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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
Broomfield County,Colorado
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FINANCIAL STATEMENTS
December 31,2006 and 2005
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Clifton
Gunderson LLP
Certified Public Accountants&Consultants
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FgTM Northwest Parkway Public Highway Authority
3701 Northwest Parkway
Broomfield, Colorado 80020
Phone: 303-533-1200 • Fax: 303-404-3049
Email: nwp@nwpky.org
www.nwpky.org
2006 has been an exciting year for the Northwest Parkway Public Highway Authority. In our
third full-year of operations, the Northwest Parkway reached and exceeded 10 million
transactions. Driver awareness of the road increased,while transactions continued year-over-year
growth increasing 12 percent over 2005. Average daily transactions for the year peaked at 12,159
in June compared to 10,673 in June of 2005.
Local area development picked up greatly in 2006. Developments in the area have continued to
grow and several new developments have come on-line. Exempla Hospital in Lafayette north of
the 287 interchange has continued to outpace its original projections adding additional capacity
before anticipated. The Broomfield Event Center south of the 287 interchange opened its doors
in November bringing concerts,minor league basketball and hockey to the corridor. The area
north of the Northwest Parkway at I-25 is seeing unprecedented growth with the Larkridge Center
bringing retailing giants including Sears and Costco to the area. The continued growth of the
Anthem and Vista Ridge communities and the groundbreaking of the Northlands development
promise to bring more drivers to the region.
The Authority's Board of Directors made a historic decision in September 2006 to seek a long-
term leasing concession agreement for the Northwest Parkway. A Request for Qualifications was
issued in October and 15 responses were received. The Board placed eleven firms on a short-list
and received several bids on March 30,2007. The Authority accepted in principal the final offer
of the preferred bidding team of Brisa Auto-estradas of Portugal and Companhia de Concessoes
Rodoviarias of Brazil. The concession agreement scheduled to close on August 31, 2007 will
allow the Authority to address its long-term financing needs while contracting with an
experienced operating team that will provide excellent service to our growing customer base.
Sincerely,
The Board of Directors
Northwest Parkway Public Highway Authority
Chairman of the Board: Joe Jehn Chris Cameron
Chris Berry Transportation City of Lafayette
City of Lafayette Commission of Colorado
Robert Masden
Vice-Chairman of the Board: Joel Rosenstein Weld County
Karen Stuart Interlocken Consolidated
City of Broomfield Metropolitan District Peggy Catlin
Colorado Department of
Secretary/Treasurer: Associate Members: Transportation
Glenn Vaad Lorraine Anderson
Weld County City of Arvada Lee Kemp
Regional Transportation
District
Ex-Officio Members: Jefferson County
Wallace(Wally)Pulliam Walt Spader
Regional Transportation Alternatives/Representatives: City of Broomfield
District Don Allard
City of Arvada Jeff Pretty
Interlocken Consolidated
Metropolitan District
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT I
MANAGEMENT'S DISCUSSION AND ANALYSIS III
BASIC FINANCIAL STATEMENTS
ii
Statements of Net Deficit 1
Statements of Revenue, Expenses and Changes in Net Deficit 2
Statements of Cash Flows 3
Notes to Financial Statements 4
Clifton
Gunderson LLP
Certified Public Accountants&Consultants
Independent Auditor's Report
Board of Directors
Northwest Parkway Public Highway Authority
Broomfield, Colorado
We have audited the accompanying basic financial statements of Northwest Parkway Public Highway
Authority (the Authority) as of and for the year ended December 31, 2006 as listed in the table of
contents. These financial statements are the responsibility of the Authority's management. Our
responsibility is to express an opinion on these financial statements based on our audit. The basic
financial statements of the Authority as of December 31, 2005, were audited by other auditors whose
{' report dated June 22, 2006, expressed an unqualified opinion on those basic financial statements.
f 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 opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the Authority as of December 31, 2006, and the changes in its financial position
and its cash flows for the year then ended in conformity with accounting principles generally accepted
in the United States of America.
As discussed in Note 1, the Authority incurred operating losses of$17,873,808 and $17,114,783 during
the years ended December 31, 2006 and 2005, respectively. As of December 31, 2006, the Authority
had a net asset deficit of$129,901,593. The Authority is currently using excess bond proceeds to meet
operating and debt service needs not otherwise met by toll revenues. The Authority is currently
exploring alternative financing structures for its debt.
IM.m ..e.
International in 15 states and Washington,DC HLB
The management% discussion and analysis pages III through X is not a req ed part of the h
financial statementsbut is supAmyary informationr ed by acc ounting pri pl , gener
accepted in the United Sta i Amea We havea lied certai n limitedte _& which _6
principally of inquiries of management regarding the methods of measurement and presentation of
required supp! _maryiom6o However, we did not alt information and express
opinion ait.
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Greenwood Village, Colorado
May 16,
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
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Management's Discussion and Analysis
I
December 31, 2006 and 2005
II4 As management of the Northwest Parkway Public Highway Authority (the Authority), we offer
readers of the Authority's financial statements this narrative overview and analysis of the
financial activities of the Authority as of and for the years ended December 31, 2006 and 2005.
This overview and analysis is required by accounting principles generally accepted in the United
I II States of America (GAAP) as prescribed by Governmental Accounting Standard Board
l Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis —for
State and Local Governments (GASB 34). GASB 34 requires that this overview and analysis
Iprovide prior years comparative data.
This discussion and analysis is designed to assist the reader in focusing on significant financial
Iissues and activities and to identify any significant changes in financial position. Please read it in
conjunction with the financial statements, which immediately follow this section.
II 111
I 2006 Financial Highlights
• 2006 represented the third hill-year of operations for the Northwest Parkway.
1 I • Toll revenues increased approximately 16% over 2005 growing from $5.6 million in 2005
i to $6.5 million in 2006.
J • Total transactions on the Northwest Parkway grew approximately 12% over 2005, while
total operating costs grew 8%.
2005 Financial Highlights
• 2005 represented the second full-year of operations for the Northwest Parkway toll road
'1 J (Northwest Parkway).
• The Northwest Parkway opened the new Sheridan Interchange and maintenance yard in
l November 2005 on time and within budget.
• Toll revenues increased approximately 34% over 2004 growing from $4.2 million in 2004
to $5.6 million in 2005.
• Total transactions on the Northwest Parkway grew approximately 35% over 2004, while
total operating costs grew 0.4%.
■ Overview of the Basic Financial Statements
The basic financial statements consist of a Statement of Net Deficit, a Statement of Revenues,
Expenses and Changes in Net Deficit, a Statement of Cash Flows and the notes thereto. The
# Authority, a corporate body and political subdivision of the State of Colorado, is a public
purpose financial enterprise and therefore follows enterprise fund accounting. The financial
1 statements offer information about the Authority's activities and operations.
1
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
Management's Discussion and Analysis
December 31, 2006 and 2005
The Statement of Net Deficit includes all of the Authority's assets and liabilities, presented in
order of liquidity. The resulting net assets presented in these statements are displayed as
restricted or unrestricted. Net assets are restricted when their use is subject to external limits
such as bond indentures, legal agreements, or statutes. Over time, increases or decreases in net
assets may serve as a useful indicator of whether the financial position of the Authority is
improving or deteriorating.
All the Authority's current year revenues and expenses are recorded in the Statement of
Revenues, Expenses and Changes in Net Deficit. This statement measures the activities of the
Authority's operations over the past year, and presents the resulting change in net deficit -
calculated as revenues less expenses.
