$37,050,000 city of omaha, nebraska general obligation ... · the executive and administrative...
TRANSCRIPT
NEW ISSUE-Book-Entry Only Ratings: Standard & Poor’s: AAA Moody’s: Aa1 (See “RATINGS” herein)
In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, except that such interest must be included in the “adjusted current earnings” of certain corporations for purposes of calculating alternative minimum taxable income. Bond Counsel also is of the opinion that, under existing laws of the State of Nebraska, such interest is exempt from Nebraska state income taxation as long as it is exempt for purposes of the federal income tax. See “TAX EXEMPTION” herein.
$37,050,000 City of Omaha, Nebraska
General Obligation Refunding Bonds Series of 2009
Dated: Date of Delivery Due: October 15, as shown on inside cover page The Series of 2009 Bonds (the “Bonds”) are issuable in fully registered form in the denominations of $5,000 and
integral multiples thereof. Interest on the Bonds is payable semiannually on April 15 and October 15 of each year, commencing October 15, 2009, by check or draft mailed to the registered owner as of the applicable record date at the address shown on the books of registry maintained by First National Bank of Omaha, as Registrar. Principal of the Bonds is payable upon presentation and surrender of the Bonds at the principal corporate office of First National Bank of Omaha, as Paying Agent, in Omaha, Nebraska. The Bonds are subject to optional redemption prior to maturity, as more fully set forth herein.
The Bonds initially will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Bonds. Purchases of the Bonds may be made only in book-entry form in authorized denominations by credit to participating broker-dealers and other institutions on the books of DTC as described herein. Purchasers will not receive certificates evidencing the Bonds. Principal of and interest on the Bonds will be payable by the paying agent directly to DTC as the registered owner thereof. Disbursement of such payments to the DTC Participants is the responsibility of DTC, and disbursement of such payments to the beneficial owners is the responsibility of the DTC Participants and the Indirect Participants, as more fully described herein. Any purchaser of a beneficial interest in the Bonds must maintain an account with a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of and interest on such Bonds. See “THE BONDS—Book-Entry Only System” herein.
The proceeds of the Bonds will be used to finance the cost of refunding certain outstanding general obligation indebtedness of the City of Omaha (the “City), including certain debt assumed by the City as a result of its annexations of fifteen Douglas County, Nebraska sanitary and improvement districts.
THE BONDS ARE PAYABLE FROM AD VALOREM TAXES, UNLIMITED AS TO RATE AND AMOUNT, LEVIED BY THE CITY AGAINST ALL TAXABLE PROPERTY IN THE CITY. THE FULL FAITH AND CREDIT OF THE CITY ARE PLEDGED TO THE PROMPT PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS.
MATURITY SCHEDULE (on inside cover page)
This cover page contains information for convenient reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential and material to the making of an informed investment decision.
The Bonds are being offered when, as and if issued by the City and accepted by the Underwriter, subject to the approval of legality of the Bonds by Kutak Rock LLP, Bond Counsel and to certain other conditions. It is expected that delivery of the Bonds will be made on or about April 16, 2009, at DTC in New York, New York against payment therefor.
Dated: March 31, 2009
D. A. Davidson & Co.
$37,050,000 City of Omaha, Nebraska
General Obligation Refunding Bonds Series of 2009
MATURITY SCHEDULE
Maturity (October 15)
Principal Amount
Interest Rate
Yield
Price
CUSIP 681712
2010 $6,735,000.00 5.000% 1.000% 105.929% UW3 2011 6,840,000.00 4.000 1.320 106.562 UX1 2012 4,490,000.00 4.000 1.560 108.273 UY9 2013 2,535,000.00 4.000 1.980 108.650 UZ6 2014 2,285,000.00 4.000 2.380 108.301 VA0 2015 1,000,000.00 3.125 2.620 102.998 VB8 2015 1,100,000.00 4.000 2.620 108.195 VC6 2016 2,100,000.00 4.000 2.850 107.713 VD4 2017 405,000.00 3.375 3.070 102.265 VE2 2017 1,000,000.00 5.000 3.070 114.338 VF9 2018 1,475,000.00 3.625 3.270 102.878 VG7 2019 1,520,000.00 3.750 3.480 102.357 VH5 2020 880,000.00 5.000 3.640 111.777∗ VJ1 2021 500,000.00 3.875 3.760 100.989∗ VK8 2021 375,000.00 5.000 3.760 110.673∗ VL6 2022 905,000.00 5.000 3.910 109.311∗ VM4 2023 950,000.00 5.000 4.040 108.147∗ VN2 2024 900,000.00 4.000 4.190 97.850 VP7 2025 1,055,000.00 5.000 4.330 105.603∗ VQ5
(No Accrued Interest)
∗ Priced to first optional call date, October 15, 2019
CITY OF OMAHA, NEBRASKA
MIKE FAHEY, MAYOR
CITY COUNCIL
Dan Welch, President
Garry Gernandt, Vice President Jim Vokal, Jr. Jim Suttle Franklin Thompson Frank Brown Chuck Sigerson, Jr.
DEPARTMENT DIRECTORS
Carol Ebdon ......................................................................................................................... Finance Director Paul D. Kratz............................................................................................................................. City Attorney Steven Jensen ......................................................................................................................Planning Director Unfilled ...............................................................................................Human Rights and Relations Director Eric Buske................................................................................................................................... Police Chief Michael McDonnell ........................................................................................................................Fire Chief Unfilled ................................................................................ Parks, Recreation and Public Property Director Robert Stubbe.............................................................................................................. Public Works Director Tom Marfisi. ........................................................................................................Human Resources Director Rivkah Sass...........................................................................................................................Library Director Dana Markel.............................................................................................. Convention and Tourism Director
Allen Herink, City Comptroller Buster Brown, City Clerk
AUDITOR KPMG LLP
BOND COUNSEL Kutak Rock LLP
UNDERWRITER
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No dealer, broker, salesperson or other person has been authorized by the City or the Underwriter to give any information or to make any representations in connection with the Bonds or the matters described herein, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information and expressions of opinion contained herein are subject to change, without notice, and neither the delivery of this Official Statement, nor any sale made hereunder, shall, under any circumstances, create any implication that there has been no change in the matters described herein since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the cover page hereof. The offering prices may be changed from time to time by the Underwriter.
TABLE OF CONTENTS Page Page
INTRODUCTION ..............................................................1 CITY OF OMAHA GENERAL
INFORMATION.................................................1 Form of Government...........................................1 City Administration ............................................1 City Financial Management and Controls...............................................................2 Financial Reporting Systems and Control Systems..................................................3 Location and General Background......................3 Area and Population............................................3 Transportation.....................................................3 Utility Services ...................................................4 Education ............................................................4 Military ...............................................................4 Economy .............................................................4
SOURCES OF CITY REVENUES ....................................5 Authority to Levy Taxes .....................................5 Property Taxes ....................................................5 City Sales and Use Taxes....................................6 City Business Taxes............................................6 Other Revenues...................................................7 Economic Factors and Next Year’s Budget and Rates ................................................7 Prospective Financial Commitments...................7
THE REFUNDING PROGRAM........................................7 THE BONDS......................................................................8
Description of the Bonds.....................................8 Place of Payment.................................................8 Book-Entry Only System....................................8 Optional Redemption ........................................11 Authority for Issuance.......................................11 Security .............................................................11 Revisions of State Property Tax System ...........11
RATINGS.........................................................................12 CONTINUING DISCLOSURE........................................12 LEGAL OPINION............................................................12 TAX EXEMPTION ..........................................................13
Federal and State Tax Exemption .....................13 Original Issue Discount.....................................13 Original Issue Premium ....................................14 Future Legislation .............................................14
LITIGATION................................................................... 15 FINANCIAL STATEMENTS ......................................... 15 VERIFICATION OF MATHEMATICAL
COMPUTATIONS........................................... 15 CERTIFICATION AS TO OFFICIAL
STATEMENT .................................................. 15
APPENDIX A—CITY OF OMAHA— SELECTED ECONOMIC INDICATORS......................... A-1
APPENDIX B—CITY OF OMAHA—FINANCIAL INFORMATION..................... B-1
Part One—Selected City of Omaha Financial Information
DEBT SERVICE REQUIREMENTS ........................... B-6 OVERLAPPING DEBT................................................ B-9 LONG-TERM CONTRACTUAL
AGREEMENTS .......................................... B-10 DEBT MANAGEMENT............................................. B-13 CASH RESERVE FUND............................................ B-13 EMPLOYEE RELATIONS: RETIREMENT
SYSTEMS................................................... B-14 CITY OF OMAHA EMPLOYEES’
RETIREMENT SYSTEM ........................... B-14 POLICE AND FIREMEN’S RETIREMENT
SYSTEM ..................................................... B-17 OTHER POST EMPLOYMENT BENEFITS............. B-19 Part Two—Independent Auditors’ Report and
General Purpose Financial Statements APPENDIX C—FORM OF CONTINUING
DISCLOSURE UNDERTAKING................. C-1 APPENDIX D—FORM OF OPINION OF
BOND COUNSEL ........................................ D-1 APPENDIX E—SCHEDULE OF PRIOR
BONDS ..........................................................E-1
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OFFICIAL STATEMENT
$37,050,000 CITY OF OMAHA, NEBRASKA
GENERAL OBLIGATION REFUNDING BONDS SERIES OF 2009
INTRODUCTION
This Official Statement, including the cover page and Appendices hereto, is furnished in connection with the offering of $37,050,000 General Obligation Refunding Bonds, Series of 2009 (the “Bonds”) of the City of Omaha, Nebraska (the “City”).
The Bonds will be issued in strict compliance with the Constitution and laws of the State of Nebraska, the Home Rule Charter of the City of Omaha, 1956, as amended (the “Charter”) and the proceedings of the City Council (the “Council”) of the City, including Ordinance No. 38384 (the “Ordinance”). See “THE BONDS—Authority for Issuance.”
The proceeds of the Bonds will be used to refund certain general obligation indebtedness of the City, including a portion of the debt assumed by the City as the result of its annexations of fifteen Douglas County sanitary and improvement districts. See “THE REFUNDING PROGRAM” herein.
This Official Statement contains brief descriptions or summaries of, among other matters, the Bonds, the City and the Ordinance. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Ordinance are qualified in their entirety by reference to such documents, and references herein to the Bonds are qualified in their entirety by reference to the form thereof included in the Ordinance. Copies of such documents may be obtained from the City by writing to the attention of the Finance Director, Tenth Floor, 1819 Farnam Street, Omaha, Nebraska 68183; telephone: (402) 444-5416.
CITY OF OMAHA GENERAL INFORMATION
Form of Government
Omaha operates with a strong mayor form of government. The Mayor is the City’s full-time Chief Executive Officer. The City has a seven-member City Council. As a home-rule city, Omaha has all of the powers available to a home-rule city under the Nebraska Constitution. The Mayor and Council are elected for four-year terms. The Mayor is elected in a citywide election while the City Council members are elected by district.
City Administration
The executive and administrative powers of the City are vested in the Mayor, who is popularly elected for four years on a nonpartisan basis. The Honorable Mike Fahey was reelected on May 11, 2005 to a four-year term of office ending June 2009. In 1978, Mayor Fahey founded American Land Title Company, a title insurance business. In 1990, Mayor Fahey sold the business but remained on as its CEO. He is now retired from the company. For 10 years starting in January 1982, Mayor Fahey served on the Omaha Planning Board and was Chairman of the board from January 1986 through December 1991.
The Mayor’s cabinet consists of the chief officers of eleven City Departments. The Mayor appoints each Department head, except that the Library Board appoints the Public Library Director.
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City Financial Management and Controls
City financial management is the responsibility of the Finance Department. In total, the Finance Department consists of 30 employees and is organized by division. The head of the Finance Department is the Finance Director of the City, Carol Ebdon. Dr. Ebdon has been Finance Director of the City since May 28, 2004. Most Recently, she was an Associate Professor of Public Administration at the University of Nebraska at Omaha since 1997; her research and teaching were in the areas of public budgeting and finance. She previously worked in budgeting and finance positions in the City of Rochester, New York, including Deputy City Treasurer and Director of Accounting. Major duties of the Finance Director include serving on the Mayor’s Cabinet, Mayor’s Budget Committee, the City’s Annexation Task Force, Capital Improvement Priority Committee, Subdivision Review Committee and Tax Increment Financing Review Committee and serving as administrator of the Police and Fire Pension Board and the Omaha Employees’ Retirement Board. Dr. Ebdon holds a Ph.D. in Public Administration from the State University of New York at Albany.
Allen R. Herink, City Comptroller, has 33 years of experience as an accountant with the City of Omaha. He began his career with the City working in the Grants Accounting Division of the Finance Department. In 1990, he was transferred to the Budget and Accounting Division. In 1997, Mr. Herink was promoted to Division Manager. He became Acting City Comptroller in July 2001 and City Comptroller in August 2003. Mr. Herink holds a Bachelor of Science degree with a major in Accounting from the University of Nebraska at Omaha.
Irene M. Wolfe, Revenue Manager, has 18 years of experience with the City of Omaha. She began her career as an internal auditor for the Finance Department. She transferred to the Budget Division in 2002 and was promoted to Accountant III in 2003. In 2005 she was selected to serve as Revenue Manager. As Revenue Manager, Ms. Wolfe serves as the investment officer for the City; manages and supervises the Revenue Division, which includes Central Cashier, Violations Bureau, Centralized Billing Section and Keno section. As a revenue analyst, Ms. Wolfe is responsible for analyzing, forecasting, formulating and administering all City revenue sources. Ms. Wolfe holds a Bachelor of Science in Business Administration with a functional major in accounting from Central Missouri State University. She is a Certified Public Accountant (CPA) and a Certified Government Financial Manager (CGFM). The Revenue Division’s activity includes budget implementation and the continuous monitoring and internal control of revenue against budget appropriations. It is responsible for the City’s centralized billing procedures, the collection and deposit of moneys by the Central Cashier and the Violation Bureau and administration of the Keno game.
Donna Wiman, Budget and Accounting Manager, has 24 years of experience with the City of Omaha. Ms. Wiman began her career in the Budget and Accounting Division of the Finance Department. She transferred to the Revenue Division of the Finance Department as an Accountant II and became Assistant Revenue Manager in 2001. Ms. Wiman spent two years as a Team Lead, developing and implementing the new Financial Resource System (ORACLE) that both the City and Douglas County use. In 2004, Ms. Wiman became the Budget and Accounting Manager for the City of Omaha. Ms. Wiman was also appointed by the Mayor as a Board Member of the Omaha Housing Authority. Ms. Wiman holds a Bachelor of Arts in Business Administration, with a major in accounting. The Budget and Accounting Division’s responsibilities include: preparation of the annual budget, maintenance of general accounting records; preparation of all checks; pre-audit of all purchase orders, invoices and disbursements; accountability of City owned property; Special Assessments; and Enterprise Funds. It is responsible for preparing and maintaining accounting records to comply with provisions of Federal and State grants.
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Financial Reporting Systems and Control Systems
The Budget and Accounting Division of the Finance Department performs significant and ongoing monitoring of the financial performance of the operating departments/divisions after budget adoption. All equipment spending is prioritized, scheduled into semiannual acquisition periods and submitted by department heads to staff accountants for analysis and review prior to any purchasing activity by the City Purchasing Agent. All purchases and contracts in excess of $20,000 must be approved by formal City Council action. Department Directors and Division Managers run status reports detailing actual to budget performance as needed. The City Charter requires quarterly budget status reporting. These reports forecast year-end revenue and expenditure balances for all operating departments/divisions. Material variances are investigated promptly as they occur. Remedial actions to return a division/department to budget might include, but are not limited to, such actions as (i) staff accountant review and approval of all requisitions prior to receipt by the Purchasing Division, (ii) postponement or reductions in quantity of materials and equipment purchased, or (iii) deferral of major budgeted expenditures.
Location and General Background
Omaha, founded in 1854, is the largest city in the State of Nebraska. Omaha is the hub of a vast transportation network leading to all parts of the nation and thus offers significant advantages to business and industry competing in regional and national markets. This fact is substantiated by the growth of population, employment and income during recent years.
Area and Population
The U.S. Census Bureau reports that at the end of 2007 the population of the eight-county Omaha Metropolitan Statistical Area (“MSA”), comprising five Nebraska counties and three Iowa counties, numbered 829,890, with over 1.1 million within a 60-minute drive. At the end of 2008, the population of the City was approximately 440,691.
Transportation
Nearly 4.4 million passengers, over 123 million pounds of cargo and over 52 million pounds of mail passed through Eppley Airfield, Omaha’s principal airport, in 2008. In the last decade, Eppley Airfield has made over $110 million in investments in terminal, apron, cargo area and runway expansions. Eppley Airfield offers over 200 flights per day and is serviced by eight national air carriers, 11 regional airlines, seven air freight carriers and two full-service general aviation facilities. A total of 161 general aviation aircraft, including 30 executive jets, are based at Eppley Airfield. There are 88 departures out of Eppley Airfield daily.
Omaha is general headquarters for the Union Pacific Railroad. The Burlington Northern Santa Fe and the Canadian National railroads also provide service and combine to make Omaha an important rail center.
Two interstate highways (Interstate 80 and Interstate 29), five federal highways and seven state highways provide fast all-weather routes within Nebraska and to and from the rest of the nation. In addition, Interstate 480 (downtown spur) and Interstate 680 (circumferential route) provide quick access to all parts of the metropolitan area.
More than 100 motor common carriers haul freight to and from Omaha and all parts of the nation, making Omaha a major Midwestern trucking center. Greyhound Bus Lines furnishes Omaha with transcontinental passenger service. Several smaller bus lines operate between Omaha and points in Iowa and Nebraska.
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Utility Services
Residential, commercial and industrial electric service rates in Omaha historically have been below the national averages, according to reports of the Edison Electric Institute in its Statistical Yearbook of the Electrical Utility Industry. In addition to low rates, the Omaha Public Power District, a Nebraska political subdivision, assures its customers ample power with a net generating capability of 2,544,100 kW.
The Metropolitan Utilities District (“MUD”), a Nebraska political subdivision, distributes natural gas and water in the Omaha area. Rates compare favorably with those prevailing in other metropolitan areas in the nation. Omaha has a plentiful water supply (Missouri River and Platte River wells) and a water system designed to the standards of the National Board of Fire Underwriters, with a current capacity of 334 million gallons a day. MUD’s supply of natural gas is purchased wholesale from Northern Natural Gas Company. This supply is supplemented with peak-shaving storage facilities which can provide up to approximately 30% of peak demand. There have been no interruptions of natural gas service to firm commercial and residential customers and no interruptions are expected in the foreseeable future. MUD continues to add new natural gas customers.
Education
Omaha is an important educational center and is the location of Creighton University, the University of Nebraska at Omaha and the University of Nebraska Medical Center. These institutions, together with three additional colleges located in Omaha, offer educational programs at the graduate and undergraduate levels, in law, and in the health professions: medicine, dentistry, nursing and pharmacy.
Public elementary and secondary education is provided by five local school districts: School District of Omaha, Douglas County School District No. 66, School District of Elkhorn, School District of Millard and School District of Ralston. The School District of Omaha has the largest enrollment of pupils residing within the City. The City is also served by a number of private and parochial schools at both the elementary and secondary levels. At the end of 2005 the publication “Business Facilities” named Omaha as one of the top 25 cities for “Best Educated Workforce.”
Section 79-2102, R.S., Supp. 2007, established a "learning community" comprising the 11 school districts (including the five school districts named above) in Douglas County and Sarpy County, Nebraska. Among other things, the learning community is responsible for levying and distributing common tax levies, approving focus schools and developing integration and diversity plans.
Military
The United States Strategic Command (“USSTRATCOM”) is headquartered at Offutt Air Force Base, just south of Omaha. USSTRATCOM has been assigned planning and targeting responsibility for the nation’s strategic nuclear weapons.
Economy
From an economy founded on the livestock industry in the late nineteenth century, Omaha is a major grain exchange market in the United States. Food processing is also an important part of the economy and is represented by such companies as ConAgra Foods, Inc., Kellogg Company and Omaha Steaks International.
The geographic centrality of Omaha in the United States has encouraged commercial development, and the City is home to four Fortune 500 companies, which represent a diverse array of industries: Berkshire Hathaway, ConAgra Foods, Inc., Peter Kiewit Sons’, Inc. and Union Pacific Corp. The City’s economy continues to diversify, although it still remains agriculturally oriented. The Omaha
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MSA contains more than 900 manufacturing plants, including plants operated by Lozier Corporation and Valmont Industries Inc. In the early 1980s, Omaha began developing as a major participant in the reservation, customer service and direct-response center industry. Currently, there are 49 such firms located within the City. In total they employ a labor force in excess of 21,000. Major employers in this group include First Data Corporation, Oriental Trading Co., Inc., West Corporation, PayPal, Marriott Worldwide Reservation Center and Omaha Steaks. Omaha is the home of Peter Kiewit Sons’, Inc., one of the largest construction and mining organizations in North America, TD Ameritrade, a major discount stock brokerage firm, and 21 insurance companies (with over 50 employees each), including Mutual of Omaha, the world’s largest mutual health and accident company, and Woodmen of the World Life Insurance Society, the largest fraternal life insurance company. Meatpacking employment in the Omaha area is at its highest level in 40 years. In December of 2008, meatpacking jobs in the Omaha MSA numbered 7,300. The district offices of the Farm Credit System for Nebraska, Iowa, South Dakota and Wyoming are headquartered in Omaha.
The City is economically attractive to potential residents. The cost of living in the City in the third quarter of 2008 across all categories was 86.6% of the national average. Omaha MSA residents enjoy a median household income of $57,850 – over 10% higher than the national average. The 2008 estimated average unemployment rate for the Omaha MSA was 3.7%, compared with 5.8% for the United States.
SOURCES OF CITY REVENUES
Authority to Levy Taxes
Under the City Charter, the tax levy of the City in any year for all purposes shall not exceed the total of (i) $.6125 per $100 of actual taxable value plus (ii) whatever tax levy is necessary to provide for principal and interest payments on the indebtedness of the City, for the administrative expenses incurred in issuing and maintaining bonds, and for the satisfaction of judgments and litigation expenses in connection therewith, plus (iii) whatever amount is required to finance certain overtime and holiday pay for members of the police force. In addition, the Omaha-Douglas Public Building Commission Act, pursuant to which the Commission issues bonds empowers the City to levy a tax on all the taxable property in the City, except intangible property, of $.0175 per $100 of actual valuation in excess of the Charter limitation if and to the extent necessary to make the City’s payments to the Commission.
Effective July 1, 1998, the tax levy of the City (exclusive of levies for preexisting lease-purchase contracts and bonded indebtedness approved according to law and secured by a levy on property) is limited by state law to 45¢/$100 of taxable valuation. See “THE BONDS—Revision of State Property Tax System” herein.
The City’s tax levy during its current fiscal year ending December 31, 2009 is 24.312 cents per $100, plus 17.581 cents per $100 for payment of the City’s general obligation indebtedness, plus 0.600 cents per $100 for satisfaction of judgments and 0.894 cents per $100 for payment on the City’s Special Redevelopment Levy, for a total levy of 43.387 cents per $100. A detailed summary of the property tax levied on real and personal property in the City appears in the table entitled “Total Property Tax Levies in the City of Omaha” in Appendix B.
Property Taxes
Property taxes on tangible property, real and personal, are levied by the City of Omaha, collected by the Douglas County Treasurer and remitted to the City. Real property taxes are levied September 1 of each year and become due December 31. The first half of tax payable becomes delinquent the following April 1 and the second half August 1. Personal property taxes also are levied September 1 of each year, become due the following December 31 and become delinquent in halves on the succeeding April 1 and August 1.
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Taxes for Year Shown
Year Ended December 31 Certified
Amount Collected
% Collected
Prior Years’ Taxes
Collected Total
Collections
% of Total Collections to Current Year Taxes
1998 $68,915,674 $67,373,636 97.8 $1,604,868 $68,978,504 100.09
1999 72,024,257 70,529,609 97.8 1,651,123 72,180,732 100.22
2000 77,109,264 75,432,998 97.8 1,771,124 77,204,122 100.12
2001 76,293,126 74,827,346 98.1 1,529,927 76,357,273 100.08
2002 80,926,571 78,176,656 97.1 1,061,170 79,237,826 97.91
2003 82,464,501 80,538,622 97.7 1,479,940 82,018,562 99.46
2004 85,165,599 83,107,249 98.7 1,623,450 84,730,699 99.49
2005 87,170,521 85,897,631 98.5 2,762,734 88,660,364 101.70
2006 93,260,893 91,592,309 98.2 1,572,719 93,165,028 99.9
2007 96,605,427 96,518,640 99.9 1,623,515 98,142,155 101.6
2008 106,888,144 107,891,173 100.9 2,021,660 109,912,833 102.8 Source: Records of Finance Department, City of Omaha.
Property Valuations and Property Tax Levies
2004 2005 2006 2007 2008
Actual Valuation $20,091,391,760 $21,495,123,600 $22,265,984,445 $25,302,239,770 $26,509,935,870 Levy (per $100 actual valuation) 43.387¢ 43.387¢ 43.387¢ 43.387¢
43.387¢
Source: Records and Projections of Finance Department, City of Omaha.
City of Omaha taxable property valuations have increased nearly 30% from 2003 to 2007. The property tax base has been enhanced through orderly annexation of developed sanitary and improvement districts contiguous to the City.
City Sales and Use Taxes
The City’s sales tax rate of 1.5%, authorized under the provisions of the Nebraska Revenue Act of 1967, has remained unchanged since July 1, 1978. Net sales tax collections have increased by 4.4% and by 2.4%, respectively, over the past two years. Projections for 2009 have been affected by the economy. The estimated reduction for 2009 revenue attributed to these conditions is $4.5 million.
City Business Taxes
Receipts for telephone occupation tax are projected at $15,750,000 for 2009. The Omaha Public Power District Occupation Tax rate is 5% of revenues resulting from the sale of electricity within the corporate limits of the City of Omaha. The 2009 budget projection of $3,886,000 is based upon the assumption that weather conditions will be normal. The Cable Television Franchise Fee rate is 5% of gross receipts generated from the operation of cable television within the City of Omaha. The 2009 revenue estimates are $4,725,000. Vehicle Occupation Tax for 2009 is $8 per rental. The 2008 revenues are projected at $2,225,000. Based on the 5 1/2% per night occupation tax for hotels/motels, the City estimates that the Hotel/Motel Tax will generate $5,275,000 for the General Fund in 2009.
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Other Revenues
The City receives intergovernmental revenues from a number of sources. Federal and state grants-in-aid and matching funds are received by the City to help fund specific programs and projects. State tax distributions are appropriated by the Nebraska Legislature according to a formula comparing its population to the total population of all incorporated municipalities within the State. The Metropolitan Utilities District pays a payment in lieu of taxes equal to two percent of the annual gross revenue derived from all retail sales of water and gas sold within the City. The Omaha Public Power District makes payments in lieu of taxes at the 1957 in-lieu-of-tax levels as dictated by section 70-651.01, Reissue Revised Statutes of Nebraska, as amended.
Economic Factors and 2009 Budget and Rates
• The increase in the City’s property tax base provided by real growth which includes annexations is estimated at 3.7% for 2009. Total growth, including revaluations of current property, is estimated at 4.8%.
• Overall General Fund revenue growth for 2009 is projected at 1.6% due primarily to revenue generated by newly annexed areas.
All of these factors were considered in preparing the City’s budget for the 2009 fiscal year.
At the end of 2007, the unreserved fund balance in the General Fund was $27.1 million. The City appropriated $2.7 million of this amount for spending in the 2008 fiscal year budget and $3.9 million for spending in the 2009 fiscal year budget. These amounts represent the 2006 and 2007 Budget Balance Carried Forward. The City Charter requires that the General Fund Budget Balance, as of the close of any particular fiscal year, shall be applied as General Fund revenue in the budget for the fiscal year two years subsequent to that fiscal year.
Prospective Financial Commitments
In June 2008, the City entered into a 25-year agreement with The National Collegiate Athletic Association and College World Series of Omaha, Inc. providing, among other things, for the construction of a new 24,000-seat baseball stadium adjacent to Qwest Center Omaha immediately north of downtown Omaha. The new stadium, to be completed by Spring 2011, will become the home of the College World Series, which has been held at Omaha's Rosenblatt Stadium annually for over 50 years. The projected cost of the new stadium is about $128 million, of which approximately $98 million will be raised through the issuance on behalf of the City, anticipated to be in late Spring 2009, by the City of Omaha Public Facilities Corporation of lease purchase revenue bonds. In anticipation of the bond issue, the City Council has passed ordinances increasing the City’s hotel/motel and car rental taxes, and the City, as lessee-purchaser of the new stadium, plans to apply the increased tax collections, among other sources, to its lease purchase payments relating to the lease purchase revenue bonds.
THE REFUNDING PROGRAM
The City has issued as general obligation indebtedness the four issues of its General Obligation Refunding Bonds, Various Purpose Bonds and Various Purpose Refunding Bonds identified in Appendix E. The City has annexed and has assumed the general obligation indebtedness of 15 Douglas County sanitary and improvement districts. The City is refunding all or a portion of such outstanding general obligation indebtedness (the “Prior Bonds”) from the proceeds of the Bonds and other available moneys of the City, as shown in Appendix E.
Pursuant to an Escrow and Agency Agreement, dated as of April 1, 2009 (the “Escrow Agreement”), which provides for the refunding of the Prior Bonds, and which is by and between the City and First National Bank of Omaha, as Escrow Agent (the “Escrow Agent”), the City will deposit the net
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proceeds from the sale of the Bonds and other available moneys of the City to the credit of the Escrow Agreement.
The moneys deposited by the City to the credit of the Escrow Agreement will be invested in direct obligations of, or obligations the principal of and interest on which are guaranteed by, the United States of America (the “Federal Securities”), the interest and principal of which (without reinvesting) will be sufficient to pay all principal of, redemption premium, if any, and interest on the Prior Bonds. See “VERIFICATION OF MATHEMATICAL COMPUTATIONS.”
THE BONDS
Description of the Bonds
The Bonds in the aggregate principal amount of $37,050,000 will be dated their date of delivery, will be issued in fully registered form and will mature as set forth on the reverse of the cover page of this Official Statement. Interest on the Bonds is payable semiannually on April 15 and October 15 of each year, commencing October 15, 2009.
Place of Payment
The principal of the Bonds will be payable in lawful money of the United States of America at the corporate trust office of the First National Bank of Omaha, as paying agent and registrar (the “Paying Agent” and “Registrar”), in Omaha, Nebraska. Interest on the Bonds will be paid by wire transfer, check or draft mailed to the person in whose name a Bond is registered as of the April 1 or October 1, as the case may be, next preceding each interest payment date.
Book-Entry Only System
The Bonds initially will be issued solely in book-entry form to be held in the book-entry only system maintained by The Depository Trust Company (“DTC”), New York, New York. So long as such book-entry system is used, only DTC will receive or have the right to receive physical delivery of Bonds and Beneficial Owners (as hereinafter defined) will not be or be considered to be, and will not have any rights as, owners or holders of the Bonds under the Ordinance. The following information about the book-entry only system applicable to the Bonds has been supplied by DTC. Neither the City nor the Paying Agent makes any representations, warranties or guarantees with respect to its accuracy or completeness.
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of maturity and will be deposited with DTC.
DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The
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Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: “AAA.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. and www.dtc.org.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City, as issuer of the Bonds, as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments, redemption proceeds and distributions on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding
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detail information from the City or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Bonds held for the accounts of customers in bearer form or registered in “street name” and will be the responsibility of such Participant and not of DTC (nor its nominee), the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of redemption proceeds, distributions, and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered.
NEITHER THE CITY NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE PAYING AGENT AS BEING A HOLDER WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE ORDINANCE TO BE GIVEN TO HOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS HOLDER.
Each Beneficial Owner for whom a Direct Participant or Indirect Participant acquires an interest in the Bonds, as nominee, may desire to make arrangements with such Direct Participant or Indirect Participant to receive a credit balance in the records of such Direct Participant or Indirect Participant, to have all notices of redemption, elections to tender Bonds or other communications to or by DTC which may affect such Beneficial Owner forwarded in writing by such Direct Participant or Indirect Participant, and to have notification made of all debt service payments.
Beneficial Owners may be charged a sum sufficient to cover any tax, fee, or other governmental charge that may be imposed in relation to any transfer or exchange of their interests in the Bonds.
THE CITY AND PAYING AGENT CANNOT AND DO NOT GIVE ANY ASSURANCES THAT THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (i) PAYMENTS OF PRINCIPAL OF AND INTEREST ON THE BONDS, (ii) BONDS REPRESENTING AN OWNERSHIP INTEREST OR OTHER CONFIRMATION OF BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS OR (iii) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNERS OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRENT “RULES” APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE
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COMMISSION, AND THE CURRENT “PROCEDURES” OF DTC TO BE FOLLOWED IN DEALING WITH DIRECT PARTICIPANTS ARE ON FILE WITH DTC.
Optional Redemption
The Bonds maturing October 15, 2020 and thereafter are subject to redemption at the option of the City at any time on or after October 15, 2019, in whole or in part in inverse order of maturities of the Bonds, and in such manner as the Paying Agent deems fair within a maturity, at a price of par, without premium, plus accrued interest to the date of redemption.
At least 30 days’ notice of redemption will be mailed to the person whose name appears in the bond registration books as the registered owner of a Bond as of the close of business on the forty-fifth day next preceding the date fixed for redemption.
Authority for Issuance
The Bonds have been authorized in accordance with the Constitution and statutes of the State of Nebraska, the Charter and proceedings of the Council providing for the issuance thereof, including the Ordinance. The issuance of the Bonds for the refunding purposes referred to in the first sentence under “THE REFUNDING PROGRAM” herein, was approved by the City Council by authority of Sections 10-142, 10-615 and 10-616, Reissue Revised Statutes of Nebraska, as amended, and applicable provisions of the Charter.
Security
The Bonds are general obligations of the City, and the City is obligated to levy ad valorem taxes for the payment of said Bonds and the interest thereon upon all property within the City subject to taxation by the City without limitation as to rate or amount. The full faith and credit of the City shall be pledged to the prompt payment of the principal of and interest on the Bonds. See “SOURCES OF CITY REVENUES—Authority to Levy Taxes.”
Revisions of State Property Tax System
The State of Nebraska’s system of assessing and taxing real and personal property for purposes of local ad valorem taxation for support of local political subdivisions, including the City, has been the subject in recent years of constitutional amendment, legislation and litigation the result of which has been to substantially resolve certain challenges to the validity of the tax system.
Governmental units in Nebraska may not adopt budgets for fiscal years beginning on or after July 1, 1998, in excess of 102.5% of the prior fiscal year’s budget plus allowable growth (which includes increases in taxable valuation for such things as new construction and annexations). However, such budgetary limitations do not apply to, among other things, revenue pledged to retire bonded indebtedness or budgeted for capital improvements. Governmental units may exceed the budget limit for a given fiscal year by up to an additional 1% upon the affirmative vote of at least 75% of the governing body or in such amount as is approved by a majority vote of the electorate. Effective July 1, 1998, the property tax levies of incorporated cities and villages, such as the City, are limited to a maximum of 45¢/$100 of taxable valuation (plus an additional 5¢/$100 to pay the municipality’s share of revenue required under interlocal agreements). The levy limit does not apply to levies for preexisting lease-purchase contracts approved prior to July 1, 1998, to bonded indebtedness, such as the Bonds, approved according to law and secured by a levy on property and to pay judgments. The City’s 2008 General Fund levy, exclusive of such unlimited levies, is 24.312¢/$100 of taxable valuation. A political subdivision may exceed its levy limitation for a period of up to five years by majority vote of the electorate.
There can be no assurance that Nebraska’s system of assessing and taxing real and personal property will remain substantially unchanged, given the possibility of further legislation and litigation.
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Such changes could materially and adversely affect the amount of property tax revenues the City and other local governments could collect in future years. The City does not believe, however, that the Nebraska Legislature would leave the City without adequate taxing resources to pay for its programs and meet its financial obligations, including the repayment of its bonds, lease-purchase obligations and other obligations. The opinion of Bond Counsel will be rendered based on the law existing as of the date of issuance of the Bonds and in reliance upon general legal presumptions in favor of the constitutionality of statutes and upon the holdings of existing case law.
