Review report, North Georgia Mountains Authority, a component unit of the state of Georgia, year ended June 30, 1997

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REVIEW REPORT NORTH GEORGIA MOUNTAINS AUTHORITY
ACOMPONENT~TOFTHE
STATE OF GEORGIA YEAR ENDED JUNE 30, 1997
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

NORTH GEORGIA MOUNTAINS AUTHORITY - TABLE OF CONTENTS -

INDEPENDENT ACCOUNTANTS COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMAnON

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES AND ACCOUNT GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

(STATUTORY BASIS)

GOVERNMENTAL FUND TYPES

5

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

6

D STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

DEBT SERVICE FUND

8

E NOTES TO THE FINANCIAL STATEMENTS

9

SUPPLEMENTARY INFORMAnON

F STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

FIDUCIARY FUND TYPE - AGENCY FUND

20

SCHEDULES

1 CASH AND CASH EQUIVALENTS

21

2 SUMMARY OF PER DIEM AND FEES

22

CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
October 24, 1997

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the North Georgia Mountains Authority
and Honorable Lonice C. Barrett, Commissioner Department ofNatural Resources
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through E) of the North Georgia Mountains Authority as of and for the year ended June 30, 1997, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the repres~ntation of the management of the North Georgia Mountains Authority.
A review consists principally of inquiries of agency personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis of accounting described in Note 1.
Our review was made for the purpose of expressing limited assurance that there were no material modifications that should be made to the financial statements in order for them to be in conformity with the basis of accounting described in Note 1. The accompanying supplementary information (Exhibit F and Schedules 1 and 2) is presented only for supplementary analysis purposes. Such information has been

97ARL-4

subjected to the inquiries and analytical procedures applied in the review of the financial statements and we are not aware of any material modifications that should be made thereto.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:cm 97ARL-4

FINANCIAL STATEMENTS - 1-

NORTH GEORGIA MOUNTAINS AUTHORITY COMBINED BALANCE SHEET (STATUTORY BASIS)
ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30, 1997

ASSETS
Cash and Cash EqUivalents (See Schedule)
Accounts Receivable Other
Fixed Assets Equipment
Amount Available in Debt Service Fund
Amount to be Provided for Retirement of General Long-Term Debt

GOVERNMENTAL FUND TYPES

DEBT

BUDGET

SERVICE

FIDUCIARY FUND TYPE
AGENCY

$ 3,524,699,63 $

1,322,00 $

0.00

334,782.42

Total Assets

$ 3,859,482.05 $

1,322.00 $ ======="O::::::;.O=:O

LIABILITIES AND FUND EQUITY

Liabilities Accounts Payable Contracts Payable Funds Held for Others Bonds Payable Deferred Revenue

$

122,904.00

725,000.00

400,028.64

$

0.00

Total Liabilities

$ 1,247,932.64

$

0.00

Fund Equity Investment in General Fixed Assets Fund Balances Reserved Debt Service Fund Special Project Unreserved Undesignated

$

$

1,207.66

2,610,341.75

1,322.00

Total Fund Equity

$ 2,611,549.41 $

1,322.00

Total Liabilities and Fund Equity

$ 3,859,482.05 $

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.

The notes to the financial statements are an integral part of this statement.
-2-

1,322.00 $=====O=.O=:O

EXHIBIT "A"

ACCOUNT GROUPS

GENERAL

GENERAL

FIXED

LONG-TERM

ASSETS

DEBT

TOTALS (Memorandum Only) JUNE 30, 1997 JUNE 30, 1996

$ 3,526,021.63 $ 1,930,032.19

334,782.42

379,962.42

$ 1,648,890.86 $

1,322.00

1,648,890.86 1,322.00

1,337,615.04 1,322.00

183,678.00

183,678.00

228,678.00

$ 1,648,890.86 $

185,000.00 $ 5,694,694.91 $ 3,877,609.65

$ 122,904.00 $

53,788.42

725,000.00

1,024,000.00

0.00

17.96

$

185,000.00

185,000.00

230,000.00

400,028.64

339,256.06

$

185,000.00 $ 1,432,932.64 $ 1,647,062.44

$ 1,648,890.86

$ 1,648,890.86 $ 1,337,615.04

$ 1,648,890.86

1,322.00 1,207.66

1,322.00 1,207.66

2,610,341.75

890,402.51

$ 4,261,762.27 $ 2,230,547.21

$ 1,648,890.86 $

185,000.00 $ 5,694,694.91 $ 3,877,609.65

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THIS PAGE LEFT BLANK

NORTH GEORGIA MOUNTAINS AUTHORITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30,1997