The final required financial statement is the Statement of Cash Flows. The primary purpose of
this statement is to provide information about the Authority's cash receipts and cash payments
during the reporting period. This statement reports cash receipts, cash payments, and net
changes in cash resulting from operating, noncapital financing, capital financing, and investing
activities. The statement provides information regarding the sources and uses of cash and the
change in the cash balance during the reporting period.
Summary of Operations
The Northwest Parkway opened to traffic on November 24, 2003. All drivers drove the Parkway
free of charge until December 8, 2003 when a period of trial cash collection began to permit
system testing and to encourage Express Toll usage. Toll collection from all users officially
started as of January 1, 2004. Northwest Parkway toll revenues for 2006 were $6,527,790, an
increase over 2005 revenues of $5,625,589. Toll revenues in 2004 totaled $4,216,492. Traffic
on Northwest Parkway for the year ended December 31, 2006 was approximately 12,582 average
weekday transactions, with over 64% collected electronically by Express Toll transponders.
Monthly Transactions
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
Management's Discussion and Analysis
December 31, 2006 and 2005
2006 Financial Results and Analysis
Net Deficit
2006 2005 2004
Current assets $ 27,123,177 29,085,408 16,565,746
Noncurrent assets:
Capital assets,net of accumulated depreciation 336,283,307 352,599,684 360,588,009
Other noncurrent assets 70,977,949 81,458,418 111,561,409
Total noncurrent assets 407,261,256 434,058,102 472,149,418
Total assets $ 434,384,433 463,143,510 48.8,715,164
Current liabilities $ 1,001,211 2,070,456 849,052
Noncurrent liabilities 563,284,815 548,043,960 533,628,710
Total liabilities 564,286,026 550,114,416 534,477,762
Net deficit:
Invested in capital assets,net of related debt (62,048,359) (33,664,613) (3,921,370)
Unrestricted (67,853,234) (50,306,293) (41,841,228)
Total net deficit (129,901,593) (86,970,906) (45,762,598)
Total liabilities and net deficit $ '434,384,433 463,143,510 488,715,164
Revenue,Expenses,and Changes in Net Deficit
2006 2005 2004
Operating revenue:
Toll revenue $ 6,527,790 5,625,589 4,216,492
Other revenue 249,250 46,041 369,965
Total operating revenue 6,777,040 5,671,630 4,586,457
Less operating expenses:
Salaries and benefits 1,115,715 1,101,633 964,974
Professional fees 1,670,387 390,495 213,728
Toll road maintenance 4,236,892 3,889,277 3,291,097
General and administrative 843,151 1,092,295 734,678
Depreciation expense 16,784,703 16,312,713 17,491,489
Total operating expenses 24,650,848 22,786,413 22,695,966
Operating loss (17,873,808) (17,114,783) (18,109,509)
Nonoperating revenue(expenses):
Interest income 4,192,541 4,341,277 5,185,711
Amoritization for bond issuance costs (1,111,256) (1,122,240) (1,089,325)
Interest expense (28,138,164) (27,312,562) (26,528,284)
(25,056,879) (24,093,525) (22,431,898)
Change in net deficit (42,930,687) (41,208,308) (40,541,407)
Net deficit,beginning of year (86,970,906) (45,762,598) (5,221,191)
Net deficit,end of year $ (129,901,593) (86,970,906) (45,762,598)
V
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
Management's Discussion and Analysis
December 31, 2006 and 2005
The largest portion of the Authority's assets, over 93% in 2006, are noncurrent. Current assets
total $27,123,177 in 2006, representing approximately 6% of total assets. The majority of the
decrease in current assets of $1,962,231 from 2005 is the use of these assets to close out the
Sheridan Interchange/Maintenance Facility project and the use of certain remaining bond
proceeds to fund debt service payments. Current assets totaled $16,565,746 in 2004. The 2005
increase of $12,519,662 in current assets over 2004 was due to an investment funds
reclassification form non-current to current based on maturity dates reached in 2005.
Approximately eighty-three percent (83%) of the noncurrent assets in 2006 are capital assets
(e.g., right-of-way, roads, bridges, buildings, toll equipment), net of accumulated depreciation.
Minimal additions of capital assets were made in 2006, only approximately $400,000 related to
the Sheridan Interchange and maintenance facility. The Authority uses these capital assets to
provide service and, consequently, these assets are not available for liquidating liabilities or other
spending. However, in the event that the Authority cannot make a debt service payment,
restricted assets will be liquidated in accordance with the bond indenture. The acquisition of
capital assets was primarily financed from revenue bond proceeds. Revenue bonds payable are
approximately 86%of noncurrent liabilities.
Total current liabilities are at the end of 2006. v
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$1,001,211 Over 50/o of the total is interest
payable related to outstanding bonds, the remaining is comprised of accounts payable and other
current liabilities. Accounts payable decreased by over $1 million due to outstanding
construction invoices for the Sheridan Interchange which were due in 2005. Total current
liabilities in 2005 increased $1,221,404 over 2004 due to similar construction related invoices
due at year-end. Total current liabilities at December 31, 2004, were $849,052. Accrued interest
payable did not change from 2005 to 2004. Current liabilities are to be paid from current assets.
Toll revenues in 2006 were $6,527,790, a 16% increase over 2005 toll revenues of$5,625,589
and a 55% increase over 2004 toll revenues of $4,216,492. Traffic and revenue projections
completed for the Northwest Parkway by Vollmer Associates in a draft study issued October
2006 projected toll revenue for 2006 to be $6.8 million. Actual toll revenues were 96% of
forecast in the draft study. The Authority is currently pursuing a concession of the road to close
in the second quarter of 2007 and plans to utilize the proceeds to retire all existing bonds
payable. Toll revenue accounted for approximately 60% of total revenue in 2006, 56% of total
revenue in 2005, and 43% of total revenue in 2004. Interest earnings accounted for 94% of all
other revenue in 2006, 99%of other revenue in 2005, and 93% of other revenue in 2004.
VI
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
II Management's Discussion and Analysis
December 31, 2006 and 2005
11 Monthly Revenue 2004 -2006
$700,000.00 �IIII�� I�III�� nlll III
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1 Total revenues for 2006 were $10,969,581, a 9% increase over 2005 total revenues of
$10,012,907 and a 12% increase over 2004 total revenues of$9,772,168.
r Total operating expenses excluding depreciation expense of $16,784,703 for 2006 were
$7,866,145, representing a 21.5% increase over 2005 expenses which were $6,473,700 before
depreciation of $16,312,713. This increase is primarily due to an approximately 12% increase
over 2005 transactions on the Northwest Parkway increasing per transaction costs and due to the
concession process begun in September 2006 which will be discussed further in the Looking
Forward section. Total operating expenses for 2004 less depreciation were $5,204,477. The
increase for 2005 total operating expenses over 2004 were primarily due to a 35% increase over
2004 transactions on the Northwest Parkway due to the addition of a new interchange and
maintenance facility and expenses due to an attempted debt restructuring. Revenue bond interest
1 payments in 2004, 2005, and 2006 were $12,897,310 annually. Interest payments on revenue
bonds outstanding for the Authority were paid from bond proceeds until June 15, 2006. The
remainder of debt service payments due were made from toll revenues and excess bond
proceeds.
The net deficit increased during 2006 from a deficit of $86,970,906 at the beginning of the year
I 1 to a deficit of $129,901,593 at the end of 2006. The deficit at December 31, 2004, was
$45,762,598. The primary reason for the increase was attributable to depreciation expense and
accrued interest expense.