RATINGS
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (“S&P”), has given the Bonds a rating of “AAA” and Moody’s Investors Service (“Moody’s”) has given the Bonds a rating of “Aa1.” Any desired explanation of the significance of such ratings should be obtained from S&P and from Moody’s. The City furnished the rating agencies with certain information and materials relating to the Bonds and the City which have not been included in this Official Statement. Generally, a rating agency bases its rating on the information and materials so furnished and on investigations, studies and assumptions made by such rating agency. There is no assurance that a particular rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing the rating, circumstances so warrant. Neither the City nor the Underwriter has undertaken any responsibility either to bring to the attention of the owners of the Bonds any proposed revision or withdrawal of the rating of the Bonds or to oppose any such proposed revision or withdrawal. Any such change in or withdrawal of such rating could have an adverse effect on the market price of the Bonds. Any explanation of the significance of such ratings should be obtained from the rating agency furnishing such rating.
CONTINUING DISCLOSURE
The Ordinance includes the City’s undertaking (the “Undertaking”) for the benefit of the holders and beneficial owners of the Bonds to send certain financial information and operating data to certain information repositories annually and to provide notice to the Municipal Securities Rulemaking Board or certain other repositories of certain events, pursuant to the requirements of Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12 (17 C.F.R. § 240.15c2-12) (the “Rule”). See “APPENDIX C—FORM OF CONTINUING DISCLOSURE UNDERTAKING.”
A failure by the City to comply with the Undertaking will not constitute an event of default with respect to the Bonds, although any holder will have any available remedy at law or in equity, including seeking specific performance by court order, to cause the City to comply with its obligations under the Undertaking. Any such failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. The City is in compliance with its previous undertakings under the Rule.
LEGAL OPINION
The approving opinion of Kutak Rock LLP (“Bond Counsel”) will affirm, among other things, that the Bonds have been authorized and issued in accordance with the Constitution and statutes of the State of Nebraska and the Charter of the City of Omaha, and constitute valid and legally binding obligations of the City, and that the City has the power and is obligated to levy ad valorem taxes for the payment of the Bonds and the interest thereon upon all the property within the City subject to taxation by the City without limitation as to rate or amount. The rights of the holders of the Bonds and the enforceability thereof may be subject to valid bankruptcy, insolvency, reorganization, moratorium and other laws for the relief of debtors.
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TAX EXEMPTION
Federal and State Tax Exemption
In the opinion of Kutak Rock LLP, Bond Counsel, to be delivered at the time of original issuance of the Bonds, under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is (a) excluded from gross income for federal income tax purposes and (b) is not a specific item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. Interest on the Bonds, however, will be included in the “adjusted current earnings” (i.e., alternative minimum taxable income as adjusted for certain items, including those items that would be included in the calculation of a corporation’s earnings and profits under Subchapter C of the Internal Revenue Code of 1986, as amended (the “Code”)) of certain corporations and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of each such corporation’s adjusted current earnings over its alternative minimum taxable income (determined without regard to this adjustment and prior to reduction for certain net operating losses).
The opinions set forth above are subject to continuing compliance by the City with its covenants regarding federal tax laws in the Ordinance. Failure to comply with such covenants could cause interest on the Bonds to be included in gross income retroactive to the date of issue of the Bonds.
The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of certain recipients such as banks, thrift institutions, property and casualty insurance companies, corporations (including S corporations and foreign corporations operating branches in the United States), certain Social Security or Railroad Retirement benefit recipients, tax payers otherwise entitled to claim the earned income credit or taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations, among others. The nature and extent of these other tax consequences will depend upon the recipients’ particular tax status or other items of income or deduction. Bond Counsel expresses no opinion regarding any such consequences and investors should consult their own tax advisors regarding the tax consequences of purchasing or holding the Bonds.
In Bond Counsel’s further opinion, under the existing laws of the State of Nebraska, the interest on the Bonds is exempt from Nebraska state income taxation so long as it is exempt for purposes of the federal income tax.
Original Issue Discount
The Bonds maturing in the year 2024 (the “Discount Bonds”), are being sold at an original issue discount. The difference between the initial public offering prices, as set forth on the cover page, of such Discount Bonds and their stated amounts to be paid at maturity constitutes original issue discount treated as interest which is excluded from gross income for federal income tax purposes, as described above.
The amount of original issue discount which is treated as having accrued with respect to such Discount Bond is added to the cost basis of the owner in determining, for federal income tax purposes, gain or loss upon disposition of such Discount Bond (including its sale, redemption or payment at maturity). Amounts received upon disposition of such Discount Bond which are attributable to accrued original issue discount will be treated as tax-exempt interest, rather than as taxable gain, for federal income tax purposes.
Original issue discount is treated as compounding semiannually, at a rate determined by reference to the yield to maturity of each individual Discount Bond, on days which are determined by reference to the maturity date of such Discount Bond. The amount treated as original issue discount on such Discount Bond for a particular semiannual accrual period is equal to the product of (i) the yield to maturity for such Discount Bond (determined by compounding at the close of each accrual period) and (ii) the amount which would have been the tax basis of such Discount Bond at the beginning of the particular accrual period if held by the original purchaser, less the amount of any interest payable for such Discount Bond
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during the accrual period. The tax basis is determined by adding to the initial public offering price on such Discount Bond the sum of the amounts which have been treated as original issue discount for such purposes during all prior periods. If such Discount Bond is sold between semiannual compounding dates, original issue discount which would have been accrued for the semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period.
Owners of Discount Bonds should consult their tax advisors with respect to the determination and treatment of original issue discount accrued as of any date and with respect to the state and local tax consequences of owning a Discount Bond.
Original Issue Premium
The Bonds maturing in the years 2010 through 2023, inclusive and 2025 (collectively, the “Premium Bonds”), are being sold at a premium. An amount equal to the excess of the issue price of a Premium Bond over its stated redemption price at maturity constitutes premium on such Premium Bond. An initial purchaser of a Premium Bond must amortize any premium over such Premium Bond’s term using constant yield principles, based on the purchaser’s yield to maturity (or, in the case of Premium Bonds callable prior to their maturity, by amortizing the premium to the call date, based on the purchaser’s yield to the call date and giving effect to the call premium). As premium is amortized, the purchaser’s basis in such Premium Bond is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser’s basis may be reduced, no federal income tax deduction is allowed. Purchasers of Premium Bonds should consult with their tax advisors with respect to the determination and treatment of amortizable premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Premium Bond.
Future Legislation
From time to time, there are legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to above or adversely affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Bonds or their market value would be affected thereby. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation.
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LITIGATION
The City is party to legal proceedings which occur in government operations and include claims for property damage and personal injury, contract disputes, discrimination claims and property condemnation proceedings. The legal proceedings, in the opinion of the City management, based on the advice of the City Attorney, are not expected to have a materially adverse effect on the City’s financial position at December 31, 2008, after giving effect to available funds provided for such contingencies in the Judgment, Cash Reserve and Contingent Liability Reserve Funds and alternative methods of satisfying judgments, these being identified as:
—City’s authority to levy under Judgment Fund set by Home Rule Charter.
—State Statute, Section 77-1620 R.R.S. 1943, which authorizes a special levy for payment of judgments.
—State Statute, Section 13-918 R.R.S. 1943, which authorizes the City to borrow money from the State to satisfy certain judgments.
In addition to amounts recorded by the City as other accrued liabilities, the City Attorney is of the opinion that there is a reasonable possibility that the City will incur additional losses on these lawsuits of approximately $8,707,000 and that there is a remote exposure to approximately $1,578,500 of additional lawsuits and claims.
FINANCIAL STATEMENTS
The general purpose financial statements of the City as of and for the year ended December 31, 2007 included as Part Two of Appendix B have been audited by KPMG LLP, independent certified public accountants, as stated in their report appearing therein.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
The accuracy of the mathematical computations of (a) the adequacy of the maturing principal of and interest earned on the Federal Securities to provide for the payment of the principal of, redemption premium, if any, and interest on the Prior Bonds when due, and (b) the actuarial yield on such Federal Securities and on the Bonds, which computations support the conclusion that the Bonds are not “arbitrage bonds” under Section 148 of the Code, will be verified by Chris D. Berens C.P.A., P.C., independent certified public accountants.
CERTIFICATION AS TO OFFICIAL STATEMENT
The City of Omaha, Nebraska, will furnish a certificate signed on its behalf by Carol Ebdon, Finance Director of the City of Omaha, and delivered concurrently with the delivery of the Bonds, to the effect that at the date of this Official Statement and at the date of delivery of the Bonds, (i) the information and statements, including financial statements, of or pertaining to the City, contained in this Official Statement were and are correct in all material respects; and (ii) insofar as the City and its affairs, including its financial affairs, are concerned, this Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The City, by such certificate, will further confirm to the effect that insofar as the descriptions and statements, including financial data, contained in the Official Statement of or pertaining to nongovernmental bodies or governmental bodies other than the City are concerned, such descriptions, statements and data have been obtained from sources believed by the City to be reliable, and that the City has no reason to believe that they are untrue or incomplete in any material respect.
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The execution and delivery of this Official Statement have been duly authorized by the City as of the date shown on the cover hereof.
CITY OF OMAHA, NEBRASKA
By /s/ Mike Fahey Mayor
APPENDIX A
CITY OF OMAHA— SELECTED ECONOMIC INDICATORS
Omaha MSA Population and Employment
Population 1 Employment 2
1950 366,395∗ 163,050∗ 1960 457,873∗ 188,950∗ 1970 542,646∗ 214,650∗ 1980 569,614∗ 261,532∗ 1990 687,569 359,000 2000 767,140 444,200 2001 775,760 445,300 2002 782,787 439,300 2003 791,461 444,000 2004 802,003 444,500 2005 812,830 451,200 2006 822,849 458,600 2007 828,741 467,500 2008 N/A 468,400 (Preliminary)
∗ Population and employment figures are for the previous five-county metropolitan statistical area. 1 Source: U.S. Census Bureau. 2 Source: Bureau of Labor Statistics: State and Area Employment, Hours, and Earnings.
Omaha MSA (Eight Counties) Nonagricultural Wage and Salary Employment
Average for 2007 Average for 2008
Number % of Total
Number % of Total
Construction and Mining 25,000 5.4% 25,500 5.4% Manufacturing 33,400 7.2 33,500 7.2 Trade, Transportation and Utilities 100,000 21.5 99,600 21.3 Information 12,600 2.7 12,200 2.6 Finance, Insurance and Real Estate 39,300 8.5 40,000 8.5 Professional and Business Services 64,300 13.8 65,300 13.9 Education and Health Services 66,700 14.4 68,100 14.5 Leisure and Hospitality 45,100 9.7 45,900 9.8 Other Services 16,500 3.6 17,100 3.6 Government 61,700 13.3 61,200 13.1
Total Nonfarm Employment 464,600 100.0% 468,400 100.0% Source: Bureau of Labor Statistics: State and Area Employment, Hours and Earnings.
A-2
Omaha MSA Personal Income (per capita)
Year Personal Income Per Capita
Personal Income U.S. Per Capita Personal Income
1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007
$ 2,547,642 6,648,387
13,293,632 24,230,391 25,179,787 26,207,762 27,237,083 29,022,926 30,731,883 32,916,784 34,835,843
$4,097 10,151 19,325 31,504 32,469 33,481 34,430 36,220 37,869 40,106 41,976
$4,085 10,114 19,477 29,843 30,562 30,795 31,466 33,090 34,471 36,307 36,609
Source: Bureau of Economic Analysis, SA1-3, CA1-3.
Omaha MSA1 Net Taxable Sales
Year Total Net
Taxable Sales (000) Net Taxable Sales
of Motor Vehicles (000)
1980 $2,589,068 $223,377 1990 4,055,334 499,033 2000 7,006,016 970,867 2001 7,241,327 1,133,659 2002 7,331,540 1,164,841 2003 7,667,430 1,171,888 2004 8,365,580 1,124,848 2005 8,669,035 1,055,036 2006 8,796,364 1,013,663 2007 2 9,116,077 1,092,087 2008 3 8,294,964 1,015,428
______________________________ Source: Nebraska Department of Revenue. 1 Includes the five Nebraska Counties in the eight County MSA. 2 Nebraska Counties of MSA (Cass, Douglas, Sarpy, Washington, Saunders (1997-present)) through October 2007. 3 Through November 2008
Value of Building Permits—City of Omaha
Year Amount Year Amount 1950 1960 1970 1980 1990 2000 2001
$ 24,105,401 46,927,523 61,626,242
136,736,312 318,473,517 473,849,942
1,558,867,305
2002 2003 2004 2005 2006 2007 2008
701,502,687 633,542,187 623,481,197 673,153,699 605,536,231 663,007,432 795,783,313
_______________________ Source: Division of Permits and Inspections, City of Omaha.
A-3
Largest Employers—City of Omaha December 2008
Employer Number of Employees
Offutt Air Force Base∗ 12,000 Alegent Health 9,000 Nebraska Medical Center (including UNMC) 8,350 Omaha Public Schools 7,000 Methodist Health System 6,200 First Data Corp. 5,300 First National Bank 4,650 Union Pacific Corporation 4,500 ConAgra Foods, Inc. 4,000 Mutual of Omaha 3,250
∗Located in Sarpy County (immediately south of Omaha). Source: Greater Omaha Chamber of Commerce Top 25 Employer List, 2008 (Ranked by Number of Employees).
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APPENDIX B
CITY OF OMAHA—FINANCIAL INFORMATION
Part One
Selected City of Omaha Financial Information
Part Two
Independent Auditors’ Report and General Purpose Financial Statements (December 31, 2007)
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APPENDIX B
CITY OF OMAHA—FINANCIAL INFORMATION
Part One Selected City of Omaha Financial Information
B-2
CITY OF OMAHA, NEBRASKA
GENERAL FUND STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
Five Years Ended December 31, 2007
2003 2004 2005 2006 2007 Revenue:
General Property Tax $ 45,861,914 $ 47,304,855 $ 50,000,897 $ 52,205,484 $ 55,126,392 Motor Vehicle Taxes 8,637,101 8,814,977 8,808,677 8,818,011 8,825,629 City sales & use tax 102,413,934 109,662,232 112,954,972 113,633,982 118,680,986 Business taxes 26,842,091 27,000,112 26,845,997 28,781,008 30,778,878 Licenses & permits 7,859,272 8,645,623 8,248,962 8,216,565 8,150,481 Intergovernmental revenue 8,224,072 7,521,860 9,956,560 8,388,815 9,246,268 Charges for services 16,507,207 15,323,915 15,616,713 16,285,001 18,568,340 Investment income 2,040,245 846,374 1,292,491 4,170,840 5,671,876 Rents & royalties 94,817 113,534 107,512 159,665 120,473 Miscellaneous 1,180,377 920,544 1,215,451 1,189,362 4,915,605
Total Revenue $219,661,030 $226,154,026 $235,048,232 $241,848,733 $260,084,928 Expenditures:
Legislative & Executive $ 2,333,390 $ 2,476,555 $ 2,587,929 $ 2,458,360 $ 2,621,744 Law, Personnel & Human Relations 5,215,843 5,587,167 5,673,577 5,490,058 5,887,846 Finance 2,747,108 3,392,483 2,819,299 2,340,491 2,389,924 Administrative Services 2,912,082 1,518,104 - 0 0 Planning 5,093,024 5,255,516 6,599,159 5,115,735 5,755,897 Parks, Recreation & Public Property 15,485,023 15,846,920 15,265,292 14,899,544 16,483,949 Public Safety 133,242,630 133,803,769 139,765,068 151,289,868 163,245,015 Public Works 13,216,251 12,264,237 13,630,679 14,227,826 15,140,836 Convention and Tourism 0 0 0 255,600 250,000 Public Library 7,473,594 8,080,267 8,406,738 7,600,999 8,356,835 Retiree Benefits 13,759,092 15,994,880 15,163,968 16,372,920 17,410,910 Agency & Other Accounts 20,377,910 18,877,442 23,225,076 23,083,677 22,869,002
Total Expenditures 221,855,947 223,097,340 233,136,785 243,135,078 260,411,958
Excess (deficit) of revenues over expenditures: $( 2,194,917) $ 3,056,686 $ 1,911,447 $ (1,286,345)
$ (327,030)
Other sources (uses) of
financial resources: Initial credit $ 2,223,541 $ 1,333 $ 489,111 $ 3,762,999 $ 2,643,828
Operating transfers and encumbrance adjustments (net) 460,487 704,980 243,269 182,684 1,579,312
Net other sources (uses) of financial resources 2,684,028 706,313 732,380 3,945,683 4,223,140
Excess (deficiency) of revenues over expenditures & other sources (uses) of financial resources* $ 489,111 $ 3,762,999 $ 2,643,827 $ 2,659,338
$ 3,896,110 Fund balance, beginning of yr. 2,224,874 490,444 4,252,110 6,406,811 5,303,150 Less initial credit (2,223,541) ( 1,333) (489,111) (3,762,999) (2,643,828) Fund balance, end of yr. $ 490,444 $ 4,252,110 $ 6,406,826 $ 5,303,150 $ 6,555,432 Source: Records of the Finance Department, City of Omaha *City of Omaha procedure in General Fund budgeting is as follows: at the end of each fiscal year, the excess, if any, of revenues and adjustments over expenditures and encumbrances is determined. Any such excess, less extraordinary transfers out, if any, is used as the initial credit to the General Fund Budget for the second year following the year in which the excess has arisen.
B-3
CITY OF OMAHA, NEBRASKA
GENERAL DEBT SERVICE FUND STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
Five Years Ended December 31, 2007
2003 2004 2005 2006 2007 Revenue:
Taxes $33,325,595 $ 34,494,562 $ 35,631,565 $ 37,751,458 $ 39,700,167 In lieu-of-taxes 74,594 74,594 74,594 92,735 88,094 Interest income 1,194,441 596,500 238,746 114,615 111,542 Tax allocation revenue - 6,418,394 - Parking fees 438,972 1,187,866 1,168,532 1,026,585 1,243,110 Seat tax 117,939 433,207 374,998 594,628 427,038 State turn back revenue 909,566 318,747 997,550 450,389 799,636
Total revenue $36,061,107 $43,523,870 $ 38,485,985 $ 40,030,410 $ 42,369,587 Contributions from annexed areas 416,626 8,193,136 822,226 344,325 14,467,116
Total revenue & contributions $36,477,733 $ 51,717,006 $ 39,308,211 $ 40,374,735 $ 56,836,703 Expenditures:
Outside services: Professional fees & liabilities $ 508,499 $ 4,747,872 $ 562,771 $ 292,396 $ 1,848,730 Collection fees 339,323 349,257 375,683 377,054 425,334
Total outside services $ 847,822 $ 5,097,129 $ 938,454 $ 669,450 $ 2,274,064 General obligation bonds:
Interest expense $25,113,274 $ 56,237,576 $ 21,883,212 $ 23,008,972 $ 37,631,606 Bonds retired 49,050,000 234,975,000 21,150,000 35,125,000 39,725,234
Total general obligation bonds $74,163,274 291,212,576 $ 43,033,212 $ 58,133,972 $ 77,356,840
Total expenditures 75,011,096 296,309,705 $ 43,971,666 $ 58,803,422 $ 79,630,904
Excess (deficit) of revenues & contributions over (under) expenditures $(38,533,363) $(244,592,699) $ (4,663,455) $(18,428,687) $(22,794,201)
Other financing sources (uses):
Refunding Bonds 31,210,633 257,091,159 - 11,425,000 27,397,421
Excess (deficit) of revenues & contributions over (under) expenditures & other financing sources (uses) $( 7,322,730) $ 12,498,460 $ (4,663,455) $ (7,003,687) 4,603,220
Fund balance at beginning of year 18,379,732 11,057,002 23,555,462 18,892,007 11,888,320 Fund balance at end of year $ 11,057,002 $ 23,555,462 $ 18,892,007 $ 11,888,320 $ 16,491,540
B-4
CITY OF OMAHA, SPECIAL TAX REVENUE REDEVELOPMENT AND SPECIAL OBLIGATION DEBT SERVICE FUND
Five Years Ended December 31, 2007
2003 2004 2005 2006 2007 Revenues: Property tax revenue 1,698,219 1,757,854 1,815,671 1,924,414 1,987,825 Tax allocation revenue 580,945 985,556 1,632,230 1,752,414 3,926,399 State cigarette tax 1,500,000 1,500,328 1,500,000 1,500,000 1,500,000 NRD Miller Park contribution 200,000 200,000 200,000 200,000 200,000 Douglas County Miller Park contribution 141,176 282,352 141,176 141,176 141,176 Rolling River --- --- 56,146 --- 111,575 Naming rights convention center --- 1,990,000 825,000 825,000 825,000 Land sales 1,060,955 1,015,257 1,656,289 --- 224,260 Other Income 440,033 207,662 --- --- --- Sewer Revenue Fees∗ 1,549,903 1,519,081 1,520,149 1,519,551 1,517,971 Total revenues 7,171,231 9,458,090 9,346,661 7,862,555 10,434,206 Expenditures: Agency and other accounts 16,851 16,718 26,119 47,445 20,842 Principal payment 1,468,217 1,481,024 1,746,813 2,003,542 4,315,527 Interest 5,146,824 4,526,330 5,459,700 5,281,609 5,094,062 Sewer Special Obligation debt service* 1,549,903 1,519,081 1,520,149 1,519,551 1,517,971 Professional fees 100,066 12,809 142,796 114,917 168,275 Total expenditures 8,281,861 7,555,962 8,895,577 8,967,064 11,116,677 Excess (deficit) of revenues over expenditures (1,110,630) 1,902,128 451,084 (1,104,509) (682,471) Fund balance, beginning of year: Fund balance 7,651,926 6,541,296 8,443,424 8,894,508 7,789,999 Fund balance, end of year: Fund balance 6,541,296 8,443,424 8,894,508 7,789,999 7,107,528
This redevelopment levy is used to pay bond and interest payments on Redevelopment Bonds. The levy for 2003, 2004, 2005, 2006 and 2007 is .894 cents per $100 of taxable valuation. The State Community Development Law authorizes a taxing authority of 2.6 cents on each $100 upon actual value of all taxable property in the City. The Omaha Special Tax Revenue Redevelopment and Special Obligation Debt Service Fund services the following issuances:
Name Date of Issue Date Retired
ConAgra Riverfront Redevelopment 1988 2008
Downtown Redevelopment 1999 2019
2002 Redevelopment ( Stockyards & Downtown ) 2002 2032
2002 Special Obligation ( Riverfront ) 2002 2032
Performing Arts Redevelopment 2004 2024
Special Tax Revenue Redevelopment 2007 2027
Special Tax & Tax Allocation Revenue Redevelopment A 2007 2016
Special Tax & Tax Allocation Revenue Redevelopment B 2007 2011 In 2002, the 2002 Special Obligation Bonds were issued. These bonds are serviced by a variety of revenue sources including Property Tax Revenue, Tax Allocation Revenue, State Cigarette Tax, NRD Miller Park Contribution, Douglas County Miller Park Contribution, Sewer Fees and Land Sales.
∗ The debt service for these 2002 Special Obligation Bonds is paid directly from the Sewer Revenue Enterprise Fund.
B-5
CITY OF OMAHA, NEBRASKA
GENERAL FUND Fiscal Year 2008 Budget and 2009 Budget
2008 2009
Budgeted Budgeted
Revenues:
General Property Tax $ 60,919,217 64,378,978
Motor Vehicle Taxes 9,009,500 9,020,000
City Sales and Use Tax 130,000,000 136,087,500
Less: LB 775 Refunds (8,000,000) (8,000,000)
Business Taxes 31,767,000 32,655,095
Licenses and Permits 8,732,400 8,437,700
Intergovernmental Revenues 8,946,200 9,869,300
Charges for Services 18,306,119 18,894,974
Investment Income 4,400,000 2,825,400
Miscellaneous 1,716,000 2,535,692
Prior Year Balance 3,249,743 3,896,110
Total Revenue 269,046,179 280,600,749
Expenditures:
Legislative & Executive 2,721,553 2,801,834 Law, Personnel & Human Relations 6,183,420 6,421,625
Finance 2,247,498 2,450,432
Planning 6,189,060 6,524,621
Parks, Recreation and
Public Property 17,400,010 18,576,407
Fire 68,218,300 69,096,544
Police 91,931,522 94,008,933
Public Works 15,212,307 15,359,629
Convention and Tourism - 500,000
Public Library 8,312,587 8,631,805
Benefits 20,204,634 22,015,412
Agency and Other Accounts 30,425,288 34,213,507
Total Expenditures 269,046,179 280,600,749 Source: Finance Department, City of Omaha.
The major portion of the City’s day-to-day operations, some annual capital improvements and various lease-purchase agreements are financed by the General Fund. Appropriations are also made from the General Fund for operating the Public Library System. Further appropriations provide for the City’s contribution to employee benefit plans including pension systems, hospitalization and life insurance and social security taxes. The 2009 Budget was formulated from revised projections for budget year 2008. 2009 Budget projections anticipate an increase of $11.6 million over the 2008 Budget or an increase of 4.3%.
B-6
DEBT SERVICE REQUIREMENTS The annual debt service requirements on all outstanding City of Omaha general obligation bonds, as of January 1, 2009, are shown below, together with
the annual debt service requirements on the City of Omaha General Obligation Refunding Bonds, Series of 2009.
Debt Service on Outstanding Bonds
Debt Service on General Obligation Refunding Bonds Series of 2009
For Year Ending
December 31
Total Principal
and Interest
4/16/09 Refunded Principal
and Interest
Total Principal
and Interest1
Principal
Interest
Total Principal
and Interest
Total Debt
Service
2009
$56,571,549 $1,377,395 $55,194,154 $ - $ 785,493 $ 785,493 $55,979,647
2010 53,281,999 8,540,144 44,741,856 6,735,000 1,579,763 8,314,763 53,056,618
2011 53,657,066 8,298,149 45,358,917 6,840,000 1,243,013 8,083,013 53,441,929
2012 55,739,846 5,603,873 50,135,974 4,490,000 969,413 5,459,413 55,595,386
2013 54,877,191 3,412,600 51,464,591 2,535,000 789,813 3,324,813 54,789,404
2014 52,205,563 3,052,618 49,152,945 2,285,000 688,413 2,973,413 52,126,358
2015 50,288,414 2,777,068 47,511,347 2,100,000 597,013 2,697,013 50,208,359
2016 48,529,147 2,693,045 45,836,102 2,100,000 521,763 2,621,763 48,457,864
2017 45,397,812 1,893,880 43,503,932 1,405,000 437,763 1,842,763 45,346,694
2018 43,317,896 1,899,846 41,418,050 1,475,000 374,094 1,849,094 43,267,144
2019 41,439,029 1,891,336 39,547,693 1,520,000 320,625 1,840,625 41,388,318
2020 39,279,268 1,176,245 38,103,023 880,000 263,625 1,143,625 39,246,648
2021 37,179,244 1,122,488 36,056,757 875,000 219,625 1,094,625 37,151,382
2022 35,341,888 1,118,138 34,223,751 905,000 181,500 1,086,500 35,310,251
2023 32,496,755 1,116,238 31,380,517 950,000 136,250 1,086,250 32,466,767
2024 30,781,029 1,016,615 29,764,414 900,000 88,750 988,750 30,753,164
2025 28,517,897 1,135,095 27,382,802 1,055,000 52,750 1,107,750 28,490,552
2026 24,870,750 - 24,870,750 - - - 24,870,750
2027 23,398,066 - 23,398,066 - - - 23,398,066
2028 1,759,792 - 1,759,792 - - - 1,759,792
2029 818,366 - 818,366 - - - 818,366
2030 816,591 - 816,591 - - - 816,591
2031 838,542 - 838,542 - - - 838,542
2032 207,642 - 207,642 - - - 207,642
2033 207,642 - 207,642 - - - 207,642
TOTALS $ 811,818,984 $ 48,124,770 $ 763,694,214 $ 37,050,000 $ 9,249,662 $ 46,299,662 $ 809,993,876
1 Less principal and interest on City of Omaha proposed Refunded Bonds.
B-7
SUMMARY OF 2008 GENERAL FUND REVENUES AND EXPENDITURES BY SOURCE 12/31/08 as of March 12, 2009
2008 Projected Projected Over
Budgeted 12/31/2008 (Under) Budget
Revenues:
General Property Tax $ 60,919,217 $ 61,594,911 $ 331,490
Motor Vehicle Taxes 9,009,500 9,374,405 364,905
City Sales and Use Tax 122,000,000 121,532,796 (467,204)
Business Taxes 31,767,000 34,465,953 6,355,139
Licenses and Permits 8,732,400 8,020,481 (711,919)
Intergovernmental Revenues 8,946,200 9,401,744 483,145
Charges for Services 18,306,119 18,660,641 (3,493,049)
Investment Income 4,400,000 3,005,631 (1,394,369)
Miscellaneous 1,716,000 1,962,169 754,158
Prior Year General Fund Balance 3,249,743 2,659,322 (590,421)
Total General Fund Revenue 269,046,179 270,678,054 1,631,875
Expenditures:
Legislative & Executive 2,721,553 2,540,850 (180,703)
Law, Personnel & Human Relations 6,183,420 5,824,837 (358,583)
Finance 2,247,498 2,276,815 29,317
Planning 6,189,060 6,486,129 297,069
Parks, Recreation and
Public Property 17,400,010 17,674,507 274,497
Public Safety 162,681,722 165,046,647 2,364,925
Public Works 15,287,307 14,906,168 (381,139)
Public Library 8,312,587 8,173,588 (138,999)
Benefits 20,204,634 19,359,778 (844,856)
Outside Agency Accounts 17,766,153 16,720,823 (1,045,330)
Contingency and Other Accounts 10,052,235 10,925,272 873,037
Total General Fund Expenditures 269,046,179 269,935,414 889,235
Excess Revenues over Expenditures Overage() 742,640 Lapsed encumbrances $ 423,589
Projected 2008 General Fund Budget Carryover Reserve 1,166,229
Source: Unaudited records and projections of the Finance Department, City of Omaha as of March 12, 2009. These records and projections have not been reviewed by the City’s outside auditors: projections are estimates only. In late December of 2008, the Commission of Industrial Relations ruled on both the Fire and Police 2008 labor contracts. Due to the complexity of the settlement, actual retroactive expenditures are still being calculated. Actual results as the result of the Year 2008 year-end audit may differ significantly.
B-8
Property Valuations and Debt Ratios
as of December 31
2004 2005 2006 2007 2008
Actual Valuation1 $20,091,391,760 $21,495,123,660 $22,265,984,445 $25,302,239,770 $26,509,935,870 Net Direct General Obligation Bonded Debt
439,551,010
465,864,465
464,368,152
520,334,932
539,312,795 % of Net Direct General Obligation Bonded Debt to Actual Valuation
2.19%
2.03%
2.09%
2.06%
2.03% 1 Source: Records of Accounting Department, Office of the Douglas County Clerk.
Population, Net General Bonded Debt and Per Capita Debt
Year Population1
Net Direct General Obligation
Bonded Debt2,3
Per Capita Net Direct
General Obligation Bonded Debt
1950 1960 1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008
251,117 301,598 346,929 313,911 335,795 390,007 390,153 399,357 404,267 404,274 409,416 419,545 433,715 440,691
$ 11,100,500 30,697,871 71,586,248 73,939,298
115,435,013 408,103,671 423,338,935 417,421,740 421,869,470 439,551,010 465,864,465 464,368,152 520,334,932 539,312,795
$ 44.20 101.78 206.34 235.54 343.77
1,046.40 1,085.06 1,045.23 1,043.54 1,087.26 1,137.88 1,106.84 1,199.72 1,223.79
1Source: United States Census and Metropolitan Area Planning Agency, City of Omaha. 2Records of the Finance Department, City of Omaha. 3In 1982, the City of Omaha inaugurated a new annexation policy. The current annexation policy is designed to create annual, balanced annexation packages and establish consistency from year to year. Such annexation packages combine areas with relatively high outstanding indebtedness in relation to assessed valuation with other areas that have a more positive financial picture. These balanced packages can then be added to the City without tax increase to cover retirement of the additional debt assumed by the City. Under this approach, Omaha has grown by approximately 126,780 people and 39 square miles as a result of annexations since 1980.
B-9
OVERLAPPING DEBT
Listed below are the political subdivisions which have the power to levy taxes and the amount of net bonded indebtedness of each, as of January 2, 2009, as reported to the State of Nebraska Auditor of Public Accounts, applicable to the taxable property within the City of Omaha:
Bonds Outstanding
% Applicable to City of Omaha
$ Amount Applicable
Douglas County1 $ 80,045,000 73.75% $ 59,033,188
Omaha-Douglas Public Building Commission2 26,820,000 73.75 19,779,750
School District of Omaha3 241,561,949 84.10 203,153,599
School District of Ralston3 27,855,000 71.31 19,863,401
School District of Millard3 157,785,000 62.76 99,025,866
School District of Elkhorn3 120,190,000 53.05 63,760,795
School District No. 66 of Douglas County3 17,960,000 100.00 17,960,000
Total $675,676,949 $405,583,411 1 Douglas County, under various lease purchase agreements, is obligated to provide for annual rental payments. The annual payments on those lease purchase agreements, mostly short-term, are in each case $500,000 or less. 2 Payable from certain property tax revenues and payments to be made to it by the City of Omaha and Douglas County under certain contractual agreements. Actual rental payments by the City for 2008 were $1,358,426. The Act authorizing issuance of bonds by the Omaha-Douglas Public Building Commission (the “Commission”) permits the Commission to levy a tax of $.017 per $100 of actual valuation on all the taxable property in Douglas County; the levy for 2007–08 is $.01096 per $100 of actual valuation. However, although the same Act authorizes the City to levy a tax on all the taxable property in the City, except intangible property, of $.017 per $100 of actual valuation in excess of the Charter limitation described under “AUTHORITY TO LEVY TAXES,” if and to the extent necessary to make the City’s payments to the Commission, no such levy has ever been made by the City for such purpose. 3 Tax levies for general obligation bond sinking fund purposes are unlimited as to amount. Residents of the City reside in one of the five school districts and pay taxes only to that school district.
The City’s ratio of direct and overlapping debt ($944,896,206) to its 2007/2008 property valuation ($26,509,935,870) is 3.564%.
B-10
LONG-TERM CONTRACTUAL AGREEMENTS
The City of Omaha, under certain existing contractual agreements (including lease purchase agreements), is obligated to provide for annual payments which are a charge on the General Fund and the Parking Revenue Fund. From 2009 to 2033, the highest annual payment is $9,349,466 (in 2011), the lowest is $1,819,270 (in 2029), and the average annual payment is $5,280,256. Such annual payments are included as General Fund budgetary items for which annual appropriations are required. Under the Charter of the City of Omaha, the outstanding amount of any lease purchase agreements executed by the City as vendee or as lessee is not chargeable against the City debt limit.
City of Omaha and Local Authorities and Districts Revenue and Special Obligation Bonds Outstanding1
as of December 31, 2007
City of Omaha:
Tax Increment Bonds and Notes $ 261,573,649 Special Tax Revenue Bonds 44,000,000 Highway Allocation Revenue Bonds 2,210,000 Convention Center Hotel Revenue Bonds 109,750,000 Special Obligation Bonds 83,825,000
Omaha Public Power District 1,565,000,000 Airport Authority of the City of Omaha 34,780,000 Sanitary Sewerage System Revenue Bonds 53,295,000 Nebraska Department of Environmental Control Sewer Revenue Notes 37,056,148 Metropolitan Utilities District 190,000,000
_______________________ 1Revenue bond indebtedness is not general obligation debt of the City. Principal and interest are paid solely from revenues arising from operations of the respective City facilities or of the Authority or District issuing such revenue bonds. No taxes are levied for payment of either principal or interest. Nor are the Tax Increment Bonds and Notes and Special Tax Revenue Bonds referred to above general obligations of the City. Principal and interest are paid (1) either from that portion of the ad valorem tax on real property in a redevelopment project which is in excess of that portion of the ad valorem tax upon real property in such redevelopment project produced by the levy at the rate fixed each year by or for each public body levying a tax in such redevelopment project on the valuation for assessment of the taxable real property as last certified for the year prior to the providing for division of such taxes pursuant to the redevelopment plan or (2) from special tax revenues collected pursuant to redevelopment laws.
