Statement of Net Position

Statement of Net Position

Governments report proprietary fund assets, liabilities, and net position in a Statement of Net Position . Proprietary fund statements draw a distinction between major and non-major proprietary funds. Bothell is unique in that it did not have any non-major proprietary funds. There are only three funds – Water, Sewer, and Storm and Surface Water.

Total assets in Water ($25.9 million), Sewer ($23.5 million), and Storm and Surface Water ($42.2 million) add up to the total assets reported under business-type activities ($91.5 million). Again, the difference between the government-wide statement of Net Position and the proprietary fund Statement of Net Position is the detailed reporting of assets, liabilities, revenues, and expenses by fund type – Water, Sewer, and Storm and Surface Water.

The proprietary fund Statement of Net Position reports current assets ($26.3 million) separately from non-current assets ($65.2 million). Governments are not required to report current assets separately from their non-current assets in the government-wide statements, but that breakdown is required in the proprietary fund statements.

Like most local governments, revenue bonds make up a large proportion of liabilities ($13.5 million). A large proportion of the city’s proprietary fund liabilities are in the Storm and Street Water fund ($10.9 million).

Like the government-wide Statement of Net Position, the proprietary fund Statement of Net Position classifies the position as either Net Investment in Capital Assets, Restricted Net Position, or Unrestricted Net Position.

• Net Investment in Capital Assets in the historical cost of capital improvements – net of depreciation – and debt associated with the acquisition, construction, or improvement of capital In the Water Fund, net investment in capital assets is equal to $16,634,885 – i.e., Capital Assets not being depreciated plus capital assets being depreciated minus depreciation ($19,670,033) minus the current portion of revenue bonds payable, net ($183,345) minus non-current revenue bonds payable ($2,851,803).
• The restricted net position represents assets restricted by a third party or law. Governments are frequently required to establish restricted reserve funds following a revenue bond issue to ensure payments occur on time and in full. Revenue bond reserve funds are often the lesser of (a) maximum annual debt service, (b) 125 percent of average annual debt service, or (c) 10 percent of original bond proceeds.
• The remainder is reported as the unrestricted net position . Each business-type activity reports a positive unrestricted net position.

Internal service funds are reported in the proprietary fund statements. They account for programs in government that serve other parts of the government. The city of Bothell has three internal service funds – Equipment Rental (Fleet), Self-Insurance, and Asset Replacement. Internal service funds are designed to be self-supporting. They bill the receiving department at rates intended to cover the costs of goods or services provided. Keep in mind that these funds are not reported in government-wide statements, as internal service accounts are canceled once we aggregate governmental activities with proprietary activities.