Ratings: Moody s: Aa1

Transcription

1 NEW ISSUE BOOK-ENTRY ONLY Ratings: Moody s: Aa1 Standard & Poor s: AA+ Fitch: AA+ (See Ratings ) In the opinion of Bond Counsel, under current law and subject to the conditions described in the section TAX EXEMPTION, interest on the Series 2016 Bonds (1) will not be included in gross income for federal income tax purposes, (2) will not be an item of tax preference for purposes of the federal alternative minimum income tax imposed on individuals and corporations and (3) will be exempt from income taxation by the Commonwealth of Virginia. Such interest may be included in the calculation of a corporation s alternative minimum income tax, and a holder may be subject to other federal income tax consequences as described in the section TAX EXEMPTION. $26,750,000 ECONOMIC DEVELOPMENT AUTHORITY OF JAMES CITY COUNTY, VIRGINIA PUBLIC FACILITY REVENUE BONDS (JAMES CITY COUNTY SCHOOL PROJECT), SERIES 2016 Dated: Date of Issuance Due: June 15, as shown on the inside cover This Official Statement has been prepared by James City County, Virginia (the County ), on behalf of the Economic Development Authority of James City County, Virginia (the Authority), to provide information on the Series 2016 Bonds, the security therefor, the County, the projects being financed with the proceeds of the Series 2016 Bonds and other relevant information. Selected information is presented on this cover page for the convenience of the user. To make an informed decision regarding the Series 2016 Bonds, a prospective investor should read this Official Statement in its entirety. Security THE SERIES 2016 BONDS WILL BE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM CERTAIN PAYMENTS TO BE MADE BY THE COUNTY PURSUANT TO A FINANCING AGREEMENT DATED AS OF JUNE 1, 2016 (THE FINANCING AGREEMENT ), BETWEEN THE COUNTY AND THE AUTHORITY; A DEED AND AGREEMENT OF FINANCING LEASE DATED AS OF JUNE 1, 2016 (THE FINANCING LEASE ), BETWEEN THE WILLIAMSBURG-JAMES CITY COUNTY SCHOOL BOARD (THE SCHOOL BOARD ), THE COUNTY AND THE AUTHORITY; AND FROM CERTAIN FUNDS AND THE INVESTMENT INCOME THEREFROM HELD BY THE TRUSTEE. THE UNDERTAKING BY THE COUNTY TO MAKE PAYMENTS UNDER THE FINANCING AGREEMENT AND THE FINANCING LEASE WILL BE SUBJECT TO APPROPRIATIONS BY THE COUNTY BOARD OF SUPERVISORS FROM TIME TO TIME OF SUFFICIENT FUNDS FOR SUCH PURPOSE. NEITHER THE SERIES 2016 BONDS, THE FINANCING AGREEMENT NOR THE FINANCING LEASE CONSTITUTES A DEBT OF THE COUNTY OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER OF THE COUNTY. THE SERIES 2016 BONDS AND THE PREMIUM, IF ANY, AND THE INTEREST ON THEM SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE COMMONWEALTH OF VIRGINIA OR ANY OF ITS POLITICAL SUBDIVISIONS, INCLUDING THE AUTHORITY AND THE COUNTY. NEITHER THE COMMONWEALTH OF VIRGINIA NOR ANY OF ITS POLITICAL SUBDIVISIONS, INCLUDING THE AUTHORITY AND THE COUNTY, SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF AND PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2016 BONDS OR OTHER COSTS INCIDENT TO THEM EXCEPT FROM THE REVENUES AND RECEIPTS PLEDGED FOR SUCH PURPOSE. THE AUTHORITY HAS NO TAXING POWER. Issued Pursuant To The Series 2016 Bonds will be issued pursuant to an Agreement of Trust dated as of June 1, 2016, as supplemented by a First Supplemental Agreement of Trust dated as of June 1, 2016, between the Authority and Wilmington Trust, National Association, as Trustee. Trustee Wilmington Trust, National Association Purpose The proceeds of the Series 2016 Bonds will be used to (a) finance the Series 2016 Project (as defined herein) and (b) finance the costs of issuing the Series 2016 Bonds. Interest Payment Dates June 15 and December 15, commencing December 15, 2016 Regular Record Dates June 1 and December 1 Redemption The Series 2016 Bonds are subject to optional, mandatory and extraordinary redemption as set forth herein. Denominations $5,000 and integral multiples thereof. Closing/Delivery Date On or about June 2, Registration Full book-entry only; The Depository Trust Company, New York, New York Bond Counsel Hunton & Williams LLP, Richmond, Virginia County Attorney Adam Kinsman, Esquire Authority Counsel Adam Kinsman, Esquire Dated: May 4, 2016

2 June 15 $26,750,000 ECONOMIC DEVELOPMENT AUTHORITY OF JAMES CITY COUNTY, VIRGINIA PUBLIC FACILITY REVENUE BONDS (JAMES CITY COUNTY SCHOOL PROJECT), SERIES 2016 Principal Amount Interest Rate Yield CUSIP ** 47030T 2017 $ 915, % 0.650% AA , AB ,000, AC ,035, AD ,065, AE ,115, AF ,170, AG ,205, AH ,270, AJ ,330, AK ,400, AL ,425, AM ,455, AN ,485, * AP ,530, * AQ ,575, * AR ,625, * AS ,775, AU5 $3,400, % Term Bonds due June 15, 2035, priced at 100% to yield 3.000% CUSIP No T AT8 * Yield reflects Bonds priced to the first optional call date of June 15, ** A registered trademark of the American Bankers Association ( ABA ), used by Standard & Poor s in its operation of the CUSIP Service Bureau for the ABA. The above CUSIP (Committee on Uniform Securities Identification Procedures) numbers have been assigned by an organization not affiliated with the Authority, and the Authority is not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely for the convenience of bondholders and no representation is made as to the correctness of such CUSIP numbers. CUSIP numbers assigned to securities may be changed during the term of such securities based on a number of factors including, but not limited to, the refunding or defeasance of such securities or the use of secondary market financial products. The Authority has not agreed to, and there is no duty or obligation to, update this Official Statement to reflect any change or correction in the CUSIP numbers set forth above.

3 The Series 2016 Bonds will be exempt from registration under the Securities Act of 1933, as amended. As obligations of a political subdivision of the Commonwealth of Virginia, the Series 2016 Bonds will also be exempt from registration under the securities laws of Virginia. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representation should not be relied upon as having been authorized by the Authority or the County. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of the Series 2016 Bonds by any person in any state in which it is unlawful for such person to make such offer, solicitation or sale. All quotations from and summaries and explanations of provisions of law and documents herein do not purport to be complete, and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinion and not as representations of fact. This Official Statement speaks as of its date except where specifically noted otherwise and is subject to change without notice. Neither the delivery of this Official Statement, any sale made hereunder, nor any filing of this Official Statement shall under any circumstances create an implication that there has been no change in the affairs of the County or the Authority since the date of this Official Statement or imply that any information herein is accurate or complete as of any later date. Certain persons participating in this offering may engage in transactions that stabilize, maintain or otherwise affect the price of the Series 2016 Bonds, including transactions to (a) overallot in arranging the sales of the Series 2016 Bonds and (b) make purchases and sales of the Series 2016 Bonds, for long or short account, on a when-issued basis or otherwise, at such prices, in such amounts and in such manner as the underwriter may determine. (i)

4 TABLE OF CONTENTS Page SECTION ONE: INTRODUCTION...1 The Issuer...1 The Series 2016 Bonds...1 Redemption...2 Delivery...2 Ratings...2 Financial Advisor...2 Continuing Disclosure...3 Additional Information...3 SECTION TWO: THE SERIES 2016 BONDS...3 THE AUTHORITY...3 THE SERIES 2016 BONDS...3 General...3 Redemption...4 Notice of Redemption...4 Effect of Redemption...4 Series 2016 Project...5 Estimated Sources and Uses of Funds...5 Estimated Debt Service Requirements...5 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2016 BONDS...6 Security for the Series 2016 Bonds...6 Financing Agreement...6 Financing Lease...7 Assignment Agreement...7 No Series Debt Service Reserve Account Established for the Series 2016 Bonds...8 Bond Fund...8 Project Fund...8 Additional Bonds...8 SECTION THREE: MISCELLANEOUS...9 JAMES CITY COUNTY...9 BONDHOLDERS RISKS...9 RATINGS...11 BONDS ELIGIBLE FOR INVESTMENT AND SECURITY FOR PUBLIC DEPOSITS...11 LITIGATION...11 LEGAL MATTERS...11 TAX EXEMPTION...12 Opinion of Bond Counsel...12 Original Issue Discount...12 Original Issue Premium...12 Other Tax Matters...13 FINANCIAL ADVISOR...13 SALE AT COMPETITIVE BIDDING...13 CONTINUING DISCLOSURE...14 MISCELLANEOUS...14 Appendix A - Definitions of Certain Terms Appendix B - Summary of the Financing Documents Appendix C - Information Regarding James City County, Virginia Appendix D - Audited Financial Statements of the County for the Fiscal Year Ended June 30, 2015 Appendix E - Form of Bond Counsel Opinion Appendix F - Form of Continuing Disclosure Agreement Appendix G - Book-Entry Only System (ii)

5 OFFICIAL STATEMENT $26,750,000 ECONOMIC DEVELOPMENT AUTHORITY OF JAMES CITY COUNTY, VIRGINIA PUBLIC FACILITY REVENUE BONDS (JAMES CITY COUNTY SCHOOL PROJECT) SERIES 2016 SECTION ONE: INTRODUCTION The purpose of this Official Statement, which includes the cover page and appendices hereto, is to provide information in connection with the issuance by the Economic Development Authority of James City County, Virginia (the Authority ), a political subdivision of the Commonwealth of Virginia (the Commonwealth ), of its $26,750,000 Public Facility Revenue Bonds (James City County School Project), Series 2016 (the Series 2016 Bonds ). The following introductory material is qualified in its entirety by the detailed information and financial statements appearing elsewhere in this Official Statement, reference to which is hereby made for all purposes. Certain capitalized terms used in this Official Statement are defined in Appendix A - Definitions of Certain Terms. The Issuer The issuer of the Series 2016 Bonds is the Economic Development Authority of James City County, Virginia, a political subdivision of the Commonwealth of Virginia. The Series 2016 Bonds The proceeds of the Series 2016 Bonds will be used to finance (a) the Series 2016 Project (as defined herein) and (b) the costs of issuing the Series 2016 Bonds. The Series 2016 Bonds will consist of $26,750,000 Public Facility Revenue Bonds (James City County School Project), Series 2016, dated the date of issuance and maturing on June 15 in the years and in the amounts set forth on the inside cover of this Official Statement. Interest on the Series 2016 Bonds will be payable on each June 15 and December 15, beginning December 15, 2016, until the earlier of maturity or redemption, at the rates set forth on the inside cover of this Official Statement. The Series 2016 Bonds will be issued in accordance with the Industrial Development and Revenue Bond Act, Chapter 49, Title 15.2, Code of Virginia of 1950, as amended (the Act ), and pursuant to an Agreement of Trust dated as of June 1, 2016 (the Master Trust Agreement ), as supplemented by a First Supplemental Agreement of Trust dated as of June 1, 2016 (the First Supplemental Trust Agreement and, together with the Master Trust Agreement, the Trust Agreement ), both between the Authority and Wilmington Trust, National Association, as trustee (the Trustee ). Pursuant to the terms of the Trust Agreement, the Authority has determined to issue from time to time revenue bonds or notes and use the proceeds thereof to finance certain authority facilities (as defined in the Act), as requested by James City County, Virginia (the County ). The Authority and the County have entered into a Financing Agreement dated as of June 1, 2016 (the Financing Agreement ), pursuant to which the County has requested the Authority to finance the Series 2016 Project with the proceeds of the Series 2016 Bonds, and the County has agreed, subject to appropriation by the Board of Supervisors of the County (the County Board ), to support such requests by paying to or on behalf of the Authority amounts sufficient to pay the principal of and premium, if any, and interest due on the Series 2016 Bonds (the Basic Payments ) and other amounts due under the Financing Agreement (the Additional Payments ). As additional security for the Series 2016, the County and the Williamsburg-James City County School Board (the School Board ), will lease the Toano Middle School property (the Property ), to the Authority pursuant to the terms of a Deed and Agreement of Ground Lease dated as of June 1, 2016 (the Ground Lease ). The Property does not include the projects being financed with proceeds of the Series 2016 Bonds. The Authority will lease back to the County and the School Board the Property pursuant to the terms of a Deed and Agreement of

6 Financing Lease dated as of June 1, 2016 (the Financing Lease ), under which the County has agreed to undertake, subject to appropriation by the County Board, to make payments of basic rent (the Basic Rent ) and certain other payments ( Additional Rent ). To the extent that the County pays in full all Basic Payments and Additional Payments when due under the terms of the Financing Agreement, the amount of such payments will be credited in full against the Basic Rent and Additional Rent due from the County under the Financing Lease. Pursuant to an Assignment Agreement dated as of June 1, 2016 (the Assignment Agreement ), the Authority will assign to the Trustee for the benefit of the holders of the Series 2016 Bonds certain of its rights under the Financing Lease, including (a) its rights to receive Basic Payments and Basic Rent, (b) its rights, if any, to receive proceeds of insurance on the Property, (c) its rights to reenter and take possession of the Property upon an event of nonappropriation or default by the County and to sell or lease its leasehold interest in the Property and (d) its rights to exercise other remedies upon a default by the County. The Series 2016 Bonds, the premium, if any, and the interest thereon will be limited obligations of the Authority payable solely from the revenues and receipts derived by the Authority under the Financing Agreement and the Financing Lease, which revenues and receipts have been pledged and assigned to secure payment thereof, and from certain funds established under the Trust Agreement. The Series 2016 Bonds, the premium, if any, and the interest thereon shall not be deemed to constitute a debt or a pledge of the faith and credit of the Commonwealth or any political subdivision thereof, including the Authority and the County. Neither the Commonwealth nor any political subdivision thereof, including the Authority and the County, shall be obligated to pay the principal of or premium, if any, or interest on the Series 2016 Bonds or other costs incident thereto except from the revenues and receipts pledged and assigned therefor, and neither the faith and credit nor the taxing power of the Commonwealth or any political subdivision thereof, including the Authority and the County, is pledged to the payment of the principal of or premium, if any, or interest on the Series 2016 Bonds or other costs incident thereto. A more complete description of the Trust Agreement, the Financing Agreement, the Ground Lease, the Financing Lease and the Assignment Agreement is provided in Appendix B - Summary of the Financing Documents. Redemption The Series 2016 Bonds are subject to optional, mandatory and extraordinary redemption as set forth in THE SERIES 2016 BONDS - Redemption in Section Two. Delivery The Series 2016 Bonds are offered for delivery when, as and if issued, subject to the approval of validity by Hunton & Williams LLP, Richmond, Virginia, Bond Counsel, and to certain other exceptions referred to herein. Certain legal matters will be passed upon for the County and the Authority by the County Attorney. Ratings The Series 2016 Bonds have been rated as shown on the cover page thereto by Fitch Ratings, One State Street Plaza, New York, New York 10004, Moody s Investors Service, 99 Church Street, New York, New York 10007, and Standard & Poor s Public Finance Ratings, 55 Water Street, New York, New York A more complete description of each rating is provided in the section RATINGS in Section Three. Financial Advisor Davenport & Company LLC, Richmond, Virginia, is employed as Financial Advisor to the County in connection with the issuance of the Series 2016 Bonds. The Financial Advisor s fee for services rendered with respect to the sale of the Series 2016 Bonds is contingent upon the issuance and delivery of the Series 2016 Bonds. 2

7 Continuing Disclosure For purposes of Rule 15c2-12 (the Rule ) promulgated by the Securities and Exchange Commission ( SEC ), the County is an obligated person with respect to the Series 2016 Bonds. The County has agreed to execute a Continuing Disclosure Agreement at closing to assist the underwriter in complying with the provisions of the Rule as in effect on the date hereof, by providing annual financial information and material event notices required by the Rule. See CONTINUING DISCLOSURE in Section Three. Additional Information Any questions concerning the content of this Official Statement should be directed to 101-D Mounts Bay Road, P.O. Box 8784, Williamsburg, Virginia (Telephone No ), or the County s Financial Advisor, Davenport & Company LLC ( ). SECTION TWO: THE SERIES 2016 BONDS THE AUTHORITY The Authority is a political subdivision of the Commonwealth of Virginia created pursuant to the Act. The Act empowers the Authority to acquire, construct, lease, remodel, renovate and equip any public building or other facility used for public purposes. The County Board has requested the Authority to undertake the Series 2016 Project. The Authority is not obligated to pay the principal of or premium, if any, or interest on the Series 2016 Bonds or other costs incident thereto except from amounts received therefor under the Financing Agreement and the Financing Lease. The Authority has no taxing power. General THE SERIES 2016 BONDS The Series 2016 Bonds will be dated the date of issuance, will bear interest from their date, payable semiannually on each June 15 and December 15, beginning December 15, 2016, at the rates, and will mature on June 15 in the years and amounts as set forth on the inside cover of this Official Statement. If such interest payment date is not a Business Day, such payment will be made on the next succeeding Business Day with the same effect as if made on the interest payment date and no additional interest will accrue. Interest on the Series 2016 Bonds will be payable by check or draft mailed to the registered owner at his address as it appears on the registration books kept by the Trustee as of the June 1 and December 1 preceding each respective payment date. The Series 2016 Bonds will be issued as fully registered bonds, in denominations of $5,000 or integral multiples thereof, initially in book-entry form only in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). Individual purchases of beneficial ownership in the Series 2016 Bonds will be made in principal amounts of $5,000 and multiples of $5,000. Individual purchasers of beneficial ownership in the Series 2016 Bonds (the Beneficial Owners ) will not receive physical delivery of bond certificates. Transfer of the Series 2016 Bonds and payment of principal of and premium, if any, and interest on the Series 2016 Bonds will be effected as described below in this section. If the book-entry system is discontinued, bond certificates will be delivered as described in the Trust Agreement, and Beneficial Owners will become registered owners of the Series 2016 Bonds. Registered owners of the Series 2016 Bonds, whether Cede & Co. or, if the book-entry system is discontinued, the Beneficial Owners, will be defined in this Official Statement as the Bondholders. So long as Cede & Co. is the sole Bondholder, as nominee for DTC, reference in this Official Statement to Bondholders means Cede & Co. and does not mean the Beneficial Owners. See Appendix G - Book-Entry Only System. The Series 2016 Bonds will be limited obligations of the Authority as described more fully in the section SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2016 BONDS. 3

8 Redemption Optional Redemption. The Series 2016 Bonds maturing on and before June 15, 2026, will not be subject to redemption prior to maturity. The Series 2016 Bonds maturing on and after June 15, 2027, will be subject to redemption prior to maturity, at the option of the Authority upon the direction of the County, on or after June 15, 2026, in whole or in part (in $5,000 integrals) at any time, upon payment of 100% of the principal amount to be redeemed, plus interest accrued to the date fixed for redemption. Mandatory Sinking Fund Redemption. The Series 2016 Bonds maturing on June 15, 2035, are required to be redeemed prior to maturity in part upon payment of 100% of the principal amount thereof plus interest accrued to the redemption date on June 15 in years and amounts, as follows: * Final maturity. Year Amount Year Amount 2034 $1,675, * $1,725,000 Extraordinary Redemption. The Series 2016 Bonds are subject to redemption, in whole or in part at any time, at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to, but not including, the redemption date, on the earliest date for which notice of redemption can be given at the direction of the County, to the extent the County and the School Board elect to apply Net Proceeds to the prepayment of all or any portion of the Basic Payments due under the Financing Agreement, after damage or destruction to or condemnation of the Property. In the event of a partial extraordinary optional redemption, the Trustee, at the direction of the County, may redeem the Series 2016 Bonds (a) from each maturity then outstanding, to the extent practicable, in the proportion that the principal amount of Series 2016 Bonds of such maturity bears to the total principal amount of all Series 2016 Bonds then outstanding or (b) in inverse order of maturity, and the Trustee shall redeem in accordance with such instructions. Notice of Redemption Notice of redemption will be given by the Trustee by facsimile transmission, registered or certified mail or overnight express delivery not less than 30 nor more than 60 days before the redemption date to DTC, or, if DTC is no longer serving as securities depository for the Series 2016 Bonds, to the substitute securities depository, or, if none, to the respective registered owner of each Series 2016 Bond to be redeemed at the address shown on the registration books maintained by the Trustee. This notice of redemption will also be given to certain securities depositories and certain national information services which disseminate redemption notices. During the period that DTC or its nominee is the registered owner of the Series 2016 Bonds, the Trustee will not be responsible for mailing notices of redemption to the Beneficial Owners. At the direction of the County, the Trustee may give a notice of redemption prior to a deposit of redemption moneys if such notice states that the redemption is to be funded with the proceeds of a refunding bond issue and is conditioned on the deposit of such proceeds. Provided that moneys are deposited on or before the redemption date, such notice will be effective when given. If such proceeds are not available on the redemption date, such Series 2016 Bonds will continue to bear interest until paid at the same rate they would have borne had they not been called for redemption and principal will continue to be payable as scheduled. On presentation and surrender of the Series 2016 Bonds called for redemption at the place or places of payment, such Series 2016 Bonds will be paid and redeemed. Effect of Redemption On the date on which any Series 2016 Bonds have been called for redemption and sufficient funds for their payment on the redemption date are held by the Trustee, interest on such Series 2016 Bonds will cease to accrue and their registered owners will be entitled to receive payment only from the Trustee from funds available for that purpose. 4

9 Series 2016 Project The County expects to use a portion of Series 2016 Bond proceeds to finance the costs of certain capital improvements for public school facilities, including (but not limited to) the construction, renovation, rehabilitation and equipping of a middle school (collectively, the Series 2016 Project ). On March 8, 2016, the County Board adopted a resolution approving the issuance of the Series 2016 Bonds to finance the Series 2016 Project and expressing its intent to appropriate sufficient funds for such purposes and to recommend to future County Boards to do likewise. Estimated Sources and Uses of Funds The proceeds received from the sale of the Series 2016 Bonds are expected to be applied as follows: Sources of Funds Principal Amount of Bonds $26,750, Plus Net Original Issue Premium 1,941, Uses of Funds Total Sources $28,691, Deposit to Project Fund $28,229, Costs of Issuance (including underwriter s discount) 462, Total Uses $28,691, Estimated Debt Service Requirements The following table shows for each fiscal year amounts required for payment of principal (either at maturity or upon mandatory redemption) of and interest on the Series 2016 Bonds. Fiscal Year Principal Interest Debt Service 6/30/2017 $ 915, $ 914, $ 1,829, /30/ , , ,830, /30/2019 1,000, , ,826, /30/2020 1,035, , ,831, /30/2021 1,065, , ,830, /30/2022 1,115, , ,827, /30/2023 1,170, , ,826, /30/2024 1,205, , ,826, /30/2025 1,270, , ,830, /30/2026 1,330, , ,827, /30/2027 1,400, , ,830, /30/2028 1,425, , ,827, /30/2029 1,455, , ,829, /30/2030 1,485, , ,826, /30/2031 1,530, , ,827, /30/2032 1,575, , ,826, /30/2033 1,625, , ,829, /30/2034 1,675, , ,830, /30/2035 1,725, , ,830, /30/2036 1,775, , ,828, $26,750, $9,822, $36,572,

10 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2016 BONDS The following is a summary of the sources of security and sources of payment for the Series 2016 Bonds. The references to the Series 2016 Bonds, the Financing Agreement, the Financing Lease, the Assignment Agreement and the Project Fund are qualified in their entirety by reference to such documents and the provisions relating to the Project Fund contained in the Trust Agreement. Security for the Series 2016 Bonds The Series 2016 Bonds will be equally and ratably secured by (1) Basic Payments and Basic Rent, which will be assigned by the Authority to the Trustee and will be applied to the payment of principal of, premium, if any, and interest on the Series 2016 Bonds as set forth in the Trust Agreement, without preference, priority or distinction of any Bond over any other Bond, and (2) certain funds established under the Trust Agreement and the investment income therefrom. The Series 2016 Bonds are equally and ratably secured under the Trust Agreement with any Additional Bonds that may hereafter be issued under the Trust Agreement; provided that any lease agreement or financing lease relating to a particular Series of Bonds will secure only such Bonds (unless otherwise provided in a Supplemental Trust Agreement), moneys in any account or subaccount of the Bond Fund relating to a particular Series of Bonds will secure only such Bonds, moneys in any account or subaccount of the Project Fund relating to a particular Series of Bonds will secure only such Bonds, and moneys in any account or subaccount of the Debt Service Reserve Fund relating to a particular Series of Bonds will secure only such Bonds (and may also secure any Additional Bonds issued to refund prior Bonds). The Authority and the County have agreed that, with respect to the Ground Lease and the Financing Lease, such documents may be amended to secure Additional Bonds (in addition to the Series 2016 Bonds) if prior to the issuance of such Additional Bonds, the Trustee receives confirmation that the rating on the Series 2016 Bonds will not be withdrawn, suspended or reduced as a result of such documents being amended to secure such Additional Bonds as well as the Series 2016 Bonds. The Series 2016 Bonds, the premium, if any, and the interest thereon will be limited obligations of the Authority payable solely from the revenues and receipts derived by the Authority under the Financing Agreement and the Financing Lease, which revenues and receipts have been pledged and assigned to secure payment thereof, and from certain funds established under the Trust Agreement and the investment income therefrom. The undertaking by the County to make payments under the Financing Agreement and the Financing Lease is subject to appropriation by the County Board. The County Board has no legal obligation to make any such appropriations. See the section BONDHOLDERS RISKS in Section Three. The Series 2016 Bonds, the premium, if any, and the interest thereon will not be deemed to constitute a debt or a pledge of the faith and credit of the Commonwealth or any political subdivision thereof, including the Authority and the County. Neither the Commonwealth nor any political subdivision thereof, including the Authority and the County, will be obligated to pay the principal of or premium, if any, or interest on the Series 2016 Bonds or other costs incident thereto except from the revenues and receipts pledged and assigned therefor, and neither the faith and credit nor the taxing power of the Commonwealth or any political subdivision thereof, including the Authority and the County, is pledged to the payment of the principal of or premium, if any, or interest on the Series 2016 Bonds or other costs incident thereto. The Authority has no taxing power. Financing Agreement The Authority is issuing the Series 2016 Bonds for the purpose of providing funds to finance the costs of the Series 2016 Project and to pay the costs of issuance of the Series 2016 Bonds. The Financing Agreement provides for the County to make payments on behalf of the Authority that will be sufficient to pay the principal of and premium, if any, and interest on the Bonds (currently consisting of only the Series 2016 Bonds) as the same shall become due in accordance with their terms and provisions and the terms of the Trust Agreement. The undertaking by the County to make payments under the Financing Agreement will constitute a current expense of the County, subject to appropriation by the County Board from time to time of sufficient funds for such purpose. The County will not be liable for any such payments due under the Financing Agreement unless and until funds have been appropriated by the County Board for payment and then only to the extent of such appropriation. 6

11 The Financing Agreement provides for the County to pay to the Trustee, as assignee of the Authority, Basic Payments in amounts calculated to be sufficient to pay principal of and interest when due on the Series 2016 Bonds and any Additional Bonds issued under the Trust Agreement. Basic Payments will be due at least 14 calendar days prior to the respective principal or interest payment date on the Series 2016 Bonds and Additional Bonds. The Financing Agreement also provides for the County to pay certain Additional Payments, including any redemption premium that may be payable on the Series 2016 Bonds and any Additional Bonds. Other provisions of the Financing Agreement are summarized in Appendix B - Summary of the Financing Documents. The undertaking by the County to make payments under the Financing Agreement constitutes neither a debt of the County within the meaning of any constitutional or statutory limitation nor a liability of or a lien or charge upon funds or property of the County beyond any Fiscal Year for which the County has appropriated moneys to make such payments. Neither the Trustee nor the Authority shall have any obligation or liability to the Bondholders with respect to the County s obligations to make payments under the Financing Agreement or with respect to the performance by the County of any other covenant contained therein. Financing Lease In connection with the leasing of the Property (which does not include the projects being financed with the proceeds of the Series 2016 Bonds), the Financing Lease will serve as additional security for the Series 2016 Bonds. The Financing Lease provides for the County to make payments of Basic Rent and Additional Rent on behalf of the Authority that will be sufficient to pay the principal of and premium, if any, and interest on the Series 2016 Bonds as the same shall become due in accordance with their terms and the provisions of the Trust Agreement. However, the County will receive a credit in full against all payments of Basic Rent and Additional Rent due under the Financing Lease to the extent the County makes all of the Basic Payments and Additional Payments due under the Financing Agreement. The undertaking by the County to make any payments under the Financing Lease will constitute a current expense of the County, subject to appropriation by the County Board from time to time of sufficient funds for such purpose. The County will not be liable for any such payments due under the Financing Lease unless and until funds have been appropriated by the County Board for payment and then only to the extent of such appropriation. The Financing Lease provides for the County to pay to the Trustee, as assignee of the Authority, Basic Rent in amounts calculated to be sufficient to pay principal of and interest when due on the Series 2016 Bonds and any Additional Bonds secured by such Financing Lease. Basic Rent will be due at least 14 calendar days prior to the respective principal or interest payment date on the Series 2016 Bonds and Additional Bonds. The Financing Lease also provides for the County to pay certain Additional Rent, including any redemption premium that may be payable on the Series 2016 Bonds and any Additional Bonds secured by such Financing Lease. However, no payments are expected to be due under the Financing Lease so long as no event of default or event of non-appropriation has occurred under the Financing Agreement. Other provisions of the Financing Lease are summarized in Appendix B - Summary of the Financing Documents. The undertaking by the County to make any payments under the Financing Lease does not constitute a debt of the County within the meaning of any constitutional or statutory limitation nor a liability of or a lien or charge upon funds or property of the County beyond any fiscal year for which the County has appropriated moneys to make such payments. Neither the Trustee nor the Authority shall have any obligation or liability to the Bondholders with respect to the County s undertaking to make payments under the Financing Lease or with respect to the performance by the County of any other covenant contained therein. Assignment Agreement In the Assignment Agreement, the Authority assigns all of its rights under the Ground Lease and the Financing Lease (except for the right to receive payment of its fees and expenses, to receive indemnification and to 7

12 receive notices) to the Trustee for the benefit of the Series 2016 Bondholders, including (a) its rights to receive Basic Rent and certain Additional Rent, (b) its rights, if any, to receive proceeds of insurance on the Property, (c) its rights under the Financing Lease to reenter and take possession of the Property in the event of failure by the County to make a payment of Basic Rent and sell or lease its interest in the Property and (d) its rights to exercise other remedies upon default by the County. No Series Debt Service Reserve Account Established for the Series 2016 Bonds The Trust Agreement provides for the establishment of a Debt Service Reserve Fund to be held by the Trustee and, if funded, a separate Series Debt Service Reserve Account for a particular Series of Bonds. No Series Debt Service Reserve Account will be established for the Series 2016 Bonds. Bond Fund Under the Trust Agreement, the Authority pledges to the Trustee all right, title and interest to the Financing Agreement, including the Basic Payments and Additional Payments made by the County, but excluding certain rights to receive payment of the Authority s fees and expenses and to receive notices thereunder. Such payments under the Financing Agreement, along with funds on deposit in the Bond Fund, are pledged to the payment of principal of and premium, if any, and interest on the Bonds. The Trust Agreement provides that the Trustee will deposit in the Bond Fund all Basic Payments and Basic Rent received by the Trustee from the County under the Financing Agreement and the Financing Lease, together with any amounts transferred from the Series 2016 Project Account. From the amounts received by the Trustee from the County, the Trustee will deposit in the subaccount in the Interest Account an amount equal to the interest due and payable on the next interest payment date for the Series 2016 Bonds and will deposit in the subaccount established for the Series 2016 Bonds in the Principal Account an amount equal to the principal due and payable on the next principal payment date for the Series 2016 Bonds. If a redemption premium is payable on the Series 2016 Bonds, the Trustee will deposit in the subaccount in the Premium Account of the Bond Fund that portion of an Additional Payment or Additional Rent representing the amount of the redemption premium due. For additional information concerning the Bond Fund, see Appendix B - Summary of the Financing Documents THE TRUST AGREEMENT. Project Fund The Trust Agreement establishes within the Project Fund a Series 2016 Project Account into which the Trustee will deposit a portion of the proceeds of the Series 2016 Bonds. The Trustee will use money in the Series 2016 Project Account solely (a) to finance the Series 2016 Project and (b) to pay costs of issuing the Series 2016 Bonds. The Trustee will make payments from the Series 2016 Project Account upon receipt of requisitions signed on behalf of the County providing required information with respect to the use of the amounts being requisitioned. For additional information concerning the Project Fund, see Appendix B - Summary of the Financing Documents THE TRUST AGREEMENT. Additional Bonds The Authority may issue from time to time Additional Bonds secured on an equal and ratable basis with the Series 2016 Bonds (a) to finance or refinance the Cost of a Project, (b) to refund any Bonds previously issued or (c) for a combination of such purposes. Any such Additional Bonds will be issued under a Supplemental Trust Agreement and an amendment to the Financing Agreement providing for modification of the amount of Basic Payments to provide for a new amount of Basic Payments sufficient to pay principal of and interest on all Bonds then Outstanding under the Trust Agreement. The Authority and the County have agreed that, with respect to the Ground Lease and the Financing Lease, such documents may be amended to secure, in addition to the Series 2016 Bonds, one or more Series of Additional Bonds, if, prior to the issuance of such Additional Bonds, the Trustee receives written evidence from each Rating Agency then rating the Series 2016 Bonds to the effect that the rating on the Series 2016 Bonds will not be 8

