Financial statements Highway Expansion and Extension Loan Program

              HELP Financial Statement
Fiscal Year Ended June 30, 2000
REPORT OF INDEPENDENT AUDITORS
Transportation Board of the State of Arizona
Arizona Department of Transportation
We have audited the accompanying balance sheets of the Highway Expansion and Extension Loan
Program Fund of the Arizona Department of Transportation as of June 30, 2000 and 1999, and the related
statements of revenues, expenditures and changes in fund balance for the years then ended. These financial
statements are the responsibility of the Arizona Department of Transportation' s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. 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 audits provide a reasonable basis for our
opinion.
As discussed in Note 1, the financial statements of the Highway Expansion and Extension Loan Program
Fund are intended to present the financial position and results of operations of only the fund of the Arizona
Department of Transportation that is attributable to the transactions of the Highway Expansion and
Extension Loan Program Fund.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the Highway Expansion and Extension Loan Program Fund of the Arizona
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Department of Transportation, as of June 30, 2000 and 1999, and the results of its operations for the years
then ended in conformity with generally accepted accounting principles.
October 13, 2000
Ernst & Young LLP is a member of Ernst & Young International, Ltd.
Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Balance Sheet
June 30, 2000
( With comparative totals at June 30, 1999)
2000 1999
Assets and other debits
Cash and cash equivalent on deposit with the State
Treasurer
( Note 2) $ 116,479,199 $ 37,600,370
Receivables:
Loan ( Note 3) 60,022,019 7,796,171
Accrued interest 2,050,507 420,050
Due from other Arizona Department of Transportation funds 9,119 500,000
Due from other Arizona counties, cities and other state
agencies
16,588 -
Total assets and other debits $ 178,577,432 $ 46,316,591
Liabilities and fund balance
Due to Arizona Department of Transportation funds $ 1,389,051 $ -
Due to Arizona counties, cites, and other state agencies 101,679,790 -
Advances from other Arizona Department of
Transportation funds 20,000,000 -
Total liabilities 123,068,841 -
Fund balance - reserved for loans and other financial
assistance
55,508,591 46,316,591
Total liabilities and fund balances $ 178,577,432 $ 46,316,591
The accompanying notes are an integral part of these financial statements.
Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Statement of Revenue, Expenditures and Changes in Fund Balance
For the fiscal year ended June 30, 2000
( With comparative totals for the fiscal year ended June 30, 1999)
2000 1999
Revenues:
Federal grants and reimbursements $ 6,561,311 $ 5,567,176
Investment interest 3,780,802 2,661,772
Interest on loans receivable 1,591,725 28,798
State match 396,600 24,794
Total revenues 12,330,438 8,282,540
Expenditures:
Interest expense 1,679,790 -
Administrative 1,387 864
Investment management fee 68,210 31,838
Total expenditures 1,749,387 32,702
Excess of revenues over expenditures 10,581,051 8,249,838
Other financing sources:
Operating transfers in - 38,066,753
Operating transfers out < 1,389,051> -
Total other financing sources 1,389,051 < 38,066,753>
Excess of revenues and other financing sources
over expenditures 9,192,000 46,316,591
Fund balance, July 1 46,316,591 -
Fund balance, June 30 $ 55,508,591 $ 46,316,591
The accompanying notes are an integral part of these financial statements.
Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements
June 30, 2000
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Arizona Department of Transportation ( Department) was authorized in 1996 to administer a State
Infrastructure Bank under a cooperative agreement with the Federal Highway Administration ( FHWA),
pursuant to Section 350 of the National Highway System Designation Act of 1995. The Highway
Extension and Expansion Loan Program ( HELP) was authorized to
be established as Arizona's State Infrastructure Bank under Arizona Revised Statute, Title 28, Chapter 21,
Article 5. The HELP Fund ( Fund) was initially capitalized with grants from FHWA and State matching
funds.
HELP is administered by a seven member advisory committee. The members serve staggered four year
terms and shall not serve more than two consecutive terms. The committee is charged with developing an
application form for financial assistance, reviewing requests for loans and financial assistance, making
recommendations to the Transportation Board of the State of
Arizona Department of Transportation ( Transportation Board) and submitting an annual report to the
Governor and State Legislature. Qualified borrowers, which include any political subdivision, the State or
its agencies or Indian tribes, may submit loan applications to HELP for eligible projects.
The Transportation Board may make loans or provide other financial assistance to qualified borrowers,
including the Department, from monies in the Fund for eligible projects, enter into a loan repayment
agreement with an entity, apply for, accept and administer grants and other financial assistance from the
United States and from other public and private sources that are made for deposit in the Fund. HELP does
not increase the Transportation Board's bonding authority.
The Department is a department of the State of Arizona and is not legally separate. The Department has no
component units. The Director of the Department serves as the Chief Administrative Officer and is directly
responsible to the Governor. The Governor appoints the seven- member Transportation Board, which has
responsibility for establishing a complete
system of State highway routes and distributing monies for local airport facilities' projects through a grant
program.
The Financial Services Division of the Arizona Department of Administration controls expenditures and
adherence to annual budgets. The State Treasurer invests the cash balances of the Department.
