Charter Township of Vienna - Michigan

Charter Township of Vienna

Financial Report
with Supplemental Information

December 31, 2010

Charter Township of Vienna

Contents

Report Letter 1-2

Management's Discussion and Analysis 3-10

Basic Financial Statements 11
12-13
Government-wide Financial Statements:
Statement of Net Assets 14
Statement of Activities 15
16-17
Fund Financial Statements:
Governmental Funds: 18
Balance Sheet
Reconciliation of the Balance Sheet to the Statement of Net Assets 19
Statement of Revenue, Expenditures, and Changes in Fund Balances 20
Reconciliation of the Statement of Revenue, Expenditures, 21
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities 22
23
Proprietary Funds: 24-44
Statement of Net Assets
Statement of Revenue, Expenses, and Changes in Net Assets 45
Statement of Cash Flows 46
47
Fiduciary Funds:
Statement of Fiduciary Net Assets
Statement of Changes in Fiduciary Net Assets - Retiree Health Care

Notes to Financial Statements

Required Supplemental Information

Budgetary Comparison Schedule - General Fund

Budgetary Comparison Schedule - Major Special Revenue Fund - Sanitation Fund

Other Supplemental Information 48

Nonmajor Governmental Funds: 49
Fund Descriptions 50
Combining Balance Sheet
Combining Statement of Revenue, Expenditures, and Changes in Fund 51
Balances 52-54
Budgetary Comparisons

Independent Auditor's Report

To the Honorable Members
of the Township Board

Charter Township of Vienna
Genesee County, Michigan

We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the discretely presented component unit, each major fund, and the
aggregate remaining fund information of the Charter Township of Vienna (the "Township") as of
and for the year ended December 31, 2010, which collectively comprise the Township’s basic
financial statements as listed in the table of contents. These financial statements are the
responsibility of the Charter Township of Vienna’s management. Our responsibility is to express
opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. 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, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, the
discretely presented component unit, each major fund, and the aggregate remaining fund
information of the Charter Township of Vienna as of December 31, 2010 and the respective
changes in financial position and cash flows, where applicable, thereof for the year then ended, in
conformity with accounting principles generally accepted in the United States of America.

The management's discussion and analysis and the budgetary comparison schedules, as identified
in the table of contents, are not a required part of the basic financial statements but are
supplemental 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 supplemental
information. However, we did not audit the information and express no opinion on it.

1

To the Honorable Members
of the Township Board

Charter Township of Vienna
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Charter Township of Vienna’s basic financial statements. The
accompanying other supplemental information, as identified in the table of contents, is presented
for the purpose of additional analysis and is not a required part of the basic financial statements.
The other supplemental information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

April 11, 2011

2

Charter Township of Vienna

Management’s Discussion and Analysis

Our discussion and analysis of the Charter Township of Vienna’s (Vienna Township or the
“Township”) financial performance provides an overview of the Township’s financial activities
for the fiscal year ended December 31, 2010. Please read it in conjunction with Vienna
Township’s financial statements.
Financial Highlights
As discussed in further detail in this discussion and analysis, the following represents the most
significant financial highlights for the year ended December 31, 2010:
 Property taxes, Vienna Township’s largest revenue source, decreased by $5,482, or .39

percent.
 State-shared revenue, Vienna Township’s third largest revenue source, was decreased by the

State of Michigan $5,640 this year.
 Investment earnings decreased by $7,618 , or 58.4 percent.
 Total net assets related to Vienna Township’s governmental activities increased by $191,022.

The unrestricted portion of the net assets decreased by $164,071.
 Recreation and cultural expense increased by $37,312, or 16.55 percent.
Using this Annual Report
This annual report consists of a series of financial statements. The statement of net assets and
the statement of activities provide information about the activities of Vienna Township as a
whole and present a longer-term view of Vienna Township’s finances. This longer-term view
uses the accrual basis of accounting so that it can measure the cost of providing services during
the current year, and whether the taxpayers have funded the full cost of providing government
services.
The fund financial statements present a short-term view; they tell us how the taxpayers’
resources were spent during the year, as well as how much is available for future spending. Fund
financial statements also report Vienna Township’s operations in more detail than the
government-wide financial statements by providing information about the Township’s most
significant funds. The fiduciary fund statements provide financial information about activities for
which Vienna Township acts solely as a trustee or agent for the benefit of those outside of the
government.

3

Charter Township of Vienna

Management’s Discussion and Analysis (Continued)

Governmental Activities
The following table shows, in a condensed format, the current year’s net assets and changes in
net assets, compared to the prior two years:

Governmental Activities

2008 2009 2010 Change Percent
Change
Other assets $ 3,554,695 $ 3,208,054 $ 3,026,081 $ (181,973)
Capital assets 9,048,172 (334,396) -6%
9,459,339 9,382,568 -4%
Total assets 12,074,253 (516,369)
13,014,034 12,590,622 -4%

Current liabilities 3,142,890 2,982,027 2,753,597 (228,430) -8%
Long-term liabilities 5,419,828 4,916,411 4,437,450 (478,961) -10%

Total liabilities 8,562,718 7,898,438 7,191,047 (707,391) -9%

Net assets: 3,474,020 3,974,380 4,228,564 254,184 6%
Invested in capital assets, 30,188 21,205 122,114 100,909 476%
net of related debt 532,528 (164,071) -24%
Restricted 947,108 696,599
Unrestricted 4,883,206 $ 191,022 4%
$ 4,451,316 $ 4,692,184 $
Total net assets

Vienna Township’s combined net assets increased 3.7 percent from a year ago from
$14,963,980 to $15,510,660. As we look at the governmental activities separately from the
business-type activities, we can see that they increased 4.1 and 3.5 percent, respectively.

Unrestricted net assets - the part of net assets that can be used to finance day-to-day
operations - decreased by $164,071 for the governmental activities. This represents a decrease
of approximately 23.6 percent. The current level of unrestricted net assets of our governmental
activities stands at $532,528, or about 15 percent of total expenses. This is within the targeted
range set by Vienna Township during its last budget process.

4

Charter Township of Vienna

Management’s Discussion and Analysis (Continued)

Governmental Activities (Continued)

Governmental Activities

2008 2009 2010 Change Percent
Change

Revenue $ 1,073,239 $ 1,082,352 $ 1,019,866 $ (62,486) -6%
Program revenue: (10,599) -3%
Charges for services 334,759 351,530 340,931 (161,814) -86%
Operating grants
Capital grants 79,241 188,799 26,985 0%
General revenue: -1%
Property taxes 1,411,243 1,391,298 1,385,816 (5,482) -58%
State-shared revenue 978,240 843,812 838,172 (5,640) 14%
Investment earnings 53,218 13,052 5,434 (7,618) 0%
Franchise fees 137,843 162,223 185,097 22,874 0%
Other revenue 8,566 - -
Transfers (115,000) - - - -6%
-
Total revenue 3,961,349 4,033,066 3,802,301 0%
Program Expenses (230,765) -3%
-15%
General government 851,546 763,337 764,957 1,620 17%
Public safety 1,621,638 1,657,802 1,606,900 (50,902) -12%
Public works (145,308)
Recreation and cultural 976,856 951,484 806,176 37,312 -5%
Interest on long-term debt 307,145 225,463 262,775 (23,641)
197,210 194,112 170,471 -21%
Total expenses
3,954,395 3,792,198 3,611,279 (180,919)
Change in Net Assets
$ 6,954 $ 240,868 $ 191,022 $ (49,846)

Vienna Township’s total governmental revenue decreased by $230,765 as a result of the
decrease in state-shared revenue and local donations.

Expenses decreased by $180,919 during the year. The largest decreases were reported in
recreation and culture and sanitation.

5

Charter Township of Vienna

Management’s Discussion and Analysis (Continued)

Business-type Activities

The following table shows, in a condensed format, the current year’s net assets and changes in
net assets, compared to the prior two years:

Business-type Activities

2008 2009 2010 Change Percent
Change

Operating revenue $ 1,514,742 $ 1,916,780 $ 1,921,233 $ 4,453 0%
(80,178) -5%
Operating expenses, other than depreciation 1,330,514 1,775,559 1,695,381 0%
-
Depreciation and amortization 164,504 164,504 164,504

Operating income (loss) 19,724 (23,283) 61,348 84,631

Interest income 13,281 4,639 2,689 (1,950) -42%
Interest expense 67,534 48,730 34,113 (14,617) -30%
Capital contributions 324,743 314,464 325,734 11,270
Transfers 115,000 4%
- - - 0%

Change in Net Assets $ 405,214 $ 247,090 $ 355,658 $ 108,568 44%

Business-type activities current assets increased $238,887. Business-type capital assets
decreased $164,504 from a year ago. This large decrease is due to depreciation expense on the
business-type activities capital assets and no capital asset additions in the current year. The
Vienna Township Business Development Authority has agreed to contribute the annual debt
payment on the Linden Road sewer extension and the Vienna Road sewer extension note to
Vienna Township.