B-11
TOTAL PROPERTY TAX LEVIES IN THE CITY OF OMAHA (Levied on Real and Tangible Personal Property)
2005 2006 2007 2008 2009
City of Omaha
Amount per $100 of actual Valuation
General Fund $.2431 $.2431 $.2431 $.2431 $.2431
Debt Service Fund .1759 .1759 .1759 .1759 .1759
Judgment Fund .0060 .0060 .0060 .0060 .0060
Redevelopment Fund .0089 .0089 .0089 .0089 .0089
Total for City of Omaha $.4339 $.4339 $.4339 $.4339 $.4339
2004-05 2005-06 2006-07 2007-08 2008-09
Amount per $100 of actual Valuation
Other Taxing Units
M.U.D.—Water Hydrants $.0070 $ -0- $ -0- $ -0- $ -0-
Douglas County .2680 .26427 .26144 0.24519 0.24519
Library-(Unincorporated Areas Only)
.0251
.02122
.01855
0.01770
0.01807
School District of Omaha1 1.2545 1.21849 1.19930 1.20059 1.20064
School District No. 66 of Douglas County1
1.2930
1.28885
1.30156
1.25282
1.25302
School District of Ralston1 1.3236 1.30261 1.29216 1.26197 1.29738
School District of Millard1 1.2989 1.28995 1.27958 1.20999 1.43084
School District of Elkhorn1 1.2581 1.23776 1.29165 1.30510 1.30499
State Educational Service Units
.01502
.01502
.01502
0.015002
0.015002
Omaha-Douglas Public Building Commission
.0110
.01096
.01096
0.01096
0.01300
Papio Missouri River Natural Resources District
.0406
.03909
.03844
0.03485
0.03375
Metropolitan Technical Community College
.0674
.0674
.0674
0.06740
0.06740
Omaha Transit Authority .0505 .04890 .04871 0.04617 0.04613
1Residents in Omaha reside in one of the above five school districts and pay taxes only to that school district. 2Residents residing in school districts other than the School District of Omaha pay $.01642 for years 2008-09, $.01629 for years 2007-08, $.01642 for years 2006-07 and $.01657 for years 2005-06.
B-12
MAJOR TAXPAYERS
The following are firms located within the City of Omaha with real estate valuations in excess of $25,000,000 as of June 18, 2008.
Taxpayer
Value of Real Property
OAK VIEW MALL LLC $102,718,100
168TH AND DODGE LP 75,907,800
WESTROADS MALL LLC 71,589,000
W D W LIFE INS SOC 57,966,600
IRET-MR9 LLC 56,175,600
FIRST DATA RESOURCES INC 53,282,900
SECURITY NATL PROPERTIES FUND 46,830,000
UNITED OF OMAHA LIFE INS 46,443,700
OPUS REALTY CO ETAL 43,994,900
CLF LANDMARK OMAHA LLC 42,030,300
CARG LLC 41,816,500
CONNECTICUT NATL BANK TR 40,218,800
CREIGHTON ST JOSEPH REGIONAL 39,000,000
FIRST NATIONAL BANK OMAHA 37,700,600
GUARANTEE MUTUAL LIFE 37.056,400
OMAHA PLAZA INVESTMENTS LLC 36,287,300
FIRST NATL OF NEBR INC 35,218,400
TARGET CORPORATION 34,325,900
WASHOVIA DEVELOPMENT CORPORATION 34,060,000
COLE MT OMAHA 33,341,600
DOUGLAS BUILDING LLC 33,302,200
WIESMAN DEVELOPMENT LLC 32,883,500
CONNECTIVITY SOLUTIONS MANUFACTURING 31,460,400
LVP OAKVIEW STRIP CENTER LLC 31,183,200
ALEGENT HEALTH 30,101,900
WEST TELESERVICES CORP 30,006,900
REGENCY LAKESIDE ASSOC LLC 29,839,100
BISHOP CLARKSON MEMORIAL HOSPITAL 28,598,900
CFO2 OMAHA LLC 27,484,300
ROE – NORTH PARK II LLC 25,623,300
PHYSICIANS MUTUAL INSURANCE CO 25,586,500
WAL-MART REAL ESTATE BUSINESS 25,461,400 Source: Records of the Tax Control Supervisor, Office of the Douglas County Clerk.
B-13
DEBT MANAGEMENT
General Obligation Debt Margin
Article V, Section 5.27, Home Rule Charter of the City of Omaha, 1956, as amended, provides:
The total amount of general obligation indebtedness outstanding at any time, which shall include bonds issued but shall not include bonds authorized until they are issued, shall not exceed 3.5 per cent of the actual value of taxable real and personal property in the city.
Computation of the general obligation debt margin as defined in the Home Rule Charter, based upon 2007 valuations, reflects the following:
Maximum debt limit (3.5% of total assessed valuation) $927,847,755
General obligation bonds outstanding 558,062,463
Less balance in General Obligation Debt Service Fund December 31, 2007
(18,749,668) (539,312,795)
General obligation debt margin $388,534,960
Revenue bond indebtedness, special obligation bonds, general obligation notes and lease-purchase agreements are not chargeable against the general obligation debt margin. The City of Omaha has no general obligation notes outstanding. Revenue and special obligation bond indebtedness and lease purchase agreement obligations are set forth herein under the captions “OVERLAPPING DEBT” and “LONG-TERM CONTRACTUAL AGREEMENTS—City of Omaha and Local Authorities and Districts Revenue and Special Obligation Bonds Outstanding.”
Debt Payment Record
The City of Omaha has never defaulted on its obligations to pay principal of or interest on its indebtedness.
General Obligation Bonds Authorized But Unissued
The City has $53,746,000 of general obligation bonds authorized but unissued. The City anticipates that these bonds will be issued in varying amounts annually through 2012.
CASH RESERVE FUND
At a special City election held on November 6, 1984, voters of the City approved an amendment to Section 5.03 of the City Charter to provide in subsection (10) for the establishment of a cash reserve fund (“Cash Reserve Fund”) for the purpose of meeting emergencies arising from:
(a) the loss or partial loss of a revenue source;
(b) an unanticipated expenditure demand due to a natural disaster, casualty loss or act of God;
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(c) expenditure demand for the satisfaction of judgments and litigation expenses when the Judgment Levy Fund balance is inadequate; or
(d) conditions wherein serious loss of life, health or property is threatened or has occurred.
The 1984 amendment to the City Charter authorized the appropriation at the close of any fiscal year for credit to the Cash Reserve Fund of any amount, or portion thereof, held as General Fund surplus. Income earned on amounts credited to the Cash Reserve Fund is retained in the fund. The maximum size of the Cash Reserve Fund was established at an amount equal to 4% of General Fund appropriations.
The ordinance adopted by the City Council to close Fiscal 1984 Accounts provided that the sum of $1,600,000 be transferred from 1984 available budgetary balances as the initial credit to the Cash Reserve Fund to be held as provided in Section 5.03(10) of the City Charter. 2008 interest earnings of $168,798 increased the balance as of December 31, 2008 to $5,586,115.
EMPLOYEE RELATIONS: RETIREMENT SYSTEMS
The City of Omaha negotiates with four major unions: The Civilian Management Professional and Technical Employees Council; The Omaha City Employees, Local No. 251; The Omaha Association of Firefighters, Local No. 385; and The Omaha Police Union, Local No. 1. Current agreements with the four unions expire as follows: The Civilian Management Professional and Technical Employees Council—December 31, 2008; Omaha Association of Firefighters, Local No. 385—December 29, 2008; Omaha City Employees, Local No. 251—December 31, 2008; and Omaha Police Union, Local No. 1—December 30, 2008.
The negotiating procedure involves meeting with the designated union representatives and discussing economic and noneconomic items regarding contractual agreements. At any time, should an impasse be reached, Nebraska law provides that either party may appeal to the Nebraska Commission of Industrial Relations. Either party may appeal the decision of such Commission to the Nebraska Supreme Court, whose decision is final.
CITY OF OMAHA EMPLOYEES’ RETIREMENT SYSTEM
The City of Omaha Employees’ Retirement System became effective on January 1, 1949. Certain of its provisions, which are governed by Chapter 22.21 of the Omaha Municipal Code, are summarized herein.
All city employees except the following are covered by the plan: police; firefighters; persons paid on a contractual or fee basis; seasonal, temporary and part-time employees; and elected officials who do not make written application to the plan.
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The historical and negotiated employee and City contributions rates based on an employee’s compensation are as follows:
Period Employee Rate City Rate
07/01/72-01/31/98 4.00% 5.20% 02/01/98-06/18/01 4.85 6.05 06/19/01-12/23/01 4.98 6.18 12/24/01-12/21/02 5.33 6.53 12/22/02-12/20/03 5.70 6.90 12/21/03-07/29/06 6.825 8.025 07/30/06-12/16/06 7.325 8.525 12/17/06-12/15/07 7.825 9.025 12/16/07-12/27/08 8.325 9.525
Prior service credit is granted for employment with the City before January 1, 1949, and
membership service credit is granted for employment thereafter. Compulsory military duty and voluntary military duty in time of war count as service.
Early retirement is permitted at age 50 with five years of service, with the accrued benefit reduced 8% per year for retirement prior to age 60. For employees whose age plus service equals or exceeds 80, the 8% per year reduction is eliminated. An employee’s monthly pension is equal to 2.25% of average final monthly compensation for each year of service.
Following is a cash flow analysis of the System for the last five fiscal years:
2004 2005 2006 2007 2008 Receipts Employee Contributions $ 3,627,681 $ 3,643,131 $ 3,532,487 $ 4,262,326 $4,695,162 Employer Contributions 4,449,203 4,500,192 4,145,033 4,975,039 5,374,082 Investment Income 30,056,366 18,008,146 30,714,663 17,158,906 (74,148,690) Security Lending Income 101,171 92,472 126,172 199,220 131,023 Total Receipts $38,234,421 $26,243,941 $38,518,355 $26,595,491 ($63,948,423) Disbursements Retirement Pensions $15,215,239 $17,647,999 $21,159,087 $22,230,727 $23,359,337 Death Benefits 173,400 210,338 75,698 11,524 256,610 Refunds 431,819 320,002 455,998 251,974 327,075 Other Disbursements 1,635,149 1,777,885 1,912,828 2,047,699 1,750,227 Total Disbursements 17,455,607 19,956,224 23,603,611 24,541,924 25,693,249 Excess of Receipts Over Disbursements $20,778,814 $ 6,287,717 $ 14,914,744 $ 2,053,567 ($89,641,672)
Source: Records of Finance Department, City of Omaha.
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The latest actuarial study by the firm of Milliman Consultants and Actuaries was for the period ended January 1, 2008 and included an 8.0% investment assumption. Summarized below is financial information concerning the System for the last five fiscal years.
2004 2005 2006 2007 2008
System Total Assets1 $270,838,150 $277,125,867 $292,040,611 $294,094,178 $204,452,506
Employee Contributions1 3,627,681 3,643,131 3,532,487 4,262,326 4,695,162
Employer Contributions1 4,449,203 4,500,192 4,145,033 4,975,039 5,374,082
Net Pension Obligation2 (5,778,439) (8,100,275) (10,080,703) (13,910,207) (17,626,003)
Unfunded Actuarial Accrued Liability
57,100,000 74,900,000 69,700,000 74,300,000 183,200,000
1System Total Assets, Employee Contributions and Employer Contributions figures are taken from City of Omaha records as of December 31 of each year. 2Complete Actuarial Valuations are performed every year, the last being for the period ended January 1, 2008. The net pension asset and unfunded accrued liability figures are taken from reports of Milliman Consultants and Actuaries and annual City audits.
City of Omaha Employees’ Retirement System Annual Pension Cost and Net Pension Obligation
December 31, 2008
The City’s annual pension cost and net pension obligation to the Civilian Plan for the fiscal year ended December 31, 2008 are as follows:
Annual required contribution $ 9,212,669 Interest on net pension asset 1,112,817 Adjustment to annual required contribution (1,235,608)
Annual pension cost 9,089,878 Contributions made 5,374,082
Increase in net pension obligation 3,715,796 Net pension obligation, beginning of year (13,910,207) Net pension obligation, end of year $(17,626,003)
Three-year trend information is as follows:
Fiscal year
ending
Annual pension
cost (APC)
Percentage of APC
contributed
Net pension
obligation
12/31/2008 $9,089,878 59% $(17,626,003) 12/31/2007 8,794,543 57 $(13,910,207) 12/31/2006 6,135,462 67 (10,090,703)
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POLICE AND FIREMEN’S RETIREMENT SYSTEM
The City of Omaha Police and Firemen’s Retirement System became effective on July 1, 1961. Certain of its provisions, which are governed by Chapter 22.61 of the Omaha Municipal Code, are summarized herein.
Membership in the System is limited to and shall include only probationary and regular uniformed personnel of the Police and Fire Departments.
Retirement is optional at age at age 45 with 20 years of service with a lifetime monthly service retirement benefit equal to 53% of average final monthly compensation. With 25 years of service or more, an employee can retire at the minimum age of 45 with a lifetime monthly retirement benefit equal to 75% of average final monthly compensation.
Following is a cash flow analysis of the system for the last five fiscal years:
2004 2005 2006 2007 2008 Receipts Employee Contributions $10,712,955 $11,558,030 $13,468,182 $14,996,443 $14,858,953 Employer Contributions 15,387,900 16,434,609 19,020,836 20,699,211 20,373,206 Prior Service Contributions 1,327,600 1,327,600 1,327,600 1,327,000 1,327,000 Investment Income 43,980,340 39,095,219 58,197,853 28,888,051 (148,242,515) Security Lending Income 102,444 85,792 84,760 150,220 448,804 $71,511,239 $68,501,250 $92,099,231 $66,060,925 ($111,234,552) Disbursements Retirement Pensions $30,994,359 $31,973,122 $33,918,970 $39,653,439 $49,426,367 Death Benefits 23,900 66,463 1,000 56,898 13,000 Refunds 195,981 121,520 318,739 235,811 221,824 Other Disbursements 3,679,805 3,365,627 3,574,750 3,799,517 3,103,770 34,894,045 35,526,732 37,813,459 43,745,665 52,764,961 Excess of Receipts Over Disbursements
$36,617,194 $32,974,518 $54,285,772 $22,315,260 ($163,999,513)
Source: Records of Finance Department, City of Omaha.
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The latest actuarial study by the firm of Milliman Consultants and Actuaries was for the period ended January 1, 2008 and included an 8.0% investment assumption. Summarized below is financial information concerning the System for the last five years.
2004 2005 2006 2007 2008
System Total Assets1 $420,348,491 $453,323,009 $507,608,781 $529,923,390 $365,923,877
Employee Contributions1 10,712,955 11,558,030 13,468,182 14,996,211 14,858,953
Employer Contributions1 16,715,500 17,762,209 20,348,436 22,026,211 21,700,206
Net Pension Obligation2 (12,500,861) (20,884,106) (31,630,196) (45,494,051) (61,464,670)
Unfunded Actuarial Accrued Liability2
$123,600,000
$250,500,000
$293,500,000
351,900,000
581,700,000
1System Total Assets, Employee Contributions and Employer Contributions figures are taken from City of Omaha records as of December 31 of each year. 2Complete Actuarial Valuations are performed every year, the last being for the period ended January 1, 2008. The net pension asset and unfunded accrued liability figures are taken from reports of Milliman Consultants and Actuaries and annual City audits.
During 1977, on the basis of an actuarial balance sheet prepared as of January 1, 1977, the District Court of Douglas County, Nebraska made a determination relative to the unfunded liability for past service credits and the method of funding such amount. The City had adopted a policy whereby the employer contributions each year exceeded the matching requirements and served to amortize in part the past service costs. Commencing in 1979, the City contributes to the Police and Firemen’s Retirement System the sum of $1,327,600 per year for 50 years to provide for the amortization of the prior service cost.
Police and Firemen’s Retirement System Annual Pension Cost and Net Pension Obligation
December 31, 2008
The City’s annual pension cost and net pension obligation to the Uniform Plan for the year ended December 31, 2008 are as follows:
Annual required contribution $ 38,073,021 Interest on net pension obligation 3,639,524 Adjustment to annual required contribution (4,041,720)
Annual pension cost 37,670,825 Contributions made 21,700,206
Increase in net pension obligation 15,970,619 Net pension obligation, beginning of year (45,494,051) Net pension obligation, end of year $(61,464,670)
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Three-year trend information is as follows:
Fiscal year
ending
Annual pension
cost (APC)
Percentage of APC
contributed
Net pension
obligation
12/31/2008 $37,671,425 58% $(61,464,670) 12/31/2007 34,563,066 60 (45,494,051) 12/31/2006 30,917,700 65 (31,630,196)
Mayor Fahey recently created a task force to review options to address the underfunded status of the Police & Fire Pension System. The goal of this group is to provide recommendations by the end of May that would achieve actuarial balance in a reasonable amount of time. The 11-member task force includes business leaders, individuals with investment and pension expertise, police and fire union leaders, two elected officials, and the Chairman of the Pension Board.
OTHER POST EMPLOYMENT BENEFITS
Implementation of GASB Statements
The Government Accounting Standards Board (“GASB”) has issued Statements No. 43 (“GASB 43”), Financial Reporting for Post Employment Benefit Plans Other Than Pension Plans (“OPEBs”), and No. 45 (“GASB 45”), Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions. GASB 43 was implemented by the City for fiscal year ending December 31, 2006 and GASB 45 was implemented by the City for fiscal year ending December 31, 2007.
GASB 45 requires the accounting for the annual cost of OPEB and the related outstanding liability using an actuarial approach similar to pensions. The City implemented prospectively (zero net obligation at transition).
Plan Description
The City provides certain postemployment health care benefits to eligible retirees and their dependents in accordance with provisions established in Chapter 23 of the Omaha Municipal Code. The plan is a single-employer defined benefit health care plan administered by the City. The plan does not issue separate financial statements.
Funding Policy
The contribution requirements of plan members and the City are established through labor negotiations, with the Omaha Police Union Local No. 101 (the “Police Union”), the Professional Firefighters Association of Omaha Local No. 385 (the “Firefighters Union”), the Omaha City Employees Local No. 251, and other classified civilian and sworn employees. All agreements are approved and can be amended by the Omaha City Council. Contributions are made to the plan based on a pay-as-you-go basis and the City self-insures this benefit. For the year ended December 31, 2007, the City paid $12,707,723 for 1,129 retirees. Retiree contribution rates vary from 0% to 5% of an annual estimated premium depending on the bargaining group date of retirement. Retiree contributions for 2007 were $386,124.
See “EMPLOYEE RELATIONS; RETIREMENT SYSTEMS” regarding the uncertain status of the City’s contract negotiations with the Firefighters Union and the Police Union.
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Annual OPEB Cost and Net OPEB Obligation
The City’s annual OPEB expense is calculated based on the annual required contribution of the employer (“ARC”), an amount actuarially determined in accordance with the parameters of GASB 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 30 years. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2007 are as follows (unaudited):
Annual OPEB
cost
Percentage of annual OPEB contributed
Net OPEB
Fiscal year ended: December 31, 2007 $ 28,600,000
44% $15,892,277
The following tables (unaudited) show (1) the components of the City’s annual OPEB cost for the
year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation and (2) the funded status of the plan:
(1) Annual required contribution $28,600,000 Contributions made 12,707,723
Increase in OPEB obligation 15,892,277
Net OPEB obligation — beginning of year –
Net OPEB obligation — end of year $15,892,277
(2) The funded status of the plan as of March 1, 2006 is as follows:
Actuarial accrued liability (AAL) $307,500,000
Actuarial value of plan assets –
Unfunded actuarial accrued liability (UAAL) $307,500,000
Funded ratio –%
Covered payroll $ 153,600,000
UAAL as a percentage of covered payroll 200%
Source: Finance Department, City of Omaha.
Actuarial Methods and Assumptions
Actuarial valuations on an ongoing plan involve estimates of the value-reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and the health care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The following Schedule of Funding Progress presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
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CITY OF OMAHA, NEBRASKA
Schedule of Funding Progress (unaudited) Year ended December 31, 2007
Post-Retirement Obligations Schedule of Funding Progress and Trend Information
(Dollar amounts in millions)
Actuarial valuation
date
Actuarial value of assets
(a)
Actuarial liability (AL)
(b)
Unfunded
AL (UAL) (b-a)
Funded ratio(a/b)
Covered payroll
(c)
UAL as a percentage of covered
payroll ((b-a)/(c)
March 1, 2006 $ - $307,500,000 $307,500,000 -% $ 153,600,000 200%
Schedule of Employer Contributions
Fiscal year ending
Annual required
contribution (a)
Total employer
contribution (b)
Percentage of ARC
contribution (b/c)
December 31, 2007 $28,600,000 $12,707,723 44.4% Source: Finance Department, City of Omaha.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan member to that point. The actuarial methods used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the March 1, 2006 actuarial valuation, the unit credit actuarial cost method was used. The actuarial assumptions included a 4% projected investment rate of return and an annual health care cost trend of 7.88% initially, reduced by decrements to an ultimate rate of 5% after five years. Both rates include a 3.25% inflation assumption. The amortization of the unfunded actuarial accrued liability is calculated assuming 30 annual payments increasing at 4% per year. The actuarial study was prepared by Milliman Consultants and Actuaries for the period ending March 1, 2006.
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APPENDIX B—CITY OF OMAHA FINANCIAL INFORMATION
PART TWO
Independent Auditors’ Report and General Purpose Financial Statements (December 31, 2007)
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CITY OF OMAHA, NEBRASKA
Basic Financial Statementsand A-133 Reports
CL) flSS
December31, 2007
(With Independent Auditors’ Report Thereon)
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CITY OF OMAHA, NEBRASKA
Table of Contents
Page(s)
Independent Auditors’ Report 1 — 2
Management’s Discussion and Analysis 3 — 14
Basic Financial Statements:Governmentwide Financial Statements:
Statement of Net Assets 15Statement of Activities 16
Fund Financial Statements:Governmental Funds:
Balance Sheet 17Statement of Revenues, Expenditures, and Changes in Fund Balances 18Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances to the Governmentwide Statement of Activities — Governmental Activities 19
Proprietary Funds:Statement of Fund Net Assets 20Statement of Revenues, Expenses, and Changes in Fund Net Assets 21Statement of Cash Flows 22
Fiduciary Funds:Statement of Fiduciary Net Assets — Fiduciary Funds 23Statement of Changes in Fiduciary Net Assets — Pension Trust Funds 24
Notes to the Financial Statements 25 — 77
Required Supplementary Information (Other than MD&A):Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and
Actual — General Fund 78Notes to Schedules of Revenues, Expenditures, and Changes in Fund Balances— Budget
and Actual — General Fund 79 — 80
Schedule of Funding Progress and Employer Contributions:Civilian Plan 81Uniformed Plan 82Post-Retirement Obligation 83
CITY OF OMAHA, NEBRASKA
Table of Contents
Page(s)
Single Audit Section:Schedule of Expenditures of Federal Awards 84Notes to Schedule of Expenditures of Federal Awards 85Independent Auditors’ Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements Performed inAccordance with Government Auditing Standards 86 — 87
Independent Auditors’ Report on Compliance with Requirements Applicable to Each MajorProgram and on Internal Control over Compliance in Accordance with 0MB CircularA-133 88—89
Schedule of Findings and Questioned Costs 90 — 91
KPMG LLP
Suite 1501 Suite 1600
Two Central Park Plaza 233 South j3th Street
Omaha, NE 68102 Lincoln NE 685082041
Independent Auditors’ Report
The Honorable Mayor and Membersof the City Council
City of Omaha, Nebraska:
We have audited the accompanying financial statements of the governmental activities, the business-typeactivities, the discretely presented component unit, each major fund, and the aggregate remaining fundinfonnation of the City of Omaha, Nebraska (the City) as of and for the year ended December 31, 2007,which collectively comprise the City’s basic financial statements as listed in the table of contents. Thesefinancial statements are the responsibility of the management of the City. Our responsibility is to expressopinions on these financial statements based on our audit. We did not audit the financial statements ofMetropolitan Entertainment and Convention Authority (MECA), which represents 100% of the total assetsand revenues of the discretely presented component unit. Those financial statements were audited by otherauditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amountsincluded for MECA, is based on the report of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. The financial statements of MECA were not audited in accordance with GovernmentAuditing Standards. An audit includes consideration of internal control over financial reporting as a basisfor designing audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the City’s internal control over financial reporting.Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit and the report of other auditors provide a reasonable basis for ouropinions.
In our opinion, based on our audit and the report of other auditors, the financial statements referred toabove present fairly, in all material respects, the respective financial position of the governmentalactivities, the business-type activities, the discretely presented component unit, each major fund, and theaggregate remaining fund infonnation of the City of Omaha, Nebraska as of December 31, 2007, and therespective changes in financial position and cash flows, where applicable, thereof for the year then endedin conformity with U.S. generally accepted accounting principles.
As discussed in note 12 to the financial statements, as of January 1, 2007, the City adopted the provisionsof Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting byEmployersfor Postemployment Benefits Other than Pensions. In addition, as discussed in note 14, the Cityannexed the City of Elkhorn as of March 1, 2007. As a result of the annexation, the City reflected a changein reporting entity.
KPMG LLP, a U.S. limited liability partnership, is the U.S.member firm of KPMS Intemational, a Swiss cooperative.
In accordance with Government Auditing Standards, we have also issued a report dated August 26, 2008on our consideration of the City’s internal control over financial reporting and on our tests of itscompliance 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 reportingand compliance and the results of that testing, and not to provide an opinion on the internal control overfinancial reporting or on compliance. That report is an integral part of an audit performed in accordancewith Government Auditing Standards and should be considered in assessing the results of our audit.
Management’s discussion and analysis on pages 3 through 14, the Budgetary Comparison Information onpages 78 through 80, and the Required Supplementary Information on pages 81 through 83 are not arequired part of the basic financial statements, but are supplementary information required byU.S. generally accepted accounting principles. We have applied certain limited procedures, whichconsisted principally of inquiries of management regarding the methods of measurement and presentationof the required supplementary information. However, we did not audit the information and express noopinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the City’s basic financial statements. The accompanying schedule of expenditures of federalawards on page 84 and 85 is presented for purposes of additional analysis as required by U.S. Office ofManagement and Budget Circular A- 133, Audits of States, Local Governments, and Non-ProfitOrganizations, and is not a required part of the basic financial statements. The schedule of expenditures offederal awards has been subjected to the auditing procedures applied in the audit of the basic financialstatements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financialstatements taken as a whole.
LCP
Omaha, NebraskaAugust 26, 2008
2
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
The discussion and analysis of the City of Omaha’s (the City) financial performance provides an overall reviewof the City’s financial activities for the fiscal year ended December 31, 2007. The intent of this discussion andanalysis is to look at the City’s financial performance as a whole. Readers should also review the basic financialstatements to enhance their understanding of the City’s financial performance.
Financial Highlights for Fiscal Year 2007
• The assets of the City, on a governrnentwide basis excluding component units, exceeded its liabilities at theclose of fiscal year 2007 by $597.1 million (net assets). Of this amount, $89.7 million (unrestricted netassets) may be used to meet the government’s ongoing obligations to citizens and creditors.
• The City’s total net assets increased by $2.6 million from the prior year. Of this amount, $5.2 million wasan increase in governmental activities and $2.6 million was a decrease in business-type activities. Thedecrease in net assets related to business-type activities is primarily attributable to the loss by theConvention Center Hotel in the amount of $2.9 million.
• As of December 31, 2007, the City’s governmental funds reported combined ending fund balances of$109.3 million, an increase of $6.0 million in comparison with the prior year. The major debt service fundincreased its fund balance by $2.3 million and nonmajor capital and special revenue funds increased theirfund balances by $8.5 million during the year. These increases were offset by a reduction in the GeneralFund balance of $4.7 million. The reduction of General Fund fund balance is attributed to the year-end2007 encumbrances being $2.7 million lower than 2006 and an unusually high year-end sales tax refund of$3.0 million. Of the combined governmental funds ending fund balances, approximately 48%, or$52.3 million, is unreserved.
• The General Fund, on a current fiscal resources basis, reported an excess of revenues over expenditures,lapsed encumbrances and transfers of $1.3 million. Revenues above budget in the amount of $2.4 millionand expenditures under budget, lapsed encumbrances and year-end transfers in the amount of $1.5 millionaccount for a 2007 year-end carryover reserve of $3.9 million.
• At the end of the current fiscal year, the unreserved fund balance for the general fund was $27.1 million, or10% of general fund expenditures.
• Finalizing a two-year legal challenge by the City of Elkhorn (Elkhorn), the Nebraska Supreme Courtissued a ruling upholding the City annexation of Elkhorn. On March 1, 2007, the annexation of Elkhorn bythe City became official. Upon annexation the City assumed all of Elkhorn’s assets and liabilities.Consequently the beginning fund balances of the governmental funds and sewer fund were restated andincreased by $3.5 million and $5.7 million, respectively. The beginning net assets balances of thegovernmentswide statement were restated and increased by $9.9 million. See note 14 for the details.
• The City maintained its AAA bond rating from Standard & Poor’s Corporation and Moody’s InvestorsService.
3 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. TheCity’s basic financial statements are comprised of three components: (1) governmentwide financial statements,(2) fund financial statements, and (3) notes to the financial statements. This report also contains othersupplementary information in addition to the basic financial statements themselves.
The basic financial statements include two kinds of statements that present different views of the City:
• The first two statements are governmentwide statements that provide both long-term and short-terminformation about the City’s overall financial status.
• The remaining statements are fund financial statements that focus on individual parts of the City’sgovernment, reporting the City’s operations in more detail than the governmentwide statements.— The governmental fund statements tell how general government services like public safety were
financed in the short term, as well as what amounts remain for future spending.— Proprietary fund statements offer short-term and long-term financial information about the activities
the government operates like a business, such as the City’s sewage treatment plants or conventioncenter hotel.
— Fiduciary fund statements provide information about financial relationships in which the City actssolely as a trustee or agent for the benefit of others, to whom the pertaining resources belong.
The financial statements also include notes that explain some of the information in the financial statements andprovide more detailed data. The statements are followed by a section of required supplementary information thatfurther explains and supports the information in the financial statements.
Governmentwide Financial Statements
The governrnentwide financial statements are designed to provide readers with a broad overview of the City’sfinances, using accounting methods similar to those used by private sector companies. The statement of net assetsand the statement of activities, which are the governmentwide statements, include the City’s assets and liabilitiesusing the accrual basis of accounting, which is similar to the accounting used by most private sector companies.All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardlessof the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some itemsthat will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacationleave).
These two governmentwide statements report the City’s net assets and how they have changed. Net assets — thedifference between the City’s assets and liabilities — is one way to measure the City’s financial health or financialposition. Over time, increases or decreases in the City’s net assets are an indicator of whether its financial healthis improving or deteriorating. Other nonfinancial factors, such as changes in the City’s property tax base and thecondition of the City’s roads and other infrastructure, may need to be considered to assess the overall health ofthe City.
4 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
In the statement of net assets and the statement of activities, the City is divided into three categories:
Governmental Activities — Most of the City’s basic services are included here, such as the police, fire, publicworks, parks and recreation, and general administration departments. Taxes and intergovernmental revenuesprincipally support these functions.
Business-type Activities — The City charges fees to customers in order to cover the costs of certain services itprovides. The City’s sewer system, air quality control enforcement, compost operation, marina, golf courses,tennis operation, parking facilities, printing services, river plaza facility, citywide sports, and hotel are includedhere.
Component Unit — The City includes one separate legal entity in its report, the Metropolitan Entertainment andConvention Authority. Although legally separate, this “component unit” is important because the City isfinancially accountable for it and provides debt service funding for the Arena and Convention Center.
The governmentwide financial statements can be found on pages 15 and 16 of this report.
Fund Financial Statements
The fund financial statements provide more detailed information about the City’s most significant funds — not theCity as a whole. Funds are accounting mechanisms that the City uses to keep track of specific sources of fundingand spending for particular purposes. The City Charter, state law, and bond covenants require some funds. TheCity Council or Administration establishes other funds to control and manage money for particular purposes or toshow that the City is properly using certain taxes and grants.
The City has three kinds of funds:
Governmental Funds — Most of the City’s basic services are included in governmental funds, which focuson (1) the flow in and out of cash and other financial assets that can readily be converted to cash and(2) the balances remaining at year-end that are available for spending. These funds are reported using themodified accrual accounting basis and a current financial resources measurement focus. Consequently, thegovernmental fund statements provide a detailed short-term view that helps the reader determine whetherthere are more or fewer financial resources that can be spent in the near future to finance the City’sprograms. The relationship between governmental activities (reported in the statement of net assets and thestatement of activities) and governmental funds is described in a reconciliation that follows thegovernmental fund financial statements.
The City maintains eighty-four governmental funds. Information is presented separately in thegovernmental fund balance sheet and in the governmental fund statement of revenues, expenditures, andchanges in fund balances for the General Fund and Debt Service Fund which are considered to be majorfunds. Data from the other governmental funds are combined into a single, aggregated presentation.
The City adopts an annual budget for the General Fund, as required by the City Charter. A budgetarycomparison statement is presented for the General Fund using the City’s budgetary basis of accounting.This statement reflects the following: (a) the original budget, (b) the final budget as amended, (c) actualresults, and (d) the variance between the final budget and actual results. Because the budgetary basis of
5 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
accounting differs from the modified accrual basis used in the funds statements, a reconciliation isprovided at the end of the statement.
The basic governmental fund financial statements can be found on pages 17 through 19 of this report.
Proprietary Funds — Services for which the City charges customers a fee are generally reported inproprietary funds. Proprietary funds, like the governmentwide statements, provide both short- andlong-term financial information. The City maintains Ii enterprise funds, which are a type of proprietaryfund. Enterprise funds are used to report the same functions presented as business-type activities in thegovernmentwide financial statements. The City uses enterprise funds to account for its sewer system, airquality control enforcement, compost operation, marina, golf courses, tennis operation, river plaza facility,parking facilities, printing services, citywide sports, and hotel.
The basic proprietary fund financial statements can be found on pages 20 through 22 of this report.
Fiduciary Funds — The City is the trustee, or fiduciary, for certain donated funds, It is also responsible forother assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The City isresponsible for ensuring that the assets reported in these funds are used for their intended purpose. Theseactivities are reported in a separate statement of fiduciary net assets. The City excludes this activity fromits governmentwide financial statements because the City cannot use these assets to finance its operations.The accounting used for fiduciary funds is much like that used for proprietary funds.
The fiduciary fund financial statements can be found on pages 23 and 24 of this report.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in thegovernmentwide and fund financial statements. The notes to the financial statements can be found on pages 25through 77 of this report.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain requiredsupplementary information concerning the City’s 2007 budget information and the City’s progress in funding itsobligation in both pension and other post employment benefits. Required supplementary information can befound on pages 78 through 83 of this report.
City Governmentwide Financial Analysis
As noted earlier, net assets (assets over liabilities) may serve over time as a useful indicator of a government’sfinancial position. In the case of the City, assets exceeded liabilities by $597.1 million at the close of fiscal year2007. By far, the largest portion of the City’s net assets (8 1%) reflects its investment in capital assets (e.g., land,building, equipment, and infrastructure), less accumulated depreciation, and less any related outstanding debtused to acquire those assets. The City uses these assets to provide services to its citizens and, consequently, theseassets are not available for future spending. The resources needed to repay the debt related to these capital assetsmust be provided from other sources.
6 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
The following table reflects the condensed summary of net assets (in millions):
City of Omaha
Summary of Net Assets
Governmental Business-type Total primaryactivities activities government2007 2006 2007 2006 2007 2006
Current and other assets $ 276 242 76 88 352 330Capital assets 932 841 477 459 1,409 1,300Total assets $ 1,208 1,083 553 547 1,761 1,630
Current and other liabilities $ 41 32 9 9 50 41Long-term liabilities 839 739 275 271 1,114 1,010Total liabilities 880 771 284 280 1,164 1,051
Net assets:Invested in capital assets net of
related debt 261 237 222 244 483 481Restricted net assets 17 15 7 12 24 27Unrestricted net assets 50 60 40 11 90 71Total net assets 328 312 269 267 597 579Total liabilities and
net assets $ 1,208 1,083 553 547 1,761 1,630
In the Basic Financial Statement section of this report, 2007 beginning fund balances have been restated due tothe March 1, 2008 annexation of Elkhorn. For comparison purposes, 2006 balances are presented in thisManagement’s Discussion and Analysis section. See note 14 on page 71 for details.
