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Financial & Management


101-F Mounts Bay Rd.
Williamsburg, VA 23185

P.O. Box 8784
Williamsburg, VA

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P: 757-253-6630
F: 757-253-6840




Suzanne R. Mellen
Director, FMS


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8 a.m. - 5 p.m.


Comprehensive Annual Financial Report for 2007 - Letter of Transmittal


November 14, 2007


The Members of the Board of Supervisors and the Citizens of James City County:

We are pleased to submit to you the Comprehensive Annual Financial Report of James City County, Virginia (the County), for the fiscal year ended June 30, 2007, as required by the Code of Virginia. The Department of Financial and Management Services has prepared this report in accordance with accounting principles generally accepted in the United States of America (GAAP) and the standards of financial reporting prescribed by the Governmental Accounting Standards Board, the Financial Accounting Standards Board and the Auditor of Public Accounts of the Commonwealth of Virginia. Section 15.1-67 of the Code of Virginia (1950, as amended) requires the County to have an annual audit of the books of account, financial records, and the transactions of the County. Goodman & Company, LLP was selected to perform the required audit. The unqualified report of Goodman & Company, LLP, the highest possible result of the audit process, accompanies the financial statements in this report.


Responsibility for both the accuracy of the presented data and the fairness of the presentation, including all disclosures, rests with the County. We believe the data, as presented, is accurate in all material respects; that it is presented in a manner designed to fairly set forth the financial position and the results of operations of the various funds of the County; and that all disclosures necessary to enable the reader to gain maximum understanding of the County's financial activity have been included.


The County government is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996, as amended, and U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Information related to this single audit, including the schedule of expenditures of federal awards, the schedule of findings and questioned costs, and the auditors' reports on internal control and compliance with applicable laws and regulations, are included in the compliance section of this report.


GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The County's MD&A can be found immediately following the report of the independent auditors on pages 3-12 of this report.


Profile of the Government

The County is located in southeastern Virginia and partially surrounds the City of Williamsburg. Although much of the County's 144 square miles consists of developed suburban areas, it has retained a considerable amount of undeveloped agricultural and forest land. There are no incorporated towns within the County. The County is empowered to levy a property tax on both real and personal properties located within its boundaries.


The County is organized under the County Administrator form of government (as defined under Virginia Law). Under this form of government, the Board of Supervisors appoints a County Administrator to serve as the Chief Executive Officer of the County. The Administrator serves at the pleasure of the Board of Supervisors, implements its policies, appoints department heads, and directs business and administrative procedures.


The Board of Supervisors is a five-member body, elected by the voters of the Electoral Districts in which they live to staggered terms. The Chairman of the Board is elected annually by its members. Each member serves a four-year term. This body enacts ordinances, appropriates funds, sets tax rates, and establishes policies for the administration of the County's public services.


The County provides a full range of services, including law enforcement, fire protection, and recreational activities. Water and Sewer services are provided through the legally separate James City Service Authority (JCSA). The Board of Supervisors of James City County serves as the Board of Directors of the JCSA. The financial activity of the JCSA is included as an integral part of the County's financial statements. The County is also financially accountable for the legally separate Williamsburg-James City County School Board and the legally separate James City County Economic Development Authority, both of which are reported separately as discretely presented component units within the County's financial statements. Additional information on each of these legally separate entities can be found in note 1(a) in the notes to the basic financial statements.


The annual budget serves as the foundation for the County's financial planning and control. In the spring of each year, departments and agencies of the County are required to submit requests for appropriation to the County Administrator. The County Administrator then submits to the Board of Supervisors a proposed operating and capital budget for the fiscal year commencing the following July 1. The operating budget and capital budget include proposed expenditures and the means of financing them. Public hearings are conducted to obtain citizen comments.


Prior to June 30, the budget is legally enacted through passage of an Appropriations Resolution. The Appropriations Resolution places legal restrictions on expenditures at the fund and function level. The appropriation for each fund and function can be revised only by the Board of Supervisors; however, the County Administrator may amend the budget within functions. Budget to actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on pages 59-64 as part of the required supplementary information other than management's discussion and analysis. For the debt service fund, this comparison is presented on page 65. For governmental funds, other than the general fund, with appropriated budgets, this comparison is presented in the other supplementary information subsection of this report which starts on page 67.