EXHIBIT"B"

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement. - 5-

NORTH GEORGIA MOUNTAINS AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30,1997

EXHIBIT"C"

FUNDS AVAILABLE
REVENUES
OTHER REVENUES RETAINED Gross Revenue from Unicoi State Park (Georgia Recreation Experiment Station) Contracts Georgia Department of Natural Resources G. O. Bond Proceeds for Mountain Park Project Central Reservations Center Hunting and Fishing License Study Stormont Trice Corporation Brasstown Valley Resort Interest Earned Lease Rental Georgia Department of Natural Resources Liquor Sales Rents Service Charges on Returned Checks
TRANSFER To Debt Service Fund
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Fund Balance Reserved Unreserved
Total Carry-Over from Prior Year

TOTALS
YEAR ENDED JUNE 30,1997 JUNE 30,1996

$ 3,494,612.71 $ 3,192,967.16

0.00 0.00 0.00

320,885.12 254,938.00
45,000.00

1,341,304.70 176,429.80

463,598.00 130,363.00

55,275.00 2,961.56 5,279.73 15.00

51,975.00 2,428.67 3,279.33 15.00

$ 5,075,878.50 $ 4,465,449.28

-55,275.00

-51,975.00

$ 5,020,603.50 $ 4,413,474.28

$

1,207.66 $

890,402.51

$

891,610.17 $

1,207.66 973,625.29
974,832.95

Total Funds Available

$ 5,912,213.67 $ 5,388,307.23

EXPENDITURES
REGULAR OPERATING EXPENSES
Supplies and Materials Repairs and Maintenance Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses
Film Processing Freight and Demurrage Legal Advertising Regulation Fees and Training Workshops Subscription and Dues Publications and Printing Equipment Purchases

$

3,235.03 $

0.00

3,309.43

14,680.00

5,474.03 2,095.74
890.89 14,680.00

2,873.42 218.66
35,682.21 885.00 160.50 152.00
4,873.91

34.50 0.00
1,537.88 989.82 0.00 0.00 0.00

66,070.16 $

25,702.86

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
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NORTH GEORGIA MOUNTAINS AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30.1997

EXHIBIT"C"

EXPENDITURES
COMPUTER CHARGES
Equipment Equipment Purchases
REAL ESTATE RENTALS
TELECOMMUNICATIONS
PER DIEM. FEES AND CONTRACTS
Per Diem and Fees Contracts
CAPITAL OUTLAY
Other Costs Supplies and Materials Repairs and Maintenance Other Operating Expenses Legal Advertisements
Equipment Equipment Purchases
Computer Charges Software
Per Diem, Fees and Contracts Per Diem and Fees Contracts
OTHER
MOUNTAIN PARK DEVELOPMENT Other Costs Supplies and Materials Repairs and Maintenance Motor Vehicle Purchases Equipment Equipment Purchases Computer Charges Software Equipment Purchases Per Diem, Fees and Contracts Per Diem and Fees Contracts
Total Other
Total Expenditures
Excess of Funds Available over Expenditures

TOTALS
YEAR ENDED JUNE 30,1997 JUNE 30,1996

$

19,011.63 $

$ 1,424,501.00 $

$

83,530.13 $

6,468.00 1,422,256.00
0.00

$

54,924.41 $

65,534.93

798,183.94

1,024,000.00

$

853,108.35 $ 1,089,534.93

$

0.00 $

120,959.00

0.00

0.00

3,354.00

4,522.92 0.00

$_---1-2:8.:,8=3=5.=92- $

5,659.41 4,867.00
74,418.92
29,604.81
4,457.77
27,419.95 9,377.00
155,804.86

$

0.00 $

0.00

0.00

884.99

66,382.00 37,793.88

27,478.59 604,444.02

$-----:.7.;3=6=,:9.8..3.:..4=8.. $ $ 3,312,040.67 $

2,600,173.00

17,187.58 76,321.12 14,965.00
7,574.00
0.00 0.00
2,830.58 1,680,396.66
1,799,274.94
4,499,041.59
889,265.64