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VII
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
Management's Discussion and Analysis
December 31, 2006 and 2005
Capital Assets and Long-Term Debt
Total gross land, property, and equipment totaled $386,914,090 in 2006 and $386,445,764 in
2005. No major construction activity took place in 2006; however, a new interchange and
maintenance facility was added in 2005 increasing capital assets almost $8,000,000.
Accumulated depreciation reduced the 2006 year-end land, property, and equipment balances by
$50,630,783. For a further understanding of capital asset amounts and activity, see note 3 to the
basic financial statements.
Total interest expense for 2006 was $28,138,164 compared to $27,312,562 in 2005 and
$26,528,284 in 2004. Interest paid on bond debt in 2004, 2005, and 2006 was $12,897,310
annually, with the majority of the remaining interest expense accreting to bond principal. Current
interest paid on outstanding bonds did not change from 2004 and 2005 amounts.
No changes to ratings were made in 2006. All of the rating agencies changed their underlying
investment grade ratings for the Authority bonds during 2005. Moody's Investors Service
downgraded the underlying rating on the senior bonds from Baa3 to B1. Moody's also
downgraded the subordinate bond rating from Baal to B3. Standard and Poor's announced the
underlying rating on the senior bonds was downgraded from BBB- to B-. S&P also downgraded
the rating on the subordinate bonds from BB+ to CCC. Fitch Ratings downgraded the senior
bonds from BBB- to BB-. All of the existing senior debt is insured by AMBAC and FSA and
consequently carries the highest and most secure rating of the rating agencies.
Senior Bonds
Rating agency Rating Outlook
Aaa Stable
Standard &Poors Moody's AAA Stable
AAA Negative
Fitch
Subordinate Bonds
Rating agency Rating Outlook
B3 Stable
ta CCC Stable
Standard d &Poors
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
Manag
ement's Discussion and Analysis
December 31, 2006 and 2005
Debt Administration
Northwest Parkway Revenue Bonds
December 31,2006
Senior Current Interest Bonds—Series 2001 A $ 175,720,000
Senior Capital Appreciation Bonds—Series 2001B 413,045,000
Senior Convertible Capital Appreciation Bonds—Series 2001 C 189,175,000
Subordinate Current Interest Bonds—Series 2001D 52,465,000
Discounts(original issue and future accretion) (346,113,357)
Total $ 484,291,643
Other Debt
December 31,2006:
Intergovernmental $ 20,000,000
Reimbursements 55,872,040
Total
$ 75,872,040
Debt levels increased over debt reported at year-end 2005 and 2004 due to the amortization of
discounts and accretion of interest. No changes in the debt structure took place in 2006. Interest
payments from capitalized interest funded by bond proceeds ended on June 15, 2006. After that
time, interest payments were paid from cash from operations and excess bond proceeds. In the
event that the Authority cannot make a debt service payment, restricted assets will be liquidated
to make payments per the bond indenture. Additionally, the senior bonds are fully insured.
Principal repayment on the bonds begins June 15, 2008 and ends June 15, 2041. For a further
understanding of long-term debt amounts and activity, see notes 4 and 5 to the basic financial
statements.
Looking Forward
Development in the Northwest Parkway corridor continues to improve. 2006 saw the ground-
breaking of many developments in the area including the Broomfield Events Center, the
Larkridge and Northlands retail centers, and the continued development of Anthem. The
Northwest Parkway saw double digit increases in traffic and revenues in 2006 and fully expects
the trend to continue into 2007. Preliminary traffic and revenue reports fo
r the firstqu
arter 2007
show approximately a 12% increase in traffic and approximately a 17% increase n revenues
over the same period in 2006.
The Authority expects 2007 to be a ground-breaking year for both the Authority and the toll
industry. In September 2006 the Authority began a concession process to lease the Northwest
Parkway to a private partner. Binding bids were due March 30, 2007. Several bids were
received and are under consideration by the Board of Directors. If successful, the transaction
will be the fourth of its kind in the country. The Authority expects to retire all bond debt with
proceeds from the concession.
IX
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
Management's Discussion and Analysis
December 31, 2006 and 2005
The net deficit will continue to grow in the short-term as the Authority incurs increasing interest
expenses coupled with depreciation expenses that will not be offset by any more revenue from
major additional capital assets. In the event of an unsuccessful concession process in 2007, the
Authority plans to reduce the unrestricted net asset deficit in future years from increased traffic
and revenue for the toll road.
Contacting Northwest Parkway's Financial Management
This financial report is designed to provide an overview of information to our bondholders,
customers, and other interested parties. Should you have any questions about this report, contact n.
the Northwest Parkway Public Highway Authority, 3701 Northwest Parkway, Broomfield,
Colorado 80020—303/533-1200.
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BASIC FINANCIAL STATEMENTS
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
STATEMENTS OF NET DEFICIT
December 31,2006 and 2005
2006 2005
ASSETS
CURRENT ASSETS
Unrestricted cash and cash equivalents $ 3,591,554 $ 5,913,467
Restricted cash and cash equivalents 13,490,565 9,255,318
Restricted investments 9,796,529 13,554,647
Restricted accrued interest receivable 128,768 134,421
Accounts receivable 23,980 155,351 I
Prepaid and other expense 91,781 72,204 I
Total current assets 27,123,177 29,085,408
NONCURRENT ASSETS t
Restricted investments 41,239,651 50,608,864 G
Capital assets
Nondepreciable 39,612,362 39,599,956
Depreciable(net of accumulated depreciation
of$50,630,783 and$33,846,080,respectively) 296,670,945 312,999,728 Irt;
Bond issuance costs (net of accumulated amortization 3,
of$5,792,455 and$4,681,199,respectively) 29,738,298 30,849,554 ' r
Total noncurrent assets 407,261,256 434,058,102
Total assets $434,384,433 $463,143,510 F
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LIABILITIES AND NET DEFICIT
CURRENT LIABILITIES
Accounts payable and other liabilities $ 463,823 $ 1,533,068
Accrued bond interest payable from restricted assets 537,388 537,388 !.
Total current liabilities 1,001,211 2,070,456
NONCURRENT LIABILITIES
Revenue bonds payable 484,291,643 469,482,892
Intergovernmental payable 20,000,000 20,000,000 y
Reimbursements payable 55,872,040 55,872,040 00
Accrued interest on reimbursements payable 3,121,132 2,689,028
Total noncurrent liabilities 563,284,815 548,043,960 a
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Total liabilities 564,286,026 550,114,416
{ NET DEFICIT
Invested in capital assets,net of related debt (63,362,911) (36,664,613)
Unrestricted deficit (66,538,682) (50,306,293) `I
Total net deficit (129,901,593) (86,970,906) (
Total liabilities and net deficit $434,384,433 $463,143,510 to
These financial statements should be read only in connection with
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the accompanying notes to financial statements.
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
STATEMENTS OF REVENUE,EXPENSES AND CHANGES IN NET DEFICIT
Years Ended December 31,2006 and 2005
2006 2005
OPERATING REVENUE
Toll revenue $ 6,527,790 $ 5,625,589
Other revenue 249,250 46,041
Total operating revenue 6,777,040 5,671,630
OPERATING EXPENSES
Salaries and benefits 1,115,715 1,101,633
Professional fees 1,670,387 390,495
Toll road maintenance 4,236,892 3,889,277
General and administrative expenses 843,151 1,092,295
Depreciation 16,784,703 16,312,713
Total operating expenses 24,650,848 22,786,413
Operating loss (17,873,808) (17,114,783)
NONOPERATING REVENUES(EXPENSES)
Investment income 4,192,541 4,341,277
Amortization expense for bond issuance costs (1,111,256) (1,122,240)
Interest expense (28,138,164) (27,312,562)
Total nonoperating(expenses) (25,056,879) (24,093,525)
Change in net deficit (42,930,687) (41,208,308)
NET DEFICIT-BEGINNING OF YEAR (86,970,906) (45,762,598)
NET DEFICIT-END OF YEAR $ (129,901,593) $ (86,970,906)
These financial statements should be read only in connection with
the accompanying notes to financial statements.