13 withdrawn, suspended or reduced as a result of such documents being amended to secure such Additional Bonds as well as the Series 2016 Bonds. SECTION THREE: MISCELLANEOUS JAMES CITY COUNTY Appendix C contains financial and demographic information concerning the County. The County s audited financial statements for the Fiscal Year ended June 30, 2015, are contained in Appendix D. The County s outside auditor has not been engaged to perform, and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. The County s outside auditor has not performed any procedures relating to this Official Statement. BONDHOLDERS RISKS The purchase of the Series 2016 Bonds involves a degree of risk; therefore, prospective purchasers of the Series 2016 Bonds should review this Official Statement in its entirety in order to identify risk factors and make an informed investment decision. A number of factors, including those set forth below, may affect the County s ability or willingness to make timely payments sufficient for the Trustee to pay debt service on the Series 2016 Bonds: (1) Source of Payments. The Series 2016 Bonds are not general obligations of the Authority or the County but are payable only from revenues received by the Trustee on behalf of the Authority from payments made by the County under the Financing Agreement or the Financing Lease and other moneys held by the Trustee and pledged to the payment of the Series 2016 Bonds. The ability of the Authority to make timely payments of principal and premium, if any, and interest on the Series 2016 Bonds depends solely on the ability of the County to make timely payments under the Financing Agreement or the Financing Lease. The undertaking by the County to make payments under the Financing Agreement or the Financing Lease is subject to and dependent upon amounts being lawfully appropriated from time to time by the County Board for such purpose. The undertaking by the County to make payments under the Financing Agreement or the Financing Lease is not a debt of the County within the meaning of any constitutional or statutory limitation nor a pledge of the faith and credit or the taxing power of the County. The County Board is not legally obligated to appropriate the funds necessary to meet the County s financial obligation under the Financing Agreement or the Financing Lease. (2) Non-Appropriation and Limited Remedies. The County Administrator or other officer charged with the responsibility for preparing the County s annual budget is required to include in the proposed County budget for each Fiscal Year as a single appropriation the amount of all Basic Payments and estimated Additional Payments coming due during such Fiscal Year. Throughout the term of the Financing Agreement, the County Administrator or other officer charged with the responsibility for preparing the County s annual budget is required to deliver to the Trustee and the Authority within 10 days after its adoption, but not later than 10 days after the beginning of each Fiscal Year, a copy of the County s adopted Annual Budget that includes an approval of funds sufficient to pay or be credited to the Basic Payments and estimated Additional Payments coming due for the relevant Fiscal Year. If any adopted annual budget does not include an appropriation of funds sufficient to pay both Basic Payments and estimated Additional Payments coming due for the relevant Fiscal Year, the County Administrator will request the County Board to take a roll call vote immediately after adoption of such annual budget acknowledging the impact of its failure to appropriate such funds. If, by 15 days after the beginning of the Fiscal Year, the County Board has not appropriated funds for the payment of both Basic Payments and estimated Additional Payments coming due for the then current Fiscal Year, the County Administrator or other officer charged with the responsibility for preparing the County s annual budget is required to give written notice to the County Board of the consequences of such failure to appropriate and to request the County Board to consider a supplemental appropriation for such purposes. Comparable notice and appropriation provisions are included in the Financing Lease. In the event of non-appropriation of funds by the County Board, neither the County nor the Authority may be held liable for the principal of and premium, if any, and interest payments on the Series 2016 Bonds following the last Fiscal Year in which funds to make payment under the Financing Agreement or the Financing Lease were appropriated by the County Board. In the event of non-appropriation, moneys already on deposit in the Bond Fund 9

14 will be used for the payment of principal of and premium, if any, and interest payments on the Series 2016 Bonds but these moneys may not be sufficient to pay the Series 2016 Bonds in full. Upon an Event of Default under the Trust Agreement, the Trustee has no right to accelerate the payment of the Series 2016 Bonds by declaring the entire principal of and interest on the Series 2016 Bonds to be due and payable. Similarly, upon an Event of Default under the Financing Agreement and the Financing Lease, the Authority has no right to accelerate the payment of Basic Payments by declaring the Basic Payments to be due and payable. (3) Political Risk. The current County Board has evidenced in its resolution adopted in connection with the Series 2016 Bonds a present intent to make future appropriations of such funds as may be necessary to make payments due under the Financing Agreement and the Financing Lease as and when such payments become due. There can be no guarantee, however, that the County Board will retain its current constituency in the future, and there can be no guarantee that a future County Board will retain the current County Board s policy with respect to the Series 2016 Bonds. (4) Limitation on Enforceability of Remedies. The realization of any rights upon a default will depend upon the exercise of various remedies specified in the Trust Agreement, the Financing Agreement and the Financing Lease. Any attempt by the Trustee to enforce such remedies may require judicial action, which is often subject to discretion and delay. Under existing law, certain of the legal and equitable remedies specified in the Trust Agreement and the Financing Agreement may not be readily available or may not be enforced to the extent such remedy may contravene public policy. The Trustee s rights under the Financing Lease to exercise remedies upon an event of default or an event of non-appropriation will be limited to the Property and will not include any of the Series 2016 Project. (5) Project Cost Overruns. As a result of any change orders with respect to design and material costs of the Series 2016 Project, the total expenditures actually incurred by the County may be in excess of the amount of available Series 2016 Bond proceeds. Any such additional costs of acquiring, constructing and equipping the Series 2016 Project are not expected to materially impact the County s ability to complete the Series 2016 Project. (6) Taxation of Interest on the Series 2016 Bonds. The opinion of Bond Counsel as described in the section Tax Exemption will state that, under the conditions set forth therein, interest on the Series 2016 Bonds is excluded from gross income for federal income tax purposes. However, in the event of non-appropriation or default by the County under the Financing Agreement or the Financing Lease, if the Trustee exercises its remedy to sell or lease its interest in the Property, interest paid on the Series 2016 Bonds from payments made from such sale or lease may not be excludable from gross income for Federal income tax purposes. (7) Title to Property. The School Board has not secured a Leasehold Mortgagee Title Insurance Policy on behalf of the Authority or the Trustee with respect to the Property in connection with the issuance of the Series 2016 Bonds. Accordingly, there can be no assurance that the School Board has unencumbered, fee simple title to the real estate upon which the Property is located or that mechanics, materialmen s or other liens have not been filed against the Property by creditors of the School Board, or that construction contractors or subcontractors, materials providers or other workmen involved with the acquisition, construction and equipping of the Series 2016 Project will not file mechanics liens against the Series 2016 Project or the Property in the future. Such liens may have a detrimental impact on the Trustee s ability to re-lease or otherwise realize upon its interest in the Property. Such a delay may detrimentally impact the Trustee s ability to make payments of principal of and interest on the Series 2016 Bonds as and when such amounts come due. (8) Environmental Concerns. The County and the School Board are not aware of any significant environmental concerns with respect to the Property; however, underground contamination or other adverse environmental conditions may exist that could impose an unforeseen expense and/or liability on the Property, the County, the School Board and the Authority, adversely affecting the ability or willingness of the County to make payments of Basic Rent or Additional Rent under the Financing Lease and/or the ability of the Trustee to realize sufficient value from the collateral serving as security for the Series 2016 Bonds in the event of non-appropriation by the County or termination of the Financing Lease. 10

15 RATINGS Fitch Ratings ( Fitch ), One State Street Plaza, New York, New York 10004, has assigned a rating of AA+ to the Series 2016 Bonds; Moody s Investors Service ( Moody s ), 7 World Trade Center, 250 Greenwich Street, New York, New York, has assigned a rating of Aa1 to the Series 2016 Bonds; and Standard & Poor s Ratings Services, a division of the McGraw-Hill Companies, Inc. ( Standard & Poor s ), 55 Water Street, New York, New York, has assigned a rating of AA+ to the Series 2016 Bonds. Such ratings reflect only the respective views of such organizations. There is no assurance that the ratings will continue for any given period of time or that such ratings will not be revised, suspended or withdrawn if, in the judgment of Fitch, Moody s or Standard & Poor s, circumstances so warrant. A revision, suspension or withdrawal of a rating may have an adverse effect on the market price of the Series 2016 Bonds. Due to the ongoing uncertainty regarding the economy of the United States of America, including, without limitation, matters such as the future political uncertainty regarding the United States debt limit, obligations issued by state and local governments, such as the Series 2016 Bonds, could be subject to rating downgrades. Additionally, if a significant default or other financial crisis should occur in the affairs of the United States or of any of its agencies or political subdivisions, then such event could also adversely affect the market for, and ratings, liquidity and market value of outstanding debt obligations, including the Series 2016 Bonds. BONDS ELIGIBLE FOR INVESTMENT AND SECURITY FOR PUBLIC DEPOSITS The Act provides that bonds issued pursuant thereto shall be legal and authorized investments for banks, savings banks, trust companies, building and loan associations, insurance companies, fiduciaries, trustees and guardians and for all public funds of the Commonwealth or other political corporations or subdivisions of the Commonwealth. No representation is made as to the eligibility of the Series 2016 Bonds for investment or any other purchase under any law of any other state. The Act also provides that bonds, such as the Series 2016 Bonds, issued pursuant thereto may properly and legally be deposited with and received by any state or municipal officer or any agency or political subdivision of the Commonwealth for any purpose for which the deposit of bonds or obligations of the Commonwealth is now or may hereafter be authorized by law. LITIGATION To the best information, knowledge and belief of the Authority and the County, there is no litigation of any kind now pending or threatened to restrain or enjoin the issuance or delivery of the Series 2016 Bonds, in any manner questioning the proceedings and authority under which the Series 2016 Bonds are being issued, or affecting the power and authority of the Authority, the County or the County Board to execute or perform their obligations under the Financing Agreement, the Financing Lease or the Trust Agreement or to make payments due under the Financing Agreement or the Financing Lease. In addition, to the best information, knowledge and belief of the County, there is no litigation presently pending or threatened against the County that, in the event of an unfavorable decision, would have a material adverse effect upon the financial condition of the County. LEGAL MATTERS Certain legal matters relating to the authorization and validity of the Series 2016 Bonds will be subject to the approving opinion of Hunton & Williams LLP, Richmond, Virginia, Bond Counsel, which will be furnished at the expense of the County upon delivery of the Series 2016 Bonds, in substantially the form set forth as Appendix E (the Bond Opinion ). The Bond Opinion will be limited to matters relating to the authorization and validity of the Series 2016 Bonds and to the tax-exempt status of interest thereon as described in the section TAX EXEMPTION. The Bond Opinion will make no statement as to the financial resources of the County or the Authority or their ability to provide for payment of the Series 2016 Bonds or as to the accuracy or completeness of this Official Statement or any other information that may have been relied on by anyone in making the decision to purchase Bonds. Certain legal matters will be passed upon for the Authority and the County by the County Attorney. 11

16 TAX EXEMPTION Opinion of Bond Counsel In the opinion of Bond Counsel, under current law, interest, including accrued original issue discount ( OID ), on the Series 2016 Bonds, (a) will not be included in gross income for federal income tax purposes, (b) will not be an item of tax preference for purposes of the federal alternative minimum income tax imposed on individuals and corporations; however, with respect to corporations (as defined for federal income tax purposes) subject to the federal alternative minimum income tax, such interest is taken into account in determining adjusted current earnings for purposes of computing such tax, and (c) will be exempt from income taxation by the Commonwealth of Virginia. Except as discussed below regarding OID, no other opinion will be expressed by Bond Counsel regarding the tax consequences of the ownership of or the receipt or accrual of interest on the Series 2016 Bonds. Further, no opinion will be expressed by Bond Counsel as to the treatment for federal income tax purposes of any interest paid on the Series 2016 Bonds in the event of non-appropriation or default by the County. Bond Counsel s opinion will be given in reliance upon certifications by representatives of the Authority and the County as to certain facts relevant to both the opinion and requirements of the Internal Revenue Code of 1986, as amended (the Code ), and is subject to the condition that there is compliance subsequent to the issuance of the Series 2016 Bonds with all requirements of the Code that must be satisfied in order for interest thereon to remain excludable from gross income for federal income tax purposes. The Authority and the County have covenanted to comply with the current provisions of the Code regarding, among other matters, the use, expenditure and investment of the proceeds of the Series 2016 Bonds and the timely payment to the United States of any arbitrage rebate amounts with respect to the Series 2016 Bonds. Failure by the County or the Authority to comply with such covenants, among other things, could cause interest, including accrued OID, on the Series 2016 Bonds to be included in gross income for federal income tax purposes retroactively to their date of issue. Customary practice in the giving of legal opinions includes not detailing in the opinion all of the assumptions, limitations and exclusions that are a part of the conclusions therein. See Statement on the Role of Customary Practice in the Preparation and Understanding of Third-Party Legal Opinions, 63 Bus. Law (2008), and Legal Opinion Principles, 53 Bus. Law. 831 (May 1998). Purchasers of the Series 2016 Bonds should seek advice or counsel concerning such matters as they deem prudent in connection with their purchase of Series 2016 Bonds. Original Issue Discount The initial public offering prices of the Series 2016 Bonds maturing in the years 2028, 2029 and 2036 (the OID Bonds ) will be less than their stated principal amount. In the opinion of Bond Counsel, under current law, the difference between the stated principal amount and the initial offering price of the OID Bonds to the public (excluding bond houses and brokers) at which a substantial amount of such Series 2016 Bonds is sold will constitute OID. The offering prices set forth on the inside cover of this Official Statement for the OID Bonds are expected to be the initial offering prices to the public at which a substantial amount of such Series 2016 Bonds are sold. Under the Code, for purposes of determining a Bondholder s adjusted basis in an OID Bond, OID treated as having accrued while the Bondholder holds the Series 2016 Bond will be added to the Bondholder s basis. OID will accrue on a constant yield-to-maturity method. The adjusted basis will be used to determine taxable gain or loss upon the sale or other disposition (including redemption or payment at maturity) of an OID Bond. Prospective purchasers of OID Bonds should consult their own tax advisors as to the calculation of accrued OID and the state and local tax consequences of owning or disposing of OID Bonds. Original Issue Premium Series 2016 Bonds purchased, whether upon issuance or otherwise, for an amount (excluding any amount attributable to accrued interest) in excess of their principal amount will be treated for federal income tax purposes as having amortizable bond premium. A holder s basis in such a Bond must be reduced by the amount of premium 12

17 which accrues while such Bond is held by the holder. No deduction for such amount will be allowed, but it generally will offset interest on the Series 2016 Bonds while so held. Purchasers of such Bonds should consult their own tax advisors as to the calculation, accrual and treatment of amortizable bond premium and the state and local tax consequences of holding such Bonds. Other Tax Matters In addition to the matters addressed above, prospective purchasers of the Series 2016 Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including without limitation financial institutions, property and casualty insurance companies, S corporations, foreign corporations subject to the branch profits tax, recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Series 2016 Bonds should consult their tax advisors as to the applicability and impact of such consequences. Prospective purchasers of the Series 2016 Bonds should consult their own tax advisors with respect to the status of interest on the Series 2016 Bonds under the tax laws of any state other than Virginia. The Internal Revenue Service (the Service ) has a program to audit state and local government obligations to determine whether the interest thereon is includable in gross income for federal income tax purposes. If the Service does audit the Series 2016 Bonds, under current Service procedures, the Service will treat the Authority as the taxpayer and the owners of the Series 2016 Bonds will have only limited rights, if any, to participate. Bond Counsel s opinion represents its legal judgment based on part upon the representations and covenants referenced therein and its review of current law, but is not a guarantee of result or binding on the Service or the courts. Bond Counsel assumes no duty to update or supplement its opinion to reflect any facts or circumstances that may come to Bond Counsel s attention after the date of its opinion or to reflect any changes in law or the interpretation thereof that may occur or become effective after such date. There are many events that could affect the value and liquidity or marketability of the Series 2016 Bonds after their issuance, including but not limited to public knowledge of an audit of the Series 2016 Bonds by the Service, a general change in interest rates for comparable securities, a change in federal or state income tax rates, federal or state legislative or regulatory proposals affecting state and local government securities and changes in judicial interpretation of existing law. In addition, certain tax considerations relevant to owners of Series 2016 Bonds who purchase Series 2016 Bonds after their issuance may be different from those relevant to purchasers upon issuance. Neither the opinion of Bond Counsel nor this Official Statement purports to address the likelihood or effect of any such potential events or such other tax considerations and purchasers of the Series 2016 Bonds should seek advice concerning such matters as they deem prudent in connection with their purchase of Series 2016 Bonds. FINANCIAL ADVISOR Davenport & Company LLC, Richmond, Virginia, serves as financial advisor to the County and has no underwriting responsibility to the Authority or the County with respect to this transaction. As financial advisor, Davenport & Company LLC has advised the County in matters relating to the planning, structuring and issuance of the Series 2016 Bonds, assisted the County with the preparation of this Official Statement and provided to the County other advice with respect to the issuance and sale of the Series 2016 Bonds. The financial advisor s fee will be paid from proceeds of the Series 2016 Bonds. Although the Financial Advisor has assisted in the preparation of the Official Statement, the Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. SALE AT COMPETITIVE BIDDING After competitive bidding on May 4, 2016, the Series 2016 Bonds were awarded to Piper Jaffray (the Underwriter ). The Underwriter has supplied the information as to the offering prices and yields on the Bonds set forth on the inside cover page hereof. If all of the Series 2016 Bonds are resold to the public at such public offering 13

18 prices and yields, the Underwriter has informed the Authority that it anticipates total underwriting compensation of $217, ( % of the principal amount). The Underwriter may change the public offering prices or yields from time to time. CONTINUING DISCLOSURE To permit compliance by the underwriter with the continuing disclosure requirements of the Rule, the County will execute a Continuing Disclosure Agreement (the CDA ) at closing agreeing to provide certain annual financial information and material event notices required by the Rule. Such information will be filed through the Electronic Municipal Market Access System maintained by the Municipal Securities Rulemaking Board and may be accessed through the Internet at emma.mrsb.org. As described in Appendix F, the CDA requires the County to provide only limited information at specific times, and the information provided may not be all the information necessary to value the Series 2016 Bonds at any particular time. The County may from time to time disclose certain information and data in addition to that required by the CDA. If the County chooses to provide any additional information, the County will have no obligation to continue to update such information or to include it in any future disclosure filing. Other than as disclosed in the following paragraph, the County has never failed to comply in all material respects with any previous continuing disclosure undertakings under the Rule. Failure by the County to comply with the CDA is not an event of default under the Series 2016 Bonds or the Bond Resolution. The sole remedy for a default under the CDA is to bring an action for specific performance of the County s covenants hereunder, and no assurance can be provided as to the outcome of any such proceeding. In each of the previous five fiscal years, the County has complied in all material respects with its previous continuing disclosure undertakings under the Rule. MISCELLANEOUS Any statements in this Official Statement involving matters of opinion or estimates, whether or not expressly so stated, are intended as such and not representations of fact. No representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the holder of the Series 2016 Bonds. The attached Appendices are an integral part of this Official Statement and must be read together with the balance of this Official Statement. The execution of this Official Statement has been duly authorized by the Authority and the County. The Authority has deemed this Official Statement final as of its date within the meaning of the Rule. ECONOMIC DEVELOPMENT AUTHORITY OF JAMES CITY COUNTY, VIRGINIA By /s/ Marshall N. Warner Chairman Approved: JAMES CITY COUNTY, VIRGINIA By /s/ Bryan Hill County Administrator 14

19 APPENDIX A DEFINITIONS OF CERTAIN TERMS

20 7KLVSDJHLQWHQWLRQDOO\OHIWEODQN1

21 DEFINITIONS OF CERTAIN TERMS Account means any of the various Accounts created within a Fund under the Trust Agreement. Additional Bonds means any Bonds issued pursuant to the Trust Agreement and secured on an equal and ratable basis with the Series 2016 Bonds and any other Outstanding Bonds. Additional Payments means payments made by the County pursuant to the Financing Agreement other than Basic Payments. Additional Rent means (a) reasonable fees for services rendered and for expenses reasonably incurred by the Trustee, including the reasonable fees of its attorneys, under the Trust Agreement with respect to the Series 2016 Bonds and any additional Series secured by the Financing Lease, (b) any fees or charges for the arbitrage rebate calculations, (c) any amounts necessary to make, when due, any required arbitrage rebate payment with respect to the Series 2016 Bonds and any additional Series secured by the Financing Lease, (d) with respect to any Series secured by the Financing Lease, any amounts necessary to restore the balance in any related Series Debt Service Reserve Account to the respective Series Debt Service Reserve Requirement, (d) the reasonable fees and expenses of the Trustee and all other amounts which the County assumes or agrees to pay, including any cost or expense necessary to cancel and discharge the Trust Agreement upon payment of the Series 2016 Bonds and any additional Series secured by the Financing Lease, (f) reasonable costs and expenses directly related to the Property, the Series 2016 Bonds or any additional Series secured by the Financing Lease, (g) reasonable costs and expenses, including premiums, for any credit facility provider, (h) a reasonable share of the fees and expenses of the Authority, including the reasonable fees of its counsel and the cost of any audit of the funds of the Authority, (i) any expenses incurred by the Authority in connection with its obligations to preserve the tax-exempt status of the interest on the Series 2016 Bonds, and (j) all other amounts which the County agrees to pay under the terms of the Financing Lease, but not including Basic Rent. Authorized Authority Representative means any officer of the Authority. Authorized County Representative means the County Administrator and such other person or persons as may be designated to act on behalf of the County by a certificate executed by the County Administrator and on file with the Trustee. Basic Payments means the payments payable by the County under the Financing Agreement which payments are calculated to correspond in amount to the payments of principal and interest due on the Bonds. Basic Rent means the payments payable by the County under the Financing Lease, which payments are calculated to correspond in amount to the payments of principal and interest due on the Series 2016 Bonds and any additional Series secured by the Financing Lease. Bond or Bonds means, collectively, the Series 2016 Bonds and any additional bonds, notes or other obligations, including any notes or other obligations issued in anticipation of bonds, notes, or other obligations as the same shall be issued from time to time pursuant to the Master Trust Agreement. Bond Counsel means an attorney or a firm of attorneys nationally recognized on the subject of municipal bonds and reasonably acceptable to the Trustee. Bond Fund means the Bond Fund established in the Master Trust Agreement. Bond Payment Date means the date on which any payment of principal of (whether at maturity or pursuant to mandatory sinking fund redemption) or interest on any Bond is due. Business Day means a day on which banking business is transacted, but not including Saturday, Sunday or legal holiday, or any day which banking institutions are authorized by law to close in the city in which the Trustee has its designated corporate trust office. Code means the Internal Revenue Code of 1986, as amended, including applicable regulations, rulings and revenue procedures promulgated or applicable thereunder. A-1

22 Fiscal Year means the twelve-month period beginning on July 1 of one year end and ending on June 30 of the following year, or such other twelve-month period as the County may select as its fiscal year. Government Certificates means certificates representing proportionate ownership of Government Obligations, which Government Obligations are held by a bank or trust company organized under the laws of the United States of America or any of its states in the capacity of custodian of such certificates. Government Obligations means (a) bonds, notes and other direct obligations of the United States of America, (b) securities unconditionally guaranteed as to the timely payment of principal, if applicable, and interest by the United States of America or (c) bonds, notes and other obligations issued or guaranteed as to the timely payment of principal and interest by the Rural Utilities Service (certificates of beneficial ownership), Federal Housing Administration (debentures), General Services Administration (participation certificates), U.S. Maritime Administration (guaranteed Title XI financing), U.S. Department of Housing and Urban Development (project notes and local authority bonds), provided such obligations are backed by the full faith and credit of the United States of America. Stripped securities are permitted only if stripped by the agency itself. Government Obligations may be held directly by the Trustee or in the form of securities of any open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940, provided that the portfolio of such investment company or investment trust is limited to Government Obligations. Interest Account means the Interest Account in the Bond Fund established in the Master Trust Agreement. Net Proceeds means the gross proceeds from any insurance recovery, or condemnation, eminent domain or loss of title award in connection with the Property less payments for attorneys fees, fees and expenses of the Trustee and other expenses incurred in the collection of such gross proceeds. Opinion of Counsel means an opinion of any attorney or firm of attorneys, who may be counsel for the Authority, the County or the Trustee but who shall not be a full-time employee of the Authority, the County or the Trustee. Outstanding means, when used as descriptive of Bonds, that such Bonds have been authorized, issued, authenticated and delivered under the Master Trust Agreement and have not been canceled or surrendered to the Trustee for cancellation, deemed to have been paid as provided in Master Trust Agreement, have had other Bonds issued in exchange therefor or had their principal become due and moneys sufficient for their payment deposited with the Trustee as provided in the Master Trust Agreement. In determining whether holders of a requisite aggregate principal amount of the Outstanding Bonds have concurred in any request, demand, authorization, direction, notice, consent or waiver under the Master Trust Agreement, words referring to or connoting principal of or principal amount of Outstanding Bonds shall be deemed also to be references to, to connote and to include the accreted value of Bonds of any Series as of the immediately preceding interest compounding date for such Bonds. Bonds that are owned by the County shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Permitted Encumbrances means, as of any particular time as to the Property, (a) liens for taxes and special assessments not then delinquent, (b) liens for taxes and assessments which are delinquent but the validity of which is being contested in good faith and with respect to which the County shall have set aside adequate reserves, unless thereby any of the Property or the interest of the County therein may be in danger of being lost or forfeited, (c) the Ground Lease and any security interests or other liens created thereby, (d) the Financing Lease and any security interests or other liens created thereby, (e) mechanics and materialmen s liens incident to construction or maintenance now or hereafter filed of record which are being contested in good faith and have not proceeded to judgment, provided that the County shall have set aside adequate reserves with respect thereto, (f) restrictions, mineral rights, easements, rights of way, exceptions or reservations for the purpose of utilities (including but not limited to water and gas pipelines, sanitary and storm sewers, telephone lines, telegraph lines, power lines, substations and other facilities and equipment used in connection with such utilities), roads, streets, alleys, highways, railroads, dikes, canals, laterals, ditches, and other like purposes, or for the joint or common use of real property, in each case which do not materially impair the use of the Property for the purposes for which it is or may reasonably be expected to be held, (g) such defects, irregularities, encumbrances, easements, rights of way and A-2

23 clouds on title as normally exist with respect to property owned or leased by the County for essential governmental purposes and similar in character to the Property and as will not, in the opinion of the County Attorney, impair the use of the Property affected thereby for the purpose for which it is or may reasonably be expected to be held by the County, and (h) present or future zoning laws and ordinances. Premium Account means the Premium Account in the Bond Fund established in the Master Trust Agreement. Principal Account means the Principal Account in the Bond Fund established in the Master Trust Agreement. Project or Projects means, individually or collectively, the Series 2016 Project (described earlier in the Official Statement) and any other project undertaken by the Authority, with the County s consent, from time to time and identified in a Supplemental Financing Agreement, including without limitation, the financing or refinancing of the acquisition, construction, improvement or equipping of infrastructure, public facilities and other improvements and facilities permitted to be undertaken pursuant to the provisions of the Act, including any extensions, additions, replacements, equipment and appurtenances to or for the benefit of such public facilities. Project Fund means the Project Fund established in the Master Trust Agreement. Property means the real property and any and all improvements now or hereafter existing thereon (but exclusive of any equipment, furnishings or other personal property located in or on the Property), as further described in the Ground Lease. Reserve Determination Date means (a) each interest payment date for the Bonds or (b) any other date established in writing by an Authorized County Representative for the valuation of obligations on deposit in a Series Debt Service Reserve Account. Series or Series of Bonds means a separate series of Bonds issued under the Master Trust Agreement and a Supplemental Trust Agreement. The Series 2016 Bonds is the first Series of Bonds issued under the Master Trust Agreement. Series Debt Service Reserve Account means any of the Series Debt Service Reserve Accounts in the Debt Service Reserve Fund established in the Master Trust Agreement. No Series Debt Service Reserve Account will be established for the Series 2016 Bonds. Series Debt Service Reserve Requirement for any Series of Bonds shall have the meaning set forth in the Supplemental Trust Agreement authorizing such Series of Bonds. There is no Series Debt Service Reserve Requirement for the Series 2016 Bonds. Supplemental Trust Agreement means any Supplemental Trust Agreement supplementing, amending or modifying the provisions of the Master Trust Agreement entered into by the Authority and the Trustee pursuant to the provisions of the Master Trust Agreement, including, but not limited to, the First Supplemental Trust Agreement. Supplemental Financing Agreement means any Supplemental Financing Agreement supplementing, amending or modifying the provisions of the Financing Agreement entered into by the Authority and the County pursuant to the provisions of the Master Trust Agreement. Term Bonds means any Bonds stated to mature on a specified date and required to be redeemed in part prior to maturity according to a sinking fund schedule. Virginia Code means the Code of Virginia of 1950, as amended. A-3

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25 APPENDIX B SUMMARY OF THE FINANCING DOCUMENTS

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27 SUMMARY OF THE FINANCING DOCUMENTS Brief summaries of the Trust Agreement, the Financing Agreement, the Ground Lease, the Financing Lease and the Assignment Agreement are included in this Appendix. The summaries do not purport to be comprehensive or definitive and are qualified by references to such documents in their entirety. All capitalized terms used in this summary have the meaning set forth in the Official Statement and in Appendix A, unless otherwise indicated. THE TRUST AGREEMENT Establishment of Funds and Accounts. The following funds and accounts are established and utilized under the Trust Agreement: (1) Project Fund, in which there is established the Series 2016 Project Account; (2) Bond Fund, in which there are established a separate Interest Account, Principal Account and Premium Account and a separate subaccount in each such Account with respect to each Series of Bonds; and (3) Debt Service Reserve Fund, in which there may be established a Series Debt Service Reserve Account for a particular Series. No such Series Account will be established for the Series 2016 Bonds. The Trust Agreement provides that separate Accounts and subaccounts will be established for each Series of Bonds issued under the Trust Agreement. Series 2016 Project Account. The Trustee will use money in the Series 2016 Project Account to finance the Series 2016 Project and to pay the costs of issuance of the Series 2016 Bonds. The Trustee will make payments from the Series 2016 Project Account upon receipt of requisitions signed on behalf of the County providing required information with respect to the use of the amounts being requisitioned. Any balance remaining in the Series 2016 Project Account after payment of the costs of issuance of the Series 2016 Bonds will be used to pay principal of and interest on the Series 2016 Bonds, to purchase Series 2016 Bonds in the open market and to pay all or any portion of the costs of the Series 2016 Project. Bond Fund. The Trustee will deposit in the Bond Fund installments of all Basic Payments received by the Trustee from the County, together with other amounts transferred from the Project Fund and the Debt Service Reserve Fund (if funded) pursuant to the Financing Agreement or the Trust Agreement, that portion of any Additional Payments received by the Trustee from the County representing the amount of any redemption premium that may be payable, and any other payments transferred to the Authority or its assignee as directed by the County. The Trustee will deposit each installment and amount (a) to the applicable subaccount established in the Interest Account an amount equal to the interest due and payable on the next Bond Payment Date for the applicable Series of Bonds and (b) to the applicable subaccount established in the Principal Account an amount equal to the principal due and payable on the next Bond Payment Date for the applicable Series of Bonds, whether at maturity or pursuant to mandatory sinking fund redemption. The Trustee will deposit to the applicable subaccount established in the Premium Account any moneys received from the County to pay any premium due in connection with redeeming such Bonds pursuant to any optional redemption exercised by the Authority, at the direction of the County. The Trustee will withdraw from the respective subaccounts within the Interest Account on each Bond Payment Date, amounts equal to the amounts of interest due with respect to the Bonds on such Bond Payment Date, and will cause the same to be applied to the payment of interest due on such Bond Payment Date. The Trustee will withdraw from the respective subaccounts within the Principal Account on each Bond Payment Date, amounts equal to the amounts of principal due with respect to the Bonds on such Bond Payment Date, and will cause the same to be applied to the payment of principal due on such Bond Payment Date. The Trustee will withdraw from the respective subaccounts within the Premium Account on each Bond Payment Date, amounts equal to the amounts of any premium due with respect to the Bonds on such Bond Payment Date, and will cause the same to be applied to the payment of any premium due on such Bond Payment Date. B-1

28 In the event there are insufficient moneys in the Interest Account or the Principal Account on any Bond Payment Date to pay interest and principal due on such Bond Payment Date, the Trustee will transfer any excess amounts on deposit in the Interest Account or the Principal Account, as applicable, to the other Account in which there are insufficient moneys, being mindful of the provisos in the section Parity of Bonds below. The Trustee will pay from the Bond Fund when due the principal of and premium, if any, and interest on the Bonds then Outstanding and will redeem or purchase Bonds in accordance with the redemption provisions of the Bonds and the Trust Agreement. The Trustee will provide for redemption of any Term Bonds from amounts upon deposit in the Bond Fund in accordance with the schedules set forth in the Supplemental Agreement of Trust for such Bonds; provided, however, that on or before the 70th day next preceding any such sinking fund payment date, the Authority may: (x) deliver to the Trustee for cancellation Term Bonds required to be redeemed on such sinking fund payment date in any aggregate principal amount desired; or (y) instruct the Trustee to apply a credit against the Authority s next sinking fund redemption obligation for any such Term Bonds that previously have been redeemed (other than through the operation of the sinking fund) and canceled but not theretofore applied as a credit against any sinking fund redemption obligation. Upon the occurrence of any of the events described in subsections (x) or (y) above, the Trustee shall credit against the Authority s sinking fund redemption obligation on the next sinking fund payment date the amount of such Term Bonds so delivered or previously redeemed. Any principal amount of such Term Bonds in excess of the principal amount required to be redeemed on such sinking fund payment date shall be similarly credited in such order as may be determined by the Authority against future payments to the Principal Account and shall similarly reduce the principal amount of the Term Bonds of the applicable Series to be redeemed on the applicable sinking fund payment date. Debt Service Reserve Fund. The Master Trust Agreement provides for the establishment of a Debt Service Reserve Fund and, if funded, a separate Series Debt Service Reserve Account for particular Series of Bonds. No Series Debt Service Reserve Account will be established for the Series 2016 Bonds. Pledge of Payments and Funds. All payments received by the Trustee under the Trust Agreement (except certain payments to the Trustee for its fees and expenses) and all money in the Project Fund, the Bond Fund and the Debt Service Reserve Fund (if funded) are pledged to the payment of the principal of and interest on the Bonds, subject only to the right of the Authority to apply them to other purposes as provided in the Trust Agreement. The lien and trust created by the Trust Agreement is for the equal and ratable benefit of the holders of the Bonds and any Additional Bonds that may be issued under the Trust Agreement; provided that moneys in any account or subaccount of the Bond Fund relating to a particular Series of Bonds shall secure only such Bonds, moneys in any account or subaccount of the Project Fund relating to a particular Series of Bonds shall secure only such Bonds, and moneys in any account or subaccount of the Debt Service Reserve Fund relating to a particular Series of Bonds shall secure only such Bonds (unless otherwise provided in a Supplemental Trust Agreement). Parity of Bonds. Each Series of Bonds will be issued pursuant to a Supplemental Trust Agreement and will be equally and ratably secured under the Trust Agreement, without preference, priority or distinction; provided, that, any lease agreement or financing lease relating to a particular Series of Bonds shall secure only such Bonds (unless otherwise provided in a Supplemental Trust Agreement), the moneys in an account of the Bond Fund, the Project Fund or the Debt Service Reserve Fund will secure only the applicable Series of Bonds to which such account relates, and, as to the Debt Service Reserve Fund, may also secure any additional Series of Bonds issued to refund the original Series of Bonds if and as provided in the respective Supplemental Agreement of Trust; and provided further, that any Series of Bonds may have other security pledged to its payment. In connection with the issuance of each Series of Bonds, the Trustee may create additional accounts and subaccounts within any fund or account established by the Master Trust Agreement. Investments; Valuation. Any money held under the Trust Agreement may be invested, as directed in writing by an Authorized County Representative, in obligations or securities that are permitted for the investment of public funds under the Investment of Public Funds Act (Chapter 45, Title 2.2 of the Virginia Code), the Government B-2

