COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF ...

COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF VIRGINIA BEACH, VIRGINIA FOR THE YEAR ENDED JUNE 30, 2004 PREPARED BY DEPARTMENT OF FINANCE PATRICIA A. PHILLIPS DIRECTOR

Acknowledgments…..

The preparation of this report has been accomplished by the efficient and dedicated services of the staff of the Department of Finance who have been assisted by the independent auditors, Cherry, Bekaert & Holland, L.L.P. The contributions of all are invaluable and sincerely appreciated and clearly reflect the high standards which have been set by the City of Virginia Beach. Management - Donald Barnett, Richard Lester, Arlene Ney Technical Review - Richard Dunford, Nancy Leavitt

Accounting Staff - Morris Freelon, Linda Harris, Patti Porter, Trudy Rogers, Darrell DiVito

Staff Support - Jackie Caldwell, Keena Garns, Penny Williams, Debbie Shevock, Trish Donahue Audit Services - Joanne Griggs, Chris Ford, Gretchen Hudome,

Joan Keith, Tim Bell, Sharon Hayes Photographs Carole Arnold-Oste, Richard L. Theibert, III

It is also appropriate to thank the City Manager, Mayor and Members of City Council for making possible the excellent financial position of the City through their interest and support in planning and conducting the financial affairs of the City. Sincerely,

Patricia A. Phillips, Director Department of Finance

On The Cover….

Photograph by Gayle Fischer, Sheriff’s Office. In the 11th Annual Members Photography Contest, Gayle received the awards of “Best in Show” and first place in the “Beautiful Virginia Beach” category.

CITY OF VIRGINIA BEACH, VIRGINIA Comprehensive Annual Financial Report for the Year Ended June 30, 2004

i

TABLE OF CONTENTS PAGE NO. INTRODUCTORY SECTION

City Council .............................................................................................................................................................1 City Organization Chart...........................................................................................................................................2 Letter of Transmittal ................................................................................................................................................3 Certificate of Achievement for Excellence in Financial Reporting.........................................................................21

FINANCIAL SECTION Exhibit

Independent Auditors==== Report............................................................................................................................23 Management====s Discussion and Analysis ..........................................................................................................25 Basic Financial Statements:

Government-Wide Financial Statements: Statement of Net Assets ..............................................................................................................................35 Statement of Activities .................................................................................................................................36

Governmental Funds Financial Statements: Balance Sheet..............................................................................................................................................38 Reconciliation of the Balance Sheet to the Statement of Net Assets ..........................................................39 Statement of Revenues, Expenditures and Changes in Fund Balance .......................................................40 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances

of Governmental Funds to the Statement of Activities .............................................................................41 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual - General Fund ...........................................................................................................42

Proprietary Funds Financial Statements: Statement of Net Assets ..............................................................................................................................43 Statement of Revenues, Expenses and Changes in Fund Net Assets ........................................................44 Statement of Cash Flows.............................................................................................................................45

Fiduciary Funds Financial Statements: Statement of Fiduciary Net Assets...............................................................................................................47 Statement of Changes in Fiduciary Net Assets ...........................................................................................48

Notes to Financial Statements .......................................................................................................................50

Required Supplemental Information other than Management====s Discussion and Analysis: Schedule of Funding Progress for Virginia Retirement System.........................................................................90

Other Supplemental Information Combining Schedules Nonmajor Governmental Funds:

Combining Balance Sheet – Other Nonmajor Governmental Funds .................................................................92 Combining Statement of Revenues, Expenditures and Changes in Fund Balance -

Other Nonmajor Governmental Funds.........................................................................................................93 General Fund Budget to Actual:

Schedule of Revenues.......................................................................................................................................96 Schedule of Expenditures……………………………………………………………………………………………….102

Combining Schedules and Individual Fund: Combining Balance Sheet - Nonmajor Special Revenue Funds .....................................................................112 Combining Statement of Revenues, Expenditures and Changes in Fund Balance -

Nonmajor Special Revenue Funds ............................................................................................................120 Statements of Revenues, Expenditures, and Changes in Fund Balance and Budget and Actual: Federal Police Department Grant Fund .....................................................................................................128 Law Enforcement Block Grant Fund............................................................................................................129 Law Library Fund .........................................................................................................................................130 Pendleton Child Service Center Fund .........................................................................................................131 Sandbridge Tax Increment Financing Fund.................................................................................................132 E-911 Communication System Fund...........................................................................................................133 Housing and Neighborhood Preservation Fund.......................................................................................... 134 Lynnhaven Mall Tax Increment Financing Fund..........................................................................................135

Mental Health and Mental Retardation Fund ...............................................................................................136


ii

FINANCIAL SECTION (continued) PAGE NO.

Combining Schedules and Individual Fund: (continued) Town Center Special Service District Fund ...............................................................................................137 Community Development Loan and Grant Fund ........................................................................................138 DEA Seized Property Fund ....................................................................................................................... 139 Access Channel Support Fund....................................................................................................................140 Federal Housing Assistance Grant Fund.....................................................................................................141 Sportsplex Fund..........................................................................................................................................142 Police Extradition Fund................................................................................................................................143 Federal Section Eight Program Fund ..........................................................................................................144 Comprehensive Services Act Fund .............................................................................................................145 Sheriff’s Department Fund...........................................................................................................................146 Inmate Services Fund..................................................................................................................................147 Parks and Recreation Fund.........................................................................................................................148 Tourism Growth Investment Fund ...............................................................................................................149 School Reserve Fund ..................................................................................................................................150 Fire Store Fund............................................................................................................................................151 Central Business District South Tax Increment Financing Fund .................................................................152 Police Services Fund...................................................................................................................................153 Sandbridge Special Service District Fund ...................................................................................................154 EMS State Two-For-Life Fund .....................................................................................................................155 Fire Programs Fund.....................................................................................................................................156 Agriculture Reserve Program Fund .............................................................................................................157 Emergency FEMA Fund ..............................................................................................................................158 Tourism Advertising Program Fund .............................................................................................................159 Proffer Impact Fund.....................................................................................................................................160 School Instructional Technology Fund.........................................................................................................161 Virginia Marine Science Museum Fund .......................................................................................................162 Public Investment Protection Strategy....................................................................................................... 163 Arts and Humanities Commission Fund ......................................................................................................164 Open Spaces Fund......................................................................................................................................165 Major Projects Fund....................................................................................................................................166

Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Debt Service Fund .....................................................................................................................................168

Capital Projects: Schedule of General Government Capital Projects…………………………………………………………………170

Enterprise Funds: Combining Statement of Net Assets - Nonmajor Enterprise Funds.................................................................178 Combining Statement of Revenues, Expenses and Changes in Net Assets - Nonmajor

Enterprise Funds........................................................................................................................................179 Combining Statement of Cash Flows - Nonmajor Enterprise Funds ...............................................................180 Statement of Net Assets - Water and Sewer Fund..........................................................................................182 Statement of Revenues, Expenses and Changes in Net Assets – Water and Sewer Fund............................183 Statement of Cash Flows - Water and Sewer Fund ........................................................................................184 Schedule of Changes in Restricted Assets - Water and Sewer Fund .............................................................185 Schedule of Operating Expenses - Budget and Actual - Water and Sewer Fund ...........................................186 Schedule of Water and Sewer Fund Capital Projects ……………………………………………………………...189 Statement of Net Assets – Storm Water Fund ................................................................................................194 Statement of Revenues, Expenses and Changes in Net Assets – Storm Water Fund………………………….195 Statement of Cash Flows - Storm Water Fund..............................................................................................196 Schedule of Operating Expenses - Budget and Actual – Storm Water Fund ..................................................197 Schedule of Storm Water Fund Capital Projects…………………………………………………………………….199

Internal Service Funds:

Combining Statement of Net Assets................................................................................................................202 Combining Statement of Revenues, Expenses and Changes in Net Assets...................................................204 Combining Statement of Cash Flows ..............................................................................................................206

Agency Funds: Combining Statement of Fiduciary Assets and Liabilities …………………………………………………….……212 Combining Statement of Changes in Assets and Liabilities……………………………………………………….213


iii

FINANCIAL SECTION (continued) PAGE NO.

Other Component Units: Statement of Net Assets …………………………………………………………………………………….…………215 Statement of Activities ……………………………………………………………………………………………..…..216

Combining Statement of Cash Flows ..............................................................................................................217

Discretely Presented School Board Component Unit: Statement of Net Assets ..................................................................................................................................220 Statement of Activities .....................................................................................................................................221 Balance Sheet - Governmental Funds.............................................................................................................222 Reconciliation of the Balance Sheet to the Statement of Net Assets ..............................................................223 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds ....................224 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances

of Governmental Funds to the Statement of Activities...............................................................................225 School Operating Special Revenue Fund – Budget and Actual ......................................................................226 Combining Balance Sheet - Nonmajor Governmental Funds - Special Revenue Funds ................................230 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -

Nonmajor Governmental Funds - Special Revenue Funds........................................................................232 Combining Statement of Net Assets - Internal Service Funds.........................................................................234 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets -

Internal Service Funds ...............................................................................................................................235 Combining Statement of Cash Flows - Internal Service Funds .......................................................................236 Combining Schedule of Changes in Assets and Liabilities - Agency Funds ...................................................237

STATISTICAL SECTION Table 1. General Government Expenditures By Function - Last Ten Fiscal Years...........................................................240 2. General Governmental Expenditures - Functions Expressed as Percent of Total -

Last Ten Fiscal Years ................................................................................................................................240 3. General Revenues By Source - Last Ten Fiscal Years.......................................................................................242 4. General Revenues - Sources Expressed as Percent of Total - Last Ten Fiscal Years.......................................242 5. Real Estate Tax Rates, Levies and Collections - Last Ten Fiscal Years ............................................................244 6. Personal Property Tax Levies and Collections - Last Ten Fiscal Years..............................................................245 7. Special Assessment Collections - Last Ten Fiscal Years ...................................................................................246 8. Principal Taxpayers.............................................................................................................................................247 9. Assessed Appraised Value of Taxable Property - Last Ten Fiscal Years ...........................................................248 10. Ratio of Net General Bonded Debt to Assessed Value and Net Debt Per Capita -

Last Ten Fiscal Years ................................................................................................................................249 11. Ratio of Annual Debt Service Expenditures for General Debt to Total

General Expenditures - Last Ten Fiscal Years ..........................................................................................250 12. Demographic Statistics - Last Ten Fiscal Years .................................................................................................251 13. Bond and Note Coverage - Water and Sewer Bonds and Notes -

Last Ten Fiscal Years ................................................................................................................................252 14. Property Value, Construction and Bank Deposits - Last Ten Fiscal Years .........................................................254 15. Miscellaneous Statistical Data ............................................................................................................................256 SINGLE AUDIT SECTION

Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance And Other Matters............................................................................................................................................259 Independent Auditors’ Report on Compliance With Requirements Applicable to Each

Major Program and on Internal Control Over Compliance...............................................................................261 Independent Auditors’ Report on Compliance With Commonwealth of Virginia Laws,

Regulations, Contracts and Grants..................................................................................................................263 Schedule of Findings and Questioned Costs ......................................................................................................265 Schedule of Expenditures of Federal Awards .....................................................................................................268 Notes to Schedule of Expenditures of Federal Awards.......................................................................................273

This Page Intentionally Left Blank iv

INTRODUCTORY SECTION

1

CITY OF VIRGINIA BEACH, VIRGINIA

CITY COUNCIL

Meyera E. Oberndorf, Mayor . . . . . . . . . . . . . . . . At-LargeLouis R. Jones, Vice Mayor . . . . . . . . . . . . Bayside DistrictHarry E. Diezel . . . . . . . . . . . . . . . . . . . . Kempsville DistrictRobert Dyer . . . . . . . . . . . . . . . . . . . . . . Centerville DistrictRichard A. Maddox . . . . . . . . . . . . . . . . . . . . Beach DistrictReba S. McClanan . . . . . . . . . . . . . . . . . . Rose Hall DistrictJim Reeve . . . . . . . . . . . . . . . . . . . . . Princess Anne DistrictPeter W. Schmidt . . . . . . . . . . . . . . . . . . . . . . . . . . At-LargeRon A. Villanueva . . . . . . . . . . . . . . . . . . . . . . . . . . At-LargeRosemary Wilson . . . . . . . . . . . . . . . . . . . . . . . . . . At-LargeJames L. Wood . . . . . . . . . . . . . . . . . . . . Lynnhaven District

CONSTITUTIONAL OFFICERS

John T. Atkinson . . . . . . . . . . . . . . . . . . . . . City TreasurerHarvey L. Bryant III . . . . . . . . Commonwealth’s AttorneyPhilip J. Kellam . . . . . . . . . . Commissioner of the RevenuePaul Lanteigne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sheriff Tina E. Sinnen . . . . . . . . . . . . . . . Clerk of the Circuit Court

APPOINTED OFFICERS

James K. Spore . . . . . . . . . . . . . . . . . . . . . . . . City ManagerLeslie L. Lilley . . . . . . . . . . . . . . . . . . . . . . . . City AttorneyRuth Hodges Smith . . . . . . . . . . . . . . . . . . . . . . . . City ClerkJerald Banagan . . . . . . . . . . . . . . . . . . . Real Estate Assessor

CITY LEADERS

Charles W. Meyer . . . . . . . . . . . . . . Chief Operating OfficerDavid C. Sullivan . . . . . . . . . . . . Chief Information OfficerSteven T. Thompson . . . . . . . . . . . . Chief Financial OfficerSusan D. Walston . . . . . . . . . . . . . . . . . . . . . . . Chief of Staff

SCHOOL BOARD

Daniel D. “Dan” Edwards, Chairman District 1 - CentervilleSandra Smith-Jones, Vice Chairman District 2 - KempsvilleRita Sweet Bellitto . . . . . . . . . . . . . . . . . . . . . . . . . At-LargeJane S. Brooks . . . . . . . . . . . . . . . . . . . . . . District 6 - BeachEmma L. “Em” Davis . . . . . . . . . . . . District 5 - LynnhavenEdward “Ed” Fissinger, Sr. . . . . . . . . . . . . . . . . . . At-LargeDan R. Lowe . . . . . . . . . . . . . . . . . . . . . . District 4 - BaysideMichael W. Stewart . . . . . . . . . . . . . . District 3 - Rose HallArthur T. Tate . . . . . . . . . . . . . . . . . . . . . . . . . . . . At-LargeCarolyn D. Weems . . . . . . . . . . . . . . . . . . . . . . . . . At-LargeDr. Lois S. Williams . . . . . . . . . . District 7 - Princess Anne

VIRGINIA BEACHDEVELOPMENT AUTHORITY

Robert G. Jones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ChairDonald V. Jellig . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice ChairRobert E. Fentress . . . . . . . . . . . . . . . . . . . . . . . . TreasurerRobert F. Hagans, Jr. . . . . . . . . . . . . . . . . . . . . . . . SecreatryTeresa H. Carrington . . . . . . . . . . . . . . . Assistant SecretaryC. Maxwell Bartholomew, Jr. . . . . . . . . . . . . CommissionerPage G. Lea . . . . . . . . . . . . . . . . . . . . . . . . . . . CommissionerPaul V. Michels . . . . . . . . . . . . . . . . . . . . . . . . CommissionerJerold L. Miller . . . . . . . . . . . . . . . . . . . . . . . . CommissionerElizabeth A. Twohy . . . . . . . . . . . . . . . . . . . . Commissioner

VIRGINIA BEACHCOMMUNITY DEVELOPMENT

CORPORATION

Douglas W. Huston . . . . . . . . . . . . . . . . . . . . . . . . . PresidentGene A. Smith . . . . . . . . . . . . . . . . . . . . . . . . . Vice PresidentDenise M. Howard . . . . . . . . . . . . . . . . Secretary-TreasurerSandra J. Baines . . . . . . . . . . . . . . . . . . . . . . . . . . . . DirectorElsie M. Barnes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DirectorBarbara E. Clevenger . . . . . . . . . . . . . . . . . . . . . . . . DirectorChristopher J. Fanney . . . . . . . . . . . . . . . . . . . . . . . DirectorCarol N. Hare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DirectorGlen A. Huff, Esquire . . . . . . . . . . . . . . . . . . . . . . . . DirectorJeffrey L. Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . DirectorDr. Helen Moore . . . . . . . . . . . . . . . . . . . . . . . . . . . . Director

City CouncilConstitutional Officers

City TreasurerCommissioner of the RevenueClerk of the Circuit CourtSheriffCommonwealth's Attorney

School Board

Electorate

SchoolSuperintendent

CityAttorney

CityClerk

CityManager

CityAssessor

School OperatingUnits

InstructionAdministration, Attendance & HealthPupil TransportationOperations & Maintenance

ChiefInformation

Officer

ChiefOperating

Officer

ChiefFinancialOfficer

Communications and Information TechnologyLibraries

PoliceFireEmergency Medical ServicesPublic WorksPublic UtilitiesGeneral ServicesParks and RecreationHousing and Neighborhood PreservationSocial ServicesMental Health/Retardation/ Substance Abuse

AgricultureFinanceManagement ServicesConvention & Visitor DevelopmentEconomic DevelopmentPlanning & Community DevelopmentMuseums and Cultural Arts

StateAgencies

CourtsGeneral RegistrarMagistrateJuvenile ProbationPublic Health

Chiefof Staff

Human ResourcesAudit Services

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The Honorable Mayor Members of the Council Municipal Center Virginia Beach, Virginia 23456 Dear Council Members:

The Comprehensive Annual Financial Report of the City of Virginia Beach, Virginia for the fiscal year ended June 30, 2004, is hereby submitted. Responsibility for the accuracy of the data and the completeness and fairness of presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included.

The Comprehensive Annual Financial Report is presented in four sections: introductory,

financial, statistical and single audit. The introductory section includes a list of principal officials, the City’s organizational chart, and this transmittal letter. The financial section includes the management discussion and analysis (MD&A), basic, fund and component unit financial statements, notes to the financial statements, required and other supplemental information, as well as the independent auditor’s report on the MD&A, financial statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The single audit section contains information on the City programs that are financed by federal grants. This information is required by the Single Audit Act Amendments of 1996, and by the Auditor of Public Accounts of the Commonwealth of Virginia.

Generally Accepted Accounting Principles require that management provide a narrative

introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis. This letter of transmittal is intended to complement the MD&A and should be read in conjunction with it. The City of Virginia Beach’s MD&A can be found immediately following the report of the independent auditors.

City of Virginia Beach

DEPARTMENT OF FINANCE (757) 427-4681 FAX (757) 427-4302 TDD (757) 427-4305

BUILDING 1 2401 COURTHOUSE DRIVE

VIRGINIA BEACH, VA 23456-9009

October 22, 2004

PROUD RECIPIENT OF THE 1998 U.S. SENATE MEDALLION OF EXCELLENCE FOR PRODUCTIVITY AND QUALITY IN THE PUBLIC SECTOR.

THE REPORTING ENTITY AND ITS SERVICES

The present City of Virginia Beach was formed on January 1, 1963 by the merger of Princess Anne County and the former, smaller, resort community known as the City of Virginia Beach. This merger created one of the largest cities in the Commonwealth of Virginia with an area of 310 square miles and 38 miles of shoreline on the Atlantic Ocean and the Chesapeake Bay. The 2004 population for the City of Virginia Beach is estimated to be 429,504.

The City of Virginia Beach derives its governing authority from a charter granted by the General Assembly of the Commonwealth of Virginia. The governing body of the City is the City Council, which formulates policies for the administration of the City. The charter provides for a Council-Manager form of government.

In accordance with the requirements of the Governmental Accounting Standards Board (GASB), the financial reporting entity consists of the primary government (the City of Virginia Beach), as well as its component units, which are legally separate organizations for which the City Council is financially accountable. Discretely presented component units qualifying for inclusion in this report are the Virginia Beach School Board, Virginia Beach Development Authority, and Virginia Beach Community Development Corporation. Financial accountability for these component units was determined on the basis of City Council’s selection of governing authority, designation of management, ability to influence operations and/or accountability for fiscal matters. The component units are discretely presented and are reported in a separate column in the financial statements to emphasize that they are legally separate from the primary government and to differentiate their financial position, results of operations, and cash flows from those of the primary government.

The City provides a full range of general governmental services for its citizens. These services include police and fire protection, collection and disposal of refuse, water and sewer services, parks and recreation facilities, museums, libraries, and maintenance of streets and highways. Other services provided include public education in grades kindergarten through twelfth, public health and social services, certain technical and special education services, mental health assistance, agricultural services, housing services, and judicial activities.

Cities in Virginia have sole jurisdiction over the entire area within their boundaries and operate independently of any county government since they are not located within any county boundaries. There are no overlapping jurisdictions, and consequently, citizens of a Virginia city are not subject to overlapping debt or taxation.

ECONOMIC CONDITION AND OUTLOOK A stable jobs market can be credited with the strong performance of the Hampton Roads and Virginia Beach economies in FY-04. The region continued to add jobs even during the recession that ended in November 2001, and employment has increased steadily each year since. The thriving military and defense industries, and a manufacturing sector that supports these industries allowed job growth in the region to remain strong, even as job growth nationwide remained modest. As a result, the unemployment rate for the region and Virginia Beach is below where it was a year ago. The total annual military payroll has increased to $6.4 billion, and that, plus the strong jobs market, helped to push the per capita personal income for Virginia Beach to 104.7% of the nation, the highest level since the early 1990s. The retail sales numbers are extremely strong, up 12.9% for the first half of the year over the same period last year, which included spending in response to Hurricane Isabel. While the value of residential building permits increased only modestly, the value of commercial building permits increased more than 51% due to the new convention center, hotels and office buildings being built around the City. Tourism remained strong as evidenced by growing hotel and restaurant sales, and there are already more than 92,000 hotel room nights booked for future events at the new convention center. Container traffic through the port is up due to increased Asian imports and the expansion of the number of retail warehouses served by the port. FY-04 was another year in which Virginia Beach and the region out-performed the nation. Someday, the nation may catch up and even out-perform the region, as it did in the late 1990s. At that point, it would be wise to remember the steady performance of the Hampton Roads economy in 2004.

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The largest employment sector in Virginia Beach is the government sector, which is composed of federal (civilian and military), state and local governments. This sector, especially the military portion, contributes to the stability of the Virginia Beach job market. The manufacturing sector, influenced by companies that supply the military, is also quite stable. The stability of these sectors, in turn, supports the many service sectors, which further contribute to the overall stability of the job market in Virginia Beach.

There were 85,002 active duty Navy and Marine Corps personnel in Hampton Roads in FY-03 (Oct 1-Sept 30)

which was essentially the same as in FY-02 at 85,030. The annual military payroll (includes retirees, reservists, and civil service workers) increased to $6.4 billion in FY-03, a 16.4% increase. The total outlay on goods and services was $3.4 billion for a total economic impact to Hampton Roads from the Navy of $9.8 billion. (Source: Department of the Navy)

Statistics from the Bureau of

Economic Analysis show the Virginia B e a c h - N o r f o l k - N e w p o r t N e ws Metropolitan Statistical Area (MSA) added 13,512 new jobs in 2002. Of these jobs, 3,741 or 27.7% were in Virginia Beach. On average over the 10-year period ending in 2002, Virginia Beach added 42% of the new jobs in the MSA.

-5-

Source: BEA

Virginia Beach Job Sectors

Construction

Manufacturing

Wholesale Trade

Retail Trade

Finance & Insurance

Real Estate

Professional & Technical Sevices

Management of Companies

Administrative & Waste Services

Educational Services

Health Care and Social Assistance

Arts, Entertainment and Recreation

Accommodation and Food Services

Other Services (except public admin)

GovernmentSource: BEA

Contribution from Virginia Beach to New Nonfarm Jobs in the MSA

-500

4,500

9,500

14,500

19,500

93 94 95 96 97 98 99 00 01 02

Num

ber

of N

ew J

obs

MSA Virginia BeachSource: BEA

Jobs in Virginia Beach

Labor Force Employment Virginia Beach employment has increased at a

steady rate since the end of the 2001 recession. The economy added 3,960 new jobs over the twelve-month period ending August 2004, increasing the number of persons employed in Virginia Beach to 220,298. The strong employment is propelled by defense spending, construction, professional services, and tourism. Unemployment

Unemployment rates at all reporting levels have dropped over the last twelve months. At 3.6%, the Virginia Beach unemployment rate for August 2004 is the lowest August rate since 2001. Unemployment in Virginia Beach is lower than that of the state at 3.7% and the MSA at 4.5%, and all are well below that of the nation at 5.4%. An unemployment rate below 5% is considered to be full employment by many economists.

Per Capita Personal Income

Per capita personal income is a broad

measure of economic welfare that includes earnings, dividends, interest, rent, and transfer payments received by residents. Virginia Beach per capita income rose to 104.7% of the nation in 2002, a level not seen since the early 1990s. The same can be said for the MSA per capita income, which rose to 91.8% of the nation. Pay increases for military personnel contributed to these increases. Also, due to the mix of industries, the region did not experience the collapse of the telecommunications and Internet companies, which slowed growth of personal income nationwide.

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Virginia Beach and MSA Per Capita Income

As a Per Cent of the Nation

50%60%

70%80%

90%100%110%

93 94 95 96 97 98 9920

00 01 02

Virginia Beach MSASource: BEA

Virginia Beach Employment

190,000

200,000

210,000

220,000

230,000

94 95 96 97 98 9920

00 01 02 03 04

August over August

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

# Employed Per Cent ChangeSource: VEC

Comparison of Unemployment Rates

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%

94 95 96 97 98 9920

00 01 02 03 04

August over August

Virginia Beach MSAVirginia United StatesSource: VEC

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Retail Sales Retail sales in Virginia Beach increased to $4.1 billion in calendar year 2003, a 4.8% increase, compared to a 6.0% increase in 2002. The MSA increased 6.3% in 2003. A comparison of first half results for 2004 to the same period in 2003 shows retail sales in Virginia Beach were up 12.9%. Nationwide, retail sales were up just 8.2% during the first half. The slower growth nationwide is being attributed to higher fuel prices and a slower growing labor market. Virginia Beach has seen strong job and income growth during this period, supporting retail sales. Port Activity The economic well-being of Virginia Beach is closely tied to that of Hampton Roads as a whole. This area is blessed with a deep and large natural harbor that supports a large international shipping trade. Virginia’s port is visited regularly by over 75 steamship lines. There are over 58,000 port-related jobs in Hampton Roads. A testament to the economic rebound, 1.6 million twenty-foot equivalent units (TEU) of containerized cargo were shipped through the port in 2003, up 14.5% over 2002. Through August of 2004, 1.2 million TEU have been shipped, up 9.2% over the same period in 2003. Much of the increased activity can be attributed to the increase in Asian imports, which has increased to 38% of port arrivals and is expected to increase by 10% by the end of the year. Also, the retail store concentration in the Eastern United States has increased. In addition to distribution hubs such as Lowe’s, Dollar Tree, CostPlus, and Best Buy, in the past five years Wal-Mart, Target, and Home Depot have opened distribution centers served by the port. There are now over 80 distribution centers located in Virginia.

Virginia Beach Annual Retail Sales

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

94 95 96 97 98 9920

00 01 02 03

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%% Change

Virginia Beach Retail Sales Comparison of First Half Results

January - June

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

9920

00 01 02 03 04

Thousands

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%% ChangeThousands

Source: VA Dept. of Taxation

Port of Virginia Activity

0250,000500,000750,000

1,000,0001,250,0001,500,0001,750,000

94 95 96 97 98 9920

00 01 02 03

Thru

Aug 2

003

Thru

Aug 2

004

Tw

enty

-foo

t Equ

ival

ent U

nits

Source: Virginia Port Authority

Tourism During FY-04, hotel room sales were

estimated at $211.4 million in Virginia Beach, an increase of 8.0% over FY-03. City hotels sold 2,358,327 room nights during this period, up 5.5% over FY-03. From January-July 2004, hotel receipts in Virginia Beach were up 8.5% over the same period last year. Virginia Beach and the region are benefiting from the easy driving distance for most of the East Coast and the new hotel rooms that are able to accommodate the demand.

Restaurant and amusement sales reflect high levels of both local and tourist spending activity due to the strengthening economy and the many new restaurants in Virginia Beach. Restaurant and amusement sales remained strong at $752.7 million in FY-04. This was an increase of 11.6% over FY-03. Res taurant and amusement sales were up 13.7% from January-July over the same period in 2003.

Virginia Beach accommodated 2.7 million out-of-town visitors in 2003 and tourist spending increased to

$729 million, up from $696 million in 2002. Total visitor expenditures generated $64.7 million in direct City revenue and cost the City $39.8 million, generating a net dollar return of $23.9 million. The City’s hospitality industry provided employment to over 10,000 people in Virginia Beach and an additional 5,198 regionally in 2003.

The City recognizes the importance of the tourism industry to the local economy. The City increased the

hotel, restaurant, and cigarette taxes to fund a new convention center, theatre, open space and parking at the Virginia Aquarium and Marine Science Center.

-8-

Comparison of Hotel Room Sales

$0

$10,000

$20,000

$30,000

$40,000

$50,000

July

Aug Sept

Oct

Nov Dec Jan

Feb Mar

April

MayJu

ne

Tho

usan

dsFY-03 FY-04Source: CVB

Comparison of Restaurant Sales

$0

$20,000

$40,000

$60,000

$80,000

July

Aug Sept

OctNov Dec Ja

nFeb Mar

April

MayJu

ne

Tho

usan

ds

FY-03 FY-04Source: CVB

Other Economic Indicators In FY-04 2,543 new residential building permits were issued, valued at $257.6 million, an increase of $10.1 million over the prior year; 2,172 commercial building permits were issued, valued at $205.4 million, an increase of $69.6 million compared to the prior year. FY-04 was a very strong year for commercial construction due to the new hotels at the oceanfront, the new office buildings at Town Center, and the new cardiac care facility at Sentara Virginia Beach Hospital. During the first quarter of FY-05, 286 new residential building permits have been issued, valued at $51.4 million; and 491 commercial permits have been issued valued at $26.1 million.

From July 1, 2003 to July 1, 2004, the total assessed value of real estate increased from $27,375,797,208 to

$30,915,861,883, an increase of 12.9%. This phenomenal growth is the result of appreciation of existing property fueled by low interest rates and high demand, and growth in new buildings and development of vacant land.

New Residential Building Permits

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

94 95 96 97 98 9920

00 01 02 03 04

Fiscal Year

0

500

1,000

1,500

2,000

2,500

3,000

Value of Permits Number of Permits

Source: VB Planning Dept

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To accomplish this mission, City Council has identified seven major destination points or businesses of the City. The City has made significant progress in these areas as indicated by the initiatives described in this section. Reflecting the cross-functional nature of an effective strategic plan, several of these initiatives affect two or more of the areas/businesses. The seven business areas are:

1. Economic Vitality 2. Quality Physical Environment 3. Family and Youth Opportunities 4. Safe Community 5. Cultural and Recreational Opportunities 6. Quality Education for Lifelong Learning 7. Quality Organization

City Council has received well-deserved recognition for its progress in making Virginia Beach a Community for a Lifetime. Men’s Fitness Magazine named Virginia Beach America’s 3rd Fittest City (2004); the Census Bureau reported that the household median income for Virginia Beach is $53,540, the fourth highest in the nation (2002); USA Weekend ranked it as the Best Place to Live in the country (2003); the National Policy Research Council ranked it as the Most Livable Large City for Women (2004); Virginia Beach is the Safest Big City in the Nation according the FBI’s 2003 crime report.; and the City was judged by Inside Business to be one of the 25 Best Places to Work in Hampton Roads (2003). These awards are the fruits of many years of planning and hard work, and this hard work continues with many projects important to the City’s future taking shape on the horizon.

MAJOR INITIATIVES

The 2003-04 financial report reflects the use of resources to meet the city government’s mission as defined by City Council.

Mission Statement

“The City of Virginia Beach government exists:

�� To enhance the economic, educational, social and physical quality of the community, and

�� To provide municipal services which are valued by its citizens.”

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Architect’s Rendering of the New Convention Center

Economic Vitality Town Center

Construction continues on the $300 million Town Center, a new urban development located within the core of the City’s emerging central business district. It is designed to provide street-level culture to encourage social interaction and a sophisticated blend of lifestyles by offering venues like neighborhood coffee shops, bookstores, art galleries and cafes. The grand opening of Phase I of the project was held on September 10, 2003. It is now possible to have Chinese food from PF Chang’s, pizza from the California Pizza Kitchen, and ice cream from the Cold Stone Creamery, all of which are new to Virginia Beach. A 14-story, 252,000-sq.-ft. office tower sits on top of a 9-story, 1,284-space parking garage. The City’s Department of Economic Development, the Development Authority, and other tenants now reside in the fully occupied office tower. Hampton University College of Virginia Beach opened in July 2003, offering classes in its schools of nursing, hotel management and graduate school of education. A 176-key Hilton Garden Hotel, which opened in fall 2003, and an 18,000-sq.-ft. Towne Bank are also a part of this phase. With the completion of Phase I, construction of Phase II is now underway. Upscale retail, more restaurants, entertainment space, and 342 residential luxury apartments are part of the vision for Phase II. Galyans Trading Company opened in April 2004 and the Cheesecake Factory opened in August. Soon to follow are Bravo! Cucina Italiana, Keegan’s Irish Pub & Restaurant, and Ruth’s Chris Steakhouse. The Funny Bones Comedy Club is part of the mix, as are Ann Taylor Loft and Stanley Adams Stationery. The Cosmopolitan luxury apartments will bring a built-in market and increased activity to the Town Center tenants. Two parking garages with a total of 1,430 spaces will accommodate visitors and residents. Subsequent phases are currently in the planning stages and include a 1,200-seat Performing Arts Theatre.

The Town Center project is being developed through an investment partnership between Town Center

Associates, LLC and the Virginia Beach Development Authority (VBDA). The City purchased the Phase I garage from Town Center Associates, LLC in 2002 and the Phase II garage in July 2004. The public parking garages and public plaza are financed through the VBDA, to be repaid with funds generated by the tax increment financing (TIF) district created for this project. The infrastructure is financed with VBDA Economic Development Investment Funds and the City’s Capital Improvement Program. A special tax district will generate additional revenue to pay for the free public parking garage operations, as well as cover any shortfall that may occur in the TIF District.

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Max & Erma’s

Town Center

Romano’s Macaroni Grill

Town Center spin-off benefits continue to occur as predicted. Pembroke Mall is in the midst of an expansion and redevelopment. Kohl’s Department Store opened in 2003 and the newly renovated food court features Famous Wok and Roman Delight Pizza. Outside the mall, Romano’s Macaroni Grill and Max & Erma’s restaurants are open for business; and Smokey Bones BBQ, the first in the area, will open in the fall. And stay tuned for more, as growing numbers of private developers are buying properties around Town Center. Lynnhaven Mall

The expansion and redevelopment of Lynnhaven Mall that was started in 1999 has been completed. Dick’s Sporting Goods moved into a portion of the sub-divided space that was once Montgomery Ward and now anchors the mall along with a new Dillard’s, Lord and Taylor, Hecht’s, and J.C. Penney. Barnes & Noble Booksellers and a new AMC Entertainment, Inc. 18-screen, state-of-the-art multiplex movie theater opened in late 2003. Movie-goers and shoppers can visit Pizzeria UNO Chicago Grill and Ruby Tuesday Restaurant in the new external pedestrian plaza next to the theaters, called “The Inlet”. The City has committed $11.5 million for the parking facility at Lynnhaven Mall and related improvements to be paid over time with future real estate taxes generated by the TIF district created for this project. The City did not issue debt for the parking facility and will repay the owner of the mall only to the extent incremental real estate taxes generated from the project are available. Convention Center

In addition to being a wonderful place to live, work, and play, Virginia Beach is a fun place to visit. The City aims to become a year-round destination for business and pleasure. A new 513,000-sq.-ft. Virginia Beach Convention Center will play a part in achieving this vision by lengthening the shoulder seasons of the tourist industry and attracting high-end conventions. The official groundbreaking ceremony for the new Convention Center was held on June 26, 2003 and construction is steadily moving ahead. By August 2004 construction of the first phase was 60% complete. Phase I comprises about one-half the project and will be completed in spring 2005. The new center will host Virginia Beach high school graduations in June as its first events. Phase II is scheduled for completion in 2007.

In keeping with the theme of a “people friendly” City, pedestrian walkways, open space, transportation,

residences, parks, restaurants and entertainment venues will be added to the six-block area east of the Convention Center to functionally connect it with the oceanfront. The Convention Center has spurred new upscale hotel development in the resort area, which in turn should attract more prestigious conventions. The Boardwalk Resort Hotel and Villas and a Courtyard by Marriott were completed in 2003. The new Fairfield Inn opened in September 2004, replacing the old Windjammer Hotel. The Ocean Beach Club, a condominium project, is under construction and will open next summer. In addition, the Tropicana Resort Hotel and The Schooner are undergoing major renovations. The 31st Street Redevelopment Project is now under construction and is scheduled for completion in February 2005. This investment partnership features a $42 million, four-star, 295-room Hilton Virginia Beach Oceanfront to be built by the developer. The City will spend $20 million to build a 1,000-space parking garage (380 spaces reserved for the hotel), streetscape, and pedestrian bridge. This investment will become the cornerstone for redevelopment of the 31st Street corridor.

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The New Convention Center Under Construction

Rendering of the 31st Street Garage

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New and Retained Jobs Ever mindful of economic growth, the City created the Virginia Beach Development Authority (VBDA) to

further expand the tax base through the creation of new high paying jobs and capital investment. In FY-04, the VBDA and the Department of Economic Development assisted in the location of 38 new companies and the expansion and retention of 44 existing businesses that created new capital investment of $151,369,000. These companies created and retained over 3,100 employment opportunities in Virginia Beach. In May 2004, Site Selection Magazine listed the City’s Department of Economic Development as being one of the “Best of the Best” Economic Development Groups in the nation in 2003.

Princess Anne Commons

At the urban and rural crossroads in the southern part of the City, Princess Anne Commons is developing as another place where people can gather together to learn, live, work and play. The Commons’ “Academic Village” includes the Virginia Beach Higher Education Center, Tidewater Community College, Landstown High School and Technology Academy, and the Advanced Technology Center (ATC). Their close proximity allows students at these institutions to share space and knowledge, to easily move from one education level to another, and to enroll concurrently in more than one institution. The Advanced Technology Center was named a 2004 Microsoft Center of Innovation, one of only eight recipients in the nation to receive this honor. This award recognizes the ATC and Virginia Beach Public Schools for demonstrating leadership, long-term strategic information technology infrastructure planning, teacher training programs, and a commitment to providing a truly “Connected Learning Community” for its students and teachers.

On December 3, 2002, City Council unanimously approved plans for a Sentara Healthcare Medical Campus

and Fitness Center on 69.2 acres of land in Princess Anne Commons. The Health Campus will be built in phases over the next ten years and will have a park-like atmosphere with walking and biking trails, benches and picnic areas. The 90,000-sq.-ft. first phase includes a Children’s Hospital of the King’s Daughters physicians’ building, a YMCA, and a health services center. Later phases include more offices, an ambulatory-surgery center and a 120-bed hospital. The City sold the land to Sentara for $11.7 million. The proceeds will be used to develop eight new softball diamonds and seven multi-sport recreational fields at a new 292-acre district park to be developed near the Sportsplex stadium. These new fields, expected to be completed in spring 2006, replace old fields that will be displaced by the medical campus.

Cultural and Recreational Opportunities

The “Athletic Village” in Princess Anne Commons features soccer and ball fields, a field hockey complex,

and the Sportsplex stadium. This combination offers opportunities to professional and amateur athletes, contributing to the development and growth of sports activities. The Sportsplex is home to the Virginia Beach Mariners professional soccer team. The U.S. Field Hockey National Training Center is the training site for the U.S. National Women’s Team. Field lighting, public restrooms, locker rooms, and the parking lot have now been completed. The USA Field Hockey Summer League held two weekends of play at the training center. Over 600 people attended each weekend. The Soccer Complex meets the needs of 12,000+ soccer players in Virginia Beach and an additional 14,000 in the Hampton Roads MSA. Tournaments held at the complex bring in teams from all over the East Coast, generating $8 million in local revenue and $300,000 in direct tax revenue to the City of Virginia Beach.

The 5th Annual NATIONWIDE TOUR Virginia Beach Open

was held September 9-12 at the Tournament Players Club (TPC). A field of 137 professional golfers participated in the tournament. All four rounds were broadcast live on the Golf Channel to more than 30,000,000 households worldwide. This excellent exposure for Virginia Beach helps fulfill the long-term vision of City Council to upgrade and expand the community’s golf offerings. Red Wing Golf Course, the City’s premier municipal course, will undergo a $5 million renovation so it can continue to meet the needs of the local golfers and those visiting Virginia Beach. Red Wing Golf Course

Princess Anne Commons also includes the Verizon Wireless Virginia Beach Amphitheater. Operating in its eighth season, the amphitheater earned a return of 10.1% on the City’s $10.5 million investment. The total tax and other revenue to the City in the year 2003 was $1,011,347. The City has received a total of $8,304,060 in revenue in the first eight seasons of operations, averaging over one million dollars per year since opening in 1996. During the 2003 season, the Amphitheater held 25 events with attendance in excess of 240,000 patrons.

There are plenty of ways to be active in Virginia Beach. The 5th

Annual Rock ‘n’ Roll Half-Marathon joined up again with the 12th Annual Verizon Wireless American Music Festival on Labor Day weekend. Over 12,700 runners and more than 50 concerts on 10 stages came together for one last summer weekend at the beach. In August 2003, a $300,000 state-of-the-art skate park was completed at Mount Trashmore, providing more recreational opportunities for the area’s skaters.

Outdoors Plan

The City recognizes that acquiring land for open space, parks, trails, and other recreational activities creates opportunities for relaxation, enjoyment and artistic expression, which contribute to the quality of life in Virginia Beach. That is why the Virginia Beach Outdoors Plan was created. A capital improvement project funds the purchase of property for preservation as open space. To date, the City has purchased 11 properties to be preserved as open space, totaling 1,654 acres. The largest part of this acreage is attributable to the acquisition of Stumpy Lake. The Master Plan for this area restricts uses of the property to low-impact activities such as hiking, bird watching and picnicking.

Quality Physical Environment

The City’s beach replenishment projects were put to the test when Hurricane Isabel roared through the area in September 2003. The $125 million spent on the seawall and wider beach in the resort area protected the businesses and homes from the force of the waves. The Army Corps of Engineers estimates that the added protection saved about $82 million in property damage from this storm alone. Under two fifty-year agreements, the federal government has agreed to pay, subject to appropriation, 65 percent of the cost to regularly spread tons of sand on the beachfront in the resort area and at Sandbridge. The new arrangement with the Corp of Engineers will replenish each beach with about 900,000 cubic yards of sand every three years.

The Lynnhaven River 2007 project is now in its second year. Its mission is for the Lynnhaven River to produce edible oysters by 2007. In partnership with the Chesapeake Bay Foundation, 200 volunteers are being asked to raise baby oysters until they are big enough to be placed on oyster reefs in the river. Other projects being undertaken include working for clean marinas, partnering with public and private businesses to reduce water pollution, educating homeowners on the benefits of “Bayscaping,” publishing a newsletter and distributing other public information. The City of Virginia Beach is supporting Lynnhaven River 2007 by providing

technical assistance and personnel. It is also partnering with the Army Corps of Engineers (ACOE) on the Lynnhaven River Environmental Restoration Study. This five-year study will identify the problems with the river and recommend measures to restore the river to a sustainable level of health. Partnering with the ACOE also opens the City to a cost-sharing arrangement for final design and construction.

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Mount Trashmore Skate Park

Lynnhaven River

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Quality Education for Lifelong Learning

The City and the School Board are committed to the vision of empowering all students with the knowledge and skills necessary to meet the challenges of the future. Together, they are funding a School Modernization Program to provide older schools with current programs and technology. This plan addresses all schools built before 1970 that have not had major renovations or additions. In FY-05, the Virginia General Assembly committed approximately $11.6 million in lottery funds for Virginia Beach school construction and other needs. The City Council and School Board directed these resources to the School Modernization Program.

Also, FY-04 is the sixth year of the School’s Technology Initiative designed to provide Virginia Beach

schools with adequate infrastructure and hardware to support the technology curriculum and the State Standards of Learning for technology instruction. The long-term plan is to place up to 13,000 computers in classrooms and labs.

In addition to the first-class school system,

Virginia Beach has first-class libraries. The City built the new Princess Anne Area Library next to the Princess Anne Recreation Center to form a community hub where citizens can meet for education and recreation. This is the first in the line of newly designed libraries that offer more convenient, friendly service to the public. This includes stationing the Information Specialists on the service floor, a drive-up window, and self-checkout stations. There are also special areas for teens and storytelling, and computer labs with word processing and Internet access. The Oceanfront Library moved to its new building on Virginia Beach Blvd. in October 2004. This building also contains the new customer-friendly design features. It provides library services to residents and visitors alike. The Forty-year old Windsor Woods Library is next in line for a complete interior renovation.

Safe Community

The new General Booth Fire and Rescue Station #21 opened in May 2003. It is also a part of the community

hub, located adjacent to the Princess Anne Library and Princess Anne Recreation Center. The presence of this station is estimated to reduce first response time by approximately 4-6 minutes in 70% of the area served. Also, the replacement Sandbridge Fire and Rescue Station #17 was opened in October 2003.

The 624-bed jail expansion project will ease jail crowding. Completed in October 2004, the jail will be able

to house 1,300 inmates and 83 additional deputies. Renovation of the existing jail will now commence, which will include new and expanded jail support facilities and a back-up Emergency Operations Center.

The new Juvenile Detention Center opened on September 30, 2004. The State’s Juvenile Justice System is responsible for 50% of the $10 million building cost and 40% of its operating budget. A partnership between the City, Schools, and the State Department of Education will open a full-fledged public school at the Center consisting of a principal, secretary, and 8 teachers. The residents will be able to earn a GED, take regular education classes counting towards their diploma, and enroll in special education classes. The state is fully funding this educational program.

New Oceanfront Library

New Juvenile Detention Center

Family and Youth Opportunities Child Safety

The City of Virginia Beach and Norfolk State University collaborated to organize and publicize the Mayor’s Summit on Child Abuse Prevention, a citywide initiative to promote child safety. Volunteers and professionals from law enforcement, social services, education, military and faith-based communities met to consider strategies to prevent deaths and injuries to children in Virginia Beach. The summit focused on three objectives: identifying the cost of child abuse to the community, presenting effective child abuse prevention programs, and enhancing inter-agency communication.

Neighborhood Resource Center

The City’s Department of Housing and Neighborhood Preservation, Virginia Wesleyan College (VWC), and civic leaders from seven neighborhoods in proximity to the college, collaborated to create the new “Neighborhood Resource Center.” The Center will allow regular and convenient contact among citizen leaders, VWC staff, and City staff to promote neighborhood and community improvement. VWC is providing the office for two part-time City staff members. There is also a computer workstation and meeting room available for staff and citizens.

Quality Organization NAS Oceana

The Oceana Naval Air Station is home to 145 FA-18C Hornets, 7 Super Hornets, and 80 F-14 Tomcats. More F/A-18 E and F model Super Hornets will be arriving 2004, while the Tomcats will be phased out by year-end 2006. Eventually, there will be 120 Super Hornets based at Oceana. The Navy estimates that the airmen needed to fly and care for the new Super Hornets and their families will bring more than 16,000 people to the area and generate an annual payroll of more than $190 million. The largest employer in Virginia Beach, the air station has a gross annual payroll of over $1.05 billion and spends another $400 million for goods and services. Oceana is the world’s largest master jet base. Financings

In June 2004, the City sold $65,000,000 General Obligation Bonds at a true interest cost of 4.355% to fund various projects in the Capital Improvement Program (CIP). All three rating agencies reaffirmed the City’s high double-A ratings on its general obligation bonds: AA+ by Fitch, Aa1 by Moody’s Investors Service, and AA+ by Standard and Poor’s.

On September 9, 2003, the VBDA took advantage of the low interest rate environment and issued $165,000,000 Public Facility Revenue Bonds. The bonds were rated AA- by Fitch, Aa3 by Moody’s Investors Services, and AA by Standard and Poor’s. Bond proceeds will be used to finance eleven projects for the City, including a portion of the Convention Center, the Performing Arts Theatre, open space, the 31st Street parking garage, Town Center parking garages and others. The bonds were issued at a true interest cost of 4.399%. The revenue bonds are secured by a support agreement from the City. The main sources of the City’s payments to the VBDA are increased hotel taxes, restaurant and cigarette taxes, as well as the revenues generated by the Town Center TIF District for the Town Center parking garages.

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FA-18 Super Hornet

Architect’s Rendering of the New Theatre

During FY-04 the City continued to acquire development rights in designated areas within the southern portion of the City for the Agricultural Reserve Program. The rights were acquired through the issuance of installment purchase agreements, which are considered valid contractual obligations of the City. Four such agreements were completed in FY-04 at a total purchase price of $1,079,365 with 197 acres acquired. For the total program at June 30, 2004, 54 agreements totaling 6,650 acres at a total purchase price of $21,542,452 have been executed. Emergency Communications

Groundbreaking for the new $10 million Emergency Communications Center (ECC)/Emergency Operations Center (EOC) was held on March 15. The new ECC will allow for the expansion and enhancement of services supporting the 911 operations, including additional dispatching and call taking positions as well as gaining efficiencies through shared space with the EOC. The building will be completed in 2005.

E-Gov

The City puts a high priority on government efficiency and good communications with its citizens. VBM@IL, the Interactive Services Guide, Live Video Streaming, and City Page Online are all part of the ongoing effort to provide enhanced public communications. VBgov.com provides direct online access to over 44 unique on-line City services, such as City Code updates, library catalog services, real estate assessments, public works problem reporting, e-Docs, e-Tickets for on-line payment of police citations and parking tickets and signing up for Parks and Recreation classes. New this year, the first phase of an online building and inspection tool is available on Vbgov.com. Citizens and business people are now able to inquire about the status of building permits and view inspection results online. Future enhancements to this system will include online scheduling of inspections and online payment for building permits and re-inspections. Also new, citizens may now pay their water and sanitary sewer bills online using e-Check. e-Check is the City’s first step in allowing citizens to pay City bills over the Internet. The services will be expanded to all municipal services in the future.

The Virginia Beach government was the first in the Commonwealth to participate in the DMV’s Local

Vehicle Registration Program, which allows the DMV to collect the local vehicle registration fee simultaneously with the state vehicle registration fee. FY-04 was the first full year of the new program. The DMV’s Vehicle Registration Withholding Program, also new this year, “stops” vehicle registrations if personal property taxes have not been paid. Together, these new programs are making Virginia Beach more efficient and effective. Another benefit, Virginia Beach citizens are able to take advantage of DMV’s on-line services.

VBgov.com won a “Certificate of Creative Achievement” from International Web Page Awards, sharing the spotlight with some of the world’s biggest commercial, government and non-profit organizations. Vbgov.com has also won several other awards, the most prestigious being ranked third in the Top 10 Digital Cities Survey for cities with populations greater than 250,000. Tampa was ranked #1, followed by Colorado Springs and Los Angeles which tied for the #2 spot.

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Rendering of the New Emergency Communications and Emergency Operations Center

INTERNAL CONTROL AND BUDGETARY ACCOUNTING

The City’s management team is responsible for establishing and maintaining an internal control structure to protect the assets of the government from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.

Budgetary controls are maintained to ensure compliance with legal provisions embodied in the annual appropriated budget approved by City Council. Activities of the General Fund, certain Special Revenue Funds, Debt Service Fund, Enterprise Funds and School Board Governmental Component Unit Funds are included in the annual appropriated budget. The level of budgetary control is established by each organizational unit included in the budget ordinance. Additional controls are exercised administratively.

The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Appropriations for the subsequent fiscal year are increased in the amount necessary to satisfy the unliquidated balance of encumbrances at year-end.

As demonstrated by the statements and schedules included in the financial section of this report, the government continues to meet its responsibility for sound financial management.

CAPITAL FINANCING AND DEBT MANAGEMENT

The FY 2005-2010 Approved Capital Improvement Program (CIP), which was approved by City Council in May 2004, sets forth a six-year program totaling $845.5 million. Of this amount, $254.6 million is from City sources and $590.9 million from outside sources. The total program represents an increase of $85.8 million from the 2004-2009 plan, or an increase of 11.2%. The six-year plan provides phased funding for critical public works infrastructure needs and upgrades that will help insure compliance with increasingly strict environmental requirements, funding for facility improvements to serve a growing City population, and funding for public schools. The CIP also includes an increase in capital investment for recreational activities, leisure programs, and the preservation and acquisition of open space which enhances the quality of life in the City of Virginia Beach.

The City has developed a series of Debt Management Policies to provide a functional tool for debt management and capital planning. The policies reiterate the City’s commitment to principles such as rapid principal retirement, maintaining sufficient working capital to avoid the use of short-term borrowing for operating purposes, and the use of self-supporting or revenue-supported debt where appropriate. The policies also establish the following target levels for these key debt ratios:

Ratio Description Established Standard FY04 FY03

Annual Debt Service to General Governmental Expenditures

No greater than 12.5% 7.9% 7.9%

Overall Net Debt to Estimated Full Value


Overall Net Debt Per Capita No greater than $1,500 $1,833 $1,412

Overall Net Debt Per Capita Personal Income


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All but one of the debt affordability indicators falls within the established guidelines at June 30, 2004. Overall Net Debt Per Capita exceeds the guideline of $1,500 in 2004 as anticipated by City Council and reported to the rating agencies. It is expected that the Overall Net Debt Per Capita ratio will continue to increase and exceed $2,000 per capita in the near future. While the City’s debt management policy in this area currently exceeds its own guideline that was established in 1998, the City will continue to evaluate the guideline compared to per capita debt of similar cities.

CASH MANAGEMENT

The City Charter provides that the elected City Treasurer is the custodian of City funds. Cash temporarily idle during the fiscal year is invested by the City Treasurer in certificates of deposit, bankers’ acceptances, commercial paper, and various other short-term instruments (See Note 7). The average yield on the City’s investments during the year ended June 30, 2004 was comparable to that of 91-day U.S. Treasury Bills and 90-day certificates of deposit during the same period. Investments and deposits totaled $652.9 million at June 30, 2004.

The City’s formally adopted investment policy stresses the minimization of credit and market risk, while maintaining a competitive yield on its portfolio. Accordingly, “bank deposits” were either insured by federal deposit insurance or collateralized. All collateral on such deposits was held by the Treasurer of Virginia in accordance with the Virginia Security for Public Deposits Act. Remaining investments were held in the City’s name by a third party, safekeeping agent.

RISK MANAGEMENT

The City’s risk management program is designed to protect the investment of taxpayers by identifying and reducing risk that confronts the City. The City manages the program with a combination of in-house staff and third-party administrators. Contributions are made by operating funds to the Risk Management Fund to accumulate resources to pay premium costs and claims filed against the City. Effective August 1, 1992, the City is self-insured for the first $2,000,000 of any liability claims and has $10 million of excess insurance coverage.

INDEPENDENT AUDIT

An independent audit of the City’s finances is required each fiscal year by Section 8.06 of the City Charter by either the Virginia Auditor of Public Accounts or by a firm of independent certified public accountants. Accordingly, the records have been audited by Cherry, Bekaert & Holland, L.L.P. and its reports on the general purpose financial statements, internal controls, and compliance (See Note 8C) are included herein.

CERTIFICATE OF ACHIEVEMENT

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2003, and the Distinguished Budget Presentation Award for the FY-04 Resource Management Plan.

In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report which conforms to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Programs requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

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ACKNOWLEDGMENTS

During the year, the staff of the Finance Department rendered professional and knowledgeable services to the City. We are most appreciative of these efforts and take this opportunity to recognize these outstanding public servants. They maintain the accounting records of the City on a current and timely basis and deserve special consideration.

The City Council’s oversight of the financial affairs of the City has resulted in this strong financial report and Council is commended for the policies and practices which have made it so. Respectively, James K. Spore City Manager Steven T. Thompson Chief Financial Officer

Patricia A. Phillips Director of Finance

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FINANCIAL SECTION

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Independent Auditors’ Report The Honorable Members of the City Council City of Virginia Beach, Virginia We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of the City of Virginia Beach, Virginia (the City), as of and for the year ended June 30, 2004, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Virginia Beach Community Development Corporation, which represents 3% and 1%, respectively of the assets and revenues of the aggregate discretely presented component units. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinions, insofar as it relates to the amounts included for the Virginia Beach Community Development Corporation, is based on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and the Specifications for Audits of Counties, Cities and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Virginia Beach, Virginia, as of June 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparisons for the general fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 22, 2004 on our consideration of the City’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.

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The Management’s Discussion and Analysis and the Schedule of Funding Progress for a Defined Benefit Pension Plan are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit this information and express no opinion thereon. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual nonmajor fund statements, statistical section, as well as the accompanying schedule of expenditures of federal awards as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical section of this report have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and, accordingly, we express no opinion on them. Virginia Beach, Virginia October 22, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

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MANAGEMENT====S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the City of Virginia Beach financial performance provides an overview of the City's financial activities for the fiscal year ended June 30, 2004. Please read it in conjunction with the transmittal letter at the front of this report and the City's financial statements, which follow this section.

FINANCIAL HIGHLIGHTS

General Fund

! At the end of the current fiscal year, undesignated fund balance for the General Fund was $73.0 million, or 9.6% of the FY2004 General Fund revenues. The undesignated fund balance increased by $10.0 million from FY2003.

! General Fund revenues and transfers increased $62.9 million, an increase of 9.0% over

FY2003. Expenditures and transfers increased $42.7 million, 6.1% higher than last fiscal year. However, FY2004 expenditures and transfers were 3.3% less than budget.

! The City’s real estate tax rate of $1.22 per $100 of assessed valuation has remained

unchanged since 1997. The tax rate on personal property of $3.70 per $100 of assessed valuation also remained unchanged. However, the real estate tax rate has been reduced to $1.1964 per $100 of assessed valuation beginning in FY2005.

! General property tax revenues (real estate and personal property taxes) comprise 58.7% of General Fund revenues. Revenues from general property taxes in FY2004 increased 8.6% from FY2003. The assessed values of real and personal property increased 6.4% to a total of $31.8 billion.

Governmental Activities

! On a government-wide basis for governmental activities, the City had expenses net of

program revenue of $595.0 million. General revenues and transfers totaled $690.9 million resulting in an increase in net assets of $95.9 million (Exhibit 2).

! As of June 30, 2004, the City's governmental activities reported combined ending net

asset balances of $2.0 billion. Most of these balances are restricted for specific purposes such as debt service, capital projects, schools, or other operations.

! During the fiscal year ended June 30, 2004, the City issued $65 million in new General

Obligation bonds and $165.0 million in Public Facility Revenue bonds, which includes obligations for the Virginia Beach Development Authority totaling $11.8 million. This new debt will be used to finance public improvements, including City and School facilities and infrastructure. At the end of fiscal year 2004, the City had $868.5 million of outstanding General Government debt. The City is rated AA+ by Standard and Poors, AA+ by Fitch, and Aa1 by Moody=s.

Business-Type Activities

! The net assets of the City=s business-type activities increased by $13.7 million during

fiscal year 2004.

! Sewer and Storm Water rates were raised to provide funding for infrastructure maintenance projects.

Entity-Wide

! The City's total net assets, excluding component units, on a government-wide basis,

totaled $2.74 billion at June 30, 2004, an increase of 4.2% over June 30, 2003. Most of these net assets are invested in capital assets or are restricted for specific purposes.

! School Board expenditures for education totaled $613.1 million during fiscal year 2004.

Net Assets totaled $265.0 million, most of which is invested in capital assets.

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USING THE FINANCIAL SECTION OF THIS COMPREHENSIVE ANNUAL FINANCIAL REPORT

This Comprehensive Annual Financial Report consists of four sections: introductory, financial, statistical, and single audit. As illustrated in the following chart, the financial section of this report has three components: management's discussion and analysis (this section), the basic financial statements, and required supplementary information. Components of the Financial Section

BASIC FINANCIAL STATEMENTS

MANAGEMENT====S DISCUSSION AND ANALYSIS

FINANCIAL STATEMENTS

Government-wide Governmental Activities (Full Accrual) Business-Type Activities (Full Accrual)

Fund

Governmental (Modified Accrual) Proprietary (Full Accrual) Fiduciary (Full Accrual)

Notes to the Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION (Other Than MD&A)

Up until 2002, the primary focus of local government financial statements has been summarized fund type information on a current financial resource basis. This approach has been modified and statements are now presented which focus on the City as a whole (government-wide) as well as the major individual funds. The government-wide financial statements provide both long-term and short-term information about the City's overall financial status. The fund financial statements, which have been provided in the past, focus on the individual parts of the City government, reporting the operations of the City in more detail than the government-wide statements. Both perspectives (government-wide and individual fund) allow the user to address relevant questions, broaden the basis for comparison (year to year or government to government) and enhance the City's accountability. GOVERNMENT-WIDE FINANCIAL STATEMENTS

The government-wide financial statements report information about the City as a whole, using accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the government's assets and liabilities, reported using the full accrual basis of accounting. The statement of activities accounts for all of the current year's revenues and expenses, regardless of when cash is received or paid.

The two government-wide statements report the City's net assets and how they have changed. Net assets, the difference between the City's assets and liabilities, is one way to measure the financial health of the City. Over time, increases or decreases in the City's net assets are an indicator of whether its financial health is improving or deteriorating. To assess the overall health of the City, one needs to consider other nonfinancial factors such as changes in the City's property tax base and condition of the City's infrastructure.