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
STATEMENTS OF CASH FLOWS
Years Ended December 31,2006 and 2005
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES
1 Receipts oft tolls
6 527 7$ 90 $ 5,503,811
If
Receipts from other revenue sources 379,631 383,145
Payments to employees (1,115,715) (1,101,633)
Payments to suppliers PPIi (7,361,911) (4,195,512) '3
Net cash provided(required)by operating activities (1,570,205) 589,811
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Interest paid (12,897,309) (12,897 310)
Purchase of capital assets (944,677) (8,324 388)
Net cash(required)by capital and related financing activities (13,841,986) (21,221,698) '
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments 11,564,112
( ) (15,038,014)
Proceeds from sale/maturity of investments 24,691,443 13,893,898 ,
Interest received 4,198,194 4,361,096
Net cash provided by investing activities 17,325,525 3,216,980 1
Net increase(decrease)in cash and cash equivalents 1,913,334 (17,414,907)
CASH AND CASH EQUIVALENTS-BEGINNING OF YEAR 15,168,785 32,583 692
CASH AND CASH EQUIVALENTS-END OF YEAR $ 17,082,119 $ 15,168,785
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE 4
STATEMENT OF NET ASSETS
Cash and cash equivalents-Unrestricted $ 3,591,554 $ 5,913,467
Cash and cash equivalents-Restricted 13,490,565 9,255,318
Cash and cash equivalents,end of year $ 17,082,119 $ 15,168,785
RECONCILIATION OF OPERATING
G LOSS TO NET CASH ,��,
PROVIDED(REQUIRED)BY OPERATING ACTIVITIES
Operating(loss) $ (17,873,808) $ (17,114,783) C.
Adjustments to reconcile operating loss to net cash
provided by(used in)operating activities:
Depreciation 16,784,703 16,312,713
Changes in assets and liabilities
Decrease in accounts receivable 131,371 215,326
(Increase)in prepaid expenses (19,577) (44,848) -
Increase(decrease)in accounts payable and other liabilities (592,894) 1,221,403
Net cash provided(required)by operating activities $ (1,570,205) $ 589,811
NONCASH INVESTING AND FINANCING ACTIVITIES
Amortization of bond issuance costs $ 1,111,256 $ 1,122,240
Amortization of bond discount 142,998 148,954
Accretion of capital appreciation bonds 14,665,753 13,834,196 I
These financial statements should be read only in connection with
j the accompanying notes to financial statements.
3
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I
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE 1 -DEFINITION OF REPORTING ENTITY
The Northwest Parkway Public Highway Authority (the Authority) was formed by an
■ intergovernmental agreement on June 2, 1999, among the City and County of Broomfield, the
■ County of Weld, and the City of Lafayette (the Governmental Unit(s)). The purpose of the
agreement was to finance, construct, operate and/or maintain the Northwest Parkway. In
III t November 2003, the toll road was opened for trial cash collection and system testing. Toll
collection officially began on January 1, 2004, but the Authority did not grant final acceptance to
the design-build contract until June 30, 2004. It is the Authority's intent to serve as an
enterprise, as such term is defined in the Colorado Constitution, Article X, Section 20(2)(d), and
in furtherance thereof,to serve as a government-owned business, engaged in the business venture
of providing roadway transportation in exchange for the payment of toll fees.
Reporting Entity
The Authority is a separate stand-alone governmental entity. Each member of the Governmental
Unit appoints a representative to the Authority Board of Directors. The State of Colorado may
join in the Authority, pursuant to the Colorado Constitution. In the event the State of Colorado
joins in the Authority, the State shall have one director on the Board. The State of Colorado had
not joined the Authority as of December 31,2006.
fThe Authority follows Governmental Accounting Standards Board (GASB) accounting
pronouncements, which provide guidance for determining which governmental activities,
,� organizations and functions should be included within the financial reporting entity. GASB
pronouncements set forth the financial accountability of a governmental organization's elected
governing body as the basic criterion for including a possible component governmental
� organization in a primary government's legal entity. Financial accountability includes, but is not
limited to, appointment of a voting majority of the organization's governing body, ability to
impose its will on the organization, a potential for the organization to provide specific financial
benefits or burdens and fiscal dependency.
The Authority is not financially accountable for any other organization, nor is the Authority a
component unit of any other primary governmental entity.
Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by its
measurement focus. Enterprise funds are accounted for on the flow of economic resources
III measurement focus and use the accrual basis of accounting. Under this method, revenues are
recorded when earned and expenses are recorded at the time liabilities are incurred. Enterprise
funds are used to account for business-type entities whose operations are financed with debt that
is secured by a pledge of net revenues from fees and charges.
I 4
ry,
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 1 -DEFINITION OF REPORTING ENTITY (CONTINUED)
The Authority applied all applicable GASB pronouncements, as well as Financial Accounting
Standards Board (GASB)pronouncements, issued on or before November 30, 1989, unless those
pronouncements conflict with or contradict GASB pronouncements. The Authority has elected
not to apply FASB pronouncements issued after November 30, 1989.
When both restricted and unrestricted resources are available for use, it is the Authority's policy
is to use restricted resources first, then unrestricted resources, as they are needed.
Changes in Accounting Principles
Effective January 1, 2005, the Authority implemented GASB Statement No. 40, Deposit and
Investment Risk Disclosures - an amendment of GASB Statement No. 3. This statement
establishes financial reporting and disclosure standards for all state and local governments and
related entities. The impact of this statement relates to common deposit and investment risks
related to credit risk, concentration of credit risk, interest rate risk, and foreign currency risk;
however, the application of this statement had no impact on total net assets.
Investments and Cash Equivalents
The Authority's investments consist of nonnegotiableguaranteed investment contracts, money
g
market funds and amounts invested in the Colorado Government Liquid Assets Trust
(COLOTRUST). The guaranteed investment contracts cannot be traded; therefore, they are
reported using a cost-based measurement. Money market funds and COLOTRUST are highly
liquid instruments and are considered cash equivalents for financial reporting purposes. Due to
the highly liquid nature of these investments, they are reported using a cost-based measurement.
Investments with maturities of one year or less are also recorded at cost.
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 1 -DEFINITION OF REPORTING ENTITY (CONTINUED)
Capital Assets
Capital assets are defined as assets with an initial cost of more than $5,000 and an estimated
useful life in excess of one year. Such assets are recorded at historical cost. Donated capital
assets are recorded at estimated market value at the date of transfer. Capital assets subject to
depreciation are depreciated using the straight-line method over the following estimated useful
lives:
Years
Assets:
Furniture, vehicles and equipment 3-7
Buildings 30
Bridges 30
Roadway 20
Net Deficit
Net deficit amounts reported in the Authority's statements of net deficit consist of two
categories; net assets invested in capital assets, net of related debt and unrestricted net assets.