Vienna Township’s business-type activities consist of the Water and Sewer Funds. We provide
water to residents from the Genesee County Water System. We provide sewage treatment
through a sewage treatment plant operated by Genesee County Water and Waste. Sewer and
water operating expenses decreased in 2010 by approximately $80,000 and operating revenue
increased by approximately $4,500.

The Township’s Funds

Our analysis of Vienna Township’s major funds begins on page 14, following the government-
wide financial statements. The fund financial statements provide detail information about the
most significant funds, not Vienna Township as a whole. The Vienna Township Board creates
funds to help manage money for specific purposes as well as to show accountability for certain
activities, such as special property tax millages. Vienna Township’s major governmental funds
for 2010 include the General Fund and the Sanitation Fund.

6

Charter Township of Vienna

Management’s Discussion and Analysis (Continued)

The General Fund pays for most of Vienna Township’s governmental services. The most
significant are police and fire, which incurred expenses of $1,381,896 in 2010. Of the two
services, Vienna Township’s share of the Fire Authority costs is supported by a 1 mill fire millage,
which is recorded in the Public Safety Department.

7

Charter Township of Vienna

Management’s Discussion and Analysis (Continued)

The Township’s Funds (Continued)

The following table shows the total governmental fund activity, on a modified accrual basis:

Governmental Funds

2008 2009 2010 Change Percent
Change

Revenue $ 1,411,243 $ 1,391,298 $ 1,385,816 $ (5,482) -0.4%
Property taxes and income taxes 431,540 439,438 417,038 (22,400) -5.1%
Charges for services 63,475 71,798 61,608 (10,190) -14.2%
Licenses and permits 987,331 852,909 847,462 -0.6%
59,992 43,309 9,890 (5,447) -77.2%
State-shared revenue 144,510 162,223 185,097 (33,419) 14.1%
Federal, state, and local grants 53,218 13,052 5,994 22,874 -54.1%
Cable franchise fees 649,961 667,524 636,888 -4.6%
Interest and rentals 275,079 381,515 230,968 (7,058) -39.5%
Special assessments (30,636)
Other (150,547)

Total revenue 4,076,349 4,023,066 3,780,761 (242,305) -6%

Expenditures 790,839 678,820 665,267 (13,553) -2%
Current: 1,547,708 1,560,026 1,487,125 (72,901) -5%
General government (195,939) -24%
Public safety 816,787 815,638 619,699 (183,993) -49%
Public works 258,497 372,913 188,920 0%
Recreation and culture - 0%
Capital outlay 1,250 - - 2,100
Debt service 781,451 771,243 773,343

Total expenditures 4,196,532 4,198,640 3,734,354 (464,286) -11%

Excess of Revenue Over (Under) (120,183) (175,574) 46,407 221,981 -126%
Expenditures
(115,000) - - - 0%
Other Financing Uses -
Transfers - Net

Net Change in Fund Balances (235,183) (175,574) 46,407 221,981 -126%
Fund Balances - Beginning of year 1,357,758 1,122,575 947,001 (175,574) -16%

Fund Balances - End of year $ 1,122,575 $ 947,001 $ 993,408 $ 46,407 5%

8

Charter Township of Vienna

Management’s Discussion and Analysis (Continued)

Sanitation Fund Budgetary Highlights

Over the course of the year, Vienna Township amended the budget to take into account events
during the year. The most significant changes were to decrease the Sanitation Fund budget by
$31,112 mainly due to the new collection agency.

Capital Asset and Debt Administration

At the end of 2010, Vienna Township had $19,167,262 invested in a broad range of capital
assets, including buildings, machinery, equipment, and water and sewer lines. In addition, Vienna
Township has invested significantly in roads within Vienna Township.

Economic Factors and Next Year’s Budgets and Rates

In recent years, Vienna Township has averaged approximately 100 new housing units
constructed annually. 2010 was a particularly down year with only one new home start, and it is
probable that the low levels will continue in 2011. This lack of growth will be reflected in a flat
level in state equalized value, tax revenue, sewer and water tap-ins, and building fee revenue.

Vienna Township is a major commercial center for northern Genesee County, but there are
currently no major commercial developments under construction. There are over 200 additional
acres under the control of developers in the planning and marketing stages. However, there is
only one project in the preconstruction phase and only one small project under construction,
which indicates that commercial construction and the revenue created by it should continue to
be down or flat in 2011.

The reduced construction and effects of the recession have resulted in an actual decline in 2011
and 2012 state equalized and taxable values. However, 2012 taxable values had a smaller
decrease of less than $27,435,000 which will result in a decrease in revenue amounting to
$111,000 to Vienna Township and its component parts.

Year Total State
Equalized Value
2001
2002 $ 299,280,000
2003 328,830,000
2004 355,540,000
2005 379,770,000
2006 414,070,000
2007 439,400,000
2008 462,200,000
2009 448,900,000
2010 425,200,000
2011 382,435,000
355,000,000

9

Charter Township of Vienna

Management’s Discussion and Analysis (Continued)

In the recent past, Vienna Township has averaged over $230,000 annually in contributions
(primarily tap-in fees) to finance the construction of additional water and sewer lines. In 2010,
tap-in fees amounted to only $24,700. Vienna Township has no plans to construct sewer and
water infrastructure in the upcoming year unless it receives stimulus funding. There is no
expectation that construction will increase thereby increasing tap-in revenue at earlier levels.
Contacting the Vienna Township Management
This financial report is intended to provide our citizens, taxpayers, customers, and investors with
a general overview of Vienna Township’s finances and to show Vienna Township’s accountability
for the money it receives. If you have questions about this report or need additional information,
we welcome you to contact the Office of the Supervisor, 3400 W. Vienna Road, Vienna
Township, Clio, MI, 48420.

10

Charter Township of Vienna

Statement of Net Assets
December 31, 2010

Primary Government Component
Unit
Governmental Business-type
Building
Activities Activities Total Development

Authority

Assets $ 1,499,765 $ 665,581 $ 2,165,346 $ 597,302
Cash and cash equivalents 194,231 - 194,231 -
Investments
Receivables - Net of allowance 1,353,310 790,824 2,144,134 50,874
Internal balances (21,643) 21,643 - -
Prepaid expenses and other assets 418 - 418 -
Capital assets:
Assets not subject to depreciation 495,758 55,200 550,958 15,000
Assets subject to depreciation 8,552,414 10,063,890 18,616,304 603,438
Tap-in contracts receivable -
Long-term - 1,801 1,801 -
Total assets 12,074,253 11,598,939 23,673,192 1,266,614

Liabilities 6,732 14,221 20,953 117,717
Accounts payable 80,751 317,541 398,292 -
Due to other governmental units 22,909 22,909 -
Deposits 119,347 - 134,053 -
Accrued interest payable 1,922,281 14,706 1,922,281
Deferred revenue 601,577 918,566 50,874
Noncurrent liabilities: 4,437,450 - 4,745,478 -
Due within one year 7,191,047 316,989 8,162,532 -
Due in more than one year 308,028
971,485 168,591
Total liabilities
Net Assets 4,228,564 9,554,276 13,782,840 618,438
122,114 - 122,114 -
Invested in capital assets - Net of 532,528
related debt 1,073,178 1,605,706 479,585

Restricted for - Rubbish $ 4,883,206 $ 10,627,454 $ 15,510,660 $ 1,098,023
Unrestricted

Total net assets

The Notes to Financial Statements are an 11
Integral Part of this Statement.