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The government-wide financial statements of the City are divided into three categories:

Governmental Activities - Most of the City's basic services are included here, such as police, fire and other public safety services, parks and recreation, public works, and general administration. Property and sales taxes, charges for services, and state and federal grants finance most of these activities.

Business-type activities - The City's water and sewer, storm water, parking, and golf course operations are reported here. Fees are charged to customers to help cover the costs of providing these services. Component units - The City includes three other entities in its report - the City of Virginia Beach School Board, the Virginia Beach Development Authority and the Community Development Corporation. Although legally separate, these "component units" are important because the City is financially accountable for them, providing operating and capital funding.

FUND FINANCIAL STATEMENTS

The fund financial statements provide more detailed information about the City's most significant funds and will be more familiar to traditional users of government financial statements. The focus is now on major funds rather than fund types. The City has three types of funds:

Governmental funds - General Fund, Debt Service Fund, Capital Projects Fund, and Special Revenue Funds (such as Parks and Recreation and Mental Health) are governmental funds, funds which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a short-term view that helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. Because this information does not encompass the additional long-term focus of the government-wide statements, additional information is provided at the bottom of the governmental funds statements that explains the relationship (or differences) between them.

Proprietary funds - Services for which the City charges customers a fee are generally reported in proprietary funds. These funds, like the government-wide statements, provide both long-term and short-term financial information. The City's enterprise funds (one type of proprietary fund) are the same as its business-type activities, but the fund financial statements provide more detail and additional information, such as cash flows. The City utilizes enterprise funds to account for its storm water, water and sewer, golf course, and parking activities. The City uses internal service funds (the other type of proprietary fund) to report activities that provide supplies and services for the City's other programs and activities. The City=s internal service funds are used for providing city garage and fuel services, risk management, printing, landscaping and information technology services.

Fiduciary funds – Used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations and other governmental units. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. The Fiduciary Funds are Agency Funds (City Fringe Benefits, Payroll Deductions, Special Welfare, Escheat Property Agency Funds) and the Pension Trust Fund. The Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. These fiduciary activities are excluded from the City's government-wide financial statements because the City cannot use these assets to finance its operations.

FINANCIAL ANALYSIS OF THE CITY AS A WHOLE

Over time, net assets may serve as a useful indicator of a government=s financial position. In the case of the City of Virginia Beach, assets exceeded liabilities by $2.74 billion at the close of the fiscal year, as shown in Table 1 on the following page.

The City's combined net assets (the City's bottom line) increased by $109.6 million to $2,742.4 million from

$2,632.8 million (Table 2). Net assets of the City's governmental funds were $1,983.3 million (Table 1). Most of these net assets are invested in capital assets or restricted for a particular purpose such as debt or capital projects. The City's unrestricted net assets, which are used to finance day-to-day operations, totaled $102.4 million (Table 1). The component units= net assets totaled $304.1 million, most of which is restricted for particular purposes.

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Statement of Net Assets: The following table reflects the condensed Statement of Net Assets:

Table 1 Comparative Statement of Net Assets

June 30, 2004 With comparative totals for June 30, 2003

(in Millions) Governmental

Activities Business-Type

Activities Total

Primary Government 2004 2003 2004 2003 2004 2003

Current and Other Assets $ 466.9 $ 298.5 $ 142.6 $ 150.0 $ 609.5 $ 448.5 Capital Assets 2,446.5 2,301.2 754.8 743.3 3,201.3 3,044.5 Total Assets $ 2,913.4 $ 2,599.7 $ 897.4 $ 893.3 $ 3,810.8 $ 3,493.0 Long-Term Liabilities $ 793.3 $ 606.7 $ 121.2 $ 126.8 $ 914.5 $ 733.5 Other Liabilities 136.8 105.6 17.1 21.1 153.9 126.7 Total Liabilities $ 930.1 $ 712.3 $ 138.3 $ 147.9 $ 1,068.4 $ 860.2 Net Assets: Invested in Capital Assets, Net of related debt $ 1,812.2 $ 1,728.5 $ 653.8 $ 648.2 $ 2,466.0 $ 2,376.7 Restricted 69.0 59.0 105.0 96.9 174.0 155.9 Unrestricted 102.1 99.9 .3 .3 102.4 100.2 Total Net Assets $ 1,983.3 $ 1,887.4 $ 759.1 $ 745.4 $ 2,742.4 $ 2,632.8

See Exhibit 1 for additional information

The largest portion of the City of Virginia Beach=s net assets (89.9 percent) reflects its investment in capital assets (e.g., land, buildings, parks, infrastructure, machinery and equipment), less any related debt used to acquire those assets that is still outstanding. These are assets that are used to provide services to citizens and therefore, are not available for future spending. Although the City of Virginia Beach=s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

Governmental Activities unrestricted net assets increased $2.2 million and totaled $102.1 million at June 30, 2004. Inclusive in Governmental Activities unrestricted net assets are ending fund balances of certain Special Revenue Funds which are intended for specific purposes by City Council. These funds are, but are not limited to, Agriculture Reserve Fund, Major Projects Fund, Open Space Fund, Tourism Growth Investment Fund, and Tourism Advertising Program Fund. The balance of these funds at June 30, 2004 was $51.9 million.

As part of the implementation of GASB Statement No. 34 in FY2002, the City increased its accounting for existing

infrastructure and other assets which now total $3.2 billion. These assets include roads, bridges, parks, water and sewer facilities, land, and other long lived assets. For FY2004, the primary governments investment in capital assets, net of related debt increased $89.3 million. Net assets of the City’s governmental activities increased 5.1 percent, or $95.9 million in FY2004. General government revenues totaled $950.9 million and included $2 million in capital contributions from the federal government for its share of the Hurricane Protection project and another $39.2 million of developer contributed roadways. In addition, right-of-way for those roadway projects totaled $15.4 million. Expenditures for the same period totaled $855.3 million. During FY2004, the City expended $144.6 million on its capital improvement program, resulting in increases in both the capital asset inventory and construction in progress. The majority of the increases were for the Convention Center Replacement, Town Center Infrastructure, Rudee Loop Development, Mount Trashmore Capping, Juvenile Detention Center, construction of Multi-Use Recreation Fields, acquisition of right-of-way for the Southeastern Parkway and Greenbelt, and several roadway intersection and signalization projects.

The net assets of business-type activities increased by $13.7 million, most of which was invested in capital assets. These net assets will be used to continue construction and maintenance of the storm water and water and sewer utilities. During 2004, these utilities provided $14.3 million of cash funding to the capital improvement program. The increase in net assets is mainly the result of developer contributed assets and the true-up with the City of Norfolk for the water servicing contract in the Water and Sewer Fund.

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Table 2

Comparative Changes in Net Assets June 30, 2004

With Comparative Totals for June 30, 2003 (in Millions)

Governmental

Activities


Total

Primary Government

2004 2003 2004 2003 2004 2003 REVENUES:

Program Revenues:

Charges for Services $ 40.4 $ 37.2 $ 106.2 $ 96.4 $ 146.6 $ 133.6 Operating Grants & Contributions 155.3 130.0 4.7 4.5 160.0 134.5 Capital Grants and Contributions 64.6 18.8 2.1 4.8 66.7 23.6 General Revenues: Property Taxes 406.8 374.8 - - 406.8 374.8 Other Taxes 224.4 199.0 - - 224.4 199.0 Other 57.0 62.5 1.4 2.0 58.4 64.5 Special Items: Sale of Property 2.4 8.8 - - 2.4 8.8 Total Revenues $ 950.9 $ 831.1 $ 114.4 $ 107.7 $ 1,065.3 $ 938.8 EXPENSES: Legislative $ 1.0 $ 1.0 $ - $ - $ 1.0 $ 1.0 Executive 2.1 2.1 - - 2.1 2.1 Law 3.1 3.1 - - 3.1 3.1 Finance 15.3 15.3 - - 15.3 15.3 Human Resources 5.4 5.4 - - 5.4 5.4 Judicial 44.8 37.3 - - 44.8 37.3 Health 2.8 2.6 - - 2.8 2.6 Police 68.3 64.5 - - 68.3 64.5 Social Services 38.9 39.0 - - 38.9 39.0 Public Works 97.3 93.5 - - 97.3 93.5 Parks and Recreation 23.6 23.2 - - 23.6 23.2 Library 14.3 12.9 - - 14.3 12.9 Planning 9.0 8.4 - - 9.0 8.4 Agriculture 1.1 1.1 - - 1.1 1.1 Economic Development 3.1 4.6 - - 3.1 4.6 Convention & Visitor Development 16.7 15.3 - - 16.7 15.3 Communication & Information

Technology 5.7 5.5 - -

5.7 5.5 General Services 27.6 26.1 - - 27.6 26.1 Boards and Commissions 10.7 11.3 - - 10.7 11.3 Fire 35.0 31.3 - - 35.0 31.3 Management Services 1.4 1.4 - - 1.4 1.4 Mental Health and Mental Retardation 31.7 29.7 - - 31.7 29.7 Education & Transfer to School 284.6 269.3 - - 284.6 269.3

Housing & Neighborhood Preservation 18.7 16.5 - - 18.7 16.5 Museums 7.4 7.2 - - 7.4 7.2

General Government 45.2 11.6 - - 45.2 11.6 Emergency Medical Services 3.6 3.1 - - 3.6 3.1 Water & Sewer - - 80.5 80.8 80.5 80.8 Storm Water - - 15.6 12.5 15.6 12.5 Parking - - 2.0 2.0 2.0 2.0 Golf Courses - - 2.3 2.3 2.3 2.3 Interest on Long-Term Debt 36.9 29.7 - - 36.9 29.7 Total Expenses $ 855.3 $ 772.0 $ 100.4 $ 97.6 $ 955.7 $ 869.6 Increase in Net Assets before Transfers 95.6 59.1 14.0 10.1 109.6 69.2 Transfers .3 1.2 (.3) (1.2) - - Change in Net Assets $ 95.9 $ 60.3 $ 13.7 $ 8.9 $ 109.6 $ 69.2 Net Assets - Beginning 1,887.4 1,827.1 745.4 736.5 2,632.8 2,563.6 Net Assets – Ending $ 1,983.3 $ 1,887.4 $ 759.1 $ 745.4 $ 2,742.4 $ 2,632.8

See Exhibit 2 for additional information

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REVENUES

For the fiscal year ended June 30, 2004, revenues from governmental activities totaled $950.9 million. General Fund revenues increased $62.9 million, primarily due to growth in real estate tax revenue, general sales taxes, and business licenses.

General property taxes, the City's largest revenue source, were $406.8 million, an increase of $32.0 million over the previous year. Included in these taxes are real and personal property levies which are assessed in December and June of the fiscal year. This revenue increase is primarily attributable to an increase in real property assessments of $ 1.9 billion for fiscal year 2004. Personal property assessments increased $290.6 million during the same period. The personal property tax rate was $3.70 per $100 of assessed value (100% of fair market value). The real estate tax rate was $1.22 per $100 of assessed value (100% of fair market value) during the fiscal year. The real estate and personal property tax rates have not been increased since 1997 and 1982 respectively. However, for FY2005, the real estate tax rate was reduced to $1.1964 per $100 of assessed value.

The "Other Local Taxes" revenue category, which includes taxes on general sales, utility purchases, cigarettes, hotel rooms, restaurant meals, amusements, and business and automobile licenses, totaled $224.4 million. This represents a $25.4 million increase over the previous year, or 12.8%.

Program revenues are derived from the program itself and reduce the cost of the function to the City. Total program revenues for governmental activities was $260.3 million. The most significant of these revenues is reported in the category AOperating Grants and Contributions@. These revenues totaled $155.3 million for the year ended June 30, 2004 and represent primarily state and federal operating grants. Other program revenue categories were "Charges for Services", totaling $40.4 million and "Capital Grants and Contributions", totaling $64.6 million. There was a substantial increase in governmental activities capital grant and contribution revenue this year. The major reason for the increase is developer contributed roadways and right-of-way being added to the city’s roadway network. For additional information and comparative results, see Table 2.

Business-type activities generated program revenues of $113.0 million, primarily from charges for services, which totaled $106.2 million. Charges for services revenue increased for the Water and Sewer, Stormwater and Golf Courses enterprise funds. The Parking enterprise fund experienced a slight decrease in this revenue. Operating grants, $4.7 million, and capital grants, $2.1 million, comprised the remaining program revenue for the business-type activities.

Other Taxes (21.1%)

General Property Taxes (38.2%)

Charges for Services (13.7%)

Operating Grants (15.0%)Other (5.7%)Capital Grants (6.3%)

PRIMARY GOVERNMENT SOURCES OF REVENUEFor FY 2004

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EXPENSES

For the fiscal year ended June 30, 2004, expenses for governmental activities totaled $855.3 million, an increase of $83.3 million. Most of this increase was for education purposes and for costs incurred related to damages from Hurricane Isabel. Otherwise, general government operating departments experienced only slight increases in spending over the previous fiscal year.

The City and School Board strive to provide competitive compensation levels for employees. The FY2004

expenses include funding for a 4.05% merit increase for City employees, based on satisfactory performance. School Board expenses include an average 4.7% increase for all School Board employees.

Education continues to be one of the City's highest priorities and commitments. The City's funding for education in FY2004 totaled $284.6 million, or 44.4% of total School=s Governmental Funds revenue. The City share of funding for educational purposes increased by $15.3 million, an increase of 5.6%. Included in the educational expense amount is $13.1 million of local funding which was provided for school construction.

Expenses for the City=s business-type activities totaled $100.5 million, which provided water, sewer and storm water utility services as well as parking and golf course facility operations (Table 2).

Education (29.8%)Other General Government (30.5%)

Storm Water (1.6%)Other Business-type (.4%)

Interest on Debt (3.9%)

Public Safety (11.2%)Public Works (10.2%)

Libraries (1.5%)Water and Sewer (8.4%)

Parks & Recreation (2.5%)

PRIMARY GOVERNMENTFUNCTIONAL EXPENSES FOR FY 2004

FINANCIAL ANALYSIS OF THE CITY'S FUNDS

For the fiscal year ended June 30, 2004, the City's governmental funds reflect a combined fund balance of $366.1 million, most of which is restricted for specific purposes. This represented a $143.6 million increase of the combined fund balances of governmental funds (Exhibit 4). The primary reason for the increase in fund balances was issuance of $218.2 million of bonded debt, which, in addition to the cash funding provided by the General Fund, exceeded capital project expenditures by $102.5 million. In addition, these other factors should be noted:

$ The General Fund contributed $34.7 million as cash funding of capital projects in FY2004.

$ Expenditures for Public Safety totaled $106.9 million, an increase of $5.4 million over FY2003.

$ Expenditures related to Hurricane Isabel damages totaled over $21.0 million in FY2004.

$ Expenditures by the Public Works department, $97.3 million in fiscal year 2004, were for the construction and preservation of general government infrastructure.

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$ Interest on Debt Service, for both general government and school debt, totaled $36.9 million for the

year. This represented an increase of $7.2 million during FY2004.

$ The City spent $18.6 million for housing and neighborhood preservation from its governmental funds.

$ The City spent $162.8 million in the Capital Projects Fund and issued $218.2 million in General Obligation bonds and other new debt to support current as well as future capital expenditures.

GENERAL FUND BUDGETARY HIGHLIGHTS

The following is a brief review of the budgetary changes from the original to the final budget (See budget to actual comparison in Exhibit 5).

The increase in the Revenue budget during the fiscal year was $1.0 million, primarily as a result of the following:

$ Revenue budget for public assistance grants was increased by $ .14 million. The Department of Social Services administers several programs which are mandated by Federal and/or State law. These programs, adoption assistance for families who adopt children with special needs, childcare subsidies to support employment of income eligible families, and maintenance payments for foster children who are eligible under Title IV-E of the Social Security Act, had a combined decrease of expenditures during FY2004 of .7%.

$ An increase in State funding for the maintenance of roads resulted in a $ .75 million increase to the

Public Works budget.

General Fund expenditure budget increased during the year under review to reflect additional funding for capital projects and the appropriation of School Board reversion funds. The Police Department's operating budget was increased during the year for the purchase of a new incinerator for the animal control division. Funding for the General Registrar was increased because of needs for the presidential primary election. The Social Services budget increased to provide funding for their food stamp employment and training program. Other departmental increases were the result of approved carryover funds and reappropriations of encumbrances. CAPITAL ASSETS

At the end of Fiscal Year 2004, the City's governmental activities (including internal service funds) had invested $2,446.5 million (See Footnote 4) in a variety of capital assets and infrastructure, as reflected in the following schedule:

Table 3

Governmental Activities Change in Capital Assets

(in Millions)

Balance

June 30, 2003

Net Additions/ Deletions

Balance

June 30, 2004

Non-Depreciable Assets: Land and Land Improvements $ 502.8 $ 37.4 $ 540.2

Agriculture Reserve Development Rights 20.5 1.0 21.5

Construction in Progress 312.5 99.5 412.0

Other Capital Assets:

Infrastructure 1,497.0 43.6 1,540.6

Buildings 626.0 16.4 642.4

Furniture and Other Equipment 105.1 6.6 111.7

Improvements 106.9 1.3 108.2

Less: Accumulated Depreciation (869.6) (60.5) (930.1) Totals $ 2,301.2 $ 145.3 $ 2,446.5

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The FY2005-2010 Capital Improvement Program (CIP), which was approved by City Council in May, 2004, sets forth a six year program totaling $845.5 million. This plan provides scheduled funding for the economic development incentive program, land acquisition for the Southeastern Parkway and Greenbelt, and continuation of the City=s open space initiative. Phased funding for beach replenishment, street resurfacing, parks, and neighborhood storm water management is also provided. Infrastructure improvements at the intersection of Princess Anne Road and Kempsville Road and Phase II of the Salem Road project, as well as the continuation of the roadways program are also included in the plan.

The School Board has included funding for the replacement of Great Neck, Virginia Beach, and Kemps Landing middle schools, and for the modernization of several elementary and middle schools. MAINTENANCE OF INFRASTRUCTURE

It is the policy of City Council to support the planned maintenance and repair of the City=s infrastructure in a manner which provides the best facilities at the least cost and maintains the value of the City=s investment. It is the long-term goal of the City Council to achieve maintenance and repair levels which insure that the City=s infrastructure remains functional and is maintained in good condition, a goal to be achieved by providing the resources required by condition assessment surveys or generally accepted industry standards. For FY2004, funding for infrastructure maintenance citywide, including schools, was 3.73% of the estimated replacement cost of infrastructure assets.

LONG-TERM DEBT

In September 2003, the City issued $165.0 million in Public Facility Revenue Bonds as financing for a number of City capital projects, primarily the new convention center and the 31st Street parking garage. $11.8 million of this amount, reported in the Virginia Beach Development Authority Component Unit, is financing for the Authority’s Town Center public parking garage.

In June 2004, the City issued $65 million in General Obligation Bonds for school construction ($20.5 million) roadways ($13.6 million) building projects ($20.6 million) and recreation and economic enhancement projects ($10.3 million). In conjunction with this sale, credit rating agencies reaffirmed the City of Virginia Beach bond ratings of AA+ by Fitch, AA+ by Standard and Poors, and Aa1 by Moody's. More detailed information about the City’s long-term liabilities is presented in Note 5 to the financial statements.

The Debt Service Fund has a fund balance of $29.1 million, held as a reserve specifically designated for future

debt service, including the Agriculture Reserve Program. The state limits the amount of general obligation debt the City can issue to ten percent of the assessed value of

real property within the City. The City's outstanding debt is significantly below this limit, which is currently $2.8 billion.

Table 4

Outstanding Debt Primary Government

at June 30, 2004 (in Millions)



Total Primary Government

General Obligation Bonds $ 555.1 $ 5.8 $ 560.9

Public Facility Revenue Bonds 153.2 - 153.2

Double Barrel and Revenue Bonds - 120.2 120.2

Certificates of Participation 16.8 - 16.8

State Literary Fund Loans 13.7 - 13.7

Obligations Under Capital Leases 1.1 - 1.1

Agriculture Reserve Program 21.5 - 21.5

Town Center Support Agreement 35.7 - 35.7

Other Long-term Debt 71.4 2.6 74.0

Totals $ 868.5 $ 128.6 $ 997.1

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ECONOMIC FACTORS

In the last five years for which data is available from the U.S. Bureau of Economic Analysis, the City added over 25,929 jobs, with total employment increasing to 220,298.

As of 2002 (the latest data available from the U.S. Bureau of Economic Analysis), the City=s per capita income was $32,374, the highest in the region, just below the state average and well above the national average.

Tourism remains a major industry for the City of Virginia Beach. During FY2004, City hotels sold 2,358,327 room nights, generating revenue of $211.4 million for the industry. This represented an 8% increase over the previous year.

Virginia Beach has an unemployment rate of 3.6% as of August 2004, lower than both the state and federal averages. CONTACTING THE CITY'S FINANCIAL MANAGEMENT

This report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City's Finance Department, City of Virginia Beach, Municipal Center, Virginia Beach, Virginia 23456, telephone 757-427-4508, or visit the City's web site at www.vbgov.com.

BASIC FINANCIAL STATEMENTS

Governmental

ActivitiesBusiness-type

Activities Total School Board OtherASSETSCash and Investments 194,763,704$ 75,300,856$ 270,064,560$ 138,660,423$ 3,472,695$ Restricted Cash & Cash Equivalents 186,936,533 39,668,334 226,604,867 - 3,534,361Receivables (net) 54,724,669 19,101,179 73,825,848 606,670 16,449,642Due from Other Governments 26,349,429 6,013,083 32,362,512 17,970,300 14,317Inventories 1,195,119 1,902,429 3,097,548 576,862 1,874,693Other Assets 174,714 660,955 835,669 1,740,156 2,615,085Land Held for Resale - - - - 18,590,029Net Pension Asset 2,719,013 - 2,719,013 - -Capital Assets (net of accumulated

depreciation):Land and Improvements 561,699,374 149,906,869 711,606,243 28,475,488 9,466,260Buildings and Improvements 478,664,742 2,323,473 480,988,215 75,217,393 34,340,711Improvements other than Buildings 87,908,837 8,026,791 95,935,628 15,615,676 -Machinery and Equipment 32,902,957 5,235,118 38,138,075 42,362,109 -Infrastructure 873,311,394 523,357,823 1,396,669,217 - -Construction in Progress 412,005,703 65,944,799 477,950,502 37,831,758 12,976,338

Total Capital Assets 2,446,493,007$ 754,794,873$ 3,201,287,880$ 199,502,424$ 56,783,309$ Total Assets 2,913,356,188$ 897,441,709$ 3,810,797,897$ 359,056,835$ 103,334,131$

LIABILITIESAccounts Payable 36,181,705$ 6,284,147$ 42,465,852$ 15,471,222$ 5,599,674$ Accrued Liabilities 8,964,441 3,376,177 12,340,618 51,785,349 93,008Due to Other Governments 16,433,204 - 16,433,204 88,264 -Long-term Liabilities:

Due Within One Year 75,221,499 7,384,534 82,606,033 13,457,218 2,545,534Due in More Than One Year 793,294,539 121,229,373 914,523,912 13,290,235 55,984,158

Total Liabilities 930,095,388$ 138,274,231$ 1,068,369,619$ 94,092,288$ 64,222,374$

NET ASSETSInvested in Capital Assets,

Net of Related Debt 1,812,254,909$ 653,808,639$ 2,466,063,548$ 199,502,424$ 4,908,826$ Restricted for:

Future Debt Service 29,118,824 14,592,036 43,710,860 - 14,776,993Special Projects 19,817,889 - 19,817,889 48,910,176 -Schools 20,026,602 - 20,026,602 - -Water and Sewer Fund Operations - 78,063,264 78,063,264 - -Storm Water Fund Operations - 12,343,966 12,343,966 - -

Unrestricted 102,042,576 359,573 102,402,149 16,551,947 19,425,938Total Net Assets 1,983,260,800$ 759,167,478$ 2,742,428,278$ 264,964,547$ 39,111,757$

The accompanying notes are an integral part of the financial statements.

35

Exhibit 1CITY OF VIRGINIA BEACH, VIRGINIA

STATEMENT OF NET ASSETSJUNE 30, 2004

Primary Government Component Units

Operating Capital

ExpensesCharges for

ServicesGrants and

ContributionsGrants and

ContributionsPrimary Government:Governmental Activities:

Legislative 981,325$ -$ -$ -$ Executive 2,113,543 - - -Law 3,072,955 557 - -Finance 15,269,331 169,031 1,357,077 -Human Resources 5,419,976 340 - -Judicial 44,811,106 3,145,182 16,348,422 -Health 2,807,217 60,787 25,182 -Police 68,335,750 1,187,622 2,314,199 606,778Social Services 38,939,054 718,007 30,206,501 -Public Works 97,304,705 2,015,889 25,885,902 59,910,437Parks & Recreation 23,587,739 8,836,600 77,528 -Library 14,257,803 555,447 278,556 -Planning 9,036,272 5,546,695 30,000 -Agriculture 1,104,806 103,263 88,608 -Economic Development 3,052,588 - - -Convention & Visitor Development 16,703,585 1,404,295 - -Communications & Information Technology 5,688,567 77,427 793,007 301,284General Services 27,638,640 314,167 38,909 -Boards and Commissions 10,698,105 70,965 76,205 -Fire 34,985,948 228,971 2,191,511 108,717Management Services 1,437,220 - - -Mental Health & Mental Retardation 31,691,000 1,608,488 20,332,078 -Education 284,577,178 - - -Housing & Neighborhood Preservation 18,661,652 133,944 17,358,363 -Museums 7,431,946 5,479,477 641,196 -Emergency Medical Services 3,536,700 - 215,462 142,349General Government 45,235,256 8,701,176 37,009,476 3,564,784Interest on Long-term Debt 36,881,222 - - -

Total Governmental Activities 855,261,189$ 40,358,330$ 155,268,182$ 64,634,349$

Business-type Activities:Water and Sewer 80,538,848$ 89,029,816$ -$ 2,082,938$ Stormwater 15,631,258 12,629,702 4,747,358 18,715Parking 1,989,947 2,362,984 - -Golf Courses 2,319,660 2,216,771 - -

Total Business-type Activities 100,479,713$ 106,239,273$ 4,747,358$ 2,101,653$

Total Primary Government 955,740,902$ 146,597,603$ 160,015,540$ 66,736,002$

Component Units: Virginia Beach Development Authority 9,450,157$ 6,866,066$ 2,375,811$ 6,842,966$ Virginia Beach Community Development Corporation 2,350,957 1,236,699 1,701,396 - Virginia Beach School Board 613,129,565 15,700,658 98,775,611 12,210,734

Total Component Units 624,930,679$ 23,803,423$ 102,852,818$ 19,053,700$


Net Assets - Ending Net Assets - Beginning

CITY OF VIRGINIA BEACH, VIRGINIASTATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2004

Transfers Total General Revenues and Transfers Change in Net Assets

Special Items: Sale of Property Transfer of Infrastructure to Primary Government

Program Revenues

36

General Revenues: Taxes: General Property Taxes - Real Estate and Personal Property Other Taxes Payment from City of Virginia Beach Grants and Contributions Not Restricted to Specific Programs Investment Earnings Miscellaneous


Business-type Activities Total School Board Other

(981,325)$ -$ (981,325)$ -$ -$ (2,113,543) - (2,113,543) - -(3,072,398) - (3,072,398) - -

(13,743,223) - (13,743,223) - -(5,419,636) - (5,419,636) - -

(25,317,502) - (25,317,502) - -(2,721,248) - (2,721,248) - -

(64,227,151) - (64,227,151) - -(8,014,546) - (8,014,546) - -(9,492,477) - (9,492,477) - -

(14,673,611) - (14,673,611) - -(13,423,800) - (13,423,800) - -

(3,459,577) - (3,459,577) - -(912,935) - (912,935) - -

(3,052,588) - (3,052,588) - -(15,299,290) - (15,299,290) - -

(4,516,849) - (4,516,849) - -(27,285,564) - (27,285,564) - -(10,550,935) - (10,550,935) - -(32,456,749) - (32,456,749) - -

(1,437,220) - (1,437,220) - -(9,750,434) - (9,750,434) - -

(284,577,178) - (284,577,178) - -(1,169,345) - (1,169,345) - -(1,311,273) - (1,311,273) - -(3,178,889) - (3,178,889) - -4,040,180 - 4,040,180 - -

(36,881,222) - (36,881,222) - -(595,000,328)$ -$ (595,000,328)$ -$ -$

-$ 10,573,906$ 10,573,906$ -$ -$ - 1,764,517 1,764,517 - -- 373,037 373,037 - -- (102,889) (102,889) - --$ 12,608,571$ 12,608,571$ -$ -$

(595,000,328)$ 12,608,571$ (582,391,757)$ -$ -$

-$ -$ -$ -$ 6,634,686$ - - - - 587,138- - - (486,442,562) --$ -$ -$ (486,442,562)$ 7,221,824$

406,780,757$ -$ 406,780,757$ -$ -$ 224,426,503 - 224,426,503 - -

- - - 279,216,604 -46,744,198 - 46,744,198 234,249,167 -

3,968,766 1,388,430 5,357,196 416,869 121,7346,227,103 9 6,227,112 200,090 536,388

2,446,549 - 2,446,549 - -- - - - (6,468,941)

294,318 (294,318) - - -690,888,194$ 1,094,121$ 691,982,315$ 514,082,730$ (5,810,819)$

95,887,866$ 13,702,692$ 109,590,558$ 27,640,168$ 1,411,005$ 1,887,372,934 745,464,786 2,632,837,720 237,324,379 37,700,7521,983,260,800$ 759,167,478$ 2,742,428,278$ 264,964,547$ 39,111,757$

Primary Government Component Units


STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2004

Net (Expenses) Revenues andChanges in Net Assets

37

Exhibit 3

General Capital ProjectsOther Nonmajor

Funds

Total Governmental

FundsASSETS

Cash and Investments 82,343,792$ -$ 95,381,918$ 177,725,710$ Cash and Investments - Restricted - 162,961,046 23,975,487 186,936,533Cash Advances 212,434 - - 212,434Receivables (net of allowance for uncollectibles, where applicable):

Property Tax 38,689,023 - - 38,689,023Accounts 5,414,735 26,902 1,232,565 6,674,202Loans 7,686,281 - 1,373,539 9,059,820Accrued Interest 203,228 - 140 203,368

Due from: Other Funds 7,359,299 - - 7,359,299Other Governments 14,912,273 1,471,017 9,962,324 26,345,614

Advances to Other Funds 290,000 - - 290,000Inventories 212,748 - 323,417 536,165

Total Assets 157,323,813$ 164,458,965$ 132,249,390$ 454,032,168$

LIABILITIES Vouchers and Accounts Payable 6,090,957$ 22,309,016$ 5,124,279$ 33,524,252$ Deposits Payable 1,573,577 - - 1,573,577Due to Other Funds - - 7,359,299 7,359,299Intergovernmental Payables 78,752 14,459,363 1,895,089 16,433,204Deferred Revenue 28,894,237 - 195,449 29,089,686

Total Liabilities 36,637,523$ 36,768,379$ 14,574,116$ 87,980,018$

FUND BALANCES Fund Balances:

Reserved for: Encumbrances 3,280,063$ 21,951,858$ 2,049,047$ 27,280,968$ Loans and Other Obligations 7,929,429 - 1,373,539 9,302,968Advances to Other Funds 290,000 - - 290,000

Unreserved: Designated for School Capital

Projects and Other 20,026,602 - - 20,026,602Designated for Future Debt Service - - 29,118,824 29,118,824Designated for Special Projects - - 19,806,574 19,806,574Designated For Future Programs 7,916,811 - - 7,916,811Designated for Capital Projects 8,243,900 105,738,728 - 113,982,628

Undesignated:General Fund 72,999,485 - - 72,999,485Special Revenue Funds - - 65,327,290 65,327,290

Total Fund Balances 120,686,290$ 127,690,586$ 117,675,274$ 366,052,150$ Total Liabilities and Fund Balances 157,323,813$ 164,458,965$ 132,249,390$ 454,032,168$


38

CITY OF VIRGINIA BEACH, VIRGINIABALANCE SHEET

GOVERNMENTAL FUNDSJUNE 30, 2004

Total Fund Balances - Governmental funds ( Exhibit 3 ) $ 366,052,150

Amounts reported for governmental activities in the Statement of Net Assets are different because:

Capital assets used in governmental activities are not current financial resourcesand therefore are not reported in the governmental funds. 2,444,187,301

Other long-term assets are not available to pay for current period expendituresand therefore are offset by deferred revenue in the governmental funds. 29,089,686

Internal Service Funds are used by management to charge the costs of printing services, risk management, information technology, and city garage to individual funds. The assetsand liabilities of the internal service funds are included in governmental activitiesin the Statement of Net Assets. ( Exhibit 1 ) 4,015,649

Services provided by the general government to business-type activities are not includedin the entity-wide statements. The elimination decreases net assets. (2,174,119)

Internal service fund amounts payable to the general government are eliminated from the Statement of Net Assets. However, the amount due from business-type activities for the Internal Service Funds loss charge back is included. (399,237)

Net Pension Asset is not included in the governmental funds. 2,719,013

Long-term liabilities, including bonds payable, are not due and payable in the currentperiod and therefore are not reported as liabilities in the funds. Long-term liabilitiesat year-end consist of:

General Obligation Bonds $ 555,079,595Public Facility Revenue Bonds 153,200,000State Literary Fund Loans 13,702,546Accrued Interest on Bonds Sold 5,783,423Town Center Support Agreements 35,655,000Agriculture Reserve Strips 21,542,452Premium on Bonds Sold 27,693,081Deferred Loss on Refunding (6,070,029)Discount on Bonds Sold (348,038)Capital Leases 779,423Certificates of Participation 16,805,000Williams Farm Property Debt 4,037,500Compensated Absences (annual and sick leave) 27,389,064Federal Arbitrage Payable 243,148Landfill Closure and Post-Closure Care 4,737,478 (860,229,643)

Total Net Assets - Governmental Activities ( Exhibit 1 ) $ 1,983,260,800


39

CITY OF VIRGINIA BEACH, VIRGINIABALANCE SHEET

GOVERNMENTAL FUNDSRECONCILIATION OF BALANCE SHEET

TO THE STATEMENT OF NET ASSETSJUNE 30, 2004

General Capital ProjectsOther Nonmajor

Funds

Total Governmental

FundsREVENUES

General Property Taxes $ 447,173,507 $ - $ 6,913,215 $ 454,086,722 Other Local Taxes 216,264,857 - 6,392,475 222,657,332Fines and Forfeitures 4,705,366 - - 4,705,366Permits, Privilege Fees, and Regulatory Licenses 5,226,392 - - 5,226,392From Use of Money and Property 3,067,666 158,210 3,038,048 6,263,924Charges for Services 7,053,878 - 18,336,191 25,390,069Miscellaneous 4,924,829 542,012 2,165,755 7,632,596Sale of Property - 2,446,549 - 2,446,549From Other Local Governments 118,166 - 219,878 338,044From Commonwealth 54,448,903 1,002,956 42,770,621 98,222,480From Federal Government 18,554,945 2,305,013 40,577,906 61,437,864

Total Revenues $ 761,538,509 $ 6,454,740 $ 120,414,089 $ 888,407,338

EXPENDITURESLegislative $ 969,139 $ - $ - $ 969,139 Executive 2,080,615 - - 2,080,615Law 3,081,811 - - 3,081,811Finance 15,301,485 - - 15,301,485Human Resources 5,345,747 - - 5,345,747Judicial 11,265,837 - 25,196,388 36,462,225Health 2,822,446 - - 2,822,446Police 66,657,302 - 1,955,012 68,612,314Social Service 30,366,714 - 8,480,073 38,846,787Public Works 58,303,898 - 953,361 59,257,259Parks and Recreation - - 21,841,790 21,841,790Library 13,635,946 - 366,155 14,002,101Planning 8,886,510 - 15 8,886,525Agriculture 895,995 - 182,864 1,078,859Economic Development 1,798,044 - - 1,798,044Convention and Visitor Development 6,222,175 - 10,793,077 17,015,252Communications and Information Technology 2,485,999 - 53,129 2,539,128General Services 27,362,418 - - 27,362,418Boards and Commissions 9,147,880 - 1,559,242 10,707,122Fire 32,042,734 - 1,800,803 33,843,537Management Services 1,412,190 - - 1,412,190Mental Health and Mental Retardation - - 31,474,570 31,474,570Education 257,520,154 18,265,461 1,524,788 277,310,403Housing and Neighborhood Preservation 1,579,788 - 17,224,607 18,804,395Museums 585,320 - 6,144,613 6,729,933General Government - - 28,022,006 28,022,006Emergency Medical Services 3,130,963 - 317,886 3,448,849Capital Outlay - 144,566,419 - 144,566,419

Debt Service:Principal Retirement - - 53,414,591 53,414,591Interest and Fiscal Charges - - 37,084,954 37,084,954

Total Expenditures $ 562,901,110 $ 162,831,880 $ 248,389,924 $ 974,122,914 Excess (Deficiency) of Revenues over Expenditures $ 198,637,399 $ (156,377,140) $ (127,975,835) $ (85,715,576)

OTHER FINANCING SOURCES (USES)Transfers In $ 618,407 $ 40,675,405 $ 168,227,094 $ 209,520,906 Transfers Out (181,079,960) - (29,992,929) (211,072,889)Proceeds from Issuance of Debt - 218,200,000 - 218,200,000Premium on Bonds Sold - - 12,659,281 12,659,281

Total Other Financing Sources (Uses) $ (180,461,553) $ 258,875,405 $ 150,893,446 $ 229,307,298 Net Change in Fund Balance $ 18,175,846 $ 102,498,265 $ 22,917,611 $ 143,591,722

Fund Balance at Beginning of Year 102,510,444 25,192,321 94,757,663 222,460,428Fund Balance at End of Year $ 120,686,290 $ 127,690,586 $ 117,675,274 $ 366,052,150


40



STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEGOVERNMENTAL FUNDS

Net change in fund balance - total governmental funds ( Exhibit 4 ) $ 143,591,722

Amounts reported for governmental activities in the Statement of Activities (Exhibit II) aredifferent because:

Governmental funds report capital outlay as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful livesand reported as depreciation expense. This and the net effect of various other transactions involving capital assets increased net assets.

General Government Capital Project Expenditures $ 137,322,130 General Government Capital Outlay Expenditures 5,897,481 Depreciation on General Government Assets (62,930,609) Contribution of Assets to General Government 56,674,161 Loss on Disposition of Assets (296,719) Additions of Capital Assets 3,236,276 139,902,720

Revenues in the fund statements which were subject to accrual in the prior year are additions to beginning net assets and, therefore, are not reported as revenues in theStatement of Activities. 995,824

The issuance of long-term debt provides current financial resources to governmental fundswhile the repayment of the principal of long-term debt consumes the current financialresources of governmental funds. 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 deferred and amortized in the Statement of Activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. (191,078,844)

Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (311,514)

The change in value of the Net Pension Asset is not reported in governmental funds. (51,410)

Internal Service Funds are used by management to charge the costs of fleet managementand management systems to individual funds and customers. Losses arising from the internal customers are added as expenditures on the Statement of Activities as charge backs. Revenues and expenditures with outside customers are included also, as are non-operating revenues and expenses. This amount is the effect of reporting internal service funds with governmental activities. 2,839,368

Change in net assets of governmental activities ( Exhibit 2 ) $ 95,887,866


41

CITY OF VIRGINIA BEACH, VIRGINIASTATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDSRECONCILIATION OF THE STATEMENT OF REVENUES,

TO THE STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2004

EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

VarianceFinal Budget

Actual Positive Original Final Amounts (Negative)

REVENUESGeneral Property Taxes $ 440,957,187 $ 440,957,187 $ 447,173,507 $ 6,216,320 Other Local Taxes 202,959,239 202,959,239 216,264,857 13,305,618Permits, Privilege Fees, and Regulatory Licenses 4,426,478 4,426,478 5,226,392 799,914Fines and Forfeitures 4,947,793 5,010,343 4,705,366 (304,977)From Use of Money and Property 5,248,821 5,265,382 3,067,666 (2,197,716)Charges for Service 5,907,772 5,907,772 7,053,878 1,146,106Miscellaneous 5,201,396 5,298,983 4,924,829 (374,154)From Other Local Governments 105,348 105,348 118,166 12,818From Commonwealth 54,359,926 55,087,511 54,448,903 (638,608)From Federal Government 18,280,355 18,417,895 18,554,945 137,050

Total Revenues $ 742,394,315 $ 743,436,138 $ 761,538,509 $ 18,102,371

EXPENDITURESLegislative $ 966,339 $ 1,012,985 $ 969,139 $ 43,846 Executive 2,089,705 2,200,785 2,080,615 120,170Law 2,972,236 3,257,695 3,081,811 175,884Finance 15,338,837 15,944,493 15,301,485 643,008Human Resources 5,704,321 5,865,059 5,345,747 519,312Judicial 11,099,390 11,440,198 11,265,837 174,361Health 2,800,205 2,839,475 2,822,446 17,029Police 67,894,469 69,475,619 66,657,302 2,818,317Social Services 32,100,568 32,715,583 30,366,714 2,348,869Public Works 57,517,402 59,847,191 58,303,898 1,543,293Library 14,204,013 14,767,856 13,635,946 1,131,910Planning 8,745,836 9,430,943 8,886,510 544,433Agriculture 933,156 1,024,555 895,995 128,560Economic Development 1,849,107 1,900,986 1,798,044 102,942Convention and Visitor Development 6,044,683 6,457,445 6,222,175 235,270Communications and Information Technology 2,263,594 2,626,581 2,485,999 140,582General Services 27,315,209 28,653,305 27,362,418 1,290,887Boards and Commissions 9,407,532 10,189,589 9,147,880 1,041,709Fire 31,683,176 32,365,165 32,042,734 322,431Management Services 1,414,798 1,480,784 1,412,190 68,594Education 256,649,521 270,726,042 257,520,154 13,205,888Housing and Neighborhood Preservation 1,525,153 1,610,441 1,579,788 30,653Museums 523,449 705,377 585,320 120,057Emergency Medical Services 2,964,791 3,177,919 3,130,963 46,956

Total Expenditures $ 564,007,490 $ 589,716,071 $ 562,901,110 $ 26,814,961 Excess of Revenues Over Expenditures $ 178,386,825 $ 153,720,067 $ 198,637,399 $ 44,917,332

OTHER FINANCING SOURCES (USES)Transfers In $ 452,177 $ 504,516 $ 618,407 $ 113,891 Transfers Out (172,875,394) (179,286,113) (181,079,960) (1,793,847)

Total Other Financing Sources (Uses) $ (172,423,217) $ (178,781,597) $ (180,461,553) $ (1,679,956) Net Change in Fund Balance $ 5,963,608 $ (25,061,530) $ 18,175,846 $ 43,237,376

Fund Balance at Beginning of Year 102,510,444 102,510,444 102,510,444 -Fund Balance at End of Year $ 108,474,052 $ 77,448,914 $ 120,686,290 $ 43,237,376



STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL

42

GENERAL FUNDFOR THE YEAR ENDED JUNE 30, 2004

Budget Amounts

Exhibit 6

GovernmentalActivities

Water and

Sewer Storm Water

Other Enterprise

Funds TotalsInternal Service

FundsASSETSCurrent Assets:

Cash and Investments 67,085,781$ 7,714,089$ 500,986$ 75,300,856$ 17,037,994$ Accounts Receivable - Net 12,263,960 4,276,763 277,100 16,817,823 98,256Intergovernmental Receivables 4,826,244 1,186,839 - 6,013,083 3,815Inventory 1,902,429 - - 1,902,429 658,954Prepaid Support and Maintenance - - - - 13,479

Total Current Assets 86,078,414$ 13,177,691$ 778,086$ 100,034,191$ 17,812,498$

Noncurrent Assets:Cash and Investments - Restricted 38,789,264$ 879,070$ -$ 39,668,334$ -$ Deferred Charges 660,955 - - 660,955 -Capital Assets:

Land 12,008,691 128,103,048 9,795,130 149,906,869 -Site Improvements - - 10,167,946 10,167,946 265,782Buildings 3,277,600 - 632,071 3,909,671 -Utility System 695,138,993 61,265,286 - 756,404,279 -Construction in Progress 36,023,324 28,915,044 1,006,431 65,944,799 -Office Furniture and Fixtures 1,602,822 - - 1,602,822 -Machinery and Equipment 11,949,815 6,898,868 1,268,608 20,117,291 8,775,889Assets Under Capital Leases - - - - 2,437,276Less: Accumulated Depreciation (222,071,330) (27,665,549) (3,521,925) (253,258,804) (9,173,241)

Total Capital Assets 537,929,915$ 197,516,697$ 19,348,261$ 754,794,873$ 2,305,706$ Total Noncurrent Assets 577,380,134$ 198,395,767$ 19,348,261$ 795,124,162$ 2,305,706$

Total Assets 663,458,548$ 211,573,458$ 20,126,347$ 895,158,353$ 20,118,204$

LIABILITIESCurrent Liabilities:

Vouchers and Accounts Payable 3,228,111$ 151,411$ 226,579$ 3,606,101$ 2,369,143$ Deposits Payable 365,696 - - 365,696 11,631Accrued Interest Payable 2,671,409 272,402 - 2,943,811 -Construction Contracts Payable 2,678,046 - - 2,678,046 -Deferred Revenue 45,647 - 21,023 66,670 -Current Portion of Long-term Liabilities 6,399,359 967,711 17,464 7,384,534 3,413,569

Total Current Liabilities 15,388,268$ 1,391,524$ 265,066$ 17,044,858$ 5,794,343$ Long-term Liabilities (less current portion) 107,958,191$ 13,117,736$ 153,446$ 121,229,373$ 10,598,212$

Total Liabilities 123,346,459$ 14,509,260$ 418,512$ 138,274,231$ 16,392,555$

NET ASSETSInvested in Capital Assets, Net of Related Debt 450,507,995$ 183,952,382$ 19,348,262$ 653,808,639$ 2,017,116$ Restricted for:

Future Debt Service 13,824,186 767,850 - 14,592,036 -Unrestricted 75,779,908 12,343,966 359,573 88,483,447 1,708,533

Total Net Assets 540,112,089$ 197,064,198$ 19,707,835$ 756,884,122 3,725,649$

Reconciling Items:Elimination of Internal Activities - Indirect Cost 2,174,119Adjustment to Reflect the Consolidation of Internal Service Fund Activities Related to Enterprise Funds 109,237

759,167,478$


43

Business-Type Activities - Enterprise Funds

CITY OF VIRGINIA BEACH, VIRGINIASTATEMENT OF NET ASSETS

PROPRIETARY FUNDSJUNE 30, 2004


Water and

Sewer Storm Water

Other Enterprise

Funds TotalsInternal Service

FundsOPERATING REVENUES

Charges for Services 77,361,849$ 12,629,669$ 4,388,199$ 94,379,717$ 42,917,142$ Insurance Recovery - - - - 47,664Miscellaneous 327,038 42 191,556 518,636 52,782

Total Operating Revenues 77,688,887$ 12,629,711$ 4,579,755$ 94,898,353$ 43,017,588$

OPERATING EXPENSES

Cost of Goods Sold 23,171,313$ -$ -$ 23,171,313$ 7,664,316$ Personal Services 16,711,406 3,294,634 1,137,914 21,143,954 12,036,339Fringe Benefits 4,125,295 799,983 268,515 5,193,793 3,090,298Contractual Services 4,278,721 732,630 1,165,241 6,176,592 5,218,306Internal Services 3,178,788 1,151,978 80,585 4,411,351 1,204,579Other Charges 8,349,470 1,438,386 1,364,253 11,152,109 11,089,683Leases and Rentals - - - - 989,626Land Structures and Improvements - 2,200,828 - 2,200,828 63,498Bad Debts 39,098 - - 39,098 -Depreciation 16,068,988 5,441,433 287,772 21,798,193 865,203

Total Operating Expenses 75,923,079$ 15,059,872$ 4,304,280$ 95,287,231$ 42,221,848$

OPERATING INCOME (LOSS) 1,765,808$ (2,430,161)$ 275,475$ (388,878)$ 795,740$

NONOPERATING REVENUES (EXPENSES)

From Commonwealth -$ 4,747,358$ -$ 4,747,358$ -$ City of Norfolk Water Servicing True Up 4,670,562 - - 4,670,562 -Interest Income 1,290,398 83,337 14,695 1,388,430 245,167Connection Fees 6,897,888 - - 6,897,888 -Gain (Loss) From Sale of Assets (30,833) (16,443) (4,467) (51,743) 37,853Interest and Fiscal Agent Fees (4,637,918) (554,943) (860) (5,193,721) (32,711)

Total Nonoperating Revenues 8,190,097$ 4,259,309$ 9,368$ 12,458,774$ 250,309$

INCOME (LOSS) BEFORE TRANSFERS ANDCONTRIBUTIONS 9,955,905$ 1,829,148$ 284,843$ 12,069,896$ 1,046,049$

Transfers In 501 63,203 258,803 322,507 2,019,175Transfers Out (89,102) - (527,723) (616,825) (172,874)Capital Contributions 1,855,417 18,715 - 1,874,132 -

INCREASE (DECREASE) IN NET ASSETS 11,722,721$ 1,911,066$ 15,923$ 13,649,710$ 2,892,350$

Total Net Assets at Beginning of Year 528,389,368 195,153,132 19,691,912 833,299Total Net Assets at End of Year 540,112,089$ 197,064,198$ 19,707,835$ 3,725,649$

Reconciling Items:Adjustment to Reflect the Consolidation of Internal Service Fund Activities Related to Enterprise Funds 52,982Change in Net Assets of Business-type Activities ( Exhibit 2 ) 13,702,692$



STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETSPROPRIETARY FUNDS

44


Business Type Activities - Enterprise Funds


STATEMENT OF CASH FLOWSPROPRIETARY FUNDS


GovernmentalBusiness-Type Activities - Enterprise Funds Activities

Other InternalWater and Storm Enterprise Service

Sewer Water Funds Totals Funds

CASH FLOWS FROM OPERATING ACTIVITIES:Receipts from Customers and Users $ 77,031,525 $ 14,215,896 $ 4,381,295 $ 95,628,716 $ 42,895,601Receipts from (Payments for) Interfund Services Provided (4,685,357) - - (4,685,357) 5,088Other Operating Cash Receipts 405,772 42 191,556 597,370 100,446Cash Payments to Suppliers of Goods and Services (40,479,868) (5,722,016) (2,651,810) (48,853,694) (25,558,834)Other Operating Cash Payments 485,699 - - 485,699 -Cash Payments to Employees for Services (20,733,449) (4,077,047) (1,410,019) (26,220,515) (15,079,385)

Net Cash Provided By Operating Activities $ 12,024,322 $ 4,416,875 $ 511,022 $ 16,952,219 $ 2,362,916

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Intergovernmental Receipts $ - $ 4,694,524 $ - $ 4,694,524 $ -Payments from Other Funds 501 63,203 258,803 322,507 2,019,175Payments to Other Funds (89,102) - (527,723) (616,825) (172,874)

Net Cash Provided (Used) By Noncapital Financing Activities $ (88,601) $ 4,757,727 $ (268,920) $ 4,400,206 $ 1,846,301

CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Interest Paid on Capital Debt $ (4,637,918) $ (554,943) $ (860) $ (5,193,721) $ (32,711)Acquisition and Construction of Capital Assets (26,912,966) (6,363,275) (81,255) (33,357,496) (669,239)Proceeds from Sale of Salvage 25,830 2,717 - 28,547 72,612Receipts of Capital Contributions 8,753,305 - - 8,753,305 -City of Norfolk Water Servicing True Up 4,670,562 - - 4,670,562 -Principal Paid on Capital Debt (7,776,033) (736,100) (175,000) (8,687,133) (557,695)

Net Cash Provided (Used) By Capital and RelatedFinancing Activities $ (25,877,220) $ (7,651,601) $ (257,115) $ (33,785,936) $ (1,187,033)

CASH FLOWS FROM INVESTING ACTIVITIES:Interest and Dividends Received $ 1,290,398 $ 83,337 $ 14,695 $ 1,388,430 $ 245,167

Net Cash Provided By Investing Activities $ 1,290,398 $ 83,337 $ 14,695 $ 1,388,430 $ 245,167

Net Increase (Decrease) in Cash and Investments $ (12,651,101) $ 1,606,338 $ (318) $ (11,045,081) $ 3,267,351

Cash and Investments, July 1 118,526,146 6,986,821 501,304 126,014,271 13,770,643

Cash and Investments, June 30 $ 105,875,045 $ 8,593,159 $ 500,986 $ 114,969,190 $ 17,037,994


45


STATEMENT OF CASH FLOWSPROPRIETARY FUNDS


GovernmentalBusiness-Type Activities - Enterprise Funds Activities

Other InternalWater and Storm Enterprise Service

Sewer Water Funds Totals FundsRECONCILIATION OF OPERATING INCOME (LOSS) TO

NET CASH PROVIDED BY OPERATING ACTIVITIES:Operating Income (Loss) $ 1,765,808 $ (2,430,161) $ 275,475 $ (388,878) $ 795,740Adjustments to Reconcile Operating Income (Loss) to

Net Cash Provided By Operating Activities:Depreciation Expense 16,068,988 5,441,433 287,772 21,798,193 865,203(Increase) in Premium on Refunding Bonds (101,050) - - (101,050) -Amortization of Deferrals 186,749 - - 186,749 -(Increase) Decrease in Accounts Receivable (291,226) 1,586,227 (10,529) 1,284,472 (21,541)(Increase) in Intergovernmental Receivables (4,685,357) - - (4,685,357) -Decrease in Deferred Charges 78,734 - - 78,734 -(Increase) in Inventory (176,238) - - (176,238) (74,247)Increase (Decrease) in Vouchers and Accounts Payable (1,712,355) (190,167) (41,731) (1,944,253) 593,962Increase in Deposits Payable 21,085 - - 21,085 14,653(Decrease) in Accrued Interest Payable (141,525) (8,027) - (149,552) -Increase in Due from Commonwealth - - - - 5,088Increase in Sinking Fund 400,000 - - 400,000 -Increase in Deferred Revenue 10,380 - 3,625 14,005 -Increase in Construction Contracts Payable 497,077 - - 497,077 -Increase in Prepaid Support and Maintenance - - - - 140,241(Decrease) in Estimated Claims and Judgments - - - - (3,435)Increase (Decrease) in Accrued Compensated Leave 103,252 17,570 (3,590) 117,232 47,252

Total adjustments $ 10,258,514 $ 6,847,036 $ 235,547 $ 17,341,097 $ 1,567,176Net Cash Provided By Operating Activities $ 12,024,322 $ 4,416,875 $ 511,022 $ 16,952,219 $ 2,362,916

NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES:Capital Contributions of Fixed Assets $ 1,855,417 $ 18,715 $ - $ 1,874,132 $ -


46

Exhibit 9

Pension Trust Agency Fund Funds

ASSETS Cash and lnvestments $ 2,738,585 $ 6,034,289Receivables - 421Due from Commonwealth - 3,395

Total Assets $ 2,738,585 $ 6,038,105

LIABILITIESVouchers and Accounts Payable $ - $ 6,038,105

Total Liabilities $ - $ 6,038,105 NET ASSETS

Held in Trust for Pension Benefits $ 2,738,585


CITY OF VIRGINIA BEACH, VIRGINIASTATEMENT OF FIDUCIARY NET ASSETS

JUNE 30, 2004

47


STATEMENT OF CHANGES IN FIDUCIARY NET ASSETSFOR THE YEAR ENDED JUNE 30, 2004

Pension Trust Fund

ADDITIONSInvestment Earnings:

Net Appreciation In the Fair Value of Investments $ 120,144Interest and Dividends 80,000

Total Investment Earnings $ 200,144

Total Additions $ 200,144

DEDUCTIONSBenefits $ 231,366Administrative Expenses 6,155

Total Deductions $ 237,521

Change in Net Assets $ (37,377)Net Assets at Beginning of Year 2,775,962Net Assets at End of Year $ 2,738,585


48

CITY OF VIRGINIA BEACH, VIRGINIA NOTES TO FINANCIAL STATEMENTS June 30, 2004

(continued) 50

PAGE NO. 1. Summary of Significant Accounting Policies

A. Financial Reporting Entity ..........................................................................................................................52 B. Government-Wide and Fund Financial Statements ...................................................................................53 C. Basis of Accounting ...................................................................................................................................55 D. Capital Assets and Long-Term Liabilities...................................................................................................56 E. Operating Budget Process .........................................................................................................................56 F. Inventories..................................................................................................................................................58 G. Land Held for Resale .................................................................................................................................58 H. Advances to Other Funds ..........................................................................................................................58 I. Accrued Compensated Leave....................................................................................................................58 J. Miscellaneous ............................................................................................................................................58 K. Fund Equity / Net Assets............................................................................................................................59 L. Long-Term Obligations...............................................................................................................................59 M. Restricted Assets - Cash and Investments ................................................................................................59

N. Unrestricted Net Assets – Governmental Activities ...................................................................................59 O. Restricted Net Assets ...............................................................................................................................59 P. Special Items .............................................................................................................................................60 2. Receivables and Accrued Liabilities

A. Property Taxes Receivable ........................................................................................................................60 B. Intergovernmental Receivables - Primary Government and School Board Component Unit.....................61 C. Allowances for Uncollectible Accounts Receivable....................................................................................62 D. Major Components of Accrued Liabilities...................................................................................................63

3. Deferred Revenue

A. General Fund .............................................................................................................................................63 B. Special Revenue Funds – Non-major ........................................................................................................63 C. Enterprise Funds........................................................................................................................................63 D. School Board Component Unit...................................................................................................................63 E. Community Development Corporation Component Unit ............................................................................63

4. Capital Assets and Land Held For Resale

A. Land Held for Resale - Discretely Presented Component Unit ..................................................................63 B. Governmental Activities .............................................................................................................................64 C. Component Unit - School Board ................................................................................................................65 D. Business-Type Activities ............................................................................................................................65 E. Major Fund - Water and Sewer Enterprise Fund .......................................................................................66 F. Major Fund - Storm Water Enterprise Fund...............................................................................................66 G. Component Unit - Virginia Beach Development Authority .........................................................................66 H. Component Unit - Virginia Beach Community Development Corporation..................................................67 I. Construction in Progress............................................................................................................................67

5. Long-Term Debt

A. A Summary of Changes in Long-Term Liabilities.......................................................................................68 B. Bonds, Notes and Loans Payable..............................................................................................................70 C. A Summary of Annual Requirements to Amortize All Bonds and Notes Payable ......................................71 D. Agriculture Reserve Program ....................................................................................................................72 E. Legal Debt Margin .....................................................................................................................................73 F. Water and Sewer Enterprise – Sinking Fund Requirements ....................................................................73 G. Water and Sewer Enterprise Revenue Bonds ..........................................................................................73 H. Storm Water Revenue Bonds ...................................................................................................................73 I. General Debt Service Fund Expenditures..................................................................................................74 J. Accrued Compensated Leave ...................................................................................................................74 K. Authorized But Unissued Bonds ...............................................................................................................74 L. Revenue Covenants ..................................................................................................................................74 M. Federal Arbitrage Rebate .........................................................................................................................74 N. Notes Payable - Discretely Presented Component Unit Community Development Corporation ..............75 O. Notes Payable - Discretely Presented Component Unit Virginia Beach Development Authority ..............75 P. Net Pension Obligation School Board Component Unit ............................................................................76

CITY OF VIRGINIA BEACH, VIRGINIA NOTES TO FINANCIAL STATEMENTS June 30, 2004

(continued) 51

5. Long-Term Debt (continued) Q. Compliance ...............................................................................................................................................76

R. 2002 Town Center Project Phase I Support Agreement ...........................................................................76 S. Sale of Public Facility Revenue Bonds .....................................................................................................77 6. Assets and Obligations under Leases

A. Capital Leases Government Activities .......................................................................................................77 B. Operating Leases Governmental Activities ................................................................................................78

7. Deposits and Investments

A. Deposits .....................................................................................................................................................79 B. Investments................................................................................................................................................79

8. Commitments and Contingencies

A. Litigation.....................................................................................................................................................80 B. Intergovernmental Grants, Entitlements and Shared Revenues................................................................80 C. City Manager Employment Contract ..........................................................................................................81 D. Salaries Payable ........................................................................................................................................81 E. Landfill Closure ..........................................................................................................................................81 F. Water Services Contract ............................................................................................................................81

9. Interfund Balances and Transactions, Fund Results and Reconciliations

A. Interfund Balances .....................................................................................................................................82 B. Interfund Transfers.....................................................................................................................................82 C. Net Assets Deficits .....................................................................................................................................83 D. New Funds .................................................................................................................................................83

E. Fund Closing and Restatement and Name Change .................................................................................83 10. Risk Management

A. Primary Government Self-Insurance Program ...........................................................................................84 B. School Board Self-Insurance Program.......................................................................................................84 C. Surety Bonds..............................................................................................................................................84

11. Retirement and Deferred Compensation

A. Virginia Retirement System........................................................................................................................85 B. Sheriff=s Supplemental Retirement Plan ....................................................................................................87 C. Post-Employment Benefits.........................................................................................................................87

CITY OF VIRGINIA BEACH, VIRGINIA NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2004

(continued) 52

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The present City of Virginia Beach, Virginia (the City), was formed on January 1, 1963, by the merger of Princess Anne County and the former smaller City of Virginia Beach. This merger created one of the largest cities in the Commonwealth of Virginia with an area of 310 square miles and a population in 2004 of 429,504.