29 Non-Arbitrage Investment Act (Chapter 47, Title 2.2 of the Virginia Code), or any successor provision of law applicable to such investments. Any investments will be held by or under the control of the Trustee and while so held will be deemed a part of the fund in which such money was originally held. The earnings accruing on such investments, including any profit realized, will be credited to such funds, except as otherwise provided in the Trust Agreement, and any loss resulting from such investments will be charged to such funds. The Trustee will sell and reduce to cash a sufficient amount of such investments whenever the cash balance in any fund is insufficient for its purposes. In computing the amount in any Fund or Account created by this Agreement, except for the Debt Service Reserve Fund, obligations purchased as an investment of moneys therein will be valued at cost or fair market value thereof, whichever is lower, plus accrued interest. Investments in the Debt Service Reserve Fund (if funded) will be valued at least semiannually at the fair market value thereof, plus accrued interest. Such valuations for each such Fund or Account, other than the Debt Service Reserve Fund, will be made by the party holding each such Fund or Account at least annually not later than the end of each Fiscal Year and at such other times as an Authorized County Representative may direct. Events of Default and Remedies. Each of the following is an Event of Default under the Trust Agreement: (1) default in the payment of interest on any Bond when due, (2) default in the payment of principal of or premium, if any, of any Bond when due, (3) default in the observance or performance of any other covenant, condition or agreement on the part of the Authority under the Trust Agreement or the Bonds, subject to certain rights of the Authority to notice and an opportunity to cure, and (4) any event of default under the Financing Agreement. Remedies; Rights of Bondholders. Upon the occurrence and continuation of an Event of Default, the Trustee may (and, if requested by the holders of not less than 25% in aggregate principal amount of Bonds Outstanding and if indemnified in accordance with prevailing industry standards, will) proceed to protect and enforce the rights of the holders of the Bonds by mandamus or other suit, action or proceeding at law or in equity, including an action for specific performance of any covenant or agreement contained in the Trust Agreement; provided, that the Trustee will have no right or authority to declare the entire unpaid principal of and interest on the Bonds due and payable. All remedies under the Trust Agreement are cumulative. Other than the remedies described above, no holder of any Bond will have any right to institute any action, suit or proceeding at law or in equity for the enforcement of the Trust Agreement, the execution of any of its trusts or any other remedy under it, unless (1) an Event of Default (as defined in the Trust Agreement) has occurred and is continuing and the Trustee has notice of it; (2) the holders of 25% in aggregate principal amount of Bonds then Outstanding have made written request to the Trustee and offered it reasonable opportunity either to proceed to exercise the powers granted by the Trust Agreement or to institute such action, suit or proceeding in its own name; (3) the Trustee has been indemnified as provided by the Trust Agreement; (4) the Trustee has failed or refused within a reasonable time to comply with such request; (5) no direction inconsistent with such request has been given to the Trustee by the holders of a majority in principal amount of Outstanding Bonds; and (6) notice of such action, suit or proceeding is given to the Trustee. Notwithstanding any other provision to the contrary, the holders of a majority in aggregate principal amount of Bonds Outstanding, upon compliance with the Trust Agreement s requirements as to indemnification of the Trustee, will have the right to direct all proceedings to be taken by the Trustee. Subject to limitations set forth in the Trust Agreement, the Trustee may in its discretion, waive any Event of Default under the Trust Agreement or any action taken pursuant to such Event of Default and will do so on the request of the holders of a majority in aggregate principal amount of Bonds then Outstanding. However, no waiver will extend to any subsequent or other default or impair any right resulting from it. Discharge of Trust Agreement. A Bond will be deemed no longer Outstanding when any such Bond has been cancelled or surrendered for cancellation or purchased by the Authority from moneys in the Bond Fund or as to any Bond not so cancelled or purchased when (i) payment of the principal and the applicable premium, plus interest to the due date thereof shall have been made or caused to be made in accordance with the terms thereof, or (ii)(a) payment of the principal and applicable premium, plus interest on such Bond to the due date thereof shall have been provided by irrevocably depositing with the Trustee (1) moneys sufficient to make such payment, (2) noncallable B-3

30 Government Obligations maturing as to principal and interest in such amount and at such times as will ensure the availability of sufficient moneys to make such payment, or (3) a combination of both such moneys and noncallable Government Obligations and (B) payment of all necessary and proper fees, costs and expenses of the Trustee shall have been made. Notwithstanding the foregoing, the Bonds which are to be redeemed before their maturity will be deemed paid and no longer Outstanding only if such Bonds have been irrevocably called or designated for redemption. Supplemental Agreements of Trust. Any provision of the Trust Agreement may be modified or altered by the Authority and the Trustee, by a Supplemental Trust Agreement, upon consent of the holders of a majority in aggregate principal amount of Bonds Outstanding; provided, that certain amendments relating to the payment of the Bonds may be made only with the consent of all holders of the applicable Bonds. In addition, the Authority and the Trustee may enter into supplemental agreements of trust without the consent of holders of the Bonds (1) to cure any ambiguity, formal defect or omission in the Trust Agreement; (2) to grant to or confer upon the Bondholders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred on the Bondholders; (3) to modify, amend or supplement the Trust Agreement in such manner as required to permit its qualification under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect or any state securities (Blue Sky) law; (4) to add to the covenants and agreements of the Authority in the Trust Agreement other covenants and agreements to be observed by the Authority; (5) to modify the Trust Agreement as required to permit the Authority to comply with the provisions of the Code relating to the rebate requirement with respect to investment of proceeds of the Bonds, provided that such modification does not materially adversely affect the holders of all Bonds then Outstanding; (6) to modify the Trust Agreement in such manner as may be required to maintain any rating on any Bonds, provided that such amendment does not, in the opinion of the Trustee, materially adversely affect the holders of all Bonds then Outstanding; (7) to authorize the issuance of and secure one or more Series of Bonds; and (8) to modify the Trust Agreement in any manner that the Trustee concludes is not materially adverse to holders of all Bonds then Outstanding. The Authority and the Trustee may enter into certain other supplemental agreements of trust upon receiving the consent of certain percentages of holders of the Bonds. If such a Supplemental Trust Agreement will affect only one Series of Bonds, it may be necessary to seek only the consent of the holders of a majority in aggregate principal amount of that Series of Bonds. THE FINANCING AGREEMENT Agreement to Issue Series 2016 Bonds. In the Financing Agreement, the Authority agrees to issue the Series 2016 Bonds and loan the proceeds thereof to the County. The County agrees to make all Basic Payments and Additional Payments when and as the same shall become due and payable, subject to appropriation by the County Board. Series 2016 Bonds. In order to provide funds for the Series 2016 Project, the Authority will agree to issue the Series 2016 Bonds bearing interest, maturing and having the other terms and provisions set forth in the First Supplemental Trust Agreement. Payments Under Financing Agreement; Subject to Appropriation. Under the Financing Agreement the County has undertaken to pay to the Authority, or its assignee, the Basic Payments set forth in the Financing Agreement. The Basic Payments are calculated to be due in such amounts and at such times as will be sufficient to pay principal of and interest on the Bonds. The County will receive a credit against its obligation to make Basic Payments to the extent there are amounts on deposit in the Bond Fund; provided that such amounts have not been applied previously as a credit with respect to any Basic Payment. The County also has undertaken to make Additional Payments to cover any redemption premium that may be payable on the Bonds, the reasonable fees and expenses of the Trustee, and the expenses of the Authority. The undertaking by the County to make Basic Payments and Additional Payments is subject to appropriations being made from time to time by the County Board for such purposes. In the Financing Agreement, the County Board has directed the County Administrator or other officer charged with the responsibility for preparing the County s annual budget to include in the budget for each Fiscal Year as a single appropriation the amount of all Basic Payments and estimated Additional Payments during such Fiscal Year. B-4

31 The County has the option to prepay Basic Payments at the times and amounts as necessary to exercise its option to cause the Bonds to be redeemed before maturity. Any applicable redemption premium would be paid as an Additional Payment. Agreement to Issue Additional Bonds to Finance Additional Projects. In order to finance the costs of additional projects for the County, the Authority agrees that it will, from time to time, issue additional obligations under the Trust Agreement. Such additional projects will be financed solely from the proceeds of Bonds issued, at the request of the County, from time to time under the Trust Agreement. The obligation of the Authority to finance the costs of additional projects and to issue additional Series of Bonds will be conditioned upon compliance with the provisions of the Master Trust Agreement. Events of Default. Events of Default under the Financing Agreement include (1) default in the due and punctual payment of a Basic Payment or an Additional Payment made to correct a deficiency in a Series Debt Service Reserve Account when the same becomes due and payable and continuation of such failure for a period of five days, or (2) failure of the County to pay when due any other payment due under the Financing Agreement (including that portion of Additional Payments allocable to any premium on the Bonds but excluding other portions of Additional Payments), or to observe and perform any covenant, condition or agreement, which failure shall continue for a period of 30 days after notice is given, with certain rights to cure as described in the Financing Agreement. Notwithstanding the foregoing, failure to make any payment due or to perform any covenant under the Financing Agreement which results from a failure of the County Board to appropriate moneys for such purposes will not constitute an Event of Default. Remedies. If an Event of Default occurs, remedies available to the Authority are to take whatever action at law or in equity, other than to declare the entire unpaid principal balance of Basic Payments to be immediately due and payable, as may appear necessary or desirable to collect Basic Payments and Additional Payments then due or to become due, or to enforce performance and observance of any obligation, agreement or covenant of the County. An event of non-appropriation is not an Event of Default. See the section BONDHOLDERS RISKS -- Non- Appropriation and Limited Remedies. The Financing Agreement will be reinstated and any default waived upon certain conditions, including the payment of all arrears with respect to the Bonds. Amendments. The Financing Agreement may be supplemented, amended or modified prior to the payment of all Outstanding Bonds, only with the consent of the Trustee, given in accordance with the Master Trust Agreement. THE GROUND LEASE Term. The Ground Lease will commence on the date of its execution and will expire on June 15, 2041 (which is five years after the stated termination date of the Financing Lease), unless terminated earlier pursuant to the provisions of the Ground Lease in connection with a prepayment under the Financing Lease. Assignment and Sublease. The Authority may assign its rights under the Ground Lease or sublet the Property without the consent of the County and the School Board only (i) in connection with the assignment of its rights under the Financing Lease, or (ii) if the Financing Lease is terminated because either an Event of Default or an Event of Non-appropriation has occurred and is continuing. Termination. Upon the payment of all outstanding Basic Rent and Additional Rent or upon the expiration of the term of the Ground Lease, the leasehold estate of the Authority will be transferred, conveyed and assigned by the Authority to the County or the School Board, as appropriate, and will be terminated through merger of the leasehold interest with the interest of the County in the Property. The County will not have the right to exclude the Authority from the use of the Property or take possession of the Property (other than pursuant to the Financing Lease) or to terminate the Ground Lease prior to the expiration of its term upon any default by the Authority of its obligations under the Ground Lease, except that if, upon payment B-5

32 by the County of all amounts specified in the Financing Lease, the Authority fails to convey its leasehold estate under the Ground Lease to the County, then the County shall have the right to terminate the Ground Lease, such termination to be effective 30 days after giving notice of such termination to the Authority. However, in the event of a default by the Authority under the Ground Lease, the County may maintain an action for specific performance. THE FINANCING LEASE Term. The Financing Lease will commence on the date of its execution and, unless sooner terminated in accordance with the provisions hereof, will terminate at midnight on June 15, 2036; provided, however, that if all payments required by the Financing Lease have not been made on such date, the Lease Term will terminate when all such payments shall have been made. Payments under the Financing Lease; Subject to Appropriation. Under the Financing Lease, the County has undertaken to pay to the Authority, or its assignee, the Basic Rent set forth in the Financing Lease. The payments of Basic Rent are calculated to be due in such amounts and at such times as will be sufficient to pay principal of and interest on the Series 2016 Bonds and any additional Series secured by the Financing Lease. The County will receive a credit against its obligation to make payments of Basic Rent to the extent there are amounts on deposit in the Bond Fund; provided that such amounts have not been applied previously as a credit with respect to any Basic Rent. The County also has undertaken to make payments of Additional Rent to cover any redemption premium that may be payable on the Series 2016 Bonds, the reasonable fees and expenses of the Trustee, and the expenses of the Authority. Notwithstanding anything in the Financing Lease to the contrary, to the extent that the County pays in full each installment of Basic Payment and Additional Payment when due under the terms of the Financing Agreement, the amount of such payment shall be credited in full against the corresponding obligation of the County to pay any installment of Basic Rent and Additional Rent due under the Financing Lease. Payments of Basic Rent and Additional Rent by the County are subject to appropriations being made from time to time by the County Board for such purposes. In the Financing Lease, the County Board has directed the County Administrator or other officer charged with the responsibility for preparing the County s annual budget to include in the budget for each Fiscal Year as a single appropriation the amount of all Basic Rent and estimated Additional Rent payable during such Fiscal Year (taking into account without duplication appropriations made to pay Basic Payments and Additional Payments due under the Financing Agreement during the same Fiscal Year). The County has the option to prepay Basic Rent at the times and amounts as necessary to exercise its option to cause the Series 2016 Bonds to be redeemed before maturity. Any applicable redemption premium would be paid as Additional Rent. Prepayment of Basic Rent. To the extent that the County prepays any amounts due under the Financing Agreement with respect to the Series 2016 Bonds and any additional Series secured by the Financing Lease, the amount of such prepayments will also be credited against the corresponding amount of Basic Rent due under the Financing Lease. Insurance. The County will continuously maintain public liability, fire and extended coverage insurance against such risks as are customary for public bodies for facilities and equipment similar in size, function and character to the Property. The County may self-insure. Maintenance. The County will maintain, preserve and keep the Property in compliance with all legal requirements and in good repair and operating condition and from time to time make all necessary repairs, replacements and renewals. Net Lease. The Financing Lease will be deemed and construed to be a net lease and the County will pay Basic Rent and Additional Rent free of all deductions, diminutions and set-offs, and without abatement for casualty, loss of title, condemnation or any other reason whatsoever, except as otherwise expressly provided in the Financing Lease. B-6

33 Liens on Property. Except as provided in the Trust Agreement and the Financing Lease, the County will not create, incur or grant any mortgage, pledge, security interest, lien or encumbrance other than Permitted Encumbrances on or with respect to the Property and will not dispose of any interest in the Property unless it delivers to the Authority a certificate of the County, signed by the County Administrator, stating: (a) that the proceeds from the disposition will be (1) applied to the purchase of additional real property to become part of the Property or (2) deposited with the Trustee in the Bond Fund and applied to the payment or redemption of the Series 2016 Bonds and any additional Series secured by the Financing Lease; and (b) that the disposition, together with any substitution of additional real property becoming part of the Property, will not adversely affect the usefulness of the Property or any part of it or its intended purpose or deprive the County of any real property needed for access to or operation of the Property. Upon receipt of such certificate, so long as the County is not in default under the Financing Lease, the Authority will release from the Financing Lease and convey to the County that portion of the Property to be disposed of but only after any real property that is to be substituted for it has been conveyed to the Authority and been subjected to the Financing Lease. Installation of County s Own Furnishings and Equipment. The County may from time to time install furnishings and equipment at the Property, which such furnishings and equipment will remain the property of the County and may be modified or removed at any time while the County is not in default under the Financing Lease. Release and Transfer of Property. The Authority will transfer, convey and assign to the County its interest in the Property within 30 days after payment or prepayment in full by the County of all payments then due under the Financing Lease. The Authority will execute and deliver to the County or file such deeds and other instruments as may be reasonably necessary and proper to effect the transfer, conveyance, release and assignment. Any reasonable expenses incurred by the Authority in effecting such transfers, conveyances, releases and assignments will constitute Additional Rent. Tax Covenants. The County will not sublease the Property, or any portion thereof, or assign any of its rights under the Financing Lease, to any entity without an opinion of Bond Counsel that such sublease or other availability would not adversely affect the exclusion of interest on the Bonds from gross income for Federal income tax purposes. The County will send notice to the Trustee and the Authority of any sublease of the Property or any portion thereof within 30 days of entering into such sublease or assignment. Damage or Destruction. The County is required to notify the Trustee and the Authority immediately in the case of damage to or destruction from fire or other casualty of the Property or any portion thereof during the Lease Term in an amount that the County determines in good faith will cost more than $100,000 to repair, reconstruct and restore. If the County determines in good faith that such cost will not exceed $100,000, the County will retain the Net Proceeds received with respect to such damage or destruction and apply such Net Proceeds to the repair, reconstruction and restoration of such portion of the Property so damaged or destroyed to substantially the same condition as it had existed prior to the event causing such damage or destruction. If such Net Proceeds are not sufficient to pay in full the cost of such repair, reconstruction and restoration, the County will, subject to appropriation, pay so much thereof as is in excess of such Net Proceeds. If the Property or any portion thereof is damaged or destroyed by fire or other casualty during the Lease Term and the County determines in good faith that the cost of repairing, reconstructing and restoring the Project to the same condition as had existed prior to such damage or destruction, will exceed $100,000 then the County will, upon the following conditions and within 90 days after the date such damage or destruction occurs, pay all Net Proceeds to the Trustee and elect one of the following two options by giving notice of such election to the Trustee and the Authority, and the Trustee shall disburse such Net Proceeds in accordance with the option so elected: Option A - Repair, Reconstruction and Restoration. The County may elect to repair, reconstruct and restore the Property. The County will proceed to cause the Property to be repaired, reconstructed and restored to substantially the same condition as had existed prior to the event causing such damage or destruction, with such alterations and additions as the County may determine to be necessary or desirable and as will not impair the capacity or character of the Property for the purposes for which it had been or intended to be used prior to such damage or destruction. The County will direct the Trustee to apply so much as may be necessary of such Net Proceeds to payment of the cost of such repair, reconstruction and restoration, either on completion thereof or as the work progresses. If such Net Proceeds are not sufficient to pay in full the cost of such repair, reconstruction and B-7

34 restoration, the County will pay to the Trustee, subject to appropriation, within 90 days of receipt of such Net Proceeds, so much of the cost thereof as may be in excess of such Net Proceeds. The County will not be entitled by reason of the payment of such excess cost to any (A) interest in the Property that it did not possess prior to such payment, (B) reimbursement from the Authority or the Trustee, or (C) abatement or diminution of Basic Rent or Additional Rent. Option B - Prepayment of Basic Rent. The County may elect to have such Net Proceeds applied to the prepayment of all or any portion of the Basic Payments due under the Financing Agreement, plus interest accrued to the date of prepayment, to be used by the Trustee (upon receiving such Net Proceeds, to the extent and in the manner provided in the Trust Agreement and to the extent of such Net Proceeds) to redeem the Series 2016 Bonds and any additional Series secured by the Financing Lease. Condemnation and Loss of Title. In the case of a taking of all or any part of the Property or any right therein under the exercise of the power of eminent domain or any loss of all or any part of the Property because of loss of title thereto, or the commencement of any proceedings or negotiations which might result in such a taking or loss, the party upon whom notice of such taking is served or with whom such proceedings or negotiations are commenced or who learns of a loss of title shall give prompt notice to the other and to the Trustee. All obligations of the County under the Financing Lease (except obligations to pay Basic Rent when due) shall terminate as to the Property or portion thereof as to which there is a loss of title or which is condemned or taken when such loss of title is finally adjudicated or when title thereto vests in the party condemning or taking the same, as the case may be (hereinafter referred to as the termination date ). In the event of any such loss of title, condemnation or taking, the County will, upon the following conditions and within 90 days after the termination date therefor, shall pay all Net Proceeds to the Trustee and elect one of the following two options by giving notice of such election to the Trustee and the Authority: Option A - Repairs, Reconstruction and Restoration. The County may elect to have the Net Proceeds as to such loss of title, condemnation or taking used to repair, restore or reconstruct the portion of the Property as to which there has been a loss of title, condemnation or taking to substantially its condition prior to such loss of title, condemnation or taking. The County will direct the Trustee to apply so much as may be necessary of the Net Proceeds received by it on account of such loss of repair, reconstruction or restoration of the Property, either on completion thereof or as the work progresses. If such Net Proceeds are not sufficient to pay in full the cost of such repair, reconstruction or restoration, the County will pay to the Trustee, subject to appropriation, within 90 days of receipt of such Net Proceeds, so much of the cost thereof as may be in excess of such Net Proceeds. The County will not be entitled by reason of the payment of such excess cost to any (A) interest in the Property that it did not possess prior to such payment, (B) reimbursement from the Authority or the Trustee, or (C) abatement or diminution of the Basic Rent or Additional Rent. Option B - Prepayment of Basic Rent. The County may elect to have the Net Proceeds payable as to any such loss of title, condemnation or taking applied to the prepayment of all or any portion of the Basic Payments due under the Financing Agreement, plus interest accrued to the date of prepayment, to be used by the Trustee (upon receiving such Net Proceeds, to the extent and in the manner provided in the Trust Agreement and to the extent of such Net Proceeds) to redeem the Series 2016 Bonds and any additional Series secured by the Financing Lease. Events of Default. Events of Default under the Financing Lease include (1) default in the due and punctual payment of an installment of Basic Rent when the same becomes due and payable and continuation of such failure for a period of five days, or (2) failure of the County to pay when due any other payment due under the Financing Lease (including that portion of Additional Payments allocable to any premium on the Bonds but excluding other portions of Additional Payments), or to observe and perform any covenant, condition or agreement, which failure shall continue for a period of 30 days after notice is given, with certain rights to cure as described in the Financing Agreement. Notwithstanding the foregoing, failure to make any payment due or to perform any covenant under the Financing Lease which results from a failure of the County Board to appropriate moneys for such purposes will not constitute an Event of Default. Remedies. continuing: The following remedies shall apply if an Event of Default shall have happened and be B-8

35 (a) reenter and take possession of all or any portion of the Property, with or without terminating the Financing Lease, exclude the County from possession, and lease or sublease the County s leasehold estate in all or any portion of the Property for the account of the County, holding the County liable for all Basic Rent and Additional Rent due up to the effective date of such lease or sublease and for the difference between the rent and other amounts paid by the purchaser or lessee pursuant to such lease and the rents, interest due upon acceleration, and the Basic Rent and the Additional Rent and other amounts payable by the County under the Financing Lease; or (b) take whatever action at law or in equity may appear necessary or desirable to collect the Basic Rent and the Additional Rent then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the County under the Financing Lease. Non-Appropriation. ANYTHING TO THE CONTRARY NOTWITHSTANDING ELSEWHERE IN THE FINANCING LEASE, THE FAILURE OF THE COUNTY TO PAY WHEN DUE ANY PAYMENT REQUIRED UNDER THE FINANCING LEASE OR THE FAILURE TO OBSERVE AND PERFORM ANY COVENANT, CONDITION OR AGREEMENT RESULTING FROM THE FAILURE OF THE COUNTY TO APPROPRIATE MONEYS FOR SUCH PURPOSES ( EVENT OF NON- APPROPRIATION ), WILL NOT CONSTITUTE AN EVENT OF DEFAULT UNDER THE FINANCING LEASE. Upon termination of the Financing Lease pursuant to an Event of Non-Appropriation, the County will immediately surrender possession of the Property. In the event the County does not so deliver possession, the County will be liable, but only from legally available funds, for payment of a pro-rata portion of the Basic Rent payments and Additional Rent attributable to the number of days during which the County fails to so deliver possession. Upon such termination, the Authority may lease or sublease the County s leasehold estate in the Property in the manner provided in the Financing Lease. THE ASSIGNMENT AGREEMENT Under the Assignment Agreement, the Authority will assign to the Trustee, for the benefit of the owners of the Series 2016 Bonds, all of its rights under the Ground Lease and the Financing Lease (except for certain rights to indemnification, the payment of fees and to receive notices and give consents). The rights assigned to the Trustee include, without limitation, the right to receive Basic Rent from the County and the right to exercise remedies upon default or non-appropriation by the County. B-9

36 7KLVSDJHLQWHQWLRQDOO\OHIWEODQN1

37 APPENDIX C JAMES CITY COUNTY, VIRGINIA [The inclusion of this information does not imply that James City County, Virginia, is legally obligated to make payments on any Bonds outstanding under the Trust Agreement, including the Series 2016 Bonds.]

38 TABLE OF CONTENTS INTRODUCTION... C-1 Government Services and Facilities... C-1 Form and Organization of Government... C-1 Economic Development... C-2 ECONOMIC AND DEMOGRAPHIC FACTORS... C-2 Population... C-2 Income... C-3 Housing, Construction, and Financial Activity... C-3 Employment... C-5 Tourism... C-6 Health Care... C-7 Education... C-7 Colleges and Universities... C-8 Public Safety... C-9 Transportation... C-9 Water and Wastewater Services... C-9 FINANCIAL INFORMATION... C-10 Budgetary Process... C-10 Current Operating Budget... C-10 Five-Year Summary of Governmental Funds... C-11 Operating Data... C-13 Capital Improvements Program... C-16 Outstanding Bonded Debt and Debt Service... C-16 Other Indebtedness and Obligations... C-19 Retirement Systems... C-19 Post-Employment Benefits Other Than Pensions... C-20 Published Financial Information... C-20 Page

39 INTRODUCTION James City County, Virginia (the County ), is the site of Jamestown, which in 1607 became the first permanent English settlement in the New World. The United States Congress called Jamestown the birthplace of Virginia and American Government. The County is conveniently located between the major metropolitan areas of Richmond and Norfolk. Adjacent to the County is the City of Williamsburg, Virginia (the City ), home to historic Colonial Williamsburg and the College of William and Mary. During the 1970 s and 1980 s, tourism plus commercial and residential development expanded dramatically in the County and surrounding areas. Today, the County is home to approximately 73,325 residents and encompasses 147 square miles, the largest land area on the Virginia peninsula. Services provided by the County include a transit system, professional police service, fire and dispatch, parks and a recreation center, public-private health center, and social services that promote self-sufficiency. Government Services and Facilities The County provides a comprehensive range of local government services characteristic of its form of government under Virginia law. Although legally separate and independent, the City and the County are closely linked. The City is the County seat and both jurisdictions share an elected Treasurer, Clerk of the Circuit Court, Commonwealth s Attorney and Sheriff. The County and the City share a public school system and courts. The County is also a partner in many regional entities such as the jail, library system, transit, public health department and behavioral health system. Cooperative agreements exist for fire, emergency medical, social services and recreation. Form and Organization of Government The County is governed by a five-member Board of Supervisors (the Board ). Each member is elected by the voters in his or her district for a term of four years. Terms are staggered with representatives from two districts being elected one year and the other three representatives being elected two years later. At their annual organizational meeting, the Board elects a chairman and vice chairman from among the five supervisors. The Board passes all local ordinances and determines all local policies that govern the County. It appoints a County Administrator as well as most boards and commissions. It also appropriates funds for County operations and generally overseas all County functions. The County Administrator is the chief administrative officer of the County and is responsible to the Board for executing policies established by the Board. The County Administrator acts as Clerk to the Board and handles the daily administrative operations of the County as well as its strategic planning. In addition to the elected members of the Board, five constitutional officers are elected. These are the Commissioner of the Revenue, the Treasurer, the Clerk of the Circuit Court, the Commonwealth s Attorney and the Sheriff. The Treasurer, the Clerk of Circuit Court, the Commonwealth s Attorney and the Sheriff are elected jointly by the voters of the County and the City. The County and the City courts are part of the 9 th Judicial District. The three judges serving the area represent Juvenile, District and Circuit Courts and are appointed by the General Assembly of Virginia. The Circuit Court Judge appoints the members of the County s Board of Zoning Appeals and members of the County s Electoral Board which, in turn, appoints the General Registrar. The County s schools are operated by the Williamsburg-James City County School Board, which consists of two members appointed by the City and five members elected by the voters of the County. Each of the County members are elected by the voters in his or her district for a term of four years, and the terms are staggered with representatives from two districts being elected one year and the other three representatives being elected two years later. C-1

40 Economic Development The Department of Economic Development s mission is to foster development and expansion of a diversified and healthy base of primary business and industry that will better balance the tax base, increase job opportunities and enhance both the quality and standard of living in the County. The department focuses on the retention and expansion of the County s existing primary businesses and industries, plus the recruitment of new businesses and industries. The Economic Development Authority of James City County, Virginia (the Economic Development Authority ) coordinates industrial revenue bond financings for qualifying businesses and charitable entities and manages inducements and loans to businesses. The Economic Development Authority works in collaboration with a variety of organizations to strengthen the economic base in the County through efforts such as James River Commerce Center (a 219 acre industrial park) and the Triangle Business & Innovation Center. Most recently, the Economic Development Authority has entered into a regional partnership with the City of Williamsburg and York County to market the area as a region to business and enterprise. Population ECONOMIC AND DEMOGRAPHIC FACTORS According to estimates by the County, the County s 2015 population is approximately 73,325. The following table presents the population figures for selected years. Year POPULATION AND RATES OF CHANGE JAMES CITY COUNTY, THE COMMONWEALTH OF VIRGINIA AND THE UNITED STATES SELECTED YEARS County Rate of Change Commonwealth of Virginia Rate of Change United States Rate of Change , ,318, ,697, , % 3,966, % 178,464, % , ,651, ,211, , ,346, ,545, , ,187, ,709, , ,079, ,421, , ,204, ,112, , ,302, ,888, , ,386, ,447, , ,510, ,191, , ,600, ,895, , ,683, ,754, , ,749, ,621, , ,854, ,059, , ,928, ,006, , ,001, ,745, , ,096, ,718, , ,185, ,102, , ,260, ,427, , ,326, ,907, , ,382, ,418, Sources: 2001 through 2015 population figures for James City County are from the Weldon Cooper Center (except 2010); 2010 and all other years are from the U.S. Department of Commerce, Bureau of the Census. C-2

41 Income years. Presented below are comparative tables on per capita income and median household income for selected PER CAPITA INCOME James City County (1) $43,505 $46,531 $49,221 $51,944 $50,035 $50,787 $53,871 $55,639 $56,208 $57,465 Commonwealth of Virginia 40,036 42,386 44,422 45,618 44,458 45,412 47,689 49,320 48,956 50,345 United States 35,904 38,144 39,821 41,082 39,376 40,277 42,453 44,266 44,438 46,049 Source: U.S. Department of Commerce, Bureau of Economic Analysis. (1) Numbers are for the County and the City of Williamsburg combined. MEDIAN HOUSEHOLD INCOME James City County (1) $65,681 $67,054 $67,984 $71,618 $72,988 $73,903 $75,938 $76,767 $76,960 $76,705 Commonwealth of Virginia 54,207 56,297 58,378 61,044 60,316 61,406 63,302 63,636 63,907 64,792 Source: U.S. Census Bureau. (1) Numbers are for the County alone; they do not include the City of Williamsburg. Housing, Construction, and Financial Activity The data in the tables below are presented to illustrate various housing characteristics for the County. As of December 31, 2015, the total number of dwelling units in the County was estimated to be 32,360, an increase of approximately 23.8% from December 31, TOTAL DWELLING UNITS Calendar Year Total Unit Count , , , , ,151 (1) , , , , ,360 Source: James City County Planning Division. (1) The number of dwelling units for calendar year 2010 was calibrated to account for official 2010 Census housing information. [Remainder of page intentionally left blank.] C-3

42 Fiscal Year Selected data is presented below to illustrate the level of new construction that has occurred in the County. TOTAL NUMBER OF BUILDING PERMITS ISSUED AND VALUE Construction Commercial/Industrial Residential Total Number of Number of Number of Permits Value Permits Value Permits Value $ 70,501,744 1,645 $264,701,674 1,842 $335,203, ,021,564 1, ,134,794 1, ,156, ,187, ,064,874 1, ,252, ,242, ,989, ,231, ,599, ,077, ,676, ,473, ,315, ,789, ,837, ,812, ,650, ,700, ,237, ,937, ,169, ,841, ,011, ,449, ,526, ,976,118 Source: James City County Building and Safety Permits Division. [Remainder of page intentionally left blank.] C-4

43 Employment Industry Group The following table presents the employment and average weekly wages for the second quarter of AVERAGE EMPLOYMENT AND AVERAGE WEEKLY WAGE Second Quarter 2015 (1) Average Employment For Quarter (1) Percent of Total Weekly Wage Per Employee Private Health Care and Social Assistance 3, % $ 743 Retail Trade 3, Accommodation and Food Services 3, Educational Services 2, Construction 1, Manufacturing 1, Professional, Scientific, and Technical Services 1, ,154 Administrative and Support and Waste Management 1, Management of Companies and Enterprises ,206 Real Estate and Rental and Leasing Wholesale Trade Other Services (except Public Administration) Finance and Insurance ,424 Information Agriculture, Forestry, Fishing and Hunting Total Private 21, % Public Local Government 3, $ 728 State Government 1, Federal Government Total Public 4, % Total 26,481 Source: Virginia Employment Commission. (1) Data excludes self-employed persons and non-disclosed data for the following industries: Arts, Entertainment and Recreation; Mining, Quarrying and Oil and Gas Extraction; Transportation and Warehousing; and Utilities. The average annual unemployment rates for the County, the Commonwealth and the United States for recent years are set forth in the following table. AVERAGE ANNUAL UNEMPLOYMENT RATES Calendar Year (1) James City County 3.2% 2.7% 2.5% 3.2% 5.4% 6.3% 6.1% 5.7% 5.3% 5.0% 3.8% Commonwealth of Virginia United States Source: Virginia Employment Commission; Bureau of Labor Statistics, Local Area Unemployment Statistics. (1) 2015 Unemployment Rate as of December C-5

44 A variety of industrial and commercial service employers are located within the County. The table below presents data regarding the major employers in the County, including the products and services they provide and the approximate number of employees. Firm MAJOR PRINCIPAL EMPLOYERS Fiscal Year Ended June 30, 2015 Type of Business Approximate Number of Employees Busch Gardens Theme Park 1,000+ Williamsburg-James City County Public Schools Educational Institution 1,000+ Eastern State Hospital Hospital James City County Local Government Wal-Mart Distribution Distribution Kingsmill Resort & Spa Accommodation Anheuser-Busch InBev Inc. Manufacturing Owens & Minor Healthcare logistics Jamestown-Yorktown Foundation Educational Institution Williamsburg Landing Continuing Care Retirement Community Source: James City County Department of Economic Development and the Virginia Employment Commission. The table presented below is a summary of recent County taxable retail sales. Source: Treasurer, James City County. Tourism Fiscal Year TAXABLE RETAIL SALES Taxable Retail Sales 2004 $ 679,508, ,697, ,202, ,593, ,444, ,852, ,195, ,445, ,214, ,914, ,911, ,053,339,000 The tourism industry makes a substantial contribution to the County s and Virginia s economy. According to the Virginia Tourism Corporation (VTC), in 2014, Greater Williamsburg area visitors contributed approximately $398 million to the James City County economy and almost $1.2 billion to the economy of the Greater Williamsburg area. The current hotel room inventory in the Greater Williamsburg area is approximately 8,021 with an inventory of 1,473 in the County. In addition, there are 12 time share properties representing 6,475 additional rooms in the region, with an inventory of 3,532 in the County. C-6

