2006 Comprehensive Annual Financial Report

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CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) 3. Property Taxes Property taxes levied are collected by the County Treasurer and are usually distributed to the primary govemment in June and in December. State statutes (IC 6-1.1-17-16) require the Indiana Department of Local Government Finance to establish property tax rates and levies by February 15. These rates were based upon the preceding year's March 1 (lien date) assessed valuations adjusted for various tax credits. Taxable property is assessed at 100% of the true tax value (determined in accordance with rules and regulations adopted by the Indiana Department of Local Govemment Finance). Taxes may be paid in two equal installments that become delinquent if not paid by May 10 and November 10, respectively. All property taxes collected by the County Treas- urerand available for distribution were distributed to the primary govemment prior to December 31. Delinquent property taxes outstanding at year end forgovemmental and/or proprietary funds, net of allowances for uncollectible accounts, are recorded as a receivable with an offset to unearned revenue since the amounts are not considered available. 4. Inventories and Prepaid Items All inventories are valued at cost using the first in/first out (FIFO) method. Inventories of govern- mental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 5. Restricted Assets Certain proceeds of the enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net assets balance sheet because their use is limited by applicable bond covenants. 6. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business- type activities column in the govemment-wide financial statements. Capital assets are reported at actual or estimated historical cost based on appraisals or deflated current replacement cost. Contributed or donated assets are reported at estimated fair value at the time received. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capi- talasset accounts), depreciation methods and estimated useful lives of capital assets reported in the government-wide statements and proprietary funds are as follows: Buildings and improvements Equipment Roads -collectors and residential Utilities' Infrastructure (small) Utilities' Infrastructure (large) Capitalization Depreciation Estimated Threshold Method Useful Life $ 50,000 Straight-line 20 to 30 5,000 Straight-line 5 to 20 3,000,000 Straight-line 40 to 50 75,000 Straight-line 30 to 99 100,000 Straight-line 30 to 99 The City has implemented retroactive reporting of its infrastructure as of December 31, 2006. 50