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
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$ 5,912,213.67 $ 5,388,307.23

NORTH GEORGIA MOUNTAINS AUTHORITY STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
DEBT SERVICE FUND
YEAR ENDED JUNE 30.1997

EXHIBIT"D"

CASH RECEIPTS REVENUES
TRANSFER From Budget Fund
CASH AND CASH EQUIVALENTS - JULY 1, 1996
DISBURSEMENTS EXPENSES
Interest on Bonds Paying Agent's Fees DEBT RETIREMENT Bonds Redeemed
Nos. 125-133
Total Disbursements
CASH AND CASH EQUIVALENTS - JUNE 30,1997

$ 55,275.00 1,322.00
$ 56,597,00
$ 9,775,00 500,00 $ 10,275.00
45,000.00 $ 55,275.00
1,322.00 $ 56,597.00

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information,
The notes to the financial statements are an integral part of this statement. - 8-

NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The North Georgia Mountains Authority is an instrumentality ofthe State of Georgia and a public corporation and consists of nine (9) members. These members are the same individuals that comprise the Board of Natural Resources. The Authority is assigned to the Department of Natural Resources for administrative purposes only. The North Georgia Mountains Authority is considered a component unit of the State of Georgia and is included within the State of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational and financial relationships with the State of Georgia. These reporting entity relationships are defmed in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING The North Georgia Mountains Authority uses funds and account groups to report on its fmancial position and the results of its operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with fmance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. Funds and account groups presented in the accompanying financial statements are as follows:
GOVERNMENTAL FUND TYPES
BUDGET FUND - The fund used to account for activities and functions of the North Georgia Mountains Authority. This presentation differs from generally accepted accounting principles in that such principles provide that the Budget Fund of the Authority be accounted for as a Proprietary Fund Type - Enterprise Fund. An Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent is that costs of providing goods or services to the general public on a continuing basis are financed or recovered primarily through user charges or that periodic measurement of revenues earned and expenses incurred are appropriate for capital maintenance, public policy, accountability and other purposes.
DEBT SERVICE FUND - The fund used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. The presentation differs from generally accepted accounting principles in that accumulation of resources and payment of general longterm debt principal, interest and related costs should be recorded as part of the Enterprise Fund as discussed above.
FIDUCIARY FUND TYPE
AGENCY FUND - The fund used to account for assets held for use by other funds, governments, or individuals.
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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,1997

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
ACCOUNT GROUPS
GENERAL FIXED ASSETS - The account group used to account for fixed assets used in governmental fund type operations. Fixed assets purchased are recorded at cost or at estimated historical cost if historical cost is not practically determinable. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on general fixed assets. Accounting practices prescribed or permitted by statutes and regulations of the State of Georgia do not require the value of land deeded to the Authority by the State of Georgia and the cost of buildings thereon to be recorded in the financial statements. This methodology of accounting for general fixed assets differs from generally accepted accounting principles in that the Budget Fund ofthe Authority should be accounted for as a Proprietary Fund Type - Enterprise Fund. Fixed assets utilized in the operations of proprietary fund types should be recorded as assets of such funds, rather than in the General Fixed Assets Account Group. The depreciation of such fixed assets should be recorded as an expense of proprietary fund types in order to more effectively determine the total cost ofproviding goods and services.
The costs of normal maintenance and repairs that do not add to the value of assets or materially extend assets' lives are not included in the General Fixed Assets Account Group. Material improvements adding to the value or useful life of assets are included in the General Fixed Assets Account Group.
GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain governmental long-term liabilities, such as claims, judgments, compensated absences and bond debt payable, which will be paid from future resources. This presentation differs from generally accepted accounting principles in that the Budget Fund of the Authority should be reflected as a Proprietary Fund Type - Enterprise Fund. The liabilities and related expenses for the items listed above should be recorded as a part of the proprietary fund type in order to more effectively determine the total cost of providing goods and services.
BASIS OF ACCOUNTING MEASUREMENT FOCUS
The accounting and fmancial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow ofcurrent financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources.
Proprietary fund types, on the other hand, should be accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities are included on the balance sheet. Operating statements of these funds present increases, (i.e., revenues) and decreases, (i.e., expenses) in net total assets. This measurement focus emphasizes the determination of net income. In accordance with

