funds and the following Special Revenue Funds: Route 17 Tax District, Downtown Business Overlay District, Suffolk Taxing District, Road Maintenance, Transit System, 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, Law Enforcement Block Grant Fund, Wireless E-911 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.

2. Excess Expenditures of Appropriations

Expenditures did not exceed appropriations in any funds for the year ended June 30, 2009.

3. Fund Deficit

The following fund had a deficit balance at June 30, 2009:

Golf Course Fund $ 1,739,857

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.

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F. Deposits and Investments: (Continued)

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.

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, 2009:

Fund

General Fund – Taxes receivable $ 1,937,876Nonmajor Funds – Taxes receivable 9,639Utility Fund – Accounts receivable 128,029Nonmajor Proprietary Funds – Fees receivable 66,217

Total $ 2,141,761

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G. Receivables and Payables: (Continued)

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 Personal Property

Levy date July 1 January 1Due date and collection date June 5 and December 5 December 5Lien date for delinquent taxes 3 years from due date 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.

I. Capital Assets

Capital outlays are recorded as expenditures of the governmental funds and as assets in the government-wide 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 FY 09 totaled $2,770,339.

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.

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I. Capital Assets: (Continued)

The estimated useful lives of capital assets are as follows:

Years

Buildings 40Improvements other than buildings 15-75Machinery and equipment 3-50Infrastructure 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.

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.

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L. Long-term Obligations: (Continued)

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 Equity

In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change.

The governmental fund types classify fund balances as follows:

Reserved Fund Balances

Reserved for grant compliance represents state and federal grant funds received in advance of use.

Reserved for encumbrances represents the portion of fund balance available to pay for commitments related to purchase orders or contracts which remain unperformed at year-end.

Reserved for inventories represent the portion of fund balance that is not available for appropriation because it represents the year-end fund balance of ending inventories, which are not expendable, available resources.

Reserved for workers compensation claims represents the portion of fund balance in which funds received from the various School Board departments for workers compensation claims which have not yet been required for payment of claims.

Reserved for health insurance claims represents the portion of fund balance in which funds received from employees School Board Department's health insurance claims which have not yet been required for payment of claims.

Unreserved Fund Balances

Designated for other specific projects represents the portion of fund balance identified for specific uses in the governmental funds.

Undesignated represents the portion of total fund balance available for appropriation that is uncommitted at year-end.

46




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 Codeof 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.

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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 4.69% and 0.21% 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, 2009 were rated by Standard & Poor’s and the ratings are presented below using Standard & Poor’s rating scale.

Rated Debt Investments AAA AAAm

SNAP $ - $ 67,002,189Repurchase Agreements - Underlying:U.S. Agency Securities 20,830,011 -

Total $ 20,830,011 $ 67,002,189

Fair Quality Ratings

Locality's Rated Debt Investments' Values

48



NOTE 2 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 Less ThanInvestment Type Value 1 Year

Repurchase Agreements $ 20,830,011 $ -

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 3 RESTRICTED CASH:

The City has restricted cash as of June 30, 2009 as follows:

NonmajorGovern- Business- Internal Total

Capital Debt mental type Service PrimaryGeneral Projects Service Funds Activities Funds Government

Unspent bond proceeds $ - $ 22,752,467 $ - $ - $ 26,495,034 $ - $ 49,247,501School projects - 3,043,324 - - - - 3,043,324Debt service - - 392,169 - - - 392,169OPEB - - - - - 2,040,000 2,040,000Cemetery - - - 968,050 - - 968,050Bridge repair - - - 2,669,183 - - 2,669,183Other external purposes 1,688,920 - 29,331 54,751 3,573,635 5,346,637

Total restricted cash $ 1,688,920 $ 25,795,791 $ 392,169 $ 3,666,564 $ 26,549,785 $ 5,613,635 $ 63,706,864

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NOTE 4 RECEIVABLES:

Taxes receivables and accounts receivable in the proprietary funds at June 30, 2009 are as follows:

Less-Allowance for

Taxes Accounts Uncollectible ReceivablesReceivable Receivable Subtotal Accounts Net

Primary Government:General $ 5,279,075 $ - $ 5,279,075 $ (1,937,876) $ 3,341,199Nonmajor Governmental

Funds 32,677 - 32,677 (9,639) 23,038Business-type Activities - 4,359,562 4,359,562 (194,246) 4,165,316Internal Service Funds - 230,038 230,038 - 230,038

Total $ 5,311,752 $ 4,589,600 $ 9,901,352 $ (2,141,761) $ 7,759,591

Component Unit-School Board $ - $ 163,055 $ 163,055 $ - $ 163,055

NOTE 5 DUE FROM OTHER GOVERNMENTS:

Due from other governments in the fund statements at June 30, 2009 are as follows:

Primary GovernmentNonmajor

Capital GovernmentalGeneral Projects Funds Total

Commonwealth of VirginiaState sales tax $ 609,599 $ - $ - $ 609,599Shared expenses 319,940 - - 319,940Social services reimbursement 506,928 - - 506,928Various grants 166,626 - 7,500 174,126

Total due from theCommonwealth of Virginia $ 1,603,093 $ - $ 7,500 $ 1,610,593

Federal GovernmentHUD grants $ - $ - $ 34,328 $ 34,328Social services reimbursement 432,205 - - 432,205Various grants 9,465 882,657 192,811 1,084,933

Total due from theFederal government $ 441,670 $ 882,657 $ 227,139 $ 1,551,466

Total due from other governments $ 2,044,763 $ 882,657 $ 234,639 $ 3,162,059

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NOTE 5 DUE FROM OTHER GOVERNMENTS:

Component Unit School BoardSchool

School Food SchoolOperating Service Grants

Fund Fund Fund TotalCommonwealth of Virginia

State sales tax $ 1,002,656 $ - $ - $ 1,002,656Various grants 25,547 - - 25,547

Total due from theCommonwealth of Virginia $ 1,028,203 $ - $ - $ 1,028,203

Federal GovernmentSchool food reimubursement $ - $ 146,723 $ - $ 146,723Title I - - 851,273 851,273Title VI-B - - 565,110 565,110Various grants 233,052 - 401,653 634,705

Total due from theFederal government $ 233,052 $ 146,723 $ 1,818,036 $ 2,197,811

Total due from other governments $ 1,261,255 $ 146,723 $ 1,818,036 $ 3,226,014

NOTE 6 INTERFUND TRANSACTIONS:

Inter-fund Receivables and Payables

Individual fund inter-fund receivable and payable balances at June 30, 2009 are as follows:

Due To Due From

General Fund $ 2,807,611 $ -Nonmajor Governmental Funds:

Grants Fund - 198,804Transit Fund - 4,535

Nonmajor Enterprise Funds:Golf Course Fund - 1,516,232

Internal Service Funds:Fleet Management Fund - 1,088,040

Totals $ 2,807,611 $ 2,807,611

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NOTE 6 INTERFUND TRANSACTIONS: (CONTINUED)

Purpose

Due to General Fund

$203,339 - Nonmajor Governmental Funds: Advances for receivables from other governments to be reimbursed in subsequent fiscal year.

$1,516,232 - Nonmajor Enterprise Fund: Advances for fund accumulated deficit at June 30, 2009.

Transactions between primary government and component units

Receivable and payable balances between the primary government and component units at June 30, 2009, are as follows:

Due To Due From

Primary Government $ 309,334 $ -

Component Units:School Board - 70,079Industrial Development Authority - 239,255

Totals $ 309,334 $ 309,334

The City transferred $47,982,051 to Suffolk School Board as part of its annual operating budget appropriation for support of schools.

Interfund Transfers

General Capital Debt Govern-Fund Projects Service mental Enterprise Total

Transfers from:General Fund $ - $ 2,871,100 $ 22,250,470 $ 840,864 $ 324,485 $ 26,286,919Capital Projects Fund - - 382,288 - - 382,288Utility 876,536 - - - - 876,536Nonmajor: Governmental 657,077 1,200,000 780,556 - - 2,637,633 Enterprise 356,150 - - - - 356,150Internal Service 266,159 - - - - 266,159Total $ 2,155,922 $ 4,071,100 $ 23,413,314 $ 840,864 $ 324,485 $ 30,805,685

Transfers toNonmajor

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.

52



NOTE 7 CAPITAL ASSETS:

The following is a summary of governmental capital asset activity for the fiscal year ended June 30, 2009:

Balance BalanceJuly 1, June 30,2008 Increases Decreases 2009

Capital assets not being depreciatedLand $ 22,017,163 $ - $ - $ 22,017,163Construction in progress 41,207,373 19,527,898 33,167,314 27,567,957

Total capital assets notbeing depreciated $ 63,224,536 $ 19,527,898 $ 33,167,314 $ 49,585,120

Capital assets being depreciatedBuildings $ 43,151,760 $ 12,406,340 $ - $ 55,558,100Improvements other than buildings 147,565,586 60,505 - 147,626,091Machinery and equipment 49,302,603 5,622,080 2,178,880 52,745,803

Total capital assets being depreciated $ 240,019,949 $ 18,088,925 $ 2,178,880 $ 255,929,994

Less accumulated depreciationBuildings $ 12,648,050 $ 1,063,077 $ - $ 13,711,127Improvements other than buildings 20,847,705 6,428,951 - 27,276,656Machinery and equipment 30,200,591 4,218,029 2,038,466 32,380,154

Total accumulated depreciation $ 63,696,346 $ 11,710,057 $ 2,038,466 $ 73,367,937

Total capital assets being depreciated net $ 176,323,603 $ 6,378,868 $ 140,414 $ 182,562,057

School Board Joint Tenancy Assets $ 98,390,164 $ - $ 9,369,727 $ 89,020,437

Total capital assets governmentalactivities $ 337,938,303 $ 25,906,766 $ 42,677,455 $ 321,167,614

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NOTE 7 CAPITAL ASSETS: (CONTINUED)

The following is a summary of Utility Fund capital asset activity for the year ended June 30, 2009:


Capital assets not being depreciatedLand $ 3,205,760 $ 2,942 $ - $ 3,208,702Construction in progress 77,476,784 26,000,692 9,431,330 94,046,146

Total capital assets notbeing depreciated $ 80,682,544 $ 26,003,634 $ 9,431,330 $ 97,254,848

Capital assets being depreciatedBuildings $ 21,782,695 $ 329,587 $ - $ 22,112,282Improvements other than buildings 224,566,225 10,694,921 - 235,261,146Machinery and equipment 48,378,883 758,408 - 49,137,291

Total capital assets being depreciated $ 294,727,803 $ 11,782,916 $ - $ 306,510,719

Less accumulated depreciationBuildings $ 7,987,496 $ 556,009 $ - $ 8,543,505Improvements other than buildings 43,265,654 4,542,669 - 47,808,323Machinery and equipment 19,022,423 1,092,391 - 20,114,814

Total accumulated depreciation $ 70,275,573 $ 6,191,069 $ - $ 76,466,642

Total capital assets being depreciated net $ 224,452,230 $ 5,591,847 $ - $ 230,044,077

Total capital assets Utility Fund $ 305,134,774 $ 31,595,481 $ 9,431,330 $ 327,298,925

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The following is a summary of Golf Course capital asset activity for the year ended June 30, 2009:

Balance BalanceJuly 1, June 30,

2008 Increases Decreases 2009

Capital assets not being depreciatedLand $ 1,390,791 $ - $ - $ 1,390,791

Capital assets being depreciatedBuildings $ 213,826 $ - $ - $ 213,826Improvements other than buildings 2,917,815 - - 2,917,815Machinery and equipment 42,982 - - 42,982

Total capital assets being depreciated $ 3,174,623 $ - $ - $ 3,174,623

Less accumulated depreciationBuildings $ 36,515 $ 6,086 $ - $ 42,601Improvements other than buildings 693,317 145,891 - 839,208Machinery and equipment 15,044 4,298 - 19,342

Total accumulated depreciation $ 744,876 $ 156,275 $ - $ 901,151

Total capital assets being depreciated net $ 2,429,747 $ (156,275) $ - $ 2,273,472

Total capital assets Golf Course Fund $ 3,820,538 $ (156,275) $ - $ 3,664,263

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The following is a summary of Component Unit-School Board capital asset activity for the year ended June 30, 2009:


Capital assets not being depreciatedLand $ 5,938,618 $ - $ - $ 5,938,618

Capital assets being depreciatedBuildings $ 167,538,993 $ 16,639,438 $ $ 184,178,431Improvements 14,292,024 2,104,852 - 16,396,876 Machinery and equipment 28,404,128 4,196,661 393,639 32,207,150

Total capital assetsbeing depreciated $ 210,235,145 $ 22,940,951 $ 393,639 $ 232,782,457

Less accumulated depreciationBuildings $ 55,095,466 $ 4,848,037 $ $ 59,943,503 Improvements 6,758,399 643,088 - 7,401,487 Machinery and equipment 17,235,343 2,293,663 381,412 19,147,594

Total accumulated depreciation $ 79,089,208 $ 7,784,788 $ 381,412 $ 86,492,584

Total capital assets being depreciated net $ 131,145,937 $ 15,156,163 $ 12,227 $ 146,289,873

City Joint Tenancy Assets $ (98,390,164) $ 9,369,727 $ - $ (89,020,437)

Total $ 38,694,391 $ 24,525,890 $ 12,227 $ 63,208,054

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The following is a summary of depreciation expense charged to various functions/funds for the year ending June 30, 2009:

Governmental Activites:General Government $ 376,367Judicial Administration 72,555Public Safety 1,703,259Public Works 8,823,696Public Health 24,776Parks, Recreation, and Culture 709,404

Total Governmental Activities $ 11,710,057

*

Proprietary Funds:

Utility Fund $ 6,191,069Golf Course Fund 156,275

Total Proprietary Funds $ 6,347,344

Component Unit School Board $ 7,784,788

Includes depreciation of $3,412,213 for the Fleet Maintenance Fund and$356,174 for Information Technology Fund.

NOTE 8 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, 2009:

Balance BalanceJuly 1, June 30, Due Within2008 Additions Reductions 2009 One Year

Governmental Funds:General obligation debt $ 202,896,724 $ 16,600,000 $ 12,734,737 $ 206,761,987 $ 13,285,954Literary fund loans 6,250,000 - 500,000 5,750,000 500,000Notes payable 480,000 - 240,000 240,000 240,000Section 108 loan 3,652,000 - 193,000 3,459,000 193,000Capital lease obligations 6,354,783 5,412,300 2,980,657 8,786,426 2,790,889

$ 219,633,507 $ 22,012,300 $ 16,648,394 $ 224,997,413 $ 17,009,843Add bond premiums

and other credits 5,335,408 - 247,746 5,087,662 247,746Claims payable 2,024,972 7,429,827 7,654,557 1,800,242 1,491,141OPEB 211,866 2,801,226 2,803,275 209,817 -Compensated absences 3,959,535 535,444 328,415 4,166,564 276,481

Total $ 231,165,288 $ 32,778,797 $ 27,682,387 $ 236,261,698 $ 19,025,211

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NOTE 8 LONG-TERM OBLIGATIONS: (CONTINUED)

The following is a summary of long-term obligations outstanding at June 30, 2009:

Issue Final Interest Authorized OutstandingDescription Date Maturity Rate and Issued June 30, 2009

Bonds Payable:Virginia Public School Authority 08/30/90 07/15/10 6.40 - 7.10 $ 3,685,000 $ 480,000 Virginia Public School Authority 07/31/91 07/15/12 4.85 - 6.60 451,546 85,188 General Obligations Bonds:

Public Improvement Series 1997 10/01/97 12/01/17 4.50 - 5.25 29,910,000 1,545,000 Public Improvement Series 1999 04/29/99 04/01/19 4.40 - 4.90 10,485,000 1,620,000 Public Improvement Series 2000 04/26/00 04/01/20 5.00 - 5.50 18,285,000 1,890,000 Public Improvement Series 2001 06/07/01 06/30/21 4.00 - 5.00 21,135,000 6,545,000 2001 Refunding Bonds 06/07/01 06/30/15 4.00 - 5.00 5,430,883 2,609,226 Public Improvement Series 2002 07/18/02 06/30/23 3.00 - 5.00 18,195,000 13,130,000 Public Improvement Series 2003 07/01/03 08/01/23 2.50 - 6.00 17,515,000 13,535,000 2003 Refunding Bonds 07/16/03 08/01/16 2.50 - 6.00 18,129,532 5,910,328 Public Improvement Series 2004 07/28/04 06/30/25 2.50 - 6.00 18,160,000 14,960,000 Public Improvement Series 2005 11/17/05 12/01/25 4.00 - 5.00 11,710,000 9,945,000 2005 Refunding Bonds 11/17/05 12/01/19 4.00 - 5.00 9,978,267 8,567,048 2007 Public Improvement and Refunding Bonds 04/11/07 02/01/35 4.00 - 4.50 88,081,239 86,090,197 2007B Public Improvement Bonds 12/01/07 12/01/27 4.00 - 5.00 24,475,000 23,250,000 2008 Public Improvement Bonds 10/28/08 02/01/29 4.00 - 5.00 16,600,000 16,600,000

Total general obligation bonds $ 206,761,987Literary Fund Loans:

Literary Fund Loan 12/01/99 12/01/19 3.00 5,000,000 $ 2,750,000 Literary Fund Loan 04/01/01 04/01/21 3.00 5,000,000 3,000,000 Total literary fund loans $ 5,750,000

Notes Payable:Planters' Club Note 07/15/05 07/15/10 5.00 1,200,000 $ 240,000

Total notes payable $ 240,000 Other Notes:

Section 108 Loan Payable 09/14/06 08/01/26 4.96 - 5.77 3,845,000 $ 3,459,000 Capital Lease Obligations:

Refuse Trucks 01/13/06 01/13/10 4.27 1,617,535 $ 336,732 Roadway Maintenance Equipment 04/26/06 07/01/11 3.69 4,662,530 2,219,023 Refuse Trucks 09/14/06 09/14/11 4.11 245,968 116,925 Roadway Maintenance Equipment 02/28/07 02/29/12 3.975 2,083,504 1,196,648

Various Equipment 11/10/08 11/10/13 3.90 5,412,300 4,917,098

Total capital lease obligations $ 8,786,426

Add premiums and other credits $ 5,087,662 Claims payable $ 1,800,242 Other post employment benefits $ 209,817 Compensated absences $ 4,166,564

Total governmental long-term obligations $ 236,261,698

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Amortization Requirements for Governmental Funds

The following is a summary of long-term obligation amortization requirements for governmental funds at June 30, 2009:

Year GeneralEnding

June 30, Principal Interest Principal Interest

2010 $ 13,285,954 $ 9,237,298 $ 500,000 $ 172,5002011 13,471,413 8,705,252 500,000 157,5002012 13,466,044 8,116,943 500,000 142,5002013 13,617,950 7,552,922 500,000 127,5002014 13,815,951 6,955,478 500,000 112,5002015 12,820,850 6,337,457 500,000 97,5002016 13,027,234 5,722,053 500,000 82,5002017 12,608,111 5,121,722 500,000 67,5002018 12,690,050 4,518,756 500,000 52,5002019 10,614,945 3,906,351 500,000 37,5002020 10,224,829 3,401,956 500,000 22,5002021 9,447,188 2,949,605 250,000 7,5002022 8,492,069 2,526,126 - - 2023 8,631,929 2,145,895 - - 2024 7,836,789 1,775,735 - - 2025 7,086,649 1,444,171 - - 2026 6,306,498 1,141,512 - - 2027 5,886,348 863,439 - - 2028 6,051,186 588,303 - - 2029 1,650,000 336,250 - - 2030 855,000 257,850 - - 2031 895,000 219,375 - - 2032 930,000 179,100 - - 2033 975,000 137,250 - - 2034 1,015,000 93,375 - - 2035 1,060,000 47,700 - -

Total $ 206,761,987 $ 84,281,874 $ 5,750,000 $ 1,080,000*

* Does not include G.O. Obligations for the Golf Course Fund which was consolidated with the General Fund as of July 1, 2009

Literary Fund LoansObligation Bonds

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Amortization Requirements for Governmental Funds: (Continued)

YearEnding

June 30, Principal Interest Principal Interest Principal Interest

2010 $ 193,000 $ 179,667 $ 240,000 $ 12,000 $ 2,790,889 $ 305,3382011 193,000 170,065 - - 2,549,608 195,5082012 193,000 160,406 - - 1,710,606 103,9252013 193,000 150,707 - - 1,145,621 51,0582014 193,000 140,979 - - 589,702 8,6392015 193,000 131,214 - - - -2016 193,000 121,410 - - - -2017 193,000 111,567 - - - -2018 193,000 101,521 - - - -2019 193,000 91,215 - - - -2020 193,000 80,764 - - - -2021 193,000 70,187 - - - -2022 193,000 59,495 - - - -2023 193,000 48,697 - - - -2024 193,000 37,812 - - - -2025 193,000 26,849 - - - -2026 193,000 15,809 - - - -2027 178,000 5,135 - - - -

Total $ 3,459,000 $ 1,703,499 $ 240,000 $ 12,000 $ 8,786,426 $ 664,468

Capital Lease ObligationsNotes PayableSection 108 Loan Payable

The Internal Services Fund capital lease obligations are collateralized by equipment with a book value of $6,996,117, which is net of accumulated depreciation of $4,380,071 at June 30, 2009.

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.