Charter Township of Vienna

Program Revenue

Operating Capital Grants

Charges for Grants and and
Services
Expenses Contributions Contributions

Functions/Programs $ 764,957 $ 203,694 $ 110,000 $ 21,540
Primary government: 1,606,900 157,455 - -
806,176 658,157 -
Governmental activities: 262,775 9,290
General government 170,471 560 221,641 5,445
Public safety - -
Public works -
Recreation and culture
Interest on long-term debt

Total governmental 3,611,279 1,019,866 340,931 26,985
activities

Business-type activities: 1,074,384 1,126,391 - 310,834
Sewer Fund 819,614 794,842 - 14,900
Water Fund
Total business-type 1,893,998 1,921,233 - 325,734
activities 340,931 $ 352,719
$ 5,505,277 $ 2,941,099 $
Total primary government -$ 3,300
Component unit - Business $ 495,606 $ -$

Development Authority General revenue:
Property taxes
State-shared revenue
Interest
Cable franchise fees

Total general revenue

Change in Net Assets

Net Assets - Beginning of year

Net Assets - End of year

The Notes to Financial Statements are an 12
Integral Part of this Statement.

Statement of Activities
Year Ended December 31, 2010

Primary Government Component
Unit
Governmental Business-type
Building
Activities Activities Total Development

Authority

$ (429,723) $ - $ (429,723) $ -
(1,449,445) - (1,449,445) -
(138,729) - (138,729) -
(35,129) - (35,129) -
(170,471) - (170,471) -

(2,223,497) - (2,223,497) -

- 362,841 362,841 -
- (9,872) (9,872) -

- 352,969 352,969 -
(2,223,497) 352,969 (1,870,528) -

- - - (492,306)

1,385,816 - 1,385,816 729,886
838,172 - 838,172 -
5,434 2,689 8,123
185,097 - 185,097 1,538
-

2,414,519 2,689 2,417,208 731,424

191,022 355,658 546,680 239,118

4,692,184 10,271,796 14,963,980 858,905

$ 4,883,206 $ 10,627,454 $ 15,510,660 $ 1,098,023

13

Charter Township of Vienna

Governmental Funds
Balance Sheet

December 31, 2010

General Fund Sanitation Nonmajor Total
Fund Funds

Assets $ 1,053,436 $ 428,965 $ 17,364 $ 1,499,765
Cash and cash equivalents 194,231 - - 194,231
Investments
Receivables - Net of allowance: 695,762 - - 695,762
- 246,856 - 246,856
Property taxes receivable 6,165 117,736
Special assessments receivable 111,571 - - 292,956
Other receivables 292,956 - - 164,417
Due from other governmental units 164,417 - -
Due from other funds - 418
Prepaid expenses and other assets 418 675,821 $
$ 2,512,791 $ 23,529 $ 3,212,141
Total assets
Liabilities and Fund Balances $ 5,117 $ 995 $ 620 $ 6,732
Liabilities 80,751 - - 80,751
Accounts payable - - 186,060
Due to other governmental units 186,060 - 22,909 22,909
Due to other funds - 552,712 - 1,922,281
Deposits
Deferred revenue 1,369,569 553,707 23,529 2,218,733
1,641,497
Total liabilities
Fund Balances 418 - - 418

Reserved for - Prepaid expenses 144,103 - - 144,103
Unreserved, reported in: 726,773 - - 726,773

General Fund - Designated for subsequent - 2,592 - 2,592
years' expenditures - 119,522 - 119,522
871,294 122,114 - 993,408
General Fund - Undesignated $ 2,512,791 $ 675,821 $ 23,529 $ 3,212,141
Special Revenue Funds - Designated for

subsequent years' expenditures
Special Revenue Funds - Undesignated

Total fund balances

Total liabilities and fund balances

The Notes to Financial Statements are an 14
Integral Part of this Statement.

Charter Township of Vienna

Governmental Funds
Reconciliation of the Balance Sheet to the Statement of Net Assets

December 31, 2010

Fund Balance Reported in Governmental Funds $ 993,408

Amounts reported for governmental activities in the statement of net assets 9,048,172
are different because: (4,819,608)

Capital assets used in governmental activities are not financial (119,347)
resources and are not reported in the funds (12,816)

Bonds payable and capital lease obligations are not due and payable in (206,603)
the current period and are not reported in the funds $ 4,883,206

Accrued interest is not due and payable in the current period and is
not reported in the funds

Employee compensated absences are payable over a long period of
years and do not represent a claim on current financial resources;
therefore, they are not reported as fund liabilities

Other long-term liabilities, such as net other postemployment
benefits, do not present a claim on current financial resources and
are not reported as fund liabilities

Net Assets of Governmental Activities

The Notes to Financial Statements are an 15
Integral Part of this Statement.

Charter Township of Vienna

Governmental Funds
Statement of Revenue, Expenditures, and Changes in Fund Balances

Year Ended December 31, 2010

General Sanitation Nonmajor Total
Fund Fund Funds

Revenue $ 1,385,816 $ - $ - $ 1,385,816
Property taxes 8,744 - 52,864 61,608
Licenses and permits - - 9,890
Federal grants - 9,890
State-shared revenue and grants 847,462 - - 847,462
Charges for services 417,038 1,705 - 417,038
Interest - 39
Rental income 3,690 560 5,434
Other revenue: - 560
Special assessments
Local donations - 636,888 - 636,888
Cable franchise fees 500 - 216,696 217,196
Other miscellaneous income 185,097 - 185,097
2,584 -
Total revenue 2,850,931 4,385 6,803 13,772
642,978 286,852 3,780,761
Expenditures - Current
General government: 185,606 - - 185,606
Township Board 55,860 - - 55,860
Supervisor 56,641 - - 56,641
Treasurer - -
Assessing 138,391 - - 138,391
Clerk 72,647 - - 72,647
Elections 15,677 - - 15,677
Township hall and grounds 95,945 - - 95,945
Cemetery 11,488 - - 11,488
Planning department 33,012 - - 33,012
Public safety: - -
Police 1,102,362 - 105,229 1,102,362
Fire 279,534 - - 279,534
Building and trade inspections - - - 105,229
Public works: 13,709 542,069 - 13,709
Streets 24,165 - - 24,165
Stormwater drainage - - - 542,069
Sanitation 39,756 - - 39,756
Street lighting 30,267 - 123,668 30,267
Recreation and culture: 34,985 - 100,000 34,985
Library - - 83,300 123,668
Parks and recreation 488,580 542,069 412,197 588,580
Senior citizens 101,463 100,909 (125,345) 184,763
Debt service
Principal 2,780,088 3,734,354
Interest on long-term debt 70,843 46,407

Total expenditures

Excess of Revenue Over (Under) Expenditures

16

Charter Township of Vienna

Governmental Funds
Statement of Revenue, Expenditures, and Changes in Fund Balances

(Continued)
Year Ended December 31, 2010

General Sanitation Nonmajor Total
Fund Fund Funds

Other Financing Sources (Uses) $ -$ - $ 125,345 $ 125,345
Transfers in (125,345) - - (125,345)
Transfers out
(54,502) 100,909 - 46,407
Net Change in Fund Balances
925,796 21,205 - 947,001
Fund Balances - Beginning of year
$ 871,294 $ 122,114 $ - $ 993,408
Fund Balances - End of year

The Notes to Financial Statements are an 17
Integral Part of this Statement.

Charter Township of Vienna

Governmental Funds
Reconciliation of the Statement of Revenue, Expenditures,

and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Year Ended December 31, 2010

Net Change in Fund Balances - Total governmental funds $ 46,407

Amounts reported for governmental activities in the statement of activities 40,161
are different because: (396,097)

Governmental funds report capital outlays as expenditures; however, 21,540
in the statement of activities, these costs are allocated over their
estimated useful lives as depreciation: 588,580
Capital outlay 14,292

Depreciation expense (2,863)
(120,998)
Donated asset 191,022

Repayment of bond principal is an expenditure in the governmental
funds, but not in the statement of activities (where it reduces long-
term debt)

Change in accrued interest payable and other

Increase in accumulated employee sick and vacation pay and other
similar expenses reported in the statement of activities do not
require the use of current resources, and therefore are not
reported in the fund statements until they come due for payment

Increase in OPEB liability

Change in Net Assets of Governmental Activities $

The Notes to Financial Statements are an 18
Integral Part of this Statement.