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING MEASUREMENT FOCUS
accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund, which should be reflected as a Proprietary Fund Type - Enterprise Fund in accordance with generally accepted accounting principles, utilizes the current fmancial resources measurement focus.
GOVERNMENTAL FUND TYPES BUDGET FUND
Except as disclosed in the following paragraphs, units of government of the State of Georgia record their Budget Fund revenues and expenditures in accordance with the modified accrual basis of accounting. Under the modified accrual basis ofaccounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues that are accrued consist of certain amounts earned under operating agreements with other parties. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences, claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available financial resources. The Budget Fund, which should be reflected as a Proprietary Fund Type Enterprise Fund in accordance with generally accepted accounting principles, should be maintained on the accrual basis of accounting.
Contractual obligations for goods and services which have not been received at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which do not provide for the recording of encumbrances within the Proprietary Fund Type - Enterprise Fund.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of the Budget Fund in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but differs from generally accepted accounting principles for proprietary fund types in that immaterial adjustments should be reported as current period revenues and expenses.
DEBT SERVICE FUND The Debt Service Fund is maintained on the Cash Receipts and Disbursements basis of accounting as prescribed or permitted by statutes and regulations ofthe State of Georgia. This basis of accounting is defmed as that method of accounting in which certain revenue and the related assets are recognized when received rather than when earned, and certain expenses are recognized when paid rather than when the obligation is incurred. To comply with generally accepted accounting principles, debt service activity should be recorded as a part of an enterprise fund on the accrual basis of accounting.
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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,1997

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING FIDUCIARY FUND TYPE AGENCY FUND
Agency Funds are custodial in nature and do not measure results of operations or have a measurement focus. The modified accrual basis of accounting is utilized for recognizing assets and liabilities.
BUDGET A budget for the financial operations of the North Georgia Mountains Authority was not prepared by the Authority, therefore, these fmancial operations represent nonbudgeted fmancial activities.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include funds on deposit with the Department of Natural Resources and cash management pools that have the general characteristics ofdemand deposit accounts in that the Authority may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty.
INVESTMENTS The North Georgia Mountains Authority participates in an investment pool managed by the State of Georgia's Office of Treasury and Fiscal Services (OTFS) referred to as the "Georgia Fund 1". The Authority does not have any risk exposure related to investments in derivatives or similar investments in Georgia Fund 1 as the investment policy of OTFS does not provide for investments in derivatives or similar investments through the Georgia-Fund 1.
ACCOUNTS RECEIVABLE The North Georgia Mountains Authority has entered into an agreement with Stormont Trice Corporation (Stormont) to operate Brasstown Valley Resort (Mountain Park Project). Pursuant to Article 5 of this agreement, the Authority provided $330,000.00 to fund an initial working capital account for the resort (See Note 7). These funds are included in the amount shown as accounts receivable on Exhibit "A" of this report.
INVENTORIES No inventories of supplies are reported in these financial statements. Expendable supplies are recorded as expenditures at the time of purchase.
DEFERRED REVENUE The North Georgia Mountains Authority reports deferred revenue on the Combined Balance Sheet (Statutory Basis). Deferred revenues arise when a potential revenue does not meet the "available" criterion for recognition in the current period. In subsequent periods, when the revenue recognition criterion is met, the liability for deferred revenue is removed from the Combined Balance Sheet (Statutory Basis) and revenue is recognized.

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RESERVED FUND BALANCE Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a brief description of the reserves reflected in the accompanying financial statements:
DEBT SERVICE FUND Funds to be used for retirement of general long-term debt principal, interest and related costs.
SPECIAL PROJECT Funds reserved for this project represent the accumulation of resources for the Tallulah Gorge Project.
MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Statements (Statutory Basis) are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position, results of operations or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying fmancial statements in order to provide an understanding of the changes in the Authority's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding of the Authority's financial position and operations or would cause the statements to be unduly complex and difficult to understand.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds of the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.

(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State of Georgia the option of exempting demand deposits from the collateral requirements.