Economic Condition and Outlook

James City County has a strong, diverse and growing economic base. The value of taxable real property grew by 18.3% from FY 2006 to FY 2007, and an increase of approximately 9% is expected over the next 12-month period, which is attributed to projected growth in new construction. Although the rate of increase is less than the trends the County has seen over the past few years, new construction activity is expected in both residential and commercial sectors.


This year, the County hosted America's 400th Anniversary celebration. As a result, significant new investment in road infrastructure and development of both the state and federal properties were made at Jamestown. The anniversary celebration increased tourism to the area.


The County bond rating was upgraded by Standard and Poor's this year to AA+. The County also enjoys a bond rating of AA2 from Moody's Investors Service and AA+ from Fitch. These bond ratings are based on analyst recommendations after a review of economic and fiscal performance, fiscal policies and practices, current debt outstanding and evidence of financial planning to meet future capital needs. These ratings are excellent for a community the size of James City County and give the County additional leverage in the bond market for potential bond buyers and investors.


Major Initiatives

In fiscal year 2007, the County continued to utilize its Strategic Management Plan as a framework for planning and accountability and continued to seek out new partnerships to help achieve its goal.


The County continues to manage finances wisely and encourage a balanced economy. The County's bond rating was upgraded to AA+ by Standard & Poor's. The County issued $21 million general obligation bonds to finance improvements to Warhill Sports Park, Freedom Park, and Chickahominy Riverfront Park. In addition, $95.8 million in lease revenue financing will go towards a classroom addition to Stonehouse Elementary School, new Matoaka Elementary School, the fourth middle school and the ninth elementary school.


The County improves the lives of citizens and fosters a sense of community. America's 400th Anniversary was held May 11-13, 2007 and the public safety plan was implemented successfully during the Jamestown 2007 events. This plan resulted in the cooperation of more than 28 law enforcement and public safety organizations from Federal, State and local agencies. In addition, Housing and Community Development improved 30 homes for elderly and disabled residents, replaced two homes that were beyond repair, rehabilitated three homes to meet federal housing quality standards and completed emergency repairs on 22 homes.


It is essential for the County to plan responsibly for the needs of a growing, diverse community. The new community building, 2007 Legacy Hall, overlooking Sullivan Square in New Town, opened for use by governmental, civic, community groups, and the general public. Warhill site development continued for Warhill High School, the Thomas Nelson Community College Historic Triangle campus, the James City County Sports Stadium, multi-use fields, a multi-use trail, and future public facilities, using the Public Private Education Facilities and Infrastructure Act (PPEA).


As stewards of the natural environment and historic heritage, the County collaborated with The Trust for Public Land, Jamestown-Yorktown Foundation, Virginia Department of Transportation, National Oceanic and Atmospheric Administration and the Dominion Foundation to acquire more than 200 acres at the Jamestown Campground and Yacht Basin, site of Anniversary Park during Jamestown 400th Anniversary commemoration events.


The County also provided outstanding customer service with successful transportation shuttle service during America's 400th Anniversary weekend. Renovations were completed at the Emergency Operations Center and equipment installed for recording public information and implementing Web-based software to use during emergencies.


Economic Development

Nine new businesses were announced with more than $12 million in capital investment and 80 initial jobs. Three of them are stationed at the Technology Incubator at Ironbound Village. Some of the new ventures included: Volvo Rents opened its new 10,000 square foot, $1.3 million heavy equipment sales and rental facility at James River Commerce Center; Ritchie-Curbow Construction Company is developing a 70,000 square foot, $3.5 million speculative multi-tenant light industrial building at James River Commerce Center; Fremont Die Consumer Products, Ind., a distributor of professional and college sports team collectibles, will be the anchor tenant in the Ritchie Building occupying 35,00 square feet and bring 20 jobs initially; and Carter Machinery Company, an affiliate of Caterpillar Inc., announced plans for a heavy construction equipment distribution, rental and campus-style repair facility at GreenMount Industrial Park totaling over $4 million in capital investment.