Invested in capital assts net of related debt consists of all capital assets, net of accumulated
depreciation, and reduced by outstanding borrowings, and the costs associated with those
borrowings, to acquire or construct the capital assets. The net deficit will continue to grow in the
short-term as the Authority incurs increasing interest expense coupled with depreciation
expenses that will not be offset by any new revenues from major additional capital assets. In
September 2006, the Authority began a concession process to lease the Northwest Parkway to a
private partner. Binding bids were due March 30, 2007. Several bids were received and are
under consideration by the Board of Directors. If successful, the Authority expects to retire all
bond debt with proceeds from the concession. In the event of an unsuccessful concessions
process in 2007, the Authority plans to reduce the unrestricted net deficit in future years from
increased traffic and revenue for the toll road.
Bond Discounts/Issuance Costs
Bond discounts and costs related to the issuance of bonds are amortized over the remaining term
of the bonds using a modified effective interest method.
6
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 1 -DEFINITION OF REPORTING ENTITY (CONTINUED)
Operating Activity re
The Authority's statements of revenue, expenses, and changes in net deficit distinguish between
operating and nonoperating revenue and expenses. Operating revenue results primarily from
vehicle tolls associated with the operation of the Authority's toll road. The Authority recognizes
toll operating revenue when earned. Operating expenses include costs incurred to provide for
maintenance and administration of the toll road.
Nonoperating revenue and expenses consist of investment income, interest on debt, and
amortization of bond issuance costs.
Statements of Cash Flows
The financial statements include statements of cash flows which presents unrestricted and
restricted cash and cash equivalents provided and used by operating, investing, and financing
activities. The Authority considers all highly liquid instruments purchased with an original
maturity of three months or less to be cash equivalents.
Use of Estimates
In preparing financial statements in conformity with accounting principles generally accepted in
the United States of America, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
Income Taxes
The income derived by the Authority is exempt from federal income tax under the provisions of
the Internal Revenue Code 115. Accordingly, no provision for the payment or refund of income
taxes has been made in the accompanying financial statements.
Budgets
In accordance with the State Budget Law, the Authority's Board of Directors holds public
hearings in the fall each year to approve the budget and appropriate the funds for the ensuing
year. The Authority's Board of Directors can modify the budget by line item within the total
PP P ro riation can only be modified upon completion of
'
ap
propriation n
ation without notification. The appropriation
publication req
uirements.
and
4
notification
II
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 1 -DEFINITION OF REPORTING ENTITY(CONTINUED)
During the year ended December 31, 2006, supplementary appropriations approved by the
Authority modified the appropriation from $6,603,690 to $21,451,000 Budgetary basis
expenditures were as follows:
Operating expenses $ 24,650,848
Amortization of bond issuance costs 1,111,256
Interest expense 28,138,164
Total expenses -GAAP basis 53,900,268
Less:
Amortization of bond issuance costs (1,111,256)
Amortization of bond discounts and accretion of
capital appreciation bonds (14,808,751)
Accrued interest on long-term reimbursements payable (432,104)
Depreciation (16,784,703)
Add:
Capital outlay 468,326
Total expenditures-Budgetary basis ,$ 21. 31 780
NOTE 2-DEPOSITS AND INVESTMENTS
The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government
deposit cash in eligible public depositories. Eligibility is determined by state regulators.
Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible
collateral is specified by the PDPA. The PDPA allows the institution to create a single collateral
pool for all public funds. The pool is to be maintained by another institution or held in trust for
all the uninsured public deposits as a group. The State Regulatory Commission for banks and
savings and loan associations is required by statute to monitor the naming of eligible depositories
and reporting of the uninsured deposits and assets maintained in the collateral pools.
•
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 1 -DEFINITION OF REPORTING ENTITY (CONTINUED)
During the year ended December 31, 2006, supplementary appropriations approved by the
Authority modified the appropriation from $6,603,690 to $21,451,000 Budgetary basis
expenditures were as follows:
Operating expenses $ 24,650,848
Amortization of bond issuance costs 1,111,256
^ Interest expense 28,138,164
Total expenses- GAAP basis 53,900,268
Less:
Amortization of bond issuance costs (1,111,256)
Amortization of bond discounts and accretion of
capital appreciation bonds (14,808,751)
Accrued interest on long-term reimbursements payable (432,104)
Depreciation (16,784,703)
Add:
Capital outlay 468.326
Total expenditures-Budgetary basis $ 21.231.780
NOTE 2-DEPOSITS AND INVESTMENTS
The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government
deposit cash in eligible public depositories. Eligibility is determined by state regulators.
Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible
collateral is specified by the PDPA. The PDPA allows the institution to create a single collateral
pool for all public funds. The pool is to be maintained by another institution or held in trust for
all the uninsured public deposits as a group. The State Regulatory Commission for banks and
savings and loan associations is required by statute to monitor the naming of eligible depositories
and reporting of the uninsured deposits and assets maintained in the collateral pools.
r
8
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 2 -DEPOSITS AND INVESTMENTS (CONTINUED)
At December 31, 2006 and 2005, the Authority's cash deposits had a book balance of$974,596
and $2,129,304 and a corresponding bank balance of$1,815,293 and $2,280,705, respectively.
The difference between the book and bank balances is due to outstanding checks and deposits
not yet processed by the banks. The Authority had no uncollateralized accounts at December 31,
2006 and 2005. As of December 31, 2006 and 2005, the Authority's book balances are classified
as follows:
2006
Deposits Investments Total
Unrestricted cash and cash equivalents $ 974,596 $ 2,616,958 $ 3,591,554
Restricted cash and cash equivalents - 13,490,565 13,490,565
Restricted investments - 51,036,180 51,036,180
$ 974,596 $67,143,703 $68,118,299
2005
Deposits Investments Total
Unrestricted cash and cash equivalents $ 2,129,304 $ 3,784,163 $ 5,913,467
Restricted cash and cash equivalents - 9,255,318 9,255,318
Restricted investments - 64,163,511 64,163,511
$ 2,129,304 $77,202,992 $79,332,296
9
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9-
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE 2 -DEPOSITS AND INVESTMENTS (CONTINUED)
The Authority's restricted investments at December 31, 2006 and 2005 are as follows:
December 31,
2006 2005
Construction Fund Part A - Cash equivalents $ 12,176,013 $ 9,255,318
Construction Fund Part A - Investments - 10,484,560
Construction Fund Part B - Investments 9,796,529 9,369,213
Senior Debt Service Reserve - Investment 36,161,406 36,161,406
First Tier Subordinate Debt Service Reserve - Investment 5,078,245 5,078,245
Revenue Fund - Cash equivalents 1,314,552 -
Senior Capitalized Interest Fund - Investment - 1,841,842
Subordinate Capitalized Interest Fund - Investment - 1,228,245
$64,526,745 $73,418,829
Investments are restricted under the bond agreement for the Series 2001A, B, C and D bonds as
follows:
Construction Fund Parts A&B — To be used for payment of project costs and, under certain
circumstances, for debt service. After project completion, remaining funds are to be transferred
to other defined bond related funds.
Senior Debt Service Reserve Fund— To be used for debt service payments and the redemption
price of the Senior Current Interest, Capital Appreciation and Convertible Capital Appreciation
Bonds if, on any debt service payment or redemption date, the amounts on deposit in the Senior
Debt Service account are not sufficient to pay the debt service.
First Tier Subordinate Debt Service Reserve Fund—To be used for debt service payments and
the redemption price of First Tier Subordinate Current Interest Bonds if, on any debt service
payment or redemption date, the amounts on deposit in the First Tier Subordinate Debt Service
account are not sufficient to pay the debt service.
