Financial & Management
101-F Mounts Bay Rd.
Williamsburg, VA 23185
P.O. Box 8784
Hours of Operation
8 a.m. - 5 p.m.
Comprehensive Annual Financial Report for 2009 - Letter of Transmittal
November 13, 2009
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, 2009, 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 13 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 68-72 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 75.
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 3.1 % from FY 2008 to FY 2009. A decrease in real estate tax revenue is expected during the next fiscal year due to lower assessments. Over the next year it is also expected that revenues will decline in areas such as personal property taxes, investment earnings and meals taxes. In addition, the state has changed the distribution for excess fees collected by the Clerk of the Circuit Court in excess of the amount the Commonwealth of Virginia contributes for salaries and office expenses from two-thirds to one-thirds.
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.
In fiscal year 2009, 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. This fiscal year was one of the most challenging economic environments in recent decades. The County experienced revenue reductions, but still continued to offer services with limited citizen impact. Construction began on the new elementary and middle schools. Federal, state and local grants totaled more than $3.5 million helping to offset the County’s costs for criminal justice, public safety and housing assistance.
The County improves the lives of citizens and fosters a sense of community. Additional work force and affordable housing options for citizens entered the market with the construction of new homes in New Town, Michelle Point, Liberty Crossing, Pocahontas Square and Ironbound Square. Parker View Apartments, a 67-unit complex for lower-income elderly residents, opened in early 2009. The County will be better able to respond to emergencies after over 260 citizens 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. County staff, Planning Commission and Board of Supervisors had public hearings and meetings on revisions to the comprehensive plan. Two master plans, Shaping Our Shores and Parks and Recreation, were adopted to guide and assist citizens, staff, commissions and the Board of Supervisors in making future land use, planning, funding, maintenance, management and administrative decisions.
As stewards of the natural environment and historic heritage, County staff formed a Green Team to identify strategies to improve energy conservation, fleet management, recycling and green building design. As part of the Go Green Virginia Challenge, the County received certification as a Green Government, which recognizes efforts to reduce carbon emissions while saving money. The Norge Depot was listed on the National Register of Historic Places. As a continuation of 2007 Legacy Projects commemorating the 400th anniversary at Jamestown, a privately funded statute honoring Chief Powhatan was unveiled at the Williamsburg-James City County Courthouse.
The County also provided outstanding customer service by participating in drills in preparation for storms and other disasters. The practice was put to the test when the County activated the Emergency Operations Center for Tropical Storm Hanna. Several communications tools were updated – this includes a new playback and message board system for JCC TV48, the citizen newsletter “FYI” received a new design that provided in-depth coverage of key County messages, and the “FYI” TV show expanded to two new shows a month highlighting County events and services.
County businesses Nicewood Enterprises and Owens-Illinois announced expansions to their existing operations in the County. The expansions resulted in the retention of 300 primary jobs and added nearly $22 million in new taxable capital investment.
Several businesses are nearing graduation from the James City County Technology Business Incubator, and should do so in the next fiscal year. 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 six-year Capital Improvement Program totals $92,872,658 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, 2009.
In fiscal year 2010, funding is included for renovation costs for Berkeley and James Blair Middle Schools and a new police building. Funding is also provided for self-contained breathing apparatus replacements, safety improvements at the Jamestown Beach Campground, fleet service truck and dump truck/sand spreader. Future planning includes a fire pumper replacement, ambulance replacement, rebuild a fire station, government center building replacement and Mid County Park upgrades.
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 339 miles of water transmission and distribution lines throughout the entire system. The water system facilities supply approximately 5.0 million gallons of water per day to 19,085 water customers.
The JCSA’s sewer system includes 76 pump stations with approximately 379 miles of sewer collection lines. The sewer system facilities collect and move approximately 5.3 million gallons of sewage per day for 18,702 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. The JCSA entered into an agreement with Newport News to purchase 4.0-6.5 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 was made on December 31, 2008. The JCSA sponsored a $25 million bond issue in the fall of 2008 to fund this payment. The JCSA is also working on conversion of its water disinfection system from chlorine to chloramines to accommodate water 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.
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, to minimize sewer system overflows. The JCSA has completed the first phase of a sewer system evaluation and as of August 2009 has competed about 40% of a smoke testing program to identified weaknesses within its sewer collections system. Once this phase is competed the JCSA will begin a flow monitoring program to complete the evaluation. Once all infrastructure deficiencies are identified they will be prioritized and addressed through construction projects.
A conservative cash management system is carried out by the County Treasurer. Temporarily 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.
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, 2008. This was the twenty-fourth 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.
Sanford B. Wanner
John E. McDonald
Manager of Financial and Management Services