October 24, 2007
The
Honorable Mayor Ernie McAlister
Members of the Town Council and Citizens
Town
of Cary
316
N. Academy
Cary, North Carolina 27513
Dear
Mayor, Members of the Town Council, and Citizens:
The
Comprehensive Annual Financial Report of the Town of Cary, North Carolina is
submitted for your review and use. This
report was prepared by the Town’s Finance Department and it is the
comprehensive publication of the Town’s financial position and results of
operations as of and for the fiscal year ended June 30, 2007. The Town,
like all other local governments in the State, is required by state law to publish
a complete set of financial statements within four months of the close of each
fiscal year. The financial statements
must be presented in conformity with generally accepted accounting principles
(GAAP) and audited in accordance with generally accepted auditing standards by
a firm of licensed certified public accountants. This report is published to fulfill that
requirement for the fiscal year ended June 30, 2007, and to provide complete and further accountability
to citizens and other interested parties by providing a comprehensive report in
lieu of the minimum basic financial statement requirements.
As
a comprehensive annual financial report this document provides financial detail
and historical trends beyond the basic financial statements in the Financial Section. The Supplementary
Information provides details on capital project activity and the utility
system enterprise fund, and the Town’s internal service funds, trust fund and
special revenue funds. The Statistical Section provides trend
information on financial performance, revenue capacity, debt capacity,
demographic and economic indicators
as well as operating information. A Compliance Section includes
documentation on federal and state grants and awards compliance, as well as
revenue bond covenant compliance.
Town
management is responsible for both the accuracy of the data and the
completeness and fairness of the report.
To ensure reliability of the information Town
management has established a comprehensive framework of internal control. Internal controls protect the Town’s assets
from loss, theft and misuse and provide reliable information for the
preparation of this report. Because the
cost of internal controls should not outweigh their benefits, the Town’s
controls have been designed to provide reasonable, rather than absolute,
assurance that the financial statements are free of any material misstatements. As management, to the best of our knowledge
and belief, this financial report is complete, accurate and reliable in all
material respects.
As
noted above, the Town is required by state law to have an annual independent
financial audit. A compliance audit on federal
and state financial assistance is also required under the Federal Single Audit
Act of 1984 and the State Single Audit Implementation Act. Cherry, Bekaert & Holland, LLP, Certified
Public Accountants, conducted the audits and concluded in an unqualified
(“clean”) opinion that the financial statements present fairly in conformity
with GAAP, in all material respects, the financial position and changes in
financial position for the Town of Cary, North Carolina, as of June 30, 2007. The
independent auditors’ report on the basic financial statements is located at
the beginning of the financial section of this report.
Management’s
discussion and analysis of the basic financial statements (MD&A)
immediately follows the independent auditors’ report and provides a narrative
introduction, overview, and analysis of the basic financial statements. The MD&A is designed to complement this
letter of transmittal and should be read in conjunction with it.
.
PROFILE
OF THE TOWN
Cary, incorporated in 1871, is a thriving community in
the heart of the Triangle area of North Carolina. The Triangle
area has repeatedly ranked among the top regions in the country to live or
work, to find a home or start a business, to raise a family or retire. Cary encompasses approximately 51 square miles in Wake
and Chatham counties in the Piedmont region of the state. Cary adjoins the City of Raleigh, which is the state capital and the county seat, at
the Town’s eastern boundary. At the
Town’s northwestern boundary, the Town adjoins renowned Research Triangle Park (“RTP”).
Cary is a diverse community primarily composed of young,
affluent and well-educated people. According
to the 2000 US census, the median age of Cary’s population is 33.7 years, more than two-thirds of Cary’s adult population has a college degree, and
fourteen percent were born in another country.
Cary’s diversity coupled with it being in one of the most
desirable areas in the country, has resulted in continued growth in commercial
and residential construction.
The
Town is the seventh largest municipality in the State based on the Town’s
population estimate at June 30, 2007 of 122,643. This is an increase of 6,789 people (+ 5.8%) since the July
01, 2006
estimate. Cary's population has increased by 28,107 people
(+29.7%) since the last U.S. Census on April 1, 2000. Cary is empowered by state statute to extend its corporate
limits by annexation. All annexations
in fiscal year 2007 were the result of voluntary application by the property
owner for annexation.
The
Town has a council-manager form of government.
The seven member Council is the policy-making and legislative body of
Town government. Four of the seven
members of the Town Council are elected from districts, and three members,
including the Mayor, are elected at large.
Each of the council members and the mayor serve four year staggered
terms. The Council is responsible for
the budget approval and appointing the Town Manager, Town Attorney and Town
Clerk. The Town Manager is responsible
for implementing Council policies and Town Ordinances, managing daily
operations, and appointing department directors.
The
Town provides its citizens with a full range of services, including police and
fire protection, solid waste and recycling services, the construction and
maintenance of streets, curbs, gutters, sidewalks and other infrastructure,
recreation and cultural activities, fixed route and demand-response transit
service, and water and sewer service.
This report includes all of the Town’s activities in delivering and
administering these services.
The
Cary Town Council is required to adopt a budget by July 1 of each year. The Town is empowered to levy a property tax
on both real and personal property located within its boundaries. The Town’s budget ordinance creates a legal
limit on spending authorizations, and serves as the foundation for Cary’s financial planning and control. The budget is prepared by fund and function,
for example, public safety. The Town Manager is authorized by the budget
ordinance to make certain limited transfers within funds to facilitate budget
execution consistent with Council intent.