45 HOTEL ROOMS TAX RECEIPTS Fiscal Year 2006 to Fiscal Year 2015 Fiscal Year Total Hotel Room Tax Receipts 2006 $2,931, ,405, ,318, ,764, ,553, ,520, ,753, ,008, ,149, ,350,328 Source: James City County Department of Financial Management Services. Health Care Located in upper York County is Sentara Williamsburg Regional Medical Center, a comprehensive medical center with an Emergency Department, all private patient rooms, and an array of inpatient and outpatient services to support optimal health. The hospital has a cardiac catheterization lab and advanced imaging services that feature a 32-slice Computed Tomography (CT) scanner. This five-story, approximately 339,000 square foot facility adjoins the existing Geddy Outpatient Center via an enclosed connector on the first and second floors. Riverside Doctors Hospital opened in the City of Williamsburg in May of This two story, 100,000 square foot facility includes an emergency department and is certified as a primary stroke center. The largest non-military medical provider on the peninsula is Riverside Regional Medical Center in the City of Newport News, Virginia ( Newport News ). This 576-bed facility offers comprehensive medical care in 29 specialties, Level II trauma care, complete cardiac care, complete cancer treatment, laser surgeries, hospice, neonatal ICU, home care and health education programs. Other hospitals located in the area are Sentara Hampton General Hospital, Mary Immaculate Hospital, Newport News General Hospital, Riverside Rehabilitation Institute, Veteran s Administration Medical Center, McDonald Army Hospital, Langley Air Force Base Hospital, Riverside Psychiatric Institute and Eastern State Hospital. For specialized needs, such as acute care for children, serious trauma or burns, peninsula area citizens can go to Norfolk to the Children s Hospital of the King s Daughters, devoted exclusively to children, and Sentara Norfolk General Hospital, which features a Level I trauma center and Nightingale helicopter service. The Medical College of Virginia in Richmond is located just an hour drive northwest. Education The Williamsburg-James City County Public Schools Division (the Public Schools ) was formed in 1954 as a joint venture of the City and County to provide quality public education to the children within the two localities. Local financing for its operating and capital budgets is governed by a contract between the two localities. The Public Schools are managed by a School Board consisting of seven members. There are five County members who are elected by County voters for four year terms. There are two City members of the School Board who are appointed for three year terms by the City Council. The School Board has the power and responsibility to set policy and ensure that the Public Schools follow state and federal guidelines. The School Board appoints the superintendent; establishes goals and adopts policies C-7

46 that become the basis for instructional programs in accordance with state regulations and local needs; sets student policies; manages school facilities and identifies additional facility requirements; and maintains public relations. There are nine elementary schools, three middle schools and three high schools for the school year. Summarized in the following tables are selected items of information concerning the total annual school membership (enrollment) and the percentage change. PUBLIC SCHOOLS STUDENT POPULATION School Year Source: Williamsburg James City County Public Schools. Number of Students Percent Change , % , , , , , , , , , Private and Parochial Schools. There are two parochial schools in the area one in the County and one in the City. Colleges and Universities There are several colleges and universities within a short distance of the County. The College of William and Mary was founded in the City over three hundred years ago. Current enrollment is approximately 8,400 students. The College sponsors the Virginia Institute of Marine Science at Gloucester Point, Virginia, and it participates in the Southeastern Universities Research Association s support of the Jefferson Labs in Newport News. Jefferson Labs, which became fully operational in 1995, conducts state-of-the-art physics research. Hampton University, located approximately 40 miles from the County in the City of Hampton, was founded in 1868 and has an enrollment of approximately 4,400 students. Christopher Newport University, located approximately 30 miles from the County in Newport News, has an enrollment of approximately 4,500 students. Thomas Nelson Community College ( TNCC ) is a two-year public college with a campus in Hampton and a campus in the County (the James City Campus ). The James City Campus is a state-of-the-art academic, administrative, physical plant and student and faculty support facility in a three-story, 120,000 square-foot building on the Historic Triangle campus located on 74 acres next to the Warhill High School in the County. TNCC has an enrollment of approximately 16,200 students. Students can transfer class credits earned at TNCC to most four year universities with no loss of credits. C-8

47 Public Safety Police Department. The Police Department is responsible for enforcing the law, preserving the peace, crime prevention services and animal control. The department has 103 sworn officers and annually responds to over 20,000 calls for service. The department is accredited by the Virginia Law Enforcement Professional Standards Commission, which rates agencies on over seven hundred different standards and criteria. Fire. The Fire Department is responsible for providing protective action services to the citizens and visitors of James City County. Those protective services include fire protection, emergency medical services, open water and dive rescue, fire prevention, fire code enforcement, and public education. The Fire Department is also responsible for the Emergency Communications system that includes the 911 dispatch center, 800 mhz radio system. The third component of the Fire Department is Emergency Management, which is responsible for planning, response, and mitigation of emergency situations including natural disasters, hazardous material incidents, and Surry Nuclear Power Plant, and citizen emergency notification systems. The Fire Department has a staff of 147 including 109 uniformed and 38 civilians. Transportation Interstate 64 links the County with the Tidewater communities to the east and with Interstate 95 and the entire interstate corridor of the eastern seaboard to the west. The commercial and industrial areas in the County are within minutes of Interstate I-64 and within 45 minutes of Interstates I-95 and I-295. Three international airports, all within 45 minutes of the County, provide air transportation and cargo facilities: Richmond International Airport to the west and Williamsburg/Newport News International and Norfolk International airports to the east. These airports handle international and domestic passenger flights and all-cargo flights daily. Williamsburg-Jamestown airport serves as a regional general aviation airport for turbo-prop and corporate aircraft. The CSX rail line that passes through the County provides rail service to the County. Along with Interstate I-64, the rail line provides access to the Hampton Roads ports some 40 minutes to the east. Hampton Roads is the second largest commercial port area on the East Coast. Water and Wastewater Services The James City Service Authority (the JCSA ) offers water and wastewater services in its service area, which includes approximately 84 square miles of the County and 77% of the total County population. The members of the County s Board also serve as the members of the JCSA s board of directors. The JCSA s operating funds are self-supporting, and the JCSA receives no share of any County tax levies. The JCSA s board of directors has the sole power to set water and sewer utility rates. The JCSA s water system currently includes a central water system with ten water production facilities and a groundwater treatment facility that serve the County s primary service area (the Primary Service Area ). The JCSA also operates eight small independent water production and distribution systems located outside the Primary Service Area. The water system includes approximately 402 miles of water transmission and distribution lines. The water system facilities supply approximately 4.7 million gallons of water per day to approximately 21,250 water customers. The JCSA s groundwater treatment facility uses reverse osmosis technology and has a capacity of five (5) million gallons of water per day. In March 2008, the JCSA entered into an agreement with the City of Newport News to purchase 4.0 million gallons of potable water capacity per day, or more, depending on climatic conditions. The Water Purchase Agreement provides the JCSA with a supply of water to meet a portion of the JCSA water supply needs in perpetuity. The JCSA s sewer system includes 76 pump stations with approximately 435 miles of sewer collection lines. The sewer system facilities collect and move approximately 5.1 million gallons of sewage per day for 22,975 C-9

48 sewer customers. The JCSA has no sewage treatment facilities. Sewage treatment for areas served by the JCSA, as well as for other Hampton Roads communities, is provided by the Hampton Roads Sanitation District. The JCSA Board of Directors approved a new rate structure in the fiscal year 2016 budget that included the initiation of a fixed charge for water and sewer service and an incremental water rate increase for fiscal year 2016 to provide for near term water supply enhancement projects and operating and maintenance costs. The new rate structure was recommended by the JCSA s fiscal year 2015 comprehensive water and sewer rate study that included a ten year rate plan. Budgetary Process FINANCIAL INFORMATION The Code of Virginia requires the County Administrator to submit, for informative and fiscal planning purposes, a balanced, proposed operating budget to the Board of Supervisors at least 90 days before the beginning of each fiscal year, which commences July 1. Inclusion of any item in the proposed budget does not constitute an obligation or commitment on the part of the Board of Supervisors to appropriate funds for such item or purpose. The budget includes a two-year financial plan for operations and a five-year plan for capital projects. Public hearings are conducted to obtain citizen comments. Prior to June 30, only the first year of the financial plan is legally enacted through passage of an Appropriations Resolution. The Appropriations Resolution places legal restrictions on expenditures at the fund and function level. The appropriation for each fund and function can be revised only by the Board; however, the County Administrator may amend the budget within functions. The School Board is authorized to transfer budgeted amounts within the Public Schools categories. Supplemental appropriations may be made without amending the budget. Each department is required to review its performance versus budget on a monthly basis. In addition, a formal review of actual revenues and expenses versus budget is performed mid-year on a County-wide basis. All County general fund appropriations lapse June 30. Current Operating Budget On April 28, 2015, the Board of Supervisors adopted a total budget for the fiscal year ending June 30, The adopted budget for fiscal year 2016 includes increases in revenues and expenses over the adopted budget for fiscal year General governmental revenues for fiscal year 2016 are projected to increase by approximately 6.7% compared to the 2015 adopted budget. [Remainder of page intentionally left blank.] C-10

49 The following table shows the County s General Fund budgeted revenues and expenditures for fiscal years 2015 and GENERAL FUND OPERATING BUDGET REVENUES AND EXPENDITURES Fiscal Year 2015 Adopted Percent of Fiscal Year 2015 Budget Fiscal Year 2016 Adopted Percent of Fiscal Year 2016 Budget REVENUES: General property taxes $112,397, % $122,976, % Other local taxes 21,765, ,790, Licenses, Permits and Fees 8,230, ,585, Fines and Forfeitures 315, , Use of Money and Property 125, , Revenue from the Commonwealth 26,584, ,177, Revenue from the Federal 7,000-7,500 - Government Charges for Current Services 5,667, ,798, Miscellaneous Revenues 158, , Total Revenues $175,250, % $186,964, % EXPENDITURES: County Operations: General Administration $ 3,254, % $ 3,254, % Court Services 3,679, ,644, Public Safety 23,908, ,389, Financial Administration 6,875, ,992, Development Management 3,568, ,629, General Services 8,843, ,592, Citizen and Community 5,691, ,873, Services and Other Operations: Contributions - Other 749, , Outside Agencies Nondepartmental 340, , Contribution to Williamsburg ,948, James City County Schools 98,832,474 Williamsburg Regional Library 4,367, ,421, System and Arts Center Other Regional Entities 3,733, ,767, Health Services 1,785, ,855, Contributions to Other Funds 9,621, ,666, Total Expenditures $175,250, % $186,964, % Source: James City County Department of Financial Management Services; Fiscal Year 2015 and 2016 Adopted Budgets. Five-Year Summary of Governmental Funds The financial data shown in the following table present a summary of revenues, expenditures and other sources and uses of the County s Governmental Funds for each of the five fiscal years through the period ended June 30, C-11

50 GOVERNMENTAL FUNDS REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES Fiscal Year End June 30, REVENUES: General property taxes $108,564,306 $110,677,787 $109,112,196 $112,151,342 $112,542,078 Other local taxes 19,100,086 20,006,069 21,208,061 21,435,046 22,771,626 Licenses, permits, and fees 7,055,618 7,487,105 7,623,652 8,134,299 8,443,821 Fines and forfeitures 334, , , , ,615 Use of money and property 442, , , , ,388 Charges for services 4,861,478 5,174,185 5,736,864 5,549,607 5,944,750 Intergovernmental 34,515,554 37,099,346 34,672,161 33,945,431 34,169,438 Miscellaneous 1,201,370 1,286,664 1,473,964 1,875,484 4,217,842 Total Revenues $176,075,743 $182,400,355 $180,452,767 $183,724,192 $188,593,558 EXPENDITURES: Storm costs $ - $ 2,454,661 $ - $ - $ - General government 8,265,513 8,669,692 9,399,885 9,643,858 9,432,889 Judicial administration 5,311,684 5,254,489 5,250,974 5,514,609 5,599,728 Public works 7,241,872 6,493,573 7,606,884 7,353,940 6,976,533 Health and welfare 7,582,994 7,042,619 6,785,380 7,061,327 7,193,841 Education 73,830,796 74,280,245 75,931,599 77,496,482 79,610,865 Parks, recreation, and 9,180,161 9,163,941 9,075,083 9,899,159 9,858,887 culture Public safety 23,792,805 24,915,821 26,555,114 26,764,383 27,475,307 Community development 10,289,898 9,873,740 10,914,977 10,958,279 10,769,064 Nondepartmental (266,150) 1,265, , , ,433 Debt service: Principal 14,830,524 14,787,955 23,473,305 16,417,326 16,862,695 Interest 9,853,465 9,384,810 9,522,081 8,822,326 7,787,361 Underwriters discount Capital outlay (1) 30,042,723 15,023,734 12,586,344 18,421,679 13,424,741 Total Expenditures $199,956,285 $188,611,083 $198,068,432 $199,075,112 $195,517,344 Excess (deficiency) of revenues over (under) expenditures ($ 23,880,542) ($ 6,210,728) ($ 17,615,665) ($ 15,350,920) ($ 6,923,786) Other financing sources: Transfers in $ 28,784,026 $ 29,412,515 $ 33,965,148 $ 34,729,940 $ 35,271,660 Issuance of debt 4,820,000 7,672,000 26,380,000-34,185,000 Underwriter s discount (20,003) - (253,624) - (112,863) Payment to refunded bond (5,019,743) (39,371,952) escrow agent Premiums on bonds issued 321,834-2,309,915-3,907,273 Transfers out (28,784,026) (29,412,515) (33,965,148) (34,729,940) (35,271,660) Total other financing sources $ 102,088 $ 7,672,000 $ 28,436,291 $ - ($ 1,392,542) Net change in fund balances ($ 23,778,454) $ 1,461,272 $ 10,820,626 ($ 15,350,920) ($ 8,316,328) Debt service as a percentage 14.27% 13.65% 17.57% 13.97% 13.36% of Noncapital expenditures (2) (1) (2) Including operating transfers to capital projects. Noncapital expenditures equals total expenditures less amounts for capitalized assets on the government-wide statement of net assets. C-12

51 The following table shows the County s fiscal year 2015 revenues by source. GOVERNMENTAL FUNDS Fiscal Year 2015 Revenues by Source Amount Percent of Total Increase (Decrease) from 2014 General Property Taxes $112,542, % 0.35% Other Local Taxes 22,771, Permits, privilege fees reg. licenses 8,443, Fines and Forfeitures 271, (7.50) Use of Money and Property 232, (31.52) Charges For Services 5,944, Intergovernmental 34,169, Miscellaneous 4,217, Total Revenue $188,593, % Source: James City County Department of Financial Management Services. Operating Data The following table sets forth the assessed value of all taxable property in the County for each of its ten most recent fiscal years. HISTORICAL ASSESSED VALUE Fiscal Year 2006 to Fiscal Year 2015 Year Real Property Personal Property Public Service Total 2006 $ 8,189,928,900 $693,850,170 $165,476,326 $ 9,049,255, ,821,638, ,150, ,475,702 10,704,264, ,672,714, ,010, ,428,097 11,610,152, ,005,655, ,654, ,750,991 11,941,060, ,155,493, ,196, ,289,584 12,092,979, ,172,929, ,751, ,802,200 12,152,483, ,316,807, ,225, ,670,868 12,341,704, ,921,180, ,145, ,588,225 11,991,913, ,067,756, ,017, ,973,337 12,165,747, ,148,405, ,845, ,370,602 14,420,621,529 Source: Real Estate Assessments and Commissioner of the Revenue, James City County. [Remainder of page intentionally left blank.] C-13

52 The following table shows the County s property tax rates for each of its ten most recent fiscal years. Fiscal Year PROPERTY TAX RATES (1) Real Estate Personal Property Assessed % NADA Loan Value 2006 $0.785 $ % Source: James City County, Virginia, Comprehensive Annual Financial Report, Year Ended June 30, 2015 (1) Per $100 of assessed value. The following table sets forth information concerning the County s general property tax collection rate for each of its ten most recent fiscal years. Fiscal Year GENERAL PROPERTY TAX COLLECTION RATE (1) Fiscal Year 2006 to Fiscal Year 2015 Collected within the Fiscal Year of the Levy Taxes Levied for the Percentage Fiscal Year Amounts (3) Of Levy Collections in Subsequent Years (4) Total Collections to Date Amount Percentage of Levy (5) 2006 $ 95,574,858 $ 78,647, % $16,850,677 $ 95,498, % ,811,945 88,752, ,977, ,729, ,071,066 96,586, ,364, ,951, ,860,437 97,895, ,806, ,702, ,355,119 99,101, ,888, ,990, ,175, ,889, ,840, ,729, ,294, ,482, ,297, ,779, ,394,409 98,431, ,076, ,508, ,756, ,523, ,406, ,071, ,071, Source: Treasurer, James City County. (1) Exclusive of penalties and interest. (2) Collections related to fiscal year levies include the Personal Property Tax Relief Act (the PPTRA ) reductions claimed by taxpayers. (3) Collections in subsequent years do not include PPTRA reductions claimed by taxpayers. (4) Collections of delinquent taxes may result in overall collections exceeding current year levy. [Remainder of page intentionally left blank.] C-14

53 The following tables set forth the County s ten largest taxpayers of personal property taxes and real estate taxes. The aggregate assessed personal property taxes of the ten largest personal property taxpayers represent 22.08% of the County s total personal property tax levy for fiscal year The aggregate assessed real estate taxes of the ten largest real estate taxpayers represent 9.33% of the County s total real estate tax levy for fiscal year Name of Business TEN LARGEST TAXPAYERS (Fiscal Year 2015) Principal Personal Property Tax Payers Property Taxes Assessed % of Total Taxable Assessed Value Anheuser-Busch, Inc. $3,924, % Seaworld Parks, LLC 1,458, Ball Metal Container 559, Printpack, Inc. 466, Owens-Brockway Glass Container 448, Wal-Mart, Inc. 317, Cox Communications of Hampton Roads 242, Toyota Lease Trust 226, HVT, Inc. 110, Branscome, Inc. 106, $7,861, % Name of Business Principal Real Estate Tax Payers Property Taxes Assessed % of Total Taxable Assessed Value Virginia Electric & Power Company $1,392, % Anheuser-Busch, Inc. 1,083, Premium Outlets of Williamsburg (1) 1,038, Powhatan Plantation Owners Association 966, Wal-Mart, Inc. 770, Williamsburg Landing, Inc. 675, Williamsburg Plantation Owners Association 650, Manor Houses Associates 580, Virginia United Methodist Homes, Inc. 577, Seaworld Parks, LLC 521, $8,256, % Source: Commissioner of Revenue, James City County. (1) Premium Outlets includes two related parties, Williamsburg Outlets, LLC and Williamsburg Mazel, LLC. They are combined in this table to show the value of the shopping center. [Remainder of page intentionally left blank.] C-15

54 Capital Improvements Program As a part of the annual budgeting process, each year the County develops a Capital Improvements Program ( CIP ) for the following five fiscal years. Only the first year of the CIP is actually appropriated. The remaining four years are included for planning purposes and are subject to revision in future years. On April 28, 2015, the Board approved the CIP for fiscal years 2016 through The following table summarizes anticipated capital expenditures for the next five fiscal years. SUMMARY OF ANTICIPATED CAPITAL EXPENDITURES FOR FISCAL YEARS ENDING JUNE 30 Description Total Schools $24,106,000 $ 5,866,000 $ 5,990,000 $ 533,000 $5,435,000 $41,930,000 General Services 6,785,317 3,869,000 3,520,000 2,953,000 2,670,000 19,797,317 Public Safety 775, , ,000 5,290,000 3,085,000 10,495,000 Parks and Recreation 385, , ,000 3,734, ,000 5,106,000 Total Uses $32,051,317 $10,527,000 $10,700,000 $12,510,000 $11,540,000 $77,328,317 Source: James City County Department of Financial and Management Services. The sources of funding for the capital improvement projects are shown in the following table: Sources of Funds Total General Fund $ 2,372,000 $ 2,725,000 $ 2,840,000 $ 3,100,000 $ 3,530,000 $14,567,000 Prior Year General Fund 1,878,000 2,000,000 2,000,000 2,000,000 2,000,000 9,878,000 Debt Financing 25,500, ,500,000 Short Term Financing (4,500,000) (4,500,000) Proffer Income 160, , , , , ,000 State Stormwater Grants 1,083, ,083,317 Additional Pennies 5,558,000 5,642,000 5,700,000 5,750,000 5,850,000 28,500,000 From Tourism Fund ,500,000-1,500,000 Total $32,051,317 $10,527,000 $10,700,000 $12,510,000 $11,540,000 $77,328,317 Source: James City County Department of Financial and Management Services. Outstanding Bonded Debt and Debt Service Pursuant to the Constitution of Virginia and the Public Finance Act of 1991 (Chapter 26, Title 15.2 of the Code of Virginia of 1950, as amended), a county in Virginia is authorized to issue general obligation bonds secured by a pledge of its full faith and credit. For the payment of such bonds, the governing body of the county is required to levy, if necessary, an annual ad valorem tax on all property in the county subject to local taxation. Although the amount of bonds issued by Virginia counties is not subject to statutory limitation, counties generally are prohibited from issuing general obligation bonds unless the issuance of such bonds has been approved by public referendum. This referendum requirement does not apply to bonds for capital projects for school purposes and sold to the Literary Fund, the Virginia Supplemental Retirement System or other state agencies prescribed by law, including the Virginia Public School Authority. The County s obligations under leases do not constitute general obligation debt under the Constitution of Virginia or the Public Finance Act of C-16

55 Set forth below is a statement of long-term general obligation and major capital lease indebtedness of the County at June 30, 2015 and a schedule of debt service payments: STATEMENT OF LONG-TERM DEBT Total Long-Term Debt as of June 30, 2015 $194,036,422 [Remainder of page intentionally left blank.] C-17

56 SCHEDULE OF GENERAL FUND LONG-TERM DEBT SERVICE REQUIREMENTS Existing Debt Series 2016 Lease Revenue Bonds Total Debt FY Principal Interest Total Principal Interest Total Principal Interest Total 2016 $ 17,122,378 $ 5,941,390 $ 23,063,768 $ 0 $ 0 $ 0 $ 17,122,378 $ 5,941,390 $ 23,063, ,157,234 5,687,921 19,845, , ,925 1,829,925 15,072,234 6,602,846 21,675, ,437,272 5,032,551 19,469, , ,588 1,830,588 15,412,272 5,888,138 21,300, ,112,497 4,468,022 17,580,519 1,000, ,338 1,826,338 14,112,497 5,294,360 19,406, ,092,917 3,907,306 16,000,223 1,035, ,338 1,831,338 13,127,917 4,703,643 17,831, ,708,538 3,436,019 14,144,557 1,065, ,288 1,830,288 11,773,538 4,201,306 15,974, ,732,000 2,944,154 13,676,154 1,115, ,038 1,827,038 11,847,000 3,656,192 15,503, ,255,000 2,457,022 12,712,022 1,170, ,288 1,826,288 11,425,000 3,113,310 14,538, ,455,000 1,977,841 12,432,841 1,205, ,188 1,826,188 11,660,000 2,599,029 14,259, ,620,000 1,510,242 12,130,242 1,270, ,938 1,830,938 11,890,000 2,071,179 13,961, ,760,000 1,069,798 11,829,798 1,330, ,438 1,827,438 12,090,000 1,567,235 13,657, ,135, ,584 4,770,584 1,400, ,938 1,830,938 5,535,000 1,066,522 6,601, ,260, ,303 4,768,303 1,425, ,938 1,827,938 5,685, ,240 6,596, ,625, ,516 5,035,516 1,455, ,438 1,829,438 6,080, ,953 6,864, ,770, ,023 5,039,023 1,485, ,700 1,826,700 6,255, ,723 6,865, ,275, ,013 1,398,013 1,530, ,150 1,827,150 2,805, ,163 3,225, ,260,000 83,363 1,343,363 1,575, ,250 1,826,250 2,835, ,613 3,169, ,305,000 42,413 1,347,413 1,625, ,000 1,829,000 2,930, ,413 3,176, ,675, ,250 1,830,250 1,675, ,250 1,830, ,725, ,000 1,830,000 1,725, ,000 1,830, ,775,000 53,250 1,828,250 1,775,000 53,250 1,828,250 Total $156,082,836 $40,504,478 $196,587,314 $26,750,000 $9,822,275 $36,572,275 $182,832,836 $50,326,753 $233,159,589 NOTE: Totals may not foot due to rounding. [Remainder of page intentionally left blank.] C-18

57 The following table shows the County s ratio of net general bonded debt to assessed value of property and net bonded debt per capita for the last ten fiscal years. Fiscal Year Population RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA Assessed Value Gross Bonded Debt (1)(2) Less Debt Service Monies Available (3) Net Bonded Debt Ratio of Net General Obligation Debt to Assessed Value Net Bonded Debt Par Capita ,893 $ 9,049,255,396 $106,091,269 $1,749,709 $104,341, % $1, ,867 10,704,264, ,590,560 1,832, ,758, , ,195 11,610,152, ,369,735 1,890, ,479, , ,135 11,941,060, ,974,105 1,706, ,267, , ,745 12,092,979, ,414,765 2,921,044 98,493, , ,500 12,152,483,497 93,283,624 2,921,037 90,362, , ,451 12,341,704,734 86,134,103 2,920,981 83,213, , ,945 11,991,913,497 80,004,294 2,920,981 77,083, , ,711 12,165,747,571 72,164,244 2,920,369 69,243, ,187 12,420,621,529 65,458,589 1,219,616 64,238, Source: Population figures were obtained from the Weldon Cooper Center for Public Service at the University of Virginia and James City County Planning Department; all other figures are from the James City County Comprehensive Annual Financial Report for June 30, 2015 (1) Includes all long-term general obligation bonded debt, bond anticipation notes, and Literary Fund loans. (2) Includes general obligation debt payable from enterprise revenues. (3) Debt Service Reserve Funds held by a trustee. Other Indebtedness and Obligations The County has no overlapping debt. The Williamsburg-James City County School Board, which is a component unit of the County according to the Government Accounting Standards Board, had no outstanding capitalized leases as of June 30, The County is one of four localities that is a member of the Virginia Peninsula Regional Jail Authority. That Authority has issued its $21,655,000 Regional Jail Facility Revenue Refunding Bonds, Series The County has a moral, but not legally binding, obligation (subject to appropriation by the Board) to pay 42% of any shortfall if such Authority is unable to pay debt service on such bonds or to fund the debt service reserve for such bonds. The County does not anticipate that it will be requested to make any such moral obligation payments. The County closed its landfill in State and federal laws and regulations require the County to perform certain maintenance and monitoring functions at the site for 10 to 30 years after closure. The County s financial statements for the fiscal year ended June 30, 2015 show $1,168,160 as landfill postclosure liability, which represents the liability estimated to monitor the landfill for an average monitoring period of 25 years. See note 11 of the County s audited financial statement in Appendix B for a more complete description of the County s landfill closure and postclosure care cost. Retirement Systems The County, the James City Service Authority and the Williamsburg-James City County Public Schools contribute to the Virginia Retirement System ( VRS ), an agent multiple-employer defined benefit pension plan. All full-time, salaried permanent employees of the County, the JCSA and the Public Schools must participate in the VRS. Plan members are required to contribute 5% of their annual salary to the VRS. In addition, the County, the JCSA and the Public Schools are required to contribute the remaining amounts necessary to fund their participation in the VRS using the actuarial basis specified by statute and approved by the VRS Board of C-19

58 Trustees. The employer contribution rates for the fiscal year ended June 30, 2015 were 11.12%, 8.49% and 7.22% of annual covered payroll for the County, the JCSA and the Public Schools, respectively, resulting in contributions of $4,091,153, $330,920 and $372,141, respectively. See note 12 of the County s audited financial statements in Appendix B for a more complete description of the County s defined pension benefit obligation as of June 30, Post-Employment Benefits Other Than Pensions For the fiscal year ended June 30, 2009, the County and Public Schools adopted GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The Statement establishes standards for reporting the liability for the County s nonpension postemployment benefit, the health care plan for retirees. The County and Public Schools provide postemployment health care (OPEB) for qualifying retired employees who are not yet eligible for Medicare through single-employer defined benefit plans. The benefits, benefit levels, employee contributions and employer contributions are governed by the County and Public Schools and can be amended through their personnel manuals. The County and Public Schools have not established a trust to prefund this liability. The anticipated growth in the net OPEB obligation is based on contributions to the benefit plan on a pay-as-you-go cost basis. The data has been projected into the future based on the assumption the current active population remains constant. Retirees pay the full rate of coverage under the medical plan. Currently, covered full-time active employees who retire directly from the County and are at least 50 years of age with 15 years of service are eligible to receive post-employment health care benefits. Each year, retirees participating in the County sponsored plans will be given the opportunity to change plans or drop coverage during an open enrollment period. Dental plans are available at the retiree s cost, and therefore, have no GASB 45 liability. There is no coverage for post-medicare retirees. The County does not contribute towards the retiree s health insurance premiums. Therefore, since the retirees pay their health insurance premiums based on a blended rate, the County has an implicit liability. The Public Schools provides a single-employer defined benefit medical plan and a retiree health insurance premium contribution plan that covers retirees until they reach 65 years of age. There is no coverage for retirees or their spouses once they reach the age of 65 and are eligible for Medicare. Both plans were established under the authority of the Williamsburg-James City County School Board and any amendments to the plans must be approved by the School Board. The Schools retiree health insurance premium contribution plan allows eligible retirees to receive a $75 contribution monthly toward their health insurance premium. The retiring employee must have a minimum of twelve continuous years of service with Williamsburg-James City County Public Schools. In July 2012 a consulting firm conducted an actuarial valuation study using the projected unit credit actuarial cost method. The actuarial assumptions included calculations based on a discount rate of 4% for the unfunded liability, rate of inflation of 2.5%, payroll growth of 3% healthcare cost trend rate of 9%, and amortization of the initial unfunded actuarial liability over a closed 26 year period based on a level percent of payroll method. The actuarial accrued liability was estimated to be $2,997,000 and $6,347,000 for the County and Public Schools, respectively. Published Financial Information The County issues and distributes a Comprehensive Annual Financial Report on its financial operations for each fiscal year. The report covers the fiscal year ending the prior June 30. Copies of the Annual Financial Report are available to the public upon request from the Department of Financial and Management Services, 101-F Mounts Bay Road, P.O. Box 8784, Williamsburg, Virginia In addition to the Annual Financial Report, the County also annually publishes an Adopted Budget and a five-year Capital Improvements Program. These documents are available through the Department of Financial and Management Services, 101-F Mounts Bay Road, P.O. Box 8784, Williamsburg, Virginia C-20

59 APPENDIX D AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2015

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61 !:>HG DIXON HUGHES GOODMAN UF Independent Auditors' Report Board of Supervisors County of James City, Virginia We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented componer:it units, each major fund, and the aggregate remaining fund information of the County of James City, Virginia as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the County of James City, Virginia's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Specifications for Audits of Counties, Cities, and Towns issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County of James City, Virginia, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. D-1

62 !JHG DIXON HUGH ES GOODMAN :.LF Emphasis of Matter Change in Accounting Principle As discussed in Notes 1 s and 18 to the financial statements, beginning net position was restated due to the implementation of GASB Statement 68, Accounting and Financial Reporting for Pensions - an Amendment of GASB Statement No. 27 and GASB Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an Amendment of GASB 68, in Our opinion is not modified with respect to these changes. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis; the schedule of revenues, expenditures and changes in fund balance - budget and actual - general fund, and schedules of changes in net pension liability and related ratios and employer contributions and related notes on pages 4 through 14; 92 through 101, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County of James City, Virginia's basic financial statements. The introductory section, supplementary information, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements. The supplementary information and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information and schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. D-2 2

63 !JHG DIXOM HUGHES GOOD MMJ LIF Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 23, 2015, on our consideration of County of James City, Virginia's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering County of James City, Virginia's internal control over financial reporting and compliance. Newport News, Virginia November 23, 2015 D-3 3

64 MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A) D-4

65 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 As management of James City County (County), we offer readers of the County's financial statements this narrative overview and analysis of the financial activities of the County for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal at the front of this report and the County's financial statements, which follow this analysis. Financial Highlights The County's total net position increased by approximately $14.1 million over the course of this year's operations, which represents a 3.8% increase from fiscal year The assets of the County exceeded its liabilities as of June 30, 2015 by approximately $385.0 million. Of this amount, approximately $296.6 million, or 77.0% is the net investment in capital assets. The County's total long-term liabilities for governmental activities at June 30, 2015 decreased by $17,252,530 to $176,738,321. The decrease was primarily principal payments on outstanding bonds. Actual General Fund revenues received were 0.2%, or $416,874 more than what had been budgeted and increased 1.7% or $2,885,410 from fiscal year There was an increase in real estate tax revenue due to new development. There was also an increase in the personal property tax revenue as a result of an increased collections, number, and the value of vehicles. The restatements of the County, the Authority, and Public Schools net position is due to the implementation of GASB Statement No. 68 and No. 71. Overview of the Financial Statements The County's Comprehensive Annual Financial Report consists of four sections: introductory, financial, statistical and compliance. The financial section consists of three primary components - government-wide financial statements, fund financial statements, and notes to the basic financial statements. Government-Wide Financial Statements The government-wide financial statements report information about the County as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the government's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide financial statements report the County's net position and how they have changed. Net position - the difference between the County's assets and liabilities - is one way to measure the County's financial health, or position. Over time, increases or decreases in the County's net position is an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the County, you need to consider additional nonfinancial factors, such as changes in the County's property tax base. The government-wide financial statements of the County are divided into three categories: Governmental activities - Most of the County's basic services are included here, such as the police, fire, parks and recreation, and general administration. Property taxes and state and federal funding finance most of these activities. 4 D-5

66 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 Business-type activities - Activities that are intended to recover all or a significant portion of their costs through user fee charges to external parties for goods or services are included here. Component units - The County includes two other entities in its report - The Public Schools and the Economic Development Authority. Although legally separate, these "component units" are important because of the County's financial accountability for them. Fund Financial Statements The fund financial statements provide more detailed information about the County's most significant funds, not the County as a whole. Funds are accounting devices that the County uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by state law and by bond covenants. Other funds are established to control and manage money for particular purposes or to show that the County is properly using certain taxes and grants. The County has three kinds of funds: Governmental funds - Most of the County's basic services are included in governmental funds, which focus on (1) how cash and other financial assets can be readily converted to cash flow in and out and (2) the balances remaining at year end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the County's programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statement, or on the subsequent page, that explains the relationship (or differences) between them. Proprietary funds - Services that are intended to recover all or a significant portion of their costs through user fees are generally reported in the proprietary fund. Proprietary funds, like the government-wide statements, provide both long and short-term financing information. The County's enterprise fund (one type of proprietary fund) is the same as its business-type activity, but provides more detail and additional information, such as cash flows. Fiduciary funds - The County is responsible for assets of various agency funds. It is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the County's fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the County's government-wide financial statements because the County cannot use their assets to finance its operations. Notes to the Basic Financial Statements The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the County's General Fund budget and progress in funding its obligation to provide pension benefits to its employees. The combining statements for nonmajor governmental funds are presented immediately following the required supplementary information on the General Fund budget and defined benefit pension plans. 5 (Continued) D-6

67 COUNTY OF JAMES CITY, vmginia Management's Discussion and Analysis June 30, 2015 Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. The County's assets exceeded liabilities by $385,036,058 at the close of the most recent fiscal year. This represents a 3.8% increase from last year. Condensed Summary of Net Position June 30, 2015 Component Governmental Business-type unit - public activities activity Total schools Assets: Current and other assets $ 88,863,125 38,765, ,628,619 18,168,380 Capital assets 329,390, ,288, ,678,846 53,549,272 Total assets 418,253, ,053, ,307,465 71,717,652 Deferred outflow of resources: Deferred pension contributions 4,091, ,920 4,422,073 9,802,152 Total assets and deferred outflow of resources $ 422,345, ,384, ,729,538 81,519,804 Liabilities: Long-term liabilities $ 176,738,321 24,715, ,454, ,821,350 Other liabilities 24,922,054 2,071,956 26,994,010 15,666,099 Deferred inflow of resources: Total liabilities 201,660,375 26,787, ,448, ,487,449 Deferred pension investment experience 8,441, ,802 9,245,288 17,052,806 Net position: Net investment in capital assets 159,469, ,173, ,642,424 53,328,252 Restricted net position: Capital projects 1,551,387 2,716,277 4,267,664 Other 382,866 Unrestricted net position 51,222,452 32,903,518 84,125,970 (113,731,569) Total net position 212,243, ,792, ,036,058 ~ 60,020,451) Total liabilities, deferred inflow of resources, and net position $ 422,345, ,384, ,729,539 81,519,804 6 (Continued) D-7