The City operates under the Council-Manager form of government. The elected eleven-member City Council, vested with the legislative powers, appoints the City Manager who is the executive and administrative head of the City government.

The City provides a full range of services for its citizens. These services include police and fire protection, collection and disposal of refuse, water and sewer services, storm water management, parks and recreation facilities, museums, libraries, and maintenance of streets and highways. Other services provided include public education in grades kindergarten through twelfth, public health and social services, certain technical and special education services, mental health assistance, agriculture services, housing services, and judicial activities. In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34, “Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments.” This Statement, known as the Reporting Model, provides for the most significant change in financial reporting for state and local governments in over 20 years and affects the way the City prepares and presents financial information. The Statement was adopted as of July 1, 2001. In addition to this statement, GASB Statement No. 37, “Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments : Omnibus” and GASB Statement No. 38, “Certain Financial Statement Note Disclosures” have been adopted and are reflected in these financial statements.

As part of this Statement, there is a reporting requirement regarding the capitalization of local government infrastructure (roads, bridges, traffic signals, etc.). This requirement permits an optional four-year delay for implementation to Fiscal Year 2006. The City has elected to not delay the capitalization of infrastructure.

The following is a summary of the significant accounting policies of the City of Virginia Beach:

A. The Financial Reporting Entity 1. Component Units

As defined by accounting principles generally accepted in the United States of America, the financial reporting entity consists of the primary government (City of Virginia Beach), as well as its component units which are legally separate organizations for which the City Council is financially accountable.

The accompanying financial statements present the City of Virginia Beach and its component units. The financial data of the component units are included in the City’s reporting entity because of the significance of their operational or financial relationship with the City of Virginia Beach.

Blended component units, although legally separate entities, are, in substance, part of the City’s operations and so data from these units are combined with data of the primary government. The City has no component units that meet the requirements for blending.

Discretely presented component units are entities that are legally separate from the City, but for which the City is financially accountable, or whose relationship with the City is such that exclusion would cause the City’s financial statements to be misleading or incomplete. These component units are reported in separate columns to emphasize that they are legally separate from the City. All component units have a June 30, 2004 year-end.

a. School Board – The School Board is a legally separate entity that is responsible for elementary and

secondary education within the City. The members of the School Board are elected by the voters; however, the School Board is fiscally dependent upon the City because the City Council annually approves its budget, levies the necessary taxes to finance operations and approves the borrowing of money and issuance of bonds. Separate financial statements including statistical information of the School Board may be obtained by writing to the Virginia Beach School Board, 2512 George Mason Drive, Virginia Beach, Virginia 23456.

b. Virginia Beach Development Authority – The Development Authority was established for the specific

purpose of attracting new industries and the expansion of existing industries. The Authority’s Commissioners are appointed by the City Council. The Authority is authorized to issue industrial development bonds after


JUNE 30, 2004

(continued) 53

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) A. The Financial Reporting Entity (continued) 1. Component Units (continued) b. Virginia Beach Development Authority (continued) approval by the City Council and to purchase land to improve and sell for development. In addition, the

Authority facilitates economic development projects as needed by City Council. Complete financial statements of the Authority may be obtained by writing to the Virginia Beach Development Authority, 222 Central Park Avenue, Suite 1000, Virginia Beach, VA 23462.

c. Virginia Beach Community Development Corporation - The Community Development Corporation was

organized in September 1985 for the purpose of expanding and improving opportunities for low and moderate income households in Virginia Beach, Virginia. The Board of Directors for the Community Development Corporation are appointed by City Council. Funding received by the Community Development Corporation from the City is in the form of grants. Complete financial statements of the Virginia Beach Community Development Corporation may be obtained by writing to Virginia Beach Community Development Corporation, 629 Wesley Drive, Virginia Beach, VA 23452.

2. Contributions to Certain Other Entities

Annually, the City contributes to various organizations on behalf of the citizens of Virginia Beach. These organizations are not considered entities qualifying for inclusion in this report. The reasons for not including the subject organizations in this report are due to the level of control the City exercises over these entities and the lack of a financial benefit or burden relationship. Contributions during the year-ended June 30, 2004 were as follows:

Arts and Humanities Commission $ 447,513 Tidewater Community College 6,000 Safe Drinking Water Act 160,000 WHRO TV 76,935 Medical College of Hampton Roads 434,250 Crime Solvers 2,000 Hampton Roads Planning District Commission 221,134 Crimes Network 5,000 Virginia Dare Soil and Water Conservation District 8,000 Hampton Roads Transportation District Commission 1,836,556 Virginia Beach SPCA 31,422 Volunteer Fire Department 13,160 Virginia Beach Neptune Festival 700,000 Virginia Beach Maritime Historical Museum 60,265 Hampton Roads Partnership 15,500 Virginia Institute of Government 20,000 American Water Works Association Research 8,190 Contemporary Art Center 157,184 Virginia Beach Foundation 87,500 Atlantic Wildfowl Museum 27,750 Tidewater Legal Aid Society 1,000 Boardwalk Arts Festival 50,500 Volunteer Rescue Squad 34,000 Hampton Roads Economic Development Alliance 426,932 Total $ 4,330,791

B. Government-Wide and Fund Financial Statements

The basic financial statements include both government-wide (based upon the City as a whole) and fund financial statements. While the previous model emphasized fund types (the total of all funds on a particular type), in the new reporting model the focus is on either the City as a whole or major individual funds (within the fund financial statements). Both the government-wide and fund financial statements (within the basic financial statements) categorize primary activities as either Governmental or Business-Type. In the government-wide Statement of Net Assets, both the Governmental and Business-Type Activities columns are presented on a consolidated basis by column and are reflected on a full accrual, and economic resources basis, which incorporates long-term assets and receivables as well as long-term debt and obligations. The City generally first uses restricted assets for expenses


JUNE 30, 2004

(continued) 54

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

B. Government-Wide and Fund Financial Statements (continued)

incurred for which both restricted and unrestricted assets are available. The City may defer the use of restricted assets based on a review of the specific transaction. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The program revenues must be directly associated with the function (public safety, public works, etc.) or a Business-Type activity. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. The City does not allocate indirect expenses. The operating grants include operating-specific and discretional (either operating or capital) grants while the capital grants column reflects capital-specific grants. Fund financial statements are provided for Governmental Funds, Proprietary Funds, and Fiduciary Funds. By definition, the assets of the Fiduciary Funds are being held for the benefit of a third party and cannot be used to address activities or obligations of the government; therefore, these funds are excluded from the government-wide statements. Major individual Governmental Funds and major Enterprise Funds are reported as separate columns in the fund financial statements. The City reports the following major Governmental Funds:

The General Fund is the City’s primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund. Revenues are derived primarily from property and other local taxes, state and federal distributions, licenses, permits, charges for service, and interest income. A significant part of the General Fund’s revenues is used principally to finance the operations of the City of Virginia Beach School Board. The Capital Projects Fund is used to account for the financial resources for the acquisition or construction of major capital facilities within the City.

The City reports the following major Proprietary Funds:

The Water and Sewer Fund provides water service and sanitary sewer waste collection and transmission services to Virginia Beach citizens and accounts for operations that are financed in a manner similar to private business enterprises. The Storm Water Fund accounts for the activities of the Storm Water Utility which charges a fee for operational and capital needs for Storm Water management in the City.

Additionally, the City reports the following fund types:

Special Revenue Funds accounts for revenue derived from specific sources that are restricted by legal and regulatory provisions to finance specific activities. Internal Service Funds accounts for the financing of goods and services provided to other departments and agencies of the City or to other governmental units on a cost reimbursement basis. The City utilizes Internal Service Funds for its City Garage, Risk Management, Print Shop, School Site Landscaping, and Information Technology operations.

Fiduciary Funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations and other governmental units. The Fiduciary Funds are Agency Funds (City Fringe Benefits, Payroll Deductions, Special Welfare, Escheat Property Agency Funds) and the Pension Trust Fund. The Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The Pension Trust Fund accounts for the assets of the Sheriff’s Retirement Plan which is a defined contribution pension plan and is accounted for in essentially the same manner as Proprietary Fund using the economic resources measurement focus.


JUNE 30, 2004

(continued) 55

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C. Basis of Accounting

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the Proprietary Fund and Fiduciary Fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by provider have been met.

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All Governmental Funds are accounted for using a current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The term available is limited to collection within forty-five days of the fiscal year end. Levies made prior to the fiscal year end but which are not available are deferred. Expenditures are recorded when the related fund liability is incurred, if measurable (except for unmatured interest on general long-term debt which is recognized when due and paid). Interest on general long-term debt is recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in Governmental Funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

The following is a list of the major revenue sources that meet the "susceptible to accrual" criteria:

General Property Taxes Interest on Deposits General Sales Taxes Revenue from Commonwealth Utility Taxes Revenue from Federal Government Hotel Taxes Amusement Taxes Restaurant Taxes

In accordance with Governmental Accounting Standards Board (GASB) Statement No. 20 “Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that use Proprietary Fund Accounting”, Government-wide Governmental Activities and Business-Type Activities follow all applicable GASB pronouncements as well as all Financial Accounting Standards Board (FASB) pronouncements and predecessor Accounting Principles Board Opinions and Accounting Research Bulletins (ARB) issued on or before November 30, 1989 unless those FASB pronouncements conflict with or contradict GASB pronouncements. Under paragraph 7 of Statement No. 20, the City has elected not to apply FASB pronouncements issued after November 30, 1989.

Deferred revenues also arise when resources are received by the government before it has a legal claim to them. In subsequent periods, when both revenue recognition criteria are met, or when the government has a legal claim to the resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized.

Unbilled Water and Sewer Enterprise Fund accounts receivable for utility services provided through June 30 are included in the financial statements.

As a general rule the effects of interfund activity have been eliminated from the government-wide financial statements . Exceptions to this general rule are payments in lieu of taxes and other charges between the City’s Water and Sewer Function and Storm Water Function and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions. Proprietary Funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a Proprietary Fund’s principal ongoing operations. The principal operating revenues of the Enterprise Funds and the City’s Internal Service Funds are charges to customers for sales and service. Operating expenses for Enterprise Funds and Internal Service Funds include the cost of sales and services, personnel, contractual services, land structures and improvements, other charges, internal service charges and depreciation. All other revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.


JUNE 30, 2004

(continued) 56

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Capital Assets and Long-Term Liabilities

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, bridges, curbs and gutters, sidewalks, drainage systems) are reported in the applicable Governmental or Business-Type Activities columns in the government-wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000 and are recorded as expenditures in the Governmental Funds and as assets in the government-wide financial statements. Depreciation is recorded on capital assets on a government-wide basis using the straight-line method and the following estimated useful lives:

Building and Improvements 40 years Equipment 5-10 years Roadway Network 40 years Bridge Network 50 years Hurricane Protection Network 50 years Landfill Network Percentage of Completion

Depreciation of exhaustible capital assets used by City Proprietary Funds are recorded as an expense against their operations and accumulated depreciation is reported on the Proprietary Funds' balance sheets. Depreciation has been provided over the estimated useful lives using the straight-line method of depreciation.

The utility system in the Water and Sewer Enterprise Fund has been recorded at cost since July 1, 1976 and contributed capital asset additions have been recorded at their estimated fair market value in the year contributed as determined by the City's utility engineers. Prior to that date, the utility system was recorded at "estimated historical cost depreciated" as determined by independent professional engineers.

Depreciation on the utility system, based on costs described above, and other capital assets of the City Proprietary Funds have been charged to operations and was computed as follows:

Utility System Water (exclusive of machinery and equipment) Less: estimated salvage value of 20% of costs 20-100 years Utility System Storm Water 5-50 years Buildings 40 years Machinery and Equipment 5-10 years Furniture and Fixtures 5-10 years

Interest incurred during the construction phase of capital assets of Business-Type Activities is included as part of the capitalized value of the assets constructed.

All capital assets are reported at cost or estimated historical cost, if actual cost was not available. The value of historical buildings is included in assets.

E. Operating Budget Process The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Manager is required by the City Charter to present a proposed operating budget at least 90 days before

the beginning of each fiscal year which begins July 1. The proposed operating budget must be balanced with projected expenditures equal to estimated revenues and/or the required financing from the proper undesignated fund balances. The necessary budget ordinances are also submitted at this time.

2. The City Council is required by the City Charter to hold a public hearing on the budget at which time all interested

persons are given an opportunity to comment. The notice of the time and place must be published at least seven days prior to the hearing. In addition, City Council holds budget workshops with the City Manager that are open to the media and public.

3. If the proposed operating budget is not legally adopted by the City Council upon one reading of the budget

ordinances by June 1, the operating budget is automatically adopted as proposed.


JUNE 30, 2004

(continued) 57

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E. Operating Budget Process (continued) 4. The City Manager or the Director of Management Services is hereby authorized to approve transfers of

appropriations in an amount up to $100,000 between any Appropriation Units included in this ordinance. The City Manager shall make a monthly report to the City Council of all transfers between $25,000 and $100,000. In addition, the City Manager may transfer, in amounts necessary, appropriations from all Reserves for Contingencies except Reserve for Contingencies - Regular, within the intent of the Reserve as approved by City Council. Additional appropriations require one reading of the ordinance for approval and must be offset by additional estimated revenues and/or a transfer from the proper undesignated fund balances. Additional appropriations that exceed 1% of the total estimated revenues shown in the adopted budget require one reading by City Council for approval after a public hearing.

5. Annual budgets are adopted for the General Fund, the Debt Service Fund, Enterprise Funds and all Special

Revenue Funds except for Access Channel Support, School Instructional Technology Loan, Fire Store, Proffer Impact, Public Investment Protection Strategy and Grants Consolidated. The Grants Consolidated Fund’s budget is adopted on a project-length basis along with the City Capital Projects Funds. The budget for these funds are adopted on a basis consistent with Generally Accepted Accounting Principles (GAAP).

6. The accounting system is employed as a budgetary management control device to monitor the individual

departments or bureaus/divisions within departments. The legal level of budgetary control is at the organizational unit level as noted in the separately issued budget report. Additional controls are exercised administratively on some budget units, personnel positions and capital outlay items and the appropriations related thereto. A budget unit is an activity (e.g. Waste Collection) of an organizational unit (e.g. Public Works Department). Each budget unit manager is authorized to transfer appropriations within their respective unit up to a maximum of $10,000 without City Manager approval. The City Manager or the Director of Management Services is authorized to transfer appropriations up to a maximum of $100,000. See Note 1E4 above.

7. Unexpended appropriations lapse (except for the City Capital Projects and Grants Funds) and are closed to the

proper fund balances at the end of each fiscal year (June 30). However, appropriations for the subsequent fiscal year are increased in the amount necessary to satisfy the outstanding encumbrances at June 30. The current operating budget ordinance approved by City Council stipulated that an undesignated General Fund Balance of between 75% and 100% of the subsequent fiscal year’s debt service payments (excluding the Water and Sewer Enterprise Fund) must be maintained for contingencies and emergency situations.

8. Capital Projects for the City are budgeted separately from the Operating Budget. Since the City has over 391

projects in its Capital Improvements Program and an annual limitation (without a referendum) on the amount of bonds that may be issued, allocations for capital projects represent funding by phases of a number of projects based upon their anticipated execution of contractual obligations. The appropriations for Capital Projects require one reading of the ordinance for approval after public hearings on the City's Capital Improvement Program. The accounting, encumbering, and controlling of the funds are based upon the project length of each individual project which may be over several years. Therefore, budgetary comparisons are not presented for Capital Projects in this report. Appropriations reallocated to new or existing capital projects require one reading of the ordinance by City Council for approval.

9. The federal and state grants in the Grants Consolidated Fund are budgeted separately from the Operating

Budget and do not parallel the City's fiscal year. Expenditures are restricted by the grantor agency and are subject to financial and compliance audits (Note 8B). Annual revenues and expenditures are reported within the applicable Special Revenue Funds.

There were supplemental amendments to the Operating Budget, other than for encumbrances (Note 1E7), of approximately $3.7 million during the 2004 Fiscal Year. The amendments were primarily funded through increases in estimated revenue and the General Fund balance.

10. The Water and Sewer Enterprise Fund incurred costs in excess of its Fiscal Year 2004 budget by $7,494,293

due to charging of depreciation. It is the policy of the City to budget for capital outlay in the year of acquisition and not include in its budget a provision for depreciation. The ending net assets were sufficient to cover this overage.


JUNE 30, 2004

(continued) 58

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E. Operating Budget Process (continued) 11. All expenditures were within existing appropriations for the governmental major funds. F. Inventories

All inventories, except in the Water and Sewer, Virginia Marine Science Museum and the City Garage Internal Service Fund, are reported at cost using the first-in, first-out inventory method. Reported inventories are accounted for under the consumption method (i.e., recorded as expenditures when used) in the Governmental Funds.

The Water and Sewer Enterprise Fund and Virginia Marine Science Museum Special Revenue Fund and the City Garage Internal Service Fund inventories are reported at cost using the moving weighted average cost inventory method.

G. Land Held For Resale

Land inventory for a discretely presented component unit (Virginia Beach Development Authority) is stated at the lower of net realizable value or original purchase price plus capitalized interest, if applicable, and development cost.

H. Advances to Other Funds

In the fund financial statements, long-term interfund loans receivable (reported as "Advances to" asset accounts) are equally offset by a fund balance reserve account. This indicates that they do not constitute "available spendable resources" in the Governmental Funds.

I. Accrued Compensated Leave

Annual leave, according to a graduated scale based on years of employment, is credited to each employee as it accrues. A permanent City employee may carryforward a maximum of 50 days.

City employees are granted one sick leave day per month and may accumulate an unlimited number of sick leave days; however, no payment is made by the City on the unused portion upon employment termination (except on the condition of retirement). In accordance with Governmental Accounting Standards Board Statement (GASB) Number 16, an accrual has been made in the financial statements for these payments.

Compensated leave for the City (current and noncurrent) is recorded in the government-wide financial statements. For Proprietary Funds the current and long-term accrued compensated leave liabilities are recorded in the appropriate fund. The current portion of compensated leave is based upon the estimated leave usage in the subsequent year increased by cost of living salary increase.

J. Miscellaneous 1. Cash and Investments

Cash invested at June 30 is included in the various cash accounts reflected in the financial statements. Investments are stated at amortized cost or at their fair value (Note 7). Interest earnings on investments are allocated to the appropriate funds based upon the average monthly cash balance of each fund. Qualified investments in State Treasurer’s LGIP, AIM, SNAP, and Overnight Repurchase Agreements are reported at amortized cost. All others are reported at fair value (Note 7B).

2. Proprietary Funds' Other Charges

This category mainly consists of General Fund Charges (e.g., data processing, buildings and grounds maintenance, indirect costs) to the Water and Sewer, Storm Water, Golf Course and Resort Parking Enterprise Funds as well as Internal Service Funds except Risk Management , where it represents premiums and claims payments (including current estimated claims and judgments).


JUNE 30, 2004

(continued) 59

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) J. Miscellaneous (continued) 3. Statement of Cash Flows

For purposes of the statements of cash flows, all highly liquid debt instruments and certificates of deposit, maturity of three months or less, are grouped into cash and temporary investments. Proprietary Funds participate in a centralized cash and investment pool and therefore, separate information on cash equivalents (i.e., investments with maturities of three months or less upon acquisition) for the funds is not applicable.

K. Fund Equity and Net Assets

In the fund financial statements, Governmental Funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for specific purpose. The most significant of these are reservations for encumbrances and loans.

Designations of fund balance represents tentative management plans that are subject to change. The City routinely establishes designations for future fund balance appropriations for School Board Capital Projects and True Up, Capital Project appropriations and carryforwards.

The difference between assets and liabilities in the government-wide statement of net assets must be labeled as net assets. GAAP further require that net assets be subdivided into three categories: net assets invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets.

L. Long-Term Obligations

In the government-wide financial statements, and Proprietary Fund types in the financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable Governmental Activities, Business-Type Activities, or Proprietary Fund type statement of net assets. Bond premiums and deferred loss on refunding bonds as well as issuance costs are deferred and amortized over the life of the bonds. Bonds issuance 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 reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds, are reported as debt service expenditures.

M. Restricted Assets - Cash and Investments

Certain proceeds of the Primary Government’s revenue bond issuance and certificates of participation have been set aside in separate bank accounts as a reserve for future debt service payments.

N. Unrestricted Net Assets - Governmental Activities

Inclusive in Governmental Activities unrestricted net assets are ending fund balances of certain Special Revenue Funds which have been earmarked for specific purposes by City Council. These funds are, but are not limited to, Agriculture Reserve Fund, Major Projects Fund, Open Space Fund, Tourism Growth Investment Fund and Tourism Advertising Program Fund. The balance of these funds at June 30, 2004 was $51.9 million.

O. Restricted Net Assets Some primary government and component unit net asset amounts are subject to various restrictions. Bond

resolutions restrict the net assets of the Water and Sewer, Storm Water, and Debt Service Funds while certain amounts in the General Fund, Special Revenue Funds, and component units are restricted through other enabling legislation.


JUNE 30, 2004

(continued) 60

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) P. Special Items

The sale of land at Princess Anne Park is reported as a special item for governmental activities. Capital assets constructed by the Virginia Beach Development Authority and subsequently transferred to the City government are reported as special items for the other component units.

2. RECEIVABLES AND ACCRUED LIABILITIES Receivables at June 30, 2004 consist of the following: Primary Government

Governmental Activities Business-Type

Activities Total Accrued Interest $ 203,368 $ - $ 203,368 Property Taxes 55,981,751 - 55,981,751 Loans 9,059,820 - 9,059,820 Accounts 6,674,202 20,676,320 27,350,522 Gross Receivables $ 71,919,141 $ 20,676,320 $ 92,595,461 Less: Allowance for Uncollectibles (17,292,728) (1,575,141) (18,867,869) Total Fund Statements $ 54,626,413 $ 19,101,179 $ 73,727,592 Internal Service Funds $ 98,256 $ - $ 98,256 Net Receivables - Entity Wide $ 54,724,669 $ 19,101,179 $ 73,825,848

Major Funds – Governmental

General Fund Capital Projects Total Accrued Interest $ 203,228 $ - $ 203,228 Property Taxes 55,981,751 - 55,981,751 Accounts 5,414,735 26,902 5,441,637 Loans 7,686,281 - 7,686,281 InterGovernmental Accounts 14,912,273 1,471,017 16,383,290 Due from Other Funds 7,359,299 - 7,359,299 Gross Receivables $ 91,557,567 $ 1,497,919 $ 93,055,486 Less: Allowance for Uncollectibles (17,292,728) - (17,292,728) Net Receivables $ 74,264,839 $ 1,497,919 $ 75,762,758

Major Funds – Proprietary

Water & Sewer Storm Water Total Accounts $ 13,633,657 $ 4,482,207 $ 18,115,864 InterGovernmental Accounts 4,826,244 1,186,839 6,013,083 Gross Receivables $ 18,459,901 $ 5,669,046 $ 24,128,947 Less: Allowance for Uncollectibles (1,369,697) (205,444) (1,575,141) Net Receivables $ 17,090,204 $ 5,463,602 $ 22,553,806

The intergovernmental accounts receivable account represents the amounts due from the Commonwealth and

other local governments. The allowance for uncollectible receivables is $1,575,141 at June 30, 2004 and is based on historical collection rates, specific account analysis and subsequent cash receipts.

Component Units Receivables at June 30, 2004 consist of the following:

School Board

Virginia Beach Development

Authority

Community Development Corporation

Total

Notes $ - $ - $ 1,094,040 $ 1,094,040 Other 1,740,156 - 80,859 1,821,015 Intergovernmental 17,970,300 - 14,317 17,984,617 Accounts 606,670 16,284,882 83,901 16,975,453 Net Receivables $ 20,317,126 $ 16,284,882 $ 1,273,117 $ 37,875,125


JUNE 30, 2004

(continued) 61

2. RECEIVABLES AND ACCRUED LIABILITIES (continued) A. Property Taxes Receivable

An annual ad valorem tax is levied by the City on the assessed value of real and tangible personal property. These levies are made each year on July 1 and January 1 for real property and tangible personal property, respectively. Taxes levied on these dates become liens on the subject property on the date of levy. Real property taxes are payable in two installments on December 5 and June 5. Personal property taxes are payable on June 5, however, pro-rated bills on automobiles are also payable throughout the year on the portion of the year they are owned if not owned a full year. These taxes are considered delinquent when not paid by the due dates and subject to penalties and interest charges by the City Treasurer. City property tax revenues are recognized when levied.

The City calculates its Allowance for Uncollectible Taxes by using historical collection data. Furthermore, the taxes receivable amount uncollected 45 days after June 30 is recorded as deferred revenue for the fund financial statements.

During Fiscal Year 2004 the real property rate was $1.22 per $100 of assessed valuation (100% of fair market value except for public service corporation properties); an additional $.12 per $100 of assessed valuation is charged to those residents of Sandbridge; an additional $.57 per $100 of assessed valuation is charged to all real estate within Town Center Special Service District, not exempt from taxation; the personal property rate was $3.70 per $100 of assessed valuation (100% of fair market value). Other personal property tax rates exist for qualified equipment. Effective July 1, 2004, the real property rate will be $1.1964 per $100 of assessed valuation. There are no limits currently on the property tax rates which may be established by the City Council.

B. Intergovernmental Receivables - Primary Government and School Board Component Unit 1. The following revenues were due from the Commonwealth of Virginia at June 30, 2004: Primary Government



Total

Maintenance of Roads $ 6,467,726 $ 1,186,839 $ 7,654,565 General Sales Tax 3,973,433 - 3,973,433 Public Assistance Grants 548,543 - 548,543 Recordation Fees 478,140 - 478,140 Other Grants, Entitlements, & Shared Revenues 763,486 2,376 765,862 Rolling Stock 21,814 - 21,814 Sheriff’s Department 867,444 - 867,444 Medicaid Reimbursement 1,236,399 - 1,236,399 Police Extradition 100,819 - 100,819 Grants Consolidated 93,040 - 93,040 Comprehensive Services Act 1,897,462 - 1,897,462 Total Due from Commonwealth $ 16,448,306 $ 1,189,215 $ 17,637,521

School Board Component Unit

State Share Sales Tax $ 4,817,881 Special Education - Regional Program 3,098,264 State Share Teacher Benefits 1,096,106 Other Grants, Entitlements, & Shared Revenues 130,476 Total Due from Commonwealth $ 9,142,727


JUNE 30, 2004

(continued) 62

2. RECEIVABLES AND ACCRUED LIABILITIES (continued) B. Intergovernmental Receivables - Primary Government and School Board Component Unit (continued) 2. The following revenues were due from various Federal agencies at June 30, 2004: Primary Government



Total

Public Assistance Grants $ 1,830,814 $ - $ 1,830,814 FEMA Reimbursement 1,060,702 - 1,060,702 Section 8 Housing 1,042,295 - 1,042,295 Law Enforcement 85,048 - 85,048 Grants Consolidated 1,140,306 - 1,140,306 Sheriff's Department 644 - 644 Housing Assistance 1,210,100 - 1,210,100 Capital Projects 1,471,017 - 1,471,017 Mental Health/Mental Retardation 135,794 - 135,794 Community Development Block Grant 1,924,403 - 1,924,403 Total Due from Federal Government $ 9,901,123 $ - $ 9,901,123


Advance Placement Fee Program $ 12,324 Carl Perkins 176,974 Drug Free Schools/Community Act 158,632 English Literacy/Civics Education 22,156 High Schools That Work 5,061 Homeless Children & Youth 25,394 IDEA Part B Sliver 45,975 Medicaid 49,406 NASA 23,490 National School Meal Program 502,426 NJROTC 51,284 Preschool Incentive 167,086 Refugee Impact 5,370 Support Team Project 10,000 Title I 3,988,178 Title II 821,815 Title III 24,065 Title V 162,888 Title VI-B 2,550,938 Title 84.215 Heart 16,279 Other Grants, Entitlements, and Shared Revenues 7,832 Total Due from Federal Government $ 8,827,573

3. Business-Type Activities

At June 30, 2004, the Water and Sewer Enterprise Fund was due $153,306 from the City of Chesapeake. The receivable represents amounts due the City for cost incurred at Lake Gaston. The Water and Sewer Fund was also due $4,670,562 from the City of Norfolk for the Water Servicing True-Up.

C. Allowances For Uncollectible Accounts Receivable

Allowances for uncollectible accounts receivable are generally established using historical collection data, specific account analysis and subsequent cash receipts. The allowances at June 30, 2004 are as follows:

a. General Fund $ 17,292,728 b. Water & Sewer Fund 1,369,697 c. Storm Water Fund 205,444 Total $ 18,867,869


JUNE 30, 2004

(continued) 63

2. RECEIVABLES AND ACCRUED LIABILITIES (continued) D. The major components of Accrued Liabilities at June 30, 2004 consist of the following: Primary Government



Total

Accrued Interest Payable $ 7,379,233 $ 2,943,811 $ 10,323,044 Deposits Payable 1,585,208 365,696 1,950,904 Unearned Revenue - 66,670 66,670 Total Accrued Liabilities $ 8,964,441 $ 3,376,177 $ 12,340,618

Component Units

School Board

Community Development Corporation Total

Accrued Interest $ - $ 48,638 $ 48,638 Unearned Revenue 4,527,484 8,518 4,536,002 Deposits Payable 30,000 - 30,000 Accrued Salaries 47,227,865 35,852 47,263,717 Total Accrued Liabilities $ 51,785,349 $ 93,008 $ 51,878,357

3. DEFERRED REVENUE

Deferred revenue represents amounts for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met. Under the modified accrual basis of accounting, such amounts are measurable, but not available. Deferred revenue is comprised of the following as of June 30, 2004:

A. General Fund

Uncollected Taxes and Assessments $ 28,894,237

B. Special Revenue Funds – Non-major $ 195,449 C. Enterprise Funds

Water and Sewer - Customers & Developers Tap and Meter Fees $ 45,647 Golf Courses - Coupon Books 21,023 Total Enterprise Funds $ 66,670

D. School Board Component Unit

School Operating Fund - Summer School Tuition, Troops to Teachers Grant, Rent $ 188,289 School Grants Fund - Algebra Readiness, SOL Remediation, FAMS Program, and other grants. 426,665 Other Governmental Funds – School Cafeteria Charges for Services 77,566 School Health Insurance Internal Service Fund - Prepayment of July Health Insurance Premiums 3,834,964 Total School Board Component Unit $ 4,527,484

E. Community Development Corporation Component Unit

Prepayment for Housing Programs $ 8,518

4. CAPITAL ASSETS AND LAND HELD FOR RESALE A. Land Held for Resale - Discretely Presented Component Unit

Oceana West Corporate Park $ 1,913,239 Corporate Landing 11,603,840 Hunt Club 2 200,305 Oceanfront 4,872,645 Total Land Held For Resale $ 18,590,029


JUNE 30, 2004

(continued) 64

4. CAPITAL ASSETS AND LAND HELD FOR RESALE (continued) B. Governmental Activities The following is a summary of the changes in capital assets for the fiscal year ended June 30, 2004:

Balance June 30, 2003

Increases

Decreases


Capital Assets Not Being Depreciated: Land and Improvements $ 502,800,818 $ 37,356,104 $ - $ 540,156,922 Agricultural Reserve Program 20,463,087 1,079,365 - 21,542,452 Construction in Progress 312,500,159 142,290,975 42,785,431 412,005,703 Total Capital Assets Not Being Depreciated $ 835,764,064 $ 180,726,444 $ 42,785,431 $ 973,705,077 Other Capital Assets: Buildings and Improvements $ 255,318,275 $ 21,751,626 $ 280,929 $ 276,788,972 School Buildings 370,687,762 2,275,444 7,399,730 365,563,476 Site Improvements 106,908,774 1,335,942 - 108,244,716 Equipment 105,082,834 9,776,058 3,122,188 111,736,704 Roadway Network 1,328,565,448 39,231,365 - 1,367,796,813 Landfill Network 13,824,956 256,729 - 14,081,685 Bridge Network 62,020,340 - - 62,020,340 Hurricane Protection Network 92,626,250 4,054,765 - 96,681,015 Total Other Capital Assets at Historical Cost $ 2,335,034,639 $ 78,681,929 $ 10,802,847 $ 2,402,913,721 Less Accumulated Depreciation For: Buildings and Improvements $ 90,939,711 $ 13,201,847 $ 200,077 $ 103,941,481 School Buildings 59,901,666 7,244,289 7,399,730 59,746,225 Site Improvements 17,644,936 2,690,943 - 20,335,879 Equipment 70,178,057 11,527,250 2,871,560 78,833,747 Roadway Network 598,053,302 33,214,136 - 631,267,438 Landfill Network 11,820,689 71,294 - 11,891,983 Bridge Network 19,166,171 1,237,817 - 20,403,988 Hurricane Protection Network 1,852,525 1,852,525 - 3,705,050 Total Accumulated Depreciation $ 869,557,057 $ 71,040,101 $ 10,471,367 $ 930,125,791 Total Capital Assets, Being Depreciated, Net $ 1,465,477,582 $ 7,641,828 $ 331,480 $ 1,472,787,930 Governmental Activities Capital Assets, Net $ 2,301,241,646 $ 188,368,272 $ 43,116,911 $ 2,446,493,007

Governmental Activities capital assets net of accumulated depreciation at June 30, 2004 are comprised of the following:

General Government Capital Assets, Net $ 2,444,187,301 Internal Service Fund Capital Assets, Net 2,305,706 Total $ 2,446,493,007

Depreciation was charged to governmental functions as follows:

Legislative $ 10,398 Executive 16,391 Law 20,799 Finance 55,822 Human Resources 61,089 Judicial 8,431,813 Health 9,523 Police 963,587 Social Services 66,344 Public Works 40,153,843 Parks and Recreation 1,796,787 Library 321,095 Planning 132,624 Agriculture 27,796 Economic Development 1,235,212 Convention and Visitor Development 268,200 Communications & Information Technology 3,392,275 General Services 1,032,587 Boards and Commissions 14,555 Fire 1,193,174 Management Services 19,601 Mental Health and Mental Retardation 260,843 Education and Transfer to School 7,304,075 Housing and Neighborhood Preservation 82,650 Museums 683,019 General Government 3,293,577 Emergency Medical Services 192,422 Total $ 71,040,101


JUNE 30, 2004

(continued) 65

4. CAPITAL ASSETS AND LAND HELD FOR RESALE (continued) C. Component Unit - School Board Capital Assets activity for the year ended June 30, 2004 was as follows:


Increases

Decreases


Capital Assets Not Being Depreciated: Land $ 28,390,833 $ 84,655 $ - $ 28,475,488 Construction in Progress 37,621,503 32,773,441 32,563,186 37,831,758 Total Capital Assets Not Being Depreciated $ 66,012,336 $ 32,858,096 $ 32,563,186 $ 66,307,246 Capital Assets Being Depreciated: Buildings $ 135,003,185 $ 25,276,764 $ 1,180,020 $ 159,099,929 Improvements Other Than Buildings 33,052,479 439,367 36,291 33,455,555 Machinery and Equipment 23,696,479 12,789,641 509,058 35,977,062 Machinery and Equipment - Automobiles 33,164,980 6,010,535 812,070 38,363,445 Total Capital Assets Being Depreciated $ 224,917,123 $ 44,516,307 $ 2,537,439 $ 266,895,991 Less Accumulated Depreciation For:* Buildings $ 73,991,064 $ 10,657,717 $ 766,245 $ 83,882,536 Improvements Other Than Buildings 16,404,126 1,459,488 23,735 17,839,879 Machinery and Equipment 9,757,259 3,963,842 464,007 13,257,094 Machinery and Equipment - Automobiles 17,386,519 2,144,495 809,710 18,721,304 Total Accumulated Depreciation $ 117,538,968 $ 18,225,542 $ 2,063,697 $ 133,700,813 Total Capital Assets, Being Depreciated, Net $ 107,378,155 $ 26,290,765 $ 473,742 $ 133,195,178 Component Unit School Board, Capital Assets,

Net $

173,390,491

$

59,148,861

$

33,036,928

$

199,502,424

* All depreciation was charged to School Board Component Unit. D. Business-Type Activities The following is a summary of the changes in capital assets for the fiscal year ended June 30, 2004:


Increases

Decreases


Capital Assets Not Being Depreciated: Land and Improvements $ 149,906,869 $ - $ - $ 149,906,869 Construction in Progress 60,634,651 29,694,177 24,384,029 65,944,799 Total Capital As sets Not Being Depreciated $ 210,541,520 $ 29,694,177 $ 24,384,029 $ 215,851,668 Other Capital Assets: Buildings and Improvements $ 3,651,469 $ 258,202 $ - $ 3,909,671 Site Improvements 10,152,259 15,687 - 10,167,946 Utility System 730,960,760 25,663,674 220,155 756,404,279 Machinery and Equipment 21,429,023 2,128,499 1,837,409 21,720,113 Total Other Capital Assets at Historical Cost $ 766,193,511 $ 28,066,062 $ 2,057,564 $ 792,202,009 Less Accumulated Depreciation For: Buildings and Improvements $ 1,112,321 $ 473,877 $ - $ 1,586,198 Site Improvements 2,110,586 30,569 - 2,141,155 Utility System 213,402,980 19,807,239 163,763 233,046,456 Machinery and Equipment 16,811,999 1,486,508 1,813,512 16,484,995 Total Accumulated Depreciation $ 233,437,886 $ 21,798,193 $ 1,977,275 $ 253,258,804 Total Capital Assets Being Depreciated, Net $ 532,755,625 $ 6,267,869 $ 80,289 $ 538,943,205 Business -Type Activities Capital Assets, Net $ 743,297,145 $ 35,962,046 $ 24,464,318 $ 754,794,873

Depreciation expense was charged to Business-Type Activities as follows:

Water and Sewer $ 16,068,988 Storm Water 5,441,433 Golf Course 241,186 Resort Parking 46,586

Total Depreciation $

21,798,193


JUNE 30, 2004

(continued) 66

4. CAPITAL ASSETS AND LAND HELD FOR RESALE (continued) E. Major Fund - Water and Sewer Enterprise Fund


Increases

Decreases


Capital Assets Not Being Depreciated: Land and Improvements $ 12,008,691 $ - $ - $ 12,008,691 Construction in Progress 36,708,883 23,606,402 24,291,961 36,023,324 Total Capital As sets Not Being Depreciated $ 48,717,574 $ 23,606,402 $ 24,291,961 $ 48,032,015 Other Capital Assets: Buildings and Improvements $ 3,019,398 $ 258,202 $ - $ 3,277,600 Utility System 669,706,287 25,652,861 220,155 695,138,993 Machinery and Equipment 13,534,323 1,687,461 1,669,147 13,552,637 Total Other Capital Assets at Historical Cost $ 686,260,008 $ 27,598,524 $ 1,889,302 $ 711,969,230 Less Accumulated Depreciation For: Buildings and Improvements $ 1,037,166 $ 256,872 $ - $ 1,294,038 Utility System 196,212,707 14,827,988 163,762 210,876,933 Machinery and Equipment 10,585,109 984,127 1,668,877 9,900,359 Total Accumulated Depreciation $ 207,834,982 $ 16,068,987 $ 1,832,639 $ 222,071,330 Total Capital Assets Being Depreciated, Net $ 478,425,026 $ 11,529,537 $ 56,663 $ 489,897,900 Water and Sewer Capital Assets, Net $ 527,142,600 $ 35,135,939 $ 24,348,624 $ 537,929,915

F. Major Fund - Storm Water Enterprise Fund


Increases Decreases Balance

June 30, 2004 Capital Assets Not Being Depreciated: Land and Improvements $ 128,103,048 $ - $ - $ 128,103,048 Construction in Progress 22,919,337 6,006,520 10 813 28,915,044 Total Capital Assets Not Being Depreciated $ 151,022,385 $ 6,006,520 $ 10 813 $ 157,018,092 Other Capital Assets: Utility System $ 61,254,473 $ 10,813 $ - $ 61,265,286 Machinery and Equipment 6,606,128 375,470 82,730 6,898,868 Total Other Capital Assets at Historical Cost $ 67,860,601 $ 386,283 $ 82,730 $ 68,164,154 Less Accumulated Depreciation For: Utility System $ 17,190,273 $ 4,979,250 $ - $ 22,169,523 Machinery and Equipment 5,097,413 462,182 63,569 5,496,026 Total Accumulated Depreciation $ 22,287,686 $ 5,441,432 $ 63,569 $ 27,665,549 Total Capital Assets Being Depreciated, Net $ 45,572,915 $ (5,055,149) $ 19,161 $ 40,498,605 Storm Water Capital Assets, Net $ 196,595,300 $ 951,371 $ 29,974 $ 197,516,697

G. Component Unit - Virginia Beach Development Authority


Increases

Decreases


Capital Assets Not Being Depreciated: Land and Improvements $ 12,484,653 $ 96,435 $ 4,097,030 $ 8,484,058 Construction in Progress 12,682,099 6,792,966 6,498,727 12,976,338 Total Capital Assets Not Being Depreciated $ 25,166,752 $ 6,889,401 $ 10,595,757 $ 21,460,396 Other Capital Assets: Buildings and Improvements $ 29,628,833 $ 363,331 $ - $ 29,992,164 Total Other Capital Assets at Historical Cost $ 29,628,833 $ 363,331 $ - $ 29,992,164 Less Accumulated Depreciation for: $ 1,367,667 $ 872,146 $ - $ 2,239,813 Component Unit – Virginia Beach Dev. Authority Capital Assets, Net

$

53,427,918 $ 6,380,586 $ 10,595,757 $ 49,212,747

All depreciation was charged to Virginia Beach Development Authority


JUNE 30, 2004

(continued) 67

4. CAPITAL ASSETS AND LAND HELD FOR RESALE (continued) H. Component Unit - Virginia Beach Community Development Corporation


Increases

Decreases


Capital Assets Not Being Depreciated: Land and Improvements $ 722,202 $ 260,000 $ - $ 982,202 Other Capital Assets: Buildings and Improvements $ 7,570,326 $ 1,428,726 $ - $ 8,999,052 Less Accumulated Depreciation for: 2,122,475 288,217 2,410,692 Component Unit – Va. Beach Community Dev. Corp. $ 6,215,963 $ 1,400,509 $ - $ 7,570,562 All depreciation was charged to Virginia Beach Community Development Corporation

I. Construction in Progress (1) Governmental Activities and School Board Component Unit

In accordance with the City’s accounting policies, these projects will not be transferred from Construction in Progress until completion. Construction in progress is comprised of the following:

Governmental Activities Expended through

June 30, 2004 Outstanding

Commitments Unobligated Balance

Engineering and Highways $ 117,835,167 $ 38,265,682 $ 76,639,331 Buildings and Other 93,985,599 33,063,065 80,966,587 Parks and Recreation 26,449,490 8,406,450 31,875,627 Coastal 21,469,354 5,182,590 13,703,703 Economic Tourism Development 152,266,093 135,903,832 15,343,928 Total Governmental Activities $ 412,005,703 $ 220,821,619 $ 218,529,176 School Board Component Unit Buildings and Improvements Other than Buildings $ 37,831,758 $ 11,162,295 $ 21,723,613

(2) Component Unit Construction in Progress is composed of the following at June 30, 2004:

Expended through June 30, 2004

Outstanding Commitments

Unobligated Balance

Virginia Beach Development Authority $ 12,976,338 $ - $ 6,872,413

(3) Business-Type Activities

In accordance with the City’s accounting policies, these projects will not be transferred from Construction in Progress into the various capital asset accounts until substantially completed. Construction in Progress for Business-Type Activities is comprised of the following at June 30, 2004:

Expended through

June 30, 2004 Outstanding

Commitments Unobligated

Balance Water Utility Projects $ 10,969,027 $ 3,816,608 $ 13,100,079 Sewer Utility Projects 25,054,297 11,985,979 38,047,496 Golf Course 1,006,431 43,459 55,378 Storm Water Projects 28,915,044 3,805,572 29,870,026 Total Business-Type Activities $ 65,944,799 $ 19,651,618 $ 81,072,979


JUNE 30, 2004

(continued) 68

5. LONG-TERM DEBT A. A Summary of Changes In Long-Term Liabilities 1. Primary Government - Governmental Activities

Balance July 1, 2003

Additions

Reductions

Balance

June 30, 2004

Amounts Due Within One Year

General Obligation Bonds $ 539,226,717 $ 65,250,000 $ (49,397,122) $ 555,079,595 $ 50,485,358 State Literary Fund Loans 15,059,046 - (1,356,500) 13,702,546 1,256,500 Public Facility Revenue Bonds - 153,200,000 - 153,200,000 3,865,000 Obligations under Capital Leases 2,119,178 - (1,051,165) 1,068,013 524,744 Certificates of Participation 18,760,000 - (1,955,000) 16,805,000 2,050,000 Williams Farm Property - 4,250,000 (212,500) 4,037,500 425,000 Town Center Support Agreements 23,855,000 11,800,000 - 35,655,000 - Federal Arbitrage Rebate - Estimate 354,606 - (111,458) 243,148 - Landfill Closure & Post Closure Care 4,641,021 96,457 - 4,737,478 - Agricultural Reserve Program 20,463,086 1,079,366 - 21,542,452 - Deferred Loss & Premium - Net 7,956,614 12,659,281 (1,007,157) 21,623,052 613,531 Accrued Compensated Leave 27,364,045 13,831,170 (12,393,966) 28,801,249 13,762,837 Estimated Claims & Judgments 12,024,440 5,192,574 (5,196,009) 12,021,005 2,238,529 Governmental Activities Long-Term Debt $ 671,823,753 $ 267,358,848 $ (70,666,563) $ 868,516,038 $ 75,221,499

2. Primary Government - Business-Type Activities


Additions

Reductions

Balance

June 30, 2004


General Obligation Bonds $ 9,881,635 $ - $ (4,041,100) $ 5,840,535 $ 1,441,100 Double Barrel and Revenue 124,648,408 - (4,471,033) 120,177,375 4,677,761 $ 134,530,043 $ - $ (8,512,133) $ 126,017,910 $ 6,118,861 Less/add Deferred Amounts: For Issuance Premiums $ 117,885 $ - $ (101,050) $ 16,835 $ 16,835 On Refundings (958,962) - 186,749 (772,213) (171,603) Total Bonds Payable $ 133,688,966 $ - $ (8,426,434) $ 125,262,532 $ 5,964,093 Obligations under Capital Leases 175,000 - (175,000) - - Accrued Compensated Leave 2,351,048 1,559,248 (1,442,015) 2,468,281 1,420,441 Federal Arbitrage - Estimate 83,094 - - 83,094 - Sinking Fund 1978 Revenue Bonds 400,000 - 400,000 800,000 - Business-Type Activities Long-Term Debt $ 136,698,108 $ 1,559,248 $ (9,643,449) $ 128,613,907 $ 7,384,534

3. Major Fund - Water and Sewer Enterprise Fund


Additions

Reductions

Balance

June 30, 2004


General Obligation Bonds $ 4,945,000 $ - $ (3,535,000) $ 1,410,000 $ 935,000 Double Barrel and Revenue 115,173,408 - (4,241,033) 110,932,375 4,437,761 $ 120,118,408 $ - $ (7,776,033) $ 112,342,375 $ 5,372,761 Less/add Deferred Amounts: For Issuance Premiums $ 117,885 $ - $ (101,050) $ 16,835 $ 16,835 On Refundings (958,962) - 186,749 (772,213) (171,603) Total Bonds Payable $ 119,277,331 $ - $ (7,690,334) $ 111,586,997 $ 5,217,993 Accrued Compensated Leave $ 1,805,434 $ 1,263,317 $ (1,160,065) $ 1,908,686 $ 1,181,366 Federal Arbitrage - Estimate 61,867 - - 61,867 - Sinking Fund 1978 Revenue Bonds 400,000 - 400,000 800,000 - Water and Sewer Long-Term Debt $ 121,544,632 $ 1,263,317 $ (8,450,399) $ 114,357,550 $ 6,399,359


JUNE 30, 2004

(continued) 69

5. LONG-TERM DEBT (continued) A. A Summary of Changes In Long-Term Liabilities (continued) 4. Major Fund - Storm Water Enterprise Fund

Balance

July 1, 2003

Additions

Reductions

Balance

June 30, 2004


General Obligation Bonds $ 4,936,635 $ - $ (506,100) $ 4,430,535 $ 506,100 Double Barrel and Revenue 9,475,000 - (230,000) 9,245,000 240,000 Total Bonds Payable $ 14,411,635 $ - $ (736,100) $ 13,675,535 $ 746,100 Accrued Compensated Leave $ 371,115 $ 226,729 $ (209,159) $ 388,685 $ 221,611 Federal Arbitrage Rebate Payable 21,227 - - 21,227 -

Storm Water Long-Term Debt $ 14,803,977 $ 226,729 $ (945,259) $ 14,085,447 $ 967,711

5. Component Unit - School Board


Additions

Reductions



Accrued Compensated Leave $ 18,394,845 $ 7,820,343 $ 7,379,931 $ 18,835,257 $ 7,556,622 Estimated Claims and Judgments 7,426,792 67,172,748 66,748,346 7,851,194 5,888,396 Net Pension Obligation 51,404 9,598 - 61,002 12,200 Component Unit Long-Term Debt – Schools

$

25,873,041

$

75,002,689

$

74,128,277

$

26,747,453

$

13,457,218

6. Component Unit - Virginia Beach Development Authority

Balance

July 1, 2003

Additions

Reductions

Balance

June 30, 2004


Lease Revenue Bonds $ 8,080,000 $ - $ 385,000 $ 7,695,000 $ 400,000 Public Facility Revenue Bonds 23,855,000 11,800,000 - 35,655,000 - Revenue Note 7,358,878 101,975 3,241,847 4,219,006 1.020,059 $ 39,293,878 $ 11,901,975 $ 3,626,847 $ 47,569,006 $ 1,420,059 Add Bond Premium 539,070 - 28,125 510,945 - Less Bond Discount (205,283) - 12,835 (192,448) - Total Bonds and Notes Payable $ 39,627,665 $ 11,901,975 $ 3,642,137 $ 47,887,503 $ 1,420,059 Notes Payable City of Virginia Beach 6,108,687 - 114,046 5,994,641 159,066 Component Unit Long-Term Debt – Virginia Beach Development Authority $ 45,736,352 $ 11,901,975 $ 3,756,183 $ 53,882,144 $ 1,579,125


JUNE 30, 2004

(continued) 70

5. LONG-TERM DEBT (continued) A. A Summary of Changes In Long-Term Liabilities (continued) 7. Component Unit - Virginia Beach Community Development Corporation


Additions

Reductions

Balance

June 30, 2004


Notes Payable $ 3,500,783 $ 2,651,817 $ 1,505,052 $ 4,647,548 $ 966,409 Component Unit Long-Term Debt – Virginia Beach Community Development Corporation $ 3,500,783 $

2,651,817 $ 1,505,052 $ 4,647,548 $ 966,409

B. Bonds, Notes and Loans Payable General Obligation Bonds and Loans: Proprietary Percentage

Bond Issue/Purpose

Dated

Issue Amount

True Interest Costs %

Storm Water %

Water & Sewer %

Balance Outstanding

2004A 06/01/04 $ 65,000,000 4.354874 1.13 $ 65,000,000 Adam Thoroughgood House 09/15,03 250,000 - 250,000 2003-A PI 05/15/03 50,000,000 3.575097 - - 47,500,000 2003-B PI Refunding 05/15/03 50,870,000 2.835286 .93 - 50,490,000 2002 PI & Refunding 03/05/02 95,000,000 4.315919 1.11 - 84,365,000 2002 State Literary 01/01/02 7,500,000 3.0 - - 6,750,000 2001 PI 06/01/01 48,500,000 4.608981 - - 41,225,000 2000 PI 01/01/00 76,100,000 5.432937 - - 60,880,000 1998 PI & Refunding 03/15/98 125,610,000 4.764679 1.31 - 88,435,000 1997 PI 06/01/97 56,700,000 5.0876 - - 36,855,000 1996-A School 11/14/96 4,151,083 3.0 - - 2,865,044 1996 PI 06/01/96 58,000,000 5.62152 26.78 - 5,800,000 1996 State Literary 03/01/96 2,500,000 3.0 - - 1,500,000 1996 State Literary 03/01/96 2,500,000 3.0 - - 1,500,000 1995-A PI 12/21/95 2,096,324 3.0 - - 1,342,409 1995-A PI 01/15/95 46,500,000 5.921 - - 2,325,000 1994 PI & Refunding 03/15/94 78,090,000 5.537492 5.3 - 5,630,000 1993 PI 04/15/93 20,000,000 5.1751574 - - 1,000,000 1993 Refunding 04/15/93 156,080,000 4.9999286 - 6.51 64,240,000 1992 School 11/12/92 794,347 5.86289 - - 394,196 1991 State Literary 09/01/91 130,546 4.0 - - 52,546 1991 State Literary 09/01/91 2,500,000 4.0 - - 1,000,000 1991-A PI VPSA 07/31/91 5,278,597 6.447 - - 2,323,481 1990 State Literary 07/15/90 2,000,000 4.0 - - 700,000 1990 State Literary 07/15/90 2,000,000 3.0 - - 700,000 1990 State Literary 07/15/90 2,000,000 4.0 - - 700,000 1988 State Literary 03/01/88 2,000,000 4.0 - - 400,000 1988 State Literary 03/01/88 2,000,000 4.0 - - 400,000 Total General Obligation Bonds and Loans $ 574,622,676

“Double Barrel” Revenue Bonds and Notes:* Proprietary Percentage

Bond Issue

Dated Issue Amount


Storm Water %

Water & Sewer

% Balance

Outstanding 2002 W&S Revenue 10/15/02 $ 28,000,000 4.8066 - 100 $ 28,000,000 2000 W&S Revenue 07/15/00 40,000,000 5.405144 - 100 37,555,000 2000 Storm Water Revenue 01/01/00 10,000,000 5.917853 100 - 9,245,000 1998 Taxable W&S Revenue 08/28/98 5,774,218 4.3 - 100 4,816,564 1997 Taxable W&S Revenue 01/30/97 7,190,048 4.75 - 100 5,628,319 1994 Taxable W&S Revenue 01/18/95 1,405,031 4.5 - 100 937,492 1993 W&S Revenue & Refund 12/15/93 46,440,000 5.131153 - 100 32,155,000 1982 W&S Revenue Notes 08/31/82 1,800,000 10.00 - 100 288,000 1982 W&S Revenue Notes 08/31/82 2,200,000 10.00 - 100 352,000 1978 Drought Relief Revenue 02/01/78 2,000,000 5.0 - 100 1,200,000 Total “Double Barrel” and Revenue Bonds and Notes $ 120,177,375


JUNE 30, 2004

(continued) 71

5. LONG-TERM DEBT (continued) B. Bonds, Notes and Loans Payable (continued)

Other Long-Term Debt: Proprietary Percentage

Bond Issue

Dated Issue Amount


Storm Water %

Water & Sewer

% Balance

Outstanding 2003 Public Facility Revenue 09/01/03 $ 153,200,000 4.6840646 - - $ 153,200,000 Williams Farm Install. Pur. Agmt 01/14/04 4,250,000 5.0 - - 4,037,500 Refunding Certificates of Participation 06/01/93 36,700,000 5.335062 - - 16,805,000 Total Other Long-Term Debt $ 174,042,500 Total Bonds, Notes and Loans Payable (Excludes Other Component Units) $ 868,842,551 Defeased Debt - In prior years, the City defeased certain general obligation, public improvement, and public utility bonds by placing funds in irrevocable escrow accounts to provide for future debt service payments on the defeased debt. Accordingly, the escrow account assets and liabilities for the defeased debt are not included in the City's financial statements. At June 30, 2004, the outstanding balance of the defeased debt, including current year defeased debt, is $133.2 million. * Water and Sewer and Storm Water Enterprise Funds incur 100% of debt service cost.

C. A Summary of Annual Requirements to Amortize All Bonds and Notes Payable Annual Debt Service requirements to maturity for general obligation bonds are as follows: Annual Debt Service requirements to maturity for revenue bonds and notes are as follows:

Business-Type Activities Year Ending June 30 Principal Interest 2005 $ 4,677,761 $ 6,095,017 2006 4,900,721 5,859,870 2007 5,099,970 5,624,905 2008 4,915,567 5,290,226 2009 4,987,576 5,049,782 2010-2014 23,857,133 21,838,112 2015-2019 31,973,647 14,537,947 2020-2024 24,050,000 7,349,031 2025-2028 15,715,000 1,277,775 $ 120,177,375 $ 72,922,665

Governmental Activities Business-Type Activities Year Ending June 30 Principal Interest Principal Interest 2005 $ 50,485,358 $ 24,603,578 $ 1,441,100 $ 282,656 2006 50,688,410 26,112,808 981,100 218,536 2007 46,826,830 23,207,951 506,100 180,735 2008 44,969,538 20,874,820 506,100 155,282 2009 42,512,008 18,517,394 506,100 125,769 2010-2014 178,958,763 62,450,540 1,900,035 223,231 2015-2019 105,311,234 25,908,702 - - 2020-2024 45,780,000 5,973,025 `- - 2025 3,250,000 162,500 - - $ 568,782,141 $ 207,811,318 $ 5,840,535 $ 1,186,209


JUNE 30, 2004

(continued) 72

5. LONG-TERM DEBT (continued) C. A Summary of Annual Requirements to Amortize All Bonds and Notes Payable (continued) Annual Debt Service requirements to maturity for other long-term debt:

Governmental Activities Year Ending June 30 Principal Interest

2005 $ 6,340,000 $ 8,376,798 2006 6,955,000 8,099,665 2007 8,240,000 7,762,752 2008 8,645,000 7,418,527 2009 9,060,000 7,024,463 2010-2014 39,247,500 28,657,136 2015-2019 41,485,000 18,789,325 2020-2024 54,070,000 6,902,616 $ 174,042,500 $ 93,031,282

Debt service requirements for general obligation bonds are principally met by the General Fund. Also, for the Governmental Activities, Landfill Closure and Post Closure Care, most compensated absences (except School Board Component Unit), Federal Arbitrage Rebate (there are no set maturity dates for these liabilities) will be liquidated by the General Fund. Internal Service Funds predominantly serve the Governmental Funds. Accordingly, long-term liabilities for them are included as part of the above totals for Governmental Activities. Claims and Judgments are liquidated by the Risk Management Fund.

Interest expense incurred on the above noted debt for the year ended June 30, 2004 was $35,438,214. Of this amount, $1,574,813 was capitalized in the Major Enterprise Funds and in the Business-Type Activities.

D. Agricultural Reserve Program

On May 9, 1995, City Council adopted an ordinance es tablishing the Agricultural Reserve Program (“ARP”). The primary purpose of the ordinance is to promote and encourage the preservation of farmland in the rural southern portion of the City. Through ARP, the City acquires development rights in designated areas within the southern portion of the City through the purchase of agricultural land preservation easements. Landowners who meet certain eligibility criteria may sell an easement to the City while holding fee simple title to the land and continuing to farm. The City acquires these development rights by executing installment purchase agreements with the landowners.

These agreements provide for the payment of the principal balance of the agreement in a single installment due

approximately twenty-five years after execution of the agreement. Interest on the unpaid principal balance is payable semi-annually. On May 9, 1995, the City Council originally dedicated a one and one-half cent increase in the real estate tax to finance the program; on May 11, 2004, the City Council reduced this amount to one cent.

These obligations constitute indebtedness within the meaning of Article VII, Section 10 of the Virginia Constitution

and will be general obligations of the City, pledging the full faith and credit and unlimited taxing power of the City. By policy, interest and principal payments will be paid from a dedicated portion of real estate taxes. Principal payments will be made from maturing zero coupon Treasury securities purchased from the dedicated portion of real estate taxes.

As of June 30, 2004, 54 installment purchase agreements totaling 6,808 acres at a total purchase price of

$21,542,452 have been executed. Annual Debt Service requirements to maturity for Agricultural Reserve Program:

Year Ending June 30

Principal

Interest

2005 $ - $ 1,337,960 2006 - 1,337,960 2007 - 1,337,960 2008 - 1,337,960 2009 - 1,337,960 2010-2014 - 6,689,800 2015-2019 - 6,689,800 2020-2024 10,195,146 5,561,733 2025-2029 11,347,306 1,516,379 Totals $ 21,542,452 $ 27,147,512


JUNE 30, 2004

(continued) 73

5. LONG-TERM DEBT (continued) E. Legal Debt Margin

Assessed Value of Real Property: Regular $ 27,589,424,261 Public Service 743,170,991 Total Assessed Value of Real Property $ 28,332,595,252 Legal Debt Limit: 10% of Assessed Value (authorized limit imposed by the State Constitution and the City Charter)

$ 2,833,259,525

Deductions:

General Obligation, “Double Barrel” and Revenue Bonds, Notes and Loans $ 694,800,051

Other Long-Term Obligations 175,110,513 Agricultural Reserve Program Installment Purchase Agreements 21,542,452 $ 891,453,016 Less:

Water and Sewer Revenue Bonds & Notes: 08/31/82 $ 288,000 08/31/82 352,000 Drought Relief Revenue Issue of 02/01/78 1,200,000 12/15/93 32,155,000 01/18/95 937,492 01/30/97 5,628,319 08/28/98 4,816,563 07/15/00 37,555,000 10/15/02 28,000,000 Storm Water Revenue Bonds: 01/01/00 9,245,000 Other Long-Term Obligations 175,110,513 295,287,887

Net Interest -Bearing Obligations Subject to Debt Limitation 596,165,129 Legal Debt Margin For Creation of Additional Debt $ 2,237,094,396

F. Water and Sewer Enterprise - Sinking Fund Requirements

Drought Relief Revenue Bond dated February 1, 1978 for $2,000,000 - was issued pursuant to a grant and loan agreement between the City and the United States of America, Department of Commerce, Economic Development Administration. At least one business day before each February 1, beginning February 1, 2003 and continuing until the payment of the bond on February 1, 2007, the City's Director of Finance is required to deposit the sum of $400,000 into a sinking fund account from net revenues of the Water and Sewer Enterprise.