Approximately 4%, or $24 million, of the City’s net assets represent resources that are subject to externalrestrictions on their use. The remaining balance of unrestricted net assets, 15% or $90 million, may be used tomeet the government’s ongoing obligations to citizens and creditors.
At December 31, 2007, the City is able to report positive balances in all three categories of net assets, both forthe government as a whole, as well as for the separate governmental and business-type activities.
Governmental Activities
Governmental activities increased the City’s net assets by $15 million as shown on the statement of activities,accounting for 83% of the total growth in the net assets of the City. This increase resulted in large part fromcontributed assets including the addition of infrastructure due to annexation and contributions of infrastructureassets from developers.
7 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
Business-type Activities
The net assets of the City’s business-type activities increased from approximately $266.6 million toS269.7 million. The City generally can only use these net assets to finance the continuing operation of itsenterprise operations. A key element of this increase was the annexation of Elkhorn. At the time of annexationthe City of Omaha assumed the assets of Elkhorn’s sewer treatment facility. The net book value of the assets atthe time of annexation was $5.7 million.
The following table shows the revenue and expense of the governmental and business-type activities:
City of Omaha’s Changes in Net Assets
(in millions)
Governmental Business-type Total primaryactivities activities government
2007 2006 2007 2006 2007 2006Revenues:
Program revenues:Charges for services $ 61.9 58.6 56.9 51.7 118.8 110.3Operating grants and contributions 76.4 52.9 76.4 52.9Capitalgrantsandcontributions 29.6 17.1 4.5 9.0 34.1 26.1
General revenues:Salesandusetax 116.1 113.6 116.1 113.6Propertytax 114.9 99.4 114.9 99.4Other taxes 45.3 42.9
— 45.3 42.9Unrestricted investment earnings 6.7 5.4 2.8 0.5 9.5 5.9Other (0.1) —
— (0.1) —
Totalrevenues 450.8 389.9 64.2 61.2 515.0 451.1Expenses:
General government 56.3 40.2— 56.3 40.2
Public safety 219.9 193.3 — — 219.9 193.3Transportation services 53.2 47.0
— 53.2 47.0Other public services 15.7 14.8 — — 15.7 14.8Community development 19.5 19.8 — — 19.5 19.8Culture and parks 44.9 37.8 — — 44,9 37.8Interest on long-term debt 34.7 32.4 — -— 34.7 32.4Convention Center Hotel — 11.3 11.6 11.3 11.6Sewage treatment
— — 45.5 39.6 45.5 39.6Other
— — 11.4 11.7 11.4 11.7Total expenses 444.2 385.3 68.2 62.9 512.4 448.2
Increase (decrease) in net assetsbefore transfers 6.6 4.6 (4.0) (1.7) 2.6 2.9
Transfers 8.4 0.1 7.1 (0.1) 15.5 —
Increase (decrease) innetassets 15.0 4.7 3.1 (1.8) 18.1 2.9
Netassetsatbeginningofyear 312.4 307.7 266.6 268.4 579.0 576.1Netassetsatendofyear $ 327.4 312.4 269.7 266.6 597.1 579.0
8 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
Governmental Activities
The City’s total revenues from governmental activities were $450.8 million for the fiscal year endedDecember 31, 2007. The largest source of revenue ($116. I million for fiscal year 2007) for the City is sales anduse tax. Net sales and use tax increased by $2.5 million (2.2%) during 2007.
In 2007, property tax revenue increased by $15.5 million when compared to 2006. The City has maintained thesame real estate tax rate (43.3 87 cents per $100 of assessed value) since 2002. Property tax valuations for 2007increased 13.6% when compared to 2006 valuations.
The City’s expenses for governmental activities cover a wide range of services, with 50%, or $219.9 million, forfiscal year 2007 related to public safety and 12%, or $53.2 million, for fiscal year 2007 for transportationservices. Overall, the expenses for governmental activities increased by 15% or $58.9 million in 2007, which canbe largely attributed to a $6.6 million increase in the workers’ compensation and healthcare claims liability,$17.4 million increase in the net pension obligation and a $15.0 million increase in the post retirement benefitobligation.
Business-type Activities
Net assets of the City’s business-type activities increased by $3.1 million. Presented below is the change of netassets by the major enterprise funds and the other nonmajor enterprise funds.
Fund AmountConvention Center Hotel $ (2,889,024)Parking Facilities (730,682)Sewer Revenue 6,606,486Other nonmajor enterprise funds 77,400
The Convention Center Hotel Fund began operations in April 2004. The City believes that future operations ofthe Hotel will eliminate this deficit. Annual appropriations from the City will subsidize any debt service shortfall.The Parking Facilities Fund was established as a tool to manage the City’s eight parking structures and varioussurface lots throughout the City. Lease purchase debt has been issued to finance the construction of the parkingstructures. Annual appropriations from the City’s General Fund to subsidize the payment of this debt willeliminate this deficit.
As noted earlier, the Sewer Revenue Fund assumed $5.7 million of net assets upon the annexation of Elkhorn.
The City’s enterprise operations are reviewed on an ongoing basis. Revenues and expenses are adjusted asnecessary to maintain an adequate amount of working capital. Annual appropriations may also be used tosubsidize these funds. The City has decided to account for these activities by the use of enterprise accounting tobetter identify the cost of the services and for better management control.
9 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
Financial Analysis of the Government’s Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legalrequirements.
Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, andbalances of spendable resources. Such information is useful in assessing the City’s financing requirements. Inparticular, unreserved fund balances may serve as a useful measure of a government’s net resources available forspending at the end of the fiscal year, except where prohibited by the Charter. For the fiscal year endedDecember 31, 2007, the governmental funds reported combined ending fund balances of $109.3 million, anincrease of $9.4 million in comparison with the prior year (includes $3.5 million for annexation of Elkhorn). TheDebt Service Fund and all other nonmajor funds increased their fund balances by $13.4 million during the year(includes $2.7 million for annexation of Elkhorn). This increase was offset by a $3.9 million decrease in theGeneral Fund (includes $0.8 million for annexation of Elkhorn).
Approximately 48%, or $52.3 million of the combined fund balance, constitutes unreserved fund balance, whichgenerally is available for spending at the City’s discretion. The remainder of the fund balance is reserved toindicate that it is not available for new spending, because it has already been committed to:• Liquidate contracts and purchase orders of the prior period ($30.0 million)• Pay debt service ($23.6 million)
• Provide income for the purpose of maintaining the City’s coin collection and a variety of other restrictedpurposes ($2.8 million).
The General Fund’s unreserved fund balance at December 31, 2007, not designated for a specific purpose, is$27.1 million. The General Fund is the City’s chief operating fund. As a measure of the General Fund’s liquidity,it may be useful to compare both the unreserved fund balance and the total fund balance to total fundexpenditures. The unreserved fund balance represents 10% of the total fund balance to total fund expenditures,while the total fund balance represents 11% of that same amount, The total fund balance of the General Funddecreased by $3.9 million for fiscal year 2007. For budgeting purposes only, the 2006 and 2007 budget surplusesof $2.6 million and $3.9 million, respectively, are available for appropriation for governmental use.The other major governmental fund is the Debt Service Fund. The Debt Service Fund has a total fund balance of$16.5 million, all of which will be used to for either payment of debt service on the City’s general obligation debtor to pay debt issuance costs.
Proprietary Funds
The City’s proprietary funds provide the same type of information found in the governmentwide financialstatements, but in more detail.
Net assets of the Convention Center Hotel Fund, Parking Facilities Fund, Sewer Revenue Fund, and otherenterprise funds amounted to $(23.8) million, $(5.l) million, $293.6 million, and $5.0 million, respectively, at
10 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
December 31, 2007. Additional discussion concerning the finances of these funds has already been addressed inthe discussion of the City’s business-type activities.
General Fund Budgetary Highlights
December 31, 2007(in millions)
Original Finalbudget budget Actual
Revenues:Taxes $ 212.9 212.9 213.4Intergovernmental 8.7 8.7 9.2Other 36.1 36.1 37.5
Total 257.7 257.7 260.1Expenditures, lapsed encumbrances,
and transfers 260.3 260.3 258.8Total 260.3 260.3 258.8Changes in fund balance $ (2.6) (2.6) 1.3
There are three types of budget transfers, each requiring a successive level of authority. First, the Mayor may, atany time, transfer an unencumbered appropriation balance or portion thereof between appropriations of the samedivision. Second, transfers between divisions in the same department may be authorized by resolution of the CityCouncil. Third, transfers between departments/agencies may be authorized by ordinance of the City Council. In2007 one transfer occurred. It appropriated funds from the contingency account to the operating departments tofund services associated with the annexation of Elkhom.
Significant variances between actual General Fund revenues and expenditures and the final amended budget aresummarized as follows:
• Sales tax revenue was $1.3 million below budget.
• Interest income was $3.4 million above budget.
• Charges for services was $2.0 million above budget.• The Mayor’s Office, City Clerk, Law, Human Rights and Relations, Finance, Planning, Parks andRecreation, Convention & Tourism, and Library Departments collectively were $1.0 million below budget.• City Council, Human Resources, Police, Fire and Public Works Departments were $5.0 million abovebudget due largely to sick and annual leave payments to retiring employees.• Outside Agency, Contingency, and Other Accounts were $2.7 million below budget.• Retiree benefits were $1.0 million below budget.
11 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
Capital Asset and Debt Administration
Capital Assets
The City’s investment in capital assets for its governmental and business-type activities as of December 31, 2007is $1.4 billion (net of accumulated depreciation). This investment in capital assets includes land, buildings,improvements, machinery and equipment, streets, bridges, storm sewers, sanitary sewers, event facilities, andwastewater treatment plants. The total change in the City’s investment in capital assets for the current year was anet increase of 8.3% (an increase of 10.8% for governmental activities and an increase of 3.9% for business-typeactivities).
City of Omaha’s Capital Assets(Net of accumulated depreciation)
(in millions)
Governmental Business-typeactivities activities Total2007 2006 2007 2006 2007 2006
Land $ 125.0 123.2 5.0 4.7 130.0 127.9Cultural assets 5.8 5.8 0.5 0.5 6.3 6.3Construction in progress 68.5 52.1 32.2 37.4 100.7 89.5Buildings 341.0 329.0 393.8 367.7 734.8 696.7Machinery and equipment 18.3 17.3 6.2 8.0 24.5 25.3Infrastructure 334.4 273.6 — — 334.4 273.6Lease purchases 38.9 40.3 39.1 40.4 78.0 80.7Total $ 931.9 841.3 476.8 458.7 1,408.7 1,300.0
Major capital asset events during 2007 included the following:
• Construction continued on the 144th Street — Stony Brook Boulevard to F Street Project; current yearexpenditures were $4.1 million.
• Construction continued on the Gibson Road Overpass Project; current year expenditures were $6.2 million.• Construction continued on the City’s sewer system including the Combined Sewer Overflow Program with
capital outlays of $27.6 million.
• Construction continued on the West Dodge Street Project; current year expenditures were $2.1 million.• Construction continued on the Americans with Disabilities Street Ramp Project; current year expenditures
were $1.4 million.
• The Police Department purchased a replacement helicopter for $2.7 million.• Construction continued on the South Omaha Library; current year expenditures were $2.3 million.• Construction continues on the City’s Public Safety Training Center; current year expenditures were
$5.6 million.
12 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
• Construction continues on the City’s Missouri River Pedestrian Bridge Project; current year expenditureswere $10.9 million.
• The City provided $1.5 million of finding for the seating expansion project on the Qwest ConventionCenter and Arena.
• Construction in progress city wide totaled $100.7 million.
• Annual city wide depreciation expense for governmental activities in 2007 amounted to $28.0 million.
Additional information on the City’s capital assets can be found in note 10 to the financial statements onpages 63 through 67 of this report.
Long-term Debt
At December 31, 2007, the City had total bonded debt outstanding of $948.1 million (including notes payable).Of this amount, $536.8 million is general obligation debt backed by the flail faith and credit of the City;$166.6 million of revenue bonds secured solely by specified revenue sources; $78.6 million of special obligationbonds backed by a variety of revenue sources, including sales tax and property tax; $40.4 million of special taxrevenue bonds backed by a redevelopment property tax levy; $85.3 million of lease purchase bonds backed byannual General Fund appropriations; and $40.4 million of notes payable backed by a variety of revenue sources.
City of Omaha’s Outstanding Debt
(in millions)
Governmental Business-typeactivities activities Total
2007 2006 2007 2006 2007 2006General obligation bonds $ 536.8 476.3
— 536.8 476.3Revenue bonds 2.4— 164.2 163.6 166.6 163.6Special obligation bonds 58.7 59.3 19.9 20.4 78.6 79,7Special tax revenue bonds 40.4 38.2
—— 40.4 38.2Lease purchase bonds 37.4 34.7 47.9 49.8 85.3 84.5Notes payable 3.3 4.3 37.1 33.0 40.4 37.3
Total $ 679.0 612.8 269.1 266.8 948.1 879.6
During 2007, the City’s total debt increased by $68.5 million (7.8%). In 2007, the City annexed 12 SanitaryImprovement Districts (SID), and Elkhorn. At the time of annexation, the City assumed all assets and debts ofthe annexed areas. Upon annexation the City assumed $57.2 million of SID debt and $13.1 million of Elkhorn’sdebt for a total of $70.3 million. The annexation of these areas accounts for the increase.
The City maintains a AAA rating from Standard & Poor’s Corporation and a Aaa rating from Moody’s InvestorsService on general obligation bonds. In 2005, Moody’s Investors Service upgraded its rating of the City’s LeasePurchase Bonds from Aal to Aaa.
13 (Continued)
CITY OF OMAHA, NEBRASKA
Management’s Discussion and Analysis
Year ended December 31, 2007
(Unaudited)
Under the City’s Home Rule Charter, the total amount of general obligation indebtedness outstanding at any timeshall not exceed 3.5% of the actual value of taxable real and personal property in the City. The debt margin as ofDecember 31, 2007 is $365.2 million.
Additional information on the City’s long-term debt can be found in notes 6 and 7 to the financial statements onpages 39 through 53 of this report.
Economic Factors and Next Year’s Budgets and Rates
• The increase in the City’s property tax base provided by real growth that includes annexations is estimatedat 3.7% for 2009. Total growth, including revaluations of current property, is estimated at 4.8%.• Sales tax collections have increased by 4.8% and 1.5% over each of the past two years, respectively, withcurrent collections through August 2008 showing an increase over the same period in 2007 of 1.9%.However, LB775 refunds have exceeded projections and have reduced net sales tax collections to a 1.8%decrease compared to the same period in 2007.• Overall General Fund revenue growth for 2008 is projected at 2.25% due primarily to revenue generatedby newly annexed areas.
All of these factors were considered in preparing the City’s budget for the 2009 fiscal year.
During 2007, the unreserved fund balance in the General Fund was $27.1 million, The City appropriated$2.7 million of this amount for spending in the 2008 fiscal year budget and $3.9 million will be appropriated forspending in the 2009 fiscal year budget. This amount represents the 2006 and 2007 Budget Balance CarriedForward. The City Charter requires that the General Fund Budget Balance, as of the close of any particular fiscalyear, shall be applied as General Fund revenue in the budget for the fiscal year two years subsequent to that fiscalyear.
Requests for Information
This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a generaloverview of the City’s finances and to demonstrate the City’s accountability for the funds it receives. Questionsconcerning any of the information provided in this report or requests for additional financial information shouldbe addressed to the City of Omaha, Finance Department, Suite 1004, 1819 Famam Street, Omaha, Nebraska68183.
14
CITY OF OMAHA, NEBRASKA
Statement of Net Assets
December 31 2007
ComponentPrimary government unitGovernmental Business-typeAssets activities activities Total MECACash and pooled investments $ 57.484,201 29,224,096 86,708,297 6,830,437Investments
27,473,389 18,184,863 45,658,252 11,064,755Receivables (net of allowance for uncollectibles) 134,546,840 4,381,108 138,927,948 160,363Due from other govemments 42,040,611 25,577 42,066.188—
Accrued interest9 12.058
— 9 12.058Inventories690,172 707,980 1,398,152Deferred charges and other assets 7,991,155 3,193,193 11,184.348 1,779,874Restricted assets:
Investments— 3,309,677 3,309,677Deposits with trustee 5,004.590 17,512.488 22,517.078Capital assets:
Nondepreciable 199,271,933 37,713,644 236,985,577 112,071Depreciable 732,645,359 439,058,526 1,171,703,885 18,278,813Total assets $ 1,208,060,308 553,311,152 1,761,371,460 38,226,313Liabilities and Net Assets
Liabilities:Accounts payable and other $ 31.841,344 4,042,371 35,883,715 3,044,965Accrued interest payable 7,146,295 4,542,953 11,689,248
—Due to other governments 1,787,237
-— 1,787.237Unearned revenue 310,335-— 310,335 2,912,001Long-term liabilities:
Net pension obligation 56,981,670 2,422,588 59,404,258Post retirement benefit obligation 15,030,222 862,055 15,892,277—
Other liabilities— 5,338,045Compensated absences:
Due within one year 3,134,934 101,886 3,236,820Due in more than one year 59,563,658 1,935,821 61,499,479Grants payable:Due within one year 4,240,000
-— 4,240,000Due in more than one year 3,975,000— 3,975,000Claims and judgments:
Due within one year 1,464,500 1,464,500Workers’ compensation and healthcare claims:Due within one year 8,863,629 508,372 9,372,001Due in more than one year 10,035,298 575,572 10,610,870Bonds. notes. and leases payable:Due within one year 33,707,634 6,047,682 39,755,316 1,145,938Due in more than one year 642,512,194 262,609,050 905,121,244 7,816,983
Total liabilities 880,593,950 283,648,350 1,164,242,300 20,257,932Net assets:invested in capital assets, net of related debt 261,308,456 222,456,144 483,764,600 9,427,962Restricted for:
Debt service— 6,898,070 6,898,070Highway and streets 9,798,623
— 9,798,623Perpetual care:Expendable 4,058
— 4,058Nonexpendable 2,775,389— 2,775,389Community improvement and judgments 4,236,375— 4,236,375
—Unrestricted 49,343,457 40,308.588 89,652,045 8,540,419Total net assets 327,466,358 269,662,802 597,129,160 17,968,381Total liabilities and net assets $ 1,208,060,308 553,311,152 1,761,371,460 38,226,313
See accompanying notes to financial statements.
15
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,866
(3,4
02,0
13)
—(3
,402
,013
)C
omm
unity
deve
lopm
ent
19,4
60.3
818,
343,
329
19,0
21,0
8715
,493
,977
23,3
98,0
12—
23,3
98,0
12—
Cul
ture
and
park
s44
,894
,282
4,78
9,66
71,
389,
716
12,4
23,1
97(2
6,29
1,70
2)—
(26,
291,
702)
—
Inte
rest
onlo
ng-t
erm
debt
34,6
96,5
94
_______________
——
(34,
696.
594)
—(3
4.69
6,59
4)
_______________
Tot
algo
vem
men
tal
activ
ities
444,
140,
215
61.9
46,6
0576
,410
,773
29,5
98,1
64(2
76,1
84,6
73)
—(2
76,1
84,6
73)
—
Bus
ines
s-ty
peac
tiviti
es:
Con
vent
ion
Cen
ter
Hot
el11
,290
,566
7.73
2,47
2—
——
(3,5
58,0
94)
(3,5
58,0
94)
—
Park
ing
4,91
1,91
64,
151.
923
——
—--
(759
.993
)(7
59.9
93)
Sew
er45
,508
,217
38,4
74,5
34—
4,48
6,72
4—
(2,5
46,9
59)
(2,5
46,9
59)
—
Dod
gePa
rk41
3,37
573
7,16
6—
——
-32
3,79
132
3,79
1T
enni
s38
2,44
624
8,23
8—
—
—(1
34,2
08)
(134
,208
)-
Gol
f3,
759,
608
3,53
7,28
7—
—
—(2
22.3
21)
(222
,321
)
City
wid
eSp
orts
139,
163
117,
543
——
—(2
1.62
0)(2
1.62
0)R
iver
Fron
tPl
aza
and
Mar
ina
12,6
3485
,482
——
—72
,848
72,8
48A
irqu
alit
y61
5,74
153
2,19
2—
—
—(8
3,54
9)(8
3,54
9)—
Com
post
703,
263
756,
900
——
—53
,637
53,6
37—
Prin
ting
and
grap
hics
439,
487
528,
309
——
_______________
88,8
2288
.822
_______________
Tot
albu
sine
ss-t
ype
activ
ities
68,1
76,4
1656
,902
,046
______________
4.48
6,72
4—
(6,7
87,6
46)
(6,7
87.6
46)
______________
Tot
alpr
imar
ygo
vern
men
t$
512,
316,
631
118,
848,
651
76,4
10,7
7334
,084
,888
(276
,184
,673
)(6
,787
,646
)(2
82,9
72,3
19)
—
Com
pone
ntun
it:M
EC
A$
25,0
35,9
8424
,863
,872
1.50
0,00
0—
——
—1,
327,
888
Gen
eral
reve
nues
:Pr
oper
tyta
xes
114,
935,
220
—11
4,93
5.22
0—
Mot
orve
hicl
eta
xes
8,82
5,62
9-—
8,82
5,62
9—
—
Sale
san
dus
eta
xes
116,
051,
364
-—
116,
051,
364
Bus
ines
sta
xes
30,8
84,5
35—
30,8
84,5
35Pa
ymen
tsin
lieu
ofta
xes
5,54
3,00
8—
5,54
3,00
8—
Don
atio
nsno
t res
tric
ted
tosp
ecif
icpr
ogra
ms
—-
—
—2.
562.
289
Unr
estn
cted
inve
stm
ent
earn
ings
6,72
2,91
52,
810,
340
9,53
3,25
582
1,14
8L
oss
onsa
leof
capi
tal
asse
ts(1
43,2
54)
(13,
447)
(156
.701
)—
Tra
nsfe
rs(1
,385
,123
)1,
385,
123
_______________
_______________
Tot
alge
nera
lre
venu
esan
dtr
ansf
ers
281,
434.
294
4,18
2,01
628
5.61
6.31
03.
383.
437
Cha
nge
inne
tas
sets
5,24
9,62
1(2
.605
,630
)2,
643,
991
4,71
1,32
5N
etas
sets
—be
ginn
ing
ofye
ar,
asre
stat
ed32
2,21
6,73
727
2,26
8.43
259
4.48
5,16
913
,257
,056
Net
asse
ts—
end
ofye
arS
327,
466.
358
269,
662.
802
597,
129,
160
17.9
68.3
8tSe
eac
com
pany
ing
note
sto
fina
ncia
lst
atem
ents
.
16
Liabilities and Fund Balances
CITY OF OMAHA, NEBRASKA
Balance Sheet
Governmental Funds
December31, 2007
Liabilities:Accounts payable and otherDue to other governmentsUnearned revenueDeferred revenue
Total liabilities
Fund balances:Reserved for:
EncumbrancesInventoriesDebt servicePerpetual care
Unreserved, reported in:General fundSpecial revenue fundsCapital projects fundsPermanent funds
Total fund balances
$ 20,956,5791,787,237
1,17059,898,047
82,643,033
1,206,616690,172
31,841,3441,787,237
310,335127,251,862
161,190,778
30,013,491690,172
23,598,2652,775,389
27,071,86627,285,911(2,097,906)
4,058
109,341,246
270,532,024
See accompanying notes to financial statements.
Assets
Cash and cash equivalentsInvestmentsReceivables, net of allowance for uncollectiblesDue from other governmentsAccrued interestInventonesOther assetsRestricted assets:
Deposits with trustee
Total assets
Debt Other TotalService governmental governmentalGeneral Fund funds funds
$ — 15,142,745 42,341,456 57,484,20115,305,099 1,237,443 10,930,847 27,473,38974,795,146 48,141,326 1 1,610,368 134,546,84019,964,265 211,968 21,864,378 42,040,611841,378— 70,680 912,058690,172—
— 690,17215,627— 2,364,536 2,380,163
—.-
— 5,004,590 5,004,590$ 111,611,687 64,733,482 94,186,855 270,532,024
118,346
84648,122,750
48,241,942
10,766,419
308,31919,231,065
30,305,803
Total liabilities and fund balances
803 28,806,072
16,490,737 7,107,528— 2,775,389
27,071,866—
—
— 27.285,911—
— (2,097,906)—
— 4,05828,968,654 16,491,540 63,881,052
$ 111,611,687 64,733,482 94,186,855Amounts reported for governmental activities in the statement
of net assets are different because:Capital assets used in governmental activities are
not financial resources and, therefore, are notreported in the funds
Revenues earned during the current period are notavailable as resources and, therefore, are recognizedas deferred revenue in the funds
Bond costs of issuance are capitalized at the government.wide level and amortized over the life of the relatedbonds
Long-term liabilities, including bonds and interest payableare not due and payable in the current period and,therefore, are not reported in the funds
Net assets of governmental activities
$ 931,917,292
127,251,862
5,610,992
(846,655,034)
$ 327,466,358
17
CITY OF OMAHA, NEBRASKA
Statement of Revenues, Expenditures, and Changes in Fund Balances —
Governmental Funds
See accompanying notes to financial statements.
Year ended December 31, 2007
RevenuesTaxes:
General
DebtServiceFund
Totalgovernmental
funds
Othergovernmental
funds
Property $ 55,126,392 39,700,167 7,854,919 102,681,478Motor vehicle 8,825,629—
— 8,825,629Citysalesanduse 116,051,364—
— 116,051,364Business 30,884,535—
— 30,884,535In lieu 5,448,575 88,094 6,339 5,543,008Licenses and permits 8,044,824—
— 8,044,824Intergovernmental 3,797,693 799,636 44,252,847 48,850,176Investment income 5,705,353 1 1 1,542 906,020 6,722,915Revenue from Keno—
— 7,693,010 7,693,010Charges for services 18,568,340 2,309,134 24,305,946 45,183,420Special assessments— 543,655 543,655Rents and royalties 3,776,219
— 1,576,826 5,353,045Contributionsandgrants— 11,481,390 37,503,655 48,985,045
Total revenues 256,228,924 54,489,963 124,643,217 435,362,104Expenditures:
Current:General government 31,711,337 2,104,191 6,874,145 40,689,673Public safety 177,031,531 6,716,344 183,747,875Transportation services 1,424,464
— 41,997,304 43,421,768Other public services 13,545,408— 1,205,538 14,750,946Community development 5,697,539— 13,047,454 18,744,993Culture and parks 24,785,908— 6,765,315 31,551,223Debt service:
Principal 2,237,400 37,631,606 2,963,706 42,832,712Interest 3,905,567 24,375,041 5,251,872 33,532,480Bond issuance costs— 169,873 133,336 303,209Capital outlay 378,645
— 58,356,152 58,734,797Total expenditures 260,717,799 64,280,711 143,311,166 468,309,676Excess (deficiency) of revenues
over expenditures (4,488,875) (9,790,748) (18,667,949) (32,947,572)Other financing sources (uses):
Transfers in 474,118 960,407 1,434,525Transfers out (710,407)— (2,109,241) (2,819,648)Proceeds from sale of bonds
— 26,985,000 30,580,000 57,565,000Proceeds from bond premium— 412,421 259,277 671,698Payment to refunded bond escrow agent — (15,350,194) (2,550,000) (17,900,194)
Total other financing sources (uses) (236,289) 12,047,227 27,140,443 38,951,381Net change in fund balances (4,725,164) 2,256,479 8,472,494 6,003,809
55,408,558 103,337,437
63,881,052 109,341,246
Fund balances — beginning of year, as restated 33,693,818 14,235,061Fund balances — end of year S 28,968,654 16,491,540
18
CITY OF OMAHA, NEBRASKA
Reconciliation of the Statement of Revenues, Expenditures,and Changes in Fund Balances to the Government-wide
Statement of Activities — Governmental Activities
Year ended December 31, 2007
Amounts reported for governmental activities in the statement of activitiesare different because:
Net change in fund balances — total governmental fundsGovernmental funds report capital outlays as expenditures. However, in the
statement of activities, the cost of those assets is allocated over their estimateduseful lives and reported as depreciation expense. This is the amount by whichcapital outlays exceeded depreciation expense in the current period.
Revenues in the statement of activities that do not provide current financialresources are not reported as revenues in the funds.
The issuance of long-term debt (e.g.; bonds, leases) provides currentfinancial resources to governmental funds, while the repayment of the principalof long-term debt consumes the current financial resources of governmentalfunds. Neither transaction, however, has any effect on net assets. Also,governmental funds report the effect of issuance costs, premiums, discounts,and similar items when debt is first issued, whereas these amounts are deferredand amortized in the statement of activities. This amount is the net effect ofthese differences in the treatment of long-term debt and related items.
Some expenses reported in the statement of activities do not require the use ofcurrent financial resources and, therefore, are not reported as expenditures inthe governmental funds.
Change in net assets of governmental activities
See accompanying notes to financial statements.
$ 6,003,809
73,029,736
19,743,671
(91,774,572)
(1,753,023)
$ 5,249,621
19
CITY OF OMAHA, NEBRASKA
Liabilities and Net Assets
See accompanying notes to financial statements.
Statement of Fund Net Assets —
Proprietary Funds
December31, 2007
$
Sewerrevenue
fund
28,562,64318,184,863
ConventionCenter Hotel
786,555
786,555
17,008,0071,325,275
18,333,282
ParkingFacilities
402,173176,425
578,598
504,481109.571
614,052
Assets
Current assets:Cash and cash equivalentsInvestmentsAccounts receivable (net of allowance
for uncollectibles)Prepaid assetsDue from other fundsDue from other governmentsInventories
Total current assets
Noncurrent assets:Restricted assets:
InvestmentsDeposits with trustee
Deferred charges
Total noncurrent assets
Capital assets:LandBuildings and systemsFurniture and fixturesMachinery and equipmentCultural assetsConstruction in progress
Less accumulated depreciation
Capital assets, net
Total noncurrent assets
Total assets
2,473,34471,222,245 61,006,3006,792,766
—
3,557,743—
498,366
82,071,120 63,479,644
3,923,3043,197
150.894
702,969
51,527.870
3,309,677
792,170
4,101,847
2,525,422562,405,901
15,955,554
32,216,512
613,103,389
253,774,818
359,328,571
363,430,418
414,958,288
3,647,2423,832,682
366,032696,461
73,583
8,616,000
Otherenterprise
funds
661,453
55,631
25,5775,011
747,672
9,571,123
3,202,503
12,773,626
6,397,221
6,376,405
6,376.405
7,124,077
198,095155,000142,340
1,744
26,606
523,785
678,305241,368161,156505,510
1,586,339
2,110,124
6,242,221
(1,228,268)
5,013,953
7,124,077
Totalproprietary
funds
29,224,09618,184,863
4,381,108966,177150,89425,577
707,980
53,640,695
3,309,67717,512,4882,227,016
23,049,181
4,998.766704,205,569
6,792,76622,715,800
498,36632,216,512
771,427,779
294.655,609
476,772,170
499,821,351
553,462,046
4.042,3716,047,682
508,3724,542,953
150,894101,886
15,394,158
262,609,0502,422,588
862,055575,572
1,935,821
268,405,086
283,799,244
222,456,1446,898,070
40,308,588
269,662,802
553,462,046
21,128,002
42,351,642
42,965,694
43,544,292
193,2952,060,000
671,728116,062
1,697
3,042,782
Current liabilities:Accounts payable and othetCurrent installments of long-term debtWorkers’ compensation and healthcare c1aimAccrued interest payableDue to other fundsCompensated absences
Total current liabilities
Noncurrent liabilities:Long-term debt, excluding current installmenttPension obligationPost retirement benefit obligationWorkers’ compensation and healthcare clainuCompensated absences
Total noncurrent liabilities
Total liabilities
Net assets:Invested in capital assets, net of related debtRestricted for debt serviceUnrestricted
Total net assets
Total liabilities and net assets
13,355,568
68,715,552
87,048,834
S 87,835,389
$ 3,739
3,173,02034,832
3,211,591
108,470,001
108,470,001
111,681,592
(26,840,781)3,588,393(593,815)
(23,846,203)
$ 87,835,389
45,587,961 108,551,088— 1,744,283— 620,687— 414,416
32,238 1,398,073
45,620,199 112.728,547
48,662,981 121,344,547
(4,682,267)
436,422)
(5,118,689)
43,544,292
247,736,9713,309,677
42,567,093
293,613,741
414,958,288
20
Sec accompanying notes to financial statements.
CITY OF OMAHA, NEBRASKA
Statement of Revenues, Expenses, and Changes in Fund Net Assets —
Proprietary Funds
Year ended December31, 2007
Operating revenues;Charges for services
Total operating revenues
Operating expenses:Personal servicesOutside servicesOperation and maintenanceCost of sales and servicesAdministrationDepreciation and amortization
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):Investment earningsMiscellaneous rents and royalticLoss on disposal of assetsInterest expense
Total nonopcrating revenues(expenses), net
Income (loss) beforecontributions and transfers
Capital contributionsTransfers inTransfers out
Change in net assets
Net assets at beginning of year, as restated
Net assets at end of year
Convention Sewer Other TotalCenter Parking Revenue enterprise proprietaryHotel Facilities Fund funds funds
$ 7,732,472 4,151,923 38,474,534 6,543,117 56,902,0467,732,472 4.151.923 38,474,534 6,543,117 56,902,046
— 172,949 9,697,991 3,562,467 13,433,407239,862 — 802,298 313,643 1,355,803
1,595,532 1,941,648 12,705,482 1,054,402 17,297,064— 2,942,863 597,279 3,540,142—
—
— 479,171 479,1713,844,384 2,797,319 14,277,185 449,549 21,368,4375,679,778 4,911,916 40,425,819 6,456,511 57,474,0242,052,694 (759,993) (1,951,285) 86,606 (571,978)
682,517 29,311 2,098,512 2,810,340—
— 12,188— 12,188
(13,447)—
—— (13,447)
(5,610,788)— (5,082,398) (9,206) (10,702,392)
(4,941,718) 29,311 (2,971,698) (9,206) (7,893,311)
(2,889,024) (8,465,289)—
— 4,474,536—
— 1,635,123—
—
— (250,000)(2,889,024) (730,682) 936,676 77,400 (2,605,630)
(20,957,179) (4,388,007) 292,677,065 4,936,553 272,268,432S (23,846,203) (5,118,689) 293,613,741 5,013,953 269,662,802
(730,682) (4,922,983) 77,400
— 4,474,536— 1,635,123
(250,000)
21
CiTY OF OMAHA, NEBRASKA
See accompanying notes to financial statements.