CATEGORIZATION OF DEPOSITS The North Georgia Mountains Authority is assigned to the Department of Natural Resources (DNR) for administrative purposes, and as such, DNR maintains accounting records, including deposits, for the Authority. As a result, we are unable to provide a separate disclosure for custodial credit risk for the Authority.

CATEGORIZATION OF INVESTMENTS Investments are stated at cost. The carrying amount of the investment balance as of June 30, 1997, shown below is maintained in an investment pool by the Office of Treasury and Fiscal Services and is not subject to risk categorization.

Type of Investment State Investment Pool NOTE 3: CHANGES IN GENERAL FIXED ASSETS

Carrying Amount
$ 4,513,369.73

Market Value
$ 4,513.369.73

The following is a summary of changes of equipment in the General Fixed Assets Account Group during the fiscal year:

Balance July 1, 1996
Additions Deductions
Balance June 30, 1997

$ 1,337,615.04
461,525.53 150,249.71
$ 1,648.890.86

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"E"

NOTE 4: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1997, the following changes occurred in the bonds payable liability reported in the General Long-Term Debt Account Group:

Balance July 1, 1996

$ 230,000.00

Less: Bonds Redeemed

45,000.00

Balance June 30, 1997

$ 185,000,00

The total general long-term debt outstanding at June 30, 1997, excluding interest, was $185,000.00. Annual debt service requirements to maturity for revenue bonds are as follows:

PAYMENTS DUE IN FISCAL YEAR ENDING JUNE 30
1998 1999 2000 2001

TOTAL DEBT SERVICE
$ 52,862.50 50,950.00 49,037.50 52,125.00
$ 204,975.00

NORTH GEORGIA

MOUNTAINS AUTHORITY

REVENUE BONDS

1971 ISSUE Onterest Rate 4.25%)

INTEREST

PRINCIPAL

$ 7,862.50 5,950.00 4,037.50 2,125.00

$ 45,000.00 45,000.00 45,000.00 50,000.00

$ 19,975.00

$ 185,000.00

Semi-Annual Interest Payment Dates Annual Debt Retirement Date

May 1 - Nov 1 May 1

NOTE 5: TRANSACTIONS WITH DEPARTMENT OF NATURAL RESOURCES

RELATED PARTIES The Department of Natural Resources and the North Georgia Mountains Authority are considered to be related parties due to certain common management personnel. The Board of Natural Resources also serves as the Board of the North Georgia Mountains Authority.

LEASED FACILITIES UNICOI STATE PARK (GEORGIA RECREATION EXPERIMENT STATION)
Under terms ofan agreement with the Department ofNatural Resources (DNR), the North Georgia Mountains Authority (NGMA) leased to DNR all facilities constructed with proceeds ofNGMA Revenue Bonds - Series 1971. The lease term was defined as the period of time until the related bonds have been paid or provision duly made to retire the bonds. Terms of the lease provide for NGMA, at DNR's request, to execute and

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1997

EXHIBIT "E"

NOTE 5: TRANSACTIONS WITH DEPARTMENT OF NATURAL RESOURCES

LEASED FACILITIES UNICOI STATE PARK (GEORGIA RECREATION EXPERIMENT STATION)
deliver to the State of Georgia a quitclaim deed for all leased properties after DNR has paid all sums due and owing under the terms ofthe lease. Accounting practices prescribed or permitted by statutes and regulations of the State of Georgia allows the lease to be accounted for as an operating lease by NGMA. This method of accounting for the lease is not in accordance with generally accepted accounting principles, which provide for the accounting of a lease ofthis nature as a direct financing lease for NGMA. Revenue derived from this lease during fiscal year 1997 amounted to $55,275.00. Future minimum rentals, including bond interest, on this lease are as follows:

Fiscal Year Ending June 30

1998 1999 2000 2001

$ 52,862.50 50,950.00 49,037.50 52,125.00

$ 204.975.00

MOUNTAIN PARK PROJECT The Department ofNatural Resources (DNR) has custody of approximately five hundred acres owned by the State of Georgia in Towns County, Georgia. This property has been developed and is referred to as Mountain Park Project (Project). Under terms of an agreement.with DNR, the North Georgia Mountains Authority (NGMA) agreed to exclusively occupy, develop and use the Mountain Park Project. Proceeds from the sale of general obligation bonds of the State of Georgia were made available to NGMA to design, construct and equip the Project. The agreement further provides that NGMA will lease the facilities from DNR and all improvements to the Project funded with State funds or proceeds of general obligation debt of the State shall remain the property of the State of Georgia. Terms of the lease, as revised, call for NGMA to pay to DNR an amount equal to the debt service required to be paid by the State in connection with general obligation bonds issued for this project. Additionally, in any fiscal year in which revenues available to NGMA are not sufficient for such purpose, the deficiency shall carry forward into the next year, and payments shall be made annually until debt service is fully recouped. The lease is accounted for as an operating lease by NGMA. Lease payments for fiscal year 1997 amounted to $1,424,501.00. Future minimum lease payments, including bond interest, on this lease are as follows:

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "E"

NOTE 5: TRANSACTIONS WITH DEPARTMENT OF NATURAL RESOURCES

LEASED FACILITIES MOUNTAIN PARK PROJECT

Fiscal Year Ending June 30

1998 1999 2000 2001 2002 Thereafter

$ 1,426,635.03 1,429,219.00 1,432,064.26 1,434,982.10 1,438,486.05
18,307,867.98

$25.469,254.42

As part of the above lease agreement for the Mountain Park Project, NGMA was designated as recipient of all income and receipts of the Mountain Park Project and of the Unicoi State Park (Georgia Recreation Experiment Station) subject to DNR billing NGMA for the costs incurred by DNR to operate the State Park. Commencing with fiscal year 1999, the agreement designates DNR as recipient of all income and receipts for the Unicoi State Park.

NOTE 6: RISK MANAGEMENT

Other Risk Management

The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The North Georgia Mountains Authority is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.

NOTE 7: OTHER FINANCIAL NOTES

The North Georgia Mountains Authority (NGMA) entered into a five (5) year agreement, commencing fiscal year 1996 and subject to extension, with Stormont Trice Corporation (Stormont) to operate the Mountain Park Project, referred to as Brasstown Valley Resort (Resort). Under terms of this agreement, Stormont is paid

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,1997

EXHIBIT"E"

NOTE 7: OTHER FINANCIAL NOTES
an operator's fee, which is adjusted each fiscal year, plus one (1) percent of annual gross revenues of the Resort not to exceed the annual operator's fee. During the first and second years of the agreement, Stormont is to transfer three (3) percent of annual gross revenues into a "reserve" account. During the third, fourth and fifth years ofthe agreement, Stormont is to transfer five (5) percent of annual gross revenues into the reserve account. A greater amount may be transferred into the reserve account if approved by NGMA. Stormont may expend these "reserve" funds for purposes as outlined in the agreement. NGMA is responsible for funding any shortfalls in the reserve account each fiscal year.
In addition, NGMA funded an initial amount for working capital and is required to provide additional funds as necessary for Stormont to maintain sufficient working capital to insure uninterrupted and efficient operation ofthe Resort.
Under terms ofthe agreement, Stormont is required to transfer to NGMA quarterly an amount equal to gross revenues of Resort operations less operating expenses and transfers to the reserve account.
NOTE 8: CON11NGENClliS
Litigation, claims and assessments filed against the North Georgia Mountains Authority, if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State ofGeorgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1997.

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SUPPLEMENTARY INFORMAnON - 19-

Children's Fund

NORTH GEORGIA MOUNTAINS AUTHORITY STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30,1997

EXHIBIT"F"

ASSETS! LIABILITIES JULY 1,1996

ADDITIONS

DELETIONS

ASSETS! LIABILITIES JUNE 30,1997

$

17.96 $

0.00 $

17.96 $=====0.=00,,=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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NORTH GEORGIA MOUNTAINS AUTHORITY CASH AND CASH EQUIVALENTS JUNE 30, 1997
NONINTEREST BEARING ACCOUNTS Funds on Deposit with Department of Natural Resources
INTEREST BEARING ACCOUNTS Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool

SCHEDULE "1"
$ -987,348.10 4,513,369.73
$ 3,526,021.63

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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NORTH GEORGIA MOUNTAINS AUTHORITY SUMMARY OF PER DIEM AND FEES YEAR ENDED JUNE 3D. 1997
BUDGET FUND
Regular Capital Outlay Mountain Park Development

SCHEDULE "2"

$

54,924.41

4,522.92

27,478.59

$

86,925.92

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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