G. Water and Sewer Enterprise Revenue Bonds

Water and Sewer Revenue Bonds are obligations of the City, payable solely from pledged revenues of the System (Water and Sewer Fund), subject to the prior application thereof to the payment of Operating Expenses. The City will fix, charge, collect and revise its fees, rates and other charges for the use of and for the services furnished by the system so as to produce revenues sufficient to meet its cash requirements each fiscal year.

H. Storm Water Revenue Bonds

Storm Water Revenue Bonds are obligations of the City, payable solely from pledged revenues of the System (Storm Water Fund), subject to the prior application thereof to the payment of Operating Expenses. The City will fix, charge, collect and revise its fees, rates and other charges for the use of and for the services furnished by the system so as to produce revenues sufficient to meet its cash requirements each fiscal year.


JUNE 30, 2004

(continued) 74

5. LONG-TERM DEBT (continued) I. General Debt Service Fund Expenditures

Principal Retirement

Interest and Fiscal Charges

Total

Serial Bonds and Notes $ 49,397,122 $ 26,306,865 $ 75,703,987 Capital Leases and Other Long-Term Obligations 2,660,969 8,286,021 10,946,990 Agricultural Reserve Program - 1,312,096 1,312,096 State Literary Fund Notes 1,356,500 489,612 1,846,112 Bank Charges & Bond Issuance Costs - 690,360 690,360 Totals $ 53,414,591 $ 37,084,954 $ 90,499,545

J. Accrued Compensated Leave The accrued compensated leave is as follows at June 30, 2004:

Primary Government

Compensated Leave


Business Type Activities


Total

City – Annual $ 21,325,977 $ 2,012,017 $ - $ 23,337,994 City - Compensatory 4,164,250 84,726 - 4,248,976 City – Sick 3,311,022 371,538 - 3,682,560 School - Annual - - 7,809,365 7,809,365 School – Sick - - 9,726,996 9,726,996 School - Personal - - 1,298,896 1,298,896 Total $ 28,801,249 $ 2,468,281 $ 18,835,257 $ 50,104,787

K. Authorized But Unissued Bonds

Purpose June 30, 2004 General Obligation Debt: 2000 Charter Bonds $ 10,803,830 2002 Charter Bonds 22,300,000 2003 Charter Bonds 43,298,763 2004 Charter Bonds 61,000,000 Total General Obligation Debt $ 137,402,593 Water and Sewer Debt: 1999 W & S Revenue Bonds $ 3,696,002 2000 W & S Revenue Bonds 4,703,619 2001 W & S Revenue Bonds 8,524,487 2002 W & S Revenue Bonds 5,208,093 2004 W & S Revenue Bonds 9,215,000 Total Water and Sewer Debt $ 31,347,201 Storm Water Utility Revenue Bonds: 1998 Storm Water Utility Revenue Bonds $ 5,028,440 1999 Storm Water Utility Revenue Bonds 5,300,000 2000 Storm Water Utility Revenue Bonds 3,900,000 2001 Storm Water Utility Revenue Bonds 200,000 2003 Storm Water Utility Revenue Bonds 580,000 2004 Storm Water Utility Revenue Bonds 510,000 Total Storm Water Utility Debt $ 15,518,440 Total Authorized and Unissued Debt - June 30, 2004 $ 184,268,234

L. Revenue Covenants

Management believes the City is in compliance with all significant financial covenants contained in the various bond indentures, including those found in the Master Resolution adopted February 1992.

M. Federal Arbitrage Rebate

The amount reported as Federal Arbitrage Rebate Payable represents the estimated liability which is to be paid in the future. For the City, no funds are considered to be expendable available financial resources for the payment of this liability until approved by City Council. Funding for this liability will occur in the year the rebate is payable to the Federal Government. The liability has been recorded in the government-wide financial s tatements.


JUNE 30, 2004

(continued) 75

5. LONG-TERM DEBT (continued) N. Notes Payable - Discretely Presented Component Unit Community Development Corporation

Various mortgage loan agreements and notes payable with interest at 4.0% to 9.25%, collateralized by real property.

$

3,774,574

Acquisition Rehabilitation Funds: Line of credit with Bank of America up to $250,000 bearing interest at 3.25%.

Line of credit with Bank of America up to $2,500,000 bearing interest at 3.28%. Total

$

75,332 797,642 4,647,548

O. Notes Payable - Discretely Presented Component Unit Virginia Beach Development Authority 1. Notes Payable - City of Virginia Beach Details for the City of Virginia Beach Notes Payable as of June 30, 2004 are as follows:

Long-Term Notes Payable $ 5,994,641

On February 25, 2003, the Virginia Beach City Council approved a restructuring proposal for the outstanding debt between the City and the Authority. Under this restructuring accrued interest in the amount of $1,235,331 was canceled and the remaining debt was separated into two non-interest bearing notes. Note 1, in the principal amount of $4,830,936, is secured by a first lien on the 31st Street property. Note 2, in the principal amount of $1,425,201, is secured by a first lien on Corporate Landing and Oceana West Corporate Parks.

The following covenants will be in effect while the loan is outstanding: 1) The Authority will incur no additional debt without City approval; 2) All net proceeds from the sale or ground lease of the 31st Street property will be paid to the City when received; 3) 20% of the net proceeds generated from all land sales in Corporate Landing and Oceana West will be used to reduce the outstanding debt; and 4) The remaining net proceeds (80%) from land sales in Corporate Landing and Oceana West will be used by the Authority to fund its infrastructure requirements and to fund strategic land acquisitions.

2. Notes Payable – Town Center Details of Other Notes Payable as of June 30, 2004, are as follows:

Note Payable: Wachovia - Town Center Note $ 4,219,006

On March 6, 2000, the Authority and Town Center Associates, L.L.C. entered into an agreement for the development of the Town Center. Financing for the purchase of the land for future phases beyond Phase I of this project was obtained from Wachovia Bank in the amount of $5,500,000. Total advances on this loan may not exceed $11,135,000 to include accrued interest through December 2006. The loan agreement was signed on June 8, 2000 and calls for semi-annual interest payments starting November 30, 2000 with all principal and interest due December 1, 2006. Under the terms of this agreement, the Authority is not required to make any principal or interest payments on this loan until the final due date of December 2006; and the intention is to not make principal or interest payments, except to the extent funds are available from the sale of this land. To date, $777,633 has been added to the original principal of the loan. As of June 30, 2004, the outstanding balance is $4,219,006. The interest rate is the LIBOR rate plus 0.42%. The loan is secured by a surety agreement provided by Town Center Associates, L.L.C. that requires Town Center Associates, L.L.C. to purchase the land no later than December 2006.

3. Bonds Payable Details of Bonds Payable as of June 30, 2004 are as follows: Social Services Facility

Lease Revenue Bonds 1998 $ 7,695,000 Less: Unamortized Bond Discount (66,351) Less Current Portion (400,000) Long-Term Portion $ 7,228,649


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5. LONG-TERM DEBT (continued) O. Notes Payable - Discretely Presented Component Unit Virginia Beach Development Authority (continued) 3. Bonds Payable (continued) Social Services Facility (continued)

Lease Revenue Bonds Series 1998, interest due semi-annually at a rate that ranges from 4.3 to 5.0% secured by the City’s obligation to pay the Authority basic rent payments due annually with final payment due December 2017.

Town Center Project Phase I

Public Facility Revenue Bonds $ 32,615,000 Public Facility Revenue Bonds (Taxable) 3,040,000 Less: Unamortized Bond Discount (126,097) Add: Unamortized Bond Premium 510,945 Long-Term Portion $ 36,039,848

Public Facility Revenue Bonds Series 2002 A & B and Series 2003A, interest due semi-annually at a rate that ranges from 4.0 to 5.75% (Series 2002 A & B) and at a rate that ranges from 3.00% to 5.25% (Series 2003 A) secured by the City’s pledge of the revenues and receipts derived from the support agreement, certain funds established under the agreement of trust and the investment income there from. Final payment under the support agreement will be in August 2023.

The requirements to amortize all long-term bonds and notes payable as of June 30, 2004, including interest payments of $19,742,350 are summarized as follows:

Fiscal Year

Principal

Interest 2005 $ 1,579,125 $ 1,580,326 2006 3,998,013 1,562,696 2007 1,094,066 1,542,028 2008 1,598,066 1,515,858 2009 1,848,066 1,481,255 2010-2014 13,731,311 6,564,500 2015-2019 14,435,000 4,318,412 2020-2024 15,280,000 1,177,275 Plus: Unamortized Net Premium 510,945 - Less: Unamortized Bond Discount (192,448) - Total $ 53,882,144 $ 19,742,350

P. Net Pension Obligation School Board Component Unit The Net Pension Obligation for the School Board Component Unit at June 30, 2004 is $61,002. Q. Compliance Management believes the City has no violations of finance related legal and contractual provisions. R. 2002 Town Center Project Phase I Support Agreement

The Virginia Beach Development Authority (Authority), a component unit of the City, issued in June 2002, $20,815,000 of Public Facility Revenue Bonds, Series 2002A and $3,040,000 Taxable Public Facility Revenue Bonds, Series 2002B to finance the acquisition of a public parking facility for the Town Center Project (Phase I). The Series 2002 Bonds are limited obligations of the Authority, payable solely from certain payments to be made by the City, pursuant to a Support Agreement dated June 1, 2002. The obligation of the City is subject to annual appropriation by the City Council and therefore, these bonds do not constitute a general obligation debt of the City nor a pledge of the full faith and credit of the City. The bonds are limited obligations of the Authority, payable solely from payments made by the City. The following is a schedule by years of future payments under this support agreement as of June 30, 2004:


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5. LONG-TERM DEBT (continued) R. 2002 Town Center Project Phase I Support Agreement (continued)

Fiscal Year Ending June 30: Principal

Amount Interest

Amount 2005 $ - $ 1,230,348 2006 - 1,230,348 2007 100,000 1,228,063 2008-2012 2,465,000 5,878,621 2013-2017 6,460,000 4,786,294 2018-2022 11,690,000 2,443,116 2023 3,140,000 78,500 Total Support Payments $ 23,855,000 $ 16,875,290

S. Sale of Public Facility Revenue Bonds

In September 2003, The Virginia Beach Development Authority (Authority), acting as a conduit issuer, sold $165 million public facility revenue bonds. The Series 2003A were rated ‘AA’ and have a true interest cos t (TIC) of 4.399577%. The Authority and the City of Virginia Beach are providing funds for a number of key economic development projects focused on redevelopment of the City’s downtown area. The public facility revenue bonds are limited obligations of the Authority, payable solely from certain payments to be made by the City, pursuant to a Support Agreement dated September 1, 2003. Of the $165 million in bonds, the City is recording $153.2 million in debt with the Authority recording $11.8 million in debt for the portion attributable to the Town Center Garage. The entire obligation is subject to annual appropriation by the City Council and therefore, these bonds do not constitute a general obligation debt of the City nor a pledge of the full faith and credit of the City. The following is a schedule by years of future payments under this support agreement as of June 30,2004:

Fiscal Year Ending June 30: Principal Amount Interest Amount 2005 $ - $ 577,262 2006 220,000 572,863 2007 400,000 560,462 2008-2012 2,335,000 2,519,986 2013-2017 3,015,000 1,845,125 2018-2022 3,945,000 973,065 2023-2024 1,885,000 91,756 Total Support Payments $ 11,800,000 $ 7,140,519

6. ASSETS AND OBLIGATIONS UNDER LEASES A. Capital Leases Governmental Activities

The City has entered into capital leases for the financing of equipment and property for the General Fund, the Print Shop and Communications and Information Technology. A description of the property leased is noted below. The majority of the leases were for a five year term with monthly and semi-annual payments. The principal source of funding for these leases will be the funds noted. Obligations under capital leases are stated at the original fair market value of the leased assets capitalized, less payments made, discounted at the interest rate implicit in the lease. Future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2004, were as follows:

Fiscal Year


2005 $ 823,183 2006 280,308 2007 4,802 Total Minimum Lease Payments $ 1,108,293 Less: Amount Representing Interest 40,280 Present Value of Net Minimum Lease Payments $ 1,068,013 Less: Current Portion Governmental Activities 524,744 Long-Term Portion $ 543,269


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6. ASSETS AND OBLIGATIONS UNDER LEASES (continued) A. Capital Leases Governmental Activities (continued) The following is an analysis of the leased property under capital leases:

Property Governmental

Activities Data Processing System $ 2,400,000 Printing Equipment 42,500 Communication Equipment 2,542,803 Vehicles and Equipment 411,626 HVAC System $ 5,396,929 Less: Accumulated Amortization 2,384,046 Net Leased Property for Governmental Activities Presentation $ 3,012,883

Amortization of current year capital leases was $487,455.

B. Operating Leases Governmental Activities 1. Social Services Facility

The City is leasing the Social Services Facility through a financing arrangement with the Virginia Beach Development Authority. Under the arrangement, the Authority issued $9,800,000 in tax-exempt Lease Revenue Bonds to finance the Facility. The scheduled payments the City makes to the trustee will be used to pay the debt service on the bonds. The following is a schedule by years of future lease payments under this operating lease as of June 30, 2004:

Fiscal Year Ending June 30: 2005 $ 749,978 2006 752,347 2007 748,965 2008 749,830 2009 754,728 2010-2014 3,773,098 2015-2018 3,033,115 Total Lease Payments $ 10,562,061

The leasing arrangement also requires additional rent equal to one-eighth of one percent of the outstanding principal balance of the bonds as an administrative fee; also, additional rent of $50,000 to be paid semi-annually. The additional rent of $50,000 will be placed in a reserve to be used as needed for capital and structural improvements, maintenance and repair of the facility.

2. 9th Street Parking Garage

In May 1996, the City entered into a long-term lease with Virginia Beach/South Parking, L.L.C., a Virginia limited liability company to lease the 9 th Street Parking Garage. This is a twenty year operating lease with an option to purchase at ten, fifteen, or twenty years, as well as options to extend the lease beyond its initial twenty year term. The following is a schedule by years of the future lease payments under this operating lease as of June 30, 2004:

Fiscal Year Ending June 30: 2005 $ 851,928 2006 851,928 2007 873,258 2008 937,249 2009 937,249 2010-2014 4,791,829 2015-2018 2,706,482 Total Lease Payments $ 11,949,923


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7. DEPOSITS AND INVESTMENTS A. Deposits

The Constitution of Virginia and the Code of Virginia require the election of a City Treasurer. The City's Charter provides that the City Treasurer is the custodian of City cash and has powers and duties prescribed by general law.

At year-end the carrying value of the City's (including balance reported in School Board Component Unit and excluding School Board Activity Funds) deposits with banks and savings institutions was $46,893,222, and the bank balance was $60,106,793. Of the bank balance, $60,106,793 was covered by Federal Depository insurance or collateralized in accordance with the Virginia Security for Public Deposits Act. Under the Act, banks holding public deposits in excess of amounts insured by FDIC must pledge collateral equal to 50% of such excess deposits to a collateral pool in the name of the State Treasury Board. Savings and Loan institutions are required to collateralize 100% of deposits in excess of FDIC limits. The State Treasury Board is responsible for monitoring compliance with the collateralization and reporting requirements of the Act and for notifying local governments of compliance by banks and savings and loans. If any member financial institution fails, the entire collateral becomes available to satisfy the claims of the City. If the value of the pool's collateral is inadequate to cover a loss, additional amounts would be assessed on a pro-rata basis to the members (banks and savings and loans) of the pool. Therefore, these deposits are considered collateralized and as a result of this are considered insured. Cash with fiscal agents totaling $4,400,055 and cash with School Board Activity Funds totaling $3,126,820 are covered by Federal depository insurance or collateralized in accordance with the Virginia Security for Public Deposits Act. The City has compensating balance arrangements with two financial institutions. Bank of America provides services to the City while a $3.5 million balance is maintained in a demand deposit account. A fluctuating checking balance, based on monthly investment services, is a requirement of BB&T Bank.

B. Investments

Statutes authorize the City to invest in obligations of the United States or agencies thereof; the Commonwealth of Virginia or political subdivisions thereof; obligations of the International Bank for Reconstruction and Development (World Bank); the Asian Development Bank; the African Development Bank; commercial paper rated A-1 by Standard and Poor's Corporation or P-1 by Moody's Commercial Paper Record; bankers’ acceptances; repurchase agreements which are collateralized with securities approved for direct investment, State Treasurer's Local Government Investment Pool (LGIP); and corporate notes with at least a rating of Aa by Moody's or AA by Standard and Poor's. The amount of investments in commercial paper is limited by City Council policy to 35% of the total available for investment, and not more than 5% of the total available for investment can be invested in any one issuing corporation.

The City's investments are categorized below to give an indication of the level of risk assumed by the entity at year-end. Category 1 includes investments that are insured or regis tered or for which the securities are held by the City or its safekeeping agent in the City's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counter party agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counter party agent but not in the City's name.

Category Reported

Amount 1 2 3

Repurchase Agreements $ - $ 15,285,819 $ - $ 15,285,819 Commercial Paper 32,904,631 - - 32,904,631 U.S. Government Securities 36,488,768 14,414,390 - 50,903,158 $ 69,393,399 $ 29,700,209 $ - $ 99,093,608 Investment in State Treasurer's Local Government Investment Pool (LGIP) $ 275,000,000 Investment in State Non Arbitrage Program – SNAP 141,197,244 Investment in Arbitrage Investment Management Program – AIM 83,151,018 Total Investments $ 598,441,870 Total School Board Activity Fund Deposits 3,126,820 Total Cash With Fiscal Agents 4,400,055 Total Deposits 46,893,222 Total Deposits and Investments $ 652,861,967 Note: Deposits & Investments are the total of: Treasurer’s Cash + School Activity + School Cafeteria


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7. DEPOSITS AND INVESTMENTS (continued) B. Investments (continued) Reconciliation of total deposits and investments to the government-wide financial statements at June 30, 2004:

Primary Government


Total

Cash and Investments $ 270,064,560 $ 138,660,423 $ 408,724,983 Restricted Cash and Cash Equivalents 226,604,867 - 226,604,867 Fiduciary Funds 6,034,289 11,497,828 17,532,117 Total Deposits and Investments $ 502,703,716 $ 150,158,251 $ 652,861,967

The City's investment in repurchase agreements represents an overnight sweep of the City’s main operating bank account balances. These amounts will vary on a daily basis.

As of October 1, 1988, all bankers’ acceptances, commercial paper, and Treasury Notes purchased by a local government that have a maturity date of greater than thirty days from the date of purchase are required to be safe kept by a third party acting as a trust agent for the City. The City's securities are safe kept by BB&T Bank and are registered in the name of the City.

The investments in State Treasurer's LGIP, AIM, and SNAP programs are not subject to categorization as to assumed risks because, in the aggregate, they are considered pooled investments (managed in accordance with the 2a-7 like pool risk limiting requirements of GASB Statement No. 31) in nature and are not evidenced by securities that exist in physical or book entry form. The fair value of the position in these programs is the same as the value of the pool shares, i.e. they maintain a stable net asset value of $1 per share. The State Treasurer's LGIP is not SEC registered (Pursuant to Sec.2.1-234.7 Code of Virginia). However, AIM and SNAP are SEC Registered. The Treasury Board of the Commonwealth sponsors the LGIP and has delegated certain functions to the State Treasurer. The LGIP reports to the Treasury Board at their regularly scheduled monthly meetings. The cash and investments of the School Board component unit have been pooled with the cash and investments of the primary government and, therefore, are included in the above information. The remaining component units and Sheriff’s Retirement Plan, with cash and investments amounting to $9,745,641, and are categorized according to risk assessment under category 1, were investments are insured or registered or for both which the securities are held by City or its safekeeping agent in the City’s name.

Investments are recorded at fair value. At June 30, 2004, in accordance with GASB 31, investments in bankers’ acceptances, commercial paper and U.S. Government Securities are recorded at fair value. All other investments are reported utilizing amortized cost due to maturity dates less than one year. The fair valuing of bankers’ acceptances, commercial paper and U.S. Government Securities at June 30, 2004 resulted in a net increase of $265,445.

As previously noted, all City and School Board Funds participate in a centralized cash and investment pool. Interest earnings on investments are allocated to the appropriate funds based upon the average monthly cash balance of each fund. As of June 30, 2004, $129,939 was reported in designated funds and subsequently transferred to the General Fund.

8. COMMITMENTS AND CONTINGENCIES

A. Litigation

The City is a named defendant in litigation filed by parties concerning alleged personal injuries, property damage, and other causes of action. The City is vigorously defending all cases and expects no losses will be incurred which would have a material effect on the City's financial position.

B. Intergovernmental Grants, Entitlements, and Shared Revenues

The City participates in a number of federal and state grants, entitlements, and shared revenues programs. These programs are subject to program compliance audits by the applicable federal or state agency or their representatives. Furthermore, the U.S. Congress passed legislation called the "Single Audit Act Amendment of 1996" which required most governmental recipients of federal assistance to have an annual independent organization-wide financial and compliance audit. The results thereof are incorporated in this report. The amounts, if any, of expenditures which may be disallowed by these audits cannot be determined at this time although the City expects such amounts, if any, to be immaterial.


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8. COMMITMENTS AND CONTINGENCIES (continued)

C. City Manager Employment Contract

On August 23, 2001, City Council adopted an ordinance extending the contract of employment for the City Manager for the period November 30, 2001, through November 30, 2006. In the event the City Manager's employment is terminated by the City Council and certain conditions are met, the City Council must continue to compensate the former City Manager for a period of twelve months. The City does not consider the liability and the related reservation of fund balance material.

D. Salaries Payable

The outstanding School Board Component Unit Funds' amount represents salaries due (2 months) to schoolteachers who have opted to be paid over a twelve-month period, and to substitute and supplemental school personnel.

E. Landfill Closure

On August 8, 1984, the City entered into two agreements with Southeastern Public Service Authority of Virginia (SPSA). Under the first 30-year agreement, the City agreed to use SPSA's solid waste disposal system to dispose of solid waste generated within and collected by the City. For this service, the City agreed to pay tipping fees to SPSA.

Under the second agreement, the City agreed to accept at its sanitary landfill ash and process residue generated by SPSA's refuse derived fuel processing plant. For these disposal services, SPSA agreed to pay the City the reasonable costs incurred in operating the landfill, including all operating costs as well as capital expenditures relative to regulatory compliance. Federal and State laws and regulations require that a final cover be placed on the landfill site when it stops accepting waste and to perform maintenance and monitoring functions at the site for 30 years after closure.

Prior to the establishment of the above agreements, the landfill was used exclusively by the City. The City believes the landfill closure and post closure care obligations should be apportioned between SPSA and the City based on actual usage of the facility. The total capacity of the developed cells at the landfill is 8.75 million tons. Future development will increase the total landfill capacity to 13.572 million tons. The City used 3.597 million tons prior to the date of the agreements (August 1984). Total usage to date has been estimated at 7.394 million tons . The remaining useful life of the landfill is estimated to be 11 years, through the year 2015.

To date, approximately 84.45 percent of the developed landfill has been used. Based on a new study, the estimated cost for both closure and post closure care is $9,700,807, an amount based on landfill capacity used to date. Until another cell of the landfill is opened, no additional estimated closure and post closure care costs will be recognized, except for the effects of inflation, changes in estimates, changes in technology or changes in laws or regulations. The City’s share of this amount is $4,737,478 and is reflected in the government-wide financial statements.

These estimates are subject to adjustment for inflation and to account for any changes in landfill conditions, regulatory requirements, technologies, or cost estimates. The City is required by law to submit a worksheet that demonstrates the ability to fund landfill closure and post-closure care costs.

F. Water Services Contract

The City and Norfolk have entered into a Water Services Contract effective July 1, 1993 expiring in the year 2030. The Services Contract establishes engineering, water quality, and operational standards for Norfolk to receive, convey, treat, and deliver Lake Gaston water to the City.

Norfolk is required to reset rates every two years based upon a cost of services study performed by an independent consulting firm that compares projected versus actual water expenses. On a biennial basis an adjustment is made based upon the actual costs incurred in the previous two years.


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9. INTERFUND BALANCES AND TRANSACTIONS, FUND RESULTS AND RECONCILIATIONS A. Interfund Balances

At June 30, the General Fund has a due from Special Revenue Funds as a result of advances made to eliminate negative cash balances in those funds. The General Fund will be reimbursed when the Special Revenue receive amounts owed from federal and state sources:

Due From:

Due To: Non-major

Governmental General Fund $ 7,359,299

B. Interfund Transfers Interfund transfers for the year ended June 30, 2004 were made up of the following:

Transfer From:

Transfers To: General

Fund Water & Sewer

Non-major Governmental

Non-major Enterprise

Internal Service

Total

General Fund $ - $ - $ 618,407 $ - $ - $ 618,407 Capital Project Funds 34,877,531 - 5,625,000 - 172,874 40,675,405 Storm Water Fund 52,028 - 11,175 - - 63,203 Water & Sewer Fund 501 - - - - 501 Non-major Governmental Funds

144,130,725

89,102

23,479,544

527,723

-

168,227,094

Non-major Enterprise Funds - - 258,803 - - 258,803 Internal Service Funds 2,019,175 - - - - 2,019,175 Total $ 181,079,960 $ 89,102 $ 29,992,929 $ 527,723 $ 172,874 $ 211,862,588

Purpose: Transfers From General Fund: $34,877,531 Capital Project Funds: Funding for Pay-As-You-Go Capital Project Funds. $52,028 Storm Water Fund: General Fund support of Storm Water operations. $144,130,725 Non-major Government Funds: Funding for Special Revenue Programs. $501 Water & Sewer Fund: General Fund support of Utility Operations. $2,019,175 Internal Service Funds: Funding to support Internal Service Funds. Transfers From Water & Sewer Enterprise Fund: $89,102 Non-major Governmental Funds: Water and Sewer support of E-911 operations. Transfers From Non-major Governmental Funds: $5,625,000 Capital Projects Funds: Funding for Pay-As-You-Go Capital Project Funds.

$23,479,544 Non-major Governmental Funds: Funding for operational and developmental support of existing programs.

$258,803 Non-major Enterprise Funds: Operational support. $618,407 General Fund: Office Rent and Code Enforcement. $11,175 Storm Water Fund: Reimbursed taxes for leased property. Transfer From Non-major Enterprise Funds: $527,723 Non-major Governmental Funds: Operational support. Transfer From Internal Service Funds: $172,874 Capital Projects Funds: Communications system – Information Technology work.


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9. INTERFUND BALANCES AND TRANSACTIONS, FUND RESULTS AND RECONCILIATIONS (continued) C. Net Assets Deficits The following Primary Government funds have a deficit balance in equity at June 30, 2004:

Special Revenue Fund: Emergency FEMA $ (1,885,033) Internal Service Fund: Risk Management $ (8,715,152)

The deficit in the Emergency Special Revenue Fund represents unreimbursed costs incurred as a result of Hurricane Isabel. A reservation in the General Fund has been established to address this deficit.

The deficit in the Risk Management Fund represents the actuarially estimated liability for future claims. The rate structure for the Risk Management Fund is continually being evaluated for adjustments thereto.

D. New Funds

The School Reserve Special Revenue Fund was established to better position the School Board to respond to unexpected fiscal events and emergencies.

E. Fund Closing and Restatement and Name Change 1. The Federal Section 108 Special Revenue Fund was closed during Fiscal Year 2004. All balances have now

been combined with CD Loan and Grant Special Revenue Fund. The beginning fund balance has been restated to reflect the combination.

2. The Fuels Internal Service Fund was closed during Fiscal Year 2004. All balances have now been combined

with the City Garage Internal Service Fund. The beginning net assets has been restated to reflect the combination.

3. The Police Airplane Special Revenue Fund will now be titled Police Extradition Special Revenue Fund. 10. RISK MANAGEMENT

A. Primary Government Self-Insurance Program

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City is also exposed to the risk of loss for employee medical benefits. These benefits are accounted for in the School Health Insurance Internal Service Fund. This fund accounts for and finances this joint self-insured program between the City and the School Board. During Fiscal Year 1973, the City established a Risk Management Fund (an internal service Fund) to account for and finance its uninsured risks of loss. Under this program, the Risk Management Fund provides coverage for up to a maximum of $500,000 for each workers’ compensation claim, $2,000,000 for each general liability claim, $100,000 for each fire and property claim, and $2,000,000 for each public officials (errors and omissions) claim. The insurance coverage for each major category of risk is the same as those reported in the prior fiscal year. There have not been any reductions in commercial insurance coverage from the prior year and the amount of settlements applied against this coverage in each of the past three years did not exceed the commercial insurance. The City has $10 million of excess insurance coverage.

All funds of the City participate in the program (except for School Board Component Unit Funds) and make payments to the Risk Management Fund based on normal underwriting criteria and each agency’s loss experience. The City uses an actuary to aid in the determination of self-insurance liabilities.

The estimated claims and judgments liability of $12,021,005 (discounted at a rate of 6%) reported in the Fund at June 30, 2004 is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.


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10. RISK MANAGEMENT (continued)

A. Primary Government Self-Insurance Program (continued)

Beginning of Fiscal -Year Liability

Current-Year Claims & Changes in Estimates

Claims Payments

Balance at Fiscal Year-End

2003-2004 2002-2003

$ 12,024,440 $ 14,318,689

$ 5,192,574 $ 2,337,306

$ 5,196,009 $ 4,631,555

$ 12,021,005 $ 12,024,440

B. School Board Self-Insurance Program

The School Board is self-insured for a portion of its risks. This self-insurance coverage for Fire and Property Insurance is $100,000 per occurrence and $250,000 for windstorms; School Leaders Liability (errors and omissions) is $1,000 per occurrence; Workers Compensation is $300,000 per occurrence; and Vehicle Liability if $25,000 per occurrence.

Commercial insurance is purchased to cover the amount in excess of the above self-insured levels for specific losses. The amount of settlements did not exceed insurance coverage for each of the past three fiscal years. This coverage extends to Fire and Property Insurance for losses greater than $100,000 for each occurrence and $250,000 for wind storms; losses greater than $25,000 for Auto Liability; losses in excess of $1,000 per occurrence for School Leaders Liability; losses in excess of $300,000 per occurrence for Workers Compensation. Where economically feasible, commercial insurance is purchased to cover certain exposures completely.

General liability is fully insured. The insurance coverage is substantially the same as in prior fiscal years. Claims processing and payments for all insurance claims, including Health Insurance, are made through commercial carriers and third party administrators. The School Board uses the information provided by the third party administrators to aid in the determination of self-insurance liabilities. The computed liability as of June 30, 2004 is $7,851,194 (undiscounted).

Beginning-of

Fiscal -Year Liab ility

Current-Year Claims & Changes in

Estimates

Claims Payments

Balance at Fiscal

Year-End 2003-2004 2002-2003

$ 7,426,792 $ 6,620,986 $ 67,172,748

$ 63,839,769 $ 66,748,346 $ 63,033,963 $ 7,851,194

$ 7,426,792 C. Surety Bonds

All City employees, including employees of elected constitutional officers (Commissioner of the Revenue, Treasurer, Commonwealth's Attorney, Sheriff, Clerk of the Circuit Court), are bonded in favor of the City in the amount of $1,000,000. This bond is written by the Aetna Casualty and Surety Company.

The City Treasurer has secured a bond in favor of the City in the amount of $1,250,000. This bond is written by Virginia Risk II. Also, the Commonwealth of Virginia has secured a blanket bond for the City Treasurer which covers only Commonwealth cash in the amount of $300,000. This bond is written by the Fidelity and Deposit Company of Maryland.

The Commonwealth of Virginia has secured a blanket bond for certain constitutional officers (Commissioner of the Revenue - $3,000, Sheriff - $60,000, Clerk of the Circuit Court - $600,000) which provides coverage for both City and Commonwealth cash. This bond is written by the Fidelity and Deposit Company of Maryland. The Commonwealth of Virginia has also secured a blanket bond for the above constitutional officers and their respective employees in the amount of $50,000 for each loss. This bond is written by the Home Insurance Company.

All School Board employees are covered by a faithful performance bond in the amount of $100,000 to protect the School Board against fraudulent acts.


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11. RETIREMENT AND DEFERRED COMPENSATION

A. Virginia Retirement System 1. Plan Description

The City and School Board contribute to the Virginia Retirement System (VRS or the System), an agent and cost-sharing multiple-employer defined benefit pension plan, respectively, administered by the VRS. All full-time, salaried permanent employees of participating employers must participate in the System. Benefits vest after five years of service. Employees are eligible for an unreduced retirement benefit at age 65 with five years of service (age 60 for participating law enforcement officers and firefighters) or age 50 with at least 30 years of service (age 50 with at least 25 years of service for participating local or law enforcement officers, firefighters and Sheriffs) payable monthly for life in an annual amount equal to 1.7 percent of their average final compensation (AFC) for each year of credited service. Benefits are actuarially reduced for retirees who retire prior to becoming eligible for full retirement benefits. In addition, retirees qualify for annual cost-of-living increases limited to 5% per year beginning in their second year of retirement. AFC is defined as the highest consecutive 36 months of reported compensation. Participating local law enforcement officers, firefighters, and sheriffs may receive a monthly benefit supplement if they retire prior to age 65. The VRS also provides death and disability benefits. Title 51.1 of the Code of Virginia (1950), as amended, assigns the authority to establish and amend benefit provisions to the General Assembly of Virginia. The System issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for VRS. A copy of that report may be obtained by writing to the System at P.O. Box 2500, Richmond, VA 23218-2500.

2. Funding Status and Progress

Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5% of their annual salary to the VRS. The City and School Board have assumed this 5% member contribution. In addition, the City and School Board are required to contribute the remaining amounts necessary to fund its participation in the VRS using the actuarial basis specified by the Code of Virginia and approved by the VRS Board of Trustees. The City’s contribution rate for the Fiscal Year ended 2004 was 6% of annual covered payroll (in addition to the 5% member contribution). The School Board (non-professional employees) contribution rate for the Fiscal Year ended 2004 was 3.00% of annual covered payroll.

The School Board 2004 contribution to the VRS statewide teacher pool was $12,321,200. This amount represented 3.77% of annual covered payroll for 2004 and compares to 3.77% for 2003 and 4.24% for 2002. The actual contribution for each of these years was equal to the required contribution.

3. Annual Pension Cost

For the Fiscal Year ended 2004, the City’s annual pension cost of $13,357,858 was greater than the City’s actual contributions of $13,306,449. For 2004, the School Board’s annual pension cost of $1,040,080 was greater than the School Board’s actual contributions of $1,030,481.

The required contributions were determined as part of the June 30, 2003 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions include (a) 8% investment rate of return, (b) projected salary increases that ranged between 4.25% and 6.10% and (c) 3.0% per year cost-of-living adjustments. Both (a) and (b) include an inflation component of 3%. The actuarial value of the City and School Board’s assets are equal to the modified market value of assets. This method was determined using techniques that smooth the effects of short-term volatility in the market value of assets over a five-year period. The City’s and School Boards unfunded actuarial accrued liability is being amortized as a level percentage of payroll on an open basis within a period of 30 years or less.


JUNE 30, 2004

(continued) 86

11. RETIREMENT AND DEFERRED COMPENSATION (continued)

A. Virginia Retirement System (continued)

3. Annual Pension Cost (continued)

The City and School Board’s annual pension costs and net pension obligations (assets) to VRS for the current year were as follows (does not include employee contribution paid by the City):

City School Board Annual required contribution $ 13,315,050 $ 1,030,481 Interest on net pension obligation/asset (221,634) 4,112 Adjustment to annual required contribution 264,442 5,486 Annual pension cost 13,357,858 1,040,079 Contributions made (13,306,449) (1,030,481) Decrease in net pension obligation/asset 51,409 9,598 Net pension obligation/asset beginning of year (2,770,422) 51,404 Net pension obligation/asset end of year $ (2,719,013) $ 61,002

4. Three-Year Trend Information for City of Virginia Beach

Fiscal Year Ending

Annual Pension

Cost (APC)

Percentage of APC

Contributed Net Pension

Obligation (Assets) City

June 30, 2004 June 30, 2003 June 30, 2002

$ 13,357,858 $ 12,740,790 $ 9,787,811

99.7% 99.6%

152.0% $ (2,719,013)

$ (2,770,422) $ (2,821,463)

School Board

June 30, 2004 June 30, 2003 June 30, 2002

$ 1,040,079 $ 976,032 $ 1,033,630

99.1% 99.6%

158.0%

$ 61,002 $ 51,404 $ 47,379


JUNE 30, 2004

87

11. RETIREMENT AND DEFERRED COMPENSATION (continued) B. Sheriff’s Supplemental Retirement Plan 1. Plan Description

The Sheriff’s Supplemental Plan is a defined contribution pension plan established by the Sheriff and approved by City Council to provide additional retirement benefits to all full-time employees of the Sheriff who have at least one year of service. Benefits vest after five years of service.

Contributions to the plan are made from the Sheriff's Special Revenue Fund and are approved by City Council prior to the end of each plan year. There were no contributions made during the current fiscal year. Contributions cannot exceed an amount equal to 15 percent of the compensation of all participants during the year. Contributions shall be allocated to the participants accounts by the proportion of the participant’s base salary to total base salary of all participants. Participant contributions are not allowed.

2. Significant Accounting Principles

Basis of Accounting. The Sheriff’s Supplemental Retirement Plan’s financial statements are prepared using the accrual basis of accounting. Employer contributions are recognized in the period that the contributions are due.

Method Used to Value Investments. Plan assets are invested in a fully benefit-responsive investment contract. Contributions are maintained in a pooled account with a guaranteed interest rate. The contract is included in the Plan’s financial statements at contract value, which approximate fair value, as reported to the Plan by the third party administrator. Contract value represents contributions made under the contract, plus earnings, less plan withdrawals and fees.

A stand alone financial report can be obtained by contacting Sheriff Paul Lanteigne, City of Virginia Beach Sheriff’s Office, 2501 James Madison Avenue, Virginia Beach, VA 23456.

C. Post-Employment Benefits

In addition to the pension benefits described above, the City provides post-retirement health care benefits, in accordance with City statutes, to all employees who retire from the City with at least 25 years of service or 5 years of service for those with a job related disability. This benefit is payable until the retiree becomes eligible for Medicare. Currently, 352 retirees meet those eligibility requirements and have elected to receive this benefit. The City has agreed to pay for each retiree who has elected to continue health care coverage the sum of $307.42 per month ($262.92 per month from July through December 2003) towards the cost of their health care benefit. Expenditures for post-retirement health care benefits is recognized on a monthly basis through the City's records. During the year, expenditures of $1,036,490 were recognized for this post-retirement benefit. Expenditures, per retiree, for the current fiscal year are comparable to that of the previous year.

REQUIRED SUPPLEMENTAL INFORMATION (Unaudited)

VIRGINIA RETIREMENT SYSTEM REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF FUNDING PROGRESS (UNAUDITED) In accordance with the Governmental Accounting Standards Board Statements No. 25, and 27, the following information is a required part of the basic financial statements. 89

CITY OF VIRGINIA BEACH REQUIRED SUPPLEMENTAL INFORMATION

SCHEDULES OF FUNDING PROGRESS FOR VRS – UNAUDITED

90

City Employees (a) (b) (b-a) (a/b) (c)

Actuarial Valuation Date

Actuarial Value of Assets

Actuarial Accrued

Liability (AAL)

Unfunded

(Overfunded ) Accrued Liability

(UAAL)

Funded Ratio

Covered Payroll

UAAL as a

Percentage of Covered Payroll

June 30, 2001 $ 699,534,703 $ 685,752,841 $ (13,781,862) 102.01 % $ 189,258,576 (7.28) % June 30, 2002 $ 730,751,177 $ 753,749,331 $ 22,998,154 96.95 % $ 202,119,728 11.38 % June 30, 2003 $ 745,943,034 $ 824,000,053 $ 78,057,019 90.53 % $ 214,612,829 36.37 %

School Board Non-Professional Employees

(a) (b) (b-a) (a/b) (c)

Actuarial Valuation Date

Actuarial Value of Assets

Actuarial Accrued

Liability (AAL)

Unfunded

(Overfunded ) Accrued Liability

(UAAL)

Funded Ratio

Covered Payroll

UAAL as a Percentage of

Covered Payroll

June 30, 2001 $ 103,193,396 $ 89,004,417 $ (14,188,979) 115.94 % $ 31,101,123 (45.62) % June 30, 2002 $ 107,462,562 $ 97,440,723 $ (10,021,839) 110.29 % $ 31,843,164 (31.47) % June 30, 2003 $ 108,726,259 $ 103,527,212 $ (5,199,047) 105.02 % $ 32,826,001 (15.84) %

OTHER SUPPLEMENTAL INFORMATION

NONMAJOR GOVERNMENTAL FUNDS

Debt Service Fund - is used to account for the financial resources for, and the payment of, general long-

term debt principal, interest, and related costs.

Special Revenue Funds - are used to account for the proceeds of specific revenue sources (other than capital projects) which are legally restricted to be expended for specific purposes.

91

Exhibit 11

Special Revenue

Funds (Exhibit 15)Debt Service

Fund

Total Nonmajor Governmental

Funds (Exhibit 3)ASSETS

Cash and Investments 73,191,806$ 22,190,112$ 95,381,918$ Cash and Investments - Restricted 16,884,658 - 16,884,658Agriculture Reserve Program Treasury Strips - 7,090,829 7,090,829Receivables (net of allowance for uncollectables, where applicable):

Loans 1,373,539 - 1,373,539Accounts 1,232,565 - 1,232,565Accrued Interest 140 - 140

Due from:Commonwealth 3,363,032 - 3,363,032Federal Government 6,599,292 - 6,599,292

Inventories 323,417 - 323,417Total Assets 102,968,449$ 29,280,941$ 132,249,390$

LIABILITIESVouchers and Accounts Payable 4,962,162$ 162,117$ 5,124,279$ Intergovernmental Payables 1,524,788 - 1,524,788Due to:

Other Funds 7,359,299 - 7,359,299Commonwealth 322,642 - 322,642Federal Government 47,659 - 47,659

Deferred Revenue 195,449 - 195,449Total Liabilities 14,411,999$ 162,117$ 14,574,116$

FUND BALANCES:Reserved for:

Encumbrances 2,049,047$ -$ 2,049,047$ Loans 1,373,539 - 1,373,539

Unreserved:Designated for Future Debt Service - 29,118,824 29,118,824Designated for Special Projects 19,817,889 - 19,817,889Undesignated 65,315,975 - 65,315,975Total Fund Balances 88,556,450$ 29,118,824$ 117,675,274$

Total Liabilities and Fund Balances 102,968,449$ 29,280,941$ 132,249,390$

92

CITY OF VIRGINIA BEACH, VIRGINIACOMBINING BALANCE SHEET

OTHER NONMAJOR GOVERNMENTAL FUNDSJUNE 30, 2004

Special Revenue

Funds (Exhibit 16) Debt Service Fund

Total Nonmajor Governmental

Funds (Exhibit 4)REVENUES

General Property Taxes 6,913,215$ -$ 6,913,215$ Other Local Taxes 6,392,475 - 6,392,475From Use of Money and Property 2,538,449 499,599 3,038,048Charges for Services 18,336,191 - 18,336,191Miscellaneous 2,165,755 - 2,165,755From Other Local Governments 219,878 - 219,878From Commonwealth 42,770,621 - 42,770,621From Federal Government 40,577,906 - 40,577,906

Total Revenues 119,914,490$ 499,599$ 120,414,089$

EXPENDITURESCurrent Operating:

Judicial 25,196,388$ -$ 25,196,388$ Police 1,955,012 - 1,955,012Social Services 8,480,073 - 8,480,073Public Works 953,361 - 953,361Planning 15 - 15Parks and Recreation 21,841,790 - 21,841,790Library 366,155 - 366,155Agriculture 182,864 - 182,864Communication and Information Technology 53,129 - 53,129Convention and Vistor Development 10,793,077 - 10,793,077Boards and Commissions 1,559,242 - 1,559,242Fire 1,800,803 - 1,800,803Mental Health and Mental Retardation 31,474,570 - 31,474,570Education 1,524,788 - 1,524,788Housing and Neighborhood Prevention 17,224,607 - 17,224,607Museums 6,144,613 - 6,144,613General Government 28,022,006 - 28,022,006Emergency Medical Services 317,886 - 317,886

Debt Service:Principal Retirement - 53,414,591 53,414,591Interest and Fiscal Charges - 37,084,954 37,084,954

Total Expenditures 157,890,379$ 90,499,545$ 248,389,924$ Deficiency of Revenues over Expenditures (37,975,889)$ (89,999,946)$ (127,975,835)$

OTHER FINANCING SOURCES (USES)Transfers In 83,948,060$ 84,279,034$ 168,227,094$ Transfers Out (28,292,929) (1,700,000) (29,992,929)Premium on Bonds Sold 7,958,910 4,700,371 12,659,281

Total Other Financing Sources and (Uses) 63,614,041$ 87,279,405$ 150,893,446$ Net Change in Fund Balance 25,638,152$ (2,720,541)$ 22,917,611$

Fund Balance at Beginning of Year 62,918,298 31,839,365 94,757,663Fund Balance at End of Year 88,556,450$ 29,118,824$ 117,675,274$

93



COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEOTHER NONMAJOR GOVERNMENTAL FUNDS

GENERAL FUND The General Fund is the general operating fund of the City which is used to account for all of the financial resources, except those required to be accounted for in another fund. 95

Original Budget Final Budget Actual

Variance - Positive

(Negative)

General Property TaxesReal Estate 334,332,664$ 334,332,664$ 339,482,242$ 5,149,578$ Personal Property 105,379,051 105,379,051 106,240,955 861,904Prior Year's Personal Property 142,770 142,770 33,068 (109,702)Interest on Delinquent Taxes 1,102,702 1,102,702 1,417,242 314,540

Total General Property Taxes 440,957,187$ 440,957,187$ 447,173,507$ 6,216,320$

Other Local TaxesGeneral Sales 43,807,065$ 43,807,065$ 46,328,049$ 2,520,984$ Utility 37,852,709 37,852,709 39,842,996 1,990,287Business Licenses 31,958,284 31,958,284 34,173,969 2,215,685Franchise Taxes - Cox Communications 4,795,420 4,795,420 4,526,609 (268,811)Automobile Licenses 7,951,117 7,951,117 9,129,316 1,178,199Bank Stock 2,612,918 2,612,918 1,554,429 (1,058,489)City Tax on Deeds 3,070,599 3,070,599 6,870,092 3,799,493City Tax on Wills 58,154 58,154 119,044 60,890Cigarette 12,425,250 12,425,250 12,243,891 (181,359)Amusement 4,089,508 4,089,508 4,228,092 138,584Hotel Taxes 18,605,576 18,605,576 19,103,583 498,007Restaurant Meals 35,732,639 35,732,639 38,144,787 2,412,148

Total Other Local Taxes 202,959,239$ 202,959,239$ 216,264,857$ 13,305,618$

Permits, Privilege Fees, and Regulatory LicensesDog and Cat Licenses 76,560$ 76,560$ 69,207$ (7,353)$ Use Permits 46,050 46,050 50,257 4,207Building Permits 1,367,321 1,367,321 1,754,329 387,008Electrical Permits 525,302 525,302 609,300 83,998Plumbing Permits 385,565 385,565 421,015 35,450Highway Permits 230,289 230,289 176,253 (54,036)Taxi Driver Permits 2,140 2,140 2,908 768Business Closing Permits 390 390 585 195Administrative Fees 52,343 52,343 83,053 30,710Bicycle Licenses 500 500 158 (342)Certificates 89,475 89,475 130,087 40,612Boat Landing and Launching Permits 2,843 2,843 630 (2,213)Pedestrian Bridge Fee - Atlantic Avenue 1,494 1,494 1,450 (44)Excavation and Soil Removal Fees - - 300 300Precious Metal Dealers Permits 8,630 8,630 8,000 (630)Encroachment Application Fees 8,720 8,720 6,900 (1,820)Vacation of Plats 200 200 140 (60)Fence Inspection Fees 4,500 4,500 5,700 1,200Non-Comforming Use Permits 1,772 1,772 250 (1,522)Mechanical Permits 546,936 546,936 689,459 142,523Sign Permits 57,523 57,523 54,626 (2,897)Fire Permits 192,000 192,000 169,149 (22,851)Special Events/Permit Fees 18,165 18,165 19,235 1,070Peddler's Permits 845 845 600 (245)Pavilion ATM Permit Fee - - 1,200 1,200



GENERAL FUNDSCHEDULE OF REVENUES COMPARED TO FINAL BUDGET

Source

(continued)96


Variance - Positive

(Negative)




Source

Permits, Privilege Fees, and Regulatory Licenses(continued)Moving and Hauling Permits 45,113$ 45,113$ 50,910$ 5,797$ Erosion and Sediment Control Permits - - 4,575 4,575Subdivision Inspection Fees - Highways 7,000 7,000 44,648 37,648Wetlands Permits 10,963 10,963 6,500 (4,463)Water and Sewer Connection Inspection Fees 100,326 100,326 84,480 (15,846)Highway Permit Inspection Fees 181,747 181,747 183,551 1,804Coastal Primary Sand Dune Fees 7,200 7,200 710 (6,490)Storage Tank Inspection 2,950 2,950 2,780 (170)Right of Way Permit Inspection Fees 45,309 45,309 49,615 4,306Transfer Fees 21,500 21,500 22,712 1,212Subdivision Approval Fees 68,705 68,705 104,318 35,613Yard Debris Trailers 212,500 212,500 179,426 (33,074)Zoning Change Fees 19,330 19,330 39,501 20,171ATM - Permit Fees - - 1,200 1,200Variance Fees 7,473 7,473 17,938 10,465Zoning Verification 5,345 5,345 6,350 1,005Reconsideration Conditions Fees 1,909 1,909 3,975 2,066Street Closures 3,000 3,000 101,312 98,312Board of Zoning Appeals - Variances 66,545 66,545 67,100 555

Total Permits, Privilege Fees, andRegulatory Licenses 4,426,478$ 4,426,478$ 5,226,392$ 799,914$

Fines and ForfeituresCourt Fines and Forfeitures 3,783,090$ 3,783,090$ 4,028,420$ 245,330$ Fire Lane Violations - - 34,840 34,840Parking Tickets - Penalties 243,384 243,384 322,157 78,773Forteited Deposits for Plans - - 1,050 1,050Overweight Vehicles Fees 222,160 222,160 150,210 (71,950)Wetlands/Dunes - Civil Charges 24,200 47,700 8,750 (38,950)Chesapeake Bay Preservation Fee 8,250 47,300 39,050 (8,250)DUI Response Reimbursements 80,955 80,955 117,689 36,734Red Light Violations 584,504 584,504 - (584,504)Zoning Fines 1,250 1,250 3,200 1,950

Total Fines and Forfeitures 4,947,793$ 5,010,343$ 4,705,366$ (304,977)$

From Use of Money and PropertyRevenue from Use of MoneyInterest on Bank Deposits 3,405,158$ 3,405,158$ 862,032$ (2,543,126)$ Interest - AIM Deposits 93 COP Debt Service - - 100,683 100,683Interest - SNAP Deposits 02 - - 109,190 109,190Interest - SNAP Deposits 03 - - 67,406 67,406Revenue from Use of PropertyRent - Virginia Power 600 600 600 -Rent - Adam Thoroughgood House 16,500 16,500 17,555 1,055Farmers Market-Merchants Dues and Promo Fees 5,040 5,040 3,370 (1,670)Rent - Rudee Inlet Property 4,000 4,000 5,650 1,650

(continued)97


Variance - Positive

(Negative)




Source

From Use of Money and PropertyRevenue from Use of Property (continued)Rent - Town Center -$ -$ 61,776$ 61,776$ Farmers Market Fees 77,483 77,483 86,212 8,729Public Telephone Commissions 16,043 16,043 4,431 (11,612)Vending Machine Concessions 1,356 1,356 1,170 (186)Rent DEWITT Cottage - - 1 1Fees - Miscellaneous Equiptment and Facilities 5,614 5,614 3,520 (2,094)Photocopying Machines 60,291 60,291 53,882 (6,409)Bicycle Auctions - Unclaimed Property 14,172 14,172 6,290 (7,882)Special Events - Farmers Market 3,500 3,500 - (3,500)Rent - Pavilion 460,000 460,000 489,779 29,779VB Symphony Orchestra 10,500 10,500 4,888 (5,612)Concessions 269,000 269,000 256,073 (12,927)Rent - 14th/15th Street Pier - - 3,500 3,500Rent - 1484 Laskin Road - - 17,375 17,375Rent-Hutchison Prop at Kempsville Vol Fire Dept 1 1 - (1)Boardwalk Telescope Fees - - 1,307 1,307Rent - Parking Lot - Old Kempsville Fire Station 1,800 1,800 1,800 -Rudee Inlet Parking Permits 50 50 259 209Farmers Market and Flea Market Vendor Fee 2,250 2,250 456 (1,794)Rent - Credit Union Municipal Center Site 1 1 1 -School Tours 2,000 2,000 4,475 2,475Rent - 2441 North Landing Road 6,600 6,600 - (6,600)Rent - Owl Creek Golf Center 22,000 22,000 22,000 -Rent - Kempsville and Indian River Road Property 1 1 1 -Rent - Central Library Meeting Rooms 604 604 750 146Rent - 1601 Sinking Creek - - 77 77Lease - Kellam Property - Courthouse Area 3,168 3,168 3,168 -Rent-Great Neck Rd Right Of Way Under Long Crk Brdg 1,240 1,240 1,380 140Rent - Law Library 60,000 60,000 60,000 -Rent - Adult Probation 81,650 81,650 83,374 1,724Rent - Community Diversion/Corrections 23,674 23,674 23,674 -Rent - Virginia Bar Association - JC 2,200 2,200 3,400 1,200Rent - Sprint Cellular Tower 8,245 8,245 9,111 866Rent - Other Properties 85,000 101,561 193,825 92,264Rent - Papa Johns 31st Street 26,400 26,400 12,950 (13,450)Rent - Rooms 1,500 1,500 469 (1,031)Rent - Nextel 19,856 19,856 - (19,856)Rent for Antennea 81,893 81,893 67,489 (14,404)Rent - Agricultural Land - - 1,565 1,565Rent - Water and Sewer Office 304,431 304,431 268,341 (36,090)Sale of Trash Containers 165,000 165,000 152,411 (12,589)

Total from Use of Money and Property 5,248,821$ 5,265,382$ 3,067,666$ (2,197,716)$

Charges For ServicesCity Clerk Services 75$ 75$ -$ (75)$ U S Passport Processing Fees - - 4,955 4,955

(continued)98


Variance - Positive

(Negative)




Source

Charges For Services (continued)Excess Fees - Clerk 1,703,200$ 1,703,200$ 2,642,841$ 939,641$ Court Costs 11,400 11,400 2,597 (8,803)Court Order Administrative Fees 30,000 30,000 26,260 (3,740)Public Defender Fees 49,346 49,346 70,201 20,855Sale of Police Reports 125,662 125,662 228,556 102,894Support Payments - Group Home - - 115 115Support Payments - Shelter Care - - 300 300Police - False Alarm Fees 41,330 41,330 49,566 8,236Fire Services - - 21,391 21,391Animal Disposal Fees 35,570 35,570 32,150 (3,420)Animal Adoption Fees 28,690 28,690 10,520 (18,170)Board and Impounding Fees 82,557 82,557 66,369 (16,188)Refuse Disposal Charges 324,000 324,000 434,570 110,570Video Services - - 8,646 8,646Refuse Disposal Charges - SPSA 1,119,926 1,119,926 1,135,313 15,387Sale of Methane Gas - Trashmore 64,980 64,980 64,980 -Obstetrical Services - - 2,126 2,126Court Mediation Fees 52,700 52,700 36,639 (16,061)FLH Gift Shop Sales 18,375 18,375 14,903 (3,472)FLH-Admissions-Special Events/General Tours 32,000 32,000 20,896 (11,104)Library Fines and Fees 253,370 253,370 274,319 20,949Beach Magazine 25,500 25,500 13,600 (11,900)Sale of Publications 140 140 8,583 8,443Sale of Maps - Planning Commission 656 656 1,600 944Pavilion Staff Services 260,000 260,000 230,409 (29,591)Maps and Digital Data 41,375 41,375 19,971 (21,404)Courthouse Maintenance 217,199 217,199 208,647 (8,552)Miscellaneous - - 362 362Site Plan Review Fees 278,129 278,129 359,977 81,848Reimbursement - FOIA - Req. Costs - - 387 387State's Attorney 8,800 8,800 14,693 5,893FLH Memberships - - 2,835 2,835Wellness Program - - 2,497 2,497Water and Sewer Direct Charges 548,730 548,730 548,818 88Water and Sewer In Lieu of Taxes 100,000 100,000 100,000 -Water and Sewer Utility Yard Maintenance 110,860 110,860 95,404 (15,456)Water and Sewer Landscape Services 273,773 273,773 218,777 (54,996)Clearing Contract Administration 29,800 29,800 24,600 (5,200)Construction Plan Review Fees 29,620 29,620 49,835 20,215Chesapeake Bay Preservation Act Variance Fees 10,009 10,009 4,670 (5,339)

Total Charges for Services 5,907,772$ 5,907,772$ 7,053,878$ 1,146,106$

Miscellaneous RevenueIndirect Costs - Public Utilities 1,841,581$ 1,841,581$ 1,773,217$ (68,364)$ Indirect Costs - Golf Courses 137,689 137,689 - (137,689)Indirect and Direct Costs - Storm Water Management 846,336 846,336 833,876 (12,460)Indirect Costs-Housing & Neighborhood Preservation 249,465 249,465 249,906 441

(continued)99


Variance - Positive

(Negative)




Source

Miscellaneous Revenue (continued)Indirect and Direct Costs - Resort Parking 94,439$ 94,439$ 94,439$ -$ Indirect and Direct Cost - TGIF 606,095 606,095 606,095 -Excess Property Processing 100 100 100,150 100,050Emergency Incidents - 3,391 - (3,391)Miscellaneous 455,112 465,112 51,400 (413,712)Returned Check Processing Charges 38,704 38,704 37,565 (1,139)Campaign Financing - - 100 100Donations - 65,844 131,382 65,538City Treasurer Charges 181,376 181,376 233,384 52,008Farm Classification - Late Filling Fees 140 140 80 (60)Pavilion Schedule Events Sales 1,650 1,650 1,310 (340)Sale of Properties 70,517 70,517 286,188 215,671Sale of Salvage Materials 200,000 200,000 176,227 (23,773)Refund of Surplus - Health Department - - 58,661 58,661Medicaid Out -Station 158,092 158,092 87,843 (70,249)Sale - Recyclable Materials 80,000 80,000 138,774 58,774Sale of Video Reproductions 2,100 2,100 621 (1,479)Beam Advertising 15,000 15,000 19,161 4,161Reimbursement - Responsible Parties - HAZMAT 23,000 41,352 23,121 (18,231)Reimbursement - DMV 200,000 200,000 14,440 (185,560)DMV-Special License-Dog & Cat Sterilization Fund - - 6,889 6,889

Total Miscellaneous Revenue 5,201,396$ 5,298,983$ 4,924,829$ (374,154)$

From CommonwealthABC Profits 249,321$ 249,321$ 648,524$ 399,203$ Share of Wine Tax 261,336 261,336 401,992 140,656Rolling Stock Tax 21,710 21,710 21,814 104Mobile Homes Sales Tax 49,535 49,535 37,670 (11,865)Passenger Car Rental Tax 733,419 733,419 846,628 113,209Demolished Vehicle 4,888 4,888 - (4,888)Reimbursement - Treasurer 733,384 733,384 700,964 (32,420)Reimbursement - Commissioner of the Revenue 688,899 688,899 656,113 (32,786)Reimbursement - General Registrar's Salary 85,153 85,153 76,205 (8,948)Reimbursement - Clerk of Circuit Court 60,000 60,000 74,200 14,200Reimbursement - Commonwealth's Attorney 1,854,853 1,854,853 1,774,259 (80,594)Reimbursement - Medical Examiner 5,520 5,520 5,280 (240)Reimbursement - Health Department Automobile 6,580 6,580 6,380 (200)Reimbursement - State Aid Law Enforcement 14,295,033 14,295,033 14,286,788 (8,245)Maintenance of Roads 25,143,315 25,870,900 25,870,902 2Recordation Fees 2,182,380 2,182,380 2,248,483 66,103Clean Community 44,518 44,518 38,909 (5,609)Public Assistance Grants 7,672,542 7,672,542 6,470,651 (1,201,891)Medicaid Out-Station - - 12,322 12,322Emergency Medical Services - - 3,151 3,151State Aid Library 267,540 267,540 267,668 128

Total From Commonwealth 54,359,926$ 55,087,511$ 54,448,903$ (638,608)$

(continued)100


Variance - Positive

(Negative)




Source

From Federal GovernmentPublic Law 97-258 -$ -$ 358$ 358$ Public Law 95-469 - Refuge Revenue Sharing Act 184,220 184,220 179,550 (4,670)Indirect Costs - Social Services 334,000 334,000 350,449 16,449Federal Emergency Management Agency 42,000 42,000 23,447 (18,553)SEVAMP Grant 31,572 31,572 18,802 (12,770)Public Assistance Grants 17,688,563 17,826,103 17,938,591 112,488Medicaid Out-Station - - 43,748 43,748