Statement of Cash FlowsProprietary Funds
Year ended December31, 2007
ConventionCenterHotel
$ 7,732,472(1,831,655)
5,900,817
Cash flows from operating activities:Receipts from customersPayments to suppliersPayments to employees
Net cash provided by operating activitiesCash flows from noncapital financing activities:
Transfers in/outRepayment of prior year advancesAdvances from other funds
Net cash provided by (used in) noncapitalfinancing activtties
Facilities
3,863,306(1,961,218)
(171.344)
1,730,744
Sewer Other TotalRevenue enterprise proprietary
Fund funds funds
37,733,561 6,886,363 56,215,702(16,728,995) (2,417,746) (22,939,614)(8,511,971) (3,300,679) (11,983,994)12,492,595 1,167,938 21,292,094
— 1,385,123— 1,385,123
34,832 (304,882) (150,894) (70,775) (491,719)
34,832 (304,882) 1,234,229 (70,775) 893,404Cash flows from capital and related financing activities:
Capital expenditures (438,562) (305,672) (26,588,593) (603,673) (27,936,500)Capital contributions—
—
—Deferred charges 611,067 37,354 (556)— 647,865Miscellaneous rents and royalties
—— 12,188
— 12.188Proceeds from sale of fixed assets—
-_Payments on long-term debt (1 10,155,000) (1,950,000) (2,436,679) (150,000) (1 14,691,679)Issuanceoflong-termdebt 109,750,000—
—— 109,750,000Premium received on issuance of long-term debt 3,197,250
——
— 3,197,250Issuance of noses payable—
— 5,767,716— 5,767,716Interest paid (5,299,307) (18,844) (5,078,921) (12,037) (10,409,109)
Net cash used in capital and relatedfinancing activities
Cash flows from investing activities:Sale (purchase) of investment securities (4,339,081) 781,989 29,796,168 330,000 26,569,076Interest received 682,517 29,311 2,098,512
— 2,810,340
(2,334,552) (2,237,162) (28,324,845) (765,710) (33,662,269)
(55,467)
(3,656,564) 811,300 31,894,680 330,000 29,379,416
— 17,296,65955,467
_____________
11,265,984— 11,321,451
$ — — 28,562,643 661,453 29,224,096
661,453 17,902,645
Net cash provided by (used in) investingactivities
Net increase (decrease) in cash andcash equivalents
Cash and cash equivalents, beginning of yearCash and cash equivalents, end of year
Supplemental disclosure of noncash investing andfinancing activities:
Annexation of Elkhorn:Capital asset additionsLiabilities assumedOther assets
Reconciliation of operating loss to net cash provided by(used in) operating activities:
Operating income (loss)Adjustments to reconcile operating income (loss) to net
cash provided by operating activities:Depreciation and amortizationCash flows impacted by changes in:
Amounts due from customers and othersInventoriesDue from other governmentsAccounts payable and otherClaims payablePension obligationPostretirement benefit obligationAccrued expenses
Net cash provided by operating activities
$— — 4,482,575
— 4,482,575—
— (1,455,000) — (1,455,000)—
— 88,272 — 88,272$
— — 3,115,847— 3,115,847
S 2,052,694 (759,993) (1,951,285) 86,606 (571,978)
3,844,384 2,797,319 14,277,185 449,549 21,368,437
— (288.617) (740,973) 343,246 (686,344)—
— 30,765 (1,244) 29,521
3,739 (19,570) (309,117) 27,993 (296,955)—
— 158,400 14,575 172,975—
— 272,321 (5,371) 266,950—
— 620,687 241,368 862,055— 1,605 134,612 11,216 147,433
$ 5,900,817 1,730,744 12,492,595 1,167,938 21,292,094
22
CITY OF OMAHA, NEBRASKA
Statement of Fiduciary Net Assets —
Fiduciary Funds
December 31, 2007
Assets:
Pension TrustFunds Agency Total
See accompanying notes to financial statements.
Cash and cash equivalents $ 1,645,049 9,380,810Receivables:Accrued interest 2,008,239 3,864Other 1,859,729 166,017Investments, at fair value 819,952,097 1,158,180
Total assets 825,465,114 10,708,871Liabilities:
Warrants payableAccounts payableDeposits payable
Total liabilities
Net assets held in trust forpension benefits
11,025,859
2,012,1032,025,746
821,110,277
836,173,985
52,6572,390,7789,712,331
12,155,766
824,018,219
52,657—
1,394,238 996,540— 9,712,331
1,446,895 10,708,871
$ 824,018,219
23
CITY OF OMAHA, NEBRASKA
Statement of Changes in Fiduciary Net Assets —
Pension Trust Funds
Year ended December 31, 2007
Additions:Contributions:
EmployerEmployee
Total contributions
Investment earnings:Dividends and interestNet increase in the fair value of investments
Total investment earnings
Less investment expenses
Net investment earnings
Total additions
Deductions:Benefits
Change in net assets
Net assets, beginning of year
Net assets, end of year
See accompanying notes to financial statements.
$ 25,674,25020,586,369
46,260,619
18,622,03327,770,216
46,392,249
(5,347,053)
41,045,196
87,305,815
62,936,988
24,368,827
799,649,392
$ 824,018,219
24
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
(1) Summary of Significant Accounting Policies
(a) Reporting Entity
The City of Omaha, Nebraska (the City) was incorporated on February 2, 1857. The City operatesunder a Home Rule Charter and has a mayor council form of government with an elected full timechief executive, the Mayor, and an elected legislative body, the council, composed of sevenmembers. The seven council members each represent one of the City’s seven districts. The Mayorand members of the council are elected through popular vote to four-year terms. The City is apolitical subdivision of the State of Nebraska and is exempt from state and federal income taxes.
The governmental reporting entity consists of the City (the primary government) and its componentunits. Component units are legally separate organizations for which the City is financiallyaccountable or other organizations whose nature and significant relationship with the City are suchthat exclusion would cause the City’s financial statements to be misleading or incomplete. Financialaccountability is defined as the appointment of a voting majority of the component unit’s board and(i) either the City’s ability to impose its will on the organization or (ii) there is potential for theorganization to provide financial benefit to or impose a financial burden on the City.
The basic financial statements include both blended component units and the City’s discretelypresented component unit. The blended component units, although legally separate entities, are, insubstance, part of the City’s operations, and data from these units are basic with data of the primarygovernment. The City’s basic financial statements blend the activity of the City of Omaha ParkingFacilities Corporation, the City of Omaha Impound Facilities Corporation, the City of OmahaStadium Facilities Corporation, City of Omaha Northwest Library Facilities Corporation, the City ofOmaha Facilities Corporation, City of Omaha Convention Hotel Corporation, and Omaha DouglasPublic Building Commission (the Commission). The City is financially accountable for theseorganizations.
The discretely presented component unit, on the other hand, is reported in a separate column in thegovernmentwide financial statements to emphasize that it is legally separate from the primarygovernment. The City’s basic financial statements discretely present the financial position andactivities of the Metropolitan Entertainment and Convention Authority (MECA).
MECA
MECA is a separate nonprofit corporation that was responsible for the design, and construction, andnow the operation of the Omaha Convention Center/Arena. MECA began operations on August 25,2000. Title to the facility and all related infrastructure assets are vested with the City. Constructionactivities were principally funded by private donations and general obligation bonds of the City.Board members of MECA are appointed by the City. The financial statements for MECA includedherein are for the year ended June 30, 2007. MECA’s separate financial statements are available at1819 Famam Street, Omaha, Nebraska 68183.
Related Organizations
The City’s officials are responsible for appointing members of the boards of other organizations, butthe City’s accountability for these organizations does not extend beyond making the appointments.
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Notes to Basic Financial Statements
December 31, 2007
The Mayor or City Council appoints board members of the Omaha Housing Authority, the OmahaAirport Authority, and the Metro Area Transit Authority. The City is not financially accountable forthese organizations.
The Douglas Omaha Technology Commission (DOT.Comm) is a governmental entity formed by aninterlocal agreement between the City and Douglas County (the County). The purpose of this entityis to increase the cooperative efforts of the County and the City in connection with electronicinformation, voice, and data communication services for governmental operations, and publicservices. The City appoints two members to the DOT.Comm board, which has a total of sevenmembers. The Mayor (or designee) and the City Council President (or designee) are the Cityrepresentatives appointed to the Board. DOT.Comm has control over its operations and fiscal mattersand holds title to its assets. DOT.Comm’s revenues are primarily derived from maintenance feesfrom the City and County. Complete audited financials can be obtained from its office at 408 South18th Street, Omaha, Nebraska 68102.
(b) Basis ofPresentation
Governmentwide Financial Statements
The statement of net assets and statement of activities display information about the primarygovernment and its component unit. These statements include the financial activities of the overallgovernment, except for fiduciary activities. Eliminations have been made to minimize interfundactivities. These statements distinguish between the governmental and business-type activities of theCity and between the City and its discretely presented component unit. Governmental activities,which normally are supported by taxes and intergovernmental revenues, are reported separately frombusiness-type activities, which rely to a significant extent on fees charged to external parties.
The statement of activities presents a comparison between direct expenses and program revenues forthe business-type activities of the City and for each function of the City’s governmental activities.Direct expenses are those that are specifically associated with a program or function and, therefore,are clearly identifiable to a particular function. Program revenues include (1) charges paid by therecipients of goods or services offered by the programs and (2) grants and contributions that arerestricted to meeting the operation or capital requirements of a particular program. Revenues that arenot classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements
The fund financial statements provide information about the City’s funds, including fiduciary funds.Separate statements for each fund category — governmental, proprietary, and fiduciary — arepresented. The emphasis of fund financial statements is on major governmental and enterprise funds,each displayed in a separate column. All remaining governmental funds are separately aggregatedand reported as nonmajor funds.
Proprietary fund operating revenues, such as charges for services, result from exchange transactionsassociated with the principal activity of the fund. Exchange transactions are those in which eachparty receives and gives up essentially equal values. Nonoperating revenues, such as investmentearnings, result from nonexchange transactions, or ancillary activities.
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Notes to Basic Financial Statements
December 31, 2007
The City reports the following major governmental funds:
• The General Fund is used to account for all revenues and expenditures necessary to carry outbasic governmental activities of the City that are not accounted for through other funds.
• The Debt Service Fund is used to account for the resources for, and the payment of, generallong term debt principal, interest, and related costs.
The City reports the following major proprietary funds:
• The Convention Center Hotel Fund is used to account for costs associated with theconstruction and operation of the Convention Center Hotel.
• The Parking Facilities Fund accounts for activity from parking revenue and relatedexpenditures for operation, maintenance, and construction of parking garages.
• The Sewer Revenue Fund accounts for activity from sewer service charges, constructiongrants, and related expenditures for operation, maintenance, and capital improvements of thesanitary sewerage system and wastewater treatment plants.
The City reports the following additional fund types:
• The Pension Trust Funds accumulate contributions from the City and its employees andearnings from the funds’ investments. Disbursements are made from the funds for retirement.
• The Agency Funds account for assets held by the City as an agent for various localgovernments.
• The Permanent Funds are used to report resources that are legally restricted to the extent thatearnings, and not principal, may be used for purposes that support the City’s programs for thebenefit of the City or its citizenry.
• The Special Revenue Funds account for the proceeds from specific revenue sources that arerestricted to expenditures for specified purposes.
• The Capital Projects Funds account for all resources received and used for the acquisition ordevelopment of major capital improvements (other than those financed by proprietary fundsand trust funds).
• The Enterprise Funds account for operations that are financed and operated in a mannersimilar to private business enterprises: (a) where the intent of the governing body is that thecosts of providing goods or services to the general public on a continuing basis is financed orrecovered primarily through user charges or (b) where the governing body has decided thatperiodic determination of revenues earned, expenses incurred, and/or net income is appropriatefor capital maintenance, public policy, management control, accountability, or other purposes.
(c) Basis ofAccounting
The govemmentwide, proprietary, and fiduciary fund financial statements are reported using theeconomic resources measurement focus and the accrual basis of accounting. Revenues are recorded
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Notes to Basic Financial Statements
December 31, 2007
when earned and expenses are recorded at the time liabilities are incurred, regardless of when therelated cash flows take place. Nonexchange transactions, in which the City gives (or receives) valuewithout directly receiving (or giving) equal value in exchange, include property and sales taxes,grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognizedin the fiscal year for which the taxes are levied. Revenues from grants, entitlements, and donationsare recognized in the fiscal year in which all eligible requirements have been met.
Governmental funds are reported using the current financial resources measurement focus and themodified accrual basis of accounting. Under this method, revenues are recognized when measurableand available. Property and sales taxes, interest, certain state and federal grants, and charges forservices are accrued when their receipt occurs within 60 days after the end of the accounting periodso as to be both measurable and available. Expenditures are generally recorded when a liability isincurred, except for debt service expenditures and other long term liabilities, which are recorded onlywhen due. General capital assets acquisitions are reported as expenditures in governmental funds.Proceeds and payments of long-term debt arc reported as other financing sources and uses.
Private sector standards of accounting and financial reporting issued prior to December 1, 1989generally are followed in both the governmentwide and proprietary fund financial statements to theextent that those standards do not conflict with or contradict guidance of the GovernmentalAccounting Standards Board. Governments also have the option of following subsequent privatesector guidance for their business-type activities and their enterprise funds, subject to this samelimitation. ‘fhc City has elected not to follow subsequent private sector guidance.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operatingrevenues and expenses generally result from providing services and producing and delivering goodsin connection with a proprietary fund’s principal ongoing operations. The principal operatingrevenues of the enterprise funds are charges to customers for goods and services. Operating expensesinclude the cost of sales and service, administrative expenses, and depreciation on capital assets. Allrevenues and expenses not meeting this definition are reported as nonoperating revenues andexpenses.
(d) Encumbrances
Encumbrance accounting is employed in the governmental funds. Under encumbrance accounting,purchase orders, contracts, and other commitments for the expenditures of funds are recorded inorder to reserve that portion of the applicable appropriation. Encumbrances are reported asreservations of net assets since they do not constitute liability. Encumbrances are reported asexpenditures on the budget basis schedule.
(e) Pooled Cash and Investments
The City maintains a pooled cash and investment account for all funds. These funds are placed in thecustody of the City Treasurer. Each fund reports its undistributed interest in the principal balance ofthe pool. Interest earned on the City’s pooled cash and investments is credited to the General Fund ofthe City, except for the Don Hayes Memorial Fund, Ralph Anderson Memorial Fund, Cash ReserveFund, Dodge Park Marina Fund, Western Heritage/Byron Reed Fund, Asarco Remediation Fund,Sewer Revenue Fund, Sewer Construction Fund, and Aksarben Bond Fund, which are credited
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Notes to Basic Financial Statements
December 31, 2007
directly to the respective funds. Interest is imputed and transferred to the Keno Funds, Police SeizedAssets Funds, Law Enforcement Block Grant Funds, and Western Heritage Fund.
(/) Cash and Cash Equivalents
For purposes of the accompanying statement of cash flows, the City enterprise funds consider allhighly liquid debt instruments with a maturity of three months or less when purchased to be cashequivalents.
(g) investments
Investments are stated at fair value. Securities traded on a national or international exchange arevalued at the last reported sales prices at current exchange rates. Income from investments notincluded in pooled cash and investments that are held by the individual funds is recorded in therespective funds as it is earned.
(h) Inventories
Inventories of materials and supplies are stated at the lower of cost or market using the first in, firstout method. The costs of governmental fund inventories are recorded as assets when purchased andexpended as used.
(i) Property Taxes
Nebraska LB 1114 imposes a tax ceiling for general revenue purposes. The tax levy certified in anyyear shall not exceed $0.45 per $100 of actual valuation. The 2007 general tax levy $0.24312 per$100 of assessed valuation) was below the legal limit by $0.20688, or $52,345,274.
The Home Rule Charter of the City imposes a tax ceiling for general revenue purposes. The tax levycertified in any year shall not exceed $0.6 125 per $100 of actual valuation plus whatever tax levy isnecessary to provide for principal and interest payments on the indebtedness of the City foradministrative expenses incurred in issuing and maintaining bonds and for satisfaction of judgmentsand litigation expenses in connection therewith. The 2007 general tax levy ($0.24312 per $100 ofassessed valuation) was below the legal limit by $03698, or $93,461,413. The assessed value uponwhich the 2007 levy was based was $25,302,239,770.
The tax levies for all political subdivisions in Douglas County are certified by the county board on orbefore October 15. Real estate taxes are due and become an enforceable lien on property onDecember 31. The first half of real estate taxes becomes delinquent on April 1 and the second halfbecomes delinquent on August 1 following the levy date. Personal property taxes are due onDecember 31 and become delinquent on April 1 and August 1 following the levy date. Delinquenttaxes bear 14% interest.
Motor vehicle taxes are due when an application is made for registration of a motor vehicle.
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December 31, 2007
(j) Deftrred Charges
For governmentwide financial statements and proprietary fund financial statements, charges resultingfrom the issuance of revenue and general obligation bonds are deferred and amortized over theremaining life of the bonds on a straight-line basis.
(k) CapitalAssets
Within the govemmentwide and proprietary fund financial statements, capital assets, includinginfrastructure, are recorded at historical cost or at estimated historical cost if actual historical cost isnot available. Contributed fixed assets are valued at their estimated fair market value on the date ofdonation. Capital assets include public domain infrastructure, including roads and bridges. The Citydefines capital assets as assets with individual costs of more than $5,000 and estimated useful livesin excess of one year. Capital assets used in operations are depreciated or amortized using thestraight-line method over the lesser of the capital lease period or their estimated useful lives in thegovernmentwide and proprietary fund financial statements. Assets are depreciated using the half yearconvention in the first and last years of the asset’s useful life.
The estimated useful lives are as follows:
Infrastructure 15 — 50 yearsBuildings and systems 15 —40 yearsImprovements 5 — 30 yearsMachinery and equipment 5 — 20 yearsVehicles 5 — 15 years
(1) Compensated Absences
Employees earn annual vacation and sick leave at various specific rates during their period ofemployment. In the event of termination, an employee is reimbursed for accumulated vacation time.This balance is the total of a yearly canyover, up to a maximum of 280 hours for civilian bargainingand civilian management employees, plus the current year’s leave balance. Civilian management andbargaining employees are reimbursed for a percentage of accumulated sick leave up to a maximumof 2,000 hours (612.5 hours). Civilian and management employees have the option of accruingcompensatory leave time at a rate of one and one half times the actual hours worked in lieu of thepayment of overtime. Employees may accrue a maximum of 120 hours of compensatory time. Thecompensatory time must be taken within three months after the end of the calendar year in which it isearned and any remaining amounts are paid out in cash. However, the employee retains the right tocash out the compensatory leave balance at any time.
In the event of termination, police employees are reimbursed for accumulated vacation time up to amaximum of 320 hours, plus the current year leave balance. Upon retirement, death, or resignationafter 20 years, police employees receive 1 for 1 for the first 1,200 hours of accumulated sick leaveand 1 for 4 hours thereafter up to a maximum of 3,200 hours (1,700 hours). Police employees mayaccrue a maximum of 360 hours of compensatory time. In the event of termination, Fire Department24-hour shift employees are reimbursed for accumulated vacation time up to a maximum of360 hours, plus current year accumulation. Upon retirement or resignation, Fire Bargaining 24-hour
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December 31, 2007
shift employees are reimbursed for accumulated sick leave 1 for 1 for the first 1,200 hours and 3 for4 for all hours greater than 1,201 to 2,400 for a maximum 2,100 hours. In the event of termination,Fire Management employees are reimbursed for accumulated vacation time up to a maximum of280 hours, plus current year accumulation. Upon retirement, Fire Management employees arcreimbursed for accumulated sick leave 1 for 1 for the first 1,200 hours and 1 for 4 for all hoursgreater than 1,201 to 3,200 for a maximum 1,700. In the event of termination, Fire Department40-hour shift employees are reimbursed for accumulated vacation time up to a maximum of240 hours, plus current year accumulation. Upon retirement or resignation, 40-hour shift employeesare converted to 24-hour shift employees reimbursed for accumulated sick leave as above.
For the govemmentwide, proprietary, and fiduciary fund financial statements, vacation leave andother compensated absences with similar characteristics are accrued as the benefits are earned if theleave is attributable to past service and it is probable that the City will compensate the employees forsuch benefits. Such accruals are based on current salary rates and include salary-related payments,such as the employer’s matching Social Security and Medicare costs, associated with payments madefor compensated absences on termination. In the governmental funds, a liability for these amounts isreported only if they have matured.
(m) S4[insurance
The City self-insures all claims related to personal liability and property damage for City-ownedvehicles, medical, dental, and workers’ compensation and the first $100,000 of buildings andcontents coverage. The City has purchased separate commercial insurance to cover losses in excessof $100,000 on buildings and contents, The City has purchased separate commercial liabilityinsurance to cover helicopters used by the Police Department.
(ii) Long-term Obligations
In the governmentwide financial statements and proprietary fund types in the fund financialstatements, long-term debt and other long-term obligations are reported as liabilities in the applicablegovernmental activities, business-type activities, or proprietary fund type statement of net assets.Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life ofthe bonds. Bonds payable are reported net of the applicable bond premium or discount. Bondissuance costs are reported as deferred charges and amortized over the term of the related debt.
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 reportedas other financing sources. Premiums received on debt issuances are reported as other financingsources, while discounts on debt issuances are reported as financing uses. Issuance costs, whether ornot withheld from the actual debt proceeds received, are reported as current expenditures.
(o) Interfund Transactions
Interfund transactions are reflected as either loans, services provided, reimbursements, or transfers.Loans, which are reported as receivables and payables, are subject to elimination upon consolidationand are referred to as either “due to/from other funds” or “advances to/from other funds.”
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Notes to Basic Financial Statements
December 31, 2007
Services provided, deemed to be at market or near market rates, are treated as revenues andexpenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriatebenefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions aretreated as transfers. Transfers between governmental or proprietary funds are netted as part of thereconciliation to the governmentwide presentation.
(p) Restricted Assets
Restricted assets include deposits with trustees of various enterprise funds and capital projects.
(q) Recent Accounting Pronouncements
In November 2006, Governmental Accounting Standards Board (GASB) issued Statement No. 49,Accounting Financial Reporting for Pollution Remediation Obligations. This statement addressesaccounting and financial reporting standards for pollution (including contamination) remediationobligations, which are obligations to address the current or potential detrimental effects of existingpollution by participating in pollution remediation activities such as site assessments and cleanups.The City has not completed its assessment of the impact of the adoption of this statement, which isrequired in 2008.
In May 2007, GASB issued Statement No. 50, Pension Disclosures, an amendment ofGASB Statements No. 25 and No. 27. This statement more closely aligns the financial reportingrequirements for pensions with those for other postemployment benefits (OPEB) and, in doing so,enhances information disclosed in notes to financial statements or presented as requiredsupplementary information (RSI) by pension plans and by employers that provide pension benefits.The City has not completed its assessment of the impact of the adoption of this statement, which isrequired in 2008.
In June 2007, GASB issued Statement No. 51, Accounting and Financial Reporting for IntangibleAssets. This statement requires that all intangible assets not specifically excluded by its scopeprovisions be classified as capital assets, Accordingly, existing authoritative guidance related to theaccounting and financial reporting for capital assets should be applied to these intangible assets, asapplicable. This statement also provides authoritative guidance that specifically addresses the natureof these intangible assets. Such guidance should be applied in addition to the existing authoritativeguidance for capital assets. The City has not completed its assessment of the impact of the adoptionof this statement, which is required in 2010.
In June 2008, GASB issued Statement No. 53, Accounting and Financial Reporting for DerivativeInstruments. This statement establishes accounting and financial reporting standards for all state andlocal governments that enter into derivatives. The City has not completed its assessment of theimpact of the adoption of this statement, which is required in 2010.
(r) Use ofEstimates
The preparation of the financial statements in conformity with U.S. generally accepted accountingprinciples (GAAP) requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
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Notes to Basic Financial Statements
December 31, 2007
financial statements, and the reported amounts of revenues and expenditures/expenses during thereporting period. Actual results could differ from those estimates.
(2) Interfund Receivables, Payables, and Transfers
Individual interfund receivables and payables at December 31, 2007 are as follows:
Receivable fund Amount Payable fund
Sewer $ 34,832 Convention Center Hotel FundSewer 116,062 Parking Facilities FundCivilian Pension Fund 1,250,530 Uniformed Pension Fund
All remaining balances result from the time lag between the dates that (1) interfund goods and services areprovided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and(3) payments between funds are made. All amounts are expected to be paid within one year.
Transfers are related to funding for capital projects, lease payments, debt service, or reallocations ofspecial revenues. The following schedule briefly summarizes the City’s transfer activity:
Transfer toGeneral NonmajorFund Governmental Sewer Total
E Maj or Governmental Funds:General Fund $ 710,407 710,407
Major Enterprise Funds:Sewer 250,000 250,000
Nonmajor Governmental 474,118 — 1,635,123 2,109,241Total $ 474,118 960,407 1,635,123 3,069,648
(3) Deposits and Investments
The City has generally pooled the cash resources of the various funds, except the pension trust fund, forinvestment purposes. Interest earned on pooled funds is credited to the City’s general fund in accordancewith Nebraska State Statute Section 77-2315, R.R.S. 1943.
(a) Deposits
Custodial credit risk is the risk that in the event of a bank failure, the City will not be able to recoverits deposits. As of December 31, 2007, all of the City’s deposits were collateralized with securitiesheld by the City’s agent in the City’s name.
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Notes to Basic Financial Statements
December 31, 2007
(b) City Investments
City funds are invested in conformity with the Public Funds Security Act, Chapter 77, Article 23,specifically 77-2387, of the Nebraska Revised Statutes. Allowable investments includeU.S. government bonds, U.S. treasury bills and notes, U.S. agency bonds and notes, certain state andpolitical subdivision bonds, repurchase agreements, warrants of the State of Nebraska and Nebraskapolitical subdivisions, and certain instruments of the FHLM, federal farm credit system, FHLB,FNMA, and the Small Business Administration. The government money market mutual fundconsists of only those securities that are allowed by N.R.S. 77-2387.
Custodial Credit Risk — Custodial credit risk is the risk that, in the event of the failure of thecounterparty, the City would not be able to recover the value of its investments or collateralsecurities that are in the possession of an outside party.
Interest Rate Risk — Interest rate risk is the risk that the fair value of the City’s investments willdecrease as a result of an increase in interest rates. The City’s investment policy related to maturity isas follows: U.S. Treasury Securities cannot exceed five years; Zero-Coupon or Stripped CouponU.S. Treasury Notes or Bonds cannot exceed two years; Certificates of Deposit issued bycommercial banks cannot exceed 12 months; all other investments not mentioned above cannotexceed a five year maturity from the date of purchase.
Investment termLess than
Investment type Fair value 1 year 1 — 5 yearsU.S. Agencies $ 124,403,830 91,194,865 33,208,965Certificates of Deposit 7,030,787 7,030,787U.S. Treasury Bills 1,237,443 1,237,443
Credit Risk — Credit risk is the risk that the City will not recover its investments due to the inabilityof the counterparty to fulfill their obligation. State statute limits investment options to certainspecific investment vehicles. There is no statutory requirement for investments to meet a certainquality rating.
QualityInvestment type Fair value rating AAA
U.S. Agencies $ 124,403,830 124,403,830U.S Treasury Bills 1,237,443 1,237,443
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Notes to Basic Financial Statements
December 31, 2007
Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to themagnitude of the City’s investment in a single issuer. State statute does not restrict the concentrationof investment in any issuer. The City’s policy states that no more than 25% of the total portfolio willbe invested in the issuance of any single institution other than securities of the U.S. government andits agencies. Concentrations of investment by issuer are displayed in the following table:
investment type Fair value PercentU.S. Agencies 124,403,830 93.8%Certificates of Deposit 7,030,787 5.3U.S. Treasury Bills 1,237,443 0.9
Foreign Currency Risk — Foreign Currency Risk is the risk that changes in exchange rates willadversely impact the fair value of an investment. The City does not have a policy related to foreigncurrency risk.
(c) Pension Trust Funds
The Pension Trust Funds consist of two funds: the civilian plan and the uniform plan. These pensionprograms operate in compliance with all city, state, and federal statutes, particularly OmahaMunicipal Code Chapter 22 and Nebraska State Statute 30-3209. City pension funds are investedaccording to a plan developed and reviewed quarterly by each plan’s Investment Committee. Theplans define the purposes of the assets, identify the parties responsible for managing the investmentprocess, establish both broad and specific guidelines for the investment of the fund’s assets, andestablish criteria to monitor and evaluate the performance of the investment managers. The planauthorizes investments in common and preferred stocks, corporate bonds, cash-equivalent securities,certificates of deposits of insured institutions, money market funds, bank STIF funds, GICs, BICs,and government bonds. They can be in mutual funds or privately managed accounts.
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Notes to Basic Financial Statements
December 31, 2007
Interest Rate Risk — The Pension Board of each plan with the recommendation from the respectiveInvestment Committee approves fund manager agreements. These management agreements outlinespecific investment policies each manager must adhere to. The Retirement Committees do restrictthe general asset allocation to fixed income. The Police & Fire Fund’s target range for fixed incomeassets is between 20% and 30% of the portfolio value and the Civilian Fund’s range is between 25%and 35%. Fixed income investments are held in six accounts managed by five managers:$134.1 million in managed accounts and $49.6 million in two bond mutual funds. Maturities of thesecurities in these commingled funds are as follows:
Managed accountsMaturity range (years)
Less thanInvestment type 1 year 1 — 5 6 — 10 10 +
U.S. Treasuries —% 6.4% 12.5% 5.4%U.S. Agencies 0.7 6.2 11.8 10.9Corporate Bonds 3.3 23.2 14.6 5.0
Bond mutual fundsMaturity % of total
0—lyears 4.8%1—Syears 75.46—l0years 9.410+ years 10.4
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Notes to Basic Financial Statements
December 31, 2007
Credit Risk — Credit risk involves the potential of loss of fair value due to the quality of the fixedincome investments. The Investment Committees of each plan monitor and select fixed fundmanagers based on an investment policy that diversifies the plan’s risks. Each manager employs avarying type of investment style. Fixed income investments are held in six accounts and are managedby five managers: $134.1 million in managed accounts and $49.6 million in two bond mutual funds.The quality ratings of the securities in these commingled funds are as follows:
Managed accountsPercent of
Investment type Ratings total
U.S. Treasuries AAA 100%U.S. Agencies AAA!AA+ 100Corporate Bonds AAA!A3 84Corporate Bonds BAA1/BBB 13Corporate Bonds N/R 3
Bond mutual fundsRating % of total
TSY/AGY 60.1%AAAIAaa 24.9AA+/A3 10.5BBB/Ba2 2.4N/R 2.1
Concentration of Credit Risk — Fixed income securities guidelines are governed by each manager’s
individual management contract. This allows a wide variety of management styles, thus diversifying
each portfolio. Combined target allocation for fixed income securities shall be 20% to 35% of the
portfolio. Equity investments shall be 40% to 60% of the portfolio with large cap domestics (30% to
53%), small cap domestics (7% to 20%), and international equities (5% to 15%). Domestic real
estate securities shall be 5% to 15% of the portfolio. They may be held individually or commingled
in mutual funds and investment pools. There are no individual investments greater than 5% with a
single issuer.
PercentInvestment type Fair value allocated
Government Securities $ 116,551,687 14%
Corporate Bonds 67,197,677 8
Domestic Equities 385,165,665 47
International Equities 109,315,869 13
Domestic Real Estate Securities 112,099,437 14
Cash and cash equivalents 29,621,762 4
Total $ 819,952,097 100%
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Notes to Basic Financial Statements
December 31, 2007
(d) Foreign Currency Risk
Foreign currency risk is the risk that changes in exchange rates will adversely impact the fair valueof an investment. The City does not have policy related to foreign currency risk.
(4) Net Assets/Fund Balances
The governmentwide and business-type activities fund financial statements utilize a net assets presentation.Net assets are categorized as invested in capital assets (net of related debt), restricted, and unrestricted.
• Invested in Capital Assets, Net of Related Debt — This category groups all capital assets, includinginfrastructure, into one component of net assets. Accumulated depreciation and outstanding balancesof debt that are attributable to the acquisition, construction, or improvement of these assets reducethe balance in this category.
• Restricted Net Assets — This category presents external restrictions imposed by creditors, grantors,contributors, or laws or regulations of other governments and restrictions imposed by law throughconstitutional provisions or enabling legislation.
• Unrestricted Net Assets — This category represents net assets of the City not restricted for any projector other purpose.
In the fund financial statements, reservations segregate portions of fund balance that are either notavailable or have been earmarked for specific purposes. The various reserves are established by actions ofthe Council and management and can be increased, reduced, or eliminated by similar actions. As ofDecember 31, 2007, reservations of find balance are described below:
• Encumbrances — to reflect the outstanding contractual obligations for which goods and services havenot been received.
• Inventories — to reflect the portion of assets that do not represent available spendable resources.• Debt service — to reflect the portion of assets that are held for payment of debt service.• Perpetual care — to reflect the portion of assets that are held for perpetual care costs.
(5) Special Assessment Note Payable
The City has obtained a short-term note dated December 21, 2007 to fund the current requirements in theSpecial Assessment Fund for the purpose of meeting obligations to contractors for work in place that willultimately be assessed to the benefited property owners. The term of the note is one year, in the amount of$215,000, at an interest rate of 4.90%. The note will be repaid from collections of special assessments.