Revenue Fund — All Authority revenues are deposited in this fund and are to be used for
purposes prioritized as follows: 1) operating expenses, 2) Senior Bond debt service, 3) Senior
Bond debt service reserve, 4) First Tier Subordinate Bond debt service, 5) First Tier Subordinate
Bond debt service reserve, 6) Operating Reserve Fund, 7) Renewal and Replacement Fund, 8)
Second Tier Subordinate debt service, 9) Rebate Fund, 10) Supplemental Reserve Fund, and 11)
Surplus Fund.
10
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE 2 - DEPOSITS AND INVESTMENTS (CONTINUED)
Senior Capitalized Interest Fund— To be used for payment of interest accruing on the Senior
Current Interest Bonds through either April 15, 2006, the end of the capitalized interest period, or
the date on which the remaining balance in the fund is $0.
Subordinate Capitalized Interest Fund — To be used for payment of interest accruing on the
First Tier Subordinate Current Interest Bonds through either May 1, 2006, the end of the
capitalized interest period, or the date on which the remaining balance in the fund is $0.
The following is a summary of the Authority's investments at fair value:
December 31,
2006 2005
U.S. government agency $ - $10,484,560
Guaranteed investment contracts 51,036,180 53,678,951
Local government investment pool 14,792,970 13,039,481
Money market fund 1,314,553 -
$67,143,703 $77,202,992
Credit Risk
Colorado statutes specify investment instruments meeting defined rating and risk criteria in
which local governments may invest which include:
Obligations of the United States, certain U.S. government agency securities and World
Bank
Bonds of certain Colorado government entities
Banker's acceptances of certain banks
Commercial paper with a certain rating
Written repurchase agreements collateralized by certain authorized securities
Certain money market mutual funds
Guaranteed investment contracts
Local government investment pools
Certain reverse repurchase agreements
11
,-
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 2 -DEPOSITS AND INVESTMENTS (CONTINUED)
The following is a summary of the Authority's investments at December 31, 2006 with credit
ratings based on the Moody's ratings scale:
Rating
Investment
Fair Value Unrated Grade AAA
r Guaranteed investment contracts $ 51,036,180 $ 51,036,180 $ -
Local government investment pool 14,792,970 - 14,792,970
Money market funds 1,314,553 - 1,314,553
$ 67.143.703 $ 51.036.180 $ 16,107,523
The following summary of the Authority's investments at December 31, 2005 with credit ratings
based on the Moody's ratings scale:
Rating
Investment
Fair Value Unrated Grade AAA
U.S. government agency:
Federal Home Loan Bank System $ 2,984,676 $ - $ 2,984,676
Federal National Mortgage Association 6,994,353 - 6,994,353
Federal Farm Credit Banks 505,531 - 505,531
- Guaranteed investment contracts 53,678,951 53,678,951 -
Local government investment pool 13,039,481 - 13,039,481
$ 7Z292.22 $ 53.678.951 $ 23.524.041
Guaranteed investment contracts are generally not exposed to credit risk and are therefore shown
as unrated.
Interest Rate Risk
The Authority employs two professional money management firms to manage its investments.
The funds are all "laddered" so that investments do not mature all at once. All the government
agency investments have maturities of less than one year. The guaranteed investment contracts
have maturities of 15 years or less.
'-
12
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 2 -DEPOSITS AND INVESTMENTS (CONTINUED)
As of December 31, 2006, the Authority held the following investments:
Fair Less
Value Thant 1 to 5 5 to 10 10 to 15
Guaranteed investment contract:
Trinity Funding Company
Investment Agreement $ 9,796,529 $ 9,796,529 $ - $ - $ -
Bayerische Hypo and
Vereinsbank AG Investment
Agreement 36,161,406 - - - 36,161,406 -.
Lehman Brothers Inc.
Investment Agreement 5,078,245 - - - 5,078,245
Local government investment
pool 14,792,970 14,792,970 - - -
Money market fund 1,314,553 1,314,553 - - -
$ 67,143,703 $25,904,052 $ - $ - $41,239,651
As of December 31,2005, the Authority held the following investments:
Fair Less
Value Than l l to 5 5 to 10 lO to 15
U.S. government agency $ 10,484,560 $10,484,560 $ -
Guaranteed investment contract:
AIG Matched Funding Corp.
Investment Agreement 3,070,087 3,070,087 - - -
Trinity Funding Company
Investment Agreement 9,369,213 - 9,369,213 - -
Bayerische Hypo and
Vereinsbank AG Investment
Agreement 36,161,406 - - - 36,161,406
Lehman Brothers Inc.
Investment Agreement 5,078,245 - - - 5,078,245
Local government investment
pool 13,039,481 13,039,481 - - _
$ 77,202,992 $26,594,128 $9,369,213 $ - $41,239,651
13 ..
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a.
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
-- December 31, 2006 and 2005
NOTE 2 -DEPOSITS AND INVESTMENTS (CONTINUED)
Concentration of Credit Risk
Investments in any one issuer(other than the U.S. Treasury securities mutual funds, and external
investment pools) should represent 5% or less of total investments. Investments in any one
issuer that represent 5% or more of total investments are as follows:
Issuer Investment Type 2006 Percentage 2005 Percentage
FNMA Federal Agency securities $ - 0.00% $ 6,994,353 9.06%
Trinity Funding Co. Guaranteed investment contract 9,796,529 14.59% 9,369,213 12.14%
Bayerische Hypo
and Vereinsbank
AG Guaranteed investment contract 36,161,406 53.86% 36,161,406 46.84%
Lehman Brothers,
Inc. Guaranteed investment contract 5,078,245 7.56% 5,078,245 6.58%
NOTE 3 -CAPITAL ASSETS
--
A summary of changes in capital assets at December 31, 2006 is as follows:
r., Balance at Balance
January 1, December 31,
2006 Increases Decreases Transfers 2006
Capital assets,not being depreciated:
Land right-of-way $ 39,599,956 $ 12,406 $ - $ - $ 39,612,362
Total capital assets, not
being depreciated 39,599,956 12,406 - - 39,612,362
-• Capital assets,being depreciated:
Furniture,vehicles and
equipment 3,664,895 18,929 - - 3,683,824
Buildings 14,116,809 - -
•--.•--. - 14,116,809
Bridges 51,175,392 - - - 51,175,392
Roadway 277,888,712 436,991 - - 278,325,703
Total capital assets, being
depreciated 346,845,808 455,920 - - 347,301,728
Less accumulated depreciation for:
Furniture,vehicles and equipment (962,932) (713,843) - - (1,676,775)
-. Buildings (869,083) (470,560) - - (1,339,643)
Bridges (3,553,884) (1,705,864) - - (5,259,748)
Roadway (28,460,181) (13,894,436) - - (42,354,617)
Total accumulated depreciation (33,846,080) (16,784,703) - - (50,630,783)
.— Capital assets,being depreciated,
net 312,999,728 (16,328,783) - 296,670,945
Total capital assets $ 352,599,684 $(16,316,377) $ - $ - $ 336,283,307
14
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 3 - CAPITAL ASSETS (CONTINUED)
A summary of changes in capital assets at December 31, 2005 is as follows:
January 1, December 31,
2005 Increases Decreases Transfers 2005
Capital assets, not being depreciated:
Construction in progress $ 109,143 $ - $ - $ (109,143) $ -
Land right-of-way 39,577,078 22,878 - - 39,599,956
Total capital assets,not
being depreciated 39,686,221 22,878 - (109,143) 39,599,956
Capital assets,being depreciated: "+
Furniture, vehicles and
equipment 2,096,189 1,598,769 (30,063) - 3,664,895
Buildings 12,375,494 1,715,255 - 26,060 14,116,809
Bridges 51,175,392 - - - 51,175,392
Roadway 272,818,143 4,987,486 - 83,083 277,888,712
Total capital assets,being
depreciated 338,465,218 8,301,510 (30,063) 109,143 346,845,808 -.