Total From Federal Government 18,280,355$ 18,417,895$ 18,554,945$ 137,050$

Other Local GovernmentsVirginia Beach Development Authority 105,348$ 105,348$ 118,166$ 12,818$

TOTAL REVENUES 742,394,315$ 743,436,138$ 761,538,509$ 18,102,371$

Other Financing SourcesTransfers In 452,177$ 504,516$ 618,407$ 113,891$

TOTAL REVENUE AND OTHERFINANCING SOURCES 742,846,492$ 743,940,654$ 762,156,916$ 18,216,262$

101


Variance - Positive

(Negative)Legislative Department

Municipal Council 468,135$ 487,785$ 462,857$ 24,928$ City Clerk 498,204 525,200 506,282 18,918

Total Legislative Department 966,339$ 1,012,985$ 969,139$ 43,846$

Executive Department City Manager 1,663,213$ 1,753,026$ 1,649,298$ 103,728$ Quality Service System 360,057 365,834 359,112 6,722Volunteer Council 66,435 81,925 72,205 9,720

Total Executive Department 2,089,705$ 2,200,785$ 2,080,615$ 120,170$

Law Department City Attorney 2,972,236$ 3,257,695$ 3,081,811$ 175,884$

Finance Department Director of Finance:

Director's Office 1,450,387$ 1,481,738$ 1,494,196$ (12,458)$ Comptroller's Office 1,424,647 1,529,085 1,429,099 99,986Payroll 520,135 531,850 514,965 16,885Purchasing 884,320 899,803 870,463 29,340Local Vehicle Registration 520,000 546,318 306,242 240,076

Total Director of Finance 4,799,489$ 4,988,794$ 4,614,965$ 373,829$

Commissioner of the Revenue 3,600,103 3,644,125 3,577,020 67,105Board of Equalization 19,040 21,787 21,716 71City Real Estate Assessor 2,393,628 2,504,161 2,485,598 18,563Treasurer 4,526,577 4,785,626 4,602,186 183,440

Total Finance Department 15,338,837$ 15,944,493$ 15,301,485$ 643,008$

Human Resources Department Director's Office 639,337$ 669,643$ 634,847$ 34,796$ Employee Relations 437,595 449,676 443,134 6,542Staffing and Placement 1,042,010 1,069,315 1,003,915 65,400Training and Development 406,245 418,652 387,954 30,698Police Services 129,529 133,318 115,460 17,858Benefits Administration 257,060 257,060 257,060 -Occupational Safety 328,047 334,823 332,738 2,085Employee Special Benefits 1,776,439 1,829,147 1,493,208 335,939Occupational Health 688,059 703,425 677,431 25,994

Total Human Resources Department 5,704,321$ 5,865,059$ 5,345,747$ 519,312$

(continued)102



GENERAL FUNDSCHEDULE OF EXPENDITURES COMPARED TO FINAL BUDGET


Variance - Positive

(Negative)




Judicial Department Circuit Court 964,552$ 1,015,418$ 955,872$ 59,546$ General District Court 252,396 318,780 302,914 15,866Juvenile and Domestic Relations - District Court 167,982 170,587 165,899 4,688Commonwealth's Attorney 4,319,464 4,426,027 4,381,308 44,719Misdemeanor Prosecution Team 310,152 238,262 216,363 21,899Consumer Affairs 287,807 296,142 304,822 (8,680)Victim/Witness 242,429 248,392 230,990 17,402Clerk of the Circuit Court 688,863 796,821 782,658 14,163Magistrates 152,017 152,197 148,187 4,010Juvenile Probation 3,713,728 3,777,572 3,776,824 748

Total Judicial Department 11,099,390$ 11,440,198$ 11,265,837$ 174,361$

Health Department Preventive Medicine 2,800,205$ 2,839,475$ 2,822,446$ 17,029$

Social Services Department Child Services 9,680,641$ 9,876,944$ 10,383,259$ (506,315)$ Benefit Programs 8,171,834 8,356,745 8,130,208 226,537Employment Services 10,799,118 10,977,926 8,821,277 2,156,649Community Services 884,823 905,653 866,805 38,848Adult Services 1,118,672 1,138,698 1,001,749 136,949Family Preservation Act 285,081 286,750 204,658 82,092Youth Intervention 122,397 122,397 129,889 (7,492)Administration 1,038,002 1,050,470 828,869 221,601

Total Social Services Department 32,100,568$ 32,715,583$ 30,366,714$ 2,348,869$

Police Department Director's Office 1,357,917$ 1,385,549$ 1,355,827$ 29,722$ Auxiliary Police 60,375 61,371 61,885 (514)Personnel and Training 1,948,675 2,089,683 1,935,445 154,238Crime Prevention 672,325 693,613 679,343 14,270Police Support 4,341,072 4,493,792 4,325,947 167,845Uniform Patrol 44,268,566 45,161,495 43,592,837 1,568,658Investigative Division 9,587,445 9,848,839 9,266,639 582,200Special Investigative Unit 3,867,384 3,912,917 3,726,321 186,596Animal Control 1,790,710 1,828,360 1,713,058 115,302

Total Police Department 67,894,469$ 69,475,619$ 66,657,302$ 2,818,317$

(continued)103


Variance - Positive

(Negative)




Public Works Department Director's Office 337,147$ 344,225$ 346,104$ (1,879)$ Administration Services 505,469 533,690 517,100 16,590Beach Management and Engineering 458,815 466,278 420,096 46,182Waste Management/Administration 795,135 807,164 805,278 1,886Bureau of Waste Disposal 10,145,654 10,172,534 10,775,393 (602,859)Bureau of Waste Collection 9,781,019 9,907,683 10,119,906 (212,223)Recycling Bureau 5,988,453 5,989,370 5,606,169 383,201Real Estate Office 2,107,856 2,129,720 2,060,960 68,760Engineering/Administration 946,147 966,558 940,617 25,941Design 358,960 364,968 356,201 8,767Surveys 1,026,828 1,055,439 991,050 64,389Drafting 407,477 430,741 505,802 (75,061)Traffic Engineering 5,991,297 6,251,580 5,934,512 317,068Project Management 1,361,562 1,382,890 1,297,629 85,261Construction 869,774 880,953 876,352 4,601Contracts 288,949 293,320 293,250 70Customer Service/Administration 871,319 897,404 873,371 24,033Planning, Estimating and Scheduling 570,654 583,707 584,009 (302)Infrastructure Maintenance Contracts 569,173 573,510 595,328 (21,818)Support Services and Systems Support 866,950 905,522 846,112 59,410System Support 690,804 853,915 762,206 91,709Street Maintenance 3,951,032 4,406,513 4,012,452 394,061Dredging Operations 1,216,130 1,423,068 1,421,498 1,570Technical Services 494,502 508,574 512,373 (3,799)Mosquito Control 1,870,887 2,029,355 1,927,801 101,554Traffic Operations 3,630,711 4,235,236 3,681,651 553,585Beach Operations 1,115,201 1,141,320 977,005 164,315Bridge Maintenance 299,497 311,954 263,673 48,281

Total Public Works Department 57,517,402$ 59,847,191$ 58,303,898$ 1,543,293$

Library Department Director's Office 965,581$ 991,290$ 880,218$ 111,072$ Central Library 2,507,494 2,561,101 2,489,129 71,972Great Neck Area Library 505,758 510,421 492,640 17,781Bayside Area Library 725,267 735,871 711,430 24,441Oceanfront Area Library 465,631 484,702 469,524 15,178Kempsville Area Library 1,095,027 1,110,134 1,068,311 41,823Windsor Woods Area Library 488,063 498,841 474,622 24,219Pungo/Blackwater Area Library 287,259 290,121 249,657 40,464Princess Anne Library 983,216 992,934 980,840 12,094Outreach Services 620,139 785,504 537,446 248,058Municipal Reference 206,956 211,221 193,717 17,504Cataloging Services 799,765 820,212 664,827 155,385Automated Services 1,880,819 1,964,325 1,851,896 112,429Collections Management 2,673,038 2,811,179 2,571,689 239,490

Total Library Department 14,204,013$ 14,767,856$ 13,635,946$ 1,131,910$

(continued)104


Variance - Positive

(Negative)




Planning Department Director's Office 1,335,194$ 1,423,336$ 1,342,027$ 81,309$ Comprehensive Planning 635,843 732,189 657,954 74,235Environmental Management 98,892 327,951 167,826 160,125Development Services 1,393,670 1,438,048 1,409,255 28,793Public Utilities - Development Services 200,345 205,144 203,623 1,521Current Planning 1,580,158 1,625,369 1,614,035 11,334Permits Administration 1,004,107 1,133,669 995,535 138,134Building Inspections 1,792,128 1,824,487 1,795,601 28,886Civil Inspections 705,499 720,715 700,654 20,061Weights & Measures - 35 - 35

Total Planning Department 8,745,836$ 9,430,943$ 8,886,510$ 544,433$

Agriculture Department Director's Office 328,791$ 337,374$ 334,536$ 2,838$ Virginia Cooperative Extension 266,652 268,794 252,978 15,816Wetlands and Dunes Restoration - 76,957 15,841 61,116Farmers Market 337,713 341,430 292,640 48,790

Total Agriculture Department 933,156$ 1,024,555$ 895,995$ 128,560$

Economic Development Department Director of Economic Development 1,849,107$ 1,900,986$ 1,798,044$ 102,942$

Convention and Visitor Development Director's Office 903,991$ 962,770$ 929,773$ 32,997$ Resort Programs and Special Events 1,763,997 2,021,486 1,949,020 72,466Tourism Marketing and Sales 326,424 338,587 336,099 2,488Convention Marketing and Sales 922,203 978,837 1,025,492 (46,655)Sports Marketing 227,568 230,682 236,194 (5,512)Pavilion 1,900,500 1,925,083 1,745,597 179,486

Total Convention and Visitor Development 6,044,683$ 6,457,445$ 6,222,175$ 235,270$

General Services Department Director's Office 647,735$ 684,206$ 534,136$ 150,070$ Management and Support 6,390,255 6,608,613 6,730,905 (122,292)Electrical Unit 1,207,466 1,301,126 1,252,669 48,457Heating and Air Conditioning 1,448,718 1,489,603 1,459,040 30,563General Maintenance 2,465,982 2,537,752 2,510,376 27,376Custodial 2,975,192 3,008,746 2,803,521 205,225Resort Building Maintenance 639,381 653,343 512,806 140,537Landscape Services Administration 2,363,880 2,555,964 2,349,084 206,880Grounds Maintenance 4,625,671 5,097,926 4,763,935 333,991Construction and Maintenance 3,200,974 3,300,907 3,041,608 259,299Resort Area Landscaping 1,349,955 1,415,119 1,404,338 10,781

Total General Services Department 27,315,209$ 28,653,305$ 27,362,418$ 1,290,887$

(continued)105


Variance - Positive

(Negative)




Boards and Commissions General Registrar 1,054,238$ 1,208,869$ 975,716$ 233,153$ Zoning Board of Appeals 39,383 39,743 35,683 4,060Mass Transit Operations 1,584,285 1,584,285 1,465,353 118,932Wetlands Board of Virginia Beach 13,925 13,925 8,036 5,889Audit Services 434,010 622,963 600,881 22,082COIG - General Operation Grants 630,525 642,638 559,582 83,056Microcomputer Support Charges 43,274 43,274 43,274 -Contemporary Arts Center 157,184 157,184 157,184 -Juvenile Detention Center 596,583 596,583 94,932 501,651Regional Participation 1,439,185 1,501,185 1,468,867 32,318Revenue Reimbursements 3,280,940 3,644,940 3,625,632 19,308Independent Financial Services 134,000 134,000 112,740 21,260

Total Boards and Commissions 9,407,532$ 10,189,589$ 9,147,880$ 1,041,709$

Fire Department Fire Marshal's Office 3,653,408$ 3,738,092$ 3,396,014$ 342,078$ Fire Operations 26,864,039 27,409,306 27,540,570 (131,264)Fire Training 1,165,729 1,217,767 1,106,150 111,617

Total Fire Department 31,683,176$ 32,365,165$ 32,042,734$ 322,431$

Communications and Information Technology Video Services 842,498$ 1,154,208$ 1,080,090$ 74,118$ Media and Communications 1,183,772 1,217,255 1,163,045 54,210Mail Services 237,324 255,118 242,864 12,254

Total Communications and Information Technology 2,263,594$ 2,626,581$ 2,485,999$ 140,582$

Housing and Neighborhood Preservation Code Enforcement 1,172,813$ 1,232,290$ 1,255,894$ (23,604)$ Nuisance and Abatement 307,404 313,215 274,855 38,360CARE Incentive Program 44,936 64,936 49,039 15,897

Total Housing and Neighborhood Preservation 1,525,153$ 1,610,441$ 1,579,788$ 30,653$

Museums Department Francis Land House 259,141$ 263,623$ 249,244$ 14,379$ Historical Preservation/Cultural Activities 199,592 211,059 207,415 3,644Adam Thoroughgood House - 165,521 63,428 102,093Cultural Activities 64,716 65,174 65,233 (59)

Total Museums Department 523,449$ 705,377$ 585,320$ 120,057$

Management Services Department Director's Office 1,414,798$ 1,480,784$ 1,412,190$ 68,594$

Emergency Medical Services Director's Office 656,946$ 678,070$ 663,157$ 14,913$ Operations 837,244 883,578 919,783 (36,205)Training 509,837 528,103 540,583 (12,480)Emergency Response System - - 627 (627)Regulation & Enforcement 960,764 1,088,168 1,006,813 81,355

Total Emergency Medical Services 2,964,791$ 3,177,919$ 3,130,963$ 46,956$ (continued)

106


Variance - Positive

(Negative)




Education School Operating 254,754,290$ 257,254,290$ 244,048,402$ 13,205,888$ School Wellness - 369,243 369,243 -School Capital Projects 1,895,231 13,102,509 13,102,509 -

Total Education 256,649,521$ 270,726,042$ 257,520,154$ 13,205,888$

Total Departmental Expenditures 564,007,490$ 589,716,071$ 562,901,110$ 26,814,961$

Other Financing Uses Transfers Out: School Instructional Technology -$ -$ 1,440,696$ (1,440,696)$ General Debt Service 66,962,404 66,962,404 66,372,793 589,611 Housing and Neighborhood Preservation 196,306 196,306 361,292 (164,986) Comprehensive Services Act 2,842,892 2,842,892 2,842,892 - Tourism Advertising Program 7,390,045 7,390,045 7,724,852 (334,807) Buildings Capital Projects 11,655,066 11,747,421 11,589,211 158,210 Engineering and Highways Capital Projects 18,119,233 19,546,818 19,546,818 - Parks and Recreation Capital Projects 3,537,472 3,587,472 3,587,472 - Sandbridge Special Service District 53,659 53,659 53,002 657 Major Projects 10,041,636 10,041,636 10,335,605 (293,969) Open Spaces 2,857,497 2,857,497 3,041,783 (184,286) Grants Consolidated 80,000 492,962 514,617 (21,655) Mental Health and Mental Retardation 9,676,397 10,057,913 10,057,913 - Sheriff's Department 7,009,428 7,259,627 7,257,383 2,244 Arts and Humanities Commission 434,250 434,250 434,250 - Inmate Services - 27,612 27,612 - Virginia Marine Science Museum 308,319 308,319 308,319 - Police Extradition - 3,052 3,052 - Tourism Growth Investment Program 11,801,465 11,801,465 12,312,046 (510,581) Agriculture Reserve 4,009,115 4,009,115 4,088,099 (78,984) Communications and Information Technology - 18,645 18,645 - Law Enforcement Block Grant - 19,457 21,241 (1,784) Law Library 150,000 150,000 150,000 - Parks and Recreation - Dedicated Tax 8,937,066 8,937,066 8,687,066 250,000 City Garage - 52,339 - 52,339 Parks and Recreation 4,284,162 4,284,162 4,284,162 - E-911 Emergency Communication 1,281,966 1,334,424 1,334,424 - School Wellness - - - - Storm Water Utility 50,576 206,058 206,058 - Public Utilities - 501 501 - Federal Section 8 14,000 14,000 14,000 - Federal Police Department Grant 687,069 687,069 502,229 184,840 Print Shop - 530 530 - Risk Management - 2,000,000 2,000,000 - School Reserve - 1,448,021 1,448,021 - Pendleton Child Service Center 495,371 513,376 513,376 -

Total Other Financing Uses 172,875,394$ 179,286,113$ 181,079,960$ (1,793,847)$

TOTAL EXPENDITURES AND OTHER FINANCING USES 736,882,884$ 769,002,184$ 743,981,070$ 25,021,114$

107

NONMAJOR SPECIAL REVENUE FUNDS The Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than special assessments or for major capital projects) that are legally restricted to be expended for specified purposes. The City has the following Special Revenue Funds: Federal Police Department Grant - accounts for funds used for salaries and benefits of non-supervisory sworn personnel to initiate or expand community policing efforts. Law Enforcement Block Grant - accounts for Federal Grant funds used for reducing crime and improving public safety. Law Library - accounts for the revenues and expenditures of providing legal information and research. Pendleton Child Service Center - accounts for the Commonwealth of Virginia, Federal, and Local revenues and expenditures related to the treatment of alleviating behavioral and learning problems in certain children. Sandbridge Tax Increment Financing - accounts for future development project costs for the Sandbridge area. E-911 Communication System - accounts for the revenues (utility taxes) and expenditures of the E-911 enhanced emergency telephone system installation, implementation and maintenance. Housing and Neighborhood Preservation - accounts for the administration of the Federal Community Development (CD) Block Grant capital improvement program and the costs associated with the delivery of financial services for the CD rental rehabilitation, and loan and grant programs within certain targeted areas of the City. Lynnhaven Mall Tax Increment Financing - accounts for transportation and parking improvements in this shopping district. Mental Health and Mental Retardation (MH/MR) - accounts for receipts from the Commonwealth of Virginia and the Federal Government and disbursements of those funds for mental health, mental retardation and substance abuse services. Town Center Special Service District – The Town Center Special Service District Special Revenue Fund was established to provide funds for the construction of public parking facilities in conjunction with realizing a long-term City Council goal of developing a town center in the Central Business District (CBD) within the Pembroke area of the City. Community Development Loan and Grant - accounts for home and property improvement federal loans and grants to qualified property owners in certain targeted areas within the City including Federal Section 108 funds used in the City's housing rehabilitation efforts in targeted neighborhoods. DEA Seized Property - accounts for City's share of Federal revenues derived from the sale of seized property by the Drug Enforcement Administration. Access Channel Support - accounts for receipts from cable franchisee in accordance with the Cable Communication Policy Act. Federal Housing Assistance Grant - accounts for the Federal HOME Program revenues and expenditures. Sportsplex - accounts for receipts and disbursement of funds for this recreational facility. Police Extradition - accounts for the cost of operating the airplane and associated revenues received from the State. Federal Section Eight Program - accounts for the Section Eight Program portion administered by the City of Virginia Beach. Comprehensive Services Act - accounts for State Funding for at-risk youth and families. (continued) 109

NONMAJOR SPECIAL REVENUE FUNDS (continued) Sheriff's Department - accounts for the cost of the care and custody of persons placed in the Virginia Beach Correctional Center by the Courts. Inmate Telephone - accounts for funds generated by inmate telephone use. Parks and Recreation - accounts for the cost of providing recreational activities in the City. Tourism Growth Investment - accounts for the TGIF projects and revenues and expenditures associated with these projects. School Reserve – accounts for funds held to better position the School Board to respond to unexpected fiscal events. Fire Store - accounts for the cost and revenue associated with the sale of fire memorabilia to the general public. Central Business District South Tax Increment Financing - accounts for funding of public parking and other public improvements in this business district. Police Services - accounts for the costs of operating a police store and associated revenue derived from the sale of police memorabilia to the general public. Sandbridge Special Service District - accounts for the revenues and expenditures associated with beach and shoreline restoration and maintenance with the Sandbridge District. EMS State Two-for-Life - accounts for supplements to the Department of Emergency Medical Services. Revenue supplements are based on a fee that the Commonwealth adds to its annual state inspection charge for vehicles. Fire Programs - supports fire fighter training and equipment needs. It receives its funding from a special fee that the Commonwealth assesses insurance companies that insure homes. Agriculture Reserve Program - accounts for revenue to promote and encourage the preservation of farmland in the rural southern portion of the City, in which agricultural uses predominate, by means which are voluntary rather than regulatory. Emergency FEMA - accounts for receipts from the Federal Emergency Management Agency (FEMA), and for the cost of providing urban search and rescue services in disaster situations. Tourism Advertising Program - accounts for revenue for increased tourist advertising. Revenue is generated by a charge per hotel room night. Proffer Impact - accounts for funds received from developers who donate funds to be used for neighborhood infrastructure development. School Instructional Technology - to increase the level of technology in the Schools. Virginia Marine Science Museum - accounts for the operations of the museum. Public Investment Protection Strategy - to account for the purchase of strategically located property. (continued) 110

NONMAJOR SPECIAL REVENUE FUNDS (continued) Arts and Humanities Commission - accounts for various grants related to arts and humanities within the City. Open Space - accounts for the acquisition and preservation of land in the City of Virginia Beach. Major Projects - was established to provide funding for the rebuilding of the Convention Center, replacement theater and a parking lot for the Virginia Marine Science Museum. Grants Consolidated - accounts for certain Commonwealth of Virginia and Federal Grants (with matching local funds, if required). 111

Federal Police Department

Grant

Law Enforcement Block Grant Law Library

Pendleton Child Service Center

SandbridgeTax Increment Financing

ASSETSCash and Investments -$ 156,789$ 80,542$ 298,919$ -$ Restricted Cash - - - - 6,744,150Accounts Receivable - - 21,075 203,560 -Interest Receivable - - - - -Loans Receivable - - - - -Due from Commonwealth - - - - -Due from Federal Government 85,048 - - - -Inventories - - 1,382 - -

Total Assets 85,048$ 156,789$ 102,999$ 502,479$ 6,744,150$

LIABILITIES AND FUNDBALANCESLiabilities: Vouchers and Accounts Payable -$ 7,150$ 10,645$ 16,608$ -$ Intergovernmental Payable - - - - - Due to Other Funds 85,048 - - - - Due to Commonwealth - - - - - Due to Federal Government - 25,257 - - - Deferred Revenue - - - - -

Total Liabilities 85,048$ 32,407$ 10,645$ 16,608$ -$

Fund Balances: Reserved for:

Encumbrances -$ 28,116$ -$ -$ -$ Loans - - - - -

Unreserved:Designated for Special Projects - - - - 6,744,150Undesignated - 96,266 92,354 485,871 -Total Fund Balances -$ 124,382$ 92,354$ 485,871$ 6,744,150$

Total Liabilities and Fund Balances 85,048$ 156,789$ 102,999$ 502,479$ 6,744,150$

112

JUNE 30, 2004


NONMAJOR SPECIAL REVENUE FUNDS

E-911 Communication

System

Housing and Neighborhood Preservation

Lynnhaven Mall Tax Increment Financing

Mental Health and Mental Retardation

Town Center Special Service

DistrictCD Loan and

GrantSub-Total

(continued)

-$ -$ -$ 3,375,745$ -$ 1,081,821$ 4,993,816$ 1,881,473 - 1,373,597 - 284,282 - 10,283,502

500,785 50 - 145,253 - 11,622 882,345- - - - - - -- - - 21,226 - 1,352,313 1,373,539- - - 962,525 - - 962,525- 1,873,731 - 135,794 - 50,672 2,145,245- - - - - - 1,382

2,382,258$ 1,873,781$ 1,373,597$ 4,640,543$ 284,282$ 2,496,428$ 20,642,354$

102,847$ 80,846$ 516,301$ 880,294$ -$ 128,096$ 1,742,787$ - - - - - - -- 1,792,935 - - - - 1,877,983- - - 179,446 - - 179,446- - - - - - 25,257- - - - - - -

102,847$ 1,873,781$ 516,301$ 1,059,740$ -$ 128,096$ 3,825,473$

20,926$ -$ -$ 403,194$ -$ -$ 452,236$ - - - 21,226 - 1,352,313 1,373,539

2,258,485 - 857,296 - 284,282 - 10,144,213- - - 3,156,383 - 1,016,019 4,846,893

2,279,411$ -$ 857,296$ 3,580,803$ 284,282$ 2,368,332$ 16,816,881$

2,382,258$ 1,873,781$ 1,373,597$ 4,640,543$ 284,282$ 2,496,428$ 20,642,354$

(continued)113

NONMAJOR SPECIAL REVENUE FUNDSJUNE 30, 2004


COMBINING BALANCE SHEET

DEA Seized Property

Access Channel Support

Federal Housing Assistance Grant Sportsplex

Police Extradition

ASSETSCash and Investments 1,435,002$ 73,101$ -$ 158,402$ -$ Restricted Cash - - - - -Accounts Receivable - - - - -Interest Receivable - - - - -Loans Receivable - - - - -Due from Commonwealth 17,408 - - - 100,819Due from Federal Government - - 1,210,100 - -Inventories - - - 287 -

Total Assets 1,452,410$ 73,101$ 1,210,100$ 158,689$ 100,819$

LIABILITIES AND FUNDBALANCESLiabilities: Vouchers and Accounts Payable 690$ -$ 4,476$ 20,280$ 20,237$ Intergovernmental Payable - - - - - Due to Other Funds - - 1,205,624 - 76,452 Due to Commonwealth - - - - - Due to Federal Government - - - - - Deferred Revenue - - - - 3,207

Total Liabilities 690$ -$ 1,210,100$ 20,280$ 99,896$


Encumbrances -$ -$ -$ -$ -$ Loans - - - - -

Unreserved:Designated for Special Projects - - - - -Undesignated 1,451,720 73,101 - 138,409 923Total Fund Balances 1,451,720$ 73,101$ -$ 138,409$ 923$

TOTAL LIABILITIES AND FUND BALANCES 1,452,410$ 73,101$ 1,210,100$ 158,689$ 100,819$

114



Federal Section Eight Program

Comprehensive Services Act

Sheriff's Department Inmate Telephone

Parks and Recreation

Sub-Total (continued)

27,585$ -$ 2,802,615$ 714,964$ 1,561,281$ 11,766,766$ - - - - - 10,283,502

1,191 - 102,416 49,132 31,368 1,066,452- - - 140 - 140- - - - - 1,373,539- 1,897,462 - - - 2,978,214

1,042,295 - 644 - - 4,398,284- - - - - 1,669

1,071,071$ 1,897,462$ 2,905,675$ 764,236$ 1,592,649$ 31,868,566$

128,945$ 1,104,277$ 113,340$ 9,096$ 436,911$ 3,581,039$ - - - - - -

930,567 82,417 - - - 4,173,043- - - - 3,337 182,783- - - - - 25,257- - - - 131,315 134,522

1,059,512$ 1,186,694$ 113,340$ 9,096$ 571,563$ 8,096,644$

-$ -$ 11,223$ 4,921$ 73,922$ 542,302$ - - - - - 1,373,539

- - - - - 10,144,21311,559 710,768 2,781,112 750,219 947,164 11,711,86811,559$ 710,768$ 2,792,335$ 755,140$ 1,021,086$ 23,771,922$

1,071,071$ 1,897,462$ 2,905,675$ 764,236$ 1,592,649$ 31,868,566$

(continued)115

JUNE 30, 2004


COMBINING BALANCE SHEETNONMAJOR SPECIAL REVENUE FUNDS

Tourism Growth

Investment School Reserve Fire Store

Central Business District South Tax

Increment Financing Police Services

ASSETSCash and Investments 804,381$ 1,448,021$ 3,241$ -$ 43,986$ Restricted Cash - - - 1,349,911 -Accounts Receivable 51,668 - - - -Interest Receivable - - - - -Loans Receivable - - - - -Due from Commonwealth - - - - -Due from Federal Government - - - - -Inventories 334 - 7,194 - 17,395

Total Assets 856,383$ 1,448,021$ 10,435$ 1,349,911$ 61,381$

LIABILITIES AND FUNDBALANCESLiabilities: Vouchers and Accounts Payable 42,114$ -$ -$ -$ 52$ Intergovernmental Payable - - - - - Due to Other Funds - - - - - Due to Commonwealth - - - - - Due to Federal Government - - - - - Deferred Revenue - - - - -

Total Liabilities 42,114$ -$ -$ -$ 52$


Encumbrances -$ -$ -$ -$ 1,182$ Loans - - - - -

Unreserved:Designated for Special Projects - - - 1,349,911 -Undesignated 814,269 1,448,021 10,435 - 60,147Total Fund Balances 814,269$ 1,448,021$ 10,435$ 1,349,911$ 61,329$

TOTAL LIABILITIES AND FUND BALANCES 856,383$ 1,448,021$ 10,435$ 1,349,911$ 61,381$

116



Sandbridge Special Service District

EMS State Two-For-Life Fire Programs

Agriculture Reserve Program

Emergency FEMA


-$ 80,280$ 213,382$ 14,826,804$ -$ 29,186,861$ 5,251,245 - - - - 16,884,658

- - - - - 1,118,120- - - - - 140- - - - - 1,373,539- - - - 289,778 3,267,992- - - - 1,060,702 5,458,986- - - - - 26,592

5,251,245$ 80,280$ 213,382$ 14,826,804$ 1,350,480$ 57,316,888$

-$ 21,857$ 17,571$ 2,768$ 49,257$ 3,714,658$ - - - - - -- - - - 3,186,256 7,359,299- - - - - 182,783- - - - - 25,257- - - - - 134,522-$ 21,857$ 17,571$ 2,768$ 3,235,513$ 11,416,519$

-$ 2,546$ 47,791$ 354$ 289,838$ 884,013$ - - - - - 1,373,539

5,251,245 - - - - 16,745,369- 55,877 148,020 14,823,682 (2,174,871) 26,897,448

5,251,245$ 58,423$ 195,811$ 14,824,036$ (1,885,033)$ 45,900,369$

5,251,245$ 80,280$ 213,382$ 14,826,804$ 1,350,480$ 57,316,888$

(continued)117

JUNE 30, 2004



Tourism Advertising

Program Proffer Impact

School Instructional Technology

Virginia Marine Science Museum

Public Investment Protection Strategy

ASSETSCash and Investments 1,727,296$ 480,717$ 1,524,788$ 515,917$ 1,078,952$ Restricted Cash - - - - -Accounts Receivable - - - 92,445 -Interest Receivable - - - - -Loans Receivable - - - - -Due from Commonwealth - - - 2,000 -Due from Federal Government - - - 9,189 -Inventories - - - 296,825 -

Total Assets 1,727,296$ 480,717$ 1,524,788$ 916,376$ 1,078,952$

LIABILITIES AND FUNDBALANCESLiabilities: Vouchers and Accounts Payable 633,538$ -$ -$ 223,721$ -$ Intergovernmental Payable - - 1,524,788 - - Due to Other Funds - - - - - Due to Commonwealth - - - - - Due to Federal Government - - - - - Deferred Revenue - - - 60,927 -

Total Liabilities 633,538$ -$ 1,524,788$ 284,648$ -$


Encumbrances 104,631$ -$ -$ 40,132$ -$ Loans - - - - -

Unreserved:Designated for Special Projects - - - - -Undesignated 989,127 480,717 - 591,596 1,078,952Total Fund Balances 1,093,758$ 480,717$ -$ 631,728$ 1,078,952$

TOTAL LIABILITIES AND FUND BALANCES 1,727,296$ 480,717$ 1,524,788$ 916,376$ 1,078,952$

118



Arts and Humanities Commission Open Space Major Projects

Grants Consolidated Totals

31,000$ 8,275,022$ 26,980,407$ 3,390,846$ 73,191,806$ - - - - 16,884,658- - - 22,000 1,232,565- - - - 140- - - - 1,373,539- - - 93,040 3,363,032- - - 1,131,117 6,599,292- - - - 323,417

31,000$ 8,275,022$ 26,980,407$ 4,637,003$ 102,968,449$

189$ 305$ 3,540$ 386,211$ 4,962,162$ - - - - 1,524,788- - - - 7,359,299- - - 139,859 322,642- - - 22,402 47,659- - - - 195,449

189$ 305$ 3,540$ 548,472$ 14,411,999$

-$ -$ 4,260$ 1,016,011$ 2,049,047$ - - - - 1,373,539

- - - 3,072,520 19,817,88930,811 8,274,717 26,972,607 - 65,315,97530,811$ 8,274,717$ 26,976,867$ 4,088,531$ 88,556,450$

31,000$ 8,275,022$ 26,980,407$ 4,637,003$ 102,968,449$

119

JUNE 30, 2004



Federal Police Department

Grant

Law Enforcement Block Grant Law Library

Pendleton Child Service Center

SandbridgeTax Increment Financing

REVENUESGeneral Property Taxes -$ -$ -$ -$ 3,163,448$ Other Local Taxes - - - - -From Use of Money and Property - - 5,092 1,130 41,415Charges for Services - - 228,582 - -Miscellaneous - - - 551 -From Other Local Governments - - - 219,878 -From Commonwealth - - - 103,000 -From Federal Government 286,634 343,408 - 12,558 -

Total Revenues 286,634$ 343,408$ 233,674$ 337,117$ 3,204,863$

EXPENDITURESCurrent: Judicial -$ 88,934$ -$ -$ -$ Library - - 357,372 - - Police 788,863 151,333 - - - Fire - - - - - Social Services - - - 1,391,535 - Public Works - - - - - Planning - - - - - Parks and Recreation - - - - - Education - - - - - Agriculture - - - - - Communication and Information Technology - - - - - Convention and Visitor Development - - - - - Housing and Neighborhood Preservation - - - - - Mental Health and Mental Retardation - - - - - Museums - - - - - General Government - - - - - Boards and Commissions - - - - - Emergency Medical Services - - - - -

Total Expenditures 788,863$ 240,267$ 357,372$ 1,391,535$ -$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (502,229)$ 103,141$ (123,698)$ (1,054,418)$ 3,204,863$

OTHER FINANCING SOURCES (USES)Transfers In 502,229$ 21,241$ 150,000$ 1,016,536$ -$ Transfers Out - - - - -Premium on Bonds Sold - - - - -

Total Other Financing Sources (Uses) 502,229$ 21,241$ 150,000$ 1,016,536$ -$

EXCESS OF REVENUE ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ 124,382$ 26,302$ (37,882)$ 3,204,863$

FUND BALANCES - JULY 1 - - 66,052 523,753 3,539,287

FUND BALANCES (DEFICITS) - JUNE 30 -$ 124,382$ 92,354$ 485,871$ 6,744,150$

120


CITY OF VIRGINIA BEACH, VIRGINIACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE


E-911 Communication

System

Housing and Neighborhood Preservation

Lynnhaven Mall Tax Increment

Financing

Mental Health and Mental Retardation

Town Center Special Service

DistrictCD Loan and

GrantSub-Total

(continued)

-$ -$ 1,237,843$ -$ 435,982$ -$ 4,837,273$ 5,935,367 - - - - - 5,935,367

31,911 - 6,976 31,249 491 32,363 150,627- 35,075 - 1,600,075 - 1,200 1,864,932

11,315 - - 60,416 - 91,665 163,947- - - - - - 219,878

793,007 - - 16,581,737 - - 17,477,744- 2,896,881 - 3,697,952 - 622,526 7,859,959

6,771,600$ 2,931,956$ 1,244,819$ 21,971,429$ 436,473$ 747,754$ 38,509,727$

-$ -$ -$ -$ -$ -$ 88,934$ - - - - - - 357,372- - - - - - 940,196- - - - - - -- - - - - - 1,391,535- - - - - - -- - - - - - -- - - - - - -- - - - - - -- - - - - - -

16,585 - - - - - 16,585- - - - - - -- 3,128,262 - - - 257,466 3,385,728- - - 31,474,570 - - 31,474,570- - - - - - -

7,360,575 - - - 312,696 - 7,673,271- - 1,106,774 - - - 1,106,774- - - - - - -

7,377,160$ 3,128,262$ 1,106,774$ 31,474,570$ 312,696$ 257,466$ 46,434,965$

(605,560)$ (196,306)$ 138,045$ (9,503,141)$ 123,777$ 490,288$ (7,925,238)$

1,423,526$ 361,292$ -$ 10,599,806$ -$ -$ 14,074,630$ (1,465,506) (164,986) - - - - (1,630,492)

106,095 - - - - - 106,09564,115$ 196,306$ -$ 10,599,806$ -$ -$ 12,550,233$

(541,445)$ -$ 138,045$ 1,096,665$ 123,777$ 490,288$ 4,624,995$

2,820,856 - 719,251 2,484,138 160,505 1,878,044 12,191,886

2,279,411$ -$ 857,296$ 3,580,803$ 284,282$ 2,368,332$ 16,816,881$

121(continued)



COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCENONMAJOR SPECIAL REVENUE FUNDS

DEA Seized Property

Access Channel Support

Federal Housing Assistance Grant Sportsplex

REVENUESGeneral Property Taxes -$ -$ -$ -$ Other Local Taxes - - - -From Use of Money and Property 7,750 1,676 9,580 34,310Charges for Services - - 450 15,552Miscellaneous - 65,183 103,055 -From Other Local Governments - - - -From Commonwealth 1,090,628 - - -From Federal Government 82,498 - 1,513,124 -

Total Revenues 1,180,876$ 66,859$ 1,626,209$ 49,862$

EXPENDITURESCurrent: Judicial 98,528$ -$ -$ -$ Library - - - - Police - - - - Fire - - - - Social Services - - - - Public Works - - - - Planning - - - - Parks and Recreation - - - - Education - - - - Agriculture - - - - Communication and Information Technology - - - - Convention and Visitor Development - - - 286,311 Housing and Neighborhood Preservation - - 1,626,209 - Mental Health and Mental Retardation - - - - Museums - - - - General Government - - - - Boards and Commissions - - - - Emergency Medical Services - - - -

Total Expenditures 98,528$ -$ 1,626,209$ 286,311$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 1,082,348$ 66,859$ -$ (236,449)$

OTHER FINANCING SOURCES (USES)Transfers In -$ -$ -$ -$ Transfers Out (200,000) - - -Premium on Bonds Sold - - - -

Total Other Financing Sources (Uses) (200,000)$ -$ -$ -$

EXCESS OF REVENUE ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES 882,348$ 66,859$ -$ (236,449)$

FUND BALANCES - JULY 1 569,372 6,242 - 374,858

FUND BALANCES (DEFICITS) - JUNE 30 1,451,720$ 73,101$ -$ 138,409$

122




Police Extradition

Federal Section Eight Program

Comprehensive Services Act

Sheriff's Department

Inmate Telephone

Parks and Recreation


-$ -$ -$ -$ -$ -$ 4,837,273$ - - - - - - 5,935,367- - - 4,960 6,700 619,102 834,705- - - 1,984,209 836,610 8,291,318 12,993,071- - 593,525 71,889 2 70,246 1,067,847- - - - - - 219,878

518,960 - 4,454,839 13,175,278 - 750 36,718,199- 10,999,853 - 255,918 - 750 20,712,102

518,960$ 10,999,853$ 5,048,364$ 15,492,254$ 843,312$ 8,982,166$ 83,318,442$

-$ -$ -$ 23,452,839$ 417,942$ -$ 24,058,243$ - - - - - - 357,372

521,089 - - - - - 1,461,285- - - - - - -- - 6,656,935 - - - 8,048,470- - - - - - -- - - - - - -- - - - - 21,744,286 21,744,286- - - - - - -- - - - - - -- - - - - - 16,585- - - - - - 286,311- 11,056,270 - - - - 16,068,207- - - - - - 31,474,570- - - - - - -- - - - - - 7,673,271- - - - - - 1,106,774- - - - - - -

521,089$ 11,056,270$ 6,656,935$ 23,452,839$ 417,942$ 21,744,286$ 112,295,374$

(2,129)$ (56,417)$ (1,608,571)$ (7,960,585)$ 425,370$ (12,762,120)$ (28,976,932)$

3,052$ 14,000$ 2,842,892$ 7,492,383$ 27,612$ 12,971,228$ 37,425,797$ - - (1,020,502) (600,000) (259,551) (2,100,000) (5,810,545)- - - - - - 106,095

3,052$ 14,000$ 1,822,390$ 6,892,383$ (231,939)$ 10,871,228$ 31,721,347$

923$ (42,417)$ 213,819$ (1,068,202)$ 193,431$ (1,890,892)$ 2,744,415$

- 53,976 496,949 3,860,537 561,709 2,911,978 21,027,507

923$ 11,559$ 710,768$ 2,792,335$ 755,140$ 1,021,086$ 23,771,922$

123(continued)




Tourism Growth Investment School Reserve Fire Store

Central Business District South Tax

Increment FinancingREVENUES

General Property Taxes -$ -$ -$ 1,503,178$ Other Local Taxes - - - -From Use of Money and Property 43,313 - 33 93,099Charges for Services - - - -Miscellaneous 281,596 - - -From Other Local Governments - - - -From Commonwealth - - - -From Federal Government - - - -

Total Revenues 324,909$ -$ 33$ 1,596,277$

EXPENDITURESCurrent: Judicial -$ -$ -$ -$ Library - - - - Police - - - - Fire - - - - Social Services - - - - Public Works - - - - Planning - - - - Parks and Recreation - - - - Education - - - - Agriculture - - - - Communication and Information Technology - - - - Convention and Visitor Development 2,487,081 - - - Housing and Neighborhood Preservation - - - - Mental Health and Mental Retardation - - - - Museums - - - - General Government - - - 67,988 Boards and Commissions - - - - Emergency Medical Services - - - -

Total Expenditures 2,487,081$ -$ -$ 67,988$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (2,162,172)$ -$ 33$ 1,528,289$

OTHER FINANCING SOURCES (USES)Transfers In 12,814,332$ 1,448,021$ -$ -$ Transfers Out (9,912,635) - - (1,535,604)Premium on Bonds Sold - - - 625,993

Total Other Financing Sources (Uses) 2,901,697$ 1,448,021$ -$ (909,611)$

EXCESS OF REVENUE ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES 739,525$ 1,448,021$ 33$ 618,678$

FUND BALANCES - JULY 1 74,744 - 10,402 731,233

FUND BALANCES (DEFICITS) - JUNE 30 814,269$ 1,448,021$ 10,435$ 1,349,911$

124




Police ServicesSandbridge Special

Service DistrictEMS State Two-

For-Life Fire Programs

Agriculture Reserve Program

Emergency FEMA


-$ 572,764$ -$ -$ -$ -$ 6,913,215$ - 457,108 - - - - 6,392,475

73,516 45,502 1,666 5,978 34,817 - 1,132,629- - - - - - 12,993,071- - - - - 500 1,349,943- - - - - - 219,878- - 212,311 634,532 - 3,875,157 41,440,199- - - - - 14,081,489 34,793,591

73,516$ 1,075,374$ 213,977$ 640,510$ 34,817$ 17,957,146$ 105,235,001$

-$ -$ -$ -$ -$ -$ 24,058,243$ - - - - - - 357,372

81,060 - - - - - 1,542,345- - - 423,122 - - 423,122- - - - - - 8,048,470- - - - - - -- - - - - - -- - - - - - 21,744,286- - - - - - -- - - - 182,853 - 182,853- - - - - - 16,585- - - - - - 2,773,392- - - - - - 16,068,207- - - - - - 31,474,570- - - - - - -- - - - - 20,136,317 27,877,576- - - - - - 1,106,774- - 286,250 - - - 286,250

81,060$ -$ 286,250$ 423,122$ 182,853$ 20,136,317$ 135,960,045$

(7,544)$ 1,075,374$ (72,273)$ 217,388$ (148,036)$ (2,179,171)$ (30,725,044)$

-$ 847,457$ -$ -$ 4,088,099$ -$ 56,623,706$ - - - (353,817) (1,593,652) - (19,206,253)- - - - - - 732,088-$ 847,457$ -$ (353,817)$ 2,494,447$ -$ 38,149,541$

(7,544)$ 1,922,831$ (72,273)$ (136,429)$ 2,346,411$ (2,179,171)$ 7,424,497$

68,873 3,328,414 130,696 332,240 12,477,625 294,138 38,475,872

61,329$ 5,251,245$ 58,423$ 195,811$ 14,824,036$ (1,885,033)$ 45,900,369$

125(continued)




Tourism Advertising

Program Proffer Impact

School Instructional Technology

Virginia Marine Science Museum

REVENUESGeneral Property Taxes -$ -$ -$ -$ Other Local Taxes - - - -From Use of Money and Property 22,779 1,242 59,304 21,389Charges for Services 861 - - 5,342,259Miscellaneous 42,375 88,529 - 605,239From Other Local Governments - - - -From Commonwealth - - - -From Federal Government - - - 200,365

Total Revenues 66,015$ 89,771$ 59,304$ 6,169,252$

EXPENDITURESCurrent: Judicial -$ -$ -$ -$ Library - - - - Police - - - - Fire - - - - Social Services - - - - Public Works - - - - Planning - - - - Parks and Recreation - - - - Education - - 1,524,788 - Agriculture - - - - Communication and Information Technology - - - - Convention and Visitor Development 8,019,685 - - - Housing and Neighborhood Preservation - - - - Mental Health and Mental Retardation - - - - Museums - - - 6,144,613 General Government - - - - Boards and Commissions - - - - Emergency Medical Services - - - -

Total Expenditures 8,019,685$ -$ 1,524,788$ 6,144,613$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (7,953,670)$ 89,771$ (1,465,484)$ 24,639$

OTHER FINANCING SOURCES (USES)Transfers In 7,724,853$ -$ 1,440,696$ 308,319$ Transfers Out - (1,243) - (75,000)Premium on Bonds Sold - - - -

Total Other Financing Sources (Uses) 7,724,853$ (1,243)$ 1,440,696$ 233,319$

EXCESS OF REVENUE ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (228,817)$ 88,528$ (24,788)$ 257,958$

FUND BALANCES - JULY 1 1,322,575 392,189 24,788 373,770

FUND BALANCES (DEFICITS) - JUNE 30 1,093,758$ 480,717$ -$ 631,728$

126




Public Investment Protection Strategy

Arts and Humanities Commission Open Space Major Projects

Grants Consolidated Totals

-$ -$ -$ -$ -$ 6,913,215$ - - - - - 6,392,475

11,199 111 120,709 1,169,087 - 2,538,449- - - - - 18,336,191- - - - 79,669 2,165,755- - - - - 219,878- - - - 1,330,422 42,770,621- - - - 5,583,950 40,577,906

11,199$ 111$ 120,709$ 1,169,087$ 6,994,041$ 119,914,490$

-$ -$ -$ -$ 1,138,145$ 25,196,388$ - - - - 8,783 366,155- - - - 412,667 1,955,012- - - - 1,377,681 1,800,803- - - - 431,603 8,480,073- - - 938,361 15,000 953,361- - - - 15 15- - 1,504 - 96,000 21,841,790- - - - - 1,524,788- - - - 11 182,864- - - - 36,544 53,129- - - - - 10,793,077- - - - 1,156,400 17,224,607- - - - - 31,474,570- - - - - 6,144,613- - 89,191 - 55,239 28,022,006- 452,468 - - - 1,559,242- - - - 31,636 317,886-$ 452,468$ 90,695$ 938,361$ 4,759,724$ 157,890,379$

11,199$ (452,357)$ 30,014$ 230,726$ 2,234,317$ (37,975,889)$

-$ 434,250$ 3,041,783$ 13,706,019$ 668,434$ 83,948,060$ - - (303,071) (8,707,362) - (28,292,929)- - 398,150 6,828,672 - 7,958,910-$ 434,250$ 3,136,862$ 11,827,329$ 668,434$ 63,614,041$

11,199$ (18,107)$ 3,166,876$ 12,058,055$ 2,902,751$ 25,638,152$

1,067,753 48,918 5,107,841 14,918,812 1,185,780 62,918,298

1,078,952$ 30,811$ 8,274,717$ 26,976,867$ 4,088,531$ 88,556,450$

127




Exhibit 16-A



REVENUESFrom Federal Government 509,606$ 509,606$ 286,634$ (222,972)$

EXPENDITURESUniform Patrol Grant FY04 1,196,675$ 1,196,675$ 788,863$ 407,812$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (687,069)$ (687,069)$ (502,229)$ 184,840$

OTHER FINANCING SOURCES (USES)Transfers In 687,069$ 687,069$ 502,229$ (184,840)$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ -$ -$ -$

FUND BALANCE - JULY 1 - - - -

FUND BALANCE - JUNE 30 -$ -$ -$ -$

128

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAFEDERAL POLICE DEPARTMENT GRANT SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFOR THE YEAR ENDED JUNE 30, 2004

Exhibit 16-B



REVENUESFrom Federal Government -$ 175,115$ 343,408$ 168,293$

EXPENDITURESLaw Enforcement -$ 194,572$ 240,267$ (45,695)$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES -$ (19,457)$ 103,141$ 122,598$

OTHER FINANCING SOURCES (USES)Transfers In -$ 19,457$ 21,241$ 1,784$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURES AND OTHER FINANCING USES -$ -$ 124,382$ 124,382$


FUND BALANCE - JUNE 30 -$ -$ 124,382$ 124,382$

129

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIALAW ENFORCEMENT BLOCK GRANT SPECIAL REVENUE FUND


Exhibit 16-C



REVENUESFrom Use of Money and Property 5,200$ 5,200$ 5,092$ (108)$ Charges for Services 240,000 240,000 228,582 (11,418)

Total Revenues 245,200$ 245,200$ 233,674$ (11,526)$

EXPENDITURESLaw Library 395,200$ 395,200$ 357,372$ 37,828$


OTHER FINANCING SOURCES (USES) Transfers In 150,000$ 150,000$ 150,000$ -$

EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES -$ -$ 26,302$ 26,302$

FUND BALANCE - JULY 1 66,052 66,052 66,052 -

FUND BALANCE - JUNE 30 66,052$ 66,052$ 92,354$ 26,302$

130

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIALAW LIBRARY SPECIAL REVENUE FUND


Exhibit 16-D



REVENUESFrom Use of Money and Property 16,000$ 16,000$ 1,130$ (14,870)$ Miscellaneous - - 551 551From Other Local Governments 219,877 219,877 219,878 1From Commonwealth 138,000 138,000 103,000 (35,000)From Federal Government 16,000 16,000 12,558 (3,442)

Total Revenues 389,877$ 389,877$ 337,117$ (52,760)$

EXPENDITURESPendleton Child Service Center 1,375,060$ 1,397,235$ 1,391,535$ 5,700$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (985,183)$ (1,007,358)$ (1,054,418)$ (47,060)$

OTHER FINANCING SOURCES (USES)Transfers In 993,223$ 1,011,228$ 1,016,536$ 5,308$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES 8,040$ 3,870$ (37,882)$ (41,752)$


FUND BALANCE - JUNE 30 531,793$ 527,623$ 485,871$ (41,752)$

131

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAPENDLETON CHILD SERVICE CENTER SPECIAL REVENUE FUND


Exhibit 16-E



REVENUESGeneral Property Taxes 3,209,183$ 3,209,183$ 3,163,448$ (45,735)$ From Use of Money and Property 209,033 209,033 41,415 (167,618)

Total Revenues 3,418,216$ 3,418,216$ 3,204,863$ (213,353)$

EXPENDITURESTotal Expenditures 3,418,216$ 3,418,216$ -$ 3,418,216$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES -$ -$ 3,204,863$ 3,204,863$

FUND BALANCE - JULY 1 3,539,287$ 3,539,287$ 3,539,287$ -$

FUND BALANCE - JUNE 30 3,539,287$ 3,539,287$ 6,744,150$ 3,204,863$

132

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIASANDBRIDGE TAX INCREMENT FINANCING SPECIAL REVENUE FUND


Exhibit 16-F



REVENUESFrom Use of Money and Property 44,775$ 44,775$ 31,911$ (12,864)$ Other Local Taxes 6,271,039 6,271,039 5,935,367 (335,672)Miscellaneous 10,655 10,655 11,315 660From Commonwealth 987,753 987,753 793,007 (194,746)

Total Revenues 7,314,222$ 7,314,222$ 6,771,600$ (542,622)$

EXPENDITURESCommunication Division 7,762,217$ 7,912,979$ 7,377,160$ 526,836$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (447,995)$ (598,757)$ (605,560)$ (15,786)$

OTHER FINANCING SOURCES (USES)Transfers In 1,371,068$ 1,423,526$ 1,423,526$ -$ Transfers Out (1,473,073) (1,473,073) (1,465,506) 16,550Premium on Bonds Sold - - 106,095 106,095

Total Other Financing Sources (Uses) (102,005)$ (49,547)$ 64,115$ 122,645$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (550,000)$ (648,304)$ (541,445)$ 106,859$

FUND BALANCE - JULY 1 2,820,856 2,820,856 2,820,856 -

FUND BALANCE - JUNE 30 2,270,856$ 2,172,552$ 2,279,411$ 106,859$

133

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAE-911 COMMUNICATION SYSTEM SPECIAL REVENUE FUND


Exhibit 16-G



REVENUESCharges for Services -$ -$ 35,075$ 35,075$ From Federal Government 2,713,600 2,713,600 2,896,881 183,281

Total Revenues 2,713,600$ 2,713,600$ 2,931,956$ 218,356$

EXPENDITURESHousing and Neighborhood Preservation 2,909,906$ 2,909,906$ 3,128,262$ (218,356)$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (196,306)$ (196,306)$ (196,306)$ -$

OTHER FINANCING SOURCES (USES)Transfers In 196,306$ 196,306$ 361,292$ 164,986$ Transfers Out - - (164,986) (164,986)

Total Other Financing Sources (Uses) 196,306$ 196,306$ 196,306$ -$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ -$ -$ -$



134

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAHOUSING AND NEIGHBORHOOD PRESERVATION SPECIAL REVENUE FUND


Exhibit 16-H



REVENUESGeneral Property Taxes 1,950,000$ 1,950,000$ 1,237,843$ (712,157)$ From Use of Money and Property - - 6,976 6,976

Total Revenues 1,950,000$ 1,950,000$ 1,244,819$ (705,181)$

EXPENDITURESMass Transit 100,000$ 100,000$ 118,932$ (18,932)$ Lynnhaven Mall 1,850,000 1,850,000 987,842 862,158

Total Expenditures 1,950,000$ 1,950,000$ 1,106,774$ 843,226$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES -$ -$ 138,045$ 138,045$

FUND BALANCE - JULY 1 719,251$ 719,251$ 719,251$ -$


135

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIALYNNHAVEN MALL TAX INCREMENT FINANCING SPECIAL REVENUE FUND


Exhibit 16-I



REVENUESFrom Use of Money and Property 74,298$ 74,298$ 31,249$ (43,049)$ Charges for Services 1,488,953 1,468,095 1,600,075 131,980Miscellaneous 21,161 25,911 60,416 34,505From Commonwealth 15,946,179 16,296,952 16,581,737 284,785From Federal Government 3,169,976 3,426,079 3,697,952 271,873

Total Revenues 20,700,567$ 21,291,335$ 21,971,429$ 680,094$

EXPENDITURESAdministration 2,747,502$ 2,745,022$ 2,251,500$ 493,522$ Mental Health 10,368,470 10,747,047 10,699,638 47,409Mental Retardation 12,169,316 12,663,490 12,549,601 113,889Substance Abuse 4,705,184 4,887,218 4,472,821 414,397MH/MR/SAS Grants 1,387,550 1,644,253 1,501,010 143,243

Total Expenditures 31,378,022$ 32,687,030$ 31,474,570$ 1,212,460$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (10,677,455)$ (11,395,695)$ (9,503,141)$ 1,892,554$

OTHER FINANCING SOURCES (USES)Transfers In 10,350,948$ 10,732,464$ 10,599,806$ (132,658)$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (326,507)$ (663,231)$ 1,096,665$ 1,759,896$



136

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAMENTAL HEALTH AND MENTAL RETARDATION SPECIAL REVENUE FUND


Exhibit 16-J



REVENUESGeneral Property Taxes 324,896$ 324,896$ 435,982$ 111,086$ From Use of Money and Property - - 491 491

Total Revenues 324,896$ 324,896$ 436,473$ 111,577$

EXPENDITURESTown Center Parking Operations 289,961$ 289,961$ 285,767$ 4,194$ Town Center Operations 34,935 34,935 26,929 8,006

Total Expenditures 324,896$ 324,896$ 312,696$ 12,200$




137

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIATOWN CENTER SPECIAL SERVICE DISTRICT SPECIAL REVENUE FUND


Exhibit 16-K



REVENUESFrom Use of Money and Property -$ -$ 32,363$ 32,363$ Charges for Services - - 1,200 1,200Miscellaneous 250,000 250,000 91,665 (158,335)From Federal Government 381,400 381,400 622,526 241,126

Total Revenues 631,400$ 631,400$ 747,754$ 116,354$

EXPENDITURESCD Loan and Grant 631,400$ 631,400$ 257,466$ 373,934$


FUND BALANCE - JULY 1 1,878,044$ 1,878,044$ 1,878,044$ -$

FUND BALANCE - JUNE 30 1,878,044$ 1,878,044$ 2,368,332$ 490,288$

138

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIACOMMUNITY DEVELOPMENT LOAN AND GRANT SPECIAL REVENUE FUND


Exhibit 16-L



REVENUESFrom Use of Money and Property -$ -$ 7,750$ 7,750$ From Commonwealth 96,212 96,212 1,090,628 994,416From Federal Government - - 82,498 82,498

Total Revenues 96,212$ 96,212$ 1,180,876$ 1,084,664$

EXPENDITURESCommonwealth Attorney 155,408$ 155,408$ 98,528$ 56,880$ Uniform Patrol 804 804 - 804

Total Expenditures 156,212$ 156,212$ 98,528$ 57,684$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (60,000)$ (60,000)$ 1,082,348$ 1,142,348$

OTHER FINANCING SOURCES (USES) Transfers Out -$ (200,000)$ (200,000)$ -$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (60,000)$ (260,000)$ 882,348$ 1,142,348$


FUND BALANCE - JUNE 30 509,372$ 309,372$ 1,451,720$ 1,142,348$

139

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIADEA SEIZED PROPERTY SPECIAL REVENUE FUND


Exhibit 16-M

Actual Amounts

REVENUESFrom Use of Money and Property 1,676$ Miscellaneous 65,183

Total Revenues 66,859$

EXPENDITURESAccess Channel Support -$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 66,859$

FUND BALANCE - JULY 1 6,242$

FUND BALANCE - JUNE 30 73,101$

140

CITY OF VIRGINIA BEACH, VIRGINIAACCESS CHANNEL SUPPORT SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEFOR THE YEAR ENDED JUNE 30, 2004

Exhibit 16-N



REVENUESFrom Use of Money and Property -$ -$ 9,580$ 9,580$ Charges for Services - - 450 450Miscellaneous 25,000 25,000 103,055 78,055From Federal Government 1,433,000 1,527,482 1,513,124 (14,358)

Total Revenues 1,458,000$ 1,552,482$ 1,626,209$ 73,727$

EXPENDITURESHome Program 1,458,000$ 1,552,482$ 1,626,209$ (73,727)$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES -$ -$ -$ -$

FUND BALANCE - JULY 1 -$ -$ -$ -$


141

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAFEDERAL HOUSING ASSISTANCE GRANT SPECIAL REVENUE FUND


Exhibit 16-O



REVENUESFrom Use of Money and Property 60,000$ 60,000$ 34,310$ (25,690)$ Charges for Services 15,000 15,000 15,552 552

Total Revenues 75,000$ 75,000$ 49,862$ (25,138)$

EXPENDITURESSportsplex Operations 381,724$ 395,223$ 286,311$ 108,912$




142

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIASPORTSPLEX SPECIAL REVENUE FUND


Exhibit 16-P



REVENUESCharges for Services 10,000$ 10,000$ -$ (10,000)$ From Commonwealth 190,000 570,000 518,960 (51,040)

Total Revenues 200,000$ 580,000$ 518,960$ (61,040)$

EXPENDITURESPolice Extradition 200,000$ 583,052$ 521,089$ 61,963$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES -$ (3,052)$ (2,129)$ 923$

OTHER FINANCING SOURCES (USES)Transfers In -$ 3,052$ 3,052$ -$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ -$ 923$ 923$

FUND BALANCE - JULY 1 -$ -$ -$ -$

FUND BALANCE - JUNE 30 -$ -$ 923$ 923$

143

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAPOLICE EXTRADITION SPECIAL REVENUE FUND


Exhibit 16-Q



REVENUESFrom Federal Government 11,338,085$ 11,446,715$ 10,999,853$ (446,862)$

EXPENDITURESRental Subsidy Program 11,352,085$ 11,460,715$ 11,056,270$ 404,445$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (14,000)$ (14,000)$ (56,417)$ (42,417)$

OTHER FINANCING SOURCES (USES)Transfers In 14,000$ 14,000$ 14,000$ -$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURES AND OTHER FINANCING USES -$ -$ (42,417)$ (42,417)$



144

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAFEDERAL SECTION EIGHT PROGRAM SPECIAL REVENUE FUND


Exhibit 16-R



REVENUESCharges for Services 9,000$ 9,000$ -$ (9,000)$ Miscellaneous 593,525 593,525 593,525 -From Commonwealth 4,342,395 4,342,395 4,454,839 112,444

Total Revenues 4,944,920$ 4,944,920$ 5,048,364$ 103,444$

EXPENDITURESSocial Services 6,639,960$ 6,639,960$ 6,656,935$ (16,975)$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (1,695,040)$ (1,695,040)$ (1,608,571)$ 86,469$