Charter Township of Vienna

Proprietary Funds
Statement of Net Assets

December 31, 2010

Enterprise Funds Total
Sewer Fund Water Fund

Assets $ 92,205 $ 573,376 $ 665,581
Current assets:
Cash and cash equivalents 415,504 - 415,504
Receivables - Net of allowance: 179,964 - 179,964
Unbilled utility charges 190,072 79 190,151
Other receivables -
Delinquent fees 5,205 287,443 5,205
Customer assessments - 287,443
Due from other funds 860,898
882,950 1,743,848
Total current assets
7,053,807 3,065,283 10,119,090
Noncurrent assets: 1,801 - 1,801
Capital assets
Tap-in contracts receivable - Long-term 7,055,608 3,065,283 10,120,891

Total noncurrent assets 7,938,558 3,926,181 11,864,739

Total assets 1,953 12,268 14,221
189,821 127,720 317,541
Liabilities 265,800 265,800
Current liabilities: -
Accounts payable 6,874 7,832 14,706
Due to other governmental units 283,672 33,317 316,989
Due to other funds
Accrued interest payable 748,120 181,137 929,257
Current portion of long-term debt
30,333 29,870 60,203
Total current liabilities
62,500 185,325 247,825
Net OPEB obligation
840,953 396,332 1,237,285
Noncurrent liabilities - Long-term debt
6,707,635 2,846,641 9,554,276
Total liabilities 389,970 683,208 1,073,178

Net Assets $ 7,097,605 $ 3,529,849 10,627,454
Invested in capital assets - Net of related debt
Unrestricted $ 10,627,454

Total net assets

Net Assets of Business-type Activities

The Notes to Financial Statements are an 19
Integral Part of this Statement.

Charter Township of Vienna

Proprietary Funds
Statement of Revenue, Expenses, and Changes in Net Assets

Year Ended December 31, 2010

Enterprise Funds Total
Sewer Fund Water Fund

Operating Revenue $ -$ 794,644 $ 794,644
Sale of water 1,079,566 - 1,079,566
Sewage disposal charges 43,773 8
Interest and penalty charges 3,052 43,781
Miscellaneous 190 3,242
1,126,391
Total operating revenue 794,842 1,921,233

Operating Expenses - 640,691 640,691
Cost of water 802,287 - 802,287
Cost of sewage treatment -
Maintenance and repair 72,323 72,323
Salaries, wages, and fringes 76,009 76,747 152,756
Professional services 946
Computer billing charge 936 1,882
Office supplies and postage 6,454 5,315 11,769
Insurance 250
Miscellaneous 258 302 508
Depreciation 59 361
11,760 12,804
Total operating expenses 1,044 72,790 164,504
91,714
Operating Income (Loss) 808,801 1,859,885
1,051,084
Nonoperating Revenue (Expense) (13,959) 61,348
Investment income 75,307
Interest expense
439 2,250 2,689
Income (Loss) - Before contributions (23,300) (10,813) (34,113)

Capital Contributions 52,446 (22,522) 29,924

Change in Net Assets 310,834 14,900 325,734

Net Assets - Beginning of year 363,280 (7,622) 355,658

Net Assets - End of year 6,734,325 3,537,471 10,271,796

$ 7,097,605 $ 3,529,849 $ 10,627,454

The Notes to Financial Statements are an 20
Integral Part of this Statement.

Charter Township of Vienna

Proprietary Funds
Statement of Cash Flows
Year Ended December 31, 2010

Enterprise Funds Total
Sewer Fund Water Fund

Cash Flow from Operating Activities $ 992,591 $ 782,255 $ 1,774,846
Receipts from customers
Receipts from interfund services and - 14,344 14,344
reimbursements (890,631)
Payments to suppliers (660,286) (1,550,917)
(56,094)
Payments to employees (56,877) (112,971)

Net cash provided by operating 45,866 79,436 125,302
activities

Cash Flows from Capital and Related Financing 312,982 16,284 329,266
Activities (301,034) (45,847) (346,881)
Capital contributions

Principal and interest paid on capital debt

Net cash provided by (used in) 11,948 (29,563) (17,615)
capital and related financing
activities

Cash Flows from Investing Activities - Interest 439 2,250 2,689
received on investments

Net Increase in Cash and Cash Equivalents 58,253 52,123 110,376

Cash and Cash Equivalents - Beginning of year 33,952 521,253 555,205

Cash and Cash Equivalents - End of year $ 92,205 $ 573,376 $ 665,581

Balance Sheet Classification of Cash and Cash $ 92,205 $ 573,376 $ 665,581

Equivalents - Cash and investments

Reconciliation of Operating Income (Loss) to Net $ 75,307 $ (13,959) $ 61,348
Cash from Operating Activities
Operating income (loss) 91,714 72,790 164,504
Adjustments to reconcile operating income (loss) (133,800)
to net cash from operating activities: 4 (133,796)
Depreciation and amortization - 1,753 1,753
Changes in assets and liabilities: 12,645
Receivables 18,848 31,493
Due from others
Accounts payable and due to other
governments

Net cash provided by operating $ 45,866 $ 79,436 $ 125,302
activities

The Notes to Financial Statements are an 21
Integral Part of this Statement.

Charter Township of Vienna

Fiduciary Funds
Statement of Fiduciary Net Assets

December 31, 2010

Retiree Health

Care Agency Funds

Assets - Cash and cash equivalents $ 136,160 $ 1,387,886

Liabilities - Due to other governmental units - $ 1,387,886

Net Assets Held in Trust for Pension and Other Employee $ 136,160
Benefits

The Notes to Financial Statements are an 22
Integral Part of this Statement.

Charter Township of Vienna

Fiduciary Funds
Statement of Changes in Fiduciary Net Assets - Retiree Health Care

Year Ended December 31, 2010

Additions $ 622
Investment income - Interest and dividends 60,000

Contributions - Employer contributions

Total additions 60,622

Deductions - Benefit payments 40,405

Net Increase in Net Assets Held in Trust 20,217

Net Assets Held in Trust for Pension and Other Employee Benefits - Beginning 115,943
of year

Net Assets Held in Trust for Pension and Other Employee Benefits - End of $ 136,160
year

The Notes to Financial Statements are an 23
Integral Part of this Statement.

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 1 - Nature of Business and Significant Accounting Policies

The accounting policies of the Charter Township of Vienna (the "Township") conform to
accounting principles generally accepted in the United States of America (GAAP) as
applicable to governmental units. The following is a summary of the significant
accounting policies used by the Charter Township of Vienna:

Reporting Entity

The Charter Township of Vienna, Michigan elected Charter Township status in August
1978. The Township provides the following services as authorized by its charter: public
safety (police, fire, and inspections), highways and streets, sanitation, public
improvements, recreation, planning, and general administrative services.

The accompanying financial statements present the Township and its component unit,
an entity for which the Township is considered to be financially accountable. The
discretely presented component unit is reported in a separate column in the
government-wide financial statements to emphasize that it is legally separate from the
Township (see discussion below for description).

Discretely Presented Component Unit

Business Development Authority - The members of the governing board are
appointed by the Township supervisor and approved by the Township board. The
Authority’s operational and capital budgets must be approved by the Township board.
The Authority was created on May 23, 1992 under Act 197, Public Act of Michigan,
1975, as amended. The Business Development Authority does not issue separate
financial statements. However, detailed financial information can be obtained from the
Authority’s administrative offices.

Administrative office:

Business Development Authority of Vienna Township
3400 W. Vienna Road
Clio, Michigan 48420

Jointly Governed Organizations - The following organizations are not included in the
Township's annual report as component units, but rather are considered joint ventures.

The organizations have the following characteristics:

Clio Area Library and Clio Area Fire Authority

 Financed by other communities besides the Township of Vienna

 Serve several communities outside the Township

 Vienna Township has no obligation to fund deficits of the library or
guarantee its debt; nor is it responsible for approving the library's operating budget.

24

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 1 - Nature of Business and Significant Accounting Policies
(Continued)

The Clio Library and Fire Authority have June 30 and March 31 year ends, respectively.
Audited financial statements of both organizations for the years ended June 30, 2010 and
March 31, 2010 are available for public inspection at the Charter Township of Vienna.

Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the
statement of activities) report information on all of the nonfiduciary activities of the
primary government and its component units. For the most part, the effect of interfund
activity has been removed from these statements. Governmental activities, normally
supported by taxes and intergovernmental revenue, are reported separately from
business-type activities, which rely to a significant extent on fees and charges for
support. Likewise, the primary government is reported separately from certain legally
separate component units for which the primary government is financially accountable.

The statement of activities demonstrates the degree to which the direct expenses of a
given function or segment are offset by program revenue. Direct expenses are those
that are clearly identifiable with a specific function or segment. Program revenue
includes (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 revenue are reported instead as general revenue.

Separate financial statements are provided for governmental funds, proprietary funds,
and fiduciary funds, even though the latter are excluded from the government-wide
financial statements. Major individual governmental funds and major individual Enterprise
Funds are reported as separate columns in the fund financial statements.