Less accumulated depreciation for:
Furniture,vehicles and equipment (490,328) (502,667) (30,063) - (962,932)
Buildings (446,893) (422,190) - - (869,083)
Bridges (1,848,560) (1,705,324) - - (3,553,884)
Roadway (14,777,649) (13,682,532) - - (28,460,181)
—.Total accumulated depreciation (17,563,430) (16,312,713) (30,063) - (33,846,080)
Capital assets,being depreciated,
net 320,901,788 (8,011,203) - 109,143 312,999,728
Total capital assets,net $ 360,588,009 $ (7,988,325) $ - $ - $ 352,599,684
Construction Contractor
On June 22, 2001, the Authority entered into a design/build contract with Northwest Parkway
Constructors (the Contractor) to construct the Authority's toll road. The original contract price
—
to be paid to Northwest Parkway Constructors was $187,637,528. The contract includes
provisions for change orders, guarantees, liquidated damages for delay and early completion
bonuses. As of December 31, 2004, there had been 81 authorized contract changes, which
increased the contract price to $191,615,337. The original design/build contact achieved fmal
acceptance in June 2004. A subsequent work order was added in November 2004 for work
related to the Sheridan Interchange. The original Authority plan included construction of an
interchange at Sheridan Boulevard by 2010. Activities in that area indicated that it would be
15 ,,,
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 3 - CAPITAL ASSETS (CONTINUED)
beneficial to the Authority to open that interchange as soon as possible. As a result, the
Authority entered into an agreement with SEMA Construction, Inc. for interchange construction
that was completed in November 2005. The total contract price including change orders was
$4,430,812.
Project Oversight
The Authority has a contract for $5,300,000 with Carter & Burgess, Inc. to serve as project
oversight engineer. This contract expired in July 2004 and was extended to December 31, 2007.
The Authority has entered into a second contract with Carter & Burgess, Inc. for design work
and project oversight related to the Sheridan Interchange in the amount of$890,000 that expired
December 31, 2005 and was extended to December 31, 2006.
NOTE 4-REVENUE BONDS PAYABLE
The detail of the Authority's long-term obligations is as follows:
$175,720,000 Series 2001A Senior Current Interest Bonds, $175,720,000 Revenue Bonds
mature June 15, 2041. Annual principal payments ranging from $1,175,000 to $10,025,000
commence on June 15, 2008 and continue through June 15, 2041. Interest is due semiannually
on June 15 and December 15 at rates ranging from 4.0%to 5.5%.
$79,865,792 Series 2001B Senior Capital Appreciation Bonds, $413,045,000 Revenue Bonds
with maturity values ranging from $6,725,000 to $38,750,000 are payable on respective maturity
dates commencing June 15, 2018 and continuing through June 15, 2034. The Series 2001B
Bonds accrete in value from date issued through maturity or any earlier redemption date,
compounded on June 15 and December 15 of each year at yields to maturity ranging from 5.90%
to 6.31%.
$108,371,280 Series 2001C Senior Convertible Capital Appreciation Bonds, $189,175,000
Revenue Bonds with maturity values ranging from $995,000 to $92,245,000, are payable on
respective maturity dates commencing on June 15, 2012 and continuing through June 15, 2025.
The Series 2001C Bonds accrete in value from date issued through conversion date, December
15, 2011, compounded on June 15 and December 15 of each year at yields to conversion date
ranging from 5.00% to 5.80%. Commencing on December 15, 2011, interest is due
r semiannually on June 15 and December 15 at rates ranging from 5.00%to 5.80%.
r
16
NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE 4-REVENUE BONDS PAYABLE (CONTINUED) "'
$52,465,000 Series 2001D First Tier Subordinate Current Interest Bonds, $52,465,000
Revenue Bonds mature June 15, 2041. Annual mandatory sinking fund requirements commence
on June 15, 2008 and continue through June 15, 2041 in increasing amounts from $400,000 to
$3,860,000. Interest is due semiannually on June 15 and December 15 at a rate of 7.125%.
The 2001 bonds are secured principally from cash flows from current and future revenues and a
debt service reserve account.
The revenue covenant relating to debt service coverage became operative in fiscal year 2006.
The Authority transferred cash reserves to debt service in 2006 in order to meet debt service
coverage ratios.
A summary of changes in long-term revenue bonds payable at December 31, 2006 is as follows:
Balance at Balance at Amount
January 1, Accretion December 31, Due in
Description 2006 Additions of Discounts 2006 One Year
Senior Current Interest Bonds
2001A(C111)-A $ 175,720,000 $ - $ - $ 175,720,000 $ -
Discount on Senior
CIB 2001A(original issue) (1,948,224) - 86,135 (1,862,089) -
Senior Capital Appreciation Bonds
2001B(CAB)-B 413,045,000 - - 413,045,000 ^
Discount on Senior
CAB 2001B(accretion) (307,794,150) - 6,648,478 (301,145,672) -
Senior Convertible Capital -.
Appreciation Bonds
2001C(CCAB)-C 189,175,000 - - 189,175,000 -
Discount Senior CCAB ^
2001C(CCAB)-C(accretion) (49,757,803) - 8,017,275 (41,740,528) -
Subordinate Current Interest Bonds
2001D(CIB)-D 52,465,000 - - 52,465,000 -
Discount Subordinated ^
CIB 2001D(original issue) (1,421,931) - 56,863 (1,365,068) -
$ 469,482,892 $ - $14,808,751 $ 484,291s $
== _
..,
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE 4-REVENUE BONDS PAYABLE (CONTINUED)
A summary of changes in long-term revenue bonds payable at December 31, 2005 is as follows:
Balance at Balance at Amount
January 1, Accretion December 31, Due in
•— D asa:iminn 2005 Additions of Discounts 2005 One Year
Senior Current Interest Bonds
2001A(CIB)-A $ 175,720,000 $ - $ - $ 175,720,000 $
•-•
-
Discount on Senior
Cm 2001A(original issue) (2,037,948) - 89,724 (1,948,224) -
Senior Capital Appreciation Bonds
2001B(CAB)-B 413,045,000 - - 413,045,000 -
Discount on Senior
CAB 2001B(accretion (314,047,475) - 6,253,325 (307,794,150) -
,., Senior Convertible Capital
Appreciation Bonds
2001C(CCAB)-C 189,175,000 - - 189,175,000 -
Discount Senior CCAB
2001C(CCAB)-C (57,338,672) - 7,580,869 (49,757,803) -
Subordinate Current Interest Bonds
2001D(CIB)-D 52,465,000 - - 52,465,000 -
•.. Discount Subordinated
C1B 2001D(original issue) (1,481,163) - 59,232 (1,421,931) -
$ 455,499,742 $ - $13,983,150 $ 469,482,892 -$ -
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 4 - REVENUE BONDS PAYABLE (CONTINUED)
The aggregate future principal maturities and interest payments for all bonds at December 31,
2006 are:
Principal Interest Total
2007 $ - $ 12,897,310 $ 12,897,310
2008 1,575,000 12,859,560 14,434,560
2009 3,925,000 12,710,419 16,635,419
2010 8,170,000 12,389,944 20,559,944
2011 5,775,000 17,396,145 23,171,145
2012-2017 38,880,000 109,095,021 147,975,021
2018-2022 130,255,000 90,809,604 221,064,604
2023-2027 201,955,000 57,211,293 259,166,293
2028-2032 218,805,000 36,649,603 255,454,603
2033-2037 158,795,000 24,979,481 183,774,481
2038-2041 62,270,000 9,373,903 71,643,903
830,405,000 396,372,283 1,226,777,283
Less net(discount) (3,227,157) - (3,227,157)
Total scheduled payments 827,177,843 $ 396,372,283 $1,223,550,126
Less future years accretion (342,886,200)
$ 484,291,643
NOTE 5-REIMBURSEMENT PAYABLE
Intergovernmental Agreements
On February 18, 1999, an intergovernmental agreement was entered into between the City and
County of Broomfield, City of Lafayette, City of Louisville, and the County of Boulder for the
purpose of regulating land uses regarding the construction of the toll road. Certain sections of
this agreement were amended on January 16, 2001 and the Authority was added as a signatory.