OTHER FINANCING SOURCES (USES)Transfers In 2,842,892$ 2,842,892$ 2,842,892$ -$ Transfers Out (1,147,852) (1,147,852) (1,020,502) 127,350

Total Other Financing Sources (Uses) 1,695,040$ 1,695,040$ 1,822,390$ 127,350$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ -$ 213,819$ 213,819$



145

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIACOMPREHENSIVE SERVICES ACT SPECIAL REVENUE FUND


Exhibit 16-S



REVENUESFrom Use of Money and Property -$ -$ 4,960$ 4,960$ Charges for Services 1,424,348 1,424,348 1,984,209 559,861Miscellaneous 74,460 74,460 71,889 (2,571)From Commonwealth 12,715,052 12,993,512 13,175,278 181,766From Federal Government 321,200 321,200 255,918 (65,282)

Total Revenues 14,535,060$ 14,813,520$ 15,492,254$ 678,734$

EXPENDITURESJudicial 22,440,283$ 24,009,195$ 23,452,839$ 556,356$


OTHER FINANCING SOURCES (USES)Transfers In 7,244,428$ 7,494,627$ 7,492,383$ (2,244)$ Transfers Out (600,000) (600,000) (600,000) -

Total Other Financing Sources (Uses) 6,644,428$ 6,894,627$ 6,892,383$ (2,244)$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (1,260,795)$ (2,301,048)$ (1,068,202)$ 1,232,846$



146

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIASHERIFF'S DEPARTMENT SPECIAL REVENUE FUND


Exhibit 16-T



REVENUESFrom Use of Money and Property 15,000$ 15,000$ 6,700$ (8,300)$ Miscellaneous - - 2 2Charges for Services 649,070 649,070 836,610 187,540

Total Revenues 664,070$ 664,070$ 843,312$ 179,242$

EXPENDITURESInmate Services 404,519$ 409,440$ 417,942$ 19,110$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 259,551$ 254,630$ 425,370$ 198,352$

OTHER FINANCING SOURCES (USES)Transfers In -$ 27,612$ 27,612$ -$ Transfers Out (259,551) (259,551) (259,551) -

Total Other Financing Sources (Uses) (259,551)$ (231,939)$ (231,939)$ -$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ 22,691$ 193,431$ 198,352$



147

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAINMATE SERVICES SPECIAL REVENUE FUND


Exhibit 16-U



REVENUESFrom Use of Money and Property 679,642$ 679,642$ 619,102$ (60,540)$ Charges for Services 9,217,792 9,217,792 8,291,318 (926,474)Miscellaneous 98,000 98,000 70,246 (27,754)From Commonwealth - - 750 750From Federal Government 2,500 2,500 750 (1,750)

Total Revenues 9,997,934$ 9,997,934$ 8,982,166$ (1,015,768)$

EXPENDITURESCitywide Recreation Programs 8,532,575$ 8,989,913$ 8,023,756$ 966,157$ Parks Operations and Services 2,444,511 2,474,343 2,451,917 22,426Recreation Centers 12,236,476 12,196,367 11,265,045 931,322City Beautification and Recreation 10,200 10,200 3,568 6,632



OTHER FINANCING SOURCES (USES)Transfers In 12,971,228$ 12,971,228$ 12,971,228$ -$ Transfers Out (1,108,754) (2,131,932) (2,100,000) 31,932


EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (1,363,354)$ (2,833,593)$ (1,890,892)$ 942,701$


FUND BALANCE - JUNE 30 1,548,624$ 78,385$ 1,021,086$ 942,701$

148

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAPARKS AND RECREATION SPECIAL REVENUE FUND


Exhibit 16-V



REVENUESFrom Use of Money and Property 135,382$ 135,382$ 43,313$ (92,069)$ Miscellaneous 230,000 230,000 281,596 51,596

Total Revenues 365,382$ 365,382$ 324,909$ (40,473)$

EXPENDITURESEconomic Development 1,119,000$ 1,119,000$ 969,000$ 150,000$ Direct Costs 606,095 606,095 606,095 -Mass Transit Operations 301,962 301,962 271,203 30,759Cultural Activities 50,500 50,500 50,500 -Contractual Services 628,508 628,508 590,283 38,225



OTHER FINANCING SOURCES (USES)Transfers In 12,121,465$ 12,121,465$ 12,814,332$ 692,867$ Transfers Out (9,780,782) (9,780,782) (9,912,635) (131,853)


EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ -$ 739,525$ 739,525$



149

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIATOURISM GROWTH INVESTMENT SPECIAL REVENUE FUND


Exhibit 16-W



REVENUES -$ -$ -$ -$

EXPENDITURESSchool Reserve -$ 1,448,021$ -$ 1,448,021$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES -$ (1,448,021)$ -$ 1,448,021$

OTHER FINANCING SOURCES (USES)Transfers In -$ 1,448,021$ 1,448,021$ -$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ -$ 1,448,021$ 1,448,021$


FUND BALANCE - JUNE 30 -$ -$ 1,448,021$ 1,448,021$

150

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIASCHOOL RESERVE SPECIAL REVENUE FUND


Exhibit 16-X

Actual Amounts

REVENUESFrom Use of Money and Property 33$

EXPENDITURES -$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 33$

FUND BALANCE - JULY 1 10,402$


151

CITY OF VIRGINIA BEACH, VIRGINIAFIRE STORE SPECIAL REVENUE FUND


Exhibit 16-Y



REVENUESGeneral Property Taxes 1,211,317$ 1,211,317$ 1,503,178$ 291,861$ From Use of Money and Property - - 93,099 93,099

Total Revenues 1,211,317$ 1,211,317$ 1,596,277$ 384,960$

EXPENDITURESCBD South -$ -$ 67,988$ (67,988)$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 1,211,317$ 1,211,317$ 1,528,289$ 316,972$

OTHER FINANCING SOURCES (USES)Transfers Out (1,482,525)$ (1,491,525)$ (1,535,604)$ (44,079)$ Premium on Bonds Sold - - 625,993 625,993

Total Other Financing Sources (Uses) (1,482,525)$ (1,491,525)$ (909,611)$ (581,914)$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (271,208)$ (280,208)$ 618,678$ 898,886$


FUND BALANCE - JUNE 30 460,025$ 451,025$ 1,349,911$ 898,886$

152

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIACENTRAL BUSINESS DISTRICT SOUTH TAX INCREMENT FINANCING SPECIAL REVENUE FUND


Exhibit 16-Z



REVENUESFrom Use of Money and Property 20,000$ 78,953$ 73,516$ (5,437)$

EXPENDITURESPolice Store 20,000$ 79,311$ 81,060$ (1,749)$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES -$ (358)$ (7,544)$ (7,186)$



153

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAPOLICE SERVICES SPECIAL REVENUE FUND


Exhibit 16-AA



REVENUESGeneral Property Taxes 562,988$ 562,988$ 572,764$ 9,776$ Other Local Taxes 340,184 340,184 457,108 116,924From Use of Money and Property 143,483 143,483 45,502 (97,981)

Total Revenues 1,046,655$ 1,046,655$ 1,075,374$ 28,719$

EXPENDITURESTotal Expenditures 1,787,401$ 1,787,401$ -$ 1,787,401$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (740,746)$ (740,746)$ 1,075,374$ 1,816,120$

OTHER FINANCING SOURCES (USES)Transfers In 740,746$ 740,746$ 847,457$ 106,711$




154

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIASANDBRIDGE SPECIAL SERVICE DISTRICT SPECIAL REVENUE FUND


Exhibit 16-AB



REVENUESFrom Use of Money and Property -$ -$ 1,666$ 1,666$ From Commonwealth 169,968 169,968 212,311 42,343

Total Revenues 169,968$ 169,968$ 213,977$ 44,009$

EXPENDITURESState Emergency Medical Assistance 169,968$ 189,486$ 286,250$ (96,764)$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES -$ (19,518)$ (72,273)$ (52,755)$



155

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAEMS STATE TWO-FOR-LIFE SPECIAL REVENUE FUND


Exhibit 16-AC



REVENUESFrom Use of Money and Property -$ -$ 5,978$ 5,978$ From Commonwealth 567,604 567,604 634,532 66,928

Total Revenues 567,604$ 567,604$ 640,510$ 72,906$

EXPENDITURESFire Programs 367,604$ 542,582$ 423,122$ 119,460$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 200,000$ 25,022$ 217,388$ 192,366$

OTHER FINANCING SOURCES (USES)Transfers Out (200,000)$ (353,817)$ (353,817)$ -$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ (328,795)$ (136,429)$ 192,366$



156

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAFIRE PROGRAMS SPECIAL REVENUE FUND


Exhibit 16-AD



REVENUESFrom Use of Money and Property -$ -$ 34,817$ 34,817$

EXPENDITURESAgriculture Reserve Program 1,490,543$ 1,490,897$ 182,853$ 1,308,044$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (1,490,543)$ (1,490,897)$ (148,036)$ 1,342,861$

OTHER FINANCING SOURCES (USES)Transfers In 4,009,115$ 4,009,115$ 4,088,099$ 78,984$ Transfers Out (2,518,572) (2,518,572) (1,593,652) 924,920

Total Other Financing Sources (Uses) 1,490,543$ 1,490,543$ 2,494,447$ 1,003,904$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ (354)$ 2,346,411$ 2,346,765$



157

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAAGRICULTURE RESERVE PROGRAM SPECIAL REVENUE FUND


Exhibit 16-AE



REVENUESMiscellaneous -$ -$ 500$ 500$ From Commonwealth - - 3,875,157 3,875,157From Federal Government - 10,000 14,081,489 14,071,489

Total Revenues -$ 10,000$ 17,957,146$ 17,947,146$

EXPENDITURESFEMA Operations -$ 10,174$ 20,136,317$ (20,126,143)$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES -$ (174)$ (2,179,171)$ (2,178,997)$


FUND BALANCE - JUNE 30 294,138$ 293,964$ (1,885,033)$ (2,178,997)$

158

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAEMERGENCY FEMA SPECIAL REVENUE FUND


Exhibit 16-AF



REVENUESFrom Use of Money and Property 61,612$ 61,612$ 22,779$ (38,833)$ Charges for Services 700 700 861 161Miscellaneous 40,000 40,000 42,375 2,375

Total Revenues 102,312$ 102,312$ 66,015$ (36,297)$

EXPENDITURESVisitor Information Center 1,242,097$ 1,377,979$ 979,874$ 398,105$ Tourism and Convention Advertising 6,300,260 7,268,739 7,039,811 228,928



OTHER FINANCING SOURCES (USES)Transfers In 7,390,045$ 7,390,045$ 7,724,853$ 334,808$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (50,000)$ (1,154,361)$ (228,817)$ 925,544$


FUND BALANCE - JUNE 30 1,272,575$ 168,214$ 1,093,758$ 925,544$

159

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIATOURISM ADVERTISING PROGRAM SPECIAL REVENUE FUND


Exhibit 16-AG

Actual Amounts

REVENUESMiscellaneous 88,529$ From Use of Money and Property 1,242


EXPENDITURESProffer -$


OTHER FINANCING SOURCES (USES)Transfers Out (1,243)$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES 88,528$

FUND BALANCE - JULY 1 392,189


160

CITY OF VIRGINIA BEACH, VIRGINIAPROFFER IMPACT SPECIAL REVENUE FUND


Exhibit 16-AH

Actual Amounts

REVENUESFrom Use of Money and Property 59,304$

EXPENDITURESEducation 1,524,788$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (1,465,484)$

OTHER FINANCING SOURCES (USES)Transfers In 1,440,696$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (24,788)$

FUND BALANCE - JULY 1 24,788

FUND BALANCE - JUNE 30 -$

161

CITY OF VIRGINIA BEACH, VIRGINIASCHOOL INSTRUCTIONAL TECHNOLOGY SPECIAL REVENUE FUND


Exhibit 16-AI



REVENUESFrom Use of Money and Property 25,000$ 25,000$ 21,389$ (3,611)$ Charges for Services 5,490,520 5,490,520 5,342,259 (148,261)Miscellaneous 178,847 178,847 605,239 426,392From Federal Government - 31,000 200,365 169,365

Total Revenues 5,694,367$ 5,725,367$ 6,169,252$ 443,885$

EXPENDITURESAdministration 1,292,898$ 1,242,022$ 1,266,178$ (24,156)$ Gift Shop 845,679 850,768 721,044 129,724Custodial Services 260,784 266,593 249,717 16,876IMAX Theater 784,770 787,140 701,094 86,046Education 482,762 492,119 441,168 50,951Exhibits 1,597,591 1,606,716 1,563,268 43,448Marketing 559,354 563,989 558,076 5,913Foundation 178,848 193,339 439,868 (246,529)Grants - 31,000 204,200 (173,200)

Total Expenditures 6,002,686$ 6,033,686$ 6,144,613$ (110,927)$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (308,319)$ (308,319)$ 24,639$ 332,958$

OTHER FINANCING SOURCES (USES)Transfers In 308,319$ 308,319$ 308,319$ -$ Transfers Out (75,000) (75,000) (75,000) -

Total Other Financing Sources (Uses) 233,319$ 233,319$ 233,319$ -$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (75,000)$ (75,000)$ 257,958$ 332,958$



162

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAVIRGINIA MARINE SCIENCE MUSEUM SPECIAL REVENUE FUND


Exhibit 16-AJ

Actual Amounts

REVENUESFrom Use of Money and Property 11,199$ Miscellaneous -


EXPENDITURES -$


FUND BALANCE - JULY 1 1,067,753$

FUND BALANCE - JUNE 30 1,078,952$

163

CITY OF VIRGINIA BEACH, VIRGINIAPUBLIC INVESTMENT PROTECTION STRATEGY SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2004

Exhibit 16-AK



REVENUESFrom Use of Money and Property -$ -$ 111$ 111$

EXPENDITURESBoards and Commissions 434,250$ 481,750$ 452,468$ 29,282$


OTHER FINANCING SOURCES (USES)Transfers In 434,250$ 434,250$ 434,250$ -$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES -$ (47,500)$ (18,107)$ 29,393$



164

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAARTS AND HUMANITIES COMMISSION SPECIAL REVENUE FUND


Exhibit 16-AL




EXPENDITURESOpen Space Program 1,441,603$ 1,441,603$ 90,695$ 1,350,908$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (1,441,603)$ (1,441,603)$ 30,014$ 1,471,617$

OTHER FINANCING SOURCES (USES)Transfers In 2,857,497$ 2,857,497$ 3,041,783$ 184,286$ Transfers Out (1,415,894) (1,415,894) (303,071) 1,112,823Premium on Bonds Sold - - 398,150 398,150





165

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAOPEN SPACE SPECIAL REVENUE FUND


Exhibit 16-AM



REVENUESFrom Use of Money and Property 363,257$ 363,257$ 1,169,087$ 805,830$

EXPENDITURESMajor Projects Expenditures 9,499,585$ 5,926,760$ 938,361$ 4,988,399$

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (9,136,328)$ (5,563,503)$ 230,726$ 5,794,229$

OTHER FINANCING SOURCES (USES)Transfers In 13,309,214$ 13,309,214$ 13,706,019$ 396,805$ Transfers Out (4,172,886) (7,747,886) (8,707,362) (959,476)Premium on Bonds Sold - - 6,828,672 6,828,672


EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURES AND OTHER FINANCING USES -$ (2,175)$ 12,058,055$ 12,060,230$



166

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIAMAJOR PROJECTS SPECIAL REVENUE FUND


DEBT SERVICE FUND The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. 167

Exhibit 17




EXPENDITURESPrincipal 58,010,608$ 58,033,786$ 53,414,591$ 4,619,195$ Interest 35,329,757 38,904,757 37,084,954 1,819,803



OTHER FINANCING SOURCES (USES)Transfers In 86,870,624$ 90,468,802$ 84,279,034$ (6,189,768)$ Transfers Out - (1,700,000) (1,700,000) -Premium on Bonds Sold - - 4,700,371 4,700,371

Total Other Financing Sources (Uses) 86,870,624$ 88,768,802$ 87,279,405$ (1,489,397)$

EXCESS OF REVENUES ANDOTHER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTHER FINANCING USES (6,469,741)$ (8,169,741)$ (2,720,541)$ 5,449,200$

FUND BALANCE - JULY 1 31,839,365 31,839,365 31,839,365 31,839,365FUND BALANCE - JUNE 30 25,369,624$ 23,669,624$ 29,118,824$ 37,288,565$

168

Budget Amounts

CITY OF VIRGINIA BEACH, VIRGINIADEBT SERVICE FUND


GENERAL GOVERNMENT CAPITAL PROJECTS

The General Government Capital Projects Fund is used to account for all revenues and expenditures related to the construction of the City’s fixed assets and infrastructure. The categories of projects accounted for in this fund are engineering and highways, buildings, parks and recreation, coastal and economic and tourism development.

169

Exhibit 18

Project Budget Prior Years' Current Year Total Outstanding AvailableNumber Project Name To Date Expenditures Expenditures Expenditures Encumbrances Balance

2007000 SHIPP'S CORNER RD BRIDGE REPLACEMENT $ 1,426,000 $ 37,601 $ 104,197 $ 141,798 $ 102,364 $ 1,181,838 2018000 MAJOR INTERSECTION IMPROVEMENTS 3,284,799 100,261 18,712 118,973 135,479 3,030,347 2021000 RURAL ROAD IMPROVEMENTS 5,155,959 2,201,004 515,836 2,716,840 1,408,302 1,030,817 2025000 WITCHDUCK ROAD - PHASE II 724,000 1,827 87,442 89,269 264,024 370,707 2029000 HARRIS ROAD 1,513,000 202,381 964,035 1,166,416 193,851 152,733 2031000 STREET RECONSTRUCTION 1,441,151 448,624 - 448,624 35,371 957,156 2039000 COMPUTERIZED TRAFFIC SIGNAL SYS UPGRADE/REPLACEMENT 6,165,833 23,506 1,929,565 1,953,071 4,212,762 - 2043000 MISCELLANEOUS CORRIDOR STUDIES 47,332 - 3,154 3,154 41,220 2,958 2048000 PRINCESS ANNE RD/KEMPSVILLE RD INTERSECTION IMP 22,433,000 2,185,972 1,833,018 4,018,990 1,880,988 16,533,022 2052000 TRAFFIC SIGNAL REHABILITATION 1,050,000 807,293 186,349 993,642 17,038 39,320 2065000 ELBOW ROAD EXTENDED - PHASE II-A 2,200,000 74,189 137,737 211,926 42,419 1,945,655 2067000 SANDBRIDGE ROAD SAFETY IMPROVEMENTS 539,164 160,114 258 160,372 54,447 324,345 2071000 BAKER ROAD EXTENDED 250,000 - - - - 250,000 2072000 FIRST COLONIAL RD/VB BLVD INTERSECTION IMPROVEMENT 3,161,000 35,748 135,510 171,258 307,244 2,682,498 2073000 BUCKNER ROAD EXTENDED 664,571 1,250 - 1,250 - 663,321 2074000 LYNNHAVEN PARKWAY INTERCHANGE/GREAT NECK RD 3,300,000 2,517,100 14,246 2,531,346 480,300 288,354 2075000 SALEM ROAD - PHASE II 80,000 - 8,244 8,244 - 71,756 2076000 LASKIN ROAD GATEWAY 10,883,647 338,244 226,750 564,994 8,392,368 1,926,285 2083000 DIAMOND SPRINGS ROAD BRIDGE REPLACEMENT 300,000 - - - 164,515 135,485 2087000 WEST NECK ROAD 110,000 - - - 100,000 10,000 2089000 SOUTHEASTERN PARKWAY AND GREENBELT (PARTIAL) 15,726,744 12,863,033 2,168,071 15,031,104 597,766 97,874 2090000 NIMMO PRKWY-PH I/WEST NECK RD EXT 5,180,000 4,444,528 375,805 4,820,333 238,208 121,459 2091000 NIMMO PARKWAY - PHASES II AND III 60,000 26,158 14,539 40,697 8,572 10,731 2107000 SEABOARD ROAD 2,437,073 372,193 227,347 599,540 65,064 1,772,469 2115000 SHORE DRIVE INTERSECTIONS - DEMO PROJECT 2,035,000 86,559 118,974 205,533 61,227 1,768,240 2121000 NIMMO PARKWAY - PHASE V-A 498,905 7,959 4,174 12,133 - 486,772 2122000 GUM SWAMP BRIDGE 2,932,763 2,833,771 - 2,833,771 - 98,992 2137000 GREAT NECK RD IV/LONDON BRIDGE RD III 6,323,694 4,240,009 780,592 5,020,601 1,298,733 4,360 2139000 KEMPSVILLE ROAD - PHASE III 930,130 773,628 - 773,628 80,826 75,676 2140000 LONDON BRIDGE ROAD - PHASE II 1,671,534 732,573 11,149 743,722 717,629 210,183 2145000 WESLEYAN DRIVE 20,000 - 9,122 9,122 5,350 5,528 2149000 BIRDNECK ROAD - PHASE II 9,897,014 821,621 219,059 1,040,680 645,162 8,211,172 2151000 SANDBRIDGE CORRIDOR IMPROVEMENTS 2,915,000 1,370,060 259,530 1,629,590 972,459 312,951 2152000 ELBOW ROAD EXTENDED - PHASE II 5,858,000 49,091 738,721 787,812 1,538,340 3,531,848 2156000 LASKIN ROAD - PHASE I (VDOT) 5,444,538 1,477,130 63,682 1,540,812 217,153 3,686,573

CITY OF VIRGINIA BEACH, VIRGINIAGENERAL GOVERNMENT CAPITAL PROJECTS


ENGINEERING AND HIGHWAY CAPITAL PROJECTS

(continued)170

Exhibit 18




2157000 LYNNHAVEN PARKWAY - PHASE IX $ 2,116,356 $ 534,796 $ 50,346 $ 585,142 $ 540,340 $ 990,874 2158000 HOLLAND ROAD - PHASE VI (PARTIAL) 802,100 30,140 7,863 38,003 50,000 714,097 2165000 LASKIN ROAD - PHASE II 7,345,866 195,411 75,420 270,831 1,354,483 5,720,552 2167000 LYNNHAVEN PARKWAY - PHASE XI 599,346 62,260 21,846 84,106 100,000 415,240 2171000 CITY WIDE STREET LIGHTING IMPROVEMENTS 100,000 61,668 36,638 98,306 265 1,429 2172000 LED TRAFFIC SIGNAL UPGRADE 100,000 64,494 19,012 83,506 - 16,494 2175000 INDEPENDENCE BOULEVARD - PHASE IV-B & C 12,261,863 8,623,594 208,374 8,831,968 3,395,398 34,497 2176000 TRANSPORTATION NETWORK ANALYSIS 650,000 - 21,482 21,482 16,890 611,628 2179000 ACCESS ROAD FOR ELEMENTARY SCHOOL 2005 985,000 113,017 127,862 240,879 123,751 620,370 2195000 PRINCESS ANNE RD-INTERSECTION IMPROVEMENTS 450,000 - 144,067 144,067 299,472 6,461 2209000 COURTHOUSE LOOP NORTH - PHASE II 1,863,898 1,561,182 2,779 1,563,961 170,851 129,086 2211000 SECONDARY STREET IMPROVEMENTS 1,071,686 926,548 71,903 998,451 2,358 70,877 2256000 INDIAN RIVER ROAD - PHASE VII 10,388,000 25,012 91,348 116,360 1,655,837 8,615,803 2257000 LYNNHAVEN PARKWAY/VOLVO PARKWAY 653,200 2,881 10,810 13,691 10,000 629,509 2261000 CITY LINE ROAD (PARTIAL) 5,200 4,878 - 4,878 - 322 2263000 MAJOR BRIDGE REHABILITATION 3,906,475 2,897,376 178,231 3,075,607 542,397 288,471 2264000 LASKIN ROAD - PHASE III 15,610 6,899 - 6,899 - 8,711 2268000 WETLANDS MITIGATION BANKING 872,000 130,364 5,150 135,514 5,543 730,943 2279000 KEMPSVILLE ROAD/PROVIDENCE RD INTERSEC 1,814,560 1,303,947 12,504 1,316,451 496,369 1,740 2284000 STREET ASPHALT RESURFACING 36,488,216 29,461,356 6,204,405 35,680,914 39,575 767,727 2285000 TRAFFIC SAFETY IMPROVEMENTS - PHASE II 12,438,557 6,711,510 1,889,890 8,601,400 2,836,601 1,000,556 2305000 PRINCESS ANNE RD - PH IV (FERRELL - PH 5,885,434 1,832,605 23,813 1,856,418 1,002,055 3,026,961 2833000 FIRST COLONIAL RD-PH III & OCEANA BLVD 2,974,640 2,036,377 279,215 2,315,592 419,828 239,220 2837000 VARIOUS COST PARTICIPATION PROJECTS 1,776,561 1,241,538 3,000 1,244,538 532,023 - 2930000 SALEM ROAD 3,761 - 3,761 3,761 - - 2931000 WITCHDUCK ROAD - PHASE I 512,000 592 112,605 113,197 392,465 6,338

TOTAL ENGINEERING & HIGHWAY CAPITAL PROJECTS $ 232,740,180 $ 97,061,872 $ 20,758,142 $ 117,835,167 $ 38,265,682 $ 76,639,331

3003000 JUDICIAL CENTER PARKING EXPANSION $ 880,500 $ 70,750 $ 550,355 $ 621,105 $ 133,597 $ 125,798 3005000 UNDERGROUND STORAGE TANKS-CITY 10,247,462 9,436,323 165,237 9,601,560 31,051 614,851 3008000 COMPUTER AIDED DISPATCH SYSTEM 1,002,161 1,002,161 - 1,002,161 - - 3009000 PUBLIC SAFETY EMERGENCY COMMUNICATIONS SYSTEM 542,830 - - - - 542,830

(continued)

ENGINEERING AND HIGHWAY CAPITAL PROJECTS (continued)

171

BUILDING CAPITAL PROJECTS

Exhibit 18




3011000 BEACH HOUSE ACQUISITION AND REHABILITATION $ 20,381 $ - $ - $ - $ 11,929 $ 8,452 3012000 SKILLQUEST ACQUISITION AND REHABILITATION 457,196 352,010 89,147 441,157 8,499 7,540 3013000 BOYS' CLUB/GIRLS' CLUB - GREEN RUN LIBRARY 103,735 81,684 - 81,684 1,122 20,929 3014000 ODU/NSU GRADUATE CENTER - START UP TECHNOLOGY 500,000 500,000 - 500,000 - - 3017000 FIRE AND RESCUE STATION - FIRST LANDING 3,832,000 853,419 49,925 903,344 281,885 2,646,771 3020000 ADA BUILDING MODIFICATIONS 2,392,000 2,194,433 9,873 2,204,306 20,383 167,311 3022000 ASBESTOS REMOVAL - CITY BUILDINGS 163,870 139,976 - 139,976 - 23,894 3024000 VIRGINIA BEACH JUVENILE DETENTION CENTER 12,684,395 3,727,985 6,666,223 10,394,208 1,339,366 950,821 3027000 LAW ENFORCEMENT TRAINING ACADEMY 2,026,616 1,320,037 76,864 1,396,901 422,518 207,197 3033000 FIRE FACILITY REHABILITATION AND RENEWAL 2,036,997 1,677,137 132,570 1,809,707 80,315 146,975 3038000 VARIOUS BUILDINGS REHABILITATION AND RENEWAL 9,208,469 5,918,355 676,530 6,594,885 363,846 2,249,738 3100000 VARIOUS BUILDINGS HVAC REHABILITATION AND RENEWAL 5,069,216 3,928,049 475,461 4,403,510 150,325 515,381 3107000 FERRY FARM HOUSE RESTORATION 77,348 43,852 - 43,852 - 33,496 3109000 LIBRARY AUTOMATION SYSTEM REPLACEMENT 1,300,000 1,121,685 92,320 1,214,005 50,450 35,545 3110000 ROLLING STOCK BACKLOG REDUCTION 402,863 387,986 - 387,986 - 14,877 3111000 CITY/SCHOOL CONSOLIDATED FUELING FACILITIES 1,861,727 1,565,197 - 1,565,197 - 296,530 3113000 SOCIAL SERVICES AUTOMATION 260,000 240,864 - 240,864 - 19,136 3114000 BEAUTIFICATION PILOT PROJECT 475,000 329,252 41,619 370,871 - 104,129 3118000 FIRE TRAINING CENTER IMPROVEMENTS 3,131,811 1,827,591 671,030 2,498,621 190,319 442,871 3173000 EMER COMMUNICATIONS/EMER OPS CENTERS 10,456,000 421,820 1,581,307 2,003,127 5,808,722 2,644,151 3175000 SOUTH ROSEMONT AREA LIBRARY 331,452 - 40,119 40,119 218,496 72,837 3185000 FIRE APPARATUS REPLACEMENT 5,600,000 2,283,130 797,741 3,080,871 1,955,257 563,872 3194000 CONTEMPORARY ART CENTER ADDITION 1,084,264 668,017 74,060 742,077 - 342,187 3195000 REDISTRICTING - 2000 CENSUS 200,000 61,328 - 61,328 - 138,672 3200000 REV ASSESSMENT & COLLECTION SYS 8,902,000 1,613,635 499,112 2,112,747 736,714 6,052,539 3207000 CIT-PH 2 PERMITS/INSPECT INTRACTV INTRNT 100,000 - - - - 100,000 3208000 CIT-CODE ENFORCEMENT DATABASE 403,320 - 98,910 98,910 76,420 227,990 3212000 CIT - IT NETWORK INFRASTRUCTURE REPLACE 406,000 - 119,052 119,052 96,949 189,999 3213000 CIT - MAINFRAME REPLACEMENT 755,000 689,383 9,162 698,545 - 56,455 3214000 CIT - CODE ENFORCEMENT DATABASE 500,000 - 2,316 2,316 - 497,684 3216000 CIT - SECTION 8 DATABASE REPLACEMENT 140,000 38,017 33,492 71,509 - 68,491 3217000 CIT - MH CLIENT INFORMATION SYSTEM 1,000,000 59,276 27,476 86,752 913,248 - 3229000 POLICE TRNG FACILITY-SITE SELECTION/DESIGN 600,000 57,274 387,079 444,353 1 155,646 3262000 TIDEWATER COMMUNITY COLLEGE EXPANSION 7,213,290 2,538,023 25,750 2,563,773 3,753,446 896,071 3273000 CIT - VIDEO SERVICES RELOCATION 617,755 528,359 58,275 586,634 13,141 17,980

172(continued)

BUILDING CAPITAL PROJECTS (continued)

Exhibit 18




3274000 MIT MEASURES CRITICAL FACILITIES (FEMA) $ 799,463 $ 83,754 $ 647,055 $ 730,809 $ 52,071 $ 16,583 3275000 VMSM RENEWAL & REPLACEMENT 350,000 135,800 11,922 147,722 44,530 157,748 3277000 FINANCE ACCOUNTING SYSTEM REPLACEMENT 5,224 - - - - 5,224 3280000 CIT-CITY HUMAN RESOURCES/PAYROLL SYSTEM 300,000 176,559 95,159 271,718 2,659 25,623 3281000 CIT-COMMUNICATION INFRASTRUCTURE REPLACE 700,000 - 98,481 98,481 151,519 450,000 3282000 MUNICIPAL BUILDING SECURITY ENHANCEMENTS 750,000 60,244 222,189 282,433 130,342 337,225 3283000 PAVILION THEATER REPLACEMENT 45,000,000 467,191 37,681 504,872 50,110 44,445,018 3286000 CIT-ADDRESS LOCATION REPLACE 367,750 - - - - 367,750 3289000 CIT-POLICE-CITIZEN INTERNET SOFTWARE MOD 206,726 - - - - 206,726 3404000 FIRE STATION - GENERAL BOOTH CORRIDOR (DESIGN) 2,647,000 2,143,466 185,720 2,329,186 49,331 268,483 3413000 BAYSIDE LIBRARY & POLICE PRECINCT 7,303,313 1,309,556 1,926,467 3,236,023 2,733,800 1,333,490 3420000 DAM NECK YARD FACILITY DESIGN 250,000 36,206 25,114 61,320 20,315 168,365 3424000 FIRE STATION 17 (SANDBRIDGE) RELOCATION 3,710,660 2,910,683 391,301 3,301,984 369,159 39,517 3432000 POLICE MOUNTED PATROL FACILITY 401 - - - - 401 3437000 MUNICIPAL CENTER HOT/CHILL WATER LINES 5,661,138 4,989,579 76,617 5,066,196 220,759 374,183 3441000 CORRECTION CENTER ADDITION III/BUILDING & LANDS 20,221,460 - 1,164,553 1,164,553 11,123,089 7,933,818 3443000 CORRECTIONAL CENTER-NEEDS STUDY 300,000 280,670 12,806 293,476 - 6,524 3446000 CIT - COMMUNICATION SYSTEM UPGRADES 7,355,625 4,969,891 1,249,967 6,219,858 194,789 940,978 3447000 LIBRARY RENOVATIONS AND REPLACEMENTS 8,863,223 2,364,759 3,150,372 5,515,131 1,054,616 2,293,476 3453000 PRINCESS ANNE AREA LIBRARY 4,155,240 2,928,083 766,982 3,695,065 207,364 252,811 3976000 FIRE TRAINING CENTER ENHANCEMENTS AND RENEWAL 2,082,370 1,936,081 2,678 1,938,759 613 142,998

TOTAL BUILDING CAPITAL PROJECTS $ 208,015,251 $ 70,469,530 $ 23,516,069 $ 93,985,599 $ 33,063,065 $ 80,966,587 CURRENT YEAR EXPENDITURES ON CLOSED PROJECTS 19,407,889 CURRENT YEAR EXPENDITURES BUILDING CAPITAL PROJECTS $ 42,923,958

4001000 NORFOLK AVENUE MULTIPURPOSE TRAIL $ 524,973 $ 455,204 $ 19,915 $ 475,119 $ 40 $ 49,814 4004000 OPEN SPACE PROGRAM SITE ACQUISITION 24,832,643 1,214,656 - 1,214,654 6,457,732 17,160,257 4005000 CAPE HENRY TRAIL REPLACEMENT 220,000 146,788 23,041 169,829 - 50,171 4008000 MARSHVIEW PROPERTY PLANNING 140,000 69,961 - 69,961 17,077 52,962 4009000 COMMUNITY RECREATION CENTERS RENEWALS AND REPLACEMENT 3,764,063 2,291,064 409,734 2,700,798 252,239 811,026 4010000 EXISTING TRAILS REPAIRS 900,000 531,389 181,495 712,884 28,974 158,142 4014000 MT TRASHMORE DIST PRK - MT CAPPING/RESTORATION 3,025,692 2,117,330 781,341 2,898,671 42,370 84,651 4015000 LITTLE ISLAND DIST PRK/REPLACE RESTROOM FACILITY 3,229 - - - 2,183 1,046

173

PARKS AND RECREATION CAPITAL PROJECTS

(continued)

BUILDING CAPITAL PROJECTS (continued)

Exhibit 18




4019000 NEW PRINCESS ANNE ATHLETIC FIELDS $ 11,326,997 $ 124,194 $ 668,901 $ 793,095 $ 312,561 $ 10,221,341 4020000 SHORE DRIVE CORRIDOR TRAILS 646,500 9,350 71,024 80,374 - 566,126 4027000 LYNNHAVEN MARINA DREDGING 225,000 - - - - 225,000 4028000 MULTI-USE RECREATION FIELDS 3,543,215 2,330,684 1,136,446 3,467,130 76,085 - 4031000 LITTLE ISLAND PIER ACCESS IMPROVEMENTS 311,000 - 31,462 31,462 29,053 250,485 4032000 PARKING LOT IMPROVEMENTS 100,000 - 79,489 79,489 233 20,278 4033000 MUNICIPAL SKATE PARKS 400,000 18,909 282,783 301,692 2,676 95,632 4034000 REC CENTERS ROOF MAIN AND REPLACE (ON-GOING) 1,725,000 - 1,191,866 1,191,866 72,171 460,963 4035000 NATURAL AREA PRESERVES 50,000 - 992 992 - 49,008 4040000 PENDLETON PRKG LOT EXP/PUB RESTROOM FACILITY 400,000 - 50,488 50,488 349,512 - 4042000 RED WING LAKE GOLF COURSE IMPROVEMENTS 1,000,000 - 154,131 154,131 424,823 421,046 4043000 BACK BAY WATERWAY ACCESS IMPROVEMENTS 150,000 - - - - 150,000 4936000 REC OFFICE AND STORAGE FACILITY AT SCHOOL SITES 1,324,332 1,224,331 90,000 1,314,331 - 10,001 4949000 DIST/COMM PARK DEVELOPMENT AND RENOVATIONS (ON-GOING) 1,063,093 594,812 365,031 959,843 66,393 36,857 4950000 NEIGHBORHOOD PARK DEVELOPMENT (ON-GOING) 3,169,762 2,617,562 200,127 2,817,689 122,436 229,637 4954000 TENNIS COURT RENOVATIONS (ON-GOING) 2,195,051 1,865,336 74,118 1,939,454 71,639 183,958 4955000 ATHLETIC FIELDS UPGRADING AND LIGHTING 920,670 844,203 - 844,203 - 76,467 4959000 GOLF COURSE INFRASTRUCTURE AND EQUIPMENT (ON-GOING) 62,312 - - - 11,537 50,775 4964000 GREENWAYS AND SCENIC WATERWAYS 583,750 432,210 122,776 554,986 1,475 27,289 4966000 VBOP PUBLIC BEACH ACCESS 490 - - - 489 1 4967000 VBOP TRAILS 414,448 381,443 29,661 411,104 3,344 - 4968000 WEST NECK DISTRICT PARK 483,997 346,665 850 347,515 28,337 108,145 4970000 PARK PLAYGROUNDS RENOVATIONS 2,025,350 1,426,284 332,144 1,758,428 - 266,922 4971000 MOUNT TRASHMORE PARK RENOVATIONS 1,200,000 923,180 186,122 1,109,302 33,071 57,627

TOTAL PARKS & RECREATION CAPITAL PROJECTS $ 66,731,567 $ 19,965,555 $ 6,483,937 $ 26,449,490 $ 8,406,450 $ 31,875,627 CURRENT YEAR EXPENDITURES ON CLOSED PROJECTS 5,788,786 CURRENT YEAR EXPENDITURES PARKS AND RECREATION CAPITAL PROJECTS $ 12,272,723

8002000 BEACH PROFILE MONITORING PROGRAM $ 150,000 $ 24,188 $ 86,508 $ 110,696 $ - $ 39,304 8003000 LANDFILL #2 PHASE I CLOSURE 5,507,000 - - - - 5,507,000 8004000 VARIOUS MINOR DREDGING PROJECTS 250,000 25,911 74,603 100,514 19,690 129,796 8006000 RUDEE INLET INFRASTRUCTURE IMPROVEMENTS 4,495,868 259,619 49,844 309,463 3,783,677 402,728

PARKS AND RECREATION CAPITAL PROJECTS (continued)

174

COASTAL CAPITAL PROJECTS

(continued)

Exhibit 18




8007000 RUDEE INLET OUTER CHANNEL MAINT DREDGE $ 100,000 $ - $ 374 $ 374 $ - $ 99,626 8008000 BEACH REPLENISHMENT 2,092,557 322,670 167,384 490,054 14,809 1,587,694 8014000 LYNNHAVEN INLET MAINTENANCE DREDGING 1,463,217 1,092,235 33,781 1,126,016 - 337,201 8109000 WESTERN BRANCH LYNNHAVEN RIVER DREDGING 2,665,483 2,639,999 - 2,639,999 - 25,484 8282000 SANDBRIDGE EMERGENCY BEACH RESTORATION 12,300,000 11,784,823 58,056 11,842,879 7,681 449,440 8830000 RUDEE INLET DREDGING 4,951,529 4,479,309 345,457 4,824,766 - 126,763 8933000 LANDFILL #2 - EXPANSION 6,379,993 - 24,593 24,593 1,356,733 4,998,667

TOTAL COASTAL CAPITAL PROJECTS $ 40,355,647 $ 20,628,754 $ 840,600 $ 21,469,354 $ 5,182,590 $ 13,703,703 CURRENT YEAR EXPENDITURES ON CLOSED PROJECTS 256,729 CURRENT YEAR EXPENDITURES COASTAL CAPITAL PROJECTS $ 1,097,329

9010000 VIRGINIA MARINE SCIENCE MUSEUM - PHASE III DESIGN $ 2,134,250 $ 1,366,692 $ 11,789 $ 1,378,481 $ 726,803 $ 28,966 9012000 24TH STREET STATE RENOVATIONS 888,986 46,887 657,308 704,195 172,397 12,394 9013000 31ST STREET DEVELOPMENT SITE ACQUISITION 355 - - - - 355 9016000 TOWN CENTER INFRASTRUCTURE 5,207,829 1,224,226 3,962,018 5,186,244 21,585 - 9018000 CONVENTION CENTER REPLACEMENT 206,096,000 31,839,907 46,492,088 78,331,995 118,861,140 8,902,865 9026000 ATLANTIC AVENUE TROLLEY LANES 575,000 529,299 - 529,299 3,072 42,629 9027000 31ST STREET PARTNERSHIP PROJECT 23,811,800 6,049,818 1,998,932 8,048,750 15,193,611 569,439 9031000 VIRGINIA MARINE SCIENCE MUSEUM PARKING 3,000,000 1,127,602 1,150,898 2,278,500 481,060 240,440 9034000 NEIGHBORHOOD REVITALIZATION START PLAN 100,000 - 18,642 18,642 - 81,358 9035000 TOWN CENTER PEDESTRIAN BRIDGE (DESIGN) 200,000 - - - - 200,000 9036000 19TH ST CORRIDOR DESIGN & IMPROVEMENTS 1,065,515 - 34,516 34,516 30,000 1,000,999 9038000 ECONOMIC DEVIL INFRASTRUCTURE PROJECTS 241,358 - - - - 241,358 9048000 BOARDWALK REVITALIZATION 3,437,625 3,427,237 - 3,427,237 - 10,388 9052000 PUBLIC BEACH IMPROVEMENT PROGRAM (PARTIAL) 416,364 392,465 - 392,465 - 23,899 9057000 OCEAN WALK 797,150 438,699 98,211 536,910 197,090 63,150 9058000 RUDE WALK (PARTIAL) - PHASE I 254,000 168,786 - 168,786 81,643 3,571 9141000 ECONOMIC DEVELOPMENT INVESTMENT PROGRAM (ON-GOING) 22,736,410 18,000,896 4,714,700 22,715,596 10,407 10,407 9198000 BURTON STATION (PARTIAL) 4,215,905 3,455,757 - 3,455,757 - 760,148 9199000 CONFERENCE/CONVENTION FACILITY RENOVATION (ON-GOING) 2,550,000 2,210,379 3,443 2,213,822 5,299 330,879 9253000 VIRGINIA BEACH HIGHER EDUCATION CENTER 3,321,000 3,318,172 - 3,318,172 - 2,828 9255000 CONFERENCE/CONVENTION FACILITY EXPANSION 2,550,232 2,549,458 - 2,549,458 570 204 9260000 ECONOMIC AND TOURISM DEVELOPMENT PARTNERSHIPS 4,384,782 3,815,056 203,913 4,018,969 6,644 359,169

175

COASTAL CAPITAL PROJECTS (continued)

ECONOMIC AND TOURISM DEVELOPMENT CAPITAL PROJECTS

(continued)

Exhibit 18




9275000 CAPE HENRY LIGHTHOUSE RESTORATION $ 200,000 $ 40,734 $ 408 $ 41,142 $ - $ 158,858 9280000 ECONOMIC AND TOURISM DEVELOPMENT STUDIES 763,800 561,608 191,704 753,313 4,502 5,985 9302000 RUDEE LOOP DEVELOPMENT - PHASE I (PARTIAL) 12,510,155 4,141,315 7,739,442 11,880,757 3,645 625,753 9303000 RESORT AREA MULTI MODAL TRANSPORATION CENTER STUDY 290,898 255,000 - 255,000 - 35,898 9360000 SPOT BLIGHT ABATEMENT PROGRAM 230,000 - 653 653 - 229,347 9704000 BEACH EROSION CONTROL AND HURRICANE PROTECTION 1,534,439 27,434 - 27,434 104,364 1,402,641

TOTAL ECONOMIC & TOURISM DEVELOPMENT CAPITAL PROJECTS $ 303,513,853 $ 84,987,427 $ 67,278,665 $ 152,266,093 $ 135,903,832 $ 15,343,928 CURRENT YEAR EXPENDITURES ON CLOSED PROJECTS (2,039,842) CURRENT YEAR EXPENDITURES ECONOMIC AND TOURISM CAPITAL PROJECTS $ 65,238,823

COMBINED TOTALSGENERAL GOVERNMENT CAPITAL PROJECTS $ 851,356,498 $ 293,113,138 $ 118,877,413 $ 412,005,703 $ 220,821,619 $ 218,529,176

CURRENT YEAR EXPENDITURES ON CLOSED PROJECTS 23,413,562 CURRENT YEAR EXPENDITURES ON CAPITAL PROJECTS $ 142,290,975

GENERAL GOVERNMENT CONSTRUCTION IN PROGRESS $ 412,005,703

176

ECONOMIC AND TOURISM DEVELOPMENT CAPITAL PROJECTS (continued)

NONMAJOR ENTERPRISE FUNDS The Enterprise Funds are used to account for the operations (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where periodic determination of revenues earned, expenses incurred, and/or net income is deemed appropriated for capital maintenance, public policy, management control, accountability, or other purposes. Golf Courses Resort Parking 177

Exhibit 19

Golf Courses Resort Parking TotalsASSETSCurrent Assets:

Cash and Investments 372,662$ 128,324$ 500,986$ Accounts Receivable - Net - 277,100 277,100

Total Current Assets 372,662$ 405,424$ 778,086$ Noncurrent Assets:

Capital Assets:Land 8,420,130$ 1,375,000$ 9,795,130$ Site Improvements 8,710,304 1,457,642 10,167,946Buildings 632,071 - 632,071Machinery and Equipment 1,205,602 63,006 1,268,608Construction in Progress 1,006,431 - 1,006,431

Total Capital Assets 19,974,538$ 2,895,648$ 22,870,186$ Less: Accumulated Depreciation (3,296,162) (225,763) (3,521,925)

Total Capital Assets (net of accumulated depreciation) 16,678,376$ 2,669,885$ 19,348,261$ Total Assets 17,051,038$ 3,075,309$ 20,126,347$


Vouchers and Accounts Payable 45,781$ 180,798$ 226,579$ Deferred Revenue 21,023 - 21,023Current Portion of Long-term Liabilities 6,706 10,758 17,464

Total Current Liabilities 73,510$ 191,556$ 265,066$

Long-term Liabilities (less current portion) 146,132$ 7,314$ 153,446$ Total Liabilities 219,642$ 198,870$ 418,512$

Net Assets:Invested in Capital Assets, Net of Related Debt 16,678,376$ 2,669,886$ 19,348,262$ Unrestricted 153,020 206,553 359,573

Total Net Assets 16,831,396$ 2,876,439$ 19,707,835$

178

CITY OF VIRGINIA BEACH, VIRGINIANONMAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF NET ASSETSJUNE 30, 2004

Exhibit 20

Golf Courses Resort Parking TotalsOPERATING REVENUES

Charges for Services 2,036,215$ 2,351,984$ 4,388,199$ Miscellaneous 180,556 11,000 191,556

Total Operating Revenues 2,216,771$ 2,362,984$ 4,579,755$

OPERATING EXPENSESPersonal Services 915,454$ 222,460$ 1,137,914$ Fringe Benefits 228,570 39,945 268,515Contractual Services 611,555 553,686 1,165,241Internal Services 53,326 27,259 80,585Other Charges 269,569 1,094,684 1,364,253Depreciation 241,186 46,586 287,772

Total Operating Expenses 2,319,660$ 1,984,620$ 4,304,280$

OPERATING INCOME (LOSS) (102,889)$ 378,364$ 275,475$

NONOPERATING REVENUES (EXPENSES)Interest and Fiscal Agent Fees -$ (860)$ (860)$ Gain (Loss) From Sale of Assets - (4,467) (4,467)Interest Income 10,752 3,943 14,695

Total Nonoperating Revenues 10,752$ (1,384)$ 9,368$

INCOME BEFORE TRANSFERS (92,137)$ 376,980$ 284,843$

TRANSFERSTransfers In -$ 258,803$ 258,803$ Transfers Out - (527,723) (527,723)

Total Transfers Net -$ (268,920)$ (268,920)$

INCREASE (DECREASE) IN NET ASSETS (92,137)$ 108,060$ 15,923$ NET ASSETS - JULY 1 16,923,533 2,768,379 19,691,912NET ASSETS - JUNE 30 16,831,396$ 2,876,439$ 19,707,835$

179

CITY OF VIRGINIA BEACH, VIRGINIANONMAJOR ENTERPRISE FUNDS

COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETSFOR THE YEAR ENDED JUNE 30, 2004


NONMAJOR ENTERPRISE FUNDSCOMBINING STATEMENT OF CASH FLOWS


Golf Courses Resort Parking Totals

CASH FLOWS FROM OPERATING ACTIVITIES:Receipts from Customers and Users $ 2,039,840 $ 2,341,455 $ 4,381,295Other Operating Cash Receipts 180,556 11,000 191,556Cash Payments to Suppliers of Goods and Services (905,506) (1,746,304) (2,651,810)Cash Payments to Employees for Services (1,149,637) (260,382) (1,410,019)

Net Cash Provided (Used) By Operating Activities $ 165,253 $ 345,769 $ 511,022

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Payments from Other Funds $ - $ 258,803 $ 258,803Payments to Other Funds - (527,723) (527,723)

Net Cash Provided By Noncapital Financing Activities $ - $ (268,920) $ (268,920)

CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Acquisition and Construction of Capital Assets $ (81,255) $ - $ (81,255)Interest Paid on Capital Debt - (860) (860)Principal Paid on Capital Debt - (175,000) (175,000)

Net Cash Used By Capital and RelatedFinancing Activities $ (81,255) $ (175,860) $ (257,115)

CASH FLOWS FROM INVESTING ACTIVITIES:Interest and Dividends Received $ 10,752 $ 3,943 $ 14,695

Net Cash Provided By Investing Activities $ 10,752 $ 3,943 $ 14,695

Net Increase (Decrease) in Cash and Investments $ 94,750 $ (95,068) $ (318)

Cash and Investments, July 1 277,912 223,392 501,304

Cash and Investments, June 30 $ 372,662 $ 128,324 $ 500,986

RECONCILIATION OF OPERATING INCOME (LOSS) TONET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:Operating Income (Loss) $ (102,889) $ 378,364 $ 275,475Adjustments to Reconcile Operating Income (Loss) to

Net Cash Provided (Used) By Operating Activities:Depreciation Expense 241,186 46,586 287,772(Increase) Decrease in Accounts Receivable - (10,529) (10,529)Increase (Decrease) in Vouchers and Accounts Payable 28,944 (70,675) (41,731)Increase in Deferred Revenue 3,625 - 3,625Increase (Decrease) in Accrued Compensated Leave (5,613) 2,023 (3,590)

Total Adjustments $ 268,142 $ (32,595) $ 235,547Net Cash Provided (Used) By Operating Activities $ 165,253 $ 345,769 $ 511,022

180

WATER AND SEWER ENTERPRISE FUND The Water and Sewer Enterprise Fund operates the water distribution and sanitary sewer collection system. The mission of this fund is to provide public water, including water for fire protection, and public sanitary sewer service to the urban areas of Virginia Beach. 181

ASSETSCurrent Assets:

Cash and Investments 67,085,781$ Accounts Receivable - Net of Estimated Uncollectibles 12,263,960Intergovernmental Receivables 4,826,244Inventory 1,902,429

Total Current Assets 86,078,414$

Non-current AssetsCash and Investments - Restricted 38,789,264$ Deferred Charges 660,955Capital Assets:

Land 12,008,691$ Buildings 3,277,600Utility System 695,138,993Office Furniture and Fixtures 1,602,822Machinery and Equipment 11,949,815Construction in Progress 36,023,324Less: Accumulated Depreciation (222,071,330)

Total Capital Assets 537,929,915$ Total Non-current Assets 577,380,134$

Total Assets 663,458,548$


Vouchers and Accounts Payable 3,228,111$ Deposits Payable 365,696Accrued Interest Payable 2,671,409Construction Contracts Payable 2,678,046Deferred Revenue 45,647Current Portion of Long-term Liabilities 6,399,359

Total Current Liabilities 15,388,268$

Long-Term Liabilities (less current portion):Double Barrel and Revenue Bonds and Notes 106,494,614$ General Obligation Bonds 475,000Deferred Loss on Refunding (600,610)Premium on Refunding Bonds -Sinking Fund 1977 and 1978 Notes 800,000Federal Arbitrage Payable 61,867Accrued Compensated Leave 727,320

Total Long-Term Liabilities (less current portion) 107,958,191$ Total Liabilities 123,346,459$

NET ASSETSInvested in Capital Assets, Net of Related Debt 450,507,995$ Restricted for Debt Service 13,824,186Unrestricted 75,779,908

Total Net Assets 540,112,089$

182

JUNE 30, 2004


WATER AND SEWER ENTERPRISE FUNDSTATEMENT OF NET ASSETS

Exhibit 23

OPERATING REVENUES

Service Charges 35,558,232$ Sale of Water 41,419,583Tap Fees 191,014Fire Hydrant Rental 17,670Navy Wheelage Charges 175,350Miscellaneous 327,038

Total Operating Revenues 77,688,887$

OPERATING EXPENSESCost of Goods Sold - Water Purchases 23,171,313$ Personal Services 16,711,406Fringe Benefits 4,125,295Contractual Services 4,278,721Internal Services 3,178,788Other Charges 8,349,470Bad Debts 39,098Depreciation 16,068,988

Total Operating Expenses 75,923,079$

OPERATING INCOME (LOSS) 1,765,808$

NONOPERATING REVENUES (EXPENSES)Interest Income 1,290,398$ Connection Fees 6,897,888Gain (Loss) From Sale of Assets (30,833)Interest on Double Barrel/Revenue Bonds and Notes (4,552,435)Interest on General Obligation Bonds (85,483)City of Norfolk Water Servicing True Up 4,670,562

Total Nonoperating Revenues (Expenses) Net 8,190,097$

CAPITAL CONTRIBUTIONS 1,855,417$

TRANSFERSTransfers In 501$ Transfers Out (89,102)

Total Transfers Net (88,601)$

INCREASE IN NET ASSETS 11,722,721$ TOTAL NET ASSETS - BEGINNING 528,389,368

TOTAL NET ASSETS - ENDING 540,112,089$

183

CITY OF VIRGINIA BEACH, VIRGINIAWATER AND SEWER ENTERPRISE FUND

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETSFOR THE YEAR ENDED JUNE 30, 2004


WATER AND SEWER ENTERPRISE FUNDSTATEMENT OF CASH FLOWS


CASH FLOWS FROM OPERATING ACTIVITIES:Receipts from Customers and Users $ 77,031,525Receipts from (Payments for) Interfund Services Provided (4,685,357)Other Operating Cash Receipts 405,772Cash Payments to Suppliers of Goods and Services (40,479,868)Other Operating Cash Payments 485,699Cash Payments to Employees for Services (20,733,449)

Net Cash Provided By Operating Activities $ 12,024,322

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Receipts from Other Funds $ 501Payments to Other Funds (89,102)

Net Cash Provided (Used) By Noncapital Financing Activities $ (88,601)

CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIES:Interest Paid on Capital Debt $ (4,637,918)Acquisition and Construction of Capital Assets (26,912,966)Proceeds from Sale of Salvage 25,830City of Norfolk Water Servicing True Up 4,670,562Receipts of Capital Contributions 8,753,305Principal Paid on Capital Debt (7,776,033)

Net Cash Provided (Used) By Capital and RelatedFinancing Activities $ (25,877,220)

CASH FLOWS FROM INVESTING ACTIVITIES:Interest and Dividends Received $ 1,290,398

Net Cash Provided By Investing Activities $ 1,290,398

Net Increase (Decrease) in Cash and Investments $ (12,651,101)

Cash and Investments, July 1 118,526,146

Cash and Investments, June 30 $ 105,875,045

RECONCILIATION OF OPERATING INCOME (LOSS) TONET CASH PROVIDED BY OPERATING ACTIVITIES:Operating Income (Loss) $ 1,765,808Adjustments to Reconcile Operating Income (Loss) to

Net Cash Provided By Operating Activities:Depreciation Expense 16,068,988Decrease in Premium on Refunding Bonds (101,050)Amortization of Deferrals 186,749(Increase) in Accounts Receivable (291,226)(Increase) in Intergovernmental Receivables (4,685,357)Decrease in Deferred Charges 78,734(Increase) in Inventory (176,238)(Decrease) in Vouchers and Accounts Payable (1,712,355)Increase in Deposits Payable 21,085(Decrease) in Accrued Interest Payable (141,525)Increase in Sinking Fund 400,000Increase in Deferred Revenue 10,380Increase in Construction Contracts Payable 497,077Increase in Accrued Compensated Leave 103,252

Total Adjustments $ 10,258,514Net Cash Provided By Operating Activities $ 12,024,322

NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES:Capital Contributions of Fixed Assets $ 1,855,417

184

Exhibit 25

CASH - DESIGNATED FOR CONSTRUCTIONBalance - July 1 $ 37,253,952Receipts:

Miscellaneous Receipts $ 212,158Water and Sewer Enterprise 4,418,100From Federal Government 24,157Transfer from WRRF 4,830,671

Total Receipts $ 9,485,086Disbursements:

Water and Sewer Construction Expenditures $ 22,271,038Prior Year Accrued Expenditures Paid in Current Year (497,077)

Total Disbursements $ 21,773,961Balance - June 30 Designated for Construction $ 24,965,077

CASH - WATER RESOURCE RECOVERY FEESBalance - July 1 $ -

Receipts:Fees $ 4,830,671

Disbursements:Construction Expenditures 4,830,671

Balance - June 30 Water Resource Recovery Fees $ -

CASH - WATER AND SEWER DEBT SERVICEBalance - July 1 $ 9,424,131

Receipts: -Balance - June 30 Water and Sewer Debt Service $ 9,424,131

CASH - WITH FISCAL AGENTBalance - July 1 $ 3,973,244

Net Disbursements and Receipts 426,812Balance - June 30 Cash With Fiscal Agent $ 4,400,056

TOTAL RESTRICTED CASH $ 38,789,264

185

CITY OF VIRGINIA BEACH, VIRGINIAWATER AND SEWER ENTERPRISE FUND

SCHEDULE OF CHANGES IN RESTRICTED ASSETSFOR THE YEAR ENDED JUNE 30, 2004

Budget Actual

Variance - Positive

(Negative)Director of Public Utilities

Personal Services 231,897$ 243,374$ (11,477)$ Fringe Benefits 55,045 56,716 (1,671)Contractual Services 1,600 293 1,307Internal Services 16,031 13,369 2,662Other Charges 21,070 14,230 6,840

Total Director of Public Utilities 325,643$ 327,982$ (2,339)$

Engineering StaffPersonal Services 3,666,412$ 3,597,127$ 69,285$ Fringe Benefits 851,532 824,703 26,829Contractual Services 362,600 131,733 230,867Internal Services 552,433 585,441 (33,008)Other Charges 382,179 179,512 202,667Land Structures and Improvements 7,000 - 7,000

Total Engineering Staff 5,822,156$ 5,318,516$ 503,640$

Water ResourcesPersonal Services 262,567$ 267,503$ (4,936)$ Fringe Benefits 65,176 66,463 (1,287)Contractual Services 53,480 51,218 2,262Internal Services 37,309 34,328 2,981Other Charges 25,160 10,240 14,920

Total Water Resources 443,692$ 429,752$ 13,940$

Operations and Maintenance AdministrationPersonal Services 960,693$ 984,660$ (23,967)$ Fringe Benefits 242,834 239,723 3,111Contractual Services 978,128 944,752 33,376Internal Services 202,665 197,913 4,752Other Charges 520,887 343,748 177,139Land Structures and Improvements - - -

Total Operations and Maintenance Administration 2,905,207$ 2,710,796$ 194,411$

Water DistributionPersonal Services 1,797,235$ 1,865,109$ (67,874)$ Fringe Benefits 433,678 428,498 5,180Contractual Services 72,231 46,794 25,437Internal Services 402,912 360,923 41,989Other Charges 693,501 450,236 243,265

Total Water Distribution 3,399,557$ 3,151,560$ 247,997$

Lake Gaston FacilitiesContractual Services 1,447,703$ 965,250$ 482,453$ Other Charges 703,000 318,924 384,076

Total Lake Gaston Facilities 2,150,703$ 1,284,174$ 866,529$



WATER AND SEWER ENTERPRISE FUNDSCHEDULE OF OPERATING EXPENSES - BUDGET AND ACTUAL

186(continued)

Budget Actual

Variance - Positive

(Negative)




Water Pump StationsPersonal Services 1,252,778$ 1,159,563$ 93,215$ Fringe Benefits 305,911 287,663 18,248Contractual Services 274,292 202,069 72,223Internal Services 84,177 129,729 (45,552)Other Charges 561,604 511,190 50,414

Total Water Pump Stations 2,478,762$ 2,290,214$ 188,548$

Sewer Collection SystemsPersonal Services 2,403,928$ 2,375,457$ 28,471$ Fringe Benefits 604,752 578,674 26,078Contractual Services 1,016,575 453,317 563,258Internal Services 788,361 726,112 62,249Other Charges 2,056,407 613,057 1,443,350

Total Sewer Collection Systems 6,870,023$ 4,746,617$ 2,123,406$

Sewer Pump StationsPersonal Services 2,469,470$ 2,405,540$ 63,930$ Fringe Benefits 639,653 617,402 22,251Contractual Services 126,163 105,923 20,240Internal Services 192,164 181,123 11,041Other Charges 1,293,403 1,398,615 (105,212)

Total Sewer Pump Stations 4,720,853$ 4,708,603$ 12,250$

Customer ServicesPersonal Services 2,174,513$ 2,135,649$ 38,864$ Fringe Benefits 595,833 574,037 21,796Contractual Services 1,449,739 1,352,450 97,289Internal Services 995,726 795,078 200,648Other Charges 771,617 655,835 115,782

Total Customer Services 5,987,428$ 5,513,049$ 474,379$

Water Purchases 26,552,670$ 23,171,313$ 3,381,357$

Meter OperationsPersonal Services 1,670,874$ 1,677,424$ (6,550)$ Fringe Benefits 453,440 451,416 2,024Contractual Services 23,955 24,922 (967)Internal Services 152,828 154,772 (1,944)Other Charges 941,620 849,326 92,294

Total Meter Operations 3,242,717$ 3,157,860$ 84,857$

187(continued)

Budget Actual

Variance - Positive

(Negative)




General Fund ChargesOffice Rental 304,431$ 268,341$ 36,090$ Landscape Services 273,773 218,777 54,996Support Personnel 548,730 548,818 (88)Building Maintenance 110,860 95,404 15,456Payment in Lieu of Taxes 100,000 100,000 -Indirect Cost Allocation 1,841,581 1,773,217 68,364

Total General Fund Charges 3,179,375$ 3,004,557$ 174,818$

Bad Debts 350,000$ 39,098$ 310,902$

Total Budgeted Operating Expenses 68,428,786$ 59,854,091$ 8,574,695$

Depreciation - 16,068,988 (16,068,988)

Total Operating Expenses 68,428,786$ 75,923,079$ (7,494,293)$

Note: Total General Fund Charges Reclassified as Other Charges.