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December 31, 2007
(6) Bonds Payable and Other Long-Term Obligations
The following is a summary of long4erm liability transactions for the year ended December 31, 2007:Balances at Change in Issuances Retirements Balances at Amount dueJanuary 1, reporting or other or other December 31, within one2007 entity additions reductions 2007 year
Governmental activities:Bonds payable:
General obligation bonds $ 455,050,000 46,785,000 29,115,000 472,720,000 25,020,000Annexed general obligationbonds 21,206,472 9,215,000 57,181,606 23,496,606 64,106,472 3,499,0(19Special tax revenue bonds 38,195.000 5,835,000 3,645,000 40,385,000 1,420.000Special obligation bonds 59,325,404
—- 670,527 58,654,877 699,182Revenue bonds 2,435,000 85,000 2,350,000 140,000Deferred amounts:Unamortizedpremium 31,907,580
— 671,698 1,752,306 30,826.972Unamortized discount-— (48,971) (408) (48,563)Loss on refunding (35,187,467) — (370,194) (2,053,244) (33,504,417)
______________
Total bonds payable 570,496,989 11,650,000 110,054,139 56,710.787 635,490,341 30,778,191Special assessment notes
payable 1,025,000 215,000 1.025,000 215,000 215,000Lease-purchase contractspayable 34,730,102
— 4,730,000 2,041,878 37,418,224 2,498,983Notes payable 3,304,842—
— 208,579 3,096.263 215.460Grants payable 12,320,000 625,000 4,730,000 8,215,000 4,240.000Compensated absences 62,267,761 430.83 1— 62,698,592 3,134,934Workers’ compensation and
healthcareelainis 12,342,544— 6,556,383 18,898,927 8,863,629Claims and judgments payable 3,411,000 — 1,946,500 1,464,500 1,464,500Net pension obligation 39,565,261— 17,416,409 — 56,981,670
—Post retirement benefit obligation—- 15,030.222
— 15,030,222—
Total governmentallong-temiliabilitiesCarryforward 739,463,499 11,650,000 155,057,984 66.662.744 839,508,739 51,410,697
39 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31. 2007
Change inreporting
entity
Issuancesor otheradditions
Balances atJanuary 1,
2007
S 739,463,499
110,155,000
(908,306)
Retirements Balances at Amount dueor other December 31, within one
reductions 2007 year
11,650.000 155,057,984 66.662,744 839,508,739 51,410,697
109,750,000 110,155,000 109,750,000
109,246,694 — 108,439,668
— 3,197,250 74,010(908,306)
(4,507,582) (104,343)
______________
109,216,361
3,123,240
(4,403,239)
108,470,001
— 1,950,000 47,815,000 2,060.000
Brought forward
Business-type activities:Convention Center Hotel:
Revenue bondsDeferred amounts:
Unamortized premiumUnamortized discountLoss on refunding
Parking Facilities Fund:Lease-purchase contracts
payableDeferred amounts:
Unamortized premiumLoss on refunding
Compensated absences
Sewer Revenue Fund:Revenue bonds
Plus unamortized premiumNotes payableSpecial obligation bonds
Plus unamortized premiumCompensated absencesWorkers’ compensation and
healthcare claimsPension obligationPost retirement benefit
obligation
Nonniajor business-type activities:Revenue bondsCompensated absencesWorkers’ compensation and
healthcare claimsPension obligationPost retirement benefit obligation
Total business-typeactivities
Total all funds
49,765,000
71,401257,235)
32,330
49,611,496
53,170,000908,781
33,030,63720,354,596
171,4521,337,044
622,0481,471,962
7,027— (25.822)
1,931,205
1,605
1,605
1,455,000 —
5,767,716
134,612
— 158,400— 272,321
64.374(231.413)
33,935
47,681.896
54,430,000878,361
37,056,14719,855,123
164,1391,471,656
195,00030,420
1,742,206499,473
7,313
1,697
2,061,697
1,135,000
2,176,864520,818
73,583
366,032
—— 620,687
111,066,520 1,455,000 6,953,736
— 780.448— 1,744.283
— 620,687
______________
2,474,412 117,000,844 4,272,297
— 18,570305,000520,900
288,921683,676
1,798,497
271,723,207
$ 1,011,186,706
150,000 155,000 155,0007,354 532,116 26,606
14,575 —
— 5,371241.368 —
1,455,000
13,105,000
______________
274,513 162,725
303,496 142,340678,305241,368 —
1,910.285 323,946
115,669,522
270,727,506
113.784,703
180.447,447
275,063,026
1,114.571,765
6,657,940
58.068,637
40 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Long-term debt at December 31, 2007 is comprised of the following individual issues:
General Obligation Bonds
Effective
Amount
$ 17,315,00016,755,00012,075,00026,475,00027,120,00025,445,00036,570,00021,000,00024,165,00021,000,00016,000,00030,175,000
205,875,00031,660,00042,800,00026,625,00046,785,000
interest rate FirstOriginal payable Series date December 31,issued Issue semiannually due callable 2097
1 1-01-95 Various purpose — refund series 4.75 — 5.00 1996— 2008 2005 $ 700,00012-01-96 Various purpose — refund series 5.0— 5.25 1997— 2008 2006 785,00003-01-97 G.O.—defeasance bonds 4.70—4.95 1998—2009 2006 1,685,00012-1 5-97 Various purpose — refund series 4.50 — 5.00 1998 —2017 2007 4,275,00012-01-98 GO. — defeasance bonds 4.10— 5.00 2000— 2015 2008 10,560,00012-15-98 Various purpose — refund series 4.20 — 4.50 1999—2018 2008 1 1,095,00011-15-99 Various purpose — refund series 5.00 — 5.125 2000—2019 2009 18,540,00012-01-00 Various purpose 4.10—5.20 2001 —2020 2010 19,000,00012-01-00 GO. —defeasancebonds 4.10—5.75 2001 —2017 2010 15,510,000I I - 15-01 Various purpose 3.00 — 4.75 2002 — 2021 201 1 14,700,00003-01-03 Various purpose 2.75— 5.00 2003— 2022 2013 12,620,00003-01-03 GO. — defeasance bonds 1.50 —4.30 2003— 2021 2013 21,605,00004-01-04 G.O. — defeasance bonds 5.25— 5.25 2012— 2027 2014 205,875,00004-01-04 Various purpose — refund series 2.00—4.125 2005 — 2024 2014 24,740,0001 1-15-05 Various purpose- refund series 4.00— 4.75 2006— 2025 2015 38,520,00010-15-06 Various purpose — refund series 4.00— 4.25 2007— 2026 2016 25,725,00010-15-07 Various purpose — refund series 4.00— 4.75 2008 — 2027 2017 46,785,000
Total general obligation bonds 472,720,000
41 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
Originalissued Issue
December 31, 2007
General Obligation Bonds
Effective
Annexed Area Bonds
Amount
interest ratepayable Series
semiannually due
Firstdate December 31,
callable 2007
S 2,210,000 01-15-04 S.LD. #203 1.40 — 4.70 2005— 2024 2009652,852 03-15-91 S.I.D. #235 1.00 1995 —2010 None285,509 03-15-91 S.LD.#235
— 2010 None4,575,000 06-01-03 S.I.D. #367 1.60—4.45 2003— 2016 20084,350,000 08-30-32 S.T.D. #367 2.50—4.45 2006—2019 20092,500,000 08-15-02 S.I.D. #375 2.50 — 5.70 2003 — 2022 20073,800,000 12-15-03 S.I.D. #375 1.60—5.30 2004—2023 20081,000,000 07-15-01 S.I.D. #379 4.15— 5.80 2002— 2021 20062,300,000 03-15-04 S.I.D. #379 1.60—4.50 2004—2018 20182,800,000 10-15-03 S.1.D. #381 3.30 — 4.00 2004 — 2010 20071,200,000 08-15-01 S.I.D. #384 4.60—5.70 2002—2021 20054,250,000 10-15-04 S.I.D. #384 1.90— 5.00 2005 — 2024 2008
465,000 09-01-99 S.I.D. #390 4.00 — 5.90 2000— 2019 20044,245,000 07-15-0 1 S.LD. #41 1 4.00— 4.90 2002— 2021 20061,750,000 01-1505 S.I.D. #423 2.50— 5.20 2005— 2025 20101,500,000 06-15-06 S.I.D. #423 4.00— 5.25 2006— 2026 20112,000,000 05-01-02 S.I.D. #433 3.00— 6.00 2003 — 2022 20073,150,000 01-15-04 S.I.D. #433 1.40— 4.70 2005— 2024 20093,500,000 12-01-03 S.I.D. #448 1.50— 5.20 2004— 2023 20077,600,000 05-01-04 S.I.D. #448 1.35 —4.90 2005— 2024 20082,950,000 02-15-07 S.I.D. #449 3.75 — 5.05 2007— 2027 201 12,000,000 05-01-04 SIll #461 2.00— 5.10 2005— 2024 20092,000,000 1 1-15-05 S.I.D. #461 3.50— 5.00 2006-- 2025 20101,000,000 11-01-06 S.I.D,#461 4.10—5.00 2007—2026 20112,000,000 07-15-03 S.I.D. #470 2.00— 5.00 2004— 2023 20082,700,000 12-15-04 S.I.D. #470 2.45 — 5.25 2005 — 2024 20094,150,000 10-01-06 S.I.D.#470 4.10—5.15 2007—2031 20112,500,000 1 1-15-06 S.I.D. #498 4.00— 5.00 2007— 2026 20114,160,000 08-01 -02 Various Purpose — Elkhom 2.00— 5.00 2003 — 2021 20075,640,000 09-18-03 Various Purpose — Elkhorn 2.50— 4.50 2004— 2023 2009
930,000 09-1 5-05 Various Purpose — Elkhorn 3.15 — 4.55 2007— 2024 2010
Total annexed area bonds
$ 1,960,000645,963285,509
3,400,0003,850,0002,080,0003,240,000
795,0001,890,000
365,0001,135,0003,935,000
335,000345,000
1,645,0001,470,000
75,0002,795,000
520,0006,730,0002,910,0001,780,0001,890,000
990,0001,705,0002,475,0004,140,0002,420,0002,615,0004,790,000
895,000
64,106,472
$ 536,826,472Total general obligation and annexed area bonds
42 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Special Tax Revenue Bonds
Effectiveinterest rate First
Original payable Series date December 31,Amount issued Issue semiannually due callable 2007
S 6,195,000 11-2-99 Downtown NortheastRedevelopment Project 4.0 —6.25 2000—2019 2009 $ 4,430,000
3,115,000 12-1-98 Riverfront RedevelopmentProject Series 1998 3.75 —4.55 1999—2008 2003 370,000
8,670,000 2-1-02 Riverfront RedevelopmentProject Series 2002A 5.125—5.50 2002—2032 Various 8,670,000
1,830,000 2-1-02 Riverfront RedevelopmentProject Series 2002B variable 2002—2013 2012 1,830,000
20,325,000 9-1-04 Performing Arts ComplexRedevelopment Bonds 2.50—5.00 2005 —2024 2014 19,250,000
1,095,000 12-20-07 Homeland RedevelopmentProject Series 2007A 4.00—4.25 2007—2016 None 1,095,000
665,000 12-20-07 Homeland RedevelopmentProject Series 2007B 4.50 —4.70 2007 — 2011 None 665,000
4,075,000 12-20-07 Various ProjectsRedevelopment Series 2007 3.06—5.13 2007—2027 None 4,075,000
$ 40,385,000
Governmental Activities Revenue Bonds
Effectiveinterest rate First
Original payable Series date December 31,Amount issued Issue semiannually due callable 2007
$ 660,000 08-01 -99 Highway Allocation 4.40 — 5.20% 2000— 2010 2004 320,000760,000 03-01-04 Highway Allocation 1.20—3.65 2004—2014 2009 610,000
1,420,000 09-30-06 Highway Allocation 3.85—4.45 2007—2026 2011 1,420,000
$ 2,350,000
43 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Enterprise Funds Revenue Bonds
$ 1,250,000 3-1-99 DodgeParkMarina2,010,000 4-1-02 Elkhorn Sewer Revenue
53,170,000 1 1-15-06 Sanitary Sewer SystemRevenue Bonds Series 2006
109,750,000 05-15-07 Convention Center HotelRevenue, Series 2007A
OriginalAmount issued
$ 29,800,000
Effectiveinterest rate First
4.00-- 4.50 2006 -20362007 — 2032
4.00—5.00 2010—2035
Special Obligation Bonds — Governmental activities
32,000,000 2-1-02 Riverfront RedevelopmentProject Series 2002B
Effective
$164,335,000
December 31,semiannually due callable 2007
4.00% — 5.50% 2003 —2032 2012 $ 26,654,877
Variable 2002— 2026 2012 32,000,000
$ 58,654,877
Special Obligation Bonds — Business-type activities
Effective
2-1-02 Riverfront RedevelopmentProject Series 2002A
interest ratepayable Series
semiannually due
4.00% — 5.50% 2003 — 2032
Firstdate December 31,
callable 2007
2012 S 19,855,123
AmountOriginalissued Issue
payable Seriessemiannually due
4.00% — 4.50% 1999 —20081.25—3.70 2003—2013
date December 31,callable 2007
2004 $ 155,0002008 1,260,000
2016 53,170,00020122017 109.750,000
Firstdate
Issue
interest ratepayable
2-1-02 Riverfront RedevelopmentProject Series 2002A
Series
OriginalAmount issued
$ 22,200,000
Issue
44 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
As of December 31, 2007, the debt service requirements of the City for principal and interest in futureyears are as follows:
Governmental activitiesPrincipal Interest Total
Year ending December 31:2008 $ 30,778,191 30,422,203 61,200,3942009 30,006,105 29,217,934 59,224,0392010 28,750,687 28,018,007 56,768,6942011 29,655,878 26,839,028 56,494,9062012 33,415,264 25,377,079 58,792,3432013 —2017 167,601,172 103,167,966 270,769,1382018—2022 158,555,000 62,564,142 221,119,1422023 —2027 136,588,162 23,657,891 160.246,0532028—2032 22,865,890 3,057,117 25,923,007
$ 638,216,349 332,321,367 970,537,716
Business-type activitiesPrincipal Interest Total
Year ending December 31:2008 $ 1,810,818 9,573,439 11,384,2572009 1,717,163 8,536,460 10,253,6232010 2,098,508 8,460,848 10,559,3562011 2,319,122 8,372,024 10,691,1462012 2,569,736 8,267,854 10,837,5902013 —2017 17,773,828 39,181,706 56,955,5342018 —2022 21,440,000 34,643,934 56,083,9342023—2027 34,841,838 28,577,656 63,419,4942028—2032 54,104,110 17,831,629 71,935,7392033 —2036 45,515,000 4,225,007 49,740,007
$ 184,190,123 167,670,557 351,860,680
General obligation bonds have been approved by the voters and issued by the City for various municipalimprovements. These bonds represent indebtedness supported by the full faith and credit of the City.
45 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Notes Payable
Notes payable consist of a loan contract between the City and the U.S. Army Corps of Engineers and fourloan contracts between the City and the Nebraska Department of Environmental Quality (NDEQ) withinterest rates ranging from 4% to 5%. Maturities of the notes payable are as follows:
Governmental activitiesPrincipal Interest Total
Year ending December 31:2008 $ 215,460 105,333 320,7932009 222,570 98,223 320,7932010 229,916 90,877 320,7932011 237,505 83,288 320,7932012 245,346 75,447 320,7932013—2017 793,779 286,968 1,080,7472018—2022 942,851 137,895 1,080,7462023—2026 208,836 7,313 216,149
$ 3,096,263 885,344 3,981,607
Business-type activitiesPrincipal Interest Total
Year ending December 31:2008 $ 2,176,864 1,609,666 3,786,5302009 2,250,876 1,523,597 3,774,4732010 2,327,437 1,434,530 3,761,9672011 2,406,636 1,342,358 3,748,9942012 2,488,565 1,246,976 3,735,5412013—2017 8,851,814 4,936,899 13,788,7132018—2022 9,266,759 2,946,759 12,213,5182023 —2026 7,287,196 696,245 7,983,441
$ 37,056,147 15,737,030 52,793,177
Grants Payable
The City has entered into various agreements with not-for-profit organizations to provide grant funds asfollows:
2008 $ 4,240,0002009 1,800,0002010 1,800,0002011 250,0002012 125,000
$ 8,215,000
46 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Tax Increment Financing Notes and Bonds
At December 31, 2007, $194,539,486 of tax increment financing notes and bonds was outstanding. Therelated tax increment districts are not component units of the City; therefore, the City is not liable for theoutstanding debt. The City’s responsibility for this liability is limited only to remittance of paid taxes to thelenders.
Tax increment notes and bonds outstanding at December 31, 2007 are comprised of the followingindividual issues listed below and on the following pages:
Tax Increment Notes and Bonds
EffectiveOriginal interest rate December 31,amount Issue at issuance 2007
$ 15,639,284 Townsend Investments (WallstreetTowers) 8.50% $ 17,707,572
9,750,000 Brandeis Lofts LLC Condominiums 7.00 11,059,47814,515,000 FNB Tower Project — Series 1999A 6.97—7.68 10,250,00011,585,000 Convention Center Hotel
Redevelopment Project 2.50 — 4.85 10,135,0008,490,000 Sorenson Park Plaza Commercial
Development 6.00 10,026,5765,972,725 Ames Center/Benson Plaza
Redevelopment 8.00 8,420,9344,000,000 Shamrock Parking LLC 7.50 5,493,1207,200,000 Aksarben Future Trust 7.42 5,335,3215,000,000 Broadmoor Development (Aksarben
Project 4) 7.50 5,214,7264,200,000 Riverfront Partners LLC 5.50 4,935,2374,100,000 Omaha World Herald 9.00 3,721,5653,500,000 jLofts Condominiums 7.50 3,685,5483,440,000 BOCA Development 7.00 3,635,6522,750,000 Courtland Place No. I LLC 8.00 3,338,0902,709,950 Benson Park Plaza Redev Phase II 8.00 3,132,0192,528,000 DMK Investments LLC 6.50 2,781,9782,315,500 North Central Group Redev Phase II 7,25 2,575,6162,650,000 First Data Resources 8.00 2,519,8073,500,000 FNB Tower Project — Series 1999B 6.97 — 7.68 2,465,0002,196,000 Georgetown Properties (Aksarben
Project 3) 7.25 2,305,4841,950,000 Jackson Lofts LLC Redevelopment 6.50 2,228,7511,949,000 North Central Group Redev Phase I 7.25 2,167,9442,087,400 1023 Jones Street LLP 7.25 2,131,2101,840,000 Model ‘T’ Ford Building LLC 7.00 1,991,0901,750,000 Ontrack Development LLC 8.50 1,966,401
47 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Tax Increment Notes and Bonds
EffectiveOriginal interest rate December 31,
amount Issue at issuance 2007
$ 1,800,000 River City Lodging LLC 6.00% $ 1,935,828
3,440,000 Downtown Northeast —
RedevelopmentProject No. 1 6.25 1,929,000
1,400,000 Livestock Exchange Building LLC 7.00 1,819,257
1,600,000 Drake Court Apts. (710 S 20th LLC) 7.00 1,727,456
1,335,000 Greater Omaha Packing II 6.00 1,678,703
1,546,998 Zone 5 LLC (Aksarben Village) 7.50 1,613,434
1,502,460 Noddle AV4 LLC (AksarbenProject 1C) 7.62 1,568,016
1,349,000 Bushido University LLC 7.25 1,547,603
1,495,000 National Parks Service Redevelopment 5.50 1,464,491
2,098,000 Airlite Plastics Company 7.75 1,458,907
1,135,000 Food Services of America 8.00 1,437,538
1,370,000 RHW Management Inc. (AksarbenProject 5) 7.50 1,428,835
790,000 Bernis Company, Inc. 8.50 1,378,868
1,553,000 Hilton Garden Inn 9.00 1,354,931
1,725,000 Millard Refrigerated Svc/NE Beef 6.00 1,338,906
1,519,000 Downtown Northeast 8.00 1,270,484
1,100,000 Kimball Lofts LLC 8.50 1,252,701
1,000,000 T.S. McShane LLC (P.E. 11cr Bldg) 7.00 1,230,313
983,000 Grover Street Acquisition LLC 7.00 1,134,716
894,600 707 South 11th StreetLP 7.50 1,128,331
3,510,000 Riverfront HotelRedevelopment Project 6.00 1,061,000
1,108,538 Phillips Realty LLC 5.00 1,060,162
1,000,000 Dowtown Dodge Developers LLC 8.25 1,042,493
4,649,620 Riverfront Redevelopment —
ConAgra Series 2A 6.50 1,018,780
856,000 Hy-Vee, Inc. Redevelopment 7.00 1,005,733
777,000 1111 Jones Street LLC (MuseumKaneko) 7.00 967,578
602,498 Signa Development Svcs (Omaha Club) 7.50 916,061
790,000 1000 Dodge Street LLC 6.50 886,594
844,805 Noddle AV3 LLC (AksarbenProject 1B) 7.62 881,666
918,400 St. Joseph Terrace Apts. LLC 8.00 878,766
495,000 Abbot Drive Plaza Redevelopment 8.00 843,714
553,000 Cintas Group (North OmahaBusiness Park) 8.50 790,740
48 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 3 1, 2007
Tax Increment Notes and Bonds
EffectiveOriginal interest rate December 31,amount Issue at issuance 2007
$ 600,000 Twenty Fourth & Hamilton LLC 7.00% $ 769,975526,000 California Housing LLC 7.50 652,561566,000 BM & J Holdings LLC 7.00 630,321602,625 Noddle AV2 LLC (Aksarben
Project 1A) 7.62 628,919510,750 Sutherlands Plaza LLC 6.50 611,131721,000 Airlite Plastics Company II 6.00 608,722576,000 Columbo LLC (Aksarben Place) 7.50 608,196500,000 Premier Place Development 9.25 590,800580,000 Miami Heights Area Redevelopment 8.50 579,217377,000 Drake Williams Steel 9.25 550,961525,000 U.S. Food Service 8.00 541,107450,000 DTD LLC & Jobbers Canyon LLC 7.00 536,100
1,222,400 Westin Aquila 7.00 529,074438,000 Turner Park LLC Redevelopment 8.00 509,539400,000 American Laboratories 9.00 502,103440,000 The Hill Condo Conversions 7.50 483,691389,000 Rycan, Inc. d!b/a West & Willy
Redevelopment 6.70 447,854416,000 Graham Ice Cream Building 8.00 438,886378,000 Joslyn Lofts Limited Partnership 8.00 432,852415,535 P&A McGill LLC 6.00 432,680406,410 Zone Three Commons LLC (Aksarben
Project ID) 7.62 424,143620,000 Downtown NE Redevelopment —
Child Care Facility 5.00 403,900655,000 Ford Warehouse Apartments 9.00 388,504355,000 Village Development (24th Street LLC) 8.00 372,659419,000 Spaghetti Building 9.00 350,428424,000 Bull Durham 9.00 347,632
1,210,000 Riverfront HotelRedevelopment Project 4.00 338,000
540,000 Rivergate Apartments 8.75 326,122300,000 James Tinsley Villas LLC 7.50 315,904
1,420,380 Riverfront Redevelopment —
ConAgra Series 2B 6.50 311,220275,000 St Clair Condos LLC 6.00 307,150
49 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Tax Increment Notes and Bonds
EffectiveOriginal interest rate December 31,amount Issue at issuance 2007
$ 180,000 1234 South 13th Street 8.78% $ 302,150235,000 Midlands Recycling 7.25 296,406307,200 Ames Avenue LLC 8.00 285,726202,000 Riley Building LLC 8.00 283,648232,000 The Village at Omaha LP
Redevelopment 7.00 279,014374,000 Securities Building LP 8.00 274,660186,000 E.A. Pedersen Redevelopment 8.00 271,881239,817 LaCuadraLLC 7.80 268,854250,000 S&S Properties LLC (Heartland Scenic
Studios) 7.50 262,894285,000 1613 Farnam StreetLLC 8.50 257,319581,820 Farnam Parl Investments 8.00 256,991243,000 King’s Heritage Estates I 8.00 256,907139,000 Riverview Meadows 9.00 247,996202,000 Channel Construction (Airport Bus. Park 8.00 239,985285,000 O’Keefe Elevator Company, Inc. Red. 8.50 239,153215,000 Salem Village 8.75 238,400238,000 Cohen Squared LLC 8.75 237,957243,600 Village Development 8.00 237,947600,000 Downtown NE Redevelopment —
FNB Data Center 2004 5.90 232,600150,000 QRS (Quality Refrigerated Svcs) 8.25 210,316
Redev II181,500 1115 Hamey LLP 9.00 188,720150,000 Fullwood Square Apartments LLP 8.75 188,205175,000 Immaculate Conception School 8.00 185,582200,000 Upstream Brewing Company 10.13 184,242106,800 Bradford Investment Group (Benson) 9.00 181,894160,000 DEEL Investments LLC 8.00 178,557150,000 5217 South 28th Street LLC
Redevelopment 7.00 177,795290,000 Orchard Manor 9.50 163,928210,000 Aspen Ridge Apartments 10.00 151,574180,225 Robbins School LLP 9.00 148,362118,000 South Omaha Affordable Housing Corp. 8.50 136,409125,000 701 South 15th LLC 8.00 132,756108,000 Underwood Properties, Inc. 7.00 125,902550,000 1101 HameyLLC 8.00 122,142120,000 Kellom Gardens Limited 7.25 119,427
50 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Tax Increment Notes and Bonds
EffectiveOriginal interest rate December 31,amount Issue at issuance 2007
$ 104,000 Nathan LP/Nathan Development LLC 7.50% $ 116,096273,000 Cannonball Express #3 9.00 113,662110,000 Grace Plaza/Twentieth Plaza 8.50 111,911125,000 Kellom Villa Limited 7.25 111,854260,000 Quality Refrigerated Services 8.50 107,707
71,000 Big Jim’s Plus Gas & Convenience Store 9.38 106,641100,000 Cox/Suburban Electric Redevelopment 8.50 101,505195,000 Campus forHope 2.71 100,591100,000 Meredith Manor 10.00 96,95086,000 CF Studio 6.25 91,758
180,015 National Building 9.00 89,70777,950 Roman Marble Products 8.00 85,90086,600 Armored Knights 5.00 84,13095,000 Jackson Street Partnership 8.00 62,05850,000 T&B Properties LLC 9.50 58,30594,140 Caldwell Limited Partnership 10.00 54,43042,885 Ames/Fontenelle LLC 9.00 52,30876,000 L&R Holdings LLC 8.50 45,701
167,600 Kellom Heights 10.00 43,64530,000 Kohils Drug 8.50 37,83688,830 Kellom Plaza 10.00 37,074
479,000 Lozier III 7.00 12,24790,000 Packers Engineering and Equipment 9.25 3,89061,500 McCarthy Printing 8.25 1,206
Total tax increment notes and bonds $ 194,539,486
Debt Margin/Covenants
According to the City Charter, the total amount of general obligation indebtedness (including annexed areabonds) outstanding at any time, which shall include bonds issued, but shall not include bonds authorizeduntil they are issued, shall not exceed 3.5% of the actual value of taxable real and personal property in theCity. Debt margin as of December 31, 2007 is calculated as follows:
Debt limit $ 885,578,392
General obligation debt 536,826,472General debt service fund balance 16,491,540
520,334,932
Debt margin $ 365,243,460
51 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Revenue bonds and certain other long-term obligations are the obligation of specific Enterprise funds andare payable solely from the revenues of the respective funds. Provisions in the revenue bond ordinancescontain limitations and restrictions on annual debt service requirements, maintenance of and flow ofmoneys through various restricted accounts, and minimum amounts to be maintained in various accounts.It is management’s opinion the City is in compliance with all such significant provisions.
In substance Defeasance
On May 15, 2007, the City issued $109,750,000 of Convention Center Hotel refunding bonds to provideresources to purchase U.S. Government, State and Local Government Series securities that were placed inan irrevocable trust for the purpose of generating resources for all future debt service payments of$109,910,000 of Convention Center Hotel bonds. As a result, the refunded bonds are considered to bedefeased and the liability has been removed from the business-type activities column of the statement ofnet assets. The reacquisition price exceeded the net carrying amount of the old debt by $4,507,582. Thisamount is being netted against the new debt and amortized over the shorter of the life of the refunded debtor original debt. This refunding was undertaken to reduce total debt service payments over the next27 years by $8,579,938 and resulted in an economic gain of $13,690,855.
On October 15, 2007, the City issued $15,260,000 of general obligation refunding bonds to provideresources to purchase U.S. Government, State and Local Government Series securities that were placed inan irrevocable trust for the purpose of generating resources for all future debt service payments of$14,980,000 of general obligation bonds. As a result, the refunded bonds are considered to be defeased andthe liability has been removed from the governmental activities column of the statement of net assets. Thereacquisition price exceeded the net carrying amount of the old debt by $370,194. This amount is beingnetted against the new debt and amortized over the shorter of the life of the refunded debt or original debt.This refunding was undertaken to reduce total debt service payments over the next 16 years by $1,363,582and resulted in an economic gain of $1,402,944.
In prior years, the City defeased certain general obligation and other bonds by placing the proceeds of newbonds 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 financialstatements. The amount of in substance defeased debt outstanding at December 31, 2007 is shown below:
General Obligation Bonds
Convention Center Series A $ 112,505,000
Business-type Revenue Bonds
Convention Center Hotel Bonds $ 102,725,000
Derivative Financial Instruments
Objective of the derivatives — In order to protect against the potential of rising interest rates, the City
entered into two separate fixed interest rate swap agreements.
Terms, fair values, and credit risk — The terms, including the fair values and credit ratings of the
outstanding swaps as of December 31, 2007, are as follows. The notional amounts of the swaps match the
52 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
principal amounts of the associated debt. The City’s swap agreements contain scheduled reductions tooutstanding notional amounts that are expected to approximately follow scheduled or anticipatedreductions in the associated bonds.
SwapAssociated Notional Effective Fixed rate termination Counterpartybond issue amounts date paid Fair value date credit rating
2002 SOBBonds* $ 32,000,000 February2002 6.12% $ 4,451,877 February2026 N/A
2002 STRBBonds** 1,830,000 February 2002 5.64 93,381 February 2013 N/A
$ 33,830,000
* City of Omaha, Nebraska, Special Obligation Bonds (Riverfront Redevelopment Project), Taxable Series 2002B.** City of Omaha, Nebraska, Special Tax Revenue Redevelopment Bonds, Taxable Series 2002B.
Termination risk — The City or the counterparty may terminate the swaps if the other party fails to performunder the terms of the contract.
Rollover risk — The City is exposed to rollover risk on swaps that are terminated prior to the maturity of theassociated debt. The termination dates for the City’s swap agreements mirror those of the associated debt;therefore; the City is only subject to rollover risk if it were to not be in compliance with the terms of theswap agreement, and as a result of this noncompliance, the counterparty terminated the agreement. If thecounterparty were to terminate either of the swaps, the City will not realize the synthetic rate offered by theswaps on the underlying debt issues.
(7) Leases
The City is leasing libraries and other facilities under noncancelable lease-purchase agreements expiring atvarious times through 2033, at which time title will be conveyed to the City. The rental payments aredesigned to equal the debt service requirements of certain nonprofit organizations that financed theconstruction of the facilities. The City has an option to purchase the facilities at any time by paying anamount equal to the total of all remaining unpaid lease obligations to the lessor at that time.
53 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
The following schedule reflects future minimum lease payments under the lease purchase agreementstogether with the present value of the net minimum lease payments as of December 31, 2007:
Governmental Business-typeactivities activities
Fiscal year ending:2008 $ 4,161,957 4,679,2872009 4,092,260 4,658,2772010 4,099,172 4,660,6902011 4,110,268 4,663,6062012 4,085,254 4,650,6882013—2017 18,657,882 21,255,6992018—2022 8,923,267 13,585,4702023—2027 2,455,914 9,891,8672028—2032 9,116,3602033 —2033
_______________
1,829,585
Total minimum lease payments 50,585,974 78,991,529
Less amount representing interest 13,167,750 31,176,529
Total principal obligation under capital leaseswith rates of interest from 2.50% to 7.98% $ 37,418,224 47,815,000
The City leases space in the Omaha Douglas Civic Center and the adjoining Hall of Justice under a leasethat expires only upon payment of all outstanding bonds of the Omaha-Douglas Public BuildingCommission. The annual rental payments are determined based upon actual space occupied by the City foroperation and maintenance. Actual rental payments for 2007 were approximately $1,389,641.
54 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
(8) Receivables and Due From Other Governments
Receivables at December 31, 2007 of the City’s major funds and nonmajor funds in the aggregate,including the applicable allowances for uncollectible accounts, are as follows:
Total
Total business-Debt governmental type
General service Nonmajor activities Parldng Sewer fond Noomajor activities Total
Receivables:
Propertylaxes $ 59898,047 43,314,785 3,690,101 106902,933 —— 106,902,933
Telephone
occupation tax 2,917,023 — 2,917,023— 2,917,023
Hotel motel
occupation tax 272,642 272,642— 272,642
Vehicle rental
occupation tax 500,086 — 500,086— 500,086
Cable TV and Gas
franchise fee 1,142,064 — — 1,142,064 —— 1,142,064
MUD in lieu of tax 1,123,616 — 1,123,616 — — —— 1,123,616
OPPDinlieuoftax 25,724 18,576 1,579 45,879 — —— 45,879
Motorvehicletax 650,551 — 650,551 — —— 650,551
Special assessment — 4,807,965 2,649,710 7,457,675 — —— 7,457,675
State aid distribution 1,014,381 — 1,014,381 — —— 1,014,381
Due from other
governments 19,964,265 211,968 21,864,378 42,040,611 — 25,577 25,577 42,066,180Accraedinlerest 841,378 — 70,680 912,058 — 214,118 — 214,110 1,126,176Charges for services
and other 7,479,391
____________
5,260,970 12,748,369 402,173 3,709,186 55,63 I 4,166,990 16,015,359
Gross
receivables 95,829,168 48,353,294 33,545,426 177,727,880 402,173 3,923,304 81,208 4,406,685 102,134,573
Less allowance for
uncolleclible (228,379) — — (228,379) — — —
____________
(228,379)
Net total
receivables S 95,600,709 48,353,294 33,545,426 177,499,509 402,173 3,923,304 01,208 4,406,685 181,906,194
Governmental funds report deferred revenues in connection with receivables for revenues not consideredavailable to liquidate liabilities of the current period. At December 31, 2007, the various components ofdeferred revenue and unearned revenue are as follows:
Unavailable Unearned
Property tax receivable (general fund) $ 59,898,047 1,170Property tax receivable (debt service fund) 43,314,785 846Special assessments (debt service fund) 4,807,965 —
Property tax receivable (other governmental funds) 3,673,224 72Special assessments (other governmental funds) 2,649,710 —
Grants (other governmental funds) 12,908,131 308,247
$ 127,251,862 310,335
55 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
(9) Employees’ Retirement Plans
Substantially all City employees are covered by one of two single employer contributory defined-benefitretirement plans. The City of Omaha Employees’ Retirement System (the Civilian Plan) and the City ofOmaha Police and Firefighters Retirement System (the Uniformed Plan), as described below, areaccounted for by the City as Pension Trust Funds.
(a) Civilian Plan
Plan Description — The Civilian Plan is a single employer contributory defined-benefit pension plan.The Civilian Plan provides retirement benefits to plan members and beneficiaries. All eligible Cityemployees, except the following, are covered by the plan: police; firefighters; persons paid on acontractual or fee basis; seasonal, temporary, and part-time employees; and elected officials who donot make written application. Cost of living adjustments are provided to members and beneficiariesat the discretion of the City in accordance with plan provisions. A cost of living adjustment currentlyis provided for members who retired prior to January 28, 1998 after a five-year waiting period. TheCity Council has the authority to negotiate, set, and amend contribution rates for the employees andemployer. The Pension Board of the City administers the Civilian Plan. The Pension Board isresponsible for establishing or amending plan provisions. The Civilian Plan does not issue separatefinancial statements.
Funding Policy — Effective December 16, 2007, Civilian Plan members are required to contribute, bypayroll deduction, 8.325% of their amual covered salary and the City is required to contribute at arate of 9.525% of annual covered salary. Administrative costs for management of the finds arefinanced through investment earnings. Other administrative costs of the Civilian Plan are paid by theCity’s General Fund. Contributions to the Civilian Plan totaled $4,262,326 for the employees and$4,975,039 for the employer for the year ended December 31, 2007.
Participant Data
Number of:Active members 1,119Service retirements 877Surviving spouses and children 252Disabled 91Deferred vested 82
Total participants 2,421
56 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Annual Pension Cost and Net Pension Obligation — The City’s annual pension cost and net pensionobligation to the Civilian Plan for the fiscal year ended December 31, 2007 are as follows:
Annual required contribution $ 8,883,617Interest on net pension obligation 807,256Adjustment to annual required contribution (896,330)
Annual pension cost 8,794,543
Contributions made (4,975,039)
Increase in net pension obligation 3,819,504
Net pension obligation, beginning of year (10,090,703)
Net pension obligation, end of year $ (13,910,207)
Schedule of employer contributionsAnnual Percentage NetPension of APC pension
Cost (APC) contributed obligation
Fiscal year ended:2007 8,794,542 57% (13,910,207)2006 6,135,462 67 (10,090,703)2005 6,822,028 65 (8,100,275)
Additional information as of the latest actuarial valuation follows:
Valuation date January 1, 2007
Actuarial cost method Entry age—normal cost
Amortization method Level percent closed
Remaining amortization period 25 years
Asset valuation method Adjusted value of plan assets
75% of Expected Value, plus 25% ofMarket Value
Actuarial assumptions:Investment rate of return 8% per yearProjected salary increases 4,5% per yearCost-of-living adjustments Lesser of 3% or $50 per month
57 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Basis ofAccounting — The Civilian Plan’s financial statements are prepared using the accrual basis ofaccounting and are presented as a pension trust find in the accompanying basic financial statementsof the City. Separate audited financial statements for the Civilian Plan are not available. Planmember and employer contributions are recognized in the period in which the contributions are due.Benefits are provided based on a percentage of the member’s final average compensation and arerecognized when due and payable.
Method Used to Value Investments — Civilian Plan assets are invested in readily marketablesecurities and are carried at fair value. Investments in securities traded on a national securitiesexchange are valued at the latest quoted market prices. Unlisted investments are valued at latestquoted market prices.
Summary financial information for the Civilian Plan is as follows:
Assets
Cash and cash equivalents $ 1,645,049Due from other funds 1,250,530Receivables:
Accrued interest 890,999Other 422,439
Investments, at fair value 290,449,005
Total assets $ 294,658,022
Liabilities
Warrants payable $ 52,066Accounts payable 511,778
Total liabilities 563,844
Net Assets
Net assets:Held in trust for pension benefits 294,094,178
Total liabilities and net assets $ 294,658,022
58 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December31, 2007
Additions:Contributions:
Employer $ 4,975,039Employee 4,262,326
Total contributions 9,237,365
Investment income (loss):Dividends and interest 6,792,314Net appreciation in fair value of investments 10,562,263Investment expenses (2,040,494)
Net investment income 15,314,083
Total additions 24,551,448
Deductions:Benefit payments 22,497,881
Change in net assets 2,053,567
Net assets held in trust for pension benefits, beginning of year 292,040,611
Net assets held in trust for pension benefits, end of year $ 294,094,178
(b) Unforrned Plan
Plan Description - The Uniformed Plan is a single employer contributory defined-benefit pension
plan. The Uniformed Plan covers all eligible probationary and regular sworn personnel of the Police
and Fire departments of the City. The Uniformed Plan provides retirement, disability, and death
benefits to plan members and beneficiaries. Cost of living adjustments are provided to members and
beneficiaries at the discretion of the City in accordance with plan provisions. The City Council has
the authority to negotiate, set, and amend contribution rates for the employer and employees. The
Pension Board of the City administers the Uniformed Plan. The Pension Board is responsible for
establishing or amending plan provisions. The Uniformed Plan does not issue separate financial
statements.
Funding Policy — Uniformed Plan members are required to contribute, by payroll deduction, a
percentage of their annual covered salary and the City is also required to contribute as follows:
Bargaining Group Employee rate City rate
Fire Sworn 15.40% 2002%
Fire Management 15.45 21.07
Police Sworn 14.55 20.17
Police Management 14.57 20.19
In addition, the City will make contributions of $1,327,600 annually through 2028. Administrative
costs for management of the funds are financed through investment earnings. Other administrative
costs of the Uniformed Plan are paid by the City’s General Fund. Contributions to the Uniformed
59 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Plan totaled $16,324,043 for the employees and $20,699,211 for the employer for the year endedDecember 31, 2007.