Capital Improvement Program

James City County will continue to face challenges over the next several years. Several years of population growth have produced demands for public services and facilities. The five-year Capital Improvement Program totals $183,634,000 and focuses on a wide variety of needs. An indication of anticipated impacts can be seen in the adopted budget and capital improvements program for the fiscal year beginning July 1, 2007.


In fiscal year 2008, funding is included for design and engineering costs for a new middle and elementary school, which are both expected to open in August 2009. Funding is also provided for a community gymnasium at the Warhill Sports Complex, and generators for the Human Services and Law Enforcement Centers to sustain operations in the event of a power emergency. Future planning includes a general services building, public safety building, new library branch, and water quality improvements.


James City Service Authority

The financial statements of the JCSA are included in this report in accordance with GAAP. The JCSA, for legal and management purposes, issues its own comprehensive annual financial report which is audited and available from the Department of Financial and Management Services.


The Board of Directors has authorized water and sewer operations for the JCSA within the Primary Service Area (PSA) in the County. The JCSA also provides water and/or sewer service to limited sections of York County and the City of Williamsburg with the concurrence of the appropriate governing bodies. The JCSA's operating funds are self-supporting, and the JCSA receives no share of any local or property tax levies.


The JCSA's water system includes the central water system with 10 water production facilities and 6 independent water production facilities that are located outside the PSA. There are approximately 329 miles of water transmission and distribution lines throughout the entire system. The water system facilities supply approximately 4.9 million gallons of water per day to 18,300 water customers.


The JCSA's sewer system includes 74 pump stations with approximately 370 miles of sewer collection lines. The sewer system facilities collect and move approximately 4.6 million gallons of sewage per day for 18,500 sewer customers. The JCSA has no sewage treatment facilities. Sewage treatment for areas served by the JCSA, as well as for other Hampton Roads communities, is provided by the Hampton Roads Sanitation District.


The JCSA currently has groundwater permits for its central system to withdraw 8.9 million gallons per day to support the residential and commercial customers. With the current rate of growth, it is estimated that this amount of water will meet the County's needs through 2013. The JCSA is pursuing separate initiatives to meet its long-term water demand by participating in a regional effort to supplement the JCSA groundwater with surface water from the proposed King William Reservoir or the construction of a second groundwater desalination facility. Water Conservation is also an important component of meeting the future water needs. The JCSA has initiated the "Let's be Water Smart" program which is a partnership with local businesses involved in the landscape industry. The partnership promotes the importance of using water wisely.


JCSA has completed a major upgrade project for the Lift Station 1-2 (John Tyler Highway) service area. This rather large service area is developing rapidly, and the existing collection and conveyance system is currently operating near maximum capacity. In FY 2008, the JCSA will begin the rehabilitation of the Powhatan Sewer Interceptor, the JCSA's largest gravity sewer line. The line was installed in the 1970's using what is now known to be inferior materials. The estimated costs for all phases are $7.0 million.


Treasury Management

A conservative cash management system is carried out by the County Treasurer. Temporary idle funds are automatically invested overnight in repurchase agreements that are secured or collateralized by government securities as required by the Code of Virginia. Funds that are available for a longer period of time are part of a comprehensive investment strategy that maximizes short- and medium-term interest rates.


Risk Management

In our opinion, the County maintains a practical insurance program through a variety of vendors which affords adequate protection against loss and includes comprehensive public liability insurance for bodily injury and property damage.


Awards of Achievement

The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to James City County for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2006. This was the twenty-second year that the County has received this prestigious award.


In order to be awarded a Certificate of Achievement, the County must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements.


A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to Certificate of Achievement Program requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.



The County has established and continues to maintain a strong and stable financial position through progressive management of financial operations and through sound accounting and financial reporting practices. Appreciation is expressed to the Members of the James City County Board of Supervisors and all of the Constitutional Officers for their interest and support in planning and conducting the financial operations of the County in a responsible and progressive manner.


The preparation of this report could not have been accomplished without the extensive effort and efficient services of the staff of Financial and Management Services. We would like to express our appreciation to each employee of the Department who assisted with the annual audit and preparation of the financial statements.


Respectfully submitted,

Sanford B. Wanner
County Administrator


John E. McDonald
Manager of Financial and Management Services

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