LOCAL
ECONOMY
Employment
opportunities are derived from a number of high technology employers within its
borders including SAS Institute, the world's largest privately held software
company, as well as from Raleigh and RTP, which employs over 39,000 in high-technology fields. Other major employers within the town limits include
MCI, American Airlines Reservations Center, WakeMed Cary Hospital, and Kellogg’s Snacks. In addition, the Raleigh-Durham-Cary area
also benefits from four notable North Carolina universities, major health care facilities and the
state government. This diverse group of
employers in the region has historically been stable and less sensitive to
economic downturns. As a result, the
unemployment rate has historically been extremely low. During the past ten years, the unemployment
rate has varied from a low of 1.0% to a high of 5.0% with a rate at June 30, 2007
of 3.0%.
The
strong employment and higher education opportunities, a warm climate, low crime
rates and easy access to outstanding recreational and cultural amenities have
helped make the region in which the Town is located one of the fastest growing
in the country. During the fiscal year,
the Town issued 1,998 permits for new single family residential construction, a
6.5% increase from the previous year.
Notable economic development in Cary in 2007
included the major expansions by local firms, Kellogg Snacks, Healthways, Inc.,
Caterpillar, PharmaNet and Siemens Medical Solutions. Strong growth by local software firms, whose
work is related to entertainment and simulation, should continue into future
years. Financial service firms have
expanded, creating hundreds of jobs for citizens.
These
new and expanding businesses, and the jobs which they create, help to maintain
a healthy balance in the tax base that has enabled the Town to keep property
tax rates and water and sewer rates at moderate levels while providing the
infrastructure and high level of services demanded by citizens.
Overall,
Cary's economy is expected to remain stable. Council has adopted a fiscal year 2008 budget
based on a moderate rate of growth. In
planning for the future, the Town continues to maintain a high priority on both
the delivery of quality services and financial stability.
LONG-TERM
FINANCIAL PLANNING and MAJOR INITIATIVES
Cary is consistently recognized for its quality of
life. Careful planning for growth has
been based on values for an attractive community, a strong commitment to
environmental protection, adequate public facilities in advance of growth and a
variety of local recreational opportunities while maintaining a strong
financial position. The Town Council has
committed to key goals and initiatives.
These goals and initiatives along with Town accomplishments are
discussed in the Town’s annual budget document and on the Town’s website at
www.townofcary.org
The
Town maintains unreserved fund balance sufficient to maintain consistent cash
flow, generate interest income, eliminate the need for short term borrowings,
provide flexibility for unanticipated opportunities and needs during
emergencies or disasters. In addition to
fiscally responsible budgeting, this has been key in maintaining and improving the
Town’s outstanding bond ratings: AAA
ratings from all three agencies for the Town’s general obligation bonds and AAA
ratings from two agencies for the Town’s utility system revenue bonds.
Each
year the town adopts a capital improvement budget and prepares a 10-year
capital improvement plan. During the
year, the Town funded and managed many significant projects including the following:
- Planning, design
and easement acquisition began on the Carpenter Fire Station Road widening, extension and Railroad Bridge. Two projects combine to
widen Carpenter
Fire Station Road to 4 lanes, align a busy intersection at HWY
55, install curb, gutter, sidewalks and includes construction of a bridge
crossing the railroad tracks.
- Planning for Phase
I of the Western Wake Regional Wastewater Management Facility (WWRWMF) continued
during FY07. This facility, which
will be jointly owned by the partnering towns with Cary serving as the operator, are expected to meet Cary’s wastewater treatment needs into the 2030’s. Phase I is expected to be complete by
2011 and provide 18 MGD capacity to the area. The final Phase III will increase
capacity to 36.8 MGD.
- Design for Phase II
of process improvements at the Cary/Apex Water Treatment Plant will begin in FY08. This project is necessary in advance of
the plant expansion, slated to be complete in following years. New equipment to expand treatment
capacity beyond the planned expansion is included. Total costs are estimated to be $13.2
million.
Other
significant initiatives and events in fiscal year 2007 included the following:
- The Town earned a
revenue bond rating upgrade from Aa2 to Aa1 from Moody’s.
- A United Soccer
League expansion team, the Carolina RailHawks, began its first season at SAS Soccer Park.
- The Town issued its
first variable rate bond sale to fund $45 million in street projects and
$2 million in parks and greenway projects.
- Grant funding
provided two traffic officers to implement the Aggressive Driving Enforcement
Program.
- Fire Station #7 was
completed, staffed and operating by year end.
- The Town completed construction
and dedication of the USA Baseball National Training Facility at Thomas
Brooks Park.
AWARDS
AND ACKNOWLEDGEMENTS
The
Government Finance Officers Association (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the Town of Cary for its comprehensive annual financial report (CAFR)
for the fiscal year ended June 30, 2006. This is the
twenty-second consecutive year that Cary has received this prestigious award. In order to be awarded a Certificate of
Achievement, the government had to publish an easily readable and efficiently
organized CAFR that satisfied both generally accepted accounting principles and
applicable legal requirements. The
Certificate is valid for a period of one year only. We believe our current CAFR continues to meet
the Certificate of Achievement Program’s requirements, and we are submitting it
to GFOA to determine its eligibility for another certificate.
In
addition, the Town also received the GFOA's Distinguished Budget Presentation Award
for its annual budget document for the fiscal years ended June 30, 1987 through 2007.
In order to qualify for the Distinguished Budget Presentation Award, the
government's budget document had to be judged to be proficient as a policy
document, a financial plan, an operations guide, and a communications device.
This
report is the work of the efficient and dedicated staff of the Finance
Department. We wish to express our appreciation to all members of the
department who assisted and contributed to the preparation of this report and
to the entire Town staff for their cooperation and assistance. Credit is also due to the mayor and the
members of the Town Council for their unfailing support of the highest
standards of professionalism in the management of Cary’s finances.
_______________________ ________________________
William B. Coleman, Jr. Karen
A. Mills, CPA
Town Manager Director
of Finance