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Other: (Continued)

The following is a summary of the changes in long-term obligation transactions of the proprietary funds forthe year ended June 30, 2009:

Balance Balance AmountJuly 1, June 30, Due Within2008 Additions Reductions 2009 One Year

Utility Fund:Bonds payable $ 145,930,016 $ 55,500,000 $ 13,176,599 $ 188,253,417 $ 3,634,787

Add bond premiumsother credits 3,938,116 754,088 133,284 4,558,920 206,845

Net bonds payable $ 149,868,132 $ 56,254,088 $ 13,309,883 $ 192,812,337 $ 3,841,632Compensated absences 309,839 118,166 65,512 362,493 13,309Total Utility Fund $ 150,177,971 $ 56,372,254 $ 13,375,395 $ 193,174,830 $ 3,854,941

Golf Course Fund:Bonds payable $ 4,070,000 $ - $ 95,216 $ 3,974,784 $ 100,192Premium on bonds 1,313 - 69 1,244 69Total Golf Course Fund $ 4,071,313 $ - $ 95,285 $ 3,976,028 $ 100,261

Stormwater Utility Fund:Compensated absences $ 46,936 $ 16,548 $ 18,442 $ 45,042 $ 955

Total Proprietary Funds $ 154,296,220 $ 56,388,802 $ 13,489,122 $ 197,195,900 $ 3,956,157

The following is a summary of proprietary funds long-term obligations outstanding at June 30, 2009:

Issue Final Interest Authorized OutstandingDescription Date Maturity Rate % and Issued June 30, 2009

Public Utility Fund:Bonds payable:General Obligation and Revenue Bonds: Water and Sewer Revenue Bonds Series 2000 03/29/00 04/01/30 4.20 - 5.90 $ 14,435,000 $ 670,0002001 Refunding Bonds 06/07/01 06/30/15 4.00 - 5.00 1,344,117 645,774Water and Sewer Bonds Series 2001 12/14/01 04/01/31 3.85 - 5.10 18,340,000 5,620,0002003 Refunding Bonds 07/16/03 08/01/16 2.50 - 6.00 3,250,469 1,059,672

Water and Sewer Revenue Bonds Series 2003 12/04/03 10/01/33 2.10 - 5.10 11,725,000 10,680,0002003C VRA Refunding Bonds 08/07/03 10/01/16 2.00 - 5.00 3,295,000 2,025,000Water and Sewer Revenue Bonds Series 2004B 11/17/04 10/01/26 2.00 - 6.00 11,695,000 10,650,000

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Other: (Continued)

Issue Final Interest Authorized OutstandingDescription Date Maturity Rate % and Issued June 30, 2009

Public Utility Fund: (Continued)Bonds payable: (Continued)Water and Sewer Revenue Bonds Series 2005B 12/07/05 10/01/35 4.77 - 5.10 14,050,000 $ 13,295,0002005 Refunding Bonds 11/17/05 12/01/19 4.00 - 5.00 26,733 22,9522006B VRA Refunding Bonds 08/09/06 04/01/30 4.10 - 4.87 12,750,000 12,325,000Water and Sewer Revenue Bonds Series 2006C 11/29/06 10/01/36 4.26 - 4.91 36,460,000 35,845,0002007 Public Improvement and Refunding Bond 04/11/07 02/01/35 4.00 - 4.50 163,761 120,0192007 Series Water and Sewer Revenue Bond - VRA 12/13/07 10/01/37 3.40 - 5.10 39,795,000 39,795,0002008 Series Water and Sewer Revenue Bond - VRA 12/10/08 10/01/38 2.29 - 5.54 45,300,000 45,300,0002009 Series Water and Sewer Revenue Bond - VRA 06/17/09 10/01/25 1.13 - 4.86 10,200,000 10,200,000

Total long-term debt $ 188,253,417

Bond premiums and other credits 4,558,920

Net bonds payable $ 192,812,337

Compensated absenses 362,493

Total Public Utility Fund $ 193,174,830

Golf Course Fund:

General Obligation Bonds:Public Improvement Series 2004 07/02/04 06/30/30 2.00 - 6.00 $ 590,000 $ 530,000Public Improvement Series 2002 07/18/02 06/30/33 3.00 - 5.00 3,765,000 3,395,0002007 Public Improvement and Refunding Bond 04/11/07 02/01/35 4.00 - 4.50 50,000 49,784

Total bonds payable $ 3,974,784

Premium on bonds 1,244

Total Golf Course Fund $ 3,976,028

Stormwater Utility Fund:

Compensated absences $ 45,042

Total Proprietary Funds $ 197,195,900

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Other: (Continued)

The following is a summary of long-term obligation amortization requirements for proprietary funds at June 30, 2009:

Major Fund Non-major Enterprise FundYear Ending Utility Fund Golf Course Fund

June 30, Principal Interest Principal Interest

2010 $ 3,634,787 $ 8,893,666 $ 96,692 $ 184,0772011 4,510,206 8,775,010 101,756 180,5092012 4,691,504 8,579,893 111,832 176,4332013 4,880,143 8,385,449 111,907 172,0342014 5,102,055 8,192,416 116,994 167,4892015 5,112,048 7,986,958 122,101 162,6642016 5,280,567 7,759,655 127,198 157,3782017 5,374,572 7,520,575 132,317 151,7312018 5,292,525 7,284,555 132,425 145,9342019 5,522,512 7,036,192 147,543 139,6622020 5,787,498 6,774,968 152,672 132,7962021 6,040,000 6,501,180 157,813 125,5492022 6,345,000 6,208,982 162,931 117,9842023 6,635,000 5,900,356 168,071 110,0162024 6,945,000 5,575,773 183,211 101,4022025 7,285,000 5,231,621 188,351 92,2722026 7,625,000 4,865,733 198,502 82,7192027 8,045,000 4,499,622 213,653 72,5172028 7,580,000 4,111,335 218,815 61,8152029 7,940,000 3,725,714 225,000 50,7312030 8,335,000 3,319,876 240,000 39,2002031 7,800,000 2,893,522 210,000 28,0002032 6,990,000 2,489,618 220,000 17,2502033 7,345,000 2,126,557 235,000 5,8752034 7,720,000 1,744,992 - -2035 7,350,000 1,363,504 - -2036 7,730,000 981,980 - -2037 7,235,000 602,419 - -2038 5,225,000 284,837 - -2039 2,895,000 75,622 - -

Totals $ 188,253,417 $ 149,692,580 $ 3,974,784 $ 2,676,037

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 $1,299,485 and $720,245, respectively.

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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, 2009:

Balance Balance CurrentJuly 1, 2008 Additions Reductions June 30, 2009 Portion

Compensated absences:School Board $ 1,844,678 $ 642,811 $ 435,269 $ 2,052,220 $ 67,858

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 7% of the assessed valuation. As of June 30, 2009 the City's aggregated general obligation indebtedness is approximately $404 million less that the City's limit and $678 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, 2009. The City does not have overlapping debt at June 30, 2009.

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 City’s financial statements. At June 30, 2009, $26,605,000 of bonds outstanding are considered defeased.

On June 17, 2009 the City issued $10,200,000 in Water and Sewer Revenue bonds to advance refund $10,215,000 Water and Sewer Bonds Series 2001 on April 1, 2011 through April 1, 2026. This refunding reduced debt service payments by $926,907. A premium was received in the amount of $754,088 and issuance costs totaled $160,135 reflecting a net loss of refunding of $578,953.

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, 2009, 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, 2009, totals $44,875,739.

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NOTE 9 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.

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/2007AnnuRept.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 2009 were 9.22% and 12.08% of annual covered payroll, respectively.

The School Board’s contributions for professional employees were $10,175,482, $6,170,650, and $4,077,444 to the teacher cost-sharing pool for the fiscal years ended June 30, 2009, 2008 and 2007, respectively and these contributions represented 13.81%, 15.30% and 9.20%, respectively, of current covered payroll.

C. Annual Pension Cost

For fiscal year 2009, the City’s annual pension cost of $4,730,739 was equal to the City’s required and actual contributions.

For fiscal year 2009, the City School Board’s annual pension cost for the Board’s non-professional employees was $837,098 which was equal to the Board’s required and actual contributions.

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NOTE 9 DEFINED BENEFIT PENSION PLAN: (CONTINUED)

C. Annual Pension Cost: (Continued)

Annual Percentage NetFiscal Year Pension of APC Pension

Ending Cost (APC) (1) Contributed Obligation

City:June 30, 2009 $ 4,730,739 100% $ -June 30, 2008 4,404,885 100% -June 30, 2007 4,123,650 100% -

School Board:Non-professional:

June 30, 2009 $ 837,098 100% $ -June 30, 2008 821,274 100% -June 30, 2007 484,246 100% -

(1) Employer portion only

Trend information for the City and School Board

The required contribution was determined as part of the June 30, 2008 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at June 30, 2008 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, 2008, the most recent actuarial valuation date, the City’s plan was 84.61% funded. The actuarial accrued liability for benefits was $168,516,668, and the actuarial value of assets was $142,580,456, resulting in an unfunded actuarial accrued liability (UAAL) of $25,936,212. The covered payroll (annual payroll of active employees covered by the plan) was $50,262,100 and ratio of the UAAL to the covered payroll was 51.60%.

As of June 30, 2008 the most recent actuarial valuation date, the City School Board’s plan was 93.50% funded. The actuarial accrued liability for benefits was $16,575,497, and the actuarial value of assets was $15,498,806, resulting in an unfunded actuarial accrued liability (UAAL) of $1,076,691. The covered payroll (annual payroll of active employees covered by the plan) was $6,776,948 and ratio of UAAL to the covered payroll was 15.89%.

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.

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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 UnearnedRevenue Revenue

Unearned developer deposits (General) $ - $ 1,263,399Unearned developer deposits (Nonmajor Governmental) - 2,686,138Unearned grant receipts (Governmental) 67,250Taxes receivable, net (Governmental) 1,934,170 -Taxes receivable, net (Nonmajor Governmental) 13,095Unearned revenue, (Nonmajor Proprietary) - 102,052

Total $ 2,014,515 $ 4,051,589

NOTE 11 CONTINGENT LIABILITIES AND COMMITMENTS:

Litigation

Various 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, 2009, projects expected to be completed at various dates through 2009 had a total unexpended balance of $18,976,201(governmental) and $12,159,295(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.

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NOTE 11 CONTINGENT LIABILITIES AND COMMITMENTS: (CONTINUED)

Self-Insurance

The City is self-insured for a portion of its health insurance risks up to $100,000 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, 2009 consists of all current self-insured claims payable amounting to $1,800,242. The current portion is $1,491,141 and $1,383,853 for 2009 and 2008, respectively. Claims payable for health insurance are based on current enrollment and benefits and historical experience. Claims payable for workman’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, 2009 and 2008:

CurrentClaims Year Claims

Payable Claims and PayableJuly 1, Changes in Claims June 30,2008 Estimates Payments 2009

Workman's Compensation and other $ 1,164,369 $ 802,921 $ (928,549) $ 1,038,741Health Insurance 860,603 6,626,906 (6,726,008) 761,501

Totals $ 2,024,972 $ 7,429,827 $ (7,654,557) $ 1,800,242

CurrentClaims Year Claims

Payable Claims and PayableJuly 1, Changes in Claims June 30,2007 Estimates Payments 2008

Workman's Compensation and other $ 684,742 $ 8,180,579 $ (7,700,952) $ 1,164,369Health Insurance 1,456,711 731,272 (1,327,380) 860,603

Totals $ 2,141,453 $ 8,911,851 $ (9,028,332) $ 2,024,972

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.

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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 $500,000 and $500,000 for each covered accident, for the years ended June 30, 2009 and 2008, respectively. Any claims exceeding $500,000 for each covered accident are paid by specific stop-loss insurance provided by a third-party insurance company. As of June 30, 2009, the workers’ compensation benefit obligation consisted of $465,510 in reported unpaid claims and estimated incurred but not reported claims. Changes in the balance of claims liabilities during the years ended June 30, 2009 and 2008, are as follows:

Current YearClaims Claims and Claims

Payable Changes in Claims PayableJuly 1, 2008 Estimates Payments June 30, 2009

Workers' compensation $ 338,917 $ 784,399 $ (657,806) $ 465,510

Current YearClaims Claims and Claims

Payable Changes in Claims PayableJuly 1, 2007 Estimates Payments June 30, 2008

Workers' compensation $ 363,659 $ 434,674 $ (459,416) $ 338,917

At June 30, 2009, School Operating Fund cash of $707,570 was held for purposes of funding the School’s future claims liabilities. As a result, $707,570 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, 2009, 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.

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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 2009. It is estimated that the remaining $255,159 will be recognized as post closure care expenses between June 30, 2009, 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 Constitutional Officer's Self-Insurance Plan $ 1,000,000Commonwealth of Virginia Faithful

Performance of Duty Bond Plan 500,000

Thomas A. Hazelwood, Constitutional Officer's Self-Insurance Plan 1,000,000Commissioner of the Revenue Commonwealth of Virginia Faithful


Raleigh H. Isaacs, Sheriff Constitutional Officer's Self-Insurance Plan 1,000,000Commonwealth of Virginia Faithful


W. Randolph Carter, Jr., Constitutional Officer's Self-Insurance Plan 1,000,000Clerk of Circuit Court Commonwealth of Virginia Faithful


C. Phillips Ferguson, Constitutional Officer's Self-Insurance Plan 1,000,000Commonwealth's Attorney

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NOTE 14 SUBSEQUENT EVENTS:

In November, 2009 the City issued General Obligation Utility Bonds, Series 2009 in the amount of $27 million to fund various utility projects.

Subsequent to year end the City entered into an agreement with a Company to lease the Sleepy Hole Golf Course Property and for the management and renovation of the golf course property.

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, 2009 the City contributed $2,323,275 and the School Board contributed $1,269,000 to the Trust Fund. There have been no expenses allocated to the Trust Fund during the fiscal year ended June 30, 2009.

NOTE 16 OTHER POST-EMPLOYMENT BENEFITS PROGRAM:

City:

A. Plan Description

The City 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 the City group health insurance plan for the 24 month prior to retirement date, who where 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.

The City 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.

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NOTE 16 OTHER POST-EMPLOYMENT BENEFITS PROGRAM:

City: (Continued)

B. Funding Policy

The City establishes employer contribution rates for plan participants as part of the budgetary process each year. The City also determines how the plan will be funded each year whether it will partially fund the plan or fully fund the plan. Again this is determined annually as part of the budgetary process. For participating retirees the City pays $167 per month towards the monthly premium and the retiree contributes remaining funds towards the monthly premium.

C. Annual Required Contribution (ARC)

In accordance with GASB Statement No. 45, an actuarial study was performed calculating the postemployment healthcare costs as of July 1, 2007. The actuarial valuation estimated the Unfunded Actuarial Accrued Liability (“UAAL”) at $15,080,528 and an Annual Required Contribution (“ARC”) of $2,323,275. The annual cost of other post employment benefits (OPEB) under GASB 45 is called the annual required contribution or ARC. The City paid $480,000 towards the estimated pay as you go cost for OPEB benefits in fiscal year 2009, and in addition contributed $2,323,275 to a Trust Fund to fully fund the ARC. The City elected to pre-fund OPEB liabilities. The City 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.

Annual OPEB Cost

For 2009, the City’s expected cash payment of $2,803,275 was more than the annual pension costs. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 are as follows:

PercentageAnnual of Annual Net

Fiscal Pension OPEB Cost PensionYear Ended Cost Contributed Obligation

June 30, 2009 $ 2,801,226 100% $ 209,817June 30, 2008 2,802,627 93% 211,866

Funded Status and Funding Progress

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.

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NOTE 16 OTHER POST-EMPLOYMENT BENEFITS PROGRAM: (CONTINUED)

City: (Continued)

C. Annual Required Contribution (ARC): (Continued)

Funded Status and Funding Progress: (Continued)

As of July 1, 2007 the most recent actuarial valuation date, the City’s plan was 23.85% funded. The actuarial accrued liability for benefits was $17,403,803, and the actuarial value of assets was $4,723,275, resulting in an unfunded actuarial accrued liability UAAL of $15,080,528. The covered payroll (annual payroll of active employees covered by the plan) was $57,292,676, and the ratio of UAAL to the covered payroll was 26.32%.

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

Cost Method

The projected unit credit (PUC) cost method was used for this valuation. The objective of this method is to fund each participant’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

Funded

Discount rate 7.5%Payroll growth N/A

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 where 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.

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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 Required Contribution (ARC)

In accordance with GASB Statement No. 45, an actuarial study was performed calculating the postemployment healthcare costs as of July 1, 2007. The actuarial valuation estimated the Unfunded Actuarial Accrued Liability (“UAAL”) at $17,783,547 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 2009, 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.

Annual OPEB Cost

For 2009, 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 2009 are as follows:

PercentageAnnual of Annual Net

Fiscal Pension OPEB Cost PensionYear Ended Cost Contributed Obligation

June 30, 2009 $ 2,214,000 100% $ -June 30, 2008 2,213,791 100% -

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School Board: (Continued)

C. Annual Required Contribution (ARC): (Continued)

Funded Status and Funding Progress

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, 2009 the School Board’s plan was 13.24% funded. The actuarial accrued liability for benefits was $19,052,547, and the actuarial value of assets was $2,714,000, resulting in an unfunded actuarial accrued liability UAAL of $17,783,547. The covered payroll (annual payroll of active employees covered by the plan) was $59,163,327, and the ratio of UAAL to the covered payroll was 30.06%.

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

Cost Method

The entry age normal cost method is used to determine the Plan’s liabilities and costs. Under this cost method, the actuarial present value of projected benefits of every active Participant as if the Plan’s provisions on the valuation date had always been in effect, is determined as a level percentage of expected annual earnings for each future year of expected service. A normal cost for each year from the assumed entry date is determined by applying this level of percentage of pay to the assumed earnings for that year (or if benefits are not pay related, the level amount for each year).

Under this method, inactive participants have no normal cost, and their actuarial liability is the present value of the plan benefits to which they and their beneficiaries are entitled. The Plan’s total annual normal cost and actuarial liability are the sum of the individual participant amounts.

An experience gain or loss is a decrease or increase in the unfunded actuarial liability attributable to actual experience that differed from that expected by the actuarial assumptions. Such gains or losses are explicitly recognized under this method.

Interest Assumptions

Funded

Discount rate 7.5%Payroll growth N/A

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NOTE 17 NET ASSET ADJUSTMENT

Net Assets were adjusted as of July 1, 2008 as follows:

SchoolCity Board

Fiduciary Fiduciary Funds Funds

Net assets, as previously reported $ 3,845,000 $ -

Adjustment in: OPEB Trust Fund for amounts included in error (1,445,000) -

School Board OPEB Trust Fund amount reported in City - 1,442,949

Net assets, as restated $ 2,400,000 $ 1,442,949

NOTE 18 FUND BALANCE DESIGNATIONS - GENERAL FUND:

The General Fund has the following items designated at June 30, 2009:

Economic development incentive funds $ 2,167,263

Commonwealth Attorney - state asset forfeiture 100,597

Police - various grants 295,078

Fire - various grants 592,201

Public works -sinking fund 15,688

Social services - grants 217,864

Parks, recreation and cultural - various 12,447

Employee Relations Committee 17,952

IDA - Harrel property 239,255

Total $ 3,658,345

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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.

77

CITY OF SUFFOLK, VIRGINIA Exhibit 12Page 1 of 4

Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual - General FundYear Ended June 30, 2009

VarianceFrom Final

BudgetOriginal Final Positive

Fund, Function, Activity, Element Budget Budget Actual (Negative)

Revenues: General property taxes: Real estate $ 78,857,750 $ 78,857,750 $ 78,411,044 $ (446,706) Personal property 15,250,000 15,250,000 14,598,591 (651,409) Public service corporations 1,960,000 1,960,000 1,983,785 23,785 Mobile homes - - 70,490 70,490 Machinery and tools - - 1,539,417 1,539,417 Penalties 1,000,000 1,000,000 909,973 (90,027) Interest - - 246,691 246,691

Total general property taxes $ 97,067,750 $ 97,067,750 $ 97,759,991 $ 692,241

Other local taxes: Sales and use $ 7,795,000 $ 7,795,000 $ 7,323,289 $ (471,711) Utility tax 3,800,000 3,800,000 4,279,814 479,814 Communication taxes 3,900,000 3,900,000 3,733,667 (166,333) Business and occupational licenses 6,400,000 6,400,000 6,261,676 (138,324) Motor vehicle license 1,580,000 1,580,000 1,713,998 133,998 Bank stock 330,000 330,000 306,405 (23,595) Recordation 1,700,000 1,700,000 1,186,018 (513,982) Tobacco 1,507,099 1,507,099 1,408,348 (98,751) Lodging 875,000 875,000 778,559 (96,441) Meals 5,600,000 5,600,000 5,683,139 83,139 Public facility taxes 95,000 95,000 39,667 (55,333) Admission 380,000 380,000 376,024 (3,976)

Total other local taxes $ 33,962,099 $ 33,962,099 $ 33,090,604 $ (871,495)

Permits, fees and licenses: (3,019,099) Animal license $ 22,000 $ 22,000 $ 35,830 $ 13,830 Permits and other licenses 1,238,200 1,238,200 1,085,128 (153,072)

Total permits, fees, and licenses $ 1,260,200 $ 1,260,200 $ 1,120,958 $ (139,242)

Fines and forfeitures $ 455,000 $ 455,000 $ 521,771 $ 66,771

Revenue from use of money and property: Revenue from use of money $ 2,700,000 $ 2,700,000 $ 923,220 $ (1,776,780) Revenue from use of property 512,470 512,470 815,339 302,869

Total use of money and property $ 3,212,470 $ 3,212,470 $ 1,738,559 $ (1,473,911)

Charges for services: Excess fees - Circuit Court Clerk $ 451,787 $ 451,787 $ 280,521 $ (171,266) Police and traffic control 32,375 32,375 121,609 89,234 Charges for other protection 50,000 50,000 70,024 20,024 Charges for parks and recreation 360,000 370,000 616,713 246,713 Charges for library 6,000 6,000 11,680 5,680 Charges for planning and community development 49,975 49,975 40,584 (9,391) Charges for other services 1,710,000 1,710,000 1,555,292 (154,708) Airport sales 1,020,000 1,020,000 733,842 (286,158)

Total charges for services $ 3,680,137 $ 3,690,137 $ 3,430,265 $ (259,872)

79



VarianceFrom Final



Revenues: (Continued) Miscellaneous revenue: Miscellaneous $ 1,772,013 $ 3,757,709 $ 1,626,657 $ (2,131,052)

Total revenue from local sources $ 141,409,669 $ 143,405,365 $ 139,288,805 $ (4,116,560)

Revenue from the Commonwealth: Noncategorical aid: Tax on Deeds $ 582,000 $ 582,000 $ 755,088 $ 173,088 Railroad rolling stock tax 90,000 90,000 124,488 34,488 House Bill 599 Funds 3,288,182 3,288,182 3,163,583 (124,599) PPTRA 10,169,729 10,169,729 10,169,730 1 Mobile home titling tax 65,000 65,000 38,843 (26,157) Vehicle rental tax 150,000 150,000 153,956 3,956