68 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 Condensed Summary of Net Position June 30, 2014 (as restated) Assets: Current and other assets Capital assets Total assets Governmental Business-type activities activi!i Total $ 95,946,019 35,614, ,560, ,432, ,582, ,0 15,452 $ 426,378, ,197, ,575,697 Deferred outflow of resources: Deferred pension contributions 4,362, ,820 4,671,5 11 Total assets and deferred outflow of resources $ 430, 741, ,506, ,247,208 Liabilities: Long-term liabilities $ 193,990,851 26,356, ,347,359 Other liabilities 35,466,285 2,466,259 37,932,544 Total liabilities 229,457,136 28,822, ,279,903 Net position: Net investment in capital assets 142,867, ,922, ,790,680 Restricted net position: Capital projects 8,320,449 2,601,160 10,921,609 Other Unrestricted net position 50,095,897 29,159,119 79,255,016 Total net position 201,284, ,683, ,967,305 Total liabilities and net position $ 430,741, ,506, ,247,208 Component unit - public schools 20,312,607 52,447,242 72,759,849 7,767,601 80,527, ,913,243 16,060, ,973,604 52,273, ,430 (113,301,255) (60,446, 154) 80,527,450 The largest portion of the County's net position at June 30, 2015 (77.0%) reflects its investment in capital assets (e.g., land, buildings, machinery and equipment), less any related debt used to acquire those assets that are still outstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The unrestricted portion of net position (21.8%) may be used to meet the County's ongoing obligations to citizens and creditors. The remaining portion of net position (1. l % ) is restricted for specific purposes. At the end of the current fiscal year, the County was able to report positive balances in all three categories of net position, both for the primary government as a whole, as well as for its separate governmental and business-type activities. 7 (Continued) D-8

69 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 The Public Schools' net position increased 0.7% to approximately ($60.0) million. Of the balance, a deficit of $113, 731,569 for unrestricted net position exists at June 30, 2015 from the adoption of GASB Statement No. 68 and $53.3 million is invested in capital assets. The increase in net position is primarily attributable to the capitalization of ongoing and completed capital projects. Summary of Changes in Net Position Year ended June 30, 2015 Component Governmental Business-type unit - public activities activit~ Total schools Revenues: Program revenues: Charges for services $ 16,715,136 16,452,120 33,167,256 2,314,333 Operating grants and contributions 31,767,861 31,767,861 16,483,871 Capital grants and contributions 346,627 5,284,379 5,631,006 General revenues: Property taxes 113,359, ,359,672 Other taxes 22,771,626 22,771,626 Grants and contributions not restricted to specific programs 113,568,153 Interest and investment earnings 232, , ,595 4,174 Miscellaneous 4,217,842 1,013,854 5,231, ,785 Total revenues 189,411,152 22,998, ,409, ,611,316 Expenses: General government administration 19,278,147 19,278,147 Judicial administration 5,598,594 5,598,594 Public safety 23,996,973 23,996,973 Public works 6,985,073 6,985,073 Health and welfare 7,013,325 7,013,325 Education 87,713,464 87,713, , 185,613 Parks, recreation and cultural 9,386,351 9,386,351 Community development 10,692,736 10,692,736 Interest on long-term debt 7,787,361 7,787,361 Service Authority 19,888,935 19,888,935 Total expenses 178,452,024 19,888, ,340, ,185,613 Change in net position 10,959,128 3,109,625 14,068, ,703 Net position at beginning of year 201,284, ,683, ,967,305 ~60,446, 154) Net position at end of year $ 212,243, , 792, ,036,058 (60,020,451) 8 (Continued) D-9

70 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 Summary of Changes in Net Position Year ended June 30, 2014 (as restated) Governmental activities Business-type activity Total Component unit - public schools Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Other taxes Grants and contributions not restricted to specific programs Interest and investment earnings Miscellaneous Total revenues Expenses: General government administration Judicial administration Public safety Public works Health and welfare Education Parks, recreation and cultural Community development Interest on long-term debt Service Authority Total expenses Change in net position Net position at beginning of year Net position at end of year $ 16,063,721 16,131,430 30,572,383 1,286,856 3,388, ,899,484 21,435, , ,061 1,875, , ,472,333 20,307,695 9,249,487 5,216,769 25,964,996 7,244,367 6,671,151 85,595,145 10,897,006 10,676,484 8,822,326 21,002, ,337,731 21,002,926 13,134,602 (695,231) 188,149, ,378,465 $ 201,284, ,683,234 32,195,151 2,537,194 30,572,383 16,091,244 4,675, ,899,484 21,435, ,960, ,419 4,087 2,395, , , 780, ,817,177 9,249,487 5,216,769 25,964,996 7,244,367 6,671,151 85,595, ,387,124 10,897,006 10,676,484 8,822,326 21,002, ,340, ,387,124 12,439,371 (109,569,947) 358,527,934 49,123, ,967,305 (60,446,154) Governmental Activities For the fiscal year ended June 30, 2015, revenues from governmental activities totaled $189,411,152. Of this amount, $53,279,854, or 28.0%, is received from sources other than local tax revenue. Real estate tax revenues, the County's largest single revenue source, totaled $84,693,239. The County's assessed real property tax base for fiscal year 2015 was $11,148,405,300, which was an increase of 0.7% from fiscal year Overall, the net position increased by $10,959,128 from last year. In fiscal year 2015, the County reported current year collections of $19,184,266 in personal property taxes, and received reimbursement from the Commonwealth of Virginia of $9, 770, Under the provisions of the Personal 9 (Continued) D-10

71 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 Property Tax Relief Act (PPTRA), the state's share oflocal personal property tax was approximately 51 % of most taxpayer's payments. For the fiscal year ended June 30, 2015, expenses for governmental activities totaled $178,452,024, including payments of $87,713,464 to Public Schools. Total expenses increased by $8,114,293 over fiscal year The increase to expenses was primarily due to an increase in the reduction of capital assets. Business-Type Activity The business-type activity had an increase in net position of $3, 109,625 during fiscal year This was a result of increased water demand primarily attributable to irrigation, an increase in the number and value of water and sewer system dedications, an increase in proffer collections, and the absence of one-time emergency infrastructure and equipment repairs. Overall, the expenses decreased from last year by 5.3%. The primary source of revenue consists of charges for water and sewer services, which totaled $12,588,470 and increased by 6.5% from last year. This decrease was primarily due to a decline in water demands. Component Unit - Public Schools The Schools received $84,348,424 from the County during fiscal year This money supported the operating and capital activities for the Schools. Expenses increased by 4.6% from fiscal year 2014, which is primarily a result of an increase in costs for retirement benefit and utilization of health insurance. Revenues increased by 2.9% from the previous fiscal year. This is primarily due to an increase in local funding for operating and capital. Financial Analysis of the County's Funds The County's General Fund experienced an overall decrease in fund balance of $3,470,273. This was mostly due to one-time transfers to the Capital Projects Fund for capital expenditures and a planned draw on capital reserves for debt funding. The portion of the unassigned fund balance for fiscal liquidity totaled $23,360,679, which was 10.7% of the total general governmental expenditures (from table l la on page 135), including the County's share of the Public Schools' operating expenditures, and within the goal of 8% to 12%. General Fund Budgetary Highlights The overall difference between the original budget and the final amended budget for revenues increased by $38,489. There were supplemental appropriations for insurance recovery funds for damaged equipment and vehicles. Actual General Fund revenues received were 0.2%, or $416,874 more than what had been budgeted and increased 1.6% or $2,885,410 from fiscal year The largest increase in revenues from fiscal year 2014 to fiscal year occurred in the County's share of state sales tax for education revenues totaling $667,098. Real estate tax revenues, both current and delinquent, are the County's largest revenue source and for fiscal year 2015 totaled $84,693,239 and was $106,761 less than the amended budget. Personal property taxes, another large source of local tax funding, had combined collections from the state and local taxpayers of $28,954,403. State revenues, not including the personal property tax reimbursement, were $292,138 less than budgeted. State revenues, not including the personal property tax reimbursement, increased $430,322 in fiscal year 2015 from fiscal year 2014 levels. This increase is primarily due to receiving more in state sales tax for education, which increased $667,098 from fiscal year (Continued) D-11

72 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 General Fund budgeted expenditures were 2.9% below the final budget, or $4,309,696, which was primarily due to reduced departmental spending. Of this amount, $740,458 is for encumbrances and is assigned in the fund balance. As a result of an increase in transfers to other funds, the fund balance decreased to $34,663,432. This was a decrease of $3,470,273 or 9.1%from2014. Other Governmental Funds The County maintains seven individual governmental funds. Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances for all funds, which can be found on pages The other governmental funds had an increase in fund balance of $210,861 in fiscal year 2015 from Proprietary Fund The County operates one proprietary fund, James City Service Authority (JCSA or the Authority), which provides water and sewer service to County residents. The proprietary funds had an increase of $3,109,625 in net position during the fiscal year primarily as a result of an increase in water demand primarily attributable to irrigation, an increase in the number and value of water and sewer system dedications, an increase in proffer collections, and the absence of one-time emergency infrastructure and equipment repairs. Capital Assets and Debt Administration At the end of fiscal year 2015, the County' s investment in capital assets for its governmental and business-type activities totaled $490,678,846 (net of accumulated depreciation). This investment in capital assets includes land, construction in progress, land improvements, buildings and improvements, water and sewer systems, infrastructure, equipment, and vehicles. The County does not own its roads and they are therefore not included in the capital assets. In addition, the Public Schools own all school buildings and the related debt is County debt. The value associated with the purchase and/or construction of the Public Schools' buildings is reported as capital assets in the governmental activities of the County to properly match with the associated debt, as allowed by Virginia state law. In fiscal year 2015, the net value of school buildings reflected in the governmental activities of the County equals $195,526,837, and the associated current year's depreciation expense of $5,008,700 is reflected in the educational expense line of the County's governmental activities in the statement of net position. 11 (Continued) D-12

73 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 Capital Assets, Net of Depreciation and Amortization June 30, 2015 and Governmental Business-type 2014 activities activi!l'. Total Total Land $ 1,739,491 1,739,491 1,750,391 Land and land rights - utility plant 962, , ,995 Land and land improvements 28,132,818 13,183 28,146,001 28,100,002 Construction in progress 7,693, ,861 8,399,196 14,424,024 Water and sewer systems 132,011, ,011, ,631,413 Buildings and improvements 242,659,350 3,404, ,063, ,004,335 Improvements other than buildings 23,258,341 23,258,341 17,895,537 Equipment and vehicles 12,594,696 1,280,254 13,874,950 14,318,149 Infrastructure 6,983,063 6,983,063 5,075,718 Intangible assets - easements 8,069,177 4,570 8,073,747 8,073,747 Intangible assets - water rights 21,165:644 21,165,644 21,779,141 Total $ 329,390, ,288, ,678, ,015,452 Additional information about the County's capital assets can be found in note 7 to the financial statements. Capital Projects Fund The Capital Projects Fund is used by the County to account for the financing sources used to acquire and construct major capital projects for the general government. A major source of funding for the capital projects is transfers from the General Fund. For fiscal year 2015, $6,760,319 was transferred to the Capital Projects Fund from the General Fund. During the year, capital project expenditures of $13,424,741 included the following: Transfers to schools for renovation of Lafayette High School Transfers to schools for renovation of Jamestown High School Transfers to schools for renovation of James River Elementary School Costs associated with renovation of a fire station Construction costs associated with replacement of a fire station Costs associated with purchase of new revenue billing software Costs associated with improvements at Jamestown Beach 12 (Continued) D-13

74 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 Long-Term Debt At June 30, 2015 and 2014, the County had total outstanding debt of$194,036,422 and $212,224,772, respectively. Compensated absences, OPEB obligation and landfill postclosure care costs of $7,417,761 and $7,007,501 at June 30, 2015 and 2014, respectively, are not included in these amounts. Summary of Long-Term Debt June 30, 2015 and 2014 Governmental activities 2015 Business-type activity Total 2014 Total General obligation bonds Revenue bonds Other capital leases Total $ 65,458, ,604,000 24,115, ,833 $ 169,921,422 24,115,000 65,458,589 72,164, ,719, ,076, , , ,036, ,224,772 Additional information about the County's long-term debt can be found in note 10 to the financial statements. 13 (Continued) D-14

75 COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 Economic Factors and Next Year's Budgets and Tax Rates The County has a two-year budget cycle. The first year of a two-year cycle is adopted and appropriated and the second year is adopted for planning purposes. Fiscal year 2015 is the first year of the next two-year cycle. The fiscal year 2015 approved budget for the General Fund is $175,250,000. Fiscal year 2016 is the second year of the current two-year cycle. The fiscal year 2016 approved budget for the General Fund is $186,964,000. This budget was adopted on April 28, 2015, and reflects an $11,430,511, or a 6.1 %, increase over the amended fiscal year 2015 budget. This increase is primarily due to increases in real estate, personal property and local sales, meals and lodging tax revenues. During fiscal year 2016, real estate revenues, the largest source of general fund revenue, are projected to increase 9.4% over last year in association with a 7 cent real estate tax rate increase. Personal property tax revenue is expected to increase by 7.0% over last year. This increase is primarily due to an increase in valuations and an increase in the number of vehicles. State revenues increase by 2.9%, primarily from an increase in sales tax for education. This increase is mostly due to increased estimates of statewide sales tax. Expenditures include increased costs for a salary increase and health insurance and funding to begin the five-year update to the Comprehensive Planning process. The County's general fund contribution to the Williamsburg-James City County School Board will be $82,917,697, which is a 2.6% or $2,116,033 increase from fiscal year Contacting the County's Financial Management This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the County's finances and to demonstrate the County's accountability for the money it receives. Questions concerning this report or requests for additional information should be directed to the Department of Financial and Management Services, 101-F Mounts Bay Road, P.O. Box 8784, Williamsburg, Virginia D-15 14

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77 BASIC FINANCIAL STATEMENTS D-17

78 COUNTY OF JAMES CITY, VIRGINIA Statement of Net Position June 30, 2015 Exhibit 1 Discretely presented Primary government comeonent units Economic Governmental Business-type Public Development Assets activities activity Total schools Authori~ Cash and cash equivalents (note 2) $ 25,463, ,750 26,301,153 17,120,502 1,238,005 Investments (note 2) 7,782,994 33,007,483 40,790,477 Cash and cash equivalents and investments - restricted (notes 2 and 3) 3,606,789 2,716,277 6,323,066 Receivables, net of allowance for uncollectibles: Taxes, including penalties 30,673,904 30,673,904 Accounts 2,574,394 2,574,394 83,239 Interest 22,377 88, , Loans 3,272,914 3,272,914 Notes 31,531 31,531 15,239 Miscellaneous 5,727,243 38,520 5,765,763 4,807 Internal balances (note 5) 1,346,004 (1,346,004) Due from component unit 325, ,283 Due from primary government (note 8) 81,591 Due from other governments, net (note 6) 9, 112,556 9, 112, ,964 Inventory 340, ,432 1,158,141 35,675 Prepaid 2,111 2,111 Other assets 1,186,838 1,186,838 Capital assets (note 7): Land and land improvements 28,132,818 2,715,669 30,848,487 8,435, ,106 Construction in progress (note 17) 7,693, ,860 8,399, l 96 1,944, ,510 Buildings, improvements and equipment 415,792, ,204, ,997,226 74,439,518 12,719 Intangible assets 8,069,178 25,004,570 33,073,748 Less accumulated depreciation and amortization (130,297,223) (120,342,588) (250,639,811) (31,269,614) (6,565) Net capital assets 329,390, ,288, ,678,846 53,549, ,770 Total assets 418,253, ,053, ,307,466 71,717,652 1,746,052 Deferred Outflow of Resources Deferred pension contributions (note 12) 4,091, ,920 4,422,073 9,802,152 Total assets and deferred outflow of resources $ 422,345, ,384, ,729,539 81,519,804 1,746,052 Liabilities Liabilities: Accounts payable (note 4) $ 3,588, ,052 3,973,796 2,212, ,190 Accrued liabilities (note 4) 1,171, ,705 1,689,016 12,459, l 95 Liabilities payable from restricted assets 939, ,352 Due to component units (note 8) 81,591 81,591 Due to primary government (note 8) 325,283 Advances for construction (note 17) 32,902 32,902 Amounts held for others 196, ,804 Unearned revenue (note 9) 3,682,264 3,682, ,436 Net pension liability (note 12) 15,458, ,493 16,398,285 Long-term liabilities (notes 10, 11 and 13): Due within one year 19,468, ,010 20,301, ,817 Due in more than one year 157,269,808 23,882, , 152, ,821,350 Total liabilities 201,660,375 26,787, ,448, ,487, ,190 Deferred Inflow of Resources Deferred pension investment experience (note 12) 8,441, ,802 9,245,288 17,052,806 Net Position Net position: Net investment in capital assets 159,469, ,173, ,642,424 53,328, ,770 Restricted net position: Capital projects 1,551,387 2,716,277 4,267,664 Other 382,866 Unrestricted net position 51,222,452 32,903,518 84,125,970 (l 13,731,569) 1,240,092 Total net position 212,243, ,792, ,036,058 (60,020,451) 1,645,862 Total liabilities and net position $ 422,345, ,384, ,729,539 81,519,804 1,746,052 See accompanying notes to basic financial statements. D-18 16

79 COUNTY OF JAMES CITY, VIRGINIA Statement of Activities Year ended June 30, 2015 Functions/programs Primary government: Governmental activities: General government administration Judicial administration Public safety Public works Health and welfare Education (including payments to school system) Parks, recreation and cultural Community development Interest on long-tenn debt $ Expenses 19,278,147 5,598,594 23,996,973 6,985,073 7,013,325 87,713,464 9,386,351 10,692,736 7,787,361 Charges for services 8,047,642 1,832,471 3,455, ,799 3,109,047 Program revenues Operating grants and contributions 23,394,952 1,213,771 1,665,855 13,010 3,668,230 9,390 1,802,653 Total governmental activities 178,452,024 16,715,136 31,767,861 Business-type activity - Service Authority Total primary government $ Component units: Economic Development Authority $ Public Schools Total component units $ 19,888, ,340, , ,185, ,533,308 16,452,120 33,167,256 20,575 2,314,333 2,334,908 31,767, ,946 16,483,871 16,646,817 General revenues: Taxes: Property taxes, levied for general purposes Local sales and use taxes Franchise license tax Taxes on recordation and wills Hotel and motel room taxes Restaurant food taxes Deeds of conveyance Penalties and interest Grants and contributions not restricted to specific programs Interest and investment earnings Miscellaneous Total general revenues Change in net position Net position - beginning, restated Net position - ending Capital grants and contributions 15, , , ,627 5,284,379 5,631,006 See accompanying notes to basic financial statements. D-19 17

80 Exhibit 2 Net (expenses) revenues and changes in net assets Discretely presented component units Primary government Economic Governmental Business-type Public Development activities activity Total schools Authority 12,164,447 12,164,447 (2,537,152) (2,537,152) (18, 718,808) (18,718,808) (6,701,264) (6,701,264) (3,345,095) (3,345,095) (87,713,464) (87,713,464) (6,093,620) (6,093,620) (8,890,083) (8,890,083) (7,787,361) (7,787,361) (129,622,400) ( 129,622,400) 1,847,564 1,847,564 (129,622,400) 1,847,564 (127,774,836) (164,174) (113,387,409) (113,387,409) (164,174) $ 113,359, ,359,672 10,533,390 10,533, , ,497 1,372,519 1,372,519 3,353,337 3,353,337 6,600,364 6,600, , , ,374 23, ,568, , , ,595 4,174 13,759 4,217,842 1,013,854 5,231, ,785 33, ,581,528 1,262, ,843, ,813,112 47,583 10,959,128 3,109,625 14,068, ,703 (116,591) 201,284, ,683, ,967,305 (60,446,154) 1,762,453 $ 212,243, ,792, ,036,058 ( 60,020,451) 1,645,862 D-20 18

81 COUNTY OF JAMES CITY, VIRGINIA Balance Sheet Governmental Funds June 30, 2015 Exhibit 3 Major Funds Nonmajor Total Capital Debt governmental governmental Assets General projects service funds funds Cash and cash equivalents and investments $ 7,689,056 15,069,695 2,704,652 25,463,403 Investments 6,363,552 1,419,442 7,782,994 Cash and cash equivalents and investments - restricted (note 3) 865,424 1,387,116 1,354,249 3,606,789 Receivables, net of allowance for uncollectibles: Taxes 30,563, ,429 30,673,904 Interest 22,377 22,377 Loans 3,272,914 3,272,914 Miscellaneous (note 4) 5,455,108 10, ,013 5,727,243 Due from other funds (note 5) 414,339 1,412,880 1,827,219 Due from blended component unit (note 8) 1,346,004 1,346,004 Due from component unit (note 8) 1,340,460 1,340,460 Due from other governments, net (note 6) 7,600,487 1,512,069 9,112,556 Inventory 340, ,709 Prepaid item 2,111 2,111 Total assets $ 61,980,965 19,322,392 9,215,326 90,518,683 Liabilities and Fund Balances Liabilities: Accounts payable (note 4) $ 2,719, , ,261 3,588,744 Accrued liabilities (note 4) 305,996 16, ,700 Liabilities payable from restricted assets 866,177 73, ,352 Due to other funds (note 5) 1,221, ,612 1,827,219 Due to component units (note 8) 94, ,680 40,092 1,096,768 Unearned revenue (note 9) 22,109, ,283,004 25,392,855 Total liabilities 27,317,533 1,592,257 4,257,848 33,167,638 Fund balances: Nonspendable: Loans 540, ,850 Inventory 340, ,709 Prepaid item 2,111 2,111 Committed 1,551, ,551,456 Assigned: General 5,991,822 16,178,748 22,170,570 Capital reserve 4,968,111 4,968,111 Other governmental funds 4,416,559 4,416,559 Unassigned: General 23,360,679 23,360,679 Total fund balances 34,663,432 17,730,135 4,957,478 57,351,045 Total liabilities and fund balances $ 61,980,965 19,322,392 9,215,326 90,518,683 D (Continued)

82 COUNTY OF JAMES CITY, VIRGINIA Balance Sheet Governmental Funds June 30, 2015 Exhibit 3 Reconciliation of the balance sheet for governmental funds to the government-wide statement of net position: Ending fund balance - governmental funds Amounts reported for governmental activities in the balance sheet are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Land held for resale and future development used in governmental activities are not financial resources and therefore are not reported in the funds. Other long-term assets are not available to pay for current-period expenditures and therefore are deferred in the funds. Deferred pension contributions do not provide current financial resources and therefore are not deferred in the governmental funds. Net pension liability and deferred pension investment experience do not require the use of current financial resources and therefore are not accrued as liabilities or deferred in the governmental funds. Obligation for OPES is not due and payable in the current period and is not recorded as a liability in the governmental funds. Unmatured interest payable reported in governmental activities will not be paid with current financial resources and therefore is not reported in the funds. Long-term liabilities, including notes and bonds payable, are not due and payable in the current period and therefore are not reported in the funds. General obligation bonds, net Capital leases Lease revenue bonds Compensated absences Landfill postclosure care cost Net assets of governmental activities $ (65,458,589) (858,833) (I 03,604,000) (3,454,777) ( 1, 168, 160) $ 57,351, ,390,782 1,186,838 21,710,591 4,091,153 (23,900,278) (2, 193,962) (848,611) ( 174,544,359) $ 212,243,199 See accompanying notes to basic financial statements. 20 D-22

83 COUNTY OF JAMES CITY, VIRGINIA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year ended June 30, 2015 Exhibit 4 Major Funds Nonmajor Total Capital Debt governmental governmental General projects service funds funds Revenues: General property taxes $ 112,542, ,542,078 Other local taxes 21,986, ,516 22,771,626 Peimits, privilege fees and regulatory licenses 8,443,821 8,443,821 Fines and forfeitures 271, ,615 Revenue from use of money and property 142,230 87,051 3, ,388 Charges for services 5,944,750 5,944,750 Miscellaneous 320,563 2,105, , ,426 3, 102,305 Intergovernmental: Local 348, ,910 Commonwealth 26,292,362 3,433,410 29,725,772 Federal 6,834 4,087,922 4,094,756 Total revenues 175,950,363 2,192, ,584 9,119, ,478,021 Expenditures: Current: General government administration 9,432,889 9,432,889 Judicial administration 4, 171,806 1,427,922 5,599,728 Public safety 26,531, ,686 27,475,307 Public works 6.962,923 13,610 6,976,533 Health and welfare 1,785,160 5,408,681 7,193,841 Education 79,610,865 79,610,865 Parks, recreation and cultural 9,673, ,465 9,858,887 Community development 5,454, ,767 4,994,440 l0,769,064 Nondepartmental 525, ,433 Debt service: Principal retirement 16,862,695 16,862,695 Interest, other fiscal charges and early retirement 7,787,361 7,787,361 Capital outlay - governmental activities 8,656,374 8,656,374 Capital outlay - school activities 4,768,367 4,768,367 Total expenditures 144, 148,976 13,424,741 24,969,823 12,973, ,517,344 Excess (deficiency) ofrevenues over (under) expenditures 31,801,387 (11,231,866) (24, 754,239) (3,854,605) (8,039,323) Other fmancing sources (uses): Sale of land 1,115,537 1,115,537 Issuance of debt 34,185,000 34,185,000 Payment to escrow agent (l,700,906) (37,671,046) (39,371,952) Premium on bond issuance 3,907,273 3,907,273 Transfers in (note 5) 6,760,319 24,445,875 4,065,466 35,271,660 Transfers out (note 5) (35,271,660) (35,271,660) Underwriters discount (112,863) (112,863) Total other fmancing sources (uses) (35.271,660) 6,174,950 24,754,239 4,065,466 (277,005) Net change in fund balances (3,470,273) (5,056,916) 210,861 (8,316,328) Fund balances at beginning of year 38,133,705 22,787,051 4,746,617 65,667,373 Fund balances at end of year $ 34,663,432 17,730,135 4,957,478 57,351,045 D (Continued)

84 COUNTY OF JAMES CITY, VIRGINIA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year ended June 30, 2015 Exhibit 4 Reconciliation of the statement of revenues, expenditures and changes in fund balances of governmental funds to the statement of activities: Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures; however, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This amount represents the difference between depreciation expense and capital outlay expenditures. The details of this difference are as follows: Depreciation expense Capital outlay expenditures Cost of assets sold Because some revenues will not be collected for several months after the County's fiscal year end, they are not considered "available" revenues and are deferred in the governmental funds. Deferred revenue decreased by this amount this year. The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, refunding costs, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related accounts. The details of this difference are as follows: Principal payments Payment to escrow agent Premium on debt issuance Underwriters discount Cost of issuance Deferred costs OPEB obligation Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. This difference includes the increase in vested compensated absences of $5,335, increase in landfill postclosure care cost of $2,485, decrease in accrued interest of $525,510, and decrease in pension and pension-related deferred amounts of $2,018,409. Change in net assets of governmental activities $ (12,115,327) 10,962,816 (186,076) 16,862,695 2,533,773 (3,907,273) 112, ,364 1,732,928 (383,000) $ (8,316,328) (l,338,587) 817,594 17,260,350 2,536,099 $ 10,959,128 ========= See accompanying notes to basic financial statements. D-24 22

85 Current assets: Cash and cash equivalents Investments Receivables, net of allowance for uncollectibles: Accounts Interest Notes Miscellaneous Inventory Total current assets Noncurrent assets: Capital assets (notes 7, I 0 and 17): Land Land - utility plant Land improvements Construction in progress Water and sewer systems - utility plant Buildings and improvements Office fixtures and equipment Automotive equipment Intangible assets Less accumulated depreciation and amonization Net capital assets Investments restricted for future use (note 2) Total noncurrent assets Total assets Deferred pension contributions Total assets and deferred outflow of resources Liabilities: Current liabilities: Accounts payable Accrued salaries Compensated absences, current ponion Due to other funds (note 5) Deposits Interest payable Current ponion of bonds payable (note l 0) Total current liabilities Noncurrent liabilities: Advances for construction (note 17) OPEB liability Bonds payable, net of current portion (note l 0) Compensated absences, net of current ponion Net pension liability Total noncurrent liabilities Total liabilities Deferred pension investment experience Net position: Net investment in capital assets Restricted for capital projects Unrestricted net position Total net position COUNTY OF JAMES CITY, VIRGINIA Assets Balance Sheet Proprietary Fund June 30, 2015 Deferred Outflow of Resources Liabilities Deferred Inflow of Resources Net Position Total liabilities, deferred inflow of resources and net position Exhibit 5 James City Service Authori~ $ 837,750 33,007,483 2,574,394 88,112 31, , ,432 37,395,222 1,739, ,995 13, , ,019,716 4,892,209 1,809,839 2,482,789 25,004,570 ( 120,342,588 ~ 161,288,064 2,716, ,004, ,399, ,920 $ 20 l, 730,483 $ 385,052 21, ,010 1,346, , , ,000 3,278,575 32, ,509 23,550,000 89, ,493 24,855,247 28, 133, , ,173,064 2,716,277 32,903, , 792,859 $ 20 l, 730,483 See accompanying notes to basic financial statements. D-25 23

86 COUNTY OF JAMES CITY, VIRGINIA Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Fund Year ended June 30, 2015 Exhibit 6 Operating revenues: Water and sewer services Water supply proffers Rental income Miscellaneous Total operating revenues Operating expenses: Salaries Fringe benefits Operating supplies Maintenance of buildings and equipment Utilities Contractual fees Depreciation and amortization Other Total operating expenses Operating loss Nonoperating revenues (expenses): Facility charges Investment income Gain on disposal of capital assets Interest expense, net Capital contributions Total nonoperating revenues, net Loss before contributions Increase in net position Net position at beginning of year, restated Net position at end of year $ $ James City Service Authority 12,588, , , ,104 13,578,827 4,257,924 1,546, ,288 2,067, , ,365 7,810, ,803 18,793,251 (5,214,424) 3,863, ,207 23,497 (1,095,684) 3,039,670 (2,174,754) 5,284,379 3,109, ,683, ,792,859 See accompanying notes to basic financial statements. D-26 24

87 Cash flows from operating activities: Cash receipts from customers Other operating cash receipts Cash payments to suppliers of goods and services Cash payments to employees for services Facility charges Net cash provided by operating activities Cash flows from capital and related financing activities: Payment of debt Interest paid Acquisition and construction of capital assets Proceeds from sale of capital assets COUNTY OF JAMES CITY, VIRGINIA Statement of Cash Flows Proprietary Fund Year ended June 30, 2015 Net cash used in capital and related financing activities Cash flows from investing activities: Purchases of investments Sales of investments Interest received Net cash used by investing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Reconciliation of operating loss to net cash provided by operating activities: Operating loss Adjustments to reconcile operating loss to net cash provided by operating activities: Depreciation and amortization Facility charges Changes in assets and liabilities: Accounts receivable Accounts receivable, miscellaneous Notes receivable Inventory Accounts payable Accrued salaries Change in compensated absences Due to other funds Deposits OPEB liability Decrease in net pension liability and related deferred inflows/outflows ofresources Net cash provided by operating activities Supplemental schedule - noncash capital and investing activities: Capital asset contributions Unrealized loss from change in fair value of investments Exhibit 7 James City Service Authority $ 12,447,781 1,067,923 (4,368,094) (5,977,476) 3,863,650 7,033,784 (545,000) (1, 104,431) (1,241,159) 33,118 (2,857,472) (28,269,994) 24,103, ,393 (3,925,532) 250, ,970 $ 837,750 $ (5,214,424) 7,810,808 3,863,650 (153,087) 48,103 29,463 2,768 (83,377) 21,605 (44,208) 890,509 12,398 36,000 (186,424) $ 7,033,784 $ 5,284,379 $ (166,009) See accompanying notes to basic financial statements. D-27 25

88 COUNTY OF JAMES CITY, VIRGINIA Statement of Fiduciary Net Position Fiduciary Funds June 30, 2015 Exhibit 8 Assets Cash and cash equivalents (note 2) Restricted cash and cash equivalents and investments with fiscal agent/trustee (notes 2 and 12): Money market funds Bond mutual funds Debt and equities U.S. stock funds International stock funds Accounts receivable Total assets Liabilities and Net Position Liabilities: Accounts payable and accrued liabilities Amounts held for others Total liabilities Net position: Held in trust for employees' retirement $ $ $ Pension trust fund 7,194, ,981 9,682,472 10,486, ,182 28,765,301 28,765,301 Total liabilities and net position $ 28,765,301 ======= Agency funds 2,104,591 7,575,422 2,487,716 12,167, ,552 11,535,177 12,167,729 12,167,729 See accompanying notes to basic financial statements. D-28 26

89 COUNTY OF JAMES CITY, VIRGINIA Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year ended June 30, 2015 Exhibit 9 Additions: Revenue from use of money and property Contributions Deductions: Total additions Distributions to employees Change in net position held in trust for employees' retirement Net position at beginning of year Net position at end of year Pension trust fund $ 962,117 2,400,440 3,362,557 2,101,990 1,260,567 27,504,735 $ 28,765,302 See accompanying notes to basic financial statements. D-29 27

90 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (1) Summary of Significant Accounting Policies The County of James City (the County or the primary government) operates under the County Administrator form of government (as defined under Virginia Law). The elected five-member Board of Supervisors appoints a County Administrator to serve as the Chief Executive Officer of the County. The accompanying financial statements of the County of James City, Virginia conform to U.S. generally accepted accounting principles (GAAP) applicable to government units promulgated by the Governmental Accounting Standards Board (GASB). The following is a summary of the County's more significant accounting policies: (a) The Financial Reporting Entity As defined by U.S. GAAP established by GASB, the financial reporting entity consists of the primary government and its component units, which are legally separate organizations for which the Board of Supervisors of the County is financially accountable. Financial accountability is defined as appointment of a voting majority of the component unit's board, and either (a) the ability to impose will by the primary government, or (b) the possibility that the component unit will provide a financial benefit or impose a financial burden on the primary government. These financial statements present the County and its component units. The component units discussed below are included in the County's reporting entity because of the significance of the operational or financial relationships with the County. Blended Component Unit 1. James City Service Authority The James City Service Authority (the Authority) was established on June 30, 1969, by resolution of the Board of Supervisors of James City County, Virginia and was chartered by the Commonwealth of Virginia State Corporation Commission in July 1969 to provide water and sewer service to County residents as permitted under the Code of Virginia, 1950, as amended (the Enabling Act). The Authority's governing body is appointed by the James City County Board of Supervisors, although the Authority is legally separate. The James City County Board of Supervisors is the appointed Board of Directors of the Authority. The County can impose its will over the Authority, significantly influencing the programs, projects, activities, or level of service. Although a financial benefit or burden relationship may not exist, the County is financially accountable. The Authority is accounted for as a proprietary fund and its financial statements have been blended with the County's financial statements for reporting purposes. The Authority's financial statements for the fiscal year ended June 30, 2015 may be obtained from the Department of Financial and Management Services, 101-F Mounts Bay Road, P. 0. Box 8784, Williamsburg, Virginia (Continued) D-30