188

Exhibit 27

Project Budget Prior Years' Current Year Total Outstanding AvailableNumber Project Name to Date Expenditures Expenditures Expenditures Encumbrances Balance

5001000 COMP EMER RESPONSE & TRAINING - PH I $ 1,475,000 $ 348,631 $ 339,628 $ 688,259 $ 481,727 $ 305,014 5002000 NIMMO PARKWAY - PHASE VII 1,365,000 647,211 83,960 731,171 11,588 622,242 5005000 NORTH LONDON BRIDGE ROAD 561,302 42,315 775 43,091 518,211 1 5006000 WATER APPURTENANCES EVAL & IMP 225,000 - - - - 225,000 5007000 CUSTOMER INFORMATION SYSTEM REPLACEMENT 2,850,000 1,475,080 200,145 1,675,225 813,385 361,390 5008000 BIRDNECK ROAD - PHASE II 125,000 46,070 - 46,070 10,000 68,930 5013000 WATER SCADA SYSTEM UPGRADE 1,074,000 112,595 27,968 140,563 69,055 864,382 5016000 SYSTEM EXPAN COST PARTICIPATION AGREEMENTS 500,548 74,632 16,748 91,380 189,085 220,082 5017000 PUBLIC ACCESS RENOVATIONS - BLDG 2 350,000 - 4,360 4,360 17,440 328,200 5024000 HOLLAND ROAD - PHASE VI 60,000 - - - - 60,000 5035000 NIMMO PARKWAY - PHASES I, II, AND III 118,225 102,581 1,067 103,649 - 14,576 5062000 NIMMO PARKWAY 225,000 167,553 - 167,553 - 57,447 5067000 COURTHOUSE AND SANDBRIDGE TANK MODIFICATIONS 330,000 278,908 - 278,908 - 51,092 5071000 AMERICUS AVE - 51% PROGRAM 60,000 52,796 - 52,796 7,205 - 5072000 MAXEY MANOR - 51% TYPE 180,000 16,508 137,225 153,732 12,468 13,799 5076000 KEMPSVILLE ROAD - PHASE III 130,533 - - - 102,429 28,104 5083000 STUMPY LAKE-WTR RESVR/PMP FACILITIES IMP 1,115,000 115,938 80,559 196,497 65,142 853,362 5085000 LYNNHAVEN PUMP STATION MODIFICATIONS - PHASE II 100,000 - - - - 100,000 5090000 LYNNHAVEN PARKWAY - PHASE XI 70,000 642 - 642 24,555 44,803 5092000 LANDSTOWN YARD IMPROVEMENTS - PHASE III 1,005,000 6,700 1,623 8,323 - 996,677 5094000 SMALL LINE IMPROVEMENTS - PHASE III 18,469 - - - 9,393 9,076 5095000 VAR RDWAY/STRM WTR COORD - PH III 23,103 - - - 1,738 21,365 5100000 SIERRA DRIVE WATER IMPROVEMENTS 200,000 - - - 48,492 151,508 5105000 STUMPY LAKE LANE - 51% TYPE 1,300 - - - - 1,296 5114000 LONDON BRIDGE ROAD - PHASE II 42,664 - - - 42,663 1 5118000 MAPPING AND INFRASTRUCTURE MGMT SYSTEM 3,410,000 2,597,493 222,701 2,820,194 162,325 427,481 5119000 FLOW MONITORING SYSTEM 345,535 572 4,736 5,308 60,887 279,340 5127000 LANDSTOWN YARD IMPROVEMENTS - PHASE II 126,179 - - - 126,113 66 5129000 POTABLE WELLS EVALUATION PROGRAM 318,017 30,270 - 30,270 30,270 257,477 5130000 LYNNHAVEN PARKWAY EXTENDED 220,000 2,945 7,769 10,714 15,466 193,820 5131000 TANK UPGRADE PROGRAM - PHASE II 3,256,000 1,572,147 131,570 1,703,717 272,175 1,280,108 5136000 WATER QUALITY PROGRAM - PHASE II (PARTIAL) 583,509 - - - 43,868 539,640 5139000 SMALL LINE IMPROVEMENTS - PHASE IV 555,616 128,434 306,244 434,678 83,563 37,375

189

CITY OF VIRGINIA BEACH, VIRGINIAWATER AND SEWER UTILITY CAPITAL PROJECTS


WATER UTILITY CAPITAL PROJECTS

(continued)

Exhibit 27




5140000 VAR RDWAY/STRM WTR COORD - PH IV $ 212,096 $ - $ - $ - $ 5,400 $ 206,696 5141000 WTR REQ/AGREEMENTS (51%) - PH IV 150,000 79,155 183 79,338 1,200 69,463 5143000 FIRE HYDRANT PROGRAM 251,739 17,095 - 17,095 108,775 125,870 5144000 WATER MAIN REPLACEMENT - NORTH END 22,137 - - - 20,084 2,053 5146000 ATLANTIC AVENUE WATER LINE ABANDONMENT 50,486 46,404 - 46,404 4,082 - 5148000 ELBOW RD EXT - PH I & II 635,000 281,987 19,375 301,362 19,375 314,263 5149000 INDIAN RIVER RD - PHASE VII 68,548 33 - 33 68,515 1 5154000 PUBLIC UTILITIES BUILDING - STUDY 125,000 40,000 - 40,000 10,000 75,000 5162000 BACKFLOW PREVENTN/CROSS CONN CONTROL PRG 100,000 597 34,276 34,873 56,664 8,463 5163000 VAR WATER INFRASTRUCTURE MAINT SUPP PRG 570,000 - 9,474 9,474 36,630 523,896 5164000 IVR/CTI, BILL PRNT, AUTO PYMT SOL DSGN 100,000 - - - - 100,000 5202000 LASKIN RD IMPRV - PH II & GATEWAY 120,000 - 2,600 2,600 23,400 94,000 5207000 LASKIN ROAD - PHASE I 130,000 - - - - 130,000 5708000 RESORT AREA NEIGHBORHOOD REVITALIZATION 1,145,000 394,901 646,564 1,041,465 103,536 -5944000 PRINCESS ANNE ROAD - PHASE IV 250,000 297 - 297 - 249,703 5964000 WATER RESOURCES - LAKE GASTON 2,849,897 - 8,988 8,988 67,184 2,773,725 5973000 FIRST COLONIAL ROAD - PHASE III 85,812 - - - 72,520 13,292

TOTAL WATER UTILITY CAPITAL PROJECTS $ 27,885,715 $ 8,680,490 $ 2,288,538 $ 10,969,029 $ 3,816,608 $ 13,100,079 CURRENT YEAR EXPENDITURES ON CLOSED WATER PROJECTS 1,841,680 CURRENT YEAR EXPENDITURES WATER CAPITAL PROJECTS $ 4,130,218

6003000 AUXILIARY POWER PRG/SEWER PUMP STA-FEMA $ 24,482 $ - $ - $ - $ 14,040 $ 10,442 6005000 FIRST COLONIAL RD-PH III/OCEANA BLVD EXT 135,894 - - - 103,002 32,892 6012000 CUSTOMER INFORMATION SYSTEM REPLACEMENT 2,850,000 1,460,836 193,305 1,654,141 813,385 382,474 6018000 COMPREHENSIVE SEWER EVALUATION/REHABILITATION PROJ 3,225,000 758,674 974,302 1,732,976 681,605 810,419 6019000 RESORT AREA NEIGHBORHOOD REVITALIZATION 2,386,000 101,432 511,097 612,529 109,670 1,663,801 6021000 SALEM ROAD "C" 4,823 - - - 4,716 107 6028000 COMPREHENSIVE EMERGENCY RESPONSE AND PLANNING 750,000 268,722 120,092 388,814 339,007 22,179 6030000 LITTLE NECK POINT (PARTIAL) 6,020,000 528,494 380,828 909,322 198,556 4,912,122 6031000 SEWER APPURTENANCES EVALUATION 125,000 - - - - 125,000 6033000 INFILTRATION, INFLOW, AND REHABILITATION - PHASE 341,074 - 4,449 4,449 314,774 21,851

190(continued)

SEWER UTILITY CAPITAL PROJECTS

WATER UTILITY CAPITAL PROJECTS (continued)

Exhibit 27




6034000 PUMP STATION MODIFICATIONS - PHASE III $ 62,114 $ - $ 17,964 $ 17,964 $ 44,150 $ - 6035000 VAR RDWAY/STRM WTR COORD - PH III 57,867 - - - 37,006 20,862 6036000 VARIOUS SEWER PROJECTS - PHASE III 52,124 - - - 44,663 7,461 6038000 SEWER SCADA SYSTEM UPGRADE 1,117,000 112,595 31,639 144,234 65,384 907,382 6039000 NORTH LANDING ROAD/WEST NECK ROAD 114,575 - - - 3,690 110,885 6046000 MAPPING AND INFRASTRUCTURE MGMT SYSTEM 3,660,000 3,121,149 251,337 3,372,486 28,625 258,889 6051000 INDIAN RIVER ROAD - PHASE VII 20,000 - - - 14,716 5,284 6052000 STUMPY LAKE LANE 6,900 - - - - 6,900 6055000 LANDSTOWN YARD IMPROVEMENTS - PHASE II 89,987 - - - 89,987 - 6057000 HOLLAND ROAD - PHASE VI 100,000 - - - - 100,000 6063000 CENTRAL BUSINESS DISTRICT NEEDS ASSESSMENT 2,600,000 1,381,474 382,850 1,764,324 82,510 753,166 6065000 INFILTRATION, INFLOW, AND REHAB - PHASE IV 7,300,000 43,196 2,144,889 2,188,085 453,525 4,658,390 6066000 PUMP STATION MODIFICATIONS - PHASE IV (PARTIAL) 7,659,000 553,802 2,748,130 3,301,932 2,013,119 2,343,949 6067000 VAR RDWAY/STRMWTR COORD - PH IV 609,383 12,834 76,541 89,375 165,643 354,365 6068000 SEWER REQ & AGREEMTS - PHASE IV (51%) 200,000 6,692 138,590 145,282 22,864 31,854 6069000 BIRDNECK ROAD - PHASE II 1,980,000 1,488,376 2,316 1,490,692 23,397 465,911 6071000 COMP SEWER MASTER PLANNING - PHASE III 1,170,817 294,236 471,860 766,096 398,696 6,024 6072000 BOW CREEK NGHHD PRK SWR IMPROVMENTS 96,540 - - - 59,730 36,811 6075000 LASKIN ROAD - PHASE I 110,000 - - - - 110,000 6079000 PUBLIC UTILITIES BUILDING - STUDY 125,000 40,000 - 40,000 10,000 75,000 6080000 WEST NECK PKWY FM - LAKE RIDGE IFM INTERCONNECT 300,000 29,338 9,364 38,703 17,112 244,185 6081000 LASKIN RD - PH II & GATEWAY IMPROVEMENTS 300,000 - 50 50 26,000 273,950 6082000 SYS EXPANSION COST PARTICIPATION AGREEMENTS 550,000 225,235 74,904 300,139 15,878 233,983 6084000 MAXEY MANOR - 51% 1,125,000 119,352 1,001,384 1,120,736 4,264 - 6086000 PU PUBLIC ACCESS RENOVATIONS - BLDG 2 350,000 - - - - 350,000 6102000 PRINCESS ANNE COMMONS 3,500,000 1,258,207 1,934,911 3,193,119 202,361 104,520 6103000 LAKE RIDGE INTERCEPTOR FORCE MAIN 10,300,000 6,795,700 742,010 7,537,710 258,224 2,504,066 6105000 PRIVATE PUMP STATION EVALUATION PROGRAM 51,997 - - - 51,997 - 6138000 LANDSTOWN YARD IMPROVEMENTS - PHASE III 1,175,230 1,776 942 2,718 73,781 1,098,731 6149000 PRINCESS ANNE SEWER FORCE MAIN - PHASE IV 75,000 - - - - 75,000 6168000 VAR SAN SEWER INTRASTRUCTURE MAINT SUPP 450,000 - 67,235 67,235 - 382,766 6169000 IVR/CTI, BILL PRNT, AUTO PYMT SOL DSGN 100,000 - - - - 100,000 6937000 ARAGONA REHABILITATION 1,013,039 - - - 42,375 970,665

SEWER UTILITY CAPITAL PROJECTS (continued)

191(continued)

Exhibit 27




6938000 PRINCESS ANNE PLAZA REHABILITATION $ 1,201,752 $ - $ - $ 840 $ 830,847 $ 370,066 6939000 COMPREHENSIVE SEWER STUDY - PHASE II 53,736 8,035 3,861 11,896 41,839 1 6962000 TIMBERLAKE FORCE MAIN 22,509 - - - 17,446 5,063 6971000 NORTH LONDON BRIDGE ROAD 531,866 79,529 1,550 81,079 450,787 1

TOTAL SEWER UTILITY CAPITAL PROJECTS $ 64,093,709 $ 18,689,684 $ 12,286,400 $ 30,976,926 $ 8,169,371 $ 24,947,417 CURRENT YEAR EXPENDITURES ON CLOSED SEWER PROJECTS 5,854,420 CURRENT YEAR EXPENDITURES SEWER CAPITAL PROJECTS $ 18,140,820

COMBINED TOTALSWATER AND SEWER UTILITY CAPITAL PROJECTS $ 91,979,424 $ 27,370,174 $ 14,574,938 $ 41,945,955 $ 11,985,979 $ 38,047,496

CURRENT YEAR EXPENDITURES ON CLOSED PROJECTS 7,696,100 CURRENT YEAR EXPENDITURES ON CAPITAL PROJECTS $ 22,271,038

CAPITALIZED INTEREST $ 1,810,046 OTHER ENTITIES SHARE OF WATER AND SEWER PROJECTS (7,732,677) WATER AND SEWER FUND CONSTRUCTION IN PROGRESS $ 36,023,324

192

SEWER UTILITY CAPITAL PROJECTS (continued)

STORM WATER ENTERPRISE FUND The Storm Water Enterprise Fund operates the city’s drainage and storm water management system. This fund addresses the City Council destination points and city strategies of creating an effective drainage system and storm water management system, protect natural resources and enhance quality of land and waterways, to maintain the city’s utility systems, encourage development only in accordance with principles of natural environment protection, and provide adequate resources to maintain existing infrastructure. 193


Cash and Investments 7,714,089$ Accounts Receivable - Net of Estimated Uncollectibles 4,276,763Intergovernmental Receivables 1,186,839

Total Current Assets 13,177,691$

Non-current Assets:Cash and Investments - Restricted 879,070$ Capital Assets:

Land 128,103,048Utility System 61,265,286Machinery and Equipment 6,898,868Construction in Progress 28,915,044Less: Accumulated Depreciation (27,665,549)

Total Capital Assets 197,516,697$ Total Non-current Assets 198,395,767$

Total Assets 211,573,458$


Vouchers and Accounts Payable 151,411$ Accrued Interest Payable 272,402Current Portion of Long-term Liabilities 967,711

Total Current Liabilities 1,391,524$ Long-Term Liabilities (less current portion):

Double Barrel and Revenue Bonds and Notes 9,005,000$ General Obligation Bonds 3,924,435Federal Arbitrage Payable 21,227Accrued Compensated Leave 167,074

Total Long-Term Liabilities (less current portion) 13,117,736$ Total Liabilities 14,509,260$

Net Assets:Invested in Capital Assets, Net of Related Debt 183,952,382$ Restricted for Debt Service 767,850Unrestricted 12,343,966

Total Net Assets 197,064,198$

194

JUNE 30, 2004


STORMWATER UTILITY ENTERPRISE FUNDSTATEMENT OF NET ASSETS

Exhibit 29

OPERATING REVENUES

Service Charges 12,629,669$ Miscellaneous 42

Total Operating Revenues 12,629,711$

OPERATING EXPENSESPersonal Services 3,294,634$ Fringe Benefits 799,983Contractual Services 732,630Internal Services 1,151,978Other Charges 1,438,386Land, Structures and Improvements 2,200,828Depreciation 5,441,433

Total Operating Expenses 15,059,872$

OPERATING INCOME (LOSS) (2,430,161)$

NONOPERATING REVENUES (EXPENSES)Interest Income 83,337$ From Commonwealth 4,747,358Gain (Loss) From Sale of Assets (16,443)Interest and Fiscal Charges (554,943)

Total Nonoperating Revenues (Expenses) Net 4,259,309$

CAPITAL CONTRIBUTIONS 18,715$

TRANSFERSTransfers In 63,203$

INCREASE IN NET ASSETS 1,911,066$ TOTAL NET ASSETS - BEGINNING 195,153,132

TOTAL NET ASSETS - ENDING 197,064,198$

195

CITY OF VIRGINIA BEACH, VIRGINIASTORMWATER ENTERPRISE FUND

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETSFOR THE YEAR ENDED JUNE 30, 2004


STORMWATER UTILITY ENTERPRISE FUNDSTATEMENT OF CASH FLOWS


CASH FLOWS FROM OPERATING ACTIVITIES:Receipts from Customers and Users $ 14,215,896Other Operating Cash Receipts 42Cash Payments to Suppliers of Goods and Services (5,722,016)Cash Payments to Employees for Services (4,077,047)

Net Cash Provided By Operating Activities $ 4,416,875

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Intergovernmental Receipts $ 4,694,524Payments from Other Funds 63,203

Net Cash Provided (Used) By Noncapital Financing Activities $ 4,757,727

CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIES:Interest Paid on Capital Debt $ (554,943)Acquisition and Construction of Capital Assets (6,363,275)Proceeds From Sale of Salvage 2,717Principal Paid on Capital Debt (736,100)

Net Cash Provided (Used) By Capital and RelatedFinancing Activities $ (7,651,601)

CASH FLOWS FROM INVESTING ACTIVITIES:Interest and Dividends Received $ 83,337

Net Cash Provided By Investing Activities $ 83,337

Net Increase (Decrease) in Cash and Investments $ 1,606,338

Cash and Investments, July 1 6,986,821

Cash and Investments, June 30 $ 8,593,159

RECONCILIATION OF OPERATING INCOME (LOSS) TONET CASH PROVIDED BY OPERATING ACTIVITIES:Operating Income (Loss) $ (2,430,161)Adjustments to Reconcile Operating Income (Loss) to

Net Cash Provided By Operating Activities:Depreciation Expense 5,441,433Decrease in Accounts Receivable 1,586,227(Decrease) in Vouchers and Accounts Payable (190,167)(Decrease) in Accrued Interest Payable (8,027)Increase in Accrued Compensated Leave 17,570

Total Adjustments $ 6,847,036Net Cash Provided By Operating Activities $ 4,416,875

NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES:Capital Contributions of Fixed Assets $ 18,715

196

Budget Actual

Variance - Positive

(Negative)Project Management

Personal Services 469,844$ 465,175$ 4,669$ Fringe Benefits 111,076 106,444 4,632Contractual Services 566,002 207,606 358,396Internal Services 139,951 133,830 6,121Other Charges 82,439 79,293 3,146

Total Project Management 1,369,312$ 992,348$ 376,964$

Customer ServicesPersonal Services 64,512$ 83,090$ (18,578)$ Fringe Benefits 16,865 18,713 (1,848)Contractual Services 135,449 124,079 11,370Internal Services 19,005 26,888 (7,883)Other Charges 92,200 85,960 6,240

Total Customer Services 328,031$ 338,730$ (10,699)$

Operations and MaintenancePersonal Services 2,803,858$ 2,641,453$ 162,405$ Fringe Benefits 635,561 645,069 (9,508)Contractual Services 673,399 356,205 317,194Internal Services 918,852 936,478 (17,626)Other Charges 1,388,417 410,233 978,184Land Structures and Improvements 3,380,508 2,200,828 1,179,680

Total Operations and Maintenance 9,800,595$ 7,190,266$ 2,610,329$

Inspections and Environmental Spill ResponsePersonal Services 72,764$ 73,272$ (508)$ Fringe Benefits 19,919 20,670 (751)Contractual Services 45,976 44,740 1,236Internal Services 11,142 8,555 2,587Other Charges 34,968 32,359 2,609

Total Inspections and Environmental Spill Response 184,769$ 179,596$ 5,173$

Residential Street SweepingPersonal Services 31,626$ 31,644$ (18)$ Fringe Benefits 9,161 9,087 74Contractual Services 322 - 322Internal Services 16,667 46,227 (29,560)Other Charges 2,500 - 2,500

Total Residential Street Sweeping 60,276$ 86,958$ (26,682)$

197(continued)



STORMWATER ENTERPRISE FUNDSCHEDULE OF OPERATING EXPENSES - BUDGET AND ACTUAL

Budget Actual

Variance - Positive

(Negative)



STORMWATER ENTERPRISE FUNDSCHEDULE OF OPERATING EXPENSES - BUDGET AND ACTUAL

General Fund ChargesDirect Cost Allocations 361,669$ 361,669$ -$ Indirect Cost Allocations 389,607 386,239 3,368Landscape Services 33,672 21,245 12,427Treasurer's Support 61,388 61,388 -

Total General Fund Charges 846,336$ 830,541$ 15,795$

Total Budgeted Operating Expenses 12,589,319$ 9,618,439$ 2,970,880$

Depreciation - 5,441,433 (5,441,433)

Total Operating Expenses 12,589,319$ 15,059,872$ (2,470,553)$

Note: Total General Fund Charges Reclassified as Other Charges.

198

Exhibit 32


7001000 CHESAPEAKE BEACH/LAKE CHUBB $ 795,507 $ 737,168 $ 23,507 $ 760,675 $ 24,941 $ 9,891 7004000 STORM WATER INFRASTRUCTURE REHABILITATION 882,188 642,518 161,899 804,417 77,771 -7005000 NORTH LAKE HOLLY WATERSHED 8,580,000 1,201,216 186,704 1,387,920 588,868 6,603,212 7008000 LAKE SHORES DRAINAGE 680,000 130,933 48,903 179,836 128,680 371,483 7010000 ELIZABETH RIVER SHORES (PARTIAL) 135,583 - 87,297 87,297 30,557 17,729 7012000 FAIR MEADOWS DRAINAGE 1,838,000 1,334,293 270,005 1,604,298 233,156 546 7013000 CAPE HENRY DRIVE (LYNNHAVEN COLONY) DRAINAGE 1,475,000 240,037 115,688 355,725 64,028 1,055,248 7014000 CAPE STORY BY THE SEA 817,000 332,089 17,816 349,905 42,699 424,397 7016000 SOUTH LAKE HOLLY WATERSHED (PARTIAL) 1,070,529 140,431 - 140,431 9,315 920,784 7018000 LAKE JAMES 158,472 158,446 - 158,446 25 1 7020000 VARIOUS DRAINAGE IMPROVEMENTS 13,858 - - - 958 12,899 7021000 GOODSPEED ROAD DRAINAGE 820,000 110,863 112,565 223,428 34,870 561,702 7024000 SOUTHERN CANAL/LEAD DITCH & CULVERT IMPRV 200,000 25,308 - 25,308 19,372 155,320 7025000 UPPER WEST NECK CREEK IMPROVEMENTS 294,925 107,581 182,719 290,300 1,650 2,975 7027000 SWM MSTR PLANNING, ANALYSIS, & INVENTORY 423,523 372,861 5,700 378,561 14,971 29,991 7063000 NEIGHBORHD SW INFRASTRUCTURE IMP 3,847,967 2,317,237 774,624 3,091,861 525,869 230,237 7067000 PRIMARY SYSTEM INFRASTRUCTURE IMPROVEMENTS 3,158,428 1,547,633 1,332,762 2,880,395 171,242 106,791 7091000 RESIDENTIAL DRAINAGE COST PART PRG 200,000 (4,923) 26,915 21,992 153,174 24,834 7113000 NPDES STORM SYS PERMIT APPL 2,272,270 2,272,269 - 2,272,269 - 1 7114000 PRINCESS ANNE PLAZA DRAINAGE - PHASE II 4,327,862 4,296,178 19,700 4,315,878 11,980 4 7115000 ROSEMONT ROAD - WINDSOR WOODS DRAINAGE 1,077,538 1,077,538 - 1,077,538 - - 7144000 SANDBRIDGE DRAINAGE IMPROVEMENTS 872,673 849,701 13,507 863,208 300 9,164 7145000 ARTIC AVENUE - BALTIC AVENUE 5,870,949 1,311,524 1,434,265 2,745,789 270,729 2,854,431 7152000 DAM & SPILLWAY STRUCTURAL IMPROVEMENTS 350,000 - 21,624 21,624 9,736 318,640 7153000 LYNNHAVEN WATERSHED RESTORATION 500,000 - 48,476 48,476 416,296 35,228 7181000 POCAHONTAS VILLAGE 13,526 - - - 13,518 8 7183000 STORM WATER QUALITY ENHANCEMENTS 2,356,324 646,499 271,902 918,401 338,067 1,099,856 7281000 LARKSPUR DRAINAGE 740,000 54,304 53,002 107,306 185,792 446,902 7800000 LYNNHAVEN COLONY-CAPE STORY BY THE SEA 812 - 812 812 - - 7902000 NORTH BEACH DRAINAGE 15,822,523 1,720,094 353,821 2,073,915 420,446 13,328,163 7960000 OCEANA GARDENS WEST DRAINAGE 2,291,963 833,764 192,047 1,025,812 16,562 1,249,589

TOTAL STORM WATER CAPITAL PROJECTS $ 61,887,420 $ 22,455,562 $ 5,756,260 $ 28,211,823 $ 3,805,572 $ 29,870,026

CURRENT YEAR EXPENDITURES ON CLOSED PROJECTS 10,812 TOTAL CURRENT YEAR EXPENDITURES $ 5,767,072

703,221 $ 28,915,044

CITY OF VIRGINIA BEACH, VIRGINIASTORM WATER CAPITAL PROJECTSFOR THE YEAR ENDED JUNE 30, 2004

199

INTERNAL SERVICE FUNDS The Internal Service Funds are used to account for the financing of goods and services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost reimbursement basis. The City has established Internal Service Funds for the following activities: City Garage - provides vehicles and repairs, parts, fuel and related thereto for City departments. Risk Management - provides insurance, claims handling, risk identification, and consulting services to City departments. Print Shop - provides for the printing and copying needs of City departments and the School Board. Communications and Information Technology - provides centralized mainframe computer operations through computer processing and data communication services for city and school agencies. School Site Landscaping - provide for landscaping services for City and Schools. 201

City Garage Risk ManagementASSETS

Current Assets: Cash and Investments 634,280$ 3,626,102$ Accounts Receivable 61,400 390 Due from Commonwealth - - Inventory 615,326 - Prepaid Support and Maintenance 8,255 - Total Current Assets 1,319,261$ 3,626,492$ Noncurrent Assets: Capital Assets: Site Improvements 265,782$ -$ Machinery and Equipment 1,901,061 293,215 Assets Under Capital Leases - - Total Property, Plant and Equipment 2,166,843$ 293,215$ Less Accumulated Depreciation 1,728,585 293,215 Net Property, Plant and Equipment 438,258$ -$ Total Assets 1,757,519$ 3,626,492$

LIABILITIESCurrent Liabilities: Vouchers and Accounts Payable 915,030$ 242,320$ Deposits Payable - 11,631 Current Portion of Long-term Liabilities 257,130 2,269,640 Total Current Liabilities 1,172,160$ 2,523,591$

Noncurrent Liabilities: Long-term Liabilities (less current portion) 462,154$ 9,818,053$ Total Noncurrent Liabilities 462,154$ 9,818,053$ Total Liabilities 1,634,314$ 12,341,644$

NET ASSETSInvested in Capital Assets, Net of Related Debt 438,258$ -$ Unrestricted (315,053) (8,715,152) Total Net Assets 123,205$ (8,715,152)$

INTERNAL SERVICE FUNDSCOMBINING STATEMENT OF NET ASSETS


JUNE 30, 2004

202

Print ShopCommunications &

Information TechnologySchool Site

Landscaping Totals

396,762$ 11,302,939$ 1,077,911$ 17,037,994$ 34,705 1,761 - 98,256

544 3,271 - 3,81543,628 - - 658,954

- 5,224 - 13,479475,639$ 11,313,195$ 1,077,911$ 17,812,498$

-$ -$ -$ 265,782$ 947,664 4,674,530 959,419 8,775,889

42,500 2,394,776 - 2,437,276990,164$ 7,069,306$ 959,419$ 11,478,947$ 957,607 5,483,996 709,838 9,173,241

32,557$ 1,585,310$ 249,581$ 2,305,706$ 508,196$ 12,898,505$ 1,327,492$ 20,118,204$

221,984$ 963,661$ 26,148$ 2,369,143$ - - - 11,631

56,794 705,342 124,663 3,413,569278,778$ 1,669,003$ 150,811$ 5,794,343$

65,977$ 240,298$ 11,730$ 10,598,212$ 65,977$ 240,298$ 11,730$ 10,598,212$

344,755$ 1,909,301$ 162,541$ 16,392,555$

9,875$ 1,319,402$ 249,581$ 2,017,116$ 153,566 9,669,802 915,370 1,708,533163,441$ 10,989,204$ 1,164,951$ 3,725,649$

INTERNAL SERVICE FUNDS


COMBINING STATEMENT OF NET ASSETSJUNE 30, 2004

203

City Garage Risk ManagementOPERATING REVENUES

Billings to Departments 12,736,346$ 8,095,497$ Insurance Recovery - 47,664Miscellaneous 9,036 424 Total Operating Revenues 12,745,382$ 8,143,585$

OPERATING EXPENSESCost of Goods Sold 7,378,006$ -$ Personal Services 3,275,258 367,345Fringe Benefits 846,720 94,121Contractual Services 362,708 483,368Internal Services 227,543 37,921Other Charges 518,784 7,122,444Leases and Rentals - -Land Structures and Improvements - -Depreciation 163,222 43,300 Total Operating Expenses 12,772,241$ 8,148,499$

OPERATING INCOME (LOSS) (26,859)$ (4,914)$

NONOPERATING REVENUES (EXPENSES)Interest Income 48$ 72,417$ Transfers In - 2,000,000Transfers Out - -Gain (Loss) on Disposition of Assets 30,477 14,561Interest Expenses - - Total Nonoperating Revenues (Expenses) 30,525$ 2,086,978$

INCREASE (DECREASE) IN NET ASSETS 3,666$ 2,082,064$

TOTAL NET ASSETS - BEGINNING 119,539 (10,797,216)

TOTAL NET ASSETS - ENDING 123,205$ (8,715,152)$

FOR THE YEAR ENDED JUNE 30, 2004COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

CITY OF VIRGINIA BEACH, VIRGINIAINTERNAL SERVICE FUNDS

204

Print ShopCommunications &

Information TechnologySchool Site

Landscaping Totals

3,074,918$ 15,738,756$ 3,271,625$ 42,917,142$ - - - 47,664- 43,322 - 52,782

3,074,918$ 15,782,078$ 3,271,625$ 43,017,588$

286,310$ -$ -$ 7,664,316$ 530,678 6,294,041 1,569,017 12,036,339141,484 1,510,742 497,231 3,090,298910,056 3,280,901 181,273 5,218,306176,121 407,373 355,621 1,204,579

21,954 3,196,522 229,979 11,089,683989,626 - - 989,626

- - 63,498 63,49850,346 570,947 37,388 865,203

3,106,575$ 15,260,526$ 2,934,007$ 42,221,848$

(31,657)$ 521,552$ 337,618$ 795,740$

1,867$ 169,044$ 1,791$ 245,167$ 530 18,645 - 2,019,175

- (172,874) - (172,874)- (13,887) 6,702 37,853

(1,645) (31,066) - (32,711)752$ (30,138)$ 8,493$ 2,096,610$

(30,905)$ 491,414$ 346,111$ 2,892,350$

194,346 10,497,790 818,840 833,299

163,441$ 10,989,204$ 1,164,951$ 3,725,649$

Exhibit 34



205

COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

City RiskGarage Management

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers and Users $ 12,725,259 $ 8,095,282Receipts from (Payments for) Interfund Services Provided - -Other Operating Cash Receipts 9,036 48,088Cash Payments to Suppliers of Goods and Services (8,054,664) (7,508,490)Cash Payments to Employees for Services (4,096,153) (460,710)

Net Cash Provided (Used) By Operating Activities $ 583,478 $ 174,170

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES

Payments to Other Funds $ - $ -Payments from Other Funds - 2,000,000

Net Cash Provided By Noncapital and Related Financing Activities $ - $ 2,000,000

CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES

Interest Paid on Capital Debt $ - $ -Purchases of Capital Assets (192,268) -Proceeds From Sale of Salvage 41,856 14,561Principal Paid on Capital Debt - -

Net Cash Used By Capital and RelatedFinancing Activities $ (150,412) $ 14,561

CASH FLOWS FROM INVESTING ACTIVITIESInterest and Dividends Received $ 48 $ 72,417

Net Cash Provided By Investing Activities $ 48 $ 72,417

Net Increase (Decrease) in Cash and Investments $ 433,114 $ 2,261,148

Cash and Investments, July 1 201,166 1,364,954

Cash and Investments, June 30 $ 634,280 $ 3,626,102

206


COMBINING STATEMENT OF CASH FLOWSFOR THE YEAR ENDED JUNE 30, 2004

Exhibit 35

Communications & Print InformationShop Technology Totals

$ 3,060,488 $ 15,742,744 $ 3,271,828 $ 42,895,6017,252 (2,164) - 5,088

- 43,322 - 100,446(2,659,482) (6,478,026) (858,172) (25,558,834)

(675,236) (7,775,043) (2,072,243) (15,079,385)$ (266,978) $ 1,530,833 $ 341,413 $ 2,362,916

$ - $ (172,874) $ - $ (172,874)530 18,645 - 2,019,175

$ 530 $ (154,229) $ - $ 1,846,301

$ (1,645) $ (31,066) $ - $ (32,711)(25,000) (451,971) - (669,239)

- - 16,195 72,612(28,432) (529,263) - (557,695)

$ (55,077) $ (1,012,300) $ 16,195 $ (1,187,033)

$ 1,867 $ 169,044 $ 1,791 $ 245,167$ 1,867 $ 169,044 $ 1,791 $ 245,167

$ (319,658) $ 533,348 $ 359,399 $ 3,267,351

716,420 10,769,591 718,512 13,770,643

$ 396,762 $ 11,302,939 $ 1,077,911 $ 17,037,994

(continued207



SchoolSite

Landscaping

City RiskGarage Management



RECONCILIATION OF OPERATING INCOME (LOSS) TONET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating Income (Loss) $ (26,859) $ (4,914)Adjustments to Reconcile Operating Income (Loss) to

Net Cash Provided (Used) By Operating Activities:Depreciation Expense $ 163,222 $ 43,300(Increase) Decrease in Accounts Receivable (11,087) (215)(Increase) Decrease in Due From Commonwealth - -(Increase) in Inventory (57,673) -Increase (Decrease) in Vouchers and Accounts Payable 349,809 124,025Increase in Deposits Payable - 14,653Increase in Prepaid Support and Maintenance 140,241 -(Decrease) in Estimated Claims and Judgments - (3,435)Increase (Decrease) in Accrued Compensated Leave 25,825 756

Total Adjustments $ 610,337 $ 179,084Net Cash Provided (Used) By Operating Activities $ 583,478 $ 174,170

208

Exhibit 35

Communications & Print InformationShop Technology Totals

SchoolSite

Landscaping



$ (31,657) $ 521,552 $ 337,618 $ 795,740

$ 50,346 $ 570,947 $ 37,388 $ 865,203(14,430) 3,988 203 (21,541)

7,252 (2,164) - 5,088(16,574) - - (74,247)

(258,841) 406,770 (27,801) 593,962- - - 14,653- - - 140,241- - - (3,435)

(3,074) 29,740 (5,995) 47,252$ (235,321) $ 1,009,281 $ 3,795 $ 1,567,176$ (266,978) $ 1,530,833 $ 341,413 $ 2,362,916

209

AGENCY FUNDS The Agency Funds are used to account for the assets held by a governmental unit as an agent for individuals, private or-ganizations, other governmental units, and/or other funds. Agency Funds do not involve the measurement of results of operations, as they are custodial in nature (assets = liabilities). The City has the following Agency Funds:

Escheat Property – funds held on behalf of others payable to the Commonwealth of Virginia.

Fringe Benefits - accounts for the employer contributions on certain fringe benefits, e.g., life insurance, retirement.

Payroll Deductions - accounts for City payroll deductions.

Special Welfare - is established under the authority of Section 63.1-51, Code of Virginia, as amended. This fund accounts for Social Security or Veteran's Administration benefits for specific individuals for which the City is acting as the custodian. It also accounts for donations and the provision for emergency assistance to indigent citizens.

211

Escheat

PropertyFringe

BenefitsPayroll

DeductionSpecial Welfare Total

ASSETSCash and Investments 11,016$ 2,872,324$ 3,000,807$ 150,142$ 6,034,289$ Accounts Receivable 421 - - - 421Due from Commonwealth - - - 3,395 3,395

Total Assets 11,437$ 2,872,324$ 3,000,807$ 153,537$ 6,038,105$

LIABILITIESVouchers and Accounts Payable 11,437$ 2,872,324$ 3,000,807$ 153,537$ 6,038,105$

Total Liabilities 11,437$ 2,872,324$ 3,000,807$ 153,537$ 6,038,105$

NET ASSETS -$ -$ -$ -$ -$

212

JUNE 30, 2004


AGENCY FUNDSCOMBINING STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES

Exhibit 37 CITY OF VIRGINIA BEACH, VIRGINIA

AGENCY FUNDSCOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES


Balance BalanceJuly 1, 2003 Additions Deductions June 30, 2004

FRINGE BENEFITS ASSETS

Cash and Investments $ 2,722,400 $ 48,796,221 $ 48,646,297 $ 2,872,324

LIABILITIESVouchers and Accounts Payable $ 2,722,400 $ 48,796,221 $ 48,646,297 $ 2,872,324

PAYROLL DEDUCTIONS ASSETS

Cash and Investments $ 2,864,073 $ 55,920,250 $ 55,783,516 $ 3,000,807


SPECIAL WELFAREASSETS

Cash and Investments $ 225,022 $ 567,264 $ 642,144 $ 150,142Due from Commonwealth 7,173 3,395 7,173 3,395

Total Assets $ 232,195 $ 570,659 $ 649,317 $ 153,537

LIABILITIESVouchers and Accounts Payable $ 232,195 $ 570,659 $ 649,317 $ 153,537

ESCHEAT PROPERTYASSETS

Cash and Investments $ 5,457 $ 284,470 $ 278,911 $ 11,016Accounts Receivable 143 421 143 421

Total Assets $ 5,600 $ 284,891 $ 279,054 $ 11,437

LIABILITIESVouchers and Accounts Payable $ 5,600 $ 284,891 $ 279,054 $ 11,437

TOTALS - ALL AGENCY FUNDSASSETS

Cash and Investments $ 5,816,952 $ 105,568,205 $ 105,350,868 $ 6,034,289Accounts Receivable 143 421 143 421Due from Commonwealth 7,173 3,395 7,173 3,395

Total Assets $ 5,824,268 $ 105,572,021 $ 105,358,184 $ 6,038,105


213

NONMAJOR COMPONENT UNITS


STATEMENT OF NET ASSETSOTHER COMPONENT UNITS

JUNE 30, 2004

Virginia Beach CommunityDevelopment Development

Authority Corporation Totals ASSETSCurrent Assets:

Cash and Investments $ 2,484,190 $ 988,505 $ 3,472,695Accounts Receivable - Net 16,284,882 83,901 16,368,783Notes Receivable - 1,094,040 1,094,040Accrued Interest Receivable - 80,859 80,859Due from Other Governments - 14,317 14,317Replacement Reserves and Security Deposits - 826,648 826,648Deferred Charges 694,397 - 694,397Inventory - 1,874,693 1,874,693

Total Current Assets $ 19,463,469 $ 4,962,963 $ 24,426,432

Noncurrent Assets:Cash and Investments - Restricted $ 3,534,361 $ - $ 3,534,361Land Held for Resale 18,590,029 - 18,590,029Capital Assets:

Land 8,484,058 982,202 9,466,260Buildings 29,992,164 8,999,052 38,991,216Construction In Progress 12,976,338 - 12,976,338

Less: Accumulated Depreciation (2,239,813) (2,410,692) (4,650,505)Total Capital Assets $ 49,212,747 $ 7,570,562 $ 56,783,309

Total Noncurrent Assets $ 71,337,137 $ 7,570,562 $ 78,907,699Total Assets $ 90,800,606 $ 12,533,525 $ 103,334,131


Vouchers and Accounts Payable $ 5,453,995 $ 145,679 $ 5,599,674Salaries Payable - 35,852 35,852Accrued Interest Payable - 48,638 48,638Deferred Revenue - 8,518 8,518Current Portion of:

Bonds and Notes Payable 1,579,125 966,409 2,545,534Total Current Liabilities $ 7,033,120 $ 1,205,096 $ 8,238,216

Noncurrent Liabilities: Bonds Payable $ 43,268,497 $ - $ 43,268,497Notes Payable - City of Virginia Beach 5,835,575 - 5,835,575Notes Payable - Other 3,198,947 3,681,139 6,880,086

Total Noncurrent Liabilities $ 52,303,019 $ 3,681,139 $ 55,984,158Total Liabilities $ 59,336,139 $ 4,886,235 $ 64,222,374

NET ASSETSInvested in Capital Assets, Net of Related Debt $ 111,119 $ 4,797,707 $ 4,908,826Restricted for Debt Service 14,776,993 - 14,776,993Unrestricted 16,576,355 2,849,583 19,425,938

Total Net Assets $ 31,464,467 $ 7,647,290 $ 39,111,757

215

Exhibit 39

Virginia BeachDevelopment

Authority

Virginia Beach Development AuthorityGovernmental-type Activities $ - $ - $ - $ 6,792,966 $ 6,792,966 $ - $ 6,792,966Business-type Activities 9,450,157 6,866,066 2,375,811 50,000 (158,280) - (158,280)

Community Development CorporationBusiness-type Activities 2,350,957 1,236,699 1,701,396 - - 587,138 587,138

Total Component Units $ 11,801,114 $ 8,102,765 $ 4,077,207 $ 6,842,966 $ 6,634,686 $ 587,138 $ 7,221,824

General Revenues:Unrestricted Investment Earnings $ 30,909 $ 90,825 $ 121,734Miscellaneous 1,695 534,693 536,388

Special Items:Transfer of Infrastructure to Primary Government (6,468,941) - (6,468,941) Total General Revenue and Special Items $ (6,436,337) $ 625,518 $ (5,810,819)

Change in Net Assets $ 198,349 $ 1,212,656 $ 1,411,005Net Assets at Beginning of Year 31,266,118 6,434,634 37,700,752Net Assets at End of Year $ 31,464,467 $ 7,647,290 $ 39,111,757

216

Functions/Programs Expenses

CapitalGrants and

Contributions

OperatingGrants and

Program Revenues

Charges forServices

Community

Contributions

CITY OF VIRGINIA BEACH, VIRGINIAOTHER COMPONENT UNITSSTATEMENT OF ACTIVITIES


Total

Net Revenue and

Changes in Net Assets

Development Corporation

Exhibit 40


Authority Corporation Totals

CITY OF VIRGINIA BEACH, VIRGINIAOTHER COMPONENT UNITS


CASH FLOWS FROM OPERATING ACTIVITIES:Receipts From Customers and Users $ 7,416,295 $ 1,589,503 $ 9,005,798Other Operating Cash Receipts 4,278,644 115,737 4,394,381Cash Payments to Employees for Services (95,688) (1,094,325) (1,190,013)Other Operating Cash Payments (10,887,756) (755,709) (11,643,465)

Net Cash Provided (Used) By Operating Activities $ 711,495 $ (144,794) $ 566,701

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITESIntergovernmental Receipts $ - $ 1,745,164 $ 1,745,164Reserve Deposits - (2,272) (2,272)

Net Cash Provided By Noncapital Financing Activities $ - $ 1,742,892 $ 1,742,892

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Interest Paid on Capital Debt $ (2,055,575) $ (186,986) $ (2,242,561)Capital Contributions From City 2,480,168 - 2,480,168Sale of Town Center Land 983,417 - 983,417Purchases of Capital Assets - (438,932) (438,932)Acquisition and Construction of Capital Assets - (2,002,773) (2,002,773)Proceeds From Debt - 2,651,817 2,651,81731st Street Project (456,194) - (456,194)Proceeds From Sales of Capital Assets - 225,663 225,663Principal Paid on Capital Debt (1,482,463) (1,489,727) (2,972,190)

Net Cash Provided (Used) By Capital and RelatedFinancing Activities $ (530,647) $ (1,240,938) $ (1,771,585)

CASH FLOWS FROM INVESTING ACTIVITIESInterest and Dividends Received $ 26,578 $ 6,392 $ 32,970

Net Increase (Decrease) in Cash and Investments $ 207,426 $ 363,552 $ 570,978

Cash and Investments, July 1 $ 5,572,138 $ 624,953 $ 6,197,091

Cash and Investments, June 30 $ 5,779,564 $ 988,505 $ 6,768,069

RECONCILIATION OF COMPONENTUNITS CASH AND INVESTMENTS:Business Type Activities $ 5,779,564 $ 988,505 $ 6,768,069Governmental Activities 238,987 - 238,987

Total per Exhibit 37 $ 6,018,551 $ 988,505 $ 7,007,056

(continued)217

Exhibit 40


Authority Corporation Totals

CITY OF VIRGINIA BEACH, VIRGINIAOTHER COMPONENT UNITS


RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BYOPERATING ACTIVITIES:Operating Income $ (121,807) $ 54,327 $ (67,480)Adjustments to Reconcile Operating Income to

Net Cash Used By Operating Activities:Depreciation Expense 916,130 288,217 1,204,347Non Cash Selling Expense and Gain on Sale - 6,749 6,749

Changes in Assets and Liabilities:Receivables, Net 4,227,244 122,392 4,349,636Accounts and Other Payables (4,910,006) 498 (4,909,508)Accrued Expenses 15,000 (511,388) (496,388)Land and Building Inventory 584,934 (105,589) 479,345

Net Cash Provided (Used) By Operating Activities $ 711,495 $ (144,794) $ 566,701

Noncash Transactions:Public Facility Revenue Bond Proceeds Receivable from City $ 11,800,000Receivables Resulting from Deferred Land Sales 851,061Decrease in Town Center Notes Payable Related to Land Sales (2,258,430)Amortization of Bond Discount/Premium (15,290)

218

DISCRETELY PRESENTED SCHOOL BOARD COMPONENT UNIT Governmental Funds:

School Operating Special Revenue Fund - accounts for the revenue and expenditures of the City's elementary and secondary education system.

School Grants Special Revenue Fund - accounts for certain Commonwealth of Virginia and Federal Grants of the school system.

School Capital Projects Fund - accounts for the acquisition and construction of School System capital facilities other than those financed by School Board Proprietary and Trust Funds.

School Athletic Special Revenue Fund - accounts for the revenues and expenditures associated with School Athletic Program.

School Cafeterias Special Revenue Fund - accounts for revenues received from and expenses associated with the operation of School System food service facilities.

School Textbook Special Revenue Fund - accounts for the financing and acquisition of textbooks used in the

School system. School Communication Towers/Technology Special Revenue Fund - accounts for the rental of communication towers on School Board property.

School Vending Operations- accounts for receipts/expenditures relating to the soft drink vending operations for the School Board. School Instructional Technology - accounts for funding designated to increase the level of technology in schools.

Proprietary Fund:

School Risk Management Internal Service Fund - provides for insurance and the administration thereof for the School Board.

School Health Insurance Internal Service Fund - Accounts for premiums for both the City and School health insurance.

Fiduciary Funds:

Payroll Deductions Agency Fund - accounts for payroll deductions and the deferred compensation plan under section 457 of the Internal Revenue Code.

Fringe Benefits Agency Fund - accounts for employer contributions on certain fringe benefits,

School Activity Agency Fund - accounts for the student activity monies maintained on behalf of the students at each school.

219

Exhibit 41



Cash and Investments $ 138,660,423Accounts Receivable 606,670Due from Local Government 1,524,888Due from Commonwealth 9,142,727Due from Federal Government 8,827,573Inventories 576,862Prepaid Items 215,268

Total Current Assets $ 159,554,411Noncurrent Assets:

Capital Assets:Land $ 28,475,488Buildings, Improvements, Equipment and Vehicles (net of accumulated depreciation) 133,195,178Construction in Progress 37,831,758

Total Noncurrent Assets $ 199,502,424Total Assets $ 359,056,835


Salaries Payable $ 47,227,865Vouchers and Accounts Payable 15,471,222Deposits Payable 30,000Due to Commonwealth 350Due to Federal Government 87,914Deferred Revenue 4,527,484Long-term Liabilities (due within one year) 13,457,218

Total Current Liabilities $ 80,802,053Noncurrent Liabilities:

Long-term Liabilities (due in more than one year) 13,290,235Total Liabilities $ 94,092,288

NET ASSETSInvested in Capital Assets $ 199,502,424Restricted for:

Capital Projects 48,015,632Grants 894,544

Unrestricted 16,551,947Total Net Assets $ 264,964,547

220


STATEMENT OF NET ASSETSJUNE 30, 2004

DISCRETELY PRESENTED SCHOOL BOARD COMPONENT UNIT

Exhibit 42

Net (Expenses)Operating Capital Revenue and

Charges for Grants and Grants and Change InExpenses Services Contributions Contributions Net Assets

Governmental ActivitiesInstruction $ 470,564,728 $ 4,159,427 $ 89,200,456 $ 12,210,734 $ (364,994,111) Admin, Attendance, & Health 18,825,783 - - - (18,825,783) Pupil Transportation 22,562,797 - 60,000 - (22,502,797) Operations and Maintenance 80,250,298 - - - (80,250,298) Cafeterias 20,925,959 11,541,231 9,515,155 - 130,427

Total Governmental Activities $ 613,129,565 $ 15,700,658 $ 98,775,611 $ 12,210,734 $ (486,442,562)

General Revenues:Local Sources:

Local Government $ 279,216,604Miscellaneous 200,090

Federal and State Aid not Restricted to Specific Purposes:State Basic Aid 162,367,121State Sales Tax 55,338,502Federal Impact Aid 16,543,544

Interest Earnings 416,869Total General Revenues $ 514,082,730 Change in Net Assets $ 27,640,168

Total Net Assets - July 1 237,324,379Total Net Assets - June 30 $ 264,964,547

221

Program Revenues


STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2004


Exhibit 43

Other TotalSchool School Capital Governmental Governmental

Operating Grants Projects Funds Funds

ASSETSCash and Investments $ 47,095,349 $ - $ 55,729,334 $ 12,923,965 $ 115,748,648 Accounts Receivable 331,553 3,645 - 26,718 361,916 Due from Other Funds 3,865,193 - - - 3,865,193 Due from Local Government - - 100 1,524,788 1,524,888 Due from Commonwealth 9,012,251 130,476 - - 9,142,727 Due from Federal Government 124,180 8,200,967 - 502,426 8,827,573 Inventories - - - 576,862 576,862 Prepaid Items 127,352 - - 86,393 213,745

Total Assets $ 60,555,878 $ 8,335,088 $ 55,729,434 $ 15,641,152 $ 140,261,552

LIABILITIES ANDFUND BALANCES

LIABILITIESSalaries Payable $ 43,432,776 $ 2,867,735 $ 6,403 $ 920,894 $ 47,227,808 Vouchers and Accounts Payable 5,476,554 280,951 7,619,485 246,860 13,623,850 Deposits Payable - - - 30,000 30,000 Due to Other Funds - 3,865,193 - - 3,865,193 Due to Commonwealth 350 - - - 350 Due to Federal Government - - 87,914 - 87,914 Deferred Revenue 188,289 426,665 - 77,566 692,520

Total Liabilities $ 49,097,969 $ 7,440,544 $ 7,713,802 $ 1,275,320 $ 65,527,635

FUND BALANCESReserved for:

Encumbrances $ 11,330,557 $ - $ 22,954,749 $ 333,786 $ 34,619,092 Inventories - - - 576,862 576,862 Prepaid Items 127,352 - - 86,393 213,745

Unreserved, Reported In:Designated:

Capital Projects Fund - - 25,060,883 - 25,060,883 Special Revenue Funds - 894,544 - 6,665,167 7,559,711

Undesignated:Special Revenue Funds - - - 6,703,624 6,703,624 Total Fund Balances $ 11,457,909 $ 894,544 $ 48,015,632 $ 14,365,832 $ 74,733,917

Total Liabilities A and Fund Balances $ 60,555,878 $ 8,335,088 $ 55,729,434 $ 15,641,152 $ 140,261,552

222


BALANCE SHEET

JUNE 30, 2004GOVERNMENTAL FUNDS


Amounts reported for governmental activities in the Statement of Net Assets (Exhibit 40)are different from amounts reported for governmental funds in this exhibit because:

Total Fund Balances - Governmental Funds (this exhibit) $ 74,733,917

Cost of Capital Assets $ 333,203,237less: Accumulated Depreciation 133,700,813 199,502,424

Compensated Absences $ 18,835,257Net Pension Obligation 61,002 (18,896,259)

Total Assets $ 23,158,052less: Total Liabilities 13,533,587

Total Net Assets 9,624,465

Total Net Assets of governmental activities in the Statement of Net Assets (Exhibit 40). $ 264,964,547

JUNE 30, 2004

223

CITY OF VIRGINIA BEACH, VIRGINIADISCRETELY PRESENTED SCHOOL BOARD COMPONENT UNIT

RECONCILIATION OF THE BALANCE SHEETTO THE STATEMENT OF NET ASSETS

Capital assets used in governmental activities are not financial resources and, therefore, arenot reported in the governmental funds.

Long-term liabilities are not due and payable in the current period and, therefore, are notreported as liabilities in the governmental funds. Long-term liabilities at year end consist ofthe following:

Internal Service Funds are used to account for the risk management and health insuranceprograms; and related charges to the various governmental funds. The assets and liabilitiesof the internal service funds are included in governmental activities in the Statement of NetAssets.

Exhibit 44

Other TotalSchool School Capital Governmental Governmental

Operating Grants Projects Funds Funds

REVENUESFrom Use of Money and Property $ 473,788 $ - $ 251,441 $ 407,328 $ 1,132,557 Charges for Services 1,436,140 - - 12,674,966 14,111,106 Miscellaneous 858,624 9,815 - 215,331 1,083,770 From Local Government 244,048,402 - 33,643,414 1,524,788 279,216,604 From Commonwealth 265,557,250 7,232,290 12,210,734 4,062,169 289,062,443 From Federal Government 17,740,491 29,257,304 - 9,165,458 56,163,253

Total Revenues $ 530,114,695 $ 36,499,409 $ 46,105,589 $ 28,050,040 $ 640,769,733

EXPENDITURESCurrent:

Instruction $ 409,960,502 $ 38,963,555 $ 2,859,504 $ 11,157,037 $ 462,940,598 Admin, Attendance, & Health 18,324,231 - 536 - 18,324,767 Pupil Transportation 20,513,063 - 10,433 - 20,523,496 Operations and Maintenance 69,784,135 - 8,957,957 20,798,969 99,541,061

Capital Outlay 6,079,228 246,466 32,773,441 469,444 39,568,579 Total Expenditures $ 524,661,159 $ 39,210,021 $ 44,601,871 $ 32,425,450 $ 640,898,501

EXCESS (DEFICIENCY) OFREVENUES OVER (UNDER)EXPENDITURES $ 5,453,536 $ (2,710,612) $ 1,503,718 $ (4,375,410) $ (128,768)

OTHER FINANCING SOURCES (USES)Transfers In $ - $ 2,763,244 $ 156,398 $ 6,169,063 $ 9,088,705 Transfers Out (8,907,307) - - (181,398) (9,088,705)

Total Other Financing Sources (Uses) $ (8,907,307) $ 2,763,244 $ 156,398 $ 5,987,665 $ -

NET CHANGES IN FUND BALANCES $ (3,453,771) $ 52,632 $ 1,660,116 $ 1,612,255 $ (128,768)

FUND BALANCES - JULY 1 14,911,680 841,912 46,355,516 12,753,577 74,862,685

FUND BALANCES - JUNE 30 $ 11,457,909 $ 894,544 $ 48,015,632 $ 14,365,832 $ 74,733,917

224


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS



Amounts reported for governmental activities in the Statement of Activities (Exhibit 41)are different from amounts reported for governmental funds in this exhibit because:

Net Change in Fund Balances - Governmental Funds (this exhibit) $ (128,768)

28,387,377

Leave Used $ 7,379,931Leave Earned (7,820,343) (440,412)

NPO - June 30, 2003 $ 51,404NPO - June 30, 2004 (61,002) (9,598)

Risk Management $ 211,630Health Insurance 1,895,383 2,107,013

(2,275,444)

Change in Net Assets of governmental activities in the Statement of Activities (Exhibit 41) $ 27,640,168

225


RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

Section 15.2-1800.1 of the Code of Virginia, as amended, affects the reporting of localSchool Board capital assets and related debt for financial reporting purposes. Under thislegislation, the City has a "tenancy in common" with the School Board whenever the Cityincurs "on-behalf" of debt for any school property owned by the School Board which ispayable over more than one year. For financial reporting purposes, the City will report theNet Book Value of School Board property (the School Board incurs the depreciationexpense) equal to the total outstanding principal balance of the applicable "on-behalf" of debtat June 30, 2003. This amount is the applicable Net Book Value change and depreciationexpense for the fiscal year.

Capital outlays to purchase or build capital assets are reported in governmental funds asexpenditures. However, for governmental activities those costs are shown in the Statement ofNet Assets and allocated over their estimated useful lives as annual depreciation expenses inthe Statement of Activities. This is the amount by which capital outlays exceededdepreciation expense (including loss on capital asset dispositions) for the fiscal year.

Compensated absences (annual, sick, and personal reasons leave) are reported ingovernmental funds as expenditures, which are measured by the amount of financialresources used (essentially, the amounts actually paid). However, for governmental activitiesthose costs are shown and measured by the net of the amounts of leave used and earned forthe fiscal year in the Statement of Activities.

Net Pension Obligation (NPO) for the nonprofessional employees in the Virginia RetirementSystem (VRS) are not reported in governmental funds. However, for governmental activitiesthe net change in the NPO to VRS for the fiscal year is reported in the Statement ofActivities.

Internal Service Funds are used to account for the risk management and health insuranceprograms, and related charges to the various governmental funds. The change in net assetsfor the Internal Service Funds for the fiscal year is reported with governmental activities inthe Statement of Activities.