Measurement Focus, Basis of Accounting, and Financial Statement
Presentation - The government-wide financial statements are reported using the
economic resources measurement focus and the accrual basis of accounting, as are the
proprietary fund, fiduciary fund, and component unit financial statements. Revenue is
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 revenue
in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.

25

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 1 - Nature of Business and Significant Accounting Policies
(Continued)

Governmental fund financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Revenue is
recognized as soon as it is both measurable and available. Revenue is considered to be
available if it is collected within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the Township considers revenue to be
available if it is collected within 60 days of the end of the current fiscal period. The
following major revenue sources meet the availability criterion: state-shared revenue,
state gas and weight tax revenue, district court fines, and interest associated with the
current fiscal period. Conversely, special assessments and federal grant reimbursements
will be collected after the period of availability; receivables have been recorded for
these, along with a "deferred revenue" liability.

Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, expenditures relating to compensated
absences, and claims and judgments are recorded only when payment is due.

The Township reports the following major governmental funds:

 The General Fund is the Township's primary operating fund. It accounts for all
financial resources of the general government, except those required to be
accounted for in another fund.

 The Sanitation Fund is used to account for the customer charges which are to be
used to pay contracted services for rubbish collection.

The Township reports the following major proprietary funds:

 The Water Supply and Sewer Disposal System are separate funds maintained for the
operations of the water distribution system and the sewage pumping and collection
system that transfer sewage to Genesee County’s treatment plant.

Additionally, the Township reports the following fund types:

 The Retiree Healthcare Benefit Trust Fund accounts for the accumulation of
resources and payment of postretirement healthcare benefits to qualified
employees.

 The Agency Fund accounts for assets held by the Township as an agent for
individuals, private organizations, and other governments. Agency Funds are
custodial in nature (assets equal liabilities) and do not involve measurement of
results of operations. Agency Funds are reported as fiduciary funds.

26

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 1 - Nature of Business and Significant Accounting Policies
(Continued)

Private sector standards of accounting issued prior to December 1, 1989 are generally
followed in both the government-wide and proprietary fund financial statements to the
extent that those standards do not conflict with the standards of the Governmental
Accounting Standards Board. The Township has elected not to follow private sector
standards issued after November 30, 1989 for its business-type activities.

As a general rule, the effect of interfund activity has been eliminated from the
government-wide financial statements. Exceptions to this general rule are charges
between the Township's water and sewer function and various other functions of the
Township. Eliminations of these charges would distort the direct costs and program
revenue reported for the various functions concerned.

Amounts reported as program revenue include (1) charges to customers or applicants
for goods, services, or privileges provided; (2) operating grants and contributions; and
(3) capital grants and contributions, including special assessments. Internally dedicated
resources are reported as general revenue rather than as program revenue. Likewise,
general revenue includes all property taxes and interest income.

When an expense is incurred for purposes for which both restricted and unrestricted
net assets are available, the Township's policy is to first apply restricted resources.

Proprietary funds distinguish operating revenue and expenses from nonoperating items.
Operating revenue and expenses generally result from providing services in connection
with a proprietary fund's principal ongoing operations. The principal operating revenue
of our proprietary funds relates to charges to customers for sales and services.
Operating expenses for proprietary funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenue and expenses
not meeting this definition are reported as nonoperating revenue and expenses.

Property Tax Revenue

Property taxes are levied on each December 1 on the taxable valuation of property as of
the preceding December 31. Taxes are considered delinquent on March 1 of the
following year, at which time penalties and interest are assessed.

The Township's 2010 tax is levied and collectible on December 1, 2010 and is
recognized as revenue in the year ended December 31, 2010, when the proceeds of the
levy are budgeted and available for the financing of operations.

The 2009 taxable valuation of the Township (which is the basis for the 2010 property
tax revenue) totaled $383 million; a portion of this is abated and a portion is captured by
the TIFA. The Township levied 4.04 mills for operating purposes, resulting in
approximately $1,385,000 of property tax revenue.

27

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 1 - Nature of Business and Significant Accounting Policies
(Continued)

Assets, Liabilities, and Net Assets or Equity

Bank Deposits and Investments - The Township’s cash and cash equivalents are
considered to be cash on hand, demand deposits and short-term investments with
original maturities of three months or less from the date of acquisition.

Investments for the Township are reported at fair value. Certificates of deposit with a
maturity date of greater than three months at time of purchase are recorded as
investments on the financial statements.

Receivables and Payables - In general, outstanding balances between funds are
reported as "due to/from other funds." Activity between funds that are representative
of lending/borrowing arrangements outstanding at the end of the fiscal year is referred
to as "advances to/from other funds." Any residual balances outstanding between the
governmental activities and the business-type activities are reported in the government-
wide financial statements as "internal balances."

All trade, notes, contracts, and property tax receivables are shown as net of allowance
for uncollectible amounts.

Prepaid Items - Certain payments to vendors reflect costs applicable to future fiscal
years and are recorded as prepaid items in both government-wide and fund financial
statements.

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 government-wide
financial statements. Capital assets are defined by the Township as assets with an initial
individual cost of more than $5,000 and an estimated useful life in excess of two years.
Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the
date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets lives are not capitalized.

28

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 1 - Nature of Business and Significant Accounting Policies
(Continued)

Property, plant, and equipment of the primary government, as well as the component
unit, are depreciated using the straight-line method over the following estimated useful
lives:

Infrastructure 5 to 30 years
Water system 60 years
Sewer system
Buildings and building improvements 100 years
Machinery and equipment 10 to 50 years
Drains
5 to 20 years
40 years

Compensated Absences (Vacation and Sick Leave) - Employees' unused sick time
is paid out in cash at the end of the year. It is the Township’s policy to permit
employees to accumulate earned but unused vacation pay benefits. Vacation pay is
accrued when incurred in the government-wide fund financial statements. A liability for
these amounts is reported in governmental funds only for employee terminations at year
end.

Long-term Obligations - In the government-wide financial statements and the
proprietary fund types in the fund 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 discounts, as well as issuance costs, are deferred and amortized over the
life of the bonds using the effective interest method. Bonds payable are reported net of
the applicable bond premium or discount. Bond 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 are reported as other financing uses. Issuance
costs are reported as debt service expenditures.

Pension and Other Postemployment Benefit Costs - The Township offers both
pension and retiree healthcare benefits to retirees. The Township receives an actuarial
valuation to compute the annual required contribution (ARC) necessary to fund the
obligation over the remaining amortization period. In the governmental funds, pension
and OPEB costs are recognized as contributions are made. For the government-wide
statements and proprietary funds, the Township reports the full accrual cost equal to
the current year required contribution, adjusted for interest and “adjustment to the
ARC” on the beginning of year underpaid amount, if any.

29

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 1 - Nature of Business and Significant Accounting Policies
(Continued)

Fund Equity - 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 a specific purpose. Designations of fund balance
represent tentative management plans that are subject to change.

Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
period. Actual results could differ from those estimates.

Note 2 - Stewardship, Compliance, and Accountability

Construction Code Revenue/Expenditures - The State Construction Code Act,
Michigan Public Act 245 of 1999, and rules promulgated by the Department of Treasury
regarding that Act, require that a local unit’s fees collected from construction code
permits be accounted for in a method which shows that all of these fees were used for
expenditures related to the operation of the enforcing agency. The rules indicated that
if the revenue exceeded the expenditures, the fees collected must be kept in a separate
fund with all the revenue and expenditures accounted for in that fund. These rules
allowed for monitoring these funds in a separate activity center within the General Fund
if the expenditures would normally exceed the revenue. The Township chose the
former presentation. The activity related to construction code activity is shown in the
Building Inspection Special Revenue Fund.

Budgetary Information - The Township follows these procedures in establishing the
budgetary data reflected in the financial statements:

1. Prior to November 1, the supervisor submits to the Township board a proposed
operating budget for the fiscal year commencing the following January 1. The
operating budget includes proposed expenditures, and the means of financing them,
for the General and Special Revenue Funds. Informational summaries of projected
revenue and expenditures are provided for all other Township funds, as well as
estimated total costs and proposed methods of financing all capital construction
projects.

2. Public hearings are conducted at the Township Hall to obtain taxpayer comments.

3. Prior to January 1, the budget is legally enacted on a departmental (activity) basis
through passage of a resolution in accordance with Public Act 621 of the State of
Michigan.

30

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 2 - Stewardship, Compliance, and Accountability (Continued)

4. The supervisor is authorized to transfer budgeted amounts within departmental
appropriation accounts; however, any revisions that alter the total expenditures of
any department must be approved by the Township board.