91 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Discretely Presented Component Units 1. Williamsburg-James City County Public Schools The Williamsburg-James City County Public Schools (the Public Schools), pursuant to an agreement dated January 14, 1954, as amended, is responsible for educating the school-age population of the City of Williamsburg, Virginia (the City) and the County. Two members of the School Board are appointed by the City Council of the City. Five members of the School Board represent James City County and are elected by the citizens of James City County. Although the Public Schools are legally separate, the County is financially accountable due to the significance of the fiscal dependency relationship with the Public Schools. Local costs related to operations of the Public Schools are apportioned between the participating localities in accordance with the agreement, as amended. For the fiscal year ended June 30, 2015, the apportionment of the Public Schools' operating costs to the City and County was $8,528,952 and 9.68% and $79,580,057 and 90.32%, respectively. For the fiscal year ended June 30, 2015, the contributions for the Public Schools' capital project costs from the City and County were $576,704 and 10.79% and $4,768,367 and %, respectively. The Public Schools' financial statements for the fiscal year ended June 30, 2015 may be obtained from the Finance Department, 117 Ironbound Road, Williamsburg, Virginia James City County Economic Development Authority The James City County Economic Development Authority (the Development Authority) is responsible for industrial and commercial development in the County. The Development Authority makes recommendations to the James City County board of supervisors. The Development Authority consists of seven members appointed by the James City County Board of Supervisors. Although the Development Authority is a legally separate entity, the County is financially accountable due to the significance of the fiscal dependency relationship with the Development Authority because the majority of their income is appropriated by the County. From time to time, the Development Authority has issued Industrial Revenue Bonds (the Bonds) to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The Bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the Bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the County, the state, nor any political subdivision thereof is obligated in any manner for repayment of the Bonds. Accordingly, the Bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2015, there were 13 series of Industrial Revenue Bonds outstanding, with an aggregate principal amount payable of approximately $186 million. The Development Authority's financial statements for the fiscal year ended June 30, 2015 may be obtained from the Director of Economic Development, 101 -D Mounts Bay Road, Williamsburg, Virginia (Continued) D-31

92 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Other Related Organizations and Joint Ventures Separate financial statements for the fiscal year ended June 30, 2015, for all other related organizations and joint ventures discussed below except the Colonial Community Corrections Program, Inc., the Virginia Peninsulas Public Service Authority, and the Williamsburg Regional Library, may be obtained from the Director of Budget and Accounting of James City County, 101-F Mounts Bay Road, P.O. Box 8784, Williamsburg, Virginia Williamsburg Area Medical Assistance Corporation The Williamsburg Area Medical Assistance Corporation (the Corporation) was incorporated on February 19, The Corporation provides a primary medical care clinic to economically disadvantaged persons in the Counties of James City and York and the City of Williamsburg. The County appoints two board members to the Corporation. The Corporation is a legally separate organization, and the County cannot impose its will on the Corporation. The program is fiscally independent, and there is no financial benefit or burden relationship with the County. The County is fiscal agent for the Corporation, and as a result, the Corporation's financial transactions are included as an agency fund in the County's financial statements. 2. Colonial Community Corrections Program The Colonial Community Corrections Program (the Program) serves the Counties of James City, New Kent, York and Charles City, and the City of Williamsburg. The Program is fiscally independent, and there is no financial benefit or burden relationship with the County. The County is the fiscal and administrative agent and the Program is included as a special revenue fund in the County's financial statements. 3. Virginia Peninsulas Public Service Authority The Virginia Peninsulas Public Service Authority (the Public Service Authority), was created pursuant to the Code of Virginia, 1950, as amended, between the Cities of Hampton, Newport News, Poquoson and Williamsburg, and the Counties of Essex, Gloucester, James City, King and Queen, King William, Mathews, Middlesex and York. The Public Service Authority's financial statements for the fiscal year ended June 30, 2015 may be obtained from the Public Service Authority, 475 McLaws Circle, Suite 3B, Williamsburg, Virginia Each jurisdiction appoints one board member. The Public Service Authority is a legally separate organization, and the County cannot impose its will on the Public Service Authority. The Public Service Authority is fiscally independent, and there is no financial benefit or burden relationship with the County; therefore, it is not included in the County's financial statements. 4. Williamsburg Regional Library Pursuant to an agreement dated May 26, 1977, as amended, the Williamsburg Regional Library (the Library) provides library services to the City of Williamsburg, James City County and York County. The Library is operated by a board of trustees. The County appoints 6 trustees, the City of Williamsburg appoints 4 trustees and York County appoints 1 trustee. The Library is a legally 30 (Continued) D-32

93 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 separate organization, and the County cannot impose its will on the trustees. The Library is fiscally independent, and there is no financial benefit or burden relationship with the County; therefore, it is not included in the County's financial statements. The Library's financial statements for the fiscal year ended June 30, 2015 may be obtained from the Library, 7770 Croaker Road, Williamsburg, Virginia Virginia Peninsula Regional Jail Authority The Virginia Peninsula Regional Jail Authority (the Jail Authority) was organized and exists pursuant to resolutions adopted in 1993 by and between the Cities of Williamsburg and Poquoson and the Counties of James City and York. The Jail Authority is operated by a board. Each member jurisdiction appoints one member and the sheriff from that jurisdiction. The County, as fiscal agent, appoints one additional member. The Jail Authority is a legally separate organization, and the County cannot impose its will on the Jail Authority. The Jail Authority is fiscally independent, and there is no financial benefit or burden relationship with the County. The County is charged user fees based on inmate population in order to cover direct and indirect costs of the Jail Authority. The County is fiscal agent for the Jail Authority, and as such, the Jail Authority's financial transactions are included as an agency fund in the County's financial statements. 6. Middle Peninsula Juvenile Detention Commission The Middle Peninsula Juvenile Detention Commission (the Commission) was created as a political subdivision of the Commonwealth of Virginia by resolutions adopted in The member jurisdictions are as follows: Caroline County, Charles City County, Essex County, Gloucester County, Hanover County, James City County, King and Queen County, King William County, Lancaster County, Mathews County, Middlesex County, New Kent County, Northumberland County, City of Poquoson, Richmond County, Westmoreland County, City of Williamsburg and Yark County. The Commission is operated by a board. Each member jurisdiction appoints one member. The Commission is a legally separate organization, and the County cannot impose its will on the Commission. The Commission is fiscally independent, and there is no financial benefit or burden relationship with the County. The County is charged user fees based on juvenile population in order to cover direct and indirect costs of the Commission. The County is fiscal agent for the Commission, and as such, the Commission's financial statements are included as an agency fund in the County's financial statements. 7. Williamsburg Area Transit Authority The Williamsburg Area Transit Authority (the Transit Authority) was created as a political subdivision of the Commonwealth of Virginia by resolutions adopted in Members include the County, City of Williamsburg, County of York and the Colonial Williamsburg Foundation. The Transit Authority is governed by a board, consisting of five representatives appointed by the members. The Transit Authority is a legally separate organization, and the County cannot impose its will on the Transit Authority. The Transit Authority is fiscally independent from the 31 (Continued) D-33

94 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 County, and there is no financial benefit or burden relationship with the County. The County is fiscal agent for the Transit Authority, and as such, the Transit Authority's financial statements are included as an agency fund in the County's financial statements. (b) The Financial Reporting Model In June 1999, GASB issued Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis-for State and Local Governments. This statement, known as the "Reporting Model" statement, affects the way the County prepares and presents financial information. State and local governments, including other governmental entities such as the County, traditionally have used a financial reporting model substantially different from the one used to prepare private-sector financial reports. GASB Statement No. 34 establishes requirements and a new reporting model for the annual financial reports of state and local governments, including other governmental entities. The statement was developed to make annual reports easier to understand and more useful to the people who use governmental financial information to make decisions and includes: Management's Discussion and Analysis - GASB Statement No. 34 requires that financial statements be accompanied by a narrative introduction and analytical overview of the government's financial activities in the form of"management's discussion and analysis" (MD&A). This analysis is similar to analysis the private sector provides in their annual reports. Government-Wide Financial Statements - The reporting model includes financial statements prepared using full accrual accounting for all of the government's activities. This approach includes not just current assets and liabilities (such as cash and accounts payable) but also capital assets and long-term liabilities (such as buildings and debt). Accrual accounting also reports all of the revenues and cost of providing services each year, not just those received or paid in the current year or soon thereafter. Statement of Net Position - The government-wide statement of net position is designed to display the financial position of the County. Governments report all capital assets, including infrastructure, in the government-wide statement of net position and report depreciation expense - the cost of "using up" capital assets - in the statement of activities. The net position of a government are broken down into three categories - 1) net investment in capital assets; 2) restricted; and 3) unrestricted. Statement of Activities - The government-wide statement of activities reports expenses and revenues in a format that focuses on the cost of each of the government's functions. The expense of individual functions is compared to the revenues generated directly by the function (for instance, through user charges or intergovernmental grants). Fund Financial Statements - These statements are, in substance, very similar to the financial statements presented in the previous financial reporting model. Emphasis here is on major funds. 32 (Continued) D-34

95 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (c) Government-Wide and Fund Financial Statements The accompanying basic financial statements include both government-wide (based on the County as a whole) and fund financial statements. While the previous reporting model emphasized fund types (the total of all funds of a particular type), in the new reporting model, the focus is on either the County as a whole or major individual funds (within the fund financial statements). Both the government-wide and fund financial statements (within the basic financial statements) categorize primary activities as either governmental or business type. fu the government-wide statement of net position, the governmental and business-type activities columns (a) are presented on a consolidated basis by column, and (b) are reflected, on a full accrual basis of accounting and economic resources measurement focus, which incorporates long-term assets and receivables as well as long-term debt and obligations. The County generally first uses restricted assets for expenses incurred for which both restricted and unrestricted assets are available. The County may defer the use of restricted assets based on a review of the specific transaction. The government-wide statement of activities reflects both the gross and net cost per functional category that are otherwise being supported by general government revenues. The statement of activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants and contributions. The program revenues must be directly associated with the function or a business-type activity. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meeting the operation or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. Administrative overhead charges are allocated to the programs and included in direct expenses. The operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. fu the fund financial statements, financial transactions and accounts of the County are organized on the basis of funds. The operation of each fund is considered to be an independent fiscal and separate accounting entity, with a self-balancing set of accounts recording cash and/or other financial resources together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The governmental fund statements are presented on a current financial resources measurement focus and modified accrual basis of accounting. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements' governmental activities column, a reconciliation is presented which explains the adjustments necessary to reconcile the fund financial statements to the governmental activities column of the government-wide financial statements. The County's fiduciary funds are presented in the fund financial statements. Since, by definition, these assets are being held for the benefit of third parties and cannot be used to address activities or obligations of the County, these funds are not incorporated into the government-wide statements. The County reports the following major governmental funds: General Fund - The General Fund is the general operating fund of the County. It is used to account for all financial resources except those required to be accounted for in other funds. A significant part 33 (Continued) D-35

96 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 of the General Fund's revenues is contributed to the joint-school operations of the City and County or is transferred to other funds principally to fund debt service, capital projects and social services requirements. Capital Projects Fund - The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by the proprietary fund. Debt Service Fund - The Debt Service Fund is used to account for the accumulation of resources for, and the payment of principal, interest and related costs on long-term debt of governmental funds. The County reports the following major proprietary fund: James City Service Authority - The James City Service Authority accounts for the operation of the County's water and sewer services. Additionally, the County reports the following fund types: Nonmajor Governmental Funds - Nonmajor Governmental Funds include special revenue funds which account for revenue derived from specific sources that are restricted by legal and regulatory provisions to finance specific activities of the County. These funds consist of Virginia Public Assistance, Colonial Community Corrections, Community Development, Trust, Tourism Investment, and Grants and Special Projects. Nonmajor Fiduciary Funds - Nonmajor Fiduciary Funds are used to account for assets held by the County in a trustee capacity or as an agent for individuals, private organizations, other governmental units and/or other funds. The Fiduciary Funds of the County are the Pension Trust Fund, which is the Deferred Compensation Plan and is accounted for in essentially the same manner as proprietary funds. Also included are the Agency Funds, which consist of Special Welfare, Williamsburg Area Medical Assistance Corporation, Regional Jail, Juvenile Detention, and Williamsburg Area Transit Authority. (d) Basis of Accounting and Measurement Focus The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using the current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet in the funds statements. Long-term assets and long-term liabilities are included in the government-wide statements. Operating statements of the governmental funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. The accompanying fund financial statements of the governmental funds are maintained and reported on the modified accrual basis of accounting using the current financial resources measurement focus. Under this method of accounting, revenues are recognized in the period in which they become measurable and available to finance operations during the year. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are 34 (Continued) D-36

97 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 collected within 45 days of the end of the current fiscal period. Expenditures, other than interest on long-term debt, are recorded when the fund liability is incurred. Interest on long-term debt is recorded when due. In applying the modified accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of those revenues. In one, monies must be expended for the specific purpose or project before any amounts will be paid to the County, which is usually within 45 days; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and are usually revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenues at the time of receipt or earlier if the susceptible to accrual criteria are met. Real estate and personal property taxes are recorded as revenues and receivables when levied and billed, net of allowances for uncollectible amounts. Property taxes levied but not collected within 45 days after year end are reflected as deferred revenue. Sales taxes, which are collected by the state and subsequently remitted to the County, are recognized as revenues and receivables upon execution of the sale, which is generally two months preceding receipt by the County. License and permits, fines and rents are recorded as revenue when received in cash because they are generally not measurable until actually received. Investment earnings are recorded at fair value as earned since they are measurable and available. The government-wide and the proprietary fund financial statements are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these activities are included on the statement of net position. The proprietary fund-type operating statement presents increases (e.g., revenues) and decreases (e.g., expenses) in net total assets. The statement of net position, statement of activities and financial statements of the proprietary fund are presented on the accrual basis of accounting. Under this method of accounting, revenues are recognized when earned and expenses are recorded when liabilities are incurred without regard to receipt or disbursement of cash. The proprietary fund distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the County's proprietary fund are charges to customers for services. Operating expenses for the proprietary fund include the cost of services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. (e) Cash and Cash Equivalents For purpose of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments that are both (a) readily convertible to known amounts of cash, and (b) so near the maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, the County considers investments with original maturities of 90 days or less to be cash equivalents. 35 (Continued) D-37

98 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (/) Allowance for Uncollectible Accounts The County calculates its allowance for uncollectible accounts using historical collection data and specific account analysis. The allowance for uncollectible accounts relating solely to property taxes was $65,160 in the General Fund at June 30, Additionally, the County recorded an allowance for uncollectible accounts of $39,214 related to business, professional and occupational license taxes and $1,703,194 for the Advance Life Support/Basic Life Support (ALS/BLS) fees. The Authority has few uncollectible receivables and does not use allowance accounts. State law permits filing of liens against real property for unpaid utility charges. The write-off of bad debts only occurs when the property is sold prior to the lien process being instituted. (g) (h) (i) Investments All investments of the County are stated at fair value as of June 30, 2015, in accordance with the provisions of GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Inventory All inventories, which consist of materials and supplies, are valued at cost using the average-cost method. Reported inventories are accounted for under the consumption method (i.e., recorded as expenditures when used) in the governmental and proprietary funds. The cost is recorded as an expenditure at the time individual inventory items are consumed. Quantities on hand at year end are recorded at cost on the balance sheet with an offsetting reserve to fund balance which indicates that they do not constitute available spendable resources. Capital Assets Capital outlays are recorded as expenditures of the General and Special Revenue Funds and as assets in the accompanying government-wide financial statements to the extent the County's capitalization threshold of $5,000 is met. Depreciation is recorded on capital assets on a government-wide basis. Capital outlays of the proprietary funds are recorded as capital assets and depreciated over their estimated useful lives on a straight-line basis on both the funds basis and the government-wide basis. All capital assets are valued at historical cost or estimated historical cost if actual cost was not available. Contributed capital assets are valued at their estimated fair market value on the date donated. Maintenance, repairs and minor equipment are charged to operations when incurred. Expenditures that materially change capacities or extend useful lives are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation, if applicable, are eliminated from the respective accounts and any resulting gain or loss is included in the results of operations. 36 (Continued) D-38

99 COUNTY OF JAMES CITY, VffiGINIA Notes to Basic Financial Statements June 30, 2015 Depreciation of capital assets is calculated on the straight-line basis over the following estimated useful lives: Buildings and improvements Improvements other than buildings Equipment and vehicles Infrastructure 10 to 50 years 6 to 40 years 3 to 20 years 20 to 40 years (j) (k) Compensated Absences County employees are granted sick and vacation leave in varying amounts based on length of service. They may accumulate, subject to certain limitations, unused sick and vacation leave, and upon retirement, termination, or death, may be compensated for certain amounts at their then current rates of pay. The accumulated annual sick and vacation leave estimated to be payable upon separation are recorded in the accompanying government-wide financial statements. Unbilled Revenue The Authority records the amount of earned but unbilled service charges revenue by prorating actual subsequent billings. Amounts accrued but unbilled were approximately $1,196,000 at June 30, (/) Property Taxes Real property taxes are recognized as receivables when levied. Real property taxes attach as an enforceable lien on property automatically. Taxes are levied no later than October 1 and are due by December 5 and June 5. Property taxes levied in the current and prior year have been recorded in governmental activities as receivables as of the date the County has the legal right to receive payments thereon. Personal property taxes create a lien on the assessed property. The receivables collected during the fiscal year and during the first 45 days of the succeeding fiscal year are recognized in the General Fund as revenues in the current fiscal year. A penalty of 10% of the tax is assessed on December 6 and June 6 on taxes outstanding as of those dates and interest at 10% per annum is added. (m) Risk Management The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Property and liability coverages are provided through a group self-insurance risk pool. The County's retention is through deductibles on a per-claim basis. Deductibles and coverage limits at June 30, 2015 are on the following page: 37 (Continued) D-39

100 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Property Flood Earthquake Inland marine General liability and law enforcement Automobile: Liability Comprehensive Collision Crime Workers' compensation $ Deductibles 10,000 25,000 25,000 1, , ,000 1,000 1, None Property insurance: Valuation at functional replacement Flood (outside 100 year flood plain) Business interruption/extra expense Property in transit Increased cost of construction/ordinance demolition Back-up of sewers and drains Debris removal Pollutant clean-up and removal Off premises power failure Media reproduction Newly acquired locations for up to 120 days General liability and law enforcement Automobile liability Public officials Crime Workers' compensation $ Coverage limits 83,792,000 83,792,000 3,000,000 5,000,000 20,000,000 1,000,000 20,000, ,000 2,000, ,000 20,000,000 9,000,000 9,000,000 9,000, ,000 Statutory limits There have been no reductions in insurance coverages from the prior year, and settled claims have not exceeded the amount of insurance coverage in any of the past three fiscal years. Effective July 1, 2011, the County participates in the group self-insurance risk pool with Virginia Association of Counties to provide Line of Duty Act benefits to eligible participants. During fiscal year 2015, the County made a payment of $137,452 for these premiums. 38 (Continued) D-40

101 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (n) Bond Premiums, Discounts and Issuance Costs In the accompanying government-wide financial statements, bond premiums and discounts are deferred and amortized over the terms of the related issues on a straight-line basis, which approximates the effective interest method. In the accompanying fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. (o) (p) (q) Interfund Transactions Interfund transactions are reflected as either loans, services provided, reimbursements or transfers. Loans are reported as receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide presentation. Encumbrances Encumbrance accounting, in which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriations, is employed as an extension of formal budgetary integration in the General, Special Revenue and Capital Projects Funds. Encumbrances outstanding at year end are reported as assigned in fund balance since they do not constitute expenditures or liabilities under GAAP. Fund Balances Fund balances are reported according to the following categories: Nonspendable - Amounts that cannot be spent because they are not in spendable form, or are legally or contractually required to be maintained intact. This classification includes inventories, prepaid amounts, assets held for sale, and long term receivables. Restricted - Amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers or through enabling legislation. Committed - Amounts that can be used only for the specific purposes determined by formal action of the Board of Supervisors by adoption of an ordinance and cannot be used for any other purpose unless the County removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. In contrast to fund balance that is restricted by enabling legislation, committed fund balance may be redeployed for other purposes with appropriate due process. 39 (Continued) D-41

102 COUNTY OF JAMES CITY, vmginia Management's Discussion and Analysis June 30, 2015 Assigned - Amounts that are intended to be used for specific purposes, but do not meet the criteria as restricted or committed. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed. In the general fund, assigned amounts represent intended uses established by the Board of Supervisors, or as delegated to the Director of Financial and Management Services. The Board of Supervisors has, by resolution, authorized the Director of Financial and Management Services to assign fund balance. Unlike commitments, assignments generally only exist temporarily and an additional action is not normally required to be taken for the removal of an assignment. Unassigned - Includes the residual classification for the County's general fund and includes all spendable amounts not contained in other classifications. Only the general fund can report a positive unassigned fund balance. This includes the County's goal of maintaining a fiscal liquidity balance between 10%-12% of the total general governmental expenditures. The County' s policy is to apply expenditures against restricted resources first when either restricted or unrestricted amounts are available. Within unrestricted fund balance, it is the County's policy to apply expenditures against committed amounts first, followed by assigned, and then unassigned amounts. In a governmental fund other than the general fund, a negative unassigned fund balance could result if expenditures incurred for a specific purpose exceeds the amounts in the fund that are restricted, committed, and assigned for that purpose. For the fiscal year ended June 30, 2015, the General Fund has the following amounts assigned or unassigned: Assigned Unassigned Capital projects $ Health insurance Potential insurance loss Capital reserve fund Encumbrances Fiscal liquidity $ 1,878,000 3,073, ,000 4,968, ,458 10,959,933 23,360,679 23,360,679 (r) The committed fund balance for the Capital Projects Fund was $1,551,387 at June 30, 2015 and was primarily for amounts approved related to bond proceeds received for improvements at three schools and a replacement of a fire station. The assigned fund balance in the capital projects fund was $16,178,748 at June 30, 2015 and was for ongoing capital projects. The assigned fund balance in the other governmental funds was $4,416,559 at June 30, 2015 and was primarily for ongoing expenditures. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at 40 (Continued) D-42

103 - COUNTY OF JAMES CITY, VIRGINIA Management's Discussion and Analysis June 30, 2015 (s) (t) the date of the financial statements. Such estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. New Accounting Principles The County has adopted GASB Statement 68, Accounting and Financial Reporting for Pensions -An Amendment ofgasb Statement 27 ("GASB 68") and GASB Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an Amendment to GASB Statement 68 ("GASB 71 "). GASB 68 replaces the requirements of Statement 27, Accounting/or Pensions by State and Local Governmental Employers, as well as the requirements of Statement 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements that meet certain criteria. GASB 68 establishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures. Note disclosure and required supplementary information requirements about pensions are also addressed. This statement details the recognition and disclosure requirements for employers with liabilities to a defined benefit pension plan and for employers whose employees are provided with defined contribution pensions. GASB 71 provides accounting and financial reporting guidance for contributions, if any, made by an employer to a defined benefit plan after the measurement date of the government's beginning net pension. The accounting changes required by GASB 68 and 71 are applied retroactively by reclassifying the statement of net position, balance sheet information, and results of operations. Subsequent Events In preparing these financial statements, the County has evaluated events and transactions for potential recognition or disclosure through November 23, 2015 the date the financial statements were available to be issued. (2) Cash and Cash Equivalents and Investments (a) Primary Government Deposits At year end, the carrying value of the deposits with banks and savings and loans was $29,907,947 and the bank balance was $31,797,120. The difference between the carrying value of bank deposits and the bank balance is primarily due to outstanding checks and deposits in transit. The entire bank balance was covered by federal depository insurance or collateralized in accordance with the Virginia Security for Public Deposits Act (the Act). Under the Act, banks holding public deposits in excess of the amounts insured by the Federal Deposit Insurance Corporation (FDIC) must pledge collateral in the amount of 50% of excess deposits to a collateral pool in the name of the State Treasury Board. Savings and loan institutions are required to collateralize l 00% of deposits in excess of FDIC limits. If any member financial institution fails, the entire collateral becomes available to satisfy the claims of the County. If the value of the pool's collateral is inadequate to cover a loss, additional amounts would be assessed on a pro rata basis to the members (banks and savings and loans) of the pool; therefore, these deposits are considered collateralized and as a result are considered insured. The State Treasury Board is responsible for 41 (Continued) D-43

104 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 monitoring compliance with the collateralization and reporting requirements of the Act and for notifying local governments of compliance by banks and savings and loans. (b) Investments As of June 30, 2015, the primary government had the following investments and maturities: Fair value Original investment maturity (in years) Less than Commonwealth of Virginia LGIP Money market funds Certificates of deposit Federal agency bonds/notes Corporate notes Municipal bonds U.S. Treasury notes $ 32,322 4,528,267 3,473,079 6,921,684 6,658, ,301 20,986,131 32,322 4,528, , ,953 1,517,282 50,014 1,554,086 2,973,079 5,154,449 6,608, ,301 19,432,045 $ 43,506,749 5,310,542 3,121,382 35,074,825 (c) Summary of Deposits A reconciliation of the carrying value of deposits and investments reported above to amounts reported in the statement of net position is as follows: Deposits $ 29,907,947 Investments 43,506,749 $ 73,414,696 Cash and cash equivalents $ 26,301,153 Investments 40,790,477 Cash and cash equivalents and investments - restricted 6,323,066 $ 73,414,696 (d) Investment Policy In accordance with the Code of Virginia and other applicable law, including regulations, the County's Investment Policy (the Policy) permits investments in U.S. government obligations, municipal obligations, prime quality commercial paper, and certain corporate notes, bankers' acceptances, repurchase agreements, negotiable certificates of deposit, bank deposit notes, mutual funds that invest exclusively in securities specifically permitted under the Policy, and the State Treasurer's Local Government Investment Pool (the Virginia LGIP, a 2a-7 like pool). The fair value of the Commission's position in the LGIP is the same as the value of the pool shares. The Treasury Board of the Commonwealth of Virginia has regulatory oversight of the LGIP. 42 (Continued) D-44

105 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 The Policy establishes limitations on the holdings of non-u.s. government obligations. The maximum percentage of the portfolio (book value at the date of acquisition) permitted in each security is as follows: Registered money market mutual funds Commonwealth of Virginia LGIP Bank deposits Repurchase agreements Bankers' acceptances Commercial paper Negotiable certificates of deposit/bank notes Municipal obligations Corporate notes 100% maximum 100% maximum 100% maximum 50%maximum 40%maximum 35%maximum 20%maximum 20%maximum 15% maximum (e) Credit Risk As required by state statute, the Policy requires that commercial paper have a short-term debt rating of no less than "A-1" (or its equivalent) from at least two of the following; Moody's Investors Service, Standard & Poor's, Fitch Investor's Service, and Duff and Phelps. Corporate notes must have a minimum of"aa" long-term debt rating by Moody's Investors Service and a minimum of"aa" longterm debt rating by Standard & Poor's. Negotiable Certificates of Deposit and bank deposit notes maturing in less than one year must have a short-term debt rating of at least "A-1" by Standard & Poor's and "P-1" by Moody's Investors Service. Notes having a maturity of greaterthan one year must be rated "AA" by Standard & Poor's and "Aa" by Moody's Investors Service. Although state statute does not impose credit standards on repurchase agreement counterparties, bankers' acceptances or money market mutual funds, the County has established stringent credit standards for these investments to minimize portfolio risk. The County's investments as of June 30, 2015 were rated by Standard & Poor's, Moody's and Fitch and/or an equivalent national rating organization and the ratings are as follows: Investment ratings AAA/AA+ AA AA- A-1+ A-1 Money market funds $ 249,818 Certificate of deposit 1,900, ,579 Corporate notes 2,511,671 1,939,321 2,207,972 Federal agency bonds/notes 6,921,684 Municipal bonds 906,302 US Treasure notes/bonds 20,986,129 Total $ 31,325,786 1,939,321 4,108, , , (Continued) D-45

106 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Commonwealth of Virginia LGIP, U.S. Treasury Notes, a portion of money market funds and a portion of certificate of deposit, totaling $4,933,199 at June 30, 2015, are unrated; therefore, they are not included in the information presented on the previous page. (/) Concentration of Credit Risk The Policy establishes limitations on portfolio composition by issuer in order to control concentration of credit risk. No more than 5% of the County's portfolio will be invested in the securities of any single issuer with the following exceptions: U.S. Treasury Each money market mutual fund Each federal agency Each repurchase agreement counterparty 100% maximum 50%maximum 35%maximum 25% maximum As of June 30, 2015, the portions of the County's portfolio (excluding the blended component units), excluding U.S. Treasury notes, which exceed 5% of the total portfolio are as follows: Federal Home Loan Mortgage Corporation Federal National Mortgage Association PFM Funds - Prime, Institutional Class 19.6% (g) Interest Rate Risk As a means of limiting exposure to fair value losses arising from rising interest rates, the County's Policy limits the investment of short-term operating funds to an average weighted maturity of no more than 180 days, with a portion of the portfolio continuously invested in readily available funds. The operating fund core portfolio will be invested in permitted investments with a stated maturity of no more than five years from the date of purchase. To control the volatility of the core portfolio, the Treasurer will determine a duration target, not to exceed three years. Proceeds from the sale of bonds must be invested in compliance with the specific requirements of the bond covenants and may be invested in securities with longer maturities, so long as the maturity does not exceed the expected disbursement date of those funds. (h) Custodial Credit Risk The Policy requires that all investment securities purchased by the County or held as collateral on deposits or investments shall be held by the County or by a third-party custodial agent who may not otherwise be a counterparty to the investment transaction. As of June 30, 2015, all of the County's investments are held in a bank's trust department in the name of James City County. 44 (Continued) D-46

107 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (i) Component Unit - Public Schools Cash and cash equivalents: Bank deposits (including school agency funds) Certificates of deposit Investment in LGIP $ 17,954,344 29, ,309 $ 18,190,898 At year end, the carrying value of the Public Schools' deposits with banks and savings institutions in the General Fund and the Agency Fund was $17,120,502 (excluding $1,070,396 of the School Activity Funds) and the bank balance was $20,734,808. The difference between the carrying value of bank deposits and the bank balance is primarily due to outstanding checks and deposits in transit. The bank balance is fully covered by federal depository insurance or collateralized in accordance with the Act. (j) Component Unit - Economic Development Authority - Deposits Cash and cash equivalents: Bank deposits Investment in LGIP Certificates of deposit $ 197, ,040,320 $ 1,238,005 At year end, the carrying value of the Development Authority's deposits with banks and savings institutions was $197,443 and the bank balance was $197,461. The bank balance, which may differ from the carrying value of deposits primarily due to outstanding checks and deposits in transit, is fully covered by federal depository insurance (FDIC) or collateralized in accordance with the Act. (3) Restricted Cash and Cash Equivalents and Investments Restricted cash and cash equivalents and investments of the County's governmental activities at June 30, 2015, are detailed as follows: Fund Purpose Amount Capital projects Lease bonds $ 1,387,116 General Subdivision escrow 865,424 Grants and special projects Grants and special projects 110,953 Community development Community rehabilitation 1,243,296 $ 3,606, (Continued) D-47

108 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (4) Receivables and Payables Amounts due from miscellaneous sources in the General Fund at June 30, 2015, are detailed as follows: Sales tax $ l,927,294 Emergency medical services l,190,017 Meals tax 889,369 Other 550,731 Business license 268,427 Charges for services 235,175 Recordation tax 178,275 Deeds of conveyance 103,352 Williamsburg Regional Library 65,325 Utility consumption fee 28,813 Fines and forfeitures 18,330 $ 5,455,108 Accounts payable and accrued liabilities at June 30, 2015, are comprised of the following: Accounts Accrued ~al'.able liabilities Total General $ 2,719, ,996 3,025,662 Capital projects 629, ,817 Other governmental funds 239,261 16, ,965 Governmental funds 3,588, ,700 3,911,444 Accrued interest 848, ,611 Governmental activities $ 3,588,744 1,171,311 4,760, (Continued) D-48

109 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (5) Interfund Receivables, Payables and Transfers Interfund receivable and payable balances are considered short-term in nature. All other balances resulted from the time-lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. At June 30, 2015, the balances are as follows: Due to other funds: Due from other funds Capital General Projects Total General $ 1,221,607 1,221,607 Nonmajor governmental funds 414, , ,612 Service Authority 1,346,004 1,346,004 Total $ 1, 760,343 1,412,880 3,173,223 lnterfund Receivable Interfund Pa~able General fund $ 414,339 1,221,607 Capital Projects 1,412,880 Nonmajor governmental funds: Virginia public assistance 292,977 Colonial community corrections 9,252 Community development 290,537 Trust fund 1,030 Tourism investment 1,572 Grants/special projects 10,244 Total $ 1,827,219 1,827, (Continued) D-49

110 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Interfund transfers for the year ended June 30, 2015, consisted of the following: Transfers to other Funds Transfers from other Funds General fund $ 35,271,660 Capital projects 6,760,319 Debt service 24,445,875 Nonmajor governmental funds 4,065,466 Total $ 35,271,660 35,271,660 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Transfers Transfers Net in out transfers Governmental funds: General fund $ (35,271,660) (35,271,660) Capital projects 6,760,319 6,760,319 Debt service 24,445,875 24,445,875 Nonmajor governmental funds 4,065,466 4,065,466 Total $ 35,271,660 (35,271,660) Transfers from the General Fund to Capital Projects Fund represent the County's budgeted pay-asyou-go funding. Transfers from the General Fund to Debt Service Fund represent the movement of restricted receipts from the funds collecting the receipts as debt service payments become due. Transfers from the General Fund to various Nonmajor governmental funds represent the movement of funds collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. 48 (Continued) D-50

111 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (6) Due from Other Governments Details of amounts due from other governments as of June 30, 2015 are as follows: Governmental activities: General Fund: Local Governments: City of Williamsburg Other Commonwealth of Virginia: Recordation tax Rolling stock tax Communications sales and use tax State sales tax Personal property tax relief Compensation Board Other Total General Fund Nonmajor Governmental Funds: Local Governments: City of Williamsburg Other Commonwealth of Virginia: Virginia Department of Social Services Virginia Department of Housing and Community Development Other Federal Government: Department of Homeland Security Department of Social Services Department of Transportation Other Total Nonmajor Governmental Funds Total Governmental Activities $ $ 102,523 15, ,040 59, ,019 1,960,844 4,836, ,980 39,949 7,600,487 15, , , ,042 66, , , ,564 1,51 2,069 9,11 2,556 D (Continued)