Participant Data
Number of:Active members 1,370Service retirements 802Surviving spouses and children 285Disabled 250Deferred vested 12
Total participants 2,719
Annual Pension Cost and Net Pension Obligation — The City’s annual pension cost and net pensionobligation to the Uniformed Plan for the year ended December 31, 2007 are as follows:
Annual required contribution $ 34,842,280Interest on net pension obligation 2,530,416Adjustment to annual required contribution (2,809,630)
Annual pension cost 34,563,066
Contributions made (20,699,211)
Increase in net pension obligation 13,863,855
Net pension obligation, beginning of year (31,630,196)
Net pension obligation, end of year $ (45,494,051)
Schedule of employer contributionsAnnual Percentage NetPension of APC pension
Cost (APC) contributed obligation
Fiscal year ended:2007 34,563,067 60% (45,494,051)2006 30,917,700 65 (31,630,196)2005 26,145,454 78 (20,884,106)
60 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Additional information as of the latest actuarial valuation follows:
Valuation date January 1, 2007
Actuarial cost method Entry Age Normal Method
Amortization method Level percent of pay
Remaining amortization period 26 years
Asset valuation method Actuarial value of assets
One-third of market value, plustwo-thirds of expected asset value
Actuarial assumptions:Investment rate of return 8% per yearProjected annual salary increases varying 4% through 6.5%Final year wage adjustment 10.0%Cost-of-living adjustments Lesser of 3% or $50 per month
($65 for Fire retirements afterJune 30, 2007)
Basis of Accounting — The Uniformed Plan’s financial statements are prepared using the accrualbasis of accounting and are presented as a pension trust fund in the accompanying financialstatements of the City. Separate audited financial statements for the Uniformed Plan are notavailable. Plan member and employer contributions are recognized in the period in which thecontributions are due. Benefits are provided based on a percentage of the member’s fmal averagecompensation and are recognized when due and payable.
Method Used to Value Investments — Uniformed Plan assets are invested in readily marketablesecurities and are carried at fair value. Investments in securities traded on a national securitiesexchange are valued at the latest quoted market prices. Unlisted investments are valued at latestquoted market prices.
61 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Summary financial information for the Uniformed Plan is as follows:
Assets
Receivables:Accrued interest $ 1,1 17,240Other 6,437,290
Investments, at fair value 524,503,092
Total assets $ 532,057,622
Liabilities
Warrants payable $ 591Accounts payable 882,460Due to other funds 1,250,530
Total liabilities 2,133,581
Net Assets
Net assets:Held in trust for pension benefits 529,924,041
Total liabilities and net assets $ 532,057,622
Additions:Contributions:
Employer $ 20,699,211Employee 16,324,043
Total contributions 37,023,254
Investment income (loss):Dividends and interest 11,829,719Net appreciation in fair value of investments 17,207,953Investment expenses (3,306,559)
Net investment income 25,731,113
Total additions 62,754,367
Deductions:Benefit payments 40,439,107
Change in net assets 22,315,260
Net assets held in trust for pension benefits, beginning of year 507,608,781
Net assets held in trust for pension benefits, end of year $ 529,924,041
62 (Continued)
(10) Capital Assets
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Capital asset activity for the year ended December 31, 2007 is as follows:
Governmental activities:Capital assets, not being
depreciated:LandCultural assetsConstruction in progress
Total capital assets,not beingdepreciated
Capital assets, being depreciated:BuildingsMachinery and equipmentInfrastructureLease purchases
$ 123,173,1905,833,600
52,110,065
463,423,79158,853,811
349,829,21953,140,326
124,934,430— 5,833,600
______________
68,503,903
8,807 199,271,933
Total accumulateddepreciation
Total capital assets,being depreciated,
Governmentalactivities capitalassets, net
134,375,34841,594,11376,231,83412,868,850
13,373,5784,011,121
18,986,2622,010,086
Beginning Change in Endingbalances reporting entity Increases Decreases balances
373,300 1,387,940
71,047
181,116,855
16,331,598 8,807
444,347 17,719,538
8,554,3112,242,614
21,500,237
18,350,3014,761,088
69,688,262590,502
490,328,4031,723,971 64,133,542
441,017,718— 53,730,828
Less accumulated depreciation for:BuildingsMachinery and equipmentInfrastructureLease purchases
Total capital assets,being depreciated 925,247,147 32,297,162 93,390,153 1,723,971 1,049,210,491
1,582,5141,792,839
11,328,111
149,331,4401,589,524 45,808,549
— 106,546,207
_______________
14,878,936
net
265,070,145 14,703,464 38,381,047 1,589,524 316,565,132
660,177,002 17,593,698 55,009,106 134,447 732,645,359
$ 841,293,857 18,038,045 72,728,644 143,254 931,917,292
63 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Depreciation expense was charged to functions/programs as follows:
Governmental activities:General government $ 696,355Public safety 2,989,337Community development 707,655Ecological services 750,317Culture and parks 13,304,850Transportation services 9,518,446
Total depreciation expense — governmental $ 27,966,960
Capital asset activity of each major enterprise fund is as follows:
Beginning Endingbalances Increases Decreases balances
Convention Center Hotel Fund:Capital assets, not being
depreciated:Cultural assets $ 498,366 — — 498,366
Capital assets, being depreciated:Buildings 70,900,691 321,554 — 71,222,245Machinery and equipment 3,490,276 103,267 35,800 3,557,743Furniture and fixtures 6,779,025 13,741 6,792,766
Total capital assets,being depreciated 81,169,992 438,562 35,800 81,572,754
Less accumulated depreciation for:Buildings 4,427,462 1,781,530 — 6,208,992Machinery and equipment 1,722,969 700,564 22,353 2,401,180Furniture and fixtures 3,383,106 1,362,290 4,745,396
Total accumulateddepreciation 9,533,537 3,844,384 22,353 13,355,568
Total capital assets,being depreciated, net 71,636,455 (3,405,822) 13,447 68,217,186
Convention Center HotelFund capitalassets, net $ 72,134,821 (3,405,822) 13,447 68,715,552
64 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Beginning Endingbalances Increases Decreases balances
Parking Facilities Fund:Capital assets, not being
depreciated:Land S 2,473,344 —
— 2,473,344Construction in progress 1,246,261 — 1,246,261 —
Total capital assets,not being depreciated 3,719,605 — 1,246,261 2,473,344
Capital assets, being depreciated:Leased buildings 54,887,138 1,551,933
— 56,439,071Buildings 4,567,229 —
— 4,567,229Total capital assets,
being depreciated 59,454,367 1,551,933 — 61,006,300Less accumulated depreciation for:
Leased buildings 14,534,174 2,797,319— 17,331,493
Buildings 3,796,509 —— 3,796,509
Total accumulateddepreciation 18,330,683 2,797,319 — 21,128,002
Total capital assets,being depreciated, net 41,123,684 (1,245,386) — 39,878,298
Parking Facilities Fundcapital assets, net S 44,843,289 (1,245,386) 1,246,261 42,351,642
65 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Change inBeginning reporting Endingbalances entity Increases Decreases balances
Sewer Revenue Fund:Capital assets, not being
depreciated:Land $ 2,216,860 127,637 180,925 — 2,525,422Construction in progress 35,722,218 — 27,370,078 30,875,784 32,216,512
Total capital assets,not being depreciated 37,939,078 127,637 27,551,003 30,875,784 34,741,934
Capital assets, being depreciated:Utility plant 517,949,911 6,864,736 37,591,254 562,405,901Machinery and equipment 15,134,562 219,622 601,370 15,955,554
Total capital assets,being depreciated 533,084,473 7,084,358 38,192,624
______________
578,361,455
Less accumulated depreciation for:Utilityplant 222,786,191 2,546,043 15,236,537 — 240,568,771Machinery and equipment 12,711,263 183,377 311,407
____________
13,206,047
Total accumulateddepreciation 235,497,454 2,729,420 15,547,944 — 253,774,818
Total capital assets,being depreciated, net 297,587,019 4,354,938 22,644,680 — 324,586,637
Sewer Revenue Fund
capital assets, net $ 335,526,097 4,482,575 50,195,683 30,875,784 359,328,571
66 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Beginning Endingbalances Increases Decreases balances
Nonmajor Enterprise Funds:Capital assets, not being
depreciated:Construction in progress $ 485,924 485,924
Capital assets, being depreciated:Buildings and systems 8,654,450 916,673
— 9,571,123Machinery and equipment 3,029,579 172,924 3,202,503
Total capital assets,being depreciated 11,684,029 1,089,597 12,773,626
Less accumulated depreciation for:Building and systems 3,393,017
— — 3,393,017Machinery and equipment 2,554,655 449,549 3,004,204
Total accumulateddepreciation 5,947,672 449,549
— 6,397,221
Nonmajor Enterprisecapital assets, net $ 6,222,281 640,048 485,924 6,376,405
67 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
(11) Fund Deficits
Fund deficits exist in the following funds:
Major Enterprise Funds:Parking Facilities $ 5,118,689Convention Center Hotel 23,846,203
Nonmajor Enterprise Fund:Printing and Graphics 156,201Air Quality 10,675
Nonmajor Capital Projects Funds:Missouri River Pedestrian Bridge 2,854,390Back to the River Project 1,375,617University of Nebraska Medical Center Improvement 20,427Capital Special Assessment 39,349
Nonmajor Special Revenue Funds:Park Development 2,874,516Nebraska Affordable Housing Trust 774,737Local Law Enforcement Block Grant 86,506Lead-Based Paint Hazard Grant 118,994School Related Grant 24,501COPS More 1998 239,212Metro Drug Task Force Grants 39,023Comprehensive Communities Program 192,447COPS More Equipment Grant 1,868,428COPS Phase One Grant 9,657Juvenile Detention Grant 27,772Weed Seed Phase Four 197,059Fire Department Grants 190,817Home Program Grant 641,882Community Development Block Grant 1,491,561EPA Administration Grants 43,567Supportive Housing Grant 32,020Economic Development Incentive Grant 92,891HUD Shelter Plus Care 36,453Federal Fire Grant 72,461
The fund deficits will be eliminated through collection of special assessments, operating transfers from
other funds, and the collection of deferred revenues.
The Parking Facilities Fund was established as a tool to manage the City’s eight parking structures and
various surface lots throughout the City. Lease purchase debt has been issued to finance the construction of
the parking structures. Annual appropriations from the City’s General Fund to subsidize the payment of
this debt will eliminate this deficit.
68 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
The Convention Center Hotel began operations in April 2004. It is projected that future operations of thehotel will eliminate this deficit. Annual appropriations from the City will subsidize any debt serviceshortfall.
The deficit in the Printing and Graphics and Air Quality Funds will be eliminated by fee increases.
The elimination of fund deficits in the Nonmajor Capital Projects Funds will be accomplished by thereceipt of deferred revenues and the collection of special assessments.
The Park Development Fund’s deficit is a result of the acquisition of two large land purchases. These sitesare outside of the City and have been selected as future regional parks. A park development fee has beenestablished, which will be collected from neighboring Sanitary Improvement Districts to fund theseacquisitions. The other Nonmajor Special Revenue Fund deficits will be eliminated upon collection ofdeferred revenues from the sponsoring grantor agency.
(12) Postretirement Healthcare Benefits
Postemployment Benefits
Effective January 1, 2007, the City adopted Governmental Accounting Standards Board Statement No, 45,Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions.This statement requires the accounting for the annual cost of other postemployment benefits and the relatedoutstanding liability using an actuarial approach similar to pensions. The City implemented prospectively(zero net obligation at transition).
Plan Description
The City provides certain postemployment health care benefits to eligible retirees and their dependents inaccordance with provisions established in Chapter 23 of the Omaha Municipal Code. The plan is. asingle-employer defined benefit healthcare plan administered by the City. The plan does not issue separatefinancial statements.
Funding Policy
The contribution requirements of plan members and the City are established through labor negotiations,with the Omaha Police Union Local No. 101, the Professional Firefighters Association of Omaha LocalNo. 385, the Omaha City Employees Local No. 251, and other classified civilian and sworn employees. Allagreements are approved and can be amended by the Omaha City Council. Contributions are made to theplan based on a pay-as-you-go basis and the City self-insures this benefit. For the year ended December 31,2007, the City paid $12,707,723 for 1,129 retirees. Retiree contribution rates vary from 0% to 5% of anannual estimated premium depending on the bargaining group. Retiree contributions for 2007 were$386,124.
Annual OPEB Cost and Net OPEB Obligation
The City’s annual other OPEB cost (expense) is calculated based on the annual required contribution of theemployer (ARC), an amount actuarially determined in accordance with the parameters of GASB StatementNo. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to covernormal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not
69 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December31, 2007
to exceed 30 years. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to theplan, and the net OPEB obligation for 2007 are as follows:
Percentage ofAnnual OPEB annual OPEB
cost contributed Net OPEB
Fiscal year ended:December 31, 2007 $ 28,600,000 44% $ 15,892,277
The following table shows the components of the City’s annual OPEB cost for the year, the amountactually contributed to the plan, and changes in the City’s net OPEB obligation:
Annual required contribution S 28,600,000Contributions made 12,707,723
Increase in OPEB obligation 15,892,277
Net OPEB obligation — beginning of year
______________
Net OPEB obligation — end of year $ 15,892,277
Funded Status and Funding Progress
The funded status of the plan as of March 1, 2006 is as follows:
Actuarial accrued liability (AAL) $ 307,500,000Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL) $ 307,500,000
Funded ratioCovered payroll $ 153,600,000UAAL as a percentage of covered payroll 200%
Actuarial Methods and Assumptions
Actuarial valuations on an ongoing plan involve estimates of the value 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 revision as
actual results are compared with past expectations and new estimates are made about the future. 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 liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include benefits provided at the time of each
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CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
valuation and the historical pattern of sharing benefit costs between the employer and plan member to thatpoint. The actuarial methods used include techniques that are designed to reduce the effects of short-termvolatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-termperspective of the calculations. In the March 1, 2006 actuarial valuation, the unit credit actuarial costmethod was used. The actuarial assumptions included a 4% projected investment rate of return and anannual healthcare cost trend of 7.88% initially, reduced by decrements to an ultimate rate of 5% afterfive years. Both rates include a 3.25% inflation assumption. The amortization of the unfunded actuarialaccrued liability is calculated assuming 30 annual payments increasing at 4% per year.
(13) Self-insurance
It is the policy of the City not to purchase commercial insurance for the risks of losses to which it isexposed. Instead, the City management believes it is more economical to manage its risks internally and setaside assets for claim settlement in the General Fund. This fund services all claims for risk of loss to whichthe City is exposed, including general liability, property, and casualty up to $100,000 per occurrence;workers’ compensation; employee health and accident; environmental; and antitrust. Changes in thebalance of claims liabilities during the fiscal years 2007 and 2006 are as follows:
Beginning Current Endof year year Claim of yearliability claims payments liability
2007 $ 13,253,513 44,171,173 37,441,815 19,982,8712006 21,270,550 26,852,829 34,869,866 13,253,513
(14) Changes in Reporting Entity
Finalizing a two-year legal challenge by the City of Elkhorn (Elkhorn), the Nebraska Supreme Courtissued a ruling upholding the City annexation of Elkhorn. On March 1, 2007, the annexation of Elkhorn bythe City became official. Elkhorn is located directly west of the City’s existing boundary. The annexationof Elkhorn added approximately 8,300 people to the City. The City’s estimated population is now 419,545,The annexation also extends the City’s three-mile planning jurisdiction by 24,481.80 acres, giving the Citymore control over the growth and development along its edges.
In terms of physical infrastructure, the annexation of Elkhorn added one library and one community center.Elkhorn had one wastewater treatment plant constructed in the last 15 years and an estimated 150,000 feetof sanitary sewer mains. The Elkhorn parks department maintained three city parks and a swimming pool,all of which will now be taken care of by the City.
The 2006 valuation of the Ellchorn was $465.3 million. The City’s 2006 valuation was $22.3 billion.Annexing Elkhorn increased the City’s property tax base by 2.1%.
71 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Government-wide business
Sewer Fund type activitiesNet assets, previously reported $ 287,007,255 266,598,622Annexation of Elkhorn 5,669,810 5,669,810Net assets, as restated $ 292,677,065 272,268,432
Government-Other wide
General Debt Service governmental governmentalFund Fund Funds activities
Net assets, previously reported S 32,908,078 11,888,320 55,078,033 312,365,692Annexation of Elkhorn 785,740 2,346,741 330,525 9,851,045Net assets, as restated $ 33,693,818 14,235,061 55,408,558 322,216,737
(15) Commitments
The City is a defendant in a number of lawsuits in its normal course of operations. In addition to the$1,464,500 recorded by the City as claims and judgments payable, the City Attorney is of the opinion thatthere is a possibility that the City will incur additional losses on these lawsuits of approximately$4.4 million.
The City participates in a number of federally assisted grant programs, principally Federal HighwayConstruction Grants, Community Development Block Grant, Workforce Investment Act, and other localimprovement programs. The programs are subject to financial and compliance audits. The amount ofexpenditures, if any, that may be disallowed by granting agencies is not determinable at this time; however,city management does not believe that such amounts, if any, would be significant.
(16) Subsequent Events
On March 25, 2008, the City issued Special Obligation Refunding Bonds (taxable) in the amount of$38,535,000 bearing interest at 6.38%. Bond proceeds will be used to refund previously issued bonds thatfunded the redevelopment of Gallup Campus/Riverfront Business Park. The original bonds were short-termvariable rate bonds, which then City converted into a fixed rate by entering into a swap agreement. Presentvalue savings as a result of this transaction are projected at $2.9 million. The loan provides for annualprincipal payment ranging from $715,000 to $4,470,000 and semiannual interest payments each February 1and August 1 through 2026.
(17) MECA
(a) Nature ofOperations
MECA was incorporated under the Nebraska Nonprofit Corporation Act, Neb. Stat §21-1901, et seq.in the State of Nebraska. Formal operations of MECA commenced on August 25, 2000, when the
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CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
City approved an Agreement and Lease between the City and MECA to implement the ConventionCenter/Arena Redevelopment Plan, to provide bond funds to MECA, to allow MECA to cause thedesign and construction of the Convention Center/Arena Facility, to allow MECA to operate theConvention Center/Arena and Parking Facility for 99 years, and to provide a multiyear operatingsubvention from the City.
Title to the facility and all related infrastructure assets are vested with the City. Constructionactivities were principally funded by private donations and general obligation bonds of the City(the Project Funds). Construction costs, bond proceeds, and payments are not reflected in MECA’sfinancial statements as these assets, liabilities, revenues, and expenditures are accounted forseparately by the City.
Construction was completed and operations commenced for the Qwest Center Omaha facility duringfiscal 2004.
In June 2004, MECA Authority entered into a facility management services and lease agreementwith the City, to manage and operate the Civic Auditorium, the Music Hall, and the Mancuso Center(collectively referred to as the Civic Auditorium) for a three-year period beginning July 1, 2004. TheCity and MECA are required under the agreement to make advances to fund Civic Auditoriumoperations. Any advances made by MECA during the term of this agreement will be repaid throughoperating profits of the Civic Auditorium or through a subvention payment by the City in 2013. InMarch 2006, MECA and the City extended the Civic Auditorium lease agreement through June 30,2012.
(b) Summary ofSignjflcant Accounting Policies
General — In its accounting and financial reporting, MECA follows the pronouncements of theGASB. In addition, MECA follows the pronouncements of all applicable Financial AccountingStandards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB)Opinions and Accounting Research Bulletins (ARBs) of the Committee on Accounting Procedureissued on or before November 30, 1989, unless they conflict with or contradict GASBpronouncements.
Reporting Entity — MECA is a component unit of the City, for financial reporting purposes. TheGASB establishes the criteria used in determining which organizations should be included infinancial statements. Accounting principles generally accepted in the United States of Americarequire the inclusion of the transactions of government organizations for which an organization isfinancially accountable.
The extent of financial accountability is based upon several criteria including: appointment of avoting majority, imposition of will, financial benefit to or burden on a primary government, andfinancial accountability as a result of fiscal dependency.
MECA’s financial statements are included in the City’s financial statements as a discretely presentedcomponent unit.
73 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Measurement Focus Basis of Accounting — MECA accounts for its operations on the flow of
economic resources measurement focus and uses the accrual basis of accounting. Under this method,
revenues are recorded when earned and expenses are recorded at the time liabilities are incurred.
Cash and Cash Equivalents — MECA considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Property, Equipment, and Intangible Assets, Net — Depreciation is based on the estimated useful
lives of the capital assets using the straight-line method. Computer equipment and furniture and
fixtures are depreciated over five to ten years. Leasehold improvements are capitalized and
amortized over the lesser of the term of the lease or the useful life of the asset. Building rights are
amortized on a straight-line basis over 15 years. Repairs and maintenance items that significantly
extend the life of an asset are capitalized and amortized over the remaining useful life of the assets.
Fixed assets are stated at historical cost. Other repairs and maintenance are charged to expense when
incurred.
Income Taxes — MECA is a tax exempt 50l(c)(3) nonprofit corporation. In April 2006, MECA
received a favorable ruling from the Internal Revenue Service (IRS) in response to a Private Letter
Ruling request filed in July 2003. The ruling found that MECA is lessening the burdens of the City
by managing the operations of Qwest Center Omaha. As a result of this finding, the IRS determined
that the revenues derived from the facility’s operations are not subject to unrelated business income
tax (UBIT).
Capital Improvements and Repair and Replacement Reserves — As of June 30, 2007, the MECA
board established a Capital Improvement Reserve in the amount of $6,000,000. This reserve will be
used to fund future upgrades and improvements to the facility. Expenditures from this reserve will be
made for upgrade/improvement projects in excess of $100,000. MECA board also established a
Repair and Replacement Reserve in the amount of $2,500,000. This fund will be used for all other
capitalized asset purchases that are under $100,000. Amounts will be added to the Reserves at the
end of each fiscal year beginning in June 2008. Fifteen percent (15%) of MECA’s net operating
profit shall be allocated to the Capital Improvement Reserve and twenty percent (20%) of MECA’s
net operating profit shall be allocated to the Repair and Replacement Reserve, with a minimum
funding requirement of $600,000 per year broken out as follows: $270,000 to the Capital
Improvement Reserve and $330,000 to the Repair and Replacement Reserve. The Reserves totaled
$8,500,000 as of June 30, 2007.
Revenue Recognition — MECA recognizes its suite license and club seat revenues over the life of the
agreements. Amounts received in advance are recorded as deferred revenues based on the fair value
of services to be provided to the licensee, as determined by management. Amounts received in
excess of the fair value are recorded as donation revenue when received. Advance ticket sales,
parking, facility rental deposits, and other event revenue received in advance are initially recorded as
deferred revenues, which are recognized as revenues as the events take place or services are
provided. Naming rights and advertising revenues will be recognized ratably over the life of the
agreements.
74 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Use ofEstimates — The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
(c) Deposits and Investments
Bank Deposits — MECA’s bank deposits are collateralized at June 30, 2007 as follows:
Deposits per bank $ 301,738Money market 6,387,997
Total deposits 6,689,735
FDIC coverage 100,000
Uninsured anduncollateralized $ 6,589,735
Investments — At June 30, 2007, MECA’s investments consist of numerous variable rate preferred
securities with various maturity dates in 2050. In addition, MECA has various mutual fund
investments in a deferred compensation account. These securities are recorded at fair value based on
quotes received from the trustee’s market valuation service. The above investments are in
accordance with the investment policy of MECA as of June 30, 2007.
(d) Property, Equipment and Intangible Assets
Activity for the year ended June 30, 2007 for property, equipment and intangible assets and
accumulated depreciation are as follows:
July 1, June30,2006 Additions Dispositions 2007
Leasehold improvements $ 58,532 5,793,092 — 5,851,624
Furniture, fixtures andequipment 4,948,514 2,082,876 (43,706) 6,987,684
Building rights 10,079,196 — 10,079,196
Construction in progress 2,149,178 — (2,037,107) 112,071
17,235,420 7,875,968 (2,080,813) 23,030,575
Accumulated depreciationand amortizaton (3,217,736) (1,465,661) 43,706 (4,639,691)
Total $ 14,017,684 6,410,307 (2,037,107) 18,390,884
75 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Construction in progress dispositions include $46,583 of asset impairments related to software,which was charged to Other Operating Expenses in the statement of revenues, expenses and changesin net assets.
(e) Agreement and Lease
On August 25, 2000, MECA entered into an agreement and lease with the City that requires the Cityto make annual subventions payments to MECA, initially to fund start-up, preconstruction, planning,
and other preoperational activities, and thereafter to help offset anticipated annual operating losses.As discussed in note 17(f), in 2004 MECA amended its agreement and lease with the City (theamended agreement and lease) to provide for the repayment of construction funds. In 2006, theAuthority further amended the agreement and lease. Under the amended agreement and lease, theCity agrees to transfer to MECA the final subvention amount of $1,815,000 in fiscal 2008.
(/) Long-term Debt
MECA’s long-term debt activity for the year ended June 30, 2007, is as follows:
BalanceBalance June 30,
July 1, 2006 Additions Reductions 2007
City $ 7,537,460 — (675,946) 6,861,514Food service contract 2,571,399 (469,992) 2,101,407
Total $ 10,108,859 (1,145,938) 8,962,921
Through the amended agreement and lease with the City, MECA agreed to exercise good faith and
best efforts to raise and pay over to the City the sum of $14,000,000 to offset additional funds
provided by the City for the construction of the facility. Proceeds from the sale of Naming Rights
were specifically identified as a source of repayment. The Naming Rights have been sold to Qwest
Communications International, Inc. under a Convention Center/Arena Naming Rights Agreement,
which terminates on September 1, 2018. As a result, the obligation for the repayment of this portion
of the construction funds has been recorded as long-term debt payable to the City offset by recording
intangible Building Rights (note 17(d)).
Under a long-term contract for food service operations, MECA received a $4 million interest-free
loan from the contractor for the purchase of food service equipment and leasehold improvements.
The loan is to be repaid over the ten-year period of the contract, which began in July 2003.
76 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Basic Financial Statements
December 31, 2007
Debt service payments for the City and food service contract debt are as follows:
Principal Interest
Year:2008 $ 1,145,938 149,0542009 1,002,226 149,0542010 1,002,226 149,0542011 1,002,226 149,0542012—2016 3,832,305 745,2672017—2019 978,000 322,949
$ 8,962,921 1,664,432
(g) Commitments and Contingencies
MECA entered into a long-term contract for food service operations in November 2001. The termsof the contract commit MECA to a ten-year CPI indexed annual payment to the contractor of$651,805 for the year ended June 30, 2007. There are incentive provisions in the contract that mayresult in additional payments to the contractor. Such incentives totaled $412,951 for the year endedJune 30, 2007.
(h) Lease Agreements
MECA leases energy systems equipment and a postage machine. Lease expense was $110,320 forthe year ended June 30, 2007. The energy systems lease was paid in full during January 2007. As aresult of the lease being paid in full during January 2007, MECA has recorded a prepaid expense inthe amount of $1,501,620 at June 30, 2007, which will be amortized to lease expense over theremaining term of the original lease.
(i) Employee Benefits
MECA has established a 401(k) profit sharing plan for all employees. Participants can contribute upto 15% of their pretax compensation, subject to IRS limitations. MECA, at its discretion, may makematching contributions equal to a discretionary percentage of the participant’s elective deferrals to bedetermined by MECA. MECA matched $92,364 and $78,231 for the years ended June 30, 2007 and2006, respectively. MECA, at its discretion, may also make profit sharing contributions. No profitsharing contributions were made to the plan during the year ended June 30, 2007.
77
REQUIRED SUPPLEMENTARY INFORMATION(Other than MD&A)
ScheduleCITY OF OMAHA, NEBRASKA
Schedule of Revenues, Expenditures, andChanges in Fund Balances — Budget and Actual — General Fun
Year ended December 31, 2007
Variance withfinal budget
Budgeted amounts positiveOriginal Final Actual (negative)
Revenues:Property tax $ 54,058,697 54,058,697 55,126,392 1,067,695Motor vehicle taxes 8,800,000 8,800,000 8,825,629 25,629City sales and use tax 119,982,441 119,982,441 118,680,986 (1,301,455)Business taxes 30,035,962 30,035,962 30,778,878 742,916Licenses and permits 8,609,645 8,609,645 8,150,481 (459,164)Intergovernmental revenues 8,667,000 8,667,000 9,246,268 579,268Charges for services 16,585,600 16,585,600 18,568,340 1,982,740Interest income 2,300,000 2,300,000 5,671,876 3,371,876Rent and royalties 120,000 120,000 120,473 473Miscellaneous 1,596,035 1,596,035 4,915,605 3,319,570Revenue from annexation 6,900,000 6,900,000 — (6,900,000)
Total revenues 257,655,380 257,655,380 260,084,928 2,429,548
Expenditures:General govemment
Mayor’s office 984,356 1,014,883 965,105 49,778City clerks 633,690 636,180 635,424 756City council 1,014,720 1,014,720 1,021,215 (6,495)Law 3,548,477 3,548,477 3,378,888 169,589Human resources 1,657,814 1,657,814 1,680,577 (22,763)l-luman rights and relations 888,543 888,543 828,381 60,162Finance 2,440,537 2,472,903 2,389,924 82,979Planning 5,672,956 5,918,350 5,755,897 162,453Employee benefits 18,443,938 18,443,938 17,410,910 1,033,028Other agencies 31,447,685 25,796,904 22,869,002 2,927,902
Total general government 66,732,716 61,392,712 56,935,323 4,457,389
Public safety:Fire 66,306,358 67,999,030 69.709,351 (1,710,321)Police 89,363,023 90,549,993 93,535,664 (2,985,671)
Total public safety 155,669,381 158,549,023 163,245.015 (4,695,992)
Public works:Environmental 12,583,480 12,863,834 12,478,649 385,185Street and highway 2,013,552 2,013,552 2,662,187 (648,635)
Total public works 14,597,032 14,877.386 15,140,836 (263,450)
Culture and recreation:Parks and recreation 15,013,870 16,560,838 16,483,949 76,889Libraries 8,036,209 8,669,249 8,356,835 312,414Convention and tourism 250,000 250,000 250,000 —
Total culture and recreation 23,300,079 25,480.087 25,090,784 389,303
Total expenditures 260,299,208 260,299,208 260,411,958 (112,750)
(Deficiency) excess of revenuesover expenditures (2,643,828) (2,643,828) (327,030) 2,316,798
Net changes in fund balances (2,643,828) (2,643,828) (327,030) 2,316,798
Fund balances — beginning of year 2,643,828 2,643,828 5,303,150 2,659,322Lapsed encumbrances — 2,289,719 2,289,719Transfer — Contingency Liability Func — (700,000) (700,000)Transfer— Stormwater Fund (10,407) (10,407)
Fund balances — end of year $ 6,555,432 6,555,432
See accompanying notes to schedule of revenues, expenditures, and changes in fund balances — budget and actual — General Fund.
78
CITY OF OMAHA, NEBRASKA
Notes to Schedule of Revenues, Expenditures,and Changes in Fund Balances — Budget and Actual — General Fund
Year ended December 31, 2007
(1) Budget and Budgetary Accounting
The Mayor is required by the City Charter to prepare and submit an annual budget to the City Council. A
budget is prepared for the General Fund and all Special Revenue Funds, exclusive of all grant funds and
the service-type special assessments fund. These budgets are prepared primarily on a cash basis for
revenues and modified accrual basis for expenditures. The budget presented reflects the original budget
and the revised budget prior to the closing ordinance. In addition, encumbrances are reported as
expenditures for budgetary purposes. Under this system, purchase orders, contracts, and other
commitments for the expenditure of funds are recorded as encumbrances in order to reserve a portion of
the applicable appropriation.
The legal level of control (the level on which expenditures may not legally exceed appropriations) is at the
fund level. Budgetary control is maintained by department/division and by the following category of
expenditures: personnel services, nonpersonnel services, capital outlay, and debt service. All budget
amendments must be approved by the Mayor andlor City Council. Unencumbered appropriations lapse at
the end of the fiscal year. Encumbered funds are carried over to the ensuing fiscal year until utilized or
canceled.
The City Charter also requires the City Council each year to make an ad valorem tax levy for a sinking
fund (Debt Service Fund) that shall provide for principal and interest payments on the general obligation
bonded indebtedness of the City.
Appropriations for certain Special Revenue Funds and Capital Projects Funds are controlled on a project
basis and are carried forward each year until the project is completed or grant funds are expended.
Budgets are also prepared for the proprietary funds as a management control device. The budgets for these
funds are prepared on a revenue and expenditure basis similar to the budgets for the governmental fund
types.
(2) Reconciliation of Budget-Basis Revenues and Expenditures to GAAP
Revenue and expenditures presented on a non-GAAP budget basis of accounting differ from the revenues
and expenditures presented in accordance with GAAP because of the different treatment of encumbrances
and accruals (revenue recognition).
In addition, Section 5.14 of the City of Omaha’s Home Rule Charter requires, in relevant part, that the
year-end General Fund balance “. . .be applied as General Fund revenue in the budget for the fiscal year
two years subsequent to that fiscal year.” Therefore, the amount of the General Fund carryover coming into
a particular fiscal year has already been determined. Any General Fund encumbrances at the end of a fiscal
year are not included in the year-end General Fund balance because those encumbrances will normally
need to be paid in the following fiscal year and cannot be held until the fiscal year two years subsequent to
the fiscal year when the encumbrance was incurred.
79 (Continued)
CITY OF OMAHA, NEBRASKA
Notes to Schedule of Revenues, Expenditures,and Changes in Fund Balances — Budget and Actual — General Fund
Year ended December 31, 2007
All General Fund encumbrances are charged to the appropriate accounts at the end of the fiscal year. This
allows those funds to be kept separate from the year-end General Fund balance. Therefore, when the actual
payments to the vendors are required in the following fiscal year, there are General Fund moneys available.