Per the agreement, the Authority will pay the following: a total of$12,000,000 for Dillon Road
improvements, of which $1,000,000 was paid to the city of Lafayette during 2001 and the other
$11,000,000 was included in the design/build contract; $12,000,000 for West Midway Boulevard
improvements to the City and County of Broomfield, of which $2,000,000 was paid during 2001
and $10,000,000 is recorded as a liability at December 31, 2006; $5,000,000 each to the City of
Louisville and the City and County of Broomfield for open space and conservation easement
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 5-REIMBURSEMENT PAYABLE (CONTINUED)
allocation, which was paid during 2001; $3,000,000 each to the City and County of Broomfield,
City of Louisville, and Boulder County, and $1,000,000 to the City of Lafayette for acquisition
of permanent open space located within the Plan area, of which the total $10,000,000 is recorded
as a liability at December 31, 2006. No amounts are due within one year at December 31, 2006.
The permanent open space payments are to be paid by December 31, 2008. No additional
amounts related to intergovernmental agreements were agreed to during 2006 and no amounts
were paid during 2006. Outstanding amounts related to the intergovernmental agreements bear
no interest.
Reimbursement Agreements
^
The Authority entered into reimbursement agreements with the following entities, Interlocken,
Ltd., Interlocken Consolidated Metropolitan District (ICMD), and the City and County of
Broomfield.
The Authority agreed to reimburse the following costs at such lime as the Authority has funds
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available. Interlocken Ltd. incurred costs with respect to the planning, financing design and/or
construction of Interlocken Loop in the amount of $1,995,904. ICMD incurred costs with
respect to planning, financing, design, and construction of Interlocken Loop in the amount of
$5,205,813. Both of these commitments are recorded as a liability and bear interest at the rate
of 6% per annum from the date of the agreements until they are paid in full. These entities will
be reimbursed at such time as the Authority has funds available. No amounts are due within one
year at December 31, 2006. At December 31, 2006 and 2005, the Authority has recorded
accrued interest of$3,121,132 and $2,689,028, respectively, for these commitments.
The Authority agreed to reimburse the City and County of Broomfield for the portion of its
expenditures that benefit or are incorporated into the toll road. The City and County of
-- Broomfield incurred initial expenditures and secondary expenditures, which were recorded as a
capital asset and liability by the Authority. The determination of whether any of these amounts
can be reimbursed from the initial funding shall be solely the determination of the Authority. If
-- reimbursement of the unpaid expenditures is not made from the initial funding, the amounts shall
be reimbursed at such lime the Authority has funds available from fmancings or revenues,if any.
The unpaid expenditures bear no interest. The Authority reimbursed the City and County of
Broomfield for their initial expenditures during 2001, and the secondary expenditures of
$48,670,323 are recorded as a liability at December 31, 2006 and 2005. No amounts are due
within one year at December 31,2006.
No additional principal amounts related to reimbursement agreements were agreed to during
2006 and no amounts were paid during 2006.
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE 6-RETIREMENT PLANS ."
The Authority has a single employer defined contribution plan in which all employees are
eligible to participate upon their first day of employment. This plan is administered by ICMA
Retirement Corporation, an outside trustee. The plan is in lieu of social security and the
Authority contributes 16.5% of each participant's compensation to the plan for full-time
employees and 6.5% for part-time employees. All participants are required to contribute 6.5%of
their compensation. Participants vest immediately 100% in all contributions. The Authority
contributed $132,126 and $103,824 to this plan for the years ended December 31, 2006 and
2005, respectively. Fringe benefit amounts paid to employees are not included as compensation
for this plan.
In addition to the defined contribution plan, the Authority has a defined contribution retirement
health savings plan that the Authority contributes $1,000 per year per full-time employee. This
plan is also administered by ICMA. Employees can contribute to this plan pretax, up to 25% of
their salary. The plan allows for tax-free withdrawals after retirement (59-1/2) for medical costs.
The Authority contributed $9,000 to this plan for each of the years ended December 31, 2006
and 2005. Employees contributed $15,038 and $2,433 to this plan for the year ended December
31, 2006 and 2005,respectively.
The Authority's Board of Directors establishes all retirement plans and amends them as
necessary.
NOTE 7-DEFERRED COMPENSATION
As of September 2001, the Authority offered all regular employees a deferred compensation plan
created in accordance with Internal Revenue Code Section 457. The plan permits participants to
defer a portion of their salary until future years. This plan is also administered by ICMA.
The employees' voluntary contributions are made to the 457 plan. No employer contributions
are made to this plan. Employees can contribute a maximum of $15,000 for the year ended
December 31, 2006 and $14,000 for the year ended December 31, 2005. Deferred compensation
is available for withdrawal any time after the participant reaches age 59-1/2, and must begin at
age 70. Withdrawals can also be made upon termination of employment, death, or unforeseeable
emergency. Such withdrawals may be subject to the IRS penalties for early withdrawal.
Withdrawals can also be made upon termination of the plan.
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NORTHWEST PARKWAY PUBLIC HIGHWAY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31,2006 and 2005
NOTE 7-DEFERRED COMPENSATION(CONTINUED)
An independent trustee administers funds in the plan. The trustee provides participants with
quarterly statements of contributions, withdrawals, and earnings. Employee contributions made
for the year ended December 31, 2006 and 2005 were $56,242 and $45,275,respectively.
The Authority's Board of Directors establishes all deferred compensation plans and amends them
as necessary.
NOTE 8 -TAX, SPENDING AND DEBT LIMITATIONS
In November 1992, the voters of Colorado approved Amendment 1, commonly known as the
Taxpayer's bill of Right (TABOR), which adds a new Section 20 to Article X of the Colorado
Constitution. TABOR contains tax, spending, revenue and debt limitations, which apply to the
State of Colorado and all local governments. Enterprises, defined as government-owned
businesses authorized to issue revenue bonds and receiving less than 10% of annual revenue in
grants from all state and local governments combined, are excluded from the provisions of
TABOR.
During the January to May 1996 session, the Colorado General Assembly enacted S.B. 96 173,
which was signed into law by the governor on March 18, 1996. The General Assembly declared
its intention that public highway authorities be permitted to qualify as enterprises under Section
20 of Article X of the Colorado Constitutions; therefore, TABOR is not applicable to the
Authority.
NOTE 9-RISK MANAGEMENT
The Authority is exposed to various risks of losses, including general liability, property damage,
and employee life, medical, dental, and accidental benefits. The Authority has a risk
management program, which includes commercial property insurance for catastrophic losses,
including floods and earthquakes, for the entity. The Authority also carries commercial
insurance for employee life, health, accident, and workers' compensation. The Authority has
various set limits on their commercial insurance coverage and has not exceeded the coverage in
the past three years. The Authority is not a part of a public entity risk pool.
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This information in an integral part of the accompanying financial statements.
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