5. Formal budgetary integration is employed as a management control device during
the year for all budgetary funds. The amount of encumbrances at year end is not
known. Also, all budgets are adopted on a basis consistent with accounting
principles generally accepted in the United States of America.

6. Budget appropriations lapse at year end except for approved contracts, which are
appropriated on a contract (grant) length basis.

Budgeted amounts are reported on the financial statements as originally adopted and as
amended by the Township board.

Note 3 - Deposits and Investments

Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended) authorizes
local governmental units to make deposits and invest in the accounts of federally insured
banks, credit unions, and savings and loan associations that have offices in Michigan. The
local unit is allowed to invest in bonds, securities, and other direct obligations of the
United States or any agency or instrumentality of the United States; repurchase
agreements; bankers' acceptances of United States banks; commercial paper rated
within the two highest classifications, which matures not more than 270 days after the
date of purchase; obligations of the State of Michigan or its political subdivisions, which
are rated as investment grade; and mutual funds composed of investment vehicles that
are legal for direct investment by local units of government in Michigan.

The Township has designated six banks for the deposit of its funds. The investment
policy adopted by the board in accordance with Public Act 196 of 1997 has authorized
investment in bonds and securities of the United States government and bank accounts
and CDs, but not the remainder of state statutory authority. The Township's deposits
and investment policies are in accordance with statutory authority.

The Township's cash and investments are subject to several types of risk, which are
examined in more detail below:

Custodial Credit Risk of Bank Deposits - Custodial credit risk is the risk that in the
event of a bank failure, the Township's deposits may not be returned to it. The
Township does not have a deposit policy for custodial credit risk. At year end, the
Township had $2,878,736 of bank deposits (certificates of deposit, checking and savings
accounts) that were uninsured and uncollateralized. The Township evaluates each
financial institution with which it deposits funds and assesses the level of risk of each
institution; only those institutions with an acceptable estimated risk level are used as
depositories.

31

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 3 - Deposits and Investments (Continued)

Credit Risk - State law limits investments in commercial paper to the top two ratings
issued by nationally recognized statistical rating organizations. The Township has no
investment policy that would further limit its investment choices. As of year end, the
credit quality ratings of debt securities (other than the U.S. government) are as follows:

Investment Fair Value Rating Rating
Organization

Mutual fund $ 194,231 AAA Fitch

Note 4 - Deferred Revenue

Governmental funds report deferred revenue in connection with receivables for
revenue that is not considered to be available to liquidate liabilities of the current period.
Governmental funds also defer revenue recognition in connection with resources that
have been received but not yet earned. At the end of the current fiscal year, the various
components of deferred revenue are as follows:

Governmental Funds
Unavailable Unearned

Property taxes $ - $ 1,369,569
Special assessments - 552,712

Total $ - $ 1,922,281

At the end of the current fiscal year, the component unit deferred revenue is as follows:

Component Unit
Unavailable Unearned

Property taxes $ - $ 50,874

32

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 5 - Capital Assets

Capital asset activity of the Township's governmental and business-type activities was as
follows:

Governmental Activities Balance Additions Disposals Balance
January 1, December 31,

2010 2010

Capital assets not being depreciated - $ 495,758 $ -$ - $ 495,758
Land

Capital assets being depreciated: 3,861,318 60,626 - 3,921,944
Infrastructure 7,310,709 - - 7,310,709
Buildings and improvements (1,844)
Machinery and equipment 538,316 1,075 537,547

Subtotal 11,710,343 61,701 (1,844) 11,770,200

Accumulated depreciation: 917,295 191,213 - 1,108,508
Infrastructure 1,435,355 192,686 - 1,628,041
Buildings and improvements (1,844)
Machinery and equipment 470,883 12,198 (1,844) 481,237
2,823,533 396,097 3,217,786
Subtotal

Net capital assets being depreciated 8,886,810 (334,396) - 8,552,414

Net capital assets $ 9,382,568 $ (334,396) $ - $ 9,048,172

Business-type Activities Balance Additions Disposals Balance
January 1, December 31,
Capital assets not being depreciated -
Land 2010 2010

Capital assets being depreciated: $ 55,200 $ -$ - $ 55,200
Water and sewer lines
Machinery and equipment 13,538,784 - - 13,538,784
Subtotal 4,275 - - 4,275
- -
Accumulated depreciation: 13,543,059 13,543,059
Water and sewer lines
Machinery and equipment 3,310,390 164,504 - 3,474,894
4,275 - - 4,275
Subtotal -
3,314,665 164,504 - 3,479,169
Net capital assets being depreciated 10,228,394 (164,504) - 10,063,890
$ 10,283,594 $ (164,504) $ $ 10,119,090
Net capital assets

33

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 5 - Capital Assets (Continued)

Component Units Balance Additions Disposals Balance
January 1, December 31,
Capital assets not being depreciated -
Land 2010 2010

Capital assets being depreciated: $ 15,000 $ -$ - $ 15,000
Buildings and improvements
Machinery and equipment 38,004 - - 38,004
Subtotal 481,862 158,116 - 639,978
519,866 158,116 - 677,982
Accumulated depreciation:
Buildings and improvements 5,599 2,027 - 7,626
Machinery and equipment 38,940 27,978 - 66,918
Subtotal - 74,544
44,539 30,005 - 603,438
Net capital assets being depreciated - $ 618,438
475,327 128,111
Net capital assets
$ 490,327 $ 128,111 $

Depreciation expense was charged to programs of the primary government as follows:

Governmental activities: $ 62,135
General government 68,060
Public safety
Public works 196,032
69,870
Recreation and culture

Total governmental activities $ 396,097

Business-type activities: $ 72,790
Water 91,714
Sewer
$ 164,504
Total business-type activities

34

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 6 - Interfund Receivables, Payables, and Transfers

The composition of interfund balances is as follows:

Receivable Fund Payable Fund Amount
Sewer Fund
Due to/from Other Funds $ 164,417
General Fund $ 186,060

Water Fund General Fund 101,383
Sewer Fund $ 287,443

Total Water Fund

These balances result from the time lag between the dates that goods and services are
provided or reimbursable expenditures occur, transactions are recorded in the
accounting system, and payments between funds are made.

Interfund transfers reported in the fund financial statements are comprised of the
following:

Fund Providing Resources Fund Receiving Resources Amount

General Fund Building Inspection Fund $ 45,524
Senior Center Fund 79,821

Total General Fund $ 125,345

The transfer from the General Fund to the Building Inspection Fund and Senior Center
Fund was made to cover the current year fund balance deficit.

Note 7 - Long-term Debt

County contractual agreements and installment purchase agreements are general
obligations of the Township.

The Township was a participant in the county-wide sanitary sewer and water system
construction program. This program was financed by general obligation bonds issued by
Genesee County. The Township is obligated to assume the portion of the total debt for
the construction of the systems within its boundaries. Significant details regarding the
Township's obligations are as follows:

35

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 7 - Long-term Debt (Continued)

The Township has the following long-term debt outstanding as of December 31, 2010:

Interest Beginning Ending Due Within
Balance One Year
Rate Ranges Balance Additions Reductions

Governmental Activities

Fire Hall installment purchase 4.75% $ 2,172,022 $ - $ 104,537 $ 2,067,485 $ 117,534
Final payment due 2020 0.0 1,536,166
- 384,043 1,152,123 384,043
County road contract
Final payment due 2013 4.9 1,700,000 - 100,000 1,600,000 100,000

2006 Capital Improvement Bonds
(Senior Center)
Final payment due 2022

Total 5,408,188 - 588,580 4,819,608 601,577

Accumulated compensated absences 9,953 2,863 - 12,816 -
OPEB liability 85,605 180,998 60,000 206,603 -

Total governmental $ 5,503,746 $ 183,861 $ 648,580 $ 5,039,027 $ 601,577
activities

Interest Beginning Additions Reductions Ending Balance Due Within
Rate Ranges Balance One Year

Business-type Activities 5.44 $ 67,423 $ - $ 9,193 $ 58,230 $ 9,026
5.40 53,279
Vienna Meadows Waterline 5.40 131,764 - 7,092 46,187 6,994
Installment Note Final payment
due 2016 - 17,539 114,225 17,297

Haven Street Waterline Installment 3.00 187,500 - 62,500 125,000 62,500
Note Final payment due 2016
5.3 431,211 - 210,039 221,172 221,172
Saginaw Road Waterline Installment
Note Final payment due 2016 871,177 - 306,363 564,814 316,989

Vienna Road Sanitary Sewer 20,418 39,785 - 60,203 -
Extension Installment Note Final
payment due 2012 $ 891,595 $ 39,785 $ 306,363 $ 625,017 $ 316,989

Linden Road Sanitary Sewer
Extension Installment Note Final
payment due 2011

Total bonds payable

OPEB liability

Total business-type
activities

The County road contract was entered into in accordance with Act 51, Public Acts of
State 1951, as amended. The act provides that the Township can levy up to 3 mills for
the payment of the debt and obligate its available General Fund balance.