A reconciliation of the differences between the budgetary versus GAAP is presented below:
Generalfund
Budget basis:2006 carryover to 2008 $ 2,659,3222007 carryover to 2009 3,896,110
Total budget basis 6,555,432
Basis differences:Taxes accrued 19,675,056Accrued interest 841,378Encumbrances 1,206,616Inventories 690,172
GAAP basis $ 28,968,654
(3) Expenditures in Excess of Budget
Budgeted expenditures were exceeded in the following departments/divisions:
Department/division Amount
General fund:City council $ (6,495)
Human resources (22,763)
Public safety:Fire (1,710,321)
Police (2,985,671)
Public works:Street and highway (648,635)
80
CITY OF OMAHA, NEBRASKA
Schedule of Funding Progress and Employer Contributions
Year ended December 31, 2007
Civilian Plan Schedule of Funding Progress (Unaudited)
(Dollar amounts in millions)
Actuarial UAAL as aActuarial accrued Unfunded percentagevalue of liability (AAL) AAL Covered of covered
Actuarial assets entry age* (UAAL) Funded ratio payroll payrollvaluation date (a) (b) (ba) (a/b) (c) ((ba)/c)
2007 $ 294.7 369.0 74.3 79.9% $ 54.0 137.6%2006 292.0 361.7 69.7 80.7 48.2 144.62005 277.1 352.0 74.9 78.7 53.4 140.32004 270.8 327.9 57.1 82.6 53.2 107.32003 250.1 316.7 66.6 79.0 54.9 121.32002 217.1 296.9 79.8 73.1 55.4 144.0
Civilian Plan Schedule of Employer Contributions (Unaudited)
Annual Percentage Netpension of APC pension
Fiscal year ended cost (APC) contributed obligation
2007 $ 8,794,542 57% $ (13,910,207)2006 6,135,462 67 (10,090,703)2005 6,822,028 65 (8,100,275)2004 6,815,746 65 (5,778,439)2003 6,176,321 70 (3,411,896)2002 6,255,127 58 (1,585,196)
81 (Continued)
CITY OF OMAHA, NEBRASKA
Schedule of Funding Progress and Employer Contributions
Year ended December 31, 2007
Uniformed Plan Schedule of Funding Progress (Unaudited)
(Dollar amounts in millions)
Actuarial UAAL as a
Actuarial accrued Unfunded percentage
value of liability (AAL) AAL Funded Covered of covered
Actuarial assets entry age * (UAAL) ratio payroll payroll
valuation date (a) (b) (b-a) (a/b) (c) ((b-a)/c)
2007 S 530.8 882.7 351.9 60.1% $ 99.6 353.3%
2006 507.6 801.1 293.5 63.4 91.7 320.12005 453.3 703.8 250.5 64.4 86.8 288.6
2004 420.3 543.9 123.6 77.3 82.1 150.5
2003 383.7 511.9 128.2 75.0 85.1 150.6
2002 314.1 481.6 167.5 65.2 79.7 210.2
Uniformed Plan Schedule of Employer Contributions (Unaudited)
Annual Percentage Netpension of APC pension
Fiscal year ended cost (APC) contributed obligation
2007 S 34,563,067 60 $ (45,494,051)2006 30,917,700 65 (31,630,196)
2005 26,145,454 78 (20,884,106)
2004 22,487,399 75 (12,500,861)
2003 23,323,354 74 (6,788,841)
2002 15,366,335 99 (746,110)
82 (Continued)
Post-Retirement Obligation Schedule ofFunding Progress
Schedule of Funding Progress (Unaudited)
CITY OF OMAHA, NEBRASKA
Schedule of Funding Progress and Employer Contributions
Year ended December 31, 2007
Actuarialvaluation date
March 1,2006
Actuarial Actuarialvalue of accrued
assets liability (AAL)(a) (b)
$ — 307,500,000
UAAL as aUnfunded percentage
AAL Covered of covered(UAAL) Funded ratio payroll payroll
(b-a) (a/b) (c) ((b-a)/c)
307,500,000 —% $ 153,700,000 200%
83
SINGLE AUDIT SECTION
CITY OF OMAHA, NEBRASKA
Schedule of Expenditures of Federal Awards
Year ended December 31, 2007
Federal grantor/pass-through CFDA 2607
grantor/program title Grant number number expenditures
US. Department of Health and Human Services:Direct program:
Urban Enterprise Community N/A N/A S 399,944
U.S. Department of Homeland Security:Direct program:
Interoperable Communications Equipment 2004-INWX-00 13 97.055 510,61 7
Passed through Nebraska Emergency Management Agency:Urban Area Security Initiative 2005-GET5-0020 97.067 966,442
Urban Area Security Initiative 2006-GET6-0016 97.067 608,810
Buffer Zone Protection Plan 2005-BZPP-Omahapro 97.078 44,230
Total U.S. Department of Homeland Security 2,130,099
U.S. Department of Housing and Urban Development:Direct programs:
Community Development Block Grants/Entitlement Grants B-04/05-MC-3 1-0002 14.218 4,906,620
Emergency Shelter Grants Program S-00/Ol -MC-3 1-0001 14.231 250,845
HOME Investment Partuership Program M-95/0 I -MC/DC-3 1-0203 14.239 2,831,053
Economic Development Incentive Various 14.246 631,520
Fair Housing Assistance Program FF2O7KOO/0 17008 14.401 83,059
Lead-Based Paint Hazard Control Various 14.900 972.03 8
Total U.S. Department of Housing and Urban Development 9,675,135
U.S. Department of Interior:Passed through Nebraska State Historical Society .— Historic
Preservation Fund Grants-in-Aid 2005 15.904 34.436
U.S. Department of Justice:Direct programs:
Juvenile Justice & Delinquency 2006-JLFX-K073 16.540 254,016
Rural Domestic Violence & Child Victimization 2006-WRAX-0005 16.589 281,075
Grants to Encourage Arrest Policies 2005-WEAX-0035 16.590 207,390
Public Safety Partnership and Community Policing Grants (COPS) Various 16.710 1,143,150
Weed & Seed Various 16.725 282,389
G.R.E.A.T. Grant Various 16.737 83,136
Justice Assistance Grant Various 16.738 165,483
Passed through State of Nebraska Commission on LawEnforcement and Criminal Justice:
Juvenile Accountability Incentive Block Grants 06-JA-60l & 05-JA-601 16.523 105,723
Project Safe Neighborhoods Various 16.609 118,246
Metro Drug Task Force 06-DA-307 & 07-DA-306 16.738 206,628
Diversity Training and Minority Recruiting 06DA308 N/A 45,140
Total U.S. Department of Justice 2,892,376
U.S. Department of Transportation:Passed through State of Nebraska Department of Roads:
Highway Planning and Construction Vanous 20.205 24,161,658
U.S. Environmental Protection Agency:Passed through State of Nebraska Department of
Environmental Quality:Air Pollution Control Program Support BG997325-Al 66.001 451,281
Capitalization Grants for Clean Water State Revolving Funds C3l73 19 &C3l7375 66.458 5,767,716
Total U.S. Environmental Protection Agency 6,218,997
Office of National Drug Control Policy:Direct Programs — High-Intensity Drug Trafficking Aret Vanous NA 277,787
Total expenditures of federal awards $ 45,790,432
See accompanying independent auditors’ report and notes to schedule of expenditures of federal awards.
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CITY OF OMAHA, NEBRASKA
Notes to Schedule of Expenditures of Federal Awards
Year ended December 31, 2007
(1) Reporting Entity
The reporting entity for the schedule of expenditures of federal awards (SEFA) is the same as thatdisclosed in note 1 to the financial statements.
(2) Basis of Accounting
Amounts reported in the SEFA are on the accrual basis, while the amounts reported on federal financialreports are primarily on a cash basis.
(3) Outstanding Loan Principal Balances
The following is a list of the outstanding principal balances of Community Development Block Grant andrelated program loans due at December 31, 2007:
Community Development Block Grant $ 564,037*
The following is the outstanding principal balance of the HOME Investment Partnership Program atDecember 31, 2007:
HOME Investment Partnership Program $ 1,367,996
Current year loans of $30,744 are included in the SEFA.
The following is a list of outstanding principal balances of capitalization grants for state revolving fundsand related program loans at December 31, 2007:
Zorinsky Project $ 482,521 *
Capitalization Grants for Clean Water State Revolving Funds 37,056,148 *
Total $ 37,538,669
* The City has no continuing compliance requirements for these loans outstanding and is presented forinformational purposes only.
(4) Subrecipients
The City granted federal awards in the form of pass-through awards to various subrecipients during theyear ended December 31, 2007 in the amount of $3,254,752.
85
KPMG LLP
Suite 1501 Suite 1600
Two Central Park Plaza 233 South l3” Street
Omaha, NE 68102 Lincoln, NE 68508-2041
Independent Auditors’ Report on Internal Control over FinancialReporting and on Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with Governnient Auditing Standards
The Honorable Mayor and Membersof the City Council
City of Omaha, Nebraska:
We have audited the financial statements of the governmental activities, the business-type activities, thediscretely presented component unit, each major fund, and the aggregate remaining fund information of theCity of Omaha, Nebraska (the City) as of and for the year ended December 31, 2007, which collectivelycomprise the City’s basic financial statements, and have issued our report thereon dated August 26, 2008.Our report was modified to include a reference to other auditors, change in reporting entity, and theadoption of Governmental Accounting Standards Board Statement No. 45. We conducted our audit inaccordance with auditing standards generally accepted in the United States of America and the standardsapplicable to financial audits contained in Government Auditing Standards, issued by the ComptrollerGeneral of the United States Other auditors audited the financial statements of Metropolitan Entertainmentand Convention Authority (MECA), the discretely presented component unit, as described in our report onthe City’s financial statements. The financial statements of MECA were not audited in accordance withGovernment Auditing Standards.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the City’s internal control over financial reporting asa basis for designing our auditing procedures for the purpose of expressing our opinions on the financialstatements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internalcontrol over financial reporting. Accordingly, we do not express an opinion on the effectiveness of theCity’s internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in thepreceding paragraph and would not necessarily identify all deficiencies in internal control that might be
significant deficiencies or material weaknesses. However, as discussed below, we identified certain
deficiencies in internal control over fmancial reporting that we consider to be significant deficiencies.
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 entity’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 entity’s financial statements that is more than inconsequential will not
be prevented or detected by the entity’s internal control over financial reporting. We consider the
deficiency described in the accompanying schedule of findings and questioned costs to be a significant
deficiency in internal control over financial reporting (#07-01).
86
KPMG LLP, a US. limited hability partnership, is the U.S.member firm of KPMC International, a Swiss cooperative.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results inmore than a remote likelihood that a material misstatement of the financial statements will not be preventedor detected by the entity’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 notnecessarily identify all deficiencies in the internal control that might be significant deficiencies and,accordingly, would not necessarily disclose all significant deficiencies that are also considered to bematerial weaknesses. However, we do not believe the significant deficiency described above is a materialweakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s basic financial statements are free ofmaterial 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 thedetermination of financial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit, and accordingly, we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance or other matters that are required to bereported under Government Auditing Standards.
The City’s response to the finding identified in our audit is described in the accompanying schedule offindings and questioned costs. We did not audit the City’s response, and accordingly, we express noopinion on it.
This report is intended solely for the information and use of the Mayor, members of the City Council,management, and federal awarding agencies and pass-through entities and is not intended to be, and shouldnot be, used by anyone other than these specified parties.
LCP
Omaha, NebraskaAugust 26, 2008
87
KPMG LLP
Suite 1501 Suite 1600
Two Central Park Plaza 233 South 13th Street
Omaha, NE 68102 Lincoln, NE 68508-2041
Independent Auditors’ Report on Compliance with Requirements
Applicable to Each Major Program and on Internal Control overCompliance in Accordance with 0MB Circular A-133
The Honorable Mayor and Membersof the City Council
City of Omaha, Nebraska:
Compliance
We have audited the compliance of the City of Omaha, Nebraska (the City) with the types of compliance
requirements described in the U.S. Office of Management and Budget (0MB) Circular A-]33 Compliance
Supplement that are applicable to each of its major federal programs for the year ended December 31,
2007. The City’s major federal programs are identified in the summary of auditors’ 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 ofthe City’s management. Our responsibility is to express an opinion on the City’s compliance based on our
audit.
The City’s financial statements include the operations of Metropolitan Entertainment and Convention
Authority (MECA). Our audit, described below, did not include the operations of MECA.
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 0MB Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations. Those standards and 0MB 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’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 on the City’s compliance with those requirements.
In our opinion, the City 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 December 31, 2007.
Internal Control over Compliance
The management of the City is responsible for establishing and maintaining effective internal control over
compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In
planning and performing our audit, we considered the City’s internal control over compliance with
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.
88
KPMG LLP, a U.S. tirrnted liability partnership. is the U.S.member tim, of KPMG International, a Swiss cooperative.
Our consideration of internal control over compliance was for the limited purpose described in the
preceding paragraph and would not necessarily identifv all deficiencies in the entity’s internal control that
might be significant deficiencies or material weaknesses as defined below. However, as discussed below,
we identified certain deficiencies in internal control over compliance that we consider to be significant
deficiencies.
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 entity’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 entity’s internal control. We consider
the deficiency in internal control over compliance described in the accompanying schedule of findings and
questioned costs as item 07-02 to be a significant deficiency.
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 entity’s internal control. We consider the
deficiency described in the accompanying schedule of findings and questioned costs as 07-02 to be
material weakness.
The City’s response to the findings identified in our audit is described in the accompanying schedule of
findings and questioned costs. We did not audit the City’s response, and accordingly, we express no
opinion on it.
This report is intended solely for the information and use of the Mayor, members of the City Council,
management, 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.
LCP
Omaha, NebraskaAugust 26, 2008
89
CITY OF OMAHA, NEBRASKA
Schedule of Findings and Questioned Costs
December 31, 2007
(1) Summary of Auditors’ Results
(a) The type of report issued on the basic financial statements: Unqualified opinions
(b) Significant deficiencies in internal control were disclosed by the audit of the basic financial
statements: Yes
Material weaknesses: No
(c) Noncompliance which is material to the basic financial statements: No
(d) Significant deficiencies in internal control over major programs: Yes
Material weaknesses: Yes
(e) The type of report issued on compliance for major programs: Unqualfled opinions
(f) Any audit findings which are required to be reported under Section 5 10(a) of 0MB Circular A-133:
No
(g) Major programs: Highway Planning and Construction (20205) and Capitalization Grants for
Clear Water State Revolving Funds (66.458)
(h) Dollar threshold used to distinguish between Type A and Type B programs: $1,407,683
(i) Auditee qualified as a low-risk auditee under Section 530 of 0MB Circular A-133: No
(2) Findings Related to the Basic Financial Statements Reported in Accordance with Government
Auditing Standards
Finding #07-01
Program: Not applicable.
Federal Grantor Agency: Not applicable.
Criteria: Governments are required to establish internal controls over access to IT systems.
Condition: The City’s IT service provider did not have adequate controls over access to financial systems.
Questioned Costs: None.
Context: IT general internal controls were determined to be ineffective.
Cause: The service provider has not monitored access.
Effect: Errors were not identified.
Recommendation: We recommend that the City’s service provider establish internal controls over access
to IT information systems.
90 (Continued)
CITY OF OMAHA, NEBRASKA
Schedule of Findings and Questioned Costs
December 31, 2007
Management Response: The City has asked the service provider to develop internal control procedures toensure appropriate security surrounding the general ledger system.
Responsible Official: Al Herink
Corrective action will be complete by August 2008.
(3) Findings and Questioned Costs Relating to Federal Awards
Finding #07-02
Programs: 20.205 Highway Planning and Construction; pass-through grant number 0317319 and 66.45 8Capitalization Grants for Clear Water State Revolving Funds-passed through State of NebraskaDepartment of Environmental Quality; pass-through grant number TCSP-STPB-28 (67).
Federal Grantor Agency: U.S. Department of Transportation and U.S. Environmental Protection Agency.
Criteria: The City is responsible to prepare the Schedule of Expenditures of Federal Awards (SEFA) inaccordance with 0MB Circular A-133.
Condition: The City incorrectly stated expenditures on the SEFA for CFDA No. 20.205 and 66.458 byapproximately $10 million each.
Questioned Costs: None.
Cause/Context: Internal controls over preparation of the SEFA are ineffective.
Effect: CFDA No. 20.205 was understated by $10 million and CFDA No. 66.458 was overstated by$10 million.
Recommendation: We recommend the City assign responsibility to review the SEFA after preparation.
Views of Responsible Official: The City’s Grant Accountant will be responsible to coordinate thecompletion of the Schedule of Expenditures of Federal Grant Awards. A financial system report will beprepared that lists all awards with any fiscal year activity. This report will be reconciled with the SEFAschedule by the City’s Grant Accountant. After the SEFA schedule is completed, a final review will bepreformed by the Accounting Manager. Corrective action will be completed by December 2008.
Responsible Official: Al Herink
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APPENDIX C
FORM OF CONTINUING DISCLOSURE UNDERTAKING
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APPENDIX C
FORM OF CONTINUING DISCLOSURE UNDERTAKING
Following is the text of Section 11 of the Ordinance. Such Ordinance provisions comprise the City’s continuing disclosure undertakings pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i) with respect to the Bonds.
(a) That the City does hereby covenant and agree and enter into a written
undertaking for the benefit of the holders and beneficial owners of the Bonds required by Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (17 C.F.R. § 240.15c2-12) (the “Rule”). Capitalized terms used in this Section 11 and not otherwise defined in this Ordinance shall have the meanings assigned such terms in subsection (d) hereof. It being the intention of the City that there be full and complete compliance with the Rule, this Section shall be construed in accordance with the written interpretative guidance and no-action letters published from time to time by the Securities and Exchange Commission and its staff with respect to the Rule.
(b) The City undertakes to provide the following information as provided in this Section 11:
(1) Annual Financial Information;
(2) Audited Financial Statements, if any; and
(3) Material Event Notices.
(c) (1) The City shall, while any Bonds are outstanding, provide the Annual Financial Information on or before the date which is 270 days after the end of each fiscal year of the City (the “Report Date”) to each then existing NRMSIR and the SID, if any. The City shall include with each submission of Annual Financial Information a written representation to the effect that the Annual Financial Information is the Annual Financial Information required by this Section 11 and that it complies with the applicable requirements of this Section 11 and that it has been provided to each then existing NRMSIR and the SID, if any. If the City changes its fiscal year, it shall provide written notice of the change of fiscal year to each then existing NRMSIR or the Municipal Securities Rulemaking Board (the “MSRB”) and the SID, if any. It shall be sufficient if the City provides to each then existing NRMSIR and the SID, if any, any or all of the Annual Financial Information by specific reference to documents previously provided to each NRMSIR and the SID, if any, or filed with the Securities and Exchange Commission and, if such a document is a final official statement within the meaning of the Rule, available from the MSRB.
(2) If not provided as part of the Annual Financial Information, the City shall provide the Audited Financial Statements when and if available while any Bonds are outstanding to each then existing NRMSIR and the SID, if any.
(3) If a Material Event occurs while any Bonds are outstanding, the City shall provide a Material Event Notice in a timely manner to each then existing NRMSIR or the
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MSRB and the SID, if any. Each Material Event Notice shall be so captioned and shall prominently state the date, title and CUSIP numbers of the Bonds.
(4) The City shall provide in a timely manner to each then existing NRMSIR or the MSRB and to the SID, if any, notice of any failure by the City while any Bonds are outstanding to provide to the NRMSIRs and the SID, if any, Annual Financial Information on or before the Report Date.
(5) Any filing or report under this Section 11 may be made solely by transmitting such filing or report to the Central Post Office, Disclosure USA established by the Texas Municipal Advisory Council (the “MAC”) as provided at http://www.disclosureusa.org unless the United States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to the MAC dated September 7, 2004.
(d) The following are the definitions of the capitalized terms used in this Section 11 and not otherwise defined in this Ordinance:
(1) “Annual Financial Information” means the financial information or operating data with respect to the City, provided at least annually, of the type included in Appendix B of the final official statement with respect to the Bonds. The financial statements included in the Annual Financial Information shall be prepared in accordance with generally accepted accounting principles (“GAAP”) for governmental units as prescribed by the Governmental Accounting Standards Board (the “GASB”). Such financial statements may, but are not required to be, Audited Financial Statements.
(2) “Audited Financial Statements” means the City’s annual financial statements, prepared in accordance with GAAP for governmental units as prescribed by the GASB, which financial statements shall have been audited by such respective independent auditors as the City shall be then required or permitted by the laws of the State of Nebraska.
(3) “Material Event” means any of the following events, if material, with respect to the Bonds:
(i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults;
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties;
(iv) Unscheduled draws on credit enhancements reflecting financial difficulties;
(v) Substitution of credit or liquidity providers, or their failure to perform;
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(vi) Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
(vii) Modifications to rights of Bondholders;
(viii) Bond calls;
(ix) Defeasances;
(x) Release, substitution or sale of property securing repayment of the Bonds; and
(xi) Rating changes.
(4) “Material Event Notice” means written or electronic notice of a Material Event.
(5) “NRMSIR” means a nationally recognized municipal securities information repository, as recognized from time to time by the Securities and Exchange Commission by no-action letter for the purposes referred to in the Rule. The NRMSIRs as of the date of this Ordinance are:
Bloomberg Municipal Repository, 100 Business Park Drive, Skillman, New Jersey 08558, Phone: (609) 279-3225, FAX: (609) 279-5962 and E-Mail: [email protected]; DPC Data Inc., One Executive Drive, Fort Lee, New Jersey 07024, Phone: (201) 346-0701, FAX: (201) 947-0107 and E-Mail: [email protected]; Standard & Poor’s Securities Evaluations, Inc., 45th Floor, 55 Water Street, New York, New York 10041, Phone: (212) 438-4595, FAX: (212) 438-3975 and E-Mail: [email protected]; and Interactive Data Pricing and Reference Data, Inc., Attn: NRMSIR, 15th Floor, 100 William Street, New York, New York 10038, Phone: (212) 771-6999, (800) 689-8466, FAX: (212) 771-7390 and E-Mail: [email protected]. (Updates are available at: http://www.sec.gov/info/municipal/nrmsir.htm.).
Beginning July 1, 2009, the sole NRMSIR will be the Municipal Securities Rulemaking
Board; Email: http://www.emma.msrb.org. Reference is made to Commission Release No. 34-59062, December 8, 2008 (the “Release”) relating to the MSRB’s Electronic Municipal Market Access (“EMMA”) system for municipal securities disclosure that becomes effective on July 1, 2009. To the extent applicable to its undertakings under this Section 11, the City shall comply with the Release and with EMMA.
(6) “SID” means a state information depository as operated or designated by the State and recognized by the Securities and Exchange Commission by no-action letter as such for the purposes referred to in the Rule. As of the date of this Ordinance, there is not an SID in the State of Nebraska.
(e) Unless otherwise required by law and subject to technical and economic feasibility, the City shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the City’s information.
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(f) (1) The continuing obligation hereunder of the City to provide Annual Financial Information, Audited Financial Statements, if any, and Material Event Notices shall terminate immediately once the Bonds no longer are outstanding. This Section 11, or any provision hereof, shall be null and void in the event that the City obtains an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require this Section 11, or any such provision, are invalid, have been repealed retroactively or otherwise do not apply to the Bonds, provided that the Issuer shall have provided notice of such delivery and the cancellation of this Section 11 to each then existing NRMSIR or the MSRB and the SID, if any.
(2) This Section 11 may be amended, without the consent of the Bondholders, but only upon the City obtaining an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance of this Section 11 and by the City with the Rule, provided that the City shall have provided notice of such delivery and of the amendment to each then existing NRMSIR or the MSRB and the SID, if any. Any such amendment shall satisfy, unless otherwise permitted by the Rule, the following conditions:
(i) The amendment may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law or change in the identity, nature or status of the obligated person or type of business conducted;
(ii) This Section 11, as amended, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(iii) The amendment does not materially impair the interests of Bondholders, as determined either by parties unaffiliated with the City (such as nationally recognized bond counsel), or by approving vote of Bondholders pursuant to the terms of the Ordinance at the time of the amendment.
The initial Annual Financial Information after the amendment shall explain, in narrative form, the reasons for the amendment and the effect of the change, if any, in the type of operating data or financial information being provided.
(g) Any failure by the City to perform in accordance with this Section 11 shall not constitute an Event of Default with respect to the Bonds. If the City fails to comply herewith, any Bondholder or beneficial owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the City to comply with its obligations hereunder.
APPENDIX D
FORM OF OPINION OF BOND COUNSEL
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
[Letterhead of Kutak Rock LLP]
April __, 2009
City Council of the City of Omaha, Nebraska Omaha/Douglas Civic Center 1819 Farnam Street Omaha, NE 68183
$37,050,000 City of Omaha, Nebraska
General Obligation Refunding Bonds Series of 2009
Ladies and Gentlemen:
We have acted as Bond Counsel in connection with the issuance and sale by the City of Omaha, a municipal corporation in the State of Nebraska, of $37,050,000 aggregate principal amount of General Obligation Refunding Bonds, Series of 2009 (the “Bonds”). The Bonds are issuable as fully registered Bonds without coupons dated as of their date of delivery in the denomination of $5,000 or any integral multiple thereof, bearing interest payable semiannually on April 15 and October 15 of each year, commencing October 15, 2009, at the rates per annum set forth in the schedule below.
The Bonds mature serially in numerical order on October 15, in each of the years and in the principal amounts as follows:
Maturity Date (October 15)
Principal Amount
Interest Rate
Maturity Date(October 15)
Principal Amount
Interest Rate
2010 $6,735,000.00 5.000% 2018 $1,475,000.00 3.625% 2011 6,840,000.00 4.000 2019 1,520,000.00 3.750 2012 4,490,000.00 4.000 2020 880,000.00 5.000 2013 2,535,000.00 4.000 2021 500,000.00 3.875 2014 2,285,000.00 4.000 2021 375,000.00 5.000 2015 1,000,000.00 3.125 2022 905,000.00 5.000 2015 1,100,000.00 4.000 2023 950,000.00 5.000 2016 2,100,000.00 4.000 2024 900,000.00 4.000 2017 405,000.00 3.375 2025 1,055,000.00 5.000 2017 1,000,000.00 5.000
D-2
The Bonds maturing October 15, 2020 and thereafter are subject to redemption at the option of the City of Omaha at any time on or after October 15, 2019, upon the terms and at the prices set forth therein. The Bonds recite that they are issued by the City of Omaha to provide for payment of the costs of refunding certain outstanding general obligation indebtedness of the City, and in each case under and pursuant to and in full conformity with the Constitution and Statutes of the State of Nebraska and the Charter of the City of Omaha, and pursuant to and in full compliance with the proceedings of the City Council of the City of Omaha duly enacted and adopted.
The City has covenanted in the ordinance pursuant to which the Bonds have been issued to comply with all necessary provisions of the Internal Revenue Code of 1986, as amended (the “Code”), to preserve the exclusion of interest on the Bonds from gross income for federal income tax purposes. Noncompliance by the City with such restrictions may cause the interest on the Bonds to be subject to federal income taxation retroactive to their date of issue.
We have examined the Constitution and Statutes of the State of Nebraska, the Charter of the City of Omaha, certified copies of proceedings of the City Council of the City of Omaha authorizing the issuance of the Bonds, and an executed bond of said issue.
In our opinion the Bonds have been authorized and issued in accordance with the Constitution and Statutes of the State of Nebraska and the Charter of the City of Omaha, and constitute valid and legally binding obligations of the City, and the City has the power and is obligated to levy ad valorem taxes for the payment of the Bonds and the interest thereon upon all the property within the City of Omaha subject to taxation by the City of Omaha without limitation as to rate or amount.
The rights of the owners of the Bonds and the enforceability thereof may be subject to valid bankruptcy, insolvency, reorganization, moratorium and other laws for the relief of debtors.
It is also our opinion that, assuming compliance by the City of Omaha with the covenant referred to in the fourth paragraph of this letter, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not a special preference item for purposes of the federal alternative minimum tax imposed on individuals and corporations. Interest on the Bonds, however, must be included in the “adjusted current earnings” of certain corporations (i.e., alternative minimum taxable income as adjusted for certain items, including those items that would be included in the calculation of a corporation’s earnings and profits under Subchapter C of the Code) and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of each such corporation’s adjusted current earnings (which includes tax-exempt interest) over its alternative minimum taxable income (determined without regard to this adjustment and prior to reduction for certain net operating losses).
The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient’s particular tax status or other items of income or deduction. We express no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of Social Security or Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit or taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations are advised to consult their tax advisors as to the tax consequences of purchasing or holding the Bonds.
D-3
It is further our opinion that, under the existing laws of the State of Nebraska, interest income on the Bonds is exempt from Nebraska state income taxation as long as it is exempt for purposes of the federal income tax.
Very truly yours,
[To be signed and delivered at closing by Kutak Rock LLP]
[THIS PAGE LEFT BLANK INTENTIONALLY]
APPENDIX E
SCHEDULE OF PRIOR BONDS
Douglas County Sanitary and Improvement District No. 151 (Oak Hills Estates) General Obligation Refunding Bonds Series 2001
Dated December 1, 2001
Maturity December 1
Amount
Interest Rate
CUSIP
2010 $15,000 4.70% 259282 VM0 2011 15,000 4.80 259282 VN8
Douglas County Sanitary and Improvement District No. 245 (Orchard Park)
General Obligation Refunding Bonds Series 2003 Dated August 1, 2003
Maturity August 1
Amount
Interest Rate
CUSIP
2010 $45,000 3.65% 259283 P29 2011 45,000 3.85 259283 P37 2012 45,000 4.00 259283 P45 2013 45,000 4.15 259283 P52 2014 50,000 4.30 259283 P60 2015 50,000 4.45 259283 P78 2016 50,000 4.55 259283 P86 2017 50,000 4.65 259283 P94 2018 55,000 4.75 259283 P28 2019 55,000 4.80 259283 P36 2020 60,000 4.85 259283 P44
Douglas County Sanitary and Improvement District No. 272 (Willow Wood)
General Obligation Refunding Bonds Series 2006 Dated May 1, 2006
Maturity
May 1
Amount
Interest Rate
CUSIP
2012 $250,000 4.15% 259288 J82 2013 265,000 4.25 259288 J90 2014 280,000 4.30 259288 K23 2015 290,000 4.40 259288 K31 2016 305,000 4.45 259288 K49
Douglas County Sanitary and Improvement District No. 321(Summer Wood)
General Obligation Refunding Bonds Series 2001 Dated July 1, 2001
Maturity
July 1
Amount
Interest Rate
CUSIP
2010 $235,000 4.90% 259282 KA8 2011 250,000 5.00 259282 KB6 2012 265,000 5.10 259282 KC4 2013 280,000 5.15 259282 KD2
E-2
Douglas County Sanitary and Improvement District No. 353 (Linden Estates) General Obligation Refunding Bonds Series 2002
Dated October 1, 2002
Maturity October 1
Amount
Interest Rate
CUSIP
2010 $160,000 4.20% 259282 7Q8 2011 165,000 4.40 259282 7R6 2012 200,000 4.50 259282 7S4 2013 265,000 4.60 259282 7T2 2014 275,000 4.75 259282 7U9
Douglas County Sanitary and Improvement District No. 364 (Cherry Hills)
General Obligation Refunding Bonds Series 2002 Dated November 1, 2002
Maturity
November 1
Amount
Interest Rate
CUSIP
2010 $230,000 3.90% 259283 CQ0 2011 240,000 4.10 259283 CR8 2012 250,000 4.20 259283 CS6 2013 265,000 4.30 259283 CT4 2014 275,000 4.45 259283 CU1 2015 295,000 4.50 259283 CV9 2016 300,000 4.60 259283 CW7
Douglas County Sanitary and Improvement District No. 367 (The Ridges)
General Obligation Refunding Bonds Series 2004 Dated December 15, 2004
Maturity
December 15
Amount
Interest Rate
CUSIP
2011 $285,000 3.60% 259287 H37 2012 300,000 3.75 259287 H45 2013 310,000 3.90 259287 H52 2014 325,000 4.00 259287 H60 2015 335,000 4.15 259287 H78 2016 350,000 4.25 259287 H86 2017 365,000 4.30 259287 H94 2018 380,000 4.40 259287 J27 2019 395,000 4.45 259287 J35
Douglas County Sanitary and Improvement District No. 369 (Mission Ridge)
General Obligation Refunding Bonds, Series 2003 Dated September 1, 2003
Maturity September 1
Amount
Interest Rate
CUSIP
2010 $135,000 3.90% 259283 Y60 2011 145,000 4.15 259283 Y78 2012 150,000 4.30 259283 Y86 2013 155,000 4.40 259283 Y94 2014 160,000 4.45 259283 Z28 2015 170,000 4.65 259283 Z36 2016 175,000 4.75 259283 Z44
E-3
Douglas County Sanitary and Improvement District No. 379 (Elk Creek Crossing) General Obligation Refunding Bonds Series 2004
Dated March 15, 2004
Maturity March 15
Amount
Interest Rate
CUSIP
2010 150,000 3.20% 259287 GS3
Douglas County Sanitary and Improvement District No. 383 (Cypress Hills)
General Obligation Refunding Bonds Series 2005 Dated June 15, 2005
Maturity
October 15
Amount
Interest Rate
CUSIP
2011 $55,000 4.00% 259288 BG2 2012 60,000 4.10 259288 BH0 2013 60,000 4.20 259288 BJ6 2014 60,000 4.30 259288 BK3 2015 65,000 4.40 259288 BL1 2016 65,000 4.50 259288 BM9 2017 70,000 4.60 259288 BN7 2018 75,000 4.65 259288 BP2 2019 75,000 4.70 259288 BQ0 2020 80,000 4.75 259288 BR8 2021 85,000 4.80 259288 BS6 2022 90,000 4.85 259288 BT4 2023 95,000 4.90 259288 BU1
Douglas County Sanitary and Improvement District No. 391 (Spring Ridge)
General Obligation Refunding Bonds Series 2005 Dated March 1, 2005
Maturity March 1
Amount
Interest Rate
CUSIP
2012 $220,000 3.70% 259287 2A7 2013 230,000 3.85 259287 2B5 2014 235,000 4.00 259287 2C3 2015 250,000 4.10 259287 2D1 2016 260,000 4.20 259287 2E9 2017 275,000 4.30 259287 2F6 2018 285,000 4.35 259287 2G4 2019 300,000 4.40 259287 2H2
Douglas County Sanitary and Improvement District No. 423 (Thompson Mile) General Obligation Bonds Series 2006
Dated June 15, 2006
Maturity June 15
Amount
Interest Rate
CUSIP
2012 $50,000 4.50% 259289 AF3 2013 60,000 4.65 259289 AG1
E-4
Douglas County Sanitary and Improvement District No. 454 (Commercial Federal Campus) General Obligation Bonds Series 2005
Dated August 15, 2005
Maturity August 15
Amount
Interest Rate
CUSIP
2011 $ 195,000 4.00% 259288 HX9 2012 205,000 4.15 259288 HY7 2013 215,000 4.30 259288 HZ4 2014 225,000 4.40 259288 JA7 2015 235,000 4.50 259288 JB5 2016 245,000 4.60 259288 JC3 2017 260,000 4.65 259288 JD1 2018 280,000 4.70 259288 JE9 2019 290,000 4.75 259288 JF6 2020 305,000 4.80 259288 JG4 2025 1,770,000 5.05 259288 JH2
Douglas County Sanitary and Improvement District No. 459 (Legacy)
General Obligation Bonds Series 2004 Dated March 15, 2004
Maturity March 15
Amount
Interest Rate
CUSIP
2010 $120,000 3.40% 259287 FL9 2011 125,000 3.70 259287 FM7 2012 130,000 3.95 259287 FN5 2013 135,000 4.15 259287 FP0 2014 140,000 4.25 259287 FQ8 2015 145,000 4.40 259287 FR6 2016 150,000 4.50 259287 FS4 2017 160,000 4.60 259287 FT2 2018 165,000 4.70 259287 FU9 2019 175,000 4.80 259287 FV7 2020 180,000 4.90 259287 FW5 2021 190,000 5.00 259287 FX3 2022 200,000 5.05 259287 FY1 2023 210,000 5.15 259287 FZ8 2024 220,000 5.20 259287 GA2
Douglas County Sanitary and Improvement District No. 459 (Legacy)
General Obligation Bonds, Series 2005 Dated March 15, 2005
Maturity March 15
Amount
Interest Rate
CUSIP
2011 $110,000 3.75% 259287 3F5 2012 115,000 4.00 259287 3G3 2013 120,000 4.10 259287 3H1 2014 125,000 4.20 259287 3J7 2015 130,000 4.30 259287 3K4 2016 135,000 4.45 259287 3L2 2017 145,000 4.50 259287 3M0 2018 150,000 4.60 259287 3N8 2019 155,000 4.65 259287 3P3 2020 165,000 4.70 259287 3Q1 2021 175,000 4.80 259287 3R9 2022 180,000 4.90 259287 3S7 2023 190,000 5.00 259287 3T5 2024 200,000 5.10 259287 3U2 2025 400,000 5.20 259287 3V0
E-5
Douglas County Sanitary and Improvement District No. 461 (Fire Ridge)
General Obligation Bonds Series 2005 Dated November 15, 2005
Maturity
November 15
Amount
Interest Rate
CUSIP
2011 $70,000 4.00% 259288 QT8 2012 75,000 4.10 259288 QU5 2013 75,000 4.20 259288 QV3 2014 80,000 4.30 259288 QW1 2015 90,000 4.35 259288 QX9 2016 95,000 4.45 259288 QY7 2017 95,000 4.55 259288 QZ4 2018 100,000 4.60 259288 RA8 2019 105,000 4.65 259288 RB6 2020 110,000 4.70 259288 RC4 2021 120,000 4.75 259288 RD2 2022 125,000 4.80 259288 RE0 2023 125,000 4.85 259288 RF7 2024 135,000 4.90 259288 RG5 2025 300,000 5.00 259288 RH3
City of Omaha, Nebraska
General Obligation Refunding Bonds, Series of 1998 Dated December 1, 1998
Maturity
December 1
Amount
Interest Rate
CUSIP
2010 $2,285,000 5.00% 681712 GP4 2011 2,270,000 5.00 681712 GQ2 2012 705,000 5.00 681712 GR0 2013 65,000 5.00 681712 GS8 2014 65,000 5.00 681712 GT6 2015 65,000 5.00 681712 GU3
City of Omaha, Nebraska
Various Purpose and Refunding Bonds, Series of 1998 Dated December 15, 1998
Maturity
December 15
Amount
Interest Rate
CUSIP
2010 $1,305,000 4.25% 681712 HG3 2011 1,105,000 4.30 681712 HH1
City of Omaha, Nebraska
Various Purpose and Refunding Bonds, Series of 1999 Dated November 15, 1999
Maturity
November 15
Amount
Interest Rate
CUSIP
2010 $2,120,000 5.125% 681712 JB2 2011 1,805,000 5.125 681712 JC0
E-6
City of Omaha, Nebraska Various Purpose Bonds, Series of 2000
Dated December 1, 2000
Maturity December 1
Amount
Interest Rate
CUSIP
2012 $1,500,000 5.50% 681712 KJ3