FOR THE YEAR ENDED JUNE 30, 2004TO THE STATEMENT OF ACTIVITIES

Exhibit 45

Variance -Original Final PositiveBudget Budget Actual (Negative)

REVENUESFrom Use of Money and Property

Rents $ 450,000 $ 450,000 $ 473,788 $ 23,788

Charges for ServicesTuition and Educational Fees $ 1,336,664 $ 1,336,664 $ 1,436,140 $ 99,476

Miscellaneous RevenueSale of School Buses & Vehicles $ 5,000 $ 5,000 $ 88,181 $ 83,181 Sale of Salvage 2,000 2,000 22,337 20,337 Insurance Proceeds - - 27,697 27,697 Flex Benefit Forfeitures 15,000 15,000 - (15,000) Donations - - 54,506 54,506 Miscellaneous 95,000 95,000 2,200 (92,800) Indirect Costs 300,000 300,000 663,703 363,703

Total Miscellaneous Revenue $ 417,000 $ 417,000 $ 858,624 $ 441,624

From Local Government $ 254,754,290 $ 257,254,290 $ 244,048,402 $ (13,205,888)

From CommonwealthBasic Aid $ 163,267,032 $ 163,267,032 $ 162,367,121 $ (899,911) Reimbursement-Social Security 8,281,014 8,281,014 8,346,520 65,506 Reimbursement-Retirement 4,802,007 4,802,007 4,839,993 37,986 Remedial Education 2,567,589 2,567,589 2,581,517 13,928 Remedial Educ-Summer School 1,244,177 1,244,177 1,078,291 (165,886) Special Education 13,726,728 13,726,728 13,801,186 74,458 Special Educ-Regional Program 4,782,741 4,782,741 6,174,987 1,392,246 Special Education-Homebound 148,770 148,770 189,975 41,205 Special Education-Foster Children - - 214,977 214,977 Foster Home Children 145,345 145,345 95,270 (50,075) Vocational 1,826,938 1,826,938 1,836,848 9,910 Vocational-Occupational/Tech 190,988 190,988 166,498 (24,490) Vocational-Adult Education - - 32,251 32,251 General Adult Education 122,846 122,846 68,591 (54,255) Sales Tax 53,697,320 53,697,320 55,338,502 1,641,182 Class Size Initiative 2,809,061 2,809,061 2,692,039 (117,022) Salary Support 1,975,960 1,975,960 1,970,527 (5,433) Enrollment Loss 113,082 113,082 418,937 305,855 At-Risk Initiative 1,299,234 1,299,234 1,306,269 7,035 English as a Second Language 249,947 249,947 243,886 (6,061) Visually Impaired - - 19,591 19,591 Gifted and Talented Aid 1,763,857 1,763,857 1,773,474 9,617

Total From Commonwealth $ 263,014,636 $ 263,014,636 $ 265,557,250 $ 2,542,614

(continued)


SCHOOL OPERATING SPECIAL REVENUE FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL



226

Exhibit 45






REVENUES (continued)From Federal Government

Public Law 874 $ 12,461,723 $ 12,461,723 $ 13,412,268 $ 950,545 Public Law 874-Special Educ - - 1,673,311 1,673,311 Adult Basic Education 134,408 134,408 298,217 163,809 Dept of the Navy-NJROTC 100,000 100,000 191,806 91,806 DOD-Teacher Incentive Program - - 8,059 8,059 Department of Defense 1,500,000 1,500,000 1,457,965 (42,035) Medicaid Reimbursement 175,000 175,000 629,693 454,693 Other Federal Funds - - 69,172 69,172

Total From Federal Government $ 14,371,131 $ 14,371,131 $ 17,740,491 $ 3,369,360

Total Revenues $ 534,343,721 $ 536,843,721 $ 530,114,695 $ (6,729,026)

EXPENDITURESCurrentInstruction

Elementary Classroom $ 105,665,841 $ 109,046,909 $ 107,671,197 $ 1,375,712 Senior High Classroom 67,146,277 68,305,290 65,116,802 3,188,488 Technical and Career Education 16,864,991 16,793,971 16,622,721 171,250 Gifted and Magnet Programs 9,895,644 10,084,298 9,787,361 296,937 Special Education 56,344,677 56,927,815 56,854,089 73,726 Summer School 3,293,099 2,898,843 2,765,461 133,382 General Adult Education 1,848,585 1,824,481 1,881,662 (57,181) Open Campus High School 1,765,647 1,672,723 1,356,569 316,154 Student Activities 2,331,679 2,582,849 2,268,482 314,367 Office/Principal - Elementary 17,011,516 17,667,962 17,193,263 474,699 Office/Principal - Senior High 8,614,879 9,000,565 8,773,275 227,290 Office/Principal - Tech & Career 427,513 462,317 445,348 16,969 Guidance Services 13,726,609 13,910,468 13,754,308 156,160 Social Work Services 1,905,920 2,006,976 1,994,684 12,292 Media and Communications 1,288,765 1,296,013 1,119,121 176,892 Instructional Technology 7,311,377 7,721,717 7,479,348 242,369 Instructional Support 7,826,255 7,768,800 7,328,430 440,370 Organizational Development 1,812,058 1,757,222 1,170,919 586,303 Special Education Support 1,444,212 1,433,090 1,420,702 12,388 Gifted & Magnet Prog Support 1,410,341 1,432,808 1,300,479 132,329 Media Services Support 10,972,713 11,250,723 10,822,520 428,203 Office of Accountability 2,001,840 2,109,905 1,535,551 574,354 Middle School Classroom 51,696,863 52,169,343 51,764,126 405,217 Remedial Education 3,986,351 3,947,601 3,561,682 385,919 Office/Principal - Middle Schools 7,517,686 7,818,637 7,600,753 217,884 Homebound Services 858,332 799,458 623,366 176,092 Technical and Career Ed Support 737,117 745,927 706,043 39,884 Student Leadership 729,521 774,409 758,722 15,687

227(continued)

Exhibit 45






EXPENDITURES (continued)Current (continued)Instruction (continued)

Psychological Services $ 2,633,991 $ 2,865,985 $ 2,858,385 $ 7,600 Audiological Services 224,125 241,972 231,148 10,824 School Administration 1,090,519 1,102,636 985,102 117,534 Alternative Education 2,236,923 2,299,504 2,208,883 90,621

Total Instruction $ 412,621,866 $ 420,721,217 $ 409,960,502 $ 10,760,715

Admin, Attendance & HealthBoard, Legal, & Governmental $ 1,065,661 $ 766,215 $ 696,513 $ 69,702 Office of the Superintendent 720,097 680,373 540,719 139,654 Department of Budget & Finance 2,717,588 2,786,333 2,776,827 9,506 Department of Human Resources 3,457,037 3,515,958 3,530,892 (14,934) Internal Audit 274,857 277,926 268,475 9,451 Purchasing Division 774,798 761,153 728,963 32,190 Organizational Development 2,293,257 2,294,562 1,906,165 388,397 Office of Technology 1,121,721 1,182,297 1,183,731 (1,434) Benefits Office 1,826,080 1,840,399 1,808,134 32,265 Health Services 4,888,192 4,975,441 4,883,812 91,629

Total Adm, Attendance, & Health $ 19,139,288 $ 19,080,657 $ 18,324,231 $ 756,426

Pupil TransportationManagement $ 1,524,558 $ 1,544,660 $ 1,535,742 $ 8,918 Vehicle Operation 16,529,278 16,462,315 14,852,528 1,609,787 Vehicle Maintenance 2,153,160 2,174,643 2,071,057 103,586 Monitoring Services 2,169,633 2,069,633 2,053,736 15,897

Total Pupil Transportation $ 22,376,629 $ 22,251,251 $ 20,513,063 $ 1,738,188

Operations and MaintenanceFacility Planning & Construction $ 597,149 $ 585,133 $ 562,670 $ 22,463 School Plant 32,162,751 35,318,200 33,516,754 1,801,446 Supply Services 1,076,547 1,044,714 965,573 79,141 Grounds Services 2,971,625 3,271,625 3,271,625 - Custodial Services 19,474,407 19,608,606 19,327,402 281,204 Security Services 4,087,396 4,210,123 3,905,138 304,985 Vehicle Services 581,371 600,456 566,239 34,217 Telecommunications 1,353,768 1,074,286 878,387 195,899 Technology Maintenance 6,894,426 7,241,582 6,790,347 451,235

Total Operations & Maintenance $ 69,199,440 $ 72,954,725 $ 69,784,135 $ 3,170,590 Total Current $ 523,337,223 $ 535,007,850 $ 518,581,931 $ 16,425,919

(continued)228

Exhibit 45






Capital OutlayInstruction $ 2,227,053 $ 2,102,889 $ 831,327 $ 1,271,562 Admin, Attendance & Health 26,478 109,110 35,016 74,094 Pupil Transportation 1,008,742 4,442,213 4,327,168 115,045 Operations and Maintenance 38,600 2,066,041 885,717 1,180,324

Total Capital Outlay $ 3,300,873 $ 8,720,253 $ 6,079,228 $ 2,641,025

Total Expenditures $ 526,638,096 $ 543,728,103 $ 524,661,159 $ 19,066,944

EXCESS (DEFICIENCY) OFREVENUES OVER (UNDER)EXPENDITURES $ 7,705,625 $ (6,884,382) $ 5,453,536 $ 12,337,918

OTHER FINANCING SOURCES (USES)Transfers Out (7,705,625) (7,705,625) (8,907,307) (1,201,682)

NET CHANGE IN FUND BALANCE $ - $ (14,590,007) $ (3,453,771) $ 11,136,236 FUND BALANCE - JULY 1 14,911,680 14,911,680 14,911,680 - FUND BALANCE - JUNE 30 $ 14,911,680 $ 321,673 $ 11,457,909 $ 11,136,236

229

School School SchoolAthletics Cafeterias Textbooks

ASSETSCash and Investments $ 723,012 $ 2,342,588 $ 7,631,131 Accounts Receivable 3,397 6,985 14,942 Due from Local Government - - - Due from Federal Government - 502,426 - Inventories - 576,862 - Prepaid Items 86,393 - -

Total Assets $ 812,802 $ 3,428,861 $ 7,646,073

LIABILITIES AND FUND BALANCESLiabilities:

Salaries Payable $ 35,730 $ 885,134 $ 30 Vouchers and Accounts Payable 33,159 169,629 44,072 Deposits Payable - - - Deferred Revenue - 77,566 -

Total Liabilities $ 68,889 $ 1,132,329 $ 44,102

Fund Balances:Reserved for:

Encumbrances $ 209,639 $ 80,651 $ 43,496 Inventories - 576,862 - Prepaid Items 86,393 - -

Unreserved:Designated for Subsequent Year's Operating Budget 447,881 536,970 2,155,528 Undesignated - 1,102,049 5,402,947

Total Fund Balances $ 743,913 $ 2,296,532 $ 7,601,971

Total Liabilities and Fund Balances $ 812,802 $ 3,428,861 $ 7,646,073

JUNE 30, 2004

230


COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS

Exhibit 46

SchoolCommunication School School

Towers/ Vending InstructionalTechnology Operations Technology Totals

$ 1,175,436 $ 1,051,798 $ - $ 12,923,965 740 654 - 26,718

- - 1,524,788 1,524,788 - - - 502,426 - - - 576,862 - - - 86,393

$ 1,176,176 $ 1,052,452 $ 1,524,788 $ 15,641,152

$ - $ - $ - $ 920,894 - - - 246,860

30,000 - - 30,000 - - - 77,566

$ 30,000 $ - $ - $ 1,275,320

$ - $ - $ - $ 333,786 - - - 576,862 - - - 86,393

1,050,000 950,000 1,524,788 6,665,167 96,176 102,452 - 6,703,624

$ 1,146,176 $ 1,052,452 $ 1,524,788 $ 14,365,832

$ 1,176,176 $ 1,052,452 $ 1,524,788 $ 15,641,152


COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS

JUNE 30, 2004

231

School School SchoolAthletics Cafeterias Textbooks

REVENUESFrom Use of Money and Property $ 21,052 $ 54,001 $ 69,693 Charges for Services 452,232 11,419,218 4,769 Miscellaneous - 122,013 93,318 From Local Government - - - From Commonwealth - 349,697 3,712,472 From Federal Government - 9,165,458 -

Total Revenues $ 473,284 $ 21,110,387 $ 3,880,252

EXPENDITURESCurrent:

Instruction $ 3,429,350 $ - $ 7,183,478 Operations and Maintenance - 20,798,969 -

Capital Outlay 377,002 92,442 - Total Expenditures $ 3,806,352 $ 20,891,411 $ 7,183,478

EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURES $ (3,333,068) $ 218,976 $ (3,303,226)

OTHER FINANCING SOURCESTransfers In $ 3,088,619 $ 25,000 $ 3,055,444 Transfers Out - - -

Total Other Financing Sources $ 3,088,619 $ 25,000 $ 3,055,444

NET CHANGES IN FUND BALANCES $ (244,449) $ 243,976 $ (247,782)

FUND BALANCES - JULY 1 988,362 2,052,556 7,849,753

FUND BALANCES - JUNE 30 $ 743,913 $ 2,296,532 $ 7,601,971


COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESNONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS

232


Exhibit 47

SchoolCommunication School School School

Towers/ Vending Site InstructionalTechnology Operations Acquisitions Technology Totals

$ 252,951 $ 8,767 $ 864 $ - $ 407,328 - 798,747 - - 12,674,966 - - - - 215,331 - - - 1,524,788 1,524,788 - - - - 4,062,169 - - - - 9,165,458

$ 252,951 $ 807,514 $ 864 $ 1,524,788 $ 28,050,040

$ - $ 544,209 $ - $ - 11,157,037 - - - - 20,798,969 - - - - 469,444

$ - $ 544,209 $ - $ - $ 32,425,450

$ 252,951 $ 263,305 $ 864 $ 1,524,788 $ (4,375,410)

$ - $ - $ - $ - $ 6,169,063 - (25,000) (156,398) - (181,398)

$ - $ (25,000) $ (156,398) $ - $ 5,987,665

$ 252,951 $ 238,305 $ (155,534) $ 1,524,788 $ 1,612,255

893,225 814,147 155,534 - 12,753,577

$ 1,146,176 $ 1,052,452 $ - $ 1,524,788 $ 14,365,832


COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESNONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS


233

Exhibit 48

School SchoolRisk Health

Management Insurance Totals


Cash and Investments $ 9,113,783 $ 13,797,992 $ 22,911,775 Accounts Receivable 210,102 34,652 244,754 Prepaid Items 1,523 - 1,523

Total Assets $ 9,325,408 $ 13,832,644 $ 23,158,052


Salaries Payable $ 57 $ - $ 57 Vouchers and Accounts Payable 172,783 1,674,589 1,847,372 Deferred Revenue - 3,834,964 3,834,964 Estimated Claims and Judgments

(due within one year) 1,958,133 3,930,263 5,888,396 Total Current Liabilities $ 2,130,973 $ 9,439,816 $ 11,570,789

Noncurrent Liabilities:Estimated Claims and Judgments

(due in more than one year) 652,711 1,310,087 1,962,798 Total Liabilities $ 2,783,684 $ 10,749,903 $ 13,533,587

NET ASSETSUnrestricted $ 6,541,724 $ 3,082,741 $ 9,624,465

Total Net Assets $ 6,541,724 $ 3,082,741 $ 9,624,465

234

JUNE 30, 2004


INTERNAL SERVICE FUNDSCOMBINING STATEMENT OF NET ASSETS

Exhibit 49



OPERATING REVENUESCharges for Services $ 3,792,985 $ 64,823,046 $ 68,616,031 Insurance Recovery 348,050 - 348,050 Miscellaneous Revenue 5,844 101,267 107,111

Total Operating Revenues $ 4,146,879 $ 64,924,313 $ 69,071,192

OPERATING EXPENSESPersonnel Services $ 193,512 $ 85,611 $ 279,123 Fringe Benefits 42,650 22,583 65,233 Other Charges 3,815,238 63,357,510 67,172,748

Total Operating Expenses $ 4,051,400 $ 63,465,704 $ 67,517,104

OPERATING INCOME (LOSS) $ 95,479 $ 1,458,609 $ 1,554,088

NONOPERATING REVENUESFrom Local Government $ - $ 369,243 $ 369,243 From Federal Government (FEMA) 15,707 - 15,707 Interest Income 100,444 67,531 167,975

Total Nonoperating Revenues $ 116,151 $ 436,774 $ 552,925

CHANGES IN NET ASSETS $ 211,630 $ 1,895,383 $ 2,107,013

TOTAL NET ASSETS - JULY 1 6,330,094 1,187,358 7,517,452

TOTAL NET ASSETS - JUNE 30 $ 6,541,724 $ 3,082,741 $ 9,624,465

235



INTERNAL SERVICE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS

Exhibit 50



CASH FLOWS FROM OPERATINGACTIVITIES:Receipts from Customers and Users $ 3,937,035 $ 65,339,415 $ 69,276,450 Payments to Vendors for Goods and Services (3,562,504) (64,420,546) (67,983,050) Payments to Employees for Services (236,162) (108,194) (344,356)

Net Cash Provided By Operating Activities $ 138,369 $ 810,675 $ 949,044

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES:Intergovernmental Receipts $ 15,707 $ 369,243 $ 384,950

CASH FLOWS FROM INVESTINGACTIVITIES:Interest Received on Investments $ 100,444 $ 67,531 $ 167,975

NET INCREASE (DECREASE) INCASH AND INVESTMENTS $ 254,520 $ 1,247,449 $ 1,501,969

CASH AND INVESTMENTS,BEGINNING OF YEAR 8,859,263 12,550,543 21,409,806

CASH AND INVESTMENTS,END OF YEAR $ 9,113,783 $ 13,797,992 $ 22,911,775

RECONCILIATION OF OPERATING INCOME TONET CASH PROVIDED BY OPERATING ACTIVITIES:

Operating Income $ 95,479 $ 1,458,609 $ 1,554,088 Adjustments to Reconcile Operating Income to

Net Cash Provided By Operating Activities:(Increase) Decrease in Assets

Accounts Receivable $ (209,844) $ 167,348 $ (42,496) Prepaid Items 30,791 - 30,791

Increase (Decrease) in LiabilitiesSalaries Payable 57 (15) 42 Vouchers and Accounts Payable 34,358 (1,299,895) (1,265,537) Deferred Revenue - 247,754 247,754 Estimated Claims and Judgments 187,528 236,874 424,402

Total Adjustments $ 42,890 $ (647,934) $ (605,044) Net Cash Provided By Operating Activities $ 138,369 $ 810,675 $ 949,044

236



INTERNAL SERVICE FUNDSCOMBINING STATEMENT OF CASH FLOWS

Exhibit 51

Balance Balance

PAYROLL DEDUCTIONSASSETS

Cash and Investments $ 4,098,287 $ 105,101,375 $ 105,255,632 $ 3,944,030 Accounts Receivable 247,170 3,739 247,170 3,739

Total Assets $ 4,345,457 $ 105,105,114 $ 105,502,802 $ 3,947,769 LIABILITIES

Vouchers and Accounts Payable $ 4,345,457 $ 105,105,114 $ 105,502,802 $ 3,947,769

FRINGE BENEFITSASSETS

Cash and Investments $ 4,320,643 $ 62,386,392 $ 62,280,057 $ 4,426,978 LIABILITIES


SCHOOL ACTIVITY ACCOUNTSASSETS

Cash and Investments $ 3,251,817 $ 14,095,247 $ 14,220,244 $ 3,126,820 LIABILITIES


TOTAL - AGENCY FUNDSASSETS

Cash and Investments $ 11,670,747 $ 181,583,014 $ 181,755,933 $ 11,497,828 Accounts Receivable 247,170 3,739 247,170 3,739

Total Assets $ 11,917,917 $ 181,586,753 $ 182,003,103 $ 11,501,567 LIABILITIES

Vouchers and Accounts Payable $ 11,917,917 $ 181,586,753 $ 182,003,103 $ 11,501,567 Total Liabilities $ 11,917,917 $ 181,586,753 $ 182,003,103 $ 11,501,567

237


AGENCY FUNDSCOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES



June 30, 2004July 1, 2003 Additions Deductions

STATISTICAL SECTION

Fiscal General Social Year Total Government Services Judicial Police

1995 $ 676,267,936 $ 34,233,460 $ 16,118,581 $ 19,881,227 $ 18,771,076 $ 47,593,7651996 705,961,379 37,304,616 18,121,867 23,916,179 18,969,018 49,115,2601997 752,847,560 40,260,409 20,213,724 22,956,233 21,132,072 53,024,0651998 813,931,429 42,997,097 21,869,815 25,311,115 23,750,277 56,085,5831999 870,335,695 47,567,508 23,261,536 30,649,929 26,646,617 59,192,5922000 920,441,959 57,724,062 25,986,820 34,099,933 27,899,616 56,811,6942001 967,540,093 62,518,883 27,798,154 33,201,309 31,285,679 60,538,7352002 1,009,953,396 66,884,806 29,590,918 37,763,933 32,906,554 63,324,2392003 1,049,638,432 71,288,773 32,222,233 38,955,232 33,183,276 64,193,4212004 1,148,542,722 96,608,427 34,297,016 38,846,787 36,462,225 68,612,314

Note: Includes General, Debt Service and City and School Board Special Revenue Funds.

CITY OF VIRGINIA BEACH, VIRGINIAGENERAL GOVERNMENT EXPENDITURES - FUNCTIONS EXPRESSED AS PERCENT OF TOTAL

Last Ten Fiscal Years

Public &Fiscal General Mental SocialYear Total Government Health Services Judicial Police

1995 100.00 5.06 2.38 2.94 2.78 7.041996 100.00 5.28 2.57 3.39 2.68 6.961997 100.00 5.35 2.69 3.05 2.81 7.041998 100.00 5.28 2.69 3.11 2.92 6.891999 100.00 5.47 2.67 3.52 3.06 6.802000 100.00 6.27 2.82 3.71 3.03 6.172001 100.00 6.46 2.87 3.43 3.23 6.262002 100.00 6.62 2.93 3.74 3.26 6.272003 100.00 6.79 3.07 3.71 3.16 6.122004 100.00 8.41 2.99 3.38 3.17 5.97

240

Health Mental

Public &

CITY OF VIRGINIA BEACH, VIRGINIAGENERAL GOVERNMENT EXPENDITURES BY FUNCTION


CITY OF VIRGINIA BEACH, VIRGINIA Table 1

Public Parks and Debt Fire Works Recreation Libraries Education Service Other

$ 19,948,923 $ 42,560,095 $ 11,491,480 $ 8,343,625 $ 358,964,515 $ 66,409,822 $ 31,951,36721,024,196 44,671,117 12,475,967 8,538,111 365,973,132 69,774,688 36,077,22823,350,664 45,432,739 13,366,930 8,667,032 396,526,734 69,964,218 37,952,74023,717,699 48,508,226 16,491,591 9,447,910 432,083,227 74,085,401 39,583,48830,782,264 50,523,133 17,325,415 9,801,062 460,812,902 71,583,284 42,189,45326,150,370 51,058,607 18,067,033 10,279,584 493,622,650 71,862,948 46,878,64227,377,108 56,950,233 18,935,601 10,911,423 511,666,430 75,534,575 50,821,96330,522,542 55,673,399 20,698,083 12,058,148 531,906,406 77,326,825 51,297,54330,759,777 56,823,767 21,494,838 12,688,503 550,120,114 82,028,247 55,880,25133,843,537 59,257,259 21,841,790 14,002,101 596,296,630 90,499,545 57,975,091

CITY OF VIRGINIA BEACH, VIRGINIA Table 2GENERAL GOVERNMENT EXPENDITURES - FUNCTIONS EXPRESSED AS PERCENT OF TOTAL


Public Parks and DebtFire Works Recreation Libraries Education Service Other

2.95 6.29 1.70 1.23 53.08 9.82 4.732.98 6.33 1.77 1.21 51.84 9.88 5.113.10 6.03 1.78 1.15 52.67 9.29 5.042.91 5.96 2.03 1.16 53.09 9.10 4.863.54 5.80 1.99 1.13 52.95 8.22 4.852.84 5.55 1.96 1.12 53.63 7.81 5.092.83 5.89 1.96 1.13 52.88 7.81 5.253.02 5.51 2.05 1.19 52.67 7.66 5.082.93 5.41 2.05 1.21 52.41 7.82 5.322.95 5.16 1.90 1.22 51.92 7.88 5.05

241

Last Ten Fiscal YearsGENERAL GOVERNMENT EXPENDITURES BY FUNCTION

Permits,Privilege Fees

General Other and FinesFiscal Property Local Regulatory andYear Total Taxes Taxes Licenses Forfeitures

1995 $ 707,673,276 $ 261,375,095 $ 128,044,884 $ 2,780,205 $ 3,171,2081996 753,954,481 284,285,512 134,941,514 3,655,490 3,435,0701997 818,232,406 298,295,069 142,212,356 3,449,833 3,767,8511998 867,826,498 314,717,643 150,552,434 3,663,320 4,031,4181999 909,638,059 325,894,366 158,289,366 3,678,921 3,914,4532000 981,934,194 354,462,044 164,881,682 4,118,927 4,121,4792001 1,021,315,069 367,306,209 173,495,188 3,833,565 4,312,3222002 1,071,758,165 390,469,411 188,146,100 4,074,179 4,544,4002003 1,128,687,165 416,444,023 199,025,004 4,251,659 3,993,0542004 1,231,043,552 454,086,722 222,657,332 5,226,392 4,705,366

Note: Includes General, Debt Service and City and School Board Special Revenue Funds.

CITY OF VIRGINIA BEACH, VIRGINIA GENERAL REVENUES - SOURCES EXPRESSED AS A PERCENT OF TOTAL


Permits,Privilege Fees

General Other and FinesFiscal Property Local Regulatory andYear Total Tax Taxes Licenses Forfeitures

1995 100.00 36.93 18.09 0.39 0.451996 100.00 37.69 17.89 0.48 0.461997 100.00 36.46 17.38 0.42 0.461998 100.00 36.27 17.35 0.42 0.461999 100.00 35.83 17.40 0.40 0.432000 100.00 36.10 16.79 0.42 0.422001 100.00 35.96 16.99 0.38 0.422002 100.00 36.43 17.56 0.38 0.422003 100.00 36.90 17.63 0.38 0.352004 100.00 36.89 18.09 0.42 0.38

Note: Total includes a 10% penalty ($10 minimum) on delinquent collections.

242

Last Ten Fiscal YearsGENERAL REVENUES BY SOURCE



Use ofMoney Charges From Other From

and For Local From FederalProperty Services Governments Commonwealth Government

$ 9,495,380 $ 13,895,616 $ 172,137 $ 248,172,907 $ 35,579,700 $ 4,986,1448,025,991 15,690,338 180,286 261,495,920 37,148,981 5,095,379

10,597,122 25,854,444 333,934 284,339,142 43,253,746 6,128,90912,301,339 28,315,424 195,284 293,728,027 53,408,058 6,913,5519,902,056 27,818,585 200,334 313,105,938 61,279,452 5,554,588

10,473,943 33,536,895 206,344 338,570,960 65,511,526 6,050,39413,274,450 34,744,516 212,535 347,499,717 68,783,915 7,852,6527,667,525 36,679,437 440,059 350,003,428 83,710,426 6,023,2007,790,817 37,065,852 344,608 357,598,455 94,735,295 7,438,3986,986,830 39,501,175 338,044 374,071,233 115,296,104 8,174,354



Use ofMoney Charges From Other From

and For Local From FederalProperty Services Governments Commonwealth Government Miscellaneous

1.34 1.96 0.02 35.07 5.03 0.701.06 2.08 0.02 34.72 4.92 0.681.29 3.16 0.04 34.75 5.29 0.751.42 3.26 0.02 33.85 6.15 0.801.09 3.06 0.02 34.42 6.74 0.611.07 3.42 0.02 34.48 6.67 0.611.30 3.40 0.02 34.02 6.73 0.770.72 3.42 0.04 32.66 7.81 0.560.69 3.28 0.03 31.68 8.39 0.660.57 3.21 0.03 30.39 9.36 0.66

243

GENERAL REVENUES - SOURCES EXPRESSED AS A PERCENT OF TOTAL

Last Ten Fiscal YearsGENERAL REVENUES BY SOURCE

Miscellaneous


TotalCollections

Real Total (Net) Current as aEstate Current Taxes Percent Delinquent Total Percent of

Fiscal Tax Taxes Receivable Of Levy Tax Tax CurrentYear Rate Receivable Collected Collected Collections Collections Levy

1995 1.140 $ 197,712,631 $ 194,287,108 98.3 $ 6,142,169 $ 200,429,277 101.41996 1.188 213,069,095 209,169,309 98.2 4,875,589 214,044,898 100.51997 1.220 226,859,499 223,265,716 98.4 5,102,726 228,368,442 100.71998 1.220 236,751,484 232,875,842 98.4 4,245,849 237,121,691 100.21999 1.220 246,389,536 241,376,374 98.0 2,174,533 243,550,907 98.82000 1.220 264,436,560 259,883,741 98.3 6,516,069 266,399,810 100.72001 1.220 280,963,485 275,592,151 98.1 4,857,709 280,449,860 99.82002 1.220 305,058,532 299,331,985 98.1 6,806,446 306,138,431 100.42003 1.220 327,953,650 321,069,574 97.9 7,067,764 328,137,338 100.12004 1.220 341,740,132 341,071,848 99.8 9,568,857 350,640,705 102.6

Note: Includes a 10% penalty ($10 minimum) on delinquent collections.

Last Ten Fiscal YearsREAL ESTATE TAX RATES, LEVIES AND COLLECTIONS

244


TotalTotal (Net) Current Collections

Current Taxes Percent Delinquent Total As PercentFiscal Taxes Receivable Of Levy Tax Tax ofYear Receivable Collected Collected Collections Collections Current Levy

1995 $ 60,903,091 $ 50,473,993 82.9 $ 8,291,560 $ 58,765,553 96.51996 67,722,092 56,985,972 84.1 10,222,298 67,208,270 99.21997 70,394,396 59,000,283 83.8 9,771,403 68,771,686 97.71998 75,048,248 63,283,152 84.3 10,830,398 74,113,550 98.81999 82,054,765 62,269,686 75.9 12,691,782 74,961,467 91.42000 102,941,101 82,149,659 79.8 15,966,047 98,115,706 95.32001 107,525,993 82,699,595 76.9 17,298,096 99,997,692 93.02002 115,002,201 96,719,843 84.1 24,623,429 121,343,272 105.52003 117,834,084 99,420,637 84.4 21,798,801 121,219,438 102.92004 117,106,629 99,590,869 85.0 21,860,675 121,451,544 103.7

Note: Includes a 10% penalty ($10 minimum) on delinquent collections.

Last Ten Fiscal YearsPERSONAL PROPERTY TAX LEVIES AND COLLECTIONS

245


Current Ratio of Deferred/Assessments Current Current Delinquent Total Total

Fiscal Due Assessments Collections Assessments Assessments OutstandingYear (Billings) Collected to Amount Due Collected Collected Assessments

1995 $ 1,347 $ 1,347 100.0% $ 557 $ 1,904 $ 3631996 - - - 363 363 -1997 - - - - - -1998 - - - - - -1999 - - - - - -2000 - - - - - -2001 - - - - - -2002 - - - - - -2003 - - - - - -2004 - - - - - -

Last Ten Fiscal YearsSPECIAL ASSESSMENT COLLECTIONS

246


Percentof Total

Real RealProperty Property

Assessed AssessedTaxpayer Business Value Value

Virginia Power Utility $ 334,382,273 1.2Lynnhaven Mall, L L C Shopping Mall 268,876,153 1.0Verizon Virginia, Inc Utility 182,473,193 0.7Ramon W. Breeden, Jr. Real Estate 130,144,676 0.5Pembroke Square Associates Shopping Mall 123,285,381 0.4Armada-Hoffler Office/Retail/Vacant Land 109,436,117 0.4Thomas J. Lyons, Jr. Hotels 103,400,252 0.4Tidewater Oxford Ltd Partnership Real Estate 102,973,200 0.4Kemps River Corner Associates Shopping Center 83,855,099 0.3F. Wayne McLeskey, Jr Real Estate 83,142,688 0.3

Total $ 1,521,969,032 5.6

Note: Includes certain personal property taxed at real property rates as provided in Section 58.512.1 of the Code of Virginia, as amended.

JUNE 30, 2004PRINCIPAL TAXPAYERS

247

CITY OF VIRGINIA BEACH, VIRGINIA Table 9ASSESSED APPRAISED VALUE OF TAXABLE PROPERTY

TotalFiscal AssessedYear Value

1995 $ 17,189,272,558 $ 1,590,254,927 $ 598,450,332 $ 19,377,977,8171996 17,569,373,603 1,773,955,263 631,854,212 19,975,183,0781997 18,231,483,508 1,848,939,232 623,804,522 20,704,227,2621998 19,068,899,073 1,975,719,516 630,802,210 21,675,420,7991999 19,880,386,330 2,162,086,075 656,859,261 22,699,331,6662000 20,997,405,999 2,723,557,700 677,545,782 24,398,509,4812001 22,085,451,417 2,847,992,931 705,956,994 25,639,401,3422002 23,365,285,988 3,049,294,683 731,786,118 27,146,366,7892003 25,949,245,358 3,188,056,285 753,259,714 29,890,561,3572004 27,513,988,726 3,478,701,901 743,170,991 31,735,861,618

Notes:1. Determined by the State Corporation Commission of Virginia.

AssessedValue

248


Public ServiceAssessedValue (1)Value

AssessedReal Property Personal Property


Estimated Overall OverallFiscal Full Net Net DebtYear Population (1) Value Debt (2) Per Capita

1995 421,893 $ 17,787,722,890 $ 515,380,727 2.9% $ 1,2221996 421,044 18,201,227,815 538,930,780 3.0% 1,2801997 421,938 18,855,288,030 555,277,800 2.9% 1,3161998 420,351 19,699,701,283 574,003,043 2.9% 1,3661999 422,369 20,537,245,591 524,144,978 2.6% 1,2412000 425,257 21,674,951,781 558,142,477 2.6% 1,3122001 426,800 22,791,408,411 559,258,300 2.5% 1,3102002 426,900 24,097,072,106 609,472,861 2.5% 1,4282003 428,200 26,702,505,072 607,274,940 2.3% 1,4182004 429,504 28,257,159,717 787,242,654 2.8% 1,833

Notes: 1. Population represents information from WCCPS, with 2004 representing an estimate.

2. Includes bonded debt and other long-term obligations charged to the General Fund. Does not include debt charged to Enterprise Funds.

249

AND NET DEBT PER CAPITARATIO OF NET GENERAL DEBT TO ASSESSED VALUE


Full Value

Ratio of OverallNet Debt to


Ratio of AnnualAnnual Interest Annual General Debt Service to

Fiscal Debt Service and Other Debt Government General GovernmentYear Principal Debt Costs Service (1) Expenditures (2) Expenditures

1995 $ 38,902,511 $ 27,973,652 $ 66,876,163 $ 676,267,9361996 43,375,055 28,229,701 71,604,756 705,961,3791997 45,943,592 27,152,568 73,096,160 752,847,5601998 49,525,114 28,123,084 77,648,198 813,931,4291999 48,587,965 27,057,721 75,645,686 870,335,6952000 44,842,867 27,778,319 72,621,186 920,441,9592001 47,134,971 29,158,329 76,293,300 967,540,0932002 48,932,058 29,148,442 78,080,500 1,009,953,3962003 51,562,365 31,218,969 82,781,334 1,049,638,4322004 53,799,591 37,451,809 91,251,400 1,148,542,722

Notes:1. Excludes bonded debt payments paid by Water and Sewer, Storm Water Enterprise Funds and

includes Social Services Facility lease payments.

2 Includes General, Debt Service and City and School Board Component Special Revenue Funds.

Last Ten Fiscal YearsGENERAL DEBT TO TOTAL GENERAL GOVERNMENT EXPENDITURES

7.9%7.9%

250

RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR

7.7%7.9%7.9%

9.5%8.7%

9.9%10.1%9.7%


Education LevelPer in Years of Unemployment Rate

Capita Median Formal School (5) (6)Fiscal Income Age Schooling MembershipYear Population (1) (2) (3) (4) National Local

1995 421,893 $ 23,592 29.3 13.9 75,264 5.1% 4.3%1996 421,044 24,961 28.2 13.8 75,898 5.4% 4.1%1997 421,938 26,015 29.0 13.9 76,265 4.9% 4.0%1998 420,351 27,461 29.0 13.7 76,805 4.5% 2.8%1999 422,369 28,642 29.0 13.9 76,949 4.2% 2.7%2000 425,257 30,098 32.0 14.1 76,773 4.0% 2.2%2001 426,800 31,273 32.3 13.7 76,065 4.8% 3.0%2002 426,900 32,374 32.7 13.7 75,518 5.8% 3.5%2003 428,200 - 33.8 12.7 75,436 6.0% 3.7%2004 429,504 - 34.2 13.3 75,151 5.8% 3.6%

Sources:1. U. S. Department of Commerce, Bureau of Economic Analysis (Hampton Roads Data Book).

2. Compiled from information contained in the Virginia Beach Dept of Economic Development - Claritas, Inc. 2004 .

3. Compiled from information contained in the Virginia Beach Dept of Economic Development - Claritas, Inc. 2004 .

4. Virginia Beach Schools Office of Business Services. Average Daily Membership as of March 31 each year.

5. U. S. Department of Labor, Bureau of Labor Statistics - Average Calendar Year (1995 - 2003).FYE 2004 reflects a period of July 1 - June 30, 2004.

6 U. S. Department of Labor, Bureau of Labor Statistics - Average Calendar Year (1995 - 2003).FYE 2004 reflects a period of July 1 - June 30, 2004.

Last Ten Fiscal YearsDEMOGRAPHIC STATISTICS

251

Fees FromDirect Customers

Total Operating andFiscal Revenues Expenses Net DevelopersYear (1) (2) Revenues (3)

1995 $ 73,572,598 $ 49,604,397 $ 23,968,201 $ 4,411,0091996 87,733,030 48,169,230 39,563,800 6,273,7871997 72,167,298 52,855,218 19,312,080 4,720,5581998 76,607,202 56,150,098 20,457,104 5,479,8631999 74,421,890 61,503,801 12,918,089 6,994,8252000 78,567,049 54,594,436 23,972,613 6,089,7132001 82,081,303 57,140,304 24,940,999 -2002 85,287,572 58,787,862 26,499,710 -2003 82,465,995 60,751,776 21,714,219 -2004 90,547,735 59,854,091 30,693,644 -

Notes:1. Includes Operating and Non-operating Revenues (Exhibit 24).

2. Excludes Depreciation .

3. Includes Main Extension and Line and Water Resource Recovery Fees.

4. Actually due on Capital Leases and "Double Barrel", Revenue, and General Obligation Bonds and Notes.

CITY OF VIRGINIA BEACH, VIRGINIABOND AND NOTE COVERAGE

WATER AND SEWER BONDS AND NOTES

252



Net Debt Service Requirement CoverageRevenues (4) Coverage by Net

and Interest by Net Revenues Fees Principal & Other Fees Total Revenues and Fees

$ 28,379,210 $ 6,113,942 $ 5,185,302 $ 11,299,244 2.12 2.5145,837,587 6,737,835 4,944,276 11,682,111 3.39 3.9224,032,638 6,589,820 4,687,585 11,277,405 1.71 2.1325,936,967 6,916,972 4,543,062 11,460,034 1.79 2.2619,912,914 7,629,946 4,271,761 11,901,707 1.09 1.6730,062,326 8,187,017 4,238,626 12,425,643 1.93 2.4224,940,999 6,595,211 5,945,787 12,540,998 1.99 1.9926,499,710 7,638,559 4,969,793 12,608,352 2.10 2.1021,714,219 7,972,983 4,763,619 12,736,602 1.70 1.7030,693,644 8,753,305 4,637,918 13,391,223 2.29 2.29

BOND AND NOTE COVERAGE

253

WATER AND SEWER BONDS AND NOTESLast Ten Fiscal Years

Residential Construction Commercial Construction(1) (1)

BankNumber Number Deposits

Fiscal of Units/ of (In Thousands)Year Permits** Value Permits Value (2)

1995 1,508 $ 162,487,690 1,765 $ 35,976,836 $ 1,782,4041996 2,330 216,411,267 1,936 108,931,649 1,800,2281997 1,562 182,876,814 1,902 64,239,160 1,805,8761998 1,783 253,002,425 2,020 120,357,805 2,655,3501999 2,531 281,054,751 2,082 86,933,610 3,941,5272000 1,829 246,813,748 2,077 170,897,797 3,961,7522001 2,769 307,592,847 2,146 134,087,654 2,481,9112002 2,523 317,651,675 1,980 118,316,329 2,878,7022003 11,163 370,493,859 2,057 135,872,015 3,342,5642004 13,695 394,052,571 2,172 205,446,578 2,837,526

Sources:** Beginning in FYE 2003 and FYE 2004. Residential Permits are being reported in lieu of

units. This provision will allow a more compatible comparison to the Residential Value.

1. Department of Permits and Inspections.

2. FY 2004 information obtained from Commissioner of Revenue.

3. Real Estate Assessor

4. Excludes Public Service Corporations.

254

CITY OF VIRGINIA BEACH, VIRGINIAPROPERTY VALUE, CONSTRUCTION, AND BANK DEPOSITS



Estimated Appraised Value(3)

Commercial/ TotalIndustrial Estimated

Residential (4) Agriculture Appraised Value Tax Exempt

$ 13,895,617,572 $ 3,205,335,189 $ 88,319,797 $ 17,189,272,558 $ 3,184,839,57514,247,828,740 3,238,007,835 83,537,028 17,569,373,603 3,213,124,47714,795,525,172 3,344,590,914 91,367,422 18,231,483,508 3,492,405,27115,529,209,136 3,449,075,129 90,614,808 19,068,899,073 3,354,428,98116,174,904,354 3,613,825,203 91,656,772 19,880,386,330 3,671,059,52417,022,737,944 3,886,257,595 88,410,461 20,997,405,999 3,692,412,87517,978,360,089 4,009,822,602 97,268,726 22,085,451,417 3,755,397,31619,042,192,734 4,220,954,286 102,138,969 23,365,285,989 3,910,564,50721,309,405,384 4,542,132,318 97,707,657 25,949,245,358 3,967,842,25922,806,015,341 4,674,581,303 108,827,617 27,513,988,726 4,375,905,649

255

Last Ten Fiscal YearsPROPERTY VALUE, CONSTRUCTION, AND BANK DEPOSITS


Date of Incorporation January 1, 1963

Date First Charter Adopted February 28, 1962

Form of Government Council - Manager

Area - Square Miles 309 TotalLand 258Water 51

Education:Number of Elementary Schools 54Number of Secondary Schools 24 Other Specialty Schools 10 Student Membership 75,436 Total School Employees:

Number of Teachers 5,740 Number of Supervisors or Administrators 382 Other Personnel 4,225

Number of School Buses 694

Fire Protection:Number of Fire Stations 19 Number of Firemen:

Uniformed 426 Civilian 27 Active Volunteers 254

Total Fire and Rescue Incidents:Fire Related Incidents 1,301 Rescue Incidents 15,386 Non-Fire, False Alarms and Good Intent Calls 8,401

Police ProtectionNumber of Police Employees:

Sworn 807 Civilian 137 Ancillary 33

Number of Calls to Which Responded (Annual) 351,315 Number of Traffic Accidents (Annual) 9,740 Number of Arrests (18 Years and Over) (Annual) 25,257

Public Works:Miles of Streets:

Lane Miles:Arterial 734 Collector/Local 2,515

Center Line Miles:Arterial 194 Collector/Local 1,232

Number of Homes Receiving Refuse Collection 123,500 Number of Tons of Garbage Collected (Annual) 212,820 Number of Street Lights 41,334

256

Table 15

JUNE 30, 2004MISCELLANEOUS STATISTICAL DATA

(continued)


JUNE 30, 2004MISCELLANEOUS STATISTICAL DATA

Recreation:Number of Developed District Parks 9 Number of Developed Community Parks 10 Number of Developed Neighborhood Parks 198 Number of Natural Parks 3 Other Park Areas 13 Number of Acres in Developed Parks 1,452 Golf Courses (City Owned) 4 Recreation Centers 6

Number of Visitations to Recreation Centers (Annual) 1,787,229

Building Permits Issued 16,906 Value of Building Permits Issued $587,511,908

Total City Employees (Exclusive of SchoolEmployees):Permanent:

Full-time 5,107

Part-time 1,582

Elections:Number of Registered Voters 253,201 Number of Votes Cast In:

Last General Election (11/2003) 44,404 Last Municipal Election (5/2004) 41,572

Population:Census 1970 172,106Census 1980 262,199Census 1990 393,069Census 2000 425,257 Current Estimate 429,504

257

SINGLE AUDIT SECTION

259

Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters

Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

The Honorable Members of City Council City of Virginia Beach, Virginia We have audited the financial statements of the City of Virginia Beach, Virginia (the "City") as of and for the year ended June 30, 2004, and have issued our report thereon dated October 22, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We did not audit the financial statements of the Virginia Beach Community Development Corporation, which represents 3% and 1%, respectively, of the assets and revenues of the aggregate discretely presented component units. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and in our opinion, insofar as it relates to the amounts included for the Virginia Beach Community Development Corporation, is based on the report of other auditors. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

260

This report is intended solely for the information and use of the City Council, management, 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. Virginia Beach, Virginia October 22, 2004

261

Independent Auditors’ Report on Compliance With Requirements Applicable to Each Major Program and on Internal Control Over Compliance

The Honorable Members of City Council City of Virginia Beach, Virginia We have audited the compliance of the City of Virginia Beach, Virginia (the City) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2004. 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 of the City’s management. Our responsibility is to express an opinion on the City’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City'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 June 30, 2004. 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 and to test and report on internal control over compliance in accordance with OMB Circular A-133.

262

Our consideration of internal control over compliance would not necessarily disclose all matters in internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants caused by error or fraud that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving internal control over compliance and its operations that we consider to be material weaknesses. This report is intended solely for the information and use of the City Council, management, 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. Virginia Beach, Virginia October 22, 2004

263

Independent Auditors’ Report on Compliance with Commonwealth of Virginia Laws, Regulations, Contracts and Grants

The Honorable Members of City Council City of Virginia Beach, Virginia We have audited the financial statements of the City of Virginia Beach, Virginia (the City) as of and for the year ended June 30, 2004, and have issued our report thereon dated October 22, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Government and Non-Profit Organizations; and Specifications for Audits of Counties, Cities and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. We did not audit the financial statements of the Virginia Beach Community Development Corporation, which represents 3% and 1%, respectively, of the assets and revenues of the aggregate discretely presented component units. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Virginia Beach Community Development Corporation, is based on the report of the other auditors. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the City’s compliance with certain provisions of the Commonwealth of Virginia’s laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statements amounts. However, providing an opinion on compliance with such provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The following is a summary of the Commonwealth of Virginia laws, regulations, contracts and grants (as specified in Specifications for Audits of Counties, Cities and Towns, Chapter Three) for which we performed tests of compliance. Code of Virginia

• Budget and Appropriation Laws • Cash and Investments • Conflicts of Interest Act • Retirement Systems • Debt Provisions • Procurement • Unclaimed Property Act • Personal Property Tax Relief Act • Enhanced 911 Services Taxes

264

State Agency Requirements

• Education • Highway Maintenance Funds • Social Services • Comprehensive Services Act Funds

The results of our tests disclosed no instances of noncompliance with the provisions referred to in the preceding paragraph. This report is intended solely for the information and use of the City Council, management and state awarding agencies and is not intended to be, and should not be used by anyone other than these specified parties. Virginia Beach, Virginia October 22, 2004

265

City of Virginia Beach Schedule of Findings and Questioned Costs

Year ended June 30, 2004 I. Summary of Auditors’ Results

(a) The type of report issued on the basic financial statements: unqualified opinion (b) Reportable conditions in internal control were disclosed by the auditor of the financial

statements: no Material weaknesses: no (c) Noncompliance which is material to the basic financial statements: no (d) Report conditions in internal control over major programs: no

Material weaknesses: no

(e) The type of report issued on compliance for major programs: unqualified opinion (f) Any audit findings which are required to be reported under Section .510(a) of OMB Circular A-133: no (g) Major Programs:

• Department of Health and Human Services - Childcare Cluster; CFDA 93.575, 93.596 • Department of Health and Human Services - Foster Care Title IV-E; CFDA 93.658 • Department of Housing and Urban Development - Community Development Block

Grant; CFDA 14.218 • Federal Emergency Management Agency - Disaster Relief Reimbursements: Public

Assistance Grants; CFDA 97.036 • Department of Education - Educationally Deprived Children - Title I; CFDA 84.010

(h) Dollar threshold used to distinguish between Type A Programs and Type B Programs:

$3,000,000 (i) Auditee qualified as a low-risk auditee under Section .530 of OMB Circular A-133: yes

II Findings Relating to the Financial Statements Reported in Accordance with Government

Auditing Standards: None noted III. Findings and Questioned Costs Relating to Federal Awards: None noted

Exhibit 52

Federal Federal Granting Agency/Recipient State Agency/ Catalogue Realized Grant Program/Grant Number Number Revenue Expenditures

DEPARTMENT OF AGRICULTURE:

Direct Payments:

Summer Food Service Program for Children 10.559 $ 39,359 $ 39,359

Pass Through Payments:

Department of Agriculture

Food Distribution 10.555 1,481,414 1,481,414

Department of Social Services

Food Stamp Program - Administration 10.561 2,774,788 2,774,788

Department of Corrections

National School Lunch Program 10.555 11,831 11,831

Department of Education

School Breakfast Program 10.553 1,364,240 1,264,600 National School Lunch Program 10.555 6,630,842 6,228,055 Total Department of Agriculture $ 12,302,474 $ 11,800,047

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION:

Direct Payments:

Aerospace Education Services Program 43.001 $ 64,557 $ 64,557

Total National Aeronautics and Space Administration $ 64,557 $ 64,557

DEPARTMENT OF HEALTH AND HUMAN SERVICES:

Direct Payments:

Medical Reserve Corps Small Grant Program 93.008 $ 8,200 $ 8,200 SAMHSA Knowledge Development and Application Program 93.230 456,538 401,968


Department of Mental Health & Retardation

Mental Health Services for the Homeless-Block Grant 93.150 47,311 47,311 Alcohol and Drug Abuse & Mental Health Service Block Grants 93.959 2,128,112 2,103,181

Department for the Aging/Southeastern Virginia Areawide Model Program

Special Programs for the Aging (Title IIIB) 93.633 18,802 18,802 Supportive Services and Senior Centers (Title IIIB) 93.044 46,822 46,822

266

CITY OF VIRGINIA BEACH, VIRGINIASCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


See accompanying notes to the Schedule of Expenditures of Federal and State Awards.

Exhibit 52




DEPARTMENT OF HEALTH AND HUMAN SERVICES: (continued)

Department of Social Services

Cooperative Agreements-State Treatment Outcomes and Performance Pilot Studies Enhancement 93.238 $ 44,797 $ 44,797 Home Energy Assistance 93.568 48,941 48,941 Social Services Block Grant (Title XX and Title IV-B) 93.667 1,539,784 1,539,784 Child Care Assistance (Childcare Cluster) 93.575 4,208,502 4,208,502 Child Care and Development Fund (Childcare Cluster) 93.596 1,562,527 1,562,527 Temporary Assistance for Needy Families 93.558 2,464,689 2,464,689 Refugee and Entrant Assistance - State Administered Programs 93.566 7,001 7,001 Refugee School Impact 93.576 5,370 5,370 Family Preservation 93.556 725,675 725,675 Child Support Enforcement 93.563 342 342 Foster Care Title IV-E 93.658 3,353,673 2,846,552 Adoption Assistance 93.659 323,722 323,722 Independent Living 93.674 29,385 29,385 Medicaid-Special Education Assistance for Therapy and Nursing (Medicaid Cluster) 93.778 629,693 629,693 Medical Assistance Program (Medicaid Cluster) 93.778 2,057,159 2,057,159

Virginia Commonwealth University

Temporary Child Care and Crisis Nurseries - CMHS Block Grant 93.958 158,805 158,174

Total Department of Health and Human Services $ 19,865,850 $ 19,278,597

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT:

Direct Payments:

Community Development Block Grant 14.218 $ 3,519,395 $ 3,154,335 Emergency Shelter Grant 14.231 98,971 98,971 Supportive Housing Programs 14.235 383,200 383,200 HOME Investment in Affordable Housing 14.239 1,513,124 1,513,124 Housing Opportunities for Persons With AIDS 14.241 1,233,744 1,056,170 Community Development Block Grant/Economic Development Initiative 14.246 1,779 1,779 Housing Choice Voucher Program 14.871 10,999,853 10,999,853

Total Department of Housing and Urban Development $ 17,750,066 $ 17,207,432

NATIONAL SCIENCE FOUNDATION:

Direct Payments:

Education and Human Resources 47.076 $ 727 $ 727

Total National Science Foundation $ 727 $ 727

NATIONAL FISH AND WILDLIFE FOUNDATION

Direct Payments:

Elizabeth River Watershed Management Grant 66.606 $ 48,694 $ 19,694

Total National Fish and Wildlife Foundation $ 48,694 $ 19,694

See accompanying notes to the Schedule of Expenditures of Federal and State Awards.267

Exhibit 52




DEPARTMENT OF THE INTERIOR:

Direct Payments:

Public Law 97-258 15.XXX $ 358 $ 358 Refuge Revenue Sharing Act (Public Law 95-469) 15.XXX 179,550 179,550

Total Department of the Interior $ 179,908 $ 179,908

DEPARTMENT OF JUSTICE:

Direct Payments:

Assistance to Localities for Administration 16.XXX $ 255,918 $ 255,918 Anti-Terrorism Grant 16.321 9,765 9,744 DEA Seized Property 16.579 82,498 82,498 Bulletproof Vest Partnership Program 16.607 4,281 - Community Policing Grant 16.710 337,235 337,235 Local Law Enforcement Block Grant Program 16.592 343,408 219,026


Department of Criminal Justice Services

Juvenile Accountability Incentive Block Grant 16.523 35,572 35,572 Young Juvenile Offender Initiative 16.540 57,723 57,723 Victim-Witness Program 16.575 58,568 50,735 Alliance to End Partner Violence 16.588 69,543 42,517

Total Department of Justice $ 1,254,511 $ 1,090,968

DEPARTMENT OF THE NAVY:

Direct Payments:

ROTC Program 12.XXX $ 191,806 $ 191,806

Total Department of the Navy $ 191,806 $ 191,806

DEPARTMENT OF ENERGY


Hampton Roads Clean Cities Corporation

Department of Energy Grant 81.119 $ 60,000 $ 60,000

Total Department of Energy $ 60,000 $ 60,000

FEDERAL HIGHWAY ADMINISTRATION

Direct Payments:

TCSP Grant for Norfolk Avenue Trail Construction 20.219 $ 374,973 $ 374,973

Total Federal Highway Administration $ 374,973 $ 374,973

268See accompanying notes to the Schedule of Expenditures of Federal and State Awards.

Exhibit 52




FEDERAL EMERGENCY MANAGEMENT AGENCY:

Direct Payments:

National Urban Search and Rescue Response System 97.025 $ 699,713 $ 699,713 Fire Act 97.044 187,916 187,569 Emergency Planning 97.051 84,272 80,200 CERT Council 97.053 5,000 5,000 Comm Emergency Response Team 97.054 43,464 41,046 Port Security Grant 97.056 275,126 275,126 FEMA Project Impact 83.551 27,416 2,832


Virginia Department of Emergency Management

Disaster Relief Reimbursements - Public Assistance Grants 97.036 14,122,209 14,120,643 Emergency Management Performance 97.042 26,500 26,500 State Domestic Preparedness Equipment Support Program 97.004 1,750,360 263,192

Total Federal Emergency Management Agency $ 17,221,976 $ 15,701,821

DEPARTMENT OF DEFENSE:

Direct Payments:

Supplemental Payment to Federal Impacted Area 12.XXX $ 1,457,965 $ 1,457,965 Troops to Teachers Incentive Grant 12.XXX 8,059 8,059

Total Department of Defense $ 1,466,024 $ 1,466,024

DEPARTMENT OF TRANSPORTATION:


Department of Motor Vehicles

DMV Traffic Safety Grants (Highway Safety Cluster) 20.600 $ 23,321 $ 1,399 Safety Incentives to Prevent Operation of Motor Vehicles by Intoxicated Persons (Highway Safety Cluster) 20.605 20,762 3,518

Virginia Department of Transportation

Highway Planning and Construction Grants 20.205 1,928,260 1,928,260

Total Department of Transportation $ 1,972,343 $ 1,933,177

DEPARTMENT OF COMMERCE (NOAA):


Department of Environmental Quality

Virginia Coastal Resources Management Program 11.419 $ 57,245 $ 33,795

Total Department of Commerce (NOAA) $ 57,245 $ 33,795

See accompanying notes to the Schedule of Expenditures of Federal and State Awards.269

Exhibit 52




DEPARTMENT OF THE INTERIOR:


Department of Environmental Quality

West Neck Creek Park Project 15.921 $ 13,127 $ 13,127

Total Department of the Interior $ 13,127 $ 13,127

DEPARTMENT OF LABOR:


Virginia Department of Education

Employment Services & Job Training Pilots-Demonstrations & Research 17.249 $ 212,809 $ 212,809 Race to GED 17.259 24,522 24,522

Opportunity Inc.

Welfare-to Work 17.253 44,081 44,081

Total Department of Labor $ 281,412 $ 281,412

DEPARTMENT OF EDUCATION:

Direct Payments:

School Assistance in Federally Affected Areas (Public Law 874) 84.041 $ 13,412,268 $ 13,412,268 Fund for the Improvement of Education 84.215 372,142 347,777 Title IV - PELL Grant 84.XXX 4,576 4,576


Department of Mental Health & Retardation

Infant Stimulation 84.181 758,593 661,058

Virginia Department of EducationHomeless Preschool Grant 84.196 11,500 11,500 Adult Education 84.002 2,008,863 2,008,863 Educationally Deprived Children - Title 1 84.010 10,146,660 10,146,660 Education of the Handicapped Act (IDEA)-Title VIB (Special Education Cluster) 84.027 13,119,128 13,119,128 Preschool Incentive Grant (IDEA) (Special Education Cluster) 84.173 571,322 571,322 Vocational Education Instruction 84.048 1,117,192 1,117,192 Partnership For Educational Improvement - Chapter II 84.151 25,457 25,457 Drug-Free Schools and Communities 84.186 426,872 426,872 Education for Homeless Children and Youth 84.196 39,032 39,032 Tech-Prep Education 84.243 7,290 7,290 Title II EESA 84.281 2,802,289 2,802,289 Title V Innovative Strategies 84.295 261,807 261,807 Title III LEP 84.365 76,599 76,599 Special Education-State Program Improvement-Children with Disabilities 84.323 10,000 10,000 Advanced Placement Program 84.330 12,324 12,324 Comprehensive School Reform Demonstration 84.332 54,027 54,027 Class Size Reduction 84.340 7,196 7,196

Total Department of Education $ 45,245,137 $ 45,123,237

Total Federal Financial Assistance $ 118,350,830 $ 114,821,302

270See accompanying notes to the Schedule of Expenditures of Federal and State Awards.

Exhibit 53 CITY OF VIRGINIA BEACH, VIRGINIA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2004 1. General

The accompanying Schedule of Expenditures of Federal Awards presents Federally assisted programs of the City of Virginia Beach, Virginia and the City=s Component Units. The City's reporting entity is disclosed in Note 1A to the City's basic financial statements. Federal awards received directly from federal agencies as well as through other government agencies are included on the schedule.

2. Basis of Accounting

The accompanying Schedule of Expenditures of Federal Awards is presented using the modified accrual basis of accounting, which is described in Note 1C to the City's basic financial statements.

3. Relationship to Financial Statements

Revenues from federal awards are reported in the City's basic financial statements as follows:

General Fund $ 18,554,945 Special Revenue Funds 40,577,906 Capital Projects Fund 2,305,013 Other Component Units (not including Virginia Beach Pass-through $1,206,145) 383,200 School Board Funds 56,178,960 Total federal awards reported in basic financial statements $ 118,000,024

Prior Year Balances from the Following: School Breakfast Program # 10.553 $ 70,049 National School Lunch Program 10.555 280,757

Less: Revenue Closed to Fund Balances from the Following: Community Development Block Grant # 14.218 $ 365,060 Housing Opportunities For Persons With AIDS 14.241 177,574 Virginia Coastal Resources Management Program 11.419 23,450 Fire Act 97.044 347 FEMA Project Impact 83.551 24,584 Infant Stimulation 84.181 97,535 Fund for the Improvement of Education 84.215 24,365 Temporary Child Care & Crisis Nurseries - CMHS Block Grant 93.958 631 Alcohol and Drug Abuse & MH Service Block Grant 93.959 24,931 Emergency Planning 97,051 4,072 Comm Emergency Response Team 97,054 2,418 Bulletproof Vest Partnership Program 16.607 4,281 Local Law Enforcement Block Grant Program 16.592 124,382 DMV Traffic Safety Grants 20.600 21,922 Safety Incentives to Prevent Operation of Motor Vehicles by Intoxicated Persons

20.605 17,244

School Breakfast Program 10.553 99,640 National School Lunch Program 10.555 402,787 Foster Care Title IV-E 93.658 507,121 SAMHSA Knowledge Development and Application Program 93.230 54,570 Elizabeth River Watershed Management Grant 66.606 29,000 Anti-Terrorism Grant 16.321 21 Victim-Witness Program 16.575 7,833 Alliance to End Partner Violence 16.588 27,026 Disaster Relief Reimbursements – Public Assistance Grants 97.036 1,566 State Domestic Preparedness Equipment Support Program 97.044 1,487,168 Total Federal Expenditures $ 114,821,302

(continued) 271

Exhibit 53 CITY OF VIRGINIA BEACH, VIRGINIA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2004 4. Relationship to Federal Financial Reports

Amounts reported in the accompanying schedule substantially agree with the amounts reported in the related federal financial reports except that certain federal financial reports are prepared on the cash basis of accounting and the Schedule of Expenditures of Federal Awards is prepared on the basis of accounting described in Note 2 above.

5. Amounts Provided to Subrecipients

Total amounts provided to subrecipients from the following programs:

Virginia Beach Community Development Corporation: Community Dev. Block Grant-Entitlement Grants HOME Investment Partnerships Emergency Shelter Grant Total Virginia Beach Community Development Corporation

# 14.228 # 14.239 # 14.235

$ 567,581 632,191 6,373 $ 1,206,145

272

COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF ...

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