36

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 7 - Long-term Debt (Continued)

Annual debt service requirements to maturity for the above bonds and note obligations
are as follows:

Governmental Activities Business-type Activities

Years Ending Principal Interest Total Principal Interest Total
December 31

2011 $ 600,211 $ 176,232 $ 776,443 $ 316,989 $ 28,185 $ 345,174
2012 613,694 165,849 779,543 97,640 12,685 110,325
2013 652,813 154,830 807,643 37,098
2014 284,556 141,919 426,475 39,133 8,750 45,848
2015 302,087 128,263 430,350 41,280 6,715 45,848
2016-2020 445,315 32,674 4,568 45,848
2,056,247 2,501,562 - 2,309 34,983
2021-2025 310,000 22,785 332,785
- -

Total $ 4,819,608 $ 1,235,193 $ 6,054,801 $ 564,814 $ 63,212 $ 628,026

Act 359, Public Acts of State 1947, as amended, provides that net indebtedness of
townships cannot exceed 10 percent of the assessed real and personal property in the
Township. As of December 31, 2010, the Charter Township of Vienna had not incurred
any indebtedness which would be limited under Act 359. The Township’s existing
general long-term debt obligation contracts are specifically exempt from consideration in
the 10 percent limit computation.

Act 99, Public Acts of State 1933 authorizes the Township to use installment purchase
agreements. However, the contracts outstanding for the Township may not exceed
1.25 percent of the Township’s assessed value. As of December 31, 2010, the Charter
Township of Vienna had the following legal debt margin for installment purchase
agreements:

Total assessed valuation $ 423,248,740

Debt limit - 1.25 percent of total assessed valuation $ 5,290,609
Less amount of debt applicable to debt limit (2,067,485)

Unused debt limitation $ 3,223,124

Note 8 - Risk Management

The Township is exposed to various risks of loss related to property loss, torts, errors
and omissions, and employee injuries. The Township has purchased commercial
insurance for these claims. Settled claims for the commercial insurance have not
exceeded the amount of insurance coverage in any of the past three fiscal years.

37

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 9 - Defined Benefit Pension Plan

Plan Description - The Township participates in the Michigan Municipal Employees'
Retirement System (the "System"), an agent multiple-employer defined benefit pension
plan that covers all employees of the Township. The system provides retirement,
disability, and death benefits to plan members and their beneficiaries. The Michigan
Municipal Employees' Retirement System issues a publicly available financial report that
includes financial statements and required supplementary information for the system.
That report may be obtained by writing to the System at 1134 Municipal Way, Lansing,
MI 48917.

Funding Policy - The obligation to contribute to and maintain the System for these
employees was established by the Township's board and requires a contribution from
the employees of 3 percent of gross wages for general employees.

Annual Pension Cost - For the year ended December 31, 2010, the Township's annual
pension cost of $52,982 for the plan was equal to the Township's required and actual
contribution.

Actuarial Methods and Assumptions - In the December 31, 2009 actuarial valuation
(the most recent actuarial evaluation), the entry age actuarial cost method was used.
Significant actuarial assumptions used include (a) an 8.0 investment rate of return and
(b) projected salary increases of 4.5-12.90 percent per year. Both (a) and (b) include an
inflation component of 4.5 percent. The actuarial value of assets was determined using
techniques that smooth the effects of short-term volatility over a five-year period. The
unfunded actuarial liability is being amortized as a level percentage of payroll on a closed
basis. The remaining amortization period is 28 years.

Three-year Trend Information

Fiscal Year Ended December 31

2008 2009 2010

Annual pension cost (APC) $ 58,309 $ 56,020 $ 52,982
Percentage of APC contributed
100.0 % 100.0 % 100.0 %

38

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 9 - Defined Benefit Pension Plan (Continued)

Fiscal Year Ended December 31

2007 2008 2009

Actuarial value of assets $ 588,762 $ 683,201 $ 809,421
Actuarial accrued liability (AAL) (entry
717,608 810,135 1,102,907
age) 128,846 126,934 293,486
Unfunded AAL (UAAL) 73.4 %
Funded ratio 82.0 % 84.3 % 333,516
Covered payroll 392,786 416,455
UAAL as a percentage of covered
32.8 % 30.5 % 88.0 %
payroll

Note 10 - Defined Contribution Pension Plan

The Township has an employer defined contribution pension plan administered by
Nationwide Retirement Services, covering substantially all elected officials and
permanent part-time employees. Fourteen percent of projected base wages plus
administrative costs is contributed to the plan by the Township at the beginning of the
year. The elected official/employee is required to contribute a minimum of 5 percent.
The Township’s policy is to fund pension costs accrued on an annual basis.

The Township's total payroll during the current year was $528,055. The current year
contribution was calculated based on covered payroll of $149,907, resulting in employer
contributions of $20,987 and employee contributions of $7,495. The pension, as
established, does not recognize prior service costs, as it is based exclusively on current
compensation earned by participants.

39

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 11 - Joint Ventures

Clio Area Fire Authority:

In April 1976, the Charter Township of Vienna entered into a joint venture with the City
of Clio and the Township of Thetford to create the Clio Area Fire Authority. The
purpose of this joint venture was to obtain adequate fire protection for residents of the
municipalities. The agreement calls for each of the three municipalities to pay the Fire
Authority such amounts as are necessary to cover one-third of the fixed operational
costs of the Fire Authority. During 1992, the three members approved a 1 mill levy to
be collected from their respective property owners to be used to fund operations of the
Authority. Effective April 1, 2007, each participating municipality has the option to
retain up to ¼ mill for the limited purpose of the construction, remodeling, or
restoration of a fire hall or to retire any debt incurred for the acquisition or construction
of a fire hall commencing with the December 2006 levy. The agreement does not state
any fixed shares of interest to be owned by the municipalities. However, if a
municipality should withdraw from the Authority, the distribution of equipment or cash
equivalent to the withdrawing unit's share shall be determined by unanimous consent of
the members. The 1 mill levied by the Authority during 2010 was $235,104. Vienna
Township is unaware of any circumstances that would cause an additional benefit or
burden to the participating governments in the near future.

The following is a summary of selected financial information from the last available
statement of the Clio Area Fire Authority:

March 31,
2010

Total assets $ 1,131,441
Total liabilities 341,739
Total net assets 789,702
Total revenue 496,626
Total expenditures 533,609

Clio Area Library:

The Clio Area Library was formed by the City of Clio, Charter Township of Vienna, and
Thetford Township effective March 20, 1978, replacing the library fund previously
operated by the City of Clio.

The Library's operation is funded by contributions made by the participating units. Each
unit's contribution is based on the usage rate of the library system by its residents. The
contribution paid by Vienna Township during 2010 was $31,920.

40

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 11 - Joint Ventures (Continued)

Should any participating municipality decide to withdraw from the Clio Area Library, it is
to give written notice and, upon a favorable vote of the majority, will be released from
the agreement.

The agreement does not state any fixed shares of interest to be owned by the
municipalities. However, if a municipality should withdraw from the Township, the
distribution of equipment or cash equivalent to the withdrawing unit's share would be
determined by unanimous consent of the members. Vienna Township is unaware of any
circumstances that would cause an additional benefit or burden to the participating
governments in the near future.

The following is selected financial information of the Clio Area Library from the latest
audited financial statements:

June 30, 2010

Total assets $ 224,867
Total liabilities 1,066
Total net assets
Total revenue 223,801
Total expenditures 57,897
60,416

Note 12 - Other Postemployment Benefits

Plan Description - The Township provides retiree healthcare benefits to eligible
employees and their spouses. Employees who meet certain point requirements (based
on age and years of service) are eligible to receive postemployment benefits upon
retirement in the form of health care, vision, and dental insurance benefits. Currently,
the plan has 13 members (including employees in active service, terminated employees
not yet receiving benefits, and retired employees and beneficiaries currently receiving
benefits).

This is a single employer defined benefit plan administered by the Township. The
benefits are provided in accordance with the Public Employee Health Care Fund
Investment Act (Act No. 149 of 1999). The plan does not issue a separate stand-alone
financial statement. Administrative costs are paid by the plan through employer
contributions.

