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Financial & Management

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101-F Mounts Bay Rd.
Williamsburg, VA 23185

P.O. Box 8784
Williamsburg, VA
23187-8784

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

 

FMS@
jamescitycountyva.gov



 

John E. McDonald
Director, FMS

 

Suzanne Mellen,

Assistant Director of FMS/Budget

 

Hours of Operation

 

8 a.m. - 5 p.m.
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Comprehensive Annual Financial Report for 2008 - Letter of Transmittal

 

November 13, 2008

 

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, 2008, 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 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, L.L.P. was selected to perform the required audit. The unqualified report of Goodman & Company L.L.P., 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 (WJCC) 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 governmental funds, other than the general fund, with appropriated budgets, these comparisons are presented in the other supplementary information subsection of this report which starts on page 67.

 

Economic Condition and Outlook

James City County has seen a slowdown in the economy during the current fiscal year. The value of taxable real property grew by 8.7% from FY 2007 to FY 2008.  A moderate increase is expected during the next fiscal year.  The Board of Supervisors changed the assessment date from July to January and the next scheduled reassessment will be January 1, 2009.  However, over the next two years it is expected that revenues will decline in areas such as business licenses, investment earnings and lodging taxes.  In addition, the state has seen a similar decline in revenues and they will be identifying reductions in locality revenues during the next fiscal year.

 

This year, the County served as host site for national and state conferences at Jamestown Settlement during the commemoration year of 2007.  The national and statewide conferences brought tourism investment to James City County and the Greater Williamsburg area.

 

The County enjoys a bond rating of AA+ from Standard & Poor’s, AA2 from Moody’s Investors Service and AA+ from Fitch Ratings. These bond ratings are based on analysts’ 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 2008, 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 goals.

 

The County continues to manage finances wisely and encourage a balanced economy.  The County and WJCC Public Schools continued to identify areas to work together and share services.  Solid waste disposal costs were reduced through the County’s purchase of recycling containers for classrooms.  Federal, state and local grants totaled more than $6.6 million helping to offset the County’s costs for criminal justice, public safety and transportation.

 

The County improves the lives of citizens and fosters a sense of community.  Students, parents and staff learned about the importance of eating right and staying active by participating in the School Health Initiative Project (SHIP).  Construction began on 67 apartments for lower-income elderly residents at Parker View in the Ironbound Square community.  The County will be better able to respond to emergencies after over 200 citizens from 30 neighborhoods have become members of the Community Emergency Response Team (CERT) since 2003.  CERT members are trained in disaster preparedness skills to support professional emergency responders.

 

It is essential for the County to plan responsibly for the needs of a growing, diverse community.  Almost 1,400 citizens contributed to the first phase of the update to the Comprehensive Plan – Historic Past, Sustainable Future.  Staff and the Community Participation Team were tasked with soliciting input for the master plan for guiding future growth.  Improvements at Mid County and Chickahominy Riverfront Park continue to promote safe play and increase usability of the facilities.

 

As stewards of the natural environment and historic heritage, Freedom Park continued to develop into an educational and historic venue for citizens through the completed construction and installation of period furnishings and landscaping at three 19th century reproduction homes.  The Park provides the opportunity for visitors to learn about one of the first free black settlements in the country.  The implementation of Special Stormwater Criteria (SSC) help protect the streams and wetlands in the Powhatan and Yarmouth watershed.

 

The County also provided outstanding customer service expanding the available sources for County information to include web based products, specifically on-demand video, JCC TV48 live streaming and podcast-type videos.  In addition, the County has partnered with The Tide 92.3FM to provide critical information before, during and after emergencies.  Over 500 citizens became more aware of how their government works through workshops promoted by the County.  Over 25 programs were offered including JCC 102 and the Citizen Leadership, Police and Fire Academies.

 

Economic Development

Many new businesses opened in the County this year, including an expansion of Prime Outlets.  New and expanded businesses help diversify tax revenue and increase employment options for the County.  Three of the new businesses added 84 jobs and $6.2 million in capital investment.  These included Dylla Manufacturing, which makes customized rubber elevator specialities, Walsh Electric, which offers a variety of commercial general electric contracting services in seven states in the Eastern U.S. and Yeargin Landscaping, Inc., which delivers quality landscaping services throughout Southeastern Virginia.

 

Two businesses graduated from the James City County Technology Business Incubator, Perceiva and Webware Pros.  A business graduates from the incubator once it has reached a stage where the product or service is commercially viable with a steady revenue stream to sustain the business without subsidies.

 

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 $138,719,537 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, 2008.

 

In fiscal year 2009, funding is included for construction costs for a new middle and elementary school, which are both expected to open in August 2010. Funding is also provided for a heavy rescue vehicle, water quality improvements, and renovation of the Community Center. Future planning includes a new public safety building, water quality and drainage improvements, rebuild a fire station and a government center building replacement.

 

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 332 miles of water transmission and distribution lines throughout the entire system. The water system facilities supply approximately 5.1 million gallons of water per day to 18,770 water customers.

 

The JCSA’s sewer system includes 75 pump stations with approximately 375 miles of sewer collection lines. The sewer system facilities collect and move approximately 4.7 million gallons of sewage per day for 18,590 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 has entered into an agreement with Newport News to purchase 5 million gallons of water per day to meet the County’s water needs through 2040.  The first of two $25 million payments for the purchase of the water will be made by December 31, 2008.  The JCSA will sponsor a $25 million bond issue in the summer of 2008 to fund the payment.  In addition, the JCSA staff is coordinating numerous water system improvements to accommodate the water made available to the JCSA system from Newport News.  Water Conservation is 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.  During fiscal year 2008, the JCSA completed the first phase of the rehabilitation of Powhatan Interceptor beginning at Lift Station 1-1 on Jamestown Road and following Powhatan Creek to Lift Station 1-2 located off of Route 5 near Jamestown High School.  In addition, the JCSA made major improvements to the sewer interceptor in the head waters of Powhatan Creek upstream of Lift Station 1-5 and located between Ford’s Colony and Windsor Forest.

 

The Hampton Roads region is participating in discussions with the U.S. Environmental Protection Agency and the Virginia Department of Environmental Quality (DEQ) regarding sewer system overflows.  In June 2007, the Board of Directors authorized the General Manager to sign a Consent Order with the DEQ to establish milestones and a time line to increase its efforts in reducing infiltration and inflow of extraneous water into the sewer system.  This will be an expensive and long-term effort, which will compliment the JCSA’s on-going efforts, minimizing sewer system overflow.

 

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 rate.

 

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 Government Finance Officers’ Association (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, 2007.  This was the twenty-third 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.

 

Acknowledgments

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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