Total noncategorical aid $ 14,344,911 $ 14,344,911 $ 14,405,688 $ 60,777

Categorical aid: Commonwealth's Attorney $ 1,013,000 $ 1,013,000 $ 955,298 $ (57,702) Commissioner of Revenue 191,000 191,000 185,356 (5,644) Treasurer 263,000 263,000 247,981 (15,019) Sheriff 957,000 957,000 932,417 (24,583) Circuit Court Clerk 461,000 608,605 615,022 6,417 Registrar 55,000 55,000 61,372 6,372

Total categorical aid $ 2,940,000 $ 3,087,605 $ 2,997,446 $ (90,159)

Other categorical aid: Public assistance and welfare administration $ 3,141,629 $ 3,141,629 $ 3,944,768 $ 803,139 Budget reduction to C/VA - - (328,846) (328,846) Other categorical aid 510,987 2,214,261 1,509,508 (704,753) Total other categorical aid $ 3,652,616 $ 5,355,890 $ 5,125,430 $ (230,460) Total categorical aid $ 6,592,616 $ 8,443,495 $ 8,122,876 $ (320,619) Total revenue from the Commonwealth $ 20,937,527 $ 22,788,406 $ 22,528,564 $ (259,842)

Revenue from the Federal Government: Categorical aid: Public assistance and welfare administration $ 5,727,368 $ 5,727,368 $ 4,870,484 $ (856,884) Emergency Services 11,000 11,000 11,032 32 Parks, recreation and cultural 35,642 35,642 27,074 (8,568) Property seizure - - 3,745 3,745 Other federal grants 194,280 198,488 218,245 19,757 Total revenue from the federal government $ 5,968,290 $ 5,972,498 $ 5,130,580 $ (841,918)

Total revenues $ 168,315,486 $ 172,166,269 $ 166,947,949 $ (5,218,320)

80



VarianceFrom Final



Expenditures: General government administration: Legislative: City Council $ 390,097 $ 380,309 $ 357,951 $ 22,358 General and financial administration: City Manager 866,995 856,008 813,490 42,518 Budget and strategic planning 375,943 432,200 369,054 63,146 City Attorney 895,537 900,249 874,641 25,608 Human resources 1,002,797 1,011,632 965,912 45,720 Commissioner of the Revenue 851,967 847,643 832,101 15,542 City Assessor 1,217,307 1,262,821 925,640 337,181 City Treasurer 1,343,498 1,341,231 1,308,121 33,110 Finance 1,218,429 1,212,701 973,926 238,775 Purchasing 320,133 320,360 307,669 12,691 Other general government - - 19,375 (19,375) Board of elections: Registrar 284,793 329,295 328,052 1,243 Total general government administration $ 8,767,496 $ 8,894,449 $ 8,075,932 $ 818,517

Judicial administration: Courts: Circuit Court $ 155,967 $ 155,967 $ 156,891 $ (924) District Court 80,070 91,925 74,162 17,763 Magistrate 19,273 21,584 18,922 2,662 Juvenile and Domestic Relations Court 25,186 26,597 23,380 3,217 Juvenile and Domestic Relations Court Service Unit 781,042 975,286 706,055 269,231 Circuit Court Clerk 1,074,960 1,283,544 1,200,238 83,306 Sheriff 1,880,024 1,866,619 1,863,131 3,488 Commonwealth's Attorney 2,654,257 2,733,862 2,591,809 142,053 Total judicial administration $ 6,670,779 $ 7,155,384 $ 6,634,589 $ 520,795

Public safety: Police $ 15,169,866 $ 15,271,929 $ 14,597,462 $ 674,467 Communications 1,437,120 1,406,448 1,428,187 (21,739) Fire 16,634,476 16,516,620 15,527,841 988,779 Western Tidewater Regional Jail 306,042 306,042 153,021 153,021 Animal shelter and management 596,038 543,016 485,656 57,360 Neighborhood development services 2,114,536 2,058,502 1,958,081 100,421 Emergency services 19,096 18,501 14,051 4,450 Total public safety $ 36,277,174 $ 36,121,058 $ 34,164,299 $ 1,956,759

Public works: Administration $ 1,347,024 $ 1,953,486 $ 1,732,228 $ 221,258 Refuse collection 3,761,619 3,679,661 3,499,899 179,762 Maintenance building and grounds 2,453,159 2,138,607 2,161,284 (22,677) Aviation facilities 1,169,203 1,175,351 899,955 275,396 Total public works $ 8,731,005 $ 8,947,105 $ 8,293,366 $ 653,739

Health and welfare: Social services $ 12,784,656 $ 13,115,222 $ 11,582,608 $ 1,532,614 Total health and welfare $ 12,784,656 $ 13,115,222 $ 11,582,608 $ 1,532,614

81



VarianceFrom Final



Expenditures: (Continued) Education: Contribution to Component Unit School Board $ 48,052,130 $ 48,052,130 $ 47,982,051 $ 70,079 Lease rent of building 491,101 491,101 490,857 244 Total education $ 48,543,231 $ 48,543,231 $ 48,472,908 $ 70,323

Parks, recreation and cultural: Parks and recreation $ 4,708,680 $ 4,577,591 $ 4,177,840 $ 399,751 Public libraries 2,326,903 2,477,807 2,368,829 108,978 Total parks, recreation and cultural $ 7,035,583 $ 7,055,398 $ 6,546,669 $ 508,729

Community development: Planning $ 1,281,724 $ 1,294,270 $ 1,206,613 $ 87,657 Geopraphic information system 577,496 598,978 471,974 127,004 Economic development 1,644,815 4,568,124 2,297,902 2,270,222 Communications 588,363 580,307 445,147 135,160 Tourism 524,717 526,467 488,841 37,626 Local and regional organizations 2,131,826 2,200,350 2,196,806 3,544 Cooperative extension services 84,296 84,296 65,147 19,149 Total community development $ 6,833,237 $ 9,852,792 $ 7,172,430 $ 2,680,362

Nondepartmental: Fringe benefits and insurance $ 9,680,666 $ 11,448,508 $ 8,753,753 $ 2,694,755 Total nondepartmental $ 9,680,666 $ 11,448,508 $ 8,753,753 $ 2,694,755

Total expenditures $ 145,323,827 $ 151,133,147 $ 139,696,554 $ 11,436,593

Excess (deficiency) of revenues over expenditures $ 22,991,659 $ 21,033,122 $ 27,251,395 $ 6,218,273

Other financing sources (uses): Transfers in $ 2,128,845 $ 2,128,845 $ 2,155,922 $ 27,077 Transfers (out) (25,323,687) (26,831,187) (26,286,919) 544,268 Total other financing (uses) $ (23,194,842) $ (24,702,342) $ (24,130,997) $ 571,345

Net changes in fund balance $ (203,183) $ (3,669,220) $ 3,120,398 $ 6,789,618

Fund balance at beginning of year 203,183 3,669,220 48,089,671 44,420,451

Fund balance at end of year $ - $ - $ 51,210,069 $ 51,210,069

82


Schedule of Funding Progress for the Virginia Retirement System and Other Post Employment Benefits

Last Three Fiscal Years

Actuarial Actuarial Unfunded UAALValue of Accrued (Excess Funded) Funded Annual as % of

Valuation Assets Liability Actuarial Ratio Covered PayrollDate (AVA) (AAL) Accrued Liability (2) / (3) Payroll (4) / (6)(1) (2) (3) (4) (5) (6) (7)

City:

6/30/2008 $ 142,580,456 $ 168,516,668 $ 25,936,212 84.61% $ 50,262,100 51.60%6/30/2007 127,487,501 151,283,005 23,795,504 84.27% 47,940,645 49.64%6/30/2006 110,472,189 131,405,148 20,932,959 84.07% 42,243,197 49.55%

Discretely Presented Component Unit School Board - Non-Professional:

6/30/2008 $ 15,498,806 $ 16,575,497 $ 1,076,691 93.50% $ 6,776,948 15.89%6/30/2007 13,749,278 15,354,981 1,605,703 89.54% 6,831,960 23.50%6/30/2006 11,982,366 13,939,590 1,957,224 85.96% 6,207,715 31.53%

Actuarial Actuarial UnfundedValue of Accrued (Excess Funded) Annual UAAL

Valuation Assets Liability Actuarial Funded Covered as % ofDate (AVA) (AAL) Accrued Liability Ratio Payroll Payroll

City:

FY 09 July 1, 2007 $ 4,723,275 $ 17,403,803 $ 15,080,528 23.85% $ 57,292,676 26.32%FY 08 July 1, 2007 2,400,000 19,803,803 17,403,803 12.12% 55,476,526 31.37%

* **School Board:

FY 09 July 1, 2007 $ 2,714,000 $ 19,052,547 $ 17,783,547 13.24% $ 59,163,327 30.06%FY 08 July 1, 2007 1,445,000 20,497,547 19,052,547 7.05% 55,305,573 34.45%

* *** These amounts reflect contributions to the OPEB trust fund by the City and School Board** Amounts provided by the City and School Board

Virginia Retirement System

Other Post Employment Benefits

83

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.

85


Schedule of Revenues, Expenditures and Changes in Fund Balance -- Budget and Actual -Debt Service FundYear Ended June 30, 2009

VarianceFrom Final

BudgetOriginal Final PositiveBudget Budget Actual (Negative)

Revenues: Revenue from use of money and property: Revenue from use of money $ - $ - $ 6,981 $ 6,981

Total revenues $ - $ - $ 6,981 $ 6,981

Expenditures: Debt service: Principal $ 13,667,737 $ 14,612,737 $ 13,667,737 $ 945,000 Interest and other fiscal charges 9,913,209 8,968,209 9,645,646 (677,437) Bond issuance costs - - 288,914 (288,914)

Total expenditures $ 23,580,946 $ 23,580,946 $ 23,602,297 $ (21,351)

Excess (deficiency) of revenues over expenditures $ (23,580,946) $ (23,580,946) $ (23,595,316) $ (14,370)

Other financing sources (uses): Transfers in $ 23,580,946 $ 23,580,946 $ 23,413,314 $ (167,632)

Total other financing sources (uses) $ 23,580,946 $ 23,580,946 $ 23,413,314 $ (167,632)

Net changes in fund balance $ - $ - $ (182,002) $ (182,002)

Fund balance at beginning of the year - - 861,708 861,708

Fund balance at end of the year $ - $ - $ 679,706 $ 679,706

87


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).

89


Capital Projects FundSchedule of Current Capital ProjectsYear Ended June 30, 2009

(1)Construction

Available in Progress(1) (2) (3) Project at June 30,

Project Name Authorization Expenditures Committed Balance 2009

Airport Development $ 300,000 $ 300,000 $ - $ - $ -Airport Drainage Study 1,034,074 414,886 421,058 198,130 414,886Airport Security Improvements 277,300 196,844 22,622 57,833 219,466Airport Water/Sewer Lines 314,000 276,914 - 37,086 276,914Ambulance Purchase 653,339 312,220 336,555 4,564 162,220Animal Shelter Kennel Floor 195,000 27,921 - 167,079 -Barnes Rd. - Widening and Paving 750,000 535,795 - 214,205 535,795Benton Road Improvements 800,000 582,819 180,909 36,272 582,819Burbage Grant Sidewalk Project 38,542 36,224 - 2,318 -Chuckatuck Village Plan 681,385 332,872 18,828 329,686 107,258Citywide Emergency Home Repair 8,822 5,000 - 3,822 5,000CMAQ-Main Street Pedestrian Improvements 726,983 114,745 11,150 601,088 114,745College Drive Ditch Pipping 53,236 - - 53,236 -Corridor Plans Implementation 431,844 431,844 - - 142,282Downtown Connector Road Improvements 3,896,220 1,593,307 2,088,612 214,301 862,307Driver Village Plan 305,772 96,598 127,767 81,407 224,366East Suffolk Complex 9,180,812 6,756,804 2,194,146 229,862 -East Washington St Plan 404,492 297,571 4,492 102,429 297,571East Washington Street/Hall Place Neighborhood 981,458 929,331 - 52,127 524,669East Washington Streetscape 11,890,972 9,477,463 282,259 2,131,250 5,968,251Eclipse/Crittenden Plan 915,788 3,548 86,469 825,771 3,548Emergency Signal - Holland/O'Kelly 170,000 166,440 2,943 617 166,440EPA Phase II Stormwater 258,917 18,277 121,543 119,097 18,277Fairground Revitalization Plan 1,000,000 302,148 351,449 346,403 302,148Finney Avenue Extension 2,002,240 1,985,821 - 16,419 4,810Fire Engine 1,114,137 - - 1,114,137 -Geographic Information System 4,025,172 3,938,616 58,253 28,303 3,522,516Great Dismal Swamp Interpretive Center 179,115 - - 179,115 -Greenways, Blueways, & Trails 1,419,886 547,420 3,565 868,901 543,856Hampton Roads Technology Park 1,154,298 - - 1,154,298 -Hangar Taxiway Construction/Site Preparation 1,085,221 1,083,992 - 1,229 -Hazardous Materials Management 300,000 246,482 - 53,518 -Health & Human Services Building 14,691 41,200 - -26,509 -Hillpoint Elementary School 20,178,968 20,016,862 - 162,106 -Holland and Kenyon Rd Inter Improve 1,250,000 686 272,220 977,095 686Holland Village Plan 474,458 454,458 10,900 9,100 46,050Hollywood 2nd Street Egress 146,686 - - 146,686 -HSIP Proactive Safety Project 424,607 - - 424,607 -Huntersville Community Plan 145,055 90,324 - 54,731 79,124James River Water Shed/Sandler Pond 36,250 - - 36,250 -Kidzone 41,334 - - 41,334 -Kings Fork Safety Center 7,710,741 1,642,073 4,737,180 1,331,488 1,642,073Kings Fork Safety Center Engine 500,000 - - 500,000 -Kings Highway Bridge Construction 1,000,000 - - 1,000,000 -Land Easement Acquisition Runway 4/22 571,591 378,813 30,915 161,862 202,660Main Street to Commerce Street Connection 517,508 508,302 17,507 -8,301 508,302Maintenance Facility Building 2,124,098 995,238 79,842 1,049,018 126,764Mullican Drive Rural Addition Roadway 153,377 35,348 8,002 110,027 35,348Municipal Center Rennovation 643,122 576,155 - 66,967 0Municipal Channel Upgrade 1,017,438 342,400 29,088 645,950 31,309Nansemond Parkway Civic League 50,000 - - 50,000 -Nansemond Parkway Elementary Second Roadway 339,848 339,848 - - -Nansemond Parkway Recreation Facility 53,000 - - 53,000 -

Cumulative Totals

91


Capital Projects FundSchedule of Current Capital ProjectsYear Ended June 30, 2009

ConstructionTotal Total Available in Progress

Project Project Project at June 30,Project Name Authorization Expenditures Committed Balance 2009

Nansemond Parkway/Shoulders Hill Road $ 15,956,250 $ 897,475 $ 66,075 $ 14,992,700 $ 897,475Nansemond River High School Sewer Pump Station 250,000 15,056 10,185 224,759 25,241Neighborhood Plan Implementation 49,475 - - 49,475 - Neighborhood Plans (Olde Towne) 217,906 195,998 9,686 12,222 27,308New Whaleyville/Holland Elementary 1,502,701 - - 1,502,701 - North Main Street Fifth Lane Project 4,609 - - 4,609 - North Main Street Landscaping 49,186 49,186 - - - North Suffolk Library 4,782,574 4,782,574 - - 96,457Northgate Industrial Park 435,138 486,139 - (51,001) 61,139Oakland Elementary Second Roadway Entrance 531,000 531,000 - - - Obici House Stabilization 364,020 133,034 - 230,986 133,034Old Courthouse Renovation/Jail Demolition 1,243,999 438,691 49,041 756,268 438,691Old East Washington Street Improvements 267,869 241,396 23,989 2,484 21,505Old Human Resource Bldg. Renovation 400,000 - - 400,000 - Parks Capital Maintenance 2,437,575 2,226,071 66,848 144,655 1,118,541Peanut Park Improvements 75,000 - - 75,000 - Phoenix Bank 1,432,287 377,113 132,763 922,411 377,113Pierce Park 80,000 73,337 - 6,663 73,337Pierce Park II Street Improvements 180,000 - - 180,000 - Planters Club Improvements $ 217 $ - - $ 217 - Police Administration Building 9,255,108 5,222,199 4,044,785 (11,876) - Program Administration 90,004 48,630 - 41,375 48,630Property Acquisition - Obici Hospital 2,001,779 1,554,077 - 447,702 1,329,510Public Buildings Capital Maintenance 2,735,530 2,388,918 4,186 342,426 1,708,400Raleigh Avenue 124,170 102,543 - 21,627 102,543Recreation Buildings Capital Maintenance 1,007,008 870,586 43,773 92,649 38,926Riddick's Folly Structural Repair 183,000 162,943 21,176 (1,119) 162,943Road Maintenance Off- Holland Rd. 160,000 18,504 112,440 29,056 18,504Road Maintenance Off- Salt Storage Facility 225,000 77,527 134,485 12,989 77,527Rt. 17 Improvements (Special Taxing District) 1,211,167 20,360 1,224,778 (33,971) 20,360Runway 4-22 Safety Area Expansion 4,129,470 226,216 396 3,902,859 226,216Saratoga 200,000 136,032 - 63,968 136,032Saratoga Phase II Neighborhood Rehabilitation 865,511 820,162 - 45,349 292,214Small Community Plans 25,000 - - 25,000 - Sportsman Blvd. 20,000 19,998 - 2 - Spring Street Park Acquisition 20,000 - - 20,000 - Storm Drainage Improvements 1,296,085 1,286,906 - 9,179 - Street Landscape 384,813 289,078 - 95,736 26,351Suffolk Industrial Park 2,832,863 2,846,087 - (13,224) - Transportation Improvements - Rt. 17 (Townpoint Rd.) 5,026,243 2,267,352 1,510,684 1,248,207 2,267,352Urban Roadway Construction 4,348,000 - - 4,348,000 - Village Plans 10,083 - - 10,083 - Wellons Street Parking Lot 250,000 58,814 949 190,237 58,814Whaleyville Village Plan 473,799 311,106 21,690 141,003 111,333

Totals $ 151,076,235 $ 85,608,713 $ 18,976,201 $ 46,491,321 $ 27,567,955

92


Utility FundSchedule of Current Capital ProjectsYear Ended June 30, 2009

ConstructionAvailable in ProgressProject at June 30,

Project Name Authorization(2) Expenditures(2) Committed (3) Balance 2009 (1)

Airport Sanitary Sewer $ 2,422,578 $ 2,532,275 $ - $ - $ -Airport Water Distribution System Improvements 64,961 64,961 - - -Bank Street Sanitary Sewer Rehab 81,667 81,667 - - -Bennett's Harbor Sanitary Sewer 3,122,179 3,122,179 - - -Bennett's Pasture Water Main 2,015,366 2,015,366 - - 223,446Carter's Cove Water Main 13,486 13,486 - - -Cedar Point Sanitary Sewer 5,004,248 4,817,198 4,459 182,591 4,646,867City Well Systems - Central Treatment 498,304 498,304 - - 97,389City Works 221,728 142,888 78,840 - 146,379Community Well Sites Abandonment 3,133,193 3,058,847 13,478 60,868 1,467,866Constance Rd Sanitary Sewer Rehab 782,233 488,396 216,085 77,752 554,527Constant's Wharf Utility Relocation 865,600 865,600 - - (13,332)Constant's Wharf Wastewater Pump Station 1,337,640 1,050,895 286,700 46 47,733Crittenden Rd./Rt. 17 Water Transmission Phase II 752,206 752,206 - - 17,593Crittenden Well Trans Main Pipeline 4,400,736 3,869,076 - 531,660 3,883,095Crittenden/Eclipse Sewer 3,395,731 3,018,525 45,598 439,081 3,101,683Crittenden/Eclipse Water 1,551,252 1,464,143 - 90,739 1,598,879Dam Rehabilitation 187,951 8,732 179,219 - 13,681Eastover Sanitary Sewer Extension 30,606 15,528 15,078 - 20,674Elephant's Fork Pump Station & FM Upgrades 400,253 189,974 162,999 47,280 197,730Emergency Generators 212,731 212,731 - - 212,731Emergency Sewer Upgrades 2,038 2,038 - - -Expansion of Treatment Plant 133,776 - - 133,776 3,331Fairgrounds Portsmouth Main Relocation 1,014,270 521,820 528,977 (36,527) 526,761Fairgrounds Sewer Upgrades 292,876 209,352 62,857 20,667 216,345Fairgrounds Water Upgrades 524,770 338,200 138,026 48,544 349,951Faulk Road Water Main Extension 372,507 372,507 - - -Finney Avenue Project 243,994 154,299 - 107,412 -Fire Hydrant Upgrades 125,775 125,775 - - -Fire Station 10 - PS & FM 77,282 76,265 1,017 - 76,563Force Main Upgrades 441,541 407,491 24,537 9,512 411,798Holland Consent Wells 1,524,186 903,030 620,090 1,065 1,357,697Holland Emergency Wells 1,644,002 1,594,403 67,011 (17,411) 1,731,886Holland Sewage Treatment Study 170,215 159,518 - 10,697 116,945Lake Kennedy Manhole Casting Replacements 162,750 162,750 - - -Lake Prince Raw Water Transmission Main 1,155,566 1,155,566 - - 239,930Lake Speight Neighborhood Sewer Extension 150,449 42,532 48,940 58,976 89,018Lead Service Line Replacement 1,075 1,075 - - -Maple Hills/Forest Glen Water 705,380 637,249 63,080 5,051 641,277Maple Hills/Forest Glenn Sewer 2,164,705 2,090,042 - 74,663 2,203,020Master Sanitary Sewer Plan Update 1,070,943 940,388 130,555 - 374,436Meadow Country Road Water Extension 788,275 593,660 188,606 6,009 -Misc Development Project Easements (Sewer) 10,579 8,008 - 2,571 -Misc Development Project Easements (Water) 500 428 - 73 -Miscellaneous Pump Station Upgrades 1,089,064 972,637 1,825 114,602 408,104Mullican Dr Water Main Ext 10,000 - 7,435 2,565 264N.E. Water Source & Transmission 867,118 867,118 - - 18,655Nansemond Auto Body 5,805 5,805 - - -Nansemond Gardens/Wilroy Acres Sewer 17,617 14,758 - 2,859 16,217Nansemond Gardens/Wilroy Acres Water 967,229 929,428 36,596 1,205 63,286Nansemond Parkway NE Water 770,424 770,424 - - -Nansemond Parkway Northeast Sewer Extension 2,822,677 2,876,679 - - -Neighborhood Sewer Projects 9,886,600 - - 9,886,600 1,742Non-Residential Sewer Extension 8,081,439 - - 8,081,439 834,706