41

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 12 - Other Postemployment Benefits (Continued)

Funding Policy - Retiree healthcare costs are recognized when paid by the Township
on a "pay-as-you-go" basis. The Township has no obligation to make contributions in
advance of when the insurance premiums are due for payment. For the fiscal year ended
December 31, 2010, the Township paid postemployment healthcare premiums of
$40,405 which was funded through a contribution of $60,000 into a prefunded retiree
healthcare fund, which is reported in this financial statement as a Pension and Other
Employee Benefit Trust Fund type.

Funding Progress - The Township has elected to calculate the ARC and related
information using the alternative measurement method permitted by GASB Statement
No. 45 for employers in plans with fewer than 100 total plan members. The valuation
computes an annual required contribution, which represents a level of funding that, if
paid on an ongoing basis, is projected to cover normal costs each year and amortize any
unfunded actuarial liabilities over a period not to exceed 30 years. This valuation's
computed contribution and actual funding are summarized as follows:

Annual required contribution (recommended) $ 221,427
Interest on the prior year's net OPEB obligation 5,831
Less adjustment to the annual required contribution (6,475)

Annual OPEB cost 220,783

Amounts contributed (60,000)

Increase in net OPEB obligation 160,783

OPEB Obligation - Beginning of year 106,023

OPEB Obligation - End of year $ 266,806

Employer contributions and annual OPEB cost data for the current year and prior year
was as follows:

Employer Contributions

Fiscal Year Annual Annual OPEB Percentage of Percentage Net OPEB
Ended Required Costs ARC OPEB Costs Obligation
Contribution Contributed
Contributed

12/31/09 $ 161,023 $ 161,023 34.1 % 34.1 % $ 106,023.0
221,427 220,783
12/31/10 27.1 % 27.2 % 266,806.0

42

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 12 - Other Postemployment Benefits (Continued)

The funding progress of the plan is as follows:

Actuarial Valuation Date Actuarial Actuarial Unfunded Funded Ratio
Value of Accrued AAL (UAAL) (Percent)
Assets Liability (a/b)
(AAL)- (b-a)
(a) Simplified
Entry Age (b)

12/31/09 $ 115,943 $ 1,923,311 $ 1,807,368 6.0
12/31/10 115,943 1,923,311 1,807,368 6.0

Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan
(the plan as understood by the employer and the plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between the employer and plan members to that point. The methods and
assumptions used include techniques that are designed to reduce the effects of short-
term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent
with the long-term perspective of the calculations.

The following simplifying assumptions were made:

Retirement age for active employees - Based on the historical average retirement age
for the covered group, active plan members were assumed to retire at age 64, or at the
first subsequent year in which the member would qualify for benefits.

Marital status - Marital status of members at the calculation date was assumed to
continue throughout retirement.

Mortality - Life expectancies were based on mortality tables from the National Center
for Health Statistics. The 2002 United States Life Tables for Males and for Females were
used.

Turnover - Non-group-specific age-based turnover data from GASB Statement 45 were
used as the basis for assigning active members a probability of remaining employed until
the assumed retirement age and for developing an expected future working lifetime
assumption for purposes of allocating to periods the present value of total benefits to be
paid.

Healthcare cost trend rate - The expected rate of increase in healthcare insurance
premiums was based on projections of the Office of the Actuary at the Centers for
Medicare & Medicaid Services. A rate of 7.3 percent initially, reduced to an ultimate rate
of 6.8 percent after six years, was used.

43

Charter Township of Vienna

Notes to Financial Statements
December 31, 2010

Note 12 - Other Postemployment Benefits (Continued)

Health insurance premiums - 2010 health insurance premiums for retirees were used as
the basis for calculation of the present value of total benefits to be paid.

Inflation rate - The expected long-term inflation assumption of 1 percent was based on
past trend of wage increases.

Payroll growth rate - The expected long-term payroll growth rate was assumed to equal
the rate of inflation.

Based on the historical and expected returns of the Township's short-term investment
portfolio, a discount rate of 5.5 percent was used. In addition, a simplified version of the
entry age actuarial cost method was used. The unfunded actuarial accrued liability is
being amortized as a level percentage of projected payroll on an open basis. The
remaining amortization period at December 31, 2010 was 30 years.

Note 13 - Upcoming Accounting Pronouncements

In March 2009, the GASB issued Statement No. 54, Fund Balance Reporting and
Governmental Fund-type Definitions. The objective of this statement is to enhance the
usefulness of fund balance information by providing clearer fund balance classifications
that can be more consistently applied and by clarifying the existing governmental fund-
type definitions. This statement establishes fund balance classifications that comprise a
hierarchy based primarily on the extent to which a government is bound to observe
constraints imposed upon the use of the resources reported in governmental funds.
Under this standard, the fund balance classifications of reserved, designated, and
unreserved will be replaced with five new classifications: nonspendable, restricted,
committed, assigned, and unassigned. The Township is currently evaluating the impact
this standard will have on the financial statements when adopted. The Township will
implement Statement No. 54 beginning with the 2011 fiscal year end.

44

Required Supplemental Information

45

Charter Township of Vienna

Required Supplemental Information
Budgetary Comparison Schedule - General Fund

Year Ended December 31, 2010

Original Budget Amended Budget Actual Variance with
Amended Budget

Revenue $ 1,393,100 $ 1,386,650 $ 1,385,816 $ (834)
Property taxes 8,744 (656)
Licenses and permits 9,400 9,400 17,601
State-shared revenue and grants 847,462 (3,990)
Charges for services 949,000 829,861 417,038
Interest 90
Other revenue: 420,828 421,028 3,690
Local donations 500
Cable franchise fees 25,000 3,600 6,097
Other miscellaneous income 1,309
- - 500
Total revenue 157,800 179,000 185,097 20,117

Expenditures - Current 1,275 1,275 2,584
General government:
Township board 2,956,403 2,830,814 2,850,931
Supervisor
Treasurer 205,296 188,756 185,606 3,150
Assessing 56,591 56,591 55,860 731
Clerk 58,780 58,780 56,641
Elections 2,139
Township hall and grounds 142,895 142,600 138,391 4,209
Cemetery 73,308 74,808 72,647 2,161
Planning department 26,190 26,190 15,677 10,513
95,945 8,760
Total general government 109,825 104,705 11,488 1,362
9,575 12,850 33,012 3,219
Public safety: 36,231
Police 37,706 665,267 36,244
Fire 701,511
720,166 1,102,362 22,933
Total public safety 279,534 666
1,097,755 1,125,295
Public works: 288,100 280,200 1,381,896 23,599
Streets
Stormwater drainage 1,385,855 1,405,495 13,709 19,491
Street lighting 24,165 85
Other public works activities 58,200 33,200 39,756
29,500 24,250 544
Total public works 40,100 40,300 - 7,900

Recreation and culture: 7,900 7,900 77,630 28,020
Library
Parks and recreation 135,700 105,650 30,267 33
34,985 1,620
Total recreation and culture 31,920 30,300
14,875 36,605 65,252 1,653
Debt service:
Principal 46,795 66,905 488,580 1
Interest on long-term debt 101,463 -
488,581 488,581
Total expenditures 101,463 101,463 2,780,088 89,517

Transfers out 2,878,560 2,869,605 (125,345) 15,250

Net Change in Fund Balance (115,475) (140,595) (54,502) 124,884
925,796 -
Fund Balance - Beginning of year (37,632) (179,386)
925,796 925,796 871,294 $ 124,884
Fund Balance - End of year
$ 888,164 $ 746,410 $

46

Charter Township of Vienna

Required Supplemental Information
Budgetary Comparison Schedule - Major Special Revenue Funds

Sanitation Fund
Year Ended December 31, 2010

Original Budget Amended Actual Variance with
Budget Amended
Budget

Revenue $ 4,000 $ 1,700 $ 1,705 $ 5
Interest
Other revenue: 668,000 636,888 636,888 -
Special assessments 4,700 4,050 4,385 335
Other miscellaneous income 340
Total revenue 676,700 642,638 642,978

Expenditures - Current - 684,790 543,130 542,069 1,061
Public works - Sanitation 1,401
(8,090) 99,508 100,909
Net Change in Fund Balance -
21,205 21,205 21,205 1,401
Fund Balance - Beginning of year
$ 13,115 $ 120,713 $ 122,114 $
Fund Balance - End of year

47

Other Supplemental Information

48