The financial statements present only the funds comprising the Fund and are not intended to present fairly
the financial position or results of operations of the Department.
The accounting policies of the Department conform to generally accepted accounting principles as
applicable to governments. The following is a summary of the more significant policies:
Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements
June 30, 2000
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Arizona Department of Transportation ( Department) was authorized in 1996 to administer a State
Infrastructure Bank under a cooperative agreement with the Federal Highway Administration ( FHWA),
pursuant to Section 350 of the National Highway System Designation Act of 1995. The Highway
Extension and Expansion Loan Program ( HELP) was authorized to
be established as Arizona's State Infrastructure Bank under Arizona Revised Statute, Title 28, Chapter 21,
Article 5. The HELP Fund ( Fund) was initially capitalized with grants from FHWA and State matching
funds.
HELP is administered by a seven member advisory committee. The members serve staggered four year
terms and shall not serve more than two consecutive terms. The committee is charged with developing an
application form for financial assistance, reviewing requests for loans and financial assistance, making
recommendations to the Transportation Board of the State of
Arizona Department of Transportation ( Transportation Board) and submitting an annual report to the
Governor and State Legislature. Qualified borrowers, which include any political subdivision, the State or
its agencies or Indian tribes, may submit loan applications to HELP for eligible projects.
The Transportation Board may make loans or provide other financial assistance to qualified borrowers,
including the Department, from monies in the Fund for eligible projects, enter into a loan repayment
agreement with an entity, apply for, accept and administer grants and other financial assistance from the
United States and from other public and private sources that are made for deposit in the Fund. HELP does
not increase the Transportation Board's bonding authority.
The Department is a department of the State of Arizona and is not legally separate. The Department has no
component units. The Director of the Department serves as the Chief Administrative Officer and is directly
responsible to the Governor. The Governor appoints the seven- member Transportation Board, which has
responsibility for establishing a complete
system of State highway routes and distributing monies for local airport facilities' projects through a grant
program.
The Financial Services Division of the Arizona Department of Administration controls expenditures and
adherence to annual budgets. The State Treasurer invests the cash balances of the Department.
The financial statements present only the funds comprising the Fund and are not intended to present fairly
the financial position or results of operations of the Department.
The accounting policies of the Department conform to generally accepted accounting principles as
applicable to governments. The following is a summary of the more significant policies:
Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements ( continued)
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Transactions between Departmental Funds
Transactions that would be treated as revenues or expenditures if they involved organizations external to
the governmental unit are accounted for as revenues or expenditures in the funds involved. Transactions
which constitute reimbursements of a fund for expenditures initially made from that fund, which are
properly applicable to another fund, are recorded as expenditures
in the reimbursing fund and as reductions of the expenditures in the fund that is reimbursed.
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.
NOTE 2- CASH AND CASH EQUIVALENTS
The cash and cash equivalents balance is on deposit with the State Treasurer for pooled investment
purposes and is not evidenced by securities that exist in physical or book entry form in the Fund's name.
Cash equivalents are defined as short- term, highly liquid investments ( investments with original maturities
of three months or less). All investments are carried in the name of the State of Arizona. State statutes
require the State Treasurer to invest these pooled funds in collateralized time certificates of deposit,
repurchase agreements, or obligations of the U. S. Government. Ali investments are carried at cost, which
approximates fair value.
Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements ( continued)
NOTE 3- LOAN RECEIVABLES
Loan receivables represent loans made pursuant to Loan Repayment Agreements. Twenty such agreements
have been authorized as of June 30,2000, as follows:
* Interest Rate will be determined on the date of the first draw.
NOTE 4- CONTINGENT LIABILITIES
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor
agencies, principally the Federal government. Any disallowed claims, including amounts already collected,
may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be
disallowed by the grantor cannot be determined at this time although
the Fund expects such amounts, if any, to be immaterial.
BORROWER
PROJECT
SPONSOR
LOAN
DATE
INTEREST
RATE*
AUTHORIZED
LOAN AMOUNT
FINAL
MATURITY
DRAWS TO
DATE
OUTSTANDING
LOAN
BALANCE
ADOT Chandler 3/ 20/ 1998 3.59% 26,000,000 Jul- 02 $ 24,690,739 $ 15,950.937
ADOT Mesa 3/ 20/ 1998 * 24,000,000 Oct- 01 - -
ADOT MAG- ROW 11/ 18/ 1999 3.92% 100,000,000 Jun- 01 41,771,082 41,771,082
City of
Tucson Tucson 3/ 17/ 2000 4.50% 2,000,000 Jan- 05 2,000,000 2,000,000
Town of
Chino
Valley
Chino
Valley 3/ 17/ 2000 4.50% 300,000 Jan- 05 300.000 300,000
ADOT SR 260 2/ 18/ 2000 * 5,664,000 Oct- 01 - -
ADOT Various
Statewide 5/ 19/ 2000 * 5,707,000 2001 - -
ADOT
Various
Pima
County
5/ 19/ 2000 * 5.285,000 2001 - -
Totals $ 168,956,000 $ 68,761,821 $ 60,022,019