Cumulative Totals

93


Utility FundSchedule of Current Capital ProjectsYear Ended June 30, 2009

ConstructionAvailable in Progress

Cumulative Totals Project at June 30,

Project Name Authorization(2) Expenditures(2) Committed (3) Balance 2009 (1)

Norfolk Bulk Water $ 1,000,000 $ 911,588 $ - $ 88,413 $ -Old Obici Pump Station Demolition 3,500 3,500 - - -Operations & Maintenance Facility 200,000 141,561 26,849 31,590 255,886Operations & Maintenance Facility FY01 7,947,800 1,308,349 - 6,639,451 1,358,654Operations Center (Sewer) 350,000 - - 350,000 - Pearl Street Rehab 68,816 20,378 48,438 - 21,655 Pembroke Water Main Replacement 137,722 26,942 110,780 - 29,936 Pepsi Water Main Ext 34,387 - - 34,387 17,186 Pine Valley Point Sewer Upgrade 18,224 18,224 - - - PS 124 - Nansemond Pkwy 603 603 - - 603 Pump Station Generator Replacements 32,895 32,895 - - - Respass Beach/Holly Acres Sewer 1,780,064 1,560,937 - 219,126 - Rt 58 Water Tank & Pump Station 4,884,102 618,421.21 4,261,236 4,444 1,136,548 Sanitary Sewer Evaluation Study 19,623,762 10,715,401 3,376,984 5,531,377 7,055,017 Sanitary Sewer Facilities Manual 99,800 99,012 788 - 84,188 Sewage PS Upgrades (10, 11, 12, 13, 43) 181,298 143,868 2,394 35,036 149,049 Sewer Infrastructure Annual Services Contract 138,017 45,244 92,773 - 47,690 Sewer Pump Station #14 Upgrades 284,829 284,829 - - - Sewer Pumping Station Access Driveway 430,919 197,825 20,421 212,373 207,195 Sewer System Upgrades 7,195,604 - - 7,195,604 99,660 Sleepy Hole Golf Course Wastewater 12,848 12,028 820 - 12,028 South Main St Sewer Rehab 36,958 32,523 4,435 - 38,978 Suffolk/Isle of Wight Interconnect 331,208 331,208 - - 544 Turlington Park Sewer Extension 275,267 180,112 45,676 49,479 180,509 Turlington Rd. Trans & Force Main Extension 800,468 800,468 - - 847,056 Waste Water Rate Study 425,144 425,144 - - - Water & Sewer Facility Generator Connect 544,967 380,000 146,552 18,415 446,391 Water Distribution & Transmission System Expansion 10,543,848 - - 10,543,848 88,983 Water Distribution System Upgrades 10,057,590 - - 10,057,590 65,109 Water Facilities Manual 60,000 53,337 6,663 - 78,637 Water Layer GIS 1,084,447 454,068 46 630,334 658,007 Water Meter Upgrades 251,747 251,747 - - - Water Source Development 5,060,720 - - 5,060,720 125,323 Water Storage Tank 60,600 57,624 2,975 1 59,388 Water System Emergency Response Plan 221,545 209,500 11,605 1,376 25,508 Water Treatment Plant Phase II 52,388,945 50,930,450 335,113 1,527,063 49,430,275 Water Valve Replacement 2,919 2,919 - - - Whaleyville Water Distribution System 4,850,412 4,312,394 725,177 (187,159) 4,810,844 Whaleyville Water Source 833,988 816,427 17,561 - 816,426

Total $ 200,046,037 $ 120,595,747 $ 12,159,295 $ 67,987,833 $ 94,046,146

(1) Included in cumulative expenditure totals(2) Inception of project through 6/30/09(3) Open POs at 6/30/09

94


Nonmajor Governmental Funds

95


Combining Balance Sheet -Nonmajor Governmental FundsAt June 30, 2009

DowntownSuffolk BusinessTaxing Overlay Road ConsolidatedDistrict District Maintenance Grants

AssetsCash and cash equivalents $ 315,312 $ 44,676 $ 6,784,551 $ 124,614Restricted cash - - 2,669,183 29,331 Receivables (Net of allowances for uncollectibles):

Taxes receivable 211 5,440 - -Accounts receivable - - 24,731 -Due from other governments - - - 234,639

Total assets $ 315,523 $ 50,116 $ 9,478,465 $ 388,584

LiabilitiesVouchers and Accounts payable $ - $ 4,930 $ 812,818 $ 46,524Due to other funds - - - 198,804Unearned revenue - - 2,673,962 12,176Deferred revenue 202 4,679 - -

Total liabilities $ 202 $ 9,609 $ 3,486,780 $ 257,504

Fund BalancesFund balances:

Reserved for encumbrances $ - $ - $ 577,208 $ 491,033Reserved for grant compliance - - - 17,211

Designated:Specific projects 200,076 - 2,669,183 -

Undesignated: Special revenue 115,245 40,507 2,745,294 (377,164)

Total fund balances $ 315,321 $ 40,507 $ 5,991,685 $ 131,080

Total liabilities and fund balances $ 315,523 $ 50,116 $ 9,478,465 $ 388,584


96

Exhibit 17

TotalRoute 17 Mosquito Non-Major

Transit Law Taxing Taxing GovernmentalSystem Library District District Cemetery Funds

$ 7,307 $ 187,092 $ 874,095 $ 802,687 $ - $ 9,140,334- - - - 968,050 3,666,564

- - 15,980 1,407 - 23,038- 4,157 - - - 28,888- - - - - 234,639

$ 7,307 $ 191,249 $ 890,075 $ 804,094 $ 968,050 $ 13,093,463

$ 2,772 $ 4,865 $ 18,624 $ - $ - $ 890,5334,535 - - - - 203,339

- - - - - 2,686,138- - 6,991 1,223 - 13,095

$ 7,307 $ 4,865 $ 25,615 $ 1,223 $ - $ 3,793,105

$ - $ - $ - $ - $ - $ 1,068,241- - - - - 17,211

- - - - - 2,869,259

- 186,384 864,460 802,871 968,050 5,345,647

$ - $ 186,384 $ 864,460 $ 802,871 $ 968,050 $ 9,300,358

$ 7,307 $ 191,249 $ 890,075 $ 804,094 $ 968,050 $ 13,093,463

97


Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental FundsYear Ended June 30, 2009

DowntownSuffolk BusinessTaxing Overlay Road ConsolidatedDistrict District Maintenance Grants

Revenues: Real estate taxes $ 3,269 $ 196,012 $ - $ - Permits, privilege fees and regulatory licenses - - 61,344 - Revenue from use of money and property 2,509 395 44,840 - Charges for services - - 1,177,468 40,821 Miscellaneous - - 61,491 89,183 Intergovernmental: Revenue from the Commonwealth - - 17,737,864 299,456 Revenue from the Federal Government - - - 1,066,092

Total revenues $ 5,778 $ 196,407 $ 19,083,007 $ 1,495,552

Expenditures Current: Judicial administration $ - $ - $ - $ 131,478 Public safety - - - 425,877 Public works - 177,968 16,888,947 14,213 Health and welfare - - - 15,302 Parks, recreation, and cultural - - - 133,834 Community development - - - 843,917

Total expenditures $ - $ 177,968 $ 16,888,947 $ 1,564,621

Excess (deficiency) of revenues over expenditures $ 5,778 $ 18,439 $ 2,194,060 $ (69,069)

Other financing sources (uses): Transfers in $ - $ - $ - $ 57,649 Transfers (out) - - (630,000) -

Total other financing sources (uses) $ - $ - $ (630,000) $ 57,649

Net changes in fund balances $ 5,778 $ 18,439 $ 1,564,060 $ (11,420)

Fund balances at beginning of year 309,543 22,068 4,427,625 142,500

Fund balances at end of year $ 315,321 $ 40,507 $ 5,991,685 $ 131,080


98

Exhibit 18

TotalRoute 17 Mosquito Nonmajor

Transit Law Taxing Taxing GovernmentalSystem Library District District Cemetery Funds

$ - $ - $ 1,081,621 $ 3,804 $ - $ 1,284,706- - - - - 61,344- 1,507 13,014 - 27,077 89,342

46,634 46,960 - - 24,733 1,336,616- 1,824 - - - 152,498

- - - - - 18,037,320- - - - - 1,066,092

$ 46,634 $ 50,291 $ 1,094,635 $ 3,804 $ 51,810 $ 22,027,918

$ - $ 49,534 $ - $ - $ - $ 181,012- - 86,180 - - 512,057

829,849 - - - - 17,910,977- - - - - 15,302- - - - - 133,834- - - - 15,987 859,904

$ 829,849 $ 49,534 $ 86,180 $ - $ 15,987 $ 19,613,086

$ (783,215) $ 757 $ 1,008,455 $ 3,804 $ 35,823 $ 2,414,832

$ 783,215 $ - $ - $ - $ - $ 840,864- - (1,980,556) - (27,077) (2,637,633)

$ 783,215 $ - $ (1,980,556) $ - $ (27,077) $ (1,796,769)

$ - $ 757 $ (972,101) $ 3,804 $ 8,746 $ 618,063

- 185,627 1,836,561 799,067 959,304 8,682,295

$ - $ 186,384 $ 864,460 $ 802,871 $ 968,050 $ 9,300,358

99

CITY OF SUFFOLK, VIRGINIA Page 1 of 3

Schedule of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds - Budget and ActualYear Ended June 30, 2009

Suffolk Taxing DistrictVariance Variance

From FromFinal Final

Budget BudgetOriginal Final Positive Original Final PositiveBudget Budget Actual (Negative) Budget Budget Actual (Negative)

Revenues: Real estate taxes $ - $ - $ 3,269 $ 3,269 $ 201,000 $ 201,000 $ 196,012 $ (4,988) Permits, privilege fees and regulatory

licenses - - - - - - - - Fines and forfeitures - - - - - - - - Revenue from use of money

and property - - 2,509 2,509 - - 395 395 Charges for services - - - - - - - - Miscellaneous - - - - - - - - Intergovernmental: - - - - - Revenue from the Commonwealth - - - - - - - - Revenue from the Federal Government - - - - - - - -

Total revenues $ - $ - $ 5,778 $ 5,778 $ 201,000 $ 201,000 $ 196,407 $ (4,593)

Expenditures Current: Judicial administration $ - $ - $ - $ - $ - $ - $ - $ - Public safety - - - - - - - - Public works - 200,076 - 200,076 201,000 201,000 177,968 23,032 Health and welfare - - - - - - - - Parks, recreation, and cultural - - - - - - - - Community development - - - - - - - -

Total expenditures $ - $ 200,076 $ - $ 200,076 $ 201,000 $ 201,000 $ 177,968 $ 23,032

Excess (deficiency) of revenues over expenditures $ - $ (200,076) $ 5,778 $ 205,854 $ - $ - $ 18,439 $ 18,439

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

Total other financing sources (uses) $ - $ - $ - $ - $ - $ - $ - $ -

Net changes in fund balances $ - $ (200,076) $ 5,778 $ 205,854 $ - $ - $ 18,439 $ 18,439

Fund balances at beginning of year - 200,076 309,543 109,467 - - 22,068 22,068

Fund balances at end of year $ - $ - $ 315,321 $ 315,321 $ - $ - $ 40,507 $ 40,507


Downtown Business Overlay District

100

Exhibit 19Page 2 of 3

Variance VarianceFrom FromFinal Final


$ - $ - $ - $ - $ - $ - $ - $ -

126,250 126,250 61,344 (64,906) - - - - - - - - - - - -

- - 44,840 44,840 - - - - 1,285,000 1,285,000 1,177,468 (107,532) 27,230 27,230 46,634 19,404

20,000 20,000 61,491 41,491 - - - - - - - - -

17,576,388 17,576,388 17,737,864 161,476 - - - - - - - - - - - -

$ 19,007,638 $ 19,007,638 $ 19,083,007 $ 75,369 $ 27,230 $ 27,230 $ 46,634 $ 19,404

$ - $ - $ - $ - $ - $ - $ - $ - - - - - - - - -

19,007,638 19,065,352 16,888,947 2,176,405 837,230 837,230 829,849 7,381 - - - - - - - - - - - - - - - - - - - - - - -

$ 19,007,638 $ 19,065,352 $ 16,888,947 $ 2,176,405 $ 837,230 $ 837,230 $ 829,849 $ 7,381

$ - $ (57,714) $ 2,194,060 $ 2,251,774 $ (810,000) $ (810,000) $ (783,215) $ 26,785

$ - $ - $ - $ - $ 810,000 $ 810,000 $ 783,215 $ (26,785) - - (630,000) (630,000) - - - -

$ - $ - $ (630,000) $ (630,000) $ 810,000 $ 810,000 $ 783,215 $ (26,785)

$ - $ (57,714) $ 1,564,060 $ 1,621,774 $ - $ - $ - $ -

- 57,714 2,371,295 2,313,581 - - - -

$ - $ - $ 3,935,355 $ 3,935,355 $ - $ - $ - $ -

Road Maintenance Transit

101


Schedule of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds - Budget and ActualYear Ended June 30, 2009 (Continued)

Variance VarianceFrom FromFinal Final


Revenues: Real estate taxes $ - $ - $ - $ - $ 1,216,000 $ 1,216,000 $ 1,081,621 $ (134,379) Permits, privilege fees and regulatory

licenses - - - - - - - - Fines and forfeitures - - - - - - - - Revenue from use of money

and property - - 1,507 1,507 - - 13,014 13,014 Charges for services 68,758 68,758 46,960 (21,798) - - - - Miscellaneous 8,000 8,000 1,824 (6,176) - - - - Intergovernmental: - - Revenue from the Commonwealth - - - - - - - - Revenue from the Federal Government - - - - - - - -

Total revenues $ 76,758 $ 76,758 $ 50,291 $ (26,467) $ 1,216,000 $ 1,216,000 $ 1,094,635 $ (121,365)

Expenditures Current: Judicial administration $ 76,758 $ 76,758 $ 49,534 $ 27,224 $ - $ - $ - $ - Public safety - - - - 435,444 435,444 86,180 349,264 Public works - - - - - - - - Health and welfare - - - - - - - - Parks, recreation, and cultural - - - - - - - - Community development - - - - - - - -

Total expenditures $ 76,758 $ 76,758 $ 49,534 $ 27,224 $ 435,444 $ 435,444 $ 86,180 $ 349,264

Excess (deficiency) of revenues over expenditures $ - $ - $ 757 $ 757 $ 780,556 $ 780,556 $ 1,008,455 $ 227,899

Other financing sources (uses): Transfers in $ - $ - $ - $ - $ - $ - $ - $ - Transfers (out) - - - - (780,556) (780,556) (1,980,556) (1,200,000)

Total other financing sources (uses) $ - $ - $ - $ - $ (780,556) $ (780,556) $ (1,980,556) $ (1,200,000)

Net changes in fund balances $ - $ - $ 757 $ 757 $ - $ - $ (972,101) $ (972,101)

Fund balances at beginning of year - - 185,627 185,627 - - 1,836,561 1,836,561

Fund balances at end of year $ - $ - $ 186,384 $ 186,384 $ - $ - $ 864,460 $ 864,460

Route 17 Taxing District


Law Library

102


Nonmajor Proprietary Funds

103


Combining Statement of Net Assets - Nonmajor Proprietary FundsAt June 30, 2009

GolfCourse StormwaterFund Fund Totals

ASSETSCurrent Assets Cash and cash equivalents $ - $ 2,898,172 $ 2,898,172 Restricted cash 54,751 - 54,751 Receivables (net of allowance for uncollectibles) 56,157 158,248 214,405

Total Current Assets $ 110,908 $ 3,056,420 $ 3,167,328

Noncurrent Assets Deferred charges $ 64,160 $ - $ 64,160 Capital assets: - Land $ 1,390,791 $ - $ 1,390,791 Buildings 213,826 - 213,826 Improvements other than buildings 2,917,815 - 2,917,815 Machinery and equipment 42,982 - 42,982 Less: Accumulated depreciation (901,151) - (901,151) Total Capital Assets (net) $ 3,664,263 $ - $ 3,664,263 Total Noncurrent Assets $ 3,728,423 $ - $ 3,728,423

Total Assets $ 3,839,331 $ 3,056,420 $ 6,895,751

LIABILITIESCurrent Liabilities Vouchers and accounts payable $ 9,736 $ 28,405 $ 38,141 Unearned revenue - 102,052 102,052 Accrued interest 77,192 - 77,192 Due to other funds 1,516,232 - 1,516,232 Current portion of compensated absences - 955 955 Bonds, notes payable and capital lease obligations - current 96,692 - 96,692 Total Current Liabilities $ 1,699,852 $ 131,412 $ 1,831,264

Noncurrent Liabilities Noncurrent portion of compensated absences $ - $ 44,086 $ 44,086 Net premium on bonds 1,243 - 1,243 Bonds, notes payable and capital lease obligations - net of current 3,878,093 - 3,878,093

Total Noncurrent Liabilities $ 3,879,336 $ 44,086 $ 3,923,422Total Liabilities $ 5,579,188 $ 175,498 $ 5,754,686

NET ASSETSInvested in capital assets, net of related debt $ (311,765) $ - $ (311,765)Unrestricted (deficit) assets (1,428,092) 2,880,922 1,452,830

Total Net Assets $ (1,739,857) $ 2,880,922 $ 1,141,065

Total Liabilities and Net Assets $ 3,839,331 $ 3,056,420 $ 6,895,751


105


Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Nonmajor Proprietary FundsYear Ended June 30, 2009


Operating revenues: Charges for services $ 1,095,315 $ 4,056,979 $ 5,152,294

Total operating revenues $ 1,095,315 $ 4,056,979 $ 5,152,294

Operating expenses: Personnel services $ - $ 1,699,899 $ 1,699,899 Purchased services 1,316,411 105,972 1,422,383 Contractual services 2,405 488,333 490,738 Supplies 4,498 - 4,498 Depreciation and amortization 156,275 - 156,275 Leased property 21,300 - 21,300 Other charges 3,341 630,066 633,407

Total operating expenses $ 1,504,230 $ 2,924,270 $ 4,428,500

Net income from operations $ (408,915) $ 1,132,709 $ 723,794

Nonoperating revenues (expenses): Interest income $ 428 $ 22,941 $ 23,369 Interest and other fiscal expenses (184,999) - (184,999)

Total nonoperating revenues (expenses) $ (184,571) $ 22,941 $ (161,630)

Net income before contributions and transfers $ (593,486) $ 1,155,650 $ 562,164

Transfers in 324,485 - 324,485 Transfers (out) - (356,150) (356,150)

Change in net assets $ (269,001) $ 799,500 $ 530,499

Net assets, beginning of year (1,470,856) 2,081,422 610,566

Net assets, end of year $ (1,739,857) $ 2,880,922 $ 1,141,065


106


Combining Statement of Cash Flows - Nonmajor Proprietary FundsYear Ended June 30, 2009


Cash flows from operating activities: Receipts from customers and users $ 1,097,492 $ 4,061,168 $ 5,158,660 Payments to employees (including fringe benefits) - (1,701,794) (1,701,794) Payments for operating activities (1,345,512) (1,219,310) (2,564,822)

Net cash provided by (used in) operating activities $ (248,020) $ 1,140,064 $ 892,044

Cash flows from non-capital financing activities: Transfers in (out) $ 526,378 $ (356,150) $ 170,228

Net cash provided by (used in) non-capital financing activities $ 526,378 $ (356,150) $ 170,228

Cash flows from capital and related financing activities: Principal paid on bonds and notes $ (95,216) $ - $ (95,216) Interest paid on debt (183,570) - (183,570)

Net cash (used in) capital and related financing activities $ (278,786) $ - $ (278,786)

Cash flows from investing activities: Interest earned $ 428 $ 22,941 $ 23,369

Net increase in cash and cash equivalents $ - $ 806,855 $ 806,855

Cash and cash equivalents at beginning of year 54,751 2,091,317 2,146,068

Cash and cash equivalents at end of year $ 54,751 $ 2,898,172 $ 2,952,923

Reconciliation of operating income (loss) to net cash provided by (used in) operating activities:Cash flows from operations: Income (loss) from operations $ (408,915) $ 1,132,709 $ 723,794

Adjustment to reconcile net income (loss) to net cash provided by (used in ) operations:

Depreciation and amortization 156,275 - 156,275

Changes in operating accounts: (Increase) decrease in: Accounts receivable 2,177 (32,922) (30,745) Increase (decrease) in: Accounts payable 2,443 5,061 7,504 Deferred revenue - 37,111 37,111 Compensated absences - (1,895) (1,895)

Net cash provided by (used in) operating activities $ (248,020) $ 1,140,064 $ 892,044


107


Internal Service Funds

109


Combining Statement of Net Assets - Internal Service FundsAt June 30, 2009

Information Fleet RiskTechnology Management Management

Fund Fund Fund TotalsASSETSCurrent Assets:

Cash and cash equivalents $ 892,259 $ 410,950 $ 8,195,815 $ 9,499,024Restricted cash - 3,573,635 2,040,000 5,613,635

Receivables (net of allowance for uncollectibles): Accounts receivable - 146,929 83,109 230,038

Inventories 47,315 298,642 - 345,957Prepaids - - 216,240 216,240

Total Current Assets $ 939,574 $ 4,430,156 $ 10,535,164 $ 15,904,894

Capital assets: Land $ - $ 298,000 $ - $ 298,000 Buildings and improvements - 1,221,050 - 1,221,050 Improvements other than buildings - 35,157 - 35,157 Machinery and equipment 2,620,303 39,997,610 - 42,617,913 Less: Accumulated depreciation (1,945,596) (23,670,609) - (25,616,205)

Total Capital Assets (net) $ 674,707 $ 17,881,208 $ - $ 18,555,915

Total Assets $ 1,614,281 $ 22,311,364 $ 10,535,164 $ 34,460,809

LIABILITIESCurrent Liabilities:

Accounts payable $ 146,896 $ 213,270 $ 112,957 $ 473,123Claims payable - current portion - - 1,491,141 1,491,141Accrued interest - 63,181 - 63,181

Due to other funds - 1,088,040 - 1,088,040Current portion of compensated absences 6,227 2,679 795 9,701Current portion of capital leases - 2,790,888 - 2,790,888

Total Current Liabilities $ 153,123 $ 4,158,058 $ 1,604,893 $ 5,916,074

Noncurrent Liabilities:Noncurrent portion of compensated absences $ 86,717 $ 76,347 $ 6,778 $ 169,842Claims payable - net of current - - 309,101 309,101Noncurrent portion of capital leases - 5,995,536 - 5,995,536

Total Noncurrent liabilities $ 86,717 $ 6,071,883 $ 315,879 $ 6,474,479

Total Liabilities $ 239,840 $ 10,229,941 $ 1,920,772 $ 12,390,553

NET ASSETSInvested in capital assets, net of related debt $ 674,707 $ 9,094,784 $ - $ 9,769,491Unrestricted assets (deficit) 699,734 2,986,639 8,614,392 12,300,765

Total Net Assets $ 1,374,441 $ 12,081,423 $ 8,614,392 $ 22,070,256

Total Liabilities and Net Assets $ 1,614,281 $ 22,311,364 $ 10,535,164 $ 34,460,809

111


Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Internal Service FundsYear Ended June 30, 2009


Fund Fund Fund TotalsOperating revenues: Charges for services $ 2,609,551 $ 10,460,936 $ 15,306,846 $ 28,377,333 Other operating revenues 870 3,655 20,586 25,111

Total operating revenues $ 2,610,421 $ 10,464,591 $ 15,327,432 $ 28,402,444

Operating expenses: Personnel services $ 877,521 $ 1,193,978 $ 153,153 $ 2,224,652 Insurance claims and expenses - - 8,114,803 8,114,803 Purchased services 96,952 27,084 63,594 187,630 Contractual services 460,064 768,913 7,725 1,236,702 Supplies 123,040 3,797,734 8,767 3,929,541 Utilities 37,085 45,837 1,493 84,415 Insurance and bonds - - 1,320,294 1,320,294 OPEB - - 2,323,275 2,323,275 Depreciation and amortization 356,174 3,412,214 - 3,768,388 Building and equipment rental 16,937 432,717 - 449,654 Other charges 95,837 7,923 20,428 124,188

Total operating expenses $ 2,063,610 $ 9,686,400 $ 12,013,532 $ 23,763,542

Net income (loss) from operations $ 546,811 $ 778,191 $ 3,313,900 $ 4,638,902

Nonoperating revenues (expenses): Interest income $ 5,023 $ 6,632 $ 57,032 $ 68,687 Interest expense - (331,212) - (331,212) Gain (loss) on disposal of capital assets - (111,099) - (111,099)

Total nonoperating revenues (expenses) $ 5,023 $ (435,679) $ 57,032 $ (373,624)

Net income (loss) before contributions and transfers $ 551,834 $ 342,512 $ 3,370,932 $ 4,265,278

Capital contributions - 2,409,702 - 2,409,702 Transfers (out) (83,790) (140,348) (42,021) (266,159)

Changes in net assets $ 468,044 $ 2,611,866 $ 3,328,911 $ 6,408,821

Net assets, beginning of year 906,397 9,469,557 5,285,481 15,661,435

Net assets, end of year $ 1,374,441 $ 12,081,423 $ 8,614,392 $ 22,070,256

112


Combining Statement of Cash Flows - Internal Service FundsYear Ended June 30, 2009


Fund Fund Fund Totals

Cash flows from operating activities: Receipts from customers and users $ 2,610,421 $ 10,317,691 $ 15,250,693 $ 28,178,805 Payments to employees (including fringe benefits) (862,764) (1,185,793) (157,625) (2,206,182) Payments for operating activities (814,785) (5,010,709) (12,017,240) (17,842,734)

Net cash provided by operating activities $ 932,872 $ 4,121,189 $ 3,075,828 $ 8,129,889

Cash flows from non-capital financing activities: Transfers (out) $ (83,790) $ (140,348) $ (42,021) $ (266,159)

Net cash provided by (used in) non-capital financing activities $ (83,790) $ (140,348) $ (42,021) $ (266,159)

Cash flows from capital and related financing activities: Acquisition of capital assets $ (464,985) $ (4,524,986) $ - $ (4,989,971) Principal paid on capital lease obligations - (2,980,657) - (2,980,657) Capital contributions - 2,409,702 - 2,409,702 Proceeds from capital lease obligations - 5,412,300 - 5,412,300 Proceeds from sale of capital assets - 1,200 - 1,200 Interest paid on debt - (320,447) - (320,447)

Net cash (used in) capital and related financing activities $ (464,985) $ (2,888) $ - $ (467,873)

Cash flows from investing activities: Interest earned $ 5,023 $ 6,632 $ 57,032 $ 68,687

Net increase (decrease) in cash and cash equivalents $ 389,120 $ 3,984,585 $ 3,090,839 $ 7,464,544

Cash and cash equivalents at beginning of year 503,139 - 7,144,976 7,648,115

Cash and cash equivalents at end of year $ 892,259 $ 3,984,585 $ 10,235,815 $ 15,112,659

Reconciliation of operating income to net cash provided by (used in) operating activities:Cash flows from operations: Income (loss) from operations $ 546,811 $ 778,191 $ 3,313,900 $ 4,638,902

Adjustment to reconcile net income (loss) to net cash provided by operations:

Depreciation and amortization 356,174 3,412,214 - 3,768,388

Changes in operating accounts: (Increase) decrease in: Accounts receivable and due from other governments - (146,900) (76,739) (223,639) Inventories (29,680) 40,321 - 10,641 Prepaids - 103,441 47,763 151,204 Increase (decrease) in: Accounts payable 44,810 (74,264) 20,106 (9,348) Compensated absences 14,757 8,186 (4,472) 18,471 Claims payable - - (224,730) (224,730)

Net cash provided by operating activities $ 932,872 $ 4,121,189 $ 3,075,828 $ 8,129,889

113


Agency Funds

115


Combining Statement of Fiduciary Net Assets -Agency FundsAt June 30, 2009

Special CommonwealthWelfare of Virginia

Fund Fund Totals

AssetsCash and cash equivalents $ 26,458 $ 3,368 $ 29,826

Total assets $ 26,458 $ 3,368 $ 29,826

LiabilitiesAmounts held for others $ 26,458 $ 3,368 $ 29,826

Total liabilities $ 26,458 $ 3,368 $ 29,826

117


Combining Statement of Changes in Assets and LiabilitiesAgency FundsYear Ended June 30, 2009

Balance BalanceBeginning End ofof Year Additions Deletions Year

Special Welfare Fund: Assets: Cash $ 20,810 $ 125,207 $ 119,559 $ 26,458

Liabilities: Amounts held for others $ 20,810 $ 125,207 $ 119,559 $ 26,458

Commonwealth of Virginia Fund: Assets: Cash $ 2,678 $ 154,145 $ 153,455 $ 3,368


Totals -- All agency funds Assets: Cash $ 23,488 $ 279,352 $ 273,014 $ 29,826 Total assets $ 23,488 $ 279,352 $ 273,014 $ 29,826


Total liabilities $ 23,488 $ 279,352 $ 273,014 $ 29,826

118


Discretely Presented Component Unit School Board

119


Combining Balance Sheet - Governmental Funds - Discretely Presented Component Unit School BoardAt June 30, 2009

ComponentUnit

School Subtotal The PrudenSchool Food School Excluding Center for Total

Operating Service Grants Component Industry & SchoolFund Fund Fund Unit Technology Board

ASSETS Cash and investments: Unrestricted $ 20,093,944 $ 1,503,701 $ - $ 21,597,645 $ 168,525 $ 21,766,170 Receivables (net of allowance for

uncollectibles): Accounts receivable 126,474 19,439 17,142 163,055 4,696 167,751 Due from other funds 749,061 - - 749,061 - 749,061 Due from other governments 1,260,255 146,723 1,818,036 3,225,014 - 3,225,014 Inventories 123,499 443,699 - 567,198 - 567,198 Prepaids 40,000 - - 40,000 - 40,000

Total assets $ 22,393,233 $ 2,113,562 $ 1,835,178 $ 26,341,973 $ 173,221 $ 26,515,194

LIABILITIESAccounts payable $ 2,080,359 $ 65,258 $ 64,066 $ 2,209,683 $ - $ 2,209,683Accrued liabilities 467,345 - - 467,345 168,525 635,870Accrued payroll 10,069,772 166,740 707,478 10,943,990 - 10,943,990Amounts held for others 37,752 - - 37,752 - 37,752Due to primary government 70,079 - - 70,079 - 70,079Due to other governments - - - - 4,696 4,696Due to other funds - - 749,061 749,061 - 749,061

Total liabilities $ 12,725,307 $ 231,998 $ 1,520,605 $ 14,477,910 $ 173,221 $ 14,651,131

FUND BALANCESReserved for:

Encumbrances $ 8,456,735 $ - $ 112,667 $ 8,569,402 $ - $ 8,569,402Inventories 123,499 443,699 - 567,198 - 567,198Workers compensation claims 707,570 - - 707,570 - 707,570Health insurance claims 380,122 - - 380,122 - 380,122State funds - - 235,535 235,535 - 235,535

Unreserved:Undesignated (deficit) - 1,437,865 (33,629) 1,404,236 - 1,404,236

Total fund balances $ 9,667,926 $ 1,881,564 $ 314,573 $ 11,864,063 $ - $ 11,864,063

Total liabilities and fund balances $ 22,393,233 $ 2,113,562 $ 1,835,178 $ 26,341,973 $ 173,221 $ 26,515,194

Reconciliation of Fund Balances to Net AssetsFund balances $ 11,864,063Capital assets used in governmental activities are not current financial resources and therefore not

63,208,054Long-term liabilities are not due and payable in the current period and therefore are not reported

(2,052,220)

Total net assets $ 73,019,897

in the funds

reported in the governmental funds

120


Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds - Discretely Presented Component Unit School BoardYear Ended June 30, 2009

ComponentUnit

School Subtotal The PrudenSchool Food School Excluding Center for Total

Operating Service Grants Component Industry & SchoolFund Fund Fund Unit Technology Board

Revenues:Revenue from use of money and property $ 78,177 $ 2,332 $ - $ 80,509 $ - $ 80,509 Charges for services 152,171 2,454,431 - 2,606,602 96,725 2,703,327 Miscellaneous 669,776 29,928 - 699,704 - 699,704 Intergovernmental:

City contribution to School Board 47,982,051 - - 47,982,051 - 47,982,051 Revenue from the Commonwealth 85,607,100 95,677 586,112 86,288,889 26,000 86,314,889 Revenue from the Federal Government 1,421,969 3,411,041 7,102,943 11,935,953 - 11,935,953 School Board contribution to Pruden Center - - - - 1,927,721 1,927,721 Isle of Wight contribution to Pruden Center - - - - 927,933 927,933

Total revenues $ 135,911,244 $ 5,993,409 $ 7,689,055 $ 149,593,708 $ 2,978,379 $ 152,572,087

Expenditures:Current:

Education $ 132,717,455 $ 5,809,930 $ 7,843,260 $ 146,370,645 $ 2,978,379 $ 149,349,024 Capital contribution to Primary Government 795,360 - - 795,360 - 795,360

Total expenditures $ 133,512,815 $ 5,809,930 $ 7,843,260 $ 147,166,005 $ 2,978,379 $ 150,144,384

Excess (deficiency) of revenues over expenditures $ 2,398,429 $ 183,479 $ (154,205) $ 2,427,703 $ - $ 2,427,703

Other financing sources (uses): Transfers in $ - $ - $ 188,969 $ 188,969 $ - $ 188,969 Transfers (out) (188,969) - - (188,969) - (188,969)

Total other financing sources (uses) $ (188,969) $ - $ 188,969 $ - $ - $ -

Net changes in fund balances $ 2,209,460 $ 183,479 $ 34,764 $ 2,427,703 $ - $ 2,427,703

Fund balances at beginning of year 7,458,466 1,698,085 279,809 9,436,360 - 9,436,360

Fund balances at end of year $ 9,667,926 $ 1,881,564 $ 314,573 $ 11,864,063 $ - $ 11,864,063

Reconciliation of Changes in Fund Balances to Changes in Net Assets: Net changes in fund balances $ 2,427,703 Change in capital assets 24,513,663 Changes in compensated absences (207,542) Changes in net assets $ 26,733,824

121


Budgetary Reconciliation Schedule Governmental Funds - Discretely Presented Component Unit School BoardYear Ended June 30, 2009

Total Total Exhibit 31 Encumbrances Exhibit 29

Total revenues $ 135,911,244 $ - $ 135,911,244Total other financing sources - - -

Total revenues and other financing sources $ 135,911,244 $ - $ 135,911,244

Total expenditures $ 141,969,550 $ (8,456,735) $ 133,512,815Total other financing (uses) 188,969 - 188,969

Total expenditures and other financing (uses) $ 142,158,519 $ (8,456,735) $ 133,701,784

Net changes in fund balances $ (6,247,275) $ 8,456,735 $ 2,209,460

School Operating Fund

122

Exhibit 30

Total Total Total Total Exhibit 31 Encumbrances Exhibit 29 Exhibit 31 Encumbrances Exhibit 29

$ 5,993,409 $ - $ 5,993,409 $ 7,689,055 $ - $ 7,689,055- - - 188,969 - 188,969

$ 5,993,409 $ - $ 5,993,409 $ 7,878,024 $ - $ 7,878,024

$ 5,809,930 $ - $ 5,809,930 $ 7,955,927 $ (112,667) $ 7,843,260- - - - - -

$ 5,809,930 $ - $ 5,809,930 $ 7,955,927 $ (112,667) $ 7,843,260

$ 183,479 $ - $ 183,479 $ (77,903) $ 112,667 $ 34,764

School Food Service Fund School Grants Fund

123


Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and ActualGovernmental Funds - Discretely Presented Component Unit School BoardYear Ended June 30, 2009

School Operating FundVariance

From FinalActual Budget

Original Final Budgetary PositiveBudget Budget Basis (Negative)

Revenues: Revenue from use of money and property $ 80,000 $ 80,000 $ 78,177 $ (1,823) Charges for services 100,000 100,000 152,171 52,171 Miscellaneous 785,000 785,000 669,776 (115,224) Intergovernmental: Contribution from the City of Suffolk 48,052,130 48,052,130 47,982,051 (70,079) Revenue from the Commonwealth 86,333,000 86,333,000 85,607,100 (725,900) Revenue from the Federal Government 1,072,000 1,072,000 1,421,969 349,969

Total revenues $ 136,422,130 $ 136,422,130 $ 135,911,244 $ (510,886)

Expenditures: Education $ 135,437,793 $ 141,808,160 $ 141,174,190 $ 633,970 Food services - - - - Grant expenditures - - - -

Total education $ 135,437,793 $ 141,808,160 $ 141,174,190 $ 633,970

Contribution to primary government 795,368 795,368 795,360 8

Total expenditures $ 136,233,161 $ 142,603,528 $ 141,969,550 $ 633,978

Excess (deficiency) of revenues over expenditures $ 188,969 $ (6,181,398) $ (6,058,306) $ 123,092

Other financing sources (uses): Transfers in $ - $ - $ - $ - Transfers (out) (188,969) (188,969) (188,969) -

Total other financing sources (uses) $ (188,969) $ (188,969) $ (188,969) $ -

Net changes in fund balances $ - $ (6,370,367) $ (6,247,275) $ 123,092

124

Exhibit 31

School Food Service Fund School Grants FundVariance Variance

From Final From FinalActual Budget Actual Budget

Original Final Budgetary Positive Original Final Budgetary PositiveBudget Budget Basis (Negative) Budget Budget Basis (Negative)

$ 30,000 $ 30,000 $ 2,332 $ (27,668) $ - $ - $ - $ -2,707,000 2,707,000 2,454,431 (252,569) - - - -

30,000 30,000 29,928 (72) - - - -

- - - - - - - -73,000 73,000 95,677 22,677 776,881 776,881 586,112 (190,769)

3,070,000 3,070,000 3,411,041 341,041 9,834,150 9,834,150 7,102,943 (2,731,207)

$ 5,910,000 $ 5,910,000 $ 5,993,409 $ 83,409 $ 10,611,031 $ 10,611,031 $ 7,689,055 $ (2,921,976)

$ - $ - $ - $ - $ - $ - $ - $ -6,310,000 6,315,106 5,809,930 505,176 - - - -

- - - - 10,800,000 10,800,000 7,955,927 2,844,073

$ 6,310,000 $ 6,315,106 $ 5,809,930 $ 505,176 $ 10,800,000 $ 10,800,000 $ 7,955,927 $ 2,844,073

- - - - - - - -

$ 6,310,000 $ 6,315,106 $ 5,809,930 $ 505,176 $ 10,800,000 $ 10,800,000 $ 7,955,927 $ 2,844,073

$ (400,000) $ (405,106) $ 183,479 $ 588,585 $ (188,969) $ (188,969) $ (266,872) $ (77,903)

$ - $ - $ - $ - $ 188,969 $ 188,969 $ 188,969 $ -- - - - - - - -

$ - $ - $ - $ - $ 188,969 $ 188,969 $ 188,969 $ -

$ (400,000) $ (405,106) $ 183,479 $ 588,585 $ - $ - $ (77,903) $ (77,903)

125


Statement of Net AssetsFiduciary Funds - Discretely Presented Component Unit School BoardAt June 30, 2009

SchoolOPEB Trust Activity

Fund Funds

AssetsCash and cash equivalents $ 2,499,425 $ 946,625

Total assets $ 2,499,425 $ 946,625

LiabilitiesAmounts held for others $ - $ 946,625

Total liabilities $ - $ 946,625

Net assets Held in trust for OPEB benefits $ 2,499,425 $ -

Total net assets $ 2,499,425 $ -

Total liabilities and net assets $ 2,499,425 $ 946,625

126


Statement of Changes in Fiduciary Net AssetsOPEB Trust Fund - Discretely Presented Component Unit School BoardAt June 30, 2009

SchoolBoard

Additions:Employer Contributions $ 1,269,000Gain (loss) on investments (210,664)

Total additions $ 1,058,336

Deductions:Administrative fees $ 1,860

Total liabilities $ 1,860

Change in net assets $ 1,056,476

Net assets - beginning of year, as restated 1,442,949

Net assets - end of year $ 2,499,425

127


Statement of Changes in Assets and Liabilities - Agency FundsDiscretely Presented Component Unit School BoardYear Ended June 30, 2009

Balance BalanceBeginning End ofof Year Additions Deletions Year

School Activity Funds:

Cash $ 936,418 $ 2,720,027 $ 2,709,820 $ 946,625

Liabilities: Amounts held for students $ 936,418 $ 2,720,027 $ 2,709,820 $ 946,625

128

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 howthe 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 factorsaffecting the City's ability to generate its property taxes. 6 to 9

Debt Capacity

These tables contain information to help the reader assess the affordabilityof the City's current levels of outstanding debt and the City's ability to issuedebt in the future.

10 to 14

Demographic and Economic Information

These tables offer demographic and economic indicators to help the readerunderstand the environment within which the City's financial activities takeplace and to help make comparisons over time and with other governments. 15 to 16

Operating Information

These tables contain information about the City's operations and resources tohelp the reader understand how the City's financial information relates to theservices the City provides and the activities it performs. 17 to 21

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.

129

CITY OF SUFFOLK, VIRGINIA Table 1

NET ASSETS BY COMPONENTLAST EIGHT FISCAL YEARS

2002 2003 2004 2005 2006 2007 2008 2009Governmental 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 Restricted:

Capital Projects 11,273,870 8,845,303 12,565,077 2,862,010 5,222,554 - - - Debt Service (245,575) (1,679,443) - - - 392,169 392,169 392,169 Other Purposes 1,189,783 1,439,773 2,250,498 944,650 3,703,280 - 959,304 - Special Programs 524,725 - - - - - - - Unrestricted 28,290,778 29,082,266 9,733,131 22,631,799 12,468,387 44,337,037 57,234,531 60,941,946

Total Governmental Activities Net Assets $ 55,488,698 $ 55,542,153 $ 65,887,938 $ 48,456,564 $ 72,088,776 $ 172,826,916 $ 199,375,635 $ 190,972,718

Business-Type Activities Invested in capital assets,

net of related debt $ 27,866,304 $ 38,652,097 $ 56,290,404 $ 69,299,223 $ 170,862,396 $ 173,084,623 $ 172,165,375 $ 171,309,403 Restricted: Capital Projects 21,854,006 17,214,206 1,689,149 - - - - - Other Purposes - - 634,206 - 39,426 - - - Unrestricted 6,869,399 7,032,281 7,773,220 1,776,739 3,058,548 445,172 1,489,816 2,935,424

Total Business-TypeActivities Net Assets $ 56,589,709 $ 62,898,584 $ 66,386,979 $ 71,075,962 $ 173,960,370 $ 173,529,795 $ 173,655,191 $ 174,244,827

Primary Government Invested in capital assets,

net of related debt $ 42,321,421 $ 56,506,351 $ 97,629,636 $ 91,317,328 $ 221,556,951 $ 301,182,333 $ 312,955,006 $ 300,948,006 Restricted: Capital Projects 33,127,876 26,059,509 14,254,226 2,862,010 5,222,554 - - - Debt Service (245,575) (1,679,443) - - - 392,169 392,169 392,169 Other Purposes 1,189,783 1,439,773 2,884,704 944,650 3,742,706 - 959,304 - Special Programs 524,725 - - - - - - - Unrestricted 35,160,177 36,114,547 17,506,351 24,408,538 15,526,935 44,782,209 58,724,347 63,877,370

Total Primary GovernmentNet Assets $ 112,078,407 $ 118,440,737 $ 132,274,917 $ 119,532,526 $ 246,049,146 $ 346,356,711 $ 373,030,826 $ 365,217,545

(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-TypeActivities Net Assets.

131

CITY OF SUFFOLK, VIRGINIA Table 2Page 1 of 2

CHANGES IN NET ASSETS

2002 2003 2004 2005 2006 2007 2008 2009ExpensesGovernmental Activities: General Government $ 5,952,937 $ 5,617,639 $ 8,019,005 $ 1,900,766 $ 6,916,053 $ 8,379,163 $ 9,575,332 $ 8,493,992 Judicial 4,771,088 4,457,170 4,428,005 4,936,491 5,535,063 6,807,141 7,157,778 7,159,993 Public Safety 22,521,545 21,195,772 24,623,891 26,646,128 33,410,471 33,914,535 36,275,476 36,372,402 Public Works 7,950,702 7,665,951 13,763,814 4,657,083 5,275,996 28,828,221 29,772,711 32,530,396 Health and Welfare 14,043,726 12,527,607 13,014,409 13,810,781 13,252,584 10,843,875 12,718,036 12,187,513 Education 26,882,975 32,979,130 26,253,784 56,260,122 38,779,835 51,958,540 42,109,639 77,678,641 Parks, Recreation and Cultural 4,515,517 4,130,338 4,043,316 15,364,543 8,707,837 8,783,502 8,524,477 8,301,660 Community Development 4,193,781 9,677,963 6,556,252 10,058,214 11,807,444 27,229,557 6,296,351 7,742,440 Other Public Services 2,868,171 2,375,419 3,662,585 2,949,560 3,669,173 - - - Interest on Long-Term Debt 6,510,669 6,549,846 7,359,854 7,266,452 7,099,604 6,989,398 11,090,479 9,896,678 Bond Costs 94,231 27,383 13,390 27,970 22,272 - - - Non-Departmental 3,201,419 4,292,818 7,587,424 5,481,997 - - - -Total Governmental Activities Expenses $ 103,506,761 $ 111,497,036 $ 119,325,729 $ 149,360,107 $ 134,476,332 $ 183,733,932 $ 163,520,279 $ 200,363,715

Business-Type Activities: Utilities $ 12,672,901 $ 13,045,332 $ 15,593,938 $ 17,773,204 $ 23,296,106 $ 30,173,237 $ 29,147,386 $ 29,133,054 Golf course 17,317 1,181,521 1,148,610 1,834,057 1,934,301 1,979,380 1,780,625 1,689,229 Stormwater management - - - - - 1,911,122 2,591,374 2,924,270Total Business-Type Activities Expenses $ 12,690,218 $ 14,226,853 $ 16,742,548 $ 19,607,261 $ 25,230,407 $ 34,063,739 $ 33,519,385 $ 33,746,553

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

Program RevenuesGovernmental activities: Charges for Services: General Government and Administration $ 103,970 $ 931,888 $ 2,114,804 $ 2,243,348 $ 2,507,468 $ - $ - $ - Judicial Administration 566,751 1,475,505 493,282 588,401 687,317 939,300 788,324 753,969 Public Safety 1,380,455 994,414 184,587 198,638 249,612 1,313,880 2,361,369 2,587,982 Public Works 769,700 - 1,380,740 1,386,084 1,254,981 1,746,854 1,531,857 2,195,198 Health and Welfare - - - - - 15,015 15,201 7,388 Parks, Recreation and Cultural 430,920 457,370 288,075 316,658 325,748 335,642 476,376 628,393 Community Development 59,509 25,102 11,357 33,296 27,930 948,983 1,215,821 302,134 Other Public Service 547,591 499,626 575,318 602,404 812,681 - - - Total Charges for Services $ 3,858,896 $ 4,383,905 $ 5,048,163 $ 5,368,829 $ 5,865,737 $ 5,299,674 $ 6,388,948 $ 6,475,064

Operating Grants and Contributions: General Government and Administration $ 383,924 $ 370,679 $ 1,195,139 $ 443,125 $ 294,285 $ 473,712 $ 531,013 $ 170,905 Judicial Administration 2,477,980 2,463,581 2,131,555 2,267,307 2,141,741 1,802,021 1,846,680 1,829,318 Public Safety 889,563 475,511 1,971,088 745,611 1,159,591 2,325,968 2,293,795 2,136,678 Public Works 706,517 754,217 6,357,646 292,492 676,331 16,350,686 17,088,074 18,491,121 Health and Welfare 10,513,767 10,960,814 11,295,734 11,788,079 10,199,959 8,172,786 8,398,910 8,848,554 Education 150,897 83,991 131,645 - - - - - Parks, Recreation and Cultural 513,362 268,232 305,659 369,363 749,244 285,761 297,489 305,120 Community Development 163,529 572,857 780,466 996,938 550,749 756,429 302,122 575,172 Other Public Services 98,691 41,039 11,494 72,711 28,630 - - - Total Operating Grants and Contributions $ 15,898,230 $ 15,990,921 $ 24,180,426 $ 16,975,626 $ 15,800,530 $ 30,167,363 $ 30,758,083 $ 32,356,868

Capital Grants and Contributions: Public Safety $ - $ - $ - $ - $ - $ - $ - $ 70,500 Public Works 1,538,340 926,906 1,151,499 1,763,201 1,979,527 105,190,141 138,253 587,602 Health and Welfare - 78,000 - - - 8,383 - - Education 1,538,360 1,030,585 1,035,898 1,290,471 1,394,061 - - - Parks, Recreation and Cultural 28,687 - 41,378 27,652 227,199 2,043 - - Community Development 1,068,879 - 26,935 86,672 628,900 1,127,019 1,088,018 966,594 Other Public Services - - - 170,280 - - - - Nondepartmental - - 1,172,283 18,701 - - - - Total Capital Grants and Contributions $ 4,174,266 $ 2,035,491 $ 3,427,993 $ 3,356,977 $ 4,229,687 $ 106,327,586 $ 1,226,271 $ 1,624,696

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

LAST EIGHT FISCAL YEARS

132

CITY OF SUFFOLK, VIRGINIA Table 2Page 2 of 2

CHANGES IN NET ASSETS

2002 2003 2004 2005 2006 2007 2008 2009Program Revenues: (Continued)Business-Type Activities: Charges for Services: Utility $ 18,359,157 $ 16,616,219 $ 16,920,731 $ 19,566,580 $ 20,419,822 $ 22,096,514 $ 23,803,453 $ 24,813,989 Non-major - 686,307 438,735 1,430,093 1,510,288 4,412,172 5,220,655 5,152,294 Total Charges for Services $ 18,359,157 $ 17,302,526 $ 17,359,466 $ 20,996,673 $ 21,930,110 $ 26,508,686 $ 29,024,108 $ 29,966,283

Operating Grants and Contributions: Utility $ - $ - $ 400,724 $ 240,093 $ 11,163 $ 814,500 $ 864,141 $ 542,287 Total Operating Grants and Contributions $ - $ - $ 400,724 $ 240,093 $ 11,163 $ 814,500 $ 864,141 $ 542,287

Capital Grants and Contributions: Utility $ - $ 3,935,770 $ 2,233,515 $ 3,284,662 $ 383,412 $ 6,043,266 $ 2,658,020 $ 3,785,842 Total Capital Grants and Contributions $ - $ 3,935,770 $ 2,233,515 $ 3,284,662 $ 383,412 $ 6,043,266 $ 2,658,020 $ 3,785,842

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

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

Net (Expense)/RevenueGovernmental 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)Business-Type Activities 5,668,939 7,011,443 3,251,157 4,914,167 (2,905,722) (697,287) (973,116) 547,859

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)

General Revenues and Other Changes in Net AssetsGovernmental Activities: Taxes $ 75,735,139 $ 82,192,711 $ 91,734,955 $ 102,418,853 $ 106,905,524 $ 120,034,998 $ 131,543,030 $ 132,560,748 Grants and Contributions Not Restricted to Specific Programs 2,947,490 2,954,054 3,041,024 3,239,271 14,174,921 14,535,729 14,427,389 14,405,688 Revenue from use of money and property 1,686,545 2,476,306 2,100,281 2,060,740 2,445,754 3,871,010 3,794,438 1,845,378 Gain on Disposal of Capital Assets - - (30,742) - 180,500 - - - Transfers/Miscellaneous 1,104,708 1,517,103 169,414 1,783,138 2,659,201 4,235,712 1,930,839 2,692,356Total Governmental Activities $ 81,473,882 $ 89,140,174 $ 97,014,932 $ 109,502,002 $ 126,365,900 $ 142,677,449 $ 151,695,696 $ 151,504,170

Business-Type Activities: Reimbursements from Other Agencies $ 518,131 $ 113,312 $ - $ 23,000 $ - $ - $ - $ - Grants and Contributions Not Restricted to Specific Programs 84,706 - - - - - - - Investment Earnings 235,370 129,655 197,469 237,146 476,611 1,042,633 1,633,718 640,041 Gain on Disposal of Capital Assets - 28,464 - - - - - - Transfers/Miscellaneous (41,608) (973,999) 39,758 (485,330) (158,526) (329,670) (535,206) (598,264)Total Business-Type Activities $ 796,599 $ (702,568) $ 237,227 $ (225,184) $ 318,085 $ 712,963 $ 1,098,512 $ 41,777

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

Change in Net AssetsGovernmental Activities $ 1,898,513 $ 53,455 $ 10,345,785 $ (14,156,673) $ 17,785,522 $ 100,738,140 $ 26,548,719 $ (8,402,917)Business-Type Activities 6,465,538 6,308,875 3,488,384 4,688,983 (2,587,637) 15,676 125,396 589,636

Total Primary Government $ 8,364,051 $ 6,362,330 $ 13,834,169 $ (9,467,690) $ 15,197,885 $ 100,753,816 $ 26,674,115 $ (7,813,281)(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.

LAST EIGHT FISCAL YEARS

133


FUND BALANCES, GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS

2000 2001 2002 2003 2004General Fund Reserved $ 4,428,206 $ 4,078,996 $ 3,740,533 $ 2,872,994 $ 2,656,053 Unreserved 33,950,304 32,399,193 32,785,732 34,169,781 28,902,323 Total General Fund $ 38,378,510 $ 36,478,189 $ 36,526,265 $ 37,042,775 $ 31,558,376

All Other Governmental Funds Reserved $ 4,369,826 $ 4,467,017 $ 8,189,533 $ 1,948,525 $ 4,117,671 Unreserved, reported in: Capital Projects Funds 18,476,127 19,519,255 3,564,030 7,378,260 8,082,082 Debt Service Funds - - (245,575) (1,679,443) (2,360,804) Permanent - - - - - Special Revenue Funds 400,086 927,608 2,137,286 1,850,914 2,224,696 Total all other Governmental Funds $ 23,246,039 $ 24,913,880 $ 13,645,274 $ 9,498,256 $ 12,063,645

Component Unit (School Board) Reserved $ 3,449,832 $ 4,236,109 $ 4,477,136 $ 6,353,892 $ 8,191,095 Unreserved 492,696 601,041 798,427 773,035 220,970

$ 3,942,528 $ 4,837,150 $ 5,275,563 $ 7,126,927 $ 8,412,065

(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.

134

Table 3

2005 2006 2007 2008 2009

$ 3,235,758 $ 2,008,158 $ 594,170 $ 810,492 $ 670,02725,079,595 28,146,402 33,217,808 47,279,178 50,540,042

$ 28,315,353 $ 30,154,560 $ 33,811,978 $ 48,089,670 $ 51,210,069

$ 4,768,672 $ 5,890,801 $ 2,419,652 $ 8,189,612 $ 12,318,937

8,307,664 (7,242,148) 28,003,480 21,339,005 19,353,128(1,572,163) (757,116) 734,340 861,708 679,706

- 977,277 1,026,077 959,304 - 2,272,683 (174,585) 4,171,904 6,635,295 8,214,906

$ 13,776,856 $ (1,305,771) $ 36,355,453 $ 37,984,924 $ 40,566,677

$ 6,611,928 $ 5,378,752 $ 8,174,301 $ 8,065,992 $ 10,459,827844,356 1,011,181 783,382 1,370,368 1,404,236

$ 7,456,284 $ 6,389,933 $ 8,957,683 $ 9,436,360 $ 11,864,063

(2)

135


CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS

2000 2001 2002 2003Revenues

General Property Taxes (1) $ 43,970,282 $ 47,924,487 $ 53,892,139 $ 57,961,870Other Local Taxes 16,113,495 18,567,350 21,843,000 23,503,407Licenses, Permits and Fees 1,122,990 1,236,861 1,405,319 1,452,509Fines and Forfeitures 370,031 414,419 349,377 553,375Use of Money and Property 3,914,986 4,681,210 2,420,813 3,185,964Intergovernmental 73,366,984 76,770,071 79,370,828 113,176,486Charges for Services 993,625 1,438,789 1,784,194 2,076,100Sale of Commodities and Property 1,352,834 1,472,687 1,580,723 1,888,096Miscellaneous 1,458,900 865,580 2,062,003 640,633

Total Revenues $ 142,664,127 $ 153,371,454 $ 164,708,396 $ 204,438,440

ExpendituresGeneral Government $ 4,157,453 $ 4,583,998 $ 5,089,739 $ 5,481,723Judicial 3,430,025 3,670,902 4,147,075 4,420,572Public Safety 15,109,512 16,443,143 19,529,292 20,911,023Public Works 5,857,877 6,412,480 6,418,212 6,839,111Health and Welfare 11,657,214 12,168,833 12,257,769 12,495,701Education 72,545,507 78,070,900 84,091,273 92,760,306Parks, Recreation and Cultural 2,747,630 2,943,721 3,750,968 3,885,476Community Development 2,381,685 2,362,377 3,666,922 3,643,667Other Public Services 2,156,018 1,452,488 2,439,054 2,380,779Non-Departmental 5,383,726 5,798,002 2,796,469 3,755,336Capital Outlay 14,667,020 27,567,545 18,144,092 25,488,540Debt Service Other 87,170 191,961 94,231 133,327 Interest 5,145,207 5,878,200 6,365,540 6,650,152 Principal 10,234,430 11,299,424 7,819,576 8,598,182

Total Expenditures $ 155,560,474 $ 178,843,974 $ 176,610,212 $ 197,443,895

Excess of Revenues Over (Under) Expenditures $ (12,896,347) $ (25,472,520) $ (11,901,816) $ 6,994,545

Other Financing Sources (Uses)Proceeds of Refunding Bonds $ - $ 5,402,123 $ - $ -Proceeds of Bonds Issued 24,700,000 26,203,584 - 18,124,270Premiums on Debt - - - -Transfers to Component Units - - (25,184,762) (27,434,956)Transfers In 26,192,681 32,212,726 33,920,389 5,980,095Payment to Refunded Bonds Escrow Agent - (5,402,123) - -Proceeds from Sale of Asset - - - -Transfers Out (25,799,701) (31,344,201) (8,521,719) (5,443,097)

Total Other Financing Sources (Uses) $ 25,092,980 $ 27,072,109 $ 213,908 $ (8,773,688)

Net Change in Fund Balance $ 12,196,633 $ 1,599,589 $ (11,687,908) $ (1,779,143)

Debt Service as a percentage of 10.92% 11.36% 8.95% 8.87% non-capital expenditures

Includes General, Capital Projects, Special Revenue, Debt Service, School Operating, School Food Service and the School Grants Fund. School Fundsare reported in the component unit section of the financial statements, but are included here since they are a part of the general goverment function.

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.

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 Bondsrelating to the Hilton Garden Inn and Suffolk Conference Center.

Note C:

Note A:

Note B:

136

Table 4

2004 2005 2006 2007 2008 2009

$ 66,231,547 $ 74,827,500 $ 76,472,589 $ 88,450,925 $ 98,037,522 $ 99,044,69725,361,853 27,514,690 30,512,149 31,261,557 33,104,223 33,090,6041,459,690 1,581,725 1,811,848 1,532,729 1,375,508 1,182,302

655,114 661,623 695,620 552,063 475,350 521,7712,164,113 2,139,060 2,542,192 3,966,250 3,794,438 1,845,378

127,923,434 134,887,182 155,028,233 (8) 180,010,723 47,805,781 49,182,6122,781,664 2,957,076 3,166,463 5,811,425 4,538,081 4,770,9912,011,073 2,174,387 2,371,587 - - -

908,522 896,602 2,678,000 (7) 4,315,695 1,368,871 1,784,155

$ 229,497,010 $ 247,639,845 $ 275,278,681 $ 315,901,367 $ 190,499,774 $ 191,422,510

$ 5,903,203 $ 6,433,652 $ 6,648,753 $ 8,177,101 $ 8,172,799 $ 8,075,9324,402,709 4,915,653 5,183,428 6,602,250 6,770,319 6,815,601

23,876,250 26,239,576 30,227,291 31,896,254 33,563,830 34,676,3567,008,118 8,767,265 11,172,271 (8) 22,157,962 24,379,984 26,204,343

13,001,895 13,786,005 12,581,669 10,493,819 11,040,820 11,597,910131,062,322 (2) 148,483,536 (2) 161,903,529 (2) 171,941,517 45,999,422 48,472,908

3,810,234 4,299,784 4,839,971 6,042,500 5,984,292 6,680,5036,506,643 (3) 4,485,621 4,541,559 (5) 26,784,795 6,192,145 8,032,3342,725,172 2,949,560 3,561,018 - - -

10,749,106 (4) 4,995,690 5,530,537 7,012,669 7,622,634 8,753,75324,763,361 29,674,725 38,086,252 18,741,520 28,574,620 20,582,782

150,408 131,124 209,398 1,005,084 190,205 288,9147,208,931 6,829,437 7,385,176 6,689,872 8,531,876 9,645,646

10,081,717 9,949,599 12,991,845 15,044,611 13,361,741 13,667,737

$ 251,250,069 $ 271,941,227 $ 304,862,697 $ 332,589,954 $ 200,384,687 $ 203,494,719

$ (21,753,059) $ (24,301,382) $ (29,584,016) $ (16,688,587) $ (9,884,913) $ (12,072,209)

$ 19,770,997 $ - $ 9,978,267 $ 28,440,000 $ - $ -18,183,028 21,160,000 14,406,949 63,486,239 24,475,000 16,600,000

- 168,989 918,255 3,131,272 501,623 -- - - - -

12,522,466 7,910,293 6,114,990 6,699,896 27,223,057 30,481,200(19,770,997) - (10,365,390) (29,703,423) - -

1,722,690 - - - - -(12,308,996) (7,423,493) (5,778,826) (6) (9,204,842) (26,407,603) (29,306,840)

$ 20,119,188 $ 21,815,789 $ 15,274,245 $ 62,849,142 $ 25,792,077 $ 17,774,360

$ (1,633,871) $ (2,485,593) $ (14,309,771) $ 46,160,555 $ 15,907,164 $ 5,702,151

7.63% 6.93% 7.64% 6.93% 12.74% 12.75%

Nondepartmental includes expenditures for Hurricane Isabel.

Includes $18,451,749 contribution to the IDA from the refunding of the Economic Development Revenue Bonds relating to the Hilton Garden Innand Suffolk Conference Center.

Includes approximately $3,000,000 in transfers to the internal service funds to eliminate fund deficits and establish a reserve for future claims inthe Risk Management Fund.

Includes $1,500,000 from the first installment payment on the sale of the Obici property.

Includes revenues and expenditures for the Road Maintenance fund which had a full year of maintenance for fiscal year 2007.

(6)

(7)

(4)

(8)

(5)

137


TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS

2000 2001 2002 2003 2004

General Property Tax $ 43,970,282 $ 47,924,487 $ 53,892,139 $ 57,961,870 $ 66,231,547 Other Local Taxes: Sales and Use 3,952,042 4,321,930 5,033,151 5,293,294 5,787,336 Utility Tax 4,104,493 5,225,478 6,619,362 7,062,298 6,439,771 Communication Taxes - - - - - Business and Occupational License 2,726,170 2,990,623 3,460,903 3,618,973 3,901,699 Franchise 119,044 311,472 197,742 481,015 216,994 Motor Vehicle License 1,058,650 1,119,357 1,196,784 1,248,266 1,330,191 Bank Stock 247,332 242,790 204,459 166,264 242,789 Recordation 326,581 384,620 507,616 644,418 855,860 Tobacco 887,858 934,559 898,407 971,777 1,693,781 Lodging 173,975 173,076 201,284 224,742 227,152 Meals 1,866,276 2,075,966 2,530,282 2,704,256 3,291,137 Admission - 127,041 293,405 351,413 386,899 Emergency Phone Services 651,074 660,438 699,605 736,691 988,243 Public Facility Tax Rebate - - - - - Total $ 60,083,777 $ 66,491,837 $ 75,735,139 $ 81,465,277 $ 91,593,399

(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.

138

Table 5

Change2005 2006 2007 2008 2009 2000-2009

$ 74,827,500 $ 76,472,589 $ 88,450,925 $ 98,037,522 $ 99,044,697 125%

6,393,278 7,043,982 7,177,386 7,579,882 7,323,289 85%6,160,225 6,420,430 5,348,947 4,190,304 4,279,814 4%

- - 1,723,627 3,682,126 3,733,667 (1) 0%4,528,220 5,177,235 5,674,968 5,806,810 6,261,676 130%

233,565 251,447 138,635 - - -100%1,350,308 1,359,928 1,532,277 1,650,732 1,713,998 62%

283,547 362,571 350,564 288,973 306,405 24%2,001,254 2,632,855 2,122,575 1,563,745 1,186,018 263%1,538,959 1,403,764 1,378,724 1,415,123 1,408,348 59%

302,463 235,137 226,867 832,049 778,559 348%3,323,238 3,886,919 4,306,494 5,632,980 5,683,139 205%

369,995 356,211 382,592 354,950 376,024 0%1,029,638 1,033,810 502,503 - - (1) -100%

- 347,860 395,398 106,549 39,667 0%$ 102,342,190 $ 106,984,738 $ 119,712,482 $ 131,141,745 $ 132,135,301

139


ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARS

Estimated Estimated Citizens Public Actual City Citizens Public Actual

Property (1) Service (2) Total Value Wide Property (3) Service (2) Total Value

$ 2,738,220,300 $ 14,497,039 $ 2,752,717,339 $ 2,930,313,339 $ 1.03 $ 414,544,994 $ 138,101,347 $ 552,646,341 $ 567,990,935

2,973,951,700 15,638,034 2,989,589,734 3,178,132,234 1.03 450,578,178 146,698,674 597,276,852 613,576,705

3,197,461,000 17,455,240 3,214,916,240 3,402,129,340 1.08 487,554,205 172,908,792 660,462,997 679,675,085

3,532,824,000 17,669,080 3,550,493,080 3,750,119,580 1.08 529,426,302 167,961,412 697,387,714 715,774,193

4,044,414,400 18,332,444 4,062,746,844 4,280,219,144 1.08 608,825,985 166,161,886 774,987,871 793,450,303

4,700,248,600 16,416,461 4,716,665,061 4,983,988,261 1.08 624,278,865 153,824,486 778,103,351 795,194,961

5,767,166,200 18,411,941 5,785,578,141 6,215,420,841 1.06 699,151,891 175,007,613 874,159,504 893,604,794

7,615,318,305 16,841,670 7,632,159,975 8,207,595,470 0.94 760,041,770 154,722,996 914,764,766 931,956,210

8,471,944,000 20,753,336 8,492,697,336 9,466,652,720 0.94 766,350,990 207,604,394 973,955,384 650,872,800

2009 9,095,186,800 23,662,692 9,118,849,492 9,723,630,800 0.91 804,367,320 217,629,411 1,021,996,731 609,262,900

(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.

2008

YearFiscal

2002

2003

2004

2005

2007

2006

2000

2001

Assessed ValueReal Property

Assessed ValuePersonal Property

140

Table 6

Ratio of TotalAssessed to

Estimated Total Personal Assessed Actual Estimated

Property (3) Value Value Actual Value

$ 4.25 $ 3,305,363,680 $ 3,498,304,274 94.48%

4.25 3,586,866,586 3,791,708,939 94.60%

4.25 3,875,379,237 4,081,804,425 94.94%

4.25 4,247,880,794 4,465,893,773 95.12%

4.25 4,837,734,715 5,073,669,447 95.35%

4.25 5,494,768,412 5,779,183,222 95.08%

4.25 6,659,737,645 7,109,025,635 93.68%

4.25 8,546,924,741 9,139,551,680 93.52%

4.25 9,466,652,720 10,117,525,520 93.57%

4.25 9,723,630,800 10,332,893,700 94.10%

Total

141


DIRECT PROPERTY TAX RATES (PER HUNDRED) (1)LAST TEN FISCAL YEARS

DowntownSuffolk Route 17 Mosquito Business Machinery Minimum

Fiscal Taxing City Taxing Control Overlay Personal and Total DirectYear District Wide District District District Property (3) Tools (4) Rate (5)

2000 $ 1.19 $ 1.03 $ 0.26 $ 0.035 $ - $ 4.25 $ 3.15 $ 5.282001 1.19 1.03 0.26 0.035 - 4.25 3.15 5.282002 1.24 1.08 0.26 0.035 - 4.25 3.15 5.332003 1.24 1.08 0.26 0.035 - 4.25 3.15 5.332004 1.24 1.08 0.26 0.035 - 4.25 3.15 5.332005 1.24 1.08 0.26 0.035 - 4.25 3.15 5.332006 1.22 1.06 0.26 0.035 - 4.25 3.15 5.312007 0.975 0.94 0.26 0.035 0.125 4.25 3.15 5.192008 - 0.94 0.26 - 0.125 4.25 3.15 5.192009 - 0.91 0.26 - 0.125 4.25 3.15 5.16

(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

Real Property (2)

143


PRINCIPAL PROPERTY TAX PAYERSCURRENT YEAR AND NINE YEARS AGO

Real Property

Percentage Percentageof Total City of Total City

Taxable Taxable Taxable TaxableAssessed Assessed Assessed Assessed

Type of Business Value Value (1) Value Value (1)

CVN Distribution Distribution Warehouse $ 43,843,300 0.48% $ 29,644,200 1.08%Rubicon - NGP Joint Military Training Facility 39,757,900 0.44% 33,609,000 1.23%Target Corporation Distribution Warehouse 39,245,000 0.43% - -Sysco Food Services of Hampton Roads Food Services 30,377,400 0.33% - -The Pergola Group Apartment Complex 28,308,900 0.31% - -Lake Prince Center, Inc. Retirement Community 26,714,100 0.29% - -Planters/Kraft Foods Peanut Products 25,685,400 0.28% 16,872,200 0.62%Allied Colloids, Inc Chemical Plant 23,556,300 0.26% - -Bon Secours Hampton Rds Health Sys Health Systems 21,969,300 0.24% - -Inland America Suffolk LV LLC Lessor to GSA (Office) 20,184,500 0.22% - -Harborview Partners Real Estate Developers - - 19,335,600 0.71%Ciba Specialty Chemical Chemical Plant - - 21,423,700 0.78%City of Norfolk Municipal Water System - - 22,901,200 0.84%Sustainable Forest Wood Products - - 13,871,500 0.51%City of Portsmouth Municipal Water System - - 12,681,400 0.46%Walmart Retail Merchandise - - 11,143,200 0.41%Dominion Land Inc. Real Estate Developers - - 10,565,700 0.39%

$ 299,642,100 3.29% $ 192,047,700 7.01%

(1) Total assessed valuation of real estate for fiscal year 2008-2009 - $9,095,186,800

Personal Property

Percentage Percentageof Total City of Total City

Taxable Taxable Taxable TaxableAssessed Assessed Assessed Assessed

Type of Business Value Value (2) Value Value (2)

Ciba Specialty Chemicals Chemical Plant $ 8,546,060 1.06% $ - -QVC of Suffolk Inc Distribution Warehouse 6,154,830 0.77% - -Sara Lee International Beverage Company 8,271,610 1.03% - -Unilever Bestfoods/Lipton Tea Beverage Company 7,460,050 0.93% - -Planters/Kraft Foods Peanut Products 6,764,720 0.84% 6,956,740 1.68%Target Corporation Distribution Warehouse 3,589,240 0.45% - -Lockheed Martin Corporation Technology Company 3,549,590 0.44% - -Massimo Zanetti Beverage USA Beverage Company 4,467,220 0.56% - -Charter Communications Cable Products 2,504,030 0.31% - -Sysco Food Services of Hampton Roads Food Services 2,412,495 0.30% - -Allied Colloids, Inc Chemical Plant - - 12,565,700 3.03%Nestle Beverage Company Beverage Company - - 5,771,690 1.39%Sysco Food Services of Hampton Roads Food Services - - 5,505,990 1.33%Thomas J. Lipton Co. Beverage Company - - 2,933,540 0.71%CVN Distribution Co Distribution Warehouse - - 1,706,270 0.41%Prillaman Chemical Corp Chemical Processing - - 1,552,260 0.37%Sonoco Products Company Fuel Services - - 1,019,950 0.25%Falcon Cable Media/ Suffolk Cable Products - - 1,005,200 0.24%Vixtex Packaging, Inc. Packaging Warehouse - - 885,200 0.21%

$ 53,719,845 6.68% $ 39,902,540 9.63%

(2) Total assessed valuation of real estate for fiscal year 2008-2009 - $804,367,320

1999-2000 - $414,544,994 Does not include Public Service Corporations

2009 2000

2009 2000

Source: City of Suffolk Assessor's Office

Source: City of Suffolk, Commissioner of Revenue's office

1999-2000 -$2,738,220,300 does not include public service corporations

Taxpayer

Taxpayer

144


PROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARS

AsPercent of As

Current Percent Outstanding As Percent At End As Percent Percent ofTotal Tax Tax of Levy Delinquent of Current of Fiscal of Current ApplicableLevy (1) Collections Collected Amount Taxes Amount (2) Levy Year (2) Levy Levies

$ 44,173,971 $ 43,161,381 97.71% $ 987,738 3974.48% $ 44,149,119 99.94% $ 24,852 0.06% 1.37%47,995,899 46,948,148 97.82% 1,021,146 3838.17% 47,969,294 99.94% 26,605 0.06% 1.32%53,553,363 52,796,334 98.59% 722,534 2094.61% 53,518,868 99.94% 34,495 0.06% 1.20%58,175,390 57,393,884 98.66% 639,900 451.89% 58,033,784 99.76% 141,606 0.24% 1.18%66,303,851 65,447,182 98.71% 683,202 393.85% 66,130,384 99.74% 173,467 0.26% 1.08%74,108,747 73,148,580 98.70% 710,992 285.34% 73,859,572 99.66% 249,175 0.34% 1.02%87,028,625 85,921,671 98.73% 852,933 335.77% 86,774,604 99.71% 254,021 0.29% 0.91%98,604,779 97,146,638 98.52% 1,023,850 235.75% 98,170,488 99.56% 434,291 0.44% 0.90%

107,353,414 105,361,772 98.14% 933,545 88.23% 106,295,317 99.01% 1,058,097 0.99% 0.97%112,502,640 110,007,171 97.78% 1,342,584 116.45% 111,349,755 98.98% 1,152,885 1.02% 1.14%

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.

(2) Adjusted for collections through August 15. Data furnished by City Treasurer

2005

20032004

Tax Collections

FiscalYear

2009

Outstanding Delinquent TaxesDelinquent Total

200020012002

2006

20082007

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Property Tax Levies and Collections

Total Tax Levy Current Tax Collections

145


RATIOS OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS

InternalGeneral Bond Section 108 Service Fund

Fiscal Obligation VPSA Literary Anticipation Loan Notes Capital Year Bonds Bonds Fund Loan Notes Payable Payable Leases

2000 $ 102,887,401 $ 2,573,619 $ 5,000,000 $ 5,000,000 $ - $ 1,415,000 $ 472,9382001 118,492,672 2,372,276 9,750,000 - - 1,415,000 2,285,1892002 111,374,910 2,170,462 9,250,000 - - 1,415,000 1,951,3752003 121,679,066 1,963,124 8,750,000 - - 1,415,000 1,738,9282004 130,576,861 1,745,204 8,250,000 - - - 2,686,0552005 139,505,817 1,526,650 7,750,000 - - 3,000,000 3,168,1622006 140,962,269 1,297,419 7,250,000 - - 4,196,949 8,370,7102007 188,919,526 1,062,465 6,750,000 - 3,845,000 1,588,475 8,767,2192008 202,079,985 816,739 6,250,000 - 3,652,000 480,000 6,354,7832009 206,196,799 565,188 5,750,000 - 3,459,000 240,000 8,786,426

Note A: Personal Income and population data is shown on the Demographic and Economic Statistics, Table 16

*Data not available

Governmental Activities

146

Table 10

General Total PercentageRevenue Obligation Notes Primary of Personal Per

Bonds Bonds Payable Government Income Capita

$ 27,710,000 $ 11,515,747 $ 25,841 $ 156,600,546 9.63% $ 2,45927,395,000 10,590,470 13,684 172,314,291 9.74% 2,67545,270,000 9,542,706 2,200,000 183,174,453 9.82% 2,71144,460,000 12,267,021 2,200,000 194,473,139 9.67% 2,77455,345,000 11,658,139 3,334,000 213,595,259 9.78% 2,93854,600,000 11,354,183 - 220,904,812 * 2,92667,410,000 10,362,731 - 239,850,078 * 3,111

103,200,000 9,385,474 - 323,518,159 * 4,068141,385,000 8,615,016 - 369,633,523 * 4,491184,380,000 7,848,201 - 417,225,614 * 5,094

Business-Type Activities

147


RATIOS OF NET GENERAL BONDED DEBT OUTSTANDINGLAST TEN FISCAL YEARS

Percentage ofSection Debt Net General

General Literary Bond 108 Service Net Debt toObligation VPSA Fund Anticipation Notes Loan Monies General Estimated Per

Bonds Bonds Loan Notes Payable Payable Total Available Debt Actual Value Capita

$ 102,887,401 $ 2,573,619 $ 5,000,000 $ 5,000,000 $ 1,415,000 $ - $ 116,876,020 $ 798,819 $ 116,077,201 3.51% $ 1,823118,492,672 2,372,276 9,750,000 - 1,415,000 - 132,029,948 2,017,096 130,012,852 3.62% 2,018111,374,910 2,170,462 9,250,000 - 1,415,000 - 124,210,372 6,680 124,203,692 3.20% 1,838121,679,066 1,963,124 8,750,000 - 1,415,000 - 133,807,190 - 133,807,190 3.15% 1,909130,576,861 1,745,204 8,250,000 - - - 140,572,065 - 140,572,065 2.91% 1,934139,505,817 1,526,650 7,750,000 - 3,000,000 - 151,782,467 - 151,782,467 2.76% 2,010140,962,269 1,297,419 7,250,000 - 4,196,949 - 153,706,637 - 153,706,637 2.16% 1,994188,919,526 1,062,465 6,750,000 - 1,588,475 3,845,000 202,165,466 734,340 201,431,126 2.20% 2,613202,079,985 816,739 6,250,000 - 480,000 3,652,000 213,278,724 861,708 212,417,016 2.10% 2,581206,196,799 565,188 5,750,000 - 240,000 3,459,000 216,210,987 679,706 215,531,281 2.09% 2,631

Note A: Population data is shown on the Demographic and Economic Statistics, Table 16Estimated 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.

2007

20092008

2003200420052006

20012002

General Bonded Debt Outstanding

YearFiscal

2000

3.51%

3.62%

3.20%

3.15%

2.91%

2.76%

2.16%

2.20%

2.10%

2.09%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Percentage of Net General Debt to Estimated Actual Value

148


DIRECT GOVERNMENTAL ACTIVITIES DEBT

OutstandingBalanceFY 2009

1990 VPSA Bond $ 480,000 1991 VPSA Bond 85,188 1997 General Obligation and Refunding Bond 1,545,000 1999 General Obligation Bond 1,620,000 1999 Literary Fund Loan 2,750,000 2000 General Obligation Bond 1,890,000 2001 Literary Fund Loan 3,000,000 2001 General Obligation Bond 6,545,000 2001 Refunding Bond 2,609,226 2002 General Obligation Bond 13,130,000 2003 General Obligation Bond 13,535,000 2003 Refunding Bond 5,910,328 2004 General Obligation Bond 14,960,000 Planters Club Note 240,000 2005 General Obligation Bond 9,945,000 2005 Refunding Bond 8,567,048 2007 Refunding and new funds 86,090,197 Section 108 Loan Payable 3,459,000 2007 General Obligation Bond 23,250,000 2008 General Obligation Bond 16,600,000 Subtotal General Government Activities $ 216,210,987

Motorola Smartnet System Upgrade Capital Lease $ 336,732 Refuse Trucks Capital Lease 2,219,023 Refuse Trucks Capital Lease 116,925 Roadway Maintenance Capital Lease 1,196,648 Refuse Trucks Capital Lease 4,917,098 Subtotal General Govermental Activities Internal Svc Funds $ 8,786,426

Total Direct Governmental Activities Debt $ 224,997,413

Debt Issue

149


LEGAL DEBT MARGINLAST TEN FISCAL YEARS

Legal Debt Margin Calculation for Fiscal Year 2009Commonwealth's

City's Legal Legal DebtDebt Margin Margin

Assessed value (as of July 1, 2009) - taxable real property, including public service corporations $ 9,118,849,492 $ 9,118,849,492

Legal debt limits: 7% of assessed value (authorized limit imposed by City Charter) 638,319,464

10% of assessed value(authorized by the Commonwealth for all cities) 911,884,949

Deduct amount of debt applicable to debt limit: Gross general debt (includes bonds and note payable) 224,059,188 224,059,188

Totals $ 414,260,276 $ 687,825,761

City's Legal Debt Margin

2000 2001 2002 2003

Debt Limit $ 192,690,214 $ 209,271,281 $ 225,044,137 $ 248,534,516

Total Net Debt applicable to Limit 128,417,608 142,634,102 135,953,078 151,476,712

Legal Debt Margin $ 64,272,606 $ 66,637,179 $ 89,091,059 $ 97,057,804

Total Net Debt Applicable to Limit as a percentage of debt limit 66.64% 68.16% 60.41% 60.95%

Commonwealth's Legal Debt Margin

2000 2001 2002 2003

Debt Limit $ 275,271,734 $ 298,958,973 $ 321,491,624 $ 355,049,308

Total Net Debt applicable to Limit 128,417,608 142,634,102 135,953,078 151,476,712

Legal Debt Margin $ 146,854,126 $ 156,324,871 $ 185,538,546 $ 203,572,596

Total Net Debt Applicable to Limit as a percentage of debt limit 46.65% 47.71% 42.29% 42.66%

Note A: 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.

150

Table 13

2004 2005 2006 2007 2008 2009

$ 284,392,279 $ 330,166,554 $ 404,990,470 $ 534,251,198 $ 594,488,418 $ 638,319,464

155,564,204 163,136,650 164,069,368 211,550,939 221,893,739 224,059,188

$ 128,828,075 $ 167,029,904 $ 240,921,102 $ 322,700,259 $ 372,594,679 $ 414,260,276

54.70% 49.41% 40.51% 39.60% 37.33% 35.10%

2004 2005 2006 2007 2008 2009

$ 406,274,684 $ 471,666,506 $ 578,557,814 $ 763,215,997 $ 849,269,734 $ 911,884,949

155,564,204 163,136,650 164,069,368 211,550,939 221,893,739 224,059,188

$ 250,710,480 $ 308,529,856 $ 414,488,446 $ 551,665,058 $ 627,375,995 $ 687,825,761

38.29% 34.59% 28.36% 27.72% 26.13% 24.57%

Legal Debt Margin

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

City's Legal Debt Margin

Commonwealth's Legal DebtMargin

151


UTILITY FUND BOND COVERAGELAST TEN FISCAL YEARS

Net RevenueDirect Available

Gross Operating For DebtRevenue (2) Expenses (1) Service Principal Interest Total Coverage

$ 13,730,406 $ 8,343,099 $ 5,387,307 $ 1,246,874 $ 1,692,601 $ 2,939,475 1.83 15,803,804 9,906,753 5,897,051 1,332,052 1,336,877 2,668,929 2.21 19,197,558 9,084,449 10,113,109 1,526,448 1,155,637 2,682,085 3.77 20,755,301 9,226,636 11,528,665 3,550,685 2,352,608 5,903,293 1.95 19,338,363 10,421,464 8,916,899 3,458,541 1,643,242 5,101,783 1.75 23,096,899 12,559,188 10,537,711 4,717,955 2,436,878 7,154,833 1.47 21,275,903 13,840,075 7,435,828 1,789,209 4,109,964 5,899,173 1.26 29,991,524 14,859,732 15,131,792 2,498,818 5,389,293 7,888,111 1.92 28,893,476 14,820,616 14,072,860 2,290,458 4,217,220 6,507,678 2.16 29,758,790 16,601,440 13,157,350 2,961,599 5,772,191 8,733,790 1.51

(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.

Financial Above VRA Above Policy or Below VRA Policy or Below

Coverage Goal Policy Coverage Goals Policy1.83 1.30 0.53 1.36 1.15 0.212.21 1.30 0.91 1.64 1.15 0.493.77 1.30 2.47 2.79 1.15 1.641.95 1.30 0.65 1.45 1.15 0.301.75 1.30 0.45 1.29 1.15 0.141.47 1.30 0.17 1.09 1.15 (0.06)1.26 1.30 (0.04) 0.93 1.15 (0.22)1.92 1.30 0.62 1.42 1.15 0.272.16 1.30 0.86 1.60 1.15 0.451.51 1.30 0.21 1.11 1.15 (0.04)

2002

20082007

Debt Service RequirementsFiscalYear

VRA

20032004

2000

20052006

2009

2001

2009

Total Utility Bonds

20002001200220032004

FiscalYear

2005200620072008

153


DEMOGRAPHIC AND ECONOMIC STATISTICSLAST TEN FISCAL YEARS

PersonalIncome (2) Per Capita Average Daily

Population (1) In Thousands Income (2)* Membership (3) City of Suffolk State of Virginia United States

63,677 1,625,939 25,328 11,387 2.5% 2.3% 4.0%64,415 1,768,615 26,630 11,608 3.1% 3.2% 4.8%67,568 1,865,282 26,924 12,003 4.3% 4.2% 5.8%70,100 2,005,863 27,536 12,476 4.3% 4.0% 6.0%72,700 2,164,876 28,592 12,966 4.1% 3.7% 5.5%75,500 2,339,067 30,033 13,297 3.9% 3.5% 5.1%77,100 2,574,717 32,126 13,452 3.4% 3.0% 4.6%79,524 2,737,833 33,751 13,490 3.2% 3.0% 4.6%82,302 not available not available 13,513 4.2% 4.0% 5.8%81,907 not available not available 13,568 7.3% 7.3% 9.7%

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

2009

Unemployment Rate

20082007

FiscalYear

2003200420052006

200020012002

0

2

4

6

8

10

12

1 2 3 4 5 6 7 8 9 10

City of Suffolk

State of Virginia

United States

Comparative Unemployment Rates2000 2009

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Fiscal Year

154


PRINCIPAL EMPLOYERSCURRENT YEAR AND NINE YEARS AGO

Percentageof Total City

Employer Type of Business Employees Employment

U.S. Joint Forces Command/Joint Warfighting Center Computer Modeling and Simulation (Civilian) 2,220 5.75%Sentara/Obici Memorial Hospital Health Care 1,200 3.11%QVC Distribution Home Shopping Distribution 900 2.33%Wal-Mart Stores Retail 900 2.33%Sysco Food Services of Hampton Roads Food Service Distribution 500 1.29%Hampton Roads BASF Chemical Manufacturer 400 1.04%Unilever Bestfoods/Lipton Tea Beverage Manufacture and Distribution 350 0.91%Planters/Kraft Foods Peanut Products 340 0.88%Target Corporation Warehouse Distribution 300 0.78%Lakeview Medical Center Health Care 270 0.70%Bon Secours Health System Health Care 269 0.70%Towne Bank Banking 230 0.60%Massimo Zanetti Beverage USA Beverage Company 227 0.59%Amadas Industries Agricultural Equipment Manufacturer 200 0.52%Birdsong Peanuts Peanut Products 150 0.39%Sara Lee International Beverage Company 85 0.22%

8,541 22.10%

Total number of employees city-wide (daytime population) for fiscal year 38,641

Percentageof Total City

Employer Type of Business Employees Employment

U.S. Joint Forces Command/Joint Warfighting Center Computer Modeling and Simulation (Civilian) - - Sentara/Obici Memorial Hospital Health Care 800 2.81% QVC Distribution Home Shopping Distribution 725 2.55%Wal-Mart Stores Retail 500 1.76%Hampton Roads BASF Chemical Manufacturer 275 0.97%Unilever Bestfoods/Lipton Tea Beverage Manufacture and Distribution 250 0.88%Planters/Kraft Foods Peanut Products 275 0.97%Lakeview Medical Center Health Care 190 0.67%Amadas Industries Agricultural Equipment Manufacturer 100 0.35%Birdsong Peanuts Peanut Products 175 0.62%Sara Lee International Beverage Company 200 0.70%

3,490 12.28%

Total number of employees city-wide (daytime population) for fiscal year 28,421

The Suffolk Public Schools (1,780 employees) and the City of Suffolk (1,202 employees) have not been included to givea clearer reflection of community activity.

Source: Economic Development Department and Virginia Employement Commission

2000

2009

155


FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAMLAST SEVEN FISCAL YEARS

2003 2004 2005 2006 2007 2008 2009

General Fund:General Government:

City Council 8 8 9 9 9 9 10 City Manager 2 2 2 2 5 5 6 Asst City Manager Operations 2 2 2 2 1 - - Asst City Manager Development 4 4 4 4 4 2 - Management Services 8 9 7 7 6 6 - Budget and Strategic Planning - - - - - - 4 City Attorney 6 7 7 7 9 9 9 Human Resources 6 6 7 7 8 8 8 Commissioner of Revenue 10 10 10 11 12 12 12 City Assessor 13 13 13 13 13 13 14 Treasurer 13 13 13 13 16 16 15 Finance - Administration and Accounting 9 9 11 12 11 11 10 Finance - Purchasing 3 3 4 4 5 5 4 Registrar 2 2 2 2 2 2 2 Total 86 88 91 93 101 98 94

Judicial:Circuit Court 2 2 2 2 2 2 2 Circuit Court - Clerk's Office 13 13 13 13 14 14 13 Sheriff 21 21 21 22 25 25 25 Commonwealth Attorney 17 17 17 18 22 29 29 Total 53 53 53 55 63 70 69

Public Safety:Police Administration and Officers 167 175 186 196 206 206 194 Emergency Communications 22 22 22 22 26 26 26 Animal Shelter and Management 9 9 9 9 9 9 8 Fire Fire and Rescue 174 183 187 190 197 197 216 Fire Prevention 3 3 3 3 3 3 5 Neighborhood Development 25 27 27 27 27 27 26 Total 400 419 434 447 468 468 475

Public Works:Public Works Administration 7 7 7 7 7 6 5 Traffic Engineering and Maintenance (1) 24 27 30 34 - - - Engineering (2) 8 9 11 12 - - - Refuse Collection (3) 11 12 12 14 46 46 40 Maintenance Building and Grounds 22 22 25 25 27 27 15 Mosquito Control 1 2 2 2 2 - - Capital Program Management 2 3 3 3 3 3 6 Aviation Facilities 3 3 3 3 3 3 3

Total 78 85 93 100 88 85 69

Health and Welfare:Social Services 103 101 102 101 102 102 101 Comprehensive Services Act 1 1 1 1 1 1 1 Total 104 102 103 102 103 103 102

Function/Program

156


FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAMLAST SEVEN FISCAL YEARS

2003 2004 2005 2006 2007 2008 2009

General Fund:Parks, Recreation and Cultural:

Parks and Recreation Administration 5 8 5 5 4 4 4 Support Services - - 5 5 4 4 4 Parks, Gateway and Facility Maintenance 17 17 18 20 22 22 20 Recreation 13 11 9 9 12 12 14Library 15 17 17 23 35 34 31 Total 50 53 54 62 77 76 73

Community Development:Planning 14 15 16 16 18 16 14Geographic Information Systems - - - - - 3 5Economic Development 6 7 7 7 7 8 5Tourism 2 2 3 3 3 3 3Communications - - 4 5 5 5 5 Total 22 24 30 31 33 35 32

Total General Fund 793 824 858 890 933 935 914

Special Revenue Fund:Transit 5 5 5 5 5 5 -Road Maintenance (1) Road Maintenance - - - - 93 94 86 Traffic Engineering - - - - 20 23 22 Total Special Revenue Fund 5 5 5 5 118 122 108

Enterprise Fund:Public Utilities Administration 4 4 6 6 6 8 6 Customer Service 7 7 17 17 18 18 18 Line Maintenance 29 29 26 26 26 26 24 Maintenance 19 17 17 20 20 20 19 Water Production 19 23 24 28 28 29 28 Engineering 11 11 11 12 16 18 15Stormwater Utility Stormwater Utility (2) - - - - 28 28 26 Mosquito Control (2) - - - - - 7 6 Total Enterprise Fund 89 91 101 109 142 154 142

Internal Service Funds:Fleet Management 17 18 19 19 25 26 23Information Technology 10 10 11 12 12 13 13Risk Management - - 2 2 2 2 2 Total Risk Management 27 28 32 33 39 41 38

Total 914 948 996 1,037 1,232 1,252 1,202

(4)

1. Road maintenance fund was increased in 2007 due to VA Dept. of Transportation turning over the highwaysystem within the City to Suffolk.

2. New program adopted by City Council in 2007 and staffing realignment.3. Change in methodology of calculationg full time employees in this department.4. 2009 actual data furnished by Human Resources. 2003-2008 provided by Budget Office.

Function/Program

157


OPERATING INDICATORS BY FUNCTION/PROGRAMLAST TEN FISCAL YEARS

Function/Program 2000 2001 2002 2003

General Government: Building permits issued 1,584 1,980 1,296 1,974 Value of permits issued (millions) $ 149.9 $ 182.0 $ 184.9 $ 228.8

Number of registered voters 37,570 39,268 41,253 41,966

Taxable retail sales (millions) 352.5 419.9 453.3 488.8 Taxable retail sales per capita 5,531 6,518 6,710 6,973

Parks, Recreation and Cultural: Library volumes in collection (,000) 135.4 160.0 160.2 157.8 Circulation (,000) - - - -

Enterprise Fund: Public Utilities Customers - Water 18,427 19,171 20,351 20,566 Customers - Sewer Average daily consumption (mgd) 4.33 4.56 5.43 5.38 Treatment Capacity daily (mgd) 7.45 7.45 7.45 7.45 Pump Stations 83 86 90 98

Sources: Various City Departments

** Data is not availabe as this is shown on a calendar year basis

158

Table 18

2004 2005 2006 2007 2008 2009

1,975 1,776 1,886 1,416 1,294 488 $ 195.4 $ 268.5 $ 288.5 $ 272.8 $ 179.4 $ 134.0

44,341 45,922 47,569 48,170 50,843 55,578

539.3 530.7 599.4 645.2 652.8 not available7,418 7,029 8,153 8,114 7,931 not available

160.1 175.0 175.7 218.1 222.7 228.4 - - - - - 401

19,885 21,515 22,533 23,435 24,370 24,576 19,795.00 20,319.00 20,708.00

5.21 5.55 6.49 6.70 7.68 6.89 7.45 7.45 11.20 11.20 11.20 11.20 104 112 113 125 129 131

159


CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAMLAST TEN FISCAL YEARS

Function/Program 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Public Safety: Police Stations 3 5 5 4 4 4 4 4 4 4 Fire Stations 7 7 7 7 8 8 8 8 8 8

Public Works: (1) State maintained road miles 1,302 1,302 1,302 1,302 1,308 1,308 1,308 17 18 18 City maintained road miles 74 74 74 76 76 76 76 1,420 1,500 1,531 Streetlights 5,216 5,423 5,768 5,968 6,467 6,710 6,940 6,980 7,000 7,139 Bridges 3 3 3 3 3 3 3 144 144 154 Traffic Signals 23 23 23 23 23 23 23 86 89 91

Education: Elementary Schools 12 12 12 12 12 12 12 13 13 14 Middle Schools 3 3 4 4 4 4 4 4 4 4 High Schools 2 2 2 2 2 3 3 3 3 3 Alternative Schools 1 1 1 1 1 1 1 1 1 1 Number of Teachers, Principals, and Assistants 1,121 1,180 1,212 1,246 1,295 1,347 1,380 1,393 1,405 1,448 Average Daily Membership 11,387 11,608 12,003 12,476 12,966 13,297 13,452 13,490 13,512 13,568 Capacity of Schools 11,450 11,450 11,450 11,450 11,450 13,250 13,250 14,050 14,050 14,632

Enterprise Fund: Public Utilities Miles of Water Main 242 247 254 256 261 271 400 415 420 420 Miles of Sanitary Sewers 174 177 182 184 188 198 293 308 309 313 Miles of Storm Sewers 6 6 6 6 6 6 6 142 495 505

Parks, Recreation and Cultural: Parks and Recreation Number of major parks and

recreation facilties (2) 36 36 38 41 41 41 41 41 41 40 Acreage of major parks and

recreation facilties 1,334 1,334 1,405 1,821 1,825 1,825 1,825 1,825 1,827 1,827 Library Number of libraries 1 1 1 1 1 1 1 1 1 1 Number of branch libraries 1 3 3 3 3 3 3 3 2 2 Number of bookmobiles - 1 1 1 1 1 1 1 1 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 1642. 2009 sold the American Leagion Building

160


PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITSLAST TEN FISCAL YEARS

BankFiscal Number Number Deposits (2)Year of Permits Value of Permits Value (in thousands) Residential Commercial Agricultural Nontaxable Total

2000 160 $ 77,495,825 1,424 $ 77,538,340 $ 401,000 $ 2,053,803,800 $ 520,146,100 $ 341,866,400 $ 534,782,700 $ 3,450,599,0002001 169 65,079,091 1,811 116,922,016 416,000 2,209,050,400 586,899,400 366,544,400 571,385,800 3,733,880,0002002 212 63,388,257 2,024 133,069,941 427,000 2,391,608,700 631,472,700 361,592,700 631,546,300 4,016,220,4002003 175 108,959,711 1,799 119,230,994 450,000 2,626,448,600 723,716,810 382,285,100 688,124,300 4,420,574,8102004 184 57,183,116 1,791 138,229,794 481,000 3,086,553,300 792,445,200 382,888,200 714,195,300 4,976,082,0002005 191 86,239,759 1,585 182,767,959 504,000 3,633,548,700 876,319,900 457,703,200 751,744,400 5,719,316,2002006 196 59,858,597 1,690 228,671,215 598,000 4,537,277,500 1,013,362,100 646,369,300 809,532,500 7,006,541,4002007 218 140,285,316 1,198 132,475,248 642,000 6,060,448,500 1,362,319,600 767,985,700 914,701,000 9,105,454,8002008 193 73,914,062 1,101 105,455,002 * 6,850,010,900 1,444,643,500 845,756,000 978,058,800 10,118,469,2002009 151 79,953,808 337 54,363,185 * 7,114,848,900 1,779,310,900 829,471,000 1,000,191,500 10,723,822,300

(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

Construction (1) Construction (1) Real Property Value (3)Commercial Residential

0 50 100 150 200 250

1

2 Single Family

Multi Family

2009 NewResidentialConstruction

Permits Issued

$40,792,046

$13,571,142

161


PRINCIPAL COMMERCIAL/INDUSTRIAL WATER AND SEWER CONSUMERSYEAR ENDED JUNE 30, 2009

AnnualConsumption % of Total

in Gallons AnnualWater Consumers Type of Business (Hundred Cubic Feet) Consumption*

Western Tidewater Water Authority Regional Water Supply 154,456 5.04%Sara Lee Coffee & Tea Beverage Company 73,651 2.40%CIBA Specialty Chemicals Chemical Plant 48,235 1.57%Western Tidewater Regional Jail Jail-Regional Facility 40,430 1.32% Sentara/Obici Hospital Hospital 32,842 1.07%Unilever Bestfoods Beverage Company 29,434 0.96%Wanchese Fish Company Seafood Processing 25,066 0.82%Planters Peanut Co. Peanut Products 17,934 0.58%Nansemond Square, LLC Real Property Management 13,378 0.44%Harbour Breeze Apartments Real Property Management 13,542 0.44%

448,968 14.64%

*Total annual consumption for fiscal year 2008-2009 was 3,066,112

AnnualConsumption % of Total

in Gallons AnnualSewer Consumers Type of Business (Hundred Cubic Feet) Consumption**

CIBA Specialty Chemicals Chemical Plant 48,235 2.11%Western Tidewater Regional Jail Jail-Regional Facility 40,430 1.77%Sara Lee Coffee and Tea Beverage Company 38,116 1.67%Sentara/Obici Hospital Hospital 32,845 1.44%Wanchese Fish Company Seafood Processing 25,066 1.10%Sara Lee Coffee and Tea Beverage Company 24,008 1.05%Unileaver Best Foods Beverage Company 17,303 0.76%Nansemond Square, LLC Real Property Management 13,060 0.57%Harbour Breeze Apartments Real Property Management 13,542 0.59%Suffolk Public School Education 12,450 0.54%

265,055 11.59%

**Total annual consumption for fiscal year 2008-2009 was 2,286,042

162

ROBINSON, FARMER, COX ASSOCIATESA 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


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, 2009, which collectively comprise the City of Suffolk, Virginia’s basic financial statements and have issued our report thereon dated November 2, 2009. 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 City’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 control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City’s financial statements that is more than inconsequential will not be prevented or detected by the City’s internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City’s internal control.

Our consideration of the 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.

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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.

We noted certain matters that we reported to management of the City of Suffolk, Virginia in a separate letter dated November 2, 2009.

This report is intended solely for the information and use of management, the City Council, 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 2, 2009

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ROBINSON, FARMER, COX ASSOCIATESCERTIFIED PUBLIC ACCOUNTANTS A PROFESSIONAL LIMITED LIABILITY COMPANY

Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133


Compliance

We have audited the compliance of the City of Suffolk, Virginia with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2009. 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 are applicable to each of its major federal programs for the year ended June 30, 2009.

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 City’s internal control over compliance.

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Internal Control Over Compliance: (Continued)

A control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the City’s internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the City’s internal control.

Our consideration of internal control over compliance 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 compliance that we consider to be material weaknesses, as defined above.

This report is intended solely for the information and use of management, the City Council, 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 2, 2009,

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Schedule of Expenditures of Federal Awards - Primary Government and Discretely Presented Component UnitYear Ended June 30, 2009

FederalFederal Grantor/State Pass - Through Grantor/ CatalogProgram Title (Pass - Through Grantor's Number) Number Expenditures

PRIMARY GOVERNMENT:

DEPARTMENT OF AGRICULTURE: Direct payments: Summer Food Service Program for Children grant 10.559 $ 78,217 Pass through payments: Department of Social Services: State administrative matching grants for the Supplemental Nutrition Assistance Program 10.561 1,042,891

Total Department of Agriculture $ 1,121,108

DEPARTMENT OF LABOR: Direct payments: WIA Pilots, Demonstrations, and Research Projects 17.261 $ 16,210

Pass through payments: Workforce Investment Act - Youth Activities 17.259 15,302

Total Department of Labor $ 31,512

DEPARTMENT OF TRANSPORTATION: Direct payments: Highway Planning and Construction 20.205 $ 198,066 Airport Improvement Program 20.106 397,971

Total Department of Transportation $ 596,037

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT: Direct payments: Home Investment Partnership Program 14.239 $ 517,673 Supportive Housing Program 14.235 18,000

Pass through payments: Department of Housing and Community Development: Community Development Block Grants/Entitlement Grants 14.218 168,703 Community Development Block Grant - Section 108 loan guarantees 14.248 382,288 Economic Development Initiative - Special Project, Neighborhood Initiative and Miscellaneous Grants 14.251 196,000

Total Department of Housing and Urban Development $ 1,282,664

DEPARTMENT OF HEALTH AND HUMAN SERVICES: Pass - through payments: Department of Social Services: Promoting Safe and Stable Families 93.556 $ 58,620 Temporary Assistance for Needy Families 93.558 1,029,508 Refugee and Entrant Assistance-State Administered Programs 93.566 1,912 Low-Income Home Energy Assistance 93.568 52,667

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Schedule of Expenditures of Federal Awards - Primary Government and Discretely Presented Component UnitYear Ended June 30, 2009 (Continued)


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 93.575 $ 423,548 Child Care Mandatory and Matching Funds of the Child Care and Development Fund 93.596 336,806 Chafee Education and Training Vouchers Program 93.599 11,656 Adoption Incentive Payments 93.603 656 Child Welfare Services 93.645 5,390 Foster Care-Title IV-E 93.658 512,869 Foster Care-Title IV-E - ARRA 93.658 12,589 Adoption Assistance 93.659 92,676 Adoption Assistance - ARRA 93.659 6,067 Social Services Block Grant 93.667 497,849 Chafee Foster Care Independence Program 93.674 22,656 Children's Health Insurance Program 93.767 76,999 Medical Assistance Program 93.778 685,123

Total Department of Health and Human Services $ 3,827,591

DEPARTMENT OF INTERIOR: Pass - through payments: Dismal Swamp 15.000 $ 27,074 Save America's Treasures 15.929 6,968

Total Department of Interior $ 34,042

DEPARTMENT OF JUSTICE: Direct payments: Bulletproof Vest Partnership Program 16.607 $ 3,931 Pass through payments: Department of Criminal Justice Services: Crime Victim Assistance 16.575 161,352 Edward Byrne Memorial Formula Grant Program 16.579 10,085 Byrne Memorial State and Local Law Enforcement Assistance Discretionary Grant Program 16.580 1,978 Drug court discretionary grant 16.585 46,525 State Criminal Alien Assistance Program 16.606 7,797 Gang Resistance Education and Training 16.737 49,018 Edward Byrne Memorial Justice Assistance Grant Program 16.738 75,731 Public Safety Partnership and Community Policing Grants 16.710 104,648 Violence Against Women Formula Grants 16.588 38,893

Total Department of Justice $ 499,958

DEPARTMENT OF HOMELAND SECURITY: Pass through payments: State Domestic Preparedness Equipment Support Program 97.004 $ 4,925 Hazard Mitigation Grant 97.039 11,032 Buffer Zone Protection Program 97.078 137,799

Total Department of Homeland Security $ 153,756

Total Primary Government $ 7,546,668

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Schedule of Expenditures of Federal Awards - Primary Government and Discretely Presented Component UnitYear Ended June 30, 2009 (Continued)


COMPONENT UNIT-SCHOOL BOARD:

DEPARTMENT OF AGRICULTURE: Pass through payments: Department of Agriculture and Consumer Services: Food Distribution 10.555 $ 344,925 Department of Education: National School Breakfast Program 10.553 800,979 National School Lunch Program 10.555 2,227,859 Summer Food Service Program for Children 10.559 37,278

Total Department of Agriculture $ 3,411,041

DEPARTMENT OF HEALTH AND HUMAN SERVICES: Direct payments: Medical Assistance Program 93.778 $ 193,040

DEPARTMENT OF DEFENSE: Direct payments: JROTC Instruction 12.000 $ 148,350

DEPARTMENT OF LABOR: Pass through payments:

Workforce Investment Act - Youth Activities 17.259 $ 100,000

DEPARTMENT OF EDUCATION: Direct payments: Impact Aid 84.041 $ 577,989 Pass through payments: Adult Education - Basic Grants to States 84.002 132,200 Title I Grants to Local Educational Agencies 84.010 2,735,823 Special Education Grants to States 84.027 2,853,823 Vocational Education: Career and Technical Education - Basic grants to states 84.048 270,390 Special Projects: Special Education - Preschool Grants 84.173 65,572 Safe and Drug-Free Schools and Communities-State Grants 84.186 52,650 21st Century Community Learning Centers 84.287 112,470 Education Technology State Grants 84.318 22,883 Reading First State Grants 84.357 480,441 Improving Teacher Quality State Grants 84.367 615,256 School Improvement Grants 84.377 164,025

Total Department of Education $ 8,083,522

Total Component Unit School Board $ 11,935,953

Total Expenditures of Federal Awards $ 19,482,621

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Notes to Schedule of Expenditures of Federal AwardsFor The Year Ended June 30, 2009

Note 1 - General

Note 2 - Basis of Accounting

Note 3 - Subrecipients

HOME Investment Partnership Program CFDA # 14.239 $ 474,675Community Development Block Grant CFDA # 14.228 5,000

Note 4 - Relationship to Financial Statements

Intergovernmental federal revenues per the basic financial statements:Primary government:

Governmental funds - exhibit 5 $ 7,546,668 School Board - exhibit 29 11,935,953

Total federal expenditures per the Schedule of Expendituresof Federal Awards $ 19,482,621

The accompanying schedule of expenditures of federal awards presents the activity of all federally assisted programs of theCity of Suffolk, Virginia. The City's reporting entity is defined in note 1 to the City's basic financial statements. All federalawards received directly from federal agencies, as well as federal awards passed through other government agencies, areincluded on the schedule.

The accompanying schedule of expenditures of federal awards is presented using the modified accrual basis of accounting,which is described in note 1 to the City's basic financial statements.

Federal expenditures, revenues and capital contributions are reported in the City's basic financial statements as follows:

Of the federal expenditures presented in the schedule, the City of Suffolk, Virginia provided federal awards to subrecipientsas follows:

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Schedule of Findings and Questioned CostsYear Ended June 30, 2009

Section I - Summary of Auditor's Results

Financial Statements

Type of auditor's report issued: Unqualified

Internal control over financial reporting:Material weaknesses identified? NoSignificant deficiencies identified not considered to be material weaknesses? None reported

Noncompliance material to financial statements noted? No

Federal Awards

Internal control over major programs:Material weaknesses identified? NoSignificant deficiencies identified not considered to be material weaknesses? None reported

Type of auditor's report issued on compliance for major programs: Unqualified

Any audit findings disclosed that are required to bereported in accordance with Circular A-133, Section .510 (a)? No

Identification of major programs:

CFDA # Name of Federal Program or Cluster

10.561 State administrative matching grants for the Supplemental Nutrition Assistance Program84.027 / 84.173 Special Education Cluster (IDEA)

93.558 Temporary Assistance for Needy Families93.778 Medical Assistance Program

Dollar threshold used to distinguish between Type A and Type B programs $584,479

Auditee qualified as low-risk auditee? Yes

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.

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Summary Schedule of Prior Audit FindingsYear Ended June 30, 2009

None reportable

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2009 comprehensive annual financial report

Documents