112 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Component Unit - Public Schools: Federal government $ 750,571 Commonwealth of Virginia 178,393 Total $ 928,964 All amounts due from other governments are expected to be collected within one year. (7) Capital Assets The following is a summary of changes in capital assets for the fiscal year ended June 30, 2015: Governmental Activities Balances Balances Jul~ 1, 2014 Increases Decreases June 30, 2015 Capital assets not being depreciated: Land and land improvements $ 28,086, , ,000 28,132,818 Construction in progress 12,675,404 9,920,162 14,902,230 7,693,336 Intangible assets - easements 8,069,178 8,069,178 Total capital assets not being depreciated 48,831,401 10,146,161 15,082,230 43,895,332 Other capital assets: Buildings and improvements 324,196,109 4,332, , , 135,903 Improvements other than buildings 25,982,862 6,507,417 32,490,279 Equipment and vehicles 43,369,641 3,097,759 1,801,763 44,665,637 Infrastructure 8,242,402 2,258,452 10,500,854 Total other capital assets 401,791,014 16,195,753 2,194, ,792,673 Less accumulated depreciation for: Buildings and improvements 78,698,283 7,021, ,449 85,476,553 Improvements other than buildings 8,087,325 1,144,612 9,231,937 Equipment and vehicles 30,237,626 3,597,884 1,764,569 32,070,941 Infrastructure 3,166, ,108 3,517,792 Total accumulated depreciation 120,189,918 12,115,323 2,008, ,297,223 Other capital assets, net 281,601,096 4,080, , ,495,450 $ 330,432,497 14,226,591 15,268, ,390, (Continued) D-52

113 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Depreciation was charged to governmental functions as follows: General government administration Judicial administration Public safety Public works Parks, recreation and cultural Community development Education Nondepartmental Total depreciation expense - governmental activities $ 860, ,965 2,357, ,661 1,770, ,139 5,008,700 1,263, 198 $ 12,115, D-53 (Continued)

114 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Business-Type Activity Balances Jul~ 1, 2014 Increases Capital assets not being depreciated: Land $ 1,750,391 1,600 Land - utility plant 962,995 Land improvements 13,183 Construction in progress 1,748,620 1,773,110 Intangible assets - easements 4,570 Total capital assets not being depreciated 4,479,759 1,774,710 Other capital assets: Water and sewer systems - utility plant 237,026,604 7,070,270 Buildings and improvements 4,884,119 40,860 Office fixtures and equipment 1,696, ,734 Automotive equipment 2,349, ,334 Intangible assets - water rights 25,000,000 Total other capital assets 270,957,582 7,579,198 Less accumulated depreciation and amortization for: Water and sewer systems - utility plant 105,395,191 6,680,140 Buildings and improvements 1,377, ,225 Office fixtures and equipment 1,000, ,585 Automotive equipment 1,860, ,360 Intangible assets - water rights 3,220, ,497 Total accumulated depreciation and amortization 112,854,386 7,810,808 Other capital assets, net 158,103,196 (231,609~ $ 162,582,955 1,543,102 Balances Decreases June 30, ,500 1,739, ,995 13,183 2,815, ,860 4,570 2,828,370 3,426,099 77, ,019,716 32,770 4,892,209 16,827 1,809, ,472 2,482,789 25,000, , ,204,553 67, ,007,794 32,770 1,488,065 16,826 1,109, ,473 1,903,277 3,834, , ,342,588 9, ,861,966 2,837, ,288,064 Depreciation and amortization of $7,810,808 was charged to water and sewer operations as follows: Water $ 4,899,603 Sewer 2,911,205 $ 7,810, (Continued) D-54

115 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Component Unit - Public Schools Balances Julr 1, 2014 Increases Decreases Balances June 30, 2015 Capital assets not being depreciated: Land improvements $ 8,435,126 Construction in progress 6,054,125 3,527,417 Total capital assets not being depreciated 14,489,251 3,527,417 Other capital assets: Buildings and improvements 44,096,015 7,711,216 Furniture and equipment 21,164,528 1,612,248 Total other capital assets 65,260,543 9,323,464 Less accumulated depreciation for: Buildings and improvements 14,135,027 2,454,823 Furniture and equipment 13,167,525 1,550,328 Total accumulated depreciation 27,302,552 4,005,151 Other capital assets, net 37,957,991 5,318,313 $ 52,447,242 8,845,730 7,637,300 7,637, , ,489 38,089 38, ,400 7,743,700 8,435,126 1,944,242 10,379,368 51,807,231 22,632,287 74,439,518 16,589,850 14,679,764 31,269,614 43,169,904 53,549,272 Depreciation of $4,005,151 was charged to the Public Schools' governmental functions. The total construction in progress for the Public Schools is $6,535,798. Capital outlay expenditures totaling $4,591,556 are presented in the County's construction in progress balance in order to match the corresponding debt. 53 (Continued) D-55

116 COUNTY OF JAMES CITY, vmginia Notes to Basic Financial Statements June 30, 2015 Component Unit- Economic Development Authority Capital assets not being depreciated: Balances Balances Jul;r 1, 2014 Increases Decreases June 30, 2015 Land $ 233, ,106 Construction in progress 166, ,510 Total capital assets not being depreciated 399, ,616 Other capital assets: Furniture and equipment 5,119 5,119 Intangible assets 7,600 7,600 Total other capital assets 12,719 12,7 19 Less accumulated depreciation for: Furniture and equipment 1, ,005 Intangible assets 3,040 1,520 4,560 Total accumulated depreciation 4,533 2,032 6,565 Other capital assets, net 8,186 ~2,032~ 6,154 $ 407,802 (2,032) 405, (Continued) D-56

117 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (8) Amounts Due From and To Component Units The Service Authority owes the County $1,346,004 at June 30, 2015, which primarily represents payroll expenses. The County funds its construction costs for new schools through the Capital Projects Fund for the component unit- Public Schools. At June 30, 2015, the County owed the Public Schools $1,014,769, which primarily represents construction incurred by the Public Schools. The Public Schools owed the County $1,340,052, which represents local schools funds unexpended at year end that are contractually required to be returned to the County. Additionally, the County owed the Development Authority $82,000, which primarily represents payments for Development Authority grants. The Development Authority owed the County $409, which is a reimbursement for a telecommunications expense. (9) Unearned Revenue Unearned revenue represents amounts for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met. Under the modified accrual basis of accounting, such amounts are measurable, but not available. Details of unearned revenue as of June 30, 2015 follow: Other General Capital governmental fund ~rojects funds Total Prepaid property taxes $ 399, ,260 Unexpended grants 3,283,004 3,283,004 Governmental activities 399,260 3,283,004 3,682,264 Property taxes not collected within 45 days 21,709, ,710,591 Governmental funds $ 22,109, ,283,004 25,392, (Continued) D-57

118 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (10) Long-Term Liabilities Primary Government A summary of the County's long-term liability activity for governmental activities for the fiscal year ended June 30, 2015, is presented below: Amounts Retirements Amounts Amounts payable at and payable at due within July 1, 2014 Additions reductions June 30, 2015 one ~ear Governmental activities: General obligation bonds $ 63,510,000 21,610,000 30,490,000 54,630,000 7,940,000 Deferred amounts: Add bond premium 8,654,244 3,907,273 1,732,928 10,828,589 Total general obligation bonds 72,164,244 25,517,273 32,222,928 65,458,589 7,940,000 Other capital lease 984, , , ,377 Lease revenue bonds 114,416,000 12,575,000 23,387,000 I 03,604,000 8,747,000 OPEB obligation 1,810, ,000 2,193,962 Compensated absences 3,449,442 3,745,245 3,739,910 3,454,777 2,591,083 Landfill postclosure care cost 1,165,675 2,485 1,168,160 60,053 Total other long-term liabilities 121,826,607 16,705,730 27,252, ,279,732 11,528,513 Governmental activities longterm liabilities $ 193,990,851 42,223,003 59,475, , 738,321 19,468,513 The General Fund or the Special Revenue Fund where the employees' salaries are charged generally liquidates compensated absences and other postemployment benefit obligation. In November 2010, the County executed a regional lease purchase agreement with York County totaling $1,312,522 to purchase enhanced 911 equipment to service each respective jurisdiction's Dispatch Center and to be compatible with current technology and telephone systems. At June 30, 2015, $1,008,200 was included in capital assets, and $100,820 depreciation expense was incurred during fiscal year (Continued) D-58

119 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 The present value of future minimum capital lease payments of the County as of June 30, 2015, is as follows: Fiscal year ending June 30: Total minimum lease payments Less amount representing interest Present value of minimum capital lease payments 162, , , , , , ,214 (115,381) $ 858,833 ======== D (Continued)

120 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (a) Governmental Activities Details of long-term bonded indebtedness: $18,800,000 School Bonds, issued May 1, 1997, maturing in various annual installments through January 15, 2018, with interest payable semiannually at 5.60% $19,220,000 School Bonds, Series 1999A, issued May 13, 1999, maturing in various annual installments through July 15, 2019, with interest payable semiannually at % $1,250,000 School Bonds, Series l 999B, issued August 17, 1999, maturing in various annual installments through July 15, 2019, with interest payable semiannually at 5.975% $39,820,000 General Obligation School Bonds, Series 2005, issued June 8, 2005, maturing in various installments through December 15, 2029, with interest payable semiannually at 3.60% $21,000,000 General Obligation Bonds, Series 2006, issued December 28, 2006, maturing in annual installments of $1,050,000 through June 15, 2026, with interest payable semiannually at 4.00% $4,820,000 General Obligation Public Improvement Refunding Bonds, Series, 2010, issued on October 20, 2010, maturing in various annual installments through December 15, 2015, with interest payable semiannually at 3.00% $1,000,000 General Obligation School Bond, Series 201 la, issued December 15, 2011, maturing in various installments through December 1, 2030, with interest payable semiannually at 4.25% $21,610,000 General Obligation Bond, Series 2014, issued August 5, 2014, maturing in various installments through December 15, 2027, with interest payable semiannually at 2.00% Total long-term bonded indebtedness Add premiums Total general obligation bonds $ 4,320,000 6,620, ,000 6,540,000 11,550,000 2,865, ,000 21,585,000 54,630,000 10,828,589 65,458,589 D (Continued)

121 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Capital lease obligation: $1,312,522 entered into on November 10, 2010, due in various annual installments through December 1, 2020, with interest paid semiannually at 3.725% Lease revenue bonds: $95,775,000 issued December 28, 2006, due in various installments through June 15, 2026, with interest paid semiannually at 5.00% $14,935,000 issued September 23, 2009, due in various installments through January 15, 2030, with interest paid semiannually at 3.50% $6,672,000 issued September 30, 2011, due in various installments through July 15, 2021, with interest paid semiannually at 2.18% $26,380,000 issued September 11, 2012, due in various installments through June 30, 2033, with interest paid semiannually at 4.00% $12,575,000 issued August 7, 2014, due in various annual installments through June 15, 2026, with interest paid semiannually at 3.00% OPEB obligation Compensated absences Landfill postclosure care costs Total other long-term liabilities Total governmental activities 858,833 52,665,000 11,430,000 4,669,000 22,265,000 12,575,000 2,193,962 3,454,777 1,168, ,279,732 $ 176,738,321 (b) Business-Type Activity A summary of the County's long-term liability activity for the business-type activity for the fiscal year ended June 30, 2015, is presented below: Amounts Retirements Amounts Amounts payable at and payable at due within July 1, 2014 Additions reductions June 30, 2015 one year Business-type activity: Revenue bonds $ 24,660, ,000 24,115, ,000 OPEB obligation 207,508 36, ,509 Compensated absences 373, , , , ,010 Total $ 25,241, ,120 1,006,680 24,715, , (Continued) D-61

122 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Details of long-term bonded indebtedness: $27,120,000 Revenue Bonds, Series 2008 issued August, 2008, maturing in various annual installments through 2040 with interest payable semiannually at 3.50% $ 24,115,000 ========= Future maturities of the County's various debt obligations together with scheduled interest payments are as follows: Governmental activities: Lease revenue General obligation bonds bonds Principal Interest Princi~al Interest Fiscal year ending June 30: ,940,000 2,291,726 8,747,000 4,666, ,345,000 1,974,336 8,857,000 4,290, ,495,000 1,677,784 8,997,000 3,882, ,095,000 1,443,575 9,147,000 3,465, ,225,000 1,268,703 8,032,000 3,040, ,650,000 4,303,275 39,844,000 9,575, ,880,000 1,481,856 16,195,000 2,140, ,785, ,787 $ 54,630,000 14,441, ,604,000 31,310,134 Future maturities of compensated absences and landfill postclosure care costs are not determinable (see note 11 ). 60 (Continued) D-62

123 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Business-type activity: Revenue bonds Principal Interest Fiscal year ending June 30: ,000 1,081, ,000 1,062, ,000 1,041, ,000 1,017, , , ,690,000 4,536, ,565,000 3,669, ,110,000 2,843, ,710,000 2,128,800 $ 24,115,000 18,372,631 Future maturities of compensated absences and landfill postclosure care costs are not determinable (see note 11). (c) Component Unit- Public Schools Amounts payable at July 1, 2014 Additions Retirements Amounts Amounts and payable at due within reductions June 30, 2015 one ~ear OPEB obligation Equipment capital leases Compensated absences Net pension liability $ 4,440, , , ,805, ,000 98, , ,000 4,996,300 51, ,020 56, ,684 1,004, ,040 16,697, ,108,314 Component Unit - Public Schools long-tenn liabilities $ 125,381,524 1,933,053 17,984, ,330, ,817 (11) Landfill Closure and Postclosure Care Cost The County closed its landfill during fiscal year 1994 and contracted with a third party to provide solid waste disposal services to its residents. This third party operates the site, collects fees based upon the source of the waste, and pays the associated expenditures. The County was responsible for construction of the transfer station and all major maintenance and repairs to it. State and federal laws and regulations require the County to perform certain maintenance and monitoring functions at the site for 10 to 30 years after closure. The $1, 168, 160 reported as landfill postclosure liability at June 30, 2015, represents the liability estimated to monitor the landfill for an average monitoring period of 25 years plus the cost of a corrective action plan. This amount is based 61 (Continued) D-63

124 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 on what it would cost to perform all closure and postclosure care in Actual costs may be higher due to inflation, technology changes, or regulation changes. The County intends to fund these costs from the net revenues collected from the above contract and from any funds accumulated for this purpose in the County General Fund. (12) Pension Plan (a) Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the County's retirement plan and the additions to/deductions from the County's retirement plan's net fiduciary position have been determined on the same basis as they were reported by the Virginia Retirement System (YRS). For this purpose, benefit payments (including refunds or employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. (b) Plan Description All full-time, salaried regular employees of participating employers are automatically covered by Virginia Retirement System (YRS) upon employment. This plan is administered by the Virginia Retirement System (the System) along with plans for other employer groups in the Commonwealth of Virginia. Members earn one month of service credit for each month they are employed and they and their employer are paying contributions to YRS. Members are eligible to purchase prior public service, active duty military service, certain periods of leave and previously refunded YRS service as service credit in their plan. YRS administers three different benefit plans for local government employees - Plan l, Plan 2 and Hybrid. Each plan has different eligibility and benefit structures as set out below. VRSPLAN 1: About VRS Plan I YRS Plan 1 is a defined benefit plan. The retirement benefit is based on a member's age, creditable service and average final compensation at retirement using a formula. Employees are eligible for YRS Plan l iftheir membership date is before July 1, 2010, and they were vested as of January 1, Eligible Members Employees are in YRS Plan 1 if their membership date is before July 1, 2010, and they were vested as ofjanuary 1, Hybrid Opt ln Election YRS non-hazardous duty covered Plan 1 members were allowed to make an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, The Hybrid Retirement Plan's effective date for eligible YRS Plan 1 members who opted in was July 1, If eligible deferred members returned to work during the election window, they were 62 (Continued) D-64

125 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 also eligible to opt into the Hybrid Retirement Plan. Members who were eligible for an optional retirement plan (ORP) and had prior service under VRS Plan 1 were not eligible to elect the Hybrid Retirement Plan and remain as VRS Plan 1 or ORP. Retirement Contributions Members contribute up to 5% of their compensation each month to their member contribution account through a pre-tax salary reduction. Some school divisions and political subdivisions elected to phase in the required 5% member contribution; all employees will be paying the full 5% by July 1, Member contributions are tax-deferred until they are withdrawn as part of a retirement benefit or as a refund. The employer makes a separate actuarially determined contribution to VRS for all covered employees. VRS invests both member and employer contributions to provide funding for the future benefit payment. Beginning July 1, 2012, the County opted for employees to pay the entire 5% member contribution. Creditable Service Creditable service includes active service. Members earn creditable service for each month they are employed in a covered position. It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member's total creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health insurance credit. Vesting Vesting is the minimum length of service a member needs to qualify for a future retirement benefit. Members become vested when they have at least five years (60 months) of creditable service. Vesting means members are eligible to qualify for retirement if they meet the age and service requirements for their plan. Members also must be vested to receive a full refund of their member contribution account balance if they leave employment and request a refund. Members are always 100% vested in the contributions that they make. Calculating the Benefit The Basic Benefit is calculated based on a formula using the member's average final compensation, a retirement multiplier and total service credit at retirement. It is one of the benefit payout options available to a member at retirement. An early retirement reduction factor is applied to the Basic Benefit if the member retires with a reduced retirement benefit or selects a benefit payout option other than the Basic Benefit. Average Final Compensation A member's average final compensation is the average of the 36 consecutive months of highest compensation as a covered employee. Service Retirement Multiplier The retirement multiplier is a factor used in the formula to determine a final retirement benefit. The retirement multiplier for non-hazardous duty members is 1. 7%. The retirement multiplier for sheriffs and regional jail superintendents is 1.85%. The retirement multiplier of eligible political subdivision 63 (Continued) D-65

126 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 hazardous duty employees other than sheriffs and regional jail superintendents is l. 7% as elected by the employer. Normal Retirement Age Age 65. Earliest Unreduced Retirement Eligibility Members who are not in hazardous duty positions are eligible for an unreduced retirement benefit at age 65 with at least five years (60 months) of creditable service or at age 55 with at least 30 years of creditable service. Hazardous duty members are eligible for an unreduced retirement benefit at age 60 with at least five years of creditable service or age 50 with at least 25 years of creditable service. Earliest Reduced Retirement Eligibility Members may retire with a reduced benefit as early as age 55 with at least five years (60 months) of creditable service or age 50 with at least 10 years of creditable service. Hazardous duty members are eligible for a reduced benefit as early as age 50 with at least five years of creditable service. Cost-of-Living Adjustment (COLA) in Retirement The Cost-of-Living Adjustment (COLA) matches the first 3% increase in the Consumer Price Index for all Urban Consumers (CPI-U) and half of any additional increase (up to 4%) up to a maximum COLAof5%. Eligibility: For members who retire with an unreduced benefit or with a reduced benefit with at least 20 years of creditable service, the COLA will go into effect on July 1 after one full calendar year from the retirement date. For members who retire with a reduced benefit and who have less than 20 years of creditable service, the COLA will go into effect on July 1 after one calendar year following the unreduced retirement eligibility date. Exceptions to COLA Effective Dates: The COLA is effective July 1 following one full calendar year (January 1 to December 31) under any of the following circumstances: The member is within five years of qualifying for an unreduced retirement benefit as of January 1, The member retires on disability. The member retires directly from short-term or long-term disability under the Virginia Sickness and Disability Program (VSDP). The member is involuntarily separated from employment for causes other than job performance or misconduct and is eligible to retire under the Workforce Transition Act or the Transitional Benefits Program. The member dies in service and the member's survivor or beneficiary is eligible for a monthly deathin-service benefit. The COLA will go into effect on July 1 following one full calendar year (January 1 to December 31) from the date the monthly benefit begins. 64 (Continued) D-66

127 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Disability Coverage Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiplier is 1. 7% on all service, regardless of when it was earned, purchased or granted. VSDP members are subject to a one-year waiting period before becoming eligible for non-work related disability benefits. Purchase of Prior Service Members may be eligible to purchase service from previous public employment, active duty military service, an eligible period of leave or VRS refunded service as creditable service in their plan. Prior creditable service counts toward vesting, eligibility for retirement and the health insurance credit. Only active members are eligible to purchase prior service. When buying service, members must purchase their most recent period of service first. Members also may be eligible to purchase periods of leave without pay. VRSPLAN2: About VRS Plan 2 VRS Plan 2 is a defined benefit plan. The retirement benefit is based on a member's age, creditable service and average final compensation at retirement using a formula. Employees are eligible for VRS Plan 2 if their membership date is on or after July 1, 2010, or their membership date is before July 1, 2010, and they were not vested as of January 1, Eligible Members Employees are in VRS Plan 2 if their membership date is on or after July 1, 2010, or their membership date is before July 1, 2010, and they were not vested as of January 1, Hybrid Opt-In Election VRS Plan 2 members were allowed to make an irrevocable decision to opt into the Hybrid Retirement Plan during a special election window held January 1 through April 30, The Hybrid Retirement Plan's effective date for eligible VRS Plan 2 members who opted in was July 1, If eligible deferred members returned to work during the election window, they were also eligible to opt into the Hybrid Retirement Plan. Members who were eligible for an optional retirement plan (ORP) and have prior service under VRS Plan 2 were not eligible to elect the Hybrid Retirement Plan and remain as VRS Plan 2 or ORP. Retirement Contributions Same as VRS Plan l. Creditable Service Same as VRS Plan l. Vesting Same as VRS Plan (Continued) D-67

128 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Calculating the Benefit See definition under VRS Plan 1. Average Final Compensation A member's average final compensation is the average of their 60 consecutive months of highest compensation as a covered employee. Service Retirement Multiplier Same as Planl for service earned, purchased or granted prior to January 1, For non-hazardous duty members the retirement multiplier is 1.65% for creditable service earned, purchased or granted on or after January 1, Normal Retirement Age Normal Social Security retirement age. Earliest Unreduced Retirement Eligibility Members who are not in hazardous duty positions are eligible for an unreduced retirement benefit when they reach normal Social Security retirement age and have at least five years (60 months) of creditable service or when their age and service equal 90. Hazardous duty members are eligible for an unreduced retirement benefit at age 60 with at least five years of creditable service or age 50 with at least 25 years of creditable service. Earliest Reduced Retirement Eligibility Members may retire with a reduced benefit as early as age 60 with at least five years (60 months) of creditable service. Hazardous duty employees are the same as YRS Plan 1. Cost-of-Living Adjustment (COLA) in Retirement The Cost-of-Living Adjustment (COLA) matches the first 2% increase in the CPI-U and half of any additional increase (up to 2%), for a maximum COLA of3%. Eligibility: Same as YRS Plan 1. Exceptions to COLA Effective Dates: Same as YRS Plan 1. Disability Coverage Members who are eligible to be considered for disability retirement and retire on disability, the retirement multiplier is 1.65% on all service, regardless of when it was earned, purchased or granted. YSDP members are subject to a one-year waiting period before becoming eligible for non-work related disability benefits. Purchase of Prior Service Same as YRS Plan l. 66 (Continued) D-68

129 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 HYBRID RETIREMENT PLAN About the Hybrid Retirement Plan The Hybrid Retirement Plan combines the features of a defined benefit plan and a defined contribution plan. Most members hired on or after January 1, 2014 are in this plan, as well as VRS Plan 1 and VRS Plan 2 members who were eligible and opted into the plan during a special election window. (See "Eligible Members") The defined benefit is based on a member's age, creditable service and average final compensation at retirement using a formula. The benefit from the defined contribution component of the plan depends on the member and employer contributions made to the plan and the investment performance of those contributions. In addition to the monthly benefit payment payable from the defined benefit plan at retirement, a member may start receiving distributions from the balance in the defined contribution account, reflecting the contributions, investment gains or losses, and any required fees. Eligible Members Employees are in the Hybrid Retirement Plan if their membership date is on or after January 1, This includes members in YRS Plan 1 or YRS Plan 2 who elected to opt into the plan during the election window held January 1-April 30, 2014; the plan's effective date for opt-in members was July 1, Some employees are not eligible to participate in the Hybrid Retirement Plan. They include members of the State Police Officers' Retirement System (SPORS), the Virginia Law Officers' Retirement System (VaLORS), or political subdivision employees who are covered by enhanced benefits for hazardous duty employees. Retirement Contributions A member's retirement benefit is funded through mandatory and voluntary contributions made by the member and the employer to both the defined benefit and the defined contribution components of the plan. Mandatory contributions are based on a percentage of the employee's creditable compensation and are required from both the member and the employer. Additionally, members may choose to make voluntary contributions to the defined contribution component of the plan, and the employer is required to match those voluntary contributions according to specified percentages. Creditable Service Defined Benefit Component: Under the defined benefit component of the plan, creditable service includes active service. Members earn creditable service for each month they are employed in a covered position. It also may include credit for prior service the member has purchased or additional creditable service the member was granted. A member's total creditable service is one of the factors used to determine their eligibility for retirement and to calculate their retirement benefit. It also may count toward eligibility for the health insurance credit in retirement, if the employer offers the health insurance credit. Defined Contributions Component: Under the defined contribution component, creditable service is used to determine vesting for the employer contribution portion of the plan. 67 (Continued) D-69

130 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Vesting Defined Benefit Component: Defined benefit vesting is the minimum length of service a member needs to qualify for a future retirement benefit. Members are vested under the defined benefit component of the Hybrid Retirement Plan when they reach five years (60 months) of creditable service. VRS Plan 1 or VRS Plan 2 members with at least five years (60 months) of creditable service who opted into the Hybrid Retirement Plan remain vested in the defined benefit component. Defined Contributions Component: Defined contribution vesting refers to the minimum length of service a member needs to be eligible to withdraw the employer contributions from the defined contribution component of the plan. Members are always 100% vested in the contributions that they make. Upon retirement or leaving covered employment, a member is eligible to withdraw a percentage of employer contributions to the defined contribution component of the plan, based on service. After two years, a member is 50% vested and may withdraw 50% of employer contributions. After three years, a member is 75% vested and may withdraw 75% of employer contributions. After four or more years, a member is 100% vested and may withdraw 100% of employer contributions. Distribution is not required by law until age 70\/i. Calculating the Benefit Defined Benefit Component: See definition under VRS Plan 1. Defined Contribution Component: The benefit is based on contributions made by the member and any matching contributions made by the employer, plus net investment earnings on those contributions. Average Final Compensation Same as VRS Plan 2. It is used in the retirement formula for the defined benefit component of the plan. Service Retirement Multiplier The retirement multiplier is 1.0%. For members that opted into the Hybrid Retirement Plan from VRS Plan 1 or VRS Plan 2, the applicable multipliers for those plans will be used to calculate the retirement benefit for service credited in those plans. Normal Retirement Age Defined Benefit Component: Same as VRS Plan 2. Defined Contribution Component: Members are eligible to receive distributions upon leaving employment, subject to restrictions. 68 (Continued) D-70

131 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Earliest Unreduced Retirement Eligibility Defined Benefit Component: Members are eligible for an unreduced retirement benefit when they reach normal Social Security retirement age and have at least five years (60 months) of creditable service or when their age and service equal 90. Defined Contribution Component: Members are eligible to receive distributions upon leaving employment, subject to restrictions. Earliest Reduced Retirement Eligibility Defined Benefit Component: Members may retire with a reduced benefit as early as age 60 with at least five years (60 months) of creditable service. Defined Contribution Component: Members are eligible to receive distributions upon leaving employment, subject to restrictions. Cost-of-Living Adjustment (COLA) in Retirement Defined Benefit Component: Same as VRS Plan 2. Defined Contribution Component: Not applicable. Eligibilitv: Same as VRS Plan 1 and VRS Plan 2. Exceptions to COLA Effective Dates: Same as VRS Plan 1 and VRS Plan 2. Disability Coverage Eligible political subdivision and school division (including VRS Plan 1 and VRS Plan2 opt-ins) participate in the Virginia Local Disability Program (VLDP) unless their local governing body provides an employer-paid comparable program for its members. Hybrid members (including VRS Plan 1 and VRS Plan 2 opt-ins) covered under VSDP or VLDP are subject to a one-year waiting period before becoming eligible for non-work related disability benefits. Purchase of Prior Service Defined Benefit Component: Same as VRS Plan 1 with the following exceptions: Hybrid retirement plan members are ineligible for ported service The cost for purchasing refunded service is the higher of 4% of creditable compensation or average final compensation Plan members have one year from their date of hire or return from leave to purchase all but refunded prior service at approximate normal cost. After that one year period, the rate for most categories of 69 (Continued) D-71

132 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 service will change to actuarial cost. Defined Contribution Component: Not applicable. (c) Employees Covered by Benefit Terms As of the June 30, 2013 actuarial valuation, the following employees were covered by the benefit terms of the pension plan: Governmental activities: Inactive members or their beneficiaries currently receiving benefits Inactive members: Vested inactive members Non-vested inactive members Inactive members active elsewhere in VRS Total inactive members Active members Total covered employees Number ,599 Business-type activities: Inactive members or their beneficiaries currently receiving Inactive members: Vested inactive members Non-vested inactive members Inactive members active elsewhere in VRS Total inactive members Active members Total covered employees Number D-72 (Continued)

133 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Component Unit - Public Schools (non-professional): Number Inactive members or their beneficiaries currently receiving benefits 82 Inactive members: Vested inactive members 19 Non-vested inactive members 70 Inactive members active elsewhere in VRS 44 Total inactive members 133 Active members 185 Total covered employees 400 (d) Contributions The contributions requirement for active employees is governed by of the Code of Virginia, as amended, but may be impacted as a result of funding options provided to political subdivisions by the Virginia General Assembly. Employees are required to contribute 5% of their compensation toward their retirement. Prior to July 1, 2012, all of the 5% member contribution was paid by the County on behalf of its employees. Beginning July 1, 2012, new employees were required to pay the 5% member contribution. In addition, for existing employees, employers were required to begin making the employee pay the 5% member contribution. This could be phased in over a period of up to 5 years and the employer is required to provide a salary increase equal to the amount of the increase in the employee-paid member contribution. The County's, Authority's, and Public Schools' contractually required contribution rates for the year ended June 30, 2015 were 11.12%, 8.49%, and 7.22% of covered employee compensation, respectively. This rate was based on an actuarially determined rate from an actuarial valuation as of June 30, This rate, when combined with employee contributions, was expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Total contributions to the pension plan from the County were $4,091, 153 and $4,362,691, the Authority were $330,920 and $308,820, and the Public Schools were $372, 141 and $435,519 for years ended June 30, 2015 and June 30, 2014, respectively. (e) Net Pension Liability The net pension liability was measured as of June 30, The total pension liability used to calculate the net pension liability was determined by an actuarial valuation performed as of June 30, 2013, using updated actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, (Continued) D-73

134 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (/) Actuarial Assumptions - General Employees The total pension liability for general employees in the County's retirement plan was based on an actuarial valuation as of June 30, 2013, using the entry age normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, Inflation: 2.5% Salary increases, including inflation: 3.5% % Investment rate of return: 7%, net of pension plan investment expense, including inflation* *Administrative expenses as a percent of the market value of assets for the last experience study were found to be approximately 0.06% of the market assets for all of the VRS plans. This would provide an assumed investment return rate for GASB purposes of slightly more than the assumed 7%. However, since the difference was minimal, and a more conservative 7% investment return assumption provided a projected plan net position that exceeded the projected benefit payments, the long-term expected rate of return on investments was assumed to be 7% to simplify preparation of pension liabilities. Mortality rates: 14% of deaths are assumed to be service related. Largest 10- Non-LEOS: Pre-retirement: RP-2000 employee mortality table projected with scale AA to 2020 with males set forward 4 years and females set back 2 years. Post-retirement: RP-2000 combined mortality table projected with scale AA to 2020 with males set forward 1 year. Post-Disablement: RP-2000 disability life mortality table with males set back 3 years and no provision for future mortality improvement. All Others (Non 10 Largest) - Non-LEOS: Pre-retirement: RP-2000 employee mortality table projected with scale AA to 2020 with males set forward 4 years and females set back 2 years. Post-retirement: RP-2000 combined mortality table projected with scale AA to 2020 with males set forward l year. Post-Disablement: RP-2000 disability life mortality table with males set back 3 years and no provision for future mortality improvement. 72 (Continued) D-74

135 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, Changes to the actuarial assumptions as a result of the experience study are as follows: Largest 10 - Non-LEOS: - Update mortality table - Decrease in rates of service retirement - Decrease in rates of disability retirement - Reduce rates of salary increase by 0.25% per year All Others (Non 10 Largest)- Non-LEOS: - Update mortality table - Decrease in rates of service retirement - Decrease in rates of disability retirement - Reduce rates of salary increase by 0.25% per year (g) Actuarial Assumptions - Public Safety Employees The total pension liability for public safety employees in the retirement plan was based on an actuarial valuation as of June 30, 2013, using the entry age normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, Mortality rates: 60% of deaths are assumed to be service related. Largest 10 - LEOS: Pre-retirement: RP-2000 employee mortality table projected with scale AA to 2020 with males set back 2 years and females set back 2 years. Post-retirement: RP-2000 combined mortality table projected with scale AA to 2020 with males set forward 1 year. Post-Disablement: RP-2000 disability life mortality table with males set back 3 years and no provision for future mortality improvement. All Others (Non 10 Largest)- LEOS: Pre-retirement: RP-2000 employee mortality table projected with scale AA to 2020 with males set back 2 years and females set back 2 years. Post-retirement: RP-2000 combined mortality table projected with scale AA to 2020 with males set forward 1 year. Post-Disablement: RP-2000 disability life mortality table with males set back 3 years and no provision for future mortality improvement. 73 (Continued) D-75

136 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from July 1, 2008 through June 30, Changes to the actuarial assumptions as a result of the experience study are on the following page: Largest 10 - LEOS: - Update mortality table - Decrease in male rates of disability All Others (Non l 0 Largest) - LEOS: - Update mortality table - Adjustments to rates of service retirement for females - Increase in rates of withdrawal - Decrease in male and female rates of disability (h) Long-Term Expected Rate of Return The long-term expected rate of return on pension system investments was determined using a lognormal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension system investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimate of arithmetic real rates of return for each major asset class are summarized in the table on the following page: 74 (Continued) D-76

137 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Arithmetic Long-Term Target Expected Asset Class (Strategy) Allocation Rate of Return U.S. Equity 19.50% 6.46% Developed Non U.S. Equity 16.50% 6.28% Emerging Market Equity 6.00% 10.00% Fixed Income 15.00% 0.09% Emerging Debt 3.00% 3.51% Rate Sensitive Credit 4.50% 3.51% Non Rate Sensitive Credit 4.50% 5.00% Convertibles 3.00% 4.81% Public Real Estate 2.25% 6.12% Private Real Estate 12.75% 7.10% Private Equity 12.00% 10.41% Cash 1.00% -1.50% Total % Inflation *Expected arithmetic nominal return Weighted Average Long-Term Expected Rate of Re tum 1.26% 1.04% 0.60% 0.01% 0.11% 0.16% 0.23% 0.14% 0.14% 0.91% 1.25% -0.02% 5.83% 2.50% 8.33% *Using stochastic projection results provides an expected range of real rates of return over various time horizons. Looking at one year results produces an expected real return of 8.33% but also has a high standard deviation, which means there is high volatility. Over larger time horizons the volatility declines significantly and provides a median return of 7.44%, including expected inflation of 2.50%. (i) Discount Rate The discount rate used to measure the total pension liability was 7%. The discount rate determination does not use a municipal bond rate. The projection of cash flows used to determine the discount rate assumed that VRS member contributions will be made per the VRS statutes and the employer contributions will be made in accordance with the VRS funding policy at rates equal to the difference between actuarially determined contribution rates adopted by the VRS Board of Trustees and the member rate. Through the fiscal year ending June 30, 2018, the rate contributed by the employer for the retirement plan will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly. From July 1, 2018 on, participating employers are assumed to contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Projected future benefit payments for all current 75 (Continued) D-77

138 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 VRS members were projected through Therefore, the long-term expected rate of return was applied to all periods of projected benefit payments to determine the total pension liability. (j) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the new pension liability using the discount rate of7%, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6%) or one percentage point higher (8%) than the current rate: Governmental activities: 1 6 /o Current 1% Decrease Discount Increase (6%) Rate (7%) (8%) Net pension liability $ 37,443,554 $ 15,458,792 $ (2,696,680) Business-type activity: 1% Current 1% Decrease Discount Increase (6%) Rate (7%) (8%) Net pension liability $ 2,967,853 $ 939,493 $ (740,025) Component Unit- Public Schools (non-professional): 1% Current 1 /o Decrease Discount Increase (6%) Rate (7%) (8%) Net pension liability $ 1,175,394 $ (804,686) $ (2,467,016) 76 (Continued) D-78

139 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (k) Changes in Net Pension Liability Governmental activities: Total pension Plan fiduciary liability (a) net eension (b) Balances at June 30, 2013 $ 145,419,002 $ 119,228,777 $ Changes for the year: Service cost 4,376,092 Interest 9,996,496 Contnbutions - employer 4,362,691 Contnbutions - employee 1,909,429 Net investment income 18,931,089 Benefit payments, including refunds of employee contnbutions (5,223,843) (5,223,843) Administrative expenses (100,186) Other changes 998 Net changes 9,148,745 19,880,178 Balances at June 30, 2014 $ 154,567,747 $ 139,108,955 $ Net pension liability (a) - (b) 26,190,225 4,376,092 9,996,496 ( 4,362,691) (1,909,429) ( 18,931,089) 100,186 {998} {10,731,433} 15,458,792 Business-type activity: Total pension Plan fiduciary liability (a) net pension (b) Balances at June 30, 2013 $ 13,242,723 $ 11,335,104 $ Changes for the year: Service cost 417,066 Interest 913,818 Contnbutions - employer 308,820 Contnbutions - employee 197,188 Net investment income 1,802,418 Benefit payments, including refunds of employee contnbutions (376,365) (376,365) Administrative expenses (9,511) Other changes 95 Net changes 954,519 1,922,645 Balances at June 30, 2014 $ 14,197,242 $ 13,257,749 $ Net pension liability (a) - (b) 1,907, , ,818 (308,820) (197,188) ( 1,802,418) 9,511 {95} {968,126} 939, D-79 (Continued)

140 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Component Unit - Public Schools (non-professional): Total pension Plan fiduciary Net pension liability (a) net pension (b) liability (a) - (b) Balances at June 30, 2013 $ 14,876,279 $ 14,283,651 $ 592,628 Changes for the year: Service cost 507, ,972 Interest 1,021,383 1,021,383 Contnbutions - employer 435,519 (435,519) Contnbutions - employee 237,728 (237,728) Net investment income 2,265,304 (2,265,304) Benefit payments, including refunds of employee contributions (570,189) (570,189) Administrative expenses (12,002) 12,002 Other changes 120 {1202 Net changes 959,166 2,356,480 {1,397,3142 Balances at June 30, 2014 $ 15,835,445 $ 16,640,131 $ {804,686~ (I) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2015, the County, Authority, and Schools recognized pension expense of $2,072,744, $144,496, $8,075,082, respectively. At June 30, 2015, deferred outflows ofresources and deferred inflows of resources to pensions from the following sources were reported: Governmental activities: Net difference between projected and actual earnings on pension plan investments Employer contnbutions subsequent to the measurement date Total $ $ Deferred outflows of resources $ Deferred inflows of resources 8,441,486 4,091,153 4,091,153 $ 8,441,486 =================== 78 (Continued) D-80

141 COUNTY OF JAMES CITY, VffiGINIA Notes to Basic Financial Statements June 30, 2015 Business-type activity: Deferred outflows of resources Net difference between projected and actual earnings on pension plan investments $ $ Employer contnbutions subsequent to the measurement date 330,920 Total $ 330,920 $ Deferred inflows of resources 803, ,802 Component Unit - Public Schools (non-professional): Deferred outflows of resources Net difference between projected and actual earnings on pension plan investments $ $ Employer contnbutions subsequent to the measurement date 372,141 Total $ 372,141 $ Deferred inflows of resources 1,009,806 1,009,806 The County, Authority, and Schools had $4,091,153, $330,920, $372,141, respectively reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Governmental activities: Year ended June $ (2,110,371) 2017 (2,110,371) 2018 (2,110,371) 2019 (2,110,373) $ (8,441,486) 79 (Continued) D-81

142 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Business-type activity: Year ended June $ Component Unit - Public Schools (non-professional): (200,951) (200,951) (200,951) (200,949) $ ==(-80=3=,8=02==) Year ended June $ $ (252,451) (252,451) (252,451) (252,451) (1,009,804) (13) Post-Employment Benefits Other Than Pensions (OPEB) For the fiscal year ended June 30, 2009, the County, Authority and Public Schools adopted GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The Statement establishes standards for reporting the liability for the County's nonpension postemployment benefit, the health care plan for retirees. A valuation report was prepared for the County by Bolton Partners, Inc. The report may be obtained from the James City County Department of Financial and Management Services, 101-F Mounts Bay Road, P.0. Box 8784, Williamsburg, Virginia (a) (b) Plan Provisions In addition to providing the pension benefits described in footnote 12, the County, Authority and Public Schools provide postemployment health care (OPEB) for qualifying retired employees who are not yet eligible for Medicare through single-employer defined benefit plans. The benefits, benefit levels, employee contributions and employer contributions are governed by the County and Public Schools and can be amended through their personnel manuals. Funding Policy The County, Authority and Public Schools do not intend to establish a trust to prefund this liability. The anticipated growth in the net OPEB obligation is based on contributions to the benefit plan on a pay-as-you-go cost basis. The data has been projected into the future based on the assumption the current active population remains constant. Retirees pay the full rate of coverage under the medical plan. 80 (Continued) D-82

143 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (c) Plan Description Currently, covered full-time active employees who retire directly from the County or Authority and are at least 50 years of age with 15 years of service are eligible to receive postretirement health care benefits. Each year, retirees participating in the County or Authority's sponsored plans will be given the opportunity to change plans or drop coverage during an open enrollment period. The pre-medicare retirees have a choice of three plans: Optima, Healthkeepers and KeyCare. The majority of the participants are in Healthkeepers. Dental plans are available at the retiree's cost, and therefore, have no GASB 45 liability. There is no coverage for post-medicare retirees. There were 556 County and 76 Authority participants at the time of the actuarial study. The County and Authority do not contribute towards the retiree's health insurance premiums. Therefore, since the retirees pay their health insurance premiums based on a blended rate, the County and Authority has an implicit liability. The Public Schools provides a single-employer defined benefit medical plan and a retiree health insurance premium contribution plan that covers retirees until they reach 65 years of age. There is no coverage for retirees or their spouses once they reach the age of 65 and are eligible for Medicare. Both plans were established under the authority of the Williamsburg-James City County School Board and any amendments to the plans must be approved by the School Board. The Public Schools' plan allows retirees under the age of 65 to remain in the same medical and dental plan as active employees if they have at least five years of service and are a covered member under the plan at retirement and for at least 24 months prior to retiring. Retirees pay 100% of the premium, minus any applicable $62.50 monthly contributed. The Public Schools' plan allows eligible retirees to receive a $62.50 monthly contribution toward their health insurance premium if they have a minimum of twelve continuous years of service. The Public Schools' current membership is 49. (d) Annual OPEB Costs and Net OPEB Obligation The net OPEB obligation as of June 30, 2015 was calculated as follows: Governmental activities: Annual required contribution Interest on net OPEB obligation Actuarial adjustments Annual OPEB cost Contributions made Increase in net OPEB obligation Net OPEB obligation, beginning of year Net OPEB obligation, end of year $ 505,000 73,000 (88,000) 490,000 (107,000) 383,000 1,810,962 $ 2,193,962 ========== 81 D-83 (Continued)

144 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Business-type activity: Annual required contribution Interest on net OPEB obligation Actuarial adjustments Annual OPEB cost Contributions made Increase in net OPEB obligation Net OPEB obligation, beginning of year Net OPEB obligation, end of year $ 47,000 8,000 (10,000) 45,000 (9,000) 36, ,509 $ 243,509 ======= Component Unit - Public Schools: Annual required contribution Interest on net OPEB obligation Actuarial adjustments Annual OPEB cost Contributions made Increase in net OPEB obligation Net OPEB obligation, beginning of year Net OPEB obligation, end of year $ 873, ,000 (192,000) 859,000 (303,000) 556,000 4,440,300 $ 4,996,300 The trend information for the OPEB plans is as follows: Governmental activities: Three-year trend information Fiscal Annual Percentage year ended OPEB Actual of annual OPEB June 30, cost contribution cost contributed 2015 $ 490, , % ,000 93, ,000 73, Net OPEB obligation $ 2,193,962 1,810,962 1,446,962 D (Continued)

145 COUNTY OF JAMES CITY, vmginia Notes to Basic Financial Statements June 30, 2015 Business-type activity: Three-year trend information Fiscal Annual Percentage year ended OPEB Actual of annual OPEB June 30, cost contribution cost contributed 2015 $ 45,000 9, % ,000 7, ,000 13, Net OPEB obligation $ 243, , ,509 Component Unit - Public Schools: Fiscal year ended June 30, 2015 $ 859, , ,000 Three-year trend information Annual Percentage OPEB Actual of annual OPEB cost contribution cost contributed 303, % 242, , Net OPEB obligation $ 4,996,300 4,440,300 3,878,300 (e) Actuarial Methods and Assumptions Valuation Methods The projected unit credit actuarial cost method was used to calculate all of the expense amounts and the funded status of the plan. The calculations were performed in accordance with the methodologies set forth in GASB Statement No. 45. Under the methods, benefits provided by the substantive plans (the plans as understood by the employers and the members of the plans) at the time of the actuarial study are projected and their present value is determined. The present value is divided into equal parts which are earned over the period from date of hire to the full eligibility date. Employees Included in the Calculations All active employees who are expected to meet the plan's eligibility requirements on or before the ultimate assumed retirement age are included in the calculations. Retirees, spouses and spouse survivors who are entitled to a benefit under the provisions of the plan are also included. Actuarial Assumptions In the July 1, 2014 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included calculations based on a discount rate of 4% for the unfunded liability, rate of inflation of 2.5%, payroll growth of 3%, healthcare cost trend rate of 9% and amortization of the initial unfunded actuarial liability over a closed 25 year period based on a level percent of payroll method. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided 83 (Continued) D-85

146 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial accrued liability was $4,396,000, $423,000 and $7,335,000 for the County, Authority and Public Schools, respectively. Future increases for medical benefits are assumed to range from an initial rate of 7.50% and gradually decrease to 5.04% thereafter. It should be noted that actuarial valuations for the OPEB plan involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. As such, actuarial calculations reflect a long-term perspective and, therefore, actuarially determined amounts are subject to revision as results are compared to past expectations and new estimates are made about the future. (/) Schedule of Funding Progress Governmental activities: Actuarial accrued Unfunded Actuarial liability actuarial UAAL as a valuation Actuarial (AAL) accrued percentage date value of project liability Funding Covered of covered July 1, assets unit credit (UAAL) ratio payroll payroll 2012 $ 2,997,000 2,997,000 $ 33,716, % ,050,000 4,050,000 34,545, ,396,000 4,396,000 34,159, Business-type activity: Actuarial accrued Unfunded Actuarial liability actuarial UAAL as a valuation Actuarial (AAL) accrued percentage date value of project liability Funding Covered of covered July 1, assets unit credit (UAAL) ratio payroll payroll 2012 $ 343, ,000 $ 4,306, % , ,000 4,288, , ,000 4,257, (Continued) D-86

147 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Component Unit - Public Schools: Actuarial accrued Unfunded Actuarial liability actuarial valuation Actuarial (AAL) accrued date value of project liability Funding July 1, assets unit credit (UAAL) ratio 2012 $ 6,349,000 6,349, ,782,000 6,782, ,335,000 7,335,000 UAAL as a percentage of covered Covered payroll eayroll $ 70,133, % 71,291, ,400, (14) Deferred Compensation Plan The County offers its employees a deferred compensation plan created in accordance with Internal Revenue Code (IRC) Section 457. The plan, available to permanent part-time and full-time County and Authority employees, permits them to defer 25% of their gross income up to the maximum allowable by the IRC ($18,000 in 2015). The deferred compensation is not available to employees until termination, retirement, death, or an unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are held in trust for the participants. The County acts as trustee for the plan with the choice of investment options being made by the participants. The activity of the plan is accounted for in the Deferred Compensation Plan trust fund in the accompanying basic financial statements in accordance with the provisions of GASB Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. (15) Related-Party Transactions Certain financial management, accounting, and other services are provided to the Authority by the County. The charges for these services amounted to $807,844 and $857,564 for the years ended June 30,2015. The County rents space in the Authority's administration building under a 10 year operating lease agreement, effective July 1, The County paid the Authority $176,928 for the year ended June 30, The rental charge includes the following: utilities, insurance, maintenance, housekeeping, supplies and custodial services. In addition, the County leases space in the Authority's building at Tewning Road. The lease agreement began July, 2014 for a ten year term, and can be adjusted every five years. For the year ended June 30, 2015, the County paid the Authority $84,000. The rent includes utilities, maintenance, housekeeping, and custodial services. The County will also pay for tenant improvements up to $150,000. During the first twelve months, the County must pay two percent (2%) interest payments on any renovation expenses incurred. For the year ended June 30, 2015, interest payments paid by the County were 85 (Continued) D-87

148 COUNTY OF JAMES CITY, VffiGINIA Notes to Basic Financial Statements June 30, 2015 $1,096. After the first twelve months, the County will pay the Authority the principal cost of the renovations plus two percent (2%) interest. In September 2009, the County entered into an agreement with the Schools for maintenance and custodial services. The agreement is in place for one year, which may be renewed or amended by November 1 each year. The County paid the Schools $123,436 for the year ended June 30, 2015 for these services. In April 2013, the County entered into a memorandum of understanding (MOU) with the Schools to provide risk management services. The MOU has an initial term of one year with the option of renewal for four additional one year terms. (16) Risk Management The County is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, injuries to employees and natural disasters. Property, liability and worker's compensation coverage are provided through the Virginia Association of Counties Group Self Insurance Risk Pool. The County reports all of its risk management expenditures in the General Fund. The County maintains surety coverage for principal officials through the Virginia Association of Counties Self Insurance Risk Pool. Surety coverage is provided under the general liability coverage with a limit of $9,000,000. All elected officials, appointed officials, members of all appointed governing bodies, employees and volunteers are covered while acting within the scope of their duties with the County. 86 (Continued) D-88

149 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (17) Commitments and Contingencies Primary Government Construction in Progress - Governmental Activities At June 30, 2015, the County had several major projects under construction which are presented in the accompanying financial statements as construction in progress. Presented below is a list of major projects, by budget, expenditures to date, balance of contract and budget balance. Expenditures Balance of Budget Project Budget to date contract balance Public safety $ 6,726,557 2,857,886 3,713, ,811 General governmental 3,387,918 84, ,586 2,784,826 Education 9,637,238 4,591,556 3,270,819 1,774,863 Parks and recreation 1,490, ,388 48,693 1,282,387 $ 21,242,181 7,693,336 7,551,958 5,996,887 Construction in Progress - Business-Type Activity At June 30, 2015, the Authority had several major projects under construction which are presented in the accompanying financial statements as construction in progress. Presented on the following page is a list of major projects, by budget, expenditures to date, balance of contract and budget balance. Project Sewer improvements $ Water supply Water distribution Water transmission Water storage Other Budget 4,038,585 12,875, , , , ,580 Expenditures to date 45, ,032 51,728 Balance of Budget contract balance 267,488 3,725, ,096 12,126, ,090 45, , ,620 62, ,965 $ 18,928, , ,546 17,707,247 Advances for Construction The Authority records advances for construction representing two separate agreement types. The first one represents funds advanced by developers for the construction of specific facilities. These agreements call for rebates, up to the amount advanced, and have no expiration date. Secondly, developers can also construct a facility, dedicate it to the Authority and receive rebates, up to the cost of the facility, for up to 10 years. The Authority no longer enters into these types of agreements. At June 30, 2015, the Authority had $32,902 outstanding in advances for construction. 87 (Continued) D-89

150 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 Operating Leases Primary Government The County leases certain land and office space under noncancelable operating lease agreements. A summary of future minimum lease payments as of June 30, 2015 are as follows: Year ending June 30: Lease payments due $ 235, , , , ,607 1,395, ,695 $ 3,153,080 Rental expenditures related to these lease agreements were $392,833 for the year ended June 30, Component Unit - Public Schools The Public Schools lease equipment and buildings under noncancelable operating leases. Total costs for such leases were approximately $259,408 for the year ended June 30, The future minimum lease payments for these leases are as follows: Year ending June 30: Lease payments due $ 240, ,496 75,579 68,135 23,837 $ 542,761 Other The County and the Public Schools participate in a number of federal awards. Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the County expects such amounts, if any, to be immaterial. The County, the Public Schools and the Development Authority are currently not involved 88 (Continued) D-90

151 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 in any litigation which management feels could have a significant impact on the County's, the Public Schools', or the Development Authority's financial condition. (18) Restatement The County adopted GASB Statement 68, Accounting and Financial Reporting for Pensions - an Amendment of GASB Statement 2 7 and GASB Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an Amendment of GASB Statement 68, in the current year. As a result, the effect on fiscal year 2014 is: Governmental activities: Deferred pension contribution Net pension liability Unrestricted net position Net position $ 2014 Previously Reported 71,923, ,111,605 Restatement 4,362,691 26,190,225 (21,827,534) (21,827,534) 2014 Restatement 4,362,691 26,190,225 50,095, ,284,071 Business-type activity: Deferred pension contnbution Net pension liability Unrestricted net position Net position $ 2014 Previously Reported 30,757, ,282,033 Restatement 308,820 1,907,619 ( 1,598, 799) ( 1,598, 799) 2014 Restatement 308,820 1,907,619 29,159, ,683,234 Component Unit - Public Schools (non-professional): Deferred pension contnbution Net pension liability Unrestricted net position Net position $ 2014 Previously Reported 21,167,976 ( 1,263,228) 51,591,873 Restatement 7,767, ,805,628 (112,038,027) (112,038,027) 2014 Restatement 7,767, ,973,604 (113,301,255) (60,446,154) 89 D-91 (Continued)

152 COUNTY OF JAMES CITY, VIRGINIA Notes to Basic Financial Statements June 30, 2015 (19) Subsequent Event On August 4, 2015, the County issued general obligation refunding bonds, series 2015A, in the amount of $11,280,000 at an interest rate of 3%. This refunded the 2005 general obligation bonds and a portion of the 2006 general obligation bonds outstanding. On August 4, 2015, the County issued taxable general obligation refunding bonds, series 2015B, in the amount of $3,820,000 at an interest rate of 1 %. This refunded a portion of the 2006 general obligation bonds outstanding. On August 5, 2015, the County issued lease revenue refunding bonds, series 2015, in the amount of $49,815,000 at an interest rate of 5%. This refunded the 2006 lease revenue bonds outstanding. In addition, at the time of these bond refundings, Moody's upgraded the County's bond rating to AAA. 90 D-92

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154 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD&A D-94

155 COUNTY OF JAMES CITY, VIRGINIA General Fund The General Fund is the general operating fund of the County, which is used to account for all of the financial resources, except those required to be accounted for in another fund. Revenues are derived primarily from general property taxes, other local taxes, licenses, permits and fees and intergovernmental revenues. Primary expenditures are for public safety, public works, health and welfare, parks, recreation and culture, education and the general administration of the County. 92 D-95

156 COUNTY OF JAMES CITY, VIRGINIA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Unaudited) General Fund Year ended June 30, 2015 Exhibit 10 Variance Original Final positive Fund, major and minor revenue source budget budget Actual (negative) Revenue from local sources: General property taxes: Real property taxes $ 84,800,000 84,800,000 84,693,239 (106,761) Real and personal public service corporation property taxes 1,800,000 1,800,000 2,632, ,859 Personal property taxes 19,197,500 19,197,500 19,184,266 (13,234) Machinery and tools taxes 5,650,000 5,650,000 5,187,583 (462,417) Penalties 600, , ,210 (26,790) Interest 350, , ,921 (79,079) Total general property taxes 112,397, ,397, ,542, ,578 Other local taxes: Local sales and use taxes 10,600,000 10,600,000 10,533,390 (66,610) Franchise license taxes 500, , ,497 (31,503) Taxes on recordation and wills 1,350,000 1,350,000 1,372,519 22,519 Hotel and motel room taxes 2,600,000 2,600,000 2,567,821 (32,179) Restaurant food taxes 6,340,000 6,340,000 6,600, ,364 Deeds of conveyance 375, , ,145 45,145 Penalties 14,454 14,454 Interest 8,920 8,920 Total other local taxes 21,765,000 21,765,000 21,986, ,110 Permits, privilege fees and regulatory licenses: Animal licenses 20,000 20,000 13,712 (6,288) Business licenses 6,355,000 6,355,000 6,514, ,163 Motor vehicle licenses 150, , ,692 (4,308) Building permits 1,000,000 1,000, ,095 (58,905) Permits and other licenses 705, , , ,159 Total permits, privilege fees and regulatory licenses 8,230,000 8,230,000 8,443, ,821 Fines and forfeitures 315, , ,615 (43,385) Revenue from use of property 125, , ,230 17,230 Charges for services: Excess fees of the clerk 175, , ,607 (31,393) Charges for Commonwealth's attorney 6,000 6,000 5,676 (324) Charges for law enforcement and traffic control 140, , ,492 (11,508) Charges for emergency medical services 2,425,000 2,425,000 2,226,186 (198,814) Charges for parks and recreation 2,838,200 2,855,250 3,109, ,797 Landfill user fees 245, , ,799 25,799 Other fees 83,500 83,500 60,943 (22,557) Total charges for services 5,912,700 5,929,750 5,944,750 15,000 Miscellaneous revenue: Sale of property 75,000 75, ,769 96,769 Miscellaneous 83, , ,794 44,055 Total miscellaneous revenue 158, , , ,824 Total revenue from local sources 148,903, ,941, ,651, ,178 D (Continued)

157 COUNTY OF JAMES CITY, VIRGINIA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Unaudited) General Fund Year ended June 30, 2015 Exhibit 10 Variance Original Final positive Fund, major and minor revenue source budget budget Actual (negative) Revenue from the Commonwealth: Noncategorical aid: Mobile home titling taxes $ 30,000 30,000 30, Tax on deeds 500, , ,821 (171,179) Railroad rolling stock taxes 60,000 60,000 59,386 (614) Personal property tax relief 9,770,137 9,770,137 9,770,137 Communications sales and use tax 1,850,000 1,850,000 1,699,802 (150,198) Car rental tax 125, , ,429 (21,571) Total noncategorical aid 12,335,137 12,335,137 11,992,039 (343,098) Categorical aid: Shared expenses: Commonwealth's attorney 541, , ,359 (2,655) Sheriff 696, , ,972 (11,431) Commissioner of the revenue 165, , ,249 3,380 Treasurer 168, , ,516 (11,409) Registrar/electoral board 47,000 47,000 44,997 (2,003) Clerk of the circuit court 482, , ,857 (22,161) Total shared expenses 2,101,229 2,101,229 2,054,950 (46,279) Other categorical aid: Wireless Board 185, , ,841 16,841 Commission of the arts 5,000 5,000 5,000 HB 599 payments 1,387,341 1,387,341 1,280,307 (107,034) Share of state sales tax I 0,515,793 10,515,793 10,696, ,136 Other 55,000 55,000 61,296 6,296 Total other categorical aid 12,148,134 12,148,134 12,245,373 97,239 Total categorical aid 14,249,363 14,249,363 14,300,323 50,960 Total revenue from the Commonwealth 26,584,500 26,584,500 26,292,362 (292,138) Revenue from the federal government: Payments in lieu of taxes 7,000 7,000 6,834 (166) Total revenue from the federal government 7,000 7,000 6,834 (166) Total revenues 175,495, ,533, ,950, ,874 D-97 94

158 CO UNTY OF JAMES CITY, VIRGINIA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Unaudited) General Fund Year ended June 30, 2015 Exhibit to Variance Original Final positive Fund, major and minor expenditure source budget budget Actual {negative) General government administration: Legislative: Board of supervisors $ 220, , ,080 7 General and financial administration: County administrator 482, , ,071 33,092 County attorney 501, , , ,755 Human resources 672, , , ,535 Legal services 13,500 23,500 20,202 3,298 Commissioner of the revenue 772, , ,814 (5,564) Real estate assessments 821, , ,597 20,780 Treasurer 1,402,168 1,402,168 1,350,228 51,940 Financial management 960, , , ,002 Accounting 182, , ,038 70,841 Publications management 210, , ,248 5,012 Purchasing 295, , ,775 32,511 Records management 263, , ,430 31,023 Information technology 1,967,527 2,019,104 1,899, ,827 Fleet maintenance 1,003,037 1,037,537 1,034,897 2,640 Total general and financial administration 9,548,133 9,667,022 8,893, ,692 Board of elections: Voter registration and elections 358, , ,479 53,408 Total general government administration 10,1 27,125 10,259,996 9,432, ,107 Judicial administration: Courts: Circuit court and judicial services 516, , ,601 5,908 General district court 37,240 37,240 30,112 7,128 Juvenile and domestic relations district court 23,760 23,760 18,696 5,064 Clerk of the circuit court 698, , ,911 12,951 Sheriff 1,296,617 1,296,617 1,264,069 32,548 9th judicial district 9,945 9,945 9, Court services and juvenile detention 446, , , Courthouse 482, , ,375 97,558 Total courts 3,511,754 3,554,628 3,392, ,008 Commonwealth's attorney 784, , ,186 4,894 Total judicial administration 4,295,834 4,338,708 4,171, ,902 Public safety: Law enforcement and traffic control: Police department 9,438,046 9,504,875 9,117, ,581 Emergency communications 2,926,704 2,960,182 2,682, ,566 Total law enforcement and traffic control 12,364,750 12,465,057 11,799, ,147 Fire and rescue services: Fire department and emergency medical services 10,993,792 11,060,792 10,724, ,440 Correction and detention: Regional jail 2,500,000 2,494,300 2,486,189 8,111 D (Continued)

159 COUNTY OF JAMES CITY, VIRGINIA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Unaudited) General Fund Year ended June 30, 2015 Exhibit 10 Variance Original Final positive Fund, major and minor expenditure source budget budget Actual (negative) Inspections: Building and safety permits $ 1,111,716 1,113,376 1,047,214 66,162 Other protection: Animal control 207, , ,227 33,071 Emergency management 342, , ,729 42,672 Total other protection 549, , ,956 75,743 Total public safety 27,519,863 27,683,224 26,531,621 1,151,603 Public works: Sanitation and waste removal: Grounds maintenance 1,635,457 1,649,612 1,495, ,747 Solid waste and recycling 1,327,653 1,330,653 1,330, Total sanitation and waste removal 2,963,110 2,980,265 2,826, ,244 Maintenance of general buildings and grounds: Facilities management 4,324,753 4,410,853 4,136, ,951 Total public works 7,287,863 7,391,118 6,962, ,195 Health and welfare: Local health department 725, , ,160 Mental health and mental retardation 1,060,000 1,060,000 1,060,000 Total health and welfare 1,785,160 1,785,160 1,785,160 Education: School board administration 80,832,474 80,832,474 79,610,865 1,221,609 Parks, recreation and cultural: Parks and recreation: Administration 4,534,815 4,508,632 4,393, ,594 Community centers 208, , ,116 28,043 Park operations 256, , ,656 23,867 Recreation services 478, , ,501 53,139 Total parks and recreation 5,477,395 5,526,954 5,306, ,643 Library: Regional library 4,367,111 4,367,111 4,367,111 Total parks, recreation and cultural 9,844,506 9,894,065 9,673, ,643 Community development: Planning and community development: Planning 924, , , ,075 Development management 213, , ,568 6,311 Communications 589, , ,780 68,523 Zoning enforcement 364, , ,194 9,393 Economic development 416, , , ,862 Satellite office 214, , ,145 14,900 Contributions - other 749, , ,982 15,695 Regional transportation 573, , ,420 Total planning and community development 4,044,879 4,134,607 3,797, ,759 D-99 96

160 COUNTY OF JAMES CITY, VIRGINIA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Unaudited) General Fund Year ended June 30, 2015 Exhibit 10 Original Final Fund, major and minor exeenditure source budget budget Actual Environmental management: Engineering and resource protection $ 954, , ,263 Stormwater management 797, , ,746 Total environmental management 1,751,992 1,927,218 1,657,009 Total community development 5,796,871 6,061,825 5,454,857 Nondepartmental: Miscellaneous 240, , ,433 Total expenditures 147,730, ,458, ,148,976 Excess of revenues over expenditures 27,764,782 27,074,817 31,801,387 Other financing uses: Operating transfers out (30,121,057) (30,121,057) (35,271,660) Deficiency of revenues over expenditures and other uses (2,356,275) (3,046,240) (3,470,273) Fund balance at beginning of year 2,356,275 3,046,240 38,133,705 Fund balance at end of year $ 34,663,432 Variance positive (negative) 88, , , ,968 (313,331) 4,309,696 4,726,570 (5,150,603) (424,033) 35,087,465 34,663,432 Unaudited - see accompanying independent auditors' report. See accompanying notes to required supplementary information. D

161 COUNTY OF JAMES CITY, VIRGINIA Schedule of Changes in the Net Pension Liability and Related Ratios Required Supplementary Information (Unaudited) Exhibit 11 Year ended June 30, County JCSA Public Schools' Employees Employees Non-Professional Total pension liability Service cost $ 4,376, ,066 $ 507,972 Interest 9,996, ,818 1,021,383 Changes of benefit terms Differences between expected and actual experience Changes in assumptions Benefit payments, including refunds of employee contributions (5,223,843) (376,365) (570,189) Net change in total pension liability 9,148, , ,166 Total pension liability - beginning 145,419,002 13,242,723 14,876,279 Total pension liability - ending (a) 154,567,747 14,197,242 15,835,445 Plan fiduciary net position Contributions - employer 4,362, , ,519 Contributions - employee 1,909, , ,728 Net investment income 18,931,089 1,802,418 2,265,304 Benefit payments, including refunds of employee contributions (5,223,843) (376,365) (570,189) Adminstrative expense (100,186) (9,511) (12,002) Other Net change in plan fiduciary net position 19,880,178 1,922,645 2,356,480 Plan fiduciary net position - beginning 119,228,777 11,335,104 14,283,651 Plan fiduciary net position - ending (b) 139,108,955 13,257,749 16,640, 131 Net pension liability (a) - (b) $ 15,458, ,493 (804,686) Plan fiduciary net position as a percentage of the total pension liability 90.00% 93.38% % Covered-employee payroll $ 36,725,410 3,943,666 4,812,365 Net pension liability as a percentage of the total 42.09% 23.82% % covered-employee payroll Note: Information in this schedule is presented for the year in which information is available. Information will be added each year until a full IO-year trend is presented. Unaudited - see accompanying notes and independent auditors' report. See accompanying notes to required supplementary information. D

162 COUNTY OF JAMES CITY, VIRGINIA Schedule of Employer Contributions Required Supplementary Information (Unaudited) Year ended June 30, 2015 Exhibit 12 County employees: Fiscal Year 2015 $ Contractually Required Contribution 4,090,933 Contributions in relation to contractually required contribution 4,09 1,153 Contribution deficiency (Excess) (220)* Employer's covered employee payroll 36,788,968 Contributions as a % of covered employee payroll 11.12% *Excess contributions are a result of an amount due for retroactive payment for prior fiscal year. James City Service Authority employees: Fiscal Year 2015 $ Contractually Required Contribution 330,920 Contributions in relation to contractually required contribution 330,920 Contribution deficiency (Excess) Employer's covered employee payroll 3,897,762 Contributions as a 0 /o of covered employee payroll 8.49% Public Schools' - non-professional: Fiscal Year 2015 $ Contractually Required Contribution 372,141 Contributions in relation to contractually required contribution 372,141 Contribution deficiency (Excess) Employer's covered employee payroll 5,154,307 Contributions as a % of covered employee payroll 7.22% Note: Information in this schedule is presented for the year in which information is available. Information will be added each year until a full I 0-year trend is presented. Unaudited - see accompanying notes and independent auditors' report. See accompanying notes to required supplementary information. 99 D-102

163 COUNTY OF JAMES CITY, VIRGINIA Notes to Required Supplementary Information (Unaudited) (1) Budgeting and Budgetary Accounting June 30, 2015 The following procedures are used by the County in establishing the budgetary data reflected in the financial statements: Prior to April 1, the County Administrator submits to the Board of Supervisors a proposed operating and capital budget for the fiscal year commencing the following July 1. The operating budget and capital budget include proposed expenditures and the means of financing them. Public hearings are then conducted to obtain citizen comments. Prior to June 30, the budget is legally enacted through passage of an Appropriations Resolution. The Appropriations Resolution places legal restrictions on expenditures at the fund and function level. The appropriation for each fund and function can be revised only by the Board of Supervisors; however, the County Administrator may amend the budget within functions. Supplemental appropriations in addition to the appropriated budget were necessary during the year. Formal budgetary integration is employed as a management control device during the year for those funds with legally adopted annual budgets which are the General Fund, Special Revenue Fund - Virginia Public Assistance, and Debt Service Fund, and these funds are integrated only at the level of legal adoption. Program and project budgets are utilized in the Capital Projects; Community Development; and Grants and Special Projects Funds where appropriations remain open and carry over to the succeeding years. All budgets are adopted on the modified accrual basis of accounting. The budget was increased by $38,489, excluding encumbrances carried forward of $690,251, in supplemental appropriations during the fiscal year ended June 30, This increase was primarily to appropriate insurance recovery funds to replace damaged equipment and vehicles. All appropriations lapse on June 30 for all County funds, except the funds referenced above. All budget data presented in the accompanying basic financial statements represents the appropriated budget as of June 30, 2015, as adopted and amended by supplemental appropriations. (2) Changes of Benefit Terms There have been no significant changes to the system benefit provisions since the prior actuarial valuation. A hybrid plan with changes to the defined benefit plan structure and a new defined contribution component were adopted in The hybrid plan applies to most new employees hired on or after January 1, 2014 and not covered by enhanced hazardous duty benefits. The liabilities presented do not reflect the hybrid plan since it covers new members joining the System after the valuation date of June 30, 2013 and the impact on the liabilities as of the measurement date of June 30, 2014 are minimal. (3) Changes of Assumptions The following changes in actuarial assumptions were made effective June 30, 2013 based on the most recent experience study of the System for the four-year period ending June 30, 2012: Largest 10 - Non-LEOS: - Update mortality table - Decrease in rates of service retirement - Decrease in rates of disability retirement